Economists at The Brattle Group have released a new study, prepared for Cypress Creek Renewables, which analyzes the generation costs and emissions impacts of a future resource mix for Duke Energy that achieves the requirements outlined in North Carolina’s House Bill 951 (H951) and minimizes additional development of natural gas capacity. H951, passed by the North Carolina House of Representatives in July 2021, requires Duke Energy to develop replacement plans for retiring several coal plants and to increase renewable resource capacity additions.

Brattle’s study concludes that, by shifting its resource mix from coal and gas resources to renewable energy and battery storage, Duke Energy could achieve over 70% GHG emissions reductions by 2030 (relative to 2005 emissions) while lowering generation costs. The study finds that such an outcome is achievable under the framework of H951, based on a combination of H951’s designated procurement of renewable energy and energy storage alongside further cost-effective additions directed by the North Carolina Utilities Commission in the future.

“With the continued decline of solar and battery storage costs, Duke Energy and other utilities across the US will be able to replace retiring coal plants with a mix of renewable energy and battery storage resources in a cost-effective way and achieve greater reductions in GHG emissions,” notes Brattle Senior Associate and study coauthor Michael Hagerty.

The Brattle study utilizes gridSIM – Brattle’s economic dispatch and capacity expansion model – to simulate the Duke Energy system and identify cost-effective new resources. The study compared two scenarios for the timing of coal plant retirements and the new resources that will be built in the Duke Energy system to replace the lost coal generation: (1) a “base case” scenario that reflects resource additions and retirements in Duke’s 2020 Integrated Resource Plan (IRP) Base Case with Carbon Policy; and (2) a “policy case” scenario with accelerated coal plant retirements and additional renewables and battery storage capacity based on H951, but with the replacement of power from the retiring Roxboro coal plant through cost-effective renewables and storage capacity. This second scenario limits new gas capacity to a single new 900 MW gas plant specified in the legislation.

Based on the Brattle analysis, the study finds:

  • Duke could reduce 2030 GHG emissions to 20.4 MMT, a 74% reduction relative to 2005, by shifting its resource mix away from existing coal plants and new gas plants and towards renewable energy and storage.
  • Greater GHG emissions reductions relative to the resource mix in Duke’s 2020 IRP Base Case with Carbon Policy could be achieved while decreasing total generation resource costs by $590 million in 2030, as shown in the figure below, and by $1,200 million in 2035 under the set of assumptions described in the study.
  • While a greater shift to renewable energy may require upgrades to the transmission and distribution (T&D) system that were not studied in the analysis, up to $5.2 billion of additional T&D upgrades could be built in the policy case with higher renewable energy and storage and ratepayers would still secure cost savings through 2035 in present value terms compared to the expected base case with more gas and coal.

Duke Energy Annual Generation Net Costs
(Policy Case – Base Case)

Brattle Principal and study coauthor Dr. Metin Celebi notes, “The assumed use of securitization to finance the recovery of undepreciated past investment costs at some of the retiring coal plants is a major driver of the customer cost savings in addition to the avoided fixed operating and ongoing capital expenditures from early retirements.”

Tyler Norris, Senior Development Director at Cypress Creek Renewables, observed that “Brattle’s study provides compelling evidence that our region can achieve ambitious decarbonization targets by 2030 at minimal ratepayer cost through the large-scale deployment of renewables and storage, especially through proven programs like North Carolina’s Competitive Procurement of Renewable Energy (CPRE).”

The study, “A Pathway to Decarbonization: Generation Cost & Emissions Impact of Proposed NC Energy Legislation,” is authored by Brattle Senior Associate Michael Hagerty, Principal Dr. Metin Celebi, Lead Analyst Matt Witkin, and Research Analysts Julia Olszewski and Frederick Corpuz. A webinar discussing the study’s findings can be viewed here.