It’s been a hard fight, but freedom is winning in the South tonight. Energy freedom, that is – the freedom both for homeowners to contribute to the electricity supply, as well as for independent companies developing large-scale energy to play on a level playing field in a state where utilities have traditionally held most of if not all the cards.
The Energy Freedom Act, H3659 unanimously passed the South Carolina Senate tonight. There’s a lot in the bill, and any of its sections would be significant on its own. Chiefly, the bill:
- Permanently eliminates caps on net metering
- Sets a process for a successor rate for net metering to be determined, to be implemented in June 2021
- Drives implementation of PURPA contracts for projects sitting in queues
- Reforms the integrated resource planning (IRP) process to introduce greater transparency
- Gives regulators the option to require all-source solicitations for projects larger than 75 MW
Net metering win (for now)
For the state’s rooftop solar industry, and homeowners who want to go solar, the biggest aspect is the elimination of caps on the aggregate capacity of utilities that can participate in net metering, which are currently set at 2% of the peak load for an electric utility – and which the market is poised to hit shortly, despite extensions by utilities.
The bill would lock in retail-rate net metering for new customers until a successor program can be created by state regulators, to be implemented in June 2021. This new program is expected to still comply with the basic outlines of net metering, but there’s a lot of room here in terms of what the final details could look like.
“It’s still a major conversation that is going to take place,” Tyson Grinstead, Sunrun’s director of public policy for the Southeast, told pv magazine.
The aspects of the bill that pertain to large-scale solar procurement and utility planning are more complicated, but potentially even more profound than the lifting of the net metering caps.
The bill will drive implementation of the Public Utilities Regulatory Policy Act of 1978 (PURPA) for large-scale solar projects that are currently in the queues of the state’s investor-owned utilities, providing 10-year contracts for these new projects until such installed capacity reaches 20% of a utility’s peak demand.
Maggie Clark, southeast states affairs senior manager for Solar Energy Industries Association (SEIA), notes that this will not have much effect on South Carolina Electric & Gas Company (SCE&G), but that it will open up a number of projects that have been stuck in Duke’s queue, some of which have been languishing for years.
Additionally, if the state chooses to privatize state-owned utility Santee Cooper, this could apply to any future entity serving its customers as well—creating a significant opportunity.
Finally, the bill makes changes to the process for approval of Integrated Resource Plans (IRPs). This includes giving regulators the ability to require all-source solicitations for new generation above 75 MW, if they find it to be in the public interest.
Finally, the bill implements new transparency requirements for a utility’s “avoided cost” calculations, which has implications for both PURPA projects and potentially other procurements.
“A major barrier to large-scale solar procurement in SC is the black box that the avoided cost calculation is,” Clark told pv magazine.
And now back to the House?
But despite all of the preliminary celebration, the bill isn’t in the clear yet. It has to go back to the House to smooth out the differences between this version and the one that passed the House in February.
And while this is normally a fairly mundane process, there’s one issue: There’s only one day left to do this. SEIA’s Maggie Clark notes that the Speaker of the House has publicly addressed this bill, which increases the chances that it will be voted on.
Assuming that the Energy Freedom Act gets through the House in time, it will go to the desk of Governor Henry McMaster (R), who has been a supporter of the solar industry and is expected to sign the bill.