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Clearway Energy, Inc  (NYSE:CWEN) (NYSE:CWEN-A)
Q3 2019 Earnings Call
Nov. 06, 2019, 8:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Clearway Energy, Incorporated Third Quarter 2019 Earnings Conference Call. [Operator Instructions]

I would now like to hand the conference to your speaker today, Mr. Chris Sotos, President and CEO. Please go ahead, sir.

Christopher Sotos -- Clearway Energy, Inc.

Good morning. Let me first thank you for taking the time to join today's call. Joining me this morning is Chad Plotkin, our Chief Financial Officer; as well as Craig Cornelius, President and CEO of Clearway Energy Group. Craig will be available for the Q&A portion of our presentation.

Before we begin, I would like to quickly note that today's discussion will contain forward-looking statements, which are based on assumptions that we believe to be reasonable as of this date. Actual results may differ materially. Please review the safe harbor in today's presentation as well as the risk factors in our SEC filings. In addition, we will refer to both GAAP and non-GAAP financial measures. For information regarding our non-GAAP financial measures and reconciliations to the most directly comparable GAAP measures, please refer to today's presentation.

Turning to Page 4. I'm happy to report strong third quarter results that give us continued confidence around our revised CAFD guidance for the full year of 2019. Chad will provide more detail in his section of the presentation.

The contracts impacted by PG&E continue to perform. Our projects have not been impacted by the recent wildfires, and we continue to believe that the emergence of PG&E from bankruptcy in June of next year is a problem. During the quarter, we entered into an agreement to sell our Dover facility. As many of you are aware since the beginning of 2019, the 103 megawatt Dover facility became a predominantly merchant gas plant in PJM that does not fit strategically with C1's [Phonetic] focus on long-term contracted cash flows. C1 constantly seeks to rationalize this portfolio to deliver efficient contracted cash flows and the sale of Dover is part of that effort. We would expect the sale to close by the end of the first quarter of 2020.

As Chad will expand upon in more detail, during the quarter C1 advanced efforts on securing forbearance from its lenders to its PG&E exposed projects. As part of these efforts, C1 was able to obtain resolution regarding the Holdco debt at key [Indecipherable] related projects, which include the repayment of the outstanding non-recourse Holdco debt at Agua Caliente, while taking a forbearance agreement on the non-recourse Holdco debt at CVSR.

Today, C1 is announcing a fourth quarter dividend of $0.20 per share, the same dividend as last quarter. This is consistent with our view that until C1 obtains additional visibility around the PG&E bankruptcy and has full access to its project distributions, dividends paid to shareholders should be aligned with available corporate liquidity and our target payout ratio.

In terms of current execute growth projects, we're happy to announce that the Hawaii Solar Phase 1 is online and our Repowering 1.0 project is on schedule. In addition, our Thermal division signed the long-term energy services agreement with the owner of the Four Seasons Cayo Largo resort in Puerto Rico, another great addition to the thermal platform.

As I will explain later in the materials with our focus on eventually acquire Carlsbad, and given our need to prioritize capital deployment due to the PG&E situation, we have also notified Clearway Group that we are not going to pursue the acquisition of the Mesquite Star. Rather, we will continue to work with Clearway Group on committing and closing on the remaining existing robust ROFO pipeline, while continuing to augment the pipeline with projects that require capital deployment within a timeframe consistent with the anticipated PG&E bankruptcy emergence in the second half of 2020.

Turning to a discussion of Carlsbad. C1 partnered with GIP and raising over $215 million of 19-year fully amortizing 4.21% [Phonetic] investment graded non-recourse debt. This low-cost capital makes the potential acquisition of Carlsbad much more manageable, given C1's current capital constraints by lowering the amount of capital required to purchase the assets from approximately $387 million to $180 million before working capital adjustments, as well as increase in the CAFD yield to 15%. I could not be more pleased with this improvement in the accretive economics of this important growth project.

