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CTW-2021-34-NextEra Energy

<span style="font-weight: 400">The world’s biggest utility company by market cap has invested some $100 billion in clean energy infrastructure over the past decade, including more than $14 billion in 2020. In Florida, its home state, NextEra has closed its last coal-fired plant; it began work this year on what will be the world’s largest solar-powered battery facility, capable of storing enough energy to run Disney World for seven hours.</span>

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A 100-year-old company that started out as Florida Power &amp; Light, NextEra Energy has grown into one of the largest energy infrastructure development companies in the U.S. NextEra provides a diverse mix of power generation, including natural gas, nuclear, renewable energy, and battery storage. Its legacy FPL subsidiary remains the nation’s largest electric utility with 12 million Florida customers. But the businesses for wind, solar, and batteries have expanded to nearly 45 states and Canada with projects either in operation or under development.

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NextEra Energy (NEE): Company Profile, Stock Price, News, Rankings

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NextEra Energy

nextera energy

Good morning, welcome to the NextEra Energy, Inc. First Quarter twenty twenty five Earnings Conference Call. All participants will be in the listen only mode. After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded.

I would now like to turn the conference over to Mark Eidelman, Director of Investor Relations. Please go ahead.

Thank you, Dorowen. Good morning, everyone, and thank you for joining our first quarter twenty twenty five financial results conference call for NextEra Energy. With me this morning are John Ketchum, Chairman, President and Chief Executive Officer of NextEra Energy Brian Bolster, Executive Vice President and Chief Financial Officer of NextEra Energy Armando Pimentel, President and Chief Executive Officer of Florida Power and Light Company Rebecca Kujawa, President and Chief Executive Officer of NextEra Energy Resources Mark Hickson, Executive Vice President of NextEra Energy and Mike Dunn, Treasurer of NextEra Energy. John will start with opening remarks, and then Mike will provide an overview of our first quarter results. Our executive team will then be available to answer your questions.

We will be making forward looking statements during this call based on current expectations and assumptions, which are subject to risks and uncertainties. Actual results could differ materially from our forward looking statements if any of our key assumptions are incorrect or because of other factors discussed in today's earnings news release and the comments made during this conference call, in the Risk Factors section of the company presentation or in our latest reports and filings with the Securities and Exchange Commission, each of which can be found on our website, www.nexteraenergy.com. We do not undertake any duty to update any forward looking statements. Today's presentation also includes references to non GAAP financial measures. You should refer to the information contained in the slides accompanying today's presentation for definitional information and reconciliations of historical non GAAP measures to the closest GAAP financial measure.

With that, I'll turn the call over to John.

Thanks, Mark, and good morning, everyone. NextEra Energy is once again off to a strong start for the year, delivering solid first quarter results. Adjusted earnings per share increased by nearly 9% year over year, reflecting solid financial and operational performance across FPL and Energy Resources. FPL placed into service eight ninety four megawatts of new solar and energy resources originated approximately 3.2 gigawatts of new renewables and storage projects. We continue to see strong demand for new sources of generation across all sectors of The U.

S. Economy. For perspective, we expect more than four fifty gigawatts of cumulative demand for new generation between now and 02/1930 in The United States. To meet this demand, we believe it's important to exercise what I describe as energy realism and energy pragmatism. Let me explain.

Energy realism is about embracing all forms of energy solutions and understanding the demand for electricity in The United States is here now and it's not slowing down. Frankly, it's unlike anything we've ever seen since the end of World War II. Energy pragmatism is about recognizing some technology is ready at scale today and other technology needs more time to get there. And there will be significant trade offs with regard to the timing and cost of each. Today, and battery storage are the lowest cost form of power generation and capacity.

And we can build these projects and get new electrons on the grid in twelve to eighteen months. We should be thinking about renewables and battery storage as a critical bridge to when other technology is ready at scale like new gas fired plants. We expect 75 gigawatts of new gas to come online between now and 02/1930. That is significant for sure, but nowhere close to meeting the over four fifty gigawatts of total generation we believe are needed. It's also important to understand that gas fired plants will come online at a higher cost than renewables and storage.

