Q4 2024 Clearway Energy Inc Earnings Call
Yeah.
Speaker Change: Hello, and welcome to Clearway Energy, Inc, fourth quarter earnings call.
Speaker Change: At this time all participants are in a listen only mode.
Speaker Change: After the speaker's presentation, there will be a question and answer session.
Speaker Change: To ask a question doing to ask a question during the session you will need to press star one on your telephone.
Dan: You bet, Dan here automated message advising your hand is raised.
Dan: To withdraw your question. Please press star one again.
Speaker Change: I would now like to turn the call over to Al Qaeda Marsh you may begin.
Speaker Change: Thank you for taking the time to join Clearway Energy, Inc. 's fourth quarter call with me today are Craig Cornelius the Companys, President and CEO and Sarah Rubinstein, the company's CFO.
Speaker Change: 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.
Speaker Change: Actual results may differ materially. Please review the safe Harbor in today's presentation as well as the risk factors in our SEC filings.
Speaker Change: In addition, 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.
Speaker Change: In particular, please note that we will refer to both offered and committed transactions in todays oral presentation and also may discuss such transactions. During the question and answer portion of today's conference.
Speaker Change: Please refer to the safe Harbor in today's presentation for a description of the categories of potential transactions and related risks contingencies and uncertainties with that I'll hand, it over to Craig.
Craig Cornelius: Thanks, <unk> turning to slide four.
Speaker Change: We are very proud of the year that clear way just turned in over 2024, our financial and operational results exceeded our key objectives. We completed the card growth objectives that we've established and we simplified and strengthened our platform in ways that enabled the successes and set us up for a bright future.
Speaker Change: In addition to achieving these outcomes in the year just passed we made further progress towards meeting the long term financial goals, we set for 2027 and beyond.
Speaker Change: I remain confident that this platform has the long lived asset base growth trajectory and capital allocation flexibility, we need to deliver sustainable earnings growth through the balance of this decade.
Speaker Change: For 2024, we met our dividend per share growth commitment, while delivering full year. Kathy ahead of our guidance. We also committed to approximately $450 million of growth investments. This year at accretive economics, while bringing online over one gigawatt of renewable power generation.
Speaker Change: <unk> and energy storage capacity.
Speaker Change: Looking ahead to 2025, we have reaffirmed our 2025 guidance range and have gained further confidence in our ability to meet the midpoint or better of that range through Cathy expected to be contributed by committed investments and the ongoing strength in the performance of our fleet.
Speaker Change: On top of the two army investment, which we've since signed we're enthused by the additional announcements we're sharing today that firmed up the predictable earnings power that we expect our existing fleet to contribute as we drive towards the top half of our 2027 target range of $2 40.
Speaker Change: To $2 60 per share.
Speaker Change: We are making attractive investments in our existing fleet with the commitment to invest in phase one of the hunting come storage projects and the Repowering of Mount Storm, which is underpinned by an awarded PPA with a major technology company.
Speaker Change: We've also firmed up our growth outlook by our revenue contracting in our existing fleet with new <unk> contracts at El Segundo and the PPA extension it will dorado that collectively increase our <unk> per share outlook without deploying incremental capital.
Speaker Change: Our growth prospects for 2027 and beyond also remained robust as clearway group continues to develop and abundant pipeline of <unk> compatible projects, while also offering reliable affordable energy to our customers.
Speaker Change: The combination of proactive planning to secure qualification for tax credits across multiple CODI vintages, thoughtful procurement and financial scale have positioned our enterprise to serve our country's growing electricity demand with resiliency across the spectrum of policy scenarios.
Speaker Change: Taking all this into account.
Speaker Change: We're proud of how we've continued to execute in the short run while we've also methodically assembled accretive building blocks for predictable growth in the long run here.
Speaker Change: Here at clear way, we like to think that we're setting the gold standard for what it means to be a leading all of the above energy company in the United States.
Speaker Change: Turning to slide five.
Since our last call. We once again made steps forward on value accretive growth we.
Speaker Change: We signed a binding agreement to acquire <unk>, which continues our successful track record of selective project acquisitions that are right sized and complementary to our fleet.
Speaker Change: The transaction, which is expected to close in the first quarter is expected to generate approximately 12% five year average annual cap to yield and expands our portfolio in the western states that make up our fleets core.
Speaker Change: We're also pleased to announce that <unk> committed to phase one of the honeycomb battery hybridization program investing in new battery projects adjacent to <unk> existing fleet of solar projects in Utah.
Speaker Change: We hope this is the first of many examples of how clear ways existing renewable projects can one day house complementary battery capacity.
Speaker Change: I'm committed to invest approximately $78 million in corporate capital in that program at an attractive cap to yield we will fund this investment in 2026.
Speaker Change: Both investments can be funded with existing sources of liquidity and Sarah will discuss the company's liquidity position in more detail during her section.
Speaker Change: Lastly, we added 492 megawatts of Western U S storage projects to our future identified dropdown opportunities list.
Speaker Change: The underlying projects have been awarded long term agreements with investment grade customers and <unk> expects to receive an offer to invest in the projects in 2025.
Speaker Change: As always any commitment will be subject to the required approvals from <unk> governance conflicts and nominating committee.
Speaker Change: Turning to slide six.
Speaker Change: During the last quarter, we also extended our track record of high return life, extending repowering and our wind fleet.
With our wind fleet assets located in some of the country's most resource rich locations. We think this track record increasingly demonstrates how well cited renewable energy projects can be an effectively perpetual asset base when sustained through disciplined value accretive investments.
Speaker Change: In aggregate, we have re powered or committed to Repower 712 megawatts of our wind portfolio successfully doing so with great effectiveness when projects are eligible.
Speaker Change: And our latest example of this track record the previously announced <unk> project achieved Repowering CRD in late 2024.
Speaker Change: This value enhancing life, extending repowering was completed on time and on budget relative to the assumptions, we disclosed Wednesday, when first committed to the investment.
