NRG to divest $4 billion assets

• 6 years ago (2017-07-13)
• David Flin

North America 998 Solar 243 Wind 239

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NRG Energy, headquartered in Houston, Texas, USA, has said that it plans to sell most, if not all, of its wind and solar power projects around the USA as part of a plan to divest $4 billion in assets in a bid to cut costs and slash debt. The plan, which also includes the sale of conventional power plants, will almost certainly lead to job losses. NRG officials did not disclose which plants and projects would be sold off and how many jobs would be cut.

The move follows a campaign by two of NRG’s biggest shareholders, the New York hedge fund Elliott Associates and the Dallas investment firm Bluescape Energy Partners, to shake up NRG’s board of directors and increase the stock price, which the activist investors have called undervalued.

Some analysts have described the move as short-sighted. NRG would sell the majority of its wind and solar projects when renewable energy is profitable and energy firms are increasing investments in green energy.

Travis Miller, an analyst with the research firm Morningstar, said: “We think NRG’s announcement is reshuffling the deck more than creating value for shareholders. We thought that the NRG renewables business was a good growth platform with some attractive returns, but management clearly decided that their investors would prefer going a different route.”

NRG’s transformation plan represents a sharp reversal of strategy. NRG had taken steps away from renewable energy in 2015 with the firing of then CEO David Crane, a proponent of electric car charging stations and residential solar panels, and the hiring of Mauricio Gutierrez as CEO, who favours natural gas as a power source.

NRG plans to divest between $2.35 and $4 billion in assets in an effort to cut 70 per cent of its $13 billion debt. The company expects to sell from half to all of its share in NRG Yield, a subsidiary that owns most of NRG’s renewable projects. It also plans to sell conventional power plants with a combined capacity of 6000 MW, about 15 per cent of its fleet’s total capacity of over 41,000 MW.