Zacks_Analysts' Blog : Turbines for Duke's Wind Projects - Analyst Blog

Duke Energy Corporation (DUK) has entered into an agreement with Siemens and Mitsubishi Heavy Industries (“MHI”) under which both will provide wind turbines for the two phases of Duke’s Los Vientos Windpower Project in Willacy County, Texas.

Per the agreement, Siemens will supply 87 2.3-megawatt (MW) turbines for the 200-MW Los Vientos I Windpower Project and Mitsubishi Heavy Industries will provide 84 2.4-MW turbines for the 202-MW Los Vientos II Windpower Project. The first delivery of turbines is expected by early June 2012.

Phase I of the Los Vientos project in Willacy County was announced by Duke Energy Renewables in August 2011. The electricity generated from the project will be sold to CPS Energy. The company announced phase II plans of the project in September 2011. The electricity generated from the project, built, owned and operated by Duke, will be sold to Austin Energy.

Construction at both these sites is expected to begin in December 2011, with commercial operation of the wind farms by late 2012.

Besides the two Los Vientos wind power projects, Duke Energy has announced four other new wind farms in 2011. It includes the 168-MW Ironwood Windpower Project in Ford County, Kansas; the 131-MW Cimarron II Windpower Project in Gray County, Kansas; the 69-MW Laurel Hill Windpower Project in Lycoming County, Pennsylvania; and the 20-MW Shirley Windpower Project in Glenmore, Wisconsin, which is already in operation.

Duke Energy Corporation’s U.S. electricity and gas operations generate a relatively stable and growing earnings stream. Looking ahead, our mostly positive outlook for the company is supported by its ongoing merger proceedings with Progress Energy Inc. (PGN), paving the way for the largest U.S. utility. In addition, its strong balance sheet and ongoing capital expansion projects add visibility to the story.

However, valuation continues to be restrained by a number of factors, including the present unfavorable macro backdrop, 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 third quarter results on November 3, 2011. The Zacks Consensus Estimates for third quarter 2011 and fiscal year 2011 are currently at 46 cents per share and $1.38 per share, respectively.

Charlotte, North Carolina-based Duke Energy 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.