Speaker Change: Today's announcement of the Mount Storm Repowering is at Quinto Quintessential example of our fleet optimization efforts continuing.
Speaker Change: Overall this planned repowering is expected to extend the assets useful life improve its risk profile and drive incremental <unk> growth.
Speaker Change: The Repowering will also increase the complex is nameplate capacity to 335 megawatts, enabling a substantial increase to its annual production.
Speaker Change: To commercialize the project we are partnering with a major technology company is the off taker under an awarded 20 year PPA that is being finalized and will be jointly announced soon.
Speaker Change: Extending beyond Mount Storm declare enterprise continues to have engagement with this customer as a core strategic partner for future potential opportunities to provide renewable energy to power data centers across multiple markets.
Speaker Change: Turning to slide seven.
Speaker Change: We also made further progress during the last quarter on driving future organic cash flow growth via contracting of open positions on our operating fleet and are pleased by the way. This pathway continues to evolve for us.
Speaker Change: 2024 was a successful year for contracting our California gas fleet in the flexible generation segment, which was formerly reported as our conventional segment.
Speaker Change: Our new segment name reflects the key value proposition our gas fleet provides to stakeholders.
Speaker Change: Proposition that will be increasingly noticeable in the years ahead.
Speaker Change: As discussed in previous quarters tight capacity conditions in the Western U S. Coupled with thoughtful system planning from regulators continues to put a focus on flexible generation units such as our gas plants that can provide dispatch of bulk capacity for grid reliability.
Speaker Change: Today, we are announcing two new RF contracts at El Segundo for approximately 272 megawatts awarded through bilateral negotiations with load serving entities with these contracts are California flexible generation fleet is now fully contracted in 2026 and 78% contract.
Speaker Change: <unk> through 2027 at price levels supportive of meeting the midpoint or better of our 2027 cap do you per share target range.
Speaker Change: For our future contracting at our gas fleet, we remain focused on being methodical in our power marketing to ensure we capture full value for the plants are a capacity.
Speaker Change: Successful revenue contracting for our existing fleet was also evident in our renewable segment.
Speaker Change: While our renewable fleet on average has a 12 year weighted average contract tenor we are seeing opportunities for PPA extensions or repowering on projects with soon to expire revenue contracts over the next few years with PPA extensions, where appropriate, allowing us to firm up our growth visibility without deploying incremental capital.
Speaker Change: The well Dorado wind farm in Texas was re powered in 2020 and had a PPA that was set to expire in 2027 and presented an ideal opportunity for a PPA extension.
Speaker Change: We were able to sign a PPA amendment with the current customer that extends the contract exploration into 2030 at terms and pricing that support our goal of targeting the upper half of our 2027 cap per share target range.
Speaker Change: Between now and 2030 over 800 megawatts of capacity in our wind fleet will present, the opportunity for us to re contract or Repower as ppas expire.
Speaker Change: Based on rigorous analysis with a core focus on maximizing shareholder value. We have currently identified these PPA explorations for either future capital light contract extensions are contracting to underpin our potential repowering.
Speaker Change: Under either scenario, our wind fleet is increasingly well positioned to create shareholder value with future contracting given the asset classes valuable clean energy production profile and the pronounced value of these assets in a market where demand for wind generation shape exceeds the market's ability to construct new supply.
Speaker Change: Turning to slide eight.
Speaker Change: Tying the news we've shared today about growth investments and fleet optimization back to our 2027 targets. We're now in an even better position to achieve the top half of our 2027 cap do you per share target range take.
Speaker Change: Taking into account previously committed growth investments and our prior disclosure for contract in an observed pricing levels for revenues and our flexible generation segment.
Speaker Change: We had previously provided visibility into how we could reach $2 40 per share of <unk> in 2027 at the bottom end of our target range.
From $2 40 per share the growth investments, we've announced since our last call position us to deploy over $350 million of capital getting us closer to meeting the midpoint of the range without need for external equity funding.
Speaker Change: To reach the high end of the range. We are now pursuing multiple redundant pathways to deliver cap the per share growth for our investors. The deployment of additional capital is one that.
Speaker Change: Clearway group's pipeline has additional potential dropdowns in store that have not yet been offered and could allow for deployment of capital at sufficient levels to meet the top half of our 2027 range.
Speaker Change: We also remain active in terms of evaluating third party M&A opportunities and are finding that today's market is presenting potential opportunities to acquire both single assets and portfolios consistent with our capital allocation framework.
Speaker Change: Additional fleet optimization improvements such as the recent revenue contracting at El Segundo and will Dorado provides still another pathway to add to our future cap deeper share levels with limited use of capital.
Speaker Change: Importantly, when evaluating the sufficiency of these avenues to meet our 2027 <unk> per share range. We've made sure to factor in the current cost of capital environment and its implications for refinancing of future maturities.
Speaker Change: So all in all our outlook to meeting our 2000 2007 financial objectives is shaping up well we are confident in where we stand and look forward to continuing to make progress towards those goals one quarter at a time.
Speaker Change: With that I'll turn it over to Sarah for the financial summary section.
Sarah Rubinstein: Thanks, Craig.
Sarah Rubinstein: On slide 10, we provide an overview of our financial results, which include full year adjusted EBITDA of 114, 6 billion and cast the $425 million.
Sarah Rubinstein: Fourth quarter, adjusted EBITDA was $228 million and Cat D with 40 million, which reflected strong wind resource at Alta.
Sarah Rubinstein: Offset in part by lower wind resource across the remainder of the portfolio.
Sarah Rubinstein: Along with the benefit of timing with respect to the receipt of payments for insurance proceeds and do under service contracts, our fourth quarter results and our flexible generation segment, formerly known as conventional reflected solid availability and the benefit the beneficial impact of energy.
Sarah Rubinstein: Management activities.
