1. Vistra Corp. (NYSE:VST)
Number of Hedge Fund Holders: 93
Vistra Corp. (NYSE:VST) is a vertically integrated energy company based in Texas and operates a diversified energy portfolio. Vistra (NYSE:VST) supplies electricity and natural gas to residential, commercial, and industrial customers. The company also operates battery energy storage facilities, and its nuclear assets play a crucial role in powering artificial intelligence (AI) systems.
On September 11, Vistra Corp. (NYSE:VST) announced a new program in partnership with Sunrun, a solar energy company, to support grid stability and provide financial incentives to homeowners in Texas. The program called the TXU Energy & Sunrun Battery Rewards program, aims to harness the collective power of solar-connected batteries in residential homes to form a virtual power plant. This virtual power plant will enable the aggregation of stored energy in these batteries, which can be discharged back to the grid during times of peak demand.
The program is designed to benefit both Vistra Corp.’s (NYSE:VST) customers and the grid as a whole. Homeowners who participate in the program and have installed Sunrun home solar panels and batteries will receive financial incentives for their participation. They will also retain control of their systems during power outages or severe weather conditions, ensuring they have a reliable source of energy when it’s needed most. Additionally, these customers can continue to benefit from TXU Energy’s solar buyback plans, which credit solar energy system owners for the electricity they add to the grid.
The partnership between Vistra Corp. (NYSE:VST) and Sunrun is a significant development in the energy sector, as it leverages the power of residential solar energy to support grid stability. With over 116,000 installed systems and a proven track record of incentivizing customers to support local power grids, Sunrun brings its expertise in virtual power plants to the partnership.
The program will also contribute to Vistra Corp.’s (NYSE:VST) sustainability goals, as it promotes the use of alternative energy and reduces the company’s reliance on fossil fuels. Additionally, the program will help to reduce the company’s costs associated with peak demand, as the company will be able to draw on the collective power of the residential solar batteries during times of high demand. This can help to reduce Vistra Corp.’s (NYSE:VST) reliance on more expensive forms of energy generation, such as natural gas or coal, and lower its overall costs. In their Q2 investor letter, Fidelity Investments shared the following insights on Vistra Corp. (NYSE:VST):
“An overweight stake in utility company Vistra Corp. (NYSE:VST) (+24%) was the top individual relative contributor. In Q1, the Texas-based independent power producer completed its acquisition of Ohio-based nuclear fleet operator Energy Harbor. The new Vistra, with its expanded geographic footprint, is in strong position to gain from the buildout of AI-capable data centers, which require enormous amounts of power to run. It is expected that local grids in the U.S. will need to invest heavily over the coming years to improve their power infrastructure and meet growing demand. In the nearer term, firms may choose to contract with independent power producers, like Vistra, rather than rely on the local provider.”
Vistra Corp. (NYSE:VST) has also integrated AI technologies into its operations to improve power plant efficiency, enhance thermal efficiency, and lower carbon emissions. The implementation of the Heat Rate Optimizer (HRO) across 67 power-generation units in 26 plants has resulted in a 1% average improvement in efficiency, saving the company millions in operational costs.
While we acknowledge the potential of Vistra Corp. (NYSE:VST) to grow, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than VST but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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