Duke Energy plans to reduce coal-generated power to just 5% of its total by 2030 and phase out coal completely by 2035.
Coal currently accounts for approximately 22% of the company’s electricity production. That number has declined since 2010, when Duke closed 56 old coal-fired units.
The company announced the new target on Wednesday, on the eve of fourth-quarter and year-end earnings announcements. Duke also said it is expanding its goal of net zero carbon emissions by 2050 to include purchased electricity and indirect supplier emissions.
The new targets will be a key part of Carolina’s carbon plan that the company is due to file with North Carolina regulators in mid-May.
Chief Financial Officer Steve Young said the plan, which is still being worked on, would outline specific plant closures and other details.
“It will look at retirements and replacements of coal with renewables, storage of batteries (and) gas needed for reliability. All of those things will start to come closer to targets,” Young said.
State regulators must approve the carbon plan by the end of the year.
The goals do not change Duke’s broader plan to reduce overall carbon emissions by 70% from 2005 levels by 2030 and achieve net zero emissions by 2050. Emissions are now lower by 44% at 2005 levels.
The company also this week announced plans to add $4 billion to its current five-year capital spending plan. The $63 billion will be used to extend the life of nuclear power plants; build new power plants, including solar and wind farms; and upgrading the power grid to accommodate more renewable energy, the company said.
“Our clean energy strategy requires significant investment and we are now budgeting $63 billion (capital expenditure) over the next five years, 80% of which is investment in our clean energy transition,” the Commission said Thursday. CEO Lynn Good to analysts.
The expanded spending plan would also need regulatory approval.
Meanwhile, Duke reported a profit of $3.9 billion last year, in part because electricity consumption rebounded from the pandemic. Earnings per share for the year were $4.94. The figure was $5.24 after adjusting for one-time charges and gains, which met Wall Street analysts’ expectations.
Adjustments for the year included a higher cost for coal ash cleanup in South Carolina after the state Supreme Court ruled Duke could not charge customers for the work. Duke also had ongoing cost-cutting spending, including job cuts. These were partially offset by settlements with insurers to pay for coal ash cleanups.
For the fourth quarter, Duke earned $670 million, rebounding from a loss a year earlier. That equates to 93 cents per share, which is below analyst estimates.
Good and Young focused on annual results.
“I think the fourth quarter caps off a really good year,” Young said in an interview. “We exceeded our initial financial targets, finishing in the upper half of our projected range. And then looking at 2021 as a whole, it’s been a very productive year for us, very transformative.”
Regarding the fourth quarter, Young said warmer weather led to lower energy consumption.
“We’ve had mild weather, especially in the Southeast. Remember people were in shorts over Christmas for several days, so that’s affecting the electric side of our business,” Young added. But the business also had lower operating expenses and taxes, he said.
“Overall, I think we reacted well in the fourth quarter, as we have done all year,” he said.
The company said it expects earnings to continue growing 5% to 7% per year through 2026.
Duke shares fell nearly $5 on Thursday, down 4.7%. Stock indices fell 1.5% to 2%.