WHY NORTH CAROLINA LAGS BEHIND IN 2017 RENEWABLE ENERGY PROJECTS!
As 2017 kicks off, Duke Energy appears to be exerting its market power in confrontation with the renewable industry by implementing new standards that have sent independent renewable energy developers for a whirl. This past July, Duke Energy put forth new policies redefining safe grid connections for independent renewable energy producers. The new grid connection requirements, also known as the stiffness test, hinder third party renewable energy companies from moving forward and subsequently leave North Carolina behind in renewable energy.
North Carolina lags behind in replenishing resources for 2017 which is a big drop from being the second ranked state for installed solar power in 2016.
– John Downey, The Charlotte Business Journal
THE STIFFNESS TEST
Duke Energy’s newest rules regarding which third-party producers can connect to their power grid demonstrate what some in the industry believes is an attempt by Duke to make interconnection more difficult for renewable energy producers. In July, Duke Energy proposed the idea of new guidelines to enter the power grid with a “stiffness test.” This test redefined the procedures for individual renewable energy companies to connect to the grid.
Duke’s position forces some developers back to the drawing board to redesign their renewable energy project schematics. In Duke’s view, it implemented the new procedures as a safety mechanism to protect against problems related to the connection between circuits with limited capacity.
John Downey, Senior Staff Writer at Charlotte Business Journal says, “The stiffness test was designed to make sure independent power projects that tap onto Duke’s grid do not overwhelm the substations used for the interconnection.”
With the newly implemented guidelines, numerous companies who were implementing huge projects found themselves back at the starting line as their projects were delayed. Many companies that had previous projects were able to negotiate terms because of previously established rules; they were grandfathered into the prior rule system. Other companies without prior approval were not so lucky.
HOW DOES THE STIFFNESS TEST IMPACT NC?
Some developers and others in the industry feel that Duke implemented these new policies to reduce its competition in North Carolina: “it eliminates competition and hampers the development and implementation of solar and other clean energy technologies,” said Joel Olsen in John Downey’s article. Olsen, CEO of O2 EMC, continues by suggesting that the “stiffness test” does not cover the issues that Duke Energy is trying to resolve but instead is denying about 80% of 600 solar projects.
Companies like Charlotte’s Pine Gate Renewables have also been affected by Duke Energy’s new stiffness testing requirements. Pine Gate established a renewable energy plan to build 250 megawatts of solar energy this year. To put that in perspective, 250 megawatts is equivalent to eliminating 395,300,000 pounds of carbon a year. This plan reflects a significant investment for both Pine Gate Renewables and related renewable energy companies that support development, but unfortunately PGR’s current plan does not contemplate any construction in North Carolina, as Duke Energy’s “stiffness test” caused PGR to consider what it has determined to be a more manageable transmission provider interconnection requirements.
In early January, this test was reported as bringing renewable energy projects to a standstill in the state of North Carolina. Developers will now look to alternative states like South Carolina and Oregon. Pine Gate Renewables has no plans to establish any projects in North Carolina at this time, but it is confident that solar continues to have future in the state.
PURPA -PUBLIC UTILITY REGULATORY POLICIES ACT
In response to Duke’s policies, many renewable energy companies filed complaints stating Duke violated state and federal grid connection regulations by denying connection for N.C. clean energy projects. The Public Utility Regulatory Policies Act (PURPA) passed under the National Energy Act strives to increase energy conservation and requires utilities to allow independent renewable energy companies access to the grid under regulations. The complaints filed against Duke Energy claimed in part that Duke failed to abide by the PURPA guidelines.
O2 EMC was not pleased with the results of the filed complaints, stating that Duke Energy only offered a vague excuse for not meeting the regulation of PURPA. To O2 EMC’s dismay, Duke Energy received no penalty for dismissing the complaints. The complaints addressed the issues with Duke’s alleged violation of PURPA. Duke continues to stand by the decision, believing its new policies and procedures have been implemented in good-faith.
NORTH CAROLINA’S FUTURE IN RENEWABLE ENERGY
Most recently, Duke found itself named in a complaint by Cypress Creek Renewables, wherein Cypress Creek alleged that Duke refuses to enter into long-term power contracts for large projects in violation of applicable law. Cypress Creek Renewable filed a complaint after Duke Energy imposed new rules limiting the length of power purchase agreements for power projects above a certain size; specifically, Duke Energy proposed to limit power purchase agreements for projects greater than five megawatts in size to no more than five years. Duke claims that a maximum of a five-year contract will help protect its customers. This change in terms affects six of Cypress Creek’s largest solar project, equaling 402 megawatts of solar energy. Duke’s policy shift evidences a change from prior contracts that allowed for ten or fifteen year terms on projects of up to 80 MW in size.
Overall, the battle to further North Carolina’s Clean Energy industry continues:
- The solar industry in North Carolina experienced a rapid ascent in terms of installed solar capacity, by many estimations second only to California.
- Duke Energy has made more stringent the standards by which it allows third party producers to connect to the power grid.
- The “Stiffness Test,” implemented in July has made it difficult for companies like Pine Gate Renewables, Cypress Creek Renewables, and O2 EMC.
- All eyes will be on Duke Energy as the power struggle continues to unfold regarding solar energy and the policies currently in place.
By: Grayson Collins
CCP Web Design