Carbon Plan Order Out – Mixed Results for Clean Energy

The North Carolina Utilities Commission (NCUC) issued its most recent Carbon Plan Integrated Resource Plan (IRP) Order on November 1, 2024. The process was directed by House Bill 951: Energy Solutions for North Carolina (HB951), which required the NCUC to take "all reasonable steps" to achieve 70% carbon emissions reductions from 2005 levels by 2030 and achieve carbon neutrality by 2050. This article summarizes the 2024 Carbon Plan IRP Order and provides an overview of the next steps.  

What is the Carbon Plan? 

The Carbon Plan “cycle” dates back to 2021, when the North Carolina General Assembly and Gov. Roy Cooper reached a bipartisan agreement that established carbon emissions reduction mandates for North Carolina — the first for a state in the Southeast. HB951 requires Duke Energy to reduce carbon emissions from power generation by 70% by 2030 and to achieve net-zero emissions by 2050. To reach the mandates, the NCUC was required to develop a Carbon Plan to specify how best to achieve the emissions reductions, to do so the NCUC directed Duke Energy, which has more than 3.3 million electric accounts in North Carolina, to file resource portfolios outlining potential pathways. The NCUC also required Duke Energy to conduct at least three stakeholder convenings with a diverse mix of North Carolinians in developing these pathways. The Carbon Plan was in addition to the IRP that the utility was required to update every two years, which outlines Duke Energy’s proposal to match future energy supply and demand. 

Duke Energy filed its initial Carbon Plan in May 2022, and the Commission finalized its first Carbon Plan order in December 2022. In its first Carbon Plan order, the Commission combined the Carbon Plan and IRP processes into one proceeding (the “CPIRP”). The plan is revisited every two years, thus creating a continuous cycle of Duke Energy proposing a plan, stakeholders and intervenors examining the plan and proposing recommendations to improve the plan, and the Commission reviewing all the evidence supporting or opposing the plan to ultimately approve a plan.   

What is NCSEA’s role? 

So where does NCSEA fit into all of this? NCSEA and our partners participate in the stakeholder processes prior to Duke Energy filing its CPIRP application and we scour Duke Energy’s filed CPIRP application to respond, raise concerns about the future of electricity generation, and recommend sustainable energy options. In this proceeding, Duke Energy also updated its load forecast, necessitating supplemental modeling and analysis. 

In the latest CPIRP process, NCSEA and the Southern Environmental Law Center, on behalf of the Southern Alliance for Clean Energy, Natural Resources Defense Council, and Sierra Club (“SACE, et al.”), jointly raised concerns that Duke Energy’s proposed supplemental CPIRP and its preferred pathway, Portfolio P3 Fall Base, did not comply with HB951. The concerns with the proposed supplemental CPIRP include Duke Energy proposing to delay achieving the 70% emissions reduction mandate beyond 2030, delaying coal plant retirements and proposing to replace coal plants with significant amounts of new gas generation facilities, and incorporating overly restrictive limits in its analysis on the amount of new solar and storage to be deployed in the near term action plan, among other things.  

NCSEA prepared expert witness testimony outlining Duke Energy’s inconsistent strategy in pursuing certain long-lead generation resources. Long-lead generation resources like offshore wind and advanced nuclear technologies (e.g., small modular reactors) take significantly longer to design, develop, and deploy compared to other energy resources. Particularly, NCSEA was concerned that Duke Energy’s CPIRP prioritized pursuing advanced nuclear reactors, which are not commercially available and operating in the U.S., over a proven, mature resource such as offshore wind. NCSEA’s expert witnesses concluded that there is no distinct benefit to not pursuing offshore wind in parallel with advanced nuclear reactors. In fact, that strategy increases risk for Duke Energy in its ability to reliably serve its customers in a high-load forecast scenario. 

NCSEA and SACE, et al. jointly asked NCUC to adjust Duke Energy’s proposed plan including, but not limited to, the following:  

• Requiring Duke Energy to explore other clean energy alternatives — such as offshore wind — to reliably serve the increased load forecast rather than over-relying on the proposed gas generation build-out and the deployment of expensive, long-lead generation facilities that are not commercially available;  

• Requiring Duke Energy to pursue further multi-value strategic transmission planning to help overcome any interconnection limits and deploy more solar and battery storage resources, in addition to supporting the proposed Red Zone Expansion Projects (transmission capacity additions to enable new solar in an area of the state with insufficient transmission infrastructure);  

• Requiring Duke Energy to conduct an updated Resource Adequacy Study to justify the increase in the planning reserve margin from 17% to 22%, and investigate sharing resources across neighboring utility service territories as outlined in E-100 Sub 190 Post-Hearing Brief of NCSEA in Support of Agreement and Stipulation of Partial Settlement and E-100 Sub 190 Partial Proposed Order of CIGFUR, CUCA, CEBA, and NCSEA; and  

• Requiring Duke Energy to engage with stakeholders to model and analyze distributed energy resources in its long-term planning and develop plans for future CPIRP proceedings. 

