Exelon Corp. (EXC)

Company website 2020 Financial Report Stock Analysis 2020 ESG Report

Ranked #1 in the amount of zero-carbon electricity generated in the US

100^%

Divestment

from coal-fired plants (more than 2 GWs) since 2010

23.6

Billion Dollars

will be invested in multiple Drawdown solutions, 2021-2024

View Our Analysis

The Path to Drawdown: Solar, Wind, Hydro and Nuclear

Addressing climate change and remaining below 1.5ºC of global warming means that the world’s electricity source needs to switch from fossil fuels to 100% emissions-free sources by 2050. Solar, wind, hydroelectric, and nuclear power are the electricity sources leading this transition.

Utility-Scale Solar

Photovoltaic (PV) solar panels are the main way of capturing the sun's energy and converting it into electricity. The industry has been growing fast and solar panels are now the cheapest source of electricity in most places in the world as of 2020.

Solar produces ~2% of global electricity today. According to Project Drawdown, to be on track to remain under 1.5ºC of warming, utility scale solar will have to generate a combined ~26% of global electricity by 2050.

To get there, the PV solar industry needs to keep scaling over the few next decades:

<::marker> 720 TWh of solar electricity generated in 2019
<::marker> 28,200 TWh needed by 2050
<::marker> CAGR of 12.56% from 2019 - 2050

Analysis from the IEA similarly forecasts that, to reach a 100% clean electricity grid by 2050, annual solar panel manufacturing capacity will need to scale from 134 GWs in 2020 to 630 GWs in 2030 (p. 74).

Onshore Wind

Onshore wind turbines account for 4.36% of global electricity generation in 2020.

Global wind capacity has risen steadily by around 20% per year for the past decade. Thanks to this expansion, the cost of electricity generated from onshore wind continues to fall, even in areas with low wind speeds.

According to Project Drawdown, to be on a path to remain under 1.5C° of warming, onshore wind turbines will need to be generating a combined 26.85% of global electricity by 2050.

To get there, the onshore wind industry will need to continue to scale over the next few decades

<::marker> 1,150 TWh of onshore wind electricity generated in 2018
<::marker> 19,460 TWh needed by 2050
<::marker> CAGR of 9.38% from 2019 - 2050

The IEA forecasts (p. 74) that, to reach a 100% clean electricity grid by 2050, annual onshore wind capacity additions will have to increase from 109 GWs in 2020 to 310 GWs in 2030.

Hydropower

Hydropower electricity generation accounts for 44.5% of global electricity Next to solar and wind, hydropower is the third-largest (p. 45) energy source in the clean electricity mix.

According to the IEA, hydropower capacity additions need to accelerate significantly to reach the Sustainable Development Scenario level.

<::marker> 4,333 TWh of hydropower electricity generated in 2019
<::marker> 5,722 TWh needed by 2030
<::marker> CAGR of 2.82% from 2019-2030

Nuclear

Nuclear power’s share of global electricity generation today is 10.5%.

Extremely powerful and efficient in generating electricity, nuclear power has reduced CO2 emissions by over 60 gigatonnes over the last five decades -- equivalent to nearly 2 years’ worth of global energy-related emissions. Unlike solar and wind, electric generation from nuclear power is stable. The cost of building new plants is still very high, but once built, the energy is stable and relatively inexpensive. With Generation III reactors on the horizon, nuclear power is becoming safer, cheaper, and more efficient.

To be on a path to remain under 1.5C° of warming, nuclear power is expected to grow mildly in the next three decades:

<::marker> 6,093 TWh of nuclear electricity generated in 2018
<::marker> 6,245.3 TWh needed by 2050
<::marker> CAGR of 0.08% from 2018-2050

Importance of Utility Companies

Electric utilities play a crucial role in the path to net-zero emissions. Through long-term power purchase agreements (PPAs) between renewable developers and utilities companies, renewable energy companies can rely on stable electricity buyers and secure project finance. Utility companies also often control electrical grids, which can be outfitted for the intermittency of solar and wind power generation. Accommodating variable renewable energy also requires large-scale energy storage, and utilities have the resources to build batteries at scale.

There are dozens of investor-owned utilities traded on the NYSE (such as Duke, NextEra, Dominion, Xcel, PG&E, etc.) and many of them are purchasing or developing renewable capacities to provide clean electricity to customers across large regions. We use a stringent criteria to determine which utilities are significantly contributing to the low-carbon energy transition.

About

Exelon Corporation (stock ticker: EXC) is the largest electric utility company in the US, headquartered in Chicago, IL. It’s the largest operator of nuclear power plants in the US, with sizable holdings in wind, solar, hydropower, and natural gas plants, as well.

