Duke Energy Corporation (holding Company) · NYSE:DUK
Duke Energy Corporation (holding Company) — Investor Day (October 2022)
72 slides from Duke Energy Corporation (holding Company)'s investor day presentation, Oct 4, 2022
Slide 1: Energy Transition Update
OCTOBER 4, 2022 Energy Transition Update
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: 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. These statements are based on management’s beliefs and assumptions and can often be identified by terms and
Slide 4: Key Messages
Key Messages Our pace of change is underscored by an unwavering commitment to customer affordability and reliability Introducing two additional interim emission reduction targets on our path to net-zero Scope 1: 80% by 2040(1) Scope 2&3: 50% by 2035(2) Updating our 10-year capital plan: ~$145B o
Slide 5: Agenda
Agenda Introduction Jack Sullivan Safety Moment and Performance Jessica Bednarcik Strategic Context Lynn Good Capital Investments and Affordability Brian Savoy Path to Net-Zero Swati Daji Exceeding Customer Expectations Harry Sideris Emissions Reduction Transparency Katherine Neebe and Sasha Weintra
Slide 6: Safety Moment and Performance
Safety Moment and Performance Jessica Bednarcik SVP / Environmental, Health and Safety and Coal Combustion Products
Slide 7: Leading the industry in safety and environmental performance
Leading the industry in safety and environmental performance Leading the industry in safety performance for the No Level 1 REEs since 2017; 7th consecutive year; nearly 42% lower than 2013 nearly 97% reduction in Level 2 Total Incident Case Rate (TICR) Reportable Environmental Events (REEs) 1.6 90 1
Slide 8: Strategic Context
Strategic Context Lynn Good Chair, President and Chief Executive Officer
Slide 9: Ambition. Action. Results.
Ambition. Action. Results. Delivering affordable, reliable and increasingly clean energy for our customers – now and in the future. // 9
Slide 10: A responsible approach to pacing our energy transition
A responsible approach to pacing our energy transition 24/7 Affordability Reliability Energy Transition Stakeholder Supply Support Chain State & Federal Technology Policy Advancements We believe in a responsible approach to our energy transition – one that drives out carbon emissions while preservin
Slide 11: Capital Investments and Affordability
Capital Investments and Affordability Brian Savoy Executive Vice President and Chief Financial Officer
Slide 12: Cost-effective clean energy transition drives earnings base growth
Cost-effective clean energy transition drives earnings base growth ~$145 BILLION OF REGULATED CAPITAL ~$120 BILLION (~85% OF 10-YR PLAN) COMMITTED TO EXPENDITURES OVER THE NEXT 10 YEARS(1)… FLEET TRANSITION AND GRID MODERNIZATION ~$75B $80B - $85B ~$40B $56B- ~$5B ~$25B $63B $66B Grid investments Re
Slide 13: Energy transition investments supported by modern recovery mechanisms
Energy transition investments supported by modern recovery mechanisms 90% of our electric capital investments are eligible for modern recovery mechanisms(1), mitigating regulatory lag Includes recovery through riders, rate cases with forecasted test years, and multi-year rate plans Majority of w
Slide 14: Customer affordability
Customer affordability MAKING INVESTMENTS TO LOWER FUEL VOLATILITY AND COST Recent fuel volatility is putting upward pressure on customer bills; our transition to renewables will reduce future fuel requirements, increasing rate stability Launching Southeast Energy Exchange Market by year end, wh
Slide 15: Projected economic impact of 10-year capital plan
Projected economic impact of 10-year capital plan $1.5 billion $250 billion Additional annual labor income over 10 years in U.S. economic output $145 billion (1) of capital investments over next 10 years Over $5 billion 20,000+ In associated property taxes over next Direct, indirect and induced addi
Slide 16: Path to Net-Zero
Path to Net-Zero Swati Daji Senior Vice President, Enterprise Strategy and Planning
Slide 17: Road to Net-Zero
Road to Net-Zero Where we’ve been Where we’re going (2005 – 2021) (2022 & beyond) 2030 On track to exceed 50% Scope 1 2035 reduction target(1) New interim target 50% Scope 2 & 3 reduction(2) 2040 New interim target 80% Scope 1 7,500 MW 2050 coal retired reduction(1) 6,000 MW Affirming regulated net-
