So, Dominion Energy and Duke Energy finally cancelled the Atlantic Coast Pipeline. Stakeholders in the proposed new gas pipeline may be frothing and fuming now, but the activists and land owners who fought tooth and nail in court against the project have just done them a huge favor. In fact, the message to all fossil fuel stakeholders is clear: get out now while you have a chance.
Gigantic Atlantic Coast Pipeline Vs. Renewable Energy
The Atlantic Coast Pipeline was supposed to carry gas over 600 miles from West Virginia and on into markets in Virginia and North Carolina. You can bet your bottom dollar that Dominion and Duke would have kept pouring money into the legal slugfest if they thought those markets were strong enough to support the project. Dropping it like a hot potato is a clear sign that the regional energy market has shifted, or is about to shift.
Renewable energy is the first thought that comes to mind. North Carolina is one of the top ten states for solar energy and Virginia has a fairly strong solar profile as well. Meanwhile, both states are committed to exploiting their rich offshore wind resources — as are most of the states along the US east coast.
In fact, Dominion itself is pushing the offshore wind envelope. The company recently inked a deal with offshore wind powerhouse Orsted for 12 megawatts in offshore turbines for Virginia. That sounds like small potatoes but the project is intended to model practices for many turbines more to come. All in all, the company has committed to 3,000 megawatts in wind and solar either or in operation under development by early 2022.
North Carolina is a bit behind the curve for offshore wind, but then again the entire sector was languishing in the doldrums during the Obama administration, mainly due to state-based pushback from certain elected officials (you know who you are). Now the gloves are off and North Carolina is poised to develop an offshore wind lease area of its own.
Nope, ‘Twas The Humble Heat Pump That Killed The Beast
All of this renewable energy activity is so exciting, but when it comes to heating peoples’ homes it is hard to beat fossil gas. Kidding! In many countries around the world, electric heat pumps are the heating technology of choice, and the trend is finally catching on in the US.
If heat pump mania hits Virginia and North Carolina, the potential for growth in electricity demand would be a more attractive target for energy stakeholders than natural gas.
Electric heat pump retrofits on existing buildings are still uncommon in the US, but the trend is growing for new construction. As of 2019 heat pumps accounted for 40% of new single family residential construction and 50% of new multi-family buildings.
That’s a huge leap considering that as of 2019, heat pumps only provided for 5% of existing residential buildings in the US. However, the push is on for banning fossil gas hookups in new construction.
The retrofit market is also set to blow up. Building electrification advocates have been making the environmental and health case for all-electric retrofits, and now they are zeroing in on the bottom line benefits, too. That goes for landlords as well as individual homeowners. Massachusetts is one state where the financials already work out.
“Because heat pumps are fundamentally more efficient that other sources, on a per btu basis, your tenants will be paying less for their heat than they would elsewhere. Also, because they can run backwards as air conditioners, you no longer need to permit window units,” explains Nomer Caceres of MassLandlords.net. “This will tend to lower your vacancy rate and window repair costs, and keep your tenants happier.”
Wait, Do These Things Really Work?
For those of you new to the heat pump topic, don’t be fooled by the word “heat.” Heat pumps can also be used to cool down homes in warm weather. Though they function best in moderate climates, the latest generation can handle a greater range of temperatures. The US Department of Energy is a big fan.
“Like your refrigerator, heat pumps use electricity to move heat from a cool space to a warm space, making the cool space cooler and the warm space warmer,” DOE explains, adding, “Because they move heat rather than generate heat, heat pumps can provide equivalent space conditioning at as little as one quarter of the cost of operating conventional heating or cooling appliances.”
DOE also notes that heat pumps dehumidify more effectively than conventional central air conditioners, which translates into more comfort at less cost. In addition, existing homes without central air ducts can install “mini-split” heat pump technology, a relatively new development that requires no ducts.
Today’s generation of heat pumps is also more energy efficient than earlier versions, so property owners who already heat with electric baseboards may be tempted towards a heat pump retrofit.
Aside from warming and cooling indoor spaces, heat pumps can also be used to heat water, so there’s that.
Activists & Allies Whack Down Atlantic Coast Pipeline
To be clear, despite the technology angle Dominion and Duke would probably have continued to push ahead with the Atlantic Coast Pipeline, and push back against the building electrification movement. However, a powerful confluence of allies has been working against it. In addition to the long, hard slog by environmental organizations and activists, other key factors include individual property owners and corporate renewable energy stakeholders.
One key action took place in 2017, when a group of conservation organizations and property owners took the Federal Energy Regulatory Commission to court over whether or not the agency granted approval for the pipeline without ruling on the need for it.
Spoiler alert: no need. A 2016 report prepared for the organizations Southern Environmental Law Center and Appalachian Mountain Advocates took a closer look and estimated that pipeline capacity would outstrip peak demand, leading to an oversupply.
That report also took into account the impact of the proposed 303-mile Mountain Valley Pipeline, and that’s where things get mighty interesting.
Last month, just days before Dominion and Duke announced cancellation of the Atlantic Coast Pipeline, Mountain Valley won approval to extend its existing pipeline into North Carolina. The already built parts are in West Virginia and Virginia.
That could have been the last straw for Dominion and Duke, considering that they dropped word of the cancellation in an unusual Sunday announcement. Though the two companies dinged environmental organizations for the legal delays (as did Energy Secretary Dan Brouillette), it seems likely that they also saw the bottom line writing on the wall in terms of a potential gas glut in the region.
The Roanoke Times reported that partners in the Mountain Valley extension are still committed to the project, including Roanoke Gas, EQM Midstream Partners, NextEra Energy Capital Holdings, Con Edison Transmission, and WGL Midstream.
If you have any thoughts about that angle, drop us a note in the comment thread.
They could be in for a rough ride. Opposition to the Atlantic Coast pipeline has dovetailed with the growing force of the environmental justice movement, for its disproportionate impact on Native American communities in North Carolina and other communities. The health and economic impacts of the COVID-19 outbreak have added even more fuel to the fire.
In their announcement, Dominion and Duke note that they will continue to advocate for more fuel diversity, only now they don’t mean more natural gas. They mean renewable energy, energy storage, and electric vehicle infrastructure — all of which will help strengthen their bottom line clout in the years ahead.
That sure leaves Mountain Valley holding the bag.
Hold on to your hats. Property owners along the Mountain Valley extension route in North Carolina are already on the alert, and last month the Roanoke Times pointed out that the pipeline has incurred multiple environmental fines in Virginia.
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Image: Via North Carolina Division of Environmental Quality.