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For months, Duke Energy has faced off against a wide array of stakeholders over how it should zero out its carbon emissions by midcentury. Now, it’s up to North Carolina regulators to produce a Carbon Plan for the utility by the end of the year.
As their decision nears, the Energy News Network is spotlighting some of the most hotly debated aspects of the plan, a requirement of a state law that passed last year with bipartisan support. On Tuesday, we looked at the role advocates see for solar power. Today, we examine an especially controversial step proposed by Duke: building a spate of new natural gas power plants to help replace its shuttering coal plants.
With the Carbon Plan due to be refreshed in 2024 and every other year after that, most intervenors are focused on the utility’s near-term proposals. The company wants regulators to include 1.2 gigawatts of new combined cycle gas plant capacity and 800 new megawatts of combustion turbine capacity as part of the plan, to be pursued in the next two years. Public Staff, the state-sanctioned customer advocate, supports the bid.
This short-term request, though, is inextricably linked to the utility’s long-term vision: replacing its coal fleet and much of its existing gas infrastructure with new combustion units that can be fired up on demand. Such plants have long been a mainstay for investor-owned, regulated utilities seeking returns for shareholders.
“The utility company has historically made money by building this stuff,” said Tyler Fitch, a senior associate with Synapse Energy Economics, who modeled alternative Carbon Plan portfolios for clean energy advocates. “You have a hammer, and everything looks like a nail.”
With Duke planning to retire over 9 gigawatts of coal-fired plants between now and 2036, the company has slotted 2.4 gigawatts of large, efficient combined-cycle natural gas units to help take their place, along with a little over 1 gigawatt of single-cycle gas combustion turbines that can run as necessary. All will produce about half the carbon emissions of coal.
Around the early 2040s, according to Duke’s plans, most of its existing 6.1 gigawatts of combustion turbines will be supplanted with newer versions that can run on hydrogen. By 2050, total gas capacity on Duke’s system could be close to today’s at nearly 12 gigawatts. Public Staff’s preferred planning portfolio shows a slightly higher number of combustion turbines.
Still, “referencing ‘gas’ capacity alone is a misnomer,” a Duke spokesperson said in an email, “especially by the end of the planning period when we expect to be operating on 100% [green] hydrogen,” produced when renewable electricity splits water into hydrogen and oxygen. Plus, the spokesperson said, the combustion turbines will run sparingly, “only during high demand periods, or during very low renewable output periods.”
Public Staff believes it imprudent for now to count on green hydrogen by 2050. Their modeling shows Duke will cut its emissions 95% by 2050, compared to 2005 levels, and zero out the last 5% from the gas plants through “offsets,” whereby the utility sucks carbon out of the atmosphere from activities such as tree planting or carbon capture.
Critics question cost, supply, and climate impacts
But critics note that drilling and transporting natural gas emits methane, which, though not regulated in the law, is a climate pollutant many times more potent than carbon. A group of 45 scientists warned in a recent letter that the “costly” new gas infrastructure envisioned by Duke and Public Staff “will emit both methane and carbon dioxide for decades, worsening the climate crisis and directly harming public health as methane emissions lead to formation of toxic ground-level ozone.”
Several intervenors also argue Duke’s gas-laden carbon portfolios are at odds with the law’s “least cost planning” requirements. That’s in part because the company made manual changes to the resource mix automatically generated by its computer software as the most economical, including replacing 35% of the battery storage with new combustion turbines.
The attorneys for Google, Apple and Meta noted the manual swap in their final comments to commissioners. Such “‘hard-coded’ selections,” they said, “do not reflect economic selection of least cost power generation and … are unnecessary to maintain reliability.”
The tech company coalition, the state attorney general, and the group of clean energy and environmental advocates represented by the Southern Environmental Law Center produced portfolios cutting carbon pollution 70% by 2030 at a lower cost than proposed by Duke, all with little to no new gas infrastructure.
