All righty. Well, good afternoon, everyone. Thanks for joining us. I'm Julien Dumoulin-Smith, Jefferies Power Utilities Clean Energy and Midstream Analyst here, joined with Craig Cornelius. We are here to chat about everything going on across the clean energy landscape and specific to Clearway. Craig, it is a real pleasure to be able to grab you for a few minutes, pin you down, and really talk about the trends into the year ahead. So it's a nice time to be able to do this. Obviously, you guys have had some incredible years trailing, and it almost feels like here we are just resetting the conversation again in a new direction, even higher direction. But Craig, why don't I just hand the mic over to you here to really kinda lay out a little bit of your thinking on 2026, the key trends.
You know, as I am fully ready and ready to pursue you on any number of questions, but I want you to dictate the narrative at the outset. And again, I really appreciate the opportunity to host this with you here.
Yeah. Great. Well, thanks for having us, Julien. We really appreciate the broad-based coverage that you and your team provide across the industry. So helpful to all the investors who you support and to all of us as issuers. It's the breadth is really incredible. And here at Clearway, yeah, we're, as you said, I think we're glad to be off to a strong start at 2026, following on an execution year last year that we just could not be more proud of. So as we sit here today, we feel great about the outlook for 2026. The guidance I know that we'd set for 2026 was well received, and we feel great about our path towards fulfilling that guidance for this year.
We feel great about our path to the goals that we'd originally set for 2027 and uprated twice last year, as, as I know you noted. Everything that we've been doing commercially and that we've announced so far much on track to be able to hit the previous top end or better of our goal. Path to a set of goals that we'd outlined out to 2030 is increasingly clear. So as you'd seen in our last earnings call, we had already commercialized substantially all of everything that we'd planned to construct to be able to enable our growth through 2027 and really into 2028 with projects that had PPAs, mature interconnection, site control, and, and equipment secured for build through 2027.
The announcement that you'd noted, we're very pleased about with Google, sets up a series of investments that mostly happen in 2028 that can support our CAFD growth into the end of this decade. And the pipeline of projects that we previously disclosed, which amounted to a substantial fraction of the 11 GW of late-stage projects that we were advancing, has really matured nicely in the last number of months. And, we're very much on track to be able to deliver a repeatable cadence of multiple GW of projects that we construct each year, deploy into CWEN, a CAFD yields at 10.5% or better, and in total deliver a capital allocation and growth model that can allow us to grow this business at 8%+ on a sustainable basis over time.
You know, I think we are very proud of what those financial metrics and our ability to fulfill them mean for our investors, but also what they represent about a business that is really executing at the top level of craftsmanship in our industry today.
Excellent. Like, seriously, kudos. Craig, let me, let me ask you this. I mean, if I can just go right at it here, this, this Clearway Group announcement with, with Google here, I mean, 1.2 GW, it's, it's the first of, frankly, several different, announcements with, with renewable energy companies and developers and hyperscalers, right? It's, in some respects, it's, it's a watershed moment, right? We saw this Intersect. We saw NextEra. It's you guys. It's not trivial. It certainly changed, I think, sentiment across the entire sector. Can you set expectations on what this means prospectively for Clearway Group and especially from your perspective, on, on the, the Clearway CWEN equity? How should we read this in terms of, of enabling growth, right?
both just in terms not just in terms of runway of growth, but how we should think about this in terms of the model itself. How do these look different versus the paradigm that we've seen thus far of renewable dropdowns that we've seen?
Yeah. Well, first, we think that they're a sign of a lot more to come. So, that basket of power purchase agreements was substantial, as you note, in relation to the size of our company, but is still just a very beginning point in the totality of all the carbon-free and grid-enhancing resources that an enterprise like Google needs to procure in order to fulfill its own goals for growing its compute capacity in a way that's also supportive of the grid and other national goals. And, so, you know, I think, those weren't the first PPAs signed with commercial industrial off-takers, but they did represent, I think, a great moment in our enterprise's business and I think others where the duration of the contracts were super long. The size of the commitment was substantial. The geography was diverse, as you'd noted.
We're building projects to fulfill those contracts in, really across the United States, Missouri, Texas, West Virginia, and I think, both with us and with other credible project sponsors that can reliably construct substantial amounts of new capacity and energy. They are just the beginning of what is likely to be a pretty substantial wedge of incremental contracting to be able to support construction over the course of the next few years into 2028 and following on that towards the end of the decade.
Some things that we think, we're happy about, about our relationship with Google, which we've been shaping over time, and we have just enormous respect for them as an enterprise. You know, companies like ourselves, and I think this is certainly true for us in our relationship with Google, and I think it's true for peers as well, are able to fashion over time a very cooperative relationship with major hyperscalers where together we look at the land bank and repository of development assets that we're able to create. We're able to increasingly engage with them about their plans for their own network, to spend time thinking about which attributes are most necessary for them in a power plant in a given location, and then really fashion the prioritization and the build-out of our development pipeline in a way that it's responsive to their needs.
