NextEra sees renewable growth, little chance for legislation in Congress

The December 2015 extension of tax credits for renewable power projects by Congress will aid NextEra Energy (NYSE:NEE) and subsidiary NextEra Energy Resources, while company officials do not expect Congress to pass broad energy legislation this year, Jim Robo, chairman and CEO of NextEra Energy, said Jan. 28.

Discussing 4Q15 earnings and financial results for 2015, Robo praised the sponsors of the bipartisan legislation in the Senate for working to pass an energy measure during an election year, but said “I think it is highly, highly unlikely that anything gets done this year.”

The legislation being debated in the Senate is co-sponsored by Sens. Lisa Murkowski (R-Alaska), chairwoman of the Senate Energy and Natural Resources Committee, and Maria Cantwell (D-Washington), ranking Democrat on the panel, with provisions for modernizing energy infrastructure, improving energy efficiency and addressing energy storage.

NextEra Energy Resources already has contracts in place for storage projects in the United States and Canada, and it expects to invest further in “this important emerging technology,” Robo said during the call with analysts.

Looking at 2015, Robo said renewable power project development exceeded expectations from 1Q15, and project costs are expected to come down in the coming years and be competitive with other generation forms as tax credits end.

The investment tax credit for solar projects and the production tax credit (PTC) for wind projects were extended by Congress in December 2015, and NextEra Energy Resources expects the Internal Revenue Service to provide guidance similar to what was in place for the PTC in 2014, Robo said.

"NextEra Energy Resources had outstanding performance in 2015 for wind and solar development, marking its second most successful year ever for renewable origination performance,” Robo said in a statement.

That included signing contracts for 2,100 MW of renewables, with 1,400 MW for wind and 700 MW for solar, according to the statement.

“We continue to believe that NextEra Energy Resources is well-positioned to capitalize on what is one of the most favorable environments for renewables development in recent history,” Robo said in the statement.

NextEra Energy Resources has 2,571 MW of contracted wind projects and 1,385 MW of contracted solar projects that have gone into service in 2015 or will in 2016, according to a presentation accompanying the financial results.

A renewable resources market that looked to be about 8 GW or 9 GW just a few years ago could reach 20 GW by 2020, and “we expect to get our fair share” of that market, Robo said. He added that it is hard to separate out how much of that would be solar and how much would be wind, but Robo commented that solar is more competitive on price in the latter years of forecasts.

NextEra Energy expects to see more natural gas-fired generation and renewables added as implementation plans for the U.S. Environmental Protection Agency’s Clean Power Plan are developed, especially as gas prices have come down, Robo said.

NextEra Energy Resources development of gas pipeline projects continued in 2015, with an application for the Mountain Valley Pipeline joint venture filed with FERC in October, the company noted. That 300-mile project, with several other partners involved, is designed to deliver gas from the Marcellus and Utica Shale regions to Mid-Atlantic and Southeast markets.

The Sabal Trail Transmission and Florida Southeast Connection pipeline applications are pending at FERC, and NextEra Energy Resources expects to receive approval in 1Q16, which would allow construction to begin in mid-2016 and an in-service date in May 2017.

NextEra Energy said it is now reporting gas pipeline results under NextEra Energy Resources to reflect the scale of its gas pipeline investments. Results for that segment previously were reported under Corporate and Other results.

The parent company reported 4Q15 net income of $508m, or $1.10/share, compared with $884m, or $2/share, in 4Q14.

For the full year 2015, NextEra Energy reported net income of $2.8bn, or $6.06/share, compared with $2.5bn, or $5.60/share.