Q4 2021 Clearway Energy Inc Earnings Call
[music].
Ladies and gentlemen, thank you for standing by and welcome to the Clearway Energy fourth quarter 2021 earnings Conference call. At this time all participants are in a listen only mode. After the speaker's presentation. There will be a question and answer session to ask a question. During this session you will need to request a start into one key on your Touchtone telephone.
I'll offer assistance. Please press Star then zero.
I would now like to turn the conference I'll, let you speak of host Chris Sotos, President and CEO of <unk> Energy. Please go ahead Sir.
Thank you.
Good morning, and let me first thank you for taking the time to join today's call.
Joining me. This morning are <unk> Marsh senior manager of Investor Relations, Chad Plotkin, our Chief Financial Officer, and Craig Cornelius President and CEO of Clearway Energy group.
We are available for the Q&A portion of our presentation before we begin I'd like to quickly note that today's discussion will contain forward looking statements, which are based on assumptions that we believe to be reasonable as of this date.
Actual results may differ materially. Please review the safe Harbor in today's presentation as well as the risk factors in our SEC filings.
We will refer to both GAAP and non-GAAP financial measures for information regarding our non-GAAP financial measures and reconciliations to the most directly comparable GAAP measures. Please refer to today's presentation.
Turning to page four.
2021 was a historic year for Clearway energy from an operational performance and Cathy generation standpoint, we exceeded our objectives for the year.
We also deployed approximately $820 million and to accretive growth projects or a sponsor made significant strides in expanding its development portfolio, which will help drive our future growth.
We materially reduced the risk of our natural gas portfolio with new contracts.
Finally, clearway energy announced the sale of our thermal business at a very attractive multiple.
As a result of all these efforts clearly enters 2022 with unprecedented flexibility.
This flexibility provides a clearer way with the longest visible runway for dividend per share growth in our history with $750 million of net proceeds remaining for capital deployment after the thermal sale.
In summary, we are very well positioned for 2022 and beyond.
For 2021 are Kathy generation performed well with full year cap you have $336 million ahead of our guidance.
Clearly also announced an increase in the quarterly dividend by 2% or $1 $3 72 per share on an annualized basis.
The sale of our thermal business is on track with anticipate closing in the second quarter.
We're also increasing the amount of capital of remaining capital as a result of the sale from $680 million to now $750 million.
This was primarily due to a recent change in California law, where prior suspension and the company's ability to utilize state Nols in 2022 was reversed.
For 2022, taking into account the sale of thermal and our current committed growth commitments. We are on track for $385 million of pro forma Kathy translating into a $1 90 per share with $520 million out of the $600 million in capital commitments already funded.
Moving forward, assuming is working to deploy the $750 million of remaining capital to drive Kathy and dividend per share and.
And working with our Clearway Energy group colleagues, we have line of sight to a minimum of $250 million or roughly a third of this capital being allocated to the next dropdown with clearly energy group's development pipeline growing to 19 Gigawatts.
This $250 million of capital deployment, we view as a floor that would potentially be increased depending on what climate and clean energy tax provisions working their way through Congress ultimately passed.
With the full deployment of the $750 million of remaining capital clearly be able to drive <unk> per share to over $2 15 on a long term basis.
Clearly is also announcing a goal and.
In 2015 of net zero DSG emissions.
The ownership of our long term contracted clean energy assets is at the heart of what clearly does every day and represents a significant majority of our Caspian EBITA generation going forward as well as a platform for future accretive renewable growth through dropdowns from our sponsor or through opportunistic third party M&A.
However, we thought it was important to formally state our board approved long term goal around climate change and our emissions given our natural gas holdings.
As a leader in the clean energy transition Clearway is well positioned for 2022 and beyond to achieve the upper range of its long term, 5% to 8% Dps growth target through 2026.
Turning to page five this provides a roadmap for anticipated Kathy growth utilizing that our $750 million of remaining capital, resulting from the thermal sale.
