North Carolina House Bill 589 Explained: How Does It Help the Solar Industry in North Carolina?

In 2017, North Carolina took a major step forward in expanding access to clean, affordable solar energy. That year, the state legislature passed House Bill 589 (HB589), also known as the “Competitive Energy Solutions for NC” law. This groundbreaking legislation has played a pivotal role in transforming North Carolina’s clean energy landscape and solidifying the state’s position as a national leader in solar power.

As a North Carolina resident, you may be wondering what exactly HB589 does and how it can benefit you. Whether you’re a homeowner looking to lower your utility bills, a business owner seeking to meet sustainability goals, or simply someone who cares about the environment, understanding the key provisions of this bill is important.

In this post, we’ll break down the main components of HB589 and explain how they work together to make solar energy more accessible and affordable for North Carolinians. From the competitive procurement of renewable energy to solar leasing and rebate programs, we’ll cover everything you need to know about this game-changing law.

By the end, you’ll have a clear understanding of how HB589 is driving the growth of North Carolina’s solar industry and opening up new opportunities for residents and businesses across the state to reap the benefits of clean energy. So let’s dive in and explore the exciting world of solar power in North Carolina!

Key Takeaways:

• HB589 was a major energy bill passed in 2017 that expanded solar access in North Carolina
• It requires Duke Energy to procure over 2,600 MW of solar through a competitive bidding process
• The bill enables solar leasing, making it easier for homeowners and businesses to adopt solar
• It establishes programs like Green Source Advantage for large energy users to directly procure renewable energy
• HB589 has helped solidify North Carolina’s position as a top state for solar energy

Overview of House Bill 589 (Competitive Procurement of Renewable Energy)

House Bill 589, also known as the “Competitive Energy Solutions for NC” law, was a major piece of energy legislation passed in 2017. One of the key components of HB589 is the Competitive Procurement of Renewable Energy (CPRE) program, which requires Duke Energy to procure a total of 2,660 MW of solar energy through a competitive bidding process.

The CPRE program is structured into multiple tranches, each with a specific capacity target and timeline. Duke Energy is required to issue requests for proposals (RFPs) for each tranche, allowing solar developers to submit bids to build utility-scale solar projects.

The first tranche sought to procure 680 MW of solar, while the second tranche aimed for another 680 MW.

The competitive nature of the CPRE program has driven significant utility-scale solar development in North Carolina while also lowering costs for ratepayers.

By requiring solar developers to compete against each other, the program has encouraged innovation and cost-efficiency. According to independent administrator Accion Group, the CPRE program is expected to yield roughly $375 million in cost savings for Duke Energy customers over the 20-year contract period compared to the company’s avoided cost.

The first tranche of the CPRE program resulted in 14 utility-scale solar projects being selected, totaling approximately 602 MW of new solar capacity. These projects, developed by both Duke Energy and independent power producers, have provided significant economic benefits to local communities across the state. For example, the projects have created construction jobs, generated local tax revenue, and in some cases, included additional investments such as solar plus storage or agrivoltaics.

While the CPRE program has been successful in driving utility-scale solar growth, it has faced some challenges. Duke Energy now estimates that it will procure between 1,231 and 1,881 MW of solar through the CPRE program, significantly less than the original 2,660 MW envisioned by HB589.

This is largely due to the higher-than-expected volume of solar projects developed under the Public Utility Regulatory Policies Act (PURPA) framework.

Despite these challenges, the CPRE program remains an important tool for advancing clean energy in North Carolina while ensuring a competitive and cost-effective process for ratepayers.

Solar Leasing

One of the key provisions of North Carolina’s House Bill 589 was enabling solar leasing, a financing model that was previously not allowed in the state.

Solar leasing offers a way for homeowners and businesses to benefit from solar energy without the burden of high upfront costs or the responsibility of maintenance.

Under a solar lease, a third-party company owns and installs the solar panels on a customer’s property. The customer then pays a fixed monthly lease payment to the company, which is typically lower than their previous utility bill.

This arrangement allows homeowners and businesses to start saving money on their energy costs immediately, without having to make a large initial investment in purchasing solar panels outright.

HB589 established a framework for solar leasing in North Carolina, including consumer protections and regulations for leasing companies. The bill requires solar lessors to be registered with the North Carolina Utilities Commission and sets standards for lease contracts, such as minimum disclosures about costs, warranties, and performance guarantees. These provisions help ensure that customers are well-informed and protected when entering into a solar lease agreement.

Since the passage of HB589, several companies have begun offering solar leases in North Carolina, providing new opportunities for residents and businesses to go solar.

For example, Eagle Solar and Light is one of the first registered solar lessors in the state. The company has partnered with organizations like the Orange Water and Sewer Authority (OWASA) to install leased solar arrays, helping the utility reduce its electricity costs and meet sustainability goals without capital expenditures.

Another success story is Marion Mitchell, a landowner in Pendleton, North Carolina who leased a portion of her property for a solar installation through the company EnerWealth Solutions. The lease provides Mitchell with a new source of income from the solar panels while allowing her to continue farming the surrounding land.

By enabling solar leasing, HB589 has opened up new possibilities for North Carolinians like Mitchell to benefit from clean energy on their own terms.

Overall, the solar leasing provision of HB589 has been a game-changer for expanding access to solar in North Carolina.

By eliminating upfront costs and providing a simple, low-risk way to go solar, leasing has made it possible for more homeowners and businesses to enjoy the financial and environmental benefits of renewable energy.

