By Belton Zeigler
The energy economy is strong, with low prices for natural gas and oil, and renewables playing an increasing role in energy generation. But the energy economy is a complex system due to new dilemmas related to renewables and the expansion of their use.
In the Southeast, renewables are mostly solar. Both South Carolina and North Carolina have strongly supported the adoption of solar. With state and federal tax incentives, the Carolinas have become national leaders in the rate of recent solar installations.
Today, over 95 percent of renewable generation in the Southeast is solar.
Solar has expanded so quickly that there will soon be more solar generation online in the Carolinas than the grid can absorb. Solar produces electricity only in the middle of the day, in clear weather. In the evening, early morning, or when a cloud front moves through, coal and nuclear power plants must swing into service to keep the grid from collapsing.
Coal and nuclear plants are massive facilities that cannot be started up or shut down on a moment’s notice. When solar projects come online, the electric grid in the Carolinas will have days and hours where solar displaces most of the electric demand. There will not be a place to put the power generated by coal and nuclear units. This excess power has to go somewhere for the plants to stay online. No one is quite sure where that will be.
Storage is the long-term answer, but the advanced batteries required are prohibitively expensive. Until that changes, new loads must be found or grid operation must be overhauled to support continued solar expansion.
Wind is another pillar of the renewables economy. But onshore wind is not in the cards for this region. The Southeast doesn’t have the same strong and steady winds that blow across the high plains of the Midwest.
Offshore wind is another matter. The best offshore wind areas on the Eastern Seaboard are from the Outer Banks of North Carolina to Maine.
The offshore wind technology is more mature than many Americans realize. Large-scale wind farms are operating in the North Sea, the Baltic, and the Irish Sea. These are harsh environments with winter storms that rival our South Atlantic hurricanes. Turbines have run successfully in these conditions for decades.
Given the wide continental shelf in our region, the turbines can be located far enough offshore that they do not spoil coastal views. The cables to bring power onshore can be buried and are not obtrusive.
The potential impact of offshore wind is impressive. The largest U.K. wind farm, Hornsea, generates 3,000 megawatts, about the same capacity as five major coal plants or the annual energy production of about 19 million individual solar panels.
But offshore wind will probably not come to South Carolina immediately. In today’s low-cost energy markets, it’s economical only where states require utilities to enter long-term contracts to buy offshore wind credits, and then pass the additional costs on to customers.
Most of the states doing this — Massachusetts, Maryland, Connecticut, Rhode Island, and New York — are part of RGGI, the Regional Greenhouse Gas Initiative. They’ve pledged to reduce carbon emissions from electric generation by 15 percent. Offshore wind is foundational to their plans. These states are investing in offshore wind generation through electric utilities, requiring utilities to buy Offshore Renewable Energy Credits (ORECs) as part of their electricity supplies. The cost of the credits becomes part of electric rates.
No states south of Maryland are part of RGGI. Without the requirement for utilities to purchase ORECs, offshore wind energy is not economical. The price is dropping as economies of scale come into play. Offshore wind is now competing in Europe without subsidies. But European electric rates are higher. For now, with natural gas prices low, and carbon emissions untaxed, offshore wind is economical only in states where it is subsidized.
Biomass is a growing part of the energy equation. Biomass plants convert chicken litter, hog waste, and other agricultural and forestry byproducts into electricity and gas. These plants capture methane emissions from decaying waste, which is important because methane is a greenhouse gas much more potent than carbon dioxide. But supplies of biomass are limited. Biomass provides less than 1 percent of electric generation today, most of which comes from paper mill wastes, which have long been exploited as a fuel. Its growth will be steady, but its impact on the overall energy economy will be modest.
So renewables in the Southeast are ultimately about wind and sun. Until the economics of offshore wind change, solar is king. The challenge will be running a reliable electric grid with the highly variable and intermittent power source that solar represents.
Belton Zeigler, a partner with Womble Bond Dickinson, has a practice focusing on the energy and natural resources sector, along with other crucial infrastructure components of our economy, including transportation and cybersecurity. Connect with him at linkedin.com/in/beltonzeigler.