NextEra Energy posted solid first-quarter financials and said its renewables portfolio continued to grow even as President Donald Trump began implementing pro-fossil fuel policies.
CEO John Ketchum said during an April 23 conference call that wind, solar and storage are indispensable now as the U.S. expects to need a lot more megawatts because renewables can be brought online much faster than natural gas generation and much, much faster than nuclear.
He called renewables “a critical bridge” to a future when other technologies can be brought online at scale.
Until fairly recently, many people were calling natural gas the “bridge fuel” to a decarbonized future. But natural gas has problems, said Ketchum, whose company is an all-of-the-above energy provider operating renewable, nuclear and natural gas generation.
The cost to build a gas plant has tripled in just a few years, and Trump’s tariffs will drive the cost higher, he said. Meanwhile, companies building LNG export terminals, factories and data centers have lured away the skilled workers who would build gas plants, and gas turbine manufacturers are booked up with yearslong wait times on new units.
“Gas is such a long-term solution,” Ketchum told analysts on the conference call. “We’ve gone up from four and a half years to build a combined cycle unit to six or longer.”
This state of affairs, he said, calls for energy realism — understanding the high demand and embracing all solutions — and calls for energy pragmatism — recognizing that some solutions are not ready today and accepting the tradeoffs this implies.
“Renewables and battery storage are the lowest-cost form of power generation and capacity,” Ketchum said, “and we can build these projects and get new electrons on the grid in 12 to 18 months.”
The U.S. is expected to need more than 450 GW of new generation by 2030, he said, and only 75 GW of that is expected to be natural gas fired. Canceling every planned coal retirement would yield only about 40 GW more. Meaningful increases in nuclear generation are 10 years away at best and likely to be much more expensive than gas when they arrive, he added.
In this scenario, NextEra expects to thrive, despite renewables suddenly falling into presidential disfavor.
In the first quarter, subsidiary NextEra Energy Resources originated 3.2 GW of new renewables and storage and scored its largest-ever quarter for solar and solar-plus-storage origination, bringing its project backlog to 28 GW.
Meanwhile, subsidiary Florida Power & Light placed 894 MW of new solar generation into service, bringing its owned-and-operated solar portfolio to more than 7.9 GW — the most of any U.S. utility.
“We continue to see a lot of appetite for renewables,” Ketchum said.
And what of the actual and threatened tariffs that are causing such consternation in so many sectors of the economy? NextEra began to get ready for this years ago. Because it is so large and its competitors are mostly small, it had the leverage and buying power to shift tariff risks onto suppliers in most of its contracts, Ketchum said. NextEra forecasts only $150 million in tariff exposure through 2028 on $75 billion in projected capital expenditures, he said, and may be able to negotiate that exposure down as low as $0.
It also shifted to U.S.-made components, where possible.
“We didn’t just wake up on Nov. 6 and say, ‘Oh my God, what do we do about our supply chain?’” Ketchum said. “We’ve been thinking about this for years, and so we put the right things in place.”
NextEra reported first-quarter revenue of $6.25 billion, up from $5.73 billion a year earlier, and GAAP net income of $833 million ($0.40/share), down from $2.27 billion ($1.10/share).
Adjusted (non-GAAP) earnings were $2.04 billion ($0.99/share), up from $1.87 billion ($0.91/share).
