North Carolina’s Coal Plan: Duke’s Hydrogen Plan Is a Mirage, but Proven, Clean Technologies Are Now Available That Can Meet Customer Needs

On June 17, the Environmental Defense Fund (EDF) was represented by our expert witnesses at a technical conference before the NC Utilities Commission (NCUC). Each of the Carbon Plan/Integrated Resource Plan interveners, including EDF, was given a few minutes to briefly summarize their testimony in May. EDF’s testimony focused on the need to more aggressively pursue offshore wind in North Carolina—the subject of this recent blog—and the fallacy of Duke’s hydrogen plans.

Duke is forecasting a rise in energy demand through the early 2030s, which may or may not happen. Their elaborate plans focus largely on meeting that need by building risky and expensive new gas-fired power plants. Part of their massive investment in new gas plants is a plan to convert those plants to run first on 3 percent hydrogen and then 100 percent hydrogen at some point in the future. But the market to supply the volumes of green hydrogen they’re proposing doesn’t currently exist, which means that — in practice — this theoretical hydrogen is just wishful thinking as they continue to seek approval for their long-standing desire to invest ever more heavily in new fossil-fuel power plants. But Duke’s plan makes no sense — or rather, it makes sense only in terms of guaranteeing profits for the company’s shareholders. Their customers have little to gain from it beyond unnecessary risk, expense, and more pollution.

Fortunately, a broad range of stakeholders, including the NCUC Public Staff, are opposing Duke. Public Staff, the state’s consumer advocate tasked with protecting ratepayers from utility monopoly scams, recommended in its latest motion that Duke scale back its gas plans and invest more in a variety of clean energy sources. EDF will have an opportunity to further address those recommendations at the Commission’s evidentiary hearing, which will begin July 22, 2024. After hearing all sides, the Utilities Commission will issue a final order by December 31, 2024. EDF and other intervenors will urge the Commission to put the brakes on Duke’s massive proposed gas investment while accelerating investment in onshore and offshore wind, solar, and battery storage, which are proven, reliable, commercially available technologies with far less risk and uncertainty than Duke’s gas-to-hydrogen gamble.

Confirmation of Gas Risk and Cost

As I described in more detail in a previous blog, the regulatory structure that allows Duke Energy to operate as an energy monopoly in North Carolina means that the more money Duke spends, the more money it makes. They are entitled to full reimbursement for the costs of building the power plants and power lines, and on top of that, they get about a 10 percent rebate as a bonus.

Let me be clear: Duke is simply doing what it has the right to do as a state power monopoly. But let me also be clear that this structure means that Duke will always have an incentive to spend more on new power plants because the more they spend, the more of that 10 percent goes to the company’s shareholders. And the more of that 10 percent goes to the shareholders, the more customers will have to pay in our monthly electricity bills.

While Duke’s energy proposals focus on the largest cost items, EDF’s expert witness in the Carbon Plan case showed how North Carolina can more quickly and strategically bring clean energy sources, especially offshore wind, onto the grid to meet our state’s growing electricity demand.

Hoping for hydrogen is not a strategy

Duke Energy’s plans are betting taxpayer dollars that a large new market for hydrogen produced from clean electricity will emerge within the next decade, allowing it to convert its massive new gas investment to a fuel that emits no carbon dioxide when burned. EDF has serious cost and feasibility concerns about its gas-to-hydrogen assumptions, so we invited engineering experts to examine Duke’s claims to build new gas plants on the assumption that they will one day run entirely on hydrogen. Here are the key takeaways:

Lack of Supply. There are currently no pipelines that can safely deliver hydrogen to Duke Energy facilities. When mixed with methane in existing pipelines, hydrogen can cause “embrittlement” in the connections of existing infrastructure. This means increased risk of dangerous leaks and equipment failures if we try to “mix” hydrogen into existing gas infrastructure. Hydrogen requires a dedicated new pipeline network, and Duke Energy has not indicated any plans for proposed hydrogen pipelines to deliver hydrogen to the Carolinas.
The second problem with Duke’s plan is the poor efficiency of hydrogen. Critics have called using clean electricity to make hydrogen a “crime against thermodynamics.” If you use clean energy to create and then burn hydrogen, you use 50 to 80 percent of the original clean energy in splitting hydrogen from water and burning that hydrogen to power a turbine. Simply sending that clean energy directly to the grid or storing it in batteries is much more efficient and cheaper for ratepayers.
A third critical problem is that Duke’s plans leave us with no idea of how much the hydrogen will actually cost or where it will come from. In our testimony, EDF experts point to Duke’s lack of transparency about the costs of pipelines, turbine upgrades and storage. North Carolina lacks geological formations that can economically store hydrogen for long periods of time, which ideally would be a major advantage of hydrogen over something like batteries. Above-ground storage is also problematic because it is both expensive and prone to leaks.

Duke also isn’t discussing plans to produce hydrogen on its own, even though other parties have pushed for at least a hydrogen “pilot” in which Duke would use an electrolyzer to split water into hydrogen on-site at proposed new gas turbines on Lake Norman. We can’t bet the state’s energy future on a cheap hydrogen market that will magically materialize in the next decade, since North Carolina and South Carolina weren’t selected as one of the nation’s “hydrogen hubs” for accelerated regional infrastructure development just last year. What if a clean hydrogen market doesn’t materialize as quickly or cheaply as Duke hopes? North Carolina electricity customers are still locked into 35 years of payments — through the 2060s — on these proposed gas-fired plants, even if those plants have to be decommissioned by 50 percent in the 2030s to comply with federal regulations, or even shut down entirely by 2050 to comply with state emissions-reduction rules.

Application

There is a better way. Cleaner, cheaper, safer, renewable energy and battery storage technologies are proven, reliable, and commercially available today. Duke Energy, one of the nation’s largest utilities, is positioned to pursue this better path—one that protects North Carolinians from unpredictable fuel costs, avoids a taxpayer-funded hydrogen gamble, and provides access to clean energy in the same 2030-2033 window that Duke is currently filling with new gas plants, while avoiding a huge amount of unnecessary and excessive carbon pollution. EDF will continue to advocate for a more affordable clean energy future. You can tell the North Carolina Utilities Commission what you think here.