Two decades ago, when coal ruled U.S. power generation, a Florida utility plowed some of its extra cash into a wind farm atop a desolate Oregon plateau.<\/p>\n
It was the start of an unimaginably successful bet.<\/p>\n
This year, that company — now named\u00a0NextEra Energy Inc.\u00a0— became the world\u2019s first utility with a market capitalization of more than\u00a0$100 billion<\/span>, thanks largely to its clean-power business. It\u2019s almost twice as valuable as the oil major\u00a0ConocoPhillips\u00a0and has developed enough wind and solar farms across the U.S. and Canada to power the entire nation of Greece. Shares have doubled in four years, outperforming virtually every other stock in the industry.<\/p>\n \u201cThey made a bunch of strategic moves early and aggressively that have paid off very well for them,\u201d said Andrew Weisel, an analyst at Scotia Howard Weil.<\/p>\n Not that NextEra started down the clean-energy road with a master plan. The move into renewables happened pretty much by accident after the company began lending money to wind-farm developers. Some of them ran into financial troubles. NextEra forgave debts in exchange for majority stakes in the farms.<\/p>\n As it would turn out, the wind farms weren\u2019t duds.<\/p>\n \u201cLo and behold, we did some projects that were quite profitable,\u201dsaid Lewis Hay III, the company\u2019s chief executive officer from 2001 to 2012.<\/p>\n So Hay pulled together a renewable energy team of his own. One of his early moves was to recruit two of his former co-workers from a consulting firm: One was Moray Dewhurst, who eventually served as NextEra\u2019s chief financial officer. The other was Jim Robo, who at the time was an executive for\u00a0General Electric Co.<\/p>\n Robo, a Harvard MBA,\u00a0became NextEra\u2019s CEO\u00a0in 2012. He rarely grants media interviews and declined to comment for this story.<\/p>\n \u201cThings really took off when Lew, Moray and Jim got together,\u201d Barclays Plc analyst Eric Beaumont said.<\/p>\n When Robo came on board in 2002, wind power was a tiny slice of the U.S. power mix. But in another stroke of luck, Congress had just extended a tax credit that would prove to be the key to a wind generation boom across America that\u2019s still going.<\/p>\n It helped turn what was a once-sleepy utility —\u00a0established in 1925 as Florida Power & Light — into a global powerhouse.<\/p>\n NextEra, which changed its name in 2009 to\u00a0reflect\u00a0its growing focus on alternative energy, now has wind and solar farms in about two dozen U.S. states and four Canadian provinces. They total roughly 18 gigawatts, enough to power almost 13 million homes. Last year, its clean power business — in addition to some natural gas and nuclear plants — raked in\u00a0$4.7 billion<\/span>\u00a0in profit, 70% of its net income.<\/p>\n And the company isn\u2019t done growing. It already has contracts to add another 12 gigawatts of renewables.<\/p>\n Challenges remain. The federal tax credit for wind farms is set to start phasing out soon. And in Florida, a campaign is under way to pass a constitutional amendment that would break up monopolies held by NextEra\u2019s utilities,\u00a0Florida Power & Light Co.\u00a0and Gulf Power. On an adjusted basis, the company\u2019s utility business still made up the bulk of its earnings last year.<\/p>\n Not all of NextEra\u2019s bets have panned out. Its\u00a0$18 billion<\/span>\u00a0attempt to buy\u00a0Oncor Electric Delivery Co.\u00a0in Texas\u00a0crashed and burned. And its\u00a0$2.6 billion<\/span>\u00a0attempt to buy\u00a0Hawaiian Electric Industries Inc.\u00a0fell apart, too.<\/p>\n And for all the company\u2019s clean energy, NextEra\u00a0unsuccessfully fought\u00a0in support of a 2016 measure in its home state of Florida that critics said would have limited rooftop solar growth and, hence, protected utility revenue. The company has a plan to install 30 million solar panels in Florida by 2030 and use batteries to replace fossil-fuel plants in its fleet.<\/p>\n NextEra\u2019s strategy has hinged on building projects in states with deregulated power markets that required utilities to buy a certain amount of electricity from wind or solar farms, including Texas and California. It enables NextEra to line up long-term contracts, ensuring revenue for a decade or more.<\/p>\n Early on, Robo negotiated a deal with his old company: GE. NextEra had a contract to buy natural gas turbines from the conglomerate. But the market for gas plants was in decline. So the utility convinced GE to rejigger the deal and allow it to buy wind turbines instead.<\/p>\n \u201cThat\u2019s a cause that led us to scale up our business much faster than maybe otherwise we would have done,\u201d Hay said. The scale soon gave the company an advantage that made it hard for others to catch up.<\/p>\n One of Robo\u2019s adages is wind and solar are essentially big data operations. An early sign was in 2006, when NextEra bought\u00a0WindLogics Inc., a high-tech forecaster. At the time, wind developers relied on WindLogics\u2019s computer modeling techniques to predict wind patterns and pinpoint exactly where to site turbines. By acquiring the company, NextEra locked up that edge for itself.<\/p>\n \u201cThat became a very powerful advantage,\u201d Stephen Byrd, an equity analyst at\u00a0Morgan Stanley, said in an interview.<\/p>\n The company has said it will do just fine even after the federal tax credit for wind farm expires. The company\u2019s size makes its well positioned to benefit from U.S.\u2019s ongoing shift away from fossil fuels, said Timothy Winter, a portfolio manager at\u00a0Gabelli Funds LLC.<\/p>\n \u201cThey\u2019re still in the very early innings of the ball game,\u201d Winter said.<\/p>\n","protected":false},"excerpt":{"rendered":" Two decades ago, when coal ruled U.S. power generation, a Florida utility plowed some of its extra cash into a wind farm atop a desolate Oregon plateau. 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