The Case for Utilities: Why Duke Energy and Entergy Are Attractive Plays in a Shifting Energy Landscape

The U.S. utility sector is undergoing a transformative phase, driven by the clean energy transition and surging electricity demand. As data centers, industrial growth, and climate resilience efforts reshape the energy landscape, two utilities-Duke Energy (DUK) and Entergy (ETR)-stand out for their strategic positioning. Recent upgrades from Scotiabank, coupled with macroeconomic tailwinds, underscore their potential as compelling long-term investments.

Strategic Positioning in the Clean Energy Transition

Duke Energy and Entergy are leveraging their infrastructure and regulatory expertise to capitalize on the dual forces of decarbonization and rising demand. According to a Deloitte report, 75% of top U.S. electric utilities reported increased electricity demand from data centers in 2025, a sector now consuming 6% to 8% of total annual U.S. electricity generation. This demand is projected to rise to 11% to 15% by 2030, driven by artificial intelligence, cloud computing, and industrial electrification.

Duke Energy, for instance, has positioned itself as a leader in grid modernization. Duke Energy's climate page notes the company is expanding its battery energy storage systems (BESS), including the 100-MW Knightdale facility in North Carolina and the Micanopy battery project in Florida, which uses non-lithium technology to provide storm resilience for 800 customers. By 2034, Duke aims to deploy 5,600 MW of battery storage, supported by federal tax credits to offset costs. These initiatives align with its $87 billion capital plan, which includes infrastructure upgrades like underground power lines and self-healing grid technology to reduce outage impacts by up to 75%.

Entergy, meanwhile, is doubling down on clean energy and industrial growth. Entergy's 2024 report details a $37 billion investment strategy through 2028, targeting 5,000 MW of new solar capacity and natural gas plants like the Delta Blues Advanced Power Station in Mississippi. Its recent partnership with Meta in Louisiana-highlighted by Scotiabank as "extremely innovative"-positions Entergy to capture data center demand while maintaining reliability. The company also raised its industrial sales growth forecast from 8%–9% to 13% and increased its 2028 EPS guidance midpoint by 13%, reflecting confidence in its Gulf South expansion.

Macroeconomic Tailwinds and Analyst Confidence

The utility sector's resilience is further bolstered by structural demand drivers. Deloitte projects solar and battery installations will account for 81% of new power generation additions in 2025, but this growth collides with an aging grid, creating opportunities for utilities that prioritize modernization. Duke Energy's quiet regulatory calendar and Entergy's positive earnings revisions have attracted attention from analysts, including Scotiabank, which upgraded both stocks to "Sector Outperform" in late 2025.

Scotiabank raised Duke Energy's price target to $137 (from $128) on August 6, 2025, citing its Q2 2025 adjusted EPS of $1.25 and strategic transactions to fund its capital plan. For Entergy, the firm increased its price target to $105 (from $89) on October 3, 2025, emphasizing its data-center growth potential and ability to "protect customers" while scaling operations. Despite Entergy trading at a 15% P/E premium, Scotiabank highlighted its fast growth and near-term catalysts, such as the completion of 73 distribution hardening projects.

Risks and Mitigants

While both utilities face challenges-such as grid reliability concerns and regulatory uncertainties-their proactive strategies mitigate these risks. Duke Energy's focus on non-lithium battery technology and Entergy's $15 billion grid resilience plan demonstrate their commitment to balancing innovation with reliability. Additionally, both companies benefit from favorable regulatory environments in their service territories, which support rate-based investments in clean energy and infrastructure.

Conclusion

As the energy transition accelerates, Duke Energy and Entergy are well-positioned to deliver consistent returns and long-term value. Their investments in clean energy, grid resilience, and strategic partnerships align with macroeconomic trends, while recent analyst upgrades validate their growth trajectories. For investors seeking exposure to a sector poised for structural demand, these utilities represent a compelling case.