TC Energy Corporation TRP, a leading energy infrastructure company in North America, recently announced its guidance for fiscal 2025. The company estimates a comparable EBITDA in the range of C$10.7 billion to C$10.9 billion (approximately $7.63 billion to $7.78 billion), indicating an increase over its 2024 outlook.
This positive estimate implies the rising demand for natural gas and electrification, alongside the company’s strategic investments in key growth projects. The announcement came during TC Energy’s 2024 Investor Day, where the company outlined its plans to capitalize on increasing energy demands across North America.
Rising Demand for Natural Gas Drives Growth Estimates
The estimated rise in EBITDA for FY2025 is largely driven by the growing demand for natural gas, which is poised to remain a critical component of energy supply as the world transitions toward cleaner energy sources. The need for natural gas has been accelerating as a reliable and flexible source of energy to complement the rise of renewable energy sources like wind and solar. TC Energy is strategically positioning itself to meet this surge in demand, reinforcing the company’s commitment to enhancing its infrastructure and capacity to deliver energy efficiently.
As part of its long-term vision, the Calgary, Alberta-based company has been making substantial investments in developing new projects. This includes four key growth projects totaling an estimated C$1.5 billion in gross capital expenditures, all of which are aligned with the increasing need for natural gas and the growing emphasis on nuclear power generation. These projects will not only boost the company’s financial outlook but also help stabilize the energy markets by providing secure and reliable energy sources.
Key Projects Supporting TC Energy's Growth
TRP’s Pulaski and Maysville Projects: Two of the key sanctioned projects highlighted by TRP are the Pulaski and Maysville projects. Both are located on the company’s Columbia Gulf system and represent a total investment of C$400 million each. These projects are important for the coal-to-gas conversion of existing power plants, making these critical to the broader shift toward cleaner energy sources.
By converting these coal-fired power plants to natural gas, TC Energy will contribute significantly to reducing carbon emissions while ensuring the continued availability of energy. The Pulaski and Maysville projects are part of a larger initiative to increase gas-fired generation capacity and support regional electricity supply as demand continues to grow. These efforts will have far-reaching impacts, both environmentally and economically, by strengthening the energy grid and reducing reliance on coal-based power generation.
TRP’s Southeast Virginia Energy Storage Project: The oil and gas storage and transportation company also revealed plans for the Southeast Virginia Energy Storage Project, which is a C$300 million liquefied natural gas (“LNG”) peaking facility. This facility will play a key role in meeting the growing demand for energy during winter peak days when electricity consumption spikes. As part of this initiative, the LNG peaking plant will supply natural gas to an existing local distribution company, ensuring reliable service during high-demand periods.
This project is a direct response to the challenges of managing energy demands during seasonal fluctuations, particularly during the colder months. By utilizing energy storage in the form of liquefied natural gas, the company is enhancing the flexibility and reliability of its infrastructure, ensuring that critical energy needs are met even during times of high strain on the grid.
Bruce Power Nuclear Facility: Increasing Nuclear Capacity in Ontario
In addition to natural gas projects, TRP has been also expanding its involvement in nuclear energy through a C$175 million investment into the co-owned Bruce Power nuclear facility in Ontario. The objective of this investment is to increase the site’s peak production capacity to 7,000 MW, which will further strengthen the company’s energy portfolio.
Nuclear power is an essential part of Canada’s clean energy strategy and Bruce Power is one of the largest nuclear facilities in the country. By increasing its production capacity, the company has been ensuring that Ontario has access to a stable and reliable source of low-carbon electricity. The Bruce Power investment aligns with TC Energy’s broader commitment to diversification in its energy sources, which includes both fossil fuels and renewables.
Strong Financial Backing: Rate Regulation and Take-or-Pay Contracts
A key factor underpinning TC Energy’s robust financial outlook is the company’s reliance on rate regulation and long-term take-or-pay contracts, which cover approximately 97% of its estimated revenues. Rate regulation ensures that TC Energy’s investments are protected and that the company can recover its costs, offering a reliable stream of revenues. This model provides stability, allowing the company to make long-term investments with confidence, knowing that a significant portion of its revenues is secured.
Moreover, long-term take-or-pay contracts offer an added layer of financial security by guaranteeing that customers will continue to pay for the company’s services, even if they do not utilize the product fully. These contracts are a critical aspect of TC Energy’s business strategy, providing steady income streams that help mitigate risks associated with fluctuating demand or market volatility.
TRP’s Prospects: Expanding Capacity and Diversification
TC Energy’s strategic investments in both natural gas and nuclear energy are designed to position the company for continued success in the years ahead. The company’s extensive infrastructure, coupled with its ability to adapt to market trends and evolving energy demands, makes TRP a key player in North America’s energy landscape.
Looking toward the future, TC Energy plans to continue diversifying its energy portfolio, focusing on both traditional and renewable energy sources. The increasing reliance on electrification and the decarbonization of power grids will drive the need for additional infrastructure and innovative solutions. TC Energy’s leadership in these areas is likely to solidify its status as one of the most influential energy providers in the region.
Overall, TC Energy’s FY2025 forecast highlights its commitment to meeting the growing demand for natural gas and nuclear power. With C$1.5 billion in new projects, including coal-to-gas conversions and nuclear expansion, the company is positioned for sustainable growth. Strategic investments and long-term contracts support its goal of providing reliable, cleaner energy solutions across North America.
TRP’s Zacks Rank & Key Picks
Currently, TRP has a Zacks Rank of #5 (Strong Sell).
Investors interested in the energy sector might look at some better-ranked stocks like Petrofac Limited POFCY, Targa Resources Corp. TRGP and TechnipFMC plc FTI, each carrying a Zacks Rank #2 (Buy) at present. You can seethe complete list of today’s Zacks #1 Rank (Strong Buy) stocks here
Petrofac is valued at $64.84 million. This oil and gas equipment and services company operates across four segments including Onshore Engineering & Construction, Offshore Projects & Operations, Engineering & Consulting Services and Integrated Energy Services.
Targa Resources is valued at $43.39 billion. In the past year, its shares have risen 134.4%. TRGP is a leading provider of midstream energy infrastructure services in the United States. It offers a wide range of services, including gathering, processing, transportation, storage and marketing of natural gas and natural gas liquids.
TechnipFMC is valued at $12.13 billion. This company currently pays a dividend of 20 cents per share, or 0.70%, on an annual basis. FTI is a leading manufacturer and supplier of products, services and fully integrated technology solutions for the energy industry.
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