I think those needs are so immense, and the value of power is significant, but at high price, still cost-effective in the context of their computation, that they're in a position to be able to help us capitalize those projects in a way that they could be constructed with high confidence, procure equipment that can be supplied with high reliability, and that allows us to together allocate capital and plan for growth in a way that's really mutually predictable. So we could not be happier with the relationship that we've fashioned with Google. We have high hopes that together that relationship has a lot of runway to go forward from here. I think that there are excellent peers in the industry, and you named two of them, that already have robust relationships with that company.
I think each of us have robust relationships with a number of similarly positioned companies like Google as well. So as we go forward over the balance of this decade, I think what you'll be seeing from us and from others are large quantities of contracts signed to deliver energy and capacity attributes front-of-the-meter. And when we do that, in a lot of cases, it is providing enhancement to the location nearby where these power plants are being built. So while these are front-of-the-meter resources, they enable load to be interconnected and served nearby these power plants.
I think Google and a number of others have been very focused on assuring that the procurement they do helps make the grid more robust and assure that the load that they're interconnecting can be interconnected while sustaining grid reliability and can be interconnected in a way where ratepayer costs are kept low. You're gonna see a substantial quantity of contracts that are signed front-of-the-meter. If you looked at last year, still the vast majority of contracts that were signed to supply power for data center customers were front-of-the-meter arrangements, but increasingly with a focus on co-located generation and capacity attributes nearby where the load is going to be interconnected.
You'll see companies like ours, which have built a good cadence of collaboration with companies, in particular across the five major hyperscalers, also transitioning towards having more large campuses like the ones that our friends at Intersect were developing, commercialized, designed, brought into construction, and serving increasingly large data centers with a mixture of resources that are both front-of-the-meter and also behind-the-meter resources. I think we're finding a contractual language to design those projects. We're coming up with a technical language and basis for designing them. I think we're gonna see a proliferation of both front-of-the-meter resources like the ones we contracted most recently with Google and also some pretty ambitious complexes that assemble regular way gas, battery, solar, and wind projects, but with some novel electrical interconnections between them.
Excellent. So let me cut to the chase on a few different things, right? You guys have laid out just even recently a 7%-8% growth CAGR of 25-30. And yet here we are starting off this year with a whole novel, foray, with Google into this data center landscape. You guys have made allusion to it earlier. How does that position you against these 27 and then longer-term 2030 targets? Just to kinda start with that at the outset.
Yeah. Well, so the contracts that we announced earlier this year are part of our roadmap to hitting our 2030 goals. They'll support construction of projects that look like the other projects in our fleet. They're big. They serve on unit contingent contracts. They're long-term. They enable us to deliver CAFD yields consistent with our historical capital allocation guidance, and they make us increasingly confident on our ability to hit the top end or better of the $3.10 in CAFD per share range that we're aiming for in 2030.
The other bigger complexes that we have had in development, and that are, you know, at least in a few instances or maybe more than a few, very much a part of our company's future, could be part of what helps add to our growth prospects in 2030 and beyond and could present individual investment opportunities for CWEN where its capital allocation allows for it before 2030. The way I think about this, our core business is very much set up now for executing at least 2 GW a year worth of project construction. Our reservoir of projects in development is robust. The relationships that we have built and sustained at the local and federal level are very supportive of the family of assets that we are advancing to be able to construct at that 2 GW per year tempo.
As we look ahead to the 2030s, if we were going to grow at that 5%-8%+ range on a sustainable basis, we need to be building about 2 GW a year, which produce about $80 million-$100 million a year worth of recurring CAFD. The unit CAFD per MW that we are routinely contracting and commercializing at today allows for that. The projects that we are developing can achieve those types of CAFD yields even beyond 2030 where if they're renewable generators, you choose to expect that they won't necessarily be able to claim tax credits. These complexes that we're creating, any one of these individual complexes, the basket of generation resources, could produce in excess of $100 million a year worth of CAFD investment opportunity for CWEN.
That magnitude of impact from a single project, as something that's an additional option on growth on top of a routine growth business that is demonstrating its ability to complete and commission and capitalize 2 GW a year, we think sets us up to be as confident as we are, about the sustainability of a 5%-8% growth model well past the end of 2030.
Nice. I mean, do you wanna speak a little bit to the scale scope of this data center opportunity? And when I say that, it's not just saying, "Hey, look, we got more of where this came from," right? I think you made allusion to that already. But what kinds of assets are we talking about? And then subsequently, how do you think about the scale of, shall we say, external equity capital are you thinking about, right? 'Cause obviously the last few years have benefited from kind of, an underleveraged balance sheet in many ways. And so it's obviously been that tailwind. How do you think about setting expectations on this data center opportunity, both in terms of the quantum, of capital, how you finance it in terms of equity, and then ultimately the form of different assets that you're acquiring, right?
Whether it includes more fossil or, you know, how do you think about, you know, traditional renewable storage as well?
Yeah. Well, everything that we create as an enterprise is created to be compatible with the investment mandate for Clearway Energy, Inc., which seeks to produce high reliability, high certainty, recurring cash flows with low interannual variability. And that means the projects we're creating, regardless of the technology type, whether it's a wind generator or a solar generator or a battery or a gas plant, we are creating in a commercial and a technical fashion where once they're added to our fleet, they will contribute to that predictable recurring cash flow.
