Enlight Renewable Energy Ltd.

Good day and thank you for standing by. Welcome to the Enlight Renewable Energy fourth quarter and year end 2023 financial results conference call. At this time, all participants are in a listen only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one and one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1 and 1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Josef Leskovec. Please go ahead.

Thank you, Operator. Good morning, everyone, and thank you for joining our fourth quarter and full year 2023 earnings conference call for Enlight Renewable Energy. Before beginning this call, I would like to draw participants' attention to the following. Certain statements made on the call today, including but not limited to statements regarding business strategy and plans, our project portfolio, market opportunity, utility demand and potential growth, discussions with commercial counterparties and financing sources, pricing trends for materials, progress of company projects including anticipated timing of related approvals and project completion and anticipated production delays, expected impact from various regulatory developments, completion of development, the potential impact of the current conflict in Israel on our operations and financial condition, and company actions designed to mitigate such impact, expected changes in Clinera's leadership, and the company's future financial and operational results and guidance, including revenue and adjusted EBITDA, are forward-looking statements within the meaning of U.S. federal securities law, which reflect management's best judgment based on currently available information. We reference certain project metrics in this earnings call, and additional information about such metrics can be found in our earnings release. These statements involve risks and uncertainties that may cause actual results to differ from our expectations. Please refer to our 2022 annual report filed with the SEC on March 30, 2023, and other filings for more information on the specific factors that could cause actual results to differ materially from our forward-looking statements. Although we believe these expectations are reasonable, we undertake no obligation to revise any statements to reflect changes that occur after this call. Additionally, non-IFRS financial measures may be discussed on the call. These non-IFRS measures should be considered in addition to and not as a substitute for or in isolation from our results prepared in accordance with IFRS. Reconciliations to the most directly comparable IFRS financial measures are available in the earnings release. and the earnings presentation for today's earnings call, which are posted on our investor relations webpage. With me this morning are Gilad Yavit, CEO and co-founder of Enlight, Nir Yudas, CFO of Enlight, Jason Ellsworth, CEO and co-founder of Clonera, and Adam Fischel, COO and co-founder of Clonera. Gilad will provide some opening remarks and will then turn the call over to Jason and Adam for review of our U.S. activity, and then to Nir for our review of our fourth quarter and full year results. Our executive team will then be available to answer your questions.

Thank you all for joining us today for Enlight's fourth quarter and full year 2023 earnings call. In 2023, we continue to deliver on the Enlight story, above-market growth and above-market project returns. Moreover, we build the necessary foundation to take the next major step in 2024 and beyond. And light is now on the cusp of another major expansion as we begin the construction of several flagship solar and storage projects, particularly in the United States. I will first review the important achievements we've made in 2023, and we'll then describe our outlook into 2024 and beyond. Let's start with our strong full-year 2023 financial results. Revenue for the whole of 2023 grew 33% over last year to $256 million. Net income grew 157% to 98 million, and adjusted EBITDA grew 45% to 189 million annually. We also saw significant growth in our operating cash flow, which reached $150 million for the full year, an increase of 66% over 2022. In the fourth quarter, revenue grew 21% over last year to $74 million. Net income grew 48% to $16 million, and adjusted EBITDA grew 8% to $47 million. Overall, we delivered strong growth and profitability in 2023. even amidst a challenging macroeconomic backdrop. Driving the growth in our financial parameters was our project addition. In 2023, we connected over 480 megawatts across Israel, Europe, and the U.S., a growth of 33 percent. This included Genesis Wind in Israel and Apex Solar in the U.S. while we also ramped up production at Bjornberget in Sweden. As of today, we have 1.9 gigawatts of operational duration, as well as our first operational storage project with a capacity of 277 megawatt hours. This result testifies to the strength and resilience of Enlight geography and technology diversification, combined with our developer-plus IPP model. As a result, we benefit from recurring and growing income from our IPP, while our greenfield development activity fuels continuous growth at high returns. In 2023, we also saw a rapidly improving outlook for electricity demand. Electricity demand is rising in the US for the first time in two decades, driving increased PPA pricing. Moreover, equipment costs have come down significantly, while the cost of finance is now in decline. As a result, we expect to see continued demand for our projects at attractive returns. We demonstrated that in 2023, by successfully amending PPA pricing upwards from over 1.8 gigawatts by an average of 25 percent, while assigning new PPAs at even higher levels. Our pipeline of large-scale projects and competitive access to the grid allows us to continue to capitalize on the need for electricity with favorable prices. At the same time, panel and battery pricing fell considerably throughout the year. These trends have continued to consolidate in the fourth quarter. Higher PPA pricing and lower construction costs contributed to the improving project returns. which we expect to reach 10% on an unlevered basis for project-reaching COD between 2024 and 2026. On top of that, in the fourth quarter, we saw nearly 70 base points decline in interest rates. When overlaying this with our unlevered project returns of 10%, we can generate average levered equity IRR in the mid to high tens, and in some cases, even higher. In 2023, we also continued to convert additions to our material portfolio. Our greenfield development teams converted 871 megawatts and 2.7 gigawatt hours from our large development pipeline into material projects. The additions included several major flagship projects in the United States, such as Roadrunner and Country Acres, which will commence construction in 2024. And finally, substantial financing is required to sustain and accelerate such growth. And in 2023, we successfully raised capital from a diverse set of sources. Given the constrained financing environment, this constitutes a notable achievement. We raised $271 million in equity through an IPO on the NASDAQ at the start of the year. and secured over half a billion dollars in project finance and tax equity. Also important was the completion of our first asset sell-down in the U.S. and some sell-downs in Israel, totaling $19 million. While these initial disposals were small, this set the precedent for sell-downs to become an increasingly important source of funds in the future. To sum up, 2023 was a year in which Enite delivered on its above-market growth and above-market return score. We secured various sources of financing, expanded the portfolio of projects to be built in the near term, and improved future project returns, all amidst a challenging macroeconomic environment. Looking to 2024, we forecast further revenue growth and profitability. We expect to add 543 megawatts of generation and 1.6 gigawatt hours of energy storage to our operational assets, among them a TRISCO project in the U.S. This represents our major move into energy storage with 580% growth in this segment. Moreover, we expect to commence construction on upwards of 1 gigawatt and 2.9 gigawatt hours of capacity in 2024, which reflects an over 55% increase on our current operational generation and 1,040% increase on our operational storage. This includes major projects such as Roadrunner, Country Acres, and Quail Ranch in the U.S. Hekama Hybrid in Spain, and several standalone storage projects in Israel and Italy. In total, including Atrisco, these projects are expected to generate $307 million in revenue and $221 million in EBITDA in their first full year of operation. This is a massive step in the growth of the company, and therefore, execution of this project is our highest priority. These new builds will also help diversify and light current geographical mix, introducing significant U.S. exposure while adding a major element of solar and storage to our technological mix, which is largely wind today. In 2024, we also expect to convert more of our large development pipeline into mature projects. Examples of this include our unique portfolio of solar and storage in PJM, in the U.S., totaling 1.4 gigawatts and 2.2 gigawatt hours of storage. This project, which benefits from exceedingly lower interconnection costs, has been moved to PGM's interconnection fast track, significantly easing their path to further development. In addition, we have additional large-scale solar and storage projects across the Western U.S. and wind projects in Europe that are approaching maturity. The depth and breadth of our development pipeline is a strategic resource for Enlight. With 15 gigawatts and 25 gigawatt hours of storage of potential, it ensures that we maintain a sizable buffer of imminently available mature projects on which we can work. Finally, it is important for me to stress that with the capital we raised last year, we have all the equity needed to fund 2024's We will have to secure significant project finance commitments. However, the success in raising project finance during 2023 provides us with confidence that we will achieve this. With macroeconomic conditions now more settled, our all-in interest rate for project finance now stands at 5.25% to 5.75%. In 2024, we also plan to execute large asset sell-downs, either of minority or majority stakes in the U.S. project, further underpinning the company's financial position. As Enlight continues to grow, our ability to sell finance also gathers steam. A larger IPP provides more operating cash flow, while additional conversion of projects increases the potential for sell-downs. Both these represent sources of funds for future growth, and when combined with our extensive pipeline of development projects, provide a path for growth without the need for external capital. Turning to our 2024 guidance, we expect revenues between $335 million and $360 million, 36% higher than in 2023 at the midpoint, and adjusted EBITDA between 235 million and 255 million, 30% above that of 2023 at the midpoint. Growth continues to be robust as we add new projects to our operational portfolio. Nir will describe in detail the assumptions that underlie this guidance later in the course. To tie it all together, In 2024, Enlight will harness its resources to grow considerably in all markets, but especially in the U.S. And as before, we aim to continue delivering on our two-fold objective, above-market growth and above-market product returns. Before handing the call over to Jason for his remarks, I'd like to comment on the CleanEURA leadership transition we announced in January. After more than 10 years at CEO of Clinera, Jason accepted a call from the Church of Jesus Christ of Latter-day Saints to serve as a full-time mission president in Chile. He will leave his post with Clinera at the end of June. Clinera's COO and co-founder, Adam Pischel, will assume the role of CEO. Adam is an amazing leader and responsible for building Clinera beside Jason during the last 10 years. We anticipate a smooth transition over the next six months as Adam and the amazing Glinera leadership team remain and continue to move the company and its projects forward. I thank Jason for his leadership and expertise in creating and cultivating Glinera. His vision, leadership, and tireless work, coupled with his talented and dedicated, propelled the company to make a huge impact on the U.S. renewable market. Adam has always been a big part of CleanAira's success, and I'm fully confident in his skills, experience, and leadership, and his ability to take CleanAira to the next level, which we at Enlight shall continue to support and accelerate. Jason?

