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Summary:

NRG Energy is kicking off its home rooftop solar plans by acquiring Roof Diagnostics Solar.

NRG Energy Scoops Up 9 Solar Projects Out West

The CEO of power giant NRG Energy, David Crane, told me earlier this week to expect big things from his company around rooftop solar systems for homes. Now here’s some major news on that front: On Thursday NRG Energy announced that it plans to acquire Roof Diagnostics Solar, the sixth largest residential solar installer in the U.S. with 470 employees. Terms of the acquisition were not disclosed.

Based in New Jersey, Roof Diagnostics Solar is currently focused on providing solar installation and financing services to East Coast home owners, but plans to expand its services to the West Coast soon. NRG Energy already has a small but growing residential solar installation and financing business called NRG Residential Solar Solutions. Roof Diagnostics Solar will start operating under the NRG Residential Solar Solutions brand within the next month.

GreenNet 2011: Katie Fehrenbacher - Editor Earth2Tech, GigaOM; David Crane - CEO and President, NRG Energy; Eric Dresselhuys - EVP and CMO, Silver Spring Networks

David Crane — CEO and President, NRG Energy

While NRG has had a business around installing and funding solar panel systems for commercial and industrial building owners for awhile, its residential rooftop solar business with solar leases was rolled out in fits and starts. Crane told me this week that NRG hadn’t been more aggressive in the home rooftop solar market before because the price of solar systems are just now  becoming affordable for about half of the U.S. this year.

But now, since the price of solar panels has come down so much, “residential solar is at the vortex of what our company is trying to do,” said Crane. NRG eventually wants to sell a branded package of residential energy services, including home automation and control systems; Crane says the company is going to spend the next 18 months rolling out these services.

SolarCity NASDAQ

Crane tells me he wants NRG to be as big or bigger than SolarCity, which is currently one of the largest solar installer and financiers in the U.S. As of the third quarter of 2013, SolarCity was responsible for a third of home solar panels on rooftops. By the end of 2014 SolarCity plans to have 1 GW of solar panels installed over its lifetime since 2006.

NRG has the balance sheet to compete, though it’s trailing an already crowded market. According to NRG’s annual report, the power company owns 25 GW of natural gas power plants, 13 GW of coal generation, 448 MW of wind farms, 1.2 GW of utility-scale solar systems, and 47 MW of distributed solar panels on rooftops (53 MW including systems under construction).

SolarCity_Copper_Ridge_School

Many of NRG’s acquisitions to date have been large power plant companies that own natural gas and clean power assets. The company bought GenOn in late 2012 and Edison Mission Energy in late 2013. But NRG says its future growth will come from distributed solar and from consumers making energy choices. In its annual report it wrote:

“The Company believes that the U.S. energy industry is going to be increasingly impacted by the long-term societal trend towards sustainability, which is both generational and irreversible. Moreover, it further believes the information technology-driven revolution, which has enabled greater and easier personal choice in other sectors of the consumer economy, will do the same in the U.S. energy sector over the years to come.”

Crane wrote in that annual report that he wants NRG to operate more like one of the top four internet players — Google, Apple, Amazon and Facebook — that create consumer services that are connected, seamless, empowering and provide choices. Distributed solar systems will be a big part of that.

Solar saw massive growth in 2013. There were 4.75 GW of solar energy systems installed in 2013, including 2 GW in just the fourth quarter alone. That made solar the second largest source of new electricity generation in the U.S. last year, only behind natural gas. The amount of solar installed last year was 41 percent higher than in 2012. There are now over 12 GW of solar panels installed in the U.S. — from 440,000 solar panel systems — and 918 megawatts of solar thermal power.

  1. If this company is so optimistic about solar, shouldn’t it be immediately scrapping its large coal portfolio and replacing it 100% with utility scale solar? For a company that is so into renewables, it seems to have an awfully large reliance on fossil fuels.

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    1. Lionel Johnnes Saturday, March 29, 2014

      Hi Charles,

      Here’s the short & sweet answer: Because of the risk mitigation benefits of diversified assets, markets and revenue streams. What they are trying to do is reduce the reliance on fossil fuels, not entirely replace fossil fuels.

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      1. Lionel Johnnes Saturday, March 29, 2014

        Forget what I said and read this, straight from the horse’s mouth:

        “Even if you believe, as we do, that this future world will be upon us with lightning-like quickness in electricity industry terms, in real time, the distributed future is going to take a while to get here. In the meantime, the lights need to be kept on, homes heated and chilled, and appliances powered up. So at NRG, we are positioning ourselves to succeed during a prolonged period through which the traditional centralized grid-based power system co-exists with the fast-emerging high-growth distributed generation sector — much like fixed-line telephony has co-existed with the wireless world for a couple of decades.”

        – David Crane, CEO of NRG

        http://www.greentechmedia.com/articles/read/nrgs-david-crane-where-is-the-amazon-apple-and-google-of-the-utility-sector

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  2. Rafael Guillen Thursday, March 27, 2014

    this is going to be common place in the solar industry. its the only way an installer/finance company will survive after the end of the 30% tax credit is the going to be if finance and install companies join forces to become bigger. the competitive nature of solar will not be as competitive in the future, and we will have to ride the movement and not dollars.

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  3. Lionel Johnnes Saturday, March 29, 2014

    Hi Katie,

    Big, very exciting news about NRG. Just one comment/question: why is it that you describe the market as “already crowded”?

    Granted, there are a large number (thousands) of “installers” in the U.S., but they are primarily grouped in the same markets (often centered around rebates), not to mention many of these companies are not “true” professional solar companies (solar as a primary service, as opposed to solar as a side business for a roofer or electrician). Furthermore, the industry has seen tremendous growth over the past several years (both in terms of adoption and general interest) and the majority of states’ potential for solar still remains largely untapped. This suggests that there exist plenty of opportunity left on the table, particularly as the market matures and electric rates creep upward.

    Would love to hear your thoughts.

    Lionel

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  4. The solar lease and PPA companies are just trying to save their outdated business model. Solar has dropped to such a low price today that even the 30% tax credit is no longer needed to get a great return on investment. For example: Hyper X Solar’s N-Type, thin film passivated, tunneling junction architecture already provides higher efficiency, a smaller footprint and a much lower cost which makes At just $2.14 per watt, Hyper X solar’s price/performance ratio hard to compete against when compared to many of the solar lease and PPA company’s poorer performing offerings.

    Hyper X solar offers a better PTC to STC ratio “Real World” performance according to the California Energy Commission’s performance rating listings than over 100 of SunPower’s solar panel models.

    Hyper X solar also offers an incredible -0.27%/degree C temperature coefficient rating for awesome performance in hot/warm climates and best of all Hyper X solar systems are priced thousands less and even tens of thousands less on larger systems than a SunPower solar system. http://vimeo.com/79755125

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  5. fred Garvin Friday, May 16, 2014

    NRG has NO idea how to do rooftop solar. Maybe their shakeup at the top of their solar division means they can find some new leadership, but I endured those fits and starts mentioned in the article. Now – if they let Roof Dynamics guys do what they do, maybe NRG has a chance.

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  6. Solar Power Green Monday, May 19, 2014

    Rooftop Solar Power is not the way to go if modules are fixed in place. Check out a Solar Transfer, better way to go.

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