So where we're looking at each one of these constituent technologies to serve data center customers, we are looking at, designing and commercializing them where they would exhibit very long-term 15-20-year recurring cash flows to the extent that there's a gas plant in any one of these complexes that we create, develop, and capitalize, and it would stay within, the enterprise structure of Clearway, then it would be something that would exhibit a long-term toll like the toll that we have for the Carlsbad Energy Center, which we've most recently completed and commissioned within our gas fleet. There are some instances where the most natural owner of a thermal resource that's developed adjacent to some of our renewable and battery facilities is the load-serving entity or the interconnecting utility in that location. And we're focused on creating, solutions for hyperscalers that give Clearway Energy Inc.
The investment opportunity and a long-term contracted asset, but not every generation resource we create has to be owned by Clearway if the more natural solution for the regulated utility that's serving a customer is that it's the owner of that gas facility. So, you might see a mixture of both, but the common denominator across the different types of projects we're creating is that there'll be long-term contracted assets that are consistent with our investment mandate. In terms of the magnitude of the opportunity, you know, I think what we see today is that anything we can permit and interconnect within three years, we can construct and capitalize. That's really the status of the market.
The magnitude of the demand growth when we look at any one of these, network resources for computation, is pretty significant in terms of what it requires from a mixture of low-cost load following and carbon-free resources. Sort of a simple rule of thumb that you could use and it varies from one place to another is something like 1.5 GW of computation load requires something like 4 GW worth of cost-optimized wind, solar, battery, and gas resources. There are variations of those combinations that could mean a need for slightly less in nameplate. But the cost-optimal solution is something in that range. The demand for new compute radically exceeds 200 GW at least as you think ahead over the course of the 10-year planning horizon that we think about as a developer.
So, when we think about the opportunity set that we're serving, any project we think we can successfully permit and interconnect, we, we are developing, in the fortunate situation where there's a customer who's ready to buy from that resource. The magnitude of the demand that they are planning for in their own networks is pretty significant in relation to anything we could successfully develop. As far as our capital allocation framework is concerned, you know, we think one of the things that's made Clearway Energy, Inc. a successful story for its investors has been our focus on predictability of fulfillment of the framework and the goals that we set.
We grow the business today looking at the capital allocation framework that we noted around maintaining a 4-4.5x leverage ratio, having our equity issuance tempo be consistent with what you see for premium utilities as a percentage of our float. We intend to continue to make good on that basic business model, which aims to make Clearway Energy Inc. a business which behaves financially like the best premium utilities in the United States today. And so the tempo with which Clearway Energy Inc. invests in new resources that we create will continue to be guided by that capital allocation framework. As the business grows, as the business becomes more valuable, its leverage capacity consistent with those metrics will grow. Its equity issuance capacity will grow.
You know, we'll take one step at a time and assure that the framework that we're implementing is consistent with what our investors wanna see us implementing.
How do you think about, you know, the scale of MWs that you need to achieve the seven or even the upper end of that 8% through 2030? And what you've already articulated here. I mean, you know, you guys have these nice little waterfalls, but in many ways, you know, you look at the scale of what you've announced here, the, you know, the 1.2 GW or what have you, and you think about some of the other incremental opportunities. I mean, how much is "left"? And obviously there's a lot of variables, financing rates, you know, CAFD yields, et cetera, on acquisitions.
But yeah, how do you think about, you know, the milestones and the amount of follow-through you already have, the amount of visibility you already have against the 7% or even the upper end at 8% for that 2030 target? 'Cause I think through it, you've got a lot of it already in place. Again, the status quo on some of the running assumptions like rates.
Yeah, you bet. Yeah. We've commercialized substantially all of what we'd planned to build through 2027. We've now commercialized a majority of what we'd planned to build into 2028. And, we are in late stages of commercializing and developing the family of projects we would construct in 2029, which would allow us to build in sufficient volume to hit the top end or better of our 2030 goals. And with what we're seeing right now in maturity of permitting advancement, forward positive progress on interconnection, and commercial uptake of the projects that we could feasibly construct through 2029, we feel quite pleased that we are in a position of abundance. So I think we're mostly done, bottom line, in terms of the follow-through that's necessary for what we'd construct over the next three years. And we're focused on maximizing the economic impact of what we'd construct in 2029.
You know, as we look beyond that to the opportunity set for what we'd construct and capitalize in 2030, it has the potential to be pretty substantial. One of the things that we're fortunate about in our corporate structure is the investment capacity of our parent entity, Clearway Group, and the sponsors behind it is significant. So if we're in a position to construct in throughput and in cumulative completed volume in excess of what Clearway Energy Inc. can capitalize, we can build up an inventory of assets that could really be measured and dropped down into Clearway Energy Inc. in the years after 2030. So bottom line, we're pretty good with everything we needed to do for the next three years in getting the projects ready to go, and we're focused now on maximizing the throughput of the business in 2029 and 2030.
