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American Water's Unit to Use Solar Energy, Cut Energy Costs

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American Water Works (AWK - Free Report) announced that its unit, Illinois American Water is collaborating with Sol Systems to develop two solar fields in its property in Champaign at 560 CR 1700 N and Peoria at 6111 N Galena Road. Both the systems will be rated at 2,000 kW and on a combined basis, will help Illinois American Water to save more than $200,000 in annual energy costs.

Illinois American Water is already using clean energy in the Peoria District, its Corporate office and Metro East operations in southern Illinois. These new projects will further lower emissions of Illinois American Water.

Energy Efficiency in Water Space

Per the U.S. Environmental Protection Agency, water and wastewater systems account for nearly 2% of energy use in the country, adding more than 45 million tons of greenhouse gases annually. By incorporating energy efficiency practices into their water and wastewater plants, water utilities can save nearly 15-30% of operating costs.

Energy efficiency initiatives coupled with the usage of clean source of energy will help water utility operators to further lower cost of operation and pass on the savings to customers through reduced utility rates.

American Water’s Plans

American Water is working in accordance with Environment Social Responsibility and Governance principles and aims to lower greenhouse gas emissions to 40% by 2025 from 2007 levels. The company already lowered emissions by 31% through 2018 from 2007 levels. The solar plants in Illinois will help it achieve the emission reduction goal over the long term.

Over the course of the next decade, the company expects to invest $20-$22 billion to upgrade its aging water and wastewater infrastructure, reduce leaks in pipelines to lower the possibility of contamination of potable water, along with increase the resilience of critical assets so that it can continue to perform even during adverse climatic conditions.

Another utility, Middlesex Water Company (MSEX - Free Report) decided to invest $298 million in the 2020-2022 time period to strengthen its water infrastructure.

Price Performance

Shares of the company have gained 11% in the past year against the industry’s 3.3% decline.

Stocks to Consider

Some better-ranked stocks in the same industry include American States Water Company (AWR - Free Report) and Essential Utilities (WTRG - Free Report) , each having a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

American States Water’s long-term (three to five years) earnings growth is currently pegged at 4.9%. The Zacks Consensus Estimate for its 2020 earnings has moved 0.9% upward in the past 60 days.

Essential Utilities’ long-term (three to five years) earnings growth is currently pegged at 6.01%. The company delivered an earnings surprise of 9.7% in the last four quarters.

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