The oft-repeated story line of U.S. utilities opposing solar is an oversimplification of a complex interaction between retail electricity providers and a new energy technology. Many utilities are not opposed to solar in principle, particularly not utility-scale solar, as long as they are in on the game.
In many ways, Duke Energy is a typical U.S. monopoly utility, and its service area in the U.S. South is one of regions where electricity generation was not opened in a wave of deregulation which started in the 1990s.
Today Duke announced that it is contracting to have a 61 MW solar PV project built in North Carolina to supply electricity to a Google data center through its Green Source Rider Program.
Cypress Creek Renewables will develop the project, and Duke will sell the electricity generated to Google under a multi-year electricity contract with a premium electricity rate. Duke notes that other customers will not pay for this project.
Google was involved with both the creation of the Green Source Rider program and the choice of this specific project, and is the first customer to be served under the program. Google will see additional electricity demand due to the expansion of its Caldwell County Data Center, and has a goal to power 100% of its operations with renewable energy.
In other states including California, a large company such as Google would typically buy electricity directly from the PV project owner via a power purchase agreement.
You can’t just set up shop in North Carolina and sell directly to Apple or Google, notes EQ Research Policy Research Manager Rusty Haynes.
Haynes also notes that the Green Source Rider is Duke’s way of adapting to the demand for renewable energy. When the utilities smell it coming and see that there is money to be made, they come up with a deal.
Duke’s commitment to maintaining its monopoly position in the sale of electricity has been made clear. When local energy non-profit NC WARN installed a PV system and began selling electricity to a church in North Carolina earlier this year, the utility sought fines of US$1,000 for every day that the PV system was connected to the grid.
However, this line in the sand does not appear to apply to self-consumption. Apple is currently building a 17.5 MW PV plant for a data center in North Carolina.
Duke Communications Manager Randy Wheeless says that in the future the utility may own some of the projects built under the Green Source Rider program, whereas others may remain privately owned but contracted to Duke.
It allows us some flexibility, notes Wheeless. There are a lot of projects which are partially developed, or maybe we can buy a project from a developer before it gets built.
GTM Research is currently tracking 1.34 GW of off-site solar projects which have signed power contracts with commercial and industrial customers. The company notes that the deal between Google and Duke is similar to a deal between data storage provider Switch and NV Energy, where Switch ended up going through the utility to buy power from a 100 MW PV project built by First Solar.
My guess is we will start to see more arrangements like Google/Duke and Switch/NV Energy where a utility signs a PPA with a utility PV developer and has 100% of the power go directly to a single corporate entity, notes GTM Research Solar Analyst Colin Smith.
We will also see more green tariff programs emerge that provide a bit more flexibility to customers. And finally I think we will start to see more corporations push to have legislation where they can have direct access to power through IPPs like there is in California.
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