NextEra expects agreements on Japan-backed gas-fired data center projects within three months

By Laila Kearney and Katha Kalia

April 23 (Reuters) – NextEra Energy expects to finalize agreements within about the next three months for giant natural gas-fired power projects that will be backed by Japan and used for data centers in the U.S., Chief Executive Officer John Ketchum said on Thursday. 

U.S. power companies like NextEra, which is one of the biggest energy developers in the world, are tapping into record electricity demand being brought by Big Tech’s quickly proliferating data centers.

To meet that demand, the U.S. government and Japan have promised billions of dollars in investments to build new power plant projects for data centers. NextEra is acting as the developer and operator on two of those projects — one in Pennsylvania and one in Texas — that are expected to total nearly 10 gigawatts (GW).

The utility said it is working on finalizing the deal terms with Japan to move forward with its plans. No customers for the projects have been announced. 

Shares of the company rose 6.7% in premarket trading. The S&P 500 utilities index rose 7.5% in the quarter ended March 31.

DATA CENTERS BOOST GAS AND NUCLEAR

Data centers, which are increasingly used for the development of artificial intelligence, are being built bigger than ever, with some planned sites totaling multiple GWs.

One GW, for reference, is enough to power roughly 750,000 homes. NextEra, a Florida-based company with operations across the country, said the pipeline of data center requests in its regulated electric utility, Florida Power & Light, has grown to 21 GWs.

It is in advanced discussions on more than half of that demand, the company said, and it expects those in advanced phases to come online by 2028.

NextEra’s regulated utility, Florida Power & Light (FPL), posted a net income of $1.46 billion during the quarter, up 11.1% from a year earlier, lifted by an increase in customers and continued capital investments.

FPL added nearly 100,000 customers during the quarter and expanded its total owned and operated solar capacity to more than 8.5 gigawatts (GW).

To serve data centers, NextEra is beefing up its investments in natural gas in addition to its renewable power sources like solar and wind.

The company is also working to restart its Duane Arnold nuclear power plant in Iowa to serve Google data centers.

NextEra Energy Resources (NER), the company’s renewables and storage unit, added 4 GW of new renewable and storage projects to its backlog, including 1.3 GW of battery storage. Its total backlog now stands at about 33 GW.

NextEra earned $1.09 per share on an adjusted basis for the quarter, compared with analysts’ average estimate of 96 cents per share, according to data compiled by LSEG.

The company maintained its full-year adjusted earnings per share forecast at $3.92 to $4.02 and reiterated its guidance of more than 8% annual earnings growth through 2032.

(Reporting by Laila Kearney in New York and Katha Kalia in Bengaluru; Editing by Jonathan Ananda and Aurora Ellis)