On May 28, the Environmental Defense Fund, along with several other parties, filed expert testimony with the North Carolina Utilities Commission (NCUC) in North Carolina’s Carbon Plan proceeding. The outcome of these regulatory proceedings, which include hearings over the summer and a Commission order by end of year, will shape over $100 billion in long-term investments proposed by Duke Energy, and ultimately largely paid for by North Carolina electricity customers. This is a huge decision point for the state’s energy future, as I described in a recent op-ed published by NC Newsline.
Duke Energy’s proposal is heavy — very heavy — on gas power plants. Duke’s proposal earns the unfortunate superlative of being one of the largest and costliest investments in new fossil fuel power plants in the country. But we are optimistic that the NCUC will see Duke Energy’s plan for what it is: a boon to utility shareholders and an unnecessary and expensive risk to North Carolina electricity customers. Indeed, its near term action plan (NTAP) alternative, North Carolina’s consumer advocate, the Public Staff, recommended nearly 80 percent less gas (see “combustion turbines” and “combined cycle” in the chart below) than Duke’s proposed plan.
Source: Testimony of Public Staff Witness Metz
You may notice that the Public Staff proposal does not include 1:1 replacement of gas with clean energy. That is because independent analysis by the Public Staff also suggests that much of the huge growth in energy demand that Duke Energy has projected may not come to pass.
Source: Testimony of Public Staff Witness Lawrence
The figure above shows that energy demand is expected to grow over the coming decade, but perhaps not as quickly or as much as Duke Energy claims. Racing to build a fleet of new, expensive, polluting power plants to serve energy demand that may never materialize is a bad deal for customers and the environment. The good news is that North Carolina has huge potential to tap a variety of new clean energy sources in time to meet growing energy demand.
In expert testimony, we highlight the financial and pollution risk that stems from heavy gas investment and reliance on currently-unavailable hydrogen technology. We also elevate the many benefits and provide a framework to bring new clean energy resources online more quickly and strategically to meet growing electricity demand in North Carolina. In our testimony, we point specifically to the opportunity to harness North Carolina’s abundant offshore wind energy potential — an important resource that can play a much more significant near-term role.
Offshore wind can carry the load
Duke Energy’s proposal includes some investment to begin deploying offshore wind to help meet North Carolina’s growing need for reliable, affordable clean energy. So even the utility recognizes that wind energy — offshore wind energy in particular — has an important role to play in North Carolina’s energy future. On that, we don’t disagree. But our expert analysis finds that Duke Energy’s plans to harness offshore wind for North Carolina are needlessly slow, limited, and inefficient. Our testimony offers a different, more ambitious course. We present a roadmap to speed deployment of offshore wind so that North Carolina households and businesses can benefit from the costs-savings of this large-scale, clean source of energy as quickly as possible.
Here’s what we found in our analysis:
1. Duke’s offshore wind plan would move far more slowly than comparable projects on the East Coast.
The good news: For the first time in a filing with the NCUC, the company’s most recent preferred portfolio actually includes offshore wind. The bad news: Duke doesn’t plan to get offshore wind online until 2035.
There are three offshore wind areas off the North Carolina coast, but Duke Energy doesn’t propose taking any concrete steps to develop them. Other East Coast states, like Virginia, have shown that if the state orders utilities to develop offshore wind, projects can be delivering energy to customers within six years. Taking concrete steps toward deploying offshore wind in existing lease areas positions North Carolina as an early-mover in the region and avoids putting us at the back of the line.
2. Duke proposes only to use one-third of the wind areas that are available and ready to go along North Carolina’s coast.
The three sites off North Carolina’s coast are already leased to wind energy developers, but Duke’s proposal would only bring one of them online in the next decade. Choosing not to leverage the state’s full potential has consequences:
- Inefficiencies in transmission and supporting infrastructure that translate into added cost for electricity customers.
- Delays to permitting and sourcing, pushing North Carolina to the back of the line for specialized ships and other high-demand supplies as other areas of the country move ahead.
- Missed opportunities for generating a huge amount of clean energy at a time when the utility says that it needs all the power it can get by the early to mid 2030s.
3. Duke’s piecemeal approach to offshore wind will cause ratepayers to miss out on huge fuel cost savings.
Looking just to the north, our expert testimony notes that offshore wind energy projects in development in Virginia are projected to save electricity customers $300 million in fuel costs per year — over $3 billion in total during their first decade of operation. Accelerating deployment of offshore wind can offer an important hedge against fuel price hikes like the ones that are currently the primary driver of residential bill increases in North Carolina. By building predictably-priced clean energy instead of buying and then charging customers the expense of gas when it is most costly, Duke could be putting big dollars back into the pockets of its customers.
4. Offshore wind boosts system reliability.
Data shows that wind off the North Carolina coast performs best at night and in the winter, which coincides precisely with when Duke Energy experiences peak demand on the state’s electricity system. This timing also works well because it complements the times when solar is less available. And with North Carolina remaining one of the top five states in the country for solar production, pairing solar and offshore wind is a winning combination as the two technologies can work in tandem, each building on the value of the other to the broader grid.
As the figure below shows, a mix of solar, onshore and offshore wind can provide consistent, predictable power supply in the Carolinas:
Graphic Credit: Southeast Wind Coalition
Conclusion
Duke Energy’s current proposal exposes North Carolina electricity customers to significant, unnecessary cost and feasibility risks, and fails to deliver significant savings that would accrue to its customers from a larger offshore wind build-out. The utility has the chance to instead invest in clean energy options that will save businesses and households money, and can be brought online to help meet electricity demand by the same 2030-33 timeframe that Duke currently proposes to build multiple new gas power plants. An affordable, clean energy future is at North Carolina’s fingertips, and it’s in the Commission’s hands now to seize it.