NRG Energy Inc.

NRG’s big announcement: 1.2 GW “Bring Your Own Power” (BYOP) data-center deal in Texas (expandable to 2.4 GW) - Aligned on principal commercial terms with a leading global cloud/AI hyperscaler, including customer capital commitment to support ~$3.2B of new generation in Texas. - NRG plans to develop, own, and operate a combined-cycle gas plant sized to support an initial ~1 GW data center load, with potential expansion up to ~2.4 GW. - Timeline: targeted late 2029 COD for first 1.2 GW; CEO indicated additional blocks could follow serially each year after 2029 (questioned as roughly 12-month cadence). - Job/community & permitting signaling: expected >1,400 construction jobs, ~30 permanent roles, and “significant” tax revenue; emphasis on water stewardship and working with local stakeholders.

Commercial structure is the key “why it’s financeable” (limited commodity exposure + capacity-payment dominance) - The structure separates (1) capacity payments (recover capex + required return) from (2) operating payments (fuel + operating costs). - NRG stressed it is paid for megawatts available, not how much the data center runs—intended to create durable, visible cash flow. - At full operation (initial 1.2 GW), expectations: ~$500M annual adjusted EBITDA and ~$375M annual free cash flow before growth (does not include expansion benefits). - Targeted economics: pretax unlevered IRR ~12%–15%, implying about a ~6x “build multiple” on expected run-rate EBITDA (and CEO suggested this project is “disciplined growth” and may be attractive vs NRG’s trading multiple).

Funding + capital allocation: preserves shareholder return commitments, but construction delays reduce near-term EPS contribution - NRG’s $1B+ annual share repurchase commitment remains unchanged, even with the new-build investment. - 2026 capital plan update: adds ~$721M expected project investment in 2026 (reclassifications included), funded mainly via less liability management / lower net debt reduction vs prior plan. - Spend phasing (total $3.2B): ~$0.8B by end of 2026 (incl. reservation payments), then $1.0B (2027), $1.1B (2028), $0.3B (2029) ahead of late 2029 COD. - NRG said much of 2026 spend is equipment-related (potentially redeployable to other projects), reducing “sunk cost” risk. - Financial realism on near-term earnings: management reiterated that during deleveraging, acquisition-related interest/D&A means EPS/net income can lag EBITDA early on.