Q4 2022 Enlight Renewable Energy Ltd Earnings Call
Speaker 2: You
Speaker 1: Good day and thank you for standing by. Welcome to the NLIQ4 2022 earnings call and webcast. At this time all participants are in a listen only mode. After the speaker's presentation there will be a question and answer session.
Speaker 1: To ask a question during the session, you will need to press star 1 and 1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1 and 1 again.
Speaker 1: Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Jusuf Lefkowitz, VP of Corporate Finance and M&A. Please go ahead.
Speaker 3: Thank you, operator. Good morning, everyone, and thank you for joining our fourth quarter and full year 2022 earnings conference call for Enlight Renewable Energy.
Speaker 3: With me this morning are Gilad Yavet, CEO and co-founder of Enlight, Nier Yehuda, CFO of Enlight, and Jason Ellsworth, CEO and co-founder of Clannell.
Speaker 3: Gilad will provide some opening remarks and will then turn over the call to Nir for a review of our fourth quarter and FOIA results, and then to Jason for a review of our US activity. Our executive team will then be available to answer your questions.
Speaker 3: Certain statements made on the call today, including but not limited to statements regarding business strategy and plans, our project portfolio, market opportunity and potential growth, completion of development and the company's future financial and operational results and guidance, including revenue and adjusted EBITDA.
Speaker 3: may be forward-looking statements which reflect management's best judgment based on currently available information. These statements involve risks and uncertainties that may cause actual results to differ from our expectations.
Speaker 3: Please refer to our earnings release for more information on the specific factors that could cause actual results to materially differ from our forward-looking statements.
Speaker 3: Although we believe these expectations are reasonable, we undertake no obligation to revise any statements to reflect changes that occur after this call. Additionally, non-IFRS financial measures may be discussed on the call. These non-IFRS measures should be considered in addition to and not as a substitute for or in an isolation from our results prepared in accordance with IFRS.
Speaker 3: Reconciliations to the most directly comparable IFRS financial measures are available in the earnings release and the earnings presentation for today's call, which are posted on our investor relations webpage.
Speaker 3: With that, I will turn the call over to Gilad.
Speaker 4: Thank you, Yerces, and thanks all for joining us today.
Speaker 4: We are very excited to announce strong results in our first E-Conference called The US Public Company.
Speaker 4: We delivered both record annual and quarterly results, continuing to demonstrate our track record of converting projects from development to operation.
Speaker 4: In 2022, we succeeded in connecting 810 megawatts over the course of the year. These successful conversions and strong performance across our business drove record financial results in 2022 with revenue up 88%.
Speaker 4: to 192 million dollars and adjusted EBITDA up 96% to 130 million dollars.
Speaker 4: In addition, we sold $18 million of electricity, which was not recognized under IFRS as revenue or a deci-divida for a project, treated as financial assets.
Speaker 4: As a result, the IPC arm of the business is already generating material cash flow. The company generated $90 million of cash flow from operation in 2022.
Speaker 4: Before we dive deeper into numbers, since this is our first earning call as a U.S. public company, I wanted to take a few minutes to talk about Enlight and what we believe makes us unique. First off, we are a true greenfield developer of utility-scale renewable energy projects.
Speaker 4: Our Greenfield development expertise enables us to source projects from scratch organically and control the full project lifecycle. We source land, find scarce interconnection, manage complex relationships with local communities, and off-take for all.
Speaker 4: power and ultimately construct, own and operate our projects over the long run.
Speaker 4: This approach has helped us to achieve market-leaning project returns, which we have demonstrated over the past decade, having successfully developed four gigawatt of power.
Speaker 4: Second, we believe we are in the right market at the right time. Our unique footprint across the US, Europe and Israel provides exposure to some of the fastest growing renewable markets in the world.
Speaker 4: We believe our US portfolio, which is largely located in the western part of the country,
Speaker 4: is well positioned to benefit from the Game-Changing Inflation Reduction Act.
