Innovative Energy Solutions on the Horizon as Duke Energy Partners with Amazon, Google, and Microsoft

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The ACE tariffs, voluntary pricing structures for Duke Energy’s large commercial and industrial customers, will be part of Duke Energy’s five-year capital plan and require regulatory approval in NC and SC. (Credit: Duke Energy)

by | May 30, 2024

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In a significant move towards sustainable energy, Amazon, Google, and Microsoft have signed initial agreements with Duke Energy to create innovative power contract terms to reduce the costs of developing new nuclear technologies and battery storage systems. Duke Energy announced this collaboration on Wednesday, seeking to advance carbon-free technologies in North and South Carolina.

Memorandums of Understanding (MOUs) and New Tariff Structures

This month, Duke Energy and steel manufacturer Nucor signed memorandums of understanding (MOUs) proposing the creation of new electricity rate structures, or “tariffs,” to support the development of small modular reactors (SMRs) and long-duration energy storage solutions. These advanced technologies are crucial for a sustainable energy future and will significantly reduce carbon emissions.

The proposed tariffs aim to facilitate beneficial on-site generation at customer facilities, allowing large energy consumers to manage their power needs more effectively. Duke Energy, serving approximately 8.4 million customers across several states and with an energy capacity of around 54,800MW, views this initiative as a critical step towards a greener energy grid.

Addressing the Growing Energy Demand for Data Centers

The rapid expansion of the technology sector, particularly energy-intensive data centers, is a key driver behind this initiative. A recent study indicates that data centers could consume up to 9% of U.S. electricity generation by the decade’s end. This surge in demand underscores the need for innovative energy solutions to sustain the sector’s growth.

Kevin Miller, Amazon Web Services, Vice President of Global Data Centers

“As the world’s largest corporate purchaser of renewable energy, Amazon is committed to enabling new sources of carbon-free energy to help power our operations and the communities where our customers live and work. With a footprint of data centers, fulfillment centers and corporate buildings across Ohio, the Carolinas and Florida, we’re excited to collaborate with Duke Energy to find new solutions that can help us achieve our Climate Pledge to be net zero carbon by 2040, and today’s agreement marks an important step in that journey.”

Duke Energy has recognized this demand increase, with utilities reporting a significant rise in power consumption this year. To address this, the company plans to develop take-or-pay tariffs, which outline the cost of power and other contract terms. These tariffs will include up-front infrastructure build-out payments to mitigate volatility in the data center industry, ensuring a stable and predictable energy supply.

The new tariffs must receive regulatory approval from North Carolina and South Carolina authorities before they can take effect. This regulatory process will involve thorough evaluations to ensure the proposed rate structures align with state policies and public interests.

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