Porter’s Five Forces Analysis of NextEra Energy
|Name||NextEra Energy, Inc.|
|Industry||Electric and Gas Utilities|
|Headquarters||Juno Beach, Florida,United States|
|CEOs||James L. Robo|
|Revenues||US $17.069 billion, FY 2021
US $ 20.956 billion, FY 2022
|Profit||US $ 3.573 billion, FY 2021
US $ 4.147 billion , FY 2022
|Year end||31st December|
|Competitors||Dominion Energy, American Electric Power, Duke Energy, Sempra, National Grid, Exelon|
The NextEra Energy is one of the leading companies in North Americanand it is on number 5th by generating electric utility revenues in U.S. with 37th in a global ranking amongst the Top 100 energy & environment by Statista .The Company is operating via three subsidiaries including Florida Power & Light (FPL),NextEra Energy Resources (NEER) and Gulf Power. NextEra deals in Natural Gas, Nuclear, Universal Solar and Battery via FPL. The Company was founded in 1925 as Florida Power and Light Company.The company has total assets of US$ 158.9 as of December 31st 2022.
The Company ranked 215th by Fortune 500 and 256th by the Forbes Global 2000 list, in 2022.
Porter’s Five Forces Analysis
Porter’s Five Forces Analysis of NextEra Energy is used to determine the company’s competitive position reference to it’s Industry for better strategizing the companies’ operations for higher profits and less competition.
NextEra Energy Competitive Rivalry within the Industry
- NextEra Energy Business Segments – Revenues Analysis:
The company has two principal businesses Florida Power & Light Company (FPL) and NextEra Energy Resources (NEER).
Operating Revenue StreamsFY 2021- FY 2022: the FPL’s operating revenue generation streams are as follows approximately Residential with 55%, Commercial with 32%, Wholesale with 3% and Other with 10% respectively in FY 2021 declared in the Annual Report.
Operating Revenue Streams the FPL’s operating revenue generation streams are as follows approximately Residential with 54%, Commercial with 32%, Wholesale with 4% and Other with 10% respectively in FY 2022 declared in the Annual Report
Power Generation Streams: In 2022 FPL generated approximately 76% of power through natural gas, 10% through solar and 11% from Nuclear energy and 2% from Other approximately mentioned in their Annual Report.
Revenues Analysis FY 2022-2021 -2020: The Company experienced a revenue growth of 23% from US$ 17.06 in FY 2021 to US$ 20.95 billion FY 2022 which is after COVID-recovery period. While the company generated revenues of 17.9 billion in FY 2020.
In 2021, capacity of the company’s owned renewable energy exceeded 23 gigawatts. The company entered into an agreement of power generation through renewable energy exceeding 8,000 megawatts, in 2021.
FPL has 9700 employees in Year 2021.
- Duke Energy Corporation:The Duke Energy generated an annual revenue of US $25.097 billion and a net profit of US $ 3.802 billion, respectively, in 2021 and gave stiff competition to the NextEra Company.
The company’s production site in Carolina and Ohio made a sale of electricity of 87.8 terawatt hours and 24.1 terawatt hours, respectively, in 2021.
As per Statista the company’s brand value in 2021, was US $ 3.5 billion. The company provides service to consumer base of approximately 8.2 million in the United States.
Total assets and market value were US $ 169.587 billion and US $ 87.98 billion, respectively of the company in 2021.
The Company possess 175th position in the Forbes Global 2000 list, in 2022.Duke Energy ranked on 21stin a global ranking amongst the Top 100 energy & environment by Statista
In 2021, the company had a total staff of 27,605 people.
- National Grid: The National Grid generated an annual revenue and a net profit of £ 18.449 and £2.354 billion in the year ended March 2022. During the period of 2013 to 2018 the company managed to increase its share capital from £433 million to £452 million.
Total assets and market value were £94.86 billion and US $ 54.88 billion, respectively of the company, in 2022.
Sales of business segment of company in New York were£5.56 billion, while sales of business segment of the UK Electricity were approximately, £2 billion, in 2022. The company delivers gas to approximately 11 million individual and entities in the UK and US.
In 2022, the company had a total staff of approximately 28,000 people
The National Grid ranked on 32nd in a global ranking amongst the Top 100 energy & environment by Statista.The Company ranked on 277th position the Forbes Global 2000 list, in 2022
NextEra Energy Threat of New Entrants
- Global Electricity Generation Industry:It is estimated that generation of electricity will increase by 70% in next three decades and will reach about 42,000 terawatt-hours till 2050. Also in the middle of 2020 and 2050 production of electricity from renewable sources will be three fold.
- Technological Investment for Diversion and Leadership : Approximately US $ 16.1 billion was the amount invested by the company in terms of capital investment for the purpose of purchase of fuel including Independent power purchases (IPP) in 2021, which was 10% more of the amount spent in 2020. FPL generates energy through solar, gas and nuclear power.
NextEra Energy Bargaining Power of Suppliers
- Collaboration with Suppliers Market Leadership and Influencing Position: The Company is dedicated toprovide support to local suppliers. The company spent amount exceeding US $ 1.56 billion with Florida based supplies in order to maintain supplier collaborations.
