Dominion Resources, Inc. (D - Free Report) further enhanced its existing green power generation capacity by acquiring a solar project in Somers, Ct. Dominion acquired this project from Kyocera Corp. (KYO - Free Report) in a deal that closed on Oct. 22, 2013. This project will add 5 megawatt (MW) of green power to Dominion’s existing generation portfolio.
Utilities responsible for aggravating environmental pollution are under the scanner for some time now. However, the recent climate action plan from President Obama, followed by the U.S. Environmental Protection Agency's (EPA) proposal for granting permission for setting up new power plants, has put immense pressure on power producing units.
These new proposals and regulations along with the existing enforceable renewable portfolio standards or other renewable generation policies in thirty-five U.S. states and the District of Columbia are prompting electricity producers to generate more power from clean sources.
The decision of Dominion to add more green power is a positive step towards meeting the renewable energy standards in the state of Connecticut. Connecticut aims to generate 27% of its electricity through renewable sources by 2020.
The acquired solar power unit is expected to start commercial operation from Dec 1, 2013 and will generate enough electricity to provide power to 1,400 households. Dominion will sell the entire output to Connecticut Light & Power Co. ("CL&P"), a Northeast Utilities company under a 20-year purchase power deal.
In February, Dominion had also acquired a 7.7 MW Azalea Solar Power Facility, near Augusta in east-central Georgia. In July, Dominion acquired three solar projects near Indianapolis, Ind. – Indy I, II and III – that will generate 28.6 MW of electricity.
Though the positive steps undertaken by Dominion to increase its renewable generation portfolio did help, those were not enough to surpass our earnings expectation in the last two quarters. In the second quarter, Dominion’s earnings were adversely impacted by lower-than-expected sales and lesser contributions from Producer Services.
Dominion has a Zacks Rank #4 (Sell). In the sector, we presently prefer NRG Yield, Inc. (NYLD - Free Report) with a Zacks Rank #1 (Strong Buy).