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An Economic Case To Prevent Solar Power's Sunset In North Carolina

Jesse Grossman's picture
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  • May 22, 2015 5:37 pm GMT
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north carolina solar policy choices

Solar energy is an economic boom for North Carolina. Only California installed more solar in 2014, pushing the Tar Heel State to fourth overall in America with 953 megawatts installed capacity – roughly the electricity demand of 90,500 homes.  

Jobs and investment have followed. Duke University reports 450 solar companies employ 4,300 workers statewide and have invested $2 billion across 55 counties, with every dollar spent on state incentives returning $1.93 in benefits. 

But this sunny forecast could quickly cloud over. Two of the most critical policies to North Carolina’s solar growth are in immediate jeopardy, a third faces long-term uncertainty, and a fourth is stuck in legislative limbo. 

Governor McCrory improved solar’s situation by extending the 35 percent North Carolina Renewable Energy Investment Tax Credit for projects “significantly complete” by the end of 2015. Projects can now start construction later in this calendar year, providing certainty for investors and ensuring more capacity comes online, but it’s not a permanent solution. 

From an investor’s perspective, the extension only pushes the existing market forward one or two quarters – the tax credit will still expire at the end of 2015. Legislation to extend the credit through 2019 has been introduced in the state legislature, but it has stagnated so far. 

However even with the tax credit extension, the Regulatory Reform Act of 2015 could shut the solar industry out of North Carolina. HB 760, which passed the House and is pending in the Senate, contains two last-minute poison pill amendments. 

HB 760 would reduce the state’s Renewable Energy Portfolio Standard (REPS) to 6 percent from the existing 12.5 percent by 2020 goal. REPS has been critical to solar in North Carolina since it became law in 2007, and has fended off attacks with bipartisan support several times, most recently this April. 

A REPS rollback would hamstring the market’s forward velocity and overall potential, and is counter-intuitive considering solar’s statewide economic contributions and other states increasing their renewable energy targets. 

A second change-of-course amendment in HB 760 would eliminate North Carolina’s existing property tax exemption for solar projects already in operation. The exemption has been on the books for years and would suddenly change the economics of utilities and businesses. 

These entities installed solar assuming one economic equation, and imposing a new tax effectively devalues their investment. Imagine if a new property tax was suddenly imposed on homeowners – how many residents could still make mortgage payments? Retroactive tax changes like this are rare in America, and would significantly harm many companies. 

The outlook isn’t all bad. HB 245, the Energy Freedom Act, could unlock the solar potential of North Carolina businesses through third-party ownership (TPO). With TPO, businesses can take control over their own energy future by hosting solar or other renewable sources on their own facilities. Whether they own an array or finance it through a power-purchase agreement, solar panels would spring up on available rooftops and acreage, and businesses could directly use the electricity generated on their property. 

Ten of North Carolina’s biggest employers including Wal-Mart, Cargill, and Volvo have lobbied for TPO as a red, white, and blue energy independence issue. TPO is an established principal across many states, and an economic opportunity for North Carolina businesses. 

Best of all, TPO can work for Duke Energy. Duke has supported solar, investing $4 billion across 1,800 megawatts of projects since 2007. The utility has traditionally purchased electricity from solar farms and facilitated grid connections for new arrays but can look to California or New Jersey where utilities benefit from TPO by investing in new solar assets or purchasing aggregated renewable energy credits and electricity from TPO facilities. 

Solar energy is shining upon North Carolina. 13 times more solar was installed statewide in 2014 as in 2010, and project costs are falling faster here than in many comparable states. By one estimate, the state could add 2.3 gigawatts additional capacity by 2023 – if just one gigawatt created these existing economic benefits, how many more jobs and investment will come from twice that growth? 

Smart government policy has powered the state’s solar growth so far. Let’s keep the momentum going through stable continued policy moving forward.

Phoo Credit: North Carolina Solar Policy/shutterstock

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Bob Meinetz's picture
Bob Meinetz on May 23, 2015

Jesse, good thing you’re making an economic case for solar in North Carolina, because there sure isn’t an environmental one.

In 2014, NC’s 953 MW of installed solar capacity generated 824 GWh of electrical energy, for a capacity factor of 9.8%. Of NC’s total 2014 electricity generation of 126,554 GWh, solar contributed a pathetic six-tenths of one percent.

Wait – and that cost $2 billion? To generate as much clean electrical energy as a 2.1 GW nuclear plant with North Carolina solar, it would cost $42.5 billion.

There’s not even an economic case for this atrocious, borderline-criminal waste of money.

http://www.eia.gov/electricity/data/browser/#/topic/0?agg=1,0,2&fuel=004&geo=00000004&sec=008&linechart=ELEC.GEN.SUN-NC-98.A&columnchart=ELEC.GEN.SUN-NC-98.A&map=ELEC.GEN.SUN-NC-98.A&freq=A&ctype=linechart&ltype=pin&rtype=s&maptype=0&pin=&rse=0

http://www.eia.gov/electricity/data/browser/#/topic/0?agg=1,0,2&fuel=g&geo=00000004&sec=008&freq=A&start=2001&end=2014&ctype=linechart&ltype=pin&rtype=s&rse=0&pin=&maptype=0

Joe Deely's picture
Joe Deely on May 23, 2015

Bob,

Just curious – How many times are you going to make the same mistake? or is it a mistake? 