Next, Clearway is establishing its 2020 CAFD guidance of $295 million on updating its pro forma CAFD outlook to $320 million. The primary driver of this increase in the pro forma outlook is the potential acquisition of Carlsbad. It's important to note that the pro forma CAFD outlook excludes other growth, including any drop-downs from the ROFO pipeline once the PG&E situation clears.

Turning to Page 5, I want to highlight the continued progress we have made since 2018 at our Thermal business with over $8 million of existing CAFD growth initiatives, and an additional $1.4 million anticipated unlevered five-year average full basis through a new agreement with Four Seasons Largo resort, Puerto Rico. I want to emphasize the quality of asset additions in thermal. As you can see in the chart, these assets carry long-dated contracts at very attractive CAFD yields on a levered or unlevered basis. Especially given our constraints around the capital during the pendency of the PG&E situation, we expect to see one continue to invest in our thermal business' growth prospects.

Turning to Page 6. I want to highlight the significant improvements we have made to the capital structure on Carlsbad, making it a much more manageable investment for C1 from a capital formation perspective. To remind our investors due to the PG&E situation, GIP stepped in under its backstop facility to purchase Carlsbad from NRG as the current owner of the facility. Carlsbad was purchased for $387 million before working capital with an anticipated CAFD yield of 10.3% for a 20-year contracted asset, a very strong profile.

Since then C1 our partners at GIP have worked to back lever the Carlsbad facility on investment-grade basis in the amount of $216 million at very attractive interest rates on a completely amortizing basis over 19 years. This improves the already strong financial profile of Carlsbad even further with C1 only acquiring $180 million of capital to acquire Carlsbad and 15% CAFD yield on a five-year average basis, creating a much more manageable capital requirements, while also achieving a significant accretive spread in CAFD for our shareholders. Given the importance of this project to the future of Clearway, we are highly focused on seeking lease to acquire the project and as a reminder, GIP continues to hold Carlsbad through August of 2020 at the same terms and conditions as previously preserving C1's economics in the project.

Turning to page 7. I do not want this page of simplicity to lose importance. While PG&E has put significant constraints on our current capital deployment capabilities, I want to emphasize that with our current 2020 CAFD guidance of $295 million equating to $1.53 of CAFD per share and the future potential acquisition of the recapitalized Carlsbad, we can see C1 on a path to $1.63 CAFD per share before any further ROFO asset dropdowns targeted for the second half of 2020 or other sources of growth. I want to assure investors that despite the PG&E situation, management at C1 is relentless in its pursuit of CAFD per share growth while being mindful of maintaining an appropriate capital structure during this challenging period.

Now, turning over to Chad.

Chad Plotkin -- Senior Vice President and Chief Financial Officer

Thank you, Chris. Turning to Slide 9. Today, Clearway Energy is reporting third quarter adjusted EBITDA of $300 million and $177 million of cash available for distribution or CAFD. With these results, Clearway has now realized $769 million of adjusted EBITDA and $232 million in CAFD year-to-date. As a reminder, because the underlying contrast continued to perform, all reported results include the Company's projects or investments that are restricted from making distributions due to the PG&E bankruptcy. Year-to-date, this includes $46 million in CAFD including $18 million related to unconsolidated investments.

During the third quarter, the Company's diversified portfolio performed quite well as overall results were at the top end of our sensitivity and seasonality ranges. Both wind and solar energy and solar energy production in the quarter exceeded our median expectations are welcome despite given the significant weakness observed in the first half of the year.

The Company's conventional assets also performed well as high availability and start reliability provided for incremental revenue due to various performance-based bonuses in the underlying tolling agreements. Additionally, the Company continued its successful efforts in reducing cash O&M and capital expenditures, while maintaining availability. This included realized cost savings, ongoing cost containment and the deferral of maintenance spend at both the Renewable and Thermal segments, some of which we anticipate reversing in the fourth quarter.

During the third quarter, we also moved forward on rationalizing the portfolio with several transactions. First, as Chris mentioned, the Company entered into an agreement to sell the 103 megawatt Dover Energy Center. This disposition upon closing will allow the Company to recycle the proceeds of a non-strategic merchant energy asset in a market with limited operational scale.