That's because gas turbines are in short supply and in high demand. It's also proving difficult to reestablish the highly skilled workforce required to build these complex power plants. Gas fired combined cycle plants rely on approximately 1,000 workers across dozens of niche trades. We've learned EPCs are hiring thousands of extra people to address high washout rates with some workers leaving earlier for higher paying jobs building for example LNG terminals, data centers, semiconductor chip manufacturing facilities and other industrial facilities. Other workers are showing up to job sites without the necessary skills.

All of this puts upward pressure on prices and the time to build gas plants. It's why the cost to build a gas fired plant has tripled in the last few years and is poised to increase even further due to tariff exposure. We believe nuclear will continue to play an important role in meeting demand. But again, we need to be practical about when that will happen. There are limited opportunities to restart shuttered nuclear units.

Two are underway in our sector and we continue to evaluate bringing our own Duane Arnold facility in Iowa back online. Beyond those limited opportunities, SMR technology is still ten years away at scale and the best of scenarios and at a much higher price point than gas fired generation. There's also an option to defer coal retirements to meet demand. But even if we kept online every coal plant in America slated to retire, it would only add approximately 40 gigawatts to the grid. And many are months away from retirement or are already slated to be converted to gas, again far short of the over four fifty gigawatts needed between now and 02/1930.

Bottom line, don't take this as picking winners and losers. It's not nor can it be. America is going to need all forms of energy to meet this enormous demand. But we need to be practical about when technologies will be available at scale and how much they'll cost when they show up, all of which factors into how Americans pay how much Americans pay on their electric bill each month. This is why energy policy in Washington is so important and why we cannot isolate ourselves to just a couple of technologies like gas and nuclear, which are much more expensive than they've ever been and take far longer to build.

We say all this as a company in our space that does it all. NextEra Energy is the quintessential all forms of energy company. We know renewables and storage because we're a world leader in the space. We know gas because we operate the largest gas fired fleet in America and have built more gas fired generation than anyone over the last two decades. We know nuclear because we operate one of the largest fleets in The United States.

And we know how to serve growth because we've been doing it for decades across The United States and in Florida, which brings me to Florida Power and Light Company. FPL is proof that embracing all forms of energy works, especially during periods of growth. Florida is the nation's third largest state and people continue to move here. In fact, we've added more than 1,300,000 new customer accounts in the last twenty years, making us roughly 30% larger than we were in 02/2005. Despite the incredible growth, FPL consistently delivers high reliability, while having customer bills significantly below the national average.

And we continue to deliver what we believe is the best customer value proposition. As we celebrate our one hundred year anniversary at FPL, our vision remains the same, to continue making smart capital investments for the benefit of our customers, be an industry leader on cost and deliver high reliability and outstanding customer service, while keeping bills low for our customers. To continue driving customer value and to power Florida's growth, we've been deploying the most cost effective option for customers, solar and storage and now have approximately 8.4 gigawatts of solar and batteries installed across Florida. In all, our generation strategy has saved customers more than $16,000,000,000 and avoided fuel costs since 02/2001. Looking ahead, at FPL, we continue to see growth on the horizon and we are projecting to add roughly 335,000 customer accounts through 2029.

To continue to meet growth and reliably serve customers, FPL plans to invest nearly $50,000,000,000 from 2025 to 2029 and add more than 25 gigawatts of new generation of battery storage by 02/1934. On February 28, we submitted testimony and detailed information for FPL's twenty twenty five base rate proceeding. The overall proposal for our 2026 through 2029 base rate plan is consistent with the test year letter filed in December. The stability of multiyear plans has allowed FPL to focus on efficiency in the business, which is critical to keeping customer bills low and has enabled FPL to maintain a strong balance sheet, which allows for consistent access to the capital markets. We look forward to the opportunity to showcase our long term track record of providing low bills and high reliability for Floridians and our plans to build an even more resilient energy future for Florida.

