NextEra Energy Inc (NEE) Q1 2023 Earnings Call Transcript

NextEra Energy Inc (NYSE: NEE) Q1 2023 earnings call dated Apr. 25, 2023

Corporate Participants:

Kirk Crews — Executive Vice President and Chief Financial Officer

Rebecca Kujawa — President and Chief Executive Officer

John Ketchum — Chairman, President and Chief Executive Officer

Armando Pimentel — President and Chief Executive Officer

Analysts:

Steve Fleishman — Wolfe Research — Analyst

Julien Dumoulin-Smith — Bank of America — Analyst

Shahriar Pourreza — Guggenheim Partners — Analyst

Jeremy Tonet — JP Morgan — Analyst

Durgesh Chopra — Evercore ISI — Analyst

Presentation:

Operator

Good day and welcome to the NextEra Energy and NextEra Energy Partners First Quarter 2023 earnings call. All participants will be in a listen-only mode. [Operator instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator instructions] Please note this event is being recorded. I would now like to turn the conference over to Kristen Rose, Director of Investor Relations. Please go ahead.

Thank you, Vaishnavi. Good morning, everyone, and thank you for joining our first-quarter 2023 combined earnings conference call for NextEra Energy and NextEra Energy Partners. With me this morning are John Ketchum, Chairman, President and Chief Executive Officer of NextEra Energy; Kirk Crews, Executive Vice President and Chief Financial Officer of NextEra Energy; Rebecca Kujawa, President and Chief Executive Officer of NextEra Energy Resources and Mark Hickson Executive Vice President of NextEra Energy, all of whom are also officers of NextEra Energy Partners as well as Armando Pimentel, President and Chief Executive Officer of Florida Power and Light Company.

Kirk will provide an overview of our results and our executive team will then be available to answer your question. We will be making forward-looking statements during this call based on current expectations and assumptions, which are subject to risks and uncertainties. Actual results could differ materially from our forward-looking statements if any of our key assumptions are incorrect or because of other factors discussed in today’s earnings news release and the comments made during this conference call and the Risk Factors section of the accompanying presentation or in our latest reports and filings with Securities and Exchange Commission, each of which can be found on our website www.nexteraenergy.com and www.nexteraenergypartners.com. We do not undertake any duty to update any forward-looking statements.

Today’s presentation also includes references to non-GAAP financial measures. You should refer to the information contained in the slides accompanying today’s presentation for definitional information and reconciliations of historical non-GAAP measures to the closest GAAP financial measure. With that, I will turn the call over to Kirk.

Kirk Crews — Executive Vice President and Chief Financial Officer

Thank you, Kristen, and good morning everyone. NextEra Energy is off to a strong start in 2023. Adjusted earnings per share increased by approximately 13.5% year-over-year building on the success of last year’s strong execution and financial performance. During the quarter, we were honored the NextEra Energy was again ranked number one in our sector on Fortune’s list of the World’s Most Admired Companies for the 16th time in 17 years. We are extremely proud of the team and culture we have built that has enabled us to deliver low-cost, clean and reliable power to our customers, while also providing long-term value to our shareholders.

FPL is the largest electric utility in the US and Florida is now officially the fastest-growing state in America. At FPL, our focus remains the same, deploying smart capital to deliver on what we believe is one of the best customer value propositions in our industry. Key to that strategy is keeping customer bills affordable. In this quarter we proposed using projected 2023 fuel savings to reduce unbilled fuel costs from 2022 to provide bill relief to customers. To further manage fuel price volatility, we are also helping customers by adding more solar to the FPL grid. This quarter, we placed into service approximately 970 MW of new low-cost solar putting FPL’s owned and operated solar portfolio in nearly 4,600 MW which is the largest solar portfolio of any utility in the country.

We believe solar is now the lowest-cost generation option for Florida customers but represents only about 5% of FPL’s delivered energy. In order to extend the benefits of low-cost solar to customers, FPL’s recently filed 10-year site plan now includes nearly 20,000 MW of new solar. Energy Resources, the world’s leader in renewables and a leader in battery storage remains laser-focused on executing the strategy of decarbonizing the power sector and helping commercial and industrial customers outside the power sector, reduce their energy costs and decarbonize their operations by moving to low-cost renewables and other clean-energy solutions. This quarter, Energy Resources added approximately 2020 MW of new renewables and storage projects to its backlog.

Energy Resources also closed on its previously-announced acquisition of a large portfolio of operating landfill gas to electric facilities, providing the foundation for our growing RNG business. We are also excited to announce a new memorandum of understanding with CF Industries to create green hydrogen establishing what we expect will be a long-term relationship with the world’s largest ammonium producer. And finally, Energy Resources continues to build what we believe is the nation’s leading competitive transmission business to help support growth and renewables.

We are pleased to announce that the California ISO recently recommended for approval approximately $400 million in new transmission and substation upgrades for NextEra Energy Transmission. We believe NextEra Energy continues to be anchored by two great businesses that leverage each other’s expertise to make them even better. We do not believe anyone in our industry has our set of skills, scale and breadth of opportunities. We believe NextEra Energy is able to buy, build, operate and finance cheaper with one of the strongest balance sheets in our sector. We also believe our best-in class development skills and unparalleled dataset enables us to provide innovative technology and low-cost clean-energy solutions for the benefit of our customers. The opportunities and products demanded by the market are becoming more complex requiring significant scale and a combination of skills that few of our competitors can offer, further enhancing our competitive advantages and creating even more growth opportunities for our business going forward.

