NextEra Energy Partners pivoting to full renewable energy portfolio

In a major twist of focus, NextEra Energy Partners, LP announced this week that it will sell its natural gas pipeline assets and concentrate solely on renewable energy in the future, effectively doubling down on low-cost renewables and decarbonization.

The company plans to sell off its MTX Midstream and Meade natural gas pipelines in 2023 and 2025 and use the resulting funds to buy out convertible equity portfolio financings. Excess proceeds from the sale of interest in natural gas pipeline assets would then be used to finance NextEra’s growth, eliminating equity requirements through 2024 and funding future growth. Further, to replace cash available for distribution from the divested pipeline assets, NextEra has agreed to suspend incentive distribution rights fees through 2026, enabling it to utilize that cash flow to replace an otherwise reduced wallet.

This could allow the company to achieve real zero carbon emissions in 2025. In so doing, NextEra hopes to become the leading 100 percent renewables pure-play investment opportunity.

“Since launching NextEra Energy Partners in 2014, we’ve delivered significant growth, increased our renewables portfolio by approximately nine times, and have become one of the largest clean energy generators in the world,” John Ketchum, chairman and CEO of NextEra Energy Partners, said. “We have a terrific track record, but we believe NextEra Energy Partners’ future growth potential is not reflected in its current valuation. We believe this disconnect is driven by a combination of macroeconomic factors and concerns around the equity required to finance the partnership’s convertible equity portfolio financing buyouts. Today, we are announcing plans to simplify the partnership’s capital structure and singularly focus on a 100 percent renewable energy strategy.”

NextEra does not expect any required equity to finance current growth plans through next year, nor any such issuances needed to finance convertible equity portfolio financing buyouts through 2025. NextEra Energy Partners expects excess proceeds from the natural gas pipeline sales, allowing it to eliminate equity requirements through 2024 – and as of the end of March, NextEra Energy Partners had approximately $2.8 billion of available liquidity.