We think it sets up the shareholders of Clearway Energy, Inc. for a very predictable growth path at the 8%+ top end of our goals.
Yeah. It's excellent. Nicely done. And thank you for stating it so explicitly. I appreciate that. I mean, let me step back just real quickly 'cause I like higher level points. I think we gotta get across. How do you think about, you know, your development and the counterparties you're dealing with here? I mean, you know, I said at the outset we have three transactions here of late that are with hyperscalers, specifically Google at that. Obviously they've been very explicit about their own clean energy targets, past tense. So it's not exactly a novel concept, but to see it finally transact and happen, I think is a really critical point. How do you think about what the new norm is, in terms of your counterparties, how to think about what these canvases look like in terms of your involvement?
And then lastly, you know, more specific from a Clearway perspective, how do you think about like a CAFD yield of acquisition? Is 10.5 still the right number? How do you think about cumulative counterparty risk being concentrated potentially with single parties like, say, Google?
Yeah. So I think.
Maybe the macro first, and then you could hit the specifics if you want. You know what I mean? Like, is this the new norm? How do you think about what the drop-down portfolio looks like?
Yeah. I think the new norm is bigger. You know, the new norm is bigger in power. And the new norm is also one where there is increasingly, amongst customers, equipment suppliers, financing sources, a recognition that the scale of what we are trying to do together is significant. And it requires the whole industry to focus its resources and attention on the most capable large enterprises that are capable of building large projects and capable of sustaining a construction tempo at size. And I think that's part of why we have found ourselves now more routinely contracting with data center companies, whereas we had not in the past because the scale of their needs and their experience with some other smaller, less capable, less well-capitalized businesses has led them to value the capabilities and assets of a company like ours.
We also, as businesses that develop power plants, are finding that our time and equipment resources are highly valuable. So we wanna focus on engagements with the biggest customers that can grow with us. A similar dynamic is unfolding with some of our most valued utility customers who themselves need to serve load growth at a rate that was not common for the preceding two decades. So they wanna entrust their assurance of the ability to serve load on the most capable and proven developers and operators of power plants in our country.
So, together, by necessity, really, I think throughout the value chain for power in the US, you see an increasing focus on commercial decision-making, equipment supply, and implementation around a strong set of companies that probably will represent a greater percentage of the total new added capacity than what was a more fragmented space historically. So that's one thing. Bigger power plants and more focused relationships between equipment suppliers and customers throughout the value chain. I think that's one thing that you should read into those agreements. And we think that plays well to our strengths as a business. I think another factor is just the importance of speed. So, we are finding ways as a business to convert from a contract like that into construction at speed.
There's a wedge of new projects that we and others are developing that have a real set of distinguishing characteristics around whether they can be interconnected and brought online between, say, now and 3 years from now. There's a real focus on projects that have those characteristics and that also have a permitting profile that's credible to be built in that timeframe. In terms of, I'm sorry, do you mind sort of the subsequent steps in your question?
Yeah. No, no, no, no, no worries. I, I realized I should have broken it up.
Yeah.
So in terms of the meat and potatoes, like, you have a 10.5 yield, you know.
Yeah.
Acquisition yield target, right? You know, you boil it down. I get that the volume, you know, if you wanna talk about like P times Q, the volume is, is certainly accelerating and you're well spoken for in terms of 2030 targets and beyond. But the acquisition yield, does this change in any way based on any kind of the different kinds of assets, the counterparty risk, the cumulative counterparty risk? You wanna speak to that.
Yeah. You bet. Thanks. Yeah. So I think we've been pleased to demonstrate through the succession of recent announcements that both when we're acquiring assets from third parties, and when Clearway Group is the sponsor for Clearway Energy, Inc. is creating new projects and dropping them down to Clearway Energy, Inc., that we're able to deliver on CAFD yields in today's environment that are even above that 10.5% CAFD yield. So wherever possible, where a project allows for a return that is in excess of that 10.5% CAFD yield, while also assuring that we're delivering a ratepayer affordable proposition, we look to convey that economic benefit to our shareholders.
We hope that will allow us to deliver a virtuous cycle of continuing capital availability that allows us to grow faster because of the high returns that we're generating on that capital for our shareholders. You know, I think we continue to guide our investors to that expectation of a routine tempo of new assets being created at 10.5% CAFD yields and $40,000 a MW or better in CAFD as a basis for underwriting our business's go forward planning. But we always look to provide some positive, favorable surprise when we're able to exceed that. And I think you can see that in our track record last year; we've certainly been able to create situations where we can better that.
I think the balance that we're looking to strike is a sustainable business model that can grow in a fashion that's predictable for our investors, and that generates high enough returns that we can continue to raise capital from those investors for its growth and being an important part of the equation, for affordability in a country where we're needing to grow a lot of new power supply.
I just wanna hit this directly. When you think about the scale and scope, I mean, how do you think about adding gas to the portfolio? I just wanna come back one more time on this 'cause this has definitely been, you know, I've alluded, you guys are, you know, an all of the above story, right? Like you never have been just renewable dedicated, right?
