Clearway Energy (CWEN) Q4 2025 Earnings Transcript

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Date

Feb. 23, 2026 at 5 p.m. ET

Call participants

• Chief Executive Officer — Craig Cornelius
• Chief Financial Officer — Sarah Rubenstein

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Takeaways

• Full-year CAFD -- $430 million, at the top end of the original $400 million-$440 million guidance range, attributed to on-time commercial operations and recent growth investment performance.
• Fourth quarter adjusted EBITDA -- $237 million as reported, with CAFD (free cash flow) of $35 million, impacted by below-median wind resources and solar cash flows affected by debt service timing.
• 2026 CAFD guidance -- Reiterated at $470 million-$510 million, with the midpoint assuming P50 renewables expectations and contributions from dropdowns and acquisitions.
• 2027 CAFD per share target -- $2.70 or higher, reaffirmed, with future growth supported by newly commissioned assets and acquisitions.
• 2030 CAFD per share target -- $2.90-$3.10, representing a 7%-8% CAGR from 2025 levels, based on current late-stage pipeline progress and diversification of growth drivers.
• Repowerings -- More than 900 MW of wind repowerings scheduled for 2027, expected to deliver CAFD yields above 11% and extend asset life.
• New PPAs with hyperscalers and utilities -- Approximately two gigawatts signed in 2025 targeting data center demand, with further gigawatts in negotiation.
• Corporate capital investments -- $1.3 billion identified for 2027-2028 at a 10.5% CAFD yield or higher, with an additional $650 million available for deployment over 2028-2030.
• Incremental equity raised -- $100 million in opportunistic equity issuances since August, achieved with minimal share price impact during a more than 30% price climb.
• January 2034 senior unsecured notes offering -- $600 million raised at one of the tightest high-yield sector spreads since 2020, reinforcing Clearway's credit quality and growth funding plan.
• Late-stage pipeline and commercialization -- All 2026 and 2027 projects fully commercialized; 2028 pipeline contracted for nearly 50% of late-stage MW, with high conviction in securing the remaining contracts.
• CAFD yield on new projects -- "10%-11% in CAFD yields," per Craig Cornelius, reflecting both current dropdowns and new opportunities including recent Royal Slope and Swan offerings.
• PPA pricing environment -- Craig Cornelius stated, "pricing on PPAs that we signed this year in comparison to pricing on PPAs in those same comparable markets signed three years ago is about double."
• ERCOT portfolio revenue enhancements -- Two new offtake contracts awarded in Texas with hyperscalers, resulting in up to 11-year contract extensions at higher power prices and improved settlement structures.

Summary

Clearway Energy (NYSE:CWEN) reported full-year CAFD at the top of guidance, with growth underpinned by successful delivery of 1.3 GW of new projects and expansion of contracted pipeline opportunities targeting data center and hyperscaler demand. Management highlighted robust capital markets access, closing $600 million in senior notes and raising $100 million in equity at favorable terms, supporting a scalable investment plan for future dropdowns and growth initiatives. Strategic clarity was given on the timing and risk profile of additional investments, with nearly all projects through 2027 commercialized, late-stage pipeline for 2028 and 2029 exceeding requirements for 2030 targets, and increased conviction in achieving a 7%-8% CAFD per share CAGR through 2030.

• Management stated, "all development preparation now completed, and construction dates set" for the 2026 and 2027 vintages, signaling high schedule certainty on capital projects.
• Craig Cornelius emphasized that returns on co-located digital infrastructure complexes are expected to mirror the "11% CAFD yield" of traditional grid-tied assets, with individual revenue contracts for each resource type.
• The Honeycomb battery program in Utah is on track to hybridize the entire solar fleet, demonstrating an operational template for battery storage expansion across Western markets.
• Clearway's capital allocation strategy remains focused on maintaining a payout ratio below 70%, leverage in the "4.0x to 4.5x" range, and optimizing between debt and equity to enhance CAFD per share.
• PPA pricing was characterized as "solid and sustained" across all geographies, with a "pull-forward for demand," from customers seeking long-term power beyond 2030.
• Explicit commentary noted the successful replacement of merchant and hedged capacity with long-term PPAs, materially reducing revenue risk for key legacy Texas assets.

Industry glossary

• CAFD (Cash Available for Distribution): Free cash flow after debt service, maintenance, and other obligations, available to be distributed to shareholders.
• PPA (Power Purchase Agreement): A contract to sell electricity at pre-agreed prices and volumes, typically between a generator and a utility or commercial buyer.
• Dropdown: The transfer or sale of an asset from a sponsor or parent company to a publicly listed subsidiary, typically at a pre-determined yield or return target.
• Repowering: Upgrading or replacing key components of existing generation assets (e.g., wind turbines) to extend operational life and improve economic returns.
• ERCOT: Electric Reliability Council of Texas, the independent system operator managing the electric grid and market for most of Texas.
• Hyperscaler: A company providing large-scale cloud, data center, or computing services that is a major buyer of power due to high infrastructure needs.

