Tuesday, May 28, 2024

Round table: Energy, all of the above


American Petroleum Institute and ElectriCities sponsored the discussion, which was moderated by E4 Carolinas’ John Morrison. It was edited for brevity and clarity.

Diversification is a common theme in North Carolina’s transition to clean energy, a move that’s intended to combat climate change by achieving net-zero emissions of carbon by 2050. Finding all its parts and keeping them in motion falls mostly to members of the state’s energy industry. Not only do they have to integrate clean energy sources, such as nuclear, solar and wind, and modernize delivery, they need to involve consumers more, all the while protecting the economic development advantage of inexpensive and plentiful power that the state has always enjoyed. Business North Carolina magazine recently gathered a panel of energy experts and industry leaders to discuss how this important resource affects the state, what the transition to clean energy will require and what the future holds.

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How does the energy industry impact North Carolina’s economy?

MARTIN: It touches everyone — residential, commercial business and industry. Industries use energy for transformation and production. We typically use energy on a larger scale and at greater intensity than other consumers. Our energy must be cost effective, so our operations can remain competitive in North Carolina. The two groups most sensitive to the price of energy are low-income residents and industries. The difference is that industry is mobile. If a manufacturer, for example, isn’t able to produce here in a cost-effective manner, it can move elsewhere. North Carolina competes globally, not only regionally. 

MCGOWAN: North Carolina has the country’s second-largest number of state-owned and -maintained miles of road. It’s the country’s ninth largest consumer of refined petroleum products. In March of 2022, North Carolina consumers and businesses used 11.7 million gallons of gasoline, 4.3 million gallons of diesel fuel and 313,000 gallons of jet fuel on average per day, according to U.S. Energy Information Administration. These amounts have likely increased given rising demand. Those gallons fuel our economy. While an energy transition is underway, and Gov. Cooper has an aggressive Clean Transportation Plan, the reality is North Carolina’s economy will continue to need petroleum products into the future. That also includes natural gas, which is important to power generation, home heating and economic development.

MUNDT: North Carolina has a once-in-a-lifetime opportunity to transition to a clean energy economy. It has been mobilizing to take advantage of it throughout Gov. Cooper’s administration. North Carolina is a national leader in solar energy, having one of the largest numbers of solar installations. Now it can secure its status as a national leader in clean energy with the development of offshore wind energy. North Carolina has the greatest potential for offshore wind energy generation of any state on the East Coast. A study released by N.C. Department of Commerce last year found it and its supply chain could mean about 85,000 new good jobs and $140 billion in capital expenditures along the East Coast over the next 13 years. The study says that North Carolina is well positioned to attract a significant portion of that investment and those jobs because it has the largest manufacturing presence on the East Coast and a highly skilled workforce to support it. At the state level, we’re working with business and industry as we move forward in this transition. The governor’s office policy staff has hosted roundtables, learning about their energy needs and challenges. There are several avenues to ensure that a company’s environmental, social and governance — ESG — goals can be met. North Carolina can accommodate their energy needs, whether we’re recruiting them or helping them expand. We’re working with N.C. Department of Transportation as it creates its Clean Transportation Plan 2.0. Duke Energy is finalizing its carbon-reduction plan in accordance with House Bill 951 — Energy Solutions for North Carolina — which was passed with bipartisan support and signed by Gov. Cooper in October. It requires utilities to reduce carbon emissions by 70% by 2030 and achieve carbon neutrality by 2050 as part of efforts to combat climate change.

What are the energy industry’s workforce needs?

MCGOWAN: The oil-and-gas industry is dealing with an aging workforce and transitioning some workers to different jobs. Some offshore drilling operators, for example, are diversifying into offshore wind because many of their skills are applicable. Our industry continues to stress science, technology, engineering and math — STEM — education, which is important regardless of your chosen industry. Many groups work on the skilled trades piece, including the state’s community colleges. There are many opportunities in the energy industry for skilled folks who don’t have or want a four-year degree.

MUNDT: Toyota is creating about 1,800 jobs with its battery plant at the Greensboro-Randolph Megasite, and VinFast will create up to 7,500 at Triangle Innovation Point in Chatham County with the state’s first electric vehicle factory. We need to work with the community colleges local to these plants, ensuring a strong supply of trained workers. That actually begins by making middle and high school students aware of STEM-related careers, some of which don’t require a four-year degree. President Biden’s administration, for example, wants 30 gigawatts of offshore wind projects deployed by 2030. Meeting that goal will require thousands of welders to fabricate, ready and install the required equipment. There aren’t that many welders currently available. NC TOWERS, the recently assembled Taskforce for Offshore Wind Economic Resource Strategies, is working with experts to detail the training and credentialing needed to work in the offshore wind sector. It involves hundreds of job titles, many of which require skills that apply to other clean energy work, including EV manufacturing.

