Grid upgrades in Duke Energy ‘red zone’ could cost $560M

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Duke Energy Corp.’s electricity-generating subsidiaries for North Carolina reported to regulators how they can comply with a state mandate that requires significant greenhouse gas reductions by the end of the decade.

The filings with the North Carolina Utilities Commission come seven months after Democratic Gov. Roy Cooper signed bipartisan legislation that directed the utility to lower carbon dioxide emissions 70% from 2005 levels by 2030. Zero-net CO2 emissions would be required by 2050.

The filing includes a mix coal-fired power plant retirements to be replaced with new wind and solar capacity and small modular nuclear reactors as well as grid-edge resources including customer-sited solar PV and batteries, energy efficiency, and demand response. The plan also forecasts the impact of electrified transportation.

‘Red zone’ upgrades

In an Appendix Duke outlined the transmission system planning and grid transformation it said is needed to deliver energy reliably under its proposed new mix of generation assets, arriving at billions in costs.

Duke Energy focused on the near-term challenge of what it calls “red zone” upgrades that will be needed to interconnect new resources to its grid.  

Those red zone upgrades were identified by interconnection cluster studies the utility performed in response to developers who are looking to connect projects to the utility’s grid in North Carolina. After the studies were performed and the grid upgrades and costs were identified, most of the developers withdrew their projects. Study results showed an average network upgrade cost allocation of around $0.17/W.

Duke said in the report that this scenario is typical: wind and solar developers request interconnection, cluster studies are performed, cost allocations are assigned, then the developers withdraw because the grid upgrade costs make the projects non-viable. With fewer projects in the queue, the system impact studies need to be redone, adding what could amount to significant delay and additional cost to the implementation of cleaner sources of electricity.

Duke proposed to the North Carolina Transmission Planning Collaborative (NCTCP) that it upgrade or rebuild 17 transmission lines and construct one new substation to address the so-called red zone challenges. The proposed upgrades are included in the chart below.

Duke said the proposed upgrades would be sufficient to meet the 2030 carbon neutrality target, but would not be sufficient to interconnect new generation sources in later phases of the carbon plan.

Grid upgrades for offshore wind

Duke’s Carbon Reduction plan also includes a proposal to interconnect up to 1.6 GW of offshore wind capacity. The utility identified the New Bern 230 kV substation as the most promising site for interconnection. In an earlier report to the NCTPC, Duke estimated the cost of radial transmission interconnection facilities from the offshore wind farm to the New Bern substation, and then transmission network upgrades from New Bern to the Wake 500 kV substation, at $1.3 billion to $2.39 billion. Most of the costs would be borne by the project developer and ultimately reflected in the energy generation rates passed on to customers.

Duke Energy said it looked at different timelines for the additional wind resource and calculated transmission cost upgrades based on the four different portfolio options outlined in the report: offshore wind by 2030, offshore wind by 2032, offshore wind by 2034 with the addition of small modular nuclear reactors.

  • Portfolio 1: $2.6B by 2030, $4.4B by 2035
  • Portfolio 2: $2.18B by 2030, $4.76B by 2035
  • Portfolio 3: $1.7B by 2030, $3.76B by 2035
  • Portfolio 4: $1.76B by 2030, $3.86B by 2035

Duke also said it would likely need to build new greenfield transmission to achieve the long-term goals of the plan the cost of which could top $7B and take as long as 15 years before it can be placed into service.

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