Atlantica Sustainable Infrastructure Annual Report 2020

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FY2020 Annual Report · Atlantica Sustainable Infrastructure

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Consolidated
Annual Report
and Financial
Statements

FOR THE YEAR ENDED DECEMBER 31, 2020

Atlantica Sustainable Infrastructure plc Consolidated Annual Report

and Financial Statements

Contents

Definitions
Strategic Report
Directors’ Report
Directors’ Remuneration Report
Directors’ Responsibilities Statement
Independent Auditor’s Report to the Members of Atlantica Sustainable Infrastructure plc
Consolidated Financial Statement
Company Financial Statements

Page
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242

Definitions

Unless otherwise specified or the context requires otherwise in this annual report:

references to “2019 Notes” refer to the 7.000% Senior Notes due 2019 in an aggregate principal
amount of $255 million issued on November 17, 2014;

references to “2020 Green Private Placement” refer to the €290 million (approximately $354
million) senior secured notes maturing in June 20, 2026 which were issued under a senior
secured note purchase agreement entered with a group of institutional investors as purchasers
of the notes issued thereunder;

references to “AAGES” refer to the joint venture between Algonquin and Abengoa to invest in
the development and construction of clean energy and water infrastructure contracted assets;

references to “AAGES ROFO Agreement” refer to the agreement we entered into with AAGES
on March 5, 2018, which became effective upon completion of the Share Sale, that provides us
a right of first offer to purchase any of the AAGES ROFO Assets, as amended and restated from
time to time;

references to “Abengoa” refer to Abengoa, S.A., together with its subsidiaries, or Abenewco1,
S.A. together with its subsidiaries, unless the context otherwise requires;

references to “ACT” refer to the gas-fired cogeneration facility located inside the Nuevo Pemex
Gas Processing Facility near the city of Villahermosa in the State of Tabasco, Mexico;

references to “Algonquin” refer to, as the context requires, either Algonquin Power & Utilities
Corp., a North American diversified generation, transmission and distribution utility, or
Algonquin Power & Utilities Corp. together with its subsidiaries;

references to “Amherst Island Partnership” or AIP refer to the holding company of Windlectric
Inc;

references to “Annual Consolidated Financial Statements” refer to the audited annual
consolidated financial statements as of December 31, 2020 and 2019, including the related
notes thereto, prepared in accordance with IFRS as issued by the IASB (as such terms are
defined herein), included in this annual report;

references to “ASI Operations” refer to ASI Operations LLC;

references to “Atlantica” refer to Atlantica Sustainable Infrastructure plc and, where the context
requires, Atlantica Sustainable Infrastructure plc together with its consolidated subsidiaries;

references to “Atlantica Jersey” refer to Atlantica Sustainable Infrastructure Jersey Limited, a
wholly-owned subsidiary of Atlantica;

references to “ATN” refer to ATN S.A., the operational electronic transmission asset in Peru,
which is part of the Guaranteed Transmission System;

references to “ATS” refer to ABY Transmision Sur S.A.;

references to “AYES Canada” refer to Atlantica Sustainable Infrastructure Energy Solutions
Canada Inc., a vehicle formed by Atlantica and Algonquin to channel co-investment
opportunities;

references to “Befesa Agua Tenes” refer to Befesa Agua Tenes, S.L.U;

references to “cash available for distribution” or CAFD refer to the cash distributions received
by the Company from its subsidiaries minus cash expenses of the Company, including third
party debt service and general and administrative expenses;

references to “Calgary District Heating” refer to the district heating asset in Canada, which we
agreed to acquire in the fourth quarter of 2020 for a total equity investment of approximately
$20 million, subject to conditions precedent and regulatory approvals;

references to “Chile PV 1” refer to the solar PV plant of 55 MW located in Chile;

references to “Chile PV 2” refer to the solar PV plant of 40 MW located in Chile;

references to “CNMC” refer to Comision Nacional de los Mercados y de la Competencia, the
Spanish state-owned regulator;

references to “COD” refer to the commercial operation date of the applicable facility;

references to “Coso” refer to the 135 MW geothermal plant located in California, which we
agreed to acquire in December 2020, subject to customary conditions.;

references to “DOE” refer to the U.S. Department of Energy;

references to “EMEA” refer to Europe, Middle East and Africa;

references to “EPC” refer to engineering, procurement and construction;

references to “EURIBOR” refer to Euro Interbank Offered Rate, a daily reference rate published
by the European Money Markets Institute, based on the average interest rates at which
Eurozone banks offer to lend unsecured funds to other banks in the euro wholesale money
market;

references to “EU” refer to the European Union;

references to “Exchange Act” refer to the U.S. Securities Exchange Act of 1934, as amended, or
any successor statute, and the rules and regulations promulgated by the SEC thereunder;

references to “Federal Financing Bank” refer to a U.S. government corporation by that name;

references to “Fitch” refer to Fitch Ratings Inc.;

references to Frequency with Leave Index (FWLI) refer to the total number of recordable
accidents with leave (lost time injury) recorded in the last 12 months per million of worked
hours;

references to “FPA” refer to the U.S. Federal Power Act;

references to “Adjusted EBITDA” refer to an Alternative Performance Measure. Adjusted EBITDA
is calculated as profit/(loss) for the year attributable to the parent company, after adding back
loss/(profit) attributable to non-controlling interest from continued operations, income tax,

share of profit/(loss) of associates carried under the equity method, finance expense net,
depreciation, amortization and impairment charges of entities included in the Annual
Consolidated Financial Statements;

references to “General Frequency Index” (GFI) refer to the total number of recordable accidents
with leave (lost time injury) recorded in the last twelve months per million of worked hours;

references to “Green Project Finance” refer to the green project financing agreement entered
into between Logrosan, the sub-holding company of Solaben 1 & 6 and Solaben 2 & 3, as
borrower, and ING Bank, B.V. and Banco Santander S.A., as lenders;

references to “gross capacity” refers to the maximum, or rated, power generation capacity, in
MW, of a facility or group of facilities, without adjusting for the facility’s power parasitics’
consumption, or by our percentage of ownership interest in such facility as of the date of this
annual report;

references to “GWh” refer to gigawatt hour;

references to “IFRIC 12” refer to International Financial Reporting Interpretations Committee’s
Interpretation 12—Service Concessions Arrangements;

references to “IFRS as issued by the IASB” refer to International Financial Reporting Standards
as issued by the International Accounting Standards Board;

references to “IPO” refer to our initial public offering of ordinary shares in June 2014;

references to “ITC” refer to investment tax credits;

references to “JIBAR” refer to Johannesburg Interbank Average Rate;

references to “La Sierpe” refer to the 20MW solar asset in Colombia to be acquired from
Algonquin by mid-2021, subject to customary conditions;

references to “LIBOR” refer to London Interbank Offered Rate;

references to “Lost time injury rate” refer to the total number of recordable accidents with leave
(lost time injury) recorded in the last 12 months per two hundred thousand worked hours;

references to “Logrosan” refer to Logrosan Solar Inversiones, S.A.;

references to “LTIP” refer to the long-term incentive plans approved by the Board of Directors;

references to “Monterrey” refer to the 142 MW gas-fired engine facility including 130 MW
installed capacity and 12 MW battery capacity, located in, Monterrey, Mexico;

references to “Multinational Investment Guarantee Agency” refer to Multinational Investment
Guarantee Agency, a financial institution member of the World Bank Group which offers
political insurance and credit enhancement guarantees;

references to “MW” refer to megawatts;

references to “MWh” refer to megawatt hour;

references to “Moody’s” refer to Moody’s Investor Service Inc.;

references to “NOL” refer to net operating loss;

references to “Note Issuance Facility 2017” refer to the senior secured note facility dated
February 10, 2017, of €275 million (approximately $336 million), with Elavon Financial Services
DAC, UK Branch, as facility agent and a group of funds managed by Westbourne Capital as
purchasers of the notes issued thereunder;

references to “Note Issuance Facility 2020” refer to the senior unsecured note facility dated July
8, 2020, of €140 million(approximately $171 million), with Lucid Agency Services Limited, as
facility agent and a group of funds managed by Westbourne Capital as purchasers of the notes
issued thereunder;

references to “O&M” refer to operation and maintenance services provided at our various
facilities;

references to “operation” refer to the status of projects that have reached COD (as defined
above);

references to “Pemex” refer to Petróleos Mexicanos;

references to “PG&E” refer to PG&E Corporation and its regulated utility subsidiary, Pacific Gas
and Electric Company collectively;

references to “PPA” refer to the power purchase agreements through which our power
generating assets have contracted to sell energy to various off-takers;

references to “PTS” refer to Pemex Transportation System;

references to “Revolving Credit Facility” refer to the credit and guaranty agreement with a
syndicate of banks entered into on May 10, 2018 and amended on January 24, 2019, August 2,
2019, December 17, 2019 and August 28, 2020, providing for a senior secured revolving credit
facility in an aggregate principal amount of $425 million;

references to “Rioglass” refer to Rioglass Solar Holding, S.A.;

references to “ROFO” refer to a right of first offer;

references to “ROFO agreements” refer to the AAGES ROFO Agreement and Algonquin ROFO
Agreement;

references to “Solaben Luxembourg” refer to Solaben Luxembourg S.A;

references to “Solnova 1, 3 & 4” refer to a 150 MW concentrating solar power facility wholly
owned by Atlantica Sustainable Infrastructure, located in the municipality of Sanlucar la Mayor,
Spain;

references to “S&P” refer to S&P Global Rating;

references to “Tenes” refer to the water desalination plant in Algeria, which is 51% owned by
Befesa Agua Tenes;

references to “Total-Record Incident” refer to the total number of recordable accidents with
and without leave (lost time injury) recorded in the last 12 months per two hundred thousand
worked hours;

references to “U.K.” refer to the United Kingdom;

reference to “U.S.” or “United States” refer to the United States of America;

references to “we,” “us,” “our,” “Atlantica” and the “Company” refer to Atlantica Sustainable
Infrastructure plc and its subsidiaries, unless the context otherwise requires.

Strategic Report

This Strategic Report has been prepared to provide shareholders with information that will aid
them in assessing Atlantica’s strategies and the potential of such strategies to succeed.

The Strategic Report contains certain forward-looking statements that are made by the directors
in good faith and based on the information available to them up to the time of their approval of
this report. These statements should be treated with caution due to the uncertainties, including
both economic and business risk factors, inherent to such forward-looking information.

The directors have prepared this Strategic Report in compliance with Section 414C of the
Companies Act 2006.

The Strategic Report discusses the following areas:

- Nature of the business.
- Business model, strategy and objectives.
-
Fair review of the business.
- Principal risks and uncertainties.
-
- Section 172 statement.
- Going concern basis.

Environment, Social and Governance.

Nature of the Business

Atlantica Sustainable Infrastructure plc (hereinafter “we”, “our”, the “Company” or “Atlantica”), a
Company registered in England and Wales and incorporated in the United Kingdom, is a
sustainable infrastructure company with a majority of our business in renewable energy assets. In
2020, our renewable sector represented approximately 74% of our revenue with solar energy
representing approximately 70%. We complement our renewable assets portfolio with storage,
efficient natural gas and transmission infrastructure assets, as enablers of the transition towards a
clean energy mix. We are also present in water infrastructure assets, a sector at the core of
sustainable development. Our purpose is to support the transition towards a more sustainable
world by investing in and managing sustainable infrastructure, while creating long-term value for
our investors and the rest of our stakeholders.

As of December 31, 2020, we own or have an interest in a portfolio of diversified assets in terms of
business sector and geographic footprint. Our portfolio consists of 27 assets with 1,551 MW of
aggregate renewable energy installed generation capacity, (of which approximately 90% is solar),
343 MW of efficient natural gas-fired power generation capacity, 1,166 miles of electric
transmission lines and 17.5 M ft3 per day of water desalination

We currently own and manage operating facilities in North America (United States, Canada and
Mexico), South America (Peru, Chile and Uruguay) and EMEA (Spain, Algeria and South Africa). We

intend to expand our portfolio, while maintaining North America, South America and Europe as
our core geographies.

Our assets generally have contracted revenue (regulated revenue in the case of our Spanish assets
and one transmission line in Chile). We focus on long-life facilities as well as long-term agreements
that we expect to produce stable, long-term cash flows. As of December 31, 2020, our assets had
a weighted average remaining contract life of approximately 17 years. Most of the assets we own,
or which we hold an interest in, have project-finance agreements in place. We intend to grow our
cash available for distribution through organic growth and by acquiring new assets and/or
businesses where revenue may not be fully contracted.

We intend to take advantage of and leverage our growth strategy on, favourable trends in clean
power generation, energy scarcity and the focus on the reduction of carbon emissions. Our
portfolio of operating assets and our strategy focus on sustainable technology including renewable
energy, storage, efficient natural gas, and transmission networks as enablers of a sustainable power
generation mix and on water infrastructure. Renewable energy is expected to represent, in most
markets, the majority of new investments in the power sector, according to Bloomberg New Energy
Finance 2020. Approximately 68% of the world’s power generation by 2050 is expected to come
from renewable energy sources, which indicates that renewable energy is becoming mainstream.
Global installed capacity is expected to shift from 56% fossil fuels today, to approximately two-
thirds renewables by 2050. A 14-terawatt expansion of generating capacity is estimated to require
approximately $15.1 trillion of new investment between now and 2050 – of which approximately
73% is expected to go to renewables. Another approximately $1 trillion of investment is expected
in batteries, along with an estimated $14 trillion in transmission and distribution during that same
period. Regions will need to complement investments in renewable energy with investments in
storage, efficient natural gas and transmission networks. We believe that Atlantica is well positioned
to benefit from the expected transition towards a more sustainable power generation mix. In
addition, we believe that water is going to be the next frontier in a transition towards a more
sustainable world. New sources of water are needed worldwide, and thus water desalination and
transportation infrastructure should help make that possible. Atlantica currently participates in
three water desalination plants with a total capacity of 17.5 million cubic feet per day.

We believe Atlantica can achieve organic growth through the optimization of the existing portfolio,
escalation factors at many of our assets and the expansion of current assets, particularly our
transmission lines, to which new assets can be connected. The Company currently owns three
transmission lines in Peru and four in Chile. We believe that current regulations in Peru and Chile
should provide an opportunity for growth via the expansion of transmission lines to connect new
clients. Additionally, we should have repowering opportunities in certain existing renewable energy
assets.

Additionally, we expect to acquire assets from third parties leveraging the local presence and
network we have in geographies and sectors in which we operate. The Company has also entered
into and intends to enter into agreements or partnerships with developers and asset owners to
acquire assets. Atlantica also invests directly and through investment vehicles with partners in
assets under development or construction.

We have signed a ROFO agreement with AAGES - a joint venture designed to invest in the
development and construction of contracted clean energy and water infrastructure contracted
assets - created by Algonquin, a North American diversified generation, transmission and
distribution utility company which owns a 44.2% stake in our capital stock.

With this business model we expect to distribute a significant percentage of our cash available for
distribution as cash dividends. We will seek to increase such cash dividends over time through
organic growth and through the acquisition of assets. Pursuant to our cash dividend policy, we
intend to pay a cash dividend each quarter to holders of our shares.

The address of our registered office is Great West House, GW1, 17th floor, Great West Road,
Brentford, TW8 9DF, United Kingdom.

Events During the Period

COVID-19 Pandemic

The outbreak of the COVID-19 coronavirus disease (“COVID-19”) declared a pandemic by the World
Health Organization in March 2020 continues to spread in our key markets, which have already
experienced several waves of the virus. The COVID-19 virus continues to evolve rapidly, and its
impact is still uncertain and subject to change. In a bid to combat the spread of the virus,
governmental authorities have both taken and recommended a wide variety of measures, including
lockdowns and travel restrictions. We have reinforced safety measures at all our assets while still
continuing to provide a reliable service to our clients. Since March 2020, we have implemented the
use of additional personal protection equipment, reinforced access control to our plants, reduced
contact between employees, changed shifts and tested employees. We have also identified and
isolated cases and potential cases together with their close contacts and taken additional measures
to increase safety procedures for our employees and operation and maintenance suppliers’
employees working at our assets. We have also purchased additional spare parts and equipment
required for operations, to safeguard against any potential supply chain disruptions . Although we
have not experienced any material impacts, we are seeing some delays in certain maintenance
activities. Furthermore, we have adopted additional precautionary measures intended to mitigate
potential risks to our employees, including temporarily requiring employees when possible to work
remotely in geographies with higher infection rates and suspending all non-essential travel. We
have also reinforced our physical and cyber-security measures. We have implemented protocols to
decide which offices to keep open and under what limitations, depending on the number of cases
and other health indicators in each specific region. We continue to monitor the situation closely at
all assets and offices and are ready to take additional action if and when required.

To date, Atlantica has not experienced material operational or financial impacts as a result of
COVID-19. We have not experienced any disruptions in availability or production in our assets due
to COVID-19. Our businesses are considered an essential and critical activity in all our geographies,
so we have continued operating our assets even in those countries where economic activity has
been limited only to essential business for a certain period of time. In addition, our assets generally
have long-term contracts or regulated revenue.

Despite all the above, we cannot guarantee that our operations and financial situation will remain
unaffected by the COVID-19 outbreak.

Conclusion of the Special Committee

On March 23, 2020 we announced that our special committee had concluded the review of the
strategic alternatives by reaffirming our current strategy. The special committee was a committee
formed in 2019 by the Board of Directors to review strategic alternatives for the Company.

2020 Acquisitions

On April 3, 2020 Atlantica made an investment in the creation of a renewable energy platform in
Chile, together with financial partners, in which we now own approximately a 35% stake and have
a strategic investor role. The first investment was the acquisition of a 55 MW solar PV plant in an
area with excellent solar resource (Chile PV 1). This asset has been in operation since 2016,
demonstrating a good operating track record during that period while selling its production to the
Chilean power market. Our initial contribution was approximately $4 million. On January 6, 2021
we also closed our second investment through the platform, with the acquisition of Chile PV 2, a
40 MW PV plant. This asset started commercial operation in 2017 and its revenue is partially
contracted. Total equity investment in this new asset was approximately $5.0 million. We have
concluded that we have control over these assets and we are fully consolidating it since each
acquisition date. The platform intends to make further investments in renewable energy in Chile
and sign PPAs with creditworthy off-takers.

On August 17, 2020 Atlantica closed the acquisition of the Liberty ownership interest in Solana.
Liberty was the tax equity investor in Solana. Total equity investment is expected to be
approximately $290 million of which $272 million has already been paid. The total price includes a
deferred payment and a performance earn-out based on the average annual net production of the
asset in the four calendar years with the highest annual net production during the five calendar
years 2020 -2024.

In October 2020 the Company reached an agreement to acquire Calgary District Heating, a district
heating asset in Canada for a total equity investment of approximately $20 million. Calgary District
Heating has been in operation since 2010 and represents our first investment in this sector, a sector
which has been recognized by the UN Environment Program as being a key measure for cities to
reduce their emissions. The asset provides heating services to a diverse range of government,
institutional and commercial customers in the city of Calgary. It has availability-based revenue with
inflation indexation and 20 years of weighted average contract life. Contracted capacity and volume
payments represent approximately 80% of total revenue. Closing is expected by mid-2021 subject
to customary conditions precedent and regulatory approvals.

In December 2020 Atlantica reached an agreement with Algonquin to acquire La Sierpe, a 20 MW
solar asset in Colombia for a total equity investment of $23 million. Closing is expected to occur
after the asset reaches the commercial operation date which is expected to occur by mid- 2021.
Closing is subject to customary conditions precedent and regulatory approvals. Additionally, we
agreed to co-invest with Algonquin in additional solar plants in Colombia with a combined capacity
of approximately 30 MW to be developed and built by AAGES.

In December 2020, Atlantica reached an agreement to acquire Coso, a 135 MW renewable asset in
California. Coso is the third largest geothermal plant in the US and provides base load renewable
energy to the California ISO. It has PPAs signed with three investment grade off-takers, with a 19-

year average contract life. Closing is subject to customary regulatory approvals and is expected to
occur during the first half of 2021. The total investment is expected to be approximately $170
million, including approximately $130 million for the equity and $40 million expected to be invested
in reducing project debt.

In October 2018, the Company reached an agreement to acquire PTS, a natural gas transportation
platform located in Mexico, close to ACT. PTS has a service agreement signed in October 2017,
which is a “take-or-pay” 11-year term contract starting in 2020. We initially acquired a 5%
ownership in the project and have an agreement to acquire an additional 65% stake subject to the
asset entering into commercial operation, non-recourse project financing being closed and final
approvals and customary conditions, including the absence of material adverse effects. Our partner
in this asset is also negotiating to sell part of its business, which may include the company that
provides operation and maintenance services to PTS. This sale may require change of control
waivers and may make the closing of the acquisition more difficult. Additionally, our partner has
proposed a number of modifications to the project and the financing agreements. We are currently
monitoring the situation in order to decide if we will proceed with the investment or not. We
therefore cannot guarantee that we will close this acquisition or that closing will occur on the terms
originally agreed.

Corporate Financing Activities

On April 1, 2020 we closed the secured 2020 Green Private Placement for €290 million
(approximately $354 million). The private placement accrues interest an annual rate of 1.96%,
payable quarterly and matures in June 2026. Net proceeds were primarily used to repay the Note
Issuance Facility 2017.

On July 8, 2020, we entered into the Note Issuance Facility 2020, a senior unsecured financing with
Lucid Agency Services Limited, as agent, and a group of funds managed by Westbourne Capital as
purchasers of the notes issued thereunder for a total amount of approximately $171 million which
is denominated in euros (€140 million). The notes under the Note Issuance Facility 2020 were issued
on August 12, 2020 and have a maturity of seven years from the closing date. We expect to use the
proceeds from the Note Issuance Facility 2020 to finance acquisitions and for general corporate
purposes.

On July 17, 2020, we issued $100 million aggregate principal amount of 4.00% Green Exchangeable
Notes due 2025. On July 29, 2020, we issued additional $15 million aggregate principal amount of
the Green Exchangeable Notes. The notes mature on July 15, 2025. The initial exchange rate of the
notes is 29.1070 ordinary shares per $1,000 principal amount of notes, which is equivalent to an
initial exchange price of $34.36 per ordinary share. Noteholders may exchange their notes at their
option at any time prior to the close of business on the scheduled trading day immediately
preceding April 15, 2025, only during certain periods and upon satisfaction of certain conditions.
On or after April 15, 2025, noteholders may exchange their notes at any time. Upon exchange, the
notes may be settled, at our election, into ordinary shares of Atlantica, cash or a combination of
both. The exchange rate is subject to adjustment upon the occurrence of certain events. The
proceeds from the Green Exchangeable Notes were used to finance the acquisition of new or
existing assets or projects which meet certain eligibility criteria in accordance with our Green
Finance Framework.

On December 11, 2020 we closed an underwritten public offering of 5,069,200 ordinary shares,
including 661,200 ordinary shares sold pursuant to the full exercise of the underwriters’ over-
allotment option, at a price of $33 per new share. Additionally, Algonquin purchased 4,020,860
ordinary shares in a private placement in order to maintain its equity interest in the Company. The
private placement closed on January 7, 2021. Gross proceeds of the public offering and the private
placement were approximately $300 million, which we intend to use to finance growth
opportunities and for general corporate purposes after deducting underwriting discounts and
commissions and offering expenses

Project Financing Activities

On April 8, 2020, Logrosan Solar Inversiones, S.A, the subsidiary-holding company of Solaben 1 &
6 and Solaben 2 & 3 entered into the Green Project Finance, a green project financing euro-
denominated agreement with ING Bank, B.V. and Banco Santander S.A. The lenders of the new
facility have no recourse to Atlantica at the corporate level. After considering transaction costs and
reserves, the Green Project Finance resulted in a net recap of $143 million that was used to finance
new investments in renewable assets. The Green Project Finance was issued in compliance with the
2018 Green Loan Principles and have a Second Party Opinion delivered by Sustainalytics.

On July 10, 2020, we entered into a non-recourse project debt refinancing of Helioenergy, one of
the Spanish solar assets, by adding a new long dated tranche of debt from an institutional investor.
The new tranche bears interest at a fixed rate of approximately 3% per annum and has a 15-year
maturity. After transaction costs, net refinancing proceeds (net “recap”) were approximately $43
million.

In addition, on July 14, 2020, we entered into a non-recourse, project debt financing for
approximately €326 million in relation to Helios. Lenders are institutional investors. The new debt
has a 17-year maturity and bears interest at a rate of approximately 2% per annum. The proceeds
were used to repay the outstanding project debt of approximately €250 million and cancel legacy
interest rate swaps. After transaction costs and the cancellation of legacy swaps, net refinancing
proceeds (net “recap”) were approximately $30 million.

Asset Portfolio and Operations

The following table provides an overview of our current assets as of December 31, 2020:

Assets

Type

Ownership Location

Curre
ncy(9)

Capacity
(Gross)

Counterparty
Credit Ratings(10)

COD*

Solana

Renewable (Solar)

100%

Mojave

Renewable (Solar)

100%

Arizona
(USA)
California
(USA)

USD 280 MW

A-/A2/A-

2013

USD 280 MW

BB-/WR/BB

2014

Contract
Years
Left(14)

Chile PV 1

Renewable (Solar)

Solaben 2 & 3

Renewable (Solar)

35%(8)

70%(1)

Chile

USD 55 MW

N/A

2016

N/A

Spain

Euro 2x50 MW

A/Baa1/A-

2012

17/16

Solacor 1 & 2

Renewable (Solar)

87%(2)

Spain

Euro 2x50 MW

A/Baa1/A-

2012

16/16

PS10/PS20

Renewable (Solar)

100%

Spain

Euro 31 MW

A/Baa1/A-

2007&
2009

11/13

Helioenergy 1 & 2 Renewable (Solar)

100%

Spain

Euro 2x50 MW

A/Baa1/A-

2011

16/16

Helios 1 & 2

Renewable (Solar)

100%

Spain

Euro 2x50 MW

A/Baa1/A-

2012

16/17

Solnova 1, 3 & 4

Renewable (Solar)

100%

Spain

Euro 3x50 MW

A/Baa1/A-

2010 14/14/15

Solaben 1 & 6

Renewable (Solar)

100%

Spain

Euro 2x50 MW

A/Baa1/A-

2013

18/18

Seville PV

Renewable (Solar)

80%(6)

Spain

Euro 1 MW

A/Baa1/A-

2006

Kaxu

Renewable (Solar)

51%(3)

South
Africa

Rand 100 MW

Palmatir

Renewable (Wind)

100%

Uruguay USD 50 MW

Cadonal

Renewable (Wind)

100%

Uruguay USD 50 MW

BB-/Ba1/
BB(11)
BBB/Baa2/BBB-
(12)
BBB/Baa2/BBB-
(12)

2015

2014

Melowind

Renewable (Wind)

100%

Uruguay USD 50 MW BBB/Baa2/BBB- 2015

Mini-Hydro

Renewable
(Hydraulic)

100%

Peru

USD

4 MW

BBB+/A3/BBB+ 2012

ACT

Efficient natural gas

100%

Mexico

USD 300 MW

BBB/ Ba2/
BB-

2013

Monterrey

Efficient natural gas

30%

Mexico

USD 142 MW

Not rated

2018

ATN (13)

Transmission line

100%

Peru

USD 379 miles BBB+/A3/BBB+ 2011

ATS

ATN 2

Transmission line

100%

Peru

USD 569 miles BBB+/A3/BBB+ 2014

Transmission line

100%

Peru

USD 81 miles

Not rated

2015

Quadra 1 & 2

Transmission line

100%

Chile

USD

49 miles/
32 miles

100%

Chile

USD 6 miles

Not rated

2014

14/14

BBB+/Baa1/
A-

2007

Transmission
line
Transmission
line

100%

Chile

USD 50 miles

A+/A1/A

1993 Regulated

Water

34.2%(4)

Algeria

USD

Water

25.5%(5)

Algeria

USD

Water

51%(7)

Algeria

USD

3.5 M
ft3/day
7 M ft3/
day
7 M ft3/
day

Not rated

2009

Not rated

2012

Not rated

2015

Palmucho

Chile TL3

Skikda

Honaine

Tenes

Itochu Corporation, a Japanese trading company, holds 30% of the shares in both Solaben 2 and Solaben 3.
JGC, a Japanese engineering company, holds 13% of the shares in each of Solacor 1 and Solacor 2.

Notes:
(1)
(2)
(3) Kaxu is owned by the Company (51%), Industrial Development Corporation of South Africa (29%) and Kaxu Community Trust (20%).
(4) Algerian Energy Company, SPA owns 49% of Skikda and Sacyr Agua, S.L. owns the remaining 16.83%.
(5) Algerian Energy Company, SPA owns 49% of Honaine and Sacyr Agua, S.L. owns the remaining 25.5%.
(6)

Instituto para la Diversificación y Ahorro de la Energía (“Idae”), a Spanish state owned company, holds 20% of the shares in Seville
PV.

(7) Algerian Energy Company, SPA owns 49% of Tenes.
(8) 65% of the shares in Chile PV 1 are held by financial partners in our renewable energy platform in Chile.
(9) Certain contracts denominated in U.S. dollars are payable in local currency.
(10) Reflects the counterparty’s credit ratings issued by Standard & Poor’s Ratings Services, or S&P, Moody’s Investors Service Inc., or

Moody’s, and Fitch Ratings Ltd, or Fitch.

(11) Refers to the credit rating of the Republic of South Africa. The off-taker is Eskom, which is a state-owned utility company in South

Africa.

(12) Refers to the credit rating of Uruguay, as UTE (Administración Nacional de Usinas y Transmisoras Eléctricas) is unrated.
(13) Including the acquisition of ATN Expansion 1 & 2.
(14) As of December 31, 2020.
(*) Commercial Operation Date.

Business Model, Strategy and Objectives

Atlantica is a sustainable infrastructure company that owns and manages renewable energy,
storage, efficient natural gas power, transmission and transportation infrastructure and water
assets. We currently have operating facilities in, North America (United States, Canada and Mexico),
South America (Peru, Chile and Uruguay) and EMEA (Spain, Algeria and South Africa). We intend
to expand our portfolio, maintaining North America, South America and Europe as our core
geographies.

Our strategy focuses on climate change solutions in the power and water sectors. We intend to
provide clean electricity, transmission capacity and desalinated water in a safe, reliable and
environmentally responsible way. We believe that by investing in sustainable sectors and managing
our assets in a sustainable manner we will create more value over time to our shareholders and the
rest of our stakeholders.

We manage and efficiently operate our portfolio of renewable energy, storage, efficient natural
gas, transmission and transportation infrastructure and water assets to generate stable cash flows.
Our assets generally have long-term contracts or regulation in place. We intend to distribute a
stable cash dividend to our shareholders.

We seek to grow our cash available for distribution and our dividend to shareholders through
organic growth and by investing in new assets, while ensuring the ongoing stability and
sustainability of our business. We believe that our diversification by business sector and geography
provides us with access to different sources of growth. We intend to grow our business maintaining
renewable energy as our main segment and with a focus in North and South America.

We expect to deliver organic growth through the optimisation of the existing portfolio and through
investments in the expansion of our current assets, particularly in our transmission lines and
renewable energy sectors. In addition, we expect to acquire assets from third parties leveraging the
local presence and network we have in geographies and sectors in which we operate. We have also
entered into and intend to enter into agreements or partnerships with developers or asset owners

to acquire assets. We also invest directly and through investment vehicles with partners in assets
under development or construction. We also expect to acquire assets through our ROFO
agreement with AAGES. AAGES is a development company created by Algonquin and designed to
invest in the development and construction of contracted clean energy and contracted water
infrastructure assets, with whom we have signed a ROFO agreement.

Our plan for executing this strategy includes the following key components:

Focus on stable, long-term contracted or regulated assets in the power and water sectors, including
renewable energy, storage, efficient natural gas generation, transmission and transportation
infrastructure, district heating assets as well as water assets

We intend to focus on owning and operating stable, sustainable infrastructure, with long useful
lives, generally contracted. We believe we have extensive experience and proven systems and
processes in place to benefit from operating efficiencies and scale. We expect this to allow us to
maximize value and cash flow generation. We intend to maintain a diversified portfolio with a
majority of our Adjusted EBITDA including unconsolidated affiliates generated from low-carbon
footprint assets, as we believe these technologies will see significant growth in our targeted
geographies.

Maintain diversification across three core geographic areas

Our focus on three core geographies, North America, South America and Europe, helps to ensure
exposure to markets in which we believe the renewable energy, storage, efficient natural gas and
transmission and transportation sectors will continue to grow significantly.

Increase cash available for distribution through the optimisation of the existing portfolio and
through the investments in the expansion of our current assets, particularly in our transmission
lines, to which new assets can be connected and in our renewable energy assets.

We intend to grow our cash available for distribution to shareholders through organic growth that
we expect to deliver through the optimization of the existing portfolio, price escalation factors in
many of our assets as well as through investments in the expansion of our current assets,
particularly in our transmission lines and renewable energy assets.

We currently own three transmission lines in Peru and four in Chile. Current regulations in Peru and
Chile provide growth opportunities via the expansion of transmission lines to connect new clients.

We have identified several opportunities to grow organically in Peru and Chile by expanding our
existing assets. These opportunities consist of (i) new clients that need to use our assets, in
situations where virtually no investment is required from us, while we will gain additional revenue
from these new business opportunities and (ii) expansion of existing transmission lines to grant
access to new clients. In this case, certain investments are required to build new assets that connect
the new clients to our current backbone transmission lines. We would expect that in some cases
these new assets would become part of our concession asset contracts, for which we would be
remunerated.

In renewable energy we expect to find opportunities to expand the size of some of our assets or
to repower them.

Increase cash available for distribution by investing in new sustainable infrastructure, including
renewable energy, storage, efficient natural gas, transmission and transportation infrastructure,
district heating as well as water assets

We will seek to grow our cash available for distribution to shareholders by investing in new assets,
generally contracted or regulated. We expect to acquire assets from third parties leveraging the
local presence and network we have in the geographies and sectors in which we operate. We have
also entered into and intend to enter into agreements or partnerships with developers or asset
owners to acquire assets. We also invest in assets under development or construction either directly
or with partners via investment vehicles. We also have a ROFO agreement with AAGES. We believe
that our know-how and operating expertise in our key markets together with a critical mass of
assets in several geographic areas, as well as our access to capital provided by being a listed
company will assist us in achieving our growth plans.

Foster a low-risk approach

We intend to maintain a portfolio of contracted assets with a low-risk profile for a significant part
of our revenue. A large majority of our revenue is contracted or regulated. We mitigate the risk of
our investments by pursuing proven technologies in which we generally have extensive experience,
located in countries where we believe conditions to be stable and safe. In certain situations, we
could invest, or co-invest with partners, in assets under development, in assets with shorter or
partially contracted revenue periods, or subject to regulation, or in assets with revenue in currencies
other than the U.S. dollar or the euro.

Our policies and management systems include thorough risk analysis. We apply our risk
management processes consistently when we analyse potential acquisitions, when we acquire
assets, and periodically through the life of the asset. Our policy is to contract insurance for all of
our assets whenever economically feasible, and in some cases we retain part of that risk in house

Maintain a prudent financial policy and financial flexibility

Project debt is an important principle for us. We intend to finance our assets with project debt
progressively amortized using the cash flows from each asset and where lenders do not have
recourse to the holding company assets. The majority of our consolidated debt is project debt.

In addition, we hedge a significant portion of our interest rate risk exposure. We estimate that as
of December 31, 2020, approximately 93% of our total interest risk exposure was fixed or hedged,
generally for the long-term. We also intend to limit our foreign exchange exposure. It is the
Company’s strategy to keep at least 80% of our cash available for distribution in U.S. dollars and
euros. Furthermore, the Company hedges net distribution in euros for the upcoming 24 months on
a rolling basis.

We intend to maintain a solid financial position through a combination of cash on hand and
undrawn credit facilities. In order to maintain financial flexibility, we use diversified sources of
financing in our project and corporate debt including banks, capital markets and private investor
financing. In recent years we have been active in green financing initiatives, improving our access
to new debt investors.

Our Competitive Strengths

We believe that we are well-positioned to execute our business strategies thanks to the following
competitive strengths:

Stable and predictable long-term cash flows

We believe that our portfolio of sustainable infrastructure has a stable cash flow profile. The off-
take agreements or regulation in place at our assets have a weighted average remaining term of
approximately 17 years as of December 31, 2020, providing long-term cash flow visibility. In 2020,
approximately 55% of our revenue was related to availability payments in the different business
sectors in which we operate, which includes our transmission lines, our efficient natural gas plant
ACT, our water assets and approximately 70% of the revenue received from our Spanish solar
assets. In these assets, our revenue does not depend (or has low dependence) on solar or wind
resources, which ensures more stable cash-flow generation. Additionally, our facilities have minimal
or no fuel risk.

Our diversification by geography and business sector also strengthens the stability of our cash flow
generation. We expect our well-diversified asset portfolio, in terms of business sector and
geography to maintain cash flow stability.

Furthermore, due to the fact that we are a U.K. registered company, we benefit from a more
favourable treatment than would apply if we were a corporation based in the United States when
receiving dividends from our subsidiaries as they should generally be exempt from U.K. taxation
due to the U.K.’s distribution exemption. Based on our current portfolio of assets, which includes
renewable assets that benefit from an accelerated tax depreciation scheme, and other tax benefit
permitted in the jurisdictions in which the Company operates. As a result of this, we do not expect
to pay significant income tax in the upcoming years in most of our geographies due to existing net
operating losses, or NOLs. Furthermore, based on our existing portfolio of assets, we believe that
there is limited repatriation risk in the jurisdictions in which we operate.

Positioned in business sectors with high growth prospects

The renewable energy industry has grown significantly in recent years and it is expected to continue
to grow in the coming decades. According to Bloomberg New Energy Finance 2020, renewable
energy is expected to account for the majority of new investments in the power sector in most
markets. By 2050, approximately 68% of the world’s power generation is expected to come from
renewable energy sources, demonstrating that renewable energy is becoming mainstream. Global
installed capacity is expected to shift from 56% fossil fuels today to approximately two-thirds
renewables by 2050. A 14-terawatt expansion of generating capacity is estimated to require
approximately $15.1 trillion of new investment between now and 2050 – of which approximately
73% is expected to go to renewables. Another approximately $1 trillion of investment is expected
in batteries along with an estimated $14 trillion expected to go into to transmission and distribution
during that same period. The significant increase expected in the renewable energy space over the
coming decades also requires significant new investments in electric transmission and distribution
lines for power supply, as well as storage and natural gas generation for dispatchability, with each
becoming key elements to support wind and solar energy generation. We believe that we are well
positioned in sectors with solid growth expectations.

We also believe that our exposure to international markets will allow us to pursue improved growth
opportunities and achieve higher returns than we would have if we had a narrow geographic or
technological focus. If certain geographies and business sectors become more competitive for asset
acquisitions for some time, we believe we can continue to execute on our growth strategy investing
in other regions or in other business sectors where we are present.

Well positioned in ESG

In 2020, 73.6% of our Adjusted EBITDA related to renewable energy and 69.4% of our Adjusted
EBITDA corresponded to solar energy production. Adjusted EBITDA including unconsolidated
affiliates from low carbon footprint assets represented 87.3%, including our renewable,
transmission and transportation, district heating as well as water assets. We have set targets to
maintain over 80% of our adjusted EBITDA including unconsolidated affiliates generated from low-
carbon footprint assets. We have also set a target to reduce our Greenhouse Gas Emissions rate
per unit of energy generated by 10% by 2030.

In terms of the social dimension of ESG, health and safety is our number one priority and we have
continued to improve our key metrics. 2020 was the sixth consecutive year we have improved our
key health and safety indicators, achieving 0.3 “Lost Time Injury” and 1.0 “Total-Record Incident”
rates. During the last few months we proactively donated protective equipment and basic goods
to some of the COVID-19 affected local communities where we operate.

In terms of governance, we maintain a simple structure with one class of shares. The majority of
our Directors are independent, and all the board committees are formed exclusively by
independent directors. In 2020, the Board approved a board diversity policy. 25% of our directors
are women.

We have been rated by various ESG rating agencies, which we believe can provide relevant
information for investors.

A sustainable growth strategy

We expect to acquire assets from third parties leveraging the local presence and network we have
in geographies and sectors in which we operate. We have also entered into and intend to enter
into agreements or partnerships with developers or asset owners to acquire assets that are either
in operation, or under construction or development. We also invest in assets under development
or construction either directly, or with partners via investment vehicles. We also have a ROFO
agreement with AAGES.

A Fair Review of the Business

Factors that Affect Comparability of our Results of Operations

▪ The results of operations of ATN Expansion 2 have been fully consolidated since October 2019,
the results of operations of Tenes have been consolidated since May 2020 and the results of
operations of Chile PV 1 have been fully consolidated since April 2020. In addition, Monterrey
has been recorded under the equity method since August 2019 and Tenes was recorded under
the equity method since January 2019 until May 2020, when we gained control over the asset
and started to fully consolidate it.

In addition, in August 2020, we acquired the tax equity investor interest in Solana. Despite
Liberty’s investment being in shares, it did not qualify as equity and was recorded as a liability
under IFRS. The acquisition resulted in a non-cash financial gain of approximately $145 million
which arose from the difference between the total purchase price and the liability previously
recorded. The gain was recognized in the line “Other Financial Income”.

▪

Impairment

In 2020, the availability at the Solana storage system was lower than expected due to certain
leaks identified in this system in the first quarter. Improvements and equipment replacements
are required over time, which have impacted production in 2020 and will continue to impact
production in 2021 with the exact scope and timing of the works subject to review. Based on
our preliminary plan, we expect that we will need to replace some elements of the storage
system, which have been written off in these consolidated financial statements through profit
and loss in the line “Depreciation, amortization, and impairment charges” for an estimated net
book value of approximately $48 million. Solana has a cash repair reserve account funded with
approximately $54 million that we expect to partially or totally use for this purpose.

Additionally, IFRS 9 requires impairment provisions to be based on expected credit losses on
financial assets rather than on actual credit losses. For the year ended December 31, 2020
Atlantica recorded a $26.6 million impairment provision in ACT following a worsening of its
client’s credit risk metrics, impairment was recognized in the line “Depreciation, amortization,
and impairment charges”. We recorded a reversal of the impairment provision for $3.2 million
for the year ended December 31, 2019.

In addition, in 2020 we accounted for an impairment reversal in our wind assets in Uruguay for
approximately $18.8 million in Cadonal and Palmatir (see Note 6 to our Annual Consolidated
Financial Statements). The reversal was recognized in the line “Depreciation, amortization, and
impairment charges”.

▪ Change in the useful life of the solar plants in Spain

In September 2020, following a thorough analysis of recent developments in the Energy and
Climate Policy Framework adopted by Spain in 2020, we decided to reduce the useful life of the
solar plants in Spain from 35 years to 25 years after COD effective from September 1, 2020 (see
Note 6 to our Annual Consolidated Financial Statements). This change in the estimated useful

life is accounted for as a change in accounting estimates in accordance with IAS 8, Accounting
Policies, Changes in Accounting Estimates and Errors. As a result, we recorded an approximately
$23.2 million increase in “Depreciation and amortization and impairment charges” in 2020
compared with the previous year.

▪ Project debt refinancing

On July 14, 2020, as previously explained, we entered into a non-recourse project debt financing
in Helios 1 & 2 for approximately €326 million. The notes were issued on July 23, 2020 and have
a 17-year maturity. Under this refinancing we cancelled the interest rate swaps hedging the old
debt, which caused the reclassification from equity to the income statement of the accumulated
impact of the mark-to-market of such derivatives for approximately $44.7 million. In addition,
we recorded a $28.4 million loss for the difference between the accounting value and nominal
value of the old debt. In total, we recorded a one-time loss of approximately $73.1 million in
the third quarter of 2020, mostly non-cash that is recognised in “Other financial expenses”.

Factors Affecting Results of Operations

▪ Exchange rates

Our functional currency is the U.S. dollar, as most of our revenue and expenses are
denominated or linked to U.S. dollars. All our companies located in North America and most of
our companies in South America have their revenue and financing contracts signed in, or
indexed totally or partially to, U.S. dollars. Our solar power plants in Spain have their revenue
and expenses denominated in euros, and Kaxu, our solar plant in South Africa, has its revenue
and expenses denominated in South African rand. Financing of projects is typically
denominated in the same currency as that of the contracted revenue agreement. This policy
seeks to ensure that the main revenue and expenses in foreign companies are denominated in
the same currency, limiting our risk of foreign exchange differences in our financial results.

Our strategy is to hedge cash distributions from our Spanish assets. We hedge the exchange
rate for the distributions from our Spanish assets after deducting euro-denominated interest
payments and euro-denominated general and administrative expenses. Through currency
options, we have hedged 100% of our euro-denominated net exposure for the next 12 months
and 75% of our euro-denominated net exposure for the following 12 months. We expect to
continue with this hedging strategy on a rolling basis.

Although we hedge cash-flows in euros, fluctuations in the value of the euro in relation to the
U.S. dollar may affect our operating results. Fluctuations in the value of the South African rand
in relation to the U.S. dollar may also affect our operating results.

▪ Interest rates

We incur significant indebtedness at the corporate and asset level. The interest rate risk arises
mainly from indebtedness at variable interest rates. To mitigate interest rate risk, we primarily
use long-term interest rate swaps and interest rate options which, in exchange for a fee, offer
protection against a rise in interest rates. As of December 31, 2020, approximately 92% of our

project debt and approximately 100% of our corporate debt either has fixed interest rates or
has been hedged with swaps or caps. Nevertheless, our results of operations can be affected
by changes to interest rates with respect to the unhedged portion of our indebtedness that
bear interest at floating rates, which typically bears a spread over EURIBOR or LIBOR.

Key Performance Indicators

We closely monitor the following key drivers of our business sectors’ performance to plan for our
needs, and to adjust our expectations, financial budgets and forecasts appropriately.

- MW in operation in the case of Renewable Energy and Efficient Natural Gas assets, miles in
operation in the case of Electric Transmission and Mft3 in operation in the case of Water assets
are indicators which provide information about the installed capacity or size of our portfolio of
assets.

- Production measured in GWh in our Renewable Energy and Efficient Natural Gas assets

provides information about the performance of these assets.

- Availability in the case of our Efficient Natural Gas assets, Electric Transmission and Water assets
also provides information on the performance of the assets. In these business segments
revenues are based on availability, which is the time during which the asset was available to our
client totally or partially divided by contracted availability or budgeted availability, as
applicable.

Renewable Energy
MW in operation1
GWh produced2
Efficient Natural Gas Power
MW in operation3
GWh produced4
Availability (%)4
Electric Transmission
Miles in operation
Availability (%)
Water
Mft3 in operation1
Availability (%)

As of December, 31
2019
2020

1,551
3,244

1,496
3,236

343
2,574

343
2,090
102.1% 95.0%

1,166

1,166
100.0% 100.0%

17.5

10.5
100.1% 101.2%

1Represents total installed capacity in assets owned or consolidated at the end of the year, regardless of
our percentage of ownership in each of the assets.
2 Includes curtailment in wind assets for which we receive compensation.
3 Includes 43MW corresponding to our 30% share in Monterrey since August 2, 2019.
4Major maintenance overhaul held in Q1 and Q2 2019 in ACT, as scheduled, which reduced production
and electric availability as per the contract. GWh produced include 30% of the production from
Monterrey since August 2019.

During 2020, our renewable assets continued to generate solid operating results and production
increased by 3.7%. Production in the U.S. solar portfolio increased by 2.1% compared to the
previous year due to higher production at Mojave. Production from wind assets also increased by
7.4% compared with the same period in 2019, as a result of good wind resources along with the
stable performance of the assets. In Spain, production decreased compared to the same period in
2019 due to lower solar radiation in the first half of 2020. In South Africa, production also decreased
primarily due to an unscheduled outage in the first quarter of 2020, which affected electrical
equipment. Damage and business interruption costs were covered by insurance, after customary
deductibles and the plant is currently producing at full capacity. Atlantica’s assets with revenue
based on availability continued to perform solidly during the year with high availability levels in
ACT, transmission lines and water assets.

Total installed capacity increased by 55 MW at our renewable energy assets due to the acquisition
of Chile PV 1 plant. Additionally, we acquired Tenes, a water desalination plant with a 7 million
cubic feet per day capacity, which explains the increase in water installed capacity.

Results of Operations

The table below details our results of operations for the years ended December 31, 2020, and 2019

$ in millions
Revenue
Other operating income
Employee benefit expenses
Depreciation, amortization and impairment charges
Other operating expenses
Operating profit

Financial income
Financial expense
Net exchange differences
Other financial income/(expense), net
Financial expense, net

Share of profit/(loss) of associates carried under the equity method
$
Profit before income tax

Income tax
Profit/(loss) for the year

Profit / (Loss) attributable to non-controlling interests
Profit/(loss) for the year attributable to the parent company

2020

2019

1,013.3
99.5
(54.4 )
(408.6)
(276.7)

1,011.5
93.8
(32.2 )
(310.8 )
(261.8 )
$ 373.1 $ 500.5

7.1
(378.4)
(1.4)
40.9

4.1
(408.0)
2.7
(1.1)
$ (331.8 ) $ (402.3)
7.4
41.8 $ 105.6
(31.0 )
(24.9 )
74.6
16.9 $
(12.5)
62.1

(4.9 )
12.0 $

0.5

Revenue

Revenue remained stable at $1,013.3 million for the year ended December 31, 2020, compared to
$1,011.5 million for the year ended December 31, 2019. Revenue increased mainly due to the
additional revenue generated by the transmission, water and solar assets we recently acquired, and
an increase in our revenue from solar assets in North America, due to the higher production in

Mojave. These effects were largely offset by lower production at Kaxu caused by the unscheduled
outage that occurred in the first quarter of 2020. Repair costs and business interruption were
covered by insurance, after customary deductibles, and insurance proceeds are recognised in
“Other operating income”. Revenue also decreased in ACT mainly due to a positive accounting
impact recorded in 2019 of approximately $6 million resulting from the application of IFRIC 12
(financial model), with no impact on cash in 2019 and with no corresponding amount in 2020. Our
ACT asset is accounted for under IFRIC 12 following the financial asset model, and a decrease in
2019 in future operation and maintenance costs increased the value of the asset, causing the one-
time increase of approximately $6 million in revenue and Adjusted EBITDA in 2019. Revenue also
decreased in ACT due to lower revenue in the portion of the tariff related to the operation and
maintenance services, driven by lower operation and maintenance costs in 2020 and due to the
progressive decrease in accounting revenue under IFRIC 12 financial model.

Other Operating Income

The following table details our other operating income for the years ended December 31, 2020 and
2019:

Other operating income
Grants

Income from various services

Total

Year ended December 31,

2020

2019

$ in millions

59.0

40.5

99.5

59.1

34.7

93.8

Other operating income increased by 6.1% to $99.5 million for the year ended December 31, 2020,
compared to $93.8 million for the year ended December 31, 2019.

“Grants” represent the financial support provided by the U.S. government to Solana and Mojave
and consist of an ITC Cash Grant and an implicit grant related to the below market interest rates of
the project loans with the Federal Financing Bank. Grants were stable for the year ended December
31, 2020 compared to the previous year.

“Income from various services” for the year ended December 31, 2020 included $18.4 million in
insurance income at Kaxu in compensation for the unscheduled outage previously explained, as
well as $5.7 million in insurance income received at Solana in compensation for events from prior
years and $6.4 million in income for the acquisition of a discounted long-term payable. In 2020 we
purchased a long-term operation and maintenance payable from Abengoa of approximately $14.4
million and paid approximately $8.0 million and therefore we recorded a $6.4 million gain. For the
year ended December 31, 2019, this account included approximately $11 million received from the
EPC contractor in our U.S. solar assets under their obligations and amounts received from insurance
claims in compensation for events from prior years. Income from various services also includes
other minor amounts received from Abengoa under their obligations for the years ended
December 31, 2020 and 2019.

Employee Benefit Expenses

Employee benefit expenses increased by 69.3% to $54.5 million for the year ended December 31,
2020, compared to $32.2 million for the year ended December 31, 2019. This increase was primarily
due to the internalization of operation and maintenance services at our U.S. solar assets, following
the acquisition of ASI Operations on July 30, 2019. The operation and maintenance costs for these
assets were mainly recognised as “Other operating expenses” until July 30, 2019.

Depreciation, Amortization and Impairment Charges

Depreciation, amortization and impairment charges increased by 31.5% to $408.6 million for the
year ended December 31, 2020, compared to $310.8 million for the year ended December 31, 2019.
Certain leaks were identified in the storage system of Solana in the first quarter of 2020. Based on
our preliminary plan, we expect that we will need to replace some elements of the storage system,
which have been written off and had an estimated net book value of approximately $48 million.
Improvements and equipment replacements are expected to be required over time, with the exact
scope and timing of works subject to review. The increase was also due to the increase in the
impairment provision of ACT following IFRS 9. IFRS 9 requires impairment provisions to be based
on the expected credit losses on financial assets rather than on actual credit losses. ACT recorded
an additional $26.6 million impairment provision for the year ended December 31, 2020, following
a worsening in its client’s credit risk metrics, while for the year ended December 31, 2019 there was
an impairment reversal of $3.2 million. In addition, in September 2020 we reduced the useful life
of our Spanish solar assets from 35 to 25 years after COD, which increased our depreciation and
amortization charges for the year ended December 31, 2020 by approximately $23.2 million
compared to the same period from the previous year. These effects were partially offset by an
impairment reversal in our wind assets in Uruguay for approximately $18.8 million after an
impairment test in Cadonal and Palmatir.

Other Operating Expenses

The following table details our other operating expenses for the years ended December 31, 2020
and 2019:

Other operating expenses

Raw materials
Leases and fees
Operation and maintenance
Independent professional services
Supplies
Insurance
Levies and duties
Other expenses
Total

Year ended December 31,

2020

2019

$ in
millions

% of
revenue

$ in
millions

% of
revenue

7.8
2.6
110.9
40.2
27.9
37.6
39.8
9.9
276.7

0.8%
0.3%
10.9%
4.0%
2.8%
3.7%
3.9%
1.0%
27.3%

9.7
1.9
116.0
41.6
25.8
24.0
34.8
8.0
261.8

1.0%
0.2%
11.5%
4.1%
2.6%
2.4%
3.4%
0.8%
26.0%

“Other operating expenses increased by 5.7% to $276.7 million for the year ended December 31,
2020, compared to $261.8 million for the year ended December 31, 2019. The increase was mainly
due to higher insurance premiums. Other operating expenses also increased due to the
consolidation of new assets acquired, Chile PV 1 and Tenes. In addition, levies and duties have
increased because at the end of 2018, the Spanish government granted a six-month exemption
from the 7% electricity sales tax in our Spanish assets until April 2019, which reduced our costs in
the first quarter of 2019. The increase was partially offset by lower operation and maintenance costs
due to the internalization of the operation and maintenance services at our U.S. solar assets since
August 2, 2019, as most of these expenses have been recorded in “Employee benefit expenses”
since that date.

Operating Profit

As a result of the above-mentioned factors, operating profit decreased by 25.4% to $373.1 million
for the year ended December 31, 2020, compared with $500.4 million for the year ended December
31, 2019.

Financial Income and Financial Expense

Financial income and financial expense
Financial income
Financial expense
Net exchange differences
Other financial income, net

Financial expense, net

Year ended December 31,

2020

2019

$ in millions
7.1
(378.4)
(1.4)
40.9

(331.8)

4.1
(408.0)
2.7
(1.1)

(402.3)

Financial Income

Financial income increased to $7.1 million for the year ended December 31, 2020, compared to
$4.1 million for the year ended December 31, 2019, primarily due to $3.8 million of non-monetary

financial income resulting from the refinancing of the Cadonal project debt in the second quarter
of 2020 (see Note 21 to our Consolidated Condensed Financial Statements).

Financial Expense

The following table details our financial expense for the years ended December 31, 2020 and
2019:

Financial expense
Expenses due to interest:
Loans with credit entities
Other debts
Interest rates losses derivatives: cash flow

Total

Year ended December 31,

2020

2019

$ in millions

(246.7)
(69.6)
(62.1)
(378.4)

(259.4)
(89.3)
(59.3)
(408.0)

Financial expense decreased by 7.3% to $378.4 million for the year ended December 31, 2020,
compared to $408.0 million for the year ended December 31, 2019.

Expenses due to interest on loans with credit entities decreased mainly due to a decrease in interest
expenses on loans indexed to LIBOR and JIBAR, since the rates of reference were lower for the year
ended December 31, 2020 compared to the previous year. This decrease was of approximately
$24.5 million. Interest at Kaxu was also lower due to the depreciation of the South African rand
against the US dollar. This decrease was partially offset by breakage costs in one of our corporate
refinancings.

Expenses due to interest on other debt primary relates to interest expense on the notes issued by
ATS, ATN, Solaben Luxembourg, Helios, interest on the 2019 Notes until May 2019, interest on the
Green Exchangeable Notes and interest on Liberty’s investment in Solana until August 2020. The
decrease was due to the acquisition of Liberty’s equity interest in Solana in August 2020. From an
accounting perspective, Liberty’s equity investment in Solana was recorded as a liability with
interest accruing in Interest on other debt. The decrease was also due to the refinancing of the
2019 Notes with the proceeds of the Note Issuance Facility 2019, since interest for this facility is
recorded under Loans from credit entities.

Interest rate losses on derivatives designated as cash flow hedges primarily relate to transfers from
equity to financial expense when the hedged item impacts profit and loss. The increase was due to
the decrease in LIBOR, which offset the decrease in interest on Loans from credit entities. This was
partially offset by the cancellation of the legacy interest rate swaps which hedged the project debt
from Helios 1 & 2 which was refinanced this year.

Other Financial Income/(Expense), Net

Other financial income/(expenses)
Other financial income
Other financial losses

Total

Year ended December 31,

2020

2019

$ in millions

162.3
(121.4)

40.9

14.2
(15.3)

(1.1)

Other financial income/(expense), net increased to a net income of $40.9 million for the year ended
December 31, 2020 compared to a net expense of $1.1 million for the year ended December 31,
2019. For the year ended December 31, 2020, Other financial income includes a non-cash gain of
approximately $145 million resulting from the acquisition of Liberty’s equity interest in Solana,
which was the primary reason for the increase. Liberty was the tax equity investor in Solana and
although Liberty’s investment was in shares, under IFRS it was recorded as a liability. In August
2020, we acquired Liberty’s equity interest in Solana and recorded a gain relating to the difference
between book value of Liberty’s equity interest in Solana and the total price expected to be paid
to Liberty.

The increase in other financial expenses was primarily due to a one-time loss of approximately
$73.1 million, mostly non-cash caused by the refinancing of Helios 1 & 2. In the third quarter of
2020, we entered into a non-recourse, project debt financing for approximately €326 million, which
refinanced the previous bank project debt with approximately €250 million outstanding. We
cancelled the interest rate swaps hedging the old debt, which caused the reclassification from
equity to the income statement of the accumulated impact of the mark-to-market of such
derivatives for approximately $44.7 million. In addition, we recorded a $28.4 million loss for the
difference between the accounting value and the nominal value of the old debt.

The increase in other financial expenses was also due to the mark-to-market of the derivative
liability embedded in the Green Exchangeable Notes for approximately $16 million. As we have the
option to settle the Green Exchangeable Notes in shares or in cash, the conversion option is
recorded under IFRS as a derivative liability with changes in profit/(loss).

Other financial expenses also includes expenses for guarantees and letters of credit, wire transfers,
other bank fees and other minor financial expenses.

Share of Profit of Associates Carried Under the Equity Method

Share of profit of associates carried under the equity method decreased to $0.5 million in the year
ended December 31, 2020 compared to $7.5 million in the year ended December 31, 2019. The
decrease was primarily due to a decrease in Honaine’s profits caused by higher deferred income
taxes compared to the previous year.

Profit/(loss) Before Income Tax

As a result of the previously mentioned factors, we reported a profit before income tax of $41.8
million for the year ended December 31, 2020, compared to a profit before income tax of $105.6
million for the year ended December 31, 2019.

Income Tax

The reconciliation between the theoretical income tax resulting from applying an average statutory
tax rate to profit before income tax and the actual income tax expense recognized in the
consolidated income statements for the years ended December 31, 2020, 2019 and 2018, are as
follows:

The effective tax rate differs from the nominal tax rate mainly due to permanent differences and
treatment of tax credits in some jurisdictions.

Year ended December 31,

2020

2019

$ in millions

Profit before tax
Average statutory tax rate
Corporate income tax at average statutory tax rate
Income tax of associates, net
Differences in statutory tax rates
Unrecognised NOLS and deferred tax assets
Purchase of Liberty´s equity interest in Solana
Other Permanent differences
Other non-taxable income/(expense)
Corporate Income Tax

41.8
25%
(10.4)
0.1
(0.1)
(37.1)
36.4
(8.9)
(4.7)
(24.9)

105.6
25%
(26.4)
1.8
(7.1)
(14.2)
-
11.2
3.7
(31.0)

For the year ended December 31, 2020, the overall effective tax rate was different than the statutory
rate of 25% primarily due to unrecognized tax losses carry forwards, mainly in the UK entities,
partially offset by the non-taxable gain recorded in the consolidated financial statements on the
purchase of Liberty´s equity interest in Solana (see Note 16 of our Annual Consolidated Financial
Statements).

For the years ended December 31, 2019 and 2018, the overall effective tax rate was different than
the statutory rate of 25% and 30%, respectively, primarily due to unrecognized tax losses carry
forwards, mainly in the UK entities and US entities.

Profit Attributable to Non-Controlling Interests

Profit attributable to non-controlling interests was $4.9 million for the year ended December 31,
2020 compared to $12.5 million for the year ended December 31, 2019. Profit attributable to non-
controlling interests corresponds to the portion attributable to our partners in the assets that we
consolidate (Kaxu, Skikda, Solaben 2 & 3, Solacor 1 & 2, Seville PV, Chile PV 1 and Tenes). The
decrease in profit attributable to non-controlling interests was mainly due to lower income in
Skikda, as a result of higher deferred income taxes compared to the previous year and a loss
reported in Kaxu resulting from the unscheduled outage previously explained.

Profit / (Loss) Attributable to the Parent Company

As a result of the previously mentioned factors, profit attributable to the parent company was $12.0
million for the year ended December 31, 2020, compared to a profit of $62.1 million for the year
ended December 31, 2019.

Our Segment Reporting

We organize our business into the following three geographies where the contracted assets and
concessions are located: North America, South America and EMEA. In addition, we have identified
four business sectors based on type of activity: renewable energy, efficient natural gas, electric
transmission and water. We report our results in accordance with both criteria.

In our segment discussion, we use Adjusted EBITDA, which is an Alternative Performance Measure.
Our management believes Adjusted EBITDA is useful to investors and other users of our financial
statements in evaluating our operating performance, as it provides them with an additional tool to
compare business performance across companies and across periods. This measure is widely used
by investors to measure a company’s operating performance, without regard to items such as
interest expense, taxes, depreciation and amortization, which can vary substantially from company
to company depending upon accounting methods and book value of assets, capital structure and
the method by which assets were acquired. This measure is widely used by other companies in our
industry. Our management uses Adjusted EBITDA as a measure of operating performance to assist
in comparing performance from period to period on a consistent basis. It also uses it to readily
view operating trends, as a measure for planning and forecasting overall expectations and for
evaluating actual results against such expectations, as well as in communications with our board of
directors, shareholders, creditors, analysts and investors concerning our financial performance.

Year ended December 31,
2019
2020

% of

% of
revenue

$ in
millions
330.9
151.5
530.9

revenue
32.6 %
15.0 %
52.4 %

32.9 %
14.1 %
53.0 %
1,013.3 100.0 % 1,011.5 100.0 %

$ in
millions
333.0
142.2
536.3

Revenue by geography
North America
South America
EMEA
Total revenue

Adjusted EBITDA by geography

North America
South America
EMEA
Adjusted EBITDA(1)

Year ended December 31,
2019
2020

$ in
millions
272.9
120.0
388.7
781.6

% of

$ in
millions
revenue
305.1
82.5 %
115.3
79.2 %
73.1 %
390.8
77.1 % 811.2

% of
revenue

91.6 %
81.1 %
72.9 %
80.2 %

Note:

(1)

Adjusted EBITDA is an Alternative Performance Measure. Adjusted EBITDA is calculated as profit/(loss) for the year
attributable to the parent company, after adding back loss/(profit) attributable to non-controlling interest from
continued operations, income tax, share of profit/(loss) of associates carried under the equity method, finance
expense net, depreciation, amortization and impairment charges of entities included in the Annual Consolidated
Financial Statements. See “Presentation of Financial Information — Non-GAAP Financial Measures.”

