Originally posted here on June 6, 2017

House energy committee leaders have hammered out compromise legislation establishing competitive bids for utility-scale solar projects and requiring Duke Energy to purchase significant amounts of solar power annually.

The bill has won the support of the state’s utilities and most of the solar industry. Duke Energy gets changes it has sought to restrain uncontrolled growth in solar. It includes provisions sought by the solar industry designed to allow the state to remain a leader in solar construction.

It expands the role of the N.C. Utilities Commission and mandates an impartial third-party to handle the bidding process. And it even includes rebates and other features to encourage the state’s long-lagging residential and rooftop solar development.

And it will make it possible to move energy reform legislation in the current legislative session.

Hard negotiations

Even two weeks ago, it seemed uncertain that Duke, the industry and other interested parties would be able to reach a consensus. But the legislature wanted a bill that would have substantial support from all sides.

To get that, leaders on the House Committee on Energy and Public Utilities finally had to get directly involved.

Chris Carmody, of the N.C. Clean Energy Business Association, says Reps. John Szoka (R-Cumberland) and Chris Arp (R-Union) took an active role in the negotiations starting in mid-May. Their involvement, he says, “pushed the negotiations over the finish line.”

Szoka says Duke, the solar industry and other stakeholders had agreed on a large number of issues. “But the stakeholder process had gotten to the point where a few areas of disagreement were preventing anything from moving forward,” he says.

To say they became active in the negotiations “is a polite way of putting it,” Szoka says. But he and Arp were determined to come up with a bill that the General Assembly could adopt with the support of most stakeholders in the process.

Stakeholder weigh in

Szoka says that some solar companies may not be entirely satisfied with bill, but it enjoys broad support from the utilities, the industry, energy cooperatives and renewable energy advocates.

The bill came together Friday, Szoka says, and was worked on by legislative drafters through the weekend before being submitted Monday afternoon as House Bill 589.

Duke, the N.C. Sustainable Energy Association, some major solar developers, Carmody’s group and environmental organizations have weighed in on the side of the legislation that Szoka and Arp will formally present at an energy committee meeting Tuesday morning.

Support is not unanimous, however. In addition to some developers still holding concerns, the conservative group Americans for Progress remains skeptical.

“We hope this legislation will protect the North Carolina ratepayer, even though ratepayers were not represented in the ‘diverse’ group of key stakeholders,” the group says in a prepared statement. “Once we’ve had a chance to review the bill we will share our thoughts with legislators and our activists, but lawmakers’ ramming state-altering energy bills through the legislature within 72 hours is no cause for optimism.”

Regulatory change

The bill gives Duke much of what it has proposed to the utilities commission. The current state regulations that enforce the federal Public Utilities Regulatory Policy Act that Duke considers to generous to solar developers will be scaled back.

The size of projects that qualify for standard power purchase contracts will be dramatically reduced and the term for those contracts will be shortened. A project will have to be 1 megawatt or smaller to qualify for the standard contract, which will last just 10 years. If a utility already has 100 megawatts of solar on its grid, as both Duke utilities do, that maximum drops to 100 kilowatts to qualify.

Under current regulations, projects up to 5 megawatts qualify for standard contracts that last for 15 years.

The bill also reduces the length of PURPA contracts that don’t qualify for standard contracts wold have a maximum term of five years. That does not apply to contracts under competitive bids, which could have longer terms.

The standard contracts in the current size had been largely responsible for North Carolina’s rising to second place in nationwide solar rankings, behind only California for the amount of solar on its grid. But Duke said the growth was uncontrolled, leading to construction of solar projects in areas where additional power was not needed and, it said, causing reliability problems at some rural substations.

The bill adopts Duke’s proposal to replace the PURPA-driven development with utility-scale development driven by competitive bids for new-project construction based on requests for proposals issued by utilities. And Duke itself can bid to build projects.

Construction mandates

To reassure independent solar developers that Duke will not dominate the industry or seek to drive out competitors, the bidding process will be administered by an independent party. And Duke’s two utilities in North Carolina are required to seek construction of 2,660 megawatts of solar over the next 42 months — a pace that would mean an average of close to 700 megawatts of new construction a year.

And small-scale solar installers and homeowners could take advantage of provisions in the bill that allow for lease agreements for residential solar projects which are not allowed under current law.

Duke’s N.C. President David Fountain calls the bill a “victory for customers and for the state of North Carolina.”

“First, it makes solar energy more affordable and efficient for all customers—while providing a balanced, reliable approach to connecting solar energy onto the grid,” he says in a prepared statement. “Second, it helps maintain North Carolina’s competitive position as a leader in energy policy and economic growth.”

Many meetings

The N.C. Sustainable Energy Association, which like Carmody’s group, represents a number of solar developers and renewable energy companies, also praised the bill.

“House Bill 589 is the result of over 30 collaborative stakeholder meetings attended by a diverse group of renewable energy, consumer advocacy organizations, and utilities, in the past year,” says spokeswoman Allison Eckley.

She says her organization participated to “help point these critical discussions in a mutually beneficial direction – one that protects and grows our State’s developing clean energy success story, as well as our legacy of economic leadership in the region.”

The energy committee is expected to act on the bill Tuesday.