Energy round table: Positives attract
North Carolina’s energy industry is growing. It employs more than 39,000 people, which is almost 10% more than in 2010, according to Cary-based Economic Development Partnership of North Carolina Inc., and it is second in U.S. solar installation, helping it gain attention on the domestic and global stages. Business North Carolina magazine recently assembled a panel of energy experts to discuss what makes the industry such a powerful force and what it needs to stay charged.
The discussion was moderated by David Doctor, president and CEO of Charlotte-based trade group E4 Carolinas. UNC Charlotte’s EPIC (Energy Production & Infrastructure Center) hosted it, and North Carolina Sustainable Energy Association, Parker Poe Adams & Bernstein LLP, Central Piedmont Community College and Research Triangle Cleantech Cluster provided support. The transcript was edited for brevity and clarity.
How strong is North Carolina’s energy industry?
Urlaub: More than 26,000 North Carolinians were employed in clean energy, renewable energy, energy efficiency, energy storage, smart grid and electric vehicles in 2015. They generated almost $7 billion in revenue. The state has seen more than $6.3 billion of renewable-energy investment and a total economic impact of more than $12 billion since 2007.
Baldwin: The state’s energy industry positions it to compete for large-scale industry and projects. Those bring capital investment and better jobs, which help the entire economy. Growth is the lifeblood of utilities, and our communities won’t grow without a strong energy industry. Energy is a large percentage of manufacturers’ operating costs. North Carolina is an oasis of low energy prices. Manufacturers know that. The state uses it as an economic-development tool.
Bennett: Energy costs in North Carolina are about 20% less than the national average. Utilities helped recruit $1.2 billion of capital investment and more than 3,000 jobs to the state in 2015. Duke has connected more than 1.4 gigawatts of solar in North Carolina. That attracts companies, too.
How is the energy sector seen outside North Carolina?
Campen: Duke Energy Corp., the country’s largest utility, is headquartered in Charlotte, and it is about to diversify with the addition of Piedmont Natural Gas. North Carolina is No. 3 in the country in installed solar capacity, and it’s predicted it’ll be No. 2 by year’s end. Other states are seeing what’s happening in North Carolina and realizing that they need to respond because investment dollars and jobs are coming here.
Baldwin: Those outside North Carolina also notice our internal collaboration. That has served the state and industry well. Our associations lead by example, and their membership follows.
Bosser: There’s a lot of research and development underway because North Carolina has the right players: research universities, software developers and big companies. Several of the partners in Duke’s Mount Holly lab, where distribution technologies are tested, are based in North Carolina. That wasn’t necessarily Duke Energy’s intention. It wanted the best partners. It’s unique for a region or state to have everything. We find that while marketing the Cleantech Cluster, which consists of companies and researchers working on technology that maximizes resource use. Many communities are trying to find the right partners, and we can say they’re all here. You don’t need to attend a big conference to meet them. Come to North Carolina, and we’ll introduce you.
Why have domestic and foreign energy companies clustered here?
Enslin: North Carolina has great universities and laboratories and a deep knowledge base. They spark innovation. A lot of it will be needed over the next 20 years to lower costs and develop the analytics associated with managing highly distributed generation assets such as solar. That will grow the economy and provide solutions that can be used worldwide.
Urlaub: Since 2010, clean-energy companies have opened offices in 63 counties, and 75% of renewable-energy investment occurred in rural counties that are economically distressed. We have many nonprofit and job centers, including the national Solar Ready Vets program at Fayetteville Technical Community College, which helps place skilled military veterans in the solar-energy industry. Those connections have introduced the energy industry to many people.
Bennett: We serve customers statewide. We have plans to modernize service in the state’s western counties. They include about 50 megawatts of solar generation and storage. Those customers want clean energy, but sometimes policy and technology have to evolve before those demands can be fulfilled. You need to balance those three. We engage with national groups such as Washington, D.C.-based Energy Storage Association. It held its annual conference in Charlotte in April. About 300 people attended its 2010 conference, and there were 1,500 people here. People from Italy attended the latest conference because they are doing some interesting things with energy storage.
Potter: The general public lacks a true understanding of the energy industry’s economic importance and the well-paying careers it generates. Community colleges are doing a better job of explaining to students the job options they have with a high-school diploma or a certificate or associate degree from a community college. Parents also need to understand the opportunities for their children that exist within the energy industry, whether they’re at Duke Energy, an advanced manufacturer or a wind or solar farm. They’re jobs that don’t require racking up thousands of dollars in school loans.
Do policymakers understand the industry’s importance?
Baldwin: I would say yes, with a qualifier. It’s hard to make good policy. It’s based on current technologies, societal views and customer choice. As those evolve, so does policy. That requires a great deal of education and conversations. When policy changes for the better, we have to let its creators know instead of pointing out problems.
