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NextEra Energy Partners (NEP) Sells Monument Gas Pipeline

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NextEra Energy Partners, LP (NEP - Free Report) announced that it has completed the sale of its 156-mile Monument Pipeline, LP — a 16-inch natural gas pipeline in Texas — to ARM Monument Intermediate Holdings, LLC for $203 million. NEP intends to utilize the net proceeds from the deal to acquire higher-yielding renewable assets.

NextEra Energy Partners continues to take advantage of the clean energy transformation and offers a best-in-class investor value proposition with prospects that remain as strong as ever.

Clean Energy Goal

NextEra Energy Partners has plans to expand the existing operations through organic growth and selective acquisitions, which are in sync with the current renewable energy portfolio. In 2021, the firm acquired interests in more than 1,850 megawatts (MW) of long-term contracted renewables and storage from Energy Resources and 500 MW of operating wind assets from third parties.

The sale of Monument Pipeline will provide funds to the firm to acquire new assets and further expand its renewable portfolio. Courtesy of stable performance from renewable assets, the firm expects 2022 adjusted EBITDA and cash available for distribution in the range of $1.775-$1.975 billion and $675-$765 million, respectively.

NextEra Energy Partners enjoys the benefits of government incentives, declining installation costs and improving technology, which will help the company further develop its renewable generation and achieve more policy incentives. The renewable assets owned by NextEra Energy Partners are predominantly wind assets. The firm currently has 5,317 MW of wind assets in the renewable portfolio.

Renewable Energy to Dominate

Per the U.S. Energy Information Administration (EIA) report, the share of U.S. power generation from renewables will increase from 21% in 2021 to 44% in 2050. This increase in renewable energy is mainly attributed to new wind and solar power.

EIA expects total solar and wind generation of 32 GW and 29 GW to be added in 2022 and 2023, respectively. The expansion of renewable energy continues to eat into the share of coal in electricity generation, and EIA expects coal’s contribution to electricity generation to fall from 23% in 2021 to 22% in 2022 and 21% in 2023.

Road Toward Net-Zero Emissions

The transition in the utility space is evident, as utilities are chalking out plans to add cleaner sources of energy in the generation portfolio and reduce emissions from the generation process. Many utilities have decided to become emission neutral in the long run through systematic reduction of emissions and the addition of clean energy projects.

Utilities like Avista Corporation (AVA - Free Report) , Xcel Energy (XEL - Free Report) , and DTE Energy (DTE - Free Report) , among others, have announced plans to go carbon neutral and have taken initiatives to lower emissions.

The long-term (three to five years) earnings growth of Avista, Xcel Energy, and DTE Energy is currently projected at 6.6%, 6.4%, and 6%, respectively.

Avista, Xcel Energy, and DTE Energy reported average earnings surprise of 36.7%, 2.1% and 9.2%, respectively, in the last four quarters.

Price Performance

In the past three months, units of the firm have gained 7.2% compared with the industry’s 15.8% rally.

Zacks Investment Research
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Zacks Rank

NextEra Energy Partners currently has a Zacks Rank #3 (Hold).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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