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AES Corp (AES) Adds 55MW Solar Project to its Portfolio

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The AES Corporation’s (AES - Free Report) subsidiary sPower has acquired Idaho solar 1 project with an operating capacity of 55 megawatt (MW), located in Kuna County, ID. The project was placed in service in late 2016. The company will continue to operate and sell the entire energy output to Idaho Power Company under a 20-year contract. The acquisition was funded via bond issuances.

The company focuses on both organic and inorganic growth opportunities, pursuing all economically feasible future acquisitions of wind and solar assets at every stage of development as well as those already in operation.

AES Corporation’s Focus on Renewable

The company looks set to focus on the growing need for renewables and is looking forward to expand its renewable footprint. Its unit AES Gener entered into a new contract during the first quarter of 2018 with Strabag for its Chile-based Alto Maipo hydroelectric project.

As of May 8, 2018, the company had a generation mix comprising 37% gas, 32% coal, 27% renewable and 4% oil, diesel & pet coke. In addition, the company had a gross 33,965 MW in operation.

The company’s subsidiary sPower recently signed long-term PPAs (power purchase agreement) for 1.2 GW with large credit worthy customers, namely Microsoft Corporation (MSFT - Free Report) and Apple Inc. (AAPL - Free Report) as well as utilities. As of June 2018, the company signed nearly 1.5 gigawatts of renewable PPAs including projects under construction totaling 5.7 gigawatts. Currently, the company aims at assigning 2-3 GW of new PPAs annually for 2019 and 2020. This would result in signing worth 7.5 GW of new renewable PPAs through 2020, all of which would be online by 2022.

Importance of Renewable

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. Per International Energy Agency (IEA), the power generation via solar PV witnessed record growth of 34% in 2017. Also, the IEA anticipates average annual growth of solar power generation of nearly 17% between 2017 and 2030 time frame.

Price Performance

Shares of AES Corporation have outperformed its industry over the past year. The stock has rallied 23.1% versus the 4.8% decline of its industry.

Zacks Rank and Stocks to Consider

AES Corporation has a Zacks Rank #3 (Hold). A better-ranked stocks in the Zacks Utility – Electric Power Industry is Ameren Corporation (AEE - Free Report) carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Ameren reported second-quarter 2018 earnings of 62 cents per share, exceeding the consensus estimate of 58 cents by 6.90%. The long-term earnings growth (3 to 5yrs) is currently pegged at 6.6%.

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