By Brian Eckhouse and David R. Baker
Shares of NextEra Energy Partners gained as much as 1.7% Monday.
NextEra Energy Partners expects the deal to yield a double-digit return. Plus, the pipeline will help balance any “potential resource volatility” in the company’s existing portfolio, Jim Robo, chairman and chief executive officer, said in the statement.
“Listen, when we did the original IPO, now I guess more than 5 years ago, we said the focus was going to be on clean-energy assets — and I view gas pipelines as clean energy,” Robo said on a call with analysts. “Gas is an important bridge to a low- or zero-carbon future, 30 years out.”
While gas-fired generators emit fewer emissions than coal plants, environmentalists and local governments are increasingly pushing to phase out fossil fuels altogether as part of their efforts to fight climate change. In July, Berkeley, California, became the first U.S. city to ban natural gas from most new buildings. Its Bay Area neighbor, San Jose, followed suit with a ban on gas in most residential buildings. Other cities — including San Francisco and Seattle — are considering the move.
Even NextEra Energy Partners’s parent company — which Robo also runs — is pushing to cut greenhouse gases, saying it will reduce its carbon dioxide emissions 40% by 2025, while doubling electricity production. The company, NextEra Energy Inc., is already the biggest U.S. wind and solar owner.
Meade owns a roughly 40% interest in the Central Penn Line, a 185-mile (298-kilometer) interstate pipeline that connects the Marcellus Shale basin in Pennsylvania to the mid-Atlantic and Southeast. The deal is expected to close within the next 60 days, and it includes a $90 million expansion project expected to be completed in mid-2022. The Marcellus is the biggest source of U.S. natural gas.
NextEra’s existing seven gas pipelines include the NET Mexico system, which carries U.S. shale gas south of the border.
“Those types of assets, combined with renewables, give you a very solid base,” Robo said on the call.