Duke Energy said on Monday that it has applied for regulatory approval to spend $100 million installing solar panels at homes, schools, stores, factories and other locations in North Carolina.
The project would be Duke’s first large-scale distributed solar power generation deal. The company plans to spend two years installing 20 megawatts of solar panels at 850 sites. But first, Duke has to get the approval of the North Carolina Utilities Commission, which received its application last Friday. The project would help Duke meet state mandates for renewable energy.
“The project allows us to meet two major goals. One is to study distributed generation. The other is to put more renewable energy on our systems,” said Paige Sheehan, a Duke spokeswoman.
Distributed energy generation, where electricity is produced closer to where it’s being used, is not a new concept. But it typically doesn’t involve utilities, which have preferred centralized projects where a lot of power is produced at one plant.
With renewable energy mandates from states such as California and North Carolina being set, utilities are finding it necessary to go beyond buying cleaner power from suppliers and build their own sources of energy.
In March, Southern California Edison said it would spend $875 million to build a 250-megawatt project that would put solar panels on 65-million square feet of commercial rooftops (see California to Get More Solar-Thermal).
“This is an indication that utilities are under pressure to meet certain requirements, so the fastest way to get from here to there is to do the projects themselves,” said Ethan Zindler, an analyst with New Energy Finance.
Duke has to meet North Carolina’s Renewable and Energy Efficiency Portfolio Standard (REPS), which lays out mandates for solar and other types of renewable energy generation. Under REPS, 0.02 percent of the electricity sold in the state must come from solar, starting in 2010. By 2018, the share goes up to 0.2 percent.
To meet these requirements, Duke last month announced a power-purchasing agreement with SunEdison, which would build the country’s largest solar electric farm in North Carolina (see SunEdison to Build Largest U.S. PV Farm).
What sets Duke’s project apart for other projects is its plan to install some of the panels on residential rooftops. Setting up panels on commercial rooftops is typically more economical because because equipment and labor costs decrease as the size of the project increases.
Duke is not releasing the installation cost per watt, Sheehan said.
With the $100 million set aside for the project, Duke will foot the cost of installing, operating and maintaining the solar panels. The project will generate 16 megawatts of power, enough to serve 2,600 homes.
The new solar project is expected to add 25 cents a month to a residential customer's utility bill over the lifetime of the project, or 20 to 25 years, Sheehan said.
Participating homeowners, schools and businesses will receive a reimbursement, such as a reduction in their electricity bill, but Duke has yet to work out specific compensation plans.
By law, Duke can pass some of the costs of its renewable energy projects to customers by charging them for the difference between building renewable energy plants and conventional power projects, for which North Carolina has set a cap. The extra cost to residential customers, for example, can’t go above $10 per year to start. But the figure can go up to $34 a year by 2021.
A date for the North Carolina Utilities Commission to vote on Duke’s proposal is uncertain, Sheehan said. The company plans to implement the project within six months of getting the approval.