FORM 10-K
STOCKHOLDER INFORMATION
STOCK TRANSFER AGENT & REGISTRAR
Shareholder correspondence should be mailed to:
Computershare
PO Box 505000
Louisville KY 40233-5000
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STOCK LISTING
Clearway Energy’s Class A and Class C common stock are listed on the
New York Stock Exchange under the ticker symbols CWEN.A and CWEN respectively
FINANCIAL INFORMATION
Clearway Energy’s Annual Report Form 10-K Proxy Statement
and other SEC Filings are available at www.clearwayenergy.com
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K
☒ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Fiscal Year ended
December 31, 2021
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the Transition period from to .
Commission File Number: 001-36002
Clearway Energy, Inc.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction
of incorporation or organization)
300 Carnegie Center, Suite 300
Princeton
New Jersey
(Address of principal executive offices)
46-1777204
(I.R.S. Employer
Identification No.)
08540
(Zip Code)
(609) 608-1525
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Class A Common Stock, par value $0.01
Trading Symbol(s)
CWEN.A
Name of each exchange on which registered
New York Stock Exchange
Class C Common Stock, par value $0.01
CWEN
New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act:
None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☒ No ☐
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes ☐ No ☒
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405
of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such
Yes ☒ No ☐
files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or
an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and "emerging growth
company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Non-accelerated filer
☒
☐
Accelerated filer
Smaller reporting company
Emerging growth company
☐
☐
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised
financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No x
Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal control over
financial reporting under section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. x
As of the last business day of the most recently completed second fiscal quarter, the aggregate market value of the common stock of the registrant held by non-affiliates
was approximately $3,029,269,190 based on the closing sale prices of such shares as reported on the New York Stock Exchange.
Indicate the number of shares outstanding of each of the registrant's classes of common stock as of the latest practicable date.
Class
Common Stock, Class A, par value $0.01 per share
Common Stock, Class B, par value $0.01 per share
Common Stock, Class C, par value $0.01 per share
Common Stock, Class D, par value $0.01 per share
Outstanding at January 31, 2022
34,599,645
42,738,750
81,869,907
42,738,750
Documents Incorporated by Reference:
Portions of the Registrant's Definitive Proxy Statement relating to its 2022 Annual Meeting of Stockholders
are incorporated by reference into Part III of this Annual Report on Form 10-K
1
TABLE OF CONTENTS
Index
GLOSSARY OF TERMS
PART I
Item 1 — Business
Item 1A — Risk Factors
Item 1B — Unresolved Staff Comments
Item 2 — Properties
Item 3 — Legal Proceedings
Item 4 — Mine Safety Disclosures
PART II
Item 5 — Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities
Item 6 — Reserved
Item 7 — Management's Discussion and Analysis of Financial Condition and Results of Operations
Item 7A — Quantitative and Qualitative Disclosures About Market Risk
Item 8 — Financial Statements and Supplementary Data
Item 9 — Changes in Disagreements With Accountants on Accounting and Financial Disclosure
Item 9A — Controls and Procedures
Item 9B — Other Information
PART III
Item 10 — Directors, Executive Officers and Corporate Governance
Item 11 — Executive Compensation
Item 12 — Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Item 13 — Certain Relationships and Related Transactions, and Director Independence
Item 14 — Principal Accounting Fees and Services
PART IV
Item 15 — Exhibits, Financial Statement Schedules
EXHIBIT INDEX
Item 16 — Form 10-K Summary
3
6
6
15
40
41
44
44
45
45
46
47
68
69
69
69
72
73
73
76
76
76
76
77
77
138
143
2
When the following terms and abbreviations appear in the text of this report, they have the meanings indicated below:
GLOSSARY OF TERMS
2020 Convertible Notes
2024 Senior Notes
2025 Senior Notes
2026 Senior Notes
2028 Senior Notes
2031 Senior Notes
2032 Senior Notes
Adjusted EBITDA
ARO
ASC
ASU
ATM Programs
Bankruptcy Code
Bankruptcy Court
Bridge Loan Agreement
CAFD
CARES Act
Carlsbad Drop Down
CEG
CEG Master Services
Agreement
CEG ROFO Agreement
Clearway Energy LLC
Clearway Energy Group LLC
$45 million aggregate principal amount of 3.25% convertible notes due 2020, issued by
Clearway Energy, Inc., which were repaid on June 1, 2020
$500 million aggregate principal amount of 5.375% unsecured senior notes due 2024, issued
by Clearway Energy Operating LLC, which were repaid on January 3,2020
$600 million aggregate principal amount of 5.750% unsecured senior notes due 2025, issued
by Clearway Energy Operating LLC, which were repaid in March 2021
$350 million aggregate principal amount of 5.00% unsecured senior notes due 2026, issued
by Clearway Energy Operating LLC, which were repaid in October 2021
$850 million aggregate principal amount of 4.75% unsecured senior notes due 2028, issued
by Clearway Energy Operating LLC
$925 million aggregate principal amount of 3.750% unsecured senior notes due 2031, issued
by Clearway Energy Operating LLC
$350 million aggregate principal amount of 3.750% unsecured senior notes due 2032, issued
by Clearway Energy Operating LLC
A non-GAAP measure, represents earnings before interest (including loss on debt
extinguishment), tax, depreciation and amortization adjusted for mark-to-market gains or
losses, asset write offs and impairments; and factors which the Company does not consider
indicative of future operating performance
Asset Retirement Obligation
The FASB Accounting Standards Codification, which the FASB established as the source of
authoritative GAAP
Accounting Standards Updates – updates to the ASC
At-The-Market Equity Offering Programs
Title 11 of the U.S. Code
U.S. Bankruptcy Court for the Northern District of California
Senior secured bridge credit agreement entered into by Clearway Energy Operating LLC
that provides a term loan facility in an aggregate principal amount of $335 million that will
mature on November 29, 2022
less cash distributions
A non-GAAP measure, Cash Available for Distribution is defined as of December 31, 2021
as Adjusted EBITDA plus cash distributions/return of investment from unconsolidated
affiliates, adjustments to reflect CAFD generated by unconsolidated investments that were
not able to distribute project dividends prior to PG&E's emergence from bankruptcy on July
1, 2020 and subsequent release post-bankruptcy, cash receipts from notes receivable, cash
distributions from noncontrolling interests, adjustments to reflect sales-type lease cash
payments,
interests, maintenance capital
expenditures, pro-rata Adjusted EBITDA from unconsolidated affiliates, cash interest paid,
income taxes paid, principal amortization of indebtedness, changes in prepaid and accrued
capacity payments, and adjusted for development expenses.
The Coronavirus Aid, Relief, and Economic Security Act
The acquisition by the Company of the Carlsbad Energy Center, a 527 MW natural gas-fired
project located in Carlsbad, CA
Clearway Energy Group LLC (formerly Zephyr Renewables LLC)
to noncontrolling
Master Services Agreements entered into as of August 31, 2018 between the Company,
Clearway Energy LLC and Clearway Energy Operating LLC, and CEG
Right of First Offer Agreement, entered into as of August 31, 2018, by and between
Clearway Energy Group LLC and Clearway Energy, Inc., and solely for purposes of Section
2.4, GIP III Zephyr Acquisition Partners, L.P., as amended by the First Amendment dated
February 14, 2019, the Second Amendment dated August 1, 2019, the Third Amendment
dated December 6, 2019 and the Fourth Amendment dated November 2, 2020
The holding company through which the projects are owned by Clearway Energy Group
LLC, the holder of Class B and Class D units, and Clearway Energy, Inc., the holder of the
Class A and Class C units
The holder of all the Company's Class B and Class D common shares and Clearway Energy
LLC's Class B and Class D units and from time to time, possibly shares of Clearway Energy,
Inc.'s Class A and/or Class C common stock
3
Clearway Energy Operating
LLC
COD
Code
Company
CVSR
The holder of the project assets that are owned by Clearway Energy LLC
Commercial Operation Date
Internal Revenue Code of 1986, as amended
Clearway Energy, Inc., together with its consolidated subsidiaries
California Valley Solar Ranch
CVSR Holdco
CVSR Holdco LLC, the indirect owner of CVSR
DGPV Holdco Entities
Collectively, DGPV Holdco 1, DGPV Holdco 2 and DGPV Holdco 3
DGPV Holdco 1
DGPV Holdco 2
DGPV Holdco 3
Distributed Solar
Drop Down Assets
ECP
EPA
ERCOT
EWG
Exchange Act
FASB
FERC
FPA
GAAP
GenConn
GHG
GIM
GIP
HLBV
IRS
ISO
ITC
KKR
kWh
LIBOR
MBTA
Mesquite Star
MMBtu
Mt. Storm
MW
MWh
MWt
NEPA
NERC
DGPV Holdco 1 LLC
DGPV Holdco 2 LLC
DGPV Holdco 3 LLC
Solar power projects, typically less than 20 MW in size, that primarily sell power produced
to customers for usage on site, or are interconnected to sell power into the local distribution
grid
Collectively, assets under common control acquired by the Company from NRG from
January 1, 2014 through the period ended August 31, 2018 and from CEG from August 31,
2018 through the period ended December 31, 2021
Energy Center Pittsburgh LLC, a subsidiary of the Company
United States Environmental Protection Agency
Electric Reliability Council of Texas, the ISO and the regional reliability coordinator of the
various electricity systems within Texas
Exempt Wholesale Generator
The Securities Exchange Act of 1934, as amended
Financial Accounting Standards Board
Federal Energy Regulatory Commission
Federal Power Act
Accounting principles generally accepted in the U.S.
GenConn Energy LLC
Greenhouse gas
Global Infrastructure Management, LLC
Global Infrastructure Partners
Hypothetical Liquidation at Book Value
Internal Revenue Service
Independent System Operator, also referred to as an RTO
Investment Tax Credit
KKR Thor Bidco, LLC, an affiliate of Kohlberg Kravis Roberts & Co. L.P.
Kilowatt Hour
London Inter-Bank Offered Rate
Migratory Bird Treaty Act
Mesquite Star Special LLC
Million British Thermal Units
NedPower Mount Storm LLC
Megawatt
Saleable megawatt hours, net of internal/parasitic load megawatt-hours
Megawatts Thermal Equivalent
National Environmental Policy Act
North American Electric Reliability Corporation
Net Exposure
NOLs
Counterparty credit exposure to Clearway Energy, Inc. net of collateral
Net Operating Losses
4
NOx
NPNS
NPPD
NRG
OCI/OCL
O&M
PG&E
PG&E Bankruptcy
PJM
PPA
PTC
PUCT
PUHCA
PURPA
QF
RENOM
ROFO
RPS
RPV Holdco
RTO
SCE
SEC
Senior Notes
SO2
SOFR
SREC
Tax Act
Thermal Business
Thermal Disposition
U.S.
U.S. DOE
Utah Solar Portfolio
Utility Scale Solar
VaR
VIE
Wind TE Holdco
Nitrogen Oxides
Normal Purchases and Normal Sales
Nebraska Public Power District
NRG Energy, Inc.
Other comprehensive income/loss
Operations and Maintenance
Pacific Gas and Electric Company
On January 29, 2019, PG&E Corporation and Pacific Gas and Electric Company filed
voluntary petitions for relief under the Bankruptcy Code in the U.S. Bankruptcy Court for
the Northern District of California. On July 1, 2020 PG&E emerged from bankruptcy.
PJM Interconnection, LLC
Power Purchase Agreement
Production Tax Credit
Public Utility Commission of Texas
Public Utility Holding Company Act of 2005
Public Utility Regulatory Policies Act of 1978
Qualifying Facility under PURPA
Clearway Renewable Operation & Maintenance LLC
Right of First Offer
Renewable Portfolio Standards
RPV Holdco 1 LLC
Regional Transmission Organization
Southern California Edison
U.S. Securities and Exchange Commission
Collectively, the 2028 Senior Notes, the 2031 Senior Notes and the 2032 Senior Notes
Sulfur Dioxide
Secured Overnight Financing Rate
Solar Renewable Energy Credit
Tax Cuts and Jobs Act of 2017
The Company's thermal business, which consists of thermal infrastructure assets that provide
steam, hot water and/or chilled water, and in some instances electricity, to commercial
businesses, universities, hospitals and governmental units
On October 22, 2021, Clearway Energy Operating LLC entered into a binding agreement to
sell the Thermal Business to KKR
United States of America
U.S. Department of Energy
Collection consists of Four Brothers Solar, LLC, Granite Mountain Holdings, LLC, and Iron
Springs Holdings, LLC, which are equity investments owned by Four Brothers Capital,
LLC, Granite Mountain Capital, LLC, and Iron Springs Capital, LLC, respectively
Solar power projects, typically 20 MW or greater in size (on an alternating current, or AC,
basis), that are interconnected into the transmission or distribution grid to sell power at a
wholesale level
Value at Risk
Variable Interest Entity
Wind TE Holdco LLC, an 814 net MW portfolio of twelve wind projects
5
Item 1 — Business
General
PART I
Clearway Energy, Inc. together with its consolidated subsidiaries, or the Company, is a publicly-traded energy
infrastructure investor in and owner of modern, sustainable and long-term contracted assets across North America. The
Company is indirectly owned by Global Infrastructure Partners, or GIP. GIP is an independent infrastructure fund manager that
makes equity and debt investments in infrastructure assets and businesses. The Company is sponsored by GIP through GIP's
portfolio company, Clearway Energy Group LLC, or CEG.
The Company is one of the largest renewable energy owners in the U.S. with over 5,000 net MW of installed wind and
solar generation projects. The Company's over 9,000 net MW of assets also includes approximately 2,500 net MW of
environmentally-sound, highly efficient natural gas-fired generation facilities as well as the Thermal Business. Through this
environmentally-sound, diversified and primarily contracted portfolio, the Company endeavors to provide its investors with
stable and growing dividend income. Substantially all of the Company's generation assets are under long-term contractual
arrangements for the output or capacity from these assets. The weighted average remaining contract duration of these offtake
agreements was approximately 12 years as of December 31, 2021 based on CAFD.
The Company consolidates the results of Clearway Energy LLC through its controlling interest, with CEG's interest
shown as noncontrolling interest in the consolidated financial statements. The holders of the Company's outstanding shares of
Class A and Class C common stock are entitled to dividends as declared. CEG receives its distributions from Clearway Energy
LLC through its ownership of Clearway Energy LLC Class B and Class D units. From time to time, CEG may also hold shares
of the Company's Class A and/or Class C common stock.
On October 22, 2021, Clearway Energy Operating LLC entered into a binding agreement to sell the Thermal Business to
KKR Thor Bidco, LLC, an affiliate of Kohlberg Kravis Roberts & Co. L.P., or KKR, for total consideration of $1.9 billion,
subject to customary closing adjustments, which is referred to herein as the Thermal Disposition. The transaction is expected to
close in the first half of 2022. The Company's Thermal segment is comprised solely of the Thermal Business's results of
operations. For further discussion of the Thermal Disposition, refer to Item 15 — Note 3, Acquisitions and Dispositions.
As of December 31, 2021, the Company owned 57.65% of the economic interests of Clearway Energy LLC, with CEG
owning 42.35% of the economic interests of Clearway Energy LLC.
A complete listing of the Company's interests in facilities, operations and/or projects owned or leased as of December 31,
2021 can be found in Item 2 — Properties.
History
The Company was formed as a Delaware corporation on December 20, 2012 by NRG. On August 31, 2018, NRG
transferred its full ownership interest in the Company to CEG, the holder of NRG's renewable energy development and
operations platform, and subsequently sold 100% of its interest in CEG to GIP.
The Company is the sole managing member of Clearway Energy LLC and operates and controls all of its business and
affairs and consolidates the financial results of Clearway Energy LLC and its subsidiaries. Clearway Energy LLC is a holding
company for the companies that directly and indirectly own and operate the Company's assets. As of December 31, 2021, the
Company owned 57.65% of the economic interests of Clearway Energy LLC, with CEG owning 42.35% of the economic
interests of Clearway Energy LLC. As a result of the current ownership of the Class B common stock and Class D common
stock, CEG controls the Company, and the Company in turn, as the sole managing member of Clearway Energy LLC, controls
Clearway Energy LLC and its subsidiaries.
6
The diagram below depicts the Company’s organizational structure as of December 31, 2021:
Business Strategy
The Company's primary business strategy is to focus on the acquisition and ownership of assets with predictable, long-
term cash flows in order that it may be able to increase the cash dividends paid to holders of the Company's Class A and Class
C common stock over time without compromising the ongoing stability of the business.
The Company's plan for executing its business strategy includes the following key components:
Focus on contracted renewable energy and conventional generation. The Company owns and operates utility scale and
distributed renewable energy and natural gas-fired generation assets with proven technologies, low operating risks and stable
cash flows. The Company believes by focusing on this core asset class and leveraging its industry knowledge, it will maximize
its strategic opportunities, be a leader in operational efficiency and maximize its overall financial performance. The Company
also owns the Thermal Business that Clearway Energy Operating LLC has entered into a binding agreement to sell to KKR.
For further discussion of the Thermal Disposition, refer to Item 15 — Note 3, Acquisitions and Dispositions.
7
Growing the business through acquisitions of contracted operating assets. The Company believes that its base of
operations provides a platform for strategic growth through cash accretive and tax advantaged acquisitions complementary to its
existing portfolio. In addition to acquiring generation facilities from third parties where the Company believes its knowledge of
the market and operating expertise provides it with a competitive advantage, the Company may consummate future acquisitions
from CEG. The Company believes that CEG's project development expertise provides the Company access to a development
platform with an extensive pipeline of potential renewable energy and storage projects that are aligned to support the
Company's growth. Furthermore, the Company has entered into the CEG ROFO Agreement, whereby CEG has granted the
Company and its affiliates a right of first offer on any proposed sale, transfer or other disposition of certain assets of CEG, or
the CEG ROFO Assets, until August 31, 2023. CEG is not obligated to sell the remaining CEG ROFO Assets to the Company
and, if offered by CEG, the Company cannot be sure whether these assets will be offered on acceptable terms, or that the
Company will choose to consummate such acquisitions. The Company and CEG work collaboratively in considering new
assets to be added under the CEG ROFO Agreement or to be acquired by the Company outside of the CEG ROFO Agreement.
The assets listed below, all of which are included in a co-investment partnership with Hannon Armstrong Sustainable
Infrastructure Capital, Inc., represent the Company's currently committed investments in projects with CEG and the CEG
ROFO Assets:
Asset
Mililani I
Waiawa
Daggett Solar 2 and 3
Technology
Gross Capacity (MW)
State
Solar
Solar
Solar
39
36
482
HI
HI
CA
COD
2H22
2H22
2H22/1H23
Status
Committed
Committed
Committed
Primary focus on North America. The Company intends to primarily focus its investments in North America (including
the unincorporated territories of the U.S.). The Company believes that industry fundamentals in North America present it with
significant opportunity to grow its portfolio without creating significant exposure to currency and sovereign risk. By primarily
focusing its efforts on North America, the Company believes it will best leverage its regional knowledge of power markets,
industry relationships and skill sets to maximize the performance of the Company.
Maintain sound financial practices to grow the dividend. The Company intends to maintain a commitment to
disciplined financial analysis and a balanced capital structure to enable it to increase its quarterly dividend over time and serve
the long-term interests of its stockholders. The Company's financial practices include a risk and credit policy focused on
transacting with creditworthy counterparties; a financing policy, which focuses on seeking an optimal capital structure through
various capital formation alternatives to minimize interest rate and refinancing risks, ensure stable long-term dividends and
maximize value; and a dividend policy that is based on distributing a significant portion of CAFD each quarter that the
Company receives from Clearway Energy LLC, subject to available capital, market conditions and compliance with associated
laws, regulations and other contractual obligations. The Company intends to evaluate various alternatives for financing future
acquisitions and refinancing of existing project-level debt, in each case, to reduce the cost of debt, extend maturities and
maximize CAFD.
Competition
Power generation is a capital-intensive business with numerous and diverse industry participants. The Company
competes on the basis of the location of its plants and on the basis of contract price and terms of individual projects. Within the
power industry, there is a wide variation in terms of the capabilities, resources, nature and identity of the companies with whom
the Company competes depending on the market. Competitors for energy supply are utilities, independent power producers and
other providers of distributed generation. The Company also competes to acquire new projects with renewable developers who
retain renewable power plant ownership, independent power producers, financial investors and other dividend, growth-oriented
companies. Competitive conditions may be substantially affected by capital market conditions and by various forms of energy
legislation and regulation considered by federal, state and local legislatures and administrative agencies, including tax policy.
Such laws and regulations may substantially increase the costs of acquiring, constructing and operating projects, and it could be
difficult for the Company to adapt to and operate under such laws and regulations.
The Company's Thermal Business has certain cost efficiencies that may form barriers to entry. Generally, there is only
one district energy system in a given territory, for which the only competition comes from on-site systems. While the district
energy system can usually make an effective case for the efficiency of its services, some building owners nonetheless may opt
for on-site systems, either due to corporate policies regarding allocation of capital, unique situations where an on-site system
might in fact prove more efficient or because of previously committed capital in systems that are already on-site. Growth in
existing district energy systems generally comes from new building construction or existing building conversions within the
service territory of the district energy provider. On October 22, 2021, Clearway Energy Operating LLC entered into a binding
agreement to sell the Thermal Business to KKR. For further discussion of the Thermal Disposition, refer to Item 15 — Note 3,
Acquisitions and Dispositions.
8
Competitive Strengths
Stable, high quality cash flows. The Company's facilities have a stable, predictable cash flow profile consisting of
predominantly long-life electric generation assets that sell electricity under long-term fixed priced contracts or pursuant to
regulated rates with investment-grade and certain other creditworthy counterparties. The Company's facilities have minimal
fuel risk. For the Company's contracted conventional assets, fuel is provided by the toll counterparty or the cost thereof is a
pass-through cost under the Contract for Differences. Renewable facilities have no fuel costs, and most of the Company's
thermal infrastructure assets have contractual or regulatory tariff mechanisms for fuel cost recovery. The offtake agreements
for the Company's conventional and renewable generation facilities have a weighted-average remaining duration, based on
CAFD, of approximately 12 years as of December 31, 2021, providing long-term cash flow stability. The Company's
generation offtake agreements with counterparties for whom credit ratings are available have a weighted-average Moody’s
rating of Ba1 based on rated capacity under contract and continues to be influenced by the PG&E Bankruptcy. All of the
Company's assets are in the U.S. and accordingly have no currency or repatriation risks.
Environmentally well-positioned portfolio of assets. The Company's portfolio of electric generation assets consists of
over 5,000 net MW of renewable generation capacity that are non-emitting sources of power generation. Additionally, the
Company's California conventional assets consist of efficient gas generation facilities that support electric system reliability.
The Company does not anticipate having to expend any significant capital expenditures in the foreseeable future to comply with
current environmental regulations applicable to its generation assets. Taken as a whole, the Company believes its strategy will
be a net beneficiary of current and potential environmental legislation and regulatory requirements that may serve as a catalyst
for capacity retirements and improve market opportunities for environmentally well-positioned assets like the Company's assets
once its current offtake agreements expire.
High quality, long-lived assets with low operating and capital requirements. The Company benefits from a portfolio of
relatively younger assets, other than thermal infrastructure assets. The Company's assets are comprised of proven and reliable
technologies, provided by leading original solar and wind equipment manufacturers such as General Electric, Siemens AG,
SunPower Corporation, or SunPower, First Solar Inc., or First Solar, Vestas, Mitsubishi, Trina Solar, JA Solar and Siemens
Gamesa. Given the modern nature of the portfolio, which includes a substantial number of relatively low operating and
maintenance cost solar and wind generation assets, the Company expects to achieve high fleet availability and expend modest
maintenance-related capital expenditures.
Significant scale and diversity. The Company is one of the largest renewable energy owners in the U.S. with over 5,000
net MW of installed wind and solar generation projects. The Company's over 9,000 net MW of assets also includes
approximately 2,500 net MW of environmentally-sound, highly efficient natural gas-fired generation facilities as well as the
Thermal Business. The Company's contracted renewable and conventional generation assets benefit from significant
diversification in terms of technology, fuel type, counterparty and geography. The Company's Thermal Business consists of
fifteen operations, seven of which are district energy centers that provide steam and chilled water to approximately 685
customers, and eight of which provide generation. The Company believes its scale and access to best practices across the fleet
improves its business development opportunities through enhanced industry relationships, reputation and understanding of
regional power market dynamics. Furthermore, the Company's diversification reduces its operating risk profile and reliance on
any single market.
Relationship with GIP and CEG. The Company believes that its relationship with GIP and CEG provides significant
benefits. Global Infrastructure Management, LLC, or GIM, the manager of GIP, is an independent infrastructure fund manager
that makes equity and debt investments in infrastructure assets and businesses in both the Organization for Economic Co-
operation and Development and select emerging market countries. GIM has a strong track record of investment and value
creation in the renewable energy sector. GIM also has extensive experience with publicly traded yield vehicles and
development platforms, ranging from Europe's first application of a yield company/development company model to the largest
renewable platform in Asia-Pacific. Additionally, the Company believes that CEG provides the Company access to a highly
capable renewable development and operations platform that is aligned to support the Company's growth.
9
Thermal infrastructure business has high entry costs. Significant capital has been invested to construct the Company's
thermal infrastructure assets, serving as a barrier to entry in the markets in which such assets operate. The Company's thermal
district energy centers are located in urban city areas, with the chilled water and steam delivery systems located underground.
Constructing underground delivery systems in urban areas requires long lead times for permitting, rights of way and inspections
and is costly. By contrast, the incremental cost to add new customers in existing markets is relatively low. Once thermal
infrastructure is established, the Company believes it has the ability to retain customers over long periods of time and to
compete effectively for additional business against stand-alone on-site heating and cooling generation facilities. Installation of
stand-alone equipment can require significant modification to a building as well as significant space for equipment and funding
for capital expenditures. The Company's system technologies often provide economies of scale in terms of fuel procurement,
ability to switch between multiple types of fuel to generate thermal energy, and fuel conversion efficiency. On October 22,
2021, Clearway Energy Operating LLC entered into a binding agreement to sell the Thermal Business to KKR. For further
discussion of the Thermal Disposition, refer to Item 15 — Note 3, Acquisitions and Dispositions.
Segment Review
The following tables summarize the Company's operating revenues, net income (loss) and assets by segment for the years
ended December 31, 2021, 2020 and 2019, as discussed in Item 15 — Note 13, Segment Reporting.
(In millions)
Operating revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Conventional
Generation
Year ended December 31, 2021
Renewables
Thermal
Corporate
Total
441 $
641 $
204 $
— $
1,286
Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
172
2,442
(65)
9,603
22
631
(204)
137
(75)
12,813
(In millions)
Operating revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Conventional
Generation
Year ended December 31, 2020
Renewables
Thermal
Corporate
Total
437 $
569 $
193 $
— $
1,199
Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
140
2,575
(109)
7,157
3
627
(96)
233
(62)
10,592
(In millions)
Operating revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Conventional
Generation
Year ended December 31, 2019
Renewables
Thermal
Corporate
Total
346 $
485 $
201 $
— $
1,032
Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
135
(104)
(5)
(122)
(96)
Policy Incentives
Policy incentives in the U.S. have the effect of making the development of renewable energy projects more competitive
by providing tax credits or grants and accelerated depreciation for a portion of the development costs, decreasing the costs and
risks associated with developing such projects or creating demand for renewable energy assets through RPS programs. The
elimination of, loss of or reduction in such incentives could decrease the attractiveness of renewable generation projects to
developers, including, but not limited to, CEG, which could reduce the Company's acquisition opportunities. Such an
elimination, loss or reduction could also reduce the Company's willingness to pursue or develop certain renewable energy
projects due to higher operating costs or decreased revenues under its PPAs.
U.S. federal, state and local governments have established various incentives to support the development of renewable
energy projects. These incentives include accelerated tax depreciation, PTCs, ITCs, cash grants, tax abatements and RPS
programs. Pursuant to the U.S. federal Modified Accelerated Cost Recovery System, or MACRS, wind and solar projects are
generally fully depreciated for tax purposes over a five-year period (before taking into account certain conventions) even
though the useful life of such projects is generally much longer than five years. The Tax Cuts and Jobs Act of 2017, or the Tax
Act, also provides the ability for wind and solar projects to claim immediate expensing for property acquired and placed in
service after September 27, 2017, and before January 1, 2023.
10
Owners of utility-scale wind facilities are eligible to claim an income tax credit (the PTC, or an ITC in lieu of the PTC)
upon initially achieving commercial operation. The PTC is determined based on the amount of electricity produced by the wind
facility during the first ten years of commercial operation. This incentive was created under the Energy Policy Act of 1992 and
has been extended several times. Alternatively, an ITC equal to a percentage of the cost of a wind facility may be claimed in
lieu of the PTC. In order to qualify for the PTC (or ITC in lieu of the PTC), construction of a wind facility must begin before a
specified date and the taxpayer must maintain a continuous program of construction or continuous efforts to advance the project
to completion. The Internal Revenue Service, or IRS, issued guidance stating that the safe harbor for continuous efforts and
continuous construction requirements will generally be satisfied if the facility is placed in service no more than four years after
the year in which construction of the facility began. In response to the COVID-19 pandemic, the IRS extended this safe harbor
by one year for facilities that began construction in 2016 or 2017. In 2021, the IRS further extended the continuity safe harbor
period to six years for facilities that began construction in 2016 through 2019. For facilities that began construction in 2020, the
continuity safe harbor was extended to five years.
Owners of solar projects are eligible to claim an ITC for new solar projects. This incentive was created under the Energy
Policy Act of 2005 and has also been extended several times, including most recently by the Consolidated Appropriations Act
of 2020.
Tax credits for qualifying wind and solar projects are subject to the following phase-down schedule:
PTC (a)
On Shore Wind ITC (b)
Solar ITC (c)
Year construction of project begins
2015
2016
2017
2018
2019
2020
2021
2022
2023
100 %
100 %
30 %
30 %
30 %
30 %
80 %
24 %
30 %
60 %
18 %
30 %
40 %
12 %
30 %
60 %
18 %
26 %
60 %
18 %
26 %
— %
— %
26 %
— %
— %
22 %
2024
— %
— %
10 %
(a) Percentage of the full PTC available for wind projects that begin construction during the applicable year.
(b) The Taxpayer Certainty and Disaster Tax Relief Act of 2020 provides for a new 30% ITC for offshore wind projects that begin construction before January
1, 2026.
(c) ITC is limited to 10% for projects not placed in service before January 1, 2026.
RPS, currently in place in certain states and territories, require electricity providers in the state or territory to meet a
certain percentage of their retail sales with energy from renewable sources. Additionally, other states in the U.S. have set
renewable energy goals to reduce GHG emissions from historic levels. The Company believes that these standards and goals
will create incremental demand for renewable energy in the future.
Regulatory Matters
As owners of power plants and participants in wholesale and thermal energy markets, certain of the Company's
subsidiaries are subject to regulation by various federal and state government agencies. These agencies include FERC and the
PUCT, as well as other public utility commissions in certain states where the Company's assets are located. Each of the
Company's U.S. generating facilities qualifies as an EWG or QF. In addition, the Company is subject to the market rules,
procedures and protocols of the various ISO and RTO markets in which it participates. Likewise, certain of the Company's
subsidiaries must also comply with the mandatory reliability requirements imposed by NERC and the regional reliability
entities in the regions where the Company has generating facilities subject to NERC's reliability authority. The Company's
operations within the ERCOT footprint are not subject to rate regulation by FERC, as they are deemed to operate solely within
the ERCOT market and not in interstate commerce. These operations are subject to regulation by PUCT.
FERC
FERC, among other things, regulates the transmission and the wholesale sale of electricity in interstate commerce under
the authority of the FPA. The transmission and sale of electric energy occurring wholly within ERCOT is not subject to
FERC’s jurisdiction. Under existing regulations, FERC has the authority to determine whether an entity owning a generation
facility is an EWG, as defined in the PUHCA. FERC also has the authority to determine whether a generation facility meets the
applicable criteria of a QF under the PURPA. Each of the Company’s U.S. generating facilities qualifies as either an EWG or
QF.
The FPA gives FERC exclusive rate-making jurisdiction over the wholesale sale of electricity and transmission of
electricity in interstate commerce of public utilities (as defined by the FPA). Under the FPA, FERC, with certain exceptions,
regulates owners and operators of facilities used for the wholesale sale of electricity or transmission in interstate commerce as
public utilities, and is charged with ensuring that market rules that are just and reasonable.
11
Public utilities are required to obtain FERC’s acceptance, pursuant to Section 205 of the FPA, of their rate schedules for
the wholesale sale of electricity. Several of the Company's QF generating facilities and all of the Company’s non-QF
generating facilities located in the U.S. outside of ERCOT make sales of electricity pursuant to market-based rates, as opposed
to traditional cost-of-service regulated rates. FERC conducts a review of the market-based rates of Company public utilities
and potential market power every three years according to a regional schedule established by FERC.
In accordance with the Energy Policy Act of 2005, FERC has approved the NERC as the national Energy Reliability
Organization, or ERO. As the ERO, NERC is responsible for the development and enforcement of mandatory reliability
standards for the wholesale electric power system, with such authority delegated in part to regional reliability entities charged
with enforcement of mandatory reliability standards for the region which they are responsible for overseeing.
The PURPA was passed in 1978 in large part to promote increased energy efficiency and development of independent
power producers. The PURPA created QFs to further both goals, and FERC is primarily charged with administering the
PURPA as it applies to QFs. QFs are exempt from certain regulations under the FPA.
The PUHCA provides FERC with certain authority over and access to books and records of public utility holding
companies not otherwise exempt by virtue of their ownership of EWGs, QFs, and Foreign Utility Companies. The Company is
exempt from many of the accounting, record retention, and reporting requirements of the PUHCA.
Environmental Matters
The Company is subject to a wide range of environmental laws during the development, construction, ownership and
operation of facilities. These existing and future laws generally require that governmental permits and approvals be obtained
before construction and maintained during operation of facilities. The Company is obligated to comply with all environmental
laws and regulations applicable within each jurisdiction and required to implement environmental programs and procedures to
monitor and control risks associated with the construction, operation and decommissioning of regulated or permitted energy
assets. Federal and state environmental laws have historically become more stringent over time, although this trend could
change in the future.
A number of regulations that may affect the Company are under review for potential revision or rescission in 2022,
including the federal Migratory Bird Treaty Act (MBTA) incidental take permit regulations and federal Bald and Golden Eagle
Protection Act incidental take permit regulations. Government leaders have also considered proposed MBTA legislation
(Lowenthal Bill). The Company will evaluate the impact of the legislation and regulations as they are revised but cannot fully
predict the impact of each until anticipated revisions and legal challenges are resolved. To the extent that proposed legislation
and new or revised regulations restrict or otherwise impact the Company's operations, the proposed legislation and regulations
could have a negative impact on the Company's financial performance.
Proposed Federal MBTA Incidental Take Legislation and Regulations — On October 4, 2021, U.S. Fish and Wildlife
Service (FWS) issued the final MBTA rule, effective December 3, 2021, restoring the MBTA to prohibit the incidental take of
migratory birds. FWS also issued an advance notice of proposed rulemaking (ANPR) advising that it intends to gather
information necessary to develop proposed regulations to authorize the incidental take of migratory birds under prescribed
conditions and prepare a draft environmental review pursuant to the National Environmental Policy Act. In the ANPR, FWS is
considering authorizing incidental take using three primary mechanisms: exceptions to the MBTA’s prohibition on incidental
take, general permits for certain activity types and specific or individual permits. FWS is seeking comments on when and how it
should apply these three mechanisms to different types of activities. The Company is working with renewable industry groups
to provide comments on the proposed rule. Scoping comments on the ANPR were due to FWS by December 3, 2021 and the
company participated in this process through the industry groups. FWS is expecting to have the Draft Environmental Impact
Statement out for public review during the summer 2022 and the Final Environmental Impact Statement and Record of
Decision are anticipated for the following summer 2023.
Changes to the National Environmental Policy Act — On October 7, 2021, the Council on Environmental Quality (CEQ)
published notice of proposed rulemaking that would alter regulations for implementing the National Environmental Policy Act
(NEPA) in order "to generally restore regulatory provisions that were in effect for decades before being modified in 2020."
Specifically, the proposed rule would (1) grant federal agencies greater discretion in developing project alternatives; (2) allow
federal agencies to adopt NEPA regulations more stringent than CEQ’s regulations; and (3) require agencies to consider direct,
indirect, and cumulative effects of major federal actions. The Notice represents "Phase 1" of the Biden Administration’s plans
to revise NEPA regulations, which focuses on provisions that pose significant near-term interpretation or implementation
challenges and that "make sense to revert to the 1978 regulatory approach." A "Phase 2" proposal that will "more broadly
revisit the 2020 NEPA Regulations" is expected to be released in 2022.
12
Proposed Federal Eagle Incidental Take Permit Proposed Rule — On September 14, 2021, the FWS published in the
Federal Register a Notice of Proposed Rulemaking (ANPR) seeking public and regulated-community input on potential
approaches for further expediting and simplifying the permit process authorizing incidental take of eagles. This advance notice
of proposed rulemaking seeks comment on several approaches that could potentially underpin a more streamlined eagle
incidental-take-permitting framework that was first established in 2009. Specifically, FWS is interested in comments clarifying
specific aspects of the current permitting process that hinder permit application, processing, or implementation. FWS is also
seeking recommendations for additional guidance that would reduce the time and/or cost associated with applying for and
implementing long-term, eagle incidental take permits under existing regulations. FWS is looking for recommendations for
targeted revisions that could be made to existing regulations consistent with the overall permitting framework that would reduce
the time and/or cost associated with applying for and processing long-term permits for incidental take of eagles. Finally, FWS is
interested in comments regarding potential new regulatory approaches to authorizing incidental take under the Eagle Act,
particularly for projects that can be shown in advance to have minimal impacts on eagles, that would reduce the time and/or
cost associated with applying for and operating under long-term permits for the incidental take of eagles. The Company is
working with renewable industry groups to provide comments on the proposed rule. Comments on the ANPR were due to FWS
by October 29, 2021 and the company participated in this process through the industry groups.
Local California Air District Rules — Air districts have proposed updates to its respective rules to amend, as applicable,
Best Available Control Technology criteria for stationary emissions sources including gas turbines, Toxic Air Contaminant
Health Risk reporting and general reporting requirements. Rulemaking in the Los Angeles Air Basin, as regulated by South
Coast Air Quality Management District, or SCAQMD, continues to update command-and-control regulations that limit NOx
emissions for stationary sources in preparation for sunsetting SCAQMD’s Regional Clean Air Market, or RECLAIM, NOx cap
and trade program in the next few years. The Company’s conventional generation plants meet the district’s existing and
proposed amendments to command-and-control regulations. Proposed updates to local California Air District Rules are not
expected to affect the operations nor compliance of the Company’s conventional generation plants.
Customers
The Company sells its electricity and environmental attributes, including RECs, primarily to local utilities under
contractual arrangements. During the year ended December 31, 2021, the Company derived approximately 33% of its
consolidated revenue from Southern California Edison, or SCE, and approximately 23% of its consolidated revenue from
PG&E.
Human Capital
As of December 31, 2021, the Company had 304 employees, 62 of which are in Corporate and 242 of which are in the
Thermal Business, which is the subject of a binding agreement to be sold to KKR. For further discussion of the Thermal
Disposition, refer to Item 15 — Note 3, Acquisitions and Dispositions. The Company also depends upon personnel of CEG for
the provision of asset management, administration and O&M services.
The Company focuses on attracting, developing and retaining a team of highly talented and motivated employees. The
Company regularly conducts assessments of its compensation and benefit practices and pay levels to help ensure that staff
members are compensated fairly and competitively. The Company devotes extensive resources to staff development and
training, including tuition assistance for career-enhancing academic and professional programs. Employee performance is
measured in part based on goals that are aligned with the Company's annual objectives. The Company recognizes that its
success is based on the talents and dedication of those it employs, and the Company is highly invested in their success. See
"Environmental, Social and Governance (ESG)" below for a discussion of the Company's commitment to the health and safety
of the Company's employees.
The Company is committed to maintaining a workplace that acknowledges, encourages, and values diversity and
inclusion. The Company believes that individual differences, experiences, and strengths enrich the culture and fabric of its
organization. Having employees with backgrounds and orientations that reflect a variety of viewpoints and experiences also
helps the Company to better understand the needs of its customers and the communities in which it operates.
By leveraging the multitude of backgrounds and perspectives of its team and developing ongoing relationships with
diverse vendors, the Company achieves a collective strength that enhances the workplace and makes the Company a better
business partner for its customers and others with a stake in the Company’s success.
13
In 2020, the Company launched its Equity, Partnership & Inclusion Council, or EPIC. As part of its commitment, the
Company provides education on topics related to diversity, inclusion, and anti-racism. The Company also identified three areas
of focus: Our People, Our Product & Customers and Our Purchasing. With the involvement of its employees, EPIC is
advancing efforts in each of these areas to identify and implement opportunities for the Company to address equity, partnership
and inclusion issues in its business activities.
Our People focuses on education and training; diversity, equity and inclusion policies and recruitment strategies;
community and industry partnerships; and maintaining high employee engagement and retention.
Our Product & Customers focuses on pursuing opportunities that provide more equitable access to renewable energy
for low-to-moderate income customers; supporting the diversity, equity and inclusion goals of the Company's
offtakers; and meaningfully representing that work in the external market.
Our Purchasing focuses on establishing a non-discriminatory practices standard for the Company’s suppliers, diverse
vendor sourcing and benchmarking.
In addition to the personnel of CEG, the Company relies on other third-party service providers in the daily operations of
its conventional facilities and certain renewable facilities.
Environmental, Social and Governance (ESG)
The Company is committed to engaging with its stakeholders on environmental, social and governance, or ESG, matters
in a proactive, holistic and integrated manner. The Company strives to provide recent, credible and comparable data to ESG
agencies while engaging institutional investors and investor advocacy organizations around ESG issues. The Company's
Corporate Governance, Conflicts and Nominating Committee reviews developing trends and emerging ESG matters as well as
the Company’s strategies, activities policies and communications regarding ESG matters, and makes recommendations to the
Company's Board of Directors regarding potential actions by the Company.
Since December 2019, the Company has issued $2.1 billion of corporate green bonds under a green bond framework that
applies the net proceeds to finance or refinance, in part or in full, new and existing projects and assets meeting certain criteria
focused on the supply of energy from renewable resources, including solar energy and wind energy. The Company's projects
and alignment of its Green Bond Principles (2018) are reviewed by Sustainalytics, an outside consultant with recognized
expertise in ESG research and analysis.
The Company includes safety performance goals in the annual incentive plan for its management and the Company had
zero fatalities in 2021. In response to the ongoing coronavirus (COVID-19) pandemic, the Company has implemented
preventative measures and developed corporate and regional response plans to protect the health and safety of its employees,
customers and other business counterparties, while supporting the Company’s suppliers and customers’ operations to the best of
its ability in the circumstances. The Company also has modified certain business practices (including limiting non-essential
business travel, implementing a temporary work-from-home policy for employees who can execute their work remotely and
encouraging employees to adhere to local and regional social distancing, more stringent hygiene and cleaning protocols across
the Company’s facilities and operations and self-quarantining recommendations) to support efforts to reduce the spread of
COVID-19 and its variants and to conform to government restrictions and best practices encouraged by governmental and
regulatory authorities. The Company continues to evaluate these measures, response plans and business practices in light of the
evolving effects of COVID-19 and its variants.
As discussed in greater detail above, the Company has focused its diversity, equity and inclusion efforts in three areas:
Our People, Our Product & Customers and Our Purchasing – through its launch of EPIC. With the involvement of the
Company’s employees, EPIC is advancing efforts in each of these areas to identify and implement opportunities for the
Company to address equity, partnership and inclusion issues in its business activities.
Available Information
The Company's annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and
amendments to those reports filed or furnished pursuant to section 13(a) or 15(d) of the Exchange Act are available free of
charge through the SEC's website, www.sec.gov, and through the "Investor Relations" section of the Company's website,
www.clearwayenergy.com, as soon as reasonably practicable after they are electronically filed with, or furnished to, the SEC.
The Company also routinely posts press releases, presentations, webcasts, and other information regarding the Company on its
website. The information posted on the Company's website is not a part of this report.
14
Item 1A — Risk Factors
Summary of Risk Factors
The Company’s business is subject to numerous risks and uncertainties, discussed in more detail in the following section. These
risks include among others, the following key risks:
Risks Related to the Company’s Business
•
•
•
•
•
•
•
•
•
The ongoing coronavirus (COVID-19) pandemic or any other pandemic could adversely affect the Company’s
business, financial condition and results of operations.
Certain facilities are newly constructed and may not perform as expected.
The Company's ability to grow and make acquisitions through cash on hand is limited.
The Company may be unable to close the Thermal Disposition.
The Company may not be able to effectively identify or consummate any future acquisitions on favorable terms, or at
all, and future acquisitions may not be accretive as a result of incorrect assumptions in the Company’s evaluation of
such acquisitions, unforeseen consequences or other external events beyond the Company’s control.
Counterparties to the Company's offtake agreements may not fulfill their obligations and, as the contracts expire, the
Company may not be able to replace them with agreements on similar terms in light of increasing competition in the
markets in which the Company operates.
The Company’s ability to effectively consummate future acquisitions will also depend on the Company’s ability to
arrange the required or desired financing for acquisitions.
The Company’s indebtedness could adversely affect its ability to raise additional capital to fund the Company’s
operations or pay dividends, and its debt may be adversely affected by changes to, or replacement of, the London
Interbank Offered Rate, or LIBOR.
The operation of electric generation facilities depends on suitable meteorological conditions and involves significant
risks and hazards customary to the power industry that could have a material adverse effect on the Company's
business, financial condition, results of operations and cash flows. These facilities may operate without long-term
power sales agreements.
• Maintenance, expansion and refurbishment of electric generation facilities involve significant risks that could result in
•
•
•
•
•
•
•
•
•
•
•
unplanned power outages or reduced output.
Supplier and/or customer concentration at certain of the Company's facilities may expose the Company to significant
financial credit or performance risks.
The Company currently owns, and in the future may acquire, certain assets in which the Company has limited control
over management decisions and its interests in such assets may be subject to transfer or other related restrictions.
The Company's assets are exposed to risks inherent in the use of interest rate swaps and forward commodity purchase
contracts and the Company may be exposed to additional risks in the future if it utilizes other derivative instruments.
The Company does not own all of the land on which its power generation or thermal assets are located, which could
result in disruption to its operations.
The Company's businesses are subject to physical, market and economic risks relating to potential effects of climate
change and public and governmental initiatives to address climate change.
Risks that are beyond the Company's control, including but not limited to acts of terrorism or related acts of war,
natural disaster, inflation, supply chain disruptions, hostile cyber intrusions or other catastrophic events, could have a
material adverse effect on the business, financial condition, results of operations and cash flows.
The operation of the Company’s businesses is subject to cyber-based security and integrity risk.
The Company relies on electric distribution and transmission facilities that it does not own or control and that are
subject to transmission constraints within a number of the Company's regions. If these facilities fail to provide the
Company with adequate transmission capacity, it may be restricted in its ability to deliver electric power to its
customers and may either incur additional costs or forego revenues.
The Company's costs, results of operations, financial condition and cash flows could be adversely impacted by the
disruption of the fuel supplies necessary to generate power at its conventional and thermal power generation facilities.
The Company depends on key personnel and its ability to attract and retain additional skilled management and other
personnel, the loss of any of which could have a material adverse effect on the Company's financial condition and
results of operations.
The Company may potentially be adversely affected by emerging technologies that may over time impact capacity
markets and the energy industry overall.
15
Risks Related to the Company’s Relationship with GIP and CEG
•
•
•
•
•
GIP, through its ownership of CEG, is the Company's controlling stockholder and exercises substantial influence over
the Company. The Company is highly dependent on GIP and CEG.
The Company may not be able to consummate future acquisitions from CEG.
The Company may be unable to terminate the CEG Master Services Agreement, in certain circumstances.
If CEG terminates the CEG Master Services Agreement or defaults in the performance of its obligations under the
agreement, the Company may be unable to contract with a substitute service provider on similar terms, or at all.
The Company is a "controlled company", controlled by GIP, and as a result, is exempt from certain corporate
governance requirements that are designed to provide protection to stockholders of companies that are not controlled
companies.
Risks Related to Regulation
•
•
•
•
•
The Company's business is subject to restrictions resulting from environmental, health and safety laws and regulations.
The electric generation business is subject to substantial governmental regulation, including environmental laws, and
may be adversely affected by changes in laws or regulations, as well as liability under, or any future inability to
comply with, existing or future regulations or other legal requirements.
The Company's business is subject to complex and evolving U.S. laws and regulations regarding privacy and data
protection.
Government regulations providing incentives for renewable power generation could change at any time and such
changes may negatively impact the Company's growth strategy.
The profitability of certain of the Company's Thermal assets is dependent on regulatory approval.
Risks Related to the Company's Common Stock
•
The Company may not be able to continue paying comparable or growing cash dividends to holders of its common
stock in the future.
• Market interest rates may have an effect on the value of the Company's Class A and Class C common stock.
• Market volatility and reports by securities and industry analysts may affect the price of the Company's Class A and
•
Class C common stock, and the future issuance of additional shares of common stock may cause dilution of investors'
ownership interest.
Provisions of the Company's charter documents or Delaware law could delay or prevent an acquisition of the
Company, even if the acquisition would be beneficial to holders of the Company's Class A and Class C common stock,
and could make it more difficult to change management.
Risks Related to Taxation
•
•
•
•
•
The Company's future tax liability may be greater than expected if the Company does not generate NOLs sufficient to
offset taxable income, if federal, state and local tax authorities challenge certain of the Company’s tax positions and
exemptions or if changes in federal, state and local tax laws occur.
The Company's ability to use NOLs to offset future income may be limited.
A valuation allowance may be required for the Company's deferred tax assets.
Distributions to holders of the Company's Class A and Class C common stock may be taxable.
Changes in tax laws or policies, including but not limited to changes in corporate income tax rates, as well as
judgments and estimates used in the determination of tax-related asset and liability amounts, could materially
adversely affect the Company’s business, financial condition, results of operations and prospects.
16
Risks Related to the Company's Business
The ongoing coronavirus (COVID-19) pandemic or any other pandemic could adversely affect the Company’s business,
financial condition and results of operations.
The ongoing coronavirus (COVID-19) outbreak, which the World Health Organization declared as a pandemic on March
11, 2020, has reached every region of the world and has resulted in widespread adverse impacts on the global economy. In
response, the Company has modified certain business and workforce practices (including discontinuing all non-essential
business travel, implementing a temporary work-from-home policy for employees who can execute their work remotely and
encouraging employees to adhere to local and regional social distancing, more stringent hygiene and cleaning protocols across
the Company’s facilities and operations and self-quarantining recommendations) to conform to government restrictions and best
practices encouraged by governmental and regulatory authorities. However, the quarantine of personnel or the inability to
access the Company’s facilities or customer sites could adversely affect the Company’s operations. Also, the Company has a
limited number of highly skilled employees for some of its operations and relies on certain independent contractors and other
service providers. If a large proportion of the Company’s employees in those critical positions, or independent contractors or
other service providers to the Company or its customers were to contract COVID-19 at the same time, the Company would rely
upon its business continuity plans in an effort to continue operations at its facilities, but there is no certainty that such measures
will be sufficient to mitigate the adverse impact to its operations that could result from shortages of highly skilled employees,
independent contractors or service providers.
There is considerable uncertainty regarding how long the COVID-19 pandemic will persist and affect economic
conditions, as well as whether governmental and other measures implemented to try to slow the spread of the virus, such as
large-scale travel bans and restrictions, border closures, quarantines, shelter-in-place orders and business and government
shutdowns that exist as of the date of this report will be effective or whether new measures will be implemented or reinstated.
Restrictions of this nature may cause the Company, its suppliers and other business counterparties to experience operational
delays and delays in the delivery of materials and supplies and may cause milestones or deadlines relating to various projects to
be missed. As a result, the Company could experience reductions in its sales and corresponding revenues in future periods. In
addition, worsening economic conditions could result in the Company’s customers being unable or unwilling to fulfill their
contractual obligations over time, or as contracts expire, to replace them with agreements on similar terms, which would impact
the Company’s future financial performance. A significant decline in sales for the output the Company generates, whether due
to decreases in consumer demand or disruption to its facilities or otherwise, would have a material adverse effect on the
Company’s financial expectations, its financial condition, results of operations and cash flows, its ability to make distributions
to its stockholders, the market prices of its common stock and its ability to satisfy its debt service obligations.
As of the date of this report, the Company's efforts to respond to the challenges presented by the conditions described
above have allowed the Company to minimize the impacts to its business.
Additionally, the effects of COVID-19 (and its variants) or any other pandemic on the global economy could adversely
affect the Company’s ability to access the capital and other financial markets, and if so, the Company may need to consider
alternative sources of funding for some of its operations and for working capital, which may increase its cost of, as well as
adversely impact its access to, capital. These uncertain economic conditions may also result in the inability of the Company’s
customers and other counterparties to make payments to the Company, on a timely basis or at all, which could adversely affect
the Company’s financial expectations, its financial condition, results of operations and cash flows, its ability to make
distributions to its stockholders, the market prices of its common stock and its ability to satisfy its debt service obligations.
The Company cannot predict the full impact that COVID-19 and its variants will have on the Company’s financial
expectations, its financial condition, results of operations and cash flows, its ability to make distributions to its stockholders, the
market prices of its common stock and its ability to satisfy its debt service obligations at this time, due to numerous
uncertainties. The ultimate impacts will depend on future developments, including, among others, the ultimate duration and
persistence of the pandemic, the consequences of governmental and other measures designed to prevent the spread of the virus,
the ability of governments and health care providers to timely distribute available vaccines and the efficacy of such vaccines,
the duration of the outbreak, actions taken by governmental actions taken by authorities, customers, suppliers and other third
parties, workforce availability and the timing and extent to which normal economic and operating conditions resume.
17
Certain facilities are newly constructed and may not perform as expected.
Certain of the Company's conventional and renewable assets are newly constructed. The ability of these facilities to meet
the Company's performance expectations is subject to the risks inherent in newly constructed power generation facilities and the
construction of such facilities, including, but not limited to, degradation of equipment in excess of the Company's expectations,
system failures, and outages. The failure of these facilities to perform as the Company expects could have a material adverse
effect on the Company's business, financial condition, results of operations, cash flows and its ability to pay dividends to
holders of the Company's common stock.
Pursuant to the Company's cash dividend policy, the Company intends to distribute a significant amount of the CAFD
through regular quarterly distributions and dividends, and the Company's ability to grow and make acquisitions through
cash on hand is limited.
