Paul: David, good to have you on the program.

David: Thank you for having me.

Paul: Well David, NRG's involved with many, many things. Can you give me some sense of NRG and your business?

David: Well, NRG starts as an independent power company, which means we own power plants but the independent power industry's about innovation and, in recent years, we've expanded and we have a very big retail presence through our two subsidiaries, Reliant and Green Mountain, so markets where people have choice on retail electricity, we are big into that business, and, increasingly, in the last few years, we've gone, very aggressively, into sustainable energy, which I think is the highest-growth part of our industries, so I really think of it as a three-legged stool.

Paul: Well, and on that clean-energy side, you hear a lot from consumers about concern that going green can cost more and that that - that's why they wouldn't wanna take that on. What are your thoughts?

David: Well, I think we recognize that that's - that is a consumer perception but when consumers think about going green, historically, they haven't been thinking about going green in the energy space because they really haven't had the alternative of picking green energy. Usually they're thinking about organic food, which I think is usually more expensive than non-organic food or other areas but, in the energy area, I think why the pleasant surprise is that people will have, if they look at it, is - is being green does not necessarily need to be more expensive. The way we like to think of it is being green, in terms of energy uses, is being innovative and being smart, and, if you are innovative and smart, you can actually save on your monthly energy bill.

Paul: Well, and - and by going green and, if consumers are look to do that, it's - it's a pretty broad topic, right? You know, you have your fuel side, your power side; you've got your efficiency side. In your view what are some of the game-changing technologies, within that mix, that we should keep an eye on?

David: Well, interestingly, people think of energy as being very complicated but, if a person sits down and thinks about their energy use, it bifurcates. It splits you use energy at your house, which is mainly electricity, and you use energy in your car, which is mainly gasoline, and one of the interesting things about the green energy revolution is that we actually see those two things coming together through the form of an electric vehicle, which will bring your transportation energy more into your house energy. Then you have to focus on where you house gets energy and how you manage your energy use in the house and if you think of electric vehicles and if you think of smart meters -- which, in an interactive way, will allow you to manage the energy use in your house so much less energy is wasted -- and then if you think of an electric system that, as a country, is getting cleaner every day with wind power, with solar power, with more environmental controls on conventional generation and we're involved in all these areas, you get into what's a very attractive picture for everybody. You get a much cleaner and less expensive energy solution with no compromise in lifestyle.

Paul: Well, I know that and - and you talked about solar. Let's dig a little more deeply there. You're involved with solar projects across the country. Can you tell us a little bit about NRG's solar efforts?

David: Well, it's interesting when - because when I think maybe my first exposure to energy at all, the first time I can recall thinking about it, I was in the third grade. I don't wanna tell you how long ago that was but let's just say it was in the 1960s.

Paul: That's fair enough

David: And I remember them showing us a little film in class and they were talking about future energy sources and there was a cartoon at the end of it and it basically said, "You're home electricity bill is free this month courtesy" and then they had a big picture of the sun and the sun was smiling and so the idea that we could make a lot of energy from the sun has been around for my entire life but I think the technology took a while to develop and then it was very expensive but what's happened in the last few years is there's been a real breakthrough and the costs of solar installation has dropped precipitously over the last three or four years and so what we're doing is we're doing a full range of solar projects. We have very large solar projects principally out in the desert where it's - out in the California and Arizona desert where it's obviously very sunny. Several hundred megawatts, which makes us, by far, the largest solar company in the United States in terms of power that's either operating or under-construction but, beyond that, what's the real beauty of solar and this is a real advantage of solar relative to wind power is that solar scales up and it scales down and so we have a whole range of very interesting projects that are more what we would call "distributed solar" at facilities within cities and also we just announced a deal to do major rooftop solar project with - on warehouses around the country and it would double the amount of rooftops, solar, in the United States, just our one initiative, so we really wanna be an all-range of the solar, from massive projects in the desert to actually solar on your rooftop and the last thing I would say about that, actually through our two retail arms, Reliant and Green Mountain, both are offering solar products for people who wanna have actually solar right on their garage and so we run the gamut.