We believe FPL is strategically positioned as Florida remains one of the fastest growing states in The U. S. And we plan to meet Florida's long term growth outlook with investments in generation, transmission and distribution infrastructure, which we believe will further enhance our best in class customer value proposition. Energy Resources had a strong quarter originating approximately 3.2 gigawatts of new renewables and battery storage projects. This marks the fifth time over the past seven quarters that Energy Resources has added more than three gigawatts to its backlog, a sign of the continued strong demand for new generation.

Energy Resources also had its largest solar origination quarter and largest solar and battery storage origination quarter ever, again demonstrating the strong demand for renewables and storage because they are low cost and can be deployed now. Assuming we achieve the midpoint of our development expectations range, Energy Resources will be operating in more than 70 gigawatt generation storage portfolio by the end of twenty twenty seven. Taking FPL and Energy Resources together, we believe NextEra Energy has the most comprehensive power generation business in the world and is well positioned to capitalize on long term growth prospects. There has been ample discussion about tariffs these last few weeks. While this has forced some companies to look at their supply chains for the first time, we've spent the last three years diversifying and domesticating ours to strategically position our supplier relationships to manage potential disruption.

For perspective, we've dramatically diversified where we source our solar panels. As a result, we don't source solar panels from countries impacted by the anti dumping and countervailing duty tariff rates announced earlier this week. Plus, we source our wind turbines from The U. S. With manufacturing in Florida.

And because of our buying power, we have been able to significantly shift tariff risk to suppliers. After discussion with our suppliers, we currently estimate Energy Resources has less than $150,000,000 in tariff exposure through 2028 on over $75,000,000,000 in expected capital spend. That's less than 0.2% of potential impact to our capital spend before exercising contractual trade measure protections in our contracts with customers. Size and scale matter more than ever in today's environment. Suppliers want us to be repeat customers and our customers want certainty, certainty that comes with doing business with an industry leader like NextEra Energy that has a long track record of delivering on its commitments.

Once we work with our customers, we expect our $150,000,000 tariff exposure to be significantly reduced potentially down to zero. Still, we continue to look for ways to further mitigate trade risk and use our supply chain management capabilities to create new opportunities. Our team had the foresight last year to secure arrangements to purchase U. S.-made batteries for a significant portion of our backlog with the remainder of the battery sourced outside of China where tariff exposure is contractually allocated to the supplier. Batteries are already more than two times cheaper than gas fired plants available now and much more flexible to interconnect to the grid.

Taking most tariffs exposure off the table for our customers in need of battery storage solutions is a big win and a way for us to meet demand while keeping bills low for customers. Our battery sourcing strategy gives us optionality and favorable pricing through our already secured domestic battery supply contracts. In short, our tariff exposure on batteries is expected to be negligible and we expect our domestic sourcing options to create significant competitive advantages for us and our customers going forward as we originate new battery storage projects. Finally, we now have nearly $37,000,000,000 of interest rate hedges in place that allows us to flexibly manage interest rate exposure over the coming years, including interest rate hedges on 100% of our backlog and a large portion of our upcoming maturities. In fact, we entered into swaps as part of our programmatic hedging strategy when interest rates sharply declined in early April after reciprocal tariffs were announced, putting our hedged risk free rate at roughly 3.9%.

Our interest rate sensitivity is included in the appendix of today's presentation. Before I hand it over to Mike, I want to briefly touch on last month's planned leadership transition announcement. As we announced in March, after eighteen years of service to NextEra Energy, Rebecca Kiyaba will be retiring. Rebecca has had an incredible career at our company and has brought a strong strategic perspective and leadership approach to everything she's accomplished. Brian Bolster will succeed Rebecca as President and CEO at NextEra Energy Resources.

