Cutbacks to TVA’s solar incentive program

Memphis Business Journal – Published July 27, 2012 by Michael Sheffield

Scott Edwards with solar consultant Peter Calandruccio€” invested in a solar array at his dental office, thanks in large part to TVA incentives.

When Scott Edwards had a solar array installed at his 4,200-square-foot dental office in July 2010, it wasn’t because he was particularly into sustainable energy. It was because his son, who had an environmental science degree from the University of Tennessee, told him about incentives the Tennessee Valley Authority provided that would help fund the project.

Two years after the installation, Edwards says he’s “tickled to death” because his energy bill is one-third of what it was before the array was installed. While Edwards’ office is smaller than some of the higher profile projects in Memphis, the impact of the arrays is higher on his business, which uses a lot of electricity for equipment like X-ray machines.

Edwards says the project wouldn’t have been feasible without the TVA incentives.

But, 10 years after it introduced incentives to help grow Tennessee’s solar industry, the Tennessee Valley Authority is altering its agenda and launching a scaled back version, called Green Power Providers. While it will still provide incentives for companies and homeowners that install solar arrays, it will cap the system size at 50 kilowatts and provide $1,000 in incentives, a significant decrease from the previous program.

The original Generation Partners program cleared the way for arrays that generated as much as one megawatt (1,000 kilowatts) of energy, which were then sold back to TVA and local utilities like Memphis Light Gas & Water and Nashville Electric Service. One megawatt of electricity is enough to power 1,000 houses.

The TVA incentives, along with grants for companies across the state from the Tennessee Solar Institute to install solar arrays, were instrumental in the state growing its solar usage from a tenth of a megawatt in 2008 to 27 megawatts in 2012. The Tennessee Solar Institute received $23.5 million from the American Recovery and Reinvestment Act, which it used to help fund solar projects.

However, Green Power Providers is causing concern for solar installation firms and their clients.

Steve Johnson, president of Lightwave Solar, a Nashville-based installer that built the array at Edwards’ office as well as the 1.6-gigawatt, $4.3 million array at Agricenter International, says the TVA changes and a tax proposed earlier this year by the Tennessee General Assembly could put a damper on the growth of solar in Tennessee, despite the gains of the last few years.

Locally, Memphis Bioworks Foundation built a 750-kilowatt solar array on a parking garage roof. The Agricenter built and activated its system this spring. And local hand tool manufacturing company Great Neck Saw Manufacturing Inc. installed a $4 million solar array last year.

All of the systems have panels manufactured locally by Sharp Manufacturing Co. The growth of solar has resulted in Sharp creating more than 200 jobs since 2009, mostly related to solar panel production. The firm currently employs about 500 in Memphis.

While Sharp has seen immense local gains, some high-profile failures haven’t done solar any favors. Solyndra, a California-based manufacturer of solar panels, declared Chapter 11 bankruptcy in September 2011 despite $535 million in federal loans.

Another manufacturer, Longmont, Colo.-based Abound Solar, announced its intention to declare bankruptcy this summer after receiving $400 million in federal loans.

Rhone Resch, president and CEO of the Solar Energy Industries Association, says despite Abound and Solyndra’s issues, more than 100,000 Americans currently work in the solar industry.

“America invented solar technology, and I have every conviction that our companies can and will continue to thrive in the global marketplace,” Resch says.

Environmental incidents, like the December 2008 spill that sent more than 1 billion gallons of coal ash slurry into the Clinch River in Kingston, Tenn., help make the argument for alternative fuel sources. TVA spent $46 million to clean up the spill, but the lasting effects and costs are still being determined.

“You look at other expenses like the coal slurry incident in Kingston, or a $2 billion change order TVA had with a nuclear plant, and they complain that solar is too expensive,” Johnson says. “TVA helped build solar in Tennessee, but once it started getting successful, they started cutting it.”

TVA hasn’t set a date for the implementation of Green Power Providers, but the solar industry is anticipating that it will be enacted by December. Companies that installed solar arrays under the old program will have their agreements honored for 10 years.

Peter Calandruccio, an architect and regional sales director for Lightwave Solar’s Memphis and West Tennessee region, says that while solar is strong even without incentives, people who may have been on the fence about installation make their decisions based on incentives.

“The price of energy and utilities is unpredictable,” Calandruccio says. “But you stabilize that with solar because the energy and fuel source are free. It will still be there for those who are wise about taking control of their energy future, because they understand that it’s viable and it works.”