Mm-hmm.
You've had everything. How do you think about adding in gas here and also what kinds of gas are we talking about? I mean, are we talking about combined cycle? Are we talking about other things that are bridge power, right? We see a lot of different permutations as being contemplated in the marketplace. How do you think about what you all would look at? Again, I appreciate there's a mantra on contracted value here.
Yeah, you bet. Yeah. I think we've been consistent really from the inception of the business that is Clearway, going back the better part of 15 years, that we see an important role for each of the new generation technologies that the country is deploying. Within our fleet, as you note, actually the biggest anchors to our fleet when we were initially listed as NRG Yield were a family of contracted gas assets that were essential to the state of California in order to enable growth of renewables because those firming resources were essential to the system. Those continue to be a real mainstay in our fleet. They provide absolutely necessary reliability benefits for the state and a consistent cash flow for us as their sponsor and operator.
We think there is a very mutually beneficial relationship between the construction of additional gas resources and markets across the country and the construction of battery resources and renewable resources that together dispatch at the times that are optimal to deliver a system that's both reliable and low cost for customers. So we are glad to continue to add gas resources to our fleet where, as noted before and you picked up on, they deliver long-term contracted revenues consistent with our business model. The situations where we are developing gas resources, they're designed to complement other renewable and battery projects in the same location so that over the course of 8,760 hours in a year, we can assure either an interconnecting utility or a data center confidence that a certain amount of capacity will be there to be able to serve computation load.
As you look from one location to another and the places where we have that in development, you see some quantities of simple cycle gas resources that can ramp up and down more quickly and operate likely at lower capacity factors to be able to firm lower cost renewable generators in places where that resource will be variable. And in some instances, CCGTs that would operate at a higher capacity factor either under a toll like the one we have for Carlsbad or potentially under ownership of a regulated utility who in turn would have their own long-term agreement with the data center host to assure that they're going to receive an adequate return on the capital that they invest in that facility.
So the way we think about that technology mix is really focused on how to deliver the lowest cost of energy and capacity to the data center and to the regulated utility through the best attributes of each one of these resources. And, you know, I think in general what we see is that having about 70% of the MW hours come from a zero marginal cost renewable generator and about 30% of the MW hours come from a combination of dispatch from battery facilities and dispatch from a gas facility tends to be a good formula for a least cost best fit. And it varies from one place to another. So, you know, I think we're trying to take the same agnostic mindset that we've applied to technology selection and resource development throughout our life to find the right optimal locations for deploying each one of those technologies.
We feel great about the kind of thoughtful relationship we've fashioned both with our end-use customers and our connecting utilities and with the state and federal administrations in finding the right fine-tuned mix of those technologies.
Excellent. Thank you for that. I appreciate it. Look, let me come back. Oh, you know, one high-level point I really wanna make sure we get across here is what do you see about the scale of renewable development itself? Right? Again, this is more of an industry question that's come in, but I'd love to hear your thoughts. I mean, how you think about, especially taking into account the latest hyperscale developments, how do you think about renewable growth, you know, both the pull forward that we're seeing in 2028 and 2029? And then how do you think about a post-ITC renew or ITC PTC, clean energy landscape? How do you think, 'cause your target ends in 2030, yet post 2030 we're talking about a market that doesn't benefit from the credit.
How do you think about what that landscape looks like, cognizant of what you guys have just signed? What are you looking at? Does the mix pivot towards gas post-2030, in order to sustain this? But even more broadly, like sticking with renewables, you've been steeped in the sector for a long time, Craig.
Yeah.
You know it. I'd love to hear how you think about it and position and set expectations thus far on, you know, post-O Triple V, you know, reform of IRA.
Yeah. I think the mix in 2031 and beyond probably doesn't look that much different than the sprint we're running over the next three or four years, to be honest. I think my hope is certainly that as we move into the 2030s, we will see some of the additional baseload technologies that are now seeing more support, both from customers and the government proliferate and that we will see additional nuclear and geothermal resources part of the equation for new capacity additions in the country. But based on what we know of forward advancement and permitting feasibility and constructability of those resources, we would imagine that that's more likely to be a material part of what you see in the fuel mix 10 years from now than 5.
What we're preparing for and we feel super confident in is that, the locations where renewables are a least cost best fit resource, will see large quantities of their deployment in the places where they make economic sense and they will stand on their own two feet. And I think there's real wisdom, which I think our industry has heard, from leadership, across the political spectrum in Washington, D.C., that it, it really needs to stand on its own two feet and the economic proposition of wind projects and solar projects that are being built at scale needs to substantiate the economic decision to build them.
And so I think the roadmap that's been created that gives that industry to get further to scale into cost effectiveness and then stand on its own two feet in 2031 and beyond should give it enough time to be really industrializing the scale economies that are necessary. You know, when we look at our fleet's development decisions, and I think we provided some useful disclosure about this in our last two earnings calls, you see a guide, at least with our perspective, for the places where we think a renewable plant is the least cost best fit resource in most places. So the Desert Southwest is an example of a place where we own large quantities of solar and battery projects. There's even more that's being deployed.
