Today, PSEG took another significant step in our evolution as a clean energy infrastructure-focused company, announcing that we agreed to sell our PSEG Fossil generating portfolio to newly formed subsidiaries of ArcLight Energy Partners Fund VII, L.P., a fund controlled by ArcLight Capital Partners LLC, furthering the Strategic Alternatives process launched last year.
However, PSEG’s move toward a primarily regulated utility with a more predictable carbon-free generation portfolio has been years in the making, including the retirement of our remaining coal units in Burlington, Hudson, Mercer and Bridgeport Harbor since 2015.
For investors and our many stakeholders, the sale of the Fossil assets will improve our business mix, help realize a more predictable earnings profile and enhance an already compelling environmental, social and governance (ESG) profile.
This transaction is a win-win and speaks to the hard work and commitment of the PSEG workforce. PSEG is powered by a dedicated, highly skilled and diverse workforce and our success is thanks to their continued efforts, day in and day out. Our work is now even more essential as the COVID-19 pandemic shines a light on how much modern lifestyles revolve around safe, reliable, always-on energy – rain, snow or shine.
The importance of goals
One outcome made possible as a result of the expected sale of the PSEG Fossil units: PSEG recently announced that we have accelerated our net-zero climate vision from 2050 to 2030, and incorporated our utility operations in this vision, in addition to our power generation. This was not the objective of the Fossil transaction, but a byproduct.
Setting goals is imperative to the success of any endeavor. Our 2030 climate vision provides a clear road map we can use to guide our business strategy, today and into the future. Similarly, PSEG is highly supportive of national- and state-level clean energy goals and policies that aim to address and mitigate climate change.
PSEG’s pivot to carbon-free generation, and especially our recent investment in Ocean Wind, is in line with President Biden’s goal of decarbonizing the U.S. electric sector by 2035 and New Jersey’s goal of 100% clean energy by 2050, including 7,500 megawatts of offshore wind energy by 2035.
I understand that the emissions from the fossil-fueled power plants we’re selling aren’t going anywhere anytime soon, even though the assets are leaving PSEG’s books. However, our transition to a carbon-free generation portfolio will allow us to be full-throated advocates for policies that support the clean energy transition and compensate carbon-free generators for their environmental and climate benefits – such as an economy-wide price on carbon.
PSEG already benefits from New Jersey’s robust policy support for carbon-free electricity, ensuring the viability and growth of nuclear, solar and offshore wind generation. More recently, lawmakers and policymakers in Washington have begun to propose federal measures to support decarbonizing the economy, from support for carbon-free nuclear and renewable energy to incentives for switching to electric vehicles and a national Clean Energy Standard.
From utilities and power companies to government, Wall Street and the technology sector, we need all stakeholders involved if we’re going to make progress toward a low-carbon economy. Companies like PSEG lead when they can within their corporate strategy, business model and governance structure. But as goals, policies, financial models and incentives come into place that are able to help move all businesses toward 100% clean energy, it will make more and more sense for every energy company to head in this direction.
At this milestone, as PSEG’s business model progresses toward a more predictable regulated and contracted business, it’s fitting to reflect on our vision for the future. PSEG’s Powering Progress vision continues to be for a future in which people use less energy, and that energy is cleaner and delivered more reliably than ever.
The goal of PSEG’s ESG, sustainability and climate change strategies is to support our overall mission and vision, which we will accomplish by providing the infrastructure that helps everyone access safe, affordable, reliable and cleaner energy.
This is an important day for PSEG. We are proud of the tremendous work our employees have delivered in making this strategic goal a reality, which will place us squarely on the path to net-zero emissions and our clean energy goals. At the same time, we recognize how far we as a region and a nation need to go in mitigating and addressing the causes and impacts of climate change. PSEG stands ready to move forward.