Duke Power, one of many largest vitality corporations on the planet, grew out of a system of lakes and dams alongside the Catawba River to generate energy for the Piedmont Carolinas. Whereas the corporate has sustained a core worth of investing sooner or later all through its 118-year historical past, planning for the vitality transition has posed crucial new uncertainties for the company big.
The half-century from 1880 and 1930 was a exceptional formative interval within the historical past of energy technology throughout the U.S. Within the South, nonetheless predominantly agricultural and rural in 1900, improvement arrived quickly, delivering beautiful advances for the poverty-crushed area. Probably the most enduring of these efforts got here from two rich entrepreneurs from North Carolina, James B. Duke, and to a lesser extent, his older brother Benjamin N. Duke.
1. Catawba Energy Co.’s 3.3-MW Catawba Hydro Station, which started working on April 30, 1904, turned the primary producing station on the Duke Energy Co. system. The date is taken into account to be the birthdate of Duke Energy. Courtesy: Duke Power
“Closely concerned in each tobacco and textile manufacturing, the Duke brothers started to discover the chances of hydroelectric energy as early because the Eighteen Nineties,” wrote historian Robert Durden. “In the meantime, in 1900 Walker Gill Wylie and his brother Robert H. Wylie established the Catawba Energy Co. to produce electrical energy to textile mills close to Rock Hill, South Carolina.” A hydropower energy plant (Determine 1) the Wylie brothers accomplished on the Catawba River 4 years later that was later bought by the Dukes kicked off the delivery of a singular investor-owned electrical utility. Via a number of mergers and acquisitions, that firm would go on to play a significant position within the industrial transformation of the Piedmont Carolinas, and later, as one of many nation’s largest energy mills and utility corporations.
From the very begin, that firm—then referred to as Southern Energy Co. earlier than it developed into Duke Energy Co. in 1924 and ultimately Duke Power Corp. in 1997 (see sidebar, “A Lengthy Legacy”)—was “distinctive and totally different from most different investor-owned utilities in a number of methods,” Durden famous. First, the corporate’s pioneers envisioned a collection of interconnected single-system producing vegetation and a complete improvement of a complete river and its valley, versus piecemeal improvement. Second, it loved non-public capital autonomy from the Duke brothers that buoyed its operational and monetary well being, and served to insulate it in the course of the Nice Melancholy. And third, Duke Energy’s engineers adopted a “do-it-yourself” coverage that might proceed into the atomic period, permitting the corporate to foray simply into innovation and transformation.
“Duke Energy turned a nationwide chief in its area by pioneering with quite a few applied sciences,” Durden wrote. “The corporate’s producing vegetation have been acknowledged by commerce journals and business associations as probably the most environment friendly within the nation over a interval of a few years.”
A Lengthy Legacy
The enormous firm that’s Duke Power Corp., (previously Southern Energy Co., after which Duke Energy Co.), developed from a collection of mergers and acquisitions, together with corporations that sought to offer fuel lighting, many years earlier than electrical energy was harnessed. Firms that Duke Power predecessors acquired early in its evolution embrace the 1837-established Cincinnati Gasoline Gentle and Coke Co. (which turned Cincinnati Gasoline and Electrical); the 1849-established Nashville Gasoline Co.; and the 1899-established St. Petersburg Electrical Gentle and Energy (which turned Florida Energy Corp. in 1927); and the 1901-established Union Gentle, Warmth and Energy Co.
1904: Catawba Energy Co.’s 3.3-MW Catawba Hydro Station, the very first energy plant within the Duke Energy Firm system, begins operation. The plant’s opening date, April 30, 1904, is taken into account to be the birthdate of Duke Energy.
1905: Southern Energy Co. is included below the legal guidelines of New Jersey.
1907: Nice Falls Hydro Station, the primary hydroelectric development venture of Southern Energy Co., is accomplished and positioned in service.
1907: Carolina Energy and Gentle is based.
1909: Cincinnati Gasoline and Electrical and Union Gentle, Warmth & Energy Co. change into subsidiaries of Columbia Gasoline and Electrical.
1910: James Buchanan Duke is known as president of Southern Energy Co., succeeding Dr. Walker Gill Wylie, who served as president because the firm’s formation.
1911: Greenville Steam Station, Duke Energy Co.’s first coal-fired producing station, is accomplished and positioned in service in Greenville, South Carolina.
1912: Samuel Insull, who performed a major position in utility consolidation, varieties the Interstate Public Service Co. to offer electrical rail automobile and utility companies in Indiana. That firm later turns into the Public Service Co. of Indiana.
