As solar cost declines, Kentucky must catch up or lose competitive edge from cheap power | Lexington Herald Leader

The news that cosmetics-giant L’Oreal plans to install one of Kentucky’s largest solar energy arrays at its manufacturing plant in Florence is exciting but also a reminder of how rarely Kentucky has such an announcement and how quickly others are passing us by.

While many states have more solar-friendly energy policies than Kentucky, the key to solar’s recent takeoff has been economic — a 60 percent drop in the cost of the underlying technology over the last five years.

Almost all of solar’s cost is upfront, which makes costs entirely predictable. Like L’Oreal, businesses and industries are turning to solar as a hedge against energy-cost increases that could result from volatility in fuel prices and operating costs, but also out of concern for a heating-up climate and the environment.

In Kentucky, the conventional wisdom — actually more like sacred truth— is that our automaking industry, refineries, aluminum smelters and other manufacturing are built on the state’s traditionally low-cost electricity.

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Kentucky still has relatively cheap power, as natural gas displaces coal as utilities’ fuel of choice. In 2105, 87 percent of Kentucky’s net electricity generation came from coal, down from 92 percent just a few years before, as aging coal plants reach the end of their lifespans.

To keep that competitive edge as solar costs continue to shrink, Kentucky will have to catch up in the renewable energy race.

Solar accounted for all of the generating capacity created last year in Alabama, Louisiana, Mississippi, Tennessee and South Carolina, said Bill Halter, CEO of Scenic Hill, the Little Rock, Ark., company that will construct L’Oreal’s solar installations in Northern Kentucky and also at a facility in North Little Rock.

Kentucky is one of only 13 states that have no standards or goals for increasing renewable energy, known as renewable portfolio standards. Twenty-nine states have enacted requirements that utilities sell a specified percentage or amount of renewable power from sources such as solar and wind. Eight states have voluntary goals. Since adopting renewable standards, North Carolina has enjoyed a sharp increase in solar investment — almost $1.7 billion last year — and its solar companies employ almost 6,000 people.

The plant in Florence, L’Oreal’s largest in production volume, will generate 1.5 megawatts of solar power, about 10 percent of its electricity needs, and buy the rest in renewable energy credits, specifically hydropower, from Duke Energy, the local utility. L’Oreal, based in France, has a 2020 goal of reducing its heat-trapping carbon emissions by 60 percent and already has solar installations at 14 facilities plus wind generation in Texas.

While cost stability is part of the motive, L’Oreal, regarded as the world’s top beauty-products brand, also is responding to customer demand. Research shows that consumers prefer products manufactured sustainably and that many will pay more for a product that leaves a smaller carbon footprint.

When a corporation such as L’Oreal thinks that environmental sustainability is integral to its brand and future prosperity, states such as Kentucky should take the hint.

An earlier version of this editorial said that L’Oreal’s planned 1.5 megawatt solar installation in Florence would be the largest in Kentucky. LG&E and Kentucky Utilities is operating a 10 megawatt solar plant in Mercer County. Fort Knox generates 3.6 megawatts of solar power, including a single 2.1 megawatt plan on 10 acres.