Customers of Duke Energy Progress and Duke Energy Carolinas (Duke Energy) have new options to achieve their clean energy goals in the Carolinas.
If customers participate in these new programs, there may be additional opportunities for solar and storage development in the two states.
North and South Carolina regulators recently approved new “green tariff” programs proposed by Duke Energy. The tariffs expand upon the utilities’ existing programs in the two states in important ways:
- Large customers can now offset up to 100% of their energy use with renewable energy procured by Duke Energy on behalf of the customer
- Larger customers have the additional options to develop and utilize energy storage to virtually time-align their energy usage with renewable energy attributes and to credit bill savings through hedging
- Increased program capacities means more customers can participate in the program
- Eligible customers may obtain carbon reduction attributes associated with the generation of renewable energy
Duke Energy has asked state regulators to offer even more options. If these programs are approved, residential and smaller commercial customers can make on-bill purchases of renewable energy attributes generated from local renewable energy facilities.
The particulars of each state’s approved and pending programs are discussed below, beginning with North Carolina, to explain the concepts, parameters and potential customer benefits. According to Duke Energy, none of these programs increase costs to nonparticipating customers.
North Carolina
Renewable Energy for Large Businesses
The North Carolina Utilities Commission (NCUC) recently approved Duke Energy’s Green Source Advantage Choice Program (GSA Choice Program). This new tariff replaces the legacy Green Source Advantage Program, which was originally authorized under North Carolina House Bill 589 and approved by the Commission in 2017.
Legacy Program
The legacy program allowed large energy users to participate in the market for renewable energy in ways not previously available to customers in the Carolinas. Eligible customers contracted directly with an independent power producer through a Power Purchase Agreement (PPA) to develop a solar project and purchase renewable energy credits (RECs), while Duke Energy provided offtake for the project and credited the customer’s electricity bill as payment for power generated from the project (PPA Option).
Over 700 megawatts of new solar facilities are in development under the legacy program. Participation has generally been limited to customers willing to pay a premium for renewable energy, which arguably limited businesses’ participation in the program. In addition, the legacy program tied the maximum capacity of an eligible project to the customer’s peak electricity demand, which rarely, if ever, permitted a customer to offset its full usage. Current subscribers include the U.S. Department of Defense, the cities of Charlotte and Durham, Duke University and Bank of America. House Bill 951, which was enacted in 2021, required Duke Energy to update its programs.
GSA Choice Program
The new GSA Choice Program approved under House Bill 951 allows eligible customers to offset up to 100% of their energy use with renewable energy, rather than limiting project capacity to peak demand as the legacy program did. However, customer eligibility remains tied to its peak demand. Eligible customers are nonresidential customers with an annual peak demand of at least 1 MW or, for a nonresidential customer with multiple accounts, an aggregated annual peak demand of at least 5 MW. Up to 250 MW of capacity under the PPA Option would be permitted each year. In addition to the PPA Option offered under the legacy program, eligible customers may purchase RECs and carbon emission reduction attributes directly from Duke Energy that are sourced from utility-owned renewable energy facilities (Direct Purchase Option).
Further, the GSA Choice Program increases the total program capacity to 5 GW of new solar facilities — over five times the capacity available in the legacy program. These changes mean 1) more customers can participate and 2) each customer can contract with a larger solar facility for even more offsets. The GSA Choice Program would not result in an increase in the total amount of solar resources deployed by Duke under its North Carolina programs because the 250 MW annual allotment of GSA Choice PPAs would be deducted from the amount of solar resources procured by Duke under its annual procurement programs. To address concerns about this, Duke added a Resource Acceleration Option program (RAO Option), under which eligible customers may also contract with developers of solar projects not otherwise selected during the utility’s procurement process to accelerate the construction of renewable energy facilities. Capacity contracted under the RAO program would be in addition to Duke’s annual procurements.
