NRG Energy, the largest privately owned power generation company in the US, says it is looking at entering the Australian market with off-grid and micro-grid solutions that will be based around solar and storage.
The offering comes as the company – which has a portfolio of generating assets including nuclear, coal, gas and solar amounting to 46GW (nearly the size of Australia’s National Electricity Market) – looks to expand offshore. It is also targeting markets in Mexico and the Carribean where fossil fuel costs are high.
Todd Michaels, a senior director with NRG Solar, its newly created subsidiary says some of the company’s large industrial customers, with significant operations in Australia, are looking at solar-based micro grids to reduce costs in their operations.
“They are burning diesel fuel and they want NRG to come up with micro grid solution to address that,” Michaels told RenewEconomy in an interview at the InterSolar conference in San Francisco. “Solar PV will be a large component of that solution.”
The move by NRG – both into the international markets and the distributed market at home, with energy solutions based around the “predictable” cost of solar – is a significant development in the energy industry, particularly given that its past has been focused on large centralised nuclear, coal and gas plants.
“For us, solar is the growth engine (of future generation),” Michaels says. “And finding ways to store that energy – and the combination of natural gas, storage and PV are the forefronts of that strategy.”
NRG CEO David Crane has previously made his views known on the rapid changes in the electricity industry, saying that solar will be a game-changer for the market. “Consumers are realising they don’t need the power industry at all,” Crane, said in an interview earlier this year. “That is ultimately where big parts of the country will go.”
Michaels heads the distributed energy business within NRG Solar, which focuses on solar PV arrays of 20MW and less, and with storage and energy management systems, which the company says is the biggest sweet spot in the market at the moment.
“Where else can you find something that has the predictability of solar, the hedge value, the predictability of PV, without having the input risk.” Michaels says.
“People forget the input risk (of fossil-fuel energy costs). With solar we can give them a delivered cost over time without volatility of fossil fuels. Because of the maturity of manufacturing in solar PV, we know were the cost curve is going to be in 2014, and we have got a pretty good idea what the cost is going to be in 2016, 2017, and 2018. It’s very predictable.”
That, he says, is very attractive to large industrial businesses with major energy costs. He says NRG is looking to provide between 20 per cent, and up to 80 per cent or 90 per cent of the energy use behind the metre in some instances. These projects, he says, are viable to day because of the rising cost of electricity and the falling cost of solar.
“Large industrial are also looking at waste heat, and looking to us to come up with fully managed positions and in some ways take them off the grid, or make give them survivability. So if reliability is issue, we have solution to that. We can integrate PV within the micro grid.”
Michaels says that NRG has already installed 60MW of distributed solar and plans another 100MW in the next year, rising to 200-300MW annually within a few years.
“If it scales correctly it will take us into foreign markets, such as Mexico, and the Caribbean,” he says. “This is one of the beachhead markets that can take us across the border. When we talk to large energy requirements, the have volatility issues driven by diesel and other fossil fuels, and they are looking for solutions to that.”
It is part of what Crane describes as the blurring of the lines between generators, network operators, and retailers as solar PV changes the dynamics of the market.
“You are going to see many evolving business models,” Michaels says. “NRG is an interesting business. Its largest customers are utilities, and now we are able to go more directly to consumers. It might take someone as a third party to drive people to solutions. We could be supplying those solutions to the utilities too.
“For us, solar is the growth engine (of future generation). And finding ways to store that energy – and the combination of natural gas, storage and PV are the forefronts of that strategy.”
NRG this week also launched an initial public offering for NRG Yield, which will raise more than $US400 million to give investors an opportunity to invest in renewable energy projects, cashing in on increased interest in wind and solar projects which has attracted the likes of Warren Buffet, Google and major banks to the sector.
“This is a hugely capital intensive business, even for a company the size of NRG,” Michaels says. “For us, this is about going to source. Many people wish they can go out and get stable return on renewables. This will deliver a vehicle where they can do that.”
