Nextera Energy, Inc. · NYSE:NEE
Nextera Energy — Investor Presentation (October 2018)
62 slides from Nextera Energy's investor presentation, October 2018
Slide 1: October 2018 Investor Presentation
October 2018 Investor Presentation
Slide 2: Cautionary Statements And Risk Factors That May Affect Future Results
Cautionary Statements And Risk Factors That May Affect Future Results This presentation includes forward-looking statements within the meaning of the federal securities laws. Actual results could differ materially from such forward-looking statements. The factors that could cause actual results to d
Slide 3: NextEra Energy is comprised of two strong businesses supported by a common platform
NextEra Energy is comprised of two strong businesses supported by a common platform • ~$79 B market capitalization(1) • ~47 GW in operation(2) • ~$95 B in total assets(3) • The largest electric utility • The world leader in in the United States by electricity generated retail MWh sales from the wind
Slide 4: Built on a foundation of best-in-class operational excellence and financial strength
Built on a foundation of best-in-class operational excellence and financial strength, and focused on clean generation FPL Service Reliability (“SAIDI”)(1) Generation Profile ~101 minutes 2017 NextEra Energy Fuel Mix MWhs(2) Nuclear Wind ~56 minutes 26% 22% Good Coal 2% Solar 3% Oil <1% FPL ~$14 FPL
Slide 5: Target to reduce carbon emissions rate by more than 65% by 2021
We have established a target to reduce our carbon emissions rate by more than 65% by 2021, off a 2001 base Creating a Sustainable Energy Future for America Investing in our Team Respecting the Environment & Sustaining Communities(2) 2,500 CO2 Emissions Rate(1) 2,000 1.1 MM Hours of employee training
Slide 6: Long-term track record of delivering value to shareholders
We have a long-term track record of delivering value to shareholders Adjusted Earnings Per Share(1) Total Shareholder Return(3) $6.70 $6.19 40% 70% $5.71 34% 60% $5.30 60% $4.97 $4.39 $4.57 30% 50% $3.84 $4.05 $4.30 $3.49 22% 38% 40% $3.04 20% $2.63 30% 24% 12% 10% 20% 10% 0% 0% '05 '06 '07 '08 '09
Slide 7: Growth strategy has led to real change in relative position
Over a sustained period of time, our growth strategy has led to real change in relative position Top 20 Global Utility Equity Market Capitalization(1) As of 6/1/2001 ($ MM) As of 9/25/2018 ($ MM) Rank Market Cap Rank Market Cap 1 $38,574 1 $78,687 NextEra Energy 2 $38,185 2 $56,141 3 $34,476 3 $55,3
Slide 8: Well positioned to continue this track record
We are well positioned to continue this track record Wholesale & Service FPL Coal FPL Territory Retirements Energy Expansion Services FPL FPL Battery FPL T&D FPL New Solar Infrastructure Generation Storage Expect $40 B - $44 B(1) FPL Capital New Wind Generation Asset of capital Recycling Growth Mode
Slide 9: Florida Power & Light is one of the best utility franchises in the U.S.
Florida Power & Light is one of the best utility franchises in the U.S. Florida Power & Light • One of the largest U.S. electric utilities • Vertically-integrated, retail rate-regulated • ~5 MM customer accounts • ~27 GW in operation • $12 B(1) in operating revenues • ~$52 B in total assets 1) As of
Slide 10: Core focus at FPL has been consistent for many years
Our core focus at FPL has been consistent for many years Areas of Focus • Unyielding commitment to customer value proposition Customer – Low Bills Satisfaction – High reliability – Excellent customer service • Focus on efficiency and best-in- Superior Constructive class cost performance Customer Vir
Slide 11: FPL's value delivery is founded on a low cost position
FPL’s value delivery is founded on a low cost position and best-in-class operations Operational Cost Effectiveness(1) $100.00 Adjusted Regressed Top Quartile Top Decile Good $/ Retail MWh Log/Log FPL 2017 = $12.44/MWh $10.00 1,000,000 10,000,000 100,000,000 1,000,000,000 Retail MWh 1) FERC Form 1, 2
Slide 12: FPL 2017 – 2020 Investment Initiatives
FPL projects total capital deployment of $17.5 B to $19.0 B from 2017 to 2020 through smart investments that result in customer savings and enhanced reliability FPL 2017 – 2020 Investment Initiatives Projected Recovery Opportunity Status Investment(1) Mechanism Completed construction on ~600 Solar B
