March 7, 2016

Inside Energy Reads: What Happened To NRG Energy?

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Utilities are usually faceless, anonymous. They are so successful at supplying us with our electricity needs, that we generally know little about them and care even less. NRG Energy Inc. was different. The company is the nation’s largest independent power producer and it stood out from the rest of the pack as a innovative green energy crusader.

But last month, after ousting longtime CEO David Crane, NRG announced a major shift away from renewables and back to fossil fuel generation.  A $6 billion dollar loss in the fourth quarter of 2015 helps explain why.  The EnergyWire team explains further in a story entitled, “Why NRG’s Green Crusade Faltered.” 

EnergyWire’s story is a fascinating tale of a mega-utility with outsized dreams, trying to compete in a startup culture and, ultimately, being forced to go back to its roots.

While all utilities are feeling the pressure to move away from coal and other CO2 emitting fuels, NRG was moving quicker than most, ultimately challenging its traditional utility corporate structure. As EnergyWire put it:

At NRG, the gap between the deeply rooted fossil fuel generation business and Crane’s galloping clean energy aspirations widened into a chasm.

Essentially David Crane’s green dreams pitted part of the company – renewables – against its fossil fuel backbone. Crane’s insistence that solar and renewables were the future began to alienate employees whose jobs were threatened by that change.

And beyond a green dream, Crane was trying to create something new all together:

In 2014, Crane published a manifesto of sorts that staked out new territory for NRG. Titled “Where is the Amazon, Apple and Google of the Utility Sector?” it outlined his plan to create an energy company unlike any the world had seen.

But, as EnergyWire reports, NRG was not a startup, was not nimble enough to manage the transition or resilient enough to hold out when stock prices tumbled and investors rebelled.

In the end, in the struggle to win the “energy business of tomorrow,” NRG couldn’t win.  EnergyWire writes that utilities have the size to make the change, but not the will or the smarts. Startups get the solution but don’t have the size. Steve McBee, who ran NRG’s Home division and resigned in January, said the winner of this race will “probably be built by a company that you’ve never heard of, or a company that may not even exist yet today.”

Part 2 of EnergyWires story on NRG and David Crane can be found here.