Duke Energy (DUK) Acquires Majority Stake in REC Solar - Analyst Blog
Charlotte, NC-based Duke Energy Corporation (DUK) declared that it has acquired a majority stake in REC Solar, a supplier of commercial solar and energy solutions. Additionally, Duke Energy will invest up to $225 million in REC Solar’s commercial projects.
The market reacted positively to the news. Shares of Duke Energy surged 1.8% from Monday, closing the following day's trading session at $84.18.
Headquartered in California, REC Solar will be involved in providing financing options for commercial-scale customers and serve the retail, manufacturing, agriculture, technology and government sectors. The partnership with Duke Energy will allow REC Solar to streamline its customer financing process in addition to offering cost-efficient energy solutions, all under one roof.
On the other hand, this arrangement will complement Duke Energy’s aim of reducing energy costs for its customers and support its goal of sustainability.
Over the last eight years, the largest U.S. electric utility, Duke Energy has invested over $4 billion in utility-scale renewable projects. The company’s aggressive renewable expansion strategy in the U.S. is primarily aimed to meet environmental regulations, going forward.
Recently, Duke Energy announced that it will build a 13-megawatt (“MW”) alternating current solar facility at the Marine Corps Base Camp Lejeune in Onslow County, NC in partnership with the U.S. Navy and Marine Corps (Read More:Duke Energy to Build 13 MW Solar Facility at Camp Lejeune). In Sep 2014, it acquired a solar photovoltaic project from a utility-scale solar projects developer, HelioSage Energy.
This Elm City-based solar facility is expected to generate approximately 82 million kilowatt-hours annually, sufficient to power about 6,800 homes in North Carolina for a year. (Read More: Duke Energy Buys NC Solar Farm, Wind Project in the Cards)
Currently, Duke Energy’s generation capacity from renewable resources totals 10% and the company considers itself well on track to own or contract 6,000 MW of wind, solar and biomass by 2020. It also expects to achieve 4%–6% long-term earnings growth on account of diversifying its generation mix and various growth projects.
As per the Energy Information Administration (“EIA”), renewable consumption in 2014 in the U.S. was about 9.6 quadrillion Btu and will likely reach 10.1 quadrillion Btu in 2016. Utility-scale solar capacity is expected to grow over 60% between 2014-end and 2016-end with California being the hotspot for building new capacity. With rising demand for clean sources of energy, Duke Energy’s focus on expanding its renewable base should improve its future prospects.
Duke Energy currently has a Zacks Rank #3 (Hold). Better-ranked stocks in the same sector include PG&E Corp. (PCG), ALLETE, Inc. (ALE) and NRG Yield, Inc. (NYLD). While NRG Yield sports a Zacks Rank #1 (Strong Buy), ALLETE and PG&E each carry a Zacks Rank #2 (Buy).
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