10-K/A
HA Sustainable Infrastructure Capital, Inc. (HASI)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K/A
Amendment No. 1
| ☒ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|---|
For the fiscal year ended December 31, 2025
OR
| ☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
|---|
For the transition period from to
Commission File Number: 001-35877
HA SUSTAINABLE INFRASTRUCTURE CAPITAL, INC.
(Exact name of registrant as specified in its charter)
| Delaware | 46-1347456 | |
|---|---|---|
| (State or other jurisdiction of<br>incorporation or organization) | (I.R.S. Employer<br>Identification No.) | |
| One Park Place Suite 200 | ||
| Annapolis, | Maryland | 21401 |
| (Address of principal executive offices) | (Zip Code) |
(410) 571-9860
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
|---|---|---|
| Common Stock, $0.01 par value per share | HASI | New York Stock Exchange |
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☒ No ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes ☐ No ☒
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer”, “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
| Large accelerated filer | ☒ | Accelerated filer | ☐ |
|---|---|---|---|
| Non-accelerated filer | ☐ | Smaller reporting company | ☐ |
| Emerging growth company | ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal controls over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to §240.10D-1(b). ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
As of June 30, 2025, the aggregate market value of the registrant’s common stock (includes unvested restricted stock) held by non-affiliates of the registrant was $3.3 billion based on the closing sales price of the registrant’s common stock on June 30, 2025 as reported on the New York Stock Exchange.
On March 23, 2026, the registrant had a total of 128,420,364 shares of common stock, $0.01 par value, outstanding (which includes 619,298 shares of unvested restricted common stock).
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the registrant’s proxy statement for the 2026 annual meeting of stockholders are incorporated by reference into Part III of this Annual Report on Form 10-K.
| Auditor Name: | Ernst & Young LLP | Auditor Location: | Tysons, VA | PCAOB ID: | 42 |
|---|
AMENDMENT NO. 1
EXPLANATORY NOTE
HA Sustainable Infrastructure Capital, Inc. (the “Company,” “we,” “our,” or “us”) is filing this amendment (the “Form 10-K/A”) to our Annual Report on Form 10-K for the year ended December 31, 2025, originally filed with the Securities and Exchange Commission (“SEC”) on February 13, 2026 (the “Original Form 10-K”), solely for the purpose of complying with Regulation S-X, Rule 3-09 ("Rule 3-09"). Rule 3-09 requires that Form 10-K contain separate financial statements for unconsolidated subsidiaries and investees accounted for by the equity method when such entities are individually significant.
We have determined that our equity method investment in Palmetto HASI Holdings LLC and its subsidiaries, which is not consolidated in our financial statements, was significant under the income test of Rule 3-09 in relationship to our financial results for the year ended December 31, 2025, and that our equity method investment in Daggett Renewable Holdco LLC and its subsidiaries, which is not consolidated in our financial statements, was significant under the income test of Rule 3-09 in relationship to our financial results for the years ended December 31, 2024 and December 31, 2023. Since the financial statements as of and for the year ended December 31, 2025, of the aforementioned investees were not available until after the date of the filing of our Original Form 10-K, Rule 3-09 provides that the financial statements may be filed as an amendment to our Original Form 10-K within 90 days after the end of our fiscal year ended December 31, 2025. Therefore, this Form 10-K/A amends Item 15 of our Original Form 10-K, to include the following Exhibits:
•Exhibit 23.2 -- Consent of CohnReznick LLP for the consolidated financial statements of Palmetto HASI Holdings LLC and Subsidiaries
•Exhibit 23.3 -- Consent of PricewaterhouseCoopers LLP for the consolidated financial statements of Daggett Renewable Holdco LLC and Subsidiaries
•Exhibit 23.4 -- Consent of Ernst & Young LLP for the consolidated financial statements of Daggett Renewable Holdco LLC and Subsidiaries
•Exhibit 99.1 -- Consolidated financial statements as of December 31, 2025 and 2024 and for the periods then ended of Palmetto HASI Holdings LLC and Subsidiaries
•Exhibit 99.2 -- Consolidated financial statements as of December 31, 2025 and 2024 and for the periods ended December 31, 2025, 2024 and 2023 of Daggett Renewable Holdco LLC and Subsidiaries
•Exhibit 99.3 -- Consolidated financial statements as of December 31, 2023 and the period then ended of Daggett Renewable Holdco LLC and Subsidiaries
This Form 10-K/A does not amend or otherwise update any other information in the Original Form 10-K (including its exhibits, except for Exhibits 31.1, 31.2, 32.1 and 32.2). Accordingly, this Form 10-K/A should be read in conjunction with our Original Form 10-K and with our filings with the SEC subsequent to the Original Form 10-K filing. In addition, in accordance with applicable rules and regulations promulgated by the SEC, this Form 10-K/A includes updated certifications from our Chief Executive Officer and Chief Financial Officer as Exhibits 31.1, 31.2, 32.1 and 32.2.
Item 15. Exhibits and Financial Statement Schedules
Documents filed as part of the report
The following documents are filed as part of this Form 10-K/A in Part II, Item 8 and are incorporated by reference:
(a)(1) Financial Statements:
See index in Item 8—“Financial Statements and Supplementary Data,” filed with the Original Form 10-K for a list of financial statements.
(3)Exhibits Files:
- 3 -
- 4 -
- 5 -
- 6 -
| 97.1 | Recovery Policy Relating to Erroneously Awarded Incentive Compensation of the Company (incorporated by reference to Exhibit 97.1 to the Registrant's Form 10-K for the period ended December 31, 2023 (No. 001-35877) filed on February 16, 2024) |
|---|---|
| 99.1* | Consolidated financial statements as of December 31, 2025and 2024and the periodsthen ended ofPalmetto HASIHoldingsLLCand Subsidiaries |
| 99.2* | Consolidated financial statements as of December 31, 2025and 2024and the periodsendedDecember 31, 2025, 2024, and 2023of Daggett Renewable HoldCo LLCand Subsidiaries |
| 99.3* | Consolidated financial statements as of December 31, 2023 and the period then ended of Daggett Renewable HoldCo LLC and Subsidiaries |
| 101.SCH | Inline XBRL Taxonomy Extension Schema (incorporated by reference to Exhibit 101.SCH to the Registrant’s Form 10-K for the period ended December 31, 2025 (No. 001-35877), filed on February 13, 2026) |
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase (incorporated by reference to Exhibit 101.CAL to the Registrant’s Form 10-K for the period ended December 31, 2025 (No. 001-35877), filed on February 13, 2026) |
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase (incorporated by reference to Exhibit 101.DEF to the Registrant’s Form 10-K for the period ended December 31, 2025 (No. 001-35877), filed on February 13, 2026) |
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase (incorporated by reference to Exhibit 101.LAB to the Registrant’s Form 10-K for the period ended December 31, 2025 (No. 001-35877), filed on February 13, 2026) |
| 101 PRE | Inline XBRL Taxonomy Extension Presentation Linkbase |
| 104 | Cover Page Interactive Data File Included as Exhibit 101 (embedded within the Inline XBRL document) |
| * Filed herewith. | |
| ** Furnished with this report. |
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| HA SUSTAINABLE | |
|---|---|
| INFRASTRUCTURE CAPITAL, INC. | |
| (Registrant) | |
| Date: March 26, 2026 | /s/ Jeffrey A. Lipson |
| Jeffrey A. Lipson | |
| Chief Executive Officer and President | |
| /s/ Charles W. Melko | |
| Charles W. Melko | |
| Chief Financial Officer, Treasurer and Executive Vice President | |
| /s/ Michelle E. Whicher | |
| Michelle E. Whicher | |
| Chief Accounting Officer and Senior Vice President |
- 7 -
Document
Exhibit 23.2
CONSENT OF INDEPENDENT AUDITORS
We hereby consent to the incorporation by reference in the following Registration Statements:
(1) Registration Statement (Form S-8 No. 333-188070) pertaining to the 2013 Hannon Armstrong Sustainable Infrastructure Capital, Inc. Equity Incentive Plan,
(2) Registration Statement (Form S-3 No. 333-198158) of HA Sustainable Infrastructure Capital, Inc.,
(3) Registration Statement (Form S-8 No. 333-212913) pertaining to the 2013 Hannon Armstrong Sustainable Infrastructure Capital, Inc. Equity Incentive Plan,
(4) Registration Statement (Form S-8 No. 333-230548) pertaining to the 2013 Hannon Armstrong Sustainable Infrastructure Capital, Inc. Equity Incentive Plan,
(5) Registration Statement (Form S-8 No. 333-265595) pertaining to the 2022 Hannon Armstrong Sustainable Infrastructure Capital, Inc. Equity Incentive Plan,
(6) Registration Statement (Form S-3ASR No. 333-269145) of HA Sustainable Infrastructure Capital, Inc.,
(7) Registration Statement (Form S-3ASR No. 333-275969) of HA Sustainable Infrastructure Capital, Inc., and
(8) Registration Statement (Form S-3ASR No. 333-285461) of HA Sustainable Infrastructure Capital, Inc.
of our audit report dated March 11, 2026, with respect to the consolidated financial statements of Palmetto HASI Holdings LLC and Subsidiaries for the year ended December 31, 2025, which appears on this Form 10-K/A of HA Sustainable Infrastructure Capital, Inc.
/s/ CohnReznick LLP
Bethesda, Maryland
March 26, 2026
Document
Exhibit 23.3
CONSENT OF INDEPENDENT AUDITORS
We hereby consent to the incorporation by reference in the Registration Statements on Form S-3 (Nos. 333-198158, 333-269145, 333-275969, and 333-285461) and Form S-8 (Nos. 333-188070, 333-212913, 333-230548, and 333-265595) of HA Sustainable Infrastructure Capital, Inc. of our report dated March 20, 2026 related to the financial statements of Daggett Renewable Holdco LLC, which appears in this Form 10-K/A of HA Sustainable Infrastructure Capital, Inc.
/s/ PricewaterhouseCoopers LLP
Baltimore, Maryland
March 26, 2026
Document
Exhibit 23.4
Consent of Independent Auditors
We consent to the incorporation by reference in the following Registration Statements:
(1)Registration Statement (Form S-8 No. 333-188070) pertaining to the 2013 Hannon Armstrong Sustainable Infrastructure Capital, Inc. Equity Incentive Plan,
(2)Registration Statement (Form S-3 No. 333-198158) of HA Sustainable Infrastructure Capital, Inc.,
(3)Registration Statement (Form S-8 No. 333-212913) pertaining to the 2013 Hannon Armstrong Sustainable Infrastructure Capital, Inc. Equity Incentive Plan,
(4)Registration Statement (Form S-8 No. 333-230548) pertaining to the 2013 Hannon Armstrong Sustainable Infrastructure Capital, Inc. Equity Incentive Plan,
(5)Registration Statement (Form S-8 No. 333-265595) pertaining to the 2022 Hannon Armstrong Sustainable Infrastructure Capital, Inc. Equity Incentive Plan,
(6)Registration Statement (Form S-3ASR No. 333-269145) of HA Sustainable Infrastructure Capital, Inc.
(7)Registration Statement (Form S-3ASR No. 333-275969) of HA Sustainable Infrastructure Capital, Inc., and
(8)Registration Statement (Form S-3ASR No. 333-285461) of HA Sustainable Infrastructure Capital, Inc.
of our report dated March 28, 2024, with respect to the consolidated financial statements of Daggett Renewable Holdco LLC and subsidiaries included in this Annual Report (Form 10-K/A) of HA Sustainable Infrastructure Capital, Inc. for the year ended December 31, 2025.
/s/ Ernst & Young LLP
Philadelphia, Pennsylvania
March 26, 2026
Document
EXHIBIT 31.1
CERTIFICATIONS
I, Jeffrey A. Lipson, certify that:
1.I have reviewed this Annual Report on Form 10-K/A of HA Sustainable Infrastructure Capital, Inc. (the “registrant”);
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a–15(e) and 15d–15(e)) and internal controls over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an Annual Report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the Audit Committee of the registrant’s board of directors (or persons performing the equivalent functions):
a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: March 26, 2026
| By: | /s/ Jeffrey A. Lipson |
|---|---|
| Name: Jeffrey A. Lipson | |
| Title: Chief Executive Officer and President |
Exh. 31.1-1
Document
EXHIBIT 31.2
CERTIFICATIONS
I, Charles W. Melko, certify that:
1.I have reviewed this Annual Report on Form 10-K/A of HA Sustainable Infrastructure Capital, Inc. (the “registrant”);
2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a–15(e) and 15d–15(e)) and internal controls over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a.Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c.Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d.Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an Annual Report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the Audit Committee of the registrant’s board of directors (or persons performing the equivalent functions):
a.All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b.Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date: March 26, 2026
| By: | /s/ Charles W. Melko |
|---|---|
| Name: Charles W. Melko | |
| Title: Chief Financial Officer, Treasurer and Executive Vice President |
Exh. 31.2-1
Document
EXHIBIT 32.1
CERTIFICATION PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002, 10 U.S.C. SECTION 1350
In connection with the Annual Report on Form 10-K/A of HA Sustainable Infrastructure Capital, Inc. (the “Company”) for the period ended December 31, 2025 to be filed with the Securities and Exchange Commission on or about the date hereof (the “report”), I, Jeffrey A. Lipson, Chief Executive Officer and President of the Company, certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that:
1.The report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2.The information contained in the report fairly presents, in all material respects, the financial condition and results of operations of the Company.
It is not intended that this statement be deemed to be filed for purposes of the Securities Exchange Act of 1934.
Date: March 26, 2026
| By: | /s/ Jeffrey A. Lipson |
|---|---|
| Name: Jeffrey A. Lipson | |
| Title: Chief Executive Officer and President |
Exh. 32.1-1
Document
EXHIBIT 32.2
CERTIFICATION PURSUANT TO SECTION 906
OF THE SARBANES-OXLEY ACT OF 2002, 10 U.S.C. SECTION 1350
In connection with the Annual Report on Form 10-K/A of HA Sustainable Infrastructure Capital, Inc. (the “Company”) for the period ended December 31, 2025 to be filed with the Securities and Exchange Commission on or about the date hereof (the “report”), I, Charles W. Melko, Chief Financial Officer, Treasurer and Executive Vice President of the Company, certify, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. Section 1350, that:
1.The report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
2.The information contained in the report fairly presents, in all material respects, the financial condition and results of operations of the Company.
It is not intended that this statement be deemed to be filed for purposes of the Securities Exchange Act of 1934.
Date: March 26, 2026
| By: | /s/ Charles W. Melko |
|---|---|
| Name: | Charles W. Melko |
| Title: | Chief Financial Officer, Treasurer and Executive Vice President |
Exh. 32.2-1
ex991-palmettohasiholdin
Palmetto HASI Holdings LLC and Subsidiaries Consolidated Financial Statements December 31, 2025 and 2024
Table of Contents INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Page Independent Auditor’s Report 1-2 Consolidated Balance Sheets 3 Consolidated Statements of Operations 4 Consolidated Statements of Members’ Equity 5 Consolidated Statements of Cash Flows 6 Notes to Consolidated Financial Statements 7-21
1 Independent Auditor's Report To the Palmetto Member of Palmetto HASI Holdings LLC Opinion We have audited the consolidated financial statements of Palmetto HASI Holdings LLC and its Subsidiaries, which comprise the consolidated balance sheets as of December 31, 2025 and 2024, and the related consolidated statements of operations, members' equity, and cash flows for the years then ended, and the related notes to the consolidated financial statements. In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the financial position of Palmetto HASI Holdings LLC and its Subsidiaries as of December 31, 2025 and 2024, and the results of their operations and their cash flows for the years then ended, in accordance with accounting principles generally accepted in the United States of America. Basis for Opinion We conducted our audit in accordance with auditing standards generally accepted in the United States of America ("GAAS"). Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are required to be independent of Palmetto HASI Holdings LLC and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audits. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Responsibilities of Management for the Consolidated Financial Statements Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of consolidated financial statements that are free from material misstatement, whether due to fraud or error. In preparing the consolidated financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about Palmetto HASI Holdings LLC 's ability to continue as a going concern for one year after the date that the consolidated financial statements are available to be issued. Auditor's Responsibilities for the Audit of the Consolidated Financial Statements Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from
2 fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the consolidated financial statements. In performing an audit in accordance with GAAS, we: Exercise professional judgment and maintain professional skepticism throughout the audit. Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of Palmetto HASI Holdings LLC 's internal control. Accordingly, no such opinion is expressed. Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the consolidated financial statements. Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about Palmetto HASI Holdings LLC's ability to continue as a going concern for a reasonable period of time. We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control-related matters that we identified during the audit. Chicago, Illinois March 11, 2026
Palmetto HASI Holdings LLC and Subsidiaries Consolidated Balance Sheets As of December 31, 2025 and December 31, 2024 As of ASSETS December 31, 2025 December 31, 2024 Current assets: Cash $ 29,597,213 $ 8,323,399 Restricted cash equivalents 57,039,534 15,277,145 Accounts receivable, net of allowance for credit losses of $201,270 and $10,736, respectively 2,053,541 985,389 Unbilled receivables 12,974,722 3,995,699 Derivative asset - current — 1,103,014 Solar energy systems to be returned to seller 158,829,413 982,171 Prepaid expenses and other current assets 1,547,097 83,812,158 Total current assets 262,041,520 114,478,975 Solar energy systems, net 3,921,921,762 1,247,731,402 Derivative asset - noncurrent 1,395,466 5,147,228 Total assets $ 4,185,358,748 $ 1,367,357,605 LIABILITIES AND EQUITY Current liabilities: Accrued interest $ 14,114,362 $ 3,265,586 Deferred revenue - current 3,876,619 151,688 Derivative liability - current 2,503,579 — Current portion of long-term debt 600,419 — Accrued purchases of solar energy systems 26,659,148 — Related party payable 3,025,640 820,582 Other current liabilities 5,488,104 479,178 Total current liabilities 56,267,871 4,717,034 Long-term debt, net of debt issuance costs and debt discount 1,265,662,880 380,300,000 Asset retirement obligation 5,900,617 7,870,185 Deferred revenue - noncurrent 8,433,338 603,098 Total liabilities 1,336,264,706 393,490,317 Commitments and contingencies (note 11) Equity: Palmetto Solar, LLC 1,352,004,479 421,112,879 HASI Sabal LLC 241,157,423 122,653,857 Noncontrolling interests in subsidiaries 1,255,932,140 430,100,552 Total equity 2,849,094,042 973,867,288 Total liabilities and equity $ 4,185,358,748 $ 1,367,357,605 The accompanying notes are an integral part of these consolidated financial statements. 3
Palmetto HASI Holdings LLC and Subsidiaries Consolidated Statements of Operations For the twelve months ended December 31, 2025 and 2024 Twelve months ended December 31, 2025 2024 Revenues $ 88,585,474 $ 15,353,485 Operating expenses General management and maintenance fees 11,008,511 1,590,421 General and administrative 415,059 92,245 Bad debt expense 1,232,148 23,138 Depreciation and accretion 66,932,916 10,338,236 Total operating expenses 79,588,634 12,044,040 Operating income 8,996,840 3,309,445 Non-operating expenses Unrealized loss (gain) on derivative instruments 7,884,433 (6,250,242) Interest expense, net 59,726,090 8,576,862 Loss (gain) on sale of solar assets (62,636) 5,490 Other expense, net 249,316 — Net income (loss) (58,800,363) 977,335 Net loss attributable to noncontrolling interests (143,093,383) (148,171,239) Net income attributable to members $ 84,293,020 $ 149,148,574 The accompanying notes are an integral part of these consolidated financial statements. 4
Palmetto HASI Holdings LLC and Subsidiaries Consolidated Statements of Members’ Equity For the twelve months ended December 31, 2024 Palmetto Solar, LLC HASI Sabal LLC Noncontrolling Interests in Subsidiaries Total Equity Balance at December 31, 2023 $ 15,875,522 $ 2,032,948 $ 17,181,484 $ 35,089,954 Contributions from members 691,328,278 46,046,622 — 737,374,900 Return of contributions from members (360,665,208) — — (360,665,208) Deemed contributions from noncontrolling interests in subsidiaries — — 83,700,000 83,700,000 Contributions from noncontrolling interests in subsidiaries — — 477,852,800 477,852,800 Distributions to noncontrolling interests in subsidiaries — — (462,493) (462,493) Net income (loss) 74,574,287 74,574,287 (148,171,239) 977,335 Balance at December 31, 2024 $ 421,112,879 $ 122,653,857 $ 430,100,552 $ 973,867,288 For the twelve months ended December 31, 2025 Palmetto Solar, LLC HASI Sabal LLC Noncontrolling Interests in Subsidiaries Total Equity Balance at December 31, 2024 $ 421,112,879 $ 122,653,857 $ 430,100,552 $ 973,867,288 Contributions from members 1,837,702,500 122,206,030 — 1,959,908,530 Return of contributions from members (897,487,678) (860,917) — (898,348,595) Contributions from noncontrolling interests in subsidiaries — — 1,096,180,270 1,096,180,270 Deemed contributions from noncontrolling interests in subsidiaries — — 249,269,387 249,269,387 Return of contributions from noncontrolling interests in subsidiaries — — (32,045,858) (32,045,858) Distributions to members (51,469,732) (44,988,057) — (96,457,789) Distributions to noncontrolling interests in subsidiaries — — (344,103,860) (344,103,860) Deemed distributions to noncontrolling interests in subsidiaries — — (374,968) (374,968) Net income (loss) 42,146,510 42,146,510 (143,093,383) (58,800,363) Balance at December 31, 2025 $ 1,352,004,479 $ 241,157,423 $ 1,255,932,140 $ 2,849,094,042 The accompanying notes are an integral part of these consolidated financial statements. 5
Palmetto HASI Holdings LLC and Subsidiaries Consolidated Statements of Cash Flows For the twelve months ended December 31, 2025 and 2024 Twelve months ended December 31, 2025 2024 Cash flows from operating activities: Net income (loss) $ (58,800,363) $ 977,335 Adjustments to reconcile net income (loss) to net cash provided by operating activities: Depreciation 66,869,265 10,147,614 Asset retirement obligation accretion 63,651 190,622 Unrealized (gain) loss on derivatives not designated as hedging instruments 7,884,433 (6,250,242) Bad debt expense 1,232,148 23,138 Loss (gain) on sale of assets (62,636) 5,490 Amortization of debt discount and issuance costs 902,134 — Change in operating assets and liabilities: Accounts receivable (2,300,300) (1,008,127) Unbilled receivables (8,979,023) (3,995,699) Other current assets (1,434,939) (112,158) Accrued interest expense 10,322,698 2,759,944 Deferred revenue 11,555,171 754,534 Related party payable 1,830,090 820,582 Other current liabilities (377,226) 478,603 Net cash provided by operating activities 28,705,103 4,791,636 Cash flows from investing activities: Acquisition of projects (3,189,670,666) (1,362,670,102) Redistribution or removal of projects 320,838,516 154,850,292 Net cash used in investing activities (2,868,832,150) (1,207,819,810) Cash flows from financing activities: Borrowings 1,486,141,637 372,200,000 Repayments (586,335,637) — Debt issuance costs (14,744,835) — Investment tax credit proceeds 332,969,387 — Contributions from members 1,959,908,530 737,374,900 Return of contributions from members (898,348,595) (360,665,208) Contributions from noncontrolling interests in subsidiaries 1,096,180,270 477,852,800 Return of contributions from noncontrolling interests in subsidiaries (32,045,858) — Distributions to members (96,457,789) — Distributions to noncontrolling interests in subsidiaries (344,103,860) (462,493) Net cash provided by financing activities 2,903,163,250 1,226,299,999 Increase in cash and restricted cash equivalents 63,036,203 23,271,825 Cash and restricted cash equivalents at beginning of the period 23,600,544 328,719 Cash and restricted cash equivalents at end of the period $ 86,636,747 $ 23,600,544 Supplemental cash flow information: Recognition of asset retirement obligations $ (2,033,219) $ 7,672,914 Deemed contributions as investment tax credits $ 249,269,387 $ 83,700,000 Deemed distributions included within Related party payable $ 374,968 $ — Cash paid for interest, net $ 46,485,438 $ 6,122,741 Acquisition of assets included in Accrued purchases of solar energy systems and Other current liabilities $ 32,045,300 $ — Capitalized debt discounts included in Long-term debt $ 5,772,954 $ — The accompanying notes are an integral part of these consolidated financial statements. 6
