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North Carolina is still fighting Solar Power-Purchase Agreements

Avatar for Ben Zientara
Published on 05/02/2016 in
Updated 04/05/2019

If you want to install solar panels in North Carolina, you’ve got to pay your own way, because the state has again and again blocked efforts to allow third-party ownership of solar energy systems. Earlier this month, the North Carolina Utilities Commission (NCUC) reaffirmed its position that any entity that proposes to own and sell the energy generation from solar panels must be regulated as a utility provider.

It did so in response to a provocation from a group that calls itself “the North Carolina Waste Awareness and Reduction Network” (NC WARN), which took an extraordinary step in its advocacy for solar choice last year, when it installed solar panels on the roof of a church and started selling the electricity produced by the panels to the church. The NCUC order makes it clear that, under its interpretation of the law, NC WARN is acting illegally.

In its order, the NCUC found NC WARN violated its rules and assessed NC WARN with a $60,000 fine, which would be suspended if NC WARN agrees to refund the church, stop selling the electricity, and (presumably) never again darken the NCUC’s doorstep with its high-minded egalitarian energy politics.

The previous 3 paragraphs may seem overly complicated. Here’s what it boils down to:

  • A group called NC WARN installed some solar panels on a church roof and…
    • is selling the church the electricity produced by the panels.
  • The North Carolina Utilities Commission said “nuh uh!” because they interpret state law to prohibit anybody other than a huge monopoly utility from selling power in the state.
  • So they threaten NC WARN with huge fines unless it says sorry and pays all the money back.
  • Now it’s going to court

Here’s why this matters:

Solar Power-Purchase Agreements (PPAs) are a way for people without huge amounts of cash or credit to get solar panels installed on their homes. They work because a solar business (like Sunrun, SolarCity, etc.) can take advantage of economies of scale and the federal solar tax credit to reduce their costs, install solar panels for cheap on lots of home, then sell power to a home or business owner to make money over time. It’s a great investment for a medium- to large-sized solar company, and a great way for low-income homeowners to get solar.

Well big utility companies don’t like competition, and North Carolina’s got a doozy of a big utility company in Duke Energy Progress. It might not seem surprising, then, that the state has a law that prevents anyone other than a regulated utility company from selling electricity direct to consumers. This leaves North Carolinians without much choice when it comes to how they pay for solar.

It’s worth noting that the Tarheel State is one of just 4 places in the US that bans PPAs.

If PPAs were allowed in North Carolina:

PPAs are a way for people with low income and less-than-excellent credit to get solar on their homes, but as you can see from the chart above, they’re not ideal. The blue bars represent the ongoing net savings from a hypothetical PPA in North Carolina, and end up at just $1,500 after a 20-year term. Compare that to the almost $15,000 25-year return from buying the system with cash, or close to $9,000 return from taking a home-equity line of credit to pay for the panels.

Here’s one possible argument for banning PPAs: the savings for consumers aren’t there (the savings estimates assume a 3.5% yearly increase in electricity prices from the utility company), and the only people making money on a PPA are the solar companies. Of course, the counterargument here is that the state shouldn’t be in the business of denying a company the right to try to make a profit, nor denying consumers the chance to get solar even if they can’t afford it another way.

We’ll keep following this story and let you know the outcome of the court case involved. Stay tuned!

Last modified: April 5, 2019

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