John Hood: Affordable energy fosters economic growth
This opinion piece argues for affordable energy in North Carolina to foster economic growth, examining why electricity prices might be higher than in neighboring states. It discusses the impact of the state's renewable portfolio standard and refutes the idea that data center demand is a statistically significant driver of higher electricity prices in a recent study. The author advocates for policies that ensure reliable and cost-effective power generation.
John Hood, a columnist for the John Locke Foundation, writes about the importance of affordable energy for North Carolina's economic growth and competitiveness. He notes that while North Carolina has many advantages, its electricity prices ranked 28th lowest in the U.S. last year, behind several neighboring states like Virginia, South Carolina, Tennessee, and Georgia, according to an American Legislative Exchange Council (ALEC) report.
Hood attributes North Carolina's relatively higher electricity prices partly to its renewable portfolio standard. He argues that this regulation obligates residents to pay more compared to states with more reasonable or no such targets. However, he also acknowledges that other factors, such as economic structure and other regulations, play a role.
The column addresses a common political theory that demand from new data centers is driving up electricity prices. Hood cites a study by Thomas Pyle and Daniel Simmons of the Institute for Energy Research, which concluded there is "no statistically significant correlation between the number of data centers in a state and its current electricity prices." They also found no significant relationship between data center concentration and faster increases in electricity rates, suggesting that blocking data center construction for this reason would be unwise due to their economic benefits.
Hood also mentions recommendations from his John Locke Foundation colleague, Jon Sanders, who suggests converting North Carolina's carbon goals from mandatory to aspirational. Sanders also proposes requiring that any retired baseload generation be replaced with an equal or greater amount of new baseload generation, favoring nuclear or natural gas plants over intermittent sources. Additionally, Sanders recommends an "Only Pay for What You Get" Act to incentivize least-cost and reliable electricity generation.