New Changes in Duke's Rate Structure
In March 2023, Duke Energy announced major changes to its Net Energy Metering (NEM) policy. These policies will affect both current and future solar clients. Duke Energy is making these changes based on an internally conducted study that concludes folks with solar PV on their homes are unfairly subsidized by non-solar customers. These changes to the rate structure are being implemented to deal with the way electricity is consumed from the grid vs the times of day that solar is produced. Duke’s reasoning is based around the theory that solar is over produced at times of day when consumption is low for residents vs the times of day when power is at peak consumption in the mornings and evenings. These peak consumption times of day require fossil fuel power plants to run and surge to cover the consumption of all residents, with or without solar. When solar clients push power back to the grid, at the current net metering rate, they are able to completely eliminate their electricity consumption charges.
Duke claims that folks with solar are not paying for the associated cost of running these peaker power plants to cover everyone’s usage at these peak times of day. To deal with this strain on the grid and the proclaimed “subsidization” that’s affecting folks without solar, Duke has implemented a “time of use” rate structure. This rate structure charges folks for electricity at a variable rate that mirrors the level of consumption on the grid for that time of day and year. Simply put, electricity will cost more at peak times of day and will cost less at times of day when solar is producing or consumption is at its lowest. Due to the complexities of this type of rate structure, and to allow time for the solar industry to adapt to these changes, Duke has accepted an intermediary bridge rate to ease the transition between net metering and time of use.
In this blog, we will outline how Duke Energy’s new policy will affect solar customers, both current and future, and how this impacts the solar industry in North Carolina. The following details focus on Duke Energy Progress. There are slight variations to clients on Duke energy Carolinas that we can discuss via phone call or email. Reach out to learn more.
Current Solar Customers and Future Solar Customers Up Until July 1st, 2023
For those who currently have solar installed or will have an interconnection submitted by July 1st, 2023, they will be grandfathered into the existing legacy net metering program. This means that these solar clients will see no changes until January 1st, 2027. These clients will continue receiving dollar for dollar credit on the power they produce, consume and sell back to the grid.
From there, these clients will enter a modified net metering program called the Bridge Rate. The bridge rate is available for 15 years minus the time solar clients have been on the legacy net metering rate. Those who have been on the legacy net metering rate for 15 years as of January 1st, 2027 Folks who already have solar, or get an interconnection by Jul 1, 2023 will have net metering until December, 31st 2026, at which time they will be transferred to the bridge rate for 15 years minus the time they have had their existing solar system on net metering. The bridge rate is guaranteed for legacy clients already on Net Metering. New clients going solar will be first come first serve to receive the bridge rate. If they do not receive the bridge rate, they would be immediately put on the Time of Use rate.
Customers who go solar after July 1st, 2023
Customers who choose to go solar after the cut off date of July 1st, 2023 will not be entitled to the legacy net metering program. These clients can apply for the Bridge Rate program and if accepted will have it for 15 years, or go straight to the time of use rate. In order to get the best financial return, we highly recommend those who are interested in transitioning to solar energy do so before July 1st, 2023 to reap the benefits of the legacy net metering program for the next 3.5 years. By doing so, customers will not entirely avoid the Time-of-Use rate structure but can delay it as long as possible.
Current and Future Rate Programs
Legacy Net Metering Program
The current net metering has been in place since 2000 and operates on 1 to 1 ratio so you get the full retail value. When your solar panels are producing more energy than you are consuming and electricity is sent back to the grid, your electric meter will run in reverse and credits will begin to accumulate for your utility account.
On the other hand, when you are consuming more electricity than your solar system is producing, usually on days with inclement weather or at night, then you will be pulling electricity from the grid. You are then billed the net difference between energy produced from the panels and the energy consumed based on that month’s consumption and the amount of net metering credits that have been accumulated from solar.
Read more about how the current net metering program works in this blog here.
Net metering is predictable and therefore easy to calculate cost savings and ROI for customers. As we move on to other rate structures, calculations become more complex which proves difficult for the design process and calculating savings for solar customers.
Bridge Rate for Duke Energy Progress
- Increased monthly connection fee (minimum bill) of $22 per month
- Additional Non-bypassable charge per month. $0.62 cents per KW DC (example:10kw DC solar system with an 8kw inverter would be charged an additional $6.20 per month)
- Total monthly consumption and production are calculated credit for credit.