1916: A historic flood alongside the Catawba River prompts Southern Energy Co. engineers to pursue a collection of interlocked reservoirs to assist handle water ranges and produce hydroelectric energy. Lake James, named after James B. Duke, is fashioned in 1919 by damming three streams: the Catawba River, Paddy Creek and the Linville River.
1922: Development begins on the Mountain Island Hydro Station, positioned on the Catawba River in Gaston County, North Carolina.
1924: James Duke, president of Southern Energy Co., is elected president of Duke Energy Co., reflecting an essential evolution for the corporate.
1947: After varied consolidations, Public Service Co. of Indiana turns into an all-electric utility.
1950: A bunch of enterprise leaders from Spartanburg, South Carolina varieties the Piedmont Pure Gasoline Co. to make pure fuel out there to the area.
1954: The three-unit, 575-MW coal-fired Sutton Plant, positioned close to Wilmington, N.C., begins business operation. The station is known as after Louis V. Sutton, one of many longest-running CEOs of Carolina Energy & Gentle.
1956: Carolina Energy & Gentle, Duke Energy Co., and neighboring corporations South Carolina Electrical & Gasoline and Virginia Electrical and Energy Co. be a part of forces to start constructing a prototype nuclear plant in Parr Shoals, South Carolina. Groundbreaking of the 17-MW plant begins in 1960, however the venture is retired in 1967.
1966: Carolina Energy & Gentle’s board approves plans to construct the Robinson Nuclear Plant in South Carolina. The 741-MW plant is the primary nuclear plant the Southeast on the time, and it reaches full energy in 1971.
1968: Development begins on the Jocassee Hydro Station—Duke Energy Co.’s first pumped-storage facility.
1969: Cincinnati Gasoline & Electrical, Columbus and Southern Ohio Electrical Co., and Dayton Energy & Gentle conform to collectively assemble the Zimmer Nuclear Station close to Moscow, Ohio. In 1982, the Nuclear Regulatory Fee (NRC) orders development full on the 97% full unit 1. CG&E and its companions transformed the almost accomplished plant right into a coal plant.
1973: Oconee Nuclear Station Unit 1, Duke Power’s largest nuclear energy plant and a two-time POWER High Plant winner, begins business operation. A “baby of the sixties,” Oconee was first introduced on July 5, 1966, as a part of the Keowee-Toxaway Complicated, Duke Power has mentioned. “That large engineering venture created Keowee, Jocassee and Dangerous Creek hydro stations, along with Oconee.” Oconee, Duke Energy’s first business nuclear venture was initially deliberate as a two-unit facility, however by Might of 1967 Duke determined so as to add a 3rd unit on the website. In whole, the venture value $500 million. When Oconee started business operation on July 16, 1973, (5 years and 5 months after the primary concrete was poured), it turned the 18th U.S. nuclear plant. Models 2 and three started operation in 1974. The capability of all three Oconee models and the hydro tasks is 4,471 MW, and the complicated stays a considerable a part of Duke Power’s whole producing portfolio.
1975: Carolina Energy & Gentle’s Brunswick Nuclear Plant goes on-line, offering the primary nuclear vitality within the state of North Carolina.
1977: Florida Energy Company’s Crystal River Nuclear Plant is accomplished and operational at a price of $410 million. The plant is positioned in Citrus County, Florida.
1982: Florida Progress is fashioned as a holding firm for Florida Energy Corp., for the aim of diversifying past utility operations.
1985: Piedmont Pure Gasoline Co. purchases Nashville Gasoline Co.
1994: Cincinnati Gasoline & Electrical and Public Service Indiana merge to kind Cinergy Corp.
1997: Duke Power Corp. is established when Duke Energy Co. and fuel pipeline agency PanEnergy Corp. full their merger.
2000: Florida Progress Corp., father or mother firm of Florida Energy Corp., is acquired by Carolina Energy & Gentle for $5.3 billion. The mixed firm title turns into Progress Power Corp.
2002: Duke Power completes the $8 billion acquisition of Westcoast Power. Duke Power Corp. additionally decides to spin off its pure fuel transmission and associated enterprise strains into Spectra Power, which might be headquartered in Houston, Texas. That 12 months, Duke Power can be named to the Dow Jones Sustainability Index, and it produces its first sustainability report.
2006: Duke Power Corp. completes a “pleasant” acquisition of Cinergy Corp. for $9 billion in inventory. Jim Rogers turns into president and CEO.
2007: Duke Power Renewables is established as a brand new business enterprise.
