ATLANTICA SUSTAINABLE INFRASTRUCTURE PLC

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CURRENCY PRESENTATION AND DEFINITIONS		7
PRESENTATION OF FINANCIAL INFORMATION		11
PRESENTATION OF INDUSTRY AND MARKET DATA		13
ITEM 1.	IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS	13
ITEM 2.	OFFER STATISTICS AND EXPECTED TIMETABLE	13
ITEM 3.	KEY INFORMATION	13
A	RESERVED	13
B.	Capitalization and Indebtedness	13
C.	Reasons for the Offer and Use of Proceeds	14
D.	Risk Factors	14
ITEM 4.	INFORMATION ON THE COMPANY	50
A.	History and Development of the Company	50
B.	Business Overview	50
C.	Organizational Structure	97
D.	Property, Plant and Equipment	99
ITEM 4A.	UNRESOLVED STAFF COMMENTS	99
ITEM 5.	OPERATING AND FINANCIAL REVIEW AND PROSPECTS	100
A.	Operating Results	100
B.	Liquidity and Capital Resources	119
C.	Research and Development	127
D.	Trend Information	127
E.	Critical Accounting Estimates	127
ITEM 6.	DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES	136
A.	Directors and Senior Management	136
B.	Compensation	141
C.	Board Practices	157
D.	Employees	159
E.	Share Ownership	159
F.	Disclosure of a Registrant’s Action to Recover Erroneously Awarded Compensation	160
ITEM 7.	MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS	160
A.	Major Shareholders	160
B.	Related Party Transactions	161
C.	Interests of Experts and Counsel	164
ITEM 8.	FINANCIAL INFORMATION	164
A.	Consolidated Statements and Other Financial Information.	164
B.	Significant Changes	167
ITEM 9.	THE OFFER AND LISTING	167
A.	Offering and Listing Details.	167
B.	Plan of Distribution	167
C.	Markets	167
D.	Selling Shareholders	167
E.	Dilution	167
F.	Expenses of the Issue	167
ITEM 10.	ADDITIONAL INFORMATION	167
A.	Share Capital	167
B.	Memorandum and Articles of Association	168
C.	Material Contracts	168
D.	Exchange Controls	168
E.	Taxation	168
F.	Dividends and Paying Agents	174

G.	Statement by Experts	174
H.	Documents on Display	174
I.	Subsidiaries Information	174
ITEM 11.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	174
ITEM 12.	DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES	178
A.	Debt Securities	178
B.	Warrants and Rights	178
C.	Other Securities	178
D.	American Depositary Shares	178
ITEM 13.	DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES	179
ITEM 14.	MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS	179
ITEM 15.	CONTROLS AND PROCEDURES	179
ITEM 16.	RESERVED	180
ITEM 16A.	AUDIT COMMITTEE FINANCIAL EXPERT	180
ITEM 16B.	CODE OF ETHICS	180
ITEM 16C.	PRINCIPAL ACCOUNTANT FEES AND SERVICES	180
ITEM 16D.	EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES	182
ITEM 16E.	PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS	183
ITEM 16F.	CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT	183
ITEM 16G.	CORPORATE GOVERNANCE	183
ITEM 16H.	MINE SAFETY DISCLOSURE	183
ITEM 16I.	DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS	183
ITEM 17.	FINANCIAL STATEMENTS	184
ITEM 18.	FINANCIAL STATEMENTS	184
ITEM 19.	EXHIBITS	184

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CAUTIONARY STATEMENTS REGARDING FORWARD-LOOKING STATEMENTS

This annual report includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Any statements that express, or involve discussions as to, expectations, beliefs, plans, objectives, assumptions, strategies, future events or performance (often, but not always, through the use of words or phrases such as may result, are expected to, will continue, is anticipated, likely to, believe, will, could, should, would, estimated, may, plan, potential, future, projection, goals, target, outlook, predict, aim and intend or words of similar meaning) are not statements of historical facts and may be forward looking. Such statements occur throughout this annual report and include statements with respect to our expected trends and outlook, potential market and currency fluctuations, occurrence and effects of certain trigger and conversion events, our capital requirements, changes in market price of our shares, future regulatory requirements, the ability to identify and/or make future investments and acquisitions on favorable terms, ability to capture growth opportunities, reputational risks, divergence of interests between our company and that of our largest shareholder, tax and insurance implications, and more. Forward-looking statements involve estimates, assumptions and uncertainties. Accordingly, any such statements are qualified in their entirety by reference to, and are accompanied by, important factors included in Part I, of “Item 3.D. Risk Factors” (in addition to any assumptions and other factors referred to specifically in connection with such forward-looking statements) that could have a significant impact on our operations and financial results, and could cause our actual results, performance or achievements, to differ materially from the future results, performance or achievements expressed or implied in forward-looking statements made by us or on our behalf in this annual report, in presentations, on our website, in response to questions or otherwise. These forward-looking statements include, but are not limited to, statements relating to:

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The condition of, and changes in, the debt and equity capital markets and other traditional liquidity sources and our ability to borrow additional funds, refinance existing debt and access capital markets, as well as our substantial indebtedness and the possibility that we may incur additional indebtedness going forward;

•	the ability of our counterparties, including Pemex, to satisfy their financial commitments or business obligations and our ability to seek new counterparties in a competitive market;

•	government regulation, including compliance with regulatory and permit requirements and changes in market rules, rates, tariffs, environmental laws and policies affecting renewable energy, including the IRA and recent changes in regulation defining the remuneration of our solar assets in Spain;

•	potential regulatory changes in Spain in relation to the proposed remuneration parameters for the year 2023 to be applicable to our solar assets in Spain published on December 28, 2022 in draft form and which are subject to final publication;

•	changes in tax laws and regulations, including new taxes recently announced in Italy, Spain and the U.K.;

•	risks relating to our activities in areas subject to economic, social and political uncertainties;

•	global recession risks, volatility in the financial markets, a persistent inflationary environment, increases in interest rates and supply chain issues, and the related increases in prices of materials, labor, services and other costs and expenses required to operate our business;

•	risks related to our ability to capture growth opportunities, develop, build and complete projects in time and within budget, including construction risks and risks associated with the arrangements with our joint venture partners;

•	our ability to grow organically and inorganically, which depends on our ability to identify attractive development opportunities, attractive potential acquisitions, finance such opportunities and make new investments and acquisitions on favorable terms;

•	risks relating to new assets and businesses which have a higher risk profile and our ability to transition these successfully;

•	potential environmental liabilities and the cost and conditions of compliance with applicable environmental laws and regulations;

•	risks related to our reliance on third-party contractors or suppliers, including issues with our O&M suppliers and their employees, among others, resulting from disagreements with subcontractors;

•	risks related to disagreements and disputes with our employees, a union and employees represented by a union;

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•	risks related to our ability to maintain appropriate insurance over our assets;

•	risks related to our facilities not performing as expected, unplanned outages, higher than expected operating costs and/ or capital expenditures, including as a result of interruptions or disruptions caused by supply chain issues and trade restrictions;

•	risks related to our exposure in the labor market;

•	risks related to extreme and chronic weather events related to climate change could damage our assets or result in significant liabilities and cause an increase in our operation and maintenance costs;

•	the effects of litigation and other legal proceedings (including bankruptcy) against us our subsidiaries, our assets and our employees;

•	price fluctuations, revocation and termination provisions in our off-take agreements and PPAs;

•	risks related to information technology systems and cyber-attacks could significantly impact our operations and business;

•	our electricity generation, our projections thereof and factors affecting production;

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risks related to our current or previous relationship with Abengoa, our former largest shareholder and currently one of our O&M suppliers, including bankruptcy and reputational risk and particularly the potential impact of Abengoa’s insolvency filing and liquidation process, as well as litigation risk;

•	the termination of certain O&M agreements with Abengoa and performing the O&M services directly and the successful integration of the O&M employees where the services thereunder have been recently replaced and internalized;

•	our guidance targets or expectations with respect to Adjusted EBITDA derived from low-carbon footprint assets;

•	risks related to our relationship with our shareholders, including Algonquin, our major shareholder;

•	the process to explore and evaluate potential strategic alternatives, including the risk that this process may not lead to the approval or completion of any transaction or other strategic change;

•	potential impact of the continuance of the COVID-19 pandemic on our business and our off-takers’, financial condition, results of operations and cash flows;

•	reputational and financial damage caused by our off-takers PG&E, Pemex and Eskom;

•	our plans relating to our financings, including refinancing plans;

•	risks related to Russian military actions in Ukraine and across global geopolitical tensions; and

•	other factors discussed under “Risk Factors”.

Any forward-looking statement speaks only as of the date on which such statement is made, and we undertake no obligation to update any forward-looking statement to reflect events or circumstances, including, but not limited to, unanticipated events, after the date on which such statement is made, unless otherwise required by law. New factors emerge from time to time and it is not possible for management to predict all of these factors, nor can it assess the impact of each of these factors on the business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained or implied in any forward-looking statement.

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CURRENCY PRESENTATION AND DEFINITIONS

In this annual report, all references to “U.S. dollar,” “$” and “USD” are to the lawful currency of the United States, all references to “euro,” “€” or “EUR” are to the single currency of the participating member states of the European and Monetary Union of the Treaty Establishing the European Community, as amended from time to time and all references to “South African rand,” “R” and “ZAR” are to the lawful currency of the Republic of South Africa.

Unless otherwise specified or the context requires otherwise in this annual report:

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references to “2020 Green Private Placement” refer to the €290 million (approximately $310 million) senior secured notes maturing on June 20, 2026 which were issued under a senior secured note purchase agreement entered with a group of institutional investors as purchasers of the notes issued thereunder as further described in “Item 5.B— Operating and Financial Review and Prospects— Liquidity and Capital Resources— Corporate debt agreements —2020 Green Private Placement”;

•	references to “Abengoa” refer to Abengoa, S.A., together with its subsidiaries, unless the context otherwise requires;

•	references to “ACT” refer to the gas-fired cogeneration facility located inside the Nuevo Pemex Gas Processing Facility near the city of Villahermosa in the State of Tabasco, Mexico;

•	references to “Adjusted EBITDA” have the meaning set forth in the Section entitled “Presentation of Financial Information—Non-GAAP Financial Measures” in the section below;

•	references to “Albisu” refer to the 10 MW solar PV plant located in Uruguay;

•	references to “Algonquin” refer to, as the context requires, either Algonquin Power & Utilities Corp., a North American diversified generation, transmission and distribution utility, or Algonquin Power & Utilities Corp. together with its subsidiaries;

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references to “Algonquin ROFO Agreement and Liberty GES ROFO Agreement” refer to the agreements we entered into with Algonquin and with Liberty GES, respectively, on March 5, 2018, under which Algonquin and Liberty GES granted us a right of first offer to purchase any of the assets offered for sale located outside of the United States or Canada as amended from time to time. See “Item 7.B—Related Party Transactions—ROFO Agreements”;

•	references to “Amherst Island Partnership” refer to the holding company of Windlectric Inc;

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references to “Annual Consolidated Financial Statements” refer to the audited annual consolidated financial statements as of December 31, 2022 and 2021 and for the years ended December 31, 2022, 2021 and 2020, including the related notes thereto, prepared in accordance with IFRS as issued by the IASB (as such terms are defined herein), included in this annual report;

•	references to “ASI Operations” refer to ASI Operations LLC;

•	references to “Atlantica” refer to Atlantica Sustainable Infrastructure plc and, where the context requires, Atlantica Sustainable Infrastructure plc together with its consolidated subsidiaries;

•	references to “Atlantica Jersey” refer to Atlantica Sustainable Infrastructure Jersey Limited, a wholly-owned subsidiary of Atlantica;