Paul: Well, and I've - I've heard the debate of do you focus on utilities, solar, distributed, home solar, and which is more economic, and it sounds like you're trying both.

David: Well, there's no doubt right now that, if you look at unit costs, like with most things that, you know, economies of scale suggest that doing gigantic solar projects is significantly less-expensive than going house-to-house. I mean just the moving house-to-house, putting the ladder up, getting on the roof, it just takes more time than solar installation in the desert but - but distributing solar has other advantages. First of all it's - it's - it's a sort of what we would say it's on the other side of the meter, so it gives the owner of that solar panel some electricity that's generating right at their house. They're not 100 percent dependent on the grid, which most people are right now. The other thing that we like to point out to businesses that are thinking of putting on solar panels is solar panels are mounted on some sort of frame and it gives room for advertisement and, as we say, solar panels themselves are, by themselves, an advertisement that you, as a business, have a commitment to sustainability and, for a lot of businesses, that's part of the image that they wanna present to their own customer base.

Paul: Is there a certain technology that - that you're more attracted to at NRG, within the solar space, is it concentrated solar, is it PV, is it a mix?

David: Well, in general terms you generally divide solar technologies into two - solar photovoltaic and mirrors, which is solar thermal or concentrating solar. We're doing both but, in terms of distributed solar, the - it's really all solar photo voltaic. The mirrors, really the application are in very large projects and we have very exciting projects in that way but, within the solar photo voltaic realm, as we like to say, we're agnostic about which technology that we would use and, in fact, what we're seeing now is that as much as an advance as solar photo voltaic technology has made, there are more advances in the pipeline that are really exciting in terms of the energy efficiency, going up the unit costs going down, the mode of application, you know, what they call peel-and-stick, so you can just slap it on the roof. Some really advanced people are talking about actually turning building materials themselves into solar-conductive, so roof tiles. I mean that's a little bit beyond anything we're looking at. I wouldn't count on that being in the store close to you next year but - but - I mean that's the - the innovation in the solar industry is really exciting.

Paul: Well, and you mentioned EV's. When we come back, I'd like to explore that a little bit further.

Paul: David, America loves their cars. Can you tell us a little bit about what NRG is doing to help power some of those vehicles?

David: America does their cars and that's why we wanna be involved with cars because, if you think about, "When do Americans think about energy and the costs of energy, they only think about it, really, at the pump, so electric vehicles are I think the most exciting thing that's happened in the car industry in a long time and, by extension, it's also the most exciting thing really, literally, by extension, by extension cord! It's the most exciting thing I think to have happen to the electric industry, as I like to say, since the air conditioner, so what we're doing is - you know the issue that you have with - with any sort of alternative-energy vehicle is how-do-you-fuel-it because whether you're talkin' about compressed natural gas or hydrogen, fuel cell or electric vehicles and we say that the enormous advantage that electric vehicles have over other alternative-energy vehicles is we have a ready substitute for the 148,000 service stations that Americans depend upon for their traditional vehicle and that's your home electricity system, so the service station of the future is your garage if you own an electric vehicle but it still raises the issue of, well, sometimes you're out and about and you need to be filled up and it' s a particular phenomena with electric cars where owners report what's known as range anxiety so what we've announced that what we're doing here in Texas, in Harris County, Texas, Houston and in Dallas-Fort Worth is that through initiatives that we call eVgo, we're setting up a network of chargers so that in general terms, you'll - wherever you'll drive within those two metropolitan areas you'll be roughly within five miles of one of our charges and the business model we're using is one that's akin to a cell phone model. It's a subscription model. You don't pay for actual usage of those chargers. We actually don't expect people to use the chargers very much. We just expect them to gain confidence by the fact that the charger's there, if they need it.

Paul: And where - where - where do they find the chargers? Are they on the streets? Are they combined with some other retail establishment?

