Wednesday, July 1, 2015

The South Begins to Pivot Toward Renewables

By Nick Lawton, Staff Attorney

Southern states are beginning to show significant investments in renewable energy, suggesting that the era of Southern resistance to renewables may be drawing to a close. Until recently, the Southeast has been one of the regions of the United States most reliant on coal and least eager to adopt policies that support renewable energy development. For example, while 37 states have adopted some form of Renewable Portfolio Standard, most southern states (Alabama, Arkansas, Floirda, Georgia, Louisiana, Mississippi, and Tennessee) have not. However, recent moves by large utilities in Georgia and North Carolina suggest that even in this reluctant region, renewable energy is starting to make significant inroads.

In North Carolina, Duke Energy is pursuing a two-pronged approach to renewable energy development. Both Duke Energy and its unregulated subsidiary, Duke Energy Renewables, are developing renewable energy projects. Duke Energy is focusing on development in its own service territory, while Duke Energy Renewables is focusing on development in other states. The utility’s investments seem to be driven by North Carolina’s Renewable Portfolio Standard, which requires the utility to meet 12.5% of retail load with renewable energy by 2021. In contrast, the subsidiary seems driven more by economics. Greg Wolf, president of Duke Energy Renewables, characterizes his company’s motivation as “a commercial decision combined with a little bit of sustainability goals,” rather than a compliance obligation.”According to Duke Energy’s Power Generation Portfolio, as of the end of March, the utility and its subsidiary owned nearly 1,500 MW of non-hydro renewable resources.

Meanwhile, Georgia Power is getting into the solar industry. Georgia recently enacted a new law allowing alternative financing models for [renewables/solar power], such as SolarCity’s leasing model, to operate in the state. Essentially, this new law will enable companies like SolarCity to compete with utilities by allowing solar installations on utility customers’ property. To hedge against this competition, Georgia Power is creating a subsidiary company that will sell and install solar panels to utility customers. Additionally, the utility is building or buying a large portfolio of solar facilities. Overall, the utility projects that it will have 1 gigawatt of solar power on its grid by the end of 2016.

These developments show that renewable energy is starting to make significant inroads in the South. Renewable energy will be a boon for the region, allowing states to reduce reliance on dirty coal-fired power plants, create new jobs, and preserve the environment in one of the nation’s most diverse and threatened regions. State governments throughout the South should take note of these developments and enact further policy support for renewable energy.

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