David Crane, former CEO of the competitive energy supplier NRG Energy, once owned a bar and pizza shop in Hong Kong.

“That was fun,” he said, addressing a small group of law students at New York University earlier this month. “Terrible pizza, though.”

Crane is far better known for his career in the energy sector than for his work as a restaurateur. After picking up a law degree at Harvard, he went on to be senior vice president of global power at Lehman Brothers and executive director of International Power PLC, before taking the helm at NRG in 2003.

Over his 12-year tenure, Crane would steer the company out of bankruptcy, launch a retail business and complete several other major acquisitions. He would also launch an ambitious initiative to lead the market in renewables and distributed energy, which may have played a role in his most recent job change.

On December 1, 2015, Crane was fired from NRG for reasons that he says are still somewhat unclear to him. On April 22, after his clean energy non-compete expired, Crane signed on as senior operating executive at the private equity firm Pegasus Capital Advisors.

Crane asked the NYU law students if they could figure out why he had been fired. The students had been given a binder full of reading on Crane’s career and the energy market -- was there something they could point to?

After a few moments of silence someone said, “Well, you did have a few bad quarters.”

“No, absolutely not,” Crane countered.

“I would say that’s one thing that has been most not remarked upon, which I think is sort of stunning,” he said. “The company was on track for record financial performance at the time I was fired.”

“The thing I struggle with most”

Crane pointed out that on NRG’s fourth-quarter earnings call, the company announced record-breaking EBITDA -- a measure used to evaluate the operational health of a business. In addition, NRG’s retail electricity arm experienced its best-ever results since the business was acquired in 2009.

EBITDA doesn’t tell the whole story, however; NRG posted a hefty net loss of $6.4 billion in the fourth quarter of 2015. But the losses stemmed primarily from the company’s struggling Texas coal plants -- not the nascent green energy businesses Crane has been criticized for.

Crane doesn't think he's blameless. He led the acquisition of GenOn Energy, which brought additional coal generation under NRG’s umbrella. He also admitted that launching a new residential solar company is a “messy business” with operational challenges. But his clean-energy vision was not destroying NRG’s bottom line, he said. The company quickly became the fourth-largest home solar business in the country and saw its large-scale solar projects boost NRG Yield earnings in 2015.

Still, NRG’s stock tanked in 2015. Share prices fell by around 60 percent in the 11 months before Crane left the company. But every other independent power producer’s stock was way down too. Dynegy, one of NRG’s competitors with a heavy coal portfolio, saw its stock value drop by more than 50 percent over the same 11-month period, and it continue to sink further in the new year. Despite the decline, CEO Robert Flexon saw his contract extended last spring for another three years.

So why did David Crane get fired?

“At a very primitive level, when your stocks are down, someone’s head has to roll, and it’s not good to be controversial, which is an unfortunate thing across the energy industry,” Crane said in an interview over coffee.

“Actually, the thing I struggle with most in having gotten fired is that I thought my special contribution to the [climate] cause was showing how a fossil fuel company can become a green company, but by getting fired and not getting there, I’ve sent the opposite message: if you think you can transform your company and get rewarded for it -- you can't.”

"Limitless, with the most exciting potential"

Many have tried to make sense of why Crane was pushed out of NRG, including Crane himself. Many are still trying to figure out what it means for NRG, but also for the broader clean energy sector. SunEdison’s rapid decline and bankruptcy filing has only fueled greater uncertainty. At the same time, regulatory changes to net-metering policy in Nevada have sparked a debate around whether or not rooftop solar is a viable industry.

Do these recent events suggest there are fundamental flaws in the solar and cleantech industries? Are there insurmountable roadblocks to bringing renewables to scale? Are distributed energy service companies too complex to succeed?

Crane said he’s still bullish. Costs continue to decline, markets continue to mature and the future growth potential is enormous. He pointed out that around 50 million homes in the U.S. could theoretically go solar. At roughly $30,000 per installation, that amounts to a $1.5 trillion market.

