Dive Brief:

• The South Carolina Public Service Commission on Nov. 15 voted 6-1 to cut the rates paid by Dominion Energy and Duke Energy to large-scale solar providers by about 33%, a move the renewables sector says could bring the state's market to a crashing halt.
• Solar advocates call it a "doomsday" scenario for the state's large-scale installers. South Carolina will now offer the lowest avoided cost rates for Public Utilities Regulatory Policy Act (PURPA) contracts in the nation, as well as some of the shortest contract lengths in the region.
• The PSC approved payments of $21.43/MWh for a 10-year contract in Dominion's South Carolina territory. For comparison, Dominion in Virginia recently executed a 20-year solar contract for about $40/MWh.

Dive Insight:

This was the first rate review for Dominion and Duke since South Carolina passed the The Energy Freedom Act, which aimed to grow the state's solar market. Both utilities defended the lower rates.

Comparisons between Dominion's territories in other states are inaccurate, the utility said in a statement. The company's South Carolina and Virginia utilities "own and operate two very different and distinct electrical systems," and those differences drive "the calculation of avoided costs; therefore, it is no surprise that the avoided costs are different for each utility."

Whether a contract falls under PURPA also factors into the analysis, according to Dominion. The utility declined to comment further until regulators issue a final order.

Duke "largely agrees with the commission's ruling on the rates," spokesperson Ryan Mosier told Utility Dive in an email. "The solar industry continues to expand in the South, and we see no reason why that shouldn't continue. In the past, solar adapted to current market conditions and prospered."

This year, Duke has signed agreements with 11 solar projects in South Carolina, totaling 81 MW.

Regulators approved new rates for Duke in two territories — Duke Energy Carolinas and Duke Energy Progress, at $29/MWh and $32/MWh respectively. The old rates, according to the Solar Energy Industries Association (SEIA), were in the upper $40s/MWh for similar-sized projects and terms.

Mosier said the PSC's decision protects customers from long-term contracts at "inflated rates in a market that continues to see price declines."

But solar advocates say the PSC's decision means "the will of the legislature and the public was ignored."

"Unless something major changes, things look bleak for solar in S.C.," Conservation Voters of South Carolina said in a statement. "These were the first big decisions to implement the Energy Freedom Act, and the PSC used them to kill solar competition and preserve the status quo."

The group says the combination of lower rates and shorter contract terms means "there are billions in private clean energy investment that may leave the state."​

The PSC decision also limited solar contracts to 10 years, and advocates say 15- to 20-year contracts are needed to grow the state's solar resources.  According to SEIA, the decision undermines the state's new energy law "and will have a lasting and devastating effect" on the solar industry's ability to operate in South Carolina.

"This is clearly not what the General Assembly had in mind when they unanimously adopted the Energy Freedom Act just six short months ago," Bret Sowers, president of the South Carolina Solar Business Alliance, said in a statement.

SEIA has vowed to fight the decision and says it is "working with its member companies to plan next steps."