Carbon Stranding: Climate Risk and Stranded Assets in Duke's Integrated Resource Plan

By Tyler Fitch

Contributing Editor: Tyler H. Norris

January 2021

➤ Download the report: Report PDF

➤ Watch the briefing: Video available here

➤ View the deck: Presentation PDF

This report represents the most comprehensive assessment to date of Duke Energy's stranded asset risk in the Carolinas. The analysis finds that carbon stranding costs from existing and proposed investments in Duke's latest IRP will conservatively total around $5 billion, based on Duke's own corporate climate commitment – nearly $1,000 in net present value cost for every residential Duke customer in the Carolinas and more than $1 billion in excess of Duke and Dominion's aggregate sunk costs into the Atlantic Coast Pipeline.

The report explores how—as a result of Duke's 2020 Carolinas IRPs—ratepayers may be burdened with the fallout from climate-related risks. 

• Section A provides background on the regulatory constructs that determine how utilities plan generation, construct energy prices, and recover money they have invested in long-lived assets.
• Section B explores the multiple dimensions of climate-related risks that affect the electric utility industry in general and Duke Energy’s Carolinas footprint in particular.
• Section C provides an overview of Duke Energy’s current generation fleet in the Carolinas and the proposals in its 2020 Integrated Resource Plan. 
• Section D quantifies the potential costs of ratepayers due to “carbon stranded” assets.
• Finally, Section E provides conclusions and policy recommendations.

The report is available for download here. 

Media coverage:

• UtilityDive. “Duke stranded gas assets could cost customers $4.8B, report finds.” Jan. 26, 2021.
• S&P Global. "Duke Energy says gas units make sense as report warns of 'carbon stranding.'" January 27, 2021.
• Charlotte Business Journal. “Study says Duke Energy customers could pay $4.8B for plants that don't produce power.” Jan. 25, 2021.
• E&E News. “Report: Duke natural gas plans ignore climate, business risks.” Jan. 26, 2021.
• Bloomberg. "Duke Mulls New Gas Plants That Would Retire Early on Climate Goal." Feb. 11, 2021.
• Greentech Media. "New Report Shows Gap Between Utility Carbon Pledges and Climate Change Imperatives." Jan. 26, 2021.

About the Author: Tyler Fitch is regulatory manager for the Southeast at Vote Solar, where he conducts regulatory analysis and expert testimony on utility rate design and climate risk. He received a Master’s of Science in Environmental Policy from the University of Michigan’s School for the Environment and Sustainability in May 2018.