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Black Hills Purchases Wind Farm, Expands Renewable Portfolio

Black Hills Corporation’s BKH unit — Black Hills Electric Generation — recently purchased 50% ownership interest of Busch Ranch I Wind Farm from AltaGas Power Holdings (U.S.) Inc. The move came post the company’s receipt of the Federal Energy Regulatory Commission’s approval. The purchase of wind farm was completed with a value of $16 million. The farm, located near Pueblo, CO, has 16 wind turbines and the capacity to generate 29 Megawatt (MW).

Another unit of Black Hills — namely Black Hills Colorado Electric — which operates as Black Hills Energy is the owner and operator of the remaining 50% of Busch Ranch I Wind. Black Hills Electric Generation will supply its share of power to Black Hills Colorado Electric under a long-term power purchase agreement that will expire in October 2037. The agreement establishes Black Hills as the sole owner of Busch Ranch I Wind Farm.

Expansion of Wind Projects

Apart from making strategic acquisitions, the company is expanding wind projects through organic growth. Black Hills Electric Generation is constructing Busch Ranch II wind project with the 60 MW capacities in an adjacent location to Busch Ranch I Wind. The project is expected to be complete by the end of 2019.

Another wind generating project adjacent to Busch Ranch is Peak View Wind Project. The project came into service in 2017 to serve 94,000 customers in Southern Colorado with 60 MW capacities.

Long-Term Plans

Black Hills focuses on wind projects to generate electricity as wind power is cost effective and has high potential. The company plans to invest $0.8 billion through 2018-2022 time frame to strengthen the electric utility operations. The company intends to spend 30% of the projected amount in Colorado. It plans to spend a total amount of $2.54 billion through 2018-2022. We expect to see more such wind farm projects to coming into operation in the upcoming days.

Increasing Renewable Focus

In the past few years, the U.S. renewable energy industry has witnessed significant growth. Awareness to lower pollution level led to higher usage of renewable energy sources.

Per a recent report by Energy Information Administration (EIA), wind, solar, and other non-hydropower renewables comprised about 10% of electricity generation in 2017. EIA expects them to provide 10% in 2018 and 11% in 2019.

Price Movement

In the past 12 months, shares of the company have gained 11.8% compared with the industry’s rise of 0.8%.

 


 

Zacks Rank & Key Picks

Black Hills currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

A few better-ranked stocks from the same industry are Ameren Corporation AEE, FirstEnergy Corporation FE and Xcel Energy Inc XEL. All the three stocks carry a Zacks Rank #2 (Buy).

The Zacks Consensus Estimate for 2018 earnings for Ameren moved up 3.7% in the past 90 days. The company pulled off positive earnings surprise of 15.40% in the last four quarters.

The Zacks Consensus Estimate for 2018 earnings for FirstEnergy rose 3.6% in the past 90 days. The company delivered average positive earnings surprise of 3.67% in the last four quarters.

The Zacks Consensus Estimate for 2018 earnings for Xcel Energy inched up 0.4% in the past 90 days. The company came up with average positive earnings surprise of 4.51% in the last four quarters.

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