Full Conference Call Transcript

Craig Cornelius: Thanks, Akil, and good evening, everyone. I will begin on slide five, where we summarize our business performance and our progress towards near and long term growth objectives. 2025 was a strong execution year for Clearway.

Sarah Rubenstein: We delivered full-year cash available for distribution at the top end of our original guidance range while our enterprise added 1.3 gigawatts of value-enhancing projects to our fleet. These newly commissioned assets, combined with accretive third-party acquisitions, serve as key growth pillars for this year and allow us to reaffirm our 2026 CAFD guidance. Execution across our redundant growth pathways has also allowed us to reiterate our 2027 CAFD per share target of $2.70 or better. We also made continued progress firming up our outlook towards meeting our 2030 CAFD per share target. Our fleet enhancement program remains on track, with meaningful further advancement on both repowerings and contract extensions.

Hyperscaler demand has been a major driver of sponsor-enabled growth this year. In 2025 alone, we signed approximately two gigawatts of new PPAs with hyperscalers and utilities serving data centers, and gigawatts more in revenue contracting opportunities are under current discussion. When combined with Clearway's late-stage development projects, this opportunity set provides us with an abundant array of pathways to meet our 2030 objectives. Taken together, we remain on track toward our 2030 CAFD per share target of $2.90 to $3.10 per share, representing a 7% to 8% CAGR from 2025, while also laying the groundwork for sustained growth beyond 2030. Turning to slide six. Progress continues along our fleet optimization pathway, with repowerings on schedule for 2027 commercial operations.

These repowerings, totaling more than 900 megawatts, are expected to deliver attractive CAFD yields in excess of 11% while extending the useful life of our wind fleet. In addition to repowerings, we are executing revenue enhancements across our operating ERCOT portfolio, where the value of Clearway's available open operating wind capacity has seen growing value appreciation in the technology and industrial customer community. Building on our momentum from last year with Wildorado, we have been awarded two offtake contracts in Texas, one with a prominent hyperscaler, with potential to lengthen the contracted life of these projects by as much as 11 years and at a higher power price and more favorable settlement structure than our status quo revenue outlook.

Turning to slide seven. Sponsor-enabled growth continues to bolster our 2030 objectives. All of our CWEN committed projects are under construction and progressing on track through milestones to meet our commercial operations date targets. For the 2027 COD vintage, CWEN has now received an offer for investment in the Royal Slope project, while we have now also identified the second phase of the Honeycomb 2 battery portfolio as a future potential CWEN investment opportunity. As the portfolio has been awarded revenue contracts with an offer expected later in 2026 as commercialization progresses. We first previewed the Honeycomb projects in May 2024.

With phase one almost complete in construction now, we are pleased to be on track to execute the second phase, developing and building battery assets adjacent to Clearway's existing Utah solar fleet, now with an outlook for hybridizing the entire fleet. Looking to 2028, newly identified opportunities for investment by CWEN at Swan Energy Center and Catamount Energy Center are now in view, both supported by 20-year PPAs with Google, further extending our sponsor-enabled growth runway. Turning to slide eight, we provide more detail on how commercialization across our development pipeline is translating into a visible and executable pathway towards long-term growth.

In our 2026 and 2027 construction vintages, 100% of our planned repowering and new construction projects have been successfully commercialized. With all development preparation now completed, and construction dates set, these projects have safe-harbored tax credit qualification, advanced interconnection and permitting status, signed long-term PPAs, and secured policy-resilient equipment supply. Looking further out, our 2028 and 2029 construction vintages are supported by a sizable pipeline that is meaningfully larger than what is required to meet our 2030 CAFD per share goal.

With contracting secured for Swan and Catamount, we have contracted nearly 50% of the megawatts classified as late stage within the 2028 COD vintage, firming up our 2030 CAFD per share outlook with high confidence on completion of the remainder of the late-stage projects we are directing to 2028. We have high conviction in our organization's ability to secure additional revenue contracts for the balance of our late-stage pipeline in this vintage as the remaining projects in that vintage are weighted towards projects in California and other Western markets that have been a long-demonstrated core strength of our enterprise and commercialization.

We see clear pathways for this vintage to generate substantial CAF towards our 2030 target given the amount of corporate capital we have line of sight to deploying in that year. Within the 2029 COD vintage, we have built in resiliency with development activity of over seven gigawatts, substantially larger than the volume needed to meet our 2030 target. We see pathways to deploy well over $600,000,000 in corporate capital in that year, subject to availability and application of our characteristic prudent capital allocation framework. From this position of strength, we will invest in attractive projects that show clear accretion to CAFD per share both in the near and long term.

