PG&E Corporation (PCG) has secured $34.5 million in funding from the U.S. Department of Energy’s (DOE) Grid Deployment Office to advance 19 hydropower projects throughout California. The funding aims to enhance grid resilience, improve dam safety, and minimize environmental impacts associated with these hydroelectric facilities.
The investment will allow PG&E to upgrade key hydropower sites, including those at Potter Valley and Lake Fordyce, reinforcing its position in the growing hydropower generation market.
PCG’s Role in Hydropower Generation
With the urgency for green energy investments escalating due to the visible effects of climate change, the transition to renewable energy sources like hydropower is accelerating. Hydropower offers immediate power supply to the grid, serving as a reliable backup during significant electricity outages.
The United States is a leader in the renewable energy sector, with commendable hydropower generation capabilities. Between 2010 and 2022, U.S. conventional hydropower capacity increased by 2.1 gigawatts (GW) due to upgrades, new projects, and retirements. According to a DOE report published in September 2024, hydropower contributes to 27% of the country’s renewable electricity generation and 93% of all utility-scale energy storage capacity.
California plays a vital role in the nation’s hydropower output. The U.S. Energy Information Administration (EIA) reported that annual hydropower generation in California surged by over 80% from 2022 to 2023. The EIA anticipates continued robust hydropower generation in California, with a projected 6% annual increase in national hydroelectricity generation for 2024, as per its April 2024 report.
PCG is well-positioned to capitalize on the anticipated expansion of hydropower generation in California and across the U.S., operating the second-largest private hydropower systems in the country, which generate approximately 3,867 megawatts (MW) of electricity. The recent DOE funding will help PCG take advantage of these growth opportunities.
Peers in Hydropower Generation
Several other companies are increasing investments in hydropower generation, poised to benefit from the expanding U.S. hydropower capacity:
- Brookfield Renewable Partners L.P. (BEP): A significant player in the renewable energy sector, hydropower represents the largest segment in BEP’s portfolio, accounting for 47% of its funds from operations. The Zacks Consensus Estimate for BEP’s 2024 sales indicates a year-over-year growth of 18.7%, with a 36.8% growth forecast for earnings per share (EPS) in 2025.
- Duke Energy Corporation (DUK): The second-largest investor-owned hydroelectric operator in the U.S., Duke Energy owns 27 hydroelectric stations that are vital to its balanced energy mix aimed at achieving net-zero carbon emissions by 2050. The company has a long-term earnings growth rate of 6.1%, with the Zacks Consensus Estimate for its 2024 sales predicting a year-over-year growth of 4.7%.
- CMS Energy’s (CMS) Consumers Energy subsidiary operates 13 hydroelectric plants across five Michigan rivers, generating approximately 1% of the total capacity provided by Consumers Energy. The company has a long-term earnings growth rate of 7.6%, with the Zacks Consensus Estimate for CMS’s 2024 sales forecasting a year-over-year growth of 4.5%.
PCG Stock Performance
Over the past six months, PCG shares have increased by 17.9%, slightly below the industry’s overall growth of 20.1%.