Homeowners with solar panels on their roofs would pay more for electricity used on summer evenings and winter mornings under an agreement Duke Energy reached this week with renewable energy organizations, who say the deal will make it easier for rooftop solar to grow in North Carolina.
Customers with solar panels on their roof often pay Duke for energy overnight and on cloudy days, offsetting that with credits when they generate more power than they need when the sun is shining. Right now, Duke credits customers the same for all solar energy, which the company contends is causing it to overpay.
The agreement introduces “time-of-use pricing,” in which Duke would charge customers with solar — and also pay more for energy generated by the panels — from 6 p.m. to 9 p.m. in the summer months and 6 a.m. to 9 a.m. in the winter.
All Duke Energy Progress customers with solar would pay a minimum monthly bill of $28 and Duke Energy Carolinas customers would pay $22, even if the home didn’t pull that much energy off of the grid. Duke officials say the minimum bill is necessary to ensure that solar customers help pay for the power lines and other infrastructure.
The agreement, which still needs to be reviewed by the N.C. Utilities Commission, is based on a very similar deal Duke reached with groups in South Carolina. If the commission approves the deal, it would take effect on Jan. 1, 2023, and remain for at least a decade, a period that energy industry representatives say provides guaranteed incentives for solar installation that will likely help the industry grow in North Carolina.
Comprehensive energy bills passed in North Carolina in 2017 and again this summer called for new rules and included provisions that raised questions about the industry’s future in the state, said Peter Ledford, the N.C. Sustainable Energy Association’s general counsel.
The 2017 legislation, House Bill 589, laid the groundwork for this week’s agreement by requiring Duke to enter into negotiations on net metering. It also created a solar rebate program that is set to expire at the end of 2022.
While Duke officials said the rebate has helped boost private solar installations from about 6,000 in 2018 to 24,000 today, the looming expiration date has introduced uncertainty. If the Utilities Commission approves this week’s agreement, Ledford said, installation companies will know customers can receive incentives to help pay for their panels.
“We saw in some of the Southwestern states, when they adopted bad policies, rooftop solar providers just packed up and left the state. The industry was devastated,” Ledford said. “This provides certainty to allow businesses to continue operating.”
According to the agreement, net metering negotiations started with a 20-organization stakeholder process that shifted to include those who were party to the final agreement. Those were the Solar Energy Industries Association the Southern Alliance for Clean Energy, Sunrun and Vote Solar, with the Southern Environmental Law Center providing legal representation.
New incentive for solar installation
The new metering agreement would establish a new incentive for customers who install rooftop solar in 2023 and later. That incentive totals $390 per kilowatt in return for installing a smart thermostat that Duke can use to control the temperature in your home at times when it expects to see high demand for energy.
A customer installing a 5 kilowatt system, for instance, would receive a credit of $1,950. Before receiving the incentive, such a system would cost about $13,100 in North Carolina, according to EnergySage, an energy pricing tool.
If a customer is uncomfortable with the temperature Duke shifts the thermostat to, they can override twice a year before having to repay part of their incentive, said Lon Huber, Duke Energy’s vice president of strategic solutions. The utility would likely also use the thermostat to heat or cool a home in advance of peak times to minimize the impact, Huber added.
Under this year’s House Bill 951, Duke must cut its carbon emissions 70% from 2005 levels by 2030 and achieve carbon neutrality by 2050. Ledford said the rooftop solar agreement could help with those goals.
“The reality is, residential customers consume a lot of electricity, and anything that can help transition that to a zero-carbon technology like solar is going to help the state meet its carbon requirements,” Ledford said.
Not everyone is happy with the new deal. Rory McIlmoil, an Appalachian Voices senior energy analyst, criticized Duke’s proposed peak energy hours, saying they disadvantage customers with solar by not aligning with hours when the sun shines the most.
“Their proposal is extremely complicated. People have to be aware of when they’re using energy and how much it costs at different parts of the day,” McIlmoil said. He added that it is particularly difficult for working class families who are getting ready to go to work in the morning or coming home for the evening to avoid using power during the proposed peaks.
McIlmoil was also critical of Duke’s use of future models to set the peak times. Instead, he said, the utility could have based those peak hours on the time when customers are actually using the most power and then adjusted them if the adoption of solar causes a shift.
Huber, the Duke analyst, said the models take into account future energy generation, so there is a large amount of power being generated by solar systems in the middle of the day and less during darker hours.
“What we try to do is come up with time-of-use periods that really align with where the grid is moving to, with more renewables on the system, and where our highest loss of load probabilities are,” Huber said, describing the times when Duke is likely to see more demand for power than it can generate.
Those periods, Huber said, are also the times when the utility emits the most carbon.
In pilot programs, Huber said, customers have taken steps like not running their dishwasher or doing laundry during the peak periods to cut usage, thus avoiding the higher fee.
Low- and moderate-income solar program?
A lack of explicit protections for low- and moderate-income customers was a key criticism of HB951.
Lindsey Hallock, Vote Solar’s Southeast senior regional director, touted a section of this week’s agreement where Duke agreed to explore a solar program that would be designed to provide rooftop systems to low-income customers.
“This agreement reflects the critical role that rooftop solar must play in North Carolina’s economy, clean energy transition and workforce development,” Hallock wrote. “In particular, the inclusion of a low-income solar program to be designed with input from stakeholders will bring the voices of low-income customers to the table, remove prohibitive cost barriers and unlock the benefits of solar for more North Carolinians.”
The Utilities Commission’s review of this week’s agreement for residential solar is expected to take months. Meanwhile, the groups that signed on have agreed to work together on a similar pricing deal for solar panels on non-residential buildings.
This story was produced with financial support from 1Earth Fund, in partnership with Journalism Funding Partners, as part of an independent journalism fellowship program. The N&O maintains full editorial control of the work.