Beyond the 2029 COD vintage, we are encouraged by the prospects we have to further extend our growth outlook after 2030 through diverse pathways. Foundationally, we continue to focus our core development activities on proven technologies in geographic markets where renewable projects and storage projects are cost competitive. Our sizable pipeline of storage projects creates an especially compelling value proposition for customers into the next decade. Approximately 90% of our 2030 late-stage pipeline is either located in our strategic core geographic markets where renewable energy will be a least-cost, best-fit resource without tax credits or is a storage project positioned for tax credit qualification well into the next decade.

Collectively, this purpose-built growth investment opportunity set provides substantial redundancy relative to the approximately two gigawatts per year or more that we expect to develop into the 2030s. Beyond core development activities, Clearway Group continues to develop multi-technology generation complexes across five states to serve growing and rapidly expanding data center infrastructure demand. As illustrated in our appendix pipeline reporting materials, the complexes are comprised of diverse technologies configured to offer hyperscalers competitively priced firm power in places where digital infrastructure is set to grow in years ahead.

The first generation resources at these complexes could come online as soon as late 2028, and investment timing for CWEN will be determined by pacing of generator interconnection, customer engagement, and our own prudent management of capital deployment capacity of Clearway Energy, Inc. In regards to potential corporate capital deployment tied to both accelerating grid-tied project development and large co-located digital infrastructure complexes, we are well placed to deploy at least $650,000,000 of capital incremental to our prior goals over 2028 to 2030, with the optionality to scale that amount higher subject to availability of accretive capital sources and our rigorous underwriting criteria and capital allocation framework.

Accelerating progress in our core development pipeline along with this activity to directly serve data center demand drives our increased conviction in the growth longevity of our platform into 2031 and the years beyond.

Craig Cornelius: Turning to slide nine.

Sarah Rubenstein: We bring together the building blocks that underpin our 2030 CAFD per share target and our outlook beyond 2030. From our 2027 target of $2.70 per share or better, our identified and committed projects provide an increasingly clear pathway to $2.90 to $3.10 of CAFD per share by 2030. Within the 2027 and 2028 time frame, we have identified approximately $1,300,000,000 of corporate capital investment opportunities tied to commercialized projects that Clearway Energy, Inc. intends to deploy at a 10.5% CAFD yield or better. Given identified growth to date, we are in a prime position to meet our 2030 target.

We believe that future milestones will be executed in a manner supportive of hitting our 2030 goal, including through future identified sponsor-enabled growth, potential third-party M&A not embedded in our target, and accretive growth financing and refinancing our 2028 and 2031 corporate bonds. As has been our practice in the past, we plan on waiting until later this year to provide a formal long-term guidance update. But given the emerging potential for corporate capital investment around our accelerating core development work, and the emerging opportunity for investment in digital infrastructure power supply, we are increasingly optimistic on the ability to grow CAFD per share at 5% to 8%+ in 2031 and the years beyond from our 2030 target baseline.

With that, I will turn the call over to Sarah, who will walk through our financial results and funding outlook in more detail.

Sarah Rubenstein: Thank you, Craig. Turning to slide 11. For the fourth quarter, Clearway delivered adjusted EBITDA of $237,000,000 and cash available for distribution, or free cash flow, of $35,000,000. In our renewables and storage segment in the quarter, wind resource was below median expectations across the fleet, including California, while solar relative to budget expectations was impacted by the timing of debt service related to growth investments. In the quarter, flexible generation exhibited solid operational execution in line with budgeted expectations.

For the full year, our results came in above the midpoint of our original range of $400,000,000 to $440,000,000, with full-year CAFD generation of $430,000,000, which benefited from on-time commercial operations and performance of recent growth investments and was also driven by solid annual fleet performance across the portfolio. With the solid conclusion to 2025, we are reiterating our 2026 CAFD guidance range of $470,000,000 to $510,000,000. As per our usual practice, guidance incorporates incremental contributions from closed and committed dropdowns and third-party acquisitions. Our guidance midpoint assumes P50 renewable expectations, and the range reflects potential variability in resource performance, energy pricing, and timing of growth investments. Turning to slide 12.

We are very proud of how Clearway's operations team has performed with excellence, resulting in high levels of plant availability across all technologies throughout 2025. The team maintains a high level of excellence in both health and safety and plant availability and performance. This was a key driver that allowed us to deliver full-year results in 2025 that were above the midpoint of our original guidance. We are extremely proud and grateful for the diligent work by the team to maintain and operate our fleet, in particular as we manage the challenges of winter storms where regions' high clean power penetration are able to keep electricity prices lower. Turning to slide 13.

