Hawaiian Electric, Eurus Energy Arm Ink Deal For Wind Project

Hawaiian Electric Industries, Inc. (NYSE:HE) ) recently signed a power purchase agreement (PPA) with EE Ewa LLC, a unit of Eurus Energy America Corporation, to buy electricity from a 46.8-megawatt Palehua wind project. The company has submitted a proposal regarding this project with Public Utilities Commission, requesting for an approval.

Details of the Deal

If approved, Palehua project will be online by December 2022. The wind farm will be built covering an area of nearly 1,600 acres on the eastern slope of the Waianae Range. The project will have 13 wind turbines, capable of generating about 150,000 megawatt hours (MWh) of energy annually. This power generation will be sufficient to serve nearly 25,000 homes power requirement every year.

Per the terms of the PPA, EE Ewa will sell electricity to Hawaiian Electric at a levelized cost of 10.975 cents per kilowatt hour (KWh), making it one of the state's lowest-cost renewable resources. The project will be beneficial for Hawaiian Electric’s customer by offering electricity at a cheaper rate than costlier fossil fuel power.

The project once operational is expected to reduce fossil fuel use and greenhouse gas emissions. This project will add nearly 2% to the Hawaiian Electric's renewable energy portfolio during the 22-year term of the agreement.

Wind Energy’s Growth Prospects

Renewable Energy source has been gaining momentum globally. Wind is one of the fastest growing sources of electricity generation in the United States over the past decade. Per a latest release from the American Wind Energy Association (AWEA), the new wind project in pipeline reached a record high of 20,798 megawatt (MW) as of Sep 30, 2018. The total number of wind projects under construction is nearly 107 projects across 23 U.S. states.

Also, 17,167 MW of wind capacity is in advanced development phase, bringing the total activity of wind project in pipeline to nearly 37,965 MW, reflecting 28% year-over-year growth. Such developments in wind power generation must have encouraged utility providers like Hawaiian Electric to reap the benefits of the expanding wind energy space.

With this similar agenda, we have witnessed other utilities to invest significantly in wind power projects of late. In July 2018, Alliant Energy (NYSE:LNT) announced its plans to produce more wind energy from Iowa and entered into an agreement with Invenergy for developing the 210 MW Richland Wind Farm in Sac County, IA. In June, NextEra Energy (NYSE:NEE) signed a power purchase agreement (PPA) to acquire 300 MW of wind energy from two new wind farms in Wilbarger and Hardeman Counties, TX. In May, Ameren Corp (NYSE:AEE) inked a deal to acquire a 400-MW wind farm in northeast Missouri.

Price Performance

Shares of Hawaiian Electric have outperformed its industry over the past year. The stock has inched up 0.5% against the 5.5% decline of its industry.

Zacks Rank

Hawaiian Electric 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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