NRG Energy is poised to complete 415 MW of new simple-cycle gas capacity at its TH Wharton power plant in Houston later this month, company executives told investors on a first-quarter earnings call Wednesday that included a broad discussion of its recent operational performance and the outlook for power providers looking to capitalize on the data center boom.
The two-unit TH Wharton addition is the first of three projects NRG is developing with backing from the Texas Energy Fund, a state-backed initiative that provides below-market financing for firm generation to serve surging load growth in the Electric Reliability Council of Texas territory. The fund executed a $216 million loan for the TH Wharton project with a nameplate capacity of 456 MW last year.
The fund is also supporting the construction of a 721-MW unit at NRG’s Cedar Bayou power plant and a 455-MW capacity addition at its Greens Bayou power plant. Both projects are “on track” for completion, NRG representatives said.
NRG President and CEO Robert Gaudette — who took over from outgoing CEO Larry Coben last week — said the company’s Texas fund-backed projects were insulated from recent demand-driven price spikes for new gas-generation projects.
“These projects were developed at well below current new-build costs because we identified the opportunity and prepared the sites years before the TEF program existed,” Gaudette said.
NRG provides electricity, natural gas and “smart home” solutions to about 8 million customers primarily in competitive retail markets such as Texas, the PJM Interconnection and parts of the Northeast.
Earlier this year, NRG completed its purchase of 18 gas-fired generation facilities totaling approximately 13 GW of capacity, along with CPower Energy Management, a demand response program, from LS Power for approximately $13 billion in cash and stock. NRG now operates about 25 GW of generating assets, largely gas, oil and coal.
NRG framed its first-quarter performance as “solid” despite weather- and price-related headwinds. Earnings in Texas took a hit from mild weather and low pricing volatility and in the eastern U.S. from higher supply costs during Winter Storm Fern, NRG said.
The company fell short of expectations in its earnings per share, and its stock closed 4.56% lower following the earnings release.
Load growth meets power constraints
NRG reiterated that it’s poised to capitalize on data center-driven demand growth in ERCOT and the PJM Interconnection. It inked two data center agreements last year that could energize 445 MW of new load by 2032. The company aims to contract at least 1 GW with data center customers that can bring their own power.
NRG’s ability to contract bilaterally with customers enables faster development as limited dispatchable supply supports pricing in its core markets, company officials said. The deals inked last year target retail energy pricing above $80/MWh with target retail margins of at least $25/MWh, according to an investor presentation.
Gaudette said rising power demand could push up wholesale pricing and lift the fortunes of NRG’s marginal generating assets in Texas. NRG’s near-term earnings modeling lists nearly half its Texas fleet and more than half of its PJM fleet as “uneconomic” in 2026, according to the presentation.
“If prices move to the right place, that generation will become economic,” he said.
That is not a foregone conclusion, however.
“The Company’s expectations regarding load growth may not materialize,” NRG said in a detailed regulatory filing earlier this year.
Updates on LS Power gas plant acquisitions and GE Vernova/Kiewit deal
NRG officially closed on its acquisition of 13 GW of gas-fired generating assets from LS Power earlier this year. The deal roughly doubled NRG’s company-owned generating capacity and significantly increased its exposure to the PJM, NYISO and ISO New England markets.
Though NRG executives previously said the company would not chase “speculative” capacity additions, today’s presentation flagged potential simple-cycle to combined-cycle upgrades and “traditional uprates” that could add 1 to 2 GW of capacity to those assets if backed by a bilateral deal or an auction process.
Meanwhile, NRG’s gas-generation partnership with GE Vernova and Kiewit “gives us construction capability, equipment access and execution readiness that most companies in this space are still trying to establish,” Gaudette said.
Last fall, NRG said the trilateral partnership could provide up to 5.4 GW of combined-cycle capacity to data centers by 2032. Today’s presentation projected bringing online 1.2 GW each year between 2029 and 2031 and placing the remainder in service by 2032.
