Nextera Energy, Inc. · NYSE:NEE
Nextera Energy — Investor Presentation (August 2020)
69 slides from Nextera Energy's investor presentation, August 2020
Slide 1: August 2020 Investor Presentation
August 2020 Investor Presentation
Slide 2: Cautionary Statements And Risk Factors That May Affect Future Results
Cautionary Statements And Risk Factors That May Affect Future Results These presentations include 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
Slide 3: NextEra Energy is comprised of strong businesses supported by a common platform
NextEra Energy is comprised of strong businesses supported by a common platform • ~$137 B market capitalization(1) • ~55 GW in operation(2) • ~$122 B in total assets(3) • The largest electric utility in the United States by retail MWh sales • Provides electric service • The world leader in to over 4
Slide 4: NextEra Energy's strategic focus remains unchanged
NextEra Energy’s strategic focus remains unchanged NextEra Energy Strategic Focus • FPL and Gulf Power remain focused on delivering outstanding customer value – Value of FPL’s smart capital investments has never been more clear – Ongoing capital investment program at both companies remains on track
Slide 5: We have a 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 Total Shareholder Return(1) $8.37 50% 119% 43% 120% 40% 100% 32% 30% 26% 80% $2.49 60% 48% 53% 20% 40% 10% 20% '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 0% 0% One Year Three Year Di
Slide 6: Growth strategy has led to real change in relative position
Over a sustained period of time, our growth strategy has led to real change in relative position Top 20 Global Utility Equity Market Capitalization(1) As of 6/1/2001 ($ MM) As of 7/31/2020 ($ MM) Rank Market Cap Rank Market Cap 1 $38,574 1 $137,444 NextEra Energy 2 $38,185 2 $92,919 3 $34,476 3 $80,
Slide 7: Target to reduce carbon emissions rate by 67% by 2025
We have established a target to reduce our carbon emissions rate by 67% by 2025, off a 2005 base Creating a Sustainable Energy Future for America Investing in our Team Respecting the Environment & Sustaining Communities(2) 2,500 CO2 Emissions Rate(1) 2,000 800,000 Hours of employee training Lbs Per
Slide 8: Updated ESG report highlights alignment of strategy with ESG
NextEra Energy recently published its updated ESG report, which highlights the alignment of our corporate strategy with the key tenets of ESG New 2020 ESG Report Highlights(1) • “We remain committed to our long-term vision to be the largest, most profitable clean energy provider in the U.S.” • Our 2
Slide 9: Well positioned to continue our track record of growth
We are well positioned to continue our track record of growth Wholesale FPL FPL Gas & Service FPL Coal Under- Energy Utility Territory Retirements grounding Services Expansion FPL Hydrogen Battery FPL Solar FPL T&D FPL New Infrastructure Generation Expect Storage $50 B - $55 B of capital FPL deploym
Slide 10: Industry's disruptive factors will expand and accelerate
We expect the industry’s disruptive factors will further expand and accelerate over the coming years Disruptive Industry Changes Today Potential Cost per MWh Post-2023/2024(1) AI / ($/MWh) Machine Learning Near-Firm Wind $20 - $30 Big Data Renewables / Storage Near-Firm Solar $30 - $40 Natural Gas $
Slide 11: Florida Power & Light is one of the best utility franchises in the U.S.
