NextEra Energy, Inc. (NEE) Earnings Call Transcript & Summary

Okay. Good afternoon, everyone. Very excited for our, I guess, we'll call it our lunch panel today with NextEra Energy. We've got the Chairman and CEO, Jim Robo, here. We're doing this live in person, which feels really good and different. So Jim, thanks for coming up to New York. It is still safe and secure and all that stuff despite some of the things I hear around the country. But -- so Jim, thank you so much for coming up and visiting with us. Jim's got some slides to go through here at the beginning and then we'll do Q&A after that. But before we get started, we are going to do our poll question. So [ Brianna ]? NEE is at or near record valuation premium to the utility sector. Does the premium expand, flatline or decline from here? So this is relative to the group. Does it expand further, stay where it is or does it narrow? I know Jim has a point of view but he promised not to say anything.

Steve told me my vote wouldn't count. So...

Great. Okay. We'll give you the answer at the end. And let me turn it over to Jim for the slides. Thanks.

Thanks, Steve. Happy to be here. I will turn you to our cautionary statements, if the slides will move forward.

[ Brianna ], we need help with the slides moving so maybe you want to try and do it? Somebody will come and help out. Do you want to start...

Someone will come and help out. We could get going. So I'll take you through the usual cautionary statements. And I'm going to talk about NextEra and then I'll talk about NEP at the end. On the NextEra front, we have a long-term vision to be the cleanest -- the largest, cleanest, most profitable clean energy provider in the world to really lead the decarbonization of the entire U.S. economy. And we have 2 terrific businesses. There we go, all right. Mouse, I could figure out how to do a mouse. Okay. We have 2 terrific businesses. Obviously, FPL, which we think is the best utility in the world, and NextEra Energy Resources. And our goal fundamentally is to lead the transition -- this energy transition to a decarbonized economy. Very excited about the opportunity in both businesses, and I'll talk about that in a minute. Our focus -- our strategic focus at FPL is to continue what we've been doing, which is smart investments that improve the value proposition. And I will take you through the FPL -- a few details on the FPL settlement agreement here in a minute around the rate case. And Energy Resources, we're continuing to work on capitalizing on what is the best renewables development environment that we've ever seen. And both businesses are taking advantage of a set of disruptive forces that we see that are really driving this energy transformation. And that is the fact that renewable costs, wind and solar, along with -- paired with batteries, are cheaper than natural gas, cheaper than nuclear, cheaper than coal. We've been getting a lot of questions of what's the fact that gas prices have gone up $0.80 on a long -- on a 10-year strip since the beginning of the year. What's that mean? Well, it means that wind and solar are even more competitive than they were in January this year. So it's terrific news. And we are leading this transition, and there is no one better positioned to take advantage of it than we are. And we're leading the transition not just of the decarbonization of the electric grid but the decarbonization of the entire U.S. economy. The electric grid is going to be the vehicle to decarbonize the transportation sector. It's going to decarbonize the industrial sector. We're very excited about the potential for green hydrogen. We talked on one of these fireside chats probably 18 months ago about hydrogen, Steve. And it is an incremental trillion dollars of investment opportunity above and beyond what just decarbonizing the electric grid means. And so we see through -- this is decarbonizing the entire economy, close to $2 trillion of investment opportunity. It says through 2050. I think it will happen much faster than that, 2035, 2040. And I'm talking about -- when I talk about decarbonization, I'm not talking about net zero. I'm talking about real 0. There's a lot of folks out there with net zero targets. And honestly, the real target is 0. And we are going to be leading the charge to get the U.S. economy there, and it's an enormous opportunity for our renewable business. Just a couple of things on the FPL rate case proposed settlement. Very happy that we've reached agreement with almost all the interveners on a new 4-year agreement that settles our rates through the end of '25. And you can see the details here. We think -- the bottom line is we think it's extremely constructive for customers. It's extremely constructive for shareholders. It essentially walks in the lowest bill in Florida for the next 4 years for customers and assures that FPL customers will have some of the lowest bills in the country over the next 4 years. So it's a home run for customers and I think very constructive for shareholders. And a couple of the features that we're excited about, obviously, the ability to build on top of the solar megawatts that we're going to be able to build, we're going to be able to build 1.8 gigawatts of capacity for a community solar program called FPL SolarTogether. That's on top of the original SolarTogether megawatts that we built. That's