Rising gas prices – and the expectation that they will stay high – are driving demand for renewable energy sources and helped NextEra Energy Inc beat second-quarter results that beat analysts’ expectations, executives said July 22.
Florida-based NextEra posted a second-quarter profit of nearly $1.4 billion on revenues of $5.2 billion, up from $256 million and $3.9 billion, respectively, in the same period of 2021. Operating income for the three months ended June climbed 86% to $948 million.
NextEra’s core Florida Power & Light subsidiary had a very strong quarter, producing $989 million in profits versus $882 million in the prior-year period as retail sales rose a total of 3.2% and 1.3% adjusted for weather. About one-tenth of the utility’s earnings came from new investments. The company’s renewable energy division reversed year-ago loss to produce $133 million in net income; adjusted profits rose to $683 million from $574 million.
Over the past three months, that NextEra Energy Resources group has added to its backlog more than 2,000 MW, about 1,200 MW of which is for solar projects. CFO Kirk Crews told analysts and investors on a conference call that high power and gas prices “are helping to make renewables the most economic form of generation” and have NextEra Energy Resources on track to meet its financial goals. The fundamentals driving adoption of renewables, added division president and CEO Rebecca Kujawa, are “terrific.”
“Our customers are acutely aware of the value of renewables in their portfolio from an economic standpoint – both in the pure sense of being low cost, but also in the sense of being a terrific offset to inflationary concerns about other forms of generation in their portfolio,” Kujawa said. “There's this underlying current of demand that has been far less affected than you might think by the headlines.”
The ability for NextEra and its peers to meet that supply has been strengthened somewhat by the Biden administration’s decision last month to waive for two years extra duties on solar panels from four Southeast Asian countries while it investigates Chinese-made products. (CEO John Ketchum was among the most critical voices this spring when the administration said it would look into claims that companies in those four countries were circumventing tariffs on Chinese peers’ products.) Crews said that timeframe is important because, in two years’ time, “we expect our suppliers to be making ingots and wafers outside of China.”
Looking to the medium term, Ketchum and his team reiterated their expectation that earnings per share will grow at about 10% annually through the end of 2025. In that window, the company plans to invest between $85 billion and $95 billion in organic growth projects.
Shares of NextEra (Ticker: NEE) rose nearly 2% to $80.25 July 22. Year to date, they have lost about 10% of their value, trimming the company’s market capitalization to about $158 billion.