Thank you for standing by, and welcome to Clearway Energy, Inc.'s Third Quarter 2023 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. I would now like to hand the call over to President and CEO of Clearway Energy, Inc., Chris Sotos. Please go ahead.

Good morning. We first thank you for taking the time to join Clearway Energy, Inc.'s third quarter call. Joining me this morning are Akil Marsh, Director of Investor Relations; Sarah Rubenstein, CFO; and Craig Cornelius, President and CEO of Clearway Energy, our sponsor. Craig will be available for the Q&A portion of our presentation. Before we begin, I'd like to quickly take note that today's discussion will contain forward-looking statements, which are based on the assumptions that we believe to be reasonable as of today. Actual results may differ materially. Please review the safe harbor in today's presentation as well as the risk factors in our SEC filings. In addition, we refer to both GAAP and non-GAAP financial measures. Information regarding our non-GAAP financial measures and reconciliations to the most directly comparable GAAP measures, please refer to today's presentation. Turning to Page 4. Given recent market volatility, we're willing to change our customer investor call format, take a step back to reinforce the strength of our platform that sets us apart from competitors and the opportunities ahead of us. As such, first and foremost, critical to the YieldCo model is the difference of the YieldCo's cost of capital compared to that of a development company. This difference has oscillated over time, and despite the current market volatility, our sponsor's historic return targets and recently disclosed development IRR targets by other market participants demonstrate that CWEN's cost of capital remains well below the target returns of a pure development, preserving this relationship and benefits for both parties. In addition, sponsors hold approximately $1.8 billion of CWEN shares, ensuring alignment of sponsor interest to the long-term interest of CWEN. The second ingredient for a successful YieldCo is the strong supply of assets with long-term contracts. While the current volatile capital markets have created some dislocation in the near-term, the fundamental strength of renewable assets in terms of transitioning the U.S. away from fossil fuels to green, lower-cost energy has not changed. The demand to transition away from fossil fuels has not diminished. Climate change is a continual challenge for the globe shared by companies and government goals of reducing their carbon footprint while the benefits of the IRA are still intact. Most importantly, competitively priced renewable generation compared to the current grid cost of energy all drive a compelling long-term growth story for CWEN. As part of these ingredients, we have Clearway work to optimize these larger macro elements in combination with a very straightforward corporate financing model that has underpinned no complex convertible or contingent equity financings and CWEN's capital structure and no need for external capital to complete our DPS objectives through 2026. Pulling many of these elements together, CWEN, in working with the sponsors, has negotiated an increased CAFD yield to 10% on drop-down assets of approximately $230 million of corporate capital deployment that we will discuss later. Importantly, we reaffirm our continued line of sight for $2.15 of CAFD per share. There's no need for external corporate capital. Our consistent message over the past several years of visibility achieved a high range of our 5% to 8% long-term target. Looking beyond 2026, in addition to the strong long-term developmental demand we described earlier, CWEN also benefits from having strategic natural gas assets in California that are critical to assisting that state in transitioning away from fossil fuels. As evidence of this value, we have recently been awarded an additional approximate 1.5 years of contracted RA value, a strong pricing on a portion of our fleet. This pricing provides a strong foundation for CWEN to continue its growth trajectory in 2027 and beyond, in line with this long-term target. In summary, despite challenging market conditions, the key elements that underpin a strong YieldCo still exist, significant cost of capital differences between the YieldCo and the sponsor, strong development spend and demand for renewable assets with long-term contracts, combined with a straightforward capital structure that translates into transparent growth. Turning to Slide 5. Critical to the success of the YieldCo model is a strong sponsorship relationship. One key element of this is a cost of capital difference between the YieldCo and development. Given the return requirements of GIP and TotalEnergies as well as other recent examples of publicly disclosed development returns, that relationship continues to hold between Clearway Group and CWEN, even in the increased cost of capital environment we're operating in. Clearway Group, which owns 85 million total shares of CWEN, representing approximately $1.8 billion of value, also receives approximately $130 million of dividends per year which helps fund and produce development activities to ensure a strong supply of drop-down assets in the future. Importantly, Clearway Group and their sponsors do not have any IDR or other special arrangements to drive value from the relationship with CWEN, as the increase in CWEN's stock price, dividends paid, and margin on development assets aligns value optimization for all entities. As evidenced in this relationship, Clearway Group has agreed to improve the targeted yields on over $230 million of CWEN investments from approximately 9% to 9.5% CAFD yield to 10%, providing additional accretion on our redeployed thermal capital and reaffirming our line of sight growth through 2026. Clearway Group continues to invest heavily in development, in line with line of sight drop-down growth through 2026 as well as flexibility for the timing of drop-downs thereafter. Slide 6 provides an overview of CEG's 29 gigawatts of development pipeline, which has grown substantially in previous years. This pipeline, which is an important source of growth for CWEN, continues to receive strong sponsor capital deployment to advance development projects that are well diversified among technology types and compatible with CWEN's growth and diversification objectives. The significant sponsor support has been demonstrated, allowing the platform to grow by over 2 gigawatts in the last 12 months, nearly doubling in the last 2 years. The continued importance of scale in this industry is critical to managing through volatile periods and being able to leverage a large development and operational platform to weather the storms. To this point, Clearway Group has been able to procure cost-effective supply agreements, which should enable domestic content qualification and/or reduce interconnection timeline risk for the 2025 to 2027 pipeline. In conclusion, the Clearway