Clearway Energy, Inc. (NYSE: CWEN, CWEN.A) (“CWEN”, “Company”) and
its renewable development partner and parent company, Clearway
Energy Group LLC (“CEG”), today announced agreements providing for
CWEN’s co-investment in a 1,204 MW portfolio of renewable energy
projects developed by CEG consisting of i) 1,012 MW from five
geographically diversified wind, solar, and solar plus storage
assets under development and ii) the 192 MW Rosamond Central solar
project which is expected to commence operations by the end of the
year. Additionally, the parties amended the existing partnership
agreement for the 419 MW Mesquite Star wind project providing CWEN
an additional 27.51% of the project’s cash flows after the first
half of 2031.
Approximately 90% of the generation from the
projects are contracted with a diverse group of primarily
investment grade counterparties, including utilities and load
serving entities, Fortune 500 corporations, commercial &
industrial customers, and financial institutions, and the portfolio
has a greater than 14-year blended average contract length. Subject
to closing adjustments and the projects achieving certain
milestones, CWEN expects to invest approximately $214 million in
corporate capital by the end of 2022. Based on the current expected
timing of the projects achieving COD, CWEN expects, before
corporate financing costs, the asset CAFD contribution from the
investments to be immaterial in 2021, approximately $9 million in
2022, and $20 million on a 5-year average basis beginning on
January 1, 2023.
"Our commitment to invest in this portfolio of
renewable energy and battery storage projects will add geographic
and technological diversification at CWEN," said Christopher Sotos,
Clearway Energy, Inc.’s President and Chief Executive Officer. “We
are pleased to achieve this important milestone in collaboration
with our development partner and look forward to working together
on future accretive portfolio investments.”
“We are thrilled to successfully complete our
largest portfolio transaction to date with Clearway Energy, Inc.,”
said Craig Cornelius, Chief Executive Officer at Clearway Energy
Group LLC. “This geographically diverse 1.6 GW portfolio of wind,
solar, and energy storage projects represents the economic
opportunity of renewable energy in every corner of this country.
Taken together, more than 2,500 American jobs will be created to
build and operate these clean energy assets, which will go on to
supply clean and low-cost power to hundreds of thousands of
households and businesses across the United States. Today’s
agreement with our investment partners will be pivotal in our
continued ability to provide clean energy at the scale of our
country’s demand while helping to deliver on investors’ growing
interest in climate change solutions.”
The assets included in the portfolio are:
Asset |
Technology Type |
MW1 |
CWEN Cash Allocation %2 |
State |
Target Financial Closing |
Additional Interest in Mesquite Star |
Wind |
419 |
50% |
TX |
Closed |
Rosamond Central |
Solar |
192 |
50% |
CA |
Closed |
Mesquite Sky |
Wind |
345 |
50% |
TX |
2H21 |
Black Rock |
Wind |
110 |
50% |
WV |
2H21 |
Waiawa |
Solar/Storage |
36 |
50% |
HI |
1H22 |
Mililani |
Solar/Storage |
39 |
50% |
HI |
1H22 |
Daggett Solar |
Solar/Storage |
482 |
25% |
CA |
2H22 |
|
|
|
|
|
|
Under the portfolio partnership agreements, CWEN
will act as managing member. The remaining interest in the cash
equity partnerships will be owned by Hannon Armstrong Sustainable
Infrastructure Capital, Inc. (“Hannon Armstrong”) (NYSE: HASI), a
leading investor in climate solutions.
On December 21, 2020, CWEN acquired its 50% cash
equity interest in Rosamond Central for $23 million and completed
the amendment for the additional interest in Mesquite Star. The
Mesquite Sky wind farm in Texas and the Black Rock wind farm in
West Virginia will commence construction in the coming weeks.
Definitive agreements relating to the Daggett, Waiawa, and Mililani
projects remain subject to certain conditions and the review and
approval by CWEN’s Independent Directors.
CEG will serve as the long-term site operator
and asset manager, ensuring continuity of performance and community
engagement over the life of each project.
About Clearway Energy, Inc.
