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ALLETE's (ALE) Unit to Sell 200-MW Wind Energy to McDonalds

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ALLETE, Inc.’s (ALE - Free Report) unit ALLETE Clean Energy has inked a deal to sell 200 megawatts (MW) of wind energy— of its 300-MW capacity under-construction Caddo wind site— to McDonalds Corp. (MCD - Free Report) . The site is likely to be ready by 2021 end and qualify for the safe harbor provision of federal renewable energy production tax credits.

The project located in Oklahoma has three renewable energy sale agreements with investment-grade Fortune 500 customers. Caddo wind project will double its capacity to meet clean energy-demand of its corporate customers.

Benefits of the Deal

Caddo’s nearly 110 turbines will likely generate energy to power the equivalent of 110,000 homes, which in turn, will boost the subsidiary’s total operating, under-construction and build-transfer wind energy projects to more than 1,450 MWs of nameplate capacity. The company also aims to have 50% renewable portfolio by 2021.

ALLETE Growth Plans

The company is strategically positioned to increase generation of clean energy as demand for the same is accelerating. ALLETE expects to invest $2,160 million for the 2020-2024 time period. It has Diamond Spring and Caddo projects in Oklahoma through which it will serve new commercial and industrial customers. ALLETE Clean Energy purchased both these sites from Apex Clean Energy. Apart from this,the utility has production tax credit qualified turbines in its pipeline. Also, the company will expand technologies along with evaluating solar and energy storage plus renewable projects.

Transition in U.S. Utility Space

In the past few years, the U.S. renewable energy industry has witnessed significant growth. Awareness of lower pollution levels led the U.S. electric utility industry to use renewable energy sources in substantial proportion. Some of the players like Alliant Energy (LNT - Free Report) and Black Hills Corp. (BKH - Free Report) are tapping this opportunity to transition to wind energy for adopting a business strategy that is environmentally sustainable.

Alliant Energy is on track to add a wind project worth 200 MW capacity in its production portfolio by this year-end and serve its customers in Iowa and Wisconsin. Black Hills recently completed the construction of its 52.5-MW Corriedale Wind Energy Project for $79 million on the 5,000-acre site in Laramie County near Cheyenne.

Zacks Rank & Price Performance

ALLETE currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The stock has rallied 12.9% in the past three months, outperforming the industry’s rise of 5.3%.

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