Duke Energy's New Plant to Offer 9MW Solar Power to Florida

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Duke Energy Company 's DUK subsidiary, Duke Energy Florida, recently completed its solar power plant in the Suwannee County of Florida. With a capacity to generate 8.8 megawatts (MW) of solar power, this latest plant adds on to the 4MW solar power (as of December 2016) that this subsidiary has been providing to the Sunshine State.

Build on an area of 70 acres, with 44,000 solar panels, this facility commenced its operations last month.

Duke Energy Florida's Solar Target

Under a recent settlement agreement, Florida Public Service Commission has provided Duke Energy an approval to add up to 700 MW of cost-effective solar power over the next four years. This in turn is projected to expedite the company's previous 10-year solar installation plan.

In line with its solar expansion target, the company currently plans to begin construction of its sixth Florida solar power plant in Hamilton County in 2018. The plant, with 300,000 solar panels to be installed in it, will have a capacity to generate 74.9 MW of solar energy.

Built on nearly 550 acres of land, the electricity generated from this facility will be able to light up more than 20,000 homes at peak production.

Our View

The solar industry in the United States is developing rapidly. Since 2008, solar installations in the country recorded 17-fold growth from 1.2 gigawatts (GW) to 30 GW. On the other hand, since 2010, the average cost of solar PV panels has declined more than 60% and the cost of a solar electric system has dropped by about 50%. This has made solar power all the more affordable.

Duke Energy is a premier utility service provider offering efficient power and energy services across various states in the United States and other international areas. We appreciate the company's efforts of expanding its scale of operations, pursuing additional generation projects and introducing solar projects to meet growing demands for renewable energy in the dynamic environment.

Realizing the expanding market for green energy, the company has invested more than $5 billion since 2007. Duke Energy aims to invest $11 billion to generate energy through renewables and natural gas as it moves to a low-carbon future. By retiring coal plants and bringing on more natural gas and renewables, the company has already reduced its carbon emissions by nearly 30 % since 2005. It has set a new goal to reduce its carbon emissions by 40% from the 2005 level by 2030. We believe the latest solar plant completion is a step of the company toward achieving this goal.

In September 2017, Duke Energy Florida's service was impacted by Hurricane Irma, which caused significant damage, resulting in approximately 1.3 million customers experiencing outages. The company estimated total storm restoration costs, including capital, of approximately $500 million; which may also increase based on additional information.

Considering the fact that Florida is one of only four U.S. states with utility-scale electricity generation from solar thermal technologies and second to Texas in net electricity generation, Duke Energy has ample scope to expand its solar base in the state and recover these costs incurred by its subsidiary in Florida.

In this same line, other utilities like NextEra Energy, Inc. NEE and Southern Company SO are also expected to expand their base in solar power production to triumph in the long run, which can pose stiff competition to Duke Energy.

Price Performance

Duke Energy's stock has returned 12.7% over a year, outperforming the 10.8% rally of the  industry  it belongs to. This may have been driven by the company's notable efforts to expand its renewable asset base and new natural gas generation.

Zacks Rank & Key Pick

Duke Energy currently has a Zacks Rank #3 (Hold). A better-ranked stock in the same space is Consolidated Edison Inc. ED . The company currently carries a zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 (Strong Buy) Rank stocks here .

Consolidated Edison posted an average positive earnings surprise of 0.06% in the trailing four quarters. Its current-quarter Zacks Consensus Estimate for earnings has gone up by 3 cents over the last 60 days.

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NextEra Energy, Inc. (NEE): Free Stock Analysis Report

Southern Company (The) (SO): Free Stock Analysis Report

Consolidated Edison Inc (ED): Free Stock Analysis Report

Duke Energy Corporation (DUK): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Business , Stocks
Referenced Symbols: NEE , SO , ED , DUK

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