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WEC Energy (WEC) to Buy 80% Stake at Illinois' Wind Farm

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WEC Energy Group (WEC - Free Report) has recently signed an agreement to acquire majority stake at the Bishop Hill III Wind Energy Center of Henry County, Illinois. Per the terms, WEC Energy will purchase 80% ownership of the wind farm for $148 million.

Developed by Invenergy, the Bishop Hill III Wind Energy Center has a capacity to generate 132 megawatt (MW) of electricity and been in service since May 2018.  

Utility’s Shift to Renewables

Rising level of air pollution along with global climate change has prompted consumers to rapidly increase the adoption of alternative energy sources, nay renewables, over the last decade. Buoyed by declining costs of solar and wind technologies as well as rising demand for more carbon-constrained practices, utilities and corporations are shifting to renewables. Consequently, many electric utilities are investing or making agreements to increase the usage of alternative energy sources to generate power.

Why Investment in Wind Power is Profitable?

While utilities are shifting focus toward renewables, solar and wind are gaining significant traction in the renewable industry. The adoption of wind energy has increased, courtesy of lower cost of turbines. In this regard, the Renewable Energy: United States report of December 2017 stated that wind turbine costs have declined by around half since 2010.

This, in turn, has made the construction and maintenance of wind power projects cheaper, setting the stage for utility providers like WEC Energy to make valuable investments in wind projects like the Bishop Hill III Wind Energy Center. Also, demand for wind energy isimpressive, with the Renewable Energy: United States report estimating a rise in of 7.2% in demand by 2021.

Moreover, the Production Tax Credit (PTC) and Investment Tax Credit (ITC) offered by the government have made investments in new wind project more productive. With these tax credits being extended through 2019, rising demand and declining turbine costs, we may expect to witness similar wind investments in the United States over the near term.

This spectacular outlook for the U.S. wind energy space has prompted other utility providers to make notable investments in wind energy for expanding their clean energy portfolio. For instance, NextEra Energy, Inc’s (NEE - Free Report) subsidiary — NextEra Energy Resources — recently announced a renewable energy partnership program with AT&T Inc (T - Free Report) . Per the power purchase agreement (PPA), the partnership will acquire 300 MW of wind energy from two new wind farms in Wilbarger and Hardeman Counties, Texas.

Similarly, to cater to the increasing demand for wind energy, NRG Energy Inc (NRG - Free Report) and Cypress Creek Renewables are set to develop a 25 MW solar project in Texas.

Price Movement

The shares of WEC Energy have gained 5.0%, against the industry’s decline of 2.2% in last 12 months.


 

Zacks Rank & Key Picks

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

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