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CMS Energy (CMS) Arm Gets Nod to Offer Coal-Free Electricity

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CMS Energy CMS recently announced that the Michigan Public Service Commission (MPSC) has given the final go-ahead for its principal subsidiary, Consumers Energy, to provide 100% coal-free electricity to its customers by 2025. This reflects an upgrade to the company’s Clean Energy Plan, which is a 20-year strategy to offer environment-friendly energy to its customers.

Impressively, this would make Consumers Energy one of the first U.S. utility providers to go coal-free, with the latest commitment to go coal-free coming 15 years faster than previously planned.

Details of Updated Clean Energy Plan

Per the latest updates, as part of the Clean Energy Plan, Consumers Energy aims to close all three units at the J.H. Campbell coal plant in West Olive in 2025, while the two units at the D.E. Karn coal plant are projected to shut down in 2023.

Moreover, Consumers Energy plans to purchase 700 megawatts (MW) of electric capacity — roughly the equivalent of a power plant — from a variety of sources through a one-time request for proposal (RFP). It further aims to expand its renewable sources by adding nearly 8,000 MW of solar power by 2040, thereby ensuring 90% of its generation capacity from clean energy sources.

Also, Consumers Energy targets to accelerate its energy storage with a total of 75 MW of energy storage by 2027, ultimately achieving 550 MW by 2040.

No doubt, the achievement of the aforementioned targets will place CMS Energy in an elevated position in the Utility sector, which is rapidly transitioning toward a carbon-free environment.

CMS’ Renewable Goals

In a bid to enhance its renewable energy portfolio, CMS Energy announced its decarbonized goal, in March 2022, to spur the greener environment movement in Michigan. In particular, the company aims at attaining net-zero greenhouse gas (GHG) emissions from the entire natural gas production and delivery system by 2050.

The company also seeks to modernize and upgrade its natural gas system to achieve net-zero methane emissions from its operations by 2030. Additionally, as part of the fleet transformation initiative, CMS Energy plans to power one million electric vehicles in the communities it serves by 2030.

All these initiatives, including the latest upgraded Clean Energy Plan, will bolster CMS Energy’s position in the booming clean energy market.

Peer Moves

The heightened awareness to decarbonize the environment resulted in most utilities committing to a carbon-neutral goal or equivalent.

For instance, Duke Energy DUK aims to reach its target of net-zero carbon emissions from electric generation by 2050.  The company has already lowered its carbon emissions by more than 44% from 2005 to 2021 and is now expanding its 2050 net-zero goals to include Scope 2 and certain Scope 3 emissions.

Duke Energy currently boasts a long-term earnings growth rate of 6.1%. The Zacks Consensus Estimate for DUK’s 2022 sales implies an improvement of 6.6% from the 2021 reported figure.

In February 2021, American Electric AEP announced new intermediate and long-term CO2 emission reduction goals, based on the output of the company’s integrated resource plans. The intermediate goal is an 80% reduction from the 2000 CO2 emission levels from the company’s generating facilities by 2030 and the long-term goal is net-zero CO2 emissions from its generating facilities by 2050.

American Electric boasts a long-term earnings growth rate of 6.2%. The Zacks Consensus Estimate for AEP’s 2022 sales suggests an improvement of 8.4% from the 2021 reported figure.

DTE Energy DTE remains committed to reducing carbon emissions of its electric utility operations by 32% by 2023, 50% by 2030 and 80% by 2040 from 2005 carbon emissions levels. The company expanded this commitment by announcing a net-zero carbon emission goal for DTE Electric and DTE Gas by 2050.

DTE Energy boasts a long-term earnings growth rate of 6%. DTE stock has gained 4% in the year-to-date period.

Price Movement

In the past year, shares of CMS have rallied 12.5% compared with the industry’s growth of 4.6%.

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Zacks Investment Research


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Zacks Rank

CMS 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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Duke Energy Corporation (DUK) : Free Stock Analysis Report
 
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