Duke Energy Corp. has agreed to change part of its Green Source Advantage clean-energy program in a settlement with Walmart Stores Inc. that brought the retailer and leading renewable energy consumer on board for the controversial program.
The settlement comes as Charlotte-based Duke, renewable energy advocates and commercial customers interested in renewable energy purchases prepare for the North Carolina Utilities Commission’s hearing on the Green Source program starting Sept. 4.
Walmart had given Duke’s original program proposal a big thumbs down. In February, the retail giant, which estimates it gets 28% of its electricity from renewable sources, said flatly it would not participate in the program as Duke initially designed it.
It said the program was too costly and cumbersome and would actually prevent the company from adopting renewables in the Duke Energy Carolinas and Duke Energy Progress areas of North Carolina.
But Duke worked with Walmart to offer a new way to calculate credits that customers contracting for clean energy from independent power producers would be given for the renewable energy produced. The changes were designed to make it more attractive to major commercial energy users like the Arkansas-based retailer.
Ken Jennings, Duke’s renewable strategy and policy director, says that the new credit calculation is designed to act as a hedge and allow commercial customers to fix their costs for power. The new calculation is tied to hourly charges for power and is not based on average long-term costs for renewable energy.
The new calculation was proposed by Walmart, he says, as an alternative to two pricing mechanisms for the credits offered initially. Those methods will still be offered, Jennings says. But customers participating in the Green Source program will be able to opt for any of the three calculation methods.
He says Duke will discuss the details of the settlement proposal with other interested parties at a meeting Tuesday. Jennings says Duke is still in discussions with commercial and institutional customers about other potential modifications to the Green Source program.
The program allows customers to let Duke match them to green power sources — for a price — or to negotiate their own power-purchase agreements with renewable energy developers and receive a bill credit from Duke for the power produced.
The settlement with Walmart affects only that second method, where producers make their own contracts. Walmart declined to comment on the settlement, which must be adopted by the commission before it becomes effective.
Legislators mandated the Green Source program to sell renewable energy to commercial and institutional customers as part of last year’s Competitive Energy Solutions for N.C. Act. The act also established the new competitive bidding process for new solar development in the Carolinas now being used by Duke Carolinas and Duke Progress. In addition, it required the utilities to offer rebate programs to encourage the construction of residential and small commercial solar projects.
The Green Source Advantage program Duke proposed at the start of the year was immediately panned by the commercial and institutional groups it was meant to attract. It was supposed to build on a little-used Duke Carolinas program that was to match large customers with an appetite for clean energy to independent producers who would supply it.
Duke proposed some modifications in response to the initial objections. But the settlement with Walmart marks the first significant breakthrough with potential customers who objected to the program’s design.
And it is clearly an important step. Walmart is one of the largest employers in North Carolina, as it is in most states. And it is a national leader in renewable energy among retailers. Only Target Corp. has more rooftop solar on its stores.
But it is not a big consumer of renewable energy in North Carolina. That may change if the new program is adopted.