Q3 2025 Clearway Energy Inc Earnings Call

Speaker #1: Hello and welcome to the Clearway Energy, Inc. . S third Quarter 2025 conference call . At this time , all participants are in listen only mode .

Speaker #1: After the speaker presentation , there will be a question and answer session . To ask a question during the session , you will need to press star one one on your telephone .

Speaker #1: You will then hear an automated message advising your hand has been raised to withdraw your question . Please press star one one again .

Speaker #1: Please be advised that today's conference is being recorded . It is now my pleasure to introduce Senior Director of Investor Relations , Akil Marsh .

Speaker #2: Thank you for taking the time to join Clearway Energy, Inc. third quarter call . With me today are Craig Cornelius , the company's president and CEO and Sarah Rubenstein the company's CFO .

Speaker #2: Before we begin , I'd like to quickly note that today's sessions will contain forward looking statements which are based on assumptions that we believe to be reasonable .

Speaker #2: As of this date . Actual results may differ materially . Please review the safe harbor in today's presentation , as well as the risk factors in our SEC filings .

Speaker #2: addition , we will refer to both GAAP and non-GAAP financial measures for regarding our non-GAAP financial measures and reconciliations to the most directly comparable GAAP measures .

As you'll see in more detail in the coming slides, this combination of Enterprise alignment and bountiful accretive growth opportunities. Underpins our confidence in meeting our growth Targets in 2030 and Beyond.

Turning to slide 7.

Turning to the building blocks of our growth Outlook through 2030. We have a clear line of sight secured by successful commercialization of substantially all development projects planned for cwen funding in the 2026 and 2027 Cod vintages.

Attractive. Cathy yields are expected for these projects through long-term.

And favorably structured, Revenue, contracts, security equipment supply and clear, paths to permits, and interconnection.

Looking for further out, clearway groups development programs in 2028 and 2029 includes a total project volume of over 6.5 gigawatts far in excess of what is needed to meet the top end of our 2030 goal.

Focusing on the approximately 4.5 gigawatts of late-stage projects planned for 2028 and 2029.

We expect those projects to Target recurring asset capacity of 40,000 dollars per megawatt or greater.

And to enable C1 investment at Kathy yields on average of 10.5% or better.

in line with the current market for recently, commercialized projects and recent drop-down offers

equating to approximately 180 million of recurring asset capy, potential, that opportunity, set is substantially larger than what is required to meet the top end of our 2030 cap, you per share goal,

turning to slide 8.

Our Enterprise is advantageously positioned for growth. Well, beyond 2030.

Given clearway groups best-in-class development Pipeline and the technological and Market resilience of its embedded projects.

Projects are being developed at increasing scale and response to power market demand.

And will be commercialized with c's, growth objectives and investment mandate front of mind.

As discussed in past quarters, our pipeline has been built for resilience through massive safe, Harbour Investments, prescient Geographic positioning and thoughtful procurement.

Proven supplier of choice for utilities and hyperscalers to meet Mission critical data center demand.

With 1.8, gigawatts of PPA is executed and awarded to support data center, loads during the last year.

From this position and using pre-existing development and operating assets. As a nucleus, for its work, clearway group is now developing multi-technology generation. Complexes to serve gigawatt class, co-located data centers across 5 States.

With the potential for these developments, to create a creative investment opportunities for clearway energy Inc. In the early 2030s,

Configurations, for these complexes range. From approximately 1, gigawatt up to almost 5 gigawatts across multiple Technologies.

with commercial operations stages, coming online as soon as 2028 and spanning into the 2030s

The ultimate design and capacity of these complexes is subject to a number of factors, but if the Enterprise is successful at bringing online, just 1 of these large multi-generation complexes a single 1 alone could allow cwen.

To meet its growth objectives from multiple years in the 2030s while aligning with our Capital allocation framework.

Given our growth Outlook and funding position. It is our view that the market could more significantly value. The longevity and diversified enabling Pathways of our growth Outlook Beyond 2030.

To give our investors, the ability to see that future growth potential as clearly as we do. We're aiming now to provide more visibility into the illustrative Financial building blocks, we plan to use to deliver durable growth well into the 2030s

as much as other power companies, if not more. So we expect that the location of our assets and their financial structures will allow our operating portfolio to benefit from rising power prices in the decades ahead.

as our initial PPA is expired, our projects will be free of project level debt, which we structure to advertise at the conclusion of ppas making a higher power price scenario, a potential Tailwind for recurring annual cash, flow contribution,

additionally, while we plan with conservative assumptions for corporate and project refinancing opportunistic execution, may result in upside relative to our planned expectations,

We have routinely demonstrated execution of project and corporate maturities at financing costs, favorable to assumptions. We incorporate into our long-term goals.