Speaker 4: In addition, we believe our European portfolio located across nine different countries is positioned to benefit from the high power price environment and increasing urgency from the European Union to accelerate the energy transition.
Speaker 4: Third, we have significant portfolio diversification, not just in geography, but in technology and in revenue claimed.
Speaker 4: We are not only in solar, but are experts in working in solar, storage and wind. We are not 100% contracted, but we are not overly exposed to merchants.
Speaker 4: This provides us with clear visibility on our cash flow with long-term PPAs together with upside potentials with select merchant exposure in Europe .
Speaker 4: Finally, we believe we have a cost capital edge. Through the credibility we have built, having successfully developed four gigawatt of projects, we have been able to cultivate the appetite of institutional partners on a global basis over the years.
Speaker 4: This is giving us access to what we view as a competitive cost of capital, which has amplified our equity returns.
Speaker 4: As the first pure play utility scale developer to be publicly traded on a national exchange in the US
Speaker 4: We aim to deliver value for our shareholders by continuing to deliver on our twofold objectives executing on above market project returns and above market growth.
Speaker 4: As many of you know, we have been a public company in Israel for the past decade and have produced very strong results and shareholder returns.
Speaker 4: We were very gratified by the response to our US IPO. We intend to be very active on the investor relationship vector in the US market and to deliver the same level of transparency and engagement that we are known for in Israel.
Speaker 4: Moving now to the fourth quarter of 2022 and full year end results.
Speaker 4: In short, Enlight had a terrific year and we believe the business has never been better in reputation.
Speaker 4: The year was characterized by two main themes. One, the successful conversion of the product portfolio, and two, the optimization and de-risking of product return.
Speaker 4: Starting from conversion, in 2022 we succeeded in connecting 810 megawatts over the course of the year including Cacama, the largest wind farm in Spain, Amacabajar, the largest operational wind farm in Israel, and gradually Bjornberget, one of the largest wind farms across Europe which we expect to reach full sea level.
Speaker 4: and 1.7 GWh of storage.
Speaker 4: This included Atrisco solar, our flagship solar and storage project in New Mexico.
Speaker 4: We now have one gigawatt of generation capacity and 1.7 gigawatt hour of storage capacity under construction, which provides clear visibility on our future performance through 2024 as projects come online.
Speaker 4: Finally, we expanded our mature project portfolio by nearly 0.9 gigawatts of generation capacity, over 20% this year, to our successful development efforts in the US and Spain.
Speaker 4: As a reminder, our mature portfolio includes operational projects, projects under construction, projects in pre-construction, meaning those due to commence construction within a year of today's date, and projects with signed PPAs.
Speaker 4: This is our portfolio project that we consider largely and relatively de-risked.
Speaker 4: With a total mature project portfolio of 4.5 gigawatts generation and 2.7 gigawatt hour of storage, all of which is expected to be operational by the end of 2025, we see a clear path for the future of our business.
Speaker 4: Moving to the second theme, this year we successfully managed to navigate a volatile macro environment which included supply chain challenges and overall cost inflation.
Speaker 4: We secured increases in PPA prices of around 17 to 25 percent for projects totaling around $110.
Speaker 4: These price increases enable us to offset the return compression we have seen from increased capex and financing costs.
Speaker 4: We are currently in advance negotiation with off-takers to increase the PPA price for an additional 900 MW of contracted product.
Speaker 4: Our ability to secure these price increases is driven by the strategic interconnection position of our project.
Speaker 4: Off takers lack energy and capacity as there are very few large scale renewable energy projects that can meet their procurement needs, even jammed into connection cubes. Our projects which are advanced from an interconnection perspective and of significant scale, are
Speaker 4: offer utilities the solution they need. As of this release, we have nearly 8.5 gigawatts past system impact study, which we believe is the unique position in the US market.
Speaker 4: On supply chain, we believe we have been ahead of the curve, particularly in the U.S. Our first project, APEC Solar, was sourced with solar panels from Worry, a tier one engine supplier, and we continue to receive deliveries to the project site. We have since expanded our relationship with Worry.
