Leyline Renewable Capital participated in the N.C. Sustainable Energy Association’s Making Energy Work (MEW) conference November 2nd and 3rd in Raleigh, N.C. Erik Lensch, Leyline’s CEO, spoke at a session entitled “Hitting Our Carbon Reduction Mandates: Costs, Timing, and Business Models of the New Generation”. Moderated by Gennelle Wilson from Rocky Mountain Institute (RMI), the other panelists included, Venu Ghanta, Vice-President, Regulatory Affairs and Policy, Duke Energy; Dave Rogers, Deputy Director, Beyond Coal, Sierra Club; and, Chris Vlahoplus, Vlahoplus Consulting.
The session highlighted North Carolina’s carbon reduction mandate of 70 percent from 2005 levels by 2030. House Bill 951 is the first law in the Southeast with a carbon goal for power companies. In the Southeast’s vertically integrated utility environment, it stands out as a bipartisan effort between a Republican legislature and a Democratic governor.
Duke Energy discussed the Carbon Plan Integrated Resource Plan (“Carbon IRP”) sent to the N.C. Utilities Commission and offered three portfolio options with varying costs and impacts to meet the carbon mandate. The Commission will make a final decision on the Carbon IRP in May 2024. The third portfolio has the least cost path and most reliability, said Venu, with an “all of the above generation strategy.” However, that portfolio option does not meet carbon neutrality until 2035—five years after the HB 951 deadline. Duke Energy countered that increased demand for electric vehicles and additional manufacturing and industry moving into North Carolina over the next 15 years necessitated a longer time horizon.
Chris Vlahoplus with Vlahoplus Consulting spoke about a pathway for new nuclear development and how it stacks up against other clean options such as long duration energy storage or carbon capture. Noting that the United States is at a stalemate with nuclear energy (Vogtle in Georgia is the first commercial nuclear power and was fraught with cost overruns and delays), Chris sees small nuclear reactors having that same problem. Since nuclear power is a high-cost option, the question is who should take the risk as the first mover?
After those two speakers, the Sierra Club Beyond Coal Campaign’s Dave Rogers shared the Club’s recent publication “Dirty Truth About Utility Climate Pledges.” This report highlights the 50 utilities most invested in fossil fuels (Duke Energy included). These utilities collectively only commit to retire 35 percent of their coal, and simultaneously plan to add 53 GW of new natural gas. Dave mentioned that the final 10-20 percent of carbon reduction could be met by either long duration energy storage or offshore wind, but the near-term activities – the importance of reducing fossil fuels and replacing it with renewable energy is of particular concern for carbon reduction. Dave believes North Carolina’s deployment of clean energy is not on pace and scale to hit the 70 percent carbon mandate.
Erik Lensch introduced himself as someone active in the solar industry and witness to North Carolina’s solar growth. North Carolina’s installed solar capacity peaked at number 2 in the country, but Erik noted the attributes that brought North Carolina its national standing are gone. Other markets are now in play. For example, the open market in Texas does not have permitting for construction and operation of solar projects. The Northwest and New England also have favorable market conditions such as the clean peak standard.
The panel discussion then veered to the issues that are top of mind for people in clean energy. Erik said,
“There is no shortage of capital once your project is ready to be built. The Inflation Reduction Act and the U.S. Department of Energy loan program are investing more money than ever before in clean energy. But if it takes 5-10 years to finish a project because of the interconnection queue, then you are throwing a lot of money at something that is not solving the problem of how to connect projects to the grid”. Continuing he noted, “Low-cost capital supports development but if you have money just sitting there because we don't have the right infrastructure in place, we will not fulfill a carbon mandate”.
The discussion ended with community concerns. Dave noted the economic impact of coal asset retirement on host counties. For example, Duke Energy is the largest employer in Person and Roxboro, and as these assets are retired, they must be replaced with something else to keep the counties from economic distress. Erik offered the opportunity to repower brownfield sites as one option for coal communities. And then went on to explain the struggles some developers face with community misinformation about distributed energy resources. Erik has counseled developers on the importance of showing up in communities to explain their projects against these threats.
Leyline enjoyed participating on the panel discussion and looks forward to watching North Carolina’s continued progress in meeting its clean energy mandate.
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