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Clearway Energy looks away from 419-MW wind purchase

Wind turbines in Texas. Author: Will De Freitas. License: Creative Commons, Attribution-NonCommercial-NoDerivs 2.0 Generic.

November 8 (Renewables Now) - US power company Clearway Energy Inc (NYSE:NYLD) has decided not to pursue the acquisition of the 419-MW Mesquite Star wind project.

San Francisco-based Clearway Energy Group (CEG), which is the company’s sponsor, is currently building the said wind farm in Texas’ Fischer and Nolan counties. It expects to complete the project next year.

On June 18, 2019, CEG offered Clearway Energy to buy the entire project, but the latter has now chosen to forgo that opportunity because of existing capital constraints on the company arising from the bankruptcy of its large customer Pacific Gas and Electric Company (PG&E). Clearway Energy said in a statement that it is focusing on the existing right-of-first-offer (ROFO) opportunities with funding dates required in late 2020 and 2021.

While reporting its third-quarter (Q3) financial results, Clearway Energy noted that it will not receive distributions under contracts with PG&E during the pendency of its bankruptcy, unless the lenders for the related project-level debt agree otherwise. This has led to a reduction in the unrestricted cash accumulated by the company and, accordingly, lower corporate liquidity and cash available for shareholder dividends and growth investments, hence Clearway Energy’s decision not to proceed with the Mesquite Star transaction.

Still, Clearway Energy’s president and CEO Christopher Sotos stated that the company has delivered strong operational results during the third quarter of the year. It posted adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) of USD 300 million (EUR 272m), up by 3.4% year-on-year, on operating revenues of USD 296 million compared with USD 292 million a year back. Net profit, though, was lower, at USD 35 million compared with USD 49 million, mainly due to non-cash changes in the fair value of interest rate swaps.

The renewables segment saw its profits drop to USD 6 million from USD 55 million even though adjusted EBITDA increased to USD 201 million from USD 195 million.

Cash Available for Distribution (CAFD) rose to USD 177 million from USD 156 million, including adjustments to reflect CAFD generated by unconsolidated investments that are unable to distribute project dividends because of the PG&E bankruptcy.

Clearway Energy retained its full 2019 forecast for CAFD of USD 250 million and made a USD-295-million projection for 2020. Below you can find more details about the company's forecast for both 2019 and 2020.

Figures in USD million 2019 2020
Net profit 20 150
Adjusted EBITDA 970 1,030
Cash from Operating Activities 577 660
CAFD 250 295
Adjusted Cash from Operations 555 610

(USD 1.0 = EUR 0.906)

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Browse all articles from Ivan Shumkov

Ivan is the mergers and acquisitions expert in Renewables Now with a passion for big deals and ambitious capacity plans.

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