An energy company that uses poultry waste for fuel can't qualify as a green energy resource under North Carolina's law.
The ruling by the N.C. Utilities Commission means that Peregrine Biomass Development will have to scrap plans to build several industrial boilers that burn chicken droppings as an energy source to make steam and hot water for factories and other industrial applications.
The development is a major setback to the use of farm animal waste as a green energy resource, some believe.
"We just haven't had other viable proposals for poultry waste," said James McLawhorn, director of the electric division at the Public Staff, the state's consumer advocacy agency.
Greenville, S.C.-based Peregrine was considering four potential sites in this state to build facilities that burn poultry waste and sell the steam or hot water to industrial users, said company president Ralph Walker.
Peregrine had also planned to sell renewable energy certificates from its industrial boilers to Progress Energy, Duke Energy or other power companies.
The renewable certificates are a subsidy to encourage development of the state's renewable sector. Electric companies are required to buy a certain amount of the certificates to meet the state's renewable energy targets.
The state's 2007 renewable energy law considers poultry waste as a type of renewable resource -- but only as long as it's used to generate electricity.
Peregrine's use of poultry litter didn't qualify as a renewable, the utilities commission said Friday, because the company planned to generate steam or boiling water, not electricity.
The ruling shows the thorniness of green energy policy.
State law allows solar electric and solar thermal to count as green energy resources for the purposes of selling renewable certificates, even though the latter generates only steam and boiling water.
But state law makes no such allowance for poultry waste, so the utilities commission felt it had no choice but to deny Peregrine's request.
Walker said that the same standard ought to apply to poultry waste as to solar thermal technology, because both offset the use of electricity to generate heat needed to boil water.
"It displaces coal, it displaces fuel oil, it potentially displaces natural gas," Walker said. "We had four industrial sites under consideration to provide competitively priced steam."
Peregrine's request was opposed by a competitor, Fibrowatt, a Pennsylvania company that would like to build small power plants in Sampson and Montgomery counties fueled by poultry litter.
Fibrowatt's plans, under discussion for several years, have yet to lead to any contracts or construction.
Fibrowatt had also proposed a power plant in Surry County, but earlier this year officials in that country said they no longer support the Fibrowatt project.
Walker, Peregrine's president, said the company will likely ask the N.C. General Assembly to modify the state's energy law in such a way as to allow poultry waste to count as a renewable resource for generating steam and boiling water.