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Duke Energy (DUK) Inks $2.8B Deal to Sell Commercial Renewables
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Duke Energy Corp. (DUK - Free Report) recently signed an agreement to sell its Commercial Renewables business to Brookfield Renewable (BEP) for $2.8 billion. The deal is subject to customary closing conditions and regulatory approval. The transaction is expected to reach completion by the end of 2023.
Rationale Behind the Deal
Commercial Renewables is an unregulated utility-scale business of Duke Energy that boasts assets of 3,400 megawatts-alternating current in the realm of utility-scale solar, wind and battery storage across the United States. As Duke Energy locks in the deal with Brookfield Renewable, it aims to become a pure regulated company with an increased focus on grid enhancement and gradual expansion into the regulated renewable energy business.
Pursuant to the sale of the business, Duke Energy will receive net proceeds of $1.1 billion. The company aims to use the sale proceeds to strengthen its balance sheet and steer clear of raising any further debt liabilities, thus providing financial flexibility to achieve business goals.
Duke Energy’s Renewable Target
Duke Energy aims to expand its regulated renewable asset base by more than 30,000 megawatts (MW) by 2035 and plans to phase out carbon emissions from electric generation by 2050. It also adopted an interim goal of reducing Scope 2 and Scope 3 emissions by 50% below the 2021 levels by 2035.
To attain this goal, it plans to invest $40 billion in zero-carbon generation, such as solar, wind and battery storage resources, and extend the life of its nuclear fleet and approximately $5 billion in hydrogen-enabled natural gas technologies. The proceeds from the aforementioned transaction are likely to contribute to its long-term goal in the renewable space.
Such efforts by Duke Energy in renewables will assist the company in achieving its target and expanding in the renewable energy space.
Utilities’ Focus on Renewables
Utilities in the United States are diversifying their energy mix with an increased focus on next-generation energy to tackle climate change. Apart from DUK, utilities that are expanding their renewable base are as follows:
Entergy Corporation’s (ETR - Free Report) arm, Entergy Louisiana, filed a request in March 2023 with the Louisiana Public Service Commission seeking consent for the construction of two solar projects with a combined production capacity of 225 MW. The company aims to expand its renewable energy portfolio with these projects.
Entergy’s long-term earnings growth rate is 5.7%. The Zacks Consensus Estimate for ETR’s 2023 earnings suggests a growth rate of 3.9% from the prior-year reported figure.
CMS Energy’s (CMS - Free Report) arm, Consumers Energy, announced the commencement of the operations of the Covert Generating Station in Southwest Michigan's Van Buren County in June 2023. This station is an important part of its industry-leading Clean Energy Plan to meet Michigan's energy needs this summer and for years to come.
CMS Energy has a long-term earnings growth rate of 7.5%. The Zacks Consensus Estimate for CMS’ 2023 sales suggests a growth rate of 3.1% from the prior-year reported figure.
The AES Corporation (AES - Free Report) announced in June 2023 that the first phase of its Chevelon Butte wind farm has commenced commercial operation. The first phase, which brings in 238 MW of clean energy to AES Corp. customers, enables the company to take a step forward in meeting its green energy goal.
AES Corp. has a long-term earnings growth rate of 8.8%. The Zacks Consensus Estimate for AES’ 2023 sales implies a growth rate of 2.3% from the prior-year reported figure.
Price Movement
In the past year, Duke Energy’s shares have decreased 9.4% compared with the industry’s 7.5% decline.
Image: Bigstock
Duke Energy (DUK) Inks $2.8B Deal to Sell Commercial Renewables
Duke Energy Corp. (DUK - Free Report) recently signed an agreement to sell its Commercial Renewables business to Brookfield Renewable (BEP) for $2.8 billion. The deal is subject to customary closing conditions and regulatory approval. The transaction is expected to reach completion by the end of 2023.
Rationale Behind the Deal
Commercial Renewables is an unregulated utility-scale business of Duke Energy that boasts assets of 3,400 megawatts-alternating current in the realm of utility-scale solar, wind and battery storage across the United States. As Duke Energy locks in the deal with Brookfield Renewable, it aims to become a pure regulated company with an increased focus on grid enhancement and gradual expansion into the regulated renewable energy business.
Pursuant to the sale of the business, Duke Energy will receive net proceeds of $1.1 billion. The company aims to use the sale proceeds to strengthen its balance sheet and steer clear of raising any further debt liabilities, thus providing financial flexibility to achieve business goals.
Duke Energy’s Renewable Target
Duke Energy aims to expand its regulated renewable asset base by more than 30,000 megawatts (MW) by 2035 and plans to phase out carbon emissions from electric generation by 2050. It also adopted an interim goal of reducing Scope 2 and Scope 3 emissions by 50% below the 2021 levels by 2035.
To attain this goal, it plans to invest $40 billion in zero-carbon generation, such as solar, wind and battery storage resources, and extend the life of its nuclear fleet and approximately $5 billion in hydrogen-enabled natural gas technologies. The proceeds from the aforementioned transaction are likely to contribute to its long-term goal in the renewable space.
Such efforts by Duke Energy in renewables will assist the company in achieving its target and expanding in the renewable energy space.
Utilities’ Focus on Renewables
Utilities in the United States are diversifying their energy mix with an increased focus on next-generation energy to tackle climate change. Apart from DUK, utilities that are expanding their renewable base are as follows:
Entergy Corporation’s (ETR - Free Report) arm, Entergy Louisiana, filed a request in March 2023 with the Louisiana Public Service Commission seeking consent for the construction of two solar projects with a combined production capacity of 225 MW. The company aims to expand its renewable energy portfolio with these projects.
Entergy’s long-term earnings growth rate is 5.7%. The Zacks Consensus Estimate for ETR’s 2023 earnings suggests a growth rate of 3.9% from the prior-year reported figure.
CMS Energy’s (CMS - Free Report) arm, Consumers Energy, announced the commencement of the operations of the Covert Generating Station in Southwest Michigan's Van Buren County in June 2023. This station is an important part of its industry-leading Clean Energy Plan to meet Michigan's energy needs this summer and for years to come.
CMS Energy has a long-term earnings growth rate of 7.5%. The Zacks Consensus Estimate for CMS’ 2023 sales suggests a growth rate of 3.1% from the prior-year reported figure.
The AES Corporation (AES - Free Report) announced in June 2023 that the first phase of its Chevelon Butte wind farm has commenced commercial operation. The first phase, which brings in 238 MW of clean energy to AES Corp. customers, enables the company to take a step forward in meeting its green energy goal.
AES Corp. has a long-term earnings growth rate of 8.8%. The Zacks Consensus Estimate for AES’ 2023 sales implies a growth rate of 2.3% from the prior-year reported figure.
Price Movement
In the past year, Duke Energy’s shares have decreased 9.4% compared with the industry’s 7.5% decline.
Image Source: Zacks Investment Research
Zacks Rank
Duke Energy currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.