Florida Power & Light is recognized as one of the best utility franchises in the U.S. Florida Power & Light Company • One of the largest electric utilities in the U.S. • Vertically integrated, retail rate-regulated • 5+ MM customer accounts • ~28 GW in operation • ~$12 B in operating revenues • ~$59
Slide 12: FPL has significant investment opportunities across its system
FPL has significant investment opportunities across its system that are expected to generate customer savings and further enhance reliability FPL 2019 – 2022 Capital Expenditures Projected Recovery Opportunity Status Investment(1) Mechanism Dania Beach Clean Energy Final regulatory approval granted
Slide 13: Growth in regulatory capital employed to drive FPL net income growth
Growth in regulatory capital employed is expected to drive FPL’s net income growth through 2022 FPL Regulatory 2019-2022 Capital Employed(1) Capital Expenditures $B $50 $47.0 - $49.0 $40 $33.7 $23 B - $30 $25 B $20 $10 T&D Storm Hardening All Other T&D $0 Solar Other Generation Other, Including Nucl
Slide 14: FPL long-term strategy delivering best-in-class customer value
At FPL, we will continue to focus on the long-term strategy that has delivered our best-in-class customer value proposition FPL Customer Value Focus Operational Service Cost Effectiveness(1) Reliability(2) $/Retail MWh minutes ~$11.10 – ~55 ~5% ~50 $11.78 $11.75(4) ~10% Good Reduction Good Improveme
Slide 15: Gulf Power acquisition expanded Florida footprint
The acquisition of Gulf Power expanded NextEra Energy’s Florida footprint and regulated operations Gulf Power • Acquisition closed 1/1/2019 • Located in Northwest Florida • ~470,000 customers • ~2,400 MW of generation in operation – ~1,600 MW coal – ~700 MW natural gas – ~75 MW solar • $1.5 B in ope
Slide 16: Opportunities to improve Gulf Power customer value proposition
Significant opportunities exist to improve the Gulf Power customer value proposition 2019 Operational Cost Effectiveness(1) 1,000-kWh Residential Bill(2) $100 ~$142 Gulf Power 2018 Adjusted Regressed ~$132 = $29.31/MWh Top Quartile Top Decile ~$115 ~$96 Good $/Retail MWh FPL 2018 = Gulf Power 2019 $
Slide 17: Gulf Power bill increased while FPL's declined
Despite growing regulatory capital employed at roughly half the rate of FPL over the past 10 years, Gulf Power’s bill has increased significantly while FPL’s has declined 2008 vs. 2018 Historical Comparison Regulatory Capital Employed(1) 1,000-kWh Residential Bill(2) $33.7 B ~$137 ~$106 ~$106 ~$99 ~
Slide 18: Gulf Power 2019–2022 capital initiatives
We have identified several opportunities to improve the customer value proposition through smart capital investments Gulf Power 2019 – 2022 Capital Initiatives Opportunity Status Projected Recovery Investment(1) Mechanism North Florida Resiliency Development in process; target ~$550 MM Base rates Co
Slide 19: First year executing strategy at Gulf Power
In the first year of ownership, NextEra Energy successfully executed on its strategy at Gulf Power Gulf Power 2019 Execution Summary Operational Regulatory Cost Effectiveness(1) Capital Employed(2) $/Retail MWh ~$32 ~$3.3 B ~20% ~11% Reduction ~$3.0 B Increase Good ~$25 2018 2019 2018 2019 2021 Targ
Slide 20: Gulf Power execution generated value in 2019
Execution of our plans at Gulf Power generated significant value creation for our customers and our shareholders in 2019 Gulf Power 2019 Execution Summary Service OSHA Adjusted Reliability(1) Recordable Rate(2) Earnings (Minutes) ($ MM) ~101 ~1.84 $200 ~81 $160 ~1.15 Good ~20% Good ~40% 25% Improvem
Slide 21: Gulf Power customer benefits over time
Successfully executing our strategy at Gulf Power will produce meaningful customer benefits over time Typical 1000-kWh Residential Bill(1) ~$137 ~9% Reduction ~$134 in real 2018 $ ~20% Reduction Mid- in real ~$120s 2018 $ 2018 2021E Mid-2020s 2020s Target Customer bills are expected to decline throu
Slide 22: Energy Resources is the leading North American clean energy company
Energy Resources is the leading North American clean energy company Energy Resources • World leader in electricity generated from the wind and sun • ~24 GW(1) of generation in operation Wind – ~16 GW wind Natural Gas Nuclear – ~3 GW solar Universal Solar – ~3 GW nuclear Storage – ~2 GW natural gas/o
Slide 23: Renewables development opportunities have never been stronger
We believe Energy Resources’ renewables development opportunities have never been stronger Low Cost Battery Battery Renewables Storage Storage Nuclear/Coal- Nuclear/Coal- Technology to-Renewables to-Renewables Improvements Buy Build Switching Switching Cheaper Cheaper ~80 GW Federal Tax Development
