US-based NRG Energy recently introduced a long-term, fixed-price, consumer solar energy product that management says enables commercial and industrial companies to acquire reliable, emissions-free energy as easily, and as cost effectively, as they do conventional power from utilities.
International food products distribution giant Sysco is the first customer for NRG’s Texas Solar Garden product. The company signed a 10-year renewable energy agreement with an NRG subsidiary to purchase the electricity produced by three solar garden sites that, when completed, will have a combined power capacity of 25 megawatts (MW).
Local, utility-scale solar power project developer Cypress Creek Renewables will build, own and operate the three solar gardens’ generation facilities. One 10 MW facility is being built outside Houston. Two others, one of 10 MW and another of 5 MW, are being built outside Dallas. All told, they will meet 10 percent of Sysco’s US electricity needs and most of its electricity demand in Texas, according to a news release.
A USD10.6 billion energy company that serves some 3 million residential and business customers, NRG Energy is in the midst of redefining itself amid a rapidly changing technological, industry and markets environment.
As is increasingly the case industry-wide, decentralization, digitization and “decarbonization” of power and energy are the principles guiding and informing management as it works to restructure, reorganize and align the organization with prevailing consumer, market and industry trends.
Solar Magazine spoke with NRG Energy Vice President of Sustainable Solutions Lynda Clemmons to learn more about the commercial-industrial customer Solar Garden product and how it fits into NRG’s transformation.
A simple, flexible, solar energy-as-a-service product for utility commercial and industrial customers
Supplying the emissions-free electricity for NRG’s initial Solar Garden agreement, the three Cypress Creek Renewables’ solar power projects are slated to come online by the first quarter of 2019. Guaranteeing Sysco a fixed cost of electricity for 10 years, the Solar Garden agreement with NRG provides energy security for the company and eliminates financial uncertainty and risk at a cost comparable to what it pays today and is expected to pay for electricity over the 10-year contract period, Clemmons told Solar Magazine.
It also conveys substantial environmental benefits, indirectly for Sysco and directly for NRG. These include reducing annual CO2 emissions by approximately 37,000 tons, which equates to taking more than 7,000 cars off the road, according to NRG. Organization-wide, NRG intends to reduce its carbon emissions 50 percent by 2030 and 90 percent by 2050.
“This collaboration marks the future of widespread availability of commercial and industrial solar products in Texas, fulfilling the state’s promise of a customer-choice market design,” Robert Gaudette, NRG senior vice president, Business Solutions, stated for a news release. “Businesses want simplicity in renewables, and together with Cypress Creek, we will help bring them closer to their sustainability goals.”
NRG’s partnership with Cypress Creek Renewables to develop the three projects that will power NRG’s initial Solar Garden project is a first step towards gaining greater flexibility in working with third-party solar power project developers that specialize in and have proven, “on the ground” solar power project design, engineering, procurement and construction experience, a company spokesperson explained. “We’re working on two fronts: rolling out a new, flexible, renewable electricity plan for retail customers, and we’re looking to secure that by working with Cypress Creek Renewables on the development end,” he said.
Transforming solar power into a secure, commodity energy product
NRG will purchase the energy produced by the three solar gardens and schedule, distribute and manage energy services for the Sysco sites in accordance with the terms of their energy services agreement. “The nuance, or the distinction, that’s important here is that we are not acting as a broker. We are transforming what has been an intermittent, clean energy source and service – solar – and eliminating the uncertainty and complexity of acquiring renewable energy for our commercial and industrial customers,” Clemmons explained in an interview.
“Renewable power is an important part of Sysco’s energy strategy,” Gaudette commented for the news release. “To help them meet their ambitious goals, NRG customized a simple electricity solution, in a familiar fixed price structure, that benefits Sysco’s operations, bottom line and the environment.”
NRG’s new Solar Gardens product aligns with the company’s strategic plans to refashion itself as a retail, consumer-centric, clean energy services provider. At its core, realizing its strategic plan entails developing an integrated, distributed, clean energy services platform capable of delivering customized solutions across its residential and business customer base.
“This is all part of a movement away from the energy company we have been towards being a consumer-driven energy company focused on enhancing energy resiliency and reliability. To the extent we can accomplish that we could almost be considered a consumer energy products company,” Clemmons commented.
NRG’s energy and organizational transformation
Expanding and strengthening its energy-as-a-service offerings is one mainstay of organizational transformation. Doing the same on the B2B (business-to-business) renewable energy side of its business is another. That includes expanding and enhancing the distributed generation assets, e.g. smaller scale gen-sets, NRG installs on customers’ sites that enable them to participate in demand response programs. An important aspect of grid modernization efforts across the US, these distributed, “behind the meter” energy resources enhance grid reliability as the amount of variable, or intermittent, solar and wind power come online.
Divesting itself of power generation assets is another key facet of NRG’s strategic plan. “NRG started as a generation company that moved into retail and some people still think of NRG in terms of (power plants),” CEO Mauricio Gutierrez was quoted in a recent news report. “But when you think about NRG in the future, I invite you to think about the company in terms of the number of customers we serve,” he said.
This past February, management sold the company’s stake in NRG Yield, a tax-advantaged, renewable energy investment pass-through vehicle, to Global Energy Infrastructure Partners. It also recently sold coal and natural gas power plants in Louisiana and Texas NRG expects to gain some $3 billion in cash as a result, funds that will enable to reduce its debt load by some USD7 billion.
In addition, its GenOn subsidiary is working through bankruptcy proceedings. NRG intends to spin-off GenOn, which holds most of the company’s coal-fired power plants, according to Reuters’ report.
All told, NRG’s portfolio of generation assets will drop from 2015’s total of more than 50 gigawatts (GW) to 24 GW. “Our retail business is going to inform the size of our generation business,” Gutierrez was quoted.
Incremental renewable energy additions to Texas’ ERCOT grid
NRG is optimistic that it will be able to expand on its first Solar Garden project in Texas, and beyond, more specifically in the service territory of PJM Interconnection, which is responsible for electricity grid operations and markets spanning 13 US states and the District of Columbia. “It’s the first time we’ve taken a B2B (business-to-business) product and packaged it as a commodity energy product for a customer,” Clemmons said.
The Solar Garden agreement with Sysco benefits all three parties, Clemmons continued. “The really important benefit for us is that we get to provide a valued customer what they’ve been asking for: a simple, fixed price, shorter term, ‘green’ energy services agreement,” she said.
“They don’t need to figure out how to do a PPA (power purchase agreement). It works in just the same way as the contracts and services agreements they have. The difference is that they acquire ‘green’ energy from a facility situated close to their own operations, as well as put incremental renewable energy on to the ERCOT grid.”
ERCOT – the Electric Reliability Council of Texas – operates the electricity grid and manages the deregulated power market for 75 percent of Texas. Wind and solar energy accounted for 18 percent of electrical energy on ERCOT’s grid in 2017. Wind power alone met more than 40 percent of state-wide electricity demand for hours at a time.
Solar energy generation capacity is growing rapidly in Texas. With 1,874 megawatt-hours (MWh) up and running, the Lone Star State ranked seventh nationwide in 2017 in terms of installed solar energy capacity, according to the US Solar Energy Industries Association (SEIA). comment↓