North Carolina: New Battlefield for Solar Energy

July 24, 2014

I’ve reported on clashes between clean energy activists and Utilities in Georgia and Arizona. Other battlefield states emerging as the solar/renewable wave moves across the country.  What we’ve seen so far is that the overwhelming popularity of renewable energy has overcome big money and big clout from utilities and dirty energy advocates like ALEC and Americans for Prosperity.
Look for more in the Southwest and Southeast, gradually moving northward as solar prices continue to drop.
At some point, one or more states will create a solution that will become the template.
Below, review Skip Pruss on the “Value of Solar” initiative that Minnesota has created.

Cleantechnica:

North Carolina has become one of the hottest states in America for solar power, ranking third in the nation for new photovoltaic installations in fourth quarter 2013 and first quarter 2014. But a regulatory fight pitting solar industry against big utilities is underway, and it could effectively end new utility-scale solar additions.

Every two years, the North Carolina Utilities Commission reviews how it calculates the “avoided costs” (the amount utilities would have to pay to generate or buy electricity elsewhere) of clean energy.

This time though, regulators are reviewing both avoided costs and the maximum size of renewable generation systems eligible for standard pricing – a regulatory process that could “have the effect of significantly reducing, if not eliminating” new solar installations in North Carolina.

The value of avoided costs has dictated standard prices North Carolina utilities pay to renewable energy projects through power purchase agreements (PPA) – a big deal for renewable energy projects in a monopoly electricity market where just a few utilities are guaranteed a majority of power customers and renewable developers must go through individual utilities to sell electricity on the state’s grid.

By establishing standard prices for long-term PPAs, developers can avoid long negotiationsthat may derail potential solar projects, and are given leverage with the much larger utilities. Long-term PPAs (North Carolina requires 15-year standard contracts) are contracts widely used in the power industry to lock in pricing so solar developers can know their payback terms and secure financing for new projects.

Without them, utilities could theoretically lower the price they pay for power, leaving developers owing money to lenders, and gaining monopoly control over solar development. State utilities advocate for cutting contracts to 10 years, while the solar industry is pushing for regulators to extend contracts to 20 years.

But in addition to reconsidering avoided costs, North Carolina regulators are also reviewing project size limits for “qualifying facilities.” Currently installations of up to five-megawatt (MW) capacity are covered – enough for a large, commercial-scale installation.

State utilities are pushing to lower that limit a shocking 98%, to just 100 kilowatts – roughly 10,000 square feet of solar panels and far too small for most commercial developments – while solar industry advocates are pushing for the size limit to be increased to 10MW. The Utility Commission’s Public Staff, representing consumers, doesn’t advocate changing the current 5MW size limit.

Why Idle A Green Economic Engine?

These two potential regulatory changes mean stakes are high for state regulators and the future of renewable energy in North Carolina. The solar industry has become an economic engine with 137 companies employing 3,100 workers statewide, generating $787 million in 2013 investments while solar PV system prices fell 8% in the past year.

Even in a fossil-fuel heavy energy market, solar has grown fast in North Carolina. The Tarheel State had 592MW installed solar capacity at the end of 2013, fourth-most in America. 335MW of that total was installed in 2013 – enough to power 31,809 homes. As a result, voters support clean energy development across the state.

High Stakes For North Carolina (And Maybe America)

But all that progress would be lost if the utilities get their way. “Changes proposed by the utilities would have the effect of significantly reducing, if not eliminating, the development of solar,” said Zoe Gamble Hanes of FLS Energy. “The industry is maturing in North Carolina and technological breakthroughs related to storage are imminent.”

Ironically the former CEO of Duke Energy, North Carolina’s largest utility, recently came out in support of more distributed energy and urged the energy industry to “run to the challenge and embrace the change.”

State regulators aren’t expected to issue a decision until this fall, but the battle lines have been drawn. On one side, the solar industry wants to continue growing green jobs and distributed clean electricity. On the other side, utilities want to squash solar power (says advocacy group NC WARN) in a move that could expand the battlefield in fossil fuel funded fights against renewables across America.

Energy and Policy:

In a majority of states in the U.S., there is no free market for electricity; individuals cannot choose from which company to buy their electricity or from what source their electricity comes. In many locales, Public Utilities Commissions regulate monopoly utility companies in a closed marketplace.

Renewable portfolio standards (RPS) and net metering policies are sparking massive investment and deployment of clean energy technologies. And these two key policies, driving more of the grid to clean energy, are now under assault at the state level from fossil fuel and utility interests.

Renewable portfolio standards set requirements for utilities to slowly increase the use of clean, renewable energy sources — which is exactly why fossil fuel interests like Koch Industries, Peabody Energy, and others want to eliminate them. RPS laws have driven billions of dollars of investment into cleantech projects and generated thousands of jobs. The fossil fuel-funded Heartland Institute sponsored model legislation at ALEC’s meeting in June 2012 to eliminate RPS laws. In the past year and a half, these rollback attempts have surfaced in at least 15 states around the country.

