DTE Energy SWOT and PESTLE Analysis

Strength

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Weakness

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Opportunity

1. Renewable energy the fastest growing energy source: With a threat of global environmental disaster due to climate change increasing and governments around the world showing increased awareness about this issue, steps are being taken to prevent the disaster. Some of the major efforts go towards changing the energy consumption patterns of the world with numerous incentives being given to renewable sources of energy like reduced taxes and favorable regulations. These efforts have helped renewable energy sources to increase its market share. Also, with research and increased scale of production, renewable energy are becoming economically competitive to traditional sources of energy. All these have culminated into renewable energy becoming the fastest growing energy source in the world. Renewable energy is expected to become the energy source of the future with 42% of all energy needs of US fulfilled by it by 2050. DTE Energy has diversified into renewable energy and has plans of expanding its presence in this subsector, hence it can leverage this shift.

2. Strategic separation of DTE energy and DTE midstream to benefit both entities: DTE Energy decided to separate its midstream non-utility natural gas pipeline, storage and gathering business from its electric and natural gas utility business. The spinoff will be called DT Midstream. This will create two separate business with focus on two different functions, the DTE Energy will predominantly be a pure play utility business and DTE midstream will be a natural gas midstream business. The separation will not have any adverse impact on operations, customers or customer rates. The separation is expected to benefit both the entities by unlocking shareholder value with spinoff generating combined dividend that is expected to be more than DTEs pre transaction dividend. The separation will also allow for better management and focus on different long-term goals.

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Threat

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Political

1. Governments investing and incentivizing use of renewable energy: Climate change and its consequences have forced the countries to reduce their emissions and shift to cleaner sources of energy, many countries have come together and pledged to these efforts in agreements like Paris agreement and UN climate change accord. This has led to governments nudging their countries into use of renewable energy as the production and usage of traditional energy is one of the primary sources of emission. To attract private players to renewable energy the governments provide various incentives in the form of tax breaks, secure power price, buy-out option, government supported loans, etc. In the US there are many federal tax credits offers such as Renewable Electricity Production Tax Credit (PTC), the Investment Tax Credit (ITC), the Residential Energy Credit etc. that private players can gain from. DTE Energy having diversified into renewable energy has been the beneficiary of some of these government schemes.

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Economic

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Social

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Technological

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Legal

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Environmental

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