House Republicans in North Carolina filed legislation last month that would legalize third-party sales of electricity, thus opening the door for solar companies to deepen their footprints in the state. House Bill 245, the Energy Freedom Act, would for the first time allow property owners in NC to buy electricity directly from a renewable energy company, completely bypassing their designated utility company. If passed by both houses of the NC legislature in the current session, the bill would go into effect July 1, 2015 .
Introduced by Rep. John Szoka (R-Cumberland), the bill’s intent is to diversify North Carolina’s energy resources, provide greater energy security and reliability through the development of distributed energy resources, and encourage private investment in new generating facilities and ancillary businesses. Under the law, renewable energy products owned or operated by a third party would be eligible to participate in net metering arrangements through public utilities. All renewable energy projects owned and operated by a third party would need to be located on the power-purchasing customer’s property, and the project could not produce more than 125% of the customer’s annual average electricity consumption. Currently, North Carolina is only one of five states that prohibits third party renewable energy leasing (FL, GA, KY, OK are the others). 24 states allow third-party solar leasing and laws are unclear in the other 21.
Big energy customers like the U.S. military, the University of North Carolina system, data centers, and large retailers are the bill’s strongest supporters. A consortium of 10 major companies -- including Wal-Mart, Lowe’s, Target, and Volvo -- is backing the proposed North Carolina bill. That bodes very well for job creation and boosting of local economies. Beyond big business, supporters of a solar energy bill hope it will give more options to low income families that face tough decisions over high utility bills (buy the utility monopoly in town or go without). This bill also speaks to green energy proponents.
Not surprisingly, Duke Energy is the bill’s strongest critic. One of NC’s two major investor-owned utilities, Duke recently made an entry into the third-party solar market by acquiring a majority stake in a California-based commercial solar installer, REC Solar. WIth respect to the North Carolina bill, Duke claims it wants to see a more comprehensive piece of legislation than what Rep. Szoka has put forward. Duke is pushing for legislation in North Carolina similar to what South Carolina reached last year. Under the South Carolina settlement, utilities agreed not to pursue any fees on solar projects through 2020. Delaying action, Duke claims, will allow North Carolina to craft a more comprehensive approach by analyzing what happens in other states (like SC).
Since its introduction in March, the North Carolina bill has picked up 12 co-sponsors and enjoys wide bipartisan support. But it has already been deferred to three different committees, which suggests that the opponents -- most notably Duke Energy -- are lobbying hard (and successfully) against it. If passed, this bill would be a huge win for U.S. solar companies. Clean energy has seen rapid growth in the Carolinas in recent years ($1.2 billion in 2013 to $4.8 billion in 2014). North Carolina has become one of the fastest growing solar markets in the U.S., ranking fourth in the country overall. Due to restrictions on the third-party sale of electricity, most of the development has been at utility scale. But that hasn’t stopped rooftop solar companies from entering the market. Residential solar loans are starting to gain market share as well, given the high upfront costs customers face when installing solar panels. NC has the potential to become “the place to be” for solar energy companies. Keep your eye on this bill if your business deals in this type of alternative energy.
