Clearway Energy, Inc. announced that, through an indirect subsidiary, it has entered into binding equity commitment agreements to enable the repowering of two of its existing wind assets: the 161-MW Wildorado in Vega, Texas, and the 122-MW Elbow Creek Wind Project, in Howard County, Texas.
“Repowering our wind energy assets will extend the life of these projects with modern technology that is more efficient and cost-effective than ever,” said Craig Cornelius, Chief Executive Officer at Clearway Group, “We’re proud to collaborate on this important investment and continue to play a leading role in our nation’s growing clean energy economy.”
These agreements commit the company to invest an estimated $111 million in net corporate capital, subject to closing adjustments. The transaction is expected to contribute incremental asset CAFD on an average annual basis of approximately $12 million beginning in 2020, which reflects the improved operational profile of the projects and the impact from the new non-recourse capital structure employed at the partnership.
The company expects to fully close the transaction by the end of 2019.
Highlights of the transaction include:
- Improved operational profile: Benefits of the repowering include the extension of design life, the reduction in operational and maintenance expenditures, and new warranty coverage
- Enhanced contract duration: Elbow Creek has entered into a new hedging arrangement with an investment-grade bank counter-party via which a majority of Elbow Creek’s output will now be contracted through 2029 rather than through 2022; the existing Wildorado PPA with a subsidiary of Xcel Energy (A-/A3) continues to run through 2027
- Non-recourse partnership financing summary: The partnership entered into a tax equity arrangement which, in combination with the Company’s equity investment, will be used to repay construction financing and costs related to the Repowering and to reduce outstanding principal at the existing Viento project financing through the removal of Wildorado from the Viento collateral package
- Corporate funding approach: The corporate capital commitment will be funded at Repowering COD of each project, will utilize existing corporate liquidity, and will have a limited impact on the Company’s corporate leverage ratio
- Construction management: As part of the partnership, Clearway Group will manage all aspects of the construction process
- Technology: Siemens Gamesa Renewable Energy turbines