Slide 24: Technology improvements improved wind and solar economics
Technology improvements and capital cost declines have significantly improved wind and solar economics Wind & Solar Technology Levelized Cost of Levelized Cost of Electricity from Wind Electricity from Solar (Including Production Tax Credits) (Including Investment Tax Credits) $/MWh $/MWh $70 $160 $
Slide 25: Wind expected to be cheapest source of generation
Wind is expected to be the cheapest source of electric generation even after production tax credits phase down Expected Drivers of Future Wind Levelized Cost of Energy (LCOE) Reductions • Increased generation as a result of Unsubsidized Wind LCOE Roadmap(1) larger turbines $/MWh – Viability of large
Slide 26: Solar expected to be cheapest source other than wind
Solar is expected to be the cheapest source of electric generation other than wind after investment tax credit steps down Expected Drivers of Future Solar Levelized Cost of Energy (LCOE) Reductions • Continued module cost declines Solar LCOE Roadmap(1) $/MWh • Continued balance of system (BoS) savin
Slide 27: Manufacturing capacity drove energy storage cost declines
Increased manufacturing capacity has resulted in energy storage cost declines and the ability to create low-cost near-firm wind and solar Energy Storage Costs Battery Pack 4-Hour Cost Relative to Capacity(1) Battery Storage Adder(2) $/kWh GWh $/MWh $1,400 350 $80 $71-$81 $70 $1,200 300 $60 $1,000 25
Slide 28: Continued battery cost declines expected
Continued declines in battery costs are expected to result in the ability to generate near-firm wind and solar at low costs even after tax credits phase down Expected Drivers of Future Energy Storage Cost Reductions Storage Adder Roadmap(1) $/MWh • Continued battery pack cost declines and efficiency
Slide 29: Battery storage as an important stand-alone business
Energy Resources increasingly sees battery storage as an important stand-alone business Battery Storage Opportunity Battery Storage Portfolio • Pairing storage at existing solar MW sites to take advantage of ITC ~630 ~2,200 and enhance customer value – ~10 GW solar portfolio (including ~680 backlog)
Slide 30: Near-firm renewables expected to create long-term demand
Low cost, near-firm renewables are expected to create significant long-term demand Wind & Solar Market Potential(1) Average Annual Average Annual Wind Additions Market Solar Additions Growing ~15% annually on ~18 – 20 average GW/Year ~12 – 15 GW/Year ~10 GW/Year ~10 GW/Year 2019 - 2022 2023 - 2030 2
Slide 31: Energy Resources' competitive advantages and development program
Energy Resources’ competitive advantages position us to continue to capitalize on what we believe is the best renewables development environment in our history Energy Resources Development Program(1) (Signed Contracts as of July 24, 2020) 2019 – 2020 2019 – 2020 2021 – 2022 2021 – 2022 2019 – 2022 S
Slide 32: Well positioned to continue strong adjusted EPS growth
We remain well positioned to continue our strong adjusted EPS growth NextEra Energy’s Adjusted Earnings Per Share Expectations • Expect 6% - 8% growth $10.00 - through 2021 off our 2018 base $9.40 - $10.75 of $7.70, plus the expected $8.70 - $9.95 accretion from the Florida $9.20 acquisitions of $0.
Slide 33: NextEra Energy Value Proposition
NextEra Energy presents a compelling investment opportunity NextEra Energy Value Proposition Drill-down of S&P 500 Companies Annual Total Return Potential 355 Investment grade(1) 10% - 12% 6% 211 Market capitalization > $20 B 116 Adj. EPS CAGR > 8% past 5 years NEE (4) (2) Median S&P 500 36 ‘19 – ‘2
Slide 34: NextEra Energy Partners
NexTera energy’ PARTNERS 2
Slide 35: NextEra Energy Partners is a diversified clean energy company
NextEra Energy Partners is a best-in-class diversified clean energy company NextEra Energy Partners’ Portfolio(1) • Stable cash flows supported by: – Long-term contracts with credit- worthy counterparties – Geographic and asset diversity • ~5,330 MW of renewables – ~4,575 MW wind – ~750 MW solar • ~
Slide 36: NEP's 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 Diversified ~5.3 GW Ability to Rating(4) Expected TTM(5) Payout Ratio 15-Yr Portfolio with Renewables Capacity opportunisticall
Slide 37: NEP growth strategy: long-term contracted clean energy assets
NEP continues to focus on investing in long-term contracted clean energy assets with strong creditworthy counterparties and attractive cash flows Growth Strategy Wind Wind Solar Organic Long-Term Growth Contract Clean Strong Energy Operations Technology Acquisitions Competitive Attractive Battery Tr
