How does Renewable Energy Giant NextEra Energy make money?

NextEra Energy

My books about NextEra Energy

It is recommended to read my book “The Rules of Super Growth Stocks Investing“:

  • Sections 1-2, pp. 32-35.

And the book “The Rules of 10 Baggers“:

  • Sections 3-7, pp. 168-169.
  • Sections 3-8, 179 pages.


Short description

As the largest renewable energy company in the world, NextEra Energy is a time-tested company with deep roots. Founded in 1925, with governments around the world supporting green energy policies, it should continue to grow along with the growth of renewable energy and Florida’s population.

Company profile

The company is the largest wind and solar energy generator in the world. It owns and operates around 48GW (FPL + NEER, 2018) of generating capacity throughout the US.

It uses natural gas, nuclear, solar, and wind as generating fuels, especially wind. It has 8 commercial nuclear power units in Florida, New Hampshire, Iowa, and Wisconsin.

In 2017, NEE generated 55% of its total net income from NextEra Energy Resources. NextEra Energy Resources uses no-carbon sources for 94% of its installed generation capacity.


FPL (Florida Power & Light Co)

It contributed 1/7 of company net income. The largest energy company in the United States as measured by retail electricity produced and sold. The largest electric utility in Florida, electricity provider for more than 10 million people in Florida.

It is one of the largest electric utilities in US. At the end of 2021, FPL has 5.6 million customer accounts (11 million people).

NEECH (NextEra Energy Capital Holdings Inc.)

It contributed 6/7 of company net income. NEECH held all of their renewable assets in an LLC named NEP (NextEra Energy Partners). NEP (ticker: NEP) was deconsolidated from NEE on January 1, 2018.

NEECH is the world’s largest operator of wind and solar projects.

WATER and Wastewater

It recently made another water deal, acquiring a wastewater system in Pennsylvania. In October, the company entered the U.S. water and wastewater utility industry via an acquisition of several regulated systems in Texas.

The company’s continued expansion into water is part of its strategy to have a dozen $100 million businesses by 2025, up from seven last year.

Business performance and valuation

Business performance

Year 2021NextEra EnergyAmerican Water Works
Annual revenue and growth rate (million)17,069 -5.16%3,930 +4.05%
Annual operating income and growth rate (million)3,121 -39.35%1,274 -1.77%
Annual net income and growth rate (million)3,573 +22.4%1,263 +78.14%
Operating margin18.28%32.42%
Net margin20.93%32.14%

Stock valuation

7/23/2022NextEra EnergyAmerican Water Works
Market capitalization ($ billion)156.8727.03
Share price79.85148.71
Dividend yield2.13%1.76%
Stock performance in past 10 years (S&P 500 was+232%)+449%+232%

Long term investment metrics

Stock performance vs. S&P 500

CompanyMarket CapDividend YieldProjected Annualized EPS Growth Over Next 5 YearsStock’s 10-Year Total Return
NextEra Energy$139 billion2.4%8.9%449%
American Water Works$23.8 billion2%8.3%378%
S&P 500N/A1.47%N/A232%


NextEra has raised its dividend for 28 consecutive years, , which is a rare achievement. In February, the company not only announced an approximately 10% dividend increase, but also said that it expects to hike its dividend roughly 10% a year through at least 2024.

NextEra Energy

Carbon Zero by 2045

FPL, its electric utility in Florida, the company expects the country’s largest solar expansion to get even bigger. It anticipates deploying hundreds of millions of solar panels by 2045 to produce more than 90 gigawatts (GW) of energy, up from 15 million panels producing 4 GW of power today.

The company expects to deploy 50 GW of battery storage capacity, up from 500 megawatts (MW) today, to supply power when the sun isn’t shining. In addition, NextEra Energy plans to replace natural gas as a fuel in its power plants with green hydrogen and renewable natural gas.


The goal by 2025

The management of the company has declared:

  • To operate more than ten new businesses by 2025.
  • Annual earning of at least $100 million generated by these new business.

Renewable Energy Capacity Expansion Plan

NextEra Energy is looking to expand its solar and wind business from a nameplate capacity of 24 gigawatts in 2021 to between 46 gigawatts and 53 gigawatts in 2025. That’s, roughly speaking, doubling the size of the company’s nameplate production capacity.

Expansion of new revenue streams

In order to achieve the company’s strategy of operating more than ten businesses with at least $100 million in annual revenue by 2025, the company has established new sources of revenue growth through various investments, while taking a cautious approach to business expansion. These new businesses and investments include:

  • RNG
  • Water: See the Wastewater section discussed earlier in this article.
  • Power transmission
  • Hydrogen
  • Battery storage

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