What Is The Long Term Plan For Duke Energy?

Duke Energy is the largest electric power holding company in the United States, providing electricity to 7.8 million retail electric customers across six states in the Southeast and Midwest regions. Headquartered in Charlotte, North Carolina, Duke Energy has over 29,000 megawatts of owned electric generating capacity serving territories spanning 95,000 square miles with 250,000 miles of distribution lines and a commercial power and electric transmission system.

With origins dating back to the early 1900s, Duke Energy has grown through mergers and acquisitions over the past century to become one of the largest investor-owned utility companies in the country today. As a vertically integrated utility, Duke Energy operates regulated electric utilities in North Carolina, South Carolina, Florida, Indiana, Ohio, and Kentucky, as well as a commercial and international energy business.

Renewable Energy Transition

Duke Energy has set ambitious goals to reduce carbon emissions and transition to renewable energy sources. By 2030, Duke aims to reduce carbon emissions by at least 50% from 2005 levels and reach net-zero carbon emissions by 2050. To meet these goals, Duke is significantly investing in and expanding its renewable energy portfolio, with a focus on solar and wind power.

Duke plans to double its renewable energy capacity by 2025, with the addition of more than 8,000 megawatts of wind, solar, and other renewables. Major investments include building and acquiring new solar farms across North Carolina, Florida, and other states. Duke is also rapidly growing its wind energy fleet, with plans to construct new wind farms and purchase existing wind projects. As renewables expand, Duke is phasing out its coal-fired power plants, with a goal to fully retire all Midwest coal generation by 2035 and all coal generation by 2050.

The renewable transition will fundamentally transform Duke’s generation portfolio over the next few decades. By 2050, Duke aims for renewables like solar, wind and hydropower to make up over 75% of its electric generation capacity. This ambitious clean energy vision will dramatically reduce Duke’s carbon emissions, while providing reliable and affordable power to customers through an increasingly sustainable grid.

Grid Modernization

Duke Energy is focused on upgrading infrastructure and improving resilience as part of its long term grid modernization plan. This involves investments in smarter energy infrastructure like automated meters, outage management systems, and grid sensors. These technologies provide enhanced visibility into the electric system and help pinpoint and respond to outages more quickly.

The company is also working to harden the grid against severe weather and cyber threats. Investments are being made to bury power lines, strengthen utility poles, trim trees, and deploy other storm protection measures. Advanced cybersecurity protections are being implemented across the grid. These steps will reduce outage frequency and duration for customers.

A more modern and resilient electric system will be essential to meet customers’ evolving energy needs in the decades ahead. Duke Energy’s grid improvements will support the integration of more renewable energy, electric vehicles, battery storage, microgrids and customer-owned resources. The grid modernization plan is a key pillar of the company’s strategy to deliver reliable, affordable and clean energy well into the future.

Electrification

A key part of Duke Energy’s long-term plan is to transition customers away from using natural gas for things like heating and cooking, and towards 100% electric solutions. This process of switching from gas appliances to electric is known as electrification.

Duke is working on programs and incentives to encourage homeowners and businesses to electrify by installing energy efficient electric heat pumps for climate control, electric hot water heaters, induction stoves, and other appliances.

In addition to transitioning existing customers, Duke aims to have new homes and buildings in their service territory all-electric from the start. This reduces their dependence on gas infrastructure.

Another major investment by Duke Energy is building out electric vehicle charging infrastructure. As more consumers adopt EVs, Duke is installing thousands of public charging stations to enable drivers to charge on the go. They are also working with local governments on EV fleet conversions and providing rebates for customers to install home EV chargers.

Electrifying the transportation sector with EVs will significantly increase demand for electricity. Duke aims to generate that additional energy from carbon-free sources like solar and wind as part of their renewable transition.

Energy Efficiency

Energy efficiency is a key component of Duke Energy’s long term plan. The company is focused on helping customers reduce their energy use through various programs and initiatives. One area of focus is the deployment of smart meters and demand response technology. Smart meters provide customers with detailed energy usage information so they can identify opportunities to conserve. The meters also enable demand response programs which help shave peak demand and reduce the need for additional power plants.

Duke is investing $2 billion in smart grid improvements across its service territories in the coming years. This will fund the installation of millions of smart meters and other infrastructure upgrades. By engaging customers and providing the tools and incentives to reduce energy consumption, Duke aims to curb demand growth and make its system more efficient.

The utility also offers extensive energy efficiency programs for residential, business, industrial, government, and low income customers. These programs provide rebates on high efficiency appliances and equipment, energy audits, weatherization services, energy tracking tools, and more. The programs are administered in partnership with local organizations and help customers identify customized ways to reduce their energy needs.

