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Episode #164: 'Duke Energy's Strategy to Harness the IIJA Opportunity' with Cynthia Klein, Director of Strategic Initiatives at Duke Energy [an Energy Central Power Perspectives™ Podcast]

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Since being passed into law, the Infrastructure Investment and Jobs Act, affectionately dubbed "Biden Bucks," has held an ever-present hold on the U.S. energy landscape. From speeding up deployment of U.S. renewables to incentivizing domestic manufacturing of clean tech, to the investment into innovative R&D opportunities, the legislation has been integral for stakeholders like utilities to account for when looking to the future. Today's guest to the podcast, Cynthia Klein, Director of Strategic Initiatives at Duke Energy, brings her invaluable perspective to the table, shedding light on the challenges, triumphs, and lessons learned in navigating the IIJA process.

From the initial reactions to the strategic maneuvering within Duke Energy, Cynthia provides a candid glimpse into the realities of securing federal funding amidst regulatory constraints. With a keen focus on collaboration and prioritization, Cynthia shares with podcast host Jason Price and producer Matt Chester her firsthand accounts of Duke Energy's efforts to drive meaningful change through IIJA, offering tangible examples of successful projects and invaluable insights into resilience in the face of setbacks. Listen in as this conversation unravels the complexities of energy transformation and the pivotal role of IIJA in shaping the future of utilities.

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Thanks to the sponsor of this episode of the Energy Central Power Perspectives Podcast: West Monroe. 

 

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TRANSCRIPT

Jason Price:

Welcome to the Energy Central Power Perspectives Podcast. This is the show that brings leading minds from the energy industry to discuss the challenges and trends that are transforming and modernizing our energy system. And new for 2024, our listeners can now submit a recorded question to a future podcast episode. Just look for the speak pipe link in the show notes below this episode, and leave us a voicemail with a question and we may just play it on the air for our future guest. And a quick thank you to West Monroe, our sponsor of today's show. Now let's talk energy.

Let I am Jason Price, Energy Central podcast host and director with West Monroe, coming to you from New York City. And I'm joined once again by the producer of this show, Matt Chester, dialing in from Orlando, Florida. Matt, today we're diving into a discussion about the Infrastructure Investment and Jobs Act, IIJA or as many people say, IIJA, or some people also call as the Biden Bucks. Now this legislation continues to loom quite large in the world of energy today and for the foreseeable future, but it has been a few years since it ended up passing Congress and getting signed by President Biden into law. Can you give us a quick reminder to our listeners about the background and outcomes of the IIJA?

 

Matt Chester:

Absolutely, Jason. The Infrastructure Investment and Jobs Act remains a pivotal piece of legislation, reshaping the energy landscape. And it was a core piece of the Biden legislative agenda. Passed back in November of 2021, in total, it allocated about $1.2 trillion of funding with its aim crossing critical infrastructure needs from transportation to broadband and with a threaded focus on issues like sustainability and job creation. And so its impacts are far-reaching, redefining America's infrastructure framework for years to come. And zooming in on the energy specific aspects of it, some of the specific areas that were funded promoted renewable energy integration, grid modernization, resilience. We saw $18 billion go towards energy and innovation, 10.6 billion go towards carbon management, $4.5 billion towards gridded broadband infrastructure, 5 billion in carbon transportation and storage, another three and a half billion towards weatherization and $2.25 billion towards port infrastructure and offshore wind. And of course that's just giving the broad overviews. The details show there's a lot more going on than just that.

 

Jason Price:

Thanks, Matt. Very helpful indeed. And like I said, it's important to have that refresher because today's episode is all about the opportunities unlocked by IIJA for the utilities, as well as the hurdles that have had to be overcome and the lessons that have to be learned along the way. And to give us that utility perspective, we're thrilled to welcome to the virtual podcast Booth, Cynthia Klein of Duke Energy. Cynthia is the director of strategic initiatives at Duke Energy and she has indeed been working with her team to move mountains when it comes to this federal funding process. Not to mention the other business as usual programs and initiatives she has her hands in. So given how busy that makes her, we're thrilled she's been able to join us for today's podcast and I'm excited to bring her in. Cynthia Klein, welcome to the Energy Central Power Perspectives Podcast.

