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Duke Energy (DUK) Applies for Nuclear Site's License Renewal

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Duke Energy Corp. DUK recently submitted a petition for operating license renewal of its largest nuclear station, Oconee, for an additional 20 years. The application, filed with the U.S. Nuclear Regulatory Commission (NRC), if approved would allow the nuclear plant to operate until 2054.

This petition comes as part of Duke Energy’s earlier announced strategy to seek renewal for the operating licenses of the 11 reactors it operates at six sites for an additional 20 years.

Rationale Behind the Petition

With majority of U.S. utility providers racing toward making their generation portfolio carbon-free, nuclear power plays the role of a catalyst. This is because, nuclear power plants produce no greenhouse gas emissions during operation, as stated by World Nuclear Association. Further, over the course of its life-cycle, nuclear produces about the same amount of carbon dioxide-equivalent emissions per unit of electricity as wind, and one-third of the emissions per unit of electricity when compared with solar.

Thus, it is beneficial for utilities like Duke Energy who have nuclear power in their generation portfolio to expand their nuclear fleet to achieve their zero-carbon emission targets. The latest petition seems to be in line with that strategy.

In fact, for Duke Energy, its nuclear fleet has already been instrumental in lowering the company's carbon emissions. In 2020, operation of the nuclear fleet avoided the release of nearly 50 million tons of carbon dioxide (if that same generation was produced with coal, oil and natural gas) and accounted for 83% of the company's carbon-free generation.

Surely the aforementioned license renewal application reflects a step forward on Duke Energy’s part toward achieving its zero-carbon emission target by 2050. We expect to witness similar petitions for the company’s other 10 nuclear sites in the days ahead.

Utilities & Zero Carbon-Emission Plans

Per the latest forecast made by the U.S. Energy Information Administration (EIA), electricity generation from renewable energy sources is expected to rise from 20% in 2020 to 22% in 2021, with utilities’ pledge of rapid reduction of carbon emission from their generating fleet being a notable catalyst. We believe the latest petition filed by Duke Energy with the NRC is part of that pledge.

Notably, like Duke Energy, there are other utilities that have pledged for a net zero carbon emission target. For instance, DTE Energy DTE aims to reach its target of net-zero carbon emissions from electric generation by 2050. Likewise, by 2050, American Electric Power AEP aims at reducing carbon dioxide emissions by 80%. Ameren Corporation AEE also plans to retire more than 75% of its current coal-fired energy-generating capacity by 2040, while closing all by 2042.

Price Performance & Zacks Rank

Duke Energy, a Zacks Rank #3 (Hold) company, has gained 23.8% in the past year compared with the industry’s 6.9% growth. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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Ameren Corporation (AEE) : Free Stock Analysis Report

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American Electric Power Company, Inc. (AEP) : Free Stock Analysis Report

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