Southeast Asian nations have played a critical role in helping solar project costs remain low for Americans for years. In 2023, the four main countries targeted by the latest round of U.S. tariffs exported almost $12 billion worth of solar modules to the United States.

Exhibit 1: Import statistics

Source: International Trade Administration

Newly announced tariffs are likely to make it more expensive for Americans to access solar power. However, NextEra Energy is in a unique position to show resilience from these tariffs compared to many of its peers that are heavily reliant on solar modules imported from Southeast Asia.

First, NextEra Energy has commendably managed its supply chain efficiently in the last few years, reducing its reliance on Southeast Asia. For example, the company is currently sourcing wind turbines domestically, which includes manufacturing required components in its plants in Florida. The company also has ties with tariff-unaffected nations such as India. Strategic diversification of the supply chain to gain exposure to U.S. allies has made it possible for NextEra to weather the tariff storm better than most of its peers.

Second, NextEra is often the largest customer of many of its suppliers, which creates wiggle room for the company to negotiate deals with suppliers to pass on any tariff impact to them. Suppliers have little bargaining power with NextEra because of its scale, which is likely to come to the rescue in the next few months.

Third, NextEra has already secured contracts with domestic suppliers to meet the majority of its backlog for its battery storage business, leaving little exposure to tariffs.

Commenting on the overall tariff exposure of the company during the first-quarter earnings call a couple of weeks ago, NextEra CEO John Ketchum revealed that the overall tariff exposure of the company through 2028 is just $150 million compared to total capital expenditures planned through 2028 of $75 billion. In a nutshell, only 0.2% of the company’s capex budget is exposed to new tariffs. Encouragingly, CEO Ketchum is confident of NextEra’s ability to shield itself from this exposure through renegotiated contracts.

We think that we’re looking at around $150 million of exposure on tariffs. That is based on the contractual protections we have in our existing contracts with suppliers and the discussions that we have had with them since Liberation Day on April 2. So that’s the first piece. So that works you down to $150 million. Then the point we were making in the prepared remarks is that not only do we have the ability to shift tariff risk to suppliers and supply contracts, which I just covered, we also have trade measure protection provisions in our customer contracts. 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.

Going by the CEO’s above remarks and the strengths highlighted earlier in this segment, investor fears over new tariffs seem overblown.

Tariff threats aside, the next step is to evaluate the long-term industry outlook for NextEra Energy.

After a period of lackluster demand growth, the U.S. has entered a new era in which the demand for electricity is expected to grow at a healthy rate. According to Deloitte, the electricity demand in the U.S. will increase by 10% to 17% between 2024 and 2030, marking a notable improvement from stable demand over the past five years. The main reasons behind these rosy projections include the growing electricity consumption by data centers and the exponential growth in EVs. According to Deolitte, data center demand alone will lead to around 11 GW of incremental electricity demand by 2030. In addition to this, the expected boost in domestic manufacturing will also drive electricity demand higher in the coming years.

With electricity demand predicted to see historically high growth in the next five years, NextEra’s utility arm, Florida Power, is well-positioned to thrive. To capture a sizeable share of the growing electricity demand, FPL is planning to invest approximately $50 billion through 2029 and add more than 25 GW of new capacity by 2034. These ambitious goals align well with the projected growth in electricity demand.

Another tailwind helping NextEra is the expected growth in renewable energy consumption. Although the Trump administration may initially focus on fossil fuel growth, the long-term outlook for renewable energy adoption remains strong. According to the International Energy Administration’s ambitious plans which aim to achieve 100% clean electricity by 2035, wind and solar energy projects are expected to account for around 70% of energy generation. This equates to approximately 2 TW of capacity. As the global leader in wind and solar power generation, NextEra Energy Resources is well-positioned to benefit from this projected growth.

NextEra will also benefit from its battery storage facilities. To meet renewable energy goals, high-quality energy storage solutions are necessary. Identifying this need, NextEra has aggressively expanded into battery storage, which has enabled the company to be recognized as a 360-degree renewable energy solutions provider.

NextEra Energy is currently valued at a forward P/E of 18.28 in comparison to its five-year average of 24.33, which implies the company is cheaply valued from a historical valuation perspective. At the current market price, the dividend yield is also attractive at just over 3.4%. Interestingly, the company is expected to return to growth this year after registering a 12% YoY revenue decline in 2024. According to analyst projections, revenue will grow almost 16% this year, followed by 8.3% in 2026 and 11.6% in 2027. Earnings are also expected to grow at high-single-digit rates through 2029. These estimates seem rational given the strong growth expectations for electricity demand in the U.S. and the steady growth in renewable energy usage.

Despite the market pessimism toward renewable energy stocks following President Trump’s victory last November, some investing gurus are betting on NextEra Energy. Some of the institutional investors that added to their long position in NextEra leading up to 2025 include Blackstone Group, T. Rowe Price, and D. E. Shaw. However, there are other gurus who have reduced their exposure to NextEra in recent times, including Mario Gabelli (Trades, Portfolio), Ken Fisher (Trades, Portfolio), Joel Greenblatt (Trades, Portfolio), and Robert Bruce (Trades, Portfolio).

According to GuruFocus data, NextEra has seen more guru sells than buys in recent times.

Source: GuruFocus

NextEra Energy stock has performed poorly this year due to concerns hanging over the sustainability of the renewable industry’s growth under President Trump’s administration. Although short-term challenges persist, a closer evaluation of newly announced tariffs reveals NextEra is unlikely to be hurt. The long-term outlook for FPL is promising with several tailwinds driving the demand for electricity in the United States, and NEER will benefit from the momentum behind renewable energy. Valued reasonably along with a dividend yield of 3.4%, NextEra Energy seems an attractive bet on the global energy transition.

This article first appeared on GuruFocus.