NRG Energy Inc.

Overview Key strengths Key risks Geographically diverse with large retail operations; comparatively modest, wholesale generation assets in Texas, the Mid-Atlantic and the east coast of the U.S. An increasingly asset-lite business exposes NRG to the risk of scarcity events and fluctuating commodity prices that could result in the potential for load-generation mismatches. Among the highest market share in residential power at about 27% of the U.S. market with almost 7.5 million customers. Exposure to commodity prices through its wholesale generation business, although this will reduce after the south Texas unit sale concludes. A proactive ratable hedging strategy. Increasing operating leverage from a portfolio of renewable power purchase agreements (PPAs). Vivint acquisition offers cross-selling opportunities that can result in higher revenues

...We view NRG's business risk prolife (BRP) as satisfactory. The nature of NRG's business has evolved. The company not only provides power and natural gas services to retail and wholesale customers but has pivoted to providing a variety of energy products and services, including premium services, differentiated by innovative features and loyalty programs. As a result, we assess NRG's competitive position group profile as a blend between `service and product' and `capital and asset' focus. We have done so to reflect the changing business strategy of the company, which now sees itself as more of a customer-facing company. From a business perspective, this means that we will focus not only on NRG's ability to deliver reliable power at a competitive price but also on its ability to retain customers within its panoply of brands even as it defends margins. In 2022, retention rates were above 82% and 86% for business power and gas customers, respectively. We typically view the retail power business...

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