Slide 13: FPL has 18 MW of battery projects in operation
FPL has 18 MW of battery projects in operation, each providing unique reliability and economic benefits FPL Storage Project Summary Primary Secondary Size In-service Application (Use Case) Benefit Benefit (MW) date Freq. Response Distribution Feeder Installation Peak T&D Deferral 1.5 8/2016 (Peaker)
Slide 14: Typical residential bills below Florida and National averages
FPL’s strategy continues to result in typical residential bills below both Florida and National averages FPL 1,000-kWh Residential Bill $140 ~$138 $120 ~$119 ~$109 ~$99 ~$100 $100 Good $80 $60 $40 $20 $- FPL FPL (1) FPL FL IOUs National 2006 2018 2021E Average(2) Average(3) FPL expects the typical r
Slide 15: Agreement to acquire Gulf Power, Florida City Gas, and Stanton and Oleander plants
NextEra Energy announced agreement to acquire Gulf Power, Florida City Gas, and the Stanton and Oleander natural gas power plants Transaction Overview • Addition of attractive regulated electric and natural gas franchises are an Tallahassee Tallahassee Tallahassee Tallahassee excellent geographic an
Slide 16: Energy Resources' focus is to be the leading North American clean energy company
Energy Resources’ focus is to be the leading North American clean energy company Energy Resources • World leader in electricity generated from the wind and sun • ~20 GW(1) of generation in operation – ~14 GW wind – ~2 GW solar – ~3 GW nuclear – ~1 GW natural gas/oil • ~8 BCF of natural gas pipeline
Slide 17: Energy Resources' growth driven by development skills and competitive advantages
Energy Resources’ growth is driven by its best-in-class development skills and competitive advantages Energy Resources Development Skills 20,000 Wind and Solar Portfolio(1) 15,000 Customer Relationships MW Engineering/ 10,000 Regulatory Construction Management 5,000 0 Wind Solar Best-In-Class Integr
Slide 18: Wind and solar expected to be competitive into the next decade
With continued technology improvements and cost declines, wind and solar are expected to be competitive into the next decade Wind and Solar Technology Levelized Cost of Levelized Cost of Electricity from Wind Electricity from Solar (Including Production Tax Credits) (Including Investment Tax Credits
Slide 19: Energy Resources benefits from NextEra Energy's purchasing power
Energy Resources benefits from NextEra Energy’s purchasing power as a top capital investor across all industries 2017 Top 10 U.S. Capital Investors(1) $20.0 $19.3 $18.0 $17.2 $16.0 $14.0 $12.0 $B $12.0 $10.7 $10.0 $9.6 $10.0 $8.7 $8.4 $8.1 $8.1 $8.0 $6.0 $4.0 $2.0 $0.0 A B C NEE D E F G H I NextEra
Slide 20: Scale and purchasing power have reduced wind O&M costs
Leveraging the scale of Energy Resources’ portfolio and purchasing power have helped reduce wind O&M costs by ~25% since 2014 Wind O&M(1) $/MWh ~5% ~10% Improvement Per Year Improvement Per Year 2014 2016 2018E NextEra Average Site (2) Top Quartile Site (2) Top Decile Site (2) Energy Resources’ flee
Slide 21: Energy Resources leverages NEE's strong balance sheet and diverse bank group
Energy Resources is able to leverage NEE’s strong balance sheet and diverse bank group with total capital commitments of over $21 B Funding Breakdown by Country(1) Our lending group is large, balanced and well-diversified 1) Reflects corporate credit facilities, commitments and term loans outstandin
Slide 22: Resource assessment and site selection support renewables growth
Resource assessment and site selection capabilities help identify optimal sites to support long-term renewables growth Renewable Development Longer-Term Pipeline Wind: 450-600 MW Wind: 4,500-4,800 2,200-2,500 MW Solar:1,600-1,700 MW Solar: 600-700 200-300 MW Wind: 300-450 MW Solar: 600-700 MW Wind:
Slide 23: Battery cost declines expected to expand the storage market
Battery efficiency improvements and cost declines are expected to expand the storage market and enable even greater renewables expansion Storage Technology Lithium-ion 4-Hour Battery Pack Cost(1) Battery Storage Adder(2) $/kWh $/MWh $1,200 $80 $71-$81 $1,000 $70 $1,000 $60 $800 $45-$55 $50 $642 $38-