Next, given a provision in the underlying PPA allowing the off-taker to exercise the call option to repurchase the solar system, Clearway closed the sale of a 6 megawatt distributed solar project. After accounting for the sale proceeds from this transaction, Clearway retired the non-recourse lease financing associated with this project, resulting in a modest improvement in net CAFD through the reduction in lease expense.

In addition to these asset dispositions, we have continued to actively work with the project lenders impacted by the PG&E bankruptcy on balanced solutions for all parties. And doing so, efforts have focused on maintaining continuity in both operational and financial performance of the affected projects while also ensuring the prudent management of Clearway's corporate balance sheet. This effort includes the non-recourse back leverage our Holdco financings at both the CVSR and Clearway's interest on Agua Caliente.

With the backdrop of the PG&E bankruptcy continuing to provide a high degree of certainty for contract assumption, we crafted a solution with the Holdco lenders that included a forbearance agreement for the CVSR Holdco Financing and a repurchase of the outstanding non-recourse debt at the Agua Caliente Holdco for our approximately $40 million, inclusive of premium and accrued interest. This solution provided our lenders, a reduction in credit exposure while allowing us to maintain the stability of key investments and an attractive incremental CAFD yield given the reduction in debt service of approximately $3.5 million per year.

Importantly, the Company retains the option to place new non-recourse debt in the future at Agua Caliente. Further, given the size of this investment, the impact to the Company's corporate credit metrics is limited and manageable until such time the event of the fault related to the PG&E bankruptcy is cured and the liquidity benefit from the reduction in debt services realized.

Lastly, and as noted on the right side of the slide, we are maintaining our revised full-year CAFD guidance of $250 million. This is based on median P50 production estimates in the fourth quarter, the contribution of committed growth investments, the ongoing performance of the PG&E projects and the expected catch-up of certain O&M spend that has been deferred year-to-date.

Moving to Slide 10 to review 2020 CAFD guidance and an update to the Company's pro forma CAFD outlook. For 2020, Clearway is initiating CAFD guidance of $295 million. As noted, this guidance includes $99 million in CAFD attributed the PG&E projects. The impact of the transaction is discussed on the prior slide and assumes all committed growth achieve COD are scheduled. Guidance is also based on the Company's P50 median renewable energy production expectations. Please refer to the appendix section of the presentation for the underlying sensitivities to this estimate.

While the $295 million estimate approximates our CAFD expectations for 2020, the timing of various known cash flow drivers in the portfolio, the potential impact of Carlsbad and the illustrative impact from new corporate capital formation to fund growth are just as critical to the forward outlook at the Company on a pro forma basis. First, the portfolio has a predicted increase of around $10 million and expected CAFD which will inure to the business after 2020. This includes the profile of project-level debt amortizations and the expected CAFD profile for growth, including the timing of tax equity proceeds from the repowering partnership.

Next, as Chris discussed, the Carlsbad transaction which the Company is very focused on completing presents a highly accretive opportunity with a potential $27 million in average annual CAFD for the Company. Realizing that capital formation is required to permanent finance some of our larger growth investments, we next presenting illustrative permanent cost of corporate debt financing for both Repowering 1.0 and Carlsbad. This is sizing consideration of our long-term target credit metrics and results in approximately $12 million and annual interest expense using an assumed 5% interest rate.

For this illustrative analysis we note that while the timing of the Carlsbad transaction is still to be determined, we anticipate funding the entirety of the Repowering 1.0 investment under the revolver until such time as permanent financing is raised. After accounting for all these items and not factoring in additional growth potential from the ROFO pipeline, we are pleased to present a pro forma CAFD outlook of $320 million or an amount that positions the Company quite well for the future dividend growth upon the PG&E bankruptcy process reaching its expected resolution.

With that, I'll turn the call back to Chris.

Christopher Sotos -- Clearway Energy, Inc.

