Xcel Energy Inc.
) operating division, Southwestern Public Service Company, in an
effort to boost its renewable portfolio is seeking approval from
the New Mexico regulators to procure 700 megawatts (MW) of wind
capacity via three power-purchase agreements.
The agreement with
NextEra Energy Inc.
) entails wind energy purchases from separate facilities in
Oklahoma, Texas and New Mexico, which will increase Xcel Energy's
wind capacity by 14%. The deal includes buying 199 MW from
NextEra Energy's Mammoth Plains Wind Energy Center in Dewey and
Blaine counties, Okla., 249 MW from the Palo Duro Wind Energy
Center in Hansford and Ochiltree counties, Texas and 250 MW from
Infinity Wind Resources/Roosevelt Wind Ranch in Roosevelt County,
These purchases will reduce fuel costs for customers in Texas
and New Mexico. Xcel Energy estimates the deal will lead to
savings of $590.4 million over 20 years. The additional contracts
are expected to double its wind asset base and will bring the
total Texas-New Mexico wind capacity in excess of 2,200 MW.
The latest initiative comes on the heels of the extension of
the wind production tax credits, which prompted Xcel Energy to
make such a move. The company stated that the price per
megawatt-hour of energy produced by wind generation is lower than
that of natural gas.
Xcel Energy already has a lofty wind energy capacity of 1,500
MW in its asset basket which is linked to its Texas-New Mexico
transmission and distribution network. It procures over 600 MW
through contracts from the network, which stretches across the
Panhandle and South Plains provinces of Texas, six eastern and
southeastern counties in New Mexico and parts of Oklahoma and
Of late, Xcel Energy has been on a wind power procurement
spree as is evident from its May 2013 plans for adding roughly
550 MW of wind capacity in Colorado in the period 2013 to 2016.
The latest bid will help the company achieve the renewable
generation goal of 30% by 2020.
With increasing preference for clean energy and government
legislation to increase renewable generation, we believe
alternative resources will continue to put pressure on fossil
fuel based power generation. Currently, Xcel Energy carries a
Zacks Rank #3 (Hold).
Other industry players well positioned in the market are Zacks
Ranked #2 (Buy)
CALPINE CORP (CPN): Free Stock Analysis
ENTERGY CORP (ETR): Free Stock Analysis
NEXTERA ENERGY (NEE): Free Stock Analysis
XCEL ENERGY INC (XEL): Free Stock Analysis
To read this article on Zacks.com click here.