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Through our investments in various projects, we will be exposed to the credit risk of the obligor of the project’s PPA or other long-term contractual revenue commitments, as well as to the credit risk of certain suppliers and project operators.
−Removed: We are exposed to credit risk in our other projects that do not benefit from governments as the obligor such as on balance sheet financing of projects undertaken by universities, schools and hospitals, as well as privately owned commercial projects.
−Removed: While we do not anticipate facing significant credit risk in our assets related to government energy efficiency projects, we are subject to varying degrees of credit risk in these projects in relation to guarantees provided by ESCOs where payments under energy savings performance contracts are contingent upon achieving pre-determined levels of energy savings.
We have invested in mezzanine loans and, as a result, we are exposed to additional credit risk.
+Added: We are exposed to credit risk in our other projects that do not benefit from governments obligors such as on-balance sheet financing of projects undertaken by universities, schools and hospitals, as well as privately owned commercial projects.
+Added: While we do not anticipate facing significant credit risk in our assets related to government energy efficiency projects, we are subject to varying degrees of credit risk in these projects in relation to guarantees provided by ESCOs where payments under energy savings performance contracts are contingent upon achieving pre-determined levels of energy savings.
We seek to manage credit risk through thorough due diligence and underwriting processes, strong structural protections in our transaction agreements with customers and continual, active asset management and portfolio monitoring.
1 unchanged sentence
We use a risk rating system to evaluate projects that we target.
−Removed: We first evaluate the credit rating of the offtakers or counterparties to the project using an average of the external credit ratings for an obligor, if available, or an estimated internal rating based on a third-party credit scoring system.
+Added: We first evaluate the credit rating of the offtakers or counterparties involved in the project using an average of the external credit ratings for an obligor, if available, or an estimated internal rating based on a third-party credit scoring system.
We then estimate the probability of default and estimated recovery rate based on the obligors’ credit ratings and the terms of the contract.
1 unchanged sentence
The results of our reviews are used to update the project’s risk rating as necessary.
−Removed: Additional detail of the credit risks surrounding our Portfolio can be found in Note 6 to our financial statements in this Form 10-K.
+Added: Additional detail of the credit risks surrounding our Portfolio can be found in Note 6 to our audited financial statements in this Form 10-K.
Interest Rate and Borrowing Risks
6 unchanged sentences
Both our current and future revolving credit facilities and other borrowings may be of limited duration and are periodically refinanced at then current market rates.
−Removed: We attempt to reduce interest rate risks and to minimize exposure to interest rate fluctuations through the use of fixed rate financing structures, when appropriate, whereby we seek to (1) match the maturities of our debt obligations with the maturities of our assets, (2) borrow at fixed rates for a period of time or (3) match the interest rates on our assets with like-kind debt (i.e., we may finance floating rate assets with floating rate debt and fixed-rate assets with fixed-rate debt), directly or through the use of interest rate swap agreements, interest rate cap agreements or other financial instruments, or through a combination of these strategies.
+Added: We attempt to reduce interest rate risks and to minimize exposure to interest rate fluctuations through the use of fixed rate financing structures, when appropriate, whereby we seek to (1) match the maturities of our debt obligations with the maturities of our assets, (2) borrow at
+Added: fixed rates for a period of time or (3) match the interest rates on our assets with like-kind debt (i.e., we may finance floating rate assets with floating rate debt and fixed-rate assets with fixed-rate debt), directly or through the use of interest rate derivatives or other financial instruments, or through a combination of these strategies.
We expect these instruments will allow us to minimize, but not eliminate, the risk that we must refinance our liabilities before the maturities of our assets and to reduce the impact of changing interest rates on our earnings.
In addition to the use of traditional derivative instruments, we also seek to mitigate interest rate risk by using securitizations, syndications and other techniques to construct a portfolio with a staggered maturity profile.
−Removed: We monitor the impact of interest rate changes on the market for new originations and often have the flexibility to negotiate the term of our investments to offset interest rate increases.
+Added: We monitor the impact of interest rate changes on the market for new originations and often have the flexibility to negotiate the terms of our investments to offset interest rate increases.
