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The New Jersey utility, NRG Energy Inc.’s (NRG - Analyst Report) solar business arm, NRG Solar, announced that its Avra Valley Generating Station located about 20 miles west of Tucson, Arizona has come online. Under a 20-year power purchase agreement, NRG Energy will supply the solar power generated from this facility to Tucson Electric Power (“TEP”), a subsidiary of UNS Energy Corporation (UNS - Snapshot Report).
The 25 megawatt ("MW") (AC) photovoltaic (“PV”) facility is the largest project to add value to TEP’s renewable energy portfolio. The company is heavily investing in solar programs and has six projects in the pipeline. Of these, the Avra Valley is the first project to come into operation.
Another NRG Energy project is the Agua Caliente in Yuma County, Arizona which is expected to be concluded in 2014. Other projects include Roadrunner in Dona Ana County in New Mexico and the Avenal, Blythe and California Valley Solar Ranch (“CVSR”) programs in California which are anticipated to be completed in 2013.
The solar project is expected to adequately power around 5,000 households and will be equipped to supply electricity to 20,000 homes when production is at full steam. Besides, the eco-friendly program will help curb CO2 emission by roughly 51,500 metric tons on an annual basis.
With solar steadily becoming the most sought-after renewable energy source next to wind in the U.S. market, we believe the Avra project is a valuable addition to the company’s green asset basket. NRG Energy recently delivered the first 22 MW of the 250-MW CVSR program to the electrical grid. CVSR is touted as one of the largest PV solar plants in the world.
All in all NRG Solar has over 2,000 MW of solar projects under its belt across the southwestern U.S. The potential upside in renewable usage in the coming years will certainly complement the company’s future renewable growth goals.
However, cheap natural gas continues to capture attention of the energy producers with its abundance in the U.S. and will present serious challenges to renewables as it has done to coal. The company currently retains a short-term Zacks #3 Rank (Hold rating).
Another operator in the utility space, DTE Energy Company (DTE - Analyst Report) is also gearing up its renewable portfolio status. The company received approval from the Michigan Public Service Commission for the second phase of the Solar Currents expansion program, which includes a pilot program for customer-owned solar installations that has met its goal of 5 MW and a utility-owned installation with a goal of 15 MW.
The Zacks Consensus Estimates for the fourth quarter and full year 2012 are currently pegged at 15 cents and 79 cents per share, respectively. With a market capitalization of $5.19 billion, the company has a total of 5,193 employees.
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