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American Electric (AEP) Arm Gets Nod to Buy 999MW Clean Energy
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American Electric Power Co. Inc.’s (AEP - Free Report) subsidiary, Southwestern Electric Power Co. (“SWEPCO”), recently received the Louisiana Public Service Commission’s go-ahead to purchase up to 999 megawatts (MW) of renewable energy resources.
As part of the acquisition, SWEPCO plans to buy a 200 MW solar facility in Louisiana, a 200.6 MW wind facility in Texas and another 598.4 MW wind facility in Oklahoma.
Rationale Behind the Acquisition
SWEPCO appealed for the generation capacity enhancement to meet the growing energy demand of its clients amidst its aging generation units that are soon getting retirements. SWEPCO has been facing a capacity deficit since the beginning of 2023, which is projected to increase to 1,574 MW in 2028 after the retirement of other generating units.
This rising capacity deficit, coupled with Southwest Power Pool’s latest rule requiring utilities to have available additional generation capacity for reliability, must have encouraged SWEPCO to make the renewable acquisition proposal. Such acquisitions will also protect its customers from volatile energy costs, which in turn should boost its future customer base.
AEP’s Renewables Plan
American Electric Power forecasts that the contribution of wind and solar energy to SWEPCO's diversified energy resource mix will increase notably over the following 20 years. This will put AEP a step ahead toward duly achieving its target of having net-zero carbon dioxide emissions by 2050.
To this end, it is imperative to mention that American Electric’s 2023-2027 capital investment strategy includes a spending plan worth $9 billion in renewables, which constitutes 22% of its total capital expenditure.
As of Mar 31, 2023, the company’s plans included the addition of 17 gigawatt of new renewable sources between 2023 and 2032. In addition to 1,484 MW North Central Wind Energy facilities, AEP aims to add nearly 15,700 MW of new renewables and energy storage over the next 10 years. We may thus conclude that the 999MW of renewables acquisition will play a significant role in AEP achieving the clean energy targets.
Peer Moves
Apart from AEP, other prominent utility players expanding their renewable energy portfolio are Alliant Energy Corp. (LNT - Free Report) , Ameren Corp. (AEE - Free Report) and TotalEnergies (TTE - Free Report) .
As of Mar 31, 2023, Alliant Energy was on track to place 840 MW of utility-scale solar in service by the first half of 2024 and aims to develop nearly 275 MW of energy storage by mid-2025. It also plans to add almost 1,100 MW of solar-generated energy by mid-2024.
LNT’s long-term (three- to five-year) earnings growth rate is 6.5%. The Zacks Consensus Estimate for its 2023 sales indicates an increase of 8% over 2022’s reported figure.
Ameren targeted to expand its renewable portfolio by adding 2,800 MW of renewable generation by the end of 2030, 400 MW of battery storage by 2035 and a total of 4,700 MW of renewable generation and 800 MWs of battery storage by 2040, as of Mar 31, 2023. The company also expects to add 1,200 MWs of natural gas-fired combined cycle generation by 2031 and 1,200 MW of additional clean dispatchable generation by 2043
AEE’s long-term earnings growth rate is 6.4%. The Zacks Consensus Estimate for its 2023 sales indicates an increase of 1.9% over 2022’s reported figure.
TotalEnergies plans to invest $5 billion in 2023 to add renewable assets to its portfolio and strives to be a net-zero carbon emission company by 2050. Recently, TTE collaborated with Gentari Renewables Sdn Bhd to develop renewable energy projects in the Asia Pacific.
TTE’s long-term earnings growth rate is 9.3%. It delivered an average earnings surprise of 1.68% in the past four quarters.
Price Performance
In the past month, shares of AEP have gained 0.2% compared with the industry’s increase of 0.5%.
Image: Bigstock
American Electric (AEP) Arm Gets Nod to Buy 999MW Clean Energy
American Electric Power Co. Inc.’s (AEP - Free Report) subsidiary, Southwestern Electric Power Co. (“SWEPCO”), recently received the Louisiana Public Service Commission’s go-ahead to purchase up to 999 megawatts (MW) of renewable energy resources.
As part of the acquisition, SWEPCO plans to buy a 200 MW solar facility in Louisiana, a 200.6 MW wind facility in Texas and another 598.4 MW wind facility in Oklahoma.
Rationale Behind the Acquisition
SWEPCO appealed for the generation capacity enhancement to meet the growing energy demand of its clients amidst its aging generation units that are soon getting retirements. SWEPCO has been facing a capacity deficit since the beginning of 2023, which is projected to increase to 1,574 MW in 2028 after the retirement of other generating units.
This rising capacity deficit, coupled with Southwest Power Pool’s latest rule requiring utilities to have available additional generation capacity for reliability, must have encouraged SWEPCO to make the renewable acquisition proposal. Such acquisitions will also protect its customers from volatile energy costs, which in turn should boost its future customer base.
AEP’s Renewables Plan
American Electric Power forecasts that the contribution of wind and solar energy to SWEPCO's diversified energy resource mix will increase notably over the following 20 years. This will put AEP a step ahead toward duly achieving its target of having net-zero carbon dioxide emissions by 2050.
To this end, it is imperative to mention that American Electric’s 2023-2027 capital investment strategy includes a spending plan worth $9 billion in renewables, which constitutes 22% of its total capital expenditure.
As of Mar 31, 2023, the company’s plans included the addition of 17 gigawatt of new renewable sources between 2023 and 2032. In addition to 1,484 MW North Central Wind Energy facilities, AEP aims to add nearly 15,700 MW of new renewables and energy storage over the next 10 years. We may thus conclude that the 999MW of renewables acquisition will play a significant role in AEP achieving the clean energy targets.
Peer Moves
Apart from AEP, other prominent utility players expanding their renewable energy portfolio are Alliant Energy Corp. (LNT - Free Report) , Ameren Corp. (AEE - Free Report) and TotalEnergies (TTE - Free Report) .
As of Mar 31, 2023, Alliant Energy was on track to place 840 MW of utility-scale solar in service by the first half of 2024 and aims to develop nearly 275 MW of energy storage by mid-2025. It also plans to add almost 1,100 MW of solar-generated energy by mid-2024.
LNT’s long-term (three- to five-year) earnings growth rate is 6.5%. The Zacks Consensus Estimate for its 2023 sales indicates an increase of 8% over 2022’s reported figure.
Ameren targeted to expand its renewable portfolio by adding 2,800 MW of renewable generation by the end of 2030, 400 MW of battery storage by 2035 and a total of 4,700 MW of renewable generation and 800 MWs of battery storage by 2040, as of Mar 31, 2023. The company also expects to add 1,200 MWs of natural gas-fired combined cycle generation by 2031 and 1,200 MW of additional clean dispatchable generation by 2043
AEE’s long-term earnings growth rate is 6.4%. The Zacks Consensus Estimate for its 2023 sales indicates an increase of 1.9% over 2022’s reported figure.
TotalEnergies plans to invest $5 billion in 2023 to add renewable assets to its portfolio and strives to be a net-zero carbon emission company by 2050. Recently, TTE collaborated with Gentari Renewables Sdn Bhd to develop renewable energy projects in the Asia Pacific.
TTE’s long-term earnings growth rate is 9.3%. It delivered an average earnings surprise of 1.68% in the past four quarters.
Price Performance
In the past month, shares of AEP have gained 0.2% compared with the industry’s increase of 0.5%.
Image Source: Zacks Investment Research
Zacks Rank
American Electric currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.