Thank you, Gilad. I will certainly miss working with you and the rest of our amazing team at Enlight and CleanAira. Regarding our U.S. business, 2023 was foundational, and in 2024, we expect to launch from that foundation into a period of significant growth. During 2023, we successfully completed APEX Solar, a 106 megawatt project located outside Dillon, Montana. APEX was the first project completed together by Enlite and CleanAira in the US. We also made progress toward completing our Atrisco Solar project in New Mexico. As of today, equipment supporting the full 364 megawatts is installed and work is underway to finalize mechanical completion. Further, during the fourth quarter, we closed tax equity and debt financing on Atrisco Solar, raising $300 million of construction and term debt and $198 million in PTC tax equity. The transaction, which released $204 million of excess equity back to Enlight's balance sheet, demonstrated our continued access to competitive project financing. including tax equity. We have reached a mutual resolution of a supplier matter on the 1.2 gigawatt hour battery storage portion of Atrisco and now expect the solar site will reach COD in third quarter of 24 and the storage installation in fourth quarter of 24. Our overall project portfolio in the U.S. advanced steadily in 2023 with approximately 10 gigawatts through system impact study We signed PPAs on 806 megawatts and 2 gigawatt hours that will enter construction in 2024. This includes Country Acres, a 392 megawatt and 688 megawatt hour project delivering to Sacramento Utility District in California, Road Runner, a 294 megawatt and 940 megawatt hour facility contracted with APCO in Arizona, and Quell Ranch, a 120 megawatt and 400 megawatt hour project that represents the second phase of our Atrisco facility in New Mexico and delivers to PNM. The full 806 megawatts and 2 gigawatt hours will start construction during 2024, launching a new phase of Clean Air's expansion and growth in the U.S. In addition to advancing and constructing projects in the U.S., we improved returns by amending many of our existing PPAs. Over the past 18 months, our team successfully raised prices by an average of 25% on contracts covering 1.8 gigawatts of capacity. Strong utility relationships and large-sized projects that are deliverable in the near term made these pricing negotiations possible. And as Gilad mentioned, we are also experiencing economic tailwinds by way of falling equipment prices. Since the beginning of 2023, we've seen our solar panel prices drop by approximately 25% and battery prices by more than 30%. We continue to focus on converting our early stage development projects into mature projects. As an example, in PGM, we are advancing a portfolio of projects totaling 1.4 gigawatts and 2.2 gigawatt hours capacity that have negligible interconnection costs. Prices in the regions where these projects are being developed are high due to a growing appetite for renewable energy and limited availability of feasible interconnections. With final interconnection agreements expected by the end of 2024, we anticipate achieving attractive PPA terms on these assets. In the western U.S., we continue to see significant utility demand for our solar and storage projects. With power demand continuously on the rise, our roughly 10 gigawatts portfolio of developing and mature projects, all with advanced interconnection, puts us in prime position to meet rising demand with attractively priced generation. Finally, as previously announced, I will be stepping down from my position as CleanAero's CEO at the end of June. Adam Pischel, CleanAero's co-founder and current COO, will take my place. I'm supremely grateful for the years I've had to work with Gilad, Adam, and the CleanAero and Enlight teams, The company is an industry leader because the organization and its partners are comprised of what I consider to be the most dedicated, talented, and genuinely good people in the business. Both Gilad and Adam are dear friends and trusted leaders. I'm excited to see all the great projects and exciting developments they deliver in coming years. Now I'll let Adam Pischel introduce himself and add some comments.

Thank you, Jason. Leading alongside Jason for nearly two decades has been an incredible journey. Together we have built three renewable energy companies, developed hundreds of solar projects, and most importantly, have built an incredible team of professionals who are now leading CleanAira into its greatest period of growth. While execution is our highest priority for 2024, Enlight and Clean Air continue to invest in our growing development portfolio that will take us through the next decade and beyond. I am passionate about renewable energy, this incredible organization, and our dedicated team, and I'm excited about this expanded role. I am confident in our 2024 execution plan and look forward to sharing more of this developing growth story during future earnings calls. Thank you. And I'll now turn the call over to Nir.

Thank you, Adam. In the fourth quarter of 23, the company's revenue increased to 74 million, up from 61 million last year, a growth rate of 21% year-over-year. Growth was mainly driven by new operational projects compared to last year, while being offset by a decline in revenue caused by much lower electricity prices in Spain relative to the prices observed in the same quarter last year. Since the fourth quarter of last year, projects in the U.S., Hungary, and Israel started selling electricity. The most important of this is Genesis Wind, which contributed $9 million to revenue. In addition, Buren, which barely sold power in 2022, contributed $6 million in this quarter. GECAMA generated revenues approximately $14 million in revenues. However, its contribution fell 36% year-over-year due to much lower Spanish power prices compared to Q4-22 and relative to expected prices in Q4-23. We sold power in spend at an average price of 50 euro per megawatt this quarter versus 115 euro per megawatt in the same period last year. In addition, we were impacted by the slower-than-expected ramp-up in production at Genesis Wind and the Israel storage cluster. Fourth quarter net income increased to $16 million, a growth rate of 48% year-over-year. three non-cash items this quarter. A mark-to-market loss related to interest rate hedges on the financial growth process at a risk of storage of $8 million, gains related to the reduction in expected earner payments linked to the acquisition of cleaner of $12 million, and a loss of $5 million due to the impact of Israeli shekel volatility on foreign currency liabilities. These figures are all net of tax. In the fourth quarter of 23, the company adjusted EBITDA grew by 8% to $47 million, compared to $43 million for the same period in 22. Aside from the positive factor which affected our revenues growth, the year-over-year decline in revenues at GECAMA, as well as slower than expected ramp-up at Project in Israel, and $3 million increase in overhead, resulted in lower profit margin and slower growth in adjusted EBITDA year-over-year. We recorded $2 million as final payment recognized from the sell-down of Faraday, completed last quarter. Looking to our balance sheet, Enlight completed a large financing deal during this quarter, reaching the closing of both the Twisco Solar in the U.S. and our Solar Plus storage project in Israel. This raised a combined $511 million in project finance, from which $325 million of excess equity capital was recycled back to Enlight. This transaction strengthened our balance sheet and reinforced the financial footing needed to deliver the growth of our business in 2024. To reiterate, no new equity capital is needed to deliver on our plans for this year. As of the date of today's report, we had 260 million of revolving credit facility at several Israeli banks, none of which has been drawn. This is 90 million above what we reported in our Q3 23 results. Moving to 24 guidance. We expect annual revenues between 335 million to 360 million with adjusted EBITDA between 235 million and 255 million. Of our total forecasted revenues, 40% are expected to be denominated in Israeli shekels, 55% errors, and 5% in U.S. dollars. Nothing. Our last exposure to the shekel and the current high degree of volatility in this currency guidance is predicated on the average annual exchange rate assumption of 3.8 shekels to the dollar and 1.05 errors to the dollar, which are lower than the current level. In addition, 90% of our 24-generation output will be sold at fixed price, either through hedges or PPA. Our guidance reflects annual growth of 36% and 30% at the midpoint compared to 23%, respectively, demonstrating our accelerated growth path in 24 and the year ahead.

