Duke Energy Corporation (DUK) announced that it plans to employ energy storage and power management system developed by Xtreme Power for the electricity generated at its 153-megawatt (MW) Notrees wind farm in west Texas. Xtreme Power will build a $44 million energy storage and power management system for the company.
Austin-based Xtreme Power will design, install and operate a 36 MW-capacity Dynamic Power Resource system at the wind farm. This system will store excess wind energy and discharge it to allow Duke to supply energy even when the wind is not blowing. Xtreme’s Dynamic Power Resource solution will increase the supply of renewable energy and will also help to stabilize the frequency of electricity traveling through the power grid.
To utilize the $22 million grant from the U.S. Department of Energy (DOE), Duke had announced plans to install large-scale batteries to store electricity produced by the company’s Notrees Windpower Project in Ector and Winkler counties in November 2009. In January 2011, DOE and Duke agreed upon the terms and conditions of the grant.
Duke Energy will work closely with the Energy Reliability Council of Texas to integrate the wind power and battery storage solution into the state’s independent power grid. It expects an in-service date for the battery storage system by late 2012.
Duke Energy’s stable U.S. electricity and gas operations generate a relatively stable and growing earnings stream. Looking ahead, our bullish outlook for the company is supported by its ongoing merger proceedings with Progress Energy Inc. (PGN). In addition, its strong balance sheet, ongoing capital expansion projects and above industry average dividend yield add visibility to the story.
However, the valuation continues to be restrained by a number of factors, including the present unfavorable macro backdrop, predominantly fossil-fuel based generation assets, tepid demand for electricity, foreign currency exchange volatility and pending regulatory cases. The company presently retains a short-term Zacks #3 Rank (Hold) that corresponds with our long-term Neutral recommendation on the stock.
The company is expected to release its first quarter 2011 earnings on May 3, 2011. Going forward, the Zacks Consensus Estimates for first quarter 2011 and fiscal year 2011 are currently at 35 cents per share and $1.37 per share, respectively.
Based in Charlotte, North Carolina Duke Energy Corporation is a diversified energy company with a portfolio of domestic and international, natural gas and electric, regulated and unregulated businesses, which supply, deliver, and process energy for customers in North America and selected international markets.
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