Volume by geography
North America (GWh)(1)
North America availability(1)
South America (GWh)(2)
South America availability
EMEA (GWh)
EMEA availability

Note:

Volume produced/availability
Year ended December 31,
2019
2020

3,908
102.1%
667
100.0%
1,243
100.1%

3,397
95.0%
516
100.0%
1,413
101.2%

(1) Major scheduled maintenance overhaul held in Q1 and Q2 2019 in ACT, which reduced electric production, as per

the contract. GWh produced includes 30% of the production from Monterrey since August 2, 2019
Includes curtailment production in wind assets for which we receive compensation

(2)

North America

Revenue remained stable at $330.9 million for the year ended December 31, 2020, compared to
$333.0 million for the year ended December 31, 2019. Revenue decreased in our Efficient Natural
Gas segment, primarily due to a one-time adjustment of approximately $6 million with no impact
in cash recorded in ACT in the first quarter of 2019. Our ACT asset is accounted for under IFRIC 12
following the financial asset model, and a change in future operation and maintenance costs in
2019 increased the value of the asset, resulting in a one-time increase in revenue and Adjusted
EBITDA of approximately $6 million. Revenue also decreased in ACT due to lower revenue in the
portion of the tariff related to the operation and maintenance services, driven by lower operation
and maintenance costs in 2020 and the progressive decrease in accounting revenue under the IFRIC
12 financial model. Revenue in our solar assets in North America increased by 4.2% mainly due to
higher production in Mojave, compared to the year ended December 31, 2019. Adjusted EBITDA
decreased by 10.6% to $272.9 million for the year ended December 31, 2020, compared to $305.1
million for the year ended December 31, 2019. The decrease was mainly driven by a decrease in
29

Adjusted EBITDA in our solar assets in North America. In the third quarter of 2019 we received $10
million from the EPC contractor under their contractual obligations with no corresponding amount
in 2020. In addition, in 2020 operating expenses were higher in the U.S. mainly due to higher
insurance premiums and larger operation and maintenance costs resulting mainly from higher
major maintenance overhaul costs. Adjusted EBITDA in our Efficient Natural Gas segment also
decreased mainly due to the decrease in revenue as previously explained. The Adjusted EBITDA
margin decreased to 82.5% for the year ended December 31, 2020, compared to 91.6% for the year
ended December 31, 2019 due to the events described above.

South America

Revenue increased by 6.6% to $151.5 million for the year ended December 31, 2020, compared to
$142.2 million for the year ended December 31, 2019. The revenue increase was primarily due to
the contribution of Chile PV 1, a solar asset recently acquired through the Chilean renewable energy
platform created in the second quarter of 2020 and ATN Expansion 2, acquired in October 2019.
Revenue also increased due to higher production in our wind assets. Adjusted EBITDA increased
by 4.1% to $120.0 million for the year ended December 31, 2020, compared to $115.3 million for
the year ended December 31, 2019 for the same reasons. Adjusted EBITDA margin decreased to
79.2% for the year ended December 31, 2020, compared to 81.1% for the year ended December
31, 2019, mainly due to lower than usual operation and maintenance expenses in our transmission
lines in the first quarter of 2019.

EMEA

Revenue decreased by 1.0% to $530.9 million for the year ended December 31, 2020, compared to
$536.3 million for the year ended December 31, 2019. This decrease was primarily due to lower
production in Kaxu resulting from the unscheduled outage explained above. Repair costs and
business interruption were covered by insurance, after customary deductibles and insurance
proceeds are recorded in “Other operating income”. The decrease in revenue was partially offset
thanks to the contribution from Tenes, the water desalination plant that we started to fully
consolidate in the second quarter of 2020. Adjusted EBITDA decreased by 0.6% to $388.7 for the
year ended December 31, 2020 compared to $390.8 million for the year ended December 31, 2019
mostly due to the same reasons. Adjusted EBITDA margin remained stable at 72.9% for the year
ended December 31, 2020 and 73.1% for the year ended December 31, 2019.

Revenue by business sector
Renewable energy
Efficient natural gas power
Electric transmission lines
Water

Total revenue

Adjusted EBITDA by business sector
Renewable energy
Efficient natural gas power
Electric transmission lines
Water
Adjusted EBITDA(1)
Note:

Year ended December 31,
2020

2019

$ in
Millions
753.1
111.0
106.1
43.1

% of
revenue
74.3%
11.0%
10.5%
4.2%

$ in
millions
761.1
122.3
103.5
24.6

% of
revenue
75.2%
12.1%
10.2%
2.4%

1,013.3 100.0%

1,011.5 100.0%

Year ended December 31,
2020

2019

$ in
Millions
575.6
97.9
84.6
23.5

% of
revenue
76.4%
88.2%
79.7%
54.5%
781.6 77.1%

$ in
millions
603.7
107.5
85.6
14.4

% of
revenue
79.3%
87.9%
82.7%
58.5%
811.2 80.2%

Adjusted EBITDA is calculated as profit/(loss) for the year attributable to the parent company, after adding back
loss/(profit) attributable to non-controlling interest from continued operations, income tax, share of profit/(loss) of
associates carried under the equity method, finance expense net, depreciation, amortization and impairment charges of
entities included in the Annual Consolidated Financial Statements. See “Presentation of Financial Information—Non-
GAAP Financial Measures.”

Volume by business sector
Renewable energy (GWh)(1)
Efficient natural gas power (GWh) (2)
Efficient natural gas power availability(3)
Electric transmission availability
Water availability

Volume produced/availability

Year ended December 31,
2020

2019

3,244
2,574
102.1%
100.0%
100.1%

3,235
2,090
95.0%
100.0%
101.2%

Note:
(1)
(2) Major scheduled maintenance overhaul held in Q1 and Q2 2019 in ACT, which reduced electric production, as per

Includes curtailment production in wind assets for which we receive compensation

the contract. GWh produced includes 30% of the production from Monterrey since August 2, 2019

(3) Major overhaul held in Q1and Q2 2019 in ACT, as scheduled, which reduced the electric availability as per the

contract with Pemex

Renewable Energy

Revenue decreased by 1.1% to $753.1 million for the year ended December 31, 2020, compared to
$761.1 million for the year ended December 31, 2019. Adjusted EBITDA decreased by 4.7% to
$575.6 million for the year ended December 31, 2020, compared to $603.7 million for the year
ended December 31, 2019. The decrease in revenue was primarily due to lower production in Kaxu,
as previously explained. This decrease was partially offset by an increase in revenue from our solar
assets in North America mainly due to the higher production in Mojave and by the contribution of
the recently acquired Chile PV 1. The decrease in Adjusted EBITDA was mainly due to the decrease
in revenue and to a decrease of Adjusted EBITDA in our solar assets in North America mostly due
to a one-off income of $10 million received in 2019 from the EPC contractor under their contractual
obligations with no corresponding amount in 2020 and also due to higher operating expenses, as
we previously discuss in our discussion for North America. Adjusted EBITDA margin decreased
mainly due to the lower Adjusted EBITDA in our North American solar assets.

Efficient Natural Gas

Revenue decreased by 9.2% to $111.0 million for the year ended December 31, 2020, compared to
$122.3 million for the year ended December 31, 2019, while Adjusted EBITDA decreased by 8.9%
to $97.9 million for the year ended December 31, 2020, compared to $107.5 million for the year
ended December 31, 2019. Adjusted EBITDA margin remained stable at 88.2% in the year ended
December 31, 2020 compared to 87.9% in the year ended December 31, 2019. Revenue and
Adjusted EBITDA decreased mainly due to an adjustment recorded in the first quarter of 2019 of
approximately $6 million resulting from the application of IFRIC 12 (financial model), with no impact
on cash in 2019 and with no corresponding amount in 2020. Our ACT asset is accounted for under
IFRIC 12 following the financial asset model, and a decrease in 2019 in future operation and
maintenance costs increased the value of the asset, causing the one-time increase of approximately
$6 million in revenue and Adjusted EBITDA in 2019. Revenue also decreased in ACT due to lower
revenue in the portion of the tariff related to operation and maintenance services, driven by lower
operation and maintenance costs in 2020 and due to the progressive decrease in accounting
revenue under IFRIC 12 financial model.

Electric Transmission Lines

Revenue increased by 2.6% to $106.1 million for the year ended December 31, 2020, compared to
$103.5 million for the year ended December 31, 2019, while Adjusted EBITDA decreased by 1.1%
to $84.6 million for the year ended December 31, 2020, compared to $85.6 million for the year
ended December 31, 2019. The increase in revenue was mainly due to the contribution of ATN
Expansion 2 acquired in 2019. The decrease in Adjusted EBITDA was mainly due to lower than usual
operation and maintenance expenses in our transmission lines in the first quarter of 2019. Adjusted
EBITDA margin decreased to 79.7% for the year ended December 31, 2020 compared to 82.7% for
the year ended December 31, 2019 for the same reason.

Water

Revenue increased by 75.2% to $43.1 million for the year ended December 31, 2020, compared to
$24.6 million for the year ended December 31, 2019. Adjusted EBITDA increased by 63.2% to $23.5
million for the year ended December 31, 2020, compared to $14.4 million for the year ended
December 31, 2019. The increases were mainly due to the contribution from Tenes, the water
desalination plant that we started to consolidate on May 31, 2020. Adjusted EBITDA margin
decreased to 54.5% for the year ended December 31, 2020 from 58.5% for the year ended
December 31, 2019 mainly due to the slightly lower Adjusted EBITDA margin in Tenes compared
to Skikda.

Liquidity and Capital Resources

Our principal liquidity and capital requirements consist of the following:

- debt service requirements on our existing and future debt;
-
- acquisitions of new companies, investments and operations.

cash dividends to investors; and

As a normal part of our business, depending on market conditions, we will from time to time
consider opportunities to repay, redeem, repurchase or refinance our indebtedness. Changes in
our operating plans, lower than anticipated sales, increased expenses, acquisitions or other events
may cause us to seek additional debt or equity financing in future periods. There can be no
guarantee that financing will be available on acceptable terms or at all. Debt financing, if available,
could impose additional cash payment obligations and additional covenants and operating
restrictions. In addition, any of the items discussed in detail under “Item 3.D - Risk Factors” and
other factors may also significantly impact our liquidity.

Liquidity Position

Volume by business sector

Corporate liquidity
Cash and cash equivalents at Atlantica Sustainable
Infrastructure, plc, excluding subsidiaries
Revolving credit facility availability

Total Corporate liquidity

Liquidity at project companies
Restricted cash (1)
Non-restricted cash

Total cash at project companies

Year ended December 31,

2020

2019

$ in millions

335.2
415.0
750.2

279.8
253.5
533.3

66.0
341.0
407.0

373.6
157.9
531.5

Note:
(1)

Restricted cash as of December 31, 2019 included cash classified as short-term financial investments for an approximately
amount of $34.6 million.

Cash at the project level includes $279.8 million and $373.6 million of restricted cash balances as
of December 31, 2020 and 2019 respectively. Restricted cash consists primarily of funds required
to satisfy the requirements of certain project debt arrangements. In the case of Solana, part of the
restricted cash is expected to be used for equipment replacements.

As of December 31, 2020, we had no amount drawn under the Revolving Credit Facility and $10
million of letters of credit were outstanding under the Revolving Credit Facility. Approximately $415
million were available under our Revolving Credit Facility. As of December 31, 2019, we had
approximately $84 million outstanding and $341 million available under the Revolving Credit
Facility.

The Company's liquidity position, cash flows from operations and availability under its revolving
credit facility is adequate to meet the Company's financial capital commitments and debt
obligations and dividend distributions to shareholders.

Credit Ratings

Credit rating agencies rate us and part of our debt securities. These ratings are used by the debt
markets to evaluate a firm's credit risk. Ratings influence the price paid to issue new debt securities
as they indicate to the market our ability to pay principal, interest and dividends.

The following table summarizes our credit ratings as of December 31, 2020. The ratings outlook is
positive for S&P and stable in the case of Fitch.

Atlantica Sustainable Infrastructure corporate rating
Senior secured debt
Senior unsecured debt

S&P
BB
BBB-
BB

Fitch
BB
BBB-
BB+

Sources of Liquidity

We expect our ongoing sources of liquidity to include cash on hand, cash generated from our
operations, project debt arrangements, corporate debt and the issuance of additional equity
securities, as appropriate, and given market conditions. Our financing agreements consist mainly
of the project-level financings for our various assets and our corporate debt financings, including
our Green Exchangeable Notes, the Note Issuance Facility 2020, the 2020 Green Private Placement,
the Note Issuance Facility 2019, the Revolving Credit Facility, a credit line with a local bank and our
commercial paper program.

▪ Corporate Debt Agreements

▪ Green Exchangeable Notes

On July 17, 2020, we issued $100 million aggregate principal amount of 4.00% Green
Exchangeable Notes due 2025. On July 29, 2020, we issued an additional $15 million
aggregate principal amount of the Green Exchangeable Notes. The Green Exchangeable
Notes are the senior unsecured obligations of Atlantica Jersey, a wholly owned subsidiary

of Atlantica, and fully and unconditionally guaranteed by Atlantica on a senior, unsecured
basis. The notes mature on July 15, 2025, unless earlier repurchased or redeemed by
Atlantica or exchanged for Atlantica’s ordinary shares (or a combination of cash and
Atlantica’s ordinary shares) at Atlantica’s election, and bear interest at a rate of 4.00% per
annum.

Noteholders may exchange all or any portion of their notes at their option at any time prior
to the close of business on the scheduled trading day immediately preceding April 15, 2025,
only during certain periods and upon satisfaction of certain conditions. Noteholders may
exchange all or any portion of their notes during any calendar quarter if the last reported
sale price of Atlantica’s ordinary shares for at least 20 trading days during a period of 30
consecutive trading days ending on the last trading day of the immediately preceding
calendar quarter is greater than 120% of the exchange price on each applicable trading day.
On or after April 15, 2025, until the close of business on the second scheduled trading day
immediately preceding the maturity date thereof, noteholders may exchange any of their
notes at any time, in multiples of $1,000 principal amount, at the option of the noteholder.
Upon exchange, the notes may be settled, at our election, into ordinary shares of Atlantica,
cash or a combination of both. The initial exchange rate of the notes is 29.1070 ordinary
shares per $1,000 principal amount of notes (which is equivalent to an initial exchange price
of $34.36 per ordinary share). The exchange rate is subject to adjustment upon the
occurrence of certain events.

Our obligations under the Green Exchangeable Notes rank equal in right of payment with
our outstanding obligations under the Revolving Credit Facility, the Note Issuance Facility
2019, the 2020 Green Private Placement and the Note Issuance Facility 2020.

The proceeds from the Green Exchangeable Notes were primarily used to finance the
acquisition of new or ongoing assets or projects which meet certain eligibility criteria in
accordance with our Green Finance Framework. The Green Exchangeable Notes comply with
the Green Bond Principles and have a second party opinion by Sustainalytics.

▪ Note Issuance Facility 2020

On July 8, 2020, we entered into the Note Issuance Facility 2020, a senior unsecured euro-
denominated financing with Lucid Agency Services Limited and a group of funds managed
by Westbourne Capital as purchasers of the notes issued thereunder for a total amount of
approximately $171 million (€140 million). The notes under the Note Issuance Facility 2020
were issued on August 12, 2020 and are due on August 12, 2027. Interest on the notes
issued under the Note Issuance Facility 2020 accrues at a rate per annum equal to the sum
of the 3-month EURIBOR plus a margin of 5.25% with a floor of 0% for the EURIBOR. We
have entered into a cap at 0% for the EURIBOR with 3.5 years maturity to hedge such
variable interest rate risk.

Our obligations under the Note Issuance Facility 2020 rank equal in right of payment with
our outstanding obligations under the Revolving Credit Facility, the Note Issuance Facility
2019, the 2020 Green Private Placement and the Green Exchangeable Notes. The notes
issued under the Note Issuance Facility 2020 are guaranteed on a senior unsecured basis

by our subsidiaries Atlantica Infrastructures, S.L.U., ABY Concessions Peru S.A., ACT Holding,
S.A. de C.V., ASHUSA Inc., ASUSHI Inc. and Atlantica Investments Limited.

The proceeds from the notes issued under the Note Issuance Facility 2020 are expected to
be used to finance the acquisition of new or ongoing assets or projects.

▪ 2020 Green Private Placement

On March 20, 2020 we entered into a senior secured, euro-denominated note purchase
agreement with a group of institutional investors as purchasers providing for the 2020
Green Private Placement. The transaction closed on April 1, 2020 and we issued notes for a
total principal amount of €290 million (approximately $354 million), maturing in June 20,
2026. Interest on the notes issued under the 2020 Green Private Placement accrues at a rate
per annum equal to 1.96%. If at any time the rating of such senior secured notes is below
investment grade, the interest rate thereon would increase by 100 basis points until such
notes are rated again investment grade.

Our obligations under the 2020 Green Private Placement rank equal in right of payment
with our outstanding obligations under the Revolving Credit Facility, the Note Issuance
Facility 2019 and the Note Issuance Facility 2020. Our payment obligations under the 2020
Green Private Placement are guaranteed on a senior unsecured basis by our subsidiaries
Atlantica Infrastructures, S.L.U., ABY Concessions Peru S.A., ACT Holding, S.A. de C.V.,
ASHUSA Inc., ASUSHI Inc. and Atlantica Investments Limited. The 2020 Green Private
Placement is also secured with a pledge over the shares of the subsidiary guarantors, which
collateral is shared with the lenders under the Revolving Credit Facility.

The proceeds of the 2020 Green Private Placement were primarily used to repay in full and
cancel all series of notes issued under the Note Issuance Facility 2017. The 2020 Green
Private Placement complies with the Green Bond Principles and has a second party opinion
by Sustainalytics.

▪ Note Issuance Facility 2019

On April 30, 2019, we entered into the Note Issuance Facility 2019, a senior unsecured
financing with Lucid Agency Services Limited, as agent, and a group of funds managed by
Westbourne Capital as purchasers of the notes issued thereunder for a total amount of the
euro equivalent of $300 million. The notes under the Note Issuance Facility 2019 were
issued on May 2019 and are due on April 30, 2025. Starting January 1, 2020, interest on the
notes issued under the Note issuance Facility 2019 accrues at a rate per annum equal to
the sum of 3-month EURIBOR plus a margin of 4.50%. The principal amount of the notes
issued under the Note Issuance Facility 2019 was hedged with an interest rate swap,
resulting in an all-in interest cost of 4.24%. The Note Issuance Facility 2019 provided that
we may elect to, subject to the satisfaction of certain conditions, capitalize interest on the
notes issued thereunder for a period of up to two years from closing at our discretion and
we elected to capitalize such interest.

Our obligations under the Note Issuance Facility 2019 rank equal in right of payment with
our outstanding obligations under the Revolving Credit Facility, the Note Issuance Facility

2020, the 2020 Green Private Placement and the Green Exchangeable Notes. The notes
issued under the Note Issuance Facility 2019 are guaranteed on a senior unsecured basis
by our subsidiaries Atlantica Infrastructures, S.L.U., ABY Concessions Peru S.A., ACT Holding,
S.A. de C.V., ASHUSA Inc., ASUSHI Inc. and Atlantica Investments Limited. The proceeds of
the notes issued under the Note Issuance Facility 2019 were used to prepay and
subsequently cancel in full the 2019 Notes and for general corporate purposes.

▪ Revolving Credit Facility

On May 10, 2018, we entered into a Revolving Credit Facility with a syndicate of banks and
Royal Bank of Canada acting as administrative agent. Total limit is currently $425 million
with maturity on December 31, 2022. As of December 31, 2020, we had no amount drawn
under the Revolving Credit Facility, $10 million of letters of credit were outstanding and
$415 million were available.

Loans under the Revolving Credit Facility accrue interest at a rate per annum equal to: (A)
for Eurodollar rate loans, LIBOR plus a percentage determined by reference to our leverage
ratio, ranging between 1.60% and 2.25% and (B) for base rate loans, the highest of (i) the
rate per annum equal to the weighted average of the rates on overnight U.S. Federal funds
transactions with members of the U.S. Federal Reserve System arranged by U.S. Federal
funds brokers on such day plus 1/2 of 1.00%, (ii) the prime rate of the administrative agent
under the Revolving Credit Facility and (iii) LIBOR plus 1.00%, in any case, plus a percentage
determined by reference to our leverage ratio, ranging between 0.60% and 1.00%.

Our obligations under the Revolving Credit Facility rank equal in right of payment with our
outstanding obligations under the, the Note Issuance Facility 2019, the 2020 Green Private
Placement, the Note Issuance Facility 2020 and the Green Exchangeable Notes. Our
payment obligations under the Revolving Credit Facility are guaranteed on a senior
unsecured basis by our subsidiaries Atlantica Infrastructures, S.L.U., ABY Concessions Peru
S.A., ACT Holding, S.A. de C.V., ASHUSA Inc., ASUSHI Inc. and Atlantica Investments Limited.
The Revolving Credit Facility is also secured with a pledge over the shares of the subsidiary
guarantors, which collateral is shared with the holders of the notes issued under the 2020
Green Private Placement.

▪ Note Issuance Facility 2017

On February 10, 2017, we entered into the Note Issuance Facility 2017, a senior secured
note facility with a group of funds managed by Westbourne Capital as purchasers of the
notes issued thereunder for a total amount of €275 million (approximately $336 million).
On April 1, 2020, all series of notes issued under the Note Issuance Facility 2017 were repaid
in full and cancelled with the proceeds of the 2020 Green Private Placement.

▪ Other Credit Lines

In July 2017, we signed a line of credit with a bank for up to €10.0 million (approximately
$12.2 million) which is available in euros or U.S. dollars. On December 13, 2019, the maturity
date was extended to December 13, 2021. Amounts drawn accrue interest at a rate per
annum equal to the sum of 3-month EURIBOR plus a margin of 2% or LIBOR plus a margin

of 2%. As of December 31, 2020, €9.9 million (approximately $12.2 million) were drawn
under this facility.

In addition, in December 2020, we entered into a credit facility with a local bank for up to
€5 million (approximately $6.1 million). The maturity date is December 4, 2025. Amounts
drawn down accrue interest at a rate per year equal to 2.50%. As of December 31, 2020, the
total amount of the credit line was drawn down.

▪ Commercial Paper Program

On October 8, 2019, we filed a euro commercial paper program with the Alternative Fixed
Income Market (MARF) in Spain. The program had an original maturity of twelve months
and was extended for another twelve-month period on October 8, 2020. The program
allows Atlantica to issue short term notes for up to €50 million, with such notes having a
tenor of up to two years. As of December 31, 2020, we had €17.4 million (approximately
$21.3 million) issued and outstanding under the Commercial Paper Program at an average
cost of 0.67%.

▪ Covenants, restrictions and events of default

The Note Issuance Facility 2020, the 2020 Green Private Placement, the Note Issuance
Facility 2019 and the Revolving Credit Facility contain covenants that limit certain of our
and the guarantors’ activities. They also contain customary events of default, including a
cross-default, with respect to our indebtedness, indebtedness of the guarantors thereunder
and
indebtedness of our material non-recourse subsidiaries (project-subsidiaries)
representing more than 25% of the cash available for distribution distributed in the previous
four fiscal quarters in excess of certain thresholds could trigger a default under the Note
Issuance Facility 2020, the 2020 Green Private Placement, the Note Issuance Facility 2019,
the Revolving Credit Facility and the Green Exchangeable Notes. Additionally, we are
required to comply with a leverage ratio of our indebtedness to our cash available for
distribution of 5.00:1.00 (which may be increased under certain conditions to 5.50:1.00 for
a limited period in the event we consummate certain acquisitions).

▪ Project Debt Refinancing

In addition to our corporate debt, in 2020 we have closed three project debt financings or
refinancings at the project level which represent additional sources of liquidity.

▪ Green Project Finance

On April 8, 2020, Logrosan entered into the Green Project Finance with ING Bank, B.V. and
Banco Santander S.A. The new facility has a notional of €140 million of which 25% is
progressively amortized over its 5-year term and the remaining 75% is expected to be
refinanced at maturity. After considering transaction costs and reserves, the Green Project
Finance has resulted in a net recap of approximately $143 million that we used to finance
new investments in renewable assets (see “—Significant Events in 2020—Project Financing
Activities”)

▪ Helioenergy 1 & 2

On July 10, 2020, we entered into a non-recourse project debt refinancing of Helioenergy
by adding a new euro-denominated long dated tranche of debt from an institutional
investor. After transaction costs, net refinancing proceeds (net “recap”) were approximately
$43 million (see “Significant Events in 2020—Project Financing Activities”) .

▪ Helios 1 & 2

On July 14, 2020, we entered into a senior secured note facility with a group of institutional
investors for a total amount of €325.6 million ($397.7 million approximately). The proceeds
of the new Helios project financing were used to fully prepay and cancel the previous bank
mini-perm project debt with approximately €250 million outstanding and to cancel legacy
interest rate swaps. After transaction costs and cancelation of legacy swaps, net refinancing
proceeds (net “recap”) were approximately $30 million. The refinancing has permitted an
improvement in both cost and tenor. Interest has decreased from approximately 4.2% with
spread step-ups to 1.90% and maturity has been extended from 2027 to 2037 (see “ -
Significant Events in 2020—Project Financing Activities”).

Use of Liquidity and Capital Requirements

▪ Debt service

Principal payments on debt as of December 31, 2020, are due in the following periods according
to their contracted maturities:

2021

2022

2023

2024

2025

312.4
23.6
336.0

328.4
-
328.4

355.8
2.0
357.8

371.5
2.0
373.5

508.8(1)
448.1
956.9

Subsequent
Years
3,360.7
517.9
3,878.6

Total

5,237.6
993.7
6,231.3

$ in millions
Project Debt
Corporate Debt
Total Debt

Note:

(1)

Includes the outstanding amount of the Green Project Finance from the sub-holding company of Solaben 1 & 6 and Solaben 2 & 3.
This facility is 25% progressively amortized over its 5-year term and the remaining 75% is expected to be refinanced before maturity.

The project debt maturities will be repaid with cash flows generated from the projects in respect
of which that financing was incurred.

▪ Contractual obligations

In addition to the principal repayment debt obligations detailed above, we have other contractual
obligations to make future payments.

Total

Up to one
year

Between
three and
five years

Subsequent
years

Between
one and
three years
$ in millions
160.2

1,709.7

93.8

172.8

1,282.9

2,309.6

286.7

541.6

468.1

1,013.2

Purchase commitments
Accrued interest estimate during the
useful life of loans

▪ Cash dividends to investors

We intend to distribute a significant portion of our cash available for distribution to shareholders
on an annual basis, less all cash expenses including corporate debt service and corporate general
and administrative expenses and less reserves for the prudent conduct of our business (including,
among other things, dividend shortfall as a result of fluctuations in our cash flows), on an annual
basis. We intend to distribute a quarterly dividend to shareholders. Our board of directors may, by
resolution, amend the cash dividend policy at any time. The determination of the amount of the
cash dividends to be paid to shareholders will be made by our board of directors and will depend
upon our financial condition, results of operations, cash flow, long-term prospects and any other
matters that our board of directors deem relevant.

Declared
Feb 26, 2020
May 6, 2020
July 31, 2020
Nov 4, 2020
Feb 26, 2021

Record
March 12, 2020
June 1, 2020
Aug 31, 2020
Nov 30, 2020
March 12, 2021

Paid
March 23, 2020
June 15, 2020
Sep 15, 2020
Dec 15, 2020
March 22, 2021

Amount (US$)
0.41
0.41
0.42
0.42
0.42

▪ Acquisitions

The acquisitions detailed in the section “Events during the period, 2020 acquisition” of this
Consolidated Annual Report have been part of our use of liquidity in 2020 and are expected to be
part of our use of liquidity in 2021.

▪ Capital Expenditures

In some cases, maintenance capex is included in the operation and maintenance agreement,
therefore it is included in operating expenses within our Income Statement.

Principal Risks and Uncertainties

The Board is responsible for the effective oversight of the Company’s risk management framework,
and corporate governance processes.

Risk management day-to-day activities are led by the Head of Internal Audit and Risk who reports
to the Audit Committee. The Audit Committee responsibilities include reviewing the effectiveness
of the Company’s Internal Controls and Risk Management, evaluating Compliance, Whistleblowing
and Anti-Fraud policies, as well as procedures and tools implemented by the Company.

Atlantica has developed a risk analysis methodology based on the ISO 31000 standard and on

common market practices. The analysis process is implemented in the following stages:

- Risk identification (ex-ante): identify causes that may turn into a risky situation, classifying those

potential causes as natural, human, intentioned, accidental and technological.
- Risk assessment: evaluate the risk considering its potential frequency and impact.
- Risk management plan: risks have to be managed in order to mitigate the effects that they may
cause. To prevent unexpected events, Atlantica’s corporate team analyses potential unexpected
risks in each of our geographies and defines a specific mitigation plan for each risk.

The Head of Internal Audit and Risk participates in identifying and monitoring risks with the
Geographical Vice-Presidents. In addition, Internal Audit updates and agrees the Risk Map with
Vice-Presidents, the Chief Financial Officer and the Chief Executive Officer. The Risk Map adopts a
multidisciplinary approach to identify risks in different areas, assigning probabilities and measuring
economic potential impact to propose action plans to further mitigate the main risks. This system
allows the Company to identify different risk categories.

All risks are assessed at the subsidiary level, compiled, and analysed on a consolidated basis. Key
conclusions are used by senior management to classify and prioritize risks and define mitigation
plans, assigning responsibilities and deadlines within the organizations. Risks are re-assessed on a
quarterly basis.

In addition, the Finance Department monitors market risks such as, interest rate and foreign
exchange risk. Furthermore, the Finance Department is also responsible for monitoring and
preventing liquidity risks.

The Company and its underlying assets are subject to a number of risks ranging from operating,
regulatory, financial and their connection to Algonquin and Abengoa. Abengoa used to be
Atlantica’s larger shareholder until 2018 and is currently its largest operation and maintenance
supplier. The processes and systems implemented have been designed to mitigate those risks to
the extent possible. We include the following table as a summary of some of those risks and action
plans carried out to mitigate them:

Assessment of Change in Risk
Year-on-Year
In 2020 we met all our Health and Safety
targets. 2020 is the sixth consecutive year we
have reduced our key health and safety
indicators: 2020 GFI: 5.0 and FWLI: 1.4 (see
“Occupational Health and Safety”).
- However, we continue to closely monitor all
accidents and incidents and expect to set
more ambitious targets.

Risk / Impact

Risks related to our Business and our
Assets

Our failure to maintain safe work
environments may expose us
to
significant financial losses, as well as
civil and criminal liabilities.

The facilities we operate often put our
employees and others, including those of
our subcontractors, in close proximity
large pieces of mechanized
with
equipment,
vehicles,
manufacturing or industrial processes,
heat or liquids stored under pressure and

moving

Mitigation of Risk

- The short-term variable compensation of
our CEO, geographic VPs, Head of
Operations and other members of our
management include Health and Safety
targets.

- Atlantica has implemented a Health and
Safety program; which is a key feature of
the Company’s measure to mitigate the
risk and has been in place since 2017. We
regularly include new best practices based
from our peers,
on
contractors and suppliers

lessons

learnt

- In 2019 we developed and launched the
for

Safety App
employees and subcontractors’ workers.

for mobile devices

Risk / Impact

Assessment of Change in Risk
Year-on-Year

supplier,

highly regulated materials. On most
facilities, we,
projects and at most
together in some cases with the operation
and maintenance
are
responsible for safety. Therefore, it is the
Company’s responsibility to implement
health
and
procedures, which are also followed by
on-site subcontractors.
If we or the operation and maintenance

safety measures

and

Mitigation of Risk

- We refer to the section “Occupational
Health and Safety” for a comprehensive
description of our initiatives.

supplier fail to design and implement such

practices and procedures or

the

practices and procedures are ineffective or

if our operation and maintenance service

providers or other suppliers do not follow

them, our employees and others may

become injured. This could result in civil

and

criminal

liabilities against

the

Company.

to
could

comply with
subject

We are also subject to regulations dealing
with occupational health and safety and
such
the
failure
regulations
to
reputational damage and/or liability. In
addition, we may incur liability based on
allegations of illness or disease resulting
from exposure of employees or other
persons
to hazardous materials or
equipment that we handle or are present
in our workplaces.
Risks related to our Business and our
Assets
Credit risk

Not being able to collect our revenues.

the clients under

If any of
these
agreements are unable or unwilling to
fulfil their related contractual obligations
or if they refuse to accept delivery of
power delivered thereunder or if they
otherwise terminate such agreements
prior to the expiration thereof, or if prices
were re-negotiated under a bankruptcy
situation, or if they delayed payments, our
assets,
financial
liabilities, business,
condition, results of operations and cash
flow may be materially adversely affected.

- On January 29, 2019, PG&E, the off-taker for
Atlantica with respect to the Mojave plant,
filed for reorganization under Chapter 11 of
the Bankruptcy Code in the U.S. Bankruptcy
Court for the Northern District of California.
PG&E paid all invoices corresponding to the
electricity delivered after January 28, 2019. A
technical event of default was triggered
under
finance
agreement in July 2019. On July 1, 2020,
PG&E emerged from Chapter 11. The
technical event of default under our Mojave
project
finance agreement, which was
preventing cash distributions from Mojave
to Atlantica, was cured and we made
distributions from Mojave.

our Mojave

project

- The credit rating of Eskom has weakened in
the last few years and is currently CCC+ from
S&P Global Rating (“S&P”), Caa1 from
Moody’s Investor Service Inc. (“Moody’s”)

this

respectively.

- In the case of Kaxu, Eskom’s payment
to our solar plant are
guarantees
underwritten by
the South African
Department of Energy. The credit rating of
the Republic of South Africa as of the date
report BB/Ba2/BB- by S&P,
of
Moody’s and Fitch,
In
addition, in 2019 we entered into a
political risk insurance agreement with the
Multinational
Investment Guarantee
Agency for Kaxu. The insurance provides
protection for breach of contract up to
$89.9 million in the event the South
African Department of Energy does not
comply with its obligations as guarantor.
This insurance policy does not cover credit
risk.

- In the case of Pemex, during the year 2020
we have maintained
a pro-active
approach and fluent dialogue with our

Risk / Impact

Risks Related to Our Business and Our
Assets:

Poor performance of assets

Loss of revenues and cash flows at the
which
project
subsequently impacts cash returns to the
Company.

company

level,

In addition, Atlantica relies on third
parties for the supply of services and
equipment,
technologically
complex equipment and operation and
maintenance services.

including

limited

Assessment of Change in Risk
Year-on-Year
and B from Fitch Ratings Inc. (“Fitch”). Eskom
is the off-taker of our Kaxu solar plant, a
state-owned,
liability company,
wholly owned by the government of the
Republic of South Africa. Eskom’s payment
guarantees to our Kaxu solar plant are
underwritten by
South African
Department of Energy, under the terms of an
implementation agreement. The credit
ratings of the Republic of South Africa have
also weakened and as of the date of this
report are BB/Ba2/BB- by S&P, Moody’s and
Fitch, respectively.

the

- In addition, the credit rating of Pemex, our
client under the contract in our ACT asset,
has also weakened in the last few years and
is currently BBB from S&P, Ba2 from
Moody’s and BB- from Fitch. We have been
experiencing significant delays in collections
from Pemex since the second half of 2019.

During 2020, our assets have generally
performed fairly in line with expectations.
Production has increased in our renewable
energy assets and our transmission, efficient
natural gas and water assets have maintained
high availability levels.
- However, in Solana, availability in the
storage system was lower than expected in
2020 due to certain leaks identified in the
storage system in the first quarter of 2020.
Improvements
equipment
replacements are required over time, and
these have impacted production in 2020
and will continue to impact production in
2021, with the exact scope and timing of
repairs subject to review.

and

- Additionally, an unscheduled outage
occurred in the first quarter of 2020 at Kaxu
which reduced its production. Repair costs
and business interruption were covered by
insurance, after customary deductibles

In addition, in recent years we have filed
several insurance claims. Our property damage
and business
interruption policies have
exclusions with respect to some equipment
which, if damaged, could result in financial
losses and business interruptions. Moreover,
insurance market terms and conditions have
been becoming more onerous over the last
insurance companies are
few years and

Mitigation of Risk

client.

- The diversification by geography and
business sector helps to diversify credit
risk exposure by diluting our exposure to
a single client.

- Dedicated supervisory and management

teams in place at our assets.

- Reporting and monitoring systems in

place.

- Asset Managers are

responsible

for
completing checklists designed to identify
operational,
and
engineering, risks, improve efficiency and
reduce costs at asset level.

maintenance

- Our corporate operations team performs
regular operational, maintenance and
engineering audits
risks,
implement and follow-up mitigation plans
and best practices and share lessons learnt
with other assets.

identify

to our

- Risk-related training courses are regularly
provided
and
subcontractors to improve their skills,
identify new risk practices and report them
to management.

employees

- Operation and maintenance

is either
carried out in-house or contracted with
specialists.

- Tracked

down
opportunities in the market.

alternative

O&M

- On-going dialogue with project finance

lenders.
- On-going

analysis

insurance

Risk / Impact

Mitigation of Risk

alternatives in the market.

Assessment of Change in Risk
Year-on-Year
requiring some companies in our sector to
retain a portion of the overall risks instead of
transferring 100% of those risks to the insurers.
We have self-retained a portion of our own
risks and may need to increase this percentage
in the future. If equipment failed at one of our
assets and this equipment was part of the
insurance exclusions or if the event was part of
the risks that we have retained, we would need
to assume
repairs and business
the
interruption costs.

loss

loss or a

Furthermore, in some of our project finance
arrangements and PPAs
include specific
conditions regarding insurance coverage that
we may need to modify. If we were to incur a
serious uninsured
that
significantly exceeded the coverage limits
established in our insurance policies, or we
were not able to modify coverage conditions,
this could have a material adverse effect on
our business, financial condition, results of
operations and cash flows. Also, our insurance
policies are subject to periodic renewals and
the terms of the renewal are reviewed by our
counterparties. If we were unable to renew our
insurance, we would not be compliant with the
finance
our
requirements
agreements and our PPAs, which could have a
material adverse effect on our business,
financial condition, results of operations and
cash flows. If insurance premiums were to
increase in the future and/or if certain types of
insurance
to become
unavailable or there was a further increase in
loss of
deductibles for damages and/or
production, it could have a material adverse
effect on our business, financial condition,
results of operations and cash flows.

coverage were

project

Risks Related to Our Business and Our
Assets:

Climate change

Our business may be adversely affected
by an increased number of extreme and
chronic weather events related to climate
change.

is causing an

Climate change
increasing
number of severe and extreme weather events,
which are a risk to our facilities, including days
of extremely high temperatures, severe winds
and rains, hurricanes, droughts, fires, cyclones,
hail and floods, among others. These risks
include:

- Rising temperatures are also increasing the
frequency and intensity of droughts and risk
of fire. For example, in California, the size
increased
and

ferocity of

fires has

- Our geographic VPs and our corporate
Operations
team monitor weather
conditions closely and we have developed
protocols to take protective measures
when necessary. For example, if winds are
forecasted, our solar fields are placed in a
defence mode.

- We have insurance in place which covers

these types of events.

- Atlantica has developed a risk analysis
methodology based on the ISO 31000 and

Mitigation of Risk

on common market practices.

- We use a risk map which adopts a
multidisciplinary approach to identify risks
in different areas.

Risk / Impact

Assessment of Change in Risk
Year-on-Year
significantly in the past 20 years, which have
also been very hot and dry years. California
wildfires have been especially catastrophic,
causing human fatalities and significant
material
lines,
could cause fires. Therefore, they can create
significant liabilities if the fire damages third
parties.

losses. Our transmission

- Severe floods could damage our plants,
especially our transmission lines or our
generation assets. If an unexpected flood
runs close to an existing transmission tower
it could cause the fall of one or more
transmission towers. Similarly, floods can
damage the solar field in our solar plants.

- Severe winds could cause damage
Atlantica’s solar fields at our solar assets.

- Severe droughts could result

in water
restrictions or in a deterioration to the
properties of water. Droughts may affect the
cooling capacity of our power projects. A
deterioration of the quality of the water
would have an impact on chemical costs in
our water treatment plants within our
generation facilities.

- Storms with intense lightning activity could
damage our plants, especially our wind
assets. Our wind farms in Uruguay have
already experienced some damages in the
past and our assets could be affected again.

Furthermore, components of our system, such
as structures, mirrors, absorber tubes, blades,
PV panels or transformers are susceptible to
being damaged by severe weather, including
for example by hail or lightning.

change.

and maintenance

In addition, our business may be adversely
temperatures
rising mean
affected by
caused
Rising
climate
by
temperatures could cause an increase in our
operation
costs.
Furthermore, a temperature rise could also
have an impact on our wind facilities. Wind
energy component is dependent on the air
density
factors. Our
desalination plants could also be affected by
a temperature increase that would imply
higher consumption of chemicals used for
operational purposes

among

other

Mitigation of Risk

- We established a COVID-19 committee
with members of Atlantica’s management
team. The committee meets at least three
times per week (or daily when necessary)
to take actions based on the analysis of
critical information.

- We have reinforced safety measures at all
of our assets while we continue to provide
a reliable service to our clients

shifts,

- We have
the use of
implemented
additional
equipment,
protection
reinforced access control to our plants,
reduced contact between employees,
employees,
changed
identified and isolated cases and potential
cases together with their close contacts
and taken additional measures to increase
safety measures for our employees and
operation and maintenance suppliers’
employees working at our assets.

tested

- We have required all employees to work
remotely when their work can be done
from home and suspended all non-
essential travel. We have implemented
protocols to decide which offices to
maintain open and with what limitation,
depending on the number of cases and
other health indicators in each specific
region.

- We have increased the purchase of spare
parts and equipment
for
operations, in order to manage potential
disruptions in the supply chain

required

- We have also reinforced our physical and

cyber-security measures

We continue to monitor the situation closely
at all of our assets and offices to take
additional action if required.

Risk / Impact

Risks Related
Pandemic

the COVID-19

The COVID-19 outbreak was declared a
pandemic by
the World Health
in March 2020 and
Organization
continues to spread in our key markets.
The COVID-19 virus continues to
evolve rapidly, and its ultimate impact
is uncertain and subject to change.

COVID-19 could have a material adverse
impact on our business,
financial
condition, liquidity, results of operations,
cash flows, cash available for distribution
and ability to make cash distributions to
our shareholders.

Assessment of Change in Risk
Year-on-Year
COVID-19 emerged as a pandemic during
2020.

- Our operation and maintenance employees
may be affected by COVID-19. Our
operation and maintenance suppliers may
also be affected by COVID-19 and the
broader economic downturn. In addition, we
may experience delays in certain operation
and maintenance activities, or certain
activities may take longer than usual, or, in a
worst case scenario, a potential outbreak at
one of our assets may prevent our
employees
and
our
maintenance suppliers’ employees from
operating the plant.

operation

- COVID-19 has caused and may continue to
cause travel restrictions and significant
disruptions to global supply chains. A
prolonged disruption could
the
availability of certain parts required to
operate our facilities and adversely impact
the ability of our operation and maintenance
If we were to experience a
suppliers.
shortage of or inability to acquire critical
spare parts, we could incur significant delays
in returning facilities to full operation.

limit

- In addition, measures taken by governments
are causing a slowdown of broad sectors of
the economy, a general reduction
in
demand, including demand for commodities
impact on prices of
and a negative
commodities, including electricity, oil and
gas. In Spain, revenue received by our assets
under the existing regulation depend to
some extent on market prices for the sale of
electricity. During 2020, electricity market
prices have been lower than in previous
years.

- The global outbreak also caused significant
disruption and volatility
in the global
financial markets, including the market price
of our shares, especially in March and April
2020. Debt and equity markets could
continue experiencing similar disruptions in
the upcoming months since COVID-19
continues to have an impact on markets. A
and
prolonged period of
disruptions in the equity and credit markets
could limit our ability to refinance our debt
maturities and to finance our potential
acquisitions and execute on our growth

illiquidity

Risk / Impact

Assessment of Change in Risk
Year-on-Year

strategy.

- Reduced demand and low prices persisting
over time could cause delays in collections,
a deterioration in the financial situation of
our clients or their bankruptcy.

Mitigation of Risk

continue

- Additionally, many governments have
implemented
to
and will
implement stimulus measures to reduce the
negative
the
impact of COVID-19
economy. In many cases, these measures will
increase government spending which may
translate into increased tax pressure on
companies
in the countries where we
operate. Changes in corporate tax rates
and/or other relevant tax laws may have a
material adverse effect on our business,
financial condition, results of operations and
cash flows.

Risks Related to Our Relationship with
Algonquin and Abengoa

No significant change

Connection to Algonquin

Algonquin is our largest shareholder and
exercises substantial influence over us.

the

approval

Currently, Algonquin beneficially owns
44.2% of our ordinary shares and is
entitled to vote on approximately 41.5%
of our ordinary shares. As a result of this
ownership, Algonquin has substantial
influence over our affairs and their
ownership interest and voting power
constitute a significant percentage of the
shares eligible to vote on any matter
requiring
our
shareholders.
Furthermore, our reputation is closely
related to that of Algonquin. Any damage
to the public image or reputation of
Algonquin could have a material adverse
effect on our business, financial condition,
results of operations and cash flows.
In addition, our ownership structure and
certain service agreements may create
conflicts of interest that may be resolved
in a manner that is not in our best
interests.

AAGES and Algonquin are related parties
and may have interests that differ from
our interests, including with respect to the
types of acquisitions made, the timing

- Any transaction between us and AAGES or
Algonquin (including the acquisition of
any ROFO assets or any co-investment
with AAGES or Algonquin or any
investment on an Algonquin asset) is
subject to our related party transactions
policy, which requires prior approval of
such transactions by the related party
transactions
is
committee, which
composed of independent directors.

- Algonquin has to comply with our Related
Parties Transaction Committee and Terms
of Reference

- Algonquin has the right to appoint
directors
their
proportionally
ownership but in any event no more than
(i)
as
such number of directors
corresponds to 41.5% of our voting
securities; and (ii) 50% of our board less
one.

Furthermore, Algonquin’s voting rights are
limited to 41.5% and the additional shares
(the difference between the actual shares
beneficially owned by Algonquin and shares
representing 41.5% of voting rights) votes
replicating non-Algonquin’s shareholders
vote.

Risk / Impact

and amount of the dividends paid by us,
the reinvestment of returns generated by
our operations, the use of leverage when
making acquisitions and the appointment
of outside advisors and service providers.

Risks Related to Our Relationship with
Algonquin and Abengoa

Connection to Abengoa

Abengoa, which is currently our largest
supplier and used to be our largest
shareholder, went through a restructuring
process which started in November 2015
and ended in March 2017 and obtained
approval for a second restructuring in July
2019 and Abengoa S.A. has recently filed
for insolvency again .

The project financing arrangement for
Kaxu contains cross-default provisions
related to Abengoa such that debt
defaults by Abengoa, subject to certain
threshold amounts and/or a restructuring
process, could trigger a default under the
Kaxu project financing arrangement. On
February 22, 2021, Abengoa S.A. (the
holding company) filed for insolvency
proceedings in Spain.

In addition, we have current and future
collection rights with certain subsidiaries
of Abengoa. Moreover, Abengoa has a
number of obligations and indemnities
which have resulted or could result in
additional liability obligations to us or to
assets. Certain of Abengoa’s
our
indemnities and obligations are no longer
valid after
filing by
the
Abengoa S.A. in February 2021.

insolvency

Abengoa and its subsidiaries provide
operation and maintenance services for
many of our assets. We cannot guarantee
that Abengoa and/or its subcontractors
will be able to continue performing with
the same level of service and under the
same terms and conditions, and at the
same prices. Because we have long-term
operation and maintenance agreements
with Abengoa for many of our assets, if
Abengoa cannot continue performing
current services at the same prices, we

Assessment of Change in Risk
Year-on-Year

Mitigation of Risk

- During 2020 we have updated our
contingency plans. We believe we can
replace Abengoa as operation and
maintenance supplier with alternative
suppliers or by
these
services.

internalizing

- In addition, in 2019 we reduced our
exposure to Abengoa as our main O&M
supplier by acquiring ASI Operations.
- In December 2020, we obtained a waiver
from Kaxu’s project debt lenders in which
they committed not to take any action
until December 31, 2021 with respect to
any potential cross-defaults with Abengoa
for the pre-insolvency filing of August
2020. This waiver does not cover the new
theoretical cross-default triggered by
Abengoa S.A. insolvency filing in 2021 or
cross-defaults
future
arising
potential insolvency events by Abengoa.
In addition, we are negotiating a waiver
from the creditors and/or contractual
modifications to permanently remove the
cross-default provision.

from

We cannot guarantee that the Abengoa
situation will not have a material adverse
effect on our business, financial condition,
results of operations and cash flows.

On May 19, 2020, Abengoa announced that it
was working on a new viability plan that would
include new financing under a COVID-19
in Spain, as well as
mitigation program
renegotiation of certain existing debt with
suppliers and lenders. Within this process on
August 18, 2020 Abengoa filed pre-insolvency
individual company
proceedings
Abengoa,
public
to
communications to the Spanish securities
market regulator, Abengoa believes this filing
should not affect the restructuring plan for
which Abengoa is currently seeking approval
from its creditors.

the
According

for
S.A.

such

proceedings,

On February 22, 2021, Abengoa S.A. filed for
insolvency proceedings in Spain. Based on the
public information filed in connection with
these
insolvency
proceedings do not include other Abengoa
companies, including Abenewco1, S.A., the
controlling company of
the subsidiaries
performing the operation and maintenance
services for us. The insolvency filing by the
individual company Abengoa S.A. in February
2021 represents a theoretical event of default
under the Kaxu project finance agreement for
which we do not yet have a waiver . Although
we do not expect the Kaxu’s project debt
lenders to accelerate the debt or take any
other action, a cross-default scenario, if not
cured or waived, may entitle lenders to
demand repayment, limit distributions from
the asset or enforce on their security interests,
which may have a material adverse effect on
our business, financial condition, results of
operations and cash flows. We are negotiating
a waiver from the creditors and/or contractual
modifications to permanently remove the
cross-default provision.

In addition, certain of Abengoa’s indemnities
and obligations are no longer valid after the
insolvency filing by Abengoa S.A. in February
2021. In addition, considering the current
financial situation of Abengoa, we cannot

Risk / Impact

may need to renegotiate contracts and
pay higher prices or change the scope of
the contracts. This could also cause us to
change suppliers or to pay higher prices
or change the level of services.

A deterioration in the financial situation of
Abengoa or the implementation of a new
viability plan may also result in a material
adverse effect on Abengoa’s and its
subsidiaries’ obligations, warranties and
guarantees, and indemnities covering, for
example, potential tax liabilities for assets
acquired from Abengoa, or any other
agreement. In addition, Abengoa agreed
to indemnify us for any penalty claimed
by third parties resulting from any breach
in
representations.
Considering the current financial situation
of Abengoa, we cannot guarantee that
these indemnities will be maintained in
the future.

Abengoa’s

In addition, although Abengoa has not
been our shareholder since the end of
2018, in some geographies our reputation
continues to be related to that of
Abengoa. Any damage to the public
image or reputation of Abengoa could
have a negative impact on us.

All these situations may have a material
adverse effect on our business, financial
condition, results of operations and cash
flows.

Risks Related to Our Indebtedness

The financing agreements of our
project subsidiaries are primarily loan
agreements which provide that the
repayment of the loans (and interest
thereon) is secured solely by the shares,
physical assets, contracts and the cash
flow of that project company.

Our project finance agreements include
covenants and restrictions which may
limit our ability to distribute cash from
project companies
the holding
company level.

In addition, if we fail to satisfy any of our
debt service obligations or breach any

Assessment of Change in Risk
Year-on-Year
guarantee that these indemnities will be
future. A potential
maintained
insolvency of Abenewco1, S.A. may also
terminate
obligations,
the
indemnities and guarantees.

remaining

the

Mitigation of Risk

- As a result of the PG&E Chapter 11, a
technical event of default was triggered
under our Mojave project finance agreement
in July 2019 and the asset was not able to
make distributions in 2019. The technical
event of default was cured in 2020 after
PG&E emerged from Chapter 11 and we
could make distributions from Mojave in
2020.

- The Kaxu project financing arrangement
contains cross-default provisions related to
Abengoa (see previous risk).

- In December 2020, we obtained a waiver
from Kaxu’s project debt lenders in which
they committed not to take any action
until December 31, 2021 with respect to
any potential cross-defaults with Abengoa
for the pre-insolvency filing of August
2020. This waiver does not cover cross-
defaults arising from future potential
insolvency events by Abengoa
In
addition, we are negotiating a waiver from
the
contractual
modifications to permanently remove the
cross-default provision.

creditors

and/or

- Reporting and monitoring of covenants in

each contract.

Assessment of Change in Risk
Year-on-Year

Mitigation of Risk

- Management and specialized compliance
and legal teams constantly tracking any
change.

could

- COVID-19 caused significant disruption and
volatility in the global financial markets,
especially in March and April 2020. Capital
markets were closed for some time. Debt
continue
and equity markets
experiencing similar disruptions
in the
upcoming months as COVID-19 continues to
have an impact on markets. A prolonged
period of illiquidity and disruptions in the
equity and credit markets could limit our
ability to refinance our debt maturities and
to finance our potential acquisitions and
execute on our growth strategy.

During the year 2020 we have refinanced
some of our corporate debt agreements,
extending maturities. We have also issued
new long-term financing to finance our
growth plan.

Risk / Impact

related financial or operating covenants,
the applicable lender could declare the
full amount of the relevant project debt to
be immediately due and payable and
could foreclose on any assets pledged as
collateral.

Risks Related to Our Indebtedness:

Liquidity Risk and Access to capital

Not being able to meet our payment
obligations as they fall due.

Not being able to meet our covenants and
obligations under our corporate financing
arrangements.

Failing to meet the required or desired
financing for acquisitions and for the
successfully refinancing of Company’s
project and corporate indebtedness.

In the past, global capital and credit
markets have experienced and may
continue
to experience, periods of
extreme volatility and disruption. At times,
our access to financing was curtailed by
market conditions and other factors.
Continued disruptions, uncertainty or
volatility in the global capital and credit
markets may limit our access to additional
capital required to refinance our debt on
satisfactory terms or at all, may limit our
ability to replace, in a timely manner,
maturing liabilities, and may limit our
access to new debt and equity capital to
make further acquisitions. Volatility in
debt markets may also limit our ability to
fund or refinance many of our projects
and corporate level debt, even in cases
where such capital has already been
committed.

Risks Related to Our Indebtedness

No material changes.

Interest rate and foreign currency
exchange rate

Increases in rates would raise our finance
expenses at project companies or
corporate level.

Revenue and expenses of our solar assets
in Spain and our solar asset in South
Africa are denominated in euros and
South African Rands,
respectively.
Depreciation in the value of euro or South

- Appropriate cash management to ensure
appropriate levels of cash: Cash on hand
as of December 31, 2020, was $335.2
million at the corporate level plus $415
million available under our revolving
credit facility.

- In 2020 we closed several corporate
financings with private investors and in
the capital markets, including an equity
issuance, proving our access to different
sources of liquidity.

- In 2020 we also closed several project
debt refinancings, allowing us to raise
cash from our existing portfolio to finance
investments and acquisitions.

- A portion of cash flows generated and
distributed by our project companies to
the holding company are retained at the
holding company level.

- Proactive relationship with banks.
- Regular discussions with rating agencies
in operating
confidence

to build
performance.

- Our board of directors may change our
dividend policy at any point in time if
required, or modify the dividend for
following prevailing
specific quarters
conditions.

- With regard to our assets, revenue, debt
and most of the expenses are generally
denominated
the same currency,
creating a natural hedge.

- Our solar power plants in Spain have their
revenue and expenses denominated in
euros. At the corporate level, we have
administrative
some
expenses and debt denominated in euros.
Our strategy is to hedge the exchange rate
for the distributions from our Spanish
assets after deducting euro-denominated

general

and

Risk / Impact

African rand against U.S. dollar may have
a negative impact on our operating
results and our cash available
for
distribution.

Assessment of Change in Risk
Year-on-Year

Risks Related to Our Growth Strategy

Access to future investments.

local

successfully

Our growth strategy depends on our
ability
identify and
evaluate investment opportunities and
favourable
complete acquisitions on
terms. The number of
investment
opportunities may be limited. We are
competing with other
and
international companies for acquisition
opportunities from third parties, which
increase our cost of making
may
investments or cause us to refrain from
making acquisitions from third parties. If
we are unable to identify and complete
future investments and acquisitions, it will
impede our ability to execute our growth
strategy and limit our ability to increase
the amount of dividends paid to our
shareholders.
In addition, our ability to grow through
acquisitions depends, in part, on AAGES’
and Algonquin’s ability to present us with
investment opportunities. AAGES and
Algonquin may not offer us assets at all or
may not offer us assets that fit within our
portfolio or contribute to our growth
strategy. AAGES and Algonquin may
decide to keep assets subject to our ROFO
Agreements in their portfolios and not
offer them to us for acquisition. We may
not reach an agreement on the price of
assets offered by AAGES or Algonquin.

- In recent years competition to acquire
renewable assets has increased. Some of our
competitors for investments are much larger
than us, with substantially greater resources.
These companies may be able to pay more
for investments and acquisitions due to cost
of capital advantages, potential synergies or
other drivers, and may be able to identify
and purchase a greater number of assets
than our financial or human resources
permit.

- In order to grow our business, we may
acquire assets and businesses which may
have a higher risk profile than the assets we
currently own. We have announced
investments with exposure to development
and construction risk. In addition, we may
consider acquiring businesses which are not
contracted, including regulated businesses
and assets which are subject to demand risk.
We may also consider investing in assets
which are not contracted or not fully
contracted, or subject to merchant risk. We
have recently invested and may consider
investing in business sectors where we do
not have previous experience and may not
be able to achieve the expected returns. We
may also consider investing with partners or
on our own in new technologies which do
not for the moment have a track record as
proven as our current assets, such as
storage, district heating or geothermal.
Furthermore, we may consider acquiring
assets with revenues not denominated in US
dollars or euros, which would increase our
exposure to local currency and which could
generate higher volatility in the cash flows
we generate, such as the agreement we
51

Mitigation of Risk

interest payments and euro-denominated
general and administrative expenses.
Through currency options, we hedge
100% of the net euro net exposure for the
next 12 months and 75% of the net euro
net exposure for the following 12 months.
- We intend to ensure that at least 80% of
our cash available for distribution is always
denominated in U.S. dollars or euros. We
hedge the euros for the upcoming 24
months on a rolling basis.
- Over 90% of our total

interest risk

exposure is fixed or hedged.

We have diversified our sources of growth
and have a proven track record of closing
acquisitions from those sources:

assets,

particularly

- We believe we can achieve organic
growth through the optimization of the
existing portfolio, escalation factors in
many of our assets and the expansion of
current
our
transmission lines, to which new assets
can be connected. We have closed two
expansions to our existing transmission
lines: ATN Expansion 1 and ATN
Expansion 2 and are actively working on
similar opportunities. In 2020 we closed
the acquisition of the tax equity partner’s
equity ownership in Solana.

- Additionally, we expect to acquire assets
from third parties leveraging the local
presence and network we have
in
geographies and sectors in which we
operate. We have also entered into and
intend to enter
into agreements or
partnerships with developers or asset
owners to acquire assets. We also invest
directly and through investment vehicles
with
under
in
development or construction. In 2020 we
reached an agreement for the acquisition
of Calgary District Heating, a district
heating asset in Calgary. We also created
a renewable energy platform in Chile with
financial partners and
reached an
agreement to acquire Coso, a 135 MW
renewable asset in California. Coso is the
third largest geothermal plant in the US
and provides base load renewable energy

partners

assets

Risk / Impact

Assessment of Change in Risk
Year-on-Year
recently announced for the acquisition of an
asset and investments in projects under
development in Colombia.

Risks Related to the Markets in Which
We Operate:

Brexit

We are exposed to political, social and
macroeconomic risks relating to the
United Kingdom’s exit from the European
Union. The exit of the United Kingdom
and
trade
agreement could have negative impacts
on our business,
financial condition,
results of operations and cash flows.

terms of

final

the

Risks Related to Regulation

International operations including in
emerging markets.

- On January 31, 2020, the U.K. ceased to be
part of the European Union and entered into
a transition period to, among other things,
negotiate an agreement with the EU on the
future terms of the United Kingdom’s
relationship with the European Union. On
December 24, 2020, both parties announced
that a trade agreement had been reached
(the “Trade Agreement”), which was passed
by both houses of the British parliament on
December 30 and given Royal Assent on
December 31, 2020, which ended the
transition period. On January 1, 2021, the
U.K. left the EU Single Market and Customs
Union, as well as all EU policies and
result,
international agreements. As a
economic relations between the U.K. and the
EU will now be on more restricted terms than
existed previously. Moreover, the Trade
Agreement does not incorporate the full
scope of the services sector, and certain
businesses such as banking and finance face
a more uncertain future. At this time, we
cannot predict the impact that the Trade
Agreement and any future agreements
between the U.K. and the EU will have on our
business. We continue to evaluate our own
risks and uncertainty related to Brexit to
better navigate the changes in the U.K.-EU
market. The terms of the Trade Agreement
once implemented, and other possible terms
we cannot anticipate, could adversely affect
our business, financial condition, results of
operations and cash flows.

- No material changes during the year.

Mitigation of Risk

to the California ISO.

- We also expect to acquire assets from or
co-invest with our partners including
AAGES and Algonquin. In December 2020
we announced that we had reached an
agreement with Algonquin to acquire a
20 MW solar plant in Colombia. Closing is
expected to occur in mid-2021.

- Management and specialized compliance
teams continuously track any potential
change.

- Support of reputable external tax lawyers
and consultants with proven expertise in
legal and tax potential implications and
mitigating actions.

- We intend to grow our portfolio mainly in
countries that we consider stable in North
America, South America and Europe. We
expect that investments in countries with
a higher risk profile such as Algeria and

Mitigation of Risk

South Africa represent always a small
portion of our portfolio.

with

- In 2019 we entered into a political risk
the
agreement
insurance
Multinational
Investment Guarantee
Agency for Kaxu. The insurance provides
protection for breach of contract up to
$89.9 million in the event the South
African Department of Energy does not
comply with its obligations as guarantor.
We have also increased coverage in our
political risk insurance for our assets in
Algeria up to $38.2 million, including 2
years dividend coverage. This insurance
policy does not cover credit risk.

- Our local presence in each region provides
us with good knowledge and expertise to
operate in these regions.

Risk / Impact

Assessment of Change in Risk
Year-on-Year

We operate our activities in a range of
international locations, including North
America (Canada, the United States and
Mexico), South America (Peru, Chile and
Uruguay), and EMEA (Spain, Algeria and
South Africa), and we may expand our
operations to certain core countries
within these regions. Accordingly, we face
risks associated with
a number of
operating and
in different
investing
countries that may have a material
adverse effect on our business, financial
condition, results of operations and cash
flows. These risks include, but are not
limited to, adapting to the regulatory
requirements
countries,
compliance with changes in laws and
regulations
foreign
applicable
corporations, the uncertainty of judicial
processes, and the absence, loss or non-
renewal of favourable treaties, or similar
agreements, with local authorities, or
political, social and economic instability,
all of which can place disproportionate
demands on our management, as well as
significant demands on our operational
and financial personnel and business. As a
result, we can provide no assurance that
our future international operations and
investments will remain profitable.

such

Risks Related to Regulation

- No significant changes during the year.

Legal, environmental and general
compliance of each asset

We are subject to extensive governmental
regulation
in a number of different
jurisdictions.

laws and

We are subject to extensive regulation of
our business in the countries in which we
operate. Such
regulations
require
licenses, permits and other
approvals to be obtained in connection
with the operations of our activities. This
regulatory framework imposes significant
actual, day-to-day compliance burdens,
costs and risks on us. In addition, we need
to adapt to the regulatory requirements
of the different countries where we
operate.

Uncertainty or changes to any such

individual

- An
compliance has been appointed in each

responsible

local

for

geography where we are present to solve

day to-day issues. These employees report

to the General Counsel. We have local legal

teams in each geography that are usually

assessed by local external lawyers. Our local

internal and external lawyers are in close

contact with the regulation and potential

regulation changes in each geography.

These, together with the asset managers,

proactively track and monitor any potential

regulatory change.

- We have a Quality, Environmental, and
Health and Safety Management System in-

place certified under ISO 9001, 14001 and

45001 standards, which are audited

Risk / Impact

Assessment of Change in Risk
Year-on-Year

regulation in any of the countries where
we operate could adversely affect the
return of our current plants and our
results of operations, cash flows, cash
available for distribution and ability to
our
cash
make
shareholders.

distributions

Mitigation of Risk

annually by an external third party.

In some of our assets, revenues are based
on regulation:
- Revenues in Spain are mainly defined by
regulation. Revenues are based on a
“reasonable rate of return” which was
reviewed following a proposal by the
Spanish regulator CNMC based on the
weighted average cost of capital
(WACC). Parameters were reviewed at
the end of 2019 and were set for a six-
year or twelve-year period starting on
January 1, 2020, depending on each
asset within our portfolio.