Sarah Rubinstein: We are also pleased with our full year result of $425 million as compared to our guidance of 395 million, noting that it reflects the diligent work of our operating teams.
Sarah Rubinstein: Carefully manage our assets and secure payments due under service agreements with our equipment suppliers.
Sarah Rubinstein: Additionally, our primarily unlevered assets and flexible generation segment.
Sarah Rubinstein: Provided strong availability and grid reliability during the year, helping us to exceed our expectations for this segment in 2024.
Sarah Rubinstein: We continue to reiterate our 2025, Kathy guidance range of $400 million to $440 million with a target to achieve the higher end in that range through the timely completion of growth investments.
Sarah Rubinstein: Closing the <unk> acquisition and continued focus on the availability and management of energy margin for our flexible generation fleet.
Sarah Rubinstein: The guidance range reflects pieces, Steve renewable production expectations at the midpoint with the upper and lower ends of the range, reflecting variability in potential outcomes for resource and availability.
The company remains well positioned for growth with a strong balance sheet.
Sarah Rubinstein: Forward looking credit metrics in line with target readings and 98% of its consolidated long term debt with a fixed interest cost to.
Sarah Rubinstein: To fund growth to support our longer term targets.
Sarah Rubinstein: To be able to use utilize retained Kathy as the primary source of capital.
Sarah Rubinstein: Targeting retained Kathy in excess of 220 million accumulated over 2025 through 2027 based on our <unk> per share growth outlook.
Sarah Rubinstein: In addition, we anticipate having excess corporate debt capacity based on the target leverage midpoint calculated using the low end of our target <unk> per share numbers for 2027 that would potentially allow for excess cumulative debt capacity of approximately $300 million to $400 million.
Sarah Rubinstein: Our revolving credit facility, which is largely undrawn remains a key source of liquidity for the company.
Sarah Rubinstein: Beyond 2027, we will target maintaining a long term payout ratio that is trending towards the bottom end of our 70% to 80% target in order to retain incremental Kathy while also prioritizing our other capital allocation target.
Sarah Rubinstein: Our long term vision continues to anticipate the modest predictable periodic issuance of equity to fund your growth investments.
Sarah Rubinstein: Only when the equity issuance required to capitalize them is anticipated to be accretive and to create long term value for cys.
Sarah Rubinstein: We will aim to utilize this source of liquidity to assist us in achieving the high end of our 2027 per share target range and continue to anticipate no external equity is needed to achieve the midpoint of our 2027 objectives.
Craig Cornelius: Now I will turn it back to Craig for a long term growth update and closing remarks.
Craig Cornelius: Thanks Sarah.
Craig Cornelius: Turning to slide 12.
Craig Cornelius: Key among our multiple pathways to growth in 2027 and beyond is clear right groups late stage pipeline, which we continue to believe is in a strong position.
Craig Cornelius: As a reminder, clearway group's late stage pipeline is diverse in technology and regional composition.
Craig Cornelius: Clearway group has made investments to secure qualification for tax credits for projects across multiple vintages has established framework agreements with major equipment suppliers, enabling access to domestic and risk mitigated supply chains and.
Craig Cornelius: <unk> possesses the robust backlog of Derisked interconnection queue positions.
Craig Cornelius: Also clearway group is managing its progress through the federal permitting nexis, where applicable with a systemic approach and with confidence that its historical success and policy aware development will continue.
Craig Cornelius: Beyond the projects that have already been committed to our offered clearway group's late stage pipeline represents over $750 million of potential corporate capital investments through the 2029 vintages.
Craig Cornelius: The amount includes at least $250 million of incremental investment opportunities in the 2026 and 2027 vintages that can support delivering 2027 cap per share at the high end of the range.
Craig Cornelius: In summary, clearway group's pipeline provides more than sufficient capital deployment opportunities to meet <unk> growth objectives through 2027 and beyond.
Craig Cornelius: Turning to slide 13.
Craig Cornelius: We're also pleased that we have been enhancing our positioning as a leading energy provider for the rapidly growing demand.
Craig Cornelius: That is emerging from the rise of digital infrastructure and Reindustrialization here in America.
Craig Cornelius: The fact that the U S is poised for secular electricity demand growth is something this audience is familiar with already.
Craig Cornelius: But given our conservative organizational culture.
Craig Cornelius: <unk> weighs that clear way is poised to benefit from this trend have been less apparent up to now.
Craig Cornelius: Though we intend to remain true to our culture and being deliberate about communicating commercial agreements and objectives. When they are material indefinite we will provide more of a window into our work in this area today and in future quarters.
Craig Cornelius: Within its overall pipeline Clearway group now has active development engagements on five gigawatts of projects that could serve datacenter demand in front of the meter or co location revenue arrangements across multiple markets, including PJM MISO ERCOT and the WAC.
Craig Cornelius: In addition to these front of the meter development stage projects Clearway group and Clearway Energy, Inc. Have begun to scope a select set of behind the meter projects in locations, where interconnection agreements and regulatory design are expected to allow for them.
Craig Cornelius: As we prove out those concepts the elbow Creek wind facility, we will host our first demonstration project for behind the meter renewable generation to serve data center load with that data center now currently under construction.
Craig Cornelius: The enterprise is also developing multi technology gigawatt scale clean energy complex is across five states to potentially serve co located data centers employing of Varian combination of wind solar battery and gas generation technology in those development projects.
Craig Cornelius: Like other project concepts of this kind these remain in the early stages of formulation, but around the end of the decade. These could potentially provide for accretive high return capital deployment opportunities to drive <unk> growth in the long run.
Craig Cornelius: As always the enterprise will be cognizant of the need to pace structure and optimize investments aligned with <unk> capital allocation framework.
Craig Cornelius: Finally to calibrate what we are seeing overall in power marketing trends amidst the backdrop of growing electricity demand. We are glad to note. The customers are acknowledging the value of ready to build projects and the importance of strong franchises backing them.
