South Carolina’s Past Failures and New Policies Contribute to a Brighter Future for Solar and Battery Storage

Author: Shelley Robbins, Clean Energy Group | Project: Resilient Power Project, Energy Storage Policy 

As states and the federal government take steps to transition away from fossil fuel generation, it is important to pay attention to recent clean energy developments in states where energy legislation has historically been less proactive, and the traditional integrated utility monopoly model has held influence over the policymaking decision process. In those states, where clean energy is now gaining a stronger foothold, valuable lessons can be found. Actions by these states to change the direction of energy policy are a powerful confirmation that clean energy is a viable, cost-effective alternative to fossil fuels.

A perfect example is South Carolina, where the legislature passed the landmark Energy Freedom Act in 2019; and where the South Carolina Public Service Commission rejected Dominion Energy’s integrated resource plan in 2020, and then rejected Duke Energy’s integrated resource plan in 2021— both for failure to adequately consider and model available clean energy options. Now, Duke Energy, one of the state’s vertically integrated investor-owned utilities, has worked with stakeholders to create a program that addresses winter peaking with a combination of solar, time-of-use rates, smart thermostats, and soon additional technologies that will likely include battery storage. 

For South Carolina, solar PV paired battery storage (solar+storage) can be more than just a tool to reduce demand and offset fossil-fuel consumption. These technologies can be used to create community resilience hubs throughout the state, providing services during hurricanes and other extreme weather events. Solar+storage can keep critical devices powered to protect vulnerable populations during outages that may imperil their lives by leaving them too hot, too cold, or without needed medical devices that require electricity. It can also be a tool to reduce the state’s high energy cost burdens, leading to a whole host of positive benefits for lower-income households. 

South Carolina now stands among the more proactive Southern states in clean energy policy. But it wasn’t always that way. There were numerous regulatory and political challenges that had to be overcome to make way for meaningful change. The story of how South Carolina met these challenges offers important insights for other states. 

The Evolution of South Carolina Energy Policy 

It is important to note that backlash resulting from a failed nuclear project had a big part to play in South Carolina’s shift to advance clean energy. Back in 2007, South Carolina’s investor-owned utilities, Duke Energy and South Carolina Electric and Gas (SCE&G), had considerable influence at the Statehouse and the Public Service Commission (PSC). That year, a piece of legislation called the Base Load Review Act (BLRA) passed fairly quietly, which allowed PSC-regulated utilities to collect revenue for major construction long before the projects were put into service —projects such as two new reactors proposed for the SCE&G/Santee Cooper VC Summer nuclear plant, approved in 2008. Construction on the nuclear reactors – the first in the U.S. in 30 years – began in 2013, but the project was abandoned in 2017 when estimated costs soared by billions 

The VC Summer failure ultimately produced the political will, via public pressure, to scrutinize the existing regulatory paradigm and then rip it apart. Backlash from the VC Summer debacle also led the Legislature to replace all seven utility commissioners starting in 2017, and the new commissioners were chosen with a more rigorous selection process than those of previous years. In 2018, the BLRA was repealed, a Utility Consumer Advocate was created, and reforms were introduced at the PSC. In 2019, the Legislature adopted the Energy Freedom Act 

A New Clean Energy Paradigm

The Energy Freedom Act (EFA) laid the groundwork for South Carolina’s clean energy transition. It included language codifying a customers’ rights to be able to reduce their electricity consumption, added “energy storage” to the definition of a customer generator, granted customers the right to their energy data and allowed data sharing with third-party vendors, and addressed the inclusion of capacity value, locational value, and ancillary service value of storage to avoided cost calculations. The legislation also enabled the PSC to require all-source solicitations for capacity over 75 megawatts and required the utilities to establish Solar Choice Net Metering tariffs (the next iteration of the net metering program). Finally, EFA established new requirements for utility integrated resource plans (IRPs) and directed the PSC to approve, deny or modify those plans within the framework of a litigated proceeding, allowing for intervenors to challenge utility assumptions and methodologies. 

Beyond the enabling elements in the EFA, the two most significant developments for the expansion of solar+storage in South Carolina were the approval of a solar choice program and the rejection of Duke Energy’s IRP. 

