I’m Zack Fuss and today we’re breaking down NextEra Energy. NextEra is America’s most valuable energy firm and consists primarily of two businesses; a high-quality regulated utility and a renewables business that is the world’s largest generator of wind and solar energy. To help break down the business, I’m joined by Mark Tomasovic, an investor at Energize VC. In our conversation, we discuss the structure of the energy market, what’s changed in the renewables space over the past twenty years, and how NextEra takes advantage of its cost of capital advantage. Please enjoy this breakdown of NextEra Energy.   For the full show notes, transcript, and links to the best content to learn more, check out the episode page here.   -----   This episode is brought to you by Brex. Brex began as the first corporate card for startups and now offers a full financial stack built for scale. Get 10-20x higher credit limits, uncapped rewards, easy deposits and payments, and expense management all in one. Grow your business faster with Brex.   -----   This episode is brought to you by MITIMCo. As the endowment office of MIT, MITIMCo searches for investment firms that are focused on achieving exceptional long-term investment returns. MITIMCo's goal is to create long-term relationships. They will partner with firms as early as Day 1 and do not ask for general partner economics in return. Visit MITIMCo’s website to learn more about their unconventional emerging manager approach, including examples of managers they have backed. While they only partner with a handful of new firms each year, they have also created and published resources for the broader universe of emerging managers to benefit from, making them even more unusual in the LP world. Visit www.mitimco.org to learn more.   -----   Business Breakdowns is a property of Colossus, LLC. For more episodes of Business Breakdowns, visit joincolossus.com/episodes.   Stay up to date on all our podcasts by signing up to Colossus Weekly, our quick dive every Sunday highlighting the top business and investing concepts from our podcasts and the best of what we read that week. Sign up here.   Follow us on Twitter: @JoinColossus | @patrick_oshag | @jspujji | @zbfuss   Show Notes [00:03:16] - [First question] - Mark’s background and how he thinks about the energy markets  [00:03:46] - A broad overview of the electricity market and how it’s structured [00:05:22] - The value chain and production line of energy from facility to customer [00:06:59] - What informs how much an energy company is allowed to earn [00:09:16] - Unregulated versus regulated markets and the risks and benefits of both [00:11:29] - How the retail electric market looks today and alternative production methods [00:12:40] - NextEra’s business fundamentals and their current scope and scale [00:14:45] - The two business arms of NextEra [00:16:00] - Inputs and costs of the low cost regulated utility side of NextEra [00:18:33] - NEER being the world’s largest generator of wind and solar [00:19:43] - How they’re able to get contracts and how they work  [00:20:03] - Comparison of revenue generated between their different branches [00:21:26] - How the regulated and unregulated arms work together for NextEra vs its competitors [00:22:30] - What their most important benchmark is and thoughts on gross margin and profits  [00:24:33] - Natural cost of capital advantage given the growing focus on ESG  [00:25:33] - How COVID impacted the energy space, specifically in electricity  [00:28:20] - Conventional energy production becoming more expensive in the near future  [00:30:10] - How reliant NextEra is on government subsidies   [00:31:20] - Where they spend all their revenue, the price of projects, and ROI [00:33:01] - How they evaluate projects  [00:34:19] - Structural differences in renewable energy business models today [00:36:18] - What could happen that could negatively impact NextEra’s growth [00:38:22] - Considering risks when underwriting turbines  [