Palmetto HASI Holdings LLC and Subsidiaries Notes to Consolidated Financial Statements December 31, 2025 and 2024 Note 1. ORGANIZATION AND BASIS OF REPORTING The accompanying consolidated financial statements include the accounts of Palmetto HASI Holdings LLC and its wholly- owned and controlled subsidiaries (the “Company” or “Palmetto HASI”). Nature of Operations Palmetto HASI Holdings LLC (the “Company”) is a limited liability company with a perpetual term that was formed pursuant to the Delaware Limited Liability Company Act on July 13, 2023. The Company conducts its operations through the joint venture agreement with HASI Sabal, LLC (“HASI”) and Palmetto Solar, LLC (“Palmetto”). The Company is engaged in procuring, owning, operating and maintaining a portfolio of residential solar power and battery projects. The customer agreements typically are structured as either a legal-form lease (a “lease”) of a solar system or the sale of the solar energy system’s output to the customer under a power purchase agreement (“PPA”). The purchase of these solar systems and their associated customer agreements is funded through a combination of tax equity investments, capital contributions made by Palmetto and HASI, and debt issued to the Company’s wholly-owned subsidiaries. As of December 31, 2025, the Company generated all its lease or PPA revenues through Antillean Solar LLC, Antillean Solar 2 LLC, Antillean Solar 3 LLC, Bermuda Sabal LLC, Bermuda Sabal 2 LLC, Bluestem Sabal LLC, Etonia Sabal LLC, GP Sabal LLC, Hat Palm Sabal LLC, Hat Palm Sabal 2 LLC, and Royal Sabal LLC, in which the Company holds the controlling interests. Basis of Presentation and Principles of Consolidation The accompanying consolidated financial statements include the accounts of the Company's wholly-owned and controlled subsidiaries. All intercompany accounts and transactions have been eliminated in consolidation. The accompanying consolidated financial statements have been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America ("US GAAP"). Under this method, revenues are recorded when earned and expenses are recorded when liabilities are incurred, regardless of when the related cash flow takes place. Certain prior period amounts have been reclassified to conform to current period presentation. The Company holds the controlling interest in eleven partnerships which are invested in by a third party tax equity investor and is determined to be variable interest entities (“VIE”). The partnership’s ownership structure allows for the ownership percentages to flip at certain points in time in the future based on the specific terms of the operating agreement. The partnership owns and operates solar energy systems in which systems are either leased or their power is sold to residential customers. In accordance with the provisions of Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Section 810, Consolidation, the Company consolidates any VIE, of which it is the primary beneficiary. The Company has determined that it is the primary beneficiary of the following partnerships as of December 31, 2025: • Antillean Solar LLC • Antillean Solar 2 LLC • Antillean Solar 3 LLC • Bermuda Sabal LLC • Bermuda Sabal 2 LLC • Bluestem Sabal LLC • Etonia Sabal LLC • GP Sabal LLC • Hat Palm Sabal LLC • Hat Palm Sabal 2 LLC • Royal Sabal LLC 7
Note 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Estimates and Assumptions U.S. GAAP requires the Company to make certain estimates, judgments, and assumptions. The Company believes the estimates, judgments, and assumptions it makes are reasonable based upon information available at the time these estimates, judgments, and assumptions were made. These estimates, judgments, and assumptions can affect reported amounts of assets and liabilities as of the date of the consolidated financial statements and reported amounts of revenues and expenses during the periods presented. These estimates include, among other items, revenue recognition, specifically, the nature and timing of satisfaction of performance obligations, allowance for credit losses, depreciable useful lives of solar energy systems, present value considerations related to asset retirement obligations, and valuation of interest rate swaps. Future events and their effects cannot be predicted with certainty; accordingly, the Company’s accounting estimates require the exercise of judgment. The accounting estimates used in the preparation of the Company’s consolidated financial statements will change as new events occur, as more experience is acquired, as additional information is obtained, and as its operating environment changes. To the extent there are material differences between these estimates, judgments, or assumptions and actual results, the Company’s consolidated financial statements will be affected. The Company evaluates and updates these assumptions and estimates on an ongoing basis. Cash and Cash Equivalents Cash equivalents represent short-term, highly liquid investments, which are readily convertible to cash and have maturities of three months or less at time of purchase. There were no cash equivalents as of December 31, 2025 and December 31, 2024. Restricted Cash Equivalents The Company considers cash to be restricted when withdrawal or general use is legally proscribed or otherwise identified. Restricted cash equivalents is classified as a current or non-current asset based on the timing and nature of when or how the cash is expected to be used or when the restrictions are expected to lapse. Restricted cash equivalents represents amounts related to obligations under the Company’s credit facilities. These funds are used to pay for capital expenditures, operating expenses and debt service payments in accordance with the financing agreements, see Note 4. Accounts Receivable Accounts receivable represent trade receivables from customers that are generally collected in the subsequent month. Accounts receivable are recorded net of an allowance for credit losses, which is based on the Company’s assessment of the collectability of customer accounts based on the best available data at the time. The Company reviews the allowance by considering factors such as historical experience, customer credit rating, contractual term, aging category and current or reasonably forecasted future economic conditions that may affect a customer's ability to pay to identify customers with potential disputes or collection issues. The Company writes off accounts receivable when the Company deems them uncollectible. Bad debt expense of $1,232,148 and $23,138 was recorded for the twelve months ended December 31, 2025 and 2024, respectively. Unbilled Receivables Unbilled receivables represent revenue earned on customer agreements that have been recorded as revenue but have not been billed to customers and are classified as current. Derivative Instruments and Hedging Activities The Company is exposed to interest rate risk on its variable rate borrowings. Accordingly, interest rate fluctuations affect the amount of interest expense the Company is obligated to pay. The Company uses interest rate derivatives with the objective of managing exposure to interest rate movements, thereby reducing the effect of interest rate changes and the effect they could have on future cash flows. Currently, interest rate swap agreements are used to accomplish this objective. The accounting for changes in value of the derivative depends on whether or not the transaction has been designated and qualifies for hedge accounting. Derivatives that are not designated as hedges are reported and measured at fair value through earnings. When derivatives are used, the Company is exposed to credit loss in the event of non-performance by the counterparties; however, non-performance is not anticipated. ASC 815, Derivatives and Hedging, requires companies to recognize all derivative instruments as either assets or liabilities at fair value in the balance sheet. Derivative assets and liabilities are recorded as derivative asset - current, derivative asset - noncurrent, derivative liability - current, and derivative liability - noncurrent in the consolidated balance sheets. The fair values of the interest rate derivatives are based on market rates, and these represent the estimated amounts the Company would receive or pay on termination of the agreements, taking into consideration current market rates and the current credit worthiness of the counterparty and the Company (based on significant observable inputs - Level 2 inputs), see Note 5. 8
Fair Value of Financial Instruments The Company’s financial instruments are cash and cash equivalents, restricted cash equivalents, accounts receivable, and derivative assets and liabilities. The carrying amounts of cash and cash equivalents, restricted cash equivalents, and accounts receivable approximate fair value because of their short-term maturity and interest rates which approximate current market rates. The Company’s derivative assets and liabilities consist principally of interest rate swaps, which are carried at fair value based on significant observable inputs (Level 2 inputs), see Note 5. Derivatives entered into by the Company are typically executed over-the-counter and are valued using discounted cash flows along with fair value models that primarily use market observable inputs. These models take into account a variety of factors including, where applicable, maturity, interest rate yield curves, and counterparty credit risks. Solar Energy Systems, Net The Company records solar energy systems subject to signed customer agreements and solar energy systems that are under installation as solar energy systems, net on its consolidated balance sheets. Solar energy systems are recorded at cost, less accumulated depreciation. Solar energy systems will be redistributed back to sponsor if certain metrics are not met within the completion deadline, as defined within the individual tax equity entity’s governing contracts. Solar energy systems will be removed if the customer purchases the system, which is typically due to the sale of the home and is approved on a case by case basis. The Company reviews its solar energy systems regularly to determine any impairment. When solar energy systems are retired or otherwise disposed of, the cost and accumulated depreciation are removed from the accounts and any resulting gain or loss is included in the results of operations for the respective period. Depreciation is provided over the estimated useful lives of the related assets using the straight-line method for consolidated financial statement purposes. Because the estimated 12-year useful life of the batteries is shorter than the typical customer agreement term and overall system life, the Company expects that batteries will be replaced during the contract term. Under the System Repair Promise included in customer agreements, the Company is obligated to repair or replace non-operational components, including batteries, at no cost to the customer in order to maintain system operability. The estimated useful lives are as follows: Solar energy systems 35 years Batteries 12 years Asset retirement obligations 35 years Solar Energy Systems to be Returned to Seller The Company may enter into agreements to return certain solar energy systems to the original seller pursuant to contractual provisions, to be refunded in cash. Solar energy systems expected to be returned within one year are classified as current assets and measured at the contractual refund amount. Impairment of long-lived assets The Company accounts for the impairment of long-lived assets under the provisions of ASC 360, Property, Plant and Equipment, which requires an impairment analysis on long-lived assets used in operations when indicators of impairment are present. If the carrying value of the assets is not recoverable, as determined by the estimated undiscounted cash flows, the carrying value of the assets is reduced to the fair value. Generally, the fair value is determined using valuation techniques such as expected discounted cash flows or appraisals, as appropriate. The Company did not recognize any impairment charges during the twelve months ended December 31, 2025 and 2024. Asset Retirement Obligations The Company has asset retirement obligations (“AROs”) arising from contractual requirements to perform certain asset retirement activities at the time the solar energy systems are disposed. The Company recognizes an ARO at the point an obligating event takes place, typically when the solar energy system is placed in service. An asset is considered retired when it is permanently taken out of service, such as through a disposal. The Company historically has estimated that 25% of customers will elect to have their systems removed after the initial term of 25 years and two 5-year extension terms, therefore the Company records 25% of the total retirement obligation in the consolidated financial statements. In accordance with its policy on asset retirement obligations, the Company reviews its estimates on an ongoing basis. This review indicated that the 9
percentage of customers expected to elect system removal was less than 25%. As a result, effective January 1, 2025, the Company revised its estimate of customers electing system removal to 5%. The liability is initially measured based on the present value of estimated removal and restoration costs and subsequently adjusted for changes in the underlying assumptions and for accretion expense. The accretion expense is recognized in operating expense in the consolidated statements of operations. The corresponding asset retirement costs are capitalized as part of the carrying amount of the solar energy system and depreciated over the solar energy system's remaining useful life (see Note 9). Accrued Purchases of Solar Energy Systems In certain asset acquisition arrangements, a portion of the purchase price for solar energy systems is payable upon the occurrence of specified future events, such as the system being placed in service. When control of the system has been obtained and payment is probable and reasonably estimable, the Company records a liability for the unpaid purchase price. The total estimated purchase price, including amounts probable of payment, is capitalized as solar energy systems, net. Changes in the estimated liability are recorded as adjustments to the carrying value of the related solar energy systems. Acquisitions The Company acquires its solar energy systems in tranches and has determined them to be asset acquisitions. Asset acquisitions are measured based on the cost to the Company, including transaction costs. As these asset acquisition transactions are with a related party not under common control, the consideration transferred is measured at fair value, which equals the value of the net assets acquired. If the consideration transferred is cash, measurement is based on the amount of cash paid to the seller, as well as transaction costs incurred. The cost of an asset acquisition is allocated to the assets acquired based on their estimated fair values. Goodwill is not recognized in an asset acquisition. Commitments and Contingencies The Company is subject to certain legal proceedings, claims, investigations, and administrative proceedings in the ordinary course of its business. The Company records a provision for a liability when it is both probable the liability has been incurred and the amount of the liability can be reasonably estimated. These provisions, if any, are reviewed at least quarterly and adjusted to reflect the impacts of negotiations, settlements, rulings, advice of legal counsel, and other information and events pertaining to a particular case. Depending on the nature and timing of any such proceedings which may arise, an unfavorable resolution of a matter could materially affect the Company’s future consolidated results of operations, cash flows, or financial position in a particular period. Revenue Recognition The Company generates revenue through its PPA and lease agreements. The PPA and lease agreements generally have a term of 25 years with an opportunity for customers to renew for up to an additional 10 years, via two 5-year renewals. Systems may include a battery energy storage system (“BESS”), which are considered not distinct from the solar energy system. The Company evaluated its PPAs and lease agreements to determine whether they are in-substance leases and, if applicable, would require revenue to be recognized pursuant to accounting guidance for leases. The Company's PPAs and leases were determined to not be leases in accordance with ASC 842, Leases. Accordingly, the Company is required to evaluate those contracts to determine whether the PPAs are derivative instruments. Certain contracts that meet the definition of a derivative may qualify for the normal purchases normal sales scope exception (“NPNS”), which are exempted from derivative accounting and reporting requirements. As of December 31, 2025, no contracts were determined to be derivatives; consequently, the Company has not elected the NPNS scope exception, and all such PPAs and lease agreements are accounted for under ASC 606. PPA Revenue The Company generates revenues by delivering electricity, generated by solar energy systems to the customers under PPAs. The Company transfers control over electricity and the customer simultaneously receives and consumes the benefits provided by the Company's satisfaction of its performance obligations. Accordingly, the Company has concluded that the sale of electricity over the term of the agreement represents a series of distinct goods that are substantially the same and have the same pattern of transfer to the customer. Each distinct transfer of electricity in megawatt hour (MWh) that the Company promises to transfer to the customer meets the criteria to be a performance obligation satisfied over time. The Company generally recognizes revenue based on the estimated annual kWh amount, divided over 12 months. There are performance guarantees on the PPA agreements, refer to “Performance Guarantee Obligations” below. The customers are invoiced monthly for the electricity sales, with customer payments generally received within one month of the invoice date. 10
Lease Revenue The Company is the lessor under lease agreements for solar energy systems, which do not meet the definition of a lease under ASC 842 and are accounted for as contracts with customers under ASC 606. The Company recognizes revenue based on the monthly lease payment per the customer agreement. The Company is the lessor under lease agreements for solar energy systems. There are performance guarantees on the lease agreements, refer to “Performance Guarantee Obligations” below. The customers are invoiced monthly for the electricity sales, with customer payments generally received within one month of the invoice date. Solar Renewable Energy Certificate (“SREC”) Revenue Each megawatt hour of electricity produced by the solar energy systems generates one solar renewable energy certificate ("SREC"). The Company accounts for its internally generated SRECs under the incremental cost method and has determined the costs associated with the SRECs to be nominal and thus has recorded no value. A portion of the SRECs generated are sold to third parties in certain jurisdictions for an upfront, lump sum payment based on the installed kilowatt (kW) capacity of each solar energy system for a term of 25 years. The Company’s performance obligation is to deliver all SRECs generated by the system, with no minimum or maximum deliver quantities. The Company recognizes SREC revenue on a straight-line basis over the contract term as the Company satisfies its obligation to provide the rights to the SRECs and to provide continuous monitoring access to the solar energy system. Uncontracted SRECs are held in SREC inventory until monetization. Deferred Revenue When the Company receives consideration, or when such consideration is unconditionally due, from a customer prior to delivering services to the customer under the terms of a PPA, lease or SREC agreement for a customer, the Company records deferred revenue. Such deferred revenue consists of amounts for which the criteria for revenue recognition have not yet been met and includes amounts that are collected or assigned from customers, including upfront deposits and prepayments, and rebates. Performance Guarantee Obligations In most cases, the Company guarantees certain specified minimum solar energy production output under the lease and PPA agreements, generally over a term of 25 years. The amounts are generally measured and credited to the customer's account thirty-six months after the solar energy system’s placed in service date, and every thirty-six months thereafter. The Company monitors the solar energy systems to ensure these outputs are achieved. The Company evaluates if any amounts are due to the customers based upon not meeting the guaranteed solar energy production outputs at each reporting period end. For leases and PPAs, these estimated amounts are recorded as a reduction to revenues from customers and a current or long-term liability, as applicable. As of December 31, 2025 and December 31, 2024, no amounts were due to the customers under the performance guarantee obligation. Income Taxes The Company is treated as a disregarded entity for income tax purposes and as such, is not subject to income taxes. Rather, all items of taxable income and deductions are disregarded and passed through to and are reported by its member in their income tax return. The Company's federal tax status as a disregarded entity is based on its legal status as a limited liability company with two members. Accordingly, the Company is not required to take any tax positions to qualify as a disregarded entity. These consolidated financial statements do not reflect a provision for income taxes and the Company has no other tax positions which must be considered for disclosure. One subsidiary of the Company is taxed as a Corporation, however, there was no material impact to the consolidated financial statements for the twelve months ended December 31, 2025 and 2024. The Company elected to account for transferrable ITCs under ASC 740, Income Taxes, using the flow-through method when it is entitled to consideration under the terms of transfer arrangements. As of December 31, 2025, the Company was not entitled to any consideration under transfer agreements. As of December 31, 2024, a receivable of $83,700,000, which is reflected in other current assets on the consolidated balance sheets, and an offsetting capital contribution from Morgan Stanley Renewables Inc. were recorded. As of December 31, 2025, this receivable has been received. Debt Issuance Costs The Company capitalizes debt discount and deferred financing costs incurred related to debt issuance. Debt issuance costs are presented in the consolidated balance sheets as a direct deduction from the carrying amount of the related debt liability, and amortized using the effective interest method. The amortization of debt issuance costs is classified as interest expense on the consolidated statements of operations. Concentrations of credit risk 11
Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash deposits and derivative instruments. Cash deposits are guaranteed by the Federal Deposit Insurance Corporation ("FDIC") up to federally insured limits. The Company may at times have deposits in excess of FDIC insured limits. The Company has not experienced any losses in such accounts. The Company has no policy requiring collateral or other securities to support its deposits. Variable interest entities ("VIE") The Company determines when it should include the assets, liabilities, and activities of a VIE in its consolidated financial statements and when it should disclose information about its relationship with a VIE when it is determined to be the primary beneficiary of the VIE. A VIE must be consolidated by a company if it is the primary beneficiary of the entity. The primary beneficiary of a VIE is the entity that has (1) the power to direct the activities of the VIE that most significantly impact the VIE's economic performance and (2) the obligation to absorb losses or receive benefits that could potentially be significant to the VIE. If multiple unrelated parties share such power, as defined, no party is required to consolidate the VIE. The Company determines whether an entity is a VIE and whether it is the primary beneficiary at the date of initial involvement with the entity. The Company reassesses whether it is the primary beneficiary of a VIE on an ongoing basis based on changes in facts and circumstances. In determining whether it is the primary beneficiary, the Company considers the purpose and activities of the VIE, including the variability and related risks the VIE incurs and transfers to other entities and their related parties. These factors are considered in determining whether the Company has the power to direct activities of the VIE that most significantly impact the VIE's economic performance and whether the Company also has the obligation to absorb losses of or receive benefits from the VIE that could be potentially significant to the VIE. If the Company determines that it is the primary beneficiary of the VIE, the VIE is consolidated within the Company's consolidated financial statements. Noncontrolling Interests in Subsidiaries Noncontrolling interests represent third-party interests in the net assets of certain consolidated subsidiaries (the "tax equity entities"). For these tax equity entities, the Company has determined the appropriate methodology for calculating the noncontrolling interest balances that reflects the substantive economic arrangements in the operating agreements is a balance sheet approach using the hypothetical liquidation at book value ("HLBV") method. Under the HLBV method, the amounts reported as noncontrolling interests in the consolidated balance sheets represent the amounts third-party investors would hypothetically receive at each balance sheet date under the liquidation provisions of the operating agreements, assuming the net assets of the subsidiaries were liquidated at amounts determined in accordance with GAAP and distributed to the investors. The noncontrolling interest balances in these subsidiaries are reported as a component of equity in the consolidated balance sheets. The amount of income or loss allocated to noncontrolling interests in the results of operations for the subsidiaries using HLBV are determined as the difference in the noncontrolling interest balances in the consolidated balance sheets at the start and end of each reporting period, after taking into account any capital transactions between the subsidiaries and the third-party investors. Factors used in the HLBV calculation include GAAP income (loss), taxable income (loss), capital contributions, investment tax credits, distributions and the stipulated targeted investor return specified in the subsidiaries' operating agreements. Changes in these factors could have a significant impact on the amounts that investors would receive upon a hypothetical liquidation. The use of the HLBV method to allocate income (loss) to the noncontrolling interest holders may create volatility in the consolidated statements of operations as the application of HLBV can drive changes in net income or loss attributable to noncontrolling interests from period to period. Risks and Uncertainties The Company is subject to risks and uncertainties common to companies in the renewable energy industry, including, but not limited to: (i) credit risk related to its commercial and residential customers; (ii) reliance on the continued performance and reliability of its systems, infrastructure, and third-party service providers; (iii) changes in federal, state, and local laws and regulations; (iv) weather conditions and other environmental factors that may impact energy production; (v) financial market conditions and access to capital; and (vi) the successful operation and performance of power markets. Recently Adopted and Issued Accounting Pronouncements In December 2025, the Financial Accounting Standards Board FASB issued ASU No. 2025-10, Government Grants (Topic 832): Accounting for Government Grants Received by Business Entities (“ASU 2025-10”) to establish authoritative guidance on how to recognize, measure, and present government grants received by business entities. The amendments in this pronouncement establish the accounting for a government grant received by a business entity, including guidance for (1) a grant related to an asset and (2) a grant related to income. A grant related to an asset is a government grant, or part of a government grant, that is conditioned on the purchase, construction, or acquisition of an asset. A grant related to income is a government grant, or part of a government grant, other than a grant related to an asset. ASU 2025-10 is effective for annual periods 12