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references to “ATM Plan Letter Agreement” refer to the agreement by and among the Company and Algonquin dated August 3, 2021, pursuant to which the Company offers Algonquin shall have the right but not the obligation, on a quarterly basis, to purchase a number of ordinary shares to maintain its percentage interest in Atlantica at the average price of the shares sold under the Distribution Agreement in the previous quarter, as adjusted;

•	references to “ATN” refer to ATN S.A., the operational electric transmission asset in Peru, which is part of the Guaranteed Transmission System;

•	references to “ATS” refer to Atlantica Transmision Sur S.A.;

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•	references to “AYES Canada” refer to Atlantica Sustainable Infrastructure Energy Solutions Canada Inc., a vehicle formed by Atlantica and Algonquin to channel co-investment opportunities;

•	references to “Befesa Agua Tenes” refer to Befesa Agua Tenes, S.L.U.;

•	references to “cash available for distribution” or “CAFD” refer to the 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;

•	references to “CAISO” refer to the California Independent System Operator;

•	references to “Calgary District Heating” or “Calgary” refer to the 55 MWt thermal capacity district heating asset in the city of Calgary which we acquired in May 2021;

•	references to “CENACE” refer to Centro Nacional de Control de Energía, the Mexican decentralized public agency, and an Independent System Operator;

•	references to “Chile PV 1” refer to the solar PV plant of 55 MW located in Chile;

•	references to “Chile PV 2” refer to the solar PV plant of 40 MW located in Chile;

•	references to “Chile PV 3” refer to the solar PV plant of 73 MW located in Chile;

•	references to “Chile TL3” refer to the 50-mile transmission line located in Chile;

•	references to “Chile TL4” refer to the 63-mile transmission line located in Chile;

•	references to “CNMC” refer to Comision Nacional de los Mercados y de la Competencia, the Spanish state-owned regulator;

•	references to “COD” refer to the commercial operation date of the applicable facility;

•	references to “Coso” refer to the 135 MW geothermal plant located in California;

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references to the “Distribution Agreement” refer to the agreement entered into with BofA Securities, Inc., MUFG Securities Americas Inc. and RBC Capital Markets LLC, as sales agents, dated February 28, 2022 as amended on May 9, 2022, under which we may offer and sell from time to time up to $150 million of our ordinary shares and pursuant to which such sales agents may sell our ordinary shares by any method permitted by law deemed to be an “at the market offering” as defined by Rule 415(a)(4) promulgated under the U.S. Securities Act of 1933, as amended;

•	references to “DOE” refer to the U.S. Department of Energy;

•	references to “DTC” refer to The Depository Trust Company;

•	references to “EMEA” refer to Europe, Middle East and Africa;

•	references to “EPACT” refer to the Energy Policy Act of 2005;

•	references to “ESG” refer to environmental, social and corporate governance;

•	references to “Eskom” refer to Eskom Holdings SOC Limited, together with its subsidiaries, unless the context otherwise requires;

•	references to “EURIBOR” refer to Euro Interbank Offered Rate, a daily reference rate published by the European Money Markets Institute, based on the average interest rates at which Eurozone banks offer to lend unsecured funds to other banks in the euro wholesale money market;

•	references to “EU” refer to the European Union;

•	references to “Exchange Act” refer to the U.S. Securities Exchange Act of 1934, as amended, or any successor statute, and the rules and regulations promulgated by the SEC thereunder;

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•	references to “Federal Financing Bank” refer to a U.S. government corporation by that name;

•	references to “FERC” refer to the U.S. Federal Energy Regulatory Commission;

•	references to “Fitch” refer to Fitch Ratings Inc.;

•	references to “FPA” refer to the U.S. Federal Power Act;

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references to “Green Exchangeable Notes” refer to the $115 million green exchangeable senior notes due in 2025 issued by Atlantica Jersey on July 17, 2020, and fully and unconditionally guaranteed on a senior, unsecured basis, by Atlantica, as further described in “Item 5.B— Operating and Financial Review and Prospects—Liquidity and Capital Resources— Corporate debt agreements —Green Exchangeable Notes”;

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references to “Green Project Finance” refer to the green project financing agreement entered into between Logrosan, the sub-holding company of Solaben 1 & 6 and Solaben 2 & 3, as borrower, and ING Bank, B.V. and Banco Santander S.A., as lenders, as further described in “Item 5.B— Operating and Financial Review and Prospects—Liquidity and Capital Resources— Corporate debt agreements —Green Project Finance”;

•	references to “Green Senior Notes” refer to the $400 million green senior notes due in 2028, as further described in “Item 5.B—Liquidity and Capital Resources— Corporate debt agreements —Green Senior Notes”;

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references to “gross capacity” refer to the maximum, or rated, power generation capacity, in MW, of a facility or group of facilities, without adjusting for the facility’s power parasitics’ consumption, or by our percentage of ownership interest in such facility as of the date of this annual report;

•	references to “GWh” refer to gigawatt hour;

•	references to “IAS” refer to International Accounting Standards issued by the IASB;

•	references to “IASB” refer to the International Accounting Standards Board;

•	references to “IFRIC 12” refer to International Financial Reporting Interpretations Committee’s Interpretation 12—Service Concessions Arrangements;

•	references to “IFRS as issued by the IASB” refer to International Financial Reporting Standards as issued by the IASB;

•	references to “IRA” refer to the U.S. Inflation Reduction Act;

•	references to “IPO” refer to our initial public offering of ordinary shares in June 2014;

•	references to “Italy PV” refer to the solar PV plants with combined capacity of 9.8 MW located in Italy;

•	references to “ITC” refer to investment tax credits;

•	references to “Kaxu” refer to the 100 MW solar plant located in South Africa;

•	references to “La Sierpe” refer to the 20 MW solar PV plant located in Colombia;

•	references to “La Tolua” refer to the 20 MW solar PV plant located in Colombia;

•	references to “Liberty GES” refer to Liberty Global Energy Solutions B.V., a subsidiary of Algonquin (formerly known as Abengoa-Algonquin Global Energy Solutions B.V. (AAGES)) which invests in the development and construction of contracted clean energy and water infrastructure assets;

•	references to “LIBOR” refer to London Interbank Offered Rate;

•	references to “Logrosan” refer to Logrosan Solar Inversiones, S.A.;

•	references to “Lost time injury rate” refer to the total number of recordable accidents with leave (lost time injury) recorded in the last 12 months per two hundred thousand worked hours;

•	references to “LTIP” refer to the long-term incentive plans approved by the Board of Directors;

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•	references to “MACRS” refer to the Modified Accelerated Cost Recovery System;

•	references to “M ft³” refer to million standard cubic feet;

•	references to “Monterrey” refer to the 142 MW gas-fired engine facility including 130 MW installed capacity and 12 MW battery capacity, located in Monterrey, Mexico;

•	references to “Multinational Investment Guarantee Agency” refer to the Multinational Investment Guarantee Agency, a financial institution member of the World Bank Group which provides political insurance and credit enhancement guarantees;

•	references to “MW” refer to megawatts;

•	references to “MWh” refer to megawatt hour;

•	references to “MWt” refer to thermal megawatts;

•	references to “Moody’s” refer to Moody’s Investor Service Inc.;

•	references to “NEPA” refer to the U.S. National Environment Policy Act;

•	references to “NOL” refer to net operating loss;

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references to “Note Issuance Facility 2019” refer to the senior unsecured note facility dated April 30, 2019, as amended on May 14, 2019, October 23, 2020 and March 30, 2021 for a total amount of €268 million, (approximately $287 million), with Lucid Agency Services Limited, as facility agent and a group of funds managed by Westbourne Capital as purchasers of the notes issued thereunder which was fully repaid on June 4, 2021;

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references to “Note Issuance Facility 2020” refer to the senior unsecured note facility dated July 8, 2020, as amended on March 30, 2021 of €140 million (approximately $150 million), with Lucid Agency Services Limited, as facility agent and a group of funds managed by Westbourne Capital, as purchasers of the notes issued thereunder;

•	references to “O&M” refer to operation and maintenance services provided at our various facilities;

•	references to “operation” refer to the status of projects that have reached COD (as defined above);

•	references to “Pemex” refer to Petróleos Mexicanos;

•	references to “PFIC” refer to passive foreign investment company within the meaning of Section 1297 of the US Inland Revenue Code (the “IRC”);

•	references to “PG&E” refer to PG&E Corporation and its regulated utility subsidiary, Pacific Gas and Electric Company, collectively;

•	references to “PPA” refer to the power purchase agreements through which our power generating assets have contracted to sell energy to various off-takers;

•	references to “PTC” refer to production tax credits;

•	references to “PTS” refer to Pemex Transportation System;

•	references to “PV” refer to photovoltaic power;

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references to “Revolving Credit Facility” refer to the credit and guaranty agreement with a syndicate of banks entered into on May 10, 2018 as amended on January 24, 2019, August 2, 2019, December 17, 2019, August 28, 2020, March 1, 2021 and May 5, 2022 providing for a senior secured revolving credit facility in an aggregate principal amount of $450 million;

•	references to “Rioglass” refer to Rioglass Solar Holding, S.A.;

•	references to “ROFO” refer to a right of first offer;

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•	references to “ROFO Agreements” refer to the Liberty GES ROFO Agreement and Algonquin ROFO Agreement;

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references to “RPS” refer to renewable portfolio standards adopted by 29 U.S. states and the District of Columbia that require a regulated retail electric utility to procure a specific percentage of its total electricity delivered to retail customers in the respective state from eligible renewable generation resources, such as solar or wind generation facilities, by a specific date;

•	references to “RRRE” refer to the Specific Remuneration System Register in Spain;

•	references to “SEC” refer to the U.S. Securities and Exchange Commission;

•	references to the “Shareholders’ Agreement” refer to the agreement by and among Algonquin Power & Utilities Corp., Abengoa-Algonquin Global Energy Solutions and Atlantica, dated March 5, 2018, as amended;

•	references to “Skikda” refer to the seawater desalination plant in Algeria, which is 34% owned by Atlantica;

•	references to “SOFR” refer to Secured Overnight Financing Rate;

•	references to “Solaben Luxembourg” refer to Solaben Luxembourg S.A.;

•	references to “Solnova 1, 3 & 4” refer to three solar plants with capacity of 50 MW each wholly owned by Atlantica, located in the municipality of Sanlucar la Mayor, Spain;

•	references to “S&P” refer to S&P Global Rating;

•	references to “Tenes” refer to Ténès Lilmiyah SpA, a water desalination plant in Algeria, which is 51% owned by Befesa Agua Tenes;

•	references to “Tierra Linda” refer to the 10 MW solar PV plant located in Colombia;

•	references to “U.K.” refer to the United Kingdom;

•	references to “U.S.” or “United States” refer to the United States of America;

•	references to “Vento II” refer to the wind portfolio in the U.S. in which we acquired a 49% interest in June 2021; and

•	references to “we,” “us,” “our,” “Atlantica” and the “Company” refer to Atlantica Sustainable Infrastructure plc and its consolidated subsidiaries, unless the context otherwise requires.

PRESENTATION OF FINANCIAL INFORMATION

The financial information as of December 31, 2022 and 2021 and for the years ended December 31, 2022, 2021 and 2020 is derived from, and qualified in its entirety by reference to, our Annual Consolidated Financial Statements, which are included elsewhere in this annual report and prepared in accordance with IFRS as issued by the IASB.

Certain numerical figures set out in this annual report, have been subject to rounding adjustments, and, as a result, the totals of the data in this annual report may vary slightly from the actual arithmetic totals of such information. Percentages and amounts reflecting changes over time periods relating to financial and other data set forth in “Item 5.A—Operating and Financial Review and Prospects—Operating Results” are calculated using the numerical data in our Annual Consolidated Financial Statements or the tabular presentation of other data (subject to rounding) contained in this annual report, as applicable, and not using the numerical data in the narrative description thereof.