 

Cynthia Klein:

Thank you so much, Jason. I'm really excited to be here to talk about IIJA.

 

Jason Price:

As are we. Cynthia, before we dive in to IIJA, I want to give you a chance to share more of your background with our listeners. What does the director of Strategic initiatives do and how did you find yourself in this role?

 

Cynthia Klein:

So great question. So my team brings together the right people across the organization to drive disciplined, cross-functional and roadmap-driven initiatives that provide insights to our strategy such as with the Infrastructure, Investment and Jobs Act. For some background, I'm actually an engineer and I love nothing more than adding structure to what can otherwise be chaos. And I really enjoy seeing something tangible at the end. Something on paper is great and all, but there's nothing like seeing your actions play out in real life. I spent my first years doing core engineering. I've crawled inside turbines and power plants, presented at engineering conferences, then took my passion for connecting dots to move into technology business development roles, program management-type roles, then eventually to a joint technology strategy role before moving to Duke Energy in January of 2020 right before a global pandemic.

But there I started in market strategy and we identified the need to really activate the organization around enterprise-wide objectives. Some of those first topics were offshore wind, hydrogen, climate resilience and adaptation and our topic of the day, IIJA. So I'm the type of person who is always looking for how we bring the right people together to make the most efficient and effective decisions. And fortunately that's what my role is now.

 

Jason Price:

That is absolutely fantastic. Really appreciate that background. So let's now talk about the topic at hand. When News of IIJA came down, what was your initial reaction? Did you recognize that your world would get a lot busier, and share with us how did executive leadership view this funding early on? And has this changed at all over time?

 

Cynthia Klein:

Well, first, yes, but giving a little bit more background. So at Duke Energy, we're executing one of the largest energy transitions. So we've been tracking the IIJA through the, will it pass, won't it pass, period. And when the legislation did pass in November of 2021, I, along with several other of my wonderful colleagues, spent that winter break in December reading the thousand plus pages. We had already developed a discipline framework to evaluate the potential for IIJA to advance our clean energy transition. Our focus has always been on opportunities that closely align with our business goals. So zero emission generating technologies, transportation electrification and grid modernization, resilience and reliability. We took a lot of time as a team to think through this opportunity and this funding in the beginning. When you hear, as Matt was saying, those big numbers, that $1.2 trillion, it sounds like a lot of money.

So our challenge was balancing this incredible opportunity with the realization that it isn't money that will offset all of the investment we need to make in our system. So we also engaged in educational sessions with our regulatory bodies on opportunities where our goals aligned because there's also some of that funding that flows through the states that we weren't eligible for but would also support our customers. So we viewed this as a really great opportunity for funding, but also one that was highly competitive. So our team's job was to make sure what funding we went after was really the funding worth pursuing for our customers.

 

Jason Price:

That's very interesting. And I will ask you as a follow-up your interactions with your customers. So I want to hear more about that. But first, take us through the process. How does Duke Energy approach and navigate the challenges of the IIJA process, especially considering the multi-year rate process and regulatory constraints that you go through? How do you prioritize all this?

 

Cynthia Klein:

So developing an approach to navigate this IIJA funding was honestly one of my favorite parts. But let me take a quick step back to give more context. So many of your listeners already know, but Duke Energy provides electric service to over 8 million customers in North Carolina, South Carolina, Florida, Indiana, Ohio, and Kentucky, and collectively owns 50,000 megawatts of energy capacity. And our natural gas unit serves 1.6 million customers in the Carolinas, Tennessee and Kentucky. So I'm going to double click into the Carolinas for just a minute. We're projecting demand for electricity to surge by 35,000 gigawatt hours over the next 15 years. To put that into perspective, that's more than the annual electric generation of Delaware, Maine and New Hampshire combined and an increase from our forecast that we had just a year ago. And this growth and demand for this increased power really reflects the economic development success, population growth, and that electric transportation expansion that's ongoing throughout the nation.