Brian has done an amazing job as our CFO and has the ideal combination of capabilities, experience and customer relationships to lead one of America's largest energy infrastructure development companies. Mike Dunn has been promoted and will succeed Brian as CFO of NextEra Energy. Mike has deep financial acumen and vast knowledge of the energy industry having spent his entire career in this sector. Both Brian and Mike are effectively transitioning into their new roles. We believe we have the best team in the industry with a track record of delivering day in and day out.

There is no team better equipped or better positioned to help meet this unique moment. That's not to say it will be easy. The enormous electricity demand of The United States creates challenges and not getting this right risks higher power prices. But this is where NextEra Energy shines. We thrive when the stakes are high.

We lean into complexity. It's what differentiates us. So many companies are approaching this moment from a standing start. We've been running this marathon for decades and I couldn't be more optimistic about our prospects to deliver for our customers with the outstanding team we have in place. With that, let me turn it over to Mike, who will review first quarter results in more detail.

For the first quarter of twenty twenty five, FPL's earnings per share increased $0.07 year over year. The principal driver of this performance was FPL's regulatory capital employed growth of approximately 8.1% year over year. We continue to expect FPL to realize more than 10% average annual growth in regulatory capital employed over our current rate agreements four year term, which runs through 2025. FPL's capital expenditures were approximately $2,400,000,000 for the quarter and we expect FPL's full year capital investments to be between $8,000,000,000 and $8,800,000,000 For the twelve months ending March 2025, FPL's reported return on equity for regulatory purposes will be approximately 11.6%. During the first quarter, we utilized approximately $622,000,000 of reserve amortization, leaving FPL with a balance of roughly $274,000,000 As we previously discussed, FPL historically uses more reserve amortization in the first half of the year.

We expect this trend to continue this year. This quarter, FPL placed into service eight ninety four megawatts of new cost effective solar, putting FPL's owned and operated solar portfolio at over 7.9 gigawatts, which is the largest utility owned solar portfolio in the country. In April, FPL filed its annual ten year site plan, which continues to indicate that solar and storage are the most cost effective options for customers to add reliable grid energy and capacity over the next decade. The twenty twenty five plan projects the need for over 17 gigawatts of cost effective solar generation across our service territory over the next ten years. And as a complement to FPL's planned solar additions, FPL is planning to deploy over 7.6 gigawatts of battery storage, which provides cost effective capacity.

With this plan, we expect to increase FPL's solar mix from approximately 9% of our total generation in 2024 to approximately 35% in 02/1934, while continuing to provide customers with low cost and reliable energy. As John mentioned, on February 28, we submitted testimony and detailed supporting information for FPL's twenty twenty five base rate proceeding. We are requesting a base rate adjustment of approximately $1,500,000,000 starting in January 2026, dollars '9 '20 '7 million in January 2027 and a solar and base rate adjustment or SOBR mechanism to recover revenue requirements for solar and battery storage projects in 2028 and 2029. With the proposed base rate adjustments and current projections for fuel and other costs, we believe that FPL's typical residential customer bill will grow at an average rate of about 2.5% from January in 2025 through the end of twenty twenty nine, which is expected to result in FPL's typical residential bill being approximately 25% below the projected national average and more than 20% lower than our typical bills twenty years ago when adjusted for inflation. Florida Public Service Commission has established a schedule for this proceeding, beginning with quality of service hearings in May and technical hearings in mid August.

The proceedings would likely conclude in the fourth quarter with staff recommendation and commission rulings on revenue requirements and rates. We look forward to the opportunity to present our case to the commission this summer and are focused on achieving a balanced outcome that supports continued smart investments for the benefit of our customers. Key indicators show that Florida's economy remains healthy. Florida continues to be one of the fastest growing states in the nation and has three of the five fastest growing U. S.

