SACE Renewable Energy Manager, Charlie Coggeshall, and SACE Director of Research, John Wilson, contributed to this post.
This week, we celebrate George Washington’s birthday to honor the leadership of our first president in particular, and that of our founding fathers in general. Our founding fathers had a bold vision for the United States–a land of liberty. Securing and protecting the rights of “life, liberty, and the pursuit of happiness” have been the dominant themes of American government since we gained our independence. Yet in government, there is sometimes a disparity between what we profess to practice and what we actually do. When this happens, it’s important to do a reality check to make sure our laws follow our values.
Here in South Carolina, State Representative J. E. Smith and ten of his colleagues have proposed legislation to give South Carolina electric customers the freedom to sign a contract to obtain the benefits of solar energy with the power company of their choice. The Energy System Freedom of Ownership Act (House Bill 3425), which has been introduced in the State House of Representatives would allow for building owners to house solar power systems on their rooftops through innovative financing methods that help take away the large upfront cost of solar power.
H 3425 would legalize contracts made between building owners and third parties who would install and own the energy system (on the building owner’s property) and sell the solar power back to the building owner via a power purchase agreement (PPA) or lease the system to the building owner. This arrangement, known as third party solar financing, would mean that rather than forcing the building owner to provide the upfront cash needed to outright buy the solar panels, they could enter into a contract (typically for 20 years) with the solar developer and then make monthly payments for that power, similar to traditional utility bills. These agreements are generally designed so that the building owner’s overall electricity payments would remain the same or be reduced, and often include service contracts so that the building owner does not have to worry about maintaining the solar system.
By leasing solar panels instead of buying them, you, the homeowner, can have solar installed on your roof for little or no cost. The investment company actually owns the panels on your roof and makes a profit by earning tax credits and selling you electricity. You benefit because, over the life cycle of the installed system, you save money on electricity. – Ryan Black, Coastal Conservation League
This legislation is important to South Carolina and to our region because its success will help open up an energy marketplace in a state where individual responsibility is such a central value to many of its citizens and elected officials. Third party solar financing will open up the solar market to people who lack the wealth to buy a system outright (provided they have good credit). H 3425 could give some much needed “juice” to the South Carolina solar industry, promoting free-market competition, and driving innovation.
Furthermore, the legislation would allow South Carolina to take a leadership role in the emerging clean energy economy. The cost of solar panels has come down by 80 percent in the last five years and the amount of installed solar in the U.S. has doubled every year for the past five years. It would be wise to establish South Carolina as a well-developed market for solar power as costs fall and customer demand rises.
Third party solar PPAs are currently allowed in 22 states (plus Washington, DC) and legislation is being considered in at least two other Southeastern states–Georgia (SB51) and Florida (HB309 and SB498). Where this legislation has passed, it has proven to be a major driver of solar development. For example, between 57 and 91 percent of residential installations were third-party financed in the third-quarter of 2012 in states that allow third-party solar. This represents an opening of the market to many households who wanted solar energy but probably could not afford to install it without innovative financing.
Innovative solar financing in the Southeast may reduce significant barriers to allowing personal energy choices and supporting free market innovation. Let’s help freedom ring loud and clear. If you are a South Carolinian, please consider signing the petition in support of third party solar financing.