We are cognizant of the, many moving pieces, that determine our operating portfolios earnings power year to year.

But over the long term, we believe the environment is shaping up to allow us to deliver low single digit, annual growth in cash flow from our existing portfolio.

On top of this we will have the opportunity to invest in growth a cross multiple redundant Pathways in Fleet and enhancement sponsor developed projects and third-party asset m&a.

Allocating Capital across those Pathways based on which investments will create the highest risk adjusted return for clearway energy Inc.

By deploying 30% or more of a growing stream of retained cash flows towards growth at Cappy yields greater than 10%.

We can achieve another 3 to 5 percentage points of annual growth in the long term.

Finally, we can in the long term deliver at least 1 to 3%. In compounding growth in Capi per share through new project Investments that are funded with corporate, Capital raised Through The Prudent issuance of corporate debt instruments and equity

Our track record has demonstrated the ability to create projects that deliver meaningful accretion relative to our costs for corporate capital.

We have demonstrated the ability to sustain that accretion across multiple Market cycles for over a decade.

And we also have demonstrated a consistent commitment to Prudence in the way we manage our balance sheet.

And judiciousness in the way we plan for and execute Equity issues.

Through this simple and sustainable model. And with an abundance of attractive growth opportunities ahead of us. We look forward to delivering our long-term growth Target of 5 to 8 plus percentage growth, well into the 2030s

Turning to slide 11.

We have continued to make progress across our redundant growth Pathways methodically executing on our prior commitments and extending our roadmap for growth with our trademark development, craftsmanship.

Complete optimization initiatives, continue to strengthen our ability to achieve our 2030 Target.

Since last quarter Mount Storm started construction. A new long-term PPA was Advanced for San Juan Mesa and safe Harbour Investments were made to enable 2 additional future. Repowering, that can be implemented over 2027 to 2029.

We are now in a position where every project that is able to be repowered through 2027 can be.

And towards the implementation of a program that will aim to have repowered over 1 gigawatt of Wind by 2029 with a majority of our wind Fleet by that year being repowered or newly constructed. This decade and in a strong position to perform for the decade ahead.

Turning to slide 12.

Our sponsor enabled growth program, has also continued its forward progress, with all previously committed Investments funded in construction or on track for completion at attractive. Cap to yields

Paul drop downs that have commenced commercial operations in 2025, are fully funded with initial operational results. Showing excellent performance and anticipated Capi contributions. And Cathy yields exceeding, these levels initially compute communicated at the time of investment commitment.

This outcome was driven by further Revenue contract and cost optimization as well as supportive project financing markets.

Committed or recently offered drop-downs plan for COD in 2026. All remain on track for completion. In that year, with a creative perspective, returns for sewing.

And additional sponsor developed drop-down opportunities for the 2020 Cod and funding year are now coming into view.

The Royal slope project in Washington state has now been identified as a C1 investment opportunity after executing a 20-year PPA and a 20-year energy storage agreement with the utility expecting significant data center demand growth in the region.

And an additional Webelo. Battery storage resource has been identified as a potential additional future drop down investment opportunity for cwen in 2027

turning to slide 13.

The last year has been a successful period of complimentary and synergistic third-party m&a. For clearway with 3 transactions consummated, at Cathy yields above 12%.

Our early October announcement of the deriva solar portfolio acquisition, capped off. A fruitful year of disciplined, acquisition engagement, in a market environment, that favored our strengths as an Enterprise

The transaction, leverages our core strengths and operating solar assets cost efficiently across the country and especially in California.

It also positions us to enhance value in the 2030s through battery, hybridizations at targeted sites and through the ability to offer solar energy and capacity value alongside our market-leading franchise for operating a new wind in pjm,

Turning to slide 14.

Our 2030 capy per share. Target is built upon the Strong building blocks discussed earlier.

From the 2025 midpoint of guidance. We've spent the last year executing across our growth pathways through Fleet improvements enhance capacity, revenues drop downs and third-party m&a such that. We now see a path to achieve the top end or better of our previously set 2027 target range of $2.50 to $2.70 in Cathy per share.