beginning after December 15, 2028, and for interim reporting periods within those annual reporting periods. The ASU may be applied using a modified prospective, modified retrospective or retrospective approach with early adoption permitted in an interim or annual reporting period. If an entity early adopts in an interim reporting period, it must adopt as of the beginning of the annual reporting period that includes that interim reporting period. The Company is evaluating the impact this will have on its consolidated financial statements and does not currently expect there to be an impact of the recognition of our transferable ITCs under ASC 740. Note 3. REVENUE RECOGNITION Revenues consist of the following: Twelve months ended December 31, 2025 2024 PPA revenue $ 50,635,279 $ 8,145,642 Lease revenue 37,770,315 7,189,602 SREC revenue 179,880 18,241 Total revenues $ 88,585,474 $ 15,353,485 The opening balance of deferred revenue was $252 as of December 31, 2023. Deferred revenue consists of the following: As of December 31, 2025 December 31, 2024 Payments received under customer agreements $ 3,516,975 $ 125,985 Payments received under SREC contracts, current 359,644 25,703 Deferred revenue - current 3,876,619 151,688 Payments received under SREC contracts, non-current 8,433,338 603,098 Total deferred revenue $ 12,309,957 $ 754,786 Note 4. RESTRICTED CASH EQUIVALENTS Restrictions on Cash As of December 31, 2025 and December 31, 2024, the Company identified as restricted cash equivalents amounts related to its Credit Facility, ABS-1 Facility and ABS-2 Facility (see Note 10). Restricted cash equivalents supports each of the following: As of December 31, 2025 December 31, 2024 Credit Facility $ 24,680,258 $ 15,277,145 ABS-1 Facility 9,063,317 — ABS-2 Facility 23,295,959 — Total restricted cash equivalents $ 57,039,534 $ 15,277,145 13
Reconciliation of Cash and Restricted Cash Equivalents The following table provides a reconciliation of cash and restricted cash equivalents reported on the consolidated balance sheets that sum to the total of the same such amounts shown in the consolidated statements of cash flows: As of December 31, 2025 December 31, 2024 Cash $ 29,597,213 $ 8,323,399 Restricted cash equivalents 57,039,534 $ 15,277,145 Total cash and restricted cash equivalents shown in the consolidated statements of cash flows $ 86,636,747 $ 23,600,544 Note 5. FAIR VALUE MEASUREMENTS Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date and the fair value measurement guidance in U.S. GAAP sets forth a fair value hierarchy. The fair value hierarchy gives the highest priority to quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). Inputs are broadly defined as assumptions market participants would use in pricing an asset or liability. The three levels of the fair value hierarchy under Fair Value Measurement ASC Topic 820, Fair Value, are described below: Level 1: Unadjusted quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. Level 2: Inputs other than quoted prices within Level 1 that are observable for the asset or liability, either directly or indirectly, and fair value that is determined using models or other valuation methodologies. Level 3: Inputs that are unobservable for the asset or liability and that include situations where there is little, if any, market activity for the asset or liability. The inputs into the determination of fair value are based upon the best information in the circumstances and may require significant management judgment or estimation. The following table presents the fair value of the Company’s interest rate derivatives included in the consolidated balance sheets as of December 31, 2025: December 31, 2025 Level 1 Level 2 Level 3 Total Fair Value Financial assets: Derivatives Not Designated as Hedging Instruments $ — $ 1,395,466 $ — $ 1,395,466 Financial liabilities: Derivatives Not Designated as Hedging Instruments $ — $ 2,503,579 $ — $ 2,503,579 The following table presents the fair value of the Company’s interest rate derivatives included in the consolidated balance sheets as of December 31, 2024: December 31, 2024 Level 1 Level 2 Level 3 Total Fair Value Financial assets: Derivatives Not Designated as Hedging Instruments $ — $ 6,250,242 $ — $ 6,250,242 14
Note 6. ACCOUNTS RECEIVABLE The opening balance of Accounts receivable, net of allowance for credit losses of $0, was $400 as of December 31, 2023. Accounts receivable, net, consists of the following: As of December 31, 2025 December 31, 2024 Accounts receivable - PPA $ 1,233,724 $ 548,691 Accounts receivable - Lease 1,021,087 447,434 Allowance for doubtful accounts (201,270) (10,736) Accounts receivable, net $ 2,053,541 $ 985,389 The opening balance of unbilled receivables was $0 as of December 31, 2023. Unbilled receivables consists of the following: December 31, 2025 December 31, 2024 Unbilled receivables - PPA $ 7,346,553 $ 2,193,074 Unbilled receivables - Lease 5,628,169 1,802,625 Unbilled receivables $ 12,974,722 $ 3,995,699 Note 7. SOLAR ENERGY SYSTEMS, NET Solar energy systems, net consist of the following: As of December 31, 2025 December 31, 2024 Solar energy systems - installed and operating $ 3,382,585,801 $ 884,253,409 Solar energy systems - constructed systems waiting for activation 212,037,040 256,117,924 Solar energy systems - in development 203,196,712 53,851,331 Solar energy systems - deficient or cancelled projects 3,516,200 28,369,812 Batteries - installed and operating 191,764,235 27,580,491 Asset retirement costs 5,646,311 7,679,530 Solar energy systems, gross 3,998,746,299 1,257,852,497 Less: accumulated depreciation (76,824,537) (10,121,095) Solar energy systems, net $ 3,921,921,762 $ 1,247,731,402 Depreciation expense was $66,869,265 and $10,147,614 for the twelve months ended December 31, 2025 and 2024, respectively. As of the date that these consolidated financial statements were available to be issued, all deficient or cancelled projects were removed and a refund was provided equal to the original purchase price (“Redistribution or removal of projects”). Additionally, for funds which have not yet reached the completion deadline, all deficient or cancelled projects were replaced with additional projects in a subsequent tranche. Note 8. ASSET ACQUISITIONS Wholly-owned subsidiaries of the Company acquired all of the property, plant and equipment during the period from Palmetto Solar LLC, a related party (refer to Note 1). The acquired property plant and equipment consisted of solar energy systems under development by Palmetto Solar LLC under a Development Asset Purchase Agreement. The acquisition of the property, plant and equipment was accounted for at the relative fair value as the acquired assets were not from entities under common control with the Company. Subsequent to the acquisition, all the acquired assets were transferred to Antillean Solar LLC, Antillean Solar 2 LLC, Antillean Solar 3 LLC, Bermuda Sabal LLC, Bermuda Sabal 2 LLC, Bluestem Sabal LLC, Etonia Sabal LLC, GP 15
Sabal LLC, Hat Palm Sabal LLC, Hat Palm Sabal 2 LLC, and Royal Sabal LLC, all eleven entities under common control, at the acquired basis of the transferor. For the assets acquired during the twelve months ended December 31, 2025 and 2024, the total gross purchase price was $3,189,670,666 and $1,362,670,102, of which $32,045,300 and $0 remains outstanding as of December 31, 2025 and December 31, 2024, included in Accrued purchases of solar energy systems and Other current liabilities on the consolidated balance sheets. Note 9. ASSET RETIREMENT OBLIGATIONS AROs consist primarily of costs to remove solar energy system assets and costs to restore the solar energy system sites to the original condition, which the Company estimates based on current market rates. Historically, the Company recognized 25% of the assets to be retired after the initial term of 25 years and two 5-year extension terms. In accordance with its policy on asset retirement obligations, the Company reviews its estimates on an ongoing basis. This review indicated that the percentage of customers expected to elect system removal was less than 25%. As a result, effective January 1, 2025, the Company revised its estimate of customers electing system removal to 5%. The Company recognizes the fair value of the ARO as a liability and capitalizes that cost as part of the cost basis of the related solar energy system. The related assets are depreciated on a straight- line basis over 35 years, which is the estimated average time a solar energy system will be installed in a location before being removed, and the related liabilities are accreted to the full value over the same period of time. The Company revises its estimated future liabilities based on recent actual experiences, including third party cost estimates, average size of solar energy systems and inflation rates, which the Company evaluates at least annually. In addition, the Company considers relevant peer data and broader market trends and performs analyses of expected future customer behavior, including anticipated rates of system removals or service termination, based on observable patters within the industry and its customer base. These updates may result in changes to the estimated percentage of customers expected to remove their systems in future periods. Changes in the estimated future liabilities are recorded as either a reduction or addition in the carrying amount of the remaining unamortized asset and the ARO and either decrease or increase its depreciation and accretion expense amounts prospectively. The following table presents the changes in AROs as recorded in other noncurrent liabilities in the consolidated balance sheets: As of December 31, 2025 December 31, 2024 Balance at beginning of period $ 7,870,185 $ 6,649 Change in estimate (6,364,429) — Additional obligations incurred 4,119,948 7,672,914 Accretion expense 274,913 190,622 Balance at end of period $ 5,900,617 $ 7,870,185 Note 10. LONG-TERM DEBT, NET The Company enters into various financing arrangements, including warehouse credit facilities and the issuance of solar asset- backed notes, as a source of funding. Borrowings under these facilities are secured, directly or indirectly, by the assets of the Company's wholly-owned subsidiaries, which primarily consist of qualifying solar energy systems, related customer agreements, and associated cash flows. The cash flows generated by these customer agreements are used to satisfy required debt service payments, fund reserve requirements, and cover the operating expenses of the Company's wholly-owned subsidiaries. These financing arrangements are typically non-recourse to the Company’s general assets, subject to certain limited exceptions. In connection with these arrangements, certain affiliates of the Company may receive fees for managing and servicing the underlying solar energy systems and customer agreements pursuant to management and servicing agreements. Credit Facilities Credit Facility with Bank of America On October 30, 2023, the Company’s subsidiary PowerCo Holding LLC entered into a credit agreement with Bank of America, as administrative agent, and Computershare Trust Company, National Association, as a collateral and paying agent, which provides the Company with a revolving credit facility (“Credit Facility”) in the amount up to $450,000,000. The debt bears annual interest of SOFR plus applicable margin of 2.5% for the availability period and has a repayment term of four years. The debt has a maturity date of October 30, 2028. On March 7, 2024, the credit agreement was amended to reduce the commitment amount to $300,000,000. On October 18, 2024, the credit agreement was amended to increase the commitment amount to $450,000,000. On February 24, 2025 the credit agreement was amended to increase the commitment amount to $600,000,000. 16
On May 9, 2025 the credit agreement was amended to increase the commitment amount to $777,500,000. On November 10, 2025 the credit agreement was amended to increase the commitment amount to $1,080,000,000. Total borrowings from the Credit Facility as of December 31, 2025 and December 31, 2024 were $598,837,482 and $380,300,000, respectively. As of December 31, 2025 and December 31, 2024, the Company had $481,162,518 and $69,700,000 respectively, of available borrowing capacity. As of December 31, 2025 and December 31, 2024 accrued interest on the advances was $5,951,023 and $3,656,257, respectively. ABS 2025-1 Facility On April 23, 2025, the Company issued solar asset backed notes (“ABS 2025-1 Facility”) in the amount of $286,000,000 and a fixed interest rate of 6.28% to a group of investors in a private placement pursuant to SEC Rule 144A. The ABS 2025-1 Facility has a final maturity date of November 1, 2060. Palmetto Solar LLC, a 50% joint venture partner to the Company, is a performance guarantor to the ABS 2025-1 Facility. As of December 31, 2025, accrued interest on the ABS 2025-1 Facility was $2,792,941. Total borrowings from the ABS 2025-1 Facility as of December 31, 2025 are summarized below: As of December 31, 2025 Principal value $ 286,000,000 Total repayments to date (19,158,528) Outstanding principal balance 266,841,472 Capitalized debt issuance costs (5,662,525) Amortization of debt issuance costs to date 401,521 Unamortized debt issuance costs (5,261,004) Capitalized debt discount (3,344,198) Amortization of debt discount to date 237,132 Unamortized debt discount (3,107,066) ABS 2025-1, net of debt discount and issuance costs $ 258,473,402 Required principal repayments under the ABS 2025-1 Facility for each of the five succeeding fiscal years and thereafter are as follows: 2026 $ (200,000) 2027 (548,781) 2028 (1,238,877) 2029 (1,952,664) 2030 (2,862,041) Thereafter (260,039,109) $ (266,841,472) ABS 2025-2 Facility On October 16, 2025 the Company issued solar asset backed notes (“ABS 2025-2 Facility”) in the amount of $420,200,000 and a fixed interest rate of 5.98% to a group of investors in a private placement pursuant to SEC Rule 144A. The ABS 2025-2 Facility has a final maturity date of April 30, 2061. Palmetto Solar LLC, a 50% joint venture partner to the Company, is a performance guarantor to the ABS-2 Facility. As of December 31, 2025, accrued interest on the ABS 2025-2 Facility was $5,234,991. 17
Total borrowings from the ABS 2025-2 Facility as of December 31, 2025 are summarized below: As of December 31, 2025 Principal value $ 420,200,000 Total repayments to date — Outstanding principal balance 420,200,000 Capitalized debt issuance costs (9,082,310) Amortization of debt issuance costs to date 207,888 Unamortized debt issuance costs (8,874,422) Capitalized debt discount (2,428,756) Amortization of debt discount to date 55,593 Unamortized debt discount (2,373,163) ABS 2025-2, net of debt discount and issuance costs $ 408,952,415 Required principal repayments under the ABS 2025-2 Facility for each of the five succeeding fiscal years and thereafter are as follows: 2026 $ (400,419) 2027 (384,446) 2028 (942,543) 2029 (1,810,089) 2030 (2,754,034) Thereafter (413,908,469) $ (420,200,000) Interest rate swaps The Company holds the pay-fixed interest rate swaps, bearing a fixed rate in exchange for receiving the 3-month SOFR rate. The swaps has a mandatory early termination date to coincide with the stated maturity on the credit facility of October 21, 2027. The swaps will be amended from time to time to adjust the notional amount as the total borrowing amount fluctuates. The interest rate swaps are undesignated hedging instruments, with periodic changes in the fair value recorded in the consolidated statements of operations as unrealized gains/losses. As of December 31, 2025, the Company held the following pay-fixed interest rate swaps: As of December 31, 2025 Interest Rate Notional Amount 4.05% $ 296,727,864 3.99% $ 122,287,591 $ 419,015,455 As of December 31, 2024, the Company held a pay-fixed interest rate swap with a notional amount of $330,613,705 and bearing a fixed rate of 3.89%. For the twelve months ended December 31, 2025, the Company recorded an unrealized loss on the interest rate swap of $7,884,433. For the twelve months ended December 31, 2024, the Company recorded an unrealized gain on the interest rate swap of $6,250,242. 18
Note 11. COMMITMENTS AND CONTINGENCIES As of December 31, 2025 and December 31, 2024, the Company does not expect the outcomes of these matters to have, either individually or in the aggregate, a material adverse effect on the Company’s financial position or results of operations. Note 12. NONCONTROLLING INTERESTS IN SUBSIDIARIES The following table summarizes the Company’s noncontrolling interests as of December 31, 2025: Tax Equity Entity Balance Sheet Classification Date Class A Member Admitted Antillean Solar LLC Noncontrolling interest in subsidiaries October 2023 Antillean Solar 2 LLC Noncontrolling interest in subsidiaries May 2024 Antillean Solar 3 LLC Noncontrolling interest in subsidiaries December 2024 Bermuda Sabal LLC Noncontrolling interest in subsidiaries July 2024 Bermuda Sabal 2 LLC Noncontrolling interest in subsidiaries July 2025 Bluestem Sabal LLC Noncontrolling interest in subsidiaries October 2024 Etonia Sabal LLC Noncontrolling interest in subsidiaries December 2025 GP Sabal LLC Noncontrolling interest in subsidiaries August 2025 Hat Palm Sabal LLC Noncontrolling interest in subsidiaries October 2025 Hat Palm Sabal 2 LLC Noncontrolling interest in subsidiaries December 2025 Royal Sabal LLC Noncontrolling interest in subsidiaries December 2024 The purpose of the tax equity entities is to own and operate a portfolio of solar energy systems and energy storage systems. The terms of the tax equity entities' operating agreements contain allocations of taxable income (loss), Section 48(a) ITCs and cash distributions that vary over time and adjust between the members on an agreed date (referred to as the flip date). The operating agreements specify either a date certain flip date or an internal rate of return ("IRR") flip date. The date certain flip date is based on the passage of a fixed period of time that generally corresponds to the expiration of the recapture period associated with Section 48(a) ITCs or a year thereafter. The IRR flip date is the date on which the tax equity investor has achieved a contractual rate of return. From inception through the flip date, the Class A members' allocation of taxable income (loss) and Section 48(a) ITCs is generally 99% and the Class B members' allocation of taxable income (loss) and Section 48(a) ITCs is generally 1%. The noncontrolling interests in subsidiaries are comprised of Class A units, which represent the tax equity investors' interest in the tax equity entities. Both the Class A members and Class B members have call options to allow either member to redeem the other member's interest in the tax equity entities upon the occurrence of certain contingent events, such as bankruptcy, dissolution/liquidation and forced divestitures of the tax equity entities. On the dates noted above, each of the tax equity entities entered in an (1) Asset Management Agreement (“AMA”) or Administrative Services Agreement (“ASA”) and (2) Maintenance Services Agreement (“MSA”) with Palmetto Solar LLC to provide certain administrative, management and operations and maintenance services to each tax equity entity. The initial terms of these agreements are twenty years and are cancellable with 180 days notice at the end of their terms. Additionally, the Company entered in an ASA with Palmetto Solar LLC on October 30, 2023, to provide certain accounting and management services to each tax equity entity. The initial term of this agreement is one year, automatically renewing for each successive one year period and cancellable with 180 days notice. For the twelve months ended December 31, 2025 and 2024, the Company recognized expense under these agreements of $11,008,511 and $1,590,421, respectively, included in General management and maintenance fees within the consolidated statements of operations. 19
Under the terms of the agreements the the tax equity entities, the Company is paid an annual management fee per project, escalating annually as a percentage of the fee paid for the preceding year. The following table summarizes these terms: AMA or ASA MSA Tax Equity Entity Annual management fee per project Annual Escalation Annual management fee per project that does not include battery storage Annual management fee per project that includes battery storage Annual Escalation Antillean Solar LLC $ 60 2.5 % $ 119 $ 199 3.0 % Antillean Solar 2 LLC $ 60 2.5 % $ 119 $ 199 3.0 % Antillean Solar 3 LLC $ 60 2.5 % $ 119 $ 199 3.0 % Bermuda Sabal LLC $ 60 2.5 % $ 119 $ 199 3.0 % Bermuda Sabal 2 LLC $ 62 2.5 % $ 123 $ 205 3.0 % Bluestem Sabal LLC $ 60 2.5 % $ 119 $ 199 3.0 % Etonia Sabal LLC $ 63 2.5 % $ 127 $ 211 3.0 % GP Sabal LLC $ 62 2.5 % $ 123 $ 205 3.0 % Hat Palm LLC $ 62 2.5 % $ 123 $ 205 3.0 % Hat Palm 2 LLC $ 63 2.5 % $ 127 $ 211 3.0 % Royal Sabal LLC $ 62 2.5 % $ 123 $ 205 3.0 % Under the terms of the ASA with Palmetto Solar LLC, the Company pays Palmetto Solar LLC an annual service fee and annual accounting expenses, with the tax equity entity paying either per project owned by the tax equity entity or by paying a fixed annual amount, with each escalating annually in an amount equal to the greater of 2.5% or the increase in the Employment Cost Index since the commencement of the prior service year. The following tables summarize these terms: Tax Equity Entity Annual service fee per project Annual accounting expenses per project Antillean Solar LLC $ 25 $ 45 Antillean Solar 2 LLC $ 25 $ 45 Antillean Solar 3 LLC $ 26 $ 46 Bermuda Sabal LLC $ 25 $ 45 Bluestem Sabal LLC $ 25 $ 45 Royal Sabal LLC $ 26 $ 46 Tax Equity Entity Annual service fee Annual accounting expenses Bermuda Sabal 2 LLC $ 125,000 $ 125,000 Etonia Sabal LLC $ 125,000 $ 125,000 GP Sabal LLC $ 125,000 $ 125,000 Hat Palm LLC $ 125,000 $ 125,000 Hat Palm 2 LLC $ 125,000 $ 125,000 Note 13. VARIABLE INTEREST ENTITIES (“VIE”) Based on the relevant accounting guidance summarized in Note 2, the Company determined that Antillean Solar LLC, Antillean Solar 2 LLC, Antillean Solar 3, Bermuda Sabal LLC, Bermuda Sabal 2 LLC, Bluestem Sabal LLC, Etonia Sabal LLC, GP Sabal LLC, Hat Palm Sabal LLC, Hat Palm Sabal 2 LLC, and Royal Sabal LLC are VIEs and after performing the assessment of required criteria for consolidation, the Company determined that it is the primary beneficiary of each tax equity entity as the Company has the power to direct the activities that significantly impact the entity’s economic performance and the Company has exposure to significant profits or losses. As such, each tax equity entity is a consolidated VIE within the Company. 20
Total revenue of the consolidated VIEs was $88,585,473 and $15,353,485 for the twelve months ended December 31, 2025 and 2024, respectively. Refer to the table below for the assets and liabilities of the entities as of December 31, 2025 and December 31, 2024: As of December 31, 2025 December 31, 2024 Current assets $ 204,462,640 $ 98,098,816 Noncurrent assets 3,921,931,113 1,247,588,787 Total assets $ 4,126,393,753 $ 1,345,687,603 Current liabilities $ 37,618,525 $ 1,018,461 Noncurrent liabilities 14,314,321 8,330,668 Total liabilities $ 51,932,846 $ 9,349,129 Note 14. MEMBERS’ EQUITY On October 30, 2023, the limited liability company operating agreement of Palmetto HASI Holdings LLC was entered into by and between HASI Sabal LLC, a Delaware limited liability company (the “HASI Member”), and Palmetto Solar, LLC, a Delaware limited liability company (the “Palmetto Member”). The Palmetto Member and the HASI Member own 500 Units each of the limited liability interests of the Company. Note 15. SUBSEQUENT EVENTS The Company evaluated subsequent events through March 11, 2026, which is the date that these consolidated financial statements were available to be issued. ABS 2026-1 Facility On February 24, 2026 the Company issued solar asset backed notes (“ABS 2026-1 Facility”) in the amount of $430,000,000 and a fixed interest rate of 6.00% to a group of investors in a private placement pursuant to SEC Rule 144A. The ABS 2026-1 Facility has a final maturity date of April 30, 2061. Palmetto Solar LLC, a 50% joint venture partner to the Company, is a performance guarantor to the ABS-2 Facility. 21
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DAGGETT RENEWABLE HOLDCO LLC AND SUBSIDIARIES Consolidated Financial Statements December 31, 2025, 2024, and 2023 (With Report of Independent Auditors)
DAGGETT RENEWABLE HOLDCO LLC AND SUBSIDIARIES Table of Contents Page Report of Independent Auditors 1 Consolidated Balance Sheets — December 31, 2025 and 2024 3 Consolidated Statements of Operations — Years ended December 31, 2025 and 2024 and the period from February 17, 2023 through December 31, 2023 4 Consolidated Statements of Equity — Years ended December 31, 2025 and 2024 and the period from February 17, 2023 through December 31, 2023 5 Consolidated Statements of Cash Flows — Years ended December 31, 2025 and 2024 and the period from February 17, 2023 through December 31, 2023 6 Notes to Consolidated Financial Statements 8
PricewaterhouseCoopers LLP, 100 East Pratt Street Baltimore, Maryland 21202 www.pwc.com/us (410) 783 7600 Report of Independent Auditors To the Members of Daggett Renewable Holdco LLC Opinion We have audited the accompanying consolidated financial statements of Daggett Renewable Holdco LLC and its subsidiaries (the “Company”), which comprise the consolidated balance sheets as of December 31, 2025 and 2024, and the related consolidated statements of operations, of equity and of cash flows for the years then ended, including the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America. Basis for Opinion We conducted our audit in accordance with auditing standards generally accepted in the United States of America (US GAAS). Our responsibilities under those standards are further described in the Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are required to be independent of the Company and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Other Matter The consolidated financial statements of the Company as of December 31, 2023, and for the period from February 17, 2023 through December 31, 2023, were audited by other auditors whose report, dated March 28, 2024, expressed an unmodified opinion on those statements. Responsibilities of Management for the Consolidated Financial Statements Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of consolidated financial statements that are free from material misstatement, whether due to fraud or error. In preparing the consolidated financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern for one year after the date the consolidated financial statements are available to be issued.
