NRG's Green Visionary Departure Leaves Clean-Energy Questionsby
David Crane says investors didn't buy into transformation
Power producer's green initiatives set it apart from peers
The future of NRG Energy Inc. following the departure of Chief Executive Officer David Crane could be decidedly less green.
Since he was fired last month, two executives hand-picked by the former CEO to manage NRG’s clean-energy business have left. The power producer is pursuing the sale announced last fall of a majority stake in a money-losing home solar business that put a drag on the stock and a nail in Crane’s coffin.
Crane, 56, lost his job after a high-profile effort to transform NRG from a fossil-fuel powerhouse into a leading clean energy provider. While the home solar unit alone wasn’t responsible for the company losing more than half its value last year -- the slump in natural gas played a role -- the push to go green struck a nerve.
“The replacement of former CEO David Crane may accelerate NRG’s full separation from its unprofitable home solar business,” Bloomberg Intelligence analyst Stacy Nemeroff said. “Appointing a new CEO may have been the only way to signal to investors that NRG’s management has a laser-like focus on optimizing the merchant power business."
Crane was among the industry’s strongest advocates for power companies to adapt to a changing world by investing in solar and renewable energy. That, he says, made him a lightning rod for traditional utility investors seeking safe, steady returns and dividends, and a target for Princeton, N.J.-based NRG’s board.
"One of the challenges I faced at NRG was that internal transformation wasn’t something the market wanted to invest in," Crane said in an interview. "We never attracted a shareholder base that was interested in clean energy."
The experience convinced him that traditional fossil-fuel providers will resist change regardless of government policies and regulations unless executives are held to account by investors.
NRG spokeswoman Karen Cleeve declined to comment on Crane’s departure or speculation about the company’s strategy. NRG rose 6.6 percent to $10.47 at 12:17 p.m. in New York.
"The traditional energy industry is a $6 trillion industry worldwide," Crane said. "Those companies, if they are not allowed to be in the new energy economy, they are going to fight like hell to preserve the status quo."
His plan called for the company to keep hold of its coal plants while launching green energy businesses. The vision was challenged as NRG’s stock tumbled and its board became "disgruntled" with the performance of the home solar unit, he said.
The moves came as global efforts to stave off the worst effects of climate change were gaining steam. Last month at United Nations climate talks in Paris, 195 countries pledged to reduce pollution blamed for rising sea levels and record high temperatures.
By the time Crane announced a turnaround plan in September to spin off the green energy businesses and sell fossil-fuel plants, it was too late. In December, NRG announced Crane was leaving the company. Chief Operating Officer Mauricio Gutierrez was installed in his place.
Gutierrez wasn’t made available for comment.
Crane said his ouster happened "fairly abruptly" for reasons that were never made clear to him. He knew the board was unhappy with the performance of the solar unit, which Crane ramped up early last year and was bleeding more cash than originally projected. At the same time, it was a relatively small part of the overall business, he said.
"NRG investors are focused on returns, and the returns didn’t come through on the new businesses," said John Bartlett, who helps manage $2.6 billion including utility funds for W.H. Reaves & Co Inc. in Jersey City, New Jersey.
Coal-fired generation makes up about 30 percent of NRG’s roughly 52,000 megawatt power portfolio, according to a regulatory filing. Wind and solar power represent about 9 percent of that total with natural gas, oil and nuclear making up the rest.
Crane, whose last day at NRG was Jan. 4, has yet to land a new job after 12 years at the company. He said he wants to be involved in the clean energy industry where he shares the core values with people he works with.
"If I had to do it over again, I would have gone into clean energy faster and harder," Crane said. "We should have sold down some of the conventional assets to keep the company in balance to build up the green side."