The Company expects to distribute a significant amount of the CAFD each quarter and to rely primarily upon external
financing sources, including the issuance of debt and equity securities and, if applicable, borrowings under the Company's
revolving credit facility to fund acquisitions and growth capital expenditures. The Company may be precluded from pursuing
otherwise attractive acquisitions if the projected short-term cash flow from the acquisition or investment is not adequate to
service the capital raised to fund the acquisition or investment, after giving effect to the Company's available cash reserves. To
the extent the Company issues additional equity securities in connection with any acquisitions or growth capital expenditures,
the payment of dividends on these additional equity securities may increase the risk that the Company will be unable to
maintain or increase its per share dividend. The incurrence of bank borrowings or other debt by Clearway Energy Operating
LLC or by the Company's project-level subsidiaries to finance the Company’s growth strategy will result in increased interest
expense and the imposition of additional or more restrictive covenants, which, in turn, may impact the cash distributions the
Company receives to distribute to holders of the Company’s common stock.
The Company may be unable to close the Thermal Disposition.
On October 22, 2021, Clearway Energy Operating LLC entered into a Membership Interest Purchase Agreement to sell
the Company’s Thermal Business to KKR, or the Thermal Disposition. The Thermal Disposition is expected to close in the first
half of 2022 and is subject to certain customary closing conditions that make its completion and timing uncertain. Accordingly,
there can be no assurance that the Thermal Disposition will be consummated on the anticipated schedule or at all. If the
Company is unable to complete the Thermal Disposition, the Company may need to seek a new buyer or reassess the decision
to sell the Thermal Business, and any such new sale would also be subject to new regulatory approvals and other conditions.
Such renegotiation and conditions and the process of obtaining regulatory approvals could have the effect of delaying or
impeding consummation of the sale of the Thermal Business. In addition, if the Thermal Disposition is not completed, the
Company may need to raise additional capital, including the issuance of additional shares of common stock to raise equity
capital to repay existing indebtedness that has been incurred in anticipation of the Thermal Disposition and to fund the
Company’s operations or future growth investments. The future issuance of additional shares of the Company’s common stock
may cause dilution of investors' ownership interest and adversely impact the value of the Company’s common stock. As a
result, a delay or failure to consummate the Thermal Disposition could have a material adverse effect on the Company’s
business, financial position or results of operations.
The Company may not be able to effectively identify or consummate any future acquisitions on favorable terms, or at all,
and future acquisitions may not be accretive as a result of incorrect assumptions in the Company's evaluation of such
acquisitions, unforeseen consequences or other external events beyond the Company's control.
The Company's business strategy includes growth through the acquisitions of additional generation assets (including
through corporate acquisitions). This strategy depends on the Company’s ability to successfully identify and evaluate
acquisition opportunities and consummate acquisitions on favorable terms. However, the number of acquisition opportunities is
limited. In addition, the Company will compete with other companies for these limited acquisition opportunities, which may
increase the Company’s cost of making acquisitions or cause the Company to refrain from making acquisitions at all. Some of
the Company’s competitors for acquisitions are much larger than the Company with substantially greater resources. These
companies may be able to pay more for acquisitions and may be able to identify, evaluate, bid for and purchase a greater
number of assets than the Company’s financial or human resources permit. If the Company is unable to identify and
consummate future acquisitions, it will impede the Company’s ability to execute its growth strategy and limit the Company’s
ability to increase the amount of dividends paid to holders of the Company’s common stock.
18
The Company’s ability to acquire future renewable facilities may depend on the viability of renewable assets generally.
These assets currently are largely contingent on public policy mechanisms including ITCs, cash grants, loan guarantees,
accelerated depreciation, RPS and carbon trading plans. These mechanisms have been implemented at the state and federal
levels to support the development of renewable generation, demand-side and smart grid and other clean infrastructure
technologies. The availability and continuation of public policy support mechanisms will drive a significant part of the
economics and viability of the Company’s growth strategy and expansion into clean energy investments.
The acquisition of companies and assets are subject to substantial risks, including the failure to identify material problems
during due diligence (for which the Company may not be indemnified post-closing) and the risk of overpaying for assets (or not
making acquisitions on an accretive basis). The integration and consolidation of acquisitions requires substantial human,
financial and other resources and, ultimately, the Company's acquisitions may divert management’s attention from the
Company's existing business concerns, disrupt the Company's ongoing business or not be successfully integrated. There can be
no assurances that any future acquisitions will perform as expected or that the returns from such acquisitions will support the
financing utilized to acquire them or maintain them. A failure to achieve the financial returns the Company expects when it
acquires generation assets could have a material adverse effect on the Company’s ability to grow its business and make cash
distributions to its stockholders. Any failure of the Company’s acquired generation assets to be accretive or difficulty in
integrating such acquisition into the Company’s business could have a material adverse effect on the Company’s ability to grow
its business and make cash distributions to its stockholders. As a result, the consummation of acquisitions could have a material
adverse effect on the Company's business, financial condition, results of operations, cash flows and ability to pay dividends to
holders of the Company’s common stock.
Counterparties to the Company's offtake agreements may not fulfill their obligations and, as the contracts expire, the
Company may not be able to replace them with agreements on similar terms in light of increasing competition in the markets
in which the Company operates.
A significant portion of the electric power the Company generates is sold under long-term offtake agreements with public
utilities or industrial or commercial end-users, with a weighted average remaining duration, based on CAFD, of approximately
12 years. As of December 31, 2021, the largest customers of the Company's power generation assets, including assets in which
the Company has less than a 100% membership interest, were SCE and PG&E, which represented 33% and 23%, respectively,
of total consolidated revenues generated by the Company during the year ended December 31, 2021.
If, for any reason, any of the purchasers of power under these agreements are unable or unwilling to fulfill 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, the Company's assets, liabilities, business, financial condition, results of operations
and cash flows could be materially and adversely affected. Furthermore, to the extent any of the Company's power purchasers
are, or are controlled by, governmental entities, the Company's facilities may be subject to legislative or other political action
that may impair their contractual performance.
The power generation industry is characterized by intense competition and the Company's electric generation assets
encounter competition from utilities, industrial companies and independent power producers, in particular with respect to
uncontracted output. In recent years, there has been increasing competition among generators for offtake agreements and this
has contributed to a reduction in electricity prices in certain markets characterized by excess supply above designated reserve
margins. In light of these market conditions, the Company may not be able to replace an expiring or terminated agreement with
an agreement on equivalent terms and conditions, including at prices that permit operation of the related facility on a profitable
basis. In addition, the Company believes many of its competitors have well-established relationships with the Company's
current and potential suppliers, lenders and customers, and have extensive knowledge of its target markets. As a result, these
competitors may be able to respond more quickly than the Company to evolving industry standards and changing customer
requirements. The adoption of more advanced technology could reduce its competitors' power production costs resulting in
their having a lower cost structure than is achievable with the technologies currently employed by the Company and adversely
affect its ability to compete for offtake agreement renewals. If the Company is unable to replace an expiring or terminated
offtake agreement, the affected facility may temporarily or permanently cease operations. External events, such as a severe
economic downturn or force majeure events, could also impair the ability of some counterparties to the Company's offtake
agreements and other customer agreements to pay for energy and/or other products and services received.
The Company's inability to enter into new or replacement offtake agreements or to compete successfully against current
and future competitors in the markets in which the Company operates could have a material adverse effect on the Company's
business, financial condition, results of operations and cash flows.
19
The Company’s ability to effectively consummate future acquisitions will also depend on the Company’s ability to arrange
the required or desired financing for acquisitions.
The Company may not have sufficient availability under the Company’s credit facilities or have access to project-level
financing on commercially reasonable terms when acquisition opportunities arise. An inability to obtain the required or desired
financing could significantly limit the Company’s ability to consummate future acquisitions and effectuate the Company’s
growth strategy. If financing is available, utilization of the Company’s credit facilities or project-level financing for all or a
portion of the purchase price of an acquisition could significantly increase the Company’s interest expense, impose additional
or more restrictive covenants and reduce CAFD. Similarly, the issuance of additional equity securities as consideration for
acquisitions could cause significant stockholder dilution and reduce the Company’s dividends if the acquisitions are not
sufficiently accretive. The Company’s ability to consummate future acquisitions may also depend on the Company’s ability to
obtain any required regulatory approvals for such acquisitions, including, but not limited to, approval by FERC under Section
203 of the FPA.
The Company’s indebtedness could adversely affect its ability to raise additional capital to fund the Company’s operations
or pay dividends. It could also expose the Company to the risk of increased interest rates and limit the Company’s ability to
react to changes in the economy or the Company’s industry as well as impact the Company’s results of operations, financial
condition and cash flows.
As of December 31, 2021, the Company had approximately $7,778 million of total consolidated indebtedness, $5,073
million of which was incurred by the Company's non-guarantor subsidiaries. In addition, the Company’s share of its
unconsolidated affiliates’ total indebtedness and letters of credit outstanding as of December 31, 2021, totaled approximately
$345 million and $37 million, respectively (calculated as the Company’s unconsolidated affiliates’ total indebtedness as of such
date multiplied by the Company’s percentage membership interest in such assets).
The Company’s substantial debt could have important negative consequences on the Company’s financial condition,
including:
•
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•
•
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increasing the Company’s vulnerability to general economic and industry conditions;
requiring a substantial portion of the Company’s cash flow from operations to be dedicated to the payment of principal
and interest on the Company’s indebtedness, therefore reducing the Company’s ability to pay dividends to holders of
the Company’s capital stock (including the Class A and Class C common stock) or to use the Company’s cash flow to
fund its operations, capital expenditures and future business opportunities;
limiting the Company’s ability to enter into long-term power sales or fuel purchases which require credit support;
limiting the Company’s ability to fund operations or future acquisitions;
restricting the Company’s ability to make certain distributions with respect to the Company’s capital stock (including
the Class A and Class C common stock) and the ability of the Company’s subsidiaries to make certain distributions to
it, in light of restricted payment and other financial covenants in the Company’s credit facilities and other financing
agreements;
exposing the Company to the risk of increased interest rates because certain of the Company’s borrowings, which may
include borrowings under the Company’s revolving credit facility, are at variable rates of interest;
limiting the Company’s ability to obtain additional financing for working capital including collateral postings, capital
expenditures, debt service requirements, acquisitions and general corporate or other purposes; and
limiting the Company’s ability to adjust to changing market conditions and placing it at a competitive disadvantage
compared to the Company’s competitors who have less debt.
The Company's revolving credit facility contains financial and other restrictive covenants that limit the Company’s ability
to return capital to stockholders or otherwise engage in activities that may be in the Company’s long-term best interests. The
Company’s inability to satisfy certain financial covenants could prevent the Company from paying cash dividends, and the
Company’s failure to comply with those and other covenants could result in an event of default which, if not cured or waived,
may entitle the related lenders to demand repayment or enforce their security interests, which could have a material adverse
effect on the Company’s business, financial condition, results of operations and cash flows. In addition, failure to comply with
such covenants may entitle the related lenders to demand repayment and accelerate all such indebtedness.
20
The agreements governing the Company’s project-level financing contain financial and other restrictive covenants that
limit the Company’s project subsidiaries’ ability to make distributions to the Company or otherwise engage in activities that
may be in the Company’s long-term best interests. The project-level financing agreements generally prohibit distributions from
the project entities to the Company unless certain specific conditions are met, including the satisfaction of certain financial
ratios. The Company’s inability to satisfy certain financial covenants may prevent cash distributions by the particular project(s)
to it and, the Company’s failure to comply with those and other covenants could result in an event of default which, if not cured
or waived may entitle the related lenders to demand repayment or enforce their security interests, which could have a material
adverse effect on the Company’s business, results of operations and financial condition. In addition, failure to comply with
such covenants may entitle the related lenders to demand repayment and accelerate all such indebtedness. If the Company is
unable to make distributions from the Company’s project-level subsidiaries, it would likely have a material adverse effect on
the Company’s ability to pay dividends to holders of the Company’s common stock.
Letter of credit facilities to support project-level contractual obligations generally have a limited term that may require
future renewal, at which time the Company or relevant project-level subsidiary will need to satisfy applicable financial ratios
and covenants. If the Company is unable to renew the Company’s letters of credit as expected or replace them with letters of
credit under different facilities on favorable terms or at all, the Company may experience a material adverse effect on its
business, financial condition, results of operations and cash flows. Furthermore, such inability may constitute a default under
certain project-level financing arrangements, restrict the ability of the project-level subsidiary to make distributions to it and/or
reduce the amount of cash available at such subsidiary to make distributions to the Company.
In addition, the Company’s ability to arrange financing, either at the corporate level or at a non-recourse project-level
subsidiary, and the costs of such capital, are dependent on numerous factors, including:
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general economic and capital market conditions;
credit availability from banks and other financial institutions;
investor confidence in the Company, its partners, GIP, through CEG, as the Company’s principal stockholder (on a
combined voting basis) and the regional wholesale power markets;
the Company’s financial performance and the financial performance of the Company subsidiaries;
the Company’s level of indebtedness and compliance with covenants in debt agreements;
•
• maintenance of acceptable project credit ratings or credit quality;
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cash flow; and
provisions of tax and securities laws that may impact raising capital.
The Company may not be successful in obtaining additional capital for these or other reasons. Furthermore, the Company
may be unable to refinance or replace project-level financing arrangements or other credit facilities on favorable terms or at all
upon the expiration or termination thereof. The Company's failure, or the failure of any of the Company’s projects, to obtain
additional capital or enter into new or replacement financing arrangements when due may constitute a default under such
existing indebtedness and may have a material adverse effect on the Company's business, financial condition, results of
operations and cash flows.
21
Changes in the method of determining the London Interbank Offered Rate, or LIBOR, or the replacement of LIBOR with
an alternative reference rate, may adversely affect interest expense related to outstanding debt.
Amounts drawn under the Company's revolving credit facility and certain of the Company's project-level debt facilities
currently bear interest at rates based on LIBOR. On July 27, 2017, the Financial Conduct Authority in the United Kingdom
announced that it would phase out LIBOR as a benchmark by the end of 2021. On November 30, 2020, ICE Benchmark
Administration Limited, the administrator of LIBOR, with the support of the United States Federal Reserve and the United
Kingdom’s Financial Conduct Authority, announced plans to consult on ceasing publication of USD LIBOR on December 31,
2021 for only the one week and two month USD LIBOR tenors, and on June 30, 2023 for all other USD LIBOR tenors. While
this announcement extends the transition period to June 30, 2023, the United States Federal Reserve concurrently issued a
statement advising banks to stop new LIBOR issuances by the end of 2021. In light of these recent announcements, the future
of LIBOR at this time is uncertain and any changes in the methods by which LIBOR is determined or regulatory activity related
to LIBOR’s phase-out could cause LIBOR to perform differently than in the past or cease to exist. While the Company's
revolving credit facility includes a mechanism to amend the facilities to reflect the establishment of an alternative rate of
interest upon the occurrence of certain events related to the phase-out of LIBOR, many of the Company's project-level debt
facilities and swap arrangements do not. The Company has not yet pursued technical amendments or other contractual
alternatives to address this matter with respect to all its existing debt facilities and swap arrangements and is continuing to
evaluate the impact of LIBOR’s expected replacement. If no such amendments or other contractual alternatives are established
on or prior to the phase-out of LIBOR, interest under the Company's revolving credit facility and other project-level debt
facilities will bear interest at higher rates based on the prime rate until such amendments or other contractual amendments are
established. Even if the Company has entered into interest rate swaps or other derivative instruments for purposes of managing
its interest rate exposure or has otherwise amended its interest rate swaps or other derivative instruments to reflect an alternative
reference rate, these hedging strategies may not be effective as a result of the replacement or phasing out of LIBOR, and the
Company may incur losses as a result. The potential increase in the Company’s interest expense as a result of the phase-out of
LIBOR and uncertainty as to the nature of the alternative reference rates could have an adverse effect on the Company's
business, financial condition, results of operations and cash flows.
The Company’s proceeds from “Green Bonds” may not satisfy investor criteria and expectations regarding environmental
impact and sustainability performance.
Certain of the Company’s Senior Notes are “Green Bonds,” which require that an amount equal to the net proceeds from
the sale of such Senior Notes must be allocated to finance or refinance, in part or in full, new and existing projects and assets
meeting certain eligibility criteria under the Company's green bond framework. There is no assurance that the eligible projects
to which the Company allocates proceeds from such Senior Notes will satisfy, or continue to satisfy, investor criteria and
expectations regarding environmental impact and sustainability performance, and no assurance is given that the use or
allocation will satisfy present or future investor expectations or requirements, voluntary taxonomies or standards regarding any
investment criteria or guidelines with which investors or their investments are required to comply, whether by any present or
future applicable laws or regulations, by their own governing rules or investment portfolio mandates, ratings criteria, voluntary
taxonomies or standards or other independent expectations. The market price of such Senior Notes may be impacted by any
failure by the Company to satisfy these present or future investor expectations or requirements.
Certain of the Company's long-term bilateral contracts result from state-mandated procurements and could be declared
invalid by a court of competent jurisdiction.
A portion of the Company's revenues are derived from long-term bilateral contracts with utilities that are regulated by
their respective states, and have been entered into pursuant to certain state programs. Certain long-term contracts that other
companies have with state-regulated utilities have been challenged in federal court and have been declared unconstitutional on
the grounds that the rate for energy and capacity established by the contracts impermissibly conflicts with the rate for energy
and capacity established by FERC pursuant to the FPA. If certain of the Company's state-mandated agreements with utilities
are ever held to be invalid or unenforceable due to the financial conditions or other conditions of such utility, the Company may
be unable to replace such contracts, which could have a material adverse effect on the Company's business, financial condition,
results of operations and cash flows.
22
The generation of electric energy from solar and wind energy sources depends heavily on suitable meteorological
conditions.
If solar or wind conditions are unfavorable, the Company's electricity generation and revenue from renewable generation
facilities may be substantially below the Company's expectations. The electricity produced and revenues generated by a solar
or wind energy generation facility is highly dependent on suitable solar or wind conditions, as applicable, and associated
weather conditions, which are beyond the Company's control. Furthermore, components of the Company's systems, such as
solar panels and inverters, could be damaged by severe weather, such as wildfires, hailstorms, tornadoes or freezing
temperatures and other winter weather conditions. In addition, replacement and spare parts for key components may be
difficult or costly to acquire or may be unavailable. Unfavorable weather and atmospheric conditions could impair the
effectiveness of the Company's assets or reduce their output beneath their rated capacity or require shutdown of key equipment,
impeding operation of the Company's renewable assets. For example, in February 2021, the Company's wind projects in Texas
were unable to operate and experienced outages for a few days as a result of the extreme winter weather conditions. In addition,
climate change may have the long-term effect of changing wind patterns at the Company's projects. Changing wind patterns
could cause changes in expected electricity generation. These events could also degrade equipment or components and the
interconnection and transmission facilities’ lives or maintenance costs.
Although the Company bases its investment decisions with respect to each renewable generation facility on the findings of
related wind and solar studies conducted on-site prior to construction or based on historical conditions at existing facilities,
actual climatic conditions at a facility site, particularly wind conditions, may not conform to the findings of these studies and
may be affected by variations in weather patterns, including any potential impact of climate change. Therefore, the Company's
solar and wind energy facilities may not meet anticipated production levels or the rated capacity of the Company's generation
assets, which could adversely affect the Company's business, financial condition, results of operations and cash flows.
Operation of electric generation facilities involves significant risks and hazards customary to the power industry that could
have a material adverse effect on the Company's business, financial condition, results of operations and cash flows.
The ongoing operation of the Company's facilities involves risks that include the breakdown or failure of equipment or
processes or performance below expected levels of output or efficiency due to wear and tear, latent defect, design error or
operator error or force majeure events, among other things. Operation of the Company's facilities also involves risks that the
Company will be unable to transport its products to its customers in an efficient manner due to a lack of transmission capacity.
Unplanned outages of generating units, including extensions of scheduled outages due to mechanical failures or other problems,
occur from time to time and are an inherent risk of the business. Unplanned outages typically increase operation and
maintenance expenses, capital expenditures and may reduce revenues as a result of selling fewer MWh or require the Company
to incur significant costs as a result of obtaining replacement power from third parties in the open market to satisfy forward
power sales obligations. The Company's inability to operate its electric generation assets efficiently, manage capital
expenditures and costs and generate earnings and cash flow from the Company's asset-based businesses could have a material
adverse effect on the Company's business, financial condition, results of operations and cash flows. While the Company
maintains insurance, obtains warranties from vendors and obligates contractors to meet certain performance levels, the proceeds
of such insurance, warranties or performance guarantees may not cover the Company's lost revenues, increased expenses or
liquidated damages payments should it experience equipment breakdown or non-performance by contractors or vendors. The
Company maintains an amount of insurance protection that it considers adequate but cannot provide any assurance that the
Company's insurance will be sufficient or effective under all circumstances and against all hazards or liabilities to which the
Company may be subject. Furthermore, the Company's insurance coverage is subject to deductibles, caps, exclusions and other
limitations. A loss for which the Company is not fully insured (which may include a significant judgment against any facility
or facility operator) could have a material adverse effect on the Company's business, financial condition, results of operations or
cash flows. Further, due to rising insurance costs and changes in the insurance markets, the Company cannot provide any
assurance that its insurance coverage will continue to be available at all or at rates or on terms similar to those presently
available. Any losses not covered by insurance could have a material adverse effect on the Company's business, financial
condition, results of operations and cash flows.
Power generation involves hazardous activities, including acquiring, transporting and unloading fuel, operating large
pieces of rotating equipment and delivering electricity to transmission and distribution systems. In addition to natural risks such
as earthquake, flood, lightning, hurricane and wind, other hazards, such as fire, explosion, structural collapse and machinery
failure are inherent risks in the Company's operations. These and other hazards can cause significant personal injury or loss of
life, severe damage to and destruction of property, plant and equipment and contamination of, or damage to, the environment
and suspension of operations. To the extent an event was not covered by insurance policies, such incidents could subject the
Company to substantial liabilities arising from emergency response, environmental cleanup and restoration costs, claims made
by neighboring landowners and other third parties for personal injury and property damage, and fines or penalties for any
related violations of environmental laws or regulations.
23
The Company’s facilities may operate, wholly or partially, without long-term power sales agreements.
The Company’s facilities may operate without long-term power sales agreements for some or all of their generating
capacity and output and therefore be exposed to market fluctuations. Without the benefit of long-term power sales agreements
for the facilities, the Company cannot be sure that it will be able to sell any or all of the power generated by the facilities at
commercially attractive rates or that the facilities will be able to operate profitably. This could lead to less predictable revenues,
future impairments of the Company's property, plant and equipment or to the closing of certain of its facilities, resulting in
economic losses and liabilities, which could have a material adverse effect on the Company's results of operations, financial
condition or cash flows.
Maintenance, expansion and refurbishment of electric generation facilities involve significant risks that could result in
unplanned power outages or reduced output.
The Company's facilities may require periodic upgrading and improvement. Any unexpected operational or mechanical
failure, including failure associated with breakdowns and forced outages, could reduce the Company's facilities' generating
capacity below expected levels, reducing the Company's revenues and jeopardizing the Company's ability to pay dividends to
holders of its common stock at expected levels or at all. Degradation of the performance of the Company's solar facilities above
levels provided for in the related offtake agreements may also reduce the Company's revenues. Unanticipated capital
expenditures associated with maintaining, upgrading or repairing the Company's facilities may also reduce profitability.
If the Company makes any major modifications to its conventional power generation facilities, it may be required to
install the best available control technology or to achieve the lowest achievable emission rates as such terms are defined under
the new source review provisions of the Clean Air Act in the future. Any such modifications could likely result in substantial
additional capital expenditures. The Company may also choose to repower, refurbish or upgrade its facilities based on its
assessment that such activity will provide adequate financial returns. Such facilities require time for development and capital
expenditures before commencement of commercial operations, and key assumptions underpinning a decision to make such an
investment may prove incorrect, including assumptions regarding construction costs, timing, available financing and future fuel
and power prices. These events could have a material adverse effect on the Company's business, financial condition, results of
operations and cash flows.
Supplier and/or customer concentration at certain of the Company's facilities may expose the Company to significant
financial credit or performance risks.
The Company often relies on a single contracted supplier or a small number of suppliers for the provision of fuel,
transportation of fuel, equipment, technology and/or other services required for the operation of certain facilities. In addition,
certain of the Company's suppliers provide long-term warranties with respect to the performance of their products or services.
If any of these suppliers cannot perform under their agreements with the Company, or satisfy their related warranty obligations,
the Company will need to utilize the marketplace to provide or repair these products and services. There can be no assurance
that the marketplace can provide these products and services as, when and where required. The Company may not be able to
enter into replacement agreements on favorable terms or at all. If the Company is unable to enter into replacement agreements
to provide for fuel, equipment, technology and other required services, it would seek to purchase the related goods or services at
market prices, exposing the Company to market price volatility and the risk that fuel and transportation may not be available
during certain periods at any price. The Company may also be required to make significant capital contributions to remove,
replace or redesign equipment that cannot be supported or maintained by replacement suppliers, which could have a material
adverse effect on the business, financial condition, results of operations, credit support terms and cash flows.
In addition, potential or existing customers at the Company’s district energy centers and combined heat and power plants,
or the Energy Centers, may opt for on-site systems in lieu of using the Company’s Energy Centers, either due to corporate
policies regarding the allocation of capital, unique situations where an on-site system might in fact prove more efficient,
because of previously committed capital in systems that are already on-site, or otherwise. At times, the Company relies on a
single customer or a few customers to purchase all or a significant portion of a facility's output, in some cases under long-term
agreements that account for a substantial percentage of the anticipated revenue from a given facility.
The failure of any supplier to fulfill its contractual obligations to the Company or the Company’s loss of potential or
existing customers could have a material adverse effect on its financial results. Consequently, the financial performance of the
Company's facilities is dependent on the credit quality of, and continued performance by, the Company's suppliers and vendors
and the Company’s ability to solicit and retain customers.
24
The Company currently owns, and in the future may acquire, certain assets in which the Company has limited control over
management decisions and its interests in such assets may be subject to transfer or other related restrictions.
As described in Item 15 — Note 5, Investments Accounted for by the Equity Method and Variable Interest Entities, the
Company has limited control over the operation of certain of its assets, because the Company beneficially owns less than a
majority of the membership interests in such assets. The Company may seek to acquire additional assets in which it owns less
than a majority of the related membership interests in the future. In these investments, the Company will seek to exert a degree
of influence with respect to the management and operation of assets in which it owns less than a majority of the membership
interests by negotiating to obtain positions on management committees or to receive certain limited governance rights, such as
rights to veto significant actions. However, the Company may not always succeed in such negotiations. The Company may be
dependent on its co-venturers to operate such assets. The Company's co-venturers may not have the level of experience,
technical expertise, human resources management and other attributes necessary to operate these assets optimally. In addition,
conflicts of interest may arise in the future between the Company and its stockholders, on the one hand, and the Company's co-
venturers, on the other hand, where the Company's co-venturers' business interests are inconsistent with the interests of the
Company and its stockholders. Further, disagreements or disputes between the Company and its co-venturers could result in
litigation, which could increase expenses and potentially limit the time and effort the Company's officers and directors are able
to devote to the business.
The approval of co-venturers may also be required for the Company to receive distributions of funds from assets or to sell,
pledge, transfer, assign or otherwise convey its interest in such assets, or for the Company to acquire GIP's or CEG's interests in
such co-ventures as an initial matter. Alternatively, the Company's co-venturers may have rights of first refusal or rights of first
offer in the event of a proposed sale or transfer of the Company's interests in such assets. These restrictions may limit the price
or interest level for interests in such assets, in the event the Company wants to sell such interests.
Furthermore, certain of the Company's facilities are operated by third-party operators. To the extent that third-party
operators do not fulfill their obligations to manage operations of the facilities or are not effective in doing so, the amount of
CAFD may be adversely affected.
The Company's assets are exposed to risks inherent in the use of interest rate swaps and forward commodity purchase
contracts and the Company may be exposed to additional risks in the future if it utilizes other derivative instruments.
The Company uses interest rate swaps to manage interest rate risk. In addition, the Company uses forward commodity
purchase contracts to hedge its limited commodity exposure with respect to the Company's district energy assets. If the
Company elects to enter into such commodity hedges, the related asset could recognize financial losses on these arrangements
as a result of volatility in the market values of the underlying commodities or if a counterparty fails to perform under a contract.
If actively quoted market prices and pricing information from external sources are not available, the valuation of these contracts
would involve judgment or the use of estimates. As a result, changes in the underlying assumptions or use of alternative
valuation methods could affect the reported fair value of these contracts. If the values of these financial contracts change in a
manner that the Company does not anticipate, or if a counterparty fails to perform under a contract, it could harm the business,
financial condition, results of operations and cash flows.
The Company does not own all of the land on which its power generation or thermal assets are located, which could result
in disruption to its operations.
The Company does not own all of the land on which its power generation or thermal assets are located and the Company
is, therefore, subject to the possibility of less desirable terms and increased costs to retain necessary land use if it does not have
valid leases or rights-of-way or if such rights-of-way lapse or terminate. Although the Company has obtained rights to
construct and operate these assets pursuant to related lease arrangements, the rights to conduct those activities are subject to
certain exceptions, including the term of the lease arrangement. The Company is also at risk of condemnation on land it owns.
The loss of these rights, through the Company's inability to renew right-of-way contracts, condemnation or otherwise, may
adversely affect the Company's ability to operate its generation and thermal infrastructure assets.
25
The Company’s use and enjoyment of real property rights for its projects may be adversely affected by the rights of
lienholders and leaseholders that are superior to those of the grantors of those real property rights to the Company.
Solar and wind projects generally are, and are likely to be, located on land occupied by the project pursuant to long-term
easements and leases. The ownership interests in the land subject to these easements and leases may be subject to mortgages
securing loans or other liens (such as tax liens) and other easement and lease rights of third parties (such as leases of oil or
mineral rights) that were created prior to the project’s easements and leases. As a result, the project’s rights under these
easements or leases may be subject, and subordinate, to the rights of those third parties. The Company performs title searches
and obtains title insurance to protect itself against these risks. Such measures may, however, be inadequate to protect the
Company against all risk of loss of its rights to use the land on which the wind projects are located, which could have a material
adverse effect on the Company’s business, financial condition and results of operations.
The Company's businesses are subject to physical, market and economic risks relating to potential effects of climate change
and public and governmental initiatives to address climate change.
Climate change creates uncertainty in weather and other environmental conditions, including temperature and
precipitation levels, and thus may affect consumer demand for electricity. For example, milder than normal weather can reduce
demand for electricity and gas distribution services. In addition, the potential physical effects of climate change, such as
increased frequency and severity of storms, cloud coverage, precipitation, floods and other climatic events, could disrupt the
Company's operations and supply chain, and cause them to incur significant costs in preparing for or responding to these
effects. These or other meteorological changes could lead to increased operating costs, capital expenses or power purchase
costs.
Furthermore, governmental, scientific and public concern over the threat of climate change arising from GHG emissions
may limit the Company's access to natural gas or decrease demand for energy generated by the Company’s conventional assets.
State, national and foreign governments and agencies continue to evaluate, and in some instances adopt, climate-related
legislation and other regulatory initiatives that would restrict GHG emissions. Changes in environmental requirements related to
GHG, climate change and alternative energy sources may impact demand for the Company's services. For example, the Build
Back Better Act, passed by the U.S. House of Representatives and supported by President Biden, includes incentives to increase
wind and solar electric generation and encourage consumers to use these alternative energy sources. While this could benefit
the Company by increasing the demand for the Company's solar or wind energy, the Company could experience delayed or
cancelled projects and/or reduced production and demand for energy generated by the Company’s conventional assets. At this
time, it is uncertain whether, and in what form, the Build Back Better Act may become law. However, the Build Back Better
Act or similar state or federal initiatives to incentivize a shift away from fossil fuels could reduce demand for energy generated
by fossil fuels, and therefore have an adverse effect on the Company’s business, financial condition and results of operations.
Lastly, companies across all industries are facing increased scrutiny from the public, stakeholders and government
agencies related to their environmental, social, and governance (ESG) practices and commitments to address climate change. In
recent years, investor advocacy groups, institutional investors, investment funds, and other influential investors have placed
increasing importance on ESG practices. Increased focus and activism related to ESG and similar matters may hinder access to
capital, as investors may decide to reallocate capital or to not commit capital as a result of their assessment of a company’s ESG
practices. While the Company is committed to engaging with its stakeholders on ESG practices in a proactive, holistic and
integrated manner, changes in the public or stakeholder sentiment could impact the Company's ability to fund its conventional
assets, or decrease the demand for the energy generated by these assets.
Risks that are beyond the Company's control, including but not limited to acts of terrorism or related acts of war, natural
disaster, inflation, supply chain disruptions, hostile cyber intrusions or other catastrophic events, could have a material
adverse effect on the business, financial condition, results of operations and cash flows.
The Company's generation facilities that were acquired or those that the Company otherwise acquires or constructs and
the facilities of third parties on which they rely may be targets of terrorist activities, as well as events occurring in response to
or in connection with them, that could cause environmental repercussions and/or result in full or partial disruption of the
facilities ability to generate, transmit, transport or distribute electricity or natural gas. Strategic targets, such as energy-related
facilities, may be at greater risk of future terrorist activities than other domestic targets. Inflation, disruption in global and
domestic supply chains, and other economic conditions could negatively impact the Company’s business in a manner that could
adversely affect the Company's results of operations and financial condition. Hostile cyber intrusions, including those targeting
information systems as well as electronic control systems used at the generating plants and for the related distribution systems,
could severely disrupt business operations and result in loss of service to customers, as well as create significant expense to
repair security breaches or system damage.
26
Furthermore, certain of the Company's power generation and thermal assets are located in active earthquake zones in
California and Arizona, and certain project companies and suppliers conduct their operations in the same region or in other
locations that are susceptible to natural disasters. In addition, California and some of the locations where certain suppliers are
located, from time to time, have experienced shortages of water, electric power and natural gas. The occurrence of a natural
disaster, such as an earthquake, wildfire, drought, flood or localized extended outages of critical utilities or transportation
systems, or any critical resource shortages, affecting the Company or its suppliers, could cause a significant interruption in the
business, damage or destroy the Company's facilities or those of its suppliers or the manufacturing equipment or inventory of
the Company's suppliers. Any such terrorist acts, environmental repercussions or disruptions or natural disasters could result in
a significant decrease in revenues or significant reconstruction or remediation costs, beyond what could be recovered through
insurance policies, which could have a material adverse effect on the business, financial condition, results of operations and
cash flows.
The operation of the Company’s businesses is subject to cyber-based security and integrity risk.
Numerous functions affecting the efficient operation of the Company’s businesses depend on the secure and reliable storage,
processing and communication of electronic data and the use of sophisticated computer hardware and software systems. The
operation of the Company's generating assets relies on cyber-based technologies and has been the target of disruptive actions.
Potential disruptive actions could result from cyber-attack or cyber intrusion, including by computer hackers, foreign
governments and cyber terrorists, or otherwise be compromised by unintentional events with respect to the Company or any of
its contractors or customers. As a result, operations could be interrupted, property could be damaged and sensitive customer
information could be lost or stolen, causing the Company to incur significant losses of revenues, other substantial liabilities and
damages, costs to replace or repair damaged equipment and damage to the Company's reputation. In addition, the Company
may experience increased capital and operating costs to implement increased security for its cyber systems and generating
assets.
The Company relies on electric distribution and transmission facilities that it does not own or control and that are subject to
transmission constraints within a number of the Company's regions. If these facilities fail to provide the Company with
adequate transmission capacity, it may be restricted in its ability to deliver electric power to its customers and may either
incur additional costs or forego revenues.
The Company depends on electric distribution and transmission facilities owned and operated by others to deliver the
wholesale power it will sell from its electric generation assets to its customers. A failure or delay in the operation or
development of these facilities or a significant increase in the cost of the development of such facilities could result in lost
revenues. Such failures or delays could limit the amount of power the Company's operating facilities deliver or delay the
completion of the Company's construction projects. Additionally, such failures, delays or increased costs could have a material
adverse effect on the business, financial condition and results of operations. If a region's power transmission infrastructure is
inadequate, the Company's recovery of wholesale costs and profits may be limited. If restrictive transmission price regulation is
imposed, the transmission companies may not have a sufficient incentive to invest in expansion of transmission infrastructure.
The Company also cannot predict whether distribution or transmission facilities will be expanded in specific markets to
accommodate competitive access to those markets. In addition, certain of the Company's operating facilities' generation of
electricity may be curtailed without compensation due to transmission limitations or limitations on the electricity grid's ability
to accommodate intermittent and other electricity generating sources, reducing the Company's revenues and impairing its ability
to capitalize fully on a particular facility's generating potential. Such curtailments could have a material adverse effect on the
business, financial condition, results of operations and cash flows. Furthermore, economic congestion on transmission
networks in certain of the markets in which the Company operates may occur and the Company may be deemed responsible for
congestion costs. If the Company were liable for such congestion costs, its financial results could be adversely affected.
The Company's costs, results of operations, financial condition and cash flows could be adversely impacted by the disruption
of the fuel supplies necessary to generate power at its conventional and thermal power generation facilities.
Delivery of fossil fuels to fuel the Company's conventional and thermal generation facilities is dependent upon the
infrastructure (including natural gas pipelines) available to serve each such generation facility as well as upon the continuing
financial viability of contractual counterparties. As a result, the Company is subject to the risks of disruptions or curtailments
in the production of power at these generation facilities if a counterparty fails to perform or if there is a disruption in the fuel
delivery infrastructure.
27
The Company depends on key personnel and its ability to attract and retain additional skilled management and other
personnel, the loss of any of which could have a material adverse effect on the Company's financial condition and results of
operations.
The Company believes its current operations and future success depend largely on the continued services of key personnel
that it employs. Although the Company currently has access to the resources of CEG, the loss of key personnel employed by
the Company or CEG could have a material adverse effect on the Company’s financial condition and results of operations.
The Company may potentially be adversely affected by emerging technologies that may over time impact capacity markets
and the energy industry overall.
Research and development activities are ongoing in the Company's industry to provide alternative and more efficient
technologies to produce power, including wind, photovoltaic (solar) cells, hydrogen, energy storage, and improvements in
traditional technologies and equipment, such as more efficient gas turbines. Advances in these or other technologies could
reduce the costs of power production to a level below what the Company has currently forecasted, which could adversely affect
its cash flows, results of operations or competitive position.
Some emerging technologies, such as distributed renewable energy technologies, broad consumer adoption of electric
vehicles and energy storage devices, could affect the price of energy. These emerging technologies may affect the financial
viability of utility counterparties and could have significant impacts on market prices, which could ultimately have a material
adverse effect on the Company’s financial condition, results of operations and cash flows.
Risks Related to the Company's Relationships with GIP and CEG
GIP, through its ownership of CEG, is the Company's controlling stockholder and exercises substantial influence over the
Company. The Company is highly dependent on GIP and CEG.
GIP, through its ownership of CEG, owns all of the Company's outstanding Class B and Class D common stock. The
Company's outstanding Class B and Class D common stock is entitled to one vote per share and 1/100th of a vote per share,
respectively. As a result of its ownership of the Class B and Class D common stock, GIP indirectly owns 54.93% of the
combined voting power of the Company's common stock as of December 31, 2021. As a result of this ownership, GIP has a
substantial influence on the Company's affairs and its voting power will constitute a large percentage of any quorum of the
Company's stockholders voting on any matter requiring the approval of the Company's stockholders. Such matters include the
election of directors, the adoption of amendments to the Company's amended and restated certificate of incorporation and fourth
amended and restated bylaws and approval of mergers or sale of all or substantially all of its assets. This concentration of
ownership may also have the effect of delaying or preventing a change in control of the Company or discouraging others from
making tender offers for the Company's shares. In addition, GIP has the right to elect all of the Company's directors. GIP may
cause corporate actions to be taken even if their interests conflict with the interests of the Company's other stockholders
(including holders of the Company's Class A and Class C common stock).
Furthermore, the Company depends on certain services provided by or under the direction of CEG under the CEG Master
Services Agreement, including numerous processes related to the Company's internal control over financial reporting. CEG
personnel and support staff that provide services to the Company under the CEG Master Services Agreement are not required
to, and the Company does not expect that they will, have as their primary responsibility the management and administration of
the Company or to act exclusively for the Company and the CEG Master Services Agreement does not require any specific
individuals to be provided by CEG. Under the CEG Master Services Agreement, CEG has the discretion to determine which of
its employees perform assignments required to be provided to the Company. Any failure to effectively manage the Company's
processes related to internal controls over financial reporting, operations or to implement its strategy could have a material
adverse effect on the business, financial condition, results of operations and cash flows. The CEG Master Services Agreement
will continue in perpetuity, until terminated in accordance with its terms.
The Company also depends upon CEG and third parties for the provision of management, administration, O&M and
certain other services at certain of the Company's facilities. Any failure by CEG or third parties to perform its requirements
under these arrangements or the failure by the Company to identify and contract with replacement service providers, if required,
could adversely affect the operation of the Company's facilities and have a material adverse effect on the business, financial
condition, results of operations and cash flows.
28
GIP and its affiliates control the Company and have the ability to designate a majority of the members of the Company’s
Board.
Due to GIP's approximate 54.93% combined voting power in the Company, the ability of other holders of the Company’s
Class A and Class C common stock to exercise control over the corporate governance of the Company is limited. GIP and its
affiliates have a substantial influence on the Company’s affairs and its voting power constitutes a large percentage of any
quorum of the Company’s stockholders voting on any matter requiring the approval of the Company’s stockholders. GIP and its
affiliates may hold certain interests that are different from those of the Company or other holders of the Company’s Class A and
Class C common stock and there is no assurance that GIP and its affiliates will exercise its control over the Company in a
manner that is consistent with the Company’s interests or those of the holders of the Company’s Class A and Class C common
stock.
The Company may not be able to consummate future acquisitions from CEG.
The Company's ability to grow through acquisitions depends, in part, on CEG's ability to identify and present the
Company with acquisition opportunities. Although CEG has agreed, pursuant to the CEG ROFO Agreement, to grant the
Company a right of first offer with respect to certain power generation assets that CEG may elect to sell in the future, CEG is
under no obligation to sell any such power generation assets or to accept any related offers from the Company. In addition,
CEG has not agreed to commit any minimum level of dedicated resources for the pursuit of renewable power-related
acquisitions. There are a number of factors which could materially and adversely impact the extent to which suitable
acquisition opportunities are made available from CEG, including that the same professionals within CEG's organization that
are involved in acquisitions that are suitable for the Company have responsibilities within CEG's broader asset management
business, which may include sourcing acquisition opportunities for CEG. Limits on the availability of such individuals will
likewise result in a limitation on the availability of acquisition opportunities for the Company. In making these determinations,
CEG may be influenced by factors that result in a misalignment with the Company's interests or conflict of interest.
The Company may be unable to terminate the CEG Master Services Agreement, in certain circumstances.
The CEG Master Services Agreement provides that the Company may terminate the agreement upon 30 days prior written
notice to CEG upon the occurrence of any of the following: (i) CEG defaults in the performance or observance of any material
term, condition or covenant contained therein in a manner that results in material harm to the Company and the default
continues unremedied for a period of 30 days after written notice thereof is given to CEG; (ii) CEG engages in any act of fraud,
misappropriation of funds or embezzlement that results in material harm to the Company; (iii) CEG is grossly negligent in the
performance of its duties under the agreement and such negligence results in material harm to the Company; or (iv) upon the
happening of certain events relating to the bankruptcy or insolvency of CEG. Furthermore, if the Company requests an
amendment to the scope of services provided by CEG under the CEG Master Services Agreement and is not able to agree with
CEG as to a change to the service fee resulting from a change in the scope of services within 180 days of the request, the
Company will be able to terminate the agreement upon 30 days prior notice to CEG. The Company will not be able to
terminate the agreement for any other reason, including if CEG experiences a change of control, and the agreement continues in
perpetuity, until terminated in accordance with its terms. If CEG's performance does not meet the expectations of investors, and
the Company is unable to terminate the CEG Master Services Agreement, the market price of the Class A and Class C common
stock could suffer.
If CEG terminates the CEG Master Services Agreement or defaults in the performance of its obligations under the
agreement, the Company may be unable to contract with a substitute service provider on similar terms, or at all.
The Company relies on CEG to provide certain services under the CEG Master Services Agreement. The CEG Master
Services Agreement provides that CEG may terminate the agreement upon 180 days prior written notice of termination to the
Company if the Company defaults in the performance or observance of any material term, condition or covenant contained in
the agreement in a manner that results in material harm and the default continues unremedied for a period of 30 days after
written notice of the breach is given. If CEG terminates the Management Services Agreement or defaults in the performance of
its obligations under the agreement, the Company may be unable to contract with CEG or a substitute service provider on
similar terms or at all, and the costs of substituting service providers may be substantial. In addition, in light of CEG's
familiarity with the Company's assets, a substitute service provider may not be able to provide the same level of service due to
lack of pre-existing synergies.
29
The liability of CEG is limited under the Company's arrangements with it and the Company has agreed to indemnify CEG
against claims that it may face in connection with such arrangements, which may lead CEG to assume greater risks when
making decisions relating to the Company than it otherwise might if acting solely for its own account.
Under the CEG Master Services Agreement, CEG does not assume any responsibility other than to provide or arrange for
the provision of the services described in the CEG Master Services Agreement in good faith. In addition, under the CEG
Master Services Agreement, the liability of CEG and its affiliates is limited to the fullest extent permitted by law to conduct
involving bad faith, fraud, willful misconduct or gross negligence or, in the case of a criminal matter, action that was known to
have been unlawful. In addition, the Company has agreed to indemnify CEG to the fullest extent permitted by law from and
against any claims, liabilities, losses, damages, costs or expenses incurred by an indemnified person or threatened in connection
with the Company's operations, investments and activities or in respect of or arising from the CEG Master Services Agreement
or the services provided by CEG, except to the extent that the claims, liabilities, losses, damages, costs or expenses are
determined to have resulted from the conduct in respect of which such persons have liability as described above. These
protections may result in CEG tolerating greater risks when making decisions than otherwise might be the case, including when
determining whether to use leverage in connection with acquisitions. The indemnification arrangements to which CEG is a
party may also give rise to legal claims for indemnification that are adverse to the Company and holders of its common stock.
Certain of the Company’s PPAs and project-level financing arrangements include provisions that would permit the
counterparty to terminate the contract or accelerate maturity in the event GIP or its affiliates ceases to control or own,
directly or indirectly, a majority of the voting power of the Company.
Certain of the Company’s PPAs and project-level financing arrangements contain change in control provisions that
provide the counterparty with a termination right or the ability to accelerate maturity in the event of a change of control of the
Company without the counterparty's consent. These provisions are triggered in the event GIP or its affiliates ceases to own,
directly or indirectly, capital stock representing more than 50% of the voting power of the Company’s capital stock outstanding
on such date, or, in some cases, if GIP or its affiliates ceases to be the majority owner, directly or indirectly, of the applicable
project subsidiary. As a result, if GIP or its affiliates ceases to control, or in some cases, own a majority of the voting power of
the Company, the counterparties could terminate such contracts or accelerate the maturity of such financing arrangements. The
termination of any of the Company’s PPAs or the acceleration of the maturity of any of the Company’s project-level financing
could have a material adverse effect on the Company’s business, financial condition, results of operations and cash flow.
The Company is a "controlled company", controlled by GIP, and as a result, is exempt from certain corporate governance
requirements that are designed to provide protection to stockholders of companies that are not controlled companies.
As of December 31, 2021, GIP indirectly controls 54.93% of the Company's combined voting power and is able to elect
all of the Company's board of directors. As a result, the Company is considered a "controlled company" for the purposes of the
NYSE listing requirements. As a "controlled company," the Company is permitted to, and the Company may, opt out of the
NYSE listing requirements that would require (i) a majority of the members of the Company's board of directors to be
independent, (ii) that the Company establish a compensation committee and a nominating and governance committee, each
comprised entirely of independent directors, or (iii) an annual performance evaluation of the nominating and governance and
compensation committees. The NYSE listing requirements are intended to ensure that directors who meet the independence
standards are free of any conflicting interest that could influence their actions as directors. While the Company has elected to
have a Corporate Governance, Conflicts and Nominating Committee consisting entirely of independent directors and to conduct
an annual performance evaluation of this committee, the majority of the members of the Company’s board of directors are not
considered independent and the Company's compensation committee is not comprised entirely of independent directors.
Therefore, the Company’s stockholders may not have the same protections afforded to stockholders of companies that are
subject to all of the applicable NYSE listing requirements. It is also possible that the interests of GIP may in some
circumstances conflict with the Company's interests and the interests of the holders of the Company's Class A and Class C
common stock.
30
Risks Related to Regulation
The Company's business is subject to restrictions resulting from environmental, health and safety laws and regulations.
The Company is subject to various federal, state and local environmental and health and safety laws and regulations. In
addition, the Company may be held primarily or jointly and severally liable for costs relating to the investigation and clean-up
of any property where there has been a release or threatened release of a hazardous regulated material as well as other affected
properties, regardless of whether the Company knew of or caused the release. In addition to these costs, which are typically not
limited by law or regulation and could exceed an affected property's value, the Company could be liable for certain other costs,
including governmental fines and injuries to persons, property or natural resources. Further, some environmental laws provide
for the creation of a lien on a contaminated site in favor of the government as security for damages and any costs the
government incurs in connection with such contamination and associated clean-up. Although the Company generally requires
its operators to undertake to indemnify it for environmental liabilities they cause, the amount of such liabilities could exceed the
financial ability of the operator to indemnify the Company. The presence of contamination or the failure to remediate
contamination may adversely affect the Company's ability to operate the business.
Greenhouse gas (GHG) regulation could also increase the cost of electricity generated by fossil fuels, and such increases
could reduce demand for the power the Company's conventional assets generate and market. Legislative and regulatory
measures to address climate change and GHG emissions are in various phases of discussion or implementation. The EPA
regulates GHG emissions from new and modified facilities that are potential major sources of criteria pollutants under the Clean
Air Act's Prevention of Significant Deterioration and Title V programs and has adopted regulations that require, among other
things, preconstruction and operating permits for certain large stationary sources and the monitoring and reporting of GHGs
from certain onshore oil and natural gas production sources on an annual basis.
In addition, in 2015, the U.S., Canada and the U.K. participated in the United Nations Conference on Climate Change,
which led to the creation of the Paris Agreement. The Paris Agreement, which was signed by the U.S. in April 2016, requires
countries to review and “represent a progression” in their intended nationally determined contributions (which set GHG
emission reduction goals) every five years beginning in 2020. In November 2020, the U.S. officially withdrew from the Paris
Agreement in November 2020. However, on January 20, 2021, President Biden signed an “Acceptance on Behalf of the United
States of America” that will allow the U.S. to rejoin the Paris Agreement. The newly signed acceptance, deposited with the
United Nations on January 20, reverses the prior withdrawal. The U.S. officially rejoined the Paris Agreement on February 19,
2021.
The U.S. Congress, along with federal and state agencies, has also considered measures to reduce the emissions of GHGs.
Legislation or regulation that restricts carbon emissions could increase the cost of environmental compliance for the Company’s
conventional assets by requiring the Company to install new equipment to reduce emissions from larger facilities and/or
purchase emission allowances. Climate change and GHG legislation or regulation could also delay or otherwise negatively
affect efforts to obtain and maintain permits and other regulatory approvals for the Company’s conventional assets’ existing and
new facilities, impose additional monitoring and reporting requirements or adversely affect demand for the natural gas the
Company gathers, transports and stores. Conversely, legislation or regulation that sets a price on or otherwise restricts carbon
emissions could also benefit the Company by increasing demand for solar or wind energy sources. In addition, governmental,
scientific and public concern over the threat of climate change arising from GHG emissions has resulted in increasing political
risks in the U.S, including climate change related pledges made by the Biden Administration. Shortly after taking office in
January 2021, President Biden issued a series of executive orders designed to address climate change and suspend, revise, or
rescind, prior agency actions that are identified as conflicting with the Biden Administration’s climate policies. Furthermore, as
part of rejoining the Paris Agreement, President Biden announced that the United States would commit to a 50 to 52 percent
reduction from 2005 levels of GHG emissions by 2030, and set the goal of reaching net-zero GHG emissions by 2050. Reentry
into the Paris Agreement and President Biden's executive orders may result in the development of additional regulations or
changes to existing regulations. The effect on the Company of any new legislative or regulatory measures will depend on the
particular provisions that are ultimately adopted.
31
The electric generation business is subject to substantial governmental regulation and may be adversely affected by changes
in laws or regulations, as well as liability under, or any future inability to comply with, existing or future regulations or
other legal requirements.
The Company's electric generation business is subject to extensive U.S. federal, state and local laws and regulations.
Compliance with the requirements under these various regulatory regimes may cause the Company to incur significant
additional costs, and failure to comply with such requirements could result in the shutdown of the non-complying facility, the
imposition of liens, fines, and/or civil or criminal liability. Public utilities under the FPA are required to obtain FERC
acceptance of their rate schedules for wholesale sales of electric energy, capacity and ancillary services. Except for generating
facilities located in Hawaii, in Texas within the footprint of ERCOT, or in Puerto Rico, all of the Company’s generating
companies are public utilities under the FPA with market-based rate authority unless exempt from FPA public utility rate
regulation. FERC's orders that grant market-based rate authority to wholesale power sellers reserve the right to revoke or revise
that authority if FERC subsequently determines that the seller can exercise market power in transmission or generation, create
barriers to entry, or engage in abusive affiliate transactions. In addition, public utilities are subject to FERC reporting
requirements that impose administrative burdens and that, if violated, can expose the company to criminal and civil penalties or
other risks.
The Company's market-based sales are subject to certain rules prohibiting manipulative or deceptive conduct, and if any
of the Company's generating companies with market-based rate authority are deemed to have violated those rules, they could be
subject to potential disgorgement of profits associated with the violation, penalties, suspension or revocation of market based
rate authority. If such generating companies were to lose their market-based rate authority, such companies would be required
to obtain FERC's acceptance of a cost-of-service rate schedule and could become subject to the significant accounting, record-
keeping, and reporting requirements that are imposed on utilities with cost-based rate schedules. This could have a material
adverse effect on the rates the Company is able to charge for power from its facilities.
All of the Company's generating assets are operating either as EWGs or FUCOs as defined under the PUHCA, or as QFs
as defined under the PURPA, as amended, and therefore are exempt from certain regulation under the PUHCA and the FPA. If
a facility fails to maintain its status as an EWG, FUCO, or a QF or there are legislative or regulatory changes revoking or
limiting the exemptions to the PUHCA and/or the FPA, then the Company may be subject to significant accounting, record-
keeping, access to books and records and reporting requirements, and failure to comply with such requirements could result in
the imposition of penalties and additional compliance obligations.
