Exhibit 99.1

Atlantica in Two Minutes

1 100% Contracted or regulated. Regulated revenues in Spain, Chile TL 3 and Italy and non-contracted nor regulated in the case of Chile PV 1 and Chile PV 3.

2 Based on CAFD estimates for the 2024-2027 period as of March 1, 2024, for the assets as of December 31, 2023, including assets that have reached COD before March 1, 2023.

3 We refer to section “Strategic Report” for further detail regarding the pipeline description.

4 The target does not include the waste generated during end-of-life decommissioning of the assets.

5 We refer to section “Occupational Health and Safety” for further detail.

Our Purpose and Values

Our purpose is to support the transition towards a more sustainable world by developing, building, investing in and managing sustainable infrastructure assets, while creating long-term value for our stakeholders.

Our values define who we are and how we behave both as individuals and as a Company. These values, described below in order of importance, serve as a compass for our day-to-day decisions and guide our relationships with stakeholders.

	Integrity, Compliance and Safety. We will always do what is right. We are strongly committed to complying with all rules and regulations.
	Value creation. We pursue a proactive approach to creating long-term value for our shareholders. Our core corporate policies are supported by a solid commitment to risk management that guides all our decisions.
	Sustainability. We invest in assets that are environmentally sustainable and we manage them in a sustainable manner. We follow policies that analyse, evaluate, and propose measures aimed at minimising the environmental impacts of our business activity.
	Excellence and Efficiency. We believe in outstanding and disciplined asset management of our operations to be the best-in-class operator, while seeking excellence on a cost-efficient basis.
	Collaborative Environment. Respect and Teamwork are key to achieving our goals. We treat others as we would like to be treated ourselves and we put the team ahead of personal success. To build strong teams, we recruit, train, and promote the best people.

About This Report

Atlantica Sustainable Infrastructure plc and its subsidiaries (“Atlantica” or “the Company”), as part of its commitment to transparency and reporting best practices, has published an Integrated Annual Report, which integrates our financial and non-financial information, including environment, social and governance (ESG) disclosures.

Integrated Annual Report Information

Atlantica’s Integrated Annual Report has been prepared in accordance with the relevant U.K. requirements for the year ended December 31, 2023.

The Consolidated Financial Statements contained in this Report have been prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board (“IASB”) and UK adopted International Accounting Standards (collectively as “IFRS”), on a basis consistent with the prior year. The Parent Company Financial Statements have been prepared in conformity with Financial Reporting Standard 101 “Reduced Disclosure Framework (“FRS 101”)”. We refer to Note 2 to the Consolidated Financial Statements, and Note 1 to the Parent Company Financial Statements for accounting policies detailed information.

In addition, this report has been prepared by Management in accordance with the Global Reporting Initiative (GRI) Standards. We report GRI in line with the matters that are important and / or material to our business.

This report has also been prepared by Management in accordance with the SASB Electric Utilities & Power Generators sustainability accounting standard and its reporting requirements. In addition, we have followed SASB Solar Technology & Project Developers sustainability accounting standards and its reporting requirements for aspects which are material to our business.

Data in this report for the year ended and as of December 31, 2023, except where otherwise noted. Comparative data for the years ended December 31, 2022, and 2021 is also provided. Our 2022, 2021 and 2020 Integrated Annual Report, U.K. Annual Reports and ESG Reports are available for download from our website.

ESG data reported corresponds to all consolidated subsidiaries. For Companies where Atlantica has joint financial control, we are consolidating the percentage of equity ownership for each of the ESG KPIs reported. Green House Gas emissions are accounted for following the financial control approach from the GHG Protocol. Emissions from joint ventures where partners have joint financial control are accounted for based on the equity share approach. We are accounting for proportional scope 1 and scope 2 emissions of equity investments in scope 3, category 15 (Investments).

A multi-disciplinary team participated in the preparation of this report.

Currency amounts are expressed in U.S. Dollars unless otherwise noted.

ESG Data Review

Atlantica’s management is responsible for the completeness, accuracy and validity of the information contained in this report. The data presented is based on the input received from internal data collection, management systems and external stakeholders. Certain parts of this report have been subject to external and/or internal assurance. We conduct regular internal audits to review our management system, including the procedures to collect information from our assets and the main data reported.

In 2023, independent third parties have been engaged to verify our reported Scope 1, 2 and 3 GHG emissions under a reasonable level of assurance.

DNV, an independent expert in assurance and risk management, verifies all our reported Scope 1, 2 and 3 GHG emissions in all the geographies where we are present. In addition, we also hired:

In addition, DNV has also been engaged to verify Atlantica’s air quality (i.e., non-GHG emissions), waste and water indicators and their compliance with GRI Reporting under a limited level of assurance.

In addition, in 2023 Atlantica’s Internal Audit team reviewed the completeness and accuracy of certain environmental, social and governance performance indicators, including GHG emissions, water and waste management, health and safety, energy consumption, supply chain, people and culture and investment in local communities.

Furthermore, Atlantica’s Accounting and Disclosure Committee reviewed this Integrated Annual Report prior to its publication.

Atlantica’s Board of Directors approved this report prior to its publication.

Non-GAAP Financial Measures:

This report contains non-GAAP financial measures including Adjusted EBITDA, CAFD and CAFD per share.

Non-GAAP financial measures are not measurements of our performance or liquidity under IFRS and should not be considered alternatives to operating profit or profit for the period or any other performance measures derived in accordance with IFRS or any other generally accepted accounting principles or as alternatives to cash flow from operating, investing or financing activities. Please refer to the section “Other Information- Reconciliation of non-GAAP measures” of this report for a reconciliation of the non-GAAP financial measures included in this Report to the most directly comparable financial measures prepared in accordance with IFRS. Also, please refer to the following paragraphs in this section for an explanation of the reasons why management believes the use of non-GAAP financial measures (including CAFD, CAFD per share and Adjusted EBITDA) in this Report provides useful information to investors.

We present non-GAAP financial measures because we believe that they and other similar measures are widely used by certain investors, securities analysts and other interested parties as supplemental measures of performance and liquidity. The non-GAAP financial measures may not be comparable to other similarly titled measures employed by other companies and they may have limitations as analytical tools. These measures may not be fit for isolated consideration or as a substitute for analysis of our operating results as reported under IFRS as issued by the IASB. Non-GAAP financial measures and ratios are not measurements of our performance or liquidity under IFRS as issued by the IASB. Thus, they should not be considered as alternatives to operating profit, profit for the period, any other performance measures derived in accordance with IFRS as issued by the IASB, any other generally accepted accounting principles or as alternatives to cash flow from operating, investing or financing activities. Some of the limitations of these non-GAAP measures are:

Some of the limitations of these non-GAAP measures are:

We define Adjusted EBITDA as profit/(loss) for the period attributable to the parent company, after adding back loss/(profit) attributable to noncontrolling interest, income tax expense, financial expense (net), depreciation, amortisation and impairment charges of entities included in our Annual Consolidated Financial Statements and depreciation and amortisation, financial expense and income tax expense of unconsolidated affiliates (pro-rata of our equity ownership). CAFD is calculated as cash distributions received by the Company from its subsidiaries minus cash expenses of the Company, including third-party debt service and general and administrative expenses and including proceeds from the sale of assets. CAFD per share is calculated as CAFD divided by the weighted average number of outstanding ordinary shares of the Company during the period.

Our management believes Adjusted EBITDA, CAFD and CAFD per share are useful to investors and other users of our financial statements in evaluating our operating performance because such measures provide investors with additional tools to compare business performance across companies and across periods. Adjusted EBITDA is widely used by investors to measure a company’s operating performance without regard to items such as interest expense, taxes, depreciation and amortisation, which can vary substantially from company to company depending upon accounting methods and book value of assets, capital structure and the method by which assets were acquired. Our management believes CAFD and CAFD per share are relevant supplemental measure of the Company’s ability to earn and distribute cash returns to investors and is useful to investors in evaluating our operating performance because securities analysts and other interested parties use such calculations as a measure of our ability to make quarterly distributions. In addition, CAFD and CAFD per share are used by our management team for determining future acquisitions and managing our growth. Our management uses Adjusted EBITDA, CAFD and CAFD per share as measures of operating performance to assist in comparing performance from period to period and aims to use them on a consistent basis moving forward. They also readily view operating trends as a measure for planning and forecasting overall expectations, for evaluating actual results against such expectations, and for communicating with our board of directors, shareholders, creditors, analysts and investors concerning our financial performance. Adjusted EBITDA, CAFD and CAFD per share are widely used by other companies in the same industry.

Information presented as the pro rata share of our unconsolidated affiliates reflects our proportionate ownership of each asset in our portfolio that we do not consolidate and has been calculated by multiplying our unconsolidated affiliates’ financial statement line items by the Company’s percentage ownership thereto. Note 7 to the Annual Consolidated Financial Statements includes a description of our unconsolidated affiliates and our pro rata share thereof. We do not control the unconsolidated affiliates. Multiplying our unconsolidated affiliates’ financial statement line items by the Company’s percentage ownership may not accurately represent the legal and economic implications of holding a non-controlling interest in an unconsolidated affiliate. We include depreciation and amortisation, financial expense and income tax expense of unconsolidated affiliates (pro rata of our equity ownership) because we believe it assists investors in estimating the effect of such items in the profit/(loss) of entities carried under the equity method (which is included in the calculation of our Adjusted EBITDA) based on our economic interest in such unconsolidated affiliates. Each unconsolidated affiliate may report a specific line item in its financial statements in a different manner. In addition, other companies in our industry may calculate their proportionate interest in unconsolidated affiliates differently than we do, limiting the usefulness of such information as a comparative measure. Because of these limitations, the information presented as the pro rata share of our unconsolidated affiliates should not be considered in isolation or as a substitute for our or such unconsolidated affiliates’ financial statements as reported under applicable accounting principles. Please refer to “Other Information” section for additional information regarding reconciliations from non-GAAP measures.

Strategic Report

This Strategic Report has been prepared to provide shareholders with information that will aid them in assessing Atlantica’s strategies and the potential of such strategies to succeed.

The Strategic Report contains certain forward-looking statements that are made by the directors in good faith and based on the information available to them up to the time of their approval of this report. These statements should be treated with caution due to the uncertainties, including both economic and business risk factors, inherent in such forward-looking information.

The directors have prepared this Strategic Report in compliance with Section 414C of the Companies Act 2006.

The Strategic Report discusses the following areas:

Our Sustainable Business Model and Strategy

Our Business

We are a sustainable infrastructure company with a majority of our business in renewable energy assets. Our purpose is to support the transition towards a more sustainable world by developing, building, investing and managing sustainable infrastructure assets, while creating long-term value for our investors and the rest of our stakeholders. In 2023, renewables represented 73% of our revenue, with solar energy representing 63%. We complement our renewable assets portfolio with storage, efficient natural gas and transmission infrastructure assets, as enablers of the transition towards a clean energy mix. We also hold water assets, a relevant sector for sustainable development.

As of the date of this annual report, we own or have an interest in a portfolio of assets and new projects under development diversified in terms of business sector and geographic footprint. Our portfolio consists of 45 assets with 2,171 MW of aggregate renewable energy installed generation capacity (of which approximately 73% is solar), 343 MW of efficient natural gas-fired power generation capacity, 55 MWt of district heating capacity, 1,229 miles of electric transmission lines and 17.5 M ft3 per day of water desalination.

We currently own and manage operating facilities and projects under development in North America (United States, Canada and Mexico), South America (Peru, Chile, Colombia and Uruguay) and EMEA (Spain, Italy, Algeria and South Africa). Our assets generally have contracted or regulated revenue. As of December 31, 2023, our assets had a weighted average remaining contract life of approximately 13 years6.

We intend to grow our business through the development and construction of projects including expansion and repowering opportunities, as well as greenfield developments, third-party acquisitions, and the optimisation of our existing portfolio. We currently have a pipeline of assets under development of approximately 2.2 GW of renewable energy and 6.0 GWh of storage. Approximately 47% of the projects are PV, 41% storage, 11% wind and 1% other projects, while 22% are expected to reach ready-to-build (“RTB”) in 2024-2025, 28% are in an advanced development stage and 50% are in early stage. Also, 20% are expansion or repowering opportunities of existing assets and 80% greenfield developments.

Our objective is to pay a consistent and growing cash dividend to shareholders that is sustainable on a long-term basis. We expect to distribute a significant percentage of our cash available for distribution as cash dividends and we will seek to increase such cash dividends over time through organic growth, investments in new assets and acquisitions.

Our plan for executing this strategy includes the following key components:

Grow our business by developing new projects and investing in new assets with a focus on renewable energy and storage.

We intend to develop new assets and, in some cases, to invest in assets under development or construction. We believe that our know-how and operating expertise in our key markets together with a critical mass of assets in several geographic areas as well as our access to capital will assist us in achieving our growth plans.

Focus on stable assets in renewable energy, storage and transmission, generally contracted or regulated.

We intend to focus on owning and operating stable, sustainable infrastructure assets, with long useful lives, generally contracted, for which we believe we have extensive experience and proven systems and management processes, as well as the critical mass to benefit from operating efficiencies and scale. We intend to maintain a diversified portfolio with a large majority of our Adjusted EBITDA generated from low-carbon footprint assets, as we believe these sectors will see significant growth in our targeted geographies.

Maintain diversification across our business sectors and geographies.

Our focus on three core geographies, North America, Europe and South America, helps to ensure exposure to markets in which we believe renewable energy, storage and transmission will continue to grow significantly. We believe that our diversification by business sector and geography limits risks, reinforces stability and provides us with better growth opportunities.

Grow our business through the optimisation of the existing portfolio and through investments in the expansion of our current assets.

We intend to grow our business through organic growth that we expect to deliver through the optimisation of the existing portfolio, price escalation factors in many of our assets as well as through investments in the expansion and repowering of our current assets and hybridisation of existing assets with other complementary technologies including storage, particularly in our renewable energy assets and transmission lines.

6 Calculated as weighted average years remaining as of December 31, 2023 based on CAFD estimates for the 2024-2027 period, including assets that have reached COD before March 1, 2024.

Maintain a low-risk approach.

We intend to maintain a portfolio of sustainable infrastructure assets, generally totally or partially contracted, with a low-risk profile for a significant part of our revenue. We generally seek to invest in assets with proven technologies in which we generally have significant experience, located in countries where we believe conditions to be stable and safe. We may complement our portfolio with investments or co-investments in assets with shorter contracts or with partially contracted or merchant revenue or in assets with revenue in currencies other than the U.S. dollar or euro. We have a set of policies and a risk management system in place which define thorough risk management processes.

Maintain a prudent financial policy and financial flexibility.

Non-recourse project debt is an important principle for us. We intend to continue financing our assets with project debt progressively amortised using the cash flows from each asset and where lenders do not have recourse to the holding company assets. The majority of our consolidated debt is project debt.

In addition, we hedge a significant portion of our interest rate risk exposure. We estimate that as of December 31, 2023, approximately 93% of our total interest risk exposure was fixed or hedged, generally for the long-term. We also limit our foreign exchange exposure. We intend to ensure that at least 80% of our cash available for distribution is always in U.S. dollars and euros. Furthermore, we hedge net distributions in euros for the upcoming 24 months on a rolling basis.

We also intend to maintain a solid financial position through a combination of cash on hand and undrawn credit facilities. In order to maintain financial flexibility, we use diversified sources of financing in our project and corporate debt including banks, capital markets and private investor financing. In recent years we have been active in green financing initiatives, improving our access to new debt investors.

Our Competitive Strengths

We believe that we are well-positioned to execute our business strategies thanks to the following competitive strengths:

Stable and predictable long-term cash flows.

We believe that our portfolio of sustainable infrastructure has a stable cash flow profile. We estimate that the off-take agreements or regulation in place at our assets have a weighted average remaining term of approximately 137 years as of December 31, 2023, providing long-term cash flow visibility. In 2023, approximately 54% of our revenue was non-dependent on natural resource, not subject to the volatility that natural resource may have, especially solar and wind resources. This includes our transmission lines, our efficient natural gas plant, our water assets and approximately 76% of the revenue received from our solar assets in Spain with most of their revenues based on capacity in accordance with the regulation in place. In these assets, our revenue is not subject to (or has low dependence on) solar, wind or geothermal resources, which translates into a more stable cash-flow generation. Going forward, our new investments will probably be more dependent on the natural resource. Additionally, our facilities have minimal or no fuel risk.

Our diversification by geography and business sector also strengthens the stability of our cash flow generation. We expect our well-diversified asset portfolio, in terms of business sector and geography to maintain cash flow stability.

Positioned in business sectors with high growth prospects.

The renewable energy industry has grown significantly in recent years and it is expected to continue to grow in the coming decades. According to Bloomberg New Energy Finance (BNEF), the next three decades will require between $46 trillion and $131 trillion of investment which translates into an annual range of $1.5-$4.4 trillion. BNEF projects an annual investment of $1.2-$3.9 trillion in low-carbon energy sources, including renewables, surpassing the $1 trillion invested in 20228. Furthermore, clean energy is on track to set new records. Global installation of wind, solar and storage is expected to exceed 680 GW in 2024, up 22% from 2023. Solar is anticipated to lead the way in 2024 with over 500 GW expected to be installed; which will likely make it the largest source of new capacity and new generation worldwide. Onshore wind follows as the second-highest, with close to 100 GW projected to be installed in 2024, followed by storage capacity, of which around 50 GW is expected to be installed9.

The significant increase expected in the renewable energy space over the coming decades also requires significant new investments in electric transmission and distribution lines for power supply, as well as storage and natural gas generation for dispatchability, with each becoming key elements to support additional wind and solar energy generation. We believe that we are well positioned in sectors with solid growth expectations.

We also believe that our diversified exposure to international markets will allow us to pursue improved growth opportunities and achieve higher returns than we would have if we had a narrower geographic or technological focus. If certain geographies and business sectors become more competitive for investments in the future, we believe we can continue to execute on our growth strategy by having the flexibility to invest in other regions or in other business sectors.

