Clearway Energy, Inc. (NYSE:CWEN) announced that it has recently completed the acquisition of 527-megawatt (MW) Carlsbad Energy Center (Carlsbad) from Global Infrastructure Partners III (GIP) for $184 million. Clearway Energy issued 5.4-million shares of Class C common stock to fund the acquisition.
This facility will further boost the company’s clean power generation portfolio, which presently includes 7,000 MWs of wind, solar and natural gas-fired power generation facilities. The project’s power purchase and tolling agreement with San Diego Gas and Electric Company has 19 years remaining (with the total being 20 years). This agreement will ensure regular earnings from the project and boost the company’s bottom line.
Long-Term Agreement
Most of Clearway Energy’s generation assets substantially sell all of their output pursuant to long-term offtake agreements. The weighted average remaining contract duration of these long-term offtake agreements was nearly 14 years as of Sep 30, 2019.
Assets acquired by the company also have long-term power purchase agreements, which make these assets accretive to earnings and contribute to an increase in cash flows.
Acquisition and Disposition
Clearway Energy continues to acquire and dispose assets to create a portfolio that is in sync with long-term growth objectives. On May 1, 2019, the company — through its indirect subsidiary ECP Uptown Campus LLC — acquired the Duquesne University district energy system totaling 82 combined MWt, located in Pittsburgh, PA, for $107 million. As part of the acquisition, Duquesne University entered into a 40-year Energy Services Agreement in exchange for monthly capacity payments.
During the second half of 2019, the company disposed Energy Center Dover LLC and Energy Center Smyrna LLC assets to focus more on core operations.
Price Performance
Shares of Clearway Energy have outperformed its industry in the past 12 months.
Zacks Rank & Key Picks
Clearway Energy currently has a Zacks Rank #3 (Hold). Some better-ranked stocks in the same sector are Bloom Energy Corporation (NYSE:BE) , Enbridge Inc. (NYSE:ENB) and World Fuel Services Corporation (NYSE:INT) , each currently holding a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Long-term earnings growth (three to five years) for Bloom Energy, Enbridge and World Fuel Services is pegged at 25%, 6.4% and 5%, respectively.
Bloom Energy, Enbridge and World Fuel Services delivered average positive surprise of 60.1%, 11.3% and 16.2%, respectively, in the last four quarters.
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