Duke Energy seeks $100M in solar equipment

Charlotte, N.C.-based Duke Energy (NYSE: DUK) is in the hunt for $100 million worth of solar panels, equipment and labor for a distributed solar project in North Carolina.

The unique deal would place Duke-owned panels on private roofs to feed into the electric grid as an experiment for the company to gauge the most cost-effective method to generate a mix of renewable energy, Duke spokesman Dave Scanzoni told the Cleantech Group.  

"We're looking at it as a pilot project, not a one-stop solution," Scanzoni said. "But this is one of many potential solutions, as is nuclear."

The distributed solar project is part of the utility's aggressive strategy to move
away from coal-fired power plants, which make up about 70 percent of its power supply. Duke receives about 1 percent of its energy from renewables.

At least 16 megawatts of solar capacity is planned to be spread across 850 sites—a mixture of residential, commercial and industrial roofs, and privately owned land. Duke Energy expects to pay a nominal rental fee to the land- or building-owner and feed the electricity straight into the grid, where it could power about 2,600 homes.

Duke is also investing in solar power plants, most recently signing a 20-year deal to buy 16.1 MW of electricity from a solar farm to be built in Davidson County, N.C. (see Duke Energy to get solar power from SunEdison). Financial terms of that deal weren't disclosed.

At $100 million for 16 MW of distributed solar, the project isn't the cheapest energy option for Duke, but Scanzoni said distributed power could be cost-effective because Duke won't have to pay for land, a developer or construction of a power plant. The company is estimating the panels will contribute to the grid for at least 20 years.

Duke plans to use multiple suppliers from across the globe using several solar and metering technologies, Scanzoni said.

Duke plans to present the project for approval by the North Carolina Utilities Commission in October. Scanzoni said the company expects a decision within a few months, allowing the company to hire contractors for installation and equipment in early 2009 and finish installation by late 2010.

Southern California Edison, a unit of Rosemead, Calif.'s Edison International (NYSE: EIX) announced a similar project in March. SCE said it planned to invest $875 million in 250 MW of solar on two square miles of rooftops.

In the short term, Duke's project could kickstart the nascent North Carolina solar industry by funneling millions of dollars into companies to install and maintain the panels, Scanzoni said. In the long term, the distributed solar project could be expanded to thousands of buildings, Scanzoni said. 

The North Carolina Energy Plan requires that utilities generate 12.5 percent of electricity sales from renewable sources, or from efficiency reductions, by 2021. The utility has promised to retire 800 MW of coal plants if customers achieve equivalent energy efficiency gains.

Duke Energy's operations in North and South Carolina include nuclear, coal-fired, natural gas and hydroelectric generation. But recent months have seen a flurry of small renewable energy deals, including the purchase of power from a 3 MW landfill gas site earlier this week.

"We're at the ground floor of renewable energy in North Carolina, and we're trying to be aggressive," Scanzoni said.

The company is also pursuing wind projects. In June, Duke paid more than $240 million for wind developer Catamount Energy, which has 300 MW of renewables in its portfolio (see Duke Energy buys wind developer for $240M). In December, Duke announced the purchase of 100 wind turbines with a capacity of 150 MW from General Electric (see Duke Energy buying 100 wind turbines from GE). In May 2007, the company purchased Austin, Texas-based Tierra Energy (see Duke buys Tierra Energy's wind business).

Duke Energy is one of the largest electric power companies in the United States, supplying energy to approximately 4 million U.S. customers. The company has nearly 35,000 MW of electric-generating capacity in the Midwest and the Carolinas. Duke has more than 4,000 MW of electric generation in Latin America.

Companies interested in bidding on the project should go here.

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