So I think that’s really what we look at. I think we’ll come back to you with more detail at our Investor Day in a month from now with more specificity around that and what we target. But these are some of the general themes that we’re looking at particularly in ’24 and beyond.
Michael Sullivan: Okay. Very helpful. Thanks for all the color.
Operator: The next question comes from the line of Angie Storozynski with Seaport Research Partners. Please go ahead.
Angie Storozynski: Thank you. So, first on the wind repowering I understand that you’re going to talk about it at length during the Analyst Day. But I’m just wondering, so you mentioned obviously attractive returns, but we’re also hearing that older wind assets are starting to see some diminished profitability from a cash perspective because of higher OpEx and CapEx. And I’m just wondering if this plan the repowering is driven by basically an attempt to retain the current earnings power of these assets or if there’s a true cash benefit associated with that?
Pedro Azagra: The answer is yes to both. I think when you see the accounting path of assets in — of renewable assets in the US, because of makers accelerated depreciation, ITC, there are many, many explanations. I think in the last part of the year those earnings are negative. It’s not that you lose value. It’s just the way it is. So from an earnings point of view and cash flow point of view, the answer is 100% yes. That’s one of the main reasons why repowering is very, very important and we are lucky that we have now an own fleet that allow us to do such a material amount of repowering.
Angie Storozynski: Okay. But there’s also this earnings benefit right associated with the sale of the tax credits and how that basically trickles into earnings. And I’m just wondering, if — again, that’s the main driver of those repowering? Or is it that — again, there’s like a true cash or value creation benefit associated with those repowering?
Pedro Azagra: I think you have a financial reason and an industrial reason. I mean the industrial reason is we continue to have customers that they want to have extended PPAs. As you can see, they are renegotiating PPAs. And the feedback we have for most of the assets, we’re going to consider repowering is that, they would love to expand and have new PPAs et cetera. So from that point of view, there is a need from the customer side and there is an opportunity for us to have new assets. From a financial point of view, it’s clear, that when you have these types of assets after 15, 18 years you have an issue in the P&L. And therefore, cash flow is different, because you have already got the cash flow back because of other reasons.
But I think when you have the opportunity to create a new asset and that asset you can invest from a CapEx point of view much less than a new asset. You’re going to have an increase on production. That probably is going to be 30% increase at least, versus the old asset. And you can have an enhancement in O&M and PTCs for 100% of the production, not just from the incremental production seems to me that that’s a no-brainer, okay? So that’s why the combination of all those things is why we need to go ahead with the repowering. Again it’s a very long period of time. And we’re going to be very opportunistic. Think about when is the right moment from a cash flow point of view, from a P&L point of view, from an investment point of view, debt point of view but the plan is there.
Angie Storozynski: Okay. And then just moving on to offshore wind, so Iberdrola and Kitty Hawk and then we had these two updates from Eversource and Dominion about their offshore wind transactions. So we have some price points, I guess for these assets. I mean do you think that that impacts the probability of the sale of your stake on Hitty Hawk — Kitty Hawk, I am sorry — and how again, if there’s like a viewpoint based on these data points that you have on offshore wind in the US.
Pedro Azagra: I think the good thing about those data points is that, if you remember many of you asked quite often well there is no body interested in offshore. And we told very often, I’m sure there is not — the long lease you had two years ago three years ago but the interest continues to be there. I think it’s good to have people interested in offshore. I — we do not know the details of all those other transactions. I think Dominion transaction that’s our regulated asset. So that’s a different animal. And I think in the case of the Eversource based on public information, I think the acquirer is being guaranteed some type of return, okay? That’s not our case. I mean why speaking about the lease, okay? And the lease market as you know they were in an auction in California and very successfully in the middle of all the Ukraine et cetera et cetera.
So that’s why you’re — it’s not really comparable. In the other cases it’s really assets that are being built right now developed and is multibillion type of approach. I think the case is a lease. I think we will continue to seek opportunities to sell the lease to do a partnership in the lease, as we do in many other assets. Last year, we sold several assets in the onshore renewable business. Some projects we didn’t want to do and we thought it was better to sell them. So we never stopped. But I don’t think to sell a lease is comparable to those deals. And again, this is not an asset that we have a CapEx deviation or we have a write-off or we have to do something it’s a different animal compared to those.
Angie Storozynski: Okay. And then lastly on NECEC, so if you could provide an update on the construction process and also how comfortable you feel spending the money given that NextEra continues to challenge the circuit breaker upgrade at Seabrook?
Pedro Azagra: I will let Catherine, to answer on the construction progress. I think our focus there is very simple. It’s first, on the change of law that’s a priority for us this year to make sure that we get that finalized. And second on NextEra seems to me that NextEra there is a change of leadership. I think the way they behaved in Maine in my opinion at the end is the right one. And I think you’ve seen some news there on other matters things that were happening in Maine. So the Seabrook I think we’re working with them. I think we’re very close to having a schedule on the breaker the issue that you have — they have to solve. And I’m sure they will get that done okay? So — but I think Catherine, if you want to comment on the construction?
Catherine Stempien: Yeah. Sure. Thanks Pedro. So we’re doing really well on construction on NECEC. We have 25% of our foundations have been set and 20% of our poles. We’ve already started stringing conductor actually on the corridor. We’ve also been doing substantial construction laying the foundation for our HVDC converter station and for the stack comp. And we’ve really been able to benefit from the power of Iberdrola in the supply chain by being able to negotiate really good contracts for most of our vendors including with Hitachi for the STATCOM and HVDC converter as well as a lot of our civil engineering works and the other work that needs to be done on the site. So we’re really pleased with the progress right now and we continue full speed ahead.
Angie Storozynski: Great. Thank you.
Operator: I will now turn the call back over to, Pedro Azagra. Please go ahead.
Pedro Azagra: Okay. So thank you to everybody. A pleasure to have spoken with all of you, I think we’re going to follow up on one-on-ones now with each of you and looking forward to seeing you in the upcoming days and weeks. Thank you very much.
Operator: Ladies and gentlemen, that concludes today’s call. Thank you all for joining. And you may now disconnect your lines.
