Policy Documents

Policy Tip Sheet: North Carolina Renewable Energy Mandate

February 11, 2013

February 8, 2013

Policy Tip Sheet — North Carolina Renewable Energy Mandate

Problem

In August 2007, Senate Bill 3 established a renewable portfolio standard (RPS) for the state of North Carolina, requiring utilities to generate 12.5 percent of retail electricity sales from renewable energy by 2021. Municipal utilities and cooperatives must meet a target of 10 percent of renewables by 2018. Up to 25 percent of the requirement may be met through energy efficiency technologies, including combined heat and power systems powered by nonrenewable fuels.

After 2021, up to 40 percent of the standard may be met through energy efficiency. The overall target for renewable energy includes technology-specific targets of 0.2 percent solar by 2018, 0.2 percent energy recovery from swine waste by 2018, and 900,000 megawatt-hours of electricity derived from poultry waste by 2014.1

This system unfairly dictates what type of energy ratepayers must consume, forcing them to pay higher rates for more-expensive and less-reliable energy.2 It is also much more restrictive than programs in other states. By setting specific percentage requirements, the standard does not even allow renewables to compete with one another on a level playing field.

Solution

Energy consumption is not a problem; it is a solution. Research shows tremendous socioeconomic benefits ensue when efficient energy systems are created through market forces. Mandating the use of energy sources that otherwise would not be economical leads to artificial expansion of that industry and the decline of other industries, at a cost to consumers.

A repeal of North Carolina’s renewable portfolio standard would lower costs for consumers and foster job creation. This would produce more long-term economic benefits for the state than any temporary and artificial “green jobs” created by this mandate.

Policy Message

Point 1: Government should not be in the business of choosing winners and losers in the energy arena.

Point 2: It is impossible to know which energy technologies will be superior in the future, and policymakers should avoid pushing technologies to market before they are ready.

Point 3: Renewable energy is currently more expensive per kilowatt hour (kWh) than conventional fossil fuels, and those higher costs are being passed on to ratepayers.2

Point 4: Under the mandate, North Carolina’s GDP will be more than $140 million lower by 2021 than without the mandate.3

Point 5: The mandate is a regressive policy that will most directly affect low-income families, who have the least capacity to absorb higher energy costs.

Point 6: North Carolina industries spent more than $215 million more on electricity in 2010 than they would have in the average non-RPS mandated state.4,5

References

1. “North Carolina Energy Facts,” Institute for Energy Research. http://www.instituteforenergyresearch.org/states/north-carolina/

2. “Levelized Cost of New Generation Resources in the Annual Energy Outlook 2011,” U.S. Energy Information Administration. http://205.254.135.24/oiaf/aeo/electricity_generation.html

3. “The Economic Impact of North Carolina’s Renewable Energy and Energy Efficiency Portfolio Standard,” The Beacon Hill Institute. http://www.scribd.com/fullscreen/23880187?access_key=key-13yhb1cbvsoxj1l05ha2

4. “The Status of Renewable Electricity Mandates in the States,” Institute for Energy Research. http://heartland.org/policy-documents/status-renewable-electricity-mandates-states

5. “Energy Efficiency & Renewable Energy in My State,” U.S. Department of Energy. http://apps1.eere.energy.gov/states/industrial.cfm/state=NC

For more information on energy & environment policy contact: Taylor Smith, policy analyst at tsmith@heartland.org or 312/377-4000