Brian Bolster; Executive Vice President, Finance and Chief Financial Officer NextEra Energy, Inc.; Nextera Energy Partners LP
Alan Liu; President and Chief Executive Officer, XPLR Infrastructure; Nextera Energy Partners LP
Shahriar Pourreza; Analyst; Guggenheim Securities LLC.
Christine Cho; Analyst; Barclays Capital Inc.
Good day, and welcome to the XPLR Infrastructure fourth-quarter and full-year 2024 earnings conference call. (Operator Instructions) Please note this event is being recorded.
I would now like to turn the conference over to Mark Edelman, Director of Investor Relations. Please go ahead.
Thank you, Betsy. Good morning, everyone, and thank you for joining our call.
With me this morning are: John Ketchum, Chairman of XPLR Infrastructure; Brian Bolster; Rebecca Kujawa; and Mark Hickson, members of the XPLR Infrastructure's Board of Directors and Alan Liu, President and Chief Executive Officer of XPLR Infrastructure.
We will be making forward-looking statements during this call based on current expectations and assumptions, which are subject to risks and uncertainties. Actual results could differ materially from our forward-looking statements if any of our key assumptions are incorrect or because of other factors discussed in today's conference call and the comments made during this conference call and the risk factors section of the accompanying presentation or in our latest report and filings with the Securities and Exchange Commission, each of which can be found on our website, www.xplrinfrastructure.com. We do not undertake any duty to update any forward-looking statements.
Today's presentation also includes references to non-GAAP financial measures. You should refer to the information contained in the slides accompanying today's presentation for definitional information.
Please note that the name change to XPLR Infrastructure became effective on January 23 in trading on the New York Stock Exchange under the new stock ticker of XIFR. It will become effective on February 3. We will also be referring to convertible equity portfolio financings as CEPF throughout today's call.
With that, I'll turn the call over to Brian.
Thank you, Mark, and good morning, everyone.
Today, XPLR Infrastructure is announcing a strategic repositioning of the company. I will first outline the major elements of that repositioning. I will then provide some background explaining how we have arrived at these changes, following a detailed strategic review of the company. Finally, I will discuss some of the related implications and opportunities. Alan Liu will conclude with details regarding XPLR's priorities and path forward.
Turning now to the broad outline. First, the most important change XPLR is making is to suspend for an indefinite period distributions to unitholders. Rather than issue equity to make investments, including investing in the CEPF buyouts, XPLR will instead utilize its retained operating cash flow.
As such, today we are transitioning from a model that focused primarily on acquiring assets and paying out substantially all of its ongoing cash flows, which required constant access to equity markets, to a strategy that focuses on making investments funded by the cash flows and balance sheet capacity of the business, growth will be an output.
And to the extent our free cash flow exceeds investment opportunities with an attractive return profile, we remain committed to returning capital to unitholders, which will ultimately be what each of our investment alternatives will be measured against.
In short, rather than seeking acquisitions to support a growing unitholder distribution, XPLR will be focused on investing its free cash flow to provide value accretion to unitholders, whether that is the cash buyout of CEPF, funding wind repowerings, investing in the colocation of storage at our renewable assets, pursuing other growth investments, or ultimately returning capital to unitholders.
By taking this action today, we believe we have eliminated the need to issue equity. We have also created a path to self-fund organic growth and other investment opportunities, while preserving our balance sheet and retaining the option to return capital to unitholders.
Second, to implement this new approach, XPLR is putting in place a new management team, all of whom are and will continue to be employees of NextEra Energy. This management team, led by Alan Liu, will be looking broadly to create additional unitholder value both at the existing asset base and through ancillary opportunities, all measured against returning capital to unitholders.
Associated with these changes is a change to the name of the company, which we think appropriately captures the transition from a company that was primarily an acquisition vehicle to an entity that will explore a broader suite of capital allocation and investment opportunities.