Almost half of the installed capacity you quote for North Carolina was installed in 2014 – so why are you counting capacity that wasn’t even installed when you make your capacity factor calculation.

  • “In 2014, North Carolina added 397 megawatts (MW) of solar electric capacity, bringing its total to 953 MW – just 47 MW short of cracking the 1 GW barrier.”

If you want to see how the current capacity is doing why not look at the first two months of 2015 where Solar has generated 189GWh vs. 82GWh in the same time period lst year… a gain of more than 130% Y-Y.

Also, by the way ,the actual number for solar generated in 2014 was 922 GWh vs the 824GWh you quote.

Solar generated 0.72% of North Carolina energy in 2014 and will generate about 1.5% in 2015. Coal usage in NC will be below 35% of total electricity production in 2015 down from 60+% in 2005. Not bad.

Bob Meinetz's picture
Bob Meinetz on May 24, 2015

Joe,

  • Why are you not counting capacity that was installed for part of 2014, or do you have evidence 397 MW of solar was installed on December 31, 2014, after sundown? How is your method more accurate than mine, and how does either version significantly alter the conclusion that solar is a remarkably poor environmental investment in North Carolina?
  • Why not look at the first two months of 2015? Easy – that would admit the unsupported assumption that solar irradiance in North Carolina during January-February of both 2014 and 2015 was very near to the statistical average of all Januarys and Februarys (“unrepresentative sample” fallacy).
  • EIA shows total NC solar generation for 2014 at 824 GWh, per my top link above, bottom of page. Please don’t shoot the messenger – you’re just wrong.
  • Again, per links above, solar generated 824 GWh out of 126,554 GWh, or .651105456959% of North Carolina electricity generation for 2014. It’s either amazing “how bad these guys are” at calculating electricity generation, or you’re just wrong – again.
  • I agree that North Carolina has made great strides at reducing its coal consumption, but it’s obvious solar’s feeble .6% contribution for 2014 had virtually nothing to do with that. Is this irrelevant statistic included as a distraction?
Joe Deely's picture
Joe Deely on May 25, 2015
  • ” Why are you not counting capacity that was installed for part of 2014, or do you have evidence 397 MW of solar was installed on December 31, 2014, after sundown? How is your method more accurate than mine, and how does either version significantly alter the conclusion that solar is a remarkably poor environmental investment in North Carolina?” 
Actually, Bob I did not make the capacity factor calculation – you did. You used incorrect data for installed capacity and I was just pointing that out. Also, not to do all of your work for you, but here are the installation figures for 2014. 35MW in Q1 , 55MW in Q2, 95 in Q3 and 212 in Q4. Check here and here for numbers.
Not quite all installed on Dec 31st – but pretty close.
 
One more thing – the 953 MW number you used as installed solar capacity come from SEIA and they include residential and commercial installations in their number. Many of these installations will be smaller than the 1MW reporting requirement for EIA. So the starting number for 2014 is actually less than 953MW – 397MW  = 456MW.  Here is an example of installations in 2013.
 
 
  • ” EIA shows total NC solar generation for 2014 at 824 GWh, per my top link above, bottom of page. Please don’t shoot the messenger – you’re just wrong.”
Actually,you have a unneccessary filter turned on in your link. In the Filter/Sector section – switch your check box to all sectors and you will get the correct number – 922 GWh
Here is the correct link.
 
  •  “Again, per links above, solar generated 824 GWh out of 126,554 GWh, or .651105456959% of North Carolina electricity generation for 2014. It’s either amazing “how bad these guys are” at calculating electricity generation, or you’re just wrong – again.”
Like I said you have an extra filter – the correct numbers are 922 GWH out of 128,904 GWh or 0.72% 
 
  •  “I agree that North Carolina has made great strides at reducing its coal consumption, but it’s obvious solar’s feeble .6% contribution for 2014 had virtually nothing to do with that. Is this irrelevant statistic included as a distraction?”
The solar contribution in North Carolina was 0.27% in 2013 and 0.72% in 2014. In 2015 it will be over 1.5%. This number will continue to grow quickly over the next 15 years.  North Carolina is perfectly setup to eliminate coal usage because of its solid base of nuclear. The combination of new gas and solar could easily eliminate most coal usage in NC by 2030.  I don’t think this is a distraction.
 
Here are some upcoming projects:
 
donough shanahan's picture
donough shanahan on May 26, 2015

Almost half of the installed capacity you quote for North Carolina was installed in 2014– so why are you counting capacity that wasn’t even installed when you make your capacity factor calculation.”

OK i will bite on this one. So lets assume this is the case, redo his maths and you get what, a 25-50% reduction on the costs listed? Still astronomically high,

Joris van Dorp's picture
Joris van Dorp on May 28, 2015

Solar power advocates are their own worst enemy.

By promoting (or at least not criticising) the ridiculous notion that ‘solar power is already cheaper than grid electricity’, solar advocates have prompted legislators to roll back solar subsidy schemes.

Because after all, why should the state subsidise something which is already competitive?

Talk about shooting oneself in the foot….

Joris van Dorp's picture
Joris van Dorp on May 28, 2015

“The combination of new gas and solar could easily eliminate most coal usage in NC by 2030.”

Why not eliminate all coal use, and all natural gas use in NC by 2030, by simply installing more nuclear power? 

“I don’t think this is a distraction.”

How do you think that?

 

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