According to John Ketchum (CEO of NextEra Energy Inc., NYSE: NEE), the demand for renewable energy is set to increase dramatically, primarily due to the growth of AI data centres and the electrification the economy.
During the company’s earnings call for the second quarter, Ketchum highlighted the factors that will drive renewable energy demand to triple within the next decade.
Ketchum’s projection was a major topic of discussion during NextEra’s financial results for the second quarter.
The company reported a revenue of $7.27 billion, which was lower than the $7.27 billion analysts expected. It also fell below $7.35 billion from a year earlier. However, it showed robust growth in its projects involving renewable energy.
NextEra’s backlog of renewable and storage projects grew by 3,000 Megawatts in the second quarter, including 860 Megawatts from Google’s AI data centers.
The shares of NextEra have risen by nearly 5.0% in the last day.
Accelerating energy demand
Ketchum predicts that the demand for power will grow four times faster in the next twenty years compared to what it was in the last twenty. This is due to the growth of AI data centers, and the trend towards electrification.
This projection is in line with a Rystad Energy report, which predicts electric vehicles and data centres will increase U.S. demand for electricity by 290 terawatt-hours by 2030 — equivalent to the total demand of Turkey.
NextEra Energy’s dividend yield of 2.73% remains attractive for income investors despite missing revenue expectations.
Investors and analysts continue to be impressed by the company’s focus in renewable energy, as evidenced by the “overweight” consensus rating and an average price target just north of $79
Exploring nuclear and gas for future energy needs
Rebecca Kujawa is the CEO of NextEra Energy Resources a subsidiary of NEE. She expects that it will take a few years for the surge in demand for power driven by data centres to fully materialize.
Natural gas is expected to play a key role in meeting the demand. Alam Armstrong, of Williams Companies, emphasizes the importance for the U.S. to not fall behind in the AI race.
NextEra Energy has a natural gas fleet in Florida that allows it to take advantage of this resource.
Ketchum, the CEO of Ketchum Energy, emphasized that renewables are still a better option because they are cost-effective and can be deployed quickly. Ketchum also revealed plans to restart Palo, Iowa’s nuclear power plant, which has been closed since 2020, in order to meet the growing demand.
Outlook and analyst confidence
NextEra Energy’s proactive approach in expanding its renewable and energy storage projects, along with its strategic investment in AI datacenters, underscores its commitment towards leading the energy transformation.
Despite short-term revenue missed, the company’s prospects for long-term growth remain strong. This is supported by favorable ratings from analysts and a focus of sustainable energy solutions.
NextEra Energy, the largest U.S. company based on market capitalization, is well positioned to capitalize on the expected tripling of renewable electricity demand by 2030.
This post NextEra Energy’s CEO predicts that renewable energy demand will triple by 2030, despite a Q2 revenue miss, may be modified as new information becomes available.
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