FirstEnergy's (FE) Units to Build Three Solar Energy Sites
FirstEnergy Corporation’s FE subsidiaries Mon Power and Potomac Edison received approval from the West Virginia Public Service Commission (PSC) for the construction of three solar projects in West Virginia that would enable consumers to purchase renewable energy and meet sustainability objectives.
PSC also agreed to the companies' request for a construction surcharge, which was around one-third less than what was first recommended. The average residential user using 1,000 kilowatt hours per month will start paying an extra 14 cents per month, starting in 2024. The surcharge is anticipated by the companies to stay the same in 2025 and to drop to 11 cents per month in 2026. All residential customers of Mon Power and Potomac Edison will be responsible for the additional cost of building the three sites.
Details of the Project
PSC's approval in August 2023, to the companies' proposal to finish three of five planned solar sites marked the beginning of the construction phase. These five locations will produce 50 megawatts (MW) of renewable energy. According to the Solar Energy Industries Association, 1 MW of solar energy can power 173 households nationwide on average.
The Commission had already given initial clearance for the development, prior to the final permission being granted once the companies secured enough industrial, commercial and residential customers to utilize around 85% of the renewable energy supplied by the sites. These criteria have been satisfied by the three locations that are planned in the counties of Monongalia, Marion and Berkeley. Once consumers sign up for the electricity they will produce, the companies intend to ask the PSC for permission to develop the remaining two solar sites.
Transition to Renewable Energy
FirstEnergy is focused on lowering emission levels and has undertaken initiatives for the same. In 2015, FirstEnergy had set a goal of reducing CO2 emissions by at least 90% below 2005 levels by 2045. In November 2020, it updated the target to attain 100% carbon neutrality by 2050, with a mid-term goal of 30% reduction in greenhouse gases within the company's direct operational control by 2030 from the 2019 level.
To address its goal, Mon Power and Potomac Edison signed an agreement with the town of Harpers Ferry in West Virginia in January 2023, to advance the use of clean energy. The town has committed to a subscription equal to 100% of its streetlight and town hall energy usage in support of the companies’ generation of solar power.
Growth Prospects
Per the U.S. Energy Information Administration report, Renewable energy capacity has been growing rapidly, and it expects this growth to continue because the electric power sector plans to add 27 gigawatts (GW) of new solar generating capacity by the end of 2023 and a further 31 GW in 2024.
Other electric power companies like Dominion Energy Inc. D, Duke Energy Corp. DUK and Alliant Energy Corp. LNT are set to benefit from growing solar market in the United States.
In August 2023, Dominion Energy unveiled a solar and energy storage project at the Dulles International Airport near Washington, DC, marking the largest renewable energy project ever developed at a U.S. airport. In partnership with the Metropolitan Washington Airports Authority, D plans an 835-acre, 100 MW capacity solar energy on the southwestern edge of the airport, along with a 50-MW energy storage facility.
D’s long-term (three to five years) earnings growth rate is 20%. It delivered an average earnings surprise of 4.3% in the last four quarters.
Duke Energy currently operates 1,200 MW of solar energy in Florida, with plans to continue adding approximately 300 MW a year going forward. To achieve this target, Duke Energy Florida announced two new solar projects in March 2023, as part of Clean Energy Connection, the company's community solar program. Once complete, each 74.9-MW solar facility will generate enough carbon-free electricity to power 23,000 homes.
DUK’s long-term earnings growth rate is 6.09%. The Zacks Consensus Estimate for 2023 earnings per share (EPS) implies a year-over-year improvement of 6.5%.
Alliant Energy is the largest owner-operator of regulated solar energy in Wisconsin. The company plans to add 1.1 GW of solar energy within the state by mid-2024. In August 2023, the Public Service Commission of Wisconsin approved two Alliant Energy battery energy storage projects — the 100-MW Grant County Battery Project and the 75-MW Wood County Battery Project.
LNT’s long-term earnings growth rate is 6.47%. The Zacks Consensus Estimate for 2023 EPS implies a year-over-year improvement of 2.5%.
Price Performance
In the past year, shares of FirstEnergy have lost 9.6% compared with the industry’s 15.8% decline.
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Zacks Rank
FirstEnergy currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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