US green power giant NextEra says 'we can jump the interconnection queue'

US clean energy industry pacesetter NextEra Energy believes the scale of its existing footprint offers customers “significant option value” and advantages for quicker market entry to potentially add several dozen gigawatts of capacity.

The US faces a multitude of bottlenecks to ramp solar, and onshore and offshore wind multiple times to keep pace with President Joe Biden’s ambitious climate targets. These challenges include interconnection, permitting, siting, and substation and transmission equipment availability.

NextEra’s Energy Resources unit, the largest clean energy developer outside China, had 21GW of operating wind capacity, 6GW of grid-scale solar, and 3GW of battery storage on 31 March. It expects to more than double that portfolio to 67GW by 2027, increasing its option value.

That option value includes co-located storage, generation closer to load, solar under wind, transmission optimisation, and wind repowering.

“Success in the future will require delivering physical solutions to specific locations to serve growing load,” the company said in a presentation this week at its annual investor conference.

It noted that historically renewables growth had been driven by economic replacement and state mandates. Resources were additive and in-service dates less critical, while transmission expertise was important, but not as critical for developers.

Today and in the future, projects are required to be in specific locations at the right time and developers must have started five to seven years in advance to meet demand. Not least, understanding transmission constraints and helping to resolve them has become central to the solution, according to company executives.

Starting with interconnection, Energy Resources now has 60% and 70% surplus capacity on its wind and solar portfolios, respectively, that can be used to provide rapid solutions for customers. That equates to up to 15GW of capacity that could more than double to 32GW by 2027.

“Our existing footprint allows us to jump the queue for interconnection,” the company said in its presentation.

The timelines to wire in for surplus interconnection average 2.5 years in California versus seven for new ties, and only one year in the wind-rich Midwest versus five for new build. In the Ercot region, which accounts for 90% of electric load in Texas, it also takes one year to tie in surplus capacity versus 2.5 years for new.

NextEra said co-location is starting to boom west of the Mississippi River with a growing backlog of projects, particularly those that pair solar and storage. It has completed 2GW of capacity co-locations thus far and sees a 50GW “long-term opportunity set” by the end of 2027.

Wind repowers offer customers “jump-the-line” advantages and create significant value for NextEra shareholders, according to the company. Repowering capital costs are 50-80% of new build and turbines are eligible for a fresh decade of annually inflation-adjusted federal production tax credits for energy sent to the grid.

It expects wind repowerings to offer a 30GW a long-term set of opportunities by the end of 2027 versus 6GW executed thus far.

The company is also starting to mine opportunities with solar repowering to unlock portfolio value and has identified 2GW of opportunities through 2027 that are under study. Repowering can be executed quickly at lower costs and value is accretive to shareholders, according to NextEra.

Repowering can involve replacement of damaged, decayed, or outmoded solar and balance-of-system components, as well to optimise space versus changing out entire models or even arrays. This can leave the owner with a large amount of waste for recycling or disposal.

Grid connections can also be fine tuned and electrical configuration changed and redistributed to make the project more efficient and productive.

Looking ahead, “We believe we have the opportunity to develop 36.5 to 46.5GW of new renewables and storage through 2027,” the company said. This includes 18.5-22.4GW of solar, 9-11.5GW of wind, 7.8-10.7GW of energy storage, and 1.2-1.9GW of wind repowerings.