How One Energy CEO Is Leading a Transition Toward Clean Energy


HANNAH BATES: Welcome to HBR On Strategy, case studies and conversations with the world’s top business and management experts, hand-selected to help you unlock new ways of doing business.

As the CEO of Duke Energy, one of the largest energy holding companies in the U.S., Lynn Good is  an aggressive transition to renewables and net zero emissions.

It’s a complex undertaking that involves short-term planning and long-term advances in technology, all while managing a wide range of stakeholders.

In this episode, HBR editor-in-chief Adi Ignatius sits down with Good to discuss her strategy for Duke’s clean energy transition.

You’ll learn how she makes incremental adjustments to her strategy as new technologies emerge, how and how often she tests her assumptions, and why she nurtures collaborations both within the energy industry and beyond it.

This conversation was originally part of HBR’s “Future of Business” virtual conference in November 2023. Here it is.

ADI IGNATIUS: Our next guest is Lynn Good, the CEO of Duke Energy. This is one of the largest energy holding companies in the US, and it is one that is in the midst of an aggressive transition to renewables and net zero emissions. Lynn previously served as Duke energy’s CFO, and she’s on the boards of Boeing, the Business Roundtable, and the World Association of Nuclear Operators. Lynn, thank you for joining us today.

LYNN GOOD: Adi, my pleasure. Good to see you.

ADI IGNATIUS: Great to see you. So, another reminder to our audience, put questions for Lynn in the Ask the Speaker Chat. We’ll try to get to as many as possible later. So, let’s dive right in. Lynn, so Duke Energy, in an earlier corporate form, had an environmental charter that I think dates back to 1990. I’m interested, in your decade-long tenure, what steps have you taken to accelerate this pace of change toward clean energy.

LYNN GOOD: Adi, it’s a really good question because Duke has been a recognized leader in sustainability and environmental stewardship for a long time. But what I would share with you is that leadership has matured and changed over time because we’re sitting here in 2023 with a demonstrated track record of carbon reduction above 40% and with targets established for 2030 and 2040 and 2050. And so, what has matured over time is we’ve taken what were probably aspirational goals in the 1990s, and we’ve turned them into more concrete plans, investment plans. We’ve taken them into stakeholder processes. We’re talking about them with our regulators and policy makers, not only about the clean transition, but also about how we achieve affordability and reliability in this world of complexity around the transition. And we’re also actively advocating, both at the state level and the federal level, on what public policy we think will be necessary in order for this transition to be successful. And I’d point to things like the Infrastructure Bill and the Inflation Reduction Act as two critical pieces of legislation that we have supported that we think will make this transition more affordable, make investments in the R&D necessary to continue the progress. And look forward to Duke’s continued leadership on sustainability and clean energy as we move forward.

ADI IGNATIUS: Got it. OK, so let’s talk some specific numbers. So, you’re clearly making progress, and I hope I get the numbers right. But from 1% renewable energy power, power generation in 2005 to about 8% this year, coal is down from 60% to 17%. But your target is 27% renewables by 2030, eventually zero coal and net zero emissions by 2050. So, in your role as a leader, how do you ensure that the company is able to get from here to there in that time?

LYNN GOOD: I think it’s consistent with the challenges that any company has as you set a long-term strategy and vision because where you’re trying to go, clean energy transition, affordable and reliable. But you’re also subject to external influences, whether it’s cost of capital or supply chain or an innovative technology that could show up somewhere along the way. So, we think about this transition as being short term. What are the projects and investments I can make today? But also, having optionality and flexibility in that plan so that I can stay aware of what’s going on in the outside world and make adjustments along the way. We actually go through a disciplined process to test our assumptions with every one year or two years so that we continue to stay on the right path, not a specific path that’s chiseled in stone, but introducing enough flexibility to make adjustments. And I think it’s particularly important as we think about this transition, which will unfold over decades because we not only need to be working on the technologies that we understand and know today. But we also need to be advancing our understanding of those technologies that will be important in the 2030s and 2040s, things like hydrogen, carbon capture, longer duration storage, advanced nuclear. And so, the transition itself lends itself to this notion of working in the short term, but also keeping an eye on the long term because we’re going to need those advanced technologies as we get deeper into the clean energy transition.

