Duke Energy is one of the largest utilities in the U.S.; after the company completes a $13.7 billion takeover of Progress Energy later this year, it will be the largest utility in the country, not to mention one of the largest greenhouse gas emitters in the nation. We had the chance to chat with Duke CEO Jim Rogers--named one of the 50 most powerful people in the world by Newsweek--about the future of the company and the energy industry.
What have been some of the biggest challenges of running a massive utility?
In the five years since I've been at Duke, our biggest
challenges have been several things. One is the recognition that
after 50 years, the real price of electricity is going to rise because of
tighter regulations on coal plants and the recognition that we have to
restrict carbon. [After the merger] we will be [one of the] largest emitters of CO2 in the U.S. We have a
special responsibility to lead on that issue.
We will have
to retire and replace virtually every plant by 2050. In a sense, that
gives us a blank sheet of paper. What will we build in the future? One of our challenges is going to be to try to position the company to totally remake its system of generation and at the same time modernize our grid,
which effectively means going from an analogue grid to a digital grid.
What do you believe the energy mix will look like in the coming decades?
Over the last 20 years we have started using coal in a cleaner way. But there needs to be more technological development to use
it in a low carbon world. Is this carbon capture and storage (CCS)? Is it a system to use algae to
capture carbon and accelerate the growth of algae and then use it as a
biofuel? I think CCS will play a role particularly if utilities are in a region where
the geography works, but that's predominantly in the Midwest. The ultimate solution to [make coal more sustainable] is
to recycle the carbon. We have
relationships with a number of Chinese companies, and they're actually more
focused on how you recycle the carbon rather than storing it. On some level, it seems like a more sustainable practice to take it and reuse it rather than store it in the ground.
So you do still believe coal will play an important part of the energy mix in the future?
2030 coal will still be here and be used, but in the longer term, with
the realization that we will have carbon constraints, the question is whether the technology will evolve to allow coal to remain a [clean] alternative. Whether or not these technologies will be here in 2050
is a function of how well we can develop technology to reduce their emissions
footprint. With respect to renewables, how fast can we bring down the cost of solar
and wind in a way that we don't need subsidies?
Do you think solar and wind will become cheap enough to compete with traditional energy sources?
I do. [The price of] wind has come down rather dramatically. What's going to drive down
the cost of solar--although I don't believe Moore's Law applies to
solar--if you look at the Chinese who are leading the world in solar
panel production, wind turbine production, and probably lead the world in the
development of batteries ...the Chinese are developing the intellectual property of scaling, and that in
itself is what creates value. The Chinese are going to find a way to scale this, and as they scale this, they will drive the costs down. I am confident that over the next two to three decades you're going to see prices come down pretty dramatically.
What about the future of nuclear plants?
We will have to retire and replace every [Duke Energy] nuclear plant by 2050. Lets start with the simple assumption that 70% of [low-carbon] electricity today comes
from nuclear. If we had to replace that with gas...it would have a
fairly detrimental impact with respect to climate. Two things give me hope. One is evolving technologies, the second is development of modular nuclear technology.
When I look at nuclear, I look at it both as
modular as well as large plants in the future. I believe we have to solve the spent fuel issue. The question is whether we store it or recycle it. My judgment is that we'll find a
way to recycle it. So [nuclear] will play a role, and it's kind of hard now to really predict the
role. I mean, that's what makes this puzzle so interesting, because we
know what the pieces are, we kind of have inklings of what some of the
shapes of the pieces will be tomorrow, but to put the map together of what
the mix will be--it's a pretty intriguing exercise. We've got to do it. We don't have a choice.
What are some of the new energy technologies that will be prevalent in the future that aren't so well known today?
If I knew that I'd be taking money and making bets. I think modular
nuclear as a group will be breakout. I think there are going to be breakthroughs in solar technology. I think in
the long run solar will trump wind because solar can be distributed [on rooftops] and also I think will be more efficient than wind
turbines over time for a variety of different reasons.
I think battery technology will be transformative, not just with respect to
intermittent sources of power, but also it has a fundamental impact on
how the grid actually operates. I'm following very closely
what BYD is doing. I think zinc air [battery technology] is kind of interesting because [the cells]
become grid storage, which I think is important.
These are some of the areas that I think will evolve. The only question is which ones will be lowest cost and most efficient. We're
at a very important point, I believe. I wish I could be a CEO for
another 23 years. The technologies are coming together and are
evolving. Some are clearer than others. I've always told people particularly recently that we're a technology company disguised as a utility.