NewEnergyNews: ORIGINAL REPORTING: INSIDE GEORGIA POWER'S MOVE INTO THE RESIDENTIAL SOLAR MARKET

NewEnergyNews

Gleanings from the web and the world, condensed for convenience, illustrated for enlightenment, arranged for impact...

December 7, 1941: Time to forgive but not forget.

The challenge now: To make every day Earth Day.

YESTERDAY

  • TODAY’S STUDY: How To Balance Competing Solar Interests
  • QUICK NEWS, December 6: Sliver Of Hope? Al Gore In Climate Change Meet With Donald Trump; The Opportunity In New Energy; Google Seizing New Energy Opportunity
  • THE DAY BEFORE

  • TODAY’S STUDY: A Way For New Energy To Meet Peak Demand
  • QUICK NEWS, December 5: Trial Of The Century Coming On Climate; The Wind-Solar Synergy; The Still Rising Sales Of Cars With Plugs
  • THE DAY BEFORE THE DAY BEFORE

  • Weekend Video: Trump Truth And Climate Change
  • Weekend Video: The Daily Show Talks Pipeline Politics
  • Weekend Video: Beyond Polar Bears – The Real Science Of Climate Change
  • THE DAY BEFORE THAT

  • FRIDAY WORLD HEADLINE-Aussie Farmers Worrying About Climate Change
  • FRIDAY WORLD HEADLINE-The Climate Change Solution At Hand, Part 1
  • FRIDAY WORLD HEADLINE-The Climate Change Solution At Hand, Part 2
  • FRIDAY WORLD HEADLINE-New Energy And Historic Buildings In Europe
  • AND THE DAY BEFORE THAT

    THINGS-TO-THINK-ABOUT THURSDAY, December 1:

  • TTTA Thursday-First Daughter Ivanka May Fight For Climate
  • TTTA Thursday-Low Profile High Power Ocean Wind Energy
  • TTTA Thursday-A Visionary Solar Power Plant
  • TTTA Thursday-EVs Have A Growth Path
  • THE LAST DAY UP HERE

  • ORIGINAL REPORTING: How The Clean Power Plan Drove The Utility Power Mix Transition
  • ORIGINAL REPORTING: How Utilities Are Answering The Distributed Energy Resources Challenge
  • ORIGINAL REPORTING: Looking At New Rates To Unlock The Utility Of The Future
  • --------------------------

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    Anne B. Butterfield of Daily Camera and Huffington Post, f is an occasional contributor to NewEnergyNews

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    Some of Anne's contributions:

  • Another Tipping Point: US Coal Supply Decline So Real Even West Virginia Concurs (REPORT), November 26, 2013
  • SOLAR FOR ME BUT NOT FOR THEE ~ Xcel's Push to Undermine Rooftop Solar, September 20, 2013
  • NEW BILLS AND NEW BIRDS in Colorado's recent session, May 20, 2013
  • Lies, damned lies and politicians (October 8, 2012)
  • Colorado's Elegant Solution to Fracking (April 23, 2012)
  • Shale Gas: From Geologic Bubble to Economic Bubble (March 15, 2012)
  • Taken for granted no more (February 5, 2012)
  • The Republican clown car circus (January 6, 2012)
  • Twenty-Somethings of Colorado With Skin in the Game (November 22, 2011)
  • Occupy, Xcel, and the Mother of All Cliffs (October 31, 2011)
  • Boulder Can Own Its Power With Distributed Generation (June 7, 2011)
  • The Plunging Cost of Renewables and Boulder's Energy Future (April 19, 2011)
  • Paddling Down the River Denial (January 12, 2011)
  • The Fox (News) That Jumped the Shark (December 16, 2010)
  • Click here for an archive of Butterfield columns

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    Some details about NewEnergyNews and the man behind the curtain: Herman K. Trabish, Agua Dulce, CA., Doctor with my hands, Writer with my head, Student of New Energy and Human Experience with my heart

    email: herman@NewEnergyNews.net

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      A tip of the NewEnergyNews cap to Phillip Garcia for crucial assistance in the design implementation of this site. Thanks, Phillip.

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    Pay a visit to the HARRY BOYKOFF page at Basketball Reference, sponsored by NewEnergyNews and Oil In Their Blood.

