NRG Energy targets a year-end signature on a $3.2 billion Texas data-center plant; the customer is unnamed

Terms are agreed, the signature is the target

On Monday's third-quarter call, NRG Energy▼−0.31% — NRG Energy, down 0.31 percent today chief executive Robert Gaudette answered the question investors have asked since August: when does the unnamed hyperscaler sign? "This project is going to happen," he said. Management has agreed on terms with the customer and is targeting a definitive agreement by year-end↗, and it is negotiating with the same customer to expand the Texas site to up to 2.4 gigawatts↗ ¹².

The economics carry the argument. The 1.2-gigawatt gas plant, part of NRG's Bring Your Own Power program, is expected to cost $3.2 billion and produce about $500 million of annual adjusted EBITDA and $375 million of free cash flow at full operation ². Capacity payments cover roughly 95% of that free cash flow whether or not the data center draws power, putting the demand risk on the customer, not NRG ².

The contract runs at least 15 years with an investment-grade guarantee, operations are targeted for late 2029, and the project won conditional inclusion in ERCOT's Batch Zero interconnection process on September 8 ².

Selling megawatts while the growth case waits

The same day, NRG agreed to sell six gas plants, just under 4.9 gigawatts, back to LS Power for $4 billion↗, an implied 8.0 times expected 2027 adjusted EBITDA ³⁴. Gaudette called the offer unsolicited and put Jack County's implied value at about $1,400 per kilowatt, against roughly $1,000 per kilowatt to build new Texas capacity ³⁴. Proceeds go to $2 billion of debt reduction, $1 billion of added buybacks within a $3 billion repurchase plan across 2026 and 2027, and $1 billion for growth or further paydown ³.

The quarter was strong: adjusted EPS of $4.68 beat estimates by $1.65↗, revenue rose 24% to $9.47 billion, and adjusted EBITDA reached $2.01 billion ⁵. But 2027 guidance, midpoints of $9.05 EPS and $5.75 billion EBITDA, excludes the sale ⁵, and the project's $721 million slice of the 2026 capital plan still awaits a financing partner, ideally by year-end, with equity ruled out ¹. Shares rose more than 6% pre-market↗ on the news ⁶.

The politics Gaudette is betting against

Analysts at Barclays▲+0.34% — Barclays, up 0.34 percent today, BNP Paribas and Morgan Stanley▲+0.48% — Morgan Stanley, up 0.48 percent today have trimmed targets on data-center opposition and policy risk↗ ⁸. Texas governor-elect Gina Hinojosa has called for a moratorium on data-center approvals↗ until the Legislature passes protections, and Governor Abbott froze grid connections and environmental permitting in August pending an audit ⁷. Gaudette argues turnover helps: incoming officials want community say, protected water supplies and lower bills, and NRG will build where it is welcome ¹. The year-end signature, the financing partner and final ERCOT approval are the tells to watch ¹².