Duke Energy Corporation (DUK) has brought a commercial solar photovoltaic power project under development in San Antonio, Texas. The company purchased the project titled Blue Wing Solar Project from Juwi Solar Inc. based in Boulder, Colorado. The 14 MW project will consist of 214,500 ground-mounted First Solar Inc.’s (FSLR) thin film panels.
 
Duke Energy also got a 30-year power purchase agreement to sell all of the output from the solar farm and associated renewable energy credits to San Antonio-based CPS Energy, one of the largest municipality-owned utilities in the U.S. Duke Energy expects to finish construction on the project by the fourth quarter of 2010.
 
Blue Wing will be the first commercial solar power project Duke Energy will own and operate. As of now, Duke owns and operates 733 MW of commercial wind power generation. In total, the company has committed more than $1 billion since 2007 to build its wind energy business.
 
Duke Energy is the third largest electric power holding company in the United States, based on kilowatt-hour sales. Its regulated utility operations serve customers in five states – North Carolina, South Carolina, Indiana, Ohio and Kentucky.
 
Duke’s steady performance across its solid base of stable utility operations, higher rates, strong balance sheet, an above-industry average dividend yield and a relatively cheap earnings-based valuation support our bullish outlook for the company. However, the present unfavorable macro backdrop, lower demand for electricity, foreign currency exchange volatility, and pending regulatory cases continue to restrain valuation.
 
We currently have a Neutral recommendation on Duke Energy, which reflects our view that the shares will trade at par with its peer companies such as Public Service Enterprise Group Inc. (PEG), FirstEnergy Corporation (FE) and Consolidated Edison Inc. (ED).
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