Beyond 2027, Cathy per share growth will be further increase through what promises to be. A very fruitful year of repowering investments in 2027.

Potential investments in now-identified sponsors enabled drop-down opportunities for the same year.

And the sizable late-stage pipeline Clearway Group is developing for completion in 2028 and 2029.

Notable items that would net out against incremental asset cap fee. From growth includes the issuance of corporate debt to fund growth and the refinancing of our corporate bonds due in 2031.

Both of which we have conservatively accounted for in our targets.

We also accept to issue modest Equity to fund growth in line with our demonstrated practices and with the prospective cost of such issuance incorporated into our 2030 Target.

The potential to prudently and methodically improve on that Outlook over time.

Through our Fleet enhancement and sponsor development Pathways. And also through additional third-party m&a, which is not incorporated into our Target setting, and would continue to be subject to a rigorous standard for financial accretion.

With that, I'll turn it over to Sarah, who will walk through our financial summary and provide additional details on our financing Outlook through 2030.

Thank you, Craig turning to slide 16 for the third quarter. Clearway delivered adjusted ibida of 385 million and cash available for distribution or Cathy of 166 million.

Year to date, we've generated 980 million in Majestic ibida and 395 million of Cathy.

In our Renewables and storage segment, wind resources and key regions track close to median expectations while solar benefited from the execution and timing of growth Investments.

Flexible generation. Also performed in mind with sensitivities,

Turning to our balance sheet, we executed million dollars of opportunistic, discrete Equity issuances at a creative levels. Since the last earnings call through our ATM and dividend reinvestment and direct stock purchase plan.

This reflects our continued commitment to Capital discipline and our ability to assess Market sufficiently to support groups.

Given the strong year-to-date performance and our expectations. For the remainder of 2025, we are narrowing our 2025, Cathy guidance range to 420 to 440 million,

We're also.

Establishing our 2026 Cathy guidance range at $470 million to $510 million.

This guidance incorporates incremental contributions from drop downs and third-party m&a, as we continue to execute on our growth strategy.

As in past years, our guidance midpoint assumes p50 renewable production expectations and the range reflects the potential variability in resource performance energy pricing and timing of growth Investments.

As a last note on this slide, I'd like to note that our definition of Cathy is a conservative metric that represents the ongoing sustainable. Cash flow, generation of our business, and has been consistently applied throughout our history and remains unchanged.

We have historically used this metric to measure the amount of cash available to distribute to our shareholders.

In the interest of making our financial metrics more, recognizable across peer benchmarks. We may now sometimes reference cash available for distribution interchangeably with free cash flow. A term that is more recognizable and commonly used among industry peers.

The terms represent the same financial metrics, and you may see them used interchangeably beginning with these earnings materials.

Starting to slide 17 with the establishment of our 2030 Cathy per share target range. We wanted to provide greater granularity on potential funding sources and corporate Capital deployment in 2026 through 2029. In support of our growth. Targets to achieve the target range of 290 to 310 in Cathy per share in 2030.

Clearway continues to have a prudent Capital allocation model to support. Our long-term objectives. First utilizing retained cash flow, which will provide a greater contribution as supported by a payout ratio trending, towards 70% by 2030.

Next, we fund growth with corporate debt while ensuring prudent corporate leverage targeting a 4 to 4 and a half times ratio of corporate debt to ibida in mine with our Target credit rating.

to round out our funding plan, we plan to issue, moderate discrete amounts of equity when accredited in an amount that as a percentage of our public float is consistent with funding plans, observed among listed utilities

Given our position of strength, opportunistic, 2025 equity issuances and excess. Proforma, debt capacity. We have the flexibility to time the placement of future equity issuances and have the flexibility to utilize alternative sources to withstand temporary Market volatility. If necessary.

To achieve our 2030 Cathy per share Target.

Turning to slide 18 to meet our goals in 2030 and beyond our Capital, allocation framework is designed to create a virtuous cycle of sustainable and resilient growth.

As the payout ratio decreases and goes below 70%, long-term retained cash flows become a greater source of funding for Creative Investments that can allow us to sustainably meet our 5% to 8% plus long-term annual growth objective.

As we grow our earnings power from creative investments and retained cash flows, this positive feedback loop repeats itself.

With our long-term capital allocation framework. We believe we have more clarity into how we can fund our long-term growth supported by our sponsors, abundant set of high return opportunities. And from this position of strength, we will prudently, use, corporate debt, and discreet Equity to aim for the top end or better of our long term targets.

