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CMS Energy (CMS) Arm to Add 400 MW of Solar Projects in Michigan

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  • CMS
  • DTY
  • AESC

CMS Energy Corporation’s CMS subsidiary, Consumer Energy, recently unveiled agreements to add three solar projects with combined capacity of 400 Megawatt (MW) in Michigan to its renewable energy portfolio. The projects are subject to regulatory approval from the Michigan Public Service Commission.

The projects are likely to expand the company’s presence in the rapidly expanding Michigan solar market.

Details of the Project

If approved, all three solar projects will commence operations from 2023. The 150 MW Washtenaw Solar Energy Project near Ann Arbor will be developed by Invenergy before it is finally transferred to Consumer Energy. Meanwhile, the solar project in Jackson County involves a 20-year power purchase agreement (“PPA”) with National Grid Renewables for 125 MW of electricity.

Meanwhile, the Cereal City Solar project with the capacity of 100 MW involves a 25-year PPA with NextEra Energy.

Benefits of the Move

CMS Energy aims to spend $2.7 billion in renewable, which includes investments in wind, solar, and hydroelectric generation resources during the 2021-2025 period. Modest growth in demand for electricity has been witnessed lately in Michigan, driven by the state’s growing economy. This growing demand, along with increasing awareness in favor of clean energy globally, is projected to boost adoption of renewable energy in the state.

With solar market rapidly gaining momentum in Michigan, prospects for solar power plants is also increasing manifold. To this end, the proposed solar projects will provide a boost to CMS Energy’s ‘Clean Energy Plan’ that aims to provide 8,000 MW of utility-scale solar power by 2040, including 1,100 MW by 2024.

The solar projects, on being operational, are expected to supply cost-effective, stable renewable energy to more than 190,000 homes. We believe that this latest move of CMS Energy will be accretive in the future.

Global Boom in Solar Market

Buoyed by the increasing adoption of renewables worldwide, global market for electricity powered by solar energy has been expanding rapidly. Going forward, the global solar energy installed capacity is projected to witness a CAGR of 13.8% over 2021-2026 period, per a report from ModorIntelligence.

Consequently, in an effort to capitalize on the solid growth trends in the global solar market, other utility players like DTE Energy DTE, American Electric Power AEP and The AES Corporation AES have also been expanding their footprint in this space.

For instance, in October 2021, DTE Energy announced that it intends to construct a first-of-its-kind community solar project in Washtenaw County, MI, as part of its MIGreenPower program. The facility, with an expected generation capacity of 20 MW, is projected to start operations in 2023.

DTE Energy has a trailing four-quarter earnings surprise of 9.05%, on average. The Zacks Consensus Estimate for 2021 earnings has been revised upward by 1.9% in the last 60 days. Shares of DTE Energy have lost 14.1% in the last one year.

In the same month, American Electric announced that its subsidiary, AEP Energy Partners, has been seeking renewable power purchase agreements (PPA) for 10, 12 or 15 years for solar and wind facilities, and stand-alone Battery Storage System (BESS) projects. These projects, located in the PJM service region, are anticipated to commence operations between 2022 and 2024.

Interestingly, American Electric has a trailing four-quarter earnings surprise of 1.61%, on average. The Zacks Consensus Estimate for 2021 earnings indicates an improvement of 5.9% from the prior-year reported figure. Shares of American Electric have returned 0.4% in the last one year.

In August, AES Corporation announced its plans to construct three utility-scale solar projects in Michigan. The solar plants will collectively generate 104,500 megawatt-hours of electricity that would power 9000 Michigan households.

AES Corporation has a trailing four-quarter earnings surprise of 4.50%, on average. The Zacks Consensus Estimate for 2021 earnings suggests growth of 6.9% from the prior-year reported figure. Shares of American Electric have returned 19.8% in the last one year.

Price Movement

In the past year, the shares of CMS Energy have lost 0.3% against the industry’s growth of 2.6%.

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Zacks Rank

CMS Energy currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.


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