NextEra Energy, Inc. has secured a major contract to construct 3,000 megawatts of solar generation capacity for the Salt River Project (SRP) in Arizona. The deal underscores the accelerating demand for electricity in the Phoenix metropolitan area, much of which is being fueled by the rapid expansion of data centers.
Under the terms of the agreement, SRP will purchase 500 megawatts of solar energy annually from 2029 through 2034, with all facilities expected to be operational by the end of 2034. The total output is estimated to be sufficient to power approximately 595,000 homes in Arizona. NextEra Energy Resources, the renewable energy arm of NextEra Energy, will be responsible for building and operating the solar plants, while SRP secures the power supply.
The deal comes as SRP, a not-for-profit utility serving the Phoenix area, races to nearly double its power system capacity by 2035. The utility is incorporating a mix of renewables, natural gas, and battery storage to meet its ambitious goals. According to Bill McClellan, SRP's director of resource acquisition, roughly two-thirds of the utility's large commercial growth is directly linked to data centers. "They are a significant part of our growth," he said.
SRP selected NextEra Energy Resources through a competitive request for proposals (RFP) process in 2024. The agreement extends a long-standing partnership; NextEra has already developed over 1,000 megawatts for SRP across five projects, including the Sonoran Solar Energy Center and the Babbitt Ranch Energy Center. However, this deal is not a substitute for SRP's broader all-source procurement, and other developers and technologies remain under consideration for future contracts.
The competitive landscape for utility-scale solar in Arizona is heating up. In March, SRP and Invenergy announced a separate agreement for 200 megawatts of solar and 200 megawatts of four-hour battery storage at the SunDog Energy Center in Pinal County. This indicates that SRP is diversifying its expansion across multiple developers and technologies.
NextEra's success in Arizona aligns with its broader push to expand its renewable energy and storage portfolio. In April, the company reported that NextEra Energy Resources added 4 gigawatts of new renewables and storage to its first-quarter backlog, including 1.3 gigawatts in battery storage. The company's stock closed at $96.95 on Friday, down 92 cents from the prior close, giving it a market capitalization of approximately $202.2 billion.
Despite the scale of the deal, cost uncertainties remain. McClellan noted that SRP has not yet finalized a purchase price with NextEra, and the first 500 megawatts are not expected to come online until 2029. This timeline leaves room for changes in permitting, equipment prices, and financing conditions before construction begins.