And with that, I'll turn the call back over to Craig for closing remarks.

Thanks. Sarah turning to slide 20.

We have decisively delivered a clear path to achieving our updated 2025 guidance and our 2027 target range.

We've now established a 2030. Growth Target demonstrating a 7 to 8% growth, compound, annual growth rate that matches up with the best in premium companies in the listed infrastructure and utility community.

Our team has done an incredible job advancing our growth Pathways and establishing strong. Visibility into how we can meet the 2030 target range. We have set today

In the quarters ahead, you can expect that we will continue to operate our Fleet with excellence.

Delivering predictable, cash flow and payment of committed dividends.

Execute with trademark craftsmanship on the completion of the projects, we have identified to enable our growth plans for the near-term through 2027.

Further crystallized and communicate our roadmap to fulfill our 2030 targets through the fleet, enhancement initiatives and growth Investments. We will complete over 2028 and 2029.

Demonstrate that, our funding strategy is being executed in a way that is financially prudent. And accretive

And show each year how the enterprise we have created is, in a clear way, one of the most diversified and promising models in the U.S. power sector for delivering sustained profit growth alongside competitive dividend growth.

As we extend the strong performance of this model, through the end of this decade, and into the decade to come.

Operator, you may open the lines for questions.

certainly as a reminder, to ask a question, you will need to press star 1 1 1 on your telephone,

We ask that you please limit yourself to 1 question in 1, follow question.

1 moment, please.

And our first question comes from the line of dimple gasai with Bank of America.

Hi. Um, good evening. Thank you for taking my question. The first one was something on the slides that kind of caught my attention: you flagged the development of flexible gas paired with renewables near hyperscaler clusters.

Um can you give us a sense of timing of these opportunities and what returns to these hybrid data center complexes Target and and how you think of the risk return profile compared to traditional Renewables and then I have a follow-up. Thank you.

Yeah, sure. Um, we've noted at the beginning of this year that we would be undertaking work to complement our existing pipeline of renewable and battery development assets and operating assets with other complementary resources that could help serve the growing co-located data center loads that the digital infrastructure community has a need to supply.

And over the course of years, have done the work to assess, which of our pre-existing development and operating assets, were positioned in locations that were most responsive to the needs of our current and prospective customers in that community.

and the projects that you see noted here, uh exhibit uh, the same Geographic footprint that you'd seen noted earlier this year

Opportunities that would likely uh, be accessible to clearway energy Inc in 2030 and Beyond.

Uh the plans we've laid out today and the goals we've set out to 2030. Don't depend on any of these complexes being realized.

We can hit the goals, we've outlined building, and developing the same project that make up the fleet that we have today. With the same type of Contracting structures. That we employ in our operating Fleet, and in our newly offered drop down assets.

For those complexes that do include potential flexible generation resources, our objective is to create, uh, complimentary gas resource that enables load following and highly contracted resources that are responsive to both the needs of interconnecting. Utilities, regulators and data center customers.

And it may be the case that in any given complex situation, the best owner of a flexible generation resource may, in fact, be the interconnecting utility or a Clearway Enterprise component. In all cases, we would envision those resources as being contracted, if part of our Enterprise complex, in the long run and exhibiting risk-adjusted returns that are at least as good, if not superior, to those you see reflected on other drop-downs today.

So they're part of our long run future, they're part of our being a responsive energy supplier that our customers can can choose to do business with, with across the country and they are part of how we can sustain substantial compounding growth for clearway energy Inc, in the decade ahead.

And we look forward to creating those projects in a way that would be entirely consistent with our pre-existing capital allocation framework.

Follow-up is, you know, repowering appears to be delivering 10% to 12% after yields, uh, which is super attractive here. Can you give us a sense of the timing of contribution and the size of that opportunity as it relates to, you know, Mount Storm, Goat Mountain, and Sanu Mesa? I believe this, you know, the sales and repurchasing mechanisms that's associated with these. Thank you.

Yeah. Um,

The majority of the repowering campaign as you will note, in our materials, uh, will will occur through Investments. That clearway energy Inc will make in 2027.

And so they're capy contribution. Will largely be reflected in? Uh, the difference between, uh, the top end of 2.70 cents and capy per share in 2027

And our goal of uh delivering 290 to 310 in capy per share or better in 2030. Uh you'll see most of the Cathy uplift from those assets reflected, in our 2028, Financial year. And we've noted the incremental, uh, Cathy contribution and the cap yields that you could expect to see from each of those projects individually.