- We have a transmission line in Chile
with revenues based on regulation.

In addition, we are subject to significant
environmental regulation, which, among
other things, requires us to obtain and
maintain regulatory licenses, permits and
other approvals and comply with the
requirements of such licenses, permits
and other approvals and perform
environmental impact studies on changes
to projects. In addition, our assets need to
comply with
environmental
strict
regulation on air emissions, water usage
and contaminating spills, among others.
As a company with a focus on ESG and
most of the business in renewable energy,
environmental
also
can
significantly harm our reputation.

incidents

Risks Related to Taxation

Changes to tax regulations could
adversely affect the return of our
current plants and our ability to
refinance projects. We are subject to
changes in tax regulation in all the
jurisdictions where we have assets.

In addition, our future tax liability may be
greater than expected if we do not use

- On June 29, 2020, California’s Governor
signed AB 85, suspending California Net

- Management and specialized teams with

broad experience.

Operating Losses (“NOL”) utilization and

- Engagement with local authorities on tax

matters.
- Support of

reputable external

tax
consultants with proven expertise in each
jurisdiction.

imposing a cap on the amount of business

incentive tax credits companies can utilize,

effective for tax years 2020, 2021 and 2022.

During these years, Mojave will not be able

to use its NOLs to offset its state tax, which

is set at approximately 8.9%. The years 2020

to 2022 will not be considered in the

calculation of NOLs expiration, resulting in a

Risk / Impact

sufficient NOLs to offset our taxable
income. We have NOLs that we can use to
offset future taxable income. Based on
our current portfolio of assets, we expect
these NOLs will be available as a future
benefit. In the event that they are not
generated as expected, or are successfully
challenged by the local tax authorities, or
are subject to future limitations, our
ability to realize these benefits may be
limited.

have

Furthermore, we
generated
significant NOLs in the U.S. and our ability
to use them is subject to the rules of
Sections 382 of the IRC. A corporation
that experiences an “ownership change”,
as defined in the rule, will generally be
subject to an annual limitation on the use
of its pre-ownership change U.S. NOLs.
We have experienced ownership changes
in the past. Future sales by our largest
shareholder, future equity issuances and
in general the activity of our direct or
indirect shareholders may further limit our
ability to use net operating loss carry
forwards in the United States, which could
have a potential adverse effect on cash
flows from U.S. assets expected in the
future.
in our
In addition, changes
shareholder base during 2019 may have
triggered an ownership change under
Section 382 of the IRC.

In addition, because we have recorded
tax credits for the U.S. tax loss carry
forwards in the past, a limit to our ability
to use U.S. NOLs could result in writing
off tax credits, which could cause a
substantial non-cash income tax expense
in our financial statements.

Mitigation of Risk

Assessment of Change in Risk
Year-on-Year
suspension rather than a cancellation or

shortening of the period of utilization of

these NOLs. We expect to utilize the

accumulated NOLs from 2022 onwards.

However, we expect AB 85 will have a

negative impact, which we estimate in the

range of $6 to $7 million per year in

distributions expected from Mojave from

2021 to 2023.

- In 2019, the Internal Revenue Service in the
U.S. also issued proposed regulations for the

calculation of built-in gains and losses under

Section 382. If enacted and depending on its

final outcome, this new regulation may

significantly limit our annual use of pre-

ownership change U.S. NOLs in the event a

new ownership change occurs after the new

rule is in place.

- On December 31, 2020, the congress of
Spain approved the General Budget Law for

2021. The new Law has introduced new

limitations

certain

incentives and

deductions of the Corporate Income Tax for

2021

onwards.

The most

relevant

modification contemplates a reduction in

the tax exemption on dividends and capital

gains received from affiliates from 100% to

95%. Despite the new limitation, we do not

expect a significant impact on cash flows

from our Spanish solar assets

in the

upcoming years.

- Additionally, many governments have
to
and will

implemented

continue

implement stimulus measures to reduce the

negative

impact of COVID-19

the

economy. In many cases, these measures will

increase government spending which may

translate into increased tax pressure on

companies

in the countries where we

operate. Changes in corporate tax rates

and/or other relevant tax laws may have a

material adverse effect on our business,

financial condition, results of operations and

cash flows.

- In addition, some countries where we

Risk / Impact

Assessment of Change in Risk
Year-on-Year
operate, including the U.S. and South Africa,

could implement tax reforms the content of

which is largely unknown currently. These

potential tax reforms could have a negative

impact on our financial condition, results of

operations and cash flows.

Mitigation of Risk

Financial Risk Management

Interest Rates

We incur significant indebtedness at the corporate and asset level. The interest rate risk arises
mainly from indebtedness with variable interest rates. To mitigate interest rate risk, we primarily
use long-term interest rate swaps and interest rate options which, in exchange for a fee, offer
protection against a rise in interest rates. As of December 31, 2020, approximately 92% of our
project debt and approximately 100% of our corporate debt has either fixed interest rates or has
been hedged with swaps or caps. Nevertheless, our results of operations can be affected by
changes in interest rates with respect to the unhedged portion of our indebtedness that bears
interest at floating rates, which typically bears a spread over EURIBOR or LIBOR.

Exchange Rates

Our functional currency is the U.S. dollar, as most of our revenue and expenses are denominated
or linked to U.S. dollars. All our companies located in North America and most of our companies
in South America have their revenue and financing contracts signed in, or indexed totally or partially
to U.S. dollars. Our solar power plants in Spain have their revenue and expenses denominated in
euros, and Kaxu, our solar plant in South Africa, has its revenue and expenses denominated in
South African rand. Financing of projects is typically denominated in the same currency as that of
the contracted revenue agreement. This policy seeks to ensure that the main revenue and expenses
in foreign companies are denominated in the same currency, limiting our risk of foreign exchange
differences in our financial results.

Our strategy is to hedge cash distributions from our Spanish assets. We hedge the exchange rate
for the distributions from our Spanish assets after deducting euro-denominated interest payments
and euro-denominated general and administrative expenses. Through currency options, we have
hedged 100% of our euro-denominated net exposure for the next 12 months and 75% of our euro-
denominated net exposure for the following 12 months. We expect to continue with this hedging
strategy on a rolling basis.

Although we hedge cash-flows in euros, fluctuations in the value of the euro in relation to the U.S.
dollar may affect our operating results. In subsidiaries with functional currency other than the U.S.
dollar, assets and liabilities are translated into U.S. dollars using end-of-period exchange rates.
Revenue, expenses and cash flows are translated using average rates of exchange. Fluctuations in

the value of the South African rand in relation to the U.S. dollar may also affect our operating
results.

Credit Risk

On January 29, 2019, PG&E, the off-taker for Atlantica in relation to the Mojave plant, filed for
reorganization under Chapter 11 of the Bankruptcy Code in the U.S. Bankruptcy Court for the
Northern District of California. On July 1, 2020, PG&E emerged from Chapter 11.

The credit rating of Eskom has weakened and is currently CCC+ from S&P Global Rating (“S&P”),
Caa1 from Moody’s Investor Service Inc. (“Moody’s”) and B from Fitch Ratings Inc. (“Fitch”). Eskom
is the off-taker of our Kaxu solar plant, a state-owned, limited liability company, wholly owned by
the government of the Republic of South Africa. Eskom’s payment guarantees to our solar plant
Kaxu are underwritten by the South African Department of Energy, under the terms of an
implementation agreement. The credit ratings of the Republic of South Africa have also weakened
and as of the date of this report are BB/Ba2/BB- by S&P, Moody’s and Fitch, respectively.

In 2019 we entered into a political risk insurance agreement with the Multinational Investment
Guarantee Agency for Kaxu. The insurance provides protection for breach of contract up to $89.9
million in the event the South African Department of Energy does not comply with its obligations
as guarantor. This insurance policy does not cover credit risk.

In addition, Pemex’s credit rating has also weakened and is currently BBB from S&P, Ba2 from
Moody’s and BB- from Fitch. We have been experiencing significant delays in collections from
Pemex since the second half of 2019.

Liquidity Risk

The objective of our financing and liquidity policy is to ensure that we maintain sufficient funds to
meet our financial obligations as they fall due.

Project finance borrowing permits us to finance projects through project debt and thereby insulate
the rest of our assets from such credit exposure. We incur project finance debt on a project-by-
project basis.

The repayment profile of each project is established based on the projected cash flow generation
of the business. This ensures that sufficient financing is available to meet deadlines and maturities,
which mitigates the liquidity risk

Environment, Social and Governance

Sustainability underpins our strategy and represents one of Atlantica’s key values

At Atlantica, our purpose is to support the transition towards a more sustainable world by investing
in and managing sustainable infrastructure, while creating long-term value for our shareholders,
employees, suppliers, customers, business partners, local communities and debt investors.

As scientists continue to warn about a shifting climate throughout the world, extreme weather
events make global headlines and new regulatory changes are implemented to transition towards

a decarbonized economic model. Companies face increasing , pressure to manage the risks and
opportunities that arise from climate change.

Climate change and Environmental, Social and Governance (ESG) are becoming more important
criteria for shareholders and investors. Many investors have already incorporated climate change
into their investment analysis. Companies are selecting suppliers taking into consideration the
environmental impact of their products or services and, customers are proactively and voluntarily
looking to improve their ESG and climate change commitment.

Atlantica’s strategy focuses on climate change solutions in the power and water sectors, we see
sustainability and climate change as a growth opportunity for us. We intend to be part of the
solution to climate change. Our long-term strategy reflects this. We are committed to investing in
renewable energy assets, transmission and transportation infrastructure, storage and natural gas
as enablers of the energy transition.

Sustainability is one of our five core values and for us, it represents a holistic approach that includes
operational, health and safety, ESG and financial performance. We believe that by investing in
sustainable sectors and managing our assets sustainably, we will create more value over time for
all our stakeholders. We have set targets to:

1. Maintain over 80% of our adjusted EBITDA including unconsolidated affiliates generated from
low-carbon footprint assets such as renewable energy, storage, transportation and transmission
infrastructure and water assets.

2. Reduce our emission rate per unit of energy generated by 10% by 2030.

Atlantica produces clean electricity, desalinated water and provides electricity transmission in a
safe, reliable and environmentally responsible way. We focus mainly on greenhouse (GHG) gas
emissions, water and waste management, health and safety, human capital and governance.

In December 2020, the Carbon Disclosure Project (CDP) issued Atlantica’s 2020 climate change
rating. It rated us “A-”, a score which corresponds to leading companies on environmental
transparency and action.

In January 2021, Atlantica was recognized as one of the World's 100 Most Sustainable Corporations
in the 17th edition of the Global 100 Most Sustainable Companies Index, issued annually by
Corporate Knights. Atlantica ranked #12 in the Global 100 index and #2 in Power Generation.

Bloomberg updated Atlantica’s ESG evaluation and issued a 69-point scoring, thus recognising
Atlantica among the best in its sector.

Also Bloomberg included Atlantica in its Gender-Equality Index (GEI). The GEI includes 380
companies across 11 sectors and 44 countries and regions. It measures disclosure and gender
equality using indicators across five areas: female leadership and talent pipeline, equal pay and
gender pay parity, inclusive culture, sexual harassment policies, and pro-women brand.

In February 2021, Sustainalytics updated its rating on Atlantica’s ESG factors. Atlantica was rated in
the ESG Risk Rating assessment as the top company within both the renewable power production
and the broader utility industry, and in the top 1% in the global rating universe, improving its score
versus last year.

Atlantica is a signatory to the United Nations Global Compact (UNGC), the world’s largest corporate
sustainability initiative with more than 12,000 signatories in over 160 countries. The UNGC is an
initiative which encourages companies and organizations worldwide to adopt sustainable and
socially-responsible policies. Participation in the UNGC is voluntary and pledge to uphold and
disseminate the principles and report on their progress once they apply them in their management.
By joining the UNGC, businesses, as primary drivers of globalization, can help ensure that markets,
commerce, technology and finance advance in ways that benefit economies and societies
everywhere.

As part of its commitment to sustainability, Atlantica has formally adopted the UNGC ten
fundamental principles in the fields of human rights, labour, environment and anticorruption.

We intend to make the UNGC and its principles an integral part of the Company’s strategy, culture
and day-to-day operations.

Atlantica is committed to orient its action to 7 of the 17 Sustainable Development Goals: Climate
action, Affordable and clean energy, Clean water and sanitation, Decent work and economic
growth, Gender equality, Life on land and Industry, Innovation and infrastructure.

Our ESG Report includes additional UNGC disclosure, which is available on our website.

In December 2020, the Board updated and issued several key documents following our long-term
strategy:

- Compliance documents, for example, Code of Conduct and the Supplier Code of Conduct.
- Health and Safety Policy.
- Environmental Policy.
- Biodiversity Policy.
- Community Development and Involvement Policy.
- Asset Management Policy.
- Board Diversity and Inclusion Policy (new)
- Stakeholder Policy (new).

These policies are available on our website (www.atlantica.com).

The European Union Taxonomy

The European Union (EU) Taxonomy defines economic activities that can be considered
environmentally sustainable. It is aimed at investors, companies and financial institutions, covers a
wide range of industries and is expected to create security from greenwashing, help companies to
plan the transition to a decarbonized economic model, and help shift investments where they are
most needed. The EU taxonomy regulation entered into force on July 12, 2020. Reporting is not
mandatory for Atlantica, but we have decided to provide initial information for business sectors
where we have concluded our analysis.

Atlantica reporting on sustainable economic activities: 2020 revenues, EBITDA and investment

Taxonomy aligned: Renewable (solar, wind and hydro)
contributing to climate change mitigation

Revenues
74.3%

EBITDA
73.6%

Investment
97.4%*

Under analysis
Total

14.7%**
$1,013.3 million

13.8%**
$781.6 million

2.6%**
$302 million

* Includes 2020 investments in Solana and Chile PV1.
** We are analysing if our transmission and transportation infrastructure and, desalination water plants are compliant

to the EU taxonomy.

Environmental Dimension

Atlantica’s Environmental and Quality Management System is ISO 14001 and ISO 9001 compliant.
These standards cover the management and acquisition of contracted assets. In 2020, we migrated
our system based on OHSAS 18.001 to the new standard ISO:45001 health and safety requirements.
Our certifications, obtained for the first time in 2015, are valid until May 2021. An external third
party (DNV GL) audits our Environmental and Quality Management System annually.

The Company’s management system guarantees that we comply not only with our own policies,
but also with the regulations in force in each of the markets in which we operate. In this sense, we
measure and monitor the environmental impact of our activities and we analyse plans to reduce
our emissions, water usage and waste.

We perform annual internal audits on our assets to ensure compliance with our best practices and
to promote continuous improvement. These audits focus on a broad range of asset management
areas, including the environmental aspects. They review the operational, maintenance, health and
safety, and environmental indicators, and compliance and reporting requirements. We aim for total
compliance with our best practices. In 2020, we had 13 of our assets audited, which resulted in
recommendations for 179 improvement actions. We are currently implementing action plans to
reach the internal standards required.

Greenhouse Gas Emissions

Atlantica complies with the U.K. Climate Change Act 2008 for greenhouse gas emissions (“GHG”)
reporting and with the Commission Regulation (EU) No 601/2012. We followed the operational
control approach to calculate the emissions data presented in this section using emissions
generated in the annual periods ending December 31, 2019 and 2020.

Our focus on renewables and sustainable technologies allows us to have lower GHG emissions rates
per unit of electricity produced than traditional utilities whose portfolio is mainly based in fossil
fuels. As of December 31, 2020 approximately 82% of our installed capacity relates to renewable
assets and 18% refers to ACT and Monterrey, our efficient natural gas plants in Mexico.

Renewables
82%

Efficient Natural Gas
18%

Installed Capacity in Generation Assets, MW

ACT has achieved “efficient cogeneration facility” status, according to the Mexican energy
regulator. The Mexican regulator categorises as “efficient plants” facilities that deliver energy above
a defined efficiency threshold. This status allows ACT to benefit from certain favourable conditions
regarding interconnection and transmission.

In 2020 we avoided emissions of approximately 5.4 million tons of equivalent CO2, compared with
a 100% fossil fuel-based generation. In 2019, we helped avoid up to 4.7 million tons of equivalent
CO2 compared with a 100% fossil-fuel based generation plant. We base these calculations on the
“Greenhouse Gas Equivalencies Calculator” and the Avoid Emissions and Generation Tool (AVERT),
U.S. national weighted average CO2 marginal emission rate, published on the United States
Environmental Protection Agency website, which converts reductions of kilowatt hours into avoided
units of carbon dioxide emissions.

h
W
M
/
e
2
O
C
f
o
s
n
o
t

1.0

0.8

0.6

0.4

0.2

0.0

0.70

0.17

Atlantica Emissions

Electricity-Related Emissions
Factor (AVERT)

Comparison of Atlantica’s GHG emission ratio and fossil fuel generation GHG emissions ratio

We quantified and reported on the emissions figures following the GHG Protocol:

- Scope 1: Emissions of GHG from sources that are owned or controlled by the Company.
- Scope 2: Indirect emissions of GHG from consumption of purchased electricity, heat or steam.
- Scope 3: Indirect emissions of GHG not included in Scope 2 that occur in the Company’s value
chain, including both upstream and downstream emissions, and the emissions of our non-
consolidated affiliates.

External auditors have verified Scope 1 emissions from our solar plants in Spain and scope 1 and 2
emissions from our efficient natural gas asset. These externally verified emissions represent
approximately 90% of Atlantica’s Scope 1 and 2 emissions, and 62% of total emissions. The
verification includes information used for its calculation, such as emission factors and activity data.
In addition, during the first quarter of 2021 we expect to audit 100% of our 2020 Scope 1, 2 and 3
GHG emissions. This would be our first complete GHG emissions verification.

We use the operational control approach to calculate the emissions based on the criteria defined
by the GHG Protocol. Our reported emissions include emissions of methane (CH4), and nitrous
oxide (N2O) as CO2 equivalents. We use the GHG inventories conversion factors indicated by the
organizations listed below:

-
Intergovernmental Panel on Climate Change (the “IPCC”).
- United States Environmental Protection Agency (the “EPA”).
- 2020 GHG National Inventory from the Ministry of Ecological Transition in Spain.

We calculated Scope 3 emissions using an economic input-output analysis and key emission factors
from CEDA’s1 5.0 database. We also used the (i) fuel consumption activity data and (ii) emission
factors disclosed at WTT DEFRA 20202 to calculate Scope 3 emissions.

Approximately 86% of the total GHG emissions generated in 2020 come from our natural gas plants
in Mexico.

Following U.K. GHG regulation disclosure, GHG emissions generated in the U.K. were less than
0.001% in both 2020 and 2019.

Efficient Natural Gas
86%

Others 14%

GHG Emissions by Technology

1 CEDA stands for “Comprehensive Environmental Data Archive”, a set of databases designed to assist on environmental system analysis throughout the
supply chain.
2 WTT DEFRA 2018 stands for “Department of Environment Food and Rural Affairs”, GHG conversion factors from resource extraction, production and
delivery.

Atlantica is committed to promote a low-carbon generation in our portfolio. We plan to reduce our
carbon emissions footprint by investing in additional renewable energy assets. Our Board of
Directors is committed to maintaining over 80% of our Adjusted EBITDA including unconsolidated
affiliates, generated from low-carbon footprint assets. This includes our renewable energy, storage,
transmission infrastructure and water assets.

Given that our largest business sector since Atlantica’s incorporation is renewable energy, our GHG
emissions have always been significantly lower than those of a company generating electricity from
fossil fuel sources. Scope 1 emissions from our generation assets were 0.17 tons of CO2 per MWh
of electricity produced in 2020, compared to approximately 0.71 tons of CO2 per MWh in a 100%
fossil fuel-based generation.

Reducing emissions is significantly more challenging for a renewable energy company like us than,
for a traditional utility with a portfolio largely based on fossil fuel generation transitioning
progressively to renewables. Our aim is to reduce our emission rate per unit of energy generated
by 10% by 2030.

The graph below represents our GHG emissions in 2020,2019 and 2018:

e
2
O
C
f
o
s
n
o
t
0
0
0

3,500

3,000

2,500

2,000

1,811

1,737

1,533

1,500

1,000

500

2,749

2,757

2,376

2018

2019

2020

793

719

821

145

123

199

Scope 1

Scope 2

Scope 3

Total

GHG Emissions Breakdown by Scope

Total CO2 equivalent emissions generated by the Company in 2020 reached 2,757 thousand tons,
compared to 2,376 thousand tons in 2019 and 2,749 thousand tons in 2018. This 17% GHG
emissions increase was mainly because of the major overhaul of our efficient natural gas asset in
2019. As a result, in 2019 natural gas consumption, production and emissions were lower. In 2018,
ACT operated at partial load for a higher number of hours at the request of our client, decreasing
the plant’s efficiency and increasing gas consumption to generate energy. A tolling agreement
exists for this asset, according to which we receive water and natural gas from the client and in
return for electricity and steam.

In 2020, as part of our commitment to sustainability, Atlantica analysed several initiatives to
mitigate some of our GHG emissions. As a result, we offset 200,000 tons of Scope 1 CO2 emissions

through Voluntary Carbon Credits. The graph below represents our adjusted GHG emissions in
2020, 2019 and 2018.

e
2
O
C
f
o
s
n
o
t
0
0
0

3,500

3,000

2,500

2,000

1,811

1,533

1,537

1,500

1,000

500

2,749

2,557

2,376

2018

2019

2020

793

719

821

145

123

199

Scope 1

Scope 2

Scope 3

Total

GHG Emissions Breakdown by Scope Including Offset GHG Emissions

The GHG emissions compensation initiative has resulted in a 7% decrease compared to 2020. We
believe this initiative highlights our climate aim and further shows Atlantica’s commitment to
sustainability.

GHG Emissions Rate per Unit of Energy Generated

h
W
M
/
e
2
O
C
f
o
s
n
o
t

0.40

0.30

0.20

0.10

0.00

0.19

0.17

2018

2019

2020

Scope 1 GHG Emissions

3
GHG Emission Ratio per Unit of Energy Generated by Scope

The rate of equivalent tons of CO2emissions per energy generation was 0.17 in 2020 and 2019. We
calculated this ratio using generation assets (renewable energy and efficient natural gas). In 2020,

3 The ratio has been calculated considering electric and thermal energy generated by our efficient natural gas plant

new renewable generation assets helped to maintain the GHG emissions rate per unit of energy
generated at 0.17 tons of CO2e/MWh. In 2019, our efficient natural gas plant had a major overhaul.
As a result, production and emissions were lower. In 2018, ACT operated at partial load for a higher
number of hours at the request of our client. This decreased the plant’s efficiency and increased
gas consumption, generating higher emissions.

Air Quality

Regarding non-GHG emissions, Atlantica generates very low NOx (excluding N2O) and SOx and
does not generate any particulate matter (PM10), lead (Pb) or mercury (Hg). Our efficient natural
gas plants in Mexico generate most of these emissions.

In 2020 our non-GHG emissions were 455 tons of NOx and 0.72 tons of SOx. In 2019 our NOx and
SOx emissions were lower mainly because of major overhaul of our efficient natural gas asset, ACT,
which resulted in lower production and, lower emissions.

Tons

NOx

SOx

2020

455

0.72

2019

366

0.67

Water Management

Atlantica is committed to using water efficiently in our operations. This covers two main types of
water use:

1. Power generation in the assets that use cycled water in the turbine circuit and in refrigeration

processes.

2. Generation of drinking water for local communities and industries through the desalination of

sea water.

1. Power Generation

Renewable Energy Assets

Our renewable energy segment uses water in its power generation process. Atlantica mainly uses
water for cooling condensers during power generation. We withdraw fresh water primarily from
rivers and aquifers. The Company holds permits to withdraw water from these sources and adheres
to regulations on water quality. The difference between water withdrawn from and returned to its
source is our water consumption which occurs because of evaporation.

We measure the water we withdraw and return using the installed water meters on the plants’
pumping equipment. The reported volumes represent the total readings measured by the water
meters at all our assets without adjusting for our interest in the assets.

The water meters are sealed and are normally subject to audit by the inspector representing the
local water authorities. We comply with the requirements and regulations of the applicable local
regulatory authorities in the areas in which we operate. We regularly report the results of our water

statistics to the local water agencies.

For example, we have implemented an air-dry cooling system, instead of cooling towers, to
refrigerate the condensers in one of our solar plants. This plant is in an area of water scarcity and
this system reduces the demand for water.

Efficient Natural Gas Plant

The ACT plant is an efficient natural gas cogeneration facility with a rated capacity of approximately
300 MW and between 550 and 800 metric tons per hour of steam. ACT produces electrical energy
and steam requested Pemex, the client, based on the expected levels of efficiency.

The water necessary to operate the plant is withdrawn and supplied by Pemex. The water received
is transformed to high pressure steam through heat recovery steam generators and delivered back
to Pemex.

The following charts set out water management key performance indicators (KPIs) for power
generation assets for 2020 and 2019:

Water Withdrawal and Water
Savings

Water Withdrawal Breakdown by
Sources of Water

Water Withdrawal and Discharges
per MWh

50%

51%

a
w
a
r
d
h
t
i

r
e
t
a
w
3

15.3

16.0

2019

2020

Water Savings

60%

50%

40%

30%

20%

10%

a
w
a
r
d
h
t
i

r
e
t
a
w
3
m

12.0

10.0

8.0

6.0

4.0

2.0

0.0

10.1

10.5

5.2

5.5

0.0

2019
Ground Water
Public Network

2020

Surface Water

3.0

h
W
M

r
e
p
3

2.0

1.0

0.0

1.71

1.56

0.21

Withdrawal

Discharges

2019

2020

We have revised 2019 water KPIs disclosure to include ACT our efficient gas plant in our reporting
even if in this asset the water is supplied by our client, Pemex, and returned in the form of steam.

In 2020, we withdrew 10.6 million cubic meters of water at our renewable energy assets and we
returned 2.1 million cubic meters (20%) back to the source, which represents a reduction of the
water used in our operations compared to the previous year. In 2019, we withdrew 11.0 million
cubic meters of water and returned 1.9 million cubic meters (17%) back to the source. Independent
external laboratories periodically test the quality of the water returned to the environment. The
10.7 million cubic meters represents 49% of the limits allowed by our water permits. The difference
between the water permit limits and actual water withdrawn represents water savings.

Also in 2020, Pemex withdrew and supplied 5.4 million cubic meters of surface water to ACT. In
2019, Pemex withdrew and supplied 4.3 million cubic meters of surface water. In both years, water
received was transformed to high pressure steam through heat recovery steam generators and
delivered back to Pemex. Water withdrawn was 1.1 million cubic meters lower in 2019 because of

ACT’s major overhaul, which resulted in lower production and water withdrawal. Oppositely, water
withdrawal in relative terms (m3 per MWh) was higher in 2019. This was mainly because of the
major overhaul, which had a higher impact on production than on water intake.

In 2020, the increase in groundwater is mainly because of higher production at our renewable
energy assets. The surface water increase is mainly driven by higher production at ACT.

2. Water Desalination

Some parts of the world are suffering from ongoing drought which, combined with a water supply
that is unfit for human consumption, can foster disease and death. Water scarcity also affects food
production. The desalination of sea water provides a climate-independent source of drinking water.

In 2020 our water segment included three desalination plants, compared to two in 2019. We
withdraw sea water for desalination as specified in the concession agreements for our three
desalination plants.

In 2020, we withdrew 330.3 million cubic meters of sea water, from which we removed salt and
minerals during the desalination process at our water treatment facilities to prepare it for human
consumption. We produced 144.3 million cubic meters of desalinated water and returned 185.9
million cubic meters (56%) back to the sea. In 2019, we withdrew 228.7 million cubic meters and
returned 127.5 million cubic meters (56%) back to the sea. The difference between water withdrawn
from and returned to the sea is the desalinated potable water delivered to the water utility, as
specified by our take-or-pay concession agreements for the consumption needs of approximately
3 million people.

Waste Management

The Company’s assets produce two main types of waste, hazardous and non-hazardous. Our
processes generate hazardous waste through the use of chemical products. We define waste that
does not contain substances that are potentially harmful to human health or the environment as
non-hazardous waste. Atlantica is committed to reduce waste and has a comprehensive waste
management system with controls in place.

e
t
s
a
W

f
o
s
n
o
T

25,000

20,000

15,000

10,000

5,000

10,543

2,680

19,836

20,532

2019

2020

Hazardous

Non-Hazardous

Our target in relation to waste goes beyond legal compliance. We have a firm commitment to
reducing the generation of waste from our operations.

In 2020, hazardous waste was considerably lower than in 2019, mainly because of the measures
implemented to control hazardous waste generation in some of our plants.

In 2019, an environmental accident at one of our solar assets in Spain explains mostly why the
amount of hazardous waste generated was higher compared to the following year. We undertook
all necessary measures to minimize its impact, informed the public authorities, performed a root-
cause analysis, implemented corrective actions to remediate contaminated soils, thus reducing the
impact and, internally sharing the lessons learnt.

Non-hazardous waste concerns the wastewater treatment plants and the reuse of wastewater
before discharge. In 2020, non-hazardous waste increased by 3.5% mainly because of non-
contaminated soil generated by our water ponds.

That same year, we reused or recycled 55% of the total hazardous waste generated and disposed
of the remaining 45% in landfills. Reusability and recycling initiatives significantly reduced our
generated hazardous waste. In 2019, we reused or recycled 12% of the total hazardous waste
generated and disposed of the remaining 88% in landfills.

Hazardous Waste

100%

80%

60%

40%

20%

88%

12%

2019

45%

55%

2020

Reused or Recycled

Disposed of in Landfills

Energy Consumption

Our renewable energy, efficient natural gas and water assets consume energy from different
sources, including purchased fuel and electricity and, self-generated energy. In 2020, Atlantica
consumed 9,287 GWh of energy. In 2019, we consumed 8,131 GWh of energy. The difference is

mainly due to ACT, the asset had a major overhaul in 2019 resulting in lower production and total
energy consumption.

Energy Consumption

In GWh

Consumption of Fuel

Consumption of Purchased Electricity for own use

Consumption of Self-Generated Renewable Energy

Total Energy Consumption

2020

2019

8,545

448

294

9,287

7,546

276

309

8,131

Following U.K. energy consumption regulation disclosure, energy consumption generated in the
U.K. was less than 0.001% in both 2020 and 2019.

Human Rights

We are committed to conduct our business in a manner that respects the rights and dignity of our
employees and everyone who is affected by our activities. We respect internationally recognized
human rights, as set out in the International Bill of Human Rights and the International Labour
Organization´s (ILO) Declaration on Fundamental Principles and Rights at Work. Employment
practice at Atlantica and the professional activities of its employees and executives are governed
by the UN’s Universal Declaration of Human Rights and its protocols, UN/ILO international
agreements on social rights, and the principles of the UNGC.

Freedom of association is a human right recognised and defined by international declarations and
conventions. Workers’ rights of collective bargaining over their terms and conditions of work is also
an internationally recognized human right. Workers are not to be intimidated or harassed in the
exercise of their right to join or refrain from joining any organisation.

Atlantica is a signatory to the UNGC, whose principles are derived from, among others, the
Universal Declaration of Human Rights and the ILO’s Declaration on Fundamental Principles and
Rights at Work (see page 61 for more information on the UNGC).

Atlantica’s Code of Conduct includes a section on human and labour Rights. The Company does
not tolerate discrimination against anyone based on any personal characteristic, such as ethnicity,
culture, religion, age, disability, gender, marital status, sexual orientation, union membership,
political affiliation, health, disability, pregnancy, smoking habits, or any other characteristic
protected by law. We provide equal opportunities to all employees, promoting equality and
working to create an inclusive workforce. Atlantica seeks to provide a climate of confidence where
employees can raise issues. We encourage employees to report any unacceptable behaviour.

Atlantica strictly prohibits forced labour, employees should undertake work voluntarily. Whether as
indentured labour, bonded labour or any other form of involuntary labour, forced labour is not
acceptable. Mental and physical coercion, slavery and human trafficking are prohibited.

All employees receive a remuneration package that meets or exceeds the legal minimum standards
or appropriate prevailing industry standards.

Besides our Code of Conduct, we also have a Supplier Code of Conduct that was amended and
approved by the Board of Directors in December 2020. Atlantica has a firm commitment to operate
at the highest standards of corporate conduct. We collaborate with third parties who operate under
principles similar to those set out in our Code of Conduct. We set our requirements in our
contractual arrangements with suppliers.

Finally, we acknowledge that our day-to-day activities affect nearby communities. Our assets
occupy extensive areas of land and we generate waste, but we also facilitate communities’
economic prosperity through local purchasing and the hiring of local employees. It is important
that we are proactive and provide value to the communities in which we operate by collaborating
with locals to promote their environmental, economic and social progress. We have implemented
our human rights initiative into the processes that govern our business activities in the areas where
we are present.

Employees

At Atlantica, fostering a collaborative environment is one of our core values. Respect, teamwork
and empowerment are key principles to building effective teams.

Our values and Code of Conduct set out what we expect of all our people. The honesty, integrity
and sound judgment of our employees, officers and directors are essential to Atlantica's reputation
and success. We seek employees who have the right skills and who understand and embody the
values and expected behaviours that guide our business activity.

Atlantica has built standardized processes for evaluating the performance of our employees and
have in-place a career development program, performance assessments and skills training
programs aimed at talent retention and development.

The Company offers packages that include monetary compensation and remuneration in-kind.

In 2020 and 2019, we based our compensation policy on these four pillars:

1. Pre-defined remuneration bands based on market surveys provided by external consultants for

certain positions.

2. Annual performance appraisal for 100% of our employees.
3. Variable compensation based on Company targets, departmental targets and individual targets.
4. Long-term incentive plan for management.

We offer six categories of training to our employees to improve distinct sets of skills, integrate
them into Atlantica’s team and culture, and as a measure to keep talented employees:

- All new employees must attend our “Introduction to Atlantica” course during their induction
period. In addition, all the employees receive training about our compliance policies and
management policies

- We offer soft management-skills courses to improve negotiation, team-working, team-

building, decision-making, leadership and communication, among other skills.

- Our training plans also include technical knowledge courses specific to different technical fields.
- We offer several language courses to our employees to allow them to operate effectively in an

international setting.

- Health and safety are to our culture and philosophy. As a result, we offer several training courses

to both our employees and O&M personnel to reinforce it.

As of December 31, 2020 and 2019, Atlantica offered over 100 different training programs to its
employees. The employee agrees on the definitive training program with his or her manager and,
the Human Resources department. In 2020, employees completed on average 33 hours of training
compared to 49 in 2019. The COVID-19 pandemic is the primary reason for this reduction.

The table below shows the average number of employees for the years 2020 and 2019 on a
consolidated basis:

Average Number of Employees by Geography
North America
South America
EMEA
Corporate
Total

2020
237
46
54
104
441

2019
112
41
55
98
306

Average Number of Employees by Category*

2020

2019

Management
Middle Management**
Engineers and Graduates
Assistants and Professionals
Asset Operations Employees

Total

Average Number of Employees by Gender
Male
Female

Total

17
94
132
20
178

441

2020

325
116

441

19
69
119
17
82

306

2019

211
95

306

(*) In 2020 we redefined our employee categories. We revised the 2019 classification following the 2020 updated employee
category classification.
(**) Middle Management consists of employees who: (i) manage a specific area, (ii) supervise a group of employees, or (iii)
are considered key personnel within the organization.

The increase in the average number of employees as of December 31, 2020 as compared to
December 31, 2019 was primarily driven by the internalization of our operation and maintenance
activities in the United States. In August 2019 we acquired ASI Operations, the company providing
operation and maintenance services to our U.S. solar assets. This subsidiary added 199 new
employees, approximately 90% of whom were men, with 155 employed in operation and
maintenance.

In 2020, 116 out of 441 average employees were women, representing 26% of the Company’s
personnel. In 2019, 95 out of 306 employees were women, or 31% of the total headcount.

If we exclude our operation and maintenance employees, in 2020 39% of Atlantica’s average
number of employees were women.

The table below shows the percentage of women at the Board of Directors, management level
(without including middle management level and without including directors) and over total
number of employees as of December 31, 2020 and 2019:

Women at the Board of Directors
Women at Management Level
Women at Atlantica

2020
25%
24%
27%

2019
0%
21%
26%

Atlantica’s objectives include removing barriers and empowering women, ensuring we offer women
the same career development opportunities as men. The Company expects to disclose its gender
remuneration gap in 2021. We did not receive any communication regarding potentially
discriminatory incidents in 2020 or 2019.

In 2020 our consolidated employee benefit expense was $54.45 million, of which $47.2 million
comprised wages and salaries, $3.7 million social security costs incurred by the Company, and other
expenses. In 2019 our consolidated employee benefit expense was $32.2 million, of which $27.6
million comprised wages and salaries, $3.0 million to social security costs incurred by the Company
and, other expenses. The increase was primarily due to the internalization of operation and
maintenance services at our U.S. solar assets, following the acquisition of ASI Operations in August
2019.

The graphs below summarize the age and gender diversity of our people as of December 31, 2020
and 2019:

2020

2019

80%

70%

60%

50%

40%

30%

20%

10%

11%

Women

Above 51

41-50

31-40

Below 30

15%

20%

28%

11%

Men

80%

70%

60%

50%

40%

30%

20%

10%

Above 51

41-50

31-40

Below 30

13%

15%

23%

12%

Men

12%

17%

Women

The table below presents our key management team in 2020 and 2019:

Name

Position

Year of Birth

Santiago Seage

Chief Executive Officer

Francisco Martinez-Davis

Chief Financial Officer

Emiliano Garcia

VP North America

Antonio Merino

VP South America

David Esteban

VP EMEA

Irene M. Hernandez

General Counsel and Compliance Officer

Stevens C. Moore

VP Corporate Strategy and Development

1969

1963

1968

1967

1979

1980

1973

There are no potential conflicts of interest between the private interests or other duties of the key
management members listed above and their duties to Atlantica. There are no familial relationships
among any of our executive officers or directors.

Diversity and Inclusion

At Atlantica, we believe that the diversity of our workforce is an asset that enriches the Company
with fresh ideas, perspectives, and experiences. We acknowledge the contribution of people of
different genders, nationalities, cultures, races, professional backgrounds, abilities, socio-economic
backgrounds, and ages. Our belief is that employees with diverse skills represent an important
resource identifying innovative solutions and improving our business performance, which
ultimately benefits all our stakeholders.

We promote diversity and provide a work environment free from discrimination, intimidation and
harassment where everyone can take part in the business’s success and where all employees are
valued for the distinctive skills and experience they bring to the Company.

We believe that for our people to reach their full potential, and for our teams to work effectively
and efficiently, a collaborative environment and a positive corporate culture are essential. Such an
environment fosters innovation and creativity, thus enhancing our performance and the Company’s
ability to meet our stakeholders’ expectations.

In 2020 the Board approved a new Board Diversity Policy to further recognize and embrace the
benefits of having a diverse Board as part of the Company’s long-term strategy. Our Diversity and
Inclusion Policy and the new Board Diversity Policy are available on our website
(www.atlantica.com).

Also in 2020, we completed Bloomberg’s Gender-Equality questionnaire for the first time. In
January 2021, Bloomberg informed us they had selected Atlantica to be part of their Gender-
Equality Index (GEI).

We believe Bloomberg’s GEI helps bring transparency to gender-related practices and policies at
publicly listed companies by increasing the breadth of ESG data available to investors. The GEI
scoring method measures gender equality using indicators across five areas: female leadership and
talent pipeline, equal pay and gender pay parity, inclusive culture, sexual harassment policies, and

pro-women brand. In 2021, the GEI includes 380 companies across 11 sectors and 44 countries and
regions.

In October 2020 we carried out an employee climate survey. Participation was approximately 80%
and the general engagement with the Company was 77%, above the average for similar
organizations. Atlantica scored highly in several areas, including our COVID-19 response,
immediate
employees’ overall experience
manager/supervisor. This survey helped us to identify certain areas for improvement. Management
has prepared action plans for those areas.

in the Company and satisfaction with their

Our People

We believe that by providing a good working environment for our employees, and by enhancing
social and professional development we will keep and attract valuable employees. Employees are
a core component of our present and future success. We have in-place performance assessments,
skills training programs and high potential (HIPO) employee programs, all aimed at talent retention
and development.

Our values and Code of Conduct set out what we expect of all our people. The honesty, integrity
and sound judgment of our employees, officers and directors is essential to Atlantica's reputation
and success. We seek employees who have the right skills and who understand and embody the
values and expected behaviours that guide our business activity.

We use a platform, called Meta4 as our global system for human resources management. Meta4 is
accessible to all Atlantica employees. It is an interactive tool that allows employees to access and
manage their development, performance reviews, benefits, compensation, work-time planning, etc.

To improve communication with our people we have implemented several measures:
- Our CEO updates Atlantica’s employees on key priorities in open sessions with Q&A at least

twice a year.

- Our senior management takes part in our “Atlantica’s Management Model” training to discuss
with all employees the Company’s long-term strategy and business model, recent milestones,
growth strategy and values and policies and procedures. We promote an informal and open
environment to foster discussions with employees in groups of less than 20 people. Employees
can express their ideas and concerns without evaluation or retaliation. The feedback is analysed
and shared with Atlantica’s management in monthly management meetings. Where
appropriate, we devise action plans and assign one or several managers responsibility for their
implementation.

- We periodically publish Atlantica-related news via our internal intranet.

During 2020, we had an employee voluntary turnover of 7.5%, which decreased from 11.1% in 2019.
If we exclude the effect of our operation and maintenance employees, our employee voluntary
turnover would have been 4.2% in 2020.

In terms of prolonged absences, 21 of our employees took parental leave in 2020, of which 14 were
men and 7 were women, and 26 employees enjoyed parental leave in 2019 (15 men and 11 women).
In both years, all employees returned to work.

At Atlantica, we offer a remuneration package that includes monetary and non-monetary
compensation. In 2020 and 2019, we based our compensation policy on these four pillars:

- Pre-defined remuneration bands based on market surveys provided by several external

consultants for certain positions.

- Annual performance appraisal for 100% of our employees.
- Variable compensation based on Company targets, departmental targets and individual targets.
-

Long-term incentive plan for certain employees.

Our human resources department receives remuneration data from two separate external
consultants for certain positions detailed by position and location.

The package offered by Atlantica includes monetary compensation and remuneration in-kind,
depending on the employee’s position, and on local practices in the countries in which we operate.
In addition, we offer flexible compensation in certain locations, which sometime presents tax
advantages for employees. Under current local regulations, we offer 401(k) plans in the U.S. We
also finance a high percentage of the health insurance costs of our employees and their immediate
family in most of the countries where we are based. Finally, in certain locations, we have
implemented health initiatives including providing fruit at our offices and subsidizing fitness.

In 2020, we implemented COVID-19 related contingency plans to guarantee the safety of our
employees. Since March 2020, we have implemented the use of additional personal protection
equipment (PPE), reinforced access control to our plants, reduced contact between employees,
changed shifts and tested employees. We have also identified and isolated cases and potential
cases together with their close contacts and taken additional measures to increase safety
procedures for our employees and operation and maintenance suppliers’ employees working at
our assets. We have also reinforced our physical and cyber-security measures. We have
implemented protocols to decide which offices to keep open and under what limitations,
depending on the number of cases and other health indicators in each specific region. We continue
to monitor the situation closely at all assets and offices and are ready to take additional action if
and when required.

To date, we have not experienced material operational or financial impacts as a result of COVID-
19.

Community Development and Involvement Initiatives

Atlantica’s day-to-day activities affect nearby communities. These are the communities where some
of our employees and other stakeholders live and raise their families, and where part of our future
workforce is educated. It is crucial that we bring value to our communities.

We recognize that some communities where Atlantica is present are suffering and will continue to
suffer the consequences of COVID-19. In 2020 we focused our efforts on mitigating the impact of
COVID-19. We donated PPE and basic supplies such as food and beverages to local governmental
agencies in certain communities in South America and EMEA. We will continue to look for ways to
help our surrounding communities to minimize the impact of COVID-19.

The Company’s corporate culture includes a commitment to supporting the long-term
development of the communities where we operate. Our Community Development and
Involvement Policy is available on our website (www.atlantica.com).

Occupational Health and Safety

The first of Atlantica’s core values is “Integrity, Compliance and Safety”. Atlantica, its Board and its
management are committed to prioritizing and actively promoting health and safety as a tool to
protect the integrity and health of our employees and those of our subcontractors at our assets or
work centres. We promote a safe operating culture across Atlantica and encourage our
subcontractors to adopt a preventive culture in the operation and maintenance activities as
reflected in our corporate health and safety Policy publicly available on our website
(www.atlantica.com).

COVID-19 Pandemic

The COVID-19 pandemic is an unprecedented event that has affected many of our key markets.
This situation requires and will continue to require us to adapt to changing events.

At Atlantica, our priority has always been to guarantee the safety of all our employees, contractors
and partners working at our premises. In February 2020, following our Crisis Management
procedure, we established a COVID-19 Committee which included the CEO, the Geographic VPs,
Health and Safety Manager and other members of Atlantica’s management team. The aim was and
continues to be, to monitor the situation at each location and take all necessary actions to manage
the risks affecting our employees, operations and stakeholders. In 2020, we held 142 COVID-19
Committee meetings. As a result, we implemented health and safety measures at all our assets,
which enabled us to operate and provide a reliable service to all our clients, with no disruptions to
availability or production because of COVID-19.

Some key actions implemented during the COVID-19 pandemic include:

▪ Members of Atlantica’s management team formed a COVID-19 Committee, which meets at
least three times per week (or daily when necessary) and takes measures based on the analysis
of the following critical information:

- Developments in COVID-19 data in countries and regions where we are present.
- Positive cases among employees and subcontractors (monitored and tracked).
- New regulations

implementing such
regulations, where appropriate). The Committee approves all necessary measures without
delay.

issued by governments (measures

include

▪ We devised and implemented safety initiatives such as purchasing PPE and making its at our
assets mandatory, and advising all employees to download COVID-19 apps in countries where
such tools are available.

▪ We developed and implemented COVID-19 protocols at all our assets and work centres. These

include:
- Symptom monitoring procedures: daily body temperature measurement, identification of

COVID-19 symptoms, etc.

- Monitoring COVID-19 cases in our workforce, tracing close-contacts and implementing

quarantine protocols.

- Using mobile tracking devices at our assets where possible to identify close contacts of

positive COVID-19 and implement quarantines

- Defining a protocol to open or close offices and establish maximum occupation capacity
based on the average number of cases in the last seven days per one million inhabitants in
the specific area and on the percentage of tested people who result in positive cases. Where
offices have re-opened, we have applied strict safety measures.

- Making remote-working a priority.
- Restricting travel unless absolutely necessary.
-

Implementing preventive safety measures such as the mandatory use of masks, social
distancing, regular hand washing, etc.

- Placing information panels with rules and key information in our corporate offices and

assets, installing protective screens on all desks and intensive cleaning.

- Stocking PPE.
-
-
- Enhancing heating, ventilation and air conditioning systems in our offices following health

Implementing access control protocols for external subcontractors and visitors.
Implementing a COVID-19 testing policy.

agencies’ requirements and recommendations.

Health and Safety Management System

Atlantica conducts annual internal and external audits to test our health and safety management
system. An independent third party carries out the external audit. In 2020, we migrated our system
based on OHSAS 18.001 to the new health and safety standard ISO:45001.

In addition, we perform periodic health and safety audits of our operation and maintenance
suppliers to monitor compliance with legal regulations, contractual requirements and our safety
best practices.

Health and Safety Best Practices

The Company’s health and safety best practices program is a key management tool. It has been in
place since 2017 and we regularly update it to include the lessons learned from our peers,
contractors and suppliers. During 2020, we implemented the following new best practices:

1. Safety Culture

- “Walk and Talk” awards. We present quarterly awards to employees of Atlantica and our

subcontractors for the best safety improvement proposals.

- “Golden Rules” applied to each of our technologies. We defined key safety rules for each of
our technologies, which we communicated to all employees, posted on boards at all our
assets and included in regular operation and maintenance training.

- Safety Day. In 2020 we held our Safety Day online. Over 450 employees of Atlantica and our
subcontractors took part. We honoured 23 employees with awards for their commitment to
safety.

2. Subcontractors Health and Safety Performance Checks

2020 Safety Day Pictures

- We developed and implemented a new procedure to monitor subcontractors’ health and
safety practices. The goal is to identify areas for improvement and implement action plans
agreed with our subcontractors.

3. Access to Safety Information

- We placed enhanced user-friendly panels with key health and safety procedures in strategic

locations at our assets.

- We placed enhanced user-friendly panels with hazardous chemicals safety facts at our plants

where chemicals are used.

Safety App

In 2019 Atlantica developed and launched a new mobile safety app for our employees and those
of our subcontractors. We implemented this user-friendly tool to raise safety awareness among our
employees and subcontractors in all our assets. It provides valuable information on safety rules,
information on the use of PPE during hazardous activities, emergency instructions and first aid
procedures. The app also serves as an important communication channel with internal and external
employees working in our assets to improve safety through lessons learned. In 2020 we
implemented several enhanced functionalities and continued to promote its use.

In addition, the app promotes risk awareness through an interactive quiz module. Regular
questions testing “how much do you know about safety?” allow users to test their safety
knowledge. In late 2020 we started developing a new “Walk and Talk” module. We expect to have
it fully operational before June 30, 2021.

Health and Safety Rates

The fatality rate has been zero, and we have recorded no major injuries since our incorporation.

Our Frequency with Leave Index (FWLI) represents the total number of lost-time accidents recorded
in the last 12 months per million hours worked. We ended 2020 at 1.40, representing approximately
a 3% decrease compared to 2019.

1.44

2019

1.40

2020

Frequency with Leave Index

Our General Frequency Index (GFI) represents the total number of recordable accidents with and
without lost time recorded in the last 12 months per million hours worked. We ended 2020 at 5.0,
representing approximately a 20% improvement compared to 2019.

6.0

5.0

2019

2020

General Frequency Index

We also monitor near-misses and unsafe acts and conditions through our Total Recordable
Deviation Index (TRDI). This index represents the number of near-misses and unsafe acts and
conditions recorded in the last 12 months per million hours worked. The goal of this Key
Performance Indicator (KPI) is to encourage the identification and communication of near misses
and unsafe acts and conditions by our employees and those of our contractors. Because this helps
us identify risks and implement adequate preventive measures, the higher the rate is, the better.

In 2020 our TRDI improved thanks to the enhanced risk identification processes and
communication implemented in our assets. Our preventive reporting program, mainly through
79

Walk and Talk, has progressed alongside our measures to managing and mitigating risks. We
believe in the health and safety processes and procedures we have in-place, hence we expect the
Total Recordable Deviations to remain relatively stable in the future.

1,178

1,197

1,600

1,400

1,200

1,000

800

600

400

200

2019

2020

Total Recordable Deviations Index

As of December 31, 2020, 65% of our assets had achieved more than 1,000 days without lost time
accidents and 80% over 500 days without lost-time accidents.

In 2021, we will continue to devote time and effort to protect our employees and subcontractors
against COVID-19 and promoting a health and safety culture. We will seek to continue to improve
our health and safety performance by using our existing tools and implementing new ones based
on best practices.

Business Ethics

“Integrity, Compliance and Safety” is one of our core values, which prevails over the rest. We
continuously strive for the highest standards of business conduct, safety and professionalism even
if it means making tough choices. We are committed to complying with all rules and regulations.

Atlantica is committed to maintaining the highest standards of honesty, integrity and ethical
conduct. We are also committed to promoting ethical business practices and complying with all
relevant laws and regulations.

The Company has adopted a Code of Conduct to reinforce our commitment to integrity and
compliance. The Code of Conduct applies to all directors, officers and employees of Atlantica
Sustainable Infrastructure plc and each of its subsidiaries. We also make our best efforts to
introduce the code in our associate non-controlled companies where possible given Atlantica ´s
level of participation. Our employees acknowledge and agree to the Code of Conduct annually. In
addition, we organize training on our management policies, which includes our Code of Conduct.

The Whistleblowing Channel is an essential part of Atlantica’s commitment to fighting fraud,
irregularities and corruption. It is available on our website to all Company employees and
stakeholders. It serves as a tool to report any complaints and concerns about management, as well

as any breaches of the Code of Conduct or any conduct contrary to ethics, law or Company
standards. The channel is managed by the Audit Committee. Confidentiality and no retaliation are
the essential operating principles of the channel. We may suspend these principles only where the
claimant did not act in good faith.

Our Code of Conduct requires the highest standards for honest and ethical conduct and explicitly
states that we do not tolerate bribery or corruption in any of its forms. We also promote and
strengthen measures to prevent and combat corruption more effectively and efficiently. Our Anti-
Bribery and Corruption Policy applies to all Atlantica businesses.

In particular, Atlantica’s business activities are governed by laws that prohibit bribery supporting
global efforts to fight corruption. Specifically, the U.S. Foreign Corrupt Practices Act (FCPA) and the
U.K. Bribery Act 2010 make it a criminal offense for companies and their officers, directors,
employees, and agents, (or any other person) to give, request, promise, offer or authorize the
payment of anything of value (such as money, any advantage, benefits in kind, or other benefits)
to a foreign official, foreign political party, officials of foreign political parties, candidates for foreign
political office or officials of public international organizations to obtain or retain business.

Similar laws have been, or are being, adopted by other countries. Private bribery is also illegal under
U.S. laws, the U.K. Bribery Act, and the laws of other jurisdictions. Payments of this nature are strictly
against Atlantica’s policy even if the refusal to make them may cause Atlantica to lose business. In
2020, we published Atlantica’s anti-bribery and anti-corruption policy on our website. Atlantica’s
Code of Conduct prohibits political involvement of any kind on the Company’s behalf. Neither the
Company, nor its directors, employees or representatives on its behalf, can make political
contributions (donations to politicians, political parties or political organizations) or sponsor events
whose exclusive purpose is political propaganda. In 2020 and 2019, neither Atlantica nor any of its
subsidiaries made any financial or political contributions in-kind to political organisations, political
campaigns, lobbyists or lobbying organizations nor other tax-exempt groups, whether directly or
indirectly.

Finally, all our officers and employees working with sensitive information sign a formal commitment
annually acknowledging our insider trading policy. We also provide compliance courses.

Atlantica’s Code of Conduct

“We always do what is right. We continuously strive for the highest standards of business conduct,
safety, professionalism and governance even if it means making tough choices. We undertake to
comply with all rules and regulations.

Atlantica is committed to maintaining the highest standards of honesty, integrity and ethical
conduct. We are also committed to promoting ethical business practice and complying with all
relevant laws and regulations.

The Company has adopted a Code of Conduct to reinforce our commitment to integrity and
compliance. We intend the Code of Conduct to help everyone recognize ethics and compliance
issues before they arise and to deal appropriately with those issues that occur.

The Code of Conduct applies to all directors, officers and employees of Atlantica and each of its
subsidiaries. We also make our best efforts to introduce the code in our associate non-controlled

companies where possible and reasonable given Atlantica ´s level of participation.

The Code of Conduct is available on our website and is accepted by all our employees annually. In
addition, we organize training on our management policies, which includes our Code of Conduct.

Our Code of Conduct encompasses our high standards of integrity and includes principles on:
✓ Personal and business integrity: conflicts of interest, bribery and corruption, travel,

entertainment and gifts, insider trading;

✓ Human and labour rights: dignity and respect, equality and diversity, occupational health and
safety, forced labour, appropriate age, fair wages, right to form and/or join trade unions,
environmental sustainability;

✓ Corporate assets and financial integrity: accounting and reporting, anti-money laundering,

confidentiality and information security, protection of assets.

The Code of Conduct also includes information on the channels available to report or communicate
a breach of the Code.

The Board of Directors approved the Code of Conduct in December 2020.

Sustainable Suppliers

At Atlantica, we are committed to operating to the highest standards of corporate conduct and we
also seek to work with third parties who operate under principles similar to those set in the Code
of Conduct. We expect our suppliers to sign and adhere to our Supplier Code of Conduct and we
include our requirements in our contractual arrangements with suppliers. Understanding that some
suppliers may face significant challenges in adhering to every aspect of the Code, from the outset
of our business relationship, we therefore pledge to work with those suppliers to help them comply.

Our main operation and maintenance suppliers are large corporations with robust corporate
policies regarding ethical standards, human rights and the environment.

Atlantica has implemented a risk identification process to evaluate and approve the engagement
of suppliers. This process comprises: (1) an internal and external supplier homologation process
and, (2) an annual internal assessment aimed at monitoring our key suppliers’ activities. The internal
homologation process determines the eligibility of a potential new supplier based on our internal
policies. We perform part of the external homologation process through a third party, Ecovadis, a
third party. This company focuses on the potential suppliers’ activities regarding : (i) the
environment, (ii) fair labour and human rights, (iii) ethics, and (iv) sustainable procurement. We
conduct the annual supplier evaluation assessment internally to monitor our key suppliers’
activities.

In 2020 and 2019 we certified suppliers representing approximately 51% of the Company‘s annual
expenses through Ecovadis.

Anti-Slavery and Human Trafficking Statement

Atlantica published its anti-slavery and human trafficking statement under the Modern Slavery Act,
2015, which can be found on www.atlantica.com. The statement outlines the steps taken by the

Company to address the risk of slavery and human trafficking occurring within its operations and
supply chains.

Given our business, we believe the risk of modern slavery is low. However, we do not intend to be
complacent and will continue to work to improve our policies and procedures to ensure slavery
and human trafficking does not take place anywhere in our supply chain.

Our main suppliers are large operation and maintenance corporations with robust corporate
policies regarding ethical standards and human rights. We also engage with financial institutions,
including banks, legal advisors, accountants, consultants and insurers, who we believe operate
under principles similar to those set in our Code of Conduct. We consider the risk of modern slavery
and/or human trafficking in our supply chain and procurement processes to be very low based on
Atlantica’s risk identification process to evaluate and approve the engagement of suppliers and the
suppliers’ adherence to our Supplier Code of Conduct,.

All new suppliers are subject to internal due diligence and required to confirm that their
organization will comply with our Supplier Code of Conduct (available at www.atlantica.com), which
includes expectations regarding sustainable development in the following areas: business integrity
and ethical standards, human rights and labour standards, environmental sustainability, and
reporting concerns and compliance monitoring. Through our Supplier Code of Conduct, Atlantica
encourages suppliers to conduct their operations fully respecting fundamental human rights, as
affirmed by the Universal Declaration of Human Rights. Atlantica joined the UNGC initiative in
January 2018 and formally adopted the Ten Fundamental Principles in the fields of human rights,
labour, environment and anticorruption. We undertake to make the UNGC and its principles an
integral part of the strategy, culture and day-to-day operations of Atlantica and our suppliers.

We further provide our employees, shareholders and others with the Whistle Blower Channel
(available at www.atlantica.com), a specific channel of communication with management and the
governing bodies that is a means to report any misconduct, instances of non-compliance with our
compliance policy framework, and unethical or unlawful behaviour, including any suspected or
actual form of modern slavery taking place within the business or supply chain.

Atlantica has a zero-tolerance approach to modern slavery. We are proud of the effective steps we
have taken to combat slavery and human trafficking that allow us to confirm that no incidents of
modern slavery were reported or identified during 2020.

We also provided training in 2020 to members of senior management as part of our annual training
on our Code of Conduct and corporate policies, which included specific content related to human
and labour rights, to promote the policy throughout our organization.

All employees must read, understand and commit to follow our corporate governance policies.

Our Board of Directors approved the Anti-Slavery and Human Trafficking Statement in 2020.

Section 172 Statement

The Board is ultimately responsible for the long-term success of the Company. Our Directors are
aware of their responsibility to promote the success of the Company in accordance with Section

172 of the Companies Act 2006 and have acted in accordance with these responsibilities during
the year.

The Board’s Approach to Section 172 and Decision-Making

The Board acknowledges that Atlantica’s purpose is to support the transition towards a more
sustainable world by investing in and managing sustainable infrastructure, while creating long-
term value for its shareholders, employees, suppliers, customers, business partners, local
communities and debt investors. As such, the Board has considered the interests of and the impact
of its decisions on these stakeholders as part of its decision-making process. When making such
decisions, each Director has acted in the way he/she considers, in good faith, would most likely
promote the success of the company for the benefit of its stakeholders.

The board believes governance of the Company is best achieved by delegation of its authority for
the executive management to the CEO, subject to a set of defined limits and monitoring by the
board. The board routinely monitors the delegation of authority, ensuring that it is regularly
updated, while retaining ultimate responsibility.

In December 2020, the Board approved a new Stakeholder Policy aimed at building and
strengthening relationships based on trust with stakeholders to minimize reputational risk, improve
operational efficiency via smooth collaboration with them, and gain respectability and credibility.
Through this policy Atlantica commits to: (i) engaging with stakeholders to obtain inputs that can
be helpful as we execute on our strategy, and (ii) doing its best to gain the stakeholders’ trust.

Stakeholder Identification and Engagement

At Atlantica, we acknowledge that our stakeholders have a broad range of interests and viewpoints.
We believe that collaboration with them is key to our success. As such, we listen and do our best
to gain stakeholders’ trust, thus leading to a more stable and long-term relationship. Across the
company, we engage with our stakeholders to obtain inputs that can be helpful as we execute our
strategy.

We have made available a two-way engagement channel with our stakeholders to build trusting
long-term relationships:

(*) Regular or on as-needed basis. (**) ESG Report issued on an annual basis. (***) Quarterly Earnings Presentations

The Board ensures that stakeholder considerations are considered in strategic decision-making by
requiring that strategic proposals include an analysis of key stakeholder impacts, which form part
of the decision-making process.

Our Employees

Our people are fundamental for the long-term success of the Company. We are committed to
prioritizing and actively promoting health and safety as a tool to protect the integrity and health
of our employees and those of our subcontractors working in our assets and at our work centres.
We promote a safe operating culture across Atlantica and encourage a preventive culture in the
operation and maintenance activities of our assets as described in our corporate health and safety
policy available at www.atlantica.com. Health and safety KPIs are discussed at all Board meetings.

At Atlantica, we are convinced that the diversity of our workforce is an asset that enriches the
Company. We provide a work environment free of discrimination, intimidation and harassment
where everyone can participate in the success of the business and where all employees are valued
for the distinctive skills and experiences they bring to the Company.

We perform an employee climate survey every three years to assess employees’ satisfaction and
intend to increase the frequency of this survey. The goal is to receive feedback as well as to engage
with our employees. The survey is confidential, it is managed by a third-party and results are
aggregated, shared and discussed with supervisors. The last climate survey was performed in
October 2020, participation reached approximately 80% and the general engagement with the
Company was 77%, which is above the average for similar organizations. Atlantica received high
scores in several sections, including our response to COVID-19, overall experience in the Company
and degree of satisfaction with immediate manager/supervisor. This survey also helped us to
identify certain areas with improvement potential. Management prepared action plans for those
areas. The Board receives reports on the survey results together with action plans that management
intend to implement going forward.

In addition, our CEO updates Atlantica’s employees on the main priorities in open sessions with
Q&A at least twice a year and feedback is actively encouraged. Our senior management participates
in our “Atlantica’s Management Model” training to discuss with all employees our long-term
strategy and our business model, Atlantica’s recent milestones, our growth strategy and our values,
policies and procedures. An informal and open environment is promoted to foster discussions with
the employees in groups of less than 20 people. Feedback is encouraged and employees are able
to express their ideas and concerns. The feedback is analysed and shared with Atlantica’s
management in monthly management meetings. Action plans are defined and one or several
managers are assigned the responsibility for their implementation.

The key metrics followed by the Board are among others:

Health and Safety

Employee

Percentage of
Women

General Frequency Index
Frequency with Leave Index
Near Misses Unsafe Acts and Unsafe
Conditions Frequency Rate
Turnover
Average Annual Training (in hours)
At Management Level
Over Total Number of Employees

2020
5.0
1.4

1,197

7.5%
33
24%
27%

2019
6.0
1.4

1,177

11.1%
49
21%
26%

For further information we refer to the “Occupational Health and Safety” and “Employees” sections
in this Strategic Report.

Our Shareholders and Debt Investors

The support and engagement of our shareholders, potential shareholders, debt investors and
capital markets is key for the future success of our business. Continued access to capital is of vital
importance to the long-term success of our business, especially considering that our strategy
includes distributing a high portion of the cash we generate as dividend and growing that dividend
through acquisitions and investments.

We strive to effectively communicate our strategic objectives and operating and financial
performance through our engagement activities, including:

- Dialogue with shareholders, prospective shareholders and analysts, led by the Chief Executive
Officer, Chief Financial Officer and Director of Investor Relations. Our Chair and Independent
Directors are also available to meet institutional shareholders.

- Quarterly earnings presentations with Q&A.