Starting on the left side of the page the $385 million or $1 90, <unk> per share takes into account the disposition of thermal as well as the committed growth investments the <unk>.
Next column indicates the anticipated Kathy our next dropdown from our sponsor with anticipated minimum capital requirement of $250 million and averaged 8%, 9% Caf deal.
Due to this dropdown, we now have line of sight to deployment of a third of the remaining proceeds from the sale of thermal.
As discussed on previous calls clearly has always focused on efficiency of capital deployment with an emphasis on accretive growth.
You are continuing to work to commit the remaining $500 million of thermal sale proceeds to accretive growth investments driving Kathy on a long term basis to approximately $440 million and <unk> per share to $2 15 or greater dependent on caf deal.
In this process, we remain focused on meeting our underwriting criteria. If we can help meet this criteria retain the option to evaluate other means of capital allocation, including returns to shareholders.
Page six provides an illustration of our environmental footprint currently energy has one of the lowest GSE intensities in the U S power sector, driven by five two gigawatts of net owned renewable generation.
As a result, approximately 91% of our electricity megawatt hours 2021 were from renewable generation.
This number should increase in the future as the size of our renewable fleet.
Growth through investment in our sponsors 19 gigawatt renewable development pipeline as well as third party acquisitions.
This renewable footprint also provides the vast majority are clearly economic value with 75% of our pro forma Kathy and 82% of our pro forma adjusted EBITDA coming from renewables after accounting for the thermal cell.
As we've discussed over the years clearly reviews. Its gasoline is essential for the transition to renewable energy of California's electricity generation.
Our natural gas assets are predominantly peaking assets to help ensure the grids reliability during periods of high demand and electrics for electric grids with high penetrations of renewables.
Our California gas is the characteristics of being fast start efficient and load pockets are critical providing electricity during periods in which renewable generation may be waning.
As I mentioned earlier the board has approved a net <unk> emission target by 2050 aligned with the Paris climate agreement.
Taken together.
<unk> is a leader in clean energy and our premium investment opportunity in energy transition space with that I'll turn over to Chad.
Ed.
Thank you, Chris turning to slide eight.
Clearly you had an excellent 2021, both operationally and strategically the company finished the year strong with fourth quarter cash available for distribution or Kathy <unk>.
$35 million and adjusted EBITDA of $250 million.
This brought full year 2021 results to $336 million and Kathy or above our guidance of $325 million and adjusted EBITDA to one $1 5 billion overall.
As a reminder, full year cap the results were impacted by approximately $25 million from ice storm Yuri almost one year ago, excluding that impact cap do you would've been approximately $360 million for 2021.
During the fourth quarter, the company's portfolio is balanced and the nonrenewable part of our business both the conventional and thermal segments performed materially in line with expectations, leading to a strong year overall.
For renewables production across the wind portfolio during the fourth quarter was modestly above expectations, and providing an offset to lower solar volumes.
As a reminder, from the third quarter call strategic effort did impact fourth quarter results relative to our original expectations due to a change in the timing of project level interest payments such that payments were made in the third quarter versus the fourth quarter.
On the strategic financing front the company continued to manage the corporate balance sheet in 2021 through effective liability management capital formation in line with our leverage targets and by implementing temporary solutions to execute on growth in advance of receiving the net proceeds from the thermal transaction.
During the year, we raised $1 3 billion in new corporate level Green bonds, which in part the company utilized to refinance the $950 million in the Dan Outstanding 2025, and 2026 senior notes.
Through these efforts and on a weighted average basis for the new financings, we reduced interest costs from approximately five 5% to $3 73.
375% in the aggregate extended the maturity to 2031 and raised additional cost effective debt capital for growth.
Importantly, fairway has further mitigated its interest rate exposure as the Companys earliest corporate maturity is now in 2028, and when also including the project level nonrecourse debt approximately 99% of the company's consolidated long term debt interest cost are fixed.
