Will NextEra Energy power our future?

Will NextEra Energy power our future?

12 February 2021

The prospect of new energy providers breaking into the utilities market has been long awaited and something many long hoped for. NextEra is leading the race in this field. Alternative forms of energy sources will likely dominate the energy industry in the near future thanks to measures such as international climate agreements, country specific carbon neutral targets and an increased appetite for ESG which has led to increased realisation that we must move away from our reliance on traditional energy sources.

Renewable energies for a sustainable future

The world’s largest producer of wind and solar energy, NextEra Energy, really started to turn heads in October 2020 when its market capital of $138.6 billion briefly surpassed the once dominant Exxon Mobil, whose market capital was down to $137.9 billion, down substantially from its peak of over $500 billion in 2007. The pandemic has reinforced existing trends, with the move to renewable energy sources being no exception. There are also other factors which have reinforced this trend, including the collapse in oil consumption during the pandemic due to for example grounded flights and a reduction in travel but also due to the rise in renewable resources.

Recipe for growth

NextEra’s growth in the past years has grown thanks to a number of factors. The company comprises of two main businesses: its electric utilities business, based in its home state of Florida, and its wholesale business that develops and delivers power plants to supply third party customers. NextEra is also taking part in a pilot scheme, which explores the possibility of using solar energy to produce hydrogen, offering a multifunctional and low-carbon energy source. The company is also continuing investing in new propositions despite the pandemic and claims it has budgeted $50-55 billion for its American infrastructure projects through to 2022. Its innovative strategies have also earned NextEra the accolade of one of Fortune’s Top 20 companies in the world for innovation.

Biden administration

With the new President Joe Biden recently taking office in the US, many may see the possibility that the new government will place addressing climate change higher up on the agenda than the previous administration. The new President has already reversed or plans to reverse many decisions of his predecessor, Donald Trump. Hours after Biden was sworn in, he announced that the US plans to re-join the 2015 Paris climate agreement and on his first day in office he signed an executive order rescinding the construction permit for the Keystone XL pipeline, which would have carried oil from Canadian oil sands across to the American Midwest. The new President has also ordered the review of over 100 rules and regulations relating to air, water, public lands, and climate change, which were all weakened or abandoned by the Trump administration. Additionally, Biden recently announced his goal that all school buses will become emission free. Shortly thereafter, NextEra responded by announcing that they plan to electrify thousands of buses. This sends clear signals that the regulations, which will be adopted by the new administration, are likely to address climate change and the move towards a carbon neutral future, meaning that NextEra, the world’s leading clean-energy giant is uniquely poised to gain from this agenda.

How can investors be a part of this trend?

Vontobel’s new Bull and Bear certificates offer investors the opportunity to go long or short and participate in either direction in this ever-developing market depending on their own expectations. The technology in this market is constantly evolving but may have the potential to drastically change the energy sector and economy as a whole. Early participation and entering the market when the trend could pick up may pay off for investors.

The future share performance will depend on various corporate-, industry- and economic factors. Investors should consider the risks before taking any investment decisions. The performance of the underlying might differ from investors’ expectations and lead to a potential capital loss.

Stock overview

NextEra‘s stock is currently being traded at USD 89,91 (11.02.2021). The stock reached a high of USD 86,87 (25.01.2020) and yearly low of USD 44,73 (23.03.2020). 14 Bloomberg analysts place the stock on BUY, 7 on HOLD and 1 analyst on SELL.

Link to NextEra produkter - Bull and Bear and Mini-Futures

Important legal information

Legal notice

This information is in the sole responsibility of the guest author and does not necessarily represent the opinion of Bank Vontobel Europe AG or any other company of the Vontobel Group. The further development of the index or a company as well as its share price depends on a large number of company-, group- and sector-specific as well as economic factors. When forming his investment decision, each investor must take into account the risk of price losses. Please note that investing in these products will not generate ongoing income.

The products are not capitalprotected, in the worst case a total loss of the invested capital is possible. In the event of insolvency of the issuer and the guarantor, the investor bears the risk of a total loss of his investment. In any case, investors should note that past performance and / or analysts' opinions are no adequate indicator of future performance. The performance of the underlyings depends on a variety of economic, entrepreneurial and political factors that should be taken into account in the formation of a market expectation.

19/01/2022 14:42:39


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