Duke Energy Corp.’s (DUK - Free Report) business unit — Duke Energy Renewables — recently signed a 12-year virtual power purchase agreement (VPPA) of new wind energy with mobile network operator Sprint Corporation (S - Free Report) . Under this agreement, Duke Energy Renewable plans to build a 182-megawatt (MW) wind power project, Maryneal, in Nolan County, Texas.
Sprint will buy 173.3 MW once the project gets completed in 2020. The project is in line with Duke Energy’s investment plan worth $2.6 billion for commercial renewables during the 2019-2023 period.
Wind Prospects in Texas
In the United States, hydro energy is the nation’s largest renewable electricity generation source. Two nonhydro renewable sources — solar and wind — are gaining more popularity of late. As a result, increased number of wind power projects is being witnessed across the United Sates, with Texas as one of the pioneers. Notably, wind energy surpassed coal for the first time as a power source in Texas in 2019. The source generated 22% of the state’s total electricity, per a report by CNN.
With Texas being the largest electricity consumer in America, the contribution of wind energy is expected to increase in the upcoming days. This is likely to encourage utilities like Duke Energy that are adapting renewable energy sources as preferred choice to generate electricity for wind projects in Texas. In April 2019, the company announced its plan of building a 200 MW wind project in Mesteño, Starr County.
Per a recent release by the U.S. Energy Information Administration (EIA), Texas accounts for 19% of the U.S. nonhydro renewables generation in 2019 and is projected to touch 21% in 2020. Such optimistic projections have likely encouraged Duke Energy to sign the recent deal with Sprint. The agreement is expected drive e earnings with increasing use wind generation.
Focus on Wind Energy
EIA expects that annual generation from wind resource will surpass hydropower generation for the first time in 2019. Wind energy will become the leading source of renewable electricity generation and will maintain that position in 2020, per EIA. From this forecast, it is evident that growth opportunities in the U.S. wind market are abudant and utilities like Duke Energy are undertaking initiatives to expand wind portfolio. Till date, Duke Energy has invested more than $4 billion to build wind power business, while in 2018 the company generated 2,900 MW of power at 21 wind farms.
Coming to its recent initiatives, the company announced its largest wind power project —Frontier II — in Kay County, OK, with generation capacity of 350 MW in July. The project was an expansion of Frontier Windpower. When completed, Frontier I and II will cumulatively generate a total of 550 MW of wind energy. The latest Maryneal project will expand the company’s U.S. wind capacity to more than 3,000 MW.
Other utility companies like Ameren Corporation (AEE - Free Report) and Xcel Energy XEL are also undertaking initiatives to increase their wind power generation portfolio. Ameren expects to invest $1 billion in Ameren Missouri’s wind-generation projects in the 2018-2022 period. Xcel Energy through its steel-for-fuel initiative received regulatory approval for nearly 3,000 MW of new wind construction.
Zacks Rank & Price Movement
Duke Energy currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Shares of Duke Energy have gained 16.9% in the past 12 months compared with the industry’s rise of 14.8%.
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