Slide 18: Diverse generation mix is key to reliability and rate stability
Diverse generation mix is key to reliability and rate stability for customers Renewables: Builds to ~35% of total generation by 2040 Enterprise GWh ZELFRs(1): Dispatchable zero-carbon resources; enables transition from natural gas 400,000 Existing nuclear: Reliable zero-carbon baseload generation th
Slide 19: Emerging technologies will complement existing generation mix
Emerging technologies will complement existing generation mix Hydrogen and biofuel capable gas turbines Current and future gas plants will be equipped to run off alternatives like hydrogen or biofuels First solar-to-hydrogen-fired turbine pilot in Florida Long-duration energy storage Evaluatin
Slide 20: Exceeding Customer Expectations
Exceeding Customer Expectations Harry Sideris Executive Vice President, Customer Experience, Solutions and Services
Slide 21: Transforming to exceed the evolving needs of our customers
Transforming to exceed the evolving needs of our customers Distributed resources & The backbone of our clean and reliable energy future: emerging technologies Modernize the grid with smart technology Products, Enable electrification and the two-way flow of clean energy services & rate Empower
Slide 22: Growing through electrification
Growing through electrification Creating a suite of programs to support growing demand Simplifying adoption for our customers through innovative programs Electrifying 100% of our 4,000 light duty and 50% of our 3,000 medium and heavy-duty vehicles Conducting pilot programs to explore vehicle-t
Slide 23: Empowering our customers to manage their energy use
Empowering our customers to manage their energy use Arming customers with tools to conserve energy, reduce Assisted customers to access carbon, save money and OVER $200 million access assistance in energy assistance since 2021 Energy efficiency programs Home Energy Reports Residential carbon c
Slide 24: Emissions Reduction Transparency
Emissions Reduction Transparency Katherine Neebe Vice President, National Engagement, Strategy, Chief Sustainability and Philanthropy Officer Sasha Weintraub Senior Vice President and President, Natural Gas Business
Slide 25: Addressing Scope 2, 3 emissions
Addressing Scope 2, 3 emissions Breakdown of emissions included in and excluded from net-zero goals 5% >95% of Duke Energy’s Emissions excluded from calculated Scope 1, 2 and 3 net-zero goal emissions fall into our currently Emissions included in net- zero goal stated net-zero goal(1) 95% Exit fro
Slide 26: LDC emissions – our approach
LDC emissions – our approach SCOPE 1 EMISSIONS STRATEGY Eliminated cast iron and bare steel mains on our system Deploying cross-compression technology and gas cloud imaging cameras Identifying and fixing leaks using satellite, ground-level sensing and other technologies – a first for natural g
Slide 27: Stakeholder Engagement
Stakeholder Engagement Kodwo Ghartey-Tagoe Executive Vice President, Chief Legal Officer and Corporate Secretary Katherine Neebe Vice President, National Engagement, Strategy, Chief Sustainability and Philanthropy Officer
Slide 28: Addressing social impacts through a just transition
Addressing social impacts through a just transition Support the workforce Enabling Drive economic Engage our development communities/customers // 28
Slide 29: Governance and Oversight
Governance and Oversight Lynn Good Chair, President and Chief Executive Officer Ted Craver Independent Lead Director
Slide 30: Key Messages
Key Messages Duke Energy is leading the industry’s largest clean energy transition Our pace of change is underscored by an unwavering commitment to customer affordability and reliability Two additional interim emission reduction targets on our path to net-zero ~$145B capital plan(1) supports ~7% ear
Slide 31: Appendix
Appendix
Slide 32: Index
Index Topics Slides Duke Energy overview 33 - 36 Ethics and compliance, disclosures 37-38 Governance and executive compensation 39-42 Human capital management 43 Enterprise security 44 Supply chain 45-46 Sustainable financing framework 47 Customer satisfaction 48 Grid, electric vehicles, and renewab
Slide 33: Duke Energy – a large-scale, highly regulated energy infrastructure company
