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Monday, December 11, 2023 | Back issues
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South lags behind rest of nation in solar investment

Even as a new 800-acre, utility-scale solar facility opens in Alabama, potential rooftop solar customers are being stymied by a regressive fee.

(CN) — When all 280,000 photovoltaic panels are powered up sometime in January, the Black Bear solar project outside of Montgomery, Alabama, will increase the state’s output of solar power by nearly 20%. Yet the state will still be among the least reliant upon renewable energy, in a region of the country that lags behind the rest in green energy investment.

The organizers of a dedication ceremony at the facility last week are hopeful Black Bear is a sign of things to come. 

“The price is the key ingredient to a utility’s interest in this type of resource,” said Fred D. Clark Jr., president and CEO of the Alabama Municipal Electric Authority, which will purchase power from the Black Bear facility from the project’s developer, LightsourceBP, and resell it to customers in 11 member cities.

“Every megawatt hour this project produces is a megawatt hour of natural gas we’re not having to buy and at a time of volatile fuel prices, that is particularly important," Clark said. "We would have saved $12 million in annual fuel costs if [Black Bear] was online this year, but we’ve estimated a savings of some $3 million per year over the course of the 20-year agreement, so approximately $60 million.” 

The 130-megawatt project, built on 800 acres, was financed with $100 million in private capital. Fully functional, it is expected to produce enough energy to power roughly 20,000 homes each year, while also reducing the amount of carbon emissions by about 173,000 tons annually. Lightsource claims the project provided as many 400 jobs during construction, will have an annual operating budget of around $2.4 million and will contribute as much as $7 million in property taxes over a period of 35 years.

“This project is a great example of how solar is a job engine for Americans,” Lightsource Americas CEO Kevin Smith said in a statement, noting the panels for the project were manufactured in Arizona, their foundation piles were made in Mississippi and their electronic light trackers were built in New Mexico.

“Black Bear Solar created hundreds of U.S. jobs across the supply chain, supporting domestic manufacturing and helping build long-term careers for our clean energy future," Smith said.

But if Alabama has a significant clean energy future, you’d be hard-pressed to find hard evidence of it today. The state currently ranks 31st for the megawatt hours it generates using solar energy, according to the Solar Energy Industries Association. Other southern states including Mississippi, Louisiana, Kentucky and West Virginia generate even less. On the other hand, Georgia ranks 7th and Florida ranks 3rd, behind California and Texas, for megawatt hours produced from solar energy. 

While 14 coal-fired power plants in Alabama have been mothballed in recent years, their generating capacity has largely been supplanted by natural gas, trading one nonrenewable resource for another.

The state is even more stubborn when it comes to the adoption of small-scale rooftop solar initiatives, as its regulatory agency, the Alabama Public Service Commission, allows power companies to charge prohibitive "backup" fees to recoup lost profits on such systems. 

Data from the Solar Energy Industries Association indicates that as of July, Alabama had only about 370 small-scale solar customers in total, compared to 8,483 in Georgia, 33,329 in North Carolina, and 28,311 in South Carolina.

According to a federal lawsuit filed last year, the backup fees are discriminatory in nature and “destroy the economics of private solar installations,” robbing potential users of expected savings and prolonging the payback period on their investments.

“These charges are the primary reason that private solar investment in Alabama Power's service territory, comprising most of Alabama, significantly lags that of other solar-rich states,” the complaint states.


Christina Tidwell, a senior attorney in the Southern Environmental Law Center’s Alabama office, said enabling policy is an important part of the equation for solar expansion in Alabama and elsewhere. 

“While we’re pleased to see the Alabama Municipal Electric Authority adding solar energy to its resource portfolio, the total amount of solar in Alabama continues to be far behind many of our Southeastern neighbors,” Tidwell said in an interview. “We still need fair policies that make solar accessible to families interested in affordable, renewable electricity.”

The state’s largest electric utility, the investor-owned Alabama Power, adopted the backup fee in 2013. According to the Southern Environmental Law Center, the fee is one of the highest in the nation, adding up to more than $9,000 over a typical rooftop solar system’s lifespan and eliminating any savings a user may experience.

“It’s almost entirely about finances and control,” explained Daniel Tait, executive director of the nonprofit Energy Alabama, an advocate for renewable energy. “Control and monopolization will override even short term financial gain, or any potential for it.”

Tait said the Black Bear project is admirable, but in order to wholly embrace renewable energy, the state must emphasize other utility-scale projects while also investing in power transmission infrastructure, energy storage technology and distributed energy resources including rooftop solar and energy efficiency. 

“This is a really good project but I hope it helps open the eyes of other utilities about how important and successful these things can be,” Tait said. “Alabama is one of the richest resource states for solar but barriers to growth have been largely manufactured by utilities or regulators who are ideologically driven to protect existing technology and resources.” 

Tait said just two weeks ago, Alabama Power released its updated integrated resource plan showing no solar additions in its portfolio until 2040 and no battery additions for energy storage until 2041.

“It’s so off the mark with reality,” he said. “What they are trying to do is get as many bites of the fossil fuel apple as they can before it completely shuts down, then they'll have to make the switch. But if you have compliant regulators at the Public Service Commission who shirk their responsibility at every turn, why not milk it for all you can get?” 

Clark, whose organization is more of a broker of electricity than a producer of it, sees it differently.

“Across the country, these projects are really measured as to what the price of power is going to be,” he said. “We are trying to hedge our bets by having a diversity in fuel. We’re hoping that will help contribute to more stable fuel costs for our member cities. I think we're going to see Alabama Power and the electric co-ops embrace this in time but a lot of it is timing and when you put these resources in play. It's all about economics of fuels. If the economics are there, it will be built. If not, it will not be.” 

For example, Clark said the price of solar panels has decreased about 80% over the past 10 years, while the industry is also beginning to receive tax rebates and other incentives. 

“It’s only been in the last five years that utility-scale solar has made any money,” he said. “In other places, people have been [installing it] at high cost, in effect, paying a premium to have it.” 

But Clark also said the tide is turning. The Alabama Municipal Electric Authority expects to partner on another 100 megawatts of solar by 2026, 

“This is the largest project of its type in central or south Alabama, but I think we’ll see more than 20 projects of this size over the next 10 years,” he said, noting additional investment may occur with the assistance of the recently passed Inflation Reduction Act, which provides as much as $370 billion for clean energy investment. 

“What the Act does for the industry is provide additional federal tax subsidies, which hopefully will drive the costs of these projects down and in doing so will make us more interested in putting it in the ground,” Clark said. “I think you’ll see Alabama Power and other utilities really embrace it in time.”

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