Duke Energy Corporation (DUK) announced that it will invest $500 million in several solar power projects, amounting to a total capacity of 278 megawatts (MW), in North Carolina. The capital outlay will be divided into two parts – investment in three solar facilities and the value of five long-term power-purchase agreements (PPA).
Per the plan, the company will own three solar facilities – the 65-MW Warsaw Solar Facility in Duplin County, the 40-MW Elm City Solar Facility in Wilson County and the 23-MW Fayetteville Solar Facility in Bladen County. All the three farms will be constructed by several solar project developers who will then hand it over to Duke Energy. The facilities are expected to commence operation in 2015. The Warsaw Solar Facility will be the largest photovoltaic plant on the East Coast.
In addition, Duke Energy will purchase power from five new solar projects, totaling 150 MW of capacity, in the state of North Carolina. The projects include two 48-MW solar projects based in Bladen County and Richmond County. The remaining three comprise the Scotland County-based 20 MW project, the 19-MW project in Cleveland County and another 15-MW facility in Beaufort County.
Considering the latest announcement, Duke Energy has completed its new solar capacity under its request for proposals (RFP) issued in Feb 2014. On Feb 14, 2014, the company issued an RFP for new solar energy capacity, of 300 MW, in the service territories of its units Duke Energy Carolinas and Duke Energy. The new capacities will come into service by the end of 2015. The RFP offered the bidders a flexibility to present power and related renewable energy certificates, and/or to give a turnkey solution where Duke Energy obtains ownership of the new capacity.
Duke Energy maintains a disciplined capital investment approach with regard to expanding its renewable portfolio. To meet environmental compliance, the company is steadily pursuing solar and wind projects. The company plans to invest around $2 billion through 2018 to expand its renewable portfolio. Apart from investing in solar projects, Duke Energy recently announced that it will construct, own and control a 110-MW wind power project, Los Vientos V, in Texas.
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.
As of Jun 30, 2014, Duke Energy had cash and cash equivalents of around $2 billion backed by a strong cash generation capacity. A strong financial position allows the company to add renewable assets to its portfolio.
Duke Energy currently has a Zacks Rank #3 (Hold). However, better-ranked stocks in the sector include ALLETE, Inc. (ALE), CMS Energy Corporation (CMS) and Consolidated Edison, Inc. (ED), each carrying a Zacks Rank #2 (Buy).
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