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Non-GAAP Financial Measures

This annual report contains non-GAAP financial measures including Adjusted EBITDA.

Our management believes Adjusted EBITDA is useful to investors and other users of our financial statements in evaluating our operating performance because it provides them with an additional tool to compare business performance across companies and across periods. This measure is widely used by investors to measure a company’s operating performance without regard to items such as interest expense, taxes, depreciation and amortization, 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. This measure is widely used by other companies in our industry.

Our management uses Adjusted EBITDA as a measure of operating performance to assist in comparing performance from period to period and we aim to use it on a consistent basis moving forward and to readily view operating trends, as a measure for planning and forecasting overall expectations and for evaluating actual results against such expectations, and in communications with our Board of Directors, shareholders, creditors, analysts and investors concerning our financial performance.

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 of other companies and have limitations as analytical tools and should not be considered in isolation 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 and should not be considered as alternatives to operating profit or profit for the year or any other performance measures derived in accordance with IFRS as issued by the IASB or 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:

•	they do not reflect our cash expenditures or future requirements for capital expenditures or contractual commitments;

•	they do not reflect changes in, or cash requirements for, our working capital needs;

•	they may not reflect the significant interest expense, or the cash requirements necessary, to service interest or principal payments, on our debts;

•	although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often need to be replaced in the future and Adjusted EBITDA does not reflect any cash requirements that would be required for such replacements;

•	the fact that other companies in our industry may calculate Adjusted EBITDA differently than we do, which limits their usefulness as comparative measures.

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 amortization, 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.

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PRESENTATION OF INDUSTRY AND MARKET DATA

In this annual report, we rely on, and refer to, information regarding our business and the markets in which we operate and compete. The market data and certain economic and industry data and forecasts used in this annual report were obtained from internal surveys, market research, governmental and other publicly available information, independent industry publications and reports prepared by industry consultants. We believe that these industry publications, surveys and forecasts are reliable, but we have not independently verified them, and there can be no assurance as to the accuracy or completeness of the included information.

Certain market information and other statements presented herein regarding our position relative to our competitors are not based on published statistical data or information obtained from independent third parties but reflect our best estimates. We have based these estimates upon information obtained from our customers, trade and business organizations and associations and other contacts in the industries in which we operate.

Elsewhere in this annual report, statements regarding our contracted assets and concessions activities, our position in the industries and geographies in which we operate are based solely on our experience, our internal studies and estimates and our own investigation of market conditions.

All of the information set forth in this annual report relating to the operations, financial results or market share of our competitors has been obtained from information made available to the public in such companies’ publicly available reports and independent research, as well as from our experience, internal studies, estimates and investigation of market conditions. We have not funded, nor are we affiliated with, any of the sources cited in this annual report. We have not independently verified the information and cannot guarantee its accuracy.

All third-party information, as outlined above, has to our knowledge been accurately reproduced and, as far as we are aware and are able to ascertain, no facts have been omitted which would render the reproduced information inaccurate or misleading, but there can be no assurance as to the accuracy or completeness of the included information.

PART I

ITEM 1.

IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

Not applicable.

ITEM 2.

OFFER STATISTICS AND EXPECTED TIMETABLE

Not applicable.

ITEM 3

KEY INFORMATION

A.	[RESERVED]

B.	Capitalization and Indebtedness

Not applicable.

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C.	Reasons for the Offer and Use of Proceeds

Not applicable.

D.	Risk Factors

Investing in our securities involves a high degree of risk. You should carefully consider the risks and uncertainties described below, together with the other information contained in this annual report, including our Annual Consolidated Financial Statements and related notes, included elsewhere in this annual report, before making any investment decision. The risks described below may not be the only risks we face. We have described only those risks that we currently consider to be material and there may be additional risks that we do not currently consider to be material or of which we are not currently aware. Any of the following risks and uncertainties could have a material adverse effect on our business, prospects, results of operations and financial condition. The market price of our securities could decline due to any of these risks and uncertainties, and you could lose all or part of your investment.

Risk Factor Summary

Set forth below is only a summary of the key risks we face. See below under this “Item 3.D—Risk Factors.” for a detailed discussion of the numerous risks and uncertainties to which the Company is subject.

Risks Related to Our Business and Our Assets

•	Our failure to maintain safe work environments may expose us to significant financial losses, as well as civil and criminal liabilities.

•	Counterparties to our off-take agreements may not fulfill their obligations and, as our contracts expire, we may not be able to replace them with agreements on similar terms or at all in light of increasing competition in the markets.

•	The concession agreements or PPAs under which we conduct some of our operations are subject to revocation, termination or tariff reduction.

•	The performance of our assets under our PPAs or concession contracts may be adversely affected by problems including those related to our reliance on third-party contractors and suppliers.

•	Supplier concentration may expose us to significant financial credit or performance risk.

•	Certain of our facilities may not perform as expected.

•	Maintenance, expansion and refurbishment of electric generation and other facilities involve significant risks that could result in unplanned power outages or reduced output or availability.

•	Our business may be adversely affected by an increased number of extreme and chronic weather events including related to climate change.

•

The generation of electric energy from renewable energy sources depends heavily on suitable meteorological conditions, and if solar or wind conditions are unfavorable, or if the geothermal resource is lower than expected, our electricity generation, and therefore revenue from our renewable energy generation facilities using our systems, may be substantially below our expectations.

•	Our insurance may be insufficient to cover relevant risks or the cost of our insurance may increase.

•	The COVID-19 pandemic or any other pandemic could have a material adverse impact on our business, financial condition, liquidity, results of operations, cash flows, cash available for distribution and ability to make cash distributions to our shareholders.

•	We may have joint venture partners or other co-investors with whom we have material disagreements.

•	We depend on our key personnel and our ability to attract and retain skilled personnel. The operation and maintenance of most of our assets is labor intensive, and therefore work stoppages by employees could harm our business.

•	Revenue from some of our renewable energy facilities is or may be partially exposed to market electricity prices.

•	Our information technology and communications systems are subject to cybersecurity risk and other risks.

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Risks Related to Our Relationship with Algonquin and Abengoa

•	Algonquin is our largest shareholder and exercises substantial influence over us.

•	Our ownership structure and certain agreements may create significant conflicts of interest that may be resolved in a manner that is not in our best interests.

•	Abengoa’s financial condition including the insolvency filing by Abengoa S.A. could affect its ability to satisfy its obligations with us under different agreements, such as operation and maintenance agreements as well as indemnities and other contracts in place and may affect our reputation.

•	Legal proceedings involving Abengoa and its current and previous insolvency processes and events and circumstances that led to them could affect us.

•	By virtue of initiating a bankruptcy filing under the Spanish Insolvency Act, Abengoa may be subject to insolvency claw-back actions in which transactions may be set aside.

Risks Related to Our Indebtedness

•

Our indebtedness could limit our ability to react to changes in the economy or our industry, expose us to the risk of increased interest rates and limit our activities due to covenants in existing financing agreements. It could also adversely affect the ability of our project subsidiaries to make distributions to Atlantica, our ability to fund our operations, pay dividends or raise additional capital.

•	We may not be able to arrange the required or desired financing for investments and acquisitions and for the successful refinancing of the Company’s project level and corporate level indebtedness.

•	Potential future defaults by our subsidiaries, our off-takers, our suppliers or other persons could adversely affect us.

Risks Related to Our Growth Strategy

•	We may not be able to identify or consummate future investments and acquisitions on favorable terms, or at all.

•	Our ability to develop renewable projects is subject to construction risks and risks associated with the arrangements with our joint venture partners.

•	In order to grow our business, we may invest in or acquire assets or businesses which have a higher risk profile or are less ESG-friendly than certain assets in our current portfolio.

•	We cannot guarantee the success of our recent and future investments.

•	Our cash dividend policy may limit our ability to grow and make investments through cash on hand.

•	The process to explore and evaluate potential strategic alternatives may not be succesful.

Risks Related to the Markets in Which We Operate

•	We have international operations and investments, including in emerging markets that could be subject to economic, social and political uncertainties.

Risks Related to Regulation

•	We are subject to extensive governmental regulation in a number of different jurisdictions, including stringent environmental regulation.

•	Revenues in our solar assets in Spain are subject to review periodically.

Risks Related to Ownership of Our Shares

•	We may not be able to pay a specific or increasing level of cash dividends to holders of our shares in the future.

•	Future dispositions of our shares by substantial shareholders or the perception thereof may cause the price of our shares to fall.

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Risks Related to Taxation

•	Changes in our tax position can significantly affect our reported earnings and cash flows.

•	Our future tax liability may be greater than expected if we do not use sufficient NOLs to offset our taxable income.

•	Our ability to use U.S. NOLs to offset future income may be limited.

I.	Risks Related to Our Business and Our Assets

Our failure to maintain safe work environments may expose us to significant financial losses, as well as civil and criminal liabilities.

The ownership, construction and operation of our assets often put our employees and others, including those of our subcontractors, in close proximity with large pieces of mechanized equipment, moving vehicles, manufacturing or industrial processes, electrical equipment, batteries, heat or liquids stored under pressure or at high temperatures and highly regulated materials. On most projects and at most facilities, we, together in some cases with the operation and maintenance supplier, are responsible for safety. Accordingly, we must implement safe practices and safety procedures, which are also applicable to on-site subcontractors. If we or the operation and maintenance supplier or the EPC contractor fail to design and implement such practices and procedures, or if the practices and procedures are ineffective, or if our operation and maintenance service providers or the contractors in charge of the construction of our assets or other suppliers do not follow them, our employees and others may become injured. In addition, the construction and operation of our facilities can involve the handling of hazardous and other highly regulated materials, which, if improperly handled or disposed of, could subject us or our suppliers to civil and criminal liabilities. Unsafe work sites also have the potential to increase employee turnover, increase the cost of a project or the operation of a facility, and raise our operating costs. Although we maintain teams whose primary purpose is to ensure we implement effective health, safety and environmental work procedures throughout our organization, the failure to comply with such regulations could subject us to reputational damage and/or liability. In addition, we may incur liability based on complaints of illness or disease resulting from exposure of employees or other persons to hazardous materials or equipment that we handle or are present in our workplaces. Any of the foregoing could result in civil, criminal or other liabilities, reputational damage and/or financial losses, which could have a material adverse effect on our business, financial condition, results of operations and cash flows.

Counterparties to our off-take agreements may not fulfill their obligations and, as our contracts expire, we may not be able to replace them with agreements on similar terms or at all in light of increasing competition in the markets in which we operate.

A significant portion of the electric power we generate, the transmission capacity we have, and our desalination capacity is 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 14¹years as of December 31, 2022.

If, for any reason, including, but not limited to, a deterioration in their financial situation or bankruptcy, any of our clients are unable or unwilling to fulfill their related contractual obligations or if they refuse to accept delivery of power delivered thereunder or if they otherwise terminate such agreements prior to the expiration thereof, or if prices were re-negotiated under a bankruptcy situation or a contract default situation, or if they delayed payments, our business, financial condition, results of operations and cash flow may be materially adversely affected. Furthermore, to the extent any of our power, transmission capacity or desalination capacity purchasers are, or are controlled by, governmental entities, our facilities may be subject to sovereign risk or legislative or other political action that may hamper their contractual performance.

¹ Calculated as weighted average years remaining as of December 31, 2022 based on CAFD estimates for the 2023-2026 period, including assets that have reached COD before March 1, 2023.

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The credit rating of Eskom is currently CCC+ from S&P, Caa1 from Moody’s and BB- from Fitch. Eskom which is the off-taker of our Kaxu solar plant, is a state-owned, limited liability company, wholly owned by the Republic of South Africa. Eskom’s payment guarantees to our Kaxu solar plant are underwritten by the South African Department of Mineral Resources and Energy, under the terms of an implementation agreement. The credit ratings of the Republic of South Africa have also weakened and as of the date of this annual report are BB-/Ba2/BB- by S&P, Moody’s and Fitch, respectively.

