Falling costs, barriers help solar flourish in the Southeast 

Source: Kristi E. Swartz, E&E reporter • Posted: Friday, April 17, 2015

A Tennessee solar installer says his company is having the best year in recent memory despite cutbacks on solar incentives.

A Georgia solar company touts a potential 175 new customers because of an innovative community solar program.

And a Florida solar developer says his customers include teachers and low-income retirees, scoffing at the argument that only the affluent can afford to put solar panels on their roofs.

Some Southeastern states slowly are loosening barriers that once prevented consumers from putting solar panels on their homes and small businesses. But many say that isn’t the reason for the recent — and probably future — growth in the residential solar market.

The explanation is more likely straight-up economics, solar industry advocates argue. Solar panel technology is improving, the costs are falling, and developers are installing systems more efficiently, they say.

LightWave Solar in Nashville is a perfect example, if you ask CEO Steve Johnson. The company used to install solar panels at roughly $9 a watt. Now a typical installation is around $3 a watt, he said.

The company sells its residential and commercial solar systems in and outside of the Tennessee Valley Authority’s territory, but the bulk of his business is done inside the federal utility’s home turf. TVA has solar programs that include paying a per-kilowatt-hour incentive, but the utility has cut those back over the years as the price of solar has fallen.

Despite that reduction, LightWave is having its most robust period in nearly three years, Johnson said. Falling panel costs are one reason but working with financing companies is another. San Francisco-based Dividend Solar’s loans let customers buy a rooftop solar array for no money down, for example.

“We’re picking up some people who don’t have $25,000 cash. They just have to have good credit,” Johnson said. “That’s been a change for us.”

Dividend Solar’s loans give solar developers an alternative to third-party financing arrangements that are popular in California and many states outside of the Southeast. Regulated electric companies in the Southeast and in other states have pushed back against third-party financing because it allows for a private solar company to enter the state and sell solar power at a fixed rate, essentially operating as a utility.

“Our process removes a lot of the red tape that you see with third-party financing,” said Eric White, president and co-founder of Dividend Solar. “We need to do everything in our power to drive down the soft costs to ensure that the economic value remains.”

Soft costs are typically referred to as costs that aren’t directly involved in construction, which, in this case, is panel installation. They include marketing and administrative costs as well as fees for permits, land surveyors and other work.

Cracking the finance riddle

Dividend Solar is one example of financing companies that have moved into some Southeastern states offering financing packages that make rooftop solar accessible to more consumers.

“Now we’re in a position where financing packages for solar actually make sense,” said Brian Keane, president of Washington, D.C.-based nonprofit SmartPower, which is one partner with Dividend Solar on a grass-roots, community solar initiative called Solarize.

Solarize programs, which began in 2008 in Portland, Ore., boil down to the bulk purchasing of rooftop solar installations in a community, which can typically drive down the cost of an individual household’s solar system by up to 25 percent.

The program has expanded to cities in Southeastern states including Virginia, South Carolina and Georgia. What’s more unusual about the South Carolina program is that South Carolina Electric & Gas is embracing the community-based solar business model (EnergyWire, March 17).

“When solar works in the marketplace, there’s going to be no stopping it, and that’s what you are seeing,” Keane said in an interview with EnergyWire.

In Georgia, Solarize Tybee started earlier this year. Tybee’s City Council awarded Atlanta-based Hannah Solar a bid to install solar panels to customers, who can pay cash or finance them over several years.

Hannah Solar already has more than 430 potential customers who have signed up to have sites reviewed and inspected, company CEO Pete Marte said. This includes 105 new customers who signed up last week, he said.

Marte said he thinks roughly 175 households will become customers, he said.

“And that’s pretty amazing,” Marte said.

Large-scale projects push ahead

South Carolina and Georgia have changed state law to allow for third-party financing arrangements (EnergyWire, March 30). There are attempts in Florida and North Carolina this year to do the same, but utilities are pushing back (EnergyWire, March 17).

That’s not to say solar won’t develop in those states where the utilities are fighting the growth of residential solar. Georgia’s largest utility secured roughly 900 megawatts of mostly large-scale solar projects under contract through 2016. Solar advocates are hoping the state’s new law will boost the residential market, which lags significantly.

Florida Power & Light Co. is building three utility-scale solar projects that will total 225 MW, and Duke Energy Florida recently unveiled a 10-year plan to build 500 MW of solar power, twice the state’s current solar capacity.

Clean energy advocates have accused FPL and Duke of using their lobbying muscle to stop any policy changes that would make rooftop solar arrays more affordable to homeowners and small businesses. Indeed, bills that would allow for third-party financing arrangements or that would remove certain tax barriers have remained stagnant in the state Legislature, which is set to wrap up in three weeks.

One company, Solar Energy Management, says lower installation costs, federal tax credits and conventional financing get around those policy barriers in Florida. The state’s net metering policy, which allows customers to sell back excess electricity, helps as well, company CEO Scott McIntyre said.

“The fact that efficiency goes up, pricing continues to be competitive and people are just generally interested in solar power all helps,” he said.

Roughly 60 percent of the Tampa Bay area-based company’s customers are homeowners, and the others are for-profit companies that own the building where they operate.

Florida gets the bulk of its electricity from natural gas, which currently is a cheap fuel, keeping power bills low. But McIntyre said those costs still have to be passed on to customers, which leads them to seek out alternatives.

“The Southeast is the last market in the United States to move forward,” he said. “We want to incentivize the utilities to allow for the markets to open up, to get the industry to come in.”