ADI IGNATIUS: Yeah, I’m sure you have scenario planning depending on when some of these, let’s say, somewhat more futuristic or somewhat unproven technologies to what extent they actually do the trick. Can you talk a little bit more about that though. What technological advancements are you most excited about that if they deliver as much as we hope, carbon capture, whatever it is, that could really be game changers?

LYNN GOOD: Sure, we are watching a number of things, Adi, hydrogen and carbon capture, really thinking about those as technologies that could be complementary to natural gas and natural gas infrastructure. The operating characteristics of natural gas are so complementary to renewables, to retirement of coal, that we are advancing our understanding of both of those technologies. We received a grant as part of the Infrastructure Bill to do some study around carbon capture at one of our plants in Indiana. And we also have a pilot producing hydrogen from a solar farm to prepare hydrogen to run in a simple cycle natural gas plant so that we can see the characteristics of hydrogen. But I would also say we are spending a lot of time on nuclear, and nuclear has been a part of the Duke heritage for a long time. We’re the second largest operator of nuclear power in the US.

ADI IGNATIUS: The other way.

LYNN GOOD: And so, finding our way into small modular reactors, understanding advanced nuclear with storage capability, those are technologies that we are keen to see advanced because a world of net zero needs nuclear. A world of net zero needs something that runs all the time, that produces carbon free energy. And so nuclear is something we’re also spending an awful lot of time on, really looking for what role it could play in the 2035 and forward. We’re also extending the licenses of what we operate today but looking into that 2035 and forward for new nuclear in a way that could really help us achieve our objectives and serve our customers in an affordable and reliable way.

ADI IGNATIUS: Got it. So, energy is a sector, at least it seems to lay people like me, where stakeholders are at odds with one another. And we did an article with your predecessor some years back, who basically said that retail customers care most about affordability, businesses about reliability, environmentalists about sustainability. I would add that suppliers and government officials maybe care most about jobs. How do you balance all those different wants and needs as you figure out your future plans?

LYNN GOOD: Well, there’s no question that energy policy is a conversation at the state level, the federal level, the international level. And we sit at the intersection of a lot of different points of view. You mentioned affordability, reliability, clean, all of those dimensions are important. I would say, as the conversation has progressed into 2023 and beyond, it’s a little more complicated. I don’t think there’s any policy maker where there’s a monolithic view. There’s no customer class where there’s a monolithic view of what’s important. But what we try to accomplish at Duke is to find the right balance between affordability, reliability, and clean because we do not believe that any single dimension can be a winning strategy if I ignore the other two. And we take that discussion deeply into stakeholder engagement, customer engagement, regulator engagement, public policy engagement so that we’re not only sharing our point of view on how we’re trying to strike that balance, but also get feedback from them on how they see the balance. What is their perspective on how they would like to prepare for the future of energy because it’s important, not only for citizenry but for manufacturing, for energy security, for national security. We operate critical infrastructure. And all of that becomes an important conversation. So, it’s about the and, affordability and reliability and clean, and it’s an ongoing conversation that I think will be a part of our industry for decades to come.

ADI IGNATIUS: Yeah, I get that. It’s interesting, the sequencing that you must think about is probably fascinating. I’m interested, as you try to get buy-in from this diverse set of stakeholders, I think people know what Duke Energy stands for. You’ve made it clear the path that you’re on. But I’m sure you have stakeholders who might not even believe in climate change. So, is there a educational/political role that you find you need to play?