The XPLR team will continue to leverage the existing relationship with their largest unitholder NextEra Energy through supplier and financing contracts, meaningful Board representation, existing service agreements, and access to investment opportunities adjacent to XPLR's clean energy assets. Through its continued close relationship with NextEra Energy, XPLR will retain the same benefits and operational expertise that NextEra Energy currently provides across its entire portfolio.
Having given you the main elements of the changes we will be making, let me now spend a few minutes on some background which will give context for these changes. I will then turn to some of the implications of the changes and describe how we believe they will benefit the long-term interests of unitholders.
When XPLR was established in 2014, we expected its basic function to be to acquire contracted clean energy assets and to hold those assets in a portfolio that delivered relatively low risk and growing cash flows. Other opportunities for growth, of course, were not ruled out, but this was expected to be the main path to growth, at least for some years.
Explicit in this model of growth driven by acquisitions was the commitment to payout a very high proportion of annual cash flows, which necessarily meant that every new acquisition would bring with it a need for new equity issuances. For many years this model worked. However, as distributions per unit grew, the partnership needed to acquire more assets and thus issue more equity to support its distribution growth rate.
As our equity needs grew, the existing public equity market for yieldcos proved to be more limited, creating the need for substantial discounting and thus increased dilution. Therefore, we looked to private capital as a financing source to help support our growing equity needs and maintain our distribution growth rate.
When issued, the CEPF offered new equity capital to support acquisitions. Unfortunately, as we began to buyout CEPF obligations by issuing equity in 2021, there was significant downward selling pressure on the unit price. If we had continued to issue equity to buyout to CEPFs, it would have resulted in significant dilution to unitholders.
Over this time, it has become clear that utilizing the significant cash available to XPLR to fund these buyouts instead of distributing that cash and issuing new equity results in what we believe is a better economic value proposition for unitholders over the longer term.
It's within this context that XPLR reexamined its distribution policy and what level of adjustment to make going forward. As you're all aware, we have multiple opportunities for our cash, one, the buyout of CEPFs; two, other growth opportunities, including but not limited to repowers and investments in co-located storage; and three, return of capital to unitholders either in the form of a distribution or common unit buybacks.
We also need to maintain sufficient balance sheet flexibility to efficiently refinance capital obligations as they come due. For several reasons, we believe a full suspension of the distribution gives us the clearest path to maximizing unitholder value.
First, we believe it is in the best interest of unitholders to finance the buyout of selected CEPFs with cash flow, not equity. We believe buying out CEPF at double-digit unitholder returns is one of our most attractive investment opportunities.
Second, we expect to see attractive investments around our clean energy assets like wind repowers and co-located storage investments that we believe will create value for unitholders. These investments will generate incremental demand for cash which can be funded from retained cash flows.
Third, given the unprecedented demand for power, we expect to have many other attractive investment opportunities through our close relationship with NextEra Energy. Finally, suspending the distribution today does not prevent a return of capital in the future, and we will evaluate all of our investment opportunities against returning capital to unitholders.
By fully suspending the distribution, we believe that XPLR will be able to adopt a business plan that does not contemplate equity issuances. In the face of attractive investment opportunities, continuing as an acquisition vehicle, while paying out a distribution at a double-digit yield is not the value maximizing path.
Similarly, maintaining a token distribution as part of our near-term capital allocation plan diverts cash flow from potential valuable investment opportunities. We believe a full suspension of the distribution allows us to retain the ability to allocate capital back to unitholders over time rather than payout a smaller distribution and potentially have to rely on the equity markets to fund buyouts or investments.
That's why today we announced the change in XPLR's business model to one that focuses on the economic allocation of the cash flows generated by XPLR's assets. Over the next two to three years that means XPLR plans to use a combination of its available cash flow and some balance sheet capacity to invest in the buyout of selected CEPFs at attractive returns and to advance our organic growth opportunities. The decision to buyout a CEPF or not will be based on the return of the cash flows acquired from the buyout.
