Publisher's Note: This post appears here courtesy of the John Locke Foundation. The author of this post is Jon Sanders.
- The Utilities Commission's initial Carbon Plan directs Duke to go ahead and procure 2,350 MWs of new solar generation - that's on top of the 1,200 MWs of solar they told Duke to procure just last November
- At 2.5 times more than the most solar Duke has ever interconnected in a single year, such a huge volume of new solar generation so quickly requires "substantial transmission upgrades," a significant cost to consumers
- On January 19 Duke requested a nearly 16 percent increase in customer bills by 2026, mostly to pay for electric grid infrastructure improvements
Background: At year's end 2022, the North Carolina Utilities Commission (NCUC) released an initial "Carbon Plan"
for future electricity generation in North Carolina. The NCUC issued this plan in response to a law passed in late 2021, House Bill 951. That law took Gov. Roy Cooper' arbitrary, aspirational goal in certain executive orders to reduce the state's carbon dioxide (CO2) emissions from electricity generation by 70 percent from 2005 levels around 2030 (and then to net zero by 2050).
What the law does that the governor would not, however, is institute extremely important protections for the grid and for electricity consumers.
Those protections in law include the following requirements that a plan approved by the NCUC must meet (emphasis added):
- be "reasonable"
- set forth the "least cost path ... to achieve compliance"
- comply with "current law and practice" regarding "least cost planning of generation"
- "maintain or improve upon the adequacy and reliability of the existing grid"
They are in keeping with North Carolina's longtime protections in law. Recognizing that "the rates, services and operations"
of electric power utilities are "affected with the public interest,"
the law makes it state policy to require "adequate, reliable and economical utility service to all of the citizens and residents of the State"
as well as "the least cost mix of generation and demand-reduction measures which is achievable."
The State of North Carolina has long recognized that least-cost, reliable electricity at the flip of a switch is in the public interest. By seeking the "reasonable," "least cost path"
to emissions reductions with "least cost planning of generation"
that would "maintain and improve upon the reliability of the grid,"
the text of the law seeking to reduce North Carolina's electricity-based CO2 emissions recognizes the very same ideal.
The first brief in this series discussed the plan's mandates to retain existing nuclear power plants (absolutely critical for reliable, least-cost, and zero-emissions generation), look into adding more nuclear (the most sensible way to add new zero-emission generation that maintains or improves grid reliability while keeping the costs of adding new generation reasonable and lower), and also to retire all coal plants by 2035 (which the emissions-reductions goals make necessary but which also forecloses any possibility of breakthrough in carbon-capture technology).
The second brief discussed the mandates to add more natural gas generation (very important in the near term to ensure the reliability of the grid and the least-cost transition to zero-emissions generation) and ensure more natural gas is available here (because, thanks to pipeline opposition by environmental extremists within and outside of government, North Carolina faces a deficiency of interstate pipeline firm transportation capacity).
This brief examines the plan's mandates regarding new solar generation and storage and focuses on whether they would help keep the plan within the law's all-important parameters.
Solar: Hurry, buy now, spend on prepping the grid, and get some battery storage while you're at it
- Directs Duke to conduct two competitive procurements between 2023-2024 targeting 2,350 MW of new solar generation to be placed into service by 2028
- Authorizes Duke to upgrade necessary transmission facilities to interconnect new solar generation
- Authorizes Duke to procure 1,000 MW standalone battery storage and 600 MW of battery storage paired with solar generation
While the NCUC plan authorizes Duke to (emphasis added) "incur project development costs associated with new nuclear generation"
and "plan for the addition of ... natural gas-fired generating capacity,"
the plan directs Duke to go ahead and procure 2,350 MWs of new solar generation. Given the law's focus on finding the least-cost path to CO2 emissions reductions that would at least maintain "the adequacy and reliability of the existing grid,"
interconnecting that much solar would seem to present significant challenges to the grid.
Plus, the challenge is even greater than it appears in the plan, because on November 2022 the NCUC had - outside of the Carbon Plan - just directed Duke to procure 1,200 MWs of new solar generation. Solar's advocates pushed for rapid interconnection of great amounts of new solar generation on what they called a "'no regrets' strategy,"
by which they meant taking advantage of tax incentives in the misnamed "Inflation Reduction Act"
offered by those incentives would pale in comparison to the costs of the "substantial transmission upgrades required"
to interconnect so much new solar so quickly. How much? Take the most solar Duke has ever interconnected in a single year - it would be, as noted in the plan, 2.5 times greater than that previous high:
Duke noted that adding this significant amount of new solar resources to its system will require the accelerated interconnection of solar resources at a rate of approximately 2.5 times that of the historic maximum amount of utility-scale solar that Duke has ever connected in a single year in the Carolinas.
The order to procure so much battery storage is necessary, as stated in the plan, "in addressing problems associated with intermittent energy resources such as solar [photovoltaic] and wind generation."
Nevertheless, "cost-effective long duration storage solutions"
are yet to be realized, though the plan seems to anticipate that battery technologies will someday "evolve"
to that. Incidentally, should that happen, it would mean that the short-term battery storage ordered now to "address the problems associated with"
this rushed new solar generation would be stranded assets, the passed-through costs of which would still impact electricity consumers.
To illustrate this problem, look at this graph from the U.S. Electricity Information Administration's grid monitoring site. It shows the hourly performance of Duke Energy Carolinas' different energy sources during the week of January 8-14, 2023. The variable brown line that rarely dips below 2,000 megawatt-hours (MWhs) of generation is coal, which the plan would replace. Those yellow camel's humps in the middle of the days represent solar generation over a few hours in the day, depending on the sunshine. The rest of the time, however, solar stays at 0 megawatt-hours (MWhs) - battery storage would try to fill in those gaps. (The top red line is not the graph's upper bound; it is steady, reliable, zero-emissions nuclear, hovering close to 7,400 MWhs.)
Duke has already submitted a request for large rate hikes
On January 19, Duke requested that the NCUC approve a nearly 16 percent increase in customer bills by 2026, including a 9.5 percent increase next year. Duke's large request is mostly to pay for the transmission upgrades made necessary by the NCUC's order that they procure such a huge volume of solar so quickly: "75% of spending over next three years consists of electric grid infrastructure improvements."
If the utility has to (a) spike consumer bills right away in order to (b) rebuild the transmission system so as to (c) interconnect unreliable, nondispatchable renewable energy generation in part because it isn't allowed to (d) replace reliable baseload generation (coal) fully with other reliable baseload generation sources (nuclear and natural gas), are we still supposed to think the plan is upholding its legal requirements? Are legislators?
Is this outcome the "reasonable," "least cost path"
to emissions reductions with "least cost planning of generation"
that would "maintain and improve upon the reliability of the grid"
? It's not even been a month.
The next brief will examine the NCUC plan's mandates involving onshore and offshore wind generation - and the plan's surprising admission that interconnecting solar and wind facilities imposes significant costs on people, and that those costs are greater the more solar and wind generation is added.