Consecutively, for the second time in September, Duke Energy Renewables, a commercial business unit of Duke Energy Corporation (DUK), announced plans for a wind farm. Per the most recent project, the company plans to build, own and operate the Los Vientos II Windpower Project in Texas. Under a 25-year agreement, the electricity generated and renewable energy credits from the 202-megawatt (MW) project will be sold to Austin Energy. Los Vientos II Windpower Project is the fifth wind farm in Texas.
Los Vientos II will be located in Willacy County, approximately 120 miles south of Corpus Christi and 20 miles inland from the Gulf of Mexico. A part of Los Vientos II might also be located in adjacent Cameron County, depending on the decision by county officials. However, if Cameron County officials decide not to participate in the project, the entire Los Vientos II wind farm may be built in Willacy County.
Duke Energy plans to begin construction of the Los Vientos II Windpower Project by December 2011 and expects to bring the wind farm on line by the end of 2012. The number of wind turbines in the project will be determined once the company finalizes a supply agreement with a turbine manufacturer.
The Los Vientos II wind farm comprises the second phase of a 402-MW-total project announced in August 2011. Duke Energy had then announced plans to build the 200-MW Los Vientos I Windpower Project in Willacy County. The electricity generated from the project will be sold to CPS Energy. The company expects to begin construction of the farm in the fourth quarter of 2011 with commercial operation in December 2012.
Besides the two Los Vientos wind power projects, Duke Energy has announced four other new wind farms in 2011. It includes the 168-MW Ironwood Windpower Project in Ford County, Kansas; the 131-MW Cimarron II Windpower Project in Gray County, Kansas; the 69-MW Laurel Hill Windpower Project in Lycoming County, Pennsylvania; and the 20-MW Shirley Windpower Project in Glenmore, Wisconsin, which is already in operation. Of these projects, the company has recently announced, in September, its plans to build the 69-MW Laurel Hill Windpower Project in Lycoming County, Pennsylvania.
Duke Energy Corporation’s U.S. electricity and gas operations, spread over North Carolina, South Carolina, Indiana, Ohio and Kentucky, generate a relatively stable and growing earnings stream. Looking ahead, our bullish outlook for the company is supported by its ongoing merger proceedings with Progress Energy Inc. (PGN). In addition, its strong balance sheet, ongoing capital expansion projects and above industry average dividend yield add visibility to the story.
However, the valuation continues to be restrained by a number of factors, including the present unfavorable macro backdrop, predominantly fossil-fuel based generation assets, tepid demand for electricity, volatile foreign currency exchange rates and pending regulatory cases. The company presently retains a short-term Zacks #3 Rank (Hold) that corresponds with our long-term Neutral recommendation on the stock.
Charlotte, North Carolina-based Duke Energy is a diversified energy company with a portfolio of domestic and international, natural gas and electric, regulated and unregulated businesses which supply, deliver, and process energy for customers in North America and selected international markets.
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