In addition, Pemex’s credit rating is currently BBB, B1 and BB- from S&P, Moody’s and Fitch, respectively. We have experienced delays in collections in the past, especially since the second half of 2019, which have been significant in certain quarters. As of December 31, 2022 these delays were shorter than in previous quarters.

The cost of renewable energy has considerably decreased since most of our plants were built and renewable energy has become a consistently competitive source of power generation compared to traditional fossil fuels in many regions, and it is expected to continue falling in the future. Our competitors may be able to operate at lower costs, which may adversely affect our ability to compete for off-take agreement renewals. Our off-takers may try to renegotiate or terminate our PPAs, most of which were signed several years ago and may be more expensive than recent PPAs or current market prices. We may not be able to replace an expiring or terminated agreement with an agreement on equivalent terms and conditions, including at prices that permit operation of the related facility on a profitable basis.

Our inability to enter into new or replacement off-take agreements or to compete successfully against current and future competitors may have a material adverse effect on our business, financial condition, results of operations and cash flows.

The concession agreements or power purchase agreements under which we conduct some of our operations are subject to revocation, termination or tariff reduction.

Certain of our operations are conducted pursuant to contracts and concessions granted by various governmental bodies and others are pursuant to PPAs signed with governmental entities and private clients. Generally, these contracts and concessions give us rights to provide services for a limited period, subject to various governmental regulations. The governmental bodies or private clients responsible for regulating and monitoring these services often have broad powers to monitor our compliance with the applicable concession and PPAs and can require us to supply them with technical, administrative and financial information. Among other obligations, we may be required to comply with operating targets and efficiency and safety standards established in the respective concession. Such commitments and standards may be amended in certain cases by the governmental bodies. Our failure to comply with the concession agreements and PPAs or other regulatory requirements may result in contracts and concessions being revoked, not being granted, upheld or renewed in our favor, or, if granted, upheld or renewed, may not be done on as favorable terms as currently applicable. In addition, in some cases our off-takers have an option to acquire the asset or to terminate the concession agreement in exchange for a compensation. All the above could have a material adverse effect on our business, financial condition, results of operations and cash flows.

In addition, in some cases, if we fail to comply with certain pre-established conditions, the government or customer (as applicable) may reduce the tariffs or rates payable to us. Also, during the life of a PPA or a concession, the relevant government authority may in some cases unilaterally impose additional restrictions on our tariff rates, subject to the regulatory frameworks applicable in each jurisdiction. Furthermore, changes in laws and regulations may, in certain cases, have retroactive effect and expose us to additional compliance costs or undermine our existing financial and business planning.

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The performance of our assets under our power purchase agreements or concession contracts may be adversely affected by problems including those related to our reliance on third-party contractors and suppliers.

Our projects rely on the supply of services, equipment, including technologically complex equipment and software which we subcontract in some cases to third-party suppliers in order to meet our contractual obligations under our PPAs and concessions. In circumstances where key components of our equipment, including, but not limited to, turbines, water pumps, heat exchangers, solar fields, tanks, batteries, transformers or electrical generators fail because of design failures or faulty operation or for any other reason, we rely on internal teams and third parties to continue operating our assets. Equipment may not last as long as expected and we may need to replace it earlier than planned. Damages to our equipment may not be covered by insurance in place. In some cases, the replacement of damaged equipment can take a long period of time, which can cause our plants to curtail or cease operations during such time, which could have a negative impact on our business, financial condition, results of operations and cash flows.

For example, Solana and Kaxu have experienced technical issues in their storage and solar field systems. Repairs have been carried out in both assets. In Solana, availability in the storage system was lower than expected in 2021 and 2022 due to the repairs and replacements that we are carrying out after leaks were identified in the first quarter of 2020. These works have impacted production in 2021 and 2022, together with a lower solar field performance, and may impact production in 2023. We have experienced delays in 2021 and 2022 in the repairs and replacements that we are carrying out. We cannot guarantee that the repairs will be effective, that Solana will reach expected production or that additional repairs will not be required. Similar interruptions could happen again at our plants due to failure of key equipment.

In addition, we are currently starting construction of our first battery storage project Coso Batteries 1, fully developed in-house. We will rely on batteries, software and other components manufactured by third parties which may contain undetected manufacturing-related defects or errors in a sector where our expertise is not as proven as in the rest of our businesses yet. Design failures, technical inspections by suppliers or the need to replace key equipment can require unexpected capital expenditures and/or outages in our plants, which may have a material adverse effect on our business, financial condition, results of operations and cash flows.

In addition, the delivery by our subcontractors of products or services which are not in compliance with the requirements of the subcontract, or delayed supply of products and services, can cause us to be in default under our contracts with our concession counterparties. To the extent we are not able to transfer all of the risk or be fully indemnified by third-party contractors and suppliers, we may be subject to a claim by our customers as a result of a problem caused by a third party that could have a material adverse effect on our reputation, business, results of operations, financial condition and cash flows.

Supplier concentration may expose us to significant financial credit or performance risk.

We often rely on a single contracted supplier or a small number of suppliers for the provision of certain personnel, spare parts, equipment, technology, fuel, transportation of fuel, and/or other services required for the operation of certain of our facilities. If any of these suppliers, including Abengoa, Siemens, Naes, GE, Nordex, EPC suppliers and equipment suppliers for assets under construction cannot or will not perform under their operation and maintenance and other agreements with us, or satisfy their related warranty obligations, we will need to access the marketplace to replace these suppliers or acquire or repair these products. There can be no assurance that the marketplace can provide these products and services as, when and where required. We may not be able to enter into replacement agreements on favorable terms or at all. If we are unable to enter into replacement agreements to provide for equipment, technology or fuel and other required services, we may have to seek to purchase the related goods or services at higher prices. We may also be required to make significant capital contributions to remove, replace or redesign equipment that cannot be supported or maintained by replacement suppliers, which may have a material adverse effect on our business, financial condition, results of operations, and cash flows.

The failure of any supplier to fulfill its contractual obligations to us may have a material adverse effect on our business, financial condition, results of operations and cash flows. Consequently, the financial performance of our facilities may be dependent on the credit quality of, and continued performance by, our suppliers and vendors.

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Certain of our facilities may not perform as expected.

Our expectations regarding the operating performance of certain assets in our portfolio, particularly Solana and Kaxu, assets recently acquired such as La Sierpe, Chile TL 4, Italy PV 4 and Chile PV 3 or assets which have recently ended construction such as Albisu, La Tolua and Tierra Linda or assets under construction are based on assumptions, estimates and past experience, and without the benefit of a substantial operating history under our control. Our projections regarding our ability to generate cash available for distribution assumes facilities perform in accordance with our expectations. However, the ability of these facilities to meet our performance expectations is subject to the risks inherent to the construction and operation of such facilities, including, but not limited to, degradation of equipment in excess of our expectations, system failures and outages and higher maintenance capital expenditures than initially expected. The failure of these facilities to perform as we expect and/or higher than expected operational costs or maintenance capital expenditures may have a material adverse effect on our business, financial condition, results of operations and cash flows.

Maintenance, expansion and refurbishment of electric generation and other facilities involve significant risks that could result in unplanned power outages or reduced output or availability.

The facilities in our portfolio may require periodic upgrading and improvement in the future. Any unexpected operational or mechanical failure, including failure associated with breakdowns and forced outages, could reduce the performance and availability of our facilities below expected levels, reducing our revenues. Degradation of the performance of our solar facilities above levels provided for in the related off-take agreements may also reduce their revenues. Unanticipated capital expenditures associated with maintaining, upgrading or repairing our facilities may also reduce profitability.

If we make any major modifications to our renewable power generation facilities, efficient natural gas or electric transmission lines, we may be required to comply with more stringent environmental regulations, which would likely result in substantial additional capital expenditures. We may also choose to repower, refurbish or upgrade our facilities based on our assessment that such activity will provide adequate financial returns. Such facilities require time for development and capital expenditures before commencement of commercial operations, and key assumptions underpinning a decision to make such an investment may prove incorrect, including assumptions regarding construction costs, timing, available financing and future fuel and power prices. This may have a material adverse effect on our business, financial condition, results of operations and cash flows.

Our business may be adversely affected by an increased number of extreme and chronic weather events including related to climate change.

Climate change is causing an increasing number of severe, chronic and extreme weather events which are a risk to our facilities and may impact them. In addition, climate change may cause transition risks, related to existing and emerging regulation related to climate change. These risks include:

•

Acute physical. Severe and extreme weather events include severe winds and rains, hail, hurricanes, cyclones, droughts, as well as the risk of fire and flooding, among others and are becoming more frequent as a result of climate change. Any of these extreme weather events could cause damage to our assets and/or business interruption.

Our assets were designed and built by third parties complying with technical codes, local regulations and environmental impact studies. Technical codes should consider extreme weather events based on historical information and should include design safety margins. However, an increased severity of extreme weather events could have an impact on our assets.

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Severe floods could damage our solar generation assets or our water facilities. Floods can also cause landslides which may affect our transmission lines.

If our transmission assets caused a fire, we could be found liable if the fire damaged third parties.

Severe winter weather, like the storm in February 2021 in Texas, could cause supply from wind farms to decline due to wind turbine equipment freezing. Also, natural gas assets could trip offline due to operational issues caused by freezing conditions.

Rising temperatures and droughts could cause wildfires like the ones that have affected California starting in 2017. In California wildfires have been especially catastrophic, causing human fatalities and significant material losses. Although our assets in California are located in areas without trees and vegetation, wildfires affected PG&E, one of our clients in the recent past (see “Downstream” described below).

Severe winds could cause damage to the solar fields at our solar assets.

Components of our equipment and systems, such as structures, mirrors, absorber tubes, blades, PV panels or transformers are susceptible to being damaged by severe weather. In addition, replacement and spare parts for key components may be difficult or costly to acquire or may be unavailable and may have long lead times. In addition, damage caused by our equipment to third parties due to weather events can result in liabilities for the Company.

•	Chronic physical.

An increase in temperatures can reduce efficiency and increase operating costs at our plants. The main impacts of rising temperatures include:

Lower turbine efficiency in our efficient natural gas asset.

Reduced efficiency at our solar photovoltaic generation assets.

Lower air density at our wind facilities.

A reduction of mean precipitations 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. For example, some regions in Spain are currently experiencing a severe drought, which may affect 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.

If any of these acute physical or chronic physical risks were to materialize at any of our plants, facilities or electric transmission lines, we may not be able to carry out our business activities at that location or such operations could be significantly reduced. Any of these circumstances could result in lost revenue at these sites during the period of disruption and costly remediation, which could have a material adverse effect on our business, financial condition, results of operations and cash flows.

•

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. As an example, we are subject to the requirements of the U.K. Climate Change Act 2008 on greenhouse gas (“GHG”) emissions reporting, and the Commission Regulation (EU) No 601/2012. Two U.S. solar plants are also subject to the permits under the Clean Air Act.

•

Emerging Regulation. Changes in regulation could have a negative impact on Atlantica’s growth or cause an increase in costs. Currently, renewable energy projects benefit from various U.S. federal, state and local governmental incentives. These policies have had a significant impact on the development of renewable energy and they could change. These incentives make the development of renewable energy projects more competitive by providing tax credits, accelerated depreciation and expensing for a portion of the development costs. The U.S. Inflation Reduction Act (IRA) signed into law on August 16, 2022 increased and / or extended some of these incentives and established new ones. For example, the IRA includes, among other incentives, a 30% solar ITC for solar projects to be built until 2032, a PTC for wind projects to be built until 2032, a 30% ITC for standalone storage projects to be built until 2032 and a new tax credit that will award up to $3/kg for low carbon hydrogen. The IRA also includes transferability options for the ITCs and PTCs, which should allow an easier and faster monetization of these tax credits. A reduction in such incentives in the future could decrease the attractiveness of renewable energy to developers, utilities, retailers and customers. In addition, an increase in regulation could cause an increase in our compliance costs. See “—VII Risks Related to Regulation — Government regulations could change at any time and such changes may negatively impact our current business and growth strategy”.

