And in terms of the return measures, we of course, are mindful that with interest rates higher in the market right now, and frankly, with power prices continuing to be fairly elevated for most of our customers and definitely community solar customers, we are entitled to look for a good return on those. And that’s a significant spread against whatever the benchmark rate is in the market. And that’s on an unlevered basis. And this asset needs to be – able to be active to Altus on an unlevered basis from a unit economic perspective. And then of course, the most effective way for us to hold that asset is in our funding facility that then produces even higher returns.
Vikram Bagri: Thank you.
Operator: Our next question is from the line of Jon Windham with UBS. Please proceed with your question.
Jon Windham: Perfect. Thanks for taking the questions. Looking forward to math camp. Can we start with – you mentioned some delays in state policies, can we get a little specific there on what particular states we should be keeping an eye on?
Lars Norell: Sure. This is Lars and thanks for that question. There is, for example, a very popular state on the East Coast where we own a lot of solar assets and a state that we have been in for more than a decade. They have a community solar program that just started going or got going last year. We were very fortunate. We swept some of the most awards under that program together with Blackstone and their Link portfolio last year, and those assets are now finished through construction and up and running. But the next sleeve was anticipated to basically open up again so that we could submit a number of deals that we already had signed leases for. These leases were signed with CBRE Investment Management. They were signed with clients of CBRE.
There was more assets from Link or Blackstone in there, and all of them were ready to basically go into construction. But for whatever reason, the state decided to limit the size of each new solar system, in this particular go around to 1 megawatts per system. We had a number of assets that were 5 megawatts in size and 6 megawatts in size and 7 megawatts and 8 megawatts in size. And so we had a choice. We could either submit those assets into this limited 1 megawatt size or hold off until the next sleeve opened up, which we are led to believe will happen in June of this year. And so we have made the tactical and strategic decision to actually hold off. We don’t want to send the hard work that we put into these 6 megawatt and 7 megawatt assets into a program sleeve that for the moment is limited to 1 megawatt.
We actually held off on all of that. Those assets are still there, they are with us. We are going to get into construction as soon as they get picked into the program. But at least for the moment, that caused a delay for us.
Jon Windham: Appreciate that. And then, the other thing I wanted to get into a little bit, if you can help us all get a little bit more comfortable with the guidance is, the miss around weather in the fourth quarter. Investors experience with blaming weather from the wind industry has not been good, right? So, like weather this quarter and then weather again, it just turns out that their capacity factor assumptions were too high. Do you have just some idea of how things have tracked to maybe last year by quarter or the last couple of years. in terms of you hitting your targeted production, like how common is this? How far out of the box was the fourth quarter?
Lars Norell: Sure. This is Lars, and I think Dustin will follow-up. So, we are happy because we have a 15-year operating history at Altus. So, we have seen a lot of weather. In the beginning of Altus, most – our history, most of the assets that we built were all in the Northeast, because that’s where we are located, and we knew a lot about the programs in Connecticut, New Jersey and so forth. Then, we tended to see occasionally bad weather throughout the Northeast region during one quarter. But even during those years, we didn’t tended to see it happening two quarters in a row. In 2014, ‘15, ‘16, we started branching out across the country, and we built assets in Hawaii, in California and in other states. And then it became increasingly rare to see even one quarter show a particularly sort of nation-wide bad weather pattern.
And so, in the Q3 and Q4 period of 2023, in spite of having a very well-diversified portfolio, the weather on both coasts turned really bad, and in particular, California, that usually sort of saves us a little bit, had a lot of rain and atmospheric rivers and other things going on. So, based on this 15-year operating history, this was not something that we had seen before. As a consequence, I guess Dustin, we want to make sure that the guidance that we have left for 2024 is understood to incorporate a fair amount of careful analysis going into it.
Dustin Weber: Yes. I think that’s right. I would add that, Jon, one anecdote is December, which was particularly frustrating, was down over 20% from historic norms and forecasts. So, that was certainly a surprise to us. Lars touched on, like how we think about weather as it relates to our forecast. We really want to make sure that we are continuing to diversify our portfolio, which is currently 25 states. That’s one aspect. And we need to make sure our forecasts are right and appropriately allowing for this variability, and we feel good that we have done that for 2024.
Operator: Thank you. Our next question is from the line of Chris Souther with B. Riley. Please proceed with your question.
