The Effect of Utilities Regulation on the Economics of Wind Energy in North Carolina

Abstract

In order for wind energy to be feasible in the sounds of North Carolina, it must be economical. The price paid for electricity produced by wind must be sufficiently high to translate into a reasonable rate of return for developers and investors. Countervailing tensions on regulators, utilities and the renewable energy generators function to depress the price of wind energy. Lawmakers have passed utility regulations in order to improve the economic situation of wind energy projects by either diminishing the initial capital needed, lowering the risk or ensuring a fair price. The two primary utility statutes affecting the economics of wind energy in North Carolina, the federal Public Utility Regulatory Policies Act of 1978 and North Carolina’s Renewable Portfolio Standard of 2007, have thus far been ineffectual. If the North Carolina legislature wants to develop wind energy in their state, it should amend NC REPS to add a wind energy percentage requirement to put it on equal footing with solar. Alternatively, adding externalities into the cost calculation would make wind one of the most economical of all the electricity options.