John Locke Update / Research Brief

Energy Crossroads, Part 2: Reliable, Cost-Effective Alternatives to Cooper’s Disastrous Plan

posted on in Economics, Economics & Environment, Energy & Environment, Law & Regulation, Rights & Regulation
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  • By favoring wind and solar generation with battery storage to the exclusion of viable, dependable sources, Gov. Cooper’s “Clean Energy Plan” would be extremely expensive, costing consumers an average of $411 per year more for electricity
  • It would cost $123.86 per metric ton of CO2 emissions reduced and take up more land than the state’s three largest counties combined
  • Alternatives provided for Locke by energy researcher Jordan McGillis showed that emissions reductions could be achieved via more natural gas or nuclear facilities at much less expense to consumers and with a miniscule environmental footprint

This series discusses analysis and findings of “Energy Crossroads: Exploring North Carolina’s Two Energy Futures” by Jordan McGillis, deputy director of policy at the Institute for Energy Research. The first part showed that Gov. Roy Cooper’s “Clean Energy Plan” (CEP) is unnecessary, given that North Carolina has long been enjoying falling greenhouse gas (GHG) emissions from electricity generation. It then discussed Duke Energy’s Integrated Resource Plan Portfolio D, which most aligns with Cooper and his Department of Environmental Quality’s (DEQ) obvious preference for wind and solar generation and battery backup. This plan not only threatens enormous costs to consumers, but it also harbors other environmental, supply-chain, ecological, and land-use costs.

This part will discuss McGillis’ alternatives to Duke’s Portfolio D. They offer reductions in GHG emissions without such jarring consumer and environmental costs.

Based on modeling by the Center for the American Experiment, Portfolio D’s costs include $100.5 billion to Duke’s customers plus another $7.5 billion for transmission investment. They portend average annual costs to residential customers above the baseline (status quo assumption) of $411 from 2020 to 2051. The average annual increase on commercial customers would be $1,705 and on industrial customers would be $48,553 from 2020 to 2051.

It would also cost North Carolina ratepayers $123.86 per metric ton of carbon dioxide (CO2) emissions reduced.

McGillis writes:

To reiterate, wind, solar, and storage cost North Carolina more than half of its electricity operating costs in this scenario, but never account for even 40 percent of the annual electricity generation. Further, it should be noted that the operation of natural gas as backup for the intermittent sources dramatically reduces the efficiency of the resource and inflating costs.

Given the reliance on wind and solar generation and battery storage in Portfolio D, reflective of Cooper and DEQ’s generation preferences, it would also require an enormous ecological footprint: over 3,373 square miles of land, bigger than the state’s three largest counties combined.

There simply must be alternatives to that. McGillis offers three, one relying more on natural gas, one on new nuclear capacity, and one on a specific new form of nuclear generator used in South Korea and the United Arab Emirates that was recently certified by the U.S. Nuclear Regulatory Commission.

The Natural Gas scenario

Under this scenario, new natural gas capacity would replace retired coal generation as opposed to “massive investment in wind, solar, and battery storage.”

This scenario would increase annual costs to residential consumers by $1.58 above the baseline; to commercial customers, $5.71; and industrial customers, $162.71. As McGillis noted, “the Portfolio D Scenario cost increases would be 300 times higher than those of the Natural Gas Scenario.”

By replacing productive capacity (coal) with equally productive capacity (natural gas) as opposed to much less productive capacity (wind and solar), this scenario would cost consumers only 79 cents per metric ton of CO2 emissions reduced. It would not, however, achieve the full 70% reduction in GHG emissions sought by the Cooper administration.

The EIA Nuclear scenario

Under this scenario, new nuclear generation would replace retired coal generation. The assumptions concerning this new nuclear generation come from the U.S. Energy Information Administration (EIA). This scenario would be costlier to ratepayers than the natural gas scenario, but it would still be significantly cheaper than Portfolio D and also achieve the 70% reduction in GHG gases.

This scenario would increase annual costs to residential consumers by $267 above the baseline; to commercial customers, $1,109; and industrial customers, $31,570. Those costs are significantly higher than they would be under the natural gas assumption, but they are also measurably lower than under Portfolio D.

Also, the EIA Nuclear scenario would cost consumers $86.83 per metric ton of CO2 emissions reduced, significantly lower than Portfolio D’s cost of $123.86.

The APR1400 Nuclear scenario

Under this scenario, pioneering technology in nuclear generation would replace retired coal generation. Specifically, this would be the APR1400 nuclear reactor developed by a Korean energy company and now employed in South Korea and the United Arab Emirates. The APR1400 is the first foreign-designed nuclear reactor to be granted certification by the U.S. Nuclear Regulatory Commission.

This scenario would also be costlier to ratepayers than the natural gas scenario, less costly than the EIA nuclear scenario, and therefore quite significantly cheaper than Portfolio D. It would notably bring about a 77% reduction in GHG gases and the largest reduction in CO2 emissions than under any other scenario. This scenario would increase annual costs to residential consumers by $135 above the baseline; to commercial customers, $561; and industrial customers, $15,974.

Also, the APR1400 scenario would cost consumers only $40.11 per metric ton of CO2 emissions reduced.

Here are graphs from McGillis’ report showing these comparisons:

One final comparison: Land use under each scenario

Part 1 of this series discussed the estimates in McGillis’ paper for how much land each generation source requires to produce the same amount of electricity (1,000 megawatts). For nuclear, it would require only a half a square mile; natural gas would need only two square miles (for combined cycle) or three (for combustion turbine). Solar, however, would need 61 square miles; offshore wind, 267 square miles; and onshore wind, 576 square miles.

This wide disparity in land use becomes critical given Cooper and DEQ’s policy preference for shifting electricity provision over time to solar and wind facilities, which would be most realized in Duke’s Portfolio D scenario. Cooper’s preference would gobble up so much natural habitat for electricity provision that in total area — over 3,373 square miles — it would outstrip that of the three largest counties in the state.

In stark contrast, McGillis’ three alternative scenarios would each barely register. The Natural Gas scenario would require 12.76 square miles of land; the EIA Nuclear scenario, 5.43; and the APR1400 Nuclear scenario, 4.53.

Again, it should not surprise that the more efficient producers of electricity are also more efficient in land use.

Noting North Carolina’s already stellar record of reducing GHG emissions in electricity provision, McGillis concludes:

The Clean Energy Plan jeopardizes the reliability and affordability of North Carolina’s electricity. Pursuing the Clean Energy Plan via Duke Energy’s Portfolio D would cause a direct cost increase of more than $400 annually for each North Carolina household. …

The Clean Energy Plan’s reliance on wind, solar, and battery storage entails significant environmental, supply chain, and land-use risks.

Nuclear energy and natural gas provide North Carolina with reliable, cost-effective pathways to achieve its emissions-reduction goals.

Given the vital importance of electricity costs to poor families and small businesses, let alone to the production of every good and service in the state, shouldn’t the policy of North Carolina continue to be what’s already the law of the land: least-cost, reliable electricity at the flip of the switch? We have shown, North Carolina’s history proves, and McGillis’ paper demonstrates that emissions reductions can happen while protecting ratepayers from unnecessary price hikes — as long as utilities are still able to choose efficient, reliable low-emissions (natural gas) and zero-emissions (nuclear) sources.

Jon Sanders is an economist studying state regulations, that spreading kudzu of invasive government and unintended consequences. Serving as Senior Fellow of Regulatory Studies and also Research Editor at the John Locke Foundation, Jon gets in the weeds of all… ...

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