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[/ezcol_1third] [ezcol_2third_end]By Guest Contributor, Stinson Ferguson | attorney, Haynsworth Sinkler Boyd[/ezcol_2third_end]
Solar energy is on the horizon as climate change and greenhouse gases are increasingly hot topics in business, science and politics – yet South Carolina has historically remained in the dark on these issues.
The South Carolina Distributed Energy Resource Program, which the Legislature recently unanimously passed and Gov. Nikki Haley signed into law, is aimed at lowering financial hurdles and environmental costs and heightening investment opportunities to access renewable energy, particularly solar. This legislation is groundbreaking both for its across-the-board buy-in from various stakeholders, ranging from electrical utilities to conservationists, and for its evidentiary value as a paradigm shift in our state’s view of renewable energy development.
Energy and business are directly related. As the costs of energy rise (fuel for transportation, electricity for lighting and other technology, heating/cooling), so do the costs of doing business. When businesses can find ways to lower energy costs, their costs of doing business also decrease, while profits increase.
Regarding utilities, traditionally, even if a utility or investor sought to enter the solar energy market, lack of legal or regulatory mechanisms in place to control potential market forces would prohibit such an endeavor. Regarding consumers, traditionally, even if a homeowner or business owner sought to enter the solar energy market, the purchase price of necessary technology prohibited such an endeavor, especially for lower-income homeowners or small business owners.
South Carolina’s legal and regulatory soil was not fertile enough to cultivate solar energy.
The Distributed Energy Resource Program speaks to these barriers to entry by providing a light at the end of this historically dark tunnel. It allows homeowners and business owners to lease solar equipment from third parties, install it, generate energy, use this energy to meet their own needs, and to sell excess energy produced to electrical utilities – something previously barred by South Carolina law.It increases the cap on the amount of solar that electrical utilities can purchase or produce on its own.
Hand-in-hand with these provisions are requirements that utilities derive certain percentages of their total energy portfolio from small energy producers, including solar, by 2021. Utilities must also begin obtaining energy generated from nonprofit entities such as churches and schools by 2021.
The Distributed Energy Resource Program opens windows for homeowners and business owners to lease expensive equipment necessary to generate solar energy and sell it to utilities. The option to lease rather than purchase increases affordability and therefore access and results in lower utility bills for these customers. Additionally, the excess solar energy sold back to utilities increases energy supply and therefore the overall reliability of the electrical grid, which benefits all consumers.
Solar energy is “clean energy,” meaning that environmental costs (pollution) are lowered when we use it rather than energy produced from sources like coal, oil or natural gas. The Distributed Energy Resource Program also requires the Public Service Commission, the regulatory agency that oversees electrical utilities, to take a close look at all costs and benefits involved in solar energy generation and to adjust the caps on allowable amounts of renewable energy sources accordingly.Utilities will also be able to petition the Public Service Commission for approval to recover more costs if they purchase or invest in solar energy pursuant to the program.
Intensifying the timeliness of the Distributed Energy Resource Program is the fact that on June 5, 2014, the Environmental Protection Agency issued new rules aimed at carbon pollution from power plants throughout the country. The cost recovery provisions of the Distributed Energy Resource Program will better enable South Carolina to achieve targets and meet deadlines set by these new EPA rules.
This legislative shift signals a change for business and the economy. Now that the Legislature has created a solid foundation for renewable energy investment and production, utilities, business owners and residents can take advantage of the opportunities provided by the program. As this legislation takes effect, lease agreements will need to be drafted and reviewed to ensure lessees are protected. Lessees and owners will require guidance to remain in compliance with parameters set by the Public Service Commission to secure the legislative protections in place. Nonprofit entities will require counsel from those familiar with the legislation to maintain their tax-exempt status.
The Distributed Energy Resource Program is an example of a collaborative effort by stakeholders representing interests that traditionally conflict and often clash. This transcendent buy-in is evidence of a necessary and appropriate step in the right direction. The program is the product of compromise and collaboration and is a new dawn for South Carolina – one focused on not only economic and business development, but also individuals and the environment.