Over the longer term, XPLR plans to evaluate investment opportunities in other clean energy assets, including but not limited to co-locating storage across its renewables portfolio. The return on these opportunities will continually be measured against the value of returning capital to unitholders, including through common unit buybacks over time and potentially eventually restoring a distribution.
At some point we can either reinitiate distributions, engage in buybacks or both. However, we do not expect to revert to a distribution policy of 90%-plus payouts of available cash flows. The timing of unit buybacks or future distributions is impossible to predict right now.
They will depend on the investment opportunities available at a time. We will keep you updated on our thinking, and we are committed to the principle of returning to unitholders all capital in excess of that needed to fund only those investments that promise attractive risk adjusted returns.
In the context of a dynamic capital allocation model, XPLR will be putting a new management team in place, all of whom will continue to be employees of NextEra Energy. The XPLR management team will be led by Alan Liu, who is on the call with me today and will serve as the partnership's Chief Executive Officer. XPLR will retain its close ties to NextEra Energy and again, XPLR's Board of Directors remains unchanged.
Alan and his team will be responsible for executing on the repositioning of the business. XPLR's new management team is committed to assessing and pursuing a disciplined capital allocation policy which maximizes unitholder value either through its multiple investment opportunities or by returning capital to unitholders over time.
Alan is an industry veteran with a proven track record of leadership and has held senior positions in risk Management and Corporate Development at NextEra Energy. Prior to joining NextEra Energy in 2021, Alan was a Managing Director at Goldman Sachs where he advised a broad range of companies, public and private, across the power utilities and renewable and energy and infrastructure sectors.
Alan brings to explore a diverse set of skills and nearly 20 years of electric infrastructure and financing experience that comes from helping companies think strategically about and execute on complex mergers, acquisitions, capital raise investments, and other strategic and financial matters.
With that, I will turn it over Alan to discuss the strategic repositioning in more detail.
Alan Liu
Thank you, Brian, and good morning, everyone. Before I discuss the repositioning in greater detail, I feel it's important to provide a brief overview of XPLR's assets and key investment highlights.
XPLR Infrastructure is one of the largest independent power producers and the third largest producer of wind and solar energy in the United States, owning and operating a diverse set of high-quality generation assets, totaling 10 gigawatts in operation today.
Our portfolio is diversified across generation technologies with wind, solar, and storage assets and across customers with high credit quality. Geographically, the portfolio is located in 31 states including power markets that are projecting significant future load growth which we think provides a number of opportunities including recontracting, repowering, and other investment opportunities enabled by the existing assets.
The portfolio generates most of its cash flows through long-term contracts with a weighted average remaining contract life of 13 years, with 78 different customers that have an average credit rating of BBB. This means we have long-term visibility to our project level cash flows.
As we have reviewed the universe of opportunities available to XPLR to deploy its cash flow, we have identified four priorities which we believe will drive value for unitholders.
The first priority is funding the cash buyout options of selected CEPFs. We expect the buyout of selected CEPFs to produce double-digit returns, allowing us to retain ownership of assets we believe will provide attractive opportunities well into the future.
We expect the buyout of these investments will also simplify our capital structure by eliminating friction costs such as change of control restrictions and make whole payments which can limit strategic flexibility.
I will provide more detail on the specifics of these CEPFs buyouts after I have finished outlining all of our capital allocation priorities, but I want to reiterate we do not expect to need new equity issuance to address these buyouts.
The second priority is investing in our existing assets, including wind repowering projects that meet double-digit return targets. Wind repowerings that we move forward on are expected to provide increased cash flows over the life of the asset which would enhance the value of our assets beyond the current contract period and create value for unitholders.
Another investment opportunity in our existing assets is through co-located storage. Given the current market dynamics and demand for power, one of the most important development assets is an interconnection position. Without an interconnect, the project cannot move forward.