We have a culture rooted in continuous improvement, always striving to be better. Along those lines, we just completed our annual employee led productivity initiatives, which we now call Velocity. For over 11 years, our employees have generated approximately $2.6 billion in annual run-rate savings ideas as part of this process. In 2023 alone, our team generated idea is expected to produce roughly $325 million in annual run-rate savings, which when combined with last year’s result of over $400 million is the most productive 2-year period in this program’s history and that’s after doing it for over a decade. We believe we have the best team in the industry and these results are indicative of the breadth and depth of capabilities and the commitment to excellence that our team brings to our business every day and executing on behalf of our customers and shareholders.

With that, let’s turn to the detailed results, beginning with FPL. For the first quarter of 2023, FPL reported net income of $1.07 billion or $0.53 per share, an increase of 9% year-over-year. Regulatory capital employed growth of approximately 11.2% was a significant driver of FPL’s EPS growth versus the prior year comparable quarter. FPL’s capital expenditures were approximately $2.3 billion for the quarter. We expect our full-year 2023 capital investments of FPL to be between $8.0 billion and $9.0 billion dollars as we continue to invest capital smartly for the continued benefit of our customers. FPL’s reported ROE for regulatory purposes will be approximately 11.8% for the 12 months ending March 2023.

During the quarter, we utilized $373 million of reserve amortization to achieve our targeted regulatory ROE leaving FPL with a balance of $1.77 billion. As we previously discussed, FPL historically utilizes more reserve amortization in the first half of the year and we expect this trend to continue this year. Earlier this year, the Florida Public Service Commission approved FPL’s proposed plan to recover approximately $2.1 billion of incremental fuel costs from 2022, partially offset by projected 2023 fuel savings of approximately $1.4 billion.

Amid high natural gas prices in 2022, FPL decades long modernization of its generation fleet has saved customers more than $2 billion in fuel costs in 2022 alone. The Commission also recently approved recovery of approximately $1.3 billion of hurricane costs from 2022 over a 12-month period. Taking all approved adjustments together, we anticipate that FPL’s typical 1,000 kilowatt-hour residential customer bills will remain well below the projected national average and among the lowest of all Florida utilities.

Turning to our development planning and efforts. FPL recently filed its annual 10-Year Site Plan that presents our generation resource plan for the next decade. The 2023 plan includes roughly 20,000 MW of new low-cost solar capacity across our service territory over the next 10 years, which would result in nearly 35% of FPL’s forecasted energy delivery in 2032 coming from cost-effective solar generation, up significantly from roughly 5% in 2022. Given the increasing customer benefit of low-cost renewables FPL’s post 2025 solar capacity additions in this year’s plan or more than double last year’s approved plan and also includes two gigawatts of battery storage over the next decade. We believe the expansion of cost-effective solar and storage will provide a valuable hedge for our customers against volatile natural gas prices and meet the electricity demand of FPL’s growing customer base with a low-cost generation source. Finally, construction of our green hydrogen piloted at our Okeechobee Clean Energy Center is on-track and projected to go into service later this year.

Turning now to the Florida economy, Florida became the fastest growing state in the nation in 2022 and its population continues to increase with over 1,000 people moving to Florida every day. Over the last five years, Florida’s GDP has grown at a roughly 7% compound annual growth rate and is now approximately $1.4 trillion which is up approximately 8% versus a year ago. Based on GDP if Florida was a country, it would have the 14th largest economy in the world. FPL’s first quarter retail sales increased 0.4% from the prior year comparable period driven by continued solid underlying population growth with FPL’s average number of customers increasing by approximately 65,000 even after removing roughly 50,000 inactive customers due to Hurricane Ian.

For the first-quarter, we estimate that the positive impact of warmer weather was more than offset by a decline in underlying usage per customer. As we have often pointed out, underlying usage can be somewhat volatile on a quarterly basis, particularly during periods when temperatures deviate significantly from normal as we experienced this winter with average temperatures greater than four degrees above normal. Our long-term expectations of underlying usage growth continues to average between 0 and approximately negative 0.5% per year. Energy Resources reported first quarter 2023 GAAP earnings of approximately $1.440 billion for $0.72 per share. Adjusted earnings for the first-quarter were $732 million or $0.36 per share, up $0.04 versus the prior year comparable period.

Contributions from new investments increased $0.07 per share year-over-year. Contributions from our existing clean-energy portfolio were lower by $0.03 per share, primarily due to less favorable wind and solar resource compared to the prior year. The contribution from our customer supply and trading business increased by $0.06 per share, primarily due to higher margin in our customer-facing business and compared to a relatively weaker contribution in the prior year comparable quarter. Gas infrastructure and all other impacts reduced earnings by $0.01 and $0.05 per share respectively versus 2022.

Energy Resources had another strong quarter of origination, capitalizing on strong renewables demand environment. Since the last call, we added approximately 2020 MW of new renewables and storage projects to our backlog, including roughly 1,370 MW of solar, 450 MW of storage and 200 MW of wind. With these additions, our renewables and storage backlog now stands at over 20.4 gigawatts, net of projects placed in-service and provides strong visibility into our future growth.

