NRG Energy Expects Capex to Drop by Half in 2017

---

Researched by Industrial Info Resources (Sugar Land, Texas)--Executives with NRG Energy, Inc. (NYSE: NRG) (Princeton, New Jersey) say they expect to see a sharp reduction in capital expenditures next year as the power provider wraps up a large capital reinvestment program. Industrial Info is tracking 62 active NRG projects worth $4.64 billion.

Chief Executive Officer Mauricio Gutierrez said during the company's earnings conference call that "the nearing conclusion of our large capital reinvestment program provides us the latitude to effectively harvest strong free cash flows through our asset optimization program, as I believe we have a good line of sight on market prices and environmental requirements, at least through the end of the decade."

NRG is expected to spend $1.2 billion on growth, environmental compliance and facility maintenance in 2016, up by $80 million from the same expenditures in 2015. However, that amount will plummet to $550 million in 2017, and even further to $500 million in 2018, according to the company's earnings presentation.

The company is developing more than 1.1 gigawatts (GW) of new gas-fired generation, which are backed by power purchase agreements and capacity contracts, it said.

Industrial Info is tracking $2.72 billion in NRG projects that are expected to see completion through 2018. One of those projects, a 600-megawatt (MW) natural gas, simple-cycle power plant at the Carlsbad Energy Center in California carries a $600 million price tag. To be located next to NRG Energy's existing Encina Power Station, the brownfield project includes construction of six 100-MW General Electric (NYSE:GE) LMS100 combustion turbines plus auxiliary equipment. Burns & McDonnell Incorporated (Kansas City, Missouri) is the project engineer and ARB Incorporated (Lake Forest, California) is the turn-key contractor. Construction is expected to start this quarter, with completion in first-quarter 2018.

NRG reported a net loss of more than $6.4 billion for 2015, compared with $132 in net income for 2014. The company said it incurred non-cash charges of $3.3 billion and $3 billion in asset impairments. The company said low commodity prices and the impact on the Texas wholesale power business was to blame for the non-cash charges.

Nearly half of the total investment value of the NRG projects being tracked by Industrial Info ($2.2 billion) are in the planning stages, where plenty of factors could increase, decrease or eliminate the expected spending. The remaining $2.4 billion is tied to projects in the construction and engineering phases.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, five offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at https://www.industrialinfo.com/.