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 impairments, unrealized gains and losses on derivatives and movements in foreign currency exchange rates, as well as other adjustments.

The following table summarizes NRG's equity method investments as of December 31, 2017:



Name	Economic Interest		Investment Balance
			(In millions)
Avenal Solar Holdings LLC ^(a)	50.0	%	$	(6	)
Desert Sunlight Investment Holdings, LLC ^(a)	25.0	%	272
Elkhorn Ridge Wind, LLC ^(a)	47.0	%	73
GenConn Energy LLC ^(a)	50.0	%	102
Four Brothers Solar, LLC^(a)(c)	50.0	%	213
Granite Mountain Holdings, LLC ^(a)(c)	50.0	%	78
Iron Springs Holdings, LLC^(a)(c)	50.0	%	54
Midway-Sunset Cogeneration Company	50.0	%	16
San Juan Mesa Wind Project, LLC ^(a)	75.0	%	66
Watson Cogeneration Company	49.0	%	21
Gladstone Power Station ^(b)	37.5	%	139
Other^(d)	Various		10
Total equity investments in affiliates			$	1,038

(a) Equity method investments owned by NRG Yield

(b) Gladstone Power Station is located in Australia

(d) Refer to Note 10 - Asset Impairments for discussion of NRG's investment in Petra Nova Parish Holdings, LLC.



	As of December 31,
	2017		2016
	(In millions)
Undistributed earnings from equity investments	$	120	$	101

Variable Interest Entities

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

Utility-Scale Solar Portfolio — As described in Note 3, Discontinued Operations, Acquisitions and Dispositions, on November 2, 2016, the Company acquired equity interests in a tax equity financed portfolio comprised of 530 MW of mechanically-complete solar assets located in Utah, and subsequently sold these interests to NRG Yield, Inc. on March 27, 2017. These equity interests in Four Brothers Solar, LLC, Granite Mountain Holdings, LLC, and Iron Springs Holdings, LLC are accounted for as equity method investments as the Company does not have a controlling financial interest. The assets reached commercial operations during the fourth quarter of 2016 and have 20-year PPAs with PacifiCorp. NRG's maximum exposure to loss is limited to its equity investment, which was $345 million as of December 31, 2017.

GenConn — NRG owns a 50% interest in GenConn, a limited liability company formed to construct, own and operate two 190-MW peaking generation facilities in Connecticut at NRG's Devon and Middletown sites.

GenConn has a $237 million note with an interest rate of 4.73% and a maturity date of July 2041 and a 5-year, $35 million working capital facility which can be used to issue letters of credit at an interest rate of 1.875%. As of December 31, 2017, $204 million was outstanding under the note and $14 million of letters of credit issued under the working capital facility. The note is secured by all of the GenConn assets. NRG's maximum exposure to loss is limited to its equity investment, which was $102 million as of December 31, 2017.

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 $139 million as of December 31, 2017.

Entities that are Consolidated

The Company has a controlling financial interest in certain entities which have been identified as VIEs under ASC 810. These arrangements are primarily related to tax equity arrangements entered into with third-parties in order to finance the cost of solar energy systems under operating leases and wind facilities eligible for certain tax credits as further described in Note 2, Summary of Significant Accounting Policies. For one of the tax equity arrangements, the Company has a deficit restoration obligation equal to $110 million as of December 31, 2017, which would be required to be funded if the arrangement were to be dissolved.

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



(In millions)	December 31, 2017		December 31, 2016
Current assets	$	118	$	87
Net property, plant and equipment	2,337		1,534
Other long-term assets	658		954
Total assets	3,113		2,575
Current liabilities	96		59
Long-term debt	661		442
Other long-term liabilities	209		183
Total liabilities	966		684
Redeemable noncontrolling interests	78		46
Noncontrolling interests	507		529
Net assets less noncontrolling interests	$	1,562	$	1,316