Black Hills Invests $125M, Builds Wind And Pipeline Project

Black Hills Corporation (NYSE:BKH) recently announced the completion of Busch Ranch II wind project in southern Colorado and the 35-mile Natural Bridge pipeline in eastern Wyoming.

The company now owns and operates 150 megawatts (MW) of wind generation in southern Colorado. It invested $71 million to develop the 60 MW Busch Ranch II wind project. All the energy produced by this wind project will be delivered to Colorado Electric through a 25-year power purchase agreement.

Wyoming Gas, a subsidiary of Black Hills, invested $54 million to construct the 12-inch steel Natural Bridge pipeline project. This project connects new supply points near Douglas, WY and interconnects existing facilities near Casper, WY. This provides additional capacity and ensures that Black Hills’ cost-effective solution will meet long-term demand of natural gas customers in the Casper and Riverton areas.

Per the U.S. Energy Information Administration (EIA) release, annual U.S. dry natural gas production will average 92.1 billion cubic feet per day (Bcf/d) in 2019, up 10% from 2018 levels. Natural gas production for 2020 is projected at an average of 94.9 Bcf/d.

Focus on Cleaner Energy and Reliability

The company is focused on clean energy development and has been modernizing its electric system for more than a decade. The company is developing its renewable energy portfolio to build one of the cleanest energy grids in Colorado by using wind, solar and natural gas generation.

In the past few years, the U.S. renewable energy industry has witnessed significant growth. Awareness toward lower pollution level led to higher usage of renewable energy sources. Per a recent release by EIA, U.S. electric power sector generation from renewable sources other than hydropower — principally wind and solar — will rise from 408 billion kilowatthours (kWh) in 2019 to 466 billion kWh in 2020.

The recently-completed wind project will enable Colorado Electric to achieve the state’s Renewable Energy Standard of delivering 30% of its energy from renewable resources by 2020. We believe that both the projects reflect the company’s inclination to serve its customers with cleaner energy.

Infrastructure Investment From Utilities

The company is investing systematically on its electric and natural gas utilities. Its capital expenditure plan for the next five years is focused primarily on projects and initiatives that maintain safety and reliability as well as foster customer growth. It expects to spend $2.9 billion capital through 2019-2023 time period.

Other companies from the same industry are also investing on a long-term basis to strengthen their infrastructure. Apart from adding more clean assets in their generation portfolio, utilities are strengthening their transmission and distribution lines, installing smart meters and using latest technology for maintenance of the electric lines. NextEra Energy (NYSE:NEE) has plans to invest nearly $36.6 billion in different projects from 2019 through 2023. Xcel Energy (NASDAQ:XEL) is planning to invest $22 billion from 2020 to 2024. Duke Energy Corporation (NYSE:DUK) currently intends to invest about $37 billion in its overall growth projects for the 2019-2023 period.

Price Movement

In the past 12 months, shares of the company have gained 11.7% compared with the industry’s rise of 7%.

Zacks Rank

Black Hills currently has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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