Duke Energy Corporation (holding Company) · NYSE:DUK
Duke Energy Corporation (holding Company) — Investor Day (October 2020)
60 slides from Duke Energy Corporation (holding Company)'s investor day presentation, Oct 9, 2020
Slide 1: Delivering Value
fm DUKE Se ENERGY. DELIVERING VALUE October 9, 2020
Slide 2: Safe Harbor statement
Safe Harbor statement This presentation includes forward-looking statements within the meaning of the federal securities laws. Actual results could differ materially from such forward-looking statements. The factors that could cause actual results to differ are discussed herein and in Duke Energy’s
Slide 3: Duke Energy's ESG Day – Agenda
Duke Energy’s ESG Day – Agenda Introduction | Bryan Buckler Safety Moment and Performance | Paul Draovitch Strategic Vision | Lynn Good Clean Energy Strategy | Julie Janson and Cari Boyce Investor Value Creation | Steve Young Natural Gas Business | Sasha Weintraub Renewables, Electrification and Eme
Slide 4: Safety Moment
Paul Draovitch Senior Vice President Environmental, Health and Safety and Project Management and Construction Safety Moment 4
Slide 5: Setting the bar in safety and environmental performance
Setting the bar in safety and environmental performance Safety of our workforce, Leading the industry in safety communities we serve and the performance for the 5th consecutive environment is a core value year (based on EEI metrics). Total Incident Case Rate (TICR) Recordable Environmental Events 0.
Slide 6: Opening Remarks
Lynn Good Chair, President and CEO Opening Remarks 6
Slide 7: We are transforming & reshaping our entire company
We are transforming & reshaping our entire company, from how we generate power and transform our fleet to the role we play in society.
Slide 8: Road to Net-Zero
Road to Net-Zero Where we’ve been Where we’re going (2005 – 2019) (2020 & beyond) Double Increased renewables, storage and new technologies renewable energy portfolio in the next Retire all 5 years coal-only units in the 6,500 Carolinas by At least 50% 2030 CO2 reduction by megawatts 2030(1) Net-zer
Slide 9: Fostering a culture rooted in social responsibility, strong governance and innovating
Fostering a culture rooted in social responsibility, strong governance and innovating for the future Employees Diversity and Inclusion Stakeholders Strong ESG Leading employer for Over 400 D&I-related Ongoing engagement in rankings diversity, women and conversations with employees in Carolinas IRPs,
Slide 10: Clean Energy Strategy
Julie Janson Executive Vice President, External Affairs President, Carolinas Region Cari Boyce Senior Vice President, Enterprise Strategy and Planning Clean Energy Strategy 10
Slide 11: Strong track record of meeting climate commitments
Strong track record of meeting climate commitments Our commitment to address climate is integrated into everything we do – every day – as we seek to reduce our greenhouse gas emissions and mitigate climate risk. This focus will deliver value for our customers and our shareholders. ✓ ✓ 2018 – 2020 an
Slide 12: National leader in low carbon intensity energy
National leader in low carbon intensity energy Carbon Intensity Benchmarks and Duke Energy Projections Carbon Intensity [lbs./MWh] 2,000 1,800 1,600 1,400 1,200 1,000 800 600 400 200 0 AEP NextEra CMS Energy Duke 2021 Duke 2030 Duke 2035 PPL FirstEnergy Duke Cons. DEC/DEP Ameren DTE Xcel WEC Souther
Slide 13: Duke Energy contemplates the largest coal closure in the industry
Duke Energy contemplates the largest coal Planned coal retirements by 2030(1) Coal remaining post 2030 closure in the industry over the next decade 2019 active coal nameplate capacity and planned retirements by 2030 (GW) 20 DUK planned retirements in addition to 6.5 GW XCEL out of coal retired betwe
Slide 14: Partnering with stakeholders on clean energy vision is critical
Partnering with stakeholders on clean energy vision is critical COLLABORATIVE STAKEHOLDER ENGAGEMENT SESSIONS AND FOCUS GROUPS INFORMED THE SIX PORTFOLIOS INCLUDED IN IRP FILING 14
Slide 15: Filed multiple portfolios as part of the IRP
Filed multiple portfolios as part of the IRP Duke Energy filed six portfolios to a cleaner energy future for the Carolinas as part of our 2020 integrated resource plan (IRP). Portfolios (1) PORTFOLIO DESCRIPTION Portfolio 1: Base case with no CO2 prices (Economic coal retirement dates) DELIVER LOWES
Slide 16: IRP portfolio results – Carolinas combined
IRP portfolio results – Carolinas combined Base with Earliest 70% CO2 70% CO2 Base without No New Gas Carbon Practicable Coal Reduction: Reduction: Carbon Policy Generation Policy Retirements High Wind High SMR Pathway A B C D E F System CO2 Reduction 56% 53% 59% 62% 64% 64% 70% 73% 71% 74% 65% 73%