Clearway Energy, Inc. is a leading
publicly-traded energy infrastructure investor focused on modern,
sustainable and long-term contracted assets across North
America. Clearway Energy’s environmentally-sound asset portfolio
includes over 7,000 megawatts of wind, solar and natural gas-fired
power generation facilities, as well as district energy systems.
Through this diversified and contracted portfolio, Clearway
Energy endeavors to provide its investors with stable and
growing dividend income. Clearway Energy’s Class C and Class A
common stock are traded on the New York Stock
Exchange under the symbols CWEN and CWEN.A,
respectively. Clearway Energy, Inc. is sponsored by its
controlling investor Global Infrastructure Partners
III (GIP), an independent infrastructure fund manager that
invests in infrastructure and businesses in both OECD and select
emerging market countries, through GIP’s portfolio
company, Clearway Energy Group.
About Clearway Energy Group
Clearway Energy Group is leading the transition
to a world powered by clean energy. Along with our public
affiliate, Clearway Energy, Inc., we own and operate more than 5
gigawatts of wind, solar, and energy storage assets in 26 states,
offsetting the equivalent of nearly 8.8 million metric tons of
carbon emissions for our customers, and we are developing a
pipeline of new renewable energy projects nationwide. With another
2.5 gigawatts of thermal energy systems and conventional power
owned by our public affiliate, we’re also helping provide reliable
and sustainable energy to thousands more customers across the
country. Clearway Energy Group is headquartered in San Francisco,
CA with offices in Carlsbad, CA; Scottsdale, AZ; Houston, TX; and
Princeton, NJ. For more information, visit
clearwayenergygroup.com.
_______________1 MW capacity is subject to change prior to COD;
excludes 395 MW/1,580 MWh of co-located storage assets at Daggett,
Waiawa, and Mililani2 The 50% cash allocation percentage for
Mesquite Star represents CWEN’s total cash allocation percentage in
the project inclusive of its September 1, 2020 acquisition of its
initial interest in the project.
Safe Harbor Disclosure
This news release contains forward-looking
statements within the meaning of Section 27A of the Securities Act
of 1933 and Section 21E of the Securities Exchange Act of 1934.
Such forward-looking statements are subject to certain risks,
uncertainties and assumptions, and typically can be identified by
the use of words such as “expect,” “estimate,” “anticipate,”
“forecast,” “plan,” “outlook,” “believe” and similar terms.
Such forward-looking statements include, but are not limited to,
statements regarding impacts related to COVID-19 or any other
pandemic, the benefits of the relationship with Global
Infrastructure Partners III (GIP) and GIP’s expertise, the
Company’s future relationship and arrangements with GIP and
Clearway Energy Group, as well as the Company's Net Income,
Adjusted EBITDA, Cash from Operating Activities, Cash Available for
Distribution, the Company’s future revenues, income, indebtedness,
capital structure, strategy, plans, expectations, objectives,
projected financial performance and/or business results and other
future events, and views of economic and market conditions.
Although Clearway Energy, Inc. believes that the
expectations are reasonable, it can give no assurance that these
expectations will prove to be correct, and actual results may vary
materially. Factors that could cause actual results to differ
materially from those contemplated above include, among others,
impacts related to COVID-19 or any other pandemic, general economic
conditions, hazards customary in the power industry, weather
conditions, including wind and solar performance, competition in
wholesale power markets, the volatility of energy and fuel prices,
failure of customers to perform under contracts, changes in the
wholesale power markets, changes in government regulations, the
condition of capital markets generally, the Company's ability to
access capital markets, cyber terrorism and inadequate
cybersecurity, the ability to engage in successful acquisitions
activity, unanticipated outages at its generation facilities,
adverse results in current and future litigation, failure to
identify, execute or successfully implement acquisitions (including
receipt of third party consents and regulatory approvals), the
Company's ability to enter into new contracts as existing contracts
expire, risk relating to the Company's relationships with GIP and
Clearway Energy Group, the Company's ability to acquire assets from
GIP, Clearway Energy Group or third parties, the Company's ability
to close drop down transactions, and the Company's ability to
maintain and grow its quarterly dividends. Furthermore, any
dividends are subject to available capital, market conditions, and
compliance with associated laws and regulations.
