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Edison Mission Group (“EMG”), an Edison International ( EIX - Analyst Report ) subsidiary, has initiated commercial operation of the 55 megawatts Pinnacle Wind Farm situated at NewPage on Green Mountain, near the Maryland-West Virginia border.
The wind farm comprises 23 wind turbines and has the capacity to generate enough electricity that would fulfill the needs of about 14,000 homes. The company plans to sell two-thirds of the power generated to Maryland Department of General Services (“DGS”) and the balance one-third to the University of Maryland Systems (“UMDS”).
Pinnacle Wind Farm stands to be the second project to begin commercial operation under the Generating Clean Horizons program of the Maryland Energy Administration (“MEA”). The Generating Clean Horizons initiative was launched in 2008 to begin utility-scale clean power generation in Maryland.
Maryland Energy Administration, in partnership with DGS and UMDS, is responsible for the initiative. The program is designed to leverage the State of Maryland’s purchasing power by offering 20-year power purchase agreements to developers of new, renewable energy facilities.
Through the Generating Clean Horizons program, the state and university system of Maryland has committed to purchase 78 MW of energy produced from two wind farms and one solar installation over 20 years. Currently, this program helps in providing 16% electricity to the state through renewable sources.
These kinds of investments in clean, renewable energy will help the state to reach its goal of generating 20% of the total from renewables by 2022. The Pinnacle wind farm project is a step toward diversifying Maryland’s energy portfolio and meeting its generation goals. Such large-scale renewable projects would one day help to achieve power generation with zero emission.
Overall, California-based Edison International has a lower risk profile with a strong portfolio of regulated utility assets and well-managed merchant energy operations. We believe that the key growth drivers are its consistent performance of its stable utility operations, California's supportive regulatory environment, ongoing alternative energy projects, and steep growth in the rate base.
However, several factors continue to weigh on the company, including volatile gas prices and imminent expiry of its cheap rail transport contract. The company presently retains a short-term Zacks #5 Rank (Strong Sell). We have a long-term Neutral recommendation on the stock. In the near term, we would advise investors to accumulate its short-term Zacks #2 Rank (Buy rating) peer Sempra Energy ( SRE - Analyst Report ) .
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