Uh, in every case we're pleased to note including through uh the PPA that we'd signed actually just earlier today for San Juan Mesa that the PPA teners on these projects. And the terms of these ppas are quite attractive. So in addition to the incremental, Cathy, they'll contribute and the hi Cathy yield at which we're deploying Capital, we're creating great longevity, and contract profile. For our wind Fleet, with these new ppas, and these new repowering,

Thank you. 1 moment, please for our next question.

Our next question comes from the line of Justin Claire with Roth Capital partners.

Hi, thanks for the time. Uh so I guess this following up on the the prior question line of questioning their um and then you know some uh comments you made in your prepared remarks, uh wondering what you're seeing in terms of the potential for PPA renewals. So not necessarily just for repowering but for other projects in your pipeline you know with the increase in uh Power pricing that we're seeing

Wondering if there's demand for from off-takers to, uh, renew and extend ppas at an earlier time than you might typically expect and whether or not, that's something that could lead to um growth in your revenue or capy, you know, in the coming few years. Yeah, thanks for the question. Um,

Landscape of Capilla creation that supports our 2030 goals.

um, and that was probably a first notable instance of the trend that you're asking about, but, uh, likely not the last,

um,

More likely than not that opportunity for extension in our wind, Fleet will mostly contribute to longevity and compounding of cash flow in 2030 and Beyond because uh, substantially all of our existing renewable Fleet is fully contracted through to the end of this decade. And as part of any contract extension negotiations, uh that we may undertake with customers, we will be focused on assuring that the uh, the cash flow contribution From Any Given asset will remain at least as high if not higher than we would, otherwise expect under our existing Revenue contracts between now and 2030.

Um,

but most definitely, we see that as a potential benefit um,

What's apparent in the case of Mount Storm is that we were able to convert a shorter term, defined quantity hedge to a long-term PPA. We do have some other Assets in our Fleet that exhibit a Sim similar commercial profile and for that subset of assets, we may be in a position to be able to undertake uh, uh, an adaptation or optimization and their revenue Contracting profile.

Between now and 2030, that could both enhance cash flow and reduce, um, inner annual variability. Um, but when we think of the recontracting and extension opportunity, we think of it, uh, principally as a driver of our ability to deliver a long-term compounding 5 to 8% plus growth rate Beyond 2030, where prism math, that we'd outlined in the presentation will aim for our existing operating Fleet to continue to grow its capy per share, contribution by 1 to 2%.

Okay, got it. That's, that's really helpful. And then just how to follow up on the 2030 targets. Uh, when I look at the, the 2030 capy per share, um, Target and then I compare that to the high end of the 2027, Cathy per share range. Uh, I calculated a kegger between the 2 of of, just over 3 and a half percent. So, it's a little bit below the growth, anticipated through 27, and a little bit below the growth anticipated in 2030 onward. So, just wondering if that's the right interpretation. And if you might be able to bridge, you know why growth might slow in those few years before we accelerating,

Yeah I think um as you've observed over time, we have a culture of um, setting goals that we know exactly how to hit. And then as we complete commercialization actions, that allow us to fulfill those goals. Then we further uh, revisit or update those and 1 of the things that we're quite proud of is the fact that between October last year and October this year, we increased our capacity per share expectations from, uh, 2.40 cents to 2.60 cents in Cathy per share, in 2027, uh, to $2.50, uh, to 270, uh, to 270 or better all in the space of 1 year. And what you can see in that is that we have a systematic, um, culture of setting goals that should be attractive to our investors, and then, uh, revisiting them and ideally uh, updating

And increasing them as we complete individual contributing actions.

Uh, we looked at that 7% to 8% CAGR per share growth. Call through 2030 is very much at the leading edge of what you see amongst premium utilities today.

Ink would need to invest in to hit the top end of our existing 2.90 to 3.10 cents per share goal so bottom line. Uh, we feel quite good about our opportunity set. We feel great about what 7 to 8% compound annual growth from 2025 represents we feel that the investment opportunity set in front of us is quite robust. We've demonstrated a culture of setting goals hitting them, and then revisiting and increasing them. And we intend as a company to continue on with that, excellent track record.

Thank you. 1 moment, please for our next question.

Our next question comes from the line of Steve fleshman with Wolfe research.

Uh, yeah, thanks. Uh, I was going to ask that same question, so I appreciate the answer you just gave there.

