NextEra Energy Inc. and NextEra Energy Partners LP have announced their financial results for the Third Quarter of 2024, showcasing growth in adjusted earnings and advancements in their renewable energy portfolio. During the earnings call on [insert date], CEO John Ketchum and CFO Brian Bolster highlighted a 10% increase in adjusted earnings per share year-over-year, driven by strong performance at Florida Power & Light (FPL) and Energy Resources. The company also expanded its backlog by 3 gigawatts, reaching a total of 11 gigawatts over four quarters. Strategic agreements, investments, response to hurricanes, and plans for future growth in renewables and storage were discussed.
Key Takeaways:
– 10% increase in adjusted earnings per share year-over-year.
– Added 3 gigawatts to backlog, totaling 11 gigawatts.
– Framework agreements with Fortune 50 customers for potential projects up to 10.5 gigawatts by 2030.
– FPL’s smart grid investments effectively prevented outages during Hurricanes Helene and Milton.
– NextEra Energy Partners announced a nearly 6% quarterly distribution increase and expanded wind repowering targets.
Company Outlook:
– Plans for a 6x increase in power demand over the next 20 years.
– Aims to potentially grow renewable generation portfolio from 38 gigawatts to 81 gigawatts by end of 2027.
– Projected long-term average annual growth in operating cash flow and dividends of around 10% through at least 2026.
NextEra Energy has positioned itself as a leader in the renewable energy sector, with a focus on growth and resilience. Despite challenges like hurricane impacts and market fluctuations, the company’s investments in smart grid technology and cost-saving initiatives have strengthened its market presence and financial performance. With a robust pipeline and strategic planning, NextEra Energy is well-equipped to meet the growing demand for clean energy and maintain profitability for shareholders and customers. The forward-looking statements provided in today’s earnings news release and conference call may differ from actual results due to key assumptions being incorrect or other factors outlined in our Risk Factors section and filings with the SEC, available on our website. We do not commit to updating forward-looking statements. Additionally, non-GAAP financial measures are referenced in today’s presentation, with definitions and reconciliations provided in the accompanying slides. Despite recent hurricanes Helene and Milton, FPL’s performance remained strong, with investments in a resilient grid proving beneficial. The industry is facing unprecedented growth in power demand, necessitating continued focus on reliability and resiliency. The projected shift in fundamental demand across industries, driven by factors such as 24/7 loads from data centers, reshoring to manufacturing, and electrification of industries like oil and gas and chemicals, is significant. U.S. data center power demand is expected to increase substantially, adding approximately 460 terawatt hours of new electricity demand at a compound annual growth rate of 22% from 2023 to 2030. This could potentially enable 150 gigawatts of new renewables and storage demand over the same period. It is crucial to consider how to meet this demand, what type of generation will be required, and when it can practically be brought to market to prevent power prices from escalating over time and maintain competitiveness on a global scale.
At FPL, we have a playbook in place to address the benefits and challenges of this growth, while delivering on our strong customer value proposition of low bills and top decile reliability. We are making smart investments in low-cost solar generation and battery storage, which have saved customers billions of dollars since 2001. Our experience puts us in a unique position to help customers meet their power demands, focusing on low-cost reliable energy that can deliver the needed capacity quickly. A mix of new renewable storage and gas generation is the solution, as renewables and storage are the lowest cost generation and capacity resource for customers in many parts of the U.S.
Renewables and storage can be built quickly and are already in the interconnection queue, making them the most efficient option for meeting growing power demand. While nuclear and gas will play a role, there are practical limitations and challenges associated with their use. Gas power generation and battery storage will need to be expanded to meet capacity needs over the next decade, enabling renewables to come to market as the lowest cost energy source. In conclusion, a strategic mix of renewables, storage, and gas generation is essential to meeting the increasing power demand efficiently and cost-effectively. Renewables and storage are becoming increasingly cost-effective and are expected to dominate new energy additions in the future. NextEra Energy is well-positioned to capitalize on this trend, with a track record of success in developing renewable energy projects. The company has ambitious growth targets, aiming to more than double its renewable generation portfolio by 2027. This growth will also create opportunities for co-located storage projects, further enhancing NextEra Energy’s competitive edge.
In addition to the economic benefits of renewable energy, such as job creation and economic stimulus, NextEra Energy emphasizes the importance of renewables in meeting the country’s energy needs. Wind, solar, and storage are not only environmentally friendly but also offer a cost-effective solution for powering American homes and businesses. With its experience, technology, and ready-to-develop sites, NextEra Energy is well-equipped to lead the way in the transition to renewable energy.
