AP Photo/Winston-Salem Journal, Walt Unks

Crews install a solar farm in Davidson County, North Carolina in 2011. The project was a joint effort between Duke Energy and SunEdison.

North Carolina bill promises short-term jolt to solar, but critics worry about long term

A bill breezing through the North Carolina legislature promises to end a high-profile standoff between the solar industry and Duke Energy, and triple the state’s capacity over the next four years.

But critics say the measure, sponsored by Reps. John Szoka (R-Cumberland) and Dean Arp (R- Union), gives Duke too much control over solar, and too little certainty that renewable energy will flourish after an initial jolt of almost 7 GW – enough to power about 750,000 homes.

The result of months of negotiations facilitated by GOP House Speaker Tim Moore, the wide-ranging House Bill 589 cleared the House easily last week – buoyed by the endorsements of Gov. Roy Cooper, a Democrat, the state’s Chamber of Commerce, solar developers and others.

Skeptics of the bill, which the Senate is expected to take up this week, and its proponents agree the long-term course of renewable energy in the state will depend on another policy overhaul in the near future.

“We can’t rest on our laurels,” if House Bill 589 passes, said Peter Ledford, counsel with the North Carolina Sustainable Energy Association, one of the legislation’s chief backers. “We have to continue the conversation about what comes next.”

‘A win for solar developers’

The centerpiece of the bill is resolution of a dispute over the Public Utilities Regulatory Policy Act (PURPA), the once-obscure 1978 federal law designed to promote small power producers in regulated utility markets.

North Carolina currently boasts just over 3,000 MW of solar energy, the second most in the country. According to Duke’s filings with regulators, it connected at least 1,300 of these megawatts to the grid because of the state’s PURPA rules.

Duke calls this PURPA-induced solar development “haphazard,” straining reliability of service. It objects to the “gold rush” by solar companies it claims are overcharging ratepayers.

The utility has sought changes to PURPA’s implementation in the state for months. At the same time, the company has slowed new solar projects’ connections to the electric grid, forcing solar companies to the negotiating table.

House Bill 589 ends the impasse by moving nearly all but the smallest renewable energy projects from under PURPA’s purview, and into an independently-administered bidding process that gives Duke more say over where solar is built and at what price.

In exchange, the bill assures solar companies a robust market, up to 2,660 MW through the middle of 2021. In addition, the utility must unbridle 3,500 MW of solar projects already planned or approved under the state’s old PURPA standard.

The potential for changes to the federal PURPA law under a Trump administration and a GOP-led Congress helped push solar developers toward a new paradigm, said Chris Carmody of the North Carolina Clean Energy Business Alliance, a trade group pushing the bill.

“PURPA was a huge success,” Carmody said. “It developed a market, it created critical mass, it created expertise, and workforce, and investment. But now we’re at a transition point.”

Some advocates point out the solar industry was obliged to bargain with very little leverage.

“Duke Energy created uncertainty by slowing down the interconnection process and threatening to upend things that at the utilities commission,” said David Neal with the Southern Environmental Law Center, “and I think that has led to [some] acquiescence.”

Touting a recent report showing North Carolina led all states in new capacity in the first quarter of this year, Duke has denied intentionally trying to delay solar construction. Yet most of the 108 megawatts added came from just two projects. The largest, at 60 megawatts, is owned by the utility.

In any case, the sheer amount of solar House Bill 589 would bring online is undeniable.

“This gives Duke more control over where solar projects can be sited on the grid,” said Brian O’Hara of Chapel Hill-based Strata Solar, which builds large-scale projects, “but it does not give Duke more control on whether solar is coming onto the grid. In fact, the opposite is true.”

“PURPA is going to be much less of a market driver than it has been in the past,” O’Hara said. “But now we’re moving to a competitive bidding market to create even more market certainty and even more market volume. It’s a win for solar developers.”

Long-term vision?

Some critics worry the win could be short-lived. Under the bill, the North Carolina Utilities Commission will set future renewable energy procurement targets based on Duke’s 15-year plans, which have typically included meager projections for solar.

“This bill does not lay out a long-term vision for North Carolina’s energy future,” Neal said. “It’s setting up a process specifically for the next 45 months that is going to change how solar gets built in the state. It doesn’t dictate what happens next.”

Duke spokesman Randy Wheeless said the future was anyone’s guess, but he waxed optimistic about clean energy’s prospects for the next decade.

“As with any emerging technology, solar may be cheaper than we imagine in three and a half years,” he said. “Wind energy may be coming into its own. There may be new technology. We’ll continue to modify and adjust our [plans] to reflect those realities as we go forward.”

Both Neal, whose organization is neutral on the legislation, and Carmody, who supports it, say a more vigorous policy debate will be needed in the future.

“Just critiquing a plan from year to year isn’t a very expansive way for everyone to think about what energy should look like in the 21st century,” Carmody said.

“What we really need to focus on in the coming years,” said Neal, “is a visionary process for rethinking North Carolina’s electric grid that would be built around distributed resources and clean renewable energy.”

A workable solution

Such a process may not come any time soon, given the effort that led to House Bill 589, which proponents hope will clear the Senate without changes.

Joseph Kyzer, spokesman for the House speaker, said his boss used a “team of rivals” approach in crafting the bill– empowering committee chairs Arp, who’s sided with Duke in the PURPA dispute, and Szoka, who’s long advocated more competition in the renewable energy sector, to work with sparring factions to resolve differences.

It was no easy undertaking, says Szoka, who with Arp oversaw more than 30 negotiation sessions and worked to “force a conclusion” even after talks stalled in February.

“We had a meeting on the Saturday before Mother’s Day. It was painful, and no one wanted to be here,” Szoka said, appearing relieved but exhausted after the bill’s second committee hearing of the day.

“It’s not the perfect solution, but it’s a workable solution that most everybody agrees on,” Szoka said.

Asked about the possibility of changes to the bill in future sessions, the lawmaker said, “I think there’s a number of things we need to monitor as time goes on.” But, “I wouldn’t be for any tweaks or changes for a couple of years.”

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