June, 2014 – Back in 2007, when the North Carolina legislature enacted the Renewable Energy and Energy Efficiency Portfolio Standard (REPS) for electric utilities, one of the requirements for all electric utilities was a “poultry power” set-aside.
The legislature identified a potential environmental concern (animal waste from large agricultural operations), devised a potential solution (collecting and using the waste to produce electricity), and decided that any additional cost for that electricity would be paid by the state’s electric utility customers/members.
At the time, we felt this was an unusual concern and/or solution since most poultry litter in NC is used by farmers on-site or nearby as fertilizer. If the poultry litter is sold, most farmers will have to purchase replacement commercial fertilizer.
We have discussed previously that sometimes what sounds like a good idea can have unexpected or unintended consequences when implemented. In this case, the idea of purchasing poultry litter as a fuel source, transporting it to some central location and using it to produce electricity sounds inefficient and expensive. Well, it is certainly turning out to be expensive.
Included in the overall 10 percent renewable requirement, the poultry power provision requires that Wake Electric generate or purchase credits associated with 4.5 million kWh annually using only poultry litter as fuel. The additional cost of producing that much electricity from poultry litter is expected to exceed $4.5 million over an expected 20-year contract period. The cost implications of this requirement deserve repeating: Wake Electric members can expect to pay an additional $4.5 million over the next 20 years to produce this electricity from poultry litter rather than our traditional nuclear/coal/natural gas fuel mix.
In an earlier post, we discussed our preference for using solar power renewable energy credits (RECs) to comply with the 10 percent renewable standard. Compared to solar power, the incremental cost of poultry power is 20 times more. Surely, this cannot be what the North Carolina legislature expected or intended back in 2007 when they included a poultry power mandate in the renewable energy standard.
Do you have a question or comment about poultry power? Suggestions for future topics? Please submit them to MAC@wemc.com.