Environmental Footprint

Now More Than Ever, Modernizing Our Generation Fleet Makes Sense

Despite a drop in demand for electricity – due to the weak economy – and uncertainty over potential federal climate change legislation, we believe it’s more important than ever to continue modernizing and decarbonizing our power generation fleet.

Duke Energy may be the only investor-owned utility in the U.S. currently pursuing the development of new assets using all five fuels: coal, nuclear, natural gas, renewable resources and energy efficiency. We’re continuing down this path for several reasons. With the possible exception of our nuclear power and hydroelectric stations, which could be relicensed for extended operation, Duke Energy will need to replace virtually every power plant on our system by 2050. Our commitment to providing clean energy compels us to consider low or zero-emitting technologies as we replace these assets. Modernizing our fleet also puts people to work.

Here is a look at some of the progress we have made.

Cleaner Coal: A Bridge to a Low-Carbon Future

The U.S. depends on coal for half of its electricity. To meet present-day demand as we transition to low-carbon technologies, coal must remain in our fuel mix. However, we are committed to using it more efficiently and reducing its impact on the environment. Two current construction projects show how that’s possible.

When finished in 2012, our state-of-the-art 630-MW integrated gasification combined-cycle (IGCC) power plant in Edwardsport, Ind., will be one of the cleanest coal-fired power plants in the world. We will retire the existing plant at the site – consisting of coal and oil units built between 1944 and 1951 – upon completion of the IGCC facility.

The new plant, which is halfway complete, will generate 10 times more electricity and emit 45 percent less CO₂ per megawatt-hour than the old, inefficient units it replaces. Because the IGCC process converts coal into a synthetic gas to produce electricity, the facility will also produce fewer emissions of SO₂, NO_x and mercury.

Our IGCC project offers us another intriguing option: the possibility of securely storing CO₂ in underground geological formations near the Edwardsport site. Paired with IGCC technology, carbon capture and sequestration could significantly reduce CO₂ emissions from the plant. We received regulatory approval from Indiana to invest $17 million to study the potential application of carbon capture technology at our Edwardsport facility. In addition, we are proposing to spend $42 million for the first phase of work to permanently store up to 60 percent of the plant’s CO₂ emissions underground.

Construction of our new 825-MW advanced cleaner-coal unit in North Carolina is more than halfway complete. When it begins operating in 2012, unit 6 at Cliffside Steam Station will rank among the cleanest and most efficient pulverized coal-fired units in the nation. Building unit 6 and modernizing unit 5 will enable the Cliffside facility to generate more than twice its current output with significantly less emissions of SO₂, NO_x and mercury.

When this modernization project is complete, we will retire 1,000 MW of older, less efficient coal-fired generation – 200 MW at Cliffside and 800 MW elsewhere on our system. We will take additional actions to make Cliffside Unit 6 “carbon neutral” by 2018.

New construction is not the only way we seek to reduce the environmental footprint of our coal plants. We have invested approximately $5 billion over the last decade to significantly reduce SO₂ and NO_x emissions from our existing fleet. We are also exploring blending wood chips with coal as a supplemental fuel source that could reduce our overall coal usage. We have conducted successful trials of this process – known as biomass co-firing – and will continue to test its practicality as a long-term option for power generation.

Nuclear Energy is a Safe, Carbon-Free and 24-7 Solution

We operate three nuclear stations in the Carolinas, consisting of seven reactors, and are the nation’s third-largest nuclear plant operator. We are pursuing the option to develop the 2,234-MW William States Lee III Nuclear Station in Cherokee County, S.C., and expect to receive a construction and operating license in the 2013 time frame. If approved by the Nuclear Regulatory Commission, the Lee Nuclear Station could come on line in the 2021 time frame.

In June 2009, we formed the Southern Ohio Clean Energy Park Alliance to explore the potential for a nuclear power plant at a former government defense site in Piketon, Ohio. Together with global energy companies AREVA, UniStar Nuclear Energy and USEC – and the Southern Ohio Diversification Initiative – we hope to transform part of the 3,700-acre U.S. Department of Energy site into a nuclear station that generates clean electricity, thousands of good-paying jobs and economic growth for the region.

The primary challenge slowing down a nuclear renaissance in the U.S. is the initial cost of building new nuclear stations. Regional partnerships may serve as the best solution to this challenge. Additional loan guarantees by the federal government may be another possibility.

The nuclear power industry continues to work with the U.S. government to address the issue of used fuel. The government recently announced that it would not pursue disposal of used fuel at the proposed national repository at Yucca Mountain in Nevada. As a potential alternative, Duke Energy and other nuclear station operators are encouraging the government to consider used fuel recycling. This process recovers energy from some of the material in used fuel and converts the remainder into a form that may offer advantages for ultimate disposal. Some European countries have successfully recycled used nuclear fuel for decades. Today, we safely and securely store used fuel in spent fuel pools or dry canisters at our nuclear stations.

The Outlook Improves for Natural Gas

Natural gas is becoming an increasingly popular alternative to coal-fired electric generation, due to increased domestic reserves, lower prices and fewer emissions. In light of the historic volatility in gas (and other commodity) prices, Duke Energy continues to take a portfolio approach to fuels, including natural gas. We are building two 620-MW combined-cycle, natural gas-fired generating plants in North Carolina that will be completed in 2011 and 2012. These cleaner-burning plants are being constructed at our existing Buck and Dan River coal stations. We may also convert two coal-burning units at our Gallagher Station in Indiana to use natural gas as fuel.

For information about Duke Energy’s growing renewable power portfolio and energy efficiency programs, see the Innovative Products and Services section of this report.