Duke Energy considers energy efficiency the cleanest and most cost effective way to meet its customers’ rising electricity needs. By managing demand more effectively through efficiency improvements, the utility can reduce the long-term infrastructure investments required to keep pace with economic and population growth in its service territories.

Natural Gas

Natural gas will continue to play an important role in Duke Energy’s generation mix during the transition to renewable energy. While renewables like solar and wind are intermittent, natural gas provides reliable on-demand power when the sun isn’t shining or wind isn’t blowing. Duke has invested heavily in natural gas infrastructure and assets in recent years, allowing for cost-effective electricity production that emits around 50% less CO2 than coal.

As Duke transitions away from coal, natural gas capacity will help fill the gap until sufficient renewable energy and storage are deployed. Natural gas is seen as a “bridge” fuel on the path to net zero emissions. However, Duke acknowledges its gas assets will likely become stranded investments in the long run. Most scenarios show natural gas generation sharply declining by 2050. Duke is planning for the future by not building any new natural gas plants after 2030. Existing gas plants will operate less frequently in later years as renewables expand. Duke is evaluating options to repurpose gas infrastructure for renewable hydrogen or carbon capture to extend its useful life.

Financial Planning

Duke Energy has laid out a long-term financial plan to support its transition to clean energy while also providing reliable returns to shareholders. A key part of this plan is periodic rate cases filed with utility commissions in the states where Duke operates. These rate cases allow Duke to recover costs for new investments in the grid and pass some of those costs onto consumers in the form of gradual rate increases. Duke states that keeping rates affordable even as it modernizes infrastructure is a priority.

At the same time, Duke acknowledges its responsibility to provide consistent returns to shareholders. The company aims to grow earnings per share by 5-7% annually. Duke also expects to maintain its dividend, which has increased for 14 consecutive years. Overall, Duke Energy strives to balance investment in clean energy, reliability, and affordability while also satisfying its obligations to shareholders.

Community Engagement

Duke Energy has made community engagement a priority, especially when it comes to environmental justice efforts. The company has implemented programs to increase access to solar energy in underserved communities. This includes community solar programs that allow customers to subscribe to a shared solar facility and receive credits on their electricity bills.

Duke has partnered with nonprofits and community organizations to identify locations for new solar installations that will benefit disadvantaged neighborhoods. The company also conducts outreach to educate residents on how they can participate in renewable energy programs. This enhances energy affordability and helps create local clean energy jobs.

Looking ahead, Duke aims to continue expanding its community solar offerings across multiple states. The goal is to bring the benefits of solar energy to more low-income households that may not have the ability to install rooftop systems. Duke’s community engagement efforts on environmental justice will be ongoing as the company transitions toward a cleaner energy system.

Regulatory Environment

Duke Energy works closely with regulators at both the state and federal levels to ensure compliance with energy policies and advance clean energy goals. The regulatory landscape is complex and ever-changing, requiring Duke to be adaptable and forward-thinking.

At the state level, Duke engages with utility commissions in the regions it serves, like the North Carolina Utilities Commission and the Public Service Commission of South Carolina. Duke provides information on its operations, investments, and future plans while incorporating feedback from regulators into its long-term strategy.

Federally, Duke monitors key regulations from agencies like the Environmental Protection Agency, Federal Energy Regulatory Commission, and Nuclear Regulatory Commission. Duke aims to meet requirements while providing reliable and affordable energy through constructive dialogue with regulators.

Looking ahead, Duke will continue working within the regulatory framework to transition its generation portfolio, invest in grid improvements, and offer new programs that align with evolving policy priorities around decarbonization, electrification, and customer empowerment.

Conclusion

Duke Energy has laid out a clear long-term vision focused on transitioning to cleaner energy sources, modernizing infrastructure, electrifying transportation, and improving energy efficiency. This forward-looking strategy aims to provide affordable, reliable, and increasingly sustainable energy to customers while reducing environmental impacts.

However, executing this long-term plan presents some substantial challenges. The costs associated with major infrastructure upgrades, expanding renewable generation, and new technologies will likely lead to rate increases for customers. Building public and regulatory support for significant investments in modernization that may drive up prices in the short term is critical. There is also uncertainty around new policies and regulations that could impact Duke’s strategy and operations.

If successful, Duke Energy is well-positioned to help lead the clean energy transition in a responsible and equitable manner. But realizing this vision will require proactive planning, responsible investments, community engagement, and adaptable implementation to meet evolving customer needs and policy environments. The long-term plan provides a compass, but the journey ahead will require continuous reassessment and course corrections.