Shares of Enterprise Products Partners (EPD -0.04%) rose as much as 5.1% in trading on Monday after announcing a big solar farm acquisition. Shares closed the day up 5%.
Enterprise Products Partners is buying power from 100 megawatts (MW) of a solar project from developer EDF Renewables. The total project is 345 MW and is located in Wharton County, Texas. The agreement is part of management's plan to generate 25% of its power from renewable energy sources by 2025.
It didn't hurt that markets were up significantly today on a more bullish view of the economy in 2021. Stocks have dropped over the past week on the fear that higher interest rates would hamper the economy and investor returns, but that sentiment has reversed today.
Buying power from solar energy projects is a way for companies to lower the risk of the cost of energy rising, which is ironic for an energy company. If the cost of electricity rises, Enterprise Products is effectively locking in their costs here, giving the company a cost shield. But it's also a way to signal to investors and the community that they're making environmentally sound investments. I don't think this will impact this energy stock long term, but right now it's one of the factors driving the stock higher today.