Dive Brief:
- Southern Co. CEO Tom Fanning told EnergyWire last week that the company wants to expand in to the nation's organized electricity markets, as well as further international sales of its lignite coal gasification and carbon capture technology.
- Fanning told investors the company's main targets will be cooperatives and municipalities that want more stable and long-term power deals.
- In April, the company signed a deal with Chinese firm Shenhua Group to license Southern's gasification technology. The technology is designed to make a lignite coal-fired plant have as little emissions of carbon dioxide as a small natural gas-fueled plant.
Dive Insight:
Expanding the business by means that don't require Southern to change its strategy or enter into risky agreements could be a lucrative move. The company so far has managed to build a regulated utility business and wholesale energy business entirely away from the organized markets like PJM and MISO. Fanning's strategy is not to compete within the market, but to offer smaller, independent bodies such as municipalities and cooperatives that meet Southern's strict criteria a long term energy plan that is more appealing than a more volatile, shorter term electricity market.
With electricity markets increasingly volatile as generation costs increase while sales remain stagnant, Southern's alternative is appealing. The company has diversified enormously in recent years from coal fired generation: In 2008, coal accounted for 70% of total generation, but now it is only 36%, with the majority, 45%, coming from natural gas. The company is also looking to expand in distributed generation, said Fanning, with rooftop solar as the main focus for that. However, Fanning warned, solar would only become a viable alternative generation resource if regulators recognized the need to revalue the commodity.