Typically, our long-term debt, or that of the projects in which we invest if applicable, is at fixed rates or may at times be fixed using interest rate hedges that convert most of the floating rate debt to fixed rate debt.
−Removed: If interest rates rise, and our fixed
−Removed: rate debt balance remains constant, we expect the fair value of our fixed rate debt to decrease and the value of any hedges on floating rate debt to increase.
−Removed: See Note 3 to our audited financial statements in this Form 10-K for the estimated fair value of our fixed rate long-term debt, which is based on having the same debt service requirements that could have been borrowed at the date presented, at prevailing current market interest rates.
−Removed: Our unsecured term loan is a variable rate loan with an outstanding balance of $247 million as of December 31, 2024, and our revolving credit facilities are variable rate lines of credit.
−Removed: We also have short-term green commercial paper borrowings outstanding of $100 million, which we may refinance through the issuance of additional paper at the then prevailing short-term rate.
−Removed: Increases in interest rates would result in higher interest expense while decreases in interest rates would result in lower interest expense.
−Removed: As described above, we may use various financing techniques including interest rate swap agreements, interest rate cap agreements or other financial instruments, or a combination of these strategies to mitigate the variable interest nature of these facilities, and have $618 million notional value of interest rate swaps to hedge these floating-rate borrowings.
−Removed: An increase in benchmark interest rates would not increase the quarterly interest expense related to our variable rate borrowings as a result of these interest rate swaps.
+Added: If interest rates rise, and our fixed rate debt balance remains constant, we expect the fair value of our fixed rate debt to decrease and the value of our hedges, if any, on floating rate debt to increase.
+Added: See Note 3 to our audited financial statements in this Form 10-K for the estimated fair value of our fixed rate long-term debt, which is based on upon the terms of comparable debt that could have been borrowed at the date presented, at prevailing current market interest rates.
+Added: We have $5.1 billion of debt with either fixed rates or which we have hedged pursuant to strategies described above to hedge floating rate debt.
+Added: We have $49 million of debt with variable interest rates outstanding as of December 31, 2025, including any unhedged portions of loans under our term loan facility, revolving credit facilities and borrowings under our commercial paper program.
+Added: Future increases in interest rates would result in higher interest expense while future decreases in interest rates would result in lower interest expense.
+Added: A 50 basis point increase in benchmark interest rates would increase the quarterly interest expense related to the $49 million in floating-rate borrowings by $61 thousand.
Such hypothetical impact of interest rates on our variable rate borrowings does not consider the effect of any change in overall economic activity that could occur in a rising interest rate environment.
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Commodity and Environmental Attribute Price Risk
−Removed: When we make equity or debt investments for a renewable energy project that acts as a substitute for an underlying commodity, we may be exposed to volatility in prices for that commodity.
+Added: When we make equity or debt investments in an energy transition project that acts as a substitute for an underlying commodity, we may be exposed to volatility in prices for that commodity.
The performance of renewable energy projects that produce electricity or natural gas can be impacted by volatility in the market prices of various forms of energy, including electricity, coal and natural gas.
−Removed: This is especially true for GC utility scale projects that sell power on a wholesale basis as opposed to BTM projects which compete against the retail or delivered costs of electricity which includes the cost of transmitting and distributing the electricity to the end user.
−Removed: Projects in which we invest, or in which we may plan to invest, may also be exposed to volatility in the prices of environmental attributes which the project may produce.
−Removed: Although we generally focus on renewable energy projects that have the majority of their operating cash flow supported by long-term PPAs or leases, many of our projects have shorter term contracts (which may have the potential of producing higher current returns) or sell their power, energy or environmental attributes in the open market on a merchant basis.
+Added: This is especially true for GC utility scale projects that sell power on a wholesale basis, as BTM projects compete against the retail or delivered costs of electricity which includes the cost of transmitting and distributing the electricity to the end user.
+Added: Projects in which we invest, or in which we may plan to invest, may also be exposed to volatility in the prices of environmental attributes which the project may produce, such as renewable energy credits (“RECs”) or renewable identification numbers (“RINs”).
