Duke Energy Corporation (Holding Company) · NYSE:DUK
Duke Energy Corporation (Holding Company) — Investor Presentation (April 2018)
48 slides from Duke Energy Corporation (Holding Company)'s investor presentation, Apr 17, 2018
Slide 1: 2018 Integrated Resource Plan Stakeholder Workshop #3
2018 Integrated Resource Plan Stakeholder Workshop #3 April 17, 2018 Plainfield, IN
Slide 2: Welcome
Welcome Safety message Technology Call-in # 866-385-2663 Wi-Fi provided as in previous meetings Melody Birmingham-Byrd Opening Comments Introductions 2
Slide 3: Why are we here today?
Why are we here today? Recap February stakeholder meeting and respond to comments/questions Review desired characteristics of preferred resource plan Update on EE modeling Discuss sources of uncertainty over planning horizon Present reference case and alternative scenarios for IRP Discus
Slide 4: Agenda
Agenda Time Topic x Time Topic x 8:30 Registration & Continental 10:45 Forecasts of Select Variables Breakfast 11:15 Update on Modeling EE 9:00 Welcome, Introductions, Agenda 11:30 Lunch 9:20 Review of February Meeting & 12:30 Reference Case Scenario Responses to Questions/Feedback & Alternative Sce
Slide 5: Review of February Meeting & Characteristics of Preferred Portfolio
Scott Park, Director IRP Analytics - Midwest Review of February Meeting & Characteristics of Preferred Portfolio 5
Slide 6: Recap of February Meeting
Recap of February Meeting Review of November 2017 meeting Desired portfolio characteristics Review of resource types EE modeling Prep for scenario development 6
Slide 7: Comments from February Meeting
Comments from February Meeting STAKEHOLDER QUESTIONS/COMMENTS RESPONSES Have any one-off meetings with SH taken place? No What about the proposal by CAC to model EE bundles We have expressed openness to a sidebar as zero-cost resources? meeting The MPS forecast was prepared in 2017 and How does the
Slide 8: Comments from February Meeting
Comments from February Meeting STAKEHOLDER QUESTIONS/COMMENTS RESPONSES • Yes but subject to time availability Will stakeholders be allowed to present at meetings? • Case by case basis • Need advance notice Understand concerns of some stakeholders, but not everyone is at the same level of knowledge;
Slide 9: Characteristics and Metrics
Characteristics and Metrics CHARACTERISTIC METRIC Low Cost 5-yr PVRR, 20-yr PVRR Low Risk Cost Variability Across Scenarios & Sensitivities Flexible Frequency, Size, Timing of Irreversible Decisions Low Environmental Impact Annual CO2 Emissions Reliable Meets Long-Term Planning Reserve Margin Each Y
Slide 10: Scenario Analysis Process, Sources of Uncertainty, Forecasts
Nate Gagnon, Lead Planning Analyst -Scenario Analysis Process -Sources of Uncertainty -Representative Forecasts for Select Variables 10
Slide 11: Scenario Planning: Process
Scenario Planning: Process Scenarios Portfolios Define Scope & Purpose Develop Quantitative Identify Sources of Models Uncertainty Sensitivity Analysis Define “Key” Uncertainties Construct Scenarios Around Themes Select Preferred Portfolio Check for Consistency and Completeness 11
Slide 12: Sources of Uncertainty
Sources of Uncertainty Market Policy Technology Gas Price Carbon Cost/Limit Cost of Wind Coal Price Tax Credits Cost of Solar Fuel Oil Price MISO Market Design Cost of Storage Power Price Other New Compliance Cost of CC/CT Load Heat Rates Emissions Rates Cost of CCS
Slide 13: Sources and Methods
Sources and Methods Forecasts in the following slides are representative of those we expect to use in the IRP analysis, but should not be considered final and do not exactly match certain proprietary forecasts Fuel Price Cases: We plan to use derivatives of the coal and gas price forecasts in th
Slide 14: Gas Price History and Forecasts
Gas Price History and Forecasts 14
Slide 15: Coal Price History and Forecasts
Coal Price History and Forecasts 15
Slide 16: Power Price History and Forecasts
Power Price History and Forecasts 16
Slide 17: Peak Load History and Forecast
Peak Load History and Forecast Range based on SUFG 2017 state-wide forecast SUFG 2017 state-wide forecast Note: Peak load forecast shown here is before accounting for utility-sponsored energy efficiency and demand response 17
Slide 18: Energy Demand History and Forecast
Energy Demand History and Forecast Range based on SUFG 2017 state-wide forecast Note: Energy demand forecast shown here is before accounting for utility-sponsored energy efficiency 18
Slide 19: Carbon Price Forecasts
Carbon Price Forecasts $60 4 = $10/ton in 2025, increasing $3/ton annually $50 —— $5/ton in 2025, increasing $3/ton annually ——— No price on emissions $40 & B $30 £ 2 $20 + $10 | $o os a a I TT 2018 2023 2028 2033 2038 DUKE * & ENERGY.
