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WEC Energy to Buy Ownership Interest in Nebraska Wind Farm

Zacks Equity Research

WEC Energy Group, Inc. WEC announced that it will acquire 80% ownership of Thunderhead Wind Energy Center. The site will comprise 108 General Electric Company GE wind turbines with a capacity of 300 megawatts (MW). The ownership interest is valued at $338 million. The company’s investment is expected to be eligible for 100% bonus depreciation and production tax credits.

The project is located in Antelope and Wheeler counties, Nebraska and is developed by Invenergy. The project is expected to be in service by the end of 2020. Notably, a Fortune 100 company will purchase 100% energy produced by the Thunderhead Wind Energy Center through a long-term offtake agreement.

Expansion via Acquisitions

WEC Energy is consistently investing in wind generation facilities. In the first half of 2019, the company recorded Wind generation revenues of $12.1 million.

Since April 2018, it has acquired wind generation facilities in Wisconsin, Illinois, South Dakota and Nebraska.

The company’s subsidiary — Wisconsin Public Service Corporation (“WPS”) — along with two other unaffiliated utilities completed the purchase of Forward Wind Energy Center that consists of 86 wind turbines located in Wisconsin. The facility has a total capacity of 129 MW in Apr 2018.  WPS’s proportionate share was 44.6% or $77.1 million.

In August, 2018, the company acquired 80% membership interest in Bishop Hill III Wind Energy Center located in Henry County, Illinois. The buyout comprised 132-MW capacity and was completed at $144.7 million. In December, 2018, WEC Energy completed another 10% membership interest in Bishop Hill III for $18.2 million.

In December 2018, the company acquired 80% ownership interest in Coyote Ridge located in Brookings County, South Dakota with 97.5 MW capacity for $61.6 million.

In January 2019, the company completed the acquisition of 80% membership interest in Upstream Wind Energy Center with generation capacity of 202.5 MW for $268.2 million. Upstream is located in Antelope County, Nebraska.

The company's recent decision to acquire along with previous buyouts will further expand its renewable power capacity. These acquisitions reflect the company’s shift toward renewable energy generation and efforts to reduce dependency on fossil fuels. We expect these acquisitions to boost the company’s earnings in the upcoming days.

Focus on Renewables

With an aim to lower carbon emissions, WEC Energy is retiring older fossil fuel generation units and investing in clean power generation facilities. The company is trying to reduce CO2 emissions by nearly 40% and 80% below 2005 levels by 2030 and 2050, respectively. Since 2018, it has retired approximately 1,800 MW of coal generation.

In the past few years, the U.S. renewable energy industry has witnessed significant growth. Awareness toward lower pollution level boosted the usage of renewable energy sources. Wind energy is one of the fastest growing forms of renewable power in the United States. Energy Information Administration (“EIA”) projects that wind, solar, and hydropower will collectively produce 18% of U.S. electricity in 2019 and 19% in 2020. EIA also expects that annual generation from wind will surpass hydropower for the first time in 2019. Wind energy will become the leading source of renewable electricity generation and maintain its position in 2020.

Like WEC Energy, other Utilities and corporations are shifting their focus to renewables and other clean sources to generate electricity. Xcel Energy XEL and Ameren Corporation AEE are focusing to add more clean sources of generations in their portfolios.

Zacks Rank and Price Movement

Currently, WEC Energy has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

In the past 12 months, shares of WEC Energy have gained 46.1% compared with the industry's rise of 17.2%.

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WEC Energy Group, Inc. (WEC) : Free Stock Analysis Report
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