Metro areas between 2023 and 2024. Had a strong quarter of customer growth with the average number of customers increasing by nearly 108,000 from the comparable prior year period. FPL's first quarter retail sales increased by approximately 1.8% year over year. After taking weather into account, first quarter retail sales increased by roughly 0.6% on a weather normalized basis from the comparable prior year period, driven primarily by continued favorable underlying population growth. Now let's turn to Energy Resources, which reported adjusted earnings growth of nearly 10% year over year.

Contributions from new investments increased $0.12 per share year over year, primarily reflecting continued growth in our power generation portfolio. Our existing clean energy portfolio declined $03 per share during the quarter associated with various puts and takes in the business. And the comparative contribution from our customer supply business decreased by $01 per share. Contributions from NextEra Energy Transmission increased $01 per share year over year. All other impacts decreased by $05 per share, driven by higher interest costs of $06 per share, half of which are related to new borrowing costs to support our new investments.

As we previously disclosed and as we deemphasize the business, we have reclassified gas infrastructure to include gas pipelines and existing clean energy and upstream gas infrastructure in customer supply. Gas pipelines and upstream gas infrastructure each had a $01 decline in the quarter. Energy Resources originated approximately 3.2 gigawatts of new renewables and storage to the backlog. With these additions, our backlog now totals roughly 28 gigawatts after taking into account 0.7 gigawatts of new projects placed into service since our last earnings call. This highlights the continued strong growth for renewables and storage.

We're also excited to announce our first solar repowering project, which we expect to be completed in 2026. Going forward, we plan to include both wind and solar repowering megawatts in the newly updated repowering line of our development expectations. Our backlog additions represent the diverse power demand that we are seeing across industries. Roughly 40% of our backlog additions are driven by commercial and industrial customer demand, while 60% are driven by demand from power companies. As evidenced by our nearly one gigawatt additions, our customers continue to choose battery storage as the lowest cost ready now solution to meet their capacity needs.

Turning now to our first quarter twenty twenty five consolidated results. Adjusted earnings from corporate and other decreased by $03 per share year over year. Our long term financial expectations remain unchanged. We will be disappointed if we are not able to deliver financial results at or near the top end of our adjusted EPS expectation ranges in 2025, '20 '20 '6 and 2027. From 2023 to 2027, we expect that our average annual growth in operating cash flow will be at or above our adjusted EPS compound annual growth rate range.

We also continue to expect to grow our dividends per share at a roughly 10% rate per year through at least 2026 off of a 2024 base. As always, our expectations assume our caveats. That concludes our prepared remarks. And with that, we will open the line for questions.

We will now begin the question and answer session. The first question comes from Steve Fleishman with Wolfe Research. Please go ahead.

Yes. Good morning. Thank you. So first, just related to the tariff disclosure you provided, which sounded very good. The battery portion where you're moving a lot domestic, I assume that means you're also getting domestic battery cells as part of that.

The way the contract works, we get certain components. Steve, sorry, I cut off there for a minute. Let me start over. No worries. With the battery, the domestic battery contract that we have entered into, it is assembled here in The United States.

There are certain components that come in from outside The United States, but because it's assembled here and it has enough concentration here in The US, it qualifies for domestic content. And we have contractual protections in the agreement in place regarding the qualification for domestic content. And also to the extent that there is any tariff exposure related to any imported parts or components related to those batteries, those are protected as well and backstopped by substantial credit. So that is a domestic contract and that's the way investors should think about it.

Got it. Thanks for that. And then just in terms of the exposure on the tariff exposure, which you've talked for a long time about making sure that you're protected there with your suppliers. Obviously, of the issues can be making sure that the suppliers still supply, while they absorb tariffs. Just how do you feel about the supplier health to kind of meet the commitments as well?

I feel good. I feel very good for two reasons. One, given the buying power that NextEra has, suppliers don't want to disappoint and they want to make sure they fall through. They're looking at this as a long game for their business. Second, the way our contracts are set up with our credit protections in the agreement, there's very strong incentive to follow through on those commitments.

