Three Years Since HB589 was Signed into Law: How are we Doing?

House Bill 589 (HB589), “Competitive Energy Solutions for NC," was passed by the North Carolina General Assembly (NCGA) and signed into law by Gov. Roy Cooper on July 27, 2017. This legislation, the first major piece of comprehensive energy legislation passed in North Carolina since Senate Bill 3 in 2007, was the result of a nine-month stakeholder process and negotiations. 

NCSEA was actively engaged during the stakeholder process and in final negotiations with legislators on HB589. Throughout the past three years, we have continued to work with our Members, partner organizations, and North Carolina electricity customers to ensure that the promise of expanding access to affordable clean energy to more North Carolinians is kept during the rulemaking and implementation processes.  

The following sections outline the major provisions of HB589 and resulting outcomes as we mark the three-year anniversary of this law. 

  

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 through Public Utility Regulatory Policies Act (PURPA) projects and projects procured through HB589’s Competitive Procurement of Renewable Energy (CPRE). 

When HB589 was passed, the expectation was that Duke would procure 2,660 MW through the CPRE program with 3,500 MW of “legacy PURPA” projects. However, as it has become clear over the past three years, 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. The first tranche of the CPRE resulted in approximately 550 MW of solar and 15 distinct projects being awarded bids, less than the 680 MW that Duke sought to procure. Projects that bid into the second tranche, which seeks 680 MW of solar, are currently being evaluated for cost effectiveness by the Independent Administrator. As of July 2020, no CPRE projects have been fully constructed although some have broken ground.  

  

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 for the UNC system at least through February 2022, after which their allocations become available to other customers.   

As of July 2020, 218.1 MW of the 250 MW available to non-UNC and military customers has been reserved, including a 35 MW solar project for the City of Charlotte that will be built by NCSEA members Carolina Solar Energy and Ecoplexus, and a 25 MW solar project for Bank of America that will be built by Silver Creek Energy and NCSEA member Pine Gate Renewables. As of July 2020, no university campuses nor military bases in North Carolina are participating in the GSA program. 

 

Solar Rebate Program

North Carolina’s highly-regulated monopoly electricity market limits innovative financing mechanisms that would make clean energy affordable to all. Thus, financing mechanisms 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 has become clear that demand for rebates has drastically exceeded supply. In 2018, the supply of 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 addition, during the 2020 application period, numerous customers experienced technical difficulties with Duke’s website, causing many applications to be lost and hundreds of consumer statements of position to be filed with the Commission. 

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. 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 have registered as lessors, including Duke. Only one of these companies, NCSEA member Eagle Solar and Light, has at least three projects that are currently in operation and at least nine others that have been filed with the North Carolina Utilities Commission and are in some stage of development.  

We are disappointed but not surprised that there are not more projects that have been leased due to the many regulatory requirements to become a lessor. Based on Commission filings, it seems that most leased systems have been proposed for tax exempt entities like churches and local governments.  

 

Community Solar Program

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. However, since the passage of HB589, Duke has not yet constructed a community solar facility. This report details how the program is waiting for Duke to update its back-office software, and that developers are having difficulty proposing a project that can meet all the restrictions imposed on the program. 

  

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. Click here to read NCSEA’s summary of the final storage report (December 2018) and click here to read the full report.  

• Visit https://energync.org/maps/ to see a map of southeastern energy storage projects 
• View North Carolina State University's website on the  North Carolina Energy Storage Study 

 

Wind Energy Moratorium and Study

In the final hours of negotiations by the North Carolina General Assembly on HB589, 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 wind 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, were never made public and the moratorium expired on December 31, 2018.  

Before the moratorium took effect, two wind farms were under development in eastern North Carolina: (1) the “Little Alligator” project in Tyrrell County by RES Americas, which would include 29 turbines on private land owned by timber company Weyerhaueser, and (2) the “Timbermill” project in Chowan County by Apex Energy, would include 48 turbines. In December 2018, RES Americas said it had abandoned its North Carolina project.