LYNN GOOD: Being in the conversation, Adi, among policymakers, in our statehouses, among our customers is important no matter what. And you mentioned the dimension of economic development. Every state in which we operate is interested in attracting jobs. Every state in which we operate would like to have a stronger manufacturing base, would like to have more commercial customers, more jobs. And as we talk about economic development, reliability and affordability come to the table, but also clean because a number of our large customers have specific objectives around clean energy and renewables that they are interested in. And so, we were successful in the state of North Carolina actually advancing bipartisan energy policy that worked on striking exactly that balance. Let’s prepare the state. Let’s take control of our future because we do want to grow. We want to be competitive. We want to transition our energy portfolio in a way that makes sense for the state. And so that conversation, whether Republican, Democrat, Independent, is an important one as we think about the future of growing the economy and making our communities as great as they can possibly be so that we attract people to our state.

ADI IGNATIUS: So, if the goal is to achieve this balance, I’m always interested in the degree to which companies work together or even encourage regulation to get everyone in the same place. So ,I’m interested, do you see strong and useful collaboration in your industry among companies that may involve regulation or just may involve a shared vision of the future?

LYNN GOOD: Sure, our industry– it may be surprising, Adi, on how much collaboration there is, not only among the industry, but with our government partners. And maybe the best way to illustrate this is something called our mutual assistance program that exists in our industry where if there’s a hurricane or an ice storm or anything of that nature that hobbles a utility and causes damage, we bring resources from other utilities to the table. And we engage with our government partners, FEMA and others, DHS, others, to communicate and talk about how we’re working together to bring critical infrastructure back together. That has been a profile of collaboration that is exercised day in and day out in our industry and has been for a long time. That then opens up collaboration around workforce. It also opens up collaboration around technology. This company is piloting that technology. I might be doing a different one. How can we share learnings? We all have the objective of serving our customers well, serving them reliably. And throughout the industry, we’re all pursuing a clean energy transition, perhaps at different paces, but we’re learning from each other. And I think this collaboration has made us stronger with our government partners on cyber and physical security. It’s also been important. So you should think of our industry as one that works together quite readily on policy, on specific events with government partners in a way that I think strengthens the industry and strengthens the US.

ADI IGNATIUS: So, it sounds like more and more companies are catching up to where Duke has been for a while. I’m interested, how do you differentiate then? How do you maintain a competitive advantage where, as you say, there is collaboration and a shared vision of what’s ahead?

LYNN GOOD: I think every company is, despite the collaboration, Adi, positioned in a different way. And some of the challenges and opportunities that Duke may differ from a utility that’s on the West Coast or one that’s in the Northeast. The good news about Duke Energy, positioned primarily in the Southeast, although we have a Midwestern position in Indiana and Ohio as well, is we’ve experienced extraordinary growth, population growth, economic development growth. We also happen to operate in jurisdictions with very constructive regulatory pathways with clear investment proposals in front of all of our regulators that are well understood and with a really strong story around growth. And so that’s how we differentiate ourselves, where we’re positioned, what we’re investing in, the pace at which we’re growing. And Duke offers a very strong investment thesis with a 5% to 7% growth rate in constructive jurisdictions.

ADI IGNATIUS: Yeah, let’s talk a little bit more about the investment community. I know that you fought off, like many people, an activist and investor a few years ago. To what extent do you have support of the investment community now? And to what extent is that an ongoing educational process?

LYNN GOOD: So, the investment community is important to Duke Energy. If you think about a utility with the capital investment that is really required by this clean energy transition, setting an agenda and a strategy that our investors understand and support is incredibly important. And we believe we do that on an ongoing basis by having a transparent set of investments, by producing predictable earnings and cash flow and growth, having a strong balance sheet that our investors can count on. And that is something that’s extraordinarily important. I spend a lot of time on it. Our team spends a lot of time on it because that investment community makes it possible for us to keep going and making investments that deliver for our customers and for our communities.

ADI IGNATIUS: So, I want to go to an audience question now. This is from Tessa. I’m not sure where Tessa is, but Tessa’s wondering, how do you test your assumptions on an annual or maybe biannual basis? What are the methods and processes for testing your assumptions, seeing where you actually are?

