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Sempra Energy (SRE), NREL Ink MOU to Promote Carbon Neutrality

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Sempra Energy (SRE - Free Report) recently signed a Memorandum of Understanding (MOU) with the U.S. Department of Energy's (DOE) National Renewable Energy Laboratory (NREL) for jointly promoting a carbon-neutral energy system. This MOU aims at further strengthening of the partnership between Sempra Energy and NREL, which dates back a decade., These two organizations are collaborating on multi-year projects exploring the development, access and integration of low-carbon fuels and microgrid technology.

Through the latest MOU, Sempra Energy along with NREL aims to boost decarbonization of industries, homes and energy and transportation systems toward 100% renewable energy communities, while continuing to deliver resilient, reliable and sustainable energy to consumers worldwide.

Sempra’s Take on Renewables

Like many other utility providers, Sempra Energy aims at enhancing its renewable asset base to promote net-zero carbon emission in the future. Notably, IEnova, a subsidiary of Sempra Energy, develops, invests in and operates renewable energy generation facilities that have long-term power purchase agreements (PPAs) to sell the electricity it generates.

As of Dec 31, 2020, IEnova had a fully contracted, total nameplate capacity of 1,041 megawatt (MW) related to its wind and solar power generation facilities that were either fully operating or under construction. With respect to its recent initiatives for clean energy expansion, we note that in March 2021, IEnova completed the acquisition of Saavi Energía’s 50% equity interest in ESJ for $65 million. Notably, ESJ owns a fully operating wind power generation facility with a nameplate capacity of 155 MW that is fully contracted by SDG&E, a unit of Sempra Energy, under a long-term PPA. No doubt, the buyout of the aforementioned stake will enhance Sempra Energy’s renewable portfolio, pushing it a step forward toward achieving the net-zero carbon emission target.

Looking ahead, ESJ is constructing a second wind power generation facility with a nameplate capacity of 108 MW that is projected to be completed in late 2021 or in the first quarter of 2022. This initiative along with the company’s latest partnership with NREL makes us optimistic about Sempra Energy’s capability to reach its carbon neutral target by 2045.  

Peer Moves

Realizing the need and advantage of the rapid shift toward clean energy, utilities are enhancing their renewable portfolio and reducing fossil fuel dependence at a faster pace.

Notably, like Sempra Energy, Duke Energy (DUK - Free Report) aims to achieve significant carbon neutrality and reduce existing carbon emissions by at least 50% by 2030, and achieve net-zero carbon emissions by 2050.

Another utility, Xcel Energy (XEL - Free Report) aims to achieve an 80% carbon reduction by 2030 and 100% carbon-free electricity by 2050.  Likewise, American Electric Power (AEP - Free Report) aims at reducing carbon dioxide emissions by 80% by 2050.

Zacks Rank & Price Movement

Sempra Energy currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

In a year’s time, shares of the company have increased 13.1% compared with the industry’s 21.6% growth.

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