What Are The Key Sources Of Revenue For Duke Energy?

by Trefis Team
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DUK
Duke
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Duke Energy (NYSE: DUK), one of the largest US power companies, supplies and delivers energy to approximately 7.7 million customers. The company operates through its subsidiaries – Duke Energy Carolinas (LLC), Progress Energy Inc., Duke Energy Progress (LLC), Duke Energy Florida (LLC), Duke Energy Ohio Inc., Duke Energy Indiana (LLC) and Piedmont Natural Gas Company Inc. The company has over 50,000 megawatts of electric generating capacity in the Carolinas, the Midwest, and Florida, and natural gas distribution services in Ohio and Kentucky. The commercial and international businesses owned by the company operate diverse power generation assets in North America and Latin America, including a portfolio of renewable energy assets.

Duke had posted better-than-expected revenue growth for the first half of 2018, backed by the favorable weather conditions in its service locations and a growth in its electric utilities and gas investments. However, the company was forced to shut down its natural gas plant due to hurricane Florence, which could affect the revenues in the 3Q’18. For the full year, we expect the company to report $24.58 billion in revenues. Below, we discuss the company’s key revenue segments.

We have a price estimate of $79 per share for the company, which is in line with the current market price. View our interactive dashboard – Key Revenue Sources For Duke Energy Corp.– and modify the key drivers to arrive at your own price estimate for the company.

The company operates through three segments: Electric Utilities and Infrastructure, Gas Utilities and Infrastructure, and Commercial Renewables.

  • Electric Utilities and Infrastructure (89%) – This segment conducts operations primarily through the regulated public utilities of Duke Energy Carolinas, Duke Energy Progress, Duke Energy Indiana, and Duke Energy Ohio. The Electric utilities and infrastructure segment is involved in the generation, transmission, distribution, and sale of electricity to approximately 7.5 million customers within the Southeast and Midwest regions of the US. Apart from residential and industrial customers, electricity is also sold wholesale to municipalities, electric cooperative utilities, and private entities. This segment derives a majority of the company’s revenues for the company. With an average revenue of $85.1 per MWh, we expect $21.8 billion in revenues from this segment.
  • Gas Utilities and Infrastructure (9%) – This segment conducts operations primarily through the regulated utilities of Piedmont and Duke Energy Ohio. The segment serves residential, commercial, industrial, and power generation gas customers. This segment has over 1.5 million customers, including more than 1 million customers in the Carolinas and Tennessee, and an additional 529,000 customers located in southwestern Ohio and northern Kentucky. The Gas utilities and infrastructure segment also owns, operates, and has investments in various pipeline transmission and natural gas storage facilities. According to our estimates, we expect $2.2 billion in revenues from this segment in 2018.
  • Commercial Renewables (2%) – This segment primarily acquires, build, develops, and operates solar and wind renewable generation throughout the US. The segment’s portfolio also includes non-regulated renewable energy, and energy storage businesses. The division’s renewable energy assets comprise of utility-scale wind and solar generation assets totaling 2,900 MW across 14 states from 21 wind farms and 63 commercial solar farms. Accordingly, we expect $0.6 billion in revenues from this segment in 2018.

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