Duke Energy submitted a settlement with large solar developers including Cypress Creek Renewables and Strata Solar to North Carolina regulators on Thursday that aims to resolve longstanding interconnection issues in the utility’s territory.
The agreement should resolve issues for more than 100 disputed projects in the Carolinas, said spokesperson Randy Wheeless, clearing the way for up to 800 megawatts of solar projects to move forward in coming years. The proposed changes will require approval from regulators in both North and South Carolina as well as the Federal Energy Regulatory Commission.
Duke originally submitted its proposal to update interconnection procedures in the two states in May. In recent years, a glut of solar has clogged Duke’s queue, and the utility was unable to process projects in a timely manner.
North Carolina is among the few states that have seen significant solar development tied to the federal Public Utility Regulatory Policies Act, which incentivizes energy production by requiring utilities to buy from “qualifying facilities” developed by third parties. From 2014 to the end of March 2020, third-party installers had added 2.4 gigawatts of new large-scale solar capacity in Duke territory, with many installations around 5 megawatts in size. Utilities often view PURPA as a challenge because it dictates how they are required to buy power, while it’s become an essential tool for developers in some states.
“The contentiousness of PURPA has been a sore spot for utilities and developers for a long time,” said Colin Smith, a senior solar analyst at Wood Mackenzie. “They ultimately have to come to some sort of middle ground.”
Duke had nearly 5 gigawatts of solar capacity in its interconnection queue in 2019, according to a May filing with regulators, but not all will be built. To get in-limbo projects connected to the grid, the utility will submit hundreds of megawatts' worth of projects to a “cluster study” where their potential grid impacts will be assessed simultaneously rather than on a one-by-one basis, with hopes that that approach will speed up the process.
Unlike the cluster study National Grid undertook recently in Massachusetts to assess distributed solar projects, the Duke agreement won support from several of the region’s largest developers. California also uses clusters to assess some interconnection requests.
“It took a lot of hard work, creativity and good faith,” said Steve Levitas, a senior vice president at North Carolina-headquartered Pine Gate Renewables, in a statement about reaching the deal.
Strata Solar CEO Markus Wilhelm said the company "look[s] forward to partnering with Duke to transform North Carolina’s electric power supply." Cypress Creek Renewables, the other leading developer in the state according to data from Wood Mackenzie, did not respond to request for comment on the deal, but it did sign the agreement filed with regulators. Duke asked commissioners to respond to the request by October 15.
The settlement comes soon after a FERC ruling on PURPA that is expected to give utilities more control over rates paid to qualifying facilities, a decision that is likely to make the law less valuable for developers and perhaps limit its use.
In September, Duke filed its most recent integrated resource plan with regulators. It included six potential pathways to the utility’s pledged goal of net-zero carbon by midcentury, but all of the scenarios proposed include more renewables. Solar additions could range from about 8.7 gigawatts by 2035 up to 16.4 gigawatts by that year if the utility adds no new gas generation.
The recent IRP, in tandem with this agreement with developers, will have a “fairly significant” impact on solar in the Carolinas, said Smith, indicating that developers and the utility are open to working together to achieve renewables goals.
This story has been updated with comment from Strata Solar.