SC solar farms on hold, awaiting tax break

Norman Patterson never again will spend Easter Sunday patching a fence because a cow got out of pasture, he said Monday, noting the 31,000 solar panels that now cover his land like a sea.

After years of running cattle, the 91-year-old farmer decided to lease his property to a solar farm, which generates enough electricity to power 1,500 homes.

“It will be a good thing for Saluda County,” Patterson said, adding other landowners call him wondering how to get in touch with solar companies. “It’s a known fact that some more industry would be welcome in the area.”

Solar companies agree.

To encourage more investment in South Carolina, those companies want a guaranteed tax break – of 80 percent – on all future solar farms. If a Senate-passed proposal now before the S.C. House becomes law, local governments would be required to offer solar farms a deal at least that good.

While the solar companies hold out the prospect of hundreds of millions of dollars of investment, not everyone is seeing the proposal’s light.

Counties want to cut their own tax-break deals, confident they can win solar investments while not giving up so much, said Josh Rhodes with the S.C. Association of Counties, which opposes the bill.

Some counties also are concerned solar projects might use up land that could be developed for more valuable business or industry, said state Sen. Harvey Peeler, R-Cherokee, who opposes the proposal, too.

Utilities helped scuttle a similar proposal in the final days of last year’s legislative session, two legislators – a Republican and a Democrat – said, without naming the companies they were referring to.

This year, the state’s two largest investor-owned utilities – Duke Energy and S.C. Electric and Gas, a subsidiary of SCANA – said they have taken no position on the solar bill. However, they could yet weigh in and influence the debate.

Together, the two companies spent $400,000 lobbying lawmakers last year. Over the last decade, they have given almost $1.7 million to S.C. candidates and political committees, according to the National Institute for Money in State Politics.

Missing out?

State Sen. Greg Gregory, R-Lancaster, who is sponsoring the tax-break bill, said South Carolina is missing out on a solar boon that neighboring North Carolina and Georgia are enjoying.

As of last year, solar companies had invested $5.4 billion in the Tar Heel State and $1.9 billion in the Peach State, according to the Solar Energy Industries Association.

South Carolina’s solar investments are growing, too, but more slowly.

Solar companies invested $11 million in 2015 and $199 million last year in South Carolina.

“When you look at the amount of solar energy being produced in South Carolina compared to Georgia and North Carolina, we’re just a blip on the screen,” Gregory said.

“Of course, we have just as much sun in South Carolina.”

Tax break for some homeowners, too?

The recent growth in S.C. solar investments comes on the heels of a 2014 law that allowed homeowners with rooftop solar panels to sell energy back to their power companies.

Gregory sponsored that bill after getting tired of reading about new solar investments in North Carolina, which borders Lancaster County, which he represents.

Gregory’s bill this year, modeled after a N.C. tax exemption for solar, and companion legislation in the S.C. House would guarantee solar companies an 80 percent tax break on the value of their solar panels and other equipment used to operate a solar farm.

The farms attach to the power grid and sell their electricity to power companies, which are required by federal law to buy electricity from qualifying facilities.

The legislation also would exempt residential rooftop solar panels from increasing a homeowner’s property tax bill.

The Association of Counties approves of that tax break for homeowners, Rhodes said, adding counties do not tax homeowners now on the value of their rooftop solar arrays.

91 solar farms on hold

Gregory’s proposal already has passed the Senate, 38-4, and he is hopeful it will become law this year.

More than 50 solar companies have identified 91 potential solar farm projects in South Carolina, according to the S.C. Solar Business Alliance.

The projects could reach construction within a couple of years if the property tax cut passes, said Bret Sowers, the Alliance’s chairman and vice president of Southern Current, a solar company with projects in the state.

Now, however, the projects are on hold while companies wait to see what happens with Gregory’s bill.

And that is causing some opposition to Gregory’s proposal.

One of the projects that has been put on hold is in Newberry County.

State Sen. Ronnie Cromer, a Newberry Republican, said his county’s leaders asked him to oppose Gregory’s bill because it hindered their negotiations with a solar company.

“The bill really destroyed ... their ability to negotiate with the solar company,” Cromer said.

Solar companies say a statewide tax break is needed to speed up their tax-break negotiations with counties.

Unlike big manufacturing companies that set up shop in one county – negotiating one tax break – solar companies say they often identify multiple sites for solar farms. That can require tax agreements with several counties, a process the solar companies say is too time-consuming to be practical.

Easy money for government?

Even with tax breaks, state and local governments stand to gain new tax revenue and local spending, supporters say.

Solar farms do not require new roads or other infrastructure to be built for them, said Sowers of the S.C. Solar Alliance. And they generate tax revenue and income for landowners.

For example, the 91 projects on hold would generate about $217 million in new property taxes from the solar panels and other equipment used in solar farms, Sowers said.

The land leased to solar companies by farmers also would increase in value, generating an additional $12.6 million in property taxes, up from the roughly $21,000 that they now pay as agriculture properties, Sowers said.

The solar farms also could provide economic development in counties that struggle to attract new industry, Sen. Gregory said, noting solar companies look for rural, inexpensive land to lease for their farms.

‘More than ... cows’

Saluda’s Charles Long said he did what anyone would do when he received a flier in the mail about solar farm opportunities.

“I threw it in the trash.”

But when he received a second flier, Long took a closer look and decided to call the company.

Now, about 45 acres of his Saluda property are being prepared for a solar farm. The company renting the land is responsible for installing and maintaining the arrays. Once complete, a fence will go up to secure the farm, and Long won’t have to do any maintenance.

Though deals vary from project to project, landowners earn on average about $750 a year per acre in rental income, Sowers said.

Long said he sees the solar farm as a good deal for him and his family.

“I’m 60 years old and trying to slow down a bit,” he said, adding of the rental income, “It’s a lot more than you get off cows.”

This story was originally published February 25, 2017 at 5:04 PM with the headline "SC solar farms on hold, awaiting tax break."