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DTE Energy to Build Massive Solar Array in Lapeer, Michigan

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Detroit-based utility DTE Energy CompanyDTE is set to construct the largest solar array in Michigan, with a generating capacity of 45 megawatts ("MW"). The City of Lapeer is leasing the land to DTE on which it will construct two solar plants.

The utility was granted state approval for a contract with Inovateus Solar MI, LLC to develop up to 50 megawatts of power, enabling the company to move forward with the Lapeer projects. DTE is assessing potential sites to generate the remaining 5 MW of power.

DTE, the largest developer of solar power in Michigan, has five other solar projects in the state. As per Michigan's renewable energy mandate, power companies are required to generate 10% of the power from renewable sources. In that regard, DTE Energy has met the goal and intends to consistently increase investments in renewables in anticipation of tighter federal limits on carbon emissions.

DTE Electric expects to make capital investments of $8.2 billion over the 2016-2020 period in renewable generation assets.This includes $3.8 billion for maintenance and other projects, $3.2 billion for distribution infrastructure, and $1.2 billion for new generation. Over the next 15 years, DTE Electric plans to withdraw a portion of its coal-fired generation and boost the natural gas and renewable mix.

However, the extension of the solar investment tax credit, which was scheduled to expire in end 2016, by 5 years will slow down growth in the solar sector by almost 24%. Nonetheless, industry experts believe that the near-term decline in solar will be more than compensated by increased investment over the next several years. The federal investment tax credit reimburses developers 30% of the cost of solar projects, and extending it will drive about $38 billion of investment in solar power through 2021.

Per the Clean Power Plan, the U.S. Environmental Protection Agency (EPA) calls for CO2 reduction of 28% by 2025 and 32% by 2030, from 2005 levels. One way to go about this is to increase investment in renewable energy. Since tax credit is a major impetus to investment, the government has decided to extend the timeframe. This will bring more companies to invest in this sector, besides increasing investments of companies that have already adopted the renewable path.

Zacks Rank

DTE Energy carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the power sector are Korean Electric Power KEP , FirstEnergy Corp. FE and Exelon Corporation EXC . While Korean Electric sports a Zacks Rank #1 (Strong Buy), FirstEnergy and Exelon carry a Zacks Rank #2 (Buy).

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EXELON CORP (EXC): Free Stock Analysis Report

KOREA ELEC PWR (KEP): Free Stock Analysis Report

FIRSTENERGY CP (FE): Free Stock Analysis Report

DTE ENERGY CO (DTE): 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.


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

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