Rooftop solar installers say Duke Energy’s proposed prices would kill the industry
Solar panel installation companies in North Carolina are alarmed at a Duke Energy proposal that they say could imperil thousands of jobs and make it difficult for the state to reach its clean energy targets.
Earlier this year, Duke Energy proposed a change to how it charges customers who have solar panels on their roofs. Right now, Duke credits and charges customers with solar panels the same amount for power no matter when it is sent to or drawn from the grid.
Duke’s “net metering” proposal would change that. Solar customers would both pay less and receive lower credits for energy at so-called “discount” times, while paying more and receiving higher credits for energy at times when high usage strains the grid.
The complexity of the price structure was one of the concerns 15 residential solar installation companies raised in a letter sent to Gov. Roy Cooper last week. Installation companies including Southern Energy Management, Sundance Power Systems and Yes Solar Solutions argue the proposal will slow the growth of rooftop solar and result in what they call discriminatory fees against solar customers.
“We believe the proposed changes could harm a growing industry on behalf of a single corporation, cause the loss of thousands of well-paying jobs in the North Carolina solar industry, threaten your climate goals and hurt all electricity customers by limiting the delivery of low-cost power to the grid,” the installation companies wrote in their letter.
The N.C. Utilities Commission, an independent regulatory body, would need to approve Duke’s proposed price structure before it could take effect. The commission is separately considering an incentive proposal that would be part of the net metering agreement.
How do bills for customers with solar work now?
Right now, customers who have solar systems pay and are credited the same price for energy they use or energy they feed to the grid, no matter what time that use or production happens.
Randy Wheeless, a Duke spokesman, said the company has about 24,300 customers with rooftop solar right now, most of whom are residential customers. Duke has about 3.5 million electric customers across North Carolina.
When solar panels on someone’s roof aren’t generating enough energy to power their home, they purchase power from Duke. When they are generating excess energy, that power is fed into the grid, and the customer receives a credit for it.
“There’s a real cost benefit, a cost savings,” said Stew Miller, the co-founder and president of Yes Solar Solutions. “We can prove to people that if they invest in solar and it’s installed properly and it’s exposed to adequate sun, it’ll pay for itself in a relatively quick period of time.”
Typically, Miller said, a rooftop solar system will pay for itself two to three times over the course of its life.
Duke argues that because solar customers likely don’t use significant amounts of energy generated by the company, they end up not paying enough for the cost of maintaining the grid infrastructure that serves their homes.
How would payments work under Duke’s proposal?
Under Duke’s proposal, customers who have solar panels would pay a minimum monthly bill of $28 for customers in the Duke Energy Progress service area and $22 for Duke Energy Carolinas customers. (Duke Energy Carolinas generally serves North Carolina from Durham west, including Charlotte and Greensboro. The Duke Energy Progress service area is generally from Raleigh east and serves Fayetteville and Wilmington.)
The customers would either use enough energy to meet those base rates or pay the difference.
Duke would also charge customers different rates for power used at different times of day, an idea Duke says is intended to curb energy usage at the highest-demand times, allowing residential solar customers to feed energy back into the grid.
“If the customer is really gung-ho about taking advantage of the new time-of-use rates and managing their consumption away from peak periods, they could save a lot on their bill,” said Lon Huber, Duke’s vice president for rate design and strategic solutions. “It’s moving beyond just the simple, ‘put solar on the roof and call it a day’ type of transaction.”
Under Duke’s proposal, peak hours include 6 to 9 p.m. from May to September and 6 to 9 a.m. from October to April. Energy would be available at lower rates from 1 to 6 a.m. from May to September and both 1 to 3 a.m. and 11 a.m. to 4 p.m. from October to April.
“We think the rooftop solar industry has a bright future under this plan,” Huber said.
What do supporters of the agreement say?
Duke negotiated the new net metering deal with some environmental groups and solar industry representatives, including the N.C. Sustainable Energy Association, the Solar Energy Industries Association and Sunrun. The Southern Environmental Law Center represented the Southern Alliance for Clean Energy and Vote Solar.
In a February blog post, the Southern Environmental Law Center and the groups it represented argued that a 2017 law required a new net metering structure by the end of 2026 and keeps the one-to-one credit for energy used and energy generated.
“The payback period for a customer under the settlement would be roughly the same as the payback period under current retail rate net metering, while also encouraging solar customers to reduce their use at peak times of demand, helping to reduce system costs and benefiting all customers,” the groups wrote.