“Of all the clean energy areas, the one I find to be the most limitless, with the most exciting potential, is solar,” said Crane. “So that’s where I’d like to be.”

A few days later, Crane announced his move to Pegasus. If his goal is still to change the world with renewables, joining a private equity firm doesn’t seem like the most obvious way to do it. But Crane believes Pegasus aligns well with his mission.

“They are smaller than some private equity firms, but they do sustainability investing, so I am working with people who share my same value system,” said Crane, in a follow-up interview.

Pegasus, founded by CEO Craig Cogut in 1996, has made sustainability a principal investment theme across the $1.8 billion in assets it manages, with a focus on “global resource scarcity, particularly energy, waste, food, water and health and wellness,” according to the company website. Pegasus’ biggest investment to date was in Lighting Science, a company that makes LED “biological light bulbs” originally designed to help astronauts sleep in space.

Crane said the combination of wellness and sustainability is a new interest of his. However, he appears to have been brought on to launch the firm into the “renewable energy future.” Pegasus has invested in biofuels, but no renewable electricity companies to date. 

"David has an excellent track record and has shown extraordinary vision in transforming businesses to meet the global challenges of the 21st century," said Cogut, in a statement. “David's worldwide network and reputation in the renewable energy space will complement Pegasus' efforts to build business platforms that promote sustainable distributed energy.”

“The industry needs a standard-bearer”

Steve McBee, former CEO of NRG Home, said in a recent interview that he sees a growing appetite among private equity investors to deploy capital in clean, distributed energy. Many of these large funds have money set aside to invest in a utility 2.0 type of company -- the difficulty has been finding businesses that can scale.

It’s unclear what the winning business model for a consumer-centric clean energy company will be. Crane attempted to make “the Google of the utility sector” by transforming a large energy retailer into a meaningful clean technology company. The leaders at SunEdison attempted to grow the first renewable energy supermajor from the ground up, but arguably tried to grow too fast in too many areas at the same time. Distributed solar and storage providers are putting increasing pressure on utilities, but have to come up with a business model to replace them. Large players like GE and Google are also making moves in the energy space, but seem more interested in serving the energy industry than running it outright.

Some energy experts, including Crane, believe that SunEdison’s story isn’t over yet. It was one of the companies best poised to lead the global clean energy transition and could still be. Bankruptcy isn’t the end; it gives a company another chance. Whether or not SunEdison emerges from Chapter 11 will depend on the value of the company’s deal pipeline and how well the transition out of bankruptcy is handled.

Crane happens to know a thing or two about bankruptcy, having led NRG through a successful restructuring 2003.

He politely declined to speculate on SunEdison’s future, stating only, “I really hope SunEdison succeeds, because the industry needs a standard-bearer.”

"Crazy man Crane"

Although he’s thought of today as clean energy champion, Crane said he’s “a little embarrassed" that he didn’t give much thought to climate change until 2006. Even once he saw the need to reduce emissions, NRG’s move into renewables was more about pragmatism than passion. On a 2009 earnings call Crane called renewables “a fact of life.” When NRG made a strategic shift into clean energy in 2010, there were a slew of new federal and state incentives available and early signals that President Obama was planning to ratchet up environmental controls.

Some people called him “crazy man Crane” for making a strong push into clean energy, Crane joked. But almost no one disagreed the industry was trending in that direction. It was just a matter of how fast or slow.

Crane saw a blend of intermittent renewables backed up by an increasingly efficient fleet of fossil fuel plants as a compelling offering to the majority of Americans. It was an offering that could appeal to the middle 70 percent of America -- the population in between the early adopters and staunch conservatives -- the “pragmatic greens” of the world who would happily opt for cleaner energy. 

But to investors, NRG’s story was hard to value.

“There’s no market on Wall Street for internal transformation,” said Crane. “An investor would often say to me, ‘If I want coal-fired power plants and distributed solar, I’ll invest in Dynegy and SolarCity -- I’ll invest in pure-play companies. I don’t want your transformation story.’”

