NRG unveils major reorganisation

NRG Energy chief executive David Crane

"Sustained double-digit growth" from residential PV: NRG CEO David Crane.

US power giant NRG Energy has announced a sweeping reorganisation that will vault renewables – and specifically rooftop PV – to the forefront of its business.

NRG will reorganise into three primary business units – known as NRG Business, NRG Home and NRG Renew.

NRG Home will rope together the company’s nearly three million retail electricity customers and its “smaller but fast-growing” residential solar company – NRG Home Solar – to draw out the “obvious synergistic benefits that each can bring to each other”, says chief executive David Crane.

NRG Home Solar was born out of NRG’s acquisition earlier this year of New Jersey-based Roof Diagnostics Solar.

The move will help NRG “capture the sustained double-digit growth that we believe will be realised by the top-tier companies in the residential solar space, as the American public increasingly embraces the idea that they can make a difference in the race to the clean-energy economy with their individual energy decision making”, Crane told analysts on Thursday.

NRG's utility-scale renewables portfolio will be housed in the new NRG Renew unit, which NRG claims will be the largest solar generator in the US and the third largest renewables generator overall.

The decision to reorganise is based on the tension between the "plentiful value-creating opportunities that we see in front of us in what is sometimes loosely called the alternative energy sector" and the "weakening long-term fundamentals in our traditional, conventional-generation grid-based business", Crane says.

“The formation of NRG Home and NRG Renew will enable NRG to take full advantage of, and realise enhanced value from, the burgeoning growth opportunities that we see arising out of the clean-energy sector."

Crane says investors can expect to hear "a lot more about this in the weeks and months to come".

Meanwhile, NRG Business will consist of NRG’s conventional wholesale power-generation portfolio and its commercial retail supply business.

In addition, two other “separate purpose” companies will also be created: Petro Nova, which will focus in part on carbon capture and storage; and eVgo, which will develop and operate an electric car charging network.

Crane emphasises that each of the five new units will have its own "focused management team", and each may eventually be spun off onto the public markets in a manner similar to NRG Yield.

NRG Yieldco – the yieldco spun off earlier this year, and in which NRG Energy retains a majority stake – will remain a “critical member of the group”, says Crane, “enabling and enhancing the value of all five companies by providing a highly competitive source of capital for their contracted assets”.

NRG Yield will continue to buy utility-scale renewables assets from the new NRG Renew unit and combined-cycle gas assets from the new NRG Business.

But Crane says that in the future assets will be added to NRG Yield “possibly [from] NRG Home or even NRG Petra Nova”.

The announcement came as NRG Energy swung to a second-quarter net loss of $97m – compared to a profit of $124m during the same quarter last year – even as revenues grew to $3.62bn.

Shares of NRG Energy – down nearly 15% in the past month – fell modestly on Thursday’s news, leaving the company with a market valuation just above $10bn.

By contrast, NRG Yield’s share price has soared since its IPO, leaving the yieldco with a market cap of $6.1bn.

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