By John Downey
Eight months after legislators finally adopted a long fought-over compromise to set out the future of solar and other renewables in North Carolina, it appears alternative energy partisans may get less than they bargained for.
Disputes between Duke Energy Corp. and the renewables industry over the meaning of the Competitive Energy Solutions for NC Act and how it should be interpreted have sprung up in at least three separate cases before the N.C. Utilities Commission.
Alternative energy advocates contend Duke has repeatedly failed to comply with the law and agreements made during negotiations and continues to block growth opportunities for independent renewable power producers. Duke says it is meeting all its obligations and that any limits placed on independent power producers are necessary to maintain the stability of the grid, prevent improper subsidy of alternative energy by customers or are mandated by the law’s requirements for an orderly process for planning and building new renewable energy projects.
The issues also surfaced — in polite but still stark terms — at the State Energy Conference in Raleigh last week.
The dispute in the forefront now is the Green Source Alternative program. That program, mandated by the act, is designed to allow large industrial and institutional customers to contract for significant amounts of renewable power (mostly solar). But many of those target customers have told regulators it is unworkable as currently proposed by Duke.
Festering in the background are head-on battles between Duke (NYSE:DUK) and solar developers over the fate of some 500 solar projects that were already in the utility’s queue for connection to the grid before the new law created a competitive-bidding process for new solar development in the Carolinas.
Even the generally well-received rooftop solar rebate program approved this month by regulators is subject of a dispute over Duke’s plan to hold off on implementing until as late as this September, when the law appears to mandate that it should have started Jan. 1.
Karen Kemerait represented solar interests during much of the nine months of negotiations that led in June to the introduction of the legislation. She participated in a panel discussion of the bill on Wednesday. She said the state is “in the middle of an energy revolution,” moving from the regulatory regime that put North Carolina in second place in solar nationally to the potentially large — but more restrictive — new market of solar auctions and institutional contracts. She started her portion of the panel with a slideshow titled “Age of Solar Development in North Carolina: Sunrise or Sunset?”
She proclaimed herself an optimist, but added “I think it’s sunrise with a lot of work left to do.”
She was more direct when discussing the Green Source Alternative. She stated flatly that the industry’s position is that the Duke program fails to meet the standards laid out in the bill. It does not allow large customers to choose their own renewable-energy provider or let them negotiate directly with providers and developers for their power needs, forcing them to work through Duke.
Casey Collins, energy manager for Duke University, noted that the design of the program added significant administrative costs to be paid to the utility for power purchased through the program. That made it unattractive to major institutional customers like the university. And he said the program could decrease the value of renewable energy credits in the state.
Kemerait noted that the program was proposed as a way to open new markets for renewable energy — as an incentive to developers to abandon the existing regime based on relatively generous state regulations on solar and other renewables for enforcement of the federal Public Utility Regulatory Policy Act, or PURPA. But the program as designed, she asserted, would be seldom used and, thus, no benefit to independent power producers. The industry “is advocating that regulators reject the program” if Duke does not make major changes, she said.
Ken Jennings, Duke’s renewable strategy and policy director, denied that the program was needlessly expensive and dismissed Kemerait’s contention that it did not comply with the law.
He also rejected Kemerait’s assertion that Duke was not complying with state law that requires the utility to connect projects built by independent producers to the grid so the power can be sold. He acknowledged that the wait times are long. But he argued that Duke has been required to deal with an enormous number of applications, and that state law essentially requires that Duke make its “best effort” to get them through the queue in a timely manner.
After the panel, he defended the wait times for some of the projects — which often exceed three years — by saying that weak projects tend to stay in the queue longer.
There are currently close to 6,300 megawatts worth of power in the connection queue, even though Duke connected 1,800 megawatts worth of solar capacity to the grid in 2016 and 2017.
Kemerait, after the panel, said that Duke has continued to put new obstacles in the way of projects applying for grid connections. And she says that although the law had generally set guidelines for grandfathering projects in the queue and allowing them eventually to be built, Duke has repeatedly found ways to frustrate developers’ hopes for getting projects on line.
One example she cited involves how Duke is attempting to push larger-scale utility projects in the queue into the bidding process this year. But most of them will not qualify in this first year’s round of bidding, because 70% of the projects in the queue are in the Duke Energy Progress’ territory, generally in eastern North Carolina. Duke has already announced that 90% of the 650 megawatts worth of new projects to be bid out this year will be in Duke Energy Carolinas’ western North Carolina territory.
That will leave most of the existing projects out of the running, she said.
Jennings said the new law specifically gives Duke the authority to decide where it will seek to build new projects offered in the bidding process. And Duke Carolinas, he said, has greater need for new solar capacity because the vast majority of solar projects built under the old PURPA rules are in Duke Progress’ territory.
The connection queue issue is still before the state utilities commission, although it has approved the bidding process. The regulators also have proceedings currently open on the Green Source program and the solar rebate program.