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North Carolina's Changing Energy Mix

North Carolina's Changing Energy Mix

By Carl M. Cannon - October 10, 2014

In the cauldron of a closely contested election season, every little thing is up for scrutiny and nearly every issue is tinged with partisanship, even such sacrosanct subjects as motherhood, football—and solar energy.

Seriously. Last week, Michigan Democrats ran an organized Twitter campaign ridiculing Senate candidate Terri Lynn Land for mentioning that she’s a mom several times during an interview. Meanwhile, the National Football League is the subject of impassioned attacks in the media over concussions, domestic violence, and the propriety of the name of its storied team in the nation’s capital. Senate Majority Leader Harry Reid has inveighed against the Washington Redskins several times, as have other Democrats.

In North Carolina’s highly charged 2014 Senate race, dueling allegations of ethical lapses have dragged solar energy into the campaign a month before Election Day. North Carolina Republicans are clamoring for a Senate Ethics Committee probe into how a company owned by the husband of Democratic Sen. Kay Hagan received nearly $400,000 in tax credits and government grants as part of the 2009 stimulus package enacted by congressional Democrats—including Kay Hagan—on a party-line vote and signed into law by President Obama.

How does this involve solar energy? Among the capital improvements that Chip Hagan’s company, JDC Manufacturing, made with that stimulus money was solar panels on a company facility in Reidsville, N.C. Meanwhile, Democrats are questioning why a North Carolina financial institution, Aquesta Bank, benefited from 2010 tax credit program supported by Hagan’s opponent, Thom Tillis, House speaker in the state legislature. What has that got to do with Tillis? According to his financial disclosure form, he owns between $50,000 and $100,000 in stock in Aquesta. Again, what does that have to do with solar power? The tax credit in question is for renewable energy.

What’s next on the 2014 midterm election hot seat, apple pie?

Actually, solar power was put in the partisan cross hairs by Republicans after the Solyndra debacle left the taxpayers short $528 million while undermining the administration’s upbeat talk about green jobs. But a funny thing has happened in the ensuing three years, and not all Republicans have kept up: Solar is hip again, especially in North Carolina.

Recently, the respected International Energy Agency released two reports asserting that by 2050 the sun could be the world’s largest supplier of energy. That’s quite a claim for a power source that provides less than half of 1 percent of electricity globally—and a lot less than that in the United States—but already things are happening.

Rapid improvements in photovoltaic technologies—and an accompanying drop in the cost of solar energy systems—have galvanized proponents of solar power. It’s a labor-intensive endeavor, too, which creates jobs locally. The challenge now, according to IEA Executive Director Maria van der Hoeven, is making capital available for solar projects.

That’s where North Carolina comes in. Seven years ago, the state government set benchmarks for renewable energy. At the time, officials of Duke Energy, the huge Charlotte-based utility, wondered if they would have to burn wood to comply. But as the price of solar has declined steeply, the utility has gone in another direction.

“The costs have fallen faster than everyone expected,” Ivan Urlaub, head of the North Carolina Sustainable Energy Association, told Fox Business News. “I think it tells us there's more to come in the future as the cost of solar continues to decline.”

Three months ago, officials at George Washington University and American University revealed that by next winter they will meet 50 percent of their schools’ energy needs from solar sources. That power will be purchased from Duke Energy, which announced a $500 million investment in North Carolina solar farms about the same time.

It’s not always easy for this kind of news to penetrate the election-year din. When renewables have come up on the campaign trail, it’s in the context of those ethics charges and countercharges between Kay Hagan and Thom Tillis. But the politics and science of North Carolina’s energy policy are more nuanced and vibrant than campaign politics can easily accommodate.

For starters, Duke Energy operates three nuclear power plants in North Carolina and another three in South Carolina, meaning that more than half of the electric energy in the Carolinas comes from nuclear sources. Coal, imported mostly from Kentucky and West Virginia, constitutes 38 percent of the mix, with renewables—mostly biomass and hydropower—providing about 7.5 percent. Solar is the fast-growing source, however.

Wind may be the next energy frontier, but in the Carolinas that means offshore development—and environmentalists fear the state is moving in two different directions at once. In May, Gov. Pat McCrory (pictured)signed legislation setting policies for issuing permits for offshore wind farms. And in August, Interior Secretary Sally Jewell designated 275,000 acres off the Carolina coast for offshore wind projects.

