Morningstar | Management Meeting: Renewable Investments Drive Alliant Energy's Capital Investments
We are reaffirming our $40 per share fair value estimate, narrow moat, and stable moat trend for Alliant Energy after meeting with management at the Edison Electric Institute Financial Conference in San Francisco.Management recently updated its 2018-22 capital expenditure plan to $7 billion with increased gas distribution investments. Alliant currently expects $5.7 billion in capital spend from 2023-27, which we think should support 5%-6% earnings growth during those years.
At the center of Alliant's capital plan is its transition to a cleaner generation supply portfolio. In 2005, just 5% of Alliant's capacity was renewable energy with management projecting by 2024 that share will be 33%. Today, that share stands at 16%.
Wind energy investment will be key to that transition. Alliant has approval to add 1,000 MW in Iowa and up to 150 MW in Wisconsin. A 40% decline in wind turbine costs over the past decade creates favorable economics for wind investment, according to management. Alliant has 8.5 MW of solar in Wisconsin, but we don't expect to see significant solar development in the near term as management notes economics aren't as favorable as wind. This is in contrast to the other main Wisconsin utility, WEC Energy Group, which plans to install 300 MW of solar. In general, Wisconsin is further behind in the renewable energy transition than Iowa, and we think there could be significant investment opportunities in the state in 2023-27.
Alliant's other large capital project, the 730 MW West Riverside Energy Center remains on budget and on track for a late 2019 in-service date. Alliant also plans sizable investments in gas distribution for safety investments from expected PHMSA rule updates, reliability, economic development, and customer experience. Management's ability to execute and identify additional capital investments should create sustainable growth for investors.
Alliant Energy is a public utility holding company, engaged in providing regulated electric and natural gas service. The company's subsidiaries are: Interstate Power and Light Company, which is engaged principally in the generation and distribution of electricity and the distribution and transportation of natural gas to retail customers in select markets in Iowa; Wisconsin Power and Light Company, which is engaged principally in the generation and distribution of electricity and the distribution and transportation of natural gas to retail customers in select markets in Wisconsin; and Alliant Energy Finance, LLC, which manages a portfolio of wholly-owned subsidiaries and additional holdings.
Morningstar, Inc. is a leading provider of independent investment research in North America, Europe, Australia, and Asia. The company offer an extensive line of products and services for individual investors, financial advisors, asset managers, and retirement plan providers and sponsors.
Morningstar provides data on approximately 530,000 investment offerings, including stocks, mutual funds, and similar vehicles, along with real-time global market data on more than 18 million equities, indexes, futures, options, commodities, and precious metals, in addition to foreign exchange and Treasury markets. Morningstar also offers investment management services through its investment advisory subsidiaries and had approximately $185 billion in assets under advisement and management as of June 30, 2016.
We have operations in 27 countries.
Unfortunately, this report is not available for the investor type or country you selected.
Browse all ResearchPool reportsReport is subscription only.
Thank you, your report is ready.
Thank you, your report is ready.