Duke Energy – a large-scale, highly regulated energy infrastructure company HEADQUARTERED IN ELECTRIC UTILITIES CHARLOTTE, NC & INFRASTRUCTURE Operating in six constructive jurisdictions, with attractive allowed ROEs, serving 8.2 million retail customers Customer rates below the national average
Slide 34: Electric utilities & infrastructure
Electric utilities & infrastructure COMPETITIVE CUSTOMER RATES(1) REGULATED ELECTRIC CAROLINAS RESIDENTIAL 2021 EARNINGS BASE U.S. AVG. 14.83 DEO - Electric DEK 14.39 DEK - Electric DEI 13.89 5% 1% DEF 13.22 DEP (NC) 12.32 DEI DEP (SC) 11.99 12% DEC Duke Energy Duke Energy DEC (SC) 11.87 Progress 37
Slide 35: Gas utilities & infrastructure
Gas utilities & infrastructure GAS UTILITIES WITH LOW VOLUMETRIC EXPOSURE DUE TO MOSTLY FIXED MARGINS… MARGIN STABILIZING MECHANISMS 13% 13% 1. Purchased Gas Adjustment All States 2. Uncollectible Recovery All States 74% 87% MOSTLY 3. Integrity Management Rider North Carolina and FIXED (“IMR”) Tenne
Slide 36: Delivering benefits to our stakeholders, guided by strong governance
Delivering benefits to our stakeholders, guided by strong governance Our customers Our investment in Workforce our communities development Energy affordability and rate Since 2021, $40 million in aid for Strong focus on stability customers, communities multiskilling workers Reliable energy a
Slide 37: 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 of reporting concerns without the fear of retaliation Elements Overseen by the Audit
Slide 38: Trust starts with transparency
Trust starts with transparency Please see these key disclosures on our website: Proxy Report 2021 ESG Report 2022 Climate Report Semiannual Corporate Political 2022 Annual Trade Associations Expenditures Report Climate Review SASB Disclosures EEI/AGA Template Disclosure GRI Disclosures EJ Principals
Slide 39: Long-standing history of strong governance driven from diverse board of directors
Long-standing history of strong governance driven from diverse board of directors 13 out of 14 directors are independent (all directors except Chair, President and CEO) Lynn J. Good Derrick Burks Annette K. Clayton Chair, President & CEO, Retired Managing Partner, President & CEO, Key Stats Duke Ene
Slide 40: Continued commitment to sound governance and compensation practices
Continued commitment to sound governance and compensation practices Governance Best Practices Compensation Program Best Practices Independent Lead Director with clearly defined role and responsibilities Integrate key performance metrics in our incentive plans relating to environmental, safety, h
Slide 41: Executive compensation program aligned with business strategy
Executive compensation program aligned with business strategy A quantitative climate-related metric has been incorporated into our short-term incentive plan for 2022 Target Compensation Mix Performance Metrics Support Key Goals (2022 Proxy) ELEMENT METRICS Short-Term CEO Incentives Adjusted EPS (C
Slide 42: Performance metrics aligned to our strategy
Performance metrics aligned to our strategy Our STI plan includes several components that are directly tied to advancing Our Clean Energy Transformation, including: Carbon Reduction A qualitative performance assessment of each executive officer’s contributions to achieving our long-term goal of
Slide 43: Human capital management
Human capital management The energy industry is in the midst of a massive transformation, and we must have an innovative, talented team of professionals who represent the diversity of the customers we serve as a foundation for success Highlights Workforce demographics Second consecutive year publi
Slide 44: Enterprise security
Enterprise security Protecting our teammates, assets and information is top priority, enabling the delivery of the essential service our customers and communities rely on. Enterprise Security is made up of three complementary departments working together to provide a foundational approach to physica
Slide 45: Supplier diversity
Supplier diversity Duke Energy’s supplier diversity program reflects our commitment to inclusion and to developing and expanding relationships with diverse businesses at least 51% owned, controlled or managed by minorities, women, veterans, LGBT individuals and those with disabilities, as well as bu
Slide 46: Supply chain sustainability – 2021 overview
