This is part four in a five-part series about the SACE “Solar in the Southeast” 2017 Annual Report. To view other blogs in this series, click here.
Utility-Scale Dominance
Solar growth throughout the southeast region has been dominated by utility-scale projects. Unlike markets that offer customers choice in power supplies, monopoly utilities in the Southeast control nearly all solar development. In several states, utilities can and do impose inefficient or unnecessary constraints on distributed generation.
Utility-scale solar represents the vast majority of the growth we have witnessed and are forecasting for the next 4 years. Most utility-scale systems are 5 MW or larger, many exceed 50 MW.
Almost 90% of solar capacity in the southeast is from large, utility-scale systems (blue bars). Florida, North Carolina and South Carolina are the only states projecting an appreciable amount of small-scale distributed solar (yellow bars).
What’s Working In Utility-Scale?
The economics of solar certainly favor utility-scale, with large solar deals last year being completed for less than $1 per watt. According to Lazard, the Levelized Cost of Energy from utility-scale, crystalline silicon solar in 2017 ranged from 3.7-4.2 cents/kWh (including the Federal Investment Tax Credit). An 86% decrease in utility-scale pricing over the last eight years has enabled solar developers to offer contracts at or below many utilities’ avoided cost — a condition that obliges utilities to accept power from these Qualified Facilities under PURPA, the Public Utility Regulatory Policies Act.
PURPA was a major driver of early solar progress in North Carolina; the 2017 Competitive Energy Solutions for North Carolina law (HB 589) established a competitive procurement process that ensures the trajectory of solar growth in that state. In Georgia, the REDI program (Renewable Energy Development Initiative) is driving Georgia Power’s solar development. The majority of that 1,200 MW will be utility-scale solar, with 150 MW allocated for distributed generation. In Florida, a Solar Base Rate Adjustment (SoBRA mechanism) has simplified/streamlined the processes for utilities to pursue cost recovery and this has enabled rapid adoption of utility-scale solar.
What’s Not Working For Customer-Owned Distributed Solar
Smaller solar projects do not enjoy the same economic benefits of scale. The 2017 “Levelized Cost of Energy” (including tax subsidies) for Rooftop Residential was over 14.5 cents/kWh and more than 6.6 cents/kWh for commercial/industrial.
Some utilities have maneuvered to actively discourage customer-sited solar (those that benefit from net metering or potentially operate “behind the meter”). Despite high customer interest, less growth is predicted for smaller residential rooftop and commercial customer-sited solar, largely because of policies and barriers put in place by the utilities in control.
For example, JEA (Jacksonville Electric Authority) has dropped their net metering credit from its current retail rate of 10.5 cents to its fuel rate of 3.25 cents kWh effective March 31, 2018 for all new customers.
Similarly, part two of this blog series mentioned that TVA has lowered their Green Power Providers rate to below the average retail rate. TVA had once been an early leader in small-scale, distributed solar, but has now relinquished that leadership posture and demonstrates limited interest to advance solar at any scale.
Our vision at SACE is for all market segments of solar to succeed: utility-scale along with (not to the exclusion of) residential rooftop, community-scale and commercial/industrial. We advocate for policies and programs that offer a fair opportunity for solar to succeed at all scales, and we oppose abusive utility practices that restrict these opportunities.
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