NRG Yield would cater to contracted generation

A renewable and conventional generation company that NRG Energy (NYSE:NRG) plans to spin off via IPO would concentrate on contracted generation assets.

That’s according to a 300-page Form S-1 Registration form that NRG Energy and NRG Yield filed June 7 with the Securities and Exchange Commission (SEC). The filing indicates that NRG Yield will start off with more than 1,300 MW of generation and continue to grow.

Each of its assets has a long-term power contract. One of its conventional operations will be the 910-MW Marsh Landing fossil plant in California.

NRG Yield is designed to be a dividend growth-oriented company formed to serve as the primary vehicle through which NRG Energy will own, operate and acquire contracted renewable and conventional generation and thermal infrastructure assets, according to the filing.

“We own a diversified portfolio of contracted renewable and conventional generation and thermal infrastructure assets in the United States,” NRG Yield said in the filing. “Our contracted generation portfolio includes three natural gas or dual-fired facilities, eight utility-scale solar and wind generation facilities and two portfolios of distributed solar facilities that collectively represent 1,324 net MW.”

“We intend to take advantage of favorable trends in the power generation industry including the growing construction of contracted generation that can replace aging or uneconomic facilities in competitive markets and the demand by utilities for renewable generation to meet their state’s RPS,” the company said in the SEC filing.

“We will focus on high-quality, newly constructed and long-life facilities with credit-worthy counterparties that we expect will produce stable long term cash flows,” NRG Yield said.

Following the completion of its merger with GenOn Energy Inc. (the ‘‘GenOn Merger’’) in December 2012, NRG became the nation’s largest competitive power generator with approximately 47,000 MW of fossil fuel, nuclear, solar and wind capacity at almost 100 generating facilities located in 18 states, enough to supply electricity to nearly 40 million homes.

          NRG Yield plans to:

• Gain access to an alternative investor base with a more competitive source of equity capital that would help accelerate its long-term growth and acquisition strategy and optimize our capital structure;

• Highlight the value inherent in NRG’s contracted conventional and renewable generation and thermal infrastructure assets by separating them from other NRG non-contracted assets; and

• Create a pure-play public issuer with operating, financial and tax characteristics that company officials believe will appeal to dividend growth-oriented investors seeking exposure to the contracted power sector.

About Wayne Barber 4201 Articles
Wayne Barber, Chief Analyst for the GenerationHub, has been covering power generation, energy and natural resources issues at national publications for more than 20 years. Prior to joining PennWell he was editor of Generation Markets Week at SNL Financial for nine years. He has also worked as a business journalist at both McGraw-Hill and Financial Times Energy. Wayne also worked as a newspaper reporter for several years. During his career has visited nuclear reactors and coal mines as well as coal and natural gas power plants. Wayne can be reached at wayneb@pennwell.com.