Duke Energy CCUS Shift: $83 B CAPEX for AI Demand, 1 Google Nuclear Deal, and 0 New Capture Projects for 2025

Industry Adoption Risks: Duke Energy’s Reversal from Decarbonization to Fossil Fuel Extension

In 2025, Duke Energy executed a significant strategic reversal, shelving near-term carbon capture plans and prioritizing the extension of its fossil fuel fleet to meet an unprecedented surge in electricity demand. This pivot was formalized in the pivotal 2025 Carbon Plan filed on October 1, 2025, which contained no new investment in carbon capture and storage (CCS) or direct air capture (DAC). Instead, the plan details a heavy reliance on new natural gas plants and the life extension of existing coal facilities to guarantee grid reliability, positioning the utility as a laggard in direct CCS investment compared to peers like Chevron and BP.

The 2025 Carolinas Resource Plan

The core of the strategic shift is the Carolinas Resource Plan, which contrasts sharply with goals set between 2021 and 2024. Previously, the utility’s trajectory suggested a phase-down of fossil fuels, but the new plan reverses this course.

• The plan, submitted to the North Carolina Utilities Commission, proposes building new combined-cycle gas turbine (CCGT) plants and keeping coal plants running for an additional two to four years as a “shorter-term fix”.
• This strategy explicitly omits any new projects or pilots for carbon capture, a notable absence given the technology’s growing role in other utilities’ decarbonization roadmaps.
• As a direct result of this strategy, Duke Energy’s carbon dioxide emissions are now projected to increase into the mid-2030 s, peaking at approximately 60 million short tons in 2036.

AI and Data Centers as the Primary Driver

The primary driver for this pivot is the exponential growth in power demand from data centers, fueled by the artificial intelligence boom. This demand requires massive, uninterrupted power that emerging technologies like CCS cannot yet guarantee at scale.

• Projections show the AI buildout could trigger a 3% annual growth in total U.S. power demand, creating an urgent need for reliable, dispatchable generation.
• A Nicholas Institute study highlighted that Duke Energy Progress alone could require an additional 1.3 GW of capacity just to power new data centers in its territory.
• This acute need for immediate, large-scale power generation favors the rapid and predictable deployment of natural gas plants over the more complex and capital-intensive integration of carbon capture systems.

$83 B in CAPEX: Duke Energy Directs Spending to Gas and Nuclear

Duke Energy’s financial strategy for 2025 reinforces its pivot away from carbon capture, with a planned $83 billion capital expenditure plan over five years allocated almost entirely to grid modernization and new generation assets. The spending priorities reflect a clear decision to invest in assets that can meet immediate demand from the AI economy rather than in carbon abatement technologies that are still maturing and face economic headwinds.

CAPEX Allocation Away from Carbon Capture

The utility’s financial commitments show a clear preference for generation over abatement. While competitors like Suncor Energy are advancing CCUS projects, Duke’s spending is directed elsewhere.

• The 2025 portion of the capital plan is directed toward building new natural gas facilities, modernizing the grid to handle higher loads, and advancing new nuclear capabilities.
• This financial allocation is a departure from the industry trend where major energy firms are increasing direct investments into carbon capture, as seen with Saudi Aramco’s Jubail hub.
• The strategy prioritizes assets that can be deployed predictably and at scale to ensure secure and affordable energy, sidelining technologies with higher perceived financial and operational risk.

The Influence of Shifting Federal Policy

Changes in the federal regulatory environment during 2025 created additional uncertainty for capital-intensive clean energy projects, further influencing Duke’s decision to lean on traditional generation.

• The “One Big Beautiful Bill Act, ” signed into law on July 4, 2025, began a phased elimination of federal tax credits for new clean energy projects, altering the financial incentives established by the Inflation Reduction Act.
• Additionally, Duke Energy lobbied the U.S. Environmental Protection Agency (EPA) in January 2025 to roll back stringent greenhouse gas regulations that would have required CCS on new gas plants.
• This shifting incentive structure and regulatory landscape made extending the life of coal plants and building new unabated gas plants a more financially predictable path in the near term.

Duke Energy Tech Alliances: 3 Partnerships to Power AI, Not Capture Carbon

In 2025, Duke Energy’s most significant partnerships centered on enabling the growth of the tech industry, not on developing carbon capture solutions. These collaborations with Google, Microsoft, and Amazon Web Services (AWS) underscore the utility’s strategic role as a foundational power provider for the AI economy, focusing on the supply of clean and reliable energy rather than the abatement of emissions from its fossil fuel fleet.

Nuclear and SMRs for Data Center Power

A key set of partnerships aims to leverage nuclear power as a long-term, carbon-free energy source for the massive electricity needs of data centers.

• Duke Energy is collaborating with Google, Microsoft, and steel manufacturer Nucor to explore new rate structures, known as “clean energy tariffs, ” to power data centers with electricity from existing nuclear plants and future Small Modular Reactors (SMRs).
• This focus on advanced nuclear as a long-term carbon-free goal suggests Duke views it as a more viable path to deep decarbonization than CCS, despite SMRs also being an emerging technology.

AI for Grid Optimization

Another strategic alliance uses AI to improve the efficiency and reliability of the energy grid itself, further supporting the integration of power-hungry data centers.