As mentioned on the last earnings call due to the timing of when we expected to receive the net proceeds from the thermal sale relative to when we needed to finance committed growth investments, we required a temporary solution to bridge the companys capital needs.
To accommodate this requirement in November we agreed with the company's Bank group on an amendment to the revolving credit facility, providing for the ability to temporarily operate at higher leverage ratios and to enter into a bridge loan to facilitate the closing of the $335 million acquisition of the remaining interest in Utah solar.
Through these efforts the company achieved significant financial operating flexibility to advance its strategic growth objectives. This included the ability to fund $520 million of growth commitments since November which was instrumental to meet both 2020 to cap the guidance and its pro forma cap the outlook.
<unk>.
We do however want to emphasize that these efforts should not be interpreted as a long term change in our leverage targets. Upon the closing of the thermal transaction. The company will repay both the bridge loan and outstanding balances under the credit facility and see its leverage ratios move back to a more normalized level.
For 2022, we continue to maintain full year capex guidance of $395 million How's.
However, and as noted on the company's last earnings call due to the uncertainty of when the thermal transaction may close guidance does continue to factor in the estimated full year contribution of $40 million and Kathy from the thermal business.
As is our normal practice for strategic transactions, we will provide an update to full year 2022 expectations. After the closing of the thermal transaction.
Lastly, we want to also remind you that 2020 to cap. The guidance also does not fully capture all cap do you expected relative to five year averages from committed growth investments, which informs the company's $385 million in pro forma cap D outlook figure that already excludes any contribution from Germany.
And with that I'll turn the call back to Chris for closing remarks.
Thank you Chad.
Going to page 10.
Just the beginning of the call 2021 was exceptionally strong year for Clearway energy, which we delivered on our financial commitments.
<unk> raised capital in an efficient and accretive manner.
The hedge profile of our natural gas assets.
The sale of our thermal portfolio and a strong multiple.
And as a result of all these efforts reduced our risks and create a high degree of financial flexibility and supports our view of growing <unk> per share at the upper range of our long term, 5% to 8% dividend per share growth rate through 2026.
Establishing our 2022 goals, we're focused as always on the near term and also long term achievement of our 2022 guidance within sensitivities growing our dps at the upper end of the range and closing the sale of our thermal business.
In parallel with the sale of our thermal business. We are working with Clearway energy group to create a strong succession of dropdown opportunities that can be completed from their existing late stage pipeline under current law, even as we look to potential upside in capital deployment and capital contribution if the climate and clean energy tax provisions moving through Congress are passed.
<unk> made significant progress in reducing the near term risk profile of our natural gas assets. In 2021, we still have work to do and this will be continuing area of focus in 2022.
Finally.
I would like to thank the employees of clearway three entire enterprise for all their hard work during another difficult year of the pen delek towards through the Texas weather event operate projects at high levels of reliability and safety engage and support third party M&A dropdown and capital raising activity.
As well as deliver on the construction of new assets in this challenging environment is an achievement. We can all be proud of thank you operator, please open the lines for questions.
Thank you, ladies and gentlemen, if you'd like to ask a question at this time. Please press. The Star then the one key on your Touchtone telephone.
A question you May press the pound key.
Okay.
Multi county, Washington.
Now first question coming from the line of Julien Dumoulin Smith with Bank of America. Your line is open.
Hey, Good morning, Tim can you hear me.
Yes, we can.
Excellent thanks for the time and the opportunity so first off.
Just start high level here I'd just be curious how would you.
Compare the backdrop available for renewable assets quarter over quarter, you or as we've seen inflationary impacts and especially just the impact of higher rates filter itself out I mean, how much does that change pricing and then perhaps more specifically here if you don't mind.
One of your peers Hannon Armstrong here.
Now in something.
