Clearway Energy Inc. plans to winterize some of its wind farms in Texas after a severe winter storm in mid-February caused generators of all kinds to freeze and malfunction, leading to the worst blackouts in the state in decades, company president and CEO Christopher Sotos said March 1.
Officials at the Electric Reliability Council Of Texas Inc. said most of the lost capacity during the cold snap was from thermal generators such as natural gas and coal plants. While frozen wind turbines played a smaller role in the crisis, their lost generation is proving costly for some project owners. Clearway expects frozen wind turbines to cost the company up to $30 million.
Sotos said on a fourth-quarter 2020 earnings call that Clearway is focused on winterizing assets that are subject to hedge contracts requiring them to deliver certain amounts of electricity, as opposed to those with power purchase agreements in which the buyers are under take-or-pay obligations.
Clearway has a wind portfolio in Texas of approximately 1,188 MW, according to S&P Global Market Intelligence data.
"Our wind machines in Texas in general were rated for operation down to ambient temperatures like those that were observed in this event. But like many other operators, I think we find that there are certain supplemental deployments that would be useful in particular in conditions like those ... observed in Texas during this event," said Craig Cornelius, CEO of Clearway sponsor Clearway Energy Group LLC, which is owned by the investment firm Global Infrastructure Partners - C LP.
Sotos said Clearway does not yet know how much it will spend on anti-icing technology.
The company reported fourth-quarter 2020 adjusted EBITDA of $229 million, an increase from $194 million in the comparable quarter of 2019. The S&P Capital IQ consensus adjusted EBITDA estimate for the quarter was $252.2 million, based on the polling of five analysts.
Net losses widened during the fourth quarter of 2020 to $73 million, from a net loss of $48 million a year earlier.
As a result of the expected financial hit from the Texas storm, Clearway maintained 2021 guidance for cash available for distribution at $325 million, enough to support expected dividend growth, said CFO Chad Plotkin.
"We view the estimated financial exposure from the February conditions in ERCOT as an event outside the scope of the company's normal annual sensitivity ranges," Plotkin said. "Given this dynamic, we are now factoring in the estimated impact related to the ERCOT event into full-year financial expectations."
