Lighting the Path: Meeting North Carolina’s Coming Energy Needs

North Carolina has tremendously benefited from tax reforms begun over a decade ago. Energy efficiency mandates that began in the late 2000s and continued into the early 2010s created an energy cushion capable of absorbing the influx of new businesses and residents. If utilities fail to keep pace with growing electricity demand, however, then continued economic growth will inevitably crash into an energy supply wall.

North Carolina’s unique geography has created an equally unique energy grid. Through mergers and acquisitions, Duke Energy has become the largest provider of electricity in the state, responsible for servicing densely populated, power-hungry metros and isolated, rural communities. Duke Energy supplies more than 90 percent of North Carolina’s retail electricity sales. Dominion Energy, Tennessee Valley Authority, municipal utilities, electric cooperatives, and businesses with independent generation are marginal suppliers of electricity to North Carolina’s grid. Consequently, Duke Energy will be largely responsible for meeting North Carolina’s emissions reduction targets.

Meeting House Bill (HB) 951’s state-mandated emissions reduction targets, given North Carolina’s unique geography and lack of in-state energy resources, will require costly energy solutions that will increase utility bills for businesses and households across North Carolina. Aware of the inevitable rate increases concomitant with building energy generation and transmission infrastructure, the North Carolina
Utilities Commission made it clear to Duke Energy that it is to “investigate and doggedly pursue every opportunity to apply downward pressure on rates and to optimize the use of the electric system to reduce system average cost.”

Fortunately, Duke Energy has already significantly reduced carbon dioxide (CO₂) emissions by retiring and upgrading coal-fired power plants and running them on cleaner-burning natural gas. As part of the Carbon Plan, Duke Energy has already committed to permanently retiring its six remaining coal-fired power plants by 2035. How Duke Energy decides to replace the baseload capacity generated by these coal plants while simultaneously increasing total generation capacity to meet North Carolina’s growing demand for energy will ultimately determine how much North Carolinians’ monthly utility bills will rise.

Under HB 951, by 2030 or shortly thereafter, utilities are required to have reduced emissions by 70 percent below 2005 levels, and by 2050 they must achieve total carbon neutrality. Doing so will require the largest expansion of electric infrastructure since electrification began in the early 1920s. What path utilities take to reconcile North Carolina’s decarbonization requirements with the state’s energy needs will ultimately determine the prices consumers will pay for energy, set the limits for North Carolina’s economic growth and development, and influence the amount of infrastructure needed to serve electricity customers reliably.

The first part of this report takes stock of North Carolina’s energy infrastructure.It looks at trends in state electricity demand and in-state electricity generation. It compares capacity factors and emissions of different electricity sources in North Carolina and gives an overview ofthem. It discusses the Carbon Plan, electricity markets, and transmission infrastructure. Finally, it examines natural gas: its transportation, its rise as a primary fuel, and its storage.

The next two sections of this report compare two different scenarios to achieve carbon neutrality by 2050 while meeting North Carolina’s growing energy needs. Always On Energy Research (AOER) modeled both scenarios to determine the amount of power plant capacity and associated energy infrastructure each would need to meet the requirements of HB 951.

Favored by Gov. Roy Cooper, his environmentalist allies, and solar and wind advocates, the Renewable Scenario would require a resource mix that relies on onshore wind, offshore wind, solar, and battery storage, while maintaining North Carolina’s existing nuclear and hydroelectric power plants. This resource portfolio would require a nearly tenfold increase in energy infrastructure and consume much more land than the current electric grid. It would require a 426-fold increase in onshore wind capacity (more than twice the amount of onshore wind capacity installed in the state of Texas) and a 21-fold increase in solar capacity (nearly double the amount of solar capacity currently installed in the rest of the United States). It would also require nearly 13 times as much four-hour battery capacity as the entire United States. All this solar and onshore wind would require enormous amounts of land, especially in comparison with what would be needed by new nuclear facilities.

By contrast, the Nuclear Scenario would require a resource mix that utilizes the built-in flexibility in HB 951 that allows existing coal and natural gas plants to remain online as needed to ensure reliability and keep electricity prices low while new nuclear power plants are constructed to replace them. Compared with the Renewable Scenario, this resource portfolio would produce far more electricity with far less energy infrastructure. The land needed by all this new nuclear power would amount to just 38 percent of the land consumed by all of North Carolina’s existing solar facilities. As a result, the Nuclear Scenario would require fewer new power plants and less transmission infrastructure and would consume much less land than the Renewable Scenario.

The final section of this report estimates the cost to North Carolinians of reaching the governor’s zero-emissions vehicle (ZEV) goals stated in Executive Order (EO) 246 of registering 1.25 million expensive ZEVs by 2030 and having half of all new vehicle sales be ZEVs. AOER estimates that the total cost — which would include getting North Carolina’s financial infrastructure, roads and highways, households, and electrical infrastructure ready for so many ZEVs — would fall between $16.5 billion and $30.5 billion. Furthermore, just over the next seven years EO 246 would entail North Carolinian drivers having to spend an extra $19.0 billion to $20.5 billion more to purchase more expensive ZEVs instead of conventional, gasoline-powered cars and diesel trucks.