Slide 20: Overnight Capital Cost, Wind
Overnight Capital Cost, Wind Note: Costs shown here exclude interconnection and owner’s costs 20
Slide 21: Overnight Capital Cost, Solar
Overnight Capital Cost, Solar Note: Costs shown here exclude interconnection and owner’s costs 21
Slide 22: Energy Efficiency
Brian Bak, Lead Planning Analyst Energy Efficiency 22
Slide 23: Modeling EE Update
Modeling EE Update The MPS shows different levels of EE savings potential under different sets of assumptions Achievable: overall portfolio is cost effective and comports with historical customer behavior Economic: each measure is cost effective but assumes full customer adoption Technical:
Slide 24: Using the MPS to Create EE Bundles
Using the MPS to Create EE Bundles Data from the MPS will be used to create different EE tiers Each tier will also be divided into bundles: Res - Weather - Summer Only Res - Weather - Year-Round Time Buckets Res - Lighting Potential Tiers 2018-19 2020-22 2023-25 2026-31 2032-37 NonRes - Flat - Dayti
Slide 25: Cost of EE bundles
Cost of EE bundles Because the cost of future EE programs is uncertain, the growth in annual cost will be modeled as three trajectories consistent with a scenarios narrative Costs increase at inflation plus a factor for increased penetration (~4%) (Rising Real Costs) Costs increase at inflation (~
Slide 26: Lunch
Lunch DUKE * & ENERGY.
Slide 27: Three Duke Scenarios
Brian Bak, Lead Planning Analyst Three Duke Scenarios - Reference - High Technology - Slower Innovation 27
Slide 28: Reference Case Scenario
Reference Case Scenario The Reference Case envisions many aspects and trends of the present persisting into the future. Load growth is moderate at approximately 0.5% per year. Innovation continues to drive down the cost of renewable resources and energy efficiency measures, and increases in the cost
Slide 29: Reference Case Scenario
Reference Case Scenario Reference Gas Price Moderate Price on Carbon Emissions Mid Cost Renewables • Reference coal prices • Reference load • Reference EE cost trajectory • ITC reduced to 10% by 2022 • PTC expires in 2020 Note: Solar cost shown for illustrative purposes 29
Slide 30: High Tech Future
High Tech Future The High Tech Future features increased levels of innovation that hasten the reduction in the cost of renewable resources and energy efficiency measures while also holding down the cost of oil, gas and coal extraction. Load growth is higher than the Reference Scenario as technology
Slide 31: High Tech Future
High Tech Future Low Gas Price High Price on Carbon Emissions Lower Cost Renewables • Low coal prices • Higher load forecast • Flat EE cost trajectory • ITC reduced to 10% by 2022 • PTC expires in 2020 Note: Solar cost shown for illustrative purposes 31
Slide 32: Slower Innovation
Slower Innovation The Slower Innovation case features a reduction in the pace of technological advancement that moderates cost declines for renewable resources and energy efficiency measures. Continued dependence on fossil fuels for generation and transportation, combined with higher resource extrac
Slide 33: Slower Innovation
Slower Innovation High Gas Price No Price on Carbon Emissions Higher Cost Renewables • High coal prices • Lower load forecast • Higher EE cost trajectory • ITC of 30% through 2022, 10% thereafter • PTC extended at $10/MWh through 2022 Note: Solar cost shown for illustrative purposes 33
Slide 34: Scenario Summary (DEI)
Scenario Summary (DEI) Cost of Gas Coal Load Carbon Cost of Federal Solar & Prices Prices Forecast Price EE Tax Credits Scenario Wind Reference Current Law Mid Mid Mid Mid Mid Mid Case Unchanged High Tech Current Law Low Low High High Low Low Future Unchanged Extended Slower High High Low None High
Slide 35: Presentation of Stakeholder Scenarios
Presentation of Stakeholder Scenarios 35
Slide 36: Current Conditions (CAC)
