Renewable Energy

In 2007 the North Carolina General Assembly passed far-reaching electricity regulations, typically referred to as Senate Bill 3. At the heart of this bill is a 12.5 percent "renewable energy and energy efficiency portfolio standard." The renewable portfolio standard requires utilities to provide customers 7.5 percent of their electricity through renewable sources of energy, such as wind, solar, or biomass. These are all forms of energy that are significantly more expensive than traditional fossil fuels and nuclear power that North Carolina's utilities voluntarily choose when they are left free to pursue truly efficient energy. The other 5 of the 12.5 percent is to come from reduced electricity usage owing to mandated energy-efficiency measures. In this case "energy efficiency" has nothing to do with actual efficiency, i.e. getting more for less, but simply refers to using less energy even if it is inconsistent with people's actual preferences and needs.

Key Facts

  • North Carolina's renewable energy mandate is forcing electric utilities, and therefore their customers, to purchase electricity generated from wind and solar plants that is 3 to 4 times as expensive as electricity generated from traditional sources.
  • All increased costs associated with the mandate are being passed on to electricity customers.
  • In addition to the higher electricity costs the mandate is forcing taxpayers to bear an extra burden. Because of the mandate, new solar and wind power plants are being built in and planned for the state, all of which are being heavily subsidized with tax credits.
  • Higher electricity costs hurt the economy. According to the Beacon Hill Institute at Suffolk University, North Carolina's renewable energy mandate will cost North Carolina rate payers $1.8 billion by 2021.
  • Because higher electricity costs increase the cost of doing business, it is estimated that the mandate will lead to losses of $140 million in GDP and 3500 jobs in the state.
  • Tax revenues will be reduced by $43 million. This is likely an underestimate since it does not include tax subsidies for the construction of new wind and solar power plants.
  • Before passing the mandate, which was supported overwhelmingly by both political parties, there was no cost-benefit analysis done and no analysis of benefits to the environment. In fact, it has not been demonstrated that the mandate will have any environmental benefits for the state at all. Except for targeted special interests, such as favored companies in the wind and solar industry, the renewable energy mandate only imposes costs with no offsetting benefits.

Recommendations

  1. Repeal Senate Bill 3, the overarching legislation that contains the renewable energy mandate or, at the very least, repeal that portion of the bill that contains the 12.5 percent renewable energy/energy efficiency mandate.

Analyst: Dr. Roy Cordato
Vice President for Research and Resident Scholar
919-828-3876 • rcordato@johnlocke.org

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