And then the third point that I would make is that The U. S. Still remains an extremely attractive market to suppliers across the globe being that they have a lot of margin when they deliver into The U. S. And when we put those three things together, I lose no sleep over whether or not our suppliers will fall through on their commitments and deliver into The U.

Yes. Got it. Makes sense. And then just on the switching to a lot of focus these days on IRA, obviously, and changes and specifically on transferability. And so maybe just one clarification on transferability.

In the event, hypothetically, if it were to go away in the future in a bill, do you would it still be applicable for existing assets that were done under transferability as well as safe harbored assets on transferability?

Yes. So, I mean, was a recent piece of legislation that was brought forward that basically Fedorchak bill, I'll use that as an example to answer the question. So on the Fedorcek bill, the way it was structured is that you'd see tech neutral eliminated through a phase down, but with transferability of eventually being phased out there. However, under the non tech neutral portion, there would be an ability to continue the safe harbor for four years and transferability is left in place there. So it all comes down to the drafting, Steve, at the end of the day.

That's how that bill was drafted. It depend on the ultimate outcome and drafting of future bills. But let me just make a couple of comments on transferability. We spent a lot of time obviously advocating for tax credits and transferability for good reason. And the reasons are I think well known by investors.

Gas has its limitations in terms of availability for the reasons I went through in the prepared remarks. They're a lot more expensive. Gas turbines have been hit by tariffs too and a lot of folks don't talk about that, which is actually going to I think we had put the proxy at 2,400 kW at our development day. It's probably closer to 2,600 to 2,800 today. When you factor in tariffs, gas turbines have actually been hit harder than I think solar or wind or storage in that regard.

And so, we need a bridge and that bridge has to come from renewables and storage, because we have all this demand today. It's got to be met by something. And the ability to transfer credits, it goes hand in glove with the credit itself. You have to be able to monetize the credit to be able to get the benefit back to the customer. And I'll use a couple of examples.

I mean utilities for example, right? And this is one of the things that we continue to stress in Washington. Utilities historically have struggled to use tax equity financing. Commissions won't approve it. It's you have to sell half the plant to qualify for tax equity financing.

And so how do you get the benefit, which we calculate to be a 12% increase in household income to the ultimate utility customer without the ability to transfer the credit. Nuclear, I'll use as an example. With nuclear, a tax equity structure doesn't work, right? There's no bank that's going to take a 50% ownership interest in a nuclear plant. And so you have to have transferability for nuclear as well.

And nuclear is going to play an important part of our future. It's definitely a focus of this administration. 45x as well, if you didn't have transferability on credits for wind, solar, storage, nuclear, 45x becomes very difficult, right? How do you stimulate all these investments, 80% of which are going into Republican jurisdictions, when you're trying to convince the CEO to build a manufacturing facility under 45X. But if the credit is not there with the ability to transfer it on the back end for wind, solar, battery storage, the demand for the product is not there either.

And so what's the incentive to invest billions of dollars in the manufacturing facility under a 45X credit. So when you put all these things together, credits and transferability go together. You have to you can't have one without the other. That's a message we're bringing to Washington. It's one that's being well understood.

I think the evidence lies in the fact that we just had 21 House Representatives, Republican House Representatives sign on to a letter saying, don't touch the credits, don't touch transferability. We had four senators say the same sign on to a very similar letter. They get it. They get the two go together. We'll be a little bit of a bumpy ride as we maybe see some proposed bills, sure.

But I think at the end of the day, folks Washington understand that transferability and tax credits are hand in glove and go together. You have to have an ability to monetize the tax credit.

Our next question comes from Julien Dumoulin Smith with Jefferies. Please go ahead.

Hey, John, team, thank you all very much and congrats again on all the new roles here, very well deserved. John, maybe just to start with a little bit of a more mundane question. You're talking about going to the higher end of the range here at NEAR. Do you want to talk a little bit what the contributing factors are there for 2025? And then I've got a quick follow-up on what you just said there.