Net metering policies ensure that utilities pay consumers the full retail price for electricity generated by customers when they invest in distributed energy systems (like a rooftop solar system). Edison Electric Institute (EEI), the utility industry’s trade association, “worked with ALEC on the [model] resolution” calling for the weakening of solar net metering policies, which was approved during ALEC’s meeting in December 2013, and has now appeared in numerous states. EEI released a report in January 2013 entitled, “Disruptive Challenges,” detailing the threat that distributed energy (especially solar) poses to the traditional utility industry business model and began taking action on the issue in 2013, pushing to repeal solar policies to protect utilities’ financial interests.

Ultimately, clean energy’s downward cost trends pose a serious threat to the fossil fuel and utility industries’ business model. Until recently, the electricity grid relied on centralized, mostly fossil fuel power plants to meet electricity demand. The emergence of affordable, clean electricity presents a serious threat to an industry that’s operated largely in the same way since Thomas Edison turned on the first investor-owned power station in 1882.

19 Responses to “North Carolina: New Battlefield for Solar Energy”

  1. andrewfez Says:

    PV + Battery + Backup NatGas Generator = Off grid = ALEC becomes less relevant…


  2. Peter, while you continual pump the message that solar prices are falling and is rapidly taking over the market for energy generation (especially in Germany), I’d like to add a reality check.

    From a very pro-solar web site:

    http://www.pv-tech.org/news/germany_will_miss_renewable_energy_targets_says_pv_industry_association

    From an admittedly less pro-solar web site:

    http://dailycaller.com/2014/06/24/europes-green-energy-industry-faces-collapse-as-subsidies-are-cut/

    I’ll be glad to entertain anyone’s response to this, provided they actually click the links and read the articles first before firing off a “solar is winning and nuclear is evil” knee-jerk message.

    • ubrew12 Says:

      From your first link: “in the first five months of this year…[Germany] only installed 818MW of new PV generation capacity”. So this is what you call a ‘reality check’?

      Check. Next.


    • “I’ll be glad to entertain anyone’s response to this, provided they actually click the links and read the articles first before firing off a “solar is winning and nuclear is evil” knee-jerk message.”

      This is bait to drag the the conversation off topic. And a straw man. Why don’t you read Peters article, listen to the post, and comment on Skip Pruss.

    • greenman3610 Says:

      only reference to nuclear on this page is in your post, Cy.

  3. greenman3610 Says:

    We will look for the rapid disintegration of the German renewable experiment, then, right?
    These dire warnings are what we’ve heard for 20 years, as the renewables keep growing, and the countries that have pushed them hardest, Germany and Denmark, continue suffering along, I guess, with low unemployment and budget surpluses.


    • Yes. You could almost call it renewable crock of the week.


    • I guess you didn’t bother to read either article, did you? They both said that in the first five months of 2014, new installations of solar had fallen by 45% compared to 2013. And since the beginning of 2012, demand for new PV dropped by 60% despite a 25% decline in prices. This is according to BSW Solar, Germany’s solar industry association – not exactly a pro-nuclear, pro-coal organization.

      Do note that total solar installations in Germany continues to rise, but at a much slower pace.

      The reason for the fall in demand appears to be financial. I can’t tell you exactly what that entails as the articles didn’t go into details.

      If you think that this is a crock, then fire off an email to BSW Solar and tell them they don’t know what they’re talking about.


    • The reason appears to be financial? Is that your deep insight?
      http://www.bloomberg.com/news/2013-07-31/german-solar-subsidy-to-drop-to-third-of-japan-s-on-installs.html
      Germany has over capacity. It’s hard to find any of this behind the accounts of record solar generation. Germany has targets and decided it has met them. The solar group thinks it has adjusted too far downwards. What’s the point? One has to go to lengths to avoid the rest of the article which states,
      “The ‘bandwidth’ targets have been roundly condemned by industry groups including BSW Solar and renewable energy association BEE when they were proposed late last year. The targets extend to 2035 and allow for Germany to aim to be generating between 55% and 60% of its energy from renewable sources.” Germany is far different from other countries. It measures it success on more than monetary terms.
      Sliding right back to topic, can we talk South Carolina and solar or do we have to constantly be dragged off topic?
      Let’s talk about Skip Pruss and his comments on the value of solar. Like how it has a capacity credit and why Minnesota found the value of solar greater than the standard rate. Or why solar is a peaker plant, not just a fuel saver.


  4. Admittedly conservative? Shades of Breitbart. Daily Caller is filth. Sleaze.
    In an article titled “Women: Sen. Bob Menendez paid us for sex in the Dominican Republic”,[16] The Daily Caller reported that New Jersey senator Bob Menendez had allegedly paid two prostitutes to have sex with him during a stay at a Dominican Republic resort.
    The FBI investigated the allegations and found no evidence to substantiate them.[20][21] Subsequently, one of the women who accused Menendez stated that she had been paid to falsely implicate the senator, whom she had never met.[17][21]
    According to a spokesperson in the Dominican government, the women in question had been paid to make the false claims in question by someone who identified himself as a Daily Caller employee.
    The other claim. German solar companies unhappy with a rapid pullout of subsidies.
    Yawwwn. That has nothing to do with the price of beans in China. FUD. Max BS.
    Credibility dropping, dropping…….


