- NextEra Energy's developer arm will be taking advantage of the production tax credit extension (PTC) to repower its wind fleet, the parent company announced during its quarterly earnings call with analysts on Friday.
- Wrapping up the fiscal year, NextEra posted $706 million for its fourth quarter adjusted earnings, down from $718 million in 2018 Q4. On the whole, the company increased its annual earnings 8.7% from 2018, with $4 billion or $8.37 per share, and continues to expect 6% to 8% annual increases through 2021, from its Florida acquisitions.
- While its developer subsidiary, NextEra Energy Resources, had a stronger fourth quarter than in 2018, it ended the year with approximately $1.81 billion in net income and $1.7 billion in adjusted earnings, down from approximately $4.7 billion in net income and $1.5 billion in adjusted earnings in 2018. During Q4, NextEra Energy Resources added around 500 MW of wind, 770 MW of solar and 340 MW of battery storage to its pipeline, a new record for the subsidiary.
In a year-end legislative push, Congress extended the 60% PTC by one year to 2021, which is prompting industry-wide investments, according to analysts.
"It is a safe bet that just about every U.S. wind developer will aim to install as much as possible before the PTC expires," Pavel Molchanov, director of the energy group at the financial services firm Raymond James, told Utility Dive via email.
"We expect that [the PTC extension] will support incremental wind demand in 2023 and 2024," NextEra CEO Jim Robo said during the quarterly call.
For NextEra, this will involve repowering its wind fleet. More than 60% of the subsidiary's operating wind projects by the end of 2020 "will have been originally recommissioned or repowered within the last five years, highlighting the young age of [its] fleet and the expected long date future value creation of the portfolio," NextEra Chief Financial Officer Rebecca Kujawa said on the quarterly call.
In 2019, NextEra Energy Partners, the subsidiary which acquires and manages a clean energy portfolio, also announced 275 MW of its wind portfolio will be repowered.
NextEra and its developer arm are planning a slew of clean energy investments. Its utility, Florida Power & Light, also has ambitious clean energy investment goals, including a 10 GW solar expansion plan.
NextEra met other zero carbon milestones in 2019 as well. In December, the Nuclear Regulatory Commission granted Florida Power and Light's Turkey Point units 3 and 4 their second 20-year license extensions, making them the first U.S. nuclear units to be renewed for such a term, NextEra said in its quarterly filing.
The company's Q4 quarterly earnings missed estimates due to several factors that offset growth from new investments, Kujawa said. One factor was a large contribution to fund the company' charitable foundation for several years, she added.
The company did not respond to requests for comment.
Wind projects also qualify for the investment tax credit (ITC), an incentive that is phasing down until it will remain at 10% for commercial and utility-scale projects in 2022. The ITC is widely used by solar and solar-plus-storage projects, and advocates led extensive lobbying efforts in 2019 to ensure the credit is also extended.
As wind projects have preferred the PTC to the ITC incentive, "the rush to get projects done by year’s end has been seen historically and is expected to continue," Richard Bowers, onshore wind analyst at the Energy Information Administration, told Utility Dive via email.
However, as wind and solar resource prices fall, Robo estimated that "new ... renewables will be cheaper than the operating costs of most existing coal, nuclear and less efficient oil and gas-fired generation units" by the middle of this decade, without incentives.
"To be sure, the [wind] industry will be fundamentally fine even after the PTC expires, but naturally there is a vested interest to maximize each company’s benefit from the PTC, hence the rush," Molchanov said.