![CERAWeek: NextEra CEO: Growing Power Demand Opportunity for Renewables](/sites/default/files/styles/hart_news_article_image_640/public/image/2024/03/ceraweek-nextera-ceo-growing-power-demand-opportunity-renewables.jpg?itok=kWMQXxzH)
S&P Global Vice President Daniel Yergin and NextEra Energy CEO John Ketchum engage in dialogue March 18 during CERAWeek by S&P Global in Houston. (Source: CERAWeek by S&P Global)
Artificial intelligence, supercomputers and cloud capacity combined with the return of the U.S. manufacturing sector and general electrification of the U.S. economy are expected to drive power demand to new heights, according to the head of NextEra Energy.
NextEra Energy CEO John Ketchum said electricity demand has been relatively flat for years, but is expected to see 81% five-year CAGR growth in the next five years.
That could translate into even more growth for renewable energy, including solar and battery storage—which set records in 2023 for new utility-scale capacity additions.
“When you look back over the last seven years, we’ve installed as an industry roughly over 140 gigawatts [GW],” Ketchum said at CERAWeek by S&P Global on March 18. “The projection for the next seven years, to accommodate that 81% increase in electric demand is anywhere from 375 gigawatts to 450 gigawatts. So a threefold increase in the amount of renewable generation that is expected over the next seven years. This is a substantial opportunity for us.”
Growing demand expectations come as the U.S. continues efforts to lower greenhouse-gas (GHG) emissions by utilizing more renewable energy sources and reducing the carbon footprint of fossil fuels. The U.S. is targeting a 100% clean electricity grid by 2035, hoping to lower energy-related GHG emissions by 2.4 gigatons.
Though renewable energy has seen its share of electricity production increase, fossil fuels—specifically natural gas—remain the most common fuel for electricity production.
The intermittent nature of renewables has also increased reliance on battery energy storage systems as a grid balancer, storing excess electricity to be dispatched when needed. Ketchum called battery storage the “holy grail of renewables” as demand increases.
Addressing challenges
Florida-based NextEra, the largest renewable energy developer in the U.S., plans to double its operating fleet to 64 GW by the end of 2026.
“At all of our existing solar and wind facilities, we have an existing interconnection agreement that we can then tie a battery into,” Ketchum said. “That allows us to jump the interconnection queue, which is a big deal, because by being able to do that you save yourself five to seven years on the development end immediately.”
However, a report released in December 2023 by Grid Strategies said the U.S. electric grid is not prepared for significant electric load growth. The power sector consulting firm pointed out it could take more than four years to bring new generation online and longer to build new interregional transmission connections, compared to only a year or two to connect new load to the grid. Plus, the number of new high-voltage transmission miles installed has dropped.
Meeting power demand needs likely won’t be without challenges.
“Demand will be there but I can identify three things that can get in the way of meeting that demand growth,” said S&P Global Vice President Daniel Yergin. “One is permitting. One is transmission, and the third is people.”
Ketchum said NextEra has been working on competitive transmission.
“We’re able to design transmission solutions that are enabling a lot more renewables. … One example is about a 165-mile line that we’re developing in Nevada to inject into Cal ISO [California Independent System Operator],” Ketchum said. “That one line, because it’s in the right place at the right time, is going to enable 20 GW of new renewable generation to flow into California.”
Having foreseen a shortage of key interconnection equipment such as transformers and switchgears, Ketchum also said the company “went long” on certain equipment, buying through mid-2028. “So, we just don’t have the same issues because of our scale.”
On the people front, the company contracts out with engineering, procurement and construction contractors generally about three years in advance, making way for large buildouts of about 2 GW in a region. Crews can be rotated around those regions, he said.
Renewables, natural gas
NextEra Energy Resources, the company’s clean energy business unit, marked its best year to date in 2023 for origination. It added about 9 GW of new renewables and battery storage projects to its backlog, which grew to more than 20 GW.
Natural gas still has a role to play, according to Ketchum.
“The two have to go hand in glove together,” he said. “Gas-fired generation is an important bridge fuel for renewables.”
Most of NextEra’s renewable generation is from onshore wind. Ketchum called wind the “first mover” in renewables. Solar, he said, wasn’t competitive until 2012-2013.
“We have a lot of wind generation that is already installed. Solar is sort of catching up. Battery storage is going to continue to see a ton of momentum,” due to falling solar and battery prices, Ketchum added. “Wind will continue to be an important part of the solution as well, particularly in parts of the country where you can put wind and solar and battery storage together.”
Considering the company’s existing renewable energy fleet, Ketchum said he sees opportunities to co-locate solar under wind at existing wind sites paired with battery storage.
“[We] feel really good about the way the portfolio fits together [and] all the growth opportunities that we have in this period of accelerating electricity demand in the U.S,” he said.
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