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In addition, there may be additional taxes on GHG emissions. Some governments in certain geographies already have mechanisms in place for taxing GHG emissions and some other governments are considering establishing comparable mechanisms for the future. Additional taxes on emissions would increase the costs of operating the assets in our portfolio which have GHG emissions, particularly our natural gas assets.

Furthermore, several regions are increasing reporting requirements in relation to climate-related risks and opportunities and we will be subject to several of those requirements. From 2024, we will be required to include climate-related disclosures in line with the Taskforce on Climate Financial Disclosures (TCFD) in our UK Annual Report. In addition, we may be subject to new mandatory climate-related disclosures pursuant to SEC, proposed rules that are currently in draft form. Some of our subsidiaries will be subject to report non-financial information in accordance with the requirements of the EU.

•	Reputation. Decreased access to capital.

Climate change and ESG are becoming important criteria for shareholders and investors. 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-fired engine facility which uses natural gas, both in Mexico. Owning these assets with higher GHG emissions than the rest of the portfolio may have a negative reputational impact on Atlantica as a renewable energy company. We rely on capital markets and bank financing to fund our growth initiatives. If our reputation worsened, our cost of capital could increase and our access to capital may become more difficult. In addition, some potential employees and /or suppliers could perceive Atlantica as a less appealing company due to an eventual deterioration in our reputation due to the foregoing.

•

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.

The efforts we may undertake in the future, to respond to the evolving and increased regulation, environmental initiatives of customers, investors, shareholders and other stakeholders, reputational risks related to climate change and climate related risks affecting our clients may cause increased costs, more difficult access to capital markets, a deterioration in the credit quality of our clients and other negative circumstances which could have a material adverse effect on our business, financial condition, results of operations and cash flows.

The electricity produced, and revenues generated by a renewable energy generation facility are highly dependent on suitable meteorological conditions, and associated weather conditions which are beyond our control. Our geothermal asset Coso depends on the geothermal resource available on the site of the plant, which is also ultimately beyond our control.

Unfavorable weather and atmospheric conditions could impair the effectiveness of our assets or reduce their output beneath their rated capacity or require shutdown of key equipment, hampering operation of our renewable assets and our ability to achieve forecasted revenues and cash flows.

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We base our investment decisions with respect to each renewable generation facility on the findings of related wind, solar and geothermal studies conducted on-site by third parties prior to construction or based on historical conditions at existing facilities. However, actual climatic conditions at a facility site, particularly wind conditions, which are sometimes severe, may not conform to the findings of these studies and therefore, our solar, wind and geothermal energy facilities may not meet anticipated production levels or the rated capacity of its generation assets, which may have a material adverse effect on our business, financial condition, results of operations and cash flows.

In the case of Coso, geothermal resource may not meet our expectations, which may have a material adverse effect on our business, financial condition, results of operations and cash flows.

Our business may be adversely affected by catastrophes, natural disasters, unexpected geological or other physical conditions, or criminal or terrorist acts at one or more of our plants, facilities and electric transmission lines.

If one or more of our plants, facilities or electric transmission lines were to be subject in the future to fire, flood, earthquakes, electric storms, lightning (especially in our wind farms), drought or other natural disaster, terrorism, or other catastrophe, or if unexpected geological or other adverse physical conditions were to occur at any of our plants, facilities or electric transmission lines, we may not be able to carry out our business activities at that location or such operations could be significantly reduced. We own two assets in Southern California, which is an area classified as high seismic risk. Any of these circumstances could result in lost revenue at these sites during the period of disruption and costly remediation, which could have a material adverse effect on our business, financial condition, results of operations and cash flows. In addition, it is possible that our sites and assets could be affected by criminal or terrorist acts. There are also certain risks for which we may not be able to acquire adequate insurance coverage, including earthquakes and severe convective storms. Any such events could have a material adverse effect on our business, financial condition, results of operations and cash flows.

Our insurance may be insufficient to cover relevant risks or the cost of our insurance may increase.

We cannot guarantee that our insurance coverage is, or will be, sufficient to cover all the possible losses we may face in the future. Our property damage and business interruption policy have significant deductibles and exclusions with respect to some key equipment which, if damaged, could result in financial losses and business interruptions. Moreover, insurance market terms and conditions have become more onerous over the last few years and insurance companies are requiring some companies in our sector to retain a portion of the overall risks instead of transferring 100% to the insurers. As a result, we have self-retained a portion of our own risks and may need to increase this percentage in the future. If equipment failed in one of our assets and this equipment was part of the insurance exclusions or if the event was part of the risks we self-insured, we would need to assume the repairs and business interruption costs, which may have a material adverse effect on our business, financial condition, results of operations and cash flows.

Furthermore, some of our project finance agreements and PPAs include specific conditions regarding insurance coverage that we may need to modify. If we did not obtain a waiver from our project finance lenders accepting these modifications, an event of default could be triggered by our lenders due to non-compliance with the terms of the project finance agreement. If we were to incur a serious uninsured loss or a loss that significantly exceeded the coverage limits established in our insurance policies or we were not able to modify coverage conditions, this could have a material adverse effect on our business, financial condition, results of operations and cash flows. In addition, our insurance policies are subject to periodic renewals and the terms of the renewal are in some cases subject to approval by our lenders or counterparties. If we were unable to renew our insurance coverage, we would not be in compliance with the requirements of our project finance agreements and our PPAs, which could have a material adverse effect on our business, financial condition, results of operations and cash flows. If insurance premiums were to increase in the future and/or or if additional key components were excluded from insurance coverage and/or if certain types of insurance coverage were to become unavailable or there was a further increase in deductibles for damages and/or loss of production, it could have a material adverse effect on our business, financial condition, results of operations and cash flows.

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In addition, we might not be able to maintain insurance coverage comparable to those in effect in the past or currently at comparable cost, or at all. If insurance costs materially increased, such additional costs could have a material adverse effect on our business, financial condition, results of operations and cash flows.

The COVID-19 pandemic or any other pandemic could have a material adverse impact on our business, financial condition, liquidity, results of operations, cash flows, cash available for distribution and ability to make cash distributions to our shareholders.

So far, we have not experienced any material impact from the COVID-19 pandemic on our business, results of operations or cash-flows. However, the COVID-19 pandemic or any other potential pandemic could affect our operation and maintenance activities in the future. We may experience delays in certain operation and maintenance activities, or certain activities may take longer than usual, or, in a worst-case scenario, a potential outbreak at one of our assets may prevent our employees or our operation and maintenance suppliers’ employees from operating the plant. All these can hamper or prevent the operation and maintenance of our assets, which may result in a material adverse effect on our business, financial condition, results of operations and cash flows.

We could also experience commercial disputes with our clients, suppliers and partners related to implications of COVID-19 or any other pandemic in contractual relations. All the risks referred to can cause delays in distributions from our assets to the holding company. In addition, we may experience delays in distributions due to logistic and bureaucratic difficulties to approve those distributions, which can negatively affect our cash available for distributions, our business, financial condition and cash flows. If we were to experience delays in distributions due to the risks previously mentioned and this situation persisted over time, we may fail to comply with financial covenants in our credit facilities and other financing agreements.

All these situations may have a material impact on our business, financial condition, results of operations or cash flows or the pace or extent of any subsequent recovery.

We may have joint venture partners or other co-investors with whom we have material disagreements.

We have made and may continue to make equity investments in certain strategic assets managed by or together with third parties, including governmental entities and private entities. In certain cases, we may only have partial or joint control over a particular asset. We hold a minority stake in Vento II (our 596 MW wind portfolio in the United States composed by Elkhorn Valley, Prairie Star, Twin Groves II and Lone Star II), Honaine (Algeria), Monterrey (Mexico), Amherst (Canada) and Ten West Link (United States) and do not have control over the operation of these assets. In addition, we have partners in Seville PV, Solacor 1 & 2, Solaben 2 & 3, Skikda, Kaxu, Chile PV 1, Chile PV 2 and Chile PV 3 and we have invested through a debt instrument in Tenes. We also have partners in projects and assets under development or construction. Investments in assets or projects under development or construction over which we have no, partial or joint control are subject to the risk that the other shareholders of the assets, who may have different business or investment strategies than us or with whom we may have a disagreement or dispute, may have the ability to independently make or block business, financial or management decisions, such as appoint members of management, which may be crucial to the success of the project or our investment in the project, or otherwise implement initiatives which may be contrary to our interests. If we do not have control of a project or an asset, our partner may decide to sell such project or asset under terms and conditions that may not be the most beneficial to us. In Monterrey and Ten West Link we hold minority stakes, and our partners are infrastructure funds that may decide to sell these assets in the future. Additionally, the approval of other shareholders or partners may be required to sell, pledge, transfer, assign or otherwise convey our interest in such assets. Alternatively, other shareholders may have rights of first refusal or rights of first offer in the event of a proposed sale or transfer of our interests in such assets or in the event we acquire an interest in new assets pursuant to ROFO agreements with third parties. These restrictions may limit the price or interest level for our interests in such assets, in the event we want to sell such interests.

Finally, our partners in existing or future projects may be unable, or unwilling, to fulfill their obligations under the relevant shareholder agreements, may experience financial or other difficulties or might sell their position to third parties that we did not choose, which may adversely affect our investment in a particular joint venture or adversely affect us. In certain of our joint ventures, we may also rely on the expertise of our partners and, as a result, any failure to perform its obligations in a diligent manner could also adversely affect the joint venture. If any of the foregoing were to occur, our business, financial condition, results of operations and cash flows may be materially adversely affected.

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We depend on our key personnel and our ability to attract and retain skilled personnel. The operation and maintenance of most of our assets is labor intensive, and therefore work stoppages by employees could harm our business.

In some of the geographies where we operate, competition for qualified personnel is high and our turnover has increased recently, in particular in the United States. 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, the performance of our assets, our business and future growth prospects and ability to compete could be adversely impacted.

In addition, the operation and maintenance of most of our assets is labor 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. In addition, we subcontract the operation and maintenance services for some of our assets. If our employees or our operators’ employees were to initiate a work stoppage, they may not be able to reach an agreement with them in 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.

Revenue from some of our renewable energy facilities is or may be partially exposed to market electricity prices.

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). If electricity market prices in these assets are lower than expected, we will not able to reach our expected returns and, in Chile PV1, we might not be able to repay the project debt as it comes due. In 2022, considering that expected electricity prices in Chile have decreased and are currently lower than the prices assumed in the moment of the acquisition, we have identified an impairment triggering event, in accordance with IAS 36, (Impairment of Assets). As a result, an impairment test has been performed which resulted in the recording of an impairment loss of $20.4 million as of December 31, 2022. Although assets with merchant exposure represent less than a 2%² of our portfolio in terms of Adjusted EBITDA, if electricity market prices were lower than expected, this may have a negative impact on our business, revenues, results of operations and cash flows.

Market prices may be volatile and are affected by various factors, including the cost of raw materials, user demand, and the price of GHG emission where applicable. During the year 2022, electricity market prices in Europe have also been affected by the war in Ukraine. In several of the jurisdictions in which we operate including Spain, Chile and Italy, we are exposed to remuneration schemes which contain both regulated incentives and market price components. In such jurisdictions, the regulated incentive or the contracted component may not fully compensate for fluctuations in the market price component, and, consequently, total remuneration may be volatile. Recent high market prices in that we have been experiencing in Spain since the third quarter of 2021 are resulting in higher cash collections which, in accordance with the regulation in place, has caused a reduction of the regulated remuneration component in 2022 and will cause a further reduction of the regulated component starting from 2023 (see “—VII Risks related to Regulation — Revenues in our solar assets in Spain are mainly defined by regulation and some of the parameters defining the remuneration are subject to review every periodically.”).