Group development platform has the benefit of leading scale in its class, meeting the sponsors' needs to ensure supply of dropdown assets for CWEN in the future. Turning to Page 7. During this period of market dislocation, there have been a number of questions around long-term challenges in the development of renewable assets with contracts. Although a rapid increase in interest rates since May has created some headwinds in the near-term, and all stakeholders have had to adjust to capital cost conditions, we do not see this as a long-term impediment to the growth of renewables in the U.S. As a backdrop, the renewable industry benefits from a variety of supportive federal and state policies as well as corporate ESG goals that drive long-term demand for renewable assets that are not as sensitive to price increases. In addition, renewable PPAs are still competitively priced versus non-renewable power outages; it is not as though an increased cost of capital only impacts renewable assets; it impacts all electricity-generating assets. Importantly, regardless of ESG or RPS standards, renewable assets produce electricity at prices that are competitive with other forms of generation, making them an attractive source of energy on economic terms as well. That being said, all of us within the Clearway enterprise are cognizant of the increased capital cost that impacts all stakeholders during the readjustment period and PPA pricing: long-term asset owners like CWEN, tax equity, non-recourse debt providers, OEM suppliers, developers, and PPA offtakers alike. We cannot forecast precisely how long it may take for PPA prices to increase. We can say that scale becomes ever more important during this period. It is critical to be able to develop quality, cost-effective projects, and at CWEN, we take significant comfort in having Clearway Energy Group as one of the largest developers in the U.S., backed by GIP and Total Energies, two of the largest companies in their respective industries, to manage through this period. Simply stated, all of us with the Clearway enterprise recognize that we are in a period that requires adjustments by all stakeholders, but we are in a more competitively advantaged position than most to manage through. Turning to Slide 8. An additional ingredient for success in the long-term is a straightforward capital allocation and financing strategy. As we've discussed through the years, we have a simple capital structure with no complex financing requiring CWEN common equity conversion or contingent issuance and no need for external capital to meet our DPS growth through 2026. We are also insulated from current interest rate volatility with 99% of our consolidated debt fixed, utilization of interest rate swaps, and no corporate maturities through 2028. CWEN also naturally amortizes over $350 billion of non-recourse debt per year as our debt amortization schedule is designed to limit risk around PPA renewal in different energy market environments, as was recently demonstrated with our three natural gas assets that became merchant in 2023. All of this leads to an overall conservative capital structure that correlates to a BB/Ba2 rating that has been maintained since 2016 and through a variety of challenges and market headwinds. CWEN's disciplined financial management has provided a strong foundation for sustainable growth through a variety of market conditions. To provide further disclosure around our sponsor support and our latest drop-down offers, please turn to Page 9. We are excited to announce that we have a commitment to purchase Texas Solar Nova for approximately $40 million of capital and a 10% CAFD. These projects consist of over 450 megawatts of solar located in Kent County, Texas, and are underpinned by power contracts that are 18 years in duration with creditworthy counterparties. In addition, discussions with Clearway Energy Group have allowed us to come to an agreement to modify Dan's Mountain's CAFD yield to approximately 10% or approximately 9%, benefiting from a new drop-down 25 offer of 3 solar assets and our approximate CAFD yield of 10% compared to the 9.5% targeted previously. These high-quality assets are significantly weighted towards solar and storage generation with fully contracted node settle unit contingent contracts to reduce volatility from the CWEN fleet. These drop-downs complete the allocation of the excess proceeds from the Thermal sales closed in May 2022 and most recently increased CAFD yields, demonstrating the long-term alignment of interest between CWEN and sponsors to continue to drive value for shareholders. Turning to Page 10. This is a graph that should be familiar to you. There's a lack of hard growth visibility through 2026. Starting on the left side of the page is our prior $420 million CAFD outlook that CWEN achieved when the majority of the drop-down '24 assets are operational on a full-year basis. The second column is a reduction in CAFD of $10 million, updated to reflect a variety of factors, including revisions to our P50 given wind resources in 2023, increased insurance costs, inflation, and other factors. The third column represents a $5 million CAFD increase from our investments in TSN as well as the incremental contribution to Cedar Hill Repowering prior to 2026, summing up to our updated pro forma CAFD outlook of $415 million. This, when added to approximately $20 million of CAFD drop-down '25 discussed previously, sums up our updated line of sight CAFD of approximately $435 million. Importantly, we are maintaining the $2.15 CAFD per share guidance through 2026 that we have discussed previously. We believe the ability to maintain our long-term CAFD line of sight and our growth trajectory speaks to the strength of the CWEN platform. Turning to Slide 11. Slide 11 provides a summary of CWEN's contracted and open positions in the resource adequacy market through the next 4 years. We currently have the benefit of approximately 100% of our capacity contracted through 2025, 87% contracted through 2026, and now with 42% contracted in 2027. As discussed throughout the year, CWEN participated in several RFP auctions and bilateral discussions. As a result, it was able to secure two contracts for approximately an additional 1.5 years at strong pricing compared to previous contracts. While we cannot disclose the pricing of these contracts due to confidentiality provisions, we can say that the pricing achieved on these contracts would be extrapolated to current uncontracted megawatts in 2027 and beyond, that would drive growth in 2027 for the low end of our 5% to 8% long-term CAFD per share growth target without requiring any other drop-downs or external capital. This is an important source of potential CAFD growth in the future, and while we do view the extension of our RA contracts and strong pricing as an excellent signal of this growth, we feel it is too early to declare victory and incorporate this higher pricing into our 2027 and beyond view. Now I'll turn it over to Sarah.