Speaker 4: from the domestic content adder on storage, a unique advantage in battery where there are very few US-based suppliers.
Speaker 4: Looking to 2023 and beyond, we benefit from what we see as healthy adjusted PPA prices, de-risk supply chain, material regulatory benefits, uncertainty past the IRA and repowered EU in a substantial pipeline of advanced development projects.
Speaker 4: in addition to the material portfolio which totals 4.2 GigaWatt
Speaker 4: We are also seeing significant demand for battery storage.
Speaker 4: especially from off-takers in Western US.
Speaker 4: Battery helps us accelerate our growth and increase project returns on the same development axis.
Speaker 4: These are all tailwinds for business.
Speaker 4: Based on the positive trends in the business and the factors I described, we are increasing our mid-range annual deployment guidance from 1 to 1.2 gigawatts per year to 1.5 gigawatts per year starting from 2026 and beyond.
Speaker 4: Over time, we also expect that the US-based project will represent at least 50% of our business. I'll now hand it over to Nir to discuss our results in the 2023 outlook.
Speaker 4: time we also expect that the US-based project will represent at least 50% of our business. I'll now hand it over to Nir to discuss our results in 2023 outlook. Thank you Gilad.
Speaker 4: Before I provide an update on 2022 performance and 2022 guidance, I would like to discuss some of the recent volatility in the literary financial market over the past few weeks, which has been driven by political uncertainty around the proposed judicial platform.
Speaker 4: While Enlight is headquarter in Israel, ultimately we are largely an international company. For former 40 IPO, 81% of the company's cash as of year end was heavy dollars or ever.
Speaker 4: In the fourth quarter of 2022, approximately 80% of our revenues will be nominated in either Europe or other European currencies.
Speaker 4: We have limited exposure to the Israeli shekel, which reflects the growing part of our business in Europe and the US.
Speaker 4: And it's important to note that we have not made any deposits or other investments with Silicon Valley Bank and to the best of our knowledge have no exposure to it.
Speaker 4: In the fourth quarter of 2022, the company revenue increased to $61 million, up from $35 million in the same period in 2021. The growth was mainly driven by the addition of new projects, including Hakama, Eme Kaba Haa in Felaq.
Speaker 4: which contributed an additional $32 million in the fourth quarter and the recognition of all profits from the sale of electricity by the Halutio project from the second quarter of 2022 as revenue following its reclassification, which contributed an additional $2 million to revenue in the fourth quarter.
Speaker 4: This positive impact was partially offset by lower production and one-time events which reduced availability that had a 6 million impact and weaker assets which had a 3 million impact.
Speaker 4: In addition, we sold two million of electricity in projects treated as financial assets in the quarter which under IFRs we are required to account for as a financing income or other non-P&L metrics. The P&L Him Entertainment Act, is anHello network platform used to present to the public
Speaker 4: In the full year 2022, the company revenues were 192 million versus 102 million in the full year 2021.
Speaker 4: The increase in revenues was mainly driven by the addition of new projects which contributed an additional 86 million. There was a classification of Caruscios which contributed an additional 12 million and 2 million from BPI populate.
Speaker 4: This positive impact was partially offset by lower production and one-time events which reduce availability that had an 8 million impact and weaker effects which had a 6 million impact.
Speaker 4: In addition, we sold 80 million of electricity from projects treated as financial assets in 2022 which under our funds we are required to account for as financing income or other non-PLL industries. Thank you very much. ?
In the fourth quarter of 2022, the company's adjusted EBITDA almost doubled to 43 million compared to 22 million for the same period in 2021. The increase was driven by the same factors which affected our revenue increase in the same period.
For the full year 2022, the company adjusted EBITDA also nearly doubled to $130 million compared to $66 million in 2021. The increase was driven by the same factor which affected our revenue increase in the same period that was offset by an additional $8 million from GoPoint over at Expanded.
2 million for the same period in 2021, an increase of 73%.
Our IPP arm is beginning to generate substantial cash flow which would help finance our growth going forward.
