Welcome to Grid Brief! Here’s what we’re looking at today: Duke Energy wants to swap out fossil fuel generators for a small modular nuclear reactor plant, American Electric Power sells of its renewable in first-of-a-kind production tax credit transfer, Hawaii fires caused by power lines, and more.

Duke Pitches Swapping Coal for Nuclear

Major American utility Duke Energy Corp. proposed to phase out coal usage with small a nuclear reactor at a North Carolina power plant in an effort to fulfill the rising electricity demand in the region.

The Belews Creek Steam Station would accommodate a compact modular reactor, designed for quicker construction and startup compared to traditional larger nuclear facilities.

“Duke, which operates 11 nuclear reactors at six plants across North and South Carolina, estimates that the two states will need an additional 35,000 gigawatt-hours of electricity generation within 15 years. That’s more than the annual output of all the power plants in Delaware, Maine and New Hampshire combined,” reports Bloomberg. “The Belews Creek reactor could be running by 2034, while the plant’s fossil-fuel units, which can burn coal or natural gas, would be retired. Duke also is looking for another location — likely another coal-fired plant — to host a second, similarly sized reactor and could add more reactors to each site later on, said spokesman Bill Norton.”

This initiative is part of a comprehensive strategy presented to regulators in North and South Carolina that aims to boost electricity production while slashing greenhouse gas emissions.

AEP Sells Off Renewables in Novel PTC Transfer

On Wednesday, American Electric Power sold its 1,365-MW unregulated renewable energy portfolio to IRG Acquisition Holdings.

“The $1.5 billion transaction is one of the largest, fully-operational renewables portfolio to come to market in years, according to Norton Rose Fulbright, which advised IRG on the deal,” reports Utility Dive. “The deal included a $580 million first-of-its-kind federal production tax credit transfer with Bank of America Securities, the law firm said.”

AEP’s sale fits into a national trend of regulated utilities selling off their renewables assets in unregulated markets. Major utilities have started to see renewable energy, especially solar, as increasingly risky as project delays and missed earnings have piled up.

According to AEP, the renewable portfolio contained 14 projects—1,200 MW of wind and 165 MW of solar. AEP is one of the largest utilities in the country with 38,000 megawatts of generation serving five million customers in 11 states.

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Power Lines to Blame in Maui Fire?

A new piece from the Wall Street Journal’s Katherine Blunt suggests the ignition of the Maui fires points to Hawaii Electric’s neglected power lines.

During 2019’s wild fire season, the utility recognized it needed to invest more in power line maintenance, but deferred on the task.

“Between 2019 and 2022, it invested less than $245,000 on wildfire-specific projects on the island, regulatory filings show,” writes Blunt. “It didn’t seek state approval to raise rates to pay for broad wildfire-safety improvements until 2022, and has yet to receive it.”

What kept the utility from investing the necessary capital in preventative measures against a known threat? In large part, the headlong dive into the renewable energy transition, according to Blunt.

“Hawaii has been on a push to convert to renewables since 2008, when a run-up in oil prices sent electrical rates at Hawaiian Electric—which relied on petroleum imports for 80% of its energy supply—through the roof. In 2015, lawmakers passed legislation mandating that the state derive 100% of its electricity from renewable sources by 2045, the first such requirement in the U.S.,” writes Blunt. “The company dove into reaching the goals, stating in 2017 that it would reach the benchmark five years ahead of schedule.”

Hawaii Electric’s fate mimics that of California’s Pacific Gas & Electric. Similarly consumed by the fever for renewables, the state government, the California Public Utility Commission, and the utility ignored other pressing concerns to pursue the energy transition. Thus, in 2018, one of PG&E’s aging power lines ignited a wicked wildfire that killed 84. Blunt details the case in her recent book, California Burning.

One hundred and ten people have died as a result of the Maui fires. It has replaced PG&E’s 2018 fire as the most dangerous wildfire in modern American history.

Conversation Starters

• China wants to create a recycling system for renewable waste. “China, the world's biggest renewable equipment manufacturer, will set up a recycling system for ageing wind turbines and solar panels as it tries to tackle the growing volumes of waste generated by the industry, the state planner said,” reports Reuters. “The state planning agency said that China would have a ‘basically mature’ full-process recycling system for wind turbines and solar panels by the end of the decade.”

• The UK struggles to green its truck fleet. “The mission to get the UK’s fleet of trucks to go green is failing to take off, new figures have revealed, due to ongoing concerns about the lack of available electric or hydrogen charging points throughout the country,” reports Oilprice.com “Heavy Goods Vehicles (HGVs) currently produce nearly 20 per cent of all transport emissions in the UK, despite making up only 1.5 per cent of vehicles on the road. New figures out today show that despite the boom in electric car sales over the last few years, the country’s fleet of lorries is failing to go green.”

• Wood Mackenzie casts doubt on offshore wind targets. “Government targets to increase wind power installations would see annual capacity additions reach 80 gigawatts (GW) per year by 2030, requiring $100 billion in secured investment in the supply chain by 2026, Wood Mackenzie said in a report,” reports Reuters. “The research and consultancy firm forecast annual capacity is more likely to increase by 30 gigawatts (GW) a year by 2030, which would require $27 billion of secured investment by 2026.”

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