Thank you for standing by, and welcome to Clearway Energy Inc.'s Fourth Quarter 2025 Earnings Conference Call. [Operator Instructions] I would now like to hand the call over to Akil Marsh, Senior Director, Investor Relations. Please go ahead.

Thank you for taking the time to join Clearway Energy, Inc.'s fourth 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 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.

Thanks, Akil, and good evening, everyone. I'll begin on Slide 5, where we summarize our business performance and our progress towards near- and long-term growth objectives. 2025 was a strong execution year for Clearway. 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 2 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 6. 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…

Thank you, Craig. Turning to Slide 11. For the fourth quarter, Clearway delivered adjusted EBITDA of $237 million and cash available for distribution or free cash flow of $35 million. 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 guidance range of $400 million to $440 million with full year CAFD generation of $430 million, which benefited from on-time commercial operations and excellent performance of recent growth investments and was also driven by solid annual fleet performance across the portfolio. With the solid conclusion to 2025, we're reiterating our 2026 CAFD guidance range of $470 million to $510 million. As per our usual practice, guidance incorporates incremental contributions from closed and committed drop-downs and third-party acquisitions. Our guidance midpoint assumes P50 renewable production 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 this team to maintain and operate our fleet, in particular, as we manage the challenges of winter storms, where regions with…

Thanks, Sarah. To recap progress on the goals we've set, we delivered 2025 results at the top half of our CAFD guidance range and fully funded all sponsor-enabled drop-downs, 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.

[Operator Instructions] Our first question comes from the line of Mark Jarvi of CIBC.

Lots of good disclosure. I appreciate everything. Clearly, organic growth is ramping here. I'm just curious on the M&A outlook, done some deals over the last couple of quarters. Just curious how that environment looks now. Clearly, you're seeing an attractive cost of capital both on the equity debt markets. Is that changing your approach and position around M&A right now?

Yes. Thanks for the acknowledgment on the organic growth front, Mark. We're really proud of the work that the organization is doing to chart that course. And I think with respect to M&A, the environment of today looks quite similar to what the environment looked like last year. as you note, that sets up well for us as an organization that's 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're 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. So, we like what today's environment does for large enterprises. It's certainly favorable that there is a large universe of subscale peers that need to evaluate whether they're 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're 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.

Got it. And then just another quick question. Just on Page 6, the PPAs and ERCOT. Can you just comment in terms of when those would kick in and maybe quantify, is that enough to move CAFD by a percentage or contribute to the growth outlook for the company?

In each instance where we're working on those, they would be effective this year. And the way we think about those instances is that there 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 2030s is a function of your point of view on merchant pricing and ERCOT. So when we think about the goals that we set for 2030 and beyond, our successfully completing those recontracting is part of what helps us build confidence that we're really aiming at $3.10 at 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.

So it's 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?

Yes. 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's targeting what we are in operating CAFD this year and next. So I think single-digit millions in CAFD enhancement. But the very long-term benefit is substantial. And 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.

Our next question comes from the line of Julien Dumoulin-Smith of Jefferies. Hannah Velásquez: This is Hannah Velasquez 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're 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're seeing similar favorable pricing? What's 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're trying to renegotiate or recontract ahead of plan?

Yes. Yes, and thanks for the acknowledgment. We're really happy with the work that our team did over the last quarter. Yes, I think we're seeing a supportive pricing environment really across all geographies. For development assets that provide additionality in power markets, whether they're deregulated or regulated, really anything that we can interconnect and construct over the course of the next three years exhibits very significant differentiated value, whether it's through a regulated utility, who's the natural customer in a regulated market or to 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're not seeing pricing necessarily escalate higher observably today than where it was, say, three to four months ago, but it is very much solid and sustained. And we think that's healthy. The attributes of the power plants that we're 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'd 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, that picture is pretty consistent across geographies. there isn't 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…

Yes. I think this is one way we're especially proud of our business and where we are optimistic that you'll see us outperform many of our peers over the quarters and years ahead. As we've noted before, the business plan we've 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% plus CAFD per share growth into the 2030s. We need to build about 2 gigawatts a year worth of projects. And at the project sizes that we're increasingly developing, that could translate into, say, something like 6 projects a year on average. And we are finding that we've 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've done on the ground in the places where we're creating projects. You see on Page 17 of our earnings slides, a map of the late-stage pipeline we're advancing. And in each one of those jurisdictions, we feel quite confident and solid about the work that we're doing in those local communities to enable those resources. And we also feel really great about the relationship that we've 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, that is a unique differentiator of our enterprise.

