NextEra Energy (NEE 0.34%) is already growing faster than most utilities, powered by its focus on clean energy. The company now expects to grow even faster over the next few years, fueled by its increasing investments to eliminate carbon emissions from its business by 2045.
That high-powered growth could enable NextEra Energy to continue generating market-crushing total returns for investors. Here's a closer look at what the utility sees ahead.
Even more growth in the near term
NextEra Energy recently increased its adjusted earnings-per-share expectations for the 2022 to 2025 time frame. The company raised its 2022 and 2023 earnings ranges by $0.05 per share, while boosting 2024's forecast by $0.10 per share. Meanwhile, it sees 2025 earnings growing by 6% to 8% off 2024's higher base.
This updated forecast would see the company expand its adjusted earnings per share at a 9.8% annual rate from 2021 to the high end of 2025's forecast range. That's faster than the 8.4% compound annual growth NextEra has delivered since 2006.
Several factors are helping power that growth. The company plans to significantly increase its core wind, solar, and storage business, expand beyond the power sector, and grow its already large-scale transmission business to help support the decarbonization of the U.S. economy.
NextEra Energy expects to deploy $85 billion to $95 billion of capital in the 2022 to 2025 time frame to significantly expand its renewable energy operations and electricity transmission business. In addition, the company expects to build a leading regulated water business.
It recently made another water deal, acquiring a wastewater system in Pennsylvania. 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.
A powerful long-term growth plan
NextEra Energy also unveiled its Real Zero plan to eliminate all the carbon emissions across its businesses no later than 2045 without the help of carbon offset credits. It plans to take several steps to achieve that goal.
For example, at 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.
Meanwhile, the company intends to help lead the decarbonization of the U.S. power sector and the overall economy by building out new wind, solar, and storage assets within its NextEra Energy resources segment. Additionally, it expects to invest heavily in building more transmission lines to support more renewable energy developments. It's currently pursuing more than $40 billion of transmission projects to help decarbonize the economy by adding more renewable energy to the power grid.
The company expects these investments to eliminate its emissions by 2045, while generating significant earnings growth in the process. Overall, it sees a $4 trillion opportunity to build more renewable energy and storage capacity through 2050 to decarbonize the U.S. economy.
Leading the charge in decarbonization
NextEra Energy has proven that going green can generate some serious green for its investors. The utility has delivered strong earnings and dividend growth over the last 15 years, helping it produce powerful total returns.
It expects to grow even faster in the near term, with ample growth potential over the next few decades. That makes it a great stock to buy and hold for the long haul because it can potentially deliver massive returns as it leads the way in decarbonizing the U.S. economy.