Under the PPA and RAO Options, participating customers would pay an amount calculated under their applicable electric rate schedule, plus the sum of (1) the negotiated price between the developer and the customer (GSA Choice Product Charge), (2) a bill credit to compensate the customer for the avoided cost of energy and capacity from the generation of renewable energy (GSA Choice Bill Credit), and (3) a GSA Choice Administrative Charge ($375 per month, plus $50 charge per additional account billed). The customer may elect to receive a fixed or hourly bill credit calculated under the terms of the approved tariff, although the fixed bill credit is not available to customers under the RAO program. Under the Direct Purchase Option, participating customers would pay an amount calculated under their standard rate (plus an agreed-upon Clean Energy Environmental Attributes (CEEA) charge, explained below, and administrative charge not to exceed 20% the cost of the CEEAs).
Clean Energy Environmental Attributes
Duke Energy has introduced CEEAs into the program. According to the utilities, CEEAs are the carbon emission reduction attributes and RECs authorized under state law associated with the electric generation from renewable energy facilities.
Duke Energy reports that “energy associated with CEEAs displaces energy that often would have otherwise been produced from non-renewable generating facilities.” However, this claim is disputed by some because none of the renewable resources developed under GSA Choice Program will generate additional renewable energy facilities beyond the capacity that Duke Energy is required to bring online to meet the carbon reduction mandates in House Bill 951, as implemented in the utilities’ integrated resource plan (IRP).
Some intervenors in the NCUC docket considering the new GSA programs filed a motion to reconsider the order approving the GSA Choice Program primarily on the ground that Duke Energy should not be able to include in the program capacity in the utilities’ portfolio that is already being procured pursuant to the IRP. The intervenors argue that if this capacity is included then customers are not offsetting their carbon footprint and are merely claiming carbon reductions that will occur whether or not they participate in the program. At least one third-party certification firm, CRS, stated it is unable to certify renewable energy and related benefits generated from the GSA Choice Program because it would not be surplus to what is required under law. According to these Intervenors, House Bil 951 requires that carbon-free capacity added through the GSA program be in addition to capacity added through annual solar procurements or other programs.
Businesses that wish to obtain certified carbon offsets or otherwise make sustainability claims should carefully review the details of individual programs to ensure they align with internal and external requirements. Moreover, regardless of any Duke Energy program, local developers of renewable energy will likely have RECs available for sale to businesses, and businesses can still participate in those markets without Duke Energy. Those transactions, however, will not be on-bill.
Storage for Large Businesses
The GSA Choice Program now allows very large energy users to partner with utilities to develop all or a portion of a grid-scale energy storage facility. Under the program, the storage facility is owned by Duke Energy and operated as a system resource anywhere on the utilities’ grid. The capital cost of developing the storage facility is shared proportionately between Duke Energy and the participating customer. Duke Energy is responsible for the development costs representing the system value of the facility, and the participating customer is responsible for all other costs. Development costs are paid via 1) a contribution in aid of construction or 2) an on-bill levelized demand charge.
The storage option is intended to allow customers to virtually time-align the customers’ real-time, hourly energy usage with renewable or clean energy output. The storage option may also allow the customer to take advantage of price hedging. The program passes through the economic benefits of hedging by providing an on-bill credit, if any, achieved by netting the hourly cost of charging the storage facility with an hourly price from discharging the storage facility.
The storage option is limited to nonresidential customers with a maximum annual peak demand of at least 15 MW or, for a customer with multiple accounts, an aggregated maximum annual peak demand of at least 30 MW.
Purchase of CEEAs for Small Businesses
Duke Energy has also sought approval in North Carolina for the Clean Energy Impact (NC CEI) Program. This program allows all Duke Energy customers, including those that are ineligible to participate in the GSA Choice Program, to offset their energy usage with renewable energy through on-bill purchases of CEEAs.
Residential and small nonresidential customers can purchase 250 kW “blocks” of CEEAs on an as-available, monthly basis, while large nonresidential customers that commit to purchasing ten blocks are eligible to purchase 1 MW blocks.
This program has not yet been approved in North Carolina.
South Carolina
Renewable Energy for Large Businesses
The South Carolina Public Service Commission recently approved amended green tariffs for Duke Energy. The existing South Carolina program, called the Green Source Advantage (GSA) Program, which generally mirrors the legacy GSA Program in North Carolina, was amended to permit the customer to offset 100% of its energy usage.
