Southeast utilities have a ‘very big ask’: More gas

By Zach Bright | 01/22/2024 06:56 AM EST

A national debate over natural gas is playing out in Georgia, Tennessee and the Carolinas as utilities plan new electric generation to serve growing demand.

The Cumberland Fossil Plant is located southwest of Clarksville, Tennessee.

The Cumberland Fossil Plant is located southwest of Clarksville, Tennessee. Tennessee Valley Authority

Key decisions are expected to be made about the future of natural gas this year, with implications for whether President Joe Biden reaches his goal to achieve a carbon-free grid by 2035.

What happens in the Southeast, where some of the nation’s largest utilities are seeking a green light for new gas plants to replace retiring coal-powered generation, will help show if it’s possible.

The Tennessee Valley Authority, Duke Energy and Georgia Power all want fossil fuel generation to remain a fundamental part of their energy mix and each has plans up for review by regulators this year.


Each utility’s long-term blueprint, or integrated resource plan (IRP), aims to ramp up natural-gas-fired production as power providers in the Southeast are projecting record-shattering power demand in the years ahead, partly because of the push to clean energy and the growth of industries like electric vehicles.

It’s a snapshot of what’s happening across the country. Populations are growing, sectors like transportation are electrifying their grids aim to electrify, and all the while, grid operators are aiming to keep the lights on. The Southeast is adding large amounts of renewables, like other areas of U.S., but gas remains a bedrock fuel.

“The five-year [demand] growth forecast nationwide is around 3.6 percent for the next five years,” Katie Southworth, a deputy director for market and policy innovation at the Clean Energy Buyers Association, said in an interview. “The Southeast is higher than that.”

For Georgia Power, demand projections have soared so high that the company put forth an update to its IRP in October, two years ahead of schedule. The unit of Atlanta-based Southern Co. anticipates that electricity demand will climb by 6,600 megawatts through the winter of 2030 to 2031, almost 17 times more than 400 MW predicted in its plans from just last year.

“I’ve been [reviewing] IRPs throughout the Southeast, including in Georgia, for over a decade at this point, and they’ve never done anything like this,” said Simon Mahan, executive director of the Southern Renewable Energy Association.

Georgia Power CEO Kim Greene said in a statement the shift is occurring because new industries “coming to the state are bringing large electrical demands at both a record scale and velocity.”

Grid reliability concerns are also top of mind across the county. The North American Electricity Reliability Corp. said in its December 2023 Long-Term Reliability Assessment that “overly rigid” environmental regulations and energy policies without grid reliability provisions can risk “jeopardizing the orderly transition of the resource mix.”

The Peach State in particular has welcomed numerous solar factories and electric automakers, and it ranks No. 1 among beneficiaries of the 2022 Inflation Reduction Act, having procured more than $15.3 billion in investments.

“Georgia Power is experiencing a significant amount of growth, which is great,” Southworth said. The group represents corporate and institutional electricity customers, including cities and universities.

Yet with rapid growth comes unprecedented demand.

The company said in its IRP update that it “cannot overly rely on short-duration storage to fully meet its capacity needs” and needs more gas-fueled combustion turbines to “preserve system reliability and resilience” for its customers.

It also wants approval from the state’s Public Service Commission to purchase power from existing natural gas plants and add battery storage and a modest amount of solar power to assist with reliability.

Southworth said Georgia’s not the only electric utility asking for more gas.

Duke, the leading electric utility in North and South Carolina, similarly wants to add up to three natural-gas-fired power plants and more solar generation. TVA announced plans last month for its eighth new gas plant in three years, although it won’t release its draft IRP until the spring of next year.

If approved in 2024, the trio of Southeast utilities’ plans could render national targets to decarbonize the country’s electric grid out of reach.

In total, their natural gas-fired additions amount to more than 12,000 MW. In comparison, the U.S. Energy Information Administration estimated the U.S. to have added 8,600 MW of new gas-fired generation in 2023.

But “just because Georgia Power has proposed all this natural gas doesn’t mean they’re gonna get it,” Southworth said. “State regulators have a key role to play in Georgia in the Carolinas, as does TVA’s board of directors.”

‘Pretty ambitious’

In its IRP, Georgia Power is asking for approval to build 1,400 MW in new gas-fired generation by the winter of 2026-2027. By the same season, it’s looking to build 200 MW of new solar paired with the same capacity of battery storage, as well as 1,000 MW in stand-alone battery storage.

“This interim IRP is a very big ask from the commission and pretty ambitious for Georgia Power,” Southworth said.

The deadlines in particular are “exceptionally aggressive construction dates,” according to Mahan from the Southern Renewable Energy Association. He said Georgia Power is “probably asking for way too much, knowing that some of these things are going to fall through — not on the commission side, but just in the marketplace.”

Georgia Power declined a request for an interview.

Aside from new generation, Georgia Power detailed two power purchase agreements for gas-fired generation, one for 750 MW of power from a Mississippi Power plant as well as 230 MW from the Santa Rosa Energy Center in Florida, owned by LS Power.

In its IRP update, Georgia Power said the purchases “will be utilized to support an economical and reliable supply of capacity and energy.”

But Mississippi Power’s status as a sister company to Georgia Power — both are owned by Southern Co. — seems “a significant conflict of interest,” Mahan said. Georgia Power could charge customers, with approval from state regulators, at higher rates while contracting for power within Southern Co.

