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Sempra Strikes Two DBE Solar Deals - Analyst Blog

California utility major, Sempra Energy 's ( SRE ) business wing, San Diego Gas & Electric ("SDG&E") announced the finalization of its dual long-term renewable power purchase contract with Diverse Business Enterprise ("DBE") entities. Sempra will buy a total of 40 megawatts ("MW") of renewable power to supply its customers in Imperial Valley, California.

The DBE program is an approach to encourage diverse owners of small-to-mid scale businesses in the U.S. to become valued suppliers to cash-rich companies like Sempra Energy. The first contract includes a 20-year deal to procure 20 MW of solar power from the Seville solar facility, a joint venture initiative with Sempra's DBE associate Tallbear Seville and Regenerate Power. The facility located northwest of Brawley in Imperial County consists of photovoltaic single-axis modules and will be finished in 2015.

The second 20-year agreement entails Sempra to purchase 20 MW of solar output generated from the Calipatria Solar Farm, a fixed-tilt photovoltaic facility also located in Imperial Valley. The project is a partnership between 8minutenergy Renewables' ancillary, 70SM1 8ME, LLC and Gestamp Solar.

The twin projects are scheduled to be completed in 2015 and will deliver power via the 117-mile Sunrise Powerlink transmission line.

Sempra Energy has been actively involved in the DBE programs over the past two years. The company's renewable business chipped in 20.8% of retail sales in 2011. Sempra is aggressively expanding its green portfolio with 17 contracts of a total 1,482 MW under its belt. In 2012, the company clinched 13 more contracts which bring the total capacity level to a massive 1,879 MW.

With the current trend in the U.S. market that favors clean energy, we expect these DBE initiatives will bode well for the company. In addition, these long-term agreements would lead to a steady flow of power to its service territories, thereby retaining customer loyalty.

Near-term negative triggers include pending regulatory cases related to the company's San Diego Gas & Electric business. The company presently has a short-term Zacks #3 Rank. (Hold rating).

Sempra Energy reaffirmed its 2012 adjusted earnings outlook in the range of $4.00 to $4.30 per share. The Zacks Consensus Estimate for full year 2012 is $4.16 per share, at the mid-point of the guided range.

Veolia Environment S.A. ( VE ) is another company that has extensively pursued DBE programs in Indiana, Georgia and Wisconsin.

With a market capitalization of $17.58 billion, San Diego based Sempra Energy has 17,483 total employees.

SEMPRA ENERGY (SRE): Free Stock Analysis Report

VEOLIA ENVIRON (VE): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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