Consolidated Edison Inc.'s pending $1.54 billion acquisition of Sempra Solar Holdings LLC, a subsidiary of Sempra Energy that owns 981 MW of operating solar and wind projects, includes a "considerable" renewable energy development pipeline with a "very significant" volume of energy storage projects, Con Edison Chairman, President and CEO John McAvoy said.
"One of the exciting things about the Sempra transaction is we get a very significant pipeline of new energy storage projects, primarily on the West Coast, primarily in California," McAvoy said Nov. 13 on the sidelines of the Edison Electric Institute Financial Conference in San Francisco. Speaking after a presentation, the CEO declined to provide details on the precise volume of renewable power and energy storage projects in the development portfolio, but said it includes battery storage projects that could be added at or near existing solar farms.
Most of Sempra's operating renewable energy assets, including several solar projects already co-owned by Con Edison, are located in Arizona, California and Nevada.
McAvoy expects the transaction, which includes $576 million in project debt, to close near the end of 2018. If approved, the deal would give Con Edison a portfolio of roughly 2,600 MW of utility-scale renewable energy capacity online or under construction and make the company one of the largest U.S. owners of solar generation.
"We believe that renewable energy will be the fastest growing segment of the electric power industry for decades to come, and we intend to be a major participant in this effort," the CEO said in a presentation to the investment community.
Despite the Sempra deal, Con Edison's growth strategy for renewables will focus more on organic development than "acquiring other people's assets," which could bring "higher returns," McAvoy added.
CapEx plans heavy on smart grid, renewables
On top of its planned purchase of Sempra's renewable assets, Con Edison forecasts an additional $1.1 billion of clean energy-focused capital expenditures through 2020, $9.5 billion in investments at its regulated utilities and $400 million on its regulated transmission business.
Through 2022, the company plans to spend $1.4 billion to install 5.4 million smart meters, which McAvoy called "the absolute cornerstone" of Con Edison's efforts to move toward a cleaner, more efficient interface with customers.
While the company forecasts relatively flat electric demand over the next five years, Con Edison is planning for large numbers of electric vehicles that could add to future demand for electricity. "We want to [incentivize] people to charge during the off-peak periods," he said, speaking after his presentation.
"If we set that structure up properly, then it's a beautiful thing. We are increasing asset utilization, increasing sales and the system can handle it as it's currently designed." If electric vehicle owners do not charge during off-peak times, however, "then we end up with a higher peak and we have to reinforce the system," he said.