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A decade ago, North Carolina boasted more solar power than any other state in the country but California — a distinction owed to scores of large projects built under a suite of clean energy–friendly policies that the Tar Heel State has since repealed or amended.
Now, many of those solar farms are staring down the end of their initial agreements with Duke Energy, the state’s predominant utility. But under a new proposal before North Carolina regulators, project owners could lock in favorable long-term renewals pending one main condition: They have to add batteries.
The scheme was proffered by Duke and is backed by clean energy businesses and advocates. If it’s green-lit by the North Carolina Utilities Commission, it would represent the first systematic move toward “repowering” large-scale solar facilities in the state. The potential is enormous: Contracts expiring in the next five years total 1.9 gigawatts — an amount equal to more than a quarter of North Carolina’s entire utility-scale solar fleet.
Since battery storage will benefit from federal tax credits with few strings attached for at least another six years, and Duke faces daunting power demands from coming data centers and other large electricity users, this form of repowering could support reliability and affordability. In large swaths of rural North Carolina, extending the life of these older projects also makes more sense than decommissioning them.
“Adding batteries to a system that’s already out there makes it immensely more valuable to the grid,” said Steve Kalland, executive director of the North Carolina Clean Energy Technology Center. “In North Carolina, that’s going to be significant.”
More so than its ample sunshine or abundant open space, state policy propelled North Carolina to become a national solar leader back in 2016.
A decades-old state tax credit supplemented federal incentives, and in 2007, lawmakers adopted a modest but meaningful renewable energy requirement. But perhaps most important was the state’s implementation of a federal law designed to encourage small power producers independent of utility monopolies. North Carolina’s rules under the Public Utility Regulatory Policy Act, or PURPA, were among the most favorable in the country, with standard offer, 15-year contracts available for projects with up to 5 megawatts of capacity.
This cocktail of rules and mandates caused PURPA-qualified solar projects to soar, with over 450 large-scale developments coming online in the state from 2010 to 2017, according to the nonprofit North Carolina Sustainable Energy Association, with a capacity of over 3.3 gigawatts.
But by 2017, Duke was on pace to easily meet the clean energy mandate, and Republican state lawmakers had repealed the tax incentive. What’s more, the utility said the surge in solar was creating interconnection bottlenecks and the need for expensive grid upgrades.
So the company helped draft a new state law that year meant to clear the backlog and move most new solar into a competitive procurement process. The standard offer contracts under PURPA survived but were reduced to 10 years for projects with up to 1 megawatt.
In part due to the PURPA changes, annual solar installations in the state have slowed, dropping from a peak of 985 megawatts in 2017 to an average of just under 500 megawatts in the years that followed.
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