Major investor relations engagement activities carried out in 2020 include:

- More than 125 meetings with existing and potential investors.
- Attendance at 19 investor conferences and roadshows.

Investors can contact our Director of Investor Relations or access all public information on our
website (www.atlantica.com).

The Board periodically receives feedback on the views of our shareholders, including their main
issues and concerns. The Board also receives reports from sector analysts on the Company.

The Annual General Meeting (“AGM”) is also an important part of effective engagement and
communication with shareholders. All shareholders have the opportunity to ask questions at our
AGM meetings. The Chairs of the Audit, Nominating and Corporate Governance and,
Compensation Committees will be available to answer questions at that meeting.

4 Total Recordable Incident Rate (TRIR) represents the total number of recordable accidents with and without leave (lost time injury) recorded in the last
twelve months per 1,000,000 worked hours.
5 General Frequency Index (GFI) represents the total number of recordable accidents with leave (lost time injury) recorded in the last twelve months per
1,000,000 worked hours.

We also maintain a dialogue with the two proxy advisory agencies covering Atlantica to explain the
main resolutions included in the notice to our AGM and answer any questions they may have.

The Environment and Local Communities

Our Board of Directors believes climate change can lead to significant risks and opportunities for
the Company and its stakeholders. Our strategy is focused on climate change solutions in the
power and water sectors and we therefore see sustainability and climate change as a growth
opportunity for us.

In 2020, we updated our Environmental Policy and reiterated our goals. We are committed to
maintaining over 80% of our adjusted EBITDA including unconsolidated affiliates generated from
low-carbon footprint assets including renewable energy, transportation and transmission
infrastructure and water assets and, to reduce our emission rate per unit of energy generated by
10% by 2030 (vs. 2018 base). Our Board takes into consideration these targets while making
decisions, including capital allocation.

In addition, we acknowledge that our day-to-day activities have impacts on nearby communities.
We recognize that the communities where we operate are where some of our employees and other
stakeholders live and raise their families, and where part of our future workforce is educated and
trained. We foster communities’ economic prosperity through local purchasing and hiring of local
employees. As such, it is key for us to be both proactive and a valued member of our communities.
As a result, in 2020 we updated our Community Investment and Development Policy to better
reflect our commitment with local communities.

We also recognize that some communities where we are present are suffering and will continue to
suffer the consequences of COVID-19. As such, in 2020 we focused most of our efforts on
mitigating COVID-19 impacts. We donated personal protection equipment (PPE) and basic supplies
such as food and beverages to local governmental agencies in certain local communities in South
America and EMEA. We will continue analysing initiatives to help our surrounding communities to
minimize the impact of COVID-19.

The key metrics followed by the Board are:

At least 80% of adjusted EBITDA including
unconsolidated affiliates coming from low
carbon footprint assets
Scope 1
Scope 2
Scope 3
Total
Scope 1 GHG Emission Rate
per Unit of Energy Generated

GHG
Emissions

Water
Management
in Power
Generation
Waste
Management

Withdrawal

Discharges

Hazardous waste
Non-hazardous waste

Community Investment and Development

2020

87.3%

2019

86.7%

1,737 thousand tons of CO2
199 thousand tons of CO2
821 thousand tons of CO2
2,757 thousand tons of CO2

1,533 thousand tons of CO2
123 thousand tons of CO2
719 thousand tons of CO2
2,376 thousand tons of CO2

0.17 tons of CO2/MWh

1.56 m3 per MWh

1.71 m3 per MWh

0.21 m3 per MWh

2,680 tons of waste
20,532 tons of waste
Investments focused on
mitigating COVID-19
pandemic consequences

10,618 tons of waste
19,836 tons of waste
Investments focused on
improving communities’
infrastructure

For further information we refer you to the “Greenhouse Gas Emissions”, “Water Management”,
“Waste Management” and “Community Development and Involvement Initiatives” sections in this
Strategic Report.

Our Suppliers and Business Partners

We have a Supplier Code of Conduct and we expect our suppliers to adhere to it. We include our
requirements in our contractual arrangements with suppliers. The Board reviews our Code of
Conduct and Supplier Code of Conduct on an ongoing basis, at least once per year. In addition, we
have a Modern Slavery and Human Trafficking Statement which sets out the steps taken to prevent
modern slavery in our business and supply chains.

In 2020 we continued the environmental certification of our suppliers through the two-step process
described in the section “Sustainable Suppliers”.

In addition, we have partners in some of our assets. In some cases, such as at Solacor 1 & 2, Solaben
2 & 3, Seville PV, Kaxu, Skikda, Tenes and Chile PV 1, we have control over the asset. In other cases,
such as Honaine or Monterrey, we are a minority partner and we do not manage the projects’ day-
to-day operations. In all these situations, our geographical VPs maintain regular engagement and
dialogue with our partners. To the extent possible, considering Atlantica’s ownership interest, we
try to introduce our Code of Conduct and business ethics practices in affiliates where we do not
have control.

Among others, the key metrics followed by the Board are:

Percentage of suppliers verified in terms of total costs
Adherence to Atlantica’s Supplier Code of Conduct

2020
>51%
~100%

2019
>51%
~100%

Our Customers

We own a portfolio of sustainable infrastructure with long-term contracts in place or regulated
revenues. We have 13 clients including utilities, corporations, electric systems and government
owned electricity and transmission companies.

Engagement with clients is achieved through dialogue led by Geographical VPs, Country Managers
and/or Asset Managers. This generally enables us to identify and react in advance to our customers’
needs. We listen and do our best to gain our customers’ trust, thus leading to a more stable and
long-term relationship.

Strategic Decisions

In 2020, the main decisions relate to our strategy going forward and asset acquisitions.

Investments and Acquisitions

In 2020, our Board analysed and approved different investment and acquisition opportunities
proposed by our Investment Committee:

- The creation of a renewable energy platform in Chile, together with financial partners. Atlantica
owns approximately a 35% stake and has a strategic investor role. The first investment was the
acquisition of Chile PV 1, a 55 MW solar PV plant in operation since 2016. In 2020, the Board
also approved the acquisition of Chile PV 2, a 40 MW PV plant, in operation since 2017.

- The acquisition of the tax equity investor interest in Solana. Liberty was the tax equity investor
in Solana. Total equity investment is expected to be approximately $290 million of which $272
million has already been paid. The total price includes a deferred payment and a performance
earn-out based on the average annual net production of the asset in the four calendar years
with the highest annual net production during the five calendar years of 2020 through 2024.
- The acquisition of Calgary District Heating, a district heating asset in Canada for a total equity
investment of approximately $20 million, in operation since 2010. The asset has availability-
based revenue with inflation indexation and 20 years of weighted average contract life. Closing
is expected by mid-2021 subject to customary conditions precedent and regulatory approvals.
- The acquisition of La Sierpe, a 20 MW solar asset in Colombia for a total equity investment of
$23 million. Closing is expected to occur after the asset reaches the commercial operation date
which is expected to occur by mid-2021. Closing is subject to customary conditions precedent
and regulatory approvals. Additionally, the Board approved to co-invest with Algonquin in
additional solar plants in Colombia with a combined capacity of approximately 30 MW to be
developed and built by AAGES.

- The acquisition of Coso, a 135 MW renewable asset in California. Coso is the third largest
geothermal plant in the United States and provides base load renewable energy to the
California ISO. It has PPAs signed with three investment grade off-takers, with a 19-year average
contract life. Closing is subject to customary regulatory approvals and is expected to occur
during the first half of 2021. Total investment is expected to be approximately $170 million,
including approximately $130 million for the equity and $40 million expected to be invested in
reducing project debt.

When approving these investments, the Board continued to promote a low-carbon energy industry
and a business model based on sustainable development. The Board considered our long-term
growth plan, expected returns for each acquisition, impact on GHG emissions and environmental
targets, synergies with existing assets, risks involved in each asset acquisition (operational, country
and off-taker credit risk, etc), potential impacts to communities and the environment. The Board
also considered resources available to finance these acquisitions in the context of our broader
growth plan. While deciding on acquisitions and investments, the Board took into consideration
the interest of all our stakeholders.

Corporate Financing

In 2020 the Board approved several corporate debt financings:

- The 2020 Green Private Placement for €290 million, maturing in 2026, which was primarily used

to repay the Note Issuance Facility 2017.

- The Note Issuance Facility 2020 for a total amount of approximately $171 million which is
denominated in euros (€140 million), maturing in 2027, which is expected to be used to finance
investments and acquisitions.

- The Green Exchangeable Notes for a total amount of $115 million, maturing in 2025, which
were used to finance the acquisition of new or ongoing assets or projects which meet certain
eligibility criteria in accordance with our Green Finance Framework.

In addition, the Board approved an equity issuance for approximately $300 million gross proceeds.
The transaction included an underwritten public offering of 5,069,200 ordinary shares and a private
placement under which Algonquin purchased 4,020,860 ordinary shares in order to maintain its
44.2% equity interest in the Company.

When approving these financings, the Board took into consideration our strategic growth plan and
how it affects all our stakeholders. The Board also considered the impact of their decisions on
shareholders and debt investors and concluded that the financing transactions would promote the
long-term success of the Company.

Dividends

In 2020, the Board decided to pay total dividends of $1.66 per share to our shareholders in quarterly
dividends, a 6% increase with respect to the previous year. Details of the dividend policy are
included in Directors’ Report, where we explain our long-term approach to dividends. The Board
decides the dividend on a quarterly basis. The Directors took into account available cash, available
liquidity under our financing arrangements and investment plans of the Company. The Directors
also considered the net liability position of the Company.

While deciding these acquisitions, the Board considered our long-term growth plan, the current
financial structure of the Company, including compliance with obligations under financing
agreements and potential access to different financing sources, among other factors. The Board
took into consideration the interest of shareholders and debt investors. The Board deliberated on
and concluded that the level of dividends approved would promote the long-term success of the
Company.

Going Concern Basis

The Group has prepared the consolidated financial statements on a going concern basis. The
Directors have considered a number of factors in concluding on their going concern assessment
covering the period to 31 March 2022. The Directors have a reasonable expectation that the Group
and Company will meet its commitments as they fall due over the going concern period.
Accordingly, the Directors continue to adopt the going concern basis in preparing the Group’s
consolidated financial statements and Company’s standalone financial statements . For further
information, please refer (Note 2.1) of the consolidated financial statements for the going concern
basis.

Directors’ Report

The directors are pleased to present their Consolidated Annual Report on the affairs of the
Company and its subsidiaries, together with the Consolidated Financial Statements and Auditor’s
Report, for the year ending December 31, 2020.

Strategic Report

The Strategic Report was prepared in accordance with the Companies Act, 2006 which requires the
Company to set out a fair review of our business during the financial year, including a financial
analysis at year-end and the trends and factors likely to affect the future development, performance
and position of the business.

Review of Business and Future Developments

The Strategic Report includes an indication of likely future developments in our business.

Dividends

We intend to distribute a significant portion of our cash available for distribution as dividend, after
considering the cash available for distribution that we expect our assets will be able to generate,
less reserves for the prudent conduct of our business (including reserves for, among other things,
dividend shortfalls as a result of fluctuations in our cash flows), on an annual basis. We intend to
distribute a quarterly dividend to shareholders. Our Board of Directors may, by resolution, amend
the cash dividend policy at any time. We intend to grow our business via organic growth through
the optimization of the existing portfolio and expansion of our current assets and through
investments in and acquisitions of new assets. We believe this will facilitate the growth of our cash
available for distribution and enable us to increase our dividend per share over time. However, the
determination of the amount of cash dividends to be paid to holders of our shares will be made by
our Board of Directors and will depend upon our financial condition, results of operations, cash
flow, long-term prospects and any other matters that our board of directors deem relevant.

Our cash available for distribution is likely to fluctuate from quarter to quarter, in some cases
significantly, as a result of the seasonality of our assets, the terms of our financing arrangements
and maintenance and outage schedules, among other factors. Accordingly, during quarters in
which our assets generate cash available for distribution in excess of the amount necessary for us
to pay our stated quarterly dividend, we may reserve a portion of the excess to fund cash
distributions in future quarters. During quarters in which we do not generate sufficient cash
available for distribution to fund our stated quarterly cash dividend, if our Board of Directors so
determines, we may use retained cash flow from other quarters, and other sources of cash, to pay
dividends to our shareholders.

Dividends paid in 2020 were:

Declared
Nov 4, 2020
July 31, 2020
May 6, 2020
Feb 26, 2020

Record
Nov 30, 2020
Aug 31, 2020
June 1, 2020
March 12, 2020

Paid
Dec 15, 2020
Sep 15, 2020
June 15, 2020
March 23, 2020
Total

Amount (US$)
0.42
0.42
0.41
0.41
1.66

On February 26, 2021, our Board of Directors approved a dividend of $0.42 per share which is
expected to be paid on March 22, 2021 to shareholders on the record as of March 12, 2021.

On May 11, 2018, the Company’s Annual General Meeting approved a redemption of the share
premium account of the Company that intended to reduce the share premium account by $
500,000 thousand and increase distributable reserves (capital reserves) by the same amount.
Pursuant to the Companies Act 2006, the Company's capital reduction is effective upon
confirmation of the reduction by the High Court. High Court confirmation of the capital reduction
was obtained on May 7, 2019. In addition, no interim financial statements showing sufficient
distributable reserves were filed with Companies House. Both these matters mean dividends paid
since the second half of 2018 were made otherwise than in accordance with the Companies Act
2006. Note 7 of the Financial Statements of the Parent Company for the year ended December 31,
2019 described the amendment made to the share premium account and capital reserve account
as of December 31, 2018. To remedy the potential consequences of the dividend payments
indicated in the preceding paragraph, a special resolution was approved at the Annual General
Meeting in May 2020 to authorise the appropriation of distributable reserves to the payment of
the said dividends and release any claims the Company may have in connection with the said
dividends against shareholders and directors (the “Directors’ Release”). The Directors Release is a
related party transaction under IFRS. The overall effect of the special resolution was to put all parties
in the position, so far as possible, in which they would have been, had the said dividends been paid
in full compliance with the Companies Act 2006.

Risks Regarding Our Cash Dividend Policy

There is no guarantee that we will pay quarterly cash dividends to our shareholders. We do not
have a legal obligation to pay any dividend. While we currently intend to grow our business and
increase our dividend per share over time, our cash dividend policy is subject to all the risks inherent
in our business and may be changed at any time as a result of certain restrictions and uncertainties,
including the following:

- The amount of our quarterly cash available for distribution could be impacted by restrictions
on cash distributions contained in our project-level financing arrangements, which require that
our project-level subsidiaries comply with certain financial tests and covenants in order to make
such cash distributions. Generally, these restrictions limit the frequency of permitted cash
distributions to semi-annual or annual payments, and prohibit distributions unless specified
debt service coverage ratios, historical and/or projected, are met. When forecasting cash
available for distribution and dividend payments we have aimed to take these restrictions into
consideration, but we cannot guarantee future dividends. In addition, restrictions or delays on
cash distributions could also happen if our project finance arrangements are under an event of
default.

- Additionally, indebtedness we have incurred under the Note Issuance Facility 2019, the Note
Issuance Facility 2020, the 2020 Green Private Placement and the Revolving Credit Facility
contain, among other covenants, certain financial incurrence and maintenance covenants, as
applicable.

- We and our Board of Directors have the authority to establish cash reserves for the prudent
conduct of our business and for future cash dividends to our shareholders, and the
establishment of or increase in those reserves could result in a reduction in cash dividends from
levels we currently anticipate pursuant to our stated cash dividend policy. These reserves may
account for the fact that our project-level cash flows may vary from year to year based on,
among other things, changes in the operating performance of our assets, operational costs,
capital expenditures required in the assets, collections from our off-takers, compliance with the
terms of project debt including debt repayment schedules and cash reserve accounts
requirements, compliance with the terms of corporate debt, compliance with all the applicable
laws and regulations and working capital requirements. Our Board of Directors may increase
the reserves to account for the seasonality that has historically existed in our assets’ cash flows
and the variances in the pattern and frequency of distributions to us from our assets during the
year.

- We may lack sufficient cash to pay dividends to our shareholders due to cash flow shortfalls
attributable to a number of operational, commercial or other factors, including low availability,
low production, unexpected operating interruptions, legal liabilities, costs associated with
governmental regulation, changes in governmental subsidies, delays in collections from our
off-takers, changes in regulation, as well as increases in our operating and/or general and
administrative expenses, principal and interest payments on our and our subsidiaries’
outstanding debt, income tax expenses, failure of Abengoa to comply with its obligations under
the agreements in place, working capital requirements or anticipated cash needs at our project-
level subsidiaries.

- We may pay cash to our shareholders via capital reduction in lieu of dividends in some years.

- Our project companies’ cash distributions to us (in the form of dividends or other forms of cash
distributions such as shareholder loan repayments) and, as a result, our ability to pay or grow
our dividends, are dependent upon the performance of our subsidiaries and their ability to
distribute cash to us. The ability of our project-level subsidiaries to make cash distributions to
us may be restricted by, among other things, the provisions of existing and future indebtedness,
applicable corporation laws and other laws and regulations.

- Our board of directors may, by resolution, amend the cash dividend policy at any time. Our
board of directors may elect to change the amount of dividends, suspend any dividend or
decide to pay no dividends even if there is ample cash available for distribution.

Our Ability to Grow our Business and Dividend

We intend to grow our business via organic growth through the optimization of the existing
portfolio and expansion of our current assets and through investments in and acquisitions of new
assets, which, we believe will facilitate the growth of our cash available for distribution and enable
us to increase our dividend per share over time. Our policy is to distribute a significant portion of

our cash available for distribution as a dividend. However, the final determination of the amount
of cash dividends to be paid to our shareholders will be made by our Board of Directors and will
depend upon our financial condition, results of operations, cash flow, long-term prospects and any
other matters that our Board of Directors deems relevant.

We expect we will rely primarily upon external financing sources, including commercial bank
borrowings and issuances of debt and equity securities, to fund any future growth capital
expenditures. To the extent we are unable to finance growth externally, our cash dividend policy
could significantly impair our ability to grow because we do not currently intend to reserve a
substantial amount of cash generated from operations to fund growth opportunities. If external
financing is not available to us on acceptable terms, our board of directors may decide to finance
investments with cash from operations, which would reduce or impair our ability to pay dividends
to our shareholders. To the extent we issue additional shares to fund our business, our growth or
for any other reason, the payment of dividends on those additional shares may increase the risk
that we will be unable to maintain or increase our per share dividend level. Additionally, the
incurrence of additional commercial bank borrowings or other debt to finance our growth would
result in increased interest expense, which in turn may impact our cash available for distribution
and, in turn, our ability to pay dividends to our shareholders.

Capital Structure

Details of the share capital, together with details of the movements in the Company's issued share
capital during the year are shown in note 13 to the Consolidated Financial Statements. The
Company has one class of ordinary shares which are listed on the NASDAQ Global Select Market
under the symbol “AY.” Our shares carry no right to fixed income and each share provides the
owner the right to one vote at general meetings of the Company.

When Algonquin acquired a 25% stake in our equity, Atlantica signed a Shareholders Agreement
with Algonquin, which set forth that, if and to the extent provided in our articles of association,
Algonquin had the right to appoint to our board the maximum number of directors that
corresponds to Algonquin’s holding of voting rights as per articles of association but in no event
more than (i) such number of directors as corresponds to 41.5% of our voting securities; and (ii)
50% of our board less one, and if the resulting number is not a whole number, it shall be rounded
up to the next whole number.

On May 9, 2019, Algonquin and the Company entered into an Enhanced Cooperation Agreement
and Algonquin and into a subscription agreement pursuant to which, among other things, the
Company agreed to permit Algonquin to acquire, and Algonquin agreed to purchase, 1,384,402
ordinary shares, representing approximately 1.4% of the issued and outstanding ordinary shares.
On May 22, 2019, Algonquin announced that they had completed the purchase of the 1.4% stake.
After giving effect to such purchase, Algonquin was the beneficial owner of 42,942,065 ordinary
shares, representing approximately 42.3% of the issued and outstanding Ordinary Shares. On May
31, 2019, Algonquin entered into an accelerated share purchase transaction with Morgan Stanley
& Co. LLC, pursuant to which on the same date AAGES acquired 2,000,000 ordinary shares for a
total price of $53,750,000.

On December 11, 2020 Atlantica closed an underwritten public offering of 5,069,200 ordinary
shares (including those sold pursuant to the underwriters’ over-allotment option) at a price of $33
per new share. Additionally, Algonquin Power & Utilities Corp. purchased 4,020,860 ordinary shares
of the Company in a private placement, which closed on January 7, 2021, which represents the pro-
rata number of shares required to maintain their previous equity ownership in the Company. As a
result, as of January 7, 2021 Algonquin is the beneficial owner of 48,962,925 ordinary shares,
representing 44.2% of the issued and outstanding ordinary shares.

With regard to the appointment and replacement of directors, the Company is governed by its
Articles of Association, the SEC listing rules, the U.K. Companies Act 2006 and related legislation.
The Articles of Association may be amended by special resolution of the shareholders.

Substantial Shareholdings

Name

5% Beneficial Owners

Algonquin (AY Holdco) B.V.” (1)

Morgan Stanley Investment Management Inc.(2)

BlackRock Inc.(3)

Ordinary Shares
Beneficially Owned

Percentage

48,962,925

5,918,853

5,864,325

44.2%

5.5%

Notes:
(1) This information is based solely on the Schedule 13D filed with the U.S. Securities and Exchange Commission
on January 7, 2021 by Algonquin Power & Utilities Corp, a corporation incorporated under the laws of Canada.

The direct beneficial owner of the shares is Algonquin (AY Holdco) B.V.

(2) This information is based solely on the Schedule 13G filed on February 10, 2021 by Morgan Stanley,
corporation incorporated under the laws of Delaware. The registered address of Morgan Stanley is 1585

Broadway New York, NY 10036.

(3) This information is based solely on the Schedule 13G filed on February 2, 2021 by BlackRock Inc., a corporation
incorporated under the laws of Delaware. The registered address of BlackRock is 55 East 52nd Street, New

York, NY 10055.

To the best of our knowledge and based on public information, the rest of our shareholders are
mainly United States-based institutional investors.

Change of Control

If any investor acquires over 50.0% of our shares or if our ordinary shares cease to be listed on the
NASDAQ or similar stock exchange, we may be required to refinance all or part of our corporate
debt or obtain waivers from the related noteholders or lenders, as applicable, due to the fact that
all of our corporate financing agreements contain customary change of control provisions and
delisting restrictions. If we fail to obtain such waivers and the related noteholders or lenders, as
applicable, elect to accelerate the relevant corporate debt, we may not be able to repay or refinance
such debt (on favourable terms or at all), which may have a material adverse effect on our business,
financial condition results of operations and cash flows. Additionally, in the event of a change of
control we could see an increase in the yearly state property tax payment in Mojave, which would

be reassessed by the tax authority at the time the change of control potentially occurred. Our best
estimate with current information available and subject to further analysis is that we could have an
incremental annual payment of property tax of approximately $12 million to $14 million, which
could potentially decrease progressively over time as the asset depreciates. Additionally, an
ownership change under section 382 could be triggered and could have a significant negative
impact on our tax positions in the U.S.

Furthermore, in order to protect the Company's know-how and to ensure continuity in terms of
attainment of business objectives, the policy approved by our shareholders at the 2017 Annual
General Meeting, introduced certain termination payments to key executives, including the Chief
Executive Officer in the case of a change of control. This is addressed in the Policy on Payments for
Loss of Office section of this report.

A change of control means that a third party or coordinated parties: (i) acquire directly or indirectly
by any means a number of shares in the Company which (together with the shares that such party
may already hold in the Company) amount to more than 50% of the share capital of the Company
or, (ii) appoint or have the right to appoint at least half of the members of the board of directors
of the Company.

In addition, if there is a change in control, all awards under long-term incentives shall vest in full
on the date of the change in control.

Directors

Our board is comprised of eight directors.

All the directors meet the U.S. securities or NASDAQ’s qualifications from independence except our
CEO. Atlantica's Board has determined that Mr. Banskota and Mr. Trisic are not independent based
on their employment relationship with Algonquin, which is currently Atlantica’s largest shareholder

with a 44.2% ownership. The Board has also determined that the rest of the non-executive directors,
Mr. Aziz, Ms. Del Favero, Ms. Eprile, Mr. Forsayeth and Mr Woollcombe are independent.

Name, Primary Occupation

Independent

Other Public
Company Boards

A N&CG

RPT

Committee
Memberships(*)

William Aziz
President and Chief Executive Officer of
BlueTree Advisors Inc.
Arun Banskota
President and Chief Executive Officer of
Algonquin
Debora Del Favero
Co-Founder of CMC Capital Limited
Brenda Eprile
Director and Chair of the Audit Committee of
Westport Fuel Systems Inc., and Director and
Chair of the Governance Committee of
Olympia Financial Group
Michael Forsayeth
Former Chief Executive Officer and Director of
Granite Real Estate Investment Trust
Santiago Seage
Chief Executive Officer of the Company
George Trisic
Chief Governance Officer and Corporate
Secretary of Algonquin
Michael Woollcombe
Partner of Voorheis & Co. LLP and Executive
Vice-President of VC & Co. Inc.

Yes

✓

★

✓

★

✓

★

(*) A = Audit Committee; N&CG = Nominating and Corporate Governance Committee C = Compensation Committee;

RPT = Related Parties Transactions Committee

Chair ✓ Member

★

The Board is committed to promoting the success of the Company. The Board is responsible to
shareholders for its performance and for the strategy and management of the Company, its values,
its governance, and its business.

Directors are obliged, among other duties, to act in the way they consider, in good faith, would be
most likely to promote the success of the Company for the benefit of its members as a whole. All
directors are expected to spend the time and effort necessary to properly discharge their
responsibilities.

The main objectives of the Board may be summarized as follows:

- Providing entrepreneurial leadership;
- Setting strategy;
- Ensuring the human and financial resources are available to achieve objectives;
- Reviewing management performance;
- Setting the company’s values and standards; and

- Ensuring that obligations to shareholders and other stakeholders are understood and met.

Under English law, the Board of Directors is responsible for management, administration and
representation of all matters concerning the relevant business, subject to the provisions of relevant
constitutional documents, applicable laws and regulations, and resolutions duly adopted at general
shareholders’ meetings.

In addition, the Board of Directors is entitled to delegate its powers to an executive committee or
other delegated committee or to one or more persons, unless the shareholders, through a meeting,
have specifically delegated certain powers to the Board and have not approved the Board of
Director’s delegation to others.

The Board has established four Board Committees:

- Audit Committee, with responsibilities including monitoring the integrity of the company’s
financial statements, reviewing internal control and risk management system, as well as the
Company’s relationship with external auditors;

- Compensation Committee, mainly responsible for setting the remuneration for directors and

recommending and monitoring remuneration for senior management;

- Nominating and Corporate Governance Committee, responsible for leading the process for

board appointments; and

- Related Party Transactions Committee, responsible for identifying and evaluating existing

relationships between counterparties and transactions with related parties.

The Board has delegated certain responsibilities to these committees. Membership, roles, duties
and authority of these committees are described in their Terms of Reference, available in the
website of the Company (www.atlantica.com). Terms of Reference are reviewed and updated by
the Board on a yearly basis.

Daniel Villalba, who was the Chair of the Board during 2020 did not stand for re-election at the
2020 Annual General Meeting. In that meeting, the directors standing for re-election were not re-
elected. The Board of directors appointed five new directors to serve on the Board until Atlantica’s
next Annual General Meeting of shareholders, expected to be held in May 2021.

The directors, who served throughout the year 2020, and to the date of this report, were as follows:

100

Name

Role

Term

William Aziz

Director, Independent

Appointed on May 5, 2020.

Arun Banskota

Director

Appointed on April 28, 2020.

Debora Del Favero

Director, Independent

Appointed on May 5, 2020.

Brenda Eprile

Director, Independent

Appointed on May 5, 2020.

Michael Forsayeth

Santiago Seage

Director, Independent

Appointed on May 5, 2020.

Director and Chief
Executive Officer

Appointed on December 17, 2013, resigned March 9, 2018,
re-appointed on December 19, 2018 and elected on June
20, 2019.

George Trisic

Director

Appointed on October 9, 2020.

Michael Woollcombe Director, Independent and
Interim Chair of the Board

Appointed on May 5, 2020.

Andrea Brentan

Director, Independent

Robert Dove

Director, Independent

Christopher Jarratt

Director

Appointed on June 23, 2017, and not re-elected on May 5,
2020.

Director: appointed March 12, 2018, elected on May 11,
2018. Resigned on October 9, 2020.

Francisco J. Martinez

Director, Independent

Appointed on June 23, 2017, and not re-elected on May 5,
2020.

Ian Robertson

Director

Appointed March 12, 2018, elected on May 11, 2018
resigned on April 28, 2020.

Jackson Robinson

Director, Independent

Appointed June 13, 2014, and elected on June 23, 2017,
and not re-elected on May 5, 2020.

Daniel Villalba

Director and Chair of the
Board, Independent

Chair of the Board: appointed on November 27, 2015.
Director, independent: appointed June 13, 2014, re-elected
June 23, 2017. Resigned on May 5, 2020.

On February 13, 2020 the Special Committee that had been created on February 13, 2019,
announced that it had concluded the review of the Company’s strategic alternatives by reaffirming
the Company’s current strategy as a leader in sustainable infrastructure.

101

Role

Attendance /
Eligible to attend (1)

Membership and Attendance

The table below outlines membership and attendance to our board during 2020

Director

William Aziz2

Membership

From

May 2020

Arun Banskota3

April 2020

Debora Del Favero2

May 2020

Brenda Eprile2

May 2020

Michael Forsayeth2

May 2020

Santiago Seage

Dec' 2018

George Trisic3

Oct’ 2020

n/a

Michael
Woollcombe2

May 2020

n/a

Director, Independent

Director

Director, Independent

Director and Chief
Executive Officer

Director

Director, Independent
and Interim Chair of the
Board

Andrea Brentan4

June 2017 May 2020

Director, Independent

Robert Dove4

June 2017 May 2020

Director, Independent

Christopher Jarratt3

Mar 2018

Oct 2020

Director

Francisco J. Martinez4

June 2017 May 2020

Director, Independent

Ian Robertson3

Mar 2018

Apr 2020

Director

Jackson Robinson4

June 2014 May 2020

Director, Independent

Daniel Villalba5

June 2014 May 2020

Director, Independent
and Chair of the Board

10/10

15/15

3/3

10/10

5/5

12/12

5/5

3/4

5/5

(1) Does not include matters approved by Director’s Written Resolution.
(2) Mr. William Aziz, Mrs. Debora Del Favero, Mrs. Brenda Eprile, Mr. Michael Forsayeth, Mr. Michael Woollcombe, joined the Board of

Directors on May 5, 2020 as independent non-executive Directors.

(3) Mr. Arun Banskota and Mr. George Trisic joined the Board of Directors on April 28, 2020 and October 9, 2020, respectively, replacing

Mr. Ian Robertson and Mr. Christopher Jarratt who resigned on April 28, 2020 and October 9, 2020. respectively.

(4) Mr Andrea Brentan, Mr. Robert Dove, Mr. Francisco J. Martinez and Mr. Jackson Robinson were not re-elected to be members of

the Board of Directors on May 5, 2020.

(5) Mr. Daniel Villalba resigned as Director and Chair of the Board of Directors on May 5, 2020.

Senior management attend meetings by invitation of the Board.

102

2020 Key Activities

In 2020, the Board of Directors held 15 meetings and adopted six written resolutions.

Major areas of focus of the Board during 2020 have been as follows:

- Review of health and safety issues;
- Review the action plan to continue improving in ESG (Environmental, Social and Governance);
- Review and approval of the strategy of the Company: growth plan, key priorities and risks;
- Review of assets’ performance and main technical issues;
- Approval and review of the budget of the Company;
- Review and approval of quarterly and annual accounts;
- Approval of significant transactions (acquisitions, partnerships, etc.);
- Review of capital markets updates; and
- Approval of dividends.

Directors’ Indemnities

The Company has made qualifying third-party indemnity provisions for the benefit of its directors
which were made during the year and are in force at the date of this report.

Financial Instruments

Information about the use of financial instruments by the Company is given in note 8 to the
Consolidated Financial Statements. In addition, a detailed analysis of risk, including liquidity,
interest rate, foreign exchange and credit risks is provided in sections “Principal risks and
uncertainties” and “Financial Risk Management” of our Strategic report.

Environmental Reporting

Environmental information such as our (i) GHG emissions and, (ii) quantity of energy consumed
from activities for which the company is responsible for and from the purchase of electricity, heat,
steam or cooling by the company for its own use is disclosed in the Strategic Report.

Employees

Information on Atlantica’s employees and its policies can be found in the Strategic Report.

Anti-Slavery and Human Trafficking Statement

Atlantica has published its anti-slavery and human trafficking statement in accordance with the
Modern Slavery Act, 2015, which can be found on www.atlantica.com. Additional information is
provided in the Strategic Report.

Political Contributions

It is the Company’s policy that neither the Company nor any of its subsidiary may, under any
circumstances, make donations or contributions to political organisations, political campaigns,
lobbyists or lobbying organizations nor other tax-exempt groups. Thus, no political donations or
contributions were made during 2020 nor 2019.

103

Research and Development

Our business model relies on using proven third-party technologies at our assets and we therefore
do not plan to invest significant amounts on R&D. Nevertheless, considering that delivering solid
operational performance is key for us, we do work on certain innovative technologies that can help
us to better manage our assets and maximize their value. As a result, we have reinforced our internal
teams responsible for big data and artificial intelligence capabilities in order to improve our real-
time predictive maintenance.

Corporate Governance Statement

Atlantica, as a non-premium listed company, is not required to implement the provisions of the UK
Corporate Governance Code (the “Code”) and has chosen to follow the requirements of the
NASDAQ Listing Rules in terms of corporate governance.

Our Board is responsible collectively for providing leadership within a framework of appropriate
and effective controls that enable us to assess the risk and then manage it promoting the success
of the Company. The Board is also responsible for the effective oversight of the Company’s strategy
and performance, financial reporting, internal control and risk management framework, and
corporate governance processes. It is also ultimately accountable to shareholders for the long-term
performance of the Company and the delivery of sustainable shareholder and stakeholder value.

The Board has put in place a clear and robust corporate governance framework in order to facilitate
the oversight role that it provides in these areas. This includes a schedule of matters reserved for
the approval of the Board, such as the approval of acquisitions, the Company strategy and budgets,
major capital expenditure, the Company’s financial statements and its dividend policy. With the aim
of allowing the Board appropriate time to focus on these key matters within the constraints of its
annual programme, a number of its other responsibilities have been delegated to four principal
committees. Such responsibilities are set out within the Terms of Reference for each Committee,
which can be found on our website at www.atlantica.com.

Auditors

Each person who is a director at the date of approval of this Consolidated Annual Report confirms
that:

- So far as the director is aware, there is no relevant audit information of which the Company's

auditor is unaware; and

- The director has taken all the steps that he ought to have taken as a director in order to make
himself/herself aware of any relevant audit information and to establish that the Company's
auditor is aware of that information.

This confirmation is given and should be interpreted in accordance with the provisions of Section
418 of the U.K. Companies Act 2006.

104

Ernst & Young S.L. and Ernst & Young LLP have been our principal accountants providing the audit
services to the Company during 2020. Ernst & Young S.L. and other member firms of EY were
appointed as external auditor of the Group in February 2019 for the period 2019 – 2022.

Events After the Balance Sheet Date

Details of significant events since the balance sheet date are contained in note 25 to the
Consolidated Financial Statements

On February 26, 2021, our Board of Directors approved a dividend of $0.42 per share which is
expected to be paid on or about March 22, 2021 to shareholders of record on March 12, 2021.

On January 6, 2021 we closed our second investment through the energy platform in Chile with
the acquisition of Chile PV 2, a 40 MW PV plant. Total equity investment for this new asset was
approximately $5.0 million.

In January 2021 we reached an agreement to increase our equity stake from 15% up to 100% in
Rioglass, a multinational manufacturer of solar components. We have closed the acquisition of a
42.5% equity stake, for which we paid $7 million. In addition, we have an option to acquire the
remaining 42.5% in the same conditions until September 2021, and after that date the seller has an
option to sell the 42.5% also in the same conditions. We intend to find partners to co-invest in the
company, as such we expect to classify the investment as held for sale in our Consolidated Financial
Statements.

On February 22, 2021, Abengoa S.A. (the holding company) filed for insolvency proceedings in
Spain. Based on the public information filed in connection with these proceedings, such insolvency
proceedings do not include other Abengoa companies, including Abenewco1, S.A., the controlling
company of the subsidiaries performing the operation and maintenance services. Although the
Company has contingency plans in place, including a potential change of supplier and/or
internalization, in the short term it expects the operation and maintenance services being provided
by Abengoa subsidiaries to continue to be provided by its current supplier. Currently, Atlantica
does not expect any material impact in the accounting value of its concessional assets as a result
of the insolvency filing of Abengoa S.A. The insolvency filing by the individual company Abengoa
S.A. represents a potential event of default under the Kaxu project finance agreement (Note 1 to
the Consolidate Financial Statements).

105

Audit Committee Report

Chair’s Introduction

Following the Company’s annual meeting in May 2020, a new audit committee was appointed
comprised of entirely new members. Shortly after our appointment we received an orientation on:

- Atlantica’s financial reporting process and team.
- The 2020 internal audit plan, progress and team, including the approach to assessing the

effectiveness of internal controls and risk management processes.
- The external auditor’s 2020 audit plan including key audit risk areas.

Regarding interim financial statements prepared subsequent to our appointment, the committee
actively challenged the reports from management and the external auditor focusing on significant
accounting issues and judgements to determine whether Atlantica’s financial reporting is fair,
balanced and understandable. At our third quarter meeting we reviewed the Company’s risk matrix
and discussed the ranking and velocity of several risks facing the company as well as the current
mitigation strategies with the Chief Financial Officer and Head of Internal Audit.

In the fall of 2020, the committee developed a broader committee mandate, which was
subsequently approved by the Board of Directors. In addition, the committee prepared a revised
written policy for approving non-audit services provided by the external auditor.

Role of the Committee

The committee monitors the effectiveness of Atlantica’s financial reporting, systems of internal
control and risk management, as well as the integrity of the Company’s external and internal audit
processes.

Membership and Attendance

Director

Membership

Role

From

Brenda Eprile

May 2020

n/a

Director, Independent and Chair of the
Audit Committee. Financial Expert

William Aziz

May 2020

n/a

Director, Independent. Financial Expert

Michael Forsayeth

May 2020

n/a

Director, Independent. Financial Expert

Mr. Francisco J.
Martinez

June 2017 May 2020

Director, Independent and Chair of the
Audit Committee. Financial Expert

Mr. Jackson Robinson June 2014 May 2020

Director, Independent

Mr. Daniel Villalba

June 2014 May 2020

Director, Independent

Notes:

(1) Does not include matters approved by the Audit Committee’s Written Resolutions.

Attendance
/ Eligible to
Attend (1)

2/2

107

All members of the committee are independent non-executive directors in accordance with the
definition provided by Rule 5605 of the NASDAQ Stock Market (“NASDAQ”) and meet the criteria
for independence set forth in Rule 10A-3(b)(1) under the United States Securities Exchange Act of
1934, as amended.

The Directors who serve on the committee have the necessary qualifications and bring a wide range
and depth of financial experience across various industries. The board is satisfied that all three
members meet the requirements to qualify as “audit committee financial experts” under applicable
SEC rules. The collective knowledge, skills, experience and objectivity of the committee members
enables the committee to work effectively and to have robust discussions with management on
important issues.

There were four committee meetings in 2020 with 100% attendance on the part of all committee
members. Regular attendees at the meetings include the Chief Financial Officer, the Head of
Accounting and Consolidation, the Head of Internal Audit, the Head of Investor Relations and the
External Auditors.

Mandate of the Audit Committee

In November 2020, the Board of Directors approved new Terms of Reference for the Audit
Committee. The committee is a standing committee of the Board, established to assist the Board
in fulfilling its oversight responsibilities with respect to:

- The Company’s accounting and financial reporting processes and audits of its financial

statements,

- The integrity including the completeness, appropriateness, and accuracy of the Company’s

financial reporting and certain other information provided to shareholders,

- The Company’s risk assessment and risk management processes, including the assessment of
significant financial and accounting risk exposures and all the actions taken to mitigate these
risks,

- The effectiveness of systems implemented and maintained by the Company to manage those
risks, in particular with regard to internal controls and critical information systems relating to
financial reporting,

- Compliance with legal and regulatory requirements, and the encouragement of legal and
ethical conduct, associated directly or indirectly with accounting and financial reporting
matters; the independence and qualifications of the external auditors; and the performance of
the Company’s internal audit function and external auditors.

The approved Terms of Reference for the Audit Committee are available on the website of the
Company (www.atlantica.com).

2020 Key Activities

Financial Reporting

The committee oversees the integrity of the Company´s financial reporting process to ensure that
the information provided to shareholders and other stakeholders is fair, balanced and

108

understandable and provides all the information necessary to assess the Company´s financial
position, recent performance, cashflows and future prospects.

During the year, the committee reviewed the quarterly and annual financial statements with
management, focusing on the integrity of the company’s financial reporting process, the clarity of
the disclosure, compliance with relevant legal and financial reporting standards and the application
of accounting policies and judgements.

In its review of financial reporting, the committee focused on the accounting policies, significant
judgements and estimates used in preparing the financial statements, as well as the disclosures
provided. Particular attention was paid to the following significant issues in the 2020 financial
reporting:

1. Recoverability of Contracted Concessional Assets.
2. Covenants Compliance.
3. Credit Risk monitoring of certain off takers / customers.
4. Change in the useful life of the solar plants in Spain.
5. The effects of COVID 19 on the business. and
6. Significant one-off transactions, including acquisitions, partnerships and other significant

agreements, etc.

The previous committee considered the 2019 Annual Report (UK Annual Report) and Form 20-F
and assessed whether the reports were fair, balanced and understandable and provided their
assessment to the full board prior to board approval of these reports.

External Audit

➢ Assessing Audit Risk

A detailed audit plan was prepared by the external auditor and reviewed by the committee. The
plan outlines the audit strategy for 2020 and the key audit risks to be addressed, including:

- The consistency of management’s judgements and estimates,
- Responding to the risk of material misstatements through substantive testing and data

analytics,

- Effect of Covid-19 on the company’s internal controls and financial reporting processes, and

any related modifications,

- Credit risk of certain significant power off-takers / customers,
- Recoverability assessment of contractual concessional assets,
- Expected credit losses on significant receivables,
- Risks related to material acquisitions/transactions,
- Management override of controls.

The committee received updates during the year on the audit process, including how the external
auditor challenged management’s assumptions on key issues.

109

➢ Assessing Audit Effectiveness

In order to assess the auditor’s performance, management undertook a survey which compromised
questions in the following areas:

- Communication and availability
- Technical knowledge
- Added value
- Deadline achievements
- Daily interaction

The results of the survey indicated that most regions were quite satisfied with the performance of
the external auditors. There were some areas for improvement noted which appear to be
attributable to 2019 being the first year EY is in the role of external auditor. None of the
improvement areas impacted the effectiveness of the audit. The results of the survey were
discussed with EY for consideration in their 2020 audit approach.

The committee held in camera meetings with the external auditors during the year and the
committee chair met separately with the external auditor and Head of Internal Audit at least
quarterly.

The effectiveness of the external auditor is evaluated by the committee through:

- Reviewing the annual audit plan and discussing the approach proposed with the engagement

partners,

- Reviewing progress against the plan throughout the year and discussing any issues that have

arisen with management and the external auditor,

- Discussing any revisions to the plan when they are made,
- Discussing the results of the external auditors’ work on the interim and annual financial

statements prior to committee approval and recommendation to the board,

- Reviewing the results of the auditor effectiveness survey and discussing with the external

auditor.

On the basis of this assessment, the committee has concluded that the appropriate quality is being
provided for the services rendered. The audit team has the dedication, expertise, as well as the
independence and objectivity necessary to fulfil their responsibilities to shareholders.

➢ Assessing Auditor Reappointment and Independence

EY and its firm members were initially appointed and approved as external auditor of Atlantica at
the AGM held on May 11, 2018. The committee is responsible for overseeing the remuneration of
the external auditor and for negotiating fees for both audit and non-audit services. The committee
approves all services contracted with the external auditor.

In November 2020, the committee approved a revised policy to safeguard the independence and
objectivity of external auditors. In general, the external auditor may be engaged to provide services
only if their independence and objectivity are not impaired. The committee considered it
appropriate to establish the Pre-Approval Policy for Audit and Non-audit services rendered by the
Statutory Auditor. According to this Policy, audit services, audit-related services, certain tax services

110

and certain other services are pre-approved by the committee under certain limits. All other
services must be approved explicitly by the committee. For non-audit services, the accumulated
annual fees must remain below the threshold of 70% of the annual audit services fees.

The Policy also includes a list of SEC’s prohibited non-audit services. This list sets forth several
services that the SOX Act and the SEC have specifically identified as services that may not be
performed by the Company’s external auditor.

All services performed by EY have been approved by the committee. All fees received by EY in 2020
have been approved by the committee.

In thousand USD
Audit Fees
Audit-Related Fees*
Tax Fees
All Other Fees
Total

Others

Total

1,391
516
502
15
2,424

54
-
-
-
54

1,445
516
502
15
2,478

(*) Audit-Related Fees include US$212 thousand paid to EY during 2020 in relation to our major
shareholder’s capital market transactions. The full amount was reimbursed by the
shareholder.

Internal Audit

In accordance with the committee’s terms of reference, it is responsible for the supervision of the
Internal Audit function.

In particular, the committee:

- Approves the Internal Audit Plan for the year and discusses the risk assessment underlying the

plan’s development,

- Reviews the progress of the Internal Audit Plan on a quarterly basis and discusses any significant

issues with the Head of Internal Audit,

- Reviews the results of particular internal audits, and discusses the main findings and

recommendations with the Head of Internal Audit,

- Reviews and monitors management’s responsiveness to the internal auditor’s findings and

recommendations,

- Meets regularly with the Head of Internal Audit.

The Internal Audit Department is responsible for conducting audits in the areas of:

-
Integrated audits (financial audit, internal control and anti-fraud procedures),
- Financial risk management (e.g. covenants compliance, financial ratio reviews, etc.),
- Due diligence (e.g. acquisitions),
- Forensic (e.g. supplier and potential partner analysis),
-

Internal control procedures and activities to prevent fraud and corruption, (e.g. the US Foreign
Corrupt Practices Act and the UK Bribery Act),

111

- Fraud risk assessment procedures performed in order to detect fraud and breaches of

regulation, together with related findings and recommendations for improvement,

- Other (e.g. management policy reviews).

At each committee meeting, progress on Internal Audit’s plan is reviewed with the Head of Internal
Audit including significant findings from audits done in the quarter, as well as management’s
progress on addressing previously identified deficiencies.

Risk Management

During the year, the risks posed by Covid-19 and the company’s response was discussed at each
regularly scheduled board meeting. In addition, the committee discussed Covid-19 risks with the
CFO and external auditor at the regularly scheduled committee meetings. Fortunately, given the
nature of the company’s business and the steps management took early on in the pandemic, the
impact on the Company’s business has been negligible.

The committee reviewed the company’s risk matrix and discussed the following risks and associated
mitigation plans with management at the third quarter committee meeting:

Insurance coverage exclusions,

- Cybersecurity,
- Major health and safety and environmental accidents,
- Climate change related incidents,
- O&M suppliers risk,
-
- Failure of critical equipment,
- Solar field underperformance
The committee reviews regular reports from Internal Audit on risk management processes
throughout the year. The findings are discussed with the Head of Internal Audit, including progress
made on addressing previously identified weaknesses.

Corporate Governance

On an annual basis the committee considers whether any changes should be made to how it
operates. This year the committee adopted a new audit committee calendar of activities to help
plan annual activities and meeting agendas. It reflects the requirements for audit committees of
NASDAQ listed companies, as well as common best practices. The tool covers more than 80 actions
or responsibilities and their frequency in the following areas:

- Financial management and reporting, accounting policies and procedures
- General business planning
- Risk management
-
-
- Whistleblower procedures
- Other matters and governance

Independent Auditor
Internal Audit

112

Whistleblowing

The committee is responsible for the management of the Whistleblower Channel. According to the
Code of Conduct, any allegation received through the Whistleblower Channel will be sent to the
Chair of the Audit Committee, the General Counsel and the Head of Internal Audit.

All allegations received are managed by the Compliance Committee according to a specific Fraud
Response Protocol. All main procedures performed, conclusions and proposed corrective measures
are communicated to the committee.

The Board has a zero-tolerance policy for corruption. Atlantica´s Code of Conduct contains
guidelines for conducting the Company’s business with the highest standards of business ethics.
Atlantica also has a Supplier Code of Conduct which ensures that all its suppliers and service
providers are also operating with the highest standards of business ethics.

The Group’s whistle-blower policy encourages employees of the Company, its subsidiaries and all
external stakeholders to raise concerns about suspected wrongdoing within the Group in complete
confidence.

Atlantica’s Whistleblower Channel is available at the Company’s website www.atlantica.com.

113

Directors’ Remuneration Report

Introduction

This report (the “Directors' Remuneration Report”) relates to the remuneration of the directors of
Atlantica for the year ending December 31, 2020. It sets out the remuneration policy and
remuneration details for the executive and non-executive directors of the Company. It has been
prepared in accordance with Schedule 8 of The Large and Medium-sized Companies and Groups
(Accounts and Reports) Regulations 2008, as amended.

The report is split into three main areas:

- The statement by the Chair of the Compensation Committee;
- The annual report on remuneration; and
- The policy report.

The remuneration report and remuneration policy will each be submitted to a vote by shareholders
at the Annual General Meeting in May 2021.

The Companies Act 2006 requires the auditors to report to the shareholders on certain parts of the
Directors’ Remuneration Report and to state whether, in their opinion, those parts of the report
have been properly prepared in accordance with the Regulations. The parts of the Directors'
Remuneration Report that are subject to audit are indicated in the report. The statement by the
Chair of the Compensation Committee and the policy report are not subject to audit.

Atlantica has a Nominating and Corporate Governance Committee, responsible for reviewing the
structure, size and composition of the Board and succession planning for directors and senior
executives. It also reviews and advises the Board on the strategy and corporate governance
responsibility objectives of the Company. The Compensation Committee is mainly focused on
setting the remuneration policy for directors and senior management.

Statement by the Chair of the Compensation Committee

I am pleased to present the Directors’ Remuneration Report for 2020. The regular and transparent
dialogue with shareholders, investors and other stakeholders is a vital element in our way of
operating and, through this remuneration report, we aim to increase the awareness of our
shareholders of the principles of our remuneration policy.

The Company´s remuneration policy is set in accordance with the applicable law, with the aim of
attracting and retaining highly skilled professional and managerial resources and aligning the
interests of management with the priority objective of value creation for shareholders, for the
Company, its stakeholders and the members of the Company as a whole, in the medium to long
term.

In 2020 the Compensation Committee held three meetings and all Committee members attended
each meeting that they were eligible to attend.

The Compensation Committee focused its activities on the following objectives:

✓ Periodically reviewing the fixed and variable remuneration for the Chief Executive Officer;

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✓ Periodically reviewing the remuneration policy and overall levels of remuneration for the Chief
Executive Officer and senior management team, including the long-term incentive plans, in
accordance with the following criteria:
- Seeking an alignment between incentives, business performance and creation of value for

shareholders,

- Consistency with the principles of the UK Corporate Governance Code, and
- Retention in the medium to long term of high-quality resources for the achievement of
ambitious targets and to face the challenges that the Company will have to face in the
current and future market context.

✓ Periodically reviewing the remuneration levels of non-executive directors,
✓ Reviewing the Company’s compensation for directors, the CEO and management in

comparison with its direct peers and best practices.

In 2020, most of the objectives defined for the Chief Executive Officer's variable bonus were met
or exceeded and the Compensation Committee decided to approve a bonus corresponding to
102.7% of the target variable compensation, which will be payable in 2021. In 2019, most of the
objectives defined for the Chief Executive Officer's variable bonus were met or exceeded and a
bonus corresponding to 100.7% of the target variable compensation was paid in 2020.

Shareholders will be asked to approve the remuneration policy at our Annual General Meeting to
be held in May 2021. The Company is seeking shareholder approval for changes to the current
remuneration policy that includes new share ownership requirements applicable to directors
receiving remuneration from the Company and executives, a Deferred Restricted Share Unit Plan
(“DRSU Plan”) for non-executive directors, and the implementation of an incentive compensation
recoupment, or clawback policy. See further detail in the “Changes to the current remuneration
policy section” below.

To finalise, I would like to thank our shareholders for their strong vote in favour of approving the
directors’ remuneration report last year, demonstrating their support of Atlantica’s remuneration
arrangements.

I look forward to welcoming you and receiving your support again at the Annual General Meeting
this year.

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Annual Report on Remuneration

Single Total Figure of Remuneration for Each Director (Audited)

Since April 2019 each independent non-executive director is entitled to receive annual
compensation of $150.0 thousand. In addition, Chair of the Board and Chairs of the committees of
the board are entitled to receive additional compensation as detailed in the table below.
Furthermore, since May 2020 non-independent non-executive directors are also entitled to be
compensated on the same terms as we compensate independent non-executive directors. In 2020,
non-independent non-executive directors declined compensation.

The following table sets out the fee schedule for 2020 and 2019:

Business
In thousands of U.S. Dollars

Annual Director Retainer
Non-Executive Director
Annual Committee Chair Retainer
Chair of the Board
Chair of the Audit Committee
Chair of
Governance Committee
Chair of the Compensation Committee

the Nominating and Corporate

2020

From April 2019 to
December 2019

From January 2019
to March 2019

2019

150.0

134.0

75.0
15.0

10.0

75.0
15.0

10.0

61.0
15.0

10.0

The table below summarizes the directors who received remuneration during the year ended
December 31, 2020, as well as the prior year for comparison. The Chief Executive Officer’s total
annual compensation is also detailed in this table.

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In thousands of U.S.

Dollars

Salary and Fees

Annual Bonuses

Long-Term
Incentive Awards1

Total Fixed

Total Variable

Remuneration

Total

Name

2020

2019

2020

2019

2020

2019

2020

2019

2020

2019

2020

2019

William Aziz2

Debora Del Favero2

Brenda Eprile2

Michael Forsayeth2

106.7

110.0

100.0

Santiago Seage3

756.8

727.7

996.4 957.7

770.9

Michael Woollcombe2

150.0

Andrea Brentan4

56.3

146.0

Robert Dove4

60.0

155.9

Francisco J. Martinez4

61.9

161.0

Jackson Robinson4

60.0

155.9

Daniel Villalba4

84.4

217.5

106.7

110.0

100.0

0.0

106.7

110.0

100.0

0.0

756.8

727.7

1,767.3

957.7

2,524.1

1,685.4

150.0

0.0

56.3

146.0

60.0

155.9

61.9

161.0

60.0

155.9

84.4

217.5

150.0

0.0

56.3

60.0

61.9

60.0

84.4

146.0

155.9

161.0

155.9

217.5

Total

1,652.8 1,564.0

996.4 957.7

770.9

1,652.8 1,564.0

1,767.3 957.7 3,420.1 2,521.7

1 Long-term Incentive Awards includes Long-term Incentive Plan (LTIP) and Special One-Off Plan.
2 Mr. William Aziz, Mrs. Debora Del Favero, Mrs. Brenda Eprile, Mr. Michael Forsayeth and Mr. Michael Woollcombe joined the Board of
Directors on May 5, 2020 as independent non-executive Directors and were appointed as Chair of the Compensation Committee, Chair
of the Nominating and Corporate Governance Committee, Chair of the Audit Committee, Chair of the Related Parties Transactions
Committee and Interim Chair of the Board, respectively.

3 The CEO’s compensation is approved in Euros. It has been converted to U.S. dollars for presentation purposes, at the average exchange

rate of each year, which is 1.14 $/€ in 2020 and 1.12 $/€ in 2019.
In 2020, the CEO’s total pay amounted to €2,222.2 thousand ($2,524.1 thousand). Fixed salary amounted to €663.0 thousand ($756.8
thousand), annual bonus to €873.0 thousand ($996.4 thousand) and long-term incentive awards to €686.3 thousand ($770.9 thousand).
In 2019, the CEO’s total pay amounted to €1,505.5 thousand ($1,685.4 thousand). Fixed salary amounted to €650.0 thousand ($727.7
thousand) and annual bonus to €855.5 thousand ($957.7 thousand). In 2019 no amount vested under long-term incentive awards.4 Mr.
Daniel Villalba, Mr. Robert Dove, Mr. Francisco J. Martinez and Mr. Jackson Robinson were directors until May 5, 2020, and were Chair
of the Board of Directors, Chair of the Nominating and Corporate Governance Committee, Chair of the Audit Committee, and Chair of
the Compensation Committee, respectively, until such date. Mr. Andrea Brentan was a director until May 5, 2020.

In 2020, the Remuneration Report has been presented in U.S. dollars since remuneration of all
directors except the CEO is defined in U.S. dollars and the functional currency of the Company is
also the U.S. dollar.

The CEO’s compensation is approved in Euros and has been converted to U.S. Dollars using the
average exchange rate of 2020 and 2019 for each of the years. Except for Santiago Seage, all
directors served only part of 2020 (see Directors’ Report).

None of the directors received any pension entitlement and/or taxable benefits in 2020 or 2019.

Only directors who received remuneration are included in the table above. Non-independent, non-
executive directors were entitled, following the Annual General Meeting held on May 5, 2020, to
the same compensation as independent non-executive directors, but declined any compensation.
In 2019, non-independent, non-executive directors were not entitled to receive compensation.

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In June 2020, one-third of the CEO’s one-off plan share units vested and were paid in cash in
accordance with the terms of the plan using the share price at the date of vesting (June 20, 2020).
The cash payment has been included in the Single Total Figure of Remuneration table above.

One-Third of Restricted
Stock Units (RSUs)

Price on
Vesting Date

Total Cash Payment
($’000)

One-Off Plan

14,535

27.97 USD

430.3 USD

In addition, on June 20, 2020, one-third of the CEO’s share options awarded under the LTIP vested.
These options were not exercised, hence not paid. The vested options have been included in the
Single Total Figure of Remuneration table above, valued at the share price on the vesting date.

LTIP

2019

One-Third of
Share Options

Price on
Vesting Date

LTIP Exercise
Price per Option

Amount Vested
($’000)

40,693

27.97 USD

19.60 USD

340.7 USD

Each member of our board of directors will be indemnified for his or her actions associated with
being a director to the extent permitted by law.

Percentage

weight

Achievement

CAFD6 – Equal or higher than the CAFD budgeted in the 2020 budget
EBITDA – Equal or higher than the EBITDA budgeted in the 2020 budget
Close accretive acquisitions for the Company
Achieve health and safety targets - (Frequency with Leave / Lost Time
Index below 3.5 and General Frequency Index below 11.0) based on
reliable targets and consistent measure metrics
Implement the succession plan

40%

15%
20%

10%

15%

96%

102%
110%

110.03%

100%

In 2019, most of the objectives defined for the Chief Executive Officer's variable bonus were met
or exceeded and the Compensation Committee decided to approve a bonus corresponding to
100.7% of the target variable compensation, which was paid in 2020.

The Chief Executive Officer’s maximum potential bonus could be 120% of such bonus,
approximately $1,164 thousand (€1,020 thousand).

No element of the Chief Executive Officer’s annual bonus is deferred.

6 Cash Available for Distribution refers to the cash distributions received by the Company from its subsidiaries, minus cash expenses of the Company,
including debt service and general and administrative expenses.

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Deferred Restricted Share Unit Plan (DRSU Plan)

As we explain in our remuneration policy below, the Company is seeking shareholder approval to
establish a DRSU Plan for non-executive directors to promote a greater alignment of interests
between directors and shareholders, by providing a means for directors to accumulate a financial
interest in the Company and to enhance Atlantica’s ability to attract and retain qualified individuals
with the experience and ability to serve as directors. Pursuant to the plan, on an annual basis and
prior to commencement of the remuneration period, the Company shall determine the amount or
percentage of the director’s annual fee payable through DRSUs.

The number of DRSUs credited to a participant’s account is determined by dividing the amount of
the annual compensation to be received in DRSUs by the market value of an ordinary share. Upon
a participant ceasing to be a member of the Board, for any reason whether voluntary or involuntary,
the DRSUs will vest. The Company shall transfer to the director a number of shares equal to the
number of vested DRSUs and a number of shares equal in value to any dividends which would have
been paid or payable, or such number of ordinary shares equal to the vested DRSUs, from the grant
date until the vesting date. The director shall not have any shareholders’ rights other than the
dividend equivalent rights until the DRSUs vest and are settled by the issuance of shares.

Remuneration of the Chief Executive Officer

The information provided in this part of the report is not subject to audit.

Details for Mr. Seage, who serves in the role of the Chief Executive Officer, are set out in the “Single
Total Figure of Remuneration for each director” section above.

In 2020, he accrued $996.4 thousand as a bonus payment in accordance with his service agreement,
payable in 2021. In 2019, Mr. Seage accrued $957.7 thousand in accordance with his service
agreement, which was paid in 2020.

Scheme interests awarded during 2020:

LTIP

2020

Number of
Restricted Stock Units

Number of
Share Options

Face Value*
($’000)

Performance Criteria

33,641

103,842

1,180

RSU: 5% minimum Total Shareholder
Return Performance Stock Unit
Share Options: Time-Based Vesting

(*) Face Value means the maximum number of shares that would vest if performance measures are met using the share price at the
grant date. The face value for the Share Options is calculated using the Option price at the grant date.

In 2020, under the LTIP, 33,641 restricted stock units were awarded to the CEO, which will vest on
the third anniversary of the grant date. In addition, 103,842 stock options were awarded, which vest
one third per year, starting on the first anniversary of the grant date.

If the TSR performance condition has not been met during the vesting period, the participant's
restricted stock units will lapse on the vesting date. The stock options are not subject to
performance vesting.

A description of type of the interest awarded and the basis on which the award is made is provided
in the Remuneration Policy section below.

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Total Shareholder Return and Chief Executive Officer Pay

The chart below shows the Company’s total shareholder return since June 2014, the date of our
Initial Public Offering (“IPO”), until the end of 2020 compared with the total shareholder return of
the companies in the Russell 2000 Index. The chart represents the progression of the return,
including investment, starting from the time of the IPO at a 100%-point. In addition, dividends are
assumed to have been re-invested at the closing price of each dividend payment date.

We believe the Russell 2000 Index is an adequate benchmark as it represents a broad range of
companies of similar size.

Total shareholders return (TSR) is calculated in U.S. dollars.

100%
100%

96%

74%

116%

76%

133%

87%

119%

85%

183%

178%

149%

121%

200%

180%

160%

140%

120%

100%

80%

60%

40%

20%

2014

2015

2016

2017

2018

2019

2020

Atlantica

Russell

The table below shows the total remuneration of the Chief Executive Officer, his bonus and his
long-term incentive awards expressed as a percentage of the maximum he is likely to be awarded.

Bonus

Long-Term Incentive Awards(3)

Year(1)

Total Pay(2)

($ 000)

2020

2019

2018

2017

2016

2015

2014

2,524.1

1,685.4

2,511.1

1,602.0

1,499.4

1,597.6(5)

174.1

Percentage of

Target

102.7%

100.7%

101.8%

96.3%

100.0%

Amount of
Bonus(4)

($ 000)

Percentage of

Maximum

Value

($ 000)

996.4

957.7

992.2

924.2

940.5

100%

22.0%

770.9

751.1

(1) 2014 to 2019 amounts have been revised and converted from Euros to U.S. Dollars using annual
each year average exchange rates, following 2020 updated directors’ compensation disclosure in
U.S. Dollars.

(2) The CEO’s compensation is approved in Euros. It has been converted to U.S. dollars for
presentation purposes. The total pay received by the CEO in thousands of Euros was €2,222.2 in

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2020, €1,505.5 in 2019, €2,170.3 in 2018, €1,418.1 in 2017, €1,329.1 in 2016, €1,440.9 in 2015, and
€130.9 in 2014.

(3) Long-Term Incentive Awards includes LTIP and Special One-Off Plan.
(4) Amount of bonus accrued by the Company at year-end and paid the next year. For example: In
2019, the Company accrued $957.7 thousand of the bonus paid to the Chief Executive Officer in
2020.

(5) Includes a €1,189.5 thousand (approximately $1,319.6 thousand) termination payment received

by Mr. Garoz after leaving the Company on November 25, 2015.

The Chief Executive Officer did not receive any variable remuneration for service provided to the
Company for the years ended December 31, 2015 and 2014. Santiago Seage occupied that office
between January and May 2015, and again since late November 2015. Meanwhile, Mr. Garoz held
that position between May and November 2015, when he left the Company.

