George Gianarikas : Okay. And just maybe a final question. You mentioned that the stronger RIN prices are offsetting some of the unplanned downtime at our R&G facilities. Now as you ramp those back, what’s your outlook, anything you can share on the recent surge in any 3 RINs and how you plan to monetize those? Have you missed an opportunity here to monetize some of your wins based on the downtime?
George Sakellaris: Well, we’re taking advantage of the market older. We started the year with about 50% merchant. And — but right now, what we have left for this year is probably the production of the last couple of months. We’ve been monetizing month to month, and we got pretty good prices, I would say. And it’s been reflected in our guidance this year as well as next year. And the other thing I want to point out, and I think I did mention one of the calls last time for ’24. We were always optimistic about the RIN prices and what we had used for that old estimate, it was pretty much what the RIN prices are today right now.
Operator: Our next question comment comes from the line of Moses Sutton from BNP Paribas.
Moses Sutton: And first, for what it’s worth, I do not think you should slow growth like Perfin noted in order to return cash when there’s real growth in the table. I guess first question, how do you think about adjusted EBITDA margins at the project business? It’s 4% for the 9 months year-to-date. I think of this closer to 10% typically. Is this due to inflation? Is it due to certain mismatches on delay? How do we think of that on the project side EBITDA?
George Sakellaris: Yes. I mean the 10% sounds a little bit high, but I think that it’s typically a function of mix, right? And so when you’re comparing year-over-year, it’s going to be a function of the mix of projects that are active at that point that are impacting the margins. I think we’ve been probably closer to 6% historically. So we’re not that far off — and again, I think we’ve seen some of our mix more recently have a little bit lower margin profile, even though overall margins have been expanding. So I think we’re not far off of kind of where our historical margins have been.
Moses Sutton : And then I guess back on the D3 RIN topic, so as the RINs on the spot basis sit near the 2021 peaks, I know you typically talk about a certain like 50% spot exposure or spot / hedges 50% contracted. Is the delay in R&D projects actually offering you the ability to contract more of the future RINs that you expect as projects roll online next year at a higher contracted price than you would have prior. Is that already embedded in the 250?
George Sakellaris: It’s a very, very good point. Actually, we are talking to a couple of fires right now. We have a couple of offers on the table. That’s why we not forecasting ring prices for next year and so on, that we might enter into a couple of long-term contracts with much higher prices than what we had, let’s say, entered to the contracts couple 3 years back. No, no, we are looking at it. And no question about it. And as soon as we feel a little bit more comfortable with the prices, we will execute them.
Moses Sutton : That’s very helpful. And what’s long term considered now in terms of — tenor in terms of years?
George Sakellaris: We have up to 15 years.
Operator: Our next question or comment comes from the line of William Grippin from UBS.
William Grippin : First question, just hoping you could maybe give a little more color around the RNG financing you recently announced with My understanding is that, that structure is flexible and that there might be a return sharing component to your actual costs to that financing? Is that something you’re able to elaborate on?
Joshua Baribeau: Folks, this is Josh Baribeau here. So it’s not variable. How it works is there’s a fixed cash component interest rate until the loan is amortized. And then after that, and it gets a bit of a cash sweep until they achieve an IRR, internal rate of return on their initial investment out.
William Grippin : Are you able to disclose what the actual — I guess, the upfront rate is for you? The effective rate for you is on that financing?
Joshua Baribeau: Yes, that’s in the 8-K, and we’re accruing at that IRR rate.
Operator: Our next question comment comes from the line of Christopher Souther from B. Riley.
Christopher Souther: With the cycle being extended for contracting awards and implementation, I think this year, we’re much more back-end loaded with the visibility you’re going to have. So I’m just kind of curious how you’re thinking about the visibility today and when you get kind of the full guidance for 2024, should we consider expectation that there’s going to be a lot more kind of visibility on awarded kind of contracted backlog as we kind of enter the year? Or is that maybe wishful thinking on my hand just how do you think about like the visibility on that [indiscernible].
George Sakellaris: I think we have pretty good visibility, and we’re relying more on contracted and we invest where we’re going to be at the end of the year and the contracted and that gives more impact than anything else and not rely as much. We’re not going to have the big attack what we did this year for the last couple of quarters, especially where we are.
Christopher Souther: Okay. And then maybe on the project, the potential development project sales. Is there any sector in particular you’re seeing that you’d be focused on for potential sales? Is it solar, batteries, RNG? Like what specific areas will you be kind of looking at there? Or is it kind of all the above?
Doran Hole: I think not really RNG. I think we’re mostly on solar, certainly and then the hybrid — solar and battery, I wouldn’t put it past us to think about some of the stand-alone battery given the fact that some of those markets, like I said, we continue to develop in multiple markets. Some of those markets might have more merchants than we like. And so therefore, we’ll work on an NTP sale of projects like that. So I think it’s more along those lines versus the RNG.
George Sakellaris: I want everybody to understand with developing assets, whether it’s solar assets, battery assets and monetizing them. It’s no different than the probably the energy sale becomes contract. Basically, we sell the receivable and then we get the money and then the financing and then at the end of the day, we guarantee the savings. This is even a simpler process. It just takes a little bit longer time. And then we have the option to keep the ones that they have with better returns and remit or have a rate of return. And RNG projects, generally, they are more complicated, no question about it. But at this point in time, they get better returns.