Duke Energy’s Solar Choice and Smart$aver Solar as Energy Efficiency programs open the door for more residential and small-scale commercial solar projects by creating a program that pairs time-of-use (TOU) rates with smart thermostats and rooftop solar. The programs enable customers to receive rebates as well as monthly demand-response incentives for lower both summer peak and winter peak demand if they enroll in the TOU program and allow Duke to manage the energy use during periodic peak demand events on the grid. This is an innovative way to incentivize renewable energy that recognizes its value to the grid. But even more exciting is that Duke Energy committed to expanding the programs to include “other peak load reduction technologies,” such as battery storage and heat pump water heaters, by June of 2022. Duke also committed to initiating a stakeholder process to explore a similar program tailored to low-income customers. 

In the Commission’s order rejecting Duke’s IRP in June 2021, the PSC noted that Duke under-estimated the value of solar and storage, over-estimated the cost of battery storage, and under-estimated future gas prices and risks. The Commission ordered Duke to remodel the IRP using the National Renewable Energy Laboratory’s Annual Technology Baseline – Low figures for battery storage. Duke must also remodel its natural gas price assumptions. And for future IRPs, the PSC ordered Duke to correct their capital cost assumptions for battery storage compared to combustion turbines, to accurately model the capacity value for solar paired with storage on the grid (with stakeholder input), and to evaluate more robust options and emerging technology within the energy efficiency (EE) and demand-side management (DSM) programs, focusing on approaches that do not rely on behavioral changes. Since the goal of the EE/DSM programs is to reduce consumption of fossil fuels and reduce the need for expensive capital investments, it stands to reason that customer-sited solar+storage should play a role and be evaluated for cost-effectiveness as an emerging tool within the program, as has been done in several New England states 

With each of these policy changes and PSC decisions, South Carolina has put in place the elements it needs to expand the adoption of solar+storage. Notably, the state has done this without the benefit of belonging to an independent system operator (ISO) or regional transmission organization (RTO). These wholesale energy market managing constructs have helped demonstrate the value of solar+storage in other regions of the country; South Carolina’s success shows that individual states can advance distributed solar+storage markets without the support of regional energy market managers. 

Lessons Learned in South Carolina: Opportunistic Teamwork 

The shift from policy that favored the monopoly utilities, shareholders, and protection of profits to policy that increasingly values distributed renewable energy and market competition did not happen organically. It was the product of crisis, intense protracted debate, and compelling advocacy by an impressively diverse group of players, all mission-aligned with the goal of opening the state to distributed renewable energy. This lesson can be of value to other states where the shift to clean energy has been sluggish. But perhaps South Carolina’s greatest achievement was the ability of the various stakeholders — from big business to environmental advocacy groups — to work together in historic fashion to raise a solar-policy phoenix out of VC Summer’s ashes. 

Now it is time to put these hard-fought policy pieces to work. As South Carolina adopts more solar+storage, it will have the potential to increase the state’s resilience to extreme weather and utility outages, protect vulnerable citizens during times of crisis, clean up its grid in a cost-effective manner, reduce energy burdens, and improve air quality as polluting fossil-fuel power plants are retired. South Carolina isn’t the only state that can do this; lessons learned there can adopted and applied elsewhere, spurring new clean energy transformations in historically challenging regions. 

Clean Energy Group Announces Retirement of Lewis Milford as President; Seth Mullendore Named to Run Organization

Clean Energy Group (CEG), a national nonprofit that works on clean energy and climate, announced the retirement of Lewis Milford, its founder and president. His retirement will become effective on December 31, 2021.

Lew Milford founded CEG in 1998, after working over several years on clean energy and utility restructuring dockets in New England while with the Conservation Law Foundation. With CEG, Milford focused on how state and communities could develop sound renewable energy policies, programs, and finance tools. At that time, very few groups were working on state-level and community-based strategies to advance clean energy. CEG also worked with federal agencies and international agencies to find policy solutions to combat climate change. In his work, Milford applied principles of disruptive technology innovation to clean energy markets, assisted by the late Professor at Harvard Business School Clay Christensen, an early mentor. CEG has worked on technology innovation from fuel cells to offshore wind, to energy storage and advancing energy equity over the past two decades.

