Black Hills Corp.’s (BKH - Free Report) subsidiaries Black Hills Energy and Black Hills Wyoming recently got the green light from the Federal Energy Regulatory Commission (FERC) for their jointly proposed 60-megawatt (MW) power purchase deal. The agreement will be effective Jan 1, 2022, and continue through Dec 31, 2032.
Per the terms of the contract, Black Hills Wyoming will continue to deliver 60 MWs of base load capacity and energy to Cheyenne Light, which does business under the name of Black Hills Energy, from its Wygen I power plant.
Benefits of the Agreement
Cheyenne Light’s long-term electric capacity and energy needs are a balanced mix of generation resources including natural gas, coal and renewables. With the expiration of the existing Wygen I power purchase agreement (PPA), the utility will face a shortage of 60 MWs in the near-term generation base load capacity.
To this end, it is imperative to mention that the Wygen I power plant is an extremely reliable, base load energy afforded by mine-mouth logistics, a low-cost, local Wyoming energy resource.Thus, the latest approval by FERC will enable Black Hills to serve its electric utility customers in Wyoming with consistency and cost efficiency apart from maintaining grid stability and resilience.
Black Hills’ Renewable Take
Currently, Cheyenne Light has 25 MWs of wind generation resources in its system and is likely to add 20 MWs of the same. This addition will happen when it’s jointly owned 52.5-MW Corriedale wind project with its affiliate Black Hills Power will come online later this year.
Meanwhile, once approved by the Colorado Public Utilities Commission (CPUC), the company’s Colorado Electric subsidiary will be able to purchase energy from a 200 MW solar facility project, situated in Pueblo County, CO. The project aims to reduce customer energy costs and provide economic and environmental benefits to Colorado Electric’s customers as well as communities. It will be enter service in 2023.
These reflect Black Hills’ initiatives to offer clean energy to its customers seamlessly in the days ahead. The latest PPA in Wyoming is yet another such instance, highlighting the company’s eco-friendly initiative.
With the whole world resorting to renewable energy, the U.S. electric utility industry is shifting its focus tothe same for electricity generation. Some including Alliant Energy (LNT - Free Report) , NextEra Energy, Inc. (NEE - Free Report) and Consolidated Edison (ED - Free Report) are tapping the opportunity to transition to solar energy for adopting a business strategy that is environmentally sustainable.
Alliant targets to add 1000 MW of solar powered production in its portfolio within 2023 while NextEra Energy announced a “30-by-30” plan to install more than 30 million solar panels in Florida by 2030. Also, Consolidated Edison is investing steadily in its renewable generation asset upgrade. It is currently the second largest solar power producer in North America, boasting 3.4 gigawatts-ac (GWac) of renewable energy production capacity.
Zacks Rank & Price Performance
Black Hills currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The company’s shares have lost 25.5% in the past year compared with the industry’s decline of 6.4%.
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