A state regulator has cut the price utilities have to pay solar farms for power.
That has some local leaders concerned about the impact on the solar industry, which has been growing in the region.
Rep. Russell Ott, D-St. Matthews, says he is still trying to understand the rationale behind the S.C. Public Service Commission’s decision.
"We were definitely moving in the direction of embracing solar and this appears to be a chilling effect for the industry," Ott said.
The PSC voted last Friday to drop the rate of major utilities such as Dominion and Duke Energy pay for solar power.
According to its ruling, the rate Dominion will pay for solar power dropped from three cents to two cents per kilowatt hour, according to the S.C. Solar Alliance.
Duke’s rate drops from 4.5 cents to three cents, the alliance and Duke Energy said Tuesday.
The solar industry was seeking rates of around four cents.
This is equivalent to $21 per megawatt hour of electricity for Dominion and between $29 and $31 per MWh for Duke.
The T&D Region has been heating up as a location for solar companies over the past few years.
About ten solar farms have announced plans to develop in Orangeburg County over the past three years, making it a state leader in solar.
Overall, solar farm developers have promised to invest $503.5 million and provide 460 megawatts of power in the county.
About half a dozen farms have also been announced in Calhoun County and one has been announced in Bamberg County over this same time period.
"We have several on the drawing board and it will be interesting to see if these projects come to fruition," Orangeburg County Development Commission Executive Director Gregg Robinson said.
"Anytime the tax policy and or regulations come into play, it can hinder the project,” he said.
He said there’s no way the change can’t impact future farms.
"It will end up heightening the value of the current farms and it will certainly create a more challenging path for the development of future farms," Robinson said.
Robinson said he does not foresee the PSC's decision impacting existing solar farms because purchase agreements and inter-connectivity agreements are already in place.
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The news comes just as Central Electric Power Cooperative announced it plans to purchase 150 megawatts of solar power from Orangeburg County Solar Project, LLC and Orangeburg South Solar Project, LLC.
The projects will cover approximately 750 acres each near Bowman. Construction will begin in 2021, and both sites are projected to reach commercial operation by the end of 2022.
The investment in the two farms is expected to be about $170 million.
Ott said he does not want to speculate on what impact the PSC’s decision may have on the solar farm industry in the state but said it comes down to the market.
"If companies are not able to come in and be able to be profitable, they are not coming," Ott said. "The Public Service price and length of contract directly impacts that."
He’s reserving judgment on the ruling until he obtains more information.
Ott has served as the vice chair of the House Utility Ratepayer protection committee and as a member of the Energy Caucus.
In making its decision, the PSC agreed with the recommendation of the Power Advisory, a management consulting firm that specializes in electricity sector matters.
In addition to the vote on rates, the PSC said utilities don’t need to provide long-term contracts to solar farm developers and noted solar companies have not made a good enough case for longer-term contracts. Under the PSC vote, contracts will not be longer than ten years.
The PSC expressed reservations about making utilities pay high rates for solar-farm produced energy.
Solar farm developers and industry backers such as the Solar Energy Industries Association have expressed their concerns about the ripple effect the PSC's decision will have on the solar industry.
They have argued that attractive rates and long-term contracts would help the industry expand in the state and force utilities to buy more solar energy.
Solar farm advocates said the PSC's decision gives South Carolina one of the lowest rates and contract terms in the nation.
For example, the SEIA notes in Virginia, Dominion Energy recently executed a 20-year solar contract for about $40 per MWh.
In North Carolina, Duke Energy recently procured solar for $38 per MWh with a 20-year contract through their Competitive Procurement of Renewable Energy Program.
Earlier this year, Georgia Power executed 30-year solar contracts at an average price of $36 per MWh, says the SEIA.
Solar industry advocates, such as Solar Power World, say the rates of Duke Energy and Dominion Energy are so low that solar developers will not be able to get financing to continue building solar farms in the state.
They argue more solar would reduce the state’s reliance on traditional forms of energy like coal, nuclear and natural gas and shield customers from seeing spikes in their utility bills from rising costs like those associated with coal and natural gas plants.
Utilities have contended that providing higher rates to solar companies for power produced on solar farms would hurt customers.
They say they would simply pass along costs to hundreds of thousands of customers in South Carolina. Duke and Dominion provide energy to most of the state.