After two years of negotiations, the South Carolina House of Representatives voted unanimously on new legislation to promote solar inthe Palmetto State. As a result of the South Carolina Distributed Energy Resource Act (S.B. 1189), Sol Systems expects the South Carolina solar market to expand from a mere 8 MW to 300 MW or more by 2021. Here’s how.
South Carolina’s New Solar Program
Under S.B. 1189, larger utilities (those who serve 100,000+ customers – effectively SCE&G and Duke Power) must obtain 2% of their average 5-year peak power demand from solar energy sources. Of this 2%, 1% must be comprised of 1-10 MW solar projects; the other 1% must be comprised of solar projects under 1 MW, 25% of which must be 20 kW or smaller. Here’s the breakdown of that 2%.
The bill also lifts the net metering cap on individual solar projects from 100 kW to 1 MW and permits the state to utilize third-party financing for the first time, albeit only with specific lease agreements subjected to Commission scrutiny. The legislation requires utilities to implement their solar procurement plans a year from now, though actual implementation may happen sooner.
South Carolina Solar Market Outlook
2% by 2020 is a serious target, similar to what we’ve seen in Maryland and other top tier states; however, it is important to remember that South Carolina has a relatively smaller population. Over the next 5 or 6 years, the program should produce about 150 MW of 1–10 MW projects, 75 MW of 0 – 1 MW non-residential, and 75 MW of residential. The market could take longer to mature, but given that utilities aren’t required to meet compliance until 2021 and that “ramp” remains undefined, market growth may be slower.
There is certainly still an opportunity for mischief in the regulatory implementation. “A proposal resembling the ultimately undersubscribed Duke North Carolina PVDG program of 2010 would comply with legislative requirements, but could restrict the local solar community to pure EPC work,” commented Sol Systems’ Director of Project Finance, Colin Murchie. “Or, attempts to simultaneously implement this program together with a significant state tax credit could actually restrict the availability of finance and increase its costs – as we have seen to some degree in North Carolina,” he added. In other words, if the 25% state tax credit is increased (right now it is capped at $3,500), the market could closely resemble North Carolina, where developers must chase after a shortage of tax equity rather than rely on a lucrative, more balanced utility program.
We expect for much of the build out in the South Carolina solar market to come from experienced Georgia and North Carolina developers. The Georgia market has taken off after the launch of Georgia Power’s solar feed-in tariff program. Meanwhile, North Carolina has become a solar giant, now ranked #4 in terms of solar capacity behind California, New Jersey, and Arizona (to date, Sol Systems has financed approximately 25.5 MW in North Carolina and expects to close another 18 – 20 MW by the end of the year). Needless to say, solar is rising in the South.
Financing for South Carolina Solar Projects
Sol Systems is very interested in financing commercial solar projects in South Carolina; interested developers should contact our project finance team at 888-235-1538 x2 or firstname.lastname@example.org. We are also happy to talk to first-time developers on how to structure third party financing deals.
About Sol Systems
Sol Systems is a renewable energy finance firm that provides secure, sustainable investment opportunities to investor clients, and sophisticated project financing solutions to developers. Founded in 2008, Sol Systems focuses on meeting the industry’s most critical solar financing needs, including tax structured investments, capital placement, debt financing, and SREC portfolio management. To date, the company has facilitated financing for thousands of distributed generation solar projects and hundreds of millions in investment on behalf of Fortune 100 corporations, utilities, banks, family offices, and individuals. For more information, please visit www.solsystemscompany.com.
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