Southern's Units Expand RNG Portfolio, Boost Clean Energy Goals

Southern Company’s SO subsidiaries, Virginia Natural Gas and Chattanooga Gas, have taken a significant step forward by completing new purchases of renewable natural gas (“RNG”). This move further expands their portfolios of clean and sustainable fuel, reflecting a growing commitment to reducing carbon emissions and advancing energy sustainability. These purchases are estimated to prevent a total of 18,978 metric tons of CO2 equivalent (CO2e) emissions over their lifecycle, which is comparable to the carbon absorbed by nearly 19,036 acres of U.S. forest within a year.

What Is Renewable Natural Gas and Why it Matters

Renewable natural gas is a sustainable fuel produced by capturing methane emissions that naturally arise from decomposing organic materials such as landfills, agricultural byproducts, wastewater and food waste. This methane, a potent greenhouse gas, is harnessed before it can escape into the atmosphere, significantly lowering overall greenhouse gas emissions. RNG’s compatibility with existing natural gas infrastructure and appliances makes it an ideal solution for utilities seeking to reduce their carbon footprint without costly equipment overhauls.

Southern Company’s Strategic Commitment to Clean Energy

Southern Company Gas leadership has emphasized its dedication to leveraging advanced infrastructure to provide cleaner fuels. Bryan Batson, executive vice president of External Affairs, stated, “These transactions are the latest examples of how we are supporting emission reductions efforts aligned with our goal of achieving net-zero direct greenhouse gas emissions from operations by 2050.” This statement highlights Southern Company’s comprehensive sustainability strategy, demonstrating its commitment to meeting stringent environmental goals.

The recent RNG transactions are not isolated efforts. They built after the initial RNG acquisitions made in 2023, demonstrating a consistent and growing commitment to cleaner energy alternatives. By integrating RNG into their fuel supply, SO’s two subsidiaries, Virginia Natural Gas and Chattanooga Gas, are setting a strong example for other utilities aiming to balance energy demand with environmental responsibility.

Policy Support: Fueling RNG Growth in Virginia and Tennessee

Legislative frameworks in Virginia and Tennessee have been instrumental in enabling Southern Company’s RNG initiatives. The Virginia Energy Innovation Act and Sustainable Gas Program actively promote the development and delivery of renewable natural gas, offering utilities a structured path toward sustainable fuel integration.

In Tennessee, the Natural Gas Innovation Act provides natural gas utilities the flexibility to pursue cleaner energy options. It also allows for the recovery of incremental costs associated with innovative natural gas solutions through the utilities’ purchased gas adjustment mechanisms. This regulatory support is crucial, enabling Virginia Natural Gas and Chattanooga Gas to make forward-thinking investments in renewable natural gas.

Collaborative Efforts and Future RNG Projects

Virginia Natural Gas recently announced a promising collaboration with the Hampton Roads Sanitation District (“HRSD”) to bring more renewable energy into the market. The initiative will utilize biogas generated from organic waste at HRSD’s Atlantic Treatment Plant, converting it into RNG for local distribution.

This innovative project serves as a model for transforming organic waste into a valuable clean energy resource, significantly reducing methane emissions while producing a fuel source that seamlessly integrates into the existing gas grid. Upon completion, the facility will reinforce Southern Company’s leadership in RNG development, promoting both environmental stewardship and economic growth.

Environmental Impact: Quantifying the Benefits of RNG

The environmental benefits of these RNG purchases are substantial. Avoiding nearly 19,000 metric tons of CO2e emissions equates to the carbon sequestration capacity of thousands of acres of forest. This comparison puts the scale of RNG’s impact into perspective, highlighting RNG’s role as a powerful tool in the fight against climate change.

Methane’s potency as a greenhouse gas is more than 25 times greater than that of carbon dioxide over 100 years. Capturing and repurposing methane into RNG significantly reduces its potential warming effect. As a result, RNG is considered a key enabler for utilities aiming to transition away from fossil fuels while maintaining energy reliability.

Seamless Transition to Sustainable Energy

One of the key advantages of renewable natural gas is its compatibility with existing infrastructure. Customers of Virginia Natural Gas and Chattanooga Gas will benefit from cleaner fuel without needing to replace appliances or modify pipelines. This seamless transition lowers barriers for widespread RNG adoption and supports scalable, cost-effective sustainability.

By continuing to expand RNG procurement, Southern Company’s subsidiaries are positioning themselves at the forefront of natural gas innovation, showcasing how traditional energy providers can evolve and contribute meaningfully to global emission reduction goals.

Looking Ahead: RNG as a Cornerstone of Sustainable Utility Services

Southern Company’s recent RNG purchases mark more than just a transaction, they signal a strategic shift toward cleaner, more sustainable energy portfolios that prioritize environmental impact without compromising service reliability. These steps align perfectly with the utilities’ long-term vision of achieving net-zero emissions and fostering resilient, climate-friendly energy systems.

Through continued investment, collaboration and leveraging supportive policy frameworks, Virginia Natural Gas and Chattanooga Gas exemplify the future of natural gas utilities, innovative, responsible and committed to a cleaner planet.

In conclusion, Southern Company’s proactive RNG purchases and projects demonstrate the significant potential of renewable natural gas to transform the energy landscape. Its natural gas subsidiaries combine environmental responsibility with operational excellence, setting a benchmark for utilities nationwide that aim to lead in sustainable energy solutions.

SO’s Zacks Rank and Key Picks

Currently, SO carries a Zacks Rank #3 (Hold).

Investors interested in the utility sector might look at some better-ranked stocks like CenterPoint Energy CNP, Fortis Inc. FTS and E.ON SE EONGY, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

CenterPoint Energy is worth approximately $23.81 billion. It currently pays a dividend of 88 cents per share, or 2.41% on an annual basis. CenterPoint Energy is a public utility holding company providing electric transmission, distribution and generation services primarily in Indiana, along with natural gas sales, transportation and distribution across several states. It also offers home appliance maintenance and repair services to customers in select regions.

Founded in 1866 and headquartered in Houston, TX, CenterPoint Energy serves more than 2.8 million metered customers and operates extensive infrastructure, including many substations and hundreds of miles of intrastate pipelines.

Fortis is worth approximately $23.77 billion. It currently pays a dividend of $1.78 per share, or 3.79% on an annual basis. Fortis is a leading electric and gas utility firm serving customers across Canada, the United States and the Caribbean, with extensive electricity generation, transmission and distribution operations.

Founded in 1885 and headquartered in Saint John's, Canada, the company operates a vast network of power and gas infrastructure, providing energy to thousands of residential, commercial and industrial customers.

E.ON SE is worth approximately $47.56 billion. It currently pays a dividend of 46 cents per share, or 2.5% on an annual basis. E.ON SE is a multinational energy company headquartered in Essen, Germany, operating across Europe and internationally through its Energy Networks, Energy Infrastructure Solutions and Energy Retail segments.

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