Yes. So when I think about higher end of the range, I start with the first quarter results, right. I mean, we're already out of the gate at 9%. And we have a business plan that we feel good about, feel good about executing against. And I don't think there's whole lot more to say about that.

Awesome. Thank you. And then, look, really appreciate the details on transferability. I know folks have been very keen to hear from you guys on that. Related here, can you speak a little bit on the timing dynamics on when and how that ultimately will work?

You say in your remarks, once we work with our customers, how do you think about the impact 01/1950 from a timing perspective on 2025 versus is that really going to get to that zero in 2026? It seems like this is sort of an assumption that principally the tariff impact is going to impact customers with higher PPAs and you're going go back to them today perhaps like what we saw before with maybe some of the COVID impacts.

So, Julien, your question is on tariffs, right, not transferability?

Yes, sorry. Yes, sorry. No, I thank you on the transferability. So let me make sure

I got focused on transferability. You pivoted tariffs. Can you clarify your question on tariffs? Just so I understand. Yes, sorry.

The timing of that, right? So you talk about supply chain. You say once you work with your customers, how do you think about the timeline for working with your customers? And is the reason for your tariff exposure to be fairly low, principally because you are passing along those costs to your customers in revised PPAs? Or do you have existing contractual terms?

Yes. So let me take those in pieces. Let's just start with the supplier first. So when we look at our entire backlog, right, and we look at our projected Q2 originations and we look out at development expectations that we've told investors, we think that we're looking at around 150,000,000 of exposure on tariffs. That is based on the contractual protections we have in our existing contracts with suppliers and the discussions that we have had with them since Liberation Day on April 2.

So that's the first piece. So that works you down to 150,000,000 Then the point we were making in the prepared remarks is that not only do we have the ability to shift tariff risk to suppliers and supply contracts, which I just covered, we also have trade measure protection provisions in our customer contracts. So we believe we got a really good shot at working with our customers to take that $150,000,000 exposure down significantly and perhaps even down to zero if we use the track record we had around circumvention, a lot of lessons learned there. And these are rights that we already have embedded in our agreements. And so when I think about where we stand, I feel very good about tariffs.

It's just not going to have much of an impact at all on our business.

If I can clarify quickly, the reason there's 150,000,000 is because you have to go back and clarify the contracts?

The reason that it is 150,000,000 is that there are certain risk sharing mechanisms and contracts. Most of the contracts, the supplier takes all the risk. Some of the contracts, they take almost all the risk except for a small sliver that we work through with them.

Got it. All right. Thank you guys very much. Thanks, Hey,

and Julian, I want to make one more and I want to make sure folks understand this from remarks. That's $150,000,000 on $75,000,000,000 of CapEx. That's less than 0.2%. And we feel like we've got a good shot at getting that to zero.

And final point I'll make is, Steve asked me a little bit about it, but there's been a lot written about battery exposure. We don't have battery exposure. Full stop. We do not have battery exposure. We are really well positioned.

We entered into a domestic contract. We have actually a real opportunity rather than a risk around batteries.

Thank you. The next question comes from Nick Campanella with Barclays. Please go ahead.

Hey, good morning and thanks for taking the question. So maybe just to close the loop on the tariff discussions, just where do you think returns are from an IRR perspective or an ROE perspective? These protections that you have in place versus your competitors could make you more competitive, would think. Does that boost your returns? Or do you see these kind of remaining flat in the post tariff world?

Yes. I mean I mean, great hey, that's a great question, Nick. So I look at it a couple of different ways. I mean, first of all, we're in great shape on our returns for all the obvious reasons we just covered. So I don't think I need to spend time on that.

I look at this as a huge opportunity for us, because we compete again against a lot of small developers and they don't have the buying power, the leverage in contracts to be able to shift risk like we can. We started looking at this three years ago. We've been at it we didn't just wake up on November 6 and say, oh my god, what do we do about our supply chain? I mean, we've been thinking about this for years. And so, put the right things in place.

