NRG Carbon 360 SM Overview. John Ragan President NRG Carbon 360

Transcription

1 NRG Carbon 360 SM Overview John Ragan President NRG Carbon 360

2 NRG Carbon 360: Why? Society, led by the Millennials, increasingly focused on carbon footprint of its consumptions EPA will not relent in its efforts to regulate greenhouse gases Abundant US coal resource cannot be disregarded-reinforces NRG s fuel diversity advantage NRG has a phenomenal, first-mover, competitive advantage to advance this opportunity

3 Double Value Enhances value and useful life of flagship coal fleet Value to NRG Group Provides unique and effective carbon hedge Preserves fuel diversity Intrinsic Value Carbon Business Capitalizes on abundant Gulf Coast EOR resources Captures significant value from existing assets Contributes to significant EBITDA growth 2 More Than Just a Barrel of Oil

4 Unique Advantage: Leveraging NRG s Coal Assets WA Parish 5MM Tons of CO 2 annually Limestone 0MM Tons of CO 2 annually Big Cajun II 4MM Tons of CO 2 annually NRG s Gulf Coast assets provide a unique opportunity for future development projects: WA Parish Limestone Big Cajun 2 Estimated 4 to 7 Billion Barrels Recoverable in Gulf Coast Region 3 Represents one of the largest equity CO 2 positions in U.S.

5 NRG Carbon 360: Economic Potential Parish Project # key statistics Adjusted EBITDA profile & sensitivity at Peak Production Reserves Total NRG Carbon 360 % Share MMBOE ~60 ~5 ($ millions) Parish Project # Illustrative Impact: Additional Projects 3 ~$270 Peak Daily Oil Production Peak Oil Estimates NRG Carbon 360 % Share BBL/D ~30,000 ~7,500 +/- $2 ~$50-$70 +/- $5/BBL Impact Est. Adj. EBITDA in 2020 Estimate at year 2020 assuming project online at year-end 206; 2 Quality of oil produced at West Ranch field trades at a premium to WTI; 3 Projects would come on at varying dates with peak production based on COD Incremental NRG capital required Upside Potential, by 2024 Based on current Jan 7 NYMEX futures price adjusted for inflation 2 4 A potential EBITDA multiplier for NRG

6 Declining Costs of Carbon Capture ($/barrel) Illustrative Oil Price for Target Return $75 ~$70 ~$60 ~$50 Investment Capital Break-even <$45 2 Current Petra Nova Parish Project (2) Lessons Learned from Project # New Technology (Pressurized Amine) New Technology (Modular Flue Gas) Represents after-tax 0% unlevered return; Oil prices represent today s dollars adjusted for annual inflation 2 Represents Petra Nova Parish Project with expansion fields 5 NRG Carbon 360 will be a first-mover in capitalizing on declining capital costs for carbon capture

7 Upside Benefit in Monetizing CO 2 Core Objective: Recover investment through monetizing NRG equity CO 2 NRG s Carbon 360 Benefit: Creates long-term coal plant advantage in a carbon constrained market ($/MW) Texas Power Sales Gross Margin Uplift $60,000 $45,000 $30,000 $0/Ton $5/Ton $20/Ton Assumed Carbon Price Illustrative Gross Margin Uplift of ERCOT Coal Fleet 2 ($ millions) ~ $65 ~ $95 ~ $25 Assumes 90% CO 2 removal rate per MW of generation, ton/mwh baseline carbon emissions, 80% capacity factor, and $0.53/MWh uplift in power prices for every $/ton carbon price 2 Assumes 50% of NRG s Texas coal assets are captured 6 Potential gross margin uplift for NRG s Texas coal assets is a significant upside benefit

8 Vast Market Opportunity in Redefining CO 2 CO 2 Gas-to-Liquids Enhanced Oil Recovery Construction Materials Optimize conversion of natural gas to fuel products Tap into vast Gulf Coast opportunity for tertiary oil recovery Support in the fabrication of precast concrete products Global market opportunity Gulf Coast opportunity 2 $9 BN $95 BN U.S. market opportunity 3 $8 BN Additional Beneficial Use Primary Approach Additional Beneficial Use Source: Johnson Matthey; Annually; 2 Source: U.S. DOE Basin Oriented Strategies for CO 2 Enhanced Oil Recovery. Assumes $25/bbl net operating margin. 3 Source: Freedonia Group 7 Monetization opportunities NOT limited to enhanced oil recovery

9 NRG Carbon 360 Major Milestones Foundation for Success Establish critical partnerships Achieve financial close and commence construction Execute Project on-time, on-budget On Track Sustained Value Drivers Capitalize on First Mover Advantage Leverage carbon potential of NRG coal plants Be the Leader in carbon monetization A Game Changer for NRG with Significant Value Uplift 8 NRG Carbon 360: Major Driver of Value Medium to Long Term