Um but Craig just 1 other uh question it. It does seem like maybe you're in a kind of a target-rich.

Environment both from your developer parent but also just the m&a environment. So maybe you could first talk a little bit about

You know, how much more m&a opportunity are you seeing? And then secondly,

Just, how are you thinking about?

Uh, just funding kind of those upside type.

uh opportunities, if if

You know, if you start having billions more to invest in just...

Can you use this framework the same way for that incremental investment?

Um and just how you're kind of managing that. Yeah. Well

I think, uh, to start with and it, it's, it's also reflected in the way that we've sought to articulate long-term goals and an accompanying Capital allocation framework. We are, uh, mindful of the important compact we have with our investors to progressively demonstrate, how our business model will continue to sustainably grow across Cycles. Using financing sources that are demonstrably within our means.

So, when we think about growth goals, when we think about any individual incremental Capital commitment, we're looking for to assure that, uh, we're able to successfully execute on it with financing sources that are accretive materially relative to the cash yield that we have on an investment. You've seen. That's absolutely been true for each of the incremental m&a, Investments, that we've announced here. Well, this year relative to our weighted average cost of capital it spreads. Um, that approach, uh, 500 basis points, um,

and so, in an environment where it's possible for us to uh, sensibly acquire assets that fit, um, with our Fleet and with our investment mandate and which we can add value to

We'll want to continue to assess whether, for our shareholders, it's sensible for us to make those incremental investments and reflect their addition in our long-term profit goals. Um,

Uh, but we also want to be judicious about assuring that what we are digesting at any given point in time is constant with what, uh, our investors would like to see us committing to and the magnitude of corresponding, uh, Securities issuance that would come with funding them.

You know, I think 1 of the things that we have done through uh, in particular the the third of the Acquisitions that we announced this year, is to use it, to help us look forward to a point in the future, where the payout ratio in our business model is declining. Uh, something that we reflect on is the great power of a payout ratio, that's declining down to 70 or 65% and how much compounding capacity per share growth, a payout ratio at those lower levels. Uh, can enable us to fund just from our own operating sources without much in the way of equity issuance. So I think if we were to see anything, uh, that would be sensible for further acquisitions.

The standards we'd be applying look like the same ones that we applied to the deals that we did this year. Meaning they have to be, uh, meaningfully accretive we have to have significant synergistic value. We're able to apply and extract, uh, the funding of the investment needs to be demonstrably within our ability. And, uh, I guess a manageable bites size and to the extent that we are acquiring additional assets. We would look to devote their incremental cash flow in particular towards, uh, reducing our payoff ratio, and increasing the self-funding, nature of our business model.

Okay, great. Thank you.

Our next question comes from the line of Heidi Hawk with BNP.

Hi. Thank you for taking my question and fraud, uh, helpful detail on the long-term Outlook. Um, I just wanted to kind of take the other end of, of the previous question in terms of um, how you're thinking about assets dispositions in terms of the broader funding strategy. Um,

is is this core to the the strategy should we think of um any specific asset or portfolios is most eligible um and and would this offset any Equity issuance needed or help to drive incremental

Yeah. Um, we have not uh Incorporated uh plan disposition of assets into our Capital allocation framework.

Uh, or the funding sources that, uh, we assumed to be able to tap into in order to deliver on our long-term growth goals.

Um, but as fiduciaries, we always remain cognizant of whether, uh, we are the best owner of an asset or whether uh, it would be more accretive for our shareholders, to selectively dispose of Assets in our Fleet.

um,

We uh certainly have done that at Large Scale in the context of the district thermal uh segment of vesture that we completed some years ago. Uh but have also done that at very small. Scales around individual uh renewable plants, that just weren't a great fit for our Fleet as we go. Forward to next year, we will always remain mindful of whether there are relatively small, uh, contributors to our Fleet, um, which may be more highly valued by other buyers. Uh, for whom those assets, might be more significant and there may be targeted opportunities along those lines to um, uh,

call it, um,

In enhanced operating efficiency in our Fleet, by reducing project count in select areas or by uh, conveying an asset to someone else. Who sees a greater strategic interest in it, what we look at in situations, like that is how much cap d. A project is contributing to us, what our Outlook is in long-term Net, Present Value, and whether someone else who is buying the project from us, would buy it at a cap to yield. That's secretive relative to the value. That's embedded in our shares today, and would assign a a terminal value to the asset. That's higher than what we do and in instances where that's possible, we will selectively determine that that's in the best.