7 Calculated as weighted average years remaining as of December 31, 2023 based on CAFD estimates for the 2024-2027 period, including assets that have reached COD before March 1, 2024.

8 BNEF Theme: Energy Investment and Climate Scenarios.

9 Where Energy Markets and Climate Policy Are Headed in 2024: BNEF.

Well positioned to capture growth opportunities.

We have in-house development capabilities and partnerships with third parties to co-develop new projects. Our development asset identification is supported by rigorous analysis and deeply rooted industry knowledge and experience. In addition, we follow a disciplined approach to make capital allocation decisions and we have strict minimum required returns for development projects and acquisitions that we update frequently. In addition, our current portfolio of assets offers growth opportunities through the expansion and repowering of existing assets and through hybridisation of existing assets with other complementary technologies. We can also grow by adding storage to our existing renewable assets or by developing standalone storage close to our existing assets.

Proven capabilities in operation and maintenance.

We perform operation and maintenance in-house in a majority of our assets. We believe this approach allows us to have full control of our assets and to optimise their performance. We can benefit from synergies in shared resources and centralised purchasing management, among other advantages. Our corporate operations departments have a plan to periodically review all our assets in detail to identify best practices and improvement actions which are then implemented across the portfolio.

Solid financing expertise.

Our Finance team has extensive experience in project financing and project refinancing in our different geographies. In our corporate financing, we have access to different pools of capital. We have issued bonds in the public markets, including convertibles, private placements with different types of investors, bank financing and commercial paper. Since a portion of the assets have revenues denominated in euros, we can issue corporate financings in euros, to take advantage of lower costs.

Lean corporate structure focused on value added activities.

We operate a lean and efficient organisation where corporate functions support each operating asset. Our core corporate policies are supported by a solid commitment to risk management that guides all our decisions. We believe that our internal management system ensures a nimble decision-making process while ensuring compliance with our policies and risk management system.

Well positioned in ESG.

In 2023, 72% of our Adjusted EBITDA was derived from renewable energy and 62% of our Adjusted EBITDA corresponded to solar energy production. Adjusted EBITDA from low carbon footprint assets represented 89%, including renewable energy, transmission infrastructure, as well as water assets. We have set a target to maintain over 85% of our Adjusted EBITDA generated from low-carbon footprint assets.

We have set a target to reduce our scope 1 and scope 2 GHG emissions per unit of energy generated10 by 70% by 2035, with 2020 as base year. This target was validated in 2021 by the Science Based Targets initiative. We have also set a target to reduce our scope 3 emissions per unit of energy generated by 70% by 2035 from a 2020 base year. With this, we target to achieve net zero GHG emissions by 2040. Additionally, we have also set targets to reduce non-GHG emissions per unit of energy generated and to reduce our water consumption per unit of energy generated.

In 2023, our key health and safety indicators met annual targets and remained below the sector average in all our geographies. Health and Safety is our number one priority, and we want our employees, partners, and contractors to apply the highest standards to ensure safe and sustainable operations.

10 Including thermal generation.

Regarding our local communities, we acknowledge that our day-to-day activities have impacts on nearby communities. We recognise that the communities where we operate are where some of our employees and other stakeholders live and raise their families, and where part of our future workforce is educated and trained. We foster communities’ economic prosperity through local purchases and by hiring local employees. As such, it is key for us to be both proactive and a valued member of our communities. In 2023 we invested $1.5 million. Atlantica’s investments in local communities are focused on improving infrastructure and supporting education.

In terms of governance, we maintain a simple structure with one class of shares. The majority of our Directors are independent, and all the board committees are formed exclusively by independent directors. 22% of our directors are women. We believe that we have a solid compliance framework with a set of policies approved and reviewed annually by the Board of Directors, a Code of Conduct which is acknowledged by all employees annually and internal procedures aimed at ensuring that all geographies comply with our policies.

We have been rated by various ESG rating agencies, which we believe can provide relevant information for investors.

Growth Visibility

Development Pipeline

We are developing new projects in most of our core geographies. In some cases, we do this with our local in-house teams and in other cases we have been working with local partners with whom we jointly invest in developing projects or with whom we have agreements based on milestones.

By focusing our development activities on locations where we already have assets in operation and by working in many cases with partners, we have been able to maintain our development cost at what we believe are low levels.

We currently have a pipeline of assets under development of approximately 2.2 GW of renewable energy and 6.0 GWh of storage. Approximately 47% of the projects are in PV, 41% in storage and 11% in wind, while 22% of the projects are expected to reach ready to build (“Rtb”) in 2023 or 2024, 28% are in an advanced development stage and 50% are in early stage.

Pipeline of Assets Under Development11

11 Only includes projects estimated to be ready to build before or in 2030 of approximately 3.7 GW, 2.2 GW of renewable energy and 1.5 GW of storage (equivalent to 6.0 GWh). Capacity measured by multiplying the size of each project by Atlantica’s ownership. Potential expansions of transmission lines not included. 

Events During the Period

Assets that entered into operation

During 2023, four assets that were under construction entered into operation:

Assets under construction

As of December 31, 2023 we had the following assets under construction or ready to start construction in the short-term:

Notes-

(1) Includes nominal capacity on a 100% basis, not considering Atlantica’s ownership.

(2) Atlantica owns 49% of the shares, with joint control, in Chile PMGD.

(3) Corresponds to the expected investment by Atlantica.

(4) Atlantica owns 50% of the shares in Honda 1, Honda 2 and Apulo 1.

Coso Batteries 1 is a standalone battery storage project of 100 MWh (4 hours) capacity located inside Coso, our geothermal asset in California. Additionally, Coso Batteries 2 is a standalone battery storage project with 80 MWh (4 hours) capacity also located inside Coso. Our investment is expected to be in the range of $40 million to $50 million for Coso Batteries 1, and in the range of $35 to $45 million for Coso Batteries 2. Both projects were fully developed in-house and are now under construction. We have closed a contract with Tesla for the procurement of the batteries. COD is expected in 2025 for both projects.

Advanced Projects

Potential Asset Sale

Our partner in Monterrey initiated a process to sell its 70% stake in the asset. Such process is well advanced and, as part of it, we intend to sell our interest as well under the same terms. The net proceeds to Atlantica are expected to be in the range of $45 to $52 million, after tax. The closing of the transaction is subject to certain conditions precedent. We cannot guarantee that the transaction will finally close.

Project Debt Refinancing

In March 2023, we refinanced the Solaben 2 and Solaben 3 project debt by entering into two green senior euro-denominated loan agreements for the two assets with a syndicate of banks for a total amount of €198.0 million. The new project debt replaced the previous project loans for a similar amount and maturity was extended from December 2030 to June 2037.

In addition, in June 2023 we extended the maturity of the debt for Logrosan Solar Inversiones, S.A, the subsidiary-holding company of Solaben 2 & 3 and Solaben 1 & 6 from April 2025 to December 2028. We refer to section “Liquidity” under “Financial Review” for more information.

Operation and Maintenance

In March 2023, we completed the process of transitioning in-house the O&M services for our assets in Spain through the acquisition of the business of an Abengoa subsidiary which was still providing those services to some of our assets.

In addition, in July 2023 we internalised the O&M services for ATN, which were previously performed by Omega Peru. Additionally, the O&M contract for ATS with Omega Peru, which could be terminated every five years was modified and can now be terminated every three years (or two years under certain circumstances) and the contract for ATN2, which was a long-term contract expiring in 2027, was also amended to reflect the same termination provision.

Currently, we perform O&M services with our own personnel for assets representing approximately 74% of our consolidated revenue for the year ended December 31, 2023.

Regulation in Spain

In June 2023, the final parameters for the year 2023 were published, including a revised assumption for electricity prices for the years 2023, 2024 and 2025.

Strategic Review

On February 21, 2023, Atlantica’s board of directors commenced a process to explore and evaluate potential strategic alternatives that may be available to Atlantica to maximise shareholder value. The Company believes it has attractive growth and other opportunities in front of it and is committed to ensuring it is best positioned to take advantage of those opportunities. The decision has the support of the Company’s largest shareholder, Algonquin. Atlantica expects to continue executing on its existing plans while the review of strategic alternatives is ongoing, including its current growth plan. As of the date of this annual report, the strategic review is ongoing. There is no assurance that any specific transaction will be consummated, or other strategic change will be implemented as a result of this strategic review. Please refer to the section: “Principal Risk and Uncertainties”.

Main ESG Actions during the year

Investing in and developing new sustainable infrastructure projects are only one part of our strategy. Managing those assets in a sustainable way is key to creating long-term value. We have launched several initiatives to ensure that we efficiently and sustainably manage key areas of our Company:

These policies are available on our website.

In 2023 we did two green project refinancings:

In 2023 we have assessed the trade associations with whom we collaborate. We refer to section “Trade Associations” under the “Governance” section for further detail.

Contribution to the Sustainable Development Goals

Atlantica is a signatory to the UNGC, the world’s largest corporate sustainability initiative with more than 20,000 signatories in over 160 countries. The UNGC is an initiative that encourages companies and organisations worldwide to adopt sustainable and socially responsible policies. Participation in the UNGC is voluntary and those entities that sign it pledge to uphold and promote the principles and report on their progress once they apply them in their management.

Atlantica formally adopted the ten fundamental UNGC principles in the fields of human rights, labour, environment, and anti-corruption and made the UNGC and its principles an integral part of our strategy, culture, and day-to-day operations.

The table below summarises Atlantica’s contribution to achieving 7 of the 17 Sustainable Development Goals (SDG): climate action; affordable and clean energy; clean water and sanitation; decent work and economic growth; gender equality; life on land; and industry, innovation, and infrastructure.

	We are committed to using water efficiently in our power generation and water desalination activities. We plan to reduce our water consumption at our generating assets that use cycled water in the turbine circuit and in refrigeration processes. In 2023, we recycled 17% more water, which mainly contributed to a 4% decrease in our overall water consumption. In addition, we have a target approved by the Board of Directors to reduce our water consumption per unit of energy generated (KWh) by 50% by 2035, from a 2020 base year. In 2023, our water consumption per unit of energy generated decreased by 5% compared to 2022. We invest in water desalination plants that generate drinking water for local communities and industries through the desalination of sea water. In 2023, these assets generated purified seawater to meet the water needs of approximately 3 million people in regions with limited access to fresh water. We encourage you to read our water management section for more detailed information.
	The renewable energy industry has grown significantly in recent years and it is expected to continue to grow in the coming decades. This requires significant new investments in, among others, storage for dispatchability to support additional wind and solar energy generation. In 2023, our renewable sector accounted for 73% of our revenue, with solar energy representing 63%. We intend to grow our business through the development and construction of projects including expansion and repowering opportunities, as well as greenfield developments, third-party acquisitions and the optimisation of our portfolio. During 2023, four assets that were under construction entered into operation: -  Albisu, the 10 MW PV asset reached COD in January 2023. -  La Tolua and Tierra Linda, two PV assets with a combined capacity of 30 MW both reached COD in the first quarter of 2023. -  Honda 1, a 10 MW PV asset reached COD in December 2023. In addition, we have 3 PV projects, 2 storage projects and 2 transmission lines that are currently under construction. We currently have a pipeline of assets under development of approximately 2.2 GW of renewable energy and 6.0 GWh of storage. We are also in the process of selling our 30% stake in one of our efficient natural gas assets. We encourage you to read section “Growth visibility” for further details on affordable and clean energy investments.

	We protect labour rights and are committed to promoting safe and secure working environments for all workers. We are committed to providing decent work for all women and men, young people and persons with disabilities and equal pay for work of equal value. We have always prioritised the health and safety of all our employees, contractors and partners working at our premises. Our key health and safety indicators met 2023 targets, improved with respect to 2022 and remained below the sector average in all our geographies. We have internal policies and procedures to support and ensure human rights, including the Human Rights Policy, the Code of Conduct and the Supplier Code of Conduct (available on our website). Our internal compliance team annually: (i) monitors human rights are internally respected, (ii) provides human rights related training to our employees, and (iii) assesses the supply chain across the jurisdictions in which we operate to identify any potential breach regarding human rights. In May 2023, the Board amended and approved our “U.K. Anti-Modern Slavery and Human Trafficking Statements” under the Modern Slavery Act, 2015 (available on our website). No human rights incidents were reported or identified during 2023. We are committed to supporting long-term development of the communities where we operate as part of our culture at Atlantica. It is key for us to be a proactive and valued member of our communities and to foster communities’ economic prosperity. In addition, we support local economic growth by choosing to buy from local businesses. In 2023, more than 90% of our total purchases in the geographies where we have assets were made to local suppliers. We encourage you to read our Social and Governance sections for details on occupational health and safety, human rights, supply chain management and training-related activities.
	Our activity has a positive impact on mitigating climate change. We are committed to the reduction of greenhouse gas emissions (GHG) by investing in renewable energy assets. Following our long-term commitment to sustainability, we have set an ambitious plan to reduce: 1.  Our GHG emissions. We target to: (i)  reduce our Scopes 1 and 2 GHG emissions per kWh of energy generated by 70% by 2035 from a 2020 base year12. This target has been approved by the Science Based Targets initiative (SBTi) (ii)  reduce Scope 3 GHG emissions per kWh of energy generated by 70% by 2035 from a 2020 base year, and (iii) achieve Net Zero GHG emissions by 2040. 2.  Our non-GHG emissions. We target to reduce our non-GHG emissions per kWh of energy generated by 50% by 2035 from a 2020 base year. In addition, we have a goal to maintain over 85% of our adjusted EBITDA generated from low carbon footprint assets including renewable energy, storage, transmission infrastructure and water assets. In 2023, we reduced (i) our Scopes 1 and 2 GHG emissions per kWh of energy generated by 14% compared to 2020 and (ii) our Scope 3 GHG emissions per kWh of energy generated by 20% compared to 2020. In addition, we helped avoid up to 7.0 million tonnes of equivalent CO2 compared to a 100% fossil fuel-based generation plant. Please read our Environmental Sustainability section for further details on our climate change related activities.

12 The target boundary includes steam generation.

Atlantica also supports other SDGs, as outlined below:

	We promote equal opportunities for our employees and stakeholders. Atlantica’s Diversity and Inclusion Policy was approved by the Board of Directors in May 2020 and was last amended in December 2021 Atlantica stands for greater equality for women. We work to ensure that men and women are treated equally and have the same work opportunities. We aim to perform a human capital analysis every 4 years at certain locations. The objective of this analysis is to guarantee equal opportunities to our employees and to promote a culture of diversity and inclusion. We analyse gender pay gap, for the year ended December 31, 2023 the total overall pay gap decreased and was 5%. We encourage you to read the Social and Governance sections for further details on gender equality.
	We work to protect flora and fauna in and around our assets. We are committed to achieving “no net loss” of biodiversity and “no net deforestation” in the areas where we operate and in all project phases through the application of the Mitigation Hierarchy. In 2023, we continued to: (i) monitor the impact of spinning blades on local species of birds at our wind farms in Uruguay, and (ii) collaborate with local administrations and other key stakeholders to protect species settled close to our assets in the U.S. and Spain. We have set a target to reduce our hazardous and non-hazardous waste per unit of energy generated by 30% and 40%, respectively, by 2035 from a 2023 base year. In addition, in 2023 we continued to deliver on our reforestation programme in Spain, where we invested approximately $445 thousand in reforesting a new 48-hectare area and maintaining previously reforested areas. We encourage you to read the Environmental Sustainability section for further details on our biodiversity initiatives.
	Infrastructure is a key driver of economic growth and social value creation. At Atlantica, we produce and transport electricity and we provide drinking water to approximately 3 million people living in high or extremely high-water stress areas. Our solar asset in South Africa contributes to providing clean electricity in a country that requires additional power capacity. In South America, our transmission lines help transport electricity to remote areas. In addition, we foster communities’ economic prosperity through local purchasing and by hiring local employees. In 2023, four PV assets that were under construction reached COD in Uruguay and Colombia. In addition, as of December 31, 2023, we have 2 battery storage projects in the U.S., 1 PV project in Chile, 2 transmission lines in Peru and 2 additional PV projects in Colombia that are under construction and that we expect will reach COD during 2024-2025. We also have a pipeline of assets under development of approximately 2.2 GW of renewable energy and 6.0 GWh of storage. Within the energy sector, innovation contributes to the fight against climate change through new or enhanced technologies that enable more sustainable, reliable and efficient solutions, including storage and green hydrogen solutions. To ensure reliability of our assets we: (1) own 22 patents and technology licences, as well as 4 patents currently in approval process, related to key components of our assets, to processes and to solutions to monitor, operate and maintain our assets in a sustainable and cost effective manner, (2) have an operations department to identify potential measures to improve asset performance, reducing operating costs and developing tools to manage our assets more efficiently, and (3) have an advanced analytics team to improve the performance of our technologies through data analytics and machine learning technologies. We encourage you to read the Asset Management and Innovation sections for further details on our industry, innovation and infrastructure initiatives.

Communication on Progress (COP):

This Integrated Annual Report constitutes Atlantica’s “Communication on Progress” under the UNGC.

Key Performance Indicators

We closely monitor the following key drivers of our business sectors’ performance to plan for our needs, and to adjust our expectations, financial budgets, and forecasts appropriately.

13 Represents total installed capacity in assets owned or consolidated at the end of the year, regardless of our percentage of ownership in each of the assets except for Vento II for which we have included our 49% interest.

14 Includes 49% of Vento II wind portfolio production since its acquisition. Includes curtailment in wind assets for which we receive compensation.

15 Includes 43 MW corresponding to our 30% share in Monterrey and 55 MWt corresponding to Calgary District Heating.

16 GWh produced includes 30% of the production from Monterrey.

Notes:

Selected Social Metrics

Notes:

A Fair Review of the Business

Factors that Affect Comparability of our Results of Operations

The results of operations of Chile TL4, Italy PV 4 and Chile PV 3 have been fully consolidated since January 2022, April 2022 and September 2022, respectively and the results of Albisu, Tierra Linda and La Tolua have been fully consolidated since these assets entered into operation in the first quarter of 2023. For the full year 2023, these investments represented revenues and Adjusted EBITDA of $14.1 million and $10.5 million respectively, which represents an increase of $7.9 million in revenue and $7.6 million in Adjusted EBITDA for the year ended December 31, 2023 with respect to 2022.

