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Doing Better: NC solar economy at crossroads

With all the financial uncertainty that comes with farming, Gary and Judy Punch are always looking for stable sources of income.

A couple years ago, Strata Solar made them an offer they couldn’t refuse.

The Chapel Hill-based provider of solar energy offered the couple a 20-year lease, with an option for 10 more years, to build a solar farm on 40 acres of their 130-acre family farm in Catawba County.

With solar companies typically paying land owners in North Carolina $500 to $1,000 a year per acre to lease their property, the Punches can now continue raising cattle and crops on the rest of their farm with the promise of steady income on the side. Meanwhile, their solar farm – 20,000 panels mounted on stakes capturing the sun’s energy – produces enough electricity to power 800 houses for a full year.

“It’s a good situation,” Gary Punch says. “It’s eco-friendly. All they have to do if this ends is pull up the stakes and the land goes back to its natural state.”

Economic boost

It’s also a situation that’s increasingly common here. Just seven years ago, North Carolina was producing virtually no solar energy. But solar-friendly policies at the state and federal levels and a robust group of investors, developers, contractors and manufacturers with an improved understanding of how to leverage those policies have created rapid changes. A report released last month by the Duke University Center on Globalization, Governance and Competitiveness found that the state now ranks No. 1 in the Southeast and fourth nationally for solar energy capacity, trailing only California, Arizona and New Jersey.

We now have 150 significant solar facilities across North Carolina with several hundred more in the works. More than 450 companies are involved in our state’s solar economy, with several project developers clustered in the Charlotte area, including O2 Energies, Narenco, SunEnergy1 and Duke Energy Renewables. Collectively, the industry provides over 4,300 jobs and represents at least $2 billion in direct investment.

Much of that investment has been made in poorer, rural parts of the state – bringing a much-needed economic boost to counties where growth is typically challenging. Catawba County led the state with $215 million in solar investment between 2007 and 2014, including the facility on the Punch farm. Robeson County attracted $167 million in investment, and Wayne drew $122 million.

Now comes the tricky part: maintaining that momentum.

The Duke report noted some major obstacles to the continued growth of our solar economy. The potential demise of the N.C. Renewable Energy Investment Tax Credit tops that list. Established in 1977, it is set to expire at the end of this year. Will a state legislature that did not renew the mill rehabilitation and film and television tax credits look kindly on one for solar energy?

Grid access

John Morrison, senior vice president for public affairs and asset management at Strata Solar, which has built more solar capacity in North Carolina than any other company, predicts a “dramatic” slowdown in solar expansion if the credit expires.

“That credit enables us to attract investors that would go elsewhere otherwise,” says Morrison, who has taught at N.C. State and served as assistant secretary for energy in the N.C. Department of Commerce. That impact would be worsened by the anticipated reduction of a federal solar energy tax credit from 30 percent to 10 percent by the end of 2016.

A second major issue involves an ongoing tug of war between major utility companies and independent producers of energy over what Morrison describes as “access to the grid.” The rate that utility companies pay to small independent power producers to purchase and re-sell the electricity they produce is renegotiated every two years in North Carolina. The rates are based on what it would cost utilities to produce the energy themselves.

As their costs decline, driven in large part by a drop in the price of natural gas, the fees they pay smaller energy providers, including solar companies, are dropping as well. A new round of rates is being negotiated right now by the N.C. Utilities Commission and the various players in our state’s energy industry, and utilities want those rates lowered significantly.

It has been a strong seven-year run for our state’s solar economy and the clean energy movement. The decisions our elected officials and regulators make in the coming months and the continually shifting supply and demand dynamics of the energy market will have a powerful impact on how the next seven unfold.

Christopher Gergen is CEO of Forward Impact, a fellow in Innovation and Entrepreneurship at Duke University, and author of “Life Entrepreneurs: Ordinary People Creating Extraordinary Lives.” Stephen Martin, a director at the nonprofit Center for Creative Leadership, blogs at www.messyquest.com. They can be reached at authors@bullcityforward.org and followed on Twitter through @cgergen.

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