Substantially all of the Company's generation assets are also subject to the reliability standards promulgated by the
designated Electric Reliability Organization (currently the North American Electric Reliability Corporation, or NERC) and
approved by FERC. If the Company fails to comply with the mandatory reliability standards, it could be subject to sanctions,
including substantial monetary penalties and increased compliance obligations. The Company will also be affected by
legislative and regulatory changes, as well as changes to market design, market rules, tariffs, cost allocations and bidding rules
that occur in the existing regional markets operated by RTOs or ISOs, such as PJM. The RTOs/ISOs that oversee most of the
wholesale power markets impose, and in the future may continue to impose, mitigation, including price limitations, offer caps,
non-performance penalties and other mechanisms to address some of the volatility and the potential exercise of market power in
these markets. These types of price limitations and other regulatory mechanisms may have a material adverse effect on the
profitability of the Company's generation facilities acquired in the future that sell energy, capacity and ancillary products into
the wholesale power markets. The regulatory environment for electric generation has undergone significant changes in the last
several years due to state and federal policies affecting wholesale competition and the creation of incentives for the addition of
large amounts of new renewable generation and, in some cases, transmission assets. These changes are ongoing and the
Company cannot predict the future design of the wholesale power markets or the ultimate effect that the changing regulatory
environment will have on the Company's business. In addition, in some of these markets, interested parties have proposed to re-
regulate the markets or require divestiture of electric generation assets by asset owners or operators to reduce their market
share. Other proposals to re-regulate may be made and legislative or other attention to the electric power market restructuring
process may delay or reverse the deregulation process. If competitive restructuring of the electric power markets is reversed,
discontinued, or delayed, the Company's business prospects and financial results could be negatively impacted.
32
The Company is subject to environmental laws and regulations that impose extensive and increasingly stringent
requirements on its operations, as well as potentially substantial liabilities arising out of environmental contamination.
The Company's assets are subject to numerous and significant federal, state and local laws, including statutes, regulations,
guidelines, policies, directives and other requirements governing or relating to, among other things: protection of wildlife,
including threatened and endangered species; air emissions; discharges into water; water use; the storage, handling, use,
transportation and distribution of dangerous goods and hazardous, residual and other regulated materials, such as chemicals; the
prevention of releases of hazardous materials into the environment; the prevention, presence and remediation of hazardous
materials in soil and groundwater, both on and offsite; land use and zoning matters; and workers' health and safety matters. The
Company's facilities could experience incidents, malfunctions and other unplanned events that could result in spills or
emissions in excess of permitted levels and result in personal injury, penalties and property damage. Any failure to comply
with applicable environmental laws and regulations, including those relating to equipment failures, or obtain required
governmental approvals and permits, may result in the assessment of administrative, civil or criminal penalties, imposition of
investigatory or remedial activities and, in certain, less common circumstances, issuance of temporary or permanent injunctions,
or construction or operation bans or delays. As such, the operation of the Company's facilities carries an inherent risk of
environmental, health and safety liabilities (including potential civil actions, compliance or remediation orders, fines and other
penalties), and may result in the assets being involved from time to time in administrative and judicial proceedings relating to
such matters. The Company has implemented environmental, health and safety management programs designed to continually
improve environmental, health and safety performance. Environmental laws and regulations have generally become more
stringent over time. Significant costs may be incurred for capital expenditures under environmental programs to keep the assets
compliant with such environmental laws and regulations. If it is not economical to make those expenditures, it may be
necessary to retire or mothball facilities or restrict or modify the Company's operations to comply with more stringent
standards. These environmental requirements and liabilities could have a material adverse effect on the business, financial
condition, results of operations and cash flows.
The Company's business is subject to complex and evolving U.S. laws and regulations regarding privacy and data protection
(“data protection laws”). Many of these laws and regulations are subject to change and uncertain interpretation, and could
result in claims, increased cost of operations, or otherwise harm the Company's business.
The regulatory environment surrounding data privacy and protection is constantly evolving and can be subject to
significant change. New data protection laws pose increasingly complex compliance challenges and potentially elevate the
Company's costs. Complying with varying jurisdictional requirements could increase the costs and complexity of compliance,
and violations of applicable data protection laws can result in significant penalties. Any failure, or perceived failure, by the
Company to comply with applicable data protection laws could result in proceedings or actions against the Company by
governmental entities or others, subject the Company to significant fines, penalties, judgments, and negative publicity, require
the Company to change its business practices, increase the costs and complexity of compliance, and adversely affect the
Company's business. As noted above, the Company is also subject to the possibility of cyberattacks, which themselves may
result in a violation of these laws. Additionally, if the Company acquires a company that has violated or is not in compliance
with applicable data protection laws, the Company may incur significant liabilities and penalties as a result.
Government regulations providing incentives for renewable power generation could change at any time and such changes
may negatively impact the Company's growth strategy.
The Company's growth strategy depends in part on government policies that support renewable generation and enhance
the economic viability of owning electric generation assets. Renewable generation assets currently benefit from various federal,
state and local governmental incentives such as ITCs, cash grants in lieu of ITCs, PTCs, loan guarantees, RPS, programs,
modified accelerated cost-recovery system of depreciation and bonus depreciation. These laws, regulations and policies have
had a significant impact on the development of renewable energy generation projects and they could be changed, reduced or
eliminated at any time. These incentives make the development of renewable generation projects more competitive by
providing tax credits or grants and accelerated depreciation for a portion of the development costs, decreasing the costs and
risks associated with developing such projects or creating demand for renewable energy assets through RPS programs. The
elimination of, loss of or reduction in such incentives could decrease the attractiveness of renewable generation projects to
developers, including, but not limited to, CEG, which could reduce the Company's acquisition opportunities. Such an
elimination, loss or reduction could also reduce the Company's willingness to pursue or develop certain renewable energy
projects due to higher operating costs or decreased revenues under its PPAs.
If these laws, regulations and policies are not continued or renewed, the market for future renewable energy PPAs may be
smaller and the prices for future renewable energy PPAs may be lower. If the IRS issues guidance that limits the availability of
the PTC or the ITC, the projects could generate reduced revenues and reduced economic returns, experience increased financing
costs and encounter difficulty obtaining financing on acceptable terms.
33
If the Company is unable to utilize various federal, state and local government incentives to acquire additional renewable
assets in the future, or the terms of such incentives are revised in a manner that is less favorable to the Company, it may suffer a
material adverse effect on the business, financial condition, results of operations and cash flows.
Many states have adopted RPS programs mandating that a specified percentage of electricity sales come from eligible
sources of renewable energy. However, the regulations that govern the RPS programs, including pricing incentives for
renewable energy, or reasonableness guidelines for pricing that increase valuation compared to conventional power (such as a
projected value for carbon reduction or consideration of avoided integration costs), may change. If the RPS requirements are
reduced or eliminated, it could lead to fewer future commodity contracts or lead to lower prices for the sale of power in future
commodity contracts, which could have a material adverse effect on the Company's future growth prospects. Such material
adverse effects may result from decreased revenues, reduced economic returns on certain project company investments,
increased financing costs, and/or difficulty obtaining financing. Furthermore, the American Recovery and Reinvestment Act of
2009 included incentives to encourage investment in the renewable energy sector, such as cash grants in lieu of ITCs, bonus
depreciation and expansion of the U.S. DOE loan guarantee program. It is uncertain what loan guarantees may be made by the
U.S. DOE loan guarantee program in the future.
Any of the foregoing could have a material adverse effect on the Company's business, financial condition, results of
operations and ability to grow its business and make cash distributions.
A portion of the steam and chilled water produced by the Company's thermal assets is sold at regulated rates, and the
revenue earned by the Company's GenConn assets is established each year in a rate case; accordingly, the profitability of
these assets is dependent on regulatory approval.
Approximately 433 net MWt of capacity from certain of the Company's thermal assets are sold at rates approved by one
or more federal or state regulatory commissions, including the Pennsylvania Public Utility Commission and the California
Public Utilities Commission for the thermal assets. Similarly, the revenues related to the GenConn assets are established each
year by the Connecticut Public Utilities Regulatory Authority. While such regulatory oversight is generally premised on the
recovery of prudently incurred costs and a reasonable rate of return on invested capital, the rates that the Company may charge,
or the revenue that the Company may earn with respect to this capacity are subject to authorization of the applicable regulatory
authorities. There can be no assurance that such regulatory authorities will consider all of the costs to have been prudently
incurred or that the regulatory process by which rates or revenues are determined will always result in rates or revenues that
achieve full recovery of costs or an adequate return on the Company's capital investments. While the Company's rates and
revenues are generally established based on an analysis of costs incurred in a base year, the rates the Company is allowed to
charge, and the revenues the Company is authorized to earn, may or may not match the costs at any given time. If the
Company's costs are not adequately recovered through these regulatory processes, it could have a material adverse effect on the
business, financial condition, results of operations and cash flows.
Risks Related to the Company's Common Stock
The Company may not be able to continue paying comparable or growing cash dividends to holders of its common stock in
the future.
The amount of CAFD principally depends upon the amount of cash the Company generates from its operations, which
will fluctuate from quarter to quarter based on, among other things:
•
•
•
•
•
•
•
•
the level and timing of capital expenditures the Company makes;
the level of operating and general and administrative expenses, including reimbursements to CEG for services
provided to the Company in accordance with the CEG Master Services Agreement;
variations in revenues generated by the business, due to seasonality, weather, or otherwise;
debt service requirements and other liabilities;
fluctuations in working capital needs;
the Company's ability to borrow funds and access capital markets;
restrictions contained in the Company's debt agreements (including project-level financing and, if applicable, corporate
debt); and
other business risks affecting cash levels.
34
As a result of all these factors, the Company cannot guarantee that it will have sufficient cash generated from operations
to pay a specific level of cash dividends to holders of its Class A or Class C common stock. Furthermore, holders of the
Company's Class A or Class C common stock should be aware that the amount of CAFD depends primarily on operating cash
flow, and is not solely a function of profitability, which can be affected by non-cash items.
The Company may incur other expenses or liabilities during a period that could significantly reduce or eliminate its
CAFD and, in turn, impair its ability to pay dividends to holders of the Company's Class A or Class C common stock during the
period. Because the Company is a holding company, its ability to pay dividends on the Company's Class A or Class C common
stock is restricted and further limited by the ability of the Company's subsidiaries to make distributions to the Company,
including restrictions under the terms of the agreements governing the Company's corporate debt and project-level financing.
For example, as a result of the PG&E Bankruptcy, between early 2019 and mid-2020, certain of the Company's unconsolidated
investments were unable to distribute project dividends to the Company. The project-level financing agreements generally
prohibit distributions from the project entities prior to COD and thereafter prohibit distributions to the Company unless certain
specific conditions are met, including the satisfaction of financial ratios. The Company's revolving credit facility also restricts
the Company's ability to declare and pay dividends if an event of default has occurred and is continuing or if the payment of the
dividend would result in an event of default.
Clearway Energy LLC's CAFD will likely fluctuate from quarter to quarter, in some cases significantly, due to
seasonality. As a result, the Company may cause Clearway Energy LLC to reduce the amount of cash it distributes to its
members in a particular quarter to establish reserves to fund distributions to its members in future periods for which the cash
distributions the Company would otherwise receive from Clearway Energy LLC would be insufficient to fund its quarterly
dividend. If the Company fails to cause Clearway Energy LLC to establish sufficient reserves, the Company may not be able to
maintain its quarterly dividend with respect to a quarter adversely affected by seasonality.
Finally, dividends to holders of the Company's Class A or Class C common stock will be paid at the discretion of the
Company's board of directors. The Company's board of directors may decrease the level, or entirely discontinue payment, of
dividends.
The Company is a holding company and its only material asset is its interest in Clearway Energy LLC, and the Company is
accordingly dependent upon distributions from Clearway Energy LLC and its subsidiaries to pay dividends and taxes and
other expenses.
The Company is a holding company and has no material assets other than its ownership of membership interests in
Clearway Energy LLC, a holding company that has no material assets other than its interest in Clearway Energy
Operating LLC, whose sole material assets are the project companies. None of the Company, Clearway Energy LLC or
Clearway Energy Operating LLC has any independent means of generating revenue. The Company intends to continue to
cause Clearway Energy Operating LLC's subsidiaries to make distributions to Clearway Energy Operating LLC and, in turn,
make distributions to Clearway Energy LLC, and, in turn, to make distributions to the Company in an amount sufficient to
cover all applicable taxes payable and dividends, if any, declared by the Company. To the extent that the Company needs funds
for a quarterly cash dividend to holders of the Company's Class A and Class C common stock or otherwise, and Clearway
Energy Operating LLC or Clearway Energy LLC is restricted from making such distributions under applicable law or
regulation or is otherwise unable to provide such funds (including as a result of Clearway Energy Operating LLC's operating
subsidiaries being unable to make distributions), it could materially adversely affect the Company's liquidity and financial
condition and limit the Company's ability to pay dividends to holders of the Company's Class A and Class C common stock.
Market interest rates may have an effect on the value of the Company's Class A and Class C common stock.
One of the factors that influences the price of shares of the Company's Class A and Class C common stock is the effective
dividend yield of such shares (i.e., the yield as a percentage of the then market price of the Company's shares) relative to market
interest rates. An increase in market interest rates, which are currently at low levels relative to historical rates, may lead
investors of shares of the Company's Class A and Class C common stock to expect a higher dividend yield and the Company's
inability to increase its dividend as a result of an increase in borrowing costs, insufficient CAFD or otherwise, could result in
selling pressure on, and a decrease in the market prices of the Company's Class A and Class C common stock as investors seek
alternative investments with higher yield.
35
Market volatility and reports by securities or industry analysts may affect the price of the Company's Class A and Class C
common stock.
The market price of the Company's Class A and Class C common stock may fluctuate significantly in response to a
number of factors, most of which the Company cannot predict or control, including general market and economic conditions,
disruptions, downgrades, credit events and perceived problems in the credit markets; actual or anticipated variations in its
quarterly operating results or dividends; natural disasters, wildfires and other weather-related events; changes in the Company's
investments or asset composition; write-downs or perceived credit or liquidity issues affecting the Company's assets; market
perception of GIP or CEG, the Company's business and the Company's assets; the Company's level of indebtedness and/or
adverse market reaction to any indebtedness that the Company may incur in the future; the Company's ability to raise capital on
favorable terms or at all; loss of any major funding source; changes in market valuations of similar power generation
companies; and speculation in the press or investment community regarding the Company, GIP or CEG.
Securities markets in general have experienced extreme volatility that has often been unrelated to the operating
performance of particular companies. Any broad market fluctuations may adversely affect the trading price of the Company's
Class A and Class C common stock.
Furthermore, any significant disruption to the Company’s ability to access the capital markets, or a significant increase in
interest rates, could make it difficult for the Company to successfully acquire attractive projects from third parties and may also
limit the Company’s ability to obtain debt or equity financing to complete such acquisitions. If the Company is unable to raise
adequate proceeds when needed to fund such acquisitions, the ability to grow the Company’s project portfolio may be limited,
which could have a material adverse effect on the Company’s ability to implement its growth strategy and, ultimately, its
business, financial condition, results of operations and cash flows.
The trading market for the Company's Class A and Class C common stock is influenced by the research and reports that
industry or securities analysts may publish about the Company, the Company's business, the Company's market or the
Company's competitors. If any of the analysts who may cover the Company change their recommendation regarding the
Company's Class A and/or Class C common stock adversely, or provide more favorable relative recommendations about the
Company's competitors, the price of the Company's Class A and/or Class C common stock could decline. If any analyst who
covers the Company were to cease coverage of the Company or fail to regularly publish reports on the Company, the Company
could lose visibility in the financial markets, which in turn could cause the stock price or trading volume of the Company's
Class A and/or Class C common stock to decline.
Provisions of the Company's charter documents or Delaware law could delay or prevent an acquisition of the Company,
even if the acquisition would be beneficial to holders of the Company's Class A and Class C common stock, and could make
it more difficult to change management.
Provisions of the Company's amended and restated certificate of incorporation and fourth amended and restated bylaws
may discourage, delay or prevent a merger, acquisition or other change in control that holders of the Company's Class A and
Class C common stock may consider favorable, including transactions in which such stockholders might otherwise receive a
premium for their shares. This is because these provisions may prevent or frustrate attempts by stockholders to replace or
remove members of the Company's management. These provisions include:
•
•
•
•
a prohibition on stockholder action through written consent;
a requirement that special meetings of stockholders be called upon a resolution approved by a majority of the
Company's directors then in office;
advance notice requirements for stockholder proposals and nominations; and
the authority of the board of directors to issue preferred stock with such terms as the board of directors may determine.
36
Section 203 of the Delaware General Corporation Law prohibits a publicly held Delaware corporation from engaging in a
business combination with an interested stockholder, generally a person that together with its affiliates owns or within the last
three years has owned 15% of voting stock, for a period of three years after the date of the transaction in which the person
became an interested stockholder, unless the business combination is approved in a prescribed manner. Additionally, the
Company's restated certificate of incorporation prohibits any person and any of its associate or affiliate companies in the
aggregate, public utility or holding company from acquiring, other than secondary market transactions, an amount of the
Company's Class A or Class C common stock sufficient to result in a transfer of control without the prior written consent of the
Company's board of directors. Any such change of control, in addition to prior approval from the Company's board of
directors, would require prior authorization from FERC. Similar restrictions may apply to certain purchasers of the Company's
securities which are holding companies regardless of whether the Company's securities are purchased in offerings by the
Company or NRG, in open market transactions or otherwise. A purchaser of the Company's securities which is a holding
company will need to determine whether a given purchase of the Company's securities may require prior FERC approval.
Investors may experience dilution of ownership interest due to the future issuance of additional shares of the Company's
Class A or Class C common stock.
The Company is in a capital intensive business, and may not have sufficient funds to finance the growth of the Company's
business, future acquisitions or to support the Company's projected capital expenditures. As a result, the Company may require
additional funds from further equity or debt financings, including tax equity financing transactions, sales under the ATM
Program or sales of preferred shares or convertible debt to complete future acquisitions, expansions and capital expenditures
and pay the general and administrative costs of the Company's business. In the future, the Company may issue shares under its
ATM Program and the Company's previously authorized and unissued securities, resulting in the dilution of the ownership
interests of purchasers of the Company's Class A and Class C common stock. Under the Company's restated certificate of
incorporation, the Company is authorized to issue 500,000,000 shares of Class A common stock, 500,000,000 shares of Class B
common stock, 1,000,000,000 shares of Class C common stock, 1,000,000,000 shares of Class D common stock and
10,000,000 shares of preferred stock with preferences and rights as determined by the Company's board of directors. The
potential issuance of additional shares of common stock or preferred stock or convertible debt may create downward pressure
on the trading price of the Company's Class A and Class C common stock.
Future sales of the Company's Class A or Class C common stock by GIP may cause the price of the Company's Class A or
Class C common stock to fall.
The market price of the Company's Class A or Class C common stock could decline as a result of sales by GIP of such
shares (issuable to GIP upon the exchange of some or all of its Clearway Energy LLC Class B or Class D units, respectively) in
the market, or the perception that these sales could occur.
The market price of the Company's Class A or Class C common stock may also decline as a result of GIP disposing or
transferring some or all of the Company's outstanding Class B or Class D common stock, which disposals or transfers would
reduce GIP's ownership interest in, and voting control over, the Company. These sales might also make it more difficult for the
Company to sell equity securities at a time and price that the Company deems appropriate. GIP and certain of its affiliates have
certain demand and piggyback registration rights with respect to shares of the Company's Class A common stock issuable upon
the exchange of Clearway Energy LLC's Class B units and/or Class C common stock issuable upon the exchange of Clearway
Energy LLC's Class D units. The presence of additional shares of the Company's Class A and/or Class C common stock trading
in the public market, as a result of the exercise of such registration rights, could have a material adverse effect on the market
price of the Company's securities.
Risks Related to Taxation
The Company's future tax liability may be greater than expected if the Company does not generate NOLs sufficient to offset
taxable income, if federal, state and local tax authorities challenge certain of the Company’s tax positions and exemptions
or if changes in federal, state and local tax laws occur.
The Company expects to generate (i) NOLs and carryforward prior year NOL balances to offset future taxable income and
(ii) generate tax credits and carryforward prior year tax credits to offset future income tax liabilities. Based on the Company's
current portfolio of assets, which include renewable assets that benefit from accelerated tax depreciation deductions and federal
tax credits, and taking into account the projected taxable gain on the Thermal Disposition anticipated to close in the first half of
2022, the Company estimates it will not pay material federal income tax through 2027, but does expect to pay material state
income tax across certain jurisdictions beginning in 2023. If the anticipated Thermal Disposition is not completed, then the
Company expects that it would not pay significant federal income tax for a period of approximately 10 years.
37
While the Company expects its NOLs and tax credits will be available as a future benefit, in the event that they are not
generated as expected, successfully challenged by the IRS or state and local jurisdictions (in a tax audit or otherwise) or subject
to future limitations from a potential change in ownership, as discussed below, the Company's ability to realize these benefits
may be limited. In addition, the Company’s ability to realize state and local tax exemptions, including property or sales and use
tax exemptions, is subject to various tax laws. If these exemptions are successfully challenged by state and local jurisdictions
or if a change in tax law occurs, the Company’s ability to realize these exemptions could be affected. A reduction in the
Company's expected NOLs, a limitation on the Company's ability to use such losses or tax credits, and challenges by tax
authorities to the Company’s tax positions may result in a material increase in the Company's estimated future income, sales/use
and property tax liability and may negatively impact the Company's liquidity and financial condition.
The Company's ability to use NOLs to offset future income may be limited.
The Company's ability to use NOLs could be substantially limited if the Company is unable to generate future taxable
income or were to experience an "ownership change" as defined under Section 382 of the Code. In general, an "ownership
change" would occur if the Company's "5-percent shareholders," as defined under Section 382 of the Code, collectively
increased their ownership in the Company by more than 50 percentage points over a rolling three-year period. A corporation
that experiences an ownership change will generally be subject to an annual limitation on the use of its pre-ownership change
deferred tax assets equal to the equity value of the corporation immediately before the ownership change, multiplied by the
long-term tax-exempt rate for the month in which the ownership change occurs. Future sales of any class of the Company's
common stock by GIP, as well as future issuances by the Company, could contribute to a potential ownership change.
A valuation allowance may be required for the Company's deferred tax assets.
The Company's expected NOLs and tax credits will be reflected as a deferred tax asset as they are generated until utilized
to offset income. Valuation allowances may need to be maintained for deferred tax assets that the Company estimates are more
likely than not to be unrealizable, based on available evidence at the time the estimate is made. Valuation allowances related to
deferred tax assets can be affected by changes to tax laws, statutory tax rates and future taxable income levels. In the event that
the Company was to determine that it would not be able to realize all or a portion of the net deferred tax assets in the future, the
Company would reduce such amounts through a charge to income tax expense in the period in which that determination was
made, which could have a material adverse impact on the Company's financial condition and results of operations.
Distributions to holders of the Company's Class A and Class C common stock may be taxable.
The amount of distributions that will be treated as taxable for U.S. federal income tax purposes will depend on the amount
of the Company's current and accumulated earnings and profits. It is difficult to predict whether the Company will generate
earnings or profits as computed for federal income tax purposes in any given tax year. Generally, a corporation's earnings and
profits are computed based upon taxable income, with certain specified adjustments. Distributions will constitute ordinary
dividend income to the extent paid from the Company's current or accumulated earnings and profits. Distributions in excess of
the Company’s current and accumulated earnings and profits will constitute a nontaxable return of capital to the extent of a
stockholder's basis in his or her Class A or Class C common stock. Distributions in excess of the Company's current and
accumulated earnings and profits and in excess of a stockholder's basis will be treated as gain from the sale of the common
stock.
For U.S. tax purposes, the Company's distributions to its stockholders in 2021 and 2020 are classified for U.S. federal
income tax purposes as a nontaxable return of capital and reduction of a U.S. stockholder's tax basis, to the extent of a U.S.
stockholder's tax basis in each of the Company's common shares, with any remaining amount being taxed as a capital gain.
The Company anticipates that, due to the Thermal Disposition anticipated to close in the first half of 2022, it may have
positive current year earnings and profits for 2022. As a result, a portion of any distributions made to holders of the Company’s
Class A and Class C Common stock in 2022 would be treated as taxable dividends for U.S. federal income tax purposes. Such
portion of distributions that will be treated as taxable dividends will depend upon a number of factors, including, but not limited
to, the Company’s overall performance, the actual amount of gain from the Thermal Disposition and the gross amount of any
distributions made to stockholders in 2022.
38
Changes in tax laws or policies, including but not limited to changes in corporate income tax rates, as well as judgments and
estimates used in the determination of tax-related asset and liability amounts, could materially adversely affect the
Company’s business, financial condition, results of operations and prospects.
The Company’s provision for income taxes and reporting of tax-related assets and liabilities require significant judgments
and the use of estimates. Amounts of tax-related assets and liabilities involve judgments and estimates of the timing and
probability of recognition of income, deductions and tax credits, including, but not limited to, estimates for potential adverse
outcomes regarding tax positions that have been taken and the ability to utilize tax benefit carryforwards, such as net operating
loss and tax credit carryforwards. Actual income taxes could vary significantly from estimated amounts due to the future
impacts of, among other things, changes in tax laws, guidance or policies, including changes in corporate income tax rates, the
financial conditions and results of operations of the Company, and the resolution of audit issues raised by taxing authorities.
These factors, including the ultimate resolution of income tax matters, may result in material adjustments to tax-related assets
and liabilities, which could materially adversely affect the Company’s business, financial condition, results of operations and
prospects.
39
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION
This Annual Report on Form 10-K of Clearway Energy, Inc., together with its consolidated subsidiaries, or the Company,
includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, or the
Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. The words
"believes," "projects," "anticipates," "plans," "expects," "intends," "estimates" and similar expressions are intended to identify
forward-looking statements. These forward-looking statements involve known and unknown risks, uncertainties and other
factors that may cause the Company's actual results, performance and achievements, or industry results, to be materially
different from any future results, performance or achievements expressed or implied by such forward-looking statements.
These factors, risks and uncertainties include the factors described under Item 1A — Risk Factors and the following:
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
The Company's ability to maintain and grow its quarterly dividend;
Potential risks related to COVID-19 (including any variant of the virus) or any other pandemic;
Potential risks related to the Company's relationships with GIP and CEG;
The Company's ability to successfully identify, evaluate and consummate acquisitions from, and dispositions to, third
parties;
The Company's ability to close the Thermal Disposition;
The Company's ability to acquire assets from GIP or CEG;
The Company's ability to raise additional capital due to its indebtedness, corporate structure, market conditions or
otherwise;
Changes in law, including judicial decisions;
Hazards customary to the power production industry and power generation operations such as fuel and electricity price
volatility, unusual weather conditions (including wind and solar conditions), catastrophic weather-related or other
damage to facilities, unscheduled generation outages, maintenance or repairs, unanticipated changes to fuel supply
costs or availability due to higher demand, shortages, transportation problems or other developments, environmental
incidents, or electric transmission or gas pipeline system constraints and the possibility that the Company may not
have adequate insurance to cover losses as a result of such hazards;
The Company's ability to operate its businesses efficiently, manage maintenance capital expenditures and costs
effectively, and generate earnings and cash flows from its asset-based businesses in relation to its debt and other
obligations;
The willingness and ability of counterparties to the Company's offtake agreements to fulfill their obligations under
such agreements;
The Company's ability to enter into contracts to sell power and procure fuel on acceptable terms and prices as current
offtake agreements expire;
Government regulation, including compliance with regulatory requirements and changes in market rules, rates, tariffs
and environmental laws;
Operating and financial restrictions placed on the Company that are contained in the project-level debt facilities and
other agreements of certain subsidiaries and project-level subsidiaries generally, in the Clearway Energy Operating
LLC amended and restated revolving credit facility and in the indentures governing the Senior Notes;
Cyber terrorism and inadequate cybersecurity, or the occurrence of a catastrophic loss and the possibility that the
Company may not have adequate insurance to cover losses resulting from such hazards or the inability of the
Company's insurers to provide coverage; and
The Company's ability to borrow additional funds and access capital markets, as well as the Company's substantial
indebtedness and the possibility that the Company may incur additional indebtedness going forward.
Forward-looking statements speak only as of the date they were made, and the Company undertakes no obligation to
publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
The foregoing review of factors that could cause the Company's actual results to differ materially from those contemplated in
any forward-looking statements included in this Annual Report on Form 10-K should not be construed as exhaustive.
Item 1B — Unresolved Staff Comments
None.
40
Item 2 — Properties
Listed below are descriptions of the Company's interests in facilities, operations and/or projects owned or leased as of
December 31, 2021.
Capacity
Location
Rated
MW
Net
MW(a)
Owner-
ship
Fuel
COD
Counterparty
Expiration
PPA Terms
Carlsbad, CA
El Segundo, CA
527
550
100 % Natural Gas
December 2018
San Diego Gas &
Electric
100 % Natural Gas
August 2013
SCE
95
50 %
50 %
95
720
Natural Gas/
Oil
Natural Gas/
Oil
June 2010
June 2011
Connecticut Light &
Power
Connecticut Light &
Power
100 % Natural Gas May 2013
Various
485
100 % Natural Gas May 2013
SCE
Total Conventional
2,662
2,472
Assets
Conventional
Carlsbad
El Segundo
GenConn Devon
Milford, CT
GenConn Middletown Middletown, CT
Marsh Landing
Antioch, CA
Walnut Creek
City of Industry,
CA
Utility Scale Solar
Agua Caliente
Alpine
Avenal
Avra Valley
Blythe
Borrego
Dateland, AZ
Lancaster, CA
Avenal, CA
Pima County, AZ
Blythe, CA
Borrego Springs,
CA
Buckthorn Solar (b)
Fort Stockton, TX
154
154
100 % Solar
July 2018
290
148
51 % Solar
June 2014
66
45
27
21
26
66
23
27
21
26
100 % Solar
50 % Solar
100 % Solar
100 % Solar
100 % Solar
February 2013
January 2013
August 2011
PG&E
PG&E
PG&E
December 2012
Tucson Electric Power
December 2009
SCE
San Diego Gas and
Electric
City of Georgetown,
TX
250
100 % Solar
October 2013
PG&E
25 % Solar
December 2014
SCE
25 % Solar
100 % Solar
December 2014
June 2013
PG&E
PG&E
48 % Solar
November 2019
95 % Solar
100 % Solar
50 % Solar
100 % Solar
530
100 % Solar
286
286
100 % Solar
25
100 % Solar
100 % Solar
Hawaiian Electric
Company
Hawaiian Electric
Company
September 2019
August 2011
El Paso Electric
December 2020
Various
March 2013
SCE
July - September
2016
PacifiCorp
September 2015
- March 2019
June 2008 - June
2012
December 2010
- October 2015
Various
Various
Various
100 % Wind
100 % Wind
100 % Wind
100 % Wind
December 2010
December 2010
February 2011
March 2011
SCE
SCE
SCE
SCE
41
CVSR
Desert Sunlight 250
Desert Sunlight 300
Kansas South
Kawailoa (b)
Oahu Solar Projects (b)
Roadrunner
Rosamond Central (b)
TA High Desert
San Luis Obispo,
CA
Desert Center,
CA
Desert Center,
CA
Lemoore, CA
Oahu, HI
Oahu, HI
Santa Teresa, NM
Rosamond, CA
Lancaster, CA
Utah Solar Portfolio
Various
250
250
300
20
49
61
20
192
20
530
Total Utility Scale Solar
2,321
1,621
Distributed Solar
DGPV Fund Projects
(b)
Solar Power Partners
(SPP) Projects
Various
Various
Other DG Projects
Various
Total Distributed Solar
Wind
Alta I
Alta II
Alta III
Alta IV
Tehachapi, CA
Tehachapi, CA
Tehachapi, CA
Tehachapi, CA
63
75
20
24
58
20
96
20
21
332
150
150
150
102
2038
2023
2040
2041
2023 - 2030
2023 - 2026
2039
2033
2031
2032
2029
2038
2043
2038
2034
2039
2033
2041
2041
2031
2035 - 2047
2033
2036
2030 - 2044
2026 - 2037
2023 - 2039
2035
2035
2035
2035
527
550
190
190
720
485
25
21
332
150
150
150
102
Assets
Alta V
Alta X (b)
Alta XI (b)
Location
Tehachapi, CA
Tehachapi, CA
Tehachapi, CA
Black Rock (b)(d)
Mineral and Grant
Counties, WV
Buffalo Bear
Buffalo, OK
Crosswinds
Ruthven, IA
Elbow Creek (b)
Howard County,
TX
Elkhorn Ridge
Bloomfield, NE
Forward
Berlin, PA
Capacity
Rated
MW
168
137
90
70
19
21
Net
MW(a)
168
137
90
35
19
21
Owner-
ship
Fuel
COD
Counterparty
Expiration
PPA Terms
100 % Wind
100 % Wind
100 % Wind
April 2011
February 2014
February 2014
SCE
SCE
SCE
50 % Wind
December 2021
Toyoya and AEP
100 % Wind
December 2008
99 % Wind
June 2007
Western Farmers
Electric Co-operative
Corn Belt Power
Cooperative
122
122
100 % Wind
December 2008
Various
81
29
54
29
66.7 % Wind
March 2009
100 % Wind
April 2008
Nebraska Public Power
District
Constellation
NewEnergy, Inc.
Goat Wind
Sterling City, TX
150
150
100 % Wind
April 2008/June
2009
Dow Pipeline
Company
Hardin
Jefferson, IA
15
15
99 % Wind
May 2007
Interstate Power and
Light Company
Langford (b)
Christoval, TX
160
160
100 % Wind
December 2009/
November 2020
Goldman Sachs
Laredo Ridge
Petersburg, NE
Lookout (b)
Mesquite Sky (b)
Mesquite Star (b)
Mt Storm
Ocotillo
Odin
Berlin, PA
Callahan County,
TX
Fisher County,
TX
Mt Storm, WV
Forsan, TX
Mountain Lake,
MN
Pinnacle (b)
Rattlesnake (b) (c)
Keyser, WV
Ritzville, WA
San Juan Mesa
Elida, NM
Sleeping Bear
South Trent
Spanish Fork
Spring Canyon II (b)
Spring Canyon III (b)
Woodward, OK
Sweetwater, TX
Spanish Fork, UT
Logan County,
CO
Logan County,
CO
Taloga
Putnam, OK
Wildorado (b)
Vega, TX
Total Wind
Thermal Generation
CA Fuel Cell
Tulare, CA
ECP Uptown Campus
Pittsburgh, PA
Energy Center -
Pittsburgh
Pittsburgh, PA
Energy Center Caguas
Caguas, PR
100 % Wind
February 2011
100 % Wind
October 2008
Nebraska Public Power
District
Southern Maryland
Electric Cooperative
50 % Wind
December 2021
Various
50 % Wind
June 2020
Various
100 % Wind
100 % Wind
October 2008
Citigroup
November 2008
N/A
2033 - 2036
2032 - 2035
2031
81
38
170
210
264
59
95
101
19
31
26
81
38
340
419
264
59
21
54
160
120
95
101
19
34
29
130
161
21
100 % Wind
June 2008
54
160
100 % Wind
100 % Wind
December 2011/
December 2021
December 2020
Avista Corporation
90
75 % Wind
December 2005
100 % Wind
100 % Wind
100 % Wind
October 2007
January 2009
AEP Energy Partners
July 2008
PacifiCorp
Missouri River Energy
Services
Maryland Department
of General Services
and University System
of Maryland
Southwestern Public
Service Company
Public Service
Company of Oklahoma
Platte River Power
Authority
Platte River Power
Authority
Oklahoma Gas &
Electric
Southwestern Public
Service Company
90.1 % Wind
October 2014
90.1 % Wind
December 2014
130
100 % Wind
July 2011
161
100 % Wind
April 2007
3,739
3,262
3
6
7
3
3
6
7
3
100 % Natural Gas May 2018
City of Tulare
100 % Natural Gas May 2019
Duquesne University
100 % Diesel
January 2019
University of
Pittsburgh Medical
Center
100 % Natural Gas
September 2020 Viatris Pharmaceuticals
42
2035
2038
2038
2036
2033
2027
2029
2029
2022
2025
2027
2033
2031
2030
2028
2031
2040
2025
2032
2029
2028
2039
2039
2031
2027
2038
2059
2038
2032
Assets
Location
Paxton Creek Cogen
Harrisburg, PA
Princeton Hospital
Princeton, NJ
Tucson Convention
Center
Tucson, AZ
University of
Bridgeport
Bridgeport, CT
Capacity
Rated
MW
12
Net
MW(a)
12
5
2
1
5
2
1
Owner-
ship
Fuel
COD
Counterparty
Expiration
PPA Terms
100 % Natural Gas
November 1986
Power sold into PJM markets
100 % Natural Gas
January 2012
Princeton Hospital
100 % Natural Gas
January 2003
City of Tucson
100 % Natural Gas
April 2015
University of
Bridgeport
2025
2023
2034
Total Thermal Generation (e)
39
39
Total Clearway Energy, Inc.
9,093
7,726
(a) Net capacity represents the maximum, or rated, generating capacity of the facility multiplied by the Company's percentage ownership in the facility as of
December 31, 2021.
(b) Projects are part of tax equity arrangements, as further described in Item 15 — Note 2, Summary of Significant Accounting Policies.
(c) Rattlesnake has a deliverable capacity of 144 MW.
(d) Black Rock's rated capacity is 115 MW, of which 70 MW, representing fourteen of the twenty-three wind turbines, became operational as of December 31,
2021. The remaining 45 MW of rated capacity became operational in January 2022.
(e) Includes thermal assets held for sale as of December 31, 2021, as further described in Item 15 — Note 3, Acquisitions and Dispositions.
The following table summarizes the Company's thermal steam and chilled water facilities as of December 31, 2021:
Name and Location of Facility
Thermal Energy Customers
(steam/chilled water)
%
Owned
Rated
Megawatt
Thermal
Equivalent
Capacity
(MWt)
Net Megawatt
Thermal
Equivalent
Capacity
(MWt) (a)
Generating
Capacity
Energy Center Minneapolis, MN . . . .
100 steam
55 chilled water
ECP Uptown Campus, PA . . . . . . . . . Duquesne University
Duquesne University
Energy Center San Francisco, CA . . .
180 steam
Energy Center Omaha, NE . . . . . . . . .
60 steam
65 chilled water
Energy Center Harrisburg, PA . . . . . .
115 steam
Energy Center Phoenix, AZ . . . . . . . .
40 chilled water
5 chilled water
Energy Center Pittsburgh, PA . . . . . . .
25 steam
30 chilled water
Energy Center San Diego, CA . . . . . .
20 chilled water
Energy Center Princeton, NJ . . . . . . .
Princeton HealthCare System
Princeton HealthCare System
Energy Center Caguas, PR . . . . . . . . . Viatris Pharmaceuticals
Viatris Pharmaceuticals
100 %
100 %
100 %
100 %
100 %
100 %
100 %
100 %
100 %
73 % (b)
24 %
100 %
100 %
100 %
100 %
100 %
100 %
100 %
284
136
53
24
133
180
88
94
14
144
5
118
68
31
21
17
1
3
284
Steam: 1,075 MMBtu/hr.
136 Chilled water: 38,700 tons
53 Steam: 181 MMBtu/hr.
24 Chilled water: 5,790 tons
133 Steam: 454 MMBtu/hr.
180
Steam: 675 MMBtu/hr.
88 Chilled water: 28,000 tons
94
Steam: 370 MMBtu/hr.
14 Chilled water: 3,900 tons
104 Chilled water 41,020 tons
1 Steam: 17 MMBtu/hr.
118
Steam: 452 MMBtu/hr.
68 Chilled water: 22,224 tons
31 Chilled water: 9,295 tons
21 Steam: 72 MMBtu/hr.
17 Chilled water: 4,700 tons
1 Steam: 4 MMBtu/hr.
3 Chilled water: 800 tons
Total generating capacity (c)
1,414
1,370
(a) Net megawatt thermal equivalent capacity represents the maximum, or rated, generating capacity of the facility multiplied by the Company's percentage
ownership in the facility as of December 31, 2021.
(b) Net MWt capacity excludes 44 MWt available under the right-to-use provisions contained in agreements between one of the Company's thermal facilities
and certain of its customers.
(c) Includes thermal assets held for sale as of December 31, 2021, as further described in Item 15 — Note 3, Acquisitions and Dispositions.
43
Item 3 — Legal Proceedings
See Item 15 — Note 16, Commitments and Contingencies, to the Consolidated Financial Statements for discussion of the
material legal proceedings to which the Company is a party or of which any of its properties is subject.
Item 4 — Mine Safety Disclosures
Not applicable.
44
PART II
Item 5 — Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity
Securities
Market Information, Equity Holders and Dividends
The Company's Class A common stock and Class C common stock are listed on the New York Stock Exchange and trade
under the ticker symbols "CWEN.A" and "CWEN," respectively. The Company's Class B common stock and Class D common
stock are not publicly traded.
As of January 31, 2022, there were two holders of record of the Class A common stock, one holder of record of the Class
B common stock, three holders of record of the Class C common stock and one holder of record of the Class D common stock.
On February 17, 2022, the Company declared a quarterly dividend on its Class A and Class C common stock of $0.3468
per share payable on March 15, 2022, to stockholders of record as of March 1, 2022.
The Company's Class A and Class C common stock dividends are subject to available capital, market conditions, and
compliance with associated laws and regulations. The Company expects that, based on current circumstances, comparable cash
dividends will continue to be paid in the foreseeable future.
Stock Performance Graph
The performance graph below compares the Company's cumulative total stockholder return on the Company's Class A
common stock and Class C common stock from December 31, 2016 through December 31, 2021, with the cumulative total
return of the Standard & Poor's 500 Composite Stock Price Index, or S&P 500, and the Philadelphia Utility Sector Index, or
UTY.
The performance graph shown below is being furnished and compares each period assuming that $100 was invested on
December 31, 2016 in each of the Class A common stock of the Company, the Class C common stock of the Company, the
stocks included in the S&P 500 and the stocks included in the UTY, and that all dividends were reinvested.
December
31, 2016
December
31, 2017
December
31, 2018
December
31, 2019
December
31, 2020
December
31, 2021
Clearway Energy, Inc. Class A common stock . . . . . . . $ 100.00 $ 130.41 $ 125.62 $ 149.27 $ 241.36 $ 286.34
Clearway Energy, Inc. Class C common stock . . . . . . .
S&P 500 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
UTY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
100.00
100.00
100.00
126.92
121.83
112.82
124.24
116.49
116.79
150.80
153.17
148.11
251.89 296.80
181.35 233.41
152.14 179.90
45
Item 6 — Reserved
46
Item 7 — Management's Discussion and Analysis of Financial Condition and the Results of Operations
As you read this discussion and analysis, refer to the Company's Consolidated Statements of Operations to this Form 10-
K. Also refer to Item 1 — Business and Item 1A — Risk Factors, which include detailed discussions of various items
impacting the Company's business, results of operations and financial condition. Discussions of the year ended December 31,
2019 that are not included in this Annual Report on Form 10-K and year-to-year comparisons of the year ended December 31,
2020 and the year ended December 31, 2019 can be found in “Management’s Discussion and Analysis of Financial Condition
and the Results of Operations” in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the year ended December
31, 2020.
The discussion and analysis below has been organized as follows:
•
Executive Summary, including a description of the business and significant events that are important to
understanding the results of operations and financial condition;
•
Results of operations, including an explanation of significant differences between the periods in the specific
line items of the consolidated statements of operations;
•
Financial condition addressing liquidity position, sources and uses of cash, capital resources and
requirements, commitments, and off-balance sheet arrangements;
•
and
•
Known trends that may affect the Company’s results of operations and financial condition in the future;
Critical accounting policies which are most important to both the portrayal of the Company's financial
condition and results of operations, and which require management's most difficult, subjective or complex
judgment.
47
Executive Summary
Introduction and Overview
Clearway Energy, Inc. together with its consolidated subsidiaries, or the Company, is a publicly-traded energy
infrastructure investor in and owner of modern, sustainable and long-term contracted assets across North America. The
Company is indirectly owned by Global Infrastructure Partners, or GIP. GIP is an independent infrastructure fund manager
that makes equity and debt investments in infrastructure assets and businesses. The Company is sponsored by GIP through
GIP's portfolio company, Clearway Energy Group LLC, or CEG.
The Company is one of the largest renewable energy owners in the U.S. with over 5,000 net MW of installed wind and
solar generation projects. The Company's over 9,000 net MW of assets also includes approximately 2,500 net MW of
environmentally-sound, highly efficient natural gas-fired generation facilities as well as the Thermal Business. Through this
environmentally-sound, diversified and primarily contracted portfolio, the Company endeavors to provide its investors with
stable and growing dividend income. Substantially all of the Company's generation assets are under long-term contractual
arrangements for the output or capacity from these assets. The weighted average remaining contract duration of these offtake
agreements was approximately 12 years as of December 31, 2021 based on CAFD.
Significant Events
Thermal Disposition
•
On October 22, 2021, Clearway Energy Operating LLC entered into a binding agreement to sell the Thermal
Business to KKR for total consideration of $1.9 billion, subject to customary closing adjustments, which is referred to
herein as the Thermal Disposition. Based on current estimates, the Company expects total net cash proceeds of
approximately $1.35 billion after the assumption of project level debt, estimated taxes and obligations owed,
transaction expenses and capital expenditures required to be funded pursuant to the terms and conditions of the
definitive agreement. The closing of the transaction is subject to various customary closing conditions, approvals and
consents and is expected to close in the first half of 2022. The Company's Thermal segment is comprised solely of the
Thermal Business's results of operations.
Corporate Level Financing
•
•
•
•
On November 30, 2021, Clearway Energy Operating LLC entered into a senior secured bridge credit agreement, or
the Bridge Loan Agreement, that provides for a term loan facility in an aggregate principal amount of $335 million.
The Bridge Loan Agreement will mature no later than November 29, 2022. The Company intends to use proceeds
from the Thermal Disposition to repay the outstanding principal balance of the term loans under the Bridge Loan
Agreement. The borrowings under the term loan facility were used to acquire the Utah Solar Portfolio on December
1, 2021, as described below.
On November 30, 2021, Clearway Energy Operating LLC entered into the Sixth Amendment to Amended and
Restated Credit Agreement to provide for an increase of the maximum permitted Borrower Leverage Ratio to 6.00 to
1.00 during the period commencing on November 30, 2021 and ending on the leverage period termination date,
which is the earliest of (i) two business days following the consummation of the Thermal Disposition, (ii) 120 days
following the termination or expiration of the binding agreement entered into with KKR to sell the Thermal Business
and (iii) the maturity date of the Bridge Loan Agreement. The Sixth Amendment also permits the incurrence of the
term loan facility under the Bridge Loan Agreement, permits the incurrence of hedging obligations, permits the
prepayment of indebtedness and implements certain other technical modifications.
On October 1, 2021, Clearway Energy Operating LLC completed the sale of $350 million of senior unsecured notes
due 2032, or the 2032 Senior Notes. The 2032 Senior Notes bear interest at 3.750% and mature on January 15, 2032.
The net proceeds from the 2032 Senior Notes were used, together with existing corporate liquidity, to repurchase the
2026 Senior Notes, as described below.
In October 2021, the Company repurchased and redeemed an aggregate principal amount of $350 million of the 2026
Senior Notes, through the cash tender offer announced on September 24, 2021 and the redemption of the remaining
amount on October 25, 2021. The repurchases and redemption were effectuated at a premium of approximately 103%
for total consideration of $359 million.
48
•
•
On March 9, 2021, Clearway Energy Operating LLC completed the sale of $925 million of senior unsecured notes
due 2031, or the 2031 Senior Notes. The 2031 Senior Notes bear interest at 3.750% and mature on February 15, 2031.
The net proceeds from the 2031 Senior Notes were used to repurchase the 2025 Senior Notes, as described below, as
well as to repay amounts outstanding under the Company’s revolving credit facility and for general corporate
purposes.
In March 2021, the Company repurchased and redeemed an aggregate principal amount of $600 million of the 2025
Senior Notes, through the cash tender offer announced on March 2, 2021 and the redemption of the remaining amount
on March 17, 2021. The repurchases and redemption were effectuated at a premium of approximately 106% for total
consideration of $636 million.
Project-Level Financing Activities
•
On March 10, 2021, the Company entered into a financing agreement for non-recourse debt for a total commitment of
$126 million related to the repowering of the Pinnacle wind project. The debt consists of a construction loan at an
interest rate of LIBOR plus 1.00%. The Company's initial borrowings of $79 million were utilized to repay
$53 million of the outstanding balance under the Tapestry financing agreement, which related to the Pinnacle wind
project, and to reimburse Clearway Renew LLC for previous contributions and pay vendor invoices and fees. On
December 15, 2021, the Company repaid the outstanding principal amount of $117 million utilizing existing
corporate liquidity, along with proceeds from tax equity.
Third-Party Acquisitions
•
•
•
On December 1, 2021, the Company acquired the remaining 50% equity interest in the Utah Solar Portfolio from
Dominion Solar Projects III, Inc., for approximately $335 million before working capital and purchase price
adjustments in the net amount of $5 million, representing total net consideration of $330 million. Borrowings under
the Bridge Loan Agreement were used to fund the acquisition. The Utah Solar Portfolio consists of seven utility-scale
solar farms located in Utah representing 530 MW of capacity. The assets within the portfolio sell power subject to
20-year PPAs with PacifiCorp that have approximately 15 years remaining under the agreements. Following the
close of the transaction, the Company owns 100% of the membership interests in the Utah Solar Portfolio. The
Company removed its equity method investment and consolidates its interests in the Utah Solar Portfolio within the
Renewables segment from the date of the acquisition.
On April 23, 2021, the Company acquired 100% of the equity interests in NedPower Mount Storm LLC, or Mt.
Storm, from Castleton Commodities International for approximately $96 million before working capital and purchase
price adjustments in the net amount of $4 million, representing a total net consideration of $100 million. Mt. Storm is
a 264 MW wind project located in Grant County, West Virginia. Mt. Storm has a 10-year energy hedge with an
investment-grade counterparty.
On February 3, 2021, the Company acquired an additional 35% equity interest in the Agua Caliente solar project from
NRG Energy, Inc. for $202 million. Agua Caliente is a 290 MW solar project located in Dateland, Arizona in which
the Company previously owned a 16% equity interest. The project has a 25-year PPA with PG&E, with
approximately 17 years remaining under the agreement. Following the close of the transaction, the Company owns a
51% equity interest in Agua Caliente. The Company removed its equity method investment and consolidates its
interest in Agua Caliente within the Renewables segment from the date of the acquisition.
Drop Down Transactions
•
On December 29, 2021, the Company, through its indirect subsidiary Lighthouse Renewable Holding Sub LLC,
acquired the Class B membership interests in Black Rock Wind Holding LLC from Clearway Renew LLC, a
subsidiary of CEG, for $60 million in cash consideration, $37 million of which was paid on December 29, 2021, with
the remaining $23 million paid in February 2022 after all remaining turbines were operational. Lighthouse Renewable
Holding Sub LLC is a wholly-owned subsidiary of Lighthouse Renewable Holdco LLC, which is a partnership
between the Company and a third-party investor. The Class A membership interests of Black Rock Wind Holding
LLC are owned by another third-party investor. Black Rock Wind Holding LLC, through its subsidiary, is the
primary beneficiary and consolidates its interests in a tax equity fund, Black Rock TE Holdco LLC, that holds the
Black Rock wind project, a 115 MW utility scale wind project located in Mineral County and Grant County, West
Virginia. As of December 31, 2021, 70 MW of the 115 MW rated capacity were operational, representing fourteen of
the twenty-three wind turbines, and the remaining 45 MW rated capacity became operational in January 2022. A
majority of the project’s output is backed by contracts with investment-grade counterparties with a 15-year weighted
average contract life.
49
•
•
•
•
•
•
On December 17, 2021, the Company through its indirect subsidiary Lighthouse Renewable Holdco 2 LLC, acquired
the Class B membership interests in Mesquite Sky Holding LLC from Clearway Renew LLC, a subsidiary of CEG,
for $61 million in cash consideration. Lighthouse Renewable Holdco 2 LLC is a partnership between the Company
and a third-party investor. The Class A membership interests of Mesquite Sky Holding LLC are owned by another
third-party investor. Mesquite Sky Holding LLC, through its subsidiary, is the primary beneficiary and consolidates
its interests in a tax equity fund, Mesquite Sky TE Holdco LLC that holds the Mesquite Sky wind project, a 340 MW
utility scale wind project located in Callahan County, Texas, which achieved commercial operations in December
2021. A majority of the project’s output is backed by contracts with investment-grade counterparties with a 12-year
weighted average contract life.
On October 28, 2021, the Company, through an indirect subsidiary, entered into an agreement with CEG to acquire
the Class A membership interests in the Daggett 3 solar project upon the project meeting certain milestones. Daggett
3 is a 300 MW solar generating facility under development with a combined 144 MW and 576 MWh battery energy
storage system located in San Bernardino, California. The Company expects to invest approximately $21 million,
subject to closing adjustments. Commercial operations of the facility and the Company's investment are expected to
occur in 2022.
On August 2, 2021, the CEG ROFO Agreement was amended to remove the 100 MW Wildflower utility scale solar
project from the ROFO pipeline.
On June 24, 2021, the Company, through an indirect subsidiary, entered into agreements with CEG to acquire the
Class A membership interests in the Mililani I and Waiawa solar projects upon the projects reaching certain
milestones. Mililani I is a 39 MW solar generating facility under development with a combined 39 MW and 156
MWh battery energy storage system located in Honolulu, Hawaii. Waiawa is a 36 MW solar generating facility under
development with a combined 36 MW and 144 MWh battery energy storage system located in Honolulu, Hawaii.
The Company expects to invest approximately $39 million, subject to closing adjustments. Commercial operations of
the facilities and the Company's investment are expected to occur in 2022.
On February 26, 2021, the Company, through an indirect subsidiary, entered into an amended partnership agreement
with CEG to repower the Pinnacle wind project, a 54 MW wind facility located in Mineral County, West Virginia.
The existing Pinnacle wind power purchase agreements will continue to run through 2031. On March 10, 2021, the
Pinnacle wind project acquired equipment from CEG for $21 million in cash consideration. On December 14, 2021,
the repowering project reached COD and on December 15, 2021, the Company funded $64 million in corporate
capital, which was utilized in part to repay the Pinnacle Repowering Partnership Holdco LLC construction loan,
along with proceeds from tax equity.