Interest of the shareholders to dispose of an asset along those lines.

But a core asset harvesting campaign to fund our growth is not part of our plan, and we feel quite good about the long-term outlook for our fleet. So the assets that are in our fleet, we're kind of enthused to own as we look out into the 2030s.

Great, that's helpful. Thank you. And then secondly, um,

Going back to the data center opportunities, specifically with developing Natural Gas.

Uh, firstly, housing. Should we expect, um, a clear way to kind of update, uh, formalize these contracts maybe, um, given the extended equipment lead times for natural gas? And then, secondly, just more broadly, what is driving Clearway to kind of get involved with developing flexible generation in addition to kind of the legacy renewable development? Is this, uh, driven from demand from hyperscalers or utilities or customer conversations? Just kind of curious on the broader strategy there.

Yeah, the bulk of our business is to develop assets that are reflective of our deep expertise and our track record for both asset development and operation. And we are mindful that in California. We have a great existence proof for what a flexible generation Fleet can do to compliment renewable resources and provide a combined, highly reliable. Um, uh

Uh, growth is driven by the fraction of load served in the state. So, that's the business model that we are selectively looking to emulate in individual areas where our customers would like for us to serve them renewables, and where they recognize that complementary gas helps those renewables get built and deliver into the system combined capacity that's needed.

Um what you should know though and what you should focus on is that the main stay of our business. By far the bulk of the 30 gigawatt pipeline, that we maintain today. The entirety of the 11 gigabytes that we have of late stage assets for completion. Over the next 7 years, our renewable and Battery projects in places where those are. The least cost best fit resources for customers who want to buy their attributes in long-term contracts.

And the plan that we've laid out, the goals that we've set and will meet through 2030, is underpinned entirely with those asset types.

So the flexible generation resources that we now have in development, are additional to that core capability that we have, they will help create opportunities for carbon-free resources to serve growing load. Uh, in places where data centers, absolutely are needed in in the gigawatt scale and they're part of how we make this business model continue to grow and compound, uh, not just through the next 5 years, but through the next 10.

Thank you.

Our next question comes from the line of Mark jarvey with CIBC

Thanks, uh, good evening. Everyone just Craig on on the data center energy, complex facilities, do any of those build off of existing, uh, renewable or battery installations.

Or those new development sites, all of them build off of either existing operating facilities or renewable and battery sites that we added in development more than five years ago.

So there'd be a contract on existing assets, and then does that factor in the ability to drive higher returns off of those types of projects?

Yeah. I think what creates an opportunity to deliver higher returns really from all the projects that we have in our our, our development footprint today, uh, is the ability to bring a power plant online uh, at size with credibility. Um, and um, you know, I think uh, when we look at the footprints that we highlighted on page, 8 of our earnings materials, when you look at the footprint that we we've we've outlined per our custom in our appendix. You will see that the average size of renewable and storage projects in our pipeline, has grown appreciably. You'll see that the total quantity of late stage projects that we have that are constructed.

Able over the next 5 years, has grown significantly. You'll see that most of them are entirely storage or include a storage component. You should see that solar amongst the renewable resources is by far the the largest share along a relative to wind in that development footprint and what is allowing us to produce. Good returns today what's allowing us to get longer ppas? What's allowing us to deliver cap fields for cwen that are higher than they have been? Historically are all the fact that we've got a power plant that we can construct that we can credibly bring online in the near term and uh and in some ways, the bigger the power plant, the greater contribution, it can make to capacity and energy needs now. The higher return we can produce. So for these larger complexes, uh, those same attributes will show up likely later in our development program into the time.

Time period after 2030. But what will make those complexes successful are the same things that are making it possible for us to develop so much over the balance of the decade between now and 2030 at high returns. Which is that we know how to build power plants. We've demonstrated that we can build build them when others can't we know how to operate them. We have a robust position of interconnection cues. We've been developing the projects in places where Renewables and batteries are least cost best fit resources.

And that those things are worth a lot whether it's to a utility or a data center company today.

Thank you.

Our next question comes from the line of Nelson NG with RBC Capital Markets.

Assuming, uh, for your flexible generation portfolio, maybe just give an update on how contracted those assets are now.

Yeah.

