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Georgia (?!?!) Marches On

There was a truly surprising development in the carbon world on July 11 when, at the request of Georgia Solar Utilities, Inc., the Georgia PSC ordered Georgia Power to add 525 MW of solar capacity to the utility’s portfolio by 2016. Georgia Power was already planning on adding 270 MW of solar to its system, but the PSC simply decided that that was not enough: “As a matter of energy policy, the Commission determines that it is appropriate to expand Georgia Power’s generation portfolio by the addition of 525 MW of new solar generation.”

Not California. Not Vermont. Not Oregon, Washington State or any of the other usual suspects. Georgia, one of the few states that does not have a Renewable Portfolio Standard, although as the one dissenting Commissioner opined, “what the Commission has approved is worse than an RPS” because the PSC chose solar as the specific renewable “winner”.

The move was the product of a rare coalition between people more normally associated with the Tea Party as well as the regular proponents of solar. The following extracts from the PSC announcement provide insight into their motivation – and the most significant hurdle the proposed solar capacity will still have to meet:

“The Commission . . . [adopted] . . . two proposals by Commissioner Stan Wise that require the Company to use an independent evaluator in the bid process and prohibit accepting any bids that exceed Georgia Power’s levelized avoided cost for the term of purchase power agreements.

Commissioner Doug Everett . . . [voted to adopt the proposal after] . . . assurance from both Commission staff and Georgia Power that this plan will not increase electric rates because all bids must be below Georgia Power’s avoided cost . . .

Commissioner Tim Echols who supported the solar motion said, “Commissioner McDonald’s motion adding 525 megawatts of solar to our 20-year energy plan is a hedge against more coal regulation and natural gas price volatility. When the President finishes his war on coal, he’ll come after fracking, and gas prices will surely go up. We have to be ready.”

We also note that despite efforts in several statehouses (e.g., Kansas, North Carolina, Texas) to reduce or repeal RPS mandates, the 2013 legislative year ended with defeats for all such efforts, and, as we have noted previously, expanded RPS mandates in several states (Colorado, Minnesota, Nevada).

The Georgia experience is a landmark step because it shows that if coal and natural gas use are (or are believed to be) constrained, PSCs will vote for solar without State mandates…. but even then, only if the cost is as competitive as its proponents claim. The next test for Georgia will be for the solar companies to deliver power at the rate the Commissioners have specified. We (and we suspect many others) will be watching with interest.