A typical site on average -- wind site on average produces energy approximately 40% of the time, which means the other 60% of the time the interconnect is available for a co-located battery. We have a multi-gigawatt opportunity with unutilized interconnection capacity that could be used to co-locate battery storage behind XPLR's approximately 10-gigawatt renewable portfolio today. This is a valuable asset, especially as times for interconnection continue to expand and the need for capacity solutions increases with growing power demand.
Over the longer term, we plan to evaluate other investment opportunities adjacent to our clean energy assets. The guiding principle of our investment strategy will be to find areas where XPLR has a differentiated market opportunity and can generate accretive returns for unitholders. We believe a logical place where we may find differentiated opportunities is in industries that are driving the fundamental 7x24 low demand for power.
Power demand growth is forecasted to increase six-fold in the next 20 years versus the prior 20. US data center demand alone is expected to increase substantially, adding approximately 460 terawatt hours of new electricity demand at a compound annual growth rate of approximately 22% from 2023 to 2030.
We believe XPLR is well-positioned to capitalize on this expected long-term secular demand shift in power demand through its own assets and also through new opportunities that may become available through its close relationship with its largest unitholder, NextEra Energy.
Over the next two years, the buyout of selected CEPFs and investments in our existing assets, including previously announced repowers, will require approximately $4.4 billion of debt financing that includes approximately $1.5 billion of new debt.
In addition to funding these initial two priorities, we plan to expand the focus of our cash allocation to new growth opportunities as well as return of capital to unitholders, our third and fourth priorities. We will measure growth opportunities in comparison to each other and relative to returning capital to unitholders with a goal of allocating capital to the highest returning opportunity.
While we are raising new debt as part of our capital plan, we are also refinancing existing debt, including project debt and holding company debt. For the $2.2 billion of holding company debt coming due through 2027, we plan to refinance those maturities at the holding company when they mature in 2025, '26 and '27.
We have approximately $3.6 billion of interest rate hedges in place to derisk those planned issuances. But consistent with our view on the dilutive impact of issuing equity, we do not plan to reissue convertible debt. We are committed to ensuring sufficient balance sheet strength and liquidity to facilitate our refinancing activities, allowing us to extend the holding company maturities.
Along these lines, we recently received ratings affirmation from each of the agencies based on the plan we are laying out here today. Again, following the distribution suspension, we believe XPLR can pursue a number of opportunities it has available to it, including the CEPF buyouts, repowers, and select other growth opportunities without having a need to issue incremental equity.
Having given you an overview of our capital plan, I want to provide more details on the CEPF buyouts. Today, we have five CEPFs in place. We intend to buyout three of these portfolios with cash and we intend to sell the assets of the other two to fund their buyouts. We have provided specific plans for each CEPF in the presentation, but in summary and based on these assumptions, for three CEPFs we plan to buyout with cash, we will invest approximately $945 million in 2025, $150 million in 2026, and $465 million in 2027.
At the end of 2027 we expect to have only two remaining CEPFs outstanding. We have also worked collaboratively with the investor in one of these two remaining CEPFs to create the option to restructure the approximately $1 billion buyout payment due in 2030 into smaller distributed payments through 2034. This allows us to fund buyouts in that timeframe from cash flow.
In summary, we believe we have a pathway to address all of the CEPFs which does not require us to issue equity.
Switching gears to our financial results. For the full year 2024, our adjusted EBITDA was approximately $1.96 billion, very close to the midpoint of our run rate expectations range. For 2025, assuming normal weather and operating conditions among other caveats, we expect our adjusted EBITDA to be roughly flat year-over-year, although results may be impacted by the timing of the expected sale of the Meade Pipeline investment that we currently expect in the fourth quarter 2025.
For calendar year 2026, we expect the portfolio to deliver adjusted EBITDA of $1.75 billion to $1.95 billion. The decline in adjusted EBITDA of approximately $105 million is due to the impact the expected sale of the Meade Pipeline investment in the fourth quarter of 2025.