On January 12, 2021, the Company acquired 100% of CEG's equity interest and a third-party investor's minority
interest in CWSP Rattlesnake Holding LLC for $132 million in cash consideration. CWSP Rattlesnake Holding LLC
indirectly consolidates the Rattlesnake wind project, a 160 MW wind facility with 144 MW deliverable capacity
located in Adams County, Washington that achieved commercial operations in December 2020. The Company's net
capital commitment was $119 million after proceeds from a state sales and use tax refund, which was received in
May 2021. The project has a 20-year PPA, which began when the facility reached commercial operations.
Resource Adequacy Agreements
•
•
On September 28, 2021, Walnut Creek contracted with SCE to sell 483 MW of Resource Adequacy, which is the full
net qualifying capacity of the plant, commencing in June 2023 and ending in December 2026.
On September 10, 2021, Marsh Landing contracted with PG&E to sell approximately 500 MW of Resource
Adequacy commencing in May 2023. The contract is for approximately three years. On May 3, 2021, Marsh Landing
contracted with a California Load Serving Entity to sell 100 MW of Resource Adequacy commencing in May 2023.
The contract is for approximately seven and a half years. Collectively, these contracts represent approximately 80%
of the plant's net qualifying capacity.
50
February 2021 Winter Events in Texas
•
In February 2021, Texas experienced extreme winter weather conditions in which certain of the Company's wind
projects were unable to operate and experienced outages due to the weather conditions at that time. Due to this event,
and inclusive of amounts related to third-party equity investors, the Company recorded a reduction of approximately
$50 million in revenue in the first quarter of 2021 to settle obligations for wind facilities during the extreme weather
conditions. After factoring in third-party equity investor contributions, the cash impact to the Company during the
first quarter of 2021 was approximately $25 million.
Environmental Matters and Regulatory Matters
Details of environmental matters and regulatory matters are presented in Item 1 — Business, Regulatory Matters and
Item 1A — Risk Factors. Details of some of this information relate to costs that may impact the Company's financial results.
Trends or Matters Affecting Results of Operations and Future Business Performance
Wind and Solar Resource Availability
The availability of the wind and solar resources affects the financial performance of the wind and solar facilities, which
may impact the Company’s overall financial performance. Due to the variable nature of the wind and solar resources, the
Company cannot predict the availability of the wind and solar resources and the potential variances from expected
performance levels from quarter to quarter. To the extent the wind and solar resources are not available at expected levels, it
could have a negative impact on the Company’s financial performance for such periods.
Recent Developments Affecting Industry Conditions and the Company's Business
COVID-19
In response to the ongoing coronavirus (COVID-19) pandemic, the Company has implemented preventative measures
and developed corporate and regional response plans to protect the health and safety of its employees, customers and other
business counterparties, while supporting the Company's suppliers and customers' operations to the best of its ability in the
circumstances. The Company continues to promote heightened awareness and vigilance, hygiene, and implementation of
more stringent cleaning protocols across its facilities and operations and continues to evaluate these measures, response plans
and business practices in light of the evolving effects of COVID-19 and its variants.
As of the date of this report, the Company has not experienced any material financial or operational impacts related to
COVID-19, or variants thereof. All of the Company’s facilities have remained operational. The Company has experienced a
decrease in volumetric sales on a weather normalized basis at certain Thermal locations in part due to COVID-19 related
impacts, which has not resulted in any material financial impacts to the Company. The Company believes that all of its
accounts receivable balances as of December 31, 2021 are collectible. The Company will continue to assess collectability
based on any future developments.
The Company cannot predict the full impact that COVID-19 and its variants will have on the Company’s financial
expectations, its financial condition, results of operations and cash flows, its ability to make distributions to its stockholders,
the market prices of its common stock and its ability to satisfy its debt service obligations at this time, due to numerous
uncertainties. The ultimate impact will depend on future developments, including, among others, the ultimate geographic
spread of the virus and related variants, the consequences of governmental and other measures designed to prevent the spread
of the virus, the development of effective treatments, including vaccines, the duration of the pandemic, actions taken by
governmental authorities, customers, suppliers and other third parties, workforce availability and the timing and extent to
which normal economic and operating conditions resume For additional discussion regarding risks associated with the
COVID-19 pandemic, see Part I, Item 1A, Risk Factors.
51
Consolidated Results of Operations
The following table provides selected financial information:
(In millions)
Operating Revenues
Year ended December 31,
2021
2020
2019
Energy and capacity revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Other revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,425 $
92
1,234 $
53
1,072
40
Contract amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Mark-to-market for economic hedges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(144)
(87)
Total operating revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,286
(88)
—
1,199
(71)
(9)
1,032
Operating Costs and Expenses
Cost of fuels . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operations and maintenance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other costs of operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation, amortization and accretion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Impairment losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
General and administrative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Transaction and integration costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Development costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total operating costs and expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating Income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other Income (Expense)
Equity in earnings of unconsolidated affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Impairment loss on investment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gain on sale of unconsolidated affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other income, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loss on debt extinguishment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Derivative interest income (expense) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total other expense, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loss Before Income Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income tax expense (benefit) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
75
279
97
509
6
40
7
6
1,019
267
32
—
—
3
(53)
53
(365)
(330)
(63)
12
(75)
73
219
74
428
24
34
9
5
866
333
7
(8)
49
4
(24)
4
(419)
(387)
(54)
8
(62)
Less: Net loss attributable to noncontrolling interests . . . . . . . . . . . . . . . . . . . . . . . . . .
Net Income (Loss) Attributable to Clearway Energy, Inc. . . . . . . . . . . . . . . . . . . . . . $
(126)
51 $
(87)
25 $
74
191
72
401
33
29
3
5
808
224
83
—
—
9
(16)
(65)
(339)
(328)
(104)
(8)
(96)
(85)
(11)
Business metrics:
Renewables MWh generated/sold (in thousands) (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Thermal MWt sold (in thousands) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Thermal MWh sold (in thousands) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Conventional MWh generated (in thousands) (a)(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Conventional equivalent availability factor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Year ended December 31,
2021
2020
2019
11,313
2,035
59
1,108
7,460
1,927
68
1,475
6,584
2,153
176
1,095
94.7 %
94.9 %
94.9 %
(a) Volumes do not include the MWh generated/sold by the Company's equity method investments.
(b) Volumes generated are not sold as the Conventional facilities sell capacity rather than energy.
52
Management's discussion of the results of operations for the years ended December 31, 2021 and 2020
Operating Revenues
Operating revenues increased by $87 million for the year ended December 31, 2021, compared to the same period in
2020, due to a combination of the drivers summarized in the table below:
Renewables Segment
Thermal Segment
Conventional Segment
Mark-to-market economic
hedging activities
Contract amortization
Increase due to the acquisitions of Agua Caliente, Mt. Storm, Mesquite Star,
Rattlesnake, Langford and Rosamond Central, and the consolidation of the
DGPV investments as well as higher wind production at Alta, partially offset by
$50 million of net settlements of obligations for wind facilities that were unable
to produce the required output during extreme weather conditions in Texas in
February 2021
Increase primarily driven by higher volumes and higher gas prices passed
through to customers, partially offset by a sales-type lease recognized in
September 2020
Increase primarily due to improved availability at the California natural gas
portfolio
Increase in unrealized losses from changes in the fair value of commodity
contracts, primarily driven by the acquisitions of Mesquite Star and Mt. Storm,
and increases in forward commodity prices in ERCOT and PJM
Increase primarily driven by amortization of the intangible asset for power
purchase agreement in connection with the acquisition of Agua Caliente
(In millions)
$
217
10
3
(87)
(56)
87
$
Operations and Maintenance Expense
Operations and maintenance expense increased by $60 million during the year ended December 31, 2021 compared to the
same period in 2020, primarily from the acquisition of solar and wind projects during the second half of 2020 and the first half
of 2021 as well as the consolidation of the DGPV investments on November 2, 2020.
Other Costs of Operations Expense
Other costs of operations expense, which primarily consists of insurance and property taxes, increased by $23 million
during the year ended December 31, 2021, compared to the same period in 2020. This was largely due to a net increase in the
Renewables segment primarily from the acquisition of solar and wind projects during the second half of 2020 and the first half
of 2021, in addition to refunds of property taxes received in 2020.
Depreciation, Amortization and Accretion
Depreciation, amortization and accretion expense increased by $81 million during the year ended December 31, 2021,
compared to the same period in 2020, primarily due to a $90 million increase in the Renewables segment, offset slightly by a $9
million decrease in the Thermal segment, as a result of the Thermal Business assets being reclassified to held for sale in the
fourth quarter of 2021, as further described in Item 15 — Note 3, Acquisitions and Dispositions. The increase in the
Renewables segment was driven by the acquisition of solar and wind projects during the second half of 2020 and the first half
of 2021, as well as the consolidation of the DGPV investments on November 2, 2020, resulting in a cumulative increase of
$65 million. In addition, approximately $34 million of accelerated depreciation was recorded in 2021, related to the repowering
of the Pinnacle wind facility, which is an increase of $25 million compared to the same period in 2020.
Impairment Losses
The Company recorded impairment losses of $6 million and $24 million, for the years ended December 31, 2021 and
2020, respectively, primarily related to several wind projects within the Renewables segment, as further described in Item 15 —
Note 9, Asset Impairments.
General and Administrative Expenses
General and administrative expenses increased by $6 million during the year ended December 31, 2021 compared to the
same period in 2020, primarily due to an increase in net MSA fees charged by CEG, personnel costs and various consulting
fees.
53
Equity in Earnings of Unconsolidated Affiliates
Equity in earnings of unconsolidated affiliates increased by $25 million during the year ended December 31, 2021
compared to the same period in 2020, primarily driven by increased earnings from Desert Sunlight and Avenal in 2021, the
acquisition of Mesquite Star on September 1, 2020, which had losses in 2020, and the consolidation of the DGPV investments
on November 2, 2020, which had losses in 2020. These increases were partially offset by the absence of equity in earnings for
Agua Caliente, which was consolidated due to the acquisition of an additional interest in February 2021, and the sale of the
interests in RPV Holdco in May 2020, which had earnings in 2020.
Impairment Loss on Investment
The Company recorded an $8 million impairment loss during the year ended December 31, 2020 related to San Juan
Mesa, an equity method investment within the Renewables segment, as further described in Item 15 — Note 9, Asset
Impairments.
Gain on Sale of Unconsolidated Affiliate
On May 14, 2020, the Company sold its interests in RPV Holdco to a third-party, which resulted in a gain on sale of
investment of approximately $49 million, as further described in Item 15 — Note 3, Acquisition and Dispositions.
Loss on Debt Extinguishment
The Company recorded loss on debt extinguishment of $53 million during the year ended December 31, 2021 primarily
driven by the write-off of previously deferred finance costs and payment of premiums related to the redemption of the 2026
Senior Notes and the 2025 Senior Notes in 2021, as further described in Item 15 — Note 10, Long-term Debt.
The Company recorded loss on debt extinguishment of $24 million during the year ended December 31, 2020, which
reflects the write-off of previously deferred debt issuance costs, primarily related to the repayment of debt and related
refinancing activities in the Renewables segment, as further described in Item 15 — Note 10, Long-term Debt.
Interest Expense
Interest expense decreased by $103 million during the year ended December 31, 2021 compared to the same period in
2020 primarily due to:
Change in fair value of interest rate swaps . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Increase in interest expense due to a net increase in project level debt primarily related to acquisitions in the
Renewables segment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Increase in Corporate interest expense due to additional issuances of the 2028 Senior Notes in May 2020, 2031
Senior Notes in March 2021 and 2032 Senior Notes in October 2021; partially offset by the repurchases of the
2025 Senior Notes in March 2021 and 2026 Senior Notes in October 2021
(122)
16
3
(In millions)
$
(103)
54
Income Tax Expense
For the year ended December 31, 2021, the Company recorded income tax expense of $12 million on pretax loss of
$63 million. For the same period in 2020, the Company recorded an income tax expense of $8 million on pretax loss of
$54 million. For the year ended December 31, 2021, the overall effective tax rate was different than the statutory rate of 21%
primarily due to the taxable earnings and losses allocated to partners’ interest in Clearway Energy LLC, which includes the
effects of applying the hypothetical liquidation at book value, or HLBV, method of accounting for book purposes to certain
partnerships.
A reconciliation of the U.S. federal statutory rate of 21% to the Company's effective rate is as follows:
Loss Before Income Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Tax at 21% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
State taxes, net of federal benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Impact of non-taxable partnership earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Valuation allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Production tax credits, including prior year true-up . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Rate change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Partnership state basis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
State taxes assessed at subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income tax expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Effective income tax rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Year Ended December 31,
2021
2020
(In millions, except percentages)
$
$
(63)
(13)
(4)
34
(14)
(1)
(2)
8
2
2
12
(19.0) %
(54)
(11)
(4)
24
—
(1)
2
—
—
(2)
8
(14.8) %
The effective income tax rate may vary from period to period depending on, among other factors, the geographic and
business mix of earnings and losses, earnings and losses allocated to partners' interest in Clearway Energy LLC which includes
the effects of applying the HLBV method of accounting for book purposes to certain partnerships, and changes in valuation
allowances in accordance with ASC 740. These factors and others, including the Company's history of pre-tax earnings and
losses, are taken into account in assessing the ability to realize deferred tax assets.
Net Loss Attributable to Noncontrolling Interests
For the year ended December 31, 2021, the Company had a loss of $126 million attributable to noncontrolling interests
and redeemable interests comprised of the following:
Losses attributable to tax equity financing arrangements and the application of HLBV . . . . . . . . . . . . . . . . . . . $
Losses attributable to CEG's interest in partnerships . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
CEG's economic interest in Clearway Energy LLC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income attributable to third-party partnerships . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
(174)
(3)
47
4
(126)
(In millions)
For the year ended December 31, 2020, the Company had a loss of $87 million attributable to noncontrolling interests and
redeemable interests comprised of the following:
Losses attributable to tax equity financing arrangements and the application of HLBV . . . . . . . . . . . . . . . . . . . $
(135)
CEG's economic interest in Clearway Energy LLC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income attributable to third-party partnerships . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income attributable to CEG's interest in partnerships . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
26
13
9
$
(87)
(In millions)
55
Liquidity and Capital Resources
The Company's principal liquidity requirements are to meet its financial commitments, finance current operations, fund
capital expenditures, including acquisitions from time to time, service debt and pay dividends. As a normal part of the
Company's business, depending on market conditions, the Company will from time to time consider opportunities to repay,
redeem, repurchase or refinance its indebtedness. Changes in the Company's operating plans, lower than anticipated sales,
increased expenses, acquisitions or other events may cause the Company 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.
Current Liquidity Position
As of December 31, 2021 and 2020, the Company's liquidity was approximately $821 million and $894 million,
respectively, comprised of cash, restricted cash and availability under the Company's revolving credit facility.
As of December 31,
2020
2021
(In millions)
Cash and cash equivalents: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Clearway Energy, Inc. and Clearway Energy LLC, excluding subsidiaries . . . . . . . . . . . . . . . . . . . . . . . $
33 $
Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Restricted cash: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Reserves, including debt service, distributions, performance obligations and other reserves . . . . . . . . .
Total cash, cash equivalents and restricted cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Revolving credit facility availability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
146
246
229
654
167
Total liquidity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
821 $
119
149
73
124
465
429
894
The Company's liquidity includes $475 million and $197 million of restricted cash balances as of December 31, 2021 and
2020, respectively. Restricted cash consists primarily of funds to satisfy the requirements of certain debt arrangements and
funds held within the Company's projects that are restricted in their use. As of December 31, 2021, these restricted funds were
comprised of $246 million designated to fund operating expenses, approximately $34 million designated for current debt
service payments, and $131 million restricted for reserves including debt service, performance obligations and other reserves,
as well as capital expenditures. The remaining $64 million is held in distribution reserve accounts.
As of December 31, 2021, the Company had $245 million of outstanding borrowings under the revolving credit facility
and $83 million in letters of credit outstanding. During the year ended December 31, 2021, the Company borrowed
$622 million under the revolving credit facility, and subsequently repaid $377 million utilizing cash on hand and the proceeds
from the issuance of the 2031 Senior Notes.
Management believes that the Company's liquidity position, cash flows from operations and availability under its
revolving credit facility will be adequate to meet the Company's financial commitments; debt service obligations; growth,
operating and maintenance capital expenditures; and to fund dividends to holders of the Company's Class A common stock and
Class C common stock. Management continues to regularly monitor the Company's ability to finance the needs of its operating,
financing and investing activity within the dictates of prudent balance sheet management.
56
Credit Ratings
Credit rating agencies rate a firm's public debt securities. These ratings are utilized by the debt markets in evaluating a
firm's credit risk. Ratings influence the price paid to issue new debt securities by indicating to the market the Company's ability
to pay principal, interest and preferred dividends. Rating agencies evaluate a firm's industry, cash flow, leverage, liquidity and
hedge profile, among other factors, in their credit analysis of a firm's credit risk.
The following table summarizes the credit ratings for the Company and its Senior Notes as of December 31, 2021. The
ratings outlook is stable.
Clearway Energy, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4.750% Senior Notes, due 2028 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3.750% Senior Notes, due 2031 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3.750% Senior Notes, due 2032 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
S&P
BB
BB
BB
BB
Moody's
Ba2
Ba2
Ba2
Ba2
Sources of Liquidity
The Company's principal sources of liquidity include cash on hand, cash generated from operations, proceeds from sales
of assets, borrowings under new and existing financing arrangements and the issuance of additional equity and debt securities
as appropriate given market conditions. As described in Item 15 — Note 10, Long-term Debt, the Company's financing
arrangements consist of corporate level debt, which includes Senior Notes and the revolving credit facility; the ATM Programs;
and project-level financings for its various assets.
Thermal Disposition
On October 22, 2021, Clearway Energy Operating LLC entered into a binding agreement to sell the Thermal Business to
KKR for total consideration of $1.9 billion, subject to customary closing adjustments. Based on current estimates, the Company
expects total net cash proceeds of approximately $1.35 billion after the assumption of project level debt, estimated taxes and
obligations owed, transaction expenses and capital expenditures required to be funded pursuant to the terms and conditions of
the definitive agreement. The closing of the transaction is subject to various customary closing conditions, approvals and
consents and is expected to close in the first half of 2022.
Revolving Credit Facility
The Company has a total of $167 million available under the revolving credit facility as of December 31, 2021. The
facility will continue to be used for general corporate purposes including financing of future acquisitions and posting letters of
credit.
Bridge Loan Agreement
On November 30, 2021, Clearway Energy Operating LLC entered into a senior secured bridge credit agreement, or the
Bridge Loan Agreement, that provides for a term loan facility in an aggregate principal amount of $335 million that will mature
no later than November 29, 2022. The Company intends to use proceeds from the Thermal Disposition to repay the outstanding
principal balance of the term loans under the Bridge Loan Agreement. The borrowings under the Bridge Loan Facility were
used to acquire the Utah Solar Portfolio on December 1, 2021, as described below.
2032 Senior Notes
On October 1, 2021, Clearway Energy Operating LLC completed the sale of $350 million of senior unsecured notes due
2032, or the 2032 Senior Notes. The 2032 Senior Notes bear interest at 3.750% and mature on January 15, 2032. Interest on the
2032 Senior Notes is payable semi-annually on January 15 and July 15 of each year. The 2032 Senior Notes are unsecured
obligations of Clearway Energy Operating LLC and are guaranteed by Clearway Energy LLC and by certain of Clearway
Energy Operating LLC's wholly-owned current and future subsidiaries. The net proceeds from the 2032 Senior Notes were
used, together with existing corporate liquidity, to repurchase the 2026 Senior Notes.
57
Pinnacle Repowering Partnership Holdco LLC Financing
On March 10, 2021, the Company entered into a financing agreement for non-recourse debt for a total commitment of
$126 million related to the repowering of the Pinnacle wind project. The debt consists of a construction loan at an interest rate
of LIBOR plus 1.00%. The company's initial borrowings of $79 million were utilized to repay $53 million of the outstanding
balance under the Tapestry Wind LLC financing agreement, which related to the Pinnacle wind project, and to reimburse
Clearway Renew LLC for equipment purchases and pay vendor invoices and fees. On December 15, 2021, the Company repaid
the outstanding principal amount of $117 million utilizing existing corporate liquidity, along with proceeds from tax equity.
2031 Senior Notes
On March 9, 2021, Clearway Energy Operating LLC completed the sale of $925 million of senior unsecured notes due
2031, or the 2031 Senior Notes. The 2031 Senior Notes bear interest at 3.750% and mature on February 15, 2031. Interest on
the 2031 Senior Notes is payable semi-annually on February 15 and August 15 of each year. The 2031 Senior Notes are
unsecured obligations of Clearway Energy Operating LLC and are guaranteed by Clearway Energy LLC and by certain of
Clearway Energy Operating LLC's wholly-owned current and future subsidiaries. The net proceeds from the 2031 Senior Notes
were used to repurchase the 2025 Senior Notes, as well as to repay amounts outstanding under the Company's revolving credit
facility and for general corporate purposes.
Oahu and Kawailoa Hawaii Refundable Tax Credits
In 2020, the members of the partnerships holding the Oahu Solar and Kawailoa Solar projects submitted applications to
the state of Hawaii for refundable tax credits based on the cost of construction of the projects. In April 2021, the members of
the partnerships contributed their respective portions of the tax credits in the amount of $49 million to the Oahu Solar and
Kawailoa project companies, which was recorded to restricted cash on the Company's consolidated balance sheet with an
offsetting adjustment to noncontrolling interests. In accordance with the projects' related agreements, the cash is held in a
restricted account and utilized to offset invoiced amounts under the projects' PPAs. As of December 31, 2021, $20 million of
the $49 million has been utilized to offset invoiced amounts under the projects' PPAs.
58
Uses of Liquidity
The Company's requirements for liquidity and capital resources, other than for operating its facilities, are categorized as:
(i) debt service obligations, as described more fully in Item 15 — Note 10, Long-term Debt; (ii) capital expenditures; (iii) off-
balance sheet arrangements; (iv) acquisitions and investments; and (v) cash dividends to investors.
Debt Service Obligations
Principal payments on debt as of December 31, 2021, are due in the following periods:
Description
2022
2023
2024
2025
2026
(In millions)
There-
after
Total
Clearway Energy Operating LLC Senior Notes, due 2028 . . . . . . $ — $ — $ — $ — $ — $
850 $
Clearway Energy Operating LLC Senior Notes, due 2031 . . . . . .
Clearway Energy Operating LLC Senior Notes, due 2032 . . . . . .
Clearway Energy LLC and Clearway Energy Operating LLC
Revolving Credit Facility, due 2023 . . . . . . . . . . . . . . . . . . . . . . .
—
—
—
—
—
—
—
—
—
—
—
245
—
—
—
Bridge Loan, due 2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
335
—
—
—
—
925
350
—
—
850
925
350
245
335
Total Corporate-level debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
335
245
—
—
—
2,125
2,705
Project-level debt: . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Agua Caliente Solar LLC, due 2037 . . . . . . . . . . . . . . . . . . . . . . .
Alta Wind Asset Management LLC . . . . . . . . . . . . . . . . . . . . . . .
Alta Wind I-V lease financing arrangements, due 2034 and 2035
Alta Wind Realty Investments LLC, due 2031 . . . . . . . . . . . . . .
Borrego, due 2024 and 2038 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Buckthorn Solar, due 2025 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Carlsbad Holdco, due 2038 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Carlsbad Energy Holdings LLC, due 2027 . . . . . . . . . . . . . . . . .
Carlsbad Energy Holdings LLC, due 2038 . . . . . . . . . . . . . . . . . .
CVSR, due 2037 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
CVSR Holdco Notes, due 2037 . . . . . . . . . . . . . . . . . . . . . . . . . . .
DG-CS Master Borrower LLC, due 2040 . . . . . . . . . . . . . . . . . . .
Duquesne, due 2059 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
El Segundo Energy Center, due 2023 . . . . . . . . . . . . . . . . . . . . . .
Energy Center Minneapolis Series D, E, F, G, H Notes, due
2025-2037 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Kawailoa Solar Portfolio LLC, due 2026 . . . . . . . . . . . . . . . . . . .
Laredo Ridge, due 2028 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Marsh Landing, due 2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
NIMH Solar, due 2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Oahu Solar Holdings LLC, due 2026 . . . . . . . . . . . . . . . . . . . . . .
Rosie Class B, due 2027 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tapestry, due 2031 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Utah Solar Holdings, due 2036 . . . . . . . . . . . . . . . . . . . . . . . . . . .
Walnut Creek, due 2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
WCEP Holdings, LLC due 2023 . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
35
1
47
2
3
3
7
21
—
25
9
28
—
63
37
1
49
2
3
4
2
38
1
51
2
3
4
3
22
23
39
1
54
2
3
40
1
55
3
3
112
—
3
25
9
26
—
—
—
—
26
9
28
28
9
29
30
9
30
32
9
30
—
—
—
—
130
—
—
—
—
—
—
2
7
65
14
3
2
6
16
55
4
19
2
7
19
14
3
2
6
15
19
26
38
4
3
11
15
69
12
2
9
—
—
—
148
—
—
3
3
8
3
3
8
14
14
74
3
9
16
—
—
—
—
—
—
14
15
16
422
495
8
500
13
39
—
181
19
407
511
124
296
95
—
309
—
26
—
—
—
65
48
198
—
—
78
684
13
756
24
54
123
205
136
407
652
169
441
95
193
328
78
72
84
176
86
78
85
273
74
30
180
3,412
5,496
Total project-level debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
437
464
392
369
Total debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
(a)
Principal debt payments relate to Thermal Business long-term debt reclassified to held for sale in the fourth quarter of 2021.
772 $ 709 $ 392 $ 369 $ 422 $ 5,537 $ 8,201
59
Capital Expenditures
The Company's capital spending program is mainly focused on maintenance capital expenditures, consisting of costs to
maintain the assets currently operating, such as costs to replace or refurbish assets during routine maintenance, and growth
capital expenditures consisting of costs to construct new assets, costs to complete the construction of assets where construction
is in process, and capital expenditures related to acquiring additional thermal customers.
For the years ended December 31, 2021 and 2020, the Company used approximately $151 million, and $124 million,
respectively, to fund capital expenditures, including maintenance capital expenditures of $25 million and $23 million,
respectively. Growth capital expenditures in 2021 include $96 million in the Renewables segment, $43 million incurred in
connection with the repowering of the Pinnacle wind project, $19 million incurred in connection with the Rattlesnake wind
project, $18 million incurred in connection with the Rosamond Central solar project, $13 million incurred in connection with
the Mesquite Star wind project and $3 million incurred by other wind projects. The Company also incurred $30 million of
growth capital expenditures in the Thermal and Conventional segments in connection with various development projects.
The Company estimates $36 million of maintenance capital expenditures for 2022, which includes the Thermal segment
for all of 2022. These estimates are subject to continuing review and adjustment and actual capital expenditures may vary from
these estimates.
Off-Balance Sheet Arrangements
Obligations under Certain Guarantee Contracts
The Company may enter into guarantee arrangements in the normal course of business to facilitate commercial
transactions with third parties.
Retained or Contingent Interests
The Company does not have any material retained or contingent interests in assets transferred to an unconsolidated entity.
Obligations Arising Out of a Variable Interest in an Unconsolidated Entity
Variable interest in equity investments — As of December 31, 2021, the Company has several investments with an
ownership interest percentage of 50% or less. GenConn is a variable interest entity for which the Company is not the primary
beneficiary. The Company's pro-rata share of non-recourse debt held by unconsolidated affiliates was approximately
$345 million as of December 31, 2021. This indebtedness may restrict the ability of these subsidiaries to issue dividends or
distributions to the Company. See also Item 15 — Note 5, Investments Accounted for by the Equity Method and Variable
Interest Entities.
Contractual Obligations and Commercial Commitments
In addition to the Company's capital expenditure programs, the Company has a variety of contractual obligations and
other commercial commitments that represent prospective cash requirements. The following table summarizes the Company's
contractual obligations. See Item 15 — Note 10, Long-term Debt, Note 16, Commitments and Contingencies, and Note 17,
Leases, for additional discussion.
Contractual Cash Obligations
By Remaining Maturity at December 31,
2021
Under
1 Year
1-3 Years
3-5 Years
Over
5 Years
Total
(In millions)
2020
Total
Long-term debt (including estimated interest) (a)
Operating leases (b) . . . . . . . . . . . . . . . . . . . . . . . .
Fuel purchase and transportation obligations . . .
Other liabilities (c) . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
$
1,107 $
1,685 $
1,303 $
6,701 $ 10,796 $
9,560
28
7
32
56
1
53
57
—
45
801
—
180
942
8
310
591
14
293
1,174 $
1,795 $
1,405 $
7,682 $ 12,056 $ 10,458
(a)
Remaining maturities of Thermal Business long-term debt reclassified to held for sale in the fourth quarter of 2021 are $19 million, $40 million, $57 million
and $596 million due under 1 Year, 1-3 Years, 3-5 Years and Over 5 Years, respectively.
(b) Remaining maturities of Thermal Business operating leases reclassified to held for sale in the fourth quarter of 2021 are $1 million, $2 million, $2 million
and $31 million due under 1 Year, 1-3 Years, 3-5 Years and Over 5 Years, respectively.
(c) Includes water right agreements, service and maintenance agreements, and LTSA commitments.
60
Acquisitions and Investments
The Company intends to acquire generation assets developed and constructed by CEG as well as generation assets from
third parties where the Company believes its knowledge of the market and operating expertise provides a competitive
advantage, and to utilize such acquisitions as a means to grow its business.
Black Rock Drop Down — On December 29, 2021, the Company, through its indirect subsidiary Lighthouse Renewable
Holding Sub LLC, acquired the Class B membership interests in Black Rock Wind Holding LLC from Clearway Renew LLC, a
subsidiary of CEG, for $60 million in cash consideration, $37 million of which was paid on December 29, 2021, with the
remaining $23 million paid in February 2022 after all remaining turbines were operational. Lighthouse Renewable Holding Sub
LLC is a wholly-owned subsidiary of Lighthouse Renewable Holdco LLC, which is a partnership between the Company and a
third-party investor. Black Rock Wind Holding LLC is the primary beneficiary and consolidates its interest in a tax equity fund,
Black Rock TE Holdco LLC, that holds the Black Rock wind project, a 115 MW utility scale wind project located in Mineral
County and Grant County, West Virginia. As of December 31, 2021, 70 MW of the 115 MW rated capacity were operational,
representing fourteen of the twenty-three wind turbines, and the remaining 45 MW rated capacity became operational in
January 2022. The investment was funded with existing sources of liquidity.
Mesquite Sky Drop Down — On December 17, 2021, the Company, through its indirect subsidiary Lighthouse Renewable
Holdco 2 LLC, acquired the Class B membership interests of Mesquite Sky Holding LLC from Clearway Renew LLC, a
subsidiary of CEG for $61 million in cash consideration. Lighthouse Renewable Holdco 2 LLC is a partnership between the
Company and a third-party investor. Mesquite Sky Holding LLC, through its subsidiary, is the primary beneficiary and
consolidates its interest in a tax equity fund, Mesquite Sky TE Holdco LLC, that holds the Mesquite Sky wind project, a 340
MW utility scale wind project located in Callahan County, Texas, which achieved commercial operations in December 2021.
The investment was funded with existing sources of liquidity.
Utah Portfolio Acquisition — On December 1, 2021, the Company acquired the remaining 50% equity interest in the Utah
Solar Portfolio from Dominion Solar Projects III, Inc., for approximately $335 million before working capital and purchase
price adjustments in the net amount of $5 million, representing total net consideration of $330 million. The Utah Solar Portfolio
consists of seven utility-scale solar farms located in Utah, representing 530 MW of capacity. Borrowings under the Bridge Loan
Agreement were used to fund the acquisition.
Mt. Storm Acquisition — On April 23, 2021, the Company acquired 100% of the equity interests in NedPower Mount
Storm LLC, or Mt. Storm, from Castleton Commodities International for approximately $96 million before working capital and
purchase price adjustments in the net amount of $4 million, representing a total net consideration of $100 million. Mt. Storm is
a 264 MW wind project located in Grant County, West Virginia.
Pinnacle Wind Repowering — On February 26, 2021, the Company, through an indirect subsidiary, entered into an
amended partnership agreement with CEG to repower the Pinnacle wind project, a 54 MW wind facility located in Mineral
County, West Virginia. On March 10, 2021, the Pinnacle wind project acquired equipment from CEG for $21 million in cash
consideration. On December 14, 2021, the repowering project reached COD and on December 15, 2021, the Company funded
$64 million in existing corporate liquidity, which was utilized in part to repay the Pinnacle Repowering Partnership Holdco
LLC construction loan, along with proceeds from tax equity.
Agua Caliente Acquisition — On February 3, 2021, the Company acquired an additional 35% equity interest in the Agua
Caliente solar project from NRG Energy, Inc. for $202 million. Agua Caliente is a 290 MW solar project located in Dateland,
Arizona in which the Company previously owned a 16% equity interest.
Rattlesnake Drop Down — On January 12, 2021, the Company acquired 100% of CEG's equity interest and a third-party
investor's minority interest in CWSP Rattlesnake Holding LLC for $132 million in cash consideration. CWSP Rattlesnake
Holding LLC indirectly consolidates the Rattlesnake wind project, a 160 MW wind facility located in Adams County,
Washington that achieved commercial operations in December 2020. The Company's net capital commitment was $119 million
after proceeds from a state sales and use tax refund, which was received in May 2021.
61
Debt Repurchases
2026 Senior Notes Tender Offer and Redemption — In October 2021, the Company repurchased and redeemed an
aggregate principal amount of $350 million of the 2026 Senior Notes, through the cash tender offer announced on
September 24, 2021 and the redemption of the remaining principal amount of $227 million on October 25, 2021. The 2026
Senior Notes repurchased and redeemed in October 2021 were effectuated at a premium of approximately 103% for total
consideration of $359 million and, as a result, the Company recorded a loss on extinguishment in the amount of $9 million. The
Company recorded an additional $3 million loss on extinguishment to write off the remaining unamortized deferred financing
fees related to the 2026 Senior Notes.
2025 Senior Notes Tender Offer and Redemption — In March 2021, the Company repurchased and redeemed an
aggregate principal amount of $600 million of the 2025 Senior Notes, through the cash tender offer announced on March 2,
2021 and the redemption of the remaining principal amount of $183 million on March 17, 2021. The 2025 Senior Notes
repurchased and redeemed in March 2021 were effectuated at a premium of approximately 106% for total consideration of
$636 million and, as a result, the Company recorded a loss on extinguishment in the amount of $36 million. In addition, the
Company recorded a $5 million loss on extinguishment to write off the remaining unamortized deferred financing fees related
to the 2025 Senior Notes.
Cash Dividends to Investors
The Company intends to use the amount of cash that it receives from its distributions from Clearway Energy LLC to pay
quarterly dividends to the holders of its Class A common stock and Class C common stock. Clearway Energy LLC intends to
distribute to its unit holders in the form of a quarterly distribution all of the CAFD that is generated each quarter less reserves
for the prudent conduct of the business. Dividends on the Class A common stock and Class C common stock are subject to
available capital, market conditions, and compliance with associated laws, regulations and other contractual obligations. The
Company expects that, based on current circumstances, comparable cash dividends will continue to be paid in the foreseeable
future.
The following table lists the dividends paid on the Company's Class A common stock and Class C common stock during
the year ended December 31, 2021:
Dividends per Class A share . . . . . . . . . . . . . . . . . . . . . . . . . . $
Dividends per Class C share . . . . . . . . . . . . . . . . . . . . . . . . . .
0.3400 $
0.3400
0.3345 $
0.3345
0.3290 $
0.3290
0.3240
0.3240
Fourth Quarter
2021
Third Quarter
2021
Second Quarter
2021
First Quarter
2021
On February 17, 2022, the Company declared a quarterly dividend on its Class A and Class C common stock of $0.3468
per share payable on March 15, 2022, to stockholders of record as of March 1, 2022.
62
Cash Flow Discussion
Year Ended December 31, 2021 Compared to Year Ended December 31, 2020
The following table reflects the changes in cash flows for the year ended December 31, 2021 compared to 2020:
Year ended December 31,
2021
2020
Change
(In millions)
Net cash provided by operating activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Net cash used in investing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net cash used in financing activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
701 $
(865)
367
545 $
(62)
(435)
156
(803)
802
Net Cash Provided by Operating Activities
Changes to net cash provided by operating activities were driven by:
Increase in operating income adjusted for non-cash items . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Increase in working capital primarily driven by the timing of accounts receivable collections and payments of
accounts payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Decrease in distributions from unconsolidated affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
142
37
(23)
156
(In millions)
Net Cash Used In Investing Activities
Changes to net cash used in investing activities were driven by:
Cash paid for Utah Solar Portfolio, Agua Caliente and Mt. Storm acquisitions, net of cash acquired, in 2021 . . $
Changes in cash paid for Drop Down assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds received from the sale of RPV Holdco, Energy Center Dover LLC and Energy Center Smyrna LLC
in 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Changes in capital expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Change in return of investment from unconsolidated affiliates, net of investments paid . . . . . . . . . . . . . . . . . . . .
Cash paid to CEG in 2021 for equipment for the Pinnacle wind project repowering . . . . . . . . . . . . . . . . . . . . . .
Consolidation of DGPV Holdco 3 in 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(533)
(107)
(90)
(27)
(21)
(21)
(17)
13
(In millions)
Net Cash Used In Financing Activities
Changes in net cash used in financing activities were driven by:
$
(803)
(In millions)
Increase in net contributions from noncontrolling interest members . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Increase in net proceeds under the revolving line of credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Payment to buy out CEG's noncontrolling interest in Repowering Partnership II LLC on May 11, 2020 . . . . . . .
Increase in payments for long-term debt, net of proceeds from issuance of long-term debt, primarily due to
issuance of the 2031 and 2032 Senior Notes, Bridge Loan Agreement and the Pinnacle financing agreement in
2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Decrease in net proceeds received from issuance of common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Increase in dividends paid to common stockholders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
720
245
70
(121)
(62)
(57)
7
802
63
NOLs, Deferred Tax Assets and Uncertain Tax Position Implications, under ASC 740
As of December 31, 2021, the Company has a cumulative federal NOL carry forward balance of $1.3 billion for financial
statement purposes, of which $0.9 billion will begin expiring between 2033 to 2037 if unutilized. The Company does not
anticipate any federal income tax payments for 2022. Additionally, as of December 31, 2021, the Company has a cumulative
state NOL carryforward balance of $769 million for financial statement purposes, which will expire between 2023 to 2040 if
unutilized. In addition, the Company has PTC and ITC carryforward balances totaling $15 million, which will expire between
2034 and 2041 if unutilized.
Based on the Company's current portfolio of assets, which include renewable assets that benefit from accelerated tax
depreciation deductions and federal tax credits, current and expected NOL balances, and after taking into account the projected
taxable gain from the Thermal Disposition that is anticipated to close in the first half of 2022, the Company estimates that it will
not pay material federal income tax through 2027, but does expect to pay material state income tax across certain jurisdictions
beginning in 2023. If the anticipated Thermal Disposition is not completed, the Company expects that it would not pay
significant federal income tax for a period of approximately 10 years.
As of December 31, 2021, the Company has an interest disallowance carry forward of $7 million as a result of the
proposed §163(j) regulation, which was enacted as part of the Tax Cut and Jobs Act. The disallowed interest deduction has an
indefinite carry forward period and any limitations on the utilization of this carry forward have been factored into the
Company's valuation allowance analysis.
On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security (CARES) Act, or the CARES Act, was signed
into law, which includes modifications to the business interest expense disallowance and net operating loss provisions. While
the Company utilized previously disallowed interest expense during 2020 as a result of the modifications, the CARES Act did
not have a material impact on the consolidated financial statements. The Company will continue to assess the effects of the
CARES Act and ongoing government guidance related to COVID-19 that may be issued.
The Company is subject to examination by taxing authorities for income tax returns filed in the U.S. federal and various
state jurisdictions. All tax returns filed by the Company for the year ended December 31, 2013 and forward remain subject to
audit. The Company believes that an adequate provision has been made for any adjustments that may result from tax
examinations. However, the outcome of tax audits cannot be predicted with certainty. If any issues addressed in tax audits of
the Company are resolved in a manner inconsistent with its expectations, the Company could be required to adjust its provision
for income taxes in the period such resolution occurs.
The Company has no uncertain tax benefits.
64
Fair Value of Derivative Instruments
The Company may enter into commodity purchase contracts and other energy-related financial instruments to mitigate
variability in earnings due to fluctuations in spot market prices and to hedge fuel requirements at certain generation facilities.
In addition, in order to mitigate interest rate risk associated with the issuance of variable rate debt, the Company enters into
interest rate swap agreements.
The tables below disclose the activities of non-exchange traded contracts accounted for at fair value in accordance with
ASC 820. Specifically, these tables disaggregate realized and unrealized changes in fair value; disaggregate estimated fair
values at December 31, 2021, based on their level within the fair value hierarchy defined in ASC 820; and indicate the
maturities of contracts at December 31, 2021. For a full discussion of the Company's valuation methodology of its contracts,
see Derivative Fair Value Measurements in Item 15 — Note 6, Fair Value of Financial Instruments.
Derivative Activity (Losses)/Gains
Fair value of contracts as of December 31, 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Contracts realized or otherwise settled during the period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Contracts acquired during the period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Changes in fair value . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Fair value of contracts as of December 31, 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
(172)
39
(52)
(51)
(236)
(In millions)
Fair Value Hierarchy Losses
1 Year or Less
Fair value of contracts as of December 31, 2021
Maturity
Greater
Than 1 Year
to 3 Years
Greater
Than 3 Years
to 5 Years
(In millions)
Greater Than 5
Years
Total Fair
Value
Level 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Level 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total
$
(22) $
(24)
(46) $
(16) $
(47)
(63) $
(18) $
(36)
(54) $
(1) $
(72)
(73) $
(57)
(179)
(236)
The Company has elected to disclose derivative assets and liabilities on a trade-by-trade basis and does not offset amounts
at the counterparty master agreement level. As discussed below in Quantitative and Qualitative Disclosures about Market Risk
-Commodity Price Risk, the Company measures the sensitivity of the portfolio to potential changes in market prices using VaR,
a statistical model which attempts to predict risk of loss based on market price and volatility. The Company's risk management
policy places a limit on one-day holding period VaR, which limits the net open position.
Critical Accounting Policies and Estimates
The Company's discussion and analysis of the financial condition and results of operations are based upon the
consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of these financial
statements and related disclosures in compliance with GAAP requires the application of appropriate technical accounting rules
and guidance as well as the use of estimates and judgments that affect the reported amounts of assets, liabilities, revenues and
expenses, and related disclosures of contingent assets and liabilities. The application of these policies necessarily involves
judgments regarding future events, including the likelihood of success of particular projects, legal and regulatory challenges and
the fair value of certain assets and liabilities. These judgments, in and of themselves, could materially affect the financial
statements and disclosures based on varying assumptions, which may be appropriate to use. In addition, the financial and
operating environment may also have a significant effect, not only on the operation of the business, but on the results reported
through the application of accounting measures used in preparing the financial statements and related disclosures, even if the
nature of the accounting policies has not changed.
On an ongoing basis, the Company evaluates these estimates, utilizing historic experience, consultation with experts and
other methods the Company considers reasonable. Actual results may differ substantially from the Company's estimates. Any
effects on the Company's business, financial position or results of operations resulting from revisions to these estimates are
recorded in the period in which the information that gives rise to the revision becomes known.
65
The Company's significant accounting policies are summarized in Item 15 — Note 2, Summary of Significant Accounting
Policies. The Company identifies its most critical accounting policies as those that are the most pervasive and important to the
portrayal of the Company's financial position and results of operations, and that require the most difficult, subjective and/or
complex judgments by management regarding estimates about matters that are inherently uncertain. The Company's critical
accounting policies include income taxes and valuation allowance for deferred tax assets, accounting utilizing Hypothetical
Liquidation at Book Value, or HLBV, and acquisition accounting.
Accounting Policy
Judgments/Uncertainties Affecting Application
Income Taxes and Valuation Allowance for Deferred Tax Assets . Ability to withstand legal challenges of tax authority
decisions or appeals
Anticipated future decisions of tax authorities
Application of tax statutes and regulations to transactions
Ability to utilize tax benefits through carry backs to prior
periods and carry forwards to future periods
Hypothetical Liquidation at Book Value (HLBV) . . . . . . . . . . . . . . Estimates of taxable income (loss) and tax capital
accounts
Estimated calculation of specified target investor returns
Application of liquidation provisions of operating
agreements
Acquisition Accounting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Identification of assets acquired
Inputs for fair values of assets and liabilities acquired
Application of appropriate fair value methodologies
Income Taxes and Valuation Allowance for Deferred Tax Assets
As of December 31, 2021, the Company had a valuation allowance of $1 million. The valuation allowance is related to
state net operating losses the Company expects to expire unutilized. Other than for the state NOLs mentioned above, the
Company believes it is more likely than not that the results of future operations will generate sufficient taxable income which
includes the future reversal of existing taxable temporary differences to realize deferred tax assets. The Company considered
the timing and future realization of net deferred tax assets, the profit before tax generated in recent years as well as projections
of future earnings and estimates of taxable income in arriving at this conclusion. The realization of deferred tax assets is
primarily dependent upon earnings in federal and various state and local jurisdictions.
66
Hypothetical Liquidation at Book Value (HLBV)
Certain portions of the Company's noncontrolling interests in subsidiaries represent third-party interests in the net assets
under certain tax equity arrangements, which are consolidated by the Company, that have been entered to finance the cost of
wind facilities eligible for certain tax credits. The Company has determined that the provisions in the contractual agreements of
these structures represent substantive profit sharing arrangements. Further, the Company has determined that the appropriate
methodology for calculating the noncontrolling interest and investment in unconsolidated affiliates that reflects the substantive
profit sharing arrangements is a balance sheet approach utilizing the HLBV method. Under the HLBV method, the amounts
reported as noncontrolling interests and investment in unconsolidated affiliates represent the amounts the investors to the tax
equity arrangements would hypothetically receive at each balance sheet date under the liquidation provisions of the contractual
agreements, assuming the net assets of the funding structures were liquidated at their recorded amounts determined in
accordance with GAAP. The investors' interests in the results of operations of the funding structures are determined as the
difference in noncontrolling interests at the start and end of each reporting period, after taking into account any capital
transactions between the structures and the funds' investors. The calculations utilized to apply the HLBV method include
estimated calculations of taxable income or losses for each reporting period as well as estimated calculations of tax capital
accounts based on the relevant provisions of each agreement and the related tax guidance. In addition, these calculations often
take into account the stipulated targeted investor return specified in the subsidiaries' operating agreement and agreed by the
members of the arrangement. In certain circumstances, the Company and its partners in the tax equity arrangements agree that
certain tax benefits are to be utilized outside of the tax equity arrangements, which may result in differences in the amount an
investor would hypothetically receive at the initial balance sheet date calculated strictly in accordance with related contractual
agreements. These differences are recognized in the consolidated statement of operations using a systematic and rational
method over the period during which the investor is expected to achieve its target return. In certain cases, the Company must
apply judgment in determining the methodology for applying these concepts in the HLBV method and changes in certain
factors may have a significant impact on the amounts that an investor would receive upon a hypothetical liquidation. The use
of the HLBV method to allocate income (loss) to the noncontrolling interest holders may create volatility in the consolidated
statements of operations.
Acquisition Accounting
The Company applies ASC 805, Business Combinations, when accounting for acquisitions, with identifiable assets
acquired and liabilities assumed recorded at their estimated fair values at acquisition date. For many of the Company's
acquisitions, the Company applies ASC 805-50, which provides that acquisitions of entities under common control are recorded
at historical cost, except in the case where the ultimate parent has a different basis, such as when an acquiree did not elect to
apply pushdown accounting. In those circumstances, the Company may also be required to record its acquired assets and
liabilities at fair value.
Significant judgment is required in determining the acquisition date fair value of the assets acquired and liabilities
assumed, predominantly with respect to property, plant and equipment, power purchase agreements, asset retirement obligations
and other contractual arrangements. Evaluations include numerous inputs including forecasted cash flows that incorporate the
specific attributes of each asset including age, useful life, equipment condition and technology as well as current replacement
costs for similar assets. Other key inputs that require judgment include discount rates, comparable market transactions,
estimated useful lives and probability of future transactions. The Company evaluates all available information as well as all
appropriate methodologies, when determining the fair value of assets acquired and liabilities assumed in a business
combination. In addition, once the appropriate fair values are determined, the Company must determine the remaining useful
life for property, plant and equipment and the amortization period and method of amortization for each finite-lived intangible
asset.
Recent Accounting Developments
See Item 15 — Note 2, Summary of Significant Accounting Policies, for a discussion of recent accounting developments.
67
Item 7A — Quantitative and Qualitative Disclosures About Market Risk
The Company is exposed to several market risks in its normal business activities. Market risk is the potential loss that
may result from market changes associated with the Company's power generation or with an existing or forecasted financial or
commodity transaction. The types of market risks the Company is exposed to are commodity price risk, interest rate risk,
liquidity risk, and credit risk.
Commodity Price Risk
Commodity price risks result from exposures to changes in spot prices, forward prices, volatilities, and correlations
between various commodities, such as electricity, natural gas and emissions credits. The Company manages the commodity
price risk of its merchant generation operations by entering into derivative or non-derivative instruments to hedge the variability
in future cash flows from forecasted power sales or purchases of fuel. The portion of forecasted transactions hedged may vary
based upon management's assessment of market, weather, operation and other factors. See Item 15 — Note 7, Accounting for
Derivative Instruments and Hedging Activities, for more information.
Based on a sensitivity analysis using simplified assumptions, the impact of a $0.50 per MMBtu decrease in natural gas
prices across the term of the derivative contracts would cause an increase of approximately $1 million to the net value of natural
gas derivatives, and an increase of $0.50 MMBtu in natural gas prices across the term of the derivative contracts would cause
an increase of approximately $3 million to the net value of natural gas derivatives as of December 31, 2021. The impact of a
$0.50 per MWh increase or decrease in power prices across the term of the derivative contracts would cause a change of
approximately $7 million to the net value of power derivatives as of December 31, 2021.
Interest Rate Risk
The Company is exposed to fluctuations in interest rates through its issuance of variable rate debt. Exposures to interest
rate fluctuations may be mitigated by entering into derivative instruments known as interest rate swaps, caps, collars and put or
call options. These contracts reduce exposure to interest rate volatility and result in primarily fixed rate debt obligations when
taking into account the combination of the variable rate debt and the interest rate derivative instrument. See Item 15 — Note 7,
Accounting for Derivative Instruments and Hedging Activities, for more information.
Most of the Company's project subsidiaries enter into interest rate swaps, intended to hedge the risks associated with
interest rates on non-recourse project level debt. See Item 15 — Note 10, Long-term Debt, for more information about interest
rate swaps of the Company's project subsidiaries.
If all of the above swaps had been discontinued on December 31, 2021, the Company would have owed the counterparties
$63 million. Based on the credit ratings of the counterparties, the Company believes its exposure to credit risk due to
nonperformance by counterparties to its hedge contracts to be insignificant.
The Company has long-term debt instruments that subject it to the risk of loss associated with movements in market
interest rates. As of December 31, 2021, a 1% change in interest rates would result in an approximately $6 million change in
interest expense on a rolling twelve-month basis.
As of December 31, 2021, the fair value of the Company's debt was $7,997 million and the carrying value was $7,782
million. The Company estimates that a 1% decrease in market interest rates would have increased the fair value of its long-term
debt by $540 million.
Liquidity Risk
Liquidity risk arises from the general funding needs of the Company's activities and in the management of the Company's
assets and liabilities.
Counterparty Credit Risk
Credit risk relates to the risk of loss resulting from non-performance or non-payment by counterparties pursuant to the
terms of their contractual obligations. The Company monitors and manages credit risk through credit policies that include: (i)
an established credit approval process, and (ii) the use of credit mitigation measures such as prepayment arrangements or
volumetric limits. Risks surrounding counterparty performance and credit could ultimately impact the amount and timing of
expected cash flows. The Company seeks to mitigate counterparty risk by having a diversified portfolio of counterparties. See
Item 15 — Note 6, Fair Value of Financial Instruments, for more information about concentration of credit risk.
68
Item 8 — Financial Statements and Supplementary Data
The financial statements and schedules are listed in Part IV, Item 15 of this Form 10-K.
Item 9 — Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
As previously reported in the Company's Current Report on Form 8-K filed on March 15, 2021, on March 9, 2021, the
Audit Committee of the Board of Directors of the Company dismissed KPMG LLP as the Company's independent registered
public accounting firm and appointed Ernst & Young LLP (PCAOB ID:42), an independent registered public accounting firm,
to audit the consolidated financial statements of the Company and its subsidiaries for the fiscal year ending December 31, 2021.
For more information, please refer to the Company's Current Report on Form 8-K filed on March 15, 2021.
Item 9A — Controls and Procedures
Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures and Internal Control Over Financial
Reporting
Under the supervision and with the participation of the Company's management, including its principal executive officer,
principal financial officer and principal accounting officer, the Company conducted an evaluation of the effectiveness of the
design and operation of its disclosure controls and procedures, as such term is defined in Rules 13a-15(e) or 15d-15(e) of the
Exchange Act. Based on this evaluation, the Company's principal executive officer, principal financial officer and principal
accounting officer concluded that the disclosure controls and procedures were effective as of the end of the period covered by
this Annual Report on Form 10-K.
Changes in Internal Control over Financial Reporting
There were no changes in the Company's internal control over financial reporting (as such term is defined in Rule
13a-15(f) under the Exchange Act) during the quarter ended December 31, 2021, that materially affected, or are reasonably
likely to materially affect, the Company's internal control over financial reporting.
Inherent Limitations over Internal Controls
The Company's internal control over financial reporting is designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of consolidated financial statements for external purposes in accordance
with GAAP. The Company's internal control over financial reporting includes those policies and procedures that:
1. Pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the Company's assets;
2. Provide reasonable assurance that transactions are recorded as necessary to permit preparation of consolidated financial
statements in accordance with GAAP, and that the Company's receipts and expenditures are being made only in accordance
with authorizations of its management and directors; and
3. Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of
the Company's assets that could have a material effect on the consolidated financial statements.
Internal control over financial reporting cannot provide absolute assurance of achieving financial reporting objectives
because of its inherent limitations, including the possibility of human error and circumvention by collusion or overriding of
controls. Accordingly, even an effective internal control system may not prevent or detect material misstatements on a timely
basis. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.