I will now turn it over to the operator for questions.

Thank you. As a reminder, to ask a question, you will need to press star 1 and 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 and 1 again. We will take our first question. Your first question comes from the line of Justin Clare from Roth MKM. Please go ahead. Your line is open.

Yeah, hello. Thanks for taking our questions. So first off here, you did mention plans to execute larger asset sell downs in 2024. I was wondering if you could give us a sense for the possible magnitude of those sell downs, how much equity capital you might be looking to raise and what would be needed to support your 2025 development and then you know the the projects in the u.s quail ranch roadrunner country acres are those projects that you're looking at for potentially selling minority interests hi thank you very much for the question justin so uh first on uh the sell down so yes as you said part of our strategy is uh to perform

and some sell downs on our very large portfolio that is maturing next year. So we intend to construct and hold the main project that we are going to construct next year, Country Acres, Road Runner, Quail Ranch, and other projects in Europe and Israel. But there is a potential for additional large sell downs. Currently, in the current guidance that we provided to the market, we assumed total sale downs of $15 million. But of course, the potential can be higher. And it's important to say, based on your second question, is that we are already fully funded in terms of the equity ticket that we need to invest for all the growth that we are going to construct next year. So we are talking about roughly 900 megawatts of new project and 2.7 gigawatt hours of new storage project. All are fully funded, and we do not have to perform any sell-downs or any capital raise or debt raise in terms of the corporate in order to raise the equity. It is already in the company. So the effort in terms of finance will be more on the construction debt and the tax equity side, so project finance.

Got it. Okay. Very helpful. All right. And then you did secure a large number of PPA amendments in 2023. Was wondering what we could expect going forward here. Are there additional possible amendments for PPAs for any of your projects that you're developing here? And then also just wondering on the general trend, we've seen a decline in module prices, battery prices. What are you seeing in terms of the PPA trend? Has that started to level off or potentially decline, or is demand so high that things are potentially moving even higher here?

Yeah, so I can start with the answer, and then Jason, you can compliment me on the U.S. market if you like.

So basically what we are seeing overall in the different markets, but especially in the U.S., is that the PPA price curves are continuing to rise, although the natural gas prices have already normalized. This is because we see for the first time in two decades a rise for the demand of electricity in the U.S. market and we believe these are very positive conditions that will continue to fuel our growth in the coming years. Now that we have amended the majority of our PPAs pre-construction, we believe that The next PPA that we are going to sign are going to be new PPAs, I would say materially. But the level of pricing in the new PPAs that we have signed recently and we expect to sign the next year, we expect to maintain the higher level than in the past of around 25%. So again, reflecting a higher level of electricity pricing and higher demand for electricity in the U.S. What we see in Europe is that electricity prices are continuing to normalize based on the historical peaks that were in the last two years. But still, as we said in previous discussions, The new norm of electricity prices after the decline is still very high comparing our levelized cost of electricity in our project in wind or solar in Europe. And therefore, the returns are very high. So we expect electricity prices in Europe to continue and normalize on the level of 50 to 60. And this level is still a high level that reflects very good return for our projects. Jason, if you want to compliment me on the U.S.

You bet. Thanks, Justin. Great question.

Gilad answered this very well. We have a small number of PPAs that we are discussing potential price increases with, but as Gilad has noted, the emphasis is on the new pricing, and we are seeing steady growth on the heels of dramatic growth in terms of of demand and strong . Some of what is advantaging the company is our interconnection position where we have projects roughly 10 gigawatts through system impact study, projects that are advanced and mature and ready to deliver to utilities where queues are clogged up and projects are behind schedule. with competing resources and therefore giving us the opportunity to deliver at strong pricing. We see long term that this steady increase in demand here in the U.S. along with a limited supply capacity is driving prices incrementally higher year over year. So that's been expected for the long term and we're experiencing that on the ground.

Got it. Okay, very, very helpful. Maybe just one more. Curious on how you're positioned relative to securing the domestic content adder in the U.S., whether it's for the solar portion of a project or the storage part of a project. What's the timeframe that we should be thinking about in terms of when that adder could be secured?

Jason, would you like to take this?

Yes, I'll take it. It's another great question. Each of these projects today is, when Gilad and Nir are speaking of the economics on these projects for project finance, none of those include domestic content adders as a basis for the economics. All of that is considered to be upside. We are working carefully along the path of confirming on a number of these projects, both in terms of storage as well as the overall PV side. Some of that does depend on the advances our suppliers make in terms of their production. And we are seeing that accelerate, but watching it carefully. And we're not getting out over our skis of our plants there. We're making certain that we're taking product from lines that are stable. The most important is making certain that we deliver on the projects on time and that those projects are producing in the coming years. So we're carefully pursuing that. domestic content, but doing it in a way that supports the overall plan. Again, not included in our current forecast by way of revenue or EBITDA.

Justin, just to reiterate that as a following to what Jason said, I think that we can now disclose that on Atrisco, we finally selected Tesla as to be the battery supplier. And as Jason said, the assumption, the current assumption for the project still does not assume tax equity either on the battery. However, we believe that there is a potential for that. We will see in the future. So this is some upside that we believe that might be unlocked in the future.

It may be worth noting just quickly as well that we have been aggressive about capturing the energy community adder and have included that on a number of projects thus far. So that is nice upside to the numbers.

Right. Okay. Thanks for the time.

Thank you. We will take our next question. Please stand by.

Your next question comes from the line of Mark Streis from J.P. Morgan. Please go ahead. Your line is open.

Great. Thank you very much for taking our questions. I'd just like to start by thanking Jason for all of your help since prior to the IPO, and best of luck with your next chapter. Our questions, I think just kind of maybe one multi-part question if I can. The 4Q revenue shortfall, you mentioned kind of a slower ramp at Genesis Wind and the Israeli or the Israel cluster. Just checking, are those now fully ramped? And then on the next part with the 2024 guide, we didn't notice any major project pushouts, but the EBITDA guide is a little bit lower than what consensus expectations were. So just kind of Seeing if you can bridge that gap between, it sounds like asset sales might be part of that driver. Can you talk about any kind of conservatism that you're baking in project ramping or FX, anything else that you think might be driving that? Thank you.

Yeah. Hi, Mark. Thank you very much for the question.

