NextEra Energy Inc., one of the world's largest renewable energy companies, reached a record for origination in the third quarter and is looking to capitalize on its scale as smaller competitors face more challenges from supply-chain disruptions and rising costs.
Rebecca Kujawa, NextEra's executive vice president of finance and CFO, said in an earnings call Oct. 20 that the record quarter sets the company up for "tremendous" growth in renewables and follows a record year of renewables deployment in 2020.
At its competitive power supply subsidiary NextEra Energy Resources LLC, the company added 2,160 MW of origination to its backlog in the third quarter, executives said, including 1,240 MW of wind, 515 MW of solar and 345 MW of storage. The company has signed contracts for up to 11,602 MW from renewables in 2021-2022 and expects as much as 12,700 MW over the same period, according to the earnings presentation. Its backlog of signed contracts is about 18,100 MW.
Through 2024, the company sees up to 30,000 MW contracted from wind, solar, storage and repowered wind products, according to the presentation.
"We're increasingly thinking about ourselves as the company that's going to lead not only the clean energy transformation of the electric grid but really the clean energy transformation in the U.S. economy and the decarbonization of the U.S. economy," NextEra Chairman, President and CEO Jim Robo said.
Kujawa also disclosed that during the third quarter, NextEra Energy Resources entered into an agreement to acquire a portfolio of small rate-regulated water and wastewater utilities in the Houston area. The deal is expected to close in 2022.
"The proposed acquisition expands our regulated utility business in an attractive market with significant expected customer growth and furthers our strategy to build a world class water utility in the coming years," the CFO said. "We are optimistic about the strong growth anticipated in this new market and the potential for clean water solutions to generate additional contracted renewables opportunities going forward."
Supply chain issues can be managed
With its massive renewables portfolio, the company can better navigate uncertainties of supply chain disruptions and rising costs, Kujawa said. "We feel good about our ability to navigate. We feel good about the long-term view for renewables and our ability to deliver on our expectations."
Rising costs for other generation also continue to benefit a renewables giant such as NextEra.
"I think people don't really appreciate ... the 10-year strip is up a buck since January it's hugely positive for the renewable business, enormously positive," Robo said.
While a few projects moved up or were pushed back because of supply chain issues, executives said the company's backlog of renewables projects still fell within expectations.
A 500-MW wind project in NextEra's backlog is intended to power an adjacent new green hydrogen facility, a first for the company, though executives declined to identify the counterparty. A separate $65 million hydrogen pilot in Florida through subsidiary regulated utility Florida Power & Light Co. is expected to be online by 2023 if approved by state regulators, executives said.
Meanwhile, Kujawa said the company expects the Florida Public Service Commission to consider on Oct. 26 a proposed settlement agreement in FPL's four-year rate plan beginning in 2022.
NextEra reported third-quarter adjusted earnings of 75 cents per share, up from earnings of 67 cents per share in the third quarter of 2020. The company maintained guidance for 2021 adjusted earnings in the range of $2.40 per share to $2.54 per share.