The construction, and cost effectiveness, of technology in that region is only gonna get better over the next three or four years. And I think we will see those being the least cost best fit resources in the Desert Southwest. Throughout the Pacific Northwest, there are a variety of locations where, those resource types are still likely to be the best cost effective resource delivering at $70 per MW hour, that kind of a range, into the 2030s, without the benefit of tax credits. In the Great Plains and parts of the Rocky Mountain West, there are certain situations where, you will see that sustainment of super necessary coal-fired power plants will be an important part of the equation. You will see many instances where new high capacity factor gas resources are gonna be a least cost best fit resource.
And then you will also see instances where solar and wind projects are absolutely cost effective and an important part of the system, especially where they can be built at very large size in locations where the investments in the grid network don't require a burden of a substantial amount of network upgrade costs. So, you know, I think as we prepare for projects today, we expect that there will still be a pretty significant tempo of construction of renewable projects without tax credits after 2031. We will expect that the additions of batteries in our country will continue to grow at a steep rate. That's the biggest fraction of our pipeline and reflects our point of view as an owner operator of them. And as a market participant that sees how effective they've been in markets like California and Texas in keeping rates down and reliability up.
We expect that we'll see all of that mix growing. You will also see pretty significant amounts of new capacity additions of gas-fired generation that will run at high capacity factors because it is an optimal resource for the system. So, you know, I think if I had to guess, if you were to look at the fuel stack in 2029 for new capacity additions in the country, the relative fraction and mix of those technologies may look pretty similar on average between 2031 and 2035 because they each have really strong attributes and there are locations in the country where they are absolutely the least cost best fit resource. From our standpoint as an individual enterprise, we're just not concerned about seeing our volume of capacity additions change in 2031. If anything, we think they'll probably keep going up.
Wow, intriguing. Do you wanna speak to the storage opportunity, especially as it pertains to your existing assets a little bit? You know, is the retrofit, I mean, the opportunity to go back and kind of redress that a little bit? I mean, how do you think about that opportunity? Tax credits on storage persist after 2030. It would seem like the retrofit opportunity persists even more so. Do you wanna talk to that just a little bit about the scope and potential, you know, return on those investments versus acquisitions?
Yeah, we'd love to. Yeah. I, the first thing I'll say, I mean, one of the things that, you know, we really welcome about being an all-of-the-above energy company is it's a performance-based culture. So we're able to look at how each one of these assets in our fleet are performing in different operating conditions and also as compared to what we expected when we engineered, underwrote and constructed them and learn from the evolution of each one of these technologies. And I have to say, the battery assets in our fleet have come out of the box as a new kind of category of technology better than anything we've ever seen. They are incredibly reliable. We've built a great competency in how we design and operate them. And, they are very useful resources for the grid.
There's nothing that moves as fast as a lithium-ion battery when a grid operator calls on us to dispatch it. They are incredibly predictable in the way we plan for their maintenance and the way that we execute maintenance cycles. The way we build and capitalize them, as a company, which is sort of under tolls and long-term resource adequacy contracts, makes these technologies the most predictable source of cash flow in our fleet, because they are paid by load-serving entities to be on demand, ready to dispatch, and we receive a fixed stream of revenues from them independent of resource and weather. We love them. So I think the first thing that I'd say is as an operator, we have a high standard and these technologies are performing to our high standard really better than anything in our fleet.
That's part of why we are excited about customers and grid operators across the country making a growing place for batteries as part of how they plan the grid. I think the data that you can see in ERCOT in particular over the course of the last couple of years is really stunning. You know, I think we should appreciate the ways that as an industry we've been able to deliver a technology that has made the ERCOT grid see sustained lower wholesale prices and sustained enhanced reliability really as a result of the role that batteries are playing in the system today. I think the first thing I'd just say is the technology is great. We love owning it. We love operating it. And we're proud of the impact that it's having favorably in the grid.
I think as more parts of the grid create market designs, as more parts of the grid create procurement mechanisms that will make batteries an eligible resource to respond to capacity needs, I think we're gonna see that same thing play out in other parts of the country. We're looking forward to being one of the companies that develops and capitalize those projects. As you know, they're eligible to claim tax credits into the next decade. Projects that commence construction out into 2020 or 2033, 2034 will be eligible to claim tax credits when they include batteries. And I think very thoughtfully, those batteries, especially if they want to claim domestic content tax credits, are going to need to buy from an increasingly domestic supply chain.
And I think something we're proud of is that we've really led the way in a high standard of procurement for domestic supply chains for solar panels for some time. We've also done that in batteries and are amongst the first customers for domestically produced lithium-ion battery cells that are going into projects that we're building today. And we're glad to see the rest of the industry of battery deployers raising their standard to our same requirements. And the number of options that we have to be able to supply domestically made lithium-ion cells and batteries as we get further into the decade will be numerous. So I think it is a great technology resource for the system. We're building a domestic industry to deliver to it. And wherever we deploy these, they're a very reliable source of power for the grid.