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

So just wanted to start on the co-located data center complexes, just how should we think about the return profile of those relative to traditional drop-downs of wind, solar or storage assets and relative to the 10.5% CAFD yields that you've 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 the entirety of all of those assets? Or could the gas component be owned by a utility? How should we be thinking about that?

Yes. 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, 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 co-located 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. and settlement and risk structures that are really the same as well. As we plan these resources today, we expect to deliver an investment return proposition for Clearway Energy, Inc. consistent with what it sees on other comparable long-term contracted assets. And so if you're trying to imagine what these could present an opportunity for Clearway Energy, Inc., you could think of they're 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 interest 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's a long-term toll like the one that we have in Carlsbad Energy Center. And those are great investments for CWEN. That's actually one of our highest reliability sources of cash flow 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.

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

Yes. First, I think we're 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've already completed through our at-the-market and direct stock purchase programs. And we've 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're 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's our -- 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've previously described. And certainly, if CWEN is in a position to invest at a higher cadence than the $2.5 billion worth of capital deployment we 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've already committed to our investors today. So, bottom line, we're 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.

Our next question comes from the line of Angie Storozynski of Seaport.

So, I have a question about the drop-downs from your sponsor because I'm 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 those future drop-downs still happen at this, say, 10.5% plus 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 drop-downs?

Yes. I think what we've 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've most recently provided and also drop-down commitments that were reached last year, we've had some instances where we've been able to deliver at levels above that kind of 10.5% level. And every time we're able to do that, we're pleased about what that means for the shareholders of Clearway Energy, Inc. I think 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've communicated that, that growth algorithm anticipates deploying CWEN's capital between 10% and 11% in CAFD yields, and that's what we're continuing to plan for.

Right. Because we're hearing all of these announcements coming from Clearway Group, right? And they're definitely bullish for the sponsor. I'm just 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. Again, I'm 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 it all comes down to the spread versus your cost of financing. And again, I'm not trying to impute it.

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've 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've noticed that, 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's 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 -- so as Clearway Group's originating new projects and capitalizing them, it certainly is planning on continuing to sustain that equation for CWEN. And as far as the digital infrastructure campuses are concerned, 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's possible in those complexes, we will see whether it's 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're 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's already a great return for CWEN on the projects that we're 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's certainly been sustained even while its cost of capital has declined. And we understand that part of what's allowed for that cost of capital to decline is the confidence our investors have that we're going to sustain a strong investment proposition for the company.

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

I just have two follow-ups. With respect to the $650 million to $800 million in investment upside kind of incrementals of the $2.5 billion, I know you had mentioned potentially issuing equity if it's 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? Or would this incremental investment require a different kind of corporate capital funding strategy?

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 4x 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're building for ourselves and that we would increase as additional investment opportunities present themselves. But again, really, when we plan the business, we're 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're going to be able to compound our dividend per share growth rate at some level that's similar to what you'd 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.

Great. And then just a follow-up. Thanks for the helpful commentary on the revenue enhancement opportunities in Texas. Just want to make sure I'm 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's the case, is there any further upside to this kind of 617-megawatt number as power demand continues to kind of increase and demand for kind of long-term agreements increase as well?

Yes. Actually, what we're executing in the instance of these projects is a little bit more like what we've done with the Mount Storm repowering in PJM, where the level of interest from hyperscaler customers and other corporate customers in ERCOT for the shape of generation that's 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. And 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.

Our next question comes from the line of Nelson Ng of RBC Capital Markets.

So first question is, can you just talk about whether there's excess interconnection capacity at your existing portfolio and whether we should expect like 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're potentially hybridizing the entire fleet, and I'm not sure whether this is what you were referring to.

Yes. Thanks. I think that reference was the entire fleet of solar projects that we had in Utah. And it's a great test case for what you're 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've 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 Big Beautiful Bill extends well into the next decade. So in the Honeycomb program through which we've installed batteries or aim to install on the remainder of the fleet batteries in its entirety, we've 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'll be in a position to be able to do things like that well into the next decade.

That's great color. And then just one another quick question. So, just regarding the pending Deriva 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're near the end of February.

Yes. 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.

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

Yes. Thank you, everyone, for joining us today and for your ongoing support of Clearway. We're proud of the work we're 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're 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.

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