Key Takeaways
A new Panasonic EV battery plant in Kansas is forcing a utility to keep a coal plant scheduled for closure open.
The battery plant will consume enormous amounts of power and must have reliable and affordable electricity.
The $4 billion plant is slated to receive $6.8 billion from Biden’s climate bill, the Inflation Reduction Act.
This is akin to China using more coal to manufacture the world’s supply of green energy devices.
A new electric vehicle battery factory in Kansas needs so much energy that the state is delaying the retirement of a coal plant to make sure the facility has enough power. The $4 billion Panasonic electric vehicle battery factory is located in De Soto, Kansas. Panasonic broke ground on the facility last year. The Japanese company is slated to receive $6.8 billion from the Inflation Reduction Act, which has been pouring billions into electric vehicles and battery factories as part of its effort to transition America to electric vehicles. The factory will require between 200 and 250 megawatts of electricity to operate as electric vehicles require enormous amounts of energy to manufacture.
A 15-pound lithium-ion battery holds about the same amount of energy as a pound of oil. To produce that battery requires 7,000 pounds of rock and dirt to obtain the minerals that are needed for its manufacture. The average EV battery weighs around 1,000 pounds. The mining and factory processing needed to produce an electric vehicle results in a lot more carbon dioxide emissions than a gas-powered car, so electric vehicles have to be driven around 50,000 to 60,000 miles before there is a net reduction in carbon dioxide emissions. The federal government requires batteries to be warranted for at least 8 years or 100,000 miles. After that, if the batteries need replacing, more energy demand would be required. As more factories are built in the United States to supply EV manufacturers, there will be higher demands on the grid for power.
Besides the energy needed for industrial activity, there will be more demands placed on the grid to charge the electric vehicles. That energy is unlikely to come from solar panels and wind turbines, which are weather-driven and provide power intermittently. While renewables are a source of “auxiliary supplemental power,” they need a solid base load to ensure the reliable energy supply such factories require.
Evergy, the utility serving the factory, indicated that the 4 million-square-foot Panasonic facility creates “near term challenges from a resource adequacy perspective.” Beyond the sheer magnitude of load and load factor, Panasonic’s construction schedule, and, in turn, its energy needs, are being planned on a very aggressive schedule. With energy needs starting to ramp in 2024 and full load requirements by 2026, there is urgency to procure capacity and energy to fulfill the expected energy usage schedule. As a result, the utility will continue to burn coal at a power plant near Lawrence, Kansas, until at least 2028, delaying plans to transition units at the plant to natural gas.
Rate Hike Requests
Evergy plans to ask for a rate increase next year to help pay for the additional infrastructure required to meet the Panasonic battery plant’s anticipated demand for electricity, after approval of a pending rate hike request. The demand created by the Panasonic battery factory is expected to double that of Evergy’s current largest customer in the state and require two new substations, upgrades to three current substations and work on 31 miles of transmission lines. The possibility that Kansas ratepayers may be asked to help shoulder the burden of providing Panasonic with power comes as the company is already expected to receive as much as $8 billion in federal, state and local incentives and support for the battery plant. Kansas is providing $829 million in state incentives to the company and De Soto has committed to another $200 million in local property tax incentives. Panasonic will likely qualify for a discounted electric rate offered to economic development projects. Many of the existing large industrial customers located in Kansas operate under economic development rates. According to Evergy’s website, the utility offers incentive programs that provide up to a 40 percent discount for five years.
Evergy, which services eastern Kansas and western Missouri, announced in April it would ask the Kansas Corporation Commission (KCC) to approve raising rates by 5.9 percent in some areas in Kansas and up to 24.9 percent in a region that includes Topeka, Wichita and western parts of Johnson County. The commission is expected to make a decision by late December and public hearings are ongoing. The potential rate hike related to Panasonic would be on top of the other proposed increase. The utility company’s documents filed with the KCC do not provide an estimate of the size or scope of the possible rate increase related to Panasonic and the allocation of costs among customers is currently undetermined. The potential increased rates, however, follows a longstanding pattern in Kansas of asking residential payers to foot the bill for corporations.
Following the KCC’s decision on the current rate increase, Evergy plans to open an abbreviated rate case within a year. Investments related to Panasonic, updated costs related to the eventual future decommissioning of the Wolf Creek nuclear power plant in Coffey County, and investments in renewable energy sources are the reasons for asking permission to file the abbreviated case. The Wolf Creek plant serves 1.6 million customers in Kansas.
Panasonic has the responsibility to pay for part of the upgrades required to provide the plant with power, and Evergy has an obligation to serve the load and ensure the reliability of the power system. The utility intends to negotiate with Panasonic and file an application with the KCC on a “special contract rate” with Panasonic for investments related to the power load.
The battery plant is expected to employ upwards of 4,000 workers. Kansas, however, did not obtain job or salary guarantees from the company despite the extensive incentives.
Conclusion
Energy needs are increasing with Biden’s energy transition, and premature power plant closures are a liability. That is why Evergy is keeping a coal plant on line until at least 2028 to provide power to a Panasonic EV battery plant that is currently under construction. Weather-driven and intermittent solar and wind power are not expected to handle the base load power that is needed for the plant, which is being built on an aggressive schedule. While Biden is pushing the transition to electric vehicles on Americans, he has not accepted the realities associated with their manufacture and the emissions that would be produced. All he would need to do is look at China’s dominance in the area and its huge amounts of cheap coal power that is used to run its manufacturing base. But, he is too oblivious to study what is needed for attaining his climate goals. Instead, Americans will have to pay through higher energy costs and frivolous tax expenditures.