LYNN GOOD: It’s a really good question. And we actually have a disciplined approach, I would say, around that forward-looking view of key assumptions and drivers for our business. We actually present to our board in June of each year. And so, we start each year with an expectation around what are the key assumptions that we believe, we’re counting on to be right for 2024, 2025, 2026, and beyond. And then we try to test them. Can we pull them to boundaries? Can we test our assumption on how quickly a technology will develop? Can we test our assumption on what if public policy changes? Can we test our assumption about the economy, interest rates, and the macro environment in which we operate? Can we test our assumptions around availability of supply chain? And so, we try to pull on them. We pull on different ones each year depending on what’s happening. You might expect that during the invasion of Ukraine we were spending a lot of time on commodities. What does that mean, availability and pricing volatility, et cetera. And we always take something away from that discussion that makes us just a little bit better, takes us a little bit deeper into the assumptions. And we actually have an approach where we model what it might mean for Duke, what we invest in, how we grow, et cetera. And it has become a routine part of our process that I strongly endorse. And we do it every year, as I said.

ADI IGNATIUS: Yeah, got it. So, here’s a question from Paula, I think in the US, who asks, why isn’t there more investment in solar energy, particularly in certain states where you would think it would be favorable, like Florida in the South? Why is it less than 5% of the source of energy?

LYNN GOOD: So, I think those percentages, Adi, I don’t know if they’re energy percentages or capacity. So sometimes you need to look behind the numbers and what it really represents. But there is a lot of investment going into solar energy, both in the Carolinas in which I operate, North and South Carolina and in Florida, at a pace that is taking advantage of the technology, taking advantage of the Inflation Reduction Act, but also layering it in a way that makes sense affordably for customers. Solar is going to play a very important role in the energy mix going forward. Battery technology coupled with solar will also play an important role as we go forward. And Duke is a believer in all of the above. So, in addition to solar and battery, we’ll look for opportunities for wind in states where that makes sense. We’ll introduce some natural gas as we retire coal to complement those renewables. And then as I said, we think nuclear remains an important resource that we ought to consider as well that not only decarbonize energy, runs all the time, but it’s also an important resource that can be controlled on demand in a way that makes reliability a little bit more achievable.

ADI IGNATIUS: On nuclear, I’d love your thought. Look, I grew up in the era of Three Mile Island and Chernobyl, and we were worried about nuclear. Is the public, by and large, say, in the US OK with nuclear now? Is that a credible option that– you seem to think it’s very important for getting the mix right in the future. Are people OK with nuclear these days?

LYNN GOOD: Adi, I don’t want to paint– that’s a monolithic statement too, is everyone OK with nuclear? I think what’s important is the commitment that the industry in the US has and really the industry around the world is safety because we understand that safety is job one at nuclear. And that will always be the case at Duke Energy. I think nuclear fuel at times can also be a question. Are we storing it safely? Yes, we are storing it safely. And I have seen the conversation around nuclear change over the last several years as people have really grappled with this issue of how do we really get to net zero? With existing technologies, how do we get beyond 70% reduction or 80% reduction? You begin looking for technologies like nuclear and hydrogen and carbon capture. And so, I believe the receptivity and the recognition of the role that nuclear can play is being more significantly recognized over the last several years as a really critical tool for clean energy. And then our job as the utility in the communities in which we operate is to continue to engage with our customers and our communities to underscore the commitment that we have to safety because I believe nuclear can be an important part of the solution. And we can operate it and will operate it safely.

ADI IGNATIUS: OK, so here’s another question from the audience about another technology. This is Max, who’s asking– who notes that Holly Krutka, the executive director of the UW School of Energy Resources recently said that carbon capture could be made just as viable as wind and solar energies if it’s invested in at the same level. Does that does that sound right to you?

LYNN GOOD: So, we believe carbon capture is one of those technologies that should be invested in. We believe that there’s some additional research and development necessary. We believe that we’ve also got to grapple with what infrastructure we need once we capture it to move it somewhere and store it somewhere. And so, Duke is active in carbon capture with, as I said, an IIJ, an infrastructure grant at one of our facilities in Indiana, where we’ll be doing a feed study around carbon capture. I know the oil companies are also very active in carbon capture. So, I think it’s an important part of the solution. It needs to be invested in in this decade so that we’re getting to the commercial scale and availability that we’re going to need in the next one. And also think about it as a solution where storage and transport will be a part of that because it’s no good just to capture it. We have to be able to transport it and store it.

