On Jul 12, 2013, shares of NRG Energy Inc. (NRG) hit a 52-week high of $28.79 on the back of the company’s successful completion of two solar photovoltaic (PV) facilities in California, a string of high-end investments in solar generation and the acquisition of GenOn Energy.
Recently, NRG Energy’s subsidiary NRG Solar has announced that its two solar PV facilities – Kansas South and TA-High Desert projects – have started commercial operation. The company acquired these two projects having power generation capacity of 20 megawatts (MW) each, from Recurrent Energy. NRG Energy will sell the output to Edison International’s (EIX) unit Southern California Edison and PG&E Corporation’s (PCG) subsidiary Pacific Gas and Electric Company. We believe these contracts will ensure a stable earnings stream.
With the renewable market dynamics becoming more favorable in the U.S., NRG Energy’s pursuit to increase its solar portfolio will definitely prove to be a key growth driver.
Recently, NRG Energy announced its plan to set up rooftop solar PV arrays at MGM Resorts International’s (MGM) Mandalay Bay Resort Convention Center in Las Vegas. The company will sell the output to MGM Resorts through a long-term power purchase agreement.
In addition to organic growth, NRG Energy is expanding its operations through inorganic strategy. The company completed the acquisition of GenOn in Dec 2012 and has already benefited from it in first-quarter 2013 through an increased realized gross margin in its East segment. In 2013, NRG Energy expects to realize $150 million of cost and operational synergies from this transaction.
We believe the timely implementation of renewable energy and fossil fuel-based programs along with acquiring new assets and service contracts would benefit NRG Energy’s future performance.
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