Duke Power to funnel bulk of $63B capital plan to vitality transition, CEO says


Duke Power Indiana’s 618-MW Edwardsport coal gasification energy plant could possibly be retired by 2035 or outfitted with carbon seize applied sciences as a part of Duke Power’s clear vitality transition plans.
Supply: Duke Power Corp.

As Duke Power Corp. prepares for a serious pivot away from coal-fired technology, the corporate will spend about $52 billion of its new five-year capital plan on zero-carbon technology and grid modernization.

The deliberate investments are a part of a $63 billion capital plan for 2022 by 2026 introduced Feb. 10 forward of Duke Power’s fourth-quarter 2021 earnings name.

“As we sit up for what we will accomplish in 2022 and past, we really feel like we have constructed a extremely robust basis that we will construct on,” Duke Power Chair, President and CEO Lynn Good mentioned in a Feb. 10 cellphone interview. “We have got $63 billion of potential funding over the subsequent 5 years, 80% of which shall be directed towards the clear vitality transition. And we now have the potential for that $63 [billion] to develop to $130 billion over the last decade.”

The CEO mentioned the “strong runway of funding” will drive 5% to 7% adjusted earnings progress by 2026 and assist meet its carbon discount targets.

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Duke Power Chair, President and CEO Lynn Good
Supply: Duke Power Corp.

On Feb. 9, Duke Power introduced plans to chop coal to lower than 5% of its complete technology by 2030 and “totally exit coal by 2035.”

Duke Power owns about 16 GW of coal-fired producing capability, making up just a little greater than 1 / 4 of its total owned portfolio, based on S&P World Market Intelligence information.

Duke Power additionally expanded its 2050 net-zero targets to incorporate Scope 2 and sure Scope 3 emissions. As well as, the corporate added a brand new net-zero by 2050 purpose for its pure fuel enterprise that features upstream methane and carbon emissions associated to bought fuel and downstream carbon emissions from buyer consumption.

To succeed in its targets, Good mentioned the corporate will depend on a “various mixture of assets” together with renewables, battery storage, nuclear technology and “some pure fuel as wanted for reliability.”

“As we get deeper into this decade, we’ll start to have a look at different clear applied sciences” together with offshore wind, hydrogen and superior nuclear assets, the CEO mentioned.

Future applied sciences

Duke Power’s five-year capital plan does earmark about $4 billion for hydrogen-enabled pure fuel technology, however Good famous that the majority of the corporate’s carbon-reduction planning this decade is concentrated on present applied sciences.

The Charlotte, N.C.-headquartered investor-owned utility plans to extend its renewables portfolio to 16,000 MW by 2025 and 24,000 MW by 2030. “There may be additionally a number of storage funding happening within the 2020s,” Good mentioned.

The CEO underscored the necessity for pure fuel technology throughout its fleet transition.

“We consider some pure fuel could possibly be necessary within the 2020s as we retire this coal and keep reliability and dispatchability to suit with all of those renewable assets,” Good mentioned. “However as we take into consideration pure fuel, we’re additionally engaged on issues like hydrogen, renewable pure fuel [and] advocating for the work that is occurring within the [National Carbon Capture Center], so we all know that that infrastructure shall be helpful over the subsequent couple of a long time.”

Duke Power’s clear vitality transition contemplates retiring Duke Power Indiana LLC’s 618-MW Edwardsport built-in gasification combined-cycle energy plant by 2035 or including carbon seize utilization and storage to the coal gasifiers.

“I’d take into consideration these new applied sciences as being extra necessary within the 2030s and 2040s,” Good mentioned. “I’d add superior nuclear to the combo, small modular nuclear to the combo, so that you’ve got the traits that come from pure fuel within the type of both hydrogen-enabled carbon seize or a complicated nuclear product that has storage functionality. So, what we’re actually on the lookout for are issues that function like a pure fuel plant within the system.”

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M&A

Whereas different U.S. utilities and energy suppliers have offloaded property and controlled companies over the previous 12 months to assist cut back fossil gas publicity, Good indicated Duke Power doesn’t have comparable plans within the close to time period.

“We regard every part we personal in the present day as core to Duke,” Good mentioned. “for those who look again during the last 10 years, we have made a number of portfolio changes, promoting and including, to get to the place we’re in the present day. We’re 95% regulated. We function in very constructive jurisdictions with a capability to deploy capital towards this clear vitality transition and ship returns for our buyers.”

Early in 2021, Duke Power introduced the sale of an almost 20% curiosity in utility subsidiary Duke Power Indiana in a transfer that allowed the corporate to keep away from elevating $1 billion in widespread fairness. The proceeds from the two-phase transaction are anticipated to assist fund Duke Power’s capital plan and fulfill all capital elevating wants by 2025.

“The transaction we entered into in January of 2021 was a really progressive technique to elevate capital and we had been in a position to take action at a worth that was extra aggressive than outright issuing Duke fairness,” Good mentioned. “We might contemplate transactions like that if we discover ourselves within the want for fairness sooner or later as this vitality transition continues. However I consider our natural progress story is so compelling that’s the place our focus and strategic consideration is at this level.”



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