Clearway Energy, Inc. — 2023 Form 10-K
Reporting period: Fiscal year ended December 31, 2023. This is an annual filing; the supplied text does not provide a clear standalone fourth-quarter income statement.
Business context
Clearway owns and invests in contracted energy infrastructure in North America. At year-end, it had approximately 8,500 net MW of assets, including about 6,000 net MW of wind, solar and storage and 2,500 net MW of natural-gas generation. Most revenue comes from long-term offtake arrangements; their weighted-average remaining duration was approximately 10 years based on CAFD. SCE and PG&E represented approximately 24% and 17% of 2023 consolidated revenue, respectively.
Key financial metrics
| Metric | 2023 | 2022 |
|---|---|---|
| Operating revenue | $1.314 billion | $1.190 billion |
| Operating income | $263 million | $1.470 billion, including $1.292 billion gain on Thermal Business sale |
| Net income (loss), consolidated | $(14) million | $1.060 billion |
| Net income attributable to Clearway Energy, Inc. | $79 million | $582 million |
| EPS, basic and diluted | $0.67 | $4.99 |
| Cash from operating activities | $702 million | $787 million |
| Capital expenditures | $212 million, including $22 million maintenance | $112 million, including $25 million maintenance |
| Consolidated debt | $8.099 billion | $6.870 billion |
| Total liquidity | $1.505 billion | $1.366 billion |
Reported operating margin was approximately 20% in 2023, versus approximately 124% in 2022; the latter was substantially elevated by the Thermal sale gain. Excluding that gain, 2022 operating income was approximately $178 million. The company reported $535 million of cash and cash equivalents and $516 million of restricted cash at year-end; revolving-credit availability was $454 million. Restricted cash is not generally available for unrestricted corporate use.
Interest expense was $337 million versus $232 million; year-over-year results also reflected changes in derivative fair values. The 2023 consolidated net loss alongside $79 million of income attributable to Clearway reflects the allocation to noncontrolling interests, including tax-equity accounting effects. The filing does not provide a clear 2023 CAFD or Adjusted EBITDA value in the supplied text.
Material changes versus 2022
- Revenue rose approximately 10%, supported by acquisitions and higher conventional-generation energy revenue after several California facilities’ PPAs expired and merchant operations began. This was partly offset by lower wind and solar generation and lower capacity revenue.
- Renewables generation increased to 14.839 million MWh from 14.334 million MWh, while solar capacity factor declined to 27.5% from 28.4% and wind capacity factor to 28.3% from 29.9%.
- Operating cash flow fell $85 million, primarily due to working-capital timing and lower distributions from unconsolidated affiliates.
- Debt increased by approximately $1.23 billion, mainly reflecting project-level financing and construction-related activity. Capital expenditures increased by $100 million.
- 2022 included the Thermal Business disposition and its $1.292 billion gain; 2023 had no comparable sale gain. Thermal operations were therefore absent from 2023 results.
Outlook, risks and unusual items
- Management said liquidity, operating cash flow and revolving-credit availability should be adequate for commitments, debt service, capital spending and dividends. It estimated 2024 maintenance capital expenditures of $40 million; this estimate may change.
- The company expects comparable cash dividends to continue based on current circumstances, but dividends remain subject to board discretion, available capital, market conditions and contractual restrictions. The February 2024 declared quarterly dividend was $0.4033 per share.
- Approximately $1.669 billion of debt principal is scheduled for 2024, including $1.11 billion of construction-related financings that the filing says are expected to be funded through long-term equity contributions or converted to long-term debt. This is a key execution and refinancing item.
- Projects under construction or completing in 2024 include Victory Pass and Arica solar-plus-storage, Rosamond Central storage, Texas Solar Nova 2, and Cedar Creek wind; Cedro Hill repowering is expected to achieve commercial operation in the second half of 2024. Completion, funding and commercial-operation timing are important uncertainties.
- Merchant exposure increased at Walnut Creek, Marsh Landing and El Segundo following PPA expirations. Marsh Landing and El Segundo secured resource-adequacy contracts through 2027 for portions of capacity; uncontracted output remains exposed to market prices and operating costs.
- Key risks include substantial debt and covenant limits on distributions, interest-rate and power-price exposure, weather and generation variability, counterparty concentration, transmission constraints, and changes to environmental rules or renewable-energy incentives. The company’s controlled-company status and reliance on CEG for services also create governance and operational dependencies. BlackRock’s proposed acquisition of GIP’s investment manager was expected to close in third-quarter 2024, subject to approvals.
- 2023 included a $12 million renewables impairment and a $14 million tax benefit from selling production tax credits. The auditor issued an unqualified financial-statement opinion and found internal control over financial reporting effective. Audit focus areas included tax-equity HLBV allocations and Level 3 power-contract valuations.
Investor verification points
- Confirm progress and final funding for the 2024 construction, storage and repowering milestones, including the treatment of the 2024 construction-related debt.
- Review updated CAFD, Adjusted EBITDA, dividend coverage and liquidity disclosures; those 2023 non-GAAP figures are not clear in the supplied filing text.
- Assess cash available for corporate purposes separately from restricted cash, project-level cash and non-recourse project debt.
- Track merchant-market exposure, hedge valuations and the remaining contract profile, particularly as conventional PPAs expire.
- Monitor SCE and PG&E credit and payment exposure, as well as the concentration of revenue with those counterparties.
- Check the status of the BlackRock-GIP transaction and whether any change-of-control provisions affect project contracts or financing.