2 Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with US GAAS will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the consolidated financial statements. In performing an audit in accordance with US GAAS, we: • Exercise professional judgment and maintain professional skepticism throughout the audit. • Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. • Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control. Accordingly, no such opinion is expressed. • Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the consolidated financial statements. • Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company”s ability to continue as a going concern for a reasonable period of time. We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control-related matters that we identified during the audit. Baltimore, Maryland March 20, 2026
DAGGETT RENEWABLE HOLDCO LLC AND SUBSIDIARIES Consolidated Balance Sheets December 31, 2025 and 2024 (In thousands) Assets 2025 2024 Current assets: Cash $ 10,513 $ 18,189 Restricted cash 2,477 11,884 Accounts receivable – trade 4,090 4,693 Inventory 1,926 364 Derivative instruments 4,236 6,568 Prepayments and other current assets 3,281 3,582 Total current assets 26,523 45,280 Property, plant, and equipment, net 903,412 946,482 Other assets: Intangible assets, net 256 307 Right-of-use assets, net 51,001 51,994 Derivative instruments 48,867 53,899 Other non-current assets 491 506 Total other assets 100,615 106,706 Total assets $ 1,030,550 $ 1,098,468 Liabilities and Equity Current liabilities: Current maturities of long-term debt $ 1,615 $ 1,656 Accounts payable – trade 2,875 5,175 Accounts payable – affiliate 631 651 Accrued and other current liabilities 146 184 Lease liabilities (201) (231) Total current liabilities 5,066 7,435 Other liabilities: Long-term debt 365,314 365,925 Asset retirement obligations 18,835 17,743 Long-term lease liabilities 56,982 56,781 Total other liabilities 441,131 440,449 Total liabilities 446,197 447,884 Commitments and contingencies Equity: Members’ equity 331,715 382,375 Noncontrolling interest 252,638 268,209 Total equity 584,353 650,584 Total liabilities and equity $ 1,030,550 $ 1,098,468 See accompanying notes to consolidated financial statements. 3
DAGGETT RENEWABLE HOLDCO LLC AND SUBSIDIARIES Consolidated Statements of Operations (In thousands) Year ended December 31, February 17, through December 31, 2025 2024 2023 Operating revenues: Total operating revenues $ 67,347 $ 64,956 $ 13,205 Operating costs and expenses: Cost of operations 19,965 19,089 4,067 Depreciation, amortization and accretion 46,747 47,188 6,310 Total operating costs and expenses 66,712 66,277 10,377 Operating income (loss) 635 (1,321) 2,828 Other income (expense): Interest income 857 1,400 2,198 Loss on debt extinguishment — — (2,667) Interest expense (24,964) (2,201) (4,532) Total other expense, net (24,107) (801) (5,001) Net loss (23,472) (2,122) (2,173) Less: net income (loss) attributable to noncontrolling interest 764 (6,876) (159,457) Net (loss) income attributable to Daggett Renewable Holdco LLC and subsidiaries $ (24,236) $ 4,754 $ 157,284 See accompanying notes to consolidated financial statements. 4
DAGGETT RENEWABLE HOLDCO LLC AND SUBSIDIARIES Consolidated Statements of Equity (In thousands) Daggett Solar HA Lighthouse Investment LLC LLC Contributed Contributed Retained Noncontrolling Total deficit capital earnings interest equity Balance at February 17, 2023 $ — $ — $ — $ — $ — Net income (loss) — — 157,284 (159,457) (2,173) Acquisition of Daggett Solar Power 3 LLC 14,219 — — — 14,219 Cash contributions 149,895 129,378 — 314,890 594,163 Cash distributions (178,186) — — — (178,186) Non-cash distributions (310) — — — (310) Payment of transaction costs — — — (13,153) (13,153) Balance at December 31, 2023 $ (14,382) $ 129,378 $ 157,284 $ 142,280 $ 414,560 Net income (loss) — — 4,754 (6,876) (2,122) Daggett 2 net assets transferred from affiliate 23,951 106,038 — 147,184 277,173 Contribution (distribution) of purchase price adjustments 5,863 (5,863) — — — Cash distributions (16,512) (8,136) — (13,994) (38,642) Payment of transaction costs — — — (385) (385) Balance at December 31, 2024 $ (1,080) $ 221,417 $ 162,038 $ 268,209 $ 650,584 Net (loss) income — — (24,236) 764 (23,472) Cash distributions (15,145) (11,279) — (16,315) (42,739) Payment of transaction costs — — — (20) (20) Balance at December 31, 2025 $ (16,225) $ 210,138 $ 137,802 $ 252,638 $ 584,353 See accompanying notes to consolidated financial statements. 5
DAGGETT RENEWABLE HOLDCO LLC AND SUBSIDIARIES Consolidated Statements of Cash Flows (In thousands) Year ended December 31, February 17, through December 31, 2025 2024 2023 Cash flows from operating activities: Net loss $ (23,472) $ (2,122) $ (2,173) Adjustments to reconcile net loss to net cash provided (used) by operating activities: Depreciation, amortization and accretion 46,747 47,188 6,310 Amortization of debt issuance costs 1,004 981 216 Contract amortization 45 46 — Loss on debt extinguishment — — 2,667 Reduction in carrying amount of right-of-use assets 993 1,007 589 Changes in derivative instruments 7,364 (15,871) (1,363) Cash provided (used) by changes in other working capital: Accounts receivable – trade 603 2,950 (5,837) Accounts receivable – affiliate — 42 (42) Inventory (1,562) (364) — Prepayments and other current assets 301 (1,016) (2,014) Other non-current assets (30) (110) (142) Accounts payable – trade (2,326) 81 1,438 Accounts payable – affiliate (20) (591) (96) Accrued and other current liabilities (38) (473) (47) Operating lease liabilities 231 248 125 Net cash provided (used) by operating activities 29,840 31,996 (369) Cash flows from investing activities: Capital expenditures (2,508) (20,632) (116,165) Payment for intangible assets — (360) — Acquisition of Daggett Solar Power 3 LLC — — 3,747 Transfer from affiliate — 38,065 — Net cash (used) provided by investing activities (2,508) 17,073 (112,418) Cash flows from financing activities: Proceeds from issuance of long-term debt — — 36,126 Payments for long-term debt (1,656) (1,495) (303,847) Contributions from members — 5,863 279,273 Contributions from noncontrolling interests — — 314,890 Distributions to members (26,424) (30,511) (178,186) Distributions to noncontrolling interests (16,315) (13,994) — Payment of debt issuance and transaction costs (20) (1,175) (13,153) Net cash (used) provided by financing activities (44,415) (41,312) 135,103 Net (decrease) increase in cash and restricted cash (17,083) 7,757 22,316 Cash and restricted cash at beginning of period 30,073 22,316 — Cash and restricted cash at end of period $ 12,990 $ 30,073 $ 22,316 See accompanying notes to consolidated financial statements. 6
DAGGETT RENEWABLE HOLDCO LLC AND SUBSIDIARIES Consolidated Statements of Cash Flows (Continued) (In thousands) Year ended December 31, February 17, through December 31, 2025 2024 2023 Supplemental disclosures: Interest paid, net of amount capitalized $ 16,596 $ 16,114 $ 6,718 Non-cash investing activities: Reduction to fixed assets for revised capitalized asset retirement costs — (77) (14) Increase to fixed assets for capitalized debt issuance costs — — 547 Increase to fixed assets for transfer of prepaid insurance — — 196 See accompanying notes to consolidated financial statements. 7
(1) Nature of Business Daggett Renewable Holdco LLC, or Daggett Renewable Holdco, and subsidiaries, or the Company, a Delaware limited liability company, is a partnership between Daggett Solar Investment LLC, a subsidiary of Clearway Energy Operating LLC, HA Lighthouse LLC, or HASI, a third-party cash equity investor, and Clearway Renew LLC, or Clearway Renew, a direct wholly-owned subsidiary of Clearway Energy Group LLC, or Clearway Energy Group. Clearway Renew’s membership interests in Daggett Renewable Holdco are not participating interests and provide for the potential future allocation of cash in the event of excess returns on the investment by HASI. Clearway Energy Operating LLC is a wholly-owned subsidiary of Clearway Energy LLC, which is owned by Clearway Energy, Inc. and Clearway Energy Group. Clearway Energy Group is a leading developer of renewable, energy storage and power infrastructure in the United States of America, or U.S. As of December 31, 2025, Clearway Energy, Inc., through its ownership of Class A and Class C common stock, had a 58.62% economic interest in Clearway Energy LLC, while Clearway Energy Group, through its ownership of Class B and Class D common stock, had a 54.89% voting interest in Clearway Energy, Inc. and a 41.38% economic interest in Clearway Energy LLC. A description of the Company’s solar and battery energy storage system, or BESS, facilities portfolio is set forth below: Daggett Solar Power 3 Daggett Solar Power 3, LLC, or Daggett Solar Power 3, is directly owned by the Company’s indirect subsidiary, Daggett TE Holdco LLC, or Daggett TE Holdco, a tax equity arrangement between Daggett Class B LLC, or Daggett Class B, and a tax equity investor, JPM Capital Corporation, or JPM Capital. Daggett Solar Power 3 owns and operates a 300-megawatt, or MW, solar photovoltaic, or PV, power generating facility and a BESS with 149 MW of capacity located in San Bernardino, California, collectively referred to as the Daggett Solar Power 3 Facility. On February 17, 2023, through its consolidated subsidiaries (shown in the diagram below), Daggett Renewable Holdco acquired Daggett Solar Power 3. See note 3, Acquisition, for further information about the acquisition. Concurrently with the acquisition on February 17, 2023, in accordance with the Equity Capital Contribution Agreement between the members, JPM Capital made its initial tax equity contribution of $62.4 million, distributed and held in an escrow account by Daggett Class B, and acquired the Class A membership interests in Daggett TE Holdco, whereas Daggett Class B retained the Class B membership interests. On December 1, 2023, JPM Capital made an additional contribution of $252.5 million upon the Daggett Solar Power 3 Facility reaching substantial completion. Tax equity proceeds were used for the repayment of the debt acquired in the acquisition and transaction expenses as described further in note 8, Long-Term Debt. DAGGETT RENEWABLE HOLDCO LLC AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2025, 2024, and 2023 8
Also on February 17, 2023, Daggett Solar Investment LLC acquired the Class A membership interests in Daggett TargetCo LLC, or Daggett TargetCo, for cash consideration of $20.5 million and HASI acquired the Class B membership interests in Daggett TargetCo for cash consideration of $129.4 million from Clearway Renew. Daggett Solar Investment LLC and HASI then contributed their Class A and B membership interests, respectively, into Daggett Renewable Holdco, that consolidates Daggett TargetCo. Daggett TargetCo consolidates, through its wholly-owned subsidiary Daggett Class B LLC, or Daggett Class B, as primary beneficiary, Daggett TE Holdco LLC, or Daggett TE Holdco, a tax equity fund that indirectly owns Daggett Solar Power 3, as further described in note 9, Variable Interest Entities. Daggett Solar Power 2 Effective January 1, 2024, Daggett 2 TargetCo LLC, or Daggett 2 TargetCo, a separate partnership amongst the same members and another consolidated subsidiary of Daggett Solar Investment LLC, consolidates into Daggett Renewable Holdco, pursuant to a Contribution Agreement, dated February 13, 2024. The members contributed 100% of their respective membership interests of Daggett 2 TargetCo to Daggett Renewable Holdco. Daggett 2 Class B LLC, or Daggett 2 Class B, is a wholly-owned subsidiary of Daggett 2 TargetCo. Daggett 2 Class B owns 100% of the Class B membership interests of Daggett 2 TE Holdco LLC, or Daggett 2 TE Holdco. A tax equity investor, BAL Investment & Advisory, LLC, or BofA, owns 100% of the Class A membership interests of Daggett 2 TE Holdco. Daggett 2 TargetCo consolidates, through Daggett 2 Class B, as primary beneficiary, Daggett 2 TE Holdco, a tax equity fund that indirectly owns Daggett Solar Power 2 LLC, or Daggett Solar Power 2, as further described in note 9, Variable Interest Entities. Daggett Solar Power 2 owns and operates a 182-MW, solar PV power generating facility, and a BESS with 131 MW of capacity located in San Bernardino, California, collectively referred to as the Daggett Solar Power 2 Facility. The assets and liabilities transferred to the Company relate to interests under common control by Clearway Energy Group and were recorded at historical cost in accordance with ASC 805-50, Business Combinations - Related Issues. This was concluded to be an asset acquisition and the Company consolidates Daggett 2 TargetCo on a prospective basis in its consolidated financial statements. DAGGETT RENEWABLE HOLDCO LLC AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2025, 2024, and 2023 9
The following is a summary of the assets and liabilities transferred to the Company as of January 1, 2024 (in thousands): Assets: Cash and restricted cash (a) $ 38,065 Property, plant and equipment, net 400,284 Right-of-use assets, net 22,340 Derivative assets 16,489 Other current and non-current assets 2,824 Total assets 480,002 Liabilities: Long-term debt, net 153,906 Lease liabilities 23,075 Other current and non-current liabilities 25,848 Total liabilities 202,829 Less: noncontrolling interests 147,184 Net assets transferred $ 129,989 (a) On December 18, 2024, $13.0 million of the final completion reserve funded by the tax equity investor was distributed to Clearway Energy Group and included in cash distributions on the consolidated statements of equity. DAGGETT RENEWABLE HOLDCO LLC AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2025, 2024, and 2023 10
The diagram below represents a summarized structure of the Company as of December 31, 2025: DAGGETT RENEWABLE HOLDCO LLC AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2025, 2024, and 2023 11
A summary of the major agreements entered into by the Company is set forth below: (a) Power Purchase Agreements and Long-Term Resource Adequacy Agreements Daggett Solar Power 3 and Daggett Solar Power 2 are contracted under the following power purchase agreements, or PPAs, and long-term resource adequacy agreements to deliver the energy output of the facilities as well as BESS capacity, resource adequacy, and renewable energy attributes. The PPAs, as amended, provide for the sale of energy based on a fixed price applied to actual production amounts. The PPAs also provide for BESS payments based on a fixed price applied to the monthly BESS contract capacity multiplied by an efficiency factor and availability adjustment as defined in the agreements. In addition, the Company qualifies for and utilizes the investment tax credit related to its solar PV and BESS assets. Under the terms of the PPAs, Daggett Solar Power 3 and Daggett Solar Power 2 have guaranteed certain performance output that if not achieved could result in the payment of shortfall amounts commencing with the commercial operation date, or COD. The Company incurred $310 thousand in damages related to the delay in COD of Daggett Solar Power 3, which Clearway Renew agreed to pay. Accordingly, the Company recorded a non-cash distribution to Clearway Renew in the consolidated statements of equity for the period from February 17, 2023 through December 31, 2023. See note 2(k) Revenue Recognition, for information on availability damages incurred in 2025 and 2024. DAGGETT RENEWABLE HOLDCO LLC AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2025, 2024, and 2023 12
Effective COD PV capacity BESS capacity Offtaker date date (MW) (MW) Term (a) Daggett Solar Power 3: Marin Clean Energy 9/25/2020 8/25/2023 110 60 15 years Clean Power Alliance of Southern California 10/2/2020 11/17/2023 123 61.5 15 years Ava Community Energy Authority 9/29/2021 9/5/2023 50 12.5 15 years Exelon Generation Company, LLC 6/8/2021 7/14/2023 17 15 10 years Pacific Gas and Electric Company (b) 12/10/2020 9/1/2023 — — 15 years Southern California Edison Company (c) 1/1/2026 N/A — — 3 years 300 149 Daggett Solar Power 2: Clean Power Alliance of Southern California 6/4/2021 12/8/2023 65 52 15 years Exelon Generation Company, LLC 6/8/2021 12/1/2023 52 46 10 years Southern California Public Power Authority 6/24/2022 12/12/2023 65 33 20 years Pacific Gas and Electric Company (d) 12/10/2020 12/1/2023 — — 15 years Southern California Edison Company (e) 1/1/2026 N/A — — 3 years 182 131 (a) Contract term effective through the 10th, 15th or 20th anniversary of COD date, or for 3 years from the Effective date. (b) Represents a long-term resource adequacy agreement to sell 15 MW of resource adequacy at a fixed price. (c) Represents a long-term resource adequacy agreement to sell 17 MW of resource adequacy at various fixed prices per contract year. (d) Represents a long-term resource adequacy agreement to sell 46 MW of resource adequacy at a fixed price. (e) Represents a long-term resource adequacy agreement to sell 52 MW of resource adequacy at various fixed prices per contract year. (b) Balance of Plant Engineering, Procurement and Construction, or EPC, Agreement Daggett Solar Power 3 is party to an amended and restated fixed-price EPC agreement with D.H. Blattner & Sons, Inc., or Blattner, for the engineering, construction, and commissioning of the Daggett Solar Power 3 Facility for $230.9 million, that was subject to price adjustments as defined in the agreement. During the period from February 17, 2023 through December 31, 2023, the Company incurred costs under this agreement of $6.1 million, which were capitalized and reflected in property, plant, and equipment, net. Amounts due to Blattner of $135 thousand was included in accounts payable – trade as of December 31, 2024, which was paid during 2025. Daggett Solar Power 3’s obligations have been fulfilled under this agreement. DAGGETT RENEWABLE HOLDCO LLC AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2025, 2024, and 2023 13
(c) Equipment Supply Contracts and Maintenance Agreements Equipment Supply Contracts Clearway Renew was party to an Equipment Supply Agreement with JA Solar USA Inc., or JA Solar, for which the Company has the ability but not the obligation to purchase solar PV energy generating modules. Daggett Solar Power 3 entered into a First Amended and Restated Purchase Order supplementing the agreement between Clearway Renew and JA Solar by adjusting the price and schedule for delivery of the modules. During the period from February 17, 2023 through December 31, 2023, Daggett Solar Power 3 incurred costs related to modules of $15.4 million, which were capitalized and reflected in property, plant, and equipment, net. Daggett Solar Power 3 and Daggett Solar Power 2 each were party to an Equipment Supply Contract with Wärtsilä North America, Inc., or Wärtsilä North America, for BESS equipment and services totaling $137.2 million and $126.9 million, respectively, that were subject to price adjustments as defined in the contracts. During the year ended December 31, 2024, the Company incurred costs under these agreements of $13.1 million, which were capitalized and reflected in property, plant, and equipment, net on the Company’s consolidated balance sheets. During the period from February 17, 2023 through December 31, 2023, the Company incurred costs under the agreement with respect to Daggett Solar Power 3 of $13.4 million, all of which were capitalized and reflected in property, plant, and equipment, net. Daggett Solar Power 3 and Daggett Solar Power 2’s obligations have both been fulfilled under their respective agreements. Maintenance Agreements Daggett Solar Power 3 and Daggett Solar Power 2 each have also contracted with Wärtsilä North America to provide certain maintenance services for their BESS. The agreements have an initial term of ten years commencing on August 11, 2023 with respect to Daggett Solar Power 3 and October 3, 2023 with respect to Daggett Solar Power 2. Each agreement will automatically renew for additional five year periods unless terminated by either party as provided for in the agreement. The agreements provide for payment of annual fixed fees, warranty fees, and capacity management fees. In addition, Wärtsilä North America has the option to provide parts to the Company or can utilize existing inventory from the Company to be used to perform its maintenance services. As of both December 31, 2025 and 2024, $1.9 million was included in prepayments and other current assets on the Company’s consolidated balance sheets related to Wärtsilä North America. During the year ended December 31, 2025, the Company incurred costs under these agreements of $3.8 million, of which $2.9 million, representing annual fixed and warranty fees, is included in cost of operations in the consolidated statements of operations, and $922 thousand representing capacity management fees was capitalized and reflected in property, plant, and equipment, net on the Company’s consolidated balance sheets. DAGGETT RENEWABLE HOLDCO LLC AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2025, 2024, and 2023 14
During the year ended December 31, 2024, the Company incurred costs under these agreements of $3.2 million for annual fixed and warranty fees, which is included in cost of operations in the consolidated statements of operations. During the period from February 17, 2023 through December 31, 2023, the Company incurred costs under the agreement with respect to Daggett Solar Power 3 of $463 thousand for annual fixed and warranty fees, which is included in cost of operations in the consolidated statements of operations. (d) Limited Liability Company Agreement The Company is governed by an amended and restated limited liability company agreement, or LLCA, dated February 17, 2023, and amended February 13, 2024, but effective January 1, 2024 corresponding with the contribution of Daggett 2 TargetCo to the Company. The LLCA provides for allocations of income, taxable items and available cash to its members, which are 25% to Daggett Solar Investment LLC, the Class A Member, and 75% to HASI, the Class B Member, except that allocations of available cash are first utilized to pay back member loans, if any. In addition, subsequent to November 20, 2035, up to 90% of the Class A Member’s cash may be allocated to the Class B Member under the provisions of a related agreement, which provides a reallocation of cash in order to ensure that the Class B Member achieves its target return on investment. If the Class B Member achieves a return above a specified threshold, certain amounts may be allocated to Clearway Renew, through its ownership of the Class C membership interests. The LLCA was further amended on July 29, 2024, to define Distribution Date as the last business day of each January, April, July and October. In accordance with the provision of the LLCA, the Class A Member is the Manager, as defined, and conducts the activities of the Company on behalf of the members. The Manager has engaged Clearway Asset Services LLC to perform certain of its duties as Manager. All management services provided are at the direction of the Manager, and the Manager retains its obligations with respect to its duties and responsibilities. See note 10, Related Party Transactions, for further detail. In addition, the LLCA establishes both a review committee, which is responsible for material decisions that protect the interests of both the Class A Member and Class B Member, and is comprised of two members appointed by each of the Class A Member and Class B Member, and an operations committee, which is responsible for advising the Company and the review committee with respect to the Company’s operations. (2) Summary of Significant Accounting Policies (a) Basis of Presentation and Principles of Consolidation The Company’s consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the U.S., or U.S. GAAP. The Accounting Standards Codification, or ASC, established by the Financial Accounting Standards Board, or FASB, is the source of authoritative U.S. GAAP to be applied by nongovernmental entities. DAGGETT RENEWABLE HOLDCO LLC AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2025, 2024, and 2023 15
The consolidated financial statements include the Company’s accounts and operations and those of its subsidiaries in which the Company has a controlling financial interest. All significant intercompany transactions and balances have been eliminated in the consolidated financial statements. The usual condition for a controlling financial interest is ownership of the majority of the voting interests of an entity. However, a controlling financial interest may also exist through arrangements that do not involve controlling voting interests. As such, the Company applies the guidance of ASC 810, Consolidations, to determine when an entity that is not controlled through its voting interests should be consolidated. (b) Cash and Restricted Cash The following table provides a reconciliation of cash and restricted cash reported within the consolidated balance sheets that sum to the total of the same such amounts shown in the consolidated statements of cash flows as of December 31, 2025 and 2024 (in thousands): 2025 2024 Cash $ 10,513 $ 18,189 Restricted cash 2,477 11,884 Cash and restricted cash shown in the consolidated statements of cash flows $ 12,990 $ 30,073 Restricted cash in 2025 and 2024 consisted of funds held in construction completion reserves for the facilities. In December 2025, $7.7 million of the construction completion reserves were released and distributed to Clearway Energy Group. (c) Accounts Receivable – Trade Trade accounts receivable are recorded at the invoiced amount and do not bear interest. The majority of the Company’s customers typically receive invoices monthly with payment due within 30 days. There was no allowance for credit losses as of December 31, 2025 and 2024. (d) Inventory Inventory consists of spare parts and is valued at weighted average cost, unless evidence indicates that the weighted average cost will not be recovered with a normal profit in the ordinary course of business. Spare parts inventory is removed when used for repairs, maintenance, or capital projects. DAGGETT RENEWABLE HOLDCO LLC AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2025, 2024, and 2023 16
