How Utilities Stall Progress on Alternative Energy
A new report from the Environmental Working Group claims that Duke Energy, the nation’s largest utility, is holding back the transition away from fossil fuels.
Renewable energy is more affordable than ever. In the United States, building new wind and solar facilities is cheaper than keeping some existing coal-fired power plants running. But not all utilities are embracing renewables: According to a new report from the Environmental Working Group, a non-profit advocacy group, utilities across the country are actively trying to undermine improvements in energy efficiency and the transition away from fossil fuels. And, EWG notes, the nation’s largest electric utility, Duke Energy, is the worst offender.
In a sustainability report from 2018, Duke’s Chief Executive Officer Lynn Good wrote that the company “has been leading the charge to a cleaner energy future.” But in its filings with the Securities and Exchange Commission, Duke noted that legislation mandating efficiency gains and increases in customer-owned solar panels would lead to decreases in demand for electricity, threatening the company’s profits.
The EWG report found that the utility, which operates in North and South Carolina, Ohio, Indiana, Florida, and Kentucky, has been slow to invest in renewable energy resources. Just 2 percent of the electricity it generated last year came from renewable energy sources such as wind and solar, compared to a national average of 17 percent. By 2030, Duke plans to generate just 10 percent of its electricity from wind, solar, and hydropower—still less than the current national average. Meanwhile, 65 percent of the utility’s energy comes from fossil fuels, including 31 percent from coal.
Though that is changing: As the economics of coal has shifted, Duke has closed down many of its coal-fired power plants, replacing that capacity with natural gas, and slashing its emissions to 31 percent below 2005 levels, according to Duke spokesman Randy Wheeless. Wheeless says natural gas will continue to be a big component of the utility’s energy mix going forward, accounting for two-thirds of new generation capacity over the next 15 years.
But while natural gas burns cleaner than coal, EWG’s Grant Smith, a senior energy policy adviser and an author on the new report, says that it is “not a clean fuel by any stretch of the imagination with respect to its impact on climate change.”
“Using data from federal agencies and the solar industry, EWG calculated that, in each state Duke serves, except Florida, the potential of wind and solar power far exceeds electricity demand,” Smith and his co-author wrote in the report. “Technical potential isn’t necessarily economic potential, but even installing a small percentage of that potential would significantly alter the energy mix in Duke territories in favor of renewables.”
Wheeless called the EWG report a “hit piece, and a sloppy hit piece at that,” noting that the report erroneously claimed that the utility owned no solar power in Florida as of 2017. According to Wheeless, Duke has been scaling up its solar capacity in Florida for years, where it has 100 megawatts of solar operating now, and has announced plans to reach 700 MW of solar by 2022.
But Smith says that it’s “too little, too late.” “Duke went with natural gas first, when it could have done a mix of other resources,” Smith says. “It’s just started with solar in the Sunshine State, when the solar boom has been going on for at least eight or nine years. And so it really doesn’t change the narrative.”
The EWG report also criticized Duke’s adoption of wind energy technology. Duke has some 22 wind farms across the nation, according to Wheeless, but none of them serve the six states where the company operates. “One of the really bizarre things about Duke is they’ve invested in wind outside of their regulated territories to sell into the wholesale market, but they don’t own any wind in their regulated states,” Smith says. “I mean, wind has become the cheapest source of generation there is, followed by solar.”
Most of Duke’s wind farms are in states in the Mid-and Southwest, such as Texas, Oklahoma, Kansas, and Wyoming. “I think we’ve just seen that wind is better in those regions, and not so much in the eastern states that we serve,” Wheeless says. “I think solar is the big renewable energy player there, especially in the two Carolinas and in Florida. And I think that’s where we’re headed.”
“The biggest state we operate in is North Carolina,” Wheeless adds, “and in North Carolina, we are second in the nation for overall solar power, only behind California, and just announced 14 new projects last month.”
According to the EWG report, there is plenty of potential for wind energy in the eastern U.S. Offshore wind farms off the coast of North Carolina, for example, could generate five times what its power plants are currently producing, according to EWG. Offshore wind in South Carolina could produce eight times the state’s current capacity.
Still, Wheeless says that Duke is “embracing renewable energy. Our customers want more renewable energy; they want to have options.”
Despite the company’s stated goal, EWG found that Duke used its political clout to derail investments in energy efficiency and incentives for customer-owned solar installations. To that end, Duke has carried out what Smith calls a “frontal assault” on net metering—the process that allows customers with rooftop solar panels to get credits from utilities for the solar-generated power they send back to the grid. Duke successfully lobbied against legislation in South Carolina, for example, that would have removed limits on the number of customers who can participate in net metering in the state. In 2015, the utility worked to kill legislation that “would have made it easier for customers to borrow and pay back the cost of solar panels, and to stop the extension of a renewable energy tax credit,” according to the report.
Wheeless says the narrative that utilities are trying to stop solar is outdated, and points out that, in North Carolina, the utility is in the middle of a five-year, $62-million solar rebate program in the state, which gives money back to customers who install solar on the roof tops.
According to Smith, another way that Duke and other utilities cut into customer savings is by increasing the flat monthly rate that utilities charge their customers. Last year, the company’s subsidiaries in the Carolinas began seeking regulators’ approval to triple the flat monthly rate to nearly $30. Duke says the rate increases are primarily to pay for upgrades to the distribution system, and ensure that all customers are paying their fair share. Wheeless likened the relationship between customer-owned solar installations and the grid to electric vehicles and the roads: “In a lot of states, electric vehicles are a bit of an issue because the state’s upkeep of the roads and bridges depends on the gasoline tax,” Wheeless says. “And if you have people with electric vehicles who aren’t buying gasoline, they are not contributing to that upkeep.”
So far, regulators have resisted the steep price increases. But the rates have been climbing steadily for years; the monthly rate in North Carolina, for example, has doubled since 2013, according to EWG. In general, rate hikes discourage customers from investing in renewables or energy efficiency improvements, according to Smith, because they don’t see as many savings after the high upfront costs. “It’s a way to embed inefficiencies into the system,” Smith says, “which is how they make how they make their money.”
It’s not just Duke, the EWG authors note: “Utilities attempt this, essentially, across the board,” Smith says.
Lawmakers in several states are increasing oversight of utilities. South Carolina, for example, passed a Utility Ratepayer Protection package meant to increase oversight and protect customers from unfair rate hikes, and regulators in the state blocked Duke from recovering more than $600 million from its customers to clean up the Dan River coal ash spill from 2014.
“We’re seeing a backlash against the influence peddling, the undermining of customer savings, the undermining of actually the entire economy,” Smith says. “Renewables and efficiency create lots of jobs and local and state revenue compared to conventional sources of power.”
Other utilities are more fully embracing renewables: Xcel Energy, a Minneapolis-based utility that serves some 3.6 million customers in eight states, for example, became the first major U.S. utility to commit to going carbon-free by 2050 last year. Many smaller utilities quickly followed suit with more ambitious plans to decarbonize even sooner.