North Carolina has been home to a thriving solar industry for the past eight years, thanks to a tax break and requiring utilities to develop clean energy.
But opponents of targeted tax credits and government-funded advantages for certain businesses have been chipping away at those benefits – with mixed results.
This year the state legislature did away with a 35 percent tax credit for investments in renewable energy.
But efforts to get rid of what is known as the “renewable energy portfolio” law, which mandates a certain level of energy production from solar, wind and other renewable sources, have repeatedly failed.
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That debate is expected to return to the General Assembly next year. Once again, the battle will be pitched.
“I like to call it the most important state policy issue you’ve never heard of,” Donald Bryson, state director of Americans for Prosperity, said Friday.
North Carolina gave a shot in the arm to solar and, to a lesser extent, wind power in 2007 when the legislature set a goal for utilities to produce 12.5 percent of their electricity from renewable energy sources. The current rate is 6 percent, and would grow to 10 percent in 2018 and cap off at 12.5 percent in 2021.
Rep. Mike Hager, a Republican from Rutherfordton and a former Duke Energy engineer, has crusaded against the portfolio law for the past several years. He has been thwarted by a bipartisan bloc of legislators who point to the jobs and other economic benefits of the growing alternative energy industry.
As he has in the past, Hager worked in this recent session for a freeze on those escalating portfolio rates in two bills. In the final shuffling of legislation, the only provision that survived was the one allowing the tax credit to sunset.
Hager said Friday that House and Senate members working on the issues decided it might be too challenging to attempt to pass both provisions. The decision was made to advance the tax credit sunset and tackle the renewable energy portfolio freeze in the 2016 short session.
The goal, he said, isn’t just to do away with the renewable energy mandate, which he and other opponents consider a government subsidy, but to work toward a broader overall strategy.
“We want to develop a low-emission energy portfolio, which would include renewable, nuclear, hydro and others, to drive us toward not only low-cost energy but also low CO2 (carbon dioxide) emissions,” Hager said.
He said the purpose of the 2007 law establishing the portfolio was not about lowering carbon emissions but about boosting the wind industry, which mostly ended up helping the solar industry. That, he said, ended up being more expensive for ratepayers.
“People don’t realize what the renewable portfolio costs us,” Hager said. “Not just a little on the bill every month. It’s an additive effect on all products in stores; distributors, manufacturers have that burden, too. Plus it’s embedded in every state, federal and local government. So it’s inflationary to the final consumer.
“My cause is, how do we include an energy strategy but still hold the cost on energy?”
The libertarian Americans for Prosperity thinks the same way, and in hopes of building support for another run at eliminating the renewable mandate the organization is sponsoring a series of “Free the Grid” town halls around the state.
Earlier this month it held the first meeting in Wilmington, where Hager and Rep. Chris Millis, a civil engineer and Republican representing Onslow and Pender counties, spoke to a full house. U.S. Rep. David Rouzer also spoke on Environmental Protection Agency regulations.
Town halls are planned in Raleigh, Winston-Salem and Asheville. The group has also launched a campaign of door-to-door, phone and mail efforts.
“We think it hurts innovation in the energy industry,” Bryson said of the mandate. “We’re not opposed to solar. We’re not opposed to wind. We’re not opposed to health insurance – but when Obamacare required people to buy it, it hurt the economy. It’s the same way with REPs (renewable energy portfolios).”
Bryson said it’s a long-range issue for AFP, and that if it isn’t successful next year it will be back at the legislature the following year for the long session.
“We plan to continue to drive it until we get some satisfaction on energy policy for the state focused on the least cost and not picking winners and losers,” he said.
Supporters of government encouragement for alternative energy point to economic benefits. Last year, the solar tax credit totaled $126 million and generated $717 million in spending, according to the N.C. Department of Revenue.
It was disclosed last week that Google is going to become the first customer of a Duke Energy program using energy from a solar farm that will be the second-largest in the state and will be in Rutherford County, which Hager represents.
Duke will buy energy from the farm, and Google will buy energy credits that represent the electricity from its Lenoir data center. The idea is to help customers that use a lot of power, such as Google, meet corporate sustainability goals, The Charlotte Observer reported.
The N.C. Sustainable Energy Association counters AFP’s argument that alternative energy increases costs. The N.C. Utilities Commission says electricity rates overall have increased this year, but the vast majority of that increase is because of new fossil fuel plants and inflation.
The association also argues that there is no free market for energy in North Carolina anyway, regardless of REPs. That’s because there is a highly regulated monopoly, in Duke Energy, and the renewable mandate allows limited competition.
Studies have shown that the energy portfolio has created jobs, many in the state’s poorest areas, said Cassie Gavin, a lawyer with the North Carolina chapter of the Sierra Club. She said clean energy benefits the environment and the economy, and reduces the need for expensive new power plants.
“It’s disappointing that some legislators are apparently still fully committed to crippling North Carolina’s clean energy success story by freezing REPs,” said Molly Diggins, the state director of the Sierra Club.