Duke Energy ESG Investor Day
A note last updated by
on Oct 12, 2020
Summary of Duke Energy's ($DUK) inaugural ESG investor day, held October 9, 2020
Aggressive Move Into Renewables Forthcoming
"So from 2020 to 2050, we expect to deploy renewable energy at a pace that we've never deployed before. Large amounts and drastic increases in the amount of renewable energy we invest in will be necessary. So think about today, we have 8 megawatts of contracted, owned or operated renewable energy across the entire Duke footprint. By 2025, we'll double that. By 2030, we'll triple it. And in order to meet our net-zero carbon goals by 2050, it will take 6x the amount of renewable energy that we have on our system today. Most of that will be in the regulated businesses. By 2050, the majority of the energy in our regulated utilities will be from renewable energy, representing about 40% of the capacity. If you think about where we stand today, we're a top 10 leader in ownership in wind and solar, and we expect to continue that leadership position going forward. In our commercial renewables, we're also seeing growth. Currently, we own about 3,500 megawatts of renewable energy. And by the end of next year, that will grow to 5,000 megawatts."
50% CO2 Reduction by 2030
"It's been something we've been working at for some time as we've retired coal and added renewables to our system, 8,000 megawatts of renewables. But we're not going to stop there 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%. And our state -- our home state of North Carolina has an aspiration to get to at least a 70% carbon reduction."
Significant Coal Closures
"Our customers, our communities, all of our stakeholders really want for us to lean into the important issue of climate change. And we need to balance that with continuing to provide the affordable, reliable and safe energy that they've come to depend upon from us, and so we're excited about doing just that in the coming years."
Ramp In Renewables Part of Filed Integrated Resource Plan (IRP)
"You can generally think of our portfolios in 4 buckets: first, delivering leased cost consistent with current energy policy; second, retiring coal as quickly as possible; third, we've included portfolios that deliver at least 70% carbon reduction by 2030; and finally, a no new gas portfolio. In all of these portfolios, we continue to meet the needs of our growing communities, and we remain on track to achieve net-zero by 2050."
"First, it's important to note that even in our leased cost portfolios we continue to make significant progress in transitioning to clean energy. Renewables and storage take center stage with additions double to quadruple what's on the system today. For the first time, we've included new insights around customer bill impacts, transmission and technology requirements to give policymakers and regulators the data they need to make informed policy decisions. Based on stakeholder feedback, we included a no new gas portfolio. In this portfolio, our coal units actually operate a little longer to allow time for new technologies such as small modular reactors, offshore wind or pump storage hydro to be integrated into our system. Here, you can see the varying levels of carbon reduction across each pathway, ranging from 53% to 74% by 2035."
Impact on Customer Bills
The present value revenue requirements, and that's a mouthful for us, actually go out to 2050 to -- so that we have an apples-to-apples comparison of the cost of the various technologies. The rate impacts that we show go through the planning horizon to 2035, and we see a range of impacts to customer bills. And again, these are just focused on the resources that we're adding in the IRP and would not be -- and would be offset, as Steve mentioned, by some of the transformation efforts underway.
But in our base case, from around 1% annual increase to customer bills to up to about 2.5% to 3% over the -- depending on the portfolio that you're looking at.
Natural Gas Remains a Big Part of Generation Mix
"The $20 billion number, I would think about it as being composed 2/3 renewables investment, 1/3 nonrenewables investment. The renewables investment is composed primarily of solar, which is more accommodated on our system in the Carolinas. There's some wind and there's some battery storage in that number as well. The nonrenewable investment piece consists primarily of gas peaking facilities, as Cari described, and transmission investment that's required to integrate all of these additional renewables."
$20 to $70 Billion Investment Opportunity For DUK
"On the right-hand part of this page, we show our rate base projections. We start with the year-end 2019, a rate base of $77 billion. We see that growing to roughly $105 billion by the end of 2024. That's a 6.5% growth rate, very solid. For the next 5-year period, ending in 2029, we see that growth rate accelerating to 7% as more capital kicks in with this transformation. Keep in mind, we have a very good track record of earning our allowed returns on a growing rate base."
Impact of Vehicle Electrification on Load
"The other thing that you can think about from an electrification standpoint is the load pickup that we get. So in 10 years, we believe that our load will grow by 0.5% just because of the existence of electrification of vehicles. And by 2050, we think the load component could grow to 2% to 4% from electrification. There's also grid investment, which is helpful for us as we look to make sure the capacity exists to supply those vehicles. And the last point I want to make on electric vehicle is a real important one. Our pledge to take our own fleet and reduce the emissions from that fleet by electrifying 100% of our light-duty vehicles by 2030, and 50% of our medium, heavy-duty and off-road vehicles with hybrid electric, electric vehicles are carbon-free fuels. We're really proud of that pledge."