Management's Report on Internal Control over Financial Reporting
The Company's management is responsible for establishing and maintaining adequate internal control over financial
reporting, as such term is defined in Exchange Act Rule 13a-15(f). Under the supervision and with the participation of the
Company's management, including its principal executive officer, principal financial officer and principal accounting officer,
the Company conducted an evaluation of the effectiveness of its internal control over financial reporting based on the
framework in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the
Treadway Commission. Based on the Company's evaluation under the framework in Internal Control — Integrated Framework
(2013), the Company's management concluded that its internal control over financial reporting was effective as of
December 31, 2021.
69
The effectiveness of the Company's internal control over financial reporting as of December 31, 2021, has been audited by
Ernst & Young LLP, the Company's independent registered public accounting firm, as stated in its report which is included in
this Form 10-K.
70
Report of Independent Registered Public Accounting Firm
To the Stockholders and the Board of Directors of Clearway Energy, Inc.:
Opinion on Internal Control over Financial Reporting
We have audited Clearway Energy, Inc.’s (the Company) internal control over financial reporting as of December 31, 2021,
based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of
the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, the Company maintained, in all material
respects, effective internal control over financial reporting as of December 31, 2021, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the 2021 consolidated financial statements of the Company and our report dated February 25, 2022 expressed an
unqualified opinion thereon.
Basis for Opinion
The Company's management is responsible for maintaining effective internal control over financial reporting and for its
assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management Report
on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company's internal control over
financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be
independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and
regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all
material respects.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material
weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk and
performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a
reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures
that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and
dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and
expenditures of the company are being made only in accordance with authorizations of management and directors of the
company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of the company's assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ Ernst & Young LLP
Philadelphia, Pennsylvania
February 25, 2022
71
Item 9B — Other Information
Disclosure Pursuant to Item 5.02 of Form 8-K – Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On February 22, 2022, the Company’s board of directors (the “Board”) elected Jennifer Lowry to serve as an independent
director of the Company, effective immediately. Ms. Lowry will serve on all three Committees of the Board.
Upon her election to the Company’s board of directors, Ms. Lowry became entitled to compensation pursuant to the
compensation program established for the Company’s independent directors, as more fully described in the Company's
Definitive Proxy Statement for its 2021 Annual Meeting of Stockholders. Pursuant to the compensation program, Ms. Lowry
will receive an annual retainer of $80,000 in the form of cash and $110,000 in the form of stock awards issued under the
Company’s Amended and Restated 2013 Equity Incentive Plan.
In addition, the Company and Ms. Lowry have entered into an indemnification agreement that provides Ms. Lowry with
contractual rights to indemnification, expense advancement and reimbursement to the fullest extent permitted under Delaware
law. The foregoing description of Ms. Lowry’s indemnification agreement does not purport to be complete and is qualified in
its entirety by reference to the complete text of the Form of Indemnification Agreement, the form of which is filed as
Exhibit 10.9 to this Annual Report on Form 10-K, and which is incorporated herein by reference.
There are no arrangements or understandings between Ms. Lowry and any other person pursuant to which Ms. Lowry was
elected to serve on the Company’s board of directors. Ms. Lowry has no direct or indirect material interest in any transaction
required to be disclosed pursuant to Item 404(a) of Regulation S-K.
72
Item 10 — Information about Directors, Executive Officers and Corporate Governance
PART III
Directors
Nathaniel Anschuetz, 34, has served as a director since August 2018. Mr. Anschuetz is a Principal at GIP. Prior to joining
GIP in 2012, Mr. Anschuetz was an Analyst in the Power & Utilities Coverage Group at Citigroup from June 2010 through
June 2012. Mr. Anschuetz is also a member of the Board of Directors of Clearway Energy Group LLC and Eolian. Mr.
Anschuetz graduated with cum laude honors from Columbia College in 2010 with an A.B. in Economics and Operations
Research, and a concentration in Sustainable Development. Mr. Anschuetz's financial expertise provides significant value to the
Company's board of directors.
Jonathan Bram, 56, has served as Chairman of the board of directors of the Company since August 2018. Mr. Bram is a
Founding Partner of GIP and serves on its Investment and Operating Committees. He leads GIP’s Power industry investment
team in North America. Prior to the formation of GIP in 2006, Mr. Bram spent 15 years at Credit Suisse as a Managing Director
in the Investment Banking Division, where he served as Co-Head of the Global Industrial and Services Group. From 2002 to
2004, he was Chief Operating Officer of the Investment Banking Division and prior to that time he was co-head of corporate
finance for the 150 person U.S. Energy Group. Mr. Bram represented the firm in raising more than $30 billion of debt and
equity capital for electric utilities and independent power generators globally. These companies and projects included
renewable power facilities that utilized wind, solar, geothermal and hydroelectric technologies. Mr. Bram is also a member of
the Board of Directors of Clearway Energy Group LLC and previously served on the boards of Terra-Gen Power, Guacolda
Energia, S.A. and Channelview Cogeneration. Mr. Bram holds an A.B. in Economics from Columbia College. Mr. Bram’s
significant experience in investment banking for, and investments in, energy and power companies, as well as his leadership
role at GIP, provide strong financial and transactional experience to the Company's board of directors.
Brian R. Ford, 73, has served as a director since July 2013 and Lead Independent Director since January 2019. Mr. Ford
was the Chief Executive Officer of Washington Philadelphia Partners, LP, a real estate investment company, from 2008 through
2010. He retired as a partner from Ernst & Young LLP in June 2008 where he had been employed since 1971. Mr. Ford
currently serves on the board of various companies, including FS Investment Corporation portfolios, a specialty finance
company that invests primarily in the debt securities of private U.S. middle-market companies, since 2013, where he also serves
as the chairman of the audit committee. He also serves on the boards of Drexel University and BAYADA Home Health. From
2013 to 2020, Mr. Ford served on the board of AmeriGas Propane, Inc., where he also served as a member of its audit and
corporate governance committees. Mr. Ford received his B.S. in Economics from Rutgers University. Mr. Ford's extensive
experience in accounting and public company matters provides strong financial, audit and accounting skills to the Company's
board of directors.
Bruce MacLennan, 55, has served as a director since August 2018. Mr. MacLennan is a Partner of GIP and serves on its
Investment and Operating Committees. Prior to joining GIP at its formation in 2006, Mr. MacLennan spent eight years at Credit
Suisse, where he most recently served as a Director in the Investment Banking Division. Previously, he spent six years at
Citibank and Citicorp Securities in New York and Tokyo. Mr. MacLennan holds an A.B. from Harvard University and an
M.B.A. from the Wharton School of the University of Pennsylvania. He is currently a member of the Board of Directors of
Clearway Energy Group LLC and Eolian and previously served on the Board of Competitive Power Ventures. Mr.
MacLennan’s significant experience in investment banking for, and investments in, energy and power companies, as well as his
leadership role at GIP, provide strong financial and transactional experience to the Company's board of directors.
Ferrell P. McClean, 75, has served as a director since July 2013. Ms. McClean was a Managing Director and the Senior
Advisor to the head of the Global Oil & Gas Group in Investment Banking at J.P. Morgan Chase & Co. from 2000 through the
end of 2001. She joined J.P. Morgan & Co. Incorporated in 1969 and founded the Leveraged Buyout and Restructuring Group
within the Mergers & Acquisitions Group in 1986. From 1991 until 2000, Ms. McClean was a Managing Director and co-
headed the Global Energy Group within the Investment Banking Group at J.P. Morgan & Co. She retired as a director of
GrafTech International in 2014, El Paso Corporation in 2012 and Unocal Corporation in 2005. Ms. McClean's experience in
investment banking for industrial companies as well as her experience and understanding of financial accounting, finance and
disclosure matters enables her to provide essential guidance to the Company's board of directors and management team.
73
Daniel B. More, 65, has served as a director since February 2019. Mr. More has been a Senior Advisor with Guggenheim
Securities since October 2015. Mr. More retired as a Managing Director and Global Head of Utility Mergers & Acquisitions of
the Investment Banking Division of Morgan Stanley in 2014. He held such position since 1996. Mr. More has been an
investment banker since 1978 and has specialized in the utility sector since 1986. Mr. More has served as a director of SJW
Group since April 2015. He served as a director of Saeta Yield from February 2015 to June 2018 and served as a director of the
New York Independent System Operator from April 2014 until February 2016. Mr. More’s extensive experience in investment
banking, including capital raising and strategic initiatives, combined with experience as a director of energy industry
companies, provides significant value to the Company's board of directors.
E. Stanley O'Neal, 70, has served as a director since August 2018. Mr. O'Neal served as Chairman of the Board and Chief
Executive Officer of Merrill Lynch & Co., Inc. until October 2007. He became Chief Executive Officer of Merrill Lynch in
2002 and was elected Chairman of the Board in 2003. Mr. O’Neal was employed with Merrill Lynch for 21 years, serving as
President and Chief Operating Officer from July 2001 to December 2002; President of U.S. Private Client from February 2000
to July 2001; Chief Financial Officer from 1998 to 2000 and Executive Vice President and Co-head of Global Markets and
Investment Banking from 1997 to 1998. Before joining Merrill Lynch, Mr. O’Neal was employed at General Motors
Corporation where he held a number of financial positions of increasing responsibility. Currently, Mr. O’Neal is chairman of
the nominating and governance committee and a member of the committee of Arconic Corp., an aluminum manufacturing
company and the former parent company of Alcoa Inc. Mr. O’Neal is also a director and member of the nominating and
governance committee of Element Solutions Inc. (formerly Platform Specialty Products Corporation), a global, diversified
producer of high technology specialty chemical products and provider of technical services. Mr. O’Neal was a director of
General Motors Corporation from 2001 to 2006, chairman of the board of Merrill Lynch & Co., Inc. from 2003 to 2007, and a
director of American Beacon Advisors, Inc. (investment advisor registered with the Securities and Exchange Commission) from
2009 to September 2012. Mr. O’Neal’s extensive executive experience, financial expertise and leadership skills enable him to
provide unique guidance to the Company's board of directors and management team.
Christopher S. Sotos, 50, has served as President and Chief Executive Officer of the Company since May 2016, and as a
director since May 2013. Mr. Sotos had also served in various positions at NRG, including most recently as Executive Vice
President - Strategy and Mergers and Acquisitions from February 2016 through May 2016 and Senior Vice President - Strategy
and Mergers and Acquisitions from November 2012 through February 2016. In this role, he led NRG’s corporate strategy,
mergers and acquisitions, strategic alliances and other special projects for NRG. Previously, he served as NRG’s Senior Vice
President and Treasurer from March 2008 to September 2012, where he was responsible for all treasury functions, including
raising capital, valuation, debt administration and cash management. Mr. Sotos also previously served as a director of FuelCell
Energy, Inc. from September 2014 to April 2019. As President and Chief Executive Officer of the Company, Mr. Sotos
provides the Company's board of directors with management’s perspective regarding the Company’s day to day operations and
overall strategic plan. Mr. Sotos also brings strong financial and accounting skills to the Company's board of directors.
Jennifer Lowry, 53, has served as a director since February 2022. Ms. Lowry served as Vice President of Risk, Treasury
and Corporate Finance for McCormick & Company, Inc. from October 2019 through July 2021, and as Vice President of
Corporate Finance from November 2016 through October 2019. From 2012 to 2016, Ms. Lowry held management positions
with Exelon Corporation as Senior Vice President, Generation Company Strategy and Constellation Energy Group, Inc as Vice
President and Treasurer. Prior to that, she held executive positions at companies within the electric power industry including
AES Corporation and Cogentrix Energy Group, Inc. Ms. Lowry served on numerous governing committees within
Constellation and Exelon and was recently Chair of the Maryland Zoo Board of Trustees. Ms. Lowry has also been a member
of the Board of Directors of MYR Group, Inc. since 2018, and currently serves on its Audit Committee. Ms. Lowry’s financial
and energy industry experience provides significant value to the Company’s board of directors.
Executive Officers
Christopher S. Sotos has served as President and Chief Executive Officer of the Company since May 2016, and as a
director of the Company since May 2013. For additional biographical information for Mr. Sotos, see above under “Directors.”
Chad Plotkin, 46, has served as the Company’s Chief Financial Officer since November 2016 and was promoted from
Senior Vice President to Executive Vice President in January 2022. From January 2016 until his appointment as Senior Vice
President and Chief Financial Officer in November 2016, Mr. Plotkin served as Senior Vice President, Finance and Strategy.
Prior to this, he served in varying capacities at NRG, including as Vice President of Investor Relations of both the Company
and NRG from September 2015 to January 2016 and from January 2012 to February 2015 and Vice President of Finance of
NRG from February 2015 to September 2015. From October 2007 to January 2012, Mr. Plotkin served in various capacities in
the Strategy and Mergers and Acquisitions group of NRG, including as Vice President, beginning in December 2010.
74
Kevin P. Malcarney, 55, has served as the Company’s General Counsel and Corporate Secretary since May 11, 2018, and
was promoted from Senior Vice President to Executive Vice President in January 2022. Mr. Malcarney served as Interim
General Counsel of the Company from March 16, 2018 to May 11, 2018. Mr. Malcarney was previously Vice President and
Deputy General Counsel and served in various other roles at NRG since September 2008. Prior to NRG, Mr. Malcarney worked
at two major law firms in Princeton, New Jersey and Philadelphia, Pennsylvania, and handled mergers and acquisitions, project
financing and general corporate matters.
Code of Ethics
The Company has adopted a code of ethics entitled "Clearway Energy, Inc. Code of Business Conduct and Ethics" that
applies to all of the Company’s directors and employees, including the Company's Officers (e.g., CEO, CFO, and Principal
Accounting Officer). It may be accessed through the "Corporate Governance" section of the Company's website at http://
www.clearwayenergy.com. The Company also elects to disclose the information required by Form 8-K, Item 5.05,
"Amendments to the Registrant's Code of Ethics, or Waiver of a Provision of the Code of Ethics," through the Company's
website, and such information will remain available on this website for at least a 12-month period. A copy of the "Clearway
Energy, Inc. Code of Business Conduct and Ethics" is available in print to any stockholder who requests it.
Other information required by this Item will be incorporated by reference to the similarly named section of the Company's
Definitive Proxy Statement for its 2022 Annual Meeting of Stockholders.
75
Item 11 — Executive Compensation
Information required by this Item will be incorporated by reference to the similarly named section of the Company's
Definitive Proxy Statement for its 2022 Annual Meeting of Stockholders.
Item 12 — Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Securities Authorized for Issuance under the Clearway Energy, Inc. Amended and Restated 2013 Equity Compensation
Plan
Plan Category
Equity compensation plans approved by security holders -
Class A common stock . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equity compensation plans approved by security holders -
Class C common stock . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equity compensation plans not approved by security
holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
746,646 $
(a)
Number of Securities
to be Issued Upon
Exercise of
Outstanding Options,
Warrants and Rights
(b)
Weighted-Average
Exercise
Price of Outstanding
Options, Warrants and
Rights
(c)
Number of Securities
Remaining Available
for Future Issuance
Under Equity
Compensation
Plans (Excluding
Securities Reflected
in Column (a)) (1)
20,624 $
726,022
—
—
—
N/A
—
—
3,269,598
—
3,269,598
(1) Beginning in May 2015, awards to be granted and associated dividend equivalent rights to be issued under the Clearway Energy, Inc. Amended and Restated
2013 Equity Incentive Plan convert to Class C common stock upon vesting.
Other information required by this Item will be incorporated by reference to the similarly named section of the Company's
Definitive Proxy Statement for its 2022 Annual Meeting of Stockholders.
Item 13 — Certain Relationships and Related Transactions, and Director Independence
Information required by this Item will be incorporated by reference to the similarly named section of the Company's
Definitive Proxy Statement for its 2022 Annual Meeting of Stockholders.
Item 14 — Principal Accounting Fees and Services
Information required by this Item will be incorporated by reference to the similarly named section of the Company's
Definitive Proxy Statement for its 2022 Annual Meeting of Stockholders.
76
Item 15 — Exhibits, Financial Statement Schedules
(a)(1) Financial Statements
PART IV
The following consolidated financial statements of Clearway Energy, Inc. and related notes thereto, together with the
Report of Independent Registered Public Accounting Firm thereon, are included herein:
Consolidated Statements of Operations — Years ended December 31, 2021, 2020 and 2019
Consolidated Statements of Comprehensive Income (Loss) — Years ended December 31, 2021, 2020 and 2019
Consolidated Balance Sheets — As of December 31, 2021 and 2020
Consolidated Statements of Cash Flows — Years ended December 31, 2021, 2020 and 2019
Consolidated Statements of Stockholders' Equity — Years ended December 31, 2021, 2020 and 2019
Notes to Consolidated Financial Statements
(a)(2) Financial Statement Schedules
The following schedules of Clearway Energy, Inc. are filed as part of Item 15 of this report and should be read in
conjunction with the Consolidated Financial Statements:
Schedule I — Clearway Energy, Inc. (Parent) Condensed Financial Statements for the years ended December 31,
2021, 2020 and 2019, are included in Clearway Energy, Inc.'s Annual Report on Form 10-K pursuant to the
requirements of Rule 5-04(c) of Regulation S-X
Schedule II — Valuation and Qualifying Accounts
All other schedules for which provision is made in the applicable accounting regulation of the Securities and
Exchange Commission are not required under the related instructions or are inapplicable, and therefore, have been
omitted
(a)(3) Exhibits: See Exhibit Index submitted as a separate section of this report
(b) Exhibits
See Exhibit Index submitted as a separate section of this report
(c) Not applicable
77
Report of Independent Registered Public Accounting Firm
To the Stockholders and the Board of Directors of Clearway Energy, Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheet of Clearway Energy, Inc. (the Company) as of December 31,
2021, the related consolidated statements of operations, comprehensive income (loss), stockholders’ equity, and cash flows for
the year then ended, and the related notes and financial statement schedules listed in the Index at Item 15(a)(2) (collectively
referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all
material respects, the financial position of the Company at December 31, 2021 and the results of its operations and its cash
flows for the year then ended, in conformity with U.S. generally accepted accounting principles.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)
(PCAOB), the Company’s internal control over financial reporting as of December 31, 2021, based on criteria established in
Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission
(2013 framework), and our report dated February 25, 2022, expressed an unqualified opinion thereon.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on
the Company's financial statements based on our audit. We are a public accounting firm registered with the PCAOB and are
required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable
rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to
error or fraud. Our audit included performing procedures to assess the risks of material misstatement of the financial statements,
whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a
test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the
accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the
financial statements. We believe that our audit provides a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the financial statements that
were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that
are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The
communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as
a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit
matters or on the accounts or disclosures to which they relate.
Allocation of earnings to noncontrolling interests in tax equity arrangements
Description of the Matter As described in Note 5 to the consolidated financial statements, during 2021 third-party tax equity
investors purchased noncontrolling interests in Rattlesnake TE Holdco LLC (Rattlesnake), Black
Rock TE Holdco LLC, Mesquite Sky TE Holdco LLC and Pinnacle Repowering Tax Equity
Holdco LLC (the “new tax equity arrangements”). Each tax equity investor received Class A
membership interests in the respective entity. The Company utilizes the output of a hypothetical
liquidation at book value (HLBV) model to determine the earnings allocated to the tax equity
noncontrolling interest holders as the contractual agreements between the parties represent
substantive profit-sharing arrangements.
Auditing the allocation of earnings using the HLBV method to the new tax equity arrangements
was complex due to the judgments required at the inception of the arrangement to evaluate whether
the HLBV model appropriately reflects the unique substantive profit-sharing terms and features
within each arrangement. A greater extent of audit effort and specialized skill and knowledge was
required with respect to evaluating the appropriateness of the tax capital account balances used in
the HLBV model for compliance with the provisions of the Internal Revenue Code, as well as
compliance with the contractual provisions in each agreement.
78
How We Addressed the
Matter in Our Audit
We obtained an understanding, evaluated the design and tested the operating effectiveness of the
control over the Company's process for establishing the HLBV model for the new tax equity
arrangements. For example, we tested a control over management’s review of the substantive
profit-sharing terms and features within each arrangement and evaluating whether they are
properly reflected in each HLBV model.
To test the allocation of earnings to noncontrolling interest holders in the new tax equity
arrangements, we read the related agreements to understand the business purpose and the
substantive profit-sharing provisions. We evaluated each HLBV model for consistency with the
contractual provisions in the related agreements and tested the initial recognition of the
noncontrolling interest balance by agreeing capital contributions to supporting documentation. We
involved tax subject matter professionals to assist in evaluating the calculation of the tax capital
accounts used in each HLBV model for compliance with the provisions of the Internal Revenue
Code, as well as compliance with the contractual provisions in the agreements. Additionally, we
tested the period end noncontrolling interest balances for the new tax equity arrangements by
agreeing distributions to supporting documentation and recalculating the allocation of earnings
using each HLBV model.
Fair value of Level 3 energy related commodity contracts
Description of the Matter As described in Note 6 to the consolidated financial statements, as of December 31, 2021, the
aggregate fair value of energy related commodity contracts classified as Level 3 derivative
instruments was $179 million. The Company's determination of the fair value of long-term
physically-settled power commodity contracts executed in illiquid markets are considered Level 3
fair value measurements as they contain significant unobservable inputs, including forward market
energy pricing curves. The Company uses a discounted cash flow valuation technique to determine
the fair value of its energy related commodity contracts.
Auditing the fair value measurement of energy related commodity contracts classified as Level 3
financial instruments was complex due to the judgmental nature of the forward market energy
pricing curve assumptions used as an input into the valuation models.
How We Addressed the
Matter in Our Audit
We obtained an understanding, evaluated the design and tested the operating effectiveness of
controls over the Company's processes for reviewing the key assumptions in estimating Level 3
fair values. For example, we tested controls over management’s review of the specific forward
market energy pricing curves used as an input into the valuation models.
To test the fair value of Level 3 energy related commodity contracts, our audit procedures
included, among others, evaluating the valuation methodologies used by the Company and testing
significant inputs, estimates and the mathematical accuracy of the calculations. In certain instances,
with the assistance of our valuation specialists, we independently determined the significant
assumptions, calculated the resultant fair values and compared them to the Company's estimates.
We obtained forward market energy prices from independent sources, including pricing service
providers and counterparty fair values, and evaluated the Company's assumptions related to their
forward curves and confirmed key inputs with counterparties. We also performed sensitivity
analyses using independent sources of market data to evaluate the significance of the change in fair
value of Level 3 energy related commodity contracts that would result from changes in underlying
assumptions.
/s/ Ernst & Young LLP
We have served as the Company’s auditor since 2021.
Philadelphia, Pennsylvania
February 25, 2022
79
Report of Independent Registered Public Accounting Firm
To the Stockholders and Board of Directors
Clearway Energy, Inc.:
Opinion on the Consolidated Financial Statements
We have audited the accompanying consolidated balance sheet of Clearway Energy, Inc. and subsidiaries (the Company) as of
December 31, 2020, the related consolidated statements of operations, comprehensive income (loss), stockholders’ equity, and
cash flows for each of the years in the two‑year period ended December 31, 2020, and the related notes and financial statement
schedules “Schedule I-Condensed Financial Information of Registrant” and “Schedule II-Valuation and Qualifying
Accounts” (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present
fairly, in all material respects, the financial position of the Company as of December 31, 2020, and the results of its operations
and its cash flows for each of the years in the two‑year period ended December 31, 2020, in conformity with U.S. generally
accepted accounting principles.
Basis for Opinion
These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express
an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the
Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the
Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and
Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the
audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement,
whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the
consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such
procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial
statements. Our audits also included evaluating the accounting principles used and significant estimates made by management,
as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a
reasonable basis for our opinion.
We served as the Company’s auditor from 2012 to 2021.
/s/ KPMG LLP
Philadelphia, Pennsylvania
March 1, 2021
80
CLEARWAY ENERGY, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
Year ended December 31,
2021
2020
2019
(In millions, except per share amounts)
Operating Revenues
Total operating revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
1,286 $
1,199 $
1,032
Operating Costs and Expenses
Cost of operations, exclusive of depreciation, amortization and accretion shown
separately below . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation, amortization and accretion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Impairment losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
General and administrative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Transaction and integration costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Development costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total operating costs and expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating Income
Other Income (Expense)
Equity in earnings of unconsolidated affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Impairment loss on investment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gain on sale of unconsolidated affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other income, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loss on debt extinguishment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total other expense, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loss Before Income Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income tax expense (benefit) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less: Net loss attributable to noncontrolling interests . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net Income (Loss) Attributable to Clearway Energy, Inc. . . . . . . . . . . . . . . . . . . . . . . $
Earnings Per Share Attributable to Clearway Energy, Inc. Class A and Class C
Common Stockholders
Weighted average number of Class A common shares outstanding - basic and diluted .
Weighted average number of Class C common shares outstanding - basic . . . . . . . . . .
Weighted average number of Class C common shares outstanding - diluted . . . . . . . . .
Earnings (Loss) per Weighted Average Class A and Class C Common Share -
Basic and Diluted . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Dividends Per Class A Common Share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Dividends Per Class C Common Share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
451
509
6
40
7
6
1,019
267
366
428
24
34
9
5
866
333
32
—
—
3
(53)
(312)
(330)
(63)
12
(75)
(126)
51 $
7
(8)
49
4
(24)
(415)
(387)
(54)
8
(62)
(87)
25 $
35
82
82
35
80
81
337
401
33
29
3
5
808
224
83
—
—
9
(16)
(404)
(328)
(104)
(8)
(96)
(85)
(11)
35
74
74
0.44 $
1.33 $
1.33 $
0.22 $
1.05 $
1.05 $
(0.10)
0.80
0.80
See accompanying notes to consolidated financial statements.
81
CLEARWAY ENERGY, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
Year ended December 31,
2021
2020
2019
(In millions)
Net Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Other Comprehensive Income, net of tax
(75) $
(62) $
(96)
Unrealized gain on derivatives, net of income tax (expense) benefit of $(3), $— and $1
Other comprehensive income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Comprehensive Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less: Comprehensive loss attributable to noncontrolling interests . . . . . . . . . . . . . . . . . .
19
19
(56)
(115)
1
1
(61)
(87)
Comprehensive Income (Loss) Attributable to Clearway Energy, Inc. . . . . . . . . . . . . $
59 $
26 $
7
7
(89)
(81)
(8)
See accompanying notes to consolidated financial statements.
82
CLEARWAY ENERGY, INC.
CONSOLIDATED BALANCE SHEETS
Current Assets
ASSETS
December 31, 2021
December 31, 2020
(In millions)
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Restricted cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts receivable — trade . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Current assets held-for-sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Prepayments and other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Property, plant and equipment, net
Other Assets
Equity investments in affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Intangible assets for power purchase agreements, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other intangible assets, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Derivative instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Right-of-use assets, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other non-current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total other assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities
Current portion of long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Accounts payable — trade . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts payable — affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Derivative instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Current liabilities held-for-sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accrued expenses and other current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other Liabilities
Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Derivative instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term lease liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other non-current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total other liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Commitments and Contingencies
Stockholders' Equity
179 $
475
144
37
631
65
1,531
7,650
381
2,419
80
95
6
550
101
3,632
12,813 $
772 $
74
107
46
54
494
84
1,631
6,939
13
196
561
173
7,882
9,513
268
197
143
42
—
58
708
7,217
741
1,230
140
104
1
337
114
2,667
10,592
384
72
17
38
44
—
79
634
6,585
—
135
345
178
7,243
7,877
Preferred stock, $0.01 par value; 10,000,000 shares authorized; none issued . . . . . . . . . . . . . .
—
—
Class A, Class B, Class C and Class D common stock, $0.01 par value; 3,000,000,000 shares
authorized (Class A 500,000,000, Class B 500,000,000, Class C 1,000,000,000, Class D
1,000,000,000); 201,856,166 shares issued and outstanding (Class A 34,599,645, Class B
42,738,750, Class C 81,779,021, Class D 42,738,750) at December 31, 2021 and 201,635,990
shares issued and outstanding (Class A 34,599,645, Class B 42,738,750, Class C 81,558,845,
Class D 42,738,750) at December 31, 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated deficit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated other comprehensive loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Noncontrolling interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total Stockholders' Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total Liabilities and Stockholders' Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
See accompanying notes to consolidated financial statements.
1
1,872
(33)
(6)
1,466
3,300
12,813 $
1
1,922
(84)
(14)
890
2,715
10,592
83
CLEARWAY ENERGY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Year ended December 31,
2020
2021
2019
Cash Flows from Operating Activities
Net loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
(In millions)
(75) $
(62) $
(96)
Adjustments to reconcile net loss to net cash provided by operating activities:
Equity in earnings of unconsolidated affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Distributions from unconsolidated affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation, amortization and accretion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization of financing costs and debt discounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Amortization of intangibles and out-of-market contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loss on debt extinguishment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Reduction in carrying amount of right-of-use assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Gain on sale of unconsolidated affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Impairment losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Change in deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Changes in derivative instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loss on disposal of asset components . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash provided (used) in changes in other working capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Changes in prepaid and accrued liabilities for tolling agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Changes in other working capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net Cash Provided by Operating Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash Flows from Investing Activities
Acquisitions, net of cash acquired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Partnership interest acquisition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Acquisition of Drop Down Assets, net of cash acquired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Buyout of Wind TE Holdco noncontrolling interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Capital expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Asset purchase from affiliate
Return of investment from unconsolidated affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investments in unconsolidated affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from sale of assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidation of DGPV Holdco 3 LLC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net Cash Used in Investing Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash Flows from Financing Activities
Contributions from noncontrolling interests, net of distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Buyout of Repowering Partnership II LLC noncontrolling interest . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from the issuance of common stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Payments of dividends and distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from the revolving credit facility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Payments for the revolving credit facility . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from issuance of long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Payments of debt issuance costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Payments for long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other
Net Cash Provided by (Used in) Financing Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Reclassification of Cash to Assets Held-for-Sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net Increase (Decrease) in Cash, Cash Equivalents and Restricted Cash . . . . . . . . . . . . . . . . . . . . . . . .
Cash, Cash Equivalents and Restricted Cash at Beginning of Period . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash, Cash Equivalents and Restricted Cash at End of Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
(32)
38
509
14
146
53
11
—
6
12
28
—
5
(14)
701
(533)
—
(229)
—
(151)
(21)
47
—
—
—
22
(865)
(7)
61
428
15
90
24
4
(49)
32
8
44
3
(1)
(45)
545
—
—
(122)
—
(124)
—
79
(11)
90
17
9
(62)
(83)
34
401
17
71
16
7
—
33
(8)
85
9
1
(10)
477
(100)
(29)
(161)
(19)
(228)
—
56
(13)
20
—
6
(468)
967
—
—
(268)
622
(377)
1,728
(20)
(2,292)
7
367
(14)
189
465
654 $
247
(70)
62
(211)
265
(265)
1,084
(20)
(1,527)
—
(435)
—
48
417
465 $
174
—
100
(155)
152
(152)
1,215
(25)
(1,484)
—
(175)
—
(166)
583
417
Supplemental Disclosures
Interest paid, net of amount capitalized . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
(337) $
(325) $
(313)
Non-cash investing and financing activities:
Reductions to fixed assets for accrued capital expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-cash adjustment for change in tax basis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-cash contributions from CEG, net of distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(32)
(7)
31
(18)
21
6
(2)
28
36
See accompanying notes to consolidated financial statements
84
CLEARWAY ENERGY, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(In millions)
Preferred
Stock
Common
Stock
Additional
Paid-In
Capital
Accumulated
Deficit
Accumulated
Other
Comprehensive
Loss
Non-
controlling
Interest
Total
Stockholders'
Equity
Balances at December 31, 2018 . . . . . . . . . . . . . . . . . . . . . . $ — $
1 $
1,897 $
(58) $
(18) $
402 $
2,224
Net loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unrealized gain on derivatives, net of tax . . . . . . . . . . . . . . .
Buyout of Wind TE Holdco non-controlling interest . . . . . . .
Carlsbad Drop Down . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Contributions from tax equity interests, net of distributions,
cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Distributions to CEG, net of contributions, cash . . . . . . . . . . .
Cumulative effect of change in the accounting principle . . . .
Contributions from CEG net of distributions, non-cash . . . . .
Stock-based compensation
Proceeds from the issuance of Class C Common Stock
Non-cash adjustment for change in tax basis . . . . . . . . . . . .
Common stock dividends . . . . . . . . . . . . . . . . . . . . . . . . . . .
Balances at December 31, 2019
Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unrealized gain on derivatives, net of tax . . . . . . . . . . . . . . .
Contributions from CEG, non-cash . . . . . . . . . . . . . . . . . . . . .
Contributions from CEG, cash . . . . . . . . . . . . . . . . . . . . . . . . .
Distributions to noncontrolling interests, non-cash . . . . . . . . .
Contributions from noncontrolling interests, net of
distributions, cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
DGPV Drop Down and Consolidation . . . . . . . . . . . . . . . . . .
Mesquite Star Drop Down and Consolidation . . . . . . . . . . . . .
Langford Drop Down . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Rosamond Central Drop Down . . . . . . . . . . . . . . . . . . . . . . . .
Lighthouse Partnership Yield Protection Agreement . . . . . . .
Buyout of Repowering Partnership II LLC non-controlling
interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stock-based compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-cash adjustment for change in tax basis . . . . . . . . . . . . . .
Net proceeds from the issuance of common stock under the
ATM Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Common stock dividends and distributions to CEG . . . . . . . .
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(5)
—
—
—
—
—
3
100
28
(11)
—
—
—
—
—
(2)
—
(1)
—
—
—
3
—
—
—
—
—
—
—
—
—
(85)
4
(14)
(35)
242
(68)
(1)
36
—
—
—
—
$ — $
—
1 $
(87)
1,936 $
—
(72) $
—
(15) $
(68)
413 $
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(15)
—
2
21
62
25
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(84)
(37)
—
1
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(87)
—
6
6
(2)
240
(20)
361
76
57
—
(70)
—
—
—
(96)
7
(19)
(35)
242
(68)
(3)
36
2
100
28
(155)
2,263
(62)
1
6
6
(2)
240
(20)
361
76
57
(15)
(70)
2
21
62
(90)
(211)
Balances at December 31, 2020
$ — $
1 $
1,922 $
(84) $
(14) $
890 $
2,715
Net income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Unrealized gain on derivatives, net of tax . . . . . . . . . . . . . . . .
Contributions from CEG, net of distributions, non-cash . . . . .
Contributions from CEG, net of distributions, cash . . . . . . . .
Contributions from noncontrolling interests, net of
distributions, cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Lighthouse Partnership Yield Protection Agreement
Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Agua Acquisition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Rattlesnake Drop Down . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Mesquite Sky Drop Down . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Black Rock Drop Down . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Stock-based compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-cash adjustment for change in tax basis . . . . . . . . . . . . . .
Common stock dividends and distributions to CEG . . . . . . . .
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
—
15
—
—
78
16
3
(7)
(155)
51
—
—
—
—
—
—
—
—
—
—
—
—
—
8
—
—
—
—
—
—
—
—
—
—
—
(130)
11
31
296
676
—
273
(117)
(198)
(153)
—
—
(113)
(79)
19
31
296
676
15
273
(117)
(120)
(137)
3
(7)
(268)
Balances at December 31, 2021
$ — $
1 $
1,872 $
(33) $
(6) $
1,466 $
3,300
See accompanying notes to consolidated financial statements.
85
CLEARWAY ENERGY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1 — Nature of Business
Clearway Energy, Inc., together with its consolidated subsidiaries, or the Company, is a publicly-traded energy
infrastructure investor in and owner of modern, sustainable and long-term contracted assets across North America. The
Company is indirectly owned by Global Infrastructure Partners, or GIP. GIP is an independent infrastructure fund manager that
makes equity and debt investments in infrastructure assets and businesses. The Company is sponsored by GIP through GIP's
portfolio company, Clearway Energy Group LLC, or CEG.
The Company is one of the largest renewable energy owners in the U.S. with over 5,000 net MW of installed wind and
solar generation projects. The Company's over 9,000 net MW of assets also includes approximately 2,500 net MW of
environmentally-sound, highly efficient natural gas-fired generation facilities as well as the Thermal Business. Through this
environmentally-sound, diversified and primarily contracted portfolio, the Company endeavors to provide its investors with
stable and growing dividend income. Substantially all of the Company's generation assets are under long-term contractual
arrangements for the output or capacity from these assets.
On October 22, 2021, Clearway Energy Operating LLC entered into a binding agreement to sell the Thermal Business to
KKR, or the Thermal Disposition. For further details of the Thermal Disposition, refer to Note 3, Acquisitions and Dispositions.
The Company consolidates the results of Clearway Energy LLC through its controlling interest, with CEG's interest
shown as non-controlling interest in the consolidated financial statements. The holders of the Company's outstanding shares of
Class A and Class C common stock are entitled to dividends as declared. CEG receives its distributions from Clearway Energy
LLC through its ownership of Clearway Energy LLC Class B and Class D units. From time to time, CEG may also hold shares
of the Company's Class A and/or Class C common stock.
As of December 31, 2021, the Company owned 57.65% of the economic interests of Clearway Energy LLC, with CEG
owning 42.35% of the economic interests of Clearway Energy LLC. For further discussion, see Note 12, Stockholders' Equity.
86
The following table represents the structure of the Company as of December 31, 2021:
Note 2 — Summary of Significant Accounting Policies
Basis of Presentation and Principles of Consolidation
The Company's consolidated financial statements have been prepared in accordance with GAAP. The FASB ASC is the
source of authoritative GAAP to be applied by nongovernmental entities. In addition, the rules and interpretative releases of the
SEC under authority of federal securities laws are also sources of authoritative GAAP for SEC registrants.
The consolidated financial statements include the Company's accounts and operations and those of its subsidiaries in
which it has a controlling interest. All significant intercompany transactions and balances have been eliminated in
consolidation. The usual condition for a controlling financial interest is ownership of a majority of the voting interests of an
entity. However, a controlling financial interest may also exist through arrangements that do not involve controlling voting
interests. As such, the Company applies the guidance of ASC 810, Consolidations, or ASC 810, to determine when an entity
that is insufficiently capitalized or not controlled through its voting interests, referred to as a variable interest entity, or VIE,
should be consolidated.
87
Cash, Cash Equivalents and Restricted Cash
Cash and cash equivalents include highly liquid investments with an original maturity of three months or less at the time
of purchase. Cash and cash equivalents held at project subsidiaries was $146 million and $149 million as of December 31,
2021 and 2020, respectively.
The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the consolidated
balance sheets that sum to the total of the same such amounts shown in the consolidated statements of cash flows:
Year ended December 31,
2021
2020
(In millions)
Cash and cash equivalents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
179 $
Restricted cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
475
Cash, cash equivalents and restricted cash shown in the consolidated statements of cash flows . $
654 $
268
197
465
Restricted cash consists primarily of funds held to satisfy the requirements of certain debt agreements and funds held
within the Company's projects that are restricted in their use. As of December 31, 2021, these restricted funds comprised of
$246 million designated to fund operating expenses, approximately $34 million designated for current debt service payments
and $131 million restricted for reserves including debt service, performance obligations and other reserves as well as capital
expenditures. The remaining $64 million is held in distributions reserve accounts.
In 2020, the members of the partnerships holding the Oahu Solar and Kawailoa Solar projects submitted applications to
the state of Hawaii for refundable tax credits based on the cost of construction of the projects. In April 2021, the members of
the partnerships contributed their respective portions of the tax credits in the amount of $49 million to the Oahu Solar and
Kawailoa project companies, which was recorded to restricted cash on the Company's consolidated balance sheet with an
offsetting adjustment to noncontrolling interests. In accordance with the projects' related agreements, the cash is held in a
restricted account and utilized to offset invoiced amounts under the projects' PPAs. As of December 31, 2021, $20 million of
the $49 million has been utilized to offset invoiced amounts under the projects' PPAs.
Accounts Receivable — Trade and Allowance for Credit Losses
Accounts receivable — trade are reported on the consolidated balance sheet at the invoiced amount adjusted for any write-
offs and the allowance for credit losses. The allowance for credit losses is reviewed periodically based on amounts past due and
significance. The allowance for credit losses was immaterial as of December 31, 2021 and 2020.
Inventory
Inventory consists principally of spare parts and fuel oil. Spare parts inventory is valued at weighted average cost, unless
evidence indicates that the weighted average cost will not be recovered with a normal profit in the ordinary course of business.
Fuel oil inventory is valued at the lower of weighted average cost or market. The Company removes fuel inventories as they
are used in the production of steam, chilled water or electricity. Spare parts inventory is removed when used for repairs,
maintenance or capital projects.
Property, Plant and Equipment
Property, plant and equipment are stated at cost; however impairment adjustments are recorded whenever events or
changes in circumstances indicate that their carrying values may not be recoverable. Significant additions or improvements
extending asset lives are capitalized as incurred, while repairs and maintenance that do not improve or extend the life of the
respective asset are charged to expense as incurred. Depreciation is computed using the straight-line method over the estimated
useful lives. Certain assets and their related accumulated depreciation amounts are adjusted for asset retirements and disposals
with the resulting gain or loss included in cost of operations in the consolidated statements of operations. For further discussion
of the Company's property, plant and equipment refer to Note 4, Property, Plant and Equipment.
Construction in-progress represents cumulative construction costs, including the costs incurred for the purchase of major
equipment and engineering costs and capitalized interest. Once the project achieves commercial operation, the Company
reclassifies the amounts recorded in construction in progress to facilities and equipment.
88
Development costs include project development costs, which are expensed in the preliminary stages of a project and
capitalized when the project is deemed to be commercially viable. Commercial viability is determined by one or a series of
actions including, among others, Board of Director approval pursuant to a formal project plan that subjects the Company to
significant future obligations that can only be discharged by the use of a Company asset. When a project is available for
operations, capitalized interest and capitalized project development costs are reclassified to property, plant and equipment and
depreciated on a straight-line basis over the estimated useful life of the project's related assets. Capitalized costs are charged to
expense if a project is abandoned or management otherwise determines the costs to be unrecoverable.
Asset Impairments
Long-lived assets that are held and used are reviewed for impairment whenever events or changes in circumstances
indicate their carrying values may not be recoverable. Such reviews are performed in accordance with ASC 360, Property,
Plant and Equipment. An impairment loss is indicated if the total future estimated undiscounted cash flows expected from an
asset are less than its carrying value. An impairment charge is measured as the excess of an asset's carrying amount over its fair
value with the difference recorded in operating costs and expenses in the consolidated statements of operations. Fair values are
determined by a variety of valuation methods, including appraisals, sales prices of similar assets and present value techniques.
For further discussion of the Company's long-lived asset impairments, refer to Note 9, Asset Impairments.
Investments accounted for by the equity method are reviewed for impairment in accordance with ASC 323, Investments-
Equity Method and Joint Ventures, which requires that a loss in value of an investment that is an other-than-temporary decline
should be recognized. The Company identifies and measures losses in the value of equity method investments based upon a
comparison of fair value to carrying value.
Debt Issuance Costs
Debt issuance costs are capitalized and amortized as interest expense on a basis which approximates the effective interest
method over the term of the related debt. Debt issuance costs related to the long-term debt are presented as a direct deduction
from the carrying amount of the related debt. Debt issuance costs related to the senior secured revolving credit facility line of
credit are recorded as a non-current asset on the consolidated balance sheet and are amortized over the term of the credit
facility.
Intangible Assets
Intangible assets represent contractual rights held by the Company. The Company recognizes specifically identifiable
intangible assets including power purchase agreements, leasehold rights, customer relationships, customer contracts, emission
allowances, RECs and development rights when specific rights and contracts are acquired. These intangible assets are
amortized primarily on a straight-line basis. For further discussion of the Company's intangible assets, refer to Note 8,
Intangible Assets.
Revenue Recognition
Revenue from Contracts with Customers
The Company applies the guidance in ASC 606, Revenue from Contracts with Customers, or Topic 606, when
recognizing revenue associated with its contracts with customers. The Company's policies with respect to its various revenue
streams are detailed below. In general, the Company applies the invoicing practical expedient to recognize revenue for the
revenue streams detailed below, except in circumstances where the invoiced amount does not represent the value transferred to
the customer.
Thermal Revenues
Steam and chilled water revenue is recognized as the Company transfers the product to the customer, based on customer
usage as determined by meter readings taken at month-end. Some locations read customer meters throughout the month, and
recognize estimated revenue for the period between meter read date and month-end. For thermal contracts, the Company’s
performance obligation to deliver steam and chilled water is satisfied over time and revenue is recognized based on the invoiced
amount. The Thermal Business subsidiaries collect and remit state and local taxes associated with sales to their customers, as
required by governmental authorities. These taxes are presented on a net basis in the consolidated statements of operations.
89
As contracts for steam and chilled water are long-term contracts, the Company has performance obligations under these
contracts that have not yet been satisfied. These performance obligations have transaction prices that are both fixed and
variable, and that vary based on the contract duration, customer type, inception date and other contract-specific factors. For the
fixed price contracts, the Company cannot accurately estimate the amount of its unsatisfied performance obligations as it will
vary based on customer usage, which will depend on factors such as weather and customer activity.
On October 22, 2021, Clearway Energy Operating LLC entered into a binding agreement to sell the Thermal Business to
KKR. For further details of the Thermal Disposition, refer to Note 3, Acquisitions and Dispositions.
Power Purchase Agreements, or PPAs
The majority of the Company’s revenues are obtained through PPAs or similar contractual agreements. Energy, capacity
and, where applicable, renewable attributes, from the majority of the Company’s renewable energy assets and certain
conventional energy plants is sold through long-term PPAs and tolling agreements to a single counterparty, which is often a
utility or commercial customer. The majority of these PPAs are accounted for as operating leases as the Company retained its
historical lease assessments and classification upon adoption of ASC 842, Leases. ASC 842 requires the minimum lease
payments received to be amortized over the term of the lease and contingent rentals are recorded when the achievement of the
contingency becomes probable. Judgment is required by management in determining the economic life of each generating
facility, in evaluating whether certain lease provisions constitute minimum payments or represent contingent rent and other
factors in determining whether a contract contains a lease and whether the lease is an operating lease or capital lease.
Certain of these leases have no minimum lease payments and all of the lease revenue derived from these leases is recorded
as contingent rent on an actual basis when the electricity is delivered. The contingent lease revenue recognized in the years
ended December 31, 2021, 2020 and 2019 was $741 million, $589 million and $537 million, respectively. See Note 17, Leases
for additional information related to the Company's PPAs accounted for as leases.
Renewable Energy Credits, or RECs
As stated above, renewable energy credits, or RECs, are usually sold through long-term PPAs or through REC contracts
with counterparties. Revenue from the sale of self-generated RECs is recognized when the related energy is generated and
simultaneously delivered even in cases where there is a certification lag as it has been deemed to be perfunctory.
In a bundled contract to sell energy, capacity and/or self-generated RECs, all performance obligations are deemed to be
delivered at the same time and hence, timing of recognition of revenue for all performance obligations is the same and occurs
over time. In such cases, it is often unnecessary to allocate transaction price to multiple performance obligations.
Disaggregated Revenues
The following tables represent the Company’s disaggregation of revenue from contracts with customers for the year ended
December 31, 2021, along with the reportable segment for each category:
(In millions)
Energy revenue (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Capacity revenue (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Contract amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Mark-to-market for economic hedges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total operating revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less: Lease revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less: Contract amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Conventional
Generation
Year ended December 31, 2021
Renewables
Thermal
Total
9 $
455
—
(23)
—
441
(464)
23
784 $
2
60
(118)
(87)
(87)
641
(716)
118
122 $
53
32
(3)
—
204
(2)
3
205 $
915
510
92
(144)
(87)
1,286
(1,182)
144
248
Total revenue from contracts with customers . . . . . . . . . . . . . . . . . . . . . . . . $
— $
43 $
(a) See Note 17, Leases, for the amounts of energy and capacity revenue that relate to leases and are accounted for under ASC 842.
90
The following tables represent the Company’s disaggregation of revenue from contracts with customers for the year ended
December 31, 2020, along with the reportable segment for each category:
(In millions)
Energy revenue (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Capacity revenue (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Contract amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total operating revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less: Lease revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less: Contract amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total revenue from contracts with customers . . . . . . . . . . . . . . . . . . . . . . . . . $
Conventional
Generation
Year ended December 31, 2020
Renewables
Thermal
Total
10 $
451
—
(24)
437
(461)
24
— $
609 $
101 $
—
21
(61)
569
(554)
61
63
32
(3)
193
(2)
3
720
514
53
(88)
1,199
(1,017)
88
76 $
194 $
270
(a) See Note 17, Leases, for the amounts of energy and capacity revenue that relate to leases and are accounted for under ASC 842.
The following tables represent the Company’s disaggregation of revenue from contracts with customers for the year ended
December 31, 2019, along with the reportable segment for each category:
(In millions)
Energy revenue (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Capacity revenue (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Contract amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Mark-to-market for economic hedges . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total operating revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less: Lease revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less: Contract amortization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Conventional
Generation
Year ended December 31, 2019
Renewables
Thermal
Total
5 $
545 $
120 $
348
—
(7)
—
346
(353)
7
—
10
(61)
(9)
485
(509)
61
54
30
(3)
—
201
(2)
3
670
402
40
(71)
(9)
1,032
(864)
71
Total revenue from contracts with customers . . . . . . . . . . . . . . . . . . . . . . . . . $
— $
37 $
202 $
239
(a) See Note 17, Leases, for the amounts of energy and capacity revenue that relate to leases and are accounted for under ASC 842.
Contract Amortization
Assets and liabilities recognized from power sales agreements assumed through acquisitions relating to the sale of electric
capacity and energy in future periods arising from differences in contract and market prices are amortized to revenue over the
term of each underlying contract based on actual generation and/or contracted volumes or on a straight-line basis, where
applicable.
Contract Balances
The following table reflects the net amount of contract assets and liabilities included on the Company’s consolidated
balance sheets as of December 31, 2021 and December 31, 2020:
(In millions)
Accounts receivable, net - Contracts with customers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accounts receivable, net - Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total accounts receivable, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
December 31, 2021
December 31, 2020
$
$
44 $
100
144 $
57
86
143
Derivative Financial Instruments
The Company accounts for derivative financial instruments under ASC 815, Derivatives and Hedging, or ASC 815, which
requires the Company to record all derivatives on the balance sheet at fair value unless they qualify for a NPNS exception.
Changes in the fair value of non-hedge derivatives are immediately recognized in earnings. Changes in the fair value of
derivatives accounted for as hedges, if elected for hedge accounting, are either:
•
•
Recognized in earnings as an offset to the changes in the fair value of the related hedged assets, liabilities and firm
commitments; or
Deferred and recorded as a component of accumulated OCI until the hedged transactions occur and are recognized in
earnings.
91
The Company's primary derivative instruments are interest rate instruments used to mitigate variability in earnings due to
fluctuations in interest rates, power purchase or sale contracts used to mitigate variability in earnings due to fluctuations in
market prices and commodity purchase contracts used to control customer reimbursable fuel cost. On an ongoing basis, the
Company qualitatively assesses the effectiveness of its derivatives that are designated as hedges for accounting purposes in
order to determine that each derivative continues to be highly effective in offsetting changes in cash flows of hedged items. If
necessary, the Company will perform an analysis to measure the statistical correlation between the derivative and the associated
hedged item to determine the effectiveness of such a contract designated as a hedge. The Company will discontinue hedge
accounting if it is determined that the hedge is no longer effective. In this case, the gain or loss previously deferred in
accumulated OCI would be frozen until the underlying hedged item is delivered unless the transaction being hedged is no
longer probable of occurring in which case the amount in accumulated OCI would be immediately reclassified into earnings. If
the derivative instrument is terminated, the effective portion of this derivative deferred in accumulated OCI will be frozen until
the underlying hedged item is delivered.
Revenues and expenses on contracts that qualify for the NPNS exception are recognized when the underlying physical
transaction is delivered. While these contracts are considered derivative financial instruments under ASC 815, they are not
recorded at fair value, but on an accrual basis of accounting. If it is determined that a transaction designated as NPNS no longer
meets the scope exception, the fair value of the related contract is recorded on the balance sheet and immediately recognized
through earnings.
Concentrations of Credit Risk
Financial instruments which potentially subject the Company to concentrations of credit risk consist primarily of accounts
receivable — trade and derivative instruments, which are concentrated within entities engaged in the energy and financial
industries. These industry concentrations may impact the overall exposure to credit risk, either positively or negatively, in that
the customers may be similarly affected by changes in economic, industry or other conditions. In addition, many of the
Company's projects have only one customer. See Item 1A, Risk Factors, Risks related to the Company's Business, for a
discussion on the Company’s dependence on major customers. See Note 6, Fair Value of Financial Instruments, for a further
discussion of derivative concentrations and Note 13, Segment Reporting, for concentration of counterparties.
Fair Value of Financial Instruments
The carrying amount of cash and cash equivalents, restricted cash, accounts receivable — trade, accounts payable —
trade, account payable — affiliate and accrued expenses and other current liabilities approximate fair value because of the
short-term maturity of these instruments. See Note 6, Fair Value of Financial Instruments, for a further discussion of fair value
of financial instruments.
Asset Retirement Obligations
Asset retirement obligations, or AROs, are accounted for in accordance with ASC 410-20, Asset Retirement Obligations,
or ASC 410-20. Retirement obligations associated with long-lived assets included within the scope of ASC 410-20 are those
for which a legal obligation exists under enacted laws, statutes, and written or oral contracts, including obligations arising under
the doctrine of promissory estoppel, and for which the timing and/or method of settlement may be conditional on a future event.
ASC 410-20 requires an entity to recognize the fair value of a liability for an ARO in the period in which it is incurred and a
reasonable estimate of fair value can be made.
Upon initial recognition of a liability for an ARO, other than when an ARO is assumed in an acquisition of the related
long-lived asset, the asset retirement cost is capitalized by increasing the carrying amount of the related long-lived asset by the
same amount. Over time, the liability is accreted to its future value, while the capitalized cost is depreciated over the useful life
of the related asset. The Company's AROs are primarily related to the future dismantlement of equipment on leased property
and environmental obligations related to site closures and fuel storage facilities. The Company records AROs as part of other
non-current liabilities on its consolidated balance sheet.
92
The following table represents the balance of ARO obligations as of December 31, 2021 and 2020, along with the
additions and accretion related to the Company's ARO obligations for the year ended December 31, 2021:
(In millions)
Balance as of December 31, 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Thermal Business AROs reclassified to held for sale . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Revisions in estimates for current obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Additions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accretion — expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Balance as of December 31, 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
117
(1)
2
19
9
146
Guarantees
The Company enters into various contracts that include indemnification and guarantee provisions as a routine part of its
business activities. Examples of these contracts include operation and maintenance agreements, service agreements,
commercial sales arrangements and other types of contractual agreements with vendors and other third parties as well as
affiliates. These contracts generally indemnify the counterparty for tax, environmental liability, litigation and other matters as
well as breaches of representations, warranties and covenants set forth in these agreements. Because many of the guarantees
and indemnities the Company issues to third parties and affiliates do not limit the amount or duration of its obligations to
perform under them, there exists a risk that the Company may have obligations in excess of the amounts agreed upon in the
contracts mentioned above. For those guarantees and indemnities that do not limit the liability exposure, the Company may not
be able to estimate what the liability would be, until a claim is made for payment or performance, due to the contingent nature
of these contracts.