Late in Texas with Clearway group can you comment on on what that means for your business, especially as you think about the palatability and desirability of large scale solar for instance, perhaps there might be something to that as well. Thank you sure probably.
If I go to your second question first and then back so for Hannon Armstrong has a good partner that we have in lighthouse currently and I think we do have a letter agreement with CTG to work on that asset. So I think we're both of US are kind of interested in that and I think the view of long term solar in ERCOT.
Positive, one, especially given our portfolio so I think nothing.
Nothing in particular, there are other than that's one of the assets that underpins kind of our view of growth going forward.
To your first question around comparing the backdrop Q on Q also ask Craig a little bit for his view, obviously kind of working it more day to day.
From our perspective, I don't necessarily think in terms of PPA pricing, which I think is the basis of your question Julien There probably has been a big change in the near term longer term there might be but I think your question is probably underpinning PPA question I don't think you've probably seen that worked through in today's environment, but Craig I don't know if theres any additional color.
Yes, sure I mean, I think Julien in terms of the overall demand picture.
It remains as robust as we've really ever seen it in the two decades that we've been building this industry here in the U S. Though.
Wholesale demand continued to accelerate and it's being driven by.
By de Carbonization goals integrated resource plan amongst utilities planned coal retirement.
In total the demand that we're tracking here in the U S.
Over 240 Gigawatts of demand just.
From IR.
We plan to be able to serve as a company.
We project 80, Gigawatts worth of coal retirements that will open up service about demand in the wholesale markets as well.
And across different corporate sustainability goals that will require additional clean energy ppas for virtual power purchase agreements. There are tens of gigawatts more that will need to be signed and built over the current becoming.
Three to five years, and when we look across that whole picture.
The ability to serve that demand at prices that reflect today's cost structure is certainly there, while providing desirable customer value proposition. So.
We've worked with customers on new projects that we're building to be able to.
Price debt.
Business objective.
They have meaningful while also allowing for our projects to be economically accretive in.
The outlook that I have for our industry to be able to serve that demand even in an inflationary environment is very strong.
Got it excellent. Thank you.
Okay.
If you don't mind me going back to this question just to clarify this.
Just how do you imagine this going forward on that project in Texas here.
You said that you've got a letter agreement with TPG.
Work on that asset.
Is this something that you could imagine a split is this a competitive bid at some point sorry to nitpick on it I'm more curious on what it means more holistically, but also as it pertains to the specific arrangement as you alluded to.
Sure.
Maybe I'm reading too much into it Julian I think it's very similar to what you saw in lighthouse, where we probably would have a partnership with housing on that asset. It's not as if your question is are we both bidding on it to own 100%.
That's not what we're doing I think it's much more of a partnership mode that you saw on lighthouse and the end of 2020 that we've deployed capital to in this year.
Got it okay. So more of a split situation sorry go for it yet.
Yes.
Sorry, Julien this is Greg Yeah, just to add to it I mean, I think we think of the portfolio that we're building for.
Clearway Energy, Inc, with handling as a partner.
Portfolio that over time, we can incorporate additional assets that are complementary to.
The range of resource profiles and customer profiles that are that are in that existing loan portfolio.
And what I think you see referenced there is just the next in a succession of complementary solar and storage opportunities that we helped both enterprises will ultimately seek from us.
Great excellent.
Maybe the underlying point here is.
You see a wealth of opportunities it doesn't really phase <unk> that you would be potentially splitting something here with CTG.
No.
Excellent alright ill leave it there. Thank you guys. Thanks, Greg.
And our next question coming from the line of Colton Bean with Tudor Pickering Holt Your line is open.
Good morning, So just on the potential $250 million drop.
Looking at the timing of the <unk> backlog is that weighted to projects with commercial in service of 2023.
A related question there any updated thoughts on third party M&A and if that can play a role in the remaining 500 million of proceeds.
Oh sure Yeah, it's definitely back weighted to kind of 23 through probably the first quarter of 2005.
