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Atlantic Power to Acquire Biomass Plants From EDF Renewables

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Atlantic Power Corporation (AT - Free Report) recently announced that it has entered into an agreement with EDF Renewables Inc. to acquire two biomass plants in South Carolina for $13 million. The two plants are the Allendale plant and the Dorchester plant, located in Allendale and Harleyville, South Carolina, respectively.  The plants have a total capacity of 20 megawatts (MW) each. The company expects to close the deal in the second half of 2019 and the acquisition will be funded by the company’s discretionary cash.

The company follows a three-year business restructuring process, and the acquisition of these plants represents the second phase of external growth investment. Earlier this summer, the company closed the acquisition of the remaining interests in the Koma Kulshan hydro project.

Biomass Market Outlook

Renewable energy source has been gaining momentum globally. Wind and solar power have been two of the fastest growing sources of electricity generation on the international front over the past decade. As per International Energy Agency (IEA), power generation via solar PV witnessed a record growth of 34% in 2017. Also, the IEA anticipates average annual growth of solar power generation to be nearly 17% between 2017 and 2030 time frame.

Biomass electricity is generated from multiple fuel sources. These include wood solids, landfill gas, municipal solid waste, and other biogenic and non-biogenic materials, which generated 68%, 17%, 11%, and 4% of total biomass electricity in 2017, respectively. In 2017, generation from biomass resources came in at 64 million megawatts hours (MWh), as per U.S. Energy Information Administration (EIA).

Per EIA, the electric power sector is expected to generate nearly 89,000 MWh and 91,000 MWh per day from biomass in 2018 and 2019, respectively. Also, with respect to other sectors, biomass energy is to reach 87,000 MWh per day in both 2018 and 2019.

Price Performance

Shares of Atlantic Power have outperformed the industry in the past six months. The stock has gained 4.8% compared with its industry’s growth of 3.7%.

Zacks Rank & Other Stocks to Consider

Atlantic Power currently sports a Zacks Rank #1 (Strong Buy). Other top-ranked stocks in the same space include Ameren Corporation (AEE - Free Report) , CMS Energy Corporation (CMS - Free Report) and NRG Yield, Inc. (CWEN - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Ameren’s has an impressive VGM Score of B. The stock has seen the Zacks Consensus Estimate for 2018 earnings being revised 6.6% upward from $3.21 per share to $3.25 over the past 60 days.  

CMS Energy’s has a favorable VGM Score of B. The stock has seen the Zacks Consensus Estimate for 2018 earnings being revised 0.4% upward from $2.33 per share to $2.34 over the past 60 days.  

NRG Yield’s has an attractive VGM Score of B. The stock has seen the Zacks Consensus Estimate for 2018 earnings being revised 13% upward from $1 per share to $1.13 over the past 60 days.  

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