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Solar farm lights way
Duke, Progress work on standards
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Published: April 6, 2009
LEXINGTON
By next year, the largest photovoltaic solar energy farm in the country will be in Davidson County, one of the most visible impacts of a new state law on renewable energy passed in 2007.
It is too early to say whether the law is working, experts say, but officials point to it as the main reason Sun Edison LLC, of Maryland, is building a $173 million solar energy farm in North Carolina. Under the law, public utilities must get 12.5 percent of their power from renewable energy and energy efficiency measures by 2021.
Duke Energy and Progress Energy are already developing plans to meet the renewable energy portfolio standard. Duke Energy entered into an agreement last year to buy all the electricity produced by the 21.5-megawatt solar farm in Davidson, which is enough to power about 2,600 homes.
"They're well aware of our renewable energy portfolio standard and Duke's requirements," said Brian Lips, a policy analyst with the N.C. Solar Center at N.C. State University, about SunEdison. "And that's the sole reason why they came here. Whether that interest turns into real installations, that's something we'll have to see."
Today, the Davidson County Board of Commissioners is expected to consider a request by SunEdison and Golden Crescent Investment Corp. to rezone about 355 acres off of New Jersey Church Road near N.C. 47. Golden Crescent owns the land, and SunEdison has an option on the land, on which the solar energy farm would be built. If commissioners approve the rezoning, construction would start in June and the solar farm would be completed by late 2010.
Last year, the commissioners approved $2 million in incentives for the project if the company invested $173 million in the project and provided up to 80 construction jobs and three full-time jobs. SunEdison still hasn't signed the agreement, and it isn't clear why. Company officials weren't available for comment.
Davidson County has gotten a lot of notice for landing the solar farm. One reason it chose the site: Duke Energy's transmission lines cross the property.
Steve Googe, the executive director of the Davidson County Economic Development Commission, said he has fielded plenty of calls from people all over the country interested in solar energy.
He puts much of the credit on the state energy law passed two years ago.
"Quite honesty, given all of the effort that we've put into conserving fossil fuel, it makes sense and puts North Carolina in a leadership role in the United States to assist the power providers in reducing their dependence on fossil fuels," he said.
North Carolina was the first state in the southeastern United States to adopt a renewable-energy portfolio standard. That came after years of resistance from power companies. Twenty eight states across the country have similar standards, said Monique Hanis, a spokeswoman for the Solar Energy Industries Association.
The Obama administration is pushing for a federal standard. Hanis said that Congress will likely consider legislation later this year.
But cost remains an obstacle. Renewable energy costs more to produce than coal and nuclear energy, experts said.
Progress Energy executives said last month they doubted they could meet the renewable energy standard because there aren't enough renewable energy resources in North Carolina.
"We've been scouring the market to find renewable energy resources," said Bill Johnson, the chief executive for Progress Energy, in an opinion column published in The News & Observer. "But what we've found is that renewable energy in North Carolina is far from plentiful and cheap."
Johnson said that there is about one-third the capacity available in North Carolina at three to four times the cost company officials had anticipated. SunEdison will be supplying energy to Progress from a 1.2 megawatt solar farm near Wilmington.
In the area of solar energy, the financing of such projects has shrunk, said Lips of the N.C. Solar Center. SunEdison typically pays the upfront costs for installing solar farms and other solar energy projects and gets its financing from commercial and investment banks.
Lips said that many of those companies have scaled back their investment because of the financial crisis.
Still, the financial crisis hasn't slowed down the number of solar energy projects going up across the country, Hanis of the Solar Energy Industries Association, said.
The total installed capacity increased 17 percent in 2008, she said. It was the third year of growth in the solar energy industry, Hanis said.
James McLawhorn, the director of the electricity division for the Public Staff of the N.C. Utilities Commission, said that utilities face obstacles in meeting the standards, including the law that bans wind turbines from certain areas, he said.
But Duke Energy and Progress Energy are moving forward, he said.
"They have both signed some contracts," he said. "They are proceeding along that path."
North Carolina now spends up to $14 billion on buying energy from other places, said Richard Andrews, a professor of public policy and environmental science engineering at UNC Chapel Hill. The renewable energy portfolio standard is a way for the state to turn that around and provide jobs in North Carolina, he said.
"It's complicated," he said. "We're in the middle of a recession. My hope would be that the law would continue to provide a stable expectation, so that as the economy recovers, we see more and more investment in renewable energy. Those will become the important drivers of North Carolina's energy needs."
■ Michael Hewlett can be reached at 727-7326 or at mhewlett@wsjournal.com.
The N.C. General Assembly passed sweeping renewable energy legislation in 2007.
According to the law, public utilities must have the equivalent of 3 percent of their retail sales come from renewable energy and energy efficiency by 2012. That jumps to 6 percent in 2015, 10 percent in 2017 and 12.5 percent in 2021.
Renewable energy includes power produced by solar energy, wind, water and biomass.
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