Yes. If your question is it going to come online in 2020 to that answer in general as well.
It's much more kind of 'twenty three and beyond to your second question definitely third party M&A is something we're looking at it was part of our capital deployment in 2021 with Mount Storm in Utah. So we look at third party M&A all the time.
Binding agreement on something we would announce it.
And then maybe a related question there I know, it's still early days, but with interest rates moving higher and have you seen any shift in valuation discussions whether that means third party processes or potential CET drops.
I would say no to both it's a little bit too early and I think while obviously the interest rate move from around 70 basis points on the 10 year or two depending where maybe this morning at one nine is significant in multiple terms.
At the end of day about 100 basis point move, which maybe I've just been in the industry too long, but the 100 basis points move do happen.
So I think for my view I don't think to date that has moved pricing around that much either in a dropdown context or in a third party managed today.
Okay.
One on <unk> I know Rick re contracting was expected sometime in 2022 any update as to where we sit in that process and just differences in expectations versus what you were able to get done on the peak of your plants.
Frankly, no that process kind of continues once again.
We occurred in the peaking facilities the rfps by the.
Investor owned utilities basically happened in kind of the second quarter and we also work to hedge them with other parties as well outside of that process. So I'd say no no new items or development remains on track for the normal timing.
Got it appreciate the time.
And as a reminder, ladies and gentlemen to ask a question. Please press star one.
Our next question coming from the line of Noah Kaye with Oppenheimer. Your line is open.
Thanks, I was just wondering around the development environment to start maybe it was actually the first part of it is just around the project timing.
It looks like really no.
Change overall, the announced projects expected to hit in <unk>.
'twenty two.
Look comparing quarter over quarter, it looks like maybe a little bit of shift out of <unk>.
At 2024, so the first part is really just around.
What youre, having to go through operations in terms of the timing of some of these projects dropping.
Overall, it looks like Youre, managing things well, but just any color you can give us on supply chain labor availability all of them.
Yes, Craig if you don't mind, you are closer to that yes, yes.
Yes of course.
Yes, thanks for noticing.
I think we're pretty satisfied with how we manage this environment generally.
And as compared to peers.
And we think that the shareholders of Clearway Energy, Inc should be satisfied as well.
We've been able to manage equipment availability and schedule risks really to keep our entire construction program that we had planned for the next two years on track.
That's really first and foremost been driven by our ability to leverage our priority customer status.
The large volumes that were procuring. It also reflects what I think has been.
Insightful collection of equipment vendors.
That we're more resilient.
Some of the factors that has driven both cost inflation.
And availability of equipment as a function of U S policy.
It has meant that we've been managing shipping costs directly with logistics and freight providers in ways that.
Other peers might not be able to accelerating payments to lock in supply and hedge costs on long lead components secure freight con.
Conduit.
Not all of that has been cockpit to us at the sponsor entity, but it has certainly been more manageable for us than peers and also really reflects the strong commitment that we've been.
Then looking to maintain for the planned pace of growth for operating cash flows and dividends at Clearway Energy Inc.
Okay.
Very helpful. And then the second part of that development questions.
The overall pipeline from 17 gigawatt to $19 one gigawatt.
Sequentially and obviously more of it's just too.
Earlier stage, but.
Does it really goes back to what you were talking about earlier.
The appetite from corporates and others.
The opportunity.
Is there something in the development engine that may be experiencing a little bit step function in terms of ability to drive project.
Okay.
Yes.
I think it really starts with the demand picture.
Which isn't strictly limited to commercial and industrial customers.
Utilities and load serving entities across the country.
Have made.
Transition in the fuel mix the real central part of their plan for this decade.
And that's allowed for us to make investments really span the continent.
Targeting the plans for our fuel mix transition that each of those different customer classes have.
And what excites us about the development pipeline that we're building is.
The way that as it has evolved over time, it will really build out a portfolio of owned assets within Clearway Energy, Inc, which is.
