The recent passage of the Fiscal Responsibility Act included provisions to help streamline the energy permitting process. Specifically, the bill included a 1-2 year time limit for reviews under the National Environmental Policy Act (NEPA), a long sought-after reform to significantly reduce the time frame needed for energy projects to be approved.
These provisions, along with ever increasing government expenditures on clean energy projects, puts the broader renewable energy industry in a great position for growth.
The U.S. Department of Energy’s (DOE) Energy Earthshots initiative will help accelerate the breakthroughs of more abundant, affordable, and reliable, clean energy solutions within the decade. Announced in 2021, the initiative combines targeted funding, research and development, regulatory support, and public-private partnerships to drive advancements in critical areas.
In September 2022, the Department of Energy announced the fifth Energy Earthshot, “Floating Offshore Wind Shot”. This initiative was launched to drive costs down to $45 dollars per megawatt hour by 2035. This includes funding for research and development into floating wind technology.
One company that is poised to benefit from this conjunction of a streamlined energy permitting process and increased government expenditure into offshore wind energy is Avangrid, Inc. (NYSE: AGR).
Avangrid, Inc. (NYSE: AGR) is a diversified energy company that operates in the United States. It is a subsidiary of Spanish utility company Iberdrola, S.A. Avangrid primarily focuses on generating, transmitting, and distributing electricity and natural gas. Its operations can be broken down into the following key areas: renewable energy generation, electricity and natural gas utilities, energy services, transmission and distribution, and energy infrastructure development.
Specifically, Avangrid has a large footprint in the wind energy sector, especially offshore, as they are developing multiple offshore wind farms through their Avangrid Renewables subsidiary. Avangrid Renewables is developing 4 offshore wind farms: Vineyard Wind One, Park City Wind, Commonwealth Wind, and Kitty Hawk Wind.
Avangrid Renewables are developing Vineyard Wind One through a 50-50 partnership with Copenhagen Infrastructure Partners. The project, located 14 miles off of Martha's Vineyard, off the coast of Massachusetts, has been awarded an 800 MW power purchase agreement with Massachusetts utilities. Vineyard Wind One is the first commercial-scale offshore wind farm to be constructed in the United States.
Park City Wind is another offshore wind project being developed by Avangrid Renewables in a wind lease area located south of Martha’s Vineyard. The 804 MW project entered power purchase agreements with Connecticut utilities in mid-2020. The proposed offshore wind development would power approximately 14% of Connecticut's energy supply, avoiding 25 million tons of carbon emissions in the state over the project's lifespan.
In late 2021, Massachusetts selected the 1,232 MW Commonwealth Wind project as part of its third offshore wind competitive procurement process to advance to contract negotiations. This deal makes Avangrid Renewables the largest offshore wind supplier in New England.
Lastly, Avangrid Renewables won the Kitty Hawk Offshore wind area bid from the U.S. Bureau of Ocean Energy Management to lease 122,405 offshore acres off the coast of North Carolina and Virginia. Avangrid is currently studying the area as part of early-stage project development.
With three offshore wind projects in the pipeline, generating a combined 2,836 MW of energy upon completion, there is certainly an argument to be made that Avangrid, through its subsidiary Avangrid Renewables, has a lot of opportunity to grow its revenue in the next few years.
With all of these offshore wind projects either under construction or in the pipeline, Avangrid has been spending an abnormal amount on corporate lobbying this year. So far this year, they have spent $1,000,000 dollars, spending $610,000 in April alone. Specifically, they lobbied for BOEM (Bureau of Ocean Energy Management) leasing and offshore wind permitting / fisheries issues. This refers to leasing offshore areas for wind energy development, the permitting process for offshore wind projects, and potential concerns related to fisheries in those areas. Additionally, they lobbied for issues related to the Outer Continental Shelf Lands Act (OCSLA). This refers to issues concerning utilizing and managing resources on the outer continental shelf, including offshore energy production.
Additionally, Since Q2 of 2022, insiders have been net buyers of Avangrid (NYSE: AGR). Since Q2 of 2022, Avangrid insiders have been net buyers of 1,144 shares, accounting for around $44,000 at current share prices. While this may seem small relative to their market capitalization, it shows confidence from Avangrid’s management team and other large shareholders. One interesting thing to note is that Alan Solomont, former United States Ambassador to Spain and Andorra, has been accumulating shares in the company since 2021. Remember, Avangrid, Inc. is a Spanish utility company Iberdrola subsidiary. While this could all be a big coincidence, it is something to consider.
Disclaimer: The views expressed in this article are solely those of the author and should not be construed as financial or investment advice. It is recommended to conduct thorough research and consult with a professional financial advisor before making any investment decisions.