NextEra doubles down on renewables as energy transition gathers steam
The company’s shares have tripled in the last five years, boosting the its value to around $170 billion, nearly as much as that of oil major Chevron Corp
NextEra Energy Inc, the world’s largest producer of wind and solar energy, said on Tuesday it would invest more in renewable power generation, hoping to make the most of a global transition from dirty fossil fuels to cleaner sources of energy.
NextEra, one of the biggest beneficiaries of the burgeoning energy transition, posted a loss due to write-downs related to a delayed U.S. natural gas pipeline but said renewable power generation continued to grow as people and businesses shift to lower-emission power.
The company’s shares have tripled in the last five years, boosting the its value to around $170 billion, nearly as much as that of oil major Chevron Corp.
NextEra said on Tuesday it plans to add as much as 30 gigawatts of renewable projects to its portfolio by 2024, well above Morningstar analysts’ estimate of a 20 gigawatts addition.
NextEra Chief Executive Officer Jim Robo said rising public support for addressing climate change makes it possible that the new administration of President Joe Biden will act to extend incentives and introduce new policy supports favoring the company.
“We anticipate our development program to be further enhanced by an ability to attract new, non-traditional customers, particularly in the commercial and industrial sector, as improving renewable economics are increasingly aligned with corporate objectives,” Robo added.
The company beat estimates for adjusted income on the back of strong demand for its projects, but an impairment charge of $1.2 billion on its investments in the Mountain Valley natural gas pipeline forced the company to report its first net loss since at least 2010.
The Mountain Valley pipeline, from West Virginia to Virginia, is one of the several oil and gas pipelines under construction that have been delayed by regulatory and legal fights with states and environmental groups.
NextEra attributed its write-down to legal and regulatory challenges, saying the project is facing “substantial delays in reaching commercial operation and increased costs associated with those delays.”
The pipeline is still expected to enter service by the end of 2021.
NextEra posted a net loss of $5 million in the three months ended Dec. 31 due to the impairment. It had reported a net income of $975 million a year earlier.
Shares were down 2.1% on Tuesday, off from an all-time closing high of $86.87 hit Monday.
However, Matt Breidert, portfolio manager at sustainable investment firm Ecofin, said the fourth quarter was “meaningless to the story or stock.” He said they see the regulatory backdrop improving for renewable developments, which should help the stock.
Excluding the charge and other items, NextEra earned 40 cents per share, beating analyst estimates of 37 cents, as demand for renewable power generation surged.