Sempra Energy SRE is advancing operational reliability and enhancing customer service through disciplined investments. The company is also continuing to expand its renewable energy portfolio.
However, this Zacks Rank #3 (Hold) company remains exposed to risks from wildfires.
Key Growth Drivers for SRE
SRE is well-positioned across North America to benefit from rising global LNG demand. Its Sempra Infrastructure unit is advancing multiple natural gas liquefaction export projects. As of December 2025, construction has progressed steadily at the ECA LNG Phase 1 and Port Arthur LNG Phase 1 projects. The ECA LNG Phase 1 project, with a nameplate capacity of nearly 3 million tons per annum, has reached mechanical completion and is expected to be completed in spring 2026.
Sempra Energy is also increasing infrastructure investments to meet rising electricity demand, partly driven by the expansion of AI data centers in the United States. A significant portion of its capital spending is directed toward enhancing transmission and distribution systems. In 2025, the company invested $13 billion, with more than $10 billion allocated to its U.S. utilities, and it plans to invest about $65 billion during 2026-2029.
The company is expanding its renewable energy portfolio to benefit from opportunities in the utility-scale clean energy market. Sempra Infrastructure develops, owns and operates renewable generation assets backed by long-term power purchase agreements (PPAs), supporting stable and predictable revenue streams.
Key Risks for SRE
In recent years, California has witnessed some of its most intense wildfires, which may lead to temporary power outages across SDG&E and SoCalGas service areas and pose risks to Sempra Energy’s electric and natural gas infrastructure, potentially resulting in significant losses.
Sempra Infrastructure is also exposed to risks tied to its partnerships with Mexico’s state-owned entities, PEMEX and CFE, including concerns over their financial health, regulatory environment and ability to meet contractual commitments. Any default by these counterparties could negatively affect Sempra’s operations and financial performance.
Infrastructure & Clean Energy Focus
The U.S. energy sector is steadily advancing toward a more resilient and cleaner power system, with companies prioritizing investments in network upgrades and low-emission generation. This transition is being supported by rising electricity demand and the need for reliable, efficient energy delivery across service territories.
To capitalize on opportunities in the expanding clean energy market, companies within the same industry, such as Clearway Energy Inc. CWEN, Ormat Technologies Inc. ORA and Constellation Energy Corporation CEG, are also focusing on expanding their renewable energy portfolios and strengthening core infrastructure, which is expected to support their long-term growth prospects.
Clearway Energy owns and operates utility-scale renewable energy and natural gas-fired generation assets, along with thermal and other infrastructure assets that provide low operating risks and stable cash flows. Backed by the modern nature of its generation portfolio, which includes a substantial number of solar and wind assets, the company expects to achieve high fleet availability and modest maintenance-related capital expenditure.
In January 2026, CWEN signed three new long-term PPAs with Google totaling 1.17 gigawatts (GW) across Missouri, Texas and West Virginia. These agreements expand Clearway Energy’s existing partnership with Google, building on their 71.5 megawatts (MW) operating PPA in West Virginia and increasing the total partnership capacity to 1.24 GW.
With the rising global adoption of renewable energy and geothermal being a reliable, clean source, Ormat Technologies is well-positioned to expand in the geothermal energy market. Geothermal accounted for 81.3% of its Electricity segment generation capacity in 2025.
Ormat Technologies plans to invest $180 million in building its storage assets and currently has six projects under development in the energy storage segment. These are expected to add 410 MW/1,540 MWh to its portfolio, supporting its target of reaching 950-1,050 MW/2,500-2,900 MWh of storage capacity by the end of 2028 in the United States.
Constellation Energy’s strategic investments and continued expansion of its renewable portfolio are supporting earnings performance. The company reported capital expenditures of $2.9 billion in 2025 and expects nearly $5.7 billion and $4.7 billion in 2026 and 2027, respectively. About 29% of projected capex is allocated to nuclear fuel procurement, including additional inventory, along with $3.9 billion for growth initiatives such as Crane restart, uprates, renewals, upgrades and refueling improvements.
The company is also launching a $350 million initiative to enhance efficiency, increase output and extend the lifespan of its renewable assets, including a 20-year extension of its Criterion wind project in Oakland, MD.
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