Nextera Energy, Inc. · NYSE:NEE
Nextera Energy — Investor Presentation (March 2020)
63 slides from Nextera Energy's investor presentation, March 2020
Slide 1: February/March 2020 Investor Presentation
February/March 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 • ~$136 B market capitalization(1) • ~54 GW in operation(2) • ~$118 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: 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% $2.49 60% 48% 53% 20% 40% 10% 20% '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 0% 0% One Year Three Year Di
Slide 5: Growth strategy has led to real change in relative position
Over a sustained period of time, our growth strategy has led to real change in relative position Top 20 Global Utility Equity Market Capitalization(1) As of 6/1/2001 ($ MM) As of 2/14/2020 ($ MM) Rank Market Cap Rank Market Cap 1 $38,574 1 $136,134 NextEra Energy 2 $38,185 2 $91,264 3 $34,476 3 $75,
Slide 6: 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 1.1 MM Hours of employee training Lbs Per 1
Slide 7: First to receive a Best In Class assessment from S&P on ESG
NextEra Energy was the first to receive a “Best In Class” assessment from S&P’s evaluation on ESG preparedness 2019 S&P ESG Evaluation(1) • “…high performance and innovative culture demonstrates excellent commitment to long-term sustainability” • Factors in report distinguishing NextEra Energy from
Slide 8: 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 Energy Under- Utility Territory Retirements Services grounding Expansion FPL FPL FPL T&D FPL New Battery Infrastructure Storage Solar Generation Expect $50 B - $55 B of capital FPL Capital Gulf Gen
Slide 9: Industry's disruptive factors will expand and accelerate
We expect the industry’s disruptive factors will further expand and accelerate over the coming years Disruptive Industry Changes Today Potential Cost per MWh Post-2023/2024(1) AI / ($/MWh) Machine Learning Near-Firm Wind $20 - $30 Big Data Renewables / Storage Near-Firm Solar $30 - $40 Natural Gas $
Slide 10: Florida Power & Light is one of the best utility franchises
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 • ~27 GW in operation • ~$12 B in operating revenues • ~$57
Slide 11: 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 12: 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 13: FPL long-term strategy and customer value proposition
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 Good $11.78 $11.75(4) ~10% Reduction Good Improveme
Slide 14: FPL storm hardening investments have made a significant difference
FPL’s investments in storm hardening since the 2004 and 2005 hurricane seasons have made a significant difference for our customers Hurricane Irma (2017) Recovery Improvement Relative to Hurricane Wilma (2005) ~3 day reduction in average customer ~8 day outage reduction in total days to restore ~60%
Slide 15: FPL has built a smarter and more modern energy grid
In addition to hardening, FPL has built a smarter and more modern energy grid Building a Smarter Grid T&D Automation & Smart Meter Machine Learning Proactive Restoration Data Analytics Image Recognition • Installed more than • Deployed more than 5 • Drones used to assess 100,000 smart devices millio
Slide 16: 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 • ~2,300 MW of generation in operation – ~1,600 MW coal – ~700 MW natural gas • $1.5 B in operating revenues
Slide 17: Opportunities to improve the Gulf Power customer value proposition
Significant opportunities exist to improve the Gulf Power customer value proposition 2018 Operational Cost Effectiveness(1) 2018 Service Reliability(2) minutes $100 ~130 Adjusted Regressed Gulf Power 2018 Top Quartile = $29.31/MWh Top Decile ~101 ~93 Good ~55 $/Retail MWh FPL 2018 = $11.78/MWh FPL 2
Slide 18: Gulf Power vs FPL regulatory capital and residential bills
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 19: 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 ~$400 MM Base rates Co
Slide 20: First year of 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 ~$25 2018 2019 2018 2019 2021 Targ
Slide 21: Gulf Power execution created value for customers and shareholders
Execution of our plans at Gulf Power generated significant value creation for our customers and our shareholders in 2019 Gulf Power 2019 Execution Summary Service OSHA Adjusted Reliability(1) Recordable Rate(2) Earnings (Minutes) ($ MM) ~101 ~1.84 $200 ~81 $160 ~1.15 Good ~20% Good ~40% 25% Improvem
Slide 22: Gulf Power strategy to produce 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 23: Recommended bidder in the Santee Cooper evaluation process
We are pleased that NextEra Energy was selected as the recommended bidder for the sale case in the Santee Cooper evaluation process Proposed Transaction Overview • Opportunity to expand NextEra Energy's regulated business operations and deliver outstanding value to SC customers • $9.461 B purchase p
Slide 24: Santee Cooper acquisition strategic rationale
We believe an acquisition of Santee Cooper offers a compelling opportunity to create benefits for all stakeholders Santee Cooper Acquisition – Strategic Rationale • South Carolina is one of the best business climates in the country – Growing population and above- average economic growth • $2.3 B inv
Slide 25: 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 • ~25 GW(1) of generation in Wind operation Natural Gas Nuclear – ~16 GW wind Universal Solar – ~3 GW solar Storage Other – ~3 GW nuclear Pipeline – ~3 G
Slide 26: Energy Resources renewables development opportunities
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 27: Technology improvements have 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 28: Wind expected to be the 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 29: 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 30: Manufacturing capacity has lowered energy storage costs
