NiSource Inc. expects to delay the development of several solar projects, including two under construction, and postpone the retirement of two coal-fired units in response to a federal probe into solar panel imports.
NiSource executives said on a May 4 earnings call that they anticipate delays of about six months to 18 months for most solar projects scheduled for completion in 2022 and 2023, including those paired with energy storage.
A U.S. Commerce Department investigation into whether solar manufacturers used factories in Southeast Asia to circumvent American tariffs on imports from China has created concerns about significant price increases and major market disruption.
"It is important to underscore the potential unintended consequences for our customers," Shawn Anderson, NiSource's chief strategy and risk officer, said on the first-quarter 2022 call. "Our focus has been to accelerate savings for our customers to benefit from the renewable transition and delays resulting from this investigation may ultimately delay the timing of when our customers could begin receiving these benefits, especially in the current energy cost inflationary environment."
The probe will ultimately impact about 10 solar projects, which are in "various stages of development," Anderson said. "Ultimately, each project will be impacted differently. ... We are working with our developer partners to refine assessments on the expected impact."
NiSource is shifting the anticipated in-service date for the 200-MW Indiana Crossroads Solar Park and the 265-MW Dunns Bridge Solar I project from the end of 2022 to the middle of 2023. NiSource utility subsidiary Northern Indiana Public Service Co., or NIPSCO, entered into a build-transfer agreement in March 2021 with EDP Renewables North America LLC for the Indiana Crossroads Solar Park in White County, Ind., which will be transferred to the utility upon completion.
NextEra Energy Inc. subsidiary NextEra Energy Resources LLC is building the Dunns Bridge Solar I project in Jasper County, Ind., and will sell it to NIPSCO once construction is done.
While general cost overruns for the projects would likely be borne by the developers, NiSource management said it is unclear who would pick up the tab for tariff-related price hikes.
Coal retirements delayed
In addition, the anticipated solar project delays have prompted the company to postpone the retirement of the last two units at its coal-fired R.M. Schahfer power plant in Jasper County, Ind., to the end of 2025. NIPSCO shut down two units at R.M. Schahfer in October 2021 and previously planned to retire the remaining 722 MW of coal-fired capacity around 2023.
The company, however, still plans to retire the 455-MW Michigan City coal plant in LaPorte County, Ind., between 2026 and 2028.
NiSource executives said the company remains focused on cutting its carbon emissions by 90% from 2005 levels by 2030 and completing its transition from coal by 2028.
NiSource previously laid out plans to invest up to $10.6 billion from 2021 through 2024 in its electric and gas operations, with $2 billion earmarked for renewable energy investments. The company now expects about $1 billion of planned renewable investments to be in service by the end of 2023, with the remaining projects online in 2024 or later.
The Indiana Crossroads and Dunns Bridge I solar projects represent about $440 million of investment, executives said.
The company will provide an update about the timing of its solar projects at an analyst day postponed to the fall, executives said. NiSource also is expected to provide more details on its strategic review and long-term growth plan beyond 2024 at the analyst day.
NiSource on May 4 reported first-quarter 2022 net operating earnings available to common shareholders of $328.7 million, or 75 cents per share, compared to net operating earnings of $304.8 million, or 77 cents per share, for the same period of 2021. The S&P Capital IQ normalized consensus EPS estimate for the quarter was 78 cents.
NiSource reaffirmed its 2022 net operating EPS guidance of $1.42 to $1.48 per share.
The company continues to target long-term net operating EPS annual growth of 7% to 9% through 2024 and expects to make capital investments of $2.4 billion to $2.7 billion in 2022.
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