Duke Energy (DUK) is well placed to deliver strong growth over the next few years, driven by its U.S. Franchised Electric & Gas division. We estimate that this division alone contributes nearly 80% to our $19.38 stock value for Duke Energy, which stands roughly in line with the market value. Duke Energy competes with other electric utilities like American Electric Power Company (AEP), Exelon Energy Corp. (EXC) and Allegheny Energy (AYE).
We estimate that the revenue per MWh for this division increased from around $64 in 2005 to nearly $70 in 2009. In 2010, we estimate it increased another 5%, and should reach around $90 by the end of our forecast period, growing at an average annual growth rate of around 3%.
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Duke Energy Acquires Solar Farm
Duke Energy is moving ahead with its plans for increasing the number of renewable energy projects that it has. It already has four solar farms in the U.S., three of which are in North Carolina. Now it has acquired a 1 megawatt solar farm on the grounds of Martins Creek elementary school in North Carolina from ESA Renewables, LLC.
The Martins Creek Solar farm, which is the only solar farm on school premises in North Carolina, is also the third-largest solar farm located on school property in the country. The solar farm has 4,400 ground-mounted photovoltaic solar modules that will generate 1.3 million kilowatt-hours of electricity per year, according to Duke Energy estimates. 
Duke Energy Upgrading its Wind Farm in Texas
Duke Energy is enhancing the technology at its Notrees wind farm in Texas, which is located in West Texas and is one of the most significant wind farms for the company. The company has selected Xtreme Power to design, install and operate a 36-megawatt network of batteries, which will allow it to supply energy even when the wind is not blowing. The system will work by storing surplus energy and discharging it whenever electricity demand is at its peak and should be ready near the end of next year. 
The revenue stream from Duke Energy's renewable energy projects are expected to become more significant in the coming years. As a result Duke Energy's continued focus on acquiring and developing renewable projects like solar farms and wind farms can manifest into a higher growth rate in the revenue per MWh for its U.S. Franchised Electric & Gas division from what we forecast.
If the revenue per MWh increases at an average annual growth rate 150 basis points higher than our current forecasts, reaching around $100 by the end of our forecast period, it would mean an upside of around 17% to our current price estimate for Duke Energy's stock.
Disclosure: No position