Whether because of rising sea levels, foreign policy or manufacturing efficiency, we have ample reasons we need to change how we generate and use energy. This week, leaders in renewable energy are gathering in Charlotte to discuss the issues in North Carolina.
There are many environmentally and economically sound solutions, including energy efficiency, combined heat and power, waste-heat recapture, anaerobic digestion, waste to energy, biomass and others. Unfortunately, many of these opportunities are not being implemented because of the least efficient solution: utility scale solar power.
Solar is inherently inefficient, producing an average of only 15 percent of its stated capacity. Every dollar spent on solar and related infrastructure is worth up to $6 with other energy solutions. Solar also requires the use of higher-polluting power plants when it is not generating power. That said, solar has its place in the world with roof-top applications and where energy options are limited, such as on islands.
The real problem is that large-scale solar development in North Carolina is no longer about energy, but about corporate finance and tax credits. The result is that solar power appears cheap, while in reality the burden has simply shifted from ratepayers to taxpayers. The disparity in incentives also makes capital harder to secure for the most effective and impactful technologies.
Solar developers are effectively selling the combined value of North Carolina’s 35 percent tax credit, the federal 30 percent tax credit and accelerated depreciation for up to 25 percent of project costs to large banks and corporations, yielding significant profits for all involved. Among falling solar panel costs from China, inflated developer fees, transactions between affiliated companies to artificially inflate costs and additional potential incentives, taxpayers are commonly funding over 100 percent of solar projects, while large corporations profit on tax breaks.
As a result, solar developers are able to sell Renewable Energy Certificates mandated by Senate Bill 3 for less than any other technology. Meanwhile, other technologies and many jobs, such as at biomass and energy-efficiency companies, are placed at a disadvantage. Further, many solar development companies have replaced dedicated installation positions with contract labor, resulting in very few permanent jobs.
If the intent of Senate Bill 3 is to benefit the environment and economy of North Carolina, it would be wise for our state to recognize and resolve the problems with solar energy development.
First, we have to stop the practice of circumventing the maximum allowable N.C. tax credit by splitting one large solar project into multiple smaller projects on paper.
Second, there should be a cap on the total combined percentage allowable for federal and state incentives. This would help level the playing field for all sustainable energy solutions and keep taxpayers from paying for virtually the entire cost of large solar projects.
We must change our energy policy and embrace sustainable technologies that benefit our environment and our economy. Senate Bill 3 was a good start, but we need to recognize its shortcomings and address them soon to achieve the change we need.
Sam McLamb of Asheville is a certified energy manager with the Association of Energy Engineers.