NRG will separate renewable, fossil generation in major reorganization

Dive Brief:

NRG Energy announced plans Sept. 18 for a major corporate restructuring, separating its clean energy business from its traditional generation and electricity retailing subsidiary.
NRG's new "GreenCo" unit will include its rooftop solar business, electric vehicle charging initiatives, and its large-scale renewable energy developing business. Beginning in January 2016, that division will operate separately from the company's traditional wholesale generation and retail business. NRG will also sell equity in its 814 MW wind portfolio to its yieldco, NRG Yield, which will remain separate as well.
NRG has faced increasing pressure from investors to show how it plans to balance its investments in the renewable sector with its holdings in conventional coal and gas-fired plants, Bloomberg reports. The company is the worst-performing member of the S&P 500 Utilities Index this year.

Dive Insight:

Calling the program "NRG Reset," company officials said Friday morning that separating its renewables business from its conventional power plants will build a simpler NRG Group, help "unlock capital" and shrink the balance sheet, according to SNL.

The restructuring announcement came sooner than many in the power sector expected. In August, CEO David Crane said that while the company was considering a split, none was likely until the middle of next year.

The company's haste may be due to pressure building from its investors. While many merchant generators have taken losses in 2015, NRG has been hit particularly hard. The company's stock has dropped nearly 30% in the last four months, making it one of the worst-performing companies in the utility sector this year.

In addition to the creation of a new clean energy business, NRG will sell 75% of the equity interests in a 814 MW wind portfolio purchased from Edison International to its yeildco. NRG Yield, which owns contracted renewable and gas generation, is the worst performer this year across a seven-company yieldco valuation index put together by Bloomberg. The "drop-down" sale will raise about $210 million for the company.

NRG executives are no strangers to dramatic reshuffling. In 2014, having concluded that a "distributed generation-centric" future was inevitable, Crane reorganized the $12 billion corporation into three divisions and founded NRG Home, which focuses on consumer technologies like rooftop solar, electric vehicle charging and home energy management. That division will now fall under NRG's new "GreenCo" business.

In all, NRG's generation fleet has a capacity of more than 50,000 MW, and its businesses serve customers in all 50 states and Washington, DC. The complete slide deck of NRG's restructuring presentation is available on its website.