With more than a year and a half remaining before the end of 2024, we are now within the 2023 to 2024 development expectations range. Given the volatility in gas and power prices over the last year and a half, we continue to see economics driving long-term decision-making and renewables remain the clear low-cost option for many customers. On the supply, solar supply-chain front, we continue to take constructive steps to mitigate potential future disruption. Nearly every one of our suppliers has repositioned their supply chains to manufacture solar panels in Southeast Asia using wafers and cells produced outside of China and all our suppliers are expected to meet the criteria established in the Commerce Department’s preliminary determination in the 2022 circumvention case by the end of 2023.

Additionally, we are focused on further diversifying our supply-chain and are currently advancing discussions to support the domestic production of solar panels. Finally, we are encouraged by the improvement in the flow of panels into the US as suppliers continue to provide the request the traceability documentation to US Customs and Border Protection. Also during the quarter, we closed on the previously announced transaction to acquire a large portfolio of operating landfill gas to electric facilities that I mentioned earlier. The approximate $1.1 billion transaction represents an attractive opportunity for Energy Resources to realize double-digit returns on this investment, while expanding its portfolio of renewable natural gas assets and growing its in-house capabilities and rapidly expanding renewable fuel market.

Turning to green hydrogen. We are excited about the role it is expected to play a solution to help our customers cost-effectively lower emission. As the world-leader in renewables and a leader in battery storage, we believe we are the logical partner for green hydrogen with significant interconnection and land inventory positions and deep market expertise to help our potential partners optimize some of the best green hydrogen sites around the country. As a result, with the right regulations we see hydrogen quickly becoming a significant technology for our customers, a new growth driver for Energy Resources, given the number and size of the opportunities we are evaluating.

Earlier this month, NextEra Energy joined a coalition of 45 other companies with a combined approximately $1 trillion in market capitalization and [Indecipherable] to the Secretary of Energy and Treasury and the White House advocating programmatic policies for the implementation of the IRAs green hydrogen production tax credit. This coalition is advocating for prudent policy that will foster investment in green hydrogen technology, paving the way for the US to become the world leader in hydrogen technology. A key aspect of this policy is for the electricity consumed for green hydrogen production to be matched to its renewable power generation on an annual rather than an hourly basis. We believe that annual imagining construct has several benefits overall including lower green hydrogen prices, more renewables being built, significant reduction in carbon emissions and green hydrogen achieving cost parity with grey and blue hydrogen, both of which rely on fossil fuels for their production. This viewpoint is supported by numerous third-party studies from respected entities such as Wood MacKenzie, Rhodium Group, Energy Futures Initiatives, Energy and Environmental Economics and MIT Energy Institute.

As we continue to work with the industry and government representatives to progress a smart hydrogen policy, we are also advancing our green hydrogen development efforts, including a recently executed Memorandum of Understanding for a joint venture with CF Industries, the world’s largest producer of ammonia to develop — excuse me, to deliver green hydrogen to an existing CF Industries ammonia production facility, which it intends to expand and incorporate green hydrogen into its production process. The proposed facility includes an approximately 450 MW Renewable Energy Solution powering a 40 tonnes per day hydrogen facility. This project combined with other opportunities we are pursuing represent significant momentum for green hydrogen, which we believe will continue to be a driver of new renewables growth going forward. Our team continues to engage with multiple potential partners and customers on hydrogen projects representing over $20 billion of capital investment and requiring more than 15 gigawatts of new renewables to support. As we focus on leading the decarbonization of the US economy building additional transmission is essential to support long-term renewables deployment. We believe our ability to build, own and operate transmission is a key competitive advantage for our renewables business in addition to being a terrific investment opportunity. We are pleased that the California ISO recently recommended for approval approximately $400 million in transmission and substation upgrades for NextEra Energy Transmission subject to approval by the CAISO Board of Governors in May. We believe these projects along with others could unlock up to 11 gigawatts of new renewable generation that could be built to support California’s ambitious clean energy goals.

Turning now to the consolidated results for NextEra Energy for the first-quarter of 2023. GAAP earnings attributable to NextEra Energy were $2.086 billion or $1.04 per share. NextEra Energy’s 2023 first-quarter adjusted earnings and adjusted EPS were approximately $1.678 billion and $0.84 per share respectively. Adjusted earnings for the corporate and other segment decreased results by $0.03 per share year-over-year, primarily driven by higher interest rates. In March, S&P affirmed all of its ratings for NextEra Energy and lowered its downgrade threshold for its funds from operations or FFO to debt metric from the previous level of 20% to the current level of 18%. In making this favorable adjustment S&P acknowledged improvement in Energy Resources business risk following the passage of the IRA, particularly noting the improved visibility and clarity into long-term cash flows. At the same time S&P adjusted its treatment of non-recourse project debt associated with FERC-regulated investment to bring it back on credit. We believe this overall favorable adjustment, which creates roughly 50 bps of additional headroom against the downgrade threshold highlights the attractive risk profile of renewables and acknowledges the long-term stable cash flows and Energy Resources business particularly given the benefits of the IRA.

Finally, as we have discussed in the past, we actively enter into various interest rate swaps products to manage interest rate exposure on future debt issuance. Today, we have $21 billion of interest-rate swaps at NextEra Energy to help mitigate the impact of potential future increases in rates, which exceeds the notional value of our 2023 and 2024 maturities, and as always, the current interest rate environment is taken into account in our financial expectations.

