NextEra Energy Inc. of Florida, which is currently one of the largest solar and wind utilities, plans to convert 16 GW of its more than 20 GW natural gas electrical generation fleet to run on green hydrogen as it continues to march toward carbon neutrality.
The utility’s primary subsidiary, Florida Power & Light Co. (FPL), recently brought a 1.2 GW natural gas-fired power plant online, according to management comments made during its 2Q2022 conference call.
The $900 million project was completed on schedule and within budget, according to the CFO, Kirk Crews. The Dania Beach Clean Energy Center is estimated to deliver almost $350 million in net cost savings for FPL consumers, while reducing carbon emissions by approximately 70% compared to the Lauderdale Plant.
As FPL aims to achieve net-zero carbon emissions by 2045, the company plans to convert around 16 gigawatts of its highly efficient gas fleet to run on green hydrogen, according to Crews.
According to NextEra Energy’s Zero Carbon Blueprint, FPL would initiate the conversion of certain natural gas units to 16 GW of solar-generated hydrogen in the early 2040s. According to FPL’s Ten Year Power Plant Site Plan, the utility has over 20 GW of natural gas-fired power in its portfolio.
According to the company’s 10-year plan, the utility expects to conduct a pilot project in late 2023 to evaluate the replacement of a part of the natural gas used to fuel the Okeechobee combined cycle unit with hydrogen.
The plan also calls for FPL to incorporate up to 6 GW of renewable natural gas, which would replace fossil fuels by 2045 and account for less than 1% of the utility’s generation capacity.
The utility also submitted its most recent Storm Protection Plan, which outlines the “billions of dollars in capital investments planned over the next decade to continue hardening FPL’s energy grid for the benefit of customers,” as stated by Crews.
The revised hardening programs, some of which have been in development for approximately 15 years, would provide FPL’s 5.8 million customers with speedier restoration timeframes and increased resilience after severe weather strikes FPL’s service zone.
In addition, Crews stated that because Florida’s three-month moving average for new home permits grew by over 9 percent year over year, “FPL’s new service accounts increased by more than 15 percent year over year. The average number of FPL customers climbed by more than 87,000, or 1.5 percent, compared to the same quarter of the previous year.
Following the state’s population expansion, the utility’s retail sales in the second quarter of 2022 climbed by 3.2% annually.
In the second quarter of 2022, FPL recorded a net income of $989 million (5 cents per share), compared to $882 million (45 cents) in the second quarter of the prior year.
Crews stated that NextEra Energy retains its stance on the “strong market demand for renewables, particularly in light of the environment of high gas and electricity pricing, which we expect will stay in the future.”
Crews stated that renewable energy is not just the most cost-effective source of energy generation, but also deflationary and countercyclical.
In addition, the utility “remains confident” in its intention to invest $85-$95 billion in new projects between 2022 and 2025.
For the second quarter of 2022, NextEra Energy reported earnings of $1.38 billion (70 cents per share), up from $256 million a year before (13 cents).
During the second quarter of 2022, the energy arm of NextEra, NextEra Energy Resources LLC (NEER), added roughly 2.1 GW of renewables and storage to its backlog.
[Want to discover how global LNG demand affects fundamentals in North America? For further information, subscribe to LNG Insight.]
Between April and June, NEER added around 815 MW of wind, 1200 MW of solar, and 20 MW of battery storage to the backlog, according to crews. Crews stated that the renewables additions increased the company’s renewables and storage backlog to 19.6 GW, enabling NEER for a substantial expansion of its renewables portfolio.
Crews stated that Energy Resources aims to construct between 28 and 37 GW of renewable energy and storage projects between 2022 and 2025. “To put these statistics in context, this planned renewables and storage construction is approximately 30 percent greater than Energy Resources’ current renewables operating portfolio,”
Crews stated that NextEra appreciated the Biden administration’s decision to exempt solar panel products from Cambodia, Malaysia, Thailand, and Vietnam from tariffs for 24 months.
The investigation into whether China is evading taxes by shipping solar panel components through these nations continues. The exception, however, “gave much-needed clarity to our suppliers to continue solar module production, recommence shipping of solar panels, and for Energy Resources to restart its solar construction projects that had been delayed owing to the circumvention inquiry,” Crews explained.
Earlier this month, NextEra Energy Transmission finished its 20-mile Empire State Transmission Line. The inclusion of attractive rate-regulated assets to our portfolio has enhanced the “regulated business mix.” The Empire State Line is anticipated to facilitate the transmission of 3,7 GW of renewable energy throughout New York.
Crews stated that, thus far in 2022, NextEra Energy Transmission had completed around $500 million in greenfield transmission projects. The Empire State line project advances a strategy to “rapidly deploy funds and facilitate additional renewables growth.”
For 2Q2022, NEER reported $133 million in profits (7 cents per share), compared to $315 million in losses for 2Q2021 (minus 16 cents).