Slide 17: Significantly reducing carbon in every portfolio
Significantly reducing carbon in every portfolio -40% -50% A -60% B C -70% D E F -80% 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 Pathway A Pathway B Pathway C Pathway D Base without Base with Earliest Practicable 70% CO2 Reduction: carbon policy carbon policy Coa
Slide 18: Serving the Carolinas' winter peak
Solar generation Serving the Carolinas' winter peak Load Carolinas California Winter Peaking Summer Peaking Solar not Solar more aligned with Winter Solar closely aligned winter peak output highly with summer variable peak – storage can be used to shift energy to evening hours Source: CAISO Solar +
Slide 19: Carolinas IRPs: generation mix by portfolio
Carolinas IRPs: generation mix by portfolio 2020E 2025E 2030E 2035E 8% 2% 1% 18% Base Case with 32% 38% 38% Carbon Policy 55% 27% 60% 60% 61% Carolinas coal generation in base case is 8% <1% by 2035 of 18% generation mix 70% CO2 Rdctn: 33% 29% 27% 32% High Wind 55% 60% 67% 71% Coal Carbon-Free Gener
Slide 20: Duke Energy Florida and Indiana executing clean energy strategy
Duke Energy Florida and Indiana executing clean energy strategy for customers ~$135B - $150B DUKE ENERGY FLORIDA DUKE ENERGY INDIANA Solar Base Rate Adjustment (SoBRA) ▪ $1 billion capital investment for 700 MW solar Progress made on fleet diversification plans… ▪ ~345 MW completed with remaining ~3
Slide 21: The Path Forward
The Path Forward ▪ We have an ambitious goal to attain net-zero by 2050 ▪ We are taking action to accelerate the clean energy transition in all our jurisdictions ▪ Stakeholder alignment is clear – and we have multiple paths to make progress 21
Slide 22: Investor Value Creation
Steve Young Executive Vice President and Chief Financial Officer Investor Value Creation 22
Slide 23: Clean energy future drives infrastructure growth opportunity in Carolinas
Clean energy future drives infrastructure growth opportunity in Carolinas Carolinas IRP- related infrastructure needs(1) – irrespective of ownership Carbon Reduction Infrastructure investment (% vs. 2005 level) ($ billion) $50B Avg. Base portfolio includes ~9 GW renewables / storage additions 55% -
Slide 24: Grid investments support fleet transformation across all jurisdictions
Grid investments support fleet transformation across all jurisdictions Grid capital plan significantly trending up in second half of the decade Transmission Improvements ▪ Transmission investments total ~$7B in current five-year plan. Significant Integrated Volt-var incremental capital over the next
Slide 25: Clean energy transition drives significant growth
Clean energy transition drives significant growth Growing 5-year capex …leads to higher …with ability to mitigate profile… earnings base growth… customer rate impacts... ✓ Fuel savings ✓ Lower O&M than coal plants $140B - $65B - $150B ✓ Efficiencies from $75B technology/digital ✓ Strong customer gro
Slide 26: Natural Gas Business
Sasha Weintraub Senior Vice President and Chief Commercial Officer of Natural Gas Natural Gas Business 26
Slide 27: Duke Energy to reduce methane emissions to net-zero by 2030
Driving methane emissions to net-zero Eliminated all cast iron and bare steel mains within our delivery systems Duke Energy to reduce Approach to achieving net-zero methane methane emissions to emissions in natural gas business ▪ New technologies to improve monitoring and net-zero by 2030 measuring
Slide 28: Our LDCs continue to serve customers and support economic development
Our LDCs continue to serve customers and support economic development with reliable infrastructure Moving forward with advanced and sustainable RNG technologies to provide benefits for customers ▪ Renewable natural gas projects ▪ SustainRNG investment ▪ RNG in compressed natural gas stations ▪ Compr
Slide 29: Piedmont acquisition has been a tremendous success
Piedmont acquisition has been a tremendous success SIGNIFICANT GROWTH IN RATE BASE … WHILE CUSTOMER RATES AND CUSTOMER SATISFACTION… AND EMISSIONS TREND DOWN $1.23 $5.7 ~2% Avg Customer Rate Rate Base 15% reduction ($B) $3.2 CAGR $1.16 2016 2020E 2016 2019 772 Satisfaction Scores Methane Emissions 4
Slide 30: Renewables, Electrification and Energy Solutions
Doug Esamann Executive Vice President Energy Solutions, President Midwest/Florida Regions, President Natural Gas Business Renewables, Electrification and Energy Solutions 30
Slide 31: Significant renewable energy investments delivering cleaner energy
Significant renewable energy investments delivering cleaner energy Renewables will be Duke Energy’s largest source of energy by 2050 Projected to add upwards of 40,000 MWs of new renewables, making up 40% of our generation mix Regulated and non-regulated renewable capacity(1): Commercial Renewables