Thank you, Chad. Turning to Page 12. I'm very pleased with our third quarter results that increased our confidence with our current CAFD guidance for the full year 2019. As has been our refrain [Phonetic] during 2019, we are working to maintain our balance sheet flexibility as PG&E continues toward its emergence from bankruptcy. As Chad discussed, so and made the decision to repurchase its outstanding Agua Holdco debt as part of a larger negotiation with Holdco lenders regarding Agua and CVSR. C1 was able to repurchase the Agua debt at favorable terms, as well as agreed on forbearance at CVSR with the Holdco lenders, allowing for increased flexibility and CAFD regarding these two valuable assets during the PG&E bankruptcy and thereafter.

As we approach the end of 2019, I want to highlight our continued execution around growth given our constraints. Hawaii Solar Phase 1 has started commercial operations with Repowering 1.0 on schedule for full operations in phases between November of 2019 and January of 2020. We continue to focus on highly accretive high-quality growth opportunities on our thermal platform with our newest asset under construction in Puerto Rico.

As emphasized in this call, due to the investment-grade rated financing at Carlsbad, we reduced the capital required to acquire the asset by more than half and increased accretive economics for our shareholders and will be the focus of our capital deployment in the near term. As discussed previously, GIP continues to dedicate capital to development at the CEG level as previously added to the ROFO pipeline assets that align with our current capital constraints and recording funding in the second half of 2020 and beyond.

As always, we manage our growth with a view that is consistent with maintaining our target ratings to preserve long-term capital formation capabilities. Thank you.

Operator, please open the lines for questions.

Questions and Answers:

Operator

Thank you. [Operator Instructions] Our first question comes from Julien Dumoulin-Smith with Bank of America. Your line is now open.

Julien Dumoulin-Smith -- Bank of America -- Analyst

Hey, good morning, team.

Christopher Sotos -- Clearway Energy, Inc.

Good morning.

Julien Dumoulin-Smith -- Bank of America -- Analyst

Hey, so a few different questions here so I'll try to be quick. First off, can you give us your latest sense on California RA pricing? I know we've talked about this a little bit in the past. I think [Indecipherable] threw out a number of $7 [Indecipherable] a month or better of late yesterday on their call, so sort of curious. I know we're a few [Indecipherable] recontract. But with that market more than doubling, I'm sort of curious, at least what your sense is for your discrete assets, say if you can comment at all?

Christopher Sotos -- Clearway Energy, Inc.

Sure. And wait for your second question. But I think your first question, I don't really have a specific RA pricing to give out. I think to your point is in a liquid market and we are more than three years out. I think it's also important to note if that number is a year-round number versus kind of summer peak. So I think the big -- the bigger point, I think you're illustrating is that prices has significantly improved and continue to. But in order to give a specific number, from my perspective it's premature.

Julien Dumoulin-Smith -- Bank of America -- Analyst

Okay. And turning back to the numbers real quickly, can you comment a little bit more granularly if you don't know -- don't mind about some of the puts and takes in the $295 million in '20? I know there's a number of different transactions, many of them small that kind of contribute in that. Can you give us a little bit more detail? And then separately if I can throw and just squeeze in another question very quickly. With respect to the Carlsbad acquisition, it seems this --ultimately this is just a corporate releveraging and then ultimately the equity check involved does not that materially different relative to the debt employed, correct? And just want to make sure we understand that.

Christopher Sotos -- Clearway Energy, Inc.

Sure. I'll let Chad kind of go through some of the detail you're looking for on your second question. But regarding your third, I want to make sure I can answer your question appropriately. I would say it's not a corporate releveraging, it's a non-recourse leveraging kind of at the project, similar some of the Holdco debt structures that you saw at Agua and CVSR. So from our perspective in terms of corporate capital before if we had done nothing, you would require once again before working capital etc. about $387 million to acquire the project.