We continue to be in an excellent position to prudently fund our growth and have raised additional capital since our last call, firming up our funding outlook. We continue to target a long-term payout ratio below 70% by 2030, resulting in retained cash flows continuing to become a greater source of funding for accretive investments. Corporate debt continues to be a pillar of growth funding, while we remain focused on honoring our commitment to target a BB credit rating. In January, we closed an upsized offering of $600,000,000 in senior unsecured notes due in 2034 at an attractive rate relative to assumptions in our funding plan that supports our longer-term target growth.

The spread to Treasuries was the second tightest high-yield issuance spread in the broader power sector since 2020, demonstrating the quality of our credit. To round out our funding plan, we expect to continue to use equity issuances as a tool to meet our growth objectives, but only when accretive to CAFD growth. Since our last earnings call, we executed $50,000,000 of opportunistic equity issuances that were the least dilutive issuances in our platform's history, while extending our position of strength to have further flexibility on the timing of future issuances.

Since late August, we have now issued $100,000,000 of equity in less than two months of trading days while our stock price is up over 30%, illustrating our ability to deftly issue equity without price disturbance. Looking further out, and as we outlined last quarter, we will raise additional debt and equity in the coming years to meet our 2030 goals. But to reiterate, we plan to be unwavering in our disciplined approach to meet funding goals and to execute our funding strategy in a transparent manner similar to what is observed among listed utilities. And with that, I will turn the call back over to Craig for closing remarks.

Craig Cornelius: Thanks, Sarah. To recap progress on the goals we have set, we delivered 2025 results at the top half of our CAFD guidance range, and fully funded all sponsor-enabled dropdowns, which are performing extremely well. We also executed value-added third-party M&A that strengthens our fleet and supports long-term value creation. Looking ahead, substantially all projects identified for CWEN investment through 2027 are now commercialized, and Clearway Group's late-stage pipeline is significantly larger than what we need for 2028 and 2029 completion to achieve our 2030 goals. As we look forward, we intend to continue increasing visibility into our growth trajectory, including rolling forward explicit CAFD per share targets beyond 2030 as commercialization progresses later this year.

Taken together, these factors make us confident in the longevity of Clearway's long-term growth prospects, enabling us to deliver durable value for our shareholders well beyond 2030. Operator, you may open up the line for questions. Thank you.

Operator: As a reminder, to ask a question, you will need to press *11 on your telephone. To remove yourself from the queue, you may press *11 again. Please limit yourself to one question and one follow-up to allow everyone the opportunity to participate. Please standby while we compile the Q&A roster. Our first question comes from the line of Mark Jarvi of CIBC. Your question, please, Mark.

Mark Jarvi: Thanks. Good evening, everyone. Lots of good disclosure. I appreciate everything. Clearly, organic growth is ramping here. I am just curious on the M&A outlook. Done some deals the last couple of quarters. I am just curious how that environment looks now. Clearly, you are seeing an attractive cost of capital within the equity and debt markets. Is that changing your approach and position on M&A right now?

Craig Cornelius: Yes. Thanks for the acknowledgment on the organic growth front, we are really proud of the work that the organization is doing to chart that course. And, you know, I think with respect to M&A, the environment of today looks quite similar to what the environment looked like last year. As you know, that sets up well for us as an organization that is in a position to help sustain operating assets that are in the market already or to engage on combinations of operating and development assets, which an organization like ours is uniquely positioned to advance.

And at the same time, the strength that we are demonstrating in our own organic growth outlook puts us in a position to be every bit as disciplined as we were last year when evaluating opportunities, because we are in the luxurious position of evaluating M&A as something that would need to be demonstrably accretive to the outlook that we have already, and something that presents a really compelling proposition for our shareholders to fund. We like what today's environment does for large enterprises. It is certainly favorable that there is a large universe of subscale peers that need to evaluate whether they are really in a position to successfully compete and grow in our industry in the future.

And because our outlook for organic growth is so bright, where we do engage on opportunities like that, we are engaging on them with a high bar and insistence that any potential capital allocation to M&A that would be in exceedance of our existing capital allocation plans and goals would represent a very compelling investment proposition for our company and our investors.

Mark Jarvi: Got it. And then just a quick question, just on page six, the PPAs in ERCOT. Just comment in terms of when those would kick in and maybe quantify if it is enough to move CAFD by a percentage or contribute to the growth outlook for the company?

Craig Cornelius: In each instance where we are working on those, they would be effective this year. And the way we think about those instances is that they are huge quality of earnings enhancements because the settlement structures on each of those revenue contracts are favorable to those that the projects have today, and the new unit-contingent long-term contract duration for the projects would extend well into the next decade as a result of the recontracting. And for any one project, the magnitude of its contribution in CAFD per share varies from one instance to another, and also, as you look over time into the late 2020s as a function of your point of view on merchant pricing in ERCOT.

