NiSource Inc.’s (NI – Free Report) unit Northern Indiana Public Service Company LLC (NIPSCO) brings Indiana-based wind projects online. The projects, namely Rosewater Wind and Jordan Creek Wind are the subsidiary’s first two wind projects that produce more cost-effective and cleaner energy for its customers across Indiana.
Details of the Projects
The 102-megawatt (MW) Rosewater Wind Farm is located in White County. Also, it is owned and operated by a joint venture (JV) consisting of NIPSCO, the developer of the facility and a tax equity investor. The reason the unit can now provide energy at lower cost is that the funding of the farm was done through tax equity investment to utilize the tax benefits more efficiently. This marks the first utilization of tax equity structure in Indiana.
The 400-MW wind farm Jordan Creek Wind Energy Center, located in Benton and Warren counties, was built by an arm of NextEra Energy Resources, LLC. It will generate energy for NIPSCO’s customers under a 20-year power purchase agreement (PPA).
Capital Plans & Addition of Renewables
Under the company’s ‘Your Energy, Your Future’ plan, NIPSCO ran a Request for Proposal (RFP) solicitation via which both the aforementioned projects were selected. While these wind plants are completed, there are other eight solar and wind projects coming up by 2023, which will add 2,145 MW of energy. Moreover, management is likely to announce additional renewable projects in the coming months. The utility is continuously working on an infrastructure modernization program for the long haul.
In the first nine months of 2020, the company invested $1.29 billion. Also, over the 2021-2024 time frame, it is going to invest in the range of $9.9-$10.5 billion.
Moreover, the company is set to retire its 100% coal-generating sources by 2028 and replace the same with reliable, more affordable and cleaner options at lower costs. It aims to reduce 90% of its greenhouse gas emissions within 2030 from the 2005 baseline and save more than $4 billion for customers of more than 30 years. NiSource has plans to invest in the $1.8-$2 billion band, primarily in 2022 and 2023, to meet its renewable goals.
Transition in U.S. Electric Utility
With the whole world resorting to renewable energy, the U.S. utility industry is also shifting its focus to clean resources for electricity generation. In 2019, wind energy was a source for 7.3% of the total electricity generation in the United States. Total annual use of wind to generate electricity in the United States increased from 6 billion kilowatthours (kWh) in 2000 to 300 billion kWh in 2019. This capacity is likely to improve 12 gigawatts (GW) in 2021 with an additional 4 GW of growth estimated for 2022.
Along with NiSource, other utilities like Xcel Energy (XEL – Free Report) , DTE Energy (DTE – Free Report) and Avista Corporation (AVA – Free Report) are also tapping the opportunity to transition to cleaner energy for adopting a business strategy that is environmentally sustainable. These companies chalked out a plan to supply 100% clean energy to customers.
Zacks Rank & Price Performance
NiSource currently has a Zacks Rank #4 (Sell).
In the past month, shares of the utility have declined 1.5% against the industry’s 0.5% growth.
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