This is going to create a lot of opportunity for us. So, if circumvention is any example, what happened in circumvention is lot of small developers blew themselves up, couldn't satisfy their commitments with their customers and a lot of demand came our way. And so I would expect that's my point around opportunity that given the position that we're in around tariffs, I expect a lot of opportunity to come our way as small developers just aren't in the position we are. They're trying to absorb significant amount of risk, particularly those that are that have entered into contracts for batteries, because they probably are buying from Chinese manufacturers and don't have domestic contracts and don't have the position that we have.

Thanks for that. And then just maybe a quick update on where you stand in the Duane Arnold contracting opportunity. I think you were working through an engineering study beforehand. How is that kind of progressing? And how have discussions been in terms of getting a contract for this site?

It's going great. We continue to make a lot of progress at Duane Arnold. We have seen no showstoppers there and continue to see a lot of demand for generation from the project. So, I think it's continues to be an opportunity that's exciting for us. And look, we continue to work it as we move forward.

The next question comes from Jeremy Tonet with JPMorgan. Please go ahead.

Hi, good morning. Good morning. I just want to touch base I guess on the GEB partnership and if there's any update that you can provide to us granted it's recent since you talked about the Developer Day, but just wondering any updated thoughts to share there?

Yes. I mean, things with our under the framework agreement continue to advance. We've been doing work together on the customer origination side. As a matter of fact, we hosted an event last week that we called deploy following development day, where Scott and I jointly hosted a number of companies across various sectors and very fruitful and we continue to try to advance opportunities on that front particularly around large scale load.

Okay, great. Thanks. And maybe just kind of continuing with this a little bit more, just wanted to see, I guess, as you talked a lot about gas development timeline for new turbines. But just as we look in the outer years here, just wondering how you think, I guess, gas power factors in for hyperscalers specifically, I guess, how conversations are going there given decarbonization goals, but the attributes that gas can offer as well? Just any updated thoughts there would be

It's interesting because we talked a lot about this at Development Day. I mean, there's three things we shoot for, right? One is just achieving the development expectations, I'll call it kind of the status quo plain vanilla business that we advance every quarter. The second is large load and that kind of falls in the two camps. One is behind the meter discussions and the second is front of the meter discussions.

And we continue to see a strong preference by hyperscalers for front of the meter solutions, which means ultimately a three way conversation right between us investor and utilities and the hyperscaler, because the hyperscaler wants two things right? They want the reliability that comes with being interconnected to the grid that you don't get from behind the meter. And two, they want the optionality of being able to monetize power if need be, which also comes by being interconnected to the grid. So that's kind of how I see the market moving forward. We also do continue dialogue around behind the meter.

There's a premium obviously that has to be paid for the additional redundancy you have to build on the generation side. But for some, that's worth pursuing because the grid can be difficult to access in certain parts of The United States, can take five, seven years. And is the additional premium for redundant generation worth the avoided cost of not having to go through trying to get interconnected. But even in those situations, they're looking for a path ultimately to be interconnected to the grid. And from a gas standpoint, which is really your question, definitely something that they are looking at as part of the solution, but they also remain observant and cautious about wanting to understand what the carbon offset is to the emissions off the plant, which is I think where our skill set comes in comes to bear perfectly because we can through BPPAs and other arrangements provide a nice combination of gas fired generation together with renewable solutions that provide a nice large scale fix that can leave the site essentially carbon neutral or close to carbon neutral at the end of the day, which is very attractive to these customers.

And I think that's why we are uniquely positioned to serve that market in partnership with the terrific relationships that we've been able to build with investor owned utilities over the last twenty or thirty years and with the strong relationships we have with the hyperscale market. So more to come on that.

Got it. That's helpful. I'll leave it there. Thanks.

Our next question comes from David Arcaro with Morgan Stanley. Please go ahead.

NextEra Energy (NEE) Q1 2025 Earnings Call Transcript

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