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Released April 28, 2023 | SUGAR LAND
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Written by John Egan for Industrial Info Resources (Sugar Land, Texas)--Right now, geography appears to be destiny for Entergy Corporation (NYSE:ETR) (New Orleans, Louisiana), as strong current and planned economic growth across the company's four-state Gulf Coast service area is powering earnings and driving capital budgeting decisions.
Entergy's five operating utilities provide electricity to an estimated three million customers in Louisiana, Texas, Mississippi and Arkansas. The company also provides natural gas service to an estimated 200,000 customers in those states.
Industrial activity in Entergy's Gulf Coast service area is experiencing strong growth, which drives up demand for electricity supplied by the company's operating utilities. Over the next few years, industrial demand for electricity in its service areas is expected to grow by about 6% on a compounded annual basis, from approximately three terawatt-hours (TWh) in 2022 to roughly 13 TWh in 2025, the company said in a February 27 presentation to investors.
Most electric utilities would be happy to have industrial demand for electricity grow by 1% to 2% on a compounded annual basis. More than a few are experiencing flat to negative growth among industrial customers.
Entergy, which reported first-quarter earnings April 26, has already benefitted from its geography. A significant portion of U.S. liquefied natural gas (LNG) export terminals are in a Gulf Coast area served by an Entergy utility. And, over the 2024-2035 period, about 85% of planned LNG export terminals are scheduled to be built in the region served by Entergy, the company told investors April 26. Refining crack spreads for Light Louisiana Sweet crude oil remain elevated, though down from historic year-earlier levels.
In an earlier investor presentation on February 27, Entergy officials told investors that its "industrial customer base is healthy and growing, and there is a clear line of sight to growth with a robust pipeline of projects." They added, "The Gulf region remains a premier economic hub, which is driving strong industrial growth."
Those officials listed a dozen planned grassroot or expansions of industrial projects in its Louisiana service area, five in East Texas, four in Arkansas and one in Mississippi. Access to the Gulf's deepwater ports and the Mississippi River are critical factors in recent and planned industrial investment in the region.
Industrial Info is tracking 75 active capital projects involving Entergy, with total investment value (TIV) of approximately $8.43 billion.
To meet burgeoning demand growth for electricity, as well as harden its electric distribution system, Entergy plans to make capital investments totaling $16 billion for the three-year period 2023-2025, company officials said February 27. Over that three-year period, approximately $4.5 billion will be invested in the distribution systems of its operating utilities while transmission business will see investment of about $2.2 billion. The generation business is expected to draw about $7.4 billion in capital outlays.
Company officials said Entergy has a "unique growth story around hydrogen that will result in load growth, more renewables, and a future-proofed generation fleet." Right now, there are about 1,600 miles of hydrogen pipelines in the U.S., and an estimated 90% of them are in Entergy's Gulf Coast region.
To meet that growing demand for electricity, particularly clean electricity, Entergy expects to add between 15 gigawatts (GW) and 17 (GW) of clean electric generation by 2031. That sum includes owned and contracted generation.
As of yearend 2022, Entergy had about 814 megawatts (MW) of owned and contracted renewable generation. That sum will swell by about 1,187 MW by the end of 2025 by renewable energy projects that have received regulatory approval and are in various stages of development. Entergy will own four of the largest planned renewable projects:
In addition, five other proposed solar projects totaling 820 MW are seeking regulatory approval. All of those will provide power to Entergy under PPAs.
An additional 7,000 MW of planned renewable generation is farther out on the horizon. Those potential projects are scheduled to begin operating at various times in 2024, 2025, 2026 and 2027. Those eight projects were selected in response to requests for proposal (RFP) issued by Entergy in 2021 and 2022. At this point, it is unclear whether Entergy will own those plants, or will buy power from them under PPAs.
As part of its work to decarbonize its electricity supply, Entergy plans to retire all of its coal-fired generation by the end of 2030, it told investors February 27.
In addition to its three-year capital program, covering the period 2023-2025, Entergy officials said the company plans to invest about $15 billion over a 10-year program to improve the resilience of its electric transmission and distribution (T&D) network. Approximately 80% of that $15 billion will be invested in the distribution systems of its operating utilities, Entergy officials said February 27. Approximately $900 million of that $15 billion sum is expected to be invested during the 2023-2025 period.
So far, assuming continued strong demand for products used or exported through the Gulf Coast -- such as crude oil, LNG, steel, specialty chemicals and petrochemicals -- Entergy should continue to derive significant value from its geographic location.
That was evident during Entergy's first-quarter earnings call with investors on April 26. The company reported net earnings of $311 million, a 13% gain over the $276 million it reported for the comparable year-earlier quarter.
"We had a productive start to the year with strong execution on important operational and regulatory fronts," said Drew Marsh, Entergy chairman and chief executive officer. "We have positioned ourselves well to deliver on our stakeholder commitments for 2023, and we are poised to capture both near- and long-term robust growth opportunities."