a terrific program. It's an optional tariff, so it's above and beyond the base rate revenues that we get. And we're also going to be investing in electric vehicle infrastructure, and we got our green hydrogen pilot approved. So several things are really critical, I think, for the clean energy transformation in Florida that FPL is leading. Very excited about the future there. Energy Resources, we've gotten a lot of questions about. Is there more competition in the business? What's going on with the supply chain? Are people going to do more rate base? The fundamental reality is it's enormous demand. We have 20% of the market. We continue to have 20% of the market. Our returns on a levered basis are as good as they've ever been. And we have enormous competitive advantages. We -- our scale advantages, our pipeline of projects, our customer relationships, our expertise, our culture of execution and the data analytics that we built in-house that allow us to operate more efficiently, that allow us to actually assess resource better than the rest of them, better than the rest of the industry. There's no one that can match up against those competitive advantages that we have. And talk about scale. Last year, we were the fifth largest investor -- capital investor in any industry in the country. And obviously, we're the largest electric player in the country, but we were the largest -- the fifth largest of any industry in the country. So we have enormous scale that is really a huge advantage to us. We've been able to manage through all the supply chain challenges that we've had this year, I think, quite well. So I continue to be very bullish about our prospects. We have always run the business with a lot of cushion. I feel very good about our prospects. I'll be very disappointed if we're not at the top end of these ranges, and we continue to expect to grow the dividend as well and feel really terrific about our future. And haven't felt as good about our future in the 9.5 years I've been CEO. Let me shift gears, go to NEP. NEP has had a terrific first half. I want to point you to something that came out today from the rating agencies. S&P published the fact that they're going to move NEP to a new methodology that reflects the greater scale, diversity and size of NEP. Going to shift us from a target of 5x debt-to-EBITDA to a 14% FFO-to-debt target instead, which gives us a significant amount, more balance sheet flexibility than we had before. And it's really a reflection from S&P of the continued maturation of NEP and the continued strength of the NEP balance sheet. So we're very happy about that. We're very focused on buying -- of converting the first [ set ], if it's going to convert here in the fourth quarter. And they also recognize that as well in the write-up. So very, very positive from that standpoint. NEP has been a home run since the IPO and by any measure, and we've grown LP distributions. It's been a terrific unit to own for our unitholders. And it's very important to me as well. NEE owns -- the market gets us $13 billion, $14 billion market cap company and NEE's share -- NEE's ownership value of that is a $7 billion asset. NEP's obvious -- NEE is obviously very important to NEP. NEP is very important to NEE. It's an important asset, and we're going to continue to grow and feel very good about the future at NEP. One thing I want to highlight. Obviously, NEP has 3 areas that can grow. It can grow -- has a great sponsor in Energy Resources and access to that huge pipeline, development pipeline that we have. That's been -- that's as big as it's ever been. We have organic opportunities of growth that we've been able to show, that we've organically grown in several segments of NEP this year. And then the third opportunity is the ability to do third-party M&A. We operate, from an operating cost standpoint, significantly cheaper than the rest of the industry. And we've been able to take a ton of cost out of wind and solar over the last several years. And whenever we look -- and we just announced that -- we just closed on that wind acquisition at NEP, a third-party wind acquisition at NEP. What made that hum is our ability to run those assets cheaper. And so the ability to access low-cost capital and assets from -- we have 20% of the market, Energy Resources. To be able to access the other 80% of the market is just another growth opportunity for NEP. And really significantly, if you think about it, lengthens the growth runway at NEP for as far as the eye can see. So we feel very good about NEP, going to continue to grow LP distributions. You can see our run rate EBITDA and CAFD and we'll be updating those expectations for -- shortly here. But I continue to feel very bullish about NEP, and it's an exciting time to be running both businesses. And with that, I'll turn it over to you, Steve, for questions.

Great. Yes, no. So Jim, one thing -- there's so many things going on, on the NEER business so maybe spend a little more time there for the moment. But I think a lot of people historically thought of NextEra and NEER as wind and solar to utility customers. But it feels like your business is changing meaningfully into other areas and then also other types of customers. So maybe you could talk about what is NEER going forward beyond the wind and the solar? You can include that, too, just the whole picture.

