New Proposal Hurts Solar Net Metering in NC

Brown home with solar panels on the roof during a sunny day

Topics in This Article

Is Net Metering Going Away?

The short answer is no. But if the proposed changes go through, starting in 2023, net metering will look drastically different from its current form.

  • Duke has filed a proposed change to its NC solar net metering policy starting in 2023.
  • NC law requires a 3rd party investigation into the value of net metering before any changes to the net metering policy are made. This investigation has not occurred.
  • The current proposal will hurt the NC solar industry so we have filed to intervene in the docket.
  • If you are considering going solar, the best time to go solar is right now so you will be grandfathered into the current net metering structure (and take advantage of the 26% Federal Tax Credit for solar before it drops to 22% in 2023).
  • We will update this article in ~45 days with clear advocacy actions for you to help stand up for solar in NC. Join our newsletter to stay tuned!

Background

After 20+ years as one of North Carolina’s oldest local solar installers, we’ve been through the many ups and downs the clean energy industry has to offer. Here’s the latest ride on the NC solar coaster — so buckle up and hold on tight!

Changes Proposed to Duke Energy's NC Net Metering Policy​​

In November of 2021, Duke Energy filed a proposed change to North Carolina’s solar net metering policy with the NC Utilities Commission. These changes are a byproduct of clean energy legislation passed in 2017 through House Bill 589. This legislation requires an investigation into the value of net metering (§ 62-126.4.b) which has yet to take place, and the current proposal does not include a plan to do so either. The ultimate goal of the 3rd party investigation is to provide clear values of the cost and benefits of net metering and distributed rooftop solar generation.

Because the proposal in its current form ignores the benefits of solar and only takes cost into account, we feel that it will negatively impact the value of solar, growth of the NC solar industry, and achieving our state’s climate goals.

What We're Standing For

If you know anything about Southern Energy Management, and especially our co-founders, Maria and Bob Kingery, you’ll know that we aim to stand for things, not against. 

Last week, we were joined by 14 other solar companies, including our friends at Sundance Solar Systems and Yes Solar Solutions in asking Governor Cooper and NC Attorney General to help NC stand for:

  • Having a 3rd party perform the required study on the value and cost of net metering
  • Fair compensation for solar generation
  • Supporting local North Carolina clean energy jobs
  • Advocating for homeowner pathways to energy independence
  • Continuing solar’s growth to meet North Carolina’s climate goals 

You can see our letter to the governor here. We’ll be updating this article again in the next few weeks with clear advocacy actions for you to take – including talking points and who to reach out to. Until then, keep reading to learn more about why we’re taking a stand and how Duke’s proposed net metering changes could impact you.

Current State of Solar Net Metering in NC

Before we dive into the proposed changes, let’s briefly look at the current state of net metering in North Carolina.

*Note: There are a handful of other smaller utilities that also offer net metering in NC. This article will focus on Duke Energy’s pending net metering changes. 

What is net metering?

Net metering is a solar interconnection policy that controls how your solar system is connected to the utility’s grid AND how you are credited for the solar energy you produce. With Duke’s current net metering policy, the utility stores your electricity credits at a 1:1 rate so you get the full retail value of your solar electricity. You can think of net metering like an energy bank that allows you to save your extra solar energy to use later during those rainy days. 

How do net metering credits work right now?

Duke Energy installs a special “bi-directional” meter that spins backwards when your solar system sends excess energy to the utility’s grid. This energy that you send to the grid is applied as a credit for you to use later when your solar system is not producing enough energy for your entire home–at night or on rainy days, for example. Sending this excess energy effectively turns the grid into a storage system for your solar array!

Why is solar net metering important?

Right now in North Carolina, net metering is the best interconnection policy for solar since it offers a true 1:1 credit for your solar energy. This allows homeowners to capture the most value out of their solar system. Other interconnection policies like buy-all-sell-all or buy-all-sell-excess compensate homeowners for their excess solar energy at a much lower, wholesale rate than what they pay for electricity.

