Alabama Power Co. – a unit of Atlanta-based electric utility firm Southern Co. (SO - Analyst Report) – entered into a power purchase deal with Kansas-based wind power developer TradeWind Energy, LLC. Per the agreement, 202 megawatts (MW) of electricity will be delivered from the Buffalo Dunes wind farm in Kansas across five states to communities in Alabama.

Earlier in September, the 20 year power purchase deal and all related renewable energy credits (RECs) received the approval of the Alabama Public Service Commission.

The project will span 42,000 acres and will be hosted by more than 120 landowners based in Haskell, Grant and Finney Counties in Kansas.

The deal will enable Alabama Power to supply the electricity generated from the wind project to serve its customers and consequently retire RECs. It can also sell the electricity and the RECs to third parties, jointly or separately.

The Buffalo Dunes Wind Project will involve an investment of about $300 million. Commercial operations are expected to start in December 2013. The capacity of the wind farm would be 200 to 405 MW upon its completion.

This project exemplifies the inherent growth potential of Midwest wind resources to serve the power requirements of consumers in eastern United States.

Southern Company – one of the largest generators of electricity in the nation along with the likes of Exelon Corporation (EXC - Analyst Report) and Duke Energy Corporation (DUK - Analyst Report) – serves both regulated and competitive markets across Southeastern U.S. It is a holding company for four regulated Southern electric utilities that serve about 4.4 million customers – Georgia Power, Alabama Power, Gulf Power and Mississippi Power.

Southern Company has a Zacks #3 Rank (Hold rating) for the short term. We are Neutral on the shares for the longer term.