What Does Green Energy Pioneer NRG Do Without Wind and Solar?

February 28, 2018, by Brian Eckhouse

(Bloomberg)

The biggest clean-energy advocate in the U.S. power industry is selling almost all of its wind and solar assets. So what’s next for NRG Energy Inc.?

Wall Street will be looking for some hints Thursday when NRG reports fourth-quarter results, and is expecting more details a few weeks later when 2017’s best performer on the S&P 500 Index hosts an analyst day to plot out its new path.

After announcing this month a $1.38 billion deal to sell almost all of its renewables assets, one thing already apparent is that NRG will depend even more on its retail business. The company delivers electricity to 3 million customers in 10 states, mainly Texas. Chief Executive Officer Mauricio Gutierrez told Bloomberg in October that he’s investing significantly in the business, and he reiterated that strategy Tuesday.

“Executing on the asset sales will allow us to strengthen our integrated retail and generation platform,” Gutierrez said in an emailed statement.

Retail operations now make up about one third of Princeton, New Jersey-based NRG’s adjusted earnings before interest, taxes, depreciation and amortization. Once the sale of its clean-energy assets to Global Infrastructure Partners closes, expected in the second half, the company projects that figure to swell to almost 60 percent as its generation fleet shrinks. It’s also selling $1 billion of coal and natural gas-fired power plants in Louisiana.

NRG will be keeping its foot in renewables, even though a key driver for the sale was pressure from activist investor Paul Singer to return to its coal, nuclear and gas roots. While the company will shed most wind and solar assets, it will need to continue sourcing power for retail customers — including from attractively priced clean energy.

“Anybody with a retail business in most places — and especially in Texas — will need to depend on renewables,” said Kit Konolige, a New York-based analyst at Bloomberg Intelligence. “It’s cheap power.”

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