Moving to 2023 guidance, we are pleased to issue our outlook for 2023 including revenues between $290 million and $300 million.
Adjusted EVDA between 188 million and 198 million. 1.8 gigabyte operational by year end 2023.
Our guidance for 2020 is based, among others, on the following assumptions.
Full COD of BON by end of Q2023. Genesis wind to reach COD by end of Q2023.
FX solar to COD by the end of Q2 2023.
Error to US dollar of 1.04 and US dollar to shekel of 3.65
It is important to note that our adjusted EBITDA estimate does not include the tax credit to be received in the COD of EPAC solar.
We also note that following the reclassification of the Haruti-Yod project, we still expect profits from the sale of electricity generated from the project treated as financial assets that are not reflected in revenue or adjusted EBITDA to reach approximately $15 million in 2023. And
We are pleased to also share project tables at the back of our annual release and in Excel format on our website. We are pleased to share project tables at the back of our annual release and in Excel
This table provides significant detail on our mature project portfolio, particularly projects under construction and great construction.
We hope to provide best-in-class transparency on our business. It is important to note that our adjusted EV estimate per project does not include tax-rated recognition and possessed forward-looking information which is subject to the disclaimer provided in our earning release and in our project statement.
I will now hand it over to Jason who will get into detail a bit more on our US project.
Thank you, Nir. While I was part of the US IPO Roadshow, for those who haven't met me, I'm a founder, president, and CEO of Cleanera, based in Boise, Idaho. Enlight acquired Cleanera in August of 2021. This has been an exceptionally synergistic partnership as the company share the same DNA, vision, and entrepreneurial spirit.
The company is executing successfully across its U.S. project portfolio. Focus continues to be on progressing a large volume of projects to maturity through the development process.
Apex solar located in Montana is progressing as planned. Commercial operation date is expected by the end of June 2020. Atrisco solar located in New Mexico and totaling 360 megawatts DC solar and 1200 megawatts or megawatt hours of storage commenced construction during the fourth quarter of 2022.
Major equipment is ordered and the construction agreement has been executed. All interconnection studies are complete. The draft interconnection agreement is underway and expected to be signed in April . The company is advancing negotiations with financing providers, debt and tax equity.
There are strong benefits for ATRISCO under the Inflation Reduction Act, including PTC on solar tax equity and the possibility of a domestic content adder on the battery energy storage system. COD is expected by mid 2024. The company has made significant progress on one of the largest projects in its portfolio, COBAR.
It's located in Arizona and totals 1200 megawatts DC solar and 824 megawatt hours of storage. The initial 580 megawatts DC of solar is contracted and the remaining capacity, including storage, is in advanced negotiation with off-takers.
The project has secured its primary real estate and conditional use permit. The impact study is complete and facility study is nearing completion.
COBAR is expected to start construction in 2nd half of 2023 and achieve COD in phases through 2025. Like Atrisco, the COBAR project stands to benefit from the Inflation Reduction Act, including PTC on solar tax equity and the possibility of a domestic content adder.
on the battery energy storage system. There is further potential to contract an additional 3.2 GWh of storage at COBAR in the future as part of our land and expand strategy.
COBAR is a good example of our land and expand strategy where we have succeeded in securing large and cost effective interconnect and developing one of the largest solar projects in the region. With respect to the supply chain, the company continues to de-risk its project portfolio. The company executed an agreement with Wari for up to 2 gigawatts of modules with delivery through 20...
its advanced portfolio and market-specific knowledge. In the quarter, the company increased the projects beyond system impact study known as – that is the point in which we know interconnection cost and timeline – by approximately 2,000 megawatts DC. With more than 8.4 gigawatts DC of projects past system impact study, the company has
the company is positioned to accelerate its growth in the United States. Given strong results across our US portfolio, we are confident in our ability to deliver above market returns and above market growth. I will now hand it back to Gilad to discuss the company's European and Israeli projects. Thanks Jason.
And life continues to benefit from the strong demand for power across Europe .