In 2023, considering that expected electricity prices in Chile over the remaining useful life of Chile PV1 have decreased, we have identified an impairment triggering event, in accordance with IAS 36 (Impairment of Assets). As a result, an impairment test has been performed and resulted in an impairment loss of $16.1 million in 2023 in the line “Depreciation, amortisation, and impairment charges”. In 2022, we also recorded an impairment loss of $20.4 million in Chile PV1 and Chile PV2. Our equity interest in Chile PV 1 and Chile PV 2 is 35%. As a result, the impact of the impairment charges in “Profit / (loss) for the year attributable to the parent company” after non-controlling interest was $5.6 million in 2023 and $7.1 million in 2022.

During 2022 we recorded an impairment loss of $41.2 million in Solana with no corresponding triggering event and impairment in 2023.

In addition, IFRS 9 requires impairment provisions to be based on expected credit losses on financial assets rather than on actual credit losses, which affects the concessional assets accounted for as financial assets. For the year 2023 we recorded a decrease in the expected credit loss impairment provision of $13.2 million reflected in the line item “Depreciation, amortisation, and impairment charges” and was primarily related to ACT ($10.9 million). In 2022 we recorded an increase in the expected credit loss impairment provision of $6.7 million, also primarily related to ACT ($4.0 million).

Total revenues in Spain were stable in 2023 compared to the previous year. In addition to regulated revenue, our solar assets in Spain receive revenue from the sale of electricity at market prices. The average electricity market price captured by our assets was approximately €69.9 per MWh during 2023 compared to approximately €145.3 per MWh during 2022. Revenue from the sale of electricity at current market prices represented $84.3 million during 2023, compared to $142.9 million in 2022. Regulated revenues are revised periodically to reflect, among other things, the difference between expected and actual market prices if the difference is higher than a pre-defined threshold and as a result, we record a provision. We decreased our provision by $3.5 million in 2023, with no cash impact, compared to an increase of $25.3 million in the previous year.

In 2023, we have calculated the provision assuming that the average market price must be corrected using the solar time of day adjustment factor (“coeficiente de apuntamiento”), as it was stated in the regulations published since 2020. This factor, which is 90% for 2023, aims to capture the difference between the daily (24 hours) average market price and the price captured by solar assets. Although the factor is not mentioned in the regulation for 2023, we believe the last order includes a clerical error that we expect is going to be corrected.

On May 12, 2022, remuneration parameters in Spain for the year 2022 were published and became final on December 14, 2022, with a decrease in regulated revenue. In addition, on June 30, 2023, the new parameters were published, including a revised assumption on electricity prices for the years 2023, 2024 and 2025. Revenue from the sale of electricity at market prices net of the incremental market price provision was $84.0 million for the full year 2023, compared to $117.6 million for the full year 2022. This decrease was offset by higher production in 2023.

Additionally, in 2022 we collected revenue from our assets in line with the parameters corresponding to the regulation in place at the beginning of the year 2022, however revenue for the year ended December 31, 2022 was recorded in accordance with the new parameters that became final on December 14, 2022, which were lower. Collections were regularised in the first quarter of 2023.

We refer to “Exchange rates” below.

Significant Trends Affecting Results of Operations

If the recently built assets and the recently closed acquisitions perform as anticipated, we expect these assets to positively impact our results of operations in 2024 and upcoming years.

The availability of solar, wind and geothermal resources affects the financial performance of our renewable assets, which may impact our overall financial performance. Due to the variable nature of solar, wind and geothermal resources, we cannot predict future availabilities or potential variances from expected performance levels from quarter to quarter. Based on the extent to which the solar, wind and geothermal resources are not available at expected levels, this could have a negative impact on our results of operations.

The capital markets in general are subject to volatility that is unrelated to the operating performance of companies. Our growth strategy depends on our ability to close acquisitions, which often requires access to debt and equity financing to complete these acquisitions. Fluctuations in capital markets may affect our ability to access this capital through debt or equity financings.

Our presentation currency and the functional currency of most of our subsidiaries is the U.S. dollar, as most of their revenue and expenses are denominated or linked to U.S. dollars. All our companies located in North America, with the exception of Calgary, with revenue in Canadian dollars, and most of our companies in South America have their revenue and financing contracts signed in or indexed totally or partially to U.S. dollars. Our solar power plants in Europe have their revenue and expenses denominated in euros; Kaxu, our solar plant in South Africa, has its revenue and expenses denominated in South African rand, La Sierpe, La Tolua and Tierra Linda, Honda 1, our solar plants in Colombia, have their revenue and expenses denominated in Colombian pesos and Albisu, our solar plant in Uruguay, has its revenue denominated in Uruguayan pesos, with a maximum and a minimum price in U.S. dollars.

Project financing is typically denominated in the same currency as that of the contracted revenue agreement, which limits our exposure to foreign exchange risk. In addition, we maintain part of our corporate general and administrative expenses and part of our corporate debt in euros which creates a natural hedge for the distributions we receive from our assets in Europe. To further mitigate this exposure, our strategy is to hedge cash distributions from our assets in Europe. We hedge the exchange rate for the net distributions in euros (after deducting interest payments and general and administrative expenses in euros). Through currency options, we have hedged 100% of our euro-denominated net exposure for the next 12 months and 75% of our euro-denominated net exposure for the following 12 months. We expect to continue with this hedging strategy on a rolling basis.

Although we hedge cash-flows in euros, fluctuations in the value of the euro in relation to the U.S. dollar may affect our operating results. For example, revenue in euro-denominated companies could decrease when translated to U.S. dollars at the average foreign exchange rate solely due to a decrease in the average foreign exchange rate, in spite of revenue in the original currency being stable. Fluctuations in the value of the South African rand and Colombian peso with respect to the U.S. dollar may also affect our operating results.

In our discussion of operating results, we have included foreign exchange impacts in our revenue by providing constant currency revenue growth. The constant currency presentation is not a measure recognised under IFRS and excludes the impact of fluctuations in foreign currency exchange rates. We believe providing constant currency information provides valuable supplemental information regarding our results of operations. We calculate constant currency amounts by converting our current period local currency revenue using the prior period foreign currency average exchange rates and comparing these adjusted amounts to our prior period reported results. This calculation may differ from similarly titled measures used by others and, accordingly, the constant currency presentation is not meant to substitute recorded amounts presented in conformity with IFRS as issued by the IASB, nor should such amounts be considered in isolation.

We incur significant indebtedness at the corporate and asset level. The interest rate risk arises mainly from indebtedness at variable interest rates. To mitigate interest rate risk, we primarily use long-term interest rate swaps and interest rate options which, in exchange for a fee, offer protection against a rise in interest rates. As of December 31, 2023, approximately 92% of our project debt and close to 94% of our corporate debt either has fixed interest rates or has been hedged with swaps or caps. Nevertheless, our results of operations can be affected by changes in interest rates with respect to the unhedged portion of our indebtedness that bears interest at floating rates, which typically bear a spread over EURIBOR or SOFR.

As previously discussed, our solar assets in Spain receive revenue from the sale of electricity at market prices in addition to regulated revenue. Regulated revenues are revised periodically to reflect the difference between expected and actual market prices if the difference is higher than a pre-defined threshold. Additionally, our assets in Italy have contracted revenues through a regulated feed-in premium in addition to merchant revenues for the energy sold to the wholesale market.

Furthermore, we currently have three assets with merchant revenues (Chile PV 1 and Chile PV 3, where we have a 35% ownership, and Lone Star II, where we have a 49% ownership) and one asset with partially contracted revenues (Chile PV 2, where we have a 35% ownership). Our exposure to merchant electricity prices represents less than 1% of our portfolio in terms of Adjusted EBITDA. At Lone Star II we are analysing, together with our partner, the option to repower or recontract the asset in the context of the IRA, at a point in time to be determined.

Due to low electricity prices in Chile, the project debts of Chile PV 1 and 2 are under an event of default as of December 31, 2023 and as of the date of this report. Chile PV 1 was not able to maintain the minimum required cash in its debt service reserve account as of December 31, 2023 and did not make its debt service payment in January. In addition, in October 2023, Chile PV 2 did not make its debt service payment. This asset obtained additional financing from the banks and made the debt service payment in December, although it was not able to fund its debt service reserve account subsequently. As a result, although we do not expect an acceleration of the debt to be declared by the credit entities, as of December 31, 2023 Chile PV 1 and 2 did not have an unconditional right to defer the settlement of the debt for at least twelve months and the project debt was classified as current in our Annual Consolidated Financial Statements. We are in conversations with the banks, together with our partner, regarding a potential waiver. Impairments were recorded in these assets in 2023 and 2022. The value of the net assets contributed by Chile PV 1 and 2 to the Annual Consolidated Financial Statements, excluding non-controlling interest, was close to zero as of December 31, 2023.

Financial Review

Note:

Production in the renewable business sector increased by 2.6% in 2023, compared to 2022. The increase was largely due to an increase in production in our solar assets in Spain and to the contribution from the assets recently consolidated or which have entered into operation recently, including Chile PV 3, La Tolua, Tierra Linda, Albisu and Italy PV 4, bringing approximately 147.9 MWh of additional electricity generation during the year 2023.

Our efficient natural gas and heat assets, our water assets and our transmission lines, for which revenue is based on availability, continued at very high levels during 2023.

Results of Operations

The table below details our results of operations for the years ended December 31, 2023, and 2022.

Notes:

Revenue

Revenue decreased to $1,099.9 million for the year 2023 compared to $1,102.0 million for 2022. Revenue decreased primarily due to the decrease in production at Kaxu resulting from the unscheduled outage and the maintenance stop previously explained. Revenue at Kaxu decreased by $45.8 million. Part of the damage and the business interruption is covered by our insurance property policy, after deductibles, and as such we have recorded a $15.3 million insurance income in Other operating income.

These effects were partially offset by higher revenues at our solar assets in the U.S. due to higher electricity production especially in Solana, as previously explained. Revenue also increased at our transmission lines in 2023 compared to 2022 mostly as a result of inflation adjustments to tariffs, including a positive tariff adjustment in Chile TL 3 corresponding to previous years, which was published in the second quarter of 2023. In addition, the Company generated additional revenue from assets recently consolidated and assets that entered into operation recently, which together represented a total of $14.1 million of revenue in 2023 compared to $6.2 million in 2022. Revenue remained stable at our solar assets in Spain, since higher production during the period was offset by lower electricity prices, net of its corresponding accounting provision (due to the factors described under “—Factors that Affect Comparability of our Results of Operations — Electricity Market prices”).

Other Operating Income

The following table details our other operating income for the years ended December 31, 2023, and 2022:

“Grants” represent the financial support provided by the U.S. Department of the Treasury to Solana and Mojave and consist of an ITC Cash Grant and an implicit grant related to the below market interest rates of the project loans with the Federal Financing Bank. Grants were stable during 2023, compared to 2022.

“Insurance proceeds and other” increased by $14.1 million in 2023 compared to 2022. In 2023, “Insurance proceeds and other” included $15.3 million of insurance proceeds related to the Kaxu unscheduled outage, as previously explained. In addition, it included $4.6 million income from the sale of part of our equity interest in our development company in Colombia to a partner who now holds a 50% equity interest, with joint control. Finally, it includes $4.8 million related to improvements in our Calgary district heating asset which are re-invoiced to the municipality, with the corresponding cost recorded in “Other operating expenses”. In 2022, “Insurance proceeds and other” included an insurance income of $9.5 million.

“Income from construction services for our assets and concessions” is related to the construction of ATS Expansion 1 and ATN Expansion 3. Since these assets are accounted for under IFRIC 12, we are required to account for income from construction services as “Other operating income”, with the corresponding construction cost recorded within “Other operating expenses, Construction costs”.

Employee Benefit Expenses

Employee benefit expenses increased by 29.7% to $104.1 million for 2023, compared to $80.2 million in 2022 mainly due to the internalisation of the O&M services at Kaxu in 2022 and at our solar assets in Spain in 2022 and 2023.

Depreciation, Amortisation, and Impairment Charges

Depreciation, amortisation, and impairment charges decreased by 11.7% to $418.3 million for the year ended December 31, 2023, compared to $473.6 million for the year ended December 31, 2022. The decrease was mainly due to the $41 million impairment loss recorded at Solana in 2022, with no corresponding amount in 2023. The decrease was also due to a decrease of the expected credit loss impairment provision at ACT. IFRS 9 requires impairment provisions to be based on the expected credit loss of the financial assets in addition to actual credit losses. ACT recorded a decrease in the credit loss impairment provision of $10.9 million in 2023, while in 2022, it recorded an increase in the credit loss impairment provision of $4.0 million. In Chile, we recorded an impairment of $16.1 million related to Chile PV1. In 2022 we also recorded an impairment of $20.4 million at Chile PV 1 and Chile PV 2. On the other hand, these effects on depreciation, amortisation and impairment were partially offset by increased charges due to the consolidation of assets recently acquired or which entered in operation recently.

Other Operating Expenses

The following table details our other operating expenses for the years ended December 31, 2023, and 2022:

Other operating expenses decreased by 4.2% to $336.6 million for the year ended December 31, 2023, compared to $351.3 million for the year ended December 31, 2022 mainly due to lower cost of “Supplies” and lower “Operation and maintenance” costs.

Cost of supplies decreased mostly due to lower price of electricity in our assets in Spain. In addition, our operation and maintenance costs decreased during 2023, compared to 2022 mainly due to lower O&M costs in Spain, where these services have been internalised and are now provided by employees of Atlantica, with the cost classified in “Employee benefit” expenses.

On the other hand, the cost of “Raw Materials” increased in the subsidiaries which are now performing the operation and maintenance which was previously subcontracted, as these costs are now assumed directly by subsidiaries of Atlantica. “Other expenses” include costs related to improvements in our Calgary district heating asset which are re-invoiced to the municipality, as previously discussed.

“Construction costs” refers to the cost of construction of ATS Expansion 1 and ATN Expansion 3.

Operating Profit

As a result of the previously above-mentioned factors, operating profit increased by 23.2% to $342.0 million for the year ended December 31, 2023, compared with $277.7 million for the year ended December 31, 2022.

Financial Income and Financial Expense17

17 Classification within Financial income and financial expense has been revised to show a more meaningful classification of financial income and expense following the increase in interest rates. Prior period classification has been revised accordingly.

Financial Income

The following table details our financial income for the years ended December 31, 2023, and 2022:

Financial income increased from $10.1 million in 2022 to $25.0 million 2023 mostly due to higher remuneration of deposits resulting from higher interest rates.

Financial Expense

The following table details our financial expense for the years ended December 31, 2023, and 2022:

Financial expense decreased to $323.8 million in 2023 compared to $330.4 million in 2022. Interest rates have been higher in 2023 than in 2022, causing an increase in interest on loans and notes, which has been more than offset by the impact in our income statement of the derivatives hedging our loans. The decrease is due to a $26.6 million gain in “Interest rate gains/losses on derivatives: cash flow hedges”, where we record transfers from equity to the income statement when the hedged item impacts profit and loss compared to a $38.4 million loss in 2022, due to the increase in the reference rates in 2023, compared to 2022. Considering interest gains on hedge instruments of such loans and notes, total interest decreased in 2023 as in 2022, which is primarily due to the repayment of project and corporate debt in accordance with the financing arrangements.

Net Exchange Differences

Net exchange differences decreased to a $2.5 million loss in 2023 compared to a $10.3 million income in 2022. The decrease was mainly due to the change in fair value of caps hedging our net cash flows in Euros, which was largely stable in 2023 while it increased in 2022.

Other Financial Income/(Expense), Net

Other financial income/(expense), net increased to a net expense of $16.7 million in 2023, compared to a net expense of $0.9 million in 2022.

Other financial income in 2023, primarily includes an income of $3.9 million corresponding to the change in the fair value of the conversion option of the Green Exchangeable Notes in the period, (compared to $12.0 million in 2022). Other financial income also includes a non-monetary change to the fair value of derivatives of Kaxu for which hedge accounting is not applied for $0.1 million (compared to $6.2 million in the 2022) and a one-time income related to the extension in the maturity of the Green Project Finance, which qualifies as a refinancing from an accounting perspective.

Other financial expense increased in 2023, mainly due to the financial impact related to the electricity market prices provision recorded at our solar assets in Spain. This is a long-term provision recorded at present value in accordance with the effective interest method, which progressively accrues a financial expense. Other financial expense also includes expenses for guarantees and letters of credit, wire transfers, other bank fees and other minor financial expenses.

Share of Profit of Associates Carried Under the Equity Method

Share of profit of associates carried under the equity method decreased to $13.2 million in the year ended December 31, 2023, compared to $21.4 million in the year ended December 31, 2022 primarily due to a lower profit at Vento II, resulting from lower production and a lower price at Lone Star II after its PPA expired in January 2023.

Profit/(loss) Before Income Tax

As a result of the previously mentioned factors, we reported a profit before income tax of $37.2 million for the year ended December 31, 2023, compared to a loss before income tax of $11.8 million for the year ended December 31, 2022.

Income Tax

The reconciliation between the theoretical income tax resulting from applying an average statutory tax rate to profit before income tax and the actual income tax expense recognised in the consolidated income statements for the years ended December 31, 2023 and 2022, is as follows:

Note:

For the year ended December 31, 2023 the overall effective tax rate was different than the statutory rate of 25% primarily due to permanent differences, most of which relate to exchange rate differences in Mexico, where taxes are calculated in local currency, which was partially offset by unrecognized tax credits in several jurisdictions.

Loss/(profit) Attributable to Non-Controlling Interests

Loss attributable to non-controlling interests was $6.9 million for the year ended December 31, 2023 compared to $3.4 million profit for the year ended December 31, 2022. Loss /(profit) attributable to non-controlling interests corresponds to the portion attributable to our partners in the assets that we consolidate (Kaxu, Skikda, Solaben 2 & 3, Solacor 1 & 2, Seville PV, Chile PV 1, Chile PV 2, Chile PV 3 and Tenes). The loss in profit attributable to non-controlling interest in 2023 was mainly due to the loss reported in Kaxu resulting from lower production as previously explained.