So for, I would say just in general, in terms of our guidance and the general way we look at the market and the company right now, I would say that after 15 years and founding the company, I think that the conditions that right now we see in the market and also for the company are maybe the best condition we've seen. we are seeing a very nice and accelerated growth, but also based on scale and very high returns. So if you look at our presentation, you can see that the average unleveraged return of our projects for the next three years is around 10% meaning that the leveraged return, the IRR, will be in the mids of the teens or maybe higher. I think this is a very good, I would say, number, especially for the large scale that we are going to build. And for the ones that we are entering into this year, and this is a large capacity of almost one giga of generation and almost three giga of energy storage, So we are talking about even a higher IRR. So first, yes, there was some shortfall in the fourth quarter, but we still grew 40% on average. between the EBITDA and the revenue and we are going to grow 35% next year. I think this kind of continuous growth will continue based on high returns and based on that we are very positive. On the EBITDA, there is no particular reason why the EBITDA is 30%. There is no trend. I would just like to point out that currently a big portion of our revenue mix is coming from the wind projects in Europe that are partially based on merchant price forecasting and on a tax mechanism that we include in our cost of sales. So basically it reflects the net price is reflected in the growth margin, but we see the growth price in the revenues, and then the price after tax in the EBITDA. So last year, since the electricity prices were dropped a little bit more rapidly, also the tax mechanism created a lower tax on the net electricity price that is reflected in our EBITDA. You see that we were more or less like our forecast, or I think in the middle of the forecast. But on the revenues, it came a little bit short. So I think that in terms of the growth of the company in the next year, we still see a very, very accelerated growth based on, I think, higher returns. In terms of the projects that are coming to operation and ramping up. I would say that in the large wind farms and maybe also in solar, I think on the broad terms across geographies, we still see some supply chain issues. I think that the big suppliers such as Siemens, General Electric, and other suppliers are still struggling a little bit after the COVID-19 with their supply chain. And this caused our project's performance to ramp up, I would say, in three or four quarters to the full level. capacity and availability rather than three months or three to six months before. This is not affecting the overall return of the project, the multi-year return of the project that is still forecasted to be very high or according to plan. So this is something that we will take into consideration in the project in the next few years until we see that supply chain is being, I would say, normalized. across their geographies.

Very helpful. I'll take the rest offline. Thank you.

Thank you. Once again, if you wish to ask a question, please press star 1 and 1 on your telephone. We will take our next question. The question comes from the line of Maheep Mandal from Mithahul. Please go ahead. Your line is open.

Hi there, this is David Benjamin in for Mahid Mandeloy. I have a question on your strategy with tax equity transferability versus traditional tax equity. Can you talk a little bit about where you guys are now and where you see that trending over the next year?

Yosef will refer to that. Thank you, Mahid.

Yes, thank you, David.

What we're seeing in the market is move towards traditional tax equity with credits being transferred through the bank's transfer desks so the banks will come in and monetize the accelerated depreciation and and some of the other attributes and the cash flow obviously in the pre flip period but what they will look to do is syndicate the transfers to you know fortune 500 customers who the bank services elsewhere and Now, what we think is important to emphasize is that the move towards the transfer market will also accelerate the path to construction finance. While in the past construction finance was predicated on full tax equity commitments, the ability for tax equity providers to use transfer and syndicate those credits will enable us to access construction capital earlier. and therefore reduce the peak equity that we need for projects. I think that's where this is headed and the conversations we've had with the major banks.

And just as an addition, I would say that I believe because of the position of Enlight as a public company, And it's positioning in the market is such that we feel that once there is a bottleneck in tax equity in the market, players like and light get prioritized. So this is why we believe we were able to complete tax equity last year with Atrisco and based on favorable terms in the future. I think that tax transferability will ease up a little bit the bottleneck, but still players like us will be able to play between the traditional structure and the transferability. And it's important to say that once we sell down more assets and we generate more profits on the corporate level, we will be able to monetize these profits in terms of depreciation, also in the tax transferability structure, and thus profit. I would say creates also a good alternative in terms of our tax structure versus the regular or traditional tax equity. So I think that we are positioned very well today in the market to be able to select between the traditional structure and the new structure and be able to execute on the project on time based on that.

Great, thanks. That's very helpful. I'll take the rest offline.

Thank you. Once again, if you wish to ask a question, please press star 1 and 1 on your telephone. We will take our next question. Your next question comes from the line of David Pass from Wolf. Please go ahead. Your line is open.

Thank you. Good morning. A couple of quick questions. James Jensen, On the CEO bar interconnection issue can just start if you look discloses already provide an update on on the timing and any further studies or anything else that's needed to achieve the 2026 cod.

Yeah, so what I can say is that there is no change in our assumption of forecast for CO bar. So we will start constructing CO bar in 25 and believe that we will reach COD by the end of 26. And the growth that we forecast for 2024 and 2025 is not based on that. So this will only, I would say, support the additional growth that is needed for 2026 and, of course, following that year. So no change in our forecast right now on CO-BAR.

Okay. And just for your other projects in the U.S., I think this internet connection issue was a surprise, if I recall correctly. Are there any other projects where we should be watching or you're awaiting for any studies that could impact timing?

Yes, I think that we can point out two very good news that we received in our PJM portfolio.

As you know, majority of the portfolio in the U.S. comes from the WEX states, but they were always areas of development in PJM and MISO. And recently, in the last quarter, we got very good, very positive milestones In PGM, in this project, totaling more than one gigawatts of generation and around two gigawatts hour of storage, with five projects getting into the fast track in terms of the interconnection queue, and with network upgrades that are less than $5 million per project, which is a very, very good result for PGM, we believe that this potential that is unlocking in a new market for us opens up a lot of alternatives for us either to go on and construct this project or maybe following our sell-down strategy to use that because of their high valuation and perform sell-downs to recycle equity into our growth in the West. So these are very, very good news that we got recently and is reflected in our presentation in slide 14.

Yeah, that's great. Not sure it was my last question related to that slide. Can any of you just talk about the growth that you see beyond what you've laid out here? Are there other projects that are maybe in the advanced, I guess, the stage behind early stage? And in particular, just how are these arrangements, particularly with the data centers, What do those look like in terms of the economics? Do you directly contract bilaterally with the data center? How do you provide the service?

So, David and then Jason, feel free to chime in afterwards. I think on the data center side, whether the demand is direct from the data center businesses or through the utilities that service them, We see massive demand through Virginia and broader PJM, but particularly in the Virginia region, which as we know is, if not the biggest data center market in the world. The interconnection advantage that we've developed in PJM, particularly these projects in Virginia, gives us a unique opportunity to provide power to, you know, the AI data center, massive growth and need for power that we're seeing. And that's putting us in the driver's seat on terms and offtake. So whether that's ultimately sleeved through the utility or directly from the data center providers, we're in a very strong position on those projects. In addition, there's some other projects outside of PJM in the West Coast. We've got another major project in Arizona called Snowflake, which is another gigawatt interconnection. We've got a gigawatt interconnection in the Pacific Northwest, which is uniquely positioned to serve the big data center markets in the Northwest, you know, the Microsofts and Amazons of the world. So, you know, the portfolio is very well positioned to echo Jason's comments at the beginning to service the massive demand of electricity that we're seeing coming particularly from the data center market, but also broadly across the U.S. in the coming years. Great.

Thank you. That's great, Yosef. And I would note that particularly in the West, we've been successful at maintaining bus bar PPA standard, and that's unique across our portfolio and will continue to be a strength of the company given our strong interconnection positions. So delivering at the bus bar and all sleeve-through utilities to date, but we continue to find that as an effective way forward.

Great. Thank you so much.

Thank you. There are no further questions. I would like to hand back to Yosef Leskovic for closing remarks.

