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NextEra Energy, Inc. (NEE) is a leading clean energy company based in Juno Beach, Florida, primarily operating through Florida Power & Light Company (FPL) and NextEra Energy Resources, LLC (NEER) . FPL is the largest electric utility in the United States, delivering clean, affordable, and reliable electricity to approximately 5.9 million customer accounts in Florida, serving over 12 million people . NEER is recognized as the world's largest generator of renewable energy from wind and solar sources and is a leader in battery storage . The company focuses on providing clean energy solutions and operates both rate-regulated and competitive energy businesses .
- Florida Power & Light Company (FPL) - Provides clean, affordable, and reliable electricity to millions of customers in Florida, operating as a rate-regulated utility business.
- NextEra Energy Resources, LLC (NEER) - Generates renewable energy from wind and solar sources and leads in battery storage, operating competitive energy and rate-regulated transmission businesses.
- Corporate and Other - Includes various corporate-level activities and other business operations contributing to the overall revenue.
What went well
- NEE anticipates continued strong customer growth in its service territory, leading to expected growth and significant capital investments in the coming years. The company is positive about upcoming regulatory outcomes due to its focus on delivering value to customers.
- NEE has effectively managed its interest rate risk by implementing $32 billion of interest rate swaps at an average coupon of 3.9%, which minimizes the impact of interest rate fluctuations on its earnings.
- NEE is exploring opportunities to recommission the Duane Arnold nuclear plant, which is in good condition. This could add valuable nuclear capacity to NEE's portfolio and demonstrates its leadership in nuclear operations.
What went wrong
- NextEra Energy expects growth in their service territory to slow down over the next four years compared to post-pandemic levels, which could impact revenue growth.
- The company had to tap into its reserve mechanism due to higher inflation and interest rates, leading to higher capital expenditures than expected, potentially putting pressure on margins.
- Rising costs and delays in gas-fired generation projects, with costs tripling in price, may make these projects less economically viable and impact future growth plans.
Q&A Summary
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Partnership with GE Renova
Q: Will you co-own projects with GE Renova?
A: Yes, we will co-own gas-fired generation projects with GE Renova in a 50-50 joint venture, focusing on long-term contracted assets and targeting large load customers by combining gas-fired generation with renewables and battery storage. -
Administration Policies Impact
Q: Any concerns about wind lease limits and IRA risks?
A: We support the new administration's mandates and believe in the need for all energy solutions, including gas, nuclear, renewables, and storage. Our onshore wind projects are mostly on private land, and we remain optimistic about working through any issues. Regarding the IRA, we emphasize that renewables are critical for meeting current power demand and create jobs, with 80% of our investments occurring in Republican states. We plan to invest $120 billion over the next four years. -
Duane Arnold Nuclear Recommissioning
Q: What's the status and condition of Duane Arnold?
A: We've filed with the NRC to recommission Duane Arnold and are in active discussions with customers. The plant is in good shape; the only issue was damage to the cooling tower, which is conventional to rebuild. We see nuclear, including recommissioning existing plants, as contributing to meeting power demand over the next 3–5 years. -
Gas-Fired Generation Timing
Q: When will gas projects contribute to growth?
A: Given the time needed for site development, permitting, obtaining turbines, and construction, we expect gas-fired generation to contribute to growth around 2030 and beyond. Costs have increased significantly, with gas turbine prices more than doubling and EPC labor costs tripling since our last gas plant. Some regions like ERCOT may see earlier development, but overall, we are being practical about timelines and costs. -
FPL Growth and ROE Expectations
Q: What's the outlook for FPL growth and ROE?
A: We continue to see strong growth in our service territory and expect to invest above the roughly $36 billion planned over the next four years. Our surplus reserve mechanism sits at around $800 million after using $400 million in 2024. We anticipate our ROE to be slightly above 11.4% in 2025. -
Renewables Policy Impact on Customers
Q: Are policies affecting customer conversations?