- Excess solar power delivered to the grid in a one month time frame will be credited at the avoided cost rate of 3.4 cents per kWH
- Excess power delivered to the home from the grid in excess of solar power produced that month will be charged at the retail kWH rate minus any credits from previous months.
We are urging folks who are considering going solar in WNC, whether they are ready for construction or not, to have Rhino Renewables submit an interconnection agreement for them to lock in the existing net metering program for the next 3.5 years. This allows you to take the most advantage out of what’s left of traditional net metering.
Customers who go solar after July 1st will have the option between Time-of-Use (TOU) or the Bridge Rate. The TOU rate will heavily rely on “critical peak pricing” meaning that the cost of electricity will be determined based on the time of day, the day of the week, the month of the year, and the ratio of solar production vs. home consumption. Unlike the legacy net metering program, this will make it difficult for installers, like us at Rhino Renewables, to calculate solar savings and will add a lot more complexity into the solar design process. Southern Energy Management has said “Under the legacy net metering system, we needed 24 energy data points to model solar effectively (12 months of the homeowner’s energy usage data and 12 months of projected solar production). Under the new system, that number increases to 17,520 data points, with hourly data required for both historic energy usage (8,760 hours) and projected solar production (another 8,760 hours).” To make the design process easier for installers, Duke Energy will provide a calculator in order to determine their potential ROI. In the 42 page NCUC approval filing “Duke asserts that these mechanisms are necessarily more complex than the current volumetric rates under the existing NEM [Net Energy Metering] programs and, as such, they are developing a bill calculator that will help customers estimate savings from adding rooftop solar.”
Time of use cost and credits for Duke Energy Progress:
- All excess solar power delivered to the grid in a month’s period will be credited at $.34 cents per kWH.
- Electricity delivered to the grid from the solar system will be credited at the associated TOU rate for the time of day / year that the electricity is delivered to the grid.
- Monthly connection fee – $28/month
- Non-bypassable charge per month – $0.62 cents per KW DC nameplate capacity
- Monthly Grid access fee – $1.50 per nameplate capacity above 15KW DC
- Schedule R-TOU-CPP
- On-Peak Energy per month, per kWh 6.375¢
- Off-Peak Energy per month, per kWh 4.261¢
- Discount Energy per month, per kWh 3.863¢
- Critical peak pricing – The Company will call up to 20 Critical Peak Days per calendar year. The number of Critical Peak Days permitted annually may be exceeded in the event of a system emergency that is expected to place the Company’s ability to provide reliable service to customers at risk During Company-designated Critical Peak Days, On-Peak Hours will become Critical Peak Hours. The Company may shift the Critical Peak Hours one hour earlier or later than the regular On-Peak Hours to provide flexibility for system operations; however, the number of Critical Peak Hours per day will remain the same as the number of On-Peak Hours that would have otherwise occurred. Any shift in Critical Peak Hours will be reflected in the customer notification
Closing thoughts from Rhino Renewables.
- These new rate structures add exponential complexity to modeling solar system financial returns for both grid tied solar and battery systems. To accurately model the time of day and year when power will be consumed vs the time of day and year that solar will be producing power makes it near impossible to accurately model.
- Battery systems are now more important than ever as they can be used to further offset your utility consumption. By charging batteries with excess solar power in the middle of the day, and discharging those batteries into the home at peak demand times of day, you can further reduce or eliminate your electricity bill.
- From an environmental standpoint, solar is better than ever. Reducing carbon emissions should be the driving force behind our transition to renewable energy, not financial returns. These new time of use rates will incentivize folks to use power at wiser times of day and by cycling batteries to reduce grid consumption at peak times, drastically reducing the need for fossil fuel peaker power plants. These peaker plants are massive producers of CO2 and the driving factor behind “stress” on the grid.
- These new rates are specifically targeted at residential clients. Existing and future commercial clients are in the clear to continue receiving credit for credit value on their solar system with traditional dollar for dollar net metering.
- Since these rate structures are brand new, there is additional information still being released. As updates are made, Rhino will be on top of updating this blog and all of our clients to help solidify everyone’s understanding of how this will work for the solar industry.
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