Thanks, Chris. On Slide 13, we provide an overview of our financial update that included CAFD of $156 million for the third quarter of 2023. Based on results incurred to date as well as forecasted activity through the balance of 2023, we are reiterating our 2023 full-year CAFD guidance range of $330 million to $350 million. We are also introducing guidance for 2024 of $395 million of full-year CAFD, reflecting certain onetime maintenance costs along with the timing of gross investments since run rate CAFD contributions are achieved after 2024. We will provide further detail in a moment. Our dividend per share growth outlook for 2024 remains aligned with our long-term objectives. For the fourth quarter, we are announcing a dividend increase of 2% or $0.3964 per share. This brings the annualized dividend to $1.5856 per share. For 2023, this reflects full-year dividend growth in line with the 2022 figure of 8%, which is distinct from our long-term growth mark. In addition, we are announcing a dividend per share growth target for 2024 of 7% in line with our growth target in the upper part of the 5% to 8% range in 2026. Turning to Slide 14, we highlight CAFD of $156 million and adjusted EBITDA of $323 million for the third quarter of 2023. Compared to our expectations, the conventional energy gross margin was approximately $11 million lower due to milder temperatures in California. Despite lower energy margins, the conventional facility has strong availability and provided positive recourse advocacy from our perspective. Solar generation also performed to expectations for the third quarter, while regeneration within the overall CWEN fleet was lower than anticipated in August and September. The third quarter CAFD was also, to a lesser degree, affected by prior expenses. Year-to-date CAFD of $289 million in the third quarter of 2023 continues to reflect the previously reported weaker production and lower-than-expected merchant energy margins from conventional facilities through the second quarter of 2023. The company continues to maintain its full-year CAFD guidance range of $330 million to $360 million. However, we anticipate that 2023 full-year results will fall towards the lower end of the guidance range. The full-year CAFD guidance range reflects potential variability for the second half of 2023 and sensitivity for conventional gross margins, the majority of which was reflected in the third quarter results. Since the fourth quarter represents a smaller portion of the projected results, as noted in our seasonality forecast for '23, despite the challenges impacting 2023 CAFD, the company remains well-positioned for growth with a strong balance sheet and pro forma credit metrics in line with target ratings. 99% of consolidated long-term debt has fixed interest costs, either through fixed-rate debt or through fixed-rate swaps. Due to the proceeds from the sales, there continues to be no external capital needs to define the line of sight growth in our dividend per share growth objective for 2026. Moving to Slide 15. We are establishing our 2024 CAFD guidance at $395 million. As we walk our 2024 CAFD guidance to our updated pro forma CAFD outlook, we note that we have deferred the timing of the Capistrano debt refinancing until after 2024. Given our sizable cash balance and liquidity position, we have the flexibility to be prudent on the timing of this refinancing, and the incremental principal and interest expenses are not in our 2024 CAFD guidance. However, they are reflected in the updated pro forma CAFD outlook. In addition, the $395 million of CAFD anticipated for 2024 reflects onetime maintenance costs and related outages for required upgrades on specific legacy wind sites. These maintenance upgrades are required to return certain facilities to normal availability levels and are expected to have a one-time impact to 2024 CAFD of $50 million. In addition, our pro forma CAFD outlook of $415 million reflects a full-year CAFD for all specific assessments based on timing, including Cedar Creek, Victory Pass, Arica, Rosamond South, and Texas Solar Nova. The full-year contribution of these growth investments is expected to be approximately $15 million of incremental CAFD as compared to the portion of CAFD realized by these investments in 2024. This is based on the anticipated timing of assessments of our project COD, the majority of which are anticipated in mid-2024. Also reflected in the $395 million of 2024 full-year CAFD guidance, along with the updated pro forma CAFD outlook, are our updated P50 renewable production estimates as well as certain cost decreases primarily driven by client solutions. These amounts are individually immaterial, and therefore, we have not quantified them in detail. In addition, merchant energy margins for the conventional facility are expected to be materially in line with long-term assumptions previously provided, and no material change has been noted either in the full-year CAFD guidance for 2024 or in the updated pro forma CAFD outlook. We continue to estimate long-term merchant energy margin in the $1 to $1.50 per kW monthly sensitivity at $20 million of CAFD per $1 per kilowatt increase. Based on these estimates, we arrive at our 2024 full-year CAFD guidance of $395 million and our updated pro forma CAFD outlook of $416 million, which along with anticipated growth investments using the remaining Thermal sale proceeds, support our long-term CAFD and dividend per share growth target. Now I will turn it back to Chris for closing remarks.

