Duke Invests In Prohibited 3rd Party Financing
As reported earlier this week, Duke Energy Renewables, an unregulated subsidiary of North Carolina-based Duke Energy, acquired a majority stake in commercial solar company REC Solar and is ready to invest up to $225 million in REC’s solar projects. With REC’s simplified customer financing options, including leases and power purchase agreements (PPAs), through this acquisition Duke will be in the position to offer commercial customers greater opportunity to invest in solar for their energy needs.
But not in its home state. “That is not possible now in North Carolina.”
While Duke Energy Renewables is expanding this third-party energy sales business models to help companies save on their energy bills elsewhere – state law prevents customers in Duke’s own North Carolina service territory from having those same energy options. Seems nonsensical to us, especially when more North Carolinians than ever, both commercial and residential customers alike, have strong interest in greater solar options and energy savings.
Third-party financing arrangements – leases or PPAs – can make it easier and more affordable for consumers to go solar by translating upfront costs into predictable monthly payments for solar power, often below utility rates. At least 24 states allow these third-party options, and law or regulation is unclear on the issue in another 22 states. However, the North Carolina Utilities Commission recently declared that state law prohibits a third-party sale of electricity, making North Carolina one of just six states that explicitly do not allow these energy options.
In states where it is allowed, third party financing arrangements have proven to be a major solar market driver. According to GTM Research, two out of every three new residential solar installations in 2013 were third-party owned systems. In Colorado, one of the top solar markets in the U.S., that number is well over 90 percent. The model is also often a preferred option for government agencies, schools, the military and corporate leaders like Walmart, all of which are going solar because it is good for their bottom line.
It is clear that electricity consumers want more choice when it comes to their energy. Simply look further south to Georgia where earlier this week, the House of Representatives unanimously passed a bill (165-0) that would expand these financing innovations to the state’s energy customer.
Duke’s investment in REC is a major validation of the third-party energy sales model. It’s exciting to see Duke Energy recognize the importance of competitive solar leasing and purchase agreements for energy users. Now, having endorsed this business model with a $225 million investment, Duke should not stand in the way of efforts to make solar leases and PPAs legal in its home states and service territory.
North Carolina energy customers should have access to the same competitive energy options that Duke is supporting elsewhere.