North Carolina committee pushes for re-evaluation of solar policies

On Wednesday, a high-level North Carolina advisory committee unanimously voted to formally request that the General Assembly re-evaluate state energy policy.

The request by the state’s Energy Policy Council includes text written by Duke Energy which calls for a “broad” re-evaluation, especially when it comes to solar energy.

The meeting focused predominantly on the effect solar generation has on Duke Energy’s overall energy mix during peak load times, specifically as it relates to the requirement to purchase third-party generation under the federal Public Utility Regulatory Policies Act (PURPA).

“They have to purchase it,” said Jenny Kelvington, the Executive Director for Energy in the N.C. Department of Environmental Quality’s Energy Group, adding that 60 percent of the nation’s PURPA projects are in North Carolina.

During the council’s discussion, councilman John Brodman, a retired Deputy Assistant Secretary for International Energy Policy in the U.S. Department of Energy, suggested that the council lobby the DOE to update PURPA, which was signed into law by President Jimmy Carter in 1978.

Solar impacting nuclear generation

In November, Duke Energy Progress, a subsidiary of Duke Energy, filed the company’s avoided cost rates – the amount paid to customers who generate their own electricity – with the N.C. Utilities Commission. In that document, Kelvington said, “They identified some of the issues they’re starting to see on their system.”

Duke Energy illustrated the issue they’ve noticed in that filing with a graph that serves as a snapshot of energy production on Jan. 31, 2016.

While it was cold that night, “It was a bright sunny day, so you saw a lot of solar generation,” Kelvington said. The high temperature that day was in the 60s, meaning low electricity demand in a state that relies largely on electricity for heating.

Because of the requirement to purchase solar-generated energy, Kelvington explained, “Duke Energy generated more energy than they could use, so they had to dump that power” – selling it at a lower rate, and potentially a loss, to the larger grid.

On the graph, the line representing solar energy generation on Jan. 31 created what’s known as a “banana curve.” Kelvington pointed out that if something similar were to occur in 2018, according to Duke Energy’s projections, that it could conceivably need to “quick cycle” nuclear generation which usually remains steady year-round as baseload generation.

Quick cycling would involve reducing the amount of energy being generated by a nuclear plant then increasing it soon afterward, something that is not usually, or easily, done.

Rob Caldwell, Sr. Vice President for Distributed Energy Resources at Duke Energy and a member of the Energy Policy Council, assured the rest of the council that the company constantly monitors its system “to make sure the demand is in balance.”

Regarding the solar spike on Jan.31, he said, “We’re talking about a few hours here.” He also said that the company has several options available during those times, including energy storage and “dumping” it.

EPC to ask General Assembly for study

Reading from a prepared document, Caldwell said, “I would move that the policy council recommend the General Assembly consider evaluating the energy issues broadly.” Soon after, he said, “I don’t necessarily agree with the recommendations” before the council.

Those recommendations include a comprehensive power grid reliability study to be funded by Duke Energy and Dominion Power that includes an assessment of third-party solar integration, a reevaluation of the 80 percent property tax exemption for “all new solar electric projects,” a re-evaluation of the state’s Renewable Energy and Energy Efficiency Portfolio Standard (REPS) and a study to assess “the need for a solar energy facility permitting program to address, among other items, construction and end of life issues.” (Items 1, 3, 5 and 6 on this document.)

The council unanimously voted to rewrite its request for the General Assembly, including the statement read by Caldwell and the recommendations listed above. It is unclear if the request will be forwarded to the General Assembly for a vote during its Dec. 13 special session which has been called by Gov. Pat McCrory to work on Hurricane Matthew and wildfire relief issues.

Should the property tax exemption be taken away from the solar industry, that would leave only federal tax incentives since the General Assembly allowed North Carolina’s solar tax credit to expire at the end of 2015.

North Carolina is ranked second in the nation for solar energy capacity, behind California.

Governor-elect Roy Cooper favors the Renewable Energy and Energy Efficiency Portfolio Standard, which became law in 2007 and requires investor-owned utilities to meet 12.5 percent of their energy production needs with renewable energy.

The REPS initiative was the first of its kind in the Southeast. In contrast, neighboring South Carolina and Virginia have renewable energy goals instead of requirements.

In response to the Energy Policy Council’s move, Sean Gallagher, vice president of state affairs for the Solar Energy Industries Associations said, “SEIA looks forward to educating the incoming governor’s administration on the opportunities to promote solar in the Tar Heel state. As lawmaking ability resides with the N.C. General Assembly, not the Energy Policy Council, we will continue to work within the broad coalition of citizens and businesses that want greater access to solar energy.”

Tony Solari, Director of Government Affairs for the N.C. Sustainable Energy Association, says his organization is also looking forward to working with Cooper. “NCSEA agrees that it is time to take a comprehensive look at energy policy in North Carolina,” he says, “especially since it’s been over 10 years since the last major legislation on energy policy was enacted.”

He says NCSEA officials believe that, “Any such study should have a special emphasis on how our state maintains and furthers its leadership in the clean energy environment.”

Duke Energy’s future generation planning

Following the council’s successful motion, Robert “Bobby” McMurry, Director of Integration Resource Planning for Duke Energy, then presented the company’s 2016 resource and generation planning to the council, noting that uncertainty regarding the federal Clean Power Plan could change projections.

He explained that, thanks to solar energy production, peak load has moved from summertime to wintertime. “Our peak load winter day is what we’re going to be planning for in capacity,” he said, adding, “This is the first time ever that Duke has been planning for a winter peak load for building capacity.”

While solar energy generation reduced the company’s peak load in summer months, McMurry said, “Solar isn’t really helping us meet our winter peak load. It helps us reduce our load in the winter, but when our peak need is 7 in the morning, it’s really not helping that much.”

In the winter months it can still be dark at 7 a.m., so any solar energy generation for that day has yet to begin. That’s also the time of day when energy usage tends to spike since people are waking up and getting ready for their days at work or school and businesses are beginning to open.

He also discussed the company’s desire “to relicense our nuclear to go to 80 years,” referring to the company’s William States Lee III Nuclear Generating Station in Gaffney, S.C. McMurry said the company began looking for a combined construction and operating license (COL) in 2008.

Licenses for three of the company’s other nuclear plants are set to expire within the next 20 years: 2030 for H. B. Robinson (Hartsville, S.C.), 2033 for Oconee (Seneca, S.C.) and 2035 for Brunswick (Southport, N.C.).

McMurry’s projections indicate that Duke Energy’s generating could need to expand as soon as 2022.

The Energy Policy Council meetings are usually livestreamed, but due to a venue change that was not possible. State audio-visual staff took video of the meeting and uploaded it later that day; you can watch here.