HOUSTON — In a conference call with investors Wednesday, executives at NRG Energy discussed third-quarter results held back by a cool summer before offering a hot projection for growth in the company’s home solar business.
NRG Energy, an electricity generator with headquarters in both Houston and near Princeton, New Jersey, said its net income rose to $168 million in the third quarter from $119 million in the same period the year prior. The increase was driven by the company’s retail business, but also set back by a summer that didn’t produce enough heat to boost to electricity prices.
The cooler summer set back the company’s wholesale business enough to require NRG to revise downward by 5 percent its full-year earnings before interest, taxes, depreciation and amortization, or EBITDA, forecast.
“Under these weather circumstances, I think, our financial results were as good as could be expected,” CEO David Crane said on the call.
Crane noted that while the 2014 earnings had been revised downward by about $200 million to between $3.1 billion and $3.2 billion, the company would set its 2015 figures at a higher $3.2 billion to $3.4 billion thanks to what he described as encouraging prospects for growth.
Perhaps the most encouraging prospect, executives said, is NRG’s push into the home solar market. The sector so far has been a money loser; NRG said its home solar business was expected to cut $50 million from the company’s year-long EBITDA in 2014 and $100 million in 2015.
But on the call, executives said that was normal for the industry at this point and asked investors to look past the negative cash flow. Instead, they stressed the myriad benefits that bolting a mini-power generator on a customer’s roof could bring. ”Our home solar business is going to be about much so much more than just solar panels on the roof,” Crane said, “and we consider that one of our greatest advantages.”
The company expects to have more than 10,000 solar installations representing 70 megawatts of capacity completed by the end of the year. By the end of 2015, the company said it hopes to quadruple that with as many as 40,000 installations or roughly 280 megawatts. NRG also said it expected to see its costs fall to between $3.20 a watt and $3.03 a watt in 2015 with further savings afterward.
Those growth figures are reasonable, said Toby Shea, an analyst and vice president with Moody’s Investors Service. Shea estimated that NRG’s home solar business could register positive EBITDA in fewer than five years.
NRG said it wouldn’t be getting into more detail about the business until a January analyst meeting, but executives implied that home solar would be a core interest in the future.
“We are dual focused both on winning the short-to-medium-term future of our business based on the current 20th century conventional grid-based paradigm, while also preparing to win the medium-to-long-term future of our industry as its 21st-century paradigm takes shape,” Crane said.
NRG’s earnings report was accompanied by an announcement that it had begun construction on a new $150 million natural-gas fired generation plant in Galveston County. The new plant will have the capacity to power 72,000 homes at peak demand.
Shares of NRG Energy Inc. traded up 7.8 percent on Wednesday to close at 32.27.
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