Although the McCrory administration acquiesced to this activity, environmentalists are convinced that his heart really isn’t in wind—it’s in offshore drilling for oil and gas. McCrory, who worked for 29 years as a Duke Power executive before going into politics, makes no secret of that, but he had maintained for years that his approach to energy is “all of the above.”

It’s a balancing act. On Thursday, the governor made a courtesy call to a fledgling solar facility in Roseboro. The occasion was a celebratory event hosted by Strata Solar, a Chapel Hill-based firm tapped by Duke Energy as part of its $500 million investment in solar power. Earlier in the day, he was the keynote speaker at the Coastal Energy Summit in Wilmington, N.C., where he touted the benefits of offshore oil and gas exploration.

“The debate about offshore drilling has been going for 25 to 30 years in North Carolina in the political environment, but frankly, we don't even know what's out there,” he said in remarks covered by the local press. “No one's checked.”

Yet, the governor made it clear he thinks the resources are out there, and that he intends for them to be extracted. On Thursday, he was all but spending the money already. “A fairly large part of [the revenue] should go to the coastal region of the Carolinas, because they're the ones investing in the infrastructure,” he said. “I think some of that revenue should be used for beach renourishment and to dredge our ports. That's where I'd put the first amount of money."

The governor is also active in the Outer Continental Shelf Governors Coalition, a group of mostly Republican chief executives who have been pushing Jewell for offshore oil exploration.

McCrory has also protested President Obama’s push to curb greenhouse gases released by coal-fired electric power plans. In June, he joined eight other Republican governors in writing a letter to the president objecting to the administration’s new emission rules. The president was seeking “to essentially ban coal from the U.S. energy mix,” the letter asserted.

But an aging coal infrastructure has also presented McCrory with the biggest environmental challenge of his tenure in office. In February, the catastrophic collapse of a storm water pipe beneath a retired Duke Energy facility in Eden, N.C., caused a massive spill of 30,000-40,000 tons of coal ash into the Dan River. It coated 70 miles of the waterway in North Carolina and Virginia with a toxic sludge that turned the river a sickening gray color.

The company has worked under EPA direction to clean up the mess, but the episode underscores the problems attendant with older coal plants, along with the perennial problem of how to safely dispose of polluted wastewater. And one month after the Dan River spill, Duke Energy was cited by the North Carolina Department of Environment and Natural Resources for surreptitiously dumping 61 million gallons of contaminated water into the Cape Fear River.

This summer, after the Southern Environmental Law Center unearthed documents showing that the state had given Duke Energy permission to drain such wastewater from all 33 of the company’s existing coal ash dumps into the state’s lakes and rivers, the EPA stepped in, noting that such a course of action would almost certainly violate federal water quality standards.

Red-faced state environmental officials promptly revoked the permission it had granted Duke Energy, asserting they’d been following an executive order issued by McCrory. Meanwhile, the thorny issue of wastewater disposal remains, and lawmakers are unsure how to proceed. A new law passed by the legislature—and signed by the governor—mandated that Duke Energy perform an inventory of all private and public drinking-water wells within a half-mile of its 32 remaining coal ash ponds. That survey was released Wednesday, and the results revealed the presence of 830 such wells.

Meanwhile, the struggle to balance America’s energy needs with prudent environmental policies proceeds apace. For years, conservationists fought the construction of Cliffside Steam Station, a huge new Duke Energy coal-burning power plant in Mooresboro, N.C., which opened in late December 2012. Environmentalist still don’t like it, but both sides got something out of the Cliffside battle—as did the people of North Carolina. As the Sierra Club notes on its website, when Duke opened the modern coal plant, it also retired four 1940s-era coal facilities at that location and upgraded another.

“With the retirements and upgrades,” the Sierra Club notes, “the Cliffside site now generates more than twice the electricity with 80 percent less sulfur dioxide and half the nitrogen oxides and mercury than it did previously.”

There’s still plenty to worry about, however, and the state’s environmentalists are raising objections not just to coal ash, but hydraulic fracturing, radioactive waste from the state’s nuclear power plants, and the effects on marine life on the seismic testing that will be taking place offshore.

In Wilmington on Thursday, protesters marched with placards registering all these objections with the governor—and more.

“Honestly, I can't even fit it all on one sign,” Kure Beach resident Judy Larrick told a Wilmington Star-News reporter. “I think he knows we're out here, but I don't think he cares. It's going to take us voting to get their attention.”

Carl M. Cannon is the Washington Bureau Chief for RealClearPolitics. Reach him on Twitter @CarlCannon.

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