NRG banking more on solar production

NRG Energy (NYSE: NRG) on May 3 said its investments in solar are just starting to pay off and will have an ever-greater effect on earnings over the next two years.

The company completed the sale of 49% of Agua Caliente solar facility to MidAmerican Energy Holdings Company at a premium to NRG’s invested and committed equity capital earlier this year.

“Even if the market doesn’t see the value in our investments, savvy and strategic investors do,” said NRG’s President and CEO David Crane during a conference call. He emphasized that the loss of market capitalizations has been lost in the manufacturing side, while NRG is a producer of solar power benefitting from cheaper panel prices.

He promised more information in the second half of 2012 on how NRG will take advantage of market conditions.

The project achieved commercial operation of 110 MW at Agua Caliente well ahead of schedule, making the $1.8 bn Agua project the largest operating solar photovoltaic (PV) project in the United States.  The project also achieved Department of Energy approval to complete the remaining 110 MW ahead of schedule, which will bring additional earnings sooner than expected.

NRG also expects $55m additional revenue from solar projects that are scheduled to come on line this year.

The company also completed first draw of $138 million against the $1.2 bn DOE loan to the California Valley Solar Ranch (CVSR) project.

NRG has $1.6 bn in debt related to its solar projects on its balance sheet. It expects only $65m to $75m in earnings this year, but as projects come on line between now and 2014, NRG expects $330m in solar revenue in that year.

NRG reported first quarter 2012 adjusted earnings of $300 million with Retail contributing $112 million and Wholesale contributing $188 million. The Company reported a first quarter net loss of $206 million, or ($0.92) per diluted common share. The first quarter’s results compare to 2011’s first quarter net loss of $260 million, or ($1.06) per diluted common share.

NRG said financial results were negatively affected by extraordinarily mild weather in all of its core markets during the first quarter.

“While the company’s performance for the quarter was weighed down by exceptionally mild weather and lower commodity prices generally, we have laid a strong foundation during the quarter for the Company to benefit over the balance of the year from the strengthening of fundamentals in several of our core commodity and capacity markets,” Crane said.

NRG has realigned its segment reporting into Conventional Power Generation, Retail Businesses, Alternative Energy and Corporate activities.

The Alternative Energy segment includes solar and wind assets, electric vehicle services and carbon capture businesses.

In Alternative Energy: Gross margin was $20 million; up from $9 million in 2011. This reflects the addition of the 20 MW Roadrunner solar facility, which began operations in late 2011 and the first two blocks of the 290 MW Agua Caliente project that reached commercial operation during the quarter. Offsetting the improved margin were NRG’s continued development efforts related to eVgo, the Petra Nova carbon capture project and distributed solar expansion.