ATLANTA -- Southern Co.'s Georgia Power is poised to take advantage of a new state law that would allow the utility and other solar providers to get into the rooftop solar market more easily.
The move comes shortly after the state Legislature passed a law that lets Georgians enter into long-term financing arrangements with independent solar power providers, propping open the door for a competitive solar market. For Georgia Power, it marks an opportunity for the dominant utility to get into the rooftop solar business.
According to multiple sources, there has been growing anticipation around Georgia Power's plans for entering the rooftop solar market once the law takes effect July 1.
"As a company with one of the most innovative and fastest growing solar programs in the country, we are engaged in the market and speak with solar installers and manufacturers regularly," Georgia Power spokesman Jacob Hawkins said in an email.
Hawkins referred to the July start date for the new law -- the Solar Power Free Market Financing Act -- as "a landmark date for solar in Georgia."
"We expect that the law will further stimulate the competitive market here," Hawkins said.
Today, Georgia Power does not offer financing for customer installations, and it also doesn't install or sell solar panels. But Hawkins said the company "may introduce new resources or programs as we move into summer and the changing marketplace."
The move puts words into action for Southern Co. CEO Tom Fanning, who has been talking publicly about how the company wants to find strategies for customers and tap the rising demand for distributed forms of generation, like solar.
Fanning told EnergyWire last May, "If somebody wants to buy distributed generation, I want to sell it to 'em."
He expanded on that during and after the Atlanta-based energy giant's 2014 shareholders meeting. "If its day will come, Southern Co. needs to learn how to compete in that business. And if financing is important, we'll consider that, as well," he said (EnergyWire, May 29, 2014).
In an interview this March, Fanning called for a rate structure that includes a price for when baseload power is used as a backup when the sun isn't shining and the photovoltaic panels aren't producing power.
"If you adequately reflect the value that those assets bring, then we're perfectly happy with moving ahead with distributed generation," he said (EnergyWire, March 17).
Southern is holding its 2015 annual shareholders meeting at Callaway Gardens in Pine Mountain, Ga., today.
Solar City not invited
The decision for Georgia Power is significant. The utility is one of four regulated electric companies that Southern owns. All are used to getting electricity from centralized sources and have been resistant to renewables, especially distributed ones.
Southern's Gulf Power and Mississippi Power electric companies are adding solar to their output through utility-scale projects. Georgia Power stands out because it is set to have more than 1 gigawatt of solar on its system by the end of 2016.
The effort is largely through a robust program that started -- and expanded -- with a nudge from the Georgia Public Service Commission. The electricity that flows from the panels established under that program flows onto Georgia Power's grid, however, and customers do not use it to offset their own use.
Georgia's new solar law makes the state the first in the region to have such a wide range of financing options for solar panels, according to those involved in the months of negotiations.
It also allows for the state's regulated, municipal and electric cooperative utilities to enter the market, as well; they just cannot compete in each other's territories.
Fanning has made it clear that he believes utility-scale solar is more economical. Other utilities as well as solar providers agree with him on that. But he's made it clear to EnergyWire and other media outlets that he wants to make sure his company is in the residential solar game before a well-established outside provider comes in.
"I don't think I'd invite Solar City in. I'd rather do it myself," Fanning said in an interview with USA Today. "If I array my corporate resources, my strategy, an optimal way, I think I can serve my customer better than anybody else."
In the view of one veteran solar industry executive, the move makes sense "because [utilities] are getting their lunch eaten by Solar City and the other companies right now, so why wouldn't they, right?"
The entry of utilities such as Georgia Power would be a boon to equipment manufacturers, he said. "But there are some companies who have made it their business to compete with the utilities for their customers that will [be] concerned about this kind of development," the executive said.
An official with a national solar trade group said the organization had yet to take a position on utilities entering the residential solar market.
"But any such program should be accompanied by rules that tend to level the market and allow independent solar providers to compete fairly," said Sean Gallagher, vice president of state affairs for the Solar Energy Industries Association.
No net metering
It's unlikely, at least for now, that some of the major national solar providers will do business in Georgia because the state doesn't let consumers sell solar back for a full 1-to-1 retail credit, known as net metering. Those with solar panels sell back the power at avoided costs only, which is significantly lower.
"Net metering is necessary for establishing a stable market," said Susan Glick, senior manager of public policy at Sunrun Inc. and spokeswoman for the Alliance for Solar Choice.
Will Craven, public policy director at SolarCity Corp., said the bill is a good place to start for Georgia's consumers, but other regulatory barriers remain.
Fanning has said avoided cost is the right concept unless a rate structure is established to reflect the value of the electric system. Avoided cost is the amount it would take to run the next-cheapest power plant.
Analysts said the residential and small commercial solar market likely won't be a huge new line of revenue for the company.
"No matter how big this first round of investment is, it's not going to be very material to the bottom line," said Mark Barnett, a utility analyst with Morningstar Inc. "It doesn't mean that it's not something that they aren't managing closely. If there are profits to be made, they are going to go for it."
In short, the utility isn't going to do -- or not do -- anything that would threaten its business, he said.
Southern and its operating companies in Florida, Georgia and Mississippi have made more headway with utility-scale solar projects. Southern's wholesale power unit, Southern Power, just bought a 103-megawatt solar array in Georgia, which brings the subsidiary's total number of solar, wind and biomass projects to 1,100 MW.
"They have shown an appetite for only utility-scale renewables," Barnett said. "Rooftop stuff is small potatoes."
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