Thank you, Sarah. Turning to Page 17. While this has been challenging from a CAFD generation perspective, we are maintaining our revised CAFD guidance range for 2023. More importantly, during this difficult period, the strength of our platform allows us to reaffirm and continue with our consistently held near and long-term objectives, which is EPS growth of 8% in 2023. We are reaffirming our EPS growth objectives at the upper end of our long-term growth target for 2026. We continue to receive support from our sponsors and enhanced CAFD yields for the next contemplated drop-downs and the additional contract length in our natural gas assets. We're getting traction around visibility beyond 2026, achieving both in line with our long-term CAFD targets. While I had intended to be able to provide you with a more precise CAFD per share growth outlook for 2027 and beyond on this call, there are certain variables we think warrant more clarity. While the resource adequacy contracting pricing environment is very constructive, we'd like to see how contracting plays out for conditions in 2027 and beyond. Additionally, as stated before, we and our sponsor have flexibility in the timing of drop-downs for growth beyond 2026, allowing us to be prudent on timing and structuring drop-downs or tax rate growth beyond 2026 and adapt to the current capital market environment. Operator, open the lines for questions, please.

Our first question comes from the line of Julien Dumoulin-Smith of Bank of America.

Look, guys, nicely done in California here. I wanted to just get a little bit of a sense here. Just what are you looking for to provide an update here? I mean, just to pick up where you just left off here. I mean what specific parameters? Is it California specifically? Or is it other drop-downs? And then I have a few specific follow-ups, if you can? And maybe you can give us a little bit clearer sense of what you're seeing in California as well?

