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NRG Inks Solar Deal with MGM

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NRG Energy, Inc.'s (NRG - Free Report) subsidiary NRG Solar announced plans to set up rooftop solar photovoltaic arrays at the Mandalay Bay Resort Convention Center in Las Vegas, owned by MGM Resorts International (MGM - Free Report) . The installation of these rooftop solar photovoltaic arrays will be one of the largest in the world.

The solar system consists of 20,000 panels on the rooftop space of approximately 20 acres at the Mandalay Bay Resort Conference and Convention Center. It will generate nearly 6.2 megawatt (MW) of electricity annually, equivalent to powering 1,000 homes.

NRG Energy will sell the output to MGM Resorts through a long-term power purchase agreement. This agreement will help MGM Resorts’ Mandalay Bay Resort to fulfill approximately 20% of electricity requirements at a cheaper cost. This project is also intended to reduce NRG Energy’s dependence on fossil fuels.

We believe NRG Energy’s efforts toward expansion of its solar portfolio will create a win-win situation for both the parties. This project will strengthen MGM Resorts’ Green Advantage sustainability initiatives. On the other hand, NRG Energy is assured of a steady revenue flow.

Globally, utilization of renewable energy is rising mainly due to its clean nature and a growing awareness among the masses about its advantages. This has influenced utility providers to shift their mode of power generation to solar, wind and water from fossil fuels.

In Aug 2005, the U.S Environmental Protection Agency circulated a regulation that each of the federal agencies will consume renewable energy in amounts of not less than 7.5% in 2013 and afterward.

Apart from NRG Energy, other utility providers including ALLETE, Inc. (ALE - Free Report) and Northeast Utilities are investing substantially to develop and upgrade their renewable emission-free utility assets to comply with environmental legislations.

NRG Energy continues to convert its existing fossil fuel-based generation facilities into cost-effective units and expand the solar asset portfolio. In Mar 2013, the company started operations at its 26 MW Borrego I Solar Generating Station, in northeast of Borrego Springs, California.

Apart from the existing project, NRG Energy has a number of solar projects lined up - the Agua Caliente, Avenal, Blythe, California Solar Valley Ranch and Ivanpah Solar Electric Generating System in California, which are presently in the construction phase. We believe these initiatives will subsequently improve the company’s earnings.

However, fossil fuels still remain the most popular fuel source among energy producers owing to its abundance in the U.S. and will continue to provide hard competition to renewable sources.

Princeton, NJ-based NRG Energy together with its subsidiaries operates as an integrated wholesale power generation and retail electricity company. The company currently has a Zacks Rank #3 (Hold).

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