Shares of NextEra Energy Partners, LP (NEP - Free Report) inched up1.10% to close at $31.24 following its announcement of the acquisition of two wind farms from its parent company, NextEra Energy, Inc. (NEE - Free Report) .
NextEra Energy Partners, set up as a limited partnership by NextEra Energy, engages in owning, operating and acquiring contracted clean energy projects. It owns interests in wind and solar projects primarily in North America.
Details of the Transaction
The partnership has acquired the 199 megawatt (“MW”) Cedar Bluff Wind Energy Center and the 86 MW Golden Hills Wind Energy Center, bringing NextEra Energy Partners’ portfolio of contracted renewable energy to nearly 2,656 MW. Both these facilities have remaining contract lives of around 20 years.
The transaction is worth $312 million, funded partly by a term loan and partly by a cash and credit line. NextEra Energy Partners also assumed liabilities of nearly $253 million.
The partnership, structured as a YieldCo, expects the new wind farms to boost the second quarter distribution by 3.5% and also help itto achieve 12%–15% annual growth in limited partner distributions through 2020.
Wind Energy Prospects
The American Wind Energy Association (“AWEA”) reported that the U.S. wind industry installed 520 MW during the first quarter of 2016. This is the strongest-ever quarter since 2012 bringing the installed wind capacity to 74,512 MW. Wind capacity of over 10,100 MW is currently under construction following the five-year extension of the Production Tax Credit (PTC) in Dec 2015.
As per the AWEA, the U.S. still ranks as the leading producer of energy from wind. Wind power is anticipated to constitute 20% of America’s electricity generation by 2030, a leap from 4.7% in 2015.
Zacks Rank and Key Picks
NextEra Energy Partners currently carries a Zacks Rank #3 (Hold).
A couple ofbetter-ranked stocks in the same space include Gevo, Inc. (GEVO - Free Report) and Hydrogenics Corp. , both carrying a Zacks Rank #2 (Buy).
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