Don’t Cry for Wind and Solar
America’s leading producer just proved the renewable energy boom is alive and well.
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We sure didn’t have to wait long for the Trump Administration to make its energy preferences known. That’s producing as much oil and natural gas as possible—and curbing the breakneck growth of renewable energy, especially wind power.
The Biden Administration restricted permitting of oil and gas drilling on federal lands. It placed a moratorium in permits for new LNG (liquefied natural gas) export facilities. And it subjected energy projects to unprecedented “environmental justice” reviews.
After less than a week in office, the Trump Administration reversed all of these policies. It also withdrew the US from the Paris Climate Accords, announced the opening of the Alaska Wildfire Refuge to oil and gas drilling, directed agencies to hold in unspent environmental funds and imposed unprecedented permitting restrictions for wind facilities on federal lands.
All US offshore wind development is essentially on federal “lands.” So at this point, any unpermitted project is on hold, barring an unlikely reversal of this executive order. And despite the influence of Tesla Inc’s (NSDQ: TSLA) Elon Musk, the new administration has said it intends to roll back what it calls “Biden’s EV mandate.”
Take all that together and it certainly looks like the Trump Administration has declared war on renewable energy. And with sector stocks sliding, it’s clear many investors fear it will succeed in reversing years of robust growth.
Ironically, it’s still very clear that solar, energy storage and even wind power growth is still accelerating.
And that’s not just true in China—which last July reached its 2030 target of installing 1,200 gigawatts of wind and solar. It’s happening in America as well, with Exhibit A the Q4 earnings and guidance issued by NextEra Energy (NYSE: NEE) this past Friday.
NextEra is the parent company of south Florida utility FPL. Last year, that company installed 2.2 GW of solar, shaving an estimated $3 billion in fuel costs. And management stated in the company’s earnings call it expects to add 15 GW more by 2033.
Solar investment has been largely pre-approved by Florida regulators, ensuring it will boost NextEra’s earnings over time. But the bulk of the company’s wind and solar investment is through its unregulated NextEra Energy Resources unit.
Resources boosted earnings 11 percent in 2024, with the primary fuel a record 6 GW of new projects into service. And it set the stage for future growth by adding “more than 12 GW” of new renewable energy and storage projects to its backlog—now at more than 25 GW of pre-contracted generation.
NextEra added 30 percent more backlog than it did in 2023, with 3.3 GW of long-term selling contracts inked in Q4 alone. That’s an unmistakable sign demand is still accelerating and that the company is well positioned to take advantage. And it keeps NextEra’s unregulated Resources unit on pace to operate 75 GW of contracted renewable energy generation “by the end of 2027,” including 7.2 GW of energy storage projects now in backlog.
That’s robust growth however you slice it. But the real surprise is how little Trump Administration policies threaten NextEra’s investment plans and future growth.
Let’s start with the fact that the Trump Administration’s actions against renewable energy so far have basically focused on wind power. That alone leaves approximately 81 percent of NextEra’s 2025-26 development plans in the clear—with 25 percent of planned GWs energy storage and 56 percent solar.
NextEra has never had any offshore projects, citing wear and tear on equipment from salt water and a general lack of ability to control costs. And during the company’s guidance call last week, CEO John Ketchum noted that just one of its onshore projects is actually on federal land. The rest are on private land where “the permitting process is rather limited.”
I would argue that Trump Administration actions to restrict wind power development on federal land will increase the value of NextEra’s unmatched network of onshore facilities and related transmission on private land. That includes “repowering” opportunities, which accounted for nearly a quarter of new wind project backlog taken in during Q4.
Biden Administration policies to restrict oil and gas drilling on federal land certainly did have the effect of boosting the value of private land development. And if anything, the value of NextEra’s wind properties will rise all the faster because of massive demand for new electricity generation from artificial intelligence-enabled data centers, as well as re-shoring of manufacturing and electrification of transportation and industry.
NextEra’s renewable energy growth targets are a meaningful increase from previous guidance. And management continues to highlight facts about wind, solar and storage that bears ignore at their peril.
Most importantly, facilities can be proposed, sited, permitted, financed, procured for, constructed and commissioned within 18 months. That contrasts to at least 3 to 5 years for major natural gas power plants and potentially decades for new nuclear, including much-hyped SMRs (small modular reactors).
Shorter construction times mean lower and more predictable all-in costs. And as Ketchum points out, the cost of a new natural gas plant now is three times what the utility paid for its most recently built facility at Dania Beach.
Given NextEra’s focus on wind and solar, many may not be aware it operates the country’s largest fleet of natural gas-fired power plants. It owns 30 percent of the Mountain Valley Pipeline. And during the earnings call, management announced a new venture with GE Vernova (NYSE: GEV) to build natural gas generation at both unregulated and regulated utility sites.
The GE alliance is squarely positioned to profit from Trump Administration energy priorities. And arguably no company is better placed to take advantage of the opportunities, with its financial strength and nationwide connections.
But during the Q4 earnings call, NextEra largely downplayed the venture’s near-term impact on either earnings or CAPEX, citing a “2030 and beyond timeframe” due to costs, state regulation and potential court challenges. And though also a leader in nuclear power, management has no plans to commit to building new reactors including SMRs over the next decade—other than advancing plans to reopen the Duane Arnold plant in Iowa by the end of the decade.
That basically means NextEra will focus on renewable energy investment for the foreseeable future. And management has laid out multiple options for financing projects. That includes IRA tax credits surviving the Trump era, thanks to the company’s many Republican friends in Congress including from its home state of Florida.
Q4 earnings reporting season has only just started. And it remains to be seen if other US wind and solar companies will be as optimistic as NextEra.
That includes renewable energy developers that appear to be more dependent on tax credits for funding like AES Corp (NYSE: AES). And it’s possible Dominion Energy’s (NYSE: D) guidance call February 12 will reveal new challenges to its Coastal Virginia Offshore Wind project, though it’s fully permitted and robustly supported by the state’s Republican Governor Youngkin.
But at this point, NextEra is the only US renewable energy developer that compares to China’s giants. And it has declared the investment boom is still on. Investors will do well to cut through the political rhetoric and take notice.