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Policy Memo: Reforming North Carolina’s Community Solar Market

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To: North Carolina (NC) State Rep. Zack Hawkins & NC State Sen. Mike Woodard

From: Brian Liechti, Senior Manager, Market Engagement, Inclusive Prosperity Capital

 

Introduction

As your constituent, I believe that North Carolina (NC) has an unprecedented opportunity to strengthen its electrical grid, reduce energy costs, and support local economic development by advancing community solar legislation (Connect the Dots, 2024).  Despite the legalization of community solar in 2017 through the passage of House Bill 589, North Carolina has yet to fully realize its benefits (North Carolina General Assembly, 2017). With federal funding available through the Inflation Reduction Act (IRA) and Greenhouse Gas Reduction Fund (GGRF), now is the time for the NC General Assembly to pass Senate Bill 701 (SB701) and enact further reforms to unlock the potential of community solar. According to a recent poll, two-thirds of NC residents support accelerating the transition to clean energy (NCLCV, 2023).

Introduced in April 2023 by Sen. Woodard (D) and co-sponsored by several other Democratic state senators, SB701 aims to fix the currently underperforming community solar market (North Carolina General Assembly, 2023). Key reforms proposed by the bill include:

  • Eliminating the need for annual income recertification for customers.
  • Creating carve-outs for low-to-moderate income (LMI) residents & affordable housing.
  • Allowing large anchor customers like hospitals and emergency shelters to participate.
  • Removing the 20 MW cap on project bidding and the 5 MW limit on system size.
  • Requiring interconnection to the distribution grid.
  • Enabling any NC customer to subscribe to projects within the state.
  • Adjusting bill credit rate to a “just and reasonable rate”.

 

Why Community Solar Matters

Community solar provides access to clean energy to customers who cannot install solar panels on their property. Participants subscribe to a shared solar facility and receive credits on their bills proportional to their share of the power generated (Policy Guidebook, 2024). This model is especially inclusive for multifamily housing tenants, renters, small businesses, and nonprofits who are often excluded from traditional solar programs. A study by the Lawrence Berkeley National Laboratory (LBNL) found that residential community solar participants are six times more likely to live in multifamily housing, four times more likely to rent, and earn 23% less than rooftop solar adopters (O’Shaughnessy et al., 2024).

While NC’s electricity rates are below the national average, low-income households in the state face a disproportionately high energy burden, averaging 19.8%—far above the national high-burden threshold of 6% (Moleka, 2024). With over 550,000 renter households earning below 50% of the area median income (NIHLC, 2024), and average electricity bills at $2,304 per year, renters could save over $460 annually by subscribing to community solar, assuming a 20% bill reduction (Energysage, 2024). This would potentially unlock millions of dollars in savings for renters statewide.

 

Key Benefits of Community Solar

  1. Enhancing Grid Resilience—Community solar projects can enhance grid resilience, reduce peak load, and decrease the need for costly utility investments in transmission infrastructure by integrating solar energy into the distribution grid (Department of Energy, 2024). Notably, during events like Winter Storm Elliott in 2022, renewables outperformed fossil fuel generators, demonstrating the reliability of solar energy during extreme weather (Albert, 2023).
  2. Reducing Dependence on Natural Gas—Community solar offers a sustainable alternative to natural gas which aligns with North Carolina’s clean energy goals.
  3. Stimulating Economic Development—Community solar projects stimulate economic growth in underserved areas, such as rural communities, by providing new, stable revenue streams for farmers, landowners, and building owners (Department of Energy, 2024). These projects create good-paying local jobs and generate tax revenue that can fund public services and infrastructure.
  4. Lowering Energy Bills—Residents, nonprofits, and businesses that subscribe to community solar receive 5-20% lower energy bills and the sign-up process is simple (McDevitt and Mooney, 2023).

