Dive Brief:
- NextEra Energy is well-positioned to shield its renewable energy projects from early tax credit phase-outs under the One Big Beautiful Bill Act and capture a greater share of the market as a result, John Ketchum, president, CEO and chairman of NextEra Energy, said Wednesday during a second quarter earnings call.
- Because NextEra is in a “constant state of construction,” the company expects to safe harbor its projects through 2029, Ketchum said. That should bring in more customers in 2028 and 2029 as competing developers' costs begin to rise, he said.
- NextEra also aims to capitalize on growing demand for new gas and nuclear generation, but Ketchum said it was still too early to predict customer needs beyond 2030.
Dive Insight:
If the One Big Beautiful Bill was meant to limit the growth of renewable energy, executives at NextEra don't see that happening — at least not for their company.
During Wednesday's Q&A with analysts, CFO Michael Dunne rejected assertions that the reconciliation bill created a “cliff” for renewable energy projects, arguing that it's “just changing the rule set, and we'll continue to build the energy infrastructure that this country needs.”
Ketchum told analysts that he was confident the company could take advantage of the law's exceptions for projects that begin construction before July 4, 2026, to lock in credits through 2029.
But smaller developers may struggle to access capital and begin construction by that date, Ketchum said, resulting in less competition for NextEra Energy Resources in 2028 and 2029.
“That could create potentially bigger opportunities for us in those years,” Ketchum said.
He also said that the company may be able to buy attractive energy projects from other developers at a discount in the years to come as a result of the reconciliation bill.
Analysts on the call were skeptical of Ketchum's claims that the company could avoid losing tax credits for its projects. The company's stock price slipped nearly 5% following the Wednesday morning call, despite NextEra beating second-quarter earnings estimates.
“There is a clear long-term headwind for” NextEra, analysts for Jefferies wrote following the call, noting that company executives declined to answer questions about long-term earnings projections.
NextEra Energy Resources has signed contracts for 3.2 GW of new projects since April, a strong figure but one that Jefferies said didn't indicate that customers are flocking to NextEra for projects ahead of the new tax credit deadlines. The analysts noted that most of the new projects are slated to begin operations post-2028.
Orders for new wind projects are slowing and not on track to meet NextEra's sales targets, according to Jefferies. Demand for energy storage, on the other hand, is growing; storage now accounts for roughly one-third of the company's nearly 30 GW development pipeline, according to Dunne.
The company continues to work toward building new natural gas generation, and maintains an interest in nuclear energy, with a full development team dedicated to small modular reactors, Ketchum said. It also continues to explore reopening the Duane Arnold nuclear power plant in Iowa, but the company has not yet announced a final decision regarding its fate.
