It’s the end of July which means it’s the beginning of second quarter results season. First up comes NextEra, which hosted its Q2 earnings call today, a call which reflected an optimism driven by the company’s record-setting renewable development backlog and deep portfolio of Q2 project acquisitions.
Positive results drive optimism which is more than apparent when you look at the breakdown of the aforementioned development backlog:
There is a TON of expected development, which could come as no surprise as NextEra has long been one of the nation’s leading developers of renewables. While the expected solar development has quite a large range in possibility, it would come as no surprise if the final number came closer to the high end of 7.3 GW.
This is in addition to the projects being built by Florida Power and Light (FPL), a subsidiary of NextEra, which has plans to install 30 million solar panels by 2030, roughly 10 GW. Furthermore, the company has already begun construction on 10 projects nearing 750 MW in capacity, all of which are anticipated to achieve commercial operation by Q1 2020.
Additionally, these expectations don’t include generation portfolio acquisitions. In Q2, NextEra completed the acquisition of 611 MW of wind and solar projects from a subsidiary of NextEra Energy Resources. This was done via a $900 million convertible equity portfolio financing, as well as existing debt capacity.
What shouldn’t go unnoticed is the projection that from 2021-2022, the company plans to have solar development overtake wind development. This is a huge prediction for any power company, let alone one of the most prolific wind developers in the country. Even more interesting is that this capacity flip is set to occur as the solar investment tax credit is set step down before its expiration, barring the oft called for extension, in 2023.
The only figure that doesn’t inspire confidence is the anticipated development of energy storage. While the earnings call specifically mentioned the 200 MW battery storage system being developed by FPL and insisted that battery storage will remain a planned partner with future solar development for reliability and flexibility, that 700 MW difference in the high and low-end expectation is not exactly inspirational.
However, the company expects 1.13 GWh of storage to go operational by 2022. The projects in this list include:
- 440 MWh in Arlington, CA
- 200 MWh in Dodge Flat, NV
- 120 MWh in Wheatridge, OR
- 120 MWh in Wilmont, AZ
- 100 MWh in Fish Springs Ranch, NV
The storage outlook is by no means poor, it just has the misfortune of having to share the light with some crazy amounts of solar and wind development. What’s more is that storage is an emerging technology and advancements in storage ability will likely drive down prices and increase development, much as we saw with solar over the past decade. The actual figure that gets installed by 2022 could well be higher than projected.
From a company standpoint, NextEra shared that both financially and in terms of completed and backlogged development, Q2’s results reflect the expectations that the company had in its projections. Even considering the impressive levels of development and anticipated development, this is not surprising for NextEra, The company has long been one of the leading power companies for renewable development, being one of the first to recognize the on the whole it is more economically sound to develop renewables than it is to continue with the development and upkeep of traditional generation assets.
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