NextEra dives deeper into wind and solar

Despite the looming Section 201 case, the company’s development and IPP arm added another 438 MW of solar projects during the quarter, while construction is underway on 594 MW of solar for utility FPL.

July 27, 2017 Christian Roselund

Image: Blattner

The threat of the looming trade case brought by Suniva and backed by SolarWorld has many in the solar industry and beyond worried, as evidenced by the activity at Solar Energy Industries Association (SEIA) and other groups.

However, there are some actors who do not appear terribly concerned about the outcome. Among these is power giant NextEra Energy, which is one of the nation’s largest developers and owners of wind and solar assets.

In its Q2 results released yesterday, NextEra announced that since the time of its Q1 results, the company’s development and independent power producer arm has added 438 MW of solar projects to its backlog. NextEra Energy Resources already has 403 MW of signed contracts for solar projects across the United States which are planned to come online over the next year and half, but it expects to build up to 1.3 GW of solar over this timeframe.

“We believe we are well-positioned to capitalize on one of the best environments for renewables development in our history,” stated NextEra Energy Executive VP and Chief Financial Officer John Ketchum on the company’s results call.

“With continued cost and efficiency improvements in wind and solar technology, economics have become the primary driver of ongoing customer origination activity.”

Going forward the company expects to build even more solar, with NextEra planning a total of 1.4-3.8 GW of solar by 2020. Clearly these projects would be affected by any trade action taken by the U.S. government, and while NextEra CEO Jim Robo says that he is watching the trade case closely, he says that he is not overly concerned.

“My own view on this is that markets adjust and this is a very competitive market out there for manufacturing panels, that the panel manufacturers are not going to abandon this market and they’ll figure out a way to compete,” explained Robo. “And it may take a little bit, but fundamentally I’m not worried about the long-term implications of whatever happens with the ITC there.”

In addition to the work through its IPP arm, NextEra is also building a large volume of solar for its utility, Florida Power and Light (FPL). Contractors Black and Veatch and Blattner are currently building 596 MW of solar for FPL, and NextEra confirmed the timeline for the first of these plants to come online by the end of the year, and the rest in 2018.

All in all, this appears to be working out well financially for NextEra as well. The parent company brought in $4.4 billion in revenues and a net income of $793 million during the second quarter. And while FPL has been a profitable business for NextEra, NextEra Energy Resources also showed a high operating margin at 26% and brought in more profit in relation to its revenues due to a lower tax burden.

This is despite significant problems for IPPs nationally due to depressed wholesale power prices. However, here NextEra’s reliance on contracted assets instead of merchant projects may be a major benefit, and in a slide accompanying its results, the company revealed that contracted renewables were responsible for around 1/3 of NextEra Energy Resources’ cash flows.

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