The latest integrated resource plan (IRP) of Progress Energy Carolinas (PEC) includes purchased power from renewables such as solar, biomass, and municipal solid waste-landfill gas (MSW-LFG) facilities.
“While these purchase contracts are targeted at adding renewable energy to PEC’s portfolio, a limited number of these renewable resources also provide capacity to the resource plan,” said the plan, filed Oct. 31 at the South Carolina Public Service Commission. “PEC is actively engaged in a variety of projects to develop new alternative sources of energy, including solar, storage, biomass, and landfill gas technologies. Renewables will consistently be evaluated for their ability to meet renewable energy requirements and resource planning needs on a case-by-case basis and included as a resource as appropriate.”
PEC, a unit of Duke Energy (NYSE: DUK), filed this plan with the South Carolina commission separately from an IRP filed recently by new sister company Duke Energy Carolinas. The July merger of the companies came too late for a coordinated IRP covering both companies to be written.
Hydro generation has been a valuable and significant part of the generating fleet for the Carolinas, PEC noted. But the potential for additional hydro generation on a commercially viable scale is limited and the cost and feasibility is highly site specific. “Given these constraints, hydro is not included in the more detailed evaluations but may be considered when site opportunities are evidenced and the potential is identified,” the plan said.
Wind projects have high fixed costs but low operating costs. So, at high enough capacity factors they could become economically competitive with the conventional technologies identified. “However, geographic and atmospheric characteristics affect the ability of wind projects to achieve those capacity factors,” the plan noted. “Wind projects must be constructed in areas with high average wind speed. In general, wind resources in the Carolinas are concentrated in two regions. The first is along the Atlantic coast and barrier islands. The second area is the higher ridge crests in the western portions of the states. Because wind is not dispatchable, it may not be suited to provide consistent capacity during system peaks.
Offshore wind power may provide greater potential for the Carolinas in the future, the plan pointed out. “Once the technology is developed and the regulatory process is established, this untapped energy source may contribute capacity and energy production for the PEC system,” said the plan about offshore wind. “PEC is partnering with the University of NC at Chapel Hill on a study to fully map and model NC’s viable offshore wind resources. The three-year research study will measure wind speeds in areas for which there is currently no data, create a refined wind resource map, and develop an atmospheric modeling system to enable improved wind forecasting capabilities.”
Solar photovoltaic (PV) projects are technically constrained from achieving high capacity factors, the plan said. In the southeast U.S., they are expected to operate at a capacity factor of approximately 25%, making them unsuitable for intermediate or baseload duty cycles. PV projects, like wind, are not dispatchable and therefore less suited to provide consistent peaking capacity. Aside from technical limitations, PV projects are not currently economically competitive technologies without state and federal subsidies, the plan said.
North Carolina’s 2007 renewable law hangs over state utilities
“With the passage of North Carolina Senate Bill 3 and the premiums provided by the NC GreenPower program, solar photovoltaic installations are increasing in number and scale,” the IRP added. “PEC has aggressively pursued solar contracts to meet requirements of North Carolina Senate Bill 3. Through these solar contracts, PEC is well positioned to meet the North Carolina Senate Bill 3 solar requirements. In South Carolina, the premiums provided by Palmetto Clean Energy (PaCE) also encourage the installation of small customer-owned solar photovoltaic systems.”
In 2007, North Carolina Senate Bill 3 (SB 3) was signed into law, establishing a renewable energy and energy efficiency portfolio standard (REPS). Under the bill, the state’s electric utilities must purchase or generate 3% of their energy (based on the prior year’s total retail sales) from renewable resources in 2012. The public utilities – PEC, Duke Energy Carolinas and Dominion North Carolina Power – must increase their use of renewable energy to 12.5% in 2021. The REPS requirements are:
- 2012 – 3% of 2011 North Carolina retail sales;
- 2015 – 6% of 2014 North Carolina retail sales;
- 2018 – 10% of 2017 North Carolina retail sales; and
- 2021 and thereafter – 12.5% of 2020 North Carolina retail sales.
Through 2020, up to 25% of the REPS requirement may be met with energy efficiency; after 2020, up to 40% of the REPS need may be met with energy efficiency. The standard may also be met through the purchase of renewable energy certificates (RECs). A portion of the renewable standard must be met with solar power and with power generated by swine and poultry waste, which is produced in large quantities by North Carolina’s agri-business farms. The solar, swine, and poultry waste requirements for the state of North Carolina ratchet up between now and 2018, but do not exceed 1% in any year.
Exactly how all the requirements of the REPS will be achieved, and through which technologies, is not fully known at this time. “In order to prepare for compliance with the new REPS requirements, PEC has issued multiple RFPs for various renewable power supply technologies since November 2, 2007,” the plan said. “In addition, PEC currently maintains an open RFP for non-solar projects that are 10 MW or less. Through the RFP process, PEC has executed numerous contracts to ensure compliance with the requirements of SB 3. To select the projects that provide the most cost-effective means for meeting SB 3 requirements, renewable bids received are evaluated against each other, the market, how each project fits within the near-term and long-term REPS compliance plan, and how each project impacts the annual cost cap limitations.”
With regard to utility ownership of new renewable energy facilities, PEC does not own or operate new renewable facilities, however, it said it does evaluate ownership options. “As with ownership of any new generation, future direct or partial ownership of new renewable energy generating facilities is dependent upon cost-effectiveness and portfolio requirements,” the plan said.