US power demand is expected to grow substantially in the coming years driven by electrification as part of the energy transition, and for NextEra that means doubling its operating generating capacity by the end of 2026, NextEra Chairman, President and CEO John Ketchum said March 18.
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Register NowNextEra currently has 34 GW in operation and plans to boost that to 64 GW by the end of 2026, Ketchum said at the CERAWeek energy conference by S&P Global in Houston.
"It's substantial," Ketchum said about power demand growth. "The year-over-year growth in the five-year [compound annual growth rate], estimate is up 81%."
It's mainly coming from artificial intelligence, cloud capacity, and the re-domestication of US manufacturing.
"Just a general electrification of the US economy," Ketchum said. "And so what you have today is electric demand that has been relatively flat for years and now all of a sudden looking at an 81% increase."
Renewable demand
"When you look back over the last seven years, we've installed as an industry roughly 140 GW," Ketchum said about renewable capacity. "The projection for the next year is to accommodate that 81% increase in electric demand is anywhere from 375 GW the 450 GW. So, a threefold increase in the amount of renewable generation that's expected over the next seven years. It's just a substantial opportunity of growth."
Permitting, transmission and labor typically are the three things that get blamed the most for slowing demand growth.
It is really important to get permitting reform in this country for linear facilities, whether it's transmission lines or it's natural gas pipelines, Ketchum said about the first piece needed to support growth.
"The second is transmission capacity," Ketchum said. "It's really important to accommodate all that new generation that's going to be required to support that increase in electric demand, it's going to require a build-out of our grid."
To deal with concerns of labor shortages, NextEra works with contractors for contract out three years in advance so the company can sign large build outs, Ketchum said.
"We're usually entering into agreements with them for roughly 2 GW of build-out in a region, and then they can rotate crews around those regions, getting significant economies of scale, but we know that we'll never be short labor," Ketchum said.
Renewables and natural gas
Natural gas and renewables have to go hand in glove together, Ketchum said, adding that gas-fired generation is an important bridge fuel for renewables. At NextEra's subsidiary Florida Power & Light, 75% of the company's installed base today is gas-fired generation, with about 5% renewables.
NextEra has five times more wind capacity than solar capacity.
"When we first got into the business, solar was not competitive as a product," Ketchum said about the evolution of renewable resources. "Solar didn't really become competitive until 2012-2013."
Battery storage is going to continue to see a ton of momentum given how solar prices have dropped, together with battery prices by roughly, 25% over the last six to nine months, Ketchum said.
"Wind will continue to be an important part of the solution as well, particularly in the parts of the country where wind and solar battery stores together," Ketchum said. "If you think about all the wind generation that we have installed, all the repowering opportunities that we have, the opportunity to co-locate solar under wind at our existing wind sites pair batteries enter as well, I feel really good about the way the portfolio fits together, all the growth opportunities that we have in this period of really accelerating the interest min the US."
Domesticate manufacturing
The trade dispute with China related to solar panels has little impact on NextEra, Ketchum said.
"We've spent a lot of time over the last couple of years to really diversifying our supply chain," Ketchum said. "We would love to continue to see more opportunities to buy domestically in the US. That certainly is going to be a long-term part of our strategy."
However, it takes time to re-domesticate an industry like making solar panels or batteries, he added.
"It's not going to happen overnight with a stamp of finger," Ketchum said. "You got to get those sites permitted. You got to get the technology here. You got to get those facilities up and running. But we're very focused on making domestic production successful."