A decade ago, North Carolina boasted more solar power than any other state in the country but California — a distinction owed to scores of large projects built under a suite of clean energy–friendly policies that the Tar Heel State has since repealed or amended.

Now, many of those solar farms are staring down the end of their initial agreements with Duke Energy, the state’s predominant utility. But under a new proposal before North Carolina regulators, project owners could lock in favorable long-term renewals pending one main condition: They have to add batteries.

The scheme was proffered by Duke and is backed by clean energy businesses and advocates. If it’s green-lit by the North Carolina Utilities Commission, it would represent the first systematic move toward

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repowering” large-scale solar facilities in the state. The potential is enormous: Contracts expiring in the next five years total

1

.

9

 gigawatts — an amount equal to more than a quarter of North Carolina’s entire utility-scale solar fleet.

Since battery storage will benefit from federal tax credits with few strings attached for

at least another six years

, and Duke faces daunting power demands from coming data centers and other large electricity users, this form of repowering could support reliability and affordability. In large swaths of rural North Carolina, extending the life of these older projects also makes more sense than decommissioning them.

“

Adding batteries to a system that’s already out there makes it immensely more valuable to the grid,” said Steve Kalland, executive director of the North Carolina Clean Energy Technology Center.

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“

In North Carolina, that’s going to be significant.”

More so than its ample sunshine or abundant open space, state policy propelled North Carolina to become a national solar leader back in 

2016

.

A decades-old state tax credit supplemented federal incentives, and in

2007

, lawmakers adopted a modest but meaningful renewable energy requirement. But perhaps most important was the state’s

implementation of a federal law

designed to encourage small power producers independent of utility monopolies. North Carolina’s rules under the Public Utility Regulatory Policy Act, or

PURPA

, were among the most favorable in the country, with

standard offer,

15

-year contracts

available for projects with up to

5

 megawatts of capacity.

This cocktail of rules and mandates caused PURPA-qualified solar projects to soar, with over

450

large-scale developments coming online in the state from

2010

to

2017

, according to the nonprofit North Carolina Sustainable Energy Association, with a capacity of over

3

.

3

 gigawatts.

But by

2017

, Duke was on pace to easily meet the clean energy mandate, and Republican state lawmakers had repealed the tax incentive. What’s more, the utility said the surge in solar was creating interconnection bottlenecks and the need for expensive grid upgrades.

So the company helped draft a new state law that year meant to clear the backlog and move most new solar into a competitive procurement process. The standard offer contracts under

PURPA

survived but were reduced to

10

 years for projects with up to

1

 megawatt.

In part due to the

PURPA

changes, annual solar installations in the state have slowed,

dropping from a peak

of

985

 megawatts in

2017

to an average of just under

500

 megawatts in the years that followed.

Hundreds of projects signed under the old

PURPA

rules remain. A wide-ranging

2021

climate law

allowed them a one-time chance to renew their contracts for

10

 years. Today, they can re-up power purchase agreements for five years at a time.

But many in the industry prefer pricing certainty for a longer time frame. And five years is often too short a period for a developer to justify repowering, which can come in the form of costly tasks like adding batteries, replacing inverters, or swapping in significantly more efficient modules.

“

There are a lot of repowering conversations right now,” said Casey Gilley, a Chapel Hill–based solar financial consultant.

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“

Not a lot of action. People are trying to figure it out. Part of it is just paying for it.”

At the same time, state law requires Duke to decarbonize by midcentury — a difficult task unless it retains and improves as many of its legacy solar farms as possible.

Fast-rising electricity demand also strengthens the case for repowering. Duke already has transmission and distribution capacity for these solar facilities, after all; upfitting them is quicker and more cost-efficient than permitting and building new projects and grid infrastructure.

“

These projects provide a really substantial opportunity to bring on capacity faster than would otherwise be possible with building new thermal resources,” said Peter Stein, a chief development officer with Durham-based Headwater Energy, a solar and storage company.

That’s why clean energy businesses, the state-sanctioned customer advocate, and regulators themselves have long sought a way to extend the

PURPA

contracts that will soon run out.

And now, Duke and others believe they have a 

workable proposal

to do just that. Under its terms, a solar facility could renew its old power purchase agreement under

PURPA

for

10

 years, rather than five, by adding four-hour battery storage that’s equal to at least

20

% of its maximum export power to the grid.

“

Ten years is a sufficient amount of time to allow that facility to recover its costs on installing the colocated battery storage system,” said Justin Somelofske, North Carolina Sustainable Energy Association’s senior regulatory counsel.

As with the expiring

PURPA

contracts, Duke will pay developers the

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“

avoided cost” rate set by regulators — a price generally keyed to what the utility would otherwise spend to generate the power itself.

The renewal option could offer a salve to the solar industry, which will soon see federal tax credits disappear and has been battered by the Trump administration over the last year. And since the batteries can’t be grid-charged and will deliver capacity when demand is high, based on price signals built into the new contract, Duke will also benefit.

“

From that perspective,” Stein said,

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“

what Duke has proposed is a win-win.”

But, he added, Duke’s proposal focuses only on the addition of batteries, without offering a way forward for other forms of repowering. The utility could improve its plan by doing so. 

“

Those projects can also add a lot of value in the near term, in terms of energy and capacity,” Stein said.

The commission is accepting initial comments on the idea through Feb.

5

 and will hold a public hearing on the matter later in the month. Stakeholders are cautiously hopeful.

“

This has been an ongoing issue at the Utilities Commission for a couple years now,” Somelofske said.

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“

We might actually be having some positive movement.”

Elizabeth Ouzts

is a contributing reporter at Canary Media who covers North Carolina and Virginia.

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