Black Hills Energy Renewable Resources Completes Acquisition of Renewable Natural Gas Production Facility in Iowa
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Insights
Black Hills Corp.'s acquisition of a renewable natural gas (RNG) production facility in Dubuque, Iowa, represents a strategic move that aligns with broader market trends towards sustainable energy solutions. The demand for RNG has been growing due to its ability to reduce carbon footprint and its compatibility with existing natural gas infrastructure. This acquisition not only diversifies Black Hills Corp.'s energy portfolio but also enhances its competitive edge in the energy market.
From a market perspective, the long-term contract for RNG production at the landfill suggests a stable revenue stream, which is appealing to investors seeking consistent returns. Furthermore, by entering into the production of RNG, Black Hills Corp. is positioning itself to capitalize on potential federal and state incentives aimed at reducing greenhouse gas emissions. The company's integration of RNG into its regulated natural gas utility in Iowa could also lead to improved regulatory relationships and potential rate benefits for consumers.
The environmental implications of this acquisition are significant. RNG is a key component in the transition to a low-carbon economy and Black Hills Corp.'s investment reflects a proactive approach to environmental stewardship. By capturing methane from landfill sites, a potent greenhouse gas and converting it into RNG, Black Hills Corp. is actively reducing environmental impact and contributing to the U.S. EPA Renewable Fuel Standard Program's goals.
The company's commitment to an emissions reduction strategy through renewable resources could set a precedent for other utility companies. This move also aligns with increasing consumer demand for environmentally responsible energy sources, potentially enhancing the company's public image and customer satisfaction.
Financially, the acquisition of the RNG production facility by Black Hills Corp. could lead to an increase in both capital expenditures and operational efficiencies. The initial investment will be offset by the long-term financial benefits of owning and operating the facility, such as the sale of RNG and related environmental attributes. As Black Hills Corp. expands its nonregulated business, it may experience a diversification of income, which can mitigate risks associated with market volatility in the energy sector.
Investors will be monitoring the performance of this facility closely, as it could influence the company's future earnings and stock price. The integration of RNG production into Black Hills Corp.’s existing operations may lead to synergies that could improve the company's overall financial health, such as reduced costs from vertical integration and enhanced revenue from the sale of RNG.
DUBUQUE, Iowa, Feb. 01, 2024 (GLOBE NEWSWIRE) -- Black Hills Corp. (NYSE: BKH) today announced that its nonregulated subsidiary, Black Hills Energy Renewable Resources, completed the purchase of a renewable natural gas production facility in Dubuque, Iowa.
The acquisition of the production facility at the Dubuque Metropolitan Area Solid Waste Agency site includes onsite infrastructure and the rights to RNG production at the landfill under a long-term contract. The facility currently injects RNG into the natural gas distribution system serving Dubuque, which is owned and operated by Black Hills Corp.’s regulated natural gas utility in Iowa.
“This investment advances our goal to responsibly integrate renewable resources as a component of our overall emissions reduction strategy,” said Todd Jacobs, senior vice president of growth and strategy. “This acquisition represents our entry into the production of RNG as a nonregulated business while leveraging our expertise in owning and operating regulated natural gas pipeline systems, including RNG interconnections.”
The RNG produced from the landfill facility captures methane that would otherwise vent into the atmosphere. It is delivered under long-term contracts to a third party that purchases the RNG and its related environmental attributes, in conformity with the U.S. EPA Renewable Fuel Standard Program.
“Investing in the production facility will allow BHERR to focus on growing its RNG business with an efficient and sustainable lower-carbon fuel,” said Jacobs.
Black Hills Corp.
Black Hills Corp. (NYSE: BKH) is a customer focused, growth-oriented utility company with a tradition of improving life with energy and a vision to be the energy partner of choice. Based in Rapid City, South Dakota, the company serves 1.33 million natural gas and electric utility customers in eight states: Arkansas, Colorado, Iowa, Kansas, Montana, Nebraska, South Dakota and Wyoming. More information is available at www.blackhillscorp.com.
Black Hills Energy Renewable Resources
Black Hills Energy Renewable Resources LLC. (BHERR) is a nonregulated subsidiary of Black Hills Corporation established in 2022 to leverage the company’s expertise in developing renewable natural gas (RNG) production, interconnections and providing a pathway for RNG to access natural gas markets. BHERR makes investment into RNG development projects to deliver profitable growth and align with the company’s sustainability strategy.
Investor Relations
Jerome E. Nichols
605-721-1171
jerome.nichols@blackhillscorp.com
24-Hour Media Relations Line
888-242-3969
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