Despite declining natural gas prices, natural gas remains significantly above historical levels.
Moreover, the steep increase in recent months in the price of carbon, recently eclipsing 100 euros per tonne, has kept thermal generation expensive.
For example, in the fourth quarter, CECAMA, our merchant asset in Spain, sold electricity at an average net price of 115 euro per megawatt hour, 82% of which was hedged.
Project Bjorn in Sweden, one of the largest onshore wind farms in Europe , totaling 372 megawatts, continues to progress with 26 turbines operational out of 60 as of the date of this meeting.
Fifty-two turbines are fully erected. In Sweden, we can generate revenues from the sale of electricity for operational turbines even before the project reaches full CLD.
We expect Bjorn to reach full COD by the end of H1 2023.
On the development front, Hekama Solar, a 250 megawatt solar and 200 megawatt hour storage project at the same site as Hekama Reed Advances has planned.
With real estate and interconnection already secured, the project awaits its environmental and construction purpose. Construction is expected to commence by the end of H2 2023, with COG expected by year end 2024.
Once the whole complex is built, we intend to reassess the commercial strategy and financing for the app.
In Israel, in the fourth quarter, we commenced construction of solar plus storage to totaling 163 MW and 328 MW storage.
Corporate PPA negotiations are ongoing with CoD expected over the course of 2024.
In addition, Genesis Wind, the largest renewable energy product in Israel, totaling 189 megawatts, has completed erection of all its wind turbines. The funding tests have begun with CoD slated for end of Q3, 2020.
We also signed a collaboration agreement with New Med Energy, the largest natural gas player in the Eastern Mediterranean, to develop renewable energy projects in the region.
While we are market leaders in Israel, developing in Israel can often be slow and bureaucratic. Israel has ambitious renewable energy goals of 30 percent by 2030, yet the pace of development projects is insufficient to achieve this goal.
We believe that together with Newmed, we will be able to unlock projects of very significant scale and high returns outside of Israel borders with Israel as the ultimate off-take. To sum up, we have never been better positioned or more excited about our business.
Our youth IPO is an unmistakable signal that then life has become a major force in renewable power on a global scale.
As you can see from our guidance, we expect another year of profitable growth in 2023, and that is just a small part of our story.
Despite being public for more than 10 years, we are still in the very early stages of our opportunity. I'd like to thank our employees, customers, and partners around the world for their support, and we look forward to keeping investors updated in our progress.
Before we open the call up for Q&A, we would like to note that we intend to be active with regard to investor relations and plan to conduct a number of non-dealer relationships and attending various investor conferences after our first quarter earnings report in May. With that, I'll turn it over to the operator for questions. Operator?
Thank you. As a reminder, to ask a question, you will need to press star 1 and 1 on your telephone and wait for your name to be announced.
To withdraw your question, please press star 1 and 1 again. Please stand by while we compile the Q&A roster.
Our first question comes from the line of Mark Streis from JP Morgan. Please go ahead, your line is open. I'm sorry, what?
Yes, thank you very much and welcome to the US public markets. Can we start with just kind of looking at your mature portfolio and just the pipeline that you have through the year end 2025. Can you talk about the funding that you have in place both from an equity perspective and from a debt perspective?
Perspective and, you know, I know you already mentioned that you don't have any exposure to to Silicon Valley bank, but. Can you just kind of talk about your your general views regarding your access to capital going forward?
Mark, I refer the question to yourself and I can complement it further on the capital side.
So thanks, Gidad. So Mark, as you've seen from the disclosure, our mature portfolio now comprises 4.5 gigawatts and 2.7 gigawatt hours of storage. The equity that we've raised in the US IPO will be sufficient to…
Finance the completion of the mature project portfolio from an equity perspective Obviously, there are certain projects there. We need to raise tax equity and that project finance more broadly, but the equity for the mature portfolio is largely funded.
Yeah, I will just add to that to the second part of the question mark on our capital funding strategy. So, as you know, we base our capital strategy on four tracks.