Slide 38: Acquisitions from Energy Resources provide visibility to NEP growth
Acquisitions from Energy Resources provide clear visibility to continued growth at NEP Energy Resources’ Renewable Portfolio Since NEP’s IPO(1) GW ~27 GW - ~5 GW 32 GW 30 ~13 GW 25 20 ~9 GW ~5 GW 15 10 ~10 GW 5 0 NEER's MW Placed in MW Sold to NEP Current Additional Current Portfolio Renewables Serv
Slide 39: NEP positioned to benefit from wind and solar growth
NEP is well positioned to benefit from the significant wind and solar growth that is expected over the coming years NEP & Long-Term Renewables Demand U.S. Renewable Energy Capacity through 2030 U.S. Renewables Penetration ~500 GW ~40% ~15% CAGR in MWh generation ~200 GW ~100 GW 9% ~27 GW – 32 GW ~5
Slide 40: NEP's balance sheet and financing flexibility
NEP’s balance sheet and financing flexibility are expected to create a sustainable base for future growth Financial Flexibility • Financing and construction of organic growth investments remain on track Convertible PAYGO Tax High-Yield Equity Equity Debt • Over the past year, NEP’s Portfolio revolvi
Slide 41: CEPFs a more efficient way for NEP to issue equity
By leveraging private infrastructure capital, CEPFs are expected to provide a more efficient way for NEP to issue equity Comparison of Common Equity to CEPFs Common Equity CEPF Efficient access to capital New issuance limited by trading liquidity Significant infra. fund capital drives demand No
Slide 42: CEPF financing flexibility options
Although the base case buyout assumes equity issuance, CEPFs provide a significant amount of flexibility in managing the buyout CEPF Financing Flexibility – Potential Options Base Case Alternative 1 Alternative 2 Alternative 3 Time Re-lever Choose Issue whether to NEP buyout unlevered around assets
Slide 43: NEP Adjusted EBITDA and CAFD expectations
NEP remains well positioned to deliver on its growth objectives and does not expect to need any acquisitions until 2022 NextEra Energy Partners Adjusted EBITDA and CAFD Expectations Adjusted EBITDA CAFD 12/31/20 Run Rate(1) $1,225 – $1,400 MM $560 – $640 MM Unit Distributions 2020(2) $2.40 - $2.46 a
Slide 44: NextEra Energy Partners Value Proposition
NextEra Energy Partners presents a compelling investment opportunity NextEra Energy Partners Value Proposition Drill-down of S&P 1000 Companies & NEP Total Return Potential ~4% 16% - 19% 651 Debt / EBITDA(1) < 5.25x 12% - 15% 78 Dividend yield > 3% 10 DPS growth > 100% past 4 years 4 ‘18 – ‘22E DPS
Slide 45: Appendix
Appendix NExTera’ NexTera energy” ENERGY & PARTNERS Z 45
Slide 46: NextEra Energy
NEXT@Cra ENERGY &%
Slide 47: NextEra Energy COVID-19 response
NextEra Energy is focused on delivering on its commitments during this challenging time NextEra Energy COVID-19 Response • Safety of our employees and the community remains our number one priority • We are committed to doing the right thing – FPL and Gulf Power temporarily suspended disconnects and
Slide 48: Pandemic plan and commitments
NextEra Energy has implemented its Pandemic Plan and is continuing to safely deliver on its commitments COVID-19 Pandemic Response Active Pandemic Planning and Employees Customers Community Execution • Leveraging extensive • Established • Continuing to provide • NextEra Energy experience in temperat
Slide 49: FPL usage per customer variance
During the second quarter, weather-normalized usage per customer improved as stay-at-home orders were lifted FPL Usage per Customer Variance vs. Expectations 6.9% 4.0% 2.0% 1.0% (1.6%) (1.6%) (3.1%) (3.9%) (1) April May June July Weather-Normalized Usage Actual Usage 1) Preliminary data 49
Slide 50: Gulf Power usage per customer variance
During the second quarter, weather-normalized usage per customer improved as stay-at-home orders were lifted Gulf Power Usage per Customer Variance vs. Expectations 1.2% 0.7% (0.4%) (0.3%) (2.1%) (2.7%) (3.1%) (6.1%) (1) April May June July Weather-Normalized Usage Actual Usage 1) Preliminary data 5
Slide 51: Sales and usage sensitivities to COVID-19
NextEra Energy is well-positioned to withstand potential changes in load from the COVID-19 pandemic Full Year Sales & Usage Sensitivities (1) (1)(2) Commentary Retail Sales Composition Impact of 1% Change in Sales • Reserve amortization provides flexibility to offset changes in usage kWh Revenues Re
Slide 52: NextEra Energy liquidity position