FUSCO: Our members have needed more line workers for a long time. The state’s community colleges have done a great job establishing a pre-apprenticeship program for high school seniors that address that need. They take a one-semester program that teaches the basic requirements of an electric utility or contractor, who then recruit them into an apprenticeship. It’s a great opportunity for a lucrative and stable job. Municipal utilities see needs for other skill sets. Smart infrastructure, for example, demands communications and systems engineers and data scientists and analysts. Along with technical advancements, operational efficiencies are driven by residential customer needs and preferences, which are shaped by experiences with other entities such as Amazon. We need people who can identify and collect them then develop programs targeted at specific market segments.

MAZZOLA: We need a diverse workforce — skilled tradespeople, professional engineers and everyone in between. EPIC prepares engineers. A major contractor with the U.S. Department of Energy, its mission is workforce development for energy companies clustered in and near Charlotte. People tell me that every time they turn around, there’s a UNC Charlotte trained engineer at work, whether at their company, a different company or starting their own company such as Ryan Kennedy and Atom Power, which is building the world’s first solid-state power distribution system for buildings.

MARTIN: North Carolina has a large military presence — fourth most by active-duty population nationwide. Don’t discount folks leaving the military and working within the energy industry. They bring a wealth of skills, from soft skills to technical skills, that translate well into the energy and manufacturing workforce. Additionally, N.C. State University has programs such as Industrial Expansion Solutions, which does process engineering for manufacturers. U.S. Department of Energy’s Industrial Assessment Center program in North Carolina recently shifted to EPIC and gives students hands-on experiences in the energy industry. These programs can help train the next generation and help transition military personnel into the workforce. That’s extremely important as the workforce needs remain high. 

What are the challenges of procuring energy to meet ESG goals?

MARTIN: ESG is unique to each energy consumer. Some commodity manufacturers might prioritize energy price, while those in other industries might rank sustainability or carbon reduction higher. Every manufacturer that I know has a carbon reduction goal. North Carolina’s natural gas system has been deregulated for many years. There are many opportunities within the natural gas system, for example, to procure based upon your corporate ESG. But we don’t see that as much with electricity. We’re forced many times to purchase renewable energy credits and carbon offsets, which only offer a short-term gain. Many companies want long-term opportunities to reduce their carbon footprint. Electricity’s source — coal, natural gas, nuclear, solar, wind, etc. — needs notation, so companies can choose power to meet their corporate goals, including ESG. I come from the electric utility sector. I’ve heard many arguments against electric competition for 20 years. Now I’m on the other side, and I see an opportunity. There must be a way that customers can make this happen by cooperating with electric utilities, so everyone wins.

FUSCO: Our members operate under one of two power supply arrangements. Some receive wholesale power as part of Duke’s portfolio, so House Bill 951 will impact them the most. They’ll see the same benefits and costs seen by Duke’s other North Carolina customers. The other utilities manage their own portfolio and have a large stake in nuclear power. If you look at the energy delivered to their customers, 96% to 98% is carbon free from Catawba nuclear stations.

Are certain regions in the state at an advantage or disadvantage in regards to the clean energy transition?

MUNDT: North Carolina as a whole has some significant advantages in the transition to a clean energy economy. The study that Commerce released last year found that the offshore wind industry and its supply chain can provide tens of thousands of family-sustaining jobs for North Carolinians and clean, renewable energy for hundreds of thousands of homes and businesses. When we think about this regionally, there will be large turbine components, such as blades, that will need to be manufactured in coastal communities.  And thousands of other components, such as cables, can be made throughout the state and transported to the coast. North Carolina’s central location and strong manufacturing presence means we could support offshore wind development along entire East Coast. That translates to more jobs statewide.

MARTIN: Natural gas, which emits less carbon than coal when burned, has been dubbed the bridge to the future. But many industries fear that bridge is out. We need natural gas to carry us through the energy transition, supplementing generation for the electric grid and offering an efficient means for heat processing. Eastern North Carolina’s natural gas supply is constrained. And it already is a constrained resource, which will cause price spikes. That will hurt the competitive edge enjoyed by North Carolina. So, we need to be careful with the balance and transition. We don’t want to build an energy system that lacks customers. We’ll electrify what we can, when it makes sense and can be done competitively. But we’ll need natural gas for a long time, so we need to ensure natural gas supplies are adequate. I recently had two conversations about that supply. One industrial customer in western North Carolina, for example, was ready to move forward on a corporate-approved expansion. But its natural gas supplier couldn’t meet its need. And I spoke with leaders from an eastern North Carolina city who won’t recruit industrial natural gas loads because they feel the capacity to serve them is lacking. Pipelines are trying to increase supply, but we need more than a bandage.

