Hello, and welcome to the Clearway Energy, Inc.'s Third Quarter 2025 Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. It is now my pleasure to introduce Senior Director, Investor Relations, Akil Marsh.

Thank you for taking the time to join Clearway Energy, Inc.'s third quarter call. With me today are Craig Cornelius, the company's President and CEO; and Sarah Rubenstein, the company's CFO. Before we begin, I'd like to quickly note that today's discussion will contain forward-looking statements, which are based on assumptions that we believe to be reasonable as of this date. Actual results may differ materially. Please review the safe harbor in today's presentation as well as the risk factors in our SEC filings. In addition, we will refer to both GAAP and non-GAAP financial measures. For information regarding our non-GAAP financial measures and reconciliations to the most directly comparable GAAP measures, please refer to today's presentation. In particular, please note that we may refer to both offered and committed transactions in today's oral presentation and also may discuss such transactions during the question-and-answer portion of today's conference. Please refer to the safe harbor in today's presentation for a description of the categories of potential transactions and related risks, contingencies and uncertainties. With that, I'll hand it over to Craig.

Thank you, Akil. We appreciate everyone joining us today. Clearway is well positioned to deliver on its near- and long-term growth objectives as it proves out the inherent strength of its enterprise business model and harnesses the advantages of being a well-prepared supplier of choice amidst an emerging renaissance in the U.S. power sector. For 2025, we've narrowed our financial guidance to the top half of our originally set range, following a strong third quarter performance and the addition of well-performing drop-downs to our operating fleet. Out to 2027, we have line of sight to delivering our increased CAFD per share target of $2.70 or better, building from the successful execution of multiple acquisitions and sound preparation of multiple repowerings and sponsor developed drop-downs. And today, we're also establishing a 2030 financial target, setting a CAFD per share goal of $2.90 to $3.10 per share, which translates to a 7% to 8% growth CAGR from our 2025 guidance midpoint, reflecting the extensive progress we've made across our growth pathways and the confidence we have in their prospective success in the years to come. Growth in both the medium and long term reflects the strong traction we've made in supporting the energy needs of our country's digital infrastructure build-out and reindustrialization. We expect this to be a core driver of Clearway's growth outlook well into the 2030s. To fund this abundant opportunity set, as we've noted in the past, we'll increasingly use retained cash flow as a funding source while prudently using debt and modest equity issuances to extend our position of strength. To that end, our long-term payout ratio beyond 2030 is targeted to be less than 70%, a goal we are targeting while continuing our commitment to maintain competitive EPS growth in the long term. With the robust growth…

Thank you, Craig. Turning to Slide 16. For the third quarter, Clearway delivered adjusted EBITDA of $385 million and cash available for distribution or CAFD of $166 million. Year-to-date, we've generated $980 million of adjusted EBITDA and $395 million of CAFD. In our Renewables and Storage segment, wind resources in key regions tracked close to median expectations, while solar benefited from the execution and timing of growth investments. Flexible generation also performed in line with sensitivities. Turning to our balance sheet. We executed $50 million of opportunistic discrete equity issuances at accretive levels since the last earnings call through our ATM and dividend reinvestment and direct stock purchase plan. This reflects our continued commitment to capital discipline and our ability to access markets efficiently to support growth. Given the strong year-to-date performance and our expectations for the remainder of 2025, we are narrowing our 2025 CAFD guidance range to $420 million to $440 million. We're also establishing our 2026 CAFD guidance range at $470 million to $510 million. This guidance incorporates incremental contributions from drop-downs and third-party M&A as we continue to execute on our growth strategy. As in past years, our guidance midpoint assumes P50 renewable production expectations and the range reflects the potential variability in resource performance, energy pricing and timing of growth investments. As a last note on this slide, I'd like to note that our definition of CAFD is a conservative metric that represents the ongoing sustainable cash flow generation of our business and has been consistently applied throughout our history and remains unchanged. We have historically used this metric to measure the amount of cash available to distribute to our shareholders. In the interest of making our financial metrics more recognizable across peer benchmarks, we may now sometimes reference cash available for distribution interchangeably with…

