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NiSource's (NI) Arm to Buy 280MW Energy From Capital Dynamics

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NiSource Inc.’s (NI - Free Report) subsidiary Northern Indiana Public Service Company LLC (NIPSCO) and the Clean Energy Infrastructure (CEI) business of Capital Dynamics have inked a long-term Power Purchase Agreement (PPA). Per the terms of the deal, NIPSCO will purchase 280 megawatt (MW) of power from Gibson Solar, a greenfield solar project, which is being developed by CEI and co-developed by Arevon Energy Management and Tenaska in Indiana.

Benefits of PPA

The PPA will support the utility’s gradual transition to a cleaner energy provider at reasonable costs for its customers. Besides helping the company meet its clean energy targets, the PPA will strengthen its position as a long-term community partner.

Capital Plans & Addition of Renewables

As part of NiSource’s "Your Energy, Your Future" generation transition plan, NIPSCO announced eight renewable energy projects, which include a combination of similar PPAs and joint ventures (JVs). Moreover, management is likely to announce additional renewable projects in the coming months. The utility is continuously working on long-term infrastructure modernization program.

In the first nine months of 2020, the company invested $1.29 billion and reaffirmed its 2020 capital spending guidance in the $1.7-$1.8 billion band. Also, over the 2021-2024 time frame, the company is going to invest in the range of $9.9-$10.5 billion.

Moreover, the company is set to retire its 100% coal-generating sources by 2028 and replace the same with reliable and cleaner options at lower costs. It aims to reduce greenhouse gas emissions by 90% within 2030 from the 2005 baseline and save more than $4 billion for customers of more than 30 years. NiSource has plans to invest in the range of $1.8-$2 billion, primarily in 2022 and 2023, to meet its renewable goals. The company via JVs and PPAs is scheduled to add nearly 1,030 MW of clean generation to its existing portfolio by 2023 end.

Transition in Utility Space

With the whole world resorting to renewable energy, the U.S. utility industry is also shifting its focus to clean resources for electricity generation. Companies like 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 aims to add 1000 MW of solar-powered production to 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

NiSource currently has a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

In the past three months, shares of the utility have gained 3.7%, underperforming the industry’s 8.5% growth.

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