The groups also argued that by coming to an agreement with Duke Energy, they avoid a long technical process in front of the Utilities Commission and the potential for a worse outcome.
So, increase usage at discount times and boost power output at peak hours?
In short, yes. To receive the full benefit of rooftop solar systems under the proposed pricing, customers would need to remain aware of when and how they use energy.
They would want to avoid running the washing machine or dishwasher on winter mornings or summer evenings. And they’d want to charge their electric vehicles overnight.
What if I send more power to the grid than I draw from it?
Under the current system, customers who send more kilowatt hours of energy to the grid than they draw from it receive credits that roll into future months. These credits can be used to reduce future bills, but reset annually on June 1.
The proposed net metering system credits customers every month instead of rolling credits over, with the credits applying to bills after the monthly minimum bill is calculated. In other words, under the proposed system a customer who generates excess energy in a given month could use it to make their bill cheaper than the proposed minimum bill.
Have utilities in other states tried this?
Solar pricing proposals across the country have drawn concern in recent months. In California, regulators shelved a net metering proposal amid pushback from environmental and solar industry groups. Florida’s legislature recently approved a bill that lowered the amount utilities credit customers for power generated by rooftop solar.
“In general, states are looking to reduce compensation for energy that’s being sent back to the grid, but there are a lot of different variations and different designs that are under consideration,” said Autumn Proudlove, the N.C. Clean Energy Technology Center’s senior policy program director.
Proudlove is a participant in a National Academies of Science, Engineering and Medicine committee that is reviewing the future of net metering.
California and South Carolina are the only states that require time-of-use rates as part of a structure right now, Proudlove said. Duke was responsible for crafting the South Carolina rate structure along with many of the same parties who negotiated the structure in North Carolina.
Proudlove said utilities and regulators across the country are considering time-of-use rate structures.
“There is a lot of interest in it as a way to more accurately line up the price signals that the customer is seeing with the costs that are being incurred,” Proudlove said.
Still, Proudlove added, there is an ongoing debate as to whether the bills of non-solar customers are subsidizing the wires and other infrastructure used by solar customers, something utility officials call “cost shifting.”
Duke officials say the North and South Carolina agreements should provide a model for other states. The company reached its agreement with environmental groups and solar providers like the NC Sustainable Energy Association, the Solar Energy Industries Association and Sunrun, among others.
“We were able to defuse a situation that has really plagued other states like Nevada and, as you can see, California,” Huber said. “So instead of a combative process, we came together and formed what I think is a sustainable vision for rooftop solar.”
Interested in solar? How to calculate what you’d pay
Part of the installers’ concern is that Duke’s proposed pricing structure would make it difficult for salespeople to tell potential customers how much money they would save over the life of their solar panels.
“The time-of-use rates, critical peak pricing, minimum bill, complicated netting procedure, non-bypassable charges, and variable treatment of existing customers create such complexity that it would become quite difficult for us to model for our customers what the payback on their solar investment would be,” the companies wrote in their letter.
Miller said Yes Solar has been working on its model for 12 years and would likely need to purchase a model from someone else if the net metering agreement is approved.
Dave Hollister, the president of Sundance Power Systems near Asheville, said figuring out savings requires knowing how much energy a home uses each hour over the course of a year so that the different costs and benefits can be calculated.
“For any particular home, it’s fuzzy math,” Hollister said. “Whereas right now we can predict very accurately what the return on investment’s going to be for a homeowner or a business to go solar, now it’s going to be a little wishy-washy.”
As part of Duke’s agreement with the industry groups, it would need to develop an online calculator that would be available for review within two years of the tariffs becoming effective.
Could net metering make solar less cost-effective?
Rooftop solar installers say Duke’s new policy would reduce the savings from installing solar panels. Hollister said the installers took hour-by-hour information from about three dozen homes with panels installed over the last year and found that savings would be decreased between 25% and 35%.
When Hollister installed solar panels on his own home 30 years ago, he said, he was unsure if the investment would ever pay off.
“There’s not as many of those people (who choose solar for its environmental benefits) as there are people who need it to be something that pencils out for them,” Hollister said. “It’s definitely going to hurt the industry, no question.”
Huber, of Duke Energy, disagrees, arguing that customers should be able to make the new system work for them without doing things dramatically differently. Duke, Huber said, ran numbers through two different models to develop the proposed structure.
“I don’t necessarily see a huge shift,” Huber said. “I think it’s more of a carrot approach.”
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.
This story was originally published March 17, 2022 at 8:00 AM.