Dive Brief:

• NextEra Energy sees hydrogen as a key component for deep decarbonization of the U.S. power sector, and is taking on a number of small projects in that space, the utility's Chief Financial Officer, Rebecca Kujawa, said Wednesday during the company's Q1 earnings call.

• Simply adding more and more renewables and battery storage to decarbonize the U.S. power sector becomes very burdensome for customers, "because you aren't getting a significant amount of value" from those additions, absent other actions, she said. But when NextEra incorporates hydrogen into its analysis, "that substantially changes the value equation for customers to fully decarbonize in the electricity sector," she added.

• NextEra is working on a variety of initiatives in the space, including a green hydrogen pilot, to generate the resource with a 25 MW solar system, in what Kujawa called the largest U.S. pilot of its kind. NextEra announced the hydrogen electrolysis project last summer.

Dive Insight:

NextEra is eager to lead in the emerging hydrogen arena, earning recognition throughout the industry for the green hydrogen pilot announced last summer. But the company is taking a measured approach to the clean energy resource.

"You'll see us continue to place small bets to get experience, to build relationships, to gain knowledge, and ... in the short term, that won't add up to a heck of a lot of capital investment opportunity, but it will add up to a tremendous amount of learning and continuing to focus our strategies on where we can add significant amount of value to the infrastructure and the market and ultimately to our shareholders as well," Kujawa said on Wednesday's call.

The ability of hydrogen to change the value equation around decarbonization, gives the company "great excitement about the potential for substantial renewables and battery storage deployment knowing that as you continue to deploy more and you find economic forms of long duration storage that continues to be very value accretive to customers both in cost and in the performance of clean energy," Kujawa added.

Kujawa highlighted NextEra's hydrogen electrolysis project at Florida Power and Light's (FPL) Okeechobee combined cycle unit as part of the company's "efforts to introduce further fuel diversity and resiliency into FPL's generation system."

In addition to its pilots and partnerships around hydrogen, Kujawa said NextEra recently committed to make a minority investment in a company "that has developed a proprietary process to essentially decarbonize the industrial production of hydrogen at economic prices."

With all these developments, Kujawa said, NextEra will remain disciplined as it takes steps "to be at the forefront of this developing market while taking a leadership role in the clean energy transition."

NextEra sees opportunities with hydrogen in the electricity, industrial and transportation sectors, and also potentially to participate in advancing hydrogen infrastructure itself whether creating or distributing the molecules. "How much, and where we participate in that is really one of the things that we're focused on in all of these different pilots," Kujawa said.

Other utilities have also jumped into the hydrogen space. Last October, San Diego Gas & Electric announced plans to bring two long-duration green hydrogen storage projects online by 2022. A few days later, Ohio's Long Ridge Energy Terminal said it would convert a 485 MW combined-cycle gas power plant to eventually run on 100% green hydrogen, which is produced using zero-emisson electricity.

Dominion Energy, Southern California Gas and other utilities are also pursuing various hydrogen projects.

Commenting on some of the wider developments driving the power sector, Kujawa said NextEra supports "a clean energy standard that accelerates the decarbonization of the electric grid and enables the decarbonization of the transportation and industrial sectors as well."

The company is working with the Biden administration on such a standard for the electric sector as well as the extension of renewable energy tax credits, along with new credits for transmission and storage, including hydrogen, she noted.