Updated: Nov 14, 2020
In mid-November, I will be speaking on a panel at the Infocast Southeast Renewable Energy Conference about the renewables procurement opportunity in North Carolina and whether reform would increase renewable deployment. So, the question that I have been doing a lot of thinking about is: what areas in North Carolina’s energy construct should be changed to provide consumers enough options to meet renewable energy goals? My clients include solar and storage developers as well as local governments challenged as to how to meet carbon neutrality goals.
By the numbers, the vision of 100 percent clean energy across the United States grew exponentially in one year’s time. In 2019, 51 cities and towns, four states, Puerto Rico, and Washington D.C. have committed to 100 percent clean, renewable energy. Within North Carolina, 26 cities have committed to 100 percent clean energy targets and more are expected to be added to that list as the election ushers in new city council members and county commissioners who decide that they want their community to be powered by renewables.
Passing a renewable resolution is one thing; the next challenge is determining what mix of clean energy policies will ensure that communities meet their resolutions. There are many clean energy policies that are available, but unfortunately, North Carolina does not legally allow many of them. This article explains what those are and why North Carolina must move past the notion that they are “just not allowed.”
The Competitive Energy Solutions for North Carolina or HB 589 was the product of nine months of negotiations among interested parties and the law was signed by Governor Cooper on July 27, 2017. North Carolina’s energy landscape has been governed by this legislation but many provisions will be coming to an end (the Competitive Procurement for Renewable Energy) and many provisions need revisiting in the near future because they do not meet customer needs. What needs changing and is it a regulatory “tweak”, a legislative fix, or an entire business model reform?
Procuring Renewable Energy
Communities with renewable energy resolutions want to pursue renewable energy procurement. There are three ways local communities may do this: (1) own the renewable energy asset and use the energy; (2) get a purchase power agreement that is linked to a physical asset; or (3) purchase renewable energy credits (RECS) on the market.
North Carolina does not allow third party sales of energy, so the first option is not available. While the Green Source Advantage (GSA) program from Duke Energy is available for large energy users, most small to medium sized communities will not benefit from this program because they do not have enough peak load; and even the larger cities have inherent difficulty securing the terms of the GSA program. For example, the City of Charlotte received a Bloomberg American Cities Climate Challenge and funding for new sustainability staff. These resources were instrumental in securing their GSA project.
Local economic development benefits are accrued when city or county projects are planned and implemented, but the lack of third-party sales means development of local renewable energy product for a local government’s use is legal only when done within one of Duke Energy’s programs. North Carolina must legislatively change the statute that only allows customers to purchase electricity from public utilities. Solutions include allowing third party sales and/or an improved Green Source Advantage program from Duke Energy.
North Carolina residents may not have access to solar if they rent, live in a multi-dwelling building such as an apartment, or have a roof that cannot support a solar system. Community solar provides homeowners, renters, and businesses equal access to the economic and environmental benefits of solar energy generation regardless of their ownership status.
A local government community solar program allows subscribers to receive credit on their electricity bills for the power produced from their portion of a solar array, offsetting their electricity costs. Community solar also expands access to low-to-moderate income customers most impacted by a lack of access, all while building a distributed electric grid.
HB589 required Duke to offer 40 MW of community solar in North Carolina. Participants are compensated at Duke’s avoided cost rate for energy generated by their portion of the community solar facility. However, as of this writing, Duke has not yet constructed a community solar facility, making this option unavailable communities. Community solar is needed for North Carolina communities and we need to ensure it is available as one option for meeting renewable energy resolutions. It is not surprising that community solar has proliferated in North Carolina’s electric cooperatives where energy is under an entirely different business model.
Community Choice Aggregations
Community choice aggregations (CCAs) are allowed in six states, where the local government can make decisions on behalf of an aggregated group of residential and small commercial customers with regard to the sources of the electricity supply; many of the CCAs have chosen renewables for their supply.
Why does the energy provider matter? Simply put, for the majority of residents, North Carolina has a monopoly-controlled, highly regulated electricity market where Duke Energy and Dominion Energy make most decisions about where power comes from. The same applies to the rural cooperatives and the municipal public power communities – there is little to no ability to choose where one’s power comes from. And, as more and more communities pass renewable energy resolutions, deciding who provides power becomes increasingly important; and that choice is something consumers want.
All of these options have traction in other states. North Carolina would be wise to consider addressing these in 2021 when the N.C. General Assembly reconvenes as well as study the options available for energy market reform as the State of South Carolina has recently done.