With risk mechanisms locked in and a strong supply chain in place, including with U.S.-based suppliers, the head of utility and renewable energy giant NextEra Energy doesn’t expect tariffs imposed by the Trump administration to have much of an impact on the business.

The company’s suppliers take most of the risk in some contracts and all of the risks in others, according to NextEra Energy CEO John Ketchum.

“Suppliers don’t want to disappoint. … They’re looking at this as a long game for their business. Second, the way our contracts are set up with our credit protections in the agreement, there’s very strong incentive to follow through on those commitments,” Ketchum told analysts on the company’s quarterly earnings call April 23. He added, “The U.S. still remains an extremely attractive market to suppliers across the globe being that they have a lot of margin when they deliver into the U.S. and when we put those three things together, I lose no sleep over whether or not our suppliers will follow through on their commitments and deliver into the U.S.”

Ketchum put the company’s renewable energy unit NextEra Energy Resources’ exposure to tariffs at less than $150 million through 2028 on more than $75 billion in expected capex.

“That’s less than 0.2% of potential impact to our capital spend before exercising contractual trade measure protections in our contracts with customers,” Ketchum said. “Size and scale matter more than ever in today’s environment.”

U.S. President Donald Trump’s trade war involving tariffs has brought angst for energy markets, among others. The potential for higher costs along supply chains could slow the pace of development for energy projects as demand for electricity rises. However, some U.S. manufacturers are working to add capacity with construction or expansion projects underway.

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“We have the ability to shift tariff risk to suppliers and supply contracts. … We also have trade measure protection revisions in our customer contracts,” Ketchum said. “So, we believe we got a really good shot at working with our customers to take that $150 million exposure down significantly, and perhaps even down to zero if we use the track record we had around circumvention. … These are rights that we already have embedded in our agreements.”

Trump’s moves have included tariffs on aluminum and steel along with a universal 10% tariff on all goods.

Ketchum added NextEra does not have battery exposure. “We entered into a domestic contract,” he said. “We have actually a real opportunity rather than a risk around batteries.”

Gas turbines have been hit by tariffs though. NextEra put the cost for a gas-fired combined cycle unit at $2,400/kW at its Development Day, but Ketchum said April 23 it is probably closer to $2,600 to $2,800 when factoring in tariffs. “Gas turbines have actually been hit harder than I think solar or wind or storage in that regard.”

The costs to build a gas plant has more than tripled in the last few years and gas turbines face a multiyear backlog.

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Competitive edge

From an IRR perspective, an analyst wanted to know whether NextEra’s tariff protections give the company a competitive edge capable of boosting returns in a post-tariff environment.

Ketchum said he sees the situation as a huge opportunity.

“We compete, again, against a lot of small developers and they don’t have the buying power or the leverage in contracts to be able to shift risks like we can,” Ketchum said. “We started looking at this three years ago. We didn’t just wake up on Nov. 6 and say ‘Oh my god. What do we do about our supply chain?’ We’ve been thinking about this for years. So, we put the right things in place.”

He recalled lessons learned about three years ago during circumvention when U.S. investigations took place into allegations that solar panels were being imported from Cambodia, Malaysia, Thailand and Vietnam to avoid U.S. tariffs on Chinese solar panels. China continues to dominate the supply chain, flooding the market with cheap panels and putting domestic manufacturers—still working to build capacity as demand grows—at a disadvantage.

NextEra, like other companies that rely on inexpensive solar panels for its projects, was impacted and began to further diversify its supply chain.

“What happened in circumvention is a lot of small developers blew themselves up, couldn’t satisfy their commitments with their customers, and a lot a demand came our way,” Ketchum said. “That’s my point around opportunity. Given the position that we’re in around tariffs, I expect a lot opportunity to come our way as small developers just aren’t in the position we are. They’re trying to absorb significant amount of risk, particularly those that have entered into contracts, because they probably are buying from Chinese manufacturers and don’t have domestic contracts.”

Just this week, the U.S. Commerce Department finalized tariffs on most solar cells from the Southeast Asian countries. The antidumping duty and countervailing duty investigations of crystalline photovoltaic cells found that Cambodia, Malaysia, Thailand and Vietnam were receiving subsidies from the Government of China. Though the duties vary based on company and country, the proposed duties range from 34.41% for Malaysia to 651.85% for Cambodia.

“For perspective, we’ve dramatically diversified where we source our solar panels. As a result, we don’t source solar panels from countries impacted by the anti-dumping and countervailing duty tariff rates announced earlier this week,” said Ketchum. “Plus, we source our wind turbines from the U.S. with manufacturing in Florida. And because of our buying power, we have been able to significantly shift tariff risk to suppliers.”

Growing backlog

NextEra Energy Resources continued to grow its renewables and storage backlog, adding approximately 3.2 gigawatts (GW) during first-quarter 2025. The addition lifted its total backlog to about 28 GW.

The addition came amid forecast of higher power consumption driven by more electrification, data centers and manufacturing.

NextEra anticipates more than 450 GW of cumulative demand for new generation between now and 2030 in the U.S. It believes renewables and battery storage are capable of meeting the demand.

“We can build these projects and get new electrons on the grid in 12 to 18 months. We should be thinking about renewables and battery storage as a critical bridge to when other technology is ready at scale, like new gas-fired plants,” Ketchum said. “We expect 75 gigawatts of new gas to come online between now and 2030. That is significant, for sure, but nowhere close to meeting the over 450 gigawatts of total generation we believe are needed.”

NextEra posted a first-quarter 2025 profit of $2.038 billion, or $0.99 per share, compared to $1.873 billion, or $0.91 per share, in the first quarter of 2024.

The renewables unit, NextEra Energy Resources, reported earnings on an adjusted basis of $908 million for the first quarter, compared to $828 million a year earlier.