Craig Cornelius: With a need for new capacity and generation to come online throughout the country load serving entities and commercial and industrial customers are engaging with us on pricing and deal terms that allow projects to progress while relevant tax trade and permitting policies are uncertain.
Craig Cornelius: In arrangements, we have reached and awarded in signed agreements in markets across the country. We are finding ways to assure adequate project investment returns, while also delivering a solid value proposition for our customers.
Speaker Change: Turning to slide 14.
Speaker Change: To recap clearway exceeded our 2024 financial objectives across the board our team worked with resolve to beat our 2024 goals, while putting ourselves in a great place to meet the targets, we set for 2025 and beyond.
Speaker Change: Turning to this year and the pass through 2027, we aim to continue to be a success oriented culture.
Speaker Change: Meeting or exceeding the midpoint of our 2025 FTE guidance range meeting, our dps growth commitments and further crystallizing visibility into meeting the top half of the 2027 target Caf II per share range, we set.
Speaker Change: Beyond 2027, we aim to accumulate further growth pathways from dropdown offers from Clearway group's development pipeline further repowering and hybridization opportunities and selective third party M&A.
Speaker Change: We view the long term outlook for Clearway is one position for secular growth.
Speaker Change: Unabated growth in corporate and utility energy demand with solutions that meet our customers' goals.
Speaker Change: Creative capital allocation and financial flexibility will remain key pillars of our capital allocation framework as we pursue growth in that backdrop aiming to execute and extend our five to eight plus percent long term cap per share growth goal.
Speaker Change: The combination of multiple growth pathways, a strict focus on allocating capital to the highest return investments and our long term target payout ratio trending towards 70% together provide a clear roadmap to effectuate predictable earnings power beyond 2027 across multiple scenarios.
Speaker Change: In conclusion, we are proud to close the books on 2024 is a great year and are enormously grateful to the excellent clearway team that has put us on strong footing to create shareholder value for years to come as.
Speaker Change: As the best in class all of the above energy company that we are.
Speaker Change: Operator, you may open the lines for questions.
Speaker Change: Thank you.
Speaker Change: Ladies and gentlemen, as a reminder to ask a question. Please press star one on your telephone and wait to hear your name to be announced to withdraw. Your question. Please press star one again.
Speaker Change: Please standby, while we compile the Q&A roster.
Speaker Change: Our first question comes from the line of Michael <unk> again.
Speaker Change: With Evercore your line is open.
Speaker Change: Hi, Thanks for taking my questions and congrats on a solid update.
Speaker Change: So as we think about your excess debt capacity, you are now, saying $300 million to $400 million versus the 300 plus million last quarter.
Speaker Change: Your total liquidity position hasnt changed much so adding incremental caf II without debt.
Speaker Change: Not too different I was just wondering if you could talk about what now potentially gets you to the $400 million versus the 300 plus previously.
Speaker Change: Yes.
Speaker Change: Thanks for the question I appreciate the recognition.
Speaker Change: The basic expression of that range reflect the outlook we have.
Speaker Change: For la.
Speaker Change: Long run cap the contribution from the fleet incorporating some of the latest updates as I think you're implying.
Speaker Change: And it's our intention to maintain.
Speaker Change: That kind of outlook for incremental debt capacity in a way that incorporates investment commitments that have been made copies thats been contributed.
By changes in our operating fleet as well as new commitments of that kind.
Speaker Change: And with that Sara I'd love to turn to you if there's anything you'd like to add.
Speaker Change: I think.
Speaker Change: You kind of covered it generally but essentially we have.
Speaker Change: Yeah.
Speaker Change: Based on what we've been working on.
Speaker Change: And what we're able to do with the existing fleet in terms of re contracting our asset.
Speaker Change: We feel comfortable that we can achieve.
Speaker Change: Up to that $400 million of excess debt capacity.
Speaker Change: <unk>.
Speaker Change: Based on.
Speaker Change: Without sort of investing incremental capital.
Speaker Change: And adding additional commitment.
Speaker Change: I think we still.
Speaker Change: Express that in a range because there.
Speaker Change: There is obviously a variety of outcomes that can occur.
Speaker Change: But as we sort of continue to execute on our plans and firm up some of the incremental capacity that we can.
Speaker Change: Realized from the existing fleet, we feel more comfortable including that $400 million at the high end of the range.
Speaker Change: Got it. Thank you and then as we think about the new political administration.
Speaker Change: The reciprocal tariffs the tariffs on steel and aluminum and the 30 day pause in Mexico, and Canada coming to an end soon I was just wondering if you could talk about what portion of Clearway group supply chain is that risk and how quickly you would be able to shift to new suppliers and also if you expect delays or renegotiations.
Speaker Change: The PPA is due to increased equipment cost.
Speaker Change: Thanks for the question, Yes, I think.
Speaker Change: Planning for and mitigating policy risk is.
Speaker Change: A competency that differentiates our company and has over time.
Speaker Change: And the present circumstances are are one that really play to our strengths.
So for the ranges.
Speaker Change: Changes in tariff are applicable duty rates that have been announced so far.
Speaker Change: Clearway group's sponsor entity.
Speaker Change: Has put in place either arrangements with respect to revenue contracts or arrangements with respect to.
Speaker Change: Equipment suppliers and relationships with them in a way that allows for.
Speaker Change: For the projects that have been planned to contribute to <unk>.
Speaker Change: Both goals that have been committed to already or <unk>.
Speaker Change: Identified as part of its near term growth.
Speaker Change: Pathway to be able to proceed on the schedule that was planned.
Speaker Change: <unk>.
Speaker Change: Absorbing the implications of those changes in applicable duties.
Speaker Change: And what we're finding in general.
Speaker Change: Is that the importance of near term constructive all projects that are well structured and are located in places where our customers need them.
Speaker Change: As such debt.
Speaker Change: The incremental cost that's attributable to tariffs like the ones that you've noted.
Speaker Change: Can be absorbed in some way that's reasonable.
