Technology giant and Dow component Cisco Systems, Inc. CSCO has agreed to purchase power from the solar arm of power producer NRG Energy, Inc. NRG, NRG Renew, to build a 20-megawatt solar power facility.
Cisco plans to develop the facility in Sonoran Desert near the California-Arizona border. It will supply power to its headquarters in San Jose. NRG Renew will develop the facility at an empty 153-acre tract at its Blythe location, which NRG has been developing since 2010.
Cisco has entered into a deal to buy power from NRG Renew for 20 years. Power will start flowing by the end of 2016. The move is in line with Cisco’s aim of using renewable sources for at least 25% of its requirements by 2017.
Cisco by now has around 2 megawatts of solar power for some of its services over the U.S., including a new system in Boxborough, MA. The company’s engineering labs are its main consumers of energy and also the source of significant greenhouse gas emissions.
Several tech companies including Google GOOGL are moving away from fossil fuels and focusing more on clean energy. These companies aim to reduce their carbon footprint and use more of renewable energy to power their operations. Moreover, these initiatives will help them to generate healthy returns from these solar and wind investments as there are associated tax incentives.
Also, several countries are increasingly relying on solar power to generate clean energy. Stringent environmental legislations on greenhouse gas emissions have also proved to be a boon for the solar power sector. Moreover, despite high initial investments, low operational costs and no fuel costs make these solar investments attractive.
Cisco currently has a Zacks Rank #3 (Hold). A better-ranked stock in this industry is PetMed Express, Inc. PETS, carrying a Zacks Rank #2 (Buy).
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