Certainly sizeable but also increasingly diverse and.
We will allow for us to really enhance the type of balanced that Chad touched on earlier so.
First it just reflects our confidence in the demand picture over time.
Certainly each quarter and each year, we get better and bigger as a company. So the types of capabilities that we can deploy behind development allow us to plan projects that are larger.
That allow us to plan projects that have multiple components to them integrating storage.
For example in places where you would not historically would have anticipated it.
And then lastly, I think we're constructive that ultimately the policy environment here in the U S government is really going to help.
Make project in some places that might not have been economically viable quite as soon.
Economically viable for construction so as we look ahead to the mid decade.
I am very optimistic about how the family of these development activities are going to turn into construction cadence in terms of operating cash flows within the fleet.
Super Helpful. Let me sneak in one on the portable.
So it's really a two parter here again.
You mentioned, Chris I think expectations for the second quarter closing change.
Change but.
Can you just sort of give us some indication if possible at all.
Ks towards early late in the quarter or any kind of color on the remaining steps being taken then I think you mentioned in the prepared remarks that just due to the tax treatment here.
Cash proceeds are going to need potentially greater so just remind us.
The acquisition everybody wants the divestitures done.
We expect to shake out from a leverage perspective.
Sure I'll kind of take the first part and then turn over to shout. It for tax but to your first question really not to cheat it would almost be the middle.
Kind of May if we had to pick the fat part of the curve. So to speak once again, we're driving to move it sooner, but yes, we obviously, we'd like to get the cash in but once again, no kind of steer either way of size.
So for US also part of it is not only the regulatory process, but also kind of working with the counterparty as well to make sure the transition occurs appropriately so.
Also expectations the second quarter, we feel very strongly about once again, we will take the mid.
The expected outcome kind of may timeframe, but could be earlier could be later, but I'll chat on the tech side sure.
Yes, So let me a couple of points I think first on the cash.
Cash proceeds or at least the estimated net proceeds I think as Chris indicated we spoke about $135 billion is our current estimate now before that was one three the driver of that $50 million estimated change at this point was driven by California enacting Senate Bill 113.
And the early part of February that's happened pretty rapidly and what that did was it reversed a.
A lot of that was put in place in 2020 at the start of the Covid pandemic.
They had suspended company's abilities to use state Nols.
For the period for the tax periods from 2020 to 2022. So for 2022 were permitted to use state Nols and as a result of that given how we looked at our current estimate in 'twenty to business activity and the apportionment that would go to California that reduced that number.
Sure.
Excuse me the potential immediate tax impact I would remind that these are estimates for taxes naturally business activity through the course of 2022 is going to affect that but obviously, we realized because of the gain that will ultimately be generated by the thermal sale there will be some leakage.
On the leverage side simply put once we close the thermal deal all the temporary borrowings that we have currently on the balance sheet will effectively be paid off so that will reduce borrowings inclusive of the <unk>.
Kind of bridge facility, we put in place for Utah by over $500 million and at that point is when you look at our pro forma targets will be back in our range of four to four five times.
And a little bit more on the four five times, but we're in range of where we would expect to be.
Perfect. Thanks, so much.
Sure.
Okay.
Our next question coming from the line of Michael Lapides with Goldman Sachs. Your line is open.
Guys. Thank you for taking my question and congrats on a good 2021, just with bank.
Given the move in valuations across pretty much everything clean energy related.
How are you thinking about how are you and the board.
The sponsor thinking about broader corporate M&A, and whether the market volatility and clean energy.
At the end of 2020.
Increased the attractiveness of corporate M&A corporate M&A as a use of training.
<unk> or use of cash flow and balance sheet relative to the returns you would generate dropdowns from your sponsor.
Sure I don't think the backdrop has changed that much in terms of I think we've always looked at value in terms of what we think is the best value for our risk in terms of the company. So I think Michael to your question. We will always look at Dropdowns is obviously thats. The most transparent dependable growth from our sponsor but to your question about corporate M&A, we look at.
