Back to top

Image: Bigstock

FirstEnergy's (FE) Minority FET Interest Sale to Fund Projects

Read MoreHide Full Article

FirstEnergy’s (FE - Free Report) unit, FirstEnergy Transmission LLC (“FET”), has completed the sale of a 19.9% minority equity stake to Brookfield Super-Core Infrastructure Partners for $2.38 billion. After completion, FirstEnergy retains an 80.1% equity interest in FET. In December 2021, the company closed an agreement for a $1 billion equity investment from Blackstone Infrastructure partners to support FE’s smart grid and clean energy transition initiatives. The combined proceeds of $3.4 billion from these two transactions will be utilized by FirstEnergy to fund its capital programs, address equity plans and strengthen its balance sheet.

FirstEnergy's $17-billion sustainable capital investment program from 2021 to 2025 also aims at building a more robust and modern grid, with an emphasis on emerging technologies, electric vehicle infrastructure and clean energy generation to help customers optimize their energy use.

These transactions will strengthen FirstEnergy’s operations along with providing funds for strategic capital expenditures. The completion of these transformative sales will act as a key catalyst for the company to fulfill the long-term growth strategy by modernizing and preparing the company's transmission infrastructure to integrate additional renewable and distributed energy resources, allowing for a clean energy and carbon-neutral future.

Transformative strategic equity financing will also support FirstEnergy's goal to achieve carbon neutrality by 2050, with an interim 30% reduction in greenhouse gas emissions under the company's direct control by 2030.

Zacks Rank & Price Performance

Currently, FirstEnergy carries a Zacks Rank #4 (Sell). In the past six months, shares of FE have rallied 11.2% compared with the industry’s 10.5% growth.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Zacks Investment Research
Image Source: Zacks Investment Research

Utilities Lowering Emission

A few electric utilities are adopting measures to develop and transmit clean and reliable energy to their customers and achieve carbon neutrality. Duke Energy (DUK - Free Report) , Xcel Energy (XEL - Free Report) and Alliant Energy (LNT - Free Report) , among others, have already pledged to achieve carbon neutrality over the long run.

Duke Energy has taken an initiative to expand the renewable asset base and aims to reach its target of net-zero carbon emissions from electric generation by 2050.  The company already lowered its carbon emissions in 2021 by more than 44% since 2005 and is now expanding its 2050 net-zero goals to include Scope 2 and certain Scope 3 emissions.

Duke Energy’s long-term (three to five years) earnings growth is currently pegged at 6.1%. The Zacks Consensus Estimate for DUK’s 2022 earnings implies year-over-year growth of 4.3%.

Xcel Energy is focusing on a clean energy transition. The addition of new clean energy projects to the generation portfolio and the closing of old coal-fired production units will assist the company in achieving the net-zero emission target set for 2050.

Xcel Energy’s long-term earnings growth is currently pegged at 6.4%. The Zacks Consensus Estimate for XEL’s 2022 earnings implies year-over-year growth of 6.8%.

Alliant Energy is making strong progress with its clean energy initiatives and by lowering carbon dioxide emissions. The company announced the voluntary goal of retiring all the existing coal-fired generation units by 2040 to lower emissions from the 2005 levels by 50% and 100% within 2030 and 2050, respectively. In total, the company will replace 1.6 GW of coal-fired generation with clean energy sources over the 2020-2025 period.

Alliant Energy’s long-term earnings growth is currently pegged at 5.7%. The Zacks Consensus Estimate for LNT’s 2022 earnings implies year-over-year growth of 4.6%.

Published in