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AES to Divest Majority Interest in Vietnam Coal Plant
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AES Corp. (AES - Free Report) recently announced that it has inked a deal to sell its 51% equity stake in the Mong Duong 2 coal-fired power plant in Vietnam to the Czech Republic-based Se.ven Global Investments.
The deal is in line with AES’ aim to exit the majority of its coal assets by 2025 end.
AES’ Decarbonization Efforts
In a bid to enhance its renewable energy portfolio, AES has been rapidly retiring its coal-fired plants in recent times. In May 2023, the company’s subsidiary AES Andes announced its intention to accelerate the retirement of the Norgener coal-fired plant in Chile in order to further advance its decarbonization strategy.
On the other hand, AES Indiana’s largest generating station, Petersburg, is coal-fired. To promote clean energy, AES Indiana retired 230 MW Petersburg Unit 1 on May 31, 2021, and is projected to retire 415 megawatt (MW) Petersburg Unit 2 in 2023, which would result in 630 MW of total retired economic capacity at this station. AES Indiana plans to convert the remaining two coal units at Petersburg to natural gas by the end of 2025.
These efforts, along with the latest divestment decision for Mong Duong 2 plant, will put AES a step ahead toward successfully exiting all of its coal facilities by year-end 2027.
Prospects in the Renewables Market
The global economy has been witnessing increasing demand for clean energy, with the Asia-Pacific region dominating the renewable energy market. This sector benefits from the declining renewables cost and favorable government policies. To this end, the Mordor Intelligence firm expects the global renewable energy market to go from 3.96 terawatt in 2023 to 5.58 terawatt by 2028, at a CAGR of 7.09% during 2023-2028.
With the utility sector rapidly adopting renewables as their preferred choice of energy source, let’s explore the growth prospects of AES in the expanding renewables market.
As of Sep 30, 2023, the company completed the construction or acquisition of 1,314 MW of wind, solar and energy storage and has signed 3,740 MW of contracts for renewables. It has a global development pipeline portfolio of 61 gigawatts (GW), with 68% comprising solar energy.
The company is a joint investor in the United States’ largest green hydrogen project worth $4 billion, which includes approximately 1.4 GW of wind and solar power generation, along with electrolyzer capacity capable of producing more than 200 metric tons per day (MT/D) of green hydrogen. In June 2023, AES acquired the 2 GW Bellefield project, the largest permitted solar-plus-storage project in the United States.
In the Asian region, AES is working on the development of 450 TBTU Son My LNG terminal and the 2,250 MW Son My 2 combined cycle gas power plant in Vietnam. Along with its decarbonization efforts, such renewable expansion plans should boost AES’ footprint in the renewable market.
Peer Moves
Other utility players that are expanding their renewables portfolio and are thus set to gain from the renewables market’s growth are Consolidated Edison Inc. (ED - Free Report) , Entergy Corp. (ETR - Free Report) and NiSource Inc. (NI - Free Report) .
As of June 2023, Consolidated Edison installed roughly 56 MW of solar capacity, 9 MW of battery storage capacity and 1,500 EV plugs. In March 2023, the company completed the sale of all of the assets of its Clean Energy Businesses to RWE Renewables America, LLC, for $6.8 billion.
ED’s long-term earnings growth rate is pegged at 2%. It delivered an average earnings surprise of 6.13% in the last four quarters.
Entergy intends to retire all coal-fired capacity by the end of 2030 and aims to invest $2.5 billion in renewables during the 2024-2026 period. The company has a portfolio of 834 MW in service and 1,567 MW projects approved or in progress as of November 2023.
ETR’s long-term earnings growth rate is 6.4%. It delivered an average earnings surprise of 4.35% in the last four quarters.
NiSource is set to retire its 100% coal-generating sources between 2026 and 2028. In July 2023, the company’s first two solar projects, Dunns Bridge 1 and Indiana Crossroads Solar, came online. In October 2023, it announced the start of a multi-phase hydrogen blending project in the United States, which enables the regulated blending of hydrogen into Safety Town's natural gas system at varying percentages in the range of 2-20%.
NI’s long-term earnings growth rate is 7.2%. It delivered an average earnings surprise of 5.59% in the last four quarters.
Price Performance
Over the past month, shares of AES have rallied 11% compared with the industry’s 3.3% increase.
