(NEE) a decade ago. But the former FPL Group has since nearly doubled the return on the Dow Jones Utility Average and topped the S&P 500 by 70 percentage points, while emerging as America’s favorite power company.
Those returns were well earned. NextEra was first in the sector to recognize the potential of renewable energy. And as a result, it’s the undisputed leader in both onshore wind (16 percent US market share) and solar (11 percent).
The company originated 6.5 gigawatts of renewable energy generating projects last year, twice the prior year’s record level. That’s mostly facilities under long-term contract to utilities through the unregulated Energy Resources unit, which contributes approximately 30 percent of overall earnings. A bigger opportunity, however, is shaping up at the regulated Florida utilities including Gulf Power, which NextEra acquired this year from Southern Company SO +0.32%
The Florida Power & Light unit produced ten times more solar energy in 2018 as it did in 2016. And this month, management announced deployment of 30 million more solar panels by 2030. That would increase the utility’s current solar output 11-fold, enough to supply 2.2 million homes.
In addition, 40 percent of the renewable energy projects NextEra announced last year feature battery storage. Solar plus storage is already proven on a commercial basis in Hawaii, with 262 megawatts operating or in development.
The Sunshine state should prove equally hospitable. NextEra expects to offer solar power as cheaply as 2.5 to 3 cents per kilowatt-hour by early in the next decade, combined with 5 to 7.5 cents per kwh for 4-hour storage. That’s near-baseload generation and it’s price competitive with anything except the newest natural gas units.
Management again touted the “disruptive” potential of renewables plus storage…