Duke Energy Corporation (DUK - Analyst Report) announced the completion of its largest-ever windpower construction projects – Los Vientos I and II – in south Texas, adding 402 megawatts (MW) to the company's renewables fleet.
All of the output and associated renewable energy credits from the 200 MW Los Vientos I Windpower Project in Willacy County are being sold to San Antonio-based CPS Energy under a 25-year agreement. CPS Energy is the nation's largest municipally owned natural gas and electric utility, providing service to approximately 728,000 electric and 328,000 natural gas customers in the Greater San Antonio area.
Similarly, Austin Energy is buying all of the output and associated renewable energy credits from the 202 MW Los Vientos II Windpower Project, located in Willacy and Cameron Counties. Austin Energy is a community-owned electric utility with more than 420,000 customers and operating revenues of $1.2 billion. Austin Energy has a diverse generation portfolio of nearly 3,000 megawatts consisting of natural gas, nuclear, coal and renewable energy.
Duke Energy also has three other windpower projects in Texas: Sweetwater in Nolan County; Ocotillo in Howard County; and Notrees in Ector and Winkler Counties. Since 2007, the company has invested more than $2.5 billion to grow its commercial wind and solar business, Duke Energy Renewables.
Duke Energy Renewables, part of Duke Energy's Commercial Businesses, is a leader in developing innovative wind and solar energy generation projects for customers throughout the United States. The company's growing portfolio of commercial renewable assets includes 15 wind farms and 14 solar farms in operation in nine states, totaling more than 1,700 megawatts in electric-generating capacity.
Based in Charlotte, North Carolina, Duke Energy is a diversified energy company with more than $100 billion in total assets. Its regulated utility operations serve approximately 7.1 million electric customers located in six states in the Southeast and Midwest. Its commercial power and international business segments own and operate diverse power generation assets in North America and Latin America, including a growing portfolio of renewable energy assets in the U.S.
Earlier, the acquisition of Progress Energy in July 2012 made Duke Energy the largest U.S. utility in terms of market capitalization. Prior to that, Chicago-based Exelon Corporation (EXC - Analyst Report) was the largest U.S. utility.
Duke Energy Corporation’s U.S. electricity and gas operations generate a relatively stable and growing earnings stream. Looking ahead, the company’s outlook is supported by its strong balance sheet and ongoing capital expansion projects which add visibility to the story.
However, valuation continues to be restrained by a number of factors, including the present unfavorable macro backdrop, predominantly fossil-fuel based generation assets, tepid demand for electricity, foreign currency exchange volatility, pending regulatory cases and the aftermath of Hurricane Sandy.
New Jersey, where Duke Energy has about 65% of its customers, was hit hardest by Sandy. Other hard-hit states include Connecticut, West Virginia, New York and Rhode Island. The biggest utilities in the path of the storm include units of Exelon Corporation, FirstEnergy Corporation (FE - Analyst Report), Consolidated Edison Inc. (ED - Analyst Report), Northeast Utilities (NU - Analyst Report), Dominion Resources, Inc. (D - Snapshot Report), and Public Service Enterprise Group Inc. (PEG - Analyst Report).
Duke Energy presently retains a short-term Zacks #3 Rank (Hold) that corresponds with our long-term Neutral recommendation on the stock.