The South Carolina GSA Program differs from the North Carolina GSA Choice Program in three material terms. First, the requirements for aggregating meters are less stringent. A customer with multiple accounts is eligible to participate if, in aggregate, the accounts have an annual peak demand of at least 1 MW (compared to 5 MW in North Carolina). Second, program capacity is much smaller and is limited to 250 MW—a 50 MW increase from the legacy program in South Carolina. These changes likely represent a smaller electricity market in South Carolina. Third, customer participation under South Carolina’s amended GSA Program is limited to the PPA Option.
Purchase of CEEAs for Large Businesses
The South Carolina Public Service Commission recently approved Duke Energy’s Renewable Choice Program for large energy users that wish to offset 100% of their energy usage. Under the program, eligible customers can purchase CEEAs sourced from up to 495 MWs of Duke Energy-owned renewable energy facilities and up to 360 MWs of renewable energy facilities owned by independent power producers (Source Limitations). These quantities will become available to eligible customers when the underlying resources come online and become operational. Customers must meet the same eligibility requirements provided in the South Carolina GSA Program.
Storage for Large Businesses
The new storage options available to South Carolina businesses are provided in the same tariff approved for the Renewable Choice Program, and they mirror the options available under the North Carolina GSA Choice Program with the exception that they adopt the Source Limitations of the Renewable Choice Program.
Procurement of CEEAs for Small Businesses
The new options to purchase CEEAs for small businesses and residential terms were approved by the South Carolina Public Service Commission in Duke Energy’s Clean Energy Impact Program — on the same terms that Duke Energy has applied in North Carolina.
Recap
Customers have several options to procure renewable energy under these programs, each of which are subject to capacity limitations. Under the NC GSA Choice, SC GSA, and SC Renewable Choice Programs, participating customers must pay a $2,000 non-refundable application fee and $375 monthly administrative fee per customer account. Participation windows are open once annually. Customers will pay additional charges based on the option selected and the amount of energy supplied.
- Direct Purchase Option: Under the NC GSA Choice and SC Renewable Choice Programs, customers contract with Duke to purchase CEEAs that are tied to renewable energy projects that the utility owns or is developing with third parties.
- PPA Option: Under the NC GSA Choice and SC GSA Programs, customers may propose their own developer for a renewable energy project and negotiate a three-way agreement among the developer, customer and Duke that allows Duke to accept renewable energy from the developer through a Power Purchase Agreement (PPA) while allowing the customer to claim credit for the generation, including CEEAs. In North Carolina, the third-party facility capacity is limited to no more than 250 MW, annually, and the annual amount available will be determined as part of the annual allocation process.
- RAO Option: Under the NC GSA Choice Program, customers may contract with the developers of solar projects that Duke did not select in previous procurement rounds to accelerate the deployment of solar resources in excess of the projected amounts required to comply with House Bill 951. To be eligible, a project must have submitted an eligible, conforming, non-winning bid in Duke’s most recent Request for Proposals (RFP) process and it must have made it to Stage 2 of that RFP.
- Energy Storage Option: Under the NC GSA Choice and SC Renewable Choice Programs, eligible customers can virtually time-align their energy usage with renewable or clean energy from a combination of Duke-owned renewable generation and energy storage or other clean energy resources. This option is only available to customers with a maximum peak demand of at least 15 MW or an aggregated maximum annual peak demand at multiple service locations in the service territory of at least 30 MW. Participating customers can elect to pay their portion of the energy storage or clean energy technology cost as an up-front Contribution in Aid of Construction payment or on their bill over time in a levelized demand charge payment.
- Subscription Option: Under the NC CEI (pending approval) and SC CEI Programs, commercial customers may purchase blocks of CEEAs from Duke-owned renewable energy resources on a month-to-month basis, subject to availability.
On the Horizon
As a condition to the approval of Duke Energy’s customer programs, the South Carolina Public Service Commission has ordered Duke Energy to develop and seek approval of a Clean Energy Connection (CEC) program, a subscription-based community solar program similar to the program already offered by Duke Energy in Florida. Duke Energy indicated it plans to seek approval of a CEC program in North Carolina as well. Duke has held stakeholder engagement forums and plans to seek approval of a CEC program in both jurisdictions before the end of the year. If approved, these programs will allow an additional way for customers to meet their sustainability goals.
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