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Thursday, April 18, 2024

Fresh start: Duke Energy’s coal-to-natural gas conversion plans

Duke Energy’s coal-to-natural gas pleases Person County. Environmentalists say not so fast.

The Roxboro coal-fired plant has been a key power generator since 1966. It’s slated to close within a decade, forcing the utility to seek new energy sources.



A windblown hill of coal ash on the shore of Person County’s Hyco Lake may seem like an odd place from which to survey North Carolina’s energy future. The view is a bit murky, clouded by the debate over what to do with the 58-year-old, 2,462-megawatt Roxboro power plant that sits across the way, belching steam from one of its four smokestacks.

It is Duke Energy’s largest such facility in the state, and one of the biggest in the country.

Roxboro runs on coal, a major source of greenhouse gasses, and the bête noir of environmentalists. But like the flora and fauna of the Carbonaceous Period from which it hails, the days of coal are numbered. Duke wants to replace its coal operation with two hydrogen-capable, natural gas-fired plants with slightly larger capacity, starting in 2028 and 2030. It’s part of a program to close its entire N.C. coal fleet by 2035. To date, the utility has retired 31 coal units, with 15 units remaining at six plants.

Duke is working to comply with a 2021 state law that requires a 70% reduction in carbon emissions by 2030 (with 2005 as the baseline year), and carbon neutrality by 2050. Its newest gas-fired plant opened in 2020 near Asheville, following the closing of a Buncombe County coal plant.

Proponents of this approach say the math is simple: swapping coal for natural gas has the potential to reduce carbon dioxide emissions by about half. Since 2007, the peak year for CO2 generation in the U.S., emissions declined by 15% through 2022, according to the U.S. Energy Information Administration (EIA). Much of this was the result of coal-to-natural gas conversion, with the growing use of solar, wind and other renewables also contributing.

Environmental lawyer, David Neal

Advocates of natural gas view it as a “bridge” (of an indeterminate length) meant to allow the country to meet its electricity needs while transitioning to renewables. Critics believe this natural gas-powered interregnum is unnecessary. “Duke is using this idea of gas as a bridge fuel for closing coal plants that might have made sense 20 years ago,” says David Neal, senior attorney at the Southern Environmental Law Center. “We have to move past that.”  It’s one of the biggest plan to expand gas in the country, he adds.

Duke’s Person County plan “is tripling down on the coal-to-gas transition, saddling customers with risky investments in new polluting power plants and failing to deliver the clean energy future called for under state law,” adds Will Scott, Southeast Climate and Clean Energy director for the nonprofit Environmental Defense Fund.

Duke says its three-pronged approach delivers on the state’s growing energy needs while meeting the mandate to be carbon-neutral by 2050. In addition to coal-to-gas, the plan filed with the N.C. Utilities Commission, includes more generation from solar, wind and nuclear sources, and added battery storage. The commission is expected to rule later
this year.

During the next 15 years, Duke plans to add 30.3 gigawatts of solar, wind, battery storage, and pumped hydro storage, compared with 8.9 gigawatts of natural gas capacity. That natural gas generation planned by 2038 will replace a similar amount of retired coal generation and enable the system to accommodate more than three times that amount of renewable energy and storage, according to Duke.

Duke NC president, Kendal Bowman

“Our focus is to deliver a path to clean energy, but we have to ensure reliability and affordability for our customers,” says Kendal Bowman, Duke’s N.C. president. “Given this big growth we’re seeing in North Carolina, we’re going to need all available resources.”

She notes that Duke expects to add about half as much capacity as it has built in North Carolina over the last 60 years, when coal and nuclear generation was dominant.

Meanwhile, the amount of electricity needed to fuel the state’s growth is a moving target. In January, Duke projected that peak-load demand growth over the next seven years will be 4.44 gigawatts, eight times the 0.55 gigawatt amount projected two years ago. (One gigawatt is enough to power 750,000 to 800,000 homes for a year, depending on usage.)

Projects cited as drivers of this growth include electric vehicle manufacturer VinFast and semiconductor maker Wolfspeed in Chatham County and Toyota’s battery plant in Randolph County. Irony alert: they are part of what Gov. Roy Cooper calls “an army of green companies coming to our state.” Other growth sources include data centers, EV parts companies, data centers, AI and the state’s growing population.

Going to the source
Opinions differ on whether renewables are up to the task of meeting growing demand
for electricity.

UNC Chapel Hill professor, Stephen Arbogast

Stephen Arbogast, director of the Kenan-Flagler Energy Center at UNC Chapel Hill, says that the idea that renewables at their present stage of development can carry the load on their own is “one of great fantasies of the left. You need natural gas to keep the lights on. Even the best battery storage won’t get you through the night. It would be more constructive if people saw natural gas as the necessary complement to renewables and then turned their attention down the road to de-carbonization.”

Brian Murray, the interim director of the Nicholas Institute for Energy, Environment & Sustainability at Duke University, is more optimistic. The utility has added 6,500 megawatts of solar power in North Carolina, “so adding another 2,600 megawatts by the end of this decade is certainly within the realm of possibility.”

Murray doesn’t think Duke needs to solely rely on solar for replacing the Roxboro coal plant. Offshore wind and small nuclear plants can provide substantial capacity, though probably not until at least 2030, he says.

Further construction of fossil fuel plants is a nonstarter when renewable options exist, some environmental group representatives say. “We think they (Duke) need to get more serious about taking full advantage of low-cost renewable energy resources, accelerating their adoption of solar, accelerate the transmission upgrades needed to accommodate larger amounts of solar and getting serious about developing offshore wind,” Neal says. North Carolina has “the best offshore wind potential on the East Coast,” he notes.

