Wouter van Kempen President,
Duke Energy Generation Services
Duke Energy continues to invest heavily in power generation from renewable resources. In the following Q&A, Wouter van Kempen discusses opportunities and obstacles associated with renewable power.
Q.What is driving the development of renewable power in the U.S., and what is working against it?
A.Factors fueling growth in renewable power include mandates by many states to boost electric generation from renewable sources, potential federal climate change legislation and a sense of competition with the rest of the world - especially Europe and China.
Without question, federal stimulus dollars, tax credits and incentives, and loan guarantee programs have accelerated renewable energy sector growth in recent years. Lower costs for renewables in turn spurred demand. But what happens if some of these incentives disappear? How will delays in adopting new U.S. energy and climate policies affect momentum in the renewables markets? These are some of the current concerns in the industry.
At the local level, renewable power project developers sometimes encounter NIMBYs - community members who may want clean energy, but "not in my backyard." It's critical to engage the community early in the development process to explain project plans and to hear and address concerns.
Q.What is Duke Energy's business model for its commercial renewables business?
A.Although we occasionally make strategic acquisitions of renewable energy projects already under development, our model is to build, own and operate projects. Another important distinction about our renewables business model: We typically sign 20-year or longer power purchase agreements with regional utilities, municipalities or cooperatives that want to buy the electricity we produce. These wholesale customers benefit by locking in a set price, and we secure a steady revenue stream.
Q.How do you intend to grow the biopower and solar businesses?
A.ADAGE, Duke Energy's joint biopower venture with AREVA, has unique advantages. Unlike wind and solar power, electricity from wood waste can be produced around the clock. The biopower sector also creates a lot of jobs, whereas wind and solar farms require fewer employees once they're operational. These are all selling points for ADAGE. One difficulty is that no states with renewable energy portfolio standards specifically require utilities to add biopower generation. Nevertheless, we're seeing increased interest in biopower in many parts of the country - particularly the Southeast and Northwest.
We plan to pattern our new commercial photovoltaic solar business after our wind power business. Naturally, we'll consider potential acquisitions of solar projects if they make strategic sense, as was the case with our purchase of the 14-megawatt Blue Wing Solar Project in Texas in early 2010. Our business model, however, is predicated on developing, owning and operating solar energy projects. When it makes sense for both companies, we'll develop U.S. solar projects together with China-based ENN Group, based on an agreement we signed with them in October 2009.
Q.What are some key lessons you have learned from growing Duke Energy's wind business?
A.There are bound to be growing pains when you add seven wind power projects totaling 735 megawatts to your generation portfolio in less than three years. But the lessons we've learned have been invaluable. Today we're better at siting wind farms, identifying high-potential opportunities for new projects and earning the trust of the communities we plan to serve. We've also become proficient at constructing wind farms. We completed all of our 2009 wind projects ahead of schedule and under budget. Another thing we've learned is that no two wind energy projects are the same, even if they share the same technology.
Q.Is the recent growth in the U.S. renewables industry sustainable?
A.I feel the growth is sustainable, especially if you're of the opinion that we'll see a price put on carbon dioxide emissions. We have a great opportunity in the U.S. right now. Although many countries got a head start on the U.S. in adding renewables, we're catching up. Lower costs associated with generating renewable power are also helping.
The lack of transmission remains the big impediment to renewables growth. If we plan to rely more on renewable energy to power our country, we need to find a better way to get the electricity from often-remote wind sites to the population centers.
Q.When might renewable energy be as affordable and reliable as traditional fuels used to generate electricity?
A.The costs associated with producing electricity from renewable resources continue to fall as the technologies mature, but we cannot power this country with renewable energy alone. Regardless, I see renewables playing an increasingly important role in the mix of fuels we use to produce electricity.
Chief Sustainability Officer Roberta Bowman talks distributed solar
Witness Duke Energy's vision of smart energy
Keep rates affordable as we invest in the modernization of our system
Enlist customers in our energy efficiency offerings
Continue to mitigate the impact of customer switching in Ohio
Replace analog grid with a digital smart grid to increase reliability and energy efficiency, and reduce costs
Develop infrastructure to support widespread adoption of plug-in electric vehicles
2009 and Early 2010 Highlights
Gained approval for energy efficiency regulatory model in N.C., S.C. and Ind.
Added more than 360 megawatts of wind energy and launched solar power initiatives
Negotiated first N.C. and S.C. nonfuel base-rate increases since 1991