Image: Bigstock
AES to Divest Majority Interest in Vietnam Coal Plant
AES Corp. (AES - Free Report) recently announced that it has inked a deal to sell its 51% equity stake in the Mong Duong 2 coal-fired power plant in Vietnam to the Czech Republic-based Se.ven Global Investments.
The deal is in line with AES’ aim to exit the majority of its coal assets by 2025 end.
AES’ Decarbonization Efforts
In a bid to enhance its renewable energy portfolio, AES has been rapidly retiring its coal-fired plants in recent times. In May 2023, the company’s subsidiary AES Andes announced its intention to accelerate the retirement of the Norgener coal-fired plant in Chile in order to further advance its decarbonization strategy.
On the other hand, AES Indiana’s largest generating station, Petersburg, is coal-fired. To promote clean energy, AES Indiana retired 230 MW Petersburg Unit 1 on May 31, 2021, and is projected to retire 415 megawatt (MW) Petersburg Unit 2 in 2023, which would result in 630 MW of total retired economic capacity at this station. AES Indiana plans to convert the remaining two coal units at Petersburg to natural gas by the end of 2025.
These efforts, along with the latest divestment decision for Mong Duong 2 plant, will put AES a step ahead toward successfully exiting all of its coal facilities by year-end 2027.
Prospects in the Renewables Market
The global economy has been witnessing increasing demand for clean energy, with the Asia-Pacific region dominating the renewable energy market. This sector benefits from the declining renewables cost and favorable government policies. To this end, the Mordor Intelligence firm expects the global renewable energy market to go from 3.96 terawatt in 2023 to 5.58 terawatt by 2028, at a CAGR of 7.09% during 2023-2028.
With the utility sector rapidly adopting renewables as their preferred choice of energy source, let’s explore the growth prospects of AES in the expanding renewables market.
As of Sep 30, 2023, the company completed the construction or acquisition of 1,314 MW of wind, solar and energy storage and has signed 3,740 MW of contracts for renewables. It has a global development pipeline portfolio of 61 gigawatts (GW), with 68% comprising solar energy.
The company is a joint investor in the United States’ largest green hydrogen project worth $4 billion, which includes approximately 1.4 GW of wind and solar power generation, along with electrolyzer capacity capable of producing more than 200 metric tons per day (MT/D) of green hydrogen. In June 2023, AES acquired the 2 GW Bellefield project, the largest permitted solar-plus-storage project in the United States.
In the Asian region, AES is working on the development of 450 TBTU Son My LNG terminal and the 2,250 MW Son My 2 combined cycle gas power plant in Vietnam. Along with its decarbonization efforts, such renewable expansion plans should boost AES’ footprint in the renewable market.
Peer Moves
Other utility players that are expanding their renewables portfolio and are thus set to gain from the renewables market’s growth are Consolidated Edison Inc. (ED - Free Report) , Entergy Corp. (ETR - Free Report) and NiSource Inc. (NI - Free Report) .
As of June 2023, Consolidated Edison installed roughly 56 MW of solar capacity, 9 MW of battery storage capacity and 1,500 EV plugs. In March 2023, the company completed the sale of all of the assets of its Clean Energy Businesses to RWE Renewables America, LLC, for $6.8 billion.
ED’s long-term earnings growth rate is pegged at 2%. It delivered an average earnings surprise of 6.13% in the last four quarters.
Entergy intends to retire all coal-fired capacity by the end of 2030 and aims to invest $2.5 billion in renewables during the 2024-2026 period. The company has a portfolio of 834 MW in service and 1,567 MW projects approved or in progress as of November 2023.
ETR’s long-term earnings growth rate is 6.4%. It delivered an average earnings surprise of 4.35% in the last four quarters.
NiSource is set to retire its 100% coal-generating sources between 2026 and 2028. In July 2023, the company’s first two solar projects, Dunns Bridge 1 and Indiana Crossroads Solar, came online. In October 2023, it announced the start of a multi-phase hydrogen blending project in the United States, which enables the regulated blending of hydrogen into Safety Town's natural gas system at varying percentages in the range of 2-20%.
NI’s long-term earnings growth rate is 7.2%. It delivered an average earnings surprise of 5.59% in the last four quarters.
Price Performance
Over the past month, shares of AES have rallied 11% compared with the industry’s 3.3% increase.
Image Source: Zacks Investment Research
Zacks Rank
AES currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.