NextEra Energy Partners, LP Announce Plan to Become 100% Renewables Investment Opportunity

NextEra Energy Partners, LP this week (May 8) is announcing a plan to concentrate solely on growing its high-quality renewable energy portfolio, capitalizing on the low-cost nature of renewables and the significant capital investment needed to decarbonize the U.S. economy. To execute on this vision, NextEra Energy Partners will focus on its core strengths, eliminate a significant amount of near-term convertible equity portfolio financing obligations, reduce equity needs and simplify and recapitalize the business, all of which are intended to deliver long-term unitholder value.

"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," said John Ketchum, chairman and chief executive officer of NextEra Energy Partners. "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% renewable energy strategy. The U.S. economy's ongoing transition to renewable energy is a significant driver of future renewable energy investments, and we want NextEra Energy Partners to be well positioned to capitalize on these investments.

"To lead this transition, we are launching a process to sell our natural gas pipeline assets and we are suspending incentive distribution rights fees to NextEra Energy through 2026. These actions would both increase our renewable energy investments and eliminate the equity issuance that would otherwise be required to complete all three convertible equity portfolio financing buyouts planned for 2023, 2024 and 2025," Ketchum said. "Under our plan, we currently do not expect any equity to be required to finance our growth plan through 2024 and do not expect any equity issuances to finance convertible equity portfolio financing buyouts through 2025. The end result of these changes is intended to create the leading 100% renewables pure-play investment opportunity for the benefit of unitholders."

NextEra Energy Partners' plan to capitalize on the clean energy transition includes the following:

• First, NextEra Energy Partners is launching a process to sell its STX Midstream and Meade natural gas pipeline assets in 2023 and 2025, respectively. Upon closing of the sales, the excess proceeds would be used to buy out the STX Midstream, 2019 NEP Pipelines and NEP Renewables II convertible equity portfolio financings. Once completed, the only planned convertible equity portfolio financing buyouts with equity requirements through 2026 would be the Genesis Holdings convertible equity portfolio financing, which is limited to $294 million in 2026.
  
• Second, NextEra Energy Partners expects to use the excess proceeds from the sale of its interest in natural gas pipeline assets to finance its growth, eliminating all equity requirements through 2024 other than opportunistic equity issuances under its at-the-market equity issuance program to fund future growth beyond 2024.
  
• Third, to replace the cash available for distribution (CAFD) from the expected divested pipeline assets, NextEra Energy, Inc. and NextEra Energy Partners have entered into an agreement to suspend NextEra Energy's incentive distribution rights (IDR) fees in respect of all quarters in 2023 through 2026. By suspending the IDR fees, the partnership will be able to use that cash flow to largely replace the reduced CAFD that would be associated with the sale of the natural gas pipeline assets.

Upon successfully completing the sales of the natural gas pipeline assets, NextEra Energy Partners is expected to achieve Real Zero carbon emissions in 2025 and become the leading 100% renewables pure-play investment opportunity. The partnership believes these changes could potentially invite a new class of investors looking for a carbon-free, pure-play option to participate in the energy transition.

In summary, the plan would eliminate the equity buyouts of the three near-term convertible equity portfolio financings via the divestiture of the partnership's interest in natural gas pipeline assets, and the CAFD associated with the sale of the natural gas pipeline assets would be largely replaced by the IDR fees suspension. NextEra Energy Partners expects that it would have excess proceeds from the natural gas pipeline sales available to eliminate equity requirements to fund future growth through 2024.

NextEra Energy Partners believes it is well positioned to execute against its plan due to its ample liquidity and significant financing capacity. The partnership had approximately $2.8 billion of available liquidity as of March 31, 2023.

_{Source:  NextEra Energy Partners, LP}

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