Nextera Energy, Inc. · NYSE:NEE
Nextera Energy — Investor Presentation (August 2019)
58 slides from Nextera Energy's investor presentation, August 2019
Slide 1: August 2019 Investor Presentation
August 2019 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 • ~$101 B market capitalization(1) • ~52 GW in operation(2) • ~$111 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: 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) $7.70 14% 15% 90% 82% 80% 10% 70% 4% 60% 5% 50% $2.48 37% 0% 40% 30% 30% -5% 20% -4% 10% '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 -10% 0% One Year Three
Slide 5: NextEra Energy maintained its status as the largest generator of wind and solar energy
In 2018, NextEra Energy maintained its status as the largest generator of wind and solar energy in the world World’s Top Generators of Wind and Solar Energy in 2018(1) Global Wind Installations(2) (TWh) (GW) 50 47 250 211 40 39 39 200 30 30 28 150 25 23 20 18 100 97 60 10 50 35 23 21 15 15 15 13 0 0
Slide 6: First to receive a Best In Class assessment from S&P on ESG preparedness
NextEra Energy was the first to receive a “Best In Class” assessment from S&P’s new 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 f
Slide 7: We are 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 Solar Generation Expect Storage $50 B - $55 B of capital FPL Capital Gulf Gen
Slide 8: Industry's disruptive factors will further expand and accelerate
We expect the industry’s disruptive factors will further expand and accelerate over the coming years Disruptive Industry Changes Today Potential Cost per MWh Post-2023(1) AI / ($/MWh) Machine Learning Near-Firm Wind $20 - $30 Big Data Renewables / Storage Near-Firm Solar $30 - $40 Natural Gas $30 -
Slide 9: Florida Power & Light is recognized as 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 • ~$55
Slide 10: FPL 2019 – 2022 Capital Expenditures
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 11: Growth in regulatory capital employed expected 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 12: FPL long-term strategy delivering best-in-class 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 – $11.78 $11.75(4) ~55 Good ~5% Reduction Good ~10% Improvement i
Slide 13: Acquisition of Gulf Power expands our Florida footprint
The acquisition of Gulf Power expands our Florida footprint and regulated operations Gulf Power • Acquisition closed 1/1/2019 • Located in Northwest Florida • ~460,000 customers • ~2,300 MW of generation in operation – 1,600 MW coal – 600 MW natural gas • $1.5 B in operating revenues • $5.4 B total
Slide 14: Opportunities to improve the Gulf Power customer value proposition
Significant opportunities exist to improve the Gulf Power customer value proposition Operational Cost Effectiveness(1) Service Reliability(2) minutes ~130 $100 Adjusted Regressed ~101 Top Quartile Gulf Power 2018 Top Decile ~93 = $29.38/MWh Good ~55 $/Retail MWh FPL 2018 = Log/Log $11.78/MWh $10 Gul
Slide 15: Gulf Power vs FPL 2008 vs. 2018 historical comparison
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 16: 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 17: Gulf Power customers will benefit from the NextEra Energy playbook
We expect Gulf Power customers will benefit from the NextEra Energy playbook, as will our shareholders The NextEra Energy Playbook at Gulf Power Operational Cost Effectiveness(1) Regulatory Capital Employed $/Retail MWh ~$29 $4.6 B - ~50% ~16% $4.8 B_ Reduction CAGR $3.0 B Good $14 - $15 2018 2021E
Slide 18: Gulf Power customers will benefit from the NextEra Energy playbook
We expect Gulf Power customers will benefit from the NextEra Energy playbook, as will our shareholders The NextEra Energy Playbook at Gulf Power Service Reliability(1) CO2 Emissions Rate minutes CO2 Lbs. / MWh ~1,680 ~101_ Good ~20% ~40% Reduction Reduction ~1,060 ~80_ 2018 2021E 2018 2021E 1000-kWh
