Rebecca Kujawa: Hey, Shahriar, it’s Rebecca, I’ll take that one. So, we’re super excited about repowers as part of the longer-term growth plan within NEP. And with such an extensive pipeline of renewable projects, to pursue these repowers, it’ll be a nice complement to continuing to acquire assets. So, it doesn’t meet the entire growth plan, but certainly is a nice part of it. As we talked about in May, we have a total of 1.3 gigawatts that we see in the near term. And obviously, this is a first step forward in order to make progress on that. So, attractive CAFD yields, as we noted, there’s still some steps to finish. But we’re also not done with the opportunities repower other assets in the portfolio.
Shahriar Pourreza: Got it. Perfect. And then just lastly for me, just on the sources and uses of cash, I think we all really appreciate the enhanced disclosures there. I guess, obviously, given the capital-intensive nature of the business, do you anticipate any incremental levers to potentially offset the $3 billion of equity and $3 billion of asset sales if, the capital market conditions become a bit more challenged? I guess any reason to rethink around flexing the payout or the balance sheet metrics? Thanks, guys.
John Ketchum: Yeah. Listen, thank you. Thank you, Shahriar and obviously, we are very, very focused, as always on costs. We’re very, very focused on capital productivity and efficiency as well. So, those are two levers we always have and I think our shareholder base is very familiar with the success that we’ve had in our annual cost reduction processes that we run across the company. But those are certainly point of focus for us and look, when I think about the $3 billion of equity and the $3 billion of asset recycling, if you look historically at what we’ve been able to do, I’d be pretty disappointed if we can only do $3 billion of asset recycling, not only through NEP, but third parties and as a reminder, over the last three or four years, we’ve been very successful in selling renewable projects, not only to NEP, but to third parties.
Think about the OTPP transaction, the Apollo transaction, the KKR transaction. So, we feel very good about our sources plan that we’ve laid out and look forward to executing against it.
Shahriar Pourreza: Perfect. Thank you, guys. Much appreciated. Congrats.
Operator: Our next question comes from David Arcaro with Morgan Stanley. Please, go ahead.
David Arcaro: Hi, good morning. Thanks so much for taking my questions. I’m wondering if, you mentioned returns, over 20% returns for storage and wind. I think that’s higher than you’ve indicated in the past and assuming that’s driven by higher PPA pricing, was wondering if you’re seeing, just given higher PPA prices, any impacts to demand in the renewables market here? And how you think about that level of return in terms of whether it’s sustainable, given the competitive dynamics in those end markets? Thanks.
Rebecca Kujawa: Dave, I’ll take that. As you know, we’ve always characterized the backdrop for renewables as a competitive environment. So, I’m very proud of how this team, our team, is executed across an ever-changing environment. And I certainly think it’s a strength of our team and most importantly, the competitive advantages that John has highlighted, investment over a long period of time, the ability to work with our supply chain, the ability to work with the folks that we partner with to build the projects and ultimately operate these projects well over time. So, I think that really contributes to our ability to maintain appropriate returns and I also think it reflects what you expect us to do, which is adjust to all of the current costs of both building, financing and operating projects over time and we believe that we are successfully able to achieve that.
In terms of demand, obviously, we can’t fully predict the future, but I can tell you that the two data points that I think are really top of mind and illustrated from our report today is 3.2 gigawatts is a fantastic sign I think, of demand. And as I highlighted a minute ago to Steve’s question, a good underlying foundation of technology, dates, locations, etcetera. So, I’m really pleased and also, in looking at the pipeline for the fourth quarter, obviously, this is a development business. Things can change. But I believe that we’re in a good position to continue realizing strong demand, particularly in that 24 timeframe to 26 timeframe. So, based on what we see today, very exciting and I think it’s founded on the things that you all know well, which is a backdrop of increasing electrification, increasing demand for generation and capacity value across our sector, and renewables continuing to be the least cost form of generation.
So, I would hope you would expect what I would argue is the best position company to execute well against an environment like that.
David Arcaro: Great. Thanks. That’s really helpful. And I was also curious on the tax credit transfers market. Could you touch on what you’re seeing in terms of demand and interest from counterparties? How deep is that market and what level of pricing that you’re realizing when you’re transferring these credits as it becomes a more important source of cash flow over the next few years?
John Ketchum: Yeah, Dave, I’ll take that question. First of all, I would argue, we have an outstanding tax department. And our tax department, yeah, together with our treasury group started early and we’ve already reached out to 50 of the top U.S. taxpayers in our building relationships and have had terrific execution against our ’23 plan. The demand is extremely robust for tax credit transfers and we’re already working on ’24 as we speak, having ’23 pretty much behind us. And one of the things that really helps NextEra and the tax transfer market is the fact that we have a strong balance sheet. We have an A minus rate from the parent and we’re able to underwrite the credit. And being able to underwrite the credit is really, really important because we compete against a lot of really small developers that can’t, that if you go to the top 50 taxpayers, they’ve never heard of these companies.
They don’t know who they are. They don’t really know what they do. They know NextEra and we can provide an indemnity behind the tax credit that we transfer. It sleeves off our vest, so to speak, to be able to do that and we get preferred pricing because of it and so I feel great about where things stand in terms of our tax credit transfer program.
Rebecca Kujawa: And I’d love to add one point on that because I think it’s a great complement to our broader business and particularly the C&I customers that we’re working with to actually buy some of the renewable energy. Some of the customers that are most active in the market in procuring renewable energy are also the ones that are most interested in buying tax credits from us and I think they really like the value proposition, certainly of the economics, as John highlighted, but really like the value proposition supporting and enabling investment in renewable projects. So we see a really deep market, a lot of interest, and really a lot of cross-selling opportunities across the portfolio.
David Arcaro: Okay, great. Appreciate all the color. Thanks so much.
Operator: Our next question comes from Julien Dumoulin-Smith with Bank of America. Please go ahead.
