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Another Strong Year for Renewables

As the economy forces many renewable energy project developers to scale back or delay their plans, Duke Energy continues to build its wind and solar portfolio.

Winds of Change
Duke Energy’s Kit Carson Windpower Project in eastern Colorado
Duke Energy’s Kit Carson Windpower Project in eastern Colorado

Duke Energy Renewables, a newly named commercial business unit, added 251 megawatts (MW) of wind-generated capacity in 2010. The 51-MW Kit Carson Windpower Project, completed in November 2010, is the company’s first renewable energy facility in Colorado. The 200-MW Top of the World Windpower Project near Casper, Wyo., is our second in the area and fourth in the Cowboy State.

While we met our goal of adding between 200 and 300 MW of wind energy to our portfolio in 2010, we foresee market challenges ahead. Because wholesale customers are requesting fewer bids, Duke Energy’s wind business, as well as the U.S. wind power industry as a whole, may slow in 2011. However, our pipeline of potential development projects — more than 5,000 MW — creates excellent prospects for growth in 2012 and beyond.

In August 2010, Duke Energy canceled plans to erect three demonstration wind turbines in North Carolina’s Pamlico Sound, between the mainland and the state’s Outer Banks. After a year of in-depth study and collaboration with the University of North Carolina at Chapel Hill, we concluded that the fixed costs associated with permitting, design and construction of the small-scale project would not be economically viable. Our partnership with UNC-Chapel Hill is now focused on studies to enable large-scale offshore wind development on the ocean side of the N.C. coast.

Solar Power Shining Brightly
Our Blue Wing Solar Project in San Antonio, Texas
Our Blue Wing Solar Project in San Antonio, Texas

Proven technology and improved economies of scale helped fuel new investments in solar energy in 2010. Duke Energy Renewables acquired and completed three commercial solar farms — two 1-MW photovoltaic (PV) projects in North Carolina and a 14-MW facility in Texas. The Blue Wing Solar Project near San Antonio consists of approximately 215,000 PV panels, making it the most expansive solar farm in Texas and one of the largest in the country. We are also adding two 5-MW commercial solar farms — one in Florida and another in North Carolina. Both of these projects will be on line by the end of 2011. We expect to complete more solar facilities by the end of the year as well.

Our N.C. regulated utility’s $50 million program to install 8 MW of solar energy capacity on the rooftops and grounds of select schools, commercial buildings and factories in the state is virtually complete. Participating customers receive rental payments from Duke Energy in exchange for hosting our solar panels. The electricity generated through the program — enough to power approximately 1,300 homes — is fed into the power grid that serves all our customers in the state.

Duke Energy also purchases solar power to help meet our renewable energy goals and state mandates. In December 2010, the 16-MW SunEdison facility in Davidson County, N.C., achieved full operation. This PV solar farm, which supplies our N.C. customers, can produce enough electricity to power more than 2,600 homes.

Investing in solar energy and other forms of renewable power creates jobs. Our contract to purchase renewable energy certificates from FLS Energy put 80 people to work in 2010. FLS Energy, a North Carolina company that uses solar technology to produce hot water at customer sites throughout the state, will need nearly 130 workers by 2012 to fulfill its agreement with Duke Energy.

Biopower and Landfill Gas

Biopower is generated when organic material — often called biomass — is used to create electricity. Many states and electricity providers count on biopower to help meet renewable energy mandates and provide a sustainable alternative to burning fossil fuels.

However, the U.S. market for large-scale biomass projects has been hampered by a lack of clear federal guidance on emission regulations, lower natural gas prices and the weak economy. In early 2011, Duke Energy and AREVA decided to suspend the activities of ADAGE, the biopower joint venture they formed in 2008. ADAGE may resume its efforts when market conditions improve.

Biopower still figures in our N.C. regulated utility’s plans to meet the state’s Renewable Energy and Energy Efficiency Portfolio Standard. We are co-firing small amounts of biomass with coal at select generation facilities, and exploring the potential retrofit of other units to burn biomass only.

In addition, we expect landfill gas-to-electricity investments to play an important role, and have executed roughly a dozen contracts to buy power from landfill gas projects.

Landfill gas, primarily consisting of methane, is produced when organic materials in large landfills decompose. Methane is approximately 20 times more potent than carbon dioxide at trapping heat in the atmosphere. Capturing methane and using it as fuel to produce electricity is preferable to burning it as a waste product.