When NextEra-owned utility Florida Power & Light proposed its 1.5-gigawatt shared solar program last year, it was both criticized as a utility overstep on the community solar model and lauded as a significant milestone for Florida’s quickly expanding solar market. The state’s Public Service Commission unanimously approved the program in March.
Now, another state utility hopes to deliver something similar: In July, Duke Energy Florida, a subsidiary of the North Carolina-based mothership, proposed a 750-megawatt shared solar program it hopes to begin in 2022. First, it needs to obtain regulatory approval.
Duke’s proposal is significant for several reasons. Most notably, it puts concrete plans behind much of the 1.7 gigawatts of solar the utility is seeking to bring online in the state, while significantly boosting Florida’s currently tiny community solar market.
Though the grip utilities such as Duke hold on Florida’s solar market rankles third-party developers, which decry the lack of competition, pro-solar groups secured several significant wins in negotiations with Duke.
So far, Duke appears to have avoided much of the controversy that surrounded FPL’s program. Whether Duke's new projects are called community solar, shared solar or something else entirely, they’ll help Florida maintain its solid third-place ranking for large-scale solar (the projects, unlike traditional community-scale installations, will be large), according to Wood Mackenzie Power & Renewables.
Following in Duke’s footsteps
Parts of Duke’s proposal hew closely to the standards approved for FPL’s SolarTogether program. Like many community solar programs, participants pay a monthly subscription fee and receive monthly bill credits associated with the production of the solar systems. As with FPL’s program, Duke’s subscription fee for most participants would outweigh the credits at first, but most participants would see payback in about seven years.
In other areas, Duke's proposal is different. Duke engaged early with parties that had pushed back against FPL's SolarTogether program, including Vote Solar, Walmart and the Southern Alliance for Clean Energy, resulting in some noteworthy departures from FPL's model.
Duke allocated 65 percent of the program, about 487 megawatts, to commercial and industrial customers. A quarter of capacity, 187 megawatts, will go to residential and small businesses. And the utility also set aside almost 75 megawatts for local government subscribers, a point of divergence from FPL’s program.
More than a quarter of the residential portion of Duke’s program — 26 megawatts of the total capacity — will be set aside for low-income customers, which the utility settled on using the proportion of customers in its service territory eligible for its low-income energy efficiency programs. FPL set aside 37.5 megawatts for those customers, a smaller portion of its overall much larger program. Duke will also offer savings to those customers sooner, in the first month of signup, compared to FPL’s guarantee that low-income customers will see savings in the first year.
Beneficial terms for low-income customers were of particular interest to Vote Solar, which advocates for broader solar access. Katie Chiles Ottenweller, the group’s Southeast director, called Duke’s provisions for low-income customers “2.0 to what FPL offered.” Duke’s initiative to work with stakeholders early in the program's development could help ease its path to approval, she said.
“Hopefully, that will be a value to the commission, with less controversy and more consensus on the front end,” said Ottenweller.
Jeff Cramer, executive director at community solar trade group the Coalition for Community Solar Access (CCSA), said the reserved capacity for low-income customers is “better than nothing,” though not nearly enough, in his opinion. Cramer noted that Duke may use competitively procured projects to fill the program's capacity, another departure from FPL's approach.
Florida has not established a competitive community solar market. Because both FPL and Duke are well versed in developing their own solar projects — Duke has brought nearly 700 megawatts online in the state — they've effectively shut out other developers. But Duke now plans to evaluate third-party bids and potentially pull in projects already in the state’s interconnection queue.
Duke also chose to distribute more of the program’s overall benefits to non-subscribers than FPL did. Estimating about $533 million in savings from the program due to lower fuel costs and deferred generation additions, Duke plans to pass $67.6 million of those savings to subscribers — about 13 percent of the total — and the remaining $465.1 million to all of its customers. While subscription dues will offset the program’s costs, the solar plants Duke builds or contracts will be rate-based, impacting all ratepayers.
Florida's solar success story looks set to continue
Today, Florida has only 44.1 megawatts of community solar installed. Duke's and FPL’s programs would significantly boost that total, though the programs look different than those underway in many states.
When proposed, FPL’s program garnered criticism from those who believed it wasn't true community solar; while the program's subscription model emulates most community solar models, the projects are large and utility-built. Most state-level community solar programs favor distributed generation chosen through competition.
Duke’s Clean Energy Connection proposal seems to have dodged similar criticism, though its projects are similarly sized, at around 75 megawatts each.
“We’re concerned with the actual experience that customers have,” said Ottenweller. “We are less concerned with semantics.”
CCSA’s Cramer said his group is more interested in customer benefits than terminology but wants to see more distributed solar development in Florida. “It’s a 'both/and' proposition."
FPL and Duke both pushed for larger projects because they’re cheaper on a per-megawatt basis than smaller-scale systems. But lack of competition offers the utilities some latitude in terms of pricing.
In its proposal to the commission, Duke quoted project prices at $1.20 per watt (DC) for its program. That’s a conservative figure, said Wood Mackenzie solar analyst Molly Cox. The prices Duke forecasts for projects slated to come online in 2022, 2023 and 2024 are up to 24 percent higher than what plants are likely to cost in Florida, according to her calculations.
While Cox said Duke may be building in contingencies for site remediation and other risks, the utility’s ability to set project prices and then ask ratepayers to fund them is one reason why many would like to see more competition in the market.
Market observers expect demand for the new community solar programs to quickly exhaust the capacity, and it’s unclear if FPL or Duke will expand their programs. FPL told Greentech Media the C&I portion of its program is already fully subscribed, and the utility expects full residential subscription by the end of 2020. Duke has already gathered pre-registrations totaling more than 70 percent of its proposed program’s capacity, and it still awaits commission approval.
In any event, Florida's solar market is likely to continue gaining momentum. Duke tucked a commitment into its agreement with Vote Solar, SACE and Walmart to evaluate the potential for solar-plus-storage to “reliably defer or replace” gas combustion turbine units within future resource plans. Already, the utility expects the program to defer several new gas peakers and displace 230 megawatts of planned gas, according to testimony from Benjamin Borsch, Duke Energy Florida’s director of IRP and analytics. Deferring those resources, Borsch said, could also delay or eliminate some gas builds in the future. Gas currently makes up 42 percent of Duke Energy’s generation mix.
“We’re starting to see some pretty significant numbers on the scoreboard in terms of utility-scale solar investment [in Florida]," Ottenweller said. "That is starting to shift or displace gas investments that were in the pipeline."
"How these types of programs shift the utility energy mix over the next three or four years in Florida is definitely going to be something to watch," she said.