Sure. I think in California, and once again, unfortunately, we can't disclose the price due to confidentiality. But the contracts that we had signed previously allowed us to give guidance through '26; we're seeing prices stronger than those weighted contracts back in the past. For us, we feel very good about the ability to extend those contracts by about 1.5 years on those 2 assets into 2027. But as you can see from our charts and the like, we're only about 42% of that capacity hedged in 2027, which makes it difficult to say exactly how CAFD works, and here's what we're going to target. What we tried to talk about on the call was that if you keep kind of the other variables held constant, if you were to move that 2027 contract that we were able to secure and said we were able to contract the corresponding 58% open position at those rates, we could potentially hit the low end of the long-term CAFD guidance through '27. With regard to drop-downs, Julien, which I think was your second question, that's obviously 3 years in the future. We're at a market that is very volatile currently. For us, we looked at the strong sponsor support we've received in our most recent drop-down discussions, and then we'll see where the market goes over time to move those CAFD deals to what makes sense in the future. But I think right now, we're very confident and happy with our ability to reaffirm the $2.15 and continue our guidance in terms of being able to hit the upper end of the range through '26. We're starting to see some good green shoots for '27 and beyond, just not as tight as we would have liked when we talked at this time last year.

All right. Fair enough. Now with that said, let me just nitpick a little bit here. Instead of using a greater than sign, now you're using the tilde on the $2.15. Can you explain a little bit of what you're seeing? It sounds like a slight reduction in confidence, and that seems despite the higher yield on the dropdown at 10%. So in theory, I would have thought that estimate revisions would have been higher. And then maybe related to that, you tell me if it is or not, it looks like updated pro forma CAFD here goes to $2.05 from $2.08, so down $0.03 there. So I don't, again, I don't mean to nitpick too much here, but I'm curious about the signaling and what's driving a little bit of a reduction, if you will, despite the higher drop-down yield environment.

No, no concern, Julien. There's a reason we tried to map it all out for you. So the question is, yes, I welcome the question. It's not as though we have less confidence in the $2.15; it's just that before we were giving you a point estimate 3 years out. So we might be $0.01 high or low in terms of routing and the like. The real driver behind the reduction from what you saw before from kind of a $440 million to $435 million is really around the $10 million that we took as a result of the P50 results we saw in 2023; insurance is a little bit higher and other costs, just the main source of that deviation that you're mentioning from what maybe you saw previously disclosed. Obviously, we're not happy with that, but as we talked about during this year, we incorporate actual performance into our estimates. We try not to be theoretical; we actually take into account what's going on. 2023, stating the obvious, has not been a good year from wind resource or solar resource perspective. So we took this into account going forward to tighten our math.

Okay. Fair enough. It doesn't sound like there's anything too specific there from what I can tell. And then the drop down here, the wind drop down, do you mind talking about it? It seems like there's a higher yield, but a higher valuation or sorry, I think I said that right.

Yes. There's more capital just because of how it's structured at the end. For us, we're looking to really target the overall deployment. For us, Julien, a lot of people count megawatts. We're much more concerned about how much capital we're deploying at good quality projects with good accretive CAFD yields. So for us, to your point, the way it was finally structured resulted in a little bit higher capital deployment, but because it's also at a higher CAFD yield, I'll take it.

Okay. Fair enough. Excellent, guys. Appreciate your patience this morning, and good luck. Hopefully, next year or next quarter, we'll get an update at last, as you nail things down?

Well, I think, once again, Julien, those RA contracts take time to basically write; we'll participate or we're always engaged in bilateral discussions. The RFPs, as you know, kind of happened in June or a little bit before during the year; we get our awards in November. So I don't think there will necessarily be that many major updates between now and let's say, the February call. I think, for us, as we continue to see if this market environment settles down and we can have more clarity around what drop-downs may look like, in addition to more RA megawatts being contracted, that's when we'll kind of give more clarity around 2027.

Our next question comes from the line of Angie Storozynski of Seaport.

I just wanted to say, well played. This is how we do it, basically. You pace yourself with the dividend growth, you just live within your means. I'm hopeful that the stock will reflect this reality versus what we're seeing at other YieldCos. So, now as far as the growth is concerned, obviously, you have a sponsor that is supportive and willing to adjust the capital yield for the current interest rate environment. But how about maybe organic growth? Any sort of repowers or expansions of existing sites, something that you could do on your own?

Sure. We look at that all the time, Angie. And I think what we've talked about is Cedar Hill as a repowering. So we have some of that built already. I think for us, and a little bit further discussion about the volatile capital market environment that you referenced, we kind of really need to see where we need to source new capital. As part of my prepared comments, we've worked through all of the excess capital that we received as part of our Thermal disposition. For us, in looking at repowers and Craig's team is looking at what PPAs we can renegotiate and what turbine prices are; there is some organic growth. But as I commented previously, it's not like we have 2 gigawatts that can be repowered in the next 2 years. Our main source of organic growth is really in that RA pricing. Given the hedges we did before in order to contract through the middle of 2026, that's probably where you have your main organic CAFD generator, depending on where those RA prices go in 2027 and beyond.