+Added: Although we generally focus on renewable energy projects that have the majority of their operating cash flow supported by long-term PPAs or leases, many of the projects in which we invest have shorter term contracts (which may have the potential of producing higher current returns) or sell their power, energy or environmental attributes in the open market on a merchant basis.
The cash flows of certain projects, and thus the repayment of, or the returns available for, our assets, are subject to risk if energy or environmental attribute prices change.
We also attempt to mitigate our exposure through structural protections.
−Removed: These structural protections, which are typically in the form of a preferred return or cash sweep mechanism, are designed to allow recovery of our capital and an acceptable return over time.
+Added: These structural protections, which are typically in the form of a preferred return mechanism, are designed to allow recovery of our capital and an acceptable return over time.
When structuring and underwriting these transactions, we evaluate these transactions using a variety of scenarios, including natural gas prices remaining low for an extended period of time.
−Removed: As energy or environment attribute price volatility continues or as PPAs expire, the cash flows from certain of our projects are exposed to these market conditions and we work with the projects sponsors to minimize any impact as part of our on-going active asset management and portfolio monitoring.
−Removed: We often invest in utility scale solar projects by owning the land under the project where our rent is paid out of project operational costs before the debt or equity in the project receives any payments.
+Added: As energy or environmental attribute price volatility continues or as PPAs expire, the cash flows from certain of our projects in which we have invested are exposed to these market conditions.
+Added: We work with the projects sponsors to minimize any impact as part of our on-going active asset management and portfolio monitoring.
+Added: We often invest in utility scale solar projects by owning the
+Added: land under the project where our rent is paid out of project operational costs before the debt or equity in the project receives any payments.
Certain of the projects in which we invest may also be obligated to physically deliver energy under PPAs or related agreements, and to the extent they are unable to do so may be negatively impacted.
1 unchanged sentence
To the extent transmission and distribution infrastructure in geographies in which we invest is not able to accommodate additional power, additional renewable penetration from other new projects in certain geographic areas could decrease the revenues of our projects.
−Removed: Environmental Risks
−Removed: Our business is impacted by the effects of climate change and various related regulatory responses.
−Removed: We discuss the risks and opportunities associated with the impacts of climate change in Item 7.
−Removed: Management’s Discussion and Analysis of Financial Condition and Results of Operations - Impact of climate change on our future operations.
−Removed: This discussion outlines potential qualitative impacts to our business, quantitative illustrations of sensitivity as well as our strategy and resilience to these risks and opportunities.
Risk Management
2 unchanged sentences
As described above, we engage in a variety of interest rate management techniques that seek to mitigate the economic effect of interest rate changes on the values of, and returns on, some of our assets.
−Removed: We seek to manage credit risk using thorough due diligence and underwriting processes, strong structural protections in our agreements with customers and continual, active asset management and portfolio monitoring.
−Removed: Additionally, we have a Finance and Risk Committee of our Board which discusses and reviews policies and guidelines with respect to our risk assessment and risk management for various risks, including, but not limited to, our interest rate, counter party, credit, capital availability, refinancing risks, and cybersecurity.
+Added: We seek to manage credit risk using thorough due diligence and underwriting processes, strong structural protections in our loan agreements with customers and continual, active asset management and portfolio monitoring.
+Added: Additionally, we have a Finance and Risk Committee of our Board which discusses and reviews policies and guidelines with respect to our risk assessment and risk management for various risks, including, but not limited to, our interest rate, counter party, credit, capital availability, refinancing risks, and cybersecurity risks.
+Added: As it relates to natural event risks, when we underwrite and structure our investments, the environmental risks and opportunities are an integral consideration to our investment parameters.
While we cannot fully protect our investments, we seek to mitigate these risks by using third party experts to conduct engineering and weather analysis and insurance reviews as appropriate.
1 unchanged sentence
Once a transaction has closed we continue to monitor the environmental risks to the Portfolio.
−Removed: We further discuss our strategy to managing these risks in Item 7.
−Removed: Management’s Discussion and Analysis of Financial Condition and Results of Operations - Impact of climate change on our future operations.
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.