So when we think about the goals that we set for 2030 and beyond, our successfully completing those recontractings is part of what helps us build confidence that we are really aiming at, you know, $3.10, the top end of our target range or better, in those out years, and helps us build confidence in our long-term CAFD per share growth goals because of the certainty that we can assign to revenues from those facilities into the future.

Mark Jarvi: So it is as much about the quality of the CAFD being enhanced or derisking relative to the increased magnitude of the CAFD. Is that a fair way to think about it?

Craig Cornelius: Yeah. And I think it reduces the exposure to merchant pricing in other parts of our portfolio in the future. So they will most definitely be helpful to our CAFD expectations in the near term, but not especially material in the context of a business that is targeting what we are in operating CAFD this year and next. So think single-digit millions in CAFD enhancement. But the very long-term benefit is substantial. We also like what it signals in terms of the inherent value of an operating fleet like ours and its attractiveness to customers that are trying to plan power for the long term.

Mark Jarvi: Makes sense. Okay. Thanks for the time.

Operator: Thank you. Our next question comes from the line of Julien Dumoulin-Smith of Jefferies. Your line is open, Julien.

Hannah Velásquez: Hi, everyone. Thank you. This is Hannah Velásquez on for Julien. Congrats on the quarter, and thank you for the update. So I had a similar question, but a bit more about the PPA pricing environment. Can you give us a sense of what you are seeing out in the market? It sounds like ERCOT has been favorable to you. But are there any other markets to identify or call out where you are seeing similar favorable pricing? What is driving that? And then similarly, are you seeing, just in the sense of elevated demand, an acceleration in some of your conversations with your offtakers that they are trying to renegotiate or recontract ahead of plan? Thank you.

Craig Cornelius: Yeah. Yeah. And thanks for the acknowledgment. We are really happy with the work that our team did over the last quarter. Yeah. You know, I think we are seeing a supportive pricing environment really across all geographies for development assets that provide additionality in power markets, whether they are deregulated or regulated. Really anything that we can interconnect over the course of the next three years exhibits very significant differentiated value, whether it is to a regulated utility who is the natural customer in a regulated market or to a technology enterprise or another source of growing industrial load in deregulated markets where we can sell directly to those customers.

Rough rule of thumb is that pricing on PPAs that we signed this year in comparison to pricing on PPAs in those same comparable markets signed three years ago is about double. We are not seeing pricing necessarily escalate higher observably today than it was, say, three to four months ago, but it is very much solid and sustained. And we think that is healthy. You know, the attributes of the power plants that we are constructing today are valuable, and all of us across the sector need to be focused on delivering an affordable energy equation for customers.

So what we would say about pricing is it is robust, it is staying strong, and we feel quite good about the return proposition we produce for our investors and the value proposition that we give our customers at these levels. In terms of its influence on operating asset long-term revenue contracting, we similarly see that picture is pretty consistent across geographies. There is not much motivation either from us as a seller or from customers to be talking about contract extensions on projects that see their PPAs expire later than 2030, say.

But where we do have open length that can serve demand in the near term, it certainly creates an opportunity to sell that length well into the 2030s and at a price that is solid and allows us to sustain earnings well into the future. And then in terms of pull-forward for demand, we are most definitely seeing that there is a growing focus on how much can be built and how soon it can be built, extending out for resources that could COD at least through 2029 today.

And I think part of what makes us as confident as we are around the upside in capital deployment opportunity for Clearway Energy, Inc. in excess of the $2,500,000,000 worth of corporate capital investments that we had pointed to just last quarter is the strength of that demand and essentially, as I have noted before, the readiness of customers to buy power from pretty much anything that we can interconnect and permit and construct between now and 2029 at this point.

Hannah Velásquez: Okay. Got it. Super detailed. Thank you. And as a follow-up, can you just speak to the permitting landscape? How have things progressed or changed over the past couple of months? How much runway do you have reflected in your pipeline, just to the extent that we are hearing about permitting challenges, particularly on the solar front.

Craig Cornelius: Yeah. I think this is one way we are especially proud of our business and where we are optimistic that you will see us outperform many of our peers over the quarters and years ahead. As we noted before, the business plan we have laid out that would allow us to target the top end or better of our 2030 CAFD per share goals and to be able to sustain 5% to 8%+ CAFD per share growth into the 2030s, we need to build about two gigawatts a year worth of projects. And at the project sizes that we are increasingly developing, that could translate into, say, something like six projects a year on average.

