By Chris O’Malley

Duke Energy plans to make its first substantial purchase of solar power in Indiana, giving customers the option to buy “locally sourced” solar energy credits to help cover the cost.

The utility, with more than 800,000 customers in 69 counties, asked the Indiana Utility Regulatory Commission on Dec. 29 (Docket No. 44578) for permission to acquire a total of 20 MW of power from four solar farms: 5 MW each from Geres Energy, McDonald Solar, Pastime Farm and Sullivan Solar.

The sites are under construction, or soon will be, in Clay, Howard and Sullivan Counties. They’re set to go on line by the end of 2016.

The 20 MW of solar power is miniscule for a utility with more than 7,500 MW of mostly coal-based generating capacity in Indiana. But it amounts to the first utility-scale solar commitment for Duke in Indiana, spokesman Lew Middleton said.

Beyond Net Metering

Virtually all Indiana-generated solar power entering Duke’s system is currently on a net-metering basis. According to the IURC’s 2014 net metering report, Duke Indiana had 241 customers with their own solar panels that generated 1,458 kW in 2013. That year Indiana ranked 19th in the nation for photovoltaic solar deployment, with only about 88 MW installed, according to the Solar Industry Association.

The proceeds from the sale of renewable energy credits (RECs) would be applied toward the ratepayers’ share of the cost to buy energy from the solar farms.

Middleton said it’s too early to say how much it will cost customers to buy the solar renewable energy credits.

A REC is a tradable instrument that represents the environmental attributes of electricity generated from renewable energy. The credits are distinct from the electricity commodity, allowing them and the actual electricity to be traded separately, Duke said.

Customers would be able to buy the solar RECs through an expansion of Duke’s GoGreen program. Currently, that program allows customers to buy at a premium blocks of wind-generated power, for a minimum of $1.80 a month.

Since 2006, customers opting to participate in the program have supported 43 MWh of wind energy, the utility says. About 1,322 customers — or less than 1% of Duke’s Indiana customer base — participate in GoGreen.

But in its filing with the IURC, Duke said a number of customers have expressed interest in locally sited renewable projects, as opposed to out-of-state RECs.

It also touted the plan as diversifying its generation portfolio and fostering economic development.

Indiana’s nascent photovoltaic deployment got a boost in 2013, when a 12.5-MW solar farm was constructed at the entrance to Indianapolis International Airport. Subsequently, another 10 MW of panels were added, making it the world’s largest airport solar farm. Indianapolis Power & Light purchases the power under a feed-in tariff.

More Solar

Under Duke Indiana’s 2013 Integrated Resource Plan “blended approach” scenario, the utility envisions potentially 2,000 MW of nameplate wind capacity and 330 MW of solar by 2033.

The Charlotte, N.C.-based utility notes that solar is the least-expensive renewable fuel source and typically amounts to more reliable capacity during summer peaking conditions than wind.

Much of Duke’s renewable activity has been focused at its Duke Energy Renewables unit, an arm of its commercial division. DER owns 150 MW of capacity at 21 solar farms. It also owns or has a management role in 15 wind farms totaling 1,800 MW in 12 states.

Solar power remains a tiny but growing portion of the energy mix in the Midwest. In the MISO region, renewables comprise about 12% of generation, and most of that consists of 13,000 MW of wind generation.

The price to install photovoltaic systems has fallen more than 34% since 2010, according to the Solar Industry Association. That’s piqued interest in solar even in Midwestern states such as Wisconsin, where solar is just one-tenth of 1% of the state’s installed generating capacity.

Yet several Wisconsin utilities last year, including Milwaukee-based We Energies, proposed to increase fixed costs customers pay on monthly bills and reduce how much they pay customers for their own solar generation fed back to the grid.

Utilities argue they need more revenue to cover their fixed costs as customers generate more of their own power and reduce consumption through energy efficiency efforts.