Thank you, everybody, for your time today. We will be at the Bank of America Power and Utilities Conference in New York early next week, and we look forward to seeing many of you there. Thank you.

This concludes today's conference call. Thank you for participating.

You may now disconnect. Yeah. Thank you. Thank you. Thank you.

Good morning, everyone, and thank you for joining our fourth quarter and full year 2023 earnings conference call for Enlite Renewable Energy. Before beginning this call, I would like to draw participants' attention to the following. Certain statements made on the call today, including but not limited to statements regarding business strategy and plans, our project portfolio, market opportunity, utility demand and potential growth, discussions with commercial counterparties and financing sources, pricing trends for materials, progress of company projects, including anticipated timing of related approvals and project completion and anticipated production delays, expected impact from various regulatory developments, completion of development, the potential impact of the current conflict in Israel on our operations and financial condition, and company actions designed to mitigate such impact, expected changes in Clinera's leadership, and the company's future financial and operational results and guidance, including revenue and adjusted EBITDA, are forward-looking statements within the meaning of U.S. federal securities law, which reflect management's best judgment based on currently available information. We reference certain project metrics in this earnings call, and additional information about such metrics can be found in our earnings release. These statements involve risks and uncertainties that may cause actual results to differ from our expectations. Please refer to our 2022 annual report filed with the SEC on March 30th, 2023, and other filings for more information on the specific factors that could cause actual results to differ materially from our forward-looking statements. Although we believe these expectations are reasonable, we undertake no obligation to revise any statements to reflect changes that occur after this call. Additionally, non-IFRS financial measures may be discussed on the call. These non-IFRS measures should be considered in addition to and not as a substitute for or in isolation from our results prepared in accordance with IFRS. Reconciliations to the most directly comparable IFRS financial measures are available in the earnings release and the earnings presentation for today's call, which are posted on our investor relations webpage. With me this morning are Gilad Yavit, CEO and co-founder of Enlight, Nir Yudas, CFO of Enlight, Jason Ellsworth, CEO and co-founder of Clonera, and Adam Fishel, COO and co-founder of Clonera. Gilad will provide some opening remarks and will then turn the call over to Jason and Adam for review of our U.S. activity and then to Nir for our review of our fourth quarter and full year results. Our executive team will then be available to answer your questions.

Thank you all for joining us today for Enlight's fourth quarter and full year 2023 earnings call. In 2023, we continue to deliver on the Enlight story, above-market growth and above-market project returns. Moreover, we build the necessary foundation to take the next major step in 2024 and beyond, And light is now on the cusp of another major expansion as we begin the construction of several flagship solar and storage projects, particularly in the United States. I will first review the important achievements we've made in 2023, and we'll then describe our outlook into 2024 and beyond. Let's start with our strong full-year 2023 financial results. Revenue for the whole of 2023 grew 33% over last year to $256 million. Net income grew 157% to 98 million, and adjusted EBITDA grew 45% to 189 million annually. We also saw significant growth in our operating cash flow, which reached $150 million for the full year, an increase of 66% over 2022. In the fourth quarter, revenue grew 21% over last year to $74 million. Net income grew 48% to $16 million, and adjusted EBITDA grew 8% to $47 million. Overall, we delivered strong growth and profitability in 2023. even amidst a challenging macroeconomic backdrop. Driving the growth in our financial parameters was our project addition. In 2023, we connected over 480 megawatts across Israel, Europe, and the US, a growth of 33%. This included Genesis Wind in Israel and Apex Solar in the US, while we also ramped up production at Bjornberget in Sweden. As of today, we have 1.9 gigawatts of operational duration, as well as our first operational storage project with a capacity of 277 megawatt hours. This result testifies to the strength and resilience of Enlight geography and technology diversification, combined with our developer-plus IPP model. As a result, we benefit from recurring and growing income from our IPP, while our drain fuel development activity fuels continuous growth at high returns. In 2023, we also saw a rapidly improving outlook for electricity demand. Electricity demand is rising in the U.S. for the first time in two decades, driving increased PPA pricing. Moreover, equipment costs have come down significantly, while the cost of finance is now in decline. As a result, we expect to see continued demand for our projects at attractive returns. We demonstrated that in 2023, by successfully amending PPA pricing upwards from over 1.8 gigawatts by an average of 25%, while assigning new PPAs at even higher levels. Our pipeline of large-scale projects and competitive access to the grid allows us to continue to capitalize on the need for electricity with favorable prices. At the same time, panel and battery pricing fell considerably throughout the year. These trends have continued to consolidate in the fourth quarter. Higher PPA pricing and lower construction costs contributed to the improving project returns. which we expect to reach 10 percent on an unlevered basis for project-reaching COD between 2024 and 2026. On top of that, in the fourth quarter, we saw nearly 70 base points decline in interest rates. When overlaying this with our unlevered project returns of 10 percent, we can generate average levered equity IRR in the mid to high tens, and in some cases, even higher. In 2023, we also continued to convert additions to our material portfolio. Our Greenfield development teams converted 871 megawatts and 2.7 gigawatt hours from our large development pipeline into material projects. The additions included several major flagship projects in the United States, such as Roadrunner and Country Acres, which will commence construction in 2024. And finally, substantial financing is required to sustain and accelerate such growth. And in 2023, we successfully raised capital from a diverse set of sources. Given the constrained financing environment, this constitutes a notable achievement. We raised $271 million in equity through an IPO on the NASDAQ at the start of the year. and secured over half a billion dollars in project finance and tax equity. Also important was the completion of our first asset sell-down in the U.S. and some sell-downs in Israel, totaling $19 million. While these initial disposals were small, this set the precedent for sell-downs to become an increasingly important source of funds in the future. To sum up, 2023 was a year in which Enite delivered on its above-market growth and above-market return score. We secured various sources of financing, expanded the portfolio of projects to be built in the near term, and improved future project returns, all amidst a challenging macroeconomic environment. Looking to 2024, we forecast further revenue growth and profitability. We expect to add 543 megawatts of generation and 1.6 gigawatt hours of energy storage to our operational assets, among them a Trisco project in the US. This represents our major move into energy storage with 580% growth in this segment. Moreover, we expect to commence construction on upwards of 1 gigawatt and 2.9 gigawatt hours of capacity in 2024, which reflects an over 55% increase on our current operational generation and 1,040% increase on our operational storage. This includes major projects such as Roadrunner, Country Acres, and Quail Ranch in the U.S. Hekama Hybrids in Spain, and several standalone storage projects in Israel and Italy. In total, including Atrisco, these projects are expected to generate $307 million in revenues and $221 million in EBITDA in their first full year of operation. This is a massive step in the growth of the company, and therefore, execution of this project is our highest priority. These new builds will also help diversify and light current geographical mix, introducing significant U.S. exposure while adding a major element of solar and storage to our technological mix, which is largely wind today. In 2024, we also expect to convert more of our large development pipeline into mature projects. Examples of this include our unique portfolio of solar and storage in PJM, in the U.S., totaling 1.4 gigawatts and 2.2 gigawatt hours of storage. This project, which benefits from exceedingly lower interconnection costs, has been moved to PGM's interconnection fast track, significantly easing their path to further development. In addition, we have additional large-scale solar and storage projects across the Western U.S. and wind projects in Europe that are approaching maturity. The depth and breadth of our development pipeline is a strategic resource for Enlight. With 15 gigawatts and 25 gigawatt hours of storage of potential, it ensures that we maintain a sizable buffer of imminently available mature projects on which we can work. Finally, it is important for me to stress that with the capital we raised last year, we have all the equity needed to fund 2024's We will have to secure significant project finance commitments. However, the success in raising project finance during 2023 provides us with confidence that we will achieve this. With macroeconomic conditions now more settled, our all-in interest rate for project finance now stands at 5.25% to 5.75%. In 2024, we also plan to execute large asset sell-downs, either of minority or majority stakes in the U.S. project, further underpinning the company's financial position. As Enlight continues to grow, our ability to sell finance also gathers steam. A larger IPP provides more operating cash flow, while additional conversion of projects increases the potential for sell-down. Both these represent sources of funds for future growth, and when combined with our extensive pipeline of development projects, provide a path for growth without the need for external capital. Turning to our 2024 guidance, we expect revenues between $335 million and $360 million, 36 percent higher than in 2023 at the midpoint, and adjusted EBITDA between 235 million and 255 million, 30 percent above that of 2023 at the midpoint. Growth continues to be robust as we add new projects to our operational portfolio. Nir will describe in detail the assumptions that underlie this guidance later in the course. To tie it all together, In 2024, Enlight will harness its resources to grow considerably in all markets, but especially in the U.S. And as before, we aim to continue delivering on our twofold objective, above-market growth and above-market product returns. Before handing the call over to Jason for his remarks, I'd like to comment on the CleanEURA leadership transition we announced in January. After more than 10 years as CEO of Clinera, Jason accepted a call from the Church of Jesus Christ of Latter-day Saints to serve as a full-time mission president in Chile. He will leave his post with Clinera at the end of June. Clinera's COO and co-founder, Adam Pischel, will assume the role of CEO. Adam is an amazing leader and responsible for building Clinera beside Jason during the last 10 years. We anticipate a smooth transition over the next six months as Adam and the amazing Glinera leadership team remain and continue to move the company and its projects forward. I thank Jason for his leadership and expertise in creating and cultivating Glinera. His vision, leadership, and tireless work, coupled with his talented and dedicated, propel the company to make a huge impact on the U.S. renewable market. Adam has always been a big part of CleanAra's success, and I'm fully confident in his skills, experience, and leadership, and his ability to take CleanAra to the next level, which we at Enlight shall continue to support and accelerate. Jason?