Clearway Energy, Inc. undertakes no obligation
to update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise. The Adjusted
EBITDA and Cash Available for Distribution are estimates as of
today’s date and are based on assumptions believed to be reasonable
as of this date. Clearway Energy, Inc. expressly disclaims any
current intention to update such guidance. The foregoing review of
factors that could cause Clearway Energy, Inc.’s actual results to
differ materially from those contemplated in the forward-looking
statements included in this news release should be considered in
connection with information regarding risks and uncertainties that
may affect Clearway Energy, Inc.’s future results included in
Clearway Energy, Inc.’s filings with the Securities and Exchange
Commission at www.sec.gov. In addition, Clearway Energy, Inc. makes
available free of charge at www.clearwayenergy.com copies of
materials it files with, or furnishes to, the Securities Exchange
Commission.
Contacts:
Investors:Akil
Marshinvestor.relations@clearwayenergy.com609-608-1500 |
|
Media:Zadie
Oleksiwmedia@clearwayenergy.com202-836-5754 |
|
|
|
Appendix Table A-1: Adjusted EBITDA and
Cash Available for Distribution Reconciliation
The following table summarizes the calculation of Estimated Cash
Available for Distribution and provides a reconciliation to Net
Income/(Loss):
($ in millions) |
|
2022 |
5-Year Average 2023-2027 |
Net Income |
|
$ |
21 |
|
$ |
85 |
|
Interest Expense, net |
|
3 |
|
14 |
|
Depreciation, Amortization, and ARO Expense |
|
7 |
|
8 |
|
Adjusted EBITDA |
|
31 |
|
107 |
|
Cash interest paid |
|
(3 |
) |
(14 |
) |
Cash from Operating Activities |
|
28 |
|
93 |
|
Net distributions to non-controlling interest |
|
(16 |
) |
(48 |
) |
Maintenance Capital Expenditures |
|
- |
|
(3 |
) |
Principal amortization of indebtedness |
|
(3 |
) |
(22 |
) |
Estimated Cash Available for Distribution |
|
$ |
9 |
|
$ |
20 |
|
|
|
|
|
|
|
|
|
Non-GAAP Financial Information
EBITDA and Adjusted EBITDA
EBITDA, Adjusted EBITDA, and Cash Available for
Distribution (CAFD) are non-GAAP financial measures. These
measurements are not recognized in accordance with GAAP and should
not be viewed as an alternative to GAAP measures of performance.
The presentation of non-GAAP financial measures should not be
construed as an inference that Clearway Energy’s future results
will be unaffected by unusual or non-recurring items.
EBITDA represents net income before interest
(including loss on debt extinguishment), taxes, depreciation and
amortization. EBITDA is presented because Clearway Energy considers
it an important supplemental measure of its performance and
believes debt and equity holders frequently use EBITDA to analyze
operating performance and debt service capacity. EBITDA has
limitations as an analytical tool, and you should not consider it
in isolation, or as a substitute for analysis of our operating
results as reported under GAAP. Some of these limitations are:
- EBITDA does not reflect cash
expenditures, or future requirements for capital expenditures, or
contractual commitments;
- EBITDA does not reflect changes in,
or cash requirements for, working capital needs;
- EBITDA does not reflect the
significant interest expense, or the cash requirements necessary to
service interest or principal payments, on debt or cash income tax
payments;
- Although depreciation and
amortization are non-cash charges, the assets being depreciated and
amortized will often have to be replaced in the future, and EBITDA
does not reflect any cash requirements for such replacements;
and
- Other companies in this industry
may calculate EBITDA differently than Clearway Energy does,
limiting its usefulness as a comparative measure.
Because of these limitations, EBITDA should not
be considered as a measure of discretionary cash available to use
to invest in the growth of Clearway Energy’s business. Clearway
Energy compensates for these limitations by relying primarily on
our GAAP results and using EBITDA and Adjusted EBITDA only
supplementally. See the statements of cash flow included in the
financial statements that are a part of this news release.
