S.C. laws hinder clean energy investment

Columbia Regional Business Reports
August 6, 2013

The state has missed out on millions from the American Recovery and Reinvestment Act. Meanwhile, South Carolina’s laws also are blocking projects on Defense Department sites.

By Mike Fitts
Published Aug. 5, 2013

South Carolina’s laws are holding back growth in promising clean energy fields while other Southeast states are forging ahead, according to several experts on entrepreneurship in the field.

State rules require that solar companies be regulated like full-blown utilities if they sell energy to any third party, even a U.S. military base. This imposes a burden on startups that is blocking the state’s potential, a top expert in financing clean energy projects told attendees of the S.C. Clean Energy Summit on July 11.

“Your state policy doesn’t lend itself to renewable energy development,” said Lee Peterson of Cohn Reznick, an Atlanta-based accounting and tax advisory firm.

Federal tax laws encourage clean energy projects, and there is substantial capital out there from hedge funds and other investment groups looking to back them, Peterson said.

In other states, Peterson said, entrepreneurs can set up and operate a solar or wind farm, for instance, and capital investors will buy a majority interest in exchange for the tax breaks. South Carolina laws shut all that down, except for projects launched by the major utilities, and the capital flows to other states.

Missing out on investment
South Carolina has missed out on millions from the American Recovery and Reinvestment Act, Peterson told the conference. North Carolina has gained more than $700 million in clean energy projects from one of the act’s tax reimbursement provisions, while South Carolina has only drawn $57 million. That shortfall is directly attributable to the state’s outdated laws on clean energy investment, Peterson said.

South Carolina’s laws also are blocking projects on Defense Department sites, according to Dave McNeil, president of Hannah Solar Government Services. The Charleston-based company launches renewable energy projects on military bases, but has none in South Carolina, despite federal incentives.

A bill to change how South Carolina regulates clean energy (House bill 3425 and similar Senate bill 536) failed to advance in this year’s legislative session. The Legislature’s Public Utilities Review Committee has appointed an advisory panel to work on these issues, and South Carolina Electric & Gas is working in that process, according to utility spokesman Eric Boomhower. Boomhower points out that SCE&G has more than 200 customer-owned solar powered generators, providing or displacing nearly 1.3 megawatts of generating capacity. Owning your own solar or wind power system avoids the legal issue that has left entrepreneurs unable to resell power in the state.

The Clean Energy Summit brought renewable energy entrepreneurs and utility leaders into the same room together; SCE&G served as one of the event’s sponsors. The event saw some positive and substantial discussion among the parties, said Tom French, executive director of the event host, the S.C. Clean Energy Business Alliance.

“The issue is complicated, but both sides are trying to define win-win outcomes,” French said after the summit.

In his keynote address at the event, Sen. Vincent Sheheen, D-Camden, noted the differences of opinion in the room and urged the sides to come together so that the state can grow its economy and jobs with clean power.

Keeping dollars at home

Helping clean energy build in the state would keep billions of dollars here that now flow to other states that produce fossil fuels, he said.

“This is an industry we need to get behind,” said Sheheen, considered the likely Democratic candidate for governor next year.

State government needs to show more leadership on clean energy, including showing taxpayers how embracing solar power and energy efficiency can save them money, Sheheen said. Such projects as solar arrays on state office buildings would help with government’s huge power costs and help the industry show what it can accomplish, Sheheen said.

“Our state government certainly should be a good example,” he said. Sheheen described constituents
That shows how much room South Carolina has to improve on energy, Sheheen said. To address this, Sheheen endorsed making small loans for efficiency improvements available, to be repaid through customers’ energy bills.

Not improving energy efficiency and clean energy use would be a waste of the state’s resources, Sheheen said. So far, the state has fallen behind because of a lack of leadership on energy, he said.

“The big vision needs to come from the governor’s office,” Sheheen said.

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