Slide 32: Leveraging energy storage as we move into next decade
Leveraging energy storage as we move into next decade 1973 2012 2016 2020 2021 First pumped storage First commercial battery McAlpine Microgrid Battery at Camp Utility-scale batteries to hydro station at Lake installed at Notrees successfully tested Atterbury dispatched be installed in Florida Jocas
Slide 33: Electrifying our fleet and supporting electrification of our communities
Electrifying our fleet and supporting electrification of our communities Aggressive pledge to electrify vehicle fleet by 2030 Duke Energy will convert 100% of its 4,000 light-duty vehicles to electric, and 50% of its combined fleet of 6,000 medium, heavy- duty and off-road vehicles to plug-in hybrid
Slide 34: Emerging hydrogen economy introduces a variety of growth opportunities
Emerging hydrogen economy introduces a variety of growth opportunities Current hydrogen research project ▪ Duke Energy, Siemens and Clemson University filed joint research proposal to DOE ▪ Pilot project to advance understanding of how hydrogen can serve as an energy storage and low-carbon fuel ▪ If
Slide 35: Exploring new technology to propel Duke Energy into the future
Exploring new technology to propel Duke Energy into the future Investing in emerging technology, research and development to propel Duke Energy to reach net-zero carbon by 2050 Zero emitting load following resource (ZELFR) technologies are needed to be ready for commercial deployment by the mid-2030
Slide 36: Nuclear Generation Update
Dhiaa Jamil Executive Vice President and Chief Operating Officer Nuclear Generation Update 36
Slide 37: Duke is an industry leader in carbon-free generation
Duke is an industry leader in carbon-free generation The Carolinas’ utilities rank second among large, regulated utilities with 53% of generation from carbon-free resources(1), driven by… ▪ Best in class nuclear fleet ▪ North Carolina ranked 2nd in the nation for solar development Duke is less “coal
Slide 38: Duke Energy investing in the future of nuclear
Duke Energy investing in the future of nuclear 2030s Advanced non-light-water reactors ▪ Zero-emitting, load-following resources (ZELFRS) Late 2020s ▪ Engaging in additional research and development and advocacy Small modular reactors (SMR) ▪ Include several reactor types ▪ Small modular reactors (S
Slide 39: Fireside Chat
Lynn Good Chair, President and CEO Bill Kennard Director Fireside Chat
Slide 40: Key messages of ESG Investor Day
Key messages of ESG Investor Day Clean energy vision centers around ambitious goals to achieve net-zero carbon emissions by 2050(1) and net-zero methane emissions by 2030 Duke Energy is a leader in carbon-free generation Our path is underpinned by world-class governance and strong commitment to soci
Slide 41: Appendix
Appendix 41
Slide 42: We operate premium franchises poised to benefit from ESG transition
We operate premium franchises poised to benefit from ESG transition Scale owner of premium utilities 53 GWS TOTAL GENERATING CAPACITY ▪ Duke Energy is the largest regulated utility in North America by: ▪ Rate base, electric customers and total assets 4 GWS COMMERCIAL ▪ We operate premium utilities i
Slide 43: Ethics and compliance
Ethics and compliance Duke Energy’s Ethics and Compliance Program promotes an organizational culture that encourages ethical conduct, a commitment to compliance with laws and regulatory requirements and a culture that supports reporting allegations without the fear of retaliation. Elements ▪ Oversee
Slide 44: Long-standing history of strong governance driven from diverse Board
Long-standing history of strong governance driven from diverse Board of Directors Board of Directors Key Stats Lynn J. Good Chair, President & CEO, Michael G. Browning Independent Lead Director Annette K. Clayton President & CEO, North America 38% Duke Energy Chairman, Browning Consolidated Operatio
Slide 45: Risk Management oversight structure
Risk Management oversight structure Key Highlights ▪ Announced a new, aggressive goal of at least 50% reductions in carbon dioxide emissions from Sustainability electricity generation by 2030 (from 2005 levels) and net-zero carbon dioxide emissions from electricity generation by 2050 & Political ▪ O
Slide 46: Executive compensation program aligned with business strategy
Executive compensation program aligned with business strategy Performance Metrics Support Key Goals Target Compensation Mix ELEMENT METRICS Short-Term CEO Incentives (Cash), Corporate Objectives (80%) 16% RSUs, 22% ▪ 50% Adjusted EPS ▪ 10% O&M Expense Base Salary, ▪ 10% Operational Excellence - Targ