David: Well, we worked a lot on that because when you do pull in for a charge, the idea is that you're gonna spend 10 to 15 minutes charging and you'll get a 4-year, 50-mile boost in that time, which will get you for where you need to go, so we've worked with some partners, host partners, and our initial host partner, here in Texas, has been Wal-Greens. Best Buy is going to host chargers. There's a regional supermarket chain in Texas called HEB that's - that's also going to host chargers, so there are others as well, so we've - we've picked partners who have strategically-located stores that have the space in their own dedicated parking lot for our chargers but also people who share our commitment both to customer service and also to a sustainable environment.

Paul: And I know from what I hear my friends in California are very pleased that you've been driving a Tesla for a long time but do I hear that we have got another happy seller of cars?

David: Well yes, I mean, our car - our system is a system that can be adapted to people who are buying plug-in hybrids, like the Chevy Vault, which - the Chevy Vault has gotten rave reviews from people who own it - but our system really appeals to people who are buying pure electric vehicles and the Nissan Leaf is now in the market. I have one, it's a phenomenal car but our system, ultimately, will not be dedicated to any one manufacturer. You don't have to go out and buy a Nissan Leaf or a Chevy Vault or a Tesla. By our estimation, within a year to 18 months, the American consumer could be choosing among 10, 11 or 12 different types of plug-in vehicles that will be offered virtually by all the traditional car manufacturers and also by some new ones.

Paul: So most like your move into solar, where you're panel-agnostic or technology-agnostic, similarly you're agnostic as to the type of car, you're just there to help provide the power?

David: Yes, absolutely. We're - we're trying to provide the network to support the - all cars, all plug-in vehicles.

Paul: Well, and providing that network, it's my understanding that you've done this without federal funding. It wasn't the federal government or some grant program that drove you into this space. Can you tell us a little bit about what made you, as an energy company, think to be innovative in this way?

David: Well, the capital commitment we've made to build out these charging networks for the 2 Texas cities is about $25 million, which is a substantial amount of money but not an amount of money that's not with - within our means. We see it as a huge opportunity if our subscription model is successful, we will reach break-even after a few thousand subscribers. That'll take a while just because it'll take a while for plug-in vehicles to get to the market in that number but we're willing to wait because it's such a great idea. As part of the stimulus the government has funded chargers that are going in various places in Texas and around the country but what all that's lacking is that they're not looking at it, holistically, and what you see a lot of municipal governments, including the City of Houston government, that wanna have chargers so it's quite common right now in the United States to have 2 chargers out in front in City Hall and certainly in California you'd see that everywhere but 2 chargers in front of City Hall is not a network that is going to help someone who is going from the mall to pick up their child at the school. You really need to have a comprehensive plan and, as far as I know what we have announced for both Houston and Dallas-Fort Worth is - is unmatched anywhere in the country, so we're very excited about it and it's getting a lotta notice. I just came back from Washington and what we're doing in Texas is a lotta people are looking at that, in Washington.

Paul: Well, and I'm interested to talk more about policy but, before we get to that, can you tell us your model that you've built for Houston and Dallas, will you expand and bring these chargers outside of this region?

David: Well, we're interested in that. It's - it's sort of a complicated analysis because - and what we've found is that you really hafta focus on a couple of things. First of all you hafta focus on where the manufacturers are selling plug-in vehicles because they're not offering their plug-in vehicles. Neither Chevrolet nor Nissan is offering their plug-in vehicles in all 50 states so you hafta go where the cars are, basically, Number 1 and, secondly, you have to look at the nature of the electric, the structure of the electric industry to make sure that a non-regulated company like us is allowed to compete but we are interested and I would tell you our - basically, at this point - with Texas as our start, our focus, at this point, is on the two coasts because, certainly, California has made more of a commitment to electric vehicles than any other state, and so that's a very interesting market for us and the Northeast United States is very interested as well. It has certain advantages, distances are shorter, I think there's gonna be a focus on electric vehicles there as well, so that's really our next geographic areas of interest.

Paul: Well, and did I hear you're doing something for the sports of the world?

