Southern Company Navigates Q2 Earnings Decline Amidst Georgia Power Solar Expansion Approval

Market Overview: Mixed Signals for The Southern Company

The Southern Company (NYSE:SO) is experiencing a period of strategic transition, marked by contrasting developments. The utility giant recently reported a decline in its second-quarter 2025 earnings, which fell short of market expectations. Concurrently, its subsidiary, Georgia Power, achieved a significant regulatory milestone with the approval of new utility-scale solar projects, signaling a robust commitment to renewable energy expansion.

Georgia Power Secures Major Solar Approvals

On September 5, 2025, Georgia Power received certification from the Georgia Public Service Commission (PSC) for five new utility-scale solar site Power Purchase Agreements (PPAs). These agreements are set to add a substantial 1,068 megawatts (MW) of clean energy capacity, benefiting all customers and supplying the company's Clean and Renewable Energy Subscription (CARES) 2023 program. The new facilities will be developed and maintained by third-party companies selected through a competitive bidding process.

Specific projects include:

• A 25-year PPA for 260 MW in Mitchell County.
• A 30-year PPA for 200 MW in Coffee County.
• A 20-year PPA for 183 MW paired with a 91.5 MW battery storage system in Wilkinson County.
• A 20-year PPA for 200 MW in Jefferson County.
• A 20-year PPA for 225 MW in Laurens County.

These projects, with commercial operation dates anticipated as early as 2028, align with Georgia Power's 2025 Integrated Resource Plan (IRP), which targets the procurement of up to 4,000 MW of renewable resources by 2035, aiming to expand its renewable portfolio to approximately 11,000 MW.

The Southern Company's Q2 2025 Earnings Report

The Southern Company reported second-quarter 2025 earnings of $0.9 billion, or $0.80 per share, a decrease from $1.2 billion, or $1.10 per share, in Q2 2024. This represents a 27.3% decline in earnings per share year-over-year and a 28.2% drop in net income. For the six months ended June 30, 2025, earnings stood at $2.2 billion, or $2.01 per share, compared with $2.3 billion, or $2.13 per share, for the same period in 2024.

Despite the decline in net income, operating revenues for Q2 2025 increased by 7.9% to $7.0 billion, up from $6.5 billion in Q2 2024. This revenue growth was primarily driven by the Electric Utilities segment. However, the higher revenue did not translate to increased profitability, indicating potential cost pressures or other financial adjustments.

Market Reaction and Strategic Context

The market's reaction to The Southern Company's (SO) recent announcements has been mixed. The earnings shortfall contributed to a mildly bearish sentiment in the immediate term, with the stock edging down 0.42% on the latest trading day. However, the regulatory approval for significant solar capacity from Georgia Power is viewed positively in the long term, particularly for investors focused on Environmental, Social, and Governance (ESG) criteria and the burgeoning Renewable Energy Sector.

This strategic expansion into solar energy is a cornerstone of The Southern Company's broader capital plan, with an overall $76 billion allocated through 2025, including $18 billion specifically for renewables and innovation. Federal incentives, notably the Inflation Reduction Act (IRA), provide a 30% Investment Tax Credit (ITC) for solar and energy storage systems, substantially bolstering the financial viability of these projects. Analysts project The Southern Company's revenue growth for 2025-2026 to be +5.8%, and the company maintains a long-term Earnings Per Share (EPS) growth rate guidance of 5% to 7%.

"Renewable RFPs, such as the CARES 2023 RFP, are designed to procure valuable renewable energy that helps to diversify Georgia Power's generation mix and increase reliability. Our planning models project that these resources will deliver benefits to customers long-term. The five projects we selected are economical and we expect they will provide energy and capacity benefits to the system and the most value for all Georgia Power customers," stated Wilson Mallard, director of renewable development for Georgia Power.

This sentiment underscores the company's commitment to a diversified generation mix and enhanced grid reliability, aiming to reduce exposure to volatile fossil fuel markets through low-cost solar and storage solutions.

Looking Ahead: Balancing Growth and Profitability

Looking forward, The Southern Company is poised to continue its aggressive renewable energy build-out. The company plans to issue further RFPs in 2026 for additional resources and has already initiated the CARES 2025 RFP targeting up to 2,000 MW of utility-scale solar or solar-plus-storage. Key factors to monitor include the execution of these large-scale solar projects, managing potential cost headwinds such as tariffs on solar panels, and the company's ability to translate its revenue growth into improved profitability in upcoming quarters. Investors will be closely watching for signs of how the substantial investments in renewable infrastructure will impact the company's bottom line and long-term shareholder value amidst its current earnings performance.