So obviously, wind and solar are hugely important. Wind and solar to our existing muni and co-op and utility customers are very important. We continue to do a lot of business with all -- in all of those areas. C&I is becoming a bigger player. C&I growth has exploded in the renewable business. Batteries, oh my gosh, battery growth is just exploding. And we're seeing huge demand for our batteries, particularly in California and, to a lesser extent, in Texas. But California, in particular, is in need of a lot of capacity, and we are uniquely positioned to be able to deliver to that. So storage is an increasing and growing opportunity there.

And your market share in storage...

Is 30% last year.

30%.

Yes. And I would expect us to continue to have a 30% market share. No one has the sites, the access to the batteries, the scale. When we buy batteries, it's a $1 billion order. And so no one -- other than -- in the grid storage business, no one is doing that, right? So we have huge runway... [Technical Difficulty]

Don't know where that music's coming from.

Yes. It's quite soothing. It's quite soothing.

Waxing poetic, yes. I don't know.

Nobody gets heard and so...

Yes, there's a lot of comment.

Yes. Someone will figure about it, too. So the other piece is obviously hydrogen. It really is a priority. Green hydrogen is going to deliver really important growth opportunity. But we have been talking about hydrogen, what's going on with the reconciliation. And so -- but we are going to have a hydrogen -- if there is a reconciliation bill, most likely there's hydrogen PTC. And that will accelerate significantly the green hydrogen revolution in this country. And you're going to see the electric grid really decarbonize the rest of transportation, diesel fuel decarbonized, the industrial sector. It's going to open up, I think, huge demand for renewables on top of what we've historically seen. So the other thing we're seeing is a lot of nontraditional sources of demand right now. Data centers, crypto, there's a lot of nontraditional areas of demand that we're seeing coming out in the C&I space. So it's a great time to be in our business. And our goal is to bring a suite of products to our customers that can enable them to -- on their decarbonization journey, right? Not all our customers are as advanced as some of the others. And we can go all the way from selling them -- we're the largest seller of green renewable credits -- energy credits in the country, all the way to selling them credits to building -- to helping them decarbonize their fleet, do DG, distributed gen at their sites and do C&I, renewable PPAs to decarbonize their entire electric supply. So it's a pretty exciting time, and we're starting to see a lot of synergy there across our businesses. And the cross-selling that we're seeing across our businesses is actually very powerful right now.

Great. Well, you mentioned D.C., and I think at dinner last night, you basically said probably spending more time there than you have maybe in your career. So maybe you could talk about the, first of all, just the likelihood that some type of reconciliation bill or other ways of getting new clean energy credits kind of passed in D.C.

Yes. So my view on it is it's more likely than not that reconciliation happens. Nothing's easy in Washington, right? And that's why I think it's extraordinarily important to the Biden administration to put up a win here. And I'm at like 60-40, 70-30 that something happens, okay? If it does happen, I feel very good that included in both the Senate and the House bills right now are long-term extension of PTC, solar PTC optionality, a long-term extension of the solar ITC, a stand-alone storage ITC, direct pay and a hydrogen PTC. And so all of those things are very positive for our company. And we -- so if there is a bill done, I expect that you will see those elements in the bill that happens in Washington at this time.

Okay. And is there anything that you would say is -- of those that are kind of most meaningful for you?

They're all important, Steve, right? And they're all important and they're all important for different reasons. And I think they enabled this decarbonization journey that the country is on. And I hate to pick one of them over any of the others. I'm excited about the hydrogen PTC, right? I mean, that will accelerate what we're seeing. That's kind of new and the storage -- the stand-alone storage ITC. I don't think anyone's fully figured out yet the real ramifications of either of those 2 things. We will be able to put storage everywhere in our network, right? Every wind site, every place we have an interconnection to, we'll be able to put storage. Won't have to just be in a solar site, and that's a very -- that will be very powerful if you have a stand-alone storage ITC. And the hydrogen PTC accelerates that huge expansion of renewable demand that we expect to see in this decade. So very excited about both of those. Long-term extension of the credits. I've always argued for shorter-term extensions of the credits because it always incents demand. But the whole package, I think, is very important. I think it's less likely you see a clean energy payment plan just because I think it's a -- anything that's new is a little bit more challenging. Anything that's not in both bills is more challenging. So we'll go. But it changes every minute. I've literally been getting texts all day, and things change from minute to minute there.