Profit / (Loss) Attributable to the Parent Company

As a result of the previously mentioned factors, profit attributable to the parent company was $43.4 million for the year ended December 31, 2023, compared to a loss of $5.4 million for the year ended December 31, 2022.

Comparison of the Years Ended December 31, 2022 and 2021

The significant variances or variances of the significant components of the results of operations between the years ended December 31, 2021 and December 31, 2021, are discussed in the 2022 Consolidated Annual Report and Financial Statements.

Our Segment Reporting

We organise our business into the following three geographies where the contracted assets and concessions are located: North America, South America and EMEA. In addition, we have identified four business sectors based on the type of activity: Renewable energy, Efficient natural gas and heat, Transmission lines and Water. We report our results in accordance with both criteria.

Note:

Volume produced/availability

Note:

North America

Revenue increased by 4.9% to $424.9 million for the year ended December 31, 2023, compared to $405.1 million for the year ended December 31, 2022, while Adjusted EBITDA increased by 3.0% to $319.3 million for the year ended December 31, 2023, compared to $310.0 million for 2022. The increase in revenue was mainly due to higher electricity production in our solar assets in the U.S. as previously discussed, together with higher revenue at ACT (see “Efficient natural gas & heat” below), which was partially offset by lower revenue at Coso due to lower production. Adjusted EBITDA increased mainly due to the increase in revenue and lower costs in our solar assets in the US, mostly caused by lower insurance costs and lower O&M costs at Mojave. These effects were partially offset by lower EBITDA at Vento II, caused by lower production and lower prices at Lone Star II after the end of its PPA.

South America

Revenue increased by 13.0% to $188.1 million for the year ended December 31, 2023, compared to $166.4 million for the year ended December 31, 2022. The increase was mainly due to indexation to inflation in our revenue in transmission lines, including a positive tariff adjustment in Chile TL 3 corresponding to previous years which was published in the second quarter of 2023, and in wind assets in South America. Revenue also increased due to assets recently consolidated and assets which entered in operation recently. This increase was partially offset by lower revenue at our PV assets in Chile, where production decreased mostly due to lower electricity prices and, to a lower extent, curtailments. Adjusted EBITDA increased by 15.9% to $146.7 million for the year ended December 31, 2023, compared to $126.5 million for the year ended December 31, 2022, mostly due to the increase in revenue and to a $4.6 million gain from the sale of part of our equity interest in our development company in Colombia to a partner in the first quarter of 2023.

EMEA

Revenue decreased to $486.9 million for the year ended December 31, 2023, which represents a decrease of 8.2% compared to $530.5 million for the year ended December 31, 2022. The decrease was mainly due to lower revenue at Kaxu by $45.8 million, mostly due to an unscheduled outage coupled with a prolonged maintenance stop, as previously explained. Revenue at our solar assets in Spain remained stable.

Adjusted EBITDA decreased to $328.9 million for the year ended December 31, 2023, which represents a decrease of 8.8% compared to $360.6 million for the year ended December 31, 2022. Adjusted EBITDA decreased mainly due to the outage at Kaxu causing a $26.6 million decrease in EBITDA. The impact in Adjusted EBITDA was lower as a result of insurance income.

Note:

Volume produced/availability

Note:

Renewable Energy

Revenue decreased to $802.8 million for the year ended December 31, 2023, which represents a decrease of 2.3% compared to $821.4 million for the year ended December 31, 2022. The decrease in revenue was primarily due to lower revenue at Kaxu as previously discussed. On the other hand, revenue increased at our solar assets in the U.S. due to higher electricity production as previously explained and at our wind assets in South America due to higher production and price indexation to inflation, together with the contribution of assets recently consolidated. As previously explained, revenue at our solar assets in Spain remained stable.

Adjusted EBITDA decreased to $575.7 million for the year ended December 31, 2023, which represents a decrease of 2.1% compared to $588.0 million for the year ended December 31, 2022. The decrease in Adjusted EBITDA was mainly due to the decrease in revenue and to lower EBITDA at Vento II, as previously explained.

Efficient Natural Gas and Heat

Revenue increased by 4.2% to $118.4 million for the year ended December 31, 2023, compared to $113.6 million for the year ended December 31, 2022, while Adjusted EBITDA increased by 3.3% to $87.4 million for the year ended December 31, 2023, compared to $84.6 million for the year ended December 31, 2022. Revenue and Adjusted EBITDA increased at ACT with Adjusted EBITDA increasing by less mainly due to higher O&M costs, since there is a portion of revenue related to O&M services plus a margin.

Transmission Lines

Revenue increased by 9.0% to $123.5 million for the year ended December 31, 2023, compared to $113.2 million for year ended December 31, 2022, while Adjusted EBITDA increased by 9.1% to $96.0 million for the year ended December 31, 2023 compared to $88.0 million for the year ended December 31, 2022. The increase in revenue and Adjusted EBITDA was mainly due to tariff indexation to inflation including a positive tariff adjustment in Chile TL 3 corresponding to previous years.

Water

Revenue increased to $55.2 million for the year ended December 31, 2023, which represents a 2.6% increase compared to $53.8 million for the year ended December 31, 2022. Adjusted EBITDA decreased to $35.7 million for the year ended December 31, 2023, which represents a 1.9% decrease compared to $36.5 million for year ended December 31, 2022. Adjusted EBITDA decreased while Revenue increased because of higher O&M costs, which are indexed to inflation.

Comparison of the Years Ended December 31, 2022 and 2021

The significant variances in the revenue and volume, by geographic region and business sector, between the years ended December 31, 2022 and December 31, 2021, are discussed in the Form 20-F filed with the SEC on February 28, 2023.

Liquidity and Capital Resources

Our principal liquidity and capital requirements consist of the following:

As part of our business, depending on market conditions, we will from time to time consider opportunities to repay, redeem, repurchase or refinance our indebtedness. Changes in our operating plans, lower than anticipated sales, increased expenses, acquisitions or other events may cause us to seek additional debt or equity financing in future periods. There can be no guarantee that financing will be available on acceptable terms or at all. Debt financing, if available, could impose additional cash payment obligations and additional covenants and operating restrictions. In addition, any of the items discussed in detail under “Principal Risk and Uncertainties” and other factors may also significantly impact our liquidity.

Liquidity Position

Note:

Cash at the project level includes $177.0 million and $207.6 million restricted cash balances as of December 31, 2023 and 2022, respectively. Restricted cash consists primarily of funds required to meet the requirements of certain project debt arrangements. In the case of Solana, part of the restricted cash is being used and is expected to be used for equipment replacement.

As of December 31, 2023, $16.9 million of letters of credit were outstanding under the Revolving Credit Facility and we had $55 million of borrowings. As a result, as of December 31, 2023, $378.1 million was available under the Revolving Credit Facility. As of December 31, 2022, we had $30 million of borrowings and $34.9 million of letters of credit outstanding and $385.1 million was available under our Revolving Credit Facility.

Non-restricted cash at project companies includes among others, the cash that is required for day-to-day management of the companies, as well as amounts that are earmarked to be used for debt service and distributions in the future.

Management believes that the Company’s liquidity position, cash flows from operations and availability under its Revolving Credit Facility will be adequate to meet the Company’s working capital requirements, financial commitments and debt obligations; growth, operating and maintenance capital expenditures; and dividend distributions to shareholders. Management continues to regularly monitor the Company’s ability to finance the needs of its operating, financing and investing activities within the guidelines of prudent balance sheet management.

Credit Ratings

Credit rating agencies rate us and part of our debt securities. These ratings are used by the debt markets to evaluate our credit risk. Ratings influence the price paid to issue new debt securities as they indicate to the market our ability to pay principal, interest and dividends.

The following table summarises our credit ratings as of December 31, 2023. The ratings outlook is stable for S&P and Fitch.

Sources of Liquidity

We expect our ongoing sources of liquidity to include cash on hand, cash generated from our operations, project debt arrangements, corporate debt and the issuance of additional equity securities, as appropriate, and given market conditions. Our financing agreements consist mainly of the project-level financing for our various assets and our corporate debt financings, including our Green Exchangeable Notes, the Note Issuance Facility 2020, the 2020 Green Private Placement, the Green Senior Notes, the Revolving Credit Facility, the “at-the-market programme”, other credit lines and our commercial paper programme.

Note:

A) Corporate Debt Agreements

Green Senior Notes

On May 18, 2021, we issued the Green Senior Notes with an aggregate principal amount of $400 million due in 2028. The Green Senior Notes bear interest at a rate of 4.125% per year, payable on June 15 and December 15 of each year, commencing December 15, 2021, and will mature on June 15, 2028.

The Green Senior Notes were issued pursuant to an Indenture, dated May 18, 2021, by and among Atlantica as issuer, Atlantica Peru S.A., ACT Holding, S.A. de C.V., Atlantica Infraestructura Sostenible, S.L.U., Atlantica Investments Limited, Atlantica Newco Limited, Atlantica North America LLC, as guarantors, BNY Mellon Corporate Trustee Services Limited, as trustee, The Bank of New York Mellon, London Branch, as paying agent, and The Bank of New York Mellon SA/NV, Dublin Branch, as registrar and transfer agent.

Our obligations under the Green Senior Notes rank equal in right of payment with our outstanding obligations under the Revolving Credit Facility, the 2020 Green Private Placement, the Note Issuance Facility 2020, the Green Exchangeable Notes and the credit line with Export Development Canada.

Green Exchangeable Notes

On July 17, 2020, we issued 4.00% Green Exchangeable Notes amounting to an aggregate principal amount of $100 million due in 2025. On July 29, 2020, we issued an additional $15 million aggregate principal amount in Green Exchangeable Notes. The Green Exchangeable Notes are the senior unsecured obligations of Atlantica Jersey, a wholly owned subsidiary of Atlantica, and fully and unconditionally guaranteed by Atlantica on a senior, unsecured basis. The notes mature on July 15, 2025, unless they are repurchased or redeemed earlier by Atlantica or exchanged, and bear interest at a rate of 4.00% per annum.

Noteholders may exchange all or any portion of their notes at their option at any time prior to the close of business on the scheduled trading day immediately preceding April 15, 2025, only during certain periods and upon satisfaction of certain conditions. Noteholders may exchange all or any portion of their notes during any calendar quarter if the last reported sale price of Atlantica’s ordinary shares for at least 20 trading days during a period of 30 consecutive trading days, ending on the last trading day of the immediately preceding calendar quarter is greater than 120% of the exchange price on each applicable trading day. On or after April 15, 2025, until the close of business on the second scheduled trading day immediately preceding the maturity date thereof, noteholders may exchange any of their notes at any time, at the option of the noteholder. Upon exchange, the notes may be settled, at our election, into Atlantica ordinary shares, cash or a combination of both. The initial exchange rate of the notes is 29.1070 ordinary shares per $1,000 of the principal amount of notes (which is equivalent to an initial exchange price of $34.36 per ordinary share). The exchange rate is subject to adjustment upon the occurrence of certain events.

Our obligations under the Green Exchangeable Notes rank equal in right of payment with our outstanding obligations under the Revolving Credit Facility, the 2020 Green Private Placement, the Note Issuance Facility 2020, the Green Senior Notes, and the credit line with Export Development Canada.

Note Issuance Facility 2020

On July 8, 2020, we entered into the Note Issuance Facility 2020, a senior unsecured euro-denominated financing with a group of funds managed by Westbourne Capital as purchasers of the notes issued thereunder for a total amount of €140 million ($155 million). The notes under the Note Issuance Facility 2020 were issued on August 12, 2020 and are due on August 12, 2027. Interest accrues at a rate per annum equal to the sum of the three-month EURIBOR plus a margin of 5.25% with a floor of 0% for the EURIBOR. We had a cap at 0% for the EURIBOR with 3.5 years maturity and in December 2023, we entered into a cap at 4% to hedge the variable interest rate risk with maturity on December 31, 2024.

Our obligations under the Note Issuance Facility 2020 rank equal in right of payment with our outstanding obligations under the Revolving Credit Facility, the 2020 Green Private Placement, the Green Exchangeable Notes, the Green Senior Notes, and the credit line with Export Development Canada. The notes issued under the Note Issuance Facility 2020 are guaranteed on a senior unsecured basis by our subsidiaries Atlantica Infraestructura Sostenible, S.L.U., Atlantica Peru, S.A., ACT Holding, S.A. de C.V., Atlantica Investments Limited, Atlantica Newco Limited and Atlantica North America LLC.

2020 Green Private Placement

On March 20, 2020, we entered into a senior secured note purchase agreement with a group of institutional investors as purchasers providing for the 2020 Green Private Placement. The transaction closed on April 1, 2020, and we issued notes for a total principal amount of €290 million ($320 million), maturing on June 20, 2026. Interest accrues at a rate per annum equal to 1.96%. If at any time the rating of these senior secured notes is below investment grade, the interest rate thereon would increase by 100 basis points until such notes are again rated investment grade.

Our obligations under the 2020 Green Private Placement rank equal in right of payment with our outstanding obligations under the Revolving Credit Facility, the Note Issuance Facility 2020, the Green Senior Notes and the credit line with Export Development Canada. Our payment obligations under the 2020 Green Private Placement are guaranteed on a senior secured basis by our subsidiaries Atlantica Infraestructura Sostenible, S.L.U., Atlantica Peru, S.A., ACT Holding, S.A. de C.V., Atlantica Investments Limited, Atlantica Newco Limited and Atlantica North America LLC. The 2020 Green Private Placement is also secured with a pledge over the shares of the subsidiary guarantors, the collateral of which is shared with the lenders under the Revolving Credit Facility.

Revolving Credit Facility

On May 10, 2018, we entered into a $215 million Revolving Credit Facility with a syndicate of banks. The Revolving Credit Facility was increased by $85 million to $300 million on January 25, 2019, and was further increased by $125 million (to a total limit of $425 million) on August 2, 2019. On March 1, 2021, this facility was further increased by $25 million (to a total limit of $450 million). On May 30, 2023, the maturity of the Revolving Credit Facility was extended to December 31, 2025. Under the Revolving Credit Facility, we are also able to request the issuance of letters of credit, which are subject to a sublimit of $100 million that are included in the aggregate commitments available under the Revolving Credit Facility.

Loans under the Revolving Credit Facility accrue interest at a rate per annum equal to: (A) for Eurodollar rate loans, Term SOFR, plus a Term SOFR Adjustment equal to 0.10% per annum, plus a percentage determined by reference to our leverage ratio, ranging between 1.60% and 2.25% and (B) for base rate loans, the highest of (i) the rate per annum equal to the weighted average of the rates on overnight U.S. Federal funds transactions with members of the U.S. Federal Reserve System arranged by U.S. federal funds brokers on such day plus ½ of 1.00%, (ii) the prime rate of the administrative agent under the Revolving Credit Facility and (iii) Term SOFR plus 1.00%, in any case, plus a percentage determined by reference to our leverage ratio, ranging between 0.60% and 1.00%.

Our obligations under the Revolving Credit Facility rank equal in right of payment with our outstanding obligations under the 2020 Green Private Placement, the Note Issuance Facility 2020, the Green Exchangeable Notes, the Green Senior Notes and the credit line with Export Development Canada. Our payment obligations under the Revolving Credit Facility are guaranteed on a senior secured basis by Atlantica Infraestructura Sostenible, S.L.U., Atlantica Peru, S.A., ACT Holding, S.A. de C.V., Atlantica Investments Limited, Atlantica Newco Limited and Atlantica North America LLC. The Revolving Credit Facility is also secured with a pledge over the shares of the subsidiary guarantors, the collateral of which is shared with the holders of the notes issued under the 2020 Green Private Placement.

Credit Line with Export Development Canada

In June 2023 we entered into a senior unsecured $50 million line of credit with Export Development Canada with a 3 year maturity. The purpose of the credit line is to finance the construction of sustainable projects. The interest is at a rate per annum equal to Term SOFR plus a percentage determined by reference to our leverage ratio, ranging between 2.46% and 3.11%, with a floor of 0% for the Term SOFR. The facility matures on May 25, 2026 and was fully available as of December 31, 2023.

Our obligations under this credit line are equal in right of payment with our outstanding obligations under the 2020 Green Private Placement, the Note Issuance Facility 2020, the Green Exchangeable Notes, the Green Senior Notes, the Revolving Credit Facility. Our payment obligations under this line are guaranteed on a senior secured basis by Atlantica Infraestructura Sostenible, S.L.U., Atlantica Peru, S.A., ACT Holding, S.A. de C.V., Atlantica Investments Limited, Atlantica Newco Limited and Atlantica North America LLC, and are also secured with a pledge over the shares of the subsidiary guarantors, the collateral of which is shared with the holders of the notes issued under the 2020 Green Private Placement.

Other Credit Lines

In July 2017, we signed a line of credit with a bank for up to €10.0 million ($11.0 million) which was available in Euros or U.S. Dollars. Amounts drawn accrue interest at a rate per annum equal to the sum of the three-month EURIBOR or SOFR, plus a margin of 2%, with a floor of 0% for the EURIBOR or SOFR. On August 7, 2023 the limit was increased to €15 million ($16.6 million) and the maturity was extended until July 2025. As of December 31, 2023, €9.0 million ($9.9 million) where drawn from this credit line.

In December 2020 and January 2022, we also entered into two different loans with banks for €5 million ($5.5 million) each. The maturity dates are December 4, 2025 and January 31, 2026, respectively, and such loans accrue interest at a rate per annum equal to 2.50% and 1.90%, respectively. Furthermore, in February 2023, we entered into a loan with a bank for €7 million ($7.7 million) with maturity in February 2028 accrues interest at a rate per annum equal to 4.2%.