EXC's Role in Drawdown

According to the IEA, getting to net-zero would mean growing combined global capacity of solar, wind, hydro, and nuclear power from 3,216 GWs in 2020 to 10,376 GWs by the year 2030, and to 26,134 GWs by 2050. EXC’s total clean energy capacity was 21.89 GWs in 2020, or 0.68% of global market share. EXC would need to scale their capacity to 70.64 GWs by 2030, and 177.92 GWs by 2050 in order to maintain their current market share in a future in which renewable energy has largely displaced fossil fuels.

This level of growth would require a 12.43% CAGR from now until 2030, and 4.73% between 2030 and 2050. This will be a challenging feat for EXC, whose net renewable and nuclear capacity in 2020 is 6.48% less than in 2017. This is the result of closures of two nuclear plants and the sale of 49% (p. 54) ownership in many of its wind farms to third parties in the last few years.

EXC: What We Like

EXC has set out and achieved (p. 6) rounds of clear GHG emissions goals for the last 15 years, and plans to reduce emissions further

<::marker> 3 rounds (p. 6) of corporate GHG emissions reduction goals since 2005. These amounted to a 17.95% reduction in scope 1 & 2 emissions since 2017, equivalent to taking ~2.4 million passenger vehicles off the road for one year
<::marker> EXC promises (p. 3) to electrify 30% of its light and heavy-duty vehicle fleet by 2025, and 50% by 2030.
<::marker> EXC retired and are planning to retire nearly 3 GWs worth of fossil fuel generation plants - that’s enough to power more than 1 million homes.

On top of these emissions reductions, EXC is expanding into important Drawdown solutions beyond clean power generation:

<::marker> Investing $17.8 billion (p. 7) in EV charging stations, integration of commercial and residential renewables, advanced meter infrastructure, microgrids and grid storage systems, and grid automation devices

Investing ~$5.8 billion (p. 7) in improvements to grid stability and resiliency, as well as renewable energy integration.

What We Want to See Improve

Retire All Fossil Fuel Facilities

EXC has steadily reduced GHG emissions, but it still owns substantial fossil fuel facilities. Specifically, natural gas and oil facilities account for 20.3% and 9.5% of EXC’s total net generation capacities, respectively. We would like to see EXC close or at least divest from these facilities.

Expand Renewable Energy Capacity

Nuclear power is the most powerful source of stable, non-intermittent clean energy. But EXC has had to close two nuclear plants in the last few years and has announced (p. 50) plans to close two more plants by 2024 for economic and regulatory reasons. To offset these closures, we urge EXC to expand their solar,wind, and battery storage capacity as aggressively as possible.

Commit to Zero GHG Emissions

We acknowledge that Exelon’s GHG emissions are relatively low compared to other electricity generators. But with more than 13.7 million metric tons (p. 34) of CO2 equivalents, their scope 1 and 2 emissions are substantial. According to its annual SEC filing (p. 21), Exelon’s natural gas, oil, and biomass fired plants, as well as GHG leakage and fossil fuel combustion in their motor vehicles account for a majority of these emissions. We want to see Exelon become serious about reducing emissions from all of their sources in the near future.

Related Green Energy Stocks in the Climate Index

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Allocated	Company	Description
3.32%	Exelon Corp. (EXC)	Exelon is one of the largest US electric utility and operates nuclear, wind, solar, hydro plants. They’re a key player in decarbonizing the power sector
2.61%	Sempra Energy (SRE)	Sempra Energy develops energy infrastructure and provides electricity and gas. Green utilities are the bedrock for developing more renewable energy
1.53%	Companhia Energética de Minas Gerais (CIG)	CIG is one of the largest power utilities in Brazil that generates its electricity from renewable sources. They’re a model of how utilities should go green
1.48%	PG&E (PCG)	PG&E is a public utility that offers electricity and natural gas to customers and growing their clean energy capacity. Green utilities are key to Drawdown
1.30%	Avangrid, Inc. (AGR)	Avangrid generates most of its electricity through solar, onshore wind, geothermal, hydroelectric and biomass - an exemplar of green utilities
0.71%	Algonquin Power & Utilities Corp. (AQN)	Algonquin Power & Utilities operates renewable and clean energy assets throughout North America. These are key sources of energy in a decarbonized world
0.19%	Enel Chile S.A. (ENIC)	Enel generates electricity from hydroelectric, solar, wind, and geothermal. They’re helping expand clean energy capacity
0.10%	Montauk Renewables, Inc. (MNTK)	Montauk has facilities that generate renewable natural gas, a sustainable fuel. Electric utilities like Montauk are key to expanding clean energy capacity