And then changing topics. Obviously, '23 has been a challenging year for a number of assets. But the results for the Thermal assets were weaker than expected. Now how much of that weakness or lessons learned have you incorporated into your '24 guidance on CAFD?

From our perspective, we're much more in line in our 2024 guidance with the upper end of that $1 to $1.50 we talked about for long-term energy gross margin. Obviously, given when we gave guidance in November of '22 for 2023. Yes, as you're well familiar, the markets were much stronger for what were expected sparks that didn't show up in several of the months that we were looking for. For us, we're materially kind of in the upper end of the range at lower $1 to $1.50, meaning upper of the $1 to $1.50 that we have for long-term EGM guidance. So to your point, we're being more conservative for full year '24 than we were for partial year '23.

Our next question comes from the line of Mark Jarvi of CIBC.

As you think about expanding the time horizon for growth, Thermal proceeds fully deployed now, obviously balance sheet funding clarity is really important in today's market. So how do you think about, as you extend that runway, communicating the funding plan in terms of how much clarity you can give? And I guess, how prescriptive it could be in terms of how you match funding with asset growth?

Sure. I think we've always been pretty prescriptive in how we viewed it. We have an undrawn revolver currently with significant liquidity underneath it. So if we had to fund something, we could on a temporary basis. But how we fund it aligns with our long-term view. At about 4x to 4.5x would be a corporate debt number, with the corporate capital remaining equity, obviously using any excess cash we have in the system first. I think we'd look to deviate from that long-term funding model that has been successful over a wide variety of circumstances. We may need to warehouse some facilities depending on where the volatility is for a period of time. It would not deviate from our long-term funding model that has worked over a number of years.

So I guess you'd be okay if you saw, say, a couple of million-dollar funding gap for equity to hit your targets, and it's a bit TBD in terms of the sources; you'd be fine sort of laying that out there. If you saw the need for external equity, would you be open to things like an ATM or something like that as you move forward?

I mean, we've used ATMs before, which we think are a very effective equity funding mechanism. We've done smaller issuances as well. So I think we do things very consistently with how we have in the past. I wouldn't expect any deviations. I think that maybe where your question is going, given how volatile things are currently, we may seek to use our revolver more depending on size to hold facilities until the markets settle down and take a much more measured approach to getting that long-term capital deployment, given current volatility.

Okay. That makes sense. And then just on the conventional units, as you continue to operate them, as you see these RA processes, the contracting process play out, any updated thoughts in terms of ways to optimize them from a commercial strategy? I'm just curious about the amount of capacity you've secured into 2027. Could you have gotten more? Was it just a trade-off with price? Just kind of understanding the depths of the market and opportunities you're seeing right now in terms of contracting?

Yes. It is very focused on price. And apologies if you already know all this, but you kind of bid in on an auction basis and see what you get awarded. We typically give kind of 1 and 1.5-year bids and 3-year bids with a combination of different price points to see what the customer wants. The customer at the end chooses the price they're looking for and tenor. So to your point, it's not as though we could really optimize that conversation because it is a well-attended auction. We provide a number of price points as part of our submission. At the end of the day, the customer picks the price point that they thought would make the most sense.

If you could do sort of a retrospective look at how you did most recently, do you think there was an opportunity to clear more capacity as you think forward in the next processes?

I don't think there's the ability to clear more just because what, to see your question, what cleared, what's accepted. You don't really know exactly what demand there is on the other side. So not to sidestep your question, but it's a little opaque for me to say directly what the number is.

Just last question for me, and maybe for Craig, your view on tax equity transferability is playing out, how that impacts where you think actually returns could be for projects? And ultimately, I guess, it comes back to Chris, in terms of drop-down CAFD yields potential under a transferability scheme on funding?

I'll answer the last part, and then, Craig, will let you answer the first part of the question. In terms of what it means for a CAFD deal, I think that's really in our all-in CAFD deal that we'd get. Mark, if your question is about whether we're doing things at a 10% CAFD yield, and would that lead to a 14% CAFD yield? I don't think that's the right interpretation. I think basically, all of the components will need to be required because it passes through. As we talked a little bit on the call, the PPA price is affected by transferability of PTCs; it kind of all has to work together in a chain. So it's not as though that PTC transferability will lead to an economic rent or significantly above market CAFD yield simply due to that. But Craig, I'll let you answer the first part of the question.

