Understanding North Carolina’s Energy Mix As Demand Grows

Thanks for joining us this morning. Today we’re returning to North Carolina’s energy future, a topic we’ve covered periodically in recent years, and one we’ll keep checking in on because it’s so critical to growth.
 
In January, Duke Energy revised sharply upward its expected power generation needs through 2030. The utility now expects demand growth up to eight times higher than it expected just two years ago. Houses, offices, factories, airports, EV charging stations – all of it requires more and more electricity. To meet that need, Duke Energy has filed plans with the Utilities Commission to expand just about every possible type of energy generating capacity it can conjure: wind, solar, natural gas, nuclear, and more.
 
But familiar opponents keep squeezing the utility to essentially bet the state’s future on renewable energy, rather than adopt an all-of-the-above energy mix. At the same time, the Biden Administration is promulgating rules that may force new natural gas plants to operate at as low as 40% capacity, even though they produce electricity with half the emissions as coal.
 
North Carolina simply cannot proceed with too little energy for its growing population. Something has to give.
 
Energy News Network, which is backed by organizations that advocate for clean energy, explained the brutal impacts of new federal rules in a recent article.
 
“The power plant rules promulgated by Biden’s Environmental Protection Agency don’t wrestle with reliability, ratepayer impacts or even methane leakage. They cover carbon dioxide pollution alone,” a recent article said. “That limit is based on carbon capture — in which carbon dioxide is sequestered underground rather than released into the atmosphere — a technology widely viewed as infeasible in North Carolina because of its geology.”
 
The net result is Duke “can only run [new planned gas plants] 40% of the time or less, beginning in 2032 and until technology becomes viable to slash their emissions.”
 
In April, the company put the stakes in stark terms: “The final rule presents significant challenges to customer reliability and affordability, as well as limits the potential of our ability to be a global leader in chips, artificial intelligence and advanced manufacturing,” a Duke Energy spokeswoman said in a statement.
 
The utility indicated recently it would press forward with its plans, as it sees no other viable route to hitting emissions reduction targets set in state law while also maintaining reliability and affordability.
 
Meanwhile, power producers in North Carolina and around the country are racing to figure a way to build new nuclear power capacity affordably. Other countries have done this – the cost to construct a new nuclear facility in South Korea, for instance, dropped by half between 1971 and 2008.
 
Environmental activist organizations aside, there seems to be a growing bipartisan consensus that nuclear power must be a major factor in the country’s energy production. Just this week, The Atlantic published a smart, matter-of-fact piece probing the landscape:
 
But just because it might one day be technically feasible to power the entire grid with renewables doesn’t mean it will ever be politically feasible. That’s because wind and solar require land—a lot of land. According to Princeton University’s “Net-Zero America” study, reaching net-zero emissions with renewables alone would involve placing solar panels on land equivalent to the area of Virginia and setting up wind farms spanning an area equivalent to Arkansas, Iowa, Kansas, Missouri, Nebraska, and Oklahoma combined. . . The case for nuclear, then, is less about technological possibilities than it is about political realities. Nuclear can generate the same amount of power while using 1/30th as much land as solar and about 1/200th as much as wind.
 
As for how to make the economics work, there are two schools of thought. One holds that if America forgot how to build nuclear because we stopped doing it, we just need to start back up. Pick a design, build lots of plants, and we’ll eventually get better. Other countries have done this with great success. . . The second school of thought is that we’ve been building nuclear reactors the wrong way all along. . .Lowering costs turns out to be much easier when a product is mass-produced on an assembly line than when it has to be built from scratch in the real world every single time. That’s why dozens of companies are now racing to build nuclear reactors that are, in a phrase I heard from multiple sources, ‘more like airplanes and less like airports.’
 
Indeed, Duke Energy has long considered the “second school of thought” as key to the state’s long-term energy mix. The company has been looking at small modular nuclear reactors for some time. Duke Energy CEO Lynn Good  told shareholders last year that Duke has “a leading role” in the technology. (TRC Nexus explored small modular reactors in depth in 2022)
 
In sum, obstacles to meeting North Carolina’s growing energy demands continue to mount. As a basic matter of math, natural gas and nuclear power must be a big part of the state’s energy mix. But new Biden Administration rules complicate plans for clean natural gas plants, and the path forward for affordable nuclear power remains uncertain. We’ll continue to report back as the landscape evolves.