NextEra is 'living proof' utilities can be clean, low-cost, profitable: CEO

Proclaiming NextEra Energy as "living proof" that a power company can be "clean, low-cost and financially successful all at the same time," the company's CEO on Friday described ambitious plans to expand a "trifecta" of wind, solar and storage projects in 2020 and beyond.

Florida Power & Light, NextEra's main utility subsidiary, in the spring announced a "30-by-30" plan, in which FPL would install 30 million solar panels by 2030, adding about 10 GW of solar to FPL's generation fleet, said Jim Robo, NextEra Energy's chairman and CEO, during Friday's earnings conference call.

Also, NextEra Energy Resources, which develops and operates renewable plants on a merchant basis backed up by power purchase agreements, added 5.8 MW of generation in 2019 to its backlog of projects in what Robo described as "the best renewables development environment in our history."

"More than 50% of the solar megawatts that were added to our backlog in 2019 included a battery storage component, and the current backlog has more than 2,000 megawatts of 'trifecta' projects that combined wind, solar and battery storage together," Robo said.

Peter Kelly-Detwiler, principal at the NorthBridge Energy Partners consultancy, cited capacity numbers in a "Energy Storage Development Program" page in the earnings presentation as "the biggest surprise" in the document.

"They are astonishing: 10 MW in 2019; 12 MW in 2020; then in 2021-22 the number soars ... to 591 MW, and [after] 2022 ... it pops to an additional 786 MW," Kelly-Detwiler said in an email Friday. "That's not a curve: it's a rocket ship!"

Robo said during the conference call that his organization expects new "near-firm" wind capacity – i.e., backed by storage -- to cost $20-$30/MWh, and new "near-firm" solar to cost $30-$40/MWh.

"At these prices, new near-firm renewables will be cheaper than the operating costs of most existing coal, nuclear and less efficient oil and gas-fired generation units," Robo said.

EARNINGS SUMMARY

On a GAAP basis, NextEra Energy reported earnings per share of $1.99 in the fourth quarter, versus 88 cents/share in the same period of 2018. Adjusted non-GAAP earnings in Q4 totaled $1.44/share in 2019, versus $1.49/share in the same period of 2018.

For the full year, GAAP earnings totaled $7.76/share in 2019, versus $13.88/share in 2018, but the adjusted non-GAAP earnings in all of 2019 totaled $8.37/share, versus $7.70/share in 2018.

Adjustments included net gains on non-qualifying hedges, change in gains on equity securites held on NextEra Energy Resources nuclear decommissioning funds, the impact of income tax rate changes, NextEra Energy Partners investment gains, effects from NextEra's solar projectsi n Spain, acquisition costs and income tax expenses or benefits.

While the quarter and year ended on a generally positive note, with results near the top end of prior guidance, the Jacksonville, Florida, municipal utility JEA on Christmas Eve handed NextEra a lump of coal, as it were, by formally terminating plans to privatize the utility.

"I would say we're disappointed that the sale process has been terminated," Robo said. "We think we could have brought enormous value to the customers and the citizens of Jacksonville."

Asked about the possibility of acquiring South Carolina's Santee Cooper utility, Robo declined comment beyond saying that "we remain very interested."

"We think South Carolina is a terrific place to do business," Robo said.

Regarding the general subject of mergers and acquisitions, Robo said NextEra has been "very focused" on projects that would be accretive to NextEra's earnings.

"I don't think there's a utility in the country that wouldn't benefit from the application of our playbook," Robo said.