Supply chain sustainability – 2021 overview Our supply chain sustainability strategy enables us to reduce carbon emissions in our supply chain, promote economic development and build diversity among our supply base. As we chart the path toward net-zero carbon emissions, our supply chain environmenta
Slide 47: Sustainable financing framework
Sustainable financing framework Green and sustainability bond financing sustainable-financing-framework New use of proceeds-based framework greatly expands the eligible project categories to align with our interim and long-term carbon reduction goals: Renewable energy, green innovation, energy e
Slide 48: Customer satisfaction
Customer satisfaction J.D. Power's residential utility studies PNG 783 DEC 772 DEP 765 DEF 764 DEMW 757 Four of our five brands were in the top quartile among large utilities nationally in the 2021 J.D. Power and Associates Utility Residential Customer Satisfaction Studies // 48
Slide 49: Building a green-enabled and resilient infrastructure
Building a green-enabled and resilient infrastructure Deliver a smarter, more resilient and reliable grid with innovative functionalities Upgrading Installing smart Distribution- Enable two-way Energy equipment self-healing scale battery flow of orchestration technology storage electricity To suppor
Slide 50: Electric vehicle infrastructure
Electric vehicle infrastructure By 2025, Duke Energy will have invested approximately $100 million in EV charging infrastructure across its service territories Initiatives include innovative programs and supporting our states’ work to deploy EV infrastructure plans – in part by helping deploy fast
Slide 51: Duke Energy transportation electrification growth
Duke Energy transportation electrification growth Forecast: Electric Vehicles in Operation MWhs EVs on the road 12,000,000 3,000,000 10,000,000 2,500,000 8,000,000 2,000,000 6,000,000 1,500,000 4,000,000 1,000,000 2,000,000 500,000 - 0 2022 2025 2030 2035 Energy Forecast (MWhs) EVs forecasted in Duk
Slide 52: Growth in renewable energy over the next decade is essential to decarbonization
Growth in renewable energy over the next decade is essential to decarbonization Plans show a need for more than 30 GWs of solar and wind capacity enterprise- wide through the end of 2035(1) Path to utility ownership across our jurisdictions provides benefits to customers and Maintaining optionality
Slide 53: 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 – and beyon
Slide 54: Example Scope 1-3 emissions categories in the value chain
Example Scope 1-3 emissions categories in the value chain // 54
Slide 55: Leading in transparency for Scope 1, 2, 3 emissions
Leading in transparency for Scope 1, 2, 3 emissions C02eEmissions % of Total Category Name (Thousands MT) Emissions Scope 1: Direct emissions Electrical generation 77,399 70.7% Over 95% of Duke Energy’s NG distribution facilities 322 0.3% calculated emissions fall into our SF6 from T&D transformers
Slide 56: Carbon emission reductions
Carbon emission reductions Duke Energy CO2 Intensity (metric tons/MWh) Projection vs. Transitional Pathways Initiative (TPI) 0.5 C02 Intensity (Metric tons/MWh) 0.4 0.3 0.2 0.1 0 2020 2030 2035 2040 2050 TPI below 2 degrees Duke Energy projected // 56
Slide 57: Significantly reducing Scope 1 emissions from electricity generation
Significantly reducing Scope 1 emissions from electricity generation Removed 62 million metric tons of annual CO2 emissions from electric generation since 2005, equivalent to taking over 13 million fossil-fueled vehicles off the road Emissions from electric generation CO2 emissions CO2 Emissions (me
Slide 58: National leader in low carbon intensity energy
National leader in low carbon intensity energy Carbon Intensity Benchmarks and Duke Energy Projections 2.5 Carbon Intensity [lbs./kWh] 2 1.5 1 0.5 0 Peer Average Duke Energy A B C D E F G H K J Duke 2030 Duke 2035 Duke 2040 I 2020 Benchmarking Air Emissions Duke Energy - ERM Projections Source: Util
Slide 59: Just Transition Principles
Just Transition Principles As we navigate the largest planned coal retirement in the industry, we are being intentional in how we approach a fair, equitable, and just transition for our employees, customers, and communities. We commit to: Fundamental to our transformation is our commitment to enable
Slide 60: Out of coal by 2035
