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Duke Energy's Solar Capacity Exceeds 1 GW, Prospects Bright

Zacks Equity Research

Duke Energy Corp.’s DUK solar portfolio capacity recently exceeded 1 gigawatt (GW), courtesy of its solar expansion in North Carolina and California. Currently, the utility provider boasts a solar portfolio that includes almost 70 sites in 10 states, with a total capacity of 1.1 GW. At peak output, Duke Energy’s solar facilities can now lighten up 2 million homes.

Notably, the company’s 150-megawatt (MW) California-based North Rosamond solar project, which came online last month, helped it to surpass the 1 GW benchmark.

Alongside expanding its existing solar footprint in North Carolina, California and South Carolina, Duke Energy’s primary focus is to strengthen its solar portfolio in the Sunshine State.

Florida’s Solar Prospects

For solar power generation, Florida’s physical and geographic condition is the third best in the United States, making it an ideal state for further development of solar power. Thanks to some recent developments, the state ranks second for projected solar capacity to be installed over the next five years, with nearly 5.5 gigawatts (GW) expected to come online (per Solar Energy Industries Association).

Moreover, the Sunshine State has occupied the top position in solar installations during the first quarter, surpassing California that has been leading the space for the past couple of years. Also, recent policy developments in Florida are expected to contribute to the state’s solar growth. Recently, the Florida Public Service Commission made solar leasing available to companies like Tesla TSLA, which has emerged as a heavyweight solar installer in the nation after its Solar City buyout.

Duke Energy’s Initiatives in Florida

Given the solar market’s solid growth prospects in Florida, it is obvious that utility providers like Duke Energy that are shifting toward renewables will focus on expanding their footprint in this state.

Currently, the company has more than 100 MW of solar generation in operation and four more solar plants targeted for operation by the end of March 2020, representing an additional 270 MW of clean energy for customers. These are part of Duke Energy’s aim to build up to 700 MW of solar projects in Florida.

To further strengthen its footprint in the Sunshine State, Duke Energy announced in June that its subsidiary in Florida will construct three battery storage projects. On completion by 2020, these will be considered the largest battery storage projects with a total storage capacity of 22 MW. During power outages, these battery storage projects are expected to enhance grid operations, increase efficiencies and improve the overall reliability of surrounding communities.

Others Following Suit

As the economics of solar in the Sunshine State look increasingly favorable against gas-fired generation (per a Wood Mackenzie report), other utilities are keen toward enhancing their solar footprint in Florida.

In May 2019, NextEra Energy’s NEE Florida Power & Light Company (FPL) started the construction of its 10 newest solar power plants, which are expected to start distributing electricity by early 2020.

Price Movement

In a year’s time, shares of Duke Energy have gained 10.5% compared with the industry’s 11.5% growth.

Zacks Rank & Stocks to Consider

Duke Energy currently carries a Zacks Rank #3 (Hold). A better-ranked stock in the same space is Atlantic Power Corporation AT, which sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Atlantic Power surpassed the Zacks Consensus Estimate for earnings in the trailing four quarters, the average being 127.41%. For 2019, the consensus mark has moved 118.2% north to 24 cents over the past 90 days.

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