How Producing Clean Power Turned Out to Be a Messy Business

Source: By DAVID GELLES, New York Times • Posted: Tuesday, August 16, 2016

Mauricio Gutierrez, the new chief executive of NRG. Bryan Anselm for The New York Times 

On the edge of a bucolic field in Princeton, N.J., an eco-friendly office building recently opened its doors. Plants festoon the roof, a living wall is planned for the lobby, and rainwater storage tanks supply the building’s needs. In the parking lot there are wind turbines, solar panels and electric vehicle charging stations.

It is the picture of a sustainable future, one in which society’s insatiable demand for electricity can be met without polluting the planet.

The same cannot be said of the building’s tenant, NRG Energy.

The biggest independent power producer in the country, NRG sells electricity to utilities, companies and individual homes. To generate all that wattage, it burns enormous amounts of natural gas, coal and oil, making NRG one of the country’s biggest polluters.

It isn’t trying to muck up the planet; that’s just the nature of the business NRG is in. The electricity industry is the biggest source of greenhouse gas emissions in the United States, according to the Environmental Protection Agency. In 2014, NRG was the fourth-largest emitter of carbon dioxide among the country’s power producers.

The business of providing Americans with electricity hasn’t evolved much in a century. But today, growing concerns about climate change, affordable wind and solar power, and the potential for distributed generation are pressuring utilities and power producers like NRG to clean up their acts, and fast.

“Our industry is going though massive transformation, the likes of which we’ve never seen,” said Mauricio Gutierrez, the recently installed chief executive of NRG. “The industry has never seen this much turnover.”

All this transformation has been particularly tumultuous for NRG, which has weathered more than its share of mishaps and unintended consequences: In May, for example, a fire knocked out a crucial tower at a cutting-edge but troubled solar power plant that the company manages in the Southern California desert. Its big bets on residential solar and on a national charging network for electric vehicles were ahead of their time and fizzled.

A solar panel at an NRG project in Spencer, Mass. Tony Luong for The New York Times 

The shale and fracking booms in the United States made natural gas cheap and abundant, pulling down the price of electricity and making power sources that NRG still depends on heavily — including coal, nuclear and renewables — less profitable. Investors lost faith in the company, NRG’s stock plummeted, and its previous chief executive was summarily fired, replaced by Mr. Gutierrez.

Far from emerging as an industry pioneer, NRG has become a cautionary tale. A power-hungry nation needs to change the way it is fueled, but as NRG shows, transitioning to clean power is messy business.

“The power producers and utilities are the canaries in the coal mine,” said Aron Cramer, C.E.O. of Business for Social Responsibility, a consulting firm. “And there’s a lot of road kill in the midst of this transition to a lower-carbon energy system.”

No two companies face the exact same set of challenges. But at some level, the quandary preoccupying NRG is one that all power producers and utilities will ultimately face: how to make more electricity while emitting fewer greenhouse gases.

NRG wasn’t always a clean-energy proponent. Until recently, it was just another power producer, burning fossil fuels to electrify the grid.

In 2003, it tapped David Crane to be its chief executive. Mr. Crane, who previously ran a traditional London-based power company, set about expanding NRG’s core business. He acquired Reliant Energy, which sells electricity to homes and businesses in Texas, as well as GenOn Energy, a rival based in Houston. These moves vastly expanded NRG’s scale, and its emissions.

By 2006, Mr. Crane began to respond to the climate crisis and became one of the country’s most unlikely environmentalists.

At first, he made modest changes. NRG bought a wind power company, which it later sold. Soon, though, Mr. Crane made large investments in wind and solar plants and spent heavily on pet projects like a national network of electric-car charging stations.

Seemingly overnight, the fossil fuels executive became a champion of renewable energy. He wanted to turn the hub-and-spoke utility model — with big power plants sending electricity out to homes and businesses — inside out.

Instead, in Mr. Crane’s vision, solar panels and wind turbines would blanket the country, heralding an era of distributed energy production. He called environmental protection a “moral imperative.” Last year, NRG said it would slash carbon emissions in half by 2030 and reduce them by 90 percent by 2050.

“It’s the destiny of NRG to be a leader,” Mr. Crane said at the groundbreaking of the new headquarters, “to create a more sustainable and prosperous future while winning the fight against climate change.”