Duke Maintains Focus on Renewables, Acquires Another Project

Duke Energy’s (NYSE:DUK) joint venture with American Transmission Company, Duke – American Transmission Co. (DATC), has recently bought the $3.5 billion Zephyr Power Transmission Project, a 950 mile transmission line which will supply wind energy generated in Eastern Wyoming to the southwestern United States. ^[1]

In our previous note about the company, we wrote about Duke’s 20MW solar project purchase from Recurrent Energy. These acquisitions demonstrate the company’s commitment to developing renewable energy sources, particularly with the rise in fuel costs and tightening environmental standards. Duke Energy is one of the largest electric utilities in the U.S. with approximately 35,000 megawatts of electric generating capacity in the Carolinas and the Midwest, as well as natural gas distribution services in Ohio and Kentucky.

Our price estimate for Duke is about $21, which is roughly in line with the current market price.

See our complete analysis for Duke Energy here

Strengthening its Renewable Energy Network

DATC purchased the 3000 megawatt (MW) transmission line project from a subsidiary of Pathfinder Renewable Wind Energy LLC., the company which is developing the project near Chugwater, Wyo. Pathfinder has already committed to use 2100MW of Zephyr’s capacity. The project, which is expected to be operational by 2020, will be built alongside Pathfinder’s wind power project to ensure optimal utilization.

Duke has announced close to 800MW of renewable energy projects in 2011. Some of the company’s important developments in the space over the past few months include:

• September 13: Duke announced that it would build a new wind farm in north-central Pennsylvania, which will serve electricity to the Delaware Municipal Electric Corp. under a 25-year agreement. ^[2]
• September 20: Duke unveiled plans to build a 202-megawatt (MW) windpower project and sell the produced energy and renewable energy credits to Austin Energy through a 25-year agreement. ^[3]
• November 15: Duke Energy Renewables acquired three 1-megawatt (MW) commercial solar projects from ESA Renewables, LLC. ^[4]
• November 22: Duke Energy Renewables and Integrys Energy Services joint venture and Smart Energy Capital announced the completion of the 1.5MW rooftop solar energy project in Pennsylvania. ^[5]
• December 12: Duke purchased two solar projects with a total generation capacity of 20MW from Recurrent Energy. ^[6]

Duke will face losses due to cost overruns at its Edwardsport Coal-to-Gas facility in Indiana as it has not been allowed to raise prices as much as it had originally planned. By focusing on the renewable energy space, Duke plans to offset the rising input costs of electricity generation and pursue environmentally sustainable developments with an eye on the future.

Understand How a Company’s Products Impact its Stock Price at Trefis

1. Duke Energy, American Transmission Co. project to deliver Wyoming wind power to California and Southwest, Duke Energy [↩]
2. Duke Energy to Build Second Pennsylvania Wind Farm, Duke Energy [↩]
3. Duke Energy to Build Fifth Texas Wind Farm, Duke Energy [↩]
4. Duke Energy Renewables Acquires Three N.C. Solar Farms, Duke Energy [↩]
5. Duke Energy, Integrys Energy Services and Smart Energy Capital Complete Rooftop Solar Projects for Two Pennsylvania School Districts, Duke Energy [↩]
6. Duke Energy Renewables Acquires Two Arizona Solar Farms, Duke Energy [↩]