• Duke Energy partnered with Amazon Web Services (AWS) to use generative AI to streamline energy grid operations and accelerate the interconnection process for new power sources.
• This collaboration focuses on using technology to manage the grid more effectively, a different strategic path than investing in hardware to capture carbon at the source.
• A review of all 2025 activities reveals a complete absence of new commercial agreements, offtakes, or pilot projects related to carbon capture, confirming it is not part of the utility’s active strategy.

North Carolina Focus: Duke Energy Responds to Regional Data Center Surge

Duke Energy’s 2025 strategy is geographically concentrated on its home territory in the Carolinas, where a confluence of explosive data center growth and favorable regulatory shifts created a unique operating environment. The decision to double down on fossil fuels is a direct response to these regional pressures, prioritizing local grid stability and economic development over alignment with national decarbonization trends.

The Data Center Effect in the Carolinas

The proximity to “Data Center Alley” in Northern Virginia and the growing tech hub in North Carolina has made the region a hotspot for new electricity demand.

• The surge in demand is so intense that under-construction data center capacity in nearby Northern Virginia surged 80% to 2, 078.2 MW in 2025.
• This regional demand pressure forced Duke Energy to propose new gas plants in Person and Rockingham counties, arguing they are essential to maintaining a reliable power supply for the state.

A Favorable Regulatory Shift

Legislative action within North Carolina provided Duke Energy with the flexibility to pursue a gas-heavy strategy without violating state mandates.

• A state law passed in July 2025 eliminated the mandatory 2030 interim carbon reduction target that had been a key driver of previous resource plans.
• This change, combined with the rollback of certain federal regulations, created a clear path for Duke to favor conventional generation assets that could be brought online quickly to meet the immediate needs of its largest customers.

CCUS Technology Risk: Duke Energy Prioritizes Proven Generation Sources

Implicit in Duke Energy’s 2025 strategy is a judgment on the current maturity and economic viability of carbon capture technology. For a utility facing an immediate and critical need for reliable, continuous power, investing in technology that is not yet fully optimized for cost and efficiency at a grid scale presents a significant risk to both reliability and customer affordability. The global CCS market, while growing, still faces major hurdles that likely informed Duke’s cautious approach.

High Costs and Low TRL as Implicit Barriers

While some CCS applications are mature, large-scale integration with power plants remains complex and expensive, a key deterrent for a utility focused on cost-effective reliability.

• The global Carbon Capture and Storage (CCS) market was valued at $3.9 billion in 2025, but the underlying technologies face high energy consumption penalties and unfavorable economics.
• Direct Air Capture (DAC) costs are estimated at $194–$200 per ton of CO₂, and many advanced capture processes are still at a low Technology Readiness Level (TRL), requiring further development to be commercially viable.
• The levelized cost of CO₂ capture increases significantly when plants must operate flexibly to balance renewables, a major issue for grid-scale deployment.

Nuclear as the Preferred Long-Term Technology

Duke Energy’s strategy indicates a clear preference for advanced nuclear, including SMRs, as its chosen long-term, carbon-free, baseload power technology over CCS.

• The company’s high-profile collaboration with tech firms to power data centers with nuclear energy highlights this strategic bet.
• By focusing its long-term R&D and partnership efforts on nuclear, Duke is signaling that it views this path as more promising for achieving deep decarbonization than retrofitting its fossil fuel fleet with carbon capture.
• This makes the current expansion of natural gas a multi-decade bridge strategy, intended to provide reliability until advanced nuclear and energy storage technologies are ready for mass deployment.

SWOT Analysis: Duke Energy’s Pivot to Gas and AI-Driven Growth

Duke Energy’s strategic direction in 2025 marks a clear pivot from the decarbonization pathway it was on from 2021-2023. The analysis reveals a company responding decisively to external market forces, prioritizing near-term reliability and financial predictability over leadership in emerging clean technologies like carbon capture. This has created new strengths in meeting industrial demand but also introduced significant long-term risks.

Table: SWOT Analysis for Duke Energy’s Carbon Strategy

Duke Energy 2026 Outlook: SMR Progress vs. Gas Plant Lock-in

Looking ahead, the central tension in Duke Energy’s strategy will be the race between the deployment of its long-term clean energy solution, advanced nuclear, and the continued lock-in of its fossil fuel infrastructure. The 2025 Carbon Plan has set a clear course for a medium-term reliance on natural gas to power the AI boom. The key signal to watch is whether progress on SMRs and other clean, firm technologies accelerates enough to alter the trajectory outlined in subsequent resource plans.

• If AI-driven demand continues to exceed forecasts, watch for proposals for even more natural gas plants in the next resource plan, further solidifying carbon lock-in and pushing decarbonization goals further out.
• If SMR development with partners like Google and Microsoft yields a clear deployment timeline, watch for the potential cancellation or deferral of a planned gas plant, which would be the first signal of a strategic re-pivot back toward deep decarbonization.
• These could be happening now: Internal teams at Duke are likely modeling scenarios where federal policy reverses course after the current regulatory relief period, calculating the financial risk of having a large, unabated gas fleet in the 2030 s. The company’s engagement with the EPA and state commissions will remain a critical indicator of its long-term strategy.

The questions your competitors are already asking

This report covers one angle of Duke Energy’s strategic response to rising data center demand. The questions that matter most depend on your work.

• Other US utility plans for data center power
• Timeline for small modular reactors in the US
• Power consumption forecast for AI data centers
• Carbon capture project costs and performance

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