Southern Co. CEO Chris Womack said in November that the company’s coal units scheduled for retirement in 2028 could remain online past 2030, because of the rapidly increasing load growth the state is seeing.

Georgia Power has signaled in its IRP update that it may reconsider plans to retire by 2027 two coal-fired units at the 3,367-MW Plant Bowen and one unit slated at the 3,720-MW Plant Scherer, the utility’s largest coal-fired plant in operation. Those closures could be pushed to as far as 2035.

Southern still has long-term plans to add 10,000 MW of renewables by 2035. But Georgia Power’s IRP update presents a stark contrast with its own plan from last year, environmental advocates said.

“The 2022 IRP had a Georgia Power that was super onboard with retiring coal,” said Isabella Ariza, a Sierra Club attorney.

Southworth said she thinks Georgia Power’s solutions are “a lot of Band-Aids.”

“We didn’t really anticipate so much investment to be so heavily invested in one particular state,” Mahan said, “and we’re really seeing a side effect of the Inflation Reduction Act.”

Bryan Jacob, solar program director for the Southern Alliance for Clean Energy, placed more blame on mistakes in anticipating demand from last year’s IRP.

“They botched the load forecast,” Jacob said in an interview, adding the company in his view is “not saying, ‘We want to meet demand with fossil fuels.’”

“They’re essentially saying, ‘We have no other choice because we can’t get a different resource online fast enough,” Jacob said.

Beyond Georgia

As for Duke, its draft IRP calls for three new gas plants capable of more than 4,000 MW of gas-fueled generation as its preferred pathway to meeting future electricity needs.

The Charlotte, North Carolina-based power giant will get a final say from regulators in South Carolina sometime in mid-2024 and from regulators in North Carolina by the end of 2024.

Like Georgia Power, Duke said the population and economic growth in its service area are booming, and the company is focused on maintaining electric reliability as power consumption rises.

“We see a growing economy in both Carolinas, spurred on by very successful economic development activity happening in both states, by electric vehicle growth that’s been spurred by the Inflation Reduction Act,” said Glen Snider, Duke’s managing director of resource planning and analytics.

South Carolina and North Carolina, like Georgia, have been centers of new domestic development, with the construction of everything from electric vehicles plants to solar panel centers.

The growth is a good thing, clean energy and environmental advocates said, but not at the cost of so much more gas-fired generation.

Cassie Gavin, director of policy at the North Carolina Sustainable Energy Association, called the plan a “slap in the face of residents who will bear the brunt of significant rate hikes” that will come from new building new gas generation.

Jacob with the Southern Alliance for Clean Energy said utilities instead should look at increasing transmission capacity in existing corridors “before we charge down the path of saying that these fossil-based resources are the only way, or the least cost way, to meet new load.”

He pointed to a lack of transmission capacity as a key reason why Georgia Power finds itself seeking new generation and power purchase agreements to meet rising load growth. The Biden administration is trying to accelerate the siting and development of new long-distance power lines. Such projects can take a decade or more to be built — acting as a roadblock to adding more generation to the grid.

Responses to TVA, which is supposed to release a draft IRP in the first quarter of this year, are more positive for some clean energy observers. The power provider has a long-term goal to add 10,000 MW of solar by 2035.

It provides power in Tennessee as well as parts of Alabama, Mississippi, Kentucky, Georgia, North Carolina and Virginia.

“TVA serves one of the fastest growing regions in the nation — people are moving to our seven-state service area at six times the national average for better jobs and quality of life,” TVA CEO Jeff Lyash said in a statement.

Mahan said the clean energy additions are an “excellent move in the right direction” and that “we’re expecting good things to come out of TVA.”

But a flurry of gas-fired plant announcements in from the utility in recent years have worried some.

With an announcement last month that it plans to build six new gas-fired turbines in Lowndes County, Mississippi, the utility’s gas-fired plant build-out totals to about 5,900 MW of new generation. That’s nearly half of TVA’s current gas- and oil-fired generation, which totals more than 12,000 MW and powers about 7 million homes.

“TVA is leading largest gas-fired generation buildout in the country,” said Brianna Knisley, the Tennessee campaign manager for Appalachian Voices, a nonprofit regional environmental group.

TVA said in IRP planning documents that its all-of-the-above approach is focused on reliability and least-cost principles, which necessitate the gas build-out.

But Knisley said TVA, by basing its decisions on its 2019 IRP, is not properly incorporating current incentives through the Inflation Reduction Act and putting the thumb on the scale in favor of unnecessary amounts of gas generation.

Unlike Georgia Power and Duke, TVA is not regulated by state public service or utility commissioners. Instead, the federally regulated agency is governed by a board of directors with members appointed by the president. Biden appointed six of the nine members.

Clifton Lowry, TVA’s resource planning and strategy director, said the power provider has “held a number of public webinars on the [IRP] process” and includes a “significant amount of public engagement and outreach stakeholder input.”

“But that doesn’t supersede the fact that we then have decision making that will follow,” Lowry said. “When you get to decisionmaking, now you’re talking about specific technology types, specific locations, specific alternatives for locations, and so it takes on a slightly more tactical form, but still just as robust in the engagement.”

“We’re trying to encourage the board to be the regulator because the current board is relatively new,” Knisley said. “I’m hopeful that this board will step up and do what it needs to do to be a good regulator … instead of just following directives from staff.”