Our long-term financial expectations, which we extended earlier this year through 2026 remain unchanged. And we will be disappointed if we are not able to deliver financial results at or near the top-end of our adjusted EPS expectation ranges in each year from 2023 to 2026, while at the same time, maintaining our strong balance sheet and credit ratings. From 2021 to 2026, we also continue to expect that our average annual growth in operating cash flow will be at or above our adjusted EPS compound annual growth rate range. We also continue to expect to grow our dividends per share at roughly 10% per year through at least 2024 off a 2022 base. As always, our expectations assume our usual caveats including normal weather and operating conditions.

Turning to NextEra Energy Partners. We believe we have never had more visible growth opportunities than we have today. We have the ability to grow in three ways, acquiring assets from Energy Resources growing organically and buying assets from other third parties. With significant tailwinds from the IRA, Energy Resources operating portfolio combined with its backlog of projects and development expectations through 2026 totaled approximately 58 gigawatts providing terrific visibility for NextEra Energy Partners. And Energy Resources and continuing to grow in innovative ways, adding new technologies and clean-energy assets to its portfolio, such as RNG and hydrogen.

In addition to acquiring assets from Energy Resources NextEra Energy Partners also has the ability to re-power its existing assets with approximately 1,300 MW of potential wind repowerings already identified and many more opportunities expected to come as well as potential to locate storage at its existing renewable assets given the new standalone storage ITC. Finally, there are significant acquisition opportunities with renewable portfolios continuously being brought to market. NextEra Energy Partners also has numerous ways that can finance this growth and we believe it can do so efficiently giving us ample liquidity and access to capital.

At the end-of-the first-quarter, NextEra Energy Partners had $2.8 billion of liquidity and approximately $6 billion of interest-rate swaps to manage future interest rate volatility on debt maturities through 2026. With regard to convertible equity portfolio financings, we can fund equity buyouts by delivering common units or utilizing our at-the-market or ATM program or a combination of both. And we believe we have ample liquidity to fund cash payment. Importantly, we have flexibility. And we expect to leverage the flexibility to manage future buyout to select the most efficient option. Using this flexibility, NextEra Energy Partners has now bought out 50% of the STX midstream convertible equity portfolio financing through funds generated from a combination of the ATM program where NextEra Energy Partners was able to be opportunistic and cash from our subsidiaries revolving credit facility.

With the buyouts of the 2018 convertible equity portfolio financing and 50% of the STX midstream convertible equity portfolio financing complete, we estimate that the convertible equity portfolio financing structure has resulted in approximately 55% and 64% respectively or 16 million fewer units being issued compared to raising capital with underwritten block equity, all for the benefit of unit holders. For the balance of the year buyouts are now expected to be limited to the remaining 50% of the STX midstream convertible equity portfolio financing and 50% of the net renewables to convertible equity portfolio financing with the equity portion of these buyouts requiring common units of approximately $280 million and $130 million respectively.

Over the next eight months, we have flexibility and time to opportunistically manage these buyouts in the most efficient way. For each buyout, we have the flexibility to deliver common units to the convertible equity portfolio of financing investor, utilize the ATM program or some combination of the two. Ultimately, we will select the most efficient option. In any event, the potential unit issuance from these buyouts are not expected to exceed an average of three days of total trading volume per quarter which we expect will make them quite manageable. Most importantly, NextEra Energy Partners’ growth expectations through 2026 already factor in its financing plan including convertible equity portfolio financing buyouts at current trading yields.

Turning to distribution growth. Yesterday the NextEra Energy Partners’ Board declared a quarterly distribution of $84.25 per common unit or $3.37 per common unit on an annualized basis, up approximately 15% from a year earlier. Inclusive of this quarter, NextEra Energy Partners has grown its LP distribution per unit, up nearly 350% since the IPO. Today, we are pleased to announce that NextEra Energy Partners has entered into an agreement with Energy Resources to acquire an approximately 690 MW portfolio of long-term contracted operating wind and solar projects, an attractive cash available for distribution yield. The high-quality portfolio has a cash available for distribution, weighted-average remaining contract life of approximately 16 years and average customer credit rating of BBB at S&P and BAA2 at Moody’s Investors Service. NextEra Energy Partners is to acquire the portfolio for approximately $708 million subject to closing adjustments and is inclusive of the portfolio of existing project debt and interest-rate swaps, which are estimated to be approximately $142 million. In addition to the approximate $708 million purchase price NextEra Energy Partners is also expected to assume the portfolios existing tax equity financing balances. The remaining purchase price is expected to be funded by a combination of new project finance debt in the corporate revolving credit facility. The portfolio of assets is expected to contribute adjusted EBITDA of approximately $110 million to $130 million and cash available for distribution prior to the existing project debt service of approximately $62 million to $72 million each on a 5-year average annual run-rate basis beginning December 31, 2023. The transaction is expected to close in the second quarter of this year.

Additional details on the portfolio of assets to be acquired by NextEra Energy Partners can be found in the appendix of today’s presentation. NextEra Energy Partners will remain opportunistic pursuing acquisitions in 2023 and with the closing of the transaction announced today, NextEra Energy Partners expects to be well positioned to meet its year end 2023, adjusted EBITDA and cash available for distribution run rate expectations.