ADI IGNATIUS: Yeah. Earlier in this event José Muñoz of Hyundai talked about how the electricity in infrastructure needs to come a long way. And I guess, is that part of your game plan? Do you think about collaboration with other industries to bring that up to speed, up to code?

LYNN GOOD: So, I assume he’s talking about electrification and the fact that all of the OEMs are looking to move into an electric vehicle future. And I would say we’ve talked a lot on this discussion about forms of generation, wind, solar, battery, nuclear. But we are also making investments aggressively in our grid, the transmission and distribution center, not only to accommodate this change in generation that’s underway, but also to enable electrification. And so, we are working closely with the OEMs to try to understand what their needs are. We’re also working with customers, customers who are adopting electric vehicles, and even commercial customers who are thinking about electrifying their fleet so that we’re trying to prepare our system at the right pace for the adoption of this important technology. And that, I see, as a decades long set of activities as well. And we track adoption rates in our service territories, and we also do some work in data analytics around our circuits, where we believe the adoption will occur based on where a depot is, an airport is, customers that are showing an interest in electric vehicles so that our investments are keeping pace with the adoption of the technology. So, it is a front-and-center objective for Duke and for the industry.

ADI IGNATIUS: So, a lot of what you’re doing, everything you’re doing is very high stakes. You’re in a critical position. I’d love to hear you talk a little bit about, I don’t know, maybe some of the biggest challenges that you’ve faced in your decade in the role and how you’ve learned from them, the lessons you’ve taken out of them.

LYNN GOOD: Well, over the course of a decade, Adi, a lot of things can happen. That’s for sure. And I think anyone’s leadership tenure has great business opportunities that you pursue, and we’ve been talking about that really with this clean energy transition. But there are also a lot of things that just land on your plate, whether they’re crises or pandemics or environmental issues, et cetera. And I would say to you, I have been blessed at Duke to be surrounded by an incredible team, a team that’s passionate about the work that we do, a team that understands we have a 24/7 job that needs to be done just right. And that has been a part of it. But I’ve also learned a lot about really facing the reality of issues that land on your desk. And if there is an issue, let’s not be defensive about it. Let’s fix it and fix it fast. We’ve had an opportunity to do that a couple of times. I’ve also learned that you don’t always have the answers. I think the pandemic brings that to mind. Think about March of 2020, where we had no idea where this was going to go. But I needed to keep employees well and customers served. And so, you moved and moved quickly with what you did know. And you kept learning and trying to explore and check and adjust as you go. So there are so many learnings, and I think recognizing you don’t have all the answers, but you’re working keeping objectives open, getting the best advice, engaging your team, talking to the folks in the field, the stakeholders that are important to your company. There are learnings, all along the way.

ADI IGNATIUS: You had mentioned earlier cybersecurity. And I don’t mean to be fatalistic, but your industry in theory could be a target for cyber attacks. So how do you think about working with, whether it’s government or industry, peers on preparing for that, for securing against that?

LYNN GOOD: Adi, it is ongoing work. So, the electric industry, gas industry, we are critical infrastructure for the US. We have had standards in the electric sector for a long time. Standards are under way in the natural gas pipeline sector as well. We have very strict compliance. We are audited. We work together as an industry, sharing resources when needed and also doing peer reviews so that we’re staying on top of things. We have deep relationships with government partners from the FBI to DHS to SISA where we are learning about what’s going on and constantly working to make sure we’re making investments, not only to put defenses in place, but also to be able to recover. And we practice together. We drill together as an industry with our government partners just to work through simulations to see if this happens, how would we respond? And so that’s the world in which we live in. We understand that critical infrastructure is a vulnerability that can be exploited by our adversaries. And we work actively to do our very best to stay connected with the best information, making the investments necessary to protect our infrastructure in a way that we can serve our customers.

