Duke Energy Exits Offshore Wind and Lowers Rate Hike as Morgan Stanley Raises Price Target

Offshore Wind Exit

Duke Energy agreed to terminate its offshore wind lease off the Brunswick, North Carolina coast in a $129 million settlement, stepping away from a project that had faced escalating costs and an uncertain regulatory environment. Offshore wind economics have deteriorated significantly across the US, with rising interest rates, supply chain inflation, and permitting delays forcing several utilities and developers to abandon or renegotiate projects. Duke's decision is consistent with a broader industry retrenchment: utilities in the southeast are concluding that gas-fired generation and nuclear expansion offer more predictable risk profiles than offshore wind for serving load growth.

Removing the offshore wind liability provides Duke with greater capital allocation clarity. The company's $65 billion five-year capital plan is focused on grid modernisation, transmission expansion, and regulated generation investment, areas that offer rate-based returns tied to predictable regulatory outcomes. Analysts at Mizuho have noted that Duke can execute this plan despite near-term regulatory friction.

Rate Regulation and Customer Pushback

DUK took the unusual step of lowering its proposed rate increase before the North Carolina Utilities Commission after objections from the state attorney general and consumer groups. The revised request signals a willingness to manage the political risk of large rate hikes, which have drawn public attention as electricity demand rises from data centre growth and hotter summers. A $1 billion investment in North Carolina suppliers adds a local economic narrative that can help Duke navigate the regulatory environment.

In a separate initiative, the company launched AI Bill Insights for customers in the Carolinas, an AI-powered service that analyses individual usage data and helps customers understand and reduce their electricity costs. The product is a customer-facing application of AI that does not change the regulatory structure of the utility, but contributes to customer satisfaction metrics that regulators consider when reviewing rate cases.

Morgan Stanley's View

Morgan Stanley raised its price target on Duke Energy, citing the utility's ability to execute its capital plan and the improved clarity following the offshore wind settlement. As a regulated electric utility in high-growth states including North Carolina, Florida, and Indiana, Duke benefits from a structural increase in electricity demand driven by data centres, manufacturing reshoring, and population growth in the Sun Belt.