Welcome, welcome. Step right up to the North Carolina rent-seeking extravaganza! That’s right, we’re giving money away again! North Carolina is desperately in need of people willing to provide expensive and unreliable electricity!
Last year, the General Assembly made their best effort to attract rent-seekers from other states by passing SB3, a renewable energy mandate. SB3 offers a guaranteed market to providers of “renewable” energy such as electricity produced from wind, biomass, or solar resources. The NC Utilities Commission has estimated that the provisions contained in SB3 would amount to a $500 million annual pot that is available to interested rent-seekers – funded through the charity of North Carolina utility customers (whose approval is, of course, not required).
Apparently, that presumed charity was not quite enough to induce the rent-seekers to come to North Carolina and claim their prize however. The SB3 provisions apparently need to be (further) subsidized with local incentives. Davidson County, for example, will soon attract the country’s largest solar power plant by providing $2 million in taxpayer-funded incentives to SunEdison. That incentive in tandem with the federal production tax credit and North Carolina’s guaranteed market was enough to lure SunEdison to Davidson County, where they will employ about 80 people during the construction phase and then a grand total of three jobs from then on.
The county’s ability to attract SunEdison is the first major “success” that has resulted from SB3. Steve Googe, Davidson County’s economic development director, explains SB3’s success:
Since the passage of the law, a variety of companies that generate renewable energy have expressed interest in coming to North Carolina. SunEdison, considered the largest solar-energy provider in the country, is one of them, Googe said.
“The legislatively created demand by the utility companies to have access to solar power was clearly the reason they looked in the North Carolina area,” he said yesterday.
(Yes, he just said “legislatively created demand.” Go ahead, read it again.)
So SB3 is starting to see success in generating the appropriate rent-seeking environment that will draw potential rent-seekers from other locations – even from locations where solar power would work better. Arizona, for example has abundant sunlight and few major storms in which solar panels would become damaged or inoperable. Yet, North Carolina legislation has been able to overcome that obstacle and instead encourage the country’s largest solar power plant to be built here – where we have overcast days and hurricanes.
State Representative Pricey Harrison is very proud of this achievement. The Winston-Salem Journal reports:
State Rep. Pricey Harrison, D-Guilford, said that renewable-energy systems such as SunEdison’s proposed solar farm are “precisely” what legislators were hoping for when they drafted the energy law last year. Harrison is one of the leaders in the General Assembly on environmental issues and was a key writer of the energy law.
“By requiring a solar set-aside, it was our hope that we would create a domestic market for solar power in North Carolina,” Harrison said.
This article also gives hope for continued success in attracting potential rent-seekers in the future:
Ivan Urlaub, the executive director of the N.C. Sustainable Energy Association, said that there is a lot of confidential activity going on now with companies looking at projects of various sizes.
“We’re seeing more and more companies craft proposals,” he said.
(For those who are unfamiliar with legislative terms: “Confidential activity” refers to activity that would otherwise be described as “corrupt” or “back-door,” except that in this case the speaker approves of it.)
Finally, as Molly Diggins of the N.C. Sierra Club points out, solar power wouldn’t even exist in North Carolina if it were not for government mandates and incentives. (You know, there is a market imperfection – people aren’t demanding unreliable electricity that costs ten times more than reliable coal or nuclear power as much as they should be.)
Without North Carolina’s new mandate for solar power — and without other forms of government support — the nascent solar industry would be unlikely to locate here, said Molly Diggins, the state director of the N.C. Sierra Club. Diggins added that coal and nuclear power also get heavy government subsidies.
Speaking of heavy government subsidies, the U.S. Energy Information Administration just released a report that details how heavy those subsidies are (only accounting for federal subsidies). Here are the report’s findings:
Federal Subsidies by Resource per Megawatt Hour Produced
Coal $0.44
Natural Gas $0.25
Nuclear $1.59
Hydroelectric $0.67
Solar $24.34
Wind $23.37
Cross-posted at www.environmentnc.com.
