Last year the General Assembly passed, and Gov. Roy Cooper subsequently signed House Bill 951,  a transformational energy policy for North Carolina. For all intents and purposes, it is a conservative response to the costly Green New Deal. 

The General Assembly gave the North Carolina Utilities Commission (NCUC) authority to pick energy source winners and losers. Through a stakeholder process, they will determine the necessary steps to achieve the goals set out in the law and take “reasonable steps” to achieve carbon reduction. 

The General Assembly is trusting the NCUC to follow the law as written and intended; trust that can quickly be taken away if the commission goes rogue. 

However, if implemented correctly, H.B. 951 provides the pathway for North Carolina to achieve carbon reduction at the least possible cost to ratepayers while maintaining grid reliability. For this to happen, the trust the legislature placed on the NCUC to follow the law is critical. It will be a battle of the experts to do their due diligence and make their case before the NCUC to take “reasonable steps” to achieve the carbon goals. 

What are reasonable steps? While the legislature gave discretion to the NCUC to determine the energy plan through a stakeholder process, they set specific guardrails that constrain the NCUC in its determinations. The two primary constraints of the law are least cost and reliability. The law mandates that the NCUC choose the least-cost plan to achieve the carbon reduction goals. Likewise, the law commands that the plan must “maintain or improve upon the adequacy and reliability of the grid.” 

Doing nothing would, of course, be the least cost to ratepayers; having no carbon reduction goals and maintaining the current energy status quo would be the cheapest plan. However, that is not the political or public policy reality locally or globally. 

The General Assembly adopted part of the governor’s carbon reduction goals and put them into statute, which changed the playing field for least cost output. The law before H.B. 951 also required the least-cost option in energy fuel selection. Current law now accepts the externality of carbon reduction but still within a least-cost restraint. 

source: Duke Energy

Maintaining or improving the reliability of the existing grid is another critical element of the law. To not experience rolling blackouts like in Texas or fall victim to the impacts of poor energy policy experienced in Europe, the NCUC’s choices need to be reliable.

Dispatchable baseload energy sources (such as natural gas and nuclear) are the most reliable when considering the reliability standard. Whereas renewables, such as solar and wind, are non-dispatchable energy sources and are thus not as reliable. Think of dispatchable energy as an energy source constantly working or constantly available to be engaged, while non-dispatchable energy is not. To avoid grid disruptions, you need energy sources that can be switched on and off in a moment without relying on external factors. 

North Carolina has no reason to be apologetic about renewables. Most studies show our state to be second or third in the nation in installed solar energy. Moreover, renewables like wind and solar require backup dispatchable sources to make them reliable, so it would not be the least expensive plan to go all-in on additional wind and solar just to install the required dispatchable sources. 

Focusing on dispatchable baseload energy sources would guarantee reliability. Wind and solar require battery storage to help increase their reliability, which adds cost and presents issues with integrating them into the existing grid. Likewise, massive solar farms and wind turbines contribute to obvious environmental problems, such as habitat destruction and harming various wildlife species. Additionally, the required land use for solar and wind energy to power the grid is astronomically larger than building baseload energy facilities. 

The law also provides room for technological advancements, as the NCUC must reevaluate the plan every two years. Technologies like carbon capture, advances in hydrogen power, improved renewable sources, and others we can’t even conceive of today are most assuredly coming. Locking into unreliable renewables as we know them today would be short-sighted. 

This brings us to one final point: grid modification. North Carolina’s current energy grid is designed for dispatchable baseload facilities, such as nuclear power plants, natural gas facilities, and the now phasing out coal plants. The grid was not designed for non-dispatchable, non-baseload fuel sources or battery storage on a large scale. Relying heavily on renewables and battery storage requires sizeable grid modifications that would incur excessive costs. 

In no reasonable way can massive grid modifications calculate to a least-cost scenario. 

Carbon reduction is coming. Whether one agrees or disagrees with current climate science, corporations and governments place climate goals into their policies. The General Assembly sought to control how North Carolina responded to the growing desire to reduce carbon. This makes sense from an economic development perspective. Businesses can achieve their internal climate policies simply by moving their operations to North Carolina, which, coupled with our favorable job creator and job seeker tax environment, makes our state even more attractive to growth. 

A battle of the experts is before the NCUC, with hearings occurring between now and when it submits a plan in December. If commissioners follow the law, North Carolina will be in a great position on several policy fronts. But, on the other hand, if they muddle the law and give in to political ideologies over sound policy, the General Assembly has multiple recourses to fix the mistake, including oversight hearings and possibly even changing the law. 

At this energy crossroads, the NCUC can plan a reliable, affordable, and pro-economic growth energy future for North Carolina. Time will tell if it does well with the legislature’s trust.

André Béliveau is the strategic projects and government affairs manager at the John Locke Foundation. He is an M.A. in government candidate at Johns Hopkins University and previously served as a policy advisor in the North Carolina Senate.