The AES Corporation (AES), Duke Energy Corp (DUK): Is the Problem With Renewable Energy Solved?

Assuming the $44 million project, half of which was paid for by the U.S. Department of Energy, works as expected, Duke Energy Corp (NYSE:DUK) could roll the technology out to other projects. Like The AES Corporation (NYSE:AES), Duke Energy Corp (NYSE:DUK), then, is at the forefront of an important change. To that end, the company is also one of two utilities with a coal gasification facility, so battery storage isn’t the only technology it’s working on.

Duke Energy Corp (NYSE:DUK) serves over seven million customers in six states in the Southeast and Midwest. The company is largely a regulated business after buying Progress Energy for nearly $14 billion. That deal, however, led to the retirement of Duke Energy Corp (NYSE:DUK)’s CEO. Still, the shares yield around 4.4%, the dividend has been increased annually since 2007, and revenues and earnings look set for slow and steady growth. More conservative investors might prefer Duke over AES.

For Over a Decade

American Electric Power Company Inc (NYSE:AEP) has over 5 million customers in 11 states, though almost 30% of its customer base is located in Ohio. The company generates most of its earnings from regulated markets, but Ohio is working toward deregulation. That’s a material risk.

Although getting top billing in The New York Times for its battery efforts is nice, the real issue right now is how well it can manage the deregulation process in a key market. Investors willing to take on the risk of this transition could find the stock’s recent price alluring and 4.2% yield alluring, but don’t buy it just because the Times highlighted it in a battery article.

Changing Power

If utilities can cost effectively store power from less reliable energy sources like wind and solar, it could materially change the power industry. AES and Duke are both worthwhile investments experimenting with the technology today. American Electric Power Company Inc (NYSE:AEP) is facing a different set of risks, but if you believe in management’s ability to navigate deregulation, it might be worth looking at.

Reuben Brewer has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Reuben is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

The article Is the Problem With Renewable Energy Solved? originally appeared on Fool.com is written by Reuben Brewer.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.