High costs prompt Duke to move away from NC offshore wind projects, including Brunswick

The decision is another blow to the state's nascent offshore wind sector that has been facing serious economic and political headwinds in Washington and Raleigh recently

Key Points

• Duke Energy has announced it won't pursue plans, at least in the short term, to build wind farms off the N.C. coast, including Brunswick County.
• This decision comes after an independent evaluation found offshore wind not currently cost-competitive compared to other energy sources.
• While this is a setback for clean energy advocates, Duke Energy will incorporate the gathered information into future carbon plan updates.

The future of offshore wind in North Carolina remains uncertain, with factors like technological advancements and climate change impacts playing a role.

In a move sure to draw blowback from clean energy advocates, Duke Energy says it won't pursue any wind farms off the N.C. coast − including two wind-to-energy areas just south of Brunswick County − in the coming years.

The move was driven by financial considerations, the utility giant said this week.

"The (acquisition request for information) process determined that offshore wind is not cost-competitive at this time, so no RFP will be issued – this decision is supported by the independent evaluator that oversaw the proceedings," said Duke spokesperson Bill Norton. "Nonetheless, the evaluation process provided valuable project, cost and schedule data that will inform long-term planning assumptions for the Carolinas Resource Plan being filed later this year.”

Offshore wind, along with solar, was seen by environmentalists and others as a key component of an ambitious plan by North Carolina officials to significantly reduce the state's carbon footprint from the Tar Heel State's energy sector, the second largest polluter of greenhouse gasses that fuel climate change after transportation.

But since legislation hashed out by then-Gov. Roy Cooper, GOP legislative leaders and Duke in 2021 set goals of substantially reducing carbon emissions by 2030 and the state reaching carbon-neutral by 2050, the law has been steadily chipped away at by economic factors and changing political winds.

First, the N.C. Utilities Commission agreed with Duke and others that the 2030 goal was unrealistic and should be pushed back to at least 2035.

Second, a bill passed this summer over the veto of Gov. Josh Stein drops the interim carbon-reduction goal, but maintains the 2050 target, due to concerns over rising power bills and the reliability of some renewbable energy sources under certain conditions.

And finally, President Donald Trump has not hidden his disdain for renewable energy sources − and offshore wind in general. That has sent the sector into financial limbo as permitting for projects has been halted or placed under additional review and financing for the projects, which require a lot of upfront capital, has become increasingly hard to secure.

'Not cost effective'

The decision announced this week by Duke to drop any immediate plans for offshore wind comes out of an update last year to the Carolinas Resource Plan, commonly known as the carbon plan, that called for a review of the financial feasibility of possibly developing up to 2,400 megawatts of N.C. offshore wind power on one or more of three sites approved by the federal government. Two of those areas are about 20 miles south of Brunswick County and the other is roughly 27 miles off Kitty Hawk on the Outer Banks.

The independent evaluator's review, approved by the N.C. Utilites Commission, started in January and was filed with the commission Aug. 11. The report included several different financial scenarios, involving confidential pricing details, submitted by the three owners of the lease areas − Cinergy, a nonregulated subsidiary of Duke Energy, and TotalEnergies off Brunswick County and Avangrid off Kitty Hawk.

"Because all submissions exceeded the reference price, the companies determined through the (action request for information) that offshore wind generation is not cost effective relative to other available resources at this time such that undertaking a binding RFP to procure offshore wind would not be a reasonable step toward executing the least cost (combined carbon plan and integrated resource plan)," states the filing.

So is this the end of offshore wind in N.C.?

While obviously not a good sign for supporters of clean energy, this week's announcement isn't likely the end of offshore wind as a potential power source for North Carolina's future power grid.

While Duke officials said no further action will be taken on pursuing offshore wind in the near term, the information gathered through the economic report and other actions will be incorporated into future reviews of the carbon plan and help inform long-term planning considerations. The next proposed update to the carbon plan is to be submitted by Duke to the utilities commission in October.

The alure of renewables as a way of building a greener power grid also isn't going away, especially as economies of scale mean the cost of building wind and solar projects will continue to drop in the future and the impacts of climate change − from warmer summers and more intense rain events to stronger hurricanes and increased sea-level rise − continue to impact more and more parts of the globe.

How Duke will replace the power generation that could have been produced by the offshore wind farms, whether through more natural gas plants or relying on emerging technologies like hydrogen or small modular nuclear reactors, also is a question that needs to be answered.

But at least in the short term, it doesn't look like offshore wind will be part of the answer to North Carolina's future power needs.