2008: Duke Power enters the wind energy enterprise, with almost 400 MW and one other 5,000 MW of potential improvement.
2009: Progress Power’s 860-MW Crystal River Nuclear Station goes out of service in September when a separation happens within the outer layer of the containment constructing’s concrete wall following steam generator alternative work. The plant is ultimately retired.
2011: Duke Power declares a $32 billion merger with Raleigh, North Carolina–primarily based Progress Power. The merger, which closed in 2012 ousted the Progress CEO Invoice Johnson and resulted in a lawsuit, nevertheless it creates the biggest electrical utility within the U.S. with the biggest regulated fleet within the U.S.
2013: Industrial operation begins on the 618-MW Edwardsport Built-in Gasification Mixed Cycle Plant in Indiana.
That 12 months, the corporate additionally decides to scrap the Crystal River nuclear plant in Florida. A report of broken containment construction on the nuclear plant in Florida was estimated to doubtless hover at $1.5 billion, nevertheless it may escalate to as a lot as $3.5 billion and take eight years to finish within the worst-case state of affairs, an unbiased assessment of a possible restore plan confirmed.
2013: Lynn Good turns into Duke Power’s president and CEO.
2014: Duke Power declares it’s making ready to promote its pursuits in 13 energy vegetation within the Midwestern U.S. and exit the service provider technology market in that area. That 12 months, a much-publicized accident at Duke Power’s retired Dan River facility releases 39,000 tons of coal ash into the Dan River, prompting North Carolina’s Normal Meeting to go the Coal Ash Administration Act. Subsequent state and federal guidelines require closure of all Duke Power’s coal ash basins by 2029 or sooner.
2015: Duke Power Corp. declares its intent to amass the Piedmont Pure Gasoline Co. for $4.9 billion in money. The acquisition closes in 2016.
2019: Duke Power Indiana, the state’s largest utility, says it should retire all 9 of its coal-fired models by 2038. Mother or father firm Duke Power, in the meantime, units a “net-zero” goal, aiming to provide zero carbon emissions from electrical technology by 2050. Duke Power additionally declares it should retire all coal-only models within the Carolinas, multiply its renewable portfolio, and stop emitting methane in its pure fuel enterprise by 2030.
2021: Duke Power kicks off an effort to resume the working licenses of all its 11 nuclear reactors for 20 extra years, beginning with Oconee Nuclear Station, its largest nuclear plant.
2022: Duke Power expands its Clear Power Motion Plan, focusing on a full coal phaseout by 2035.
An Power Mammoth
At present, Duke Power Corp., headquartered in Charlotte, North Carolina, is among the largest investor-owned utilities within the nation. Its sprawling enterprise includes three important reportable segments: electrical utilities and infrastructure, fuel utilities and infrastructure, and business renewables. Its electrical utility subsidiaries, which embrace Duke Power Carolinas, Duke Power Progress, Duke Power Florida, Duke Power Indiana, and Duke Power Ohio, present retail service by technology (Determine 2), transmission, distribution, and energy gross sales, in addition to wholesale gross sales to municipalities, cooperatives, and different load-serving entities.
2. Duke Power subsidiaries personal an enormous producing fleet with a mixed capability of fifty.3 GW. Nevertheless, Duke Power’s energy combine has remodeled dramatically since 2005. Courtesy: Duke Power
In whole, Duke Power serves about 8.2 million clients inside the Southeast and Midwest—in a service territory that spans 91,000 sq. miles throughout six states. All these companies—except for Ohio, which operates in a aggressive electrical energy provide market—function as sole suppliers of energy inside their service territories, with companies which can be priced by state commission-approved charges. The Federal Power Regulatory Fee, nevertheless, additionally approves cost-based charges for gross sales to some energy and transmission wholesale clients.
The fuel utilities and infrastructure phase, in the meantime, conducts pure fuel operations primarily by the regulated public utilities of Piedmont, Duke Power Ohio, and Duke Power Kentucky, serving residential, business, industrial, and energy technology pure fuel clients. Lastly, Duke Power’s business renewables phase acquires, develops, builds, operates, and owns wind and photo voltaic renewable technology all through the U.S. The phase’s portfolio consists of utility-scale wind and photo voltaic technology property, distributed photo voltaic technology property, distributed gasoline cell property, and battery storage tasks, which whole 3,554 MW throughout 22 states. These embrace 23 wind services, 178 photo voltaic tasks, 71 gasoline cell areas, and two battery storage services.