With the repositioning, XPLR is changing its cash flow expectations metric to free cash flow before growth. Cash available for distribution is no longer meaningful for an entity suspending its distribution indefinitely. You can reference our financial disclosures for the specific definitions.
As with other companies including independent power producers with meaningful free cash flow and multiple capital allocation opportunities, we believe free cash flow before growth will be a more appropriate metric to help guide our capital allocation decisions.
Given that 2025 is a transition year which will have partial impacts of $945 million for CEPF buyouts, the expected Meade pipeline investment sale and other HoldCo financings, we believe 2026 represents a more appropriate baseline for our free cash flow before growth metric. We expect free cash flow before growth to be in the range of $600 million to $700 million in 2026 and we expect it to remain relatively consistent through the end of the decade.
As discussed earlier, we expect our cumulative free cash flow before growth will exceed our remaining CEPF buyout options, which we expect will provide us optionality to allocate capital on the benefit of unitholders.
We have provided a detailed walk from our midpoint 2023 run rate cash available for distribution expectations provided in the fourth quarter of 2023 to our 2026 free cash flow before growth expectations. After adding back debt paydown to get to free cash flow before growth, the main drivers between expected 2024 free cash flow before growth and 2026 calendar year expectations are the estimated impact of the expected Meade Pipeline sale and higher financing costs.
Higher financing costs include the buyout of CEPF 1 and the refinancing of zero coupon and other low cost converts with debt. While our cash flow is expected to decline as a function of these higher financing costs, we believe unitholders are meaningfully better off on a cash flow per unit basis relative to issuing equity at current prices.
In summary, we are suspending the distribution and executing on a plan that enables XPLR to pursue investment opportunities available to it and that does not contemplate issuing equity. We believe investing in CEPF buyouts is our best value maximizing opportunity for unitholders.
Next, we are going to opportunistically invest in growth opportunities including repowerings and co-located battery storage across our portfolio, as well as other investment opportunities that arise, while maintaining sufficient balance sheet strength to address our maturities.
All of these investments will be measured against returning capital to unitholders. Over the time, we expect that return of capital to take the form of either common unit buybacks or potentially the reinitiation of a distribution.
In our view, we believe this repositioning will enable XPLR to unlock the value of the strong cash flows in the existing portfolio today and best position XPLR to allocate cash flow optimally for unitholders in the future. This focus on disciplined capital allocation is consistent with the capital allocation strategy deployed by high cash flow generating companies like independent power producers.
We believe XPLR offers an attractive value proposition to existing and potential unitholders. XPLR's diverse assets and long-term contracts with high-quality customers provides long-term visibility in our project level cash flows.
The chart on slide 14 illustrates a range of theoretical potential unit prices based on a range of independent power producer trading levels and our 2026 free cash flow before growth expectations range. Of course, we cannot predict actual unit prices, but we do firmly believe XPLR represents a compelling long-term investment opportunity due to the unprecedented demand for power, our close relationship with NextEra Energy, and the quality of our large, diversified portfolio of renewable energy projects that uniquely position us for opportunities to create value for unitholders through a disciplined approach to capital allocation.
That concludes our prepared remarks, and with that, we will open the line for questions.
Operator
We will now begin the question-and-answer session. (Operator Instructions)
Shahriar Pourreza, Guggenheim Partners.
Shahriar Pourreza
Hey, guys. Good morning.
Brian Bolster
Good morning.
Alan Liu
Morning.
Shahriar Pourreza
Morning. So just really quick one for me, please. Just on the guidance, as we're thinking about the free cash flow before growth, how much of that is kind of driven by the ITC and PTC? Thanks.
Alan Liu
Hey Shahr, it's Alan. So in the appendix of the presentation, we've given you the tax credits up to 2026. So the way I think about it is, as we've said in the prepared remarks, our free cash flow before growth is relatively consistent through the end of the decade. So that's kind of what we're willing to share with you today.
