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near term is for the State to lead by example. Since NC GreenPower will be demand-driven,
the State, as well as public and private universities, and industrial, commercial and
residential customers all can play a positive role by purchasing NC GreenPower for a
significant percentage of their electricity use. A third option for promotion of green power is
to expand the research, extension and outreach programs of State renewable energy
entities at our universities and other nonprofit organizations.
Lastly, NCSEA noted in its initial comments that renewable energy production using
North Carolina’s indigenous fuel resources can help solve many serious air and water
quality problems while reducing greenhouse gas emissions and at the same time water
consumption, particularly in the State’s agricultural sector. Farmers and agribusiness
industries have several advantages that make them prime candidates for renewable
energy generation. First, farmers and forestry interests naturally create renewable fuels in
the course of raising livestock (biogas) or separating product from crop waste (biomass).
Second, farmers are familiar with generating equipment and its use for emergency backup
power. Third, farms and agribusiness processing are usually located in EMC territory.
NCSEA further noted that NC GreenPower, even if successful when compared to similar
programs around the country, is not large enough to drive development of even one-quarter
of the State’s biomass potential. Therefore, additional options are needed to take
advantage of the State’s biomass resource to displace coal and nuclear power from the
grid mix. One way to capture the additional ‘‘public good’’ value of these resources would
be to make agricultural-based renewable generation competitive at the avoided cost rate
by using PBF funding. Such funding could be used to build demonstration projects with the
goal of lowering costs by reducing risks, to buy down the capital costs of farm based
generation, or to provide research money and create opportunities for renewable energy
based combined heat and power (CHP) to lower costs of investment and operation.
Another alternative would be to create a North Carolina RPS with an in-state generation
requirement and significant penalty for non-compliance. Since various forms of biomass
energy are likely to be among the lowest cost options in North Carolina to satisfy an RPS
requirement, this would make utility investment in biomass projects attractive.
The State Energy Office, in its initial comments, applauded the Commission and the
Public Staff for their leadership and foresight in encouraging the development of
NC GreenPower. Unfortunately, NC GreenPower will have a limited effect on the overall
development of renewable energy in North Carolina because the amount of power likely to
be purchased by our citizens, businesses and governmental agencies will be relatively
small – less, in fact, that the minimum amount of production expected from North
Carolina’s first major wind farm or a future animal waste-to-energy plant. Therefore, stated
the State Energy Office, other funding and financial mechanisms must be found to assist
renewable technologies if they are to successfully enter the North Carolina electricity
market. The State Energy Office noted that the two mechanisms being utilized by 21 and
10 other states, respectively, to spur development are a PBF and an RPS. Sometimes
those mechanisms are used simultaneously and in parallel, since each has different
strengths and benefits, while some states have chosen just to pursue one of two