Duke Energy's Carolinas utilities lead the Southeast in energy efficiency for another year

Duke Energy's Carolinas utilities lead the Southeast in energy efficiency for another year

By John Downey – Senior Staff Writer, Charlotte Business Journal

1/28/21

Duke Energy Carolinas leads the Southeast in energy efficiency for a fifth straight year, according to a new report from the Southern Alliance for Clean Energy.

The Energy Efficiency in the Southeast report issued Wednesday said Duke Energy Corp. (NYSE: DUK) accounts for about 20% of the retail electricity sales in the region. But it accounts for 59% of the region's energy efficiency savings.

And almost all of those savings come from Duke Carolinas and Duke Energy Progress, which have ranked first and second, respectively, in the region every year since 2015. The study is based on 2019 figures, the most recent year for which annual efficiency savings can be calculated.

"Duke is the regional leader, has consistently been … (but) there is, nevertheless, a gap between the performance of Duke in the Carolinas and in Florida, very much chalked up to the different state policies that drive the utilities to promote efficiency," said Forrest Bradley-Wright, one of the report's authors, during an online presentation on Wednesday. "The policies in Florida result in vastly lower savings for a company that has proven its ability to perform at a much higher level."

Energy efficiency reduced power consumption at Duke Carolinas, based in Charlotte, by 0.98% in 2019, the report calculates. That is well above the national average, which the alliance, known as SACE, calculates at 0.66%. It is nearly four times the Southeast's average but lags behind the nation as a whole at a 0.26% average savings over the previous year.

That is by far the weakest energy efficiency rate for the five regions SACE analyzes across the country. The Northeast leads with a 2.15% efficiency savings year over year. Outside the Southeast, none of the five regions came it at less than 0.87% year-over-year savings.

Duke Progress, based in Raleigh, hit 0.82% in year-over-year efficiency savings. Duke Energy Florida, based in St. Petersburg, trailed badly at a 0.19% savings, SACE said. Though below the regional average in the Southeast, it is still better than Florida's rather abysmal state average of 0.12% savings for 2019 over 2018.

The annual efficiency report comes as Duke is facing criticism from several other environmental groups on whether its current long-range plant construction plans jibe with its carbon-reduction goal for net-zero carbon emissions.

Three reports issued this week by the Energy Transition Institute (ETI), the Institute for Energy Economics and Financial Analysis (IEEFA) and the Sierra Club all contend Duke — and particularly its Carolinas utilities — is relying too heavily on natural gas to achieve that goal. ETI estimated that Duke will be forced to close its Carolinas natural gas plants it plans to build through 2035 long before they are paid for. It said that possibly opens up customers to $4.8 billion in "stranded costs" they will have to pay for the construction of plants that are no longer producing electricity. The Sierra Club also argues that Duke, overall, is going to slow on its retirement of coal plants to achieve its goals and needs to significantly step up its adoption of no-carbon renewable energy resources if it is going to help control global warming.

But energy efficiency is an area where environmental groups see Duke as consistently outperforming its peers — and one where it receives repeated praise. Still, Duke Carolinas, while remaining tops in the Southeast, has seen its efficiency gains slip a little in recent years. It was the first Southeast utility ever to top the 1% year-over-year efficiency savings mark, achieving that in both 2017 and 2018. But the utility peaked in 2017.

"Part of that is because you deliver efficiency savings to customers and those needs have been met, so you need to be reaching new customers beyond that or be getting more savings to customers that have participated before," Bradley-Wright said.

"Think of the change in lighting that has happened because of new requirements and market transformation," he said, citing the example of the move away from traditional light bulbs and fluorescents. "Lighting savings were a big part of Duke's performance in the past and that side is receding. It needs to be filled up with other savings."

Bradley-Wright said Duke has proved particularly adept at that kind of adaptation in the past and is likely to remain so. He noted a number of new efficiency programs it introduced in the Carolinas in 2020. It says its utilities are expanding programs to increase the efficiency of new residential construction, bringing financing for energy-saving projects to small businesses, working more with third-party efficiency vendors and on utility programs that target winter peak.

Bradley-Wright also noted that the Covid-19 pandemic disrupted existing energy efficiency programs for utilities across the nation. But he said, "Duke was one of the first major utilities in the Southeast to implement new safety protocols and make delivery changes, allowing them to resume (efficiency) operations." He said its Southeast utilities "have reported being on track to reach their previously projected 2020 savings goals." That should show up in next year's report.

Bradley-Wright also noted that South Carolina's Energy Freedom Act passed last year is demanding higher efficiency efforts from utilities there. The new requirements led regulators in that state to reject Dominion Energy South Carolina's Integrated Resource Plan in 2020 and demand more thorough analysis of its energy efficiency efforts.

Duke's IRP for that state is still pending, he said, but its utilities have closely followed what happened to Dominion, which is still developing its new IRP. Bradley-Wright said Duke is likely to be in a better position to meet the new requirements because of its strong starting position on energy efficiency, but that it could lead to interesting developments for its Carolinas utilities going forward.