latest-news-headlines Market Intelligence /marketintelligence/en/news-insights/latest-news-headlines/target-zero-southern-must-complete-vogtle-nukes-offset-gas-to-cut-emissions-65204574 content esgSubNav
In This List

Target Zero: Southern must complete Vogtle nukes, offset gas to cut emissions

Blog

Insight Weekly: Labor market recovery hurdles; power market integration; nonbank M&A hunt

Blog

ESG & Technology: Impacts and Implications

Blog

Q&A: Q2'21 Power Forecast: Overheated Power Markets are Here – Who Wins, Who Loses, and Why?

Blog

Essential Energy Insights - October 2021


Target Zero: Southern must complete Vogtle nukes, offset gas to cut emissions

Southern Co.'s ability to meet its carbon reduction goals or accelerate its emissions cuts in line with U.S. President Joe Biden's ambitions likely hinges on substantial investments in renewables and the completion of the over-budget and delayed Alvin W. Vogtle nuclear expansion.

The company's dependence on gas-fired generation is another hurdle to clear to reach its emissions reduction goals.

Southern's gas plants contributed to about 52% of its 2019 carbon emissions, while coal accounted for the remaining 48%, an S&P Global Market Intelligence analysis shows.

SNL Image

Southern has been reducing the carbon intensity of its generating fleet, but its carbon intensity is still above the United States as a whole.

The company emitted 0.98 pounds of carbon dioxide per kWh in 2019, down from 1.17 pounds of CO2 emitted/KWh in 2015, according to S&P Global Market Intelligence data. The U.S. national average in 2019 fell to 0.86 pounds of CO2 emitted/kWh from 1.03 pounds of CO2 emitted/KWh in 2015.

In its net-zero report issued in September 2020, Southern notes that it reduced its greenhouse gas intensity by 40% since 2007.

"Importantly, despite a slight increase in total [greenhouse gas] emissions from 2017 to 2018, our [greenhouse gas] intensity decreased in 2018," the company wrote. "Our [greenhouse gas] intensity further decreased in 2019."

SNL Image

In April, Southern said it expects to achieve net-zero greenhouse gas emissions ahead of its 2050 target and has already reduced emissions by 52% from 2007 benchmark levels, exceeding an intermediate emissions reduction goal of 50% 2030.

Biden, meanwhile, has called for the nation to produce 100% carbon-free electricity by 2035 and achieve economywide net-zero emissions by 2050.

In its net-zero report, Southern points out that it has more than 9,000 MW of renewable resources across its regulated utilities and competitive power supplier subsidiary Southern Power Co. The company expects this to grow to about 14,000 MW by 2024.

Southern also notes that it has retired or converted 56 coal and oil units representing about 9,600 MW of generating capacity since 2007.

Southern Chairman, President and CEO Tom Fanning told shareholders in May that "the days of coal are numbered" as the company has pivoted to cleaner energy investments and is evaluating natural gas with carbon capture technology,

There are, however, not many success stories yet when it comes to carbon capture.

Southern subsidiary Mississippi Power Co.'s ill-fated coal gasification and carbon capture venture was called off in 2017 by Mississippi regulators to protect ratepayers against $6.4 billion in losses.

In addition to carbon capture, Southern sees emerging technologies such as renewable natural gas, "next generation nuclear" and hydrogen as key to its emissions reduction goals.

The company's net-zero report includes an illustrative 2050 nameplate capacity mix consisting of 10,100 MW of solar, 13,400 MW of solar with storage, 6,900 MW of nuclear, 12,600 MW of natural gas with carbon capture utilization and storage with 10,900 MW of natural gas without carbon capture. About 6,800 MW of generation would be tied to hydro, wind and distributed energy resources.

Southern also is exploring direct air capture technologies through the National Carbon Capture Center.

SNL Image

Vogtle woes

Southern plans to add more than 1,000 MW of nuclear generation to its mix in 2022 but the new Vogtle nuclear units are not without their own problems.

The first of two new 1,117-MW units at the nuclear plant is unlikely to begin generating electricity before the first quarter of 2022, Southern officials told Georgia state regulators in May.

The Georgia Public Service Commission in December 2017 approved November 2021 and November 2022 in-service dates for the two new units, designated as units 3 and 4, respectively.

Southern subsidiary Georgia Power Co. owns 45.7% of the Vogtle units.

Georgia Power's capital cost forecast for the project continues to increase, with the utility disclosing July 29 an additional $460 million expected, bringing its share to $9.2 billion.

SNL Image

Weaning off fossil fuels

Southern has ownership interests in three of the 10 largest coal plants operating in the United States and has not yet announced retirement plans for any of its largest coal-fired units. Among them is the 3,440-MW Scherer plant, operated by Georgia Power, the largest operating coal-fired power plant in the country.

Florida municipal utility JEA and NextEra Energy Inc. subsidiary Florida Power & Light Co. in 2020 reached a deal to shut down Scherer unit 4 by January 2022. This would retire about 860 MW of capacity.

The bulk of Southern's operating coal capacity was brought online between 1969 and 1992, the Market Intelligence analysis shows. This means even Southern's youngest coal plants are approaching potential retirement age.

By 2025, coal will still account for more than 20% of Southern's capacity mix.

Natural gas, meanwhile, will make up more than 50% of the company's capacity mix in 2025.

From 1994 through 2014, Southern added more than 18,000 MW of natural gas capacity and about 500 MW of nuclear and solar. Since 2014, the company has focused primarily on adding wind and solar generation, with less than 100 MW of natural gas capacity, the analysis shows.

"In order for this company to achieve net-zero by whatever time frame, whether it's 2050 or in working with the aspirations of the Biden administration to make that date 2035, it's very clear we're going to do it with an enormous penetration of renewables," Fanning told shareholders in May.

The company plans to have about 5,400 MW of renewable energy resources in its portfolio by the end of 2025, a spokesperson said. On July 6, Georgia Power received regulatory approval to pursue power purchase agreements for 970 MW of solar capacity from five projects.

SNL Image

Headquartered in Atlanta, Southern serves approximately 8.6 million electric and gas utility customers primarily in the Southeast. Its electric utility subsidiaries include Mississippi Power, Georgia Power and Alabama Power Co.

Southern also operates natural gas distribution, pipeline and wholesale companies in Virginia, Tennessee, Illinois, Florida and Georgia.

The company said it sees a "critical" role for natural gas in the energy future and its decarbonization plan when it comes to providing "clean, safe, reliable and affordable energy" to its customers. Southern also sees the fuel as essential for providing affordable and efficient heating in cold climates.

To counteract the emissions produced by natural gas distribution businesses and pipeline companies, Southern is exploring opportunities to utilize renewable natural gas and minimize fugitive methane emissions.

"[Southern Co. Gas'] fugitive methane emissions, inclusive of distribution and storage operations, as well as fugitive methane emissions from equity ownership interstate pipelines, represent less than 1% of Southern Company's Scope 1 [greenhouse gas] emissions," Southern wrote in its net-zero report.