Exelon Corporation ( EXC - Analyst Report ) has received the first installment of the loan assured by the U.S. Department of Energy’s Loan Programs Office to finalize its overall control on the Antelope Valley (AV) Solar Ranch One project. The Loan Programs Office has sanctioned a maximum limit of $646 million for the development of this project.

First Solar, Inc. ( FSLR - Analyst Report ) developed the 230-megawatt (“MW”) solar photovoltaic (“PV”) AV Solar Ranch One project. In September 2011, Exelon acquired this project from First Solar. Now, Exelon will use it to generate electricity, which it will distribute to its customers. The project site is situated on 2,100 acres of fallow farmland near Lancaster in northern Los Angeles, California.

The project will deploy the FS Series 3 PV Module for a section of the plant. This technology enables solar panels to be tilted to track the daily movement of the sun, resulting in increased production volume and uninterrupted electricity supply. Exelon seems intent on meeting the guidelines of California’s Renewable Portfolio Standard Program, which requires utilities to acquire 33% of their power from renewable sources by 2020.

First Solar will now carry out the construction, operation and maintenance of the plant on behalf of Exelon. Exelon expects operation of the first phase to commence by the end of 2012. Full capacity production is likely to start from late 2013. Exelon expects to raise approximately $713 million through equity to finance the project through 2013 and currently estimates total investments at around $1.36 billion.

Under a 25-year power purchase agreement (“PPA”), the electricity generated from the plant will be sold to Pacific Gas & Electric Company, a subsidiary of PG&E Corporation ( PCG - Analyst Report ) .

The addition of a PV portfolio expands Exelon’s coverage in the Californian solar energy market. Since Exelon has a 25-year PPA, it will likely generate steady revenues in the near term. We therefore expect the AV Solar Ranch One project acquisition to generate steady earnings and free cash flow for the company.

Moreover, when in operation, the acquired entity will produce clean and renewable electricity and there will be no fear of harmful air emissions and waste production. The unit is expected to light up approximately 75,000 homes per year on an average and also create construction, operation and maintenance jobs in California. The full capacity AV Solar Ranch One project is likely to displace yearly carbon emissions of approximately 140,000 metric tons. Therefore, it takes the company closer to its carbon emission goals.

We view Exelon Corporation as a well-managed, high-quality, regulated electric utility provider with increasing investment in utility infrastructure and expansion of solar portfolio.

Our major concerns regarding the company revolve around the effects of rising long-term interest rates, lower electricity demand due to mild weather, continuous decline in natural gas and power prices, and higher nuclear power plant operating costs. However, Exelon Corporation currently retains a Zacks #3 Rank, which translates into a short-term Hold rating.

Headquartered in Chicago, Illinois, Exelon Corporation is one of the nation’s largest electric utilities with approximately $19 billion in annual revenues. The company has one of the industry’s largest portfolios of electricity generation, a nationwide reach and enjoys a strong position in the Midwest and Mid-Atlantic markets.