Yes. Sure. First, the market is really still taking shape and becoming organized. As you may well know, both the banks that traditionally provided fully integrated tax equity solutions that would both monetize tax credits and depreciation are playing roles to provide sponsors like us solutions to monetize depreciation while also looking to serve as clearing houses for the disposition and monetization of tax credits produced by projects. They're certainly an important part of organizing this market. There are numerous other channels that are looking to establish themselves as more direct conduits to buyers of tax credits. The market structures for how everything from indemnities to timing of payments will take place are still forming and stabilizing. In that environment, as a sponsor that has a strong balance sheet, which we do, we want to make sure that we make smart choices about how and when we fix the structures we will employ. Other sponsors may not be in a position to wait. But in the 6 months since guidance was first issued about how that transferability market would take shape, we've seen the structures and the depth of the market really improve in favor of projects, and we expect that it will continue. So when I look out to the future, my hope is that this market will do many of the things that were hoped for when transferability was incorporated into the text of the statute by deepening the range of options that projects have to monetize tax credits. We eventually, as an enterprise, will want to create structures that we find most efficient for disposing of the depreciation benefits that the projects we create produce.

Our next question comes from the line of Noah Kaye of Oppenheimer & Company.

I appreciate all the incremental details and disclosures and, frankly, the reframing of the platform here points well taken. Called out the Capistrano refinancing timing. I just wanted to ask about the project-level debt in the portfolio. It does appear like there's a fair amount of debt coming due over the next few years for some of these projects at the project level. How are you thinking about any potential additional refinancings? Or are all these basically going to be paid off the term?

Sure. It depends on the market, to be fair to your question, but I do think that we should be in good shape from a refinancing perspective. The next 2 large project refinancings are what's referred to as NIM solar in 2024 and Buckthorn in '25 or '26. I believe Buckthorn is backed by a 20-year PPA still underneath it. We have quite a bit of length there to be able to refinance. The NIM solar assets will require refinancing around September 2024. From our view, that should be manageable. So we don't have a lot of concern about near-term non-recourse assets needing to be refinanced.

That doesn't impact the pro forma CAFD outlook?

If the interest rates are drastically different, it may move it around. But keep in mind, NIM solar is about $148 million, if I recall correctly. So a 100 to 200 basis points move overall is $3 million, not to minimize $3 million, but it's not a major driver.

Yes. And just the key point here, right, is that your refinancing risk both at the corporate level and at the project level is very minimal for the next several years.

Correct. I'm not saying it's zero, but yes, the risk is minimal.

I appreciate adjusting the P50 expectations. Does that generally apply to how you look at future drop-downs or acquisitions as well? I mean, I'm sure there's some degree of regional resource specificity here to the adjustments. But just talk to us a little bit about how you model in expectations for P50 going forward and whether that's changed at all.

Sure. Step one, just for way of background, we always ask for an additional return on wind assets versus solar to take into account that volatility. So part one note to your question is we view wind as a riskier asset in general because of P50 volatility, and we typically look for a higher IRR or CAFD yield or both when we negotiate those; just for background. The other part is, we haven't seen anything that we need to change how we model our P50. Those are based upon long-term rates. But as we've talked about in previous calls, once you're kind of getting through 5 years, we try to take a much more pragmatic approach on assets than a statistical model may say. We try to be much more empirical and blend the two. For us, while you're looking at future drop-downs or other acquisitions, we try to take into account those deviations between what might be a 30-year model and what we're seeing in the past 5 years, trying to add on a premium for wind in certain regions showing more volatility. But once again, we're trying to get that as tight as we can. We take recent events into account, that's why we easily see the revisions. But it really is trying to be comprehensive without overestimating what's happened in the past 2 years either.

Our next question comes from the line of Justin Clare of Roth MKM.

So first off, I just want to ask about the 2024 guide. It looks like about a $15 million impact to the guide as a result of change in the expectation from growth investments. I was wondering if you could just provide a little bit more detail on the project timing and what led to that reduction for 2024.

Sure. I'll let Sarah address it. But I think, for us, we looked at our 2023 results, and obviously, we're not happy with them. Part of that, as we talked about during the year, is due to P50 generation, some of it's due to availability. We took a comprehensive look at our overall portfolio. I'll let Sarah reflect anything she wants, but that's really the basis of it.

Yes. And Justin, just to clarify, were you asking about the $50 million of timing for growth investments?