² Calculated as a percentage of our Adjusted EBITDA for the year 2022.

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In addition, operating costs in certain of our existing or future projects depend to some extent on market prices of electricity used for self-consumption and, to a lower extent, on market prices of natural gas. In Spain, for example, operating costs have increased as a result of the increase in the price of natural gas and electricity.

There can be no assurance that market prices will remain at levels which enable us to maintain profit margins and desired rates of return on investment. A decline in market prices below anticipated levels could have a material adverse effect on our business, financial condition, results of operations and cash flows.

Additionally, in some of our current or future PPAs, and contracts our subsidiaries have obligations to reach a minimum production, to deliver certain amounts of energy irrespective of actual production or to settle with the customer for the difference between the market price at our delivery point and a pre-agreed price in certain locations. This can result in our subsidiaries facing additional costs to purchase or sell power in the market or to settle for differences or defaulting on PPAs or contracts or not reaching minimum production. This could have a material adverse effect on our business, financial condition, results of operations and cash flows.

Lack of electric transmission capacity availability, potential upgrade costs to the electric transmission grid, and other systems constraints could significantly impact our ability to generate electricity power sales and develop new projects.

We depend on electric interconnection and transmission facilities owned and operated by others to deliver the wholesale power we sell from our electric generation assets to our customers. We also depend on the assignment of the access to new interconnection points for the development and construction of new projects. A failure or delay in the operation or development of these interconnection or transmission facilities or a significant increase in the cost of the development of such facilities could result in the loss of revenues or in delays in the development and construction of new assets. Such failures or delays could limit the amount of power our operating facilities deliver or delay the completion of our construction projects, as the case may be. Additionally, such failures, delays or increased costs may have a material adverse effect on our business, financial condition, results of operations and cash flows. If a region’s electric transmission infrastructure is inadequate, our ability to generate electricity may be limited. If restrictive transmission price regulation is imposed, the transmission companies may not have a sufficient incentive to invest in expansion of transmission infrastructure. We cannot predict whether interconnection and transmission facilities will be expanded in specific markets to accommodate competitive access to those markets. Certain of our operating facilities’ generation of electricity may be curtailed without compensation, or access to the grid might become uneconomical at certain times, due to transmission limitations or limitations on the electricity grid’s ability to accommodate intermittent electricity generating sources, reducing our revenues and impairing our ability to fully capitalize on a particular facility’s generating potential. For example, in 2022 our wind assets in the U.S. and our solar assets in Chile and in Spain have been subject to curtailment and may be subject to similar or higher curtailment in the future. In addition, our solar assets in Spain need to achieve an annual minimum production threshold in order to obtain the right to receive the Remuneration on Investment (Rinv). In the second quarter and beginning of third quarter of 2022, some of these assets were subject to significant technical curtailment by the grid operator, which had happened very seldomly in the past. If this curtailment happened again in the future, Atlantica’s assets may not reach the annual minimum production threshold necessary to obtain the Remuneration on Investment (Rinv). Curtailments in our different geographies may have a material adverse effect on our business, financial condition, results of operations and cash flows.

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Our information technology and communications systems are subject to cybersecurity risk and other risks. The failure of these systems could significantly impact our operations and business.

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. Recently, energy facilities worldwide have been experiencing an increased number of cyber-attacks. Cybersecurity incidents, in particular, are constantly evolving and include malicious software, attempts to gain unauthorized access to data and other electronic security breaches that could lead to disruptions in systems, unauthorized release of confidential or otherwise protected information and to the corruption of data. There have been cyberattacks within the energy industry on electricity infrastructure such as substations and related assets in the past and there may be such attacks in the future. Our generation assets, transmission facilities, storage facilities, information technology systems and other infrastructure facilities and systems could be direct targets of, or otherwise be materially adversely affected by such activities.

Given the unpredictability of the timing, nature and scope of information technology disruptions, we could potentially be subject to production stops, unavailability in our transmission lines, operational delays, the compromising of confidential or otherwise protected information, destruction or corruption of data, security breaches, other manipulation or improper use of our systems and networks or financial losses from remedial actions. These events could cause reputational damage and could limit our ability to raise capital. In addition, the implementation of security guidelines and measures has resulted in and is expected to continue to result in increased costs. Such events or actions may materially adversely affect our business, financial condition, results of operations and prospects

We maintain global information technology and communication networks and applications to support our business activities. Given the increasing sophistication and evolving nature of the above mentioned threats, we cannot rule out the possibility of them occurring in the future, and information technology security processes may not prevent future damages to systems, malicious actions, denial-of-service attacks, or fraud, resulting in corruption of our systems, theft of commercially sensitive data, unauthorized release, gathering, monitoring, misuse, loss or destruction of confidential, proprietary and other information, misappropriation of funds and businesses (also known as phishing), or other material disruptions to network access or business operations. Material system breaches and failures could result in significant interruptions that could in turn affect our operating results and reputation and cash flows.

Negative impacts on biodiversity, including harming of protected species or other environmental hazards can result in curtailment of power plant operations, monetary fines and negative publicity.

Managing and operating large infrastructure assets may have a negative impact on biodiversity in the regions where we operate. In particular, the operation of wind and solar power plants can adversely affect endangered, threatened or otherwise protected animal species. Wind power plants involve a risk that protected species will be harmed, as the turbine blades travel at a high rate of speed and may strike flying animals (such as birds or bats) that happen to travel into the path of spinning blades. Solar power plants can also present a risk to animals.

Excessive killing of protected species or other environmental accidents or hazards could result in requirements to implement mitigation strategies, including curtailment of operations, and/or substantial monetary fines and negative publicity. We cannot guarantee that any curtailment of operations, monetary fines that are levied, decrease on our ESG ratings and credentials or negative publicity as a result of incidental killing of protected species and other environmental hazards will not have a material adverse effect on our business, financial condition, results of operations and cash flows. Violations of environmental and other laws, regulations and permit requirements may also result in criminal sanctions or injunctions.

We may be subject to litigation, other legal proceedings and tax inspections.

We are subject to the risk of legal claims and proceedings (including bankruptcy proceeding), requests for arbitration, tax inspections as well as regulatory enforcement actions in the ordinary course of our business and otherwise, including claims against our subsidiaries, assets, deals, or our subsidiaries not meeting their obligations. The results of legal and regulatory proceedings or tax inspections cannot be predicted with certainty. We cannot guarantee that the results of current or future legal or regulatory proceedings, tax inspections or actions will not materially harm our operations, business, financial condition or results of operations, nor can we guarantee that we will not incur losses in connection with current or future legal or regulatory proceedings, tax inspections or actions that exceed any provisions we may have set aside in respect of such proceedings or actions or that exceed any available insurance coverage, which may have a material adverse effect on our business, financial condition, results of operations and cash flows. See “Item 4.B—Business Overview—Legal Proceedings.”

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If we are deemed to be an investment company, we may be required to institute burdensome compliance requirements and our activities may be restricted, which may make it difficult for us to complete strategic acquisitions or effect combinations.

If we were deemed to be an investment company under the Investment Company Act of 1940 (the “Investment Company Act”), our business would be subject to applicable restrictions under the Investment Company Act, which could make it impractical for us to continue our business as contemplated. We believe our Company is not an investment company under Section 3(b)(1) of the Investment Company Act because we are primarily engaged in a non-investment company business, and we intend to conduct our operations so that we will not be deemed an investment company. However, if we were to be deemed an investment company, restrictions imposed by the Investment Company Act, including limitations on our capital structure and our ability to transact with affiliates, could make it impractical for us to continue our business as contemplated.

II.	Risks Related to Our Relationship with Algonquin and Abengoa

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 approximately 41.5% of our ordinary shares. As a result of this ownership, Algonquin has substantial influence on our affairs and has the power to vote a significant percentage of the shares eligible to vote on any matter requiring the approval of our shareholders. Such matters include the election of directors, the adoption of amendments to our articles of association and approval of mergers, the sale of all or a high percentage of our assets and other strategic transactions.

In addition, Algonquin or other significant shareholders (present or future) could exercise substantial influence and could seek to direct or change our strategy or corporate governance or could obtain effective control of us. The Shareholders Agreement that we have entered into with Algonquin may be amended and Algonquin may increase its voting rights above 41.5% or may increase its equity interest and take a controlling position in Atlantica and change our strategy, including our dividend policy. Algonquin may also sell its stake in Atlantica and a third party may gain control over us and decide to change our strategy. There can be no assurance that the interests of Algonquin or other (present or future) significant shareholders will coincide with the interests of our other shareholders or that Algonquin or other significant shareholders (present or future) will act in a manner that is in our best interests. This concentration of ownership of our shares may also have the effect of discouraging others from making tender offers for our shares or propose other transactions that might otherwise provide you with an opportunity to dispose of or realize a premium on your investment in our shares.

Further, our reputation is closely related to that of Algonquin. Any damage to the public image or reputation of Algonquin including as a result of adverse publicity, poor financial or operating performance, liquidity, changes in financial condition, rating downgrades, decline in the price of its shares or otherwise could have a material adverse effect on our business, financial condition, results of operations, cash flows or the price of our shares.

Our ownership structure and certain agreements may create significant conflicts of interest that may be resolved in a manner that is not in our best interests.

Our ownership structure involves several relationships that may give rise to certain conflicts of interest between us, Algonquin, and the rest of our shareholders. Currently, one of our directors is an officer of Algonquin and another director was an officer of Algonquin until recently.

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Currently, Algonquin is a related party and may have interests that differ from our interests, including with respect to the growth appetite, types of investments made, the timing and amount of dividends paid by us, the re-investment of returns generated by our operations, the use of leverage or capital increases when making investments, the appointment of outside advisors and service providers and the potential sale of their equity interest in Atlantica, including its timing and process, among others. Any transaction between us and Algonquin or Liberty GES (including the acquisition of any assets under the ROFO Agreements or any co-investment with Algonquin or Liberty GES or any investment in an Algonquin or Liberty GES asset) is subject to our related party transactions policy, which requires prior approval of such transaction by the related party transactions committee, which is composed of independent directors. The existence of our related party transactions approval policy may not insulate us from derivative claims related to related party transactions and the conflicts of interest described in this risk factor. Regardless of the merits of such claims, we may be required to spend significant management time and financial resources in the defense thereof. Additionally, to the extent we fail to appropriately deal with any such conflicts, it could negatively impact our reputation and ability to raise additional funds and the willingness of counterparties to do business with us, all of which may have a material adverse effect on our business, financial condition, results of operations and cash flows.

Abengoa’s financial condition including the insolvency filing by Abengoa S.A. could affect its ability to satisfy its obligations with us under different agreements, such as operation and maintenance agreements as well as indemnities and other contracts in place and may affect our reputation.

In 2021, Abengoa performed operation and maintenance (O&M) services for assets that represented approximately 47% of our consolidated revenue for that year. Following the internalization of the O&M services in Kaxu and in part of our assets in Spain during 2022, Abengoa provided services for assets representing approximately 20% of our consolidated revenue in 2022. As of the date of this annual report, we are in the process of transitioning the O&M services for these assets in Spain from an Abengoa subsidiary to a Company’s subsidiary. Once this transfer is completed, we expect Abengoa to provide O&M services for assets representing less than 5% of our consolidated revenue in 2022.

On February 22, 2021, Abengoa, S.A., which is the holding company of subsidiaries performing O&M services for those assets, filed for insolvency proceedings in Spain. In addition, on July 28, 2022, the subsidiary in Spain performing the O&M services at some of our plants filed for insolvency proceedings.

