Duke Energy operates in the Southeast and Midwest. But it has just purchased development rights to a large (130 MW) solar project in California. It will sell the electricity to Southern California Edison.
It has also pledged $500 million to expand its solar generating capacity in North Carolina. That’s no help for homeowners who want third-party financing for their own systems.
According to Duke’s web site,
More and more people across the U.S. are looking for greater renewable energy choices, and solar plays an increasingly important role in the way Duke Energy provides electricity to our customers.
Already, it’s helping homeowners, businesses and governmental organizations meet part of their energy needs. And as the cost of solar installations continues to decrease nationwide, it’s easier for customers to choose solar.
Just not in North Carolina and similar states.
NC Warn claims, “Duke Energy is trying to destroy our growing solar industry to protect its ‘build plants, raise rates’ business plan and monopoly control.” The article later asks, “Why does Duke Energy hate solar?”
Duke obviously doesn’t hate solar. Yet it just as obviously stands in the way of rooftop solar installations for North Carolina residents.
Distributed generation and net metering
Generation of electricity by someone other than the utility is known as distributed generation. A home-owner with a grid-tied solar system sells excess electricity back to the utility. The utility determines payment with net metering.
North Carolina is one of four states that ban third-party sales of solar energy. Duke Energy has fought to keep it that way. It actively opposed the Energy Freedom Act, sponsored by state Rep. John Szoka (a Republican, by the way) that would have legalized it.
Duke Energy is a regulated monopoly in North Carolina. It is responsible for both generation and distribution of electricity. Distributed generation threatens the viability of regulated monopolies.
After all, the utilities make their money by generating electricity and selling it. The more electricity generated by roof-top solar systems, the less the utilities can sell. But under net metering, they must pay home owners.
Utilities charge more for electricity at times of peak usage. That’s the time that all those solar panels operate at peak capacity. So roof-top solar not only takes revenue from utilities. It takes it at the time when they earn the most revenue.
Former Duke CEO Jim Rogers predicts that almost every power plant now operating will be replaced by mid century. He insists that utilities must embrace distributed generation.
Before his retirement, he wanted Duke to strengthen its promotion of rooftop solar. To do so would require changes in state law. It doesn’t allow direct competition between its renewables development arm and solar installers. Rogers wanted Duke to earn money from rooftop solar and not just concede the market to others.
Lynn Goode, his successor, has different ideas. She has asked regulators to lower payments for net metering from 11¢ per KWH to 7¢. She contends that owners of rooftop solar systems shift the burden of taking care of the grid to customers who don’t have them.
The Alliance for Solar Choice wrote an open letter to Rogers asking him to pressure Goode to change her stance. Rogers, however, blames state regulators for hindering Duke’s solar efforts.
Under the current regulator environment in North Carolina, Duke cannot co-exist with distributed generation. Other business models exist that make it easier.
The mixed up legal climate in North Carolina
North Carolina House Majority Leader Mike Hager, a former engineer at Duke, is a primary sponsor of House Bill 681, filed on April 13, 2015. Like Szoka, he is a Republican.
So far, his bill has not reached the House floor for a vote.
In 2007 North Carolina adopted renewable energy portfolio standards. They set targets for the proportion of renewable energy utilities must use.
Under current law, the target rises to 12.5% of utility sales by 2021. Hager’s bill would keep it at the current target of 6%. It also would also require more solar developers to negotiate contracts with utilities.
Duke Energy is officially neutral on HB 681. It has met the rising targets of the standard since it was passed in 2007 and should have no trouble meeting the higher standard. Rogers has made a reputation as a defender of green energy among utility executives.
Rogers was appalled at the provision to freeze the renewable energy standards. But he had unsuccessfully tried to get state utility regulators to approve the restrictions on solar developers. In a speech, he pointed out the number of jobs created by the renewable energy industry. He slammed the legislature for being focused on the past and not the future.
“This is the same Jim Rogers who ran Duke with coal ash plants and coal ash ponds and never made any attempt to protect them (from problems) such as the Dan River spill? That Jim Rogers?” said Rep. Charles Jeter, a Huntersville Republican.
“Jim Rogers criticizing the legislature for not doing enough for the environment is like Al Capone criticizing someone for stealing a pack of gum.”
Clearly North Carolina Republicans are divided over rooftop solar and distributed generation. Some of them follow the general utility talking points. I have already pointed out how this clearly un-conservative line of argument rests on begging the question.
Meanwhile, the same Duke web page cited earlier links to articles about its solar initiatives in three states. In South Carolina, Duke offers a rebate program. It helps residential and business customers afford their own solar systems.
So Duke Energy clearly doesn’t hate rooftop solar. It cooperates with rooftop solar where the legal framework either requires it or allows it to make money from it. Unfortunately for North Carolina residents that framework doesn’t exist, And with Rogers gone, Duke lacks the imagination to envision cooperation with distributed generation.
And state regulators and legislators completely lack the imagination, too. Why can’t they look for a viable alternative to the current straightjacket of a top-down regulated monopoly?
NC Warn, and too many other environmental lobbying groups, likewise lack imagination. They appear not to see the regulatory environment as the real enemy of rooftop solar. They content themselves with complaining that corporations make a profit. Bashing corporations becomes more important in their minds than effective advocacy for rooftop solar.
Alternative business models exist that will allow utilities to remain profitable. It’s past time to figure out how to put them into effect.