And we are finding that we have got a point of view around our ability to do better than that as we look later into the decade. And a lot of that is a function of the very effective work we have done on the ground in the places where we are creating projects. You see on page 17 of our earnings slides a map of the late-stage pipeline we are advancing, and in each one of those jurisdictions, we feel quite confident and solid about the work that we are doing in those local communities to enable those resources.

And we also feel really great about the relationship that we have forged at the federal level with an administration whose energy policy objectives we fully understand and sympathize with, and I think has been able to see in our company an enterprise that respects their goals and is prepared to work on enabling their own. So we feel very good about our ability to execute in the current permitting environment, and we think that is a unique differentiator of our enterprise.

Operator: Thank you. Our next question comes from the line of Justin Clare of Roth Capital Partners. Your line is open, Justin.

Justin Clare: Hi. Good afternoon. So just wanted to start on the co-located data center complexes. How should we think about the return profile of those relative to traditional dropdowns of wind, solar, or storage assets, and relative to the 10.5% CAFD yield that you have talked about? And then also just curious on the ownership structure we should be thinking about for CWEN for one of these complexes that includes renewables and gas and storage. Would you anticipate CWEN owning, you know, the entirety of, you know, all of those assets? Or could the gas component be owned by a utility? How should we be thinking about that?

Craig Cornelius: Yeah. The way these projects are being developed, you ultimately have a collection of individual power plants that are all located in the same place, each of which have their own respective revenue contract and severable electrical infrastructure, and in every instance, some phasing of how one unit or another comes online based on the staging of demand from the data center and the ability of an interconnecting utility to serve load enabled by the colocated generation resources that we build.

So at least as far as Clearway Energy, Inc. is concerned, our intention is to create a succession of project investment opportunities that look like the other project investment opportunities we routinely create, with contract tenors like those you see from us recently measured in multiple decades, settlement and restructures that are really the same as well. As we plan these resources today, we expect to deliver an investment return proposition for Energy, Inc. consistent with what it sees on other comparable long-term contracted assets.

And so if you are trying to imagine what these could present an opportunity for Clearway Energy, Inc., you could think of their presenting similar CAFD yield investment opportunities with similar sort of 20-year-type tenor contracts. And as we noted, that investment opportunity is all additional to what our core grid-connected opportunities are targeting today. In terms of ownership of gas resources, this is something that will be a case-by-case consideration based on the unique circumstances and interests of the interconnecting utility at that location. And we think of the gas resources at each one of these locations as being an essential part of the puzzle of assuring that firm capacity can be delivered.

And what corporate entity is the best owner of that will vary from instance to instance. But where Clearway Energy, Inc. makes any investment, it would do so into some structure that is a long-term toll like the one that we have in Carlsbad Energy Center. Those are great investments for CWEN. That is actually one of our highest reliability sources of cash within the fleet. So we look forward to illustrating what these different opportunities could translate into for Clearway Energy, Inc. in the future, and are especially mindful of the importance of fitting them into its own capital allocation environment.

And you could think of these as additional ways for us to accelerate CWEN's investment tempo, but into the same type of assets that it owns already today.

Justin Clare: Okay. Got it. No, that is really, really helpful. And then just as a follow-up, you had raised $50,000,000 in equity in Q4, $50,000,000 in Q1, so I think a total of $100,000,000 here. So just how should we think about, with this additional capital, your ability to deliver on the 2030 goals or potentially above those goals at this point in time?

Craig Cornelius: Yeah. You know, first, I think we are quite pleased with the execution of our organization and its capital markets activity, both in the bond issuance we completed earlier this year and each one of the two equity issuances that we have already completed through our at-the-market and direct stock purchase programs. And we have looked at those as a useful proof of concept to our investors that we can return to being a regular issuer of securities, and we can successfully issue them at a pricing level that makes the investments we are making today at 10.5% CAFD yields very accretive on a CAFD per share basis for our investors when accounting for how we fund those investments.

And it is our comp—we are building confidence based on that demonstrated execution that allows us to think about the potential for accelerating the investment tempo at CWEN based on the opportunity set that we have previously described. And certainly, if CWEN is in a position to invest at a higher cadence than the $2,500,000,000 worth of capital deployment we had previously noted would take us to the top end of our $2.90 to $3.10 in CAFD per share goal for 2030, that increased investment cadence would bring with it modest amounts of additional funding requirement.

But we would only undertake those commitments in that funding plan if we thought it was going to lead us to substantially better outcomes than we have already committed to today. So bottom line, we are quite proud of the quality of execution in our capital markets work thus far. We hope it builds confidence amongst our investors that we, like some of the premium utilities we compare ourselves to, can really enter into what is a potential super cycle for growth investment opportunities, and that we can do so assuring that an increased cadence of investment activity will be highly accretive to our existing shareholders.

