Back to top

Image: Bigstock

UGI Joint Venture to Invest in RNG Project in New York

Read MoreHide Full Article

UGI Corporation (UGI - Free Report) unit, UGI Energy Services, LLC (“UGIES”), and Global Common Ventures, LLC’s joint venture — Cayuga RNG — has entered an agreement to build and deliver a fourth renewable natural gas (“RNG”) plant in upstate New York.

UGI has committed to investing nearly $250 million in RNG projects across multiple states, which will further expand its geographic footprint and generate accretive earnings. The new plant is anticipated to pump RNG into a local gas pipeline, supplying the regional distribution system from 2024, and the project is anticipated to produce about 150 million cubic feet of RNG yearly.

The project is expected to be complete in the second half of 2024. Once finished, the RNG will be marketed by GHI Energy and the renewable subsidiary of UGI's energy services unit, UGIES.

Benefits of the Agreement

The agreement aims to strengthen UGI’s infrastructure to facilitate the production of RNG and solidify its position in the global RNG market.

Furthermore, it will expand UGI's portfolio of sustainable energy solutions. This will provide environmental benefits for farmers, communities and consumers by limiting the amount of methane released into the atmosphere through the storage of manure and the use of methane to replace fossil fuels.

UGI Expands in the Clean Energy Space

As the demand for RNG continues to rise worldwide, UGI is well-positioned to expand renewable products and support its aim of growing into an environmentally friendly business.

In February, UGI entered an agreement with Global Clean Energy Holdings to purchase and distribute renewable LPG in California. In April, the utility acquired a 33% equity interest in Ag-Grid Energy, a renewable energy producer with projects in the United States.

Also, UGI received the regulatory approval for the intended joint venture with SHV Energy, which will promote the production and use of renewable dimethyl ether in the United States and Europe.

Peer Moves

Utilities that have been taking significant measures to develop clean energy production and reduce emissions in the environment are Atmos Energy Corporation (ATO - Free Report) , National Fuel Gas Company (NFG - Free Report) and Spire Inc. (SR - Free Report) .

Atmos Energy is making planned capital investments to lower emissions and improve the reliability of distribution and transportation systems. ATO aims to reduce methane emissions by 15-20% from the current levels in the next five years. Atmos Energy also aims at lowering methane emissions by 50% by 2035 from the 2017 levels.

National Fuel Gas Company’s systematic capital spending to strengthen its natural gas and oil operation is positively impacting the total production of the company. NFG is making significant investments to lower methane and greenhouse gas emissions from the delivery system and aims to lower emissions by 75% in 2030 and 90% in 2050 from the 1990 levels.

Spire is making systematic investments in infrastructure, which will enable it to cut down methane emissions from its operation. Spire aims to reduce methane emissions by 59% by 2025 and 73% by 2035 from the 2005 levels. SR already curbed 46% methane emissions in 2021 since 2005.

The long-term (three to five years) earnings growth of Atmos Energy, National Fuel Gas Company and Spire is projected at 7.5%, 13.6% and 5%, respectively.

Zacks Rank & Price Performance

Currently, UGI carries a Zacks Rank #3 (Hold). In the past six months, shares of UGI have rallied 13.8% compared with the industry’s growth of 8.4%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Zacks Investment Research
Image Source: Zacks Investment Research

Published in