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Duke Energy’s Misleading “Clean Energy Connection” Program: Does It Make Cents?

Duke Energy’s Misleading “Clean Energy Connection” Program: Does It Make Cents?

Duke offers its customer a way to “go solar” and “receive the benefits of clean renewable solar energy without the commitment and expense of rooftop panels.” It’s called the “Clean Energy Connection” Program, and it’s presented as a better option to homeowner-owned solar.

But is it really?  The main benefit of owning solar is the significant cost savings on energy over time.  Does this program provide that, or is it just a feel-good way to pay more money to your power company?

How it works

The program has you pay Duke a monthly subscription fee ($8.35) for your own “chunk” of the utility’s own solar production, roughly 1 kW worth of panels.  Then, they pay you back a credit for the power your chunk produces: a measly $0.04/kWh.

Here’s the language from their site:

“The initial credit rate on your bill will be approximately $0.04 per kilowatt-hour (kWh) and will remain at that level for the first 36 months. Starting with the 37th month of continuous enrollment, the rate will increase 1.5% annually, eventually exceeding your fee and delivering a positive return. The longer you remain in the program, the more you are projected to save on your bill.”

So they imply that eventually this will be a net benefit for you, but is that true?

The Real Math

      • Subscription fee: $8.35/month

      • Subscription Size: 1 kW

      • Credit Rate: $0.04/kWh (for the first 36 months)

      • Credit Rate Increase: 1.5%/yr

    Here in Duke’s Florida service area, 1 kW DC of solar panels, after considering things like shading, inverter losses, etc, will produce approximately 1548 kWh/Year of energy (source: PVWatts) or an average of 129 kWh/month.

    At the advertised $0.04/kWh credit rate, Duke is going to credit you 129 x $0.04 = $5.16.

    With an $8.35 subscription fee, you are still going to be paying an extra $8.35 – $5.16 = $3.19/month.

    Wait, isn’t this program supposed to save you money?

    Ok, but the payback credit increases over time, so let’s look at the rate increase.  Let’s ask a question:

    “At 1.5% growth rate, how long until my $5.16 monthly credit matches my $8.35/month subscription and I can start to earn money back?”

    Let’s assume the best case, that it’s a compound growth rate.  We can take the formula for Compound Annual Growth Rate (CAGR):

    And solved for t with some boring math:


    Add the 36 months that the credit rate doesn’t increase, at that means that your credit will break even in over 35 years. And don’t forget, that’s just the time it takes for you to get to a net-zero monthly payment. Double that to get your money back.  In the meantime you’ve given the power company roughly a thousand dollars, and for what? Yikes!

    (Oh, and by the way, even if we remove estimated system losses completely (impossible) and run the calculation with a “perfect” solar panel, it would still take 25.5 years to get to a net zero payment)

    Conclusion

    The Clean Energy Connection program and others like it provided by the major utilities, are simply a way to offer the “thought” of clean, renewable energy to their customers at an additional expense to them.  You will never net positive from joining this program, and there is no guarantee that the subscription rate won’t be increased in the future.

    If you want to benefit from solar power, which can completely pay itself off within a few years and continue to produce free power for decades, the best way is to purchase a system directly from a professional and high integrity installer, like Solarvironment!

    Cheers,

    Martin Elkins, COO of Solarvironment

    PS. What about the others?  Here’s a quick breakdown of 2 more of FL’s major utility programs:

    FPL SolarTogether©

        • Subscription: $6.76/kW/mo

        • Claimed Production: 180 kWh/kW/mo (unrealistic, even with zero loss factor!)

        • Credit: $0.036/kWh

      • Credit Rate Increase: ??
       

      FPL wouldn’t or couldn’t tell me what their credit escalation rate was, but they claim that the credits will exceed the subscription costs “by the 4th year”.

      With their numbers, that’s roughly a 1% increase.

      But their production numbers are super inflated. 

      With my numbers: Looking at the West Palm Beach, FL area, the best I could get out of PVWatts with a “perfect” 0% loss system  was 152 kWh/kW/month of production. Along with my 129 number from the previous example, that’s anywhere from 15% to 28% inflated.

      Using that 129 kWh/kW/mo number, that means FPL either needs to offer a 10% annual credit increase (compared to the more realistic 1%), or it will take up to 37 years for your credit to match your subscription

      TECO Sun Select

      TECO’s program is a bit different in that they remove the “fuel charge,” but bill you a “Sun Select” kWh rate for the energy you use related to the amount of solar you’ve subscribed to, but we can still compare the costs:

          • Avoided Fuel Charge: -$0.029 to -$0.039/kWh

          • Added Sun Select Solar Charge: $0.063/kWh

          • Net bill change: : +$0.024 to +$0.034/kWh

        TECO is a bit more transparent in the fact that you’re really just paying for the environmental factor, and they even say your bill will increase:

        “A residential or small business customer who chooses to replace 100 percent of their electricity bill with solar from Sun Select will see an increase of about $1 per day. (Based on a 1,000 kwh/month bill.)”

        Ok, but that’s $30 a month!

        Why pay them when you could get the same environmental benefits AND make a positive-ROI investment?