Operator: Thank you. Our next question comes from the line of Angie Storozynski of Seaport. Please go ahead, Angie.

Angie Storozynski: Hi. How are you? So I have a question about the dropdowns from your sponsor because I am just wondering, given the strong performance of your stock and the reduction and implied reduction in the cost of funding, is it fair to assume that the future dropdowns still happen at this, say, 10.5%+ CAFD yield? Or is it that we should think about it more as a spread over your cost of financing, i.e., the stock performance would be sort of potentially weighing on the future CAFD yield from the dropdowns.

Craig Cornelius: Yeah. You know, I think what we have said in our last few long-term planning calls is that we are planning our business around an average of 10.5% CAFD yields on new capital allocation, and we might see some projects capitalized and completed below or above that level. And as you can see from the disclosure we have most recently provided and also dropdown commitments that were reached last year, we have had some instances where we have been able to deliver at levels above that kind of 10.5% level. And every time we are able to do that, we are pleased about what that means for the shareholders of Clearway Energy, Inc.

We see that giving Clearway Energy, Inc. the opportunity to participate in the rising return environment is core to assuring that the flywheel of success in our business continues. And as we plan our projects, as we price new revenue contracts at Clearway Group, as we capitalize them and prepare them for offerings for CWEN, we are looking to deliver a consistent growth algorithm, and we have communicated that growth algorithm anticipates deploying CWEN's capital between 10%–11% in CAFD yields, and that is what we are continuing to plan for.

Angie Storozynski: Right. Because we are hearing all of these announcements coming from Clearway Group. Right? And they are definitely bullish for the sponsor. I am just, you know, debating if you guys will share some of the benefit, not just coming from the scale of projects or the megawatts being developed, but also the margins of it. Again, I am debating if there is some improvement in margins for you guys, or is that the benefit of the digital infrastructure pipeline more accrues predominantly to the parent, and then you guys are more of a financing arm, and so, you know, it all comes down to the spread versus your cost of financing.

Craig Cornelius: No. No. No. I totally understand the question. Well, I mean, I think what you see in the existence proof of the recent offerings from Royal Slope and Swan, which were made in the course of the current month, certainly after we have seen a share price increase for CWEN, each of those were offered within that same 10% to 11% CAFD yield range where assets were being offered last year. And because you carefully pay attention to our story over time, Angie, I know you have noticed that CAFD yield has increased over where assets were being dropped down, say, 18 months ago and certainly 36 months ago.

So I think there is a clear existence proof that the Clearway Group sponsor entity is providing the opportunity for Clearway Energy, Inc. to participate in the rising return environment and deliver an improving return proposition for its investors as a result. And as far as the digital infrastructure campuses are concerned, you know, I think for us, the easiest rule of thumb for the time being is to assume that each one of these assets exhibits a return and contract proposition similar to what we do in traditional grid-tied projects today. As we get to know what is possible in those complexes, we will see whether it is possible to do even better than that.

But in our minds, and I think probably in yours, we should recognize that whether power resources are co-located with a data center or they are delivering power to data centers through the grid, there is still some cost-of-ownership equation that we need to satisfy for the owner of that digital infrastructure. And mindful of that cost equation, we would not want to overpromise about the potential for doing even better than what is already a great return for CWEN on the projects that we are deploying already into it. So bottom line, we think the investment proposition for Clearway Energy, Inc. has been improved over the course of the last 18 months.

It has certainly been sustained even while its cost of capital has declined. And we understand that part of what has allowed for that cost of capital to decline is the confidence our investors have that we are going to sustain a strong investment proposition for the company.

Operator: Our next question comes from the line of Heidi Hauch of BNP Paribas. Please go ahead, Heidi.

Heidi Hauch: Hi, good afternoon. Thanks for taking my question. I just have two follow ups. With respect to the $650,000,000 to $800,000,000 in investment upside, kind of incremental to the $2,500,000,000, I know you had mentioned potentially issuing equity if it is accretive to fund that. But should we be expecting that the funding strategy or the percent kind of funding breakout that you had highlighted last quarter with the 5% to 15% equity, 20% retained cash flow and the remaining corporate debt—Is that kind of the strategy you would use to fund even the incremental investment? Would this incremental investment require a different kind of corporate capital funding strategy?

Craig Cornelius: I think that same approximate strategy is how we imagine running the business into the future.

When we think about the particular constraints and factors that we are trying to optimize for in building a long-term plan for Clearway Energy, Inc., the things we think about are our intention of running the business to the same 4.0x to 4.5x leverage ratio that we have historically run it at, our goal to drive our payout ratio down to 70% or lower in the long run so that we can create a strong base of recurring cash flow that can be reinvested in growth at a growing absolute level over time, sustaining a payout dividend per share growth rate that is compelling in its alignment with that of other premium utilities.

