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Why this gas-heavy utility is going (really) big on solar

Why this gas-heavy utility is going (really) big on solar

Entergy CEO Phillip May joined Episode 44 of the Factor This! podcast and offered an inside look at this Gulf State utility's view on the energy transition. May shared his outlook for solar, energy storage, green hydrogen, offshore wind, and more. Subscribe wherever you get your podcasts.

The news from Entergy Louisiana may have required a second reading. And a third. This gas-heavy utility wants to go (really) big on solar. Why now?

Entergy Louisiana asked state regulators in March to approve 3 GW of new solar resources. That's on top of its request from a few weeks earlier for 225 MW of new solar, which would have nearly doubled the state's existing capacity.

Louisiana isn't known as being the friendliest to solar. So what led to Entergy's sudden change of heart?

Entergy CEO Phillip May joined Episode 44 of the Factor This! podcast to share an inside look at the Gulf State utility's view on the energy transition.

"It comes down to what our customers are asking for," May said. "This is not driven by a policy in Washington. This is not being driven by whatever is going on in this moment. It's being driven by our customers."

Louisiana is experiencing industrial sector growth that clocks in at around 6% per year. Access to low- and zero-carbon power is a prerequisite to economic development in today's corporate environment, May said. Entergy Louisiana's most recent procurement target demonstrates that the utility, and state, don't want to be left behind.

The demand is clear. A recent green tariff offering to industrial customers within Entergy Louisiana's territory was fully subscribed in 8 minutes, and customers said they had the desire to secure more than 2,000 MW of additional clean power, should it become available.

Those customers want "additionality," or new solar on the system to meet their demand. Clean resources located within the state of operation, and in the same power market, at least, is also a priority, May said.

"Solar is the go-to resource in Louisiana at this point for low- and no-carbon resources," May said. "There's a huge appetite for this with companies that are looking to reduce their carbon footprint. But more importantly, as they expand, they're not going to move away from their decarbonization goals as part of their expansions."

Making the case for solar

May said he believes Entergy--which provides electricity to 3 million utility customers in Arkansas, Louisiana, Mississippi and Texas--has the ideal system to expand its solar portfolio quickly.

Nearly half of the utility's generation mix comes from gas, while nuclear supplies 27%. This flexible backbone can support the rapid build out of intermittent resources like solar and wind, May said, in a way that other systems can't, due to resource adequacy issues.

But Entergy Louisiana has to work with a regulatory body, the Louisiana Public Service Commission, that often errs on the side of conservative planning. The LPSC is "not going to go green for the sake of green," according to May.

Steadily improving economics behind solar and more volatile natural gas prices, are helping to sell solar in the South. Ultimately, the lowest-cost generation source will win out, and solar is trending in the right direction.

May said reform is needed to expedite resource procurement "at the speed of market," instead of drawn-out proposal processes that can take years to complete. Market dynamics that include solar supply chain constraints and international trade disputes don't support projects waiting for a green light.

"We need to be developing long-term relationships with these developers," May said. "We're going to need these folks in our area, collaborating with us, helping our customers meet their needs on an ongoing basis."

Getting to zero

Entergy claims to be the first U.S. utility to set a voluntary carbon emissions reduction goal, dating back to 2001. The utility has a goal of reducing emissions by 50% from 2000 levels by 2030. And it wants to achieve net-zero emissions throughout its system by 2050.

Setting a decades-off goal is easy. Getting there is a much more challenging proposition.

"We have a good understanding of existing technology. But if Entergy looks at how to get to 50% (carbon emissions reduction), I have plan for that and, in fact, I can probably get there early," May said.

But to get to zero? "Something else has to happen," May said, admitting, "We don't know what that something is."

May said he sees promise in green hydrogen, small modular nuclear, and offshore wind to finish the decarbonization job.

Entergy has signed a series of agreements to study and advance these emerging technologies. The utility has partnered with green hydrogen developer Monarch, SMR manufacturer Holtec, and with RWE and Diamond Offshore Wind to explore the Gulf Coast's offshore wind potential.

While May acknowledges that the energy transition is "incredibly complicated and uncertain," he said he's energized by the challenge.

"I think that actually makes for some excitement."