Out of coal by 2035(1) Planned Coal Capacity Retirements Coal Capacity Total Capacity (MW) Retirement Year Allen 1&5 426 2023 15,792 MW Dual fuel(2) Cliffside 5(2) 546 2025 14,507 MW Coal only Marshall 1-2(2) 760 2028 DEC Marshall 3-4(2) 1,318 2032 8,305 MW - 9,714 MW Belews Creek 1-2(2) (3) 2,220 2
Slide 61: Coal as a percentage of earnings base
Coal as a percentage of earnings base(1) ~12% 4% ~7% Dual Fuel(2) 3% Coal / Oil 8% ~2-3% 4% 1-2% 1% 2021 2025E 2030E (1) Subject to regulatory approvals (2) Dual fuel denotes coal units that have been or will be retrofitted to run fully or partially on natural gas. As of December 31, 2021, the dual-
Slide 62: Coal as a percentage of earnings base by jurisdiction
Coal as a percentage of earnings base by jurisdiction(1) DUKE ENERGY CAROLINAS DUKE ENERGY INDIANA Dual Fuel(2) Coal / Oil 14% 36% 16% 8% 8% 22% 5% 11% 4% 9% 20% 6% 3% 6% 3% 11% 1% 3% 2021 2025E 2030E 2021 2025E 2030E DUKE ENERGY PROGRESS DUKE ENERGY FLORIDA 8% 7% 4% 4% 1% <1% 2021 2025E 2030E 2021
Slide 63: Jurisdictional update – Duke Energy Carolinas and Duke Energy Progress
Jurisdictional update – Duke Energy Carolinas and Duke Energy Progress Key Stats(1) Energy Transition – Carolinas Carbon Plan 4.5 million electric customers Filed Carolinas Carbon Plan in North Carolina; includes a range of portfolios that achieve the interim 70% reduction target and reach carbo
Slide 64: Jurisdictional update – Duke Energy Florida
Jurisdictional update – Duke Energy Florida Key Stats(1) Energy Transition 1.9 million electric customers Focused transition from fossil fuel generation to renewables over the next decade positions DEF for a gradual reduction in CO2 emissions and provides rate stability for 10.3 GW owned gener
Slide 65: Jurisdictional update – Duke Energy Indiana
Jurisdictional update – Duke Energy Indiana Key Stats(1) Energy Transition 0.9 million electric customers 2021 Integrated Resource Plan (IRP) outlines Duke Energy Indiana’s plans to transition out of coal generation by 2035 (2.5 GW of coal retired by 2030, remainder 6.3 GW owned generation cap
Slide 66: Jurisdictional update – Duke Energy Kentucky
Jurisdictional update – Duke Energy Kentucky Key Stats(1) Energy Transition 146 thousand electric customers 2021 Integrated Resource Plan (IRP) outlines Duke Energy Kentucky’s plans to transition out of coal generation by 2035 1.1 GW owned generation capacity 153 renewables combined with sto
Slide 67: Diverse generation mix is key to reliability and rate stability for customers
Diverse generation mix is key to reliability and rate stability for customers(1) Generating Capacity (GW) – Enterprise(2) 160 140 120 100 80 60 40 20 - 2021 2025 2030 2035 2040 2045 2050 Demand Response 4 4 5 5 5 5 5 Storage 2 3 4 11 19 26 28 Renewables 7 11 21 32 44 52 55 ZELFRs (3) - - - 2 7 27 43
Slide 68: Gas LDC emission reduction strategies
Gas LDC emission reduction strategies MAKING PROGRESS ON 2030 NET-ZERO CLEAR PATH TO ACHIEVING SCOPE 3 GOAL FOR SCOPE 1 METHANE EMISSIONS EMISSION REDUCTION GOALS(1) Partnering with natural gas producers and shippers to reduce Partnering with Accenture, methane emissions Avanade and Microsoft on
Slide 69: Awards and recognition
Awards and recognition Dow Jones Human Rights Hire Vets Sustainability Index Campaign Foundation 2021 Gold Medallion Award 16 years in a row 2022 Corporate Equality Index No.1 in 2021 among 2022 Fortune 2021 Forbes U.S. utilities for World’s Most Admired Best Employers for Diversity Companies and Be
Slide 70: Ratings and rankings
Ratings and rankings Scale 2021 2022 Comments Letter grade and 0-10 A AA Feb. 2022 upgrade MSCI (best) score 6.7 8.1 to AA Sustainalytics ESG 0 (best)-100 and rank 59 out of 296 33.2 risk rating 27.6 risk rating Risk Rating (1=best) in global electric sector Bloomberg ESG Highest score for our 0-100
Slide 71: Investor relations contact information
Investor relations contact information JACK SULLIVAN, VICE PRESIDENT INVESTOR RELATIONS Jack.Sullivan@duke-energy.com (980) 373-3564 CHRIS JACOBI, DIRECTOR INVESTOR RELATIONS Christopher.Jacobi@duke-energy.com (704) 382-8397 LINDA MILLER, MANAGER INVESTOR RELATIONS Linda.Miller@duke-energy
Slide 72: Non-GAAP Reconciliations
Duke Energy Corporation Non-GAAP Reconciliations 2022 Energy Transition Update Adjusted Earnings per Share (EPS) The materials for Duke Energy Corporation’s (Duke Energy) Energy Transition Update presentation in October 2022 include a reference to adjusted EPS. The non-GAAP financial measure, adjust