Power and automation technology giant ABB Ltd. ABB recently won a $130 million contract from the leading Danish integrated energy company DONG Energy. The deal entails ABB to supply a high-voltage cable system for transmitting power from offshore wind park Walney Extension to the U.K. mainland, lighting up more than a million households.
Per the contract, ABB is responsible for designing, manufacturing, supplying and commissioning the 220 kilovolt alternating current (“AC”) cable system. For this, ABB needs to engineer a 157 km-long submarine cable linking the two wind platforms to each other, and another 24 km-long underground cable for developing the grid connection.
The Walney Extension, situated off the northwest coast of England, is equipped to generate an additional 660 MW of electricity beyond the offshore wind farm’s existing capacity of 367 MW. The firm and its extension will provide clean electricity to more than 800,000 households in U.K., thereby, contributing significantly toward the country’s 2020 goal of generating 15% of aggregate energy from renewable sources.
Presently, Europe boasts 8 GW of offshore wind power, with U.K. being the leading contributor who owns about half of the installed capacity. With additional 11.9 GW of offshore capacity under construction, the U.K. government exhibits relentless efforts to promote renewable sources of power generation.
Last month, ABB had won a $100 million contract from another Danish operator, Energinet.dk, for constructing a cable system to connect offshore wind farm Kriegers Flak to mainland in Rodvig, Denmark (read more: ABB Wins Contract to Power Danish Wind Farm). Both the contracts are likely to provide a significant boost to ABB’s position in the Danish market.
ABB has long aspired to develop itself as an innovative high-voltage cable technology provider by reducing environmental impact. We believe the company’s intention mirrors the U.K. government’s target of slashing carbon dioxide emissions by 2020. The country’s regulatory inclination toward clean energy is expected to improve the company's market share. ABB, a reputed provider of high-voltage cable systems, will further graduate to applications ranging from integration of renewable energy to enabling sub-sea interconnections.
ABB currently has a Zacks Rank #3 (Hold). Some better-ranked stocks in the industry include ESCO Technologies Inc. ESE, II-VI Inc. IIVI and AO Smith Corp. AOS. All three stocks carry a Zacks Rank #2 (Buy).
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