Can North Carolina utilities unlock the state's solar potential?
Big IOUs have led impressive solar growth – but what about residential rooftops?
North Carolina has 700 megawatts of installed solar but its population of 9.85 million has accounted for only some 1,700 rooftop systems. That’s a solar system for every 5,794 residents.
California’s population of 38 million has accounted for over 180,000 systems, one for every 211 residents.
But sun isn’t necessarily the key. Massachusetts’ 6.7 million population has installed over 6,800 systems, one for about every 985 residents, much better than North Carolina despite its New England weather. And New Jersey’s 8.9 million people account for over 18,000 systems, one for every 494 residents, despite significantly less sun.
North Carolina’s solar grew 127% between 2010 and 2013, according to Star Power; The Growing Role of Solar Energy in North Carolina, a report from Environment North Carolina. Strong policies and major building of central station solar by Duke Energy, the state’s dominant electricity provider made the state 10th in the U.S. for Installed solar capacity at the end of last year.
Because of the way state policy is shifting, only an opening up of the residential rooftop market will prevent a squelching the growth of solar power that the report forecasted could provide 20% of the state’s electricity by 2030.
While Massachusetts is among the states with the least solar potential and New Jersey is only a step up, according to the report, North Carolina is in the same solar potential category as California.
North Carolina’s solar potential and how to get it
By achieving its solar potential, North Carolina could get more than two-thirds of its Clean Power Plan-imposed 2030 emission reductions. The policies needed to achieve that potential, according the report, include:
- Maintaining strong net metering and interconnection standards,
- Promoting community solar, virtual net metering, and government owned-solar
- Allowing third party ownership (TPO) of solar through leasing programs that offer solar without upfront costs or maintenance responsibilities
- Making solar part of its Clean Power Plan compliance program.
The generous state tax incentive that supplements the federal Investment Tax Credit (ITC) in undercutting the enormous upfront cost of a rooftop solar system will expire at the end of next year. Duke, state legislators, and the North Carolina Utility Commission (NCUC) are not expected to support efforts to extend it, according to Environment North Carolina Clean Energy Associate Maya Gold.
Contracts have been signed and plans have been laid by Duke to meet its 12.5% by 2021 renewables mandate. The state’s cooperative utilities are likewise on track to meet their 10% by 2018 renewables mandate. Further requirements are expected to be met through efficiency measures, not new generation.
“Duke will not allow solar leasing or community-owned solar,” NC WARN Energy Policy Specialist Nancy LaPlaca said. “The main thing that will keep North Carolina’s solar market growing is PURPA.”
Under the 1978 Public Utility Regulatory Policies Act (PURPA), a utility has to provide interconnection and a power purchase agreement at a previously established avoided cost tariff to any developer who brings a completed project to its system.
This does not open up the rooftop market. Neither does Duke’s recent $500 million, 8-project, 278 megawatt commitment to North Carolina utility-scale solar.
But North Carolina utility customers are showing signs of a new interest in the type of customer-owned distributed generation being built by homeowners from Hawaii to Vermont at record rates.
Electric Membership Corporations
Piedmont and Blue Ridge Electric Membership Corporations (EMCs) are examples of “what a small utility could be doing,” said NC WARN Legal Counsel John Runkle.
North Carolina's 26 electric cooperatives serve more than a quarter of the state’s population. Their 2012 assets were $5.8 billion and their revenues were $3.0 billion, with a projected 1.2% average growth through 2022. Some 99% of EMC customers are residences and small businesses.
Both Piedmont and Blue Ridge service territories touch on North Carolina’s great university communities and its world famous Durham-Chapel Hill-Raleigh research triangle.
Blue Ridge began developing streamlined interconnection procedures and rates for renewables systems of less than 25 kilowatts in 2012 to support member interest, according to Public Relations Director Renee Whitener.
Interconnection can be established for sell-all or sell-excess generation plans. There are rate options for net metering and net billing plans. “41 members are on the net metering rate and we have another 21 members on other renewable energy rates,” according to Whitener.
More recently, Blue Ridge has established a FlexPay program that gives members more awareness of and control over their energy use. It is also preparing a tool for members "to manage and reduce their usage utilizing smart phones and other smart devices,” Whitener added. The electric utility business model is changing and we are adapting to become our customers' "trusted energy adviser.”
Piedmont EMC serves some 31,000 accounts, according to Communications Manager Susan Cashion. “Around 100 have solar," she said. "We also offer rebates for solar water heating systems because we found they have a shorter payback period than solar electric systems.”
Piedmont tries “to look at our business through the glasses of our members,” Cashion said, “and make sure our choices are fair to everybody.”
Aside from rebates, Piedmont offers $10,000 loans at 5% for up to 7 years that are granted after a free home energy audit and are repaid through an on-bill repayment program. Members use them for solar, solar water heating, and energy efficiency upgrades, especially for heating and cooling systems, Cashion said.
Piedmont EMC’s advanced meters allowed it to recently add a PrePay program that, like Blue Ridge’s FlexPay program, gives members more awareness and control, Cashion said.
Piedmont’s goal is “a balanced portfolio, solar and nuclear, too,” Cashion said. The solar systems among its customers range from 2 kilowatts to 300 kilowatts. “And we have bigger projects under discussion. We are also thinking about storage and about community solar.”
The link between EMCs and IOUs
The North Carolina Electric Membership Corporation (NCEMC) is something of a link between IOUs and the EMCs, according to VP Lee Ragsdale. As the EMCs’ only generation and transmission service, it contracts for power from Duke, Southern Company, AEP, Dominion Power, and other utilities, or invests in its own generation. The electricity serves North Carolina’s other 25 EMCs.
Its portfolio of roughly 3,000 megawatts includes nuclear and gas and about 8 megawatts of solar. But "we have had 200 megawatts in the queue for some time now and they have applied for a PPA under the PURPA law,” Ragsdale said. “With the state tax credit expiring, a substantial portion will likely want to be built before December 31, 2015.”
NCEMC is also committed to add 100 megawatts of Duke’s new 750 megawatt combined cycle unit in South Carolina to its existing 700 megawatts of gas. Integration of renewables into a balanced portfolio is NCEMC’s goal, Ragsdale explained.
He remains concerned about “where any new generation is going to be located, how it is going to operate within the system, and what the impact is going to be on the infrastructure” but is also confident “we have the tools or they will be developed."
NCEMC is working with the other EMCs to enable demand-side solutions. “Everything in the portfolio has value. When you bring efficiency to your portfolio, how are you valuing that?” Something like a capacity value can help members understand where they can find remuneration for reducing their load during periods of peak demand.
Interest by EMC customers across the state is a harbinger of North Carolinians budding interest in more control over their energy. Everywhere else, that has turned into a demand for rooftop solar. Nothing has facilitated meeting that demand in the U.S. like third party ownership, or solar leasing.
“People want TPO,” Laplaca said, echoing several others interviewed. All agreed the signs are there in EMC policies. They also agreed TPO will likely only come after a protracted fight with Duke, with state legislators to enact it, and the NCUC to implement it.
Duke Energy, in its own way, also seems to be preparing for the future by raising questions about the cost-effectiveness of the state tax credit and the retail net metering rate. They are questions that even the Edison Electric Institute has acknowledged only becomes of concern at high penetrations of distributed generation.