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North Carolina Sees Green in Stimulus Funds

The state will receive $75.9 M to promote efficiency and renewable power as it looks to lead the Southeast in green job creation.

The U.S. Department of Energy recently approved North Carolina’s plan to use federal stimulus funds for the development of a clean energy economy—including more than $75 million to enhance energy efficiency, promote renewable power, and foster new technologies.

“With this approval, North Carolina is prepared to quickly move ahead to create jobs and position our state to become a national leader in green energy,” Governor Bev Perdue said in a press release. “I have directed the State Energy Office and other agencies to move as fast as possible to put these funds to work creating jobs and building North Carolina’s green economy.”

In a state facing rising electricity costs, job losses, and budget deficits, the Governor’s announcement demonstrates her recognition that energy independence and support for a clean energy economy will lead the way to North Carolina’s recovery. Similar energy plans are taking shape in Georgia, Mississippi and other states in the region.

These efforts reinforce findings from recent WRI studies with regional energy experts at the Southeast Energy Efficiency Alliance, Southern Alliance for Clean Energy and Southface. The research shows abundant efficiency opportunities in North Carolina and other states in the Southeast. Investments in efficiency are typically far more cost-effective (meeting energy needs at less than $0.05 per kWh) than investments in new power plants (that will deliver power for $0.08 to $0.14 or more per kWh). Perhaps most importantly, efficiency gains can produce tens of thousands of local jobs and net savings for Southeast businesses.

State policymakers are already helping consumers save on their electricity use and spur new markets for clean energy. In 2007, North Carolina became the first southeastern state to adopt a Renewable Energy and Energy Efficiency Portfolio Standard (REPS). The program requires utilities to supply 12.5% of electricity from renewable energy sources and efficiency measures by 2020, including 0.2% from solar.

In response to state requirements, North Carolina electric utilities such as Progress Energy have launched demand-side management and energy efficiency programs. Through its Energy Efficiency for Business program, Progress Energy is offering its customers incentives to enhance energy performance in new construction and building retrofits. The initiative, which state regulators approved earlier this year, allows property owners to spread out payments based on the energy savings yielded from upgrades.

State legislators recently introduced a bill that would establish an independent, nonprofit body to administer programs that reduce emissions and create jobs. Through an open bidding process, contractors would compete to deliver a range of residential efficiency services, including home weatherization and appliance installations. The bill ensures that low- and middle-income residents—ratepayers whose energy costs typically represent a higher share of earnings—would capture the bulk of financial savings.

At the federal level, policymakers are discussing national legislation to advance clean energy. The American Council for an Energy Efficient Economy has analyzed several recent policy proposals, finding that a national energy efficiency resource standard (EERS) would create nearly 6,500 additional jobs in North Carolina and save more than $3 billion by 2020.

Beyond efficiency, North Carolina has a major opportunity to harness local renewable energy resources. Solar photovoltaic (PV) power, for example, could play a significant role in building the state’s clean energy portfolio. According to a recent study by Environment North Carolina, this can accelerate economic recovery since solar leads to nearly triple the jobs of a comparable coal plant. Surveys by the North Carolina Sustainable Energy Association suggest these and similar employment opportunities are growing.

Although high capital costs have previously prevented broad development of a solar market in North Carolina, the state is poised to stimulate manufacturing and installation jobs as the clean energy sector takes advantage of technology advances, funding, and policy support.

Recent deals highlight promising developments in North Carolina’s solar market:

  • In a 20-year purchase contract, Duke Energy has agreed to procure 16 megawatts from a SunEdison solar farm in North Carolina’s Davidson County. Duke is also planning to invest $50 million to install solar panels on rooftops across the state. When fully operational, the farm will supply enough electricity to power more than 2,600 homes in the Carolinas.

  • Progress Energy signed a similar 20-year deal to buy power from a one megawatt solar power plant. FLS Energy will build, own, and operate the PV array (housed on a former North Carolina landfill site) and sell the energy to the utility for distribution. In the fall, Progress Energy will offer customers up to $20,000 for rooftop solar installations, helping cut the total cost of one of the most expensive forms of green energy by 75 percent.

In order to build the market for cleantech innovation, North Carolina has announced an $18 million Revolving Loan Fund for energy saving initiatives and renewable energy projects. The Fund will provide no- and low- interest loans to businesses, non-profit organizations, local governments, and others to support the transition to a low-carbon future.

North Carolina has made significant energy progress, but important regulatory and financial challenges remain as the Southeast seeks to build a clean energy economy. Below are several of the priorities highlighted in WRI’s research with local experts:

  • Overcome high initial costs: Efficiency upgrades and renewable power projects can require significant upfront investments that can be difficult to finance, but policies can find solutions to overcome these obstacles.
  • Align incentives to save energy: To ensure there are sufficient rewards for clean energy investments, policies are needed to connect the economic benefits to the party that makes the investment.
  • Promote education and awareness: Information gaps prevent energy providers, users, and regulators from capturing available efficiency potential. More education and awareness can help address this.
  • Create the necessary infrastructure for a clean energy economy: To recognize the Southeast’s full potential, policymakers must take early steps to lay a foundation for clean energy development. Renewable power generation, such as ground-mounted solar PV arrays, can require significant tracts of land. As with siting for conventional power plants, it will be critical to engage communities and develop procedures for siting and permitting. In addition, states will need to develop the rules and guidelines to integrate power into the Southeast’s electric grid and ensure efficiency and renewable resources are appropriately priced and valued.

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