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CMS Energy's (CMS) Gratiot Farms Starts Wind Power Supply

Zacks Equity Research
·3 min read

CMS Energy Corp. CMS announced that the Gratiot Farms Wind Project, operated by the company’s principal subsidiary, Consumers Energy, has started operations since Dec 16. Installed with 60 turbines, this plant has the capacity to provide 150 megawatts (MW) of clean energy, which can light up the residence of approximately 58,000 Michiganian.

Worth an investment of $260 million, Gratiot Farms is in line with CMS Energy’s strategy of investing $1.8 billion in renewables during the 2020-2024 period.

Consumers’ Wind Energy Adoption

In line with the global transition toward a greener environment, Consumers Energy plans to reduce carbon emissions by more than 90% by 2040 and eliminate the use of coal to generate electricity during this time frame over the long run. With wind energy being one of its strengths in renewables, we expect to see a notable expansion in Consumer Energy’s wind portfolio. The Gratiot Farms project is a bright example of that.

Looking ahead, under Consumers’ renewable energy plan, the Michigan Public Service Commission (MPSC) earlier approved the acquisition of up to 525 MW of new wind generation projects and authorized Consumers to earn a 10.7% return on equity on any projects approved by the MPSC. As part of this plan, the MPSC approved Consumers to purchase the Crescent wind generation project, which comers with a capacity of up to 166 MW, in Hillsdale, MI.

The scheduled commencement of the Crescent project is likely to have been delayed due to the COVID-19 pandemic.

Wind Energy Prospects & Utilities

In spite of the persistent adverse impact of the COVID-19 pandemic, the U.S. Energy Information Administration (EIA) expects 39.7 gigawatts (GW) of new electricity generating capacity to start commercial operation in 2021, with wind accounting for 31% of the new electricity generating capacity. Moreover, 12.2 GW of wind capacity is scheduled to come online in 2021.

This surely implies ample growth opportunity for utilities that are expanding their renewable portfolio, with wind energy constituting a major portion. Notably, DTE Energy DTE, during the second quarter of 2020, commissioned the largest wind park in Michigan, the Polaris Wind park, which has 68 turbines and can power 64,000 homes.

Notably, Xcel Energy XEL is aiming to increase its wind portfolio by 70% in 2021 from 2016 levels. The company is planning to add 4,700 MW of wind energy in the generation portfolio, which will be enough to provide clean power to nearly 2.3 million homes annually.

Dominion Energy D owns a few wind projects and is working to develop 2,640 MW offshore wind projects to further expand renewable footprint in Virginia.

Zacks Rank & Price Performance

The stock currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

In the past year, shares of the company have lost 7.9% compared with the industry’s decline of 4.3%.

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