Is NRG Energy Inc. CEO David Crane the face of the evolving utility business model? On today's The Cutting Edge, EnergyWire reporter David Ferris talks about the aggressive and complex behind-the-scenes world of the nation's largest competitive power generator.
Monica Trauzzi: Welcome to The Cutting Edge. NRG's David Crane is making waves throughout the utility industry. EnergyWire's David Ferris joins me with a look at the CEO's game-changing moves. David, you co-wrote a piece that ran this week in EnergyWire highlighting the CEO of NRG. Is he the face -- is David Crane the face of the evolving utility business model?
David Ferris: You know, it's funny. He's really the two faces of the energy industry because it's a company that's trying to be two things. On one face, it's a big energy company that's moving into building and buying huge solar plants, installing huge amounts of rooftop solar, building one of the largest carbon capture plants in the world, things that remove carbon from the atmosphere and alleviate global warming. And the other face is that he's the head of a company that, for years, has been one of the largest carbon emitters in the power industry, running lots of coal and gas plants and continuing to buy more and worsening the problem of global warming. So it's a contradiction that me and my co-writers, Jeff Tomich and Ed Klump, wanted to get to the bottom of.
Monica Trauzzi: So Crane recently issued a manifesto with some very big targets. How is he establishing himself as different from other CEOs?
David Ferris: Well, I think the first thing is that he wrote a manifesto. That's not something that people in the energy industry usually do. And in it, he said he wanted NRG to be like the big tech titans that everyone knows and usually loves, like Google, Facebook, Amazon, Apple, companies that are known for their information technology and are user-friendly and close to the customer. And that's not something that any energy company has really been. They always kind of work at this awkward, clunky remove from the customer, and now they want to be -- they want to be a household name. They want to be someone who you interact with the same way you'd interact with at Google. And it's going to be very interesting to see how an energy company goes about doing that.
Monica Trauzzi: As you said, he's aggressive on renewables, but he also stays firmly invested in fossil fuels. So is he sort of the embodiment of the all-of-the-above energy strategy?
David Ferris: You know, if Obama -- President Obama was giving out gold stars for all-of-the-above energy strategies, I think that NRG would win it 'cause it's -- it is the most diversified energy company in the country, by far. It's in nuclear, it's got a 1,000-megawatt-plus nuclear plant in Texas. They've got some of the country's largest solar farms. They're building rooftop solar. They just bought a company that does small handheld solar, and they have this new device called the Beacon 10 they're going to be rolling out soon, which actually takes natural gas from your gas line, converts it into electricity and, in tandem with the solar panels on your roof, create the possibility of a home being entirely off the grid. And so there's some questions about whether that company, like that big and that far-reaching, can be cohesive.
Monica Trauzzi: What are other executives in the industry staying about him behind the scenes? I mean, do they look at him for cues or do they wish he'd stop changing the game so quickly?
David Ferris: I get the impression that they wish he'd stop changing the game so quickly. Their criticism of him is muted. He himself is quite outspoken, and he has let the -- especially the utility industry know that he's gunning for them. He thinks that they are dinosaurs and they're fixed in their ways and that he is coming after them and wants to put them out of business by offering a different model. And it is surprising to see that, among other independent power producers, they've followed NRG's lead on some things, but among utilities, there's really not much sense that they're following him, and so that seems to me that it's setting up more of a clash between business models as we look forward.
Monica Trauzzi: So where has he misstepped?
David Ferris: Well, his biggest misstep is that he -- I mean, he's been with the company since 2003. He's been -- he came with the -- got on the company when it was just coming out of bankruptcy, and it really -- he's really built the company in his own image and made a lot of really smart moves that have made his company one of the leading players in his space, but at the same time, one misstep he made is that in 2007 he decided to go in big on nuclear plants in Texas, and that seemed like a really smart strategy until the Fukushima meltdown in Japan. And they had to -- NRG had to abandon that effort at about a $500 million write-off, which was -- David Crane said it was a very painful experience. The most recent concern was expressed by an analyst on a recent earnings call when he said is NRG becoming too complicated. Does it have its hands in too many pies to be able to be something that investors could really understand? And David Crane, who's a very smart, very articulate, well-spoken person, kind of stumbled on the answer. He wasn't really able to say whether -- wasn't able to explain how a big sprawling company like this can make a coherent value proposition, and that's going to be a challenge for NRG.
Monica Trauzzi: All right. An interesting story to keep watching, for sure. Thanks for coming on the show.
David Ferris: Thanks for having me.
Monica Trauzzi: More Cutting Edge coming next Friday. We'll see you then.
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