This wasn’t helped by the fact that NRG wasn’t just transitioning from brown energy to green energy, he added. NRG was really trying to achieve three transitions at once: one was from coal-fired generation to cleaner energy, one was from wholesale-focused to retail-focused, and one was from centralized to distributed.

All of these areas stand to offer potentially huge paybacks. But in today’s market, Wall Street is rewarding utilities for rate-based investments, not for engaging in competitive markets, said Crane. The rate base, meanwhile, has received hardly any reward.

"Least customer-friendly entities on Earth"

Natural gas prices have plummeted from around $13 per million BTU in June 2009 to $2 per million BTU today, saving utilities billions on resource spending. But regulated utilities haven’t turned the precipitous drop in commodity prices into savings for customers; they’ve predominantly been investing those dollars back into the same poles and wires system they’ve been operating for decades, said Crane, who has called this strategy “shockingly stupid.”

“Utilities are the least customer-friendly entities on the Earth, because they’re regulated monopolies,” he said. “If you have to fight for a customer, you’re going to do your best to serve your customer.”

Now that customers have technology alternatives in the form of rooftop solar, energy storage and home energy management, the conversation is starting to change among both competitive power suppliers and regulated utilities. 

“Ultimately, while the [regulated utility] industry isn’t as sensitive to consumer preferences, it’s not immune to it either,” said Crane.

Crane believes the most critical factor for promoting distributed energy would be to pass federal legislation that creates a seamless path for installing rooftop solar -- a universal way for projects to be inspected and approved. This would mean that companies don’t have to navigate a patchwork of local policies, which slows down installation times and inflates project costs.

Rather than mention the state-level debates taking place around the country, Crane said he wants to see “enabling legislation for home solar to clear all of that detritus out of the way.”

"His impact will be felt for years to come"

Crane’s vision for NRG didn’t come to fruition, but that doesn’t mean the company won’t do meaningful things in the renewable energy space. With more than 4,500 megawatts of renewables still owned or operated by NRG, CEO Mauricio Gutierrez said the company remains focused on renewables development, particularly large-scale projects.

So the transition continues, but perhaps at a slower place than Crane fought for. 

“I think that David’s experience speaks to the difficulty that many business leaders face as they begin to really wrestle with the business implications of climate change,” said Mark Brownstein, vice president of climate and energy at the Environmental Defense Fund. "If you are running a business that is fossil-fuel-intensive, you have to be thinking long and hard about the necessary steps to transition away from that dependence toward new technologies that present new opportunities. And that can be a difficult thing to do in a world that tends to focus on quarterly earnings statements.”

But that’s starting to change. For instance, Europe’s second-largest oil and gas company, Total, recently announced plans to invest $500 million a year in renewable energy. The company already owns a majority stake in U.S. solar firm SunPower and plans to become a “global leader in solar power,” according to its website. On April 22, the day 185 countries signed the Paris climate agreement, Total joined an initiative to deploy more than 1 terawatt of solar power by 2030, representing an investment of over $1 trillion.

Brownstein said he thought of Crane while hearing Total CEO Patrick Pouyanné recently describe the complementary interplay between solar and natural gas. “To some extent, it’s a similar strategy to the one [Crane] was deploying at NRG -- take cash from legacy assets and begin to redeploy them in stuff that has greater viability in the long term,” he said.

Big regulated utilities such as Southern Company and Duke Energy are also making significant investments in solar and wind, recognizing their ability to drive revenue.

While they may not have taken their companies in the exact same direction, Crane's business skills are still highly regarded among his peers.

"David brought a vision to the [independent power producer] space like no other leader has, and his reach has extended further than many realize," Dynegy CEO Robert Flexon wrote in a letter after Crane’s departure, EnergyWire reported. "I attribute many of our accomplishments at Dynegy from [what] we learned from David over the years. David is a visionary this space has not previously encountered and his impact will be felt for years to come.”