A: No, customers are primarily concerned about getting projects built to meet their power needs. They need resources now and focus on solutions available today at the lowest cost with high confidence. Time and money are top of mind for them. -
Interest Rate Hedging
Q: How are you managing interest rate exposure?
A: We've put $32 billion of interest rate swaps in place with an average coupon of around 3.9%. Our sensitivities are about $0.01 to $0.03 on EPS for 2025 and 2026, and $0.03 to $0.05 for 2027, which we consider very manageable. -
Customer Demand for Gas
Q: Are customers more open to gas now?
A: Yes, there's increased interest in natural gas to enable capacity value, especially as customers focus on speed to market and reliable resources. Discussions include pairing gas with renewables, and some interest in behind-the-meter gas solutions, though we don't see that becoming the prevalent way to meet demand.
Guidance Changes
Annual guidance for FY 2025, FY 2026, and FY 2027:
- Adjusted EPS: at or near the top end of expectations (no prior guidance)
- Operating Cash Flow: average annual growth from 2023 to 2027 at or above adjusted EPS CAGR (no prior guidance)
- Dividends per share: plan to grow ~10% per year through at least FY 2026, based on a 2024 base (no prior guidance)
- Regulatory capital employed growth for FPL: ~10% average annual growth through FY 2025 (no prior guidance)
- FPL’s base rate adjustments proposal: $1.55B starting Jan 2026 and $930M starting Jan 2027 (no prior guidance)
- Interest rate hedges: $28.5B in hedges; $32B in swaps at ~3.9% average coupon (no prior guidance)
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Given the challenges you mentioned in addressing the remaining convertible equity portfolio financings due in 2027 and beyond , could you provide more details on the specific alternatives you are evaluating to manage these obligations without impacting NEP's growth trajectory?
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While you've highlighted plans to invest approximately $1.9 billion through 2027 in competitive transmission projects , transmission development often faces regulatory and execution risks; how are you mitigating these risks, and what impact could potential delays or cost overruns have on your expected returns and growth targets?
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Considering the draft hydrogen guidance that requires hourly matching, which increases costs and may limit project feasibility , how confident are you in the viability of your hydrogen initiatives, and what are your contingency plans if the regulatory framework remains unchanged?
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Wind origination has been lower compared to solar and storage, with higher interconnection costs affecting certain projects ; what specific strategies are you implementing to bolster wind additions to meet your 2025 and 2026 targets, and how do you plan to overcome these challenges?
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With plans to repower approximately 985 megawatts of wind projects through 2026 , repowering requires significant capital investment; how do you intend to fund these repowering projects without straining your balance sheet, especially considering the upcoming convertible equity portfolio financings that need to be addressed?
Recent developments and announcements about NEE.
Financial Reporting
- 2024 Adjusted Earnings Per Share (EPS): NEE reported full-year adjusted EPS of $3.43, an 8% increase from 2023, reaching the high end of its expectations.
- Growth in Operating Cash Flow: Operating cash flow grew by more than 17% in 2024, exceeding adjusted earnings growth.
- FPL Performance: Florida Power & Light (FPL), a subsidiary of NEE, achieved a $0.12 increase in adjusted EPS compared to 2023, driven by a 10% growth in regulatory capital employed.
- EPS Growth Expectations: NEE reaffirmed its long-term financial expectations, aiming for adjusted EPS growth at or near the top end of its range for 2025-2027.
- Dividend Growth: The company plans to grow dividends per share by approximately 10% annually through at least 2026.
- Capital Investments: NEE expects to invest $120 billion over the next four years, focusing on renewables, storage, and grid infrastructure .
- Renewables and Storage: NEE added over 12 gigawatts of new renewables and storage projects to its backlog in 2024, a record year for origination. The backlog now exceeds 25 gigawatts .
- Natural Gas Collaboration: NEE announced a framework agreement with GE Renova to develop natural gas-fired generation solutions, aiming to pair these with renewables for integrated energy solutions.
- Nuclear Developments: The company is exploring the recommissioning of the Duane Arnold nuclear plant, with potential operations resuming by the end of 2028. Small modular reactors (SMRs) are also being evaluated as a longer-term option .
