NRG pays $10bn to double its gas fleet as the S&P 500's top 2025 stock (interview)
CEO Larry Coben bought 18 LS Power plants at roughly half new-build cost, projecting 10%-14% EPS growth with zero data-center demand assumed.
What was changed
In a Fortune interview published May 27, 2025, NRG Energy chairman and CEO Larry Coben speaks as head of the S&P 500's top-performing large-cap stock of 2025 — up 75% year to date and about 240% since he took over as interim president and CEO in November 2023, after Paul Singer's Elliott Investment Management pushed out his predecessor following the $2.8bn Vivint Smart Home acquisition. 'We beat consensus by a couple hundred million bucks,' Coben says of the prior quarter, 'across every sector of the business.'
The centerpiece is the deal struck earlier in May 2025: nearly $10 billion (excluding debt) for 18 natural gas-fired plants from LS Power, essentially doubling NRG's gas generation at 'roughly 50% of what it would cost to build it new', concentrated in the two markets Coben calls the country's most attractive — PJM and Texas. LS Power's investors take 11% of NRG, their largest equity position.
Smaller moves stack the same strategy: $560m for Rockland Capital's Texas plants in March and Texas Energy Fund projects, together about 4 gigawatts in Texas — enough, Coben says, to supply NRG's entire Texas retail load from its own generation for the first time.
The demand case is deliberately conservative: NRG's projections put zero data-center growth in the numbers, yielding compound annual EPS growth of 10% to 14% 'with no data centers or other significant large load additions'. If data centers do arrive, Coben describes a three-legged offer — long-term power products, 36 potential sites for plants or colocation, and over 5 gigawatts of turbine capacity reserved with GE Vernova and Kiewit — on top of a portfolio set to run 75% to 85% gas.
Why it worked
Buying at roughly half of new-build cost caps the downside while the market tightens — capacity, not hope, is the hedge.
The demand signal comes from NRG's own book: the second-largest C&I electricity book, the largest residential provider in Texas and the largest C&I gas provider, talked to daily.
Seller alignment de-risked the price: LS Power, wary of a volatile IPO market, kept 11% of the combined company.
The plan clears its hurdle without the data-center boom — zero assumed — making any AI-driven demand pure upside.
The acquired fleet is younger, with about a gigawatt of peaker-to-CCGT upgrade potential already identified.
What can be applied
A conservative bet is still a bet: price the asset at half replacement cost, stress the demand case to zero, and you can afford to be early on a boom you don't need.
Aftermath
As of the May 2025 interview, the LS Power deal was signed but pending completion, with NRG's stock the S&P 500's best performer year to date (figures self-reported in the interview). The Rockland acquisition had closed in March 2025, and Coben anticipated all three Texas Energy Fund projects would close and be built.