Sempra Adopts Latest Solar Tech - Analyst Blog

Zacks Investment Research
Posted: May 23, 2012 2:15 PM
Sempra Adopts Latest Solar Tech - Analyst Blog

Southern California Gas Co. or SoCalGas, a subsidiary of Sempra Energy (SRE), has installed an advanced concentrated solar cogeneration system built by Cogenra Solar of Mountain View, California. This newest technology has been installed at SoCalGas' Energy Resource Center in Downey to benefit its business.

Like the solar panels, the cogeneration system uses mirrors and a tracking system to incarcerate the energy from the sun. The sunlight captured is then focused onto an array of photovoltaic solar collectors that simultaneously produces electricity and hot water. The hot water thus produced is uniquely used in an air conditioning system, as a substitute for electricity or natural gas, to provide 10 tons of cooling. This is sufficient to cool two medium-sized homes.

Despite taking less space than flat-panel photovoltaic systems, the solar cogeneration technology provides more solar power and has increased efficiencies. The solar cogeneration technology is modular and is small enough in scale to be installed on commercial, industrial and institutional building rooftops. 

More than 50% of a building's electrical usage is required for running air conditioners. These cogeneration systems with their solar-driven technology capture heat during the middle of the day and help in reducing energy usage when electric rates are at a high. Undoubtedly, solar-powered air conditioning reduces customer costs and greenhouse-gas emissions besides providing a sustainable renewable alternative.

Sempra Energy is a southern California-based energy services holding company involved in the sale, distribution, storage, and transportation of electricity and natural gas. SoCalGas is the first utility in the United States to test and demonstrate the solar cogeneration technology. This move comes from the need to accelerate the commercialization of new technology that uses solar energy rather than the electric grid or natural gas. These measures will bring the company close to achieving its target of generating 33% of renewable energy by 2020.

We believe the company presents a lower risk profile relative to its peers. Moreover, its diversified basket of businesses insulates its operations to a significant degree from regulatory rate risks. However, these positives are offset by a lack of any near-term positive triggers, along with near-term trepidation in natural gas prices and pending regulatory cases. The company presently retains a short-term Zacks #4 Rank (Sell). We have a long-term Neutral recommendation on the stock.

Some of its main competitors are Edison International (EIX) and PG&E Corporation (PCG)

EDISON INTL (EIX): Free Stock Analysis Report
PG&E CORP (PCG): Free Stock Analysis Report
SEMPRA ENERGY (SRE): Free Stock Analysis Report
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