Agreement reached between NC Solar Companies and Duke Energy
NC solar companies and Duke negotiate net metering policy: A group of North Carolina rooftop solar installers has reached an agreement with Duke Energy on the future of net metering in the state. Several weeks ago, seventeen NC rooftop solar companies, including Sundance Power Systems, signed a letter to Governor Roy Cooper stating that the proposed changes by Duke Energy would reduce the value of a solar customer’s investment by 25-35%. The presidents of three of those companies delved deep into negotiations with Duke in an attempt to create a less onerous set of changes than those proposed. Choosing this collaborative approach versus litigation has created a transition period through a new ‘Bridge Rate’. This will allow the original changes to take place but in a phased manner, allowing a smoother transition for future rooftop solar customers. Stew Miller of YES Solar, Dave Hollister of Sundance Power Systems and Bob Kingery of Southern Energy Management (SEM) are the three solar company owners who lead the way on these crucial negotiations. “In the end, we did the best we could to secure the best deal possible for our industry, one that would give us a runway that was sellable to our customers, and buy some time for some systemic changes to occur that could create a better system moving forward.” said Hollister of Sundance.
Many states are fighting over net metering, mainly leading to negative changes in policy. NC solar companies and Duke negotiate net metering policy that will create a strong path forward for rooftop solar adoption. It is encouraging to see the NC rooftop solar industry and Duke Energy work together on a negotiated solution as opposed to a litigious, expensive and time-consuming battle that would have served no one well. Climate change necessitates changes in energy policy and solar power is a key part of this fight for a better future. While much work remains and the effectiveness of these policy changes is yet to be tested, this is a positive step forward.
Background on This Important Issue
Duke Energy filed changes to net metering, dubbed Solar Choice, months ago. Various environmental and solar groups supported the proposed changes but solar power companies in North Carolina were left out of the discussion. But what are these changes all about? Essentially, Duke is innovating their business model with regard to Distributed Generation (DG). The main goal is to provide incentives that will capture environmental and social benefits of solar and deliver them back to customers in the form of a rebate. This rebate would allow Duke to receive ‘cost recovery’ on these monies as well as lost revenues on the power that is generated by these systems. This would have the effect of getting Duke out of the way of any expansion by NC solar installers with NO caps on DG solar which could serve the rooftop solar industry well in the long term.
Original Duke Net Metering Proposal Details
- The original filing would be very complicated and it would be difficult to calculate customer savings.
- According to NC rooftop solar installers’ calculations, without any incentive program, all customers would have had a value of solar reduced by 25%-35%
- The grandfathered rate did not have any energy rate escalator and extended paybacks for all legacy customers by 7-8 years. This would have been devastating financially to existing customers. This was a ‘hidden pitfall’ that the rooftop solar installers were not aware of before the negotiations.
- Customers who currently heat with gas were negatively impacted. With no incentive for gas customers, they would have received the maximum value degradation.
- None of the benefits of DG solar were included in the rate design.
- Future changes did not have clear financial values attached to them (i.e. the minimum of .60/watt agreed to in the new settlement was missing from the first settlement.)
NC solar companies and Duke negotiate net metering policy
- All ROI improved by years. This is assuming the Smart Saver incentive program is not approved, believed to be the most likely outcome as was the case in South Carolina.
- If the Smart Saver incentive program fails, the bridge rate makes it much simpler to calculate the ROI for prospective customers.
- Gas customers will not be harmed as much as the original settlement.
- Bridge rate for existing customers created. Existing customers will switch to bridge rate in 2027 and can remain on the bridge rate for 15 years minus the time spent on current net metering.
- Commits Duke to getting incentive programs for all customers in place.
- Buys the industry and society time of up to 5 years to find a true value of net metering and better rate schedules that include benefits of DG solar.
- Commits both Duke and Industry to work through the legislature to classify self-consumed renewable energy as energy efficiency. This will change the entire equation for cost shifting and bring even more value to distributed solar.
- Retains opportunity to promote better rate designs in the future as the value of DG changes and social pressures mount to shift to renewable energy on a wide scale.
- Consumer protections are in the works to ensure long term value of solar market in NC. (i.e., inflated savings projections & opaque pricing to be monitored.)
- Establishes a relationship directly with Duke decision makers and a shared understanding of installers’ business needs, and allows the rooftop solar industry to negotiate directly in all future incentives and tariffs.
- Got the ‘value of solar’ added to the NC Carbon Plan which will be a long-term driver for the value of solar both through the incentives as well as through the avoided cost and energy rates.
The proposed agreement provides a significant growth opportunity for the industry under the available yearly capacity of the bridge rate, enabling the solar industry to transition to the more sustainable Solar Choice tariff. The agreement also aligns on an updated valuation framework and waves the bridge rate minimum bill (but not the basic facilities charge) for low-income customers.
“Duke Energy knows that customer-sited solar is an important part of the future growth of solar in North Carolina,” said Lon Huber, Duke Energy’s senior vice president of pricing and customer solutions. “We believe this phased-in compromise will help the installer industry navigate market changes and adapt to the long-term rate design of Solar Choice.”
With these concessions, the NC rooftop solar companies can now fully support the changes to net metering before the N.C. Utilities Commission and they encourage their customers and allies to do the same.