  • ---------------
  • TODAY AT NewEnergyNews, December 7:

  • ORIGINAL REPORTING: Turning Distributed Energy From Threat To Opportunity
  • ORIGINAL REPORTING: Solar Policy Action Heats Up
  • ORIGINAL REPORTING: Maine’s Almost Solar Policy Breakthrough

    Wednesday, January 27, 2016

    ORIGINAL REPORTING: INSIDE GEORGIA POWER'S MOVE INTO THE RESIDENTIAL SOLAR MARKET

    Inside Georgia Power's move into the residential solar market; The utility says it will offer solar through an unregulated business, but installers fear possible anticompetitive impacts

    Herman K. Trabish, June 11, 2015 (Utility Dive)

    If somebody wants to buy distributed generation, I want to sell it to 'em," Southern Company CEO Tom Fanning recently said in talking about Georgia’s new solar law.

    The Solar Power Free Market Financing Act, HB 57, legalizes in Georgia the third party ownership (TPO) residential solar finance plan that has skyrocketed solar growth nationally.

    Georgia Power (GP), the state’s dominant electricity provider and a subsidiary of national utility powerhouse Southern Co., is readying plans for a rooftop solar business to be added to the utility scale development it already does.

    The strategy behind the move is clear. As Fanning told other utility CEOs at a panel discussion this week, “If distributed generation is eroding your growth, own distributed generation!”

    “We expect to have a new customer solar program ready by July 1, 2015, where we will sell solar installation services to customers through an unregulated business unit,” Georgia Power Spokesperson John Kraft said. “We don’t expect leasing to be a part of this offering.” But, Kraft added, the program’s structure and payment options are still in development.

    Solar advocates backed the law’s passage because it allows Georgians to install solar “using a financing mechanism of their choice, including financing mechanisms such as leases and solar energy procurement agreements, in which payments are based on the output of the system,” according to Steve O'Day, head of the Environmental and Sustainability Practice at Georgia law firm Smith, Gambrell & Russell.

    It also limits residential third party financed systems to 10 kW and TPO commercial installations to no more than 125% of the host site’s peak demand,O’Day explained. And it makes clear that third party owners who transfer the solar generation to system hosts are not electric utilities.

    Installers approve of the law

    SolarCity applauded the law’s finalization. “We think third party ownership is an important building block for any mature solar market,” said the company's Deputy Director of Policy Aaron Kraus.

    The most important thing about the law is that it opens the solar market to entities without tax liability that could not previously take advantage of the tax incentives, said Sam Hilley, a spokesperson for Georgia engineering, procurement, and construction firm Radiance Solar. The company focuses not on residential solar but on larger commercial-industrial scale installations.

    Many would-be customers have been “on the fence about solar but couldn’t capture the full amount of the federal investment tax credit and accelerated depreciation associated with solar projects or it didn’t fit their return on investment model,” Hilley explained.

    “We can now go to a school or another non-profit entity and put solar on the facility at no upfront cost, sell the power under a fixed cost long term PPA, and, since solar has no fuel cost, offer immediate savings on what they pay for electricity.”

    But those solar endorsements of the law should not be confused with support for Georgia Power's move into residential solar. To companies focused on the residential market, Hilley acknowledged, a Georgia Power selling residential solar installation services “would definitely be a competitor,” he said. “It remains to be seen how the new legislation works out. We are preparing to adapt to whatever we need to.”

    How will Georgia Power enter the market?

    “The law is a step in the right direction,” agreed Tyson Grinstead, spokesperson for The Alliance for Solar Choice (TASC), a solar advocacy group. But “Fanning's play is about ownership and control of the market so that customers are beholden to the utility's rates and are prohibited from making their own choices."

    Fanning’s remarks were troubling, Kraus added. “We support utilities getting involved in the distributed generation market. If an unregulated entity competes on an open playing field with other providers and does not get unfair treatment from a regulated parent, that’s fair and reasonable. But if there is significant involvement from the regulated entity it is a real cause for concern.”

    The new law prevents utilities from interfering with customer solar except to perform their required interconnection duties and fulfill their “public safety, power quality, and system reliability” responsibilities, according to O’Day.

    But it does allow utilities and affiliates “to finance onsite solar projects for customers within their respective territories,” O’Day added, as long as they don’t violate “restrictions on discriminatory rules and ratemaking.”

    Any electric service provider or affiliate is authorized to become “a solar financing agent,” concurred Southern Environmental Law Center (SELC) Senior Attorney Kurt Ebersbach. “That means they can engage in the business of leasing, financing, or installing solar technology.”

    Some speculate GP will ask the PSC for permission to recover the cost of its solar investment from customers through a rate increase but “rate basing rooftop solar is, of course, unfair,” Kraus added. Rate basing investments, however, would mean that the utility would have to work through its regulated business, and not its unregulated subsidiary, as Kraft indicated it plans to do.

