Dive Brief:

• NextEra’s renewable energy projects are back on track and enjoying record-setting demand after the Biden administration's two-year moratorium on new solar panel tariffs, company leaders told investors during a Friday morning earnings call.
• The two-year moratorium will give the company’s suppliers adequate time to begin sourcing solar panels with wafers made outside China. This means NextEra should be able to avoid any tariffs stemming from the Department of Commerce investigation into solar panel tariff circumvention, according to Kirk Crews, NextEra Energy chief financial officer.
• CEO John Ketchum said he anticipates NextEra will continue to enjoy strong growth as high natural gas prices drive demand for more renewable energy.

Dive Insight:

NextEra leaders presented investors with an optimistic view of the company’s future during Friday’s second quarter earnings call.

NextEra Energy Resources added 1,200 MW of new solar energy projects to its long-term queue during the second quarter of 2022, marking the second-largest addition in the company’s history, according to Crews. The majority of those projects, according to Rebecca Kujawa, president and CEO of NextEra Energy Resources, are slated for construction in the 2024-2025 timeframe.

High prices for natural gas and electricity should continue to drive demand for renewable energy even higher, and NextEra, Crew said, is poised to capitalize on the company’s “significant competitive advantages” in the renewable energy space.

NextEra believes renewables “are going to continue to get cheaper and cheaper over time, and gas generation, which we primarily compete against, continues to get more expensive,” Ketchum said. “When I think about gas prices today, we think they’re going to remain elevated over a long period of time ... and that is creating a ton of demand for renewables.”

Ketchum noted that higher natural gas prices allow NextEra to charge higher prices for power purchase agreements, which increases the company’s margins and has allowed them to offset increased interest rates.

Company leaders also expressed optimism about their ability to avert 2 GW of project cancellations put on the table by the solar tariff investigation and short supplies of solar panels. NextEra’s suppliers, Crews said, are expected to use ingots and wafer manufactured outside China within 24 months. Panels made without Chinese wafers are not subject to the Department of Commerce investigation and should remain free of new tariffs regardless of the investigation outcome, he said.

“There is still a path where there are little to no cancellations across the board,” Kujawa said. “But we’re not there yet, there is still some risk.”

But even if the company does see some cancellations this year as a result of the investigation, Kujawa said, she believes the company should have no trouble entering into new contracts to replace them.

Mike Doyle, a senior equity analyst covering utilities for Edward Jones, said that given the evident demand that currently exists for renewable energy, it is more likely that any projects NextEra cannot complete this year will be delayed, rather than canceled outright.

“There’s just a lot of demand and companies want to do these projects and get on the roster to do that,” Doyle said. “For these projects, I think they’ll continue — maybe just pushed back a year in some cases.”