Not long after starting CEG, Milford initiated a multi-state project to work with new clean energy development funds that states had begun to create around the country – so-called public benefit funds. That effort led to the creation of another national nonprofit in 2002, the Clean Energy States Alliance (CESA). Managed and staffed by CEG, CESA now works with states on solar access, offshore wind, energy storage, building electrification, and 100% clean energy goals.

Among the accomplishments of these organizations over the last 20 plus years was an early focus to bring new clean energy technologies to underserved communities. Milford created CEG’s Resilient Power Project in 2013 after Superstorm Sandy, to ensure that frontline communities and climate-vulnerable populations had access to new technologies like solar and battery storage, which can provide power during blackouts. Much of that work now informs national and state policy on energy resiliency in low-income communities and communities of color, including strategies to replace polluting peaker power plants with renewables and energy storage.

Recently, Milford has spearheaded CEG’s efforts to raise concerns about the industry rush to burn hydrogen in power plants, which can create harmful levels of nitrogen oxide in environmental justice communities.

“To call Lew Milford a ‘visionary’ doesn’t even begin to scratch the surface of the work Lew has undertaken for CEG, for the environment, and the future of resiliency,” said CEG Board Chair Brian F. Keane, President of SmartPower. “Lew’s relentless drive and determination and his dedication and sense of purpose have made CEG one of the premier clean energy organizations of our time. But Lew’s intellect, his honesty, and, perhaps most importantly of all, his humanity, have made him one of the greatest environmental leaders of his generation.”

Milford’s work with CEG and CESA came after 25 years working in the public interest as an attorney and advocate. After graduation from Georgetown Law, he first worked for the federal government to enforce civil rights laws among government contractors.

Then, he had the good fortune to be hired on the faculty of American University Law School as director of its first Public Interest Law Clinic. The program was a joint project of the American Civil Liberties Union and the Legal Services Corporation. He represented Vietnam veterans exposed to the defoliant Agent Orange, to help them obtain compensation and health care for their service-related injuries, including cancer and birth defects in their children—a tragedy that still plays out today. After filing numerous lawsuits against the federal government, the process of obtaining federal care and compensation for these veterans began with his work.

Milford also represented older veterans needlessly exposed to radiation at the Bikini Atoll nuclear tests in World War II and at the Nevada test site in the 1950s. He won a federal court case to require better VA compensation rules for their extensive radiation-related injuries, but after an oral argument before Robert Bork and Antonio Scalia, then both federal appeals court judges in DC, they reversed the victory below—the worst loss of his legal career.
During that time, he and a New York Times reporter wrote a book Wages of War, a social history of America’s treatment of its war veterans from the Revolutionary War to Vietnam.

After his veterans’ work, Milford served as an Assistant Attorney General for the State of New York working on the Love Canal hazardous waste case. His work on the legal team led to the recovery of almost a half-billion dollars in state funds from the responsible chemical companies. This fund allowed families to relocate away from the hazardous waste site where chemical companies had dumped carcinogenic chemicals—land that these companies had sold to the community as a site for a new school.

After a short stint in private law practice in his home state of New Jersey, he returned to public interest work. For ten years into the late 1990s, Milford was a project director and then Vice President at Conservation Law Foundation, focused mainly on energy as part of the team that negotiated the restructuring of the electric power industry in New England. He also brought numerous federal lawsuits and other actions in Vermont to protect forests, to stop hazardous medical incinerators, preserve precious waterways, and to force the utilities to invest in efficiency and renewable energy.

Milford leaves a strong, diverse, and experienced team in place at CEG to lead the organization forward. Seth Mullendore, CEG’s vice-president, has been named as the new Executive Director of CEG, effective January 1st. CEG is planning to announce a new deputy director in late summer; more information on the new management team and the direction of the organization will be announced then.

Over the years, CEG and Milford’s work have received tremendous support from key foundations, including Barr Foundation, Energy Foundation, Kresge Foundation, Jane’s Trust, John Merck Fund, JPB Foundation, Merck Family Fund, Nathan Cummings Foundation, New York Community Trust, Oak Foundation, Park Foundation, Rockefeller Brothers Fund, and Surdna Foundation, among many others. Milford is thankful for their support and partnership.

He looks forward to a retirement filled with new possibilities.