In terms of financial performance, FPL, a subsidiary of NextEra Energy, saw an increase in earnings per share driven by regulatory capital growth. The company continues to invest in capital projects, with a focus on renewable energy and expects strong growth in regulatory capital employed over the next few years. FPL’s retail sales also showed growth, despite milder weather conditions. Energy Resources, another subsidiary, reported solid earnings growth, driven by new investments in renewables and storage projects. The company’s backlog of projects provides visibility into its future development program expectations. We anticipate that the backlog additions will be put into service over the next few years. Moving on to our consolidated results for the third quarter of 2024, the adjusted EPS was $1.03 per share. The adjusted earnings from corporate and other were consistent with the previous year’s comparable quarter. Our long-term financial expectations at NextEra Energy remain unchanged. We aim to achieve financial results at or near the top end of our adjusted EPS expectation ranges in 2024, 2025, 2026, and 2027. We expect our average annual growth in operating cash flow to be at or above our adjusted EPS compound annual growth rate range from 2023 to 2027. Additionally, we plan to increase our dividends per share by approximately 10% per year through at least 2026 based on a 2024 base. These expectations are subject to change.
For NextEra Energy Partners, a quarterly distribution of $0.9175 per common unit was declared by the board, which is a 6% increase from the previous year. The wind repowering of approximately 225 megawatts of wind facilities is expected, bringing the total backlog of wind repowering to around 1.6 gigawatts through 2026. The partnership is expanding its organic growth opportunities and increasing its wind repowering target to approximately 1.9 gigawatts of wind projects by 2026. NextEra Energy Partners is focused on executing additional wind repowering opportunities to enhance operating performance and generation.
In the third quarter, adjusted EBITDA was $453 million, and cash available for distribution was $155 million, reflecting a decline from the previous year due to various factors including the divestiture of the Texas Pipeline portfolio. NextEra Energy Partners expects the run rate contribution for adjusted EBITDA from its forecasted portfolio at the end of 2024 to be between $1.9 billion and $2.1 billion. The partnership is evaluating options to address its financing obligations and improve its capital structure. Opportunities for growth include acquiring assets, wind repowerings, and other organic growth opportunities.
NextEra Energy Partners plans to provide distribution and run rate cash available for distribution expectations by the fourth quarter of 2024. These expectations are subject to change. This concludes our prepared remarks, and we are now open for questions. John Ketchum: Yes, so on the NEP side, we are still working diligently on the financial review and we expect to have that concluded by our year-end call. We are taking the necessary steps to ensure that everything is in order and we will provide updates as we progress. So, in terms of small modular reactors (SMRs), we are constantly evaluating new technologies and considering them as part of our resource mix. We have a comprehensive expertise across the energy value chain, including nuclear, and we are open to exploring SMRs as a potential asset in the future. At this time, we cannot confirm whether FPL will incorporate SMRs into its resource mix, but it is something we are actively considering as we look towards the future of clean energy solutions. Starting with a small SMR team within the company, we have been closely monitoring the SMR market for a long time. We have advised Fortune 100 companies on SMRs and have conducted technology and financial reviews on various OEMs in the SMR space. Many of these companies are financially strained, with only a few having the capitalization to sustain them in the coming years. SMRs are first-of-a-kind technologies that come with a high level of risk and are still relatively expensive. As renewables become cheaper, it may become more challenging for SMRs to compete economically. The nuclear fuel supply chain also faces challenges, including the need to establish enrichment and conversion industries in the U.S. Some SMRs rely on HALEU, which is still unproven. Overall, we are not bullish on SMRs and believe they may only become a viable option towards the end of the next decade. We prioritize other generation resources, such as renewables, at this time. We continue to monitor the SMR market closely and have the capacity to add SMRs to our existing generation facilities in the future.
Regarding renewable returns, we have seen a positive trend in demand for renewable projects, leading to improved margins and opportunities for growth. We remain disciplined in capital allocation and responsive to changes in the cost of capital. The market dynamic is favorable for us, and our unique position in the industry provides a strong tailwind for future growth.
In terms of backlog additions, we have added 3 gigawatts in recent quarters and 11 over the past year. While we expect some variability in quarterly signings, the increase in demand for new electrons, both in energy and capacity, is driving growth in our greenfield development program. We are confident in our ability to meet the expectations laid out at the investor conference in June and continue to see positive momentum in our development pipeline through 2027. I forgot the second part of your question, Jeremy. Did that cover the checking part too? Just market share going forward. Listen, we’ve consistently maintained roughly a 20% market share across technologies over time, and we believe that is achievable and potentially higher. We will continue to balance higher market share and higher margin, as they are interconnected. Our focus is on building projects that have great returns, create value for shareholders, and build incremental value for our platform over time.
Regarding solar versus wind and battery additions, the trends are consistent with what we’ve discussed in previous quarters. Solar and storage continue to have a strong tailwind, with solar being relatively attractive due to factors like the addition of the PTC. Storage is essential for meeting incremental demand for energy and capacity, and customers are keen on storage projects. Wind, while slightly weaker, still has interest from customers, and we see a mix of all three technologies as a good complement to provide 24/7 solutions.
In terms of Duane Arnold and transmission constraints, our large pipeline allows us to convert queue positions to different technologies without concerns about transmission. The framework agreement with Entergy and the two new ones is expected to contribute to the midpoint of our growth expectations, with opportunities to exceed that midpoint. Customer supply margins have normalized after the high gas prices in 2022, but we expect it to continue being a solid contributor going forward. Thank you for attending today’s presentation.