- Duke Energy’s rolling blackouts raises questions about their energy investment choices
- Renewable energy sources like wind and solar are generally cheaper and more reliable than fossil fuels
- “Energy independence” will require liberating energy consumers from global commodity markets
Duke Energy’s unannounced rolling blackouts this past Christmas Eve brought North Carolina’s energy choices to the attention of millions across the state. Investigations afterward revealed that the blackouts were caused by many of Duke Energy’s coal and natural gas plants seizing up and failing in cold weather, plunging households and businesses across the state into the dark. (See: What went wrong at Duke Energy?)
The blackouts come at an awkward time for Duke Energy, North Carolina’s regulated monopoly provider of electricity. The company is in the midst of a planned transition of its power generation base, stemming from the state’s Clean Energy Plan championed by Governor Cooper’s administration. Achieving the Cooper administration’s goals of reducing greenhouse gas emissions and achieving carbon neutrality by 2050 won’t be easy for Duke Energy, which overwhelmingly relies on fossil fuels like coal and gas for power generation. The company has put forth a plan, which the state utilities commission largely accepted, that would involve phasing out some of its dirtiest coal plants, but scaling up investments in natural gas-fired power instead.
But just a few weeks ago, the next shoe dropped: Duke Energy announced a whopping 18% rate hike for customers across the state, in order to – did you guess it? – make up for higher natural gas prices.
It’s clear by now that Duke Energy is pursuing an energy strategy that benefits the corporation’s shareholders and executives first and most, not the people (let alone the ratepayers) of North Carolina. There is a better, smarter way to “future-proof” North Carolina’s energy portfolio – and policymakers should take note.
The simple costs of energy
Different energy sources involve very different costs. These costs represent not only physical equipment and maintenance, but also the fuel those sources consume, if any. Technological progress and engineering expertise are also changing those costs every year, as newer technologies improve. Across the energy landscape, nowhere has that technological progress made a bigger impact than in renewables. One recent analysis of the relative changes in cost-per-megawatt of electricity put this progress into its sharpest possible focus.
Natural gas is Duke Energy’s preferred energy resource by far. Unfortunately, the cost profile of natural gas is affected strongly by the fuel supply it constantly needs to operate. In fact, natural gas-derived power has not become much more efficient over the last few decades, but the price of gas itself has gotten cheaper (until quite recently). While natural gas is also “cleaner” than other fossil fuel sources, it is still not “clean” per se. According to the U.S. Energy Information Agency, burning natural gas produces about 117 pounds of CO2 compared to an equivalent unit of coal (which produces 200 pounds of CO2), or fuel oil (160 pounds CO2). Natural gas is also methane, a hydrocarbon which has a powerfully damaging greenhouse impact when released into the atmosphere than plain carbon dioxide. Methane is about 25 times as potent at trapping heat in the atmosphere as CO2, which makes natural gas leaks a major concern.
Coal power is both dirty and inefficient, managing to combine the worst of both worlds. Worse, there is no known technological way to make coal-fired power any more efficient.
Nuclear energy has tremendous potential to be a source of clean, renewable power with a tiny carbon (and physical) footprint. Recent technological advances show great promise to produce large amounts of power affordably – but until these are realized, it’s still somewhat theoretical.
By comparison, solar photovoltaic and offshore wind, plus battery storage, offer obvious advantages to all the above energy sources. As demonstrated in the above chart, their cost curves have been on a sharp downward trend for decades, and now compare favorably with all conventional energy sources. They are widely understood, off-the-shelf, “tried and true” technologies with scores of industrial-scale operations worldwide: wind power supplies half of all electricity demand in Denmark, a quarter of all power in Texas and the entire national train system in the Netherlands. Solar power produces 17% of California’s total electricity generation, a figure which continues to climb every year.
As for battery storage, which is necessary to realize the greatest possible advantages of renewable energy sources, its cost curve is on a similar trajectory as solar, crashing 97% over the last few decades.
Any realistic energy plan – for North Carolina or anywhere else – will involve a mix of energy sources, as obsolete technologies are phased out and new ones brought online. But investment choices should embrace proven technologies that are oriented towards the future, and not held back by sunk-cost commitments to the past. Shackling North Carolina to relatively expensive fossil fuel-based energy subject to volatile fuel prices is a terrible plan – that is, unless you happen to be a significant Duke Energy shareholder. Moreover, a large majority of North Carolinians themselves agree:
Energy independence actually means "independence"
The unavoidable Achilles' heel of conventional fossil fuel energy sources like coal, oil and gas is that, at the end of the day, they are fuel. Not only do they require the constant, uninterrupted transfers of massive quantities of physical commodities from some places to others, involving innumerable profit-seeking intermediaries; but they are also subject to the rollercoaster of global commodities markets, forever pitting American consumers against buyers in Brazil, South Africa, China, Indonesia or a hundred other places in a bidding war for fuel. This situation can never be described as "independence."
Instead, renewable energy sources like solar and wind, as well as next-generation nuclear, offer a much more realistic version of "energy independence." What makes them "independent" is breaking the link between Americans' energy consumption and the whiplash of global energy markets. No recession or tinpot dictator's whim will ever change how much power one solar panel or wind turbine can produce, or at what price. Solar power, in particular, can be widely distributed for use almost anywhere in North Carolina, where we are blessed by geography with abundant sunshine, making it fault-tolerant and highly resistant to outages.
It's not hard to see why energy independence would scare the pants off of a profit-maximizing corporation like Duke Energy. But it's equally clear why it's in the best interest of North Carolina.