solar farm

The solar industry believes investments in large-scale solar farms in South Carolina may dry up due to a recent decision by the state’s seven utility regulators. File  

The solar industry believes investments in large-scale solar farms in South Carolina may dry up due to recent decisions by the state's seven utility regulators.  

The South Carolina Public Service Commission issued its rulings last week that decided how much money Duke Energy and Dominion Energy need to pay solar companies for the power they produce and pump onto the grid. 

The rulings came six months after state lawmakers passed the Energy Freedom Act. The state's solar industry hoped that bill would open up the energy markets in South Carolina and make their projects more profitable. 

The legislation called for the state's utility regulators to establish new terms for the contracts between the solar companies and the state's investor-owned electric utilities. 

But the outcome of the utility case isn't what the solar industry or South Carolina's environmental community hoped. 

The Solar Energy Industry Association, a national trade group, called the rulings "egregious." And the Conservation Voters of South Carolina referred to the decisions as a "doomsday scenario" for the industry. 

During the hearings, the South Carolina Solar Business Alliance asked the Public Service Commission to increase how much Duke and Dominion are required to pay under what are known as power purchase agreements. Independent solar companies can't supply power to customers in South Carolina without one of those contracts. 

Unless the prices were increased, the solar industry argued, companies would not be able to find financing for new solar projects in South Carolina. 

Dominion and Duke, meanwhile, warned any price increase for those contracts would be passed on to their ratepayers. The utilities also argued that too much solar would cost customers more because they would need other power plants as a backup for when the sun isn't shining. 

The Public Service Commission's decision is likely to play a hand in deciding who owns the solar farms that are added in South Carolina. Part of Duke and Dominion's business model in the state is based on making a guaranteed profit off the power plants, transmission lines and solar projects they own. 

The utilities don't make that money if the independent solar companies own the solar arrays. 

Ryan Mosier, Duke Energy's spokesman, said the company supports solar energy, but it believes the Public Service Commission should "protect customers from overpaying" for electricity from the independent solar companies.  

"The solar industry continues to expand in the South, and we see no reason why that shouldn’t continue," Mosier said in a written statement. "In the past, solar adapted to current market conditions and prospered. Duke Energy sees solar as a growing and important part of our overall energy mix."

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The utility commissioners set the price for Dominion's solar contracts around $21 per megawatt hour of electricity. The prices that were set for Duke were a little more complicated, but came out somewhere between $29 to $31 per megawatt hour, according to an analysis by state solar officials. 

Ashley Cunningham, a spokeswoman for Dominion, pointed out that the Public Service Commission's decisions closely mirrored the position of the independent consulting firm the utility regulators hired to advise them. She said the commissioners didn't take Dominion's side in the case. 

Hamilton Davis, director of regulatory affairs for Southern Current, said the new prices for solar contracts could destroy the marketplace for the more than half a dozen solar companies currently operating in South Carolina. 

Davis doesn't expect any new solar contracts to be signed with Duke and Dominion if the new prices stay in effect. 

The Solar Energy Industry Association openly complained that Duke and Dominion were offering far better terms to solar companies in Virginia and North Carolina. 

The South Carolina Solar Business Alliance is likely to ask the Public Service Commission to reconsider its rulings, Davis said.

But if the utility regulators don't change their minds, the industry may have to wait another two years to reset the terms of the power contracts. 

Reach Andrew Brown at 843-708-1830 or follow him on Twitter @andy_ed_brown.