Riding the Solar Coaster

There’s a limit to how downhearted a person can be while sipping some of Asheville’s finest craft beers, listening to a local bluegrass band, and gazing over the Blue Ridge Mountains. And for the more than 100 supporters of the N.C. Sustainable Energy Association (NCSEA) who had gathered at Highland Brewing Company for a May networking event, the photovoltaic array on the brewery’s roof—the sixth-largest such installation at a craft brewery in the U.S.—only added to the evening’s clear views. 

And yet an undercurrent of frustration was brewing as a panel discussed the obstacles to solar deployment in the region. “Somebody’s going to have to refill this if you want me to get into all of our challenges,” said Buncombe County Sustainability Officer Jeremiah LeRoy, gesturing at his empty glass. 

A fresh beverage duly delivered, LeRoy continued, “I feel like I’m preaching to the choir in this room, but we’ve got some issues with the utility, right? It’s a safe space to just bitch about Duke a little bit.”

His fellow panelist Dave Hollister of Weaverville-based Sundance Power Systems explained that since the state first passed standards for connecting customer-owned rooftop solar to the power grid in 1998, those projects have been in tension with Duke Energy’s business model. State regulators guarantee the utility a roughly 10 percent return on any power generation it builds, so any customer-owned solar cuts into Duke’s potential profits.

Duke thus has a strong incentive, Hollister said, to make small-scale solar less attractive. “We call it the solar coaster,” he said of the ever-changing policies that result from skirmishes between the utility and the rooftop solar industry.

The coaster’s latest dip came last October, when new rules, supported by Duke and approved by the N.C. Utilities Commission, went into effect for net metering. The policy refers to the way a utility pays solar-panel owners for the power they feed back into the grid. 

Under the former net-metering rules, any excess electricity from a customer’s panels offset the same amount of power purchased from Duke, regardless of when it was generated. 

The new rules divide those credits into “on-peak” and “off-peak” hours, with different rates for different times of day. During the summer months, for example, power is most expensive between 6 and 9 p.m., when many users demand electricity to run air conditioners. But customers can no longer count rooftop solar sent to the grid earlier in the day, when the sun is at its brightest, toward their own power consumption during the evening.

According to the N.C. utilities commission’s Public Staff, an independent agency that represents ratepayers in regulatory cases, the changes slash the financial benefits of solar by an average of 30 percent. The typical customer with solar would save about $56 per month under the new rules, down from roughly $98.

Duke, like other utilities fighting net-metering rules, argued that the old rates benefited solar customers at the expense of everyone else. Regulators in more than a dozen states, from California to Vermont, have heeded such arguments and cut net-metering benefits over the last decade. Those decisions have disrupted the industry: The Solar Energy Industries Association found that residential solar installations were down 25 percent year-over-year across the country as a whole in the first quarter of 2024.

North Carolina has been no exception. With new solar projects suddenly less economically viable, customers cooled on adopting the technology. Due to a slowdown after October, said NCSEA Executive Director Matt Abele, residential solar installations in the state failed to increase year-over-year for the first time since 2016. And the SEIA’s most recent projection for customer-owned solar rollout in N.C. through 2028 is down 40 percent from its estimate before the net-metering change. 

The changes discourage carbon-free solar power at a critical period for both the state’s energy sector and the global fight against climate change driven by fossil fuels. A state law passed in 2021 requires utilities to cut carbon dioxide emissions 70 percent from 2005 levels by 2030. Some local governments have set even more aggressive goals; Buncombe County’s aims to power all municipal operations with renewables in that timeframe.   

Duke projects that customer-owned solar installations will account for just over 1 percent of its power by 2035—meaning it would have a marginal impact on decarbonization. The utility has staked most of its planned investments in new nuclear power, natural gas plants, offshore wind, and large-scale solar projects, even as it notes that approach wouldn’t meet the state’s 2030 carbon reduction timeline.

“Renewables and storage play a major role in our proposed plan, but they can’t meet our customers’ needs by themselves,” said Duke spokesperson Bill Norton. “We are focused on a diverse, ‘all of the above’ approach that protects reliability and affordability while reducing emissions and continuing to attract jobs and investment to our state.”

Backers of customer-owned solar agree it isn’t the only answer. But they say small-scale projects can play a much larger role in the energy mix, pointing to a 2016 study by the National Renewable Energy Laboratory that found rooftop panels could ultimately meet 35 percent of the state’s electricity demands. They’re looking for ways to counter the effects of Duke’s net-metering changes and keep the solar coaster rolling along.

“We’re fundamentally in a battle with who controls our energy,” Hollister said.