Slide 24: Battery portfolio has rapidly transitioned to long duration applications
Energy Resources’ battery portfolio has rapidly transitioned from single-use short duration ancillary services to long duration multi-use stacked applications Energy Storage Portfolio Operating Portfolio Announced Backlog Portfolio Project MW Duration Project MW Duration Parry 2 4.0 Rush Springs 10
Slide 25: Competitive advantages position us well for continued success
Energy Resources’ competitive advantages position us well for continued success Energy Resources Development Program(1) (Signed Contracts as of July 25, 2018) 2017 – 2018 2017 – 2018 2019 – 2020 2019 – 2020 2017 – 2020 Signed Current Signed Current Current Contracts(2) Expectations Contracts Expecta
Slide 26: Energy Resources backlog of future renewables projects has never been stronger
Energy Resources backlog of future renewables projects has never been stronger Energy Resources Renewables Backlog(1) (MW) ~7,400 ~5,000 ~3,700 ~2,900 ~2,400 ~2,100 Q4 2013 Q4 2014 Q4 2015 Q4 2016 Q4 2017 Q2 2018 Wind Solar Repowering Energy Storage Year to date 2018, Energy Resources announced ~2,6
Slide 27: Positioned to capitalize on potentially disruptive industry changes
We are well positioned to capitalize on and respond to potentially disruptive changes to our industry in the next decade Disruptive Industry Changes Potential Cost per kWh Post-2020(1) Shale (¢/kWh) Gas 3.5 - 5¢ 4 - 5¢ 3 - 4¢ 3 - 4¢ Big Data Renewables /Storage 2 - 2.5¢ Generation Wind Solar Gas Coa
Slide 28: Expansion into the natural gas pipeline business
We have leveraged our skills and capabilities to expand into the natural gas pipeline business Natural Gas Pipeline Assets Sabal Trail and Florida Mountain Texas Southeast Connection (FSC) Valley Pipeline (MVP) Pipelines • ~$1.5 B investment in Sabal • NextEra is a 31% owner of • NEP completed the $
Slide 29: Well positioned to achieve 2018 target adjusted EPS
We remain well positioned to achieve the $7.70 target adjusted EPS for 2018 as well as our long-term financial expectations NextEra Energy’s Adjusted Earnings Per Share Expectations(1) • The Gulf Power, Florida City $9.40 - $8.70 - $9.95 Gas, and two natural gas $8.00 - $9.20 power plant acquisition
Slide 30: NextEra Energy Investment Proposition
NextEra Energy’s businesses deliver strong earnings, dividend and cash flow growth and a low beta NextEra Energy Investment Proposition Track record of delivering value to shareholders High visibility into earnings growth to support 11% - 12% total return potential Low payout ratio and above a
Slide 31: NextEra Energy Partners
NExTera energy” PARTNERS Z
Slide 32: NextEra Energy Partners is a best-in-class diversified clean energy growth company
NextEra Energy Partners is a best-in-class diversified clean energy growth company NextEra Energy Partners’ Portfolio(1) • Stable cash flows supported by: – Long-term contracts with credit- worthy counterparties – Geographic and asset diversity • ~4,700 MW of renewables – ~4,100 MW wind – ~600 MW so
Slide 33: Since the IPO, NEP has grown distributions by ~133%
Since the IPO, NEP has grown distributions by ~133% and delivered total unitholder return of 122% Annualized Total Unitholder Return LP Distributions(1) NEP vs. Indices $1.75 140% 122% 120% 100% 80% 63% 60% 40% 38% 24% $0.75 20% 0% Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2
Slide 34: NEP's value proposition is built upon four core strengths
NEP’s value proposition is built upon four core strengths NextEra Energy Partners’ Core Strengths High-Quality Portfolio(1) Financial Strength and Flexibility Issuer Credit ~4.7 GW Rating(4) Year-end 2017 17-Yr Baa1 Renewables >90% Ba1/BB/BB+ Remaining Counterparty Capacity of Project Debt ~1.2x & T
Slide 35: NEP agreement to acquire ~1.4 GW of renewable projects
NextEra Energy Partners announced an agreement to acquire ~1.4 GW of renewable projects from Energy Resources as we continue to execute on our plan to expand the portfolio NextEra Energy Partners – Portfolio Additions • Purchase price of $1.275 B(1), Portfolio Overview plus assumption of: Remaining
Slide 36: NEP Portfolio Financing with BlackRock