 

Beyond SB701: Further Steps for Comprehensive Reform

While SB701 lays a strong foundation, further legislative action is necessary to ensure the long-term success of community solar in North Carolina. As representatives in the General Assembly, consider the following additional measures in future legislation, recommended by the community solar advocacy group, the Coalition for Community Solar Access:

  • Maximize Federal Funding— Design carve-outs and criteria to ensure North Carolina maximizes funding from the Inflation Reduction Act (IRA) and Greenhouse Gas Reduction Fund (GGRF).
  • Guarantee Discounts for Low- to Moderate Income (LMI) Subscribers— Implement guaranteed discounts of 20% or more for LMI subscribers to ensure significant bill reductions, aligning with the EPA’s Solar for All program goals (Environmental Protection Agency, 2024).
  • Enhance Consumer Protections— Prohibit upfront costs, early termination fees, and credit score checks for LMI households.
  • Protect Energy Assistance Eligibility— Ensure the State Energy Office and NC Department of Health and Human Services coordinate to prevent community solar participation from negatively impacting eligibility for energy assistance programs.

 

Conclusion

By passing SB701 and advancing additional community solar reforms, the NC General Assembly can unlock significant economic, environmental, and social benefits for the state. These steps will enhance grid resilience, lower energy costs, and ensure that all North Carolinians, especially those in low-income and disadvantaged communities, can participate in and benefit from the clean energy transition.

 

Works Cited

Albert, Naomi. “Reliance on Fossil Fuels Was Last Year’s Grinch That Stole Christmas - and the Real Cause of Winter Storm Elliot Blackouts.” Appalachian Voices, 21 Dec. 2023, appvoices.org/2023/12/21/winter-storm-elliot/#:~:text=During%20Winter%20Storm%20Elliot%2C%2090,solar%20and%204%25%20from%20wind

“Connect the Dots on Community Solar.” Department of Energy, www.energy.gov/eere/solar/connect-dots-community-solar. Accessed 26 Aug. 2024.

“Electricity Cost in North Carolina: 2024 Electric Rates.” Energysage, www.energysage.com/local-data/electricity-cost/nc/. Accessed 22 Sept. 2024.

Moleka, Elvis. “A Call to Action: Analyzing Rural Energy Burdens in North Carolina.” Groundswell, June 2023, https://groundswell-web-assets.s3.amazonaws.com/report/The+Report+NC+rural+burden+-+FINAL.pdf. Accessed 22 Sept. 2024.

McDevitt, C. and Mooney, M. E. “How Much Can You Save with Community Solar?” Energysage, 25 Oct. 2023, www.energysage.com/community-solar/community-solar-savings/

“New Climate and Clean Energy Poll Findings.” North Carolina League of Conservation Voters, 30 Oct. 2023, nclcvf.org/clean-energy-poll-2023/

North Carolina, General Assembly. House Bill 589. legnc.gov, 2017. General Assembly of North Carolina. https://www.ncleg.gov/Sessions/2017/Bills/House/PDF/H589v5.pdf

North Carolina, General Assembly. Senate Bill 710. legnc.gov, 2023. General Assembly of North Carolina. https://www.ncleg.gov/Sessions/2023/Bills/Senate/PDF/S710v1.pdf

O’Shaughnessy, E., Barbose, G., Kannan, S. et al. Evaluating community solar as a measure to promote equitable clean energy access. Nat Energy 9, 955–963 (2024). https://doi.org/10.1038/s41560-024-01546-2

“Out of Reach: North Carolina.” National Low Income Housing Coalition (NLIHC), nlihc.org/oor/state/nc. Accessed 22 Sept. 2024.

Policy Guidebook, Coalition for Community Solar Access, 2024, communitysolaraccess.org/wp-content/uploads/Policy-Guidebook_2024.pdf

“Solar for All Fast Facts”. EPA, Environmental Protection Agency, www.epa.gov/greenhouse-gas-reduction-fund/solar-all-fast-facts. Accessed 6 Dec. 2024.