Yes, exactly. Just what led to that? Because it looks like it's impacting 2024 and then it's going to be a contributor in probably 2025. So I just wanted to understand a bit more there.

Yes. It's not a change in 2024; it's just a bridge between 2024 and our pro forma outlook, which is supposed to reflect the full amount of CAFD once the drop-downs are up and running and at their full CAFD amount. So it's really just a bridge item because we'll only be picking up a smaller portion of those in the 2024 guidance due to the timing of the drop-down or project COD. So we'll have a fraction of that CAFD amount just in 2024. By the time we get to the pro forma outlook, we'll have the full amount, and that difference is the $50 million.

And then just I was wondering for the projects for which you have committed investments and then for those identified as potential drop-down opportunities in 2024 or 2025 here, can you talk about where you are in the process of securing the permits and interconnections for these projects? I'm wondering if there's still risk there that those factors could cause delays, and just where you are in that process?

Craig, if you wouldn't mind addressing that.

Yes, sure. All of the projects that are listed as committed or potential future drop-down opportunities have existing signed large generator interconnection agreements and have obtained all of the major permits that would influence their construction feasibility or schedule. You could consider the dates that are reflected here as high confidence dates. They've also secured all of the revenue contracts necessary for financial closing. We procured all the equipment for the projects and are mature in the course of advancing financial structuring of the projects as well. Some of those projects now reflect later dates than we would have hoped for one year ago, reflecting the observed experience from interconnecting utilities around the country and their ability to execute scope of large generator interconnection agreements and also timing that have been observed as elongated for the delivery of high-voltage equipment. We've taken further actions to derisk timelines for these projects in particular but also other projects in our pipeline to address what's being observed in terms of interconnection timelines as well. We think these are pretty derisked in terms of the execution timetable that's reflected on the page.

Our next question comes from the line of William Grippin of UBS.

I guess just my first one here, just with the excess thermal proceeds now fully allocated. Could you speak to how you foresee the pacing of future investment announcements? Should we expect a quieter next few quarters with respect to announcements?

Yes, I think your question is, should we expect some large drop-down announcement in the next 6 months? I doubt it. I think it's heavily conditioned upon how the capital markets settle down or not. To your question, CEG is incredibly busy getting the gigawatts we talked about online in '24 and '25. Obviously, this will develop while doing that. If your question is, should we expect a large drop-down announcement here in the near-term? It might be a little quiet for a while for the reasons we've discussed.

And so in that light, do you continue to view the conventional assets as core to the Clearway strategy? And how are you thinking about potential opportunities to recycle those assets as you continue to contract the open capacity?

Sure. I think for us, obviously, we're willing to sell assets at what we think is a strong price. So if somebody offered us a good price for those assets, we'd look at that. However, it's always been part of our core strategy because it provides diversification versus simply wind and solar resource availability. We think it's very beneficial, and we're bullish on how things will look for, let's say, through the end of the decade in those assets. So we view them as core. That being said, if someone offered us a price that we thought made sense, we would consider it; we've been willing to transact in the past. We're pretty bullish through at least 2030.

Great. Just one last one for me. Could you elaborate a little bit on the onetime maintenance items in the wind portfolio? Is that in any way related to the Siemens turbines in the fleet?

Not specifically. That's a variety of assets, as I incorrectly answered the last question that somebody asked. Essentially, that's a result of us looking at our fleet and recognizing some of the weaknesses that affected our 2023 results. We concluded how we can try to address that with a one-time maintenance push here. Some of that relates to Siemens assets, but some of them do not. It's really just looking at the overall fleet and some of the challenges we faced in '23.

I guess are you getting any sort of warranty reimbursements or any cost reimbursement of any kind for these efforts?

That's part of it. These things are negotiations, but that's the amount that we think we'll have to net out during the year.

Thank you. I would now like to turn the conference back to Chris Sotos for closing remarks.

I just wanted to thank everybody for their attention on the call. I know this was a little longer than our typical calls. But really given the volatility that we've seen, we wanted to provide you as analysts or investors with a much more comprehensive view of where we see ourselves and where we think we're going. While obviously there are a number of challenges in the capital markets, we're able to reiterate where we are for '24, our growth rate to '26, and that we're seeing positive things even in this volatile environment in '27 and beyond. But more to come as we walk through '24. I appreciate everyone's support.

This concludes today's conference call. Thank you for participating. You may now disconnect.