If somehow the reconciliation bill does not pass, what other avenues, if any, are there? What do you think it's -- do you think it's likely that this group of credits could get passed in other ways?

Yes, so I think there's a potential that -- there's always the end-of-year extension of existing credits that always needs to happen. And not just the energy credits, but all credits, right? There's a whole plethora of tax credits that expire at the end of this year. So that's another vehicle and another avenue that if reconciliation, for some reason, doesn't happen this year, that it could -- that could still happen in December. Harder to get new stuff done in that, but on the existing stuff, a lot -- much easier to get it done. And then this is really long-term planning when it comes to Washington. Lame duck next year is another opportunity for reconciliation to happen. So I think we have at least 3 bites of the apple.

One concern this year of investors on the renewables business has been supply chain and logistics and inflation, and all those things and then, of course, tariffs. So maybe you could talk to how you're managing your thoughts on those things, how much it's impacting the business and margins and how you're feeling on that.

Yes. So feel very good about all of it. We manage it very closely is the short answer. And you can imagine I've been having weekly meetings on it because there's clearly been challenges in the supply chain this year. And we've been very successful at working through those challenges. I think very -- I look at last night's news on the circumvention thing with -- that came out of commerce as an indication of, I think, where they're leaning. And they're leaning, I think, to -- we'll see if the petitioners even choose to respond in the next 6 days. I'd be surprised if they unmasked themselves but maybe they will because they're anonymous right now. And -- but even if they do, I think the reality is that I feel -- I am cautiously optimistic that the administration is going to come to the right answer on that even if they do refile. And we've been managing through all of this. We have such scale, such relationships. And we -- when you're spending $15 billion of capital a year across both your businesses, you have enormous leverage and scale. And we have been held harmless against a lot of the issues a lot of other people have had, and that's because of our position. And my expectation with our suppliers is that's how we get treated better than everybody else, and we have. And we will continue to work it. That's not mean that we haven't had challenges, seeing a little bit of inflation. It's not anything that $1 or $2 on PPA price can't offset, and the team has been off reflecting that with customers, and customers get it. I mean of any time -- right, particularly with gas prices up as much as they are, to go get $1 or $2 on PPA price is not a big lift.

Yes. I mean that's -- I guess I look at this as there's kind of 2 phases. There's the contracts you've already signed up for before some of these pressures. Is it fair to say on those, that you're pretty well locked up what you need?

That's exactly the way to think about that.

Then there's developing new projects where it sounds like you can basically price in whatever some of the costs are. And you're dealing with a market where gas has gone up actually a lot more than a lot of the cost of solar or wind.

Way more, way more, right? I mean the -- I think the -- since January, the 10-year strip is up -- well, year 10 is up $0.80 so it's probably up $1 from $2.75 to $3.75. So at a -- at a 7 heat rate, that's $7 a megawatt-hour, right? And most of these markets cleared in $8 or $9, so that's like $8 or $9 a megawatt-hour, right? So that's a big up in power prices that's just happened as a result of gas prices.

And if you would say like relative to the cost of wind or solar versus what it was?

$1 or $2. $1 or $2 on a PPA, right? So versus the $9 on solar, so -- $9 on gas prices going up, right? Making that our price equivalent. So it's a great time to be in the renewables business despite some of the challenges. And we're working on those challenges. I think the administration has been terrific to work with. They understand the importance of supply chain. They understand the importance of -- and we're very supportive of building the domestic industry in the U.S. A lot of wind is already built in the U.S. We're working hard to build more solar in the U.S. as well. And -- but that's going to take some time, and we're very supportive of that. But the administration has been very supportive of understanding that we need a flowing supply chain in order to decarbonize the U.S. economy, and that's really important. You see the extreme weather.

Yes.

You see -- right? So that decarbonization, I think, is more important today than it's ever been.

And then just in terms of competition, you brought it up, you feel very good about your relative advantages. But just people ask about, oh, the big oils want to come in and they're desperate to get involved or utilities and the like. So maybe you could just talk to who you really compete with. And how you feel about the impact of maybe not as sophisticated players getting more involved?

