Dive Brief:
- By 2050, the generation fleet owned by Southern Co. will be "low to no-carbon," CEO Thomas Fanning announced Monday at an energy conference in New York.
- While he gave no exact targets, Fanning told Utility Dive that Southern will focus on technologies "that will allow us to take down carbon emissions to zero," including renewables, nuclear, storage and natural gas with carbon capture technology.
- Fanning also touted his company's decision to continue construction of the delayed Vogtle nuclear project in Georgia. Though billions over budget, the CEO said the project will still come in below regulators' original estimates of customer rate impacts.
Dive Insight:
While details remain unclear, Fanning said his clean energy announcement marks an inflection point for Southern Co.
When he became CEO in 2010, Southern relied on coal for about 70% of its electricity. That's now down to 28% thanks to cheap natural gas prices and increasing investment in renewable resources, a number that Fanning said is likely to decrease in future decades.
"What we're trying to do is figure out technology solutions that will allow us to take down carbon emissions to zero," Fanning told Utility Dive after his appearance at the Bloomberg Global Energy Summit. "It will depend on some technological innovation — that's why I can't say prescriptively zero — but I think we're working on those things."
There will likely still be fossil fuel resources on Southern's system in 2050, Fanning said, but they are likely to be natural gas, not coal, and include carbon capture and storage (CCS) technologies.
"Coal is pretty much going to dissipate over time so I think you're really dealing with gas at that point," he said.
How those CCS technologies come to market remains to be seen. Southern last year abandoned coal gasification and carbon capture efforts at its Kemper plant in Mississippi, electing to run it as a natural gas plant after billions in cost overruns. Fanning said that while the CCS facility is not operating today, it gave the company important experience with the technology.
"We have evaluated carbon capture both from pre- and post-combustion gas," he said. "The other place we've done it is down at Plant Barry with Alabama where we took post-combustion gases and captured the carbon there."
Fanning said Southern's model as a vertically-integrated utility will help it finance research and development of low-carbon options like CCS and new storage technologies.
"I think the market structure that we find in the so-called organized markets really lend themselves to short-term efforts all the time and they try to make long-term progress," Fanning told the conference audience. "What we need is the ability to value appropriately long-term capacity, which we don't have."
That vertically-integrated structure is allowing Southern to continue building its Vogtle nuclear expansion in Georgia despite being years behind schedule and billions over budget. Fanning told the audience the project would have about a 10% rate impact on residential customers — lower than the 12% originally expected by state regulators, but significantly higher than Southern's original estimate of 6.5%.
Other speakers at the conference questioned that perspective. Former FERC Commissioner Nora Mead Brownell, a Republican George W. Bush appointee, said competition in wholesale power markets prevents situations like the Kemper and Vogtle plant overruns.
"You don't hear big of huge mistakes with big huge ratepayer funded R&D projects," she said, "because there's financial transparency."
Fanning's announcement comes after a series of moves from Southern to diversify its holdings, purchasing gas utility AGL, buying in to the Atlantic Coast Pipeline with Duke and Dominion, and picking up microgrid leader Powersecure in recent years.