House of the Rising Sun

The first prong of solar proponents’ strategy is playing out in the courts. Shortly after the net- metering changes took effect last year, a group of solar advocates including NC WARN, the Environmental Working Group, and the Durham chapter of the Sunrise Movement filed a challenge with the N.C. Court of Appeals, which heard oral arguments in February and has yet to issue a ruling.

At the core of their challenge, explained NC WARN Executive Director Jim Warren, is the approach the utilities commission used to approve the tweaks. Per a state law passed with bipartisan support in 2017, the commission could only approve new net-metering rules after an investigation of rooftop solar’s costs and benefits. 

But instead of conducting that analysis itself, the commission relied on internal Duke documents that the appellants say severely underestimated solar’s value.

Warren said the law was intended to prevent Duke from using its own solar appraisals to justify new rules. He pointed to remarks Republican Rep. John Szoka, the bill’s lead sponsor, made to Energy News Network at the time: “It’s not up to the utility to determine whether net metering is good or bad,” Szoka said. “We’re not putting the fox in charge of the hen house here.”

Szoka did not seek reelection in 2022 and now serves as the CEO of the Conservative Energy Network, a right-leaning clean energy advocacy group based in Lansing, Michigan. He did not respond to a request for comment.

The appellants also reference a regulatory filing from the state Department of Justice, under Democratic Attorney General Josh Stein, which says Duke’s study “did not analyze potential benefits of customer-sited generation” as required by the law. These include the many indirect impacts of rooftop solar, such as supporting local businesses and reducing grid vulnerability. Although the DOJ did not join the appeal, Stein’s office continues to hold that Duke’s approach was legally insufficient. DOJ lawyers plan to advocate for expanded solar through the ongoing Carbon Plan hearings and other dockets at the commission.  

Duke’s Norton countered that the utility’s analysis was thorough and included feedback from a wide range of outside stakeholders. He noted that several solar industry groups, including NCSEA, agreed to the net metering changes as part of a 2021 settlement “to avoid a contentious adversarial proceeding” at the utilities commission. (That settlement also called for the commission to adopt a solar rebate program to help offset the impacts of net metering, which the regulators did not do.)

“Our agreement with the solar community and environmental groups, and the subsequent evaluation and approval by the N.C. Utilities Commission, ensures fair treatment for all customers whether they choose to install solar or not,” Norton said.

Sam Watson, general counsel for the utilities commission, declined to comment on the ongoing litigation. He instead pointed to the commission’s March 2023 order approving the net metering rules, which said Duke’s approach captured “the majority, if not all, of the known and verifiable benefits of solar generation.” 

Many solar advocates are frustrated that state officials—particularly Democratic Gov. Roy Cooper, who has made climate action a focus of his administration through Executive Order 80 and other efforts—haven’t put more pressure on the commission or lent their support to the appeal. 

Cooper, Warren said, has “been painfully silent, despite dozens of solar companies, alongside us and independently, pleading for his help as Duke Energy moves to crush their industry.” 

Cooper’s office declined to make Clean Energy Director Peter Ledford available for an interview on net metering. Spokesperson Ford Porter responded with a statement attributed to the governor.

“Rooftop solar is an important part of North Carolina’s clean energy mix, providing clean electricity and resilience during power outages,” it read. “I am excited to see new utility programs and federal funding opportunities like the EPA’s Solar for All program that will help more North Carolinians enjoy the benefits that the technology can provide.”

Parting the Clouds

While the appeal winds through the courts, solar installers like Hollister are working to keep people interested. Rooftop solar remains a good deal for many homeowners, he argues; Sundance and two other solar companies negotiated a “bridge rate” with Duke that lets a limited number of residential customers operate under the more favorable net-metering rules for 15 years as long as they install panels by the end of 2026.

Installers are also increasingly adding battery systems, which allow customers to store power and sell it back to the utility during peak periods. Duke has its own PowerPair program, which gives new customers an incentive of up to $9,000 if they purchase both solar panels and battery systems together; over 1,300 customers have enrolled since its May launch. A 30 percent federal tax credit for rooftop solar approved through the 2022 Inflation Reduction Act can reduce costs even further.

But the shifting regulatory and incentive structures can be difficult to explain to prospective clients, Hollister said. And once the bridge rate expires, the new rules will make it much more difficult to give homeowners an estimate for when they’ll recoup installation costs.

“People want to make an investment, but they want to know what the return on that investment is going to be,” Hollister said. “And if you can’t give them concrete numbers, then you’ve undermined the entire industry.”