Turning to the detailed results, NextEra Energy Partners delivered first-quarter adjusted EBITDA and cash available for distribution results in line with management’s expectations. Adjusted EBITDA of $447 million increased by $35 million versus the prior year, driven primarily by favorable contributions from the approximately 1,200 net MW of new projects acquired in 2022. Both adjusted EBITDA and cash available for distributions were negatively affected by lower resource from existing projects. Additionally, cash available for distribution was lower versus the prior year comparable period due to incremental debt service and timing of payable payments.

Looking forward in the second-half of 2023, we expect strong double-digit growth in adjusted EBITDA and cash available for distribution to support NextEra Energy Partners LP distribution per unit growth expectation range of 12% to 15% for the full year 2023. Additional details are shown on the accompanying slide. NextEra Energy Partners continues to expect run rate contributions for adjusted EBITDA and cash available for distributions from its forecasted portfolio at December 31, 2023 to be in the ranges of $2.22 billion to $2.42 billion and $770 million to $860 million respectively. As a reminder, year end 2023 run-rate projections reflect calendar year 2024 contributions from the forecasted portfolio at year end 2023 and include the impact of IDR fees, which we treat as an operating expense. As always, our expectations are subject to our usual caveats including normal weather and operating conditions.

From a base of our fourth quarter 2022 distribution per common unit at an annualized rate of $3.25, we continue to see 12% to 15% growth per year in LP distributions as being a reasonable range of expectations through at least 2026. We continue to remain comfortable with these growth expectations. And in fact, even at the current yield, Energy Resources portfolio loan is just one way NextEra Energy Partners believes it can meet its growth expectations through 2026. For 2023, we expect the annualized rate of the fourth quarter 2023 distribution that is payable in February 2024 to be in a range of $3.64 to $3.74 per common unit. We also continue to expect to achieve our 2023 distribution growth of 12% to 15%. In summary, we continue to believe that both NextEra Energy and NextEra Energy Partners are well positioned to continue delivering on their long-term growth prospects. At FPL, that means executing on smart capital investments to deliver on its customer value proposition of low bills, high reliability and outstanding customer service. At Energy Resources, that means leading the de-carbonization of both the power sector and non-power sector and leveraging its competitive advantage to capitalize on low-cost renewal and new emerging technologies like green hydrogen. At NextEra Energy Partners, we expect to capitalize on its unmatched growth visibility to further expand its best-in class clean energy portfolio to provide long-term distribution growth for unit holders.

With that, we’re happy to address your questions.

Questions and Answers:

Operator

Thank you. [Operator Instructions] At this time we will pause momentarily to assemble our roster. The first question comes from Steve Fleishman with Wolfe Research. Please go ahead.

Steve Fleishman — Wolfe Research — Analyst

Yes, thank you, good morning. So, first a couple of questions on the NEP drop. So, should, I think you’re looking at the CAFD yield as kind of the midpoint of the CAFD range over the $708 million, which I guess, would be about 9.5%. If you were to — you know, kind of overtime exclude the project at and exclude the project at from the base and exclude the payments of the project how does that compare to the 9.5% yield.

Unidentified Speaker —

Yes, so, yeah, good morning, Steve. Thank you for the question. So you’re right. The math you’re doing is correct. So you’re taking on an unlevered basis, it is a 90.5 cap yield. So, at the midpoint of the CAFD that we provided is a 9.5% CAFD yield. And the reason for that, Steve, is because the debt that is included is going to be, is going to be paid off in about three years. And so we felt like that was the appropriate way to present the CAFD yield. If you included the debt it would actually be a much higher CAFD yield, it would be a 10.4 CAFD yields and so — but as you’re probably aware, we’ve typically provided that figure as an unlevered number.

Steve Fleishman — Wolfe Research — Analyst

Okay, great, that’s helpful. And then the amount of tax equity, just to kind of round this out.

Unidentified Speaker —

Sure. Sure, yeah, the amount of tax equity is $165 million and that will be disclosed in the 10-Q, that we will be filing either later today or tomorrow.

Steve Fleishman — Wolfe Research — Analyst

Okay. And Kirk, I think you said something about the growth through 2006 could just come from the — I don’t know if that was from the NEP portfolio or I guess maybe the front that the near portfolio, could you just clarify what you said there.

Kirk Crews — Executive Vice President and Chief Financial Officer

Yeah, happy to do that, Steve. So look, as I shared in our prepared remarks, we have — NextEra Energy Partners, the growth visibility that next Energy Partners has it’s never been better. And when you think about the visibility that has been enhanced, really with the passage of the IRA and just take it through the three the three steps that we go through, the three ways that NextEra Energy Partners can grow and Energy Resources and you look at the existing portfolio that exists today at Energy Resources, and then you combine that with the current backlog, which today is 20.4 gigawatts. And then you combine that with the development expectations as we disclosed, that’s 58 gigawatts. And then you also consider the organic growth opportunities that NextEra Energy Partners has and the passage of the IRA has really unlocked that optionality that exists in the portfolio at NextEra Energy Partners. And so we now have tremendous opportunity to grow organically through repowerings. And as we said, we’re pursuing 1.3 gigawatts of repowerings now. And we also have the ability to co-locating storage within the footprint as well. And then, obviously, as you will see there is just a tremendous number of renewable portfolio is coming to the market and NextEra Energy Partners has had a history of being able to execute on those opportunities, those third-party opportunities because of many of the advantages that we have in terms of being able to operate and cost-of-capital advantages. So NextEra Energy Partners has tremendous growth visibility but with respect to your question, the statement we made is when you’re looking — when we look at the ability to achieve the 12% to 15% LP distribution growth, we believe we can achieve that just looking at Energy Resources portfolio alone. And that space at the current trading yield as well. And includes our current financing plan that assumes the buyout of all the convertible equity portfolio financing as well.

