The Path to Drawdown: Electrical Utilities
Electric utilities play a key role in the path to a world of net-zero emissions. They provide the connective tissue between key Drawdown solutions: renewable energy generation and energy storage. Through long-term power purchase agreements (PPAs), utilities enable renewable energy developers to secure buyers for their power and unlock project finance. Utility companies also often control electrical grids, putting them in the position to prioritize (or deprioritize) the extent to which the grid is outfitted for the intermittency of solar and wind power generation. They're also the key players in greenlighting the development of large-scale energy storage.
There are dozens of investor-owned utilities traded on the New York stock exchange (such as Duke, NextEra, Dominion, Xcel, PG&E, etc.), and many of them are purchasing or developing renewable power capacities to provide clean electricity to customers across large regions. We use a stringent criteria to determine which utilities are significantly contributing to the low-carbon energy transition.
Sempra Energy (stock ticker: SRE) is a holding company with energy infrastructure investments in North America. Their businesses invest in, develop and operate energy infrastructure and provide electric and gas services to customers through regulated public utilities. Sempra is headquartered in San Diego, California.
SRE's Role in Drawdown
Sempra has five reportable segments, two of which are regulated public utilities.
Their SDG&E business is a regulated public utility that provides electric and gas services to ~3.5 million customers in Souther California. Their SolCalGas is also a regulated public utility that owns and operates natural gas distribution, transmission and storage systems that supplies natural gas to a population of ~22 million in Southern and central California.
Their Sempra Texas Utilities business is comprised of their equity method investments in a couple of holding companies, and their Sempra Mexico segment includes the operating companies of their subsidiary, IEnova, as well as certain holding companies and risk management activities. Lastly, their Sempra LNG business develops, builds, operates and invests in natural gas liquefaction export facilities, including natural gas pipelines and infrastructure.
In all, Sepra passes the Climate Index criteria because they produce 52% of their energy from renewables and 48% from fossil fuels. It has no coal power generation.