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Saving Sunshine: Will the sun keep shining on the SC solar industry?

Upstate Business Journal
By Evan Peter Smith -January 16, 2020

Ike Maddox prefers sunny days.

He’s hardly alone in that opinion, for who wouldn’t choose a bright day of sunshine over a gloomy day of rain clouds? But Maddox, who owns Ike’s Carpet and Upholstery Cleaning on Poinsett Highway in Greenville, has an added layer of incentive when it comes to the weather.

Namely, his electric bill.

“As long as the sun comes out 20 days or so a month, I’m home free,” Maddox said. “So to be honest, I don’t even worry about my electric bill anymore. I’m already saving a bunch of money.”

A little more than a year ago, Maddox had a solar panel system installed on the roof of his business. He needed a new roof anyway, and with Duke Energy offering rebates for those looking to install solar, he decided to opt in.

“It’s a lot of money up front to pay for it,” Maddox said, “but you start realizing immediate savings.”

In Maddox’s case, his power bill went down from an average of about $600 a month before he had solar installed, to around $50 dollars now. With the rebate he got from Duke in addition to tax incentives, the overall cost of his system will be practically paid for after six years.

This Google tool allows you to enter the address of your home or business to see how much solar would save you.
Things have changed, however, in the short time since Maddox had his solar system installed. For one, Duke Energy has ended its rebate program. The program was specifically aimed at jumpstarting the solar industry in South Carolina, according to Jason Martin, Duke’s distributed energy technology director. After three years and more than $60 million in rebates handed out, the number of solar customers connected to Duke’s power grid has gone up from about 100 individuals and businesses in 2014 to more than 7,600 today. Laurens Electric Cooperative has also seen significant growth in solar customers.

But industry analysts say that quick growth may soon slow down. The combined impact of the trade war with China and a recent decision not to extend a federal tax credit for solar-energy projects has had a chilling effect, says Steffanie Dohn, director of government relations with Southern Current, a major developer of large-scale solar farms.

“It’s disappointing, and it’s definitely going to hinder the solar industry,” Dohn said, referring to the decision not to extend the federal solar-investment tax credit.

That tax credit, established in 2006, offers individuals or businesses money back on the overall cost of a solar system. The tax credit was 30% as of 2019, meaning if you had installed an $18,000 solar panel system on your home — the average price for a residential system — you would save about $5,400. But that tax credit dropped to 26% as of Jan. 1. It will drop again next year to 22%. After 2021, it will drop down to zero for individuals, while commercial installations can still receive a 10% tax credit.

Dohn called the decision not to extent the tax credit a “head scratcher,” especially given the federal subsidies given to fossil fuel sources. Since 1950, oil and gas have received almost 60% of federal spending to support energy, or about $490 billion, while just 11% of federal spending, or $90 billion, has gone to support wind, solar and geothermal energy combined, according to a report from the Nuclear Energy Institute.

Dohn said the solar tax credit specifically has been a major boon economically.

“It’s probably the most successful policy for growth for renewable energy ever,” she said.

Since the tax credit was enacted in 2006, the industry as a whole has grown by more than 10,000%, according to a report from the Solar Energy Industries Association. The tax credit has directly helped create more than 200,000 jobs, the report notes, and has generated more than $140 billion in private investment.

Had the tax credit been extended through 2030, the report estimates the U.S. solar industry would have added an additional 113,000 jobs and an additional $87 billion in investment. The industry will still continue to grow without the tax credit’s extension, but that growth will be at a much slower pace, with the number of solar jobs expected to reach about 440,000 by 2030, compared with an estimated 553,000 jobs had the tax credit been allowed to continue.

“South Carolina is primed for solar, and it provides a real viable option for the state to transition to more sustainable, renewable, low carbon sources of energy,” said Weston Dripps, executive director of Furman’s Shi Center for Sustainable Communities. Photo by Irina Rice
But as Dohn and other industry leaders are quick to point out, the consequences of the tax credit not being extended will be felt unequally across the country.

“When it comes down to it,” Dohn said, “this is going to hurt red states like South Carolina a lot more.”

That’s because in recent years, blue states like California, Colorado, Maine, Nevada, New Mexico, New York and Washington have passed aggressive climate bills aimed at reducing greenhouse gas emissions, the result being an increased investment in renewable energy infrastructure — with solar at the forefront.

But red states, which have historically resisted new climate policies, are only just now beginning to see the economic advantages of solar investment.

“I do think South Carolina was sort of late to the party,” said Tyson Grinstead, director of public policy for Sunrun, a residential solar panel installer that operates in dozens of states, including South Carolina and the Upstate specifically.

Grinstead said that South Carolina, like other red states, is still in the relatively early stages of establishing widespread solar infrastructure. This means that on top of trying to catch up to blue states, which opted in earlier, South Carolina will also be paying higher costs in the coming years, given that blue states were able to build the majority of their solar infrastructure with the tax credit cushioning their overall costs.

The trade war added “further uncertainty,” Grinstead said, after the Trump administration tacked a 30% tariff on Chinese-made solar panels, which account for more than 80 percent of solar panels used in the United States. Chinese panels also amount to the only practical option for large-scale solar farms to purchase in the amount South Carolina needs to build up its infrastructure.