“NCSEA and our joint collaborators asked the Commission not to approve Duke Energy’s preferred pathway 3, as its recommended portfolio does not comply with HB951’s statutory timeline for carbon emission reductions and is overly reliant on carbon-emitting resources and expensive, generation technologies that are not commercially scaled,” said Senior Regulatory Counsel, Justin Somelofske. 

NCUC’s Carbon Plan Order 

The NCUC issued its 2024 Carbon Plan IRP Order  on November 1, 2024.  

Here are some of the big takeaways from the order: 

Deadline for carbon reduction goals 

The NCUC agreed with Duke Energy’s claim that it was unable to meet the interim 70% carbon emissions reductions by 2030 while keeping the energy system reliable. Therefore, NCUC waived the requirement for Duke Energy to model scenarios achieving 70% emissions reductions by 2030 in future CPIRPs and ordered the utility to take all reasonable steps to meet the reduction by the “earliest date possible.” NCUC didn’t issue a specific requirement for an interim target date.  

“There’s a lot to celebrate in this order, including significant additions of solar, battery storage, and onshore wind, which reflects the value these resources bring to ratepayers across the state from a cost-savings and reliability perspective,” said NCSEA Executive Director Matt Abele. “However, on the other end, it’s concerning to see a movement away from the intention of House Bill 951 to achieve 70% carbon emissions reductions in the electricity sector by 2030. This order leaves the door open for Duke Energy to stall on carbon compliance in order to develop additional resources, like natural gas, that largely benefit their shareholders over ratepayers.” 

Additional clean energy resources 

The NCUC accepted Duke Energy’s additional proposed clean energy buildout, including: 

• Solar: 3,460 megawatts (MW) of new solar generation, 6,700 MW total by 2031 

• Battery: 1,100 MW of battery energy storage, 2,700 MW total by 2031 

• Onshore Wind: 1,200 MW of onshore wind in operation by 2033, including at least 300 MW in operation by 2031 

PowerPair rooftop solar plus storage program 

The order expedited a new nonresidential PowerPair program, which is designed to lower the cost of new solar and battery storage systems. The Order also required Duke Energy to model the existing residential PowerPair program as a selectable resource in at least one modeling sensitivity. This will allow PowerPair to be economically compared alongside other supply side resources Duke Energy already models rather than simply being used as a load reduction modifier based on existing program parameters.  

New gas plants 

Although Duke Energy’s and the Public Staff’s modeling identified the need for a total of five proposed large gas plants to reliably serve customers, the Commission determined that not all the plants need to be constructed at this time.  

“This delay, to reassess and reevaluate in subsequent proceedings protects customers from paying for more fossil fuel resources than may be necessary,” Somelofske said. “As technologies for cleaner energy options advance and costs continue to fall, Duke Energy will need to further prove these gas plants are still needed.” 

The Commission concluded that the approved gas plants in Duke Energy’s and Public Staff’s modeling can operate for 35 years.  

“The Commission concluded that Duke Energy's strategy, which includes adding significant amounts of solar, energy storage, and onshore wind, too, reasonably balanced the volatility in the price for fuel to operate these gas plants and the need to reliably serve customers while reducing emissions,” Somelofske said. “NCSEA will continue to advocate for additional renewable energy resources like offshore wind to be approved in future CPIRPs to further reduce the need for even more gas plants and protect customers from potential future gas rate hikes.” 

Offshore wind 

The order did not authorize early-development costs for offshore wind even though Duke Energy identified offshore wind as an economic long-lead resource in its proposed plan. But the NCUC did acknowledge that offshore wind can be cost-competitive and provide significant reliability benefits. Accordingly, the NCUC approved Duke Energy’s request for $1.4 million to issue an Acquisition Request for Information (ARFI) to further study the feasibility and costs of procuring offshore wind. The NCUC required the ARFI to be issued within 90 days of the issuance of the final order — January 30, 2025 — for as many as 2,400 MW of offshore wind to achieve commercial operation by 2035, including 800 to 1,100 MW to achieve commercial operation by 2034. The NCUC also agreed with intervenors that Duke Energy’s proposed ARFI required more detail to provide certainty for the offshore wind developers and that it did not adequately leverage the experience and expertise of the offshore wind developers. Accordingly, the NCUC also required Duke Energy to engage with the offshore wind developers prior to issuing the ARFI to develop defined procurement structures, contractual structures, and procurement schedules for offshore wind. 

“While the Commission noted that the modeling conducted by Duke Energy and the Public Staff demonstrates that offshore wind is an economic resource option and potentially part of a least-cost pathway to achieving the interim target, it’s disappointing to see there was not an authorization of early development costs,” Somelofske said. “North Carolina has one of the best available wind resource capacities along the East Coast, yet this order does little to jumpstart early development activities necessary to deploy this commercially proven technology in favor of further study and analysis. All the while, other more speculative and expensive technologies were given the greenlight.”  

Next steps
Duke Energy will file the next iterations of the CPIRP no later than September 1, 2025, and it will be reviewed throughout 2026. 

NCSEA will continue to provide updates on the various provisions and near-term actions outlined in this order and keep the energy community abreast of the next steps.   

For additional analysis on the 2024 NC Utilities Commission Carbon Plan order take a listen to Episode 119 of NCSEA’s Squeaky Clean Podcast or watch our webinar update.