So we don't compete with people who buy the end product. And that's typically -- big oils are not developing. The utilities are not developing on their own. They tend to buy already permitted to build projects typically. And all the value creation is in development. And so who we compete with is really develop -- is private developers, right? We don't really compete. There's really -- other than potentially a little bit AES, and honestly even AES, we don't see very often. And once in a while, we see Avangrid. The people we compete with are people that most of the folks on this call have never heard of, and it's small developers. And we have all those competitive advantages that I talked about: a 90-gigawatt pipeline, 20 gigawatts of existing sites, all these interconnect positions, the scale, the ability to do all of that. So I feel as good -- that competitive moat is as big as it's ever been. And when you look at folks coming into the industry, the oil companies have been in it. Before, they were in it -- our biggest competitor in wind in 2003 was Shell. When they got out, BP was in, then they got out and they're coming back in. It's -- I don't worry about the big oil companies. I think it would take a seismic shift, and they're thinking to really understand how to be good developers. And this is all about being good developers and customer relationships and being small and nimble. And we're big but we think like a small company, and that's so important to being successful in a development business.

Great. Well, I've got, I think, 2 more questions I'll ask and folks on the audience, please feel free to send your questions in. We've got a bunch already but if you got others, send them in now. So first of all, at the utility, obviously, you have the rate settlement. Hopefully, that gets approved. Could you just give us a kind of high-level picture of the growth runway at the utility in terms of the capital investment? And what you're investing in over this next 4- to 5- to 10-year period at FPL?

Yes, yes, yes. So there is a terrific runway of growth at FPL for a long period of time. So I'd put it in 3 buckets. Just regular growth, right? I mean housing starts and permits are at levels that we haven't seen since '05 and '06. And the biggest difference is there's no inventory now. There was huge amounts of inventory in '05 and '06 and there was a lot of speculation. There's very little speculation in the market right now. It's really all demand-driven. And so we're seeing great growth there. So we'll see better-than-average growth, the best growth in the country, I think. The decarbonization of the generation fleet, we're going to see that increasingly happen over the next decade. And so all the solar that you see us building, that's going to happen. There's a solar PTC. It means even more solar is going to get built in at FPL than we have in our 10-year site plan, and it's in the settlement agreement. And so that -- we're very excited about that. And then the grid hardening right? We have a very -- and that's not going to -- we're not going to harden the grid -- we're not going to underground the grid overnight. But over the next 20 years, we're going to be -- we have an enormous opportunity to harden that grid, have -- do it through clause. Makes sense to pay a little bit at a time, do it slowly over time. And all 3 of those are enormous opportunities for us to grow.

I guess watching the rest of the country, it's -- the grid hardening's kind of become a no-brainer.

It's a must-have, right? No one -- anyone who's ever lived through a hurricane, grid hardening is a no-brainer, right? Are you willing to pay an extra $1 a month to have a hardened grid? I think we ran -- I don't know -- I think -- I don't want to quote the number because it's not at the top of my head. But you're going to do it -- you're not going to do it all at once because it would be a big rate shock. But over time, it's a no-brainer.

And then final one for me is just -- the one I always have to ask you is on M&A. So a year ago at this conference, there was a Wall Street Journal article as you walked in the door about NextEra potentially merging with Duke.

Yes, the alleged offer.

Yes, alleged offer. And that obviously did not happen. And -- but I'm sure folks are wondering what your thoughts are on M&A now and whether it makes sense.

Yes. So I think over the last year, I think I've been pretty consistent. Big M&A is hard to do. And honestly, one of the benefits of the alleged offer being written about was we got a lot of feedback from investors around how important they feel the renewable business is to the entire company, right, and don't dilute the franchise. And so that was great feedback, and I -- and we listen. My job is I work for our owners, right? Like that's my job. I work for our owners. And so I take that feedback. And the other piece is, when you look at it, it's hard to find -- it's a very tough mix to find someone who's willing to sell for a premium, who's -- because we're not great. We're never going to do an MOE. I'm not a great partner, right? I'll nip that. I want to run things the way I want to run them. And so you got to pay a control premium. People aren't typically willing to take reasonable control premiums to exit. You have customer benefits that you got to pass through. So that's hard. You've got to get state regulatory approval. Folks, if they don't want to sell, will always hide behind state regulatory approval. And so that's -- and then you look at -- there's -- I don't know, some giant percentage of the utilities in this country are -- would be a degradation to the quality of our regulated assets, right? And so that's always a -- do we like the regulated environment is always a very important driver for us, right? So when you do all that, we're focused on things that are $20 billion or less. We've done, over the last several years, we did Gulf. And we're also focused on things like, can you buy subsidiaries from people who need to sell or those kind of thing, right? We need to sell to raise equity. So we've done Gulf. We did Trans Bay. We did GridLiance. Those were all regulated deals. We've done 3. It's been -- cumulatively, it's about $8 billion of assets of deals that we've done over the last 3 years. And you know what, that's the kind of size that we're looking at right now. And I feel it will always be -- we'll always look because we have a great playbook and we can bring it to bear. But you got to -- it's very hard to find the right situation. And I will always, always be disciplined, always.

