NORTH CAROLINA HOUSE BILL 589

House Bill 589 Overview

House Bill 589 (HB589) was the result of a nine-month stakeholder process and became law in 2017, marking the first major piece of comprehensive energy legislation passed in North Carolina since SB3 in 2007. NCSEA worked on the initial passage of HB589 and is continuing to work with stakeholders throughout the rulemaking and implementation process. The following sections outline the major provisions of HB589 and resulting outcomes as we marked the four-year anniversary of this law on July 27, 2021.

Competitive Procurement of Renewable Energy

As part of HB589, Duke Energy (Duke) is required to reach 6,160 megawatts (MW) of utility-scale solar on its grid. When HB589 was passed, it was expected that Duke would procure 2,660 MW through the Competitive Procurement of Renewable Energy (CPRE) process, and the remaining 3,500 MW would be procured through legacy Public Utility Regulatory Policies Act (PURPA) projects. 

 

However, it became clear that there will be significantly more than 3,500 MW of legacy PURPA projects, lowering the amount of new solar procured through the CPRE. 

Duke estimated that it would procure a revised total of 1,297 MW of solar through CPRE, which is less than stakeholders originally predicted; however, the program still results in additional MW of solar connecting to the grid thanks to the combination of newly procured CPRE solar and “transition MW” from legacy PURPA projects.”

As of July 2021, four years after HB589 was enacted into law, a number of CPRE projects are underway. Duke Energy Carolinas (DEC) has a 25-MW facility and a 69-MW facility that are commercially operational, and Duke Energy Progress (DEP) has a 7-MW facility that achieved commercial operation. DEP also has a 75-MW facility expected to be commercially operational by Nov. 30, 2022. DEC and DEP have a combined total of approximately 1,185 MW under contract from Tranche 1 and 2, and as much as 200 MW pending under Tranche 3.

Green Source Advantage

HB589 requires the creation of a program for large businesses, universities, and the military to directly procure renewable energy. HB589 creates a 600 MW program, of which 100 MW is reserved for major military installations and 250 MW is reserved for the UNC system at least through February 2020, after which their allocations become available to other customers. In February 2020, The North Carolina Utilities Commission ruled on Duke’s Green Source Advantage proposal, which can be read here. NCSEA is disappointed in the approved program, as it does not provide the financial certainty that customers want and will not sufficiently meet the needs of North Carolina businesses and solar developers.
As of July 2020, 218.1 MW of the 250 MW available to non-UNC and military customers is reserved, including a 35 MW solar project for the City of Charlotte and a 25 MW solar project for Bank of America . As of July 2020, no university campuses nor military bases in North Carolina are participating in the GSA program.

Solar Rebate Program

Innovative financing opportunities like rebates are needed to expand accessibility and encourage customer adoption of clean energy technologies like rooftop solar energy. NCSEA worked with Duke Energy and other stakeholders to craft the Solar Rebate Program in HB589, which requires the creation of a rebate program for 20 MW of rooftop solar installations per year for five years. Since then, NCSEA has continued working to implement this program before the NC Utilities Commission so that it successfully attracts and assists clean energy adopters wanting to install solar on their homes and businesses. 

To date, this program has helped to take residential solar installations in Duke’s North Carolina territories from a total of about 5,600 systems (31 total MWs) in 2017 to over 17,000 systems (115 total MWs) by the end of 2020.

NCSEA was pleased with the intention of the rebates program to jumpstart the residential and small commercial solar markets in North Carolina. Since then, it has become clear that demand for residential and commercial rebates has drastically exceeded supply. 

  • In 2018, the supply of residential and commercial rebates exhausted within two weeks of the opening of the application period; 
  • In 2019, the supply was exhausted within one and a half hours; and  
  • In 2020, the supply was exhausted within twenty-one minutes.
  • In 2021, the NCUC enacted changes to the rebates program that decreased rebate size, implemented a lottery system rather than first-come-first-served allocation, and altered the application schedule so that rebate offerings would occur biannually in January and July. Demand for rebates remains high, and in its most recent offering Duke reserved a total of 777 rebates with an associated installed capacity of approximately 9,208 kW.
Throughout the past four years of rebate program implementation, NCSEA has fought to ensure the program benefits customers as intended by HB589, and various changes have been made to the program over time. The rebates program is slated to conclude by Dec. 31, 2022.

Solar Leasing Program

Third-party power purchase agreements are prohibited in North Carolina and case law was mixed about whether the leasing of solar installations was allowed. HB589 created a framework for solar leasing in North Carolina, including Commission oversight of lessors and consumer protections.   As of 2024, 12 companies have registered as lessors, including Duke. However, due to statutory limitations on total amount of projects that can operate under a leasing model (“shall not exceed one percent of the previous five-year average of the North Carolina retail contribution to the offering utility’s retail peak demand”), we have seen only a limited number of projects move forward under this structure.  Due to the many regulatory requirements to become a lessor, it is not surprising that there are not more projects that have been leased. Based on Commission filings, most leased systems have been proposed for tax exempt entities.  
  • View companies registered as lessors here by selecting Electric Generator 
  • Read Part VI of HB589 
View the 4 statutes related to HB589 on leasing: 

Community Solar Program

Community solar allows North Carolinians to jointly own a solar facility or subscribe to a portion of a facility’s output. Community solar systems can be owned by utilities, solar developers, or directly owned by a group of neighbors or customers. HB589 requires Duke to offer 40 MW of community solar in North Carolina. Participants are compensated at Duke’s avoided cost rate for energy generated by their portion of the community solar facility. Since this programs inception, Duke has not yet constructed a single community solar facility.

Wind Energy Moratorium and Study

Right before HB589 was passed into law, the North Carolina Senate included an 18-month wind energy moratorium on the issuance of permits for new wind energy projects by the North Carolina Department of Environmental Quality or the Coastal Resources Commission and expansive study of wind impact to HB589. On July 27, 2017, as Governor Cooper signed the bill into law, he expressed his opposition to the wind moratorium and issued Executive Order 11 to promote wind energy development in North Carolina. NCSEA believes that the moratorium and $150k study were unnecessary, as the United States Department of Defense, Federal Aviation Administration (FAA), and nearby military bases already have an extensive review process for all energy development and must approve every proposed wind project. The findings of the wind study, submitted in May 2018, have not yet been made public and the moratorium expired on December 31, 2018. 

Energy Storage Study

HB589 directed the North Carolina Policy Collaboratory at the University of North Carolina at Chapel Hill (Collaboratory) to study the values and services that energy storage can provide to North Carolina and to make policy recommendations. NCSEA’s Energy Storage Working Group worked with the Collaboratory to secure private funding to match state funds. The Collaboratory partnered with North Carolina State University to conduct the study, which was reported to the General Assembly and the Energy Policy Council on December 3, 2018.  

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