Yeah. No, I, I definitely hear you. Oh, I should take a quick second. If you guys do have questions, or comments, reactions, just ping me here, email, or chat. I wanna make sure I reflect that through the course of our conversation here, but certainly this would be the moment for folks to chime in. Look, Craig, back to the, back to the regularly scheduled program here. Look, as, as far as we're concerned, I, I'd love to hear a little bit more about how sort of the cadence of announcements here through the course of the year. We've seen, shall we say, lumpier announcements. Again, this latest one, you call it a portfolio of contracts, but it's lumpy. We've seen that with your friends and peers across the space, right?
The days of seeing, you know, ones and twos in terms of contracts get announced, that was maybe yesterday's paradigm. Today, we're seeing these much larger scale. Should we expect more of these through the course of the year, or is this kind of like the first foray, the first volley? You got a bunch of them, and then now, you know, subsequent contracts will kind of go back to, you know, smaller scale. Or do you legitimately think we should be thinking about you guys as having, you know, large data center campuses that you're gonna see entitlements to? And again, I get that these will come in the form of drops, but ultimately the opportunity, you know, will be fairly chunky when you hear about it in terms of entire campuses.
Will you maybe contemplate partial drops of assets just because they may end up being so large as a single campus with a whole suite of assets and stakes in assets rather than the entire thing at a time?
Yeah. Well, I mean, I think the first thing I'd say is, if we are a business that is going to be building 2 GW or more per year of projects, in a regular way, unit contingent grid-tied format, and we report earnings 4 times a year, you're gonna start to see the ordinary cadence of contracting announcements from us get larger. That's sort of consistent with that theme that the industry's getting bigger, our company's getting bigger. And whether it's with one company or multiple customers, you will see the magnitude of progress that our company makes each quarter going up, because it needs to be large quantities of announcements that we're making in any given quarter or in between quarters just have to be larger if we're gonna grow at that scale.
So I think big announcements may become more routine for us and other folks, but they will be routine, that just because the tempo of growth itself is larger. As far as, you know, the idea of these bigger co-located families of generation resources, certainly the way that we are developing them, and I think the way other peers have is that they're ultimately assembled through a series of constituent technologies. So you have different phases of a solar or a battery or a gas resource that are being developed. Those phases are electrically distinct. They have distinct power purchase agreements, and they will be built and financed in modules. And that allows you to announce contracts around those modules. That allows you to capitalize and drop down those assets and modules.
It's likely that if and as you see Clearway as a developer of something other than just a grid-tied single asset that you will see us ultimately capitalize it or make it available for Clearway Energy, Inc. to invest in in increments over time rather than just in one fell swoop. I think what you've seen from us over time as an enterprise is that we've been very thoughtful about metering out a progression of growth with a progression of a capital allocation framework. You know, the constituent parts of complexes like the one you're asking about really lend themselves to that because they're ultimately contracted, engineered, constructed, and financed in phases and increments. They're ultimately a basket of separate distinct contracts for each one of those phases.
So yeah, I think that is how we would ultimately convey them into Clearway Energy, Inc. over time. So yeah, bottom line, I think what you could expect over time is that, the scale of what we have to report on in terms of success will be larger each quarter. You can hear from this conversation that we're quite confident about the roadmap that we have for growth. And, both with, you know, hopefully one customer who we value in the runway for growth with that customer and also with groups of multiple customers, you'll see us routinely, reporting on some pretty large quantities of success.
Excellent. Thank you. And look, as we start to reach the top of the hour, look, I gotta ask you, how do you think about the capital raising side of this? You talked about more balance sheet latitude earlier. I certainly caught that. How do you think about the 4x at the corporate level as a target? And then separately, how do you think about, you know, ATM versus public equity raises, you know, these larger chunkier raises? Thoughts, reactions? Heard some comments here, but certainly wanna hear from you.
Yeah. I mean, I think, as I'd noted, we, you know, we want to be a business that is predictable for our investors to underwrite investments in. So, you know, the commitment we've made is that for our regular way business, which is the business that we're advancing to be able to routinely deliver 5%-8%+ in CAFD per share growth into the 2030s and beyond, we will aim to steer the business towards a lower leverage ratio over time. We will aim to steer the business towards a lower payout ratio over time, and then use the recurring cash flow in our fleet to invest in our growth because we see great opportunities to make investments of that nature. So, we see virtue in that business model.
And I think our intention is to move in the direction of that more cash flow generative capital allocation model while continuing to make good on all the dividend per share growth targets that we've set and sustaining a dividend per share growth rate in the years after 2027 that's competitive with what you'd find for other premium valued high growth utilities. So that's sort of how we think about that. ATM direct stock purchase programs, these are familiar tools for utility investors. We've used them successfully now that we've started to be back in the market as an issuer. We're enormously proud about the tight execution of the bond issuance that we completed earlier this year. And it's reflective of the way that we'll handle the routine issuance of equity from our business.
