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Duke Energy says it will eliminate coal for power generation by 2035

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David Boraks / WFAE
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Duke Energy has six remaining coal-fired power plants in the Carolinas, including the Allen Steam Station in Belmont. The company says it will eliminate coal by 2035.

Duke Energy says it expects to reduce energy generated by coal to just 5% of its total by 2030 and to eliminate coal entirely by 2035.

Coal currently accounts for about 22% of the company's electricity output. That number has fallen since 2010, as Duke closed 56 older coal-fired units.

The company announced the new target Wednesday, on the eve of fourth-quarter and year-end earnings announcements. Duke also said it's expanding its goal of net-zero carbon emissions by 2050 to include purchased power and indirect emissions from suppliers.

The new targets will be a key part of the Carolinas Carbon Plan that the company must file with North Carolina regulators in mid-May.

CFO Steve Young said that plan, which is still being drafted, would spell out specific plant closings and other details.

"It will look at coal retirements and replacements with renewables, battery storage, (and) some gas needed for reliability. All of those things will start driving towards the targets," Young said.

State regulators must approve the carbon plan by year's end.

The goals don't change Duke's broader plan to reduce overall carbon emissions by 70% from 2005 levels by 2030 and to achieve net-zero emissions by 2050. Emissions now are 44% below 2005 levels.

The company also announced plans this week to add $4 billion to its current five-year capital spending plan. The $63 billion will pay for extending the lives of nuclear plants; building new 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're now budgeting $63 billion in (capital expenditures) over the next five years - 80% of which represents investments toward our clean energy transition," CEO Lynn Good told analysts Thursday.

The expanded spending plan also would need regulatory approval.

Annual profit

Meanwhile, Duke reported a profit of $3.9 billion last year, in part because electricity use rebounded from the pandemic. Earnings per share for the year were $4.94. The number was $5.24 after adjusting for one-time charges and gains, which met the expectations of Wall Street analysts.

Adjustments for the year included a higher cost for coal ash cleanups in South Carolina after the state Supreme Court ruled that Duke could not charge customers for the work. Duke also had expenses for ongoing cost-cutting, including cutting jobs. Those 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 works out to 93 cents a share, which fell short of analysts' estimates.

Both Good and Young focused on the full-year results.

"I think the fourth quarter caps off a very good year," Young said in an interview. "We exceeded our initial financial targets, finishing up in the upper half of our projected range. And then looking at 2021 as a whole, it was a very productive year for us, very transformative."

As for the fourth quarter, Young said warmer weather drove down energy usage.

"We saw some mild weather, particularly in the Southeast. Remember, people were in shorts at Christmas for several days. So that affects the electric side of our business," Young added. But the company also had lower operating expenses and taxes, he said.

"Overall, I think we responded well in the fourth quarter, as we did all year," he said.

The company said it expects profits to keep growing at 5% to 7% a year through 2026.

Duke shares lost nearly $5 on Thursday, a decline of 4.7%. Market indexes were down 1.5% to 2%.  

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