Commercial Paper Programme

On November 21, 2023, we filed a euro commercial paper programme with the Alternative Fixed Income Market (MARF) in Spain. The programme has a maturity of twelve months. The programme allows Atlantica to issue short term notes for up to €100 million, with such notes having a tenor of up to two years. As of December 31, 2023, we had €23.3 million ($25.7 million) issued and outstanding under the Commercial Paper Programme at an average cost of 5.23% maturing on or before June 2024.

Covenants, restrictions, and events of default

The Note Issuance Facility 2020, the 2020 Green Private Placement, the Green Senior Notes and the Revolving Credit Facility contain covenants that limit certain of our and the guarantors’ activities. The Note Issuance Facility 2020, the 2020 Green Private Placement and the Green Exchangeable Notes also contain customary events of default, including a cross-default with respect to our indebtedness, indebtedness of the guarantors thereunder and indebtedness of our material non-recourse subsidiaries (project-subsidiaries) representing more than 25% of our cash available for distribution distributed in the previous four fiscal quarters, which in excess of certain thresholds could trigger a default. Additionally, under the 2020 Green Private Placement, the Revolving Credit Facility and the Note Issuance Facility 2020 we are required to comply with a leverage ratio of our corporate indebtedness excluding non-recourse project debt to our cash available for distribution of 5.00:1.00 (which may be increased under certain conditions to 5.50:1.00 for a limited period in the event we consummate certain acquisitions).

Furthermore, our corporate debt agreements contain customary change of control provisions (as such term is defined in each of those agreements) or similar provisions. Under the Revolving Credit Facility, a change of control without required lenders’ consent would trigger an event of default. In the other corporate debt agreements or securities, a change of control or similar provision without the consent of the relevant required holders would trigger the obligation to make an offer to purchase the respective notes at (i) 100% of the principal amount in the case of the 2020 Green Private Placement and Green Exchangeable Notes and at (ii) 101% of the principal amount in the case of the Note Issuance Facility 2020 and the Green Senior Notes. In the case of the Green Senior Notes, such prepayment obligation would be triggered only if there is a credit rating downgrade by any of the agencies.

B) At-The-Market Programme

On February 28, 2022, we established an “at-the-market programme” and entered into the Distribution Agreement with BofA Securities, Inc., MUFG Securities Americas Inc. and RBC Capital Markets LLC, as our sales agents, under which we may offer and sell from time to time up to $150 million of our ordinary shares, including in “at-the-market” offerings under our shelf registration statement on Form F-3 filed with the SEC on August 3, 2021, and a prospectus supplement that we filed on February 28, 2022. During the year 2023, we did not issue and sell any ordinary shares under the programme.

C) Project debt refinancing

In March 2023 we refinanced Solaben 2&3. We entered into two green senior euro-denominated loan agreements for the two assets with a syndicate of banks for a total amount of €198.0 million. The new project debt replaced the previous project loans and maturity was extended from December 2030 to June 2037. The interest on the loans accrues at a rate per annum equal to the sum of six-month EURIBOR plus a margin of 1.50% between 2023 and June 2028, 1.60% between June 2028 and June 2033 and 1.70% from June 2033 onwards. The principal is 90% hedged for the life of the loan through a combination of the following instruments:

The financing agreement also includes a mechanism under which, in the case that electricity market prices are above certain levels defined in the contract, a reserve account should be established and funded on a six-month rolling basis for the additional revenue arising from the difference between actual prices and prices defined in the agreement. Under certain conditions, such amounts, if any, should be used for early prepayments upon regulatory parameters changes.

The total outstanding balance of these loans as of December 31, 2023 was $202.9 million for both Solaben 2 and Solaben 3. The financing arrangements permit cash distributions to shareholders twice per year if the debt service coverage ratio is at least 1.10x.

In addition, on April 8, 2020, Logrosan Solar Inversiones, S.A, the subsidiary-holding company of Solaben 2 & 3 and Solaben 1 & 6 entered into the Green Project Finance with ING Bank, B.V. and Banco Santander S.A. The facility is a green project financing euro-denominated agreement. The Green Project Finance is guaranteed by the shares of Logrosan and its lenders have no recourse to Atlantica corporate level.

In June 2023 we extended the maturity of the debt from April 2025 to December 2028. The facility had an initial notional of €140 million of which approximately 37% is amortised between the signing date and maturity. The outstanding balance of this facility as of December 31, 2023, was $118.2 million, of which €23.2 million is progressively amortised with a two-year grace period and the remaining €87.8 million is expected to be refinanced at maturity.

The interest on the loans accrues at a rate per annum equal to the sum of six-month EURIBOR plus a margin of 3.25%. The principal is 100% hedged for the life of the loan through a combination of the following instruments:

The Green Project Finance permits cash distribution to shareholders twice per year if Logrosan sub-holding company debt service coverage ratio is at least 1.20x and the debt service coverage ratio of the sub-consolidated group of Logrosan and the Solaben 1 & 6 and Solaben 2 & 3 assets is at least 1.075x.

The financing agreement also includes a mechanism under which, in the case that electricity market prices are above certain levels defined in the contract, a reserve account should be established and funded on a six-month rolling basis for the additional revenue arising from the difference between actual prices and prices defined in the agreement. Under certain conditions, such amounts, if any, should be used for early prepayments upon regulatory parameters changes.

Use of Liquidity and Capital Requirements

Principal payments on debt as of December 31, 2023, are due in the following periods according to their contracted maturities:

Note: 

In addition to the principal repayment debt obligations detailed above, we have other contractual obligations to make future payments. The material obligations consist of interest related to our project debt and corporate debt and agreements in which we enter in the normal course of business.

Purchase obligations include agreements for the purchase of goods or services that are enforceable and legally binding and that specify all significant terms.

Accrued interest estimate during the useful life of loans represents the estimation for the total amount of interest to be paid or accumulated over the useful life of the loans, notes and bonds, taking into consideration the hedging contracts.

We intend to distribute a significant portion of our cash available for distribution to shareholders on an annual basis less reserves for the prudent conduct of our business, on an annual basis. We intend to distribute a quarterly dividend to shareholders. Our board of directors may, by resolution, amend the cash dividend policy at any time (See “Directors Report”).

The investments and the assets under construction detailed in “Significant events in 2023” have been part of the use of our liquidity in 2023. In addition, we have made investments in assets which are currently under development or construction.

We intend to grow our business through the development and construction of our project pipeline including expansion and repowering opportunities, as well as greenfield developments, third-party acquisitions and the optimisation of our existing portfolio. We currently have a pipeline of assets under development of approximately 2.2 GW of renewable energy and 6.0 GWh of storage. Approximately 47% of the projects are PV, 41% storage, 11% wind and 1% other projects, while 22% are expected to reach ready-to-build (“RTB”) in 2024-2025, 28% are in an advanced development stage and 50% are in early stage. Also, 20% are expansion or repowering opportunities of existing assets and 80% greenfield developments.

In 2023, we invested $27.9 million in maintenance capital expenditures in our assets. In 2022, we invested $39.1 million in maintenance capital expenditures in our assets, mainly corresponding to capital expenditures and equipment replacements at Solana. In some cases, maintenance capex is included in the operation and maintenance agreement, therefore it is included in operating expenses within our income statement.

Principal Risks and Uncertainties

Effective risk management is an essential part of our culture and strategy. Our corporate policies are supported by a solid commitment to risk management that guides all our decisions.

Our risk management system is based on risk identification, assessment, prioritisation, mitigation and monitoring processes, which are continually evaluated, improved and enhanced in line with best practice. Considerations regarding climate change are fully integrated within our risk management system.

Understanding and mitigating our risks is critical to our future success. We are therefore committed to an effective, robust system of risk identification and an effective response to such risks, in order to support the achievement of our objectives.

Our Approach to Risk

Our Risk Appetite

We define risk appetite as the nature and extent of risk Atlantica is willing to accept in relation to the pursuit of its objectives. A scale is used to help determine the risk appetite threshold for each risk, keeping in consideration that risk appetite may change over time. The risk management approach is based on the assessment of risk appetite performed by management and shared with the Board of Directors.

The following principles guide Atlantica´s overarching appetite for risk and determine how our businesses and risks are managed.

Operating model and business practice

Maintain a contracted portfolio of operational assets with a low risk profile

Grow our business through the development and construction of assets

Maintain a prudent financial policy and financial flexibility

Additionally, our policies and management systems include thorough risk analysis and risk management processes applied on an ongoing basis from the date of asset acquisition or the beginning of construction.

We seek to build our business for the long term by balancing social, environmental and economic considerations in the decisions we make. Our strategic priorities are underpinned by our endeavour to operate in a sustainable way. This helps us to manage the risk profile of the business.

Our Risk Management Framework

Risk Governance

The Board, with the support of management, has overall responsibility for risk management and determines the nature and extent of the principal and emerging risks that we will accept in order to achieve our strategic objectives. The Board receives detailed analysis of key matters in advance of Board meetings. This includes reports on our operating performance including safety and health, financial, environmental, legal and social matters, and key progresses in our business development activities, as well as information on talent management and analysis of financial investments. The provision of this information allows the early identification of potential issues and the assessment of any necessary preventive and mitigating actions.

The Audit Committee assists the Board by reviewing the effectiveness of the risk management process and monitoring principal and emerging risks, preventive and mitigation procedures and action plans. The Chair of the Audit Committee reports to the Board when required and, if necessary, the Board discusses the matters raised in greater detail.

The Risk Management Department is responsible for risk management systems across the Company. It implements the Company’s risk management policy, vision and purpose to ensure a strong risk management culture at all levels of the organisation. The Department supports business areas in analysing their risks, identifying existing preventive and mitigating controls and defining further action plans. It maintains and regularly updates the Company’s risk map matrix.

The Business Committee, which is comprised of our Geographic VPs and top management assesses the Company’s principal risks and their potential impact on the achievement of our strategic goals. The Committee promotes our risk management culture in each of the business areas.

Atlantica has developed a risk analysis methodology based on ISO 31000 standard and on common market practices. The risk analysis comprises the following steps:

The Head of Risk Management coordinates the risk identification, assessment, monitoring and mitigation effort primarily with the Geographic VPs. The resulting Risk Heat Map is periodically reviewed and approved by the senior management team including Atlantica’s VPs, the Chief Financial Officer, and the Chief Executive Officer and reported to the Board quarterly.

Atlantica’s risk management process follows a multidisciplinary approach to identifying risks in different areas, assigning probability distributions, and estimating potential economic impacts in order to develop action plans to mitigate the main risks facing the Company. The process includes completing a questionnaire regarding risk indicators and economic impact. An output of the process includes reporting on each major risk including the risk assessment, mitigation strategies, deadlines, and responsible parties. Risks are re-assessed on a quarterly basis.

The Finance Committee monitors market risks such as interest rate risk, foreign exchange risk and credit risk and is also responsible for monitoring and managing liquidity risks.

In addition, the Operations Department and the Operations Committee are responsible for monitoring and preventing health and safety, operational and environmental risks.

Risk management Structure

Principal risks  

The Company and its underlying assets are subject to a number of risks. The processes and systems implemented have been designed to mitigate those risks to the extent possible.

At the end of 2022, we included the potential impacts of dependence on certain key personnel because employee turnover increased in 2022 as one of our risks. During 2023, turnover has decreased and the relevance of this risk in our risk map has also decreased. In addition, in 2023, we included as one of our significant risks the potential delays and extra costs in projects under construction, as our development and construction activities continued increasing as planned. During the year 2023, we have also considered the potential increase in long-term interest rates as one of or significant risks.

We include the following table as a summary of some of those risks and action plans carried out to mitigate them:

18 Lost Time Frequency Index represents the total number of lost-time accidents recorded, including major injuries (defined as death or serious accidents), in the last 12 months per 1,000,000 hours worked. Differs from the metric generally used in the U.S. which is calculated per 200,000 hours worked. 

19 Total Recordable Frequency Index TRFI represents the total number of recordable accidents with and without lost-time recorded in the last 12 months per 1,000,000 hours worked. Differs from the metric generally used in the U.S. which is calculated per 200,000 hours worked.

Risk / Impact	Risk Appetite	Risk Trend	Assessment of Change in Risk Year-on-Year	Mitigation of Risk
Counterparty credit risk   Not being able to collect our revenues.   A significant portion of the electric power we generate, the transmission capacity we have, and our desalination capacity are sold under long-term off-take agreements with public utilities, industrial or commercial end-users or governmental entities, with a weighted average remaining duration of approximately 13 years as of December 31, 2023.   If any of our clients are unable or unwilling to fulfil their contractual obligations or if they delay payments, our business, financial condition, results of operations and cash flow may be materially adversely affected.   Pemex’s credit rating is currently BBB, B3 and B+ from S&P Global Rating (“S&P”), Moody’s Investor Service Inc. (“Moody’s”) and Fitch Ratings Inc. (“Fitch”), respectively. We have experienced delays in collections from Pemex in the past, especially since the second half of 2019, which have been significant in certain quarters, including the fourth quarter of 2023.   In addition, Eskom is the off-taker of our Kaxu solar plant, a state-owned, limited liability company, wholly owned by the Republic of South Africa. The credit rating of Eskom has weakened in the last few years and is currently B from S&P, B2 from Moody’s and B from Fitch.	Medium		There was a downgrade of Pemex credit rating by Fitch in 2023. In the past, we have experienced delays in collections and periods when such delays were reduced. As of December 2023, delays in collections were higher than usual.   In the case of Eskom, the credit rating of S&P has improved during 2023 and we have never experienced delays in collections.	In the case of Pemex, during 2023 we have maintained a pro-active approach including fluid dialogue with our client and we have increased the number of meetings with them. We are currently working with them on a plan to reduce the amount due in the upcoming months.   In the case of Kaxu, Eskom’s payment guarantees to our Kaxu solar plant are underwritten by the South African Department of Energy, under the terms of an implementation agreement. The credit ratings of the Republic of South Africa as of the date of this report are BB-/Ba2/BB- by S&P, Moody’s and Fitch, respectively and all these ratings have remained stable during 2023.
Poor performance of assets   If our assets perform worse than expected, we can experience loss of revenues and cash flows at the project level, which subsequently impacts cash returns to the Company.   The ability of certain assets in our portfolio to meet our performance expectations is subject to the risks inherent to the operation of such facilities, including, but not limited to, degradation of equipment in excess of our expectations, system failures and outages and more operational costs or maintenance capital expenditures than initially expected.   In addition, Atlantica relies on third parties for the supply of services and equipment, including technologically complex equipment and software, and certain operation and maintenance services to operate our assets.	Low		During 2023, our assets have generally performed fairly in line with expectations.   However, at Solana, we have been working on repairs and replacements in the storage system since 2021 until the first half of 2023. During this period, availability in the storage system was lower than expected. We cannot guarantee that the repairs will be effective, that Solana will reach expected production or that additional repairs will not be required.   In addition, in 2023 an unscheduled outage occurred at Kaxu when a problem was found in the turbine, a few weeks after a scheduled turbine major overhaul was carried out by Siemens, the original equipment manufacturer. The plant restarted operations in mid-February.	-  Dedicated supervisory and management teams in place at our assets.   -  Reporting and monitoring systems in place.   -   Asset managers are responsible for completing checklists designed to identify operational, maintenance and engineering, risks, improve efficiency and reduce costs at asset level.   - Our corporate operations team performs regular operational, maintenance and engineering audits to identify risks, implement and follow-up on mitigation plans and best practices and share insights gained from other assets.   -  Risk-related training courses are regularly provided to our employees and subcontractors to improve their skills, identify new risk management practices and report them to management.

Dependence on key personnel and risk of work stoppages   In some of our geographies, competition for qualified personnel is high. Some of our assets are in remote locations, and it may be difficult for us to retain employees or to cover certain positions. We may experience difficulty in hiring and retaining employees with appropriate qualifications. We may face high turnover, requiring us to dedicate time and resources to find and train new employees. The challenging markets in which we compete for talent may also require us to invest significant amounts of cash and equity to attract and retain employees. If we fail to attract new personnel or fail to retain and motivate our current personnel, this could adversely impact the performance of our assets, our business and future growth prospects and our ability to compete.   In addition, the operation and maintenance of most of our assets is labour intensive and in many cases our employees and our operators’ employees are covered by collective bargaining agreements. A dispute with a union or employees represented by a union could result in production interruptions caused by work stoppages. If our employees or our operators’ employees were to initiate a work stoppage, we may not be able to reach an agreement with them in a timely fashion. If a strike or work stoppage or disruption were to occur, our business, financial conditions, results of operations and cash flows may be materially adversely affected.

Low

In 2023, our turnover has decreased, in particular in the United States.   In addition, in March 2023, we completed the process of transitioning in-house the O&M services for our assets in Spain. In July 2023 we also internalised the O&M services for ATN. Currently, we perform O&M services with our own personnel for assets representing approximately 74% of our consolidated revenue for the year ended December 31, 2023.

-  Remuneration packages attractive to employee, taking into account the specific geography.  -  Identification of employees with high potential and who are more difficult to replace.  -  The local teams and the People and Culture Department take ownership of managing this risk.  -  We believe that having the O&M services performed by our own personnel provides a better control of the process and permits a direct dialogue with employees in charge of these activities, which can help to decrease turnover for these employees, who have experienced traditionally a higher turnover rate.