Steve Fleishman — Wolfe Research — Analyst

Okay, that’s helpful. I’m sure others will have questions on that topic. But one other thing. I guess just on the overall renewables development environment maybe Rebecca you could just talk to what the — we’ve now seen I think some stabilization and a lot of pressures last year, but we’ve also seen lower gas prices. Just when you look at the overall environment. Could you give us some kind of color what you’re seeing and conviction on hitting the development targets that you have out there or maybe hopefully better. Thanks.

Rebecca Kujawa — President and Chief Executive Officer

Thank you, good morning. So we continue to see a very strong renewables development environment and I think 2 gigawatts that we added to the backlog is a great sign of that and it’s mix of wind, solar and battery storage in that portfolio and the conversations that we continue to have both with customers in the power sector as well as customers outside of the power sector remain quite robust. And if anything, I’m concerned about whether or not we have, we and everybody else have enough renewables in order to support the demand in short, and of course, longer-term, we are planning accordingly to make sure that we have all the projects available for our customers. I’d say if there’s one thing that I’ve seen change over the last year in our discussions with our customers, it’s really an increased emphasis on partners that have the ability to execute. It’s not lost on anybody inside the power sector or outside the power sector that the demand for renewables is really strong. And there are challenges to building projects successfully and ultimately operating them long-term for the benefit of customers and our conversations with customers now reflect that, I think appropriately. And we’ve had some terrific engagements with customers across the board about making sure that we are building what they need for the long-term and their needs are quite significant. The other thing, I would highlight, that’s been very significant development over the last year and really in the last 9 months since the passage of the Inflation Reduction Act, it’s really around hydrogen and I know we’ve talked about it lot. And today, we wanted to give you some additional color on what we’re seeing and I think that $20 billion of pipeline projects with partners and customers that we’re now working on and honestly, that’s growing by the day. And requires just for that $20 billion worth of projects over 15 gigawatts of new renewables to be built to support them. It is unlike anytime that we’ve seen in our industry and of course in our customer — in our company’s history of being able to have significant visibility to tremendous growth and tremendous innovation across the board. We couldn’t be more excited about what’s ahead.

Steve Fleishman — Wolfe Research — Analyst

Okay, thank you.

Julien Dumoulin-Smith — Bank of America — Analyst

The next question comes from Julien Dumoulin-Smith with Bank of America. Please go ahead. Hey, good morning, team. Thank you for the time. Just first, following up the backlog, just can you elaborate a little bit of what you’re seeing here. It seems like you’re adding beyond 2026, how are you thinking about potential for acceleration of the numbers that you’ve articulated thus far in the 4-year period. And then related, how much of that is hydrogen in total. I mean, if you can kind of give us at least some initial discussion on that front.

Rebecca Kujawa — President and Chief Executive Officer

Thanks, Julien, it’s Rebecca. I’ll take that. So we continue to feel and I didn’t directly answer Steve’s questions. I appreciate you giving me another shot at it. I feel very good about our development expectations across the board. Obviously, we’re now, we’re at the low-end of the range for ’23 and ’24 and continue to feel very well positioned to meet the longer-term expectations across the 4-year period and with the comments I just made and Kirk made on the call, we couldn’t be more excited about what’s beyond the 2006 time frame. I do think the hydrogen opportunity is probably more – not probably, it is definitively more past 2026 than in ’26 for a lot of practical reasons not least of which is needed clarity on the treasury guidance, which of course affects the customer discussions that we’re having today. It also affects the way manufacturers are committing to their ramp-up of their capabilities to produce electrolyzers in particular. And of course, as that clarity comes to fruition and hopefully, in particular, we realize the annual matching guidance for the hydrogen production tax credit, all that will start to accelerate. And then on top of that, we’ve continued to see tremendous innovation across the clean tech space just over the last two years. I was looking at the numbers from Bloomberg New Energy Finance. It’s a $100 billion invested in clean tech across the venture capital space. So just tremendously exciting innovations that we’re seeing and I think we’ll really make a huge difference in the latter part of this decade.

Julien Dumoulin-Smith — Bank of America — Analyst

Excellent, thank you. Just quickly going back and quickly, how do you think about using ATM to buy out the remaining surplus as they come due. Further, should we assume issuing new surplus on a rolling basis as credit facilities are refinanced right again. Obviously, right now, this is a temporary financing in some respects, and then ultimately how do you think about the IDR, but there’s holidays and other tools in the current environment.

