North Carolina homeowners and businesses could soon be able to install rooftop solar panels without prohibitive upfront costs under a sweeping energy proposal moving through the state legislature this week.
The bill would let residents lease solar panels on their rooftops rather than owning them outright, a financing arrangement popular in other states but long considered a nonstarter here. The leasing arrangement would remove a major financial barrier to solar energy by eliminating the down payment for homeowners – typically ranging from $10,000 to $20,000.
“I think there’s a certain amount of pent-up demand for that,” said solar advocate Stephen Kalland, director of the N.C. Clean Energy Technology Center. “The utility is going to sell less electricity to the customers, and that customer is not going to have to come up with the up-front costs of the system.”
The legislation, House Bill 589, cleared two committees Tuesday and is expected to face its first vote in the full House on Wednesday, according to the bill’s Republican sponsor, John Szoka, who lives outside Fayetteville.
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The 20-page bill is the first comprehensive overhaul of North Carolina’s energy laws since 2007, when the legislature passed Senate Bill 3, known as the Renewable Energy Portfolio Standard, requiring electric utilities to sell power derived from solar energy and other renewables.
“It should matter to everyone in the state because it works to lower energy bills for all electric customers,” Szoka said after his bill unanimously passed the House Energy and Public Utilities Committee.
The legislation includes a number of provisions, including an agreement to resolve simmering conflicts over the location of utility-scale solar farms, and reducing the amount Duke Energy would pay industrial solar farms for electricity.
And for the first time electric utilities would be required to let state residents participate in a program called community solar. The program lets residents purchase stakes in solar farms not located on their property, getting credit for the power their share generates, just as if the solar panels were bolted to their roof.
Similar to the energy diplomacy that produced SB 3 a decade ago, Szoka’s bill is the result of more than 30 meetings held since September involving the N.C. Utilities Commission, Public Staff, Duke Energy, Environmental Defense Fund, N.C. Sustainable Energy Association, ElectriCities, N.C. Pork Council, independent solar developers, municipal power agencies, rural electric cooperatives and others. Gov. Roy Cooper endorsed the legislation Tuesday.
Szoka said his attempt to get the issues resolved in a single piece of legislation received the blessing from House Speaker Tim Moore and Senate leader Phil Berger, adding that at this point nothing in the bill can be altered for fear of losing support from the participants who agreed to the compromise.
“I’m not sure anyone thought we could get to this point in the process,” Szoka said.
North Carolina law currently prohibits a solar developer from owning a solar panel array on someone else’s roof and selling electricity directly to the owner of the property, which would bypass the electric utility. By giving utilities a monopoly to sell power, the state requires the companies to provide power to everyone in a particular service area, maintain the service, restore power and maintain service quality.
The one attempt to test this law, by the Faith Community Church in Greensboro, resulted in a 2016 ruling by the N.C. Utilities Commission that the arrangement was illegal.
Under Szoka’s proposal, the solar developer would own the solar panels and lease them to the homeowner or business owner for a monthly fee, as long as the fee is not directly tied to the amount of electricity generated by the solar panels. The property owner, in exchange, will get electricity from the panels, which will reduce the power bill from Duke Energy.
Charlotte-based Duke Energy supports the proposal because it’s structured as a financing arrangement, not as a direct sale of electricity to a Duke customer by a third party, said Duke spokesman Randy Wheeless. Duke customers have had a similar leasing option in South Carolina since 2015.
Stewart Miller, owner of Yes Solar Solutions, a rooftop solar installer in Cary, said the proposed leasing option may not be more appealing than other financing options now available, including arrangements that generate power for the homeowner and don’t require customers to start making payments until a year has passed. Miller said many homeowners prefer to own their solar panels, which can generate power for up to 40 years, whereas leasing panels will leave the homeowner with zero ownership at the end of the lease term.
In exchange for making a concession on leases, Duke would pay less for power purchased from industrial-scale solar farms, rather than being stuck with a standard wholesale rate set by the N.C. Utilities Commission. Kendal Bowman, Duke’s vice president of regulatory affairs and policy, told lawmakers that competitive bidding for the lowest rates could save the company as much as $850 million over 10 years in payments to solar farms. Under state law those savings would be passed on to customers.
The legislation would require Duke to accept bids from solar farms and offer longer-term contracts, which is expected to reduce the prices Duke pays for the power.
Brian O’Hara, senior vice president of strategy and government affairs at Chapel Hill-based Strata Solar, the state’s largest solar farm developer, said solar developers can accept lower prices if they get longer contracts.
“It’s not killing solar at all,” Szoka said. “We wouldn’t have all the renewable energy people standing up saying they’re in support of this if they were putting themselves at an economic disadvantage.”