One of them only is equity rate, which we successfully completed recently. We are very excited about that. But we do have an increase in cash flow coming from the project. We just completed 2022 with 90 million of cash flow coming from operations. This is something that contributes.
with minority sell-downs at COD when projects, especially in the US, come to fruition. As you know, we still hold 100% of the portfolio in the US and we believe there is significant upside that will reduce our equity check and further increase our returns by performing from time to time also minority sell-downs and keeping the IPP model.
with the majority of the holdings like we do in Europe . Okay, great. And then just for a follow-up, you know, the industry continues to wait for the Treasury within the US to give us more guidelines about the IRA. The longer that goes on, does that impact any of your project timing looking out over the next eight...
I'll compliment on Europe .
Yeah, no, thank you. For the US, absolutely, the lack of clarity is a challenge. However, much of that is around content adders, US content adders, and other incentives beyond the baseline that we've already budgeted in our models. That is not a cause for delay on our projects, in fact.
Projects are proceeding as planned and on time. Thank you Jason, just complimenting on the Europe side. So we've seen a huge growth in Europe this year, 34% in renewable energy installations.
We see a strong push for renewable energy going forward, 23, 24, because of the lack of energy in Europe and the low cost of renewable energy versus the traditional price setters in Europe . So currently we believe that we will gain and we will benefit.
from this increased need even before additional regulation acts in Europe . In the future, we are also attentive to the new incentives that may arise. We believe that this will only accelerate, but we don't see any freeze to the opposite. Okay, very helpful. Thank you.
this increased need even before additional regulation acts in Europe and in the future we are also attentive to the new incentives that may arise. We believe that this will only accelerate but we don't see any freeze to the help of it. Okay very helpful thank you. Thank you we will take our next question.
Your next question comes from the line of Julian DeMoulin Smith from Bank of America. Please go ahead, your line is open.
Hey, good morning team. Congratulations again I should add. Welcome to the US Markets Indeed. So I wanted to come back to the first point you made earlier around the increase in the 2026 and onward targets here. Can you break down a little bit as to why now specifically what data points led you to the outcome?
including how do you think about the geographic breakdown of that pro forma 1.5 gigawatt target now, as you think about the contributor.
Well, I can start generally and then Jason, you can compliment me on the details. So, on the overall, about 70% of our portfolio comes from the WEC state in the US and we see increasing conversion of this portfolio into advanced phases in many areas. So we see a very strong indicator for our portfolio.
Great question, Julian. Since the acquisition, we've been able to move 2.6 gigawatts of projects to mature and advanced status. We now have 1.7 gigs in mature category here in the US with 8.4 gigawatts through system impact studies. So across the portfolio, things have accelerated.
We're experiencing strong demand for our projects. In fact, over the last several months we have been awarded through RFPs approximately 1.5 gigawatts DC of solar projects and 2.1 gigawatts of storage.
All of that is driving an increase of momentum across the U.S. portfolio, most of which is, to Gilad's point, centered in the western U.S. For example, we are planning to start...
Construction on our CO bar project here in 2nd, half as noted already and that is for the 1st, half of the project already contracted. Roughly 600 megawatts of the total 1.2 gigawatts. The remaining 600 megawatts has been awarded through RFP and is in is in negotiate.
where we're benefiting from TTC and other benefits under the IRA. So, yeah, thanks for the question.
And then related – oh, sorry. Go for it. Yeah, Julian, just to add into Jason's great input of 8.4 gigawatts fastest impact studies, we were just in the roadshow presentation and I suppose you remember that at this time it was 6.5. So we grew from –
that included in that 26 number? What is the status on that piece and then related and you gave some updates on COBAR and Atrisco here but the expansions at those sites seem pretty meaningful and chunky can you give us a quick update on potentially the commercial progress on those expansions? Further expansion? So, Yusef you will start with the data and then JSON and COBAR. Yes, thanks.
clusters we have in the West.
Yeah, no thank you. So the second phases of those large cell clusters are again coming together well. So on the field bar project as mentioned.
