Duke, WEC Energy emerge among multi-utility renewables capex leaders | Utilities Message Board Posts

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Msg  1587 of 1615  at  11/27/2020 7:14:11 AM  by


Duke, WEC Energy emerge among multi-utility renewables capex leaders

 from SNL Power Daily with Market Report

Duke, WEC Energy emerge among multi-utility renewables capex leaders

Byline: Jason Lehmann

Amid a broader energy utility sector transition from emissions-intensive operations, declining technology and installation costs, state renewable portfolio standards and growing expectations for increased demand for cleaner sources of electricity under a Biden Administration are driving forces behind the addition of regulated and contracted wind and solar energy to utilities generating portfolios. Federal production and investment tax credits also remain an important component of renewable energy development: citing supply chain disruptions and subsequent delays to wind and solar projects as a result of the COVID-19 pandemic, the U.S. Treasury Department and the Internal Revenue Service in May extended safe harbor deadlines for the production tax credit and the investment tax credit from four years to five years for projects that began construction in 2016 or 2017.

In addition to the aforementioned factors, environmental, social and governance considerations appear to be a significant factor in utilities investment plans and operational outlooks, with numerous companies outlining ambitious emissions reduction goals in conjunction with substantial planned capital investments in low- and zero-carbon emission generating projects. For additional detail on utilities' ESG efforts, see the March 3, Sept. 3, Sept. 21 and Sept. 24 Financial Focus reports Large and midcap US electric utilities, Mid- and smallcap US electric utilities, US energy multi-utilities, part 1 and US energy multi-utilities, part 2.

Based on conclusions from our most recent review of company spending plans made available through investor presentations including those from the Virtual EEI Financial Conference held Nov. 9-Nov. 11 as well as SEC filings and other sources, renewable energy capital expenditures are projected to reach $14.60 billion in 2020 among our group consisting primarily of electric and multi-utilities, as well as one gas utility. Renewables capex is projected to decrease 16% in 2021 to $12.23 billion and hold steady in 2022 at $12.35 billion before declining in the outer years of our forecast. Although 2023 and 2024 forecasts show a decline in renewables capex, actual spending is likely to rise as companies' plans for future projects solidify and new opportunities arise.

Among multi-utilities, Duke Energy Corp. carries the highest renewables capex forecast between 2020 and 2022 at approximately $2.93 billion, followed by Avangrid Inc., WEC Energy Group, Inc. and Xcel Energy Inc. Other multi-utilities with renewables capex forecasts over the same period include Alliant Energy Corp., Consolidated Edison Inc. and CMS Energy Corp.

Duke Energy Corp.

With a goal to reduce CO2 emissions by 50% by 2030 from 2005 levels and to achieve net-zero carbon emissions by 2050, Duke Energy is contemplating a significant expansion of its renewable energy portfolio, primarily within its regulated utility operations. The company plans to triple its current renewable capacity of approximately 8,000 MW to 24,000 MW by 2030, rising to 40,000 MW of renewable capacity by 2050. The company's Carolinas utilities in September filed 15-year integrated resource plans that envision significant renewable energy additions under scenarios that include or exclude a carbon policy that "effectively puts a price on carbon emissions from power generation." Under a base-case scenario without a carbon policy, Duke's Carolinas utilities would add 8,650 MW of new solar capacity and 2,050 MW of energy efficiency and demand response to the combined portfolios of the two utilities, but no new wind capacity; a base-case scenario with a carbon policy would add 12,300 MW of solar and 750 MW of onshore wind. In either case, the plans also contemplate significant new gas-fired capacity, which Duke and other utilities view as a bridge fuel as other emissions-intense fuel sources, such as coal, are retired and more renewable generation is brought online.

WEC Energy

WEC Energy, which owns natural gas and electric utilities and operates energy infrastructure including electric generation and natural gas storage, plans $2.29 billion of renewables capex between 2020 and 2022, with a goal to reduce its carbon emissions by 70% by 2030 from 2005 levels and to achieve becoming net-zero carbon emissions by 2050. To that end, the company plans to remove 1,400 MW of coal-fired generation and 400 MW of older gas-fired generation from its portfolio, to be replaced with 200 MW and 100 MW of solar under-development or in service at Wisconsin Public Service Corp. and We Energies, respectively, as well as future additions of 800 MW of solar, 100 MW of wind and 600 MW of battery storage. Earlier in November, WPS and Madison Gas and Electric Co. announced that the 150-MW Two Creeks Solar Project developed and built by NextEra Energy Resources LLC was brought online. The utilities are also collaborating on the 300-MW Badger Hollow Solar Farm, the first phase of which, expected online in April 2021, MGE will own 50-MW and Wisconsin Public Service will own 100 MW. MGE will share ownership with WEC utility Wisconsin Electric Power Co. of the second 150-MW phase of the project, which is expected to start operating in December 2021

CMS Energy

CMS Energy's renewable capex are expected to average $350 million annually over the next several years. The company intends to eliminate coal as a fuel source and add 6 GW of solar and more than 500 MW of wind to its system as part of its plan to achieve net-zero carbon emissions by 2040. While nuclear energy is expected to be phased out by 2030, CMS Energy expects customer efficiency and demand response to play a growing role in meeting the company's energy needs. CMS' clean energy plan followed Michigan regulatory approval of its integrated resource plan in 2019.

This report is designed to identify capital expenditure trends in the U.S. utility sector using a range of sources of information. While S&P Global Market Intelligence takes all due care to ensure the data represented is accurate and represents our best interpretation of industry trends, the varying nature of the available sources of information in terms of depth, quality, availability and timeliness means this report should only be used as outlined. Though the underlying data is included in this report, those looking for company-specific capital expenditure information should use data filed with the U.S. Securities and Exchange Commission.


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