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NextEra (NEE) to Sell 50% Share in 2,520 MW Renewable Assets

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  • NEE
  • DTY
  • DCUE
  • DUK

NextEra Energy NEE recently announced that its unit NextEra Energy Resources, LLC has entered into an agreement to sell 50% non-controlling interest in a nearly 2,520 megawatt (MW) renewable asset portfolio to Ontario Teachers' Pension Plan Board (Ontario Teachers'). These renewable assets already have a long-term contract with customers, and the remaining life of the deal is 19 years.

NextEra Energy unit is already under an agreement to sell the remaining 50% of 2,520 MW portfolio to NextEra Energy Partners. NextEra Energy Resources intends to utilize the sale proceeds to fund its new wind, solar and battery storage growth opportunities. At present, NextEra Energy Resources has more than 18,100 MW in the backlog of signed contracts. The proceeds will be utilized to fund these projects. NextEra Energy Resources is also expected to receive an ongoing annual fee income of nearly $16 million in year one, escalating thereafter.

Renewable and Emission Reduction Plan of NextEra Energy

NextEra Energy has well-chalked plans to invest nearly $34.5 billion in different projects during the 2022-2025 time period. These investments will be directed to modernize and strengthen the existing infrastructure of the company, enabling it to serve the expanding customer base more effectively. These investments are also helping the company to produce more electricity from clean sources and lower carbon emissions from the production process.

Florida Power & Light Company (“FPL”), another unit NextEra Energy, has “30-by-30" plan. The goal is to install more than 30 million solar panels in Florida by 2030. By early 2022, FPL — through consistent efforts — will install more than 15 million solar panels, surpassing 50% completion of its solar installation per the 30-by-30" plan.

NextEra Energy, through these initiatives, aims to lower emission levels by 67% in 2025 from the 2005 levels. NextEra is yet to declare a net-zero carbon emission target like many other utilities operating in the space.

Transition in Utility Space

A clear shift is evident in the utility space, with utilities setting up goals on their own to achieve net-zero emissions over the next three decades. Per the U.S. Energy Information Administration report, the increase in electricity generating capacity between 2021 and 2050 will essentially come from solar, wind and natural gas.

The ongoing research & development, along with investments in renewables, is making utility-scale renewable plants viable compared with conventional energy sources. Utilities like Duke Energy DUK, DTE Energy Company DTE and Dominion Energy D have decided to achieve net-zero emissions by 2050. These utilities have been steadily investing to increase their renewable portfolio.

The long-term earnings (three to five years) growth of Duke Energy, DTE Energy Company and Dominion are currently pegged at 5.3%, 6% and 6.8%, respectively. Current dividend of Duke Energy, DTE Energy Company and Dominion is 4.06%, 3.05% and 3.54%, respectively, better than Zacks S&P 500 Composite average yield of 1.4%.

Duke Energy, DTE Energy Company and Dominion reported average positive surprises of 2.3%, 9% and 2.4%, respectively, in the last four reported quarters. The Zacks Consensus Estimate for 2021 earnings of DUK, DTE and D has moved up 0.2%,1.8% and 0.5%, respectively, in the past 60 days.

Price Performance

In the past 12 months, NextEra Energy’s shares have gained 19.7% compared with the industry’s growth of 1.1%.

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Zacks Rank

NEE currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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NextEra Energy, Inc. (NEE) : Free Stock Analysis Report

Duke Energy Corporation (DUK) : Free Stock Analysis Report

DTE Energy Company (DTE) : Free Stock Analysis Report

Dominion Energy Inc. (D) : Free Stock Analysis Report

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