Shahriar Pourreza
Okay. Perfect. No, that's all the questions I had. Appreciate it. And congrats, Alan, on the new spot.
Alan Liu
Thanks, Shahr.
Operator
Julien Dumoulin-Smith, Jefferies.
Julien Dumoulin-Smith
Hey, good morning team. Thank you, guys, very much. I appreciate the time and congrats and Alan, pleasure.
Maybe just to follow-up a little bit, how do you think about what that run rate EBITDA is in terms of the growth CapEx that you guys are laying out here? So i.e., how do you think about that run rate growing and then how do you think about the net of, as you say, selling assets out from under the CEPF?
How do you think about that over time? I imagine there's some puts and takes and probably for convenience you're talking about run rate. But can you talk about the gross up and the gross down there a little bit as you think about run rate?
Alan Liu
Yeah. So I think, the way I look at it is let's -- we're not going to talk about run rate on a go forward basis, right? I think what matters to my mind is going forward is what the actual cash flows that we're going to produce that we can allocate on behalf of unitholders.
And our project -- as we stated, our project level cash flows are relatively consistent. What we've laid out here is a plan where you have significant movements in the capital structure. The change in the capital structure is primarily due to our decision not to issue equity.
So you've got higher interest expense. But after you've kind of gotten your way through 2025, we're into 2026, we arrive at a free cash flow growth of $600 million to $700 million. That I think is the most important metric. Right? We're at that $600 million to $700 million of free cash flow that we can allocate on behalf of all the capital allocation decisions of this company to drive unitholder value.
Brian Bolster
Hey, Julien, on the question with regard to EBITDA and I think we've shown you a page on that EBITDA is effectively flat during the period that we're talking about. The one changed EBITDA will be Meade. Right? And so, you can see that step down. And then on the repowerings, it's effectively flat.
So we're spending the capital, but I think you need to -- that is effectively extending the asset life of the assets. So we're creating meaningful NPV, we're creating attractive IRRs. But what you're seeing that in is in the multiple more years of asset life that we've added to it.
Julien Dumoulin-Smith
Got it. And then just in terms of incremental interest expense, how do you think about what you're targeting there beyond the 2016 environment? Any kind of way to think about how you're thinking about refinancing at the HoldCo and interest expense there or any kind of heuristics each year? Just as you think about rolling forward. I mean, would you use converts and other lower coupon structures again. Are you thinking about more traditional debt structures?
Alan Liu
Yeah. I think right now we're obviously focused on straight debt because we like the value of our equity price and so we don't want to sell it through a convert. We'll see where we are when the next set of maturities comes due. But we're doing a lot of the refinancing in the '25 and '26 timeframe. So that's why we feel very confident about the cash flow number that we put in front of you today.
Julien Dumoulin-Smith
Awesome. And then, if I can think of it in a different direction, as you think about recontracting the portfolio here, et cetera, again, that's also recontemplating your run rate conversation. I get repowering, a net flat. You're selling assets here, so presumably that pushes down the EBITDA relative to your run rate conversation. Are there other positive offsets or should we not read your run rate EBITDA as being inclusive of these CEPFs off over time?
Brian Bolster
Right. So Julien, if I'm following the question, I guess I'll just say a couple things. One is, we're going to eliminate conversations of run rate going forward. We're just going to talk about the EBITDA of the assets. And if you look at the page that we presented, the EBITDA of the assets is effectively flat, except for when we sell off the CEPFs, which we've shown you that step down over time.
And then as Alan mentioned, from a cash flow perspective, we've given you where we think we are in 2026, and we said we think that's effectively flat. That's the right range to think about for through the end of the decade. So hopefully that answers your question. But want to make sure we're hitting it directly.
Julien Dumoulin-Smith
No, absolutely. Thank you, guys very much for the details. I appreciate the time and patience. Good luck. All right, look forward to it.
Brian Bolster
Thank you.
Operator
William Grippin, UBS.