To meet those demands, we'll need dispatchable resources, think natural gas to enable our coal retirement and support this greater integration of intermittent renewable resources like solar and wind that are being added to our grid. And ultimately we want to serve demand for electricity in a smart and strategic way that considers the needs of our customers and communities. So our goal is to maintain that competitive advantage and positions of our states for continued growth. So with that context and with that lens and background, that's how we evaluated our screening process for IIJA to really maximize the value for our customers and communities. As I mentioned before, before the bill was officially signed, we were already evaluating what opportunities could benefit our customers. After the bill was signed, we kicked off a cross-functional team that executed on that disciplined approach and prioritization framework to ensure we were providing the most value to our customers.

We weighed each opportunity based on four main factors, customer value, likelihood of success, executability and importantly, stakeholder alignment. And that includes if this is a state regulatory priority. So our focus for these applications is really on quality and value over quantity. Like the rest of us, they have limited time and resources and they're really looking for you to put your best foot forward through the application process. And the applications can be substantial. For instance, just one of our hydroelectric power incentive applications was around 500 pages. So as a company, we applied for a number of grants on our own. Those were the grid resilience grants and the hydropower incentives that I just mentioned beforehand.

And we've also pursued funding as a member of a really robust partnership. So examples here would be for our clean energy transition or ZELFRs, which are zero emitting load following resources where a partnership approach really would be most impactful. And our application with our peer utilities on the Southeast Hydrogen Hub was a very strong partnership opportunity.

The final way we've approached these applications is through support. So programs that we cannot pursue directly, but we provide varying levels of support to those who will be applying for those applications.

 

Jason Price:

Very interesting, and an incredibly thoughtful process indeed. So I want to go back to the collaborations and the local stakeholder support that you brought up earlier. Are there examples that you can share where you're not specifically putting in bids, but you're assisting local governments, communities and other stakeholders with what they need from you to put in their bid, and in such cases, what strategies are you employing to ensure effective collaboration?

 

Cynthia Klein:

So a lot of the IIJA funding relevant to our businesses will actually flow to our state and local governments and to our customers. So think of funding for electric school and transit buses and to deploy the much needed EV infrastructure. Across the states and communities we serve, we've conducted very robust outreach and supported a variety of stakeholders and their efforts to bring those benefits of this funding to our communities. For example, we are very excited about awards that will flow to transit authorities in our own backyard. So the Cincinnati public schools were awarded almost $4 million for 10 EV school buses. $6 million was awarded to the Greenville Transit Authority Greenlink in South Carolina to acquire low emission compressed natural gas buses. And $30 million was awarded to the Charlotte Area Transit System, CATS in North Carolina to acquire battery electric and hybrid electric diesel buses and that needed associated charging equipment.

And even for projects where we are the prime applicant, we work closely with stakeholders to develop community benefits plans, which are a really integral part of each application. It's counted as 20% of the funding, but it's really foundational work. And these community benefits plans include four elements that are really core and tied closely to Duke's engagement with our community. So those include ensuring benefits flow to those with the most need, diversity and inclusion, two-way engagement with our communities and one I'm very passionate about, which is bringing good jobs.

 

Jason Price:

That's fantastic. Those are great examples of Duke Energy working with the community where the community is the recipient of the funds. Let's talk about now Duke Energy's efforts. Can you highlight a couple of projects, maybe one or two that has passed to the next round with DOE encouragement or outright successfully funded at Duke Energy?

 

Cynthia Klein:

So yes, excitingly, we've had a few wins on the board. We had an early success with the Department of Energy awarding our Piedmont Natural Gas a million dollars to extend our industry-leading methane monitoring work. So that funding is helping us build off of our earlier efforts to detect leaks and measure real-time methane emissions on the natural gas distribution systems. The DOE also awarded an $8.2 million grant for a carbon capture and storage study at our Edwardsport power station in Indiana. And fun fact, this award is one of the first to be finalized with the DOE's newly formed Office of Clean Energy Demonstrations that was established as part of IIJA. And most recently, all of the Duke Energy submitted concept papers for the recent tranche 2 of the grid resilience and innovations programs were encouraged by the DOE to continue to full application. So those are due in April and May. So we're working on those applications as we speak.

 

Jason Price:

That's fantastic. Well, congratulations there. And don't hate me for asking the next question, but of course not all of them can be winners. Duke did put in applications for long duration energy storage using the Energy Dome technology, as well as one for the hydrogen hub that I understand didn't get selected. So what can be learned and how did you handle this with you and your team?

