Sempra Energy (SRE) entered into a 20-year power-purchase agreement with Pacific Gas & Electric Company (PCG) to sell 150 megawatts (MW) of solar power produced at its Mesquite Solar I project in Arizona. After completion in early 2013, Mesquite Solar I will produce enough emission-free electricity to power approximately 56,000 homes.
Sempra Energy expects to begin construction on Mesquite Solar I in 2011. The power-purchase contract with Pacific Gas for Mesquite Solar I is, however, subject to approval of the California Public Utilities Commission.
Mesquite Solar I is the first phase of Sempra Energy’s planned Mesquite Solar complex in Arlington, Arizona. The company, in the long-run, plans to build up to 600 MW of solar power at the site, which would make it the largest photovoltaic solar power plant in North America. The solar installation will connect to the power grid at the nearby Hassayampa switchyard, a major energy hub that provides access to consumer markets throughout the Western U.S.
Mesquite Solar I is Sempra Generation’s third solar energy project. The company already has two solar facilities in Nevada –10-MW El Dorado Solar facility and the 48-MW Copper Mountain Solar project.
Sempra Energy is a Southern California-based energy services holding company involved in the sale, distribution, storage, and transportation of natural gas. Its subsidiary Sempra LNG develops, owns and operates liquefied natural gas receipt terminals serving North American markets. Sempra competes with other companies for construction and operation of liquefied natural gas receiving terminals and purchase of the same.
Sempra Energy’s diversified basket of businesses insulates its operations to a significant degree from regulatory rate risks, compared to integrated utility peers.
We believe that Sempra Energy presents a lower risk profile relative to its peers. This bullish outlook is supported by stable utility earnings, steady progress at its LNG terminals and Sunrise Powerlink transmission line, ongoing installations of smart meter and renewable power projects in the Pacific Southwest.
However, on account of pending regulatory issues, and execution risk associated with ongoing infrastructure projects, we reiterate our Neutral recommendation on the Zacks #3 Rank Sempra Energy stock. In the near term we would advise investors to focus on its Zacks #1 Rank (Strong Buy) peers like AGL Resources Inc. (AGL).
SEMPRA ENERGY (SRE): Free Stock Analysis Report
Zacks Investment Research
