Duke Energy's Carbon Plan: The Top TakeawaysÔøº

In October 2021, North Carolina passed HB 951: Energy Solutions for North Carolina. The new law requires the N.C. Utilities Commission (NCUC) to cut the state's emissions 70 percent by the year 2030, with carbon neutrality by 2050. In addition, investor-owned utilities willould need to submit plans to meet this goal.

As the state's largest utility, Duke Energy filed its carbon plan with the NCUC on May 16, 2022 and proposed four different options for curbing emissions (see the figure below). These options come in the form of power generation portfolios across Duke Energy's service territory. The company asked the NCUC to have flexibility to pursue any short-term investments common to all four portfolios. Other stakeholders will have two months to review, comment, and conduct their own emissions modeling. Then, the NCUC will issue the final carbon plan by year's end, which will be revisited every other year.

What are the takeaways from Duke Energy's proposed carbon plan? Most notably, all four plans would retire all coal capacity by 2035. In addition, they all pursue an "all of the above energy strategy," including 3 GW of new natural gas, up to 5,400 MW of energy storage, 1,800 MW of offshore wind, and up to 6.8 MW of solar. They also include the use of small modular nuclear reactors (SMR).

Importantly, only the first portfolio achieves the 70 percent reduction of carbon emissions by 2030 - the other three push the deadline to 2034. The figure below from the submitted plan compares the capacity allocations of each proposed portfolio.

Figure 1: Portfolio Snapshot to Achieve 70 Percent Interim Target (2030-34) from Duke Energy's Carbon Plan, Ch. 3: Portfolios, p.3

Duke Energy's proposal rests on two somewhat controversial issues: 3 GW of new natural gas capacity and the pursuit of SMRs as a new, yet unproven technology. The new natural gas capacity is contingent on an unknown, yet to be constructed, natural gas pipeline in the state. Opponents suggest that any new reliance on natural gas holds the risk of becoming a stranded asset, like coal. With regard to SMRs, there are not any operating in the United States, because they lack the threshold needed to meet the "least-cost" energy standard for new capacity.

Duke Energy's four scenarios range from $95.2 billion to $101.1 billion by 2050 in net present value. For ratepayers, Duke Energy's proposals would increase a residential customer's energy bill between $33-45 each month by 2035. Average annual rate increases would be between 1.9 and 2.5 percent each year for the next 13 years.

While Duke Energy does not have a preference of one proposal over another, the NCUC has a big task in determining how to achieve HB 951's stated goals. Nevertheless, North Carolina will undoubtedly see much more clean energy development in the coming years.

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