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NextEra Energy (NEE) Unit Brings Solar Power Plants Online

Zacks Equity Research

NextEra Energy, Inc.’s NEE primary subsidiary, Florida Power & Light Company (“FPL”) recently made an announcement regarding the retirement of one of Florida's largest coal-fired power plants and the inauguration of four new solar power plants.

The new solar plants comprise more than 1 million solar panels and became operational on Jan 1, 2018. This announcement marked the official retirement of St. Johns River Power Park, one of Florida’s largest coal-fired power plants. This plant is the second of three coal power plants FPL is shutting down.

In addition another four solar plants are expected to come online by Mar 1, 2018. Notably, the plants will encompass approximately 2.6 million solar panels in total, and have the capacity of generating 74.5 megawatts (MW).

How Will This Benefit NextEra Energy?

The subsidiary’s announcement marks another milestone in support of its ongoing strategy of providing clean affordable energy services for customers. In fact, the initiatives are anticipated to improve FPL's carbon emissions profile. Further, the closure of the St. Johns River Power Park coal-fired plant is projected to prevent 5.6 million tons of carbon dioxide emissions annually.

FPL's typical customer bill is lower at the moment compared with year 2008. Even with the increase in costs of most product and services, the cost savings initiatives undertaken by the company has helped it to keep, a typical 1,000-kWh residential customer's bill, at 25% lower than the U.S. average. Further, the shutting down of the plant is anticipated to save an estimated $183 million, for FPL customers.

Further, NextEra Energy and its subsidiary continue to work progressively toward increasing the number of customer accounts. FPL is the largest electric utility in Florida, catering to 4.9 million customers. It produces 95% of its power from natural gas, nuclear and solar sources. In the third quarter of 2017, earnings came in at $1.19 per share; up 7.2% from the prior-year quarter figure mainly driven by 62,000 customer additions in the third quarter. It has installed more than 3.5 million new solar panels in Florida, in less than two years.

The company stands to gain from positive economic fundamentals, which will also aid in achieving targeted compound annual earnings growth rate of 6-8% through 2020 from 2016-base.

Going Ahead

FPL is aiming to generate another 300 MW of zero-emissions energy, with the operations of another four power plants in March. Together with the solar plants that have come online, it aims at achieving a total of 600 MW of new zero-emissions energy through 2018. In fact, the eight solar plants expected to enter into service in 2018 are anticipated to result in savings of $100 million for FPL customers after taking into consideration costs of construction.

NextEra Energy has plans to invest nearly $40-$44 billion in different projects over the 2017-2020 period. The company continues to work on its strategy of making a long-term investment in clean energy assets. Consistent with strategy, the company announced plans to add nearly 1,400-3,800 MW of solar generation across the United States over the next several years.

The company has brought nearly 2,500 MW of renewable power in service in 2016 and its current renewal energy development program aims at nearly 10,100-16,500 MW of new renewable projects (including wind repowering) online over the 2017–2020 time frame.

In addition to renewable projects, NextEra Energy and subsidiaries are making progress with the help of new investments in natural gas fueled projects that are expected to lower its carbon footprint. Toward this, we have witnessed other Utilities like PNM Resources, Inc. PNM and Dominion Energy Inc. D, invest heavily to expand respective green energy generation portfolio to lower emission levels.

Price Movement

Shares of NextEra Energyhave outperformed the industry in the last three months. The company’s shares gained 0.5%, against the industry’s decline of 5.8%.

Zacks Rank & Stocks to Consider

NextEra Energycurrently carries a Zacks Rank #3 (Hold). A better-ranked stock from the same space is Atlantic Power Corporation AT which carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Atlantic Power delivered an average surprise of 29.21% in the trailing four quarters. Its 2017 estimates have narrowed to a loss of 22 cents from a loss of 27 cents in the last 90 days.

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