This letter from NC WARN to Duke Energy provides new, hopeful and vitally important background about surging energy storage, the demise of fracked gas, and impacts on the climate crisis. Eight pieces of evidence – summarized after the short letter. Note Forbes Magazine citing Duke Energy as a high-risk laggard.
Duke Energy recently blocked evidentiary hearings over gas vs. renewables-with-storage. Today, NC WARN put Duke executives on notice; they can’t later say they didn’t know of the climate and financial damage caused by their huge gas expansion and their puny plan for renewables (8% of generation by 2033 in the Carolinas).
August 8, 2019
Lynn J. Good, President and CEO
Stephen G. De May, North Carolina President
Duke Energy Corporation
Charlotte, North Carolina
Subject: Filing prior notice that advances in renewables-with-storage make your huge fracked gas expansion an indefensible climate and financial risk that cannot be recovered from ratepayers
Dear Ms. Good,
Below are summaries* of eight recent news and research items adding to the overwhelming evidence that renewables paired with energy storage are ready to replace fossil fuels on our electricity grid and that the U.S. fracking boom is a house of cards. This is exceedingly hopeful for the world-wide struggle to slow the climate crisis before the narrowing window to avert runaway chaos closes. The evidence also shows that your continued building of fracked gas infrastructure puts your customers and shareholders in extreme climate and economic jeopardy.
In fact, Forbes Magazine singles out Duke Energy for swimming against the clean energy tide, putting investors at risk of holding “junk assets.” Other large utilities are taking the lead in renewables-with-storage, while Duke is among those collectively risking trillions in fracked gas power plants and projects such as your Atlantic Coast Pipeline and the Robeson County gas storage facility, which harm communities and cannot compete in the clean energy economy.
In the 2018 integrated resources dockets now before the N.C. Utilities Commission, NC WARN and other intervenors, including Attorney General Josh Stein, provided substantial data establishing that renewables-plus-storage are more cost effective and more reliable than Duke’s proposed 15-year gas expansion plans. So far you have persuaded regulators not to require you to defend your plans in an evidentiary hearing, but the writing is on the wall. National trends signal that even your monopoly control is increasingly fragile in the face of the overwhelming shift in the electricity industry that your predecessor, the late Jim Rogers, largely predicted in 2013.
The science, economics and utility trends are clear that further expansion of fracked gas infrastructure is an imprudent investment that both exacerbates the climate crisis and damages Duke’s future financial wellbeing. As the below-described articles summarize, the evidence is clear that Duke Energy should join its peers by emphasizing renewables-plus-storage. The evidence is so strong that NC WARN hereby puts Duke Energy on notice that further investment in natural gas is neither reasonable nor prudent, and therefore, Duke should be disallowed from recovering those investments from ratepayers – and profiting from them – in future rate proceedings. NC WARN and other parties will vehemently fight any cost recovery by Duke Energy for such shortsighted investments in natural gas.
As we have done many times over the years, we again call on you to join the increasingly dire fight to stem the ongoing and increasing damage caused by global climate disruption. Our case that such a move coincides with your investors’ economic interests has never been more obvious and profound.
cc. Governor Roy Cooper
Public Staff Executive Director Chris Ayers
*The Summaries (emphasis added):
Cheap Clean Energy Makes New Natural Gas A Risky Bet Utility Regulators Should Avoid Forbes, July 10, 2019: “Utilities across the U.S. are rapidly decarbonizing their generation fleets, but are diverging between two paths: Completely phasing out fossil fuels in favor of clean generation like Xcel Energy, or doubling down on new natural gas generation like Duke Energy.” Recent solar-plus-storage projects signal “that clean and dispatchable energy is available for less than the cost of new natural gas – a death-knell for new gas plants … regulators who approve massive investments in new gas plants could be facing a new wave of junk assets on utility books sooner rather than later. New natural gas is extremely risky in this context …”
Former Shale Gas CEO Says Fracking Revolution Has Been ‘A Disaster’ For Drillers, Investors Desmogblog, June 23, 2019: In the shale gas revolution, “spending outweighed income for a group of 29 large public shale gas companies by $6.7 billion in 2018, bringing the group’s 2010 to 2018 cash flow to a total of negative $181 billion.” Former CEO of drilling company EQT: “The shale gas revolution has frankly been an unmitigated disaster for any buy-and-hold investor in the shale gas industry with very few limited exceptions … Since 2015, there’s been 172 E&P company bankruptcies involving nearly a hundred billion dollars of debt … In a little more than a decade, most of these companies just destroyed a very large percentage of their companies’ value that they had at the beginning of the shale revolution … has long-term implications for the end users of natural gas. … There will be a reckoning and the only question is whether it happens in a controlled manner or whether it comes as an unexpected shock to the system.”
Giant batteries and cheap solar power are shoving fossil fuels off the grid Science, July 11, 2019: Los Angeles is closing a deal for a huge solar farm backed up by one of the world’s largest batteries, at a cost of 2 cents per kilowatt hour for the solar power and 1.3 cents per kWh for the battery. That’s cheaper than any power generated with fossil fuel … Precipitous price declines have already driven a shift toward renewables backed by battery storage. A March analysis of 7000 global storage projects showed utility-scale lithium battery costs fell by 76% since 2012, and by 35% in just the past 18 months. Prices are projected to drop 50% by 2030.
US renewable energy transition to move faster than anticipated by 2022: FERC report Utility Dive, July 9, 2019: “By June 2022, the pace of U.S. renewables growth is going to surpass fossil fuel growth by a significantly greater margin than what [federal regulators] had anticipated as recently as April, according to the commission’s May 2019 Energy Infrastructure Update.”
Natural Gas Beat Coal in the US. Will Renewables and Storage Soon Beat Natural Gas? World Resources Institute, July 8, 2019: “Natural gas faces intensifying pressure from wind and solar power combined with storage technologies … Utility regulators from [Arizona, California, Colorado, Indiana, Nevada and Virginia] have begun to question continued investments in new natural gas generation, instead turning to low cost wind and solar … Limiting global warming to 1.5 degrees C above preindustrial levels, which scientists say is necessary for preventing the worst impacts of climate change, requires the U.S. to achieve carbon neutrality by midcentury. This is only possible if power sector emissions fall close to zero.”
Existing power plants alone put us over 1.5 threshold unless closed early National Geographic, July 1, 2019 (from upcoming paper in Nature): “The fossil-fuel burning power plants, factories, vehicles, and buildings we’ve already built will, if operated normally over their full lifetimes, almost certainly warm the Earth more than the Paris Agreement climate target of 1.5 degrees Celsius.” Estimated lifetime emissions from existing plants are 78 billion metric tons above the maximum the IPCC says can be emitted to have a better than 50 percent chance of stabilizing temperatures at 1.5°C of warming.”
“Stranded” fossil fuel assets may prompt $4 trillion crisis Cosmos, June 5, 2018 (paper in Nature Climate Change): “The world could be heading for fiscal havoc on a scale not seen since the 2008 financial crisis, erasing as much as $US 4 trillion from the global economy, with fossil fuel industries at the centre of the upheaval, and the U.S., Russia and Canada tipped as big losers.”
Duke drags its feet on the energy transition PV Magazine, June 24, 2019: “Duke talks a good fight, and there is never a shortage of announcements from the power company’s PR department about their deployment of renewable energy and energy storage. Duke would even like to take credit for the rapid deployment of large-scale solar in North Carolina. The reality is that Duke fought the policy that enabled the deployment of that solar, tooth and nail. And following Duke disabling PURPA, the solar market in North Carolina has significantly contracted.”