(e) Property, Plant, and Equipment Property, plant, and equipment are stated at cost; however, impairment adjustments are recorded whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. Significant additions or improvements extending asset lives are capitalized as incurred, while repairs and maintenance that do not improve or extend the life of the respective asset are charged to expense as incurred. Depreciation is computed using the straight-line method over the estimated useful lives of the assets. Certain assets and their related accumulated depreciation amounts are adjusted for asset retirements and disposals with the resulting gain or loss included in cost of operations in the consolidated statements of operations. See note 5, Property, Plant, and Equipment, for additional information. Interest incurred on funds borrowed to finance capital projects is capitalized until the project under construction is ready for its intended use. The amount of interest capitalized for each of the years ended December 31, 2025 and 2024 was zero and $17.8 million for the period from February 17, 2023 through December 31, 2023, which includes amortized debt issuance costs of $547 thousand. (f) Asset Impairments Long-lived assets that are held and used are reviewed for impairment whenever events or changes in circumstances indicate their carrying amounts may not be recoverable. Such reviews are performed in accordance with ASC 360, Property, Plant, and Equipment. An impairment loss is indicated if the total future estimated undiscounted cash flows expected from an asset are less than its carrying amount. An impairment charge is measured as the excess of an asset’s carrying amount over its fair value with the difference recorded in operating costs and expenses in the consolidated statements of operations. Fair values are determined by a variety of valuation methods, including third-party appraisals, sales prices of similar assets, and present value techniques. There were no indicators of impairment loss as of December 31, 2025, 2024 and 2023. (g) Debt Issuance Costs Debt issuance costs consist of legal fees and closing costs incurred by the Company in obtaining its financing. These costs are capitalized and amortized as interest expense using the effective interest method over the term of the financing obligation and are presented on the consolidated balance sheets as a direct deduction from the carrying amount of the related debt. Prior to reaching COD, these amortized amounts were included in the calculation of capitalized interest. Amortization expense, included in interest expense in the consolidated statements of operations, was $1.0 million, $981 thousand and $216 thousand for the years ended December 31, 2025 and 2024 and the period from February 17, 2023 through December 31, 2023, respectively. In addition, Daggett Solar Power 3 recorded a $2.7 million loss on extinguishment of debt associated with writing off a portion of the debt issuance costs for the period from February 17, 2023 through December 31, 2023. DAGGETT RENEWABLE HOLDCO LLC AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2025, 2024, and 2023 17
(h) Intangible Assets Intangible assets represent the fair value of software licenses acquired. The Company recognizes specifically identifiable intangible assets when specific rights and contracts are acquired. The assets are amortized on a straight-line basis over the estimated useful life of the software or seven years. See note 7, Intangible Assets, for additional information. (i) Leases The Company accounts for leases under ASC 842, Leases, or ASC 842. ASC 842 requires the establishment of a lease liability and related right-of-use asset for all leases with a term longer than 12 months. The Company evaluates each arrangement at inception to determine if it contains a lease. The Company has elected to apply the practical expedient to not separate lease and non-lease components of the leases. The Company records its operating lease liabilities at the present value of the lease payments over the lease term at lease commencement date. Lease payments include fixed payment amounts. The Company determines the relevant lease term by evaluating whether renewal and termination options are reasonably certain to be exercised. The Company uses its incremental borrowing rate to calculate the present value of the lease payments, based on information available at the lease commencement date. All of the Company’s leases are operating leases. See note 2(k), Revenue Recognition, and note 11, Leases, for information on the Company’s leases. (j) Income Taxes The Company is classified as a partnership for federal and state income tax purposes. Therefore, federal and state income taxes are assessed at the partner level. Accordingly, no provision has been made for federal or state income taxes in the accompanying consolidated financial statements. The Company has determined that, based on a more-likely-than-not evaluation of the tax positions taken, there are no material uncertain tax positions to be recognized as of December 31, 2025, 2024 and 2023 by the Company. DAGGETT RENEWABLE HOLDCO LLC AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2025, 2024, and 2023 18
(k) Revenue Recognition Power Purchase Agreements The Company sells power and BESS capacity to offtakers under PPAs as described in note 1(a), Power Purchase Agreements and Long-Term Resource Adequacy Agreements. The PPAs with respect to power sales are derivative financial instruments that qualify for the normal purchase normal sale exception and as such, are accounted for under the revenue recognition guidance in ASC 606, Revenue from Contracts with Customers, or ASC 606, and revenue is recognized when the underlying power is delivered. Revenue from the sale of bundled RECs under the PPAs is recognized when the related energy is generated and simultaneously delivered to the market, even in cases where there is a certification lag as it has been deemed to be perfunctory as this is the point in time in which the performance obligation is satisfied and control of the REC is transferred to the customer. In such cases, it is unnecessary to allocate transaction price to multiple performance obligations. During 2025 and 2024, the delivery of electricity was curtailed in accordance with the terms of the PPAs. The Company received compensation for the related lost production and recognized $510 thousand and $140 thousand of curtailment revenue for the years ended December 31, 2025 and 2024, respectively. This income is included in the energy revenue in the table below and in operating revenues in the consolidated statements of operations. There was no curtailment revenue recognized for the period from February 17, 2023 through December 31, 2023. Lease Revenue The Company accounts for the BESS component recognized under the PPAs as operating leases in accordance with ASC 842. The BESS component includes variable payments not based on an index or rate and sales-type lease treatment would result in a loss at lease commencement. ASC 842 requires the minimum lease payments received to be amortized over the term of the lease and contingent rentals are recorded when the achievement of the contingency becomes probable. Judgment is required by management in determining the economic life of each BESS component, in evaluating whether certain lease provisions constitute minimum payments or represent contingent rent and other factors in determining whether a contract contains a lease and whether the lease is an operating lease or finance lease. The BESS component of the PPAs has fixed capacity payments treated as minimum lease payments and variable amounts recorded as contingent rent on an actual basis when electricity is delivered. The Company recognizes the fixed capacity payments over the term of the PPAs. See note 11, Leases, for information on minimum future lease payments. The contingent lease revenue recognized for each of the years ended December 31, 2025 and 2024 was zero and $72 thousand for the period from February 17, 2023 through December 31, 2023. Under the terms of its PPAs with offtakers, the Company incurred $0.6 million and $2.0 million in BESS availability penalties and other charges, which was recorded as a reduction to operating revenues in the consolidated statements of operations for the years ended December 31, 2025 and 2024, respectively. No costs were incurred for the period from February 17, 2023 through December 31, 2023. DAGGETT RENEWABLE HOLDCO LLC AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2025, 2024, and 2023 19
Unbundled Renewable Energy Credits, or RECs, Revenue The Company’s PPAs with Exelon Generation Company, LLC provide for the sale of RECs separately. RECs are sold at a fixed price per MWh as defined in the agreements. The REC agreements are derivative financial instruments that qualify for the normal purchase normal sale exception and as such, the REC agreements are accounted for under the revenue recognition guidance in ASC 606. REC revenue is recognized when the related energy is generated and simultaneously delivered to the market, even in cases where there is a certification lag as it has been deemed to be perfunctory, as this is the point in time in which the performance obligation is satisfied and control of the REC is transferred to the customer. Capacity Revenue The Company’s contracts with Pacific Gas and Electric Company provide for the sale of resource adequacy at a fixed price as defined in the agreements. On November 13, 2025, the Company contracted with Southern California Edison Company to sell resource adequacy of 17 MW with respect to Daggett Solar Power 3 and 52 MW with respect to Daggett Solar Power 2 at various fixed prices per contract year, beginning January 1, 2026 through December 31, 2028. The Company also contracted with Southern California Edison Company to sell resource adequacy of 17 MW with respect to Daggett Solar Power 3 and 52 MW with respect to Daggett Solar Power 2 at various prices depending on the calendar month from January 1, 2025 through December 31, 2025. In addition, on May 22, 2024, the Company contracted with NRG Business Marketing LLC to sell resource adequacy of 3.35 MW with respect to Daggett Solar Power 3 and 10.2 MW with respect to Daggett Solar Power 2 at a fixed price from August 1, 2024 through December 31, 2024. The Company accounts for revenue recognized under its resource adequacy agreements in accordance with ASC 606. Disaggregated Revenues The following table represents the Company’s disaggregation of revenue from contracts with customers for the years ended December 31, 2025 and 2024 and the period from February 17, 2023 through December 31, 2023 (in thousands): 2025 2024 2023 Energy revenue $ 40,252 $ 40,604 $ 10,290 Capacity revenue 24,781 21,451 2,699 REC revenue 2,314 2,199 216 Other revenues — 702 — Total operating revenues 67,347 64,956 13,205 Less: Lease revenue (20,141) (17,695) (2,577) Total revenue from contracts with customers $ 47,206 $ 47,261 $ 10,628 DAGGETT RENEWABLE HOLDCO LLC AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2025, 2024, and 2023 20
Contract Balances The following table reflects the contract assets in the Company’s consolidated balance sheets as of December 31, 2025 and 2024 (in thousands): 2025 2024 Accounts receivable – contracts with customers $ 2,165 $ 1,999 Accounts receivable – leases 1,574 2,366 Accounts receivable – other 351 328 Total accounts receivable – trade $ 4,090 $ 4,693 (l) Derivative Financial Instruments The Company accounts for derivative financial instruments in accordance with ASC 815, Derivatives and Hedging, which requires the Company to recognize all derivative instruments on the balance sheet as either assets or liabilities and to measure them at fair value each reporting period unless they qualify for a normal purchase normal sale exception. The Company uses interest rate swaps to manage its interest rate exposure on long-term debt, which are not designated as cash flow hedges. Changes in the fair value of non-hedge derivatives are immediately recognized in earnings. Cash flows from derivatives not designated as cash flow hedges are classified as operating activities in the consolidated statements of cash flows. See note 4, Accounting for Derivative Instruments and Hedging Activities, for more information. (m) Risks and Uncertainties Financial instruments, which potentially subject the Company to concentrations of credit risk, consist primarily of accounts receivable – trade and derivative financial instruments. Accounts receivable are concentrated with utility companies and electricity providers. The concentration of sales to a small group of customers may impact the Company’s overall exposure to credit risk, either positively or negatively, in that the customers may be similarly affected by changes in economic, industry, or other conditions. However, the Company believes that the credit risk posed by such concentrations is offset by the diversification and creditworthiness of its customer base. The Company is also exposed to credit losses in the event of noncompliance by counterparties to its derivative financial instruments. Risks associated with the Company’s operations include the performance of the facilities below expected levels of efficiency, output and storage capacity, shutdowns due to the breakdown or failure of equipment, which could be further impacted by the inability to obtain replacement parts, or catastrophic events such as extreme weather, fires, earthquakes, floods, explosions, pandemics, supply chain disruptions, hostile cyber intrusions, or other similar occurrences affecting a power generation and BESS facility or its energy purchasers. DAGGETT RENEWABLE HOLDCO LLC AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2025, 2024, and 2023 21
(n) Fair Value Measurements The Company accounts for the fair value of financial instruments in accordance with ASC 820, Fair Value Measurement, or ASC 820. The Company does not hold or issue financial instruments for trading purposes. ASC 820 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three levels as follows: • Level 1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access as of the measurement date. • Level 2 – Inputs other than quoted prices included within Level 1 that are directly observable for the asset or liability or indirectly observable through corroboration with observable market data. • Level 3 – Unobservable inputs for the asset or liability only used when there is little, if any, market activity for the asset or liability at the measurement date. In accordance with ASC 820, the Company determines the level in the fair value hierarchy within which each fair value measurement in its entirety falls, based on the lowest level input that is significant to the fair value measurement in its entirety. For cash, restricted cash, accounts receivable – trade, accounts payable – trade, accounts payable – affiliate, and accrued and other current liabilities, the carrying amounts approximate fair value because of the short-term maturity of those instruments and are classified as Level 1 within the fair value hierarchy. The carrying amount and estimated fair value of the Company’s recorded financial instrument not carried at fair market value or that does not approximate fair value as of December 31, 2025 and 2024 is as follows (in thousands): 2025 2024 Carrying Amount Fair Value Carrying Amount Fair Value Long-term debt (a) $ 369,998 $ 376,000 $ 371,654 $ 379,445 (a) Excludes net debt issuance costs, as shown in note 8, Long-Term Debt. The fair value of long-term debt is based on expected future cash flows discounted at current interest rates for similar instruments with equivalent credit quality and is classified as Level 3 within the fair value hierarchy. The fair value is higher than the carrying amount due to lower current interest rates used for discounting future cash flows compared to the stated aggregate interest rates on the outstanding debt. DAGGETT RENEWABLE HOLDCO LLC AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2025, 2024, and 2023 22
Derivative instruments, consisting of interest rate swaps, are recorded at fair value on the Company’s consolidated balance sheets on a recurring basis and are classified as Level 2 within the fair value hierarchy as the fair value is determined using an income approach, which uses readily observable inputs, such as forward interest rates and contractual terms to estimate fair value. The fair value of each contract is discounted using a risk-free interest rate. In addition, the Company applies a credit reserve to reflect credit risk, which for interest rate swaps is calculated using the bilateral method based on published default probabilities. The credit reserve is added to the discounted fair value to reflect the exit price that a market participant would be willing to receive to assume the Company’s liabilities or that a market participant would be willing to pay for the Company’s assets. As of December 31, 2025, the non-performance reserve was a $406 thousand loss recorded to interest expense in the consolidated statements of operations. For further discussion of interest rate swaps, see note 4, Accounting for Derivative Instruments and Hedging Activities. (o) Commitments and Contingencies In the normal course of business, the Company is subject to various claims and litigation. Management of the Company expects that these various litigation items will not have a material adverse effect on the results of operations, cash flows, or financial position of the Company. (p) Asset Retirement Obligations The Company accounts for its asset retirement obligations, or AROs, in accordance with ASC 410-20, Asset Retirement Obligations, or ASC 410-20. Retirement obligations associated with long-lived assets included within the scope of ASC 410-20 are those for which a legal obligation exists under enacted laws, statutes, and written or oral contracts, including obligations arising under the doctrine of promissory estoppel, and for which the timing and/or method of settlement may be conditional on a future event. ASC 410-20 requires an entity to recognize the fair value of a liability for an ARO in the period in which it is incurred and a reasonable estimate of fair value can be made. Upon initial recognition of a liability for an ARO, other than when an ARO is assumed in an acquisition of the related long-lived asset, the Company capitalizes the asset retirement cost by increasing the carrying amount of the related long-lived asset by the same amount. Over time, the liability is accreted to its future value, while the capitalized cost is depreciated over the useful life of the related asset. See note 6, Asset Retirement Obligations, for further information. DAGGETT RENEWABLE HOLDCO LLC AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2025, 2024, and 2023 23
(q) Tax Equity Arrangements Certain portions of the Company’s noncontrolling interests in subsidiaries represent third-party interests in the net assets under certain tax equity arrangements, which are consolidated by the Company. The Company has determined that the provisions in the contractual agreements of these structures represent substantive profit sharing arrangements. Further, the Company has determined that the appropriate methodology for calculating the noncontrolling interest that reflects the substantive profit sharing arrangements is a balance sheet approach utilizing the hypothetical liquidation at book value, or HLBV, method. Under the HLBV method, the amounts reported as noncontrolling interests represent the amounts the Class A Member would hypothetically receive at each balance sheet date under the liquidation provisions of the contractual agreements, assuming the net assets of the funding structures were liquidated at their recorded amounts determined in accordance with U.S. GAAP. The Class A Member’s interests in the results of operations of the funding structure are determined as the difference in noncontrolling interests at the start and end of each reporting period, after taking into account any capital transactions between the structure and its investors. The calculations utilized to apply the HLBV method include estimated calculations of taxable income or losses for each reporting period. (r) Comprehensive Loss The Company’s total comprehensive loss is equal to its net loss for the years ended December 31, 2025 and 2024 and the period from February 17, 2023 through December 31, 2023. (s) Use of Estimates The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results may differ from those estimates. DAGGETT RENEWABLE HOLDCO LLC AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2025, 2024, and 2023 24
(3) Acquisition On February 17, 2023, the Company, through its subsidiary, Daggett TE Holdco, acquired Daggett 3 Project Sub LLC, the holding company for Daggett Solar Power 3, from Daggett Project Holdco LLC, pursuant to a Membership Interest Purchase Agreement, dated November 24, 2021 and amended April 6, 2022, in connection with the acquisition of the Class A membership interests of Daggett TargetCo by Daggett Solar Investment LLC and the Class B membership interests of Daggett TargetCo by HASI from Clearway Renew, as described in note 1, Nature of Business. Daggett TE Holdco’s purchase price was paid to Clearway Renew with amounts contributed by Daggett Solar Investment LLC and HASI. In September 2024, the Company distributed $5.9 million to HASI for purchase price adjustments related to the acquisition of Daggett Solar Power 3 and Daggett Solar Power 2, funded through contributions by Clearway Renew. On February 17, 2023, $62.4 million was placed into a restricted cash account designated for payment of the tax equity bridge loan as described in note 1, Nature of Business, as well as $75.6 million of net proceeds from the acquisition of Daggett TargetCo, which were contributed back to the Company from Clearway Energy Group and were utilized to repay the cash equity bridge loan, along with related fees, as further described in note 8, Long-Term Debt. The acquisition was determined to be an asset acquisition, and the Company consolidates Daggett Solar Power 3 on a prospective basis in its consolidated financial statements. The assets and liabilities transferred to the Company relate to interests under common control by Clearway Energy Group and were recorded at historical cost in accordance with ASC 805-50, Business Combinations - Related Issues. The historical cost of the Company’s net assets acquired of $14.2 million was recorded as an adjustment to contributed capital on the Company’s consolidated statements of equity. DAGGETT RENEWABLE HOLDCO LLC AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2025, 2024, and 2023 25
The following is a summary of assets and liabilities transferred in connection with the acquisition as of February 17, 2023 (in thousands): Assets: Current assets $ 3,776 Property, plant, and equipment, net 533,855 Right-of-use assets, net 31,250 Derivative instruments 26,744 Total assets acquired 595,625 Liabilities: Long-term debt (a) 480,311 Lease liabilities 33,102 Other current and non-current liabilities (b) 67,993 Total liabilities assumed 581,406 Net assets acquired $ 14,219 (a) Includes a $181.0 million construction loan, $75.4 million cash equity bridge loan and a $228.5 million tax equity bridge loan, offset by $4.5 million in unamortized debt issuance costs. See note 8, Long-Term Debt, for further discussion of the long-term debt assumed in the acquisition. (b) Includes $31.9 million of construction costs that were subsequently funded by a subsidiary of Clearway Renew. Subsequent to the acquisition date, a subsidiary of Clearway Renew funded an additional $21.9 million in construction costs. The combined $53.8 million funded by a subsidiary of Clearway Renew was repaid to a subsidiary of Clearway Renew in October 2023. DAGGETT RENEWABLE HOLDCO LLC AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2025, 2024, and 2023 26
(4) Accounting for Derivative Instruments and Hedging Activities (a) Interest Rate Swaps In accordance with the financing agreements, as described in note 8, Long-Term Debt, the Company has a series of outstanding amortizing interest rate swap agreements for 85% of the outstanding term loan amounts, intended to hedge the risks associated with floating interest rates. Daggett Class B and Daggett 2 Class B pay its counterparties the equivalent of a fixed interest payment on a predetermined notional amount, and quarterly, the subsidiary receives the equivalent of a floating interest payment based on Daily Simple Secured Overnight Financing Rate, or Daily Simple SOFR, calculated on the same notional amount. The notional amount of the interest rate swaps decrease in proportion to the principal balance of the loans. Daggett Class B interest rate swaps have a fixed rate of 1.8670% to 1.9030%, effective September 30, 2024, and mature on September 30, 2043, subject to mandatory early termination dates of September 29-30, 2028. Prior to September 30, 2024, the interest rate swap agreements entitled Daggett Class B to receive a floating rate based on Term Secured Overnight Financing Rate, or Term SOFR, and pay a fixed rate of 1.9080%. Daggett 2 Class B interest rate swaps have a fixed rate of 2.1701% to 2.2121%, effective March 29, 2024, and mature on March 31, 2043, subject to mandatory early termination dates of December 29-31, 2028. Prior to March 29, 2024, the interest rate swap agreements entitled Daggett 2 Class B to receive a floating rate based on Term SOFR and pay a fixed rate of 2.2171%. (b) Volumetric Underlying Derivative Transactions The following table summarizes the net notional volume of the Company’s open interest rate swaps as of December 31, 2025 and 2024: Total Volume (In thousands) 2025 2024 Commodity Units Interest Dollars $ 314,906 $ 320,994 DAGGETT RENEWABLE HOLDCO LLC AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2025, 2024, and 2023 27
