Investments Accounted for by the Equity Method and Variable Interest Entities

12 Months Ended

Dec. 31, 2021

Equity Method Investments and Joint Ventures [Abstract]

Investments Accounted for by the Equity Method and Variable Interest Entities

Entities that are not Consolidated

NRG accounts for the Company's significant investments using the equity method of accounting. NRG's carrying value of equity investments can be impacted by a number of elements including impairments, unrealized gains and losses on derivatives and movements in foreign currency exchange rates.

The following table summarizes NRG's equity method investments as of December 31, 2021:


(In millions, except percentages)
Name:	Economic Interest		Investment Balance(a)
Gladstone	37.5	%	$	127
Ivanpah Master Holdings, LLC	54.5	%	4
Watson Cogeneration Company	49.0	%	14
Midway-Sunset Cogeneration Company	50.0	%	12
Total equity investments in affiliates			$	157
Petra Nova Parish Holdings, LLC(b)	50.0	%	$	(16)

(a)As of December 31, 2021, the carrying value of NRG's equity method investment was $116 million lower than the underlying net assets of the investees. The basis difference is being amortized into net income over the remaining estimated useful lives of the underlying net assets. The basis difference is primarily due to impairments booked on Petra Nova, but not booked at the project level, as well as differences related to the deconsolidations of Ivanpah and the treatment of certain deferred tax assets

(b)The Company continues to account for Petra Nova under the equity method due to the fact that NRG still has a financial guaranty. As a result, the Company continues to record losses for a negative equity method investment. As of December 31, 2021, NRG recorded $16 million to other non-current liabilities. Refer to Note 11, Asset Impairments, for discussion of NRG's investment in Petra Nova Parish Holdings, LLC


	As of December 31,
(In millions)	2021		2020
Undistributed earnings from equity investments	$	33	$	30

Variable Interest Entities

NRG accounts for its interests in certain entities that are considered VIEs under ASC 810, Consolidation, for which NRG is not the primary beneficiary, under the equity method.

Through its consolidated subsidiary, NRG Solar Ivanpah LLC, NRG owns a 54.5% interest in Ivanpah Master Holdings, LLC, or Ivanpah, the owner of three solar electric generating projects located in the Mojave Desert with a total capacity of 393 MW. NRG considers this investment a VIE under ASC 810 and NRG is not considered the primary beneficiary. The Company accounts for its interest under the equity method of accounting.

Other Equity Investments

Gladstone — Through a joint venture, NRG owns a 37.5% interest in Gladstone, a 1,613 MW coal-fueled power generation facility in Queensland, Australia. The power generation facility is managed by the joint venture participants and the facility is operated by NRG. Operating expenses incurred in connection with the operation of the facility are funded by each of the participants in proportion to their ownership interests. Coal is sourced from local mines in Queensland. NRG and the joint venture participants receive their respective share of revenues directly from the off takers in proportion to the ownership interests in the joint venture. Power generated by the facility is primarily sold to an adjacent aluminum smelter, with excess power sold to the Queensland Government-owned utility under long-term supply contracts. NRG's investment in Gladstone was $127 million as of December 31, 2021.

Entities that are Consolidated

The Company has a controlling financial interest that has been identified as a VIE under ASC 810 in NRG Receivables LLC, which has entered into financing transactions related to the Receivables Facility as further described in Note 13, Long-term Debt and Finance Leases.

The summarized financial information for the Company's consolidated VIEs consisted of the following:


(In millions)	December 31, 2021		December 31, 2020
Accounts receivable	$	939	$	647
Other current assets	—		2


Total assets	939		649
Current liabilities	78		78




Net assets	$	861	$	571