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TransAlta Company TAC has signed two long-term power purchase agreements (PPAs) for the offtake of 100% of power produced from the 300 MW (megawatt) White Rock wind power project in Caddo County. With this project, TAC is moving closer to its clean electricity growth plan which foresees a capacity of 2 gigawatts by 2025.
Wind project details
Construction of the project will begin at the end of 2022 with a target operating date in the second half of 2023. The estimated capital required will be $ 460- $ 470 million, which will likely be funded by existing cash and tax equity. from TransAlta.
The wind project will likely generate total annual profit before interest, taxes, depreciation and amortization of $ 44 million, including production tax credits. TransAlta will be responsible for the construction, operation and ownership of the facility, which will include 51 Vestas turbines.
Emissions reduction initiatives
During the September quarter, TAC began construction on the 130 MW Garden Plain wind project while its 206 MW Windrise wind project reached the final stages of commissioning. With a focus on wind power, TransAlta acquired a 122 MW solar portfolio in North Carolina and issued a full notice to proceed with the 48 MW Northern Goldfields solar project.
In addition to expanding its renewables, TAC is pulling out coal-fired projects. In the third quarter of 2021, TransAlta announced its intention to suspend the Sundance Unit 5 recharge project and to withdraw Unit 1 from Keephills at the end of 2021 and Unit 4 from Sundance in 2022, with a 1,200 MW coal-fired capacity. TransAlta aims to reduce its emissions by 70% by 2030 from its 2005 base levels and achieve full carbon neutrality by 2050.
Other electric utilities are also taking steps to provide clean and reliable energy to their customers, including Duke Energy DUK, Xcel Energy XEL and Allied energy LNT, all currently wearing a Zacks Rank # 3 (Hold). All three stocks plan to deliver absolutely clean energy by 2050.
The long-term profit growth rate (three-five) for DUK, XEL and LNT is set at 5.3%, 6.4% and 6.1% each. The dividend yield of Duke Energy, Xcel Energy and Alliant Energy is 3.8%, 2.7% and 2.7% respectively.
Surprise profits delivered by DUK, XEL and LNT over the last four quarters are 2.3%, 2.1% and 4.4% each, on average. Zacks’ consensus estimate for 2022 earnings for Duke Energy has risen 0.2% in the past 60 days, while those for Xcel Energy and Alliant Energy have remained stable.
Zacks Ranking and Price Performance
Over the past year, shares of TransAlta, currently a No.3 ranked player in Zacks, have gained 50.6%, outpacing the industry’s 8.6% gain. You can see The full list of Zacks # 1 Rank (Strong Buy) stocks today here.
One year price performance
Image source: Zacks Investment Research
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