Duke Energy Chairman, President and CEO Lynn Good speaks Oct. 9 at the company's virtual ESG Investor Day.Source: Duke Energy Corp. livestream Duke Energy Corp. on Oct. 9 laid out plans to retire the bulk of its coal fleet and triple its renewable capacity in the next 10 years, but also defended the role of natural gas in its carbon-reduction plan.
There is "a need for us to balance our environmental aspirations with reliability and affordability," Duke Energy Chairman, President and CEO Lynn Good said at an investor day focused exclusively on the company's environmental, social and governance practices. "And that's where we see a role for natural gas. At least at this point in time when the technology development and resources are not quite where they may be in the 2030s. So, we see it as a peaking resource. We see it as important [to] retiring coal."
Duke Energy's inaugural ESG Investor Day comes about a year after the company announced its updated goal to reduce carbon dioxide emissions at least 50% by 2030 compared to 2005 baseline levels and achieve net-zero carbon emissions by 2050.
Good said the company has already reduced carbon emissions by 39% from 2005 levels, which she said is "well ahead" of the commitments laid out in the now-defunct Clean Power Plan and the Paris Agreement on climate change.
During this time, Duke Energy has retired 6,500 MW of coal-fired generation and added 8,000 MW of renewables to its portfolio.
"But we're not going to stop there," Good said. "Because the future is also bright for us. We look at the next decade and we will aggressively pursue further carbon reduction getting to at least 50%."
Duke Energy also is working to meet the goals of the North Carolina Clean Energy Plan, which calls for up to a 70% reduction in greenhouse gas emissions by 2030 from 2005 levels.
"So, how will we do that? By more retirement of coal and also by adding more renewables and battery storage," Good said. "We also see the need for new technologies to get to that ultimate goal of zero. This is hydrogen, it's advanced nuclear, it's longer duration storage."
In addition, Duke Energy on Oct. 9 announced its plan to achieve net-zero methane emissions from its gas utility business by 2030.
The company is also adding a climate goal to its executive compensation plan in 2021, according to the CEO.
Billions in investments
To reflect near-term investment potential, Duke Energy increased its five-year capital plan to $58 billion from $56 billion for 2020 through 2024. The company also provided some visibility into its next five-year capital plan, which it expects to be in the range of $65 billion to $75 billion for 2025 through 2029.
"As we pursue this clean energy transition, we see the path to accelerate capital investment and deliver 7% rate base growth by the end of this planning period," Good said.
A substantial portion of this investment opportunity is tied to the integrated resource plans, or IRPs, filed in September by Duke Energy Carolinas LLC and Duke Energy Progress LLC in the Carolinas.
Duke Energy sees $20 billion to $50 billion in "incremental investment" opportunities over the next 15 years in the Carolinas based on various scenarios laid out in the IRPs, Executive Vice President and CFO Steve Young said.
The $20 billion would fund base-case scenarios in the plan that include about 9,000 MW of renewables and storage additions to drive a nearly 55% to 65% reduction in carbon emissions by 2035. Duke Energy would use $50 billion in capital to pursue a more aggressive 70% to 75% carbon reduction plan, which would include roughly 22,000 MW of new renewables and storage.
Renewables would make up about two-thirds of the base case funding plan, Young said.
"The renewables investment is composed primarily of solar," Young said. "There's some wind and there's some battery storage in that number as well."
"The non-renewables investment piece consists primarily of gas peaking facilities ... and transmission investment as required to integrate all of these additional renewables," the CFO said.
Meanwhile, about $30 billion of the $50 billion in potential capital investments in the more aggressive carbon reduction plan would be tied to renewables, according to Young. "Of that $30 billion, roughly half of it we would estimate to be solar facilities. The other half would be consisting of wind and battery storage," he said.
The $20 billion of nonrenewables investment potential in the $50 billion scenario consists of three buckets: gas peaking facilities, transmission investment and further expansion of the 1,360-MW Bad Creek Pumped Storage Project in Oconee County, S.C.
Duke Energy's current five-year plan includes about $7 billion in transmission infrastructure investments, with about $17 billion attributed to distribution investments with "significant" additional capital needed to support the fleet transformation.
"The impacts of these scenarios are not reflected in the distribution system at this point in time," Young said.
Moving away from coal
Duke Energy plans to retire 72% of its 15,200-MW coal fleet by 2030, which includes 9,000 MW of power plants that "rely exclusively on coal" in the Carolinas.
"Looking ahead, we're preparing to transition our coal fleet in the largest move from coal in our industry," said Julie Janson, executive vice president of external affairs and president of Duke Energy's Carolinas region. "That probably bears repeating. The largest move away from coal in the industry."
The IRPs in the Carolinas are primarily focused on delivering least-cost energy and "retiring coal as quickly as possible" while evaluating further carbon reductions and portfolio changes, said Cari Boyce, Duke Energy's senior vice president of enterprise strategy and planning.
Doug Esamann, Duke Energy's executive vice president of energy solutions and president of the Midwest and Florida regions, outlined the company's ambitious plan to triple renewable capacity to 24,000 MW by 2030, up from 16,000 MW by 2025, on a path to 40,000 MW of renewable capacity by 2050.
"In order to meet our net-zero carbon goals by 2050, it will take six times the amount of renewable energy that we have on our system today. Most of that will be in the regulated businesses," Esamann said. "By 2050, the majority of energy in our regulated businesses will be from renewable energy, representing about 40% of the capacity."
Duke Energy plans to add 11,000 MW of energy storage by 2050 to complement renewable additions.
Still, the company is counting on emerging zero-emitting load-following resources to help close the gap to net-zero emissions.
"We need new clean energy technologies," said Esamann, also the head of Duke Energy's natural gas business. "Hydrogen is a good example of one of those technologies. We're testing hydrogen now. It's really not in full-scale deployment. But we believe that hydrogen as a clean fuel has expansive capabilities that change the dynamics of what's available for us in clean fuel technologies."
Duke Energy has applied for a grant from the U.S. Department of Energy as part of a project to add hydrogen as fuel source at the Clemson University Combined Heat and Power plant in South Carolina, Esamann noted.
Sasha Weintraub, Duke's senior vice president and chief commercial officer of natural gas, told S&P Global Market Intelligence that the company sees potential in green hydrogen, a gas alternative produced through electrolysis that uses electricity from renewable sources.
The company expects hydrogen and commercial deployment of advanced nuclear reactors to play a bigger role in the next decade.