Investments Accounted for by the Equity Method
The Company has investments in various energy projects accounted for by the equity method, several of which are VIEs,
where the Company is not a primary beneficiary, as described in Note 5, Investments Accounted for by the Equity Method and
Variable Interest Entities. The equity method of accounting is applied to these investments in affiliates because the ownership
structure prevents the Company from exercising a controlling influence over the operating and financial policies of the projects.
Under this method, equity in pre-tax income or losses of the investments is reflected as equity in earnings of unconsolidated
affiliates. Distributions from equity method investments that represent earnings on the Company's investment are included
within cash flows from operating activities and distributions from equity method investments that represent a return of the
Company's investment are included within cash flows from investing activities.
Sale-Leaseback Arrangements
The Company is party to sale-leaseback arrangements that provide for the sale of certain assets to a third-party and
simultaneous leaseback to the Company. In accordance with ASC 840-40, Sale-Leaseback Transactions, if the seller-lessee
retains, through the leaseback, substantially all of the benefits and risks incident to the ownership of the property sold, the sale-
leaseback transaction is accounted for as a financing arrangement. An example of this type of continuing involvement would
include an option to repurchase the assets or the buyer-lessor having the option to sell the assets back to the Company. This
provision is included in most of the Company’s sale-leaseback arrangements. As such, the Company accounts for these
arrangements as financings.
Under the financing method, the Company does not recognize as income any of the sale proceeds received from the lessor
that contractually constitutes payment to acquire the assets subject to these arrangements. Instead, the sale proceeds received
are accounted for as financing obligations and leaseback payments made by the Company are allocated between interest
expense and a reduction to the financing obligation. Interest on the financing obligation is calculated using the Company’s
incremental borrowing rate at the inception of the arrangement on the outstanding financing obligation. Judgment is required to
determine the appropriate borrowing rate for the arrangement and in determining any gain or loss on the transaction that would
be recorded either at the end of or over the lease term.
93
Stock-Based Compensation
The Company accounts for its stock-based compensation in accordance with ASC 718, Compensation — Stock
Compensation, or ASC 718. The fair value of the Company's relative performance stock units, or RPSUs, are estimated on the
date of grant using the Monte Carlo valuation model. The Company uses the Class A and Class C common stock price on the
date of grant as the fair value of the Company's restricted stock units, or RSUs. Forfeiture rates are estimated based on an
analysis of the Company's historical forfeitures, employment turnover, and expected future behavior. The Company recognizes
compensation expense for both graded and cliff vesting awards on a straight-line basis over the requisite service period for the
entire award. The Company incurred total stock compensation expense of $4 million, $3 million and $4 million for the years
ended December 31, 2021, 2020 and 2019, respectively, which was primarily recorded in general and administrative expense
on the Company's consolidated statements of operations.
Income Taxes
The Company accounts for income taxes using the liability method in accordance with ASC 740, Income Taxes, or ASC
740, which requires that the Company use the asset and liability method of accounting for deferred income taxes and provide
deferred income taxes for all significant temporary differences.
The Company has two categories of income tax expense or benefit — current and deferred, as follows:
•
•
Current income tax expense or benefit consists solely of current taxes payable less applicable tax credits, and
Deferred income tax expense or benefit is the change in the net deferred income tax asset or liability, excluding
amounts charged or credited to accumulated other comprehensive loss.
The Company reports some of its revenues and expenses differently for financial statement purposes than for income tax
return purposes, resulting in temporary and permanent differences between the Company's financial statements and income tax
returns. The tax effects of such temporary differences are recorded as either deferred income tax assets or deferred income tax
liabilities in the Company's consolidated balance sheets. The Company measures its deferred income tax assets and deferred
income tax liabilities using income tax rates that are currently in effect. The Company believes it is more likely than not that
the results of future operations will generate sufficient taxable income which includes the future reversal of existing taxable
temporary differences to realize deferred tax assets, net of valuation allowances. In arriving at this conclusion to utilize
projections of future profit before tax in its estimate of future taxable income, the Company considered the profit before tax
generated in recent years. A valuation allowance is recorded to reduce the net deferred tax assets to an amount that is more-
likely-than-not to be realized.
The Company accounts for uncertain tax positions in accordance with ASC 740, which applies to all tax positions related
to income taxes. Under ASC 740, tax benefits are recognized when it is more-likely-than-not that a tax position will be
sustained upon examination by the authorities. The benefit recognized from a position that has surpassed the more-likely-than-
not threshold is the largest amount of benefit that is more than 50% likely to be realized upon settlement.
In accordance with ASC 740 and as discussed further in Note 14, Income Taxes, changes to existing net deferred tax
assets, valuation allowances, or changes to uncertain tax benefits, are recorded to income tax expense.
Business and Asset Acquisitions
The Company accounts for its acquisitions in accordance with ASC 805, Business Combinations, or ASC 805. For third-
party acquisitions, ASC 805 requires an acquirer to recognize and measure in its financial statements the identifiable assets
acquired, the liabilities assumed and any noncontrolling interest in the acquiree at fair value at the acquisition date. It also
recognizes and measures the goodwill acquired or a gain from a bargain purchase in the business combination and determines
what information to disclose to enable users of an entity's financial statements to evaluate the nature and financial effects of the
business combination. In addition, for business combinations, transaction costs are expensed as incurred. For asset acquisitions,
identifiable assets acquired and liabilities assumed are recorded at acquisition date fair value. No goodwill is recognized and
excess purchase price or negative goodwill are allocated to the acquired assets on a relative fair value basis. For acquisitions
that relate to entities under common control, ASC 805 requires retrospective combination of the entities for all annual periods
presented as if the combination has been in effect from the beginning of the earliest financial statement period presented or
from the date the entities were under common control (if later than the beginning of the earliest financial statement period).
The difference between the cash paid and historical value of the entities' equity is recorded as a distribution/contribution from/to
CEG with the offset to noncontrolling interest.
94
Use of Estimates
The preparation of consolidated financial statements in accordance with GAAP requires management to make estimates
and assumptions. These estimates and assumptions impact the reported amounts of assets and liabilities and disclosures of
contingent assets and liabilities as of the date of the consolidated financial statements. They also impact the reported amounts
of net earnings during the reporting periods. Actual results could be different from these estimates.
In recording transactions and balances resulting from business operations, the Company uses estimates based on the best
information available. Estimates are used for such items as plant depreciable lives, tax provisions, uncollectible accounts,
AROs, acquisition accounting and legal costs incurred in connection with recorded loss contingencies, among others. In
addition, estimates are used to test long-lived assets for impairment and to determine the fair value of impaired assets. As better
information becomes available or actual amounts are determinable, the recorded estimates are revised. Consequently, operating
results can be affected by revisions to prior accounting estimates.
Tax Equity Arrangements
Certain portions of the Company's noncontrolling interests in subsidiaries represent third-party interests in the net assets
under certain tax equity arrangements, which are consolidated by the Company, that have been entered into to finance the cost
of solar and wind facilities eligible for certain tax credits. Additionally, certain portions of the Company's investments in
unconsolidated affiliates reflect the Company's interests in tax equity arrangements, that are not consolidated by the Company,
that have been entered into to finance the cost of solar energy systems, under operating leases or PPAs, that are eligible for
certain tax credits. The Company has determined that the provisions in the contractual agreements of these structures represent
substantive profit sharing arrangements. Further, the Company has determined that the appropriate methodology for calculating
the noncontrolling interest and investment in unconsolidated affiliates that reflects the substantive profit sharing arrangements is
a balance sheet approach utilizing the hypothetical liquidation at book value, or HLBV, method. Under the HLBV method, the
amounts reported as noncontrolling interests and investment in unconsolidated affiliates represent the amounts the investors to
the tax equity arrangements would hypothetically receive at each balance sheet date under the liquidation provisions of the
contractual agreements, assuming the net assets of the funding structures were liquidated at their recorded amounts determined
in accordance with GAAP. The investors' interests in the results of operations of the funding structures are determined as the
difference in noncontrolling interests and investment in unconsolidated affiliates at the start and end of each reporting period,
after taking into account any capital transactions between the structures and the funds' investors. The calculations utilized to
apply the HLBV method include estimated calculations of taxable income or losses for each reporting period. In addition, in
certain circumstances, the Company and its partners in the tax equity arrangements agree that certain tax benefits are to be
utilized outside of the tax equity arrangements, which may result in differences in the amount an investor would hypothetically
receive at the initial balance sheet date calculated strictly in accordance with related contractual agreements. These differences
are recognized in the consolidated statement of operations using a systematic and rational method over the period during which
the investor is expected to achieve its target return.
Reclassification
Certain prior year amounts have been reclassified for comparative purposes.
Recently Adopted Accounting Standards
In March 2020, the FASB issued ASU No. 2020-4, Facilitation of the Effects of Reference Rate Reform on Financial
Reporting. The amendments provide for optional expedients and exceptions for applying GAAP to contracts, hedging
relationships and other transactions affected by reference rate reform if certain criteria are met. These amendments apply only
to contracts that reference LIBOR or another reference rate expected to be discontinued because of reference rate reform, which
affects certain of the Company's debt and interest rate swap agreements. The guidance is effective for all entities as of March
12, 2020 through December 31, 2022. As of December 31, 2021, the Company has applied the amendments to all its eligible
contract modifications, where applicable, during the reference rate reform period. Additionally, the Company has not elected
any optional expedients provided in the standard.
Effective January 1, 2021, the Company adopted ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the
Accounting for Income Taxes. The amendments in this ASU simplify the accounting for income taxes by removing certain
exceptions to the general principles in Topic 740, Income Taxes. The amendments also improve consistent application of and
simplify GAAP for other areas of Topic 740 by clarifying and amending existing guidance. Adoption of the new standard did
not have a material impact on the Company's consolidated financial statements.
95
Note 3 — Acquisitions and Dispositions
Acquisitions
Black Rock Drop Down — On December 29, 2021, the Company, through its indirect subsidiary Lighthouse Renewable
Holding Sub LLC, acquired the Class B membership interests in Black Rock Wind Holding LLC from Clearway Renew LLC, a
subsidiary of CEG, for $60 million in cash consideration, $37 million of which was paid on December 29, 2021 with the
remaining $23 million paid in February 2022 after all remaining turbines were operational. Lighthouse Renewable Holding Sub
LLC is a wholly-owned subsidiary of Lighthouse Renewable Holdco LLC, which is a partnership between the Company and a
third-party investor. The third-party investor also contributed cash consideration utilized to acquire their portion of the Class B
membership interests. The Class A membership interests in Black Rock Wind Holding LLC were acquired by another third-
party investor in 2020. Black Rock Wind Holding LLC, through its wholly-owned subsidiary, Black Rock Class B Holdco
LLC, is the primary beneficiary and consolidates its interests in a tax equity fund, Black Rock TE Holdco LLC, that holds the
Black Rock wind project, a 115 MW utility scale wind project located in Mineral County and Grant County, West Virginia,
which achieved commercial operations in December 2021, as further described in Note 5, Investments Accounted for by the
Equity Method and Variable Interest Entities. As of December 31, 2021, 70 MW of the 115 MW rated capacity were
operational, representing fourteen of the twenty-three wind turbines, and the remaining 45 MW rated capacity became
operational in January 2022. A majority of the project’s output is backed by contracts with investment-grade counterparties
with a 15-year weighted average contract life. The Black Rock operations are reflected in the Company's Renewables segment
and the acquisition was funded with existing sources of liquidity. The acquisition was determined to be an asset acquisition and
not a business combination, therefore the Company consolidated the financial information for Black Rock on a prospective
basis. The assets and liabilities transferred to the Company relate to interests under common control by GIP and were recorded
at historical cost in accordance with ASC 805-50, Business Combinations - Related Issues. The difference between the cash
paid of $60 million and the historical cost of the Company's acquired interests of $19 million was recorded as an adjustment to
CEG's noncontrolling interest balance. In addition, the Company reflected additional contributions paid by CEG and the portion
of the Company’s purchase price utilized to repay long-term debt, totaling $133 million, as contributions from CEG in the
statement of stockholders’ equity, and as an impact of the Black Rock Drop Down in noncontrolling interest.
The following is a summary of assets and liabilities transferred in connection with the acquisition as of December 29,
2021:
(In millions)
Current assets (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Right-of-use-assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other non-current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total assets acquired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term debt (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term lease liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other current and non-current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total liabilities assumed (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net assets acquired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Black Rock
36
178
7
2
223
186
7
11
204
19
(a) Includes $35 million reserved for project completion costs included in restricted cash on the Company's balance sheet at acquisition date, which is included
within the $133 million contributed by CEG described above.
(b) Repaid at acquisition date utilizing $56 million contributed by the tax equity investor, $36 million from the cash equity investor and $61 million contributed
by CEG, all recorded as contributions in noncontrolling interest, as well as $37 million of the Company's acquisition price. Of the $190 million contributed,
$186 million was utilized to pay down the acquired debt and $4 million was utilized to pay associated fees. The $61 million contributed by CEG and the
Company’s initial acquisition price of $37 million are also included within the $133 million contributed by CEG described above.
(c) Total liabilities assumed excludes amounts due to CEG as of December 31, 2021 for the remaining turbines that became operational in January 2022. The
liabilities totaled $83 million, of which $59 million was received from the tax equity and cash equity investors and was held in escrow accounts as of
December 31, 2021.
96
Mesquite Sky Drop Down — On December 17, 2021, the Company, through its indirect subsidiary Lighthouse
Renewable Holdco 2 LLC, acquired the Class B membership interests of Mesquite Sky Holding LLC from Clearway Renew
LLC, a subsidiary of CEG, for $61 million in cash consideration. Lighthouse Renewable Holdco 2 LLC is a partnership
between the Company and a third-party investor. The third-party investor also contributed cash consideration utilized to acquire
their portion of the Class B membership interests. The Class A membership interests of Mesquite Sky Holding LLC were
acquired by another third-party investor in 2020. Mesquite Sky Holding LLC, through its wholly-owned subsidiary, Mesquite
Sky Class B Holdco LLC, is the primary beneficiary and consolidates its interests in a tax equity fund, Mesquite Sky TE
Holdco LLC, that holds the Mesquite Sky wind project, a 340 MW utility scale wind project located in Callahan County, Texas,
which achieved commercial operations in December 2021, as further described in Note 5, Investments Accounted for by the
Equity Method and Variable Interest Entities. A majority of the project’s output is backed by contracts with investment-grade
counterparties with a 12-year weighted average contract life. The Mesquite Sky operations are reflected in the Company's
Renewables segment and the acquisition was funded with existing sources of liquidity. The acquisition was determined to be an
asset acquisition and not a business combination, therefore the Company consolidated the financial information for Mesquite
Sky on a prospective basis. The assets and liabilities transferred to the Company relate to interests under common control by
GIP and were recorded at historical cost in accordance with ASC 805-50, Business Combinations - Related Issues. The sum of
the cash paid of $61 million and the historical cost of the Company's net liabilities assumed of $7 million was recorded as an
adjustment to CEG's noncontrolling interest balance. The difference between cash paid, interests acquired, and the balance in
equity is capital reserved for project completion. In addition, the Company reflected additional contributions paid by CEG and
the portion of the Company’s purchase price utilized to repay long-term debt, totaling $52 million, as contributions from CEG
in the statement of stockholders’ equity, and as an impact of the Mesquite Sky drop down in noncontrolling interest.
The following is a summary of assets and liabilities transferred in connection with the acquisition as of December 17,
2021:
(In millions)
Mesquite Sky
Current assets (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Right-of use assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other non-current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total assets acquired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term debt (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term lease liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Derivative liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other current and non-current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total liabilities assumed (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net liabilities assumed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
46
377
45
7
475
355
45
43
39
482
(7)
(a) Includes $44 million reserved for project completion costs included in restricted cash on the Company's balance sheet at acquisition date, which is included
within the $52 million contributed by CEG described above.
(b) Repaid at acquisition date utilizing $241 million contributed by the tax equity investor and $107 million contributed by the cash equity investor, both
recorded as contributions in noncontrolling interest, as well as the Company's $61 million acquisition price. Of the $409 million contributed, $355 million was
utilized to pay down the acquired debt and $1 million was utilized to pay associated fees. The remaining $53 million was distributed to CEG for the acquisition.
The net of the Company’s $61 million acquisition price and the distribution to CEG of $53 million are included within the $52 million contributed by CEG
described above.
(c) Total liabilities assumed excludes amounts due to CEG as of December 31, 2021 of $6 million, of which $5 million was received from the tax equity and
cash equity investors and was held in escrow accounts as of December 31, 2021.
97
Utah Solar Portfolio Acquisition — On December 1, 2021, the Company acquired the remaining 50% equity interest in
the Utah Solar Portfolio from Dominion Solar Projects III, Inc., for approximately $335 million before working capital and
purchase price adjustments in the net amount of $5 million, representing total net consideration of $330 million. The Utah Solar
Portfolio consists of seven utility-scale solar farms located in Utah, representing 530 MW of capacity. The assets within the
portfolio sell power subject to 20-year PPAs with PacifiCorp that have approximately 15 years remaining under the agreements.
Following the close of the transaction, the Company owns 100% of the membership interests in the Utah Solar Portfolio and
consolidates the Utah Solar Portfolio. The Utah Solar Portfolio operations are included in the Company's Renewables segment.
The acquisition was determined to be an asset acquisition and the cash consideration of $330 million, net of restricted cash
acquired of $8 million, represented a net cash outflow of $322 million, which was allocated to the fair value of the assets
acquired and liabilities assumed on the acquisition date. The acquisition was funded with the borrowings under the Bridge Loan
Agreement, as described in Note 10, Long-term Debt.
The following is a summary of assets and liabilities transferred in connection with the acquisition as of December 1, 2021:
(In millions)
Utah Solar Portfolio
Current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Intangible assets for power purchase agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other intangible assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Right-of use assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total assets acquired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term lease liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other current and non-current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total liabilities assumed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equity method investment removed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net assets acquired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
20
258
302
4
163
747
163
24
187
(230)
330
Mt. Storm Wind Acquisition — On April 23, 2021, the Company acquired 100% of the equity interests in NedPower
Mount Storm LLC, or Mt. Storm, from Castleton Commodities International for approximately $96 million before working
capital and purchase price adjustments in the net amount of $4 million, representing a total net consideration of $100 million.
Mt. Storm is a 264 MW wind project located in Grant County, West Virginia. Mt. Storm has a 10-year energy hedge with an
investment-grade counterparty. The acquisition was determined to be an asset acquisition and the purchase price was allocated
to the fair value of the assets acquired and liabilities assumed on the acquisition date as follows:
(In millions)
Mt. Storm
Current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other non-current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total assets acquired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Derivative instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other current and non-current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total liabilities assumed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net assets acquired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
3
108
2
113
9
4
13
100
98
Agua Caliente Acquisition — On February 3, 2021, the Company acquired an additional 35% equity interest in the Agua
Caliente solar project from NRG Energy, Inc. for $202 million. Agua Caliente is a 290 MW solar project located in Dateland,
Arizona in which Clearway previously owned a 16% equity interest. The project has a 25-year PPA with PG&E, with
approximately 17 years remaining under the agreement. Following the close of the transaction, the Company owns a 51%
equity interest in Agua Caliente. The Agua Caliente operations are included in the Company's Renewables segment. The
acquisition was determined to be an asset acquisition and the cash consideration of $202 million, net of restricted cash acquired
of $91 million, represented a net cash outflow of $111 million, which was allocated to the fair value of the assets acquired and
liabilities assumed on the acquisition date. A third-party investor holds the remaining 49% equity interest in Agua Caliente,
which is reflected in noncontrolling interest at fair value at the acquisition date.
The following is a summary of assets and liabilities obtained in connection with the acquisition as of February 3, 2021:
(In millions)
Agua Caliente
Restricted cash . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Intangible asset for power purchase agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total assets acquired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other current and non-current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total liabilities assumed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Noncontrolling interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equity method investment removed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net assets acquired less noncontrolling interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
91
154
1,022
9
1,276
716
5
721
273
(80)
202
Rattlesnake Drop Down — On January 12, 2021, the Company acquired CEG's equity interest and a third-party investor's
minority interest in CWSP Rattlesnake Holding, LLC for $132 million in cash consideration. CWSP Rattlesnake Holding LLC
indirectly consolidates the Rattlesnake wind project, a 160 MW wind facility with 144 MW of deliverable capacity in Adams
County, Washington, as further described in Note 5, Investments Accounted for by the Equity Method and Variable Interest
Entities. The project has a 20-year PPA with Avista Corporation, which began when the facility reached commercial operations
in December 2020. The Rattlesnake operations are included in the Company's Renewables segment. The acquisition was
determined to be an asset acquisition and not a business combination, therefore, the Company consolidated the financial
information for Rattlesnake on a prospective basis. The assets and liabilities transferred to the Company relate to interests
under common control by GIP and were recorded at historical cost in accordance with ASC 805-50, Business Combinations -
Related Issues. The difference between the cash paid of $132 million and the historical cost of the Company's acquired interests
of $14 million was recorded as an adjustment to CEG's noncontrolling interest balance.
The following is a summary of assets and liabilities transferred in connection with the acquisition as of January 12, 2021:
(In millions)
Rattlesnake
Current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Right-of-use assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total assets acquired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term debt (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term lease liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other current and non-current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total liabilities assumed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net assets acquired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
8
200
12
220
176
12
18
206
14
(a) Repaid at acquisition date utilizing $107 million contributed by tax equity investor and $103 million contributed by CEG, both recorded as contributions in
noncontrolling interest. Of the $210 million contributed, $176 million was utilized to pay down the acquired debt, $29 million was utilized to fund project
reserve accounts and $5 million was utilized to pay associated fees.
99
Langford Drop Down — On November 20, 2020, the Company acquired 100% of the Class B membership interest in
Langford Holding LLC from CEG for $55 million as well as a minority interest from a third-party investor for $9 million.
Langford Holding LLC indirectly consolidates its interest in the Langford wind project as further described in Note 5,
Investments Accounted for by the Equity Method and Variable Interest Entities. The Langford project is a 160 MW wind project
located in West Texas which achieved repowering commercial operations in November 2020. The Langford operations are
included in the Company's Renewables segment and the acquisition was funded with cash on hand. The acquisition was
determined to be an asset acquisition and not a business combination, therefore the Company consolidated the financial
information for Langford on a prospective basis. The assets and liabilities transferred to the Company relate to interests under
common control by GIP and were recorded at historical cost in accordance with ASC 805-50, Business Combinations - Related
Issues. The difference between the cash paid of $64 million and the historical value of the Company's acquired interests of $21
million was recorded as an adjustment to noncontrolling interest.
The following is a summary of assets and liabilities transferred in connection with the acquisition as of November 20,
2020:
(In millions)
Current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other non-current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total assets acquired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other current and non-current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total liabilities assumed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Noncontrolling interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net assets acquired less noncontrolling interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Langford
4
138
15
157
17
17
119
21
Rosamond Central Drop Down — On December 21, 2020, Rosamond Solar Investment LLC, a subsidiary of the
Company, acquired 100% of the Class A membership interests of Rosie TargetCo LLC from Renew Development HoldCo
LLC, a subsidiary of CEG, for $23 million in cash consideration and an additional $1 million adjustment concurrent with the
tax equity investor's final funding which was paid in January 2021. Rosie Target Co LLC is the primary beneficiary and
consolidates its interest in a tax equity fund that owns the 192 MW Rosamond Central solar project, located in Kern County,
California as further described in Note 5, Investments Accounted for by the Equity Method and Variable Interest Entities. The
Rosamond Central operations are included in the Company's Renewables segment. The acquisition was determined to be an
asset acquisition and not a business combination, and therefore, the Company consolidated the financial information for
Rosamond Central on a prospective basis. The assets and liabilities transferred to the Company relate to interests under
common control by GIP and were recorded at historical cost in accordance with ASC 805-50, Business Combinations - Related
Issues. The difference between the cash paid of $24 million and the historical value of the Company's acquired interests of $28
million was recorded as an adjustment to noncontrolling interest.
The following is a summary of assets and liabilities transferred in connection with the acquisition as of December 21,
2020:
(In millions)
Rosamond Central
Current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other non-current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total assets acquired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other current and non-current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total liabilities assumed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Noncontrolling interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net assets acquired less noncontrolling interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
49
246
1
296
205
11
216
52
28
100
Mesquite Star Drop Down — On September 1, 2020, the Company, through its indirect subsidiary Lighthouse Renewable
Class A LLC, acquired the Class A membership interests in Lighthouse Renewable Holdco LLC (formerly Mesquite Star
Pledgor LLC) from Clearway Renew LLC, a subsidiary of CEG, for $74 million in cash consideration inclusive of a purchase
price adjustment received in the fourth quarter of 2020 concurrent with the partnership amendment referenced below.
Lighthouse Renewable Holdco LLC indirectly owns 100% of the Class B membership interests in Mesquite Star Tax Equity
Holdco LLC, a tax equity partnership that it consolidates as the primary beneficiary, and owns the Mesquite Star wind project, a
419 MW utility scale wind project located in Fisher County, Texas. A majority of the project's output is backed by contracts
with investment-grade counterparties with a 12 year weighted average contract life. The Mesquite Star operations are reflected
in the Company's Renewables segment and the acquisition was funded with cash on hand. The Company initially recorded its
interest in Lighthouse Renewable Class A LLC as an equity method investment. The assets and liabilities transferred to the
Company relate to interests under common control by GIP and were recorded at historical cost in accordance with ASC 805-50,
Business Combinations - Related Issues. The difference between the $74 million cash paid and the historical value of the
Company's acquired interests of $83 million was recorded as an adjustment to noncontrolling interest.
On December 21, 2020, Clearway Renew LLC sold the Class B membership interest in Lighthouse Renewable Holdco
LLC to a third-party investor as further described in Note 5, Investments Accounted for by the Equity Method and Variable
Interest Entities. The investor and the Company amended the terms of the related partnership and as a result, the Company now
consolidates its interest in the Mesquite Star wind project, through its consolidation of Lighthouse Renewable Holdco LLC.
The membership interests acquired by the Company relate to interests under common control by GIP and were recorded at
historical cost. The difference between the carrying value of the Company's equity method investment of $58 million and the
historical value of the net assets consolidated for Mesquite Star of $63 million was recorded as an adjustment to noncontrolling
interest.
The following table shows the balances that were consolidated effective on December 21, 2020:
(In millions)
Mesquite Star
Current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Property, plant and equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other non-current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total assets acquired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other current and non-current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total liabilities assumed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Noncontrolling interests and redeemable noncontrolling interests . . . . . . . . . . . . . . . . . .
Net assets acquired less noncontrolling interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
22
443
31
496
87
87
346
63
DG Residual Interest and SREC Contract Drop Down — On November 2, 2020, the Company acquired the Class B
membership interests in DGPV Holdco 1, DGPV Holdco 2 and DGPV Holdco 3, or DGPV Holdco Entities, from Renew DG
Holdings LLC, a subsidiary of CEG, for approximately $20 million in cash consideration and an SREC contract for
approximately $24 million in cash consideration. The Company previously held the Class A membership interests in the
DGPV Holdco Entities and accounted for its interests in DGPV Holdco 1 and DGPV Holdco 2 as equity method investments,
while DGPV Holdco 3 was consolidated by the Company effective May 29, 2020 as further described in Note 5, Investments
Accounted for by the Equity Method and Variable Interest Entities. Subsequent to the acquisition of the remaining interests in
the DGPV Holdco Entities, the Company transferred its interests to DG-CS Master Borrower LLC, and issued debt that was
utilized to repay existing project-level debt outstanding and unwind interest rate swaps for certain of the tax equity
arrangements related to the underlying project funds, as further described in Note 10, Long-term Debt. The acquired SREC
contract is a contract to receive incremental cash flows related to renewable energy credits from certain underlying solar
projects. The assets and liabilities transferred to the Company relate to interests under common control by GIP and were
recorded at historical cost in accordance with ASC 805-50, Business Combinations - Related Issues. The difference between
the cash paid for the residual interest of the DGPV Holdco Entities and the historical value of the net assets consolidated less
the carrying value of the equity method investments was recorded as an adjustment to noncontrolling interest.
101
The following table shows the balances that were consolidated:
(In millions)
November 2, 2020
DGPV Holdco 1 and 2 (a)
May 29, 2020
DGPV Holdco 3 (b)
Current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
29 $
Property, plant and equipment, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Intangible assets, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other non-current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total assets acquired . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other current and non-current liabilities . . . . . . . . . . . . . . . . . . . . . . . . .
Total liabilities assumed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Noncontrolling interests and redeemable noncontrolling interests . . . . .
324
19
52
424
160
54
214
5
Net assets acquired less noncontrolling interests . . . . . . . . . . . . . . . . . . $
205 $
(a) Includes DGPV 1, LLC, DGPV 2, LLC, CA Fund, LLC, DGPV 4 Borrower LLC and Puma Class B LLC
(b) Includes Renew Solar CS4 Fund LLC and Chestnut Fund LLC
32
331
1
37
401
206
84
290
6
105
The fair value of property, plant and equipment determined at GIP's acquisition date was determined primarily based on
an income method using discounted cash flows and validated using a cost approach based on the replacement cost of the assets
less economic depreciation. This methodology was utilized as the forecasted cash flows incorporate specific attributes of each
asset including age, useful life, equipment condition and technology. The fair value of intangible assets was determined
utilizing a variation of the income approach determined by discounting incremental cash flows associated with the contracts to
present value. Primary assumptions utilized included estimates of generation, contractual prices, operating expenses and the
weighted average cost of capital reflective of a market participant. These assumptions are considered to be a Level 3
measurement as defined in ASC 820, as they utilize inputs that are not observable in the market.
Dispositions
Thermal Disposition — On October 22, 2021, Clearway Energy Operating LLC entered into a binding agreement to sell
the Thermal Business to KKR for total consideration of $1.9 billion, subject to customary closing adjustments. The closing of
the transaction is subject to various customary closing conditions, approvals and consents and is expected to close in the first
half of 2022. Effective with the approval by the Board of Directors and signing of the agreement to sell the Thermal Business,
the Company concluded that all entities that are included within the Thermal Business will be treated as held for sale on a
prospective basis, resulting in the assets and liabilities being reported as separate held for sale line items on the Company’s
consolidated balance sheet as of December 31, 2021. Property, plant and equipment represents 78% and intangible assets
represents 9% of assets classified as held for sale while long-term debt represents 85% of liabilities classified as held for sale.
The Company expects to recognize a gain upon the completion of the Thermal Disposition. The Company's Thermal segment is
comprised solely of the Thermal Business's results of operations.
Sale of RPV Holdco 1 LLC — On May 14, 2020, the Company sold its interests in RPV Holdco 1 LLC, or RPV Holdco,
to Spruce Power for net proceeds of approximately $75 million. The Company previously accounted for its interest in RPV
Holdco as an equity method investment. The sale of the investment resulted in a gain of approximately $49 million.
Sale of Energy Center Dover LLC and Energy Center Smyrna LLC Assets — On March 3, 2020, the Company, through
Clearway Thermal LLC, sold 100% of its interests in Energy Center Dover LLC and Energy Center Smyrna LLC to DB Energy
Assets, LLC for cash proceeds of approximately $15 million.
102
Note 4 — Property, Plant and Equipment
The Company's major classes of property, plant, and equipment were as follows:
Facilities and equipment . . . . . . . . . . . . . . . . . . . . . . . . . $
Land and improvements . . . . . . . . . . . . . . . . . . . . . . . . .
Construction in progress (a) . . . . . . . . . . . . . . . . . . . . . . .
Total property, plant and equipment . . . . . . . . . . . . .
Accumulated depreciation . . . . . . . . . . . . . . . . . . . . . . .
Net property, plant and equipment . . . . . . . . . . . . . . $
December 31, 2021
December 31, 2020
Depreciable Lives
(In millions)
9,747 $
320
84
10,151
(2,501)
7,650 $
9,254
2 - 40 Years
224
62
9,540
(2,323)
7,217
(a) As of December 31, 2021 and 2020, construction in progress includes $17 million and $14 million, respectively, of capital expenditures
that relate to prepaid long-term service agreements in the Conventional segment.
Depreciation expense related to property, plant and equipment during the years ended December 31, 2021, 2020 and 2019
was $499 million, $420 million and $395 million, respectively. The Company accelerated depreciation of the Pinnacle wind
project in connection with the repowering project, which resulted in additional depreciation expense in the amount of $34
million in 2021 and $9 million in 2020.
The Company recorded long-lived asset impairments during each of the years ended December 31, 2021 and
December 31, 2020, as further described in Note 9, Asset Impairments.
Note 5 — Investments Accounted for by the Equity Method and Variable Interest Entities
Equity Method Investments
The Company's maximum exposure to loss as of December 31, 2021 is limited to its equity investment in the
unconsolidated entities, as further summarized in the table below:
Name
Economic Interest
Investment Balance
(In millions)
Avenal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Desert Sunlight . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Elkhorn Ridge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
GenConn (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
San Juan Mesa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
50%
25%
66.7%
50%
75%
$
$
4
239
29
86
23
381
(a) GenConn is a variable interest entity.
As of December 31, 2021 and 2020, the Company had $14 million and $10 million, respectively, of undistributed
earnings from its equity method investments.
The Company acquired its interest in Desert Sunlight on June 30, 2015, for $285 million, which resulted in a difference
between the purchase price and the basis of the acquired assets and liabilities of $171 million. The difference is attributable to
the fair value of the property, plant and equipment and power purchase agreements. The Company is amortizing the related
basis differences to equity in earnings of unconsolidated subsidiaries over the related useful life of the underlying assets
acquired.
The Company's pro-rata share of non-recourse debt held by unconsolidated affiliates was $345 million as of December 31,
2021.
103
The following tables present summarized financial information for the Company's equity method investments:
Income Statement Data:
GenConn . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Desert Sunlight . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other (a) (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Year Ended December 31,
2021
2020
(In millions)
2019
55 $
22
13
60 $
26
17
205
146
112
49
16
13
209
142
88
299
138
60
Balance Sheet Data:
GenConn . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Desert Sunlight . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other (a) (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-current assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Non-current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
As of December 31,
2021
2020
(In millions)
$
38 $
328
15
178
131
1,228
64
904
26
172
24
98
60
27
17
205
123
58
318
110
50
40
344
17
185
132
1,244
71
921
177
2,201
114
700
(a) Includes Avenal, Elkhorn Ridge, San Juan Mesa, DGPV Holdco 1, DGPV Holdco 2 and DGPV Holdco 3. DGPV Holdco 1, DGPV Holdco 2 and DGPV
Holdco 3 were consolidated by the Company during 2020 and are therefore excluded from the summarized balance sheet data as of December 31, 2020.
(b) On February 3, 2021, the Company acquired an additional 35% equity interest in Agua Caliente and removed its equity investment in Agua Caliente and, on
December 1, 2021, the Company acquired the remaining 50% equity investment in the Utah Solar Portfolio and removed its equity investment in the Utah Solar
Portfolio. As a result, both Agua Caliente and the Utah Solar Portfolio are excluded from the summarized balance sheet data as of December 31, 2021 and from
the summarized income statement data for the year ended December 31, 2021.
Variable Interest Entities, or VIEs
Entities that are Consolidated
The Company has a controlling financial interest in certain entities which have been identified as VIEs under ASC 810,
Consolidations, or ASC 810. These arrangements are primarily related to tax equity arrangements entered into with third
parties in order to monetize certain tax credits associated with wind and solar facilities and are further described below.
104
Summarized financial information for the Company's consolidated VIEs consisted of the following as of December 31,
2021:
(In millions)
Other current and non-current
assets . . . . . . . . . . . . . . . . . . . . . . $
Property, plant and equipment . . .
Intangible assets . . . . . . . . . . . . . .
Total assets . . . . . . . . . . . . . . . . .
Current and non-current liabilities
Total liabilities . . . . . . . . . . . . . .
Noncontrolling interest . . . . . . . . .
Net assets less noncontrolling
interests . . . . . . . . . . . . . . . . . . . $
Alta TE
Holdco
Buckthorn
Renewables,
LLC
DGPV
Funds(a)
Kawailoa
Partnership
Langford TE
Partnership
LLC
Lighthouse
Renewable
Holdco LLC(b)
Lighthouse
Renewable
Holdco 2 LLC(c)
53 $
4 $
331
212
596
40
40
13
202
—
206
10
10
44
104
592
16
712
76
76
6
$
40 $
17 $
84 $
135
—
175
103
103
48
132
2
151
18
18
66
605
—
689
150
150
416
83
377
—
460
118
118
239
543 $
152 $
630
$
24 $
67 $
123 $
103
(a)
DGPV Funds is comprised of DGPV Fund 2 LLC, Clearway & EFS Distributed Solar LLC, DGPV Fund 4 LLC, Golden Puma Fund LLC, Renew Solar
CS4 Fund LLC and Chestnut Fund LLC.
(b)
Lighthouse Renewable Holdco LLC consolidates Mesquite Star Tax Equity Holdco LLC and Black Rock TE Holdco LLC, which are also consolidated
VIEs.
(c)
Lighthouse Renewable Holdco 2 LLC consolidates Mesquite Sky TE Holdco LLC, which is also a consolidated VIE.
(In millions)
Other current and non-current
assets . . . . . . . . . . . . . . . . . . . . . . $
Property, plant and equipment . . .
Intangible assets . . . . . . . . . . . . . .
Total assets . . . . . . . . . . . . . . . .
Current and non-current liabilities
Total liabilities . . . . . . . . . . . . .
Noncontrolling interest . . . . . . . .
Net assets less noncontrolling
interests . . . . . . . . . . . . . . . . . . . $
Oahu
Solar Partnership
Pinnacle
Repowering
Partnership LLC
Rattlesnake TE
Holdco LLC
Rosie Target Co
LLC
Wildorado TE
Holdco
Other(a)
47 $
172
12 $
108
30 $
194
26 $
251
21 $
225
—
219
114
114
31
18
138
6
6
78
—
224
23
23
98
—
277
100
100
140
—
246
18
18
121
74 $
54 $
103 $
37 $
107 $
16
168
1
185
44
44
84
57
(a)
Other is comprised of Crosswind Transmission, LLC, Hardin Hilltop Wind LLC, Elbow Creek TE Holdco and Spring Canyon TE Holdco projects.
Pinnacle Repowering Partnership LLC — On February 26, 2021, the Company entered into an amended agreement with
CWSP Pinnacle Holding LLC, an indirect subsidiary of CEG, with respect to Pinnacle Repowering Partnership LLC in order to
facilitate the repowering of the Pinnacle wind project, a 54 MW wind facility located in Mineral County, West Virginia. On
March 10, 2021, the Company contributed its interest in the Pinnacle wind project to Pinnacle Repowering Partnership LLC
concurrent with entering into a financing agreement as further described in Note 7, Long-term Debt. The Company owns 100%
of the Class A membership interests in Pinnacle Repowering Partnership LLC, which is a VIE, and the Company consolidates
its interest as the primary beneficiary and managing member. CWSP Pinnacle Holding LLC owns 100% of the Class B
membership interests in Pinnacle Repowering Partnership LLC and is entitled to allocations of 15% of the cash distributions
from the partnership. On March 10, 2021, CWSP Pinnacle Holding LLC contributed $27 million in equipment to the
partnership, which was a transfer of assets under common control and recorded at historical cost in property, plant and
equipment, with a corresponding non-cash contribution in Pinnacle Repowering Partnership LLC's noncontrolling interests.
Additionally, on March 10, 2021, the Pinnacle wind project acquired equipment from CEG for $21 million in cash
consideration.
On December 15, 2021, in connection with the completion of the repowering of the project, a third-party tax equity
investor acquired the Class A membership interests in Pinnacle Tax Equity Holdco LLC, which is a tax equity fund, and the
holder of the Pinnacle wind project, for $48 million. The Company consolidates Pinnacle Tax Equity Holdco LLC, as primary
beneficiary through its consolidated subsidiary Pinnacle Repowering Partnership LLC, who acts as managing member. In
addition, upon completion of the repowering, the Company made a payment of $64 million, which was utilized along with the
proceeds of the tax equity investment to repay the outstanding debt under the financing agreement referenced above. The
Company utilizes the HLBV method to determine the net income or loss allocated to tax equity noncontrolling interest.
105
Rattlesnake TE Holdco LLC — As described in Note 3, Acquisitions and Dispositions, on January 12, 2021, the
Company acquired CEG's equity interest and a third-party investor's minority interest in CWSP Rattlesnake Holding LLC for
$132 million. CWSP Rattlesnake Holding LLC owns Rattlesnake Class B LLC, which owns the Class B membership interests
in Rattlesnake TE Holdco LLC, which is a VIE. Rattlesnake Class B LLC is the primary beneficiary and managing member and
consolidates its interest in Rattlesnake TE Holdco LLC, which owns the Rattlesnake wind project. Subsequent to the
acquisition, on January 12, 2021 the third-party tax equity investor contributed $107 million into Rattlesnake TE Holdco LLC
in exchange for the Class A membership interests. The proceeds from the tax equity contribution along with cash contributed by
CEG were used to repay a portion of the $176 million of the outstanding principal under the Rattlesnake Class B LLC credit
facility. The Company utilizes the HLBV method to determine the net income or loss allocated to tax equity noncontrolling
interest.
DGPV Holdco 3 Consolidation — DGPV Holdco 3 LLC or DGPV Holdco 3 owned approximately 113 MW of
Distributed Solar capacity, based on cash to be distributed, with a weighted average remaining contract life of approximately 21
years. On May 29, 2020, the final construction projects for DGPV Holdco 3 were placed in service which resulted in a
reconsideration event for consolidation of the entity. Upon the reconsideration event, the Company determined that it was the
primary beneficiary of DGPV Holdco 3, as it is entitled to 99% of allocations of income and cash distributions from the entity.
As such, effective on May 29, 2020, the Company consolidates DGPV Holdco 3, and records the interest owned by CEG as
noncontrolling interest. DGPV Holdco 3 owns an interest in two tax equity funds with tax equity investors, both of which are
consolidated by DGPV Holdco 3, and the interests owned by the tax equity investors are shown as noncontrolling interests.
The Company removed its equity method investment in DGPV Holdco 3 of $155 million as of May 29, 2020 and recorded the
difference between the net assets consolidated and the investment balance as a reduction to noncontrolling interests. The
Company acquired CEG's interest in DGPV Holdco 3 on November 2, 2020 as further described in Note 3, Acquisitions and
Dispositions and below.
Prior to the reconsideration event described above, the Company invested $10 million of cash in DGPV Holdco 3 during
the first half of 2020.
DGPV Tax Equity Funds — As described in Note 3, Acquisitions and Dispositions, on November 2, 2020, the Company
acquired the Class B membership interests in DGPV Holdco 1, DGPV Holdco 2 and DGPV Holdco 3, or the DGPV Holdco
Entities, from Renew DG Holdings LLC, a subsidiary of CEG. The Company previously held the Class A membership
interests in the DGPV Holdco Entities and accounted for its interests in DGPV Holdco 1 and DGPV Holdco 2 as equity method
investments, while DGPV Holdco 3 was consolidated by the Company effective May 29, 2020 as further described above.
Concurrent with the acquisition, the Company transferred its interests to DG-CS Master Borrower LLC. Effective with the
acquisition of the Class B membership interests of the DGPV Holdco Entities, the Company consolidates all of the DGPV
Holdco Entities, including DG-CS Master Borrower LLC, and its subsidiaries, which consist of seven projects including six tax
equity funds that collectively own approximately 172 distributed solar projects with a combined 286 MW of capacity. Each of
the six tax equity funds is a VIE, where the Company is the primary beneficiary and consolidates the fund, with the tax equity
investor's interest shown as noncontrolling interest or redeemable noncontrolling interest. The Company utilizes the HLBV
method to determine its share of the income or losses in the investees. The Company removed its equity method investments in
DGPV Holdco 1 and DGPV Holdco 2 of $144 million as of November 2, 2020 and recorded the difference between the net
assets consolidated and the investment balance as a reduction to noncontrolling interests.
Langford Tax Equity Partnership, LLC — As described in Note 3, Acquisitions and Dispositions, on November 20,
2020, the Company acquired 100% of the Class B membership interest in Langford Holding LLC from CEG for $55 million as
well as 100% of the Class A membership interests in Langford Holding LLC from a third-party investor for $9 million.
Langford Holding LLC owns 100% of the membership interests in Langford Class B Holdco LLC, which owns 100% of the
Class B interest in Langford Tax Equity Partnership LLC, which indirectly owns 100% of the interest in a 160 MW wind
project. Langford Tax Equity Partnership LLC is a variable interest entity. The Company is the primary beneficiary, through
its position as managing member, and indirectly consolidates Langford Tax Equity Partnership LLC, through Langford Class B
Holdco LLC. The Class A member is a tax equity investor whose interest is reflected as noncontrolling interest on the
Company's consolidated balance sheet. The project achieved repowering COD in November 2020. The Company utilizes the
HLBV method for income or loss allocation to the tax equity investor's noncontrolling interest.
Lighthouse Partnership Arrangements
Lighthouse Renewable Holdco LLC — As described in Note 3, Acquisitions and Dispositions, on September 1, 2020,
the Company, through its indirect subsidiary Lighthouse Renewable Class A LLC, acquired the Class A membership interests
in Lighthouse Renewable Holdco LLC (formerly Mesquite Star Pledgor LLC) from Clearway Renew LLC, a subsidiary of
CEG. Lighthouse Renewable Holdco LLC is a VIE and at the time of the acquisition the Company was not the primary
beneficiary. Accordingly, the Company recorded the acquired interest as an equity method investment.
106
On December 21, 2020, CEG sold its Class B membership interest in Lighthouse Renewable Holdco LLC to a third-
party investor which resulted in a reconsideration event for consolidation of the entity. Upon the reconsideration event, the
Company determined that it was the primary beneficiary of Lighthouse Renewable Holdco LLC. As such, effective on
December 21, 2020, the Company consolidates Lighthouse Renewable Holdco LLC, and shows the Class B interests owned by
the third-party investor as noncontrolling interests on the Company’s consolidated balance sheet. Through its Class A
membership interests, the Company receives 50.01% of income and distributable cash. In addition, Lighthouse Renewable
Holdco LLC holds the Class B interests in a tax equity fund, Mesquite Star Tax Equity Holdco LLC, that holds the Mesquite
Star project. The tax equity investor's interest is shown as noncontrolling interest. The HLBV method is utilized to allocate the
income or losses of Mesquite Star Tax Equity Holdco LLC. As described in Note 3, Acquisitions and Dispositions, on
December 29, 2021, Lighthouse Renewable Holdco LLC, through its indirect wholly-owned subsidiary, Lighthouse Renewable
Holding Sub LLC, acquired the Class B interests in a partnership, Black Rock Wind Holding LLC, which consolidates, as the
direct owner of the primary beneficiary, a tax equity fund, Black Rock TE Holdco LLC, that holds the Black Rock wind
project. The tax equity investor’s interest is shown as noncontrolling interest and the HLBV method is utilized to allocate the
income or losses of Black Rock TE Holdco LLC. As described in Note 3, Acquisitions and Dispositions, the third-party investor
in Lighthouse Renewable Holdco LLC also acquired and contributed an interest in Black Rock Wind Holding LLC to
Lighthouse Renewable Holdco LLC. The Company recorded the related noncontrolling interest at historical carrying amount,
with the offset to additional paid-in capital.
Lighthouse Renewable Holdco 2 LLC — On December 17, 2021, the Company formed Lighthouse Renewable
Holdco 2 LLC, a partnership between the Company and a third-party investor. Lighthouse Renewable Holdco 2 LLC is a VIE
and the Company is the primary beneficiary, through its role as managing member. As described in Note 3, Acquisitions and
Dispositions, on December 17, 2021, Lighthouse Renewable Holdco 2 LLC acquired the Class B interests in a partnership,
Mesquite Sky Holding LLC, which consolidates, as the direct owner of the primary beneficiary, a tax equity fund, Mesquite
Sky TE Holdco LLC, that holds the Mesquite Sky wind project. The tax equity investor’s interest is shown as noncontrolling
interest and the HLBV method is utilized to allocate the income or losses of Mesquite Sky TE Holdco LLC. As described in
Note 3, Acquisitions and Dispositions, the third-party investor in Lighthouse Renewable Holdco 2 LLC also acquired and
contributed an interest in Mesquite Sky Holding LLC to Lighthouse Renewable Holdco 2 LLC. The Company recorded the
related noncontrolling interest at historical carrying amount, with the offset to additional paid-in capital.
Rosie TargetCo LLC — As described in Note 3, Acquisitions and Dispositions, on December 21, 2020, the Company
acquired 100% of CEG's Class A membership interests of Rosie TargetCo LLC which owns 100% interest in Rosie Class B
LLC, which in turn owns 100% of the Class B membership interest of Rosie TE Holdco LLC. The Company consolidates
Rosie TargetCo LLC as a VIE as the Company is the primary beneficiary, through its role as managing member. The Class B
membership interest of Rosie TargetCo LLC is owned by a third-party investor and is reflected as noncontrolling interest on the
Company’s consolidated balance sheet. Through its Class A membership interests in Rosie TargetCo LLC, the Company
receives 50% of income and distributable cash. Rosie TargetCo indirectly consolidates Rosie TE Holdco LLC, which is also a
VIE. The tax equity investor's interest is shown as noncontrolling interest. The HLBV method is utilized to allocate the income
or losses of Rosie TE Holdco LLC.
Kawailoa Partnership — On August 31, 2018, the Company entered into an agreement with Clearway Renew LLC, a
subsidiary of CEG, to acquire the Class A membership interests in the Kawailoa Solar Partnership LLC, or Kawailoa
Partnership, for $9 million in cash consideration. The purpose of the partnership is to own, finance, operate, and maintain the
Kawailoa Solar project, a 49 MW utility-scale solar generation project, an indirect subsidiary of the Kawailoa Partnership,
located in Oahu, Hawaii. The Kawailoa Solar project is contracted to sell power under a 22-year PPA with Hawaiian Electric
Company, or HECO. The Kawailoa Solar project is 51% owned by the Kawailoa Partnership, with the remaining 49% owned
by a third-party investor. The Kawailoa Partnership consolidates the Kawailoa Solar project through its controlling majority
interest. On May 7, 2019, the Company made an initial capital contribution of $2 million, which represents 20% of its total
anticipated capital contributions. The Company assumed non-recourse debt of $120 million, as further described in Note 10,
Long-term Debt, and non-controlling interests attributable to third parties in the amount of $21 million. Effective May 1, 2019,
the Company, as a Class A member, is the primary beneficiary through its position as managing member and consolidates
Kawailoa Partnership. Allocations of income and taxable items are equal to the distributions of available cash, which is
currently 95% to the Company and 5% to Clearway Renew LLC. The Company's acquisition of the Class A membership
interests in the Kawailoa Partnership was accounted for as a transfer of assets under common control and was recorded at
historical cost in accordance with ASC 805-50, Business Combinations — Related Issues. The difference between the cash paid
and payable recorded and the historical value of the assets was recorded as a distribution to CEG and decreased the balance of
its noncontrolling interest.
107
Upon reaching COD in November of 2019, the Kawailoa Solar project's fixed assets were placed in service and began to
depreciate. On December 22, 2019, Kawailoa Solar Holdings LLC, a tax equity fund, received its final equity contribution of
$61 million. The proceeds were utilized to repay the ITC bridge loan in the amount of $57 million, and the construction debt
was converted to term debt (and upsized, with an additional $5 million drawn). Distributions were paid to the third-party
investor and Clearway Renew LLC, funded by the excess of the tax equity investment and the term loan upsizing above the
amount of the bridge loan repayment and related fees. On December 27, 2019, the Company made its substantial completion
contribution of $7 million into the Kawailoa Partnership, which was also utilized to make a distribution to Clearway Renew
LLC. In addition, the Company started applying HLBV to allocate income attributable to the tax equity investor during the
fourth quarter of 2019.
Oahu Partnership — On August 31, 2018, the Company entered into an agreement with Clearway Renew LLC, a
subsidiary of CEG, to acquire the Class A membership interests in the Zephyr Oahu Partnership LLC, or Oahu Partnership, for
$20 million in cash consideration. The purpose of the partnership is to own, finance, operate, and maintain the Oahu Solar
projects, which consist of Lanikuhana and Waipio, utility-scale solar generation projects with rated capacity of 15 MW and 46
MW, respectively, the indirect subsidiaries of the Oahu Partnership, located in Oahu, Hawaii. The Oahu Solar projects are
contracted to sell power under a 22-year PPA with HECO. The Oahu Partnership consolidates the Oahu Solar projects through
its controlling majority interest. On March 8, 2019, the Company made an initial capital contribution of $4 million, which
represents 20% of its total anticipated capital contributions. The Company also assumed non-recourse debt of $143 million, as
further described in Note 10, Long-term Debt, and $18 million of non-controlling interest attributable to a tax equity investor's
initial contribution. Effective March 8, 2019, the Company, as a Class A member, is the primary beneficiary through its
position as managing member and consolidates Oahu Partnership. Allocations of income and taxable items are equal to the
distributions of available cash, which is currently 95% to the Company and 5% to Clearway Renew LLC. The Company's
acquisition of the Class A membership interests in the Oahu Partnership was accounted for as a transfer of assets under
common control and was recorded at historical cost in accordance with ASC 805-50, Business Combinations - Related Issues.
The difference between the cash paid and payable recorded and the historical value of the assets was recorded as a contribution
from CEG and increased the balance of its noncontrolling interest.
Upon reaching COD in September 2019, the Oahu Solar projects' fixed assets were placed in service and began to
depreciate. On November 12, 2019, the tax equity investor made its final tax-equity contribution of $71 million and the
proceeds were utilized to repay the related ITC bridge loan in the amount of $67 million, and the construction loan was
converted to term debt. The Company paid the remaining 80% of the equity commitment in the amount of $16 million to
Clearway Renew LLC when the Oahu Solar projects reached certain milestones in December 2019. In addition, the Company
started applying HLBV to allocate income attributable to the tax equity investor during the third quarter of 2019.
