Legislature May Approve Solar Panel Lease Financing, with Limits
On Tuesday, January 13, 2015, a subcommittee created by State Rep. Don Parsons (R-Marietta), who chairs the House Energy, Utilities, & Telecommunications Committee, approved legislation drafted by State Rep. Mike Dudgeon (R-Johns Creek).
Dudgeon officially introduced the legislation–HB 57, the Solar Power Free-Market Financing Act of 2015– on yesterday, January 14, 2015, but the bill does not have to go back to subcommittee, Parsons told Atlanta Progressive News.
“I’m an electrical engineer – I’m almost certain I’m the only one in the Legislature,” Rep. Dudgeon told APN of how he got involved in this issue.
“Being on the Energy Committee, the power issues have always been interesting to me… how our electricity system changes over time. It came to my attention last year, the issues around financing,” Dudgeon said.
“This is a legislative process, we had to have a compromise between ninety parties, Georgia Power… [almost] forty EMCs [electric membership corporations], over forty cities… ten months of negotiations,” Dudgeon said.
“It is really a big deal – it’s really a big, big fix to get an agreement,” between Georgia Power, the EMCs, the solar industry, and advocates, Parsons told APN.
As previously reported by APN, the solar industry in Georgia has been restricted by Georgia’s Territorial Act, preventing households and businesses from participating in lease financing agreements.
Many who wish to install solar panels cannot do so without lease financing agreements, because the cost of up-front purchases of solar panels and their installation have been cost-prohibitive.
Solar energy procurement agreements allow homeowners and businesses to lease solar panels, and then use their energy savings generated over a period of years, to pay back the cost of the panels and installation.
Once those costs are paid back, consumers are able to see significant net savings–both in terms of financial and environmental costs–by reducing their usage of nonrenewable, dirty energy sources.
“A special subcommittee chaired by [State Rep.] Harry Geisinger (R-Roswell) had been working on the bill with Mike Dudgeon in late summer and fall,” of 2014, Parsons said.
“There was a bill last year, that’s what we were using as a working draft – that bill was literally dead at the end of Session. A new bill has to be introduced. Rep. Dudgeon had a bill – a legislative counsel draft. That’s what we were working on in the Subcmte meeting,” he said.
“Rep. Geisinger went ahead and kind of did a vote there – the Subcmte… approved the draft,” he said.
“We’re out of Session next week for the birthday of Martin Luther King and budget hearings. The next week after that, now that there is a bill, I’m going to try to have a hearing on the bill in the full Committee,” Parsons said.
“I want to try to get out of Cmte and get it through Rules [Cmte.] and on the floor of the House as quickly as I can,” Parsons said.
“They did exactly what I asked them to do, and they did a fantastic job. It’s a long way to get the players involved. Georgia Power is a major player, the EMCs are major players too, but there’s so many of them, they didn’t all agree,” Parsons said.
“And Rep. Dudgeon had to work with the solar organizations. As of the time, they had agreement amongst everybody. Any changes that could be made to it could jeopardize it, but I would like to get it through with the exact language… that way there’s no big heated discussion about it… it’s a good thing, it really is,” Parsons said.
The Act would “provide for financing of solar technology by retail electric customers for the generation of electric energy to be used on and by property owned or occupied by such customers or to be fed back to the electric service provider.”
The bill also would require that the solar installations are up to safety standards set by national solar industry organizations.
However, the legislation sets a “capacity limit” for how much energy can be produced by consumers who use such a solar energy procurement agreement.
Those limits are ten kilowatts, for a residential application; or one hundred and twenty-five percent of the actual or expected maximum annual peak demand of the premises the solar technology serves, for a commercial application.
APN asked Parsons whether having a capacity limit would reduce the economy of scale for households and companies who add solar panels using lease agreements, thus reducing their cost savings.
“I imagine a lot of people would agree with that, but it’s a compromise effort. Georgia Power guards its customer base that’s set out for them in the Territorial Act… very jealously,” Parsons said.
“It goes to the fact they don’t want this to be somebody selling electricity, setting up as a power company within their territory… They are correct in that they have a territory assigned to them by the Territorial Act,” Parsons said.
The legislation specifically states that households and companies who set up solar panels using a lease agreement will not be defined as energy producers under state law.
Any excess energy would going back to Georgia Power or the EMCs, per existing state and federal law, Dudgeon said.
Georgia Power was concerned with “preventing someone from becoming a back-door provider,” Dudgeon said.
“Say I have five acre property, and I put a building with a light bulb, and put solar panels it, and said this was residential use. The utilities were trying to keep it within intended use, which is use on premise,” Dudgeon said.
“Solar companies obviously would have preferred to have that [the ability to sell excess energy to third parties, to help pay down solar installation debts] in there, that’s why it’s a negotiation,” he said.
Those who use lease purchasing agreements will be able to still pay back their loans for the up-front installation costs using cost savings generated by using solar power.
“The savings on your power bill, if you size it for your house, your bill goes to zero… that’s where the leases will be saving you the money,” Dudgeon said.
The capacity limit still “allows to supply the vast majority of the residences,” he said.
Georgia is one of the fastest growing solar markets in the nation. There are currently more than 150 solar companies employing thousands of workers in the state.
“We advocate for solar through free market principles, so anything that introduces a new energy source, creating competition, the result is gonna be costs to be lowered… for the consumers to be the benefit of that occurrence. We advocate for anything that lowers consumer cost,” Craig Briscoe, Executive Director of Georgians for Solar Freedom, an organization founded in 2013, told APN.
“We’re pleased the language is taking shape, we’re looking forward to HB 57 making its way through the Gold Dome,” he said.
The proposed legislation “benefits the folks who hold those free market principles and the environmentalist contingency – it’s very seldom when it’s a win-win… This is good politics, good policy,” he said.
Dudgeon is optimistic the bill will pass this year.
“I hope so… historically, when there’s a bill negotiated for a year in off-season and everybody comes to the table and says they’re okay with it, the vast majority of times, it makes it through – I’m optimistic,” he said.