Duke Power notes that revenues from the more and more profitable business renewables division are primarily generated by promoting renewable energy by long-term contracts to an array of shoppers, lots of which have obligations below state-mandated renewable portfolio requirements. Outdoors of those ventures, Duke Power additionally owns a captive insurance coverage firm, Bison, which offers the corporate’s subsidiaries with indemnification for monetary losses. It additionally notably holds a 17.5% fairness curiosity in NMC, a petrochemical and plastics producer primarily based in Saudi Arabia.
Grappling With Multi-Pronged Challenges
Whereas the corporate’s enterprise pursuits have traditionally been formed by enterprise alternative and hovering energy demand, latest adjustments seem like extra solidly pushed by a mix of things, together with stress from shareholders to enhance its environmental, social, and governance (ESG) posture. In response to a latest decision by non-profit advocacy group As You Sow that urged the corporate to revise its net-zero goal, Duke Power in February mentioned it should develop its 2050 net-zero objectives to incorporate Scope 2 and particular Scope 3 emissions. (Scope 2 emissions are oblique emissions from energy the corporate purchases from others to make use of in its services, whereas Scope 3 consists of oblique emissions that come up from different sources within the firm’s worth chain.)
3. By 2035, just one Duke Power coal plant may very well be operational—the Edwardsport built-in gasification mixed cycle (IGCC) plant. The 618-MW coal-fired venture in Knox County, Indiana, began business operations in June 2013. A POWER High Plant in 2013, the plant is one in every of solely a handful of large-scale IGCC tasks which can be working immediately worldwide. Courtesy: Duke Power
In tandem, as a part of its expanded “Clear Power Motion Plan,” the corporate additionally mentioned it will dramatically slash coal technology’s share from the present 22% of whole technology to five% by 2030 and obtain a full phaseout of unabated coal—companywide—by 2035. Duke Power has already lowered its Scope 1 carbon emissions from electrical energy technology by 44% from 2005 ranges. Nearly all of these reductions have been achieved by the retirement of 56 coal models—a mixed 7.5 GW—since 2010.
However as Lynn Good, Duke Power Corp. chair, president, and CEO, famous on the firm’s inaugural ESG Investor Day in October 2020, ESG efforts are additionally rooted in long-term sustainability, notably as the corporate continues to navigate rising business disruptions and associated uncertainties. “We turned a stronger, extra agile firm, intensifying our focus [on ESG] issues, and accelerating our clear vitality transformation,” Good mentioned. ESG-conscious adjustments to the corporate’s producing fleet and enterprise pursuits supply a “compelling funding story,” and funding, Good famous, might be essential to the corporate’s progress, given new infrastructure calls for associated to the vitality transition. To realize a whole coal phase-out by 2035, the corporate in February mentioned it expects to deploy greater than $130 billion over the subsequent decade—$63 billion of which it should spend over the subsequent 5 years—to fund investments in grid modernization and efforts to interchange its coal fleet with renewables, pure fuel, and rising applied sciences.
Conserving buyer payments inexpensive, nevertheless, stays a vital precedence for the corporate, which is why the corporate will attempt to mitigate capital will increase by lowering different prices. “As you transition out of coal, you’ll have decrease gasoline prices,” mentioned Steve Younger, Duke Power government vp and chief monetary officer. “There are [fewer] folks. The outages are much less complicated. The third space is our continuous pursuit of efficiencies throughout our footprint to our enterprise transformation mannequin,” he added. “Now we have an excellent monitor file right here as effectively. We are going to proceed to search out digital purposes to automate processes,” he mentioned. “We are going to use knowledge analytics to inform us the way to do issues and when to do it higher. And we now have discovered from the pandemic the way to nearly transfer our workforce from areas of lesser significance to emergent work to assist us displace the necessity for contractors.”
Duke Power’s precarious makes an attempt to strike the fitting steadiness between reliability, affordability, and sustainability aren’t with out dangers, nevertheless. “Duke Power’s outcomes of operations rely, in important half, on the extent to which it may well implement its enterprise technique efficiently,” the corporate acknowledges. “Duke Power’s clear vitality technique, which incorporates reaching net-zero carbon emissions from electrical energy technology by 2050, modernizing the regulatory assemble, remodeling the client expertise, and digital transformation, is topic to enterprise, coverage, regulatory, expertise, financial and aggressive uncertainties and contingencies—lots of that are past its management and will make these objectives troublesome to realize,” it says.
