Investment Strategy Analysis of Duke Energy's Battery Storage Project at Decommissioned Coal Power Plant

Based on collected data and in-depth analysis, I now provide you with a complete investment research report on the strategy of Duke Energy’s battery storage project at decommissioned coal power plants.

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Duke Energy (Duke Energy) has successfully put into operation a

at the site of the Allen Coal-fired Power Plant in Gaston County, North Carolina. The total investment of the project is approximately $100 million, and it officially began supplying power to customers in November 2025, with final testing completed in January 2026 [1][2].

This project is a key component of Duke Energy’s large-scale energy storage deployment strategy. According to its

(currently under review by regulatory authorities), the company plans to add in North Carolina and South Carolina by 2035, a scale sufficient to power more than 5 million households during peak electricity demand periods [1].

Project Phase	Location	Capacity	Expected Online Time	Status
Phase 1 BESS	Allen Coal Power Plant	50 MW/4h	November 2025	Operational
Phase 2 BESS	Allen Coal Power Plant	167 MW/4h	2028	Construction to start in May 2026
Phase 3 BESS	Riverbend Coal Power Plant	115 MW/4h	Late 2027	Construction to start in late 2026
Proposed Project	Allen Coal Power Plant	TBD	Late 2028	Under regulatory review

The Allen Coal Power Plant operated from 1957 to December 2024 when it was officially decommissioned, while the Riverbend Coal Power Plant operated from 1929 to 2013 when it was decommissioned [1][2].

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Duke Energy’s battery storage project is eligible for a

, which consists of two parts [1][2]:

1. Base ITC (30%)
   : Eligible renewable energy investments can receive a 30% base investment tax credit under Section 48 of the Inflation Reduction Act (IRA)
2. Energy Community Bonus (10%)
   : As the Allen Coal Power Plant is located in a qualified “energy community”, it receives an additional 10% bonus credit

cover three types of areas [3]:

• Brownfields
• Communities that have historically relied or currently rely on coal mining or power generation
• Areas that have experienced unemployment rates higher than the national average since 1999

Taking the 50MW project as an example:

Financial Indicator	Amount
Total Project Investment	$100 million
Federal Tax Credit (40%)	$40 million
Actual Net Investment Cost to Customers	$60 million

The tax credit directly benefits customers, effectively reducing Duke Energy’s capital cost burden, which is ultimately passed on to end-users’ electricity prices [2].

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Building battery storage projects at the sites of decommissioned coal power plants significantly reduces capital expenditures. Comprehensive analysis shows that the project has achieved approximately

, mainly from the following aspects:

Cost Saving Category	Estimated Amount (Millions of USD)	Percentage of Total Investment
Land Acquisition Cost Savings	$15	15%
Transmission Line Access Cost Savings	$25	25%
Environmental Permitting Cost Savings	$8	8%
Utility Supporting Cost Savings	$5	5%
Total	$53	53%

Combined with federal tax credits and site selection advantages, the project has achieved a

:

• Tax Credit Contribution
  : 40%
• Site Selection Advantage Contribution
  : 53%
• Total
  : 93%

This means that a new project of the same scale that would originally require $193 million in investment can be realized with only $100 million through this strategy.

Duke Energy plans to deploy 6,550MW of energy storage capacity by 2035, which is

the capacity of the first 50MW project. Based on a 15% learning rate, unit costs are expected to decrease by approximately as cumulative deployed capacity increases [4].

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As a regulated utility company, Duke Energy realizes investment returns through the

. The company’s capital expenditures are eligible for efficient cost recovery mechanisms, and upon regulatory approval, it can earn investment returns based on its approved rate of return [5].

