Public Service Unit Sells Two Coal-Burning Power Plants
Zacks Investment Research | Jan 09, 2019 09:43PM ET
Public Service Enterprise Group Incorporated’s (NYSE:PEG) subsidiary PSEG Power LLC (PSEG) recently announced the sale of its two coal-burning power plants to Hilco Redevelopment Partners LLC, an operating company within Hilco Global.
The two coal-burning plants were built in the 1960s and retired in June 2017. The coal sites are Hudson Generating Station in Jersey City/Secaucus and Mercer Generating Station at Hamilton Township. The company’s divestment compliments the goal of eliminating 13 million metric tons of CO2-equivalent emissions by 2030 from 2005 levels.
Public Service Enterprise’s Renewable Target (NYSE:TGT)
Apart from focusing on transmission and distribution infrastructure, Public Service Enterprise is expanding its renewable assets. As of Dec 31, 2017, PSEG Power owned and operated 414-megawatt dc (MW) of photovoltaic solar generation facilities across various states. The company is currently pursuing two solar initiatives, namely the Solar Loan Program and the Solar 4 All and Solar 4 All Extension programs.
Also, the company’s another subsidiary Public Service Electric and Gas Company aims to file its proposed Clean Energy Future program, a six-year estimated $2.9-billion project, looking to achieve New Jersey’s energy efficiency goals and support electric vehicle infrastructure as well as battery storage initiatives. Such initiatives should boost the company’s footprint in the renewable space.
Transition to Cleaner Source
The power generation from coal in the United States is plagued by numerous challenges ranging from domestic to international markets. In the United States, stiff competition from natural gas, stringent regulations and an additional impetus to solar and wind power generation through the extension of tax credits are steadily luring away utility operators from the natural commodity.
Though the Clean Power Plan has been repealed by President Donald Trump, we could still find investors shying away from investing in coal fired plants and even new investments are being directed toward natural gas and renewable-based power production. To this end, utilities like NextEra Energy (NYSE:NEE) , Dominion Energy (NYSE:D) and Duke Energy Corp. (NYSE:D) are already investing in heaps to create a green energy generation portfolio, thus enhancing focus on electricity from clean fuel sources.
The U.S. Energy Information Administration’s (EIA) report indicates that the share of U.S. total utility-scale electricity generation from renewable sources will increase from 10% in 2018 to 11% in 2019. EIA expects natural gas to generate nearly 35% of U.S. electricity in 2018 and 2019, up from 32% in 2017 while coal is estimated to contribute 26% in 2019, down from 28% in 2018. The above prediction from EIA signals the preference to or against the legislation supporting the usage of coal.
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Price Movement
In the past 12 months, shares of Public Service Enterprise have gained 2.6%, underperforming the Zacks Investment Research
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