After blowback and months of deliberation over its green tariff proposal, Duke Energy is now suggesting a new twist meant to speed the addition of carbon-free electrons to North Carolina’s grid.
The utility’s proposed “resource acceleration option” is backed by an influential group of large customers and the state’s ratepayer advocate. But critics contend the option leaves intact the fundamental problem with Duke’s initial plan: It would let some customers pay extra to help the utility comply with the law, not lead to more clean energy, sooner.
“It’s disappointing,” said Nick Jimenez, senior attorney with the Southern Environmental Law Center. While the program may offer some degree of acceleration, he said, “how much is very fuzzy.”
The question of ‘additionality’
Scores of large customers in Duke’s North Carolina territory have corporate goals to advance clean energy. But the utility’s monopoly means they can’t contract with renewable energy developers directly.
For some, chipping in for a solar farm that already sells power to Duke is an adequate work-around. But a growing number of companies want to compel clean energy projects that wouldn’t otherwise exist: They need additionality.
Duke’s existing green tariff program, called Green Source Advantage, satisfies that demand. A large customer can negotiate the construction of a new renewable energy project, which sells electrons to Duke. The utility then charges the customer for the same amount of electrons, plus a premium and an administrative fee.
The initial program is capped and has almost run its course. But a 2021 law that requires the utility to zero out its carbon emissions also mandates that it offer a new tariff option.
Enter Green Source Advantage Choice, which Duke first proposed in January 2023. The program would allow large customers to contract with developers for up to 4 gigawatts of clean energy projects over about a decade, averaging 400 megawatts a year.
But for critics, there was a big catch: Duke would be buying about 4 gigawatts of renewable energy anyway to comply with the law. Plus, whatever projects moved forward under the tariff would be subject to an annual interconnection limit critics believe is arbitrary.
The result would be less solar overall. And companies with stringent standards for reducing their carbon footprints would have no legitimate way of claiming additionality.
“If it goes through as currently proposed,” Ethan Blumenthal, regulatory counsel at the North Carolina Sustainable Energy Association, told Energy News Network last year, “those who participate in the program would help subsidize the transition to renewables, but not expedite the transition.”
Meaningful new option, or paper tiger?
Commissioners took note of the debate over additionality playing out in a flurry of legal filings throughout last year. In March, they ordered the utility to report on its “efforts to resolve outstanding issues” with stakeholders.
The company complied, and last Friday followed up with a side deal between it, the state-sanctioned ratepayer advocate, and Carolina Industrial Group for Fair Utility Rates, a trade group of manufacturers and other large electricity users.
“We listened to stakeholders,” said Duke spokesperson Bill Norton over email, “and based on their feedback, developed another option for potential Green Source Advantage Choice customers.”
The alternative would allow large customers to procure about 300 MW of clean energy every two years on top of the amounts Duke will procure to fulfill its targets under its biennial Carbon Plan — a requisite under the 2021 law. The total “extra” would be limited to 1 GW.
“When the program reaches the cap,” Norton said, “we will consider filing for approval of additional programs and options.”
Crucially, the roughly 150 MW contracted for under the proposed acceleration option also won’t fall under the company’s annual interconnection constraint.
Still, advocates fear the alternative won’t work for many large customers.
“We were pleased to see some movement from Duke in response to customer concerns about additionality,” said John Burns, general counsel for the Carolinas Clean Energy Business Association, a trade association. But, he added, “we don’t think the [new] proposal gets it done in a way that customers are going to want to take advantage of.”
That’s partly because large customers would have to choose projects among losing bids in Duke’s solar procurement process, which may not be cost competitive or otherwise desirable. And it’s partly because, since the Carbon Plan is updated every two years, the acceleration timeline is relatively short.
“It’s designed to deduct whatever a customer subscribes to from the next annual solar procurement,” Jimenez said of the option. “Someone who subscribes to it — I don’t know what they’re accomplishing in terms of clean energy and carbon reductions.”
The alternative could expedite clean energy by a few years or so, he acknowledged. But, he added, “it might be all on paper.”
‘A lot of hard work’
To be sure, more than a dozen local chambers of commerce and institutions ranging from General Electric to an Asheville continuing care retirement community have voiced support for Duke’s original green tariff proposal from last year.
Susan Vick, lobbyist for the Carolina Industrial Group for Fair Utility Rates, says the group deserves credit for negotiating to make the green tariff even better.
“A lot of hard work has gone into this program,” said Vick, a former Duke employee. “It is certainly heading North Carolina in the direction of encouraging more businesses and industrial customers to go green.”
Members of Vick’s group are not publicized, but she said their climate aims run the gamut, with some just happy to chip in to the clean energy transition.
“Some are very interested in assisting, but aren’t necessarily in a position to move quicker,” she said. She also allowed: “some have very specific goals and criteria and are going above and beyond.”
An ‘elegant solution?’
It’s those “above and beyond” large customers that advocates say the green tariff program should cater to — especially those like Google, who want to spur enough clean energy and storage to serve 24-hour data centers.
That’s part of why Burns’ group this week plans to propose another variation on the program.
Instead of forcing large customers to pick from solar projects that lost in the competitive bidding process, the Carolinas Clean Energy Business Association wants to allow customers to arrange their own solar projects, then enlist Duke as the go-between — essentially how the green tariff operates now.
“Our proposal is to keep doing that up to 250 MW a year,” Burns said, and make those megawatts supplemental to the targets in the Carbon Plan and the interconnection constraint. “That gives the customer an argument as to why they are accelerating or adding megawatts that the utility otherwise would not have added in that year.”
That plan would be a marked improvement over what’s on the table now, said Jimenez, who is representing the Southern Alliance for Clean Energy in the docket.
Regulators this week asked for formal feedback on Duke’s latest proposal, and ultimately the choice is theirs. But Burns hopes his group’s compromise will prevail.
“We think we have a pretty elegant and simple solution,” he said.