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Released March 01, 2017 | SUGAR LAND
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Researched by Industrial Info Resources (Sugar Land, Texas)--NRG Energy Incorporated (NYSE:NRG) (Princeton, New Jersey) swam toward the surface in 2016 as it reported a net loss much smaller than the previous year and looked forward to major projects set to wrap up this year. The loss was driven by a $1.2 billion impairment of goodwill and fixed assets, as commodity prices continued their downward trend. Nonetheless, the company reported stronger results from its coal-to-gas and renewable energy projects. Industrial Info is tracking $4.12 billion in active projects involving NRG.
NRG saw a net loss of $891 million in 2016, compared with a loss of $6.44 billion in the previous year; total operating revenues dropped to $12.35 billion, from $14.67 billion in 2015. Lower realized energy margins hit NRG especially hard in its Gulf Coast and Eastern regions. Offsetting the market conditions were more than $100 million in cost reductions, exceeding the targeted $400 million.
Capital expenditures were reported to be $1.24 billion, compared with $1.28 billion in 2015. NRG completed 2.2 gigawatts (GW) of coal-to-gas conversions during the year, as well as its Petra Nova carbon-capture project in Texas, which is the world's largest post-combustion carbon-capture system. Executives said that at this level of operation, Petra Nova can capture more than 5,000 tons of CO2 per day, which is the equivalent of taking more than 350,000 cars off the road. For more information, see Industrial Info's project report.
NRG also completed the installation of environmental control upgrades at its coal-fired Powerton Power Station in Pekin, Illinois, and Unit 9 at its Avon Lake Power Station in Avon Lake, Ohio. At Pemberton, NRG is at work on an $18 million electrostatic precipitator installation on the 892-megawatt (MW) Unit 5, which is expected to wrap up in April. At Avon Lake, the company has proposed a $41 million fuel conversion of Unit 9 to natural gas, although this idea remains in the economic evaluation phase. For more information, see Industrial Info's project reports on the Powerton and Avon Lake plans.
NRG's renewables portfolio proved beneficial in 2016, with increased generation and lower operating expenses at several key facilities. The company is planning the $190 million Buckthorn Windfarm in Stephenville, Texas, which is designed to generate 96.6 MW from 42 General Electric (NYSE:GE) wind turbine generator sets. It is set to be completed toward the end of the year. For more information, see Industrial Info's project report.
"We are focused on adding simpler mainstream technologies to our fleet with a core focus on utility-scale solar, which can be operated at $20 per kilowatt, and utility-scale wind at $50 per kilowatt," said Mauricio Gutierrez, the president and chief executive officer of NRG, in a quarterly earnings call. "As a result of these initiatives, you should expect our renewable cost structure to step down over time."
Although they did not provide a specific total amount, executives said they plan to reduce capital expenditures in 2017. Growth expenditures at NRG's core businesses, which stood at $564 million in 2016, are currently expected to drop to $185 million; environmental expenditures are expected to drop from $240 million to $12 million, while spending at the GenOn nuclear business is expected to drop from $268 million to $91 million.
The lower expected spending in these areas could be a result of several major projects facing indefinite delays. The addition of units 3 and 4 at the South Texas Project Nuclear Generating Station near Wadsworth, Texas, has been crimped by inexpensive natural gas and coal prices, which have weakened demand for new nuclear power, while the $600 million Carlsbad Energy Center in Carlsbad, California, has faced years of staunch opposition from local residents. For more information, see Industrial Info's project reports on the South Texas and Carlsbad projects.
"In 2017, we're estimating the three-quarters of our gross margin will come from stable sources, such as retail, contracted assets, including NRG Yield, and capacity revenues," Gutierrez said. "We have built a business that is not dependent on commodity prices to deliver strong results, but that remains well positioned to benefit from upside in a commodity market we cover."
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 http://www.industrialinfo.com.
NRG saw a net loss of $891 million in 2016, compared with a loss of $6.44 billion in the previous year; total operating revenues dropped to $12.35 billion, from $14.67 billion in 2015. Lower realized energy margins hit NRG especially hard in its Gulf Coast and Eastern regions. Offsetting the market conditions were more than $100 million in cost reductions, exceeding the targeted $400 million.
Capital expenditures were reported to be $1.24 billion, compared with $1.28 billion in 2015. NRG completed 2.2 gigawatts (GW) of coal-to-gas conversions during the year, as well as its Petra Nova carbon-capture project in Texas, which is the world's largest post-combustion carbon-capture system. Executives said that at this level of operation, Petra Nova can capture more than 5,000 tons of CO2 per day, which is the equivalent of taking more than 350,000 cars off the road. For more information, see Industrial Info's project report.
NRG also completed the installation of environmental control upgrades at its coal-fired Powerton Power Station in Pekin, Illinois, and Unit 9 at its Avon Lake Power Station in Avon Lake, Ohio. At Pemberton, NRG is at work on an $18 million electrostatic precipitator installation on the 892-megawatt (MW) Unit 5, which is expected to wrap up in April. At Avon Lake, the company has proposed a $41 million fuel conversion of Unit 9 to natural gas, although this idea remains in the economic evaluation phase. For more information, see Industrial Info's project reports on the Powerton and Avon Lake plans.
NRG's renewables portfolio proved beneficial in 2016, with increased generation and lower operating expenses at several key facilities. The company is planning the $190 million Buckthorn Windfarm in Stephenville, Texas, which is designed to generate 96.6 MW from 42 General Electric (NYSE:GE) wind turbine generator sets. It is set to be completed toward the end of the year. For more information, see Industrial Info's project report.
"We are focused on adding simpler mainstream technologies to our fleet with a core focus on utility-scale solar, which can be operated at $20 per kilowatt, and utility-scale wind at $50 per kilowatt," said Mauricio Gutierrez, the president and chief executive officer of NRG, in a quarterly earnings call. "As a result of these initiatives, you should expect our renewable cost structure to step down over time."
Although they did not provide a specific total amount, executives said they plan to reduce capital expenditures in 2017. Growth expenditures at NRG's core businesses, which stood at $564 million in 2016, are currently expected to drop to $185 million; environmental expenditures are expected to drop from $240 million to $12 million, while spending at the GenOn nuclear business is expected to drop from $268 million to $91 million.
The lower expected spending in these areas could be a result of several major projects facing indefinite delays. The addition of units 3 and 4 at the South Texas Project Nuclear Generating Station near Wadsworth, Texas, has been crimped by inexpensive natural gas and coal prices, which have weakened demand for new nuclear power, while the $600 million Carlsbad Energy Center in Carlsbad, California, has faced years of staunch opposition from local residents. For more information, see Industrial Info's project reports on the South Texas and Carlsbad projects.
"In 2017, we're estimating the three-quarters of our gross margin will come from stable sources, such as retail, contracted assets, including NRG Yield, and capacity revenues," Gutierrez said. "We have built a business that is not dependent on commodity prices to deliver strong results, but that remains well positioned to benefit from upside in a commodity market we cover."
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 http://www.industrialinfo.com.