(c) Fair Value of Derivative Instruments The following table summarizes the Company’s derivative assets on the consolidated balance sheets as of December 31, 2025 and 2024 (in thousands): 2025 2024 Derivatives not designated as cash flow hedges: Interest rate contracts current $ 4,236 $ 6,568 Interest rate contracts long-term 48,867 53,899 Total derivative assets $ 53,103 $ 60,467 (d) Impact of Derivative Instruments on the Consolidated Statements of Operations Mark-to-market gains and losses related to the Company’s derivatives are recorded to interest expense. For the years ended December 31, 2025 and 2024 and the period from February 17, 2023 through December 31, 2023, the impact to the consolidated statements of operations was a loss of $7.4 million and gains of $15.9 million and $1.4 million, respectively. (5) Property, Plant, and Equipment The Company’s major classes of property, plant, and equipment as of December 31, 2025 and 2024 were as follows (in thousands): 2025 2024 Depreciable lives Plant equipment $ 933,004 $ 931,516 5 - 30 years Buildings 3,298 3,293 15 - 27 years Land improvements 41,719 41,636 20 - 25 years Transmission assets 20,941 20,906 27 years Construction in progress (a) 2,666 1,743 — Total property, plant, and equipment 1,001,628 999,094 Less accumulated depreciation (98,216) (52,612) Net property, plant, and equipment $ 903,412 $ 946,482 (a) As of both December 31, 2025 and 2024, construction in progress included $1.1 million of accrued non-cash capital expenditures. DAGGETT RENEWABLE HOLDCO LLC AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2025, 2024, and 2023 28
(6) Asset Retirement Obligations The Company’s AROs are the estimated cost to remove the above ground solar and BESS equipment and restore the site to conditions similar to the surrounding parcels. The following table represents the balance of the AROs, along with the related activity for the years ended December 31, 2025 and 2024 (in thousands): Balance as of December 31, 2023 $ 4,267 Liabilities acquired from Daggett Solar Power 2 12,527 Revisions in estimated cash flows (77) Accretion expense 1,026 Balance as of December 31, 2024 17,743 Accretion expense 1,092 Balance as of December 31, 2025 $ 18,835 (7) Intangible Assets As of December 31, 2025 and 2024, the intangible assets subject to amortization consisted of the following (in thousands): 2025 2024 Software licenses $ 360 $ 360 Less accumulated amortization (104) (53) Net intangible assets $ 256 $ 307 Aggregate amortization expense was $51 thousand and $53 thousand for the years ended December 31, 2025 and 2024, respectively, which was recorded to depreciation, amortization and accretion in the consolidated statements of operations. There was no amortization expense recorded for the period from February 17, 2023 through December 31, 2023. The Company estimates the future amortization expense for its intangibles for the next five years as follows (in thousands): 2026 $ 51 2027 51 2028 51 2029 51 2030 43 DAGGETT RENEWABLE HOLDCO LLC AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2025, 2024, and 2023 29
(8) Long-Term Debt The Company’s long-term debt consisted of the following as of December 31, 2025 and 2024 (in thousands, except rates): Maturity Date(s) 2025 2024 Interest rate % (a) Letters of Credit Outstanding at December 31, 2025 Non-recourse debt: Daggett Class B LLC December 2028 $ 216,255 $ 216,692 S + 1.762 $ 43,633 Daggett 2 Class B LLC December 2028 153,743 154,962 S + 1.762 31,875 Total long-term debt (including current maturities) $ 369,998 $ 371,654 Less current maturities (1,615) (1,656) Less debt issuance costs, net (3,069) (4,073) Long-term debt $ 365,314 $ 365,925 (a) As of December 31, 2025, S + equals Daily Simple SOFR plus 1.762%. The indebtedness referenced in the aforementioned table is secured by the Company’s subsidiaries interests in the facilities. In addition, each of these financing arrangements listed above contain certain covenants, including financial covenants that the Company is required to be in compliance with during the term of the respective arrangement. As of December 31, 2025, the Company was in compliance with all of the various covenants. Daggett Class B LLC Daggett Class B and Daggett Solar Power 3, as co-borrowers, executed a borrowing arrangement with a consortium of financial institutions, or the Daggett 3 Financing Agreement, as amended, for the construction financing of assets. On February 17, 2023, as part of the acquisition of Daggett Solar Power 3, as further described in note 3, Acquisition, the Company assumed the Financing Agreement which included a $181.0 million construction loan, a $228.5 million tax equity bridge loan, and a $75.4 million cash equity bridge loan, offset by $4.5 million in unamortized debt issuance costs. The cash equity bridge loan was repaid at acquisition date, along with $8.1 million in associated fees, utilizing the proceeds contributed to the Company from the acquisition of Daggett Solar Power 3’s indirect parent, Daggett TargetCo, by Daggett Solar Investment LLC and the cash equity investor. On December 1, 2023, when the Daggett Solar Power 3 Facility reached substantial completion, the tax equity investor contributed an additional $252.5 million, which was utilized, along with the $68.5 million in escrow, to repay the $228.5 million tax equity bridge loan, to fund $40.4 million in completion reserves, and to pay $7.5 million in associated fees, with the remaining $44.6 million distributed to Clearway Energy Group. Subsequent to the acquisition on February 17, 2023, the Company borrowed an additional $36.1 million in construction loans and the total outstanding construction loans were converted to a term loan in the amount of $217.1 million on December 1, 2023. DAGGETT RENEWABLE HOLDCO LLC AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2025, 2024, and 2023 30
Daggett 2 Class B LLC Daggett 2 Class B and Daggett Solar Power 2, as co-borrowers, executed a borrowing arrangement with a consortium of financial institutions, or the Daggett 2 Financing Agreement, as amended, for the construction financing of assets. Effective January 1, 2024, as part of the transfer of the ownership interest in Daggett 2 TargetCo to the Company, as further described in note 1, Daggett Solar Power 2, the Company assumed the Daggett 2 Financing Agreement which included a $156.1 million term loan, offset by $2.2 million in unamortized debt issuance costs. Annual Maturities Annual payments based on the maturities of the Company’s debt as of December 31, 2025 are summarized as follows (in thousands): Year ending December 31: 2026 $ 1,615 2027 1,472 2028 366,911 $ 369,998 Interest Rate Swaps The Company’s subsidiaries entered into interest rate swap agreements to hedge the majority of the variable interest rate exposure associated with floating rate debt. For further details regarding the interest rate swap agreements, see Note 4, Accounting for Derivative Instruments and Hedging Activities. (9) Variable Interest Entities, or VIEs The Company has a controlling financial interest in certain entities which have been identified as VIEs under ASC 810, Consolidations. These arrangements are related to tax equity arrangements entered into with third parties in order to monetize certain tax credits associated with the solar and BESS facilities. Under the Company’s arrangements that have been identified as VIEs, the third-party investors are allocated earnings, tax attributes, and distributable cash in accordance with the respective limited liability company agreements. Many of these arrangements also provide a mechanism to facilitate achievement of the investor’s specified return by providing incremental cash distributions to the investor at a specified date if the specified return has not yet been achieved. The Company indirectly holds the Class B membership interests in tax equity funds, which include Daggett TE Holdco and Daggett 2 TE Holdco. DAGGETT RENEWABLE HOLDCO LLC AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2025, 2024, and 2023 31
Daggett TE Holdco Daggett TargetCo LLC, or Daggett TargetCo, is a wholly owned subsidiary of the Company. Daggett TargetCo consolidates as primary beneficiary and through its ownership of the Class B membership interests, Daggett TE Holdco, a tax equity fund which is a VIE, that indirectly owns Daggett Solar Power 3. The Class A membership interests in Daggett TE Holdco are held by a tax equity investor, JPM Capital, and are reflected as noncontrolling interest on the Company’s consolidated balance sheets. Daggett 2 TE Holdco As described in note 1, Daggett Solar Power 2, on January 1, 2024, the Company was transferred the ownership interest in Daggett 2 TargetCo. Daggett 2 TargetCo consolidates as primary beneficiary and through its ownership of the Class B membership interests, Daggett 2 TE Holdco, a tax equity fund which is a VIE, that indirectly owns Daggett Solar Power 2. The Class A membership interests in Daggett 2 TE Holdco are held by a tax equity investor, BofA, and are reflected as noncontrolling interest on the Company’s consolidated balance sheets. Summarized financial information for the Company’s consolidated VIEs consisted of the following as of December 31, 2025 (in thousands): Daggett TE Holdco Daggett 2 TE Holdco Other current and non-current assets $ 40,062 $ 30,302 Property, plant, and equipment, net 536,046 367,366 Total assets $ 576,108 $ 397,668 Current liabilities $ 2,096 $ 1,491 Non-current liabilities 39,026 36,791 Total liabilities $ 41,122 $ 38,282 Summarized financial information for the Company’s consolidated VIEs consisted of the following as of December 31, 2024 (in thousands): Daggett TE Holdco Daggett 2 TE Holdco Other current and non-current assets $ 47,263 $ 37,496 Property, plant, and equipment, net 561,525 384,957 Total assets $ 608,788 $ 422,453 Current liabilities $ 3,314 $ 2,578 Non-current liabilities 38,360 36,163 Total liabilities $ 41,674 $ 38,741 DAGGETT RENEWABLE HOLDCO LLC AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2025, 2024, and 2023 32
(10) Related Party Transactions The Company has the following related party transactions and relationships in addition to the lease agreements described in note 11, Leases. Amounts due to Clearway Energy Group subsidiaries are recorded as accounts payable – affiliate and amounts due to the Company from Clearway Energy Group subsidiaries are recorded as accounts receivable – affiliate on the Company’s consolidated balance sheets. These account balances are netted by affiliate party. Daggett Renewable Holdco and Daggett 2 TargetCo each have a Management Services Agreement for asset management and administration services with Clearway Asset Services LLC, a subsidiary of Clearway Energy Group. The agreements have an initial term of ten years commencing on December 1, 2023 with respect to Daggett Renewable Holdco and December 22, 2023 with respect to Daggett 2 TargetCo with provisions for extension until terminated. The agreements provide for the payment of fixed fees that escalate annually, as defined in the agreements, and for the reimbursement of reasonable expenses incurred in connection with its services. For the years ended December 31, 2025 and 2024, the Company incurred costs of $91 thousand and $94 thousand, respectively, under these agreements. These costs are included in cost of operations in the consolidated statements of operations. No costs were incurred under the agreement with respect to Daggett Renewable Holdco for the period from February 17, 2023 through December 31, 2023. Daggett Solar Power 3 had a Construction Management Agreement with Renewables Construction LLC, or Renewables Construction, a subsidiary of Clearway Renew, effective October 28, 2021 through the three months following the commercial operations date. Under the terms of the agreement, Renewables Construction provided certain construction management and administrative services for the Daggett Solar Power 3 Facility. As full compensation for the services provided, Renewables Construction was paid a service fee of $40.0 million. The service fee was payable on or before the commercial operation capital contribution date. As of December 31, 2023, $40.0 million of costs have been incurred under this agreement, $4.0 million of which were previously capitalized and are reflected in property, plant, and equipment, net and $36.0 million of costs represented a development margin and was recorded as a distribution to Clearway Renew included in contributed capital in the consolidated statements of equity. Daggett Solar Power 3’s obligations have been fulfilled under this agreement. DAGGETT RENEWABLE HOLDCO LLC AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2025, 2024, and 2023 33
Daggett Solar Power 3 and Daggett Solar Power 2 each have an Operation and Maintenance Agreement, or O&M Agreement, with Clearway Renewable Operation & Maintenance LLC, or RENOM, a subsidiary of Clearway Energy Group, to provide operation and maintenance services for the balance of the plant not covered by the maintenance agreement with Wärtsilä North America. The O&M Agreements have an initial term of ten years commencing on May 28, 2021 with respect to Daggett Solar Power 3 and July 15, 2022 with respect to Daggett Solar Power 2. Each agreement will automatically renew for additional five year periods unless terminated by either party as provided for in the O&M Agreements. The O&M Agreements allow for reimbursement of mobilization expenses, start-up expenses, and direct operating and capital improvement expenses, including a five percent markup. Additionally, there is an annual profit fee subject to performance factors with an annual escalation of 2.25%. For the years ended December 31, 2025 and 2024, the Company incurred costs of $3.0 million and $2.1 million, respectively, under these agreements. These costs are included in cost of operations in the consolidated statements of operations. During 2025, RENOM agreed to forgive Daggett Solar Power 3’s and Daggett Solar Power 2’s obligations to make performance bonus payments that would otherwise be due under the O&M Agreements totaling $185 thousand as a result of Daggett Solar Power 3 and Daggett Solar Power 2 not achieving their performance targets. On July 5, 2024, RENOM entered into reimbursement agreements with Daggett Solar Power 3 and Daggett Solar Power 2, whereby RENOM agreed to reimburse a total of $1.6 million, but under no obligation to do so, for costs incurred by the facilities under certain offtaker agreements. This reimbursement is included as a reduction to the costs described above, and is included in cost of operations in the consolidated statements of operations. For the period from February 17, 2023 through December 31, 2023, the Company incurred costs of $858 thousand under the agreement with respect to Daggett Solar Power 3, of which $94 thousand of these costs are included in cost of operations in the consolidated statements of operations and $764 thousand was capitalized and reflected in property, plant, and equipment, net. On November 7, 2025, RENOM agreed to reimburse Daggett Solar Power 3 and Daggett Solar Power 2 a total of $1.3 million, but under no obligation to do so, for auxiliary equipment expected to be installed during the first half of 2026 to address unexpected increases in operating costs associated with power usage by the facilities. No costs or reimbursements have been incurred during 2025. Clearway Asset Services LLC provides administration services to Daggett Solar Power 3 and Daggett Solar Power 2 pursuant to Project Administration Agreements, or PAAs. The PAAs have an initial term of ten years commencing on October 28, 2021 with respect to Daggett Solar Power 3 and July 15, 2022 with respect to Daggett Solar Power 2. The PAAs will automatically renew in one-year increments unless either party delivers written notice of termination to the other party no later than 180 days prior to the expiration of the initial term or applicable renewal term. The PAAs provide for the payment of fixed fees per annum with an annual escalation of 2.25%, and reimburses Clearway Asset Services LLC for reasonable expenses incurred in connection with its services. For the years ended December 31, 2025 and 2024, the Company incurred costs of $511 thousand and $499 thousand, respectively, under these agreements. For the period from February 17, 2023 through December 31, 2023, the Company incurred costs of $325 thousand under the agreement with respect to Daggett Solar Power 3. These costs are included in cost of operations in the consolidated statements of operations. DAGGETT RENEWABLE HOLDCO LLC AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2025, 2024, and 2023 34
(11) Leases Lessee - Related Party The Company has a solar facility ground lease agreement with Daggett Land Holdings LLC, a subsidiary of Clearway Renew, which grants Daggett Solar Power 3 exclusive easement rights to use the land on which the solar power facilities are located. The Company is obligated to pay fixed fee rent payments as defined in the agreement through December 18, 2062. The Company has a lease liability of $33.8 million and $33.5 million as of December 31, 2025 and 2024, respectively, and a corresponding $29.4 million and $30.0 million right-of-use asset, net related to the lease as of December 31, 2025 and 2024, respectively. The Company has a solar facility ground lease agreement with Daggett Land Holdings 2 LLC, a subsidiary of Clearway Renew, which grants Daggett Solar Power 2 exclusive easement rights to use the land on which the solar power facilities are located. The Company is obligated to pay fixed fee rent payments as defined in the agreement through June 30, 2058. On January 1, 2024, Daggett Solar Power 2 was transferred to the Company which increased right-of-use assets, net by $22.3 million and total lease liabilities by $23.1 million. The Company has a lease liability of $23.0 million as of both December 31, 2025 and 2024, and a corresponding $21.6 million and $22.0 million right-of-use asset, net related to the lease as of December 31, 2025 and 2024, respectively. Lease expense for each of the years ended December 31, 2025 and 2024 was $3.8 million and $2.3 million for the period from February 17, 2023 through December 31, 2023. These costs are included in cost of operations in the consolidated statements of operations. Operating lease information as of December 31, 2025 and 2024 was as follows (in thousands, except term and rate): 2025 2024 Right-of-use assets - operating leases, net $ 51,001 $ 51,994 Short-term lease liability - operating leases $ (201) $ (231) Long-term lease liability - operating leases 56,982 56,781 Total lease liabilities $ 56,781 $ 56,550 Weighted average remaining lease term 35 years 36 years Weighted average discount rate 5.18 % 5.18 % Year ended December 31, February 17, through December 31, 2025 2024 2023 Cash paid for operating leases $ 2,622 $ 2,590 $ 1,609 DAGGETT RENEWABLE HOLDCO LLC AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2025, 2024, and 2023 35
Minimum future rental payments of operating lease liabilities as of December 31, 2025 are as follows (in thousands): 2026 $ 2,665 2027 2,714 2028 2,767 2029 2,820 2030 2,864 Thereafter 128,595 Total lease payments 142,425 Less imputed interest (85,644) Total lease liability - operating leases $ 56,781 Lessor Revenues derived from the BESS component of the Company’s PPAs are accounted for as operating leases. The terms of the PPAs are further described in note 1(a), Power Purchase Agreements and Long- Term Resource Adequacy Agreements and note 2(k), Revenue Recognition. Minimum future rent payments the Company expects to receive for the remaining periods related to operating leases as of December 31, 2025 are as follows (in thousands): 2026 $ 20,405 2027 20,405 2028 20,405 2029 20,405 2030 20,405 Thereafter 162,505 Total lease payments $ 264,530 Property, plant, and equipment, net related to the Company’s operating leases were as follows as of December 31, 2025 and 2024 (in thousands): 2025 2024 Property, plant, and equipment $ 325,973 $ 325,973 Accumulated depreciation (42,051) (22,329) Net property, plant, and equipment $ 283,922 $ 303,644 DAGGETT RENEWABLE HOLDCO LLC AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2025, 2024, and 2023 36
(12) Subsequent Events The Company has evaluated subsequent events from the balance sheet date through March 20, 2026, the date at which the consolidated financial statements were available to be issued, and determined that there are no additional items to disclose. DAGGETT RENEWABLE HOLDCO LLC AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2025, 2024, and 2023 37
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DAGGETT RENEWABLE HOLDCO LLC AND SUBSIDIARIES Consolidated Financial Statements December 31, 2023 (With Report of Independent Auditors)
DAGGETT RENEWABLE HOLDCO LLC AND SUBSIDIARIES Table of Contents Page Report of Independent Auditors 1 Consolidated Balance Sheet — December 31, 2023 3 Consolidated Statement of Operations — Period from February 17, 2023 through December 31, 2023 4 Consolidated Statement of Equity — Period from February 17, 2023 through December 31, 2023 5 Consolidated Statement of Cash Flows — Period from February 17, 2023 through December 31, 2023 6 Notes to Consolidated Financial Statements 7
Ernst & Young, LLP One Commerce Square, Suite 700, Philadelphia, Pennsylvania 19103 Tel: 215 448 5000 Fax: 215 448 4069 ey.com Report of Independent Auditors The Members Daggett Renewable Holdco LLC Opinion We have audited the consolidated financial statements of Daggett Renewable Holdco LLC and subsidiaries (the Company), which comprise the consolidated balance sheet as of December 31, 2023, and the related consolidated statements of operations, equity and cash flows for the period from February 17, 2023 through December 31, 2023, and the related notes (collectively referred to as the “financial statements”). In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2023, and the results of its operations and its cash flows for the period from February 17, 2023 through December 17, 2023 in accordance with accounting principles generally accepted in the United States of America. Basis for Opinion We conducted our audit in accordance with auditing standards generally accepted in the United States of America (GAAS). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the Company and to meet our other ethical responsibilities in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Responsibilities of Management for the Financial Statements Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free of material misstatement, whether due to fraud or error. In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern for one year after the date that the financial statements are available to be issued. Auditor’s Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free of material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood
that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements. In performing an audit in accordance with GAAS, we: Exercise professional judgment and maintain professional skepticism throughout the audit. Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control. Accordingly, no such opinion is expressed. Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements. Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern for a reasonable period of time. We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control-related matters that we identified during the audit. March 28, 2024
DAGGETT RENEWABLE HOLDCO LLC AND SUBSIDIARIES Consolidated Balance Sheet December 31, 2023 (In thousands) Assets 2023 Current assets: Cash $ 3,641 Restricted cash 18,675 Accounts receivable – trade 5,837 Accounts receivable – affiliate 42 Derivative instruments 5,047 Prepayments and other current assets 1,848 Total current assets 35,090 Property, plant, and equipment, net 587,625 Other assets: Right-of-use assets, net 30,661 Derivative instruments 23,060 Other non-current assets 142 Total other assets 53,863 Total assets $ 676,578 Liabilities and Equity Current liabilities: Current maturities of long-term debt $ 396 Accounts payable – trade 9,400 Accounts payable – affiliate 440 Accrued liabilities 90 Lease liabilities (298) Total current liabilities 10,028 Other liabilities: Long-term debt 214,198 Asset retirement obligations 4,267 Long-term lease liabilities 33,525 Total other liabilities 251,990 Total liabilities 262,018 Commitments and contingencies Equity: Members’ equity 272,280 Noncontrolling interest 142,280 Total equity 414,560 Total liabilities and equity $ 676,578 See accompanying notes to consolidated financial statements. 3
DAGGETT RENEWABLE HOLDCO LLC AND SUBSIDIARIES Consolidated Statement of Operations Period from February 17, 2023 through December 31, 2023 (In thousands) 2023 Operating revenues: Total operating revenues $ 13,205 Operating costs and expenses: Cost of operations 4,067 Depreciation and accretion 6,310 Total operating costs and expenses 10,377 Operating income 2,828 Other income (expense): Interest income 2,198 Loss on debt extinguishment (2,667) Interest expense (4,532) Total other expense (5,001) Net loss (2,173) Less: net loss attributable to noncontrolling interest (159,457) Net income attributable to Daggett Renewable Holdco LLC and subsidiaries $ 157,284 See accompanying notes to consolidated financial statements. 4
DAGGETT RENEWABLE HOLDCO LLC AND SUBSIDIARIES Consolidated Statement of Equity Period from February 17, 2023 through December 31, 2023 (In thousands) Daggett Solar HA Lighthouse Investment LLC LLC Contributed Contributed Retained Noncontrolling Total capital capital earnings interest equity Balance at February 17, 2023 $ — $ — $ — $ — $ — Net income (loss) — — 157,284 (159,457) (2,173) Acquisition of Daggett Solar Power 3 LLC 14,219 — — — 14,219 Cash contributions 149,895 129,378 — 314,890 594,163 Cash distributions (178,186) — — — (178,186) Non-cash distributions (310) — — — (310) Payment of transaction costs — — — (13,153) (13,153) Balance at December 31, 2023 $ (14,382) $ 129,378 $ 157,284 $ 142,280 $ 414,560 See accompanying notes to consolidated financial statements. 5