Thank you, Gilad. I will certainly miss working with you and the rest of our amazing team at Enlight and CleanAra. Regarding our U.S. business, 2023 was foundational, and in 2024, We expect to launch from that foundation into a period of significant growth. During 2023, we successfully completed APEX Solar, a 106 megawatt project located outside Dillon, Montana. APEX was the first project completed together by Enlite and CleanAira in the US. We also made progress toward completing our Atrisco Solar project in New Mexico. As of today, equipment supporting the full 364 megawatts is installed, and work is underway to finalize mechanical completion. Further, during the fourth quarter, we closed tax equity and debt financing on Atrisco Solar, raising $300 million of construction and term debt and $198 million in PTC tax equity. The transaction, which released $204 million of excess equity back to Enlight's balance sheet, demonstrated our continued access to competitive project financing. including tax equity. We have reached a mutual resolution of a supplier matter on the 1.2 gigawatt hour battery storage portion of Atrisco and now expect the solar site will reach COD in third quarter of 24 and the storage installation in fourth quarter of 24. Our overall project portfolio in the U.S. advanced steadily in 2023 with approximately 10 gigawatts through system impact study We signed PPAs on 806 megawatts and 2 gigawatt hours that will enter construction in 2024. This includes Country Acres, a 392 megawatt and 688 megawatt hour project delivering to Sacramento Utility District in California, Road Runner, a 294 megawatt and 940 megawatt hour facility contracted with APCO in Arizona, and Quell Ranch, a 120-megawatt and 400-megawatt-hour project that represents the second phase of our Atrisco facility in New Mexico and delivers to PNM. The full 806 megawatts and 2-gigawatt hours will start construction during 2024, launching a new phase of Clean Airways expansion and growth in the U.S. In addition to advancing and constructing projects in the U.S., we improved returns by amending many of our existing PPAs. Over the past 18 months, our team successfully raised prices by an average of 25% on contracts covering 1.8 gigawatts of capacity. Strong utility relationships and large-sized projects that are deliverable in the near term made these pricing negotiations possible. And as Gilad mentioned, we are also experiencing economic tailwinds by way of falling equipment prices. Since the beginning of 2023, we've seen our solar panel prices drop by approximately 25% and battery prices by more than 30%. We continue to focus on converting our early stage development projects into mature projects. As an example, in PGM, we are advancing a portfolio of projects totaling 1.4 gigawatts and 2.2 gigawatt hours capacity that have negligible interconnection costs. Prices in the regions where these projects are being developed are high due to a growing appetite for renewable energy and limited availability of feasible interconnections. With final interconnection agreements expected by the end of 2024, we anticipate achieving attractive PPA terms on these assets. In the Western US, we continue to see significant utility demand for our solar and storage projects. With power demand continuously on the rise, our roughly 10 gigawatts portfolio of developing and mature projects, all with advanced interconnection, puts us in prime position to meet rising demand with attractively priced generation. Finally, as previously announced, I will be stepping down from my position as CleanAero's CEO at the end of June. Adam Pischel, CleanAero's co-founder and current COO, will take my place. I'm supremely grateful for the years I've had to work with Gilad, Adam, and the CleanAero and Enlight teams The company is an industry leader because the organization and its partners are comprised of what I consider to be the most dedicated, talented, and genuinely good people in the business. Both Gilad and Adam are dear friends and trusted leaders. I'm excited to see all the great projects and exciting developments they deliver in coming years. Now I'll let Adam Pitchell introduce himself and add some comments.

Thank you, Jason. Leading alongside Jason for nearly two decades has been an incredible journey. Together we have built three renewable energy companies, developed hundreds of solar projects, and most importantly, have built an incredible team of professionals who are now leading CleanAira into its greatest period of growth. While execution is our highest priority for 2024, Enlight and Clean Air continue to invest in our growing development portfolio that will take us through the next decade and beyond. I am passionate about renewable energy, this incredible organization, and our dedicated team, and I'm excited about this expanded role. I am confident in our 2024 execution plan and look forward to sharing more of this developing growth story during future earnings calls. Thank you. And I'll now turn the call over to Nir.

Thank you, Adam. In the fourth quarter of 23, the company's revenue increased to 74 million, up from 61 million last year, a growth rate of 21% year-over-year. Growth was mainly driven by new operational projects compared to last year, while being offset by a decline in revenue caused by much lower electricity prices in Spain relative to the prices observed in the same quarter last year. Since the fourth quarter of last year, projects in the U.S., Hungary, and Israel started selling electricity. The most important of this is Genesis Wind, which contributed $9 million to revenue. In addition, Buren, which barely sold power in 2022, contributed $6 million in this quarter. GECAMA generated revenues, approximately 14 million in revenues. However, its contribution fell 36% year-over-year due to much lower Spanish power prices compared to Q422 and relative to expected prices in Q423. We sold power in Spain at an average price of 50 euro per megawatt this quarter, versus 115 euro per megawatt in the same period last year. In addition, we were impacted by the slower-than-expected ramp-up in production at Genesis Wind, and the Israel's cluster. Fourth quarter, net income increased to 16 million, a growth rate of 48% year-over-year. Three non-cash items this quarter. A mark-to-market loss related to interest rate hedges, on the financial growth process at a risk of storage of $8 million, gains related to the reduction in expected earner payments linked to the acquisition of Clean Air of $12 million, and a loss of $5 million due to the impact of Israeli shekel volatility on foreign currency liabilities. These figures are all net of tax. In the fourth quarter of 23, the company adjusted EBITDA grew by 8% to $47 million, compared to $43 million for the same period in 22. Aside from the positive factor which affected our revenues growth, the year-over-year decline in revenues at GECAMA, as well as slower than expected ramp-up at Project in Israel, and $3 million increase in overhead, resulted in lower profit margins and slower growth in adjusted EBITDA year-over-year. We recorded $2 million as final payment recognized from the sell-down of Faraday, completed last quarter. Looking to our balance sheet, Enlight completed a large financing deal during this quarter, reaching the closing of both the Twisco Solar in the U.S. and our Solar Plus storage project in Israel. This raised a combined $511 million in project finance, from which $325 million of excess equity capital was recycled back to Enlight. This transaction strengthened our balance sheet and reinforced the financial footing needed to deliver the growth of our business in 2024. To reiterate, no new equity capital is needed to deliver on our plans for this year. As of the date of today's report, we had 260 million of revolving credit facility at several Israeli banks, none of which has been drawn. This is 90 million above what we reported in our Q3 23 results. Moving to 24 guidance. We expect annual revenues between 335 million to 360 million with adjusted EBITDA between 235 million and 255 million. Of our total forecasted revenues, 40% are expected to be denominated in Israeli shekels, 55% errors, and 5% in U.S. dollar. Nothing. Our last exposure to the shekel and the current high degree of volatility in this currency guidance is predicated on the average annual exchange rate assumption of 3.8 shekels to the dollar and 1.05 errors to the dollar, which are lower than the current level. In addition, 90% of our 24-generation output will be sold at fixed price, either through hedges or PPA. Our guidance reflects annual growth of 36% and 30% at the midpoint compared to 23%, respectively, demonstrating our accelerated growth path in 24 and the year ahead.

