CenterPoint's (CNP) Green Hydrogen Project Starts Operation

CenterPoint Energy’s CNP green hydrogen project, located in downtown Minneapolis, recently started its operations. Consequently, this Texas-based utility provider became one of the first natural gas utilities in the United States to produce and add green hydrogen to its distribution system.

This should strengthen CenterPoint Energy’s position in the rapidly expanding renewable energy market in the United States.

Benefits of the Green Hydrogen Project

The primary goal of the green hydrogen project is to gain operational experience with the technology for making green hydrogen and how it can be integrated most effectively into the local natural gas distribution system, thereby lowering the carbon content of delivered energy.

The project is powered by renewable electricity and can produce up to 60 Dekatherms (432 kilograms) of hydrogen gas per day, using approximately two gallons of water per minute.

Impressively, there are no carbon emissions from either production or end-use of green hydrogen, which thus has the potential to be an important zero-carbon supplement to conventional natural gas. Thus, green hydrogen is expected to avoid approximately 1,200 tons of carbon dioxide emissions per year.

No doubt this green hydrogen plant is a revolutionary step in the clean energy space, thus bolstering CNP’s renewable energy portfolio.

Utilities’ Prospects in Renewable Energy

Utilities are rapidly adopting renewable energy sources to produce electricity to mitigate the deadly effects of climate change in the United States. Per the latest forecast made by the U.S. Energy Information Administration (EIA), electricity generation from renewable energy sources is expected to rise from 20% in 2021 to 23% in 2022 and 24% in 2023, primarily driven by projected additions to the wind and solar energy generating capacity.

CenterPoint Energy is committed to being the first combined electric and natural gas utility with regulated electric generating assets to achieve Net Zero for its Scope 1 and Scope 2 greenhouse gas emissions by 2035, 15 years ahead of its peers’ average goals.

Other utilities have also pledged net-zero carbon emissions to achieve a carbon-free environment and benefit from the growing renewable generation opportunities.

For instance, DTE Energy DTE is committed to reducing the carbon emission from electric utility operations by 32% by 2023, 50% by 2030 and 80% by 2040 from the 2005 levels. To meet carbon reduction goals in the near term, DTE Electric plans to put in service a natural gas-fueled combined-cycle generation facility in 2022.

DTE Energy boasts a long-term earnings growth rate of 6%. DTE came up with a four-quarter average earnings surprise of 8.97%.

Likewise, American Electric Power’s AEP intermediate goal is an 80% reduction from 2000 CO2 emission levels from its generating facilities by 2030. The long-term goal is net-zero CO2 emissions from its generating facilities by 2050. Its 2022-2026 capital investment forecast includes $9.9 billion in a regulated renewables plan.

American Electric boasts a long-term earnings growth rate of 6.2%. AEP has a trailing four-quarter earnings surprise of 2.40%, on average.

Duke Energy DUK has taken the initiative to expand the renewable asset base and aims to reach its target of net-zero carbon emissions from electric generation by 2050. From 2005 to 2021, the company lowered its carbon emissions by more than 44% and is now expanding its 2050 net-zero goals to include Scope 2 and certain Scope 3 emissions.

Duke Energy boasts a long-term earnings growth rate of 6.1%. DUK has a trailing four-quarter earnings surprise of 0.89%, on average

Price Movement

In a year’s time, shares of CenterPoint Energy have gained 21.5% compared with the industry’s growth of 10.1%.

Image Source: Zacks Investment Research

Zacks Rank

CenterPoint Energy currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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