Chief Executive Officer, Director’s and Employee’s Pay

The table below sets out the percentage change between 2019 and 2020 in salary, bonus and long-
term incentive awards for independent non-executive directors, executive director, and the average
per capita change for employees of the Group as a whole, excluding the Chief Executive Officer.

Name

2020

Salary

Bonus

Long-Term
Incentive Awards1

Independent, non-executive directors

William Aziz2

Debora Del Favero2

Brenda Eprile2

Michael Forsayeth2

Michael Woollcombe2

Andrea Brentan3

Robert Dove3

Francisco J. Martinez3

Jackson Robinson3

Daniel Villalba3

Executive director

Santiago Seage (CEO)

Employees (excluding CEO)4

n/a

2%5

n/a

2%5

n/a

n/a 6

Notes:
This is the first year in which this reporting requirement is applicable for the Company. Over subsequent years this will build up to a
rolling five-year period.
Except for Santiago Seage, all directors served only part of 2020 (see Directors’ Report).
None of the directors received any pension entitlement and/or taxable benefits in 2020 or 2019.
Only directors who received remuneration are included in the table above.
n/a: Non-applicable.

Directors on May 5, 2020 as independent non-executive Directors, hence there is no percentage change between 2019 and 2020.

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3 Mr. Daniel Villalba, Mr. Robert Dove, Mr. Francisco J. Martinez and Mr. Jackson Robinson were directors until May 5, 2020, and were
Chair of the Board of Directors, Chair of the Nominating and Corporate Governance Committee, Chair of the Audit Committee, and
Chair of the Compensation Committee, respectively, until such date. Their percentage of salary change has been calculated on a full-
time equivalent basis, hence based on their total remuneration received in 2019 compared to their 2020 entitled compensation as
shown in the Single Total Figure of Remuneration section.

4 The salary and bonus percentage change for employees (excluding the CEO) has been calculated considering the same average number
of employees and the same average exchange rate in both 2020 and 2019. This is the most appropriate methodology to reflect how
much the salary and potential bonus changed on a year-to-year basis as it excludes the effect of employee hires and turnover.

5 The Compensation Committee approved a (i) fixed remuneration of €663 thousand ($757 thousand) for the Chief Executive Officer for
2020 compared to €650 thousand ($728 thousand) for 2019, representing a 2% increase in Euros on a year-to-year basis, and (ii)
variable remuneration of €873 thousand ($996 thousand) for 2020 compared to €856 thousand ($958 thousand) for 2019, representing
a 2% increase in Euros on a year-to-year basis.

6 In 2019 no amount vested under long-term incentive awards for the CEO or Management.

Relative Importance of Spend on Pay

The following table sets out the change in overall employee costs, directors’ compensation and
dividends.

$ in Million

Amount in

2020

Amount in
2019(1)

Difference

Spend on Pay for All Employees(2)

Total Remuneration of Directors

Dividends Paid

54.5

3.4

168.8

32.2

2.5

159.0

22.3

0.9

9.8

(1) 2019 amounts have been revised and converted from Euros to U.S. Dollars, following 2020 updated directors’
compensation disclosure in U.S. Dollars.
(2) 2019 Spend on Pay for All Employees has been revised to include wages and salaries, social security costs and
other staff costs (see Note 24 to our Annual Consolidated Financial Statements).

The Company has not made any share repurchases during 2020 or 2019.

The average number of employees in 2020 in Atlantica was 441 employees, compared to 306
employees in 2019.

The $22.3 million increase in spend on pay and the increase in the average number of employees
is mostly due to the acquisition of ASI Operations in August 2019. This subsidiary, that performs
the operation and maintenance services to the Solana and Mojave plants, added 199 new
employees. 2020 was the first complete year with these U.S. employees in our workforce.

The $0.9 million increase in total remuneration of directors is mainly due to the vesting in June
2020 of one-third of the CEO’s One-Off Plan and one third of his share options awarded under the
LTIP. No units or shares vested in 2019 under our LTIP.

Directors’ Shareholdings (Audited)

The following table includes information with respect to beneficial ownership of our ordinary shares
as of December 31, 2020 and by each of our current directors and executive officers, as well as their
connected persons.

Directors not included in the table below do not hold shares and are not required to comply with
minimum share ownership requirements as they do not receive remuneration from the Company.

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Investment

Minimum Share

Share Units(1)

Value
($000’s)(2)

Santiago Seage

20,000

109,700

4,926

William Aziz

Brenda Eprile

2,500

Michael Forsayeth

1,600

Michael Woollcombe

Debora Del Favero

Ownership

Requirement

6 times fixed

compensation

3 times annual

compensation

3 times annual

compensation

3 times annual

compensation

3 times annual

compensation

3 times annual

compensation

Compliance
With Policy(3)



On track

(1) Includes vested and non-vested Share Units as of December 31, 2020. LTIP share units subject to 5% minimum Total

Shareholder Return Performance Stock Unit.

(2) Assuming a share price of $37.98 as of December 31, 2020.
(3) 5-year window to comply with this policy.

Between the year end and the date of issuance of this report there have been no changes to
directors’ share ownership.

Under the LTIP and one-off plans, the CEO holds as of December 31, 2020 109,700 share units,
convertible into shares in the future and 225,562 options, out of which 40,693 options vested, but
were not exercised. As of December 31, 2019, he held 90,593 share units, convertible into shares in
the future and 122,080 options. No options vested in 2019.

Minimum Share Ownership

On February 26, 2021, the Board of Directors adopted minimum share ownership guidelines for
directors receiving remuneration from the Company and for the executives participating in the LTIP
to further align executive and shareholder interests. Directors and executives subject to these
guidelines shall achieve, within a period of five years, a minimum share ownership in the Company.
In calculating the value of shares owned, shares that are issuable pursuant to the LTIP and DRSU
Plan, vested and non-vested, are counted. Directors receiving remuneration and executives
participating in the LTIP shall achieve a minimum share ownership in the Company equal in value
to:

- Directors receiving remuneration from the Company: 3 times their annual compensation,
- CEO: 6 times his fixed compensation,
- CFO: 3 times his fixed compensation,
- Other executives: 2 times their fixed compensation.

The directors receiving remuneration from the Company and executives have a 2-year window to
amend non-compliances with minimum share ownership requirements derived from a stock price
decrease.

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The directors not receiving remuneration from the Company are not required to comply with
minimum share ownership requirements.

Termination Payments (Audited)

No termination payments were made to the Chief Executive Officer or any other director in 2020
nor 2019. The policy for termination remuneration is detailed under the section “Policy on
payments for loss of office” of this report.

Statement of Implementation of Policy in 2020

The targets for bonuses are detailed under the section “Remuneration Policy” of this report. The
current policy was approved at our 2020 Annual General Meeting, held in May 2020.

For 2021, the bonus measures for the remuneration of the Chief Executive Officer, will focus on
four areas: financial targets, value creating growth/investments, health and safety and management
of relationships with key shareholders and partners

This approach is intended to provide a balanced assessment on how the business has performed
over the course of the year against stated objectives. Targets are aligned with the annual plan and
strategic and operational priorities for the year.

For 2021 the bonus objectives are:

CAFD – Equal or higher than the CAFD budgeted in the 2021 budget
EBITDA – Equal or higher than the EBITDA budgeted in the 2021 budget
Close accretive acquisitions for the Company
Achieve health and safety targets – (Frequency with Leave / Lost Time Index
below 3.5 and General Frequency Index below 10.0) based on reliable targets
and consistent measure metrics
Management of relationships with key shareholders and partners

Percentage
Weight
40%
15%
20%
10%

15%

Compensation Committee

The Compensation Committee was created in February 2016, together with the Nominating and
Corporate Governance Committee. These two committees replaced the Appointments and
Remuneration Committee which was in place since the IPO.

The Compensation Committee is responsible for determining the remuneration policies of directors
and the remuneration of the Chief Executive Officer and other senior members of management.

In 2020, the Compensation Committee focused its activities on the following key remuneration
topics:
- Periodically reviewing Long Term Incentive Plans,
- Deciding on the Chief Executive Officer’s remuneration,
- Reviewing Independent non-executive director’s remuneration, and
- Analysing peers and comparable remuneration structures.

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Membership and Attendance

As of December 31, 2020 all members of the Compensation Committee are independent, non-
executive directors. The Compensation Committee held three meetings in 2020.

Membership

Director

From

William Aziz

May 2020

n/a

Role

Attendance /
Eligible to Attend

Director, Independent and Chair
of the Compensation Committee

Debora Del Favero

May 2020

n/a

Director, Independent

Christopher Jarratt

Mar 2018

Oct 2020

Director

Andrea Brentan

June 2017 May 2020

Director, Independent

Jackson Robinson

June 2014 May 2020

Director, Independent

2/2

1/1

On May 5th, 2020, the directors William Aziz and Debora Del Favero were appointed as new
members of the Compensation Committee. Mr. Aziz is the Chair of the Compensation Committee.
Mr. Jarratt resigned as member of the Board of Directors on October 9th, 2020. Since then, all
committee members are independent, non-executive directors.

No director or senior manager shall be involved in any decision as to their own remuneration. The
Chief Executive Officer and members of senior management, such as the Head of Human
Resources, may attend the meetings by invitation.

The Compensation Committee Chair provides regular updates to the Board of Directors on the key
issues discussed at the Compensation Committee’s meetings.

Role of the Compensation Committee

The Board of Directors approved Terms of Reference for the Compensation Committee which are
available on the website of the Company (www.atlantica.com).

These Terms of Reference provide the roles and responsibilities of the Compensation Committee,
which are reviewed by the Compensation Committee itself and the Board of Directors on a yearly
basis. In accordance with this document, the Compensation Committee’s responsibilities include,
but are not limited, to the following matters:

1. To analyse, discuss and make recommendations to the Board regarding the setting of the

remuneration policy for all directors and senior management,

2. To analyse and discuss proposals made by the Board regarding the Company’s remuneration

policy,

3. To obtain reliable and updated information about remuneration in other companies of

comparable scale and complexity,

4. To review the Chief Executive Officer’s annual compensation package and performance

objectives,

5. To review the design of long-term incentive plans for approval by the board and shareholders,

and

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6. To review and approve the compensation payable to executive directors, and the Chief

Executive Officer for any loss or termination of office or appointment.

2020 Key Activities

In 2020, the Compensation Committee continued its work on revising our remuneration structure
to ensure that the Company has in place an effective remuneration policy which:

- Allows the Company to attract and retain top quality talent; and
- Rewards and compensates sustainable performance to the benefit of both shareholders and

stakeholders.

Remuneration Analysis

The Compensation Committee has re-assessed the remuneration policy implemented by the Board
of Directors and approved in the Annual General Meeting. At least once a year, the Compensation
Committee reviews compensation practices for non-executive directors in similar companies.

The Compensation Committee has been particularly focused on reviewing the remuneration for
directors and the Chief Executive Officer, based on the information collected from external
consultants that provided independent advice on remuneration best practices and market practice
on directors´ minimum ownership requirements.

The Compensation Committee has the responsibility to propose the remuneration of the Chief
Executive Officer and the overall remuneration of the senior management to the Board of Directors,
including any kind of compensation.

The Compensation Committee has the following duties regarding performance-related bonuses or
variable remuneration:

- Definition of specific targets for the Chief Executive Officer and overall structure for senior

management.

- Evaluation of the accomplishment of those objectives in the case of the Chief Executive Officer.

Long-Term Incentive Awards

In April 2018, the Board of Directors approved the implementation of a new remuneration policy
including LTIP awards. The long-term incentive plan permits the granting of share options and
restricted stock units to the executive team of the Company. The LTIP applies to approximately 13
executives and the Board of Directors also proposed to include the Chief Executive Officer, who is
also a director. The Chief Executive Officer’s participation in the LTIP was approved by shareholders
at the 2019 annual general meeting in June 2019.

Voting at the 2020 Annual General Meeting

The Company takes an active interest in voting outcomes. In the event of a substantial vote against
a resolution in relation to director´s remuneration, the Company would seek to understand the

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reasons for any such vote and would set out in the following Annual Report any actions in response
to it.

At the 2020 Annual General Meeting, votes in relation to the Directors’ Remuneration Report,
excluding the directors’ remuneration policy, for the year ended December 31, 2019 were as
follows:

Remuneration Report

Number of votes

For
Against
Withheld*

70,538,902
3,282,483
89,653

95.6
4.4
-

In addition, votes at the 2020 Annual General Meeting in relation to the directors’ remuneration
policy for the year ended December 31, 2019 were as follows:

Remuneration Policy

Number of votes

For
Against
Withheld*

65,176,545
8,614,159
120,334

88.3
11.7
-

* A vote “withheld” is not a vote in law and is not counted in the calculation of the proportion of votes for and against the resolution.

Remuneration Policy

The current policy was approved at our 2020 Annual General Meeting, held in May 2020.
Shareholders will be asked to approve the remuneration policy at our 2021 Annual General Meeting
to be held in May 2021.

Changes to the current remuneration policy:

a) Share Ownership Requirements

On February 26, 2021, the Board approved a share ownership requirement applicable to
directors receiving remuneration from the Company and executives (see the Directors’
Shareholdings section). Within a period of five years, directors receiving remuneration from the
Company should have a minimum share ownership in the Company of 3 times their annual
compensation. In the case of the CEO, this requirement is 6 times his fixed compensation.

b) Deferred Restricted Share Unit Plan (DRSU Plan) for Non-Executive Directors

The Company is seeking shareholder approval to establish a DRSU Plan for non-executive
directors to promote a greater alignment of interests between directors and shareholders, by
providing a means for directors to accumulate a financial interest in the Company and to
enhance Atlantica’s ability to attract and retain qualified individuals with the experience and
ability to serve as directors. Pursuant to the plan, on an annual basis and prior to

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commencement of the remuneration period, the Company shall determine the amount or
percentage of the director’s annual fee payable through DRSUs.

The number of DRSUs credited to a participant’s account is determined by dividing the amount
of the annual compensation to be received in DRSUs by the market value of the ordinary shares.
Upon a participant ceasing to be a member of the Board, for any reason whether voluntary or
involuntary, the DRSUs will vest. The Company shall transfer to the director a number of shares
equal to the number of vested DRSUs and a number of shares equal in value to any dividends
which would have been paid or payable on such number of ordinary shares equal to the vested
DRSUs from the grant date until the vesting date. The director shall not have any shareholders’
rights other than the dividend equivalent rights until the DRSUs vest and are settled by the
issuance of shares.

c) Clawback Policy

The Company is seeking shareholder approval to implement an incentive compensation
recoupment, or clawback policy. The policy is aimed at allowing the Company to recover
performance-based compensation for three years after short-term variable compensation
and/or long-term compensation awards are granted. The clawback policy is applicable from
2021 to all executives who participate in long term incentive arrangements.

The clawback policy is applicable in the event of the occurrence of either of the following
triggering events: material financial restatement, including a restatement resulting from
employee misconduct, or in the case of fraud, embezzlement or other serious misconduct that
is materially detrimental to the Company. The Compensation Committee shall retain discretion
regarding application of the policy. The policy is incremental to other remedies that are
available to the Company.

If a triggering event occurs, unless otherwise determined by the Compensation Committee
and/or if the Company is required to prepare a material restatement of its financial statements
as a result of misconduct, and the Compensation Committee determines that the executive
knowingly engaged in the misconduct or acted knowingly or with gross negligence in failing
to prevent the misconduct, or the Compensation Committee concludes that the participant
engaged in fraud, embezzlement or other similar activity (including acts of omission) that the
Compensation Committee concludes was materially detrimental to the Company, the Company
may require the participant (or the participant’s beneficiary) to reimburse the Company for, or
forfeit, all or any portion of any short or long term variable compensation awards.

The application of this clawback policy to our CEO is a change to our remuneration policy
approved by the Compensation Committee.

d) The Company is seeking shareholder approval to modify the Long Term Incentive Plan so that
awards are granted as restricted stock units only. Prior to the 2021 Annual General Meeting,
awards under the LTIP have been granted in restricted stock units representing 75% of the
Award Value and share options representing 25% of the Award Value. If shareholder approval
is obtained for the amendment of the Long Term Incentive Plan, awards will be granted as
restricted stock units, and the restricted stock units will be granted with the same vesting

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conditions as they are currently: units vest on the third anniversary of the grant date, subject to
an annual TSR of at least a 5% yearly average over such 3-year period.

The current remuneration policy is as follows:

Non-Executive Directors:

For non-executive directors, independent and non-independent directors, the Company’s policy is
to compensate in cash for the time dedicated, subject to a maximum total annual compensation
for non-executive directors in aggregate of two million dollars. Once a year, the Compensation
Committee reviews compensation practices for non-executive directors in similar companies and
the skills and experience required and may propose an adjustment in the current compensation.

None of the non-executive directors receive bonuses, long-term incentive awards, pension or other
benefits in respect of their services to the Company.

Executive Directors:

The policy for executive directors, only applicable to the Chief Executive Officer as the only
executive director, is as follows:

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How does this
component support the
company’s (or Group’s)
short and long-term
objectives?

What is the
maximum that may
be paid in respect
of the component?

Maximum amount
€800 thousand
(approximately $976
thousand), may be
increased by 5% per
year.

Salary levels for peers
are considered.

Helps to recruit and retain
executive directors and
forms the basis of a
competitive remuneration
package.

Helps to offer a competitive
remuneration package and
align it with the company’s
objectives.

Align executive directors and
shareholders interests.

70% of target annual
salary + bonus.

Name of
component

Description of
component

Salary/fees

Benefits

Fixed remuneration
payable monthly.

Opportunity to join
existing plans for
employees but
without any
increase in
remuneration.

Annual Bonus Annual bonus is

paid following the
end of the financial
year for
performance over
the year. There are
no retention or
forfeiture
provisions.

Restricted stock
units subject to
certain vesting
periods and
minimum TSR.

Long Term
Incentive
Awards

Framework used to assess
performance

Not applicable.

No retention or clawback.

10%-15% of EBITDA.

40%-50% of other operational
or qualitative objectives.

No retention.

Clawback policy.

Granted as restricted stock
units subject to 5% average
annual TSR. If the TSR
performance condition has not
been met during the vesting
period, the participant's
restricted stock units will lapse
on the vesting date.

200% of base salary.

40%-50% of CAFD.

Special one-off plan in
2019 for 50% of 2019
salary + bonus.

Share units.

Clawback policy.

CAFD, EBITDA and TSR have been selected as key parameters to measure the company’s
performance due to their importance for our shareholders. These measures are considered
standard indicators of financial performance in our sector.

Compensation Committee Discretions

The Compensation Committee has discretion, consistent with market practice, in respect of, but
not limited to participants, timing of payments, size of the award subject to policy, performance
measures and when dealing with special situations, such as change of control or restructuring.

The annual bonus is a variable cash bonus, based on the objectives described above. Those
objectives include Cash Available for Distribution (CAFD) and EBITDA, as these are key financial
metrics for our industry sector. Additionally, the annual bonus includes 2-3 objectives that reflect
some of the key projects, initiatives or key objectives.

Annual bonus performance targets include annual CAFD and EBITDA performance thresholds for
payment and also thresholds for the operational/qualitative targets defined by the Compensation
Committee. These could vary on a year-to-year basis, hence assessment performance thresholds
are analysed and updated by the Compensation Committee on an annual basis.

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For the management team and key personnel, our policy is to use two external consultants to
estimate market conditions for similar positions in terms of fixed and variable remuneration and,
based on a performance appraisal, set a target remuneration, as a general rule, within that market
practice. Variable payments are based on a number of specific measurable targets in relation to the
measures described herein, which are defined by the Compensation Committee at the beginning
of the year. For the rest of its employees, the Company establishes predefined remuneration ranges
for different positions and reviews each individual remuneration depending on performance
appraisal and within two ranges without employee consultation.

In addition, the Compensation Committee shall retain discretion regarding application of the
clawback policy described in the remuneration policy section.

Long-Term Incentive Awards

LTIP

In April 2018, the Board of Directors approved the implementation of a remuneration policy
including LTIP awards. The purpose of this LTIP is to attract and retain the best talent for positions
of substantial responsibility in the Company, to encourage ownership in the Company by the
executive team whose long-term service the Company considers essential to its continued progress
and, thereby, encourage recipients to act in the shareholders’ interest and to promote the success
of the Company.

The long-term incentive plan permits the granting of restricted stock units (“Awards”) to the
executive team of the Company (the “Executives”). The LTIP applies to approximately 13 Executives
and the Chief Executive Officer.

The aggregate number of shares which may be reserved for issuance under the LTIP must not
exceed 2% of the number of the shares outstanding at the time of the Awards are granted, but is
expected to be significantly less. In addition, total equity-based awards will be limited to 10% of
the Company's issued share capital over a 10-year rolling period, in order to assure shareholders
that dilution will remain within a reasonable range. In any case, the Compensation Committee may
decide that, instead of issuing or transferring shares, the Executives may be paid in cash.

The value of the Awards will be defined as 50% of the Executives’ total annual compensation for
the year closed before the date upon which an Award is granted and, in the case of the Chief
Executive Officer, would be 70% of the same previous year total annual compensation at the grant
date (in each case, "Award Value"). The award will be granted in restricted stock units.

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Main Terms of the LTIP

Nature

Exercisability and Vesting Period

Ownership and Dividends

Restricted Stock Units

Conditions shall be based on continuing employment (or other service
relationship) and achievement of a minimum 5% average annual TSR.

The shares will vest on the third anniversary of the grant date but only if the
annual TSR has been at least a 5% yearly average over such 3-year period. If
the TSR has not met such threshold during the period, the participant's
relevant restricted stock units will lapse on the vesting date.

The Company will decide at vesting if cash or shares are given as payment.

The participant will be entitled to receive, for each restricted stock unit held, a
payment equivalent to the amount of any dividend or distribution paid on one
share between the grant date and the date on which the restricted stock unit
vests.

Effect on Termination of Employment

If a participant’s employment terminates by reason of involuntary termination (death, disability,
redundancy, constructive dismissal or retirement dismissal rendered unfair), any portion of his/her
Award shall thereafter continue to vest and become exercisable according to the terms of the LTIP
but such participant shall no longer be entitled to be granted Awards under the LTIP.

If a participant incurs a termination of employment for cause or voluntary resignation or
withdrawal, share options that have vested at the termination date will be exercisable within the
period of 30 days from such termination date (after which they will lapse) but any unvested Awards
(options or restricted stock units) shall lapse.

Change of Control

If there is a change of control, all Awards shall vest in full on the date of the change in control. The
participants must exercise their share options within a period of 30 days following receipt of a
change of control notice from the Company without which, the options will lapse.

Delisting

If the Company is delisted, all outstanding Awards shall vest in full on the date of delisting and will
be settled in cash. The cash payment for restricted stock units will be the last quoted share price of
the Company and the cash payment for any outstanding share options will be the difference
between the last quoted share price and the exercise price for the applicable option. Such cash
payments will be made after applicable tax deductions within 30 days of the delisting.

One-Off Plan:

There is a special one-off plan in-place that grants stock units to certain members of the
management and certain members of middle management7, consisting of approximately 25
managers including the Chief Executive Officer. The value of the award was defined as 50% of 2019

7 Middle Management consists of employees who: (i) manage a specific area, (ii) supervise a group of employees, or (iii) are considered
key personnel within the organization.

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target remuneration (including salary and variable bonus). The share units vest over 3 years, one
third each year starting in 2020, provided that the manager is still an employee of the company.
This was approved by shareholders at the 2019 Annual General Meeting.

Pension:

The executive director does not receive any pension contributions.

None of the non-executive directors receive bonuses, long-term incentive awards, pension or other
benefits in respect of their services to the Company.

There are no provisions for the recovery of sums paid or the withholding of any sum, except for
those potentially derived from the application of the clawback provision. The clawback policy is a
change to the current remuneration policy, hence subject to approval at our 2021 Annual General
Meeting to be held in May 2021.

Chief Executive Officer Remuneration Policy

The Compensation Committee approved a fixed remuneration of €690 thousand ($838 thousand)
for the Chief Executive Officer for 2021, a 4% increase versus 2020.

Total remuneration of the only executive director for a minimum, target and maximum
performance in 2021 is presented in the chart below.

Minimum, Target and Maximum Performance*
In thousands of U.S. Dollars

$1,835

26%

28%

46%

$838

100%

$2,558

19%

48%

33%

Minimum

Target

Maximum

Salary and Benefits

Annual Bonus

LTIPs and Special One-Off

* Minimum, target and maximum performance has been converted to U.S. dollars for presentation purposes, at the exchange rate as of
February 23, 2021, which was 1.22 $/€.

Assumptions made for each scenario are as follows:

▪ Minimum: fixed remuneration only, assuming performance targets are not met for the annual

bonus nor for the RSU and assuming no value for the options vesting in the year.

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▪ Target:

fixed remuneration, plus half of target annual bonus and LTIP and one-off plans
vesting in 2021 at face value, using share price at grant date for units and option
value at grant date for options.

▪ Maximum: fixed remuneration, plus maximum annual bonus and LTIP and one-off plans vesting
in 2021 at face value, using share price at grant date for units and option value at
grant date for options.

In addition, if we assume a 50% appreciation of the share price with respect to the grant date,
maximum remuneration for 2021 including vesting long-term awards would be approximately
$3,059 thousand.

For 2021, the bonus measures for the remuneration of the Chief Executive Officer, will focus on
four areas: financial targets, value creating growth/investments, health and safety, and
management of relationships with key shareholders and partners.

This approach is intended to provide a balanced assessment of how the business has performed
over the course of the year against stated objectives. Targets are aligned with the annual plan and
strategic and operational priorities for the year.

The CEO’s 2021 bonus objectives are disclosed in the section Annual Report on Remuneration.

Approach to Recruitment

The remuneration policy reflects the composition of the remuneration package for the
appointment of new executive and non-executive directors. We expect to offer a competitive fixed
remuneration, an annual bonus (for executive directors) not exceeding 200% of the fixed
remuneration and a participation in the LTIP.

Nominee directors do not receive any compensation from the Company.

Policy on Payments for Loss of Office

The Company has an agreement in-place with certain executives with strategic and key
responsibilities in the Company (“Key Managers”), including the Chief Executive Officer, to protect
the Company's know-how and to ensure continuity in terms of attainment of business objectives,
the policy approved by our shareholders at the 2019 Annual General Meeting, introduced certain
termination payments to key executives, including the Chief Executive Officer.

The Company agreed with certain executives with strategic and key responsibilities in the Company
(“Key Managers”), including the Chief Executive Officer, the Company would make payments for
loss of office or employment in addition to the severance payment under the prevailing labour and
legal conditions in their contracts or countries where they are employed if they should leave (by
loss of office or employment) the Company within 2 years of a change in control. The payment
would represent six months of remuneration and will be adjusted to ensure that total payment
including severance payment required under prevailing laws represent at least 12 months of
remuneration (including salary, benefits, long term incentive plans and variable pay), but never
more than 24 months of remuneration, unless required by local law.

134

A change of control means that a third party or coordinated parties (i) acquire directly or indirectly
by any means a number of shares in the Company which (together with the shares that such party
may already hold in the Company) amount to more than 50% of the share capital of the Company;
or (ii) appoint or have the right to appoint at least half of the members of the Board of Directors
of the Company.

No payments would be made to Key Managers for dismissal for breach of contract, breach of
fiduciary duties or gross misconduct, determined (in the event of a dispute) by a court of competent
jurisdiction to reach a final determination.

Consideration of Employee Conditions Elsewhere

For the management team and key personnel, our policy is to use two external consultants to
estimate market conditions for roles of a similar level of managerial responsibilities and complexity
in terms of fixed and variable remuneration and, based on a performance appraisal, set a target
remuneration, as a general rule, within that market practice.

The annual variable remuneration payment is calculated with reference to the achievement of a
number of specific measurable targets defined in the previous year. Each specific target is measured
on a performance scale of 0%-120%.

For the rest of its employees, the Company establishes predefined remuneration ranges for
different positions and reviews each individual remuneration depending on performance appraisal
within two ranges without employee consultation.

The remuneration of all employees, including the members of the management team, may be
adjusted periodically in the framework of the annual salary review process which is carried out for
all employees.

Overall, we expect that, following the implementation of our policies, remunerations of the
Company’s employees will increase in line with the market with the exception of individuals that
have recently been promoted or whose remuneration is above market conditions.

Statement of Consideration of Shareholder Views

There are no comments in respect of directors’ remuneration expressed to the Company by
shareholders. The next Annual General Meeting is expected to be held in May 2021.

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Summary of Policy for Non-Executive Directors

Name of
component

Fees and/or
Deferred
Restricted
Share Units
(DRSU)

How does the component
support the company’s
objective?

Operation

Maximum

Attract and retain the high-
performing independent non-
executive directors.

Reviewed annually by
the
Compensation Committee and
Board.

Align interests of non-executive
independent directors with
interests of shareholders.

lead

The
independent
director/chair of the Board and
the chair of each committee
receive additional fees.

Annual total compensation for -
independent
non-executive
directors, in any case, the fees or
DRSUs will not exceed two
million dollars.

Benefits

Reasonable travel expenses to
the Company’s registered office
or venues for meetings.

Customary control procedures.

Real costs of travel with a
maximum of one million dollars
for all directors.

Non-independent, non-executive directors are entitled, following the Annual General Meeting held
on May 5, 2020, to the same compensation as independent non-executive directors.

On February 26, 2021, the Board approved a share ownership requirement applicable to directors
receiving remuneration from the Company and executives. Within a period of five years, directors
receiving remuneration from the Company should have a minimum share ownership in the
Company of 3 times their annual compensation. The Company is seeking shareholder approval to
compensate its remunerated directors via a mix of cash and DRSUs. On an annual basis and prior
to commencement of the remuneration period, the Company shall determine the amount or
percentage of the director’s annual fee payable through DRSUs. The DRSUs shall vest upon the
date on which the director ceases to be a member of the Board due to a voluntary or involuntary
separation from service. The director shall not have any rights of a shareholder unless and until the
DRSUs vest and are settled by the issuance of shares (see further detail in the Changes to the
current remuneration policy section above).

Service Contracts

Mr. Seage has a service contract with Atlantica that includes a 6-month notice period.

Non-executive directors do not have a service contract and will be submitted for election by
shareholders at the 2021 Annual General Meeting for one year. All directors will be submitted for
re-election by shareholders annually.

Employee Benefit Trusts

The Company has not established employee trusts for share plans.

Statement of Voting at General Meetings

The remuneration report and the remuneration policy will be submitted to a vote of shareholders
at the Annual Shareholders’ Meeting in 2021.

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Directors’ Responsibilities Statement

The directors are responsible for preparing the Consolidated Annual Report and the Consolidated
Financial Statements in accordance with applicable law and regulations.

Company law requires the directors to prepare financial statements for each financial year. Under
that law the directors are required to prepare the group financial statements in accordance with
International Accounting Standards in conformity with the requirements of the Companies Act
2006 and have elected to prepare the parent company financial statements in accordance with
Financial Reporting Standard 101 Reduced Disclosure Framework. Under company law the
directors must not approve the accounts unless they are satisfied that they give a true and fair view
of the state of affairs of the company and of the profit or loss of the company for that period.

In preparing the parent company financial statements, the directors are required to:

▪

Select suitable accounting policies and then apply them consistently,

▪ Make judgments and accounting estimates that are reasonable and prudent,

▪

State whether Financial Reporting Standard 101 Reduced Disclosure Framework has been
followed, subject to any material departures disclosed and explained in the financial
statements,

Prepare the financial statements on the going concern basis unless it is inappropriate to
presume that the company will continue in business,

In preparing the group financial statements, International Accounting Standard 1 requires that
directors:

- Properly select and apply accounting policies,
- Present information, including accounting policies, in a manner that provides relevant,

reliable, comparable and understandable information,

- Provide additional disclosures when compliance with the specific requirements in IFRSs are
insufficient to enable users to understand the impact of particular transactions, other
events and conditions on the entity's financial position and financial performance, and

- Make an assessment of the company's ability to continue as a going concern.

The directors are responsible for keeping adequate accounting records that are sufficient to show
and explain the company’s transactions and disclose with reasonable accuracy at any time the
financial position of the company and enable them to ensure that the financial statements comply
with the Companies Act 2006. They are also responsible for safeguarding the assets of the company
and hence for taking reasonable steps for the prevention and detection of fraud and other
irregularities.

Responsibility Statement

The directors are responsible for the maintenance and integrity of the corporate and financial
information included on the company’s website. Legislation in the United Kingdom governing the
preparation and dissemination of financial statements may differ from legislation in other
jurisdictions.

138

Independent Auditor’s Report to the Members of Atlantica
Sustainable Infrastructure plc

Opinion

In our opinion:

Atlantica Sustainable Infrastructure plc’s group financial statements and parent company financial
statements (the “financial statements”) give a true and fair view of the state of the group’s and of
the parent company’s affairs as at 31 December 2020 and of the group’s profit for the year then
ended;

the group financial statements have been properly prepared in accordance with International
Accounting Standards in conformity with the requirements of the Companies Act 2006;

the parent company financial statements have been properly prepared in accordance with United
Kingdom Generally Accepted Accounting Practice; and

the financial statements have been prepared in accordance with the requirements of the
Companies Act 2006.

We have audited the financial statements of Atlantica Sustainable Infrastructure plc (the ‘parent
company’) and its subsidiaries (the ‘group’) for the year ended 31 December 2020 which comprise:

Group

Parent company

Consolidated Balance Sheet as at 31 December 2020

Balance Sheet as at 31 December 2020

Consolidated Income Statement for the year then ended Statement of changes in equity for the

year then ended

Related notes 1 to 9 to the financial
statements including a summary of
significant accounting policies

Consolidated Statement of other comprehensive income
for the year then ended

Consolidated Statement of changes in equity for the year
then ended

Consolidated Cash flow statement for the year then
ended

Related notes 1 to 26 to the financial statements,
including a summary of significant accounting policies

The financial reporting framework that has been applied in the preparation of the group financial
statements is applicable law and International Accounting Standards in conformity with the
requirements of the Companies Act 2006. The financial reporting framework that has been applied in
the preparation of the parent company financial statements is applicable law and United Kingdom
Accounting Standards, including FRS 101 “Reduced Disclosure Framework” (United Kingdom
Generally Accepted Accounting Practice).

140

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and
applicable law. Our responsibilities under those standards are further described in the Auditor’s
responsibilities for the audit of the financial statements section of our report. We are independent of
the group in accordance with the ethical requirements that are relevant to our audit of the financial
statements in the UK, including the FRC’s Ethical Standard as applied to listed entities, and we have
fulfilled our other ethical responsibilities in accordance with these requirements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.

Conclusions relating to going concern

In auditing the financial statements, we have concluded that the directors’ use of the going concern
basis of accounting in the preparation of the financial statements is appropriate. Our evaluation of the
directors’ assessment of the group and parent company’s ability to continue to adopt the going
concern basis of accounting included:

· We performed a walkthrough of the Group’s financial close process to confirm our

understanding of management’s going concern assessment process. From this walkthrough,
we obtained an understanding of management’s financing structure that splits the Group into
corporate level financing and project level financing. The finance secured by the projects is
non-recourse to the Group. The Group going concern assessment is therefore based on
Corporate level cash flows only and does not include these non-recourse project level finance
arrangements. The corporate forecast incorporates the cash flows from the Parent and all
holding and investment entities within the Group, as well as dividends received from the
operating subsidiaries.

· We performed an independent risk assessment on going concern to identify potential risks to
the liquidity of the Group in order to determine whether management’s process had identified
all the appropriate risks.

· We obtained management’s going concern assessment, including the corporate cash flow
forecast, available liquidity and debt maturity profiles for the going concern period which
covers the 13-month period from when these financial statements are authorised for issue to
31 March 2022.

In obtaining an understanding of the Group’s project finance structure, we instructed
component teams to inspect the terms of the agreements to understand the structure of the
project finance debt. We confirmed that the project debt was non-recourse to the Group.

· We agreed the opening cash position to external bank confirmations and available bank

facilities to external credit facility agreements.

· We agreed the debt maturity profiles, including the upcoming repayment profiles, to the terms
of the signed agreements with the debt providers and we also obtained confirmation from
debtholders on the amounts due.

· We obtained management’s assessment of the budgeted EBITDA for the going concern
period. We assessed the reasonableness of the budgets by analysing the historical
performance of the operating assets and by comparing 2020 actual data to 2020 budgeted
data. Through this, we confirmed that the operating assets were generating sufficient EBITDA
to fulfil their financial commitments and also to upstream dividends. We did not identify any
defaults at a project level, except at Kaxu where the Group sought a waiver (forbearance)
before the Balance Sheet date, as described in Note 1. We confirmed the contracted revenues
through our revenue testing.

141

· We recalculated the Group’s performance against financial covenants as at 31 December
2020 to ensure that covenant testing had been performed correctly in accordance with the
Group’s agreements with debtholders. We also recalculated the Group’s forecasted
performance against the covenant ratios in the going concern period in order to assess its
future ability to comply.

· We assessed the corporate cash flow forecast and considered the appropriateness of the key

assumptions, inputs and methods used to calculate it.

· We performed reverse stress testing to determine what would be the corporate cash shortfall
in case no dividends were received from the operating subsidiaries, which is the main source
of operating cash flows at the corporate level throughout the going concern period. This
exercise also included considering mitigating factors which are within the Board of Directors’
control that could be implemented in a very short time to prevent or mitigate any cash shortfall
during the going concern period.

· We read the Group’s going concern disclosures included in the annual report to assess that

the disclosures were appropriate and in conformity with the reporting standards.

Based on the work we have performed, we have not identified any material uncertainties relating to
events or conditions that, individually or collectively, may cast significant doubt on the group and
parent company’s ability to continue as a going concern over a period of 13 months from when the
financial statements are authorised for issue.

Our responsibilities and the responsibilities of the directors with respect to going concern are
described in the relevant sections of this report. However, because not all future events or conditions
can be predicted, this statement is not a guarantee as to the group’s ability to continue as a going
concern.

Overview of our audit approach

Audit scope

· We performed an audit of the complete financial information of 4

components and audit procedures on specific balances for a further 21
components. In addition, we selected 3 components where we performed
specified procedures.

The components where we performed full, specific or specified audit
procedures accounted for 86% of Earnings before interest and tax (EBIT),
90% of Revenue and 67% of Total contracted concessional assets.

Key audit matter

· Recoverability assessment of contracted concessional assets

Materiality

· Overall group materiality of $21m which represents 5% of group EBIT.

An overview of the scope of the parent and group audits

Tailoring the scope
Our assessment of audit risk, our evaluation of materiality and our allocation of performance
materiality determine our audit scope for each company within the Group. Taken together, this
enables us to form an opinion on the consolidated financial statements. We take into account size, risk
profile, the organisation of the group and effectiveness of group wide controls and changes in the
business environment when assessing the level of work to be performed at each company.

142

In assessing the risk of material misstatement to the Group financial statements, and to ensure we
had adequate quantitative coverage of significant accounts in the financial statements, of the 70
reporting components of the Group, we selected 28 components covering entities within the UK,
Spain, Mexico, USA, Peru, South Africa and Uruguay, which represent the principal business units
within the Group.

Of the 28 components selected, we performed an audit of the complete financial information of 4
components (“full scope components”) which were selected based on their size or risk characteristics.
For 21 components (“specific scope components”), we performed audit procedures on specific
accounts within that component that we considered had the potential for the greatest impact on the
significant accounts in the consolidated financial statements either because of the size of these
accounts or their risk profile. For the remaining 3 components (“specified procedures components”),
we performed procedures at the component level that were specified by the group engagement team
in response to specific risk factors.

The reporting components where we performed audit procedures accounted for 86% (2019: 89%) of
the Group’s Earnings before interest and tax (EBIT), 90% (2019: 91%) of the Group’s Revenue and
89% (2019: 92%) of the Group’s Total contracted concessional assets. For the current year, the full
scope components contributed 31% (2019: 46%) of the Group’s Earnings before interest and tax
(EBIT), 37% (2019: 42%) of the Group’s Revenue and 40% (2019: 46%) of the Group’s Total
contracted concessional assets. The specific scope components contributed 49% (2019: 43%) of the
Group’s Earnings before interest and tax (EBIT), 50% (2019: 49%) of the Group’s Revenue and 46%
(2019: 46%) of the Group’s Total contracted concessional assets. The audit scope of these
components may not have included testing of all significant accounts of the component but will have
contributed to the coverage of significant accounts tested for the Group. We also instructed 3
locations to perform specified procedures over adjustments made in relation to the impairment of the
carrying amounts of intangible assets or goodwill, and procedures over a new debt facility issued in
the year.

Of the remaining 42 components that together represent 14% of the Group’s EBIT, none are
individually greater than 4% of the Group’s EBIT. For these components, we performed other
procedures, including analytical review, testing of consolidation journals and intercompany
eliminations and foreign currency translation recalculations to respond to any potential risks of material
misstatement to the Group financial statements.

The charts below illustrate the coverage obtained from the work performed by our audit teams.

Earnings before interest

and tax (EBIT)

31% Full scope

49% Specific
scope

6% Specified
procedures

14% Other
procedures

Revenue

37% Full
scope

50% Specific
scope

3% Specified
procedures

10% Other
procedures

143

Total contracted concessional
assets

40% Full scope

46% Specific
scope

3% Specified
procedures

11% Other
procedures

Changes from the prior year
The approach to audit scope is similar to the prior year audit with the addition of 3 components to
perform specified procedures in response to specific risk factors, and also certain specific scope
components to introduce a level of unpredictability through rotational testing.

Integrated team structure
The overall audit strategy is determined by the UK Senior Statutory Auditor, Stephney Dallmann, and
the Spanish Senior Auditor, Ambrosio Arroyo Fernandez-Rañada. Atlantica Sustainable Infrastructure
plc Group is based in the UK. However, due to the structure of the Atlantica Sustainable Infrastructure
plc ownership, the Group audit team includes members from both the UK and Spain. Members of the
Group audit team in both jurisdictions worked together as an integrated team. The UK Senior Statutory
Auditor planned to visit Spain but this was cancelled due to travel restrictions imposed as a result of
COVID-19. In order to compensate for the UK members of the Group team’s lack of physical presence
in Spain and the ability to perform the planned site visit, the following compensating procedures were
performed:
·

The UK audit team members were in ongoing communication, including planning and closing
calls and video conferences;
The Spanish audit team members, including the Spanish Senior Auditor, travelled to
Atlantica’s Corporate office in Spain at various points during the year, the details of which
have been shared with the UK members of the Group team;
Both partners attended certain Audit Committee meetings virtually during the course of the
audit and concluded on key judgements; and
There was no decrease in the extent of interactions between the UK and Spanish members
of the Group audit team.

Involvement with component teams
In establishing our overall approach to the Group audit, we determined the type of work that needed to
be undertaken at each of the components by us, as the primary audit engagement team, or by
component auditors from other EY global network firms operating under our instruction. Of the 4 full
scope components, significant audit procedures were performed on 3 of these directly by the primary
audit team. For the 21 specific scope components, where the work was performed by component
auditors, we determined the appropriate level of involvement to enable us to determine that sufficient
audit evidence had been obtained as a basis for our opinion on the Group as a whole.

The Group audit team intended to complete site visits to the component teams in the UK, Spain,
Mexico, the United States, South Africa, Peru and Uruguay. Following the outbreak of COVID-19 and
government guidance issued by the UK and other governments, it was not possible to complete the
planned visits. We therefore completed the site visits virtually through the use of video or
teleconferencing facilities. These virtual visits involved discussing the audit approach with the
component teams and any issues arising from their work, attending planning and closing meetings
reviewing key audit working papers on risk areas and meeting with local management. There was no
decrease in the extent of interactions with local management and the heads of relevant business
functions. The primary team interacted regularly with the component teams where appropriate during
various stages of the audit, reviewed key working papers and were responsible for the scope and

144

direction of the audit process. This, together with the additional procedures performed at Group level,
gave us appropriate evidence for our opinion on the Group financial statements.

Key audit matters

Key audit matters are those matters that, in our professional judgment, were of most significance in
our audit of the financial statements of the current period and include the most significant assessed
risks of material misstatement (whether or not due to fraud) that we identified. These matters included
those which had the greatest effect on: the overall audit strategy, the allocation of resources in the
audit; and directing the efforts of the engagement team. These matters were addressed in the context
of our audit of the financial statements as a whole, and in our opinion thereon, and we do not provide
a separate opinion on these matters.

Key observations
communicated to the Audit
Committee

Based on the audit procedures
performed, we conclude that the
review of the impairment
indicators analysis performed by
management is appropriate.

For Solana (US Asset) and
certain assets in Spain, no
impairment charges were
identified through our testing
and we consider it appropriate
that no impairment charges
were recorded for Solana and
the assets in Spain.

With regards to the Uruguayan
assets, an impairment reversal
was identified by management
and recorded for $18.8 million.
Based on the evidence obtained
and the audit procedures
performed we consider that the
impairment reversal is fairly
stated.

We conclude that the related
disclosures as per IAS 36
are appropriately
presented in the financial
statements.

Risk

Our response to the risk

Recoverability assessment of
contracted concessional
assets ($8,155 million value of
risk, PY comparative $8,161
million)

Refer to the Audit Committee
Report (section 11 pages 17 and
18); Accounting policies (Note 2
of the Consolidated Financial
Statements page 162); and Note
6 of the Consolidated Financial
Statements (page 190).

At December 31, 2020, the
Company’s revenues, totalling
$1,013 million, were derived
exclusively from its assets
across a range of different
geographies. The most
significant assets and
technologies of the Company
are renewable energy, efficient
natural gas, transmission lines
and water assets. As described
in Note 6 to the consolidated
financial statements, these
assets are referred to as
“contracted concessional
assets”, totalling $ 8,155 million
at December 31, 2020, which
are primarily classified as
intangible assets or as financial
assets, depending on the nature
of the payment entitlements
established in the agreement.
Revenue derived from the
Company’s contracted

We obtained an understanding
of the Company’s process
related to the recoverability
assessment of the Company’s
contracted concessional assets.
We evaluated the design and
tested the operating
effectiveness of the controls for
identifying and evaluating
potential impairment indicators
or triggering events.

To test the Company’s
impairment indicators identified
for all contracted concessional
assets, our audit procedures
included, among others,
validating the inputs and
assumptions used by
management by comparing
actual energy generated versus
budget, obtaining updates on
regulatory matters on all
significant locations and
evaluating the financial situation
of the off-takers.

For those assets where
triggering events were present
(Solana (US Asset) and certain
assets in Spain and Uruguay),
we evaluated the design and
tested the operating
effectiveness of controls over
the current year impairment
calculation, including

145

Risk

Our response to the risk

Key observations
communicated to the Audit
Committee

concessional assets are
governed by power purchase
agreements (“PPAs”) with the
Company’s customers, known
as “off-takers” or by regulation.

As indicated in Note 2 to the
consolidated financial
statements, the Company
reviews its contracted
concessional assets for
impairment indicators whenever
events or changes in
circumstances (“triggering
events”) indicate that the
carrying amounts of the assets
or group of assets may not be
recoverable, or previous
impairment losses are no longer
adequate.

As discussed in Note 6,
management identified triggering
events at the Solana asset
located in the United States
along with certain assets located
in Uruguay and Spain.

The Company’s recoverability
assessment related to the
contracted concessional assets
involves significant judgment in
determining whether a triggering
event occurred and, if an event
did occur, in the assumptions
used by management in the
determination if an impairment
should be recorded or reversed.

The main inputs considered
when evaluating the triggering
events include the performance
of the plants in relation to
external conditions such as
weather and technology
changes, as well as legal and
tax changes and financial
conditions, among others. As
indicated in Note 6, significant
assumptions which required
substantial judgement or
estimation used in the
impairment calculations of the

management’s review of the
significant assumptions used.

As part of our audit procedures,
we assessed the
appropriateness of the main
inputs used in the cash ﬂow
projections by comparing the
future performance of the assets
to their historical production and
evaluating the consistency of
the actual incomes and costs
versus budget for the year 2020,
as well as the adequacy of the
related disclosures in the
Company’s financial statements.
For the discount rate, we
involved our specialists to assist
us in recalculating and
developing a range of discount
rates, which we compared to
those used by the Company.

Finally, we also developed an
independent sensitivity analysis
through the performance of
various stress tests on the
primary assumptions used by
management, including energy
generation and discount rates
used in the models.

146

Risk

Our response to the risk

Key observations
communicated to the Audit
Committee

assets referred above, include:
discount rates and projections
considering real data based on
energy generation, contract
terms, and changes in both,
projected energy selling prices
and costs.

In the prior year, our auditor’s report included a key audit matter in relation to the determination of
distributable reserves. In the current year, this has been removed as a key audit matter. The issue
related to distributions being declared and paid by management from August 2018 until June 2019
which were not in compliance with the Companies Act 2006 requirements. There are no new issues in
relation to this matter in the current year.

Our application of materiality

We apply the concept of materiality in planning and performing the audit, in evaluating the effect of
identified misstatements on the audit and in forming our audit opinion.

Materiality
The magnitude of an omission or misstatement that, individually or in the aggregate, could reasonably
be expected to influence the economic decisions of the users of the financial statements. Materiality
provides a basis for determining the nature and extent of our audit procedures.

We determined materiality for the Group to be $21 million (2019: $25 million), which is 5% (2019: 5%)
of earnings before interest and tax (EBIT). We believe that EBIT provides us with the best assessment
of the requirements of the users of the financial statements.

We determined materiality for the Parent Company to be $29 million (2019: $32 million), which is 2%
(2019: 2%) of Equity.

Performance materiality
The application of materiality at the individual account or balance level. It is set at an amount to
reduce to an appropriately low level the probability that the aggregate of uncorrected and undetected
misstatements exceeds materiality.

On the basis of our risk assessments, together with our assessment of the Group’s overall control
environment, our judgement was that performance materiality was 75% (2019: 50%) of our planning
materiality, namely $17m (2019: $12.5m). We have set performance materiality at this percentage
having considered the nature, the number and the impact of audit differences identified in 2019 as well
as the overall control environment. This is an increase from 50% in the prior year where there were
additional complexities associated with a first year audit.

Audit work at component locations for the purpose of obtaining audit coverage over significant
financial statement accounts is undertaken based on a percentage of total performance materiality.
The performance materiality set for each component is based on the relative scale and risk of the
component to the Group as a whole and our assessment of the risk of misstatement at that

147

component. In the current year, the range of performance materiality allocated to components was
$2m to $7m (2019: $2m to $6m).

Reporting threshold
An amount below which identified misstatements are considered as being clearly trivial.

We agreed with the Audit Committee that we would report to them all uncorrected audit differences in
excess of $1.1m (2019: $1.2m), which is set at 5% of planning materiality, as well as differences below
that threshold that, in our view, warranted reporting on qualitative grounds.

We evaluate any uncorrected misstatements against both the quantitative measures of materiality
discussed above and in light of other relevant qualitative considerations in forming our opinion.

Other information

The other information comprises the information included in the annual report set out on pages 1 to
139, other than the financial statements and our auditor’s report thereon. The directors are
responsible for the other information contained within the annual report.

Our opinion on the financial statements does not cover the other information and, except to the extent
otherwise explicitly stated in this report, we do not express any form of assurance conclusion thereon.

Our responsibility is to read the other information and, in doing so, consider whether the other
information is materially inconsistent with the financial statements or our knowledge obtained in the
course of the audit or otherwise appears to be materially misstated. If we identify such material
inconsistencies or apparent material misstatements, we are required to determine whether there is a
material misstatement in the financial statements themselves. If, based on the work we have
performed, we conclude that there is a material misstatement of the other information, we are required
to report that fact.

We have nothing to report in this regard.

Opinions on other matters prescribed by the Companies Act 2006

In our opinion, the part of the directors’ remuneration report to be audited has been properly prepared
in accordance with the Companies Act 2006.

In our opinion, based on the work undertaken in the course of the audit:

the information given in the strategic report and the directors’ report for the financial year for
which the financial statements are prepared is consistent with the financial statements; and

the strategic report and directors’ report have been prepared in accordance with applicable legal
requirements.

Matters on which we are required to report by exception

In the light of the knowledge and understanding of the group and the parent company and its
environment obtained in the course of the audit, we have not identified material misstatements in the
strategic report or the directors’ report.

We have nothing to report in respect of the following matters in relation to which the Companies Act
2006 requires us to report to you if, in our opinion:
·

adequate accounting records have not been kept by the parent company, or returns adequate for
our audit have not been received from branches not visited by us; or
the parent company financial statements and the part of the directors’ remuneration report to be
audited are not in agreement with the accounting records and returns; or

148

certain disclosures of directors’ remuneration specified by law are not made; or
·
· we have not received all the information and explanations we require for our audit

Responsibilities of directors

As explained more fully in the directors’ responsibilities statement set out on page 138, the directors
are responsible for the preparation of the financial statements and for being satisfied that they give a
true and fair view, and for such internal control as the directors determine is necessary to enable the
preparation of financial statements that are free from material misstatement, whether due to fraud or
error.

In preparing the financial statements, the directors are responsible for assessing the group and parent
company’s ability to continue as a going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless the directors either intend to liquidate
the group or the parent company or to cease operations, or have no realistic alternative but to do so.

Auditor’s responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole
are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that
includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that
an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it
exists. Misstatements can arise from fraud or error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of users taken on
the basis of these financial statements.

Explanation as to what extent the audit was considered capable of detecting
irregularities, including fraud

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design
procedures in line with our responsibilities, outlined above, to detect irregularities, including fraud. The
risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one
resulting from error, as fraud may involve deliberate concealment by, for example, forgery or
intentional misrepresentations, or through collusion. The extent to which our procedures are capable
of detecting irregularities, including fraud is detailed below. However, the primary responsibility for the
prevention and detection of fraud rests with both those charged with governance of the company and
management.

· We obtained an understanding of the legal and regulatory frameworks that are applicable to
the group and determined that the most significant are those that relate to the reporting
framework (IFRS, FRS 101 and the Companies Act 2006), the relevant tax compliance
regulations in the jurisdictions in which the Group operates, Anti-Money Laundering
Regulation and General Data Protection Regulation. In addition, the Group is subject to the
laws and regulations set forth by both the Securities and Exchange Commission (“SEC”) and
the National Association of Securities Automated Quotations (“NASDAQ”). Also, the Group
operates in a number of regulated markets; it is subject to extensive regulations from the
national regulatory authorities in the jurisdictions it operates in, as well as additional
regulations at a state, regional and local level in certain countries, including Spain, Mexico,
Peru and the United States.

· We understood how Atlantica Sustainable Infrastructure plc is complying with those

frameworks by making enquiries of management, internal audit and those responsible for legal
and compliance procedures. We corroborated our enquiries through our review of Board
minutes, papers provided to the Audit Committee and correspondence received from
regulatory or licensing authorities. We noted that there was no contradictory evidence.

· We assessed the susceptibility of the group’s financial statements to material misstatement,
including how fraud might occur by meeting with management within various parts of the
business to understand where they considered there was susceptibility to fraud. We also

149

Consolidated Financial Statement

Consolidated Income Statement

Amounts in thousands of U.S. dollars

Revenue
Other operating income
Employee benefit expenses
Depreciation, amortization, and impairment charges
Other operating expenses

Operating profit

Finance income
Finance expenses
Net exchange differences
Net other finance (expenses)/income

Net finance costs

Note (1)

For the year ended December 31,

4
20
24
6
20

21
21
21
21

2020

1,013,260
99,525
(54,464)
(408,604)
(276,666)

2019

1,011,452
93,774
(32,246)
(310,755)
(261,776)

373,051

500,449

7,052
(378,386)
(1,351)
40,875

4,121
(407,990)
2,674
(1,153)

(331,810)

(402,348)

Share of profit of associates carried under the equity
method

510

7,457

Profit before income tax

41,751

105,558

Income tax expense

(24,877)

(30,950)

Profit for the year

16,874

74,608

Profit attributable to non-controlling interests

(4,906)

(12,473)

Profit for the year attributable to owners of the Company

11,968

62,135

Weighted average number of ordinary shares outstanding
(thousands) - basic
Weighted average number of ordinary shares outstanding
(thousands) - diluted

Basic earnings per share (U.S. dollar per share)

Diluted earnings per share (U.S. dollar per share)

101,879

101,063

103,392

101,063

0.12

0.61

(1) Notes 1 to 26 are an integral part of the consolidated financial statements

All results are derived from continuing operations.

151

Consolidated Statement of Other Comprehensive Income

Amounts in thousands of U.S. dollars

Note (1)

Year
Ended
December
31, 2020

Year
Ended
December
31, 2019

Profit for the year

16,874

74,608

Items that may be reclassified subsequently to profit or
loss:

Change in fair value of cash flow hedges
Less: reclassification adjustments for gains transferred to profit
or loss

(26,272)

58,381

(81,713)

55,765

Exchange differences on translation of foreign operations

(9,947)

(22,284)

Income tax relating to items that may be reclassified
subsequently to profit or loss

(8,698)

6,147

Other comprehensive income/(loss) for the year net of tax

13,464

(42,085)

Total comprehensive income for the year

30,322

32,523

Total comprehensive income attributable to:
Owners of the Company
Non-controlling interests

25,711
4,627

20,094
12,429

(1)

Notes 1 to 26 are an integral part of the consolidated financial statements

152

Consolidated Balance Sheet
Amounts in thousands of U.S. dollars

Note (1)

As of
December
31, 2020

As of
December
31, 2019

Assets
Non-current assets

Contracted concessional assets
Investments carried under the equity method
Financial investments
Deferred tax assets

6
7
8
18

Total non-current assets

Current assets

Inventories
Trade and other receivables
Financial investments
Cash and cash equivalents

Total current assets

Total assets

Equity

Share capital
Share premium
Capital reserves
Other reserves
Accumulated currency translation reserve
Accumulated deficit

Equity attributable to the Company

Non-controlling interests

Total equity

Non-current liabilities

Long-term corporate debt
Long-term project debt
Grants and other liabilities
Derivative liabilities
Deferred tax liabilities

Total non-current liabilities

Current liabilities

Short-term corporate debt
Short-term project debt
Trade payables and other current liabilities
Income and other tax payables

Total current liabilities

Total equity and liabilities

8,155,418
116,614
89,754
152,290
8,514,076

8,161,129
139,925
91,587
147,966
8,540,607

11
8
8&12

23,958
331,735
200,084
868,501
1,424,278

20,268
317,568
218,577
562,795
1,119,208

9,938,354

9,659,815

13
13
13
9
13
13
13
13

14
15
16
9
18

14
15
17

10,667
1,011,743
881,745
96,641
(99,925)
(373,489)
1,527,382
213,499
1,740,881

970,077
4,925,268
1,229,767
328,184
260,923
7,714,219

23,648
312,346
92,557
54,703
483,254

10,160
1,011,743
889,057
73,797
(90,824)
(385,457)
1,508,476
206,380
1,714,856

695,085
4,069,909
1,658,867
298,744
248,996
6,971,601

28,706
782,439
128,062
34,151
973,358

9,938,354

9,659,815

(1) Notes 1 to 26 are an integral part of the consolidated financial statements

153

Consolidated Statement of Changes in Equity

Amounts in thousands of
U.S. dollars

Share
Capital

Share
Premium

Capital
Reserves

Other
reserves

Accumulated
Deficit

Accumulate
d currency
translation
differences

Total equity
attributable
to the
Company

Non-
controlling
interest

Total
equity

Capital increase (Note 13)

507

Balance as of January 1,
2020

Profit for the year after
taxes

Change in fair value of cash
flow hedges

Currency translation
differences

Tax effect

Other comprehensive
income /(loss)

Total comprehensive
income/(loss)

Business Combinations
(Note 5)

Distributions (Note 13)

Balance as of December
31,2020

Balance as of January 1,
2019

Profit for the year after
taxes

Change in fair value of cash
flow hedges

Currency translation
differences

Tax effect

Other comprehensive
income /(loss)

Total comprehensive
income/(loss)

Capital increase (Note
13)

Amherst Island (Note 7)

Reduction of Share
Premium (Note 13)

Distributions (Note 13)

Balance as of December
31, 2019

10,160

1,011,743

889,057

73,797

(385,457)

(90,824)

1,508,476

206,380

1,714,856

161,347

(168,659)

11,968

31,353

(8,509)

22,844

11,968

4,906

16,874

31,353

756

32,109

(9,101)

(846)

(9,947)

(9,101)

(8,509)

13,743

(189)

(279)

(8,698)

13,464

22,844

11,968

(9,101)

25,711

4,627

30,338

161,854

25,308

(168,659)

(22,816)

(191,475)

10,667

1,011,743

881,745

96,641

(373,489)

(99,925)

1,527,382

213,499

1,740,881

10,022

1,981,881

48,059

95,011

(449,274)

(68,315)

1,617,384

138,728

1,756,112

138

29,862

(1,000,000)

1,000,000

(159,002)

62,135

(27,947)

1,682

62,135

12,473

74,608

(26,265)

317

(25,948)

6,733

(22,509)

225

(22,284)

6,733

(586)

6,147

(21,214)

1,682

(22,509)

(42,041)

(44)

(42,085)

(21,214)

63,817

(22,509)

20,094

12,429

32,523

30,000

92,303

(159,002)

(37,080)

(196,082)

10,160

1,011,743

889,057

73,797

(385,457)

(90,824)

1,508,476

206,380

1,714,856

(1) Notes 1 to 26 are an integral part of the consolidated financial statements

155

Consolidated Cash Flow Statement
Amounts in thousands of U.S. dollars

Profit for the year

For the year ended

Note (1)

2020

2019

16,874

74,608

Non-monetary adjustments

Depreciation, amortization and impairment charges
Finance costs
Fair value losses on derivative financial instruments
Shares of (profits)/losses from associates
Income tax
Other non-monetary items

6
21
21
7
18

408,604
315,151
15,308
(510)
24,877
(21,633)

310,755
405,634
(613)
(7,457)
30,950
(37,432)

Profit for the year adjusted by non-monetary items

758,671

776,445

Variations in working capital

Inventories
Trade and other receivables
Trade payables and other current liabilities
Financial investments and other current assets/liabilities

11
17

Variations in working capital

Income tax paid
Interest received
Interest paid

Net cash provided by operating activities

Acquisitions of subsidiaries and entities under equity method
Investments in contracted concessional assets*
Distribution from entities under the equity method
Other non-current assets/liabilities

5&7
6
7

(4,590)
(790)
(9,771)
(18,061)

(1,343)
(71,505)
(36,533)
(3,970)

(33,212)

(113,351)

(16,425)
5,148
(275,961)

(23)
10,135
(309,625)

438,221

363,581

2,453
(1,361)
22,246
(29,198)

(173,366)
22,009
30,443
2,703

Net cash (used in) / provided by investing activities

(5,860)

(118,211)

Proceeds from Project debt
Proceeds from Corporate debt
Repayment of Project debt
Repayment of Corporate debt
Dividends paid to Company´s shareholders
Dividends paid to Non-controlling interests
Purchase of Liberty´s equity interest in Solana
Non-controlling interests capital contribution
Capital increase

15
14
15
14
13
13
16
7
13

603,949
678,651
(621,691)
(502,042)
(168,659)
(22,944)
(266,850)
-
162,246

5,860
352,966
(282,255)
(320,815)
(159,002)
(29,239)
-
92,303
30,000

Net cash used in financing activities

(137,340)

(310,182)

Net increase / (decrease) in cash and cash equivalents

295,021

(64,812)

Cash and cash equivalents at beginning of the year

Translation differences cash and cash equivalents

562,795
10,685

631,542
(3,935)

Cash and cash equivalents at the end of the year

868,501

562,795

* Includes proceeds for $7.4 million and $22.2 million for the years ended December 31, 2020 and 2019, respectively (Note 6)

(1)

Notes 1 to 26 are an integral part of the consolidated financial statements

156

Notes To The Consolidated Financial Statements

1. General Information

Atlantica Sustainable Infrastructure plc (“Atlantica” or the “Company”) is a sustainable
infrastructure company that owns, manages and invests in renewable energy, storage, efficient
natural gas, electric transmission lines and water assets focused on North America (the United
States, Mexico and Canada), South America (Peru, Chile and Uruguay) and EMEA (Spain, Algeria
and South Africa).

The Company is incorporated in the United Kingdom under the Companies Act. The Company
is a public Company limited by shares and is registered in England and Wales. The address of
the registered office is Great West Road, Brentford TW8 9DF, Greater London (United Kingdom).
The Company is the ultimate parent company of the Group.

Atlantica’s shares began trading on the NASDAQ Global Select Market under the symbol “ABY”
on June 13, 2014. The symbol changed to “AY” on November 11, 2017.

Algonquin Power & Utilities (“Algonquin”) is the largest shareholder of the Company and
currently owns a 44.2% stake in Atlantica. Algonquin’s voting rights and rights to appoint
directors are limited to 41.5% and the difference between Algonquin´s ownership and 41.5%
will vote replicating non-Algonquin’s shareholders vote.