I will now turn it over to the operator for questions.

Thank you.

As a reminder, to ask a question, you will need to press star 1 and 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 and 1 again. We will take our first question. Your first question comes from the line of Justin Clare from Roth MKM. Please go ahead. Your line is open.

Yeah, hello. Thanks for taking our questions. So first off here, you did mention plans to execute larger asset sell-downs in 2024. I was wondering if you could give us a sense for the possible magnitude of those sell-downs, how much equity capital you might be looking to raise, and what would be needed to support your 2025 plans? development. And then, you know, the projects in the U.S., Coil Ranch, Roadrunner, Country Acres, are those projects that you're looking at for potentially selling minority interests?

Hi, thank you very much for the question, Justin.

So, first on the sell-down, so yes, as you said, part of our strategy is to perform and some sell downs on our very large portfolio that is maturing next year. So we intend to construct and hold the main project that we are going to construct next year, Country Acres, Roadrunner, Quail Ranch, and other projects in Europe and Israel. But there is a potential for additional large sell downs. Currently, in the current guidance that we provided to the market, we assumed total sell-downs of $15 million, but of course the potential can be higher. And it's important to say, based on your second question, is that we are already fully funded in terms of the equity ticket that we need to invest for all the growth that we are going to construct next year. So we are talking about roughly 900 megawatts of new project and 2.7 gigawatt hours of new storage project. All are fully funded, and we do not have to perform any sell-downs or any capital raise or debt raise in terms of the corporate in order to raise the equity. It is already in the company. So the effort in terms of finance will be more on the construction debt and the tax equity side, so project finance.

Got it. Okay. Very helpful. All right. And then you did secure a large number of PPA amendments in 2023. I was wondering what we could expect going forward here. Are there additional possible amendments for PPAs for any of your projects that you're developing here? And then also just wondering on the general trend, we've seen a decline in module prices, battery prices. What are you seeing in terms of the PPA trend? Has that started to level off or potentially decline, or is demand so high that things are potentially moving even higher here?

Yeah, so I can start with the answer, and then, Jason, you can compliment me on the U.S.

market if you like. So, basically, what we are seeing overall in the different markets, but especially in the U.S., is that the PPA price curves are continuing to rise, although the natural gas prices have already normalized. This is because we see, for the first time in two decades, a rise for the demand of electricity in the U.S. market. And we believe these are very positive conditions that will continue to fuel our growth in the coming years. Now that we have amended the majority of our PPAs pre-construction, we believe that The next PPA that we are going to sign are going to be new PPAs, I would say materially. But the level of pricing in the new PPAs that we have signed recently and we expect to sign the next year, we expect to maintain the higher level than in the past of around 25%. So again, reflecting a higher level of electricity pricing and higher demand for electricity in the US. What we see in Europe is that electricity prices are continuing to normalize based on the historical peaks that were in the last two years. But still, as we said in previous discussions, The new norm of electricity prices after the decline is still very high comparing our levelized cost of electricity in our project in wind or solar in Europe. And therefore, the returns are very high. So we expect electricity prices in Europe to continue and normalize on the level of 50 to 60. And this level is still a high level that reflects very good return for our project. Jason, if you want to compliment me on the U.S.

You bet. Thanks, Justin. Great question.

Gilad answered this very well. We have a small number of PPAs that we are discussing potential price increases with, but as Gilad has noted, the emphasis is on the new pricing, and we are seeing steady growth on the heels of dramatic growth in terms of of demand and strong . Some of what is advantaging the company is our interconnection position where we have projects roughly 10 gigawatts through system impact study, projects that are advanced and mature and ready to deliver to utilities where queues are clogged up and projects are behind schedule. with competing resources and therefore giving us the opportunity to deliver at strong pricing. We see long term that this steady increase in demand here in the U.S. along with a limited supply capacity is driving prices incrementally higher year over year. So that's been expected for the long term and we're experiencing that on the ground.

Got it. Okay. Very, very helpful. Maybe just one more. Curious on how your positions relative to securing the domestic content adder in the U.S., whether it's for the solar portion of a project or the storage part of a project. You know, what's the timeframe that we should be thinking about in terms of when that adder could be secured?

Jason, would you like to take this?

Yes, I'll take it. It's another great question. Each of these projects today is, when Gilad and Mir are speaking of the economics on these projects for project finance, none of those include domestic content adders as a basis for the economics. All of that is considered to be upside. We are working carefully along the path of confirming on a number of these projects, both in terms of storage as well as the overall PV side. Some of that does depend on the advances our suppliers make in terms of their production. And we are seeing that accelerate, but watching it carefully. And we're not getting out over our skis of our plants there. We're making certain that we're taking product from lines that are stable. The most important is making certain that we deliver on the projects on time and that those projects are producing in the coming years. So we're carefully pursuing that. domestic content, but doing it in a way that supports the overall plan. Again, not included in our current forecast by way of revenue or EBITDA.

Justin, just to reiterate that as a following to what Jason said, I think that we can now disclose that on Atrisco we finally selected Tesla as to be the battery supplier. And as Jason said, the assumption, the current assumption for the project still does not assume tax equity either on the battery. However, we believe that there is a potential for that. We will see in the future. So this is some upside that we believe that might be unlocked in the future.

It may be worth noting just quickly as well that we have been aggressive about capturing the energy community adder and have included that on a number of projects thus far. So that is nice upside to the numbers.

Right. Okay. Thanks for the time.

Thank you. We will take our next question. Please stand by.

Your next question comes from the line of Mark Streis from JP Morgan. Please go ahead. Your line is open.

Great. Thank you very much for taking our questions. I'd just like to start by thanking Jason for all of your help since prior to the IPO, and best of luck with your next chapter. Our questions, I think just kind of maybe one multi-part question if I can. The 4Q revenue shortfall, you mentioned kind of a slower ramp at Genesis Wind and the Israeli or the Israel cluster. Just checking, are those now fully ramped? And then on the next part with the 2024 guide, we didn't notice any major project pushouts, but the EBITDA guide is a little bit lower than what consensus expectations were. So just kind of Seeing if you can bridge that gap between, it sounds like asset sales might be part of that driver. Can you talk about any kind of conservatism that you're baking in project ramping or FX, anything else that you think might be driving that? Thank you.

Hi, Mark. Thank you very much for the question.