Thanks, Sarah. Turning to Slide 20. We have decisively delivered a clear path to achieving our updated 2025 guidance and our 2027 target range. We've now established a 2030 growth target, demonstrating a 7% to 8% compound annual growth rate that matches up with the best in premium companies in the listed infrastructure and utility community. Our team has done an incredible job advancing our growth pathways and establishing strong visibility into how we can meet the 2030 target range we have set today. In the quarters ahead, you can expect that we will continue to operate our fleet with excellence, delivering predictable cash flow and payment of committed dividends, execute with trademark craftsmanship on the completion of the projects we have identified to enable our growth plans for the near term through 2027, further crystallize and communicate our road map to fulfill our 2030 targets through the fleet enhancement initiatives and growth investments we will complete over 2028 and 2029, demonstrate that our funding strategy is being executed in a way that is financially prudent and accretive and show each year how the enterprise we have created in Clearway has one of the most diversified and promising models in the U.S. power sector for delivering sustained profit growth alongside competitive dividend growth as we extend the strong performance of this model through the end of this decade and into the decade to come. Operator, you may open the lines for questions.

[Operator Instructions] And our first question comes from the line of Dimple Gosai with Bank of America.

The first one was something on the slides that kind of caught my attention here. You flagged development of flexible gas paired with renewables near hyperscaler clusters. Can you give us a sense of timing of these opportunities and what returns do these hybrid data center complexes target and how you think of the risk return profile compared to traditional renewables? And then I have a follow-up.

Yes, sure. We've noted at the beginning of this year that we would be undertaking work to complement our existing pipeline of renewable and battery development assets and operating assets with other complementary resources that could help serve the growing co-located data center loads that the digital infrastructure community has a need to supply. And over the course of the year, we have done the work to assess which of our pre-existing development and operating assets were positioned in locations that were most responsive to the needs of our current and prospective customers in that community. And the projects that you see noted here exhibit the same geographic footprint that you'd seen noted earlier this year. and represent work that Clearway Group is doing to create a subset of investment opportunities that would likely be accessible to Clearway Energy, Inc. in 2030 and beyond. The plans we've laid out today and the goals we've set out to 2030 don't depend on any of these complexes being realized. We can hit the goals we've outlined building and developing the same projects that make up the fleet that we have today with the same type of contracting structures that we employ in our operating fleet and in our newly offered drop-down assets. For those complexes that do include potential flexible generation resources, our objective is to create a complementary gas resource that enables load following and highly contracted resources that are responsive to both the needs of interconnecting utilities, regulators and data center customers. And it may be the case that in any given complex situation, the best owner of a flexible generation resource may, in fact, be the interconnecting utility or a Clearway enterprise component. In all cases, we would envision those resources as being contracted if part of our enterprise complex in the long run and exhibiting risk-adjusted returns that are at least as good, if not superior to those you see reflected on other drop-downs today. So they're part of our long-run future. They're part of our being a responsive energy supplier that our customers can choose to do business with across the country. And they are part of how we can sustain substantial compounding growth for Clearway Energy, Inc. in the decade ahead. And we look forward to creating those projects and again, in a way that would be entirely consistent with our pre-existing capital allocation framework.

And the follow-up is repowering appears to be delivering 10% to 12% CAFD yields, which is super attractive here. Can you give us a sense of the timing of contribution and the size of that opportunity as it relates to Mt. Storm, Goat Mountain and San Juan Mesa? I believe there's sales and repurchasing mechanisms that's associated with these.

Yes. The majority of the repowering campaign, as you will note in our materials, will occur through investments that Clearway Energy, Inc. will make in 2027. And so their CAFD contribution will largely be reflected in the difference between the top end of $2.70 in CAFD per share in 2027 and our goal of delivering $2.90 to $3.10 in CAFD per share or better in 2030. You'll see most of the CAFD uplift from those assets reflected in our 2028 financial year. And we've noted the incremental CAFD contribution and the CAFD yields that you could expect to see from each of those projects individually. In every case, we're pleased to note, including through the PPA that we'd signed actually just earlier today for San Juan Mesa, that the PPA tenors on these projects and the terms of these PPAs are quite attractive. So in addition to the incremental CAFD they'll contribute and the high CAFD yield at which we're deploying capital, we're creating great longevity and contract profile for our wind fleet with these new PPAs and these new repowerings.

