Internet giant Google collected $262 million in incentives when it located a data center in North Carolina, and now is urging the General Assembly to continue offering hundreds of millions of dollars in subsidies to renewable energy investors.
But while the search engine company strongly advocates maintaining green-energy subsidies for North Carolina, it once shut down its own research and development project after concluding it was impossible to make renewable energy more affordable than traditional electricity.
On May 27 Google teamed with fellow tech companies Apple and Facebook to issue a letter to Senate leader Phil Berger, R-Rockingham, and House Speaker Tim Moore, R-Cleveland, opposing House Bill 332, legislation that would have, among other things, capped mandates forcing utilities to purchase power from renewable sources. All three Internet companies have data centers in the state that consume large amounts of electricity.
State Rep. Chris Millis, R-Pender, is displeased that companies receiving taxpayer-funded support to locate in North Carolina are asking for more.
“It should be a testament to lawmakers that once you grant one business interest access to the taxpayers’ pocketbook that they show the way for others, and that it is a truth that government gets more of what it subsidizes,” Millis said.
“No conventional power station anywhere in the world has been closed down because of solar or wind. They are supplemental programs,” said Howard Hayden, professor of physics emeritus at the University of Connecticut and editor of The Energy Advocate newsletter.
“Sometimes they’re adequate. Sometimes they do some good. Most often they line their owners’ pockets with money from other ratepayers, and taxpayers,” Hayden said of renewable energy generating facilities.
N.C. State University professor Herb Eckerlin said some solar advocates, such as former Bank of America chairman and CEO Hugh McColl Jr., whose recent op-ed urged lawmakers not to curtail the subsidies, have a vested interest in maintaining taxpayer support for the industry.
“The banks are one of the biggest investors in solar farms, so they gain directly from these tax credits,” Eckerlin said. “They gain, but everybody else in the state who’s not in the solar business has to ante up.”
Investors in renewable energy receive a 35 percent tax credit. Carolina Journal has reported that Bank of America received $7,969,794 in solar tax credits over the past five years. In all, North Carolina has issued $224.5 million in renewable tax credits since 2010, mostly to large banks and insurance companies.
Google, Apple, and Facebook oppose H.B. 332 because it would freeze the amount of renewable energy utilities are required to purchase at 6 percent, instead of allowing it to jump to 12.5 percent by 2021. The bill also would reduce the size of renewable projects eligible for state-mandated contracts with electric utilities.
TechNet, a self-described “policy and political network of CEOs and senior executives that promotes the innovation economy,” sent the letter to Berger and Moore for the three Internet companies. It says H.B. 332 would hamper investment strategies and derail the companies’ requirement for “a reliable, sustainable electricity supply … from renewable energy.”
Caroline Joiner, executive director of TechNet and listed on the letter as the contact person, did not respond to a request for an interview.
Research by Jonathan Morgan, an associate professor in the School of Government at UNC-Chapel Hill, found that Google was pledged $97.1 million in state incentives, including $89 million in sales tax exemptions on the purchase of electricity and some equipment, along with $165 million in cash grants from Caldwell County and the town of Lenoir. The incentives are spread over 30 years.
“I am not as intimately familiar with the detailed numbers for Facebook and Apple,” Morgan said. But using estimates derived from a Good Jobs First study, he believes Apple got an incentives arrangement valued at $320.7 million to locate in North Carolina.
Spokesmen for Gov. Pat McCrory and the departments of Revenue and Commerce told CJ they had no records of state incentives for Facebook.
While Google, Apple, and Facebook believe “the right and ability to access power from renewable resources is not merely a goal, but an expectation,” according to the TechNet letter, they’re not all developing renewable projects in North Carolina.
“The only facility that has its own solar facilities is Apple,” said James McLawhorn, director of the North Carolina Public Utilities Commission’s Electric Division. Apple has two 20-megawatt solar farms, and a 10-mw fuel cell farm.
“According to our records, Google and Facebook have not developed their own solar resources,” McLawhorn said.
While insisting that North Carolina maintain its renewable mandates, Google shut down development of its own “multibillion-dollar fast path to the totally renewable green economy,” said Kathleen Hartnett White, senior fellow at the Texas Public Policy Foundation.
The engineers in charge of the project concluded that “renewables are a false hope,” said White, former chairwoman of the Texas Commission on Environmental Quality.
The reason renewables cannot replace fossil fuel plants, according to Eckerlin, is because the wind doesn’t blow all the time, and the sun doesn’t always shine. That requires backup sources, generally provided by electric generating plants powered by fossil fuels or nuclear energy.
“Whenever there’s green power available, the utility has to take it” under the federal PURPA law, said Eckerlin, who designed and built the NCSU Solar House on the N.C. State campus, and is a former treasurer of the North Carolina Sustainable Energy Association. “Even if they don’t need it, they have to accept it. So that’s a rather bizarre situation, and it puts the utility under a lot of stress.”
Utility companies rather than solar developers have to build the electric generating systems, infrastructure, and controls that are capable of accepting solar electricity when it is available. These added costs are shifted to ratepayers, Eckerlin said.
Duke Energy spokesman Randy Wheeless said he did not have information whether Apple, for example, profits from selling its solar farm power to Duke at a higher price than it buys power back off the grid, but agreed that is a possible scenario.
“Every company wants to keep their competitive information private. I don’t think anyone wants to say they’re getting a fabulously great deal or they’re actually losing a lot of money,” Wheeless said.
Mark Mills, a physicist and senior fellow at the Manhattan Institute, said there is no point in the near future where solar energy would be feasible on a utility scale.
“You can’t go beyond certain physics limits on a PV [photovoltaic] cell, and we’re getting very close” to that limit, he said.
Mills called the “idea that solar is moving towards grid parity [a] fiction.”
While Apple promotes green energy, Mills’ research shows an iPhone, iPad, or smart phone uses more energy per hour streaming a baseball game or movie than a Toyota Prius consumes on a 30-mile drive to the stadium or theater.
The energy is not used by the devices, Mills said. Rather, it is used in “the telecommunications networks, in the data centers themselves” to make streaming services available.
Use of a smart phone is equal to “two refrigerators’ worth of electric demand used that way,” Mills said. There are now 400 million such phones sold per year, and that number soon will rise to 1 billion, further driving up electric demand that renewable sources can’t meet, he said.
Dan E. Way (@danway_carolina) is an associate editor of Carolina Journal.