Why NextEra Decided to Leave Data Centers to Others

About three years ago, NextEra Energy bought a couple of small data centers just to learn how they work. After a quick look inside, the power company decided to leave that business to someone else.

John Ketchum, the company's chief executive, says the customers' wants differed. In his account, the building sizes, technical requirements, computer processors inside, and customers being served varied from case to case.

Ketchum says the big technology companies, known as hyperscalers, "want to own and control their own data centers." They want the security and cybersecurity that come with protecting customer data, and freedom to replace chips as technology changes.

So NextEra returned to work it knows best, developing land and building power. It buys land for a generating plant, buys adjoining land for a data center, and then sells that second parcel to a hyperscaler.

That leaves NextEra handling power projects and delivery, including wind, solar, batteries and gas plants, plus the wires and pipes to move power, and marketing the power. Ketchum describes that lineup as focusing on what it does best.

The point is to have the electricity ready to connect when the data center is finished. NextEra lines up the generation and the link to the site so power is prepared to flow once the customer's building is ready.

Ketchum says NextEra sees better business in that split, with more opportunities from building generation while hyperscalers build data centers, "rather than cannibalizing demand by insisting on building both."