Photo Credit: NC WARN
Over the years, driven by the requirements of its renewable energy portfolio standard and the Public Utility Regulatory Policies Act, North Carolina has risen to become the country's second-largest solar market.
The state now has more than 3,500 megawatts of solar installed and more than 7,000 solar jobs. The Solar Energy Industries Association projects the state will see 3,818 megawatts of growth in the next five years. According to GTM Research, the state already has contracts in place for 2.4 gigawatts.
But according to the Energy Information Administration, the state still gets well below 1 percent of its power from renewables. Now that the market has surpassed its nascency, regulators and renewable energy advocates are actively hashing out how the state can bring even more renewables into the energy mix.
There have already been growing pains. The outcome of controversies surrounding a solar power-purchase agreement appeal, a new law that restructures solar bidding, and a rate increase currently being haggled by Duke Energy will all shape the state’s solar future.
“There’s a lot of promise,” said Jim Warren, the executive director at environmental advocacy group NC WARN. “It’s just going to take some time.”
Faith in solar
Last week NC WARN filed an appeal with the state Supreme Court on an issue that's been wending its way through the North Carolina courts since 2015. NC WARN paid for the installation of a 5.25-kilowatt solar project on the roof of Faith Community Church in Greensboro. To pay back the funds, the two nonprofits entered into a 3-year PPA where the electric payments go toward the balance for installation and maintenance.
The legality of the case hinges on whether NC WARN is selling electricity to the public, as Duke has an exclusive monopoly right to sell electricity in Greensboro. In its appeal the environmental group argues that the setup is legal, because it functions as a lease agreement and that the power is going to a private party, not the public. Warren said the lawsuit is a typical Duke ploy to limit solar. “There’s just a lot of smoke and mirrors in North Carolina,” he said.
The Court of Appeals ruled in favor of Duke in October and NC WARN was hit with a $60,000 fine. But the outcome of the appeal, if its successful, could change the precedent for how the state addresses third-party installation. A law signed in July, House Bill 589, limits third-party solar sales but allows third-party leasing.
Duke and regulators have 30 days to respond to the appeal. Warren said oral arguments will likely start this spring. But Duke said the contents of HB 589 may change the circumstances of the suit altogether. “We think its made this case a little bit obsolete,” said Duke spokesperson Randy Wheeless.
A new law on the books
NC WARN disagrees. The organization sees the portion of the law that bans third-party sales as a direct response to its case. “We think that that portion of it is unconstitutional,” said Warren.
The July law comes as a compromise between Duke Energy, which has agonized over the strain created on transmission and distribution from small solar projects, and the state’s solar developers. Now all but the smallest (under 1 megawatt) solar projects will go through a competitive-bidding process where Duke will work with an independent administrator to select projects. The bidding system will bring on up to 2.66 gigawatts over 45 months -- a big increase even in an already blossoming market.
“It's keeping a lot of the developers happy, and it’s going to stimulate a tremendous amount of growth in North Carolina, but it’s still going to give [Duke] a lot of control,” said Colin Smith, a solar analyst with GTM Research.
A Green Source Rider Program allows corporations, the military, and the University of North Carolina to cumulatively procure up to 600 megawatts. The legislation also sets out third-party leasing guidelines, which will allow customers to install panels without upfront costs. But the law does not allow the type of third-party sale undertaken by NC WARN and Faith Community Church.
Though HB 589 made it through the legislature and past Gov. Roy Cooper’s desk, many of the intricacies of the law still need to undergo rulemaking at the utilities commission. Warren said he’s concerned about the uncertainty on the final rules, and he thinks after an initial push the bill could mean less solar in the long run. The maximum amount of leased generation is just 1 percent of Duke’s peak load, about 250 megawatts.
“It was released with a PR strategy to make it look like this was just the greatest thing since peanut butter,” said Warren. “The clear design, in our eyes, is to put a limit on solar.”
But Lauren Bowen at the Southern Environmental Law Center said the bill at least opens the door to more rooftop generation, whereas past development has largely focused on utility-scale.
“If the different parts of this legislation that are aimed at rooftop solar are implemented well, and if the programs Duke Energy proposes are designed to benefit customers, than we do have an opportunity with this bill to see more of that distributed solar and rooftop solar developed,” Bowen said.
Wind was definitely the loser. HB 589 placed an 18-month moratorium on permit issuance for wind power, which will ostensibly allow the military time to study the impacts of wind turbines on its operations.
Rising rates
If the solar push-and-pull wasn’t enough drama for North Carolina’s renewable markets, Duke is also in the midst of negotiating a rate increase.
Duke initially proposed a 16.7 percent hike for Charlotte-area households, with a 13.6 average increase across all groups. Part of that money is intended for cleaner power generation and investments in solar, according to Wheeless. Over $500 million will go to replace old coal-fired plants with natural gas. But over half the rate hike would fund coal ash cleanups. In 2016, Duke was ordered to close all of its coal ash storage sites in the state by 2024.
On Monday, after discussions with the utilities commission, Duke said it would ask for a smaller hike of 13 percent.
Discussions are ongoing about whether ratepayers will shoulder all the costs for coal ash cleanup. But Wheeless said there’s no question that Duke will continue investing in renewables. A third of the new generation Duke is building or acquiring in the future will be renewable generation, and Wheeless said that will mostly be solar.
“North Carolina has shown it's a national leader in solar, and it will continue to be so, especially with HB 589,” he said.