In North and South Carolina, Duke Energy’s Path to Net Zero Underpins Strong Solar OutlookTom Kline, 25 September 2020
North Carolina is second only behind California in total solar capacity in the United States1 so it is no surprise that twenty-eight of US Solar Fund’s (USF) plants are located here but recent news makes the outlook for solar in the region look brighter still.
Duke Energy, the largest generator and provider of electricity in North Carolina and South Carolina and the offtaker of USF North Carolina plants, is committed to halving emissions by 2030 and achieving net zero emissions by 20502. The energy group recently released a plan setting out six scenarios by which it could achieve these goals. This commitment and scenarios are set against an outlook of increasing energy demand, despite increasing energy efficiency savings and the reduction of supply due to the retirement of large-scale coal plants. Such a commitment from one of the largest providers of energy in the US is encouraging and underpins increasing demand for solar and higher electricity prices. This is good news for both existing and new renewables plants in the Carolinas.
Duke Energy operates utilities in six states and is one of the United States’ largest providers of energy with over 7 million customers. In North and South Carolina, the business operates Duke Energy Carolinas (DEC) and Duke Energy Progress (DEP), vertically integrated utilities serving a combined 3.2 million residential, commercial and industrial customers. Duke Energy, through these subsidiaries, is the contracted offtaker for eight of New Energy Solar’s plants, all located in North Carolina.
On 1 September this year Duke Energy lodged its integrated resource plan (IRP) for 2020 which details six scenarios by which DEP and DEC could reach Duke Energy’s stated goals of halving emissions by 2030 and achieving net-zero carbon by 20503.
The six scenarios vary depending on energy policy, the introduction of a price for carbon or not, and the rate of maturation of new, clean technologies. The six possible portfolios of generating resources contemplated in the six scenarios explore, over the 15-year planning horizon, the earliest practicable paths for coal retirement, acceleration of renewable technologies, integration of battery and pumped hydro storage, expanded energy efficiency and demand response programs and rates of deployment of new technology, primarily battery storage and small modular nuclear reactors.
Despite the effectiveness of Duke Energy’s existing demand management and progress generally in energy efficiency, the IRP assumes increasing electricity demand growth of 0.5% per annum over the next 15 years. This increase is based on an increase in customers of 560,000 in the Carolinas region. This projected population and household growth is above the national average and is anticipated to result in 1,650 MW of additional winter peak demand and cumulative annual energy consumption growth of 7,200 GWh between 2021 and 2035. The increasing demand profile is also despite the continued expansion of energy efficiency and demand reduction programs. Added to the forecast growth in demand, Duke Energy is planning to retire some of its less efficient generation resources over the course of the 15-year planning horizon. After accounting for the required reserve margin, Duke Energy expects to bring approximately 4,600 MW of new resources into service in North and South Carolina over the next 15 years.
To meet its near-term target of halving emissions by 2030, Duke Energy committed in 2019 to double its 8 GW of renewable generation across all its operations by 20254 and under the two base cases in the IRP, DEP and DEC will retire all of their roughly 7 GW of exclusively coal generation units by 2035. Of the six scenarios put forward in the IRP, two are aimed at meeting the 2030 target and four go beyond the near-term target.
Source: Duke Energy Carolinas Integrated Resource Plan 2020 Biennial Report page 8 of 405
"In terms of solar, the IRP shows that the use of solar by DEP and DEC is expected to more than double to 8,650 MW by 2035, even under the base case “without carbon policy” scenario. Under the “with carbon policy” base case this rises to 12.3 GW and up to 16.4 GW under the most aggressive scenario."