Inside Clean Energy: In South Carolina, a Happy Compromise on Net Metering

A compromise in South Carolina between advocates of solar power and a utility may offer a blueprint for other states trying to resolve one of the major conflicts in the clean energy transition: the debate over net metering.

Duke Energy has reached an agreement with Sunrun, the rooftop solar company, and Vote Solar, the solar advocacy group, that sets up a process for compensating solar owners for the excess electricity they send back to the grid.

This potential breakthrough in the net metering debate follows years of bitter conflict in the Carolinas and across the country.

The specifics apply to South Carolina and probably will extend to North Carolina because Duke operates in both. But many of the underlying ideas can be used in other states, said Thad Culley, Southeast regional director for Vote Solar.

“We can come together and really find a happy middle,” he said.

Under the plan, solar owners would pay rates that vary depending on the time of day, and would get credits at those same rates for sending excess electricity to the grid. The rates would be highest from 6 p.m. to 9 p.m., when electricity demand is high. Rates would be lower during the day and lowest overnight.

The agreement, which is still subject to approval by state regulators, would allow Duke to pay lower rates for solar during the hours when the grid has plenty of electricity, such as in the morning. And by paying higher rates during times of peak demand, Duke would be encouraging solar owners to set up their panels in places that get more sun during the evening.

“This new arrangement not only recognizes the value of solar and the enabling energy grid, but it unlocks additional benefits for all customers by addressing when utilities experience peak demand across their systems in the Carolinas,” said Lon Huber, Duke Energy’s vice president for rate design and strategic solutions, in a statement.

Duke also would set a $30 minimum bill for solar customers, which would apply only to customers who produce so much solar power that their monthly bill would otherwise be less than that amount. This touches on utilities’ concerns that solar customers are not paying an appropriate share of the costs for maintaining infrastructure. Solar advocates say that only a small share of solar customers have large enough systems to have bills of less than $30, so the minimum bill would affect very few people.

Customers who already have solar can be grandfathered in and continue to use the current rates, or choose to use the new rates.

And there are a lot of those customers. South Carolina has seen rapid growth in small-scale solar in recent years, generating 329 gigawatt-hours last year, which is an eye-popping total, considering the number was just 4 gigawatt-hours in 2014. The growth was tied to incentive programs along with the falling price of solar panels and an increase in companies selling solar.

The solar industry likes the agreement with Duke because it preserves the idea that the utility will continue to give customers credits for the excess electricity they generate and make available to the grid and it removes the uncertainty that has existed for years as utilities and the industry have fought over regulations.

Culley told me that part of what represents progress here is that Duke and the solar industry are agreeing that solar customers can make the grid more reliable by generating electricity during times of high demand. That’s different from before, when Duke and other utilities warned that the growth of solar was making the grid more difficult to manage.

Based in North Carolina, Duke is one of the largest utilities in the country. Last year, it made a commitment to get to net-zero emissions by 2050. At the same time, the company has proposed new natural gas plants, something that environmentalists say is incompatible with the net-zero pledge.

Culley said he thinks Duke’s net-zero commitment has played a role in the company choosing to take a conciliatory stance on rooftop solar, following the years of conflict.

I’ve written about net metering fights in many states and seen how utilities harm their public image by trying to limit rooftop solar, and how the conflicts lead to years-long legislative, regulatory and legal fights. Iowa, Nevada, Michigan and Utah are among the many states with current or recent debates.

Culley noted that the Duke agreement showed that utilities and the solar industry can meet to hash out their differences before getting regulators or lawmakers involved.

“Utilities and advocates should be working together,” he said. “It will lower the temperature and hopefully get a rational result.”

Federal Ruling Is a Big Step Toward a Decentralized Grid

When talking to energy policy experts, I often ask them to answer a question as if we’re at a backyard barbeque, and I know nothing about energy.

I do this because some of the most consequential energy news is also ridiculously wonky.

The Federal Energy Regulatory Commission gave us this kind of news last week with a ruling that says grid operators must open up wholesale markets to “distributed energy resources,” like rooftop solar and battery storage.

I got in touch with Jeff Dennis, managing director and general counsel for the trade group Advanced Energy Economy, and asked him to explain what this meant the way he might to a neighbor.

“I’ve actually tried to explain this to a couple of my neighbors,” he said.

He said the FERC order is important because it means that the companies that sell solar, battery storage and EV charging systems will have new opportunities to sell services to the grid. Those services will come from being able to band customers together in large groups. 

One example: A company could set up a system that lets thousands of EV owners sell some of the electricity in their batteries to help stabilize the grid during times of high demand. The company would make money from this, and compensate the EV owners.

