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Published: 2022-07-17 05:30:00 Updated: 2022-07-17 05:30:00

Posted July 17, 2022 5:30 a.m. EDT

By Travis Fain, WRAL state government reporter

State regulators are combing through mountains of data and widely varied energy plans now in a process that will ultimately chart North Carolina’s energy future.

Crucial decisions loom, for the climate and for customers’ wallets, as Duke Energy, environmentalists and consultants for many of the state’s largest companies pitch regulators on their preferred answers to a key question: As North Carolina phases out coal-fired electricity plants, what should take their place?

Charlotte-based Duke Energy, one of the world’s largest energy companies and North Carolina’s biggest provider, has backed a mix of natural gas, solar energy, wind and next-generation nuclear power. The company also has a plan to eventually burn a mix of natural gas and hydrogen in its proposed new gas plants—a technology Duke Energy planning documents assume is at least a decade away.

Environmental groups sifting through the company’s proposed carbon plan, which is broken down into four potential scenarios, question this reliance on unproven nuclear and hydrogen technologies, as well as the company's more immediate dependence on natural gas.

Methane, the chief component of natural gas, is an even more formidable greenhouse gas than the carbon dioxide this plan seeks to reduce in Earth’s atmosphere in a bid to slow the planet’s warming. Environmentalists—and the renewable energy companies that hope to add massive amounts of solar and wind energy to the grid through this planning process—also argue that new natural gas plants represent huge financial investments in a rapidly changing energy industry.

If renewable energy technology moves as fast as they predict, those plants won’t be needed in the coming years, leaving customers to pay for expensive monuments to a fossil fuel past. Duke Energy and many of the state’s political leaders see natural gas as a necessary bridge to avoid energy shortfalls as wind and solar usage grows, and particularly until battery-storage technology advances.

Demand is only expected to rise. The company said that it set new peak usage records, twice, just days apart last month.

“Natural gas must play a complementary role,” Duke Energy spokesman Bill Norton said in an email. “We believe a diverse, all-of-the-above mix of generation resources is the best way to balance affordability and reliability for our customers. This energy diversity is what keeps the lights on when the sun is not shining and the wind is not blowing.”

Gudrun Thompson, a senior attorney for the Southern Environmental Law Center, said Duke Energy is asking state regulators to “grease the skids for new gas.” She said her group plans to release a detailed report this week showing that North Carolina can get the energy it needs from wind and solar power improvements when combined with electric grid improvements and battery storage.

“No utility should be proposing to build new gas-fired power plants here in 2022, at a time when we know we need to be moving away from fossil fuels,” she said.

This planning is required by House Bill 951, a landmark energy bill that passed in the statehouse last year with widespread bipartisan support.

The measure calls for “all reasonable steps” to cut carbon dioxide emissions from Duke Energy’s power plants by 70%, compared to 2005 levels, by 2030. The N.C. Utilities Commission, which regulates Duke Energy, decides what’s reasonable, and the law charges commissioners with finding the “least-cost path” to the 70% goal.

The measure also allows for delays beyond 2030 if the commission signs off on complex wind or nuclear power projects that take longer to bring online.

The commission is an appointed body made up largely of attorneys and former state lawmakers, all appointed by Gov. Roy Cooper. The planning process started in earnest in May, when Duke Energy released its carbon plan. The commission began holding public hearings this month, and details on future hearings are available online from the commission.

The commission’s process works much like a court case, with the seven commission members acting as judge and jury. Duke Energy, environmental groups and dozens of other businesses and interest groups are currently in the process of filing briefs for board members to consider. That includes Walmart, the retail giant, which says in its brief that electricity is one of its single largest costs.

Commissioners have also heard from local governments worried about how a move away from coal will affect their communities. Person County is home to Duke’s Mayo and Roxboro coal-fired plants. Roxboro is one of the biggest electricity plants in the United States. Together these facilities employ 240 people and generate 18.5% of the county’s annual property tax revenue, Person County officials said in a filing with the commission.

More than 150 documents have been filed in the case so far.

Commission members may decide how to proceed largely from these filings, or they may decide to hear expert testimony in person. The commission’s final plan is due by the end of this year. It is slated for review by the commission every two years after that.

Duke Energy proposed four “portfolios” with different blends of natural gas, wind, solar and nuclear generation. Only one, Portfolio 1, would meet the 70% milestone by 2030.

The others rely on offshore wind or nuclear small modular reactors, both of which would potentially trigger House Bill 951’s allowance for delays.