As solar leasing continues to grow in the state, it will play an increasingly important role in North Carolina’s transition to a clean energy future.

Green Source Advantage Program

House Bill 589 created the Green Source Advantage (GSA) program, which allows large energy users such as businesses, universities, and military installations to directly procure renewable energy.

The program provides a total of 600 MW of capacity, with 100 MW reserved for major military installations and 250 MW for the University of North Carolina (UNC) system through at least February 2022, after which any unused allocations become available to other customers.

Under the GSA program, participants can negotiate directly with renewable energy developers on pricing and contract terms for projects connected to the Duke Energy grid.

Duke Energy then delivers the energy to the customer and provides a bill credit for the avoided cost of the renewable energy.

This structure enables large energy users to have more control over their renewable energy procurement and potentially secure lower prices than standard utility rates.

The GSA program has been popular among major energy users looking to meet ambitious sustainability goals and reduce energy costs. As of July 2020, 218.1 MW of the 250 MW available to non-UNC and military customers had been reserved. Notable participants include:

• The City of Charlotte, which signed a contract for a 35 MW solar project developed by Carolina Solar Energy and Ecoplexus. The project is expected to offset about 25% of the city’s carbon emissions from municipal buildings and save $2 million in energy costs over 20 years.
• Bank of America, which contracted for a 25 MW solar project developed by Pine Gate Renewables.
• The City of Durham, Durham County, and Durham Public Schools, which are jointly purchasing 35 MW of solar capacity to make significant progress toward their renewable energy goals.
• Vanderbilt University and the City of Nashville, which partnered to procure 125 MW of solar energy through the program’s sister offering, Green Invest, in Tennessee.

However, the GSA program has faced some challenges. Duke Energy now estimates it will procure only 1,231 to 1,881 MW of solar through GSA, significantly less than the 2,660 MW originally envisioned under HB589.

This is largely due to the higher-than-expected volume of solar developed through PURPA contracts. Additionally, some GSA-contracted projects have struggled to move forward due to rising costs, supply chain issues, and local opposition.

Despite these hurdles, the GSA program remains an important tool for expanding renewable energy access to large customers in North Carolina. By allowing major energy users to directly procure cost-effective clean energy, the program helps them meet their sustainability targets while supporting the growth of the state’s renewable energy industry.

As more cities, universities, and businesses commit to ambitious climate goals, innovative utility offerings like GSA will play an increasingly crucial role in the transition to a clean energy economy.

Other Solar-Friendly Provisions

In addition to the Competitive Procurement of Renewable Energy, solar leasing, and Green Source Advantage programs, House Bill 589 included several other provisions designed to support the growth of solar energy in North Carolina.

One notable provision was the establishment of a solar rebate program. HB589 required Duke Energy to offer $62 million in rebates for customers who install rooftop solar panels from 2018 to 2022. The program provided rebates of $0.60 per watt for residential customers and $0.50 per watt for non-residential customers, with a maximum rebate of $6,000 for residential and $50,000 for non-residential installations.

This rebate program helped offset the upfront cost of solar installations, making solar more accessible and affordable for North Carolina residents and businesses.

Another solar-friendly aspect of HB589 was the creation of a community solar program.

The bill required Duke Energy to file a plan with the North Carolina Utilities Commission to offer 40 MW of community solar in its service territory.

Community solar allows multiple customers to subscribe to a portion of a shared solar facility and receive bill credits for the electricity generated by their share. This model expands access to solar for customers who may not have suitable roofs for their own solar panels or who cannot afford to purchase a full system.

These provisions, along with the other key components of HB589, have helped further expand access to solar energy for North Carolina residents and businesses.

By providing financial incentives, enabling new ownership models, and creating opportunities for community participation, the bill has supported the continued growth of the state’s solar industry and made clean energy more widely available.

Challenges and Future Outlook

Despite the many solar-friendly provisions of HB589, the implementation of the bill has not been without challenges. One significant issue has been the high demand for the solar rebate program, which has led to the available rebates being exhausted quickly each year. In 2020, the rebate capacity was fully subscribed within just 20 minutes of the application period opening, leaving many customers unable to take advantage of the incentive.

Another challenge has been the slower-than-expected rollout of the community solar program. As of July 2020, Duke Energy had not yet constructed any community solar facilities under the HB589 program. Regulatory filings suggest that delays in updating the utility’s billing software and challenges with the program’s restrictions have hindered progress.

The Competitive Procurement of Renewable Energy program has also faced hurdles. Duke Energy now estimates that it will procure significantly less solar capacity through the CPRE program than originally envisioned by HB589, largely due to the higher-than-expected volume of solar developed through PURPA contracts.

Looking ahead, the long-term impact of HB589 on North Carolina’s solar industry will depend on how these challenges are addressed and how the various programs continue to be implemented. Stakeholders have called for modifications to the rebate program to better match supply with demand, as well as changes to the community solar program to facilitate more participation.

The future of solar in North Carolina will also be shaped by broader policy developments, such as the state’s Clean Energy Plan, which calls for a 70% reduction in power sector greenhouse gas emissions by 2030 and carbon neutrality by 2050.

Meeting these ambitious targets will likely require a sustained commitment to solar energy development, building upon the foundation established by HB589.

Despite the challenges, HB589 has played a crucial role in advancing solar energy in North Carolina.

By creating new opportunities for solar deployment and expanding access to clean energy for residents and businesses, the bill has helped solidify the state’s position as a national leader in solar.

As implementation continues and new policies emerge, North Carolina has the potential to further accelerate its transition to a clean energy future.