NextEra setting wind record as PTC lapses

NextEra Energy Resources will set a U.S. record for a single company by adding 1,500 MW of wind generation assets this year while it prepares for the dramatic slowdown as the federal production tax credit (PTC) lapses at the end of the year.

But the unit of NextEra Energy (NYSE: NEE) sees most of its activity over the next two years in 600 MW of projects that it has contracts for in Canada.

Jim Robo, president and CEO of NextEra shared these and other insights at the Bank of America Merrill Lynch Power and Gas leaders Conference in New York on Sept. 19.

“We are not immune to the headwinds that the industry faces with low natural gas prices,” Robo said. “We’re also hit by the headwinds with PTC roll-off. Those headwinds are more than offset by the largest backlog in our history of renewable energy projects.”

NextEra’s generation unit has a backlog of $6.5bn in wind and solar projects through 2014, split roughly in half between the two resources.

One area in which NextEra sees opportunities is in acquisitions of projects. It acquired a 165-MW project in Kansas that will be completed in November, a strategy that may occur more frequently.

 Unusual in the current market, it also committed to a 100-MW project for construction next year that is not contingent on the PTC.

But the company expects a short-term extension of the 2.2 cent per kWh credit after the election, though it says it can’t expect it to last indefinitely. “But we don’t want to see it go from 100% to zero,” Robo said. “The question is how you phase it out.”

That’s where Canada comes in. “It’s a great wind business and it’s a hedge against the PTC,” he added.

On the regulated side, its FPL utility in Florida offers opportunities in solar power. “We are going to building incremental renewable,” Robo said. The drop in panel prices may drive that decision forward. “In our first project in 2009, the first 100-MW project had a customer impact of $1 a month. That same customer impact now would be from building 2,000 MW.”