Southern’s US$4 Billion Grid Upgrade Plan Could Be A Game Changer For Southern (SO)

• In recent days, Southern’s settlement in Georgia’s All-Source Request for Proposals was outlined as adding about US$4.00 billion to its capital expenditure plans, alongside ongoing construction of new natural gas generation units at Plant Yates to help meet rising state power demand.
• This combination of higher planned spending and investment in flexible, potentially hydrogen-capable turbines at Plant Yates underscores how Southern is committing more capital to support long-term grid reliability and cleaner generation options.
• With Southern now expecting an extra US$4.00 billion of capital spending, we’ll examine how this development reshapes its investment narrative today.

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Southern Investment Narrative Recap

To own Southern today, you need to believe that regulated utilities in fast‑growing Southeastern markets can earn fair returns on large, ongoing grid and generation buildouts. The added US$4.00 billion of Georgia capex does not appear to alter the near term focus on delivering approved projects on time and on budget, but it does slightly sharpen the main risk around higher capital needs, potential equity issuance, and pressure on margins.

The recent US$1.75 billion Composite Units offering is especially relevant here, because it shows Southern already tapping equity‑linked capital to support its larger investment plan. Set against the expanded Georgia spending and projects like the new, flexible gas units at Plant Yates, this financing move reinforces how closely the investment case is tied to balancing growth in the regulated rate base with dilution and cost of capital risk.

Yet even with strong demand growth, investors should be aware that rising construction costs and heavier capital needs could still...

Read the full narrative on Southern (it's free!)

Southern's narrative projects $31.7 billion revenue and $5.8 billion earnings by 2028. This requires 3.8% yearly revenue growth and about a $1.5 billion earnings increase from $4.3 billion today.

Uncover how Southern's forecasts yield a $99.22 fair value, a 16% upside to its current price.

Exploring Other Perspectives

Four members of the Simply Wall St Community see Southern’s fair value between US$92.53 and US$258.28, showing very different expectations. Against this wide range, the added US$4.00 billion capex and reliance on constructive regulation give you several distinct risk reward angles to explore further.

Explore 4 other fair value estimates on Southern - why the stock might be worth just $92.53!

Build Your Own Southern Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your Southern research is our analysis highlighting 2 key rewards and 2 important warning signs that could impact your investment decision.
• Our free Southern research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Southern's overall financial health at a glance.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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