During the year 2019, the Company completed the following acquisitions:

- On May 24, 2019, Atlantica and Algonquin formed Atlantica Yield Solutions Canada Inc.
(“AYES Canada”), a vehicle to channel co-investment opportunities in which Atlantica holds
the majority of voting rights. AYES Canada’s first investment was in Amherst Island, a 75
MW wind plant in Canada owned by the project company Windlectric, Inc. (“Windlectric”).
Atlantica invested $4.9 million and Algonquin invested $92.3 million, both through AYES
Canada, which in turn invested those funds in Amherst Island Partnership (“AIP), the holding
company of Windlectric.

- On August 2, 2019, the Company closed the acquisition of ASI Operations LLC (“ASI Ops”),
the company that performs the operation and maintenance services to Solana and Mojave
plants. The consideration paid was $6 million.

- On August 2, 2019, the Company closed the acquisition of a 30% stake in Monterrey, a 142
MW gas-fired engine facility (“Monterrey”) and paid $42 million for the total investment.

- On October 22, 2019, the Company closed the acquisition of ATN Expansion 2 from Enel
Green Power Perú, for a total equity investment of approximately $20 million, controlling
the asset from this date.

157

On April 3, 2020, the Company made an initial investment in the creation of a renewable energy
platform in Chile, together with financial partners, where it owns approximately a 35% stake
and has a strategic investor role. The first investment was the acquisition of a 55 MW solar PV
plant in an area with excellent solar resource (“Chile PV I”). This asset has been in operation
since 2016 demonstrating a good operating track record while selling its production in the
Chilean power market. The Company’s initial contribution was approximately $4 million. In
addition, on January 6, 2021, the Company closed its second investment through the platform
with the acquisition of a 40 MW solar PV plant (“Chile PV 2”). This asset started commercial
operation in 2017 and its revenue is partially contracted. Total equity investment for this new
asset was approximately $5.0 million. The platform intends to make further investments in
renewable energy in Chile and to sign PPAs with credit worthy off-takers.

In January 2019, the Company entered into an agreement with Abengoa (references to
“Abengoa” refer to Abengoa, S.A., together with its subsidiaries, or Abenewco1, S.A. together
with its subsidiaries, unless the context otherwise requires) under the Abengoa ROFO
Agreement for the acquisition of Befesa Agua Tenes, a holding company which owns a 51%
stake in Ténès Lilmiyah SpA (“Tenes”), a water desalination plant in Algeria. The Company paid
in January 2019 an advance payment of $19.9 million. Closing of the acquisition was subject to
conditions precedent which were not fulfilled. In accordance with the terms of the share
purchase agreement, the advance payment was converted into a secured loan to be reimbursed
by Befesa Agua Tenes, together with 12% per annum interest, through a full cash-sweep of all
the dividends to be received from the asset. In October 2019, the Company received a first
payment of $7.8 million through the cash sweep mechanism. On May 31, 2020, the Company
entered into a new $4.5 million secured loan agreement with Befesa Agua Tenes, in addition to
the initial one granted in 2019. The aggregate amount owed at that date, including interest
accrued, was $14.0 million. This new loan agreement is expected to be reimbursed by Befesa
Agua Tenes, together with 12% per annum interest, through a full cash-sweep of all the
dividends to be received from the Tenes asset. The new agreement signed with Abengoa
provides Atlantica with a majority at the board of directors of Befesa Agua Tenes and control
over the asset.

On August 17, 2020, the Company closed the acquisition of Liberty’s equity interest in Solana.
Liberty was the tax equity investor in the Solana project. Total equity investment is expected to
be approximately $290 million of which $272 million has already been paid. Total price includes
a deferred payment and a performance earn-out based on the average annual net production
of the asset in the four calendar years with the highest annual net production during the five
calendar years of 2020 through 2024 (Note 16).

In October 2020, the Company reached an agreement to acquire Calgary District Heating
(Calgary District Energy Centre), an approximately 55 MWt district heating asset in Canada for
a total equity investment of approximately $20 million. Calgary District Heating has been in
operation since 2010 and represents the first investment of the Company in this sector, which
is recognized as a key measure for cities to reduce emissions by the UN Environment Program.
The asset provides heating services to a diverse range of government, institutional and
commercial customers in the city of Calgary. Closing is subject to customary conditions
precedent and regulatory approvals and is expected by mid-2021.

158

In December 2020, the Company reached an agreement with Algonquin to acquire La Sierpe, a
20 MW solar asset in Colombia for a total equity investment of $23 million. Closing is expected
to occur after the asset reaches commercial operation date which is expected to occur by mid-
2021. Closing is subject to customary conditions precedent and regulatory approvals.
Additionally, the Company agreed to co-invest with Algonquin in additional solar plants in
Colombia with a combined capacity of approximately 30 MW to be developed and built by
AAGES, a joint venture between Algonquin and Abengoa designed to invest in the development
and construction of contracted clean energy and contracted water infrastructure assets.

In December 2020, the Company reached an agreement to acquire Coso, a 135 MW renewable
asset in California. Coso is the third largest geothermal plant in the US and provides base load
renewable energy to the California ISO. Coso has signed PPAs with three investment grade
offtakers, with a 19-year average contract life. Closing is subject to customary regulatory
approvals and is expected to occur during the first half of 2021. Total investment is expected to
be approximately $170 million, including approximately $130 million for the equity and $40
million that would be invested to reduce project debt.

In January 2021, the Company reached an agreement to increase its equity stake from 15% to
100% in Rioglass, a multinational manufacturer of solar components. The Company has closed
the acquisition of 42.5% of the equity for $7 million. In addition, the Company has an option to
acquire the remaining 42.5% in the same conditions until September 2021, and after that date
the seller has an option to sell the 42.5% also in the same conditions. The Company intends to
find partners that would co-invest in Rioglass.

The following table provides an overview of the main concessional assets the Company owned
or had an interest in as of December 31, 2020:

Assets

Solana

Mojave

Chile PV I

Solaben 2 & 3

Solacor 1 & 2

PS10 & PS20

Helioenergy 1 &
2

Helios 1 & 2

Type
Renewable
(Solar)
Renewable
(Solar)
Renewable
(Solar)
Renewable
(Solar)
Renewable
(Solar)
Renewable
(Solar)
Renewable
(Solar)
Renewable
(Solar)

100%

Ownership Location Currency(9)
Arizona
(USA)
California
(USA)

100%

USD

Capacity
(Gross)

280 MW

Counterparty
Credit

Ratings(10) COD*

Contract
Years
Left(14)

A-/A2/A-

2013

280 MW BB-/WR/BB

2014

35%(8)

Chile

USD

70%(1)

Spain

Euro

87%(2)

Spain

Euro

55 MW
2x50
MW
2x50
MW

N/A

2016 N/A

A/Baa1/A-

2012 17/16

A/Baa1/A-

2012 16/16

100%

Spain

Euro

31 MW

A/Baa1/A-

2007&
2009

11/13

100%

Spain

Euro

100%

Spain

Euro

2x50
MW
2x50
MW
3x50

A/Baa1/A-

2011 16/16

A/Baa1/A-

2012 16/17

A/Baa1/A-

2010 14/14/15

Solnova 1, 3 & 4 Renewable

100%

Spain

Euro

159

100%

Spain

Euro

MW
2x50
MW

A/Baa1/A-

2013 18/18

80%(6)

51%(3)

Spain
South
Africa

Euro

1 MW

Rand

100 MW

100% Uruguay

USD

50 MW

100% Uruguay

USD

50 MW

A/Baa1/A-
BB-/Ba2/
BB-(11)
BBB/Baa2/BBB-
(12)
BBB/Baa2/BBB-
(12)

2006

2015

2014

100% Uruguay

USD

50 MW BBB/Baa2/BBB- 2015

100%

Peru

USD

100% Mexico

USD

4 MW BBB+/A3/BBB+ 2012
BBB/ Ba2/
BB-

2013

300 MW

30% Mexico

USD

142 MW Not rated

2018

100%

Peru

USD

100%

Peru

USD

379
miles
569
miles

BBB+/A3/BBB+ 2011

BBB+/A3/BBB+ 2014

100%

Peru

USD

81 miles Not rated

2015

100%

Chile

USD

49
miles/
32 miles Not rated

2014

14/14

100%

Chile

USD

6 miles

BBB+/Baa1/
A-

2007

(Solar)
Renewable
(Solar)
Renewable
(Solar)
Renewable
(Solar)
Renewable
(Wind)
Renewable
(Wind)
Renewable
(Wind)
Renewable
(Hydraulic)
Efficient
natural gas
Efficient
natural gas
Transmission
line
Transmission
line
Transmission
line

Transmission
line
Transmission
line
Transmission
line

Solaben 1 & 6

Seville PV

Kaxu

Palmatir

Cadonal

Melowind

Mini-Hydro

ACT

Monterrey

ATN (13)

ATS

ATN 2

Quadra 1 & 2

Palmucho

Chile TL3

Skikda

Honaine

Tenes

100%

Chile

USD

Water

34.2%(4) Algeria

USD

Water

25.5%(5) Algeria

USD

Water

51%(7) Algeria

USD

50 miles
3.5 M
ft3/day
7 M ft3/
day
7 M ft3/
day

A+/A1/A-

1993 Regulated

Not rated

2009

Not rated

2012

Not rated

2015

(1) Itochu Corporation, a Japanese trading company, holds 30% of the shares in each of Solaben 2 and Solaben 3.
(2) JGC, a Japanese engineering company, holds 13% of the shares in each of Solacor 1 and Solacor 2.
(3) Kaxu is owned by the Company (51%), Industrial Development Corporation of South Africa (29%) and Kaxu
Community Trust (20%).
(4) Algerian Energy Company, SPA owns 49% of Skikda and Sacyr Agua, S.L. owns the remaining 16.83%.
(5) Algerian Energy Company, SPA owns 49% of Honaine and Sacyr Agua, S.L. owns the remaining 25.5%.
(6) Instituto para la Diversificación y Ahorro de la Energía (“Idae”), a Spanish state owned company, holds 20% of
the shares in Seville PV.
(7) Algerian Energy Company, SPA owns 49% of Tenes.
(8) 65% of the shares in Chile PV I is indirectly held by financial partners through the renewable energy platform of
the Company in Chile.
(9) Certain contracts denominated in U.S. dollars are payable in local currency.
(10) Reflects the counterparty’s credit ratings issued by Standard & Poor’s Ratings Services, or S&P, Moody’s
Investors Service Inc., or Moody’s, and Fitch Ratings Ltd, or Fitch.

160

(11) Refers to the credit rating of the Republic of South Africa. The offtaker is Eskom, which is a state-owned utility
company in South Africa.
(12) Refers to the credit rating of Uruguay, as UTE (Administración Nacional de Usinas y Transmisoras Eléctricas) is
unrated.
(13) Including the acquisition of ATN Expansion 1 & 2.
(14) As of December 31, 2020.
(*) Commercial Operation Date.

The project financing arrangement of Kaxu contains cross-default provisions related to
Abengoa such that debt defaults by Abengoa, subject to certain threshold amounts and/or a
restructuring process, could trigger a default under the Kaxu project financing arrangement.
The restructuring process and the pre-insolvency filing by the individual company Abengoa S.A.
in August 2020 represented a theoretical event of default under the Kaxu project finance
agreement. In December 2020, the Company obtained a waiver from Kaxu’s project debt
lenders, which waived any potential cross-defaults with Abengoa for the pre-insolvency filing
of August 2020, until December 31, 2021, but the waiver did not cover potential future cross-
default events. The insolvency filing by the individual company Abengoa S.A. on February 22,
2021 represents a theoretical event of default under the Kaxu project finance agreement (Note
25). Although the Company does not expect the acceleration of debt to be declared by the
credit entities, Kaxu does not have contractually from this date, what International Accounting
Standards define as an unconditional right to defer the settlement of the debt for at least twelve
months, as the cross-default provisions make that right not unconditional. Thus, the total debt
of Kaxu, which amounts to $355 million as of December 31, 2020 (Note 15), may be presented
as current in the consolidated financial statements of the Company as of March 31, 2021 in
accordance with International Accounting Standards 1 (“IAS 1”), “Presentation of Financial
Statements”, if the cross-default is not cured or waived. The Company is negotiating a waiver
from the creditors and/or contractual modifications to permanently remove the cross-default
provision.

Outbreak of COVID-19

The outbreak of the COVID-19 coronavirus disease (“COVID-19”) was declared a pandemic by
the World Health Organization in March 2020 and continues to spread in key markets of the
Company. The COVID-19 virus continues to evolve rapidly, and its ultimate impact is uncertain
and subject to change. Governmental authorities have imposed or recommended measures or
responsive actions, including quarantines of certain geographic areas and travel restrictions.

Main risks and uncertainties identified by the Company, which may result in a material adverse
effect on its business, financial condition, results of operations and cash flows, are:

- COVID-19 may affect the operation and maintenance employees of the Company as well as
suppliers of operation and maintenance. Furthermore, COVID-19 has caused travel
restrictions and significant disruptions to global supply chains. A prolonged disruption
could limit the availability of certain parts required to operate the facilities of the Company
and adversely impact the ability of its operation and maintenance suppliers. If the Company
were to experience a shortage of or inability to acquire critical spare parts, it could incur
significant delays in returning facilities to full operation.

161

- Slowdown of broad sectors of the economy, a general reduction in demand, including
demand for commodities and a negative impact on prices of commodities, including
electricity, oil and gas. The global outbreak also caused significant disruption and volatility
in the global financial markets, especially from the end of February until the end on May
2020, including the market price of the shares of the Company. Debt and equity markets
have also been affected and there have been weeks with a very low number of new debt
and equity issuance transactions. Interest rates for new issuances and spreads with respect
to treasury yields increased significantly. Although the revenue of the Company is generally
contracted or regulated, clients may be affected by a reduced demand, lower commodity
prices and the turmoil in the credit markets. A reduced demand and low prices persisting
over time could cause delays in collections, a deterioration in the financial situation of the
clients of the Company or their bankruptcy.

Measures taken by the Company so far have focused on reinforcing safety measures in all its
assets while it continues to provide a reliable service to its clients. For example, the Company
has implemented the use of additional protection equipment, reinforced access control to its
plants, reduced contact between employees, changed shifts, tested employees, identified and
isolated potential cases together with their close contacts and taken additional measures to
increase safety measures for its employees and operation and maintenance suppliers’
employees working at its assets. Furthermore, the Company has adopted additional
precautionary measures intended to mitigate potential risks to its employees, including
temporarily requiring all employees to work remotely when their work can be done from home,
and suspending all non-essential travel. The Company has also reinforced its physical and
cyber-security measures. The Company has implemented a protocol to decide when to maintain
offices open and with what limitations, depending on the number of cases and other health
indicators. In addition, the Company has increased the purchase of spare parts and equipment
required for operations, to manage potential disruptions in the supply chain. The Company
continues to monitor the situation closely in all assets and offices to take additional action if
required.

COVID-19 did not have any material impact on the business disclosed in these consolidated
financial statements.

2. Significant Accounting Policies

2.1. Basis of Preparation

These consolidated financial statements are presented in accordance with the International
Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board
(“IASB”) and with the International Accounting Standards in conformity with the requirements of
the Companies Act 2006, on a basis consistent with the prior year.

The consolidated financial statements are presented in U.S. dollars, which is the Company’s
functional and presentation currency. Amounts included in these consolidated financial statements
are all expressed in thousands of U.S. dollars, unless otherwise indicated.

162

The Company presents assets and liabilities in the statement of financial position based on
current/non-current classification. An asset or liability is current when it is expected or due to be
realized within twelve months after the reporting period.

Application of new accounting standards

a) Standards, interpretations and amendments effective from January 1, 2020 under IFRS-IASB,
applied by the Company in the preparation of these consolidated financial statements:

IFRS 3 (Amendment). Definition of Business. This amendment is mandatory for annual
periods beginning on or after January 1, 2020 under IFRS-IASB, earlier application is
permitted.

IAS 1 and IAS 8 (Amendment). Definition of Material. This amendment is mandatory for
annual periods beginning on or after January 1, 2020 under IFRS-IASB, earlier application is
permitted.

IFRS 7 and IFRS 9. Amendments regarding pre-replacement issues in the context of the
IBOR reform. These amendments are mandatory for annual periods beginning on or after
January 1, 2020 under IFRS-IASB.

IFRS 16. Amendment to provide lessees with an exemption from assessing whether a
COVID-19-related rent concession is a lease modification. This amendment is mandatory
for annual periods beginning on or after June 1, 2020 under IFRS-IASB.

IAS 41. Amendments resulting from Annual Improvements to IFRS Standards 2018–2020
(taxation in fair value measurements) These amendments are mandatory for annual periods
beginning on or after January 1, 2020 under IFRS-IASB.

- Amendments to References to the Conceptual Frameworks in IFRS Standards. This Standard
is applicable for annual periods beginning on or after January 1, 2020 under IFRS-IASB.

The applications of these amendments have not had any material impact on these financial
statements.

b) Standards, interpretations and amendments published by the IASB that will be effective for
periods beginning on or after January 1, 2021:

IAS 1 (Amendment). Classification of liabilities. This amendment is mandatory for annual
periods beginning on or after January 1, 2023 under IFRS-IASB.

IAS 37. Amendments regarding the costs to include when assessing whether a contract is
onerous. This amendment is mandatory for annual periods beginning on or after January 1,
2022 under IFRS-IASB.

IFRS 1. Amendments resulting from Annual Improvements to IFRS Standards 2018–2020
(subsidiary as a first-time adopter). This amendment is mandatory for annual periods
beginning on or after January 1, 2022 under IFRS-IASB.

163

IFRS 3. Amendments updating a reference to the Conceptual Framework. This amendment
is mandatory for annual periods beginning on or after January 1, 2022 under IFRS-IASB.

IFRS 4. Amendments regarding the expiry date of the deferral approach. The fixed expiry
date for the temporary exemption in IFRS 4 from applying IFRS 9 is now 1 January 2023.

IFRS 4, IFRS 7, IFRS 16, IFRS 9 and IAS 39. Amendments regarding replacement issues in the
context of the IBOR reform. This amendment is mandatory for annual periods beginning on
or after January 1, 2021 under IFRS-IASB.

IFRS 9. Amendments resulting from Annual Improvements to IFRS Standards 2018–2020.
This amendment is mandatory for annual periods beginning on or after January 1, 2022
under IFRS-IASB.

IFRS 17. Amendments to address concerns and implementation challenges that were
identified after IFRS 17 was published. This amendment is mandatory for annual periods
beginning on or after January 1, 2023 under IFRS-IASB.

IAS 16. Amendments prohibiting a company from deducting from the cost of property, plant
and equipment amounts received from selling items produced while the company is
preparing the asset for its intended use. This amendment is mandatory for annual periods
beginning on or after January 1, 2022 under IFRS-IASB.

The Company does not anticipate any significant impact on the consolidated financial
statements derived from the application of the new standards and amendments that will be
effective for annual periods beginning on or after January 1, 2021, although it is currently still
in the process of evaluating such application.

Effect of IBOR reform

Following the financial crisis, the reform and replacement of benchmark interest rates such as
LIBOR and other inter-bank offered rates (‘IBORs’) has become a priority for global regulators.
There remains some uncertainty around the timing and precise nature of these changes. The
Company currently has several contracts which reference LIBOR and extend beyond 2021. These
contracts are disclosed within the tables below.

It is currently expected that alternative risk-free rates (“RFRs”) will replace LIBOR. Key differences
between LIBOR and RFRs remain. LIBOR is a ‘term rate’, which means that it is published for a
borrowing period (such as three months or six months) and is ‘forward looking’, because it is
published at the beginning of the borrowing period. RFRs may be based on overnight rates
from actual transactions and published at the end of the overnight borrowing period.
Furthermore, LIBOR includes a credit spread over the risk-free rate, which RFRs currently may
not. To transition existing contracts and agreements that reference LIBOR to RFRs, adjustments
for term differences and credit differences might need to be applied to RFRs, to enable the two
benchmark rates to be economically equivalent in the transition. At the time of reporting,
industry working groups are reviewing methodologies for calculating adjustments between
LIBOR and RFRs.

164

Risks arising from the transition relate principally to the potential impact of rate differences if
the debt and related hedging instruments do not transition to the new benchmark interest rate
at the same time and/or the rates move by different amounts. This could result in hedge
ineffectiveness and a net cash expense to the Company as a result of the IBOR transition.

The following table contains details of the financial instruments that the Company holds as of
December 31, 2020 which reference LIBOR and which have not yet transitioned to RFRs:

Non-derivative assets and liabilities referenced to LIBOR
Measured at amortized cost
Project debt
Total non-derivatives items
Derivatives

Total assets and liabilities referenced to LIBOR

Carrying amount as of
December 31, 2020
Assets

Liabilities

-
1,143,815
- 1,143,815
105,742
-

- 1,249,557

The following table contains details of only the hedging instruments used in the Company's
hedging strategies which reference LIBOR and have not yet transitioned to RFRs, such that
relief(s) of phase 1 amendments to IFRS 9 and IFRS 7 for IBOR reform, effective January 1st,
2020, have been applied to the hedging relationship:

Carrying amount as of December 31, 2020

Notional Assets

Liabilities

Balance
sheet line
item(s)

2020 changes in
fair value used for
calculating hedge
ineffectiveness

Cash flow hedge

Interest rate swaps

618,806

Total cash flow
hedges

618,806

105,742

Derivative
liabilities

36,172

In calculating the change in fair value attributable to the hedged risk of floating-rate debt, the
Company has made the following assumptions that reflect its current expectations:
- The floating-rate debt will move to RFRs during 2022, and the spread will be similar to the

spread included in the interest rate swap used as the hedging instrument;

- No other changes to the terms of the floating-rate debt are anticipated;
- The Company has added an additional spread to the discount rate used in the calculation

to incorporate the uncertainty over when the floating-rate debt will move to RFRs.

165

Going concern

Atlantica has prepared the consolidated financial statements on a going concern basis. The
Directors have considered a number of factors in concluding on their going concern assessment
covering the period up to March 31, 2022 and have not identified material uncertainties that
may cast significant doubt about the ability to continue to adopt the going concern basis of
accounting.

A presentation on going concern assessment, including sensitivity analysis and key assumptions
used, was presented to the Audit Committee. The Committee discussed with management to
ensure the Company has sufficient headroom to continue as a going concern. The Committee
agreed with management that there is no uncertainty in relation to this assessment, in relation
to the Group and the Company.

The Group has a formal process of budgeting, reporting, measuring asset performance,
identifying and mitigating risks, and its overall review. This information is provided to the
directors, which is used to ensure the adequacy of resources available for the Group to meet its
business objectives. The Company’s business activities, together with the factors likely to affect
its future development, performance and position are set out within this report.

The Company’s operations have been operating as normal despite the COVID-19 restrictions
imposed by Governments and so there has been no disruption to production levels. Atlantica’s
portfolio of assets is considered an “essential” and “critical” activity in all its geographies.
Furthermore, Atlantica’s revenues are predominantly contracted or regulated and thus have not
experienced a material impact, despite the current economic environment. This is expected to
continue throughout the going concern period.

As of December 31, 2020, Atlantica had $335.2 million cash at the corporate level and $415
million available under its revolving credit facility. Total liquidity was therefore $750.2 million.
In addition, in January 2021, Atlantica closed a private placement subscribed for Algonquin with
net proceeds of approximately $131 million. Corporate debt position was $994 million at 31
December 2020, with $966 million of these facilities maturing in 2025, 2026 or 2027.

During the period, the Group generated $438.2 million from operating activities, used $5.9
million in investing activities and $137.3 million in financing activities. All of these resulted in a
$295.0 million increase on our cash position by year-end, with a closing cash position of $868.5
million (Note 12). The cash includes $279.8 million of funds which are held by the projects to
satisfy the customary requirements of certain non-recourse debt agreements (Note 15). The
Group also had access to $415.0 million of available credit facilities, which mature in December
2022.

As of December 31, 2020, all our corporate debt has long-term maturities except for $23.6
million of corporate debt which matures during the going concern period ($23.3M of notes and
bonds and $0.3 million of credit facilities) (Note 14). Additionally, we have short-term project
debt that amounts to $312.4 million, all of which is non-recourse to the Group (Note 15).

The directors believe that this cash position as of December 31, 2020 is above the level of cash
needed to operate the business for the foreseeable future and to meet the Group’s liabilities as
they fall due, as well as to be a significant source of funding of future acquisitions, including
those which are already committed in the going period.

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2.2. Principles to include and record companies in the consolidated financial

statements

Companies included in these consolidated financial statements are accounted for as
subsidiaries as long as Atlantica has had control over them and are accounted for as
investments under the equity method as long as Atlantica has had significant influence over
them, in the periods presented.

a) Controlled entities

Control is achieved when the Company:

- Has power over the investee;
-
- Has the ability to use its power to affect its returns.

Is exposed, or has rights, to variable returns from its involvement with the investee; and

The Company reassesses whether or not it controls an investee when facts and circumstances
indicate that there are changes to one or more of the three elements of control listed above.

The Company uses the acquisition method to account for business combinations of companies
controlled by a third party. According to this method, identifiable assets acquired and liabilities
and contingent liabilities assumed in a business combination are measured initially at their fair
values at the acquisition date. Any contingent consideration is recognized at fair value at the
acquisition date and subsequent changes in its fair value are recognized in accordance with
IFRS 9 either in profit or loss or as a change to other comprehensive income. Acquisition related
costs are expensed as incurred. The Company recognizes any non-controlling interest in the
acquiree either at fair value or at the non-controlling interest’s proportionate share of the
acquirer’s net assets on an acquisition by acquisition basis.

All assets and liabilities between entities of the group, equity, income, expenses, and cash flows
relating to transactions between entities of the group are eliminated in full.

b) Investments accounted for under the equity method

An associate is an entity over which the Company has significant influence. Significant influence
is the power to participate in the financial and operating policy decisions of the investee but is
not control or joint control over those policies.

The results and assets and liabilities of associates are incorporated in these financial statements
using the equity method of accounting. Under the equity method, an investment in an associate
is initially recognized in the statement of financial position at cost and adjusted thereafter to
recognize the Company share of the profit or loss and other comprehensive income of the
associate.

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2.3. Contracted Concessional Assets

Contracted concessional assets include fixed assets, related to service concession arrangements
recorded in accordance with IFRIC 12, except for Palmucho, which is recorded in accordance with
IFRS 16 and PS10, PS20, Sevilla PV, Mini-Hydro, Chile TL 3, ATN Expansion 2 and Chile PV I which
are recorded as tangible assets in accordance with IAS 16. The infrastructures accounted for by
the Company as concessions are related to the activities concerning renewable energy assets,
transmission lines, efficient natural gas assets and water plants. The useful life of these assets is
approximately the same as the length of the concession arrangement. The infrastructure used in
a concession can be classified as an intangible asset or a financial asset, depending on the nature
of the payment entitlements established in the agreement.

The application of IFRIC 12 requires extensive judgement in relation with, among other factors,
(i) the identification of certain infrastructures and contractual agreements in the scope of IFRIC
12, (ii) the understanding of the nature of the payments in order to determine the classification
of the infrastructure as a financial asset or as an intangible asset and (iii) the timing and
recognition of the revenue from construction and concessionary activity.

Under the terms of contractual arrangements within the scope of this interpretation, the
operator shall recognize and measure revenue in accordance with IFRS 15 for the services it
performs.

Intangible asset

The Company recognizes an intangible asset to the extent that it receives a right to charge final
customers for the use of the infrastructure. This intangible asset is subject to the provisions of
IAS 38 and is amortized linearly, taking into account the estimated period of commercial
operation of the infrastructure which coincides with the concession period.

Once the infrastructure is in operation, the treatment of income and expenses is as follows:

- Revenues from the updated annual revenue for the contracted concession, as well as
operation and maintenance services are recognized in each period according to IFRS 15
“Revenue from contracts with Customers”.

- Operating and maintenance costs and general overheads and administrative costs are
recorded in accordance with the nature of the cost incurred (amount due) in each period.

Financial asset

The Company recognizes a financial asset when demand risk is assumed by the grantor, to the
extent that the concession holder has an unconditional right to receive payments for the asset.
This asset is recognized at the fair value of the construction services provided, considering
upgrade services in accordance with IFRS 15, if any.

The financial asset is subsequently recorded at amortized cost calculated according to the

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effective interest method. Revenue from operation and maintenance services is recognized in
each period according to IFRS 15 “Revenue from contracts with Customers”. The income from
managing and operating the asset resulting from the valuation at amortized cost is also recorded
in revenue.

According to IFRS 9, Atlantica recognises an allowance for expected credit losses (ECLs) for all
debt instruments not held at fair value through profit or loss. ECLs are based on the difference
between the contractual cash flows due in accordance with the contract and all the cash flows
that the Company expects to receive.

There are two main approaches to applying the ECL model according to IFRS 9: the general
approach which involves a three stage approach, and the simplified approach, which can be
applied to trade receivables, contract assets and lease receivables. Atlantica has elected to apply
the simplified approach. Under this approach, there is no need to monitor for significant
increases in credit risk and entities will be required to measure lifetime expected credit losses at
the end of each reporting period.

The key elements of the ECL calculations, based on external sources of information, are the
following:

-
-

the Probability of Default (“PD”) is an estimate of the likelihood of default over a given time
horizon. Atlantica calculates PD based on Credit Default Swaps spreads (“CDS”);
the Exposure at Default (“EAD”) is an estimate of the exposure at a future default date;
the Loss Given Default (“LGD”) is an estimate of the loss arising in the case where a default
occurs at a given time. It is based on the difference between the contractual cash flows due
and those that the Company would expect to receive. It is expressed as a percentage of the
EAD.

Property, plant and equipment

Property, plant and equipment is measured at historical cost, including all expenses directly
attributable to the acquisition, less depreciation and impairment losses, with the exception of
land, which is presented net of any impairment losses.

Once the infrastructure is in operation, the treatment of income and expenses is the same as the
one described above for intangible asset.

Right-of-use assets

Main right of use agreements correspond to land rights. The Company recognizes right-of-use
assets under IFRS 16, at the commencement date of the lease (i.e., the date the underlying asset
is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation
and impairment losses, and adjusted for any remeasurement of lease liabilities (Note 2.11). The
cost of right-of-use assets includes the amount of lease liabilities recognised, initial direct costs
incurred, and lease payments made at or before the commencement date less any lease
incentives received. Right-of-use assets are depreciated on a straight-line basis over the shorter

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of the lease term and the estimated useful lives of the assets.

The right-of-use assets are also subject to assets impairment (Note 2.4).

2.4. Asset Impairment

Atlantica reviews its contracted concessional assets to identify any indicators of impairment at
least annually. When impairment indicators exist, the company calculates the recoverable
amount of the asset.

The recoverable amount of an asset is the higher of its fair value less costs to sell and its value
in use, defined as the present value of the estimated future cash flows to be generated by the
asset. In the event that the asset does not generate cash flows independently of other assets,
the Company calculates the recoverable amount of the Cash Generating Unit (‘CGU’) to which
the asset belongs.

When the carrying amount of the CGU to which these assets belong is higher than its recoverable
amount, the assets are impaired.

Assumptions used to calculate value in use include a discount rate and projections considering
real data based in the contracts terms and projected changes in both selling prices and costs.
The discount rate is estimated by Management, to reflect both changes in the value of money
over time and the risks associated with the specific CGU.

For contracted concessional assets, with a defined useful life and with a specific financial
structure, cash flow projections until the end of the project are considered and no relevant
terminal value is assumed.

Contracted concessional assets have a contractual structure that permits the Company to
estimate quite accurately the costs of the project and revenue during the life of the project.

Projections take into account real data based on the contract terms and fundamental
assumptions based on specific reports prepared internally and third-party reports, assumptions
on demand and assumptions on production. Additionally, assumptions on macro-economic
conditions are taken into account, such as inflation rates, future interest rates, etc. and sensitivity
analyses are performed over all major assumptions which can have a significant impact in the
value of the asset.

Cash flow projections of CGUs are calculated in the functional currency of those CGUs and are
discounted using rates that take into consideration the risk corresponding to each specific
country and currency.

Taking into account that in most CGUs the specific financial structure is linked to the financial
structure of the projects that are part of those CGUs, the discount rate used to calculate the
present value of cash-flow projections is based on the weighted average cost of capital (WACC)
for the type of asset, adjusted, if necessary, in accordance with the business of the specific activity

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and with the risk associated with the country where the project is performed.

In any case, sensitivity analyses are performed, especially in relation with the discount rate used
and fair value changes in the main business variables, in order to ensure that possible changes
in the estimates of these items do not impact the recovery of recognized assets.

Accordingly, the following table provides a summary of the discount rates used (WACC) to
calculate the recoverable amount for CGUs with the operating segment to which it pertains:

Operating segment
EMEA
North America
South America

Discount rate (*)
3% - 5%
4% - 5%
5% - 7%

(*) post tax

The discount rates applied in 2020 are consistent with the ones applied in 2019.

In the event that the recoverable amount of an asset is lower than its carrying amount, an
impairment charge for the difference would be recorded in the income statement under the item
“Depreciation, amortization and impairment charges”.

An assessment is made at each reporting date to determine whether there is an indication that
previously recognized impairment losses no longer exist or have decreased. If such indication
exists, the Company estimates the CGU’s recoverable amount. A previously recognized
impairment loss is reversed only if there has been a change in the assumptions used to
determine the asset’s recoverable amount since the last impairment loss was recognized. The
reversal is limited so that the carrying amount of the asset does not exceed its recoverable
amount, nor exceed the carrying amount that would have been determined, net of depreciation,
had no impairment loss been recognized for the asset in prior years. Such reversal is recognized
in the income statement.

2.5. Loans and Accounts Receivable

Loans and accounts receivable are non-derivative financial assets with fixed or determinable
payments, not listed on an active market.

In accordance with IFRIC 12, certain assets under concessions qualify as financial assets and are
recorded as is described in Note 2.3.

Pursuant to IFRS 9, an impairment loss is recognized if the carrying amount of these assets
exceeds the present value of future cash flows discounted at the initial effective interest rate.

Loans and accounts receivable are initially recognized at fair value plus transaction costs and are
subsequently measured at amortized cost in accordance with the effective interest rate method.
Interest calculated using the effective interest rate method is recognized under other financial
income within financial income.

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2.6. Derivative Financial Instruments and Hedging Activities

Derivatives are recognized at fair value in the statement of financial position. The Company
maintains both derivatives designated as hedging instruments in hedging relationships, and
derivatives to which hedge accounting is not applied.

When hedge accounting is applied, hedging strategy and risk management objectives are
documented at inception, as well as the relationship between hedging instruments and hedged
items. Effectiveness of the hedging relationship needs to be assessed on an ongoing basis.
Effectiveness tests are performed prospectively at inception and at each reporting date. The
Company analyses on each date if all these requirements are met:

-
-

there is an economic relationship between the hedged item and the hedging instrument;
the effect of credit risk does not dominate the value changes that result from that
economic relationship; and
the hedge ratio of the hedging relationship is the same as that resulting from the quantity
of the hedged item that the Company actually hedges and the quantity of the hedging
instrument that the Company uses to hedge that quantity of hedged item.

Ineffectiveness is measured following accumulated dollar offset method.

In all cases, current Company´s hedging relationships are considered cash flow hedges. Under
this model, the effective portion of changes in fair value of derivatives designated as cash flow
hedges are recorded temporarily in equity and are subsequently reclassified from equity to profit
or loss in the same period or periods during which the hedged item affects profit or loss. Any
ineffective portion of the hedged transaction is recorded in the consolidated income statement
as it occurs.

When interest rate options are designated as hedging instruments, the time value is excluded
from the hedging instrument as permitted by IFRS 9. Changes in the effective portion of the
intrinsic are recorded in equity and subsequently reclassified from equity to profit or loss in the
same period or periods during which the hedged item affects profit or loss. Any ineffectiveness
is recorded as financial income or expense as it occurs. Changes in options time value is recorded
as cost of hedging. More precisely, considering that the hedged items are, in all cases, time
period hedged item, changes in time value is recognized in other comprehensive income to the
extent that it relates to the hedged item. The time value at the date of designation of the option
as a hedging instrument, to the extent that it relates to the hedged item, is amortized on a
systematic and rational basis over the period during which the hedge adjustment for the option’s
intrinsic value could affect profit or loss.

When the hedging instrument matures or is sold, or when it no longer meets the requirements
to apply hedge accounting, accumulated gains and losses recorded in equity remain as such
until the forecast transaction is ultimately recognized in the income statement. However, if it
becomes unlikely that the forecast transaction will actually take place, the accumulated gains
and losses in equity are recognized immediately in the income statement.

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Any change in fair value of derivatives instruments to which hedge accounting is not applied is
directly recorded in the income statement.

2.7. Fair Value Estimates

Financial instruments measured at fair value are presented in accordance with the following level
classification based on the nature of the inputs used for the calculation of fair value:

Level 1: Inputs are quoted prices in active markets for identical assets or liabilities.

Level 2: Fair value is measured based on inputs other than quoted prices included within
Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly
(i.e. derived from prices).

Level 3: Fair value is measured based on unobservable inputs for the asset or liability.

In the event that prices cannot be observed, management shall make its best estimate of the
price that the market would otherwise establish based on proprietary internal models which, in
the majority of cases, use data based on observable market parameters as significant inputs
(Level 2) but occasionally use market data that is not observed as significant inputs (Level 3).
Different techniques can be used to make this estimate, including extrapolation of observable
market data. The best indication of the initial fair value of a financial instrument is the price of
the transaction, except when the value of the instrument can be obtained from other
transactions carried out in the market with the same or similar instruments, or valued using a
valuation technique in which the variables used only include observable market data, mainly
interest rates. Differences between the transaction price and the fair value based on valuation
techniques that use data that is not observed in the market, are not initially recognized in the
income statement.

Atlantica derivatives correspond primarily to the interest rate swaps designated as cash flow
hedges, which are classified as Level 2.

Description of the valuation method

Interest rate swap valuations consist in valuing separately the swap part of the contract and the
credit risk. The methodology used by the market and applied by Atlantica to value interest rate
swaps is to discount the expected future cash flows according to the parameters of the contract.
Variable interest rates, which are needed to estimate future cash flows, are calculated using the
curve for the corresponding currency and extracting the implicit rates for each of the reference
dates in the contract. These estimated flows are discounted with the swap zero curve for the
reference period of the contract.

The effect of the credit risk on the valuation of the interest rate swaps depends on the future
settlement. If the settlement is favourable for the Company, the counterparty credit spread will
be incorporated to quantify the probability of default at maturity. If the expected settlement is

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negative for the Company, its own credit risk will be applied to the final settlement.

Classic models for valuing interest rate swaps use deterministic valuation of the future of variable
rates, based on future outlooks. When quantifying credit risk, this model is limited by considering
only the risk for the current paying party, ignoring the fact that the derivative could change sign
at maturity. A payer and receiver swaption model is proposed for these cases. This enables the
associated risk in each swap position to be reflected. Thus, the model shows each agent’s
exposure, on each payment date, as the value of entering into the ‘tail’ of the swap, i.e. the live
part of the swap.

Variables (Inputs)

Interest rate derivative valuation models use the corresponding interest rate curves for the
relevant currency and underlying reference in order to estimate the future cash flows and to
discount them. Market prices for deposits, futures contracts and interest rate swaps are used to
construct these curves. Interest rate options (caps and floors) also use the volatility of the
reference interest rate curve.

To estimate the credit risk of the counterparty, the credit default swap (CDS) spreads curve is
obtained in the market for important individual issuers. For less liquid issuers, the spreads curve
is estimated using comparable CDSs or based on the country curve. To estimate proprietary
credit risk, prices of debt issues in the market and CDSs for the sector and geographic location
are used.

The fair value of the financial instruments that results from the aforementioned internal models
takes into account, among other factors, the terms and conditions of the contracts and
observable market data, such as interest rates, credit risk and volatility. The valuation models do
not include significant levels of subjectivity, since these methodologies can be adjusted and
calibrated, as appropriate, using the internal calculation of fair value and subsequently compared
to the corresponding actively traded price. However, valuation adjustments may be necessary
when the listed market prices are not available for comparison purposes.

2.8. Trade and Other Receivables

Trade and other receivables are amounts due from customers for sales in the normal course of
business. They are recognized initially at fair value and subsequently measured at amortized cost
using the effective interest rate method, less allowance for doubtful accounts. Trade receivables
due in less than one year are carried at their face value at both initial recognition and subsequent
measurement, provided that the effect of not discounting flows is not significant.

An allowance for doubtful accounts is recorded when there is objective evidence that the
Company will not be able to recover all amounts due as per the original terms of the receivables.
The Company has established a provision matrix that is based on its historical credit loss
experience, adjusted for forward-looking factors specific to the debtors and the economic
environment.

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2.9. Cash and Cash Equivalents

Cash and cash equivalents include cash in hand, cash in bank and other highly-liquid current
investments with an original maturity of three months or less which are held for the purpose of
meeting short-term cash commitments.

2.10. Grants

Grants are recognized at fair value when it is considered that there is a reasonable assurance
that the grant will be received and that the necessary qualifying conditions, as agreed with the
entity assigning the grant, will be adequately complied with.

Grants are recorded as liabilities in the consolidated statement of financial position and are
recognized in “Other operating income” in the consolidated income statement based on the
period necessary to match them with the costs they intend to compensate.

In addition, as described in Note 2.11 below, grants correspond also to loans with interest rates
below market rates, for the initial difference between the fair value of the loan and the proceeds
received.

2.11. Loans and Borrowings

Loans and borrowings are initially recognized at fair value, net of transaction costs incurred.
Borrowings are subsequently measured at amortized cost and any difference between the
proceeds initially received (net of transaction costs incurred in obtaining such proceeds) and the
repayment value is recognized in the consolidated income statement over the duration of the
borrowing using the effective interest rate method.

Loans with interest rates below market rates are initially recognized at fair value in liabilities and
the difference between proceeds received from the loan and its fair value is initially recorded
within “Grants and Other liabilities” in the consolidated statement of financial position, and
subsequently recorded in “Other operating income” in the consolidated income statement when
the costs financed with the loan are expensed.

Lease liabilities are recognized by the Company at the commencement date of the lease at the
present value of lease payments to be made over the lease term. The lease payments include
the exercise price of a purchase option reasonably certain to be exercised by the Company and
payments of penalties for terminating the lease, if the lease term reflects the Company exercising
the option to terminate. In calculating the present value of lease payments, the Company uses
its incremental borrowing rate at the lease commencement date considering that the interest
rate implicit in the lease is not readily determinable.

2.12. Bonds and notes

The Company initially recognizes ordinary notes at fair value, net of issuance costs incurred.
Subsequently, notes are measured at amortized cost until settlement upon maturity. Any other
difference between the proceeds obtained (net of transaction costs) and the redemption value

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is recognized in the consolidated income statement over the term of the debt using the effective
interest rate method.

Convertible bonds or notes or debt issued with conversion features must be separated into
liability and equity components if the feature meets the equity classification conditions in IAS
32. The issuer separates the instrument into its components by determining the fair value of
the liability component and then deducting that amount from the fair value of the instrument
as a whole; the residual amount is allocated to the equity component. If the equity conversion
feature does not satisfy the equity classification conditions in IAS 32, it is bifurcated as an
embedded derivative unless the issuer elects to apply the fair value option to the convertible
debt. The embedded derivative is initially recognized at fair value and classified as derivatives
in the statement of financial position. Changes in the fair value of the embedded derivatives are
subsequently accounted for directly through the income statement. The debt element of the
bond or note (the host contract), will be initially valued as the difference between the
consideration received from the holders for the instrument and the value of the embedded
derivative, and thereafter at amortized cost using the effective interest method.

2.13.

Income Taxes

Current income tax expense is calculated on the basis of the tax laws in force as of the date of
the consolidated statement of financial position in the countries in which the subsidiaries and
associates operate and generate taxable income.

Deferred income tax is calculated in accordance with the liability method, based upon the
temporary differences arising between the carrying amount of assets and liabilities and their tax
base. Deferred income tax is determined using tax rates and regulations which are expected to
apply at the time when the deferred tax is realized.

Deferred tax assets are recognized only when it is probable that sufficient future taxable profit
will be available to use deferred tax assets.

2.14. Trade Payables and Other Liabilities

Trade payables are obligations arising from purchases of goods and services in the ordinary
course of business and are recognized initially at fair value and are subsequently measured at
their amortized cost using the effective interest method. Other liabilities are obligations not
arising in the normal course of business and which are not treated as financing transactions.
Advances received from customers are recognized as “Trade payables and other current
liabilities”.

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2.15. Foreign Currency Transactions

The consolidated financial statements are presented in U.S. dollars, which is Atlantica’s functional
and presentation currency. Financial statements of each subsidiary within the Company are
measured in the currency of the principal economic environment in which the subsidiary
operates, which is the subsidiary’s functional currency.

Transactions denominated in a currency different from the subsidiary’s functional currency are
translated into the subsidiary’s functional currency applying the exchange rates in force at the
time of the transactions. Foreign currency gains and losses that result from the settlement of
these transactions and the translation of monetary assets and liabilities denominated in foreign
currency at the year-end rates are recognized in the consolidated income statement, unless they
are deferred in equity, as occurs with cash flow hedges and net investment in foreign operations
hedges.

Assets and liabilities of subsidiaries with a functional currency different from the Company’s
reporting currency are translated to U.S. dollars at the exchange rate in force at the closing date
of the financial statements. Income and expenses are translated into U.S. dollars using the
average annual exchange rate, which does not differ significantly from using the exchange rates
of the dates of each transaction. The difference between equity translated at the historical
exchange rate and the net financial position that results from translating the assets and liabilities
at the closing rate is recorded in equity under the heading “Accumulated currency translation
differences”.

Results of companies carried under the equity method are translated at the average annual
exchange rate.

2.16. Equity

The Company has recyclable balances in its equity, corresponding mainly to hedge reserves and
translation differences arising from currency conversion in the preparation of these consolidated
financial statements. These balances have been presented separately in Equity.

Non-controlling interest represents interest from other partners in entities included in these
consolidated financial statements which are not fully owned by Atlantica as of the dates
presented.

Share Capital, Share Premium and Capital Reserves represent the Parent’s net investment in the
entities included in these consolidated financial statements.

The costs of issuing equity instruments are accounted for as a deduction from equity.

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2.17. Provisions and Contingencies

Provisions are recognized when:

-
-

there is a present obligation, either legal or constructive, as a result of past events;

it is more likely than not that there will be a future outflow of resources to settle the

obligation; and the amount has been reliably estimated.

Provisions are measured at the present value of the expected outflows required to settle the
obligation. The discount rate used is a current pre-tax rate that reflects, when appropriate, the
risks specific to the liability. The increase in the provision due to the passage of time is then
recognized as a financial expense. The balance of provisions disclosed in the Notes reflects
management’s best estimate of the potential exposure as of the date of preparation of the
consolidated financial statements.

Contingent liabilities are possible obligations, existing obligations with low probability of a
future outflow of economic resources and existing obligations where the future outflow cannot
be reliably estimated. Contingences are not recognized in the consolidated statements of
financial position unless they have been acquired in a business combination.

Some companies included in the group have dismantling provisions, which are intended to cover
future expenditures related to the dismantlement of the plants and it will be likely to be settled
with an outflow of resources in the long term (over 5 years).

Such provisions are accrued when the obligation for dismantling, removing and restoring the
site on which the plant is located, is incurred, which is usually during the construction period.
The provision is measured in accordance with IAS 37, “Provisions, Contingent Liabilities and
Contingent Assets” and is recorded as a liability under the heading “Grants and other liabilities”
of the Financial Statements, and the corresponding entry as part of the cost of the plant under
the heading “Contracted concessional assets.” The estimated future costs of dismantling are
reviewed annually if conditions have changed and adjusted appropriately. The impact of changes
in the estimate of future costs or in the timing of when such costs will be incurred, on the
dismantling provision, is recorded against an increase or decrease of the cost of the plant.

2.18. Earnings per share

Basic earnings per share is calculated by dividing the profit for the period attributable to ordinary
equity holders of the parent by the weighted average number of ordinary shares outstanding
during the period.

Diluted earnings per share is calculated by dividing the profit for the period attributable to
ordinary equity holders of the parent by the weighted average number of ordinary shares
outstanding during the period plus the weighted average number of ordinary shares that would
be issued on conversion of all the dilutive potential ordinary shares into ordinary shares.

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2.19. Significant judgements and estimates

Some of the accounting policies applied require the application of significant judgement by
management to select the appropriate assumptions to determine these estimates. These
assumptions and estimates are based on the historical experience, advice from experienced
consultants, forecasts and other circumstances and expectations as of the close of the financial
period. The assessment is considered in relation to the global economic situation of the
industries and regions where the Company operates, taking into account future development of
the businesses of the Company. By their nature, these judgements are subject to an inherent
degree of uncertainty; therefore, actual results could materially differ from the estimates and
assumptions used. In such cases, the carrying values of assets and liabilities are adjusted.

The most critical accounting policies, which reflect significant management estimates and
judgement to determine amounts in these consolidated financial statements, are as follows:

Impairment of intangible assets and property, plant and equipment.

- Contracted concessional agreements and PPAs.
-
- Assessment of control.
- Derivative financial instruments and fair value estimates.
-

Income taxes and recoverable amount of deferred tax assets.

As of the date of preparation of these consolidated financial statements, no relevant changes in
the estimates made are anticipated and, therefore, no significant changes in the value of the
assets and liabilities recognized at December 31, 2020, are expected.

Although these estimates and assumptions are being made using all available facts and
circumstances, it is possible that future events may require management to amend such
estimates and assumptions in future periods. Changes in accounting estimates are recognized
prospectively, in accordance with IAS 8, in the consolidated income statement of the year in
which the change occurs.

3. Financial Risk Management

Atlantica’s activities are exposed to various financial risks: market risk (including currency risk
and interest rate risk), credit risk and liquidity risk. Risk is managed by the Company’s Risk
Finance and Compliance Departments, which are responsible for identifying and evaluating
financial risks quantifying them by project, region and company, in accordance with mandatory
internal management rules. Written internal policies exist for global risk management, as well as
for specific areas of risk. In addition, there are official written management regulations regarding
key controls and control procedures for each company and the implementation of these controls
is monitored through internal audit procedures.

a) Market risk

The Company is exposed to market risk, such as movement in foreign exchange rates and
interest rates. All of these market risks arise in the normal course of business and the Company

179

does not carry out speculative operations. For the purpose of managing these risks, the
Company uses a series of interest rate swaps and options, and currency options. None of the
derivative contracts signed has an unlimited loss exposure.

Interest rate risk

Interest rate risk arises when the Company’s activities are exposed to changes in interest rates,
which arises from financial liabilities at variable interest rates. The main interest rate exposure
for the Company relates to the variable interest rate with reference to the Libor and Euribor. To
minimize the interest rate risk, the Company primarily uses interest rate swaps and interest rate
options (caps), which, in exchange for a fee, offer protection against an increase in interest rates.
The Company does not use derivatives for speculative purposes.

As a result, the notional amounts hedged, strikes contracted and maturities, depending on the
characteristics of the debt on which the interest rate risk is being hedged, are very diverse,
including the following:

- Project debt in Euros: the Company hedges 100% of the notional amount, maturities until

2030 and average guaranteed strike interest rates of between 0.00% and 4.87%.

- Project debt in U.S. dollars: the Company hedges between 72% and 100% of the notional
amount, including maturities until 2034 and average guaranteed strike interest rates of

between 1.98% and 5.27%.

In connection with the interest rate derivative positions of the Company, the most significant
impacts on these consolidated financial statements are derived from the changes in EURIBOR or
LIBOR, which represent the reference interest rate for most of the debt of the Company. In the
event that Euribor and Libor had risen by 25 basis points as of December 31, 2020, with the rest
of the variables remaining constant, the effect in the consolidated income statement would have
been a loss of $2,897 thousand (a loss of $2,745 thousand in 2019 and a loss of $2,731 thousand
in 2018) and an increase in hedging reserves of $22,130 thousand ($27,570 thousand in 2019
and $32,928 thousand in 2018). The increase in hedging reserves would be mainly due to an
increase in the fair value of interest rate swaps designated as hedges.

A breakdown of the interest rates derivatives as of December 31, 2020 and 2019, is provided in
Note 9.

- Currency risk

The main cash flows in the entities included in these consolidated financial statements are cash
collections arising from long-term contracts with clients and debt payments arising from project
finance repayment. Given that financing of the projects is always closed in the same currency in
which the contract with client is signed, a natural hedge exists for the main operations of the
Company.

In addition, the Company policy is to contract currency options with leading financial institutions,

180

which guarantee a minimum Euro-U.S. dollar exchange rate on the net distributions expected
from Spanish solar assets. The net Euro exposure is 100% hedged for the coming 12 months and
75% for the following 12 months on a rolling basis.

Credit risk

The Company considers that it has a limited credit risk with clients as revenues derive from power
purchase agreements with electric utilities and state-owned entities.

Liquidity risk

Atlantica’s liquidity and financing policy is intended to ensure that the Company maintains
sufficient funds to meet our financial obligations as they fall due.

Project finance borrowing permits the Company to finance the project through project debt and
thereby insulate the rest of its assets from such credit exposure. The Company incurs in project-
finance debt on a project-by-project basis.

The repayment profile of each project is established on the basis of the projected cash flow
generation of the business. This ensures that sufficient financing is available to meet deadlines
and maturities, which mitigates the liquidity risk significantly.

d) Capital risk management
The group manages its capital to ensure that entities in the group will be able to continue as a
going concern while maximising the return to shareholders through the optimisation of the debt
and equity balance. The capital structure of the Company consists of net debt (borrowings
disclosed in note 14 and 15 after deducting cash and bank balances) and equity of the group
(comprising issued capital, reserves and accumulated deficit). The board of directors review the
capital structure on a regular basis. As part of this review, the Company considers the cost of
capital and the risks associated with each class of capital.

e) Gearing ratio

The gearing ratio at the year-end is as follows:

181

Debt

Cash and cash equivalents

Net Debt

Equity

Balance as of
December 31, 2020
$’000

Balance as of
December 31, 2019
$’000

6,231,339

868,501

5,576,139

562,795

5,362,838

5,013,344

1,740,881

1,714,856

Net debt to equity ratio

308%

292%

Corporate and Project debt repayment schedules are disclosed in Note 14 and 15, respectively.

4. Financial Information by Segment

Atlantica’s segment structure reflects how management currently makes financial decisions and
allocates resources. Its operating and reportable segments are based on the following
geographies where the contracted concessional assets are located:

- North America
- South America
- EMEA

Based on the type of business, as of December 31, 2020 the Company had the following
business sectors:

- Renewable energy
- Efficient natural gas
- Electric transmission lines
- Water

Atlantica’s Chief Operating Decision Maker (CODM), which is the CEO, assesses the performance
and assignment of resources according to the identified operating segments. The CODM
considers the revenues as a measure of the business activity and the Adjusted EBITDA as a
measure of the performance of each segment. Adjusted EBITDA is calculated as profit/(loss) for
the period attributable to the parent company, after adding back loss/(profit) attributable to
non-controlling interests from continued operations, income tax, share of profit/(loss) of
associates carried under the equity method, finance expense net, depreciation, amortization
and impairment charges of entities included in these consolidated financial statements.

In order to assess performance of the business, the CODM receives reports of each reportable
segment using revenues and Adjusted EBITDA. Net interest expense evolution is assessed on a

182

consolidated basis. Financial expense and amortization are not taken into consideration by the
CODM for the allocation of resources.

In the years ended December 31, 2020 and December 31, 2019 Atlantica had four customers
with revenues representing more than 10% of the total revenues, three in the renewable energy
and one in the efficient natural gas business sectors.

The following tables show Revenues and Adjusted EBITDA by operating segments and

business sectors for the years 2020 and 2019:

Revenue
$’000

Adjusted EBITDA
$’000

Geography
North America

South America

EMEA

For the twelve-
month period ended December 31,

2020

2019

2020

2019

330,921

151,460

530,879

332,965

142,207

536,280

272,909

120,023

388,723

305,085

115,346

390,774

Total

1,013,260

1,011,452

781,655

811,204

Revenue
$’000

Adjusted EBITDA
$’000

For the twelve-
month period ended December 31,

2020

2019

2020

2019

753,089

111,030

106,042

43,099

761,090

122,281

103,453

24,629

575,660

97,864

84,584

23,548

603,666

107,457

85,657

14,424

1,013,260

1,011,452

781,655

811,204

Business sector
Renewable energy

Efficient natural gas

Electric transmission lines

Water

Total

The reconciliation of segment Adjusted EBITDA with the loss attributable to the parent
company is as follows:

For the twelve-
month period ended December 31,

2020
$’000

11,968
4,906
24,877
(510)
331,810

2019
$’000

62,135
12,473
30,950
(7,457)
402,348

Profit attributable to the Company
Profit attributable to non-controlling interests
Income tax
Share of profits/(losses) of associates
Financial expense, net

183

Depreciation, amortization, and
charges

impairment

408,604

310,755

Total segment Adjusted EBITDA

781,655

811,204

The assets and liabilities by operating segments (and business sector) at the end of

2020 and 2019 are as follows:

Assets and liabilities by geography as of December 31, 2020:

North
America
$’000

South
America
$’000

EMEA

$’000

Balance as of
December 31, 2020
$’000

Assets allocated

Contracted concessional assets

3,073,785

1,211,952

3,869,681

74,660

129,264

206,344

27,836

70,861

41,954

42,984

255,530

3,484,053

1,310,649

4,21,149

Investments carried under the equity method

Current financial investments

Cash and cash equivalents (project companies)

Subtotal allocated

Unallocated assets

Other non-current assets

Other current assets (including cash and cash
equivalents at holding company level)
Subtotal unallocated

Total assets

8,155,418

116,614

200,084

532,735

9,004,851

242,044

691,459

933,503

9,938,354

North
America
$’000

South
America
$’000

EMEA

$’000

Balance as of
December 31, 2020
$’000

Liabilities allocated

Long-term and short-term project debt

Grants and other liabilities

Subtotal allocated

Unallocated liabilities

Long-term and short-term corporate debt

Other non-current liabilities

Other current liabilities

Subtotal unallocated

Total liabilities

Equity unallocated

Total liabilities and equity unallocated

Total liabilities and equity

1,623,284

1,078,974

902,500

2,711,830

11,355

139,438

2,702,258

913,855

2,851,268

184

5,237,614

1,229,767

6,467,381

993,725

589,107

147,260

1,730,092

8,197,473

1,740,881

3,470,973

9,938,354

Assets and liabilities by geography as of December 31, 2019:

North
America
$’000

South
America
$’000

EMEA

$’000

Balance as of
December 31, 2019
$’000

Assets allocated

Contracted concessional assets

3,299,198

1,186,552

3,675,379

90,847

159,267

181,458

3,730,771

29,190

49,078

20,673

80,909
1,296,652

234,097
3,979,227

Investments carried under the equity method

Current financial investments

Cash and cash equivalents (project companies)

Subtotal allocated

Unallocated assets

Other non-current assets

Other current assets (including cash and cash
equivalents at holding company level)
Subtotal unallocated

Total assets

8,161,129

139,925

209,131

496,464

9,006,649

239,553

413,613

653,166

9,659,815

North
America
$’000

South
America
$’000

EMEA

$’000

Balance as of
December 31, 2019
$’000

Liabilities allocated

Long-term and short-term project debt

Grants and other liabilities

Subtotal allocated

Unallocated liabilities

Long-term and short-term corporate debt

Other non-current liabilities

Other current liabilities

Subtotal unallocated

Total liabilities

Equity unallocated

Total liabilities and equity unallocated

Total liabilities and equity

4,852,348

1,658,867

6,511,215

723,791

547,740

162,213

1,433,744

7,944,959

1,714,856

3,148,600

9,659,815

1,676,251

1,490,661

884,835

2,291,262

12,864

155,342
2,466,604

3,166,912

897,699

185

Assets and liabilities by business sectors as of December 31, 2020:

Assets allocated
Contracted concessional assets
Investments carried under the equity
method
Current financial investments
Cash and cash equivalents (project
companies)
Subtotal allocated

Unallocated assets
Other non-current assets
Other current assets (including cash
and cash equivalents at holding
company level)
Subtotal unallocated

Total assets

Renewable
energy

$’000

Efficient
natural
gas
$’000

Electric
transmission
lines
$’000

Water

Balance as of
December 31, 2020

$’000

6,632,611

502,285

842,595

177,927

8,155,418

61,866

15,514

39,204

6,530
397,465

124,872
67,955

27,796
46,045

40,886
21,270

116,614

200,084
532,735

7,098,472

710,626

916,466

279,287

9,004,851

242,044

691,459

933,503

9,938,354

Renewable
energy

$’000

Efficient
natural
gas
$’000

Electric
transmission
lines
$’000

Water

Balance as of
December 31, 2020

$’000

Liabilities allocated
Long-term and short-term project
debt
Grants and other liabilities

3,992,512

504,293

625,203

115,606

1,221,176

108

6,040

2,443

Subtotal allocated

5,213,688

504,401

631,243

118,049

and

Unallocated liabilities
Long-term
corporate debt
Other non-current liabilities
Other current liabilities

short-term

Subtotal unallocated

Total liabilities

Equity unallocated

liabilities

Total
unallocated
Total liabilities and equity

and

equity

186

5,237,614

1,229,767

6,467,381

993,725

589,107
147,260

1,730,092

8,197,473

1,740,881

3,470,973

9,938,354

Assets and liabilities by business sectors as of December 31, 2019:

Assets allocated
Contracted concessional assets
Investments carried under the equity
method
Current financial investments
Cash and cash equivalents (project
companies)
Subtotal allocated

Unallocated assets
Other non-current assets
Other current assets (including cash
and cash equivalents at holding
company level)
Subtotal unallocated

Total assets

Renewable
energy

$’000

Efficient
natural
gas
$’000

Electric
transmission
lines
$’000

Water

Balance as of
December 31, 2019

$’000

6,644,024

559,069

872,757

85,280

8,161,129

77,549

13,798

17,154

148,723

45,222

28,237

18,373

421,198

11,850

53,868

9,548

139,925

209,131

496,464

7,156,568

736,796

954,862

158,423

9,006,649

239,553

413,613

653,166

9,659,815

Renewable
energy

$’000

Efficient
natural
gas
$’000

Electric
transmission
lines
$’000

Water

$’000

Balance as of
December 31,
2019
$’000

3,658,507

529,350

640,160

24,331

4,852,348

Liabilities allocated
Long-term and short-term project
debt
Grants and other liabilities

1,651,476

146

6,517

728

Subtotal allocated

5,309,983

529,495

646,677

25,059

and

Unallocated liabilities
Long-term
corporate debt
Other non-current liabilities
Other current liabilities

short-term

Subtotal unallocated

Total liabilities

Equity unallocated

liabilities

Total
unallocated
Total liabilities and equity

and

equity

187

1,6458,867

6,511,215

723,791

547,744
162,213

1,433,744

7,944,959

1,714,856

3,148,600

9,659,815

The amount of depreciation, amortization and impairment charges recognized for the

years ended December 31, 2020 and 2019 are as follows:

For the twelve-month period
ended December 31

$’000

impairment by

2020

2019

Depreciation, amortization and
geography
North America
South America

EMEA

Total

(197,643)
(39,191)
(171,770)

(116,232)
(47,844)
(146,679)

(408,604)

(310,755)

For the twelve-month period
ended December 31,

$’000

2020
(350,785)

(30,889)

(26,563)

(367)

2019
(286,907)

(27,490)

3,102

541

(408,604)

(310,755)

impairment by

Depreciation, amortization and
business sectors
Renewable energy

Electric transmission lines

Efficient natural gas

Water

Total

5. Business Combinations

For the year ended December 31, 2020

On April 3, 2020, the Company completed the investment in a 35% stake in a renewable energy
platform in Chile for approximately $4 million. The first investment made by the platform has
been in a 55 MW solar PV plant, Chile PV I, located in Chile. Atlantica has control over Chile PV I
under IFRS 10, Consolidated Financial Statements. The acquisition of Chile PV I has been
accounted for in these consolidated financial statements in accordance with IFRS 3, Business
Combinations, showing 65% of Non-Controlling interest.

On May 31, 2020, the Company obtained control over the Board of Directors of Befesa Agua
Tenes which owns a 51% stake in Tenes and therefore controls the asset, a water desalination
plant in Algeria. The total investment, in the form of a secured loan agreement to be reimbursed
through a full cash-sweep of all the dividends to be received from the asset, amounted to
approximately $19 million as of May 31, 2020. The acquisition has been accounted for in the
consolidated financial statements of Atlantica, in accordance with IFRS 3, Business Combinations,
showing 49% of Non-Controlling interest.

