Duke Energy, which earns billions from coal and nuclear power, has become sun-splashed North Carolina's biggest source of solar power - and, critics charge, an obstacle to growing the new industry.

Duke Energy Carolinas ranked 10th-largest among U.S. utilities for the amount of solar energy it brought online last year. That's because of a state law that, for the first time, required N.C. utilities to make a smidgen of their electricity from the sun.

That law, combined with state tax credits, ignited the solar industry. North Carolina leapt from the bottom 10 solar-producing states five years ago to 11th-largest now.

The 2007 law is intended to spur development of homegrown energy sources. It makes electric utilities increase their use of renewable sources, starting with a quota for solar power in 2010. Utilities can generate their own renewable energy, purchase it elsewhere or buy tradable certificates that represent units of energy.

But complaints grew about the way Duke answered the solar mandate.

The state's leading clean-energy advocacy group, and some solar companies, say Duke essentially cornered the market in its territory. By developing its own projects and buying power from one sprawling solar farm, they say, Duke left out contractors and private investors who could have expanded the industry.

A growing number of utilities are installing their own solar projects rather than buying power from private systems, the Solar Electric Power Association says. Utility-owned solar projects increased 300 percent from 2009 to 2010, the association reported this month.

Raleigh-based Progress Energy, by contrast, bought all of its power to meet the solar mandate from privately owned solar installations. That approach was intended to expand the depth of know-how in a growing industry.

"We wanted to make sure we grew a local group of experts," said spokesman Scott Sutton.

After five years of business in Charlotte, Argand Energy Solutions President Erik Lensch moved to Chapel Hill, in Progress' territory, partly in search of more fertile ground. Progress' willingness to buy solar power at a clear price, he said, created a steady market that attracts investors.

"The reality is, that's where the business is now," he said, though Argand's 15-member company core will stay in Charlotte.

Owen Smith, Duke's managing director of renewable strategy and compliance, disputes claims that the utility is hoarding its solar wealth. Duke will actually own only 10 percent of the solar power it needs by 2018, he said. Even so, he said, Duke regularly works with local designers, installers and suppliers.

"It's really not true to say that solar developers are cut out of the loop," he said.

Companies that got some of Duke's business agree.

"The reality is, Duke went through a vetting process that was fairly intensive and gave all the local vendors opportunities to compete, and they've been a very good client to us," said Eric Blomendale, commercial services director of Southern Energy Management.

Developers see problems

This month, Duke revealed that it had locked up enough power to satisfy the solar mandate by 2018. Although Duke says it will continue to pursue solar projects, companies say it's likely to become even harder to do business with the utility.

Developers say they're handicapped because utilities don't have to reveal their progress toward complying with the solar mandate, what kind of projects they're pursuing or how much they will pay. The utilities say secrecy is needed because contractors privy to such information would inflate bids.

"This has meant (developers) are spending a lot of money generating project bids, recruiting investors and partners and sending their project bids into a utility black hole - not knowing whether the utility needs what these companies are offering to build," said Ivan Urlaub, executive director of the N.C. Sustainable Energy Association.

Urlaub says Duke could have saved money for its customers, who pay the costs of the renewable-energy program, by buying solar power instead of building its own projects.

Duke says its "diverse and balanced portfolio" minimizes risks and protects customers as renewables markets evolve. The N.C. Utilities Commission agreed in 2008 that Duke could own its commercial rooftop installations to help comply with the solar mandate. Those panels produced 8 megawatts of the 21 megawatts of solar power Duke Carolinas brought online last year.

"It didn't seem reasonable for us to be wholly dependent on third-party suppliers," Smith said, because the utility has regulatory responsibilities that contractors don't.

Both Duke and Progress fought state legislation this year that would have doubled the solar mandate - to 0.4 percent of their total output - by 2018.

Increasing the solar goal, Duke says, would be unfair to developers of other forms of renewable energy. Solar developers, on their own, are already finding ways to cut costs to compete with forms such as wind and biomass, Smith said.

Passage of the bill, and a second failed measure to allow renewable-energy developers to sell power directly to facilities, would have created 8,350 jobs by 2015, the sustainable energy group estimates. N.C. solar businesses employed about 1,350 people last year, it says.

Boosting the target "is essential because we've maxed out demand under the current regime," said Richard Harkrader of Durham's Carolina Solar Energy, a former policy chair for the association.