The acquisition will be funded with the Canadian asset sale proceeds and a $750 MM convertible equity portfolio financing with BlackRock NextEra Energy Partners – Portfolio Financing(1) • BlackRock pays $750 MM in Financing Comparison exchange for an equity interest in 2018 the acquisition portfolio
Slide 37: NEP focuses on investing in clean energy assets with stable cash flows
NEP continues to focus on investing in clean energy assets with stable cash flows Asset Suitability Long-Term Contract Clean Energy Technology Creditworthy Counterparty “NEP-Able” Asset Stable Regulatory Environment Limited or Monetized Tax Credits Strong Operations Any clean energy asse
Slide 38: Clear visibility to future growth opportunities
Acquisitions from Energy Resources, organic growth and third party M&A all provide NEP with clear visibility to future growth Growth Opportunities Potential Acquisition of Potential Organic Clean Energy Potential for 3rd Prospects for Assets at Energy Party Texas Pipelines Resources, Acquisitions an
Slide 39: NEP's credit ratings increase financing flexibility and debt capacity
NEP’s credit ratings increase financing flexibility and debt capacity due to greater market access Corporate Credit Rating and Debt Capacity • NEP corporate credit ratings: Convertible Term Loan B High-Yield Equity Debt Portfolio Convertible Financing Revolving Moody’s S&P Fitch Preferred Credit Fac
Slide 40: NEP's long-term outlook for distribution growth through 2023
NEP’s long-term outlook for distribution growth through 2023 is best-in-class NextEra Energy Partners Financial Expectations Annualized LP Distributions(1) Adjusted EBITDA and CAFD(3) Annual 12% - 15% $1,000–$1,150 MM Growth(2) $1.81-$1.86 $1.62 $360–$400 MM Q4 2017 Q4 2018E Q4 2023E 12/31/2018 12/3
Slide 41: NEP offers a superior value proposition
We believe NEP offers a superior value proposition and is better positioned than ever to deliver upon its long-term expectations Investor Total Return Potential • Opportunity to earn a total return of ~4% 16% - 19% roughly 16% - 19% per year through at least 2023 12% - 15% • Diversified portfolio wi
Slide 42: Appendix
Appendix NExTera’ NexTera energy” ENERGY & PARTNERS 2 42
Slide 43: NextEra Energy
NEXT@ra ENERGY &%
Slide 44: NextEra Energy's credit metrics remain on track
NextEra Energy’s credit metrics remain on track Credit Metrics A- Downgrade Actual Target S&P Range Threshold 2017(1) 2018(2) FFO/Debt 23%-35% 23% 26% / 29% 28% Debt/EBITDA 2.5x-3.5x 3.0x 3.0x Baa Downgrade Actual Target Moody’s Range Threshold 2017 2018(2) CFO Pre-WC/Debt 13%-22% 20% 22% 23% CFO-Di
Slide 45: Contracted Wind and Solar Development Program
Contracted Wind and Solar Development Program(1) Wind Location MW Solar Location MW 2017: 2017: Oliver III ND 99 Whitney Point CA 20 Golden Hills North CA 46 Marshall MN 62 Bluff Point IN 120 Westside CA 20 Cottonwood NE 90 Distributed Generation Various 97 TOTAL 2017 Wind: 355 TOTAL 2017 Solar: 199
Slide 46: U.S. Federal tax incentives for renewables projects extended
U.S. Federal tax incentives for completed renewables projects have been extended into the next decade Extended U.S. Federal Tax Credits Wind Production Solar Investment Tax Credit (PTC) Tax Credit (ITC) Start of Start of Construction COD Wind Construction COD Solar Date Deadline PTC Date Deadline IT
Slide 47: Reconciliation of Earnings Per Share to Adjusted Earnings Per Share
Reconciliation of Earnings Per Share Attributable to NextEra Energy, Inc. to Adjusted Earnings Per Share 1) Net of approximately $0.08 of income tax benefit at FPL 47
Slide 48: Definitional information
Definitional information NextEra Energy, Inc. Adjusted Earnings Expectations This presentation refers to adjusted earnings per share expectations. Adjusted earnings expectations exclude the cumulative effect of adopting new accounting standards, effect of non-qualifying hedges, the transitional impa
Slide 49: Cautionary Statement And Risk Factors That May Affect Future Results
Cautionary Statement And Risk Factors That May Affect Future Results This document contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are typically identified by words or phrases such as “may,” “will,” “anticipat
Slide 50: Cautionary Statement And Risk Factors (cont.)
