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Renewable Energies marketing models USA

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This overview focuses on solar energy in the United States and the State of Georgia. Currently, solar is the only renewable energy for which Georgia law allows power purchase agreements as a financing arrangement, and is by far the most robust renewable energy market in the state.  Self-Consumption and Leasing are allowed for other forms of renewable energy, but there is little interest in or market for renewable energy other than solar.

 

U.S. Market Overview

Solar energy has enjoyed steady growth in the United States, thanks to federal policies like the Investment Tax Credit (ITC), declining costs of equipment, and increasing demand for clean energy. In the last decade, the United States has seen an average annual growth rate of 49% in solar energy. There are now more than 85 GW of solar capacity installed nationwide. As of 2019, the solar industry employed more than 250,000 Americans and generated more than $18.7 billion of investment into the American economy. In 2019, solar energy comprised 40% of all new electric capacity added to the electrical grid. Solar energy’s share of total U.S. electrical generation grew from 0.1% in 2010 to nearly 3% today. Although the COVID-19 pandemic has caused slower-than-expected growth in the U.S. solar market, which installed a total of 3.5 GW of solar PV capacity in Q2 2020 (a 7% decline from Q1), this capacity increase represented a 52% year-over-year increase and the largest Q2 ever.

 

 

 

 

 

Georgia Market Overview

There are approximately 2,039 solar installations with a capacity of 2,664.39 MW installed in Georgia to date. Several large retailers have installed solar facilities at their locations, including IKEA’s 1 MW installation at its location in Port Wentworth.

 

Legal Framework of Electric Service in Georgia

Retail electricity service in Georgia is provided by 94 different electric utilities operating in the state. These 94 utilities fall into one of three categories: (1) investor-owned; (2) electric membership cooperatives; and (3) electric municipalities. Georgia Power Company is the sole investor-owned electric utility in Georgia. Though it generates most of the power it sells, it also purchases power from individual power producers under long-term power purchase agreements. There are 41 electric membership cooperatives (EMCs) in Georgia. EMCs are local corporations that are customer-owned and governed by a board of directors. Finally, there are 51 municipalities and one county that own and operate their own electric utilities in Georgia.

 

The Georgia Public Service Commission (PSC) is the state agency that regulates electric utilities. Investor-owned utilities are fully regulated by the PSC, meaning their rates, resource procurement plans, and financing applications are overseen and approved by the PSC. The PSC also decides territorial disputes, monitors environmental compliance plans, approves transfer of retail electric service, and conducts investigations and audits of investor-owned utilities. EMCs and municipal electric utilities are only partially regulated by the PSC; they set their own rates, and procure energy from suppliers they choose.

 

Georgia’s Territorial Electric Service Act, O.C.G.A. § 46-3-1 et seq. (the “Territorial Act”), was enacted in 1973 and grants electric suppliers the exclusive right and responsibility to provide retail electric service to all residential, commercial, and industrial customers located within their assigned area. Under the Territorial Act, geographical areas located within municipalities were assigned to the primary supplier in each municipality, and geographical areas located outside municipalities were assigned to electric suppliers by the PSC. O.C.G.A. §§ 46-3-4; 46-3-5.

Every three years, Georgia Power must develop an Integrated Resource Plan (IRP) for providing electricity to its customers for the next twenty years pursuant to the Integrated Resource Planning Act, O.C.G.A. § 46-3A-1 et seq. The IRP is filed with the PSC, which reviews and ultimately approves of the plan after a public hearing on the application. In 2013, Georgia had less than 300 MW of solar energy online. In the 2013 IRP, 525 MW of solar energy were added under Georgia Power’s IRP, with another 1,600 MW being added under the 2016 IRP. The 2019 IRP requires Georgia Power to add an additional 2,210 MW of solar energy procurement by 2022.

 Feed-in-Tariff

Georgia does not have a Feed-in Tariff.

 Self-consumption

Status Quo

Most solar installations for self-consumption in Georgia are small, rooftop, residential installations, with some larger installations like the afore-mentioned IKEA solar facility.  The market for commercial and industrial installations for self-generation is warming up somewhat, with some larger projects being sold in recent years.

 

Current Challenges

Rooftop solar in Georgia continues to lag behind its full potential, in part due to solar standby capacity fees in some municipal and EMC territories, and the historical lack of traditional net metering. Prior to the 2019 IRP, Georgia Power did not offer traditional net metering, a billing mechanism whereby owners of solar installations are credited at retail rates for electricity they add to the grid and billed only for their net energy use. As a result of a PSC Order in the rate case that followed the 2019 IRP, Georgia Power's Renewable & Nonrenewable Tariff (RNR) now allows owners of residential solar installations with a maximum capacity of 10 kW and commercial installations with a maximum of 250 kW to feed excess power back to the grid, which then offsets their total monthly energy consumption at retail rates. However, the newly adopted RNR tariff is capped at 5,000 participants or 32 MW of additional capacity.

 

Outlook

The RNR tariff provides an additional incentive for self-consumption. Under the RNR Monthly Netting program, generation above the premise's usage is credited on a monthly basis at the annual Solar Avoided Energy Cost Rate, which is set by the PSC. Customers with larger installations may sell their electricity to utilities in Georgia as a Qualifying Facility (QF) under the federal Public Utility Regulatory Policies Act (PURPA). Generators participating in this program are paid at Georgia Power's hourly avoided cost rate.

 PPA

 

Status Quo

1.  Utility Programs

As part of its approval of Georgia Power's 2016 IRP, the PSC approved a Commercial & Industrial customer renewable program that allowed Georgia Power to procure up to 1,200 MW of solar generation through long-term PPAs from solar industry suppliers. The 2019 IRP included the Customer Renewable Supply Procurement (CRSP) Program, under which Georgia Power will procure an addition 1,000 MW of solar generation through power purchase agreements for subscription by commercial and industrial customers.

 

2.  Third Party PPAs

In 2015, the Georgia legislature adopted the Solar Power Free-Market Financing Act (HB 57, drafted in part and negotiated with the utilities by Mr. O'Day), which clarifies that solar companies can finance, install and own onsite solar systems to provide for private sales of electricity generated from the systems to onsite customers through a Solar Energy Procurement Agreement ("SEPA"). This has led to an emerging market of third party owned solar facilities on residential, commercial, industrial, institutional and government properties. The investment tax credit is preserved under a SEPA.

 

Current Challenges

There are capacity limitations under HB 57:  10 kW for residential installations, and 125% of the premise's peak or expected annual demand (AC) for commercial installations.

 Leasing

Status Quo

Georgia allows for the leasing of solar installations whereby a solar company builds and owns a solar array at no upfront cost to the customer and leases it to the customer for fixed monthly payments.  No form of direct marketing other than SEPAs and leasing is available in Georgia. 

 

Current Challenges

Under the federal tax code, the investment tax credit is lost under a leasing arrangement to a non-taxpaying entity like a government or nonprofit. 

 Direct marketing

No form of direct marketing other than SEPAs and leasing is available in Georgia. 

 

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