Slide 19: 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 – ~15 GW wind – ~3 GW solar – ~3 GW nuclear Wind Natural Gas Solar Nuclear – ~3 GW natural gas/oil Storage Other P
Slide 20: Energy Resources 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 Federal Tax Development ~80 GW
Slide 21: Technology improvements and capital cost declines 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 22: Wind expected to be the cheapest source of electric 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 23: Solar expected to be the 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 24: Increased manufacturing capacity has resulted in 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 25: Continued declines in battery costs 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 26: Low cost, near-firm renewables expected to create significant 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 27: 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, 2019) 2019 – 2020 2019 – 2020 2021 – 2022 2021 – 2022 2019 – 2022 S
Slide 28: New wind and solar investments expected to drive capital expenditures through 2022
New wind and solar investments are expected to drive capital expenditures through 2022 Projected Capital Expenditure Summary(1) $8.0 $6.6 – $7.0 $6.6 – $7.2 $6.6 – $7.2 $7.0 $5.7 – $6.2 $6.0 $5.0 $B $4.0 $3.0 $2.0 $1.0 $0.0 2019E 2020E 2021E 2022E Renewables Gas Pipelines NEET (2) Gas Infrastructure
Slide 29: Adjusted Earnings Per Share Expectations
We remain well positioned to continue our strong adjusted EPS growth NextEra Energy’s Adjusted Earnings Per Share Expectations(1) • For 2019 through 2021, expect $10.00 - 6% - 8% growth off a 2018 base $9.40 - $10.75 of $7.70, plus the expected $8.70 - $9.95 accretion from Florida $8.00 - $9.20 acqu
Slide 30: We expect to continue to grow dividends per share 12% - 14% per year
We expect to continue to grow our dividends per share 12% - 14% per year through at least 2020, an above average rate compared to our peers NextEra Energy Dividend Per Share Expectations • In 2018, extended expected $4.44 growth in DPS of 12% - 14% per year through at least 2020, off a 2017 base • A
Slide 31: 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% 366 Investment grade(1) 10% 216 Market capitalization > $20 B (4) NEE Median S&P 500(2) 138 Adj. EPS CAGR > 8% past 5 years DPS Growth(
Slide 32: NextEra Energy Partners
NExTera energy” PARTNERS Z
Slide 33: NextEra Energy Partners' Portfolio
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 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 Diversified ~5.3 GW Ability to Rating(3) Year-end 2018 16-Yr Portfolio with Renewables Capacity opportunistically Ba1/BB/BB+ ~1
Slide 35: 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 36: Acquisitions from Energy Resources provide visibility to continued growth
Acquisitions from Energy Resources provide clear visibility to continued growth at NEP Energy Resources’ Renewable Portfolio Since NEP’s IPO(1) GW ~22 GW - 30 ~7 GW 29 GW 25 ~10 GW 20 ~7 GW ~5 GW 15 10 ~10 GW 5 0 NEER's MW Placed in MW Sold to NEP Current Backlog Additional Current Portfolio Renewab
Slide 37: 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% ~22 GW – 29 GW ~5
Slide 38: 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 Corporate Credit Convertible PAYGO Tax • NEP corporate credit ratings: High-Yield Equity Equity Debt Portfolio Revolving Financing – S&P: BB, stable Credit Facility Convert
Slide 39: NEP Portfolio – Embedded CAFD Growth
The future release of cash flow from PG&E-related assets combined with the organic growth opportunities could provide NEP roughly one and a half years of CAFD and DPU growth NEP Portfolio – Embedded CAFD Growth +22% $95 - $105 ($25 - $30) $510 - $580 $15 - $20 ($10 - $15) $25 - $30 $410 - $480 2019
Slide 40: NEP extending distribution growth expectations through 2024
NEP is extending its distribution growth expectations through 2024, which is best-in-class NextEra Energy Partners Financial Expectations Annualized LP Distributions(1) Adjusted EBITDA and CAFD(3) Annual $1,200 MM- 12% - 15% $1,375 MM Growth(2) $2.14 $485 MM - $1.86 $555 MM $410 MM - $480 MM Q4 2018