DAGGETT RENEWABLE HOLDCO LLC AND SUBSIDIARIES Consolidated Statement of Cash Flows Period from February 17, 2023 through December 31, 2023 (In thousands) 2023 Cash flows from operating activities: Net loss $ (2,173) Adjustments to reconcile net loss to net cash used by operating activities: Depreciation and accretion 6,310 Amortization of debt issuance costs 216 Loss on debt extinguishment 2,667 Reduction in carrying amount of right-of-use assets 589 Changes in derivative instruments (1,363) Cash (used) provided by changes in other working capital: Accounts receivable – trade (5,837) Accounts receivable – affiliate (42) Prepayments and other current assets (2,014) Other non-current assets (142) Accounts payable – trade 1,438 Accounts payable – affiliate (96) Accrued liabilities 90 Accrued interest expense (137) Operating lease liabilities 125 Net cash used by operating activities (369) Cash flows from investing activities: Capital expenditures (116,165) Acquisition of Daggett Solar Power 3 LLC 3,747 Net cash used by investing activities (112,418) Cash flows from financing activities: Proceeds from issuance of long-term debt 36,126 Payments for long-term debt (303,847) Contributions from members 279,273 Contributions from noncontrolling interests 314,890 Distributions to members (178,186) Payment of transaction costs (13,153) Net cash provided by financing activities 135,103 Net increase in cash and restricted cash 22,316 Cash and restricted cash at beginning of period — Cash and restricted cash at end of period $ 22,316 Supplemental disclosures: Interest paid, net of amount capitalized $ 6,718 Non-cash investing activities: Reductions to fixed assets for revised capitalized asset retirement costs (14) Increase to fixed assets for capitalized debt issuance costs 547 Increase to fixed assets for transfer of prepaid insurance 196 See accompanying notes to consolidated financial statements. 6
(1) Nature of Business Daggett Renewable Holdco LLC, or Daggett Renewable Holdco, and subsidiaries, or the Company, a Delaware limited liability company, was formed on October 26, 2021 and is a partnership between Daggett Solar Investment LLC, a subsidiary of Clearway Energy Operating LLC, HA Lighthouse LLC, or HASI, a cash equity investor, and Clearway Renew LLC, or Clearway Renew, a direct wholly-owned subsidiary of Clearway Energy Group LLC, or Clearway Energy Group. Clearway Renew’s membership interests in Daggett Renewable Holdco are not participating interests and provide for the potential future allocation of cash in the event of excess returns on the investment by HASI. From October 26, 2021 through February 16, 2023, Daggett Renewable Holdco had no activity. On February 17, 2023, through its consolidated subsidiaries (shown in the diagram below), Daggett Renewable Holdco acquired Daggett Solar Power 3, LLC, or Daggett Solar Power 3, a 300-megawatt, or MW, solar photovoltaic power generating facility that is paired with 149 MW of energy storage and located in San Bernardino, California, collectively referred to as the Facility. See note 3, Acquisition, for further information about the acquisition. Also on February 17, 2023, Daggett Solar Investment LLC acquired the Class A membership interests in Daggett TargetCo LLC, or Daggett TargetCo, for cash consideration of $20.5 million and HASI acquired the Class B membership interests in Daggett TargetCo for cash consideration of $129.4 million from Clearway Renew. Daggett Solar Investment LLC and HASI then contributed their Class A and B membership interests, respectively, into Daggett Renewable Holdco, that consolidates Daggett TargetCo. Daggett TargetCo consolidates, through its wholly-owned subsidiary Daggett Class B LLC, or Daggett Class B, as primary beneficiary, Daggett TE Holdco LLC, or Daggett TE Holdco, a tax equity fund that indirectly owns Daggett Solar Power 3, as further described in note 8, Variable Interest Entities. Daggett TE Holdco is a tax equity arrangement between Daggett Class B and a tax equity investor, JPM Capital Corporation, or JPM Capital. Concurrently with the acquisition on February 17, 2023, in accordance with the Equity Capital Contribution Agreement, or ECCA, between the members, JPM Capital made its initial tax equity contribution of $62.4 million, distributed and held in an escrow account by Daggett Class B, and acquired the Class A membership interests in Daggett TE Holdco, whereas Daggett Class B retained the Class B membership interests. On December 1, 2023, JPM Capital made an additional contribution of $252.5 million upon the Facility reaching substantial completion. Tax equity proceeds were used for the repayment of the debt acquired in the acquisition and transaction expenses as described further in note 6, Long-Term Debt. Clearway Energy Operating LLC is a wholly-owned subsidiary of Clearway Energy LLC, which is owned by Clearway Energy, Inc. and Clearway Energy Group. Clearway Energy Group is equally owned by Global Infrastructure Partners III and TotalEnergies SE. As of December 31, 2023, Clearway Energy, Inc., through its ownership of Class A and Class C common stock, had a 57.90% economic interest in Clearway Energy LLC, while Clearway Energy Group, through its ownership of Class B and Class D common stock, had a 54.91% voting interest in Clearway Energy, Inc. and a 42.10% economic interest in Clearway Energy LLC. DAGGETT RENEWABLE HOLDCO LLC AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2023 7
The diagram below represents a summarized structure of the Company as of December 31, 2023: DAGGETT RENEWABLE HOLDCO LLC AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2023 8
A summary of the major agreements entered into by the Company is set forth below: (a) Limited Liability Company Agreement The Company is governed by an amended and restated limited liability company agreement, or LLCA, dated February 17, 2023. The LLCA provides for allocations of income, taxable items and available cash to its members, which are 25% to Daggett Solar Investment LLC, the Class A Member, and 75% to HASI, the Class B Member, except that allocations of available cash are first utilized to pay back member loans, if any. In addition, subsequent to November 20, 2035, up to 90% of the Class A Member’s cash may be allocated to the Class B Member under the provisions of a related agreement, which provides a reallocation of cash in order to ensure that the Class B Member achieves its target return on investment. If the Class B Member achieves a return above a specified threshold, certain amounts may be allocated to Clearway Renew, through its ownership of the Class C membership interests. In accordance with the provision of the LLCA, the Class A Member is the Manager, as defined, and conducts the activities of the Company on behalf of the members. The Manager has engaged Clearway Asset Services LLC to perform certain of its duties as Manager. All management services provided are at the direction of the Manager and the Manager retains its obligations with respect to its duties and responsibilities. See note 9, Related Party Transactions, for further detail. In addition, the LLCA establishes both a review committee, which is responsible for material decisions that protect the interests of both the Class A Member and Class B Member, and is comprised of two members appointed by each of the Class A Member and Class B Member, and an operations committee, which is responsible for advising the Company and the review committee with respect to the Company’s operations. (b) Power Purchase Agreements and Long-Term Resource Adequacy Agreement Daggett Solar Power 3 is contracted under the following power purchase agreements, or PPAs, and a long-term resource adequacy agreement to deliver the energy output of the Facility as well as energy storage capacity, resource adequacy, and renewable energy attributes. The PPAs, as amended, provide for the sale of energy based on a fixed price applied to actual production amounts. The PPAs also provide for storage payments based on a fixed price applied to the monthly storage contract capacity multiplied by an efficiency factor and availability adjustment as defined in the agreements. In addition, the Company intends to qualify for and utilize the investment tax credit. Under the terms of the PPA agreements, Daggett Solar Power 3 has guaranteed certain performance output that if not achieved could result in the payment of shortfall amounts commencing with the commercial operations date, or COD. A delay in the guaranteed COD resulted in payment of delay damages to the offtakers as defined in the agreements. The Company incurred $310 thousand in damages related to the delay in COD, which Clearway Renew agreed to pay. Accordingly, the Company recorded a non- cash distribution to Clearway Renew in the consolidated statement of equity for the period from February 17, 2023 through December 31, 2023. DAGGETT RENEWABLE HOLDCO LLC AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2023 9
Effective COD Contract capacity Energy storage capacity Offtaker date date (MW) (MW) Term (a) Renewable PPAs: Marin Clean Energy 9/25/2020 8/25/2023 110 60 15 years Clean Power Alliance of Southern California 10/2/2020 11/17/2023 123 61.5 15 years Ava Community Energy Authority (b) 9/29/2021 9/5/2023 50 12.5 15 years Exelon Generation Company, LLC 6/8/2021 7/14/2023 17 15 10 years Pacific Gas and Electric Company (c) 12/10/2020 9/1/2023 — — 15 years 300 149 (a) PPA term effective through 10th or 15th anniversary of COD date as defined in PPA. (b) Effective November 29, 2023, East Bay Community Energy Authority was renamed to Ava Community Energy Authority. (c) Represents a long-term resource adequacy agreement to sell 15 MW of resource adequacy at a fixed price. (c) Balance of Plant Engineering, Procurement and Construction, or EPC, Agreement Daggett Solar Power 3 is party to an amended and restated fixed-price EPC agreement with D.H. Blattner & Sons, Inc., or Blattner, for the engineering, construction, and commissioning of the Facility for $230.9 million, that was subject to price adjustments as defined in the agreement. During the period from February 17, 2023 through December 31, 2023, the Company incurred costs under this agreement of $6.1 million, all of which were capitalized and reflected in property, plant, and equipment, net on the Company’s consolidated balance sheet. Amounts due to Blattner of $4.1 million are included in accounts payable – trade as of December 31, 2023, of which the Company received a $3.2 million credit and paid the outstanding balance during the first quarter of 2024. Daggett Solar Power 3’s obligations have been fulfilled under this agreement. (d) Equipment Supply Contracts and Maintenance Agreement Equipment Supply Contracts Clearway Renew is party to an Equipment Supply Agreement with JA Solar USA Inc., or JA Solar, for which the Company has the ability but not the obligation to purchase solar photovoltaic energy generating modules. Daggett Solar Power 3 entered into a First Amended and Restated Purchase Order supplementing the agreement between Clearway Renew and JA Solar by adjusting the price and schedule for delivery of the modules. During the period from February 17, 2023 through December 31, 2023, Daggett Solar Power 3 incurred costs related to modules of $15.4 million, all of which were capitalized and reflected in property, plant, and equipment, net on the Company’s consolidated balance sheet. DAGGETT RENEWABLE HOLDCO LLC AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2023 10
Daggett Solar Power 3 is party to an Equipment Supply Contract with Wärtsilä North America, Inc., or Wärtsilä North America, for energy storage equipment and services totaling $130.4 million, that was subject to price adjustments as defined in the contract. During the period from February 17, 2023 through December 31, 2023, the Company incurred costs under this agreement of $13.4 million, all of which were capitalized and reflected in property, plant, and equipment, net on the Company’s consolidated balance sheet. Daggett Solar Power 3’s obligations have been fulfilled under this agreement. Maintenance Agreement In addition, Daggett Solar Power 3 contracted with Wärtsilä North America to provide certain maintenance services for the battery energy storage system. The agreement has an initial term of ten years commencing on August 11, 2023, and will automatically renew for additional five year periods unless terminated by either party as provided for in the agreement. The agreement provides for payment of annual fixed fees, warranty fees, and capacity management fees. During the period from February 17, 2023 through December 31, 2023, the Company incurred costs under this agreement of $2.0 million, of which $463 thousand representing annual fixed and warranty fees was included in cost of operations in the consolidated statement of operations, $916 thousand representing capacity management fees was capitalized and reflected in property, plant, and equipment, net and $648 thousand representing prepaid annual fixed and warranty fees was included in prepayments and other current assets on the Company’s consolidated balance sheet. Amounts due to Wärtsilä North America of $2.0 million are included in accounts payable – trade as of December 31, 2023. (2) Summary of Significant Accounting Policies (a) Basis of Presentation The Company’s consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States, or U.S. GAAP. The Accounting Standards Codification, or ASC, established by the Financial Accounting Standards Board, or FASB, is the source of authoritative U.S. GAAP to be applied by nongovernmental entities. The consolidated financial statements include the Company’s accounts and operations and those of its subsidiaries in which the Company has a controlling financial interest. All significant intercompany transactions and balances have been eliminated in the consolidated financial statements. The usual condition for a controlling financial interest is ownership of the majority of the voting interests of an entity. However, a controlling financial interest may also exist through arrangements that do not involve controlling voting interests. As such, the Company applies the guidance of ASC 810, Consolidations, to determine when an entity that is not controlled through its voting interests should be consolidated. DAGGETT RENEWABLE HOLDCO LLC AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2023 11
(b) Restricted Cash The following table provides a reconciliation of cash and restricted cash reported within the consolidated balance sheet that sum to the total of the same such amounts shown in the consolidated statement of cash flows as of December 31, 2023 (in thousands): 2023 Cash $ 3,641 Restricted cash 18,675 Cash and restricted cash shown in the consolidated statement of cash flows $ 22,316 Restricted cash consists primarily of funds held in construction completion reserves which were funded by the tax equity investor. (c) Accounts Receivable – Trade Trade accounts receivable are recorded at the invoiced amount and do not bear interest. The majority of the Company’s customers typically receive invoices monthly with payment due within 30 days. There was no allowance for credit losses as of December 31, 2023. (d) Property, Plant, and Equipment Property, plant, and equipment are stated at cost; however, impairment adjustments are recorded whenever events or changes in circumstances indicate that their carrying amounts may not be recoverable. Significant additions or improvements extending asset lives are capitalized as incurred, while repairs and maintenance that do not improve or extend the life of the respective asset are charged to expense as incurred. Depreciation is computed using the straight-line method over the estimated useful lives of the assets. Certain assets and their related accumulated depreciation amounts are adjusted for asset retirements and disposals with the resulting gain or loss included in cost of operations in the consolidated statement of operations. See note 5, Property, Plant, and Equipment, for additional information. Interest incurred on funds borrowed to finance capital projects is capitalized until the project under construction is ready for its intended use. The amount of interest capitalized for the period from February 17, 2023 through December 31, 2023 was $17.8 million, which includes amortized debt issuance costs of $547 thousand. DAGGETT RENEWABLE HOLDCO LLC AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2023 12
(e) Asset Impairments Long-lived assets that are held and used are reviewed for impairment whenever events or changes in circumstances indicate their carrying amounts may not be recoverable. Such reviews are performed in accordance with ASC 360, Property, Plant, and Equipment. An impairment loss is indicated if the total future estimated undiscounted cash flows expected from an asset are less than its carrying amount. An impairment charge is measured as the excess of an asset’s carrying amount over its fair value with the difference recorded in operating costs and expenses in the consolidated statement of operations. Fair values are determined by a variety of valuation methods, including third-party appraisals, sales prices of similar assets, and present value techniques. There were no indicators of impairment loss as of December 31, 2023. (f) Debt Issuance Costs Debt issuance costs consist of legal fees and closing costs incurred by the Company in obtaining its financing. These costs are capitalized and amortized to interest expense on a basis which approximates the effective interest method over the term of the financing obligation and are presented on the balance sheets as a direct deduction from the carrying amount of the related debt. Prior to reaching COD, these amortized amounts were included in the calculation of capitalized interest. Amortization expense, included in interest expense in the consolidated statement of operations, was $216 thousand for the period from February 17, 2023 through December 31, 2023. In addition, Daggett Solar Power 3 recorded a $2.7 million loss on extinguishment of debt associated with writing off a portion of the debt issuance costs for the period from February 17, 2023 through December 31, 2023. (g) Leases The Company accounts for leases under ASC 842, Leases, or ASC 842. ASC 842 requires the establishment of a lease liability and related right-of-use asset for all leases with a term longer than 12 months. The Company evaluates each arrangement at inception to determine if it contains a lease. The Company has elected to apply the practical expedient to not separate lease and non-lease components of the leases. The Company records its operating lease liabilities at the present value of the lease payments over the lease term at lease commencement date. Lease payments include fixed payment amounts. The Company determines the relevant lease term by evaluating whether renewal and termination options are reasonably certain to be exercised. The Company uses its incremental borrowing rate to calculate the present value of the lease payments, based on information available at the lease commencement date. All of the Company’s leases are operating leases. See note 2(i), Revenue Recognition, below and note 10, Leases, for information on the Company’s leases. DAGGETT RENEWABLE HOLDCO LLC AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2023 13
(h) Income Taxes For the period February 17, 2023 through December 31, 2023, the Company is classified as a partnership for federal and state income tax purposes. Therefore, federal and state income taxes are assessed at the partner level. Accordingly, no provision has been made for federal or state income taxes in the accompanying consolidated financial statements. The Company has determined that, based on a more-likely-than not evaluation of the tax positions taken, there are no material uncertain tax positions to be recognized as of December 31, 2023 by the Company. (i) Revenue Recognition Power Purchase Agreements The Company sells power and battery storage to offtakers under PPAs as described in note 1(b), Power Purchase Agreements and Long-Term Resource Adequacy Agreement. The PPAs with respect to power sales are derivative financial instruments that qualify for the normal purchase normal sale exception and as such, are accounted for under the revenue recognition guidance in ASC 606, Revenue from Contracts with Customers, or ASC 606, and revenue is recognized when the underlying power is delivered. Revenue from the sale of bundled RECs under the renewable PPAs is recognized when the related energy is generated and simultaneously delivered to the market, even in cases where there is a certification lag as it has been deemed to be perfunctory as this is the point in time in which the performance obligation is satisfied and control of the REC is transferred to the customer. In such cases, it is often unnecessary to allocate transaction price to multiple performance obligations. Lease Revenue The Company accounts for the battery storage component recognized under the PPAs as operating leases in accordance with ASC 842. The battery storage component includes variable payments not based on an index or rate and sales-type lease treatment would result in a loss at lease commencement. ASC 842 requires the minimum lease payments received to be amortized over the term of the lease and contingent rentals are recorded when the achievement of the contingency becomes probable. Judgment is required by management in determining the economic life of each generating facility, in evaluating whether certain lease provisions constitute minimum payments or represent contingent rent and other factors in determining whether a contract contains a lease and whether the lease is an operating lease or finance lease. The battery storage component of the PPAs has fixed capacity payments treated as minimum lease payments and variable amounts recorded as contingent rent on an actual basis when electricity is delivered. The Company recognizes the fixed capacity payments over the term of the PPAs. See note 10, Leases, for information on minimum future lease payments. The contingent lease revenue recognized for the period from February 17, 2023 through December 31, 2023 was $72 thousand. Unbundled Renewable Energy Credits, or RECs, Revenue The Company’s PPA with Exelon Generation Company, LLC provides for the sale of RECs separately. RECs are sold at a fixed price per MWh as defined in the agreement. REC revenue is recognized when the related energy is generated and simultaneously delivered to the market, even in DAGGETT RENEWABLE HOLDCO LLC AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2023 14
cases where there is a certification lag as it has been deemed to be perfunctory, as this is the point in time in which the performance obligation is satisfied and control of the REC is transferred to the customer. This revenue is accounted for in accordance with ASC 606, utilizing the invoicing practical expedient, which represents the RECs delivered. Capacity Revenue The Company’s PPA with Pacific Gas and Electric Company provides for the sale of resource adequacy for 15 MW sold at a fixed price as defined in the agreement. The Company accounts for revenue recognized under its long-term resource adequacy agreement in accordance with ASC 606. Disaggregated Revenues The following table represents the Company’s disaggregation of revenue from contracts with customers for the period from February 17, 2023 through December 31, 2023 (in thousands): 2023 Energy revenues $ 10,290 Capacity revenues 2,699 REC revenues 216 Total operating revenues 13,205 Less: Lease revenue (2,577) Total revenue from contracts with customers $ 10,628 Contract Balances The following table reflects the contract assets in the Company’s consolidated balance sheet as of December 31, 2023 (in thousands): 2023 Accounts receivable – contracts with customers $ 3,954 Accounts receivable – leases 1,791 Accounts receivable – other 92 Total accounts receivable – trade $ 5,837 DAGGETT RENEWABLE HOLDCO LLC AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2023 15
(j) Derivative Financial Instruments The Company accounts for derivative financial instruments in accordance with ASC 815, Derivatives and Hedging, which requires the Company to recognize all derivative instruments on the balance sheet as either assets or liabilities and to measure them at fair value each reporting period unless they qualify for a normal purchase normal sale exception. The Company uses interest rate swaps to manage its interest rate exposure on long-term debt, which are not designated as cash flow hedges. Changes in the fair value of non-hedge derivatives are immediately recognized in earnings. Cash flows from derivatives not designated as cash flow hedges are classified as operating activities in the consolidated statement of cash flows. See note 4, Accounting for Derivative Instruments and Hedging Activities, for more information. (k) Risks and Uncertainties Financial instruments, which potentially subject the Company to concentrations of credit risk, consist primarily of accounts receivable – trade and derivative financial instruments. Accounts receivable are concentrated with utility companies and electricity providers. The concentration of sales to a small group of customers may impact the Company’s overall exposure to credit risk, either positively or negatively, in that the customers may be similarly affected by changes in economic, industry, or other conditions. However, the Company believes that the credit risk posed by such concentrations is offset by the diversification and creditworthiness of its customer base. The Company is also exposed to credit losses in the event of noncompliance by counterparties to its derivative financial instruments. Risks associated with the Company’s operations include the performance of the Facility below expected levels of efficiency, output and storage capacity, shutdowns due to the breakdown or failure of equipment, which could be further impacted by the inability to obtain replacement parts, or catastrophic events such as extreme weather, fires, earthquakes, floods, explosions, pandemics, or other similar occurrences affecting a power generation and energy storage facility or its energy purchasers. (l) Fair Value Measurements The Company accounts for the fair value of financial instruments in accordance with ASC 820, Fair Value Measurement, or ASC 820. DAGGETT RENEWABLE HOLDCO LLC AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2023 16