Adjusted EBITDA is presented as a further
supplemental measure of operating performance. Adjusted EBITDA
represents EBITDA adjusted for mark-to-market gains or losses,
non-cash equity compensation expense, asset write offs and
impairments; and factors which we do not consider indicative of
future operating performance such as transition and integration
related costs. The reader is encouraged to evaluate each adjustment
and the reasons Clearway Energy considers it appropriate for
supplemental analysis. As an analytical tool, Adjusted EBITDA is
subject to all of the limitations applicable to EBITDA. In
addition, in evaluating Adjusted EBITDA, the reader should be aware
that in the future Clearway Energy may incur expenses similar to
the adjustments in this news release.
Management believes Adjusted EBITDA is useful to
investors and other users of our financial statements in evaluating
our operating performance because it provides them with an
additional tool to compare business performance across companies
and across periods. This measure is widely used by investors to
measure a company’s operating performance without regard to items
such as interest expense, taxes, depreciation and amortization,
which can vary substantially from company to company depending upon
accounting methods and book value of assets, capital structure and
the method by which assets were acquired.
Additionally, Management believes that investors
commonly adjust EBITDA information to eliminate the effect of
restructuring and other expenses, which vary widely from company to
company and impair comparability. As we define it, Adjusted EBITDA
represents EBITDA adjusted for the effects of impairment losses,
gains or losses on sales, non-cash equity compensation expense,
dispositions or retirements of assets, any mark-to-market gains or
losses from accounting for derivatives, adjustments to exclude
gains or losses on the repurchase, modification or extinguishment
of debt, and any extraordinary, unusual or non-recurring items plus
adjustments to reflect the Adjusted EBITDA from our unconsolidated
investments. We adjust for these items in our Adjusted EBITDA as
our management believes that these items would distort their
ability to efficiently view and assess our core operating
trends.
In summary, our management uses Adjusted EBITDA
as a measure of operating performance to assist in comparing
performance from period to period on a consistent basis and to
readily view operating trends, as a measure for planning and
forecasting overall expectations and for evaluating actual results
against such expectations, and in communications with our Board of
Directors, shareholders, creditors, analysts and investors
concerning our financial performance.
Cash Available for
Distribution
A non-GAAP measure, Cash Available for
Distribution is defined as of September 30, 2020 as Adjusted EBITDA
plus cash distributions/return of investment from unconsolidated
affiliates, adjustments to reflect CAFD generated by unconsolidated
investments that were not able to distribute project dividends
prior to PG&E's emergence from bankruptcy on July 1, 2020 and
subsequent release post-bankruptcy, cash receipts from notes
receivable, cash distributions from noncontrolling interests,
adjustments to reflect sales-type lease cash payments, less cash
distributions to noncontrolling interests, maintenance capital
expenditures, pro-rata Adjusted EBITDA from unconsolidated
affiliates, cash interest paid, income taxes paid, principal
amortization of indebtedness, Walnut Creek investment payments,
changes in prepaid and accrued capacity payments, and adjusted for
development expenses. Management believes CAFD is a relevant
supplemental measure of the Company’s ability to earn and
distribute cash returns to investors.
We believe CAFD is useful to investors in
evaluating our operating performance because securities analysts
and other interested parties use such calculations as a measure of
our ability to make quarterly distributions. In addition, CAFD is
used by our management team for determining future acquisitions and
managing our growth. The GAAP measure most directly comparable to
CAFD is cash provided by operating activities.
However, CAFD has limitations as an analytical
tool because it does not include changes in operating assets and
liabilities and excludes the effect of certain other cash flow
items, all of which could have a material effect on our financial
condition and results from operations. CAFD is a non-GAAP measure
and should not be considered an alternative to cash provided by
operating activities or any other performance or liquidity measure
determined in accordance with GAAP, nor is it indicative of funds
available to fund our cash needs. In addition, our calculations of
CAFD are not necessarily comparable to CAFD as calculated by other
companies. Investors should not rely on these measures as a
substitute for any GAAP measure, including cash provided by
operating activities.
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