4. The Asheville Mixed Cycle Station in Arden, North Carolina, is one in every of Duke Power’s latest gas-fired energy vegetation. The $817 million facility, which started working in July 2020, is a two-unit facility with a complete capability of 560 MW. The station usually runs on pure fuel, however may burn diesel gasoline when crucial. Courtesy: Duke Power
The corporate is particularly cautious of federal or state insurance policies that might “prohibit the provision of fuels or technology applied sciences,” comparable to pure fuel (Determine 4) or nuclear energy, restrict retirements, or restrict investments in new capability. It additionally actively advocates for supportive insurance policies that might facilitate siting and value restoration of transmission and distribution upgrades wanted to construct out massive volumes of renewable and vitality storage. As well as, the corporate has highlighted issues about labor procurement constraints, together with shortages, that could be wanted to construct new technology on time and on price range. As with different utilities, Duke Power additionally faces a decline in buyer demand—owing to vitality effectivity measures and advances in distributed technology—cybersecurity dangers, and environmental litigation, together with from ESG issues.
Persevering with a Legacy of Innovation
One more outstanding threat includes gambles on applied sciences that aren’t but commercially out there, or are unproven at utility scale, however which may reshape its funding technique if profitable. “If these applied sciences should not developed or should not out there at cheap costs, or if we put money into early-stage applied sciences which can be then supplanted by technological breakthroughs, Duke Power’s potential to realize a net-zero goal by 2050 at a cheap worth may very well be in danger,” the corporate notes.
Up to now, the corporate has launched into a cautious vetting of an array of rising applied sciences. Duke Power is, for instance, partnering with Siemens and Clemson College on a Division of Power–backed research to guage hydrogen integration and utilization at Duke Power’s Clemson mixed warmth and energy plant. The pilot venture, which started in March 2021, is evaluating 30% co-firing of hydrogen in 2024 and 100% firing of hydrogen on or earlier than 2030. Hydrogen’s attract is entrenched is a longer-term play for the corporate’s sizable pure fuel fleet in addition to for vitality storage, Good instructed in February.
Below one other venture, Duke Power is testing Honeywell’s new move battery expertise, which might retailer and discharge electrical energy for as much as 12 hours—exceeding the length of four-hour lithium-ion batteries. Honeywell is predicted to ship a 400-kWh unit to Duke Power’s Rising Expertise and Innovation Heart in North Carolina this 12 months. Duke Power additionally plans to start testing an EOS zinc-bromine Znyth Gen 3.0 battery in late 2022.
For now, nevertheless, Duke Power is doubling down on its current nuclear fleet, buoyed by its noteworthy efficiency and low-carbon attributes. Good in February instructed Duke Power’s six nuclear vegetation within the Carolinas might issue closely in a carbon plan it intends to file in Might 2022 to adjust to North Carolina’s Home Invoice 951, landmark laws that gives a framework to realize a 70% carbon discount by 2030. The corporate has since 2019 explored subsequent license renewals (SLRs) for all of its 11 reactors, that are sited on the six nuclear vegetation.
In 2021, the corporate filed its first SLR software for the three-unit 2.5-GW Oconee plant in Seneca, South Carolina, in a bid to maintain that plant open till 2054. In the meantime, just lately introduced federal tax incentives for nuclear may show “very favorable” from a money move standpoint, Good famous in February. Nevertheless, if Duke Power embarks on future new nuclear builds, they’ll doubtless be smaller, superior reactors. As Good famous in February, smaller reactors seem far more engaging than “a 10-year journey to construct a large-scale nuclear reactor.”
Duke Power already offers consulting and “advisory in-kind” companies for the 500-MW Natrium sodium-cooled quick reactor plant at PacifiCorp’s Naughton Energy Plant website in Wyoming, a TerraPower and GE Hitachi Nuclear Power venture that’s anticipated to be operational by 2028. The corporate has additionally been working with different superior nuclear builders, together with Holtec and NuScale, for potential funding within the 2030s, Good mentioned.
Requested a few timeframe for Duke Power to start incorporating these applied sciences in its enterprise, Good mentioned the “consciousness” of what may be doable with hydrogen; superior nuclear; and carbon seize, storage, and utilization (CCUS) is already a part of conversations with all its regulators. “The excellent news is we imagine we now have runway with current applied sciences to realize nearly all of our aspirations round clear vitality transition over the subsequent 5 years or so,” she mentioned. These applied sciences may start to develop extra considerably within the 2030s when it “could be extra essential to get to net-zero and the subsequent tranche of carbon discount,” she added.
“And so, I feel time will inform on whether or not they get to business scale,” she mentioned. Nevertheless, the corporate intends to “be considerate, working with stakeholders and our regulators earlier than we start introducing any of those applied sciences, in order that we now have a typical view of what we want to obtain and put money into to satisfy our objectives,” she mentioned.