Each portfolio would bring new costs, ranging between $5 per month for residential customers to $35 per month as of 2030. Portfolio 1—which would cut carbon outputs the fastest—is the most expensive plan, but there’s a big difference in the cost for customers in different parts of the state, regardless of which portfolio is analyzed.

What people typically think of as Duke Energy is actually two subsidiaries serving parts of North Carolina and South Carolina. Duke Energy Progress serves the eastern half of North Carolina, and Duke Energy Carolinas handles the western half. Duke Energy predicts much higher costs in the eastern half.

With Portfolio 1, the company says the monthly increase for Duke Energy Carolinas customers would be $8 per month in 2030, but $35 per month for Duke Energy Progress customers. The figures get closer to each other by 2035, when Duke Carolinas customers would expect to pay $33 more per month than they do now and Duke Progress customers would pay an extra $45 per month.

That’s primarily because the planned wind and solar projects, along with needed transmission upgrades, would largely be located in the eastern half of the state, Norton, the Duke Energy spokesman, said. The company is “very sensitive to that concern” and is looking for solutions, including a potential merger of the two utilities, he said.

Duke Energy says it has retired 34 coal-fired units since 2010, and that what’s left has been critical for year-round dependability, particularly in the winter months.

But beyond the environmental impact, the remaining coal plants have an average age of nearly 50 years, and coal supply chains “continue to deteriorate,” the company says in its carbon plan. Depending on the portfolio, that plan calls for four or five new gas units over the next decade, Norton said.

Norton defended the reliance on natural gas, which has been a chief criticism from environmentalists for years.

“By 2035, we’re looking at nearly two to three times more new solar than new gas,” Norton said in an email. “And any new natural gas facilities we build will be capable of burning carbon-free hydrogen in the future, allowing us to leverage existing infrastructure as we transition toward carbon neutrality by 2050.”

Thompson, the Southern Environmental Law Center lawyer, and other experts said the move toward hydrogen is speculative—as is the reliance on nuclear small modular reactors. A group of scientists and former U.S. Environmental Protection Agency regulators has been pushing for a no-new-gas plan in North Carolina since at least 2019.

Natural gas is methane, and burning it for energy produces less carbon dioxide than burning coal. But methane itself is about 80 times more potent a heat-capturing greenhouse gas over 20 years. Keeping methane out of the atmosphere would have a more immediate impact on climate change than limiting carbon dioxide, climate scientists have said.

“A lot of us want to see a no-new-gas proposal from Duke,” said Dale Evarts, a former EPA official living in North Carolina. “Our science tells us we have to stop now.”

Norton said Duke Energy is “committed to achieving net-zero methane emissions from our natural gas business by 2030.” Evarts said too much is out of the company’s control, because it does not actually harvest the gas.

“If you look at the whole lifecycle of the fracking, the drilling, the transport, the storage … that’s where the methane leakage comes out,” Evarts said.

Solar power industry executives and the Southern Environmental Law Center said Duke Energy underplayed solar’s potential in its carbon plan. The company took “a very conservative approach to solar” and a much more liberal one in assessing the potential of nuclear small modular reactors, according to Tyler Norris, of Cypress Creek Renewables, a solar energy company based in Durham.

Norton said Duke Energy “proposed more than three times the level of solar that exists on our system today, and North Carolina is already No. 4 in the nation for solar.” In its carbon plan, the company notes several concerns with adding more solar, including a push for growth in other states that is “rapidly increasing competition for materials and labor to interconnect solar and expand the distribution and transmission grids.”

There are also logistics questions about natural gas. The plan notes “potential uncertainty,” given the status of pipeline projects, in the company’s ability to bring in lower-cost natural gas from the Appalachia region. If that gas doesn’t flow, Norton said, the company may need to pivot in the future.

Thompson said she’d like to see more commitment to efficiency in the plan, providing more incentives to people who install more efficient HVAC units and insulation, for example.

“Those are really cost effective,” she said. “Duke has proposed some energy efficiency as part of their plan, but nowhere near enough.”

Because the Duke Energy subsidiaries serving North Carolina also operate in South Carolina, decisions in each state impact the other, and South Carolina regulators have rejected Duke’s plans, deciding instead to keep coal-fired plants running.

The company hopes South Carolina’s Public Service Commission will change its mind next year, after North Carolina regulators approve a plan.

“If differences in state energy policy do not allow for alignment and system-wide planning, then the companies may need to plan and operate as two different systems, which could result in ultimate separation of the utilities,” Duke Energy said in its North Carolina proposal. “This approach could increase costs and will, in general, make the energy transition less efficient.”

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