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Southern Company SO, through its subsidiary Southern Power, has made a major announcement regarding expanding its Millers Branch Solar Facility in Haskell County, TX. This Phase III expansion will further enhance the facility’s generating capacity by adding 132 megawatts (“MW”) to its previous expansions. With the completion of this phase, the Millers Branch Solar Facility will reach a total capacity of 512 MW, making this the subsidiary’s largest solar facility to date.

Overview of the Millers Branch Solar Facility

The Millers Branch Solar Facility is one of the most notable renewable energy projects under Southern's umbrella. SO’s expansion plans for the facility have been progressing in phases, with each phase contributing to the growing importance of the facility in the U.S. renewable energy landscape.

With Phase I and Phase II already completed, contributing 200 MW and 180 MW, respectively, the addition of Phase III will make Millers Branch Solar Facility one of the top solar energy producers in the country. This expansion highlights SO's commitment to scaling up its renewable energy portfolio and the company’s dedication to providing clean, sustainable energy across the United States.

Phase III Expansion: Key Details

The Phase III expansion will add a further 132 MW, pushing the total generating capacity of the Millers Branch Solar Facility to a remarkable 512 MW. This marks a significant achievement in Southern's efforts to strengthen its position as a leading player in the solar energy sector. The completion of this final development phase is expected in the fourth quarter of 2026. At this point, the facility will become a powerhouse in Texas's renewable energy landscape.

The project’s commercial operation will contribute substantially to Southern's overarching goal of providing clean energy to its diverse set of customers while helping to meet the company’s sustainability targets. With the ability to generate large quantities of renewable energy, the Millers Branch Solar Facility will play a key role in powering homes, businesses and industries, contributing to the shift toward a greener energy future.

Southern’s Growing Renewable Energy Fleet

The Millers Branch Solar Facility is part of Southern's larger renewable energy strategy, which includes a diverse portfolio of solar and wind energy assets spread across the United States. With the addition of Phase III, Southern’s solar portfolio will exceed the energy capacity of 3,050 MW, supporting its leadership in the renewable energy sector.

As of now, SO’s subsidiary Southern Power operates or is in the process of constructing 30 solar facilities and 15 wind facilities, amounting to a total of 5,590 MW of renewable energy capacity. This expanded fleet not only supports the growing demand for renewable energy but also aligns with SO's business strategy to strengthen its wholesale energy business. By acquiring and developing these assets, Southern ensures that it can meet long-term energy demands while supporting the energy transition across the United States.

Partnerships and Power Purchase Agreements

On the other hand, SO’s unit Southern Power has been proactive in securing long-term Power Purchase Agreements (PPAs) to ensure the financial stability and success of its renewable energy projects. The Millers Branch Solar Facility is no different. Through its partnership with companies like Synopsys, Inc. and Keysight Technologies, SO’s unit has signed agreements to provide renewable energy credits produced from the facility. These agreements will allow the companies to meet its sustainability goals while supporting the further development of the Millers Branch Solar Facility.

The Sustainability Roundtable, Inc. also backed the PPA for Synopsys, the project's anchor tenant. These agreements are integral to ensuring that SO’s unit can continue to fund future developments while maintaining a steady and predictable revenue stream. This validates SO’s unit’s ability to integrate sustainability into its business operations and create mutually beneficial relationships with other businesses committed to environmental responsibility.

Looking Ahead: The Future of Southern and Millers Branch

The Millers Branch Solar Facility is just one example of Southern’s broader vision for the future of energy in the United States. The completion of Phase III will cement the facility’s place as a leader in renewable energy generation. Southern Power’s ongoing commitment to developing new energy assets will continue to shape the future of clean energy in the United States.

As Southern moves forward with this and other projects, it remains focused on delivering clean, sustainable energy to the company’s customers while strengthening its position in the growing renewable energy sector. By investing more in solar, wind and other renewable sources, Southern is helping to build a more sustainable and reliable energy future for the generations ahead.