Our next question comes from the line of Justin Clare with ROTH Capital Partners.

So I guess just following up on the prior line of questioning there and then some comments you made in your prepared remarks. I'm wondering what you're seeing in terms of the potential for PPA renewals, so not necessarily just for repowering, but for other projects in your pipeline. With the increase in power pricing that we're seeing, wondering if there's demand from offtakers to renew and extend PPAs at an earlier time than you might typically expect and whether or not that's something that could lead to growth in your revenue or CAFD in the coming few years?

Yes. Thanks for the question. You noted that last year, as an example of the line of questioning you're posing that we were able to extend the power purchase agreement for our Wildorado project and do so with a CAFD contribution that is part of the overall landscape of CAFD accretion that supports our 2030 goals. And that was probably a first notable instance of the trend that you're asking about, but likely not the last. More likely than not, that opportunity for extension in our wind fleet will mostly contribute to longevity and compounding of cash flow in 2030 and beyond because substantially all of our existing renewable fleet is fully contracted through to the end of this decade. And as part of any contract extension negotiations that we may undertake with customers, we will be focused on assuring that the cash flow contribution from any given asset will remain at least as high, if not higher, than we would otherwise expect under our existing revenue contracts between now and 2030. But most definitely, we see that as a potential benefit. What's apparent in the case of Mt. Storm is that we were able to convert a shorter-term defined quantity hedge to a long-term PPA. We do have some other assets in our fleet that exhibit a similar commercial profile. And for that subset of assets, we may be in a position to be able to undertake an adaptation or optimization in their revenue contracting profile between now and 2030 that could both enhance cash flow and reduce interannual variability. But when we think of the recontracting and extension opportunity, we think of it principally as a driver of our ability to deliver a long-term compounding 5% to 8% plus growth rate beyond 2030, where per the math that we'd outlined in the presentation, we'll aim for our existing operating fleet to continue to grow its CAFD per share contribution by 1% to 2%.

Okay. Got it. That's really helpful. And then I just had a follow-up on the 2030 targets. When I look at the 2030 CAFD per share target and then I compare that to the high end of the 2027 CAFD per share range, I calculate a CAGR between the 2 of just over 3.5%. So it's a little bit below the growth anticipated through '27 and a little bit below the growth anticipated in 2030 onward. So just wondering if that's the right interpretation and if you might be able to bridge why growth might slow in those few years before reaccelerating?

Yes. I think as you've observed over time, we have a culture of setting goals that we know exactly how to hit. And then as we complete commercialization actions that allow us to fulfill those goals, then we further revisit or update those. And one of the things that we're quite proud of is the fact that between October last year and October this year, we increased our CAFD per share expectations from $2.40 to $2.60 in CAFD per share in 2027 to $2.50 to $2.70 to $2.70 or better, all in the space of 1 year. And what you can see in that is that we have a systematic culture of setting goals that should be attractive to our investors and then revisiting them and ideally updating and increasing them as we complete individual contributing actions. We look to that 7% to 8% CAFD per share growth goal through 2030 is very much at the leading edge of what you see amongst premium utilities today. If we were to be compounding, as you noted, from $2.70, let's say, a 6% growth rate out to 2030, that would take you to, say, $0.10 a share above that range that we'd articulated. And we will certainly look as a company to what series of actions and growth investments and execution will allow us as we move forward between now and 2030 to continue to compound across our portfolio systematically at that 5% to 8% range. And as you can see from what we've outlined in our development and investment opportunity set, in total, the total amount of projects that Clearway Group is developing, which are potentially recipients of investments from Clearway Energy, Inc. in 2028 and 2029 would meaningfully exceed the amount of projects that Clearway Energy, Inc. would need to invest in to hit the top end of our existing $2.90 to $3.10 per share goal. So bottom line, we feel quite good about our opportunity set. We feel great about what 7% to 8% compound annual growth from 2025 represents. We feel that the investment opportunity set in front of us is quite robust. We've demonstrated a culture of setting goals, hitting them and then revisiting and increasing them. And we intend as a company to continue on with that excellent track record.

