The Duke Energy board has approved the sale of the company’s commercial renewable energy business after receiving “robust” interest from potential buyers, CEO Lynn Good told investors during a Friday third quarter earnings call. Company leaders have said previously they believe the company’s commercial arm is worth $4 billion.
The company expects to announce the details of its sale of commercial renewable energy assets, which includes 3.4 GW of wind and just under 1.7 GW of solar, in early 2023.
“Adjusted” third quarter earnings from Duke Energy’s regulated utilities increased by $51 million year-over-year, to $1.54 billion from $1.49 billion, and company leaders anticipate continued growth into the years ahead. However, they said the company is targeting an additional $100 million in cost reductions to get ahead of rising interest rates and inflation.
Although company leaders maintain a positive outlook for 2023 and beyond, Duke Energy continues to prepare for headwinds in the future—especially rising interest rates.
The company’s utilities saw earnings grow in the third quarter. Electrical demand is now up 2% over pre-pandemic levels in the company’s service areas, and the growth is expected to continue based on recent economic developments, according to Brian Savoy, executive vice president and CFO for Duke Energy. Recent months have seen announcements of new manufacturing and data center facilities that Good said should increase Duke Energy sales over the next five years.
Duke Energy also maintains a positive outlook for the economy overall, although Good noted the economic forecast remains uncertain.
Good seemed particularly keen to tout Duke Energy’s performance in the utility sector after announcing that the company would move forward with plans to sell off its commercial renewable energy operations. Good said the company planned to announce the specifics of the sale in the first quarter of 2023, and anticipated it could close on a deal as early as the middle of next year.
“We have received indications of interest for the utility scale business at attractive valuations,” Good said.
Duke Energy expects to sell its distributed generation business, which includes REC Solar, separately, according to Good. The sale will likely follow a similar timeline to closing as the utility-scale sale, she said.
The proceeds of the sale, Good said, will help strengthen the company’s financial position and allow it to pursue its energy transition goals through at least 2027 without taking on new debt under today’s higher interest rates.
But she said the company is also looking to cut an additional $100 million in costs from its operations, on top of a $200 million cost-cutting goal already in place. She said these cost cutting measures were part of the company’s long-running “commitment to drive costs out of the business.” An initiative launched earlier this year to find ways to use digital technologies to streamline the company’s governance and reporting processes found additional savings beyond the $200 million target, resulting in the new cost cutting goal, Good said.