AVANGRID (AGR) Receives Power Supply Contract From Google

AVANGRID, Inc.’s (NYSE:AGR) subsidiary — Avangrid Renewables — signed a contract with Google, a subsidiary of Alphabet Inc. (NASDAQ:GOOGL) , to supply 196 megawatt (MW) of clean energy from new South Dakota wind farms.

Per the agreement, the power produced from Avangrid Renewables’ Coyote Ridge and Tatanka Ridge Wind Farms in Brookings and Deuel counties will be sold to Google. Each of the wind farms will generate 98 MW of clean energy. The renewable power usage will help Google to utilize 100% renewable energy for its global operations.

South Dakota Renewable Assets

Once the wind farms come online, AVANGIRD through its subsidiary will control more than 500 MW wind power assets. In last six months the company returned 15.9% outperforming the Zacks Electric Power industry’s rally of 3.2%.

South Dakota is among the windiest states in the United States and is a preferable choice for utility operators to develop wind projects. In September 2017, one of the largest wind farm operators of the United States, Xcel Energy (NYSE:XEL) , announced plans to develop 300 MW of wind farm in the state.

Currently, South Dakota has nearly 1,000 MW of wind assets in operation and this windy states have potential and offers opportunity to the utility operators to set up new projects.

Renewables Gaining Popularity

The carbon-free power production and declining production costs is driving popularity of the renewable sources as an energy source to produce electricity. The U.S. Energy Information Administration (EIA) projects higher usage of wind energy in the total production. Wind capacity at the end of 2017 and 2018 is expected to be 88 gigawatt (GW) and 96 GW respectively, up from 82 GW in 2016.

Avangrid Renewables continues to add renewable power generation in its existing 6.3 GW of generation capacity, courtesy of 53 wind farms in 18 states. The company’s long term plan is to add 1.8 GW of new wind and solar asset within 2016-2020 period. The company aims to invest nearly $3.3 billion in 2017-2020 to fulfill renewable goals.

Despite the new U.S. administration’s initiatives to promote higher usage of coal, importance of renewable energy is increasing among the existing utilities of the Unites States. The recent plans of American Electric Power Company Inc. (NYSE:AEP) substantiate that fact. The company will invest nearly $1.8 billion in enhancing renewable generation capacity with 2018-2020 time period.

Zacks Rank

AVANGRID currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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