New football season marks a critical victory for NRG Energy

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September rolls around again and so another National Football League opens.

Last week, defending champions, the New York Giants, took on the Dallas Cowboys for the kick off at the MetLife Stadium in New Jersey.

The hosts lost 24-17. But as fans kept score from the bleachers, the opening game of the season marked a critical victory for a traditional power generation company with ambitions to shape the 21st century energy industry.

NRG Energy, the Princeton-based Fortune 500 company, is about to become the largest independent power producer in the US when it merges with GenOn, another mid-sized power producer.

NRG owns 25,000MW of capacity. But only a fraction of that – 166MW – is solar, with around 950MW under construction.

Last July, the Washington Redskins announced that NRG would install a 2MW system, the largest solar system in Washington, DC, at FedExField. Deals soon followed with the New England Patriots and the New York Giants and New York Jets who share the MetLife Stadium.

On a recent tour of installations at the MetLife Stadium in New Jersey and the Gillette Stadium in Foxborough, Massachusetts, it was clear that these were no ordinary PPAs or marketing horse trades.

David Crane, NRG's refreshingly outspoken chief executive, said: “People in the renewables industry tend to talk about all renewables being the same; solar takes a second seat to wind. What really impressed us about solar was the runway solar has to a lower cost point.

“The second advantage is that the sun shines when people are using electricity in the US for the most part, for example, air conditioning. But the wind doesn't necessarily blow when people are using electricity.

“We see solar in a vast range of applications from vast giant mirror arrays in the California desert to solar panels on NFL stadiums that are arranged in a highly aesthetic way.”

The deal with the Patriots includes 2,457 Sunpower panels atop a strip mall. The 327kW panels hadn't yet been connected on the day of my visit, but Crane vouched for their advertised ease of deployment when he later mentioned that he'd had to send a panicked email the previous week when no panels had been installed.

Together with the very sleek Schott BIPV panels over an outdoor shopping mall attached to the Patriots' complex, these two systems are expected to kick out 1.1m kWh annually, or 60% of the load outside of the Gillette Stadium.

NRG owns the systems and sells the electricity back to the team at a rate that is kept a closely guarded secret. Even the length of the PPA is not for public consumption.

“More than five but less than 50 years,” Jonathan Kraft, president of the club told me.

In the absence of any real information on price, the assumption has to be that the rate per kWh is high, the costs of panels are high, but the deal will last long enough to recoup the Investment Tax Credit and all the depreciation benefits, and then perhaps NRG will flip the project.

Tom Gros, president of NRG Solutions who headed up the NFL projects, said they all represented “very good value”.

“David Crane would never let me do anything that lost money so yes these all generate money.

“We're right at the tipping point in a handful of states where it is competitive with the grid and if you talk to those NFL teams there's certainty over time in addition.

“You'll see some of these other barriers start to fall and the economics will make sense. As technology improves those efficiencies go up. I don't think I'd want to be the head of a utility in that kind of market. It's going to be tough to compete.”

Maybe Gros is right. But it won't happen overnight.

The next stop took us to the MetLife stadium in New Jersey where NRG has installed 1,350 BIPV panels made by Atlantis Energy in Poughkeepsie, New York.

These 350kW panels ring the stadium and are trimmed with multi-coloured LEDs that can be seen over the water in Manhattan. From the mile-long catwalk that encircles the top tier seats, the installation is really quite a feat of engineering.

From the helicopter, it becomes really clear why the Giants and the Jets have struck this deal with NRG: the installation has an aesthetic that was missing from the original design of the US$1.6bn stadium while providing a very expensive shelter from the rain and snow for fans up in the Gods.

The electricity generated by the panels is tiny, only enough to power the lights 25 times over. Given the expense of the panels, which each take six hours to craft by hand, this is a cost ratio that would be the equivalent of buying a super flash car that does 22 yards to the gallon.

So what's the equation here? According to Forbes, NRG has scooped deals with four of the five highest-valued teams in the NFL.

Regardless of the price of the panels or the cents per kWh NRG can charge, the company will be a winner come next season when the Superbowl final will be played in the MetLife Stadium.

Last season, 111.3m viewers tuned in to watch the Giants beat the Patriots in the final earlier this year. Advertisers paid an average of US$3.5m to flash their brands in front of the crowds for just 30 seconds.

But some NFL plans have been over-ambitious. Jeff Lawrie, the owner of the Philadelphia Eagles, wanted to take the stadium off the grid entirely.

“Anyone who would listen to this thing would know that it wasn't going to work,” said Crane.

Other plans for NRG to work its way through the Forbes list of top NFL teams are thwarted by regulators' restrictions on third party ownership, such as Florida and Georgia.

Crane said that 18 of the 32 NFL teams attended a presentation soon after the Eagles' announcement. Almost every team contacted them afterwards. But the keen teams in the wrong states were given a short, hard lesson in the asymmetry of state-based energy regulations that choke the development of solar.

“We had a call from the Atlanta Falcons,” said Crane. “What can you do for me in Atlanta? they asked. We had to say I'm sure you guys have decent sun down there but you're also in Southern Company's territory; we're basically not allowed to do business down there. So the only thing I can do for you is give you the phone number of the CEO of the Southern Company … good luck.

“What it needs is further deregulation of the power industry. But the traditional power companies, they're going to fight it. We can't offer that opportunity in Georgia. We had a phenomenal drawing of what we could do for the Miami Dolphins.

“We see the NFL as very important to that and we're very proud of what [we've done so far]. It's just the beginning, so we want to get the snowball rolling.”

 

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