Currently sitting on Governor Cooper’s desk awaiting signature, veto, or just allowing it to go into effect after 30 days, is the “Competitive Energy Solutions for NC” bill (HB 589). On the last day of the 2017 session, the North Carolina General Assembly passed this bill that would, among other things, restructure how North Carolina implements the federal Public Utilities Regulatory Policy Act of 1978 (“PURPA”). This legislation would make some of the most comprehensive changes in energy policy in North Carolina in a decade.

Under current law, public utilities, such as Duke Energy, are required to purchase renewable energy from a qualified facility under at an “avoided cost” rate. Avoided cost rates are set by the Utilities Commission, and standard contracts are provided to qualified facilities of 5 MW or less. Standard contracts are currently offered at 5-, 10- and 15-year terms. There is an ongoing proceeding before the Utilities Commission to determine the avoided cost rate (see previous blog post: https://www.elementsforgrowth.com/2017/06/02/much-stake-duke-energy-solar-industry/).

North Carolina currently has 6,916 MW of installed renewable energy capacity. https://energync.org/. Of that, 3,287 MW is solar energy. North Carolina is ranked second in the country for solar energy generation. http://www.seia.org/state-solar-policy/north-carolina.

HB 589 restructures how renewable energy will be purchased and sold in North Carolina. Here are some of the key provisions:

Small Power Producers

HB 589 offers standard contracts at the avoided cost rate for small power producers that produce 1 MW or less of capacity, and shifts larger scale solar production to a new competitive bidding process.

The standard contracts for small power producers would be limited to 10 years at the avoided cost rate. Once an electric public utility has purchased 100 MW of capacity from small power producers, the contracts would only be available to small power producers of 100 kW or less of capacity. Other small power producers would have to negotiate with the electric utilities for contracts for a fixed five-year term.

The fixed five-year terms does not apply to swine and poultry waste facilities, hydroelectric facilities of up to 5 MW, landfill gas, manure digester gas, agriculture waste gas, sewer gas, and sludge gas, allowing them to enter into fixed-term contracts for longer periods. The bill also provides for an expedited review process for interconnection of swine and poultry waste-to-energy projects of 2 MW or less.

Competitive Bidding Process

The competitive bidding process for larger renewable energy producers requires public utilities, including Duke Energy, to submit request for proposals (RFPs) for a total of 2,660 MW over 45 months. The bidding process would be overseen by an independent administrator. The public utility would have authority to determine the location and allocated amounts of renewable energy projects within its service territory, and would have the right to control the operation and dispatch of third-party facilities. Electric public utilities can purchase renewable energy facilities from third-parties, and they are also permitted to construct their own renewable energy facilities for up to 30% of the amount of the competitive procurement requirement.

Under the bill, the initial request for proposals of 2,660 MW will be reduced if the utilities have power purchase agreements for more than 3,500 MW of capacity not subject to economic dispatch or curtailment.

Distributed Resources Access Act

The bill also allows for third-party leasing of solar energy, which is currently prohibited. This allows customers to enter into purchase power agreements with solar companies to operate a solar energy system on their property and purchase all of the energy produced by the system.

Moratorium on Wind Energy

Finally, the bill places a moratorium on new and modified permits for wind energy producers until December 31, 2018 so the State can study the impacts of wind energy on military operations in the State. North Carolina currently has one wind energy farm in Perquimans and Pasquotank Counties, the Amazon Wind Farm US East, that was completed in February, 2017 and produces 208 MW of energy. http://elizabethcitypasquotankedc.com/north-carolinas-first-wind-farm/. The moratorium only affects new and modified permits; but it will likely impact the planned expansion of the project, which was intended to increase production to 300 MW. Two other proposed wind farms, in Chowan County and Tyrell County, could be derailed by the moratorium, according to news reports.

The bill includes many other changes, and the full bill can be found here: http://www.ncleg.net/Sessions/2017/Bills/House/PDF/H589v5.pdf. The Governor will make a decision on how to respond to the bill by the end of the month.