In the event of visible climate change around the world, the growing need for cleaner energy sources cannot be avoided. Advanced technologies are being developed around the world to reduce the impact of greenhouse gases on the environment.
In the United States, Joe Biden’s government has invested heavily in offshore wind, nuclear and clean hydrogen technologies. In addition, the government attaches importance to solar energy. By 2024, the Biden government aims to increase its in-house solar power manufacturing capacity to 22.5 gigawatts from the current 7.5 gigawatts.
To achieve this goal, the White House made critical announcements related to the solar industry on June 6, 2022 (Monday).
First, the Biden government decided to remove certain import duties on solar parts, including cells and modules, from Vietnam, Cambodia, Thailand, and Malaysia.
The easing, which aims to support the country’s existing solar projects, has only been allowed for 24 months. It should be mentioned that this decision will not interfere with the Commerce Department’s investigation into whether China is playing an unfair role in routing its production through the four Asian countries mentioned above.
Second, the government has implemented the Defense Production Act to stimulate domestic manufacturing of solar panels and parts. He is also working to gain congressional support on tax cuts and investment-related issues for the clean energy industry.
At this point, it will be interesting to know how the decisions impact energy companies in the United States, especially when some resentment seems to be surfacing from domestic solar parts manufacturers. However, these might only be short-lived.
Now let’s talk about two US utilities — NextEra Energy, Inc. (NYSE: NEE) and Xcel Energy Inc. (NASDAQ: XEL) – that have significant exposure to the US solar energy space
The Florida-based utility is a leading clean energy provider in the United States. It operates primarily through Florida Power & Light Company and NextEra Energy Resources, LLC.
At the end of the first quarter of 2022, FPL’s total solar portfolio was > 3,600 MW. It is also working to further strengthen its 9,500 MW portfolio.
NextEra Energy Resources, LLC – one of the largest generators of renewable energy dependent on sun and wind – plans to add 11.8 GW to 14.4 GW of solar power by 2024.
Following Monday’s announcements, NextEra Energy President and CEO John Ketchum said, “The Biden administration’s announcement of a two-year pause on new solar tariffs is an important step to help the solar industry to recover from the uncertainty of the past three months. .”
According to the TipRanks risk analysis tool, NEE’s legal and regulatory risk category contributes to 11 risks out of the total of 50 risks identified for the title. In this category, the company is exposed to regulatory and environmental or social risks.
Despite its risks, NextEra Energy has a consensus Strong Buy rating based on 10 Buys and three Holds. NEE’s average price target of $92.15 suggests a 14.91% upside from current levels. It has a smart “Perfect 10” score on TipRanks, indicating that the stock is likely to outperform the market. Shares of the $157.5 billion utility are up 10.7% over the past year.
The $40.7 billion utility generates electricity from multiple sources, including solar, nuclear, coal and natural gas. It is headquartered in Minnesota.
The company plans to reduce its carbon footprint by 80% by 2030, while planning to eliminate the use of coal for power by 2034. Its portfolio is expected to include 67% renewable energy from by 2030 (mainly including solar and wind sources), compared to only 36% in 2021.
According to TipRanks, XEL is exposed to six risks in the Legal & Regulatory category. The business may face regulatory and environmental or social challenges.
XEL has a smart “Perfect 10” score on TipRanks, which suggests the stock has strong potential to outperform the market.
Overall, the street has a moderate buy consensus rating on the stock based on five buys, three holds and one sell. XEL’s price target of $77.78 implies upside potential of 4.11% from current levels. Shares of XEL have climbed 6.6% over the past year.
Monday’s announcements from the Biden-led government should benefit clean energy providers in the United States, especially those that rely heavily on imports of solar parts.
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