Full Interview with John Ketchum | POLITICO Energy Summit

Summary

In this engaging discussion, Matt Daly of Politico talks with John Ketchum, CEO of NextEra Energy, about the future of U.S. energy infrastructure. They explore the challenges posed by growing electricity demand due to electric vehicles, AI, and industrial expansion. Ketchum discusses NextEra's strategy, the increasing role of renewables, and the difficulties of relying on gas and nuclear energy for future power generation. They also touch on the economic implications, supply chain issues, and legislative challenges, particularly around energy credits and coal's diminishing role in U.S. power generation.

Takeaways

• 😀 The U.S. electricity demand is expected to surge in the coming years due to factors like electric vehicles, AI-driven data centers, and industrial growth.
• 😀 NextEra Energy, led by John Ketchum, is heavily involved in multiple energy sectors, including natural gas, wind, solar, battery storage, and nuclear power.
• 😀 An energy shortage is a real concern if energy policy doesn't adapt to the growing demand, with a projected six-fold increase in the growth rate for power over the next 20 years.
• 😀 While renewables are key to meeting energy demands, natural gas generation will face delays until 2032 due to supply chain issues and labor shortages.
• 😀 Nuclear energy has significant potential but faces challenges in terms of development timelines and high costs, with new reactors potentially not ready until the 2030s.
• 😀 High natural gas prices are expected due to rising global LNG demand and reduced associated gas production from oil drilling.
• 😀 The push to sunset certain incentives for wind and solar energy in the Inflation Reduction Act could complicate the growth of renewable energy in the U.S.
• 😀 A delay in the availability of gas-fired and nuclear generation may lead to power shortages and high energy costs, emphasizing the importance of renewables as a bridge solution.
• 😀 Battery storage is a growing part of the energy solution, with improvements allowing renewables to become more reliable and cheaper than gas-fired generation in many regions.
• 😀 U.S. energy companies are shifting to domestic supply chains for critical components, like batteries and turbines, to reduce reliance on foreign imports, particularly from China.
• 😀 Coal is increasingly seen as a nonviable energy source due to its high costs, and even if some coal plants remain online, they won't be able to meet the growing energy demands of the future.

Q & A

What is the primary challenge facing companies like NextEra Energy?

The primary challenge is managing the surge in electricity demand driven by factors like the rise of electric vehicles, growing demand for cooling, electrification, and the growing need for data centers driven by artificial intelligence.

How much is NextEra Energy planning to invest in American energy infrastructure over the next four years?

NextEra Energy is planning to invest $120 billion in American energy infrastructure over the next four years.

Why is gas-fired generation facing challenges in meeting demand?

Gas-fired generation is facing delays in getting new facilities online due to global demand for gas turbines, a shortage of skilled labor, and the rising cost of turbines, all leading to longer lead times, up to 2032.

What role does renewables play in the power sector, according to John Ketchum?

Renewables, such as wind and solar, play an essential role in filling the gap left by the delays in gas and nuclear power generation. They are seen as a critical bridge to meet growing demand before gas-fired generation and nuclear power come online.

What is the projected increase in electricity demand in the U.S. over the next 20 years?

Over the next 20 years, electricity demand in the U.S. is projected to increase six-fold, driven by factors such as industrial expansion, AI growth, and increased residential and commercial electricity consumption.

How does the shortage of skilled labor impact the construction of new gas-fired generation facilities?

The shortage of skilled labor means that for every thousand workers needed to build a gas-fired generation facility, contractors have to hire around 6,000 workers due to a high turnover rate, contributing to delays and increasing costs.

Why is nuclear power not seen as a quick solution to meet growing demand?

Nuclear power is not seen as a quick solution because it requires significant time and investment to develop. Small modular reactors, for example, are not expected to be operational until at least 2035, and the cost of building them is very high.

What is the risk of not having sufficient power generation capacity in the U.S.?

If the U.S. fails to meet the increasing demand for electricity, there could be power shortages, leading to blackouts and a loss in competitive advantage in industries like AI and data centers, ultimately stalling economic growth.

How is the global demand for LNG affecting natural gas prices in the U.S.?

The rising demand for LNG (liquefied natural gas) globally is putting upward pressure on natural gas prices in the U.S., and at the same time, the decline in oil prices is reducing the availability of associated gas, further driving up natural gas prices.

What challenges does the energy industry face due to foreign entity concerns in the House version of the reconciliation bill?

The provisions in the House bill around foreign entity concerns are problematic because they impose strict requirements on supply chains, potentially disqualifying companies from tax credits if even a small part of the supply chain involves Chinese components or investment, making compliance very difficult.

What impact does the growing battery storage technology have on the energy sector?

Battery storage technology, especially in the form of 4-hour batteries, has become a critical component in making renewables like wind and solar more reliable, providing energy during evening hours when the sun isn’t shining, and displacing more expensive gas-fired power generation.

What is NextEra Energy's stance on coal as a power generation resource?

NextEra Energy believes coal is no longer a viable solution due to its high cost and environmental impact. Even with executive orders to extend the life of coal plants, the overall contribution of coal to the power generation mix is minimal compared to the need for other sources like renewables.