Risk / Impact	Risk Appetite	Risk Trend	Assessment of Change in Risk Year-on-Year	Mitigation of Risk
(2)  Reduced efficiency at our solar photovoltaic generation assets.   (3) Lower air density at our wind facilities.   (4) Lower efficiency in battery systems.   Furthermore, a reduction of mean precipitation may result in a reduction of availability of water from aquifers and could also modify the main water properties at our generation facilities. Droughts could result in water restrictions that may affect our operations, and which may force us to stop generation at some of our facilities. A deterioration of the quality of the water would also have a negative impact on chemical costs in our water treatment plants at our generating facilities.   -  Current Regulation. Atlantica is directly affected by environmental regulation at all our assets. This includes climate-related risks driven by laws, regulation, taxation, disclosure of emissions and other practices   -  Emerging regulation. Changes in regulation could have a negative impact on Atlantica’s growth or cause an increase in cost.   -  Reputation. While a significant part of our business consists of renewable energy assets, we also own assets that can be considered less environmentally friendly, currently consisting of a 300 MW efficient natural gas plant and a non-controlling stake in a gas engines facility which uses natural gas, both in Mexico. If our reputation worsened, our cost of capital could increase and our access to capital may become more difficult. In addition, some potential employees, clients, and /or suppliers could perceive Atlantica as a less appealing company due to a deterioration in our reputation.   -   Downstream. Some of our clients are large utilities or industrial corporations. These are also exposed to significant climate change related risks, including current and emerging regulation, acute and chronic physical risks. If our clients are affected by climate related risks, this could impact their credit quality and affect their ability to comply with the existing contract.				- Emerging regulation: Various internal working groups and management regularly review risks arising from new regulatory developments and potential impacts. At the Corporate level, the ESG team analyses the applicability of new reporting requirements and conveys them to the appropriate departments.   Reputation:  -  We refer to the Environment, Social and Governance section in this Report. -  Atlantica has developed a risk analysis methodology based on the ISO 31000 and on common market practices. -  We use a multidisciplinary approach to identify risks in different areas and develop appropriate mitigation plans. -  Management, local teams and the corporate operations department take ownership of managing this risk.
Risks Related to Our Relationship with Algonquin   Algonquin is our largest shareholder and exercises substantial influence over us.   Currently, Algonquin beneficially owns 42.2% of our ordinary shares and is entitled to vote on approximately 41.5% of our ordinary shares. As a result of this ownership, Algonquin has substantial influence over our affairs and their ownership interest and voting power constitute a significant percentage of the shares eligible to vote on any matter requiring the approval of our shareholders.	Not Relevant		In 2023, Algonquin conducted a strategic review which concluded in August with the announcement that they will pursue the sale of its renewable energy business and their intention focus on their regulated business. This announcement did not include Algonquin’s ownership in Atlantica. It is possible that in the future Algonquin may have interest in selling part or all of its equity interest in Atlantica. Uncertainty about Algonquin’s plans or strategy with respect to the holding or disposition of all or any portion of its equity interest in Atlantica and such uncertainty may negatively affect the market price for our shares and our ability to raise capital by offering equity or equity-related securities.	-   Any transaction between us and Liberty GES or Algonquin (including the acquisition of any ROFO assets or any co-investment with Liberty GES or Algonquin or any investment in an Algonquin asset) is subject to our related party transactions policy, which requires prior approval of such transactions by the Related Party Transactions Committee, which is composed of independent directors.

Risk / Impact	Risk Appetite	Risk Trend	Assessment of Change in Risk Year-on-Year	Mitigation of Risk
The financing agreements of our project subsidiaries   These are primarily loan agreements which provide that the repayment of the loans (and interest thereon) is secured solely by the shares, physical assets, contracts and the cash flow of that project company.   Our project finance agreements include covenants and restrictions which may limit our ability to distribute cash from project companies to the holding company level.   In addition, if we fail to satisfy any of our debt service obligations or breach any related financial or operating covenants, the applicable lender could declare the full amount of the relevant project debt to be immediately due and payable and could foreclose on any assets pledged as collateral.	Low		Due to low electricity prices in Chile, the project debts of Chile PV 1 and 2 are under an event of default as of December 31, 2023. Chile PV 1 was not able to maintain the minimum required cash in its debt service reserve account as of December 31, 2023 and did not make its debt service payment in January. In addition, in October 2023, Chile PV 2 did not make its debt service payment. This asset obtained additional financing from the banks and made the debt service payment in December 2023, although it was not able to sufficiently fund its debt service reserve account subsequently. We do not expect an acceleration of the debt to be declared by the credit entities.	-  With respect to Chile PV1 and Chile PV2, we are in conversations with the banks, together with our partner, regarding a potential waiver. The value of the net assets contributed by Chile PV 1 and 2 to our Annual Consolidated Financial Statements, excluding non-controlling interest, was close to zero as of December 31, 2023.   -  In general, to monitor this risk we have the following measures:   ● Reporting and monitoring of covenants in each contract.   ● Forecasts by local teams, reviewed by our corporate departments to monitor the main covenants and identify any potential future restriction to take measures in advance.   ● Management and specialised compliance and legal teams constantly tracking any change.   ● The local teams take ownership of managing this risk.   ● A quarterly report is provided to the Audit Committee from Internal Audit on covenant compliance.   ●  Local teams and the corporate controlling department (under the CFO supervision) take ownership of this risk.
Liquidity Risk and Access to capital   Our liquidity at the corporate level depends on distribution from the project level entities, most of which have project debt in place. Distributions are generally subject to the compliance with covenants and other conditions under our project finance agreements   Liquidity risk involves:   -  Not being able to meet our payment obligations as they fall due.  - Not being able to meet our covenants and obligations under our corporate financing arrangements.  -  Failing to meet the required or desired financing for acquisitions and for the successfully refinancing of Company’s project and corporate indebtedness.   The global capital and credit markets have experienced in the past and may continue to experience, periods of extreme volatility and disruption. At times, our access to financing was curtailed by market conditions and other factors. Continued disruptions, uncertainty or volatility in the global capital and credit markets may limit our access to additional capital required to refinance our debt on satisfactory terms or at all, may limit our ability to replace, in a timely manner, maturing liabilities, and may limit our access to new debt and equity capital to make further acquisitions. Volatility in debt markets may also limit our ability to fund or refinance many of our projects and corporate level debt, even in cases where such capital has already been committed.	Low		Capital markets have been experiencing high volatility during 2022 and 2023 both in the United States and Europe. High inflation, interest rate increases, war in Ukraine, energy crisis in Europe, high electricity prices particularly in Europe, tensions between the U.S., Russia and China, the availability and cost of credit, and the economic conditions and concerns of a global recession have exacerbated and contributed to increased volatility in capital markets and worsened expectations for the economy. During the year 2023, the valuations of renewable ETFs and renewable companies in the United States and Europe have generally decreased.	-  The objective of our financing and liquidity policy is to ensure that we maintain sufficient funds to meet our financial obligations as they fall due.   -  Project finance borrowing permits us to finance projects through project debt and thereby insulate the rest of our assets from such credit exposure. We incur project finance debt on a project-by-project basis or by groups of projects. The repayment profile of each project is established based on the projected cash flow generation of the business. This ensures that sufficient financing is available to meet deadlines and maturities, which mitigates the liquidity risk. In addition, we maintain a periodic communication with our lenders and regular monitoring of debt covenants and minimum ratios.  -  Appropriate cash management to ensure appropriate levels of cash: as of December 31, 2023, we had $411.1 million liquidity at the corporate level, comprised of $33.0 million of cash on hand at the corporate level and $378.1 million available under our Revolving Credit Facility.

Risk / Impact	Risk Appetite	Risk Trend	Assessment of Change in Risk Year-on-Year	Mitigation of Risk
			In addition, our high pay-out ratio may hamper our ability to manage liquidity in moments when accessing capital markets becomes more challenging.	-  Managing debt maturities and refinancing our corporate debt when the markets are favourable.  -  Management continues to regularly monitor the Company’s ability to finance the needs of its operating, financing and investing activities within the guidelines of prudent balance sheet management.   -  A portion of cash flows generated and distributed by our project companies to the holding company are retained at the holding company level.   -  Regular discussions with rating agencies.   -  Our Board of Directors may change our dividend policy at any point in time if required, or modify the dividend for specific quarters taking into consideration the prevailing conditions.   -  The Finance Committee and the Board of Directors take ownership of managing this risk.
Interest rate risk   Some of our indebtedness (including project-level indebtedness) bears interest at variable rates, generally linked to market benchmarks such as EURIBOR and SOFR. Increases in interest rates would raise our finance expenses at project companies or corporate level.	Low		During 2023, the U.S. Federal Reserve increased the reference interest rates in the United States from a targeted range between 4.25% and 4.50% to a range between 5.25% to 5.50%. Similarly, the European Central Bank increased the reference interest rates in the Euro zone from 2% up to 4.5% in 2023.   Any increase in interest rates would increase our finance expenses relating to our un-hedged variable rate indebtedness and increase the costs of refinancing our existing indebtedness and issuing new debt.	As of December 31, 2023, approximately 92% of our project debt and approximately 94% of our corporate debt either has fixed interest rates or has been hedged with swaps or caps. To mitigate interest rate risk, we primarily use long-term interest rate swaps and interest rate options which, in exchange for a fee, offer protection against a rise in interest rates.   The Finance Committee and local management teams take ownership of managing this risk. CFO¿?
Foreign currency exchange rate   Revenue and expenses of our solar assets in Europe, South Africa, Colombia and Uruguay are denominated in euros, South African Rands, Colombian pesos and Uruguayan pesos (with a maximum and minimum price in U.S. dollars in the case of Uruguayan pesos), respectively. Depreciation in the value of these currencies against the U.S. dollar may have a negative impact on our operating results and our cash available for distribution.	Low		During the year 2023, the euro remained stable and the South African rand depreciated against the U.S. dollar.	The main cash flows in our subsidiaries are cash collections arising from long-term contracts with clients and debt payments arising from project finance repayment. Project financing is typically denominated in the same currency as that of the contracted revenue agreement, which limits our exposure to foreign exchange risk. In addition, we maintain part of our corporate general and administrative expenses and part of our corporate debt in euros which creates a natural hedge for the distributions we receive from our assets in Europe.

Risk / Impact	Risk Appetite	Risk Trend	Assessment of Change in Risk Year-on-Year	Mitigation of Risk
				To further mitigate this exposure, our strategy is to hedge cash distributions from our assets in Europe. Through currency options, we have hedged 100% of our net euro-denominated net exposure for the next 12 months and 75% of our euro-denominated net exposure for the following 12 months. We expect to continue with this hedging strategy on a rolling basis.     The Finance Committee and local management teams take ownership of managing this risk.
Risks Related to Our Growth Strategy   We may not be successful in finding investment opportunities or we may invest in projects and assets with a higher risk profile.   Our growth strategy depends on our ability to successfully identify and evaluate investment opportunities, develop and build new assets and consummate acquisitions on favourable terms. The number of investment opportunities may be limited. We are competing with other local and international developers for the development and construction of new assets, which may hamper our ability to grow. Our ability to develop and build new assets depends, among other things, on our ability to secure transmission interconnection access or agreements, to secure land rights to secure PPAs or similar schemes and to obtain licences and permits and we cannot guarantee that we will be successful obtaining them. Similarly, we are competing with local and international companies for acquisition opportunities from third parties, which may increase our cost of making investments or cause us to refrain from making acquisitions from third parties. Our ability to consummate future investments and acquisitions may also depend on our ability to obtain any required government or regulatory approvals. If we are unable to identify and complete future investments and acquisitions, it will impede our ability to execute our growth strategy and limit our ability to increase the amount of dividends paid to our shareholders.	Medium		In 2023, following the trend of recent years, competition to develop and acquire renewable assets remained high. In our development and construction activities in some geographies we have seen longer periods required to obtain permits and interconnections. Some of our competitors for investments were ready to bid for PPAs at lower prices or were ready to pay more for investments and acquisitions, especially during the first part of the year.   In addition, in 2023 we continued to increase our investments in assets under development and construction, in assets with revenue denominated in local currency and assets with exposure to electricity prices.	We have a proven track record of closing acquisitions and investments in development and construction, and we have diversified sources of growth:   We intend to develop new projects and, in some cases, to invest in assets under development or construction with a focus on renewable energy and storage. We believe that our know-how and operating expertise in our key markets together with a critical mass of assets in several geographic areas as well as our access to capital will assist us in achieving our growth plans.   We intend to grow our business organically through the optimisation of the existing portfolio, price escalation factors in many of our assets as well as through investments in the expansion and repowering of our current assets and hybridisation of existing assets with other complementary technologies including storage, particularly in our renewable energy assets and transmission lines.   Additionally, we expect to complement our development and construction growth through the acquisition of assets from third parties leveraging the local presence and network we have in geographies and sectors in which we operate.   We intend to maintain a portfolio where a majority of the assets have stable and predictable cash flows. Every time we make an investment decision, we always consider the impact the potential investment will have on the overall portfolio, in order to preserve its low risk profile.

Risk / Impact	Risk Appetite	Risk Trend	Assessment of Change in Risk Year-on-Year	Mitigation of Risk
In addition, in order to grow our business, we may develop and build or acquire assets and businesses which may have a higher risk profile than certain of the assets we currently own. In addition, we may consider investing more in assets which are not contracted or not fully contracted, for which revenues will depend on the price of the electricity. We may also consider investing in businesses which are regulated or which are contracted with “as contracted” agreements or hedge agreements where we need to deliver the contracted power even if the facility is not in operation or which are subject to demand risk. We have recently invested and may consider investing in business sectors where we do not have previous experience and may not be able to achieve the expected returns. We may also consider investing in new technologies where we do not have for the moment a long historical track record as proven as our current assets, such as storage, district heating, geothermal, offshore wind, distributed generation or hydrogen. Furthermore, we may consider investing in assets in new markets or with revenues not denominated in U.S. dollars or euros, which would increase our exposure to local currency, and which could generate higher volatility in the cash flows we generate. In all these types of assets and businesses, the risk of not meeting the expected cash flow generation and expected returns is higher than in contracted assets.				The Investment Committee and the Board of Directors take ownership of managing this risk.
Our investments may not perform as expected and development and construction activities are subject to specific risks   Our investments are subject to substantial risks, including unknown or contingent liabilities, the failure to identify material problems during due diligence, the risk of over-paying for assets and the ability to retain customers.   Development and construction activities are subject to failure rate and different types of risks. Our ability to develop new assets is dependent on our ability to secure or renew our rights to an attractive site on reasonable terms; accurately measuring resource availability; the ability to secure new or renewed approvals, licences and permits; the acceptance of local communities; the ability to secure transmission interconnection access or agreements; the ability to acquire suitable labour, equipment and construction services on acceptable terms; the ability to attract project financing; and the ability to secure PPAs or other sales contracts on reasonable terms. Failure to achieve any one of these elements may prevent the development and construction of a project. If any of the foregoing were to occur, we may lose all of our investment in development expenditures and may be required to write-off project development assets.	Low		In 2023 we continued to increase our investments in development and construction with partners or on our own. During the year, four assets fully developed in-house entered in operation. In addition, as of December 31, 2023 we had seven assets under construction, including PV and battery storage assets as well as expansions of our transmission lines.   In addition, we currently have a pipeline of assets under development, including both repowering or expansion opportunities of existing assets and greenfield development, of approximately 2.2 GW of renewable energy and 6.0 GWh of storage. As we continue increasing our pipeline and as our projects get to construction phase, our construction risk is expected to continue to increase.	-  We have in-house development capabilities and partnerships with third parties to co-develop new projects.   -  The identificaction of new projects to be developed is supported by rigorous analysis and deeply rooted industry knowledge and experience.   -  We follow a disciplined approach to make capital allocation decisions and we have strict minimum required returns for development projects and acquisitions that we update frequently.   -  Detailed due diligences both for acquisitions and project development, carried out either in-house or contracted with specialists.   -  Senior management, including Geographic VPs, and local teams take ownership of managing this risk.

Risk / Impact	Risk Appetite	Risk Trend	Assessment of Change in Risk Year-on-Year	Mitigation of Risk
In addition, the construction and development of new projects is subject to environmental, engineering and construction risks that could result in cost-overruns, delays and reduced performance. A delay in the projected completion of a project can result in a material increase in total project construction costs through higher capitalised interest charges, additional labour and other expenses, and a delay in the commencement of cash flow.
International operations including in emerging markets.   We operate our activities in a range of international locations, including North America (Canada, the United States and Mexico), South America (Peru, Chile, Uruguay and Colombia), and EMEA (Spain, Italy, Algeria and South Africa), and we may expand our operations to certain core countries within these regions. Accordingly, we face several risks associated with operating and investing in different countries that may have a material adverse effect on our business, financial condition, results of operations and cash flows. These risks include, but are not limited to, adapting to the regulatory requirements of such countries, compliance with changes in laws and regulations applicable to foreign corporations, the uncertainty of judicial processes, and the absence, loss or non-renewal of favourable treaties, or similar agreements, with local authorities, or political, social and economic instability, all of which can place disproportionate demands on our management, as well as significant demands on our operational and financial personnel. As a result, we can provide no assurance that our future international operations and investments will remain profitable.	Medium		No significant change.	We intend to grow our portfolio mainly in countries that we consider stable in North America, South America and Europe. North America represents 52% of our total pipeline in renewables and 67% of our pipeline in storage.   We expect that investments in countries with a higher risk profile such as Algeria and South Africa will always represent a small portion of our portfolio.   We also have a political risk insurance policy in place with the Multinational Investment Guarantee Agency for Kaxu. The insurance provides protection for breach of contract up to $47.0 million in the event that the South African Department of Energy does not comply with its obligations as guarantor. We lso have a political insurance for two of our assets in Algeria up to $35.8 million, including 2 years dividend coverage. This insurance policy does not cover credit risk.   Our local presence in each region provides us with good knowledge and expertise to operate in these regions.   The geographic VPs together with the local teams and support from the compliance department take ownership of managing this risk.
Risks Related to Regulation: legal, environmental and general compliance of each asset   We are subject to extensive regulation of our business in the countries in which we operate. Such laws and regulations require licences, permits and other approvals to be obtained in connection with the operations of our activities. This regulatory framework imposes significant actual, day-to-day compliance burdens, costs and risks on us. In addition, we need to adapt to the regulatory requirements of the different countries where we operate.	Low		In 2022 electricity market prices increased in Spain, which resulted in higher cash collections in 2022. Since our renewable assets in Spain have the right to receive a “reasonable rate of return”, higher electricity prices caused a reduction of the regulated remuneration component in 2023 (we refer to “Regulation in Spain” under “Events during the period” section). During 2023, electricity market prices have been lower than the price expected by the regulation. If electricity market prices continue to be lower than the market price assumed in the regulation and the regulated parameters are not revised until 2026, we may have an adverse effect on revenues, results of operations and cash flows in 2024 and 2025, which we expect will be compensated starting in 2026 in accordance with the regulation in place.	- An individual responsible for local compliance has been appointed in each geography where we are present to solve day to-day issues. These employees report to the General Counsel. We have local legal teams in each geography that are usually assisted by local external lawyers. Our local internal and external lawyers are in close contact with the regulation and potential regulation changes in each geography. These, together with the asset managers, proactively track and monitor any potential regulatory change.