NextEra Energy maintains its strong liquidity position NextEra Energy’s Liquidity Position(1) Liquidity as of 6/30/2020 • Largest core credit facility, with ($ B) most credit providers in the industry(3) $13.9 ($1.1) – Core FPL, Gulf and NEECH credit $12.8 ($0.8) $1.0 $13.0 facilities mature Februar
Slide 53: NextEra Energy credit metrics
NextEra Energy’s credit metrics remain on track Credit Metrics A- Downgrade Actual Target S&P Range Threshold 2019(1) 2020 FFO/Debt 13%-23% 21% 22.8% >21% Debt/EBITDA 3.5x-4.5x 3.6x <4.5x Baa Downgrade Actual Target Moody’s Range Threshold 2019(1) 2020 CFO Pre-WC/Debt 13%-22% 17% 19.9% >18% CFO-Div/
Slide 54: Contracted Wind and Solar Development Program
Contracted Wind and Solar Development Program(1) Wind Location MW Solar Location MW Solar Location MW 2019: 2019: 2021-2022 (cont.): Emmons-Logan ND 216 Quitman GA 150 Excelsior NY 280 Crowned Ridge I SD 200 Shaw Creek SC 75 Trelina NY 80 Blue Summit III TX 201 Dougherty GA 120 Watkins Glen NY 50 Sh
Slide 55: Energy Storage Development Program
Energy Storage Development Program(1) Project Location MW Duration Project Location MW Duration 2019: Post – 2022: Montauk NY 3 8.0 Proxima CA 5 4.0 Minuteman MA 5 2.0 Alabama Power AL 240 2.0 Total 2019: 8 Sonoran AZ 250 4.0 Storey AZ 88 3.0 2020: CT DEEP CT 3 2.0 Skeleton Creek OK 200 4.0 Rush Spr
Slide 56: U.S. federal tax incentives 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 57: Reconciliation of GAAP Net Income to Adjusted Earnings
Reconciliation of GAAP Net Income to Adjusted Earnings Attributable to NextEra Energy, Inc. (Twelve Months Ended December 31, 2019) Florida Pow er Gulf Energy Corporate & NextEra (m illions, except per share am ounts) & Light Pow er Resources Other Energy, Inc. Net Incom e (Loss) Attributable to Nex
Slide 58: Reconciliation of EPS to Adjusted EPS
Reconciliation of Earnings Per Share Attributable to NextEra Energy, Inc. to Adjusted Earnings Per Share 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016(1) 2017(1) 2018 2019 Earnings Per Share Attributable to NextEra Energy, Inc. (assuming dilution) $ 2.48 $ 2.34 $ 3.23 $ 3.27 $ 4.0
Slide 59: 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, the effects of non-qualifying hedges and unrealized ga
Slide 60: Cautionary Statement And Risk Factors
Cautionary Statement And Risk Factors That May Affect Future Results 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 facts, bu
Slide 61: Cautionary Statement And Risk Factors (cont.)
Cautionary Statement And Risk Factors That May Affect Future Results (cont.) effect of reductions in the liquidity of energy markets on NextEra Energy's ability to manage operational risks; effectiveness of NextEra Energy's risk management tools associated with its hedging and trading procedures to
Slide 62: NextEra Energy Partners
NExTera energy’ PARTNERS La
Slide 63: NEP's strong liquidity position
NEP’s strong liquidity position provides flexibility in executing its long-term growth objectives NextEra Energy Partners’ Liquidity Position Liquidity as of 6/30/2020 ($ MM) • $1.25 B revolving credit facility $1,250 ($550) matures in February 2025 – 26 banks participating • $300 MM convertible deb
Slide 64: NEP's credit metrics
NEP’s credit metrics remain on track Credit Metrics BB Downgrade Actual Target S&P(1) Range Threshold 2019(4) YE 2020(4) HoldCo Debt/EBITDA 4.0x - 5.0x 5.0x 5.1x 4.0x - 5.0x Ba1 Downgrade Actual Target Moody's(2) Range Threshold 2019(4) YE 2020 (4) Total Consolidated Debt/EBITDA <7.0x >7.0x 6.1x 4.5
Slide 65: Expected Cash Available for Distribution
Expected Cash Available for Distribution(1) (December 31, 2020 Run Rate CAFD; $ MM) $1,370-$1,540 ($20-$30) ($110-$120) $1,225-$1,400 ($165-$215) ($430-$510) ($40-$45) ($5-$15) $560-$640 Project-Level Corporate IDR Fees Adjusted Debt Pre-Tax Tax Non-Cash Maintenance Estimated (2) (3) (4) Adjusted EB
Slide 66: 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 67: Cautionary Statement And Risk Factors
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 68: Cautionary Statement And Risk Factors (cont.)
Cautionary Statement And Risk Factors That May Affect Future Results (cont.) NEP may not be able to extend, renew or replace expiring or terminated power purchase agreements (PPA), natural gas transportation agreements or other customer contracts at favorable rates or on a long-term basis; If the en
Slide 69: Cautionary Statement And Risk Factors (cont.)
Cautionary Statement And Risk Factors That May Affect Future Results (cont.) NEP's ability to make distributions to its unitholders depends on the ability of NEP OpCo to make cash distributions to its limited partners; If NEP incurs material tax liabilities, NEP's distributions to its unitholders ma