House Bill 951, passed last summer, requires the N.C. Utilities Commission to approve a carbon dioxide reduction plan by the end of 2022. Broadly speaking, that plan needs to chart a path for a 70% reduction in carbon dioxide emissions by 2030 — with some exceptions for certain new projects — and net zero by 2050.
The 2021 legislation required the Utilities Commission to consider affordability and reliability as it decides how emissions will be reduced. Starting Tuesday, the state commission met in a Raleigh conference room to hear from utilities lawyers on how to do that.
Duke Energy’s initial carbon-reduction proposal asked the commission to leave open four pathways for North Carolina’s energy future by approving a series of near-term steps including electrical grid modifications and some new solar energy investments, rather than any single plan.
Crucially to environmental groups that were among the dozens of parties intervening in the case, three of those plans would see Duke meet the 70% carbon reduction goal after 2030. It would do so using the leeway included in HB 951 by lawmakers to allow for the permitting and construction of offshore wind farms or small modular nuclear reactors.
Environmental groups have expressed a wide array of concerns about the all-of-the-above strategy, but a key one has been Duke’s proposed construction of new natural gas plants to generate power. At public hearings last month, many speakers urged Duke to invest in resources like solar or wind instead of natural gas, saying it is important to slash emissions of methane — a potent greenhouse gas.
Over the summer, many experts and lawyers crafted their own plans that would reduce carbon dioxide emissions from the state’s power sector.
N.C. Attorney General Josh Stein’s office, for example, presented an alternative plan that showed a path to hitting the 70% reduction by 2030. This plan would, Stein’s office wrote, retire coal plants sooner and forgo investments in new natural gas plants for renewable energy sources.
“We need to act now to achieve these important energy goals and make sure that North Carolinians benefit economically from a clean energy economy. I urge the Utilities Commission to adopt a stronger, smarter, and more affordable plan,” Stein said in a written statement.
As part of that, the attorney general’s office asked the commission to require Duke to put battery storage at the sites of a pair of coal power plants in an effort to hasten their retirements. Additionally, it asked the commission to require Duke to create a “contingency scenario” in which natural gas prices remain high, likely resulting in additional renewable sources of generation.
By placing new sources of generation at the sites of former coal plants, it wrote, Duke could avoid having to upgrade some parts of the grid.
Duke maintains that its approach of focusing on near-term goals and leaving many options open is the most likely to keep costs down for North Carolina customers.
“We appreciate the diverse feedback, which reaffirms the importance of the NCUC adopting a flexible plan that will protect reliability and manage customer costs. That’s why it’s critical to focus on the near-term activities that support all portfolios,” Erin Culbert , a Duke spokeswoman, wrote in an emailed statement.
Culbert continued, “An ‘all of the above’ strategy puts us on a strong path today while preserving the ability to adjust every two years for evolving issues, such as advances in technology and federal funding to reduce customer costs.”
Inflation Reduction Act impacts
The attorney general’s office also argued that Congress’s passage of the climate, energy and health law known as the Inflation Reduction Act further calls into question investing in natural gas-fired power plants.
“In an ideal world, a major federal policy change like this would be a moment to ‘hit pause’ and give parties additional time to reevaluate what resources the preferred Carbon Plan portfolio should include,” Edward Burgess , a utilities consultant with the firm Stratgen, wrote in comments on behalf of the attorney general’s office.
Incorporating the Inflation Reduction Act in modeling would likely lead to more wind and solar resources, with a significant spike in battery storage, Burgess wrote. He also expected that natural gas would see “reduced competitiveness” and lead to quicker replacement of coal plants.
For its part, Duke argued that the Inflation Reduction Act’s investments in the development of hydrogen fuel sources could actually boost its plans to build gas-fired power plants that could eventually operate using hydrogen as a fuel source.
In their written comments, Duke employees also said that incentives included in the Inflation Reduction Act could “offset” rising costs for wind, solar and storage resources.
Limits on new solar?
Another key point of contention is how much new utility-scale solar energy would be added by 2030. Duke’s carbon proposal limits that to between 4,500 and 5,400 megawatts.
By comparison, the Clean Power Suppliers Association , which represents North Carolina solar developers, argues Duke should add about 7,500 megawatts of solar power by 2030. Modeling done for the association shows such a move could save customers $860 million annually by 2030, said Tyler Norris , vice president of development at Cypress Creek Renewables and a representative of the association.
Norris also said that it’s important that Duke start adding solar power sooner because it takes about four years from the time a project is procured to the time energy from its panels is on the grid.
“If you defer the procurement, you’re going to get fewer projects being bid in, fewer projects submitted in the queue and it’s going to delay essentially the discovery process to identify the necessary upgrades we’re going to need and of course delays the commencement of those upgrades,” Norris said in an interview.
The Clean Power Suppliers Association supports a package of electricity transmission upgrades Duke proposed in order for solar to make sense in more corners of the state, Norris added. But, he said, there is plenty of opportunity to add solar power in areas that already have sufficient infrastructure to support it.
“The more that we delay procurement, the more that achieving compliance is going to depend on flawless execution in the later years,” Norris said.
In its written testimony, Duke argued that the Utilities Commission could increase the amount of solar energy the company needs to procure at any time, as long as solar remains the most reliable and affordable technology.
“In any case, pre-emptively selecting the significantly higher volumes of solar and batteries recommended ... to be procured in the near-term would significantly increase execution risk and is not a reasonable step,” Duke Energy resource planners wrote in rebuttal testimony.
The hearing began Tuesday at 9 a.m in Commission Hearing Room 2115 , 430 N. Salisbury St. , Raleigh , and was being streamed live on YouTube.
This story was produced with financial support from 1Earth Fund, in partnership with Journalism Funding Partners , as part of an independent journalism fellowship program. The N&O maintains full editorial control of the work.
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