Speaker Change: The pricing of the revenue contract.
Speaker Change: Delivering a really compelling value proposition for our customers. So we were planning for scenarios like the ones that are emerging now in U S. Trade law and are pleased that the positioning of our projects and the relationships, we have with our customers and with our equipment suppliers are allowing us to continue to proceed in construction even with those changes.
Speaker Change: Applicable trade policy.
Speaker Change: Great. Thank you very much.
Speaker Change: Thank you.
Speaker Change: Please standby for our next question.
Speaker Change: Our next question comes from the line of Julien Dumoulin Smith with Jefferies. Your line is open.
Hanna Alaska: Hey, Good afternoon. This is Hanna Alaska, Ontario, Julien I think the call and congrats on the quarter.
Speaker Change: My question is around M&A opportunities that you alluded to so what sort of assets or technologies are you looking at primarily is it wind or solar is it more of a ghastly and then separately I know you talk about not really meeting any equity or big equity raises to get to 2020.
Hanna Alaska: Seven midpoint.
Hanna Alaska: And potentially better but further write transaction would you consider a big block of an equity raise.
Hanna Alaska: Okay.
Hanna Alaska: On the first question.
Hanna Alaska: I think as we have historically we.
Hanna Alaska: Select for potential operating asset acquisitions based on.
Hanna Alaska: A few key factors first complementarity to the existing.
Hanna Alaska: Technology resource.
Hanna Alaska: And customer portfolio that we have.
Hanna Alaska: Second.
Hanna Alaska: Opportunities too.
Hanna Alaska: Extract cost our operating synergy based on proximity or similarity of technology.
Hanna Alaska: Third the ability for a clear way to apply some kind of unique.
Hanna Alaska: <unk> addition to the operating assets through some commercialization or technology change.
Hanna Alaska: And.
Hanna Alaska: And then last and.
Hanna Alaska: Essentially the compatibility of the investment with the corporate capital allocation framework, we've committed to our investors.
Hanna Alaska: Those are the same principles that we apply in today's environment.
Hanna Alaska: We are presently looking at projects that span the same family of resource technologies that make up our fleet today, which include all of wind solar battery and gas resources.
Hanna Alaska: We would expect the business to continue to look like it does today, where emissions free resources are really the principal contributor of generation output for the facility for the company and its earnings powers.
Hanna Alaska: As far as.
Hanna Alaska: Yes.
Hanna Alaska: Magnitude of transaction I think what we feel is that we've made a really clear roadmap that's compelling to our investors and first and foremost we want to focus on acquisitions that are right sized and complementary to our growth profile.
Hanna Alaska: Without.
Hanna Alaska: Unduly disrupting the capital allocation framework that we've laid out so far.
Hanna Alaska: But we are at a time, where big enterprises of scale will want.
Hanna Alaska: We remain cognizant of the bigger opportunity set and so we will do that.
Hanna Alaska: But at the moment, we are focused first and foremost when engaging on M&A around acquisitions that are compatible with the corporate allocation framework, we've laid out and that enable us to.
Hanna Alaska: Complete a set of commitments that underpin our goal to.
Hanna Alaska: To meet or exceed the top half of our $2027 50 per share range.
Speaker Change: Okay Super helpful. Thank you and then just as a second question on the two contracts that are under contract signed for a single window.
Speaker Change: Previously I think last quarter, you talked about hopefully signing additional capacity at levels that you saw throughout 2024 hour was there any upside to where you priced el Segundo add or was it fairly consistent with the way you expect it to be I'm, just trying to see if there's any incremental upside to getting towards.
Speaker Change: Point or better on 2027 guide.
Speaker Change: We price those latest contracts for <unk> consistent with.
Speaker Change: The pricing.
Speaker Change: <unk> estimated we would realize for resource adequacy sales in order to deliver on the range that we've articulated.
Speaker Change: So.
Speaker Change: So.
Speaker Change: That capacity cleared at the levels that would be necessary for us to hit the midpoint.
Speaker Change: Or better of our 2027 per share range, and where the balance of the opposite open position clears will help us determine.
Speaker Change: We're in that upper half of the range.
Speaker Change: Better we planned.
Speaker Change: Thank you.
Speaker Change: Thank you.
Speaker Change: Please standby for our next question.
Speaker Change: Our next question comes from the line of Noah Kaye with Oppenheimer <unk> Company. Your line is open.
Noah Kaye: Thanks folks for taking the questions.
Speaker Change: This this very interesting slide on the data center capabilities I, just want to unpack it a little bit.
Noah Kaye: First of all I'm just.
Noah Kaye: I'm not sure I heard it correctly did you say that you had five gigawatts of projects in development front, a meter or gigawatt scale in five states.
To clarify we said both.
Noah Kaye: Okay.
Noah Kaye: Alright.
Noah Kaye: Maybe the question that will help us both on the best.
Noah Kaye: To understand the opportunity set.
Noah Kaye: Is to think about how your land positions your interconnection and your mix of resources aligned with.
Speaker Change: The data center development ambitions of some of the Hyperscale and Colo customers Youre clearly talking to here talk to us a little bit about that and where you think you might have an advantage in terms of speed to market.
Noah Kaye: On.
Noah Kaye: The.
Noah Kaye: First for front of the meter arrangements.
Noah Kaye: Yeah.
Noah Kaye: The five gigawatts worth of projects we've referenced there.
Noah Kaye: Our project that are in service territories, where either through.
Noah Kaye: Utility sleeve relationships are deregulated power sales we have.
Noah Kaye: Renewable or battery project that can deliver on the shape needs of hyper scaler in that market.
Noah Kaye: During the timeframe, where in the next year hyper scaler would be procuring.
Noah Kaye: Supply.
Noah Kaye: And I think something we've seen in the last six months I've noted in your research and others is that.
Noah Kaye:
Noah Kaye: Hyperscale areas utilities, who serve them other commercial industrial companies continue to see great usefulness and.