Risks Related to Taxation: changes to tax regulations could adversely affect the return of our current assets. We are subject to changes in tax regulation in all the jurisdictions where we have assets. Our future tax liability may be greater than expected if we do not use sufficient NOLs to offset our taxable income.   We have NOLs that we can use to offset future taxable income. Based on our current portfolio of assets, which includes renewable assets that benefit from an accelerated tax depreciation schedule, and subject to potential tax audits, which may result in income, sales, use or other tax obligations, we do not expect to pay significant taxes in the upcoming years in most of our assets.

Low

Changes in tax regulation have been announced in some countries where we operate. We currently do not expect any material impact from these changes.

-  Management and specialised teams with broad experience monitor these developments.   -   Engagement with local authorities on tax matters.   -  Support of reputable external tax consultants with proven expertise in each jurisdiction.   -  The Corporate Tax Department (under the CFO supervision) and local teams take ownership of managing this risk.

Risk / Impact	Risk Appetite	Risk Trend	Assessment of Change in Risk Year-on-Year	Mitigation of Risk
			In addition, our NOL carryforwards and certain recognised built-in losses may be limited by Section 382 of the IRC if we experience an “ownership change.” In general, an “ownership change” occurs if 5% shareholders of our stock increase their collective ownership of the aggregate amount of the outstanding shares of our company by more than 50 percentage points, generally over a three-year testing period. In addition, the IRS has issued proposed regulations concerning the calculation of built-in gains and losses under Section 382 which, if finalised, may significantly limit our annual use of pre-ownership change U.S. NOLs in the event that a new ownership change occurs after the new rule is in place.     In 2022, the government of South Africa approved tax limitations on deductions for tax years ending on or after March 31, 2023. The net interest expense has been limited to 30% of the EBITDA and any NOLs carried forward may only be applied to offset 80% of a corporation’s taxable income. These new limitations may have a negative impact on our cash flows.
Cybersecurity risk   We are dependent upon information technology systems to run our operations. Our information technology systems are subject to disruption, damage or failure from a variety of sources, including, without limitation, computer viruses, security breaches, cyber-attacks, ransomware attacks, malicious or destructive code, phishing attacks, natural disasters, design defects, denial-of-service attacks or information or fraud or other security breaches.	Low		The number of cyber-attacks to companies has been increasing in the last few years. Many of these attacks have focused on critical infrastructure.	-  We have implemented prevention, monitoring and threat-detection measures following international standards including ISO 27000.   -   Internal and external audits to ensure that our cybersecurity controls are effective, including simulated and targeted cyberattacks to our servers and employees accounts.   -   Employees training to detect, monitor and prevent threats.

Financial Risk Management 

We refer to Note 3 to the Consolidated Financial Statements for more detail on Financial Risk Management.

Materiality Analysis

Stakeholder Inclusiveness

Our stakeholders have a broad range of interests and viewpoints. We believe that collaboration with them is key to our success. As such, we listen and do our best to gain stakeholders’ trust, thus leading to a more stable and long-term relationships. Across the Company, we engage with our stakeholders to obtain input that can be helpful as we execute on our strategy.

We believe that systematic stakeholder engagement, executed properly, is likely to result in ongoing learning within the Company, as well as increased accountability to a wide range of stakeholders.

Atlantica has a Stakeholder Policy in-place to emphasise the importance of collaboration with our shareholders, employees, suppliers, customers, business partners, local communities, and debt investors to generate a stable and predictable business environment.

We have made a two-way engagement channel available for our stakeholders to build trusting long-term relationships:

(1) Regular or on an as-needed basis; (2) On an annual basis; (3) Always available; (4) At least every three years.

ESG Materiality Assessment

Our materiality assessment is based on international sustainability standards GRI and SASB, and ESG rating entity assessments.

We have performed a double materiality assessment where we have identified the most important impacts on society (i.e., impacts on the economy, the environment and people) and the most important impacts on the Company.

This analysis enables us to identify potential risks and opportunities, focus on key ESG priorities that may materially impact our stakeholders and our businesses, on how we can best mitigate these impacts, and to respond adequately in a dynamic and rapidly changing sustainability landscape.

The materiality assessment process consists of five steps, as shown in the table below:

Step 1: In previous years we gained input from 50 internal and external stakeholders, these inputs helped us to identify the most significant impacts that Atlantica had on society. Considering that we engage with our stakeholders on a continuous basis, we believe to have an up-to-date understanding of themes that our stakeholders consider material. To assess significant impacts on our business, we have considered the company’s strategy, risk reports, taxonomy and policies.

We identified 4 main categories: Climate Change, Occupational Health and Safety, Human Rights, Ethics and Integrity and Environmental Impacts.

Steps 2 - 5: Prioritise topics based on their impact on society and on our business, set a response and an implementation plan and disclose ESG related information:

We have identified 10 material topics based on the significant impacts on our society and our business: 

Note: Atlantica’s Management considers all topics disclosed in the Materiality Matrix when planning and executing business activities, independently to their impact as shown in the Matrix.

Significant changes compared to previous year:

Note 1: Corporate Governance and ESG-related documents and policies are available on our website.

Note 2: Material topics are addressed in the Global Reporting Initiative (GRI) Content index and Sustainability Accounting Standards Board (SASB) Index (“Other Information” Section).

Atlantica’s management determined while reviewing 2023’s materiality assessment process, and after analysing international best practices, ESG rating assessments, and peer frameworks, that in addition to these topics, it was important to address the Company’s approach to innovation and tax management.

In 2024, we will look into how we can further strengthen our double materiality assessment.

Environment Sustainability

Task Force on Climate-Related Financial Disclosures (TCFD)

We have reported climate-related financial disclosures consistent with Listing Rule 9.8.6R(8) and the 2017 Annex to the TCFD Recommendations and Recommended Disclosures. We have reported climate-related financial disclosures largely consistent with the recommendations of TCFD Guidance 2021 on climate-related financial disclosures. We will continue working towards improving these disclosures acknowledging this is an evolving area.

This section is structured using the four TCFD pillars: Governance, Strategy, Risk Management, and Metrics and Targets.

The analysis has been prepared based on the TCFD guidance, advice of expert third-party consultants, and internal expertise.

1 We apply a carbon price when we evaluate investments in natural gas assets with long-term useful life. The economic impact is evaluated as an additional cost. In 2023 and 2022, we did not evaluate investments in natural gas assets. In 2021, when the carbon pricing cost was factored in the investment opportunity model of a gas plant in North America, the Investment Committee decided that the potential investment was not reaching the minimum returns required for the specific sector and geography and rejected any potential investment.

We refer to the subsections Business Ethics and Sustainability Governance within the Governance section for a description of the role of the Board of Directors and Management in terms of climate-change.

We refer to the Directors’ Report for details on the Board of Directors’ profiles.

We have screened for potential climate-related risks and opportunities and conducted a climate-related scenario analysis to analyse Atlantica’s 2030 and 2050 key risk and opportunity impacts.

The risks were identified following a two-step process. In the first place, an initial screening was carried out to determine which physical and transition risks are most likely to affect all our businesses and geographies. Once the initial screening was completed, company-specific data (e.g., historical records of past events, input from internal stakeholders) was taken into account to determine the key risks most likely to affect Atlantica as well as their potential impact on our activities.

We refer to the ESG Materiality Analysis for details on our materiality assessment.

Due to the nature of climate risks and opportunities we are monitoring them across a number of time horizons. Short term (1-2 years), medium-term (3 to 10 years) and long-term (over 11 years) horizons. We have updated this climate-related classification based on our long-term decarbonisation strategy and SBTIs updated guidance. As of December 31, 2023, Atlantica’s portfolio of assets have 13 years of weighted average contract life remaining2. We expect to progressively repower our assets, hybridize them with other technologies, include storage in certain cases and replace our existing fleet with newer renewable and storage assets. In any case, long term risks and opportunities have a very low impact on our current portfolio of assets.

Physical Risks: Methodology and Key Findings

The physical risk analysis covered fourteen regions and eight different climate hazards. The selection took into consideration Atlantica’s key technologies, countries and assets, past events that affected Atlantica’s or other peers’ operations, and climate scenarios that project how the intensity or frequency of certain climate hazards might change as a result of global warming.

Summary of Potential Impacts of Physical Climate Risks3

2 Calculated as weighted average years remaining as of December 31, 2023 based on CAFD estimates for the 2024-2027 period, including assets that have reached COD before March 1, 2024.

3 From a climate-related perspective, potential physical climate risks include short-term (1-2 years), medium-term (3 to 10 years) and long-term (over 11 years) horizons. We have updated this climate-related classification based on our long-term decarbonisation strategy and SBTIs updated guidance.

Assessment of the current and short-term exposure to potential impacts of physical climate risks:

We believe that physical climate risks are adequately managed based on our policies, procedures, processes and systems in-place.

Assessment of the medium and long-term exposure to potential impacts of physical climate risks through scenario analysis

We evaluated the potential changes in the selected risks as projected by the Representative Concentration Pathway (RCP) 8.5, a business-as-usual scenario. This scenario assumes that GHG emissions will continue rising at today’s rate until the end of the century, with little mitigation efforts. By the end of the century, the RCP 8.5 scenario projects a rise of approximately 4ºC in global mean temperature by 2100, compared to pre-industrial levels.

Under the RCP 8.5 scenario, chronic and acute physical risks become greater and more frequent as a result of the increase in the average global temperature.

The analysis carried out focused on the Company’s specific locations. Furthermore, scientific literature such as the (i) NASA Centre for Climate Simulations (NCCS), and (ii) Aqueduct Floods Hazard Maps and Aqueduct Global Maps 3.0 from the World Resources Institute (WRI) that included projections from different climate models were consulted to further analyse future climate conditions in the medium (2030) and long term (2050).

A qualitative rating was assigned, ranging from low to high, which reflects the future changes in the frequency and/or severity of the hazard from baseline conditions under the RCP 8.5 scenario.

Potential Changes in Frequency and Severity of the Hazard from Baseline Conditions under RCP 8.5 

We have completed a detailed analysis of four physical risks which have been selected based on (i) potential change in 2030 and 2050 with respect to baseline conditions, (ii) risk exposure at asset level, and (iii) Atlantica’s management assessment. The identified physical climate risks impacts were:

Potential Physical Climate Risks Impacts 

Notes:

Based on the work completed (i.e., including historical records of past events, input from different stakeholders and RCP 8.5 scenario analysis where chronic and acute physical risks become greater and more frequent as a result of the increase in the average global temperature), the potential impact of physical climate-related risks on our short, medium and long-term assets’ financial performance (i.e., revenues, costs) and financial position (i.e., asset, liabilities) is expected to be immaterial4. From a physical risk perspective, the results of the work completed indicate that Atlantica’s short, medium and long-term strategy and asset portfolio would be resilient to physical climate-related changes.

4 We categorize risks depending on their potential impact on (1) CAFD pre-corporate debt service and asset value (equity value) of the company and (2) health and safety and environment. Additional disclosure on risk impacts is provided in Atlantica’s 2022 CDP’s Climate Change questionnaire (section C2 Risks and Opportunities) available on our website. 

Transition Risks and Opportunities: Methodology and Key Findings

Transition Climate Risks Description and Mitigation

Note: all these transition-related risks and their mitigation plans apply to the Company in the short, medium and long-term. We refer to Atlantica’s 2023 CDP’s Climate Change questionnaire (section C2) for additional details on transition-related risks.

The transition risks prioritised for this analysis relate to policy, technology and market developments. The analysis considered two of the scenarios provided in the World Energy Outlooks (WEO) 2021 report prepared by the International Energy Agency (IEA).

As global decarbonisation ambitions increase, the physical impacts of climate change decrease, but transition risk increases as more aggressive and disruptive policies are required to achieve the necessary global warming temperature goal.

Based on the work completed (i.e., including historical records, input from different stakeholders and existing risk mitigation plans), the potential impact of transition-related risks on our short, medium and long-term assets’ financial performance (i.e., revenues, costs) and financial position (i.e., asset, liabilities) is expected to be immaterial, hence we have not analysed transition-related risks under SDS and STEPS scenarios.

Opportunities

We have focused on two opportunities for our medium and long-term scenario analysis:

Note: We refer to “Our Sustainable Business Model and Strategy” for additional disclosures on our: (i) short-term opportunities (“growth visibility” section), (ii) growth pipeline of assets under development pipeline and (iii) competitive strengths to execute our business strategies.

A qualitative rating was assigned, ranging from low to high, which reflects the potential future changes in (i) demand for low-carbon products, and (ii) government supporting schemes under STEPS and SDS scenarios. 

Potential Opportunities by Geography under STEPS and SDS Scenarios in the
Medium (2030) and Long-Term (2050)

From a transition perspective, the combination of market trends, including the growing demand for clean energy supported by expanding GHG reduction targets, and the increasingly favourable economics of clean energy, creates many opportunities for our business.

According to Bloomberg New Energy Finance (BNEF), the next three decades will require between $46 trillion and $131 trillion of investment which translates into an annual range of $1.5-$4.4 trillion. BNEF projects an annual investment of $1.2-$3.9 trillion in low-carbon energy sources, including renewables, surpassing the $1 trillion invested in 20225 . Furthermore, clean energy is on track to set new records. Global installation of wind, solar and storage is expected to exceed 680 GW in 2024, up 22% from 2023. Solar is anticipated to lead the way in 2024 with over 500 GW expected to be installed, which will likely make it the largest source of new capacity and new generation worldwide. Onshore wind follows as the second-highest, with close to 100 GW projected to be installed in 2024, followed by storage capacity, of which around 50 GW is expected to be installed6.

In addition, in the U.S. the Inflation Reduction Act was signed into law in 2022 and includes a bundle of measures to incentivise clean energy investment and storage.

We have a majority of our business in renewable energy assets. In addition, we are developing new projects in most of our core geographies. We currently have a pipeline of assets under development of approximately 2.2 GW7 of renewable energy and 6.0 GWh7 of storage. We believe that our diversification by business sector and geography (including the U.S. and the European Union), our know-how in project development and operating expertise in our key markets together with a critical mass of assets in several geographic areas, as well as our access to capital will assist us in benefiting from the expected transition towards a green energy generation mix in our markets.

Based on the work completed (i.e., including historical investments, our competitive strengths, identified growth opportunities and SDS and STEPS scenario analysis), Atlantica’s short, medium and long-term strategy would be resilient and would be well positioned to take advantage of transition-related opportunities.

We refer to “Our Sustainable Business Model and Strategy” section for further details on our growth plans.

We refer to Atlantica’s 2023 CDP’s Climate Change questionnaire (section C2) for additional details on transition climate-related opportunities.

5 BNEF Theme: Energy Investment and Climate Scenarios

6 Where Energy Markets and Climate Policy Are Headed in 2024: BNEF

7 Only includes projects estimated to be ready to build before or in 2030 of approximately 3.7 GW, 2.2 GW of renewable energy and 1.5 GW of storage (equivalent to 6.0 GWh). Capacity measured by multiplying the size of each project by Atlantica’s ownership. Potential expansions of transmission lines not included. 

We refer to the “Reporting under the European Union Taxonomy” section for further details on clean revenues, Adjusted EBITDA, and capital allocation and capital expenditures (investments and maintenance capex).

Atlantica’s Board of Directors is responsible for supervising climate change risk analysis. Day-to-day risk management activities are led by the Head of Risk Management8. Climate change risks and opportunities are also discussed, whenever considered, in the ESG Committee and in the Geographic Committees. In addition, when we evaluate potential investments, the Investment Committee evaluates all potential risks related to the potential investment, including ESG and climate-related risks. Atlantica has developed a risk analysis methodology based on ISO 31000 and on standard market practices.

We refer to the “Principal Risks and Uncertainties” section for a detailed description of our risks, including how our risks are assessed and prioritised (i.e., based on their likelihood and magnitude of the impact).

We refer to the “Sustainability Governance” section for further details on processes and committees for identifying, assessing and managing ESG and climate-related risks.

We use a number of key metrics and targets to assess and manage climate risks and opportunities

We refer to the Annual Integrated Report and Atlantica’s 2023 CDP’s Climate Change questionnaire, sections C2 and C3, for additional metrics on climate-related risks and opportunities, and on our climate strategy, respectively.

8   The Head of Risk Management participated in the screening for potential climate-related risks and opportunities and in the climate-related scenario analysis to analyse Atlantica’s 2030 and 2050 key risk and opportunity impacts. 

Greenhouse Gas Emissions  

Information on our Reporting

Atlantica complies with the (i) 2008 U.K. Climate Change Act on GHG reporting, (ii) Commission Regulation (EU) No 601/2012, (iii) ISO 14064-1:2018 Greenhouse gases, Part 1, on quantification and reporting of GHG emissions and removals, and (iv) GHG Protocol on GHG quantification.

In 2023 we have followed the financial control approach to calculate our GHG emissions. 2022 and 2021 GHG emissions have been revised following the new approach. Under the financial control approach, a company accounts for 100% of the GHG emissions from operations over which it has financial control. Emissions from joint ventures where partners have joint financial control are accounted for based on the equity share approach. We are accounting for proportional Scope 1 and Scope 2 emissions of equity investments in Scope 3, category 15 (Investments).

We quantified and reported on the GHG emissions figures following the GHG Protocol:

Our reported emissions include emissions of carbon dioxide (CO2), methane (CH4), and nitrous oxide (N2O) as CO2 equivalents9. CH4 and N2O emissions represent 0.53% and 0.04%, respectively, of our total Scope 1 GHG emissions.

We calculated Scopes 1 and 2 emissions using the GHG inventories conversion factors indicated by the organisations listed below:

9 Some of our transmission lines use sulfur hexafluoride (SF6). We analysed this KPI following our internal process and procedures and concluded that the SF6-related GHG emissions are not significant. 

