Clearway Energy, Inc. Class C Common Stock 2026 Q2 Earnings Call

Please go ahead. Thank you for taking time to join Clearway Energy Inc.'s second quarter call.

With me today are Craig Cornelius, the company's President and CEO, and Sarah Rubenstein, the company's CFO. In addition, we have other members of the management team in the room to answer your questions if needed. 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 reconciliation 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.

Thanks, Akhil. Good afternoon, everyone. I'll begin on slide five, where we summarize our business update. Clearway remains firmly on track to deliver best-in-class durable growth into the long term. We are reaffirming our 2027 CAFD per share target of $2.70 or better. Looking further out, we now have even greater visibility into our roadmap for potential deployment of $3 billion of corporate capital over 2026 through 2029. Visibility that gives us confidence in targeting the top end or better of our 2030 financial goals. Our targets are grounded in projects we control within the Clearway enterprise. The rapid commercialization progress we are making on our development pipeline gives us continued confidence in our ability to meet them.

Beyond this core outlook, Clearway Energy Group's maturing digital infrastructure business presents meaningful additive upside, opportunities we look forward to making a more visible part of CWEN's story in the quarters ahead. Finally, though not factored into the targets we set for ourselves, third-party project M&A remains a potential growth pillar for our fleet, where we find ourselves presented with the opportunity to add projects that exhibit synergies with our core fleet that can be acquired with shareholder accretive returns within our established capital allocation framework. With that backdrop, we now have increasing line of sight to growth well beyond 2030, and our track record as one of the power industry's most reliable infrastructure providers gives us confidence in the runway ahead. In the near term, our 2026 outlook has been impacted by transitory weather patterns in the first half of the year.

Given low wind resource in the first half, as outlined in the operational preview we published in mid-July as part of new enhanced disclosure practice, we are adjusting our 2026 CAFD guidance range to $430 million-$470 million. Sarah will provide additional detail in her section of the presentation, but I want to emphasize our conviction that the underlying earnings power of our operating fleet remains fully intact. Turning to slide six. Fleet enhancements continue to be one of our most capital-efficient growth pathways, and this quarter, we made further tangible progress in advancing them.

In our ERCOT wind fleet, we've completed new long-term PPA transactions on all three projects we set out to enhance, extending contracted tenors across more than 600 megawatts to beyond 2040, increasing the pro forma EBITDA and CAFD the projects will produce, and materially improving the predictability of our cash flows on these large and well-positioned projects. With our fleet enhancements growth pathway, our repowering program continues to execute on track. We still expect to deploy approximately $600 million of capital into this program at 11%-12% CAFD yields, with attractive long-term internal rates of return and meaningful reinforcements to the long-term life of the projects. Turning to slide seven. Our sponsor-enabled growth program continues to advance with on-time construction progress across all committed projects and accelerating maturation of the next wave behind them.

For our 2026 and 2027 COD vintages, we remain on track with construction timelines, the projects we plan to build in those vintages for CWEN are 100% commercialized. The Royal Slope Energy Center is advancing towards financial close and commitment soon, Honeycomb Phase 2 has now been offered as a next investment opportunity for 2027, rounding out the investment program we have planned for CWEN in 2027. Looking further out, our 2028 vintage is maturing into a robust year of potential growth. With signed or awarded contracts now in place for more than 2 gigawatts of late-stage projects, including Swan Solar, Catamount, and the newly added Wildflower 2 and 3 solar plus storage projects, all planned for construction mobilization in the first half of 2027.

In our 2029 COD vintage, we continue to see increasing quantities of identified investment opportunities coming into view, further solidifying our path to exceed our 2030 financial target. The 2029 vintage volumes now include approximately two gigawatts of late-stage solar plus storage projects, representing roughly $650 million of potential corporate capital investment. As a result, approximately 70% of the growth investment needed to achieve the top end or better of our 2030 target is already commercialized and in view. Beyond the projects we have now commercialized, we have a sizable redundancy of projects in development relative to the approximately 2.7 gigawatts we would need to build that year for CWEN to exceed the top end of its 2030 targets, providing us with confidence in the resiliency of our plan and optimism about the potential for upside to it if prudent capital allocation allows.

Clearway Group is also targeting completion of the first phases of generating capacity in its co-located digital infrastructure complexes in 2029, potentially providing an upside investment opportunity that could eventually contribute to CWEN's earnings power in 2030 and beyond. Turning to Slide 9. Across all our growth pathways through 2029, our best-in-class development craftsmanship has meaningfully de-risked our outlook towards achieving the top end or better of our 2030 targets. While we were pleased to see that reflected in our stock price earlier this year, we don't believe our current price fully captures the value of our growth outlook, and we remain focused on doing the work necessary to close that gap. Our investors can expect us to continue executing with resolve and capital discipline towards those long-term objectives that support that value.

I have full confidence that Clearway will prove to be one of the best risk-adjusted returns available in the energy industry. Turning to Slide 10. Turning now to how these potential growth investments translate into a long-term CAFD per share outlook, we have high conviction that Clearway Energy, Inc. is positioned to deliver 7%-8% plus compound annual growth in the CAFD per share it delivers to its investors from 2025 to 2030 at the top end of the range we set. We now have over $2 billion of identified growth already lined up for our 2027 through 2029 completion vintages, building a well-defined bridge towards achieving the top end or better of our 2030 target.

This is a disciplined plan that reflects our unwavering focus on allocating capital to high-return investments that build durable value for our shareholders, with a measured cadence of investment, paced by deliberate capital formation in a prudent capital allocation framework. Turning to Slide 11. Looking beyond our current five-year window, we have increasing line of sight to growth opportunities for CWEN in 2031 and beyond. Projects and development for 2030 are well diversified across technologies and markets, with particular depth in the Western U.S., where Clearway has a long track record of execution. Remarkably, over 1.5 gigawatts of those 2030 projects already carry signed or awarded PPAs, representing substantially more than half of the megawatts needed to sustain growth at the high end of our 5%-8% plus long-term goal.

With over $500 million of potential investment planned for completion more than four years out, our enterprise has greater long-term visibility than ever before. Beyond our core development activity, co-located digital infrastructure complexes represent substantial additional upside for CWEN. Clearway Energy Group's pipeline now includes over 17 gigawatts of co-located generation under development, with initial contracts for revenue already signed and more targeted for later this year. With progression accelerated at its MISO South and Wyoming complexes in particular, there is now over 6 gigawatts of capacity in development at these digital infrastructure complexes that has been incorporated into Clearway Energy Group's reported pipeline. We look forward to sharing more about this opportunity as it takes further shape.