Got it. Great. So I have one question from someone this morning, which was the Ossoff provision in the Senate related to solar. And just assuming the likelihood that, that gets included and what would that potentially mean for...

So if you mean domestic content. And so right now, the domestic content provisions that are in the Senate finance bill are -- don't kick in until 2024. And they're only to qualify for direct pay. They're not qualified for full credit. And those same domestic content provisions are in the House Ways and Means bill as well. And again, it's to qualify for direct pay, not for the full credit. We have great access to tax equity, so either way, it's fine by us. And we're committed to bring more domestic content. As I said earlier, we're committed to bring more domestic content onshore, particularly in solar. Wind will get to 70%, 80%. Already wind, when you look at total project basis, it's probably 80% domestic content. Solar is probably a little less than that, but we have the -- we are working with our suppliers, encourage them to onshore. There may be some manufacturing tax credits to incent folks to bring things onshore, and we're supportive of those. And so we'll figure it out. We're working closely with everyone in both the House and the Senate on this piece, but very supportive of more made in America renewables.

Okay. So there's a few questions on batteries, but I guess I'll ask this one. I think it's -- kind of hits them. Can you extend the storage market share? Can you extend and speak to your battery leadership? Is it technology, scale, first mover advantage? And then someone also asking about how the accounting works. If you build storage for a peer, do you get royalties? Or how do the contracts work?

Yes, okay. So all of the competitive advantages we have in wind and solar are typically the same ones. So scale, we buy billions of dollars of batteries a year. Software, and so this is a little different. The ability to control and -- control systems and software to integrate these storage assets into the grid and enable our customers to get the maximum use of those storage assets, it's particularly for things like price arbitrage or those kind of things. We have very sophisticated software that come along with our projects. And that's a big competitive advantage for us. We've chosen not to sell that as a third party in the United States because we think it's a key part of our competitive advantage. So that's a key part. And I fully expect us to keep a 30% market share. We -- and plus all the sites, all the existing sites we have and all the interconnections we already have, due to new FERC rules, we can put grid -- we can put battery storage there. And with a stand-alone storage ITC, holy cow, wind, it opens up every wind site we have in the country to put battery storage in the site.

Which has got, obviously, the transmission there already...

Got the transmission there already. And the typical wind site is 35% or 40% capacity factor. And so there's lots of -- you firm it up with storage. And there's lots of real powerful combos that you can do from putting grid storage together. And so I'm really excited about our storage. On the contractual side, typically, it's dollar per month, dollar per kW month kind of hell or high water. Sometimes, when you have storage and solar together, you bake it into the solar price sometimes.

Okay. But the customer is the one that gets the value of the -- how they're using the batter. It's not like a sharing arrangement or anything like that?

Well, so there's some goofy accounting associated with who dispatches the battery, and you got to be careful that you do that right such that the utilities accounting is good and our accounting is good. So...

Got it, okay. Question here is, the likelihood of the House Democrat plan to allow renewable energy industry to form MLPs passes? And could this be an option for NEP over the long term?

I think there's some -- that was in the House bill. It's not in the Senate bill. And so that becomes 50-50 immediately, right? Does it get in the reconciliation of the reconciliation bill, right? It's easy when both sides have it in. It's harder when one or the other doesn't have it in. We've looked at it. It is -- NEP is a better structure than an MLP. And I mean, MLPs were set up to pass -- to be able to really -- I mean, there's a ton of institutional investors who can't own them because they're K-1s. And we structured NEP as a C-corp to allow institutional investors to be able to own it, not have a K-1. And we've looked at it, and we don't think it makes sense for NEP. But it's obviously an option if rules change over time, but we think NEP is a superior structure than that.

Yes. Big picture question on -- you talked about the grid, can decarbonized by 2035 or 2040. Is this -- do you see it as an economic inevitability? Or does it require government help or mandate?

