Back to top

Image: Bigstock

Sempra Energy (SRE) Arm Wins $1.7M Funding to Reduce Emission

Read MoreHide Full Article

Sempra Energy (SRE - Free Report) recently announced that its subsidiary Southern California Gas Company was awarded $1.7 million in funding from the South Coast Air Quality Management District (AQMD). The amount has been granted for a couple of projects to lower emissions in residential and commercial buildings.  

Details of the Deal

The company will provide a commercial water heating incentive program that offers rebates to distributors selling ultra-low emission water heaters. Also, the awarded money will be utilized to build a 1.5-kilowatt (KW) fuel cell in a new, mixed fuel, zero-net-energy home.

Per California Air Resources Board (CARB), residential and commercial buildings account for about 12% of the state's greenhouse gas emissions.  In the last five years, Southern California Gas energy efficiency programs saved more than 146 million therms, enough to power 326,000 households a year, and have reduced emissions by an amount equivalent to taking 165,000 passenger cars off the road.

Sempra Energy’s Take on Emission

The company was conferred with $1.2 million from the AQMD for midstream commercial water heating incentive program. Through this program, the company aims to deploy about 1,000 ultra-low emission commercial water heating boilers, space heating boilers and tankless water heaters across its service territory. Also, the company inked a $0.5-million deal for a residential fuel cell and solar power storage demonstration project. It is working with a homebuilder to install a 1.5 KW fuel cell in a new, mixed fuel, zero-net-energy home, located within the service territory.

Looking Ahead

Sempra Energy is expected to expand its footprint in energy infrastructure by constructing new liquid fuels projects in Mexico. The company announced that it has secured long-term contracts for storage at both its liquid fuel marine terminals in Mexico. The two terminals are likely to come online during the second half of 2020.

In March 2018, Sempra Energy completed the acquisition of Oncor Electric Delivery Company, LLC for $9.5 billion in cash. In a bid to broaden and reinforce its transmission and distribution network, Sempra Energy decided to support Oncor's plan of investing capital worth $10.5 billion for a five-year period. This, in turn, will enhance Sempra Energy’s service territory, widening opportunities to earn more profit.

Also, the company continues with systematic investments in infrastructure development projects. For the 2018-2020 period, it expects to incur a capex and make investments of approximately $15.2 billion including $12.3 billion for California Utilities and $2.9 billion for other subsidiaries regarding the funding of capital projects in Mexico and South America along with developing LNG projects. Through these investments, the company aims at vigorously modernizing its electric transmission lines and substation infrastructure.

Price Performance

Shares of Sempra Energy have outperformed the industry in the past 12 months. The stock has rallied 7.3% compared with its industry’s rise of 4.1%.

Zacks Rank & Other Stocks to Consider

Sempra Energy currently carries a Zacks Rank #2 (Buy). Other top-ranked stocks in the same sector include American Water Works Company, Inc. (AWK - Free Report) , Southwest Gas Corporation (SWX - Free Report) and Spire Inc. (SR - Free Report) , each carrying a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

American Water Works delivered average positive surprise of 4.44% in the last four reported quarters. The Zacks Consensus Estimate for 2019 earnings has inched 0.6% up to $3.51 in the past 60 days.

Southwest Gas came up with average beat of 31.31% in the trailing four reported quarters. The Zacks Consensus Estimate for 2019 earnings has been revised 1% upward to $4.04 in the past 60 days.

Spire pulled off average beat of 14.37% in the trailing four reported quarters. The Zacks Consensus Estimate for fiscal 2019 earnings has been raised 1.1% to $3.75 in the past 60 days.

More Stock News: This Is Bigger than the iPhone!

It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.

Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.

Click here for the 6 trades >>