NextEra Energy Partners, a Florida-based energy firm, has decided to sell its natural gas pipelines and turn into a pure-play renewable energy investment option.
NextEra Energy Partners (NEP) is part of NextEra Energy, a diversified energy company that still holds fossil fuel assets in power generation. NEP is now known as one of the world’s leading clean power generators, having increased its renewable energy portfolio nine times in less than ten years. The company plans to sell its interest in the fossil gas pipelines and focus on renewable energy investments to attract a new class of investors looking for a carbon-free, pure-play option. NEP believes that achieving pure-play status for its renewable energy business will be worth the effort as leading businesses globally continue to align with the corporate ESG (environmental, social, governance) movement, and ESG guidelines are widely recognized as risk management tools for businesses to cope with 21st-century challenges. NEP is also interested in green hydrogen, which could provide an additional demand platform for its renewable energy plans. Green hydrogen can be produced from water with electrolysis systems powered by wind or solar power, which is right up NEP’s alley. NEP has set the green hydrogen wheels in motion for another leading user of hydrogen, the agriculture industry. Green hydrogen can be combined with ambient nitrogen from the air to produce green ammonia, which is then used to make ammonia fertilizer.
The Florida Governor Ron DeSantis has been agitating against renewable energy investment, and NEP’s decision to sell its fossil fuel assets and turn into a pure-play renewable energy developer has pulled the rug out from under him. However, green hydrogen is part of NEP’s overall plan, and if everything goes according to plan, the green hydrogen wave will hit Arkansas, Louisiana, and Oklahoma. The US Department of Energy launched a program in 2020 aimed at using green ammonia as a hydrogen carrier, to help release a bottleneck in the hydrogen distribution chain. Leading ammonia producers are also interested in the green ammonia trend.
NEP’s transition to renewable energy and the green hydrogen trend have the potential to make a significant impact on the energy industry. However, NEP will face some potential challenges in its transition, including the financial transactions that stand between NEP and its pipeline-free goal. NEP must sell its natural gas pipelines to achieve pure-play status, which may take time. The supply chain for green hydrogen is still ramping up, which may delay NEP’s plans for decarbonizing its fleet of fossil natural gas power plants. Despite these challenges, NEP is well positioned to capitalize on the Biden administration’s climate policies as the US economy continues to transition to renewable energy.