Georgia’s DG Market: Not So Peachy


By Kate Brandus, Fall 2016 Fellow 


At first glance, the state of solar in Georgia appears bright. As of September 2016, there were 201 active solar companies in Georgia, employing 3,185 people. Total installed solar capacity sits at 495 MW, ranking the state 12th in the nation. However, distributed solar generation (DG), a booming sector of solar in other states has not experienced significant growth in Georgia.

What is DG?

DG refers to solar electricity that is produced at or near the point of consumption. It eliminates or greatly reduces the costs and inefficiencies associated with transmission and distribution infrastructure. DG is typically mounted on residential roofs or ground-mounted at commercial and industrial sites. Often, the solar systems will be connected to the utility grid. DG generation has become popular throughout the U.S. and provides benefits to the electricity consumer and utility or electricity supplier in a region. Benefits include increased electrical system reliability, reduced peak power requirements and provision of ancillary services. Cost savings and electricity independence are two main benefits for residents.


On the other hand, several utilities view DG as a threat. Utilities lose revenue when customers are serving their own load rather than buying electricity from the utility. Additionally, several utilities are concerned about the effects of DG on non-solar ratepayers. However, the electricity sector as a whole is moving towards DG, causing utilities to re-think their business models, accounting for load reduction and cost recuperation. So what’s holding Georgia’s market back?


The Current Outlook

In May 2015, the Georgia legislature passed HB57, which allows residential and commercial third-party financing and ownership. Third-party financing has been central to the growth of residential and commercial DG nationwide. Solar City Deputy Director of Policy voiced the company’s stance stating, “We think third-party ownership is an important building block for any mature solar market”. However, on the same day of the passage of HB57, GA Power decided to introduce an unregulated residential solar installation business. There is concern that the introduction of Georgia Power’s unregulated installation arm gives Georgia Power an unfair advantage in the market. Most Georgian’s already purchase electricity from GA Power. Why look anywhere else to have a solar system installed?

A year has passed since HB57 and solar giants including Solar City, Vivint and Sungevity have yet to set roots in the Peach State. This is a huge missed opportunity for Georgia’s residents. These companies offer popular leasing options that have attracted numerous solar customers in other states. Unfortunately, Solar City spokeswoman Suzanne Merkelson states “No Southern state has lined up all the incentives and regulations needed for the [residential] model to work”. Leases are popular because customers can forgo the upfront and maintenance costs while still capturing the benefits of solar energy. Georgia Power’s unregulated installation arm currently does not offer leases, despite the passage of HB57. Thus, despite the opportunity to lease a system in Georgia, residents are left with nobody to lease a system from.

Another reason for the lack of DG growth is that Georgia’s Net Energy Metering (NEM) policy is restrictive. The Georgia PSC allows NEM but does not require utilities to buy back electricity at the full retail-rate.  Rather, customers are credited with the “avoided cost”. Avoided cost calculations – which are performed by the utility and approved by regulators - typically come out lower than the retail rate, meaning NEM customers get a smaller credit than they would in another state. Selling back electricity at full retail-rate has been pivotal to fostering the growth of DG in other states. With restricted NEM, low electricity rates and the lack of availability of leasing options, there is no financial case for customers to go solar in Georgia.  

Why Georgia?

Georgia is positioned to be a leader in the DG market. The state has high solar insolation rates and demand for residential and commercial DG systems is high. Recently, DeKalb County introduced the Solarize Decatur-DeKalb program—a bulk-purchase program designed to make solar cheaper for residents. Macon-Bibb County is installing solar panels for government use. The county is planning on installing 750 panels to prepare for emergencies, stating, “losing power is not an option”.  Additionally, Valdosta County is partnering with local installer, Hannah Solar, to build panels on top of a water treatment facility. Thus, it is evident that individuals, businesses and government entities within Georgia are interested in energy alternatives.

However, Georgia Power is partial to owning its assets and is reluctant to shake up its business model. Nonetheless, the electricity sector is moving towards a DG-based market and Georgia Power would be wise to adapt. To implement new policies, businesses and individuals must take action. Business can support DG-friendly policies by joining the GA SEIA advocacy network. Individuals can contact their state legislature, urging their representative to promote policies that encourage the growth of DG. Currently, the restrictive NEM policies and the lack of third-party financing options serve as barriers to the success of DG. Adopting and implementing policies that promote DG in Georgia can provide desired alternatives to residents, promote business and spur economic growth.

Kate Brandus is a Fellow with the Clean Energy Leadership Institute and a Customer Accounts & Operations Specialist at Sol Systems.