Duke, Dominion issue $1.3B in green bonds
- Duke Energy Carolinas (DEC) last week announced it had completed the issuance of $1 billion in green bonds, calling it one of the largest such issuances by a utility.
- Dominion Energy also completed its inaugural green bond issuance this month and will use proceeds from $362 million in privately placed notes as reimbursement for its investment in 20 merchant solar plants. DTE Electric priced its inaugural offering in May, with $525 million in bonds, calling itself the fifth investment-grade energy company in the United States to issue green bonds.
- DEC said it would use the bonds to finance eligible green energy projects that include solar and energy storage in North Carolina and South Carolina, part of its strategy to reduce carbon emissions by 40% by 2030.
Green bonds aren't a new concept anymore — the first was issued more than a decade ago — but they are now being embraced by utilities looking for cash at reasonable prices.
Dominion said it had made significant investments in renewable energy over recent years, "but this marks the first time that the company has specifically allocated the net proceeds of a bond issuance to support investment in renewable (or clean) generation." Combined with Duke and DTE's recent announcements, the trio raised nearly $2 billion for clean energy development.
The solar energy developments supported by Dominion's bond issuances are located in Virginia, North Carolina, South Carolina and California, and the utility says they collectively represent 574 MW of renewable energy.
DEC has improved its environmental impact over the past decade through the retirement of coal plants and the development of cleaner resources. The utility anticipates adding 1,800 MW of built and purchased solar capacity over the next five years.
Duke's green bonds have a weighted average coupon of 3.74% between the three-year and 10-year maturities. The utility said they priced the bonds on Nov. 5 and closed the transaction three days later, helping "ensure the company's renewable energy projects continue to be financed on attractive terms to serve Carolinas customers."
Bonds issued by DTE have a maturity of 30 years at an annual fixed coupon of 4.05%, and will help fund solar arrays, wind farms and efficiency programs, the utility said.
It isn't just utilities issuing green bonds. Apple offered $1 billion in bonds to finance its clean energy projects last year. And the year before that, the company issued another $1.5 billion, making the technology giant one of the largest issuers of dollar denominated green bonds.
Follow Robert Walton on Twitter