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DUK Closes Black Mountain Project

DUK UNS

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Duke Energy Renewables, a unit of Duke Energy Corporation (DUK - Analyst Report), has completed its fifth Solar Project, the Black Mountain Solar Power Project, in Arizona. The project has an electric generation capacity of 10 megawatt (“MW”).

The Black Mountain Solar Power Project consists of 42,000 PV panels. The company had purchased the solar project from SOLON Corp. in May 2012. SOLON has designed the solar array powered by its single-axis tracking technology. Going forward, it will continue to handle operations, monitoring and maintenance of the system.

Per a 20-year agreement, the energy generated from the project will be sold to UNS Energy Corporation (UNS - Snapshot Report). In fact, the company had already begun supplying electricity to UES in mid-December 2012. Located in Mohave County, the Black Mountain site is expected to generate clean and renewable energy that is sufficient to power 1,900 homes annually.

With this project entering into its full phase of operations, the company will be fully established in Arizona with plants having a generation capacity of approximately 37 MW. The other four solar projects at Arizona include a 5 MW Ajo Solar Project, a 15 MW Bagdad Solar Project, a 1.5 MWDC Prescott Valley Solar Project and a 6 MW Gato Montes Solar Power Project. The company had recently purchased the Gato Montes Solar Power Project from AstroSol Inc.

Since 2007, Duke Energy has invested more than $2.5 billion to grow its commercial wind and solar business and approximately $6 billion in new plants and retiring of up to 6,800 megawatts of older coal capacity. Duke Energy is actively expanding its footprints in all fields. Recently, three new power plants of Duke Energy– the Cliffside Steam Station Unit 6, the H.F. Lee plant and the Dan River natural gas fired plants –recently started their commercial operation. These three plants jointly represent an investment of $3.65 billion.

Charlotte, North Carolina-based Duke Energy Corporation is a diversified energy company with a portfolio of domestic and international, natural gas and electric, regulated and unregulated businesses, which supply, deliver, and process energy for customers in North America and selected international markets.

Duke Energy focuses on core utility operations to build its rate base through capital expenditure investments. Additionally, the company is proactively and effectively mitigating long-term environmental-related risks. Moreover, Duke Energy Corporation’s U.S. electricity and gas operations spread over the Carolinas, Florida, Indiana, Kentucky and Ohio generate a relatively stable and growing earnings stream.

Given the current pulse in the U.S market that favors sustainable green generation, we believe these projects would bode well for Duke Energy going forward. Overall, these activities would bring in revenue for the company.

However, we remain concerned due to the present unfavorable macro backdrop, predominantly fossil-fuel based generation assets, tepid demand for electricity, and pending regulatory cases. The company presently retains a short-term Zacks Rank #3 (Hold) that corresponds with our long-term Neutral recommendation on the stock.

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