Saturday, July 24, 2010

Duke Energy Intends to be Major Player in Consolidating US Utilities

Duke Energy Chief Executive Officer Jim Rogers said that consolidation in the US utility market is long overdue and that the company will be a major player in the process.

To indicate his willingness to make big deals, Rogers said at the Clean Energy Ministerial in Washington DC that the company was very interested in acquiring E.On's Kentucky assets, but was beaten out mainly over price by rival PPL (NYSE:PPL).

When asked about Duke's renewable energy business, Rogers said he sees no reason to spin off or even consider selling it as it provides better bottom-line growth to the company than its regulated assets. In fact, Rogers said it is a good time to continue buying renewable energy assets.

A Duke Energy source said that the company is in talks with its Chinese partners to create a solar energy joint venture that would allow Duke and its Chinese partner to roll out mega projects. The source said Duke hopes it can form a major joint venture with ENN Group, Huaneng Group and another partner that has not yet been publicly announced.

Late last year, ENN Group and Duke Energy signed an agreement creating a 50:50 joint venture to co-develop solar energy projects in the US. ENN Gropp has an on-going partnerships with Duke Energy in terms of technology development and market expansion, said an ENN insider focused on overseas market expansion.

"Such partnership is not limited by our joint venture," said the insider, who added he was unaware of any further solar energy joint venture plan Duke might have for China. He did did not rule out the possibility of further partnerships in solar energy projects in China between the two companies.

Though aware that Duke is talking to other potential Chinese partners, including Huaneng Group, a technology-focused insider at ENN noted that Duke’s potential cooperation with Huaneng could probably focus on wind power projects or smart grid skill development rather than solar energy.

The Duke source said the company has already reached an agreement with China’s sovereign wealth fund CIC to finance mega solar and other renewable projects. He said such a project could combine the best US corporate practices with China’s ability to manage and build out huge projects.

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