Fewer options are available for commercial and industrial entities, which aren’t eligible for the bridge rate or the PowerPair program. Bryce Bruncati, director of residential sales for Raleigh-based 8M Solar, said at a February press conference that his company had seen its non-residential business drop off by nearly 80 percent after the net metering changes.

8M Solar owner and principal engineer Usman Noor told The Assembly that non-residential business remained soft. Clients who have set environmental or carbon-reduction goals, primarily in the public sector, continue to show interest, but private-sector installations are way down.

“A lot of larger organizations that have green-energy mandates and are not focused solely on financial ROI are still doing projects,” Noor said. “But the small-business owners who have warehouses and buildings favorable for solar, who were also motivated by financial gain, have seen a large drop off.”

Both Noor and Hollister said the net-metering changes are often leading them to install smaller systems than they would have in the past. If Duke isn’t giving customers enough return on their investment, there’s no sense in paying the extra upfront cost—and the result is less carbon-free electricity in North Carolina.

Duke, Hollister said, has “a myopic view” of rooftop solar. “Rather than seeing customers’ investment in the future of our planet as a value, they’re basically saying, ‘You know what? You’re the bad people here. You rich people who put solar on your house, you’re going to make poor people spend more for their their electricity.’”

Of Photons and Finance 

North Carolina’s solar industry can’t pin all of its recent troubles on the net-metering changes, emphasized Bret Biggart, the CEO of Austin-based installer Freedom Solar Power. His company largely works in Texas and Florida but entered the North Carolina market in 2022.

Biggart said he’s seen reductions in customer interest across all of their markets over the last year, regardless of net-metering rules. He blames higher interest rates that make it more difficult for people of modest means to finance rooftop projects. 

When rates were low, Biggart explained, up to 85 percent of his residential customers paid for their panels using loans, and in many cases their electric bill savings more than covered the monthly cost. “The demographics of who was able to go solar changed from doctors, lawyers, and those kinds of folks to school teachers, blue-collar folks, policemen, anybody who could make a $200 payment,” he said. 

But now, more expensive financing has turned anticipated positive cashflow into a negative for many potential projects.

Abele with NCSEA agrees that rising interest rates have been a substantial drag, especially among low- and middle-income residents. But he’s hopeful about new solutions like the N.C. Clean Energy Fund. Part of the EnergizeNC coalition that received $156 million from the federal Environmental Protection Agency in April, the fund will provide low-interest financing for residential and community solar projects around the state.

On the commercial rooftop side, Abele highlights the General Assembly’s recent passage of a law approving “property-assessed capital expenditure.” The program allows businesses to pay for solar panels through annual assessments on their tax bill, generally over 25-30 years rather than the 3-5 years of a commercial loan. That approach can lower solar loan payments, thereby improving cashflow, and help borrowers avoid higher-interest mezzanine financing. 

NC WARN has floated an even more radical proposal called “Sharing Solar” in ongoing proceedings at the utilities commission. The idea, explained Warren, is to let Duke customers add new rooftop solar and battery systems at no upfront expense by designating them as capital expenditures for the utility. 

Local companies would install the panels, Duke would own them, and the utility would recover its costs by billing them across all ratepayers, just as it does for large-scale power plants. No other state has enacted such a program, Warren said, but it combines ideas that have previously found success in Vermont and California.

“We need something bold that causes dramatic change. And we’re hopeful that this proposal we’re making is something Duke will pick up on after all, because they really can benefit from it,” said Warren.

Duke’s Norton seemed less impressed by the idea of widespread customer-owned systems as the future. “It’s simply not feasible to power North Carolina’s growing economy with rooftop solar and four-hour batteries alone.”

The utilities commission would have the final say on approving Sharing Solar, but most players in the industry aren’t optimistic that its members would sign off on such a major alteration to the state’s power sector. For North Carolina to truly prioritize solar, argued Sundance Power’s Hollister, advocates will need to seek a shift at the General Assembly.

“It’s going to come from legislative action. It’s not going to be the utilities commission; they’re just doing the same thing they’ve done for the last 120 years,” he said. “We need to support those people and organizations that can get inside, change the conversation, and actually get the legislation and regulations we need to create a sustainable future.”

Asked how he expects that advocacy to change the course of the solar coaster over the next few years, Hollister responds with a grin and a shrug. “You got a Ouija board?” he asks.

Daniel Walton is an Asheville-based freelance reporter covering science, sustainability, and political news. He was previously the news editor of Mountain Xpress and has written for The Guardian, Civil Eats, and Sierra. Contact him at danielwwalton@live.com.