In addition, the project financing arrangement for Kaxu contained a cross-default provision related to Abengoa S.A.’s insolvency filing. In September 2021, we obtained a waiver for such cross-default which became effective on March 31, 2022, following the transfer of the employees performing the O&M in Kaxu from an Abengoa subsidiary to an Atlantica subsidiary and other conditions. The Kaxu project debt was reclassified to non-current as of that date.

There may be unanticipated consequences of Abengoa S.A. insolvency filings and potential liquidation process, Abengoa’s subsidiary in Spain, Abenewco1, S.A.’s and certain other Abengoa’s subsidiaries pre-insolvency filings or potential insolvency filings, further restructurings by Abengoa or ongoing bankruptcy proceedings by Abengoa’s subsidiaries that we have not yet identified. There are uncertainties as to how any further bankruptcy proceedings would be resolved and how our current O&M agreements or other relationships with Abengoa would be affected following the initiation or resolution of any such proceedings.

In addition, in Mexico, Abengoa was the owner of a plant that shares certain infrastructure and has certain back-to-back obligations with ACT. ACT is required to deliver an equipment to Pemex which has been recently donated and delivered to ACT by such plant. If we are unable to comply with these obligations, it may result in a material adverse effect on ACT and on our business, financial conditions, results of operations and cash flows. According to public information, the plant mentioned above is currently controlled by a third party.

In addition, although Abengoa has not been our shareholder since the end of 2018, in some geographies our reputation continues to be related to that of Abengoa. Any damage to the public image or reputation of Abengoa as a result of bankruptcy, adverse publicity, poor financial or operating performance, changes in financial condition, or otherwise could have a material adverse effect on our business, financial condition, results of operations and cash flows.

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Legal proceedings involving Abengoa and its current and previous insolvency processes and events and circumstances that led to them could affect us.

Prior to the completion of our initial public offering in 2014, we and many of our assets were part of Abengoa. Many of our senior executives have previously worked for Abengoa. Abengoa’s current and prior restructuring processes, and the events and circumstances that led to them, are currently the subject of various legal proceedings (including the insolvency proceedings filed in Spain on February 22, 2021 and July 28, 2022 by Abengoa S.A. and its subsidiary in Spain performing the O&M services at some of our plants, respectively) and investigations, and may in the future become the subject of additional proceedings. To the extent that allegations are made in any such proceedings that involve us, our assets, our dealings with Abengoa or our employees, such proceedings may have a material adverse effect on our business, financial condition, results of operations and cash flows, as well as on our reputation and employees.

In addition, given that Abengoa is incorporated in Spain and has assets and operations in several countries around the world, bankruptcy laws other than those of Spain could apply. The rights of Abengoa’s creditors may be subject to the laws of a number of jurisdictions and such multi-jurisdictional proceedings are typically complex and often result in substantial uncertainty. In addition, the bankruptcy and other laws of such jurisdictions may be materially different from, or in conflict with, one another. If Abengoa is subject to U.S. bankruptcy law, bankruptcy courts in the United States may seek to assert jurisdiction over all of its assets, wherever located, including property situated in other countries.

Current, future and potential bankruptcy proceedings by Abengoa S.A. or its subsidiaries may permanently affect their operations, which may have a material adverse effect on our business, financial condition, results of operations and cash flows. We cannot predict how any bankruptcy proceeding would be resolved or how our relationship with those entities will be affected following the initiation or after the resolution of any such proceedings.

Under the Spanish Insolvency Act, Abengoa may be subject to insolvency claw- back actions in which transactions may be set aside.

Under the Spanish Insolvency Act, any transaction entered into within two years immediately prior to the commencement of an insolvency proceeding that is deemed to be materially damaging to the insolvency estate (whether or not there was intent to defraud) could be set aside through claw-back actions. Material damage is assessed by the Spanish court on the basis of the circumstances at the time the transaction was entered into (including if the transaction was suitable at the time and if it was entered into on an arm’s length basis), without the benefit of hindsight and without considering subsequent events or occurrences, including events in relation to insolvency proceedings or the request to set-aside the transaction.

Transactions that are more frequently subject to claw-back relate to avoidable preferences, transfers of assets below fair market value or for little or no consideration. If any of the transactions entered into between us and Abengoa (or any subsidiary thereto that is declared insolvent), including those related to drop-downs assets, were subject to a claw-back action by a Spanish court, unless it is determined we acted in bad faith, such transaction would be unwound and we would receive back the cash paid, which may have a material adverse effect on our business, financial condition, results of operations and cash flows.

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III.	Risks Related to Our Indebtedness

Our indebtedness could limit our ability to react to changes in the economy or our industry, expose us to the risk of increased interest rates and limit our activities due to covenants in existing financing agreements. It could also adversely affect the ability of our project subsidiaries to make distributions to Atlantica Sustainable Infrastructure plc, our ability to fund our operations, pay dividends or raise additional capital.

As of December 31, 2022, we had (i) $4,553.1 million of total indebtedness under various project-level debt arrangements and (ii) $1,017.1 million of total indebtedness under our corporate arrangements, which include the Revolving Credit Facility, the Note Issuance Facility 2020, the 2020 Green Private Placement, the Green Exchangeable Notes and the Green Senior Notes. Furthermore, we may incur in the future additional project-level debt and corporate debt.

Our substantial debt could have important negative consequences on our business, financial condition, results of operation and cash flows including:

•	increasing our vulnerability to general economic and industry conditions;

•

requiring a substantial portion of our cash flow from operations to be dedicated to the payment of principal and interest on our indebtedness, therefore reducing our ability to pay dividends to holders of our shares or to use our cash flow to fund our operations, capital expenditures, and future business opportunities;

•	limiting our ability to enter into long-term power sales, fuel purchases and swaps which require credit support;

•	limiting our ability to fund operations or future investments and acquisitions;

•	restricting our ability to make certain distributions with respect to our shares and the ability of our subsidiaries to make certain distributions to us, in light of restricted payment and other financial covenants in our credit facilities and other financing agreements;

•	exposing us to the risk of increased interest rates because a portion of some of our borrowings (approximately 7% as of December 31, 2022 after giving effect to hedging agreements) are at variable interest rates;

•	limiting our ability to obtain additional financing for working capital, capital expenditures, debt service requirements, investments and acquisitions and general corporate or other purposes, and limiting our ability to post collateral to obtain such financing; and

•	limiting our ability to adjust to changing market conditions and placing us at a disadvantage compared to our competitors who have less debt.

The operating and financial restrictions and covenants in the Revolving Credit Facility, the 2020 Green Private Placement, the Note Issuance Facility 2020 and the Green Senior Notes may adversely affect our ability to finance our future operations or capital needs, to engage in other business activities that may be in our interest and to execute our business strategy as we intend to do so. Each contains covenants that limit certain of our, the guarantors’ and other subsidiaries’ activities. If we breach any of these covenants (including as a result of our inability to satisfy certain financial covenants), a default may result which may entitle the related noteholders or lenders, as applicable to demand repayment and accelerate all such debt or to enforce their security interests, which would have a material adverse effect on our business, financial condition, results of operations and cash flows. See “Item 5.B—Operating and Financial Review and Prospects—Liquidity and Capital Resources— Corporate debt agreements.”

In addition, our inability to satisfy certain financial covenants may prevent cash distributions by the particular project(s) and other subsidiaries to us. If our project-level and other subsidiaries are unable to make distributions, it would likely have a material adverse effect on our ability to service debt at the corporate level or to pay dividends to holders of our shares. Our failure to comply with those and other covenants could result in an event of default which, if not cured or waived, may entitle the related noteholders or lenders, as applicable to demand repayment or to enforce their security interests, which may have a material adverse effect on our business, financial condition, results of operations and cash flows. In addition, failure to comply with such covenants, may entitle the related noteholders or lenders, as applicable, to demand repayment and accelerate all such indebtedness.

Letter of credit facilities or bank guarantees to support project-level contractual obligations generally need to be renewed, at which time we will need to satisfy applicable financial ratios and covenants. If we are unable to renew the letters of credit as expected or replace them with letters of credit under different facilities on favorable terms or at all, we may experience a material adverse effect on our business, financial condition, results of operations and cash flows. Furthermore, such inability may constitute a default under certain project-level financing arrangements, restrict the ability of the project-level subsidiary to make distributions to us and/or reduce the amount of cash available at such subsidiary to make distributions to us.

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We may not be able to arrange the required or desired financing for investments and acquisitions and for the successful refinancing of the Company’s project level and corporate level indebtedness.

Our ability to arrange the required or desired financing, either at corporate level or at a project-level, and the costs of such capital, are dependent on numerous factors, including:

•	general economic and capital market conditions;

•	credit availability from banks and other financial institutions;

•	investor confidence in us;

•	our financial performance, cash flow generation and the financial performance of our subsidiaries;

•	our level of indebtedness and compliance with covenants in debt agreements;

•	maintenance of acceptable project and corporate credit ratings or credit quality; and

•	tax and securities laws that may impact raising capital.

We may not be successful in obtaining additional capital for these or other reasons. Furthermore, we may be unable to refinance or replace project-level financing arrangements or other credit facilities on favorable terms or at all upon the expiration or termination thereof. We may be unable to repay our existing debt as it becomes due if we fail, or any of our projects fails, to obtain additional capital or enter into new or replacement financing arrangements, which would have a material adverse effect on our business, financial condition, results of operations and cash flows.

In addition, 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 investments and 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. In addition, given that our dividend policy is to distribute a high percentage of our cash available for distribution, our growth strategy and refinancing relies on our ability to raise capital to finance our investments and acquisitions. Our high pay-out ratio may hamper our ability to manage liquidity in moments when accessing capital markets becomes more challenging. In the event we are not able to raise capital, we may have to postpone or cancel planned acquisitions, investments or capital expenditures. The inability to raise capital, higher costs of capital or postponement or cancellation of planned acquisitions, investments or capital expenditures may have a materially adverse effect on our business, financial condition, results of operations and cash flows. If financing is available, utilization of our credit facilities, debt securities or project level financing for all or a portion of the purchase price of an acquisition, as applicable, could significantly increase our interest expense and debt repayment, impose additional or more restrictive covenants, and reduce cash available for distribution.

We may be subject to increased finance expenses if we do not effectively manage our exposure to interest rate and foreign currency exchange rate risks.

We are exposed to various types of market risk in the normal course of business, including the impact of interest rate changes and foreign currency exchange rate fluctuations. Some of our indebtedness (including project-level indebtedness) bears interest at variable rates, generally linked to market benchmarks such as EURIBOR, LIBOR or over the alternative rates replacing LIBOR, including SOFR. During 2022, the U.S. Federal Reserve has increased the reference interest rates in the United States from 0.125% to a targeted range between 4.25% and 4.50% and has announced additional increases in 2023. Similarly, the European Central Bank has increased the reference interest rates in the Euro zone from negative levels up to 2% and also expects additional increases. 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.

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In addition, we seek to actively work with lending financial institutions to mitigate our interest rate risk exposure and to secure lower interest rates by entering into interest rate options and swaps. We estimate that approximately 92% of our project debt and 96% of our corporate debt was fixed or hedged as of December 31, 2022. The Revolving Credit Facility, with a limit of $450 million of which $385.1 million were available as of December 31, 2022 is subject to variable interest rates.