    HB 57 sponsor Representative Mike Dudgeon said the intent was not to give Georgia Power or any regulated entity an unfair advantage, according to Kraus. “SolarCity and the rest of the solar industry expect that intent to be adhered to.”

    The law covers Georgia Power as well as the electric cooperatives and municipal utilities that are not regulated by the Georgia Public Service Commission (PSC), he added, but “doesn’t speak to whether a regulated utility like Georgia Power could rate base a solar program. That will be a key debate.”

    GP’s most likely strategies, both Ebersbach and O’Day agreed, would be to go into the solar business through Southern Company subsidiary Southern Power, GP’s unregulated affiliate, or to create a new unregulated affiliate.

    The PSC would likely have a real problem with GP asking “to put the cost of the program into rate base and then recover it from ratepayers,” Ebersbach said. “They would not be likely willing to give a utility monopoly that sort of power.”

    They already have market advantages like captive customers, the ability to recover costs, and a high guaranteed return on equity, Ebersbach said. “Allowing them to compete in the market against other companies would be a perversion of the regulatory compact.”

    PSC consent would not be necessary if GP decides to work through Southern Power or its own unregulated affiliate, Ebersbach added.

    The Act does not provide for whether or not Georgia Power could rate base its rooftop solar investments but that would require regulatory consent, something Georgia’s commission is unlikely to give, O’Day agreed. The most likely interpretation of Fanning’s remarks, he thought, is that Southern Company is planning to use its unregulated Southern Power arm to compete in the Georgia solar market.

    Georgia Power's Kraft confirmed speculation that GP plans at this time to work through an unregulated affiliate, which means it could not rate base solar investments, but he could not offer specifics because the program is not yet finalized.

    Other regulatory dilemmas

    Both Kraus and Grinsted are equally concerned that GP might use other leverage.

    “There are other tangible and intangible benefits that a regulated utility has with incumbent customers,” Kraus said. Examples are using the utility’s data to streamline customer acquisition by cherry picking the most likely solar purchasers or cross-marketing products through utility-customer contacts that have a credibility inaccessible to new market entrants.

    “Those should be concerns for regulators because they should be ensuring fair and competitive markets and that no one firm has an unnatural advantage in the market,” Kraus said.

    There is a line GP cannot cross, Ebersbach explained. If the regulated company tries to funnel customers to the unregulated affiliate, the PSC would likely find that an abuse of monopoly power and anti-competitive. But the law permits an unregulated affiliate to operate independently in solar installation.

    “We have a good Public Service Commission here,” Ebersbach said. “The commissioners are committed to free market principles. The debate on the solar financing law focused on not allowing utility monopoly rights to interfere with the right to have rooftop solar. Any anti-competitive behavior would raise alarms and the commission and its staff would not let that happen.”

    Kraft's remarks suggested GP is aware of the pitfalls and regulatory barriers, but would offer no specifics as to how the utility would approach the issue. But on the issue of whether a utility owning rooftop solar is fair, his parent company CEO's opinion is clear. As Fanning put it at the EEI annual convention, Southern Co. sees distributed generation as a "natural evolution" of central station power. If customers want to buy it from a trusted name like Georgia Power, Fanning said, then he will try to sell it to them. Not only that, but the utility can better optimize the grid system if it is the solar installer, he said, because only it knows where and how to position solar panels to ensure reliability.

    Other policy issues

    Solar growth in Georgia has so far been primarily utility scale, like Georgia Power’s Dalton installation, but a lot of the developers will likely now start looking at the rooftop market, Ebersbach expects.

    “I would like to think that Georgia Power’s announcement will bring national installers in because they believe their experience gives them a market advantage," he said.

    But the Georgia rooftop solar market will not reach its potential until there is fair compensation for solar exports because that is fundamental to the solar value proposition, Ebersbach said. That is why the SELC is pushing for a value of solar docket at the PSC. “The remuneration rate for exports needs to change from a utility’s avoided cost to something more like a value of solar.”

    Georgia policy “is not where it needs to be yet,” Grinsted agreed. “It is a work in progress.”

    The state also has burdensome personal property tax rates, Kraus said. Without tax reform and net metering, the TPO bill was fundamental and an important first step but not sufficient to create a full market.”

    Presumably, the net metering and tax obstacles would challenge Southern Power as well, Kraus added. “If an unregulated affiliate of a regulated utility is making things work when no other company can, that would be a situation regulators should look into.”

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