Final Report from Tranche 1 of Competitive Procurement of Renewable Energy Process Released

On April 9, 2019 the Independent Administrator (IA) for the Competitive Procurement of Renewable Energy (CPRE) released its report on proposals selected for the Tranche 1 Request For Proposal (RFP). By way of reminder, House Bill 589 required Duke Energy to procure 2,660 MW of renewable energy over a 45-month period from small power producers through the CPRE process. Accion Group, was selected as the IA to oversee the RFP submission, evaluation, and selection process. 

According to the IA, CPRE Tranche 1 met the stated goal of providing 20-years of renewable energy at pricing below Duke’s Avoided Cost. The prices, savings, and total MW approved for each utility are below: 

• Duke Energy Carolinas (DEC) 
  • Procurement target: 600 MW 
  • Average price per proposal: $36.93/MW 
  • Amount procured: 515 MW 
  • Savings (verses avoided cost over 20-year term): $290.20 Million 
  • 58 proposals received totaling 2682.72 MWs 
    • 12 of the proposals met the CPRE requirements and were recommended for Power Purchase Agreements (PPAs) 
      • Tranche 1 procurement for DEC fell short of the 600 MW goal by 85 MW (or 14 percent) 
• Duke Energy Progress (DEP) 
  • Procurement target: 80 MW 
  • Average price per proposal: $31.24/MW 
  • Amount procured: 87 MW 
  • Savings (verses avoided cost over 20-year term): $84.69 Million 
  • 19 proposals received totaling 1156.25 MWs 
    • Two projects totaling 87 MW were recommended for PPAs 
      • DEP Tranche 1 procurement goal of 80 MW exceeded

The RFP review and selection processes were extensive, and we encourage readers to view the final report for an in-depth overview. However, the most common reasons that proposals were eliminated from consideration include: 

• Applicant failed to post the required security (DEC) 
• Transmission and distribution system upgrade costs required by the utility for interconnection resulted in the proposal coming in above the avoided cost rate (DEC and DEP) 
• Bids were more expensive to ratepayers than the selected winners (DEP)

Overall, the IA report concludes that Tranche 1 was successful, despite not meeting the MW goal for DEC, and the unmet capacity will be included in CPRE future tranches. The report highlights a challenge with the current process relating to the number of projects that were ranked competitively but declined to provide proposal security, indicating that they were not development ready. Moving forward, the IA suggests considering the challenges with transmission access when speculative projects in the queue are treated as ready for development. 

NCSEA wants to highlight the financial benefit received when Duke Energy is required to procure power from small power producers. Over the 20-year term, granting small power producers the ability to sell energy and capacity to the public utility will result in huge savings: $290.20 Million (DEC) and $84.69 Million (DEP). These numbers confirm what many of us already know, that clean energy is a financially smart addition to our clean energy system.  

Tranche 2 of the CPRE is expected to begin later in 2019, and the NCSEA team will continue to monitor the process and keep our members informed of updates. To be the first to hear about updates to this and other important policy and regulatory issues, become an NCSEA Business Member today!