Duke Energy Corp.’s (NYSE:DUK) subsidiary, Duke Energy Florida, has recently submitted a proposal with the Florida Public Service Commission (FPSC) for reducing its electricity rates in 2020. Once approved, this will help each residential customer reduce the monthly electricity bill by $4.69 per 1,000 kWh beginning January 2020.
Electricity rates for commercial and industrial customers will decrease between 3% and 9%. To this end, the company has identified lower fuel costs as the primary factor enabling the reduction in electricity rate.
Duke Energy’s Solar Plans in Florida
The aforementioned proposal also included the company’s plan to strengthen its renewable energy portfolio in the state, keeping solar energy in focus. Indeed, the fact that Florida, widely known as the sunshine state, is currently the fifth-fastest-growing solar market in the United States, has made the state a solar hub attracting huge expansion plans. Per the Solar Energy Industries Association, Florida is currently the 2nd U.S. state projecting installation of solar capacity of nearly 5.5 gigawatts (GW) over the next five years.
Undoubtedly, increasing solar opportunities in Florida are luring utilities like Duke Energy to invest in the state’s growing solar market. In line with this, Duke Energy Florida is investing around $1 billion in the construction of a total of 700 MW of cost- effective solar power facilities through 2022.
Renewable Energy Prospects on a Global Scale
Over the past few years, renewable sources of energy have been significantly utilized to produce electricity globally. The share of renewables in meeting global energy demand is expected to grow one-fifth to 12.4% by 2023, per a report by the International Energy Agency (IEA).
Such robust renewable energy prospects are thus ushering in notable investments in the clean energy space. Per a recent report by The United Nations Environment Programme (UNEP), global investment in new renewable energy capacity is set to reach $2.6 trillion by 2019 end. Solar power alone is estimated to draw half of the investment. Hence, with the increasing adoption of renewable energy, many utility companies are shifting away from fossil fuel (their preferred choice for energy resource) and investing more in renewable energy sources. This is evident from Duke Energy’s investment plan worth $2.6 billion in commercial renewables for the 2019-2023 period.
Keeping in these lines, American Electric Power (NYSE:AEP) also plans to invest approximately $2.2 billion in contracted renewables over the 2019-2023 period. Pinnacle West Capital (NYSE:PNW) has plans to invest $915 million in clean energy generation during the 2019-2021 period. DTE Energy (NYSE:DTE) has already invested approximately $2.5 billion over the last 10 years and currently focuses on more than doubling its renewable energy generation capacity by investing an additional $2 billion by 2024.
We believe such expanding investments in renewable energy will further bring down the cost of clean energy generation in the days ahead, enabling utilities like Duke Energy to offer more affordable, reliable, carbon-free electricity eventually.
Zacks Rank and Price Movement
Duke Energy currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Shares of the company have rallied 19.5% in the past 12 months compared with the industry’s growth of 16.3%.
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