Can Environmental Regulation Promote Economic Development?

Community and Economic Development – Blog by UNC School of Government

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Can Environmental Regulation Promote Economic Development?

By CED Guest Author

Published November 26, 2013

In response to pressure from the state’s new data centers, Duke Energy recently filed a pilot program with the North Carolina Utilities Commission requesting approval to directly sell renewable energy to “new” industrial customers in the state. This pilot program seems directly targeted to the new data centers in the Foothills of the state. Google, in particular, has been working closely with the investor-owned energy company to make available this option and help it reduce its carbon footprint to zero.

According to a self-published white paper entitled “Expanding Renewable Energy Options for Companies Through Utility-Offered ‘Renewable Energy Tariffs,” Google wants to be able to choose where its energy is coming from, and it’s not interested in just purchasing renewable energy credits (the environmental attributes that can be separated from the generic kWh). It wants the energy and the credit to help move the market towards more green energy.

Without Utility Commission approval of the proposed Green Source Rider pilot program, Duke Energy cannot actually isolate and sell a certain energy source (e.g. solar energy). The proposed rider seems to be specifically targeted to industrial customers but could conceivably serve as a model that Duke Energy would and could replicate for smaller customers in the future. (In the meantime, small commercial and residential customers still have the option of purchasing renewable energy credits through NC GreenPower.)

Apparently, Duke’s movement into this space was not fast or significant enough for Apple, which recently announced 50 MW of renewable energy projects near its Maiden, NC 40-MW-consuming data center. Apple built two solar farms and one fuel cell farm to more than cover the energy demands of its LEED Platinum data center. In the absence of a viable utility-driven option, Apple circumvented Duke Energy and is now selling them the energy.

This movement in clean energy is happening in addition to the state’s requirement that investor-owned utilities meet at least 12.5% of their energy needs by 2012 using renewable energy sources or renewable energy. NC is the first and only state in the Southeast to adopt a renewable energy standard, a project that has brought about many public-private solar projects in the State.

Duke Energy’s website touts 25 solar distributed generation sites across North Carolina from Kimberly Clark in Hendersonville (with 83 kW of solar capacity and “aggressive energy and sustainability goals”) to the Research Triangle Park EPA campus’ childcare center (with 109.5 kW of solar capacity and an interest in teaching children about “sustainable living”). Most companies that have partnered with Duke state a corporate social responsibility policy. Although these policies are generated internally within these corporations, they require a great deal of public and private partnerships to achieve. And for some, a predictable regulatory framework that requires energy utilities to invest in a certain level of renewable energy projects is an important driver of these partnerships. In fact, the energy manager of the BMW Manufacturing Plant in South Carolina recently stated that a state-wide renewable portfolio standard in South Carolina would be “huge” for the company and others in meeting green energy objectives.

What is interesting is that the cost of utilities is a commonly cited factor in economic development and an advantage that much of North Carolina has over other areas of the country. It’s promising to see that some companies are using that “savings” to reinvest in cleaner energy sources.

Mary Tiger was formerly on staff with the UNC Environmental Finance Center.