Coal retirement evaluations, carbon dioxide discount plans, and analysis of all – sure, all – assets are actually firmly required by the North Carolina Utilities Commission. Duke Energy has till November to meet sure necessities, with the rest being filed in 2020.
John D. Wilson | August 28, 2019
The North Carolina Utility Commission has ordered Duke Energy to evaluate the potential to retire every one in all its coal crops within the state. This is a big victory for everybody who has advocated for clear energy within the Carolinas. While it would take extra proceedings to see what steps Duke Energy will really take, this can be a large turning level and will have an effect on different utilities within the Southeast.
For over a decade, SACE has labored carefully with our attorneys on the Southern Environmental Law Center and allies from plenty of organizations who’ve joined us from yr to yr, significantly Natural Resources Defense Council and the Sierra Club. Each time, now we have shared proof that Duke Energy’s Integrated Resource Plan – which lays out its plans to purchase and retire power crops – was not price-efficient. In latest years, the Commission has given perfunctory consideration to our proof, and basically accepted the utility’s built-in useful resource plans. This yr, the Commission has acted, exhibiting it would overview utility plans with a extra essential eye.
The rulings have an effect on Duke Energy Carolinas (DEC) and Duke Energy Progress (DEP). Although the jurisdiction of the Commission is proscribed to North Carolina, the utilities file the identical plans in South Carolina, so the impression can be felt in each states. Below, I summarize essentially the most impactful points and quote extensively from the complete order. The Commission’s order speaks effectively for itself, however I’ll add a little bit of commentary, explaining how the order has the potential to save prospects cash in addition to shifting in direction of a cleaner energy combine.
“To address the issue of economic retirement of aging coal plants, in the 2020 IRPs DEC and DEP shall include an analysis that removes any assumption that their coal-fired generating units will remain in the resource portfolio until they are fully depreciated. Instead, the utilities shall model the continued operation of these plants under least cost principles, including by way of competition with alternative new resources. In this exercise the full costs of disposal of coal combustion wastes shall be included in making any comparison with alternative resources. If such analysis concludes that continued operation of the utilities’ existing coal-fired units until they are fully depreciated is the least cost resource alternative, then the utilities 2020 IRPs shall separately model an alternative scenario premised on advanced retirement of one or more of such units and shall include in that alternative scenario an analysis of the difference in cost from the base case and preferred case scenarios.”
We submitted a report by the Applied Economics Clinic that confirmed how Duke Energy onerous-wired the projected lifespans of their present coal items. Duke Energy’s plans confirmed that their coal items would function “peaking” crops, working solely often at a really excessive common price. Based on the Commission’s order and my interpretation of the unbiased research which have been accomplished, Duke Energy could be very seemingly to advance the retirement date of a number of crops, leading to a decrease price plan that may profit prospects.
The Commission’s extra requirement is important. By requiring Duke Energy to examine superior retirement of coal crops, even these they declare are price-efficient, we can have the chance to see how a lot (or how little) it might price to advance retirement of extra items – maybe your entire fleet.
Carbon Dioxide Reduction Plans
The Commission requires DEC and DEP to submit up to date modeling by November 4th describing their “most present strategic plans to cut back carbon dioxide (CO2) emissions, together with:
(a) The implementation plan … that ends in the attainment of DEC’s and DEP’s most present targets for reductions in CO2 emissions.
(b) Modelling of the carbon discount targets within the draft Clean Energy Plan released … by the North Carolina Department of Environmental Quality and Duke’s present carbon discount plan. The modelling shouldn’t solely present the useful resource portfolio wanted to obtain these targets however also needs to present any price differentials (will increase or financial savings) from the bottom case and the popular case. In modelling price differentials, the plans ought to embody anticipated prices attributable to disposal of coal wastes from ongoing and continued operation of coal-fired crops and anticipated price financial savings attributable to earlier retirement of such crops.
(c) A comparability of DEC’s and DEP’s most present plans for CO2 emission reductions to the Governor’s Executive Order No. 80 which states that ‘The State of North Carolina will try to accomplish the next by 2025: a. Reduce statewide greenhouse fuel emissions
to 40% beneath 2005 ranges.’“
This is a big step ahead for Governor Cooper’s Executive Order No. 80. Compelling Duke Energy to submit high quality modeling of plans to meet the targets set out in his order and the draft Clean Energy Plan will display what is required to take severe motion on climate within the Carolinas.
Consideration of All Resources
The Commission requires that Duke Energy submit extra examinations and explanations of its evaluation of battery storage by November 4th, and that their 2020 IRPs “explicitly embody and display assessments of the advantages of bought power solicitations, different provide aspect assets, potential DSM/EE packages, and a complete set of potential useful resource choices and mixtures of useful resource choices … together with:
(a) An in depth dialogue and work plan for how Duke plans to tackle the 1,200 MW of expiring bought power contracts …
(b) A dialogue of the next assertion [from the Applied Economics Clinic report submitted by our organizations]: ‘The Companies’ evaluation of their capability and energy wants focuses on new useful resource choice whereas failing to evaluate different potential futures for present
assets. As a part of the event of the IRPs, the Companies carried out a quantitative evaluation of the useful resource choices obtainable to meet prospects’ future energy wants. This evaluation meant to produce a base case by a least price evaluation the place every firm’s system was optimized independently. However, the modeling train fails to take into account whether or not present assets will be cheaply changed with new assets. Therefore, Duke has not carried out a least-price evaluation to design its beneficial plans.’…
(d) A stand-alone evaluation of the associated fee effectiveness of a considerable improve in EE [energy efficiency] and DSM [demand-side management] …
(e) In 2009, … the Commission … reiterated the significance of Rule R8-60(d), which requires that the utilities ‘assess on an ongoing foundation the potential advantages of soliciting proposals from wholesale power suppliers and power entrepreneurs.‘ Provide a dialogue of the benefits and downsides of periodically issuing ‘all assets‘ RFPs so as to evaluate least price assets (each present and new) wanted to serve load.
This represents one other main change. What this implies is that the Commission expects Duke Energy to submit a useful resource plan that comprehensively evaluates the choices obtainable to it, and to look effectively past its personal enterprise mannequin for options. If one of the best plan for North Carolina means a shakeup at Duke Energy, then Duke Energy wants to begin shaking!
Other Issues: Load Forecast and Reserve Margin
While the Commission’s choices on Duke Energy’s load forecast and reserve margin are pretty wonky, they’re additionally vital. Duke Energy’s load forecast relies on questionable assumptions that underpin its declare that winter peak demand is the primary driver for future power technology wants. Also it has been utilizing this load forecast and different assumptions to recommend that it wants further reserve power technology capability, and that that reserve capability wants to be fuel-fueled for the winter. The Commission’s necessities on these points prolong for over two pages, and embody quite a few particular references to points that Duke glossed over or wouldn’t clarify in its filings, in addition to a reference to a report to FERC by one of many consultants Duke Energy used that’s considerably at odds with these points.
These technical points put solar power at an obstacle. While Duke Energy has raised some reputable points, it has marred its personal evaluation by placing a thumb on the size. When these points are sorted out, it’s our expectation that solar power can be proven to be an much more promising useful resource, worthy of continued funding.
While these two points are significantly wonky, I’m personally thrilled that they’re getting the eye that they deserve. I’m gratified that the Commission took discover of their significance and is directing Duke Energy to tackle these issues.