- Adding a solar project to the electrical grid cannot be done without also adding backup generation
- The North Carolina Utilities Commission excludes the costs of backup generation in evaluating solar projects’ costs, even though those costs get added to customer bills
- Ignoring those costs makes solar seem more price-competitive against other generation resources and subverts state law’s intent to ensure adequate, reliable electricity at the lowest cost possible
The previous brief in this series discussed the well-known fact that solar power cannot be added to the electrical grid without backup generation. It then noted that, despite that fact, the North Carolina Utilities Commission (NCUC) excludes the costs of backup generation in evaluating solar projects’ costs to ratepayers, even though those costs will still be added to customer bills.
In other words, the NCUC treats solar’s necessary firming or regulating reserves not as a consequence of adding solar to the grid, but as if they are just another cost of doing business as a utility.
This selective accounting is inexplicable. It makes solar projects seem more price-competitive against reliable, dispatchable power generation resources. It is especially troubling because the NCUC is legally required to promote “adequate, reliable and economical [affordable] utility service to all of the citizens and residents of the State.”
This requirement for adequate, reliable, and affordable power also applies, of course, to planning for future reliable generation. To be clear, the law specifies that the NCUC’s choices must result in rates as “least cost” as “achievable” (“energy planning and fixing of rates [must be done] in a manner to result in the least cost mix of generation and demand‑reduction measures which is achievable”).
Even the resource and generation choices the NCUC makes under the Carbon Plan law passed in 2021 are legally required to be “reasonable,” to “maintain or improve upon the adequacy and reliability of the existing grid,” and to represent the “least cost path” to achieving “carbon neutrality” by 2050.
Questions and answers before the Utilities Commission
Testimony before the NCUC on Sept. 30, 2025, from Angela Tabor, renewable compliance manager for Duke Energy Progress, demonstrated in the starkest terms that (a) solar facilities cannot be divorced from backup generation but also that (b) the NCUC does not include the cost of backup generation in determining the costs of solar facilities.
The testimony included reading from “the minor [New Source Review (NSR) air quality] permit application for the combined cycle turbines project, Duke Energy Progress Roxboro Steam Electric Plant from March of 2024.” The information in the application and subsequent explanation before the NCUC showed the depth of solar projects’ need for firming or regulating reserves even as those costs are deliberately ignored. The application as read stated:
As solar capacity increases on the bulk electric systems, so does the importance of regulating reserves. A substantial amount of regulating reserves is required in the downward direction to accommodate the rapid increase of solar output as the sun begins to rise in the morning. Likewise, regulating reserves in the up direction are required to replace the loss of solar generation as the sun begins to set in the evening.
Throughout any given day, regulating reserves are required in both directions to cover the change in solar output that comes from cloud cover, rain, or anything else that impacts the sun’s intensity. For example, an overcast sky can reduce a solar facility’s production to as low as 15 to 30 percent of its rated capacity.
To interrupt: These regulating reserves are “required.” They are required in the mornings to help as solar begins to generate power, in the evenings to replace the dwindling solar generation, and throughout the day to deal with solar’s fluctuations from changes in “cloud cover, rain, or anything else that impacts the sun’s intensity.” Continuing:
This variability in solar output, whether predictable or not, requires an increase in regulating reserves to maintain an acceptable match between demand and generation within the operating area. Failure to maintain adequate regulating reserves would result in excessive inadvertent interchange with neighboring control areas, and could also potentially threaten the integrity of the bulk electric system.
Gas-fired generating units have a relatively high ramp rate when compared to most other generating technologies. Gas-fired units are also typically cheaper to operate from a fuel cost standpoint. These two factors position gas-fired units to provide much of the needed regulating reserves to accommodate the increase in solar penetration in North Carolina.
In other words, it’s not just that regulating reserves are required. The amount of regulation reserves must be adequate enough to prevent grid failures. And the cheapest and most efficient generating technology to provide regulating reserves are natural gas–fired generating units.
To double-check, Commissioner Donald van der Vaart asked Tabor if Duke’s application was saying that regulating reserves are “needed to accommodate the increase in solar penetration in North Carolina.” Tabor responded, “That’s how I understand it.”
Another portion of the application that the NCUC heard discussed the different options for regulating reserves:
Duke Energy evaluated several alternatives to address the minimum load and ramp rates associated with solar integration. These options include the sale of excess energy, curtailing coal plants, curtailing nuclear plants, curtailing solar energy storage, and demand-side management. While several of these options, including the sale of excess energy, curtailing solar, energy storage and demand-side management can contribute to flexibility and solar integration. None of these alternatives can substitute for increased natural gas operational flexibility.
Also to double-check, van der Vaart asked if Duke’s application meant that, among those options, “natural gas combustion turbines are best suited to substitute to provide this flexibility.”
The response was affirmative, so van der Vaart asked if, in comparing project costs, “no such firming or regulating reserves are included in the cost. You’re only going to cost the standalone solar facility; is that right?” Tabor answered, “That’s right.”
Further questions and consumer consequences
State law does not determine which generation sources the NCUC must pick for the generation mix. Instead, it describes what a legally compliant mix exhibits: adequate, reliable electricity at the lowest cost possible.
Even under the terms of the Carbon Plan law, the generation resources picked must be reasonable and offer the least-cost path to achieving the goal while maintaining or improving the reliability of the grid. How reasonable is it to select a generation resource that cannot be reliable on its own but can only approximate reliability if it is mirrored by a dispatchable resource (natural gas)? Why not just build a natural gas power plant and operate it full-time, which would be far more efficient (and cheaper) than toggling it on and off throughout the day? Furthermore, how could such a tandem pairing be the lowest-cost option?
Ignoring significant costs of solar projects subverts the law’s intent to protect North Carolina’s electricity consumers from overpaying for electricity. Under the law, paying more than the least cost achievable is overpayment. If not changed, NCUC’s selective accounting will inevitably result in inadequate, unreliable, and expensive electricity.