Current Conditions (CAC) Uses reference case forecasts for load growth, fuel, wholesale prices, wind, solar, etc. Natural Gas Price, Henry Hub NYMEX futures Coal Price, Delivered CME futures plus delivery charge Carbon Price Solar All-In Overnight Capital Cost, Fixed Tilt, 20 MW AC Pegged to Bloombe
Slide 37: Social Cost of Carbon (CAC)
Social Cost of Carbon (CAC) Uses reference case forecasts for load growth, fuel, wholesale prices, wind, solar, etc, with a carbon price imposed in line with the social cost of carbon as estimated by EPA. Natural Gas Price, Henry Hub NYMEX futures Coal Price, Delivered CME futures plus delivery char
Slide 38: Beneficial Electrification (CAC)
Beneficial Electrification (CAC) Customer preferences push adoption of distributed solar, electric vehicles, and "smart" thermostats. Storage costs are pegged to Wood Mackenzie forecasts, EV adoption rates from BNEF, and appropriate vendor commodity prices will be utilized in order to maintain consi
Slide 39: Load Growth and Economy Decouple (CAC)
Load Growth and Economy Decouple (CAC) Electricity consumption and economy growth continue to decouple from each other such that electricity consumption remains stagnant even as the economy improves. The commodity prices would have be developed with vendor support under the presumption that load gro
Slide 40: Global Carbon Constraint (Mullett)
Global Carbon Constraint (Mullett) This scenario is based on the IPCC 2011 Report which considers constraining cumulative global carbon emissions to no more that one trillion metric tons by 2050 in order to have any meaningful chance (25%) of constraining global temperature rise to below two degrees
Slide 41: Global Carbon Constraint (Mullett)
Global Carbon Constraint (Mullett) Of late, major investors and financial standards organizations have extended this analytical framework to major corporations in the energy, oil and gas industries as a financial disclosure framework designed to better inform management, boards of directors, investo
Slide 42: Utility of The Future (Mullett)
Utility of The Future (Mullett) Indiana utilities face unavoidable and significant financial and operational risks in the current IRP planning horizon from 2018 through 2037 associated with technological innovation and electricity market transformation. This scenario is intended to reflect the evolu
Slide 43: Overall Scenario Discussion & Next Steps
Scott Park, Director IRP Analytics - Midwest Overall Scenario Discussion & Next Steps 43
Slide 44: Evaluation of Scenarios in Aggregate
Evaluation of Scenarios in Aggregate Do we have a comprehensive set of scenarios? What major potential futures have we overlooked? How can we address significant gaps (if any)? Have we avoided redundancy? Delete/merge redundant scenarios What possibilities remain to be addressed in sensi
Slide 45: Scenario Summary
Scenario Summary Coal Load Carbon Cost of Solar Cost Federal Tax Gas Prices Scenario Prices Forecast Price & Wind of EE Credits 1) Reference Case Mid Mid Mid Mid Mid Mid Expire 2) High Tech Future Low Low High High Low Low Expire 3) Slower Innovation High High Low None High High Renewed Extrapolate
Slide 46: Next Steps
Next Steps April/May – Finalize model inputs May/June – Inputs to be made available to stakeholders June – Develop optimized portfolios for each scenario June – Develop hybrid portfolios as needed Stakeholders will be asked to propose alternative portfolios at the June 29th meeting 46
Slide 47: Closing Comments, Stakeholder Comments
Heather Quinley, Director Energy Affairs & Stakeholder Engagement Closing Comments, Stakeholder Comments 47
Slide 48: Closing Comments
Closing Comments Please complete comment cards or send by April 24 to Scott at: scott.park@duke-energy.com Meeting summary and other materials will be posted on website by April 25 (http://www.duke-energy.com/indiana/in-irp-2018.asp) Next workshop scheduled for June 29th, 2018 48