Debating North Carolina's Renewable Energy Policies

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Debating North Carolina's Renewable Energy Policies

Published: Monday, June 22nd, 2015 @ 9:30 pm
By: John Locke Foundation ( More Entries )

Publisher's note: The author of this post is Jon Sanders, who is director of regulatory studies for the John Locke Foundation.

The debate over North Carolina's renewable energy policies continues this week, even as the North Carolina Senate takes up other issues. The News & Observer hosted opposing op-eds, one from former Duke Energy CEO Jim Rogers, and the other from yours truly.

Rogers gave what he called the "business case" for the continuing tax credits for renewable energy sources and increasing renewable energy portfolio standards (REPS) mandates.

He also ironically termed the opponents of those policies written to provide special breaks and purchase mandates to a specific industry "special interests."

Last week, Carolina Journal looked into the extent of this favoritism with respect to tax credits (which, to Rogers, only "special interests" oppose). In an article entitled "Green Energy Big Business for Big Business," Dan Way wrote:

While Duke Energy is passing higher costs to ratepayers because state law forces it to purchase renewable energy, the utility also claimed a whopping $62.8 million in tax write-offs in 2014 for its own investments in green power projects.

The electric giant accounted for roughly half of the state's $126,661,982 renewable tax credit bonanza in 2014, with Blue Cross and Blue Shield a distant second at $16.8 million, according to state Department of Revenue records.

Dating back to 2010, Duke has claimed an additional $3,112,503 in tax credits, and BCBS has been issued another $12,696,204.

The state grants tax credits for 35 percent of investments in renewable energy projects, most of which are solar farms. Developers also can claim a 30 percent federal tax credit for solar projects. In addition, the NC Clean Energy Technology Center at N.C. State University lists 113 programs under which renewable projects in North Carolina can qualify for various state and federal incentives.

State Revenue Department records show that big solar is big business for big business. The state has issued $224,508,181 in tax credits since 2010, according to Revenue Department records.

My op-ed urged a solid accounting of the costs of the tax credits and REPS mandate. It discussed cost issues that are already familiar to this newsletter's readers and followed with others. A snippet:

Lack of price competitiveness. Renewable energy sources, especially intermittent sources such as solar and wind, are several levels less efficient at energy production than traditional sources. They require comparably much greater resources of land (let alone state and federal subsidies) to produce the same amount of energy as traditional sources.

Dispatchability. The intermittency problem is simply a fact of nature: Sun and wind cannot be summoned to produce on an immediate, as-needed basis, as can traditional sources.

Backup generation. Managing intermittency requires keeping traditional energy sources on standby. Their costs are necessarily a part of those renewable sources' operating costs. Worse, those traditional sources don't operate as efficiently as backup, which involves ramping them up and down.

Greater social cost of renewables. For the above reasons, a landmark study last year from the Brookings Institution found that solar and wind power were the most (not least) expensive sources for reducing carbon emissions. Solar was the worst. Natural gas, all things considered, was the least expensive source.

I urged pulling back and studying the policies, noting that many other states are already rethinking their own REPS mandates.

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