ARKANSAS, Oct 3 (Future Headlines)- Kansas, known for its agricultural landscapes, is in the midst of an energy dilemma that highlights the challenges and trade-offs in transitioning to cleaner energy sources while meeting surging electricity demands. Panasonic Energy‘s $4 billion electric vehicle (EV) battery manufacturing project in De Soto, Kansas, hailed as an economic boon for the state, has led the local energy provider, Evergy, to delay its transition away from coal and consider raising rates for residential customers.

Evergy’s decision to pause its transition away from coal has drawn criticism from environmental advocates and raised questions about the environmental impact. The Sierra Club Beyond Coal Campaign accused Evergy of doubling down on “costly, dirty coal” and passing the financial burden to Kansans. They argue that Evergy’s business decisions have caused health problems, including an estimated 18 premature deaths annually, and disproportionately affected Black and LatinX communities.

Panasonic Energy’s massive 4 million-square-foot EV battery project in De Soto was initially hailed as a game-changer for Kansas. Kansas Governor Laura Kelly touted it as transformative for the state’s economy, with the promise of creating 8,000 high-quality jobs. The project aimed to make Kansas globally competitive and a hub for technological innovation.

To meet the electricity demands of the EV factory, Evergy estimated it would need between 200 and 250 megawatts of electricity, equivalent to powering a small city. This surge in demand presented immediate challenges for the utility company. It required building two new substations and upgrading three existing ones, reflecting the urgency to procure capacity and energy to fulfill the energy usage schedule. The energy provider expressed concerns about resource adequacy, given the aggressive construction schedule.

In response to the infrastructure investments required for the Panasonic project, Evergy planned to request a rate increase on residential customers’ energy bills in parts of the state. This proposal was met with scrutiny by environmental groups and state officials.

The Kansas Corporation Commission (KCC) and Evergy reached a settlement agreement over rate increase requests, with the Commission stating that expenditures related to the Panasonic project remained uncertain. The Commission noted that it was not evident that the addition of Panasonic would necessitate rate increases, given the ongoing estimate adjustments and the magnitude of the project’s load additions.

Panasonic’s $4 billion investment in the project could potentially be supplemented by as much as $8 billion in incentives from local, state, and federal governments. This includes eligibility for up to $6.8 billion from the Inflation Reduction Act’s 45X Advanced Manufacturing Tax Credit, designed to boost electric vehicle production.

Kansas Senator Roger Marshall expressed concerns about the extent of government subsidies for green energy programs. He acknowledged the desire for the project’s success but emphasized his worries about the financial burden placed on hardworking Kansans.

Panasonic responded by deferring to Evergy on the management of its grid assets. The company acknowledged that while a substantial portion of the region’s energy came from zero-emission sources like wind, solar, and nuclear power, increased power generation was needed to accommodate rapid growth. Over time, inefficient coal plants would be phased out in favor of zero-carbon energy sources.

Kansas faces the challenge of accommodating surging energy demand while striving to transition to cleaner energy sources. The involvement of government incentives and concerns about subsidies further complicate this multifaceted issue. The outcome of this situation will likely impact the broader discussions surrounding green energy initiatives, government support, and sustainability in the United States.

Reporting by Moe Khaled; Editing by Sarah White