NextEra’s portfolio horizon keeps getting longer

Source: Kristi E. Swartz, E&E News reporter • Posted: Thursday, April 26, 2018

NextEra Energy Inc.’s renewable energy portfolio has grown to the point that executives said they are eyeing projects into the next decade.

The company’s wholesale power unit continues to capitalize on the falling cost of wind and solar, combined with utilities closing uneconomical coal and nuclear plants nationwide. This is allowing NextEra Energy Resources to sign long-term contracts with a wide range of customers, including large investor-owned utilities, electric cooperatives and municipalities, executives said yesterday.

NextEra Energy Resources added more than 1 gigawatt of solar and wind projects during the first three months of the year, executives said. The business unit is now looking at contracts for projects in 2020 and as far ahead as 2022.

“We’re deploying as much capital as we ever have deployed in this business,” NextEra Chief Financial Officer John Ketchum said during a conference call with analysts to discuss the company’s first-quarter earnings.

NextEra Energy Resources is the world’s biggest renewable energy developer. The company’s size gives it a number of advantages when it comes to competing for new projects.

This includes lower operating and maintenance costs and a lower cost of capital, Ketchum said.

There is also high demand, said Armando Pimentel, CEO of NextEra Energy Resources.

“I’m sure we’ve never seen the volume out in the market that we’re seeing,” Pimentel said. “It makes me pretty happy about the future.”

NextEra Energy Resources has been known for its robust renewable energy growth for more than a decade. NextEra, based in Juno Beach, Fla., also owned a regulated electric company that is adding a significant amount of utility-scale solar to its portfolio.

Florida Power & Light Co. plans to add more than 3,200 megawatts of solar to its grid, the utility said in its “10-Year Site Plan” filed with the Florida Public Service Commission. FPL, the state’s largest electric company, also finished four 74.5-MW solar projects during the first quarter of 2018.

FPL benefits from Florida’s growth and high electricity demand because of the warm weather. Besides solar, the electric company is building a natural gas plant in South Florida in an area known as the Treasure Coast.

FPL also secured its permit to build and operate two more nuclear units at its Turkey Point power plant south of Miami but has no plans to do so at this time.

Analysts said they expect NextEra’s renewable energy growth at both units to continue, especially as costs continue to fall.

This is “positioning [NextEra Energy Resources] to capture a greater share of the renewable market going forward; that said, efforts at the utility to expand solar throughout the regulated franchise aren’t quite flying under the radar anymore,” analysts from Guggenheim Securities LLC wrote in a research note yesterday.

Battery pilot projects

FPL also has two projects in a battery storage pilot program.

Renewable energy advocates have criticized FPL for aggressively blocking policy changes that would make it easier for customers to put solar on their homes and small businesses. Clean energy advocates also are pushing for utility regulators and electric companies to look at microgrids and other fresh technologies to make the power grid more resilient during hurricanes and other bad weather.

With FPL’s entry into battery storage, it is unclear whether any policy changes — at the Legislature or PSC — will take place in the near future.

Storage is a key focus for NextEra Energy Resources. The unit just put its first solar-storage combination on the grid. Ketchum called it the beginning of a phase of renewables where the company is combining solar, wind and storage in one project.

Greg Gordon, a utility analyst with Evercore ISI, asked why NextEra Energy Resources had not expanded into offshore wind and wasn’t doing more projects outside North America. NextEra CEO Jim Robo, who used to run the renewable energy unit, said the company looked at a wind project off Long Island 15 years ago.

He was critical of the process and of the offshore wind industry in general.

“It’s a moonshot in terms of building, in terms of finding people who know what they are doing in terms of construction,” he said, later adding, “It’s bad energy policy, and it’s bad business, and we tend to not do either of those things.”

When it comes to doing business elsewhere, “We have plenty of things to keep us busy in North America.”