Slide 41: 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% 698 Debt / EBITDA(1) < 5x 12% - 15% 125 Dividend yield > 3% 12 DPS growth > 100% past 4 years 3 ‘18 – ‘21E DP
Slide 42: Appendix
Appendix NExTera’ NexTera energy” ENERGY & PARTNERS 2 42
Slide 43: NextEra Energy
NEXT@ra ENERGY &%
Slide 44: Contracted Wind and Solar Development Program
Contracted Wind and Solar Development Program(1) Wind Location MW Solar Location MW 2019 – 2020: 2019 – 2020: Burke ND 200 Blythe III CA 125 Emmons-Logan ND 300 New England Various 49 Crowned Ridge I SD 300 Wilmot AZ 100 Sky River CA 62 Blythe IV CA 125 Dodge County MN 170 Quitman GA 150 Borderlands
Slide 45: Energy Storage Development Program
Energy Storage Development Program(1) Project Location MW Duration Project Location MW Duration 2019 – 2020: Post – 2022: Montauk NY 5 8.0 Proxima CA 5 4.0 Wilmot AZ 30 4.0 Contracted, not yet announced 203 Rush Springs OK 10 2.0 Total: 208 Minuteman MA 5 2.0 Total: 50 2021 – 2022: Dodge Flat NV 50
Slide 46: U.S. Federal tax incentives for renewables 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 47: NextEra Energy's credit metrics remain on track
NextEra Energy’s credit metrics remain on track Credit Metrics A- Downgrade Target S&P Range Threshold 2019 FFO/Debt 13%-23% 21% >21% Debt/EBITDA 3.5x-4.5x <4.5x Baa Downgrade Target Moody’s Range Threshold 2019 CFO Pre-WC/Debt 13%-22% 18% >18% CFO-Div/Debt 9%-17% >12% A Downgrade Target Fitch Midpo
Slide 48: 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) Amounts have been retrospectively adjusted for accounting standard update related to leases 2) Beginning in 2018, reflects the implementation of an accounting standards update related to finan
Slide 49: 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 50: 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 51: Cautionary Statement And Risk Factors That May Affect Future Results (cont.)
Cautionary Statement And Risk Factors That May Affect Future Results (cont.) effectiveness of NextEra Energy's risk management tools associated with its hedging and trading procedures to protect against significant losses, including the effect of unforeseen price variances from historical behavior;
Slide 52: NextEra Energy Partners
NExTera energy’ PARTNERS Ve
Slide 53: NEP - PG&E Related Projects
NEP - PG&E Related Projects 12/31/18 Run 12/31/19 Run 12/31/18 Financing PPA Price Rate CAFD Rate CAFD Financing Maturity (1) Project Customer MW COD Term ($/MWh) ($MM) ($MM) Financing Balance Date (2) Genesis Solar PG&E 250 Mar-14 25 $214 $41 - $45 $41 - $45 Genesis Solar LLC $402 2038 Genesis Sola
Slide 54: Expected Cash Available for Distribution
Expected Cash Available for Distribution(1) (December 31, 2019 Run Rate CAFD) $1,325-$1,500 ($20-$30) ($90-$100) $1,200-$1,375 ($210-$260) ($430-$510) ($30-$35) ($5-$15) $485-$555 ($95-$105) $410-$480 Project-Level Corporate IDR Fees Adjusted Debt Pre-Tax Non-Cash Maintenance Estimated Trapped Unava
Slide 55: 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 56: 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 57: Cautionary Statement And Risk Factors That May Affect Future Results (cont.)
Cautionary Statement And Risk Factors That May Affect Future Results (cont.) NEP does not own all of the land on which the projects in its portfolio are located and its use and enjoyment of the property may be adversely affected to the extent that there are any lienholders or land rights holders tha
Slide 58: Cautionary Statement And Risk Factors That May Affect Future Results (cont.)
Cautionary Statement And Risk Factors That May Affect Future Results (cont.) NEP's financial condition and ability to make distributions to its unitholders, as well as its ability to grow distributions in the future, is highly dependent on NEER’s performance of its obligations to return all or a por