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NRG Energy, Green Mountain Power Promote Renewables

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NRG Energy, Inc. (NRG) inked a partnership agreement with Green Mountain Power Corporation (GMP.TO) to introduce new products and services for Vermont customers. Per the deal, the companies will jointly develop a wide array of clean energy solutions for the Vermonters.

Vermont-based GMP is an electric utility engaged in providing reliable, affordable, smart, and clean power to its customers through clean energy sources. The firm caters to customers’ increasing preference to shift towards clean energy sources and save money.

The main focus of the partnership is to convert the primitive distribution grid to a market-based platform. NRG Energy and GMP will jointly construct an advanced distribution grid in Rutland, VT. This initiative will help to distribute energy solutions through renewable mechanisms and energy storage, besides improving efficiency.

In addition, they will develop a wide array of new clean energy products and services, including Personal Energy Management, NRG Portable Power, Electric Vehicle Infrastructure and Community Solar. These sustainable and novel energy saving solutions will be available from early 2015.

NRG Energy and GMP have been tying up for energy solutions. In May 2014, NRG Energy’s unit NRG Residential Solar Solutions constructed a community solar array in Rutland, VT, under its Vermont Community Solar Project. The company will be selling the output from the 150-kilowatt solar farm to 50 GMP customers.

Both NRG Energy and GMP are eager to set up Rutland as the Energy City of the Future and establish the state of Vermont as a leader in promoting sustainable energy solutions at a cost-effective manner.

NRG Energy has steadily expanded its renewable energy asset base. In the first half of 2014, the company invested around $0.2 billion in renewable ventures and intends to invest roughly $0.4 billion in 2014.

Recently, NRG Energy completed two acquisitions – Goal Zero, a personal solar products manufacturer, and a 4-megawatt (MW ac) Spanish Town Estate Solar project, located in the island of St. Croix in the U.S. Virgin Islands, from Toshiba International Corporation.

In Jun 2014, the Obama administration rolled out its plan to curtail carbon emissions from coal-fired power plants by 30% by 2030 from 2005 levels. The rule is expected to come into effect next year. The aforesaid initiatives will allow NRG Energy to meet government environmental mandates.

Apart from NRG Energy, other utility providers like ALLETE, Inc. (ALE), DTE Energy Company (DTE) and Exelon Corporation (EXC) are investing significantly in renewable utility infrastructure to achieve regulatory compliance.

However, we are concerned about NRG Energy’s rising cost of operations, which is continuously eating into margins. The company reported a loss in second-quarter 2014 primarily due to higher expenses. In the second quarter, its total operating expenses increased 33.7% year over year to approximately $3.53 billion. The company’s failure to control rising expenses will once again impact its financial performance.

NRG Energy currently holds a Zacks Rank #5 (Strong Sell).

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