Campen: Businesses want consistent rules so they can plan to grow. I’m afraid the clean-energy industry is facing too much uncertainly from proposed changes, such as allowing tax credits to expire. This sector needs time to flourish further. There’s a lot at stake. The Southeast’s first wind farm is under construction in northeastern North Carolina. There are 240 people building 104 wind turbines for [Seattle-based] Amazon.com Inc. on a 22,000-acre site. The Pasquotank County Commission chairman recently told me he was driving by an Elizabeth City hotel and noticed it was full. He stopped and talked to its manager. The guests were construction workers for the wind farm. That’s just one piece of that farm’s economic impact. A supplier is bringing in trainloads of aggregate for road reinforcement. Everybody — the restaurants, the hotels, the portable- toilet leasing companies — is benefiting. Its taxes will be greater than what’s paid by the top six taxpayers combined. It’s bumping former farmland into a higher tax rate and then putting $15 million of solar equipment on it. People have asked how to help rural North Carolina counties for many years. Renewable energy has done more for rural North Carolina recently than any other industry.
How does the energy industry tell its story?
Urlaub: We need to invite business leaders and decision-makers to the manufacturing and construction sites to meet investors, owners, workers and the folks in the community. Two-thirds of our legislators started in 2011. It takes time to develop an appreciation and policy vision. When we connect our decision-makers with what’s on the ground in the places and spaces they know and love, they go from espousing misinformed perceptions to asking the questions that need to be asked.
Potter: Energy is a complicated field. We constantly breathe, live and eat it, so we take many things for granted. It’s on us to educate the general public. [Portland, Ore.-based] NuScale Power, which has an office in Charlotte, is developing a small modular nuclear reactor. There’s an opportunity to build it in North Carolina, once the design is licensed. But people have to get together and decide to have a state energy strategy that says what we’re going to do and what we need to implement it. We need people thinking in a much broader context and a longer range.
Bennett: We lock arms with county and city leaders wherever we develop a solar farm. Our lobbyists educate legislators. We help the developers reach energy companies and colleagues. We do ribbon cuttings, which announce our commitment to this important resource. Duke has always worked to deliver energy at the least cost. Cleaner energy technologies aren’t always less expensive, at least at first. The costs of energy storage, for example, are declining but need to fall further. That’s a struggle from a policy perspective because our first job is delivering affordable, reliable service. We’re working to solve that.
Bosser: Millennials and younger generations care about sustainability. That will create economic growth. It’s a story in the Research Triangle, where there’s a clean-tech project in every county. How do we leverage that to the state’s advantage? The Cleantech Cluster tells the aggregate’s story in a way individuals can’t. The region has seen 17% job growth, the second-largest of any other benchmark community that we’ve weighed ourselves against. That’s significant. Those facts need to be touted locally, nationally and internationally.
Urlaub: I recently sat on a panel with a Duke Energy executive who said 40% to 50% of the utility’s employees will retire within 10 years. We’ve done a good job of giving young adults coming into the energy industry a strong foundation, filled with new technologies at various stages of price, accessibility and maturation. We’ve done that without pressuring electricity rates. That needs to continue. We need to work together to create a high-quality and affordable place to work and live.
What will shape the state’s energy industry in the next five years?
Baldwin: Natural-gas prices dropped about 25% over the last 10 years. It has stimulated manufacturers’ interest in natural gas, not only for traditional uses, such as heat, but as a raw material for developing chemicals and products. Natural gas’s future is bright, though there are workforce issues, such as replacing retirees and training for new technologies. We’re no longer seeking the type of workers that we recruited
a few years ago. Utility mergers and additional natural gas-powered generation is restructuring the industry. Distributed generation opportunities may emerge down the road. Test labs in other states are coupling natural gas with other technologies. What they uncover may not work here, but we can learn from it.
Campen: The Atlantic Coast Pipeline, which is being built and managed in part by soon-to-be-merged Duke Energy and Piedmont Natural Gas and will transport natural gas from West Virginia to customers in Virginia and North Carolina, will be an economic boon for eastern counties.
Enslin: We are continuously evolving the service and manufacturing sides of the industry. Many changes are happening, and we’re in the right position to capitalize on them. Research and workforce skills development are linked. When one steps forward, so does the other. We’re training engineers and technicians for jobs that are five or 10 years away and have yet to be defined. Nobody knew about energy analytics 20 years ago. Now, it drives the industry. University research needs to be relevant at the fundamental and applied levels. It’s not always like that. Sometimes it’s ahead of needs.
Bennett: We’ll see more convergence of distributed generation resources, storage and electric vehicles. Duke created an organization to focus on those. The ultimate opportunity is bringing those pieces together with today’s energy such as natural gas. Global brands, such as [Cupertino, Calif.-based] Apple Inc., have significant goals regarding switching to clean energy and reducing carbon-dioxide emissions. Retail customers are pulling for that change, even if they don’t have clean energy at home. That will continue. We have to assemble a plan to continue growing that sector of the industry with new technologies.
Potter: Education is the key. We’re starting to see retirements, especially in operation, maintenance and generation. We’re doing a better job over the last few years of educating people about the opportunities to really create careers in the industry that have longevity and sustainability.