You know, I think the bottom line is that we plan to continue to roll the business forward with a capital allocation framework consistent with what we've laid out in the past. You know, sometimes we're asked questions about third party M&A, the opportunity for it, and how you'd capitalize third party acquisitions. We don't factor third party acquisitions into our growth plans, and so they don't factor into our capital allocation framework. I think, the standard that we set for third party M&A is high. You could certainly see how accretive the acquisitions that we announced last year would be. Depending on the capital needs for any given acquisition and its degree of accretiveness, then, you know, we, we need to think about what kind of, ways that fits into the allocation framework we've already announced.
But I think the important message for us to deliver, and you've seen us execute on this, is that we're a business that will be predictable and we're gonna be predictable in delivering great growth and great returns.
Absolutely. Yeah. It's really been quite impressive. Look, you know, I don't mean to belabor anything here, but I'd love to get your thoughts here. Post ITC, post, you know, the 2031 kind of timeframe, do you see a different financing composition of how these assets are getting done? I mean, presumably without the ITC, does that, you know, presumably more traditional leverage and then more equity potentially? I'm not sure it matters per se. You know, again, your yield is your yield that you're acquiring it, but any, you know, any nuances that you care to share about that as you think about the next permutations here?
I mean, a couple of observations. Hybrid resources will be, if not universal, still a pretty substantial portion of what the business and our business and others are building in 2031 and beyond. So to the extent that there's a battery incorporated into a power plant, which can claim a tax credit, you would still see a tax equity structure to finance that battery as part of the project's overall capital structure. And so I think we will still see structures to monetize tax credits that are consistent with the ones that we employ today be a norm.
When we look at evaluating what a solar project would look like after 2030, if it wasn't claiming a tax credit, more likely than seeing the relative fraction of the project that's invested in through cash equity, you'd probably see non-recourse project term debt expand to occupy a lot of the section of the project that's already expanded.
The white space.
Yeah. But as a business in Clearway that looks to sustain a runway for our federal income tax liability, we will still see value in allocating a portion of our capital to sustain a forward shield of depreciation benefits that we retain within the business. So I think there's a lot of opportunities to optimize across a family of projects or of individual projects, but we foresee a similar use of equity in the future, and we foresee a similar return, and we see robust markets to be able to capitalize those projects without tax credits. And we continue to expect tax credit partnerships to be relevant for the battery part of projects.
Two quick questions that have come in. I just wanna hit you with it. One, it sounds like M&A acquisitions of anything other than what you're seeing from Clearway Group is, is really not the priority. I mean, it's just, it doesn't seem like we're gonna, we should expect much on that front. You tell me. I mean, we saw some past tense. You guys recycled some assets. Should we set expectations there? Didn't hear that per se, but I would love to hear your thoughts again, especially given the quantum accelerates here. Are there other divestable assets out there? And then separately, California RA has been a big underlying driver of, of your success past tense. That market seems to have more stabilized than necessarily continued to increase very late. Any thoughts about where that goes? Do you think it stays, hangs out here?
Do you think it actually turns higher? Do we see a little bit more moderation in this in the near term? Any thoughts about, you know, California? You guys obviously have a good amount of exposure in the longer term there as well.
Yeah. We're always cautious about setting expectations on M&A because it takes two, two, two people to dance. But, you know, I think what I'd say consistent with some of what we'd said on that topic in earnings calls over the last few quarters of last year, this is an environment today where large, proficient businesses that have access to financing are in a position to execute acquisitions with a better risk-adjusted return than any time we've seen in a long time. So when you're in an environment like that, you certainly wanna think as a capital allocator about whether there's something meaningful you could do for your shareholders, within a cur, with a return that's accretive and how you can approach something like that in a fashion that is also honoring the capital allocation framework you'd set up with your investors. So I think that is how we're thinking.
There's a lot out there, and our shareholders would want us to look at the things that are additive, that are complementary to our existing portfolio, and also would want us to think about how we could act on those things in a fashion that honors our capital allocation framework. So I think that's what I would say on that topic. We're really proud of the execution track record we had last year on third party and M&A. And, you know, the environment that we're in today still continues to seem to advantage businesses like ours for single or multiple asset transactions today. In terms of California RA, we like the position.
Yeah. Embrace.
Yeah. We like the assets that we have. They're super essential in California's long-term resource plan. We're happy to be able to have the strategic patience that we do to make sure that they earn what they should, while delivering their resource attributes in a cost-effective way. And we're also mindful that there are adjacent markets in the Western Power Pool that are also short capacity. So I think what our investors could expect is that we'll continue to be thoughtful custodians of our thermal assets in California and that as we go forward over the next few years, that those assets are gonna see a stream of revenues that are consistent with their market value. And when we set the goals that we do and we articulate confidence in them, we do so fully mindful of the market we're operating in.
Awesome. Well, look, it's been a real pleasure. Craig, thank you so very much. I really appreciate the opportunity to do this today. Best of luck this year. Pretty exciting stuff. Curious to see this marriage between data centers and, and you all in the renewable space, continue. But, in the interim, good luck, Here. We'll talk to you soon, all right?
Yeah. Great. My pleasure.
Thank you.
Thank you, Julien.
Thanks for everyone participating. Cheers. Have a great day.