The supply of front of the meter power in particular in places where there is density of load growth. So.
Noah Kaye: There is a lot for projects that deliver power under a bus bar contracts or hub settled contracts.
Noah Kaye: To do in order to support load growth over the course of the next three or four years, which is the timeframe.
Noah Kaye: Supply.
Noah Kaye: For which hyperscale theirs are procuring now in particular resources that come online in the next three years. So those projects are mature, they're being sponsored by a company that knows how to deliver them in a lot of cases.
Noah Kaye: They are in places that exhibit complementary load shape.
Noah Kaye: And you see some of the Repowering projects that we've announced is evidence of.
Noah Kaye: Where wind shape and a lot of these places it's proving to be kind of useful for data center load growth support.
Noah Kaye: And then in terms of.
Sort of other more complex co location project concepts.
Noah Kaye: We have a lot of acreage in different places in the country where.
Noah Kaye: The combination of data center location.
Noah Kaye: Wind or solar construction.
Noah Kaye: And.
Noah Kaye: Gas Cte or battery construction.
Noah Kaye: Feasible and can support more sizable load construction.
Noah Kaye: And.
Speaker Change: I think we'd noted starting back in July that we were working through our bank of those resources and engagements with.
Speaker Change: Co location developers and data center customers.
Speaker Change: To determine which of them are most complementary for individual customers.
Speaker Change: I think we found that a lot of those development resources are complementary to their plans and as a company that knows how to operate and construct really all of the constituents technologies that are needed I think we bring a credibility to those conversations that helps our customers choose to focus on us.
Speaker Change: I think we we've we've gotten a lot of questions about what the rise of industrialization and digital infrastructure will mean for clearway and.
Speaker Change: We've wanted to start to answer those questions with an affirmation that it will.
Speaker Change: It will mean eventually additional investable opportunities and I think what you can probably count on from US is that when we've got.
Speaker Change: <unk> that are definite.
Speaker Change: In terms of their asset construction and their potential financial contribution that will that will share more about them and we're optimistic about what the future holds.
Speaker Change: We're looking forward to that I'll take the rest of my questions offline appreciate.
Speaker Change: The response.
Noah Kaye: I'll Echo the congrats on the stronger that's great. Thanks Noah.
Speaker Change: Please standby for our next question.
Speaker Change: Our next question comes from the line of.
Speaker Change: Justin Clare with Roth Capital Partners. Your line is open.
Speaker Change: Hi, yes, thanks for the time here.
Speaker Change: I just wanted to follow up on the opportunity here with <unk>.
Speaker Change: Data centers.
Speaker Change: You'll see our capabilities and solar and wind and storage and so just wondering if you could talk a little bit more about the solutions that you might be offering.
Speaker Change: Data set our customers and then maybe if you could speak to how contracts are being structured are you looking at potentially providing round the clock renewable power and then.
Speaker Change: I guess the last piece here, just if you're thinking about behind the meter opportunities can you potentially get to.
Build those quicker by avoiding interconnection Qs is that something that you are.
Speaker Change: Are you waiting here.
Speaker Change: Yes, I think.
Speaker Change: <unk>.
Speaker Change: What.
Speaker Change: We and others find is that any engagement around and energy solutions starts with what's technically possible in one place or another.
Speaker Change: First and then second.
Speaker Change: What applicable.
Speaker Change: Rules for.
Speaker Change: Interconnection and cost allocation work for those resources.
Speaker Change: And as you and others have noted those rules are in varying stages of formation from one power pool to another.
Speaker Change: There's more for us yet to all see.
Speaker Change: In terms of what the FERC has to say about all that but.
Speaker Change: Sure.
Speaker Change: We are generally engaging with customers around our.
Speaker Change: Concepts for.
Speaker Change: Technology driven.
Speaker Change: Physical infrastructure.
Speaker Change: Around which some family up revenue contracts could be structured.
Speaker Change: That generally don't attempt to aggregate all of those technologies as though theyre, one but acknowledged that you have multiple generation sources, all and some common location and each of those probably deserves its own unique type of revenue contracting instrument and I think for the right family of infrastructure.
Speaker Change: <unk>.
Speaker Change: That are responsive to given customers' needs.
Speaker Change: <unk>.
Speaker Change: One can find some kind of revenue contracting structure that is compatible with regulation and what the technologies can deliver.
Speaker Change: I think.
Speaker Change: We sort of feel like it's kind of premature to get into the details of that.
Speaker Change: Today, we have wanted simply to make it clear because folks have asked.
What our family of technologies allow for and we're optimistic about what they will.
Speaker Change: Got it okay.
Speaker Change: Helpful.
Speaker Change: And then one more just wanted to ask about.
Speaker Change: The President's executive order on federal permitting for wind projects from January just wondering if you've seen a change in clearway energy group's ability to secure permits for wind projects or for solar or storage as well and then just thinking about the repowering.
Speaker Change: <unk>.
Speaker Change: Is there any challenge in securing those permits is it easier maybe just speak to how things have evolved here.
Speaker Change: Yes.
I mean, I think it's been a changeable landscape over the course of.
Speaker Change: The last.
Speaker Change: 45 days that I think.
Speaker Change: We have found that Clearway group is able to continue to make progress in advancing its development pipeline.
Speaker Change: On that.
Speaker Change: Leaders of the New administration and the agencies that make up the administration are.
Speaker Change: Continuing to make progress on advancing.
Speaker Change: The administrations.
Speaker Change: Energy dominance agenda mindful of how important it is to enable projects that can be constructed in the next three or four years to be constructed.
Speaker Change: For Clearway group, specifically of the nine gigawatt late stage pipeline that was referenced in our materials today.
Speaker Change: There is there is only 390 megawatts worth 391 megawatts worth of projects.
Speaker Change: That rely on the issuance of some sort of federal right away.
Speaker Change: That's more directly implicated by the executive order and the balance of the projects are being executed on private land.
