Electric Power, Natural Gas, Energy Transition, Nuclear, Renewables

March 10, 2025

CERAWEEK: Renewables ready to go, labor and parts delays gas plants: NextEra CEO

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HIGHLIGHTS

Power demand to increase 55% in next 20 years

Renewable energy cheaper package for near term

In a landscape of steep demand growth projections, renewables energy projects are ready to go, while labor and parts delay natural-gas generation plant development, NextEra Energy's John Ketchum said.

"When you think about the demand that we have in the power sector, it's unlike anything we've seen in the past," Ketchum, chairman, president and CEO of NextEra, said March 10 at CERAWeek by S&P Global. "We are expecting a six-fold increase in power demand over the next 20 years compared to what we saw over the prior 20 years. And so over the next 20 years, about a 55% increase in power demand, and we're going to have to be really smart in terms of how we adapt our energy policy to meet that demand."

In order to meet that growth in demand, there needs an "all of the above energy solution," he added.

"We are gonna need it all," Ketchum said about generation resources. "We're gonna need renewables. We're gonna need gas, we're gonna be new nuclear ... It's super important we get this right because we want to make sure that demand is here right now. We have to have the generation available to meet that demand" at the lowest cost possible. "Otherwise, we're gonna have a huge power affordability crisis in this country with utility bills going through the roof."

Labor shortage

However, meeting current obstacles such as parts procurement and labor shortages will push back the development of new natural gas-fired power plants, he added.

"We have a real shortage of labor supply in this country," Ketchum said about competing with data center build-out, LNG terminals, chemical companies, oil and gas refineries, and electrification of energy.

NextEra Energy is the country's largest wind and solar company in the US as well as the largest utility as owner of Florida Power and Light. In the last five years, NextEra installed 175 GW of renewables, 13 GW of gas and 3 GW of nuclear.

"It's so important to have a dialogue because everything that we're building are these are 30-, 35-, 40-year life assets," Ketchum said. "It doesn't matter if it's renewables, gas, nuclear or transmission solutions."

An active dialogue about the location of data centers is important because not every part of the country works, he said, adding there needs to be water resources, fiber connectivity, and population density to help support the workers at the data center.

"It's so important to understand where the congestion is on our transmission system because it's critically important to identify those areas of the country where we support multi-gigawatt buildouts," Ketchum said. "So, it's having those large-scale discussions."

There's not a one-size-fits-all solution, he added.

"We are going to need all forms of generation," Ketchum said. "It's really important that we make the right decisions around energy policy because we are seeing in the market today is that we want to build it all ... We want to bring renewables solutions, gas, nuclear all together, and we have capabilities to do that."

However, there is a timing difference in terms of when those generation solutions can be brought to the market, and there's a cost difference, he said.

Gas generation costs are up

"Renewables are ready to go right now because they've been up and running," Ketchum said. "When you look at gas as a solution, to get your hands on a gas turbine, and actually get a built brought to market, you're really looking at 2030 or later."

The cost of gas-fired generation has gone up more than threefold, Ketchum said. NextEra's last gas-fired generation came online in 2022.

"If we wanted to build that same gas fire combine cycle unit today, $2,400 a KW," Ketchum said.

There are a number of factors driving costs up including increasing demand for gas turbines. Labor shortage is driving prices up even more than procurement delays. A lot of contractors that worked on natural-gas-fired plant builds have retired or left the industry, Ketchum said,

"Now labor that we would use to build gas fire-generation, we're competing with data centers, LNG terminals, chemical companies, oil and gas for refineries, electrification of energy," Ketchum said. "We have a real shortage of labor supply in this country, and then you got to find a way to get the gas there."

Natural gas will be needed to meet rising demand but because of its cost and times, it will come on as a long-term solution, he added.

"We are going need it all, we're going to need new gas, we're going to need new nuclear," Ketchum said. "But nuclear also is really 2035 or later."

In the near term, renewable energy is the cheaper package as well as some gas project for which turbines have already been procured.

Inflation Reduction Act

From a policy perspective, lawmakers' decisions can also impact the ability of companies to build generation to meet the growing demand, Ketchum said referring to the Inflation Reduction Act.

"That's why you may have seen 21 house members today sign on a letter that went through [US House of Representatives Ways and Means Committee] Chairman [Jason] Smith and [US Senate Finance Committee] Chairman [Mike] Cabo saying, please don't touch the credits, don't touch the transferability provisions," Ketchum said.

Making the wrong policy decisions could lead to a huge affordability crisis and state commissions could react by making utilities build less generation at the wrong time, he added.