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The Latest Misinformation About the Impact of NC’s Renewable Energy & Energy Efficiency Portfolio Standard

Posted By Samantha Radford, Wednesday, July 27, 2016
Updated: Wednesday, July 27, 2016

Last week, the Civitas Institute published a report, "North Carolina's Renewable Energy Portfolio Standard: Examining the Economic Effects" that criticizes NC's Renewable Energy & Energy Efficiency Portfolio Standard, or REPS. The NC General Assembly passed Senate Bill 3 in 2007, which included the REPS, with overwhelming support. Despite attempts by opponents to repeal the REPS law in recent years, a strong bipartisan group of legislators have voted numerous times to maintain the REPS, which has been a driving force behind NC's $7 billion clean energy industry and its 26,000+ jobs. All of this has contributed to much-needed investments found in every region of the Tar Heel state.

The Civitas report is the latest in a string of discredited and biased studies attacking the success of North Carolina’s REPS law. This report looks at 12 different states, ranging all the way from Oregon to South Carolina, which have Renewable Portfolio Standard (RPS) laws or goals. However, very little NC-specific data is used in its methodology, and instead relies mostly on national averages and outdated or inaccurate information. NCSEA takes issue with many of its claims and wishes to address a few here:

  1. Civitas gets the "basics" wrong. The report inaccurately says that NC's REPS law is 12% of total electricity consumption by 2020. In fact, the NC REPS increases incrementally to 12.5% of retail electricity consumption by 2021. The report also significantly overestimates the amount of new generation needed to satisfy future REPS requirements compared to projections from Lawrence Berkeley National Laboratory

  2. The report falsely assumes that all NC REPS requirements would be complied with new utility-owned and financed wind and solar projects. In fact, NC's REPS law allows for the REPS requirements to be met with energy efficiency (25% increasing to 40% after 2020) and various renewable energy resources. In addition, utilities can meet 25% of the REPS requirements by purchasing "out-of-state" renewable energy credits (RECs). NC utilities are also allowed to use significant amounts of biomass and small-scale hydropower. All RECs and energy efficiency credits are publicly available here.

  3. The report does not evaluate actual NC REPS requirements, including the cost cap that limits the amount customers can be charged for REPS compliance. The current (annual) cost caps are $34 for residential, $150 for commercial, and $1,000 for industrial customers; however, the NC REPS Riders have always been well below those cost caps. For example, Duke Energy Carolinas' residential customers currently pay $0.54 each month, and Duke Energy Progress is $1.17. Even accounting for the maximum amount that NC ratepayers could pay if the cost caps were met in 2016 (projected by the NC Utilities Commission and the Public Staff here and here), the Civitas estimate for NC REPS costs in 2016 is over $1 billion more than the maximum amount allowed under the cost caps.

  4. The report significantly overestimates the levelized costs of energy for solar and wind power in NC. For example, the latest version of Lazard's Levelized Costs of Energy shows that the LCOE for utility scale solar is between $58 and $70 nationally, and $32 to $77 for wind per MWH. Both of these estimates are significantly under the LCOE estimates in the Civitas study (estimated at $154 for solar and $135 for wind). 

In contrast, a 2015 analysis of NC's REPS law by RTI International and ScottMadden closely examined only NC-specific data regarding energy resources and costs related to NC's REPS law. It found dramatically different results than the Civitas report. The RTI/ScottMadden study found that by 2029, the REPS in NC is expected to save ratepayers $651 million, in addition to substantial new economic development opportunities and investments in communities.

North Carolina’s citizens and economy are the real winners under existing clean energy policies. Policymakers should continue to support the Renewable Energy and Energy Efficiency Portfolio Standard as a critical step to expanding North Carolina’s energy mix for a secure, affordable long-term energy future.

 

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