Unidentified Speaker —

All right. So Julian, I’ll try to work off all those all those questions and team will make sure I get to them all. So the first question was around the use of the ATM. So look, as we shared in the prepared remarks, we have the flexibility to be opportunistic to deliver to the investor either directly units or to use the ATM on the buyouts and so you should expect us to use that flexibility and to be opportunistic around those options and so if we to the ATM, there is some value to go into the ATM at times to deliver and there’s also, there’ll be times where it’s just beneficial to deliver the units. So we have both those tools and we can use them. In terms of using perhaps in the future as we share today, the CPIF [Phonetic] have provided benefits for unit holders. And when you compare it to the alternative, which is doing an underwritten block equity deal, when you compare those two as we presented on the slide, it has saved unit holders considerably more than 60 million units. And when you compare those two, I think that slide does a really nice job laying out the benefits. And so, as we’ve always done, we will look at what’s the best financing option when it’s time to finance an acquisition and we look at all the different financing tools that we have. And as we shared today when we build our financing plan and when we think about delivering on our LP distribution growth, we build the financing plan into those financing expectations, and that includes the conversion of the outstanding units, and certainly, if we’re going to use a new CPIF, we will build that into the financing plan. And what that means in terms of being able to continue to deliver on the expectations. And I believe your third question was around what are the other, is there going to be something around an IDR holiday or something like that. Look, as I shared in responding to Steve’s comment we have tremendous growth opportunities and tremendous growth visibility at NextEra Energy Partners. We have a lot of flexibility in terms of being able to finance that growth. The acquisition that we announced today, I think is really strong indication of how we can acquire a very attractive set of assets for unit holders. And so we feel very good about being able to acquire assets and support growth. And so we’re focused on being able to tap into that growth visibility and deliver to unit holders that way.

John Ketchum — Chairman, President and Chief Executive Officer

Hey, Julien, this is is John. Let me just add on a little bit about the ATM and the ability to issue shares directly to a set of investors. Our first preference. I think would be to issue shares directly to a set of investors. This was a situation where we were able to use the ATM for the first 50% of the SPX buyout very opportunistically and we could do it basically at a zero discount and it made a lot of sense to be able to do it that way. It’s great to have the flexibility when you have opportunities like that that are presented by the ATM to be able to execute on them. So it’s a nice tool to have in the toolkit. But again, we have ultimate flexibility in terms of, if opportunities present themselves that are very attractive under the ATM, we we can explore those opportunities. But again, we always have the chance to just give the shares directly to the CPIF holder. We’re always going to do whatever is most efficient for unit holders. We had a slide in the deck today that I think demonstrates the value of the CPIF, the 54% savings on the BlackRock conversion back in 2018, roughly the 65%, 66% savings and even the 50% FTX buyout that we’ve accomplished so far today, but at NEP, right now we’re very focused on execution for the things that Kirk has already gone through. We’ve got great growth visibility, attractive acquisition at a 9.5% CAFD yield. And we have a lot of ways to finance the business going forward. There’s never been more capital chasing renewables than there is today, There are billions and billions and billions of dollars sitting on the sidelines waiting to find a home around renewable assets. So we feel very good about the way NEP is positioned. NEP is also very important to NEE. It’s a great way to recycle capital, provides tax optimization benefits. We continue to get distributions from assets that we drop into NEP. So the relationship between the two companies is very strong, has been very successful both, we’ve got a lot of levers. NEP is very well positioned.

Julien Dumoulin-Smith — Bank of America — Analyst

Thank you guys.

Operator

The next question comes from Shahriar Pourreza with Guggenheim Partners. Please go ahead.

Shahriar Pourreza — Guggenheim Partners — Analyst

Hey guys, good morning. Just real quick on rounding out on NEP. I guess the latest portfolio acquisition, the midpoint CAFD yield 9.5%, it’s a bit higher than some of the prior ones. I guess. Do you still see attractive economics on new acquisitions. Is that enough to balance out the dilution from the legacy CPF conversions. I guess, I’m kind of asking a question on accretive economics versus the cost of capital there.

Rebecca Kujawa — President and Chief Executive Officer

Shahriar, I think the answer very simply is, yes, we think they are tremendously attractive acquisitions for NEP. And as John just highlighted, Energy Resources often finds itself in a position of wanting to recycle capital. So there’s a lot of synergy in that and I think we will always continue to focus on current market conditions when we’re thinking about divestitures from a near perspective and acquisitions from a NEP perspective. And as Kirk highlighted and John emphasized we factor all of that in as we think about the expectations for NEP going forward and remain very comfortable with NEP’s ability to grow the 12% to 15% distributions per unit through ’26 as we have iterated and having a tremendous amount of both financing flexibility and visibility to that growth through all the avenues that Kirk highlighted.

Shahriar Pourreza — Guggenheim Partners — Analyst

Got it and then just just on NextEra, in general, in terms of sort of the inputs we’ve seen you guys have announced several earnings accretive data points since last year. You’ve got the RNG acquisition hydrogen organic transmission growth and some incremental visibility on FPL’s solar deployment. Do any of these investments kind of displace the CapEx you guys embedded in plan at the Analyst Day. Is there any sort of headwinds, we should be thinking about and ultimately, do you anticipate this to start being accretive to your plan from, let’s say, ’25 to ’26 timeframe, especially as we’re thinking about the 6 to 8.