ASC 820 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three levels as follows: • Level 1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access as of the measurement date. • Level 2 – Inputs other than quoted prices included within Level 1 that are directly observable for the asset or liability or indirectly observable through corroboration with observable market data. • Level 3 – Unobservable inputs for the asset or liability only used when there is little, if any, market activity for the asset or liability at the measurement date. In accordance with ASC 820, the Company determines the level in the fair value hierarchy within which each fair value measurement in its entirety falls, based on the lowest level input that is significant to the fair value measurement in its entirety. For cash, restricted cash, accounts receivable – trade, accounts receivable – affiliate, accounts payable – trade, accounts payable – affiliate, and accrued liabilities, the carrying amounts approximate fair value because of the short-term maturity of those instruments and are classified as Level 1 within the fair value hierarchy. The carrying amounts and estimated fair values of the Company’s recorded financial instruments not carried at fair market value or that do not approximate fair value as of December 31, 2023 are as follows (in thousands): 2023 Carrying Amount Fair Value Long-term debt (a) $ 217,088 $ 214,235 (a) Excludes net debt issuance costs, as shown in note 6, Long-Term Debt. The fair value of long-term debt is based on expected future cash flows discounted at current interest rates for similar instruments with equivalent credit quality and is classified as Level 3 within the fair value hierarchy. DAGGETT RENEWABLE HOLDCO LLC AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2023 17
Derivative instruments, consisting of interest rate swaps, are recorded at fair value on the Company’s consolidated balance sheet on a recurring basis and are classified as Level 2 within the fair value hierarchy as the fair value is determined using an income approach, which uses readily observable inputs, such as forward interest rates and contractual terms to estimate fair value. The fair value of each contract is discounted using a risk free interest rate. In addition, the Company applies a credit reserve to reflect credit risk, which for interest rate swaps is calculated using the bilateral method based on published default probabilities. The credit reserve is added to the discounted fair value to reflect the exit price that a market participant would be willing to receive to assume the Company’s liabilities or that a market participant would be willing to pay for the Company’s assets. As of December 31, 2023, the non-performance reserve was a $1.9 million loss recorded to interest expense in the consolidated statement of operations. For further discussion of interest rate swaps, see note 4, Accounting for Derivative Instruments and Hedging Activities. (m) Commitments and Contingencies In the normal course of business, the Company is subject to various claims and litigation. Management of the Company expects that these various litigation items will not have a material adverse effect on the results of operations, cash flows, or financial position of the Company. (n) Asset Retirement Obligations The Company accounts for its asset retirement obligations, or AROs, in accordance with ASC 410-20, Asset Retirement Obligations, or ASC 410-20. Retirement obligations associated with long-lived assets included within the scope of ASC 410-20 are those for which a legal obligation exists under enacted laws, statutes, and written or oral contracts, including obligations arising under the doctrine of promissory estoppel, and for which the timing and/or method of settlement may be conditional on a future event. ASC 410-20 requires an entity to recognize the fair value of a liability for an ARO in the period in which it is incurred and a reasonable estimate of fair value can be made. Upon initial recognition of a liability for an ARO, other than when an ARO is assumed in an acquisition of the related long-lived asset, the Company capitalizes the asset retirement cost by increasing the carrying amount of the related long-lived asset by the same amount. Over time, the liability is accreted to its future value, while the capitalized cost is depreciated over the useful life of the related asset. See note 7, Asset Retirement Obligations, for further information. DAGGETT RENEWABLE HOLDCO LLC AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2023 18
(o) Tax Equity Arrangements The Company’s noncontrolling interest in subsidiaries represents the Class A Member’s interest in the net assets of Daggett TE Holdco under a tax equity arrangement, which is consolidated by the Company. The Company has determined that the provisions in the contractual agreements of this structure represents a substantive profit sharing arrangement. Further, the Company has determined that the appropriate methodology for calculating the noncontrolling interest that reflects the substantive profit sharing arrangements is a balance sheet approach utilizing the hypothetical liquidation at book value, or HLBV, method. Under the HLBV method, the amounts reported as noncontrolling interests represent the amounts the Class A Member would hypothetically receive at each balance sheet date under the liquidation provisions of the contractual agreements, assuming the net assets of the funding structures were liquidated at their recorded amounts determined in accordance with U.S. GAAP. The Class A Member’s interests in the results of operations of the funding structure are determined as the difference in noncontrolling interests at the start and end of each reporting period, after taking into account any capital transactions between the structure and its investors. The calculations utilized to apply the HLBV method include estimated calculations of taxable income or losses for each reporting period. (p) Comprehensive Loss The Company’s total comprehensive loss is equal to net loss for the period from February 17, 2023 through December 31, 2023.. (q) Use of Estimates The preparation of the consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results may differ from those estimates. DAGGETT RENEWABLE HOLDCO LLC AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2023 19
(3) Acquisition On February 17, 2023, the Company, through its subsidiary, Daggett TE Holdco, acquired Daggett 3 Project Sub LLC, the holding company for Daggett Solar Power 3, from Daggett Project Holdco LLC, pursuant to a Membership Interest Purchase Agreement, dated November 24, 2021 and amended April 6, 2022, in connection with the acquisition of the Class A membership interests of Daggett TargetCo by Daggett Solar Investment LLC and the Class B membership interests of Daggett TargetCo by HASI from Clearway Renew, as described in note 1, Nature of Business. Daggett TE Holdco’s purchase price was paid to Clearway Renew with amounts contributed by Daggett Solar Investment LLC and HASI. On February 17, 2023, $62.4 million was placed into a restricted cash account designated for payment of the tax equity bridge loan as described in note 1, Nature of Business, as well as $75.6 million of net proceeds from the acquisition of Daggett TargetCo, which were contributed back to the Company from Clearway Energy Group and were utilized to repay the cash equity bridge loan, along with related fees, as further described in note 6, Long-Term Debt. The acquisition was determined to be an asset acquisition, and the Company consolidates Daggett Solar Power 3 on a prospective basis in its consolidated financial statements. The assets and liabilities transferred to the Company relate to interests under common control by Clearway Energy Group and were recorded at historical cost in accordance with ASC 805-50, Business Combinations - Related Issues. The historical cost of the Company’s net assets acquired of $14.2 million was recorded as an adjustment to contributed capital on the Company’s consolidated statement of equity. DAGGETT RENEWABLE HOLDCO LLC AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2023 20
The following is a summary of assets and liabilities transferred in connection with the acquisition as of February 17, 2023 (in thousands): Assets: Current assets $ 3,776 Property, plant, and equipment, net 533,855 Right-of-use assets, net 31,250 Derivative instruments 26,744 Total assets acquired 595,625 Liabilities: Long-term debt (a) 480,311 Lease liabilities 33,102 Other current and non-current liabilities (b) 67,993 Total liabilities assumed 581,406 Net assets acquired $ 14,219 (a) Includes a $181.0 million construction loan, $75.4 million cash equity bridge loan and a $228.5 million tax equity bridge loan, offset by $4.5 million in unamortized debt issuance costs. See note 6, Long-Term Debt, for further discussion of the long-term debt assumed in the acquisition. (b) Includes $31.9 million of construction costs that were subsequently funded by a subsidiary of Clearway Renew. Subsequent to the acquisition date, a subsidiary of Clearway Renew funded an additional $21.9 million in construction costs. The combined $53.8 million funded by a subsidiary of Clearway Renew was repaid to a subsidiary of Clearway Renew in October 2023. (4) Accounting for Derivative Instruments and Hedging Activities (a) Interest Rate Swaps In accordance with the financing agreement, as described in note 6, Long-Term Debt, the Company has a series of outstanding amortizing interest rate swap agreements for 86% of the outstanding term loan amount, intended to hedge the risks associated with floating interest rates. The Company pays its counterparty the equivalent of a fixed interest payment on a predetermined notional amount, and quarterly, the Company receives the equivalent of a floating interest payment based on a three-month Term Secured Overnight Financing Rate, or Term SOFR, calculated on the same notional amount. The Company also had entered into an interest rate swap agreement that became effective November 30, 2022 and matured on July 31, 2023. The swap was intended to hedge the risks associated with floating interest rates on the expected borrowings under the construction financing. The interest rate swap agreement entitled the Company to receive a floating (one-month SOFR) rate and pay a fixed rate of 4.729%. The swap was not designated as a cash flow hedge. DAGGETT RENEWABLE HOLDCO LLC AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2023 21
(b) Volumetric Underlying Derivative Transactions The notional amount of the interest rate swaps will decrease in proportion to the principal balance of the loan. The table below summarizes the outstanding notional amounts and terms of the interest rate swaps as of December 31, 2023: Notional amount (in thousands) Effective date 2023 Fixed Rate Maturity Date September 29, 2023 $ 148,894 1.908% September 30, 2043 (a) September 30, 2023 37,224 1.908% September 30, 2043 (a) $ 186,118 (a) The interest rate swap agreements are subject to a mandatory early termination date of September 29-30, 2028. (c) Fair Value of Derivative Transactions The following table summarizes the Company’s derivative assets on the consolidated balance sheet as of December 31, 2023 (in thousands): 2023 Derivatives not designated as cash flow hedges: Interest rate contracts current $ 5,047 Interest rate contracts long-term 23,060 Total derivative assets $ 28,107 (d) Impact of Derivative Instruments on the Consolidated Statement of Operations Mark-to-market gains and losses related to the Company’s derivatives are recorded to interest expense. For the period from February 17, 2023 through December 31, 2023, the impact to the consolidated statement of operations was a gain of $1.4 million. DAGGETT RENEWABLE HOLDCO LLC AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2023 22
(5) Property, Plant, and Equipment The Company’s major classes of property, plant, and equipment as of December 31, 2023 consists of (in thousands): 2023 Depreciable lives Plant equipment $ 592,827 10 - 27 years Construction in progress 916 — Total property, plant, and equipment 593,743 Less accumulated depreciation (6,118) Net property, plant, and equipment $ 587,625 (6) Long-Term Debt On February 17, 2023, as part of the acquisition of Daggett Solar Power 3, as further described in note 3, Acquisition, the Company assumed the financing agreement which included a $181.0 million construction loan, a $228.5 million tax equity bridge loan, and a $75.4 million cash equity bridge loan, offset by $4.5 million in unamortized debt issuance costs. The cash equity bridge loan was repaid at acquisition date, along with $8.1 million in associated fees, utilizing the proceeds contributed to the Company from the acquisition of Daggett Solar Power 3’s indirect parent, Daggett TargetCo, by Daggett Solar Investment LLC and the cash equity investor. On December 1, 2023, when the Facility reached substantial completion, the tax equity investor contributed an additional $252.5 million, which was utilized, along with the $68.5 million in escrow, to repay the $228.5 million tax equity bridge loan, to fund $40.4 million in construction completion reserves, and to pay $7.5 million in associated fees, with the remaining $44.6 million distributed to Clearway Energy Group. Subsequent to the acquisition on February 17, 2023, the Company borrowed an additional $36.1 million in construction loans and the total outstanding construction loans were converted to a term loan in the amount of $217.1 million on December 1, 2023. The term loan will mature on December 1, 2028 and is secured by the Company’s interests in the Facility. The construction loan and the tax equity bridge loan each had an interest rate of Term SOFR, plus an adjustment of 0.26161% per annum and an applicable margin of 1.00% per annum. In addition to interest on the outstanding borrowings, the Company paid a quarterly commitment fee on each of the unused portions of the construction loan equal to 0.375% per annum. The term loan bears interest at a rate of Term SOFR plus an adjustment of 0.26161% per annum and an applicable margin, which is 1.50% per annum through the third anniversary of the term conversion, and 1.625% per annum thereafter through the term loan maturity date. DAGGETT RENEWABLE HOLDCO LLC AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2023 23
The financing agreement also provides for a letter of credit facility of up to $47.1 million, consisting of $39.3 million to support power purchase agreements and $7.8 million to support debt service requirements. The Company pays on a quarterly basis a letter of credit fee of 1.00% per annum on issued amounts under the letter of credit facility, which escalates 0.50% on the term conversion and 0.125% on the third anniversary of term conversion. In addition, the Company pays quarterly commitment fees on any of the unused portions of the letter of credit commitments equal to 0.375% per annum. As of December 31, 2023, the amount of outstanding letters of credit totaled $42.9 million, of which $38.7 million supports power purchase agreements and $4.2 million supports debt service reserve requirements. Daggett Class B LLC entered into interest rate swap agreements to hedge the majority of the variable interest rate exposure under the term loan. For further details regarding the interest rate swap agreements, see note 4, Accounting for Derivative Instruments and Hedging Activities. As of December 31, 2023, long-term debt consists of the following (in thousands): 2023 Total long-term debt (including current maturities) $ 217,088 Less current maturities (396) Less debt issuance costs, net (2,494) Long-term debt $ 214,198 Distributions from the Company are subject to the terms and conditions defined in the financing agreement, including a condition to meet a required debt service coverage ratio of 1.20 to 1.0. At December 31, 2023, the Company is not subject to the requirements to perform the calculation or make distributions until March 31, 2024, the end of the first full calendar quarter after term conversion. Annual payments based on the maturities of the Company’s debt as of December 31, 2023 are summarized as follows (in thousands): Year ending December 31: 2024 $ 396 2025 437 2026 427 2027 398 2028 215,430 $ 217,088 DAGGETT RENEWABLE HOLDCO LLC AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2023 24
(7) Asset Retirement Obligations The Company’s AROs are the estimated cost to remove the above ground solar and energy storage equipment and restore the site to conditions similar to the surrounding parcels. The following table represents the balance of the AROs, along with the related activity for the period from February 17, 2023 through December 31, 2023 (in thousands): Balance as of February 17, 2023 $ — Acquired liabilities 3,989 Revisions in estimated cash flows (14) Accretion expense 292 Balance as of December 31, 2023 $ 4,267 (8) Variable Interest Entities, or VIEs The Company has a controlling financial interest in Daggett TE Holdco, a tax equity arrangement entered into with a third party, which has been identified as a VIE under ASC 810, Consolidations. As described in note 1, Nature of Business, on February 17, 2023, Daggett Solar Investment LLC acquired the Class A membership interests in Daggett TargetCo while HASI acquired the Class B membership interests. Daggett Solar Investment LLC and HASI then contributed their Class A and B membership interests, respectively, into Daggett Renewable Holdco and concurrently, Daggett TargetCo became a wholly owned subsidiary of Daggett Renewable Holdco. Daggett TargetCo consolidates as primary beneficiary and through its ownership of the Class B membership interests, Daggett TE Holdco, a tax equity fund which is a VIE, that indirectly owns Daggett Solar Power 3. The Class A membership interests in Daggett TE Holdco are held by a tax equity investor, JPM Capital, and are reflected as noncontrolling interest on the Company’s consolidated balance sheet. The summarized financial information for Daggett TE Holdco as of December 31, 2023 consisted of the following (in thousands): 2023 Other current and non-current assets $ 58,805 Property, plant, and equipment, net 587,625 Total assets 646,430 Current liabilities 9,576 Non-current liabilities 37,792 Total liabilities 47,368 Net assets $ 599,062 DAGGETT RENEWABLE HOLDCO LLC AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2023 25
(9) Related Party Transactions The Company has the following related party transactions and relationships in addition to the reimbursement of liquidated damages described in note 1, Nature of Business, and the lease agreement described in note 10, Leases. Amounts due to Clearway Energy Group subsidiaries are recorded as accounts payable – affiliate and amounts due to the Company from Clearway Energy Group subsidiaries are recorded as accounts receivable – affiliate on the Company’s balance sheets. These account balances are netted by affiliate party. The Company entered into a Management Services Agreement for asset management and administration services with Clearway Asset Services LLC, a subsidiary of Clearway Energy Group. The agreement has an initial term of ten years commencing on December 1, 2023 with provisions for extension until terminated. The agreement provides for the payment of fixed fees that escalate annually, as defined in the agreement, and for the reimbursement of reasonable expenses incurred in connection with its services. No costs were incurred under this agreement for the period from February 17, 2023 through December 31, 2023. Daggett Solar Power 3 had a Construction Management Agreement with Renewables Construction LLC, or Renewables Construction, a subsidiary of Clearway Renew, effective October 28, 2021 through the three months following the commercial operations date. Under the terms of the agreement, Renewables Construction provided certain construction management and administrative services for the Facility. As full compensation for the services provided, Renewables Construction was paid a service fee of $40.0 million. The service fee was payable on or before the commercial operation capital contribution date. As of December 31, 2023, $40.0 million of costs have been incurred under this agreement, $4.0 million of which were previously capitalized and are reflected in property, plant, and equipment, net on the Company’s consolidated balance sheet and $36.0 million of costs represented a development margin and was recorded as a distribution to Clearway Renew included in contributed capital in the consolidated statement of equity. Daggett Solar Power 3’s obligations have been fulfilled under this agreement. Daggett Solar Power 3 has an Operation and Maintenance Agreement, or O&M Agreement, with Clearway Renewable Operation & Maintenance LLC, or RENOM, a subsidiary of Clearway Energy Group, to provide operation and maintenance services for the balance of the plant not covered by the maintenance agreement with Wärtsilä North America. The initial term of the agreement is ten years commencing May 28, 2021, and will automatically renew for additional five year periods unless terminated by either party as provided for in the O&M Agreement. The O&M Agreement allows for reimbursement of mobilization expenses, start-up expenses, and direct operating and capital improvement expenses, including a five percent markup. Additionally, there is an annual profit fee subject to performance factors with an annual escalation of 2.25%. For the period from February 17, 2023 through December 31, 2023, the Company incurred costs of $858 thousand under this agreement, of which $94 thousand of these costs are included in cost of operations in the consolidated statement of operations and $764 thousand was capitalized and reflected in property, plant, and equipment, net on the Company’s consolidated balance sheet. DAGGETT RENEWABLE HOLDCO LLC AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2023 26
Daggett TE Holdco and Daggett Solar Power 3 are parties to a Project Administration Agreement, or PAA, with Clearway Asset Services LLC, a subsidiary of Clearway Energy Group. The agreement has an initial term of ten years commencing on October 28, 2021, and will automatically renew in one-year increments unless either party delivers written notice of termination to the other party no later than 180 days prior to the expiration of the initial term or applicable renewal term. The PAA provides for the payment of fixed fees of $359 thousand with an annual escalation of 2.25%, and reimburses Clearway Asset Services LLC for reasonable expenses incurred in connection with its services. For the period from February 17, 2023 through December 31, 2023, the Company incurred costs of $325 thousand under this agreement. These costs are included in cost of operations in the consolidated statement of operations. Daggett Solar Power 3 is party to a Shared Facilities Common Ownership Agreement with Daggett Solar Power 2 LLC, a subsidiary of Daggett Solar Investment LLC, Daggett Solar Power 1 LLC and Daggett Land Holdings LLC, subsidiaries of Clearway Renew, which grants Daggett Solar Power 3 rights to use the operations and maintenance building and storage yard facilities including surrounding areas, and access and use of other shared equipment and facilities owned by the respective subsidiaries. The agreement also addresses Daggett Land Holdings LLC rights and obligations in connection with various licenses. Daggett Solar Power 3 is obligated to pay an administration fee of 10% of costs and expenses paid by the administrative manager, Daggett Solar Power 2 LLC. No costs were incurred under this agreement for the period from February 17, 2023 through December 31, 2023. (10) Leases Solar Facility Ground Lease Agreement The Company has entered into a solar facility ground lease agreement with Daggett Land Holdings LLC, a subsidiary of Clearway Renew, which grants Daggett Solar Power 3 nonexclusive easement rights to use the land on which the Facility is located. The Company is obligated to pay fixed fee rent payments as defined in the agreement through December 2062. Lease expense for the period from February 17, 2023 through December 31, 2023 was $2.3 million. These costs are included in cost of operations in the consolidated statement of operations. DAGGETT RENEWABLE HOLDCO LLC AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2023 27
Operating lease information as of December 31, 2023 was as follows (in thousands, except term and rate): 2023 Right-of-use assets - operating leases, net $ 30,661 Short-term lease liability - operating leases $ (298) Long-term lease liability - operating leases 33,525 Total lease liabilities $ 33,227 Weighted average remaining lease term 39 years Weighted average discount rate 5.69 % February 17, through December 31, 2023 Cash paid for operating leases $ 1,609 Minimum future rental payments of operating lease liabilities as of December 31, 2023 are as follows (in thousands): 2024 $ 1,609 2025 1,634 2026 1,661 2027 1,693 2028 1,724 Thereafter 93,291 Total lease payments 101,612 Less imputed interest (68,385) Total lease liability - operating leases $ 33,227 DAGGETT RENEWABLE HOLDCO LLC AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2023 28
Lessor Certain of the Company's revenue is obtained through PPAs in which the battery storage component of the PPAs are accounted for as operating leases. The terms of the PPAs are further discussed in note 1(b), Power Purchase Agreements and Long-Term Resource Adequacy Agreement and note 2(i), Revenue Recognition. Minimum future rent payments the Company expects to receive for the remaining periods related to operating leases as of December 31, 2023 are as follows (in thousands): 2024 $ 12,796 2025 12,829 2026 12,829 2027 12,829 2028 12,829 Thereafter 125,640 Total lease payments $ 189,752 Property, plant, and equipment, net related to the Company’s operating leases were estimated as follows for December 31, 2023 (in thousands): 2023 Property, plant, and equipment $ 163,459 Accumulated depreciation (2,130) Net property, plant, and equipment $ 161,329 (11) Subsequent Events Effective January 1, 2024, Daggett 2 TargetCo LLC, a separate partnership amongst the same members and another consolidated subsidiary of Daggett Solar Investment LLC, consolidates into Daggett Renewable Holdco, pursuant to a Contribution Agreement, dated February 13, 2024. The members contributed 100% of their respective membership interests of Daggett 2 TargetCo LLC to Daggett Renewable Holdco. As the transfer is among entities under common control, the transaction will be recognized at historical cost and no gain or loss will be recognized. The Company has evaluated subsequent events from the balance sheet date through March 28, 2024, the date at which the financial statements were available to be issued, and determined that there are no additional items to disclose other than the events described elsewhere in the notes to financial statements. DAGGETT RENEWABLE HOLDCO LLC AND SUBSIDIARIES Notes to Consolidated Financial Statements December 31, 2023 29