What we're looking at is completing contracts here in the 2nd half. And the intent is to have to kick off our continuous construction here this year in the 2nd half on the 1st. 1st, a bit of contracted projects with the intent to have maintained continuous construction.
through the end of 2025, achieving full COD on the 1.2 gigawatts at that site through the end of 2025, following the strategy we have of really the pieces are coming together on this landing and expand with these large projects where what we're doing is adjusting the seats of the table in such a way that
We have efficiency on the EPC contracting and can emphasize sort of continuous construction without a mobilization and demobilization. So, for example, on COBAR we'll be achieving COD at the beginning of 2025 on the first half.
that has already been contracted and by the end of 2025 and in the second half complete the remaining 600 megawatts through a carefully planned set of activities at the site. Excellent guys. Thank you very much. I appreciate it.
Thank you. We will take our next question. Your next question comes from the line of Mahib Manloy, Farm Credit Suisse. Please go ahead. Your line is open. Hey, good morning. Thanks for your questions and congratulations indeed on coming to the US market.
additional capital raised beyond what I can talk about here. Yes, so I'll refer the question to your staff. Thank you, Gilad. So in terms of the 4.5 gigawatts of mature projects,
and 2.7 gigawatt hours, we're generating significant free cash flow from our existing portfolio of operational projects. We have, as you can see in the earnings release, a significant liquidity position as well, and we have access to additional corporate level facilities and the corporate bond market here in Israel.
So, through those sources, we will be able to reach the 4.5 gigawatts and gives us a lot of certainty on our funding plan to reach that project capacity and operational capacity.
One thing to add is we've made significant progress on the Atrisco project financing, and we have significant confidence in our ability to secure project finance and tax equity across our U.S. project portfolio. You will see in the tables in the back.
of our earnings release are equity assumptions that we've made per project which is driven by some of the quotes we've received from lenders and the equity requirement for each of those projects.
Just adding to that, on a general note, you can see cost of CAPEX for the project, which is roughly one billion for each gigawatt going forward. Today, with us benefiting from locations in the West and...
around 7.5% or 75 million per each gigawatts and this allows a lot of flexibility together with our I think very solid liquidity position right now.
And separately just on the IRA here, can you just remind us what is the status of all the guidance expecting from the Treasury here on energy community or domestic content? Are there any timeline you're looking forward here?
To our upside, it is not necessary for the main line track projects. The baseline models do not include the upside on on.
For for energy community. We are, we are hopeful that that will achieve that upside. So, for example, on on our battery supply, while we're not, we're not closing details on the battery supplier for for a Trisco. We are noting that.
the supplier is on track and meeting key milestones, including a ramp up of US supply. So we see a great deal of growing confidence in our ability to deliver a US content equation on battery for Atrisco, which is further upside to our model. But like you, we're anxiously awaiting guidance. Gevaud, anything you'd like to add to that?
That's perfect. Thanks. Thanks for me. I'll take the rest of my.
Thanks. Thanks a lot for me. I'll take the rest.
Thank you. We will take our next question. The next question comes from the line of David Charles from Wolf. Please go ahead. Your line is open.
Thank you. We will take our next question. The next question comes from the line of David Charles from Wolf. Please go ahead. Your line is open. Good morning.
Morning. For my first question, for the potential PPA amendments, do you expect similar PPA increases as you've seen in the last year or so?
Yeah, so I'll start in just an appropriate to compliment me. So we are now negotiating additional GPA increases in the volume of 900 megawatts. So we do see an upside and an opportunity to further increase the PPA and we do see the PPA prize continue to...
As as mentioned, we, we are consistently achieving the same 20 to 25% increase from those existing rates. And when we note that includes. Awarded projects, some of our historical awarded projects.