Repowering Partnership II LLC — On August 30, 2018, Wind TE Holdco, an indirect subsidiary of the Company,
formed Repowering Partnership LLC with Clearway Renew LLC, an indirect subsidiary of CEG, in order to facilitate the
repowering of wind facilities of two of its indirect subsidiaries, Elbow Creek Wind Project LLC, or Elbow Creek, and
Wildorado Wind LLC, or Wildorado Wind. Wind TE Holdco contributed its interests in the two facilities and Clearway Renew
LLC contributed a turbine supply agreement, including title to certain components that qualify for production tax credits. Wind
TE Holdco is the managing member of the partnership and consolidates the entity, which is a VIE. Clearway Renew LLC is
initially entitled to allocations of 21% of income, which is reflected in Wind TE Holdco’s noncontrolling interests.
On June 14, 2019, Repowering Partnership LLC was replaced with Repowering Partnership II LLC as the owner of the
Elbow Creek and Wildorado Wind projects as well as Repowering Partnership Holdco LLC, which concurrently entered into a
financing agreement for construction debt commitment totaling $352 million, as further described in Note 10, Long-term Debt.
Repowering of the Elbow Creek project was completed and on November 26, 2019, a third-party tax equity investor
purchased 100% of the Class A membership interests in Elbow Creek Repowering Tax Equity Holdco LLC, or Elbow TE
Holdco for $89 million pursuant to a membership interest purchase agreement dated June 14, 2019. The Company also
contributed $4 million. In connection with the completion of the Elbow Creek repowering, the construction loan of $93 million
was repaid with the proceeds from the combined proceeds from the tax equity investor and the Company. The Company began
applying HLBV during the fourth quarter to allocate income between the partners of Elbow TE Holdco. In connection with the
closing, the allocations of income at Repowering Partnership II LLC (which indirectly consolidates both projects) changed to
59.63% for Wind TE Holdco LLC (the Company member) and 40.37% for CWSP Wildorado Elbow Holding LLC (the CEG
member). In addition, approximately half of the repowered Wildorado equipment was placed in service in December 2019,
with the remaining equipment being placed in service in January of 2020. In connection with repowering of the projects, the
Company revised the remaining useful life of the property, plant and equipment that was replaced, resulting in additional
expense of $54 million during the year ended December 31, 2019 related to accelerated depreciation.
108
On February 7, 2020, a third-party tax equity investor purchased 100% of the Class A membership interests in Wildorado
TE Holdco, for $148 million. In addition, the Company contributed $112 million to Wildorado TE Holdco. The combined
proceeds were used to repay construction debt under the Repowering Partnership Holdco credit agreement, as described in Note
10, Long-term Debt. The third-party tax equity investor, or Wildorado Investor, will receive 99% of allocations of taxable
income and other items until the Wildorado Investor obtains a specified return on its initial investment, or the last day of the
PTC period, whichever occurs sooner. At such time, the allocations to the Wildorado Investor will change to 5%. Until such
time, the Wildorado Investor will receive a variable percentage of cash distributions. Wildorado TE Holdco is a VIE and the
Repowering Partnership II LLC is the primary beneficiary through its position as managing member. As a result, the Company
consolidates Wildorado TE Holdco, with the Wildorado Investor's interest shown as noncontrolling interest. In connection with
the Wildorado TE Holdco closing, the allocations of income at Repowering Partnership II LLC changed to 60.14% for Wind
TE Holdco LLC (the Company member) and 39.86% for CWSP Wildorado Elbow Holding LLC (the CEG member).
On May 11, 2020, the Company acquired CEG's interest in Repowering Partnership II LLC, for cash consideration of
$70 million. Repowering Partnership II LLC is no longer a VIE and subsequent to the acquisition, is a wholly-owned
subsidiary of the Company. Repowering Partnership II LLC continues to own interests in two VIEs, Wildorado Repowering
Tax Equity Holdco LLC, or Wildorado TE Holdco, and Elbow Creek Repowering Tax Equity Holdco LLC, or Elbow Creek TE
Holdco. The Company removed the related noncontrolling interest balance of $8 million and recorded the difference between
the cash paid and the noncontrolling interest balance removed as a reduction to noncontrolling interests. The Company utilizes
the HLBV method to determine the net income or loss allocated to tax equity noncontrolling interest.
Alta TE Holdco — On June 30, 2015, the Company sold an economic interest in Alta TE Holdco to a financial institution
in order to monetize certain cash and tax attributes, primarily PTCs. The financial institution, or Alta Investor, receives 99% of
allocations of taxable income and other items until the flip point, which occurs when the Alta Investor obtains a specified return
on its initial investment, at which time the allocations to the Alta Investor change to 5%. The Company receives 94.34% until
the flip point, at which time the allocations to the Company of distributable cash will change to 97.12%, unless the flip point
will not have occurred by a specified date, which would result in 100% of distributable cash allocated to the Alta Investor until
the flip point occurs. Alta TE Holdco is a VIE and the Company is the primary beneficiary through its position as managing
member, and therefore consolidates Alta TE Holdco, with the Alta Investor's interest shown as noncontrolling interest. The
Company utilizes the HLBV method to determine the net income or loss allocated to the noncontrolling interest.
Spring Canyon — The Company holds 90.1% of the Class B interests in Spring Canyon II, a 32 MW wind facility, and
Spring Canyon III, a 28 MW wind facility, each located in Logan County, Colorado, and Invenergy Wind Global LLC owns
9.9% of the Class B interests. The projects are financed with a partnership flip tax-equity structure with a financial institution,
who owns the Class A interests, to monetize certain cash and tax attributes, primarily PTCs. Until the flip point, the Class A
member receives a variable percentage of cash distributions based on the projects’ production level during the prior year. After
the flip point, cash distributions are allocated 5% to the Class A member and 95% to the Company and Invenergy. Spring
Canyon is a VIE and the Company is the primary beneficiary through its position as managing member, and therefore
consolidates Spring Canyon. The Class A member and Invenergy's interests are shown as noncontrolling interest. The
Company utilizes the HLBV method to determine the net income or loss allocated to the Class A member. Net income or loss
attributable to the Class B interests is allocated to Invenergy's noncontrolling interest based on its 9.9% ownership interest.
Note 6 — Fair Value of Financial Instruments
Fair Value Accounting under ASC 820
ASC 820 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value
into three levels as follows:
• Level 1—quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has
the ability to access as of the measurement date.
• Level 2—inputs other than quoted prices included within Level 1 that are directly observable for the asset or
liability or indirectly observable through corroboration with observable market data.
• Level 3—unobservable inputs for the asset or liability only used when there is little, if any, market activity for
the asset or liability at the measurement date.
In accordance with ASC 820, the Company determines the level in the fair value hierarchy within which each fair value
measurement in its entirety falls, based on the lowest level input that is significant to the fair value measurement.
For cash and cash equivalents, restricted cash, accounts receivable — trade, accounts payable — trade, accounts payable
— affiliates and accrued expenses and current other liabilities, the carrying amounts approximates fair value because of the
short-term maturity of those instruments and are classified as Level 1 within the fair value hierarchy.
109
The carrying amounts and estimated fair values of the Company’s recorded financial instruments not carried at fair market
value or that do not approximate fair value are as follows:
As of December 31, 2021
Carrying
Amount
Fair Value
As of December 31, 2020
Carrying
Amount
Fair Value
(In millions)
Liabilities:
Long-term debt, including current portion (a) . . . . . . . . . . . . . . . . . . $
7,782 $
7,997 $
7,048 $
7,020
(a) Excludes net debt issuance costs, which are recorded as a reduction to long-term debt on the Company's consolidated balance sheets.
The fair value of the Company's publicly-traded long-term debt is based on quoted market prices and is classified as Level
2 within the fair value hierarchy. The fair value of debt securities, non-publicly traded long-term debt and certain notes
receivable of the Company are based on expected future cash flows discounted at market interest rates, or current interest rates
for similar instruments with equivalent credit quality and are classified as Level 3 within the fair value hierarchy. The
following table presents the level within the fair value hierarchy for long-term debt, including current portion as of
December 31, 2021 and 2020:
As of December 31, 2021
As of December 31, 2020
Level 2
Level 3
Level 2
Level 3
(In millions)
Long-term debt, including current portion . . . . . . . . . . . . . . . . . . . . $
2,159 $
5,838 $
1,905 $
5,115
Recurring Fair Value Measurements
The Company records its derivative assets and liabilities at fair market value on its consolidated balance sheets. The
following table presents assets and liabilities measured and recorded at fair value on the Company's consolidated balance sheets
on a recurring basis and their level within the fair value hierarchy:
(In millions)
Derivative assets
Interest rate contracts . . . . . $
Other financial instruments (b) . .
Total assets . . . . . . . . . . $
Derivative liabilities
Commodity contracts . . . . . . . $
Interest rate contracts . . . . . . .
Total liabilities . . . . . . . . $
As of December 31, 2021
As of December 31, 2020
Fair Value
Level 2
Fair Value (a)
Level 3
Fair Value
Level 2
Fair Value (a)
Level 3
6 $
—
6 $
— $
63
63 $
— $
25
25 $
179 $
—
179 $
1 $
—
1 $
— $
129
129 $
—
29
29
44
—
44
(a) There were no derivative assets classified as Level 1 or Level 3 and no liabilities classified as Level 1 as of December 31, 2021 and
December 31, 2020.
(b) SREC contract acquired on November 2, 2020.
110
The following table reconciles the beginning and ending balances for instruments that are recognized at fair value in the
consolidated financial statements using significant unobservable inputs:
(In millions)
Beginning balance
Total losses for the period included in earnings
Contracts acquired
Settlements
Ending balance
Change in unrealized losses included in earnings for derivatives and other
financial instruments held as of December 31,
Derivative and Financial Instruments Fair Value Measurements
Year ended December 31,
2021
2020
Fair Value Measurement Using Significant
Unobservable Inputs (Level 3)
(15) $
(93)
(52)
6
(154) $
(93) $
(9)
—
(6)
—
(15)
1
$
$
$
The Company's contracts are non-exchange-traded and valued using prices provided by external sources. The Company
uses quoted observable forward prices to value its energy contracts. To the extent that observable forward prices are not
available, the quoted prices reflect the average of the forward prices from the prior year, adjusted for inflation. As of
December 31, 2021, contracts valued with prices provided by models and other valuation techniques make up 74% of derivative
liabilities and 100% of other financial instruments.
The Company’s significant positions classified as Level 3 include physical commodity contracts executed in illiquid
markets. The significant unobservable inputs used in developing fair value include illiquid power tenors and location pricing,
which is derived by extrapolating pricing as a basis to liquid locations. The tenor pricing and basis spread are based on
observable market data when available or derived from historic prices and forward market prices from similar observable
markets when not available.
The following table quantifies the significant unobservable inputs used in developing the fair value of the Company's Level 3
positions as of December 31, 2021:
Fair Value
Input/Range
December 31, 2021
Assets
Liabilities
(In millions)
Valuation
Technique
Significant
Unobservable
Input
Low
High
Weighted
Average
Commodity Contracts
$
— $
(179)
Discounted Cash
Flow
Forward Market
Price (per MWh) $
13.93 $
56.06 $
27.46
Other Financial
Instruments
25
Discounted Cash
Flow
—
Forecast annual
generation levels
of certain DG
solar facilities
80,872 MWh 129,913 MWh 124,783 MWh
The following table provides the impact on the fair value measurements to increases/(decreases) in significant
unobservable inputs as of December 31, 2021:
Significant Observable Input
Forward Market Price Power
Forward Market Price Power
Forecast Generation Levels
Position
Change In Input
Buy
Sell
Sell
Increase/(Decrease)
Increase/(Decrease)
Increase/(Decrease)
Impact on Fair Value
Measurement
Higher/(Lower)
Lower/(Higher)
Higher/(Lower)
111
The fair value of each contract is discounted using a risk-free interest rate. In addition, a credit reserve is applied to reflect
credit risk, which is, for interest rate swaps, calculated based on credit default swaps using the bilateral method. For
commodities, to the extent that the Net Exposure under a specific master agreement is an asset, the Company uses the
counterparty’s default swap rate. If the Net Exposure under a specific master agreement is a liability, the Company uses a
proxy of its own default swap rate. For interest rate swaps and commodities, the credit reserve is added to the discounted fair
value to reflect the exit price that a market participant would be willing to receive to assume the liabilities or that a market
participant would be willing to pay for the assets. As of December 31, 2021, the non-performance reserve was a $17 million
gain recorded primarily to total operating revenues in the consolidated statement of operations. It is possible that future market
prices could vary from those used in recording assets and liabilities and such variations could be material.
Concentration of Credit Risk
In addition to the credit risk discussion as disclosed in Note 2, Summary of Significant Accounting Policies, the following
item is a discussion of the concentration of credit risk for the Company's financial instruments. Credit risk relates to the risk of
loss resulting from non-performance or non-payment by counterparties pursuant to the terms of their contractual obligations.
The Company monitors and manages credit risk through credit policies that include: (i) an established credit approval process;
(ii) monitoring of counterparties' credit limits on as needed basis; (iii) as applicable, the use of credit mitigation measures such
as margin, collateral, prepayment arrangements, or volumetric limits; (iv) the use of payment netting agreements; and (v) the
use of master netting agreements that allow for the netting of positive and negative exposures of various contracts associated
with a single counterparty. Risks surrounding counterparty performance and credit could ultimately impact the amount and
timing of expected cash flows. The Company seeks to mitigate counterparty risk by having a diversified portfolio of
counterparties.
Counterparty credit exposure includes credit risk exposure under certain long-term agreements, including solar and other
PPAs. As external sources or observable market quotes are not available to estimate such exposure, the Company estimates the
exposure related to these contracts based on various techniques including, but not limited to, internal models based on a
fundamental analysis of the market and extrapolation of observable market data with similar characteristics. A significant
portion of these commodity contracts are with utilities with strong credit quality and public utility commission or other
regulatory support. However, such regulated utility counterparties can be impacted by changes in government regulations or
adverse financial conditions, which the Company is unable to predict. Certain subsidiaries of the Company sell the output of
their facilities to PG&E, a significant counterparty of the Company, under long-term PPAs, and PG&E's credit rating is below
investment-grade.
Note 7 — Accounting for Derivative Instruments and Hedging Activities
ASC 815 requires the Company to recognize all derivative instruments on the balance sheet as either assets or liabilities
and to measure them at fair value each reporting period unless they qualify for a NPNS exception. The Company may elect to
designate certain derivatives as cash flow hedges, if certain conditions are met, and defer the change in fair value of the
derivatives to accumulated OCI/OCL, until the hedged transactions occur and are recognized in earnings. For derivatives that
are not designated as cash flow hedges or do not qualify for hedge accounting treatment, the changes in the fair value will be
immediately recognized in earnings. Certain derivative instruments may qualify for the NPNS exception and are therefore
exempt from fair value accounting treatment. ASC 815 applies to the Company's energy related commodity contracts and
interest rate swaps.
Interest Rate Swaps
The Company enters into interest rate swap agreements in order to hedge the variability of expected future cash interest
payments. As of December 31, 2021, the Company had interest rate derivative instruments on non-recourse debt extending
through 2031, a portion of which were designated as cash flow hedges. Under the interest rate swap agreements, the Company
pays a fixed rate and the counterparties to the agreements pay a variable interest rate.
Energy Related Commodities
As of December 31, 2021, the Company had energy-related derivative instruments extending through 2033. At
December 31, 2021, these contracts were not designated as cash flow or fair value hedges.
112
Volumetric Underlying Derivative Transactions
The following table summarizes the net notional volume buy/(sell) of the Company's open derivative transactions broken
out by commodity as of December 31, 2021 and 2020:
Total Volume
December 31, 2021
December 31, 2020
Units
Commodity
Natural Gas MMBtu . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
MWh . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Power
Dollars . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Interest
(In millions)
2
(17)
1,326 $
1
(8)
1,600
Fair Value of Derivative Instruments
The following table summarizes the fair value within the derivative instrument valuation on the consolidated balance
sheets:
Fair Value
Derivative Assets
Derivative Liabilities
December 31,
2021
December 31,
2020
December 31,
2021
December 31,
2020
(In millions)
Derivatives Designated as Cash Flow Hedges:
Interest rate contracts current . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Interest rate contracts long-term . . . . . . . . . . . . . . . . . . . . . . . . .
Total Derivatives Designated as Cash Flow Hedges . . . . . . . . . $
— $
2
2 $
— $
—
— $
5 $
3
8 $
Derivatives Not Designated as Cash Flow Hedges:
Interest rate contracts current . . . . . . . . . . . . . . . . . . . . . . . . . . . $
— $
— $
17 $
Interest rate contracts long-term . . . . . . . . . . . . . . . . . . . . . . . . .
Commodity contracts current . . . . . . . . . . . . . . . . . . . . . . . . . .
Commodity contracts long-term . . . . . . . . . . . . . . . . . . . . . . . .
Total Derivatives Not Designated as Cash Flow Hedges . . . . . $
Total Derivatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
4
—
—
4 $
6 $
1
—
—
38
24
155
1 $
1 $
234 $
242 $
8
15
23
25
81
5
39
150
173
The Company has elected to present derivative assets and liabilities on the balance sheet on a trade-by-trade basis and
does not offset amounts at the counterparty level. As of December 31, 2021 and 2020, there was no outstanding collateral paid
or received. The following tables summarize the offsetting of derivatives by counterparty:
As of December 31, 2021
Commodity contracts
Derivative liabilities . . . . . . . . . . . . . . . . . . $
Total commodity contracts . . . . . . . . . . . . . $
Interest rate contracts
Derivative assets . . . . . . . . . . . . . . . . . . . . . $
Derivative liabilities . . . . . . . . . . . . . . . . . .
Total interest rate contracts . . . . . . . . . . . . . $
Total derivative instruments . . . . . . . . . . . . $
Gross Amounts Not Offset in the Statement of Financial Position
Gross Amounts of Recognized
Assets/Liabilities
Derivative Instruments
Net Amount
(In millions)
(179) $
(179) $
6 $
(63)
(57) $
(236) $
— $
— $
(5) $
5
— $
— $
(179)
(179)
1
(58)
(57)
(236)
113
As of December 31, 2020
Commodity contracts
Derivative liabilities . . . . . . . . . . . . . . . . . . $
Total commodity contracts . . . . . . . . . . . . . $
Interest rate contracts
Derivative assets . . . . . . . . . . . . . . . . . . . . . $
Derivative liabilities . . . . . . . . . . . . . . . . . .
Total interest rate contracts . . . . . . . . . . . . . $
Total derivative instruments . . . . . . . . . . . . $
Accumulated Other Comprehensive Loss
Gross Amounts Not Offset in the Statement of Financial Position
Gross Amounts of Recognized
Assets/Liabilities
Derivative Instruments
(In millions)
Net Amount
(44) $
(44) $
1 $
(129)
(128) $
(172) $
— $
— $
— $
—
— $
— $
(44)
(44)
1
(129)
(128)
(172)
The following table summarizes the effects on the Company’s accumulated OCL balance attributable to interest rate
swaps designated as cash flow hedge derivatives, net of tax:
Year ended December 31,
2021
2020
2019
(In millions)
Accumulated OCL beginning balance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
(30) $
(31) $
(38)
Reclassified from accumulated OCL to income due to realization of previously
deferred amounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Mark-to-market of cash flow hedge accounting contracts . . . . . . . . . . . . . . . . . . . . . .
Accumulated OCL ending balance, net of income tax benefit of $2, $5 and $6,
respectively . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated OCL attributable to noncontrolling interests . . . . . . . . . . . . . . . . . . . . . . .
Accumulated OCL attributable to Clearway Energy, Inc. . . . . . . . . . . . . . . . . . . . . . . . . $
Losses expected to be realized from OCL during the next 12 months, net of income
tax benefit of $2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
8
11
(11)
(5)
8
(7)
(30)
(16)
(6) $
(14) $
16
(9)
(31)
(16)
(15)
(7)
Amounts reclassified from accumulated OCL into income are recorded to interest expense.
Impact of Derivative Instruments on the Consolidated Statements of Operations
Mark-to-market gains and losses related to the Company's derivatives are recorded in the consolidated statements of
operations as follows:
Year ended December 31,
2021
2020
2019
(In millions)
Interest Rate Contracts (Mark-to-market interest expense) . . . . . . . . . . . . . . . . . . . . . . . $
Commodity Contracts (Mark-to-market for economic hedging activities) (a) . . . . . . . . .
53 $
(83)
(38) $
(4)
(65)
(9)
(a) Relates to long-term commodity contracts at Elbow Creek Wind Project LLC, or Elbow Creek, Mesquite Star, Mt. Storm and Mesquite Sky and gains or
losses are recognized in operating revenues.
A portion of the Company’s derivative commodity contracts relates to its Thermal Business for the purchase of fuel/
electricity commodities based on the forecasted usage of the thermal district energy centers. Realized gains and losses on these
contracts are reflected in the fuel costs that are permitted to be billed to customers through the related customer contracts or
tariffs and, accordingly, no gains or losses are reflected in the consolidated statements of operations for these contracts.
See Note 6, Fair Value of Financial Instruments, for a discussion regarding concentration of credit risk.
114
Note 8 — Intangible Assets
Intangible Assets — The Company's intangible assets as of December 31, 2021 and 2020 primarily reflect intangible
assets established from its business acquisitions and are comprised of the following:
•
•
•
•
•
•
PPAs — Established predominantly with the acquisitions of the Alta Wind Portfolio, Walnut Creek, Tapestry, Laredo
Ridge, Carlsbad Energy Center, Agua Caliente and the Utah Solar Portfolio. These represent the fair value of the PPAs
acquired. These are amortized on a straight-line basis, over the term of the PPA.
Leasehold Rights — Established with the acquisition of the Alta Wind Portfolio, this represents the fair value of
contractual rights to receive royalty payments equal to a percentage of PPA revenue from certain projects. These are
amortized as a reduction to operating revenue on a straight-line basis over the term of the PPAs.
Customer relationships — Established with the acquisition of Energy Center Omaha and Energy Center Phoenix, these
intangibles represent the fair value at the acquisition date of the businesses' customer base. The customer relationships
related to Energy Center Omaha are amortized as a reduction to operating revenue, which approximates the expected
discounted future net cash flows by year. These intangible assets are included in the Thermal Business and were
reclassified to held for sale during the fourth quarter of 2021.
Customer contracts — Established with the acquisition of Energy Center Phoenix, these intangibles represent the fair
value at the acquisition date of contracts that primarily provide chilled water, steam and electricity to its customers.
These contracts are amortized to revenues based on expected volumes. These intangible assets are included in the
Thermal Business and were reclassified to held for sale during the fourth quarter of 2021.
Emission Allowances — These intangibles primarily consist of SO2 and NOx emission allowances established with the
El Segundo, Walnut Creek and Carlsbad Energy Center acquisitions. These emission allowances are held-for-use and
are amortized to cost of operations, with NOx allowances amortized on a straight-line basis and SO2 allowances
amortized based on units of production.
Other — Consists of a) the acquisition date fair value of the contractual rights to a ground lease for South Trent and to
utilize certain interconnection facilities for Blythe as well as land rights acquired in connection with the acquisition of
Elbow Creek and Langford Wind; b) development rights related to certain solar business acquisitions; c) RECs
acquired in connection with the acquisition of the Utah Solar Portfolio; and d) favorable leases acquired in connection
with the acquisition of the Utah Star Portfolio.
The following tables summarize the components of intangible assets subject to amortization:
Year ended December 31, 2021
PPAs
Leasehold
Rights
Customer
Relationships
Customer
Contracts
Emission
Allowances
Other
Total
(In millions)
January 1, 2021 . . . . . . . . . . . . . . . . . . . . . $
Acquisitions (a) . . . . . . . . . . . . . . . . . . . . . .
Reclassified to held for sale (b) . . . . . . . . . .
December 31, 2021
Less accumulated amortization . . . . . . .
1,661 $
86 $
66 $
15 $
17 $
12 $ 1,857
1,324
—
2,985
(566)
—
—
86
(30)
—
(66)
—
—
—
(15)
—
—
—
—
17
(3)
4
—
16
1,328
(81)
3,104
(6)
(605)
Net carrying amount . . . . . . . . . . . . . . . . . . $
2,419 $
56 $
— $
— $
14 $
10 $ 2,499
(a) The weighted average life of acquired intangibles was 17 years for PPAs, 15 years for RECs and 15 years for favorable leases.
(b) Thermal Business intangible assets were reclassified to held for sale during the fourth quarter of 2021.
Year ended December 31, 2020
PPAs
Leasehold
Rights
Customer
Relationships
Customer
Contracts
Emission
Allowances
Other
Total
(In millions)
January 1, 2020 . . . . . . . . . . . . . . . . . . . . . $
1,630 $
86 $
66 $
15 $
17 $
8 $ 1,822
Consolidation of DGPV Holdco Entities . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
December 31, 2020 . . . . . . . . . . . . . . . . . .
Less accumulated amortization . . . . . . .
23
8
1,661
(431)
—
—
86
(26)
—
—
66
—
—
15
(11)
(11)
—
—
17
(3)
—
4
12
(5)
23
12
1,857
(487)
Net carrying amount . . . . . . . . . . . . . . . . . . $
1,230 $
60 $
55 $
4 $
14 $
7 $ 1,370
115
The Company recorded amortization expense of $143 million during the year ended December 31, 2021, $91 million for
the year ended December 31, 2020 and $73 million for the year ended December 31, 2019. Of these amounts, $135 million for
the year ended December 31, 2021, $88 million for the year ended December 31, 2020 and $72 million for the year ended
December 31, 2019, were related to the amortization of intangible assets for power purchase agreements and were recorded to
contract amortization expense, which reduced operating revenues in the consolidated statements of operations. The Company
estimates the future amortization expense for its intangibles for the next five years as follows:
2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2025 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2026 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(In millions)
158
155
153
153
153
Note 9 — Asset Impairments
2021 Impairment Losses
During the fourth quarter of 2021 in preparation and review of its annual budget, the Company updated its long-term
estimates of operating and capital expenditures and revised its assessment of long-term merchant power prices, which was
primarily informed by present conditions and did not contemplate future policy changes, which could impact renewable energy
power prices. The annual budget process coincides with the Company's annual impairment analysis of long-lived assets. The
impairment analysis reviews certain qualitative factors as well as the fair value of the facilities against its carrying value to
determine if impairment indicators are present. The impairment analysis indicated that the projected future cash flows for
several wind projects within the Renewables segment no longer supported the recoverability of the carrying value of the related
long-lived assets. As such, the Company recorded an impairment loss of $6 million, which primarily related to property, plant,
and equipment to reflect the assets at fair market value. The fair value of the facilities was determined using an income
approach by applying a discounted cash flow methodology to the updated long-term budgets for each respective plant. The
income approach included key inputs such as forecasted merchant power prices, operations and maintenance expense, and
discount rates. The resulting fair value is a Level 3 fair value measurement.
2020 Impairment Losses
During the fourth quarter of 2020 in preparation and review of its annual budget, the Company updated its long-term
estimates of operating and capital expenditures and revised its assessment of long-term merchant power prices, which was
primarily informed by present conditions and did not contemplate future policy changes, which could impact renewable energy
power prices. The annual budget process coincides with the Company's annual impairment analysis of long-lived assets. The
impairment analysis reviews certain qualitative factors as well as the fair value of the facilities against its carrying value to
determine if impairment indicators are present. The impairment analysis indicated that the projected future cash flows for
several wind projects within the Renewables segment no longer supported the recoverability of the carrying value of the related
long-lived assets. As such, the Company recorded an impairment loss of $24 million, which primarily related to property, plant,
and equipment to reflect the assets at fair market value. The fair value of the facilities was determined using an income
approach by applying a discounted cash flow methodology to the updated long-term budgets for each respective plant. The
income approach included key inputs such as forecasted merchant power prices, operations and maintenance expense, and
discount rates. The resulting fair value is a Level 3 fair value measurement.
Additionally, during the fourth quarter of 2020, as the Company updated its estimated cash flows in connection with the
preparation and review of the Company's annual budget, the Company determined that there was a significant decrease in the
estimated future cash flows for its equity method investment in San Juan Mesa, a facility in the Renewables segment located in
Elida, New Mexico. The decrease in the forecasted cash flows which was primarily driven by a decline in forecasted revenue in
future merchant periods, was significant enough to be considered an indication of a decline in value of the investment that was
not temporary. The Company concluded there was an other-than-temporary impairment of its investment and recorded an
impairment loss of $8 million to reflect the investment at fair market value. The resulting fair value is a Level 3 fair value
measurement.
116
2019 Impairment Losses
The Company recorded an impairment loss of $19 million related to a facility in the Thermal segment during the second
quarter of 2019. The impairment was triggered by a potential sale negotiation with a third-party, which resulted in signing the
purchase and sale agreement in September 2019, as further described in Note 3, Acquisitions and Dispositions. The fair value of
the facility was determined using an income approach by applying a discounted cash flow methodology to the long-term
budgets for each respective plant. The income approach utilized estimates of discounted future cash flows, which were Level 3
fair value measurement and include key inputs, such as forecasted power prices, operations and maintenance expense, and
discount rates. The Company measured the impairment loss as the difference between the carrying amount and the fair value of
the assets.
Additionally, during the fourth quarter of 2019, as a result of the preparation and review of its annual budget and
assessment of long-term merchant power prices, the Company updated its estimated future cash flows and determined that the
future cash flows for several wind projects within the Renewables segment no longer supported the recoverability of the related
long-lived asset. The annual budget process coincides with the Company's annual impairment analysis of long-lived assets. The
impairment analysis reviewed certain qualitative factors as well as the fair value of the facilities against its carrying value to
determine if impairment indicators are present. As such, the Company recorded an impairment loss of $14 million to reflect the
assets at fair market value. The fair value of the facilities was determined using an income approach by applying a discounted
cash flow methodology to the updated long-term budgets for each respective plant. The income approach included key inputs
such as forecasted merchant power prices, operations and maintenance expense, and discount rates. The resulting fair value is a
Level 3 fair value measurement.
117
Note 10 — Long-term Debt
The Company's borrowings, including short-term and long-term portions consisted of the following:
December 31,
2021
December 31,
2020
Interest rate % (a)
(In millions, except rates)
Letters of Credit
Outstanding at
December 31, 2021
2025 Senior Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
— $
2026 Senior Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2028 Senior Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2031 Senior Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2032 Senior Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Clearway Energy LLC and Clearway Energy Operating LLC Revolving
Credit Facility, due 2023 (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Bridge Loan, due 2022 (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Project-level debt:
Agua Caliente Solar LLC, due 2037 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Alta Wind Asset Management LLC, due 2031 . . . . . . . . . . . . . . . . . . . . . . . . .
Alta Wind I-V lease financing arrangements, due 2034 and 2035 . . . . . . . . . .
Alta Wind Realty Investments LLC, due 2031 . . . . . . . . . . . . . . . . . . . . . . . . .
Borrego, due 2024 and 2038 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Buckthorn Solar, due 2025 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Carlsbad Energy Holdings LLC, due 2027 . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Carlsbad Energy Holdings LLC, due 2038 . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Carlsbad Holdco, due 2038 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
CVSR, due 2037 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
CVSR Holdco Notes, due 2037 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
DG-CS Master Borrower LLC, due 2040 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Duquesne, due 2059 (d) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
El Segundo Energy Center, due 2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Energy Center Minneapolis Series D, E, F, G, H Notes, due 2025-2037 (d) . . .
Kawailoa Solar Portfolio LLC, due 2026 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Laredo Ridge, due 2028 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Marsh Landing, due 2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
NIMH Solar, due 2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Oahu Solar Holdings LLC, due 2026 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Rosie Class B LLC, due 2027 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Tapestry, due 2031 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Utah Solar Holdings, due 2036 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Walnut Creek, due 2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
WCEP Holdings, LLC, due 2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Subtotal project-level debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less current maturities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Less net debt issuance costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Add premiums (e) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
—
850
925
350
245
335
684
13
756
24
54
123
136
407
205
652
169
441
—
193
—
78
72
84
176
86
78
85
273
74
30
180
5,073
7,778
(772)
(71)
4
5.750
5.000
4.750
3.750
3.750
1.750
$
S+1.000
2.395 - 3.633
L+2.625
5.696 - 7.015
7.000
Various
L+1.750
L+1.625
4.120
4.210
2.339 -3.775
4.680
3.510
4.620
83
45
—
34
—
—
21
62
—
6
—
13
30
—
L+1.875 - L+2.500
138
Various
L+1.375
L+2.125
L+2.375
L+2.000
L+1.375
L+1.750
L+1.375
3.590
L+1.750
L+3.000
Various
—
14
3
46
10
10
17
12
10
116
—
201
600
350
850
—
—
—
—
—
14
800
25
57
126
156
407
210
675
176
467
95
250
327
81
78
146
191
89
80
143
290
126
35
199
5,243
7,043
(384)
(79)
5
Total long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
6,939 $
6,585
(a) As of December 31, 2021, L+ equals 3 month LIBOR plus x%, except Clearway Energy Operating LLC Revolving Credit Facility, due 2023, Marsh
Landing, due 2023, and Walnut Creek, due 2023, where L+ equals 1 month LIBOR plus x%
(b) Applicable rate is determined by the borrower leverage ratio, as defined in the credit agreement
(c) S+ equals SOFR, plus x%
(d) Thermal Business long-term debt reclassified to held for sale in the fourth quarter of 2021
(e) Premiums relate to the 2028 Senior Notes
118
The financing arrangements listed above contain certain covenants, including financial covenants that the Company is
required to be in compliance with during the term of the respective arrangement. As of December 31, 2021, the Company was
in compliance with all of the required principal, interest, sinking fund and redemption covenants.
Bridge Loan Agreement
On November 30, 2021, Clearway Energy Operating LLC entered into a senior secured bridge credit agreement, or the
Bridge Loan Agreement. The Bridge Loan Agreement provides for a senior secured term loan facility in an aggregate principal
amount of $335 million. Borrowings under the term loan facility bear interest, at Clearway Energy Operating LLC’s option, at a
rate per annum equal to either (a) term SOFR, plus a SOFR adjustment and a margin equal to 1.00% during the period from
December 1, 2021 through May 31, 2022, and 1.25% thereafter or (b) a base rate plus a margin equal to 0.00% during the
period from December 1, 2021 through May 31, 2022, and 0.25% thereafter. The Bridge Loan Agreement will mature no later
than November 29, 2022 and the Company intends to use the proceeds from the Thermal Disposition to repay the outstanding
principal balance of the term loans under the Bridge Loan Agreement. Borrowings under the Bridge Loan Agreement are
guaranteed by Clearway Energy LLC and certain subsidiaries of Clearway Operating LLC, other than subsidiaries that are
excluded project companies, and are secured by substantially all of the assets of Clearway Energy Operating LLC and its
guarantor subsidiaries. The borrowings under the term loan facility were used to acquire the Utah Solar Portfolio on December
1, 2021, as further described in Note 3, Acquisitions and Dispositions.
Clearway Energy LLC and Clearway Energy Operating LLC Revolving Credit Facility
On November 30, 2021, Clearway Energy Operating LLC entered into the Sixth Amendment to Amended and Restated
Credit Agreement, which amended the Company’s revolving credit facility to provide for an increase of the maximum
permitted Borrower Leverage Ratio (as defined in the credit agreement governing the Company’s revolving credit facility) to
6.00 to 1.00 during the period commencing on November 30, 2021 and ending on the date which is the earliest of (i) two
business days following the consummation of the Thermal Disposition, (ii) 120 days following the termination or expiration of
the agreement entered into with KKR to sell the Thermal Business and (iii) the maturity date of the Bridge Loan Agreement, or
the Leverage Period Termination Date. The Sixth Amendment also (i) permits the incurrence of the term loan facility under the
Bridge Loan Agreement, (ii) permits the incurrence of hedging obligations, subject to certain conditions, and provides for a
$40 million basket for cash collateral which may be provided to secure hedging obligations (iii) permits the prepayment of
unsecured, junior or subordinated indebtedness at any time following the Leverage Period Termination Date, subject to certain
conditions, including that, after giving effect to such payment, the Borrower Leverage Ratio would not be greater than 5.50 to
1.00 and the Borrower Interest Coverage Ratio (as defined in the credit agreement governing the Company's revolving credit
facility) would not be less than 1.75 to 1.00 and (iv) implements certain other technical modifications.
As of December 31, 2021, the Company had $245 million in outstanding borrowings under the revolving credit facility
and $83 million in letters of credit outstanding. During the year ended December 31, 2021, the Company borrowed
$622 million under the revolving credit facility, and subsequently repaid $377 million utilizing cash on hand and proceeds from
the issuance of the 2031 Senior Notes, as described below.
2032 Senior Notes
On October 1, 2021, Clearway Energy Operating LLC completed the sale of $350 million of senior unsecured notes due
2032, or the 2032 Senior Notes. The 2032 Senior Notes bear interest at 3.750% and mature on January 15, 2032. Interest on the
2032 Senior Notes is payable semi-annually on January 15 and July 15 of each year. The 2032 Senior Notes are unsecured
obligations of Clearway Energy Operating LLC and are guaranteed by Clearway Energy LLC and by certain of Clearway
Energy Operating LLC's wholly-owned current and future subsidiaries. The net proceeds from the 2032 Senior Notes were
used, together with existing corporate liquidity, to repurchase the 2026 Senior Notes, as described below.
2026 Senior Notes Tender Offer and Redemption
In October 2021, the Company repurchased and redeemed an aggregate principal amount of $350 million of the 2026
Senior Notes, through the cash tender offer announced on September 24, 2021 and the redemption of the remaining principal
amount of $227 million on October 25, 2021. The 2026 Senior Notes repurchased and redeemed in October 2021 were
effectuated at a premium of approximately 103% for total consideration of $359 million and, as a result, the Company recorded
a loss on extinguishment in the amount of $9 million. The Company recorded an additional $3 million loss on extinguishment
to write off the remaining unamortized deferred financing fees related to the 2026 Senior Notes.
119
2031 Senior Notes
On March 9, 2021, Clearway Energy Operating LLC completed the sale of $925 million of senior unsecured notes due
2031, or the 2031 Senior Notes. The 2031 Senior Notes bear interest at 3.750% and mature on February 15, 2031. Interest on
the 2031 Senior Notes is payable semi-annually on February 15 and August 15 of each year. The 2031 Senior Notes are
unsecured obligations of Clearway Energy Operating LLC and are guaranteed by Clearway Energy LLC and by certain of
Clearway Energy Operating LLC's wholly-owned current and future subsidiaries. The net proceeds from the 2031 Senior Notes
were used to repurchase the 2025 Senior Notes, as described below, as well as to repay amounts outstanding under the
Company’s revolving credit facility and for general corporate purposes.
2025 Senior Notes Tender Offer and Redemption
In March 2021, the Company repurchased and redeemed an aggregate principal amount of $600 million of the 2025
Senior Notes, through the cash tender offer announced on March 2, 2021 and the redemption of the remaining principal amount
of $183 million on March 17, 2021. The 2025 Senior Notes repurchased and redeemed in March 2021 were effectuated at a
premium of approximately 106% for total consideration of $636 million and, as a result, the Company recorded a loss on
extinguishment in the amount of $36 million. The Company recorded an additional $5 million loss on extinguishment to write
off the remaining unamortized deferred financing fees related to the 2025 Senior Notes.
2020 Convertible Notes
The 2020 Convertible Notes matured on June 1, 2020 and the Company repaid the outstanding principal amount of
$45 million. The repayment was funded by the issuance of the 2028 Senior Notes.
2028 Senior Notes
On May 21, 2020, the Company completed the issuance of an additional $250 million in aggregate principal amount of its
4.750% Senior Notes due 2028. The 2028 Senior Notes bear interest at 4.75% and mature on March 15, 2028. Interest on the
2028 Senior Notes is payable semi-annually on March 15 and September 15 of each year. The 2028 Senior Notes are
unsecured obligations of Clearway Energy Operating, LLC and are guaranteed by Clearway Energy, LLC and by certain of
Clearway Energy Operating LLC’s wholly-owned current and future subsidiaries. The notes were issued at a price of 102% of
par plus accrued interest from December 11, 2019. The net proceeds were utilized to repay the $45 million outstanding
principal amount of the Company's 2020 Convertible Notes on June 1, 2020, as well as to repay amounts outstanding under the
Company’s revolving credit facility and for general corporate purposes.
2024 Senior Notes Redemption
On January 3, 2020, the Company redeemed the $88 million aggregate principal amount of the 2024 Senior Notes that
remained outstanding following the Company's tender offer for the 2024 Senior Notes in December 2019. The redemption was
effectuated at a premium of 102.7% for a total consideration of $90 million and as a result, the Company recorded a loss on
debt extinguishment in the amount of $3 million, which also included the write off of previously deferred financing fees related
to the 2024 Senior Notes.
Project level Debt
Agua Caliente Solar LLC
As part of the acquisition of Agua Caliente Borrower 1 LLC and the consolidation of Agua Caliente, as further described
in Note 3, Acquisitions and Dispositions, the Company consolidated non-recourse debt of $716 million related to Agua Caliente
Solar, LLC on February 3, 2021. The debt consists of a credit agreement with the Federal Financing Bank and accrues interest
at fixed rates between 2.395% and 3.633%, which matures in 2037.
Pinnacle Repowering Partnership HoldCo LLC
On March 10, 2021, the Company entered into a financing agreement for non-recourse debt for a total commitment of
$126 million related to the repowering of the Pinnacle wind project. The debt consists of a construction loan at an interest rate
of LIBOR plus 1.00%. The Company's initial borrowings of $79 million were utilized to repay $53 million of the outstanding
balance under the Tapestry Wind LLC financing agreement, which related to the Pinnacle wind project, to pay vendor invoices
and fees and to acquire certain equipment from Clearway Renew LLC to be utilized in the repowering project. On December
15, 2021, the Company repaid the outstanding principal amount of $117 million.
120
Rosamond Central (Rosie Class B LLC)
On December 21, 2020, as part of the acquisition of Rosie TargetCo LLC, as further descried in Note 3, Acquisitions and
Dispositions, the Company assumed the Amended and Restated Financing Agreement, which provided for a construction loan
of up to $91 million, a cash equity bridge loan of up to $24 million and an investment tax credit loan of up to $132 million.
On December 31, 2020, Rosie Class B, LLC converted the construction loan to a $80 million term loan and repaid the
investment tax credit loan of $130 million, utilizing tax equity funding. The term loan bears annual interest at a rate of LIBOR
plus an applicable margin, which is 1.75% per annum through the third anniversary of the term conversion, and 2.00% per
annum thereafter through the maturity date of December 31, 2027. In addition, Rosie Class B LLC is party to several letter of
credit facility agreements, not to exceed $23 million. As of December 31, 2021, a total of $17 million in letters of credit were
outstanding.
Consolidation of DGPV Holdco 3
Upon consolidation of DGPV Holdco 3, as described in Note 5, Investments Accounted for by the Equity Method and
Variable Interest Entities, the Company consolidates additional non-recourse debt for certain subsidiaries as further described
below.
Renew CS4 Borrower LLC, or CS4 Borrower, a consolidated subsidiary of DGPV Holdco 3, is party to a credit
agreement for construction loans up to $97 million, an investment tax credit bridge loan, or ITC bridge loan, for up to
$90 million and letter of credit facilities up to $5 million. The construction loan and the ITC bridge loan both have an interest
rate of LIBOR plus an applicable margin of 2.00% per annum. As of June 30, 2020, all construction loans were converted to
term loans and the ITC bridge loans were repaid in connection with tax equity funding. The term loan was repaid on November
2, 2020 with the proceeds of the term loan issued by DG-CS Master Borrower LLC, as described below.
Chestnut Borrower LLC, a consolidated subsidiary of DGPV Holdco 3, is party to a credit agreement for term loans of up
to $120 million and letters of credit of up to $8 million. The loans were repaid on November 2, 2020 with the proceeds of the
term loan issued by DG-CS Master Borrower LLC, as described below
DG-CS Master Borrower LLC
On November 2, 2020, DG-CS Master Borrower LLC, a wholly-owned subsidiary of Clearway Energy Operating LLC,
entered into a financing arrangement, which included the issuance of a $467 million term loan, as well as $30 million in letters
of credit in support of debt service. The term loan bears interest at 3.51% and matures on September 30, 2040. The proceeds
from the loan were utilized to repay existing project-level debt outstanding for Chestnut Borrower LLC, Renew Solar CS 4
Borrower LLC, DGPV 4 Borrower LLC and Puma Class B LLC of $107 million, $102 million, $92 million and $73 million,
respectively and unwind related interest rate swaps in the amount of $42 million. The remaining proceeds were utilized to pay
related fees and expenses and in part to acquire the Class B membership interests in the DGPV Holdco Entities and an SREC
contract from CEG as further described in Note 5, Investments Accounted for by the Equity Method and Variable Interest
Entities. Concurrent with the refinancing, the projects were transferred under DG-CS Master Borrower LLC and the
obligations under the financing arrangement are supported by the Company's interest in the projects.
Utah Solar Holdings, LLC
On September 1, 2020, Utah Solar Holdings, LLC, or Utah Solar, entered into a financing arrangement, which included
the issuance of approximately $296 million in senior secured notes supported by the Company’s interest in the Utah projects
(Four Brothers, Granite Mountain and Iron Springs, previously defined as the Utah Solar Portfolio), as well as $16 million in
letters of credit in support of debt service obligations. The notes bear interest at 3.59% per annum and mature on December 31,
2036. The proceeds from the issuance were utilized to repay existing debt outstanding of approximately $247 million for the
Utah projects and to unwind the related interest rate swaps in the amount of $33 million. The remaining proceeds were utilized
to pay related fees and expenses, with the remaining $9 million distributed to Clearway Energy Operating LLC.
121
NIMH Solar LLC
On September 30, 2020, the Alpine, Blythe and Roadrunner projects were transferred under NIMH Solar LLC, a wholly-
owned subsidiary of Clearway Energy Operating LLC. Concurrently, total project-level debt outstanding for Alpine, Blythe and
Roadrunner of $158 million was assigned to NIMH Solar LLC. The consolidated facility was amended to a term loan for
$193 million, as well as $16 million in letters of credit in support of debt service and project obligations. The term loan bears
interest at an annual rate of LIBOR, plus an applicable margin, which is 2.00% per annum through the third anniversary of
closing, and 2.125% per annum thereafter through the maturity date in September 2024. As a result of the amendment the
Company received $35 million, which was utilized to pay related fees and expenses and along with existing project level cash,
provided a distribution to Clearway Energy Operating LLC of $45 million. The obligations under the financing arrangement
are supported by the Company’s interests in the projects.
Interest Rate Swaps — Project Financings
Many of the Company's project subsidiaries entered into interest rate swaps, intended to hedge the risks associated with
interest rates on non-recourse project level debt. These swaps amortize in proportion to their respective loans and are floating
for a fixed rate where the project subsidiary pays its counterparty the equivalent of a fixed interest payment on a predetermined
notional value and will receive quarterly the equivalent of a floating interest payment based on the same notional value. All
interest rate swap payments by the project subsidiary and its counterparty are made quarterly and the LIBOR is determined in
advance of each interest period.
The following table summarizes the swaps, some of which are forward starting as indicated, related to the Company's
project level debt as of December 31, 2021:
Effective Date
November 30, 2012
Maturity Date
November 30, 2030
May 22, 2013
June 30, 2020
February 28, 2018
Various
Various
June 28, 2013
November 30, 2019
December 17, 2014
June 28, 2013
September 30, 2020
November 30, 2019
December 31, 2020
June 14, 2019
Various
Various
July 11, 2023
June 28, 2013
May 15, 2031
December 31, 2024
December 31, 2041
September 30, 2027
Various
December 31, 2030
October 31, 2040
December 31, 2028
June 30, 2023
Various
October 31, 2040
Various
June 30, 2028
Various
Various
June 30, 2028
May 31, 2023
June 28, 2013
May 31, 2023
Avra Valley . . . . . . . . .
Alta Wind Asset
Management . . . . . . . . .
Borrego . . . . . . . . . . . . .
Buckthorn Solar . . . . . .
Carlsbad . . . . . . . . . . . .
El Segundo . . . . . . . . . .
Kansas South . . . . . . . .
Kawailoa Solar . . . . . . .
Laredo Ridge . . . . . . . .
Marsh Landing . . . . . . .
NIMH Solar LLC . . . . .
Oahu Solar . . . . . . . . . .
Rosie Class B . . . . . . . .
South Trent . . . . . . . . . .
Tapestry . . . . . . . . . . . .
Viento Funding II . . . . .
Viento Funding II . . . . .
Walnut Creek Energy . .
WCEP Holdings . . . . . .
Total . . . . . . . . . . . . . . .
% of
Principal
Fixed
Interest
Rate
Floating
Interest Rate
88 % 2.33 % 3-Month LIBOR $
Notional Amount
at December 31,
2021 (In millions)
35
100 % 2.47 % 3-Month LIBOR
100 % 0.476 % 3-Month LIBOR
81 % Various
3-Month LIBOR
100 % Various 3-Month LIBOR
100 % Various 3-Month LIBOR
75 % 2.368 % 6-Month LIBOR
94 % Various 3-Month LIBOR
100 % Various 3-Month LIBOR
100 % Various 3-Month LIBOR
100 % Various 3-Month LIBOR
96 % Various 3-Month LIBOR
95 % 1.446 % 3-Month LIBOR
90 % 3.847 % 3-Month LIBOR
100 % Various 3-Month LIBOR
100 % 3.03 % 6-Month LIBOR
100 % 4.985 % 6-Month LIBOR
90 % 3.543 % 3-Month LIBOR
97 % 4.003 % 3-Month LIBOR
$
13
10
100
136
193
15
74
72
84
176
83
74
31
85
29
21
66
29
1,326
122
Annual Maturities
Annual payments based on the maturities of the Company's debt, for the years ending after December 31, 2021, are as
follows:
(In millions)
772
709
392
369
422
5,537
8,201
2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2025 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2026 (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Thereafter (a) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
(a)
Annual payments based on the maturities of Thermal Business long-term debt reclassified to held for sale in the fourth quarter of 2021 are $4 million,
$15 million and $404 million due in 2025, 2026 and thereafter, respectively.
Note 11 — Earnings (Loss) Per Share
Basic earnings per common share is computed by dividing net income by the weighted average number of common shares
outstanding. Shares issued during the year are weighted for the portion of the year that they were outstanding. Diluted earnings
per share is computed in a manner consistent with that of basic earnings per share while giving effect to all potentially dilutive
common shares that were outstanding during the period.
The reconciliation of the Company's basic and diluted earnings (loss) per share is shown in the following table:
(In millions, except per share data)
Basic and diluted earnings (loss) per share attributable
to Clearway Energy, Inc. common stockholders
(a)
Year Ended December 31,
2021
2020
2019
Common
Class A
Common
Class C
Common
Class A
Common
Class C
Common
Class A
Common
Class C
Net income (loss) attributable to Clearway Energy, Inc. $
Weighted average number of common shares
outstanding — basic . . . . . . . . . . . . . . . . . . . . . . . . . . .
Weighted average number of common shares
outstanding — diluted . . . . . . . . . . . . . . . . . . . . . . . . . .
Earnings (loss) per weighted average common
share — basic and diluted . . . . . . . . . . . . . . . . . . . . . . $
15 $
36 $
7 $
18 $
(4) $
(7)
35
35
82
82
35
35
80
81
35
35
74
74
0.44 $
0.44 $
0.22 $
0.22 $
(0.10) $
(0.10)
(a) Net income (loss) attributable to Clearway Energy, Inc. and basic and diluted earnings (loss) per share might not recalculate due to presenting values in
millions rather than whole dollars.
The Company had 2 million Common Class C shares related to the outstanding 2020 Convertible Notes that were anti-
dilutive and were not included in the computation of the Company's diluted earnings per share for the year ended December 31,
2019. The 2020 Convertible Notes were repaid on June 1, 2020.
Note 12 — Stockholders' Equity
At-the-Market Equity Offering Program, or the ATM Programs
On August 6, 2020, Clearway Energy, Inc. entered into an equity distribution agreement with Credit Suisse Securities
(USA) LLC, Goldman Sachs & Co. LLC, Morgan Stanley & Co. LLC and UBS Securities LLC, as sales agents. Pursuant to
the terms of the equity distribution agreement, Clearway Energy, Inc. may offer and sell shares of its Class C common stock
from time to time through the sales agents up to an aggregate sales price of $150 million through an at-the-market equity
offering program, or the 2020 ATM Program.
123
On August 9, 2016, Clearway Energy, Inc. entered into an equity distribution agreement, or EDA, with Barclays Capital
Inc., Credit Suisse Securities (USA) LLC, J.P. Morgan Securities LLC and RBC Capital Markets, LLC, as sales agents.
Pursuant to the terms of the equity distribution agreement Clearway Energy, Inc., offered and sold shares of its Class C
common stock from time to time through the sales agents up to an aggregate sales price of $150 million through an at-the-
market equity offering program, or the 2016 ATM Program. As of June 30, 2020, the Company had completed the issuance of
shares of Class C common stock totaling $150 million in gross proceeds under the 2016 ATM Program.
The following table summarizes Class C common stock shares sold under the ATM Programs during the year ended
December 31, 2020:
Number of shares
sold
Gross Proceeds
from the sale of
shares(a)
(in millions)
2020 ATM Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
940,790 $
2016 ATM Program . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1,749,665
Total Class C common stock sold during the year ended December 31, 2020 . . . . . . . . . .
2,690,455 $
24
39
63
(a) The Company incurred commission fees of $0.6 million during the year ended December 31, 2020.
As of December 31, 2021, approximately $126 million of Class C common stock remains available for issuance under the
2020 ATM Program.
Through December 31, 2020, the Company utilized the proceeds of the sales under the ATM Programs to acquire
2,690,455 Class C units of Clearway Energy LLC and, as a result, as of December 31, 2021, the Company owned 57.65% of
the economic interests of Clearway Energy LLC, with CEG owning 42.35% of the economic interests of Clearway Energy
LLC.
Dividends to Class A and Class C common stockholders
The following table lists the dividends paid on the Company's Class A and Class C common stock during the year ended
December 31, 2021:
Dividends per Class A share . . . . . . . . . . . . . . . . . . . . . . . . . . $
0.3400 $
0.3345 $
0.3290 $
Dividends per Class C share . . . . . . . . . . . . . . . . . . . . . . . . .
0.3400
0.3345
0.3290
0.3240
0.3240
Fourth Quarter
2021
Third Quarter
2021
Second Quarter
2021
First Quarter
2021
Dividends on the Class A and Class C common stock are subject to available capital, market conditions, and compliance
with associated laws, regulations and other contractual obligations. The Company expects that, based on current circumstances,
comparable cash dividends will continue to be paid in the foreseeable future.
On February 17, 2022, the Company declared a quarterly dividend on its Class A and Class C common stock of $0.3468
per share payable on March 15, 2022, to stockholders of record as of March 1, 2022.
