Clearway Energy, Inc. Q1 FY2025 earnings call

Fleet Enhancements

• Progressed repowering opportunities like Mt. Storm, with a revenue contract signed with Microsoft and on track for commercial operation in phases by 2026-2027; Goat Mountain repowering advancing with an awarded PPA; San Juan Mesa repowering with a PPA extension as a bridge to 2027 repower.

Sponsor-Enabled Dropdown Growth

• Clearway Group's projects with 2025 CODs committed to CWEN are on track; opportunities for 2026-2027 COD projects advanced, including the Spindle Storage project with a 20-year PPA, Rosamond South II project in PPA negotiation, and Honeycomb projects in construction.

Asset-Centered M&A

• Closed Tuolumne Wind acquisition; signed binding agreement to acquire an operational solar project in California, leveraging operating synergies.

Risk Mitigation

• Hedged interest rate risk for refinancing of corporate bond maturing in 2028 with forward starting interest rate swaps.

Clearway delivered strong first quarter results with adjusted EBITDA of $252 million and CAFD of $77 million. In the Renewables & Storage segment, capacity factors improved: solar by 4.7% to 25.7% and wind by 2.9% to 33.9%. The Flexible Generation segment saw availability improve by 3% to 89.3%.

2025 Guidance

• Reaffirmed CAFD guidance range of $400 million to $440 million, aiming for the higher end.

Growth Funding

• Expect to generate $250 million or more of retained CAFD from 2025 to 2027 for growth investments; plan to use debt capacity and retained CAFD, with opportunistic equity issuances via ATM facility.

Risks

• Interest rate volatility risk associated with refinancing corporate bonds.
• Tariff impacts on battery projects, though strategies in place to manage costs.
• Potential changes in the Inflation Reduction Act (IRA) affecting tax credits and permit risks for repowering projects.

Q: How are you thinking about battery storage in the pipeline going forward?

A: Batteries have a bright future; we'll continue executing with prudence, leveraging suppliers and customers to keep projects on track.

Q: Could we see a revision to 2025 guidance with recent acquisitions?

A: We'll track closing of acquisitions and other factors, updating guidance when confident in the outlook.

Q: Talk about CAFD yield on repowering projects?

A: We target CAFD yields of at least 10%, evaluating returns against non-repowered baseline to ensure value creation.

Q: Thoughts on M&A market and recent solar project acquisition?

A: Market has balance between buyers and sellers; recent acquisition was unique with synergies due to proximity to existing assets.

Q: Equity needs and growth projections beyond 2027?

A: Intend to fund growth through cash flow and modest equity, updating guidance in third quarter based on long-term planning process.