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Duke Energy Buys NC Solar Farm, Wind Project in the Cards

Zacks Equity Research

The largest electric holding power company in the U.S., Duke Energy Corp. (DUK), acquired a solar photovoltaic (PV.V) project from a developer of utility scale solar projects, HelioSage Energy.

The 40-megawatt AC (MW) Elm City Solar Facility is expected to generate an estimated 82 million kilowatt-hours annually. This is equivalent to power about 6,800 average North Carolina homes a year. Presently, the project is under the development phase in Elm City, NC. Upon commissioning, it will be one of the largest solar PV facilities east of the Mississippi. It will be owned and operated by Duke Energy.

Developed by HelioSage Energy and partnered by First Solar Inc. (FSLR), this solar venture is in response to a competitive request for proposals (RFP) issued by Duke Energy in Feb 2014. First Solar will supply 500,000 modules and provide construction management services once the project is underway.

Duke Energy remains proactive in extending its renewable operations besides investing in traditional fuel-fired plants. Duke-American Transmission, a joint venture of Duke Energy Corp. and American Transmission Co., and three other companies -- Dresser-Rand Group Inc. (DRC), Magnum Energy and Pathfinder Renewable Wind Energy -- have jointly proposed a $8 billion renewable energy project that would supply Los Angeles with more than twice the power generated by the Hoover Dam.

The project in Los Angeles will involve the construction of one of the country’s largest wind farms in Wyoming, one of the world's biggest energy storage facilities in Utah, and a 525-mile electric transmission line connecting the two sites.

As per the California Energy Commission, energy demand in Los Angeles is estimated to increase by approximately 18% by 2024 and Southern California is looking for more renewable power to meet the state requirement.

Duke-American will be constructing a $2.6 billion transmission line linking the wind farm and storage unit. The line is slated for completion in 2023. Pathfinder will construct and operate a $4 billion wind farm near Chugwater, WY. A Dresser-Rand facility near Delta, UT is expected to utilize air injected into underground salt caverns to store power.

Duke Energy maintains a disciplined capital investment approach to fund its expanding renewable portfolio. The company plans to invest around $2 billion through 2018 on renewable projects.

In Jun 2014, the U.S. Environmental Protection Agency proposed the Clean Power Plan to curb carbon emissions from the power sector by 30% by 2030 from 2005 levels. The rule is expected to come into effect next year. Duke Energy’s steady efforts to expand its renewable asset base will enable it to diversify its generation mix, thereby meeting the government’s environmental mandates.

Duke Energy currently has a Zacks Rank #3 (Hold). However, a better-ranked stock in the sector includes Black Hills Corp. (BKH), carrying a Zacks Rank #1 (Strong Buy).

Read the Full Research Report on DUK
Read the Full Research Report on FSLR
Read the Full Research Report on BKH
Read the Full Research Report on DRC

Zacks Investment Research