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Duke Energy's Arms File Proposal for CO2 Emission Reduction

Zacks Equity Research
·4 min read

Duke Energy Corporation’s DUK subsidiaries, Duke Energy Progress and Duke Energy Carolinas recently submitted their Integrated Resource Plans (IRPs) for 2020, with the North Carolina Utilities Commission (NCUC) and the Public Service Commission of South Carolina (PSCSC). The IRPs include six potential pathways for the company to achieve up to 70% reduction in carbon emissions.

On approval, the IRPs will enable Duke Energy to duly achieve its near-term carbon reduction goal of at least 50% by 2030 and long-term goal of net-zero by 2050 in the Carolinas.

Carolinas’ Renewable Prospects

As the entire United States is transitioning toward a clean energy economy, Carolinas are leading the nation in terms of carbon emission reduction in the electric sector. The pathway to replace fossil fuels with cleaner energy sources includes accelerating carbon footprint reduction along with expanding renewable energy portfolio.

Per a report by S&P Global Market Intelligence, the North Carolina Department of Environmental Quality suggested in 2019 that the state’s power sector has the potential to reduce emissions by 60%-70% below 2005 baseline levels by 2030. The department also announced its projections of substantial increases in renewable energy generation, approximately 33,000 GWh or 25% of total projected generation in 2030.

On the other hand, per a February 2019 report by the Southern Alliance for Clean Energy, South Carolina witnessed a 33% decrease in carbon emissions from the power sector over the last decade.

Moreover, hydropower, biomass, and solar energy are South Carolina's primary renewable resources and accounted for only 6% of the state's electricity net generation during 2018, per the U.S. Energy Information Administration.

Considering the above discussion, there remains no doubt that Carolinas hold solid renewable growth prospects, thereby offering ample scope for utilities like Duke Energy to expand their renewable energy portfolio in this region. Notably, in July 2020, Duke Energy announced that Progress customers in North Carolina and South Carolina are receiving 560 MW of cleaner energy from the company's new state-of-the-art Asheville Combined Cycle Station in Arden, N.C. Further, the company is converting three of its largest coal plants in the Carolinas to run partially or fully on natural gas, thereby reducing carbon emissions.

Going ahead, the company can be expected to duly achieve its clean energy goals for Carolinas through its latest IRPs, which include substantial investments in solar, wind, energy storage as well as grid enhancement, apart from the carbon reduction targets.

Another Utility Following Suit

Considering the aforementioned discussion, it is quite evident that not only Duke Energy but other utilities operating in the Carolinas are putting in efforts to enhance their renewable energy portfolio in this region.

For instance, Dominion Energy D aims to achieve 12.5% of customer sales paired with renewable energy by 2021 and thereafter in North Carolina. On Feb 11, 2020, the company announced significant expansion of its greenhouse gas emissions reduction goals, establishing a new company-wide commitment to achieve net zero carbon dioxide and methane emissions by 2050, to keep up with clean energy plans of North Carolina.

Utilities’ Global Green Initiative

Per the latest forecast made by the U.S. Energy Information Administration (EIA), electricity generation from renewable energy sources is expected to rise from 17% in 2019 to 20% in 2020 and 22% in 2021 in the country. This has encouraged utilities across the nation to reduce their carbon footprint and enhance clean energy portfolio.

Evidently, DTE Energy DTE is committed to achieving its net-zero carbon emission target by 2050. In March 2018, DTE Electric filed its 2018 Renewable Energy Plan with the Michigan’s regulatory authority proposing approximately 1,000 additional megawatts of energy from new wind and solar projects to be completed by 2022.

Similarly, NextEra Energy NEE has a plan of reducing the carbon dioxide emissions rate to 67% by 2025 from the 2005 base. The company targets to add nearly 11,500-18,500 MW of alternate power generation assets across the United States over the 2019-2022 time frame.

Zacks Rank & Price Performance

Duke Energy has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

In the past year, its shares have lost 13.3% compared with the industry’s 10.3% decline.

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Click to get this free report Dominion Energy Inc. (D) : Free Stock Analysis Report DTE Energy Company (DTE) : Free Stock Analysis Report Duke Energy Corporation (DUK) : Free Stock Analysis Report NextEra Energy, Inc. (NEE) : Free Stock Analysis Report To read this article on Zacks.com click here.