NextEra Energy Resources LLC placed more than 1,800 MW into commercial operation over the past three months and added about 1,665 MW of solar, wind and storage projects to its now roughly 20-GW backlog, with plans for both more generating capacity and transmission, executives said on a July 25 call to discuss second-quarter earnings.
Those additions keep parent company NextEra Energy Inc. on track to achieve its renewables development expectations through 2026, NextEra CFO and Executive Vice President of Finance Terrell Crews II said on the call. The company is already within its 2023-2024 development expectations range and only needs about 15 GW over the next three-and-a-half years to achieve the midpoint of its 2023-2026 development expectations range of 32.7 GW to 41.8 GW.
"Given all of our competitive advantages, Energy Resources is uniquely positioned to continue to lead the decarbonization of the US economy," Crews said.
Within the backlog, NextEra during the second quarter signed its first contract for a standalone battery storage project colocated with an existing wind facility. That 65-MW storage project is expected to serve growing capacity need in the Southwest Power Pool region.
"We believe there are many more opportunities to monetize the value of our existing 29-GW operating renewables portfolio, including deploying colocated storage like we did here," Crews said.
NextEra-regulated utility subsidiary Florida Power & Light Co. (FPL) has commissioned more than 1,600 MW of new solar generation alone in the last two years, along with combined-cycle, gas-fired power plants. With more than two years left in its current settlement agreement, FPL expects to add about 3,100 MW of incremental solar through 2025, Crews said.
FPL is expected to invest about $10 billion in new solar generation and about $14 billion to $16 billion in transmission and distribution infrastructure within capital investments totaling $32 billion to $34 billion through 2025, Crews added.
After a period of underlying commodity price inflation, supply chain disruption and trade policy risk premiums, executives said NextEra is seeing signs of stability.
"Today we have a pipeline of roughly 250 GW of renewables and storage projects in various stages of development," Crews said, including projects in early stage diligence, and roughly 145 GW of secured interconnection queue positions.
NextEra President, CEO and Chairman John Ketchum said the company is "laser-focused" on competitive transmission buildout around where its renewable assets are locating.
"We are not waiting," Ketchum said. "We are taking the transmission and interconnect issues into our own hands." He cited NextEra's 2021 acquisition of Midwest-focused transmission developer GridLiance Holdco LLC as an example.
"I'm not going to talk about them today, but we have a number of various other transmission projects on the board right now that we are evaluating," Ketchum added.
Since NextEra's first-quarter earnings call, NextEra Energy Partners, a limited partnership formed by NextEra, completed a drop-down acquisition of about 690 MW of wind and solar assets, bringing its portfolio to more than 10,000 MW and "strengthening its position as the world's seventh-largest producer of electricity from the wind and sun," Crews said.
Ketchum said he expects some tailwinds, including eased price for solar panels, batteries and other equipment, to lift the company's renewables development.
Hydrogen
NextEra continued to advocate for hydrogen policy in the second quarter, aiming to help establish and support a green hydrogen market in the US to drive increased renewables penetration, executives said.
The company also advanced its own pipeline of potential green hydrogen opportunities by executing a memorandum of understanding to explore developing green hydrogen and related facilities.
"Hydrogen should be thought of as simply another renewable customer class," Crews said.
Ketchum said the company expects to hear more about federal green hydrogen regulations in late summer or early fall.
"We have built up you know, a significant hydrogen pipeline ... well over $20 billion," Ketchum said. "Hydrogen is one of those things that can really provide a nice boon to the development expectations."
Hydrogen has long development cycles, Ketchum added, so the contribution the company will see from hydrogen investments would be expected over the latter part of the decade.
Results
NextEra Energy reported second-quarter adjusted earnings of $1.78 billion, or 88 cents per share, compared with $1.59 billion, or 81 cents per share, in the second quarter of 2022. The S&P Capital IQ normalized consensus EPS estimate for the quarter was 81 cents.
NextEra reiterated its 2023 adjusted earnings guidance of $2.98 to $3.13 per share. The company also backed its prior projection of adjusted earnings between $3.23 and $3.43 per share for 2024. For 2025 and 2026, NextEra expects to grow earnings 6% to 8% off the 2024 adjusted EPS range, which translates to $3.45 to $3.70 for 2025 and $3.63 to $4 for 2026.
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