NextEra Energy Partners Assignment and Solution

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NextEra Energy Partners Assignment Help 

You are required to prepare a business report that deconstructs an organisation & business model and identifies the critical success factors that make the business sustainable. Your analysis will demonstrate your critical thinking skills and your ability to professionally articulate your findings.

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Introduction

Renewable sources of energy have been gaining strong foothold in the energy industry. The different sources such as solar power, wind power, as well as hydro power are the most commonly used sources for the production of renewable energy. Global warming and water and air pollution are the major issues that are associated with the use of fossil fuelin the generation of energy. The increasing average temperature of the climate system of earthand the ever-risingenergy demands, the renewable energy sources offer the best solutions for tackling the side effects that are associated with the use of fossil fuels. Furthermore, the production of carbon footprint by the renewable energy sources is significantly low when compared to the other kind of fossil fuels that reduces the effect of global warming. In the following discussion, the business of NextEra Energy Partnershas been deconstructed using the business canvas model to determine the innovations that have been employed by the organization in the area of renewable energy sector.

NextEra Energy Partners: Business Overview

NextEra Energy Partners LP is a renewable energy company, which is a publicly traded subsidiary of NextEra Energy and is based at Florida. NextEra Energy Partners acquires, manages and own contracted clean energy projects that has stable and long-term cash flows. NextEra Energy Partners owns interest in solar and wind projects in the U.S., along with the natural gas infrastructure assets in Texas (NextEra Energy Partners, LP, 2019a). The renewable energy projects are contracted, and NextEra Energy Partners use industry leading technologies and the locations in the regions which are favorable to generate energy from sun and wind. Furthermore, there are seven natural gas pipelines that are strategically located, serves the power producers and municipalities in South Texas, while in the Eagle Ford Shale, it serves the producers and processing plants. In the Houston area, NextEra Energy Partners serves the industrial and commercial customers. The NET Mexico Pipelines of NextEra Energy Partners is the largest pipeline and provides critical source of natural gas transportation for the low cost, US-sources shale gas to Mexico (NextEra Energy Partners, LP, 2019a).

Business Model Deconstruction

The business model of any firm has the potential to either make it a huge success or result in an absolute failure (Osterwalder, Pigneur, Oliveira, & Ferreira, 2011). To understand the business model that has been adopted by any organisation, the Business Model Canvas, developed by Osterwalder and Pigneur (2010), can be used. It is an effective tool and comprises of 9 fundamental elements, namely, the key partners, the key activities, company's value propositions, customer relationships, customer segment, key resources of the firm and the channels that are used to acquire the raw materials and to deliver the final products to the consumers (Osterwalder, Pigneur, Oliveira, & Ferreira, 2011).The business model deconstruction of NextEra Energy Partnerscan be elaborated as follows.

Key Partners

The key partners of NextEra include the investors, Delaware limited partnership, network of sellers, varied suppliers and distributors, stockholder, employees and relative financial institutes.

Key activities

The key activities of NextEra Energy includeDistribution, Logistics, Supply chain practices, Negotiations with vendors, Pricing, Customer service, Innovations, Human resources, New renewable energy developments and projects, Application development and maintenance.

Key Resources

The key resources of NextEra Energy comprises of Focus on innovation, Logistics assets, employees, affiliates and managers under the MSA (management services agreement among NEP, NEE Management, NEP OpCo and NEP OpCo GP)

Value Proposition

The value proposition of the company consists of US buyers and sellers, its competitive Pricing strategy, Financial services, Innovative solution for energy sources, Unwavering commitment to save consumer's finances.

Customer relationships

Next Era Energy concentrates on benefits for members, tips and ideas, automated services, convenience, recommendations, wide selection and reputation

Customer segments

The demographics of the customer segment of NextEra energy encompass on environment sensitive customer in US and Texasmarkets

Channels

The channels for the conducting business of NextEra Energy include Website and online media, Social network, Logistics network, Blogs, Media

Cost Structures

The initial costs involved with running the business at NextEra energy are related to the expenses linked with cost of goods, logistics costs, shipping cost, distribution cost, IT maintenance, advertising, human resources, customer services, technology, taxes, Research and development, fuel management, lower cost for wind facility installation.

Value Added services

The operating business revenue streams and value added services will account for the additional proposition for the firm
(NextEra Energy Partners, LP, 2019b)

Interrelationships

The nine blocks of the Business Model Canvas provided details regarding the relationship between different factors that surround the business of any organisation these factors are essential to survive in the competitive global business market (Osterwalder, Pigneur, Oliveira, & Ferreira, 2011). By analysing the business model canvas of NextEra Energy Partners, it can be stated that the innovative strategy of providing renewable energy sources has benefitted the company. Additionally, the various activities of NextEra Energy Partners are inter-connected with each other on various aspects. The ability to develop and install low cost wind facilities further provides to be advantageous for the organization.

The pricing strategy of NextEra Energy Partners, along with the varied options in the area of wind, solar energy and natural gases as energy sources has attracted several of the US consumers towards it. The organization has been developing and it has been estimated that it would continue adding to the operating revenue. Furthermore, through excellent customer services that are offered by NextEra Energy Partners, it is expected that the firm would be able to improve its customer base and gain their loyalty.

Critical Success Factor

With last year's acquisition, NextEra Energy Partners has the cash flow necessary to continue increasing its distribution to investors at a high rate for at least the next year. Meanwhile, the company recently sanctioned a $115 million project to expand the capacity of its natural gas pipeline system (DiLallo, 2019). Motyka (2019) has mentioned that the fundamental drivers of renewable energy growth in 2018 are poised to continue in 2019, but we also see three trends coming into sharper focus that are likely to shape renewable growth in the coming year. Therefore, it can be stated that the primary work of NextEra Energy Partners that is associated with the generation and distribution of renewable energy is favorable for its businesses. Additionally, technological improvements such as autonomous vehicles, ride-sharing, the internet of things affect the demand and timing for energy services and can ease the integration of renewables (International Renewable Energy Agency, 2019).

Downside Risks

The renewable energy sector is one of the fastest growing components of the energy industry and along with this increased demand for renewable energy there has been an increase in investing and financing activities. The tradeoff between risk and return in the renewable energy sector is, however, precarious. There exist the risks of reduced sales in the events where there is decline in the price of oil as this would shift the consumers towards the oil based energy sources as the price of oil is less than renewable energy sources such as wind and solar energy or the natural gas (Sadorsky, 2012). In 2018, the US renewable energy sector remained remarkably resilient, gaining ground despite uncertainty about the effects of federal tax reform legislation and a spate of new import tariffs (Motyka, 2019). Therefore, NextEra Energy Partners is required to be prepared to encounter such issues and develop suitable strategies for overcoming the same.

Recommended Changes to Business Model

With respect to the case of NextEra Energy Partners, it can be recommended that the organization may consider improving its product diversity so as to be able to offer wider range of products that would make it more attractive and lucrative solution for its potential customers. Furthermore, NextEra Energy Partners can also aim at enhancing its pricing strategy for attracting more consumers towards it. NextEra Energy Partners believes that its dividend growth plan will richly reward investors over the long term (DiLallo, 2019). Therefore, the organization should also focus on enhancing the same as well.

Conclusion

The rising global temperature and concern regarding protection of the environment has been increasing the demands for cleaner energy sources and therefore, NextEra Energy Partners should continue investing in the area of solar and wind energy, along with natural gases, so as to ensure profitability and further growth in the energy industry.

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