October 24, 2019
Alabama, U.S.

World’s biggest wind, solar developer bets on gas pipeline

Kristi E. Swartz, E&E News reporter | Published: Wednesday, October 23, 2019 | www.eenews.net

A unit of NextEra Energy Inc. has agreed to build a 50-mile pipeline into Alabama to supply a natural gas plant set to stand where a coal plant once did.

NextEra Energy Resources, the world’s biggest wind and solar developer, said it views the Lowman pipeline as a way to secure a 40-year revenue stream and diversify its portfolio.

If the project wins regulatory approval, it will supply a new PowerSouth Energy Cooperative natural gas plant being built to replace three decades-old coal units scheduled to retire next year.

“We believe the project … will help provide meaningful benefits to both PowerSouth members through reduced energy costs and to the environment, through reduced emissions,” NextEra’s chief financial officer, Rebecca Kujawa, said yesterday during the company’s third-quarter earnings conference call with analysts.

PowerSouth announced on New Year’s Eve that it would close the long-standing Lowman power plant in October 2020, citing federal coal ash and other environmental regulations. The cooperative’s CEO Gary Smith blamed environmentalists in a sharply worded blog post.

“It is sad and disheartening that environmental activists, politicians, bureaucrats and others have allowed environmental and climate change movements to close coal-fired units and cost good, hardworking people their jobs and livelihoods,” Smith wrote.

NextEra’s move adds to a string of major natural gas investments from major power companies, such as DTE Energy Co.’s announcement Friday that it would spend $2.25 billion on gas gathering and pipeline infrastructure in Louisiana.

A NextEra subsidiary is part of the joint venture behind the Mountain Valley natural gas pipeline, a 300-mile project through West Virginia and Virginia. NextEra’s chairman and CEO, Jim Robo, has said he “view[s] gas pipelines as clean energy,” casting the fuel as a “bridge” away from more carbon-intensive resources like coal (Energywire, Oct. 21).

Alabama’s power companies, including Southern Co.’s Alabama Power unit, still get a significant amount of their electricity from coal. Alabama Power announced earlier this year it would close a 100-year-old coal plant, citing Obama-era environmental rules.

Birmingham-based Drummond Co. Inc., a major coal mining company, also is one of the state’s top employers.

NextEra Energy Resources has signed roughly 1.38 gigawatts of wind and solar contracts during the last three months. That figure includes 350 megawatts of energy storage projects that pair batteries with solar power.

The company now has a backlog of more than 12 GW worth of renewable energy projects, including 5.5 GW that are scheduled to be built after 2020. The timing is significant: NextEra has roughly 600 MW of wind projects slated for development in 2021, the first year that such projects won’t receive the full value of a federal production tax credit, barring action from Congress.

NextEra executives are among those who have said publicly that wind and solar can stand on their own without federal incentives, owing to falling costs and technological improvements.

Kujawa told Wall Street analysts yesterday that the company has shifted its focus to inking new deals after 2020 based on the amount of projects it has already signed this year. “We have now largely pivoted our development efforts to 2021 and beyond,” she said.

Analysts noted NextEra’s strong growth with the potential for more gains, largely because of renewable energy. More electric companies’ commercial and industrial customers are turning to wind and solar, especially if they are using a competitive bidding process to procure electricity.

“We do not see a need for [NextEra] to change strategy, as execution currently continues to trend above peers,” analysts with Guggenheim Securities LLC, wrote in a research note yesterday afternoon.