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 31: Declining battery costs enable low-cost near-firm wind and solar
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 32: 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 33: 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 January 24, 2020) 2019 – 2020 2019 – 2020 2021 – 2022 2021 – 2022 2019 – 202
Slide 34: 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 35: NextEra Energy presents a compelling investment opportunity
NextEra Energy presents a compelling investment opportunity NextEra Energy Value Proposition Drill-down of S&P 500 Companies Annual Total Return Potential 11% - 12% 361 Investment grade(1) 9% 232 Market capitalization > $20 B (4) NEE Median S&P 500(2) 141 Adj. EPS CAGR > 8% past 5 years DPS Growth(3
Slide 36: NextEra Energy Partners
NExTera energy’ PARTNERS 2
Slide 37: NextEra Energy Partners has built a diversified clean energy company
In the five years since the IPO, NextEra Energy Partners has built 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 renewab
Slide 38: NEP's value proposition built on 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) Payout Ratio 16-Yr Portfolio with Renewables Capacity opportunistically Ba1/BB/BB+ Mid
Slide 39: NEP focus on 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 Attractive Battery Competitive Tr
Slide 40: 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 ~24 GW - ~8 GW 32 GW 30 25 ~11 GW 20 ~8 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 41: 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 8% ~24 GW – 32 GW ~5
Slide 42: NEP balance sheet and financing flexibility
NEP’s balance sheet and financing flexibility are expected to create a sustainable base for future growth Financial Flexibility Corporate Credit Convertible PAYGO Tax High-Yield • NEP corporate credit ratings: Equity Equity Debt Portfolio Financing – S&P: BB, stable Revolving Credit Convertible Faci
Slide 43: Convertible equity portfolio financings leverage private infrastructure capital
Convertible equity portfolio financings (CEPF) leverage private infrastructure capital as an attractive equity issuance tool Leveraging Private Clean Energy Infrastructure Capital NEP Objectives CEPF Attributes Efficient access to capital to Significant infrastructure fund fund accretive acquisiti
Slide 44: NEP adjusted EBITDA, CAFD and distribution expectations
NEP does not expect to need any further asset acquisitions until 2021 to achieve its targeted distribution growth expectations NextEra Energy Partners Adjusted EBITDA and CAFD Expectations Adjusted CAFD(4) CAFD EBITDA(3) (Including (Excluding Desert PG&E-Related) Sunlight CAFD) 12/31/19 Run Rate(1)
Slide 45: NextEra Energy Partners presents a compelling investment opportunity
NextEra Energy Partners presents a compelling investment opportunity NextEra Energy Partners Value Proposition Drill-down of Russell 1000 Companies & NEP Total Return Potential ~4% 16% - 19% 705 Debt / EBITDA(1) < 5.25x 12% - 15% 141 Dividend yield > 3% 11 DPS growth > 100% past 4 years 2 ‘18 – ‘21E
Slide 46: Appendix
Appendix NExTera’ NexTera energy” ENERGY & PARTNERS Z 46
Slide 47: NEX Tera
NEX Tera ENERGY &
Slide 48: 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 2019(1) 2020 FFO/Debt 13%-23% 21% 22.5% >21% Debt/EBITDA 3.5x-4.5x 3.7x <4.5x Baa Downgrade Actual Target Moody’s Range Threshold 2019(1) 2020 CFO Pre-WC/Debt 13%-22% 18% 19.6% >18% CFO-Div/
Slide 49: Contracted Wind and Solar Development Program
Contracted Wind and Solar Development Program(1) Wind Location MW Solar Location MW Solar Location MW 2019: 2019: Post – 2022: Emmons-Logan ND 216 Quitman GA 150 Proxima CA 50 Crowned Ridge I SD 200 Shaw Creek SC 75 Skeleton Creek OK 250 Blue Summit III TX 201 Dougherty GA 120 Chariot NH 50 Sholes N
Slide 50: Energy Storage Development Program
Energy Storage Development Program(1) Project Location MW Duration Project Location MW Duration 2019: Post – 2022: Montauk NY 5 8.0 Proxima CA 5 4.0 Minuteman MA 5 2.0 Alabama Power AL 240 2.0 Total 2019: 10 Sonoran AZ 250 4.0 2020: Storey AZ 88 3.0 Rush Springs OK 10 2.0 CT DEEP CT 3 5.0 Distribute
Slide 51: U.S. Federal tax incentives extended into next decade
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 52: 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 53: 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 54: 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 55: 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 safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are not statements of historical facts, bu
Slide 56: 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 57: NextEra Energy Partners
NExTera energy’ PARTNERS 2
Slide 58: NEP's credit metrics remain on track
NEP’s credit metrics remain on track Credit Metrics BB Downgrade Actual Target S&P(1) Range Threshold 2019(4) YE 2020(5) HoldCo Debt/EBITDA 4.0x - 5.0x 5.25x 5.1x 4.0x - 5.0x Ba1 Downgrade Actual Target Moody's(2) Range Threshold 2019(4) YE 2020(5) Total Consolidated Debt/EBITDA <7.0x >7.0x 6.1x 4.5
Slide 59: 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 ($55-$59) $505-$585 Project-Level Corporate IDR Fees Adjusted Debt Pre-Tax Tax Non-Cash Maintenance Estimated Des
Slide 60: 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 61: 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 62: Cautionary Statement And Risk Factors (cont.)
Cautionary Statement And Risk Factors That May Affect Future Results (cont.) PG&E, which contributes a significant portion of NEP's revenues, filed a voluntary petition for reorganization under Chapter 11 of the U.S. Bankruptcy Code. Any rejection by PG&E of a material portion of NEP's PPAs with it
Slide 63: 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