The amount of assets and liabilities consolidated at the effective acquisition date is shown in the
following table:

188

Contracted concessional assets (Note 6)
Other non-current assets
Cash and cash and equivalent
Other current assets
Non-current Project debt (Note 15)
Current Project debt (Note 15)
Other current and non-current liabilities
Non-controlling interests
Total net assets acquired at fair value
Asset acquisition - purchase price
Net result of business combinations

Business combinations
for the year ended December 31, 2020
$‘000

163,064
356
17,646
29,998
(149,585)
(8,680)
(4,881)
(25,308)
22,610
(22,610)
-

The purchase price equals the fair value of the net assets acquired.

The allocation of the purchase prices is provisional as of December 31, 2020, and the amounts
indicated above may be adjusted during the measurement period to reflect new information
obtained about facts and circumstances that existed at the acquisition date that, if known, would
have affected the amounts recognized as of December 31, 2020. The measurement period will
not exceed one year from the acquisition dates.

The amount of revenue contributed by the acquisitions during 2020 to the consolidated financial
statements of the Company for the year 2020 is $22.5 million, and the amount of profit after tax
is $6.3 million. Had the acquisitions been consolidated from January 1, 2020, the consolidated
statement of comprehensive income would have included additional revenue of $14.7 million
and additional profit after tax of $3.7 million.

For the year ended December 31, 2019

On August 2, 2019, the Company closed the acquisition of a 100% stake in ASI Operations LLC
(“ASI Ops”), the company that performs the operation and maintenance services for the Solana
and Mojave plants. The total equity investment amounted to $6 million. The acquisition has been
accounted for in the consolidated financial statements of Atlantica, in accordance with IFRS 3,
Business Combinations.

On October 22, 2019, the Company closed the acquisition of ATN Expansion 2 from Enel Green
Power Peru, for a total equity investment of $20 million, controlling the asset from this date. The
purchase has been accounted for in the consolidated accounts of Atlantica, in accordance with
IFRS 3, Business Combinations.

The amount of assets and liabilities consolidated at the effective acquisition date is shown in the
following table:

189

Concessional assets
Current assets
Deferred tax liabilities
Other current and non-current liabilities
Total net assets acquired at fair value
Asset acquisition - purchase price
Net result of business combinations

Business combinations
for the year ended December 31, 2019
$‘000

28,738
1,503
(2,539)
(1,512)
26,190
(26,190)
-

The purchase price was equal to the fair value of the net assets acquired.

The allocation of the purchase prices was provisional as of December 31, 2019 for some of the
acquisitions that were made effective near to year end. No significant adjustments were made
in 2020 to the amounts indicated in the table above during the measurement period (one year
from the acquisition dates).

The amount of revenue contributed by the acquisitions performed during 2019 to the
consolidated financial statements of the Company for the year 2019 was $0.3 million, and the
amount of profit after tax was nil. Had the acquisitions been consolidated from January 1, 2019,
the consolidated statement of comprehensive income would have included additional revenue
of $2.3 million and additional profit after tax of $1.2 million.

6. Contracted Concessional Assets

Contracted concessional assets include fixed assets financed through project debt, related to
service concession arrangements recorded in accordance with IFRIC 12, except for Palmucho,
which is recorded in accordance with IFRS 16, and PS10, PS20, Seville PV, Mini-Hydro, Chile TL3,
ATN Expansion 2 and Chile PV I, which are recorded as property plant and equipment in
accordance with IAS 16.

The following table shows the movements of assets included in the heading “Contracted

a)
Concessional assets” for 2020:

190

Cost

Financial
assets under
IFRIC 12

Financial
assets
under
IFRS 16

(Lessor)

Intangible
assets
under
IFRIC 12

Intangible
assets
under
IFRS 16
(Lessee)

Other
intangible
assets

Property,
plant and
equipment

Total assets

Total as of
January 1, 2020

Additions

Subtractions

Business
combinations
(Note 5)

Translation
differences

Reclassification
and other
movements

872,945

3,459 9,183,011

60,618

12,927

251,637 10,384,597

102,560

29,213

1,832

557

3,753

35,355

(71,706)

(954)

385

(223)

(72,883)

63,916

166,861

(8,166)

(163)

326,791

4,349

317

17,836

340,964

(30,502)

(355)

(30,857)

Total Cost

936,837

2,941 9,467,309 66,230

13,801

336,919 10,824,037

Depreciation,
amortization and
impairment

Total as of January 1,
2019

Additions

Subtractions

Reversal of impairment

(27,111)

Business combinations
(Note 5)

(3,797)

Translation differences

476

Financial
assets
under
IFRIC 12

Financial
assets
under
IFRS 16
(Lessor)

Intangible
assets
under
IFRIC 12

Intangible
assets
under
IFRS 16
(Lessee)

Other
intangible
assets

Property,
plant and
equipment

Total
assets

(57,258)

- (2,055,946)

(6,585)

(3,653)

(100,026) (2,223,468)

(338,393)

(3,527)

(2,219)

(13,739)

(384,989)

17,571

18,787

634

18,253

17,787

(3,797)

(84,538)

(581)

(238)

(8,524)

(93,404)

Total depreciation,
amortization and
impairment

(87,689)

(2,442,520)

(10,060)

(6,111)

(122,239)

(2,668,619)

During 2020, the cost of contracted concessional assets increased primarily due to the effect of
the appreciation of the Euro against the U.S. dollar for the year ended December 31, 2020,
compared to the year ended December 31, 2019, and to the acquisition of new concessional
assets (Note 5).

This increase is mainly offset by the amortization charge for the year and the write-off registered
in Solana (see below).

191

The decrease included in “Reclassification and other movements” is mainly due to the
reclassification from the long to the short term of the current portion of the contracted
concessional financial assets.

Solana storage system partial write-off

The availability in the storage system of Solana has been lower than expected in 2020 due to
certain leaks identified in the storage system in the first quarter. The Company has a preliminary
plan to replace some elements of the storage system, which have been written off in these
consolidated financial statements through profit and loss in the line “Depreciation,
amortization, and impairment charges” for an estimated net book value of approximately $48
million. The exact scope and timing of the improvements and repairs are currently under review
and still need to be finalized.

Solana triggering event of impairment

The Company identified in 2020 a triggering event of impairment for Solana as a result of the
underperformance of the plant in terms of production. The Company therefore performed an
impairment test as of December 31, 2020, which resulted in the recoverable amount (value in
use) exceeding the carrying amount of the asset by 10%. To determine the value in use of the
asset, a specific discount rate has been used in each year considering changes in the debt/equity
leverage ratio over the useful life of this project, resulting in the use of a range of discount rates
between 3.8% and 4.3%.

An adverse change in the key assumptions which are individually used for the valuation would
not lead to future impairment recognition; neither in case of a 5% decrease in generation over
the entire remaining useful life (PPA) of the project nor in case of an increase of 50 basis points
in the discount rate.

Change in the useful life of the solar plants in Spain

Further to the recent developments in the Energy and Climate Policy Framework adopted by
Spain in 2020, the Company concluded that the expected deep transformation of the electricity
sector in Spain would probably significantly reduce the market price at which the electricity is
sold in the mid- to long-term. In particular, the Company believes this may impact the price
captured by the Company’s solar plants in Spain after the end of the regulation in place (2035
to 2038 onwards). As a result, the price captured by the plants after 2035 to 2038 (the end of
the 25 years regulatory period) would likely not be sufficient to cover operating costs. In this
case, the plants would stop operating and be dismantled at that point in time.

The Company believes that it is possible that long-term price evolution and technology changes
could result in scenarios where the plants may continue to operate after the end of the
regulatory period. Nevertheless, given the information currently available, the Company
decided to reduce the useful life of the CSP plants in Spain from 35 years to 25 years after COD.
This change of estimate of the useful life, effective September 1st, 2020, is accounted for as a
change in accounting estimate in accordance with IAS 8, Accounting Policies, Changes in

192

Accounting Estimates and Errors.

The main impacts recorded prospectively in these consolidated financial statements are:

- an increased amortization charge from September 1st, 2020, considering the reduction in
the residual useful life of the plants. The impact is approximately $23 million as of December
31, 2020, recorded within the line “Depreciation, amortization and impairment charges” in
the profit and loss statement.

- an increase in the discounted value of the dismantling provision, as the dismantling of the
plants would occur earlier. The provision increased by approximately $13 million as of
December 31, 2020 (Note 16).

In addition, reducing the useful life of the solar plants in Spain is a triggering event of
impairment, given that the recoverable amount of the asset is negatively impacted if the plants
stop operating in year 25 after COD.

The Company therefore performed an impairment test as of December 31, 2020, which resulted
in the recoverable amount (value in use) exceeding the carrying amount of the assets by 6%.
To determine the value in use of the assets, a specific discount rate has been used in each year
considering changes in the debt/equity leverage ratio over the useful life of these projects,
resulting in the use of a range of discount rates between 3.3% and 3.8%.

An adverse change in the key assumptions which are individually used for the valuation would
not lead to future impairment recognition; neither in case of a 5% decrease in generation over
the entire remaining useful life of the projects nor in case of an increase of 50 basis points in
the discount rate.

Palmatir and Cadonal impairment reversals

As part of the triggering event analysis performed for Palmatir and Cadonal assets in 2020, the
Company identified factors, such as a reduced discount rate according to favourable market
conditions, increasing their recoverable amount (value in use). The Company therefore
performed an impairment test as of December 31, 2020, which resulted in the reversal of
impairments previously recorded, for an amount of $15.6 million and $3.1 million in Cadonal
and Palmatir, respectively, recorded within the line “Depreciation, amortization and impairment
charges” of the profit and loss statement.

No losses from impairment of contracted concessional assets, excluding any change in the
provision for expected credit losses under IFRS 9, Financial instruments, were recorded during
the years ended December 31, 2020 and 2019. The impairment provision based on the expected
credit losses on contracted concessional financial assets increased by $29 million in the year
ended December 31, 2020 (reversal of $6 million in the year ended December 31, 2019),
primarily in ACT.

The following table shows the movements of assets included in the heading “Contracted

b)
Concessional assets” for 2019:

193

Financial
assets
under
IFRIC 12

Financial
assets
under IFRS
16 (Lessor)

Intangible
assets under
IFRIC 12

Intangible
assets
under IFRS
16 (Lessee)

Other
intangible
assets

Property,
plant and
equipment

Total assets

902,508

4,068

9,265,742

60,808

4,008

238,694

10,475,828

(22,391)

(347)

454

(15)

886

(119)

1,431

(22,872)

2,067

- 8,548

18,123

28,738

(1,049)

(295)

(62,498)

157

(68)

(5,947)

(69,700)

(28,514)

(314)

(28,828)

Cost

Total as of
January 1,
2019

Additions

Subtractions

Business
combinations
(Note 5)

Translation
differences

Reclassification
and other
movements

Total Cost

872,945

3,459

9,183,011

60,618

12,927

251,637

10,384,597

Depreciation,
amortization and
impairment

Total as of January 1,
2019

Additions

Subtractions

Translation differences

Total depreciation,
amortization and
impairment

Financial
assets
under
IFRIC 12

(63,285)

5,997

Financial
assets
under
IFRS 16
(Lessor)

Intangible
assets under
IFRIC 12

Intangible
assets
under IFRS
16 (Lessee)

Other
intangible
assets

Property,
plant and
equipment

Total assets

(1,766,179)

(3,341)

(2,157)

(91,684)

(1,926,646)

(305,702)

(3,294)

(1,523)

(10,147)

(320,666)

4,205

11,730

1,803

10,204

13,640

(57,258)

(2,055,946)

(6,585)

(3,653)

(100,026)

(2,223,468)

During 2019, contracted concessional assets decreased primarily due to the effect of the
depreciation of the Euro against the U.S. dollar for the year ended December 31, 2019 compared
to December 31, 2018 and to the amortization charge for the year.

Other relevant movements in the cost of contracted concessional assets were an increase for
the acquisition of new concessional assets (Note 5), offset by a decrease for the payments
received from Abengoa by Solana in January, June and December 2019 further to Abengoa´s
obligation as EPC Contractor for a total amount of $22.2 million (Note 15), included in the line
“Subtractions” in the table above.

194

The Company has not identified any triggering event of impairment for its contracted
concessional assets, and consequently, no losses from impairment of contracted concessional
assets were recorded during the year ended December 31, 2019.

7. Investments Carried Under the Equity Method

The table below shows the breakdown and the movement of the investments held in associates
for 2020 and 2019:

Investments in associates

Initial balance

Share of (loss)/profit

Dividend distribution

Equity distribution

Acquisitions

2020

2019

139,925 53,419

510

7,457

(23,703) (30,528 )

(6,252 )

- 113,897

Others (incl. currency translation differences)

(118)

1,932

Final balance

116,614 139,925

Decrease in investments carried under the equity method in 2020 is primarily due to
distributions received from the projects Honaine for $4.5 million ($4.6 million in 2019) and
Amherst for $16.1 million ($25.9 million in 2019). A significant portion of the distributions
received from Amherst are distributed by the Company to Algonquin Power Co. (Note 13).

On May 24, 2019, Atlantica and Algonquin formed AYES Canada, a vehicle to channel co-
investment opportunities in which Atlantica holds the majority of voting rights. The first
investment was in Amherst Island, a 75 MW wind plant in Canada owned by the project
company Windlectric. Atlantica invested $4.9 million and Algonquin invested $92.3 million, both
through AYES Canada, which in turn invested those funds in AIP, the holding company of
Windlectric. Atlantica accounts for the investment in AIP and ultimately Windlectric under the
equity method as per IAS 28, Investments in Associates and Joint Ventures. Since Atlantica has
control over AYES Canada under IFRS 10 Consolidated Financial Statements, its consolidated
financial statements initially showed a total investment in the Amherst Island project of $97.2
million, accounted for as “Investments carried under the equity method” and Algonquin’s
portion of that investment of $92.3 million as “Non-controlling interest”.

On August 2, 2019, the Company closed the acquisition of a 30% stake in Monterrey, a 142 MW
gas-fired engine facility with batteries. The total investment amounted to $42.0 million, out of
which $16.7 million is an equity investment, and the rest is a shareholder loan classified as

195

financial investments in these consolidated financial statements. The acquisition has been
accounted for in the consolidated accounts of Atlantica, in accordance with IAS 28, Investments
in Associates.

The tables below show a breakdown of stand-alone amounts of assets, revenues and profit and
loss as well as other information of interest for the years 2020 and 2019 for the associated
companies:

%
Shares

Non-
current
assets

Current
assets

Non-
current
liabilities

Current
liabilities

Revenue

Operating
profit/
(loss)

Net
profit/
(loss)

Investment
under the
equity
method

57.16

19,531

1,130

16,721

646

853

(167)

(194)

976

25.50 165,688

57,808

71,867

12,742

50,739

30,519 12,402

39,204

50.00

2,743

40.02

3,201

134

1,861

257

(168)

1,587

5.00 468,131 156,528

604,986

25,773

80,240

17,415

1,615

30.00 127,429 121,468

258,295

4,725

28,832

3,068

(6,237)

15,514

20.00

135

(53)

30.00 316,251

7,229

216,765

31,403

23,663

10,451

(493)

59,116

50.00

323

210

(66)

169

116,614

Company
Evacuación
Valdecaballeros,
S.L.
Myah Bahr
Honaine, S.P.A.(*)
Pectonex, R.F.
Proprietary
Limited
Evacuación
Villanueva del
Rey, S.L
Ca Ku A1,
S.A.P.I de CV
(PTS)
Pemcorp SAPI de
CV (**)
ABY
Infraestructuras
S.L.U.
Windlectric Inc
(***)
Other renewable
energy joint
ventures (****)
As of December
31, 2020

196

%
Shares

Non-
current
assets

Current
assets

Non-
current
liabilities

Current
liabilities

Revenue

Operating
profit/
(loss)

Net
profit/
(loss)

Investment
under the
equity
method

57.16

18,584

1,268

13,145

783

694

(277)

(303)

2,348

25.50 184,332

63,148

71,614

13,562

51,504

33,372

30,186

45,222

50.00

3,074

40.02

2,946

107

1,841

225

5.00 486,179

55,423

543,077

(190)

1,391

(39)

(495)

30.00 125,301

72,669

197,324

5,090

32,302

5,737

(10,073)

17,179

20.00

(104)

(101)

30.00 319,041

10,655

232,938

22,424

24,867

11,125

(6,537)

73,693

50.00

146

(46)

139,925

The Company has no control over Evacuación Valdecaballeros, S.L. as all relevant decisions of
this company require the approval of a minimum of shareholders accounting for more than
75% of the shares.

None of the associated companies referred to above are a listed company.

(*) Myah Bahr Honaine, S.P.A., the project entity, is 51% owned by Geida Tlemcen, S.L. which is accounted for using
the equity method in these consolidated financial statements. Share of profit of Myah Bahr Honaine S.P.A. included
in these consolidated financial statements amounts to $3.1 million in 2020 and $7.7 million in 2019.
(**) Pemcorp SAPI de CV, Monterrey´s project entity, is 100% owned by Arroyo Netherlands II B.V. which is accounted
for under the equity method in these consolidated financial statements. Arroyo Netherlands II B.V. is 30% owned by
Atlantica. Share of profit of Pemcorp SAPI de CV included in these consolidated financial statements amounts to a
loss of $1,9 million in 2020 and a profit of $0,5 million in 2019.
(***) Windlectric Inc., the project entity, is 100% owned by Amherst Island Partnership which is accounted for under
the equity method.
(****) Other renewable energy joint ventures correspond to investments made in the following entities: AC
Renovables Sol 1 SAS Esp, PA Renovables Sol 1 SAS Esp, SJ Renovables Sun 1 SAS Esp and SJ Renovables Wind 1
SAS Esp.

197

8. Financial instruments by Category

Financial instruments, in addition to Contracted concessional assets disclosed in Note 6, are
primarily deposits, derivatives, trade and other receivables and loans. Financial instruments by
category (current and non-current), reconciled with the statement of financial position as of
December 31, 2020 and 2019 are as follows:

Category
Derivative assets
Investment in Ten West Link
Investment in Rioglass
Financial assets under IFRIC 12
(short-term portion)
Trade and other receivables
Cash and other equivalents
Other financial investments
Total financial assets

Corporate debt
Project debt
Related parties – non-current
Trade and other
current
liabilities
Derivative liabilities

Total financial liabilities

Notes
9

11
12

14
15
10
17

Amortized Cost
$’000

Fair value through
Other Comprehensive
Income
$´000

Fair value
through
profit or loss
$’000

Balance as of
12.31.20
$’000

-
-
-

178,198

331,735
868,501
94,497
1,472,931

993,725
5,237,614
6,810

92,557

-
12,896
-

-
-
-
12,896

-
-
-

1,559
-
2,687

1,559
12,896
2,687

178,198

-
-
-
4,246

-
-
-

331,735
868,501
94,497
1,490,073

993,725
5,237,614
6,810

92,557

328,184

328,814

6,330,707

328,184

6,658,891

198

Amortized Cost
$’000

Fair value through
Other Comprehensive
Income
$´000

Fair value
through
profit or loss
$’000

Category
Derivative assets
Investment in Ten West Link
Investment in Rioglass
Financial assets under IFRIC 12
(short-term portion)

Notes
9

Trade and other receivables
Cash and cash equivalents
Other financial investments
Total financial assets

Corporate debt
Project debt
Related parties – non-current
Trade and other current liabilities
Derivative liabilities

Total financial liabilities

11
12

14
15
10
17
9

-
-
-
160,624

317,568
562,795
127,436
1,168,423

723,791
4,852,348
17,115
128,062
-

5,721,316

Balance as
of 12.31.19
$’000

5,230
9,874
7,000
160,624

317,568
562,795
127,436
1,190,527

723,791
4,852,348
17,115
128,062
298,744

-
9,874
-
-

-
-
-
9,874

-
-
-
-
-

5,230
-
7,000
-

-
-
-
12,230

-
-
-
-
298,744

298,744

6,020,060

Other financial investments as of December 31, 2020 include, among others, a loan to
Monterrey (Note 7) and restricted cash for repairs or scheduled major maintenance work. As of
December 31, 2019, Other financial investments additionally included a loan to Befesa Agua
Tenes amounting to $13 million (Note 1).

Investment in Ten West Link is a 12.5% interest in a 114-mile transmission line in the U.S.,
currently under development.

Investment in Rioglass corresponds to 15.12% of the equity interest of Rioglass, a multinational
solar power and renewable energy technology manufacturer, acquired in May 2019 by the
Company (Note 1).

9. Derivative Financial Instruments

The breakdown of the fair value amounts of the derivative financial instruments as of
December 31, 2020 and 2019 are as follows:

Balance as of 12.31.20

Balance as of 12.31.19

Assets
$’000

Liabilities
$’000

Assets
$’000

Liabilitiesº
$’000

Interest rate cash flow hedge
Foreign exchange derivatives instruments
Notes conversion option (Note 14)
Total

898
661
-
1,559

302,302
-
25,882
328,184

1,619
3,610
-
5,230

298,744
-
-
298,744

199

The derivatives are primarily interest rate cash-flow hedges. All are classified as non-current
assets or non-current liabilities, as they hedge long-term financing agreements.

As stated in Note 3 to these consolidated financial statements, the general policy is to hedge
variable interest rates of financing agreements using two types of hedging derivatives:

Interest rate swaps under which the Company receives the floating leg and pays the
fixed leg; and

- Purchased call options (cap), in exchange of a premium to fix the maximum interest

rate cost.

The notional amounts hedged, strikes contracted and maturities, depending on the
characteristics of the debt on which the interest rate risk is being hedged, can be diverse:

- Project debt in Euros: the Company hedges 100% of the notional amount, maturities
until 2030 and average guaranteed interest rates of between 0.00% and 4.87%.
- Project debt in U.S. dollars: the Company hedges between 72% and 100% of the
notional amount, including maturities until 2034 and average guaranteed interest
rates of between 1.98% and 5.27%.

The table below shows a breakdown of the maturities of notional amounts of interest rate cash
flow hedge derivatives designated as cash flow hedges as of December 31, 2020 and 2019.

Notionals

Balance as of 12.31.20

Balance as of 12.31.19

Up to 1 year
Between 1 and 2 years
Between 2 and 3 years
Subsequent years

Total

$’000

Assets

Liabilities

Assets

Liabilities

61,364
296,828
257,548
292,011

120,874
249,785
276,111
852,696

43,266
45,955
49,259
455,235

117,574
124,908
240,570
1,697,033

907,752

1,499,466

593,715

2,180,085

The table below shows a breakdown of the maturity of the fair values of interest rate cash flow
hedge derivative as of December 31, 2020 and 2019.

Fair value

Balance as of 12.31.20

Balance as of 12.31.19

Up to 1 year
Between 1 and 2 years
Between 2 and 3 years
Subsequent years

Total

$’000

Assets

Liabilities

Assets

Liabilities

59
255
305
280

(21,042)
(48,276)
(55,220)
(177,764)

118
128
140
1,234

(18,721)
(19,787)
(21,802)
(238,434)

898

(302,302)

1,619

(298,744)

200

The net amount of the fair value of interest rate derivatives designated as cash flow hedges
transferred to the consolidated income statement in 2020 is a loss of $58,381 thousand (loss of
$55,765 thousand in 2019 and a loss of $67,519 thousand in 2018).

The after-tax result accumulated in equity in connection with derivatives designated as cash
flow hedges at the years ended December 31, 2020 and 2019, amount to a $96,641 thousand
gain and a $73,797 thousand gain respectively.

Additionally, the Company owns following derivatives instruments:

- Currency options with leading international financial institutions, which guarantee

minimum Euro-U.S. dollar exchange rates. The strategy of the Company is to hedge

the exchange rate for the net distributions from its Spanish assets after deducting

euro-denominated interest payments and euro-denominated general and

administrative expenses. Through currency options, the strategy of the Company is

to hedge 100% of its euro-denominated net exposure for the next 12 months and

75% of its euro denominated net exposure for the following 12 months, on a rolling

basis. Change in fair value of these foreign exchange derivatives instruments are

directly recorded in the consolidated income statement;

- The conversion option of notes issued in July 2020 (Note 14), which fair value is a

liability of $26 million as of December 31, 2020.

10. Related Party Transactions

The related parties of the Company are primarily Algonquin and its subsidiaries, non-controlling
interests (Note 13), entities accounted for under the equity method (Note 7) and directors and
the senior management of the Company.

201

Details of balances with related parties as of December 31, 2020 and 2019 are as follows:

Balance as of
December 31, 2020
$’000

Balance as of
December 31, 2019
$’000

Credit receivables (current)

Credit receivables (non-current)

Total current receivables with related parties

Credit payables (current)

Credit payables (non-current)

Total current payables with related parties

23,067

10,082

33,149

18,477

6,810

25,287

13,350

21,355

34,705

23,979

17,115

41,094

Current credit receivables as of December 31, 2020 mainly correspond to the short-term portion
of the loan to Arroyo Netherland II B.V., the holding company of Pemcorp SAPI de CV.,
Monterrey´s project entity (Note 7) for $15.5 million ($4.0 million as of December 31, 2019) and
to a dividend to be collected from Amherst Island Partnership for $4.3 million ($5.5 million as
of December 31, 2019).

Non-current credit receivables as of December 31, 2020 and December 31, 2019 correspond to
the long-term portion of the loan to Arroyo Netherland II B.V.

Credit payables relate to debts with non-controlling interests partners in Kaxu, Solaben 2&3
and Solacor 1&2 for an amount of $21.1 million as of December 31, 2020 ($35.6 million as of
December 31, 2019). Current credit payables also include the dividend to be paid from Atlantica
Yield Energy Solutions Ltd to Algonquin for $4.2 million as of December 31, 2020 ($5.4 million
as of December 31, 2019).

The transactions carried out by entities included in these consolidated financial statements with
related parties not included in the consolidation perimeter of Atlantica, for the years ended
December 31, 2020 and 2019 have been as follows:

For the twelve-month period
ended December 31,

2020
$’000

2,017

(155)

2019
$’000

978

(195)

Financial income

Financial expenses

The total amount of the remuneration received by the Board of Directors of the Company,
including the CEO, amounts to $3.4 million in 2020 ($2.5 million in 2019), including $1.0 million
of annual bonus ($1.0 million in 2019). The increase of the total remuneration in 2020 is mainly

202

due to the CEO having received a long-term award of $0.8 million in 2020. No long-term awards
have vested in 2019. None of the directors received any pension remuneration in 2020 nor
2019.

11. Trade and Other Receivables

Trade and other receivables as of December 31, 2020 and 2019, consist of the following:

Trade receivables

Tax receivables

Prepayments

Other accounts receivable

Total

Balance as of
December 31, 2020
$’000

Balance as of
December 31, 2019
$’000

258,087

50,663

12,074

10,911

331,735

242,008

50,901

5,150

19,508

317,568

As of December 31, 2020, and 2019, the fair value of trade and other accounts receivable does
not differ significantly from its carrying value.

Trade receivables in foreign currency as of December 31, 2020 and 2019, are as follows:

Balance as of
December 31, 2020
$’000

Balance as of
December 31, 2019
$’000

105,826

24,121

6,929

136,876

108,280

24,289

4,001

136,570

Euro

South African Rand

Other

Total

12. Cash and Cash Equivalents

The following table shows the detail of cash and cash equivalents as of December 31, 2020 and
2019:

Cash at bank and on hand - non-restricted
Cash at bank and on hand - restricted

2020
$’000

588,690
279,811

2019
$’000

223,867
338,928

Total

868,501

562,795

Cash includes funds held to satisfy the customary requirements of certain non-recourse debt
agreements within the Company´s projects (Note 15) amounting to $280 million as of December
31, 2020 ($339 million as of December 31, 2019).

203

The following breakdown shows the main currencies in which cash and cash equivalent balances
are denominated:

US Dollar

Euro

South African Rand

Mexican Peso

Algerian Dinar

Others

2020
$’000

2019
$’000

575,567

313,678

196,431

181,961

40,561

23,570

21,114

11,258

47,679

9,301

10,112

868,501

562,795

13. Equity

As of December 31, 2020, the share capital of the Company amounts to $10,667,087 represented
by 106,670,866 ordinary shares completely subscribed and disbursed with a nominal value of
$0.10 each, all in the same class and series. Each share grants one voting right.

Algonquin completed in 2018 the acquisition from Abengoa of its entire stake in Atlantica,

41.47% of the total shares of the Company, becoming the largest shareholder of the Company.

On May 22, 2019, the Company issued an additional 1,384,402 ordinary shares, which were fully

subscribed by Algonquin for a total amount of $30,000,000, increasing the stake of Algonquin

to 42.27%. Additionally, Algonquin purchased 2,000,000 ordinary shares on May 31, 2019,

increasing its stake in Atlantica to 44.2%.

On December 11, 2020 the Company closed an underwritten public offering of 5,069,200
ordinary shares, including 661,200 ordinary shares sold pursuant to the full exercise of the
underwriters’ over-allotment option, at a price of $33 per new share. Gross proceeds were
approximately $167 million. Given that the offering was issued through a subsidiary in Jersey,
which became wholly owned by the Company at closing, and subsequently liquidated, premium
on issuance was credited to a merger reserve account (Capital reserves), net of issuance costs,
for $161 million. Additionally, Algonquin committed to purchase 4,020,860 ordinary shares in a
private placement in order to maintain its previous equity ownership of 44.2% in the Company.
The private placement closed on January 7, 2021. Gross proceeds were approximately $133
million.

Atlantica´s reserves as of December 31, 2020 are made up of share premium account and capital

reserves. The share premium account reduction by $1,000,000 thousand during the year 2019,

increasing capital reserves by the same amount, was made effective upon confirmation received

from the High Court, pursuant to the Companies Act 2006.

204

Other reserves primarily include the change in fair value of cash flow hedges and its tax effect.

Accumulated currency translation differences primarily include the result of translating the

financial statements of subsidiaries prepared in a foreign currency into the presentation currency

of the Company, the U.S. dollar.

Accumulated deficit primarily includes results attributable to Atlantica.

Non-controlling interests fully relate to interests held by JGC in Solacor 1 and Solacor 2, by Idae
in Seville PV, by Itochu Corporation in Solaben 2 and Solaben 3, by Algerian Energy Company,
SPA and Sacyr Agua S.L. in Skikda, by Industrial Development Corporation of South Africa (IDC)
and Kaxu Community Trust in Kaxu and by Algonquin Power Co. in AYES Canada, by Algerian
Energy Company, SPA in Tenes and by our partners in the Chilean renewable energy platform in
Chile PV1.

Dividends declared during the year 2020 by the Board of Directors of the Company were:

- On February 26, 2020, the Board of Directors declared a dividend of $0.41 per share
corresponding to the fourth quarter of 2019. The dividend was paid on March 23, 2020 for
a total amount of $41.7 million

- On May 6, 2020, the Board of Directors of the Company approved a dividend of $0.41 per
share corresponding to the first quarter of 2020. The dividend was paid on June 15, 2020
for a total amount of $41.7 million.

- On July 31, 2020, the Board of Directors of the Company approved a dividend of $0.42 per
share corresponding to the second quarter of 2020. The dividend was paid on September
15, 2020 for a total amount of $42.7 million.

- On November 4, 2020, the Board of Directors declared a dividend of $0.42 per share
corresponding to the third quarter of 2020. The dividend was paid on December 15, 2020
for a total amount of $42.7 million.

In addition, the Company declared dividends to non-controlling interests, primarily to
Algonquin Power Co. for $14.7 million in 2020 ($25.6 million in 2019) and Algerian Energy
Company SPA for $5.6 million in 2020 ($4.1 million in 2019).

205

Companies Act 2006. Note 7 of the Financial Statements of the Parent Company for the year
ended December 31, 2019 described the amendment made to the share premium account and
capital reserve account as of December 31, 2018. To remedy the potential consequences of the
dividend payments indicated in the preceding paragraph, a special resolution was approved at
the Annual General Meeting in May 2020 to authorise the appropriation of distributable
reserves to the payment of the said dividends and release any claims the Company may have
in connection with the said dividends against shareholders and directors (the “Directors’
Release”). The Directors Release is a related party transaction under IFRS. The overall effect of
the special resolution was to put all parties in the position, so far as possible, in which they
would have been, had the said dividends been paid in full compliance with the Companies Act
2006.

As of December 31, 2020, there was no treasury stock and there have been no transactions
with treasury stock during the period then ended.

14. Corporate Debt

The breakdown of the corporate debt as of December 31, 2020 and 2019 is as follows:

Non-current

Balance as of
December 31, 2020
$’000

Balance as of
December 31, 2019
$’000

Credit Facilities with financial entities

Notes and bonds

867,933
102,144

695,085
-

Total Non-current

970,077

695,085

Current

Credit Facilities with financial entities
Notes and Bonds

Total Current

Balance as of
December 31, 2020
$’000

Balance as of
December 31, 2019
$’000

342
23,306

23,648

789
27,917

28,706

On February 10, 2017, the Company issued Senior Notes due 2022, 2023, 2024 (the “Note
Issuance Facility 2017”), in an aggregate principal amount of €275,000 thousand. The Note
Issuance Facility 2017 was fully repaid on April 2, 2020.

On July 20, 2017, the Company signed a credit facility (the “2017 Credit Facility”) for up to €10
million, approximately $12.2 million, which is available in euros or U.S. dollars. Amounts drawn
down accrue interest at a rate per year equal to EURIBOR plus 2% or LIBOR plus 2%, depending
on the currency. As of December 31, 2020, the 2017 Credit Facility is fully available (€9 million
drawn down as of December 31, 2019). The credit facility maturity is December 13, 2021.

206

On May 10, 2018, the Company entered into a $215 million revolving credit facility (the
“Revolving Credit Facility”) with Royal Bank of Canada, as administrative agent and Royal Bank
of Canada and Canadian Imperial Bank of Commerce, as issuers of letters of credit. Amounts
drawn down accrue interest at a rate per year equal to (A) for Eurodollar rate loans, LIBOR plus
a percentage determined by reference to the leverage ratio of the Company, ranging between
1.60% and 2.25% and (B) for base rate loans, the highest of (i) the rate per annum equal to the
weighted average of the rates on overnight U.S. Federal funds transactions with members of
the U.S. Federal Reserve System arranged by U.S. Federal funds brokers on such day plus ½ of
1.00%, (ii) the U.S. prime rate and (iii) LIBOR plus 1.00%, in any case, plus a percentage
determined by reference to the leverage ratio of the Company, ranging between 0.60% and
1.00%. Letters of credit may be issued using up to $100 million of the Revolving Credit Facility.
During the year 2019, the amount of the Revolving Credit Facility increased from $215 million
to $425 million and the maturity was extended to December 31, 2022. On December 31, 2020,
the Company had issued letters of credit for $10 million and, therefore, $415 million of the
Revolving Credit Facility are available. On December 31, 2019 the Company had drawn down
$84 million which were repaid in the third quarter of 2020.

On April 30, 2019, the Company entered into a senior unsecured note facility with a group of
funds managed by Westbourne Capital as purchasers of the notes issued thereunder for a total
amount of €268 million (the “Note Issuance Facility 2019”). The principal amount was issued on
May 24, 2019. The Note Issuance Facility 2019 includes an upfront fee of 2% paid on drawdown
and its maturity date is April 30, 2025. Interest accrue at a rate per annum equal to the sum of
3-month EURIBOR plus 4.50%. The interest rate on the Note Issuance Facility 2019 is fully
hedged by an interest rate swap with effective date June 28, 2019 and maturity date June 30,
2022, resulting in the Company paying a net fixed interest rate of 4.24%. The Note Issuance
Facility 2019 provides that the Company may capitalize interest on the notes issued thereunder
for a period of up to two years from closing at the Company´s discretion, subject to certain
conditions.

On October 8, 2019, the Company filed a euro commercial paper program (the “Commercial
Paper”) with the Alternative Fixed Income Market (MARF) in Spain. The program had an original
maturity of twelve months and was extended for another twelve-month period on October 8,
2020. The program allows Atlantica to issue short term notes over the next twelve months for
up to €50 million, with such notes having a tenor of up to two years. As of December 31, 2020,
the Company had €17.4 million issued and outstanding under the program at an average cost
of 0.69% (€25 million as of December 31, 2019).

On April 1, 2020, the Company closed the secured 2020 Green Private Placement for €290
million (approximately $354 million). The private placement accrues interest at an annual 1.96%
interest, payable quarterly and has a June 2026 maturity. Net proceeds were primarily used to
fully repay the Note Issuance Facility 2017.

207

Facility 2020 was issued on August 12, 2020, accrues interest at an annual 5.25% interest,
payable quarterly and has a maturity of seven years from the closing date.

On July 17, 2020, the Company issued $100 million aggregate principal amount of 4.00%
convertible bonds (the “Green Exchangeable Notes”) due 2025. On July 29, 2020, the Company
closed an additional $15 million aggregate principal amount of the Green Exchangeable Notes.
The notes mature on July 15, 2025 and bear interest at a rate of 4.00% per annum. The initial
exchange rate of the notes is 29.1070 ordinary shares per $1,000 principal amount of notes,
which is equivalent to an initial exchange price of $34.36 per ordinary share. Noteholders may
exchange their notes at their option at any time prior to the close of business on the scheduled
trading day immediately preceding April 15, 2025, only during certain periods and upon
satisfaction of certain conditions. On or after April 15, 2025, noteholders may exchange their
notes at any time. Upon exchange, the notes may be settled, at the election of the Company,
into ordinary shares of Atlantica, cash or a combination thereof. The exchange rate is subject to
adjustment upon the occurrence of certain events.

On December 4, 2020, the Company entered into a credit facility (the “2020 Credit Facility”) for
up to €5 million, approximately $6.1 million. Amounts drawn down accrue interest at a rate per
year equal to 2.50%. As of December 31, 2020, the total amount of the credit has been drawn
down. The maturity date is December 4, 2025.

As per IAS 32, “Financial Instruments: Presentation”, the conversion option of the Green
Exchangeable Notes is an embedded derivative classified within the line “Derivative liabilities”
of these consolidated financial statements (Note 9). It was initially valued at transaction date
for $10 million, and prospective changes to its fair value are accounted for directly through the
profit and loss statement. The principal element of the Green Exchangeable Notes, classified
within the line “Corporate debt” of these consolidated financial statements, is initially valued
as the difference between the consideration received from the holders of the instrument and
the value of the embedded derivative, and thereafter, at amortized cost using the effective
interest method as per IFRS 9, “Financial Instruments”.

The repayment schedule for the Corporate debt at the end of 2020 is as follows:

2021

2022

2023

2024

2025

Subsequent
years

2017 Credit Facility
Notes Issuance Facility 2019
Commercial paper
2020 Green Private Placement
Note Issuance Facility 2020
Green Exchangeable Notes
2020 Credit Facility
Total

41
-
21,224
289
-
2,083
11
23,648

-
-
-
-
-
-
-
-

-
-
-
-
-
-
2,036
2,036

-
343,999
-
-
-
102,144
1,990
448,133

-
-
-
351,026
166,846
-
-
517,872

Total

41
343,999
21,224
351,315
166,846
104,227
6,073
993,725

208

The repayment schedule for the Corporate debt at the end of 2019 was as follows:

2020

2021

2022

2023

2024

Subsequent
years

Revolving Credit Facility
Note Issuance Facility
2017 Credit Facility
2019 Notes Issuance Facility
Commercial Paper
Total

701
84
4
-
27,917
28,706

-
-
10,085
7,938
-
18,023

81,164
101,317
-
-
-
182,481

-
100,513
-
-
-

-
100,413
-
-
-

100,513

100,413

-
-
-
293,655
-
293,655

Total

81,865
302,327
10,089
301,593
27,917
723,791

The following table details the movement in corporate debt for the years 2020 and 2019, split
between cash and non-cash items:

Corporate Debt

Initial balance
Cash Flow

Non-cash changes

Final balance

2020

2019

723,791
171,182

684,073
6,620

98,752

33,098

993,725 723,791

The non-cash changes primarily relate to interests accrued and to currency translation
differences.

15. Project debt

The main purpose of the Company is the long-term ownership and management of contracted
concessional assets, such as renewable energy, efficient natural gas and electric transmission
lines assets, which are financed through project debt. This note shows the project debt linked to
the contracted concessional assets included in note 6 of these consolidated financial statements.

Project debt is generally used to finance contracted assets, exclusively using as a guarantee the
assets and cash flows of the company or group of companies carrying out the activities financed.
In most of the cases, the assets and/or contracts are set up as a guarantee to ensure the
repayment of the related financing. In addition, the cash of the Company´s projects includes
funds held to satisfy the customary requirements of certain non-recourse debt agreements and
other restricted cash for an amount of $280 million as of December 31, 2020 ($339 million as of
December 31, 2019).

Compared with corporate debt, project debt has certain key advantages, including a greater
leverage and a clearly defined risk profile.

The variations for 2020 and 2019 of project debt have been the following:

209

Project debt - long
term
$’000

Project debt - short
term
$’000

Balance as of December 31, 2019
Increases
Decreases
Business Combination (Note 5)
Currency translation differences
Reclassifications
Balance as of December 31, 2020

4,069,909
613,604
(272,548)
149,585
150,506
214,211
4,925,268

782,439
268,339
(552,770)
8,680
19,869
(214,211)
312,346

Total
$’000

4,852,348
881,943
(825,318)
158,265
170,375
-
5,237,614

The increase in total project debt as of December 31, 2020 is primarily due to:

- business combinations, being the acquisition of Chile PV I and Tenes for a total amount of

$158 million (Note 5).

- a green project financing agreement entered into by Logrosán Solar Inversiones, S.A.U., the
holding company of Spanish assets Solaben 1, 2, 3 and 6, closed on April 8, 2020 for a €140

million nominal amount.

- a non-recourse project debt refinancing of Helioenergy assets by adding a new long dated
tranche of debt from an institutional investor closed on July 10, 2020, providing with a net

refinancing proceeds (net “recap”) of approximately $43 million.

- a non-recourse, project debt financing closed on July 14, 2020 for approximately €326
million in relation to Helios, with institutional investors, which has refinanced the previous

bank project debt with approximately €250 million outstanding and has cancelled legacy

interest rate swaps. After transaction costs and cancelation of legacy swaps, net refinancing

proceeds (net “recap”) were approximately $30 million. The accumulated impact of the

change in fair value of the interest rate swaps recorded in Other reserves and any difference

between the nominal amount of the debt repaid and the amortized cost of the debt have

been transferred to the profit and loss in line “Other financial income/(expense), net” on

transaction date for a total amount of $73 million (Note 21).

the higher value of debt denominated in Euro given the increase in the exchange rate of

the Euro against the U.S. dollar since December 31, 2019.

The increase of Project debt during the year 2020 has been partially offset by the contractual
payments of debt for the year. Interests accrued are offset by a similar amount of interests paid
during the year.

Additionally, on June 12, 2020 the Company refinanced the debt of Cadonal (Uruguay). The
terms of the new debts are not substantially different from the original debts refinanced and
therefore the exchange of debts instruments does not qualify for an extinguishment of the
original debts under IFRS 9, ´Financial instruments´. When there is a refinancing with a non-
substantial modification of the original debt, there is a gain or loss recorded in the income
statement. This gain or loss is equal to the difference between the present value of the cash
flows under the original terms of the former financing and the present value of the cash flows

210

under the new financing, discounted both at the original effective interest rate. In this respect,
the Company recorded a $3.8 million financial income in the profit and loss statement of the
consolidated financial statements (Note 21).

Due to the PG&E Corporation and its regulated utility subsidiary, Pacific Gas and Electric
Company (“PG&E”), Chapter 11 filings in January 2019, a default of the PPA agreement with
PG&E occurred. Since PG&E failed to assume the PPA within 180 days from the commencement
of the PG&E’s Chapter 11 proceedings, a technical event of default was triggered under the
Mojave project finance agreement in July 2019. On July 1, 2020, PG&E emerged from Chapter
11. In addition, PG&E paid to Mojave the portion of the invoice corresponding to the electricity
delivered for the period between January 1 and January 28, 2019. This invoice was overdue
because the services relate to the pre-petition period and any payment therefore required the
approval by the Bankruptcy Court. The technical event of default under the Mojave project
finance agreement, which was preventing cash distributions from Mojave to Atlantica, was
cured and the Company can make distributions from Mojave. As a result, as of December 31,
2020, the Company has again an unconditional right to defer the settlement of the debt for at
least twelve months, and therefore the debt previously presented as current (during the year
2019) has been reclassified as non-current in accordance with the financing agreements in these
consolidated financial statements.

Balance as of December 31, 2018
Increases
Decreases
Currency translation differences
Reclassifications
Balance as of December 31, 2019

Project debt -
long term
$’000

Project debt -
short term
$’000

4,826,659
53,222
(19,272)
(33,718)
(756,981)
4,069,909

264,455
280,005
(516,147)
(2,855)
756,981
782,439

Total
$’000

5,091,114
333,226
(535,418)
(36,574)
-
4,852,348

The line “Increases” includes primarily accrued interest for the year.

The decrease of Project debt during the year 2019 is primarily due to the contractual payments
of debt for the year and the partial repayment of Solana debt using the indemnity received
from Abengoa for $22.2 million (Note 6). Interest accrued is offset by a similar amount of
interest paid during the year.

The repayment schedule for project debt in accordance with the financing arrangements and
assuming there will be no acceleration of the Mojave debt, as of December 31, 2020, is as follows
and is consistent with the projected cash flows of the related projects:

211

2021

2022

2023

2024

2025

Interest
Repayment

Nominal
repayment

Subsequent
years

Total

19,287

293,059

328,364

355,806

371,548

508,843

3,360,707

5,237,614

The repayment schedule for project debt in accordance with the financing arrangements and
assuming there will be no acceleration of the Mojave debt, as of December 31, 2019, was as
follows and is consistent with the projected cash flows of the related projects:

2020

2021

2022

2023

2024

Interest
Repayment

Nominal
repayment

Subsequent
years

Total

12,799

256,620

262,787

293,642

319,962

335,067

3,371,471

4,852,348

Current and non-current loans with credit entities include amounts in foreign currencies for a
total amount of $2,711,830 thousand as of December 31, 2020 ($2,291,262 thousand as of
December 31, 2019).

The following table details the movement in Project debt for the years 2020 and 2019, split
between cash and non-cash items:

Project Debt

Initial balance

Cash Flow

Non-cash changes

Final balance

2020

2019

4,852,348 5,091,114

(254,495) (531,726)

639,763

292,960

5,237,614 4,852,348

The non-cash changes primarily relate to interest accrued, currency translation differences and
the business combinations for the year.

The equivalent in U.S. dollars of the most significant foreign-currency-denominated debts held
by the Company is as follows:

Currency

Euro
Algerian Dinar
South African Rand

Total

Balance as of December 31, 2020
$’000

Balance as of December 31, 2019
$’000

2,240,811
115,606
355,414

2,711,830

1,882,618
24,331
384,313

2,291,262

All of the Company’s financing agreements have a carrying amount close to its fair value.

212

16. Grants and Other Liabilities

Grants
Other liabilities

Balances as of
December 31, 2020
$’000

Balances as of
December 31, 2019
$’000

1,028,765
201,002

1,087,553
554,199

Grant and other non-current liabilities

1,229,767

1,641,752

As of December 31, 2020, the amount recorded in Grants corresponds primarily to the ITC Grant
awarded by the U.S. Department of the Treasury to Solana and Mojave for a total amount of
$674 million ($707 million as of December 31, 2019), which was primarily used to fully repay
the Solana and Mojave short-term tranche of the loan with the Federal Financing Bank. The
amount recorded in Grants as a liability is progressively recorded as other income over the
useful life of the asset.

The remaining balance of the “Grants” account corresponds to loans with interest rates below
market rates for Solana and Mojave for a total amount of $352 million ($379 million as of
December 31, 2019). Loans with the Federal Financing Bank guaranteed by the Department of
Energy for these projects bear interest at a rate below market rates for these types of projects
and terms. The difference between proceeds received from these loans and its fair value, is
initially recorded as “Grants” in the consolidated statement of financial position, and
subsequently recorded in “Other operating income” starting at the entry into operation of the
plants. Total amount of income for these two types of grants for Solana and Mojave is $58.9
million and $59.0 million for the years ended December 31, 2020 and 2019, respectively.

Other liabilities included as of December 31, 2019, the investment from Liberty Interactive
Corporation (”Liberty”) made on October 2, 2013 for an original amount of $300 million. The
liability was recorded in Grants and other liabilities for a total amount of $380 million as of
December 31, 2019 and its current portion was recorded in other current liabilities for $41
million (Note 17). The investment was made in the parent company of the project entity, in
exchange for the right to receive a large part of taxable losses and distributions until such time
when Liberty reaches a certain rate of return, or the Flip Date. According to the stipulations of
IAS 32 and in spite of the fact that the investment of Liberty was in shares, it did not qualify as
equity and had been classified as a liability as of December 31, 2019. This liability had been
initially valued at fair value, calculated as the present value of expected cash-flows during the
useful life of the concession, and was then measured at amortized cost in accordance with the
effective interest method, considering the most updated expected future cash-flows.

The Company acquired on August 17, 2020 Liberty´s equity interest in Solana for a total
estimated purchase price of approximately $290 million, of which $272 million have already
been paid. Total price includes a deferred payment and a performance earn-out based on the
average annual net production of the asset in the four calendar years with the highest annual
net production during the five calendar years of 2020 through 2024 (Note1). The difference
between the purchase price and the carrying amount of the liability previously recorded
resulted in a $145 million gain recorded within the line “Other financial income/(expense), net”
in the profit and loss statement (Note 21).

213

Additionally, other liabilities include $52 million of finance lease liabilities and $88 million of
dismantling provision as of December 31, 2020 ($54 million and $60 million as of December 31,
2019, respectively). The increase in the dismantling provision since December 31, 2019 is
primarily due to the reduction of the useful life of the CSP plants in Spain, effective September
1, 2020 (Note 6).

17. Trade and Other Payables

Item

Trade accounts payable
Down payments from clients
Liberty (Note 16)
Other accounts payable

Total

Balance as of December 31, 2020
$’000

Balance as of December 31, 2019
$’000

54,219
416
-
37,922

92,557

52,062
565
41,032
34,403

128,062

Trade accounts payable mainly relate to the operation and maintenance of the plants.

Nominal values of Trade payables and other current liabilities are considered to approximately
equal to fair values and the effect of discounting them is not significant.

18. Income Tax

All the companies of Atlantica file income taxes according to the tax regulations in force in each
country on an individual basis or under consolidation tax regulations.

The consolidated income tax has been calculated as an aggregation of income tax
expenses/income of each individual company. In order to calculate the taxable income of the
consolidated entities individually, the accounting result is adjusted for temporary and permanent
differences, recording the corresponding deferred tax assets and liabilities. At each consolidated
income statement date, a current tax asset or liability is recorded, representing income taxes
currently refundable or payable. Deferred income taxes reflect the net tax effects of temporary
differences between the carrying amount of assets and liabilities for financial statement and
income tax purposes, as determined under enacted tax laws and rates.

Income tax payable is the result of applying the applicable tax rate in force to each tax-paying
entity, in accordance with the tax laws in force in the country in which the entity is registered.
Additionally, tax deductions and credits are available to certain entities, primarily relating to
inter-company trades and tax treaties between various countries to prevent double taxation.

The Company offsets deferred tax assets and deferred tax liabilities in each entity where the
latter has a legally enforceable right to set off current tax assets against current tax liabilities,
and the deferred tax assets and liabilities relate to income taxes levied by the same taxation
authority.

214

As of December 31, 2020, and 2019, the analysis of deferred tax assets and deferred tax liabilities
is as follows:

Deferred tax assets

Balance as of December 31,

from

2020

2019

Net operating loss carryforwards (“NOL´s”)

497,184

546,705

Temporary tax non-deductible expenses

Derivatives financial instruments

Other

Total deferred income tax assets

115,063

83,847

3,021

95,847

86,096

699,115

728,648

Deferred tax liabilities

Balance as of December 31,

from

2020

2019

Accelerated tax amortization

652,600

682,800

Other difference between tax and book value of assets

154,969

137,192

Other

Total deferred income tax liabilities

179

9,686

807,748

829,678

After offsetting deferred tax assets and deferred tax liabilities, where applicable, the resulting
net amounts presented on the consolidated balance sheet are as follows:

Consolidated balance sheets classifications

Balance as of December 31,

Deferred tax assets

Deferred tax liabilities

Net deferred tax liabilities

2020

2019

152,290

147,966

260,923

248,996

(108,633) (101,030)

Most of the NOL´s recognized as deferred tax assets corresponds to the entities in the U.S.,
South Africa, Perú, Chile and Spain as of December 31, 2020 and 2019.

As of December 31, 2020, deferred tax assets for non-deductible expenses are primarily due to
the temporary limitation of financial expenses deductibles for tax purposes in the solar plants
in Spain for $110 million ($83 million as of December 31, 2019).

Deferred tax assets for derivatives financial instruments as of December 31, 2020 mainly relate
to ACT for $22 million and to solar plants in Spain for $51 million ($17 million and $61 million
as of December 31, 2019, respectively).

215

As of December 31, 2020, deferred tax liabilities for accelerated tax amortization are primarily
in Solana and Mojave for $361 million, the solar plants in Spain for $202 million and Kaxu for
$90 million ($391 million, $182 million and $109 million as of December 31, 2019, respectively).

Deferred tax liabilities for other temporary differences between the tax and book value of
contracted concessional assets relate primarily to ACT for $75 million, the Chilean entities for
$29 million and the Peruvian entities for $32 million as of December 31, 2020 ($84 million, $29
million and $25 million as of December 31, 2019, respectively).

In relation to tax losses carryforwards and deductions pending to be used recorded as deferred
tax assets, the entities evaluate their recoverability projecting forecasted taxable result for the
upcoming years and taking into account their tax planning strategy. Deferred tax liabilities
reversals are also considered in these projections, as well as any limitation established by tax
regulations in force in each tax jurisdiction.

In addition, the Company has $329 million unrecognized net operating loss carryforwards as of
December 31, 2020 ($180 million as of December 31, 2019), as it considers it is not probable
that future taxable profits will be available against which these unused tax losses can be utilized.

The movements in deferred tax assets and liabilities during the years ended December 31, 2020
and 2019 were as follows:

Deferred tax assets

As of December 31, 2018

Increase/(decrease) through the consolidated income statement

Increase/(decrease) through other consolidated comprehensive income (equity)

Other movements

As of December 31, 2019

Increase/(decrease) through the consolidated income statement

Increase/(decrease) through other consolidated comprehensive income (equity)

Other movements

As of December 31, 2020

Amount

136,066

5,809

6,147

(56)

147,966

6,003

(8,698)

7,019

152,290

216

Deferred tax liabilities

As of December 31, 2018

Increase/(decrease) through the consolidated income statement

Business Combinations (Note 5)

Other movements

As of December 31, 2019

Increase/(decrease) through the consolidated income statement

Other movements

As of December 31, 2020

Amount

211,000

31,678

2,539

3,779

248,996

9,675

2,252

260,923

Details of income tax for the years ended December 31, 2020 and 2019 are as follows:

Current tax

Deferred tax

relating to the origination and reversal of
temporary differences

Year ended 2020
$’000

Year ended 2019
$’000

(21,205)

(3,672)

)

(5,081)

(25,869

)

(3,672)

(25,869)

Total income tax benefit/(expense)

(24,877)

(30,950)

The reconciliations between the theoretical income tax resulting from applying an average
statutory tax rate to profit before income tax and the actual income tax expense recognized in
the consolidated income statements for the years ended December 31, 2020 and 2019, are as
follows:

217

Profit before tax

Average statutory tax rate

Year ended 2020
$’000

Year ended 2019
$’000

41,751

25%

105,558

25%

Tax at the average statutory tax rate

(10,438)

(26,390)

Tax effect of share of results of associates

Differences in statutory tax rates

128

(94)

1,808

(7,076)

Unrecognized NOLs and deferred tax assets

(37,183)

(14,161)

Purchase of Liberty´s equity interest in Solana

Other permanent differences

Other non-taxable income/(expense)

36,352

(8,895)

(4,747)

11,220

3,649

Tax charge for the year

(24,877)

(30,950)

For the year ended December 31, 2020, the overall effective tax rate was different than the
statutory rate of 25% primarily due to unrecognized tax losses carryforwards, mainly in the UK
entities, partially offset by the non-taxable gain recorded in the consolidated financial
statements on the purchase of Liberty´s equity interest in Solana (Note 16).

For the year ended December 31, 2019, the overall effective tax rate was different than the
statutory rate of 25%, respectively, primarily due to unrecognized tax losses carryforwards,
mainly in the UK and US entities.

The average statutory tax rate used by the Company changed in 2019 considering some
changes in the statutory tax rate of some geographies over the past years.

The Company had no identified uncertain tax positions that require evaluation as of December
31, 2020 and 2019.

19. Contingent Liabilities, Guarantees and Commitments

The following table shows the breakdown of the third-party commitments and contractual
obligations as of December 31, 2020 and 2019:

218

2020

$’000

Total

2021

2022 and
2023

2024 and
2025

Subsequent

Corporate debt (Note 14)
Loans with credit institutions
project debt (Note 15)
Notes and bonds project debt
(Note 15)
Purchase commitments(*) (**)
Accrued interest estimate during
the useful life of loans (**)

993,725
4,123,856

23,648
261,800

2,036
583,259

450,169
517,872
770,507 2,508,290

1,113,758

50,558

100,911

109,884

852,405

1,709,660

93,791

160,211

172,776

1,282,8811

2,309,597

286,724

541,652

468,060 1,013,161

2019

$’000

Total

2020

2021 and
2022

2023 and
2024

Subsequent

723,791 28,706
4,105,915 241,116

200,504
504,921

200,926
598,837

293,655
2,761,041

746,433 28,304

51,508

56,192

610,429

1,758,147 84,881

186,222

173,622

1,313,422

2,472,070 294,676

549,320

471,535

1,156,539

* Purchase commitments include undiscounted lease commitments for $94.6 million as of December 31, 2020 ($93.0
million as of December 31, 2019), of which $5.3 million is due within one year and $89.3 million thereafter as of
December 31, 2020 ($5.1 million due within one year and $87.9 million thereafter as of December 31, 2019).

** Off-balance sheet items

Third-party guarantees

As of December 31, 2020, the overall sum of Bank Bond and Surety Insurance directly deposited
by the subsidiaries of the Company as a guarantee to third parties (clients, financial entities and
other third parties) amounted to $36.3 million attributed to operations of technical nature
($38.2 million as of December 31, 2019). In addition, Atlantica Sustainable Infrastructure plc
issued guarantees amounting to $159.8 million as of December 31, 2020 ($130.1 million as of
December 31, 2019). Guarantees issued by Atlantica Sustainable Infrastructure plc correspond
mainly to guarantees provided to off-takers in PPAs, guarantees for debt service reserve
accounts and guarantees for points of access for renewable energy projects.

Corporate debt guarantees

The payment obligations under the Revolving Credit Facility, the Note Issuance Facility 2020
and 2019, and the 2020 Green Private Placement are guaranteed on a senior unsecured basis
by following subsidiaries of the Company: Atlantica Infrastructures, S.L.U., ABY Concessions Peru
S.A., ACT Holding, S.A. de C.V., ASHUSA Inc., ASUSHI Inc. and Atlantica Investments Limited. The

219

Revolving Credit Facility and the 2020 Green Private Placement are also secured with a pledge
over the shares of the subsidiary guarantors.

Legal Proceedings

A number of Abengoa’s subcontractors and insurance companies that issued bonds covering
Abengoa’s obligations under such contracts in the U.S. included some of the non-recourse
subsidiaries of Atlantica in the U.S. at the time of the construction of the plants the Company
currently owns as co-defendants in claims against Abengoa. Generally, the subsidiaries of
Atlantica were dismissed as defendants at early stages of the processes. With respect to a claim
addressed by a group of insurance companies to a number of Abengoa’s subsidiaries and to
Solana for Abengoa related losses of approximately $20 million that could increase, according
to the insurance companies, up to a maximum of approximately $200 million if all their
exposure resulted in losses, Atlantica reached an agreement with all but one of the above-
mentioned insurance companies, under which they agreed to dismiss their claims in exchange
for payments of approximately $4.3 million, which were paid in 2018. The insurance company
that did not join the agreement has temporarily stopped legal actions against Atlantica, and
Atlantica does not expect this particular claim to have a material adverse effect on its business.

In addition, an insurance company covering certain Abengoa’s obligations in Mexico claimed
certain amounts related to a potential loss. This claim is covered by existing indemnities from
Abengoa. Nevertheless, the Company reached an agreement under which Atlantica´s maximum
theoretical exposure would in any case be limited to approximately $35 million, including $2.5
million to be held in an escrow account. On January 2019, the insurance company executed
$2.5 million from the escrow account and Abengoa reimbursed such amount according to the
indemnities in force between Atlantica and Abengoa. The payments by Atlantica would only
happen if and when the actual loss has been confirmed, and after arbitration, if the Company
initiates it. The Company used to have indemnities from Abengoa covering potential losses, but
such indemnities are no longer valid following the insolvency filing by Abengoa S.A. in February
2021 (Note 25).

The Company is not a party to any other significant legal proceeding other than legal
proceedings arising in the ordinary course of its business. The Company is party to various
administrative and regulatory proceedings that have arisen in the ordinary course of business.

While the Company does not expect these proceedings, either individually or in the aggregate,
to have a material adverse effect on its financial position or results of operations, because of
the nature of these proceedings the Company is not able to predict their ultimate outcomes,
some of which may be unfavourable to the Company.

Other matters

Abengoa maintains a number of obligations under EPC, O&M and other contracts, as well as
indemnities covering certain potential risks. Certain of these indemnities and obligations are no
longer valid after the insolvency filing by Abengoa S.A. in February 2021. In addition, a potential
insolvency of Abenewco1, S.A. may also terminate the remaining obligations, indemnities and
guarantees. Additionally, Abengoa represented that further to the accession to its restructuring

220

agreement, Atlantica would not be a guarantor of any obligation of Abengoa with respect to
third parties and agreed to indemnify the Company for any penalty claimed by third parties
resulting from any breach in such representations. The Company has contingent assets, which
have not been recognized as of December 31, 2020, related to the obligations of Abengoa
referred above, which result and amounts will depend on the occurrence of uncertain future
events.

20. Other Operating Income and Expenses

The table below shows the detail of Other operating income and expenses for the years
ended December 31, 2020, and 2019:

Other Operating income

Grants
Income from various services and insurance
proceeds

Total Other Operating Income

For the twelve-
month period ended
December 31, 2020

For the twelve-
month period ended
December 31, 2019

$’000

59,010

40,515

99,525

59,142

34,632

93,774

For the twelve-
month period ended
December 31, 2020

For the twelve-
month period ended
December 31, 2019

Other Operating Expenses

$’000

Raw materials and consumables used
Leases and fees
Operation and maintenance
Independent professional services
Supplies
Insurance
Levies and duties
Other expenses

(7,792)
(2,531)
(110,873)
(40,193)
(27,926)
(37,638)
(39,820)
(9,891)

(9,719)
(1,850)
(116,018)
(41,579)
(25,823)
(23,971)
(34,844)
(7,971)

Total

(276,666)

(261,776)

Grants income mainly relate to Investment Tax Credits (´ITC´) cash grants and implicit grants
recorded for accounting purposes in relation to the Federal Financing Bank (´FFB´) loans with
interest rates below market rates in Solana and Mojave projects (Note 16).

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21. Financial Expenses, Net

The following table sets forth financial income and expenses for the years ended December 31,
2020 and 2019:

For the twelve-
month period ended
December 31, 2020
$’000

For the twelve-
month period ended
December 31, 2019
$’000

Finance income
Interest income from loans and credits

Profit on interest rate derivatives: cash flow hedges

TOTAL

6,651
401
7,052

3,665

456

4,121

Finance expenses

Expenses due to interest:

- Loans from credit entities

- Other debts

Interest rate losses derivatives: cash flow hedges

TOTAL

For the twelve-month
period ended
December 31, 2020
$’000

For the twelve-
month period ended
December 31, 2019
$’000

(246,676)

(259,416)

(69,561)

(62,149)

(378,386)

(89,256)

(59,318)

(407,990)

Financial interest income from loans and credits primarily includes a non-monetary financial
income of $3.8 million resulting from the refinancing of the debt of Cadonal in the second
quarter of 2020 (Note 15).

Interests from other debts are primarily interests on the notes issued by ATS, ATN, Solaben
Luxembourg, Hypesol Solar Inversiones and Atlantica Sustainable Infrastructure Jersey, and
interests related to the investment from Liberty (Note 16). The decrease is primarily due to the
acquisition of Liberty’s equity interest in Solana in August 2020. The decrease in 2019 was
primarily due to a lower increase of the amortized cost of the Liberty debt compared to the
previous year.

Losses from interest rate derivatives designated as cash flow hedges correspond primarily to
transfers from equity to financial expense when the hedged item is impacting the consolidated
income statement.

Net exchange differences

Net exchange differences primarily correspond to realized and unrealized exchange gains and

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losses on transactions in foreign currencies as part of the normal course of the business of the
Company.

