Distributed Solar: Today s Rubik s Cube Commissioner ToNola Brown-Bland North Carolina Utilities Commission September 25, 2013
Outline Introduction to the North Carolina Utilities Commission Growth of Distributed Solar in North Carolina and Beyond State and Federal Distributed Solar Incentives North Carolina Renewable Portfolio Standard Tax Incentives Net Metering Orders Distributed Solar Challenges Technology/Price/Policy Land Use Complaints Neighboring States Virginia Georgia Concluding Thoughts 2
North Carolina Utilities Commission The North Carolina Utilities Commission is an agency of the State of North Carolina created by the General Assembly to regulate the rates and services of all public utilities in North Carolina. It is the oldest regulatory body in state government. The present Commission evolved from the Railroad Commission which was created in 1891 and given authority to regulate railroad, steam boat, and telegraph companies. Today, the Commission regulates electric, telephone (including payphone service and shared tenant service), natural gas, water, wastewater, water resale, household goods transportation, busses, brokers, and ferryboats. To a limited degree, the Commission regulates electric membership corporations, small power producers, and electric merchant plants. 3
North Carolina Utilities Commission Commissioners Edward S. Finley, Jr., Chairman Bryan E. Beatty ToNola D. Brown-Bland Jerry C. Dockham Susan W. Rabon Don M. Bailey James G. Patterson Dobbs Building, 430 North Salisbury Street 4325 Mail Service Center 27699-4325 Phone: (919) 733-4249 Fax: (919) 733-7300 www.ncuc.net 4
Public Staff North Carolina Utilities Commission Representing the Using and Consuming Public Chris Ayers, Executive Director Dobbs Building, 430 North Salisbury Street 4326 Mail Service Center 27699-4326 www.pubstaff.commerce.state.nc.us Consumer Services Division (Consumer Complaints) Phone: (919) 733-9277 Toll Free: 1-866-380-9816 Fax: (919) 733-4744 5
Renewable Energy Concepts A renewable portfolio standard (RPS) is a policy tool that requires retail sellers of electricity to obtain a portion of their electricity portfolio from renewable resources A renewable energy certificate (REC) is a tradable instrument equal to one unit of energy derived from a renewable energy resource 6
Solar Growth Rush to 2016 : 30% Federal Tax Credit set to expire in December of 2016 North Carolina Credit set to expire in December of 2015 According to the SEIA the United States solar industry had a 76% growth rate in 2012, adding a record 3.3 GW of new capacity. North Carolina ranked 5 th in the nation in installed capacity in 2012 and ranked 2 nd in the second quarter of 2013. 7
Solar Growth SOLAR ENERGY MONTH Governor s Proclamation June 1, 2013 WHEREAS, North Carolina has significant solar energy potential; and WHEREAS, according to the Solar Energy Industries Association, North Carolina ranked fifth in the nation last year for installed solar energy projects, and is on pace to be ranked fourth in 2013; and WHEREAS, North Carolina is home to one of the fastest-growing solar energy industries in the United States, attracting solar energy developers, installers, manufacturers and related enterprises; and WHEREAS, solar installations create jobs, increase local and state revenue and are environmentally sound; NOW, THEREFORE, I, PAT McCRORY, Governor of the State of North Carolina, do hereby proclaim June 2013 as SOLAR ENERGY MONTH in North Carolina, and commend its observance to all citizens. IN WITNESS WHEREOF, I have hereunto set my hand and affixed the Great Seal of the State of North Carolina at the Capitol in Raleigh this tenth day of May in the year of our Lord two thousand and thirteen, and of the Independence of the United States of America the two hundred and thirty-seventh. 8
Solar Growth The U.S. solar industry is expected to grow by about 2.8 GW through the end of 2013 as the residential sector rebounds from a flat second quarter and distributed generation gains momentum in what is anticipated to be a shift in coming years that will see distributed generation claim market share from the utility sector. Michael Copley, Distributed generation to claim solar market share in coming years, industry says Solar photovoltaic capacity is already at retail grid parity in 10 states, and that number is likely to more than double within 18 months Andrew Engblom, Solar at grid parity in 10 states, with another 11 closing in, Deutsche Bank says 9
Renewable Energy and Energy Efficiency Portfolio Standard (REPS) In 2007, North Carolina became the first State in the Southeast to adopt a renewable portfolio standard Session Law 2007-397 (Senate Bill 3) 10
Renewable Energy and Energy Efficiency Portfolio Standard (REPS) REPS requirement may be met through combination of renewable energy generation and energy efficiency savings REPS requirement applies to investor-owned electric utilities (electric public utilities), electric membership corporations (EMCs), and municipally-owned electric suppliers 11
REPS Compliance Requirement General REPS requirement increases from 3% of prior year s retail sales in 2012 to 10% by 2018, then to 12.5% by 2021 (for electric public utilities) Specific set-asides established for energy derived from the sun (beginning in 2010) and from poultry and swine waste REPS compliance costs are recovered through a rate rider Cap imposed on incremental cost of compliance 12
Renewable Energy Facility Defined as a facility that either: generates electric power by the use of a renewable energy resource, including a combined heat and power facility; or is a solar thermal energy facility Excludes large-scale (>10 MW) hydro Electric public utilities limited to purchases from new renewable energy facilities Placed into service on or after January 1, 2007 (with a limited number of grandfathered facilities) 13
Renewable Energy Resource REPS defines it as: a solar electric, solar thermal, wind, hydropower, geothermal, or ocean current or wave energy resource; a biomass resource (reviewed on a case-by-case basis); waste heat derived from a renewable energy resource and used to produce electricity or useful, measurable thermal energy at a retail electric customer's facility; or hydrogen derived from a renewable energy resource Excludes peat, a fossil fuel, or nuclear energy resource 14
Solar Set-Aside Requirement Solar set-aside requirement: Year % of Prior Year s Retail Sales 2010-2011 0.02% 2012-2014 0.07% 2015-2017 0.14% 2018-0.2% Each electric power supplier met its solar set-aside requirements in 2010 and 2011, and appear to have in 2012. 15
