Apr. 25 2011

By TODD WOODY
http://blogs.forbes.com/toddwoody

David Crane, chief executive of NRG Energy, made news last week when he announced that the New Jersey-based power producer would abandon further investment in a Texas nuclear power project.

But when I sat down with Crane at the Green:Net conference in San Francisco on Thursday, it was clear he remains a true believer in nuclear power.

"I thought we should have trended toward France," Crane told me. "I would have liked to have seen nuclear’s market share go from 20 percent to 40 percent."

That, he acknowledged, is not going to happen anytime in the foreseeable future in the wake of the Japanese nuclear crisis and the existing financial and licensing challenges facing the United States industry.

"The fact that nuclear at best is at best an extremely uphill putt on the most difficult green at Augusta, that’s really unfortunate," he added. "I just don’t see that there’s the will to change that."

NRG, meanwhile, has been ramping up its investments in solar and wind power as well as rolling out an electric car-charging network in the petro capital of Houston, of all places.

And Crane strongly hinted that NRG will jump into the residential solar business, a market currently dominated by startups such as SolarCity and Sungevity.

"We think over the next three to five years the solar business will migrate heavily from a utility-sized solar business to a more of a distributed solar model driven by consumer demand not by government largesse," he said. "And we expect to be out in the forefront of that."

He noted that NRG electricity retailers Reliant and Green Mountain Energy would be natural channels for a residential solar business.

That doesn’t mean NRG has shied aways from making big investments in Big Solar. The company has committed up to $300 million for BrightSource Energy’s 370-megawatt Ivanpah solar thermal power plant, which is under construction in the Southern California desert thanks to a $1.6 billion federal loan guarantee. (BrightSource on Friday filed for a $250 million initial public offering). And NRG has invested in large-scale photovoltaic farms in California and Arizona, both of which have also obtained U.S. Department Energy loan guarantees.

Underscoring the importance of such federal assistance, a partnership NRG struck with eSolar to build a series of solar thermal power plants fell apart when the Pasadena, Calif., startup failed to obtain government loan guarantees, Crane said. NRG has since replaced eSolar’s power tower technology for those projects with photovoltaic panels like those found on residential rooftops.

Solar thermal projects deploy fields of mirrors called heliostats that focus the sun on liquid-filled boilers to create steam that drives an electricity-generating industrial turbine. They typically are built in deserts and other areas with intense sunshine.

"Wall Street is much more comfortable financing PV than solar thermal," Crane said. "If you look at the solar radiation map of the United States, solar thermal looks like it has very limited market potential. So from my perspective, while we’re happy to own solar thermal within that footprint, the success of solar thermal as an investment proposition depends on the ability to sell internationally."

And the electric charging network in Houston? That’s more about keeping customers from defecting to rival electricity retailers in Texas’ competitive and deregulated market, Crane acknowledged.

Called eVgo, the network offer three-year contracts with monthly subscription packages that give drivers a home charging station and access to a citywide grid of charging stations.

"We just wanted to make money in a more straightforward way by getting people signed up for fueling packages," Crane said. "What’s really attractive to us as a retailer is that if you can tie up a customer on a multi-year contract with a three-year fueling package for the electric vehicle or a 15-to-20-year lease for a solar array on their roof, that customer in all likelihood is going to just stick with you for that time."

In the long run, he sees millions of electric car batteries as storage for renewable energy and a way to balance demands on the power grid.

"I think that’s where it all comes together," said Crane. "Renewable power and electric vehicles all interconnected seamlessly by a smart grid."

All of which points to a different future for a power provider whose fleet is dominated by fossil fuels.

"There is reason to assume that as a post-industrial society that might be getting more serious than it has in the past about conservation and efficiency with widespread support for more renewables, if a company like ours were to find itself as the fossil fuel power generation company, we would be in a business that is in terminal decline."