ADI IGNATIUS: Yeah. Thank you. So, this is a question from Gregory, who would love to hear more about how Duke operationalizes some of the strategic foresight and scenario planning processes that we mentioned. I think that’s a practical question. How do you how do you operationalize those? How do you bring them into your business?

LYNN GOOD: It’s an interesting question, and maybe I’ll pick one. So, the scenario plan or the plan around generation transition, we’ve been talking about the clean energy transition. So, we will work on a model that lays out an investment plan and a generation plan for the next several decades. And that becomes something that is worked on, reviewed, tested, stressed, not only by the operators, do we know how to build it? What kind of partnerships would it take? What are the implications to the workforce, the financial team? How are we going to finance that? How does that fit into our balance sheet, our investor proposition, et cetera? We also engaged with our government affairs team and our state presidents. How does that work with policymakers and regulators? Is this something that we think works and we take it into a stakeholder process? And so that’s a good example of a model, a set of assumptions, a scenario that would play out over decades, which is worked on from an operating standpoint, a financial standpoint, a government affairs standpoint. And it’s ongoing at Duke because those plans exist in every state in which we operate. And so, it has become a part of the way we do business so that we’re not only working on the 24/7 operation we have responsibility for right now. But we’re planning for the future. It takes five years to build a gas plant, for example. It might take 10 years to get a pump storage facility or a nuclear plant going. So, keeping that long and short-term view of where we may and want to go, need to go is important and deeply embedded in our culture, in our operations, in our executive leadership and our planning processes.

ADI IGNATIUS: So, I find that people who are thinking about sustainability, people who are thinking about climate change, people who are thinking about the trying to get to net zero, they fall on a spectrum between optimism and pessimism and how dire it is to do such and such by such and such a date. Where do you fall in the optimistic versus pessimistic in terms of getting to zero in terms of, beyond just Duke, the world getting to where it needs to be in terms of sustainable energy production?

LYNN GOOD: Adi, think it’s hard to be optimistic about moving the world from my chair because I can’t move the world. But I can move Duke. And so my optimism centers around– I have a clear line of sight on what I need to do between now and 2030 with investment plans and opportunities, not only to strike a balance between clean that we’ve been talking a lot about, but also between reliable and affordable, to be able to serve all the economic development, this reshoring of manufacturing, the CHIPS Act, the fact that data centers are an important part of leading the way on artificial intelligence. I have a clear line of sight on how to accomplish that between now and 2030. And then we are captured by the opportunities that exist with hydrogen and carbon capture and nuclear. And I have teams of people who are excited about figuring out how to make those technologies available for us when we need them in the 2030s. So, Duke is optimistic about the leadership role we can play and always willing and at the table to contribute on how the US can do more. We do engage internationally as an industry with Australia and Europe and South America on how we can work together as an industry. But that’s a once every couple of year engagement. But at Duke, this assignment is every day.

ADI IGNATIUS: All right, Lynn, I’m afraid we’re out of time. There are more questions, but I have to cut it now. But I want to thank you very much for your time and your insights. It was a great conversation.

LYNN GOOD: It’s a pleasure. Adi, thanks so much.

HANNAH BATES: That was Lynn Good, CEO of Duke Energy in conversation with Adi Ignatius at HBR’s “Future of Business” virtual conference in November 2023.

We’ll be back next Wednesday with another hand-picked conversation about business strategy from Harvard Business Review. If you found this episode helpful, share it with your friends and colleagues, and follow our show on Apple Podcasts, Spotify, or wherever you get your podcasts. While you’re there, be sure to leave us a review.

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This episode was produced by Anne Saini, and me, Hannah Bates. Ian Fox is our editor. Special thanks to Dave Di Iulio, Terry Cole, and Maureen Hoch, Erica Truxler, Ramsey Khabbaz, Nicole Smith, Anne Bartholomew, and you – our listener.

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