Renewable energy demand is poised to skyrocket, driven primarily by the rise of AI data centers and the electrification of the economy, according to John Ketchum, CEO of NextEra Energy Inc. (NYSE: NEE). 

Speaking during the company’s second-quarter earnings call, Ketchum highlighted how these factors will propel renewable energy demand to triple by the end of the decade.

Ketchum’s forecast was a key topic during the discussion of NextEra’s second-quarter financial results. 

Despite reporting a revenue of $6.07 billion—falling short of the $7.27 billion analysts had expected and a decrease from $7.35 billion a year ago—the company demonstrated robust growth in its renewable energy projects. 

In the second quarter alone, NextEra expanded its backlog by 3,000 megawatts of renewable and storage projects, including 860 megawatts from agreements with Google to power its AI data centers. 

This strategic move positions NextEra at the forefront of the renewable energy market, with shares up nearly 5.0% today.

Accelerating power demand

Ketchum anticipates that power demand will grow up to four times faster over the coming decades compared to the past twenty years, driven by AI data centers and the broader trend of electrification. 

This projection aligns with a report from Rystad Energy, which predicts that electric vehicles and data centers will boost U.S. electricity demand by 290 terawatt hours by 2030—equivalent to the total power demand of Turkey.

Despite missing revenue expectations, NextEra Energy remains attractive to income investors due to its 2.73% dividend yield. 

The company’s focus on renewable energy continues to resonate with investors and analysts, as reflected in the consensus “overweight” rating and an average target price just north of $79.

Exploring nuclear and natural gas for future power needs

Rebecca Kujawa, CEO of NextEra Energy Resources, a subsidiary of NEE, expects the surge in power demand driven by data centers to take a couple of years to fully materialize. 

Meanwhile, natural gas is anticipated to play a pivotal role in meeting this demand. Alam Armstrong of Williams Companies emphasizes the importance of natural gas to prevent the U.S. from lagging in the AI race.

NextEra Energy’s existing natural gas fleet in Florida positions it well to leverage this resource. 

However, CEO Ketchum underscores that renewables remain a superior option due to their cost-effectiveness and rapid deployment. Additionally, Ketchum revealed plans to restart the company’s nuclear plant in Palo, Iowa, which has been shuttered since 2020, to further meet the rising demand.

Outlook and analyst confidence

NextEra Energy’s proactive approach to expanding its renewable and storage projects, combined with its strategic investments in AI data centers, underscores its commitment to leading the energy transition. 

Despite short-term revenue misses, the company’s long-term prospects remain strong, supported by favorable analyst ratings and a focus on sustainable energy solutions.

With the anticipated tripling of renewable energy demand by 2030, NextEra Energy is well-positioned to capitalize on this growth, reinforcing its status as the largest U.S. renewable energy company by market capitalization.

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