SRE Closes Ist Phase of Mesquite - Analyst Blog

Sempra U.S. Gas & Power, a subsidiary of Sempra Energy ( SRE ), has completed the construction of the first phase of the Mesquite Solar complex in Arlington, Arizona. With a generation capacity of 150 MW, the photovoltaic (PV) solar energy project has now come online.

The construction of the project had begun in June 2011 and employed more than 450 workers. Located about 40 miles west of Phoenix, the solar power project generates clean electricity that is sufficient to power approximately 56,000 homes.

Going forward, when other phases of the solar complex comes on line, it would likely produce 700 MW of clean energy. Per a 20-year contract, all the electricity generated from the project will be sold to Pacific Gas & Electric Company, a subsidiary of PG&E Corporation ( PCG ).

The company is progressing well with its solar and natural gas projects worldwide. In December last year, Sempra Energy has completed the construction of the first phase of the Copper Mountain Solar 2 project (i.e. 92 megawatt ("MW")), which is the company's new 150 MW photovoltaic solar power facility.

Located in Boulder City, Nevada, about 40 miles southeast of Las Vegas on a 1,110 acre site, Copper Mountain Solar 2 encompasses 1.5 million solar panels. These solar panels are capable of generating sufficient clean energy to power 27,600 homes on an average. With the completion of the second phase, the plant will be able to generate additional electricity of 58 MW, thereby bringing the total output to 150MW. The company expects the whole project to be completed by 2015.

In October last year, the company had received two contracts for the construction and operation of an approximately 500-mile pipeline network that will connect the Northwestern states of Sonora and Sinaloa.

Arizona seems to be leading the nation in the production of clean and renewable solar energy. Yesterday, another utility Duke Energy Corporation ( DUK ) had completed its fifth Solar Project, the Black Mountain Solar Power Project in Arizona that has an electric generation capacity of 10 megawatt ("MW").

With the completion of the first phase of this solar project, Sempra can now continue to focus on the development of the remaining 4,000-acre complex. With this progress, the company believes that it is on track to own and operate more than 1,000 megawatts of renewable energy capacity by the end of full year 2013.

Sempra Energy's diversified basket of businesses insulates its operations to a significant degree from regulatory rate risks. We believe the company presents a lower risk profile relative to its peers. This bullish outlook is supported by stable utility earnings, steady progress at its LNG terminals, renewable power projects in the Pacific Southwest, the Sunrise Powerlink transmission line and ongoing installations of smart meter.

However, the above positives are offset due to a lack of any near-term positive triggers, along with near-term trepidation in natural gas prices and pending regulatory cases. The company presently retains a short-term Zacks Rank #3 (Hold) that corresponds with our long-term Neutral recommendation on the stock.

Sempra Energy is a southern California-based energy services holding company, involved in the sale, distribution, storage, and transportation of electricity and natural gas. The company's businesses are broadly divided into Sempra Utilities, Sempra International and Sempra U.S. Gas & Power.

DUKE ENERGY CP (DUK): Free Stock Analysis Report

PG&E CORP (PCG): Free Stock Analysis Report

SEMPRA ENERGY (SRE): 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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