North Carolina has established itself as the outright solar leader in the Southeast and ranks second in the nation for installed solar capacity. A succession of complementary state policies dating back to the early 2000s led to the coastal state’s prominence in solar.
But neighboring South Carolina hasn’t seen the same success in PV solar. North Carolina’s solar capacity accounts for about 38% of the 15 GW installed in the Southeast, coming in at 5,601.29 MW. While most states in the region haven’t broken the 1-GW mark, South Carolina’s 802.75-MW output is even more glaring when sharing a border with overachieving North Carolina.
North Carolina solar policy history
North Carolina, D.C. and Delaware are the three territories in the Southeast with an active renewable energy portfolio standard (RPS), which requires utilities to purchase or develop a specified renewable energy capacity as part of their total energy output. North Carolina’s RPS, which passed in 2007, requires 12.5% from renewable energy by 2021.
West Virginia established an RPS in 2009 that was repealed in 2015, and South Carolina and Virginia have voluntary renewable portfolio standards. But North Carolina’s state policies, when paired with federal mandates, laid a groundwork for solar growth in the state.
“It would not be accurate to say that the RPS was the single factor that led to the great solar success in North Carolina, but it was a great contributing factor that created the atmosphere,” said Stephen Smith, executive director of the Southern Alliance for Clean Energy. “The greater solar growth was due to PURPA.”
PURPA, or the Public Utility Regulatory Policies Act, is federal legislation that requires utilities to purchase renewable energy from power producers that are considered qualified facilities. It is interpreted differently by each state, but in North Carolina PURPA was combined with the state’s RPS, its (now inactive) solar tax credit and the federal solar investment tax credit.
Large-scale solar developers in North Carolina have seen a lot of success due to PURPA, and utility-scale projects account for the majority of the state’s installed capacity.
“It was a more aggressive administration and legislature [then] than what we have now in North Carolina, and they were more willing to be innovative and willing to get people into the room and browbeat them into compromise,” Smith said. “At that time, North Carolina was one of the last states that passed an RPS and was looking around at other states to see what was working. They weren’t the first in the country, but they were the first and only in our region.”
These pro-solar policies are predated by the Clean Smokestacks Act, landmark legislation passed in 2002 that required investor-owned utilities operating in North Carolina to reduce pollution emissions from their 45 coal-fired plants in the state. This mandate led to plant closures in some cases, and convinced legislators to consider an RPS and subsidize renewables in North Carolina.
“I believe because of the RPS and the political strength and involvement, North Carolina set a pretty high standard for renewables in the Southeast, and the states adjacent have seen the success of the industry in North Carolina and really grown tremendously because of that,” said Stew Miller, co-founder and president of North Carolina-based installer Yes Solar Solutions.
Recent policy action
The latest policy meant to support the North Carolina solar industry is HB 589, which was passed in 2017. It mandates that utility Duke Energy fulfill a 2,660-MW request for proposals; it also requires Duke to issue rebates for 20 MW of rooftop solar every year, for five years.
HB 589 reinterprets PURPA, making utilities offer up to 10-year terms for qualified facilities with systems up to 1 MW. The bill also includes a clause that allows in-development projects to be eligible for interconnection.
This important policy introduced a competitive bidding process for renewable projects, and created the Distributed Resources Access Act that lets energy providers and utilities create community solar programs and offer solar system leasing.
“It was building on the success that the RPS in North Carolina and the tax credit, which had expired a few years ago, had driven,” said Chris Carmody, executive director of the North Carolina Clean Energy Business Alliance, at a policy session at Solar Power International 2019. “Where I think 589 is leading us is to really think about…where the best system is for North Carolina. Colorado has done amazing things in modernizing their grid, which allows them to take on renewables in a big way. That’s going to be a big concern for us. We certainly think the utilities have the expertise in transmission, but, clearly, we need to have head-to-head competition on fuel sources among independent power producers.”
Establishing net metering in S.C.
While North Carolina has a comfortable lead for Southeastern solar output, South Carolina has enacted policies within the last five years to boost the state’s PV presence.
The 2014 Act 236, or Distributed Energy Resource Program Act, established net metering in the state and created incentives for utilities to purchase energy from utility-scale solar systems. It also made it possible to lease rooftop solar systems to homeowners in the state.
“The overarching point of this is customers want renewable energy,” said George Brown, general manager of distributed energy at Duke Energy during a session at SPI. “They want access to renewable energy. Some of them want it on their premises if they can. Others can’t do that, practically speaking, but they want to support it.”
Brown said South Carolina had no net metering in Duke territories prior to Act 236.
“Subsequently, we’ve now got a greater percentage of our people net metering in South Carolina than we do in North Carolina,” he said.
Energy Freedom Act
South Carolina Electric & Gas (SCE&G) applied to expand the single-reactor Virgil C. Summer nuclear powerplant located in Fairfield County, South Carolina, in 2008. Construction began in 2013, with a second reactor scheduled for operation in 2017 and a third in 2018.
Six years and several billion dollars later, the V.C. Summer plant remains unfinished, and the construction costs have been passed down to utility ratepayers. SCE&G’s decision as a utility to attempt this nuclear construction project, the first in 30 years on U.S. soil, inspired state legislative action.
“That forced lawmakers like myself to figure out what went wrong here. What led to this situation?” said Senator Tom Davis (R-SC) during a session at Solar Power International 2019. “What I’ve learned is that [with] energy policy in South Carolina, we essentially divide the state into territories, and in each territory, the legislature gives the utility a monopoly. That caused us to ask, ‘What’s a better way [to go] about producing, distributing and transmitting energy?’”
Legislators answered by enacting the South Carolina Energy Freedom Act in June 2019.
The Energy Freedom Act gave independent power producers the right to sell their energy to utilities operating in South Carolina if they can generate power at lower than the avoided cost. It extended net metering to June 1, 2021, for rooftop solar customers, eliminated the 2% cap on power generation from rooftop solar and established developer rules for the South Carolina Public Service Commission to follow when selecting eligible solar projects. The PSC determines the net-metered rates for rooftop solar customers and large-scale developers alike.
The Energy Freedom Act gave ratepayers the chance to generate their own energy and sell it back to the utility charging them for a failed nuclear plant. Davis said it was supposed to pass savings on to the consumer, shifting away from a structure where territorial utilities establish rates and giving consumers agency in the energy production market.
“The Energy Freedom Act does some very specific things, but it’s also very aspirational in nature,” Davis said. “We want to have power purchase agreements that are fair. We want to have avoided cost technologies that are fair. We want to do things to facilitate the growth of renewables. It’s not an ending that’s happening, it’s really a beginning.”
The South Carolina Public Service Commission issued an order on November 15 that allows utilities to set shorter contract lengths and decrease solar rates, leaving them the lowest in the country. The Solar Energy Industries Association called the order disheartening and said the new rates and contracts could stop solar developments entirely in certain utility territories.
With the Energy Freedom Act, South Carolina was on a track to encourage serious solar growth in the state, but with this latest development, North Carolina remains the dominant player in the Southeast solar market.