After divesting renewables, NRG gets back in the business
NRG Energy got out of the renewables business earlier this year when it sold its wind and solar operations for $1.8 billion to satisfy shareholders seeking better returns. But now NRG, the biggest electricity seller in Houston, is getting back into the solar power business with a new approach.
The company has teamed up with an independent solar power provider to develop 25 megawatts of solar projects that NRG hopes will attract environmentally sensitive commercial and industrial customers.
NRG is betting that solar installations provided by Cypress
Creek Renewables of Santa Monica, Calif., will serve as the foundation for NRG to sell renewable energy plans to large businesses. The solar sites are expected to reduce about 37,000 tons of carbon dioxide emissions each year, the equivalent of taking 7,000 cars off the road.
Last week, NRG announced its first solar customer, Sysco, the Houston food distribution company. Sysco signed a 10-year renewable energy agreement with NRG. Three solar installations — including one near Houston and two near Dallas — are expected to meet most of Sysco’s power needs in Texas.
NRG is trying to fulfill a growing desire among image-conscious companies to show their commitment to the environment, energy specialists say.
“There are a lot of corporations that want to enhance their green profile, and one of the ways to do that is to partner with a green energy provider,” said Travis Miller, a strategist who follows NRG for investment research company Morningstar in Chicago. “There is certainly a large market there.”
The deal between Cypress Creek and NRG comes just months after NRG unloaded its renewables business as part of a corporate strategy to refocus on coal and natural gas-fired power production. The utility had invested in production of wind and solar power under the leadership of its one-time CEO David Crane.
Crane, however, was pushed out of the job by major shareholders, unhappy with the strategy and returns it was delivering.
This time around, NRG will essentially outsource the production of solar power. Cypress Creek was once a competitor of NRG, but now Cypress Creek will buy the land, build the solar installations and sell the power to NRG.
NRG will package it as green energy to customers seeking to build their sustainability credentials, said Robert Gaudette, president of business solutions at NRG Energy. “They get marketing opportunities and pointing opportunities to the solar farm,” he said.
Cypress Creek will own and operate the solar installations and deliver the electricity to NRG and its customers under power purchase agreements. Customers can obtain fix-priced multiyear contracts and receive naming rights to designated solar facilities.
NRG is based in Houston and Princeton, N.J., and owns several retail electricity companies including Reliant Energy, Cirro Energy, Green Mountain Energy Co. and Pennywise Power.
Cypress Creek was founded four years ago. It has 2,300 megawatts of solar projects operating in a dozen states (One megawatt can power about 200 Texas homes on the hottest summer days). The company has raised $2 billion for project development, according to its website. lynn.sixel@chron.com twitter.com/lmsixel