As previously explained, independent third parties have been engaged to verify our reported Scope 1, 2 and 3 GHG emissions under a reasonable level of assurance.

% of Reviewed GHG Emissions in 2023, 2022 and 2021

Highlights

As of December 31, 2023, and 2022, approximately 89% of our Adjusted EBITDA comes from low carbon footprint assets (renewable energy, transmission lines and water assets) complying with our goal of having over 85% of our Adjusted EBITDA generated from low carbon footprint assets. The remaining 11% of our Adjusted EBITDA refers to ACT and Monterrey, two efficient natural gas-fired power generation assets in Mexico, and one district heating plant in Canada. Our partner in Monterrey initiated a process to sell its 70% stake in the asset. Such process is well advanced and, as part of it, we intend to sell our interest as well under the same terms.

ACT is located in a natural gas complex belonging to our client. Our plant does not purchase or pay for the natural gas, it is just one more step in our client’s production process (i.e., ACT receives natural gas and water from its client under a tolling Agreement and in exchange provides electricity and steam). The client bears the cost and also all the responsibility for environmental obligations. Nevertheless, following reporting best practices we are consolidating all ACT’s environmental indicators, including GHG emissions, water and waste.

ACT has an “efficient cogeneration facility” status granted by the Mexican energy regulator that is renewed each year. The Mexican regulator categorises facilities that deliver energy above a defined efficiency threshold as “efficient plants”. This status allows ACT to benefit from certain favourable conditions regarding interconnection and transmission.

GHG Emissions Avoided by Power Generation Assets

We base our avoided emissions calculations on the “Greenhouse Gas Equivalencies Calculator” and the Avoided Emissions and Generation Tool (AVERT) U.S. national weighted average CO2 marginal emission rate, to convert reductions of kilowatt-hours into avoided units of CO2 emissions. We consider electric and steam generation in the calculation.

In 2023, the GHG emissions avoided increased compared to 2022 largely due to the increase in production at our solar assets in Spain where solar radiation was higher in 2023 compared to 2022 with good performance of the assets.

Emissions Reduction Targets

This objective is particularly ambitious for a company like Atlantica, where approximately 74% of our 2023 revenues consists of renewable energy production, an activity which already has a very low rate of emissions per unit of energy produced. In 2023, Atlantica’s Scope 1 and 2 GHG emissions rate per unit of energy generated decreased compared to 2022 demonstrating our commitment to achieve our target.

Scope 1 and 2 GHG Emissions rate per unit of energy generated

Source: In-house

Scope 3 GHG Emissions rate per unit of energy generated

Source: In-house

Scopes 1, 2 and 3 absolute emissions

In 2023, approximately 70% of the Scopes 1 and 3 GHG emissions generated came from our efficient natural gas plant in Mexico and 80% of the Scope 2 GHG emissions generated came from our water assets.

Scope 1, 2 and 3 GHG Emissions by Technology

Note: 2022 was the first full year we consolidated COSO, our geothermal asset in the U.S.

Following U.K. GHG regulation disclosure, GHG emissions generated in the U.K. were less than 0.001% in both 2023 and 2022.

In 2023, as part of our commitment to sustainability, we offset 380 thousand tonnes of Scope 1 CO2 emissions through Certified Emissions Reduction (CERs) credits, compared to 320 thousand tonnes of Scope 1 CO2 offset emissions in 2022.

GHG Emissions Breakdown by Scope Including Offset GHG Emissions

Note: Scope 2 market-based figure

The GHG emissions offsetting mechanism reduced our total GHG emissions by 13% and our Scope 1 GHG emissions by 21%, compared to 11% and 17%, respectively, in 2022, and 9% and 14%, respectively, in 2021. We believe this initiative proves our sustainability focus and further demonstrates Atlantica’s commitment to fighting climate change. 

The graph below shows our GHG emissions in 2021, 2022 and 2023 (without offsets):

Scope 1, 2 and 3 GHG emission as of December 31, 2023, 2022 and 2021

Note: Scope 2 market-based figure

In 2023, our Scopes 1 and 3 emissions decreased mainly due to lower availability at our efficient natural gas asset, ACT, due to the scheduled major overhaul performed in the turbines. Natural gas consumption decreased and consequently emissions were lower. Scope 2 emissions remained stable in 2023 compared to 2022.

In 2022, our Scope 1 emissions increased mainly due to Coso, as this asset was fully consolidated for the entire year 2022 while only for 8 months in 2021 (i.e., we closed the acquisition of Coso in April 2021).

Coso is our geothermal asset located in California. The area where our asset is located releases GHG emissions to the atmosphere, mostly in the form of CO2 that already exists and is released progressively in a natural process. With our activity, while we produce electricity, we are accelerating this process of release of already existing CO2. Following the GHG protocol, we record these emissions as part of our Scope 1 emissions even though these emissions were not created by Atlantica.

Scope 3 GHG emissions average for the years ended as of December 31, 2023, 2022 and 2021

We have identified the following Scope 3 categories as relevant for Atlantica:

Other categories: the rest of our Scope 3 emissions, which in total represent 1%, correspond to Upstream transportation and distribution, Waste generated in operations, Business travel, Employee commuting, Upstream leased assets and Downstream transportation and distribution.

Non-Greenhouse Gas Emissions

Atlantica generates (i) nitrogen oxide (NOx), excluding nitrous oxide (N2O) which is computed within the GHG emission calculation, (ii) sulphur dioxide (SO2), and (iii) carbon monoxide (CO). Our efficient natural gas plants in Mexico generate most of these emissions.

NOx, SO2 and CO Emissions as of December 31, 2023, 2022 and 2021

NOx and CO emissions decreased mainly due to lower production at ACT, which resulted in lower emissions.

Our assets do not generate any lead (Pb) or mercury (Hg), and limited amounts of particulate matter (PM), volatile organic compounds (VOC) and hazardous air pollutants (HAP).

Following our long-term commitment to sustainability, in 2022 we set a non-GHG emissions reduction target. We target to reduce our non-GHG emissions10 per kWh of energy generated by 50% by 2035 from a 2020-year base. In 2023, we reduced our NOx, SO2 and CO emissions per kWh of energy generated by 25%, 20% and 27%, respectively, compared to 2020.

10 Non-GHG emissions including nitrogen oxide (NOx), sulfur dioxide (SO2) and carbon monoxide (CO). 

Energy Management

In 2023 and 2022 approximately 97% of fuel consumption was related to ACT, our efficient natural gas asset. In 2023, ACT had lower production, resulting in lower fuel consumption. This is the main reason for the decrease in Atlantica’s energy consumption in 2023 compared to 2022.

Energy Consumption and Generation in 2023, 2022 and 2021

Note: We have revised 2022 and 2021 figures following the new perimeter of consolidation.

Following U.K. energy consumption regulation disclosure, energy consumption in the U.K. was less than 0.001% in both 2023 and 2022.

Reporting our activities under the European Union Taxonomy

The EU taxonomy regulation describes a framework to classify “green” or “sustainable” economic activities. The EU taxonomy regulation creates a clear framework for the concept of sustainability, exactly defining when a company or enterprise is operating sustainably or environmentally friendly. Compared to their competitors, these companies stand out positively and thus should benefit from higher investments. Thereby, the legislation aims to reward and promote environmentally friendly business practices and technologies. The focus lays on the following six environmental objectives:

To be classified as a sustainable economic activity according to the EU taxonomy regulation, a company must not only contribute to at least one environmental objective but also must not violate the remaining ones. For example, an activity aiming to mitigate the climate but at the same time also negatively affecting biodiversity cannot be classified as sustainable. The classification of an economic activity in terms of sustainability is based on the following four criteria, which are based on the previously mentioned environmental objectives:

Reporting is not mandatory for Atlantica, but the company voluntarily discloses Revenue, Adjusted EBITDA and CapEx information from our business activities. All our assets are eligible following the EU Taxonomy principles. Activities related to our renewable energy assets (wind and solar), storage assets and transmission lines, representing 78% of our revenue and 97% of our CapEx, are aligned with the EU Taxonomy objectives.

The following assets do not meet the EU Taxonomy thresholds to be considered as aligned activities:

As described above, 100% of our Revenue, Adjusted EBITDA and CapEx as of December 31, 2023, 2022 and 2021 is eligible following the EU Taxonomy. The table below summarises the amount of U.S. Dollars that are considered Eligible and Aligned to the European Union Taxonomy and the % of aligned activities:

Water Management

Atlantica is committed to using water efficiently in its operations. This covers two main types of water use:

We are also committed to: (i) calculating and monitoring our water usage and promoting rational and sustainable use of water in compliance with our Environmental Policy, (ii) limiting water consumption as much as possible and operating our assets using an amount of water well below legal limits, and (iii) continuing to improve our water management beyond compliance. We aim to reduce the water consumption of our plants over time.

We generally have water permits at our assets that limit total water withdrawals. We operate our assets well below these limits.

Risk Assessment

Atlantica’s risk assessment includes management of water risks. These water-associated risks could be potentially material to many of our generation and water desalination assets. We refer to the TCFD section for additional details on water-related risks.

Our local asset management teams systematically track and monitor water availability as a key KPI. Our internal operations team performs annual audits of our assets aimed at reviewing compliance with our best practices, identifying and mitigating risks, and promoting constant improvement. These audits cover a broad range of areas, including water management.

Regarding regulatory changes, we have local legal teams in each geography who work generally with the support of local external lawyers. Our local internal and external lawyers are in close contact with the regulation and potential regulation changes in each geography. These, together with the asset managers, monitor any potential regulatory change.

We participate in integrated watershed management initiatives in certain key asset locations. For example, in Spain, we (i) participate in the Drainage Commission meetings and in the Watershed Governing Board, (ii) have regular or as-needed meetings with the Hydrographic Confederations to address specific water matters. In addition, we test water samples at reservoirs to verify the quality of the water discharged and to comply with total water withdrawal requirements permitted under the existing regulatory limits.

Water Used in Power Generation Assets

Renewable Energy Assets

Some of our renewable assets use water in their power generation process. These plants use water for cooling condensers during power generation. We withdraw fresh water primarily from rivers and aquifers. The Company holds permits to withdraw water from these sources and adheres to regulations on water quality. The difference between water withdrawn from and returned to its source is our water consumption which occurs because of evaporation.

We measure the water we withdraw and return using the installed water metres on the plants’ pumping equipment. The reported volumes represent the total readings measured by the water metres at all our assets without adjusting for our economic interest in the assets.

The water metres are sealed and are normally subject to audit by the inspector representing the local water authorities. We comply with the requirements and regulations of the applicable local regulatory authorities in the areas in which we operate. We regularly report the results of our water statistics to the local water agencies.

We have implemented initiatives to reduce our water consumption. For example, we have installed an air-dry cooling system, instead of cooling towers, to refrigerate the condensers at one of our plants.

Efficient Natural Gas Plant

ACT is an efficient natural gas cogeneration facility which produces electricity and steam, with a rated capacity of approximately 300 MW and between 550 and 800 metric tonnes per hour of steam.

The water necessary to operate the plant is withdrawn and supplied by our client. The water received is transformed to high pressure steam through heat recovery steam generators and delivered back to the client.

The following charts set out water management KPIs for power generation assets for 2021, 2022 and 2023:

Note: We have revised 2022 and 2021 figures following the new perimeter of consolidation.

Water Consumption per MWh

Water Withdrawal and Discharges in millions of m3

In 2023 we had seven power generation assets located in extremely high or high baseline water stress areas as classified by the World Resources Institute’s (WRI) Aqueduct Water Risk Atlas Tool. Mojave and Coso, our solar and geothermal plants located in California, were also located in high baseline water stress areas in 2022 and 2021. In 2023, following the World Resources Institute’s (WRI) Aqueduct Water Risk Atlas Tool, these assets’ locations were classified as “arid and low water use”, therefore, they are no longer classified as assets located in high or extremely high baseline water stress areas.

Extremely High or High Baseline Water Stress Areas of our Generating Assets

Withdrawal by Water Source in 2023, 2022 and 2021- Power generation assets

All water withdrawals intended for use in power generation are generally strictly regulated by government authorities, which issue the permits and determine the maximum permitted withdrawal volumes.

After use in cooling and other auxiliary processes, approximately 29% of the water withdrawn at our solar facilities is returned. At ACT, the water we receive from our offtaker is transformed into high pressure steam through heat recovery steam generators and delivered back to the client.

Discharge by Water Source in 2023, 2022 and 2021- Power generation assets

The water is treated in accordance with our water permits and then returned to its original source without.

The following table details total water consumption at generating assets, considered as the difference between total water withdrawal and water discharged.

Consumption by Water Source in 2023, 2022 and 2021 - Power generation assets

1 High or extremely high water stress areas according to the 2023 Aqueduct Water Risk Atlas classification.

Water used in Water Desalination

Some parts of the world are suffering from ongoing drought which, combined with a water supply that is unfit for human consumption, can foster disease and death. Water scarcity also affects food production. The desalination of sea water provides a climate-independent source of drinking water.

We withdraw sea water for desalination as specified in the agreements for our investments in our desalination plants.

In 2023, we withdrew 234.8 million cubic metres of sea water, from which we removed salt and minerals during the desalination process at our water treatment facilities to prepare it for human consumption. The difference between water withdrawn from and returned to the sea is the desalinated potable water delivered to the water utility, as specified by our take-or-pay agreements for the consumption needs of approximately 3 million people. In 2023, we produced 102.3 million cubic metres of desalinated water and returned 132.5 million cubic metres (56%) back to the sea.

Extremely High or High Baseline Water Stress1 Areas of our Water Desalination Assets

1 Water stress areas classification according to 2023 Aqueduct Water Risk Atlas.

Water Withdrawal, Desalinated Potable Water Production and Discharges in 2023, 2022 and 2021

Note: We have revised 2022 and 2021 figures following the new perimeter of consolidation.

100% of the water withdrawn in 2023, 2022 and 2021 is seawater that does not affect water stress areas.

Waste Management

The Company’s assets produce two main types of waste, hazardous and non-hazardous. Our processes generate hazardous waste through the use of chemical products. Waste that does not contain substances that are potentially harmful to human health or the environment is defined as non-hazardous waste.

Atlantica is committed to reducing waste and has a comprehensive waste management system with controls in place. In 2023, 95% of the waste generated was non-hazardous. Hazardous waste decreased from to 5% from 8% compared to 2022. We continue analysing and implementing new initiatives to reduce our waste.

% of type of waste as of December 31, 2023, 2022 and 2021

Hazardous Waste

Hazardous Waste Reused, Recycled or Disposed in 2021, 2022 and 2023

Note 1: Diverted from disposal refers to reused or recycled waste, and directed to disposal refers to waste disposed.

Note 2: We have revised 2022 and 2021 figures following the new perimeter of consolidation.

In 2023 we reduced our total hazardous waste by 27% compared to 2022. This reduction was mainly driven by an innovative water treatment system installed at one of our solar assets in Spain. The system uses cutting-edge technology to continuously measure water pollutants. Once a predetermined threshold is reached, it filters the water through activated carbon, separating the contaminated fraction from the water. The remaining water is then treated in accordance with our water permits and returned to its source.

The increase in hazardous waste directed to disposal in 2023 is mainly explained by the removal of the remaining contaminated soil related to an environmental accident that occurred in 2019 at one of our solar assets in Spain. The removal was carried out by a specialised company in accordance with local environmental regulations.

Non-Hazardous Waste

Non-hazardous waste corresponds primarily to the wastewater11 from treatment plants and the reuse of wastewater before discharge. This type of waste does not contain substances that are potentially harmful to human health or the environment. The increase in non-hazardous waste in 2023 is mainly due to higher production at our solar assets in Spain, which resulted in higher wastewater volumes.

Non-Hazardous Waste Reused, Recycled or Disposed in 2021, 2022 and 2023 

Note 1: Diverted from disposal refers to reused or recycled waste, and directed to disposal refers to waste disposed.

Note 2: We have revised 2022 and 2021 figures following the new perimeter of consolidation.

Environmental Compliance

We promote the highest environmental standards and a culture of continuous improvement to minimise our environmental risks. Among others, we: (i) have certified our environmental management system (EMS) under ISO 14001, (ii) regularly monitor environmental KPIs, (iii) perform annual environmental audits on our assets to ensure compliance with our best practices, identifying and mitigating risks, and sharing lessons learnt to promote continuous improvement, (iv) have an ERP-software that enables us to have strict control over our assets, (v) have in-house legal and compliance teams supervising compliance with contractual and existing and/or new regulation requirements, and (vi) provide regular environmental training to our employees and contractors working at our plants.

11 Wastewater treatment is the process of improving the quality of wastewater and converting it into an effluent that can be either returned to the nature or incorporated to the water cycle with minimum environmental issues or that can be reused.

In 2023, we had two instances of non-compliance that were resolved with a non-material sanction ($6 thousand). In 2022, we had one instance of non-compliance that was resolved with a non-material sanction ($800). In 2021, we had one instance of non-compliance that was resolved without sanction and two that were resolved with non-immaterial sanction ($7 thousand).

In 2023, we had 7 moderate accidents related to one paint spill at one of Rioglass factories, four spills at one of our solar plants in the U.S. and two spills at our solar plant in South Africa. All spills were managed as hazardous waste by certified third parties and are included in our waste KPIs.

We consider all environmental fines and penalties over the period 2021-2023 to be non-material.

Biodiversity

The protection of the ecosystem is a critical issue for global sustainability; we intend to promote its conservation as an essential means for environmental, economic and social progress.

We are aware that our assets interact with various ecosystems, landscapes and species. The Company therefore commits to promoting biodiversity, allowing balanced co-existence, and conserving, protecting and promoting the natural ecosystem.

Atlantica’s strategy for biodiversity conservation aligns with the Kunming-Montreal global biodiversity framework, embracing the mission of taking urgent action to halt and reverse biodiversity loss by 2030.

In particular12, we are committed to:

In addition, we also have various tools to help manage our biodiversity matters: