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NextEra Energy Continues to Expand Its Renewable Portfolio

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Jan. 18 2016, Updated 1:36 p.m. ET

Capital expenditure

In the previous part, we discussed the revenue trends of NextEra Energy. Let’s take a look at its capital allocation in this part. In the next couple of years, NextEra Energy (NEE) aims to focus its investments on the expansion of its generation facilities.

From 2015–2019, NextEra Energy expects to invest approximately $13–$15.8 billion primarily in projects related to capacity addition and the improvement of transmission reliability. Florida Power and Light, a principal subsidiary of NEE, is projected to take up the maximum portion of this capital spending, at an estimated ~$12 billion. The remaining ~$4 billion is allocated to NextEra Energy Resources.

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Strengthening generation and transmission

NextEra Energy’s capital spending plan up to 2019 concentrates on capacity addition using renewables. It’s expected to spend nearly $3.5 billion on wind and solar power generation infrastructure assets. Florida Power and Light is also expected to spend $7.5 billion on its transmission and distribution by 2019. This includes grid modernization, which can increase reliability and expand geographical reach.

NextEra Energy Resources has created contracts worth $3 billion to purchase renewable assets with validities up to 2033.

Operational efficiency

Given the low growth of electric business and interest rate hikes, many utilities (IDU) (VPU) are attempting to increase operational efficiency by investing in transmission and distribution. Duke Energy (DUK) is planning to invest $9.6 billion in grid modernization from 2016–2020. Dominion Resources (D) is expected to invest $1.2 billion per year in transmission and distribution from 2016–2020.

Better transmission and distribution infrastructure offers cost advantages, which ultimately enhance operational efficiency.

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