Speaker Change: A large quantity of them.
Speaker Change: Already have in hand.
Speaker Change: Determinations of no hazard or.
Speaker Change: Or not.
Speaker Change: Are not susceptible to.
Speaker Change: Consideration under the executive order because of the technology that they employ.
Speaker Change: So I think for the I think what we're finding for the projects that are really essential for Clearway group to advance for Clearway Energy, Inc to meet its goals.
Speaker Change: They're able to keep progressing and.
Speaker Change: We're optimistic that the administration in the fullness of time, we'll also recognize how important it is for all of these technologies that can be deployed in the next four years to turn into new spending hardware in the ground.
Speaker Change: And.
Speaker Change: As far as the B.
Speaker Change: The let's see the other question that you posed beyond executive orders susceptibility was what I'm sorry.
Speaker Change: I had mentioned just on Repowering.
Speaker Change: Yes, yes on the Repowering.
Yes, I think what we've actually found is that some of these projects are.
Execute a bowl with a greater level of certainty.
Speaker Change: And I think that's one of the things thats really position them to exhibit a great value proposition for the customers, we plan to serve with them and for Clearway Energy Inc. Reinvestments. So.
Speaker Change: I think we're optimistic about the embedded value and operating wind projects and projects that can be re powered and certainly a diminished risk profile and execution is one of those value propositions.
Speaker Change: Okay got it makes sense. Thank you.
Speaker Change: Thank you.
Speaker Change: Please standby for our next question.
Speaker Change: Our next question comes from the line of Mark choppy with CIBC. Your line is open.
Speaker Change: Thanks, everyone Great update here Tonight.
Speaker Change: Just Craig maybe on the on the commentary around the 2027 targets I think you were kind of saying that youre getting close to the midpoint of the range now.
Speaker Change: With a view that Mount storm comes online after effectively opt for <unk> hundred 27, not really included it not projection at this point.
Speaker Change: Yes, good question, yes.
Speaker Change: The bulk of its long run cap the contribution will be in 2028 and beyond based on.
Speaker Change: The phasing of its construction.
Speaker Change: <unk>.
Speaker Change: We will start construction at the end of this year.
Speaker Change: Yes.
Speaker Change: Yes.
Speaker Change: Growth capital commitments that we've announced today along with some of.
Speaker Change: The evolutions in our op.
Speaker Change: We have shifted our outlook to the point, where we're really focused on delivering the top half of the $2 40 to $2 60 per share range, meaning that.
Speaker Change: Additional agreements on our operating fleet for additional growth investments would be actions that we're executing to try to land us in that top half between $2 50, and $2 60 per share.
Speaker Change: And then to that point, Craig I think you were saying that there's still ample assets.
Craig Cornelius: At the sponsor to facilitate hitting the top end of the range is that right and then when you said $250 million I believe of capital commitments was that inclusive of the storage projects identified on slide five.
Speaker Change: Or would that be on top of that.
Speaker Change: That includes it includes those projects that were constructed ball for funding and completion in 2026 and 2027.
Speaker Change: And then still others.
Speaker Change: Which have not yet been identified but.
Speaker Change: But will be identified in due course.
Speaker Change: And then wanted to follow up on the coffee yields a nice step up from the last update of 11% to 13% both on the third party M&A and the organic is there something specific about some of those investments that have led to the higher cash do you think thats sustainable and then I guess, if you can do acquisitions that 12% cap to yield we think that that's a lower risk adjusted are pretty good great question.
Speaker Change: The return is that something you prioritize now if you can find more deals like that.
Speaker Change: Yeah.
Speaker Change: Well I think first of all we're pleased that.
Speaker Change: The cap the yields on those announcements or further improved over the expectation at the time that those commitments were initially made.
Speaker Change: Or when they were initially offered.
Speaker Change: <unk> improvements.
Speaker Change: Were were achieved through continued optimization of.
Speaker Change: Our plan for operating the project.
Speaker Change: Financing there.
Speaker Change: Ultimate funding or acquisition.
Speaker Change: And yes, I think our goal will certainly be to deliver.
Speaker Change: Kathy yields that are at the sort of highest achievable level with an acceptable risk profile thats consistent with the investment mandate that we've established for Clearway Energy Inc.
Speaker Change: I think what we have.
Speaker Change: What we've used to underpin the long term growth goals with a 10% cap to yield.
Speaker Change: And the commitments, we're making and reaffirming today are still underpinned by that being the basic planning assumption for incremental corporate capital commitments, whether they're to operating asset acquisitions or new dropdown offers.
Speaker Change: <unk>.
Speaker Change: When we've got the opportunity to secure an asset on.
Speaker Change: On a well defined risk adjusted basis, both through trailing operating data or the kind of structure and its contracts.
Speaker Change: That underpin the asset.
Speaker Change: We're certainly going to allocate capital to the highest achievable long term internal rate of return and Caf deal.
Speaker Change: <unk>.
Speaker Change: Yes.
I think if it was our intention to.
Speaker Change: Lead you.
Speaker Change: To expect 11% to 13% cap yields on a routine basis.
Speaker Change: We will let you know, but I think for the time being.
Speaker Change: The way we would suggest you think about these outcomes as they represent our relentless focus on value optimization.
Speaker Change: We will try to continue to deliver cap deals that are very compelling, but it would be premature I think to <unk>.
Speaker Change: Right the entire expectation for further growth capital investments just yet.
Speaker Change: Thanks for the time Tonight.
Speaker Change: Thank you.
Speaker Change: Please standby for our next question.
Speaker Change: Our next question comes from the line of Angie stores and ski with Seaport. Your line is open.
Speaker Change: Thank you.
Speaker Change: So I was just wondering.
Speaker Change: Clearly.
Speaker Change: Reflecting a high cost of capital and the returns on the assets you are.
Speaker Change: Wiring.
Speaker Change: But I'm just wondering I mean is this.