Process of being negotiated so those have all largely been adjusted in terms of of rates and as as we announce those numbers Looking forward as those are contracted what you'll see are the adjusted the numbers that have been adjusted upward reflecting a an increase in our bill
Price in the marketplace and a lot of that that ability to price is is emphasized with our Increased volume through system impact study. What we're finding is that there are very few the supply of projects that are
Interconnection ready and and have advanced status in terms of land and permitting. Are are are, in fact, limited there's there very few of those and and and a great deal of.
Which is giving us pricing power in the market and that continues and we're seeing that also in our in in our on the P side again. Noting that over the last several months, we've, we've garnered 1.5 gigawatts of solar awards and another 2.1. A lot hours of of storage and we'll, we'll have more to announce in the next in the next few months.
Thank you very much, Jason.
Great, thank you for that. My last question, what is the expected annual cash generation from your updated mature projects?
Yeah, so Nir, would you like to refer to that? Yeah, so first of all from the unconsolidated basis, based on the current production and generation of cash flow during 2022, as you can see in the financial, we generate around 90 million dollars in cash flow during 2022.
dollar cash flow from operating activities and our shares is around 65%. We presume that while all the mature portfolios will start generation on a runway basis will produce something around 150 based on the current assumption.
I will share it with them.
Okay, thank you. Thank you. Once again, if you wish to ask a question, please press star 1 and 1.
We will take our final question.
And your question comes from the line of Justin Clear from MKM. Please go ahead, your line is open.
Yeah, thanks for taking our questions. I guess first off here, I just wanted to ask about your merchant exposure in 2023 and what you've kind of baked into guidance. You know, how much should we expect in terms of merchant sales and maybe how much of that have you hedged today and and how are you thinking about hedging.
It blends in around 20% coming from merchants and 80% coming from long-term PPAs. The fact that in the US all our projects are for long-term PPAs on 100% of production.
So going forward we see a declining percentage of revenues coming from merchants. In Europe in the year of 2023 we might see areas where in the blend.
To some quarters, it will be a little bit more than 20 percent, but what we see currently is that the level of prices of electricity in the market, in the forward and future for 2023 are much higher than our original financial models. Even that produced some bl undercoveraudELS, although mothafuckin'
in the trend that we see. And by the way, we believe it's positive of the stabilization of electricity prices in Europe and normalization of electricity prices. We still see levels that are significantly higher than the original financial models driving higher returns on the project.
Going forward in the global perspective, we believe that this level of around 15 percent of exposure to merchants in selected markets with liquidity and good visibility towards the price setters in this market is going to provide a good hedge against volatility to the company. Okay, great. That's really good. Go ahead.
Okay, thank you very much. And then I had one more, if I could sneak sneak one more in here. You had mentioned earlier, you know, there are still some uncertainties that need to be resolved by the Treasury regarding the IRA and the tax credits.
I was wondering how that's being treated in your tax equity negotiations. Is there any potential for tax equity investments to be delayed if the guidance is delayed? Or are you expected essentially to be funded at baseline levels and then there could be upside later if you do get the adder?
are based on the current incentives that provide very high return solid double digits and potential upside from energy community and domestic content will only add to that if they occur.
While currently we negotiate on the tax equity on Atrisco PTC track for the solar and ITC track for the batteries, so this is the base case, we believe that in case we can be on time with domestic content on the batteries we might have this other
as early as in Etrisco already, and maybe also the energy zone. But these are all upside on top of a very solid return on this project. Looking forward, we do build a strategy that will allow us to gain...
the other for the domestic content on the battery and on several positions of the company. We believe that we have a nice potential also in the energy zone but we will wait for that.
for the domestic content on the battery and on several positions of the company. We believe that we have a nice potential also in the energy zone but we will wait for that. Okay, great. Thank you.
Thank you. I would now like to turn the conference back to management for closing remarks. Yeah, so we are very excited to be here on our first call. Thank you everybody for your time. We are very positive as you saw on all main indicators of the company.
both for the performance we've shown in 22 and also the guidance that we provided for 23 that shows an additional increase of more than 50% in the main indicators. So summary that we are looking forward to our next quarterly meeting. Thank you. This concludes today's conference call. Thank you for participating.
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