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3 Utility Stocks That Are in Focus on 2021 Global Wind Day

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With the world reeling under the impact of rising emission, utilities across the globe are shifting focus to clean renewable sources of energy. Also, favorable government policies along with such affordable sources are making these players a lucrative option for investors. Per the U.S. Energy Information Administration (EIA), electricity generation from renewable sources is likely to increase to 21% in 2021 and 23% in 2022 from 20% in 2020.

WindEurope along with the Global Wind Energy Council (GWEC) comes forward every year on Jun 15 to celebrate the Global Wind Day, and to discuss and discover the power of wind energy. Today on this occasion, let’s take a look at the evolution of wind energy and how it gradually became a prominent agent of power to further strengthen its effects in the upcoming years.

Per the Mordor Intelligence, the global wind power capacity installed is expected to see a CAGR of more than 8%, thus totaling the installed capacity to 1,166.73 gigawatt (GW) by 2026 from the base figure of 650.54 GW in 2019.

Talking of the United States in particular, total annual electricity generation from wind energy grew to 338 billion kilowatthours (kWh) in 2020 from 6 billion kWh in 2000, per EIA. Also, wind turbines accounted for 8.4% of the total U.S. electricity generation last year. Moreover, according to the 2021 U.S. Renewable Energy Outlook Report submitted by the S&P Global Market Intelligence, above 21 GW of wind capacity is expected to come online by this year-end.

U.S. utilities have been making sufficient investments over the years to increase the share of wind power in their renewable energy portfolio. Also, President Joe Biden’s concentration on renewable is likely to support the industry players’ efforts. As part of the government’s plans, it extended its production tax credit of 1.5 cents per kWh for wind projects for another year, which was earlier set to expire at the end of 2020.

Moreover, consistent investments in Research and Development led to the ongoing expansion in the size of wind turbines, which in turn, helps producing more energy per tower. Another factor making wind energy a perfect eco-friendly choice is that it enables utilities to meet their emission-reduction goals, thereby making their operations sustainable in nature.

Key Picks

We picked a few stocks that made efforts to widen the wind energy share in their portfolio. Also, these companies have performed better than the Zacks Utility-Electric Power industry in the past year and all carry a Zacks Rank #3 (Hold) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Shares of DTE Energy (DTE - Free Report) , NextEra Energy, Inc. (NEE - Free Report) and Xcel Energy (XEL - Free Report) have gained 28.1%, 18.1% and 8.3%, respectively, in the past year, outperforming the industry’s rise of 7.6%.

One-Year Price Performance

Zacks Investment ResearchImage Source: Zacks Investment Research

DTE Energy is a diversified energy company with operating units including an electric company and a natural gas company. It plans to add 850 MW of wind energy between during the 2020-2025 time period. The company remains committed to reduce carbon emissions from its electric utility operations by 32% within 2023, 50% within 2030 and 80% by 2040 from the 2005 carbon-emission levels. Also, its long-term earnings growth rate is pegged at 5.50%.

NextEra Energy, Inc.’s operations include generation, transmission, distribution and the sale of electric power to retail and wholesale customers. The company generates electricity through wind, solar, nuclear and fossil fuel. The utility has plans to add 5,950-7,900 MW of wind assets to its generation portfolio in the 2021-2024 time period. Its unit Florida Power & Light Company aims to trim its combined emission rate by 62% within 2030 from the industry’s average figure in 2005. Also, its long-term earnings growth rate is pegged at 7.79%.

Xcel Energy’s operating utilities are engaged in generating, purchasing, transmitting, distributing and selling electricity in the United States. It generates electricity using coal, nuclear, hydro, wind and solar energy. It plans to spend $210 million on augmenting wind power generation by 120 MW capacity within 2022. The company has nearly 4,000 MW wind projects in service to date. It plans to achieve 85% carbon reduction by 2030 and 100% carbon-free electricity by 2050. Also, its long-term earnings growth rate is pegged at 6.11%.

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Xcel Energy Inc. (XEL) - free report >>

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DTE Energy Company (DTE) - free report >>