Local Government:City of Charlotte, North Carolina
Project:35 Megawatt Solar Farm
To build a 35 megawatt (MW), utility-scale solar energy project that will provide Charlotte with enough clean electricity to power 10,000 homes and advance the City’s goal to power its fleet and facilities with 100 percent zero-carbon sources by 2030.
In February 2020 the Charlotte City Council voted to become the first municipality to participate in Duke Energy’s Green Source Advantage (GSA) program, enabling the City to move forward with the development of a 35 MW solar project. The approval of the deal made Charlotte the most populous city in the United States to acquire new renewable energy using a utility green tariff. Partnering with Carolina Solar Energy and Ecoplexus to build the solar farm, the City expects the project to be fully operational by 2022.
Back in 2019, Duke Energy’s GSA program, which allows large energy customers to select and negotiate a power purchase agreement (PPA) directly with a solar or wind developer, caught the eye of Charlotte and a few other North Carolina cities and counties. Soon after the City decided to participate, it put out a request for proposal (RFP) to find a solar developer, ultimately short-listing three candidates before selecting a joint bid between Carolina Solar Energy and Ecoplexus.
The 35 MW, 300-acre solar farm will be located near Statesville in Iredell County.
What were Charlotte’s biggest challenges in setting up this project?
Navigating the process of participating in a green tariff as one of the first US cities to do so: Traditionally, commercial and industrial corporate customers have driven the majority of green tariff deals. Only a handful of cities have signed on to a green tariff to date, so figuring out the details for municipal participation was a major initial challenge. Additionally, Charlotte had to conduct its own RFP process to find a project that had suitable economics for the City and met all of Duke Energy’s timing and development requirements. Once it selected the developer and project, the City had to submit its proposed project to Duke, which had to approve and accept the project into its program.
Understanding and evaluating the economics of the program: There are three parties involved in every GSA project: the customer, the project developer, and Duke Energy. The economics of the project depend on two variables: a contract price ($/kWh) that the customer negotiates with the selected developer for 10–20 years, and the avoided cost rate ($/kWh) that Duke will pay the customer for the electricity that the project generates. The customer can choose to have its avoided cost rate updated every five years, two years, or on an hourly basis, for the duration of its contract.
Techno-economic modeling showed that the hourly rate was the greatest risk-to-reward scenario. Because prices change hourly there is little price certainty, but there is also the potential for higher rates as projects produce power during peak hours or periods of high demand. After running financial analyses and evaluating its options, Charlotte chose the five-year rate because it had the longest term of price certainty, and the City’s modeling predicted that the project will still be cost neutral to positive by the end of the 20-year contract term.
What advice would Charlotte give other local governments as they pursue climate action projects?
Educate yourself early: Projects can be difficult to understand and evaluate, and you will need champions within the city who understand the value of the project from the start.
Leverage local government status: In your negotiations with a solar developer, know that being a municipality makes you a great “customer.” City contracts have long-term viability, so developers see very little risk in contracting with you.
Define all project priorities in the RFP: Include and detail in your RFP the non-energy priorities that are part of the project (e.g., priorities for women- and minority-owned business selection, preferences to work with local companies, workforce development programs, etc.). A city can only evaluate and make decisions based on those aspects if they are laid out in the criteria included in the city’s RFP. Then make sure to follow up on these extra benefits by signing a memorandum of understanding with the developer, to hold them to their word.
Engage with your utility (if applicable): If your city falls under the jurisdiction of a regulated utility, engage with the utility early and often. Duke Energy helped Charlotte understand the economics of the project and navigate the green tariff process because the city established a good relationship with Duke representatives early on. Even if you don’t see eye to eye on every issue, it’s important to have a seat at the table to be as involved as possible in the conversation.
How does this project fit into Charlotte’s broader climate and community goals?
Charlotte’s Strategic Energy Action Plan outlines a goal to procure 100 percent of the energy used by the City’s municipal buildings and fleet from zero-carbon sources by 2030 and put it on track to becoming a low-carbon city by 2050. The 35-megawatt solar project will help offset about 25 percent of carbon emissions from city-owned buildings over the next 20 years, building toward that target.
Implementation of the project isn’t just about getting to net zero for Charlotte, though; participating in the GSA project will help the city save money and advance social and health benefits. The solar project is expected to save the city $2 million in energy expenses over the next 20 years. It will create over 400 local jobs because the project will be sited in Statesville, North Carolina, only 50 miles north of the city. The deal will also improve air quality, helping the City avoid $20 million in expected regional healthcare expenses and reduce carbon emissions equivalent to removing 12,000 passenger vehicles from the road.
Additional Information and Resources
- City of Charlotte Announces Partnership to Construct Major Utility-Scale Solar Energy Project (City of Charlotte press release)
- Green Source Advantage Program—Solar Energy Project (City of Charlotte project page)
- Charlotte Is the Largest US City to Purchase Renewable Energy through a Green Tariff (RMI-WRI blog)
- Strategic Energy Action Plan (City of Charlotte plan)
- Green Source Advantage program (Duke Energy’s program website)
- North Carolina Utilities Commission Approves Duke Energy’s Green Source Advantage Program in North Carolina (News article)
The City of Charlotte received technical assistance from the American Cities Climate Challenge Renewables Accelerator on its Green Source Advantage program participation. This project was included on the Renewables Accelerator’s list: 10 of the Most Noteworthy Local Government Renewables Deals of 2020.