Key Points:
- NextEra Energy expects to finalize massive agreements within three months to build natural gas-fired power projects in the United States.
- Japan and the US government promised billions in investment to help build these power plants to support new data centers.
- NextEra will develop two massive projects in Pennsylvania and Texas that will generate nearly 10 gigawatts of power.
- The company also plans to restart the Duane Arnold nuclear power plant in Iowa to supply energy to Google data centers.
NextEra Energy is gearing up to supply massive amounts of power to the tech industry. Chief Executive Officer John Ketchum announced on Thursday that the company expects to finalize huge agreements within the next three months. NextEra plans to build giant natural gas-fired power projects in the United States. Japan will provide financial backing for these massive facilities, which will generate the electricity needed to power data centers.
American power companies are currently rushing to meet a historic surge in electricity demand. Big Tech companies are building new data centers at a record pace to support the rapid growth of artificial intelligence. As one of the world’s largest energy developers, NextEra is well-positioned to capitalize on this massive shift in the tech sector.
To help meet this surging demand, both the United States government and the Japanese government recently promised billions of dollars in new investments. These funds will specifically help build new power plants dedicated to powering data centers. NextEra will act as the lead developer and primary operator on two of these massive projects. The company plans to build one facility in Pennsylvania and another in Texas. Together, these two plants are expected to generate an astonishing 10 gigawatts of power.
NextEra executives confirmed that the company is working hard to finalize the specific deal terms with Japan so it can move forward with construction. However, the company has not yet announced which specific tech companies will buy the power from these new plants. Investors loved the news, sending NextEra shares jumping 6.7% in premarket trading. This boost follows a strong quarter for the broader sector, as the S&P 500 utilities index rose 7.5% during the quarter ending March 31.
The sudden rise of artificial intelligence is fundamentally changing how tech companies build data centers. Developers are designing these facilities bigger than ever before. Some planned tech sites require multiple gigawatts of power just to keep their computer servers running smoothly. For reference, a single gigawatt of electricity can power roughly 750,000 average homes.
NextEra sees this massive demand firsthand. The Florida-based company operates across the country, but its regulated electric utility, Florida Power & Light, closely tracks local demand. The company reported that the pipeline of requests for new data center power through Florida Power & Light has exploded to a staggering 21 gigawatts.
NextEra is currently in advanced discussions to fulfill more than half of that massive local demand. Executives expect the tech projects currently in the advanced planning phases to officially come online and start drawing power by the year 2028. The local utility is already highly profitable. Florida Power & Light posted a net income of $1.46 billion during the recent quarter. This figure represents an 11.1% increase from a year earlier, driven by an influx of new residential customers and heavy capital investments in the local grid. FPL added nearly 100,000 new customers during the quarter and successfully expanded its total solar capacity to more than 8.5 gigawatts.
However, solar and wind power cannot meet the tech industry’s demands alone. Data centers need reliable, constant power that does not depend on the weather. To serve these massive tech facilities, NextEra is aggressively beefing up its investments in traditional natural gas power plants. The company is also looking to older technologies to help fill the gap. NextEra is currently working to restart the Duane Arnold nuclear power plant in Iowa, specifically to serve massive Google data centers in the region.
NextEra Energy Resources, the company’s dedicated renewables and storage unit, also reported a very strong quarter. The unit added 4 gigawatts of new renewable energy and storage projects to its official backlog, including a massive 1.3 gigawatts of battery storage capacity. The unit’s total project backlog now stands at a massive 33 gigawatts of future power generation.
The company delivered strong overall financial results. NextEra earned $1.09 per share on an adjusted basis for the quarter. This performance easily beat the analysts’ average estimate of just 96 cents per share, according to data compiled by LSEG. Following the strong report, NextEra executives maintained their full-year adjusted earnings forecast, predicting between $3.92 and $4.02 per share. The company also confidently reiterated its long-term financial guidance, promising investors more than 8% annual earnings growth through 2032.