    • The first article I linked to was on pv-tech.org, about as pro-solar as one can get. I only added the link on the Daily Caller because it had a few additional details, but both articles referred to the same report, the source of which was BSW Solar.


      • Look Cy. You posted an article from daily caller. You might want to take that one back. That’s like citing an article about smoking from Joe Bast. Now the next one. Somehow you conflate an article in which german solar producers disagree on government targets. The solar market is heavily controlled by the government, which decided it had met its target. What is the point? The german government has ambitious targets. German solar output is breaking records. One hardly expects that to be a signal the German government takes to increase solar. Mountain out of a molehill.

  5. dumboldguy Says:

    Here we go again. Peter is commenting about the miniscule (in the big picture) German and Danish solar experiments, and Chris is ignoring the points made by a German PRO-solar group while trying to discredit all of what Cy says by focusing on the Daily Caller and even mentioning Breitbart (may he NOT rest in peace). Very Goebbels-ish, that Daily Caller bit.

    The fact is that it’s an evolving situation, and “tide goes in, tide goes out” with only limited predictability. I think we all know and accept that renewables are going to have to grow or we are doomed, and that they are growing (even in some cases exponentially from a very small base while the Gorilla of COAL dies slowly) We need to remember that folks other than scientists who want to reduce CO2 levels have their fingers in the pie, both here and in Germany. First, the politicians *and ALEC), who are beholden to those who finance their campaigns rather than their constituents or the truth. Second, the utility companies and the “investors”, who are concerned with profit and bottom lines rather than the greater good. Third, the economists who have no idea what they’re doing. It’s a mess.

    Things will fluctuate—-rejoice at the good news, worry about the bad—but please stop trying to say that we really see what’s going on and can project with confidence. The NC situation will be messy for a while, just as it is in many other states (and we have discussed this at length on Crock on other threads).

    A classic illustration of what I’m talking about is outlined in an article in the Washington Post this AM about what’s going on in Colorado—-in the Pueblo area specifically. They’re shutting down a coal plant, substituting NG, rates are skyrocketing, utilities are sandbagging residential solar but buying into wind because they can control it and profit from it, the legislators and state regulatory agencies are milling around trying to sort it out—-all while CO2 climbs—-sound familiar?


    • Can’t you post without making personal comments? Is it too much to ask to stick to topic? ,

      • dumboldguy Says:

        LOL—-look who’s talking about “staying on topic” and “not getting personal”. Does “staying on topic” mean taking very narrow views of only SOME of the subject matter under discussion and refusing to try to think globally? If so, I guess you do it and I often don’t.

        And “personal” comments? LIFE is personal, and when you step through the door here and comment, YOU don’t get to define how others respond. Stop evading and argue the points being made in response to yours. If this comment of mine was NOT on topic, stop whining and tell me why. I’m not as interested in your opinions as I am in your arguments. Can you refute my contention that we face a very confused picture and it’s presumptuous to be so bright-sided (or, on the other hand, as negative as the renewables bashers?)

        (I’m actually your friend, and only your friends will tell you when you’re really full of shit. Your enemies will tell you that when you’re really NOT FOS in order to distract you from the truth, or NOT tell you when you really ARE FOS, so that you can embarrass yourself while they laugh).

        PS I mentioned somewhere else in a response to you that I was disappointed at the waffling of my representatives in DC on issues related to climate change. Has that been your experience? What response do you get when you call or write yours?


  6. Peter – Thanks for the educating and illuminating video. You have a knack for finding people that are knowledgeable and express themselves well. Even if you are following solar developments, its hard to keep up. It is surprising that Minnesota came up with a value of solar rate that exceeds the retail rate. The concepts make sense, but I did not know that. Its really nice the way he explains why solar has value beyond fuel savings. The workings of the power system are arcane and dense. Its nice to have someone that can translate them for better understanding.


  7. It should be noted here, that value of solar(VOS), as practiced in Minnesota, is a different system than net metering. It is difficult to have a coherent conversation on net metering, because there so many different state approaches. Its crying out for a more uniform approach. Roughly, net metering means the PV generator pays the difference between their net demand and generation, usually over a year. There are differences in how this gets paid. In California, its wholesale. In other states it might be retail. California calls their system, NEM, net energy metering. Some systems forfeit excess energy over a period, others roll it over.


  8. Net metering arguments tend to get bogged down in arguments about how much solar PV gets paid. The point is that its net. If the net is zero, there is no payment to anyone. Over a year, the net is much smaller than the amount previously consumed. The economic advantage of solar PV is what costs are avoided much more than in the check exchanged at the end of the year between the utility and the PV provider. This article includes considerations for larger providers that could be utility scale. These providers compete to sell electricity to the utility.


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