Our next question comes from the line of Steve Fleishman with Wolfe Research.

I was going to ask that same question. So I appreciate the answer you just gave there. But Craig, just one other question. It does seem like maybe you're in a kind of a target-rich environment, both from your developer parent, but also just the M&A environment. So maybe you could first talk a little bit about how much more M&A opportunity are you seeing? And then secondly, just how are you thinking about just funding kind of those upside type opportunities if you start having billions more to invest in, just can you use this framework the same way for that incremental investment? And just how you're kind of managing that?

Yes. Well, I think to start with, and it's also reflected in the way that we've sought to articulate long-term goals and an accompanying capital allocation framework. We are mindful of the important contact we have with our investors to progressively demonstrate how our business model will continue to sustainably grow across cycles using financing sources that are demonstrably within our means. So when we think about growth goals, when we think about any individual incremental capital commitment, we're looking first to assure that we're able to successfully execute on it with financing sources that are accretive materially relative to the cash yield that we have on an investment. You've seen that's absolutely been true for each of the incremental M&A investments that we've announced here this year relative to our weighted average cost of capital at spreads that approach 500 basis points. And so in an environment where it's possible for us to sensibly acquire assets that fit with our fleet and with our investment mandate and which we can add value to, we'll want to continue to assess whether for our shareholders, it's sensible for us to make those incremental investments and reflect their addition in our long-term profit goals. But we also want to be judicious about assuring that what we are digesting at any given point in time is constant with what our investors would like to see us committing to and the magnitude of corresponding securities issuance that would come with funding them. I think one of the things that we have done through, in particular, the 1/3 of the acquisitions that we announced this year is to use it to help us look forward to a point in the future where the payout ratio in our business model is declining. Something that we reflect on is the great power of a payout ratio that's declining down to 70% or 65% and how much compounding CAFD per share growth, a payout ratio at those lower levels can enable us to fund just from our own operating sources without much in the way of equity issuance. So I think if we were to see anything that would be sensible for further acquisition, the standards we'd be applying look like the same ones that we applied to the deals that we did this year, meaning they have to be meaningfully accretive. We have to have significant synergistic value we're able to apply and extract. The funding of the investment needs to be demonstrably within our ability and, I guess, a manageable bite size. And to the extent that we are acquiring additional assets, we would look to devote their incremental cash flow, in particular, towards reducing our payout ratio and increasing the self-funding nature of our business model.

Our next question comes from the line of Heidi Hauch with BNP Paribas.

Helpful detail on the long-term outlook. I just wanted to kind of take the other end of the previous question in terms of how you're thinking about asset dispositions in terms of the broader funding strategy. Is this core to the strategy? Should we think of any specific asset or portfolios as most eligible? And would this offset any equity issuance needed or help to drive incremental growth?

Yes. We have not incorporated planned disposition of assets into our capital allocation framework. or the funding sources that we assume to be able to tap into in order to deliver on our long-term growth goals. But as fiduciaries, we always remain cognizant of whether we are the best owner of an asset or whether it would be more accretive for our shareholders to selectively dispose of assets in our fleet. We certainly have done that at large scale in the context of the district thermal segment divestiture that we completed some years ago, but have also done that at very small scales around individual renewable plants that just weren't a great fit for our fleet. As we go forward to next year, we will always remain mindful of whether there are relatively small contributors to our fleet, which may be more highly valued by other buyers for whom those assets might be more significant. And there may be targeted opportunities along those lines to call it, enhance operating efficiency in our fleet by reducing project count in select areas or by conveying an asset to someone else who sees a greater strategic interest in it. What we look at in situations like that is how much CAFD a project is contributing to us, what our outlook is in long-term net present value. and whether someone else who is buying the project from us would buy it at a CAFD yield that's accretive relative to the value that's embedded in our shares today and would assign a terminal value to the asset that's higher than what we do. And in instances where that's possible, we will selectively determine that, that's in the best interest of the shareholders to dispose of an asset along those lines. But a core asset harvesting campaign to fund our growth is not part of our plan. And we feel quite good about the long-term outlook for our fleet. So the assets that are in our fleet, we're kind of enthused to own as we look out into the 2030s.