Slide 47: Performance metrics aligned to our ESG strategy
Performance metrics aligned to our ESG strategy In September 2019 we announced a new aggressive goal of at least 50% reduction in carbon emissions from electricity generation by 2030 compared to 2005 levels and net-zero carbon emissions from electricity generation Carbon Reduction by 2050. To promot
Slide 48: Duke Energy's scores on ESG ratings and rankings
Duke Energy’s scores on ESG ratings and rankings Scale Early 2019 2020 Comments Letter grade and 0-10 BBB A Aug. 2020 upgrade MSCI (best) score 5.2 6.7 from BBB Sustainalytics ESG 0 (best)-100 and rank 33.3 risk rating (45 out of 180 51 out of 180 33.2 risk rating Risk Rating (1=best) in global elec
Slide 49: Road to net-zero – foundation to climate strategy
Generation Fleet: Road to net-zero – foundation to climate strategy 2005 – 2020 > 39% CO2 reduction as of 2019 2020 – 2030 > Nuclear delivers 86% of > Accelerate retirement of coal and add flexibility to existing assets carbon- free generation > Significantly increase renewables > 51 coal unit retir
Slide 50: Coal as a percentage of earnings base
Coal as a percentage of earnings base Coal assets as a percentage of Electric & Gas earnings base(1) 14% 9% 7% 4% 2 -3% ~1% 2019A 2024E 2029E Total Coal Earnings Base Excluding Dual Fuel (1) Does not reflect accelerated depreciation requested in North Carolina rate cases Coal assets as a percentage
Slide 51: Collaborating with stakeholders to develop sound energy policy
Collaborating with stakeholders to develop sound energy policy Build stronger relationships Achieved constructive with stakeholders at the Active involvement with outcomes and delivered value center of the federal climate stakeholders involved in the for stakeholders during solar and technology deba
Slide 52: 2019 vs. 2020 Carolinas IRPs: What's changed?
2019 vs. 2020 Carolinas IRPs: What’s changed? Carolinas Combined System 2019 IRP 2020 IRP 2020 IRP 2020 IRP Base with Carbon Policy Base without Carbon Policy 70% CO2 Reduction: High Wind No New Gas System CO2 Reduction 50% 48% 59% 62% 70% 73% (2030 | 2035) Total Solar [MW] 8,400 8,650 16,250 16,400
Slide 53: Developing integrated resource plans in collaboration with stakeholders
Developing integrated resource plans in collaboration with stakeholders Stakeholder Interest How Addressed in IRP ▪ Portfolios will reflect multiple potential pathways to achieving Duke Diversity in carbon portfolios, with specific interest in NC CRP Energy’s net-zero carbon goals including two 70%
Slide 54: Carolinas coal retirements by IRP portfolio
Carolinas coal retirements by IRP portfolio Carolinas fleet coal capacity (MW)(1) 12,000 Remaining 5,000 MW after Coal Capacity [MW] 10,000 2030 are dual fuel units 8,000 6,000 4,000 2,000 0 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2049 2019 IRP
Slide 55: Carolinas IRP capacity additions (MW)
Carolinas IRP capacity additions (MW) Base without Carbon Policy Base with Carbon Policy Earliest Practicable Coal Retirements 2021-2025 2026-2030 2031-2035 Total 2021-2025 2026-2030 2031-2035 Total 2021-2025 2026-2030 2031-2035 Total Incremental Solar(1) 3,000 1,710 15 4,725 3,150 2,600 2,625 8,375
Slide 56: Duke Energy is an industry leader in ESG/Sustainability disclosure
Duke Energy is an industry leader in ESG/Sustainability disclosure Please see Duke Energy’s new ESG website… www.duke-energy.com/esg … with links to key disclosures ▪ Sustainability Report ▪ Climate Report ▪ Sustainability Accounting Standards Board (SASB) ▪ EEI and AGA Reporting ▪ Global Reporting
Slide 57: Investor relations contact information
Investor relations contact information BRYAN BUCKLER, VICE PRESIDENT INVESTOR RELATIONS ▪ Bryan.Buckler@duke-energy.com ▪ (704) 382-2640 CINDY LEE, DIRECTOR INVESTOR RELATIONS ▪ Cynthia.Lee@duke-energy.com ▪ (980) 373-4077 ABBY MOTSINGER, MANAGER INVESTOR RELATIONS ▪ Abby.Motsinger@duke-energy.com ▪
Slide 58: Safe harbor statement
Safe harbor statement This document includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward- looking statements are based on management’s beliefs and assumptions and can often be identified by
Slide 59: For additional information on Duke Energy, please visit duke-energy.com/investors
For additional information on Duke Energy, please visit duke-energy.com/investors
Slide 60: Non-GAAP Reconciliations 2020 ESG Investor Day
Duke Energy Corporation Non-GAAP Reconciliations 2020 ESG Investor Day Adjusted Earnings per Share (EPS) The materials for the 2020 ESG Investor Day include a discussion of adjusted EPS. The non-GAAP financial measure, adjusted EPS, represents basic EPS available to Duke Energy Corporation common st