Charlotte's solar challenges follow similar projects' rising costs
A solar farm project that was supposed to help the City of Charlotte meet its climate goals is now uncertain after developers said they need a 25% price increase to keep it financially viable. It's one of many nationwide stalled by economic and social headwinds.
Four years ago, the Charlotte City Council set a goal of powering all its buildings and vehicles with carbon-free electricity by 2030. But most comes from Duke Energy, which by then expects to deliver just 65% zero-carbon energy, leaving a 35% gap to meet the goal. A proposed solar farm in Iredell County would cut that by about half. But now that project is in jeopardy because of rising equipment costs.
"We received a note from our solar developer that in order to continue in this agreement with the city of Charlotte, they would need to increase their product charge because of several macroeconomic factors that are really prevalent in a variety of industries, but certainly in the solar industry and in renewable energy," City Chief Sustainability Officer Sarah Hazel told City Council members Monday.
Macroeconomic factors such as inflation, rising interest rates, supply chain delays and tariffs on Asian-made solar equipment. The cost increase would mean that instead of saving money on its electric bill, the city would pay an extra $750,000 a year for 20 years. The city has until January to decide how to proceed.
At the council meeting, Hazel offered two options: Accept the price increase and revise the contract with the developer or allow the project to default and hope some future option can fill the gap. But she says it's not clear if anything will be as large as the 35-megawatt solar farm, which would be 28 times the capacity of 15 rooftop solar panels already installed on its own buildings.
"There are other options that will allow us to continue to strive towards making progress (on the goals), just not readily available options that are this large," Hazel said.
The city's struggle isn't unique. Municipalities, institutions and businesses across the country are facing similar delays in bringing renewable energy online, and that's threatening their own goals of eliminating the heat-trapping pollution that causes global warming.
"It just takes a while for manufacturing and supply chains to catch up with this, you know, increase in demand that has been created," said Steve Kalland, executive director of the North Carolina Clean Energy Technology Center at North Carolina State University. "There's going to be short-run turbulence, probably upward pressure on prices, which we're seeing. I think that in the long term, that will iron its way out."
Kalland said rising demand and new federal incentives will drive the creation of new production in the U.S. and supply chain issues will ease.
Duke Energy pilot program
The city signed a deal two years ago with Duke Energy and developer Ecoplexus to buy power from a new solar farm in Iredell County. It's part of Duke Energy's Green Source Advantage pilot program, which allowed four large customers to contract for solar or wind energy from independent power producers. Others were Bank of America, Wells Fargo, and Duke University.
"None of them are up and running yet," said Duke Energy spokesman Randy Wheeless. "I think they've been hampered by some of the same delays (as Charlotte) as well. But we think they'll still get to the finish line."
Wheeless said Duke Energy still expects the four projects to be finished in early 2024. He referred detailed questions to the four partners.
Duke University did not respond by our deadline. Bank of America confirmed that its project is delayed, but said it remains committed to it.
Wells Fargo's plan for a solar farm in Catawba County was rejected by Catawba County commissioners last summer. A Wells spokesman said Tuesday there's no update.
Normally, big customers can't buy power directly from third-party producers in North Carolina. That's why the Green Source Advantage is a three-way partnership. Kalland said Duke Energy and regulators may need to revise the program.
"If you've got a program that's designed to make life easier for companies, and they're not taking advantage of it, it's probably time to go back and re-evaluate policy to make sure that it's set up the right way," Kalland said.
State regulators are currently reviewing Duke Energy's carbon plan and other proposals for reaching the state's carbon-reduction goals. Wheeless said the company may have to modify the program to make it more attractive to customers.
Although demand for solar energy remains high across the U.S., growth in solar installations nationwide slowed last year and is expected to decline this year, according to the U.S. Solar Energy Industries Association. Many scheduled projects have been delayed until 2023 or later because of supply chain delays and higher prices and financing costs.
Similar problems are plaguing offshore wind projects. In Massachusetts, leaders of two projects are telling regulators they need to charge higher rates than originally planned to offset rising costs.