American Electric Power Inc.
) is busy increasing its wind power deliveries in Ind., Michi.
and Okla. regions to meet the surging demand for renewable
Recently, Indiana Michigan Power Company (I&M), a fully owned
subsidiary of American Electric Power, signed a 20-year power
purchase agreement (PPA) with EDP Renewables North America LLC to
buy renewable energy from the 200 MW Headwaters wind farm.
Located in Ind., the Headwaters wind farm project is scheduled to
be installed by the end of 2014. The project will be connected to
the AEP transmission system to deliver power to both Mich. and
Ind. customers. I&M will have a total power generation
capacity of 450 megawatt (MW).
The Production Tax Credits (PTC) extension in Jan 2013 ensures
significant wind capacity additions over the next three years,
thereby leading to higher generation from wind. This favorable
environment facilitates long-term PPAs in the U.S., thereby
creating growth opportunities for companies like EDP Renewables.
Again, American Electric Power's Okla. unit - Public Service
Company of Oklahoma - recently issued a request for proposals for
up to 200 MW of long-term purchase deals for wind energy.
The proposals call for wind projects that are in advanced stages
of development and capable of qualifying for the federal
government's PTC. Power delivery under the deals should start by
Jan 1, 2016, subject to approvals by Oklahoma Corporation
Commission. Any purchase made herein will replace a PPA that is
expiring at the end of 2015.
American Electric Power Company Inc. is one of the largest
investor-owned utility holding companies in the country, catering
to over 5 million customers across 11 states. However,
uncertainty surrounding its predominantly fossil fuel based
generation assets continues to weigh on the valuation of the
stock. Hence, the company is buying more renewables as federal
regulators have given a directive on emissions from coal-fired
power plants. The company's Indiana Michigan unit operates over
5,700 MW of coal and nuclear generation to supply electricity to
more than 582,000 customers.
Stipulating installation of renewable sources of electricity
generation as mandated by Renewable Energy Standards has
benefited the wind sector over the last few years with the PTC
acting as a catalyst. As per the Energy Information
Administration or EIA, renewable generating capacity will account
for nearly one-fifth of the total capacity in 2040. Of this,
solar generation will be the primary contributor to renewable
capacity growth, with wind capacity occupying the second spot.
The company presently retains a Zacks Rank #3 (Hold). However,
other stocks to consider are
Companhia Paranaense de Energia
CPFL Energia S.A.
). While Companhia Paranaense and CPFL Energia carry a Zacks Rank
#1 (Strong Buy), ALLETE holds a Zacks Rank #2 (Buy).
AMER ELEC PWR (AEP): Free Stock Analysis
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