Duke Energy and the Nuclear Renaissance

Richard H.K. Vietor; Forest L. Reinhardt

Case | HBS Case Collection | September 2011 (Revised February 2014)

Duke Energy and the Nuclear Renaissance

by Richard H.K. Vietor and Forest L. Reinhardt

Abstract

Duke Energy, an American investor-owned electric utility, confronts multibillion dollar decisions about its future fuel mix. In particular, its leaders are considering building new nuclear capacity. Whether this is sensible depends, among other things, on demand growth, capital costs, fossil fuel prices, possible regulatory or other delays in constructing the reactors, and possible future restrictions on carbon dioxide. CEO Jim Rogers believes that nuclear power makes sense from a social standpoint but also must consider the perspectives of his ratepayers and his shareholders.

Keywords: Cost vs Benefits; Expansion; Policy; Business Strategy; Energy Sources; Utilities Industry; Energy Industry; United States;

Language: English

Format: Print

32 pages

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Citation:

Vietor, Richard H.K., and Forest L. Reinhardt. "Duke Energy and the Nuclear Renaissance." Harvard Business School Case 712-002, September 2011. (Revised February 2014.)

Brazilian logistics company Rumo operated 13,500 km in railway networks, port terminals, and inland transshipment terminals, connecting major Brazilian ports to the agriculture hubs of Mato Grosso and São Paulo state. Controlled by Cosan, Brazil's leading sugar and ethanol producer, Rumo had been through a turnaround over the last three years, including heavy investment in operational improvements and financial deleverage, taking cash flow generation from a negative $278 million in 2015 to positive $15.3 million in 2018. In 2019, as the company planned its new expansion cycle ($3.4 billion would be invested from 2019 to 2023), Rumo's executives had to find the best way to continue to capture the value created, while preserving its relations with customers and other stakeholders.

Since its expulsion from Malaysia in 1965, Singapore had transformed itself from a third world island nation into a vibrant city-state with one of the highest levels of GDP per capita in the world. However, sluggish demand among Singapore's major trade partners began testing the nation's export-driven growth model. It was also becoming clear that the Singaporean government could no longer focus single-mindedly on economic growth. Was Singapore facing a mid-life crisis? If so, how could the government revive optimism in the nation's future?

Twenty years after the end of Apartheid, South Africa's democracy persists, albeit with problems. A tripartite coalition—the African National Congress, the labor unions, and the Communist Party—still controls the political system but with diminishing economic results and authority. Since 2010, the economy has grown at 1.4% annually, with unemployment at 25%. Several national plans have been initiated but none with success. Most recently, the National Development Plan is the Zuma administration's approach. And then, at the end of 2015, cronyism sunk the stock market and the currency, causing a political crisis. Pravin Gordhan, an experienced bureaucrat, is once again Finance Minister but faces the tradeoff between growth and debt reduction. With the recent resignation of Zuma and the instatement of former deputy president and wealthy businessman Cyril Ramaphosa as President, it was still to be determined if a change in leadership would be enough to improve the country's economic and social situation.

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Duke Energy and the Nuclear Renaissance

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