Um, when we set the range, we set it, as is our philosophy, at a level where, uh, we are confident we can meet the range in current market conditions, uh, for our open position, and that's reflected in that range of $2.90 to $3.10. Uh, the corresponding levels look similar to what, uh, our fleet was contributing. The flexible generation fleet was contributing in 2024 and 2025, um, and we, uh, intend to be able to ultimately harvest, uh, even more value, um, or aim to, uh, harvest even more value from, uh, that segment in those out years. Uh, then we would need to, in order to hit the range that we've articulated of $2.90 to $3.10 per share.

Um, we are optimistic about, uh, the value that those assets will harvest in the market, uh, informed by a few key data points. First, just the marginal cost of 4 hour storage, um, uh, which were Contracting extensively in the state for newly built resources and it's still very solidly in the uh, the double digits. Um, uh, and you know, low to even

Sort of mid double digits.

Uh, in in cost, um second uh, because of the ongoing.

Increase in demand, forecast, not just for kaiso, but for adjacent markets that have historically, been sources of capacity for kaiso.

Um, and uh, the substantially costlier, uh, profile for long duration storage, that could potentially try to, uh, that would be really needed to substitute for the attributes of the thermal resources. Um, so we feel really comfortable about the durable value in our Fleet, um, which is, uh, 1 of the state's most modern and most reliable. Um, and Exhibits comparatively high capacity values as compared to peer capacity and that puts us in a position to be patient in our optimization of incremental resource adequacy contracts.

And also, um, clear-eyed and the goal of having them contribute even more than is embedded in the $290 to $310 in Cathy per share, which we could most definitely execute within today's market environment.

Okay, great and then just a quick, follow-up question. So obviously your development pipeline is a lot larger than what CU needs to hit its targets or even to exceed the targets moderately. Um, so in terms of drop downs and and transactions, should we

expect to see see you and by like 50% of future projects or like something much lower than 100%,

you know, I think

Um, we both sometimes drop assets with 100% equity interest for Clearway Energy, Inc., and in some instances have consummated equity partnerships. Um,

uh,

that work like you've just described, um,

Everything we have developed uh and identified for potential C1 investment through uh 2027 is planned for 100% C1 Equity investment, as we look later into the decade, we'll certainly be evaluating, uh, the capital all allocation framework for C and, and its embedded funding capacity. And looking at how we pay development assets in relation to that funding capacity, what we have often done in the past where we've had an exceedance of development pipeline relative to see, when's funding capacity is to selectively move, our best development assets to uh successive periods of time where they fit neatly into see when's plan. Um,

Uh, and we will also look at whether there are complimentary funding sources that help sustain the growth profile for cwen. Um uh, while capitalizing projects that have to be built on a a firm timeline. What our main stay has been throughout our history, is that we use Simple financing structures that will deliver predictable financial performance for CN and that basic principle is what will guide what we build and how we capitalize it with C1 over time?

Thank you.

And our last question comes from the line of Karen Blanchard with Deutsche Bank.

Um, most of them have been on sale but maybe a quick 1, um, I think we're so clear where gold, uh, having now 27d, I was in the pipeline and I think last quarter it was over 29, can you just talk about the what caused that decrease? And I think as well we're seeing like early stage has decreased while Prospect has increased. So, just trying to understand if there's a push back in some of those projects. Thank you.

Yeah, our disclosure aim to clarify that. Uh, the pipeline in clearway group today is actually 30 gigawatts um, that's up from 29 in the last quarter. Um, and we noted that 27 gigawatts was a proforma pipeline level that we would expect to be at after certain select harmonization of development assets that are not necessary for the Enterprise to hit its goals over the next uh, 3 to 4 years. Um, what you should see is that we've now

Uh, we have dialed in a specific set of projects that we are planning on constructing over the course of the next seven years. Uh, in the late-stage pipeline progression that we have on that same page, which in total still quite meaningfully exceeds the total quantity that Clearway Energy, Inc. needs for Clearway Group to develop and build for its plan to be realized.

So um, in point of fact, the pipeline that we have today is the is is up quarter over quarter, but we've wanted to set expectations that we would selectively Harvest individual assets that are not uh essential to executing on the goals that we have for the next 5 years.

Thank you. I'll now hand the call back over to President and CEO Craig Cornelius for any closing remarks.

Thank you everyone for joining us today and for your ongoing support of clearway. We look forward to continuing to deliver with excellence in the quarters ahead. As we strive to set the gold standard for sustainably growing Mission critical energy companies here in America,

operator, you can close the call.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating, and you may now disconnect.