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DTE Energy (DTE) Brings Lapeer Solar Park Online in Michigan

Zacks

DTE Energy Company DTE has recently started the commercial operation of its Lapeer solar park — one of the largest utility-owned solar parks, located east of the Mississippi River. The construction of the project started on the spring of 2016.

Located in Lapeer, MI, the 200,000-panel array solar project covers over 250 acres. On completion, it is expected to generate sufficient clean energy to power 11,000 homes.

Scope of Alternate Energy

Regulations pertaining to pollution control are becoming increasingly stringent, making it crucial for utilities to spend more on emission control infrastructure. Meanwhile, because of their clean-burning nature, investment in the alternate energy space could prove to be profitable over the long run. In particular, solar energy, which presently contributes to only 1.2% of the total electricity generation in the United States, represents ample scope of improvement in the days to come.

Our View

Due to declining costs of solar and wind energy producing technologies the global renewable energy market has been witnessing enhanced growth in the last two years. The trend to curb energy production from fossil fuel is gaining traction these days. DTE Energy is striving to position itself in this ever-expanding market.

In an initiative to transform itself into a full-fledged renewable energy provider, DTE Energy in May announced its plan to get rid of all coal-fired units by 2040. The company is gradually trying to reduce carbon emissions by more than 80% by 2050 (compared to 2005 levels).

Notably, the latest news was reported at a crucial time, when the United States slipped to the third position in the latest EY (Ernst &Young) Renewable energy country attractiveness index (RECAI). In fact, the new U.S. Government's decision to roll back many of the past administration's climate change policies, reviving the coal industry and repealing the U.S. Clean Power Plan has been hampering the growth trajectory of alternative energy industry.

We believe that DTE Energy’s promise of sumptuous investment in the renewable energy space may uplift the nation on the RECAI. However, we remain on the sidelines considering the fact that President Trump has been calling the climate change a “Chinese Hoax” and has long been in favor of reviving the coal industry. It also remains a matter of question as to whether his newly made policies, if approved, will let energy providers like DTE Energy to wholly shift to renewable resources. In that case, the entire investment plan of DTE Energy will go down the drain, causing a loss for the company. The company has already spent more than $2 billion in wind and solar resources since 2009.

Price Movement

In the last six months, shares of DTE Energy have returned 16.9% outperforming the industry’s growth of 8.7%.



The company’s focus on expanding its renewable portfolio and gradual recovery of Michigan’s economy has most likely boosted its performance.

Zacks Rank and Stock to Consider

DTE Energy carries a Zacks Rank #3 (Hold). Better-ranked stocks from the same space include NRG Energy, Inc NRG, CenterPoint Energy, Inc CNP and Brookfield Infrastructure Partners LP BIP. While NRG Energy and CenterPoint Energy sport a Zacks Rank #1 (Strong Buy), Brookfield Infrastructure Partners carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

NRG Energy delivered positive earnings surprise of 457.07% in the last four quarters. The Zacks Consensus Estimate for current-year earnings climbed by 9% to 73 cents per share in the last 90 days.

CenterPoint Energy pulled off positive earnings surprise of 10.34% in the last four quarters. The company’s 2017 estimates inched up by 0.8% to $1.31 per share in the last 60 days.

Brookfield Infrastructure Partners delivered positive earnings surprise of 1.51% in the last four quarters. The company expects its EPS to grow 11% in the next five years.

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