The retail business of Constellation Energy (CEG) is planning to offer a solar panel leasing program to its residential customers in Maryland, New Jersey, New York, Massachusetts, Ohio and Pennsylvania.
Per the program, Constellation will install solar panels on homes with little or no cost upfront to the customer. The customer would then make lease payments to Constellation for 20 years and will potentially reduce the electricity bill.
The leasing program will make solar generation a beneficial option for homeowners. It will allow customers to select the solar panels and system size that will be compatible with their energy needs and budget. Besides reducing the upfront costs, leasing will reduce electricity costs for residential customers whose homes meet the requirements for sun exposure and roof area.
Constellation will offer residential solar leasing in Maryland through its subsidiary Baltimore Gas and Electric Company (“BGE”) HOME. BGE HOME, a division of Constellation Energy, is the source of all heating, air conditioning, plumbing, electrical and appliance service needs. However, in the other markets leasing will be offered under the brand Leasing Powered by Constellation Energy.
In June 2011, Constellation made a $3 million equity investment in Maryland-based, Astrum Solar. It will now be responsible for providing sales, installation and service support for Constellation’s residential solar leasing program.
Solar power is an important and fast-growing part of Constellation’s energy portfolio. Besides adding to profits, it is also a viable option for those who consider the social and environmental cost of fossil fuel technologies. Solar energy lowers total energy costs and does not require any upfront investment.
On an average, a solar installation can help to supplement 40% to 50% of household electricity use. Throughout the United States, the company owns and operates approximately 95 megawatts of solar installations that have been completed or are under construction for commercial customers. By structuring its solar projects as power purchase agreements, the company is able to provide power at a fixed cost that is less than the projected market rates and does not require upfront capital from its customers.
Constellation Energy Group Inc. is a diversified energy company with regulated and merchant businesses. The visibility of its underlying earnings strength is enhanced by a geographically disparate customer base and diversified power generation portfolio, as well as a strong balance sheet. Looking forward, our bullish stance on Constellation Energy stems from the ongoing merger deal with Exelon Corporation (EXC). The companies expect the transaction to be neutral to earnings in 2012 and be more than 5% accretive to earnings in 2013.
The positives, however, are offset by the company’s significant Maryland exposure, risks in the merchant power space, and pending regulatory cases. The company presently retains a short-term Zacks #3 Rank (Hold) that corresponds with our long-term Neutral recommendation on the stock.
Constellation Energy is a leading competitive supplier of power, natural gas and energy products and services for homes and businesses across the continental United States. The company delivers electricity and natural gas through the Baltimore Gas and Electric Company, its regulated utility in Central Maryland.
