PPL's Arm Issues RFP for Offshore Wind to Power Rhode Island
PPL Corporation’s PPL subsidiary, Rhode Island Energy, announced that it has issued a Request for Proposals (RFP) to secure an additional 1200 megawatt (MW) of offshore wind to help power the state's energy needs. This is Rhode Island's largest-ever RFP for renewable energy.
The company released the request only a week after Connecticut, Massachusetts and Rhode Island signed a Memorandum of Understanding (MoU). This MoU might enable a coordinated multi-state selection of offshore wind opportunities as each state seeks its own procurements in a similar time frame.
Rhode Island Energy believes in the urgency to get additional renewables online. The next RFP will provide developers with a fresh, exceptional chance to imagine how they may satisfy the state's clean energy and economic development goals, while balancing the customers' affordability demands.
In accordance with the state's Affordable Clean Energy Security Act, Rhode Island Energy is looking for proposals from prospective developers to negotiate long-term power purchase agreements (PPAs) for energy and renewable energy certificates from the recently completed offshore wind projects.
Responding offers will be accepted through Jan 31, 2024, and successful bidders will be revealed in the summer of 2024, as stated in the RFP. The Rhode Island Public Utilities Commission will assess and approve any upcoming PPAs that Rhode Island Energy enters into.
Growth Prospects
Utilities in the United States are gradually shifting focus and concentrating more on clean energy sources like renewable energy to generate electricity. Wind and solar are the predominant sources of power generation that will help achieve the target of net zero emissions by 2050.
Offshore wind projects are expected to grow rapidly in the coming years as the turbines at sea make use of stronger winds. According to a report by the U.S. Department of Energy, the capacity of the currently operating and under construction U.S. offshore wind energy projects increased 15% from the previous year’s level to 52,687 MW. When fully developed, these projects would be enough to power more than 18 million American homes.
Per a Precedence Research report, the global offshore wind energy market size was valued at $33 billion in 2022 and is expected to hit $179.41 billion by 2032. It is poised to witness a CAGR of 18.50% during 2023-2032.
Utilities’ Focus on Renewable Energy
Along with PPL, other electric power companies like Dominion Energy D, Xcel Energy, Inc. XEL and Avangrid Inc. AGR are also set to benefit from the growing need for renewable energy.
Dominion’s long-term objective is expected to add 24 gigawatt (GW) of battery storage, solar, hydro and wind (offshore as well as onshore) projects by 2036 and increase the renewable energy capacity by more than 15% per year, on average, over the next 15 years. The company plans to develop the 2,640-MW offshore wind project, located 27 miles off the coast of Virginia Beach, VA, which will further expand the state’s renewable footprint.
D’s long-term (three to five years) earnings growth rate is 4%. It delivered an average earnings surprise of 4.3% in the last four quarters.
After completing six wind projects with 1,500 MW capacities in 2020, XEL completed four wind farms, adding another 800 MW of clean energy generation capacity to its portfolio. Xcel Energy's total wind capacity is 11,000 MW, out of which 4,500 MW is from its own wind farms.
XEL’s long-term (three to five years) earnings growth rate is 6.49%. The Zacks Consensus Estimate for 2023 EPS indicates a year-over-year improvement of 6%.
AGR plans renewable construction of 806 MW of offshore wind, 408 MW of solar and 106 MWs of onshore wind projects. The company has increased the presence of sustainable energy in Texas, where it currently produces more than 1,250 MW through six wind farms and has a pipeline of 1,300-MW projects.
AGR’s long-term (three to five years) earnings growth rate is 4.05%. The Zacks Consensus Estimate for 2023 sales indicates a year-over-year improvement of 6.4%.
Price Performance
In the past month, shares of PPL have lost 6.9% compared with the industry’s 12% decline.
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Zacks Rank
PPL currently carries a Zacks Rank #4 (Sell).
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