South Carolina’s investor-owned electric companies are rolling out new incentives for customers who install solar power, as required under a sweeping state law dealing with alternative energy that took effect a year ago.
For SCE&G customers, plans call for small incentives that would be paid for 10 years for those installing solar after Jan. 1. For Duke Energy and Duke Progress Energy customers, a one-time incentive worth thousands of dollars would be available to those installing solar systems.
The cost of the incentives would eventually be seen in utility bills.
The proposals awaiting state approval would add financial sweeteners to existing incentives — state and federal tax credits that can essentially rebate 55 percent of the cost of solar panels — and a system known as “net metering” under which utilities generally buy excess solar power at retail rates.
When the questions about incentives are settled, that will also clear the way for solar leasing arrangements, in which consumers and businesses could rent rather than buy solar panels, in deals structured to save money immediately.
Large companies such as Wal-Mart have made extensive use of solar leasing deals in other states, and in South Carolina, the company was involved in negotiations about SCE&G’s proposal.
“The magic of leasing is, they (the leasing companies) own the system, so they can monetize the tax credits,” said Blan Holman, an attorney with Southern Environmental Law Center, which was also a party to negotiations with Cayce-based SCE&G.
Under SCE&G’s proposal, which goes before the state Public Service Commission on Tuesday, customers who install residential solar panels could sell their excess power to the utility for a slightly higher price — up to 4 cents per kilowatt hour — than the utility charges customers. The incentive offered would decline as the amount of installed solar capacity grows.
“If you’re an early adopter, you’ll get the greatest incentive,” said Danny Kassis, vice president of customer relations and renewables at SCE&G.
He said the incentive should make solar projects that already make financial sense a little bit better. Businesses would get bill credits, also at fixed rates for 10 years, starting on the date a commercial customer is accepted into the as-yet-unapproved program.
Solar panels can generate more or less power than a building consumes at a particular time. Under the “net metering” law approved last year, the power flowing back and forth between the home and the utility is valued the same, with the customer paying for the “net” amount of power they pull off the grid.
The proposed SCE&G incentive would make excess power sold to the utility worth more than the power a home pulls from the grid. For example, if a home with solar panels uses 12,000 kilowatt hours of power yearly, with half coming from solar, the homeowner would pay for 6,000 kWh at regular retail rates, and would get up to 4 cents per kilowatt hour (or $240 yearly in this example) for the all solar-generated power.
Kassis said the final details will be settled after the Public Service Commission rules later this year.
Duke Energy’s proposal is more generous. Instead of paying a solar bonus over 10 years, Duke and Progress residential customers who install solar could get a one-time payment to offset their cost, based on the power rating of the system. A typical residential installation could cost $17,500, Duke estimates, and in such a case, the company’s incentive would be worth $5,000.
With state and federal tax credits potentially covering 55 percent of the cost of a residential installation, that $17,500 system could end up costing a Duke customer $2,875 after the utility’s incentive payment.
“It’s a much shorter payback,” said Holman of the Southern Environmental Law Center.
Reach David Slade at 937-5552.