Cautionary Statement And Risk Factors That May Affect Future Results (cont.) This presentation contains “forward-looking statements” within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not statements of historical f
Slide 51: Cautionary Statement And Risk Factors (cont.)
Cautionary Statement And Risk Factors That May Affect Future Results (cont.) risk to NextEra Energy Resources of increased operating costs resulting from unfavorable supply costs necessary to provide NextEra Energy Resources' full energy and capacity requirement services; inability or failure by Nex
Slide 52: NextEra Energy Partners
NExTera energy” PARTNERS Z
Slide 53: NEP's portfolio of ~4.7 GW of renewable assets plus seven pipelines
NEP’s portfolio is comprised of ~4.7 GW of renewable assets plus seven natural gas pipelines with an ~17 year weighted average remaining contract life Portfolio Overview(1) Project COD Location Net MW Technology Counterparty Credit PPA Life Ashtabula III Dec-10 ND 62 Wind A3 20 Baldwin Dec-10 ND 102
Slide 54: Portfolio Financing Summary Terms
Portfolio Financing Summary Terms(1) Key Terms Summary Funding Amount: BlackRock to fund $750 MM; NEP to fund the balance of the $1,275 MM Energy Resources portfolio purchase price Issuer: Newly-formed private HoldCo managed and operated by affiliates of NEP BlackRock to purchase Class B Common Equi
Slide 55: NEP's tax shield creates the need to employ tax equity financing
NEP’s tax shield creates the need to employ tax equity financing for projects that generate a large portion of their economics from tax credits PAYGO Tax Equity Financing • Tax equity financing is used Project Cash Flow Split(1) to monetize tax attributes • Under tax equity, an investor makes an up-
Slide 56: NEP's holdco leverage target consistent with strong BB credit ratings
NEP’s holdco leverage to project distributions metric target of 4.0x – 5.0x is consistent with its strong mid– to high–BB credit ratings Credit Metrics BB Actual Target (1) (4) S&P Range 2017 YE 2018(5) Holdco Debt/EBITDA 4.0x - 5.0x 3.8x 4.0x - 5.0x Ba1 Actual Target (2) (5) Moody's Range 2017 YE 2
Slide 57: Expected Cash Available for Distribution
Expected Cash Available for Distribution(1) (December 31, 2018 Run Rate CAFD) $1,100-$1,250 ($15-$25) ($75-$85) $1,000-$1,150 ($170-$250) ($400-$480) ($30-$35) ($5-$15) $360-$400 Project-Level Corporate IDR Fees Adjusted Debt Pre-Tax Non-Cash Maintenance Estimated Adjusted Expenses EBITDA Service (2
Slide 58: Definitional information
Definitional information NextEra Energy Partners, LP. Adjusted EBITDA and CAFD Expectations This presentation refers to adjusted EBITDA and CAFD expectations. NEP’s adjusted EBITDA expectations represent projected (a) revenue less (b) fuel expense, less (c) project operating expenses, less (d) corpo
Slide 59: Cautionary Statement And Risk Factors That May Affect Future Results
Cautionary Statement And Risk Factors That May Affect Future Results This presentation contains “forward-looking statements” within the meaning of the federal securities laws. Forward-looking statements are not statements of historical facts, but instead represent the current expectations of NextEra
Slide 60: Cautionary Statement And Risk Factors (cont.)
Cautionary Statement And Risk Factors That May Affect Future Results (cont.) A change in the jurisdictional characterization of some of the Texas pipeline entities' assets, or a change in law or regulatory policy, could result in increased regulation of these assets, which could have a material adve
Slide 61: Cautionary Statement And Risk Factors (cont.)
Cautionary Statement And Risk Factors That May Affect Future Results (cont.) The natural gas pipeline industry is highly competitive, and increased competitive pressure could adversely affect NEP's business; NEP may not be able to access sources of capital on commercially reasonable terms, which wou
Slide 62: Cautionary Statement And Risk Factors (cont.)
Cautionary Statement And Risk Factors That May Affect Future Results (cont.) Holders of NEP's common units and preferred units currently cannot remove NEP GP without NEE’s consent; NEE’s interest in NEP GP and the control of NEP GP may be transferred to a third party without unitholder consent; The
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