David: Interestingly a lotta people wouldn't draw this connection but we see that people will increasingly draw a connection to electric-vehicle charging and solar power. A lotta people are concerned about potential contradiction with buying an electric vehicle in order to be sustainable and then fueling it with electricity from the grid, assuming that electricity from the grid involves conventional power generation. I would tell you that even doing that, you're making a big step forward for the environment because that whole value chain is much cleaner than the alternative but a lotta people will say, "Look, I wanna go the whole way, you know? I want an electric vehicle in my garage and I wanted to take electricity from the solar panels on the roof," so we are increasingly involved in, sort of, packaging the two, so what you're referring to is we just announced a deal with the Washington Redskins at FedEx Field outside Washington, D.C. to provide actually solar pavilions over something like 800 parking spaces in one of their parking and we're gonna put electric vehicle chargers in there as well, starting with just ten electric chargers because you have to wait for the cars to get there but, ultimately, we can expand that number but the solar array is so large that it will handle the load of the stadium on, except for, if they're fully blowing and going on a Sunday night, again, with all the lights, they'll need to bring more power from the grid but there's a lot of activity at the stadium, seven-days-a-week and we will cover that with the solar panels.

Paul: No but before we leave EV's, can you tell our audience what they should expect with regard to this range anxiety that you were speaking about before because I know there is some concern if-I-get-in-my-electric-car-can-I-make-it-there, just your - your feelings about range and ____?

David: Well the other issue with electric vehicles is, right now, the sticker price is a little bit higher than the traditional vehicle and the sticker price is higher because the most expensive part of the electric vehicle is the batter, with these new battery technologies. The quickest way to get the cost of an electric vehicle down is to have - you don't wanna have a battery any bigger than you actually need. What they've found - what has been found and tested and demonstrated is if someone who owns an electric vehicle knows that the only place that they can charge that electric vehicle is in their own garage, they will probably use 20 percent of their battery capacity, which is ridiculous and it's silly but I can personally assure you that it's true, so - so what we are focused on, by having this network around the community, they've again shown with real studies that if someone knows they have access to a charger in a community, they will use, on average, 70 or 80 percent of their battery capacity even if they've never used the charger and then the third element of it is that we are - we will be focusing and we think employers will be focusing, particularly in cities like Houston on offering charging at work so that someone who's had a long commute into the city can top up during the day and have a full - a full tank when they head home at night but when you put all this together it basically turns this concern range anxiety into a positive thing, range confidence, and what we try and say to someone, "Think about it, you never have to go to a service station again" and, apparently, women, in particular, don't like to go to service stations. That's - again and I'm not making a gender stereotype, I'm just telling you what the studies show and how great is it, every morning, when you wake up and go to your car, that you could just guarantee that you have a - you have a full tank. You're - you're - the dial's on full and so that's one of the convenience benefits of owning an electric vehicle.

Paul: Well David when just a moment ago you were telling us that you came back from Washington. I'd like if we could when we come back to talk a little bit about energy policy.

Paul: David, when we left, we were about to talk about energy policy and I've heard from a lot of our investor friends and CEO friends that there's some real concern about our nation's ability to compete without a long-term durable energy policy. Just broadly can you give us your take on maybe where we are and where we might look to go?

David: The as a blinding glimpse of the obvious I'd say we don't have a long-term energy policy and we haven't for the 40 years since the 1st and 2nd oil shock of the '70s and - and it doesn't get any better, it just gets more complicated. I mean I had actually hoped for a while that you could see a confluence of the right and the left of the political spectrum in the center because, particularly if you include sustainable energy, wind, solar power, it's domestic energy, so there's no importation of anything involved in there and then you get electric vehicles and reducing America's strategic dependence on foreign sources of oil, which is something that appeals to all Americans, particularly the right side of the spectrum. You could come together and have an energy policy that everyone agrees with but I feel that right now probably in Washington energy policy is as polarized as every other thing that is in Washington and that's a shame but we need it and, unfortunately, it will take some - a 3rd oil shock. For there to be some sort of consensus that develops.