And by making money from selling to the grid, companies could make their products less expensive.

“Anything that improves competition in the market drives down price,” Dennis said.

Some grid operators are already doing some version of this. One example is in New England, where the rooftop solar company Sunrun has set up a system in which 5,000 solar and storage customers are available to provide up to 20 megawatts to the grid when needed. The grid operator, ISO-New England, is now paying Sunrun for having this resource available to the grid.

But other grid regions, like PJM Interconnection, do not have rules that allow this kind of participation by customer-based systems, Dennis said. The FERC order means that all grid regions need to implement the rules.

FERC Chairman Neil Chatterjee said the order “will allow us to build a smarter, more dynamic grid that can help America keep pace with our ever-evolving energy demands.”

Clean energy groups have criticized Chatterjee for taking actions that favor fossil fuels. But this order is a clear win for clean energy and Chatterjee was effusive in his praise of it, calling it a “critical rule.”

Dennis said the implications of the order are potentially huge, leading to a grid that relies less on big power plants and more on customer-owned resources.

As more customers produce their own electricity and have the ability to store and sell it, they will have a personal stake in the transition to clean energy. That buy-in is an essential part of building and maintaining a political consensus that supports the transition, as countries like Germany have shown.

If, a decade from now, the grid is much less centralized and the clean energy companies have entered a new period of rapid growth aided by their ability to sell services to the grid, the adoption of this order will be the moment that made it possible.

Tesla Plan Calls for Big Expansion and Major Price Cuts 

As automakers ramp up their production of electric vehicles, Tesla is showing that it has no intention of giving up its status as king of the hill.

The company used its annual shareholders’ meeting on Tuesday to announce plans for an EV that would sell for $25,000 and go on sale within three years.

That price, which is $10,000 less than the base price of the Tesla Model 3, is possible because the company is forecasting that it will reduce its cost of batteries by half.

“EV market share is growing but EVs still aren’t accessible to all,” said Tesla CEO Elon Musk.

He said the company will do this by making its manufacturing process more efficient. Julian Spector, writing for Greentech Media, gives a good overview of the company’s presentation, including that Tesla now plans to manufacture its battery cells in-house, as opposed to getting them from outside suppliers.

As batteries become less expensive, that brings down the prices of EVs and home energy storage systems.

The shareholders’ meeting took place on an outdoor stage, with the audience parked in rows, as they would at a drive-in movie. Musk spoke into a wireless microphone, dressed in a black T-shirt and black jeans.

Watching the presentation, which you can see on YouTube, I realized that I’ve been writing and thinking so much about the automakers who are hoping to dethrone Tesla, I’d almost forgotten that Tesla has some big advantages as the current market leader. The company has already built EVs on a large scale and can learn from its experience in a way that competitors will need years to match.

So Volkswagen can chip away at Tesla’s lead by releasing the ID series of electric vehicles, and Ford can try to establish itself as a leader in electric trucks with the all-electric F-150.

But Tesla has an edge because it has the lead and is showing no signs of the complacency that would allow others to catch up.

Walmart Net-Zero Pledge Is a First for a Giant Retailer

Walmart said this week that it is committing to reach net-zero emissions across its global operations by 2040, the latest of several climate announcements by some of the world’s largest businesses.

The Arkansas-based company says it is the first retailer to make a commitment of this scope. Because of Walmart’s global footprint and its reliance on an elaborate logistics system to stock its shelves, the company’s plan focuses on reducing emissions in buildings and in transportation.

“The commitments we’re making today not only aim to decarbonize Walmart’s global operations, they also put us on the path to becoming a regenerative company—one that works to restore, renew and replenish in addition to preserving our planet, and encourages others to do the same,” Doug McMillon, Walmart’s president and CEO.

After years of writing about corporate climate plans that were big on talk and light on details, I am struck by the substance of what Walmart is doing and by some of the other plans I’ve written about recently, like Google’s.

But before we celebrate, remember that the initial announcement is the easy part, giving the companies a burst of good publicity. The follow-through is where things get tough. The implementation will last for decades, meaning that generations of executives will need to carry on with this work, and providing many opportunities for progress to slow or even stop.

Among the details in Walmart’s plan are commitments to preserve one acre of natural habitat for every acre of land the company develops in the United States and steps to get farmers to adopt more climate-friendly practices.

We will see over time whether these initiatives do real good and whether the company can meet its goals.

For now, my big takeaway is that it is no longer a novelty for a big company to have an ambitious climate plan, which means we probably should spend more time looking at the companies with weak plans or no plans at all.

Inside Clean Energy is ICN’s weekly bulletin of news and analysis about the energy transition. Send news tips and questions to [email protected].