UPDATED: Duke Energy (s DUK) has decided to cut in half its $100 million distributed solar rooftop program after the utility was criticized during the permitting process by
the Vote Solar Initiative and Wal-Mart (s WMT), among others, the state Utility Commission over cost recovery and monopolistic practices. The new program will spend $50 million to install 10 megawatts of solar panels in North Carolina. Under the new plan the average customer will pay an extra 8 cents per month as opposed to an extra 34 cents under the original proposal.
The lengthy testimony from Duke’s executives before the North Carolina Utility Commission Thursday, emailed to us by Duke, reveals a lot about the hurdles a utility must clear to add renewable energy generation in a regulated market. Southern California Edison has similar plans for rooftop solar and PG&E (s PCG) has said it would like to invest in solar power but was waiting for regulatory changes. Duke’s regulatory ordeal is a cautionary tale for utilities and policymakers alike.
Owen Smith, Duke’s managing director of regulated renewable energy and carbon strategy, testified before the Commission and was grilled over claims from Vote Solar and the Solar Alliance that Duke’s utility-owned solar model would make Duke a solar monopoly, destroying the nascent commercial and residential solar installer businesses. In his testimony, Smith said Duke is supportive of third-parties investing in their own installations but doesn’t want to have to rely on those to help it meet the state’s Renewable Portfolio Standard (RPS). He added that most third-party installations to date have been in Hawaii and California — two energy markets that are more expensive and have very different regulations than North Carolina.
North Carolina’s RPS requires utilities to generate 12.5 percent of their energy from renewable sources by 2021. The RPS is setup to allow for rollover, so utilities can save extra renewable energy credits (RECs) for future years. But Vote Solar pointed out that between this rooftop program and Duke’s power purchase agreement with Sun Edison, the utility will have more than enough RECs racked up in the first few years to satisfy the RPS requirements for years thereafter without adding new generation. A strange conundrum, but this illustrates a limitation of regulatory mandates and is a case where an incentive program might be better suited to encourage sustained solar development.
However, despite all of the bickering, Duke says there’s a lot of interest in the program. The utility says it’s received requests from 460 customers interested in having solar installed as well as proposals from 70 solar installers wanting to participate. Duke added that it’s even been contacted by several solar module manufacturers who are interested in building manufacturing facilities in Duke’s service territory to supply the hardware.