- Code of Conduct and Environment Protective Policies: The Company designs and ensures policies related to Ethical Code of Conduct, Environmental Protection and Sustainability, Anti-Bribery and Corruption Policies in sourcing from suppliers.
- Supplier Diversity and Inclusion: For Inclusion women, small business, veteran NextEra spent US$ 633 million in Year 2020 in contracts with the following distribution US$ 113 million for small disadvantage business, US$ 160 million women-owned business ,US$ 357 million to minority owned business and US$ 29 million to veteran owned business. NextEra is also founding member of Florida State Minority Supplier Development Council.
NextEra Energy Bargaining Power of Buyers
- Increasing Amount of Buyers:There are two types of consumers, individuals and corporate with Customer Accounts 89% residential and 11% are commercial in FY 2021 and FY 2022.FPL provides its services to customers amounting to 5.6 million, including 11million occupants of Florida.The return on equity was 10.60% in FY 2021
- Satisfaction of Customers:Fulfilment of customer requirements and continuously innovating is necessary to not only retain but also increase the market share. The NextEra ranked on number 3rd as per Investor-owned energy utilities with the highest customer satisfaction score in the United States as of 2022 with a score of 72-75/100.While the company ranked on first is CenterPoint Company with a score 78-75/100 as of Year 2022 declared by Statista. While Sempra scored 73/100 and Duke Energy scored 72/100 in the same survey.
NextEra Energy Threat of Substitute Products or Services
- Governmental Policies ,Regulations and Taxes : As FPL is Florida’s biggest rate regulated energy company and providing and serving more than 12 million people with approximately 5.8 million customer accounts in 12 counties of Florida it is highly subjective towards governmental policies, regulations and taxes. Any changes in governmental policies will be affecting NextEra’s strategic and operational directions.
- Global Warming and Alternative Energy Solutions:The different types of substitutes within the industry include biomass, solar, wind etc. However; since the company uses different alternative sources, for production of electricity, there is a very low threat for substitutes.
- NextEra Energy – statistics &facts(Feb 8, 2023)| Available at Statista
- NextEra Energy Fortune 500
- Forbes Global 2000 Year 2022.Available at Forbes Global 2000
- Basic Information of NextEra| Available at Forbes
- Electricity sales of Duke Energy in 2021, by regulated utility(Jan 25, 2023)| Available at Statista
- Brand value of Duke Energy from 2020 to 2022(Jan 6, 2023)| Available at Statista
- Number of retail electricity customers of Duke Energy from FY 2015 to FY 2021(Jan 25, 2023)| Available at Statista
- Number of employees at Duke Energy from FY 2014 to FY 2021(Feb 8, 2023) | Available at Statista
- Operating revenue of Duke Energy from FY 2006 to FY 2021(Jan 17, 2023) | Available at Statista
- Net income of Duke Energy from FY 2008 to FY 2021(Feb 8, 2023) | Available at Statista
- Duke Energy – statistics &facts(Feb 8, 2023) | Available at Statista
- Share capital of National Grid Plc for years from 2013 to 2018(Dec 19, 2022)| Available at Statista
- Adjusted earnings per share of National Grid Plc from FY 2013 to FY 2022(Jan 25, 2023)| Available at Statista
- Sales to third parties of National Grid Plc in FY 2022, by segment(Jan 25, 2023)| Available at Statista
- Annual revenue of National Grid Plc from FY 2016 to FY 2022(Jan 25, 2023)| Available at Statista
- Regulated asset value of National Grid Plc from FY 2012 to FY 2022(Jan 25, 2023)| Available at Statista
- Projected electricity generation worldwide in 2020 with a forecast to 2050, by energy source(Jan 24, 2023)| Available at Statista
- Our Supply Chain| Available at NextEra Energy
- Forbes Global 2000 List 2022| Available at Forbes
- Total assets of NextEra Energy from FY 2011 to FY 2021(Jan 25, 2023)| Available at Statista
- Capital expenditure of NextEra Energy from FY 2015 to FY 2021(Jan 25, 2023)| Available at Statista
- Installed renewable power capacity of NextEra Energy from 2005 to 2021(Jan 25, 2023)| Available at Statista
- Net income of NextEra Energy from FY 2011 to FY 2021(Jan 25, 2023)| Available at Statista
- Operating revenue of NextEra Energy from financial year 2006 to 2021(Jan 24, 2023) | Available at Statista
- Total assets of NextEra Energy from FY 2011 to FY 2021(Jan 25, 2023)| Available at Statista
- Statista (January 25, 2023) ,Distribution of electricity generation of Florida Power and Light in FY 2021,by fuel type. Available at Statista
- Statista, Top 100 energy & environment companies .Available at Statista
- NextEra Energy-statistics & facts. Available at Statista
- NextEra Energy, Our History
- Statista (January 25, 2023) Number of employees of Florida Power and Light from FY 2015 to FY 2021 (in 1,000s).Available at Statista
- Statista,(January 25,2023) Number of Employees of Florida Power and Light from FY 2015 and FY 2021 (in 1,000).Available at Statista
- NextEra Supply Chain. Available at NextEra
- Statista,(January 31,2023) Energy & Environment –Energy, Investor-owned energy utilities with the highest customer satisfaction score in the United States as of 2022.Available at Statista