County budgets expected to reap massive revenue gains from solar farms- if projects are completed

Published: Mar. 23, 2023 at 6:15 PM EDT
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LEE COUNTY, S.C. (WIS) – All manner of crops, trees and flowers grow in Lee County, but county revenue predictions show one of the most lucrative resources isn’t coming from the soil.

It’s coming from the sun.

Midlands county officials provided WIS revenue projections showing large solar farm developments stand to significantly increase the county tax revenue the land generates without straining public services.

The money is a valuable resource amid inflation and wage competition.

However, the projects can hinge on agreements with utility companies which must weigh logistics and the cost to its customers.

Boosts to the budget

Lee County Administrator Alan Watkins reported to WIS there are eight solar farms which are either active or in production in Lee County. The projects cover more than 500 acres and are expected to produce 42 megawatts of power.

Watkins provided a revenue projection that estimates the projects will bring in $145,000 a year for the county budget, once fully in production.

If that same land were used for agriculture, he estimated the properties would only bring in $2,500 a year.

“Level of funding that can make a true difference in a community our size in our ability to meet the needs of our citizens and again, hopefully, avoid fees and tax increases,” he said.

Lee County’s FY23 budget was $14.6 million, meaning the solar fee income will add almost one percent to the county’s total revenue without adding cars to the road or students to the classroom.

It’s unclear how the county will use the specific solar funds, but Watkins said county leadership is looking to raise the salaries of its employees.

“Inflation is a word we’ve all become very familiar with in the last year to two years. Just like it hits individuals, it’s hitting county governments, and it’s hitting the state government. The price of doing business has gone up,” he said.

Watkins said he expects the production of the solar farms to be completed in the next year and a half, but that could only be the beginning.

He reported the county has reached fee agreements with two developers, NARENCO and Southern Current, for approximately 1,500-2,000 acres of solar fields if fully developed.

Watkins estimated those farms would bring in more than $350,000 to the county budget a year.

“If everything that’s out there came to fruition, we would add 120 megawatts. That would be a good day,” he said.

Lee County records show the NARENCO project crosses into Darlington County. The status of any fee agreement in that county is unclear.

Watkins said those projects will need power purchase agreements with Duke Energy. They’re not alone.

A similarly large solar project is potentially underway in Newberry County.

RELATED COVERAGE: Solar company announces plans for solar farm in Newberry County

In November, the international development company Ecoplexus announced an $89 million investment to build a solar farm outside Silverstreet.

If built, solar farm will span 396.9 acres and churn out 74.5 megawatts.

Newberry County Director of Economic Development Rick Farmer provided WIS a breakdown of revenues showing the property resulted in $4,951.98 of tax revenue in 2022.

If a deal with Duke Energy goes through, Farmer reported the property would generate $194,445 to $216,050 a year.

Newberry County’s FY22 Revenues were projected at $27.2 million.

“This is pretty much a no-brainer type thing. You take a piece of property that generates a little bit of revenue into a piece of property that generates a lot of revenue. But at the same time you don’t put any additional stresses on either your work force or public services,” he said.

He said the company expects it wouldn’t be built into 2024 or 2025 in the best-case scenario. However, an agreement with Duke Energy is still needed.

Right now all that sits on the targeted land is trees and vegetation. “[The project not happening] is always a risk. But that’s not just a risk with solar, that’s a risk with every project,” he said.

Attempts to arrange interviews with Ecoplexus, Southern Current and NARENCO were unsuccessful.

Southern Current sent a statement reading:

We look forward to continuing our support of the utility’s decarbonization goals by delivering reliable, clean energy and economic investments in Lee County and across South Carolina.

The Power Purchase Agreements

After acquiring the land and negotiating a fee agreement with county leadership, Watkins and Farmer said the future of a solar farm project can often hinge on the developer’s ability to find a customer for electricity.

Those power purchase agreements traditionally fall to the main utility in the area, which for Newberry and Lee Counties is Duke Energy Carolinas and Duke Energy Progress, respectively.

A Duke Energy spokesman declined an interview request but sent the following statement in response to what factors it weighs during negotiations.

Many factors. The length of the contract. The current wholesale rate for power (the avoided cost) which is determined at certain thresholds by either administratively determined prices set by our state commissions or otherwise resulting from [request for proposals]. Where the project is on the utility’s system. Are there grid upgrade costs that need to be covered by the developer? How much are they? Is there battery storage at the site?

He later elaborated on the pitfalls of the process stating:

From the developer side, financing and local zoning issues hamper most projects. In recent years, supply chain issues with solar panels have delayed many projects. From the utility standpoint, location and impact on the energy grid. Some areas can be constrained with how much new generation can be placed in them. Upgrade costs are also key. And having the right clarity in state policy and in orders from our state commissions is important so we have clarity that we are procuring solar in line with state requirements and expectations.

The company declined to comment on the Newberry and Lee County projects.

Dominion Energy General Manager of New Business and Customer Solutions Daniel Kassis said the cost of the energy can determine the feasibility of an agreement.

“We don’t pay more. We pay what the energy is worth or the energy and capacity is actually worth and that’s done purposefully because we want to make sure that in the end of the day what we pay is what consumers pay,” he said.

Kassis also said the project’s ability to safely, reliably and efficiently connect to the system is weighed.

“In some cases they’re not sited well on the system. So you could end up with excessive costs for interconnection. So those are costs that developers pay. They have right to deliver us the energy, but they don’t have the right for rate payers to pay the cost,” he said.

Despite the logistical hurdles, Both Duke Energy and Dominion Energy have publicly signaled they will be increasing their utilization of solar power in the coming years as part of a cleaner energy future.

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