By Frank H. Sheffield, Jr., Ward and Smith, P.A.

Editor’s Note: Frank H. Sheffield, Jr. is a member of the Environmental, Litigation, Real Estate Development, and Zoning and Land Use Practice Groups at Ward and Smith, P.A.

A recent study on wind energy conducted by researchers at The University of North Carolina at Chapel Hill ("UNC Study") concluded that North Carolina "is well-positioned to develop utility scale wind energy production." Studies have shown that both the coastal area and mountains of North Carolina have sufficient wind resources to support utility scale wind energy development. Therefore, the question is "what is the future of wind energy in North Carolina?"

The Current Status of Wind Energy Development in North Carolina

Compared to states like Texas which has a total installed capacity of 7,118 Mw of wind energy, wind energy development is in its infancy in North Carolina. Other states such as Iowa, California, Minnesota, and Washington also have become national leaders in wind energy production.

In contrast, and due primarily to various regulatory and political considerations, North Carolina has only a single 100 Kw wind turbine installed at the Broyhill Center in Boone, along a ridge top that is not subject to North Carolina’s ridge top prohibition on tall structures. While the ridge top law was enacted originally to prevent construction of high rise condominium structures along North Carolina’s mountain tops, the North Carolina Attorney General has opined that the law also prohibits wind turbines. A major wind energy bill, which included provisions exempting wind turbines from the ridge top law, failed in this year’s General Assembly session.

In an additional setback to wind energy production in North Carolina, efforts to construct a small 1.5 Mw project consisting of three wind turbines in Carteret County (known as the Golden Wind Farm project) were defeated last year by local action. The Carteret County Board of Commissioners, at the urging of nearby residents, first passed a moratorium on wind energy projects in the county, and then enacted a local ordinance that effectively blocked the project. A few other counties, including Currituck and Hyde Counties on the coast and Ashe County in the mountains, have followed suit by adopting local ordinances regulating wind turbines.

Incentives for Wind Energy in North Carolina

One of the main incentives for developing wind energy projects in North Carolina is to allow utilities located in the state, while investing their money and creating "green" jobs in North Carolina, to comply with the Renewable Energy Efficiency Portfolio Standard ("REPS") law passed by the General Assembly in 2007. REPS requires power companies, electric membership corporations, and municipalities to rely on alternative energy sources for at least 10 % of their total supply of energy by 2017. Along with solar, geothermal, animal waste, hydropower, and other forms of renewable energy, wind energy can be used to meet the REPS requirements. Due to the constraints on wind energy development in North Carolina, utilities in the state are being required to invest, and are investing, in wind energy facilities located in other states.

Another major incentive for wind energy development is the tax credits available for such projects. These tax credits have been extended recently at both the state and federal levels and provide a financial inducement to project developers and investors to include wind energy as part of their projects.

North Carolina’s Potential

The strongest sustained winds in and around North Carolina are located offshore, primarily in federal waters that extend from three to 200 miles off the North Carolina coast. Projects located in these offshore waters are subject primarily to federal laws and permitting processes. The principal role of North Carolina will be to certify that the projects in federal waters are "consistent" with state and local coastal management plans and policies as required by the federal Coastal Zone Management Act. Conversely, wind energy projects sited within three miles of the North Carolina shore are governed by North Carolina law, but may not be permitted due to their potential visual impacts on shoreline areas.

Another area of strong and sustainable wind resources is North Carolina’s inner coast, comprised of the state’s various sounds and estuaries. The UNC Study identified the eastern part of the Pamlico Sound as an attractive area for utility scale wind generation installations. However, many of the best inner coast sites for wind energy development are located in areas restricted as training areas for military aircraft. However, the Marine Corps has developed a land use map that identifies those portions of the inner coast that would not present conflicts with low-flying military aircraft and, thus, be available for wind energy development.

Regulatory Issues and "NIMBY"

A significant constraint to wind energy development in North Carolina is the lack of a comprehensive state regulatory framework addressing wind energy projects and their impacts. The Coastal Resources Commission ("CRC") currently has the authority to permit wind turbines, but does not have any rules dealing specifically with wind energy to guide such decisions. There was a major attempt to solve this problem in this year’s General Assembly (Senate Bill 1068), but a Senate-approved version was not adopted by the House before the session ended. Senate Bill 1068 would have prescribed permitting procedures for the CRC to follow for wind projects in North Carolina’s 20 coastal counties, as well as similar procedures for projects in other parts of the state. However, even Senate Bill 1068 failed to contain any provisions preempting regulation of wind energy facilities by local governments, where "not in my back yard" ("NIMBY") sentiment can run strong.

Conclusion

There clearly is excellent potential for development of wind energy projects in North Carolina and strong incentives to pursue such projects. Some persons knowledgeable of the technology of wind energy production are confident that utility scale wind energy projects lie in North Carolina’s future, while others familiar with political considerations and sensitive to NIMBY predict that few, if any, large wind projects will ever be built due to local opposition. Time will determine North Carolina’s future in the wind energy game and, to quote Bob Dylan, "The answer, my friend, is blowin’ in the wind!"

© 2009, Ward and Smith, P.A.

Ward and Smith, P.A. provides a multi-specialty approach to the representation of technology companies and their officers, directors, employees, and investors. Frank H. Sheffield, Jr. practices in the Environmental, Litigation, Real Estate Development, and Zoning and Land Use Practice Groups. Comments or questions may be sent to fhs@wardandsmith.com.

This article is not intended to give, and should not be relied upon for, legal advice in any particular circumstance or fact situation. No action should be taken in reliance upon the information contained in this article without obtaining the advice of an attorney.