NRG solar expansion faces host of competitors

OREANDA-NEWS. August 10, 2015. NRG Energy's expansion into the distributed solar market has been tempered by what it sees as a glut of competing suppliers and a need to focus its core merchant generation business on the near term.

Residential solar, and renewables more broadly, are best considered longer-term complements to traditional coal-and natural gas-fired generation assets, particularly in light of federal regulations such as the Clean Power Plan for CO2 emissions from power plants, the company said.

"After announcement of the Clean Power Plan, it is clear the one true path for an incumbent power provider like us is to build an edifice of new clean energy capabilities and assets on top of a rock-solid foundation of multi-fuel, multi-market conventional generation," NRG chief executive David Crane said this week.

NRG's total generation across California, Texas and the US northeast fell slightly in the second quarter, to 30.1/TWh, down by 3.5pc from last year. The company did not experience an uptick in its California operations like competing merchant generator Calpine, which ramped up dispatch by nearly 32pc due to limited renewable dispatch in the state. Instead, NRG's California production fell to about 800GWh from 900GWh the previous year.

Lower-than-expected numbers plagued NRG's residential solar business, which counts just over 19,000 customers, less than half of its 2015 target of 40,000. The outlook for hitting the target is hampered by having to compete with a large number of developers in California and the northeastern US, including SolarCity, SunPower, SunRun and SunEdison.

In contrast to some of its competitors, NRG says that subsidiary NRG Yield, which owns the majority of the company's utility-scale and distributed renewable assets, is unlikely to look for third-party acquisitions. It istead will diversify through more internal transfers, including nearly 800MW of contracted California natural gas assets by 2017.

Long-term demand for renewables should be supported by the Clean Power Plan, which requires each state to hit a CO2 target by 2030, the company said.

"We appreciate that [the EPA] placed increased emphasis on replacing conventional generation with more renewables," Crane said. "We think that is the right objective, and stand ready with both our large-scale and distributed clean energy businesses to help customers and states succeed."