Advance Real Property Seminar:
Solar and Wind
Katherine E. Ross
Parker Poe Adams & Bernstein LLP
September 26, 2014
 US and NC Facts
 Policy Drivers
 Local Considerations
2
Nationally
 During the timeframe of 2008 to
2012, the United States doubled
renewable electricity generation from
a combination of wind, solar, and
geothermal technologies.
 Renewable electricity was 12.4% of
total annual generation in the United
States in 2012.
3
 Since
2000,
cumulative
renewable
electricity installations in the United States
have nearly doubled.
 Wind and solar photovoltaics are the
fastest growing
sectors.
renewable
electricity
 In 2012 in the United States, installed
wind capacity increased by nearly 28%
and installed solar photovoltaic capacity
grew more than 83% from the previous
year.
Cite: NREL Renewable Energy
Data Book
http://www.nrel.gov/docs/fy14osti/60197.pdf
available
at:
4
Solar photovoltaics and wind dominate
renewable capacity growth
5
NC Headlines September 2014
 Duke Energy reveals partners for US$500 million
North Carolina solar push
 First Solar to supply 105 MW of PV modules for
North Carolina projects
 NC’s rise in solar power must accelerate
 Duke Energy goes big on solar in North
Carolina, plans to drop $500M
 Solar energy generates interest in Orange
County
6
FUN FACTS ON SOLAR IN NC
There are currently more than 140
solar companies in North Carolina,
employing 3,100 people.
7
In 2013, North Carolina installed
335 MW of solar electric capacity,
ranking it 3rd nationally.
There are now over 15,900 MW of
cumulative solar electric capacity
operating in the U.S., enough to power
more than 3.2 million average
American homes.
8
The 627 MW of solar energy currently
installed in North Carolina ranks the
state 4th in the country in installed solar
capacity. There is enough solar energy
installed in the state to power 68,300
homes.
9
In 2013, $787 million was invested in
North Carolina to install solar for home,
business, and utility use. This represents a
156% increase over the previous year and is
expected to grow again this year.
Average installed residential and commercial
photovoltaic system prices in North
Carolina have fallen by 9% in the last
year. National prices have also dropped
steadily — by 8% from last year and 39%
from 2010.
10
Rules of Thumb… Developers Vary
 1 MW about 5 to 6 acres.
 5 MW is most popular size… right now.
 $10 to $15 million investment.
 3 to 6 months construction for 5 MW.
 60 to 100 jobs during construction for
5 MW.
 Racking, modules and inverters.
11
12
13
14
15
16
17
18
19
20
21
22
23
U.S. Wind Generation Increased
27% in 2011
Source: US Energy Information Association, March 12, 2012
24
25
26
27
FUN FACTS ON WIND
 Over 550 manufacturing facilities in
the United States.
 Blade, tower and nacelle assembly
facilities, raw component suppliers
(e.g. fiberglass and steel).
Cite: AWEA North Carolina State Fact Sheet, available at
http://awea.rd.net/Resources/state.aspx?ItemNumber=5193
28
Wind Related Manufacturing
29
Facilities in NC
30
North Carolina’s onshore wind potential at
80 meters hub height is 808 MW.
North Carolina’s offshore wind potential
at 90 meters hub height is 297,456 MW.
Onshore and offshore wind power are
capable of meeting more than 7.5 times the
state’s current electricity needs.
31
In the United States, installed wind
electricity capacity increased more than
23 fold between 2000 and 2012.
In the United States, wind experienced
strong growth in 2012, and more than
13 GW of new capacity was added.
Texas led the United States in wind
installations in 2012, installing 1,826 MW
of wind capacity.
32
Although global cumulative installed
offshore wind capacity surpassed 5 GW
in 2012, no commercial offshore wind
turbines have been commissioned in
the United States thus far.
33
NORTH CAROLINA LAND BASED
One fully permitted project: 300 MW in
Pasquotank and Perquimans counties.
Multiple developers are active in the
eastern part of the state.