So from a corporate capital perspective, I might disagree with your view a little bit that the corporate capital required a significantly different than it was before, once again, about $180 million versus that $387 million. But to emphasize, it's not a corporate leveraging. It is a non-recourse investment-grade leveraging kind of at the Holdco level above the project.

Chad, in terms of Julien's second question?

Chad Plotkin -- Senior Vice President and Chief Financial Officer

Yes. Julien, I mean I guess to answer your question, I think the way you put it is, there's always puts and takes, so I mean there are puts and take. I mean, I think, obviously in the way we're reporting with the constraints under PG&E, there is obviously an up arrow relative to the reduction in debt service on the Agua side. I think you've got a little bit of a down arrow on what was originally predicted for the Dover disposition and some other impacts there.

We obviously as we talk about we always do a recalibration as we gather more historical information on expected P50 performance in some of the wind assets. So there is a little bit of a minor adjustment there. I think all-in sort of bundles into where we are. I think the way I would think about it also there is, if you think about how we've been presenting things previously in the prior pro forma outlook, we've generally presented things using our five-year average CAFDs for growth. And knowing that there is sometimes a shape-dependent on the timing of expected proceeds and tax equity, the shape of project debt amortization relative to some of those projects.

So if you note on Page 10, we have this item we call other base portfolio drivers because that's consistent with how we've disclosed it, but there is call it about half of that -- four of it, if you look in the appendix is actually attributed to that. So you're kind of very close to where we were previously if you factor in that variable.

Julien Dumoulin-Smith -- Bank of America -- Analyst

Thank you very much. I'll pass it on.

Christopher Sotos -- Clearway Energy, Inc.

Thank you.

Operator

Thank you. Our next question comes from Colin Rusch with Oppenheimer. Your line is now open.

Colin Rusch -- Oppenheimer -- Analyst

Thanks so much. Could you guys give us a better sense of the dynamics around this forbearance agreement? Is it something that you guys are -- were pushing forward to ease some of the cash considerations near term? Is it something that you could repeat or is it something that lenders are looking for to give themselves some more comfort around that portfolio?

Christopher Sotos -- Clearway Energy, Inc.

Sure. I'll let kind of Chad get into details. But I think it really is the benefit for both sides that I think we're dealing with in many ways what's unique situation with PG&E, and which you have the counterparty that's in bankruptcy painful freight under all of its contracts with once again a probable emergence from bankruptcy in kind of June of 2020. So I think everyone is working to make certain that we kind of understand the rules of the road, so to speak while that for -- while the pendency of the PG&E situation is ongoing.

But Chad, any details?

Chad Plotkin -- Senior Vice President and Chief Financial Officer

Yes. I mean, I think, Colin, we've gone through since the start of this. We've got an active and very constructive dialog with our lenders. And I think the one thing I would point out is and why we're focused here on the Holdco debt is at the Holdco debt unlike some of the other projects structurally speaking, not on a sizing basis given how we size the debt, but structurally speaking, they don't have a direct secured interest in the underlying project, so it is a little bit different. And naturally, some of those investors that are in that paper are going to have a different kind of view of credit overall.

So I think part of the dialog was just to try to be balanced to sort of create a bit of a win-win. So they feel like they're in a more stable position, they can go back to their own committees and make sure that they can represent a little bit of a reduction in risk and then just create a more stable platform. I mean, I'm not -- we're not going to get into the weeds of the underlying agreements. But I think we were quite satisfied with the end result. And candidly given the ability to purchase some of that debt it's very manageable within our credit ratios and we feel like it was an attractively priced piece of paper in irrespective of the action, etc., so.

Colin Rusch -- Oppenheimer -- Analyst

Okay. Thanks. And then just moving on to the development pipeline and the ROFO portfolio, maybe this is a question for Craig. Could you talk a bit about the dynamics on the development space? There's certainly been a lot of discussion around some decent sized developers that are running into some distress and maybe liquidating assets. Is there an opportunity to aggregate a fair amount of capacity here over the next, call it 12 to 18 months that is a little bit unique and can leverage the balance sheet from the partner more actively, but look to understand a little bit, where there's opportunity and maybe some areas for growth that we're not necessarily seeing now, right, in the reported numbers?