NC-RETS Usage Currently registered 629 renewable energy projects. Of those 269 are solar photovoltaic projects Number of RECs and Solar RECs issued, by vintage year: Year RECs Issued Solar PV RECs Issued 2008 1,062,494 300 2009 1,495,282 5,424 2010 1,748,687 23,326 2011 2,642,519 54,015 2012 3,198,017 133,525 16
State Tax Credit N.C.G.S. 105-129.15 Tax credit equal to 35% of the cost of eligible renewable energy property constructed, purchased or leased by a taxpayer and placed into service in North Carolina during the taxable year. A maximum of $10,500 per installation for residential PV systems or solar-electric systems. A maximum of $2.5 million per installation for all solar, used for a business purpose. The allowable credit may not exceed 50% of a taxpayer's state tax liability for the year, reduced by the sum of all other state tax credits. 17
Net Metering Net Metering Defined A billing arrangement whereby a customer that owns and operates an electric generating facility is billed according to the difference over a billing period between the amount of energy the customer consumes and the amount of energy the customer generates. Docket No. E-100, Sub 83 Two Commission Orders: October 25, 2005 (prior to the passage of the REPS) March 31, 2009 (amendments in response to the passage of the REPS) 18
Net Metering- October 25, 2005 Order (pre-reps) Required utilities to offer net metering to customer who owns and operates a solar PV electric generating facility. (Applies to other forms of renewable generation as well.) Established a maximum a capacity of up to 20 kw for residential generator and 100 kw for a non-residential generator. Required that the Utility must net meter on a first-come first-served basis up to 0.2% of the utilities North Carolina retail peak load for the previous year. Kilowatt-hour credit applied to following monthly billing period, but shall reset to zero at the beginning of each summer billing season. RECs associated with excess generation shall be granted to the utility. 19
Net Metering- March 31, 2009 Order (post-reps) Required utilities to revise riders or tariffs to allow net metering for any customer that owns or operates a renewable energy facility that generates electricity with a capacity of up to 1 MW. Stated that the customer shall connect pursuant to the approved generator interconnection standard, which requires the study and implementation of any improvements to the system required Stated that customers may elect to take retail electric service pursuant to any rate schedule available and may not be assessed any standby, capacity, metering or other fees other than those approved for all customers on the same rate schedule Directed that standby charges will be waived, for any net-metered residential customer with electric generating capacity up to 20 kw and any net-metered nonresidential customer up to 100 kw. Credit for excess electricity shall remain the same Eliminated the aggregate cap of 0.2% of the utilities NC retail peak load for the previous year. If the customer chooses to take retail electric service pursuant to a TOU-demand rate schedule, it shall retain ownership of all RECs associated with its electric generation. 20
Recent Challenges: Technology/Price/Policy Intermittency always a concern: Causes issues in forecasting, capacity, grid stability, and dispatchability. Accentuated by large growth in the solar industry in NC. Cost Competitive? With the federal and State tax credits, public testimony has stated that facilities are viable simply on avoided cost rates with solar REC prices near $0.00 Expiration of tax credits could push up REC prices Legislative uncertainty over both the tax credits and the REPS cloud the issue. Interconnection standards no complaints in North Carolina after adopting FERC standards 21
Recent Challenges: Solar Complaints Facilities greater than 2MW must obtain a Certificate of Public Convenience and Necessity (CPCN) from the Commission prior to construction of the facility. Pursuant to N.C. G.S. 62-82: Applicant for CPCN required to publish a notice thereof once a week for four successive weeks in a newspaper of general circulation in the county where such facility is proposed to be constructed Upon complaint, the Commission shall enter upon a hearing to determine whether such certificate shall be awarded. Complaints filed on at least 13 solar farm CPCN applications: 3 projects have withdrawn from the process. 2 public and evidentiary hearings have been held to date. Rutherford County recently placed a 90 day moratorium on solar farms BANANA 22
Other States: Georgia Georgia Power Company Advanced Solar Initiative (GPASI) - will add 210 megawatts of solar capacity over the next three years. Georgia does not have an REPS Staged implementation 45 MW total from facilities up to 100 kw over the next two years 45 MW total from facilities 100 kw - 1 MW, over the next two years. 60 MW per year of utility-scale projects for 2013 and 2014, to be brought online in 2015 and 2016. Approved by the Georgia Public Service Commission in 2012, the competitive bidding RFPs were issued this summer. 23
Other States: Virginia Dominion Community Solar Power Program Functions as a limited solar power feed-in-tariff, an alternative to traditional offset net-metering offered. Capped at 3 MW Dominion will pay customers $0.15 per kwh for the electricity they produce. Paid for with contributions from the roughly 14,000 Dominion Green Power customers who pay higher electricity rates so that all or a portion of their electricity is offset by certified green power sources (similar to NC GreenPower) Approved by the Virginia State Corporation Commission March 22, 2013. Works in tandem with Dominion initiative to construct and operate up to 30 MW of solar generation facilities at commercial, industrial and public locations. Has been criticized by solar advocates for limited size and undervaluing the energy provided. 24
Concluding Remarks Solar is growing rapidly and prices are dropping dramatically. Several State and Federal policies are driving some of the growth in North Carolina Technology issues must be resolved to fully take advantage of solar potential. Like any development, as it grows solar development will encounter local resistance. 25
Contact Information North Carolina Utilities Commission http://www.ncuc.net Commissioner ToNola Brown-Bland (919) 733-4249 26