This article identifies some possible energy plays in the new administration.
tinyurl.com
LNG exports
A Biden administration moratorium on new permits to widely export liquefied natural gas is all but out the window thanks to Trump’s victory.
Trump has promised to end that permitting pause his “very first day back.” That could take the form of an executive order directing the Energy Department to resume its review of applications to export natural gas to key Asian nations and other countries that aren’t free-trade partners with the United States.
Potential beneficiaries include Venture Global LNG Inc., Energy Transfer LP and Commonwealth LNG, which have projects pending before the agency. Power plants
The president-elect has repeatedly vowed to “terminate” a suite of EPA rules that stifle power-plant pollution and encourage the closure of units generating electricity from coal, arguing that surging demand from artificial intelligence and manufacturing means the U.S. needs to be building more of the units, not shutting them down.
Thanks to AI, we’ll “need twice the amount of electricity currently supplied for everything to the entire United States of America,” Trump said in an August news conference.
A 2024 rule that limits emissions from the nation’s existing coal plants and new gas-fired units will be a top focus. Utilities, electric co-operatives and some states are already challenging the measure in federal court, potentially providing an easier opening for the EPA to begin rewriting the regulation in ways that prolong the lifespan of some coal plants.
The agency also is expected to hit the pause button on its work developing new greenhouse gas emission limits for existing gas-fired power plants.
financialpost.com --------------------------------------------------------------
I started a position in Dominion Energy Inc (D) Friday. I closed out my losing position early 2024 because of all the Green Energy deals they were doing that only worked w/ the subsides. A hidden asset that D has are interconnect deals w/ other utilities which will be needed to power/expand the Grid especially w/ emerging AI data center demand. These interconnect agreements are key and valuable (I never considered them as an assets before).
Deregulation will help speed these projects along especially any road blocks from FERC.
Dominion Energy's Interconnection Deals- PJM Transmission Projects: Dominion Energy has been tapped to construct transmission projects valued at approximately $2.5 billion under the PJM Interconnection's recent recommendations. This initiative aims to address reliability concerns stemming from a significant increase in electricity demand due to new data centers and the retirement of older power plants across the PJM footprint, which includes 13 states and Washington, D.C. 1
. - Small Modular Reactors (SMRs): In October 2024, Dominion entered a memorandum of understanding with Amazon to explore the development of small modular reactors in Virginia. This collaboration aims to add at least 300 MW of new capacity to the Virginia grid, supporting Amazon's operations while advancing nuclear technology deployment 3
. - Data Center Connections: In 2023 alone, Dominion connected 15 data centers totaling 933 MW of capacity in Virginia, with plans for an additional 15 centers in 2024. This growth is part of a broader trend where data centers are becoming a significant part of Dominion's electricity sales, constituting 24% of sales by the end of 2023 4
. - Interconnection Requirements for Solar Projects: Dominion has stringent interconnection requirements for solar projects, including demands for high-speed fiber optic lines and rapid shutdown capabilities during outages. These requirements have been criticized for potentially stalling community solar initiatives due to high costs associated with compliance 2
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Other Utilities with Similar Arrangements
Several other utilities are also engaging in interconnection deals and projects aimed at enhancing grid reliability and capacity:- Exelon’s Potomac Electric Power: This utility is involved in building projects worth approximately $653 million as part of the same PJM recommendations that include Dominion's projects 1
. - Public Service Electric & Gas (PSEG): PSEG is exploring potential nuclear-powered data center developments alongside its existing nuclear plants, aiming for reliable carbon-free power solutions
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. - FirstEnergy and NextEra: Both utilities are also part of the PJM plan, contributing to various transmission projects designed to meet growing energy demands from commercial sectors like data centers 1 4
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These interconnection agreements reflect a broader trend among utilities to adapt their infrastructure to meet increasing demands for electricity while integrating more renewable energy sources into the grid.
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Under the new administration it may be easier to expand new power plants (deregulation), get them built faster and meet the demand for an expanding economy especially Data Centers.
Not sure where the values are as many companies in this sector have already moved higher but I believe it is just the beginning. I will be searching for compelling value propositions in this sector.
I plan to continue to hold my pipeline companies as their infrastructure is mostly built out but now they can expand even further w/ proposed deregulation (FERC). Remember the XL pipeline discussion in 2020.
Similar argument for LNG exports. I will stay away from all the MLPs simply because of the accounting issues that a K1 brings. Maybe we get that Coos Bay Oregon LNG export facility approved on the West coast (I doubt that as the State already killed it ).
Sempra (SRE) is one of my top holding and they have exposure to LNG exports.
Sempra Energy (SRE) has significant involvement in liquefied natural gas (LNG) export facilities in Mexico, particularly through its subsidiary Sempra Infrastructure.LNG Export Facilities
- Energía Costa Azul (ECA) LNG Terminal:
- Location: Ensenada, Baja California, Mexico.
- Capacity:
- Phase 1: Approximately 636 billion cubic feet per year (Bcf/yr), which translates to about 12 million tons per annum (Mtpa) once fully operational.
- Phase 2: Proposed to add another 636 Bcf/yr, bringing the total potential capacity to around 24 Mtpa.
- The facility is currently under construction with commercial operations expected to start in 2025
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- Vista Pacifico LNG Terminal:
- Location: Topolobampo, Sinaloa, Mexico.
- Capacity: Approximately 3.5 Mtpa, which corresponds to about 200 Bcf/yr of LNG exports.
- This facility has received authorization from the U.S. Department of Energy (DOE) for re-exporting U.S.-sourced LNG to non-Free Trade Agreement countries
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Overview of Sempra's LNG Export Strategy
Sempra Infrastructure is advancing these projects as part of a broader strategy to bolster energy security and diversify supply chains, particularly for Asian markets. The company emphasizes the importance of these facilities in supporting global energy transitions and enhancing economic ties between the U.S. and Mexico.
Additional Context
Mexico is emerging as a key player in the global LNG market, with multiple projects under development that could significantly increase its export capacity. If all proposed projects are completed, Mexico could potentially export up to 60 million tons per year (Mtpa) of LNG, positioning it as one of the top exporters globally 1 4 5
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Could we see some bilateral deals w/ Mexico & US to look at expanding their LNG footprint in Mexico? I doubt it but maybe SRE would be exempt from any new tariffs as their production is from US.
Lots of opportunity to deploy new capital in this area.
As far as Banks, I agree w/ you but other than owning PayPal I am just avoiding all of them. PayPal could be a big player in Bitcoin if deregulated. For any expanding economy, the banks and transactional banking (digital currency, credit/debt cards) are key to getting the retail customer aboard. Even the investment bankers and access to capital will be in demand for new projects. Many already were up big this week.
Maybe time to begin to deploy all that cash I have sitting in the Treasury Fund. As rates move lower, my 4.5% interest rate is not so attractive if/when it moves into the 3% area. |