In September comments to the commission, the Environmental Justice Action Network and other community-based nonprofits in eastern North Carolina said the federal Inflation Reduction Act could also affect “least cost” calculus. Marking the “largest investment the United States has ever made to combat climate change,” the law will not only lower the cost of renewable energy with tax incentives, according to the environmental justice coalition, but potentially raise the cost of gas infrastructure.
“The IRA includes several new sections for the Clean Air Act, each with new appropriated funding and each defined to include carbon dioxide as an ‘air pollutant,’” the coalition wrote. With the Environmental Protection Agency poised to issue greenhouse gas rules for existing power plants next spring, “the passage of the IRA has increased the risk that new regulations could significantly impact the economics of continuing to run certain fossil fuel-based plants.”
Some also question how the gas plants will be supplied. In its preferred modeling, Duke assumes the embattled Mountain Valley Pipeline will be completed by the end of next year. Public Staff banks on more supply via the state’s existing interstate pipeline, Transco. Both suppositions come with uncertainty.
The Mountain Valley Pipeline “is already a number of years behind schedule, and there is no guarantee it will be completed by 2023,” attorneys for Walmart wrote in their post-hearing brief. “In fact, the Federal Energy Regulatory Commission … has extended the MVP construction permit through October 2026. In the event MVP is not a viable option, [Duke has] indicated an intent to ‘pivot’ to secure gas via a Southern Transco route,” but the utility hasn’t said when it would make that decision.
“At this time, there simply is no known path for natural gas supply,” Walmart’s brief summarizes. “It makes little sense to build expensive new natural gas resources without a path forward to fuel them.”
‘We’re more focused on the short term’
Then, there’s the risk of “stranded assets,” plants that must be shut down before the end of their book life and paid off at an accelerated rate by customers. In both Duke’s and Public Staff’s modeling, new gas plants are expected to run for 35 years — past the 2050 deadline when the company must zero out its carbon pollution.
In a September expert witness hearing, Duke’s director of long-term planning Glen Snider allowed that if neither green hydrogen nor carbon offsets evolve to make up for the plant’s emissions, and reliability is ensured with another technology, “yes, in 2050, 28 years from now, a portion of that investment would have to be retired.”
Many intervenors say those are not unlikely outcomes. Walmart called the utility’s assumptions about hydrogen “highly speculative and without evidentiary support,” and noted that Duke itself, in its initial modeling, called carbon offsets “too speculative and not useful for this initial Carbon Plan.”
Public Staff emphasizes that a lot could change in 30 years, and that Duke will still have to seek permits for any plants through the state’s usual process.
“We’re more focused on the short term right now, because we believe there is ample opportunity to change directions,” said James McLawhorn, head of Public Staff’s energy division. “We’re going to have a proceeding every two years.”
Yet that’s precisely why so many intervenors oppose the commission’s blessing of the new plants, at least for now. There’s no harm from a reliability perspective in waiting two years, they argue, while pursuing new gas now could ultimately cost ratepayers.
“There are portfolios before the Commission that do not select natural gas resources,” Walmart’s brief says, “while also adequately serving customer load for more than a decade.”
A group of large electric customers was among the few intervenors not to oppose outright the commission’s ‘selection’ of natural gas plants for now. But it stressed that such a choice shouldn’t replace the state’s normal permitting process.
“The Commission should clarify that selection of a resource in the Carbon Plan does not create a presumption of need, necessity, public convenience, or cost-effectiveness for purposes of a future Certificate of Public Convenience and Necessity … proceeding,” read the post-hearing brief from the Carolina Industrial Group for Fair Utility Rates.
For the many North Carolinians who packed public hearings on the Carbon Plan this summer, a blueprint that relies on fossil fuels simply strikes an emotional nerve.
“When I hear Duke Energy is proposing a Carbon Plan using natural gas, using methane, a gas that will heat the environment 80 times more than carbon,” Melanie Chopko testified at the Asheville hearing, “it makes me sick to my stomach.”