Speaker Change: You also need to execute on your growth targets, if not exceed them.
Speaker Change: He showed us.
Speaker Change: Our long term financing plan.
Speaker Change: And yet.
Speaker Change: Cost of financing is not subsiding.
Speaker Change: I mean is this just a.
Speaker Change: The plan is to just stick with the.
Speaker Change: The plan and then continue to execute and then wait for the market to.
Speaker Change: To recognize how different do you all versus your peers.
Speaker Change: Will there come a time, where you might consider somewhat options. Thank you.
Speaker Change: I think.
Speaker Change: I think we are very proud of the work we've done as a company really throughout.
Speaker Change: The life of Clearway Energy, Inc. As a public entity.
Speaker Change: And I think.
Speaker Change: Our history of making good on financial commitments once made.
Speaker Change: And assembling a business that's run with.
Disciplined within our means I think.
Speaker Change: We will prove out over time, how compelling our business model. This is we look at.
Speaker Change: The 5% to 8% plus <unk> per share growth goals that we've laid out is compelling and absolutely consistent with what the best leading edge.
Speaker Change: Midcap utilities in the United States deliver.
Speaker Change: We look at the corporate capital structure that we've put in place.
Speaker Change: And commitments, we've made around that is being disciplined and cautious.
Speaker Change: And I think Angie our hope is that.
Speaker Change: In due time.
Speaker Change: That prudence as well as the compelling growth proposition, where our offering is going to be rewarded.
Speaker Change: With cost of capital on a share price that really reflects how compelling it is.
Speaker Change: So I think we like the plan, we've built we know how to execute it well.
Speaker Change: <unk> at executing really the top end of the range of it and.
Speaker Change: Our intention is to do that and I think our hope is that through actions we will.
Speaker Change: Find that our financial stakeholder base theyre going to reward us with.
Speaker Change: <unk>.
Speaker Change: A compelling valuation that drives to the kind of cost of capital outcome that I think you are alluding to.
Speaker Change: Okay, and then separately on the third party M&A you guys have looked at.
Speaker Change: Numerous projects for many years.
Speaker Change: <unk>.
Speaker Change: With.
Speaker Change: With few findings so so what's changed I mean.
Speaker Change: You feel like there is.
The it's just the time has lapsed that these owners of assets have waited long enough or is there.
Speaker Change: Some sort of shift in the investment.
Speaker Change: <unk> for those sellers I mean, what do you think drives the higher appeal of some of the assets that youre looking at right now.
Well I think so far the types of acquisition to I'll, Let me is representative of the.
Speaker Change: The limited number of assets centered acquisitions, we've executed in the past, where we had a relationship with the pre existing owner, we were well positioned to be able to operate it we're in a position to be able to potentially repower at in the future.
Speaker Change: All of those things made it.
Speaker Change: Really compatible with our ability to do something unique and value creative for the asset.
Speaker Change: That was true also for Mount Storm, which we had acquired a few years ago with the expectation. We are eventually going to repower. It like we are now doing.
Speaker Change: It played to our strengths in mid Atlantic wind.
And for the time being we're really focused on first and foremost asset acquisitions of that kind, whether they're a single asset.
Speaker Change: Portfolio of them.
Speaker Change: <unk>.
Speaker Change: And what I think is marginally different today than you might have seen a few years ago was that the environment of demand for.
Speaker Change: Financial investors, who could compete against us as a financial sponsor has dissipated somewhat.
Speaker Change: And for sellers, who are looking to find somebody else to.
Speaker Change: To acquire their project or improve it.
Speaker Change: We stand out now more as somebody who has a certain buyer.
Speaker Change: Who is in a good position to be able to do something to improve their asset.
Speaker Change: And I think just the community of buyers is now a shorter list for contracted.
Speaker Change: Our renewable operating assets and you might have seen in the past.
I think were sober about how long these cycles last in our industry. So I wouldn't assume that it's going to be an environment that is.
Speaker Change: Usually advantaged.
Speaker Change: Forever, but when we do end up with these moments of opportunity we want to be ready to work hard to execute on investments that exhibit a compelling value proposition and hopefully we.
Speaker Change: We will do so over the course of the next six months, but just in ways that are measured.
Speaker Change: And then just last question. So we saw some recent.
Speaker Change: M&A deals involving renewable power portfolio square.
Speaker Change: Public entities team up with the financial sponsors is that an option for you.
Speaker Change: Now that <unk> has been acquired and basically has the largest financial backing.
Speaker Change: I think for a clear way one of the things that.
Speaker Change: We really consider a blessing is that between the CIP Blackrock and total we enjoy financial sponsors that are amongst the biggest and most committed investors and clean power assets here on planet Earth and.
Speaker Change: If we have some good idea as an operator or.
Speaker Change: Development agent.
Speaker Change: That is compelling but requires financial resources beyond those that we can prudently deploy.
Speaker Change: It's an idea that we can still engage on by virtue of the relationship that we have with CIP Blackrock until Tal so.
Speaker Change: Hopefully, we will find more opportunities that give us the chance to deploy the capital of Clearway Energy, Inc. In a way that's compelling.
Speaker Change: Leverage the substantial market presence.
Speaker Change: In investment power of those entities as well.
Speaker Change: Hey, good thank you.
Thanks Angie.
Speaker Change: Thank you.
Speaker Change: Ladies and gentlemen, I'm showing no further questions in the queue I would now like to turn the call back to create comes off.
Speaker Change: Clearway energy for closing remarks.
Speaker Change: Thanks, everyone for joining us today and for your ongoing support of Clearway. We are looking forward to continuing to demonstrate to you. What we really think is a leading market position.
Speaker Change: In the coming quarters that is further magnified by our operating excellence and discipline.
Speaker Change: Operator, you can close the call. Thank you.
Speaker Change: Ladies and gentlemen that concludes today's conference call. Thank you for your participation you may now disconnect.
Speaker Change: Okay.
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