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Avista (AVA) to Buy Hydro Energy, Boosts Clean Energy Moves

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Avista AVA signs a 20-year renewable hydro power contract with the Chelan County Public Utility District (PUD) for energy from two hydro projects on the Columbia River.

The competitively-priced deal will provide Avista with 5% of the total clean energy output from the PUD’s Rock Island and Rocky Reach hydropower projects from 2026 to2030. Post this forecast period, AVA’s share will increase to 10% of the production from these projects during the 2031-2045 time frame.

This deal will accelerate AVA’s renewable energy goals, of reaching 100% clean electricity by 2045 and 100% carbon neutral resources within 2027 for its electric resources. Also, Avista aims to trim 30% greenhouse gas emissions by 2030 and become carbon neutral by 2045 for its natural gas resources.

AVA expects annual capital expenditures to total $450 million in 2021, and $445 million in 2022 and 2023. This CAPEX will help 5% growth in the annual rate base. Such strategic capital plans will help AVA meet its renewable targets.

Peer Moves

The United States government announced plans to generate carbon-free electricity by 2035 and reach net-zero emissions within 2050. The directive for utilities to cut down on emissions will help lower the release of harmful greenhouse gases. Companies from the Zacks Utilities sector were already setting targets to reduce their emissions much before the current ruling regime unveiled its plans.

Some of the electric utilities adopting measures to supply clean and reliable energy to their customers include Duke Energy DUK, Xcel Energy XEL and Alliant Energy LNT. All three stocks are planning to provide absolute clean energy by 2050.

DUK aims to reduce carbon emissions between approximately 55% and 75% through 2035 and cut methane emissions to net zero by 2030 for its natural gas distribution companies. By 2050, renewables are projected to be Duke Energy’s largest energy source, covering more than 40% of its generation capacity.

The long-term earnings growth rate and the dividend yield for DUK are pegged at 5.3% and 3.76%, respectively. Earnings surprise of Duke Energy in the last four quarters is 2.29%,on average.

Xcel Energy achieved 51% carbon reduction in June 2021 from its 2005 baseline. According to XEL’s plan, it will attain 85% carbon reduction and completely exit the usage of coal by 2030. Overall, XEL aims to generate 100% carbon-free electricity by 2050.

The long-term earnings growth rate and the dividend yield for XEL are pegged at 6.4% and 2.69%, respectively. Earnings surprise delivered by XEL in the last four quarters is 2.09%, on average.

LNT announced retiring all its existing coal-fired generation units by 2040 to lower emissions from the 2005 levels by 50% and 100% within 2030 and 2050, respectively. In total, Alliant Energy will replace 2 gigawatts of coal-fired generation with clean energy sources over the next few years.

The long-term earnings growth rate for LNT is pegged at 6.1%, while its dividend yield is 2.63%. Earnings surprise delivered in the last four quarters is 4.41%, on average.

Zacks Rank & Price Performance

In the past month, shares of AVA, presently a Zacks Rank #3 (Hold) player, have gained 8.9%, outperforming the industry’s rise of 7.8%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Price Performance

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Zacks Investment Research

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Xcel Energy Inc. (XEL) : Free Stock Analysis Report

Duke Energy Corporation (DUK) : Free Stock Analysis Report

Avista Corporation (AVA) : Free Stock Analysis Report

Alliant Energy Corporation (LNT) : Free Stock Analysis Report

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