Duke Energy Goes Solar (A Little)

Michael Ziegler, at photovoltaik-guide.de, reports that Duke Energy (DUK) has acquired the Blue Wing Solar Project from juwi solar Inc., based in Boulder, CO. The Blue Wing project is situated in San Antonio, TX and all output will be sold to San Antonio-based CPS Energy. CPS is one of the largest municipality-owned utilities in the U.S.. First Solar (FSLR) thin film solar panels will be used in the project, which will have an output of 14 megawatts.

This is the first major solar power venture for Duke and is expected to come on line by the end of 2010. When generation starts, solar will be only about 1.4% of Duke's renewable power output. By the end of the year Duke expects to have nearly 1,000 megawatts of wind generation in operation.

Duke has already made other commitments to solar. In 2008 they entered a 20-year agreement to purchase 16 megawatts of solar power from SunEdison, a subsidiary of MEMC Electronics (WFR).

Duke Energy (DUK) is based in Charlotte, NC and provides electrical power in several states including North Carolina, South Carolina, Ohio, Indiana and Kentucky. In the latter three states power generation is primarily coal, oil and natural gas fired, while in the Carolinas the generation is about half nuclear.

Duke has made commitments to develop increased used of renewable sources of generation. In North Carolina the commitment is 12.5% of power from renewables by 2012. In Ohio, the same commitment was made by 2025. Specifically for solar, 0.2% of power for North Carolina must come from solar by 2018. Duke also is using biomass (especially methane from landfills) and hydroelectric electricity generation.

Duke has plans for up to 6,000 megawatts of wind generation, including that already under construction and on line. It is not clear from their website whether this is expected average output or capacity. The expected output typically can be 25% to 33% of capacity because wind speeds are not always optimal (and sometimes are nil). The same problem exists for the numbers for solar generation. It is not clear whether the power numbers refer to capacity of to actual output which may be a fraction much less than 50% because the sun does not shine 24/7. In the following discussion I will use to numbers as output. If Duke refers to capacity, the wind and solar numbers are high by at least a factor of three.

The estimated generation from various sources for Duke in 2010 is: 70% fossil fuels, 9% hydroelectric, 3% wind (by the end of 2010), <1% solar, <1% biomass and 17% nuclear (estimated by difference). An additional nuclear plant is planned for Cherokee County, SC and additional wind and bio mass projects are expected. Assuming all planned wind objectives are met, the Cherokee nuclear plant comes on line and Duke grows its generation to 55,000 megawatts in ten years, the distribution could be (2020 estimates by the author) 67% fossil fuels, 13% nuclear, 11% wind, 6% hydroelectric, and 3% for solar and biomass combined.

Question: Will energy storage technology be needed to effectively use more than 10% electricity from wind or will output from supply on demand sources (fossil fuels, nuclear, biomass and hydroelectric) be able to level the supply fluctuations from wind and solar?

What is interesting about all this analysis is that what sounds like an aggressive renewable energy development program does not reduce the use of fossil fuels when a growth in electricity demand of approximately 5% a year is assumed. (I use this number because that is the analyst’s 5-year growth estimate at Yahoo Finance. I could not find a generation growth estimate - or history, for that matter - for DUK.) In fact, the fossil fuel generation in 2010 of about 25,000 megawatts would grow in ten years by almost 50% to more than 37,000 megawatts, even though the percentage drops from 70% to 67% of all power. If no changes were made except to build the planned nuclear plant and maintain 2010 levels of renewable, fossil fuel generation would increase to nearly 44,000 megawatts by 2020, about 80% of output.

Note 1: I have assumed that the numbers DUK has presented are actual output estimates. Reader Davewmart has suggested that the numbers are capacity. If that is the case, then wind generation will only grow to about 3% of generation by 2020, not the 11% I suggested.

Note 2: The estimate of 5% annual growth in electrical power demand may be too high. The Energy Information Administration's (EIA) "Annual Energy Outlook 2004" estimated a 50% increase in demand for the 20 year period 2005-25 (http://www.ncpa.org/pub/ba511/). Using that same annual compounding rate (2%), the demand for electricity from DUK would be about 43,000 megawatts, not the 55,000 used in the article.

Using both Note 1 and Note 2, we still get a significant increase in fossil fuel generation by 2020 of about 4,000 megawatts, or about 11%.

Hat tip to Mike Seagal on Twitter for the lead to the Blue Wing Project. Hat tip to Davewmart for information about capacity vs. output and growth rates.

Disclosure: No positions.