NextEra looks beyond huge renewables business as energy transition accelerates

NextEra Energy Inc. raised its projection for renewable energy development through next year and expects to have its largest construction program ever in 2023 and 2024 as the company moves to capitalize on rising demand for clean energy.

Additionally, executives on Jan. 26 announced a second green hydrogen project as well as a joint venture to electrify thousands of school buses and public transportation vehicles in the U.S. and Canada.

"Along with the broader public shift toward calls for action to fight climate change, over the past few years there's been an increased focus on environmental, social and governance [issues] on the part of many of our stakeholders," NextEra Chairman, President and CEO James Robo said on the company's fourth-quarter earnings call. "While we expect this trend to amplify demand among our traditional customers and in our core renewables business, we also believe that it is opening up significant new markets and business opportunities."

NextEra, which owns the regulated utility Florida Power & Light Co., expects to develop between 10,525 MW and 12,700 MW of wind, solar and energy storage projects through 2022 at its competitive power business, NextEra Energy Resources LLC, and up to 17,300 MW in 2023-2024. That would more than double the roughly 7,900 MW that NextEra Energy Resources brought into service during the past two years.

Rebecca Kujawa, NextEra's executive vice president of finance and CFO, said the outlook reflects "the significant acceleration of renewables activity over the past year and a half" and "our high level of confidence in Energy Resources' ongoing leadership position in renewable energy development."

NextEra Energy Resources, along with its affiliated companies, is the world's largest generator of wind and solar power.

'Gigawatts and gigawatts'

The developer also plans to start construction on a $20 million project in 2022 that will include a solar farm, hydrogen production and storage, and a fuel cell that will be able to feed power to the local electric grid during periods of peak demand, Kujawa said. In 2020 NextEra announced its first hydrogen pilot project, which is expected to use solar power from FPL to make hydrogen that can replace some of the natural gas burned at the utility's Okeechobee Clean Energy Center.

Across the world, companies are racing ahead with hydrogen investments that they hope will deliver longer-term options for storing renewable power and decarbonizing industry and transportation.

If green hydrogen technology proves to be cost-effective, it would in turn drive "gigawatts and gigawatts and gigawatts and gigawatts of renewable [energy] demand in this country," Robo told analysts in July 2020.

NextEra also sees the shift away from internal combustion engines as a huge driver of new power demand in coming decades. John Ketchum, president and CEO of NextEra Energy Resources, said the company's planned partnership with First Transit Inc., a transportation manager, and school bus operator First Student Inc. to electrify vehicles across North America will "enable future investments in electrification upgrades and charging stations, as well as energy management services."

"We are positioning the business to be the preferred strategic partner with [commercial and industrial] customers, and we are looking at the business in a holistic way where we can provide clean energy solutions across the board: It's wind, it's solar, it's storage, it's hydrogen, it's mobility," Robo said.

At the same time, NextEra continues to invest in natural gas infrastructure, including Mountain Valley Pipeline LLC and the Dania Beach Clean Energy Center. The company said Jan. 26 that it had written down the value of its investment in the Mountain Valley pipeline by $1.2 billion as a result of "legal and regulatory challenges." The Dania Beach project is on budget and is expected online in 2022, Kujawa said.

NextEra reported fourth-quarter 2020 adjusted earnings of 40 cents per share compared to earnings of 36 cents per share a year earlier. The S&P Capital IQ consensus normalized EPS estimate for the fourth quarter of 2020 was 38 cents.

For 2021, NextEra expects adjusted earnings per share to be in the range of $2.40 to $2.54.