William Grippin
Good morning. Thanks very much for the time. Just one quick one for me. Could you give us a little bit more color on sort of the quantum and timing of your expected growth investments, or perhaps when we could get a little bit more color on how exactly you plan to make those investments.
Alan Liu
Yeah. So I think we've laid out in the source of uses in the appendix, right, the plan CapEx expenditures. I would say, you have -- most of it is going to be in the 2025 timeframe. Right? And then you have some of it in 2026. But what we've laid out here today is really a '25 to '26 plan. The current -- that's kind of how you think should think about it.
Does that answer your question or?
William Grippin
I guess, well -- and then how do I think about that sort of in the context of guiding to flat, free cash through the end of the decade, right?
Alan Liu
Sorry. So I think what you should think about it is, obviously, in the near term, we're focused on our two first priorities, right, which is the CEPF buyouts and the repowering projects. The guidance does not contemplate growth beyond that at this point. Obviously, as we complete our two priorities and we have access to cash flows, we think there's plenty of opportunities beyond that. But the guidance today does not incorporate anything beyond that.
William Grippin
Got it. Thanks very much.
Operator
Willard Grainger, Mizuho.
Willard Grainger
Hi. Good morning, everybody. Just a point of clarity. Do you expect there is the expectation that the EBITDA from the $1.7 billion to $1.9 billion of growth CapEx will bridge you or offset any decline in EBITDA from asset sales? Is that how we should be thinking about it?
Brian Bolster
I think the way you should think about repowers, which is where the money is going to over the next. So we're spending money on two things as Alan laid out. One is, we're going to buyout selected CEPFs, right? And then two, we're going to spend money on repowers. And the way I would think about repowers is not adding meaningful prompt to your cash flow but extending the life of the asset.
And so, we're adding meaningful NPV and meaningful IRR. And so, we are spending capital and we're holding the EBITDA and the cash flow at a range that we talked about, but we are extending the life of the assets many years, which is adding NPV. That's why we've talked about them being positive IRR investments.
Willard Grainger
Got it. And the funding of the new CapEx, should we just think about that as a combination of equity and tax equity, or is there a refinancing of the project level debt, or will a lot of that just be kind of pushed down from the HoldCo -- in the form of HoldCo? How should we be thinking about that? Thanks.
Alan Liu
I think it's going to be a combination of project level and tax equity. Obviously, we think the majority of that financing will be at the project level.
Willard Grainger
Perfect. I'll leave it there. Thank you.
Alan Liu
I would point you to slide 20 in the appendix where we've actually laid out in detail our financing plan, the expectations of the financing plan for the next two years.
Operator
Andrew Weisel, Scotiabank.
Andrew Weisel
Hi, thanks. Good morning, everyone. Appreciate all the details here, a lot to digest. My first question, just to clarify, the EBITDA and free cash flow before growth guidance figures, are those calendar guidance figures? In the past, you've talked about December 31st run rate figures. Is this a change? Are these more traditional full year numbers?
Alan Liu
That is correct. As stated, what we think matters most in a go forward basis is how much cash do we have available in each calendar year to fund the different sources and the different capital allocation decisions that we intend to make.
Andrew Weisel
Okay. Great. Thank you for clarifying. Then secondly, Brian, just to elaborate on what you were saying a moment ago. If I understand correctly, the $1.7 billion to $1.9 billion of growth CapEx over '25 to '26 primarily repowerings and that should basically maintain the EBITDA and free cash flow before growth that you're guiding to for 2026 that should be stable through the end of the decade.
So my question is should we model out a similar level of growth CapEx each year in order to maintain that level, or how do we think about that? I mean, I think --
Brian Bolster
The way that I would think about repowers is, is as you said, we're putting money into the assets to extend the life of the assets. Right? So on an NPV basis we've added years of cash flow to the business because it -- we've extended the life of the assets. That's where we're going to focus our money in '25 and '26.
