The heightened uncertainty around the supply of solar panels could push utilities and other energy industry stakeholders to accelerate their investments in wind generation, the leaders of Xcel Energy Inc. told analysts April 28.
Speaking after reporting Minneapolis-based Xcel’s first-quarter earnings, Chairman, President and CEO Bob Frenzel and CFO Brian Van Abel said the U.S. Department of Commerce’s investigation into whether companies in Cambodia, Malaysia, Thailand and Vietnam are circumventing decade-old U.S. tariffs on Chinese solar panels is one reason they’ve pushed back the timeline of a request for proposals for more capacity in Minnesota. Government officials have said they expect to issue a preliminary finding of their work late this summer.
Xcel’s leaders pointed out both that the company doesn’t stand to lose much in the way of immediate opportunities because of Commerce’s inquiry—only about 3% of their five-year capital spending plan is allocated to solar, which is in line to get many more investment dollars late in the decade—and that today’s supply chain snarls won’t affect the industry’s long-term desire to add massive amounts of both wind and solar energy to its infrastructure as the economy moves forward on decarbonization. (Xcel alone, for instance, has plans to add 10,000MW of capacity in the next decade, split roughly 60-40 between wind and solar.)
But, Frenzel pointed out, this scuffle—which has drawn the ire of NextEra chief John Ketchum—points to the need for a domestic supply chain to feed the solar energy industry and underscores the importance of securing production tax credits for solar, wind and other forms of renewable energy as part of a slimmed-down Build Back Better infrastructure spending package being debate in Congress.
“We’re certainly weighing in where we can on this issue,” Frenzel said.
For the first three months of the year, Xcel posted a net profit of $380 million, up from $362 million early last year, on revenues that climbed 6% to $3.75 billion. Total retail electric sales rose 4.8% year over year (3.9% on a weather-adjusted basis), with sales to commercial and industrial customers rising 6.2% and residential growth coming in at 1.9%. Frenzel and Van Abel have lifted their full-year forecast for weather-adjusted sales growth to a range of 1% to 2% from their previous forecast of about 1%. But they have left intact their outlook for Xcel’s earnings per share because several other items, including interest expense and depreciation, have gone up since early this year.
Shares of Xcel (Ticker: XEL) were up nearly 2% to $74 and change on the afternoon of April 28. Year to date, they have risen about 10%, growing the company’s market value to more than $40 billion.