NRG Energy Inc.’s (NRG) subsidiary NRG Solar has acquired a solar project from Quantum Utility Generation, LLC’s affiliate Quantum Guam Power Holdings, LLC. The project has a power generation capacity of 25.65-megawatts (MW).
NRG Energy will sell the output to the Guam Power Authority (:GPA), the sole electricity utility of the island of Guam, through two 25-year power purchase agreements (PPA). These agreements will help GPA to provide clean and emission-free power to the consumers at a cheaper price.
Both the parties will be benefited from the current project. The GPA is currently relying on fuel oil and diesel to generate power. The project will help the power authority to save more than $300 million as fuel cost with net savings of approximately $100 million. In addition, NRG Energy will be benefited in terms of reducing its dependence on fossil-fuel for power generation.
It is evident from NRG Energy’s recent activities that it is concentrating on expanding its solar portfolio via organic as well as inorganic route.
Recently, NRG Energy announced its plan to set up rooftop solar photovoltaic 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.
As far as inorganic growth strategy is concerned, NRG Energy recently announced that its two solar photovoltaic facilities - Kansas South and TA-High Desert projects - have started commercial operation. The company acquired these two projects having power generation capacity of 20 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) unit Pacific Gas and Electric Company.
In addition, NRG Energy completed the acquisition of GenOn in Dec 2012. The company has already benefited from it in first-quarter 2013 through an increased realized gross margin in its East segment and expects to realize $150 million of cost and operational synergies in 2013.
We believe the timely implementation of renewable energy ventures along with acquiring new assets and developing and improving existing portfolio would benefit NRG Energy’s future performance.
Princeton, N.J.-based NRG Energy together with its subsidiaries operates as an integrated wholesale power generation and retail electricity company. The company currently has a Zacks Rank #2 (Buy).
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