Great. That's helpful. And then secondly, going back to the data center opportunity, specifically with developing natural gas. Firstly, how soon should we expect Clearway to kind of update or formalize these contracts maybe given the extended equipment lead times for natural gas? And then secondly, just more broadly, what is driving Clearway to kind of get involved with developing flexible generation in addition to kind of the legacy renewable development? Is this driven from demand from hyperscalers or utilities or customer conversations? Just kind of curious on the broader strategy there.

Yes. The bulk of our business is to develop assets that are reflective of our deep expertise and our track record for both asset development and operation. And we are mindful that in California, we have a great existence proof for what a flexible generation fleet can do to complement renewable resources and provide a combined highly reliable increment of baseload capacity. When we think about the flexible generation fleet that we have in California and the totality of our emissions footprint, as a business, more than 95% of the megawatt hours that we generate are emissions-free. But fully 1/4, if not more, of our operating cash flow comes from a flexible generation fleet that's absolutely essential to the state of California and which has facilitated what are quite favorable reliability statistics for the state as a whole as low marginal cost renewable energy grows as it's a fraction of loads served in the state. So that's the business model that we are selectively looking to emulate in individual areas where our customers would like for us to serve them renewables and where they recognize that complementary gas helps those renewables get built and deliver into the system combined capacity that's needed. What you should know, though, and what you should focus on is that the mainstay of our business, by far the bulk of the 30 gigawatt pipeline that we maintain today, the entirety of the 11 gigawatt pipeline that we have of late-stage assets for completion over the next 7 years are renewable and battery projects in places where those are the least cost best fit resources for customers who want to buy their attributes in long-term contracts. And the plan that we've laid out, the goals that we've set and will meet through 2030 is underpinned entirely with those asset types. So the flexible generation resources that we now have in development are additional to that core capability that we have. They will help create opportunity for carbon-free resources to serve growing load in places where data centers absolutely are needed in the gigawatt scale. And they're part of how we make this business model continue to grow and compound, not just through the next 5 years, but through the next 10.

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

Just, Craig, on the data center energy complex facilities, do any of those build off of the existing renewable and battery installations or those new development sites?

All of them build off of either existing operating facilities or renewable and battery sites that we had in development more than 5 years ago.

So will there be a contract on existing assets? And then does that factor in the ability to drive higher returns off of those types of projects?

Yes. I think what creates an opportunity to deliver higher returns really from all the projects that we have in our development footprint today is the ability to bring a power plant online at size with credibility. And I think when we look across the footprint that we highlighted on Page 8 of our earnings materials, when you look across the footprint that we've outlined per our custom in our appendix, you will see that the average size of renewable and storage projects in our pipeline has grown appreciably. You'll see that the total quantity of late-stage projects that we have that are constructable over the next 5 years has grown significantly. You'll see that most of them are entirely storage or include a storage component. You should see that solar amongst the renewable resources is by far the largest share relative to wind in that development footprint. And what is allowing us to produce good returns today, what's allowing us to get longer PPAs, what's allowing us to deliver CAFD yields for CWEN that are higher than they have been historically are all the fact that we've got a power plant that we can construct that we can credibly bring online in the near term. And in some ways, the bigger the power plant, the greater contribution it can make to capacity and energy needs now, the higher return we can produce. So for these larger complexes, those same attributes will show up likely later in our development program into the time period after 2030. But what will make those complexes successful are the same things that are making it possible for us to develop so much over the balance of the decade between now and 2030 at high returns, which is that we know how to build power plants. We've demonstrated that we can build them when others can't. We know how to operate them. We have a robust position of interconnection queues. We've been developing the projects in places where renewables and batteries are least-cost, best-fit resources. And that those things are worth a lot, whether it's to a utility or a data center company today.

And our next question comes from the line of Nelson Ng with RBC Capital Markets.

Congrats on a strong quarter. So just a quick clarification on your 2030 outlook. Can you just give some more details in terms of what you're assuming for your flexible generation portfolio? And maybe just give an update on how contracted those assets are now?

