Big energy buyers, eager to see more around-the-clock clean energy on the U.S. electric grid, are using their purchasing power to negotiate new tariffs and contracts with utilities.
Georgia Power, for example, is collaborating with the Clean Energy Buyer’s Association, a trade group that represents over 400 companies, on a fossil-free energy program for commercial and industrial customers.
“Companies are not just thinking about offsetting their energy consumption,” said Priya Barua, senior director of marketing and policy innovation at CEBA. They want to wean themselves off gas and oil: “It’s no longer about setting goals, it’s expanding to think about decarbonization more broadly, and really trying to ensure their investments are having an impact,” she said.
Three sectors face particular challenges in sourcing clean power because of their massive demand for new power: Data center providers, manufacturers seeking to tap federal incentives for new facilities and the automotive industry, Barua said.
Conversations are already paying off with other utilities. Duke Energy, which serves North Carolina, South Carolina, Florida, Indiana, Ohio and Kentucky, on May 29 joined Amazon, Google, MIcrosoft and Nucor in announcing “Accelerating Clean Energy” tariffs that support new nuclear technologies, renewable energy, long-duration energy storage and demand-response services (which incentivize customers to shift their power usage into off-peak times).
“We’ve had a pretty rich history of partnering with our customers and figuring out ways to provide customized solutions for them,” said Lon Huber, senior vice president of pricing and customer solutions for Duke. “We’re at this intersection. We’ve got some very large loads coming in. We have retirements that are coming from more traditional power plants. If we could marry the desire for clean energy from our customers with where we need to go in terms of our carbon goals, then we have a win-win outcome that we all want.”
Google funds enhanced geothermal in Nevada
Duke’s initial tariffs are subject to regulatory approval in North Carolina and South Carolina, which is where customers want them first, but could be available to large commercial customers within the next 90 days to six months, according to Huber.
One of the new models Duke plans to use is a “clean transition tariff,” a new type of fee based on a long-term arrangement to fund emerging technologies that add clean resources around the clock to a utility’s electricity generation mix. The tariff works by covering the cost difference between projects using those resources versus alternatives that are cheaper, but that add fossil fuels to the grid, such as a natural gas peaker plant. The costs are borne by a large commercial customer, so that they aren’t forced upon other ratepayers. A similar tariff was also proposed in Nevada in June as part of a partnership between Google and NV Energy, the state’s largest utility.
“We need clean, firm technologies, and we don’t want to fund the natural gas buildout,” said Caroline Golin, global head of energy market development and innovation at Google. “Everyone sees that there is a huge need for this.”
In Nevada, a clean transition tariff will be used to finance NV Energy’s investment in 115 megawatts of enhanced geothermal power generated by a plant being built by Fervo Energy. Google envisions using the model with a range of clean power and energy storage options, depending on the region.
“It is replicable, it is scalable and it is technology-agnostic,” Golin said.
The Nevada utility commission is expected to rule on the proposal before the end of the year. Google is also discussing clean transition tariffs with American Electric Power, Dominion Energy, Southern Co. and Tennessee Valley Authority.
Steelmaker Nucor needs energy that isn’t intermittent
While Google and its peers in cloud computing and artificial intelligence have so far been the most vocal proponents of these new tariffs, steelmaker Nucor is also hungry to source low-carbon energy that isn’t intermittent, such as solar and wind.
Nucor, which makes much of its steel from recycled content, has pledged to cut its greenhouse gas emissions 35 percent by 2030. That will require it to reduce the footprint of its steelmaking processes to 77 percent less than the industry average.
“We are often our utilities’ largest load and realize the need not just for cleaner electric resources but additional capacity in the areas where we operate to allow for continued economic development in the community at large,” said Ben Pickett, vice president and general manager of public affairs and government relations at Nucor.
In October, the company announced a $35 million investment in nuclear fusion company Helion, to build a 500 megawatt plant for one of its steel mills. Nucor is also teaming with Google and Microsoft to spur demand for green power.
Nucor’s energy solutions services division, which sells structures for solar and wind farms, is also assessing the feasibility of repurposing the generation and distribution infrastructure at decommissioned coal plants so the sites can be used for clean power installations, said Tabitha Stine, general manager of energy solution services at Nucor. While it has yet to announce a project of this nature, it is studying locations near its own operations and those of large customers, she said.
“We are absolutely game for that and committed to being an off-taker if we can work with the regulators and utilities that own that property to make that happen,” she said. “It’s really just a matter of how we work together with these buyers, these big industrial off-takers to make this happen.”