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Clearway Energy (CWEN) to Buy 50% of Utah Solar Portfolio

·2 min read

Clearway Energy CWEN announced that it has entered into an agreement to purchase the remaining 50% interest in the Utah Solar Portfolio that it does not own. Subject to necessary approvals, this transaction is expected to be completed in the fourth quarter of 2021. The company expects to fund the consideration of $335 million partly with new non-recourse project level debt within $210-$240 million.

Completion of the acquisition is going to be accretive to Clearway Energy’s earnings, as the seven utility-scale solar farms of the 530-megawatt (MW) Utah Solar Portfolio has 20-year power purchase agreements with PacifiCorp that have nearly 15 years remaining. This acquisition is expected to provide incremental annual levered asset CAFD on a five-year average basis of $9-$11 million beginning January 2022. The company’s total operating wind and solar portfolio will exceed 5,000 MW after completion of the acquisition.

Utilities operating in the United States are expanding their operation through organic means or acquisitions. Clearway Energy is quite active in expanding operations through organic means. On Apr 26, 2021, the company completed the acquisition of Mt. Storm — a 264-MW wind asset in Grant County, WV — from Castleton Commodities International. This acquisition further diversified and expanded renewable operation of the company.

Transition in Utility Space

Per the U.S. Energy Information Administration, renewables’ share in U.S. generation will rise from 20% in 2020 to 21% and 22% in 2021 and 2022, respectively. Given rising awareness against emissions and the usage of new technologies, it is expected that the share of clean sources will continue to increase in the U.S. electricity generation mix. Utilities operating in the United States even during the pandemic invested millions of dollars, carried out infrastructure strengthening work and boosted their generation portfolio with clean energy assets.

A few utilities in the United States have already started working to become net-zero emission companies over the next few decades. Utilities like Xcel Energy XEL, Duke Energy Corporation DUK and The Southern Company SO, among others, have already decided to target net-zero emissions by 2050.

Price Performance

Shares of the company have outperformed the industry in the past 12 months.

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Zacks Rank

The company currently carries a Zacks Rank #3 (Hold).

You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.


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