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Robert Gaudette took over as the new CEO of power and electricity giant NRG Energy at the end of April ready to ride the AI wave and build the \u201cbespoke desires and needs\u201d of hyperscalers nationwide.<\/p>\n
But NRG isn\u2019t only in the business of rapidly building new power plants\u2014primarily gas-fired facilities\u2014to satiate the hunger of data centers. NRG also is leaning into the burgeoning business of turning the United States\u2019 dumb power grid smart with better technology and efficiency.<\/p>\n
That\u2019s where demand-response programs and so-called \u201cvirtual power plants\u201d come into play, convincing both industrial users and residential customers to turn their thermostats over to AI at times of peak demand\u2014and returning excess renewable energy back to the grid if available\u2014to save energy and keep energy prices lower, essentially acting as a de facto power plant.<\/p>\n
NRG (No. 153 on the Fortune 500) represents a tale of two strategies\u2014rapid power growth to satisfy demand and smarter grid efficiency to help solve the rising utility bill woes that are triggering AI backlashes nationwide.<\/p>\n
\u201cWe\u2019ve barely started the first inning from a VPP-virtual power plant perspective,\u201d Gaudette told Fortune in a sit-down interview. \u201cWhere we are today is now we have an affordability issue. Now we have a need. You have the combination of technology, willingness, and the economic desire to find a way to mobilize the power of the consumer to make a difference.\u201d<\/p>\n
Scaling up quickly<\/p>\n
Early this year, NRG closed the roughly $10 billion acquisition of 18 natural gas-fired power plants from LS Power, nearly doubling NRG\u2019s power generation nationwide. NRG also recently partnered with GE Vernova and Kiewit for 5.4 gigawatts\u2014enough to power 4 million homes\u2014of gas-fired turbines to power data center campuses.<\/p>\n
Gaudette is leaning into those two acronyms, VPP and BYOP\u2014bring your own power\u2014paid for by hyperscalers and built by NRG. \u201cNRG is uniquely positioned with two attacks on how we solve the challenges,\u201d he said.<\/p>\n
NRG is pushing for AI complexes in Texas, but Gaudette insists there are no limitations. New AI deals are expected later this year.<\/p>\n
\u201cThey can go anywhere in the country. We haven\u2019t been specific about where we would think the first project would be,\u201d Gaudette said. \u201cWe have talked to our investors about the benefits of building down here [in Texas]. It\u2019s one market; it\u2019s one government; it\u2019s one permitting regime. But we can take them wherever our customer wants and where we think it makes the most sense.<\/p>\n
\u201cFrom a speed perspective and getting things done\u2014and getting the data center built\u2014Texas has a lot of advantages,\u201d he added.<\/p>\n
Houston-based NRG has its power plants in Texas, the Northeast, Midwest, and a handful of facilities in California.<\/p>\n
The moves to scale up with LS power plants and partner with GE made NRG a Wall Street darling as the power sector boomed. But the deal also\u2014more quietly\u2014came with LS\u2019 CPower demand-response business for commercial and industrial (C&I) customers. The CPower tagline is: \u201cYour energy assets have value. We pay you to unlock it.\u201d\u00a0<\/p>\n
Likewise, NRG recently introduced a residential VPP program with its Vivint smart home and Reliant retail electricity businesses. NRG gives away smart doorbells and thermostats for contracted participants.<\/p>\n
\u201cWe\u2019ve never harnessed the power of the load. We have never gone out of our way to help those people who are using the electricity to use it smarter, to use less of it, and to be more thoughtful about how they do it,\u201d Gaudette said. \u201cIt\u2019s hard, and there hasn\u2019t been technology to do it. We\u2019re in a different place now.\u201d<\/p>\n
The C&I customers were already moving in this direction.<\/p>\n
\u201cWe have entire teams that work directly with big customers like that, and we\u2019ve been doing that for a decade,\u201d Gaudette said. \u201cIt\u2019s not just around traditional-demand response, but also, \u2018Just maybe you should schedule your maintenance outage for next weekend, because it looks like it\u2019s going be very hot and prices are going to be very high.\u2019<\/p>\n
\u201cWhat technology has done is now you can take that same thought process and apply it across a million homes. That\u2019s the big change.\u201d<\/p>\n
Rapid changes<\/p>\n
The acquisition of Vivint was originally considered a boondoggle by investors and contributed to a previous CEO\u2019s ouster over two years ago. But now it\u2019s considered a key part of the growth story. NRG chairman Larry Coben took over as CEO in late 2023, stabilized the company, and led the LS deal.<\/p>\n
But Coben\u2019s leadership was always temporary, handing over the reins to Gaudette, a corporate president who\u2019s been with NRG and predecessor companies for 25 years.<\/p>\n
A Houston native and Army veteran\u2014a platoon leader removing mines in Bosnia\u2014Gaudette started as an energy trader with Mirant, which was acquired by NRG in 2012\u2014a few years after it tried and failed to buy NRG.<\/p>\n
\u201cThe military is its own graduate school\u2014the people, leadership, and stress,\u201d he said with a laugh. \u201cIt probably helped me a lot when I was on the trading floor in all of the commodity cycles that we\u2019ve been over through the last 20 years.\u201d<\/p>\n
And now the power business is looking strong. NRG\u2019s stock is up nearly 60% in 24 months. However, that overall rise includes a nearly 20% in 2026 down to a market cap of about $27 billion.<\/p>\n
NRG\u2019s first-quarter earnings fell short of expectations due to high supply costs during Winter Storm Fern and, alternatively, mild winter weather in Texas.<\/p>\n
But those are seasonal factors. What Wall Street wants is for NRG to start announcing some big AI deals and build those 5.4 gigawatts of power\u2014and more.<\/p>\n
After all, NRG aimed to complete 20 megawatts of VPP power last year. Instead, it achieved 200 megawatts. NRG recently announced plans to add more than 1 gigawatt of battery storage power to its systems. And NRG is currently building about 1.5 gigawatts of gas-fired power plants at three locations around the Houston area. NRG also forecasts 2 gigawatts of expansion and efficiency projects in the Northeast and Midwest.<\/p>\n
\u201cThe beauty of NRG is that we have the ability to wrap all of those things\u2014batteries or wind or solar\u2014as well as the firm capacity that a GE Vernova turbine provides, into a solution set for a customer, and we can give it to them all in one bill because we are their retail provider,\u201d he said.<\/p>\n
#NRG #CEO #leans #growth #bring #power #boom #virtual #power #plants<\/p>\n","protected":false},"excerpt":{"rendered":"
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