Investing for Our Future: Modernization Strategy
Duke Energy is making decisions today for future energy investments. These decisions are critical to our mission to deliver affordable, reliable and clean energy. Power plants take years to permit and construct and require enormous amounts of capital to be invested over several years. We recover these investments through customer rates over the 30- to 40-year operating lives of our baseload power plants.
Our customers enjoy reliable power today because of investment decisions made many decades ago. In the Carolinas, for example, Duke Energy has not built any new baseload generating plants since 1986. Over the past decade, we have invested roughly $5 billion to significantly reduce sulfur dioxide and nitrogen oxide emissions. And, we anticipate more stringent environmental regulations to come. As a result, we expect to retire and replace our entire fleet, excluding hydro units, by 2050. Modernization isn’t a “nice to have” strategy; it’s a “must have.”
In 2010, we made significant progress in constructing four advanced, highly productive, cleaner energy generation plants, the centerpiece of our modernization strategy:
- EDWARDSPORT POWER PLANT IN INDIANA. When operational in 2012, this 618-megawatt, state-of-the-art Integrated Gasification Combined Cycle (IGCC) facility will replace the site’s existing coal units, in service since 1944 and 1951. It will be the largest power plant in the world to use advanced technology to gasify coal, strip out pollutants, and then use this gas to produce power. Indiana coal will help power homes, businesses, schools and factories and reduce emissions to the environment. Duke Energy has received approval for local, state and federal tax incentives totaling more than $460 million for the project, which will help mitigate customer rate increases over time. Construction remained on schedule in 2010, but the scale and complexity of the project have pushed costs higher than the previous estimate of $2.35 billion. We have a pending request before the Indiana Utility Regulatory Commission to approve the estimated cost increase from $2.35 billion to $2.88 billion. A decision is expected in 2011.
- CLIFFSIDE POWER PLANT IN NORTH CAROLINA. This advanced coal-fired 825-megawatt facility is expected to go on line in 2012 at an estimated cost of $2.4 billion. Once it is operational, we will start to retire 1,000 megawatts of generation at older, less efficient plants — some built in the 1920s. At year-end, the project was on schedule and on budget and had been awarded $125 million in federal clean-coal tax credits.
- BUCK POWER PLANT IN NORTH CAROLINA. Construction of our 620-megawatt combined cycle gas-fired Buck plant is estimated to cost $700 million, with an expected in-service date in late 2011. It ended the year on schedule and on budget. By 2015, we plan to retire the construction site’s four existing coal units, all built between 1941 and 1953.
- DAN RIVER POWER PLANT IN NORTH CAROLINA. In October 2010, we broke ground on our second 620-megawatt combined cycle natural gas-fired plant — the Dan River facility. The $710 million plant is expected to go on line in late 2012, and we plan to retire the site’s three existing coal units that were built between 1949 and 1955.
Additionally, we are investing up to $1 billion in the long-term build-out of a digital two-way communications network along the power grid. Once complete, customers will be able to better manage their energy usage and save money. All these modernization projects are creating jobs in our communities.