Duke Assesses Proposals for 400 Megawatts of Renewable Capacity

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Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--Duke Energy Corporation (NYSE:DUK) (Charlotte, North Carolina) received a "good" response to its request for proposals (RFP) for 400 megawatts (MW) of renewable energy generation, company spokesman Randy Wheeless said in an interview. "We're sorting through the bids now, but we're not prepared to say how many megawatts of proposals we received or who's on the short list. We expect to make a decision later this year."

Last October, Duke issued an RFP for 750,000 MW-hours of renewable electricity and associated renewable energy credits (RECs), or about 400 MW of generating capacity. The projects could be based anywhere in the company's North and South Carolina service area, but the company would prefer to site as many projects as possible west of Raleigh, North Carolina, the Duke spokesman explained. The RFP required projects to be operating by year-end 2018.

Industrial Info is tracking 94 active renewable energy projects in North and South Carolina valued at about $4.79 billion. More than half of those projects--49 projects valued at $3.3 billion--are solar projects. But 38 of those 94 projects, valued at about $3.1 billion, are scheduled to be built in the eastern half of North Carolina (Zone 2), which is not where Duke needs them. By contrast, 16 North Carolina projects valued at $447 million are scheduled to be built west of Raleigh, in North Carolina's Zone 1.

North Carolina's 2007 Renewable Energy and Energy Efficiency Portfolio Standard (REPS) requires each utility operating company in the state to generate 12.5% of its electricity from renewable energy sources or energy-efficiency programs by 2021. The eastern part of the North Carolina, which Duke serves through its merger with Progress Energy, has "a great deal of solar energy," Wheeless told Industrial Info. The western portion of North Carolina, Duke's traditional service area, "doesn't have that much" renewable energy, he added. He further stated that the preference for solar projects located west of Raleigh is not related to transmission constraints.

In announcing the RFP, Duke said about 75% of its owned and purchased solar generating capacity lies east of Raleigh, in the Duke Energy Progress (DEP) territory.

Renewable power developers were free to submit projects located in Duke's western or eastern North Carolina service areas, as well as its service area in South Carolina. Wheeless said projects located in the utility's South Carolina service area could be counted in the North Carolina RPS. The RFP is open to nearly any type of renewable energy: solar, wind, biomass, landfill gas and other facilities that qualify as a renewable energy resource under North Carolina's REPS requirements.

In its RFP, Duke Energy said it was open to developers building the projects themselves or selling current projects under development to the utility.

"Solar is the most economically viable form of renewable energy in the Carolinas," Wheeless said, but the utility will consider all types of renewable energy, except facilities burning swine or poultry waste.

"Prices for solar have come down across the country, and we're seeing that in the Carolinas as well," the Duke Energy spokesman continued, declining to characterize the size of those price declines. "Large-scale solar projects in the Carolinas were benefiting from better building practices, improved economies of scale and maturing supply chains. After you build the first one, the second one is easier and less expensive."

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