Monday, November 23, 2009

Q&A with NRG's David Crane: the full version

From the Houston Chronicle:
Last week I sat down with NRG Energy CEO David Crane after the company's two-day analyst meeting here in Houston. We ran an abbreviated version of the Q&A in Sunday's Chronicle but we needed to edit it down greatly for space. So here's a lengthier version which includes more of Crane's thougths on electric cars, including his own Tesla.

Q: At your analyst meeting in Houston [last week] all your talk about renewable energy made you sound more a regulated California utility than an independent power producer. Why such a dramatic change?

A: To me there's no doubt that in terms of investor perception there are benefit to us of a significantly greener portfolio, or decarbonizing our portfolio. To paraphrase Bob Lutz at GM, who said he wants to take environmental issues out of the car buying equation, I feel the same way about investing in us. Whether investors know it or not there's a drag on our stock that comes with the fact that a good amount of our revenues come from traditional coal plants. That's the 20th century and we need to be developing a portfolio for the 21st century, which is not 'no coal' but it's certainly a difference balance that it is now.

Q: Why is this now a liability to investors, having this strong, cheap baseload coal capacity?

A: On the political front, this idea of renewable portfolio standards [requiring a certain percentage of energy generation come from renewable sources] has been popular in both red state and blue states. There's no more obvious example than Texas. But certainly the election of the Obama administration in a time of financial crisis just accelerates the trend. Because they start talking about a federal renewable portfolio standard, which could increase the amount of renewable energy output in the country by two or three times.
The stimulus for certain types of technology is the only source of money out there. And the executive branch specifically said there will be $80 billion in loan guarantees through the Department of Energy, the vast majority of which is going to low- or no-carbon. There's no money in there for traditional coal plants. The EPA is also being more assertive in its plans to regulate CO2, so that has focused the mind that that's the way we're going....MUCH MORE