According to Duke Energy’s current regulatory status [6]:

• North Carolina: Requested 10.85% return on equity (ROE), 53% equity capital structure
• South Carolina: Approved 9.9% ROE, 53% equity capital structure
• Kentucky: 9.8% ROE, 52.7% equity capital structure

Financial forecast for the 50MW project based on conservative assumptions:

Financial Indicator	Estimated Value
Total Project Investment	$100 million
Net Investment Cost (After ITC Deduction)	$60 million
Estimated Annual Revenue	$7.5 million
Estimated Annual O&M Cost	$0.6 million
Annual Depreciation Expense	$3 million (20-year lifespan)
Estimated Annual Net Cash Flow	$6.9 million
Simple Payback Period	8.7 years
Discounted Payback Period (6%)	Approximately 11.3 years
20-Year Cumulative ROI	Approximately 130%

1. Improved Grid Stability and Reliability
   : The energy storage system can fill the power supply gap before solar power generation in the early morning of winter, store excess power from clean energy sources such as nuclear power during off-peak periods, and release it during peak demand periods [1]

2. Optimized Operational Costs
   : Duke Energy has achieved multiple cost savings, including [7]:
   • $340 million in savings for customers through improved efficiency of natural gas power plants
   • $750 million in savings for customers through three new solar power plants
   • $65 million in Inflation Reduction Act tax credits benefiting customers

3. Regulatory Compliance Support
   : Energy storage investments meet regulatory requirements for clean energy transformation, helping to obtain supportive rulings in rate cases

4. Customer Cost Control
   : Through tax credits and operational cost savings, residential customers can save approximately $10-33 on their monthly electricity bills [7]

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• Growth in rate base requires approval from state regulatory authorities, with uncertainty in the approval process
• The rate of return and capital structure may be adjusted in regulatory rulings

• The cost of battery technology may continue to decline, but early projects may face the risk of asset stranding
• Fluctuations in auxiliary service market prices may affect project revenue

• The construction progress of large-scale energy storage projects may be affected by factors such as supply chains and labor
• Long-term operational reliability requires continuous verification

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Duke Energy’s strategy of building battery storage projects at decommissioned coal power plant sites, combined with the federal 40% investment tax credit policy, has had significant positive impacts in the following areas:

Impact Dimension	Assessment Conclusion
Capital Expenditure Efficiency	Improved by approximately 93%, significantly reducing unit energy storage costs
Profitability	Expected 8.7-year payback period, approximately 130% cumulative ROI over 20 years
Strategic Value	Lays the technical and operational foundation for the 2035 target of 6,550MW
Customer Benefits	Tax credits and operational cost savings benefit end-users

Duke Energy’s energy storage investment strategy reflects the unique advantages of regulated utility companies in the energy transition:

1. Stable Return Mechanism
   : The regulatory framework provides a predictable return path for capital investments
2. Cost Pass-Through Capability
   : Investment costs can be gradually passed on to customers through rate adjustment mechanisms
3. Economies of Scale
   : Unit costs will continue to decline as deployment scale expands
4. Policy Dividend Capture
   : Proactively leveraging federal tax credit policies to optimize capital structure

The company expects its adjusted earnings per share (EPS) growth rate to remain in the range of

[5], and the continuous advancement of energy storage investments will provide important support for this growth target.

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[1] Duke Energy - “Duke Energy brings new grid battery on line at former Allen coal plant” (https://news.duke-energy.com/releases/duke-energy-brings-new-grid-battery-on-line-at-former-allen-coal-plant)

[2] PR Newswire - “Duke Energy brings new grid battery on line at former Allen coal plant” (https://www.prnewswire.com/news-releases/duke-energy-brings-new-grid-battery-on-line-at-former-allen-coal-plant-302660773.html)

[3] Reunion Infrastructure - “Guide For Energy Community Tax Credit Bonus & Eligibility” (https://www.reunioninfra.com/insights/spotlight-on-the-energy-community-bonus-credit-adder)

[4] IRS - “Clean Energy Tax Incentives for Businesses” (https://www.irs.gov/pub/irs-pdf/p5886.pdf)

[5] Yahoo Finance - “How Does Duke Energy’s Regulated Utility Model Drive Stable Returns” (https://finance.yahoo.com/news/does-duke-energys-regulated-utility-134500262.html)

[6] Duke Energy Q3 2025 Earnings Presentation (https://s201.q4cdn.com/583395453/files/doc_financials/2025/q3/Q3-2025-Earnings-Presentation_vF-w-Reg-G.pdf)

[7] Florida Politics - “Duke Energy to remove cost recovery charge from customers’ bills a month early” (https://floridapolitics.com/archives/773877-duke-energy-to-remove-cost-recovery-charge-from-customers-bills-a-month-early/)