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Pinnacle West Capital (PNW) to Cut 100% Emission by 2050

Zacks Equity Research

Pinnacle West Capital Corporation PNW announced that its subsidiary Arizona Public Service Company (“APS”) has set a target to deliver 100% clean electricity to customers by 2050. The company’s nearer-term target will be to supply 65% of its total electricity from clean sources by 2030, with 45% being generated from renewable sources. Pinnacle West Capital operates through its wholly-owned subsidiary APS.

Initiatives to Attain Goal

Pinnacle West Capital’s unit APS aims to achieve this renewable target through focusing on clean sources like natural gas, energy storage solutions that support development and usage of more renewable sources, as well as modernization of the electric grid that supports more renewables and lowers the possibility of outages. In addition, planned electrification of Arizona’s different economic sectors, particularly the transportation sector and specific building applications, will increase the demand and usage of clean energy.

Production of 100% clean electricity will require a transition from the polluting sources of energy to cleaner and renewable sources. By the end of 2018, the company produced 23.2% of its electricity from coal. It has plans to shut all coal-fired generation by 2031, seven years sooner than the previous projection.

Rising Use of Clean Sources

The U.S. Energy Information Administration (“EIA”) release indicated that clean renewable energy will account for the majority of global power generation by 2050. Per EIA, nearly 28% of the world’s power came from renewables in 2018, courtesy of improved technology and increasing awareness about emissions. Renewable sources are expected to account for 49% of global power generation by 2050.

The same trend can be noticed in the United States as well, with utilities setting targets to cut emissions from their production portfolio. Utilities like Dominion Energy D, Xcel Energy XEL, and American Electric Power AEP have laid out plans to reduce carbon emissions from their electric generation by 80%, 100% and 80%, respectively, by 2050.  

The above development is hurting the companies belonging to the U.S. coal industry, as demand for coal continues to decline in the United States. The latest report from EIA forecasts 2020 coal consumption in the United States to fall 11% to 531 million short tons (MMst) from the 2019 level of 596 MMst. Coal consumption is estimated to further drop to 513 MMst in 2021.

Price Performance

In the past 12 months, Pinnacle West’s shares have underperformed its industry.

Zacks Rank

Pinnacle West currently carries a Zacks Rank #4 (Sell). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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