- Interest Rate Management: NEE has $28.5 billion in interest rate hedges, minimizing the impact of rate fluctuations on its financials.
- Customer Demand: Strong demand for renewables and storage persists, driven by utilities, municipalities, and commercial customers seeking low-cost, reliable energy solutions .
- Challenges in Gas and Nuclear: Gas-fired generation faces cost and timeline challenges, with significant contributions expected only after 2030. Nuclear remains a longer-term solution due to development and permitting complexities .
- Renewables Policy Impact: Analysts inquired about potential policy changes affecting renewables. Management emphasized that customer demand remains robust, with no significant concerns about project delays.
- Gas and Turbine Costs: Analysts raised questions about the rising costs of gas turbines and EPC labor. Management acknowledged these challenges but highlighted its strategic positioning to address them.
- Net Income (GAAP Basis): $1.203 billion, or $0.58 per share, compared to $1.210 billion, or $0.59 per share, in Q4 2023.
- Adjusted Earnings: $1.095 billion, or $0.53 per share, compared to $1.067 billion, or $0.52 per share, in Q4 2023.
- Net Income (GAAP Basis): $6.946 billion, or $3.37 per share, compared to $7.310 billion, or $3.60 per share, in 2023.
- Adjusted Earnings: $7.063 billion, or $3.43 per share, reflecting an 8.2% year-over-year growth in adjusted earnings per share.
- Renewables and Storage: NextEra Energy Resources added over 12 gigawatts (GW) of new renewables and storage projects to its backlog in 2024, achieving a record year for origination. The company also placed 8.7 GW of new projects into service.
- Florida Power & Light (FPL): FPL grew its regulatory capital employed by approximately 10% year-over-year and commissioned 2.2 GW of new solar capacity. FPL continues to maintain customer bills nearly 40% below the national average while delivering top-decile reliability.
- Earnings Growth: NextEra Energy has delivered compound annual growth in adjusted earnings per share of more than 10% since 2021, the highest among the top-10 power companies in the U.S..
- Customer Savings: FPL's investments in low-cost solar and battery storage have saved customers nearly $16 billion since 2001, with non-fuel operational costs per customer being 50% better than the second-best utility in its peer group.
- 2025 Adjusted EPS Guidance: $3.45 to $3.70.
- 2026 and 2027 Adjusted EPS Guidance: $3.63 to $4.00 and $3.85 to $4.32, respectively.
- Dividend Growth: The company expects to grow dividends per share at a roughly 10% annual rate through at least 2026.
Earnings Call
NextEra Energy (NEE) recently released its earnings call transcript, providing key insights into its financial performance, forward guidance, and strategic initiatives. Below is a summary of the main points:
Financial Performance
Forward Guidance
Strategic Initiatives
Market Conditions and Analyst Questions
Key Analyst Topics
This earnings call underscores NEE's strong financial performance, strategic focus on renewables and storage, and proactive measures to address market challenges, positioning it as a leader in the energy transition.
Sources: , , , , , , , ,
Earnings Report
NextEra Energy (NEE) Releases Fourth-Quarter and Full-Year 2024 Financial Results
NextEra Energy, Inc. (NYSE: NEE) has announced its financial results for the fourth quarter and full year of 2024. Below are the key highlights:
Fourth-Quarter 2024 Results
Full-Year 2024 Results
Operational Highlights
Significant Trends
Outlook
CEO Statement
John Ketchum, Chairman, President, and CEO, stated:
"NextEra Energy had an excellent year of execution in 2024, growing full-year adjusted earnings per share by more than 8% over 2023 and once again achieving the top end of our adjusted earnings per share expectations range. With experience in every part of the energy value chain and a track record of delivering for our customers and shareholders, we believe NextEra Energy is well positioned to capitalize on the opportunity set that lies ahead and the increased power demand that is happening now in the U.S.".
Conference Call Details
NextEra Energy will host a conference call to discuss these results at 9 a.m. ET on January 24, 2025. A replay will be available for 90 days on the company's website.