NextEra Energy CEO: Powering AI, Nuclear's Comeback and a Historic Utility Merger

John Ketchum · NextEra Energy

US power demand has jumped from stagnant to a projected sixfold increase by the mid-2040s, driven by AI.

Two to three years ago NextEra was still anticipating stagnant demand. About twenty-four months ago, as AI adoption by customers and data-centre/hyperscaler capex surged, the projection jumped to a six-fold increase by the mid-2040s. Ketchum says the growth is not only from data centres: trade policy is redomesticating manufacturing, which adds load from LNG terminals, chip fabs and transportation, and homes are using more electricity too. He notes the sharpest recent change came from AI. A broad global recession that cut AI spending would be the main thing that could make the demand picture badly wrong.

“the demand really exploded overnight and went to a projection of six fold increase by the mid 2040s.”at 9:58

John Ketchum · NextEra Energy

Data centres need 24/7 baseload that storage cannot yet provide, so gas-fired generation is the near-term answer.

Data centres, and the AI training models they run, need round-the-clock generation. Battery storage has improved, and NextEra has four-hour storage that it could stack to around eight hours alongside solar, but that is not enough for 24/7 baseload. Baseload today comes from gas-fired generation, and nuclear could potentially supply it someday. Ketchum says gas is not just roughly twice as expensive as solar, but two to three times more expensive than building a solar facility. Gas is still what the market demands today, which is why NextEra pivoted back to it.

“you need to have that twenty four hour generation capability, which requires more base load. And that base load's coming from gas fired generation”at 13:37

John Ketchum · NextEra Energy

Data centres must pay their full generation and transmission costs, so hyperscalers bring their own power and protect ratepayers.

Ketchum argues that data centres have to pay their own generation and transmission costs. Hyperscalers, including the ones NextEra works with, have signed a ratepayer protection pledge to bring their own generation matched to their data centres. Hyperscalers are sensitive to taking electrons off the grid because that can drive up prices for retail customers. Regulators are moving the same way: FERC is analysing models for PJM, MISO and SPP that all rest on the principle that data centres pay for the power they need. Florida has codified one of the most protective large-load tariffs, and other states are following. Dominion has also signed the pledge.

“data centers have to pay their fair share. They have to pay their own costs for generation and transmission, full stop”at 19:58

John Ketchum · NextEra Energy

NextEra will stay out of owning data centers, selling land and supplying power while hyperscalers build and own the facilities.

NextEra bought a couple of smaller data centres about three years ago to learn the business model, then decided to leave ownership to others. Footprints, technology specifications, chip refresh needs and customer types differ across data centre customers. Hyperscalers want to own and control their own data centres for security, cybersecurity and control over their chips. NextEra's approach is to buy land for both the generation plant and the data centre, sell the data-centre land to a hyperscaler, have generation ready to interconnect, and focus on building wind, solar, storage, gas, nuclear, transmission, distribution and pipelines. Ketchum argues this earns more opportunity than insisting on owning both, which would cannibalise demand.

“we think we can get more opportunities out of building the power generation while letting the [hyper]scalers build their data centers, rather than cannibalizing demand by insisting on building both.”at 12:32

John Ketchum · NextEra Energy

Data-centre community backlash is being addressed by responsible hyperscalers with closed-loop cooling, taxes and community giving.

Ketchum sees the backlash as twofold: community relations, and uncertainty about what AI means for jobs. On community relations, he says the industry is trying to improve its image and that the hyperscalers NextEra works with are responsible developers. They use closed-loop cooling, draw water from treatment facilities rather than local supply, pay property taxes, observe noise and setback rules, and give back locally. He cites Louisiana examples such as a $50,000 scholarship to teachers and support for first responders, and says this messaging matters.

“the industry is really trying to improve its image and its approach to communities. And so the hyperscalers that we work with are really responsible developers.”at 16:16

John Ketchum · NextEra Energy

AI has added work at NextEra rather than causing layoffs, letting staff work faster and pursue more opportunities.

Ketchum addresses public uncertainty about what AI models will mean for jobs with NextEra's own experience. The company implemented AI and it has created more work for its people. It has not led to layoffs. Instead it has let the company work faster, uncover better opportunities and execute more business than before. This is a concrete example from inside a large utility rather than a forecast about the wider economy.

“we have implemented artificial intelligence. It's actually created more work for our people. You know, it hasn't resulted in layoffs.”at 17:27

John Ketchum · NextEra Energy

The US cannot afford to lose the AI race to China or India, since falling behind would cost jobs and economic leadership.

Ketchum argues AI is something the US cannot afford to lose. If the US chose not to invest, China, India and other economies investing heavily would double down and shift their economies around AI. They would gain economic opportunities and lead in industries where the US would fall behind, which would reduce US employment because the economy would suffer from not keeping pace with technology. He says the US has prospered as a global leader because it has been a technology leader, and giving that up would have a substantial impact.

“when I look at AI, this is something we can't afford to lose in, right? ... The US has always been able to prosper and be a global leader because we've been a technology leader.”at 18:03

John Ketchum · NextEra Energy

Small modular reactors are unlikely to reach nth-of-a-kind economics before the middle of the next decade.

There are around 96 SMR makers. NextEra has narrowed this to three or four it considers viable, focusing on Gen 3 over Gen 4 because Gen 4 carries both technology risk and nuclear fuel risk. Getting past first-of-a-kind requires someone to take the last-dollar risk. NextEra will not put that on customers or on shareholders for a technology that has never worked before. The hyperscaler, the EPC contractor and the OEM should share risk, but OEMs are often undercapitalised. The federal government will need to backstop first-of-a-kind costs. Given that, Ketchum thinks the timeline runs to the middle of the next decade or later.

“But I still think you're looking at the middle of the next decade to later before you get to that point.”at 25:15