At project level M&A for example, third party as we've talked about months storm in Utah in 2021, and when you look at broader corporate M&A as well. So I think all of those are available to us I think as well the big part is where can you generate the basket with best risk adjusted return and so thats. The focus so I am not sure if it's really changed that much in the past year.
From our perspective on the corporate side.
Got it meaning the valuation move lower a lot of your peers among the publicly traded renewable companies that move lower Hasnt made corporate M&A more attractive.
It really depends there's not all list of 100 different candidates out there if thats. Your question Michael is that got it. So it really is relative amongst a couple of them I don't think there's that many paradigm changes in that math over the past 12 months.
Got it and then Chad.
One for you I'm just looking at slides 23, and 24 in the appendices can you remind me the Cathy and the adjusted EBITDA numbers and especially the EBITDA numbers are pretty different between those two slides can you remind me the difference <unk> 23 versus 2014.
Yes, sorry, I'm just looking at the slides right now yes.
Think if you're probably focused as if I would guess Michael it's the drop in projected adjusted EBITDA is that what youre focused on.
One of them has the EBITDA like if I look at.
But as the slide 23, it's kind of adjusted EBITDA with Delta seven slide 24 below five.
Yes.
I think that the.
Main driver there I would remind you of is when we go out to our pro forma outlook, we've indicated that that.
Is post the period of time in which the existing three California natural gas assets.
So I would say that the obviously when we do our estimates like that on a pro forma basis Theres, a number of moving variables, but the material point of that would be the drop in expected EBITDA that we would have and being mindful that thats something we have been consistent about because as those project become unlevered, we don't need the amount of revenue in order to sustain Kathy.
On an unlevered project basis, principally because youre not having to generate revenue to support the debt service.
Got it okay that makes sense and then I guess, one one last one speaking of those California assets can you remind me in the post 'twenty three time frame how much of those have you signed up under what percent of those assets have you signed up under our agreements for 24 and beyond.
Sure, it's a 100% of Walnut Creek.
There is 80% hedged through I'll call. It 127 of Marsh landing with 100 megawatts.
Tail out longer than that and then zero percent also got no.
Got it. Thank you guys much appreciate it.
And our next question coming from the line of William <unk> with UBS. Your line is open.
Great. Thank you and good morning, everybody just one quick one for me.
This release.
Talking about the investment in Daggett III noted that.
The investments subject to some certain milestones and that that project is still in development I'm just curious.
Are you investing in that project before it's actually brought online.
And then I guess more broadly how do you think about investing in projects after COPD versus possibly doing earlier stage investments.
To capture higher returns.
Sure.
Your first question no thats not as though we're investing well before you might do a little bit <unk> in terms of months just for tax equity credit and alike, but significantly I don't know is the simple answer your first question to your second question.
Basically.
Fully power rings, where we have a much better view of what the asset looks like because obviously, we've owned it for a period of time, we might start to walk a little bit more during construction, but pure development in general we would and so I think if I kind of define your question in terms of development.
No in terms of maybe moving up a little bit closer to full notice to proceed or when there is financing in place on our Repowering project. We may look to that in the future just because we already obviously on the asset have a much better view of what it is so on and so forth, but for Dropdowns in general I don't think we're trying to move earlier in the construction cycle as a generalization.
Got it thanks very much.
I am showing no further questions at this time I would now like to turn the call back over to Mr. <unk> for any closing remarks.
Once again, thank you all for joining the call and look forward to talking next quarter take care.
Ladies and gentlemen, our next teleconference for today. Thank you for your participation you may now disconnect.
Okay.
And as a result.
Okay.
Thank you.
[music].
Yes.
Yes.
Okay.
Sure.
Okay.
Okay.
[music].
Yes.
Okay.
Okay.
[music].
[music].
[music].