And once we have accounted for each one of those constraints, then optimizing the balance of corporate debt issuance and equity issuance based on what maximizes CAFD per share for our owners. So I think you could think of that as kind of that approximate percentage of sources as being sustained in the funding plan we are building for ourselves, and that we would increase as additional investment opportunities present themselves.

But again, really, when we plan the business, we are thinking about those constraints and those goals of maintaining a prudent leverage ratio, driving to a payout ratio of 70% or lower, and assuring that we are going to be able to compound our dividend per share growth rate at some level that is similar to what you would see from other premium valued, fast-growing utilities. And then the particular mix of equity and debt issuance in any given year would be something we optimize based on the long-term CAFD per share impact that we would expect to see.

Heidi Hauch: Great. Thank you. And then just a follow-up. Thanks for the helpful commentary on the revenue enhancement opportunities in Texas. Just want to make sure I am understanding. So, are these PPAs that were set to expire this year, or rather PPAs that customers are kind of proactively recontracting years before expiration? And if that is the case, is there any further upside to this kind of 617 megawatt number as power demand continues to increase and demand for long-term agreements increases as well?

Craig Cornelius: Yeah. Actually, what we are executing in the instance of these projects is a little bit more like what we have done with the Mount Storm repowering in PJM, where the level of interest from hyper customers and other corporate customers in ERCOT for the shape of generation that is available from wind projects in the market allows us to terminate existing bank hedges that are on those projects, replace them with a new long-term unit-contingent power purchase agreement, and what was previously a combination of hedged and merchant capacity at the projects now becomes fully contracted.

Where we do have some existing commercial and industrial customers for those projects, as their existing power purchase agreements roll off, the new customers' contracted quantity increases over time. So what we end up with is a fully contracted project with a very favorable risk profile on our settlement structure that allows us to now look at this as a contracted asset well into the next decade.

Heidi Hauch: Great. Thank you so much.

Operator: Thank you. Next question comes from the line of Nelson Ng of RBC Capital. Your question please, Nelson.

Nelson Ng: Great. Thanks, and good evening, everyone. So first question is, can you just talk about whether there is excess interconnection capacity at your existing portfolio and whether we should expect a broader trend in terms of co-locating battery storage at a number of sites. Because I know, Craig, you mentioned earlier on the call that you are potentially hybridizing the entire fleet, and I am not sure whether this is what you were referring to.

Craig Cornelius: Yeah. Thanks. I think that reference was the entire fleet of solar projects that we had in Utah. And it is a great test case for what you are asking about, where for those projects, the ability to provide a firming capacity resource, making use of existing interconnection and the faster path towards interconnecting batteries versus filing interconnection queues for new batteries that would be built elsewhere, created a really compelling value proposition for the utility in the state that needs to serve growing demand. There is most definitely the opportunity to do something like that in other projects in our fleet. And we continue to examine what the optimal timing, location, and instance of that would be.

It tends to be most valuable at solar projects. And the bulk of our solar fleet is either in California or is interconnected to deliver energy and capacity attributes into California. And something we like about that opportunity is that we have got the ability to take our time with it. Much of that solar fleet is contracted well into the next decade. And the ability to install hybridizing battery resources that qualify for tax credits based on the provisions of the one big beautiful bill extends well into the next decade.

So in the Honeycomb program through which we have installed batteries, or aim to install on the remainder of the fleet batteries in its entirety, we have got a good proof point for what it looks like when a market creates an opportunity for that kind of hybridization, and we think we will be in a position to be able to do things like that well into the next decade.

Nelson Ng: That is great color. And then just another quick question. So just regarding the pending Dureva acquisition, do you have an updated time frame of when you expect the transaction to close? I think your previous guidance was, like, the first half of this year, and, obviously, we are near the February.

Craig Cornelius: Yeah. We are on a very solid track towards concluding that acquisition imminently. And we expect to be able to close well in advance of the end of the first half of this year. And you could see in some of our disclosures that the first phase of the financing that—the nonrecourse financing that will be employed to fund the acquisition—actually already was put in place by Clearway Energy, Inc. So the closing of the transaction is imminent.

Nelson Ng: Great. Thanks. I will leave it there.

Operator: Thank you. I would now like to turn the conference back to Craig Cornelius for closing remarks. Sir?

Craig Cornelius: Yeah. Thank you, everyone, for joining us today and your ongoing support of Clearway. We are proud of the work we are doing to deliver new generating capacity in markets across our country, with an array of diverse energy resources that are critical to our country's needs. In the quarters ahead, we are looking forward to continuing to execute with operational excellence and fulfilling our bright outlook for robust financial growth at best-in-class levels for you, our valued investors. Operator, you may close the call.

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

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