As we look at other opportunities, we mentioned co-located storage, right, so that could be a different kind of CapEx. Obviously, that will come with incremental cash flow and its own NPV So the near-term cash flow is invest in the assets, extend the life of the assets, which we think is a very attractive IRR. And then, we'll look at other -- as Alan said, we'll look at other opportunities when we get out to the '25, '26, and '27 timeframe.
Andrew Weisel
Okay. So in the simplest terms of modeling, until we hear otherwise, EBITDA and free cash flow should be flattish, no growth CapEx and no distribution. Is that kind of the way we should think about this until we hear otherwise?
Alan Liu
That's correct.
Andrew Weisel
Okay. Great. Thank you. And one last question --
Alan Liu
Obviously, we mentioned, I just want to point out, as we talked about in the presentation, there is, obviously the expected drop in EBITDA from the sale of the Meade Pipeline investment. Right? So you should factor that in as well.
Andrew Weisel
Correct. I should have said after 2026. Right. Very clear on the near-term changes. Okay. Great. Then my last one, if I may. You mentioned some additional changes coming on the management team. Congratulations to Alan again. Can you maybe elaborate on what other new faces we might see coming into the picture here or position?
Alan Liu
Yeah. I think with this announcement today, we are also -- we have a new CFO, Jessica Geoffroy. Jessica has been a leader within NextEra for a number of years. Really talented individual that I'm super excited to be going on this journey with. So she's going to be the other named Executive Officer.
With us is a really talented team as well at NextEra. And obviously as you heard today, the relationship between XPLR and NextEra Energy isn't changing. So obviously, we have continued support and opportunities to work with the NextEra team.
Brian Bolster
Andrew, you might remember, Jessica, she was a former Head of IR. So you may have interacted with her in that capacity.
Andrew Weisel
Yep, I do. Congratulations all around. Thank you everyone.
Operator
M Wolfe Research. Please go ahead.
Michael Sullivan
Yeah. Hey, good morning. I think you mentioned rating agencies effectively signing off on the plan. Can you just give us a sense of what the credit metrics look like over the next couple of years?
Alan Liu
Yeah. I think, obviously, we've previewed this plan with all of the three of the agencies that rate us. Right? And our credit metrics, from an FFO perspective, are expected to be kind of consistent with levels that are consistent with our ratings. I think that's kind of what the expectation.
Brian Bolster
Yeah. So you'll get. If you haven't seen their press releases, I think they'll be coming out later this morning. So they've affirmed their expectations and each of them has a slightly different way of going through the calculation.
So rather than taking them agency by agency, you can look at the reports, but you'll be able to see their guidance and where we sit within their guidance. But I think the important part for this conversation is that they've affirmed where they are relative to where they were before this announcement.
Michael Sullivan
Okay. Very helpful. And then just on the Meade sale. So to confirm, you expect to close it in the fourth quarter and has the process kicked off yet officially?
Brian Bolster
I don't want to comment on the process more broadly, but I think the timing is consistent with the fourth quarter of this year.
Michael Sullivan
Okay. And any change to how much leverage is on that asset from prior disclosures?
Brian Bolster
No change.
Michael Sullivan
Okay. Thank you.
Operator
Christine Cho, Barclays.
Christine Cho
Good morning. Thank you for taking my question. I just have one. And I know you've kind of touched upon this, but the repowerings, you talk about it being NPV positive as you extend the terms. But is there any opportunity to renegotiate the PPA rate, especially for thre ones that don't have some sort of adder? I would just think that given some of these original PPAs were signed 10 years ago, that there could be some uplift in the PPA rate.
Brian Bolster
Sure. I mean, listen, as part of these conversations, there's always an option to renegotiate the PPA. And so, it obviously depends on where the PPA was struck relative to where current prices are. So we look at all those opportunities in the context of these repowerings.
Operator
This concludes our question-and-answer session and concludes our conference call today. Thank you for attending today's presentation. You may now disconnect.
