In a previous post, we detailed how pro-renewables groups, like the Green Tea Party, are making significant inroads in many traditionally conservative states – such as Georgia, Florida, and Louisiana – that, in the past, have largely rejected policies that support renewable energy development. These groups, an unusual mix of conservatives and environmentalists, are breaking down political partisan barriers with a unified message that renewable energy development promotes national security, free market competition, and technological innovation.
Despite being a southeastern state, North Carolina has often been described not as “red” or even “blue,” but as a deep shade of purple due to the state’s mix of conservative ideals and progressive liberalism. When Barack Obama won the state in the 2008 presidential election, he became the first Democratic presidential nominee to win the state in 32 years. Shortly thereafter, the Republican party won both houses of the legislature. And when the current governor took office in 2013, he became only the third Republican to hold that office since 1900.
North Carolina’s Strong Commitment to Renewable Energy Threatened
Unlike some of its neighbors that are just now coming around to the idea, North Carolina has been proactive in its strong commitment to renewable energy. In August 2007, under the leadership of a Democratic governor, North Carolina became the first state in the Southeast to adopt a Renewable Energy and Energy Efficiency Portfolio Standard (REPS). Under the current standard, investor-owned utilities are required to meet up to 12.5% of their energy needs through renewable energy resources or energy efficiency measures.
This commitment, coupled with a low cost of living, attracted billions of dollars of investment in the state by companies with household names, such as Google, Apple, Facebook, New Belgium Brewing, MillerCoors, and Smithfield Foods. North Carolina cashed in as corporate America began “greening” their companies and their bottom lines. These companies came to North Carolina because they anticipated an ability to access cheap, clean power from renewable resources. With them came much needed tax revenues and jobs. Moreover, the state’s commitment to renewable energy also brought “green” jobs as North Carolina’s booming market for solar over the last few years moved the state to third in the nation for energy investment.
Recently, however, certain elements in the legislature have been embracing a regressive posture with respect to renewables. This agenda now threatens future energy investment. The Senate Finance Committee is considering House Bill 332, which instead of allowing the state’s REPS to increase from 6% in 2015 to 10% by 2018, and 12.5% by 2021, would halve the standard and freeze it at 6%. Further, the bill would shrink the guaranteed market by requiring utilities to only pay a standard rate for projects up to 100 kilowatts, as opposed to the current 5 megawatts. The result of these measures could not only mean an end to investment in renewable energy in the state, but also could detrimentally impact investment in general.
As it was reported in the Triangle Business Journal last week, the before-mentioned companies have spoken out against HB 332 and warned state lawmakers that changes to the state’s renewable energy policies could be detrimental to investment. As pointed out in their letter to the North Carolina legislature, these companies chose North Carolina “in part because the state’s existing energy policies.” If these policies change, companies will simply look elsewhere.
Hugh McColl Jr., former chairman and CEO of Bank of America, believes that North Carolina has the “opportunity to compete and be a leader in this 21st century industry. All our legislature has to do is maintain our renewable energy policies and phase down the tax credit responsibly rather than ending it abruptly this year.” A local source from one of the largest solar developers in the state reiterates this message stating, “[t]he North Carolina RPS was agreed to with all stakeholders involved, including utilities. The proposed ‘freeze’ of the NC RPS would damage the solar industry because its sets a precedent that a handful of special interest groups can roll back the clock on renewable energy policy and create investor uncertainty in financial markets.”
The State’s Solar Policies Have Been in Danger Before
This isn’t the first time the solar industry has been under attack. We reported in the Energy Finance Report back in February that the North Carolina Utilities Commission entered an order in its biennial rate proceeding that rejected requests by Duke Energy and other utilities seeking to alter standard contract terms that were vitally important to solar developers in North Carolina. It appears that advocates for HB 332 want a second bite at the apple.
We believe that if HB 332 makes it out of the Senate Finance Committee in its current form and ultimately passes the full Senate, companies and investors will be forced to look to other states for opportunities. This step backward not only makes the state less attractive in terms of a significantly smaller REPS, but also calls into question the stability of any future commitments to renewable energy. Thus, opportunities may lie in some of North Carolina’s neighbors that, although late to the game, could surpass the state in terms of a future renewable energy market.