Paul: We're seeing the Department of Defense coming more and more into this space. You hear about our troops in harm's way and the fueling trucks getting out to support the troops and I know DOD can drive some of the policy. They even installed our - North America's largest PV array out at Nellis Air Force Base. How are you seeing the DOD drive policy if at all?

David: Well it's a very interesting question and you allude to something, which I had heard a statistic, which I'm - I haven't been able to substantiate but that someone in the military had calculated that if you looked at Afghanistan and Iraq together, American forces were sustaining one casualty for every 13 oil tankers that they were sending out to fuel the troops in the field and - and that's just a - that's a crime and so the DOD is moving, the DOD is trying to be as green about their energy usage. I mean, they could be. I guess what I tell you, in short, is the DOD could be a real leader and it could bring maybe the right wing of the political spectrum along but that hasn't happened. Maybe it's because the DOD, they've said they were gonna do a lotta things and they're starting to do things but the procurement process with any part of the government but, particularly with the DOD, is very ponderous so - so there haven't been that many successes to claim and, for whatever reason, it does not seem to be resonating with the right wing of the political spectrum that American casualties are being taken to support because of fossil fuels and the DOD is a leader in this whole area but that's not resonating yet but hope springs eternal.

Paul: Absolutely. Well, I've often said that Congress has this inability to think strategically about our energy needs over, say, a 30-year time horizon but the people who do understand how to plan and model for that are our friends in the incumbent energy space and our traditional energy friends. Are you seeing and I know you're deeply engaged in Washington and having these discussions trying to better educate Congress, are you seeing others get engaged and do you have some sense of optimism that over the next two-to-five years will chart a more certain path?

David: I probably should be optimistic because when you're talking to the media you're supposed to be optimistic but I would say I was more pessimistic because what - I think the challenge is that we have so many issues in the country that are outside the energy space that, if anything, awareness that energy is this huge issue and a huge issue that's gone unaddressed, essentially, for 40 years, is not even really falling into the first tier, you know, between the budget and, you know, you very quickly could say budget, healthcare, immigration, there are several issues that people in Washington seem to be more focused on, getting reelected, so I wouldn't say that I'm overly optimistic. The other concern I have is that there's really no leading politician, I would say, from either party that really has, sorta, staked their identity on being an energy person. President Obama, Vice President Biden, neither has ever said that, you know, "I'm an energy person" and the leading candidates in the Republican field, I don't think any of them have said that they were an energy person at least amongst the people who are announced so far.

Paul: Well, that's right. Well, David, without any policy, how do we solve some of these big problems?

David: Well, I think there can be some policy, I just don't think there's gonna be this overarching, incredibly-insightful dictated policy as you would see in China, for instance, but, even though I'm pessimistic about too much government vision in this area, what I'm really excited about is what I see coming outta the private sector in the energy space and the amount of innovation that comes from the Silicon Valley types, regardless of whether they're in Silicon Valley, is just truly exciting and we've formed - we have a collaboration with General Electric and ConocoPhillips, uhh, a new energy technology, Accenture Capital Fund, a $300 million fund, and we're just seeing some things that are so exciting. We have these sessions once-a-quarter where we hear from the management of 5-to-10 of the best ideas and I just come outta those meetings brimming with optimism and excitement and certainly there's innovation going on in energy technologies really around the world but I would still say that I'm seeing much more of it in this country. This isn't just laboratory-type innovation, we're talkin' about innovative technologies that are ready to be scaled up, deployed in the field or if it's a manufacturing technique, scaled manufacturing and we wanna invest in it and we wanna make a profit on it but we also want to deploy these technologies through other parts of our company, so it's very exciting.

Paul: Well, David, what a perfect way to end the interview. I'll tell you I do find impressive that you're involved with fossil energy, clean energy, policy and now investing. It's an incredible drive forward and we're lucky to have a CEO like you helping educate our policy makers, make some prudent investments in scale and I must tell you I'm just very impressed and thank you so much for taking the time to be on the show today.

David: Well, thank you for having me.