Leading the Renewables Charge

IN THE FAST-GROWING UNIVERSE OF RENEWABLE ENERGY, NEXTERA ENERGY RESOURCES IS CONSIDERED A DOMINANT player in both wind and solar power generation. The company's president, Mitch Davidson, 47, is out to grow the business well beyond its current reach, which encompasses revenue of about $9 billion a year, 18,000 megawatts of generation and a workforce of 4,500. He recently spoke with EnergyBiz about both his company and his industry. His comments, edited for style and length, follow.

ENERGYBIZ   Now that your parent, the former FPL Group, has adopted your NextEra moniker, how are you going to avoid marketplace confusion?

DAVIDSON   NextEra Energy Resources is a significant contributor to the total net income of our company. We changed our corporate name to better reflect the entire company, not just a segment of it. And quite honestly, I doubt we'll have issues distinguishing NextEra Energy and NextEra Energy Resources.

ENERGYBIZ   So do you think there's a message here that the parent company views you as really the vibrant future of the entire company?

DAVIDSON   I'd say that we are a significant part of the company's growth. NextEra Energy is not just a utility in Florida.

ENERGYBIZ   You are the largest wind and solar generator in the United States, so you are the renewable energy company in the United States.

DAVIDSON   That's correct.

ENERGYBIZ   From that perch, what policies do you think this country needs to enable us to really bring renewables to the level they can be producing at?

DAVIDSON   We're a company that wants to build renewable resources where it makes good economic sense. On the demand side are the customers whose needs are typically driven by renewable portfolio standards. The missing piece is transmission planning and development.

ENERGYBIZ   What about the supply side?

DAVIDSON   What we want is a level playing field with other fossil fuels. Production tax credits, convertible investment tax credits—these types of tools are very important to us. Policies that support these tools help support the growth of renewable energy.

ENERGYBIZ   So wind and solar are not ready for prime time without external support?

DAVIDSON   We still need to have these types of tools to support the economics of renewable projects and create the level playing field I mentioned before.

ENERGYBIZ   How long will that be true?

DAVIDSON   You're going to need these incentives until renewable energy is on a level playing field with carbon-based fuel. There is a bridge between the production tax credit world, where we are today, and a world where there is a price on carbon sufficient to put renewable energy on a level playing field.

ENERGYBIZ   What is that bridge?

DAVIDSON   That bridge would be a national renewable energy standard.

ENERGYBIZ   Do you think such a standard is more or less likely now, given the oil spill in the Gulf?

DAVIDSON   It's hard to say, but it's definitely drawn attention to the issue.

ENERGYBIZ   Let's return to the need for a national renewable portfolio standard.

DAVIDSON   I believe a national RPS could help drive the demand for more renewable energy.

ENERGYBIZ   People in the Southeast say they do not have an abundance of renewable energy resources. Is there a way to finesse that?

DAVIDSON   I think so. We shouldn't expect the states in the Southeast to produce their own renewable energy. There are plenty of renewable resources in other areas of the country. States that do not have abundant natural resources should be allowed to purchase renewable energy credits from other states and use them toward a renewable portfolio standard.

ENERGYBIZ   It'll make the energy industry more predictable

DAVIDSON   I believe it will, especially if we want to reduce our dependence on foreign resources. Following a national RPS should be a national or Federal Energy Regulatory Commission (FERC) supported plan to build out the transmission grid to those areas that are known to be rich with renewable resources.

ENERGYBIZ   How bad is our transmission system and what will it take to get it where you think it should be?

DAVIDSON   It isn't bad. It does exactly what it has been designed to do. Each utility has done what is needed to ensure reliability for its customers. However, there has never been a large-scale transmission build out to support the development of new renewable resources. That's what we need. We need the federal government to support building new transmission to renewable energy zones. This is exactly what they are doing in Texas. By creating these zones and developing a federally supported transmission plan we should be able to resolve the cost allocation issues we face today.

ENERGYBIZ   Is it too simplistic to say that we need to be able to take Southwest solar and Midwest wind and bring it to the East Coast?

DAVIDSON   No, I think it is that simple. One solution is FERC. FERC has the authority to site transmission, build the transmission, and then allocate the cost of the transmission.

ENERGYBIZ   So what would it take to get them to do it? Does the Congress have to do anything? Does the president need to say anything? Or is it in FERC's power to make it happen?

DAVIDSON   Well, as I said, I think FERC already has the authority to do it, and they are taking steps in the right direction. However, this could be a very long process, so we need to find a way to implement it now.

ENERGYBIZ   NextEra has 18,000 megawatts that you control, and 40 percent of it is wind and about 1 percent is solar. If there's a national RPS and adequate transmission is put in place, how big do you think you would like to see your business grow?

DAVIDSON   That is very tough for me to predict. At the end of 2008 coming into 2009, before we had the economic downturn, our goal was to add between 1,500 and 2,000 megawatts of new wind energy per year and to continue to build our solar business. Solar has a much longer lead time and it is a much larger investment per kilowatt hour than wind. A typical wind farm can be constructed in six months. Solar takes much longer. I believe we can add 3,500 to 5,000 megawatts of wind through 2014 with another 400 to 600 megawatts of solar.

ENERGYBIZ   Will you double your renewables holdings in the next decade if conditions warrant?

DAVIDSON   That's possible. As long as conditions permit, our goal is to invest up to $3 billion a year in new renewable projects. It's a significant commitment.

ENERGYBIZ   And do you have any trouble raising that money given the economy right now?

DAVIDSON   We've been successful so far, but it's very important to have customers willing to purchase our power under long-term contracts.

ENERGYBIZ   Hence the need for a national RPS?

DAVIDSON   That is exactly the point and why we're encouraging a national renewable energy standard so that we can get more customers into the game.

ENERGYBIZ   Nuclear power represents 14 percent of your generation. Do you see that as being an area you'd like to expand in?

DAVIDSON   We've looked at a lot of opportunities on the nuclear side. Acquisitions are difficult for a number of reasons. As a non-rate-regulated company, there's too much regulatory risk associated with us building new nuclear units.

ENERGYBIZ   How big can renewables get?

DAVIDSON   Well, I think renewable energy can play a much larger role than it plays today. Think of the thousands of jobs that we have and could continue to create. Building renewable projects could put tens of thousands of people to work for a very long time. We'd like to invest up to $3 billion a year. Imagine how many people we can create jobs for. And we're just one company!

ENERGYBIZ   Would you call yourself a lifelong environmentalist?

DAVIDSON   I think everyone cares about the environment, but I wouldn't have called myself an out-and-out environmentalist. We need to think about both the environment and economics, and here we can create good, high-skilled jobs and help the environment at the same time. That seems like a great thing. I can tell you though, after being at NextEra Energy Resources over five years, you get pretty passionate about what you're doing. We are finding ways to put more people to work and looking to invest money in all the right places for all the right reasons. What better place is there to invest in our country and to put people to work than to do what NextEra Energy Resources is doing right here? I love what I'm doing. I work with great people, and we're doing something that I think is really important for our country's future. And they pay me for it, too. What could be better?

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