34
Senate Bill 3: North Carolina’s
Renewable Energy and Efficiency
Portfolio Standard
 On August 20, 2007, with the signing of Senate Bill 3, North
Carolina became the first state in the Southeast to adopt a
Renewable Energy and Energy Efficiency Portfolio Standard
(REPS).
 Each investor-owned public utility that sells electric power to retail
electric customers in North Carolina must meet the REPS
according to the following schedule:
Calendar Year
REPS Requirement
2012
3% of 2011 NC retail sales
2015
6% of 2014 NC retail sales
2018
10% of 2017 NC retail sales
2021 and thereafter
12.5% of 2020 NC retail sales
N.C. Gen. Stat. 62-133.8(b)(1).
35
36
States with Operating
Wind Projects
37
Senate Bill 3
 Each electric membership corporation and
municipality that sells electric power to retail
electric customers in North Carolina must meet
the REPS according to the following schedule:
Calendar Year
2012
2015
2018 and thereafter
REPS Requirement
3% of 2011 NC retail sales
6% of 2014 NC retail sales
10% of 2017 NC retail sales
N.C. Gen. Stat. § 62-133.8(c)(1).
38
Senate Bill 3

The investor-owned public utilities may meet the REPS
requirement through:
(1) generating electric power at a new renewable
(2)
(3)
(4)
(5)
(6)
energy facility;
using a renewable energy resource to generate
electric power at a generating facility;
reducing energy consumption through the
implementation of an energy efficiency measure;
purchasing electric power from a new renewable
energy facility;
purchasing renewable energy certificates
(RECs);
electricity demand reduction.
N.C. Gen. Stat. § 62-133.8(b).
39
Avoided Costs
 PURPA: Federal Law
 North Carolina Implementation
 Utilities Commission sets avoided cost
rates every 2 years
 Standard Offer for 5 MW and below
 5, 10 and 15 year terms
 Negotiated terms above 5 MW
 Uncertainty on future terms
40
NC Renewable Energy Tax Credit
 Tax credit equal to 35% of the cost of
“renewable energy property.”
 The credit is taken against NC income tax
or franchise tax.
 The credit is taken in 5 equal installments
beginning in the year in which the
property is placed in service.
41
 The maximum credit is $2.5M per
installation placed in service for a
business purpose.
 An “installation” is “renewable energy
property” that, standing alone or in
combination with other machinery,
equipment or real property is able to
produce usable energy on its own.
 The allowable credit cannot exceed
50% of the taxpayer’s tax liability for
the year, reduced by the sum of all
other credits.
42
The Future of the NC Renewable
Energy Tax Credit
 NC Tax Credit sunsets January 1, 2016.
 Discussions in last Legislative session of
extending, extending at lower levels and a
safe harbor.
43
Federal Tax Credits
 Investment Tax Credit
 Dollar-for-dollar offset against the taxpayer’s
income tax liabilities
 “Energy property” includes solar equipment
(i.e., “equipment which uses solar energy to
generate electricity, to heat or cool (or provide
hot water for use in) a structure, or to provide
solar process heat . . . .”).
 The “energy percentage” is currently 30% for
solar equipment used to generate electricity,
but the percentage will revert to 10% for
periods ending after December 31, 2016.
44
Federal Tax Credits
 “Renewable Electricity Production Credit”
 An amount equal to the product of 1.5 cents,
multiplied by the kilowatt hours of electricity (i)
produced by the taxpayer and (ii) sold by the
taxpayer to an unrelated person during the tax
year, subject to various limitations and
adjustments
 The electricity must be produced by the taxpayer
from “qualified energy resources”, which
expressly include wind.
 Timing: placed in service after December 31,
1993, but only if construction of the facility
begins before January 1, 2014. There is a lot of
guidance an discussion on when constriction
begins.
45
Local Considerations
 Zoning
 Infrastructure
 Economic Development Incentive
Grants
46
Questions?
Contact:
Katherine Ross
katherineross@parkerpoe.com
(919) 8354671
47