Understanding Solar Net Metering Changes Impacting Duke Energy Customers
(Of note – the changes outlined in this blog took effect in October 2023.)
In 2023, the NC Utilities Commission approved changes to Duke Energy’s Net Energy Metering (NEM) policies for all customers—residential and nonresidential. These changes apply to both Duke Energy Carolina and Duke Energy Progress. It’s important for customers to understand the net metering rates in your service territory to assess the costs and benefits of solar. And it’s important for solar installers to know the rates to be able to explain the costs and benefits of solar to customers correctly. See below for information on how these changes are being implemented for each type of customer.
Residential Net Energy Metering Changes
On March 23, 2023, the NC Utilities Commission approved new net metering rates for residential customers in both the Duke Energy Carolinas and Duke Energy Progress service territories (Docket No. E-100 Sub 180). The previous rate, now called the “Legacy Net Metering rate”, was closed to new customers on October 1, 2023. Those customers that applied for service under this rate will be allowed to stay on it through October 1, 2027. They will then be transitioned to the Net Metering Bridge rate for up to another 15 years—whereupon they will automatically be transitioned to the Residential Solar Choice rate.
Customers applying for net metering service after October 1, 2023, have two choices in rate structure—the Net Metering Bridge (NMB) rate and the Residential Solar Choice (RSC) rate. The principal difference between these rates is that RSC must be paired with a time-of-use based rate schedule, while NMB does not. Duke Energy created a Solar Bill Savings Estimator calculator for customers to use to determine which rate fits them best.
The nameplate capacity of a customer’s system is limited to the lesser of their estimated maximum monthly kW demand or 20 kW for both NMB and RSC. The estimated maximum monthly kW demand is calculated by dividing the last 12-month actual kWh usage by 8,760 hours per year, and then dividing that number by 13%. Where this data is not available, maximum demand will be estimated by using the home’s square footage.
The NMB rate is only available through October 1, 2027, and has limited capacity available each year through that time. Duke Energy will regularly update the remaining capacity on their website, under “Learn more about your billing options” (this will be updated monthly until 25% of capacity is remaining, then biweekly until 10% capacity is remaining, and then weekly until full subscribed, whereupon a notice will be placed on the website). Once on NMB, customers can stay on it for 15 years from submitting their interconnection request. Customers utilizing NMB will be compensated for the energy they export to the grid at the annualized avoided cost rate, called the “net excess energy credit.” The NMB also features a non-by-passable charge and minimum monthly bill, and customers are allowed to retain the Renewable Energy Credits (RECs) generated from their system.
The RSC rate is open to new customers indefinitely. It also features a non-by-passable charge and minimum bill, as well as a grid access fee (depending on the size of the installed system), and customers are allowed to retain the RECs generated from their system. Customers taking service under RSC must use a time-of-use rate schedule. This type of rate schedule has different prices for energy depending on the time of day and the season. For the months of October, November, December, January, February, March, and April the On-Peak period is from 6am to 9am, the Off-Peak period is 9am to 11am, 4pm to 1am, and 3am to 6am, and the Discount period is 1am to 3am and 11am to 4pm. From May through September the On-Peak period is from 6pm to 9pm, the Off-Peak period is from 6am to 6pm and 9pm to 1am, and the Discount period is from 1am to 6am. Energy must either be consumed within each time period or will be compensated at the net excess energy credit rate as described above.
Nonresidential NEM changes
The NC Utilities Commission also approved changes to nonresidential NEM rates for each Duke Energy utility, with Duke Energy Progress (DEP) implementing these changes on October 1, 2023, and Duke Energy Carolinas (DEC) implementing these changes on January 1, 2024.
Unfortunately, the Commission did not provide as much discussion about these changes as they did with the residential NEM changes. However, for those wishing to dig deeper, the Commission’s Order accepting these changes can be found here for DEP (see pp. 138-42 for NEM discussion, Docket No. E-2 Sub 1300) and here for DEC (pp. 176-79, Docket No. E-7 Sub 1276). The Commission ultimately accepted Duke Energy’s rationale for these changes, as provided by their witness Jonathan Byrd. Witness Byrd’s discussion of the new nonresidential NEM rates, as well as new time-of-use and demand charge changes, can be found in his initial testimony for DEP (pp. 20-22 and Exhibit 7 for NEM specifically). For DEC, Witness Byrd provided a substantially similar discussion in his initial testimony (pp. pp. 20-22 and Exhibit 7 for NEM specifically), and provided further explanation in his rebuttal testimony (pp. 33-40).
Similar to the changes to residential NEM, customers who submitted interconnection requests prior to these implementation dates will be allowed to stay on the Legacy Net Metering rate for 10 years (October 1, 2033, for DEP, and January 1, 2034, for DEC). After that period, those customers will be transitioned to the Nonresidential Solar Choice (NSC) rate.
Similar to the RSC rate, the NSC rate requires customers to take service under a time-of-use rate schedule. Customers retain the RECs generated from their system if they take service under a time-of-use schedule with demand rates, otherwise the RECs must be provided to Duke Energy. The NSC rate does not feature a minimum monthly bill requirement as is found in the RSC rate. Unfortunately, Duke Energy does not plan to provide a bill savings estimator like the one available for residential customers.
The new NSC rate allows for systems to be built up to the lesser of 5,000 kWAC or 100% of the Customer’s contract demand, which is up from 1,000 kWAC under the Legacy Net Metering rate (though leased systems still have a maximum system size of 1,000 kWAC). This size limitation is applied by contract as opposed to individual meter, such that a customer with a contract for 6 MW of demand divided between two delivery points of 3 MW each would still be limited to a maximum system size of 5 MW. Projects sized over 1,000 kWAC must go through the Definitive Interconnection System Impact Study processes.
While the NSC rate utilizes the same time-of-use periods as described above, unlike the RSC rate, NSC allows excess energy generated during a higher-value period to “waterfall” to a lesser value one. Meaning that excess energy generated during the on-peak time period will be applied to the off-peak time period, then to the discount time period, and if any is left it will then be compensated at the net excess energy credit rate (as determined in annual avoided cost proceedings).
Though the NSC rate does include the potential for standby charges in each Duke Energy service territory for generation with capacities above 100 kWAC (the wording of rate schedules and riders differs slightly between DEP and DEC), there is a further limitation that standby charges shall only apply to systems with planning capacity factors of 60% and above. This means that these standby charges should not apply to rooftop solar facilities, which usually have capacity factors of between 20-25%.
For more information on net metering and rooftop solar in North Carolina, visit NCSEA’s website here: https://energync.org/net-energy-metering/