Diversified utility MDU Resources Group (MDU) announced that its unit Montana-Dakota Utilities Co. (Montana-Dakota) has entered into an agreement to acquire a North Dakota wind farm for $200 million. The wind farm will be developed by ALLETE Clean Energy, a subsidiary of ALLETE, Inc. (ALE). The purchase of the wind farm is subject to regulatory approvals.
The wind farm is located near Hettinger, ND and is expected to produce 107.5 megawatt (MW) of green electricity from 43 turbines. The project is expected to be completed by Dec 2015. MDU Resources had initially signed an agreement with Thunder Spirit Wind to purchase the power produced from the wind farm.
However, MDU Resources subsequently decided to acquire the wind farm outright from ALLETE. The change in decision was driven by increasing customer demand for energy in its service territories. Montana-Dakota Utilities’ service area covers more than 168,000 square miles and the utility serves about 384,000 customers.
Utilities across the U.S. are trying to lower their dependence on coal for power generation. A good many coal based power plants are scheduled to go idle in 2015. Alternate energy sources and natural gas based power plants are being constructed in larger numbers to control pollution.
Wind power is the third largest source of renewable energy in the U.S. with hydroelectric and wood biomass taking the first two spots. We expect renewable sources to occupy more and more of the power generation mix going forward as the U.S. Environmental Protection Agency proposes to lower emission by as much as 30% in 2030 from 2005 levels.
Per a recent release from the U.S. Energy Information Administration, renewable energy consumption will increase 12.7% to 9.118 quadrillion btu in 2015 from 8.093 quadrillion btu in 2012. Wind based power production is expected to increase 39% to 1.861 quadrillion btu in 2015 from 1.339 quadrillion btu in 2012.
MDU Resources currently has a Zacks Rank #4 (Sell). Better-ranked stocks in the utility space include Atmos Energy Corporation (ATO) and Sempra Energy (SRE). Both stocks carry a Zacks Rank #2 (Buy).
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