California utility major, Sempra Energy’s (SRE) renewable business wing, Sempra U.S. Gas & Power, LLC, received support from Southern California Public Power Authority (“SCPPA”) to supply 250 megawatt ("MW") of solar power to the cities of Los Angeles and Burbank for a period of 20 years. The solar output will be delivered from Sempra’s Copper Mountain Solar 3 program located in Boulder City roughly 40 miles southeast of Las Vegas.
SCPPA is an entity comprising 11 municipal utilities and one irrigation district which finances power and transmission resources on behalf of its members. Copper Mountain Solar 3 is the fourth utility-scale renewable venture undertaken by Sempra in Boulder City, Nevada.
Per the agreement, the company will provide around 210MW of green power to the Los Angeles Department of Water and Power (“LADWP”) while Burbank will be the receiver of 40MW. The building of the Copper Mountain Solar 3 facility is anticipated to initiate next month. Solar power will be transported via a substation and transmission lines controlled by LADWP.
Recently, the company has completed Phase I of the construction of the Copper Mountain Solar 2 unit as well as developed a 58MW Copper Mountain Solar 1 unit in Boulder City.
Combining Sempra’s Copper Mountain project along with other solar ventures will bring the total solar capacity to more than 450MW in Boulder City alone. The latest program which is expected to be concluded by the end of 2015 will amply power about 80,000 residences on an annual basis. The Copper Mountain Solar 3 program will also create 300 new jobs when the construction of this project reaches full steam.
With the current positivity in the U.S. market for sustainable green energy, we believe the company will accrue significant benefits from this long-term contract. Meanwhile, the construction of Sempra’s Mehoopany wind farm in Pennsylvania is in full swing and will provide cost-competitive power to U.S. consumers. In addition, the company has 700 MW of additional solar power development program in California and Arizona under its belt.
Sempra intends to bring into service 1,400 MW of renewable capacity by 2016 which will offer favorable prospects given the expected increase in renewable usage in the next couple of years.
However, cheap natural gas continues to grab attention of the energy producers with its abundance in the U.S. and will present serious challenges to renewables. Also, pending regulatory cases related to the company’s Southern California Gas and San Diego Gas & Electric businesses could offset the above positives. Sempra presently holds a short-term Zacks # 3 Rank (Hold rating).
Another Zacks #3 Rank renewable player, Edison International (EIX), is also undertaking initiatives like compliance with California’s renewable energy mandate through projects like SmartConnect and Solar Photovoltaic Program.
Sempra Energy reaffirmed its 2012 adjusted earnings outlook in the range of $4.00 to $4.30 per share. The Zacks Consensus Estimates for fourth quarter and full year 2012 are currently pegged at 98 cents and $4.16 per share, respectively.
With a market capitalization of $17.25 billion, San Diego-based Sempra Energy has 17,483 total employees.
More From Zacks.com