(Corrects to add transmission lines in seventh paragraph of story published March 26.)
NRG Energy Inc. (NRG:US), the power producer that gets more than half its revenue (NRG:US) from the wholesale market, is seeking to acquire rooftop-solar installers to generate power for residential customers.
Residential solar power will be “competitive on a price basis” in as many as 25 states by next year, Chief Executive Officer David Crane said in an interview yesterday. That’s helping Princeton, New Jersey-based NRG define its expansion strategy.
The shift fits into Crane’s vision that the U.S. energy industry is in the midst of a profound transformation. Producing electricity on residential rooftops is upending the century-old model that relied on utilities to deliver power from large generating plants. Instead, NRG is planning for a network that uses many, smaller generating sites located close to where electricity is consumed.
“People thought I was crazy,” Crane said, about his prediction last year that these distributed power plants are making the grid increasingly unnecessary. “Now, almost everyone accepts that it is going to happen.”
NRG already owns large solar farms that sell energy to utilities, and commercial sites that generate power for businesses. It also delivers electricity to about 3 million customers through its retail businesses. Moving into the residential solar market offers the chance to boost sales to consumers.
“The most valuable customers for us are the home energy customers,” where margins are higher, Crane said.
Crane detailed his vision of the evolving energy industry in an annual letter to shareholders yesterday. A national network of transmission lines that connects large solar projects and wind farms in remote sites would be “an expensive and pointless white elephant,” he said.
NRG foresees “a prolonged period through which the traditional centralized grid-based power system co-exists with the fast-emerging high-growth distributed generation sector,” Crane wrote. “We are doing everything in our power to head in that direction.”
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