Other financial income/(expenses), net

The following table sets out Other net financial income and expenses for the years 2020 and
2019:

Other finance income / (expenses), net
Other finance income
Other finance expenses

TOTAL

For the year ended
December 31, 2020
$’000

For the year ended
December 31, 2019
$’000

162,290
(121,415)

40,875

14,152
(15,305)

(1,153)

Other financial income in 2020 include a $145 million gain further to the purchase of Liberty´s
equity interest in Solana (Note 16). Residual items are primarily interests on deposits and loans,
including non-monetary changes to the amortized cost of such loans. In 2019, other financial
income was primarily interests on deposits and on loan granted to third parties.

Other financial losses include in 2020 a $73 million expense further to the refinancing of the
Helios 1&2 debts (Note 15) ) and a $16 million expense further to the change in the fair value of
the conversion option of the Green Exchangeable Notes since July 2020 (Note 14). Residual items
are primarily guarantees and letters of credit, other bank fees, non-monetary changes to the fair
value of derivatives for which hedge accounting is not applied and of financial instruments
recorded at fair value through profit and loss, and other minor financial expenses.

22. Earnings Per Share

Basic earnings per share for the years 2020 and 2019 has been calculated by dividing the profit
attributable to equity holders of the company by the number of shares outstanding.

Diluted earnings per share for the year 2020 have been calculated considering the potential
issuance of 3,347,305 shares on settlement of the Green Exchangeable Notes (Note 14). Diluted
earnings per share equals basic earnings per share for the year 2019.

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Item

Profit from continuing operations attributable to
Atlantica Sustainable Infrastructure Plc.
Average number of ordinary shares outstanding
(thousands) - basic
Average number of ordinary shares outstanding
(thousands) - diluted
Earnings per share from continuing operations (US
dollar per share) - basic and diluted
Earnings per share from profit for the period (US
dollar per share) - basic and diluted

For the twelve-month

period ended
December 31, 2020
$’000

For the twelve-month
period ended
December 31, 2019
$’000

11,698

101,879

103,392

0.12

62,135

101,063

0.61

23. Auditor’s Remuneration

The analysis of the auditor’s remuneration is as follows:

Fees payable to the company’s auditor and their associates for
the audit of the company’s annual accounts
Fees payable to the company’s auditor and their associates for
other services to the group

–The audit of the company’s subsidiaries

Total audit fees

- Audit-related services
- Tax services
- Other services

Total non-audit fees

Year ended 2020
$000

Year ended 2019
$000

604

596

787

1,391

516

502

1,033

2,424

758

1,354

481

406

271

1,158

2,512

“Audit Fees” are the aggregate fees billed for professional services in connection with the audit
of the Annual Consolidated Financial Statements, quarterly reviews of the Company interim
financial statements and statutory audits of the subsidiaries’ financial statements under the
rules of England and Wales and the countries in which subsidiaries are organized. The increase
in audit fees is mainly due to new companies under scope and exchange rates.

“Audit-Related Services” include fees charged for services that can only be provided by the
auditor of the Company, such as consents and comfort letters of non-recurring transactions,
assurance and related services that are reasonably related to the performance of the audit or
review of the Company financial statements. Fees paid during 2020 and 2019 related to comfort
letters and consents required for capital market transactions of the major shareholder are also
included in this category. These fees were re-invoiced and paid by this shareholder.

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“Tax Services” include mainly fees charged for transfer pricing services and tax compliance
services in the Company US subsidiaries.

“Other Services” comprises fees billed in relation to financial advisory and due diligence services
and other services which cannot be included under other categories.

The Audit Committee approved all of the services provided by Ernst & Young S.L and by other
member firms of EY.

24. Staff Costs

The average monthly number of employees (including executive directors) was:

Executives

Middle Managers

Engineers and Graduates

Assistants and Professionals

Plant technicians

2020

2019

Number

132

178

441

119

82
306

(*) In 2020 we redefined our employee categories. We revised the 2019 classification following the 2020
updated employee category classification.

Their aggregate remuneration comprised:

Wages and salaries

Social security costs

Other staff costs

Year ended
2020
$000

Year ended
2019
$000

(47,228)

(27,596)

(3,718)

(3,518)

(2,983)

(1,667)

(54,464)

(32,246)

The increase in employee benefit expenses in 2020 is primarily due to the internalization of
operation and maintenance services in the U.S. solar assets of the Company, following the
acquisition of ASI Operations in July 2019.

Key management includes the Directors’, the CEO, the CFO and 5 key executives. Total
compensation received by key management in 2020 amounts to $6.1 million ($4.5 million in
2019). Also,$1.3 million (2019: $nil) of long-term awards received. The long term-awards include

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one third of the share units under the Special One-Off plan which vested in 2020 and were paid,
and one third of the share options awarded under the Long Term Incentive Plan which vested
in 2020, regardless if they were exercised or not. Furthermore, information about the
remuneration of individual directors’ is provided in the audited part of the Directors'
Remuneration Report on pages 114 to 137.

25. Events After the Balance Sheet Date

On January 6, 2021, the Company closed its second investment through its renewable energy
platform in Chile, with the acquisition of a 40 MW solar PV plant (“Chile PV 2”). This asset started
commercial operation in 2017 and its revenue is partially contracted. Total equity investment
for this new asset was $5.0 million.

On January 7, 2021, Algonquin purchased 4,020,860 ordinary shares of the Company in a private
placement in order to maintain its previous equity ownership of 44.2% in the Company. Gross
proceeds were approximately $133 million.

On February 22, 2021, Abengoa S.A. (the holding company) filed for insolvency proceedings in
Spain. Based on the public information filed in connection with these proceedings, such
insolvency proceedings do not include other Abengoa companies, including Abenewco1, S.A.,
the controlling company of the subsidiaries performing the operation and maintenance
services. Although the Company has contingency plans in place, including a potential change
of supplier and/or internalization, in the short term it expects the operation and maintenance
services to continue to be provided by its current supplier. Currently, Atlantica does not expect
any material impact in the accounting value of its concessional assets as a result of the
insolvency filing of Abengoa S.A. The insolvency filing by the individual company Abengoa S.A.
represents a theoretical event of default under the Kaxu project finance agreement (Note 1).

On February 26, 2021, the Board of Directors of the Company approved a dividend of $0.42 per

share, which is expected to be paid on March 22, 2021.

26. Service Concessional Arrangements

Below is a description of the concessional arrangements of the Atlantica group.

Solana

Solana is a 250 MW net (280 MW gross) solar electric generation facility located in Maricopa
County, Arizona, approximately 70 miles southwest of Phoenix. Arizona Solar One LLC, or Arizona

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Solar, owns the Solana project. Solana includes a 22-mile 230kV transmission line and a molten
salt thermal energy storage system. Solana reached COD on October 9, 2013.

Solana has a 30-year, PPA with Arizona Public Service, or APS, approved by the Arizona
Corporation Commission (ACC). The PPA provides for the sale of electricity at a fixed price per
MWh with annual increases of 1.84% per year. The PPA includes limitations on the amount and
condition of the energy that is received by APS with minimum and maximum thresholds for
delivery capacity that must not be breached.

Mojave

Mojave is a 250 MW net (280 MW gross) solar electric generation facility located in San
Bernardino County, California, approximately 100 miles northeast of Los Angeles. Mojave
reached COD on December 1, 2014.

Mojave has a 25-year, PPA with Pacific Gas & Electric Company, or PG&E, approved by the
California Public Utilities Commission (CPUC). The PPA provides for the sale of electricity at a
fixed base price per MWh without any indexation mechanism, including limitations on the
amount and condition of the energy that is received by PG&E with minimum and maximum
thresholds for delivery capacity that must not be breached.

Palmatir

Palmatir is an on-shore wind farm facility in Uruguay with nominal installed capacity of 50 MW.
Palmatir has 25 wind turbines and each turbine has a nominal capacity of 2 MW. UTE, Uruguay’s
state-owned electricity company, has agreed to purchase all energy produced by Palmatir
pursuant to a 20-year PPA. UTE will pay a fixed-price tariff per MWh under the PPA, which is
denominated in U.S. dollars and will be partially adjusted in January of each year according to a
formula based on inflation.

Palmatir reached COD in May 2014.

Cadonal

Cadonal is an on-shore wind farm facility in Uruguay with nominal installed capacity of 50 MW.
Cadonal has 25 wind turbines and each turbine has a nominal capacity of 2 MW. UTE, Uruguay´s
state-owned electricity company, has agreed to purchase all energy produced by Cadonal
pursuant to a 20-year PPA.

Cadonal reached COD in December 2014.

Solaben 2 & 3

The Solaben 2 and Solaben 3 are two 50 MW Solar Power facilities.

Renewable energy plants in Spain, like Solaben 2 and Solaben 3, are regulated through a series
of laws and rulings which guarantee the owners of the plants a reasonable return for their
investments. Solaben 2 and Solaben 3 sell the power they produce into the wholesale electricity

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market, where supply and demand are matched and the pool price is determined, and also
receive additional payments from the CNMC, the Spanish state-owned regulator.

Solacor 1 & 2

The Solacor 1 and Solacor 2 are two 50 MW Solar Power facilities. JGC Corporation, a Japanese
engineering company, holds 13% of Solacor 1 & Solacor 2.

ACT

The ACT plant is a gas-fired cogeneration facility with a rated capacity of approximately 300 MW
and between 550 and 800 metric tons per hour of steam. The plant includes a substation and a
115-kilowatt 52 mile transmission line .

On September 18, 2009, ACT entered into the Pemex Conversion Services Agreement, or the
Pemex CSA, with Pemex. Pemex is a state-owned oil and gas company supervised by the
Comision Reguladora de Energía (CRE), the Mexican state agency that regulates the energy
industry. The Pemex CSA has a term of 20 years from the in-service date and will expire on March
31, 2033.

According to the Pemex CSA, ACT must provide, in exchange for a fixed price with escalation
adjustments, services including the supply and transformation of natural gas and water into
thermal energy and electricity. Part of the electricity is to be supplied directly to a Pemex facility
nearby, allowing the Comision Federal de Electricidad (CFE) to supply less electricity to that
facility. Approximately 90% of the electricity must be injected into the Mexican electricity
network to be used by retail and industrial end customers of CFE in the region. Pemex is then
entitled to receive an equivalent amount of energy in more than 1,000 of their facilities in other
parts of the country from CFE, following an adjustment mechanism under the supervision of CFE.

The Pemex CSA is denominated in U.S. dollars. The price is a fixed tariff and will be adjusted
annually, part of it according to inflation and part according to a mechanism agreed in the
contract that, on average over the life of the contract, reflects expected inflation. The

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components of the price structure and yearly adjustment mechanisms were prepared by Pemex
and provided to bidders as part of the request for proposal documents.

ATN

ATN, is part of the Peruvian SGT (Sistema Garantizado de Transmision), which includes all
transmission line concessions allocated by a bidding process by the government and is
comprised of the following facilities:

the approximately 356 mile, 220kV line from Carhuamayo-Paragsha-Conococha-Kiman-

(i)
Ayllu-Cajamarca Norte;

the 4.3 mile, 138kV link between the existing Huallanca substation and Kiman Ayllu

(ii)
substations;

the 1.9 mile, 138kV link between the 138kV Carhuamayo substation and the 220kV

(iii)
Carhuamayo substation;

the Conococha and Kiman Ayllu substations; and (v) the expansion of the Cajamarca

(iv)
Norte, 220kV Carhuamayo, 138kV Carhuamayo and 220kV Paragsha substations.

Additionally, on December 28, 2018 ATN completed the acquisition of a 220-kV power
substation and two small transmission lines to connect the lines of the Company to the
Shahuindo mine located nearby (ATN Expansion 1) and, on October 22, 2019, the Company
closed the acquisition of ATN Expansion 2.

Pursuant to the initial concession agreement, the Ministry of Energy, on behalf of the Peruvian
Government, granted ATN a concession to construct, develop, own, operate and maintain the
ATN Project. The initial concession agreement became effective on May 22, 2008 and will expire
30 years after COD of the first tranche of the line, which took place in January 2011. ATN is
obliged to provide the service of transmission of electric energy through the operation and
maintenance of the electric transmission line, according to the terms of the contract and the
applicable law.

The laws and regulations of Peru establish the key parameters of the concession contract, the
price indexation mechanism, the rights and obligations of the operator and the procedures that
have to be followed in order to fix the applicable tariff, which occurs through a regulated bidding
process. Once the bidding process is complete and the operator is granted the concession, the
pricing of the power transmission service is established in the concession agreement. ATN has a
30-year concession agreement with a fixed-price tariff base denominated in U.S. dollars that is

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adjusted annually after COD of each line, in accordance with the U.S. Finished Goods Less Food
and Energy Index published by the U.S. Department of Labor.

ATS

ATS is part of the Peruvian Guaranteed Transmission System, or (Sistema Garantizado de
Transmisión) which includes all transmission line concessions allocated by a bidding process by
the government, and is comprised of:

a 500kV electric transmission line and two short 220kV electric transmission lines, which

(i)
are linked to existing substations;
three 500kV substations; and
(ii)
three existing substations (two existing 220kV substations and one existing 550/220kV
(iii)
substation), through the development of new transformers, line reactors, series reactive
compensation and shunt reactions in some substations.

Pursuant to the initial concession agreement, the Ministry of Energy, on behalf of the Peruvian
Government, granted ATS a concession to construct, develop, own, operate and maintain the
ATS Project. The initial concession agreement became effective on July 22, 2010 and will expire
30 years after COD, which took place in January 2014. ATS is obliged to provide the service of
transmission of electric energy through the operation and maintenance of the electric
transmission line, according to the terms of the contract and the applicable law.

The laws and regulations of Peru establish the key parameters of the concession contract, the
price indexation mechanism, the rights and obligations of the operator and the procedure that
has to be followed in order to fix the applicable tariff, which occurs through a regulated bidding
process. Once the bidding process is complete and the operator is granted the concession, the
pricing of the power transmission service is established in the concession agreement. ATS has a
30-year concession agreement with fixed-price tariff base denominated in U.S. dollars that is
adjusted annually after COD of each line, in accordance with the U.S. Finished Goods Less Food
and Energy Index published by the U.S. Department of Labor.

Quadra 1 & Quadra 2

Quadra 1 is a 49-miles transmission line project and Quadra 2 is a 32-miles transmission line
project, each connected to the Sierra Gorda substations.

Both projects have concession agreements with Sierra Gorda SCM. The agreements are
denominated in U.S. dollars and are indexed mainly to CPI. The concession agreements each

230

have a 21-year term that began on COD, which took place in April 2014 and March 2014 for
Quadra 1 and Quadra 2, respectively.

Quadra 1 and Quadra 2 belong to the Northern Interconnected System (SING), one of the two
interconnected systems into which the Chilean electricity market is divided and structured for
both technical and regulatory purposes.

As part of the SING, Quadra 1 and Quadra 2 and the service they provide are regulated by several
in particular: the Superintendent’s office of Electricity and Fuels
regulatory bodies,
(Superintendencia de Electricidad y Combustibles, SEC), the Economic Local Dispatch Center
(Centro de Despacho Economico de Cargas, CDEC), the National Board of Energy (Comision
Nacional de Energia, CNE) and the National Environmental Board (Comision Nacional de Medio
Ambiente, CONAMA) and other environmental regulatory bodies.

In all these concession arrangements, the operator has all the rights necessary to manage,
operate and maintain the assets and the obligation to provide the services defined above, which
are clearly defined in each concession contract and in the applicable regulations in each country.

Helioenergy 1&2

The Helioenergy 1 and 2 solar plants are located in Ecija, Spain and reached COD in 2011.

Renewable energy plants in Spain, like Helionergy 1 and Helionergy 2, are regulated through a
series of laws and rulings which guarantee the owners of the plants a reasonable return for their
investments. Helionergy 1 and Helionergy 2 sell the power they produce into the wholesale
electricity market, where supply and demand are matched and the pool price is determined, and
also receive additional payments from the Comision Nacional de los Mercados y de la
Competencia, or CNMC, the Spanish state-owned regulator.

Helios 1&2

The Helios 1 and 2 solar plants are located in Spain. They reached COD in 2012.

Solnova 1, 3&4

The Solnova 1, 3 and 4 solar plants are located in the municipality of Sanlucar la Mayor, Spain.
The plants have 50 MW each and reached COD in 2010.

Honaine

The Honaine project is a water desalination plant located in Taffsout, Algeria. Myah Bahr Honaine
Spa, or MBH, is the vehicle incorporated in Algeria for the purposes of owning the Honaine

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project. Algerian Energy Company, SPA, or AEC, owns 49% and Sacyr Agua S.L., a subsidiary of
Sacyr, S.A., owns indirectly the remaining 25.5% of the Honaine project.

Honaine has a capacity of 7 M ft3 per day of desalinated water and it has been in operation since
July 2012.

The water purchase agreement is a 25-year take-or-pay contract with Sonatrach / Algérienne
des Eaux, or ADE. The tariff structure is based upon plant capacity and water production,
covering variable cost (water cost plus electricity cost). Tariffs are adjusted monthly based on
the indexation mechanisms that include local inflation, U.S. inflation and the exchange rate
between the U.S. dollar and local currency.

Skikda

The Skikda project is a water desalination plant located in Skikda, Algeria. AEC owns 49% and
Sacyr Agua S.L. owns indirectly the remaining 16.83% of the Skikda project.

Skikda has a capacity of 3.5 M ft3 per day of desalinated water and is in operation since February
2009. The project serves a population of 0.5 million.

The water purchase agreement is a 25-year take-or-pay contract with Sonatrach / ADE. The tariff
structure is based upon plant capacity and water production, covering variable cost (water cost
plus electricity cost). Tariffs are adjusted monthly based on the indexation mechanisms that
include local inflation, U.S. inflation and the exchange rate between the U.S. dollar and local
currency.

ATN 2

ATN 2, in Peru, is part of the Complementary Transmission System, or Sistema Complementario
de Transmision, SCT, and is comprised of the following facilities:

(i) The approximately 130km, 220kV line from SE Cotaruse to Las Bambas;

(ii) The connection to the gate of Las Bambas Substation

(iii) The expansion of the Cotaruse 220kV substation (works assigned to Consorcio
Transmantaro)

The Client is Las Bambas Mining Company.

The ATN2 Project has an 18-year contract period, after that, ATN2 assets will remain as property
of the SPV allowing ATN2 to potentially sign a new contract. The ATN2 Project has a fixed-price
tariff base denominated in U.S. dollars, partially adjusted annually in accordance with the U.S.
Finished Goods Less Food and Energy Index as published by the U.S. Department of Labor. The
base tariff is independent from the effective utilization of the transmission lines and substations
related to the ATN2 Project. The base tariff is intended to provide the ATN2 Project with
consistent and predictable monthly revenues sufficient to cover the ATN2 Project’s operating
costs and debt service and to earn an equity return. Peruvian law requires the existence of a

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definitive concession agreement to perform electricity transmission activities where the
transmission facilities cross public land or land owned by third parties. On May 31, 2014, the
Ministry of Energy granted the project a definitive concession agreement to the transmission
lines of the ATN2 Project.

Kaxu

Kaxu Solar One, or Kaxu, is a 100 MW solar project located in Pofadder in the Northern Cape
Province of South Africa. Atlantica., owns 51% of the Kaxu Project while Industrial Development
Corporation of South Africa owns 29% and Kaxu Community Trust 20%.

The project reached COD in February 2015.

Kaxu has a 20-year PPA with Eskom SOC Ltd., or Eskom, under a take or pay contract for the
purchase of electricity up to the contracted capacity from the facility. Eskom purchases all the
output of the Kaxu Plant under a fixed price formula in local currency subject to indexation to
local inflation. The PPA expires on February 2035.

Solaben 1&6

The Solaben 1&6 50 MW solar plants are located in the municipality of Logrosán, Spain. and
reached COD in 2013

Melowind

Melowind is an on-shore wind farm facility wholly owned by the Company, located in Uruguay
with a capacity of 50 MW. Melowind has 20 wind turbines of 2.5 MW each. The asset reached
COD in November 2015.

Melowind signed a 20-year PPA with UTE in 2015, for 100% of the electricity produced. UTE pays
a fixed tariff under the PPA, which is denominated in U.S. dollars and is partially adjusted every
year based on a formula referring to U.S. CPI, Uruguay’s CPI and the applicable UYU/U.S. dollar
exchange rate.

Tenes

Tenes is a water desalination plant located in Algeria. Befesa Agua Tenes has a 51.0% stake in
Ténès Lilmiyah SpA. The remaining 49% is owned by AEC.

The water purchase agreement is a 25-year take-or-pay contract with Sonatrach/ADE. The tariff
structure is based upon plant capacity and water production, covering variable cost (water cost
plus electricity cost). Tariffs are adjusted monthly based on the exchange rate between the U.S.
dollar and local currency and yearly based on indexation mechanisms that include local inflation
and U.S. inflation.

Projects subject to the application of IFRIC 12 interpretation based on the concession of services
as of December 31, 2020:

233

Country Status(1)

% of
Nominal
Share(2)

Period of
Concession(4)(5)

off-taker(7)

Financial/
Intangible(3)

Assets/
Investment

Accumulated
Amortization

Operating
Profit/
(Loss)(8)

Arrangement
Terms (price)

Description of the
Arrangement

Project

name

Renewable
energy:

Solana

USA

(O)

100.0

30 Years

APS

(I)

1,830,148

(468,323)

(5,722)

Mojave

USA

(O)

100.0

25 Years

PG&E

(I)

1,557,559

(374,193)

48,436

Palmatir

Uruguay

(O)

100.0

20 Years

Cadonal

Uruguay

(O)

100.0

20 Years

Melowind

Uruguay

(O)

100.0

20 Years

Solaben 2

Spain

(O)

70.0

25 Years

Solaben 3

Spain

(O)

70.0

25 Years

Solacor 1

Spain

(O)

87.0

25 Years

Solacor 2

Spain

(O)

87.0

25 Years

Solnova 1

Spain

(O)

100.0

25 Years

Solnova 3

Spain

(O)

100.0

25 Years

Solnova 4

Spain

(O)

100.0

25 Years

UTE, Uruguay

Administratio
n

UTE, Uruguay

Administratio
n

UTE, Uruguay

Administratio
n

Kingdom of

Spain

Kingdom of

Spain

Kingdom of

Spain

Kingdom of

Spain

Kingdom of

Spain

Kingdom of

Spain

Kingdom of

Spain

147,911

(48,843)

7,971

121,986

(37,315)

15,293

(I)

135,977

(29,598)

4,673

(I)

337,506

(80.255)

10,222

(I)

336,556

(81,998)

10,802

(I)

341,674

(88,382)

9,359

(I)

355,614

(90,861)

9,248

(I)

340,713

(108,908)

14,090

(I)

318,415

(98,755)

14,331

(I)

297,118

(91,251)

13,865

234

Fixed price per
MWh with
annual
increases of
1.84% per year

30-year PPA with
APS regulated by
ACC

Fixed price per
MWh without
any indexation
mechanism

25-year PPA with
PG&E regulated
by CPUC and
CAEC

Fixed price per
MWh in USD
with annual
increases
based on
inflation

Regulated
revenue

base(6)

Regulated
revenue

base(6)

Regulated
revenue

base(6)

Regulated
revenue

base(6)

Regulated
revenue

base(6)

Regulated
revenue

base(6)

Regulated
revenue

20-year PPA with
UTE, Uruguay
state-owned
utility

Regulated
revenue
established by
different laws and
rulings in Spain

Regulated revenue
established by
different laws and
rulings in Spain

Regulated revenue
established by
different laws and

Helios 1

Spain

(O)

100.0

25 Years

(I)

344,533

(84,144)

11,285

Kingdom of

Spain

Kingdom of

Helios 2

Spain

335,550

(80,361)

11,677

(O)

100.0

25 Years

Spain

(I)

Helioenergy
1

Helioenergy
2

Spain

(O)

100.0

25 Years

Spain

(O)

100.0

25 Years

Solaben 1

Spain

(O)

100.0

25 Years

Solaben 6

Spain

(O)

100.0

25 Years

Kingdom of

Spain

Kingdom of

Spain

Kingdom of

Spain

Kingdom of

Spain

(I)

330,497

(87,496)

11,149

(I)

331,206

(84,360)

11,560

(I)

332,537

(70,486)

11,542

(I)

329,203

(69,659)

12,161

Kaxu

South
Africa

(O)

51.0

20 Years

Eskom

(I)

521,523 (154,962)

41,483

Efficient natural gas:

ACT

Mexico (O)

100.0

20 Years

Pemex

(F)

580,141

75,349

base(6)

rulings in Spain

Regulated
revenue

base(6)

Regulated
revenue

base(6)

Regulated
revenue

base(6)

Regulated
revenue

base(6)

Regulated
revenue

base(6)

Regulated
revenue

base(6)

Regulated revenue
established by
different laws and
rulings in Spain

Take or pay
contract for
the purchase
of electricity up
to the
contracted
capacity from
the facility.

20-year PPA with
Eskom SOC Ltd.
With a fixed price
formula in local
currency subject
to indexation to
local inflation

20-year
Services
Agreement
with Pemex,
Mexican oil &
gas state-
owned
company

Fixed price to
compensate both
investment and O&M
costs, established in
USD and adjusted
annually partially
according to inflation
and partially
according to a
mechanism agreed in
contract

Electric transmission lines:

235

30-year
Concession
Agreement
with the
Peruvian
Government

Tariff fixed by
contract and adjusted
annually in
accordance with the
US Finished Goods
Less Food and Energy
inflation index

30-year
Concession
Agreement
with the
Peruvian
Government

21-year
Concession
Contract with
Sierra Gorda
regulated by
CDEC and the
Superentenden
cia de
Electricidad,
among others

Fixed price in USD
with annual
adjustments indexed
mainly to US CPI

21-year
Concession
Contract with
Sierra Gorda
regulated by
CDEC and the
Superentenden
cia de
Electricidad,
among others

Fixed price in USD
with annual
adjustments indexed
mainly to US CPI

Fixed-price tariff base
denominated in U.S.
dollars with Las
Bambas

18 years
purchase
agreement

ATS

Peru

(O) 100.0 30 Years

Republic
of

Peru

(I)

531,887

(122,005)

29,339

ATN

Peru

(O) 100.0 30 Years

Republic
of Peru

(I)

359,912

(105,618)

6,474

Quadra I

Chile

(O) 100.0 21 Years

Sierra
Gorda

(F)

40,381

5,362

Quadra II

Chile

(O) 100.0 21 Years

ATN 2

Peru

(O) 100.0 18 Years

Water:

Skikda

Argelia (O)

34.2

25 Years

Honaine

Argelia

(O)

25.5

25 Years

Sierra
Gorda

Las
Bambas
Mining

Sonatra
ch &
ADE

(F)

55,417

4,922

(F)

78,743

12,332

(F)

77,702

13,909

U.S. dollar indexed
take-or-pay contract
with Sonatrach / ADE

25 years
purchase
agreement

(F)

N/A(9)

U.S. dollar

indexed take-

or-pay

25 years
purchase

contract with

agreement

Sonatrach /

ADE

236

Tenes

Argelia

(O)

25.5

25 Years

Sonatra
ch &
ADE

(F)

106,071

10,610

U.S. dollar

indexed take-

or-pay

25 years
purchase

contract with

agreement

Sonatrach /

ADE

Classified as concessional financial asset (F) or as intangible assets (I).
The infrastructure is used for its entire useful life. There are no obligations to deliver assets at the end of the concession

(1) In operation (O), Construction (C) as of December 31, 2020.
(2)
Itochu Corporation holds 30% of the economic rights to each of Solaben 2 and Solaben 3. JGC Corporation holds 13% of
the economic rights to each Solacor 1 and Solacor 2. Algerian Energy Company, SPA, or AEC, owns 49% and Sacyr Agua, S.L., a
subsidiary of Sacyr, S.A., owns the remaining 25.5% of the Honaine project. AEC owns 49% and Sacyr Agua S.L. owns the remaining
16.83% of the Skikda project. Industrial Development Corporation of South Africa (29%) & Kaxu Community Trust (20%) for the
Kaxu Project. AEC owns 49% of the Tenes project.
(3)
(4)
periods, except for ATN and ATS.
(5)
the operator, for example.
(6)
(7)
(8)
December 31, 2020.
(9)

Sales to wholesale markets and additional fixed payments established by the Spanish government.
In each case the off-taker is the grantor.
Figures reflect the contribution to the consolidated financial statements of Atlantica Sustainable Infrastructure Plc. as of

Generally, there are no termination provisions other than customary clauses for situations such as bankruptcy or fraud from

Recorded under the equity method.

Projects subject to the application of IFRIC 12 interpretation based on the concession of services
as of December 31, 2019:

Project

name

Country

Status(1)

Renewable energy:

% of
Nominal
Share(2)

Period of

Financial/

Assets/

off-taker(7)

Concession(4)(5)

Intangible(3)

Investment

Accumulat
ed
Amortizati
on

Operating

Arrangement

Description of

Profit/

Terms

the

(Loss)(8)

(price)

Arrangement

Solana

USA

(O)

100.0

30 Years

APS

(I)

1,916,268

(424,627)

47,344

Mojave

USA

(O)

100.0

25 Years

PG&E

(I)

1,556,638

(312,544)

49,939

Palmatir

Uruguay

(O)

100.0

20 Years

Cadonal

Uruguay

(O)

100.0

20 Years

148,043

(43,967)

3,537

122,104

(43,987)

2,650

UTE, Uruguay

Administration

UTE, Uruguay

Administration

(I)

237

Fixed price
per MWh
with annual
increases of
1.84% per
year

Fixed price
per MWh
without any
indexation
mechanism

Fixed price
per MWh in
USD with
annual
increases
based on
inflation

Fixed price
per MWh in
USD with
annual

30-year
PPA with
APS
regulated
by ACC

25-year
PPA with
PG&E
regulated
by CPUC
and CAEC

20-year
PPA with
UTE,
Uruguay
state-
owned
utility

20-year
PPA with
UTE,
Uruguay

Project

name

Country

Status(1)

% of
Nominal
Share(2)

Period of

Financial/

Assets/

off-taker(7)

Concession(4)(5)

Intangible(3)

Investment

Accumulat
ed
Amortizati
on

Operating

Arrangement

Description of

Profit/

Terms

the

(Loss)(8)

(price)

Arrangement

Melowind

Uruguay

(O)

100.0

20 Years

UTE, Uruguay

Administration

(I)

136,421

(22,501)

3,826

Solaben 2

Spain

(O)

70.0

25 Years

Solaben 3

Spain

(O)

70.0

25 Years

Solacor 1

Spain

(O)

87.0

25 Years

Solacor 2

Spain

(O)

87.0

25 Years

Solnova 1

Spain

(O)

100.0

25 Years

Solnova 3

Spain

(O)

100.0

25 Years

Solnova 4

Spain

(O)

100.0

25 Years

Helios 1

Spain

(O)

100.0

25 Years

Kingdom of

Spain

Kingdom of

Spain

Kingdom of

Spain

Kingdom of

Spain

Kingdom of

Spain

Kingdom of

Spain

Kingdom of

Spain

Kingdom of

Spain

(I)

308,407

(63,275)

12,763

(I)

307,174

(65,072)

12,836

(I)

311,963

(70,393)

11,569

(I)

324,834

(72,228)

11,559

(I)

311,759

(89,172)

15,482

(I)

292,904

(80,829)

16,569

(I)

271,943

(74,523)

15,966

(I)

313,132

(66,794)

14,095

238

increases
based on
inflation

Fixed price
per MWh in
USD with
annual
increases
based on
inflation

Regulated
revenue

base(6)

Regulated
revenue

base(6)

Regulated
revenue

base(6)

Regulated
revenue

base(6)

Regulated
revenue

base(6)

Regulated
revenue

base(6)

Regulated
revenue

base(6)

Regulated
revenue

base(6)

state-
owned
utility

20-year
PPA with
UTE,
Uruguay
state-
owned
utility

Regulated
revenue
establishe
d by
different
laws and
rulings in
Spain

Regulated
revenue
established by
different laws
and rulings in
Spain

Project

name

Country

Status(1)

% of
Nominal
Share(2)

Period of

Financial/

Assets/

off-taker(7)

Concession(4)(5)

Intangible(3)

Investment

Accumulat
ed
Amortizati
on

Operating

Arrangement

Description of

Profit/

Terms

the

(Loss)(8)

(price)

Arrangement

Helios 2

Spain

(O)

100.0

25 Years

Kingdom of

Spain

(I)

304,945

(63,626)

14,346

Helioener
gy 1

Spain

(O)

100.0

25 Years

Kingdom of

Spain

(I)

303,316

(68,486)

14,927

Helioener
gy 2

Spain

(O)

100.0

25 Years

Kingdom of

Spain

(I)

304,083

(66,007)

16,130

Solaben 1

Spain

(O)

100.0

25 Years

Solaben 6

Spain

(O)

100.0

25 Years

Kingdom of

Spain

Kingdom of

Spain

(I)

303,392

(54,293)

12,603

(I)

300,209

(53,641)

11,730

Kaxu

South
Africa

(O)

51.0

20 Years

Eskom

(I)

543,761

(132,849)

53,040

Efficient natural gas:

ACT

Mexic
o

(O)

100.0

20 Years

Pemex

(F)

610,363

113,549

Regulated
revenue
established
by different
laws and
rulings in
Spain

Regulated
revenue

base(6)

Regulated
revenue

base(6)

Regulated
revenue

base(6)

Regulated
revenue

base(6)

Regulated
revenue

base(6)

Take or pay
contract for the
purchase of
electricity up to
the contracted
capacity from
the facility.

20-year PPA
with Eskom
SOC Ltd. With
a fixed price
formula in
local currency
subject to
indexation to
local inflation

Fixed price to
compensate both
investment and
O&M costs,
established in USD
and adjusted
annually partially
according to
inflation and
partially according
to a mechanism
agreed in contract

20-year Services
Agreement with
Pemex, Mexican
oil & gas state-
owned company

239

Project

name

Country

Status(1)

Electric transmission lines:

% of
Nominal
Share(2)

Period of

Financial/

Assets/

off-taker(7)

Concession(4)(5)

Intangible(3)

Investment

Accumulat
ed
Amortizati
on

Operating

Arrangement

Description of

Profit/

Terms

the

(Loss)(8)

(price)

Arrangement

ATS

Peru

(O)

100.0

30 Years

Republic of

Peru

(I)

531,779 (104,201)

28,993

ATN

Peru

(O)

100.0

30 Years

Republic of
Peru

(I)

356,876

(93,061)

5,680

Quadra I Chile

(O)

100.0

21 Years

Sierra Gorda

(F)

41,237

5,716

Quadra II Chile

(O)

100.0

21 Years

Sierra Gorda

(F)

55,157

6,638

ATN 2

Peru

(O)

100.0

18 Years

Las Bambas
Mining

(F)

80,407

14,432

Water:

Skikda

Argelia

(O)

34.2

25 Years

Sonatrach &
ADE

(F)

87,285

15,583

240

Tariff fixed by
contract and
adjusted annually
in accordance
with the US
Finished Goods
Less Food and
Energy inflation
index

Fixed price in USD
with annual
adjustments
indexed mainly to
US CPI

Fixed-price tariff
base
denominated in
U.S. dollars with
Las Bambas

30-year
Concession
Agreement
with the
Peruvian
Government

21-year
Concession
Contract
with Sierra
Gorda
regulated by
CDEC and
the
Superentend
encia de
Electricidad,
among
others

18 years
purchase
agreement

U.S. dollar
indexed take-or-
pay contract with
Sonatrach / ADE

25 years
purchase
agreement

Project

name

Country

Status(1)

% of
Nominal
Share(2)

Period of

Financial/

Assets/

off-taker(7)

Concession(4)(5)

Intangible(3)

Investment

Accumulat
ed
Amortizati
on

Operating

Arrangement

Description of

Profit/

Terms

the

(Loss)(8)

(price)

Arrangement

Honaine

Argelia

(O)

25.5

25 Years

Sonatrach &
ADE

(F)

N/A(9)

U.S. dollar

indexed take-

or-pay

25 years
purchase

contract with

agreement

Sonatrach /

ADE

In operation (O), Construction (C) as of December 31, 2019.
(1)
(2)
Liberty Interactive Corporation agreed to invest $300 million in Class A membership interests in exchange for
a share of the dividends and the taxable loss generated by Solana on October 2, 2013. Itochu Corporation holds 30%
of the economic rights to each of Solaben 2 and Solaben 3. JGC Corporation holds 13% of the economic rights to
each Solacor 1 and Solacor 2. Algerian Energy Company, SPA, or AEC, owns 49% and Sacyr Agua, S.L., a subsidiary of
Sacyr, S.A., owns the remaining 25.5% of the Honaine project. AEC owns 49% and Sacyr Agua S.L. owns the remaining
16.83% of the Skikda project. Industrial Development Corporation of South Africa (29%) & Kaxu Community Trust
(20%) for the Kaxu Project
(3)
(4)
concession periods, except for ATN and ATS.
(5)
or fraud from the operator, for example.
(6)
(7)
(8)
31, 2019.
(9)

Classified as concessional financial asset (F) or as intangible assets (I).
The infrastructure is used for its entire useful life. There are no obligations to deliver assets at the end of the

Generally, there are no termination provisions other than customary clauses for situations such as bankruptcy

Recorded under the equity method.

241

Company Financial Statements

Company Balance Sheet

Amounts in thousands of U.S. dollars

Non Current assets
Intangible and tangible assets
Investments in subsidiaries
Amounts owed by group undertakings
Financial investments
Derivatives assets

Current assets
Trade and other receivables
Amounts owed by group undertakings
Financial investments
Derivatives assets
Cash and cash equivalents

Total assets

Creditors: Amounts falling due within one year
Trade and other payables
Amounts owed to group undertakings
Borrowings

Net current assets/(liabilities)

Total assets less current liabilities

Creditors: Amounts falling due after more than one year
Borrowings
Amounts owed to group undertakings
Derivatives liabilities
Other liabilities

Total liabilities

Net assets

(1) Notes 1 to 9 are an integral part of the financial statements

242

Notes
(1)

2020

2019

3
4

6
4
5

5
4

201
1,846,157
475,819
4,271
325

309
1,909,066
500,871
-
1,562

2,326,773

2,411,808

697
48,686
-
460
335,193

1,495
48,349
7,398
2,048
66,013

385,036

125,303

2,711,809

2,537,111

5,652
14,215
21,554

4,592
5,688
28,706

41,421

39,986

343,155

85,317

2,670,388

2,498,125

861,871
360,521
1,481
6,261

695,085
186,913
2,340
273

1,230,134

884,611

1,271,555

923,597

1,440,254

1,613,514

243

Company Statement of Changes in Equity

Amounts in thousands of U.S. dollars

Share
capital

Share
premium
account

Capital
reserves

Other
reserves

Accumulated
deficit

Total
Shareholder´s
funds

Balance at 1 January
2019

Capital increase
share premium
Loss for the year
Dividends
Change in fair value
of cash flow hedges
(net of deferred
taxation)

Reduction of share
premium (Note 7)

Balance at 31
December 2019

Capital increase
share premium
Loss for the year
Dividends
Change in fair value
of cash flow hedges
(net of deferred
taxation)
Balance at 31
December 2020

10,022

1,981,881

48,059

138

29,862

-
-

-
(159,003)

(637)

(1,000,000)

1,000,000

-
-

(270,816)

1,769,146

(25,992)
-

30,000

(25,992)
(159,003)

(637)

10,160

1,011,743

889,056

(637)

(296,808)

1,613,514

507

-
-

161,348

-
(168,659)

-
-

(165,612)
-

161,855

(165,612)
(168,659)

(844)

10,667

1,011,743

881,745

(1,481)

(462,420)

1,440,254

244

Notes to the Company Financial Statements

1. Significant Accounting Policies

The separate financial statements of the Company are presented as required by the
Companies Act 2006. The Company meets the definition of a qualifying entity under FRS
100 (Financial Reporting Standard 100) issued by the Financial Reporting Council.

As permitted by FRS 101, the Company has taken advantage of the disclosure exemptions
available under that standard in relation to share-based payment, financial instruments,
capital management, presentation of comparative information in respect of certain
assets, presentation of a cash-flow statement and certain related party transactions.

Where required, equivalent disclosures are given in the consolidated financial
statements.

The financial statements have been prepared on the historical cost basis except for the
re measurement of certain financial instruments to fair value. The principal accounting
policies adopted are the same as those set out in note 2 to the consolidated financial
statements except as noted below.

The Company’s has prepared these financial statements on a going concern basis. For
further information, please refer the “going concern basis” in note 2.1 of the consolidated
financial statements.

Investments in subsidiaries and impairment

Investments in subsidiaries are stated at cost less, where appropriate, provisions for
impairment.

At each balance sheet date, the Company reviews the carrying amounts of its investments
to determine whether there is any indication that those assets have suffered an
impairment loss. If any such indication exists, the recoverable amount of the asset is
estimated to determine the extent of the impairment loss.

Recoverable amount is the higher of fair value less costs to sell and value in use. In
assessing value in use, the estimated future cash flows are discounted to their present
value using a pre-tax discount rate that reflects current market assessments of the time
value of money and the risks specific to the asset for which the estimates of future cash
flows have not been adjusted.

If the recoverable amount of an asset is estimated to be less than its carrying amount,
the carrying amount of the asset is reduced to its recoverable amount. An impairment
loss is recognised immediately in the profit and loss.

Where an impairment loss subsequently reverses, the carrying amount of the asset is
increased to the revised estimate of its recoverable amount, but so that the increased
carrying amount does not exceed the carrying amount that would have been determined

245

had no impairment loss been recognised for the asset in prior years. A reversal of an
impairment loss is recognised immediately in the profit and loss.

Critical Accounting Policies and Estimates

The most critical accounting policies, which reflect significant management estimates and
judgement to determine amounts in the Company’s financial statements, are as follows:

Impairment of investments;

To assess the potential impairment on the Company´s investments, the recoverable amount
of the investment is calculated if there is an indicator of impairment. The recoverable
amount determination requires a significant amount of judgement to calculate future cash
flow projections and pre-tax discount rates, among others.

- Derivative financial instruments and fair value estimates.

The Company uses valuation techniques that are appropriate in the circumstances and for
which sufficient data’s available to measure fair value, maximising the use of relevant
observable inputs and minimising the use of unobservable inputs.

2. Loss for the year

As permitted by section 408 of the Companies Act 2006 the Company has elected not to
present its own profit and loss account for the year. The Company reported a loss for
the financial year ended 31 December 2020 of $165.6 million (2019: loss of $26.0 million).

The auditor’s remuneration for audit and other services is disclosed in note 23 to the
consolidated financial statements.

3. Investments in Subsidiaries

Details of the Company’s subsidiaries at 31 December 2020 are as follows:

Name

Place of
incorporation
and principal
place of business

Proportion
of
ownership
interest

Proportion
of voting
power
held

Registered office

Palmucho, S.A. Chile

100.00%

Atlantica Corporate Resources, S.L.

Spain

99.99%

Avda. Apoquindo, 3600, Piso 5,
Oficina 517, Las Condes,
Santiago de Chile
C/ Albert Einstein, s/n
41092, Sevilla (Spain)

246

Transmisora Baquedano, S.A.

Chile

100.00%

Transmisora Mejillones, S.A.

Chile

100.00%

ASUSHI Inc.

USA

100.00%

ACT Holdings, S.A. de C.V.

Mexico

99.99%

Atlantica Peru, S.A.

Peru

100.00%

Atlantica Infraestructura Sostenible,
S.L.U.
ASHUSA Inc

Spain

USA

100.00%

Atlantica South Africa (Pty) Ltd

South Africa

100.00%

ATN 2, S.A.

Peru

100.00%

Mojave Solar Holdings, Llc

Mojave Solar, Llc

USA

100.00%

ASO Holdings Company, LLC

USA

100.00%

Arizona Solar One, LLC (USA)

USA

100.00%

ATN, S.A.

Peru

99.99%

Atlantica Transmisión Sur, S.A.

Peru

100.00%

ACT Energy Mexico, S.A. de C.V.

Mexico

99.99%

247

Avda. Apoquindo, 3600, Piso 5,
Oficina 517, Las Condes,
Santiago de Chile
Avda. Apoquindo, 3600, Piso 5,
Oficina 517, Las Condes,
Santiago de Chile
1553 West Todd Dr., Suite 204
Tempe, AZ 85283 (USA)

Avda. Jaime Balmes, 11, Piso
10, Torre C, Fracción C, Oficina
1001, Col. Los Morales
Polanco, 11510, Ciudad de
México
Av. El Derby 55, Edificio
Cronos, Torre 3, Piso 6; oficina
608.
Santiago de Surco
Lima (Peru).
C/ Albert Einstein, s/n
41092, Sevilla (Spain)
1553 West Todd Dr., Suite 204
Tempe, AZ 85283 (USA)
Office 103 Ancorley Building;
45 Scott Street
Upington
8801 (South Africa)
Av. El Derby 55, Edificio
Cronos, Torre 3, Piso 6; oficina
608.
Santiago de Surco
Lima.
1553 West Todd Dr., Suite 204
Tempe, AZ 85283 (USA)
1553 West Todd Dr., Suite 204
Tempe, AZ 85283 (USA)
1553 West Todd Dr., Suite 204
Tempe, AZ 85283 (USA)
1553 West Todd Dr., Suite 204
Tempe, AZ 85283 (USA)
Av. El Derby 55, Edificio
Cronos, Torre 3, Piso 6; oficina
608.
Santiago de Surco
Lima.
Av. El Derby 55, Edificio
Cronos, Torre 3, Piso 6; oficina
608.
Santiago de Surco
Lima.
Avda. Jaime Balmes, 11, Piso
10, Torre C, Fracción C, Oficina

Kaxu Solar One (Pty) Ltd

South Africa

51.00%

Sanlucar Solar, S.A.

Solar Processes, S.A.

Spain

100.00%

Palmatir, S.A

Uruguay

100.00%

Cadonal, S.A.

Uruguay

100.00%

Banitod, S.A.

Uruguay

100.00%

Ecija Solar Inversiones, S.A.

Spain

100.00%

Helioenergy Electricidad Uno, S.A.

Spain

100.00%

Helioenergy Electricidad, Dos, S.A.

Spain

100.00%

Carpio Solar Inversiones, S.A.

Spain

100.00%

Solacor Electricidad Uno, S.A.

Spain

87.00%

Solacor Electricidad Dos, S.A.

Spain

87.00%

Logrosán Solar Inversiones, S.A.

Spain

100.00%

Solaben Electricidad Dos, S.A.

Spain

70.00%

Solaben Electricidad Tres, S.A.

Spain

70.00%

Hypesol Energy Holding, S.L.

Spain

100.00%

Helios I Hyperion Energy
Investments, S.L.
Helios II Hyperion Energy
Investments, S.L.

Spain

100.00%

248

1001, Col. Los Morales
Polanco, 11510, Ciudad de
México
Office 103 Ancorley Building;
45 Scott Street
Upington
8801 (South Africa)
C/ Albert Einstein, s/n
41092, Sevilla (Spain)
C/ Albert Einstein, s/n
41092, Sevilla (Spain)
Avda. Luis Alberto de Herrera,
1248 , World Trade Center,
Torre II, Piso 1. Oficina 1505,
Montevideo, Uruguay.
Avda. Luis Alberto de Herrera,
1248 , World Trade Center,
Torre II, Piso 1. Oficina 1505,
Montevideo, Uruguay.
Avda. Luis Alberto de Herrera,
1248 , World Trade Center,
Torre II, Piso 1. Oficina 1505,
Montevideo, Uruguay.
C/ Albert Einstein, s/n
41092, Sevilla (Spain)
C/ Albert Einstein, s/n
41092, Sevilla (Spain)
C/ Albert Einstein, s/n
41092, Sevilla (Spain)
C/ Albert Einstein, s/n
41092, Sevilla (Spain)
C/ Albert Einstein, s/n
41092, Sevilla (Spain)
C/ Albert Einstein, s/n
41092, Sevilla (Spain)
C/ Albert Einstein, s/n
41092, Sevilla (Spain)
Plataforma Solar Extremadura,
Carretera EX-116 PK 17,560,
10120 Logrosán (Cáceres,
Spain)
Plataforma Solar Extremadura,
Carretera EX-116 PK 17,560,
10120 Logrosán (Cáceres,
Spain)

C/ Albert Einstein, s/n
41092, Sevilla (Spain)
C/ Albert Einstein, s/n
41092, Sevilla (Spain)
C/ Albert Einstein, s/n
41092, Sevilla (Spain)

Solnova Solar Inversiones, S.A.

Spain

100.00%

Solnova Electricidad Uno, S.A.

Spain

100.00%

Solnova Electricidad Tres, S.A.

Spain

100.00%

Solnova Electricidad Cuatro, S.A.

Spain

100.00%

Logrosan Solar Inversiones Dos, S.L. Spain

100.00%

Solaben Luxembourg S.A.

Luxembourg

100.00%

Logrosan Equity Investment S.a.r.l.

Luxembourg

100.00%

Extremadura Equity Investment
S.a.r.l.
Solaben Electricidad Uno, S.A.

Luxembourg

100.00%

Spain

100.00%

Solaben Electricidad Seis, S.A.

Spain

100.00%

Geida Skikda, S.L.

Spain

67.00%

Aguas de Skikda, S.P.A.

Algeria

34.17%

Atlantica North America, LLC.

USA

100.00%

Fotovoltaica Solar Sevilla, S.A.

Spain

80.00%

RRHH Servicios Corporativos

Mexico

100.00%

Atlantica DCR, LLC.

Atlantica Chile, S.P.A.

USA

Chile

100.00%

Atlantica Investments Ltd

100.00%

CKA1 Holding S. de R.L. de C.V

Mexico

100.00%

249

C/ Albert Einstein, s/n
41092, Sevilla (Spain)
C/ Albert Einstein, s/n
41092, Sevilla (Spain)
C/ Albert Einstein, s/n
41092, Sevilla (Spain)
C/ Albert Einstein, s/n
41092, Sevilla (Spain)
C/ Albert Einstein, s/n
41092, Sevilla (Spain)
6, rue Eugène RuppertL-2453
Luxembourg
6, rue Eugène RuppertL-2453
Luxembourg
6, rue Eugène RuppertL-2453
Luxembourg
Plataforma Solar Extremadura,
Carretera EX-116 PK 17,560,
10120 Logrosán (Cáceres,
Spain)
Plataforma Solar Extremadura,
Carretera EX-116 PK 17,560,
10120 Logrosán (Cáceres,
Spain)
Paseo de la Castellana 83-85,
28046 Madrid (Spain)

162 Bois des Cars III
DelyIbrahim — Alger - Algerie
1553 West Todd Dr., Suite 204
Tempe, AZ 85283 (USA)
C/ Albert Einstein, s/n
41092, Sevilla (Spain)
Avda. Jaime Balmes, 11, Piso
10, Torre C, Fracción C, Oficina
1001, Col. Los Morales
Polanco, 11510, Ciudad de
México
1553 West Todd Dr., Suite 204
Tempe, AZ 85283 (USA)
Avda. Apoquindo, 3600, Piso 5,
Oficina 517, Las Condes,
Santiago de Chile
Great West House, GW1
Great West Road
Brentford TW8 9DF
London, UK
Avda. Jaime Balmes, 11, Piso
10, Torre C, Fracción C, Oficina
1001, Col. Los Morales
Polanco, 11510, Ciudad de
México

Hidrocañete, S.A.

Peru

100.00%

AY Holding Uruguay S.A

Uruguay

100.00%

Estrellada S.A

Uruguay

100.00%

AYES International UK Ltd.

100.00%

Atlantica Yield España, S.L.U.

Spain

100.00%

Overnight Solar LLC

USA

100.00%

Nesyla, S.A.

Uruguay

100.00%

Hypesol Solar Inversiones, S.A.

Spain

100.00%

Tenes Lilmiyah SPA

Algeria

51.00%

Atlantica Sustainable Infrastructure
Jersey Ltd.
Atlantica Newco, Ltd

Jersey

100.00%

ASI Operations, LLC

USA

100.00%

Calgary District Heating Inc.

Canada

100.00%

Atlantica Yield Energy Solutions
Canada Inc.
Befesa Agua Tenes, S.L.U.

Canada

10.00%

66.66%

Spain

100.00%

Hypesol Solar Inversiones S.A.U

Spain

100.00%

Av. El Derby 55, Edificio
Cronos, Torre 3, Piso 6; oficina
608.
Santiago de Surco
Lima.
Avda. Luis Alberto de Herrera,
1248 , World Trade Center,
Torre II, Piso 1. Oficina 1505,
Montevideo, Uruguay.
Avda. Luis Alberto de Herrera,
1248 , World Trade Center,
Torre II, Piso 1. Oficina 1505,
Montevideo, Uruguay.
Great West House, GW1
Great West Road
Brentford TW8 9DF
London, UK

C/ Albert Einstein, s/n
41092, Sevilla (Spain)
1553 West Todd Dr., Suite 204
Tempe, AZ 85283 (USA)
Avda. Luis Alberto de Herrera,
1248 , World Trade Center,
Torre II, Piso 1. Oficina 1505,
Montevideo, Uruguay.
C/ Albert Einstein, s/n
41092, Sevilla (Spain)
19 Lot Bois des Cars III.
Dely Ibrahim, Alger.
47 Esplanade, St Helier,
Jersey JE1 0BD UK
Great West House, GW1
Great West Road
Brentford TW8 9DF
London, UK
1553 West Todd Dr., Suite 204
Tempe, AZ 85283 (USA)
Suite 2500 Park Place
666 Burrard Street
Vancouver BC V6C 2X8
354 Davis Road Suite 100
Oakville On L5J 2X1
Calle Energia Solar, 1
41014 Sevilla
C/ Albert Einstein, s/n
41092, Sevilla (Spain)

250

The investments in subsidiaries are all stated at cost. Information on the investments acquired
in the year is disclosed in Note 5 in the consolidated financial statements. As of 31 December
2020, the carrying amount of the direct investments was as follows:

Palmucho, S.A.
Atlantica Corporate Resources, S.L.
Transmisora Baquedano, S.A.
Transmisora Mejillones, S.A.
ASUSHI Inc.
ACT Holdings, S.A. de C.V.
Atlantica Perú, S.A.
Atlantica Infraestructura Sostenible, S.L.U.
ASHUSA, Inc.
ATN, S.A. (*)
Atlantica Transmisión Sur, S.A. (*)
Atlantica Investments Ltd.
ATN 2, S.A.
Atlantica North America, LLC.
Atlantica DRC, LLC.
CKA1 Holding S. de R.L. de C.V.
AYES International UK Ltd.
Atlantica Sustainable Infrastructure Jersey Ltd.
Atlantica Newco, Ltd.

2020
$’000

2019
$’000

-
8,954
-
-
78,473
98,543
261,920
887,039
381,493
13,116
11,847
56,998
13,720
16,255
12,938
7
4,854
-
-

-
11,357
-
-
146,572
98,543
261,920
887,039
380,193
12,929
11,847
56,998
15,897
11,005
9,906
7
4,854
-
-

Total investments in subsidiaries

1,846,157 1,909,066

(*) Includes initial difference between the amortized cost and nominal amount of interest free loans (classified as
amounts owed by group undertakings, see note 5), classified as capital contribution in accordance with IFRS 9.

251

Movements in the carrying value of investments during the years 2020 and 2019 were as
follows:

As at 1 January 2020
Increase
Impairment

As at 31 December 2020

As at 1 January 2019
Increase

As at 31 December 2019

$ ´000

1,909,066
9,771
(72,680)

1,846,157

$ ´000

1,883,964
25,102

1,909,066

The increase in 2020 mainly relates to a capital increase in Atlantica North America LLC for
$5.3 million and Atlantica DDR, LLC for $3.0 million. The impairment for $72.7 million
corresponds to ASUSHI Inc. for $68.1 million, to ATN 2, S.A. for $2.2 million and Atlantica
Corporate Resources, S.L. for $2.4 million.

The increase in 2019 mainly relates to a capital increase in Atlantica North America LLC for
$11.0 million, AYES International UK Ltd. for $4.9 million and Atlantica DRC LLC for $3.8
million.

4. Amounts Owed by/to Group Undertakings

2020
$’000

2019
$’000

Non-current receivables from group companies

475,819

500,871

Non-current amounts owed by group undertakings

475,819

500,871

Current amounts owed by group undertakings

48,686

48,349

Total amounts owed by group undertakings

524,505

549,220

Current amounts owed to group undertakings
Non-Current amounts owed to group undertakings
Total amounts owed to group undertakings

14,215
360,521
374,736

5,688
186,913
192,601

252

As of 31 December 2020, the detail of the non-current amounts owed by group
undertakings was as follows:

ATN, S.A.
Atlantica Infraestructura Sostenible, S.L.U.
Carpio Solar Inversiones, S.A.
Atlantica Transmisión Sur, S.A.
ACT Holdings, S.A. de C.V.
Ecija Solar Inversiones, S.A.
Solnova Solar Inversiones, S.A.
Atlantica South Africa (Pty) Ltd.
ASHUSA, Inc.
Atlantica Corporate Resources, S.L.
Atlantica Investments Ltd.
Solnova Electricidad Cuatro, S.A.
Helios I Hyperion Energy Investments, S.A.
Helios II Hyperion Energy Investments, S.A.
Atlantica North America LLC
Other

2020
$’000

2019
$’000

33,430
-
29,227
10,335
-
-
-
6,579
57,701
3,684
50,546
2,584
4,067
3,459
266,932
7,275

45,107
250,957
28,762
20,888
4,860
3,863
19,643
20,733
54,941
4,808
42,881
-
-
-
-
3,428

Amounts owed by group undertakings

475,819

500,871

The principal features of the loans to subsidiary undertakings are as follows:

Interest Rate

Maturity

ATN, S.A.
Atlantica Infraestructura Sostenible, S.L.U.
Atlantica Corporate Resources, S.L.

0%
5%
5%

Carpio Solar Inversiones, S.A.
Atlantica Transmisión Sur, S.A.

Ecija Solar Inversiones, S.A.

Solnova Solar Inversiones, S.A.

Atlantica South Africa (Pty) Ltd.
ASUSHA Inc.
Atlantica Investments Ltd.
Atlantica North America LLC

Not applicable
31 December 2030
31 December 2030

31 July 2031
Not applicable

2.5% plus Euribor 12

months
0%

4.25% plus Euribor 12

months

27 December 2030

4.25% plus Euribor 12

months
-
5.9%
5%
5%

25 June 2030
Not applicable
Not applicable
31 December 2030
31 December 2030

As at 31 December 2020, the amounts owed to group undertakings primarily relate to ACT Energy
Mexico, S.A. de C.V. for $203.4 million ($186.9 million as of 31 December 2019) and to Atlantica
Sustainable Infrastructure Jersey Ltd for $112.1 million (nil as of 31 December 2019).

253

5. Borrowings

As of 31 December 2020, the details of the amounts owed to third parties were as follows:

Secured borrowing at amortised cost
Bonds
Borrowings

Total borrowings
Amount due for settlement within 12 months

2020
$’000

2019
$’000

21,224
862,201

27,917
695,874

883,425
21,554

723,791
28,706

Amount due for settlement after 12 months

861,871

695,085

The principal features of the borrowings and bonds are as follows:

On February 10, 2017, the Company issued Senior Notes due 2022, 2023, 2024 (the “Note Issuance
Facility 2017”), in an aggregate principal amount of €275,000 thousand. The Note Issuance Facility
2017 was fully repaid on April 2, 2020.

On July 20, 2017, the Company signed a credit facility (the “2017 Credit Facility”) for up to €10
million, approximately $12.2 million, which is available in euros or U.S. dollars. Amounts drawn
down accrue interest at a rate per year equal to EURIBOR plus 2% or LIBOR plus 2%, depending on
the currency. As of December 31, 2020, the 2017 Credit Facility is fully available (€9 million drawn
down as of December 31, 2019). The credit facility maturity is December 13, 2021.

On May 10, 2018, the Company entered into a $215 million revolving credit facility (the “Revolving
Credit Facility”) with Royal Bank of Canada, as administrative agent and Royal Bank of Canada and
Canadian Imperial Bank of Commerce, as issuers of letters of credit. Amounts drawn down accrue
interest at a rate per year equal to (A) for Eurodollar rate loans, LIBOR plus a percentage determined
by reference to the leverage ratio of the Company, ranging between 1.60% and 2.25% and (B) for
base rate loans, the highest of (i) the rate per annum equal to the weighted average of the rates
on overnight U.S. Federal funds transactions with members of the U.S. Federal Reserve System
arranged by U.S. Federal funds brokers on such day plus ½ of 1.00%, (ii) the U.S. prime rate and
(iii) LIBOR plus 1.00%, in any case, plus a percentage determined by reference to the leverage ratio
of the Company, ranging between 0.60% and 1.00. Letters of credit may be issued using up to $100
million of the Revolving Credit Facility. During the year 2019, the amount of the Revolving Credit
Facility increased from $215 million to $425 million and the maturity was extended to December
31, 2022. On December 31, 2020, the Company had issued letter of credits for $10 million and
therefore, $415 million of the Revolving Credit Facility are available. On December 31, 2019 the
Company had drawn down $84 million which were repaid in the third quarter of 2020.

EURIBOR plus 4.50%. The interest rate on the Note Issuance Facility 2019 is fully hedged by an
interest rate swap with effective date June 28, 2019 and maturity date June 30, 2022, resulting in
the Company paying a net fixed interest rate of 4.24%. The Note Issuance Facility 2019 provides
that the Company may capitalize interest on the notes issued thereunder for a period of up to two
years from closing at the Company´s discretion, subject to certain conditions.

On October 8, 2019, the Company filed a euro commercial paper program (the “Commercial
Paper”) with the Alternative Fixed Income Market (MARF) in Spain. The program had an original
maturity of twelve months and was extended for another twelve-month period on October 8, 2020.
The program allows Atlantica to issue short term notes over the next twelve months for up to €50
million, with such notes having a tenor of up to two years. As of December 31, 2020, the Company
had €17.4 million issued and outstanding under the program at an average cost of 0.69% (€25
million as of December 31, 2019).

On April 1, 2020, the Company closed the secured 2020 Green Private Placement for €290 million
(approximately $354 million). The private placement accrues interest at an annual 1.96% interest,
payable quarterly and has a June 2026 maturity. Net proceeds were primarily used to fully repay
the Note Issuance Facility 2017.

On July 8, 2020, the Company entered into a senior unsecured financing (the “Note Issuance Facility
2020”) with Lucid Agency Services Limited, as agent, and a group of funds managed by Westbourne
Capital as purchasers of the notes issued thereunder for a total amount of approximately $171
million which is denominated in euros (€140 million). The Note Issuance Facility 2020 was issued
on August 12, 2020, accrues interest at an annual 5.25% interest, payable quarterly and has a
maturity of seven years from the closing date.

6. Trade and Other Payables

As of 31 December 2020, Trade and other payables primarily relate to independent professional
services.

7. Equity

As of December 31, 2020, the share capital of the Company amounts to $10,667,087 represented
by 106,670,866 ordinary shares completely subscribed and disbursed with a nominal value of $0.10
each, all in the same class and series. Each share grants one voting right.

On December 11, 2020 the Company closed an underwritten public offering of 5,069,200 ordinary
shares, including 661,200 ordinary shares sold pursuant to the full exercise of the underwriters’
over-allotment option, at a price of $33 per new share. Gross proceeds were approximately $167
million. Given that the offering was issued through a subsidiary in Jersey, which became wholly
owned by the Company at closing, and subsequently liquidated, premium on issuance was credited
to a merger reserve account (Capital reserves), net of issuance costs, for $161.3 million. The Capital
reserves of $161.3 million generated as a result of this transaction are distributable reserves.

The share premium account reduction by $1,000,000 thousand during the year 2019, increasing
capital reserves by the same amount, was made effective upon confirmation received from the
High Court in the UK, pursuant to the Companies Act 2006.

255

Accumulated deficit are the results of the Company, which have been as follows in 2020 and 2019:

Accumulated deficit

Balance at 1 January 2019

Net loss for the year

Balance at 31 December 2019

Net loss for the year

Balance at 31 December 2020

$’000

(270,816)

(25,992)

(296,808)

(165,612)

(462,420)

8. Cash and cash equivalents

Cash and cash equivalents as of December 31, 2020, include $265.2 million of cash at bank and on
hand ($66.0 million as of December 31, 2019) and $70 million of highly liquid remunerated deposits
(nil as of December 31, 2019).

9. Third-party guarantees

The Company issued guarantees on behalf of subsidiaries amounting to $159.8 million as of
December 31, 2020 ($130.1 million as of December 31, 2019), which correspond mainly to
guarantees provided to off-takers in PPAs, guarantees for debt service reserve accounts and
guarantees for points of access for renewable energy projects.

256