SO’s Zacks Rank and Key Picks

Currently, SO carries a Zacks Rank #3 (Hold).

Investors interested in the utility sector might look at some better-ranked stocks Ameren Corporation AEE, DTE Energy Company DTE and NiSource Inc. NI, each holding a Zacks Rank #2 (Buy), at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here

Ameren is worth approximately $24.62 billion. St. Louis, MO-based AEE is a utility company, which generates and distributes electricity and natural gas to residential, commercial, industrial and wholesale end markets in Missouri and Illinois. The company currently pays a dividend of $2.68 per share, or 2.91%, on an annual basis. In the past year, its shares have risen 22%.

DTE Energy is worth approximately $25.3 billion. Detroit, MI-based DTE is a diversified energy company that develops and manages energy-related businesses and services nationwide. The company currently pays a dividend of $4.08 per share, or 3.34%, on an annual basis. In the past year, its shares have risen 18.4%.

NiSource is worth approximately $17.41 billion. NI, a Merrillville, IN-based energy holding company, together with its subsidiaries, provides natural gas, electricity and other products and services in the United States. The company currently pays a dividend of $1.06 per share, or 2.84%, on an annual basis. In the past year, its shares have risen 44.4%.

Zacks Investment Research

Xcel Energy Inc.’s XEL strategic investments in infrastructure projects and focus on clean power generation should further boost its performance. The company’s consistent customer base growth acts as a tailwind.

However, this Zacks Rank #3 (Hold) company faces risks related to the failure of transmission and distribution lines.

Factors That Act as Tailwinds for XEL

Xcel Energy continues to invest substantially in its utility assets to provide reliable services and effectively meet the rising electricity demand. It aims to spend $45 billion during the 2025-2029 period. These investments are aimed at strengthening and expanding its transmission, distribution, electric generation and renewable projects.

Xcel Energy is focusing on clean-energy transition. After completing six wind projects with 1.5 GW capacities in 2020, the company completed four wind farms, adding another 800 megawatts (MW) of clean energy generation. It received regulatory approval for the Minnesota resource plan, which includes the closing of coal plants like the A.S. King Plant by 2028 and Sherco 3 by 2030.

The high-quality and reliable services provided by the company attract new customers and allow Xcel Energy to serve an expanding electric and natural gas customer base. The residential electric and natural gas bills of customers in Xcel Energy's operating regions are lower than the national average, which attracts new customers for its services. In the third quarter of 2024, the electric customer base increased 1.3% and the natural gas customer base improved 1.1%. Year to date, sales volumes increased 0.2% for retail electricity and 0.1% for natural gas.

XEL’s Headwinds

Xcel Energy’s natural gas and electric transmission and distribution operations are exposed to several risks, including explosions, leaks and mechanical setbacks. These incidents can adversely impact the company’s operations, thereby affecting its financial performance.

XEL’s operations are subject to commodity price fluctuations. Despite the existing fuel recovery mechanisms in most of its service territories, higher fuel costs could adversely impact the results of operations if expenses are not recovered.

XEL Stock Price Performance

In the past three months, shares of the company have risen 16.8% compared with the industry’s 1.1% growth.

Stocks to Consider

Some better-ranked stocks from the same industry are NiSource Inc. NI, Ameren Corporation AEE and DTE Energy DTE, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

NiSource’s long-term (three-to-five years) earnings growth rate is 6.95%. The Zacks Consensus Estimate for NI’s 2024 earnings per share (EPS) implies an improvement of 8.1% from the bottom line recorded in 2023.

AEE’s long-term earnings growth rate is 6.59%. The Zacks Consensus Estimate for AEE’s 2024 EPS implies an improvement of 5.3% from the bottom line recorded in 2023.

DTE Energy’s long-term earnings growth rate is 8.04%. The company delivered an average earnings surprise of 8.9% in the trailing four quarters.

Zacks Investment Research