I think the government help or mandates is all around the timing of it, not around the inevitability of it. So without any incentives, you would get there by 2040, 2045 because just the cost curve continued decrease.

Okay. And then someone is asking about the hydrogen PTC, if it passes, $3. What role do you see NEE playing in the hydrogen economy? Is it just owning the renewables? Do you own electrolyzers? Do you sell green hydrogen? What do you see as NEE's investments and role?

So as a minimum, we own the renewables, right? We are -- we have probably 30 or 40 pilots that we're looking at right now that are anywhere from $50 million to $300 million kind of projects that would be -- almost all of them need a hydrogen PTC to hum. And we would own the whole infrastructure and sell green hydrogen. So -- and we'll see. And if it's a long-term contracted business, we'll like it and we'll do it. And if it's a merchant business, we won't. And that's some of the stuff that is yet to shake out. And -- but I think to make those kind of investments, you're going to need long-term contracts to be able to finance this, right? So I feel like it's a good opportunity for us to own electrolyzers, pair them with renewables and bring a total solution to customers.

You said 30 to 40 pilots that you...

Yes. I just reviewed the pipeline yesterday and a lot of exciting stuff going on. We've announced a couple of MOUs that we signed. But fundamentally, very early on, we're having great conversations with customers. And we are -- our view of how the hydrogen economy plays out is you're going to have hydrogen terminals around the country. And you're going to -- and they're going to serve hydrogen needs within a 200- or 300-mile radius for those terminals. And we're putting -- we are off getting sites. It's cheap to get sites, right? We're building options very cheap options. And we've got a site in Jersey. We've got a site in Arizona, we got sites in Oklahoma and Texas we're putting together. And away we go. We see if it works, and it's a very cheap option for us to build over time.

Okay. Last question I'm going to ask from here is just, what do you expect electric -- do you expect electric vehicles to be material to the grid in the Florida territory?

Probably not.

A lot of air conditioning in Florida.

A lot of air conditioning though, and so it's a hair dryer and charge a -- so is it going to -- it adds like a 0.5 point or 1 point of growth. So it's not immaterial, but it's not -- doesn't take this -- it doesn't take the electric business in Florida from 1 percentage point to 5 percentage points of growth a year, right? And I think it's going to take a while to have EV penetration. You need to get the charging infrastructure put in place. You need to have more consumer choice on vehicles. They need to be on par with -- they can't all be $100,000, right? They need to be on par. And I mean the vehicle fleet in the U.S. changes over every 9 or 10 years. So it's going to be a long time before you get rid of every gas vehicle in the U.S. economy, right? So I think it's going to get accelerated if some of these EV credits get put in place. But those are honestly some of the places where if they need to find money, they'll probably find money there before they find money in -- because per dollar, you get more decarbonization from wind and solar credits than you do from -- or storage than you do from [ vehicles ].

Right. Well, I'm going to take the last question, if that's all right. Just hearing the story of the utility and the long runway of growth, the rate settlement and then the near -- kind of all these different growth runways and potentially the tax credit support. Just what does this mean overall to NEE? What is the financial benefits of all this?

Yes. Yes. So I think, first of all, we see growth as far as the eye can see at a very good rate. And we haven't said -- we're going to -- we will lay out probably in January. I mentioned that we run the business with a lot of cushion. We're going to probably lay out in January an extension of our guidance, and we'll be able to talk more about it then. But I feel -- I've never felt more bullish about the prospects for this company. And we have the best utility in the world, combined with the best decarbonization platform in the world. And we have great policy tailwinds and a terrific team and the best talent in the industry, too. And you combine all that, I'm very excited about our future.

Great. Thanks, Jim. We're going to get the poll answer before we wrap up, so that was a great wrap up. So let's get the poll answer, [ Brianna ]. Hopefully, we'll get the poll answer, hopefully. We might have lost the poll.

Hopefully, it's the right answer.

If we don't get it out, we'll send it over to everybody to get later on. Here it is. All right. Will the multiple expand, flatline or decline? So 41% say expand, 38% stay the same as the relative premium, 21% says decline. So we're on the expand but I'm sure you are, too, but we'll see. Thanks, everyone.

That's terrific.

Good to see you.

Thank you. Thanks, everyone.

Take care.