Worldwide, NRG has
experienced dramatic growth over the past four years resulting in a diverse
portfolio of approximately 30,000 MW of projects in operation, in construction
or with signed agreements. NRG's goal is to own at least 50,000 MW of
plants by 2005. Today, the North American asset base makes up about 70
percent of NRG's total worldwide portfolio. The balance of assets is located
in Australia, Europe, and Latin America.
Craig Mataczynski,
president and CEO of NRG Energy Inc.'s North American region, has led
the region created in 1998 through its enormous growth period from approximately
1000 megawatts (MW) to over 20,000 MW today.
NRG has expanded
its core North American markets from three to five. They are in northeast,
mid-Atlantic, south central, central and western portions of the United
States. The majority of projects are located where electricity supply
is constrained, transmission is accessible and where NRG can take advantage
of a diverse mix of peaking, intermediate and baseload units.
Historically, most
of NRG's growth has occurred by acquisition. Going forward over the next
four years, growth through acquisition will still be about half of the
total, while the remaining 50 percent will come from a combination of
building on new sites and repowering existing sites.
Twelve years after
its founding in 1989, NRG finds itself once again back to its roots with
an increasing focus on greenfield development. The company's original
emphasis was to market and build power plants using a standardized reference
plant design for 400-megawatt coal-fired facilities for the IPP market.
The innovations and construction efficiencies that were designed into
those plants are the same principles being applied to NRG's current greenfield
construction program.
NRG's insistence
on diversity adds stability to the bottom line.
Central to NRG's
market strategy is a portfolio of generation that is diverse in dispatch
level, geography and fuel.
Peaking, intermediate
and baseload facilities all play important roles in NRG's diverse strategy.
Peaking and intermediate units provide needed flexibility and value in
keeping the lights from going out and enhancing the return on the overall
portfolio, while baseload plants provide a stable return. Geographical
project diversity limits risk related to weather, economic, political
or other market issues. NRG North America's diverse fuel portfolio includes
natural gas, oil and coal. NRG has, and intends to always have, a coal
component.
"Coal provides
additional margin-especially when gas prices are high-and provides a benefit
to the end user," commented Mataczynski. "We are committed to
being environmentally responsible and can generate using coal and oil
in an environmentally-sensitive manner while assuring an adequate supply
at all times. This makes energy much more affordable for the consumer.
"
Mataczynski added,
"We also have plants that can switch between oil and gas. The ability
to arbitrage the oil and gas position is a value enhancement that other
companies who are solely reliant on a single fuel simply don't have. California
shows what can happen when you don't have that fuel diversity."
NRG's investment
in power marketing capabilities creates shareholder value.
NRG is building a
track record of performance, not only from the standpoint of operating
facilities, but also the ability to convert those operations into net
income and earnings.
"We have built
a first-class North American power marketing group consisting of more
than 60 people with the proven ability to boost the overall return on
the portfolio through the use of our expanded trading expertise,"
said Mataczynski. "This capability has been critical to our ability
to raise capital to fuel further growth."
Another key element
in adding the value that converts rapid top-line growth to increased earnings
is the ability for NRG to quickly and easily integrate new acquisitions
into the overall power marketing and risk management aspects of the business.
Mataczynski commented,
"By the time we close on a new acquisition, we are prepared to trade
around the asset and have already increased its value. One of the keys
is to get the people on the ground to become more entrepreneurial and
look at the operation from the perspective of an owner. That's the NRG
culture."
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