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To power the state, lawyers help lasso the sun

The amount of solar power that bombards the Earth each hour is more than what the entire world consumes in a year. In a world of rising carbon emissions, harnessing more of that abundant power would be useful. But capturing the sun’s bounty requires an interconnected grid of brainpower as important as the one for electric power—and within this knowledge network that is increasingly powering the globe, lawyers are playing a crucial role.

North Carolina is among the states currently leading the solar power pack. It’s home to the second-largest solar development market in the nation, behind only huge-and-sunny California. One major reason is the state’s regulatory support of small, non-utility-owned projects, making it feasible for independent landowners to support a solar farm project. The regulations are now shifting, but North Carolina’s foothold remains strong while it navigates the current transition in the energy industry.

“We’re the clear leader” in the region, N.C. Sustainable Energy Association attorney Peter Ledford said. “That said, other Southeastern states are definitely catching up and are adding solar at a much faster rate than North Carolina.”

Energy and environmental attorneys say changes in the regulatory structure will shape the future, and that market reform might be necessary to keep the state on the map.

“The market in North Carolina has matured,” says Raleigh energy attorney Ben Snowden. He said the pace of development has slowed, and one main reason is interconnection. To build a solar farm or any kind of solar-generating facility, it must connect to the grid. North Carolina’s boom in development has created a backed-up “interconnection queue,” Snowden said.

Improving the interconnection infrastructure is a massive, costly task. It’s ongoing, but it won’t be quick. At the same time, the interconnection requirements are more stringent and therefore more difficult and expensive to comply with, said Snowden. Major utilities—Duke Energy and Dominion Energy make up the lion’s share of the market—would say the requirements are necessary to protect system reliability in an effort to improve overall interconnection, Snowden said, and many in the solar industry see these as new and additional roadblocks for new projects to navigate.

“The market is continuing to grow although there are some significant hurdles,” Ledford said. Issues like interconnection have decelerated utility-scale development, he said, but smaller projects have managed a slow-and-steady uptick. “We’re continuing to see the expansion of markets like rooftop solar.”

Meanwhile, energy regulation is changing. Since the late 1970s, the backbone of the state’s guidelines has been the federal Public Utility Regulatory Policies Act (PURPA); the act considers utilities regulated monopolies and creates a small market for independent power projects. Historically, a “progressive implementation of PURPA,” said Ledford, offered fixed tax rates to land owners that made financing small projects—5 megawatts, which typically requires 40 acres of land or less—appealing and feasible.

“The development of 5 megawatt-and-below projects is really what got solar off the ground in North Carolina,” Snowden said.

Legislation in the past few years has moved the state away from emphasis on PURPA, Snowden said, and instead toward encouraging “competitive solicitations,” where utilities request project proposals from independent developers, both for projects to be sold to the utility and for contracts for delivering power from independently-owned projects. This structure tends to favor larger, although still mid-sized, projects of up to about 80 megawatts, Snowden said.

Snowden works on issues in both North and South Carolina, and says both states are undergoing a regulatory shift. “There is a lot of interest in market-oriented solutions for energy in the Carolinas,” he said.

One such idea is to create a regional transmission operator (RTO). Columbia, South Carolina, energy attorney Jamey Goldin said he’s following legislation in both Carolinas to study RTOs, which would set up a utility-independent electric grid that all providers vie for part of, utilities and independent projects alike. “If we were to join an RTO or create a Carolinas RTO, or some sort of hybrid combination of the two … we’d have more corporations who crave renewable energy able to access it.”

Goldin said it will be another five years before the studies and legislation fully play out, but that there are many ideas on the table—and that’s a good thing. 

“Long term, we’ve got to look at a systemic market reform to really continue to keep North Carolina, a leader in renewable power,” Goldin said.

Ledford agrees that the future for solar power in the state is, pardon the phrase, bright. “If we introduce some competition into the market, we could see a lot of solar continue to proliferate. That’s a policy change that’s going to have to be made by the utilities commissioner and our general assembly.”

Investing both brainpower and dollars into solar just makes sense, the attorneys say. “Climate change is a priority for the utilities, and rate-payers care increasingly about whether their power is coming from sources that are carbon-limited or carbon-free,” Snowden said.

“Certainly there’s the sustainability rationale behind it, but these [energy investors] are for-profit businesses,” said Ledford. “Most of them view it as a long-term investment and solar development provides a long-term fixed income stream.” It’s the smart spend all around, he said.

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