North Carolina House Bill 589

COMPETITIVE ENERGY SOLUTIONS FOR NORTH CAROLINA

House Bill 589 (HB589) was passed in 2017 and was the result of a nine-month stakeholder process and negotiation. It was the first major piece of comprehensive energy legislation passed in North Carolina since SB3 in 2007. NCSEA worked on the initial passage of HB589 and is continuing to work with stakeholders throughout the rulemaking and implementation process. The following sections outline the major provisions of HB589 and resulting outcomes as we marked the three-year anniversary of this law on July 27, 2020.

Competitive Procurement of Renewable Energy

As part of HB589, Duke Energy (Duke) is required to reach 6,160 megawatts (MW) of utility-scale solar on its grid. When HB589 was passed, it was expected that Duke would procure 2,660 MW through the Competitive Procurement of Renewable Energy (CPRE) process, and the remaining 3,500 MW would be procured through legacy Public Utility Regulatory Policies Act (PURPA) projects.

However, it became clear that there will be significantly more than 3,500 MW of PURPA projects, lowering the amount of solar procured through the CPRE.

Duke now estimates that it will procure between just 1,231 and 1,881 MW of solar through the CPRE, significantly less than was envisioned by HB589.

As of July 2020, no CPRE projects are operational although some have begun construction.

Green Source Advantage

HB589 requires the creation of a program for large businesses, universities, and the military to directly procure renewable energy. HB589 creates a 600 MW program, of which 100 MW is reserved for major military installations and 250 MW is reserved for the UNC system at least through February 2020, after which their allocations become available to other customers.

In February 2020, The North Carolina Utilities Commission ruled on Duke’s Green Source Advantage proposal, which can be read here. NCSEA is disappointed in the approved program, as it does not provide the financial certainty that customers want and will not sufficiently meet the needs of North Carolina businesses and solar developers.

NC Nine 2-6 MW -May '15

Photo Credit: McKim & Creed

As of July 2020, 218.1 MW of the 250 MW available to non-UNC and military customers is reserved, including a 35 MW solar project for the City of Charlotte and a 25 MW solar project for Bank of America .

As of July 2020, no university campuses nor military bases in North Carolina are participating in the GSA program.

Solar Rebate Program

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Photo Credit: Cape Fear Solar Systems

North Carolina’s highly-regulated monopoly electricity market limits innovative financing mechanisms that would make clean energy affordable to all. Thus, financing incentives like rebates are needed to encourage customer adoption of clean energy like rooftop solar energy. HB589 requires the creation of a rebate program for 20 MW of rooftop solar installations per year for five years. NCSEA worked with Duke to craft a Solar Rebate Program that would attract potential clean energy adopters waiting for the right time to install solar on their homes and businesses.

To date, this program has helped to take residential solar installations in Duke’s North Carolina territories from a total of about 5,600 systems (31 total MWs) in 2017 to over 12,000 systems (81 total MWs) by the end of 2019.

Overall, NCSEA was pleased with the rebate program approved by the North Carolina Utilities Commission in early 2018; in the years since, it became clear that demand for residential and commercial rebates has drastically exceeded supply.

  • In 2018, the supply of residential and commercial rebates exhausted within two weeks of the opening of the application period; 
  • In 2019, the supply was exhausted within one and a half hours; and  
  • In 2020, the supply was exhausted within twenty-one minutes.  

In response to the issue of demand greatly exceeding supply, in 2020 NCSEA proposed changes to the rebate program that would make rebates available to more customers. As of July 2020, NCSEA’s request is currently pending before the Commission.

Solar Leasing Program

Third-party power purchase agreements are prohibited in North Carolina and case law was mixed about whether the leasing of solar installations was allowed. HB589 created a framework for solar leasing in North Carolina, including Commission oversight of lessors and consumer protections.  

As of July 2020, five companies had registered as lessors, including Duke. Only one of these companies, NCSEA member Eagle Solar and Light, had at least three projects in operation and at least nine others filed with the North Carolina Utilities Commission for development.  

Due to the many regulatory requirements to become a lessor, it is not surprising that there are not more projects that have been leased. Based on Commission filings, most leased systems have been proposed for tax exempt entities 

O2---Solar-Project

Photo Credit: O2 emc

  • View companies registered as lessors here by selecting Electric Generator 
  • Read Part VI of HB589 

View the 4 statutes related to HB589 on leasing: 

Community Solar Program

Don’t let the Sun set on the North Carolina Solar Industry -O2 EMC

Photo Credit: O2 emc

Community solar allows North Carolinians to jointly own a solar facility or subscribe to a portion of a facility’s output. Community solar systems can be owned by utilities, solar developers, or directly owned by a group of neighbors or customers. HB589 requires Duke to offer 40 MW of community solar in North Carolina. Participants are compensated at Duke’s avoided cost rate for energy generated by their portion of the community solar facility.

As of July 2020, Duke has not yet constructed a community solar facility.

Wind Energy Moratorium and Study

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Photo Credit: Apex Clean Energy

Right before HB589 was passed into law, the North Carolina Senate included an 18-month wind energy moratorium on the issuance of permits for new wind energy projects by the North Carolina Department of Environmental Quality or the Coastal Resources Commission and expansive study of wind impact to HB589. On July 27, 2017, as Governor Cooper signed the bill into law, he expressed his opposition to the wind moratorium and issued Executive Order 11 to promote wind energy development in North Carolina.

NCSEA believes that the moratorium and $150k study were unnecessary, as the United States Department of Defense, Federal Aviation Administration (FAA), and nearby military bases already have an extensive review process for all energy development and must approve every proposed wind project. The findings of the wind study, submitted in May 2018, have not yet been made public and the moratorium expired on December 31, 2018. 

Energy Storage Study

HB589 directed the North Carolina Policy Collaboratory at the University of North Carolina at Chapel Hill (Collaboratory) to study the values and services that energy storage can provide to North Carolina and to make policy recommendations. NCSEA’s Energy Storage Working Group worked with the Collaboratory to secure private funding to match state funds. The Collaboratory partnered with North Carolina State University to conduct the study, which was reported to the General Assembly and the Energy Policy Council on December 3, 2018.  

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Photo Credit: Yes Solar Solutions