What Are the Proposed Changes to Net Metering in North Carolina in 2023

The proposed changes to North Carolina’s net metering policy with Duke Energy (DEC) and Duke Energy Progress (DEP) require customers who go solar after January 1, 2023 to move to new Time-of-Use (TOU) Rates*. If you do not have a solar system, switching to TOU rates will be optional. Customers that complete solar installations before January 1, 2023 will also have the option to remain under the current net metering rate until Dec 31, 2037 but will have additional fees added to their bill after January 1, 2027.

*Note: There are three new rates proposed, two for Duke Energy and one for Duke Energy Progress. For simplicity, the numbers we use in this post are based on Duke Energy’s proposed RSTC rate, but the structure and impact of all the new rates are similar.

What are Time of Use (TOU) Rates?

TOU rates mean that your energy consumption and solar production are valued differently based on the hour of the day, day of the week, and month of the year. The value of energy is outlined in a rate schedule, with the utility typically charging more for energy during peak demand hours (think mornings and evenings when everyone is at home). This is in contrast to a flat rate system where usage and solar production are valued the same every hour of the day, year round. 

How Will These Changes Impact the NC Solar Industry?

The proposed changes to net metering in North Carolina complicate and reduce the value of solar for individual system owners. 

But what about the broader impact? If the proposal passes in its current form, it will lead to job loss in the rooftop solar industry, hinder adoption of energy independence, and severely imperil our state’s climate goals.

Weakening and Complicating the Value of Home Solar

20-35% Reduction in the Value of Solar Energy

Right now, solar energy is worth 9.34 cents per kWh in DEC territory, which is the same value as what someone without solar would pay to pull energy from the grid. We analyzed hourly data from 30 of our solar customers and found that under the new proposal, the value of solar energy would drop 28% to an average of 6.8 cents per kWh. Meanwhile, the TOU rates leave the cost customers pay for energy from the utility essentially unchanged. So at the end of the day, solar customers will pay the same amount for energy used but get less for solar energy generated.

In the graph below you can see how the time of use rates line up with typical solar production throughout the day. The hours when solar produces the most energy (middle of the day when the sun is shining high in the sky) are specifically diminished by the proposed rates. 

Graph showing how proposed TOU rates line up with typical solar production throughout the day

While 6.8 cents is the average value of solar on the proposed rate schedule, the value ranges dramatically (from 20-35% in our analysis) from one solar system to another because the rates are so complicated and convoluted. Ultimately, solar’s value will be dependent not only on the time of day, day of the week, and month of the year, but also on the ratio of solar production vs energy consumption from hour to hour for each home (if you are confused by that sentence, don’t worry, it’s confusing).

If the legally mandated independent study on the value of net metering is conducted, we know it would result in a net metering rate structure that is more balanced and offers a fair value for the benefits that rooftop solar has on the grid and to our environment.

The Proposed Net Metering Rates are Insanely Complicated

In addition to outright devaluing solar, all the variables that come with a TOU system add heaps of complication to the solar design and modeling process. This direction creates more opportunities for error and miscalculating solar savings, while further challenging the process of homeowner education and explaining the value of solar.

Complicated and Inaccessible

Under the current net metering system, we need 24 energy data points to model solar effectively (12 months of the homeowner’s energy usage data and 12 months of projected solar production).  Under the proposed plan, those 24 data points would increase to 17,520 points with hourly data required for both historic energy usage (8,760 hours) and projected solar production (another 8,760 hours). 

This adds magnitudes of complication to the design process while adding no value for solar system owners. Finally, the raw energy usage data we would need to accurately model a system design is not currently available to customers in an accessible format from Duke Energy.

Death by 1,000 Cuts Fees

Meme of ticketmaster fees

The proposed TOU rates add multiple new and confusing fees that will further restrict and devalue solar savings. Current residential rates have two fees in addition to the charge for energy usage:  a basic facilities charge and a 94 cent Renewable Energy Portfolio Standard (REPS) fee. This table shows how current fees compare to the proposed fees:

Current Bill Proposed Bill
  • Energy Charge
  • Basic Facilities Charge
  • REPS Rider Per Month
  • Energy Charge
    • Discount
    • Off
    • Peak
    • Critical
  • Basic Facilities Charge
  • REPS Rider Per Month
  • Grid Access Fee for >15 kW per kWDC
  • Non-Bypassable Charge per kW
  • Minimum Bill Calc
  • Minimum Bill Charge
  • Total Bill Before Excess Solar
  • Excess Solar Adjustment

