Duke Energy Takes Solar Shot at Modest Commercial Businesses
When it comes to accessing the new energy market place, Duke Energy has a made a key move â€” going after the smaller-to-mid-sized commercial solar markets, which it thinks has huge potential. Today, the Charlotte-based utility announced it will be making significant investments in REC Solar, including personnel.
The aim of the matchup has been to provide sales and financing to those businesses that want to go green as a way to save on their electricity bills but that do not have the internal knowledge. Through the Duke-REC alignment, modest commercial businesses can choose to have Duke build out their projects and they can own them, if they need the tax breaks. Or, if they donâ€™t have the upfront capital, they can lease the projects from Duke and buy the output from the utility through 20-year power purchase agreements.
â€śSmall to mid commercial businesses want to become more sustainable and cleaner,â€ť says Matt Walz, who moved over from Duke to become REC Solarâ€™s chief executive, in an interview with Environmental Leader. â€śAt the same time, they want to save on their electric bill. They can work with us. The panels would be on their roofs or behind their meters and on their property. We will develop and build a renewable energy solution.â€ť
Duke plans to double its production and purchases of renewable power to 8,000 megawatts by 2020. It expects to invest $3 billion in new wind and solar projects in the next five years, up from the $4 billion it spent on renewables over the prior 10 years.
A decade ago, Duke had no investments in renewable energy. Itâ€™s investments today are almost exclusively large wind and solar projects that connect to the grid, as opposed to those that are on site. The typical project with REC, it says, would be 1 megawatt and on an enterpriseâ€™s property.
REC has a 20-year history. Today, it has 530 projects in the commercial energy space. Duke plans to invest $225 million into the company. The market is potentially a lucrative one.
The Solar Energy Industries AssociationÂ notesÂ that â€śchallenges remain in providing competitive financing for smaller companies without credit ratings.â€ťÂ
Why does Duke feel it can access this market? â€śTo me, it comes down to finding the right people, partners and standards,â€ť says Walz. â€śWho are the best partners and origination partners in those markets we are not now in?
â€śItâ€™s a proactive mindset,â€ť he continues. â€śIt applies to the behind the meter, commercial segment. Duke believes that with ownership of REC Solar, it can be nimble and entrepreneurial and win this market. It is not reactive. This is coming and we can be a leader nationally.â€ť
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