Kirk Crews — Executive Vice President and Chief Financial Officer

So, Shahriar, this is Kirk. Look, we are always, as you know, capital is fungible. We’re always looking at what all kinds of investment opportunities we have. When we laid out the plan at the investor conference, that was certainly pre IRA. The world has changed a little bit as a result of that, but fundamentally we feel very good about executing and delivering on the adjusted EPS expectations that we laid out. We obviously are before, at the time of the Investor Day, hydrogen wasn’t an economic product. Green hydrogen was not an economic product. It is today because of the IRA. And so we’re running hard at it. But as Rebecca also outlined, the reality is that it’s probably a post 2026 realization in terms of what it — how it’s going to translate into benefit. So there’s a lot that we’re running after and a lot we’re looking at but most of this is things that we were evaluating and thinking about at the time of of the investor conference or it’s towards things that are going to really come to fruition post 2026 and really either part of the plans post plans but all things that are supporting ultimately but it’s the things that we laid out and feel comfortable about in terms of delivering adjusted EPS for ’26.

Shahriar Pourreza — Guggenheim Partners — Analyst

Terrific, thank you guys. Appreciate it.

Operator

The next question comes from Jeremy Tonet with JP Morgan. Please go ahead.

Jeremy Tonet — JP Morgan — Analyst

Hi, good morning.

Kirk Crews — Executive Vice President and Chief Financial Officer

Hi, good morning.

Jeremy Tonet — JP Morgan — Analyst

Just wanted to touch base on what does it warrant supply chain if we could, if you might be able to provide a bit more commentary on how flow panels stand today versus a few years back. And also as well as bringing the supply chain onshore, just wondering if you could provide a little bit more color on what timeline do you see that finally.

Kirk Crews — Executive Vice President and Chief Financial Officer

Sure, so as we shared in our prepared remarks. I mean, we’ve spent a lot of time thinking about supply chain, working with suppliers. It has been a very comprehensive effort. It’s been looking both globally and then obviously here domestically as well. Look, there is lots of lots of things to think through domestically. We’re continuing to work through that as well. It is about trying to evaluate where in the supply chain there might be opportunities in terms of how to participate. But the way to think about that Jeremy is our view has always been, we could be supportive through an anchor order. We could help provide support through that mechanism. That continues to be our preferred approach and we’re working with various potential partners and discussions that way and that’s continued — those discussions continue to occur.

Jeremy Tonet — JP Morgan — Analyst

Got it and just flow panels today. Just wondering how that stacks up versus where it was a few years ago.

John Ketchum — Chairman, President and Chief Executive Officer

Yeah, this is John. So the flow of panels is going very well. As Kirk said, we’ve been active with Customs Border Patrol and panels are now flowing through the ports. Really don’t see any material delays to any of our projects and feel good about that. And as Kirk said, I mean, we’re in active — the great thing about a company like NextEra with the capital spend that we have and the sophistication that we have around running a global supply chain, we have a lot of options, a lot of options, a diversified set of options globally and we’re exercising those options and we’re exploring new opportunities as well. Obviously, there’s a lot of interest in working directly with NextEra given the amount of buying power that we have. We will always be the preferred customer for each of these supplier, just given the scale at which we purchase and that allows us to drive attractive arrangements, which we think will really help make the business even more competitive going forward. And so we have launched a number of those efforts both domestically and looking at some other diversification opportunities globally that will even better position the business than it’s ever been before going forward to really capitalize on the competitive advantage we have in terms of the buying power around the supply chain.

Jeremy Tonet — JP Morgan — Analyst

Got it, that’s helpful. I’ll leave it there. Thanks.

Operator

The next question comes from Durgesh Chopra with Evercore ISI. Please go ahead.

Durgesh Chopra — Evercore ISI — Analyst

Hey, good morning, team. Thanks for taking my question. All my other questions have been asked and answered. Just quickly wanted to follow up on the 10-year site plan. But maybe can you just remind us what are sort of the key milestones for us to watch from here on from a regulatory standpoint for you to get approvals et-cetera, et-cetera, and then second, would this be the spending here, you mentioned post 2025 would some of the spending investment be accretive to the current plan you have for 2026. Thank you.

Armando Pimentel — President and Chief Executive Officer

So, it’s Armando. The way to think about it is for the rest of the time under the settlement agreement that we have at FPL, so through the end of 2025, what you see in the 10-Year Site Plan is what we have in our plan. There is no additional amount that that will be added to that capex. So it’s really about ’26 moving forward. In terms of approval of the Public Service Commission, you’ll see that as we as we provide the information for our next rate case, most of that, all of that, all of the big generation in there is solar and there’s also some storage in there. So there’s no additional capex through 2025 and most of that, you will see when we update our expectations at some point beyond ’26.

Durgesh Chopra — Evercore ISI — Analyst

Got it. So the approval, Armando, thank you for that. I appreciate it. The approval of this plan comes through the rate case process.

Armando Pimentel — President and Chief Executive Officer

Well, the approval comes through either the rate case process, because we’ve got capex that we’ve invested just as general infrastructure or it will come through one of the two solar programs that we have today. So SoBRA solar program and also our SolarTogether solar program. The SoBRA and SolarTogether solar program as long as we stick within the guidelines that we reached in the last settlement, those will get approved on an annual basis.

Durgesh Chopra — Evercore ISI — Analyst

Got it, thanks so much, much appreciate it. Thank you guys.

Operator

[Operator Closing Remarks]