Critical Peak Pricing is Inconsistent

Energy charges on the TOU rates are divided into four parts based on when energy is imported or exported from the utility. For the the RSTC Rate we’ve used for this analysis those parts look like:

  • Discount – 6.09 cents per kWh
  • Off Peak – 8.04 cents per kWh
  • On Peak – 19.23 cents per kWh
  • Critical Peak – 35 cents per kwh

The utility can choose up to 20 random on-peak periods during the year and dub them Critical Peak Periods. During these periods, cost per kWh jumps from 19.23 cents to 35 cents. Strangely (if unsurprisingly) the rates don’t allow these additional costs to be offset by solar production. This pricing is unfair and inconsistent.

Punch in the Gut to Rooftop Solar

All these things – the devaluing of solar through rates specifically designed for that purpose, the gordian knot complexity of the rates and interdependent fees, and the lack of consistency – are a punch in the gut to rooftop solar in North Carolina. In the next section, we dive into the injuries that will result from this punch.

Loss of Solar Jobs

The rooftop solar industry in North Carolina currently employs thousands of people and is on pace to add thousands of more jobs over the next five years. The proposed changes to net metering would halt solar’s growth and eliminate thousands of local, well-paid, and skilled jobs that provide full-time benefits to hardworking North Carolinians. Without these opportunities, we could see passionate, experienced, and valuable North Carolina solar workers leaving to other states where solar is not being constricted by regressive policies. Right now, California is projected to lose more than 50,000 solar jobs as a result of similar changes to solar net metering policies in that state.

A Step in the Wrong Direction for Climate & Energy Independence Goals

Issued in January, 2022, Executive Order No. 246 states that North Carolina will need to achieve net-zero emissions no later than 2050. Devaluing solar through the proposed net metering changes would strangle a critical piece of our clean energy mix – putting these goals in jeopardy. 

Placing the profits of utility companies above our state’s climate and energy independence needs at a time when scientists say we must accelerate our transition to clean energy is short-sighted and irresponsible. And as world events continually demonstrate,  there is a collective need to shift away from fossil fuels and strive for energy independence. Duke Energy’s proposed net metering plan would prevent those efforts by taking power away from individual North Carolinians who want to pursue energy independence. 

What Do the 2023 Net Metering Changes Mean for You?

What do these net metering changes mean for current solar system owners, people exploring solar, and everyone else?

If you are considering solar:
Our advice is to go solar in 2022 so that you benefit from the current net metering structure and have more options going forward. 2022 is also the last year for the 26% Federal Tax Credit for solar (before it drops to 22% in 2023) so going solar this year allows you to beat two deadlines at once.

Polaroid with a aerial picture of a home with a roof top solar system

If you already have solar or will have solar installed before Jan 1, 2023:

You are grandfathered into the current net metering rate and structure until Jan 1, 2038. In other words, you won’t have to switch to the new Time of Use rates in 2023.

After January 1, 2027, you will have a hybrid of the current and proposed net metering structures: 

  • If you have excess solar production at the end of the month, it will no longer roll over but be credited against your bill at the utility’s “avoided cost rate” which is currently 2.68 cents per kWh for Duke Energy.
  • A monthly minimum bill charge and a monthly non-bypassable charge will be added to your bill. These are both fees included in the proposed TOU rates.

After Dec 31, 2037, your system will be moved to the proposed 2023 net metering structure.

Two solar installers giving a thumbs up while they hold a solar panel on a roof

If you are not considering solar:

You should be! Regardless of the changes to Duke’s net metering policy, energy prices and our need for clean and independent energy is only going to go in one direction: up.

What's Next?

Stay tuned, we’ll be updating this piece with more information as it becomes available! In the coming weeks we expect to have more clarity on the next steps for how your advocacy can help to stand for solar in North Carolina.

If you are just starting on your solar journey, our best recommendation is to go solar in 2022 to be grandfathered into the current net metering system regardless of what happens. Reach out to let us know if you’d like to get started and see if solar is a good fit for you!

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