The trade war led to a quiet rift between the Trump administration and that of Gov. Henry McMaster, who made multiple trips to Washington, D.C., in a failed attempt to convince the administration not to impose the tariffs.

McMaster’s trips to Washington came right on the heels of his signing the unanimously passed South Carolina Energy Freedom Act, a bill that opened up the state to more solar power by increasing competition. The bill also got rid of the net metering cap on solar power, meaning those with solar panel systems can sell any unused energy collected back to the grid at market price without limits.

Still, that may not be enough to offset the impact of decisions made at the federal level.

“We’re going to see a dip,” Grinstead said of the state’s solar industry. “It’s not anything related to state lawmakers — in fact, it’s the opposite. But the federal side is worsening things.”

For now, with the tax credit still at 26%, solar providers have at the very least the benefit of being able to sell customers on that deadline.

It’s a sales pitch Ike Maddox has been making since he had his own panels installed.

“If your solar system itself is going to pay for itself in a short period of time anyway, and they’re going to pay you some money to do it, why not?” Maddox said. “Otherwise you’re just throwing money away.”

Do solar panels work in the winter?

Here in South Carolina, we are used to plenty of sunshine and warm weather. Based on years of data from The National Climatic Data Center, South Carolina averages over 200 days of full and partial sunshine per year. That’s why the Palmetto state is ideal for solar energy production! 

But what does that mean for solar when the winter brings shorter days and less sun? To answer this, first it’s valuable to understand how solar panels work.

How solar panels create electricity

A solar energy system uses photovoltaic (or PV) modules that are installed on a roof or mounted in a yard. Each panel is made up of silicon cells which works as a semiconductor to generate electricity. When sunlight hits the system, it causes the electrons in these cells to move and generate an electrical current. Wiring inside the array captures this current and combines it with the power from the other solar cells. This DC electricity is then converted into AC electricity which feeds directly into your home to power things such as appliances and lights. Excess electricity is sent back to the utility grid. 

How solar works

Are solar panels still effective in winter months? 

As is the case with most electronics, solar panels actually function more efficiently in colder temperatures. Additionally, as the leaves fall off trees, it means less shade to block the panels. Snow really is the only deterrent for energy absorption, but it typically melts quickly and solar arrays are designed for snow to slide off easily. (Read more at energysage.com) Not that we see much snow around here, anyway! 

In fact, solar can be a fantastic option for energy production in the winter when your family stays indoors more often and starts to turn on the heat. You can hang up those holiday lights knowing that solar has your back! And because no fuel is burned in the process of converting solar energy into electricity, it offers a clean resource that truly is renewable. With the combination of the current federal and state tax credits, most solar installations pay themselves off in around 7 years.* 

Even with less direct sunlight hours in the winter months, homeowners and the environment can continue to reap the benefits all year round.

*for a standard 5kW solar system

 

Note: the federal state tax credit will be stepping down AGAIN. Find out more. 

Understanding an electric bill after going solar

solar meter

What are kilowatt hours anyway?

In order to understand solar energy production, it’s helpful to have a grasp on how it is measured. The size of a solar system is often described in kilowatts (kW). Watts are a unit of power that we use to express output of energy that the system is producing.  

One kilowatt = 1,000 watts

So, kilowatts measure power while kilowatt hours measure energy usage and production over a set period of time. This is how your utility company determines how much electricity to bill you for. All the appliances in your home have a rating based on how many watts of power they use.

When sunlight is captured in a solar array, it produces electricity measured in kilowatt-hours (kWh). One kWh is produced when a kW of power production is sustained for one hour. 

Net Metering

Net metering is a billing mechanism that allows residential customers who generate their own electricity from solar power to feed electricity they do not use back into the utility grid. When your solar system is installed, you will also get a bi-directional meter that will measure both the electricity you are purchasing from your utility and the excess electricity you are sending back to the grid. 

net metering bell curve solar vs the grid

Utility power usage from the grid drops when solar is on site

You are charged only for your “net” energy use from that meter; which is the electricity you purchased minus what your system sent to the grid. If your solar system generates more kilowatt hours (kWh) during daylight hours than you purchase in a given month, you receive a 1:1 credit on your account for those excess kWh. 

When your usage is low, like a Wednesday afternoon when everyone is at work, surplus solar production is sent to the utility for the same price you pay for it, reducing your bill, and saving you money.  The utility can then utilize this power, sending it to your neighbors to support their needs – selling it to them on the same power lines you are using!

Results! 

real life solar customer electric bill

What will your particular electric bill look like after going solar? That will depend on a few aspects, including your particular solar system’s energy production, your local electric rate and your household’s energy consumption. When assessing your home for solar, a goal is to build an array that will generate as close to 100% of your household’s energy usage as possible. This is dependent on additional key factors such as roof space, budget and tax liability. Our experts will help you create a financial equation that balances your electric bill and energy needs. Then, it is as simple as adding up the thousands of dollars you’re not spending over the years by using solar, especially as energy prices continue to increase.

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