New rules for Duke Energy customers means less savings for going solar

CHARLOTTE — Starting Oct. 1, North Carolina is changing the way owners of residential solar panels get paid for the energy they produce, and, specifically, how much Duke Energy will pay for it.

Since 2000, Duke customers with residential solar panels have been able to take advantage of something called net metering. When the panels produce more energy than the household can use at the time, the electricity goes back to the grid. Under the original rules, Duke paid a flat rate for the power, equal to the amount the customers paid per kilowatt. Now, Duke is shifting the pay scale to something that reflects the cost of electricity at the time it’s produced.

Why is this change happening?

Like utility companies across the country, Duke Energy argued the company was overpaying solar owners for their power.

Duke did a study on their net metering costs and found residential solar was producing the most energy at times like midday when energy usage is low. If Duke was buying from other power producers, the utility would be paying far less for that energy but because of the net metering rules, they had to purchase the solar energy at the higher, guaranteed rate.

According to spokesman Randy Wheeless, that extra cost was getting passed on to Duke’s non-solar customers.

“We were paying too much for that excess energy,” he said. “Solar customers were probably being subsidized by non-solar customers.”

He argued with the savings from selling back their excess energy, solar customers weren’t paying their fair share when it came to grid upkeep which is built into the power rates.

Advocates for solar fought back, arguing net metering is an important way for solar owners to recoup their investment and reducing the rates takes away a major incentive for homeowners thinking of going solar.

Ultimately the groups came to a compromise and the North Carolina Public Services Commission approved new rules.

What are the changes?

Instead of a flat rate, Duke customers with solar will shift to a time-of-usage system, which compensates them for excess energy the panels produce based on the cost of energy at the time it’s produced. The timing for customers shifting to that system depends on when they installed their solar.

Existing customers can stay on the current rates for the next three years. In Oct. 2027, they will be moved to a bridge rate, which will offer a lower flat rate for excess energy for the next 15 years, or they have the option to move to the time of use rates.

Customers that connect to the grid in Oct. 2023 or later, can choose between the bridge rate for the next 15 years or the time of use rates.

How big of a difference is this?

When it comes to a solar customer’s energy bill, it will be a noticeable difference. Energy Sage estimates it will reduce the average customer’s savings by 20 percent and take far longer for any household that invests in solar to break even.

To put that in perspective, the average North Carolina household pays about $137 a month for energy. Solar installers say the conservative estimates for a 10 kW system put customer savings around 30 percent on each monthly bill. That number can vary greatly due to the placement and output of the panels, as well as household energy use, however.

Assuming 30 percent savings, customers could save just under $500 a year under the original rules. Under the new rules and an expected 20 percent reduction in savings, that’s down to $400 a year. The greater the energy output from the panels, the greater the difference would be.

What does this mean for the future of solar in North Carolina?

While solar advocates acknowledge this dulls the shine a little bit, they say the future is not as cloudy as it looks in other states.

Matt Abele, the interim executive director of the North Carolina Sustainable Energy Association, considers the new rules a compromise, though the organization, along with a number of solar installers filed a motion to try and push back the start date for commercial customers. The motion claimed solar installers did not get adequate time to educate their customers on the changes.

As for residential solar customers, Abele said they can still benefit from the net metering rules, though to a lesser extent, and the time of use changes open the door to a new way for solar customers to optimize their systems.

“Overall, I think some of the things we’re going to see is incentives to actually move forward with whole home electrification, the addition of things like storage, the addition of things like electric vehicles in the home,” he said.

Abele recommends existing solar customers consider installing a battery in their homes to hold onto the energy their panels produce, use it when they need it, and reduce their reliance on Duke’s grid. Battery installations and new panel installations are both eligible for a 30 percent federal tax credit until 2032.

John Sheldon, with Charlotte-based solar installer Renu Energy Solutions, said that’s been his recommendation to new customers as well, not only to save money on their energy bills, but also to make the home more resilient in future power outages.

“You’re virtually off-grid because the battery is going to be what’s going to provide the power to your home overnight,” he said.

For those not looking to invest in more energy products, advocates also suggest time-shifting energy use, based on the times when the panels are most productive. For example, running appliances like the dishwasher or laundry during the day, rather than at night, when your electricity would come from the grid.

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