The largest solar farm on the East Coast will be among eight projects Duke Energy announced Monday, quickly raising the scale of North Carolina’s solar landscape.
Duke said it will spend $500 million to acquire three large solar farms and buy power from five more new projects, all in North Carolina.
While dozens of utility-scale arrays checker rural corners of the state, the nation’s fourth-largest for solar capacity, Duke purposely went big with the projects announced Monday.
The biggest, to be owned by Duke, is a 65-megawatt array that will sprawl across nearly a square mile of Duplin County in Eastern North Carolina. Duke said it will be the largest east of the Mississippi.
None of the eight projects will be smaller than 15 megawatts. By contrast, Duke has previously signed contracts with only four solar farms larger than 5 megawatts.
Duke will pay about 10 percent less for the energy from the large new farms than it would have from smaller solar projects, said Rob Caldwell, Duke’s senior vice president for distributed generation. At least in theory, that saves customers money.
The announcement “demonstrates our commitment to solar and renewables on the regulated side of the utility, and in doing so in a way that benefits our customers,” Caldwell said.
The deals will let Duke meet North Carolina’s green energy target for 2015, which requires utilities to produce 6 percent of their electricity from renewable sources.
They also answer critics who claim Duke is trying to squelch the state’s fast-growing solar industry.
Duke fueled those charges by saying last year it wants to pay less for solar power generated on home rooftops. The company has also proposed controversial changes, now under review by the N.C. Utilities Commission, to contracts for energy it buys from small solar farms.
The N.C. Sustainable Energy Association, which represents solar developers, said the announcement has promising implications.
“NCSEA’s members … are committed to driving down the cost of solar,” the association said in a statement. “Duke Energy’s intentions to include solar in their rate base tells us our members are succeeding in their efforts.”
Charlotte’s Birdseye Renewable Energy will develop two solar farms, in Scotland and Cleveland counties, that will sell power to Duke.
“The first thing it showed was that Duke has an interest in solar when it’s a well-developed project in a good location that works well for them,” said owner Brian Bednar.
Bednar, who has developed 16 solar projects in North Carolina, said utilities like the economies of scale of larger installations. But he said lower costs are only part of the reason North Carolina’s solar sector has flourished.
“What it’s done, as much as drive down costs, is to establish a really sophisticated solar industry here,” he said. “Cost is critical, but it’s also just experience in how to make projects work better.”
In place by end of 2015
Duke solicited proposals in February for 300 megawatts in new solar capacity. The deals announced Monday will total 278 megawatts.
Duke will acquire and build, with Utilities Commission approval, solar farms in Bladen, Duplin and Wilson counties. It will buy power from new projects in Bladen, Richmond, Scotland, Cleveland and Beaufort counties.
All are expected to be running by the end of 2015.
Duke won’t reveal what it will pay for each component. The total $500 million investment will be roughly divided, it said, between the three acquired projects and the five power-purchase agreements.
While solar prices are falling, Duke will still pay a premium for the energy. It will cost more than Duke would have spent to build a conventional gas-fired power plant of its own. Those “avoided costs” are roughly equal to the rates for wholesale power, or 5 to 7 cents a kilowatt-hour.
Power-purchase agreements for larger projects, including those announced Monday, are individually negotiated. The Utilities Commission is reviewing how utilities pay for electricity from solar farms smaller than 5 megawatts, which qualify for standardized rates.
Most of the solar power-purchase agreements Duke already has in place in North Carolina, totaling 470 megawatts, fall within the smaller range. The 33 agreements signed this year total 109 megawatts, or about 3 megawatts a project.
“The perception that we’re not interested in small solar is not borne by the numbers,” Caldwell said. “The (February) request for proposals was specifically designed to look at the economics and opportunities for larger solar development.”
Caldwell said he expects to continue to see a mix of sizes of solar farms be developed, but he added that large projects are more complicated to pull together.
While sizable in solar terms, the new agreements will add only about 1 percent to Duke’s total generation mix in North Carolina. That mix largely relies on nuclear, coal- and gas-fired power plants.
Critics, including Greenpeace, cheered Monday’s announcement but said Duke has ample room for more solar energy in its portfolio.
Duke Energy Carolinas, which serves Charlotte, expects to nearly quadruple its solar capacity by 2029. But renewable energy would supply only 4 percent of its electricity, according to recent planning documents.