 

Cynthia Klein:

Energy Dome is a great example of our efforts to pursue funding for emerging technologies. We put in a strong application for this incredibly competitive energy storage application, and our goal was to demonstrate a commercially scaled 10 hour storage system that was developed by Energy Dome. So the system is known as a CO2 battery. It's actually charged by compressing CO2 in a closed system and then storing that energy as heat. What's so interesting is as we increase the amount of renewable energy on our system, these load following resources that can store energy over long periods of time are going to be increasingly important for maintaining that grid reliability. Ultimately, we submitted an application for the technology that was chosen, so we were really close to an award, and even though we weren't awarded funding, we'll still be able to monitor that technology for future potential use at one of our sites. So that really excited the team.

And yes, you have that right, Battelle submitted the Southeast Hydrogen Hub application we put in with a number of our peer utilities. So hubs were selected that focused on feedstock diversity and harder to decarbonize sectors like heavy duty transport and fertilizer. So your listeners may understand after tuning into the mock H2 Hub podcast back in January, but I don't think a lot of people realize that hydrogen has so many potential use cases, and that's why the DOE put out that $8 billion investment for these hydrogen hubs. It's ultimately going to be this variety of uses that supports the build out of the hydrogen infrastructure. We were disappointed, but for us at Duke Energy, we learned so much through the application process and we'll continue to engage with our Southeast Hydrogen Hub Coalition to advance our strategies, strengthen our partnerships with our peer utilities, the large customers and other stakeholders we really established through the application process.

And we're excited to monitor how the hubs and the hydrogen economy evolves based on this monumental funding. I'll also note we weren't just dependent on that funding for learning about hydrogen. So in Florida we recently announced a project we've been working on for the last few years. At our plant in DeBary, Florida, we plan to operate one of the turbines there on a hundred percent hydrogen fuel to demonstrate end-to-end hydrogen production and use. Although it's relatively small scale, the project will draw power from a 75 and a half megawatt solar array to run two one megawatt electrolyzer units installed at the DeBary plant. This DeBary hydrogen project will actually demonstrate both generating hydrogen and operating a hundred percent hydrogen fuel turbine. And right now our anticipated 2024 completion date would make it one of the first projects of its kind in the nation.

 

Jason Price:

Well that's fantastic. Lots of exciting things coming from Duke Energy and it's amazing to be talking to you who has your hands on in many of it. So this is really exciting and we want to thank you for breaking this down and helping us really understand and appreciate the IIJA process.

But now we want to put you through what we call the lightning round, which gives our listeners a chance to learn more about you, the person, rather than the professional. To do so, we're going to throw a few questions your way and your responses should be kept to one word or phrase. So Cynthia, are you ready?

 

Cynthia Klein:

Yes. Let's go for lightning round.

 

Jason Price:

Okay, let's take it away. So question one, what book, film or TV show are you taking to a deserted island with you?

 

Cynthia Klein:

Oh, so I'm going to go with a good book and that's a hard choice. I have too many favorites, but right now I'm rereading Atomic Habits. So small improvements every day.

 

Jason Price:

What's your preferred way to spend a day off?

 

Cynthia Klein:

I love nothing more than being outdoors hiking. So for Mother's Day, for instance, my ask of my family is just to go hiking and to picnic to one of the beautiful waterfalls we have in North Carolina.

 

Jason Price:

Off the path recommendation for someone visiting the Charlotte area for the first time.

 

Cynthia Klein:

Oh, so many great places. But for the true outdoors experience, you may not know that we have the U.S. National Whitewater Center in Charlotte. It's the world's largest and most complex recirculating, artificial whitewater river. You can go rafting, kayaking, mountain biking, hiking, rock climbing, and ziplining all in one place.

 

Jason Price:

Wow, I did not know that. 

 

Cynthia Klein:

It's so cool, right?

 

Jason Price:

That's awesome. All right, what's the best part about your job?

 

Cynthia Klein:

Oh, well, that's easy. Connecting dots and bringing people together to prove that the whole is greater than the sum of its parts.

 

Jason Price:

You are clearly very good at what you do. What advice would you have given a younger you when first graduating from university?

 

Cynthia Klein:

Get comfortable being uncomfortable. Put yourself out there. Talk to your neighbor at work. Find out what other people in your company and your community do.

