Utilities serving the US Southeast have resource plans that are out of line with federal carbon emissions-reduction targets due mainly to an ongoing reliance on, and plans to expand, gas capacity, according to a recent report.
The Southern Alliance for Clean Energy (SACE) released the fifth edition of its "Tracking Decarbonization in the Southeast" report Aug. 8. The group found that utilities' projected resource mixes across the region based on their integrated resource plans as of this summer show a decrease in coal, an increase in solar and a continued reliance on gas generation.
Gas generation is projected to increase by 2030 as utilities such as Duke Energy Corp., the Tennessee Valley Authority (TVA) and Dominion Energy South Carolina Inc. plan to add new gas-fired generation to their fleets.
Coal plant retirements and increased solar across the Southeast will drive most of the region's expected reductions in CO2 emissions from 2022 through 2030, according to the report, but the planned new gas-fired generation will prevent a steeper decline.
To track with the Biden administration's 2035 target for a clean electric grid, the Southeast's power sector emissions need to be close to 120 million tons by 2030, but the SACE projects that regional CO2 emissions from the sector will be more than double that. And since many utilities are not required to update their resource plans annually, the SACE noted, it could be years before the long-term emissions-reduction impacts of federal legislation such as the Inflation Reduction Act and the Bipartisan Infrastructure Law show up in those projections.
Florida requires a simplified 10-year site plan every year, North Carolina now requires a "Carbon Plan" every two years, South Carolina and Georgia each require integrated resource plans every three years, and the TVA completes an integrated resource plan every five years.
Duke
Duke's three Southeast utilities — Duke Energy Carolinas LLC, Duke Energy Progress LLC and Duke Energy Florida LLC — are off track to decarbonize by 2035 or even by 2050 due in large part to continued plans to replace coal with gas generation, according to the report.
Duke's two Carolinas utilities begin new integrated resource and carbon plans this fall, and the SACE said that if those rely more on clean energy to replace fossil generation, Duke will get closer to a path to zero. The report also noted that without influence from the Florida Public Service Commission or state lawmakers, the SACE does not expect major changes. In the Carolinas, Duke is proposing new gas power plants.
Southern
Georgia Power Co. underwent its last integrated resource plan process in 2022, which resulted in projections for reduced emissions over the long term due to expected coal reductions, fairly steady gas generation, the addition of Vogtle nuclear units 3 and 4, and an increase in solar generation. Georgia Power's current plans project steeper emissions reductions than Southern Co. subsidiaries Alabama Power Co. and Mississippi Power Co. Report authors described a "worrisome" flattening of emissions after 2030 that will make it difficult for Southern to achieve zero emissions by 2050.
NextEra
NextEra Energy Inc., parent company to Florida Power & Light Co., has experienced one of the most significant changes in emissions trajectory compared to the prior year's report. The resource plan that Florida Power & Light released in April included more solar and an increase in the pace of decarbonization with a goal of reaching "real zero" by 2045.
TVA
The TVA has the largest planned new-gas buildout of any utility in the US, according to the report. The federal power provider has committed to retiring its coal generation by 2035 but so far has proposed replacing coal plants with new gas generation and pipelines.
Flat load growth combined with new nuclear have given the TVA sharp declines in emissions since 2010, but its current plans do not continue that trend and leave it unlikely to decarbonize by 2050, let alone by 2035, the report said. The TVA is working on its 2024 integrated resource plan, with cycles every five years.
Dominion
Dominion Energy South Carolina is undergoing its integrated resource plan process this year, and the SACE report said that while the Dominion Energy Inc. utility has seen some improvements in its near-term emissions trajectory, it remains off track to decarbonize by 2050, at least under its current integrated resource plan, largely due to plans to add new fossil gas generation.
Dispatchable generation
Although utility executives have repeatedly cited a need for dispatchable generation as a key reason for pursuing additional gas resources, they have rarely backed up those assertions with modeling to show where and why they need specific dispatchable resources, Maggie Shober, the SACE's research director, told S&P Global Commodity Insights.
"One solution we've proposed is moving toward an all-source procurement model where traditional and nontraditional resources, like battery storage, are able to compete head to head to meet a specific need that the utility has," Shober said. "That need could be simply energy or capacity at a particular time of day/year or it could also include certain ancillary services or ramping capabilities."
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