NextEra Energy Inc. plans to invest more money annually in renewable energy in the next several years than most utility companies' total spending over that period, analysts at CreditSights said June 18.

Of the $52.5 billion of capital expenditures NextEra is expected to make in a four-year period through 2022, 57%, or $30.06 billion, is earmarked for renewables, according to CreditSights. That comes to about $7.5 billion in annual spending on clean energy, most of which will be deployed through NextEra's unregulated project development business, NextEra Energy Resources LLC, CreditSights said.

While many utilities are making big investments in renewables to take advantage of falling costs and to meet environmental and clean energy mandates, none come close to NextEra in terms of the size of the investment or the share of total capital expenditures going to clean energy.

"[We] believe the market opportunity for low-cost renewables has never been greater," NextEra Chairman, President and CEO James Robo said on an earnings call in April. By the mid-2020s, as battery costs continue to fall, "near-firm" wind and solar power is expected to be cheaper, without incentives, than most existing coal and nuclear power plants as well as less-efficient natural gas-fired generators, Robo said.

A NextEra spokesperson declined a request for an interview on the company's capital spending plans. John Ketchum, president and CEO of NextEra Energy Resources, which claims to be the top producer of wind and solar power globally, has said the company will leverage its scale to seize on new investment opportunities that are emerging due to the economic downturn caused by the coronavirus pandemic. NextEra is also aggressively adding to the solar portfolio at regulated utility subsidiaries Florida Power & Light Co. and Gulf Power Co.

Capital spending booms

Utilities are charging ahead with capital spending plans despite slumping electricity sales across much of the U.S., according to an analysis by Regulatory Research Associates, a group within S&P Global Market Intelligence. Executives said the investments are needed to maintain reliability and to capitalize on the shift to cheaper and cleaner energy resources.

For many utilities, investing capital through their state-regulated businesses is a way to generate reliable earnings even as some consider cutting costs to cope with falling demand.

Such rate-based investments account for about half of the money utilities plan to spend on renewables in the coming years as the companies increasingly opt for owning wind and solar plants rather than buying electricity from third parties, CreditSights said.

Dominion Energy Inc. plans to invest $9 billion in wind and solar plants and energy storage facilities through 2023, 35% of total capital expenditures during that period, with the bulk put into rate base, according to CreditSights.

Executives at Dominion, which owns Virginia Electric and Power Co., doing business as Dominion Energy Virginia, recently told investors that the company increased the amount of money it expects to spend on renewables and energy storage after Virginia Gov. Ralph Northam signed the Virginia Clean Economy Act earlier this year. The law requires all of Dominion Energy Virginia's retail power sales to be carbon-free by 2045.

Berkshire Hathaway Energy, with electric utility operations in Iowa and seven western U.S. states, and Duke Energy Corp., with utility operations in five states, also stand out in the CreditSights analysis. Berkshire Hathaway Energy is investing $5.5 billion, or 32% of its capital budget, in renewables through 2022, while Duke is devoting $6.37 billion, or 11% of capital expenditures, through 2024.

Berkshire Hathaway Energy is putting all of its renewable energy investments into rates at utilities including MidAmerican Energy Co. and PacifiCorp, according to CreditSights, while about two-thirds of Duke's will be rate-based.

With utilities projected to invest close to $150 billion of capital in 2020, access to equity markets will be crucial for those spending plans, said Obioma Ugboaja, director of North American utilities at S&P Global Ratings.