 

Jason Price:

And last question, do you have a question or curiosity that you would like to ask a future guest on Power Perspectives?

 

Cynthia Klein:

Oh, definitely. All right. So we just had IIJA 1.0. If there's an IIJA 2.0, what are those funding opportunities that are going to accelerate us for the future of the energy transition?

 

Jason Price:

Nicely done. And for navigating the lightning round, we award you with the final word of this episode. So knowing that you've got the industry listening in, what's the final piece of advice you hope listeners take away from today's conversation?

 

Cynthia Klein:

So I hope you all take away the importance of collaboration when considering any major infrastructure project, especially one that involves federal funding. Having the right collaborators and the community involved in each step of the process is not only the right thing to do, but it really greatly improves your chances for success.

 

Jason Price:

Excellent. Well, this is a wonderful conversation and I thank you for joining us today, Cynthia. I know our community will eagerly listen into this episode or maybe read the transcript and we'll have questions and comments for you. So let's keep this conversation going. Until then, though, we just want to thank you for sharing your insights with us on today's episode of the podcast.

 

Cynthia Klein:

Thank you, Jason.

 

Jason Price:

And once again, you can always reach Cynthia through the Energy Central Community platform where she welcomes your questions and comments. And if our listeners have a question they want to have answered in a future episode and even hear their own voice on the podcast, we've started this year offering that opportunity. Listeners can head to the speak pipe link. We'll leave in the show notes where you can leave us a recorded message, including a question you're eager to have answered on a future episode of the podcast. We'll listen through them, pick out the right guests and upcoming lineup to address them, and maybe you'll hear yourself as part of the conversation.

We also want to give a shout out of thanks to the podcast sponsors that made today's episode possible. Thanks to West Monroe. West Monroe is a leading partner for the nation's largest electric gas and water, utilities working together to drive grid modernization, clean energy, and workforce transformation. Our comprehensive services are designed to support utilities and advancing their digital transformation, building resilient operations, securing federal funding, and providing regulatory advisory support. With a multidisciplinary team of experts, west Monroe offers a holistic approach that addresses the challenges of the grid today and provides innovative solutions for a sustainable future. Once again, I'm your host, Jason Price. Plug in and stay fully charged in the discussion by hopping into the community at energycentral.com. And we'll see you next time at the Energy Central Power Perspectives Podcast.

 

About Energy Central Podcasts

The ‘Energy Central Power Perspectives™ Podcast’ features conversations with thought leaders in the utility sector. At least twice monthly, we connect with an Energy Central Power Industry Network community member to discuss compelling topics that impact professionals who work in the power industry. Some podcasts may be a continuation of thought-provoking posts or discussions started in the community or with an industry leader that is interested in sharing their expertise and doing a deeper dive into hot topics or issues relevant to the industry.

The ‘Energy Central Power Perspectives™ Podcast’ is the premiere podcast series from Energy Central, a Power Industry Network of Communities built specifically for professionals in the electric power industry and a place where professionals can share, learn, and connect in a collaborative environment. Supported by leading industry organizations, our mission is to help global power industry professionals work better. Since 1995, we’ve been a trusted news and information source for professionals working in the power industry, and today our managed communities are a place for lively discussions, debates, and analysis to take place. If you’re not yet a member, visit www.EnergyCentral.com to register for free and join over 200,000 of your peers working in the power industry.

The Energy Central Power Perspectives™ Podcast is hosted by Jason Price, Community Ambassador of Energy Central. Jason is a Business Development Executive at West Monroe, working in the East Coast Energy and Utilities Group. Jason is joined in the podcast booth by the producer of the podcast, Matt Chester, who is also the Community Manager of Energy Central and energy analyst/independent consultant in energy policy, markets, and technology.  

If you want to be a guest on a future episode of the Energy Central Power Perspectives™ Podcast, let us know! We’ll be pulling guests from our community members who submit engaging content that gets our community talking, and perhaps that next guest will be you! Likewise, if you see an article submitted by a fellow Energy Central community member that you’d like to see broken down in more detail in a conversation, feel free to send us a note to nominate them.  For more information, contact us at [email protected]. Podcast interviews are free for Expert Members and professionals who work for a utility.  We have package offers available for solution providers and vendors. 

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