As of January, North Carolina ranked No. 3 in installed utility-scale solar capacity, according to the EIA, trailing only California and Texas. That ranking falls to No. 28 based on projected growth over the next five years. Looking at utility-scale alone, the state has about 8,428 megawatts of solar generating capacity, according to theNorth Carolina Sustainable EnergyAssociation. The group’s executive director, Matt Abele, notes that utility scale solar grew rapidly in the state from 2013 to 2022 but has since leveled off.

Duke Energy’s plans for adding renewables are consistent with the power industry’s shift from new natural gas plants. A December 2023 report from the EIA found that 96% of planned new U.S. grid capacity for 2024 would be carbon free. Solar is expected to account for 58%, with wind at 13%.

In that sense, the proposed Roxboro plant is an outlier. Duke says the plant will at some point run on hydrogen, dramatically decreasing harmful emissions. But Neal calls that “a fantasy.”

The energy needed to create the hydrogen to power the facilities would be “so costly and inefficient” that it doesn’t make sense, “a crime against thermodynamics,” as critics put it.

“If you look at a net zero 2050 target and you talk about building plants with a 30-year lifespan, we should be trying to satisfy as much of our needs as possible with clean energy,” the EDF’s Scott says.

Costs to ratepayers
There is widespread agreement that adding renewables is good, but the upfront costs for such systems can be higher than a natural gas plant. Because the sun doesn’t always shine nor does the wind always blow, more generating capacity is needed for the same energy as from a combined cycle plant that uses natural gas and steam to generate electricity,
Arbogast says.

“It takes 600 megawatts of installed solar to generate about 150 megawatt years of power over the course of 12 months,” he says. ”A 600-megawatt combined-cycle plant will generate about 510 megawatt years over the same period.”

Renewable energy also demands more storage, further increasing costs. Renewable-only advocates counter that the price and availability of natural gas can not be guaranteed over a plant’s lifetime. Moreover, generating sites are subject to unexpected shutdowns (Winter Storm Elliott in 2022 resulted in unprecedented rolling “service disruptions” for Duke), and ratepayers will bear the burden of rising gas prices as a result of the fuel rider, which allows the utility to adjust rates based on cost.

“Granted there are higher upfront costs, but over time they’re a better deal for ratepayers,” says SELC’s Neal. “A clean renewable grid is fuel free.”

In any case, there will be a cost to ratepayers. Duke’s plan projects an additional $54 per month for a typical 1,000-kilowatt N.C. customer after a decade. This amounts to a 3.6% annual increase (compounded) and includes all phases of the build-out — natural gas, solar, wind, storage and nuclear.

Duke University professor, Brian Murray

Duke Energy spokesperson Bill Norton says, “The energy transition has a cost that will impact all utilities nationwide – and all utility customers. We’re in a stronger position than most because our rates are far below the national average – our low rates are a key competitive edge for North Carolina. We’re doing everything we can to ensure that remains the case, including taking full advantage of federal funding to help offset the costs of the energy transition for our customers.”

The Utilities Commission approved a 15%, three-year rate hike in December, prompting an appeal from North Carolina Attorney General Josh Stein, now the Democratic candidate for governor. A commission ruling is pending.

Not to be overlooked, The disposition of the Roxboro facility will have a major impact on Person County, where the population of nearly 40,000 has barely budged despite its proximity to the Triangle. The plant employs about150 people and pays $7 million in annual taxes, the largestin the county, which has an annual budget of about $94 million. The proposed build is expected to bring hundreds of new construction jobs, and about 60 permanent positions. It will use existing transmission lines. Another benefit: the mountain of coal ash would stop growing.

“We’re emphasizing ‘retire and replace,’” says Bowman. “Our power plants where we’ve been in these local communities for years help with the tax base and generating jobs. We want to focus on reinvesting there.”

Bowman notes that Person County commissioners recently issued a resolution supporting Duke’s efforts, including exploring options for small nuclear reactors.

Getting it there
Natural gas plants require pipelines, which is another issue raised by project critics, who cite potential methane gas leaks and damage to waterways. In Roxboro, Duke Energy has contracted with Dominion Energy to build a 45-mile pipeline to deliver natural gas to the facility. It would connect with the Transco Pipeline, the state’s sole source of natural gas. It may eventually link to the proposed MVP Southgate pipeline, which would deliver gas originating in West Virginia.

Dominion is building on an existing pipeline corridor and expects the project to be completed by 2027, in time for the planned opening of the first Duke plant. It also is considering a liquid natural gas storage facility in Person County, separate from the Duke Energy project. That project has also generated some opposition.

Methane, the primary component of natural gas, represents about 10% of U.S. greenhouse emissions, according to a 2022 Biden Administration report. The oil and gas sector accounts for about one-third of the emissions, while agriculture and natural decomposition of organic materials are other major contributors. Duke Energy says methane makes up less than two-tenths of one percent of its greenhouse gas emissions.

There are significant assumptions being made by all parties about reliability, technology advances and permitting for pipelines, transmission lines and offshore and onshore wind farms. But, history shows that large-scale energy build-outs rarely run smoothly.

Still, the need for energy is growing, and affordable, reliable electricity is one of North Carolina’s key selling points as it competes for new industries. Quickly, or more slowly, North Carolina is moving toward a carbon-neutral future.

John Szoka, a former Cumberland County state representative, and now the head of the Conservative Energy Network, puts it this way: “I love solar. I love wind. But I truly believe that we need all of the above to keep the cost for ratepayers as low as possible. … Each form of energy generation has its own benefits and its own liabilities.”

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