Yes. When we set the range, we said it as is our philosophy at a level where we are confident we can meet the range in current market conditions for our open position, and that's reflected in that range of $290 million to $310 million. The corresponding levels look similar to what our fleet was contributing, the flexible generation fleet was contributing in 2024 and 2025. And we intend to be able to ultimately harvest even more value or aim to harvest even more value from that segment in those out years than we would need to in order to hit the range that we've articulated of $2.90 to $3.10 in CAFD per share. We are optimistic about the value that those assets will harvest in the market informed by a few key data points. First, just the marginal cost of 4-hour storage, which we're contracting extensively in the state for newly built resources and it's still very solidly in the double digits and low to even sort of mid-double digits in cost. Second, because of the ongoing increase in demand forecast, not just for CAISO, but for adjacent markets that have historically been sources of capacity for CISO and the substantially costlier profile for long-duration storage that could potentially try to -- that would be really needed to substitute for the attributes of the thermal resources. So we feel really comfortable about the durable value in our fleet, which is one of the state's most modern and most reliable and exhibits comparatively high capacity values as compared to peer capacity. And that puts us in a position to be patient in our optimization of incremental resource adequacy contracts and also clear eyed and the goal of having them contribute even more than is embedded in the $2.90 to $3.10 in CAFD per share, which we could most definitely execute within today's market environment.

Okay. Great. And then just a quick follow-up question. So obviously, your development pipeline is a lot larger than what CWEN needs to hit its targets or even to exceed the targets moderately. So in terms of drop-downs and transactions, should we expect to see CWEN buy like 50% of future projects or like something much lower than 100%?

I think we both sometimes drop assets with 100% equity interest for Clearway Energy, Inc. and in some instances, have consummated equity partnerships that work like you've just described. everything we have developed and identified for potential CWEN investment through 2027 is planned for 100% CWEN equity investment. As we look later into the decade, we'll certainly be evaluating the capital allocation framework for CWEN and its embedded funding capacity and looking at how we pace development assets in relation to that funding capacity. What we have often done in the past where we've had an exceedance of development pipeline relative to CWEN's funding capacity is to selectively move our best development assets to successive periods of time where they fit neatly into CWEN's plan. And we will also look at whether there are complementary funding sources that help sustain the growth profile for CWEN while capitalizing projects that have to be built on a firm time line. What our mainstay has been throughout our history is that we use simple financing structures that will deliver predictable financial performance for CWEN. And that basic principle is what will guide what we build and how we capitalize it with CWEN over time.

And our last question comes from the line of Corinne Blanchard with Deutsche Bank.

Most of them have been answered, but maybe a quick one. I think we saw Clearway Group having now 27 gigawatts in the pipeline. And I think last quarter, it was about 29. Can you just talk about what caused that decrease? And I think as well we're seeing like early stage has decreased what prospect has increased. So just trying to understand if there's a pushback in some of those projects.

Yes. Our disclosure aim to clarify that the pipeline in Clearway Group today is actually 30 gigawatts. That's up from 29 in the last quarter. And we noted that 27 gigawatts was a pro forma pipeline level that we would expect to be at after certain select harmonization of development assets that are not necessary for the enterprise to hit its goals over the next 3 to 4 years. What you should see is that we've now dialed in a specific set of projects that we're planning on constructing over the course of the next 7 years in the late-stage pipeline progression that we have on that same page, which in total, still quite meaningfully exceeds the total quantity that Clearway Energy, Inc. needs for Clearway Group to develop and build for its plan to be realized. So in point of fact, the pipeline that we have today is up quarter-over-quarter, but we've wanted to set expectations that we would selectively harvest individual assets that are not essential to executing on the goals that we have for the next 5 years.

Thank you. I'll now hand the call back over to President and CEO, Craig Cornelius, for any closing remarks.

Thank you, everyone, for joining us today and for your ongoing support of Clearway. We look forward to continuing to deliver with excellence in the quarters ahead as we strive to set the gold standard for sustainably growing mission-critical energy companies here in America. Operator, you can close the call.

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