*from www.bloomberg.com, Mar. 25, 2013 (To view original article click here.)
Take Away #1: NRG Energy Inc. (NRG), becomes a renegade in the $370 billion energy-distribution industry by providing electricity directly to consumers.
Key Facts and Figures:
- NRG Energy Inc. is the biggest power provider to U.S. utilities.
- Bypassing its utility clients, NRG is installing solar panels on rooftops of homes and businesses.
- CEO David Crane said, in the future NRG will offer natural gas-fired generators to customers to kick in when the sun goes down.
- NRG is the first operator of traditional. Large scale power plants to branch into running mini-generation systems that run a single building.
- NRG acquired GenOn Energy Inc. for $2.2 billion in December and Texas Genco for $5.8 billion in 2006.
- With $8.4 billion in 2012 sales, NRG has become strong by supplying power to the businesses that it’s now competing against with its NRG Residential Solar Solutions unit.
- Shares rose 0.6% to $25.94 at 9:34 a.m. in New York.
Take Away #2: The endeavor strikes at the core business of utilities that have earned money from making and delivering electricity since the first investor-owned power plant opened in 1882.
Key Facts and Figures:
- CEO Jim Rogers of Duke Energy Corp., the largest U.S. utility owner, says, “It is obviously a potential threat to us over the long term.”
- Duke’s earnings before interest, tax, depreciation and amortization grew 25% last year to $6.43 billion, compared with NRG’s 15% decline to $1.59 billion.
- Other energy companies are challenging traditional utilities by providing rooftop solar panels to power individual buildings.
- These companies typically offer customers lower prices for power from rooftop panels than they pay utilities, reducing monthly bills.
Take Away #3: The rooftop solar model is missing an important component as panels can’t provide constant power, says NRG CEO David Crane.
Key Facts and Figures:
- The other part of the package is the growing underground network of pipes that delivers gas to about half the homes in the country.
- Crane wants to provide customers with fuel cells and microturbines, which produce electricity from gas.
Take Away #4: Utilities are aware that generating power at customer sites will disrupt their business and could become far less important in the long term.
Key Facts and Figures:
- Duke Energy is also considering a move into rooftop solar, a business that presents an “opportunity in the short term,” says CEO Rogers.
- If the cost of solar panels keeps coming down, installation costs come down, the combination of solar and battery technology will become the main source and traditional utility companies will be used mostly for backup.
- Other independent power producers may be evaluating the merits of distributed generation, building many small systems at customer sites instead of a few large ones.
- Einhorn’s Greenlight, is urging Apple to issue high-yielding preferred stock to carve out more cash for investors.
Take Away #5: The industry may be experiencing a shift to distributed generation, which will impact utilities more than customers.
Key Facts and Figures:
- NextEra Energy Inc. (NEE), the largest producer of renewable energy, now has a vice president of distributed generation, Andrew Beebe.
- Andrew Beebe stepped down as chief commercial officer for the struggling Chinese solar-panel maker Suntech Power Holdings Co. in September.
- NextEra expects to have about 900 megawatts of utility-scale solar plants in operation by the end of the year.
- The shift to distributed generation will have more of an impact on utilities than on customers, Crane said.
*To view original article from www.bloomberg.com click here.