FUSCO: Electricity transmission constraints predate issues with renewables. They happen when generation is added or removed. So, as the energy supply portfolio changes, we must monitor the impact on energy delivery. A future impact will be electrification, specifically EVs. It won’t be with residential load, but Amazon, for example, placing a fleet of delivery EVs is significant. Or if a Sheetz convenience store wants to add an EV charging station, that’s a significant impact because it’s on a rural highway. It’s not starting with robust infrastructure. Duke provided a reasonable grid modernization proposal in the past, which was more than $10 billion. It’s significant for municipal utilities in terms of cost and the design and changes that need to be enacted. They’ve invested in their distribution systems to maintain reliability, but they haven’t needed to invest for different uses until now.

MORRISON: Nationwide, 80% of new generation is distributed resources — wind, solar and energy storage. That’s a very different sort of layout, and that’s happening today. 

The number of EVs is expected to increase. How will that impact the oil-and-gas industry?

MCGOWAN: There’s tremendous momentum around EV and battery factories, especially in the Southeast. Hyundai and Rivian for example, are building in Georgia, and Tennessee has three projects — an SK Innovation battery plant and Ford and Nissan factories. And Toyota and VinFast are in North Carolina. Our members are involved in the clean-energy transition and have a desire to compete with other private-sector entities on a level playing field. Shell, through Shell Recharge Solutions, and BP, through Amply Power, for example, are engaged in the EV space, and both had an interest in recent North Carolina offshore wind lease sales. Others are pursuing emerging technologies and energy sources as they look to diversify their business model. They know adaptation is required, and they will rise to the challenge. But the reality, at least in North Carolina, is liquid fuels will remain the basis for transportation for the foreseeable future. That’s particularly true on the commercial side, where EV replacements for heavy-duty vehicles are still emerging. 

What does the future hold for the energy industry?

MARTIN: Innovation comes from many places. Toyota started in textiles, making looms and sewing machines. Then it had a great idea to get into the car business. It has been a leader in hybrid technology for the transportation industry for more than 20 years. Think how much carbon it has saved. Don’t only look inside a cluster for the innovation it needs. Look for transferable skills from other clusters, too.

MAZZOLA: Despite energy transition being linked to changing resources, many people are under the impression that the grid will remain static. Consumers’ current role in the grid is nearly nonexistent: Turn on the light switch, and power flows. But that’ll change as more renewable energy resources are added. Consumers will become the smartest part of the smart grid. That’s reflected in Duke’s carbon-reduction plan. The utility says rates will shape use to better support carbon-free resources, such as increasing demand during the day, when solar power is generated. Some people think that other states and countries are ahead of North Carolina in achieving decarbonization because they’re attached to certain clean energy resources. But after reviewing Duke’s plan, I’d argue that North Carolina is committed to finding a reliable and affordable energy supply system that works for everyone. Other states and countries can’t claim that. EPIC works with traditional renewable energy and advanced nuclear construction, so we’ll have some dispatchable reliable zero-emission sources of energy by 2050. Nuclear does that best, and it’s recognized worldwide. Only a few places resist its use. North Carolina receives more than half of its electricity from some of the world’s finest nuclear power plants. EPIC also is working on power-system resiliency. It’s helping modernize the grid, for example, to reduce the economic impact of long-term loss of electricity caused by hurricanes. 

MUNDT: This is an exciting time in the energy industry in our state. North Carolina is looking at the resources that our continental shelf can provide for offshore wind, whether its fixed-base or floating technology. North Carolina has the greatest potential for offshore wind energy generation of any state on the East Coast. It’s a burgeoning opportunity. 

FUSCO: There are many opportunities to use conservation to reduce greenhouse gases. Utilities can align generation costs with the price it charges consumers. That can spur reductions in both, which are equally important. It leads to a win-win, especially when you talk about low-income consumers.

MCGOWAN: Emerging technologies and resources, such as hydrogen or offshore wind, will play larger roles. Duke’s plan expects small modular nuclear reactors to be a big part of meeting net-zero carbon emissions by 2050. Some pump hydro scenarios would be new to North Carolina. There also is renewable natural gas, which is collected from organic waste. It’s developing in the state and getting attention. It has many potential positive contributions, from environmental protection to a less carbon intensive energy source. Carbon capture is big, too. Natural gas generation will be key to meeting the state’s carbon reduction goals, and carbon capture could play a role. The state Utilities Commission, from conversations I’ve had, is interested in how it would look for North Carolina.

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