The Company has also authorized 10,000,000 shares of preferred stock, par value $0.01 per share. None of the shares of
preferred stock have been issued.
Distributions to CEG
The following table lists the distributions paid to CEG during the year ended December 31, 2021 on Clearway Energy
LLC's Class B and D units:
Distributions per Class B unit . . . . . . . . . . . . . . . . . . . . . . $
Distributions per Class D unit . . . . . . . . . . . . . . . . . . . . . .
0.3400 $
0.3400
0.3345 $
0.3345
0.3290 $
0.3290
0.3240
0.3240
Fourth Quarter
2021
Third Quarter
2021
Second Quarter
2021
First Quarter
2021
The portion of the distributions paid by Clearway Energy LLC to CEG is recorded as a reduction to the Company's
noncontrolling interest balance. The portion of the distributions paid by Clearway Energy LLC to the Company was utilized to
fund the dividends to the Class A and Class C common stockholders described above.
124
On February 17, 2022, Clearway Energy LLC declared a quarterly distribution on its Class B and Class D units of
$0.3468 per unit payable to CEG on March 15, 2022.
Note 13 — Segment Reporting
The Company’s segment structure reflects how management currently operates and allocates resources. The Company's
businesses are segregated based on conventional power generation, renewable businesses, which consist of solar and wind, and
the Thermal Business, which is held for sale as of December 31, 2021. The Corporate segment reflects the Company's
corporate costs and includes eliminating entries. The Company's chief operating decision maker, its Chief Executive Officer,
evaluates the performance of its segments based on operational measures including adjusted earnings before interest, taxes,
depreciation and amortization, or Adjusted EBITDA and CAFD, as well as net income (loss).
The Company generated more than 10% of its revenues from the following customers for the years ended December 31,
2021, 2020 and 2019:
Customer
SCE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
PG&E . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Conventional
17%
10%
Renewables
16%
13%
Conventional
18%
10%
Renewables
16%
8%
Conventional
21%
12%
Renewables
19%
10%
2021
2020
2019
Conventional
Generation
Year ended December 31, 2021
Renewables
Thermal
Corporate (a)
Total
(In millions)
Operating revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Cost of operations, exclusive of depreciation, amortization and
accretion shown separately below . . . . . . . . . . . . . . . . . . . . . . . .
Depreciation, amortization and accretion . . . . . . . . . . . . . . . . . . . .
Impairment losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
General and administrative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Transaction and integration costs . . . . . . . . . . . . . . . . . . . . . . . . . .
Development costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equity in earnings of unconsolidated affiliates . . . . . . . . . . . . . . . .
Other income, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loss on debt extinguishment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest expense, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income (loss) before income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income tax expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net Income (Loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net Income (Loss) Attributable to Clearway Energy, Inc. . . . . . . $
Balance Sheet . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equity investment in affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Capital expenditures (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total Assets (c) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
441 $
641 $
204 $
— $
1,286
90
132
—
—
—
—
219
6
—
—
(53)
172
—
172
229
354
6
—
—
—
52
26
2
(1)
(142)
(63)
2
(65)
134
23
—
4
—
4
39
—
1
—
(18)
22
—
22
(2)
—
—
36
7
2
(43)
—
—
(52)
(99)
(194)
10
(204)
172 $
109 $
22 $
(252) $
451
509
6
40
7
6
267
32
3
(53)
(312)
(63)
12
(75)
51
86 $
295 $
12
2,442 $
77
9,603 $
— $
29
631 $
— $
381
1
137
119
12,813
(a) Includes eliminations
(b) Includes accruals
(c) Thermal Business assets were reclassified to held for sale during the fourth quarter of 2021.
125
(In millions)
Operating revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Cost of operations, exclusive of depreciation, amortization
and accretion shown separately below . . . . . . . . . . . . . . . . .
Depreciation, amortization and accretion . . . . . . . . . . . . . . . . .
Impairment losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
General and administrative . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Transaction and integration costs . . . . . . . . . . . . . . . . . . . . . . .
Development costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equity in earnings (losses) of unconsolidated affiliates . . . . .
Impairment loss on investment . . . . . . . . . . . . . . . . . . . . . . . .
Gain on sale of unconsolidated affiliates . . . . . . . . . . . . . . . .
Other income, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loss on debt extinguishment . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest expense, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income (loss) before income taxes . . . . . . . . . . . . . . . . . . . . . . . .
Income tax expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net Income (Loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net Income (Loss) Attributable to Clearway Energy, Inc. . . . $
Balance Sheet
Equity investments in affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . $
Capital expenditures (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
(a) Includes eliminations
(b) Includes accruals
Conventional
Generation
Year ended December 31, 2020
Renewables
Thermal
Corporate (a)
Total
437 $
569 $
193 $
— $
1,199
90
132
—
—
—
—
215
8
—
—
1
—
(84)
140
—
140
147
264
24
—
—
—
134
(1)
(8)
—
3
(21)
(216)
(109)
—
(109)
131
32
—
3
—
5
22
—
—
—
—
—
(19)
3
—
3
(2)
—
—
31
9
—
(38)
—
—
49
—
(3)
(96)
(88)
8
(96)
140 $
3 $
3 $
(121) $
366
428
24
34
9
5
333
7
(8)
49
4
(24)
(415)
(54)
8
(62)
25
90 $
12
2,575 $
651 $
44
7,157 $
— $
50
627 $
— $
—
233 $
741
106
10,592
(In millions)
Operating revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Conventional
Generation
Year ended December 31, 2019
Renewables
Thermal
Corporate (a)
Total
346 $
485 $
201 $
— $
1,032
Cost of operations, exclusive of depreciation, amortization
and accretion shown separately below . . . . . . . . . . . . . . . . .
Depreciation, amortization and accretion . . . . . . . . . . . . . . . . .
Impairment losses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
General and administrative . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Transaction and integration costs . . . . . . . . . . . . . . . . . . . . . . .
Development costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Operating income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Equity in earnings of unconsolidated affiliates . . . . . . . . . . . . .
Other income, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loss on debt extinguishment . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest expense, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income (loss) before income taxes . . . . . . . . . . . . . . . . . . . . . . . .
Income tax benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net Income (Loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
60
103
—
—
—
—
183
9
2
—
(59)
135
—
135
143
271
14
1
—
—
56
74
6
(1)
(239)
(104)
—
(104)
134
27
19
3
—
5
13
—
—
—
(18)
(5)
—
(5)
—
—
—
25
3
—
(28)
—
1
(15)
(88)
(130)
(8)
(122)
Net Income (Loss) Attributable to Clearway Energy, Inc. . . . $
135 $
(33) $
(5) $
(108) $
337
401
33
29
3
5
224
83
9
(16)
(404)
(104)
(8)
(96)
(11)
(a) Includes eliminations
126
Note 14 — Income Taxes
Effective Tax Rate
The income tax provision consisted of the following amounts:
Year Ended December 31,
2020
2019
2021
(In millions)
Deferred
U.S. Federal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
State . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total — deferred
Total income tax expense (benefit) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
(2) $
14
12
12 $
7 $
1
8
8 $
(4)
(4)
(8)
(8)
A reconciliation of the U.S. federal statutory rate of 21% to the Company's effective rate is as follows:
2021
Year Ended December 31,
2020
2019
(In millions, except percentages)
Income Before Income Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Tax at 21% . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
State taxes, net of federal benefit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Impact of non-taxable equity earnings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Valuation allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Investment tax credits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Production tax credits, including prior year true-up . . . . . . . . . . . . . . . . . . . . .
Rate Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Partnership state basis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
State taxes assessed at subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income tax expense (benefit) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Effective income tax rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
$
$
(63)
(13)
(4)
34
(14)
—
(1)
(2)
8
2
2
12
(19.0) %
$
$
(54)
(11)
(4)
24
—
—
(1)
2
—
—
(2)
8
(14.8) %
(104)
(22)
(7)
24
—
(1)
(1)
—
—
—
(1)
(8)
7.7 %
For the years ended December 31, 2021, 2020 and 2019, the overall effective tax rate was different than the statutory rate
of 21% primarily due to the taxable earnings and losses allocated to partners’ interest in Clearway Energy LLC, which includes
the effects of applying the HLBV method of accounting for book purposes of certain partnerships.
For tax purposes, Clearway Energy LLC is treated as a partnership; therefore, the Company and CEG each record their
respective share of taxable income or loss.
127
The temporary differences, which gave rise to the Company's deferred tax assets, consisted of the following:
Deferred tax liabilities:
Investment in projects
Total deferred tax liabilities
Deferred tax assets:
Interest expense disallowance carryforward - Investment in Projects
Production tax credits
Investment tax credits
U.S. Federal net operating loss carryforwards
Capital loss carryforwards
State net operating loss carryforwards
Total deferred tax assets
Valuation allowance
Total deferred tax assets, net of valuation allowance
Net deferred noncurrent tax asset
Tax Receivable and Payable
As of December 31,
2021
2020
(In millions)
$
267 $
267
7
10
5
277
—
51
350
(1)
349
$
82 $
226
226
11
9
5
260
12
48
345
(15)
330
104
As of December 31, 2021, the Company has no current or long-term tax receivable or payable to be recorded.
Deferred Tax Assets and Valuation Allowance
Net deferred tax balance — As of December 31, 2021 and 2020, the Company recorded a net deferred tax asset of $82
million and $104 million, respectively. The Company believes it is more likely than not that the results of future operations
will generate sufficient taxable income which includes the future reversal of existing taxable temporary differences to realize
deferred tax assets. The Company considered the profit before tax generated in recent years as well as projections of future
earnings and estimates of taxable income in arriving at this conclusion. The Company believes that $1 million of existing state
NOLs, based on forecasted future earnings and estimated taxable income, will expire unutilized, resulting in the recording of a
valuation allowance.
NOL carryforwards — As of December 31, 2021, the Company had domestic NOLs carryforwards for federal income tax
purposes of $277 million and cumulative state NOLs of $51 million tax-effected.
Interest disallowance carryforward — As of December 31, 2021, the Company has a deferred tax asset of $7 million
related to disallowed interest expense under the proposed IRC §163(j) regulation.
The disallowed interest deduction has an indefinite carry forward period and any limitations on the utilization of
this carryforward have been factored into the valuation allowance analysis.
Uncertain Tax Positions
The Company has not identified any uncertain tax positions to be reported as of December 31, 2021.
Note 15 — Related Party Transactions
In addition to the transactions and relationships described elsewhere in the notes to the consolidated financial statements,
certain subsidiaries of CEG provide services to the Company and its project entities. Amounts due to CEG subsidiaries are
recorded as accounts payable — affiliates and amounts due to the Company from CEG subsidiaries are recorded as accounts
receivable — affiliates in the Company's consolidated balance sheet. The disclosures below summarize the Company's material
related party transactions with CEG and its subsidiaries that are included in the Company's operating costs.
128
O&M Services Agreements by and between the Company and Clearway Renewable Operation & Maintenance LLC
Various wholly-owned subsidiaries of the Company in the Renewables segment are party to services agreements with
Clearway Renewable Operation & Maintenance LLC, or RENOM, a wholly-owned subsidiary of CEG, which provides
operation and maintenance, or O&M, services to these subsidiaries. The Company incurred total expenses for these services of
$56 million, $37 million and $31 million for the years ended December 31, 2021, 2020 and 2019, respectively. There was a
balance of $9 million and $10 million due to RENOM as of December 31, 2021 and 2020, respectively.
Administrative Services Agreements by and between the Company and CEG
Various wholly-owned subsidiaries of the Company are parties to services agreements with Clearway Asset Services LLC
and Clearway Solar Asset Management LLC, two wholly-owned subsidiaries of CEG, which provide various administrative
services to the Company's subsidiaries. The Company incurred expenses under these agreements of $14 million, $10 million
and $7 million for the years ended December 31, 2021, 2020 and 2019, respectively. There was a balance of $2 million due to
CEG as of both December 31, 2021 and 2020.
CEG Master Services Agreements
The Company is a party to Master Services Agreements with CEG, or MSAs, pursuant to which CEG and certain of its
affiliates or third-party service providers provide certain services to the Company, including operational and administrative
services, which include human resources, information systems, external affairs, accounting, procurement and risk management
services, and the Company provides certain services to CEG, including accounting, internal audit, tax and treasury services, in
exchange for the payment of fees in respect of such services. The Company incurred net expenses of $4 million, $2 million
and $1 million under these agreements for the years ended December 31, 2021, 2020 and 2019, respectively.
Note 16 — Commitments and Contingencies
Gas and Transportation Commitments
The Company has entered into contractual arrangements to procure power, fuel and associated transportation services for
the Thermal Business. For the years ended December 31, 2021, 2020 and 2019, the Company purchased $40 million,
$32 million, and $38 million, respectively, under such arrangements.
As of December 31, 2021, the Company's future minimum commitments under such outstanding agreements are estimated
as follows:
2022 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
2023 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2024 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2025 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2026 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Thereafter . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
(In millions)
7
1
—
—
—
—
8
Contingencies
The Company's material legal proceedings are described below. The Company believes that it has valid defenses to these
legal proceedings and intends to defend them vigorously. The Company records reserves for estimated losses from
contingencies when information available indicates that a loss is probable and the amount of the loss, or range of loss, can be
reasonably estimated. As applicable, the Company has established an adequate reserve for the matters discussed below. In
addition, legal costs are expensed as incurred. Management assesses such matters based on current information and makes a
judgment concerning its potential outcome, considering the nature of the claim, the amount and nature of damages sought and
the probability of success. The Company is unable to predict the outcome of the legal proceedings below or reasonably
estimate the scope or amount of any associated costs and potential liabilities. As additional information becomes available,
management adjusts its assessment and estimates of such contingencies accordingly. Because litigation is subject to inherent
uncertainties and unfavorable rulings or developments, it is possible that the ultimate resolution of the Company's liabilities and
contingencies could be at amounts that are different from its currently recorded reserves and that such difference could be
material.
129
In addition to the legal proceedings noted below, the Company and its subsidiaries are party to other litigation or legal
proceedings arising in the ordinary course of business. In management's opinion, the disposition of these ordinary course
matters will not materially adversely affect the Company's consolidated financial position, results of operations, or cash flows.
Nebraska Public Power District Litigation
On January 11, 2019, Nebraska Public Power District, or NPPD, sent written notice to certain of the Company's
subsidiaries which own the Laredo Ridge and Elkhorn Ridge wind projects alleging an event of default under each of the PPAs
between NPPD and the projects. NPPD alleges that the Company moved forward with certain transactions without obtaining
the consent of NPPD. NPPD threatened to terminate the applicable PPAs by February 11, 2019 if the alleged default was not
cured. The Company filed a motion for a temporary restraining order and preliminary injunction in the U.S. District Court for
the District of Nebraska relating to the Laredo Ridge project, and a similar motion in the District Court of Knox County,
Nebraska for the Elkhorn Ridge project, to enjoin NPPD from taking any actions related to the PPAs. On February 19, 2019,
the U.S. District Court in the Laredo Ridge matter approved a stipulation between the parties to provide for an injunction
preventing NPPD from terminating the PPA pending disposition of the litigation. On February 26, 2019, the Knox County
District Court approved a similar stipulation relating to the Elkhorn Ridge project. On April 13, 2020, the U.S. District Court
granted the wind projects' motion for summary judgment and permanently enjoined NPPD from terminating the PPAs in
reliance on the alleged events of default. The U.S. District Court decision was appealed by NPPD on May 11, 2020. On August
24, 2021, the U.S. Court of Appeals for the Eighth Circuit affirmed the U.S. District Court decision granting summary
judgment. On October 18, 2021, the Appeals Court denied a petition by NPPD for rehearing and a request that the case be heard
by the full Appeals Court. On November 2, 2021, the Knox County District Court issued an order dismissing the case with
respect to the Elkhorn Ridge project. Accordingly, the federal case and the state case are now concluded.
Buckthorn Solar Litigation
On October 8, 2019, the City of Georgetown, Texas, or Georgetown, filed a petition in the District Court of Williamson
County, Texas naming Buckthorn Westex, LLC, the Company’s subsidiary that owns the Buckthorn Westex solar project, as
the defendant, alleging fraud by nondisclosure and breach of contract in connection with the project and the PPA, and seeking
(i) rescission and/or cancellation of the PPA, (ii) declaratory judgment that the alleged breaches constitute an event of default
under the PPA entitling Georgetown to terminate, and (iii) recovery of all damages, costs of court, and attorneys’ fees. On
November 15, 2019, Buckthorn Westex filed an original answer and counterclaims (i) denying Georgetown’s claims, (ii)
alleging Georgetown has breached its contracts with Buckthorn Westex by failing to pay amounts due, and (iii) seeking relief in
the form of (x) declaratory judgment that Georgetown’s alleged failure to pay amounts due constitute breaches of and an event
of default under the PPA and that Buckthorn did not commit any events of default under the PPA, (y) recovery of costs,
expenses, interest, and attorneys’ fees, and (z) such other relief to which it is entitled at law or in equity. Buckthorn Westex
believes the allegations of Georgetown are meritless, and Buckthorn Westex is vigorously defending its rights under the PPA.
Note 17 — Leases
Accounting for Leases
The Company evaluates each arrangement at inception to determine if it contains a lease. Substantially all of the
Company’s leases are operating leases.
Lessee
The Company records its operating lease liabilities at the present value of the lease payments over the lease term at lease
commencement date. Lease payments include fixed payment amounts as well as variable rate payments based on an index
initially measured at lease commencement date. Variable payments, including payments based on future performance and
based on index changes, are recorded as the expense is incurred. The Company determines the relevant lease term by
evaluating whether renewal and termination options are reasonably certain to be exercised. The Company uses its incremental
borrowing rate to calculate the present value of the lease payments, based on information available at the lease commencement
date.
The Company’s leases consist of land leases for numerous operating asset locations, real estate leases and equipment
leases. The terms and conditions for these leases vary by the type of underlying asset.
130
Lease expense for the years ended December 31, 2021, 2020 and 2019 was comprised of the following:
(In millions)
Operating lease cost - Fixed
Operating lease cost - Variable
Total lease cost
December 31, 2021 December 31, 2020 December 31, 2019
$
$
27 $
15
42 $
19 $
9
28 $
13
8
21
Operating lease information as of December 31, 2021 and 2020 was as follows:
(In millions, except term and rate)
Right-of-use assets - operating leases, net (a) (b)
Short-term lease liability - operating leases (c)
Long-term lease liability - operating leases
Total lease liabilities (a) (b)
Weighted average remaining lease term (in years)
Weighted average discount rate
Cash paid for operating leases
December 31, 2021
December 31, 2020
$
$
$
$
550
8
561
569
$
$
$
28
3.5 %
26
$
337
8
345
353
25
4.3 %
19
(a) Increases in right-of-use assets and total lease liabilities are primarily due to third-party and drop down asset acquisitions, as further described in Note 3,
Acquisitions and Dispositions.
(b) Thermal Business right-of-use assets and lease liabilities were reclassified to held for sale during the fourth quarter of 2021.
(c) Short-term lease liability balances are included within the accrued expenses and other current liabilities line item of the consolidated balance sheets as of
December 31, 2021 and 2020.
Minimum future rental payments of operating lease liabilities as of December 31, 2021 are as follows:
2022
2023
2024
2025
2026
Thereafter
Total lease payments (a)
Less imputed interest
Total lease liability - operating leases
(In millions)
28
28
28
28
29
801
942
(352)
590
$
$
(a) Minimum future rental payments of the Thermal Business operating lease liabilities classified as held for sale are $1 million for each of 2022, 2023, 2024,
2025 and 2026, with $31 million due thereafter.
Oahu Solar Lease Agreements
The Oahu Solar projects are party to various land lease agreements with a wholly-owned subsidiary of CEG. The projects
are leasing the land for a period of 35 years, with the ability to renew the lease for two additional five-year periods. The
Company has a lease liability of $20 million as of both December 31, 2021 and 2020 and corresponding right-of-use asset of
$18 million related to the lease as of both December 31, 2021 and 2020.
Rosamond Lease Agreement
The Rosamond Central project is party to a land lease agreement with a wholly-owned subsidiary of CEG. The project is
leasing the land for a period of 35 years, with the ability to renew the lease for two additional five-year periods. The Company
has a lease liability of $12 million as of both December 31, 2021 and 2020 and corresponding right-of-use asset of $11 million
related to the lease as of both December 31, 2021 and 2020.
131
Lessor
The majority of the Company’s revenue is obtained through PPAs or other contractual agreements that are accounted for
as leases. These leases are comprised of both fixed payments and variable payments contingent upon volumes or performance
metrics. The terms of the leases are further described in Item 2 — Properties of this Form 10-K. Many of the leases have
renewal options at the end of the lease term. Termination may be allowed under specific circumstances in the lease
arrangements, such as under an event of default. All but one of the Company’s leases are operating leases. The remaining lease
met the criteria of a sales-type lease and the impact of this sales-type lease to the consolidated financial statements was
immaterial. Certain of these leases have both lease and non-lease components, and the Company allocates the transaction price
to the components based on standalone selling prices.
The following amounts of energy and capacity revenue are related to the Company’s operating leases:
December 31, 2021
Energy revenue
Capacity revenue
Operating revenue
December 31, 2020
Energy revenue
Capacity revenue
Operating revenue
December 31, 2019
Energy revenue
Capacity revenue
Operating revenue
Conventional
Generation
Renewables
Thermal
Total
9 $
455
464 $
(In millions)
716 $
—
716 $
2 $
—
2 $
727
455
1,182
Conventional
Generation
Renewables
Thermal
Total
10 $
451
461 $
(In millions)
554 $
—
554 $
2 $
—
2 $
566
451
1,017
Conventional
Generation
Renewables
Thermal
Total
5 $
348
353 $
(In millions)
509 $
—
509 $
2 $
—
2 $
516
348
864
$
$
$
$
$
$
Minimum future rent payments for the remaining periods related to the Conventional segment operating leases as of
December 31, 2021 were as follows:
2022
2023
2024
2025
2026
Thereafter
Total lease payments
(In millions)
$
$
453
261
106
107
108
1,390
2,425
Property, plant and equipment, net related to the Company’s operating leases were as follows:
(In millions)
Property, plant and equipment
Accumulated depreciation
Net property, plant and equipment
December 31, 2021
December 31, 2020
$
$
8,981 $
(2,827)
6,154 $
7,201
(1,964)
5,237
132
Clearway Energy, Inc. (Parent)
Condensed Financial Information of Registrant
Condensed Statements of Operations
Schedule I
(In millions)
Year ended December 31,
2021
2020
2019
Total operating costs and expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
2 $
2 $
Equity in losses of consolidated subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . .
Interest expense . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total other expense, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Loss Before Income Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Income tax expense (benefit) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(63)
—
(63)
(65)
10
(75)
Less: Net loss attributable to noncontrolling interests . . . . . . . . . . . . . . . . . . . .
(126)
Net Income (Loss) Attributable to Clearway Energy, Inc. . . . . . . . . . . . . . . . $
51 $
(52)
—
(52)
(54)
8
(62)
(87)
25 $
2
(101)
(1)
(102)
(104)
(8)
(96)
(85)
(11)
See accompanying notes to condensed financial statements.
133
Clearway Energy, Inc. (Parent)
Condensed Balance Sheets
ASSETS
Schedule I
December 31,
December 31,
2021
2020
(In millions)
Current Assets
Accounts receivable — affiliates
Note receivable — Clearway Energy Operating LLC
Other Assets
$
3 $
1
Investment in consolidated subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3,217
95
Total Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
3,316 $
LIABILITIES AND STOCKHOLDERS' EQUITY
Other Liabilities
Deferred income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Other non-current liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
11 $
5
16 $
Stockholders' Equity
Preferred stock, $0.01 par value; 10,000,000 shares authorized; none issued . . . . . . . . . . . . . .
—
Class A, Class B, Class C and Class D common stock, $0.01 par value; 3,000,000,000
shares authorized (Class A 500,000,000, Class B 500,000,000, Class C 1,000,000,000, Class
D 1,000,000,000); 201,856,166 shares issued and outstanding (Class A 34,599,645, Class B
42,738,750, Class C 81,779,021 Class D 42,738,750) at December 31, 2021 and
201,635,990 shares issued and outstanding (Class A 34,599,645, Class B 42,738,750, Class
C 81,558,845, Class D 42,738,750) at December 31, 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . .
Additional paid-in capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated deficit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Accumulated other comprehensive loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Noncontrolling interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Total Stockholders' Equity
1
1,872
(33)
(6)
1,466
3,300
Total Liabilities and Stockholders' Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
3,316 $
See accompanying notes to condensed financial statements.
3
1
2,612
104
2,720
—
5
5
—
1
1,922
(84)
(14)
890
2,715
2,720
134
Clearway Energy, Inc. (Parent)
Condensed Statements of Cash Flows
Net Cash Used in Operating Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
Cash Flows from Investing Activities
Investments in consolidated affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Cash advances for notes receivable — affiliate . . . . . . . . . . . . . . . . . . . . . . . .
Cash received from notes receivable — affiliate . . . . . . . . . . . . . . . . . . . . . . .
Net Cash Provided by (Used in) Investing Activities . . . . . . . . . . . . . . . . . . . .
Cash Flows from Financing Activities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Payments for long-term debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Proceeds from the issuance of common stock . . . . . . . . . . . . . . . . . . . . . . . . .
Cash received from Clearway Energy LLC for the payment of dividends . . .
Payment of dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Net Cash Provided by (Used in) Financing Activities . . . . . . . . . . . . . . . . . . .
Net (Decrease) Increase in Cash and Cash Equivalents . . . . . . . . . . . . . . . . .
Cash and Cash Equivalents at Beginning of Period . . . . . . . . . . . . . . . . . . . . .
Cash and Cash Equivalents at End of Period
$
Schedule I
Year ended December 31,
2021
2020
2019
(In millions)
(2) $
(3) $
(5)
2
(2)
2
2
—
—
155
(155)
—
—
—
— $
(59)
(3)
45
(17)
(45)
62
121
(121)
17
(3)
3
— $
(87)
—
215
128
(220)
100
87
(87)
(120)
3
—
3
See accompanying notes to condensed financial statements.
135
Clearway Energy, Inc. (Parent)
Notes to Condensed Financial Statements
Schedule I
Note 1 — Background and Basis of Presentation
Background
Clearway Energy, Inc., together with its consolidated subsidiaries, or the Company, is a publicly-traded energy
infrastructure investor in and owner of modern, sustainable and long-term contracted assets across North America. The
Company is indirectly owned by Global Infrastructure Partners, or GIP. GIP is an independent infrastructure fund manager that
makes equity and debt investments in infrastructure assets and businesses. The Company is sponsored by GIP through GIP's
portfolio company, Clearway Energy Group LLC, or CEG.
The Company is one of the largest renewable energy owners in the U.S. with over 5,000 net MW of installed wind and
solar generation projects. The Company's over 9,000 net MW of assets includes approximately 2,500 net MW of
environmentally-sound, highly efficient natural gas-fired generation facilities as well as the Thermal Business. Through this
environmentally-sound, diversified and primarily contracted portfolio, the Company endeavors to provide its investors with
stable and growing dividend income. Substantially all of the Company's generation assets are under long-term contractual
arrangements for the output or capacity from these assets.
The Company consolidates the results of Clearway Energy LLC through its controlling interest, with CEG's interest
shown as non-controlling interest in the financial statements. The holders of the Company's outstanding shares of Class A and
Class C common stock are entitled to dividends as declared. CEG receives its distributions from Clearway Energy LLC
through its ownership of Clearway Energy LLC Class B and Class D units. From time to time, CEG may also hold shares of the
Company's Class A and/or Class C common stock.
As of December 31, 2021, the Company owned 57.65% of the economic interests of Clearway Energy LLC, with CEG
owning 42.35% of the economic interests of Clearway Energy LLC.
Basis of Presentation
The condensed parent-only company financial statements have been prepared in accordance with Rule 12-04 of
Regulation S-X, as the restricted net assets of Clearway Energy, Inc.’s subsidiaries exceed 25% of the consolidated net assets of
Clearway Energy, Inc. The parent's 100% investment in its subsidiaries has been recorded using the equity basis of accounting
in the accompanying condensed parent-only financial statements. These statements should be read in conjunction with the
consolidated financial statements and notes thereto of Clearway Energy, Inc.
Note 2 — Long-Term Debt
For a discussion of Clearway Energy, Inc.’s financing arrangements, see Note 10, Long-term Debt, to the Company's
consolidated financial statements.
Note 3 — Commitments, Contingencies and Guarantees
See Note 14, Income Taxes, and Note 16, Commitments and Contingencies, to the Company's consolidated financial
statements for a detailed discussion of Clearway Energy, Inc.’s commitments and contingencies.
Note 4 — Dividends
Cash distributions paid to Clearway Energy, Inc. by its subsidiary, Clearway Energy LLC, were $155 million,
$121 million and $87 million for the years ended December 31, 2021, 2020, and 2019, respectively.
136
SCHEDULE II. VALUATION AND QUALIFYING ACCOUNTS
For the Years Ended December 31, 2021, 2020, and 2019
(In millions)
Income tax valuation allowance, deducted from deferred tax assets
Balance at
Beginning of
Period
Charged to
Costs and
Expenses
Charged to
Other Accounts
Balance at
End of Period
Year Ended December 31, 2021 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $
15 $
(14) $
— $
Year Ended December 31, 2020 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Year Ended December 31, 2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
15
15
—
—
—
—
1
15
15
137
Number
2.1*
2.2*
2.3
3.1
3.2
4.1
4.2
4.3
4.4
4.5
4.6
4.7
4.8
4.9
4.10
4.11
4.12
4.13
4.14
EXHIBIT INDEX
Description
Purchase and Sale Agreement, dated as of February 6, 2018, by and
between NRG Gas Development Company, LLC and NRG Yield
Operating LLC.
Method of Filing
Incorporated herein by reference to Exhibit 2.10 to
the Company's Annual Report on Form 10-K, filed
on March 1, 2018.
Purchase and Sale Agreement, dated as of December 6, 2019, by and
between Clearway Energy Operating LLC and GIP III Zephyr Carlsbad
Holdings, LLC.
Incorporated herein by reference to Exhibit 2.1 to the
Company's Current Report on Form 8-K, filed on
December 9, 2019.
Purchase and Sale Agreement, dated as of November 19, 2020, by and
between NRG Solar Sunrise LLC and Clearway AC Solar Holdings
LLC.
Incorporated herein by reference to Exhibit 2.1 to the
Company's Current Report on Form 8-K, filed on
November 20, 2020.
Amended and Restated Certificate of Incorporation of Clearway
Energy, Inc.
Fourth Amended and Restated Bylaws of Clearway Energy, Inc., dated
August 31, 2018.
Fourth Amended and Restated Limited Liability Company Agreement
of NRG Yield LLC, dated as of August 31, 2018, by and between NRG
Yield, Inc. and Zephyr Renewables LLC.
Specimen Class A Common Stock Certificate.
Specimen Class C Common Stock Certificate.
Incorporated herein by reference to Exhibit 3.1 to the
Company's Current Report on Form 10-Q filed on
May 4, 2020.
Incorporated herein by reference to Exhibit 3.2 to the
Company's Current Report on Form 8-K filed on
September 5, 2018.
Incorporated herein by reference to Exhibit 10.6 to
the Company's Current Report on Form 8-K filed on
September 5, 2018.
Incorporated herein by reference to Exhibit 4.13 to
the Company's Annual Report on Form 10-K filed
on February 28, 2019.
Incorporated herein by reference to Exhibit 4.14 to
the Company's Annual Report on Form 10-K filed
on February 28, 2019.
Indenture, dated December 11, 2019, among Clearway Energy
Operating LLC, the guarantors named therein and Delaware Trust
Company, as trustee.
Incorporated herein by reference to Exhibit 4.1 to the
Company's Current Report on Form 8-K filed on
December 12, 2019.
Form of 4.750% Senior Notes due 2028.
Incorporated herein by reference to Exhibit 4.2 to the
Company's Current Report on Form 8-K filed on
December 12, 2019.
First Supplemental Indenture, dated as of January 6, 2020, among
Clearway Energy Operating LLC, the guarantors named therein and
Delaware Trust Company.
Incorporated herein by reference to Exhibit 4.3 to the
Company’s Current Report on Form 8-K filed on
January 8, 2020.
Second Supplemental Indenture, dated as of February 26, 2020, among
Clearway Energy Operating LLC, the guarantors named therein and
Delaware Trust Company.
Incorporated herein by reference to Exhibit 4.3 to the
Company’s Current Report on Form 8-K filed on
March 3, 2020.
Third Supplemental Indenture, dated as of July 17, 2020, among
Clearway Energy Operating LLC, the guarantors named therein and
Delaware Trust Company.
Incorporated herein by reference to Exhibit 4.3 to the
Company's Current Report on Form 8-K filed on
July 21, 2020.
Fourth Supplemental Indenture, dated as of August 17, 2020, among
Clearway Energy Operating LLC, the guarantors named therein and
Delaware Trust Company.
Incorporated herein by reference to Exhibit 4.3 to the
Company's Current Report on Form 8-K filed on
August 20, 2020.
Fifth Supplemental Indenture, dated as of November 18, 2020, among
Clearway Energy Operating LLC, the guarantors named therein and
Delaware Trust Company.
Incorporated herein by reference to Exhibit 4.3 to the
Company's Current Report on Form 8-K filed on
November 19, 2020.
Sixth Supplemental Indenture, dated as of December 1, 2020, among
Clearway Energy Operating LLC, the guarantors named therein and
Delaware Trust Company.
Incorporated herein by reference to Exhibit 4.3 to the
Company's Current Report on Form 8-K filed on
December 4, 2020.
Seventh Supplemental Indenture, dated as of December 23, 2020,
among Clearway Energy Operating LLC, the guarantors named therein
and Delaware Trust Company.
Incorporated herein by reference to Exhibit 4.3 to the
Company's Current Report on Form 8-K filed on
December 29, 2020.
Eighth Supplemental Indenture, dated as of February 3, 2021, among
Clearway Energy Operating LLC, the guarantors named therein and
Delaware Trust Company.
Incorporated herein by reference to Exhibit 4.3 to the
Company's Current Report on Form 8-K filed on
February 5, 2021.
Indenture, dated March 9, 2021, among Clearway Energy Operating
LLC, the guarantors named therein and Delaware Trust Company, as
trustee.
Incorporated herein by reference to Exhibit 4.1 to the
Company's Current Report on Form 8-K filed on
March 9, 2021.
4.15
Form of 3.750% Senior Notes due 2031.
Incorporated herein by reference to Exhibit 4.2 to the
Company's Current Report on Form 8-K filed on
March 9, 2021.
4.16
Ninth Supplemental Indenture, dated as of May 14, 2021, among
Clearway Energy Operating LLC, the guarantors named therein and
Delaware Trust Company.
Incorporated herein by reference to Exhibit 4.2 to the
Company's Current Report on Form 8-K filed on
May 19, 2021.
138
4.20
4.21
4.22
4.23
10.1
10.2
10.3.1
10.3.2
10.3.3
10.3.4
10.3.5
10.4
10.5
10.6
10.7
4.17
4.18
First Supplemental Indenture, dated as of May 14, 2021, among
Clearway Energy Operating LLC, the guarantors named therein and
Delaware Trust Company.
Incorporated herein by reference to Exhibit 4.3 to the
Company's Current Report on Form 8-K filed on
May 19, 2021.
Indenture, dated October 1, 2021, among Clearway Energy Operating
LLC, the guarantors named therein and Delaware Trust Company, as
trustee.
Incorporated herein by reference to Exhibit 4.1 to the
Company's Current Report on Form 8-K filed on
October 1, 2021.
4.19
Form of 3.750% Senior Notes due 2032.
Incorporated herein by reference to Exhibit 4.2 to the
Company's Current Report on Form 8-K filed on
October 1, 2021.
Tenth Supplemental Indenture, dated as of October 7, 2021, among
Clearway Energy Operating LLC, the guarantors named therein and
Delaware Trust Company.
Incorporated herein by reference to Exhibit 4.2 to the
Company's Current Report on Form 8-K filed on
October 8, 2021.
Second Supplemental Indenture, dated as of October 7, 2021, among
Clearway Energy Operating LLC, the guarantors named therein and
Delaware Trust Company.
Incorporated herein by reference to Exhibit 4.3 to the
Company's Current Report on Form 8-K filed on
October 8, 2021.
First Supplemental Indenture, dated as of October 7, 2021, among
Clearway Energy Operating LLC, the guarantors named therein and
Delaware Trust Company.
Incorporated herein by reference to Exhibit 4.4 to the
Company's Current Report on Form 8-K filed on
October 8, 2021.
Description of Securities.
Filed herewith.
Master Services Agreement, dated as of August 31, 2018, by and
among NRG Yield, Inc., NRG Yield LLC, NRG Yield Operating LLC
and Zephyr Renewables LLC.
Incorporated herein by reference to Exhibit 10.1 to
the Company's Current Report on Form 8-K filed on
September 5, 2018.
Master Services Agreement, dated as of August 31, 2018, by and
among Zephyr Renewables LLC, NRG Yield, Inc., NRG Yield LLC,
and NRG Yield Operating LLC.
Incorporated herein by reference to Exhibit 10.2 to
the Company's Current Report on Form 8-K filed on
September 5, 2018.
Right of First Offer Agreement, dated as of August 31, 2018, by and
among NRG Yield, Inc., Zephyr Renewables LLC and solely for
purposes of Section 2.4, GIP III Zephyr Acquisition Partners, L.P.
Incorporated herein by reference to Exhibit 10.3 to
the Company's Current Report on Form 8-K filed on
September 5, 2018.
First Amendment to Right of First Offer Agreement, dated February 14,
2019, by and between Clearway Energy Group LLC and Clearway
Energy, Inc.
Incorporated herein by reference to Exhibit 10.1 to
the Company's Current Report on Form 8-K filed on
February 14, 2019.
Second Amendment to Right of First Offer Agreement, dated August 1,
2019, by and between Clearway Energy Group LLC and Clearway
Energy, Inc.
Incorporated herein by reference to Exhibit 10.1 to
the Company's Quarterly Report on Form 10-Q filed
on August 6, 2019.
Third Amendment to Right of First Offer Agreement, dated as of
December 6, 2019, by and between Clearway Energy Group LLC,
Clearway Energy, Inc. and GIP III Zephyr Acquisition Partners, L.P.
Incorporated herein by reference to Exhibit 10.1 to
the Company's Current Report on Form 8-K filed on
December 9, 2019.
Fourth Amendment to Right of First Offer Agreement, dated as of
November 2, 2020, by and between Clearway Energy Group LLC and
Clearway Energy, Inc.
Incorporated herein by reference to Exhibit 10.1 to
the Company's Quarterly Report on Form 10-Q filed
on November 5, 2020.
Zephyr Voting and Governance Agreement, dated as of August 31,
2018, by and between NRG Yield, Inc. and Zephyr Renewables LLC.
Incorporated herein by reference to Exhibit 10.4 to
the Company's Current Report on Form 8-K filed on
September 5, 2018.
Third Amended and Restated Right of First Offer Agreement, dated as
of August 31, 2018, by and between NRG Yield, Inc. and NRG Energy,
Inc.
Incorporated herein by reference to Exhibit 10.5 to
the Company's Current Report on Form 8-K filed on
September 5, 2018.
Transition Services Agreement, dated August 31, 2018, by and between
NRG Yield, Inc. and NRG Energy, Inc.
Termination Agreement, dated as of August 31, 2018, by and among
NRG Yield, Inc., NRG Yield LLC, NRG Yield Operating LLC and
NRG Energy, Inc.
10.8†
Clearway Energy, Inc. Amended and Restated 2013 Equity Incentive
Plan, as amended and restated effective February 19, 2021.
10.9
Form of Indemnification Agreement.
10.10.1
Amended and Restated Credit Agreement, dated April 25, 2014, by and
among NRG Yield Operating LLC, NRG Yield LLC, Royal Bank of
Canada, as Administrative Agent, the lenders party thereto, Royal Bank
of Canada, Goldman Sachs Bank USA and Bank of America, N.A., as
L/C Issuers and RBC Capital Markets as Sole Left Lead Arranger and
Sole Left Lead Book Runner.
139
Incorporated herein by reference to Exhibit 10.7 to
the Company's Current Report on Form 8-K filed on
September 5, 2018.
Incorporated herein by reference to Exhibit 10.9 to
the Company's Current Report on Form 8-K filed on
September 5, 2018.
Incorporated herein by reference to Exhibit 10.1 to
the Company's Current Report on Form 8-K filed on
May 3, 2021.
Incorporated herein by reference to Exhibit 10.10 to
the Company's Annual Report on Form 10-K filed
on February 28, 2019.
Incorporated herein by reference to Exhibit 10.1 to
the Company’s Current Report on Form 8-K filed on
April 28, 2014.
10.10.2
10.10.3
10.10.4
10.10.5
10.10.6
10.10.7
10.11†
10.12†
10.13†
10.16†
10.17†
10.18^
10.19
10.20
10.21
First Amendment to Amended & Restated Credit Agreement, dated
June 26, 2015, by and among NRG Yield Operating LLC, NRG Yield
LLC, Royal Bank of Canada and the Lenders party thereto.
Incorporated herein by reference to Exhibit 10.9 to
the Company's Quarterly Report on Form 10-Q filed
on August 4, 2015.
Second Amendment to Amended & Restated Credit Agreement, dated
February 6, 2018, by and among NRG Yield Operating LLC, NRG
Yield LLC, the guarantors party thereto, Royal Bank of Canada, as
Administrative Agent, and the lenders party thereto.
Third Amendment to Amended and Restated Credit Agreement and
Administrative Agent Resignation and Appointment Agreement, dated
as of April 30, 2018, by and among NRG Yield Operating LLC, NRG
Yield LLC, the guarantors party thereto, Royal Bank of Canada, as
Resigning Administrative Agent, JPMorgan Chase Bank, N.A., as
Successor Administrative Agent, and the lenders party thereto.
Fourth Amendment to Amended and Restated Credit Agreement, dated
as of November 30, 2018, by and among Clearway Energy Operating
LLC, Clearway Energy LLC, the guarantors party thereto, JPMorgan
Chase Bank, N.A., as administrative agent, and the lenders party
thereto.
Fifth Amendment to Amended and Restated Credit Agreement, dated
as of December 20, 2019, by and among Clearway Energy Operating
LLC, Clearway Energy LLC, the guarantors party thereto, JPMorgan
Chase Bank, N.A., as administrative agent, and the lenders party
thereto.
Sixth Amendment to Amended and Restated Credit Agreement,
effective as of November 30, 2021, by and among Clearway Energy
Operating LLC, Clearway Energy LLC, the guarantors party thereto,
JPMorgan Chase Bank, N.A., as administrative agent, and the lenders
party thereto.
Form of Clearway Energy, Inc. 2013 Equity Incentive Plan Restricted
Stock Unit Agreement for Officers.
Form of Clearway Energy, Inc. 2013 Equity Incentive Plan Restricted
Stock Unit Agreement for Non-officers.
Form of Clearway Energy, Inc. 2013 Equity Incentive Plan Relative
Performance Stock Unit Agreement.
10.14†
Clearway Energy, Inc. Annual Incentive Plan.
10.15†
Clearway Energy, Inc. Involuntary Severance Plan.
Clearway Energy, Inc. Executive Change-in-Control and General
Severance Plan.
Clearway Energy, Inc. Key Management Change-in-Control and
General Severance Plan.
Consent and Indemnity Agreement, dated as of February 6, 2018, by
and among NRG Energy, Inc., NRG Repowering Holdings LLC, NRG
Yield, Inc., and GIP III Zephyr Acquisition Partners, L.P., and NRG
Yield Operating LLC (solely with respect to Sections E.5, E.6 and
G.12).
Incorporated herein by reference to Exhibit 10.1 to
the Company's Current Report on Form 8-K filed on
February 12, 2018.
Incorporated herein by reference to Exhibit 10.1 to
the Company's Quarterly Report on Form 10-Q filed
on May 3, 2018.
Incorporated herein by reference to Exhibit 10.1 to
the Company's Current Report on Form 8-K filed on
December 6, 2018.
Incorporated herein by reference to Exhibit 10.1 to
the Company's Current Report on Form 8-K filed on
December 23, 2019.
Incorporated herein by reference to Exhibit 10.1 to
the Company's Current Report on Form 8-K filed on
December 1, 2021.
Incorporated herein by reference to Exhibit 10.22 to
the Company's Annual Report on Form 10-K filed
on February 28, 2019.
Incorporated herein by reference to Exhibit 10.23 to
the Company's Annual Report on Form 10-K filed
on February 28, 2019.
Incorporated herein by reference to Exhibit 10.24 to
the Company's Annual Report on Form 10-K filed
on February 28, 2019.
Incorporated herein by reference to Exhibit 10.25 to
the Company's Annual Report on Form 10-K filed
on February 28, 2019.
Incorporated herein by reference to Exhibit 10.26 to
the Company's Annual Report on Form 10-K filed
on March 2, 2020.
Incorporated by reference to Exhibit 10.19 to the
Company's Annual Report on Form 10-K, filed on
March 1, 2021.
Incorporated by reference to Exhibit 10.20 to the
Company's Annual Report on Form 10-K, filed on
March 1, 2021.
Incorporated by reference to Exhibit 10.34 to the
Company's Annual Report on Form 10-K, filed on
March 1, 2018.
Assignment and Assumption Agreement, effective as of February 26,
2019, among Clearway Energy Operating LLC and GIP III Zephyr
Carlsbad Holdings, LLC.
Incorporated herein by reference to Exhibit 10.30 to
the Company's Annual Report on Form 10-K filed
on February 28, 2019.
Amended and Restated Exchange Agreement, dated as of May 14,
2015, by and among NRG Energy, Inc., NRG Yield, Inc., and NRG
Yield LLC and, pursuant to a joinder thereto, dated as of August 31,
2018, Zephyr Renewables LLC.
Amended and Restated Registration Rights Agreement, dated as of
May 14, 2015, by and between NRG Energy, Inc. and NRG Yield, Inc.
and, pursuant to a joinder thereto, dated as of August 31, 2018, Zephyr
Renewables LLC.
Incorporated herein by reference to Exhibit 10.1 to
the Company's Current Report on Form 8-K filed on
May 15, 2015.
Incorporated herein by reference to Exhibit 10.2 to
the Company's Current Report on Form 8-K filed on
May 15, 2015.
140
10.23*^
10.24*^
10.25†*
10.26†*
10.27†*
10.28*^
10.29
10.30
10.31
10.32
10.33
10.34
10.35
16.1
21.1
23.1
23.2
24.1
31.1
31.2
31.3
32
10.22*^
Purchase and Sale Agreement, dated as of April 17, 2020, by and
between Clearway Energy Operating LLC and Clearway Renew LLC.
Incorporated herein by reference to Exhibit 10.1 to
the Company's Current Report on Form 8-K filed on
April 20, 2020.
Membership Interest Purchase Agreement, dated as of April 17, 2020,
by and between Clearway Energy Operating LLC and SP Wind
Holdings, LLC.
Incorporated herein by reference to Exhibit 10.2 to
the Company's Current Report on Form 8-K filed on
April 20, 2020.
Membership Interest Purchase Agreement, dated as of April 17, 2020,
by and between CWSP Wildorado Elbow Holding LLC and Wind TE
Holdco LLC.
Incorporated herein by reference to Exhibit 10.3 to
the Company's Current Report on Form 8-K filed on
April 20, 2020.
Membership Interest Purchase Agreement, dated as of December 21,
2020, by and between Renew Development HoldCo LLC and
Rosamond Solar Investment LLC.
Incorporated herein by reference to Exhibit 10.1 to
the Company's Current Report on Form 8-K filed on
December 22, 2020.
Membership Interest Purchase Agreement, dated as of December 21,
2020, by and between Clearway Renew LLC and Lighthouse
Renewable Class A LLC.
Incorporated herein by reference to Exhibit 10.2 to
the Company's Current Report on Form 8-K filed on
December 22, 2020.
Membership Interest Purchase Agreement, dated as of December 21,
2020, by and between Clearway Renew LLC and Lighthouse
Renewable Class A LLC.
Incorporated herein by reference to Exhibit 10.3 to
the Company's Current Report on Form 8-K filed on
December 22, 2020.
Second Amended and Restated Limited Liability Company Agreement
of Pinnacle Repowering Partnership LLC, dated as of February 26,
2021.
Incorporated by reference to Exhibit 10.31 to the
Company's Annual Report on Form 10-K, filed on
March 1, 2021.
Fifth Amendment to Right of First Offer Agreement, dated as of
August 2, 2021, by and between Clearway Energy Group LLC and
Clearway Energy, Inc.
Incorporated by reference to Exhibit 10.2 to the
Company's Quarterly Report on Form 10-Q, filed on
August 3, 2021.
Purchase and Sale Agreement, dated as of August 20, 2021, by and
between Dominion Solar Projects III, Inc. and Utah Solar Holdings II
LLC.
Incorporated by reference to Exhibit 10.1 to the
Company's Current Report on Form 8-K, filed on
August 23, 2021.
Amended and Restated Employment Agreement, dated September 23,
2021, by and between Clearway Energy, Inc. and Christopher Sotos.
Incorporated by reference to Exhibit 10.1 to the
Company's Current Report on Form 8-K, filed on
September 23, 2021.
Membership Interest Purchase Agreement, dated as of October 22,
2021, by and between Clearway Energy Operating LLC and KKR Thor
Bidco, LLC.
Incorporated by reference to Exhibit 10.1 to the
Company's Current Report on Form 8-K, filed on
October 26, 2021.
Senior Secured Bridge Credit Agreement, dated as of November 30,
2021, by and among Clearway Energy Operating LLC, Clearway
Energy LLC, the guarantors party thereto, Bank of America, N.A., as
administrative agent, and the lenders party thereto.
Incorporated by reference to Exhibit 10.2 to the
Company's Current Report on Form 8-K, filed on
December 1, 2021.
First Amendment to Membership Interest Purchase Agreement, dated
as of December 17, 2021, by and among Lighthouse Renewable Class
A LLC, Clearway Renew LLC and Clearway Energy Operating LLC.
Incorporated herein by reference to Exhibit 10.1 to
the Company's Current Report on Form 8-K filed on
January 18, 2022.
First Amendment to Membership Interest Purchase Agreement, dated
as of December 29, 2021, by and among Lighthouse Renewable Class
A LLC and Clearway Renew LLC.
Incorporated herein by reference to Exhibit 10.2 to
the Company's Current Report on Form 8-K filed on
January 18, 2022.
Letter from KPMG LLP, dated March 15, 2021.
Subsidiaries of Clearway Energy, Inc.
Consent of Ernst & Young LLP.
Consent of KPMG LLP.
Power of Attorney
Rule 13a-14(a)/15d-14(a) certification of Christopher S. Sotos.
Rule 13a-14(a)/15d-14(a) certification of Chad Plotkin.
Rule 13a-14(a)/15d-14(a) certification of Sarah Rubenstein.
Section 1350 Certification.
101 INS
Inline XBRL Instance Document.
101 SCH Inline XBRL Taxonomy Extension Schema.
101 CAL
Inline XBRL Taxonomy Extension Calculation Linkbase.
101 DEF
Inline XBRL Taxonomy Extension Definition Linkbase.
101 LAB Inline XBRL Taxonomy Extension Label Linkbase.
101 PRE
Inline XBRL Taxonomy Extension Presentation Linkbase.
141
Incorporated herein by reference to Exhibit 16.1 to
the Company’s Current Report on Form 8-K filed on
March 15, 2021.
Filed herewith.
Filed herewith.
Filed herewith.
Included on the signature page of this Annual Report
on Form 10-K.
Filed herewith.
Filed herewith.
Filed herewith.
Furnished herewith.
Filed herewith.
Filed herewith.
Filed herewith.
Filed herewith.
Filed herewith.
Filed herewith.
104
Cover Page Interactive Data File (the cover page interactive date file
does not appear in Exhibit 104 because its Inline XBRL tags are
embedded within the Inline XBRL document)
†
*
^
Indicates exhibits that constitute compensatory plans or arrangements.
This filing excludes schedules pursuant to Item 601(a)(5) of Regulation S-K, which the registrant agrees to furnish supplementary to
the Securities and Exchange Commission upon request by the Commission.
Information in this exhibit identified by the mark “[***]” is confidential and has been excluded pursuant to Item 601(b)(10)(iv) of
Regulation S-K because it (i) is not material and (ii) would likely cause competitive harm to the Registrant if disclosed.
142
Item 16 — Form 10-K Summary
None.
143
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned thereunto duly authorized.
SIGNATURES
CLEARWAY ENERGY, INC.
(Registrant)
/s/ CHRISTOPHER S. SOTOS
Christopher S. Sotos
Chief Executive Officer
(Principal Executive Officer)
Date: February 25, 2022
144
POWER OF ATTORNEY
Each person whose signature appears below constitutes and appoints Christopher S. Sotos, Kevin P. Malcarney and
Amelia McKeithen, each or any of them, such person's true and lawful attorney-in-fact and agent with full power of substitution
and resubstitution for such person and in such person's name, place and stead, in any and all capacities, to sign any and all
amendments to this report on Form 10-K, and to file the same with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said attorneys-in-fact and agents, and each of them, full
power and authority to do and perform each and every act and thing necessary or desirable to be done in and about the
premises, as fully to all intents and purposes as such person, hereby ratifying and confirming all that said attorneys-in-fact and
agents, or any of them or his or their substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following
persons on behalf of the registrant and in the capacities and on the dates indicated.
Signature
Title
Date
/s/ CHRISTOPHER S. SOTOS
Christopher S. Sotos
/s/ CHAD PLOTKIN
Chad Plotkin
President, Chief Executive Officer and Director
(Principal Executive Officer)
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
/s/ SARAH RUBENSTEIN
Sarah Rubenstein
Senior Vice President and Chief Accounting Officer
(Principal Accounting Officer)
February 25, 2022
February 25, 2022
February 25, 2022
/s/ JONATHAN BRAM
Jonathan Bram
/s/ NATHANIEL ANSCHUETZ
Nathaniel Anschuetz
/s/ BRIAN FORD
Brian Ford
/s/ BRUCE MACLENNAN
Bruce MacLennan
/s/ FERRELL MCCLEAN
Ferrell McClean
/s/ DANIEL B. MORE
Daniel B. More
/s/ E. STANLEY O'NEAL
E. Stanley O'Neal
Chairman of the Board
February 25, 2022
February 25, 2022
February 25, 2022
February 25, 2022
February 25, 2022
February 25, 2022
February 25, 2022
Director
Director
Director
Director
Director
Director
145
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Clearway Energy, Inc.
300 Carnegie Center
Suite 300
Princeton, NJ
08540-6213
clearwayenergy.com
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