Carolinas Wrestle Over Duke's Future Plans for Gas

Duke Energy's plans for the Carolinas has hit a rough patch as long-range plans to keep natural gas as a mainstay of its generation mix catches flack. The South Carolina Public Service Commission (PSC) voted 4-1 last week to reject Duke Energy's integrated resource plan, which includes development of new gas-fired plants. Meanwhile, a massive bill unveiled in the North Carolina House that would replace coal-fired power generation mainly with new gas capacity is running into a buzz saw of opposition. The South Carolina PSC is asking for several changes to its plan related to gas cost projections including that solar power be priced at $38 per megawatt hour in model 20-year purchase agreements. While this isn't a directive to reduce gas generation within the scenarios, it could undermine the economic attractiveness of gas-fired electricity and bolster the economic case for renewables. That, solar advocates maintain, could require Duke to build less gas-fired capacity and more solar farms and arrays. Meanwhile, Duke continues to argue the existing proposal is a "prudent" way to "meet customer needs long term." In North Carolina, Gov. Roy Cooper (D) issued a rare formal statement blasting House Bill 951 before it had its first legislative appearance. Cooper said the Republican-backed bill would "cost ratepayers too much, fall short of clean energy goals, hamper job recruitment and weaken the Utilities Commission, which exists to provide accountability for utility companies." The 47-page bill evolved over months of closed-door negotiations between Duke Energy, House Republican leaders and other state stakeholders. Its genesis alone was enough to raise environmentalists’ hackles, but their main objection is it clears the exit for coal generation mainly by adding new gas-fired capacity. That is not how Cooper sees North Carolina's energy future. He recently announced plans for developing offshore wind energy as part of an executive order (NGW Jun.21'21). Cooper has set a goal to reduce the state’s greenhouse gas emissions 70% below 2005 levels by 2030. Power in North Carolina is now mainly generated by gas, 39%; coal, 22%; and nuclear, 37%. Hydro and other renewables account for just 2% of the generation mix. As for clean energy advocates, they say the path laid down by the proposed legislation would cost too much and do little to wean Duke off fossil fuels. "It takes some steps toward more renewable energy but not nearly enough, and it’s clear they need to go back to the drawing board and negotiate with a broader spectrum of stakeholders in order to get a better plan," Cooper said. The green lobby was more pointed with its criticism that the shuttering of five coal-fire plants could usher in 900 megawatts of new gas infrastructure, according to one proposal. “This legislation appears to bind the hands of the commission by mandating new fossil-fuel power plant construction, irrespective of how those projects stack up against alternatives,” David Kelly, director of North Carolina political affairs for the Environmental Defense Fund, said in a statement bemoaning the impact of the state possibly "trading one fossil-fueled future for another.” Charlotte-based Duke has outlined plans to cut carbon emissions by at least 50% by 2030 and reach net-zero carbon emissions by 2050. But it has also championed gas-fired generation as a means to reach those targets. Duke was among the utilities in Virginia and North Carolina that had bet on securing cheap Appalachian supply for a growing gas-fired portfolio. But when plans for the Dominion Energy-led Atlantic Coast Pipeline crashed, Duke announced goals to reduce gas capacity in the energy mix from 42% by shifting emphasis to increasing renewable generation, particularly solar projects (NGW Aug.17'20). Nonetheless, Duke’s 15-year power generation plan forecast through 2035 has drawn fire from green activists as proposing too much new gas-fired capacity and too little wind, solar and energy conservation. Still, Duke is making headway in efforts to build out solar capacity in the Carolinas. Last week it started construction on its 22.6 MW Stony Knoll Solar power plant, which will be owned and operated by Duke Energy Sustainable Solutions. The project was selected as part of the competitive bidding process established by 2017’s solar legislation in North Carolina. The facility, which has the capacity to power roughly 5,000 homes, should be in commercial operation by the end of this year. But there is only so much renewables can do to meet power needs in the Carolinas and ensure reliability, Duke maintains. "Building highly efficient natural gas plants is part of Duke Energy's balanced approach to modernizing the fleet, maintaining a diverse fuel portfolio, managing costs and providing reliable and increasingly clean energy to meet customer needs," according to a statement on the Duke website. Tom Haywood and Lisa Lawson, Houston