US renewables development pacesetter NextEra Energy plans to invest $85bn-$95bn in energy storage and generation projects through to 2025 in a bid to boost its share of an emerging $2trn clean power market.
The company’s main subsidiaries are Florida Power and Light (FPL), the largest US electric utility by number of customers and retail megawatt-hour sales, and NextEra Energy Resources, its competitive power business that claims to be the global leader in solar and wind generation and battery storage.
FPL, which closed the last of its Florida coal-fired power plants in 2020, is investing heavily to expand utility-scale solar capacity and increasingly pairing it with energy storage in the sun-drenched state. At the end of 2021, it commissioned a 409MW solar-powered battery, the world’s largest.
Energy Resources expects to bring between 27.7GW and 36.9GW of energy storage, solar, and wind capacity into commercial operation from the start of this year through 2025.
This includes between 4.9GW to 6.9GW of energy storage, 14.3GW to 18.5GW of solar, and 8.3GW to 10.7GW of wind, according to a presentation by CFO Kirk Andrews at this week’s Barclays Energy-Power Conference in New York.
Despite dwarfing its renewables competitors in every statistical category for backlog of signed contracts, development pipeline, and project portfolio, and having the largest renewables yieldco, NextEra Energy Partners, the company has no apparent interest in offshore wind.
Former CEO Jim Robo, who stepped down earlier this year, famously said that offshore wind was "bad business" and "really expensive", citing lengthy development timelines and uncertain permitting outcomes.
NextEra’s decarbonisation strategy is to lead by example by executing the largest renewables build-out by an US electric utility and striving to eliminate carbon emissions from its operations by 2045.
Energy Resources is pushing hard to leverage its purported competitive advantages, or “differentiators” as NextEra calls them, to provide a one-stop shop for clean energy solutions beyond the electric power sector to help decarbonise the national economy and reduce electric costs.
These differentiators include ability to leverage and augment existing renewables portfolio, access to capital and strength of balance sheet, advanced analytics that can enable superior site identification and design, and sourcing, buying power, and a resilient supply chain.
The clean energy transition occurring across the US is being accelerated by multiple renewable demand drivers - economic, regulatory, and sustainability - that support NextEra’s decarbonisation strategy, according to company executives.
“Renewables are not just the most economic form of generation, they are deflationary and countercyclical,” Andrews said on a recent earnings call, adding that battery storage, solar, and wind also support energy independence, help stimulate economic growth, including domestic job creation.
“We continue to see strong market demand for renewables, especially in light of the environment of high gas and power prices that we believe will persist going forward,” he told analysts.
The US at the end of 2021 had 210GW of energy storage and renewables capacity and NextEra anticipates it will need a 17-fold increase to 3.55TW (terawatts) to fully decarbonise the electric grid by 2050. That is 15 years later than the 2035 goal set by President Joe Biden.
High renewables penetration to decarbonise the electricity sector will result in 25% to 30% excess generation by 2050. The company believes this renewables surplus could be used to make clean hydrogen to decarbonise other sectors of the economy.
NextEra estimates that full mid-century decarbonisation of the US economy, presently the world’s largest at $23trn, would require a 33-fold growth in energy storage and renewables to 7TW, roughly a $4trn investment.
“Expanding renewables beyond just the power sector is projected to double the total addressable market for renewables,” Andrews told the conference.
NextEra views the new federal climate law as significant, citing the 10-year extension of tax incentives for solar and wind and creation of new ones for clean hydrogen and standalone storage. This gives the company – and industry - increased long-term visibility and a huge growth opportunity.