North Carolina may use batteries to give new life to old solar farms

“We might actually be having some positive movement”

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. ​“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 ​“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, ​“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. ​“We might actually be having some positive movement.”