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Duke Energy Buys Solar Farm


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Duke Energy Corporation’s (DUK - Analyst Report) subsidiary Duke Energy Renewables acquired a 1-megawatt solar farm on the grounds of Martins Creek elementary school in the southwestern corner of North Carolina. Duke Energy Renewables, part of Duke Energy's Commercial Businesses, acquired the solar farm from ESA Renewables, LLC.

The farm is the only solar farm on school premises in North Carolina and the third-largest solar farm located on school property in the U.S. The Martins Creek Solar farm is Duke Energy Renewables' fourth commercial solar farm in North Carolina and fifth nationwide.

Per Duke Energy’s estimation approximately 4,400 ground-mounted photovoltaic (PV) solar modules on the farm will generate an estimated 1.3 million kilowatt-hours of electricity annually. Electricity from the solar farm is sold to the Tennessee Valley Authority.

Duke Energy Renewables focuses on developing innovative wind and solar energy solutions for customers throughout the U.S. The company's growing portfolio of commercial renewable assets includes nine wind farms and four solar farms in operation in five states, totaling approximately 1,000 megawatts in electricity generating capacity.

Headquartered in Charlotte, North Carolina, Duke Energy is one of the largest electric power holding companies in the United States. Its commercial power and international business segments own and operate diverse power generation assets in North America and Latin America, including a growing portfolio of renewable energy assets in the U.S.

Duke Energy is slated to release its earnings for the first quarter of fiscal 2011 on May 3, 2011. The Zacks Consensus Estimate for the first quarter is 35 cents, representing a year-over-year decrease of 3.17%. The Zacks Consensus Estimate for fiscal 2011 is $1.37, down 4.51%. Duke Energy has had a mixed track record with regard to surpassing earnings estimates in the last four quarters with a trailing four-quarter average of 11.67%.

Duke Energy’s stable U.S. electricity and gas operations 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. paving the way for the largest U.S. utility. Moreover, its strong balance sheet and ongoing capital expansion projects add visibility to the story.

However, 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, foreign currency exchange volatility and pending regulatory cases. Duke presently retains a short-term Zacks #3 Rank (Hold), which corresponds to our long-term Neutral recommendation on the stock.

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