NRG Energy’s (NYSE:NRG) plans to repower its existing electric generation units in Astoria, Queens in New York City appear to continue at “full speed ahead,” following the July 22 announced merger between the company and GenOn Energy (NYSE:GEN), according to NRG President and CEO David Crane.
“One of the things that we think by joining forces, we can look at the entire portfolio and look to repower plants that deserve to be repowered,” Crane told TransmissionHub July 23. “We haven’t done the full analysis yet, but I’m pretty sure that we’ll be full speed ahead with Astoria because it’s very geographically well-located in terms of the needs of New York City and New York more generally, so I think we’ll keep pushing ahead on that project at full speed.”
NRG and GenOn said they have signed a definitive agreement to merge the companies in a stock-for-stock, tax-free transaction, creating the largest competitive generator in the country with a diverse fleet of about 47,000 MW with asset concentrations in the East, Gulf Coast and West, and a combined enterprise value of $18bn. The combined fleet generates more than 104 TWh of electricity annually.
The companies also said they expect to close the merger by the first quarter of 2013, noting that the transaction is subject to closing conditions and regulatory approvals, including approval by both companies’ shareholders, FERC as well as New York and Texas state regulators.
In a June interview with TransmissionHub, Jon Baylor, director of development for New York with NRG, said the company submitted the Astoria repowering project in response to the request for information (RFI) issued by New York Gov. Andrew Cuomo’s New York Energy Highway Task Force.
In his 2012 State of the State Address delivered Jan. 4, Cuomo announced a plan to build a private sector funded $2bn “Energy Highway” system that will tap into the generation capacity and renewable energy potential in upstate and western New York to bring low-cost power to downstate New York.
The Astoria project consists of 31 oil- and natural gas-fired peaking units that were originally commissioned in 1970; NRG has owned them since 1999. Baylor also said NRG plans to replace the units on site – a total of 600 MW – in two phases. Each phase will cost about $750m, for a total cost of about $1.5bn, he said.
Baylor said NRG also submitted a response to the RFI involving the company’s proposal to convert one of its coal plants, located just south of Buffalo, N.Y., in the town of Dunkirk, into a natural gas combined-cycle plant.
While Astoria is the “premier project in the state,” the Dunkirk project meets a lot of the objectives of the Energy Highway as well, as it improves air emissions and supports construction of renewable energy resources in western New York, and it has a focus on grid reliability, he said.
Moving forward on renewable, electric vehicle efforts
In announcing their merger, NRG and GenOn said the combined company, which will retain the name NRG Energy, will continue their work in reducing emissions from the existing conventional fleets, noting that NRG and GenOn combined have invested more than $3bn since 2000 to reduce emissions.
The combined company will continue to grow NRG’s portfolio of solar generating facilities, electric vehicle (EV) charging network and other clean energy products and services.
On renewable energy generation, Crane told TransmissionHub, “[W]e’re…focused on performing our responsibilities under our power purchase agreements.”
While utilities in California, for instance, have reported problems as they move to comply with the state’s 33% renewable portfolio standard, “we just stay focused on getting all those renewables online, on budget and ahead of schedule,” he said.
Regarding the EV charging network, Crane said generally, what the merger does is give the company a strong base of conventional generation in the three geographic markets: East, Gulf Coast and West.
“In at least two of those geographic markets, we’ve already announced that we’re going to have electric vehicle charging networks in Texas and we obviously have something pending in California,” he said. “We haven’t been too secretive of the fact that we’d like to do something on the East Coast as well. … We see these big power plants basically backing up our consumer-focused energy strategy in the various retail markets.”
Indeed, in March, NRG said it entered into an agreement with the California Public Utilities Commission where the company will build an EV charging network in the state, investing about $100m over the next four years. The fee-based charging network will consist of at least 200 publicly available fast-charging stations – installed in the San Francisco Bay Area, the San Joaquin Valley, the Los Angeles Basin and San Diego County – which can add 50 miles of range in less than 15 minutes of charging, the company said.
In January, NRG said Pappas Bros. Steakhouse worked with Reliant, an NRG company, to install an EV charging station at its premier location in Houston.
Offshore wind may be ‘resurrected’
Crane also spoke of the company’s offshore wind energy efforts.
In December 2011, NRG said it is putting active development of offshore wind projects on hold for the near term, noting that NRG Bluewater Wind, its subsidiary and lead developer of the Mid-Atlantic Wind Park off the coast of Delaware, has been unable to find an investment partner and intends to end the project’s 200-MW power purchase agreement with Pepco Holdings (NYSE:POM) subsidiary Delmarva Power and Light.
“[W]e’re not saying it’ll never be resurrected, but right now, there are just so many different aspects of offshore wind in the United States that require coordinated government action, and we just don’t see that that’s going to happen,” Crane said of the project.
He said NRG has been more focused on distributed solar as opposed to offshore wind.
“[W]e just find the price point for solar, including distributed solar, coming down so quickly that if people are going to do offshore wind, it’s because the government has decided that that’s a public policy priority of the United States, because we feel we can undercut the price of offshore wind on the East Coast of the U.S. with distributed solar,” he said.