Christopher Sotos -- Clearway Energy, Inc.

Sure. Craig, to Colin's point, I want you to take that.

Craig Cornelius -- President and Chief Executive Officer

Sure. Good morning, Colin. A few thoughts on that. So first, I think you're correct in noting that the step-down of the production tax credits, as well as some of the project requirements that go into qualifying solar projects for full value under the ITC create some natural advantages for a well-capitalized platform that has both development in construction and operating capabilities as we do. And in the disclosures that we provide, we disclose -- we make disclosures only on the controlled pipeline that we own or control through JVs [Phonetic] right now. But those dynamics are certainly setting up for a period of acquisition opportunities that we are engaged on.

As I think you're suggesting there are more pressing matters for the moment in the wind industry and it's our hope that those dynamics will allow us to add to the opportunity set that we're working on for CODs in the '21 and '22 timeframe, in particular as 2020 is pretty well set up for most. And on the solar front, we feel pretty good about the pipeline that we have already, but are selectively evaluating places to supplement it where regionally we think there is greater opportunity.

One of the particular advantages that we bring to bear on those acquisition opportunities is the substantial safe harbor investment program that we've previously disclosed. So with more than 4,000 megawatts worth of equipment that we have invested in to qualify projects for either PTCs are ITCs through 2023 that's increasingly becoming a valuable tool that we can bring to bear in those M&A opportunity situations. And so we're constructive about what that can mean for the whole of the enterprise over the next 24 months.

Colin Rusch -- Oppenheimer -- Analyst

That's incredibly helpful. Thanks so much, guys.

Operator

Thank you. Our next question comes from David Fishman with Goldman Sachs. Your line is now open.

David Fishman -- Goldman Sachs -- Analyst

All right. Good morning.

Christopher Sotos -- Clearway Energy, Inc.

Good morning.

David Fishman -- Goldman Sachs -- Analyst

Just a question on how you guys are thinking about the renewable impact from the wind resource year-over-year. When I looked at the third quarter '18 deck, the wind index was about 106% and then this year it's 112%. But in the release is kind of reported that the wind was actually down year-over-year. So I was just wondering if there is a rebasing of what the P50 was year-over-year, or what's driving that?

Chad Plotkin -- Senior Vice President and Chief Financial Officer

I think the one thing that probably is factored in there, because when you look at the index is the removal of -- a big chunk of the Texas assets because we're excluding that right now because their performance in this past quarter. I included Elbow Creek and Wildorado, and we're not including that in the index because as you know we're going through the repowering processing and construction. So those are actually offline or a big chunk of it during the period. I suspect that's the number, David, on that point.

David Fishman -- Goldman Sachs -- Analyst

Okay.

Chad Plotkin -- Senior Vice President and Chief Financial Officer

Yes. So that's probably what you're seeing overall as to why there is a variance.

David Fishman -- Goldman Sachs -- Analyst

Okay, that makes sense. And then I think I heard in the stated remarks that there is some deferred O&M during 2019. I was just wondering if you guys have put out a number on what the magnitude of that was?

Chad Plotkin -- Senior Vice President and Chief Financial Officer

Yes. So it was a number of things. I think as I brought we're obviously working very constructively across the portfolio on cost containment and savings overall. I think the deferral piece of it tends to fall in a couple of buckets, on the one hand dependent on dependent on when -- it's like predictive maintenance on the wind fleet can cause some issues where you're deferring spend because you're not having to spend it and as the facilities to begin to turn that will pick up. And then on the Thermal segment, we run through this frequently where you have expected spend on maintenance and dependent on if it's a local and within the city centers, you might have some permitting things. We didn't give a specific number, but we're not talking tens of millions of dollars of here. It's in the single-digit millions that will move around.

David Fishman -- Goldman Sachs -- Analyst

Okay, great. Thank you. I appreciate. And congrats on the quarter.