I would say just in general, in terms of our guidance and the general way we look at the market and the company right now, I would say that after 15 years and founding the company, I think that the conditions that right now we see in the market and also for the company are maybe the best condition we've seen. We are seeing a very nice and accelerated growth, but also based on scale and very high returns. So if you look at our presentation, you can see that the average unleveraged return of our projects for the next three years is around 10%. meaning that the leverage return, the IRR, will be in the mids of the teens or maybe higher. I think this is a very good, I would say, number, especially for the large scale that we are going to build. And for the ones that we are entering into this year, and this is a large capacity of almost one giga of generation and almost three giga of energy storage, So we are talking about even a higher IRR. So first, yes, there was some shortfall in the fourth quarter, but we still grew 40% on average. between the EBITDA and the revenue and we are going to grow 35% next year. I think this kind of continuous growth will continue based on high returns and based on that we are very positive. On the EBITDA, there is no particular reason why the EBITDA is 30%. There is no trend. I would just like to point out that currently a big portion of our revenue mix is coming from the wind projects in Europe that are partially based on merchant price forecasting and on a tax mechanism that we include in our cost of sales. So basically it reflects the net price is reflected in the growth margin, but we see the growth price in the revenues, and then the price after tax in the EBITDA. So last year, since the electricity prices were dropped a little bit more rapidly, also the tax mechanism created a lower tax on the net electricity price that is reflected in our EBITDA. You see that we were more or less like our forecast, or I think in the middle of the forecast. But on the revenues, it came a little bit short. So I think that in terms of the growth of the company in the next year, we still see a very, very accelerated growth based on, I think, higher returns. In terms of the projects that are coming to operation and ramping up. I would say that in the large wind farms and maybe also in solar, I think on the broad terms across geographies, we still see some supply chain issues. I think that the big suppliers such as Siemens, General Electric, and other suppliers are still struggling a little bit after the COVID-19 with their supply chain. And this caused our project performance to ramp up, I would say, in three or four quarters to the full level. capacity and the availability rather than three months or three to six months before. This is not affecting the overall return of the project, the multi-year return of the project that is still forecasted to be very high or according to plan. So this is something that we will take into consideration in the project in the next few years until we see that supply chain is being, I would say, normalized. across their geographies.

Very helpful. I'll take the rest offline. Thank you.

Thank you. Once again, if you wish to ask a question, please press star 1 and 1 on your telephone. We will take our next question. The question comes from the line of Maheep Mandal from Mizahu. Please go ahead. Your line is open.

Hi there, this is David Benjamin in for Mahib Mandeloy. I have a question on your strategy with tax equity transferability versus traditional tax equity. Can you talk a little bit about where you guys are now and where you see that trending over the next year?

Yes, I will refer to that. Thank you, Mahib.

Yes, thank you, David.

What we're seeing in the market is move towards traditional tax equity with credits being transferred through the bank's transfer desks so the banks will come in and monetize the accelerated depreciation and and some of the other attributes and the cash flow obviously in the pre flip period but what they will look to do is syndicate the transfers to you know fortune 500 customers who the bank services elsewhere and Now, what we think is important to emphasize is that the move towards the transfer market will also accelerate the path to construction finance. While in the past construction finance was predicated on full tax equity commitments, the ability for tax equity providers to use transfer and syndicate those credits will enable us to access construction capital earlier. and therefore reduce the peak equity that we need for projects. I think that's where this is headed and the conversations we've had with the major banks.

And just as an addition, I would say that I believe because of the position of Enlight as a public company and its positioning in the market is such that we feel that once there is a bottleneck in tax equity, and in the market, players like and light get prioritized. So this is why we believe we were able to complete tax equity last year with Atrisco and based on favorable terms. In the future, I think that tax transferability will ease up a little bit the bottleneck, but still players like us will be able to play between the traditional structure and the transferability. And it's important to say that once we sell down more assets and we generate more profits on the corporate level, we will be able to monetize these profits in terms of depreciation, also in the tax transferability structure, and thus I would say creates also a good alternative in terms of our tax structure versus the regular or traditional tax equity. So I think that we are positioned very well today in the market to be able to select between the traditional structure and the new structure and be able to execute on the project on time based on that.

Great, thanks. That's very helpful. I'll take the rest offline.

Thank you. Once again, if you wish to ask a question, please press star 1 and 1 on your telephone. We will take our next question. Your next question comes from the line of David Pass from Wolf. Please go ahead. Your line is open.

Thank you. Good morning. A couple of quick questions. On the CO bar interconnection issue, can you just, sorry if you disclosed this already, but provide an update on the timing and any further studies or anything else that's needed to achieve a 2026 COD?

Yeah, so what I can say is that there is no change in our assumption of forecast for CO bar. So we will start constructing CO bar in 25 and believe that we will reach COD by the end of 26. And the growth that we forecast for 24 and 25 is not based on that. So this will only, I would say, support the additional growth that is needed for 26 and, of course, following that year. So no change in our forecast right now on CO-BAR.

Okay. And just for your other projects in the U.S., I think this internet connection issue was a surprise, if I recall correctly. Are there any other projects where we should be watching or you're awaiting for any studies that could impact timing?

Yes, I think that we can point out two very good news that we received in our PJM portfolio. As you know, majority of the portfolio in the U.S. comes from the WEG states, but they were always areas of development in PJM and MISO. And recently, in the last quarter, we got very good, very positive milestones In PGM, five projects totaling more than one gigawatts of generation and around two gigawatts hour of storage, with five projects getting into the fast track in terms of the interconnection queue, and with network upgrades that are less than $5 million per project, which is a very, very good result for PGM, we believe that this Potential that is unlocking in a new market for us opens up a lot of alternatives for us either to go on and construct this project or maybe following our sell down strategy to use that because of their high valuation and perform sell downs to recycle equity into our growth in the West. So these are very, very good news that we got recently and is reflected in our presentation in slide 14.

Yeah, that's great. That was my last question related to that slide. Can any of you just talk about the growth that you see beyond what you've laid out here? Are there other projects that are maybe in the advanced, I guess, the stage behind early stage? And in particular, just how are these arrangements, particularly with the data centers, What do those look like in terms of the economics? Do you directly contract bilaterally with the data center? How do you provide the service?

So, David and then Jason, feel free to chime in afterwards. I think on the data center side, whether the demand is direct from the data center businesses or through the utilities that service them, We see massive demand through Virginia and broader PJM, but particularly in the Virginia region, which as we know is, if not the biggest data center market in the world. The interconnection advantage that we've developed in PJM, particularly these projects in Virginia, gives us a unique opportunity to provide power to the AI data center, massive growth and need for power that we're seeing. And that's putting us in the driver's seat on terms and offtake. So whether that's ultimately sleeved through the utility or directly from the data center providers, we're in a very strong position on those projects. In addition, there's some other projects outside of PJM in the West Coast. We've got another major project in Arizona called Snowflake, which is another gigawatt interconnection. We've got a gigawatt interconnection in the Pacific Northwest, which is uniquely positioned to serve the big data center markets in the Northwest, you know, the Microsofts and Amazons of the world. So, you know, the portfolio is very well positioned to echo Jason's comments at the beginning to service the massive demand of electricity that we're seeing coming particularly from the data center market, but also broadly across the U.S. in the coming years.

Great. Thank you. That's great, Yosef. And I would note that particularly in the West, we've been successful at maintaining bus bar PPA standard, and that's unique across our portfolio and will continue to be a strength of the company given our strong interconnection positions. Delivering at the bus bar and all sleeve-through utilities to date, but we continue to find that as an effective way forward.

Great. Thank you so much.

Thank you. There are no further questions. I would like to hand back to Yosef Leskovitz for closing remarks.

Thank you, everybody, for your time today. We will be at the Bank of America Power and Utilities Conference in New York early next week, and we look forward to seeing many of you there. Thank you.