Southern Company (SO): Powering America’s Growing Electricity Needs

Electricity production is generally grouped in the utility sector, a category of industry considered by investors as stable and “boring”, with little expectation for growth and the associated large gains. Instead, the utility sector is favored by investors seeking stable dividend income.

When it comes to electricity, this is changing rapidly, as the power demand is exploding.

At first, it was the electrification of energy demand, shifting away from fossil-fuel transportation (gas-powered cars to EVs), heating (from furnaces to heat pumps), and heavy industries (alternative fuels, electric furnaces, green hydrogen, etc.).

Now, it is the AI-boom with its many gigawatt-scale data centers, the output of an entire nuclear reactor, which is pushing demand further.

The result is that for the first time in decades, the demand for electricity is growing quickly in the USA. It hit a new record in 2025 at 4,195 billion kilowatt-hours (kWh) of electricity, up 2.8% year-to-year. And electricity demand is expected to reach new record highs of 4,269 billion kWh in 2026 and 4,399 billion kWh in 2027.

Source: EIA

This move is happening so quickly that electric utility and grid operators are barely able to keep up. And this is before eventual high prices or shortage of oil from war in the Middle East, and the impact of Ukraine strikes on Russia, pushing for even quicker and larger shifts to adoption of EVs in the coming years.

For investors, this brings electric utility companies into a new spotlight, with the largest one most likely to have the financial ability, regulatory reach, technical expertise, and grid connections to quickly deploy new generation capacity to answer these new sources of demand.

We covered previously the largest US electric utility company, NextEra (NEE ) (follow the link to our investment report). The second-largest US electric utility is equally promising: Southern Company (SOT.DE ).

Southern Company Overview

Southern Company History

The company was originally formed in 1945 as a holding company for the Commonwealth & Southern Corporation’s southern assets.

Its roots trace back to the 1940s, when Commonwealth & Southern was dissolved to comply with the Public Utility Holding Company Act of 1935. But the subsidiaries Alabama Power, Georgia Power, Gulf Power, and Mississippi Power were considered integrated and allowed to keep operating together.

After pioneering hydropower in previous decades, the company was involved in the 1970s in the deployment of nuclear energy in the USA with the plants Hatch, Farley, and Vogtle. In 1991, Southern Company subsidiary Southern Nuclear began providing services to the system’s nuclear power plants.

After the launch of this segment in 1996, the company has also been involved in digital wireless communications services with Southern Telecom.

Southern started production of renewable energy (RET ) in 2011 with the acquisition of a 30 MW solar project from First Solar (FSLR ) and a 115 MW biomass-fueled electric generating plant in Texas in 2012.

In June 2010, the United States Department of Energy (DOE) awarded an $8.3B loan guarantee to facilitate the construction of two new nuclear reactors at Plant Vogtle, near Augusta, Georgia. While commercial operations for Unit 3 started in July 2023 and for Unit 4 in April 2024, the project has become famous for being extremely late on schedule and over budget (see below)

Southern Company By The Numbers

Southern Company serves more than 9 million customers across the USA, with electric utilities in Alabama, Georgia, and Mississippi, and natural gas distribution companies in four states. In total, it has a generation capacity of 44 Gigawatts from 103 facilities, of which 13 Gigawatts are unregulated and use natural gas and renewable assets.

It was ranked 163rd on the Fortune 500 listing of the largest U.S. corporations in 2025. The company employs ~29,800 workers.

For a long time, the company was highly dependent on coal power plants, leading to large CO2 emissions. These emissions have declined 46% since 2007. The recent start of the Vogtle units 3 & 4 avoided roughly 5 to 10 million metric tons of CO2 emissions annually.

The company has also undertaken modernization with advanced scrubbing systems so that it has reduced its SO2 emissions by 99% and its mercury emissions by 97% from historical baselines.

Today, the energy mix of the company is 51% natural gas, 20% coal, 19% nuclear, and 10% renewable (solar + wind + hydropower + biomass) through both company-owned assets and long-term Power Purchase Agreements (PPAs).

In 2025, the company generated $23.7B in revenues from electricity businesses, for a net income of $4.7B. Its gas business generated another $732M in net income. Its “other businesses” had a net loss of $1.1B, which includes PowerSecure (distributed energy and deployment of microgrids), Southern Linc (wireless communication), and the investment company Southern Holdings.

The company expects electric sales growth of ~10% from 2026 to 2030 and 8% to 9% adjusted EPS growth through 2028.

From an investment point of view, Southern Company is also notable for having kept its dividend equal or steadily increased it for 79 years, making it a favored stock for income portfolios, distributing a 3%+ dividend yield in mid-2026.

Source: Southern Company

Vogtle Growing Production

Overall Growth

As mentioned before, demand from data centers is a strong driver of higher electricity consumption and grew 42% in Q1 2026 compared to the previous year, primarily from the ramping up of large loads at hyperscaler facilities.