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 Trillion (USD).
Entergy's five operating utilities provide electricity to an estimated three million customers in Louisiana, Texas, Mississippi and Arkansas. The company also provides natural gas service to an estimated 200,000 customers in those states.
Industrial activity in Entergy's Gulf Coast service area is experiencing strong growth, which drives up demand for electricity supplied by the company's operating utilities. Over the next few years, industrial demand for electricity in its service areas is expected to grow by about 6% on a compounded annual basis, from approximately three terawatt-hours (TWh) in 2022 to roughly 13 TWh in 2025, the company said in a February 27 presentation to investors.
Most electric utilities would be happy to have industrial demand for electricity grow by 1% to 2% on a compounded annual basis. More than a few are experiencing flat to negative growth among industrial customers.
Entergy, which reported first-quarter earnings April 26, has already benefitted from its geography. A significant portion of U.S. liquefied natural gas (LNG) export terminals are in a Gulf Coast area served by an Entergy utility. And, over the 2024-2035 period, about 85% of planned LNG export terminals are scheduled to be built in the region served by Entergy, the company told investors April 26. Refining crack spreads for Light Louisiana Sweet crude oil remain elevated, though down from historic year-earlier levels.
In an earlier investor presentation on February 27, Entergy officials told investors that its "industrial customer base is healthy and growing, and there is a clear line of sight to growth with a robust pipeline of projects." They added, "The Gulf region remains a premier economic hub, which is driving strong industrial growth."
Those officials listed a dozen planned grassroot or expansions of industrial projects in its Louisiana service area, five in East Texas, four in Arkansas and one in Mississippi. Access to the Gulf's deepwater ports and the Mississippi River are critical factors in recent and planned industrial investment in the region.
Industrial Info is tracking 75 active capital projects involving Entergy, with total investment value (TIV) of approximately $8.43 billion.
To meet burgeoning demand growth for electricity, as well as harden its electric distribution system, Entergy plans to make capital investments totaling $16 billion for the three-year period 2023-2025, company officials said February 27. Over that three-year period, approximately $4.5 billion will be invested in the distribution systems of its operating utilities while transmission business will see investment of about $2.2 billion. The generation business is expected to draw about $7.4 billion in capital outlays.
Company officials said Entergy has a "unique growth story around hydrogen that will result in load growth, more renewables, and a future-proofed generation fleet." Right now, there are about 1,600 miles of hydrogen pipelines in the U.S., and an estimated 90% of them are in Entergy's Gulf Coast region.
To meet that growing demand for electricity, particularly clean electricity, Entergy expects to add between 15 gigawatts (GW) and 17 (GW) of clean electric generation by 2031. That sum includes owned and contracted generation.
As of yearend 2022, Entergy had about 814 megawatts (MW) of owned and contracted renewable generation. That sum will swell by about 1,187 MW by the end of 2025 by renewable energy projects that have received regulatory approval and are in various stages of development. Entergy will own four of the largest planned renewable projects:
- The $280 million, 250-MW Driver PV Solar Plant project in Arkansas
- The 180-MW, $220 million West Memphis PV Solar Farm project in Arkansas
- The $134 million, 120-MW Saint Jacques Louisiana PV Solar project, and
- The 100-MW, $120 million Walnut Bend PV Solar Project in Arkansas
In addition, five other proposed solar projects totaling 820 MW are seeking regulatory approval. All of those will provide power to Entergy under PPAs.
An additional 7,000 MW of planned renewable generation is farther out on the horizon. Those potential projects are scheduled to begin operating at various times in 2024, 2025, 2026 and 2027. Those eight projects were selected in response to requests for proposal (RFP) issued by Entergy in 2021 and 2022. At this point, it is unclear whether Entergy will own those plants, or will buy power from them under PPAs.
As part of its work to decarbonize its electricity supply, Entergy plans to retire all of its coal-fired generation by the end of 2030, it told investors February 27.
In addition to its three-year capital program, covering the period 2023-2025, Entergy officials said the company plans to invest about $15 billion over a 10-year program to improve the resilience of its electric transmission and distribution (T&D) network. Approximately 80% of that $15 billion will be invested in the distribution systems of its operating utilities, Entergy officials said February 27. Approximately $900 million of that $15 billion sum is expected to be invested during the 2023-2025 period.
So far, assuming continued strong demand for products used or exported through the Gulf Coast -- such as crude oil, LNG, steel, specialty chemicals and petrochemicals -- Entergy should continue to derive significant value from its geographic location.
That was evident during Entergy's first-quarter earnings call with investors on April 26. The company reported net earnings of $311 million, a 13% gain over the $276 million it reported for the comparable year-earlier quarter.
"We had a productive start to the year with strong execution on important operational and regulatory fronts," said Drew Marsh, Entergy chairman and chief executive officer. "We have positioned ourselves well to deliver on our stakeholder commitments for 2023, and we are poised to capture both near- and long-term robust growth opportunities."
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 Trillion (USD).