Christopher Sotos -- Clearway Energy, Inc.

Thanks.

Operator

Thank you. [Operator Instructions] Our next question comes from Greg Gordon with Evercore. Your line is now open.

Greg Gordon -- Evercore ISI -- Analyst

Hey, good morning.

Christopher Sotos -- Clearway Energy, Inc.

Good morning.

Greg Gordon -- Evercore ISI -- Analyst

Really solid numbers, congrats. Can you just remind us -- I know that you're -- in the deck, in the deck, you point out that $99 million of run rate, annual CAFD is associated with PG&E projects. How much cash is currently trapped as of the end of this quarter at the project level? And assuming that they do exit from bankruptcy on or before the June 30, deadline under AB-1054, over what period of time will that trap the cash flow back to the parents, so that it can be redeployed?

Christopher Sotos -- Clearway Energy, Inc.

Sure. Greg, I'll handle it. So I think if you note in the release, so we indicate how much-restricted cash is associated to the PG&E assets. That total balance is actually like on our consolidated basis is over $140 million. However, that number is not reflective of what I would call the excess cash that would otherwise be available from a distribution perspective.

Perhaps a simple way to think about it is, I think in my prepared remarks I emphasized that we have generated CAFD year-to-date of roughly $46 million. I have the PG&E projects. So if you made the assumption all of that is effectively something that would get distributed over time. And then I couple that with candidly at the end of the fourth quarter we had excess cash in some of our projects -- excuse me, at the end of the fourth quarter of 2018, we had excess cash with the projects that we're not able to get distributed because of the timeframe of which the event of default was occurred relative to distribution dates given the PG&E situation. So there was more capital in there.

With that -- I mean, I think if I look holistically if I said right now there is between, call it $60 million to $70 million of cash in the system that could otherwise be cleared over time. That's not a bad number to think about. [Speech Overlap]

Greg Gordon -- Evercore ISI -- Analyst

And that will continue to build until you -- until they exit and hopefully -- correct?

Christopher Sotos -- Clearway Energy, Inc.

Correct.

Greg Gordon -- Evercore ISI -- Analyst

All right.

Christopher Sotos -- Clearway Energy, Inc.

And then to your second question about the speed of release, I would think if using June 2020 within six to nine months, the vast majority of that should be released.

Greg Gordon -- Evercore ISI -- Analyst

Great. And then what are you contemplating doing in terms of the conversation around the dividend with your Board once you get back to -- on trapped ongoing CAFD run rate that actually, in reality matches your projections and isn't here a cut by the traps?

Chad Plotkin -- Senior Vice President and Chief Financial Officer

I think, as we've indicated before we -- that any of the cash that is trapped would use to basically acquire acquisitions versus a special dividend or something of that nature. And in terms of dividends going forward, once again important to assess the facts on the ground at that time, but we do it consistent with our 80%, 85% payout ratio how we've talked about over the years.

Greg Gordon -- Evercore ISI -- Analyst

Great. Thank you for reminding me. Take care.

Chad Plotkin -- Senior Vice President and Chief Financial Officer

Sure.

Operator

Thank you. I'm not showing any further questions at this time. I would now like to turn the call back over to Chris Sotos for any further remarks.

Christopher Sotos -- Clearway Energy, Inc.

Thank you. So once again I want to thank everyone for the call. And I'm really proud of a very strong quarter and good accretive opportunities at Clearway. And I look forward to talking to you in February. Thanks, everyone's time.

Operator

[Operator Closing Remarks]

Duration: 33 minutes

Call participants:

Christopher Sotos -- Clearway Energy, Inc.

Chad Plotkin -- Senior Vice President and Chief Financial Officer

Julien Dumoulin-Smith -- Bank of America -- Analyst

Colin Rusch -- Oppenheimer -- Analyst

Craig Cornelius -- President and Chief Executive Officer

David Fishman -- Goldman Sachs -- Analyst

Greg Gordon -- Evercore ISI -- Analyst

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