The company added no less than 2GW to its existing production in Q1 2026, and has another 23GW of projects that have either been contracted or are in late stages. Beyond that stage, it also has 75+GW in its prospective pipeline with as many as 100+ projects.

Source: Southern Company

In the renewable category, the next largest projects are the repowering of 5 wind facilities (1GW total) underway across Oklahoma and Texas, projected in-service in 2026-2027, and the Millers Branch solar facility’s 512MW of solar capacity by the end of 2026.

In addition to extra power generation capacity, in the next 4 years, Southern Company is going to add as much as 4.2GW of battery capacity, as well as 500+ miles of new transmission line. As the grid is increasingly relying on intermittent renewable energy, this will help alleviate some of the strain on the electric infrastructure, especially in peak consumption hours in the evenings.

Source: Southern Company

In February 2026, the DOE awarded a $26.54B loan to Southern Company, the largest loan in DOE’s history. The loan will finance a wide variety of investments and upgrades to Southern facilities:

• 16 GW of power, including about:
  • 5 GW of new natural gas generation
  • 6 GW of nuclear upgrades and license renewals
• Hydropower modernization
• Battery energy storage systems
• 1,300 miles of transmission infrastructure and grid enhancement projects.

This loan will have a maturity date of 2055 and is priced at a fixed rate: Treasury +37.5bps. This low-cost financing is projected to provide an estimated $7B in savings for customers over the next 30 years.

Source: Southern Company

The Vogtle Expansion Project

The expansion project of the Vogtle nuclear power plant has, for a long time, been the most important and discussed part of Southern Company’s strategy to increase its production.

The design chosen is an innovative, advanced nuclear power plant AP1000, produced by Westinghouse (now part of Cameco (CCJ ) and BEP (BEP )). This was the first agreement for new nuclear development in the United States since the Three Mile Island accident in 1979. Launched in 2006, the permit for this power plant was approved in 2012 by the NRC (Nuclear Regulatory Commission), and construction started in 2013.

This project has, however, suffered from the difficulties associated with essentially restarting from scratch the civilian nuclear industry in the USA. Westinghouse’s bankruptcy in 2017 (connected to losses from its two U.S. nuclear construction projects) contributed to further delays and cost overruns, leading to both units being finished only in 2023 and 2024.

The total cost ended in the $34B-$35B range, or more than double the initial estimates, leading to a news headline as “Plant Vogtle: Not a Star, but a Tragedy for the People of Georgia”. Overall, construction failures from the contractor, Westinghouse bankruptcy, a first-of-a-kind technology, and the absence of a preexisting, active nuclear supply chain in the USA have all been blamed for the high costs.

“But here’s the truth: At $35 billion, Plant Vogtle is the most expensive power plant ever built on earth. Vogtle’s electricity is estimated to cost $170–$180/MWh, which is astoundingly high. 2,200 MW of geothermal would have cost just $9 billion, and solar plus storage would have cost between $4 billion and $5 billion, less than a fourth the cost of Vogtle.”

As a result, and controversially, residential and small-business electricity bills climbed by more than 20% to 23.7%, in large part because the utility receives a guaranteed rate of return on those assets, thereby maximizing long-term profitability despite project inefficiencies.

Still, the power plant will now generate a massive, carbon-free baseload for the next 60 to 80 years. It is also a high-quality baseload power supply, the kind increasingly in demand for data centers and other facilities, especially as renewables’ role grows in the power grid.

In the future, Southern Company is looking at extended power uprates at Units 1 and 2 of the Vogtle and Hatch nuclear plants, which will safely add a combined 112 Megawatts (MWe).

Vogtle will also serve as a learning experience to execute more efficiently the 6GW of nuclear power financed by the recent DoE loan.

The company is also teaming up with Bill Gates-backed TerraPower and CORE POWER for nuclear-powered ships.

The Future Of Southern Company

For years, the delays and growing costs of Vogtle had loomed like a shadow over the reputation of Southern Company. Now that these two nuclear reactors are finally launched and finished, the company can instead focus on the future.

As the USA is experiencing an unprecedented surge in demand for power, Southern Company will be an integral part of the national answer required to succeed in electrifying away from fossil fuels and powering the AI boom.

In that respect, the experience acquired at Vogtle will be essential to building another 6GW of nuclear capacity that will come in support of additional gas-powered and renewable electricity. It also makes the company the only one to experiment with deploying new nuclear capacity in the country.

With a strong presence in the US South, the company can also benefit from the upcoming boom in solar production in these sunny states, as it is massively expanding the utility-scale battery storage infrastructure and the power grid capacity to handle this intermittent source of energy.

Overall, Southern Company is still a very income-focused stock for investors, but with a strengthening growth profile as well, especially as it secured billions of dollars of capital at a low cost through the largest DoE loan in the department’s history.

Latest Southern Company (SO) Stock News and Developments