In addition, although most of our long-term contracts are denominated in, indexed or hedged to U.S. dollars, we conduct our business and incur certain costs in the local currency of the countries in which we operate. In addition, the revenues, costs and debt of our solar assets in Spain, Italy, South Africa and Colombia are denominated in local currency. We have a hedging strategy for our solar assets in Europe. Since the beginning of 2017, we have maintained euro-denominated debt at the corporate level. Interest payments in euros and our euro denominated general and administrative expenses create a natural hedge for a portion of the distributions from assets in Europe. Our strategy is to hedge the exchange rate for the distributions received in euros after deducting euro-denominated interest payments and euro-denominated general and administrative expenses. Through currency options, we hedge on a rolling basis 100% of the net euro net exposure for the next 12 months and 75% of the net euro net exposure for the following 12 months. However, if the euro continued to depreciate against the U.S. dollar, we would have a negative impact on our cash flows after 24 months. In addition, a depreciation of the South African rand, the Colombian peso or a long-term depreciation of the Euro could have a negative impact on our results of operations and cash flows. See “Item 5.A—Operating and Financial Review and Prospects —Results of Operations—Factors Affecting the Comparability of Our Results of Operations.”

In addition, 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 South African rand and Colombian peso with respect to the U.S. dollar may also affect our operating results.

As we continue expanding our business, an increasing percentage of our revenue and cost of sales may be denominated in currencies other than our reporting currency, the U.S. dollar. Under that scenario, we would become subject to increasing currency exchange risk, whereby changes in exchange rates between the U.S. dollar and the other currencies in which we do business could result in foreign exchange losses.

If our risk-management strategies are not successful in limiting our exposure to changes in interest rates and foreign currency exchange rates our business, financial condition, results of operations and cash flows maybe materially adversely affected.

Potential future defaults by our subsidiaries, our off-takers, our suppliers or other persons could adversely affect us.

The financing agreements of our project subsidiaries 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 cash flow of that project company. This type of financing is usually referred to herein as “project debt.” As of December 31, 2022, we had $4,553.1 million of outstanding indebtedness under various project-level debt arrangements.

While the lenders under our project debt do not have direct recourse to us or our subsidiaries (other than the letter of credit and bank guarantee facilities), defaults by the project borrowers under such financings can still have important consequences for us and our subsidiaries, including, without limitation:

•	reducing our receipt of dividends, fees, interest payments, loans and other sources of cash, since the project company will typically be prohibited from distributing cash to us and our subsidiaries until the event of default is cured or waived;

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•	default under our other debt instruments;

•	causing us to record a loss in the event the lender forecloses on the assets of the project company; and

•	the loss or impairment of investors and project finance lenders’ confidence in us.

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.

Under the Revolving Credit Facility, the 2020 Green Private Placement, the Green Senior Notes and the Note Issuance Facility 2020, a payment default with respect to indebtedness having an aggregate principal amount above certain thresholds by us, any guarantor thereof or one or more of our non-recourse subsidiaries representing more than 25% of the cash available for distribution distributed in the previous four fiscal quarters could trigger a default.

Any of these events may have a material adverse effect on our business, financial condition, results of operations and cash flows.

Uncertainty relating to the LIBOR calculation process and potential phasing out of LIBOR in the future may adversely affect the value of any outstanding debt instruments.

On July 27, 2017, the Chief Executive of the U.K. Financial Conduct Authority (the “FCA”), which regulates LIBOR, announced that the sustainability of LIBOR cannot be guaranteed and that the FCA will no longer persuade or compel banks to submit rates for the calculation of LIBOR after 2021. On May 31, 2019, the Alternative Reference Rates Committee proposed that the Secured Overnight Financing Rate (“SOFR”) is the rate that represents best practice as the alternative to USD-LIBOR for use in derivatives and other financial contracts that are currently indexed to USD-LIBOR. SOFR is a more generic measure than LIBOR and considers the cost of borrowing cash overnight, collateralized by U.S. Treasury securities. Moreover, on March 5, 2021, the ICE Benchmark Administration, which administers LIBOR, and the FCA announced that all LIBOR settings will either cease to be provided by any administrator, or no longer be representative immediately after December 31, 2021, for all non-USD LIBOR settings and one-week and two-month USD-LIBOR settings, and immediately after June 30, 2023 for the remaining USD-LIBOR settings, such as the overnight, one-month, three-month, six-month and 12-month USD-LIBOR settings. Accordingly, the FCA has stated that is does not intend to persuade or compel banks to submit to LIBOR after such respective dates. Until such time, however, FCA panel banks have agreed to continue to support LIBOR.

As a result of the phase out of LIBOR, we had to renegotiate and may have to renegotiate certain of our LIBOR-based debt and derivative instruments to reflect the phase out of LIBOR and substitute for SOFR or another replacement benchmark.

We have not experienced any material impact of the LIBOR phase out and its transition to a replacement benchmark and as of today we do not expect any material impact. However, given the inherent differences between LIBOR and SOFR or any other alternative benchmark rate that may be established, there are many uncertainties regarding a transition from LIBOR. At this time, it is not possible to predict the effect that these developments, discontinuance of LIBOR, modification or other reforms to any other reference rate, or the establishment of alternative reference rates may have, or other benchmarks. Furthermore, the shift to alternative reference rates, including SOFR, or other reforms is complex and could cause the payments calculated for the LIBOR-based debt and derivative instruments to be materially different than expected, which may affect our business, financial condition, results of operations, liquidity and cash flows. Although we do not expect a material impact on our LIBOR-based debt and derivative instruments, we cannot guarantee that the shift to alternative reference rates will not have any impact on our business, financial condition, results of operations and cash flows.

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A change of control or a delisting of our shares may have negative implications for us.

If any investor acquires over 50.0% of our shares or if our ordinary shares cease to be listed on the NASDAQ or a similar stock exchange, we may be required to refinance all or part of our corporate debt or obtain waivers from the related noteholders or lenders, as applicable, due to the fact that all of our corporate financing agreements contain customary change of control provisions and delisting restrictions. If we fail to obtain such waivers and the related noteholders or lenders, as applicable, elect to accelerate the relevant corporate debt, we may not be able to repay or refinance such debt (on favorable terms or at all), which may have a material adverse effect on our business, financial condition results of operations and cash flows. Additionally, in the event of a change of control we could see an increase in the yearly state property tax payment in Mojave, which would be reassessed by the tax authority at the time the change of control potentially occurred. Our best estimate with current information available and subject to further analysis is that we could have an incremental annual payment of property tax of approximately $10 million to $12 million, which could potentially decrease progressively over time as the asset depreciates. There could also be other tax impacts and other impacts that we have not yet identified. Furthermore, a change of control could trigger an ownership change under Section 382 of the IRC which could have a material adverse effect on our business, financial condition results of operations and cash flows (see “Risks Related to Taxation – Our ability to use U.S. NOLs to offset future income may be limited”).

The process to explore and evaluate potential strategic alternatives may not be successful.

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 maximize shareholder value. There is no assurance about the outcome of this process, that any specific transaction will be identified or consummated or that any other strategic change will be implemented as a result of this strategic review, or that any such review may achieve any expected results.

Unanticipated developments could delay, prevent or otherwise adversely affect the planned strategic review, including but not limited to disruptions in general or financial market conditions or potential problems or delays in obtaining various regulatory and tax approvals or clearances.

In addition, whether or not any such strategic alternative is identified, pursued and/or consummated, such review could cause disruptions in the businesses of the Company by directing the attention of the board of directors and management and other resources (including significant costs) toward such review or the preparation of the Company to pursue and consummate any strategic alternative. The process could potentially increase employee turnover. If no such strategic alternative is identified or completed, the Company may have incurred significant costs, including the diversion of directors and management resources, for which they will have received little or no benefit.

IV.	Risks Related to Our Growth Strategy

We may not be able to identify or consummate future investments and acquisitions on favorable terms, or at all.

Our business strategy includes growth through the acquisition of additional revenue-generating assets and investments in projects under development or construction. This strategy depends on our ability to successfully identify and evaluate investment opportunities, develop and build new assets and consummate acquisitions on favorable terms. The number of investment opportunities may be limited.

Our ability to acquire future renewable energy projects or businesses depends on the viability of renewable energy projects generally. These projects are in some cases contingent on public policy mechanisms including, among others, ITCs, PTCs, cash grants, loan guarantees, accelerated depreciation, expensing for certain capital expenditures, carbon trading plans, environmental tax credits and research and development incentives. See “—VII. Risks Related to Regulation—Government regulations could change at any time and such changes may negatively impact our current business and our growth strategy.” 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 licenses and permits and we cannot guarantee that we will be successful obtaining them (see “Our ability to develop renewable projects is subject to construction risks and risks associated with the arrangements with our joint venture partners”). Our ability to consummate future investments and acquisitions may also depend on our ability to obtain any required government or regulatory approvals for such investments, including, but not limited to, FERC, approval under Section 203 of the FPA in respect of investments in the United States; or any other approvals in the countries in which we may purchase assets in the future. We may also be required to seek authorizations, waivers or notifications from debt and/or equity financing providers at the project or holding company level; local or regional agencies or bodies; and/or development agencies or institutions that may have a contractual right to authorize a proposed acquisition.

Furthermore, we will compete with other 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. Some of our competitors for investments and acquisitions may pay more for acquisitions and may be able to identify, evaluate, bid for and purchase a greater number of assets or projects under development than our financial or human resources permit. If we are unable to identify and consummate 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 holders of our shares.

Our ability to consummate future investments also depends on the availability of financing. See “—IV. Risks Related to Our Indebtedness—We may not be able to arrange the required or desired financing for investments or for the successful refinancing of the Company’s project level and corporate level indebtedness.”

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Demand for renewable energy may be affected by the cost of other energy sources. To the extent renewable energy becomes less cost-competitive, demand for renewable energy could decrease. Slow growth or a long-term reduction in the energy demand could cause a reduction in the development of renewable energy program projects. Decreases in the prices of electricity could affect our ability to acquire assets, as renewable energy developers may not be able to compete with providers of other energy sources at such lower prices. Our inability to acquire assets could have a material adverse effect on our ability to execute our growth strategy.

In addition, our ability to grow organically is limited to some assets which have inflation indexation mechanisms in their revenues, to our transmission lines and to some renewable assets. We may not be able to deliver organic growth.

In addition, although we have a ROFO Agreement with Algonquin, our growth through the acquisitions from Algonquin or co-investments with them has been limited. Liberty GES and Algonquin may not offer us assets at all or may not offer us assets that fit within our portfolio or contribute to our growth strategy. Only certain assets outside the United States and Canada are included in the Algonquin ROFO Agreement. Liberty GES and Algonquin may decide to keep assets subject to our ROFO Agreements in their portfolios and not offer them to us for acquisition. Algonquin can terminate the Algonquin ROFO Agreement with us with a 180-day notice. Additionally, we may not reach an agreement on the price of assets offered by Liberty GES or Algonquin. For these reasons, we may not be able to consummate future investments from Liberty GES or Algonquin, which may restrict our ability to grow.

Furthermore, Liberty GES or Algonquin may have financial and resource constraints limiting or eliminating their ability to continue building the contracted assets which are currently under construction and may have financial and resource constraints limiting or eliminating their ability to develop and build new contracted assets. They could also decide to invest in other types of businesses which are not our core business. In addition, Liberty GES or Algonquin may sell assets under development, before they reach their commercial operation date. Some of the assets subject to the ROFO Agreements may not be attractive enough to us for different reasons. Furthermore, Liberty GES and Algonquin may compete with us in some of the markets where we intend to grow.

Our ability to develop renewable projects is subject to construction risks and risks associated with the arrangements with our joint venture partners

We are developing projects and we have reached agreements with a number of partners in order to develop assets in the geographies in which we operate, however we cannot guarantee that our investments will be successful and that our growth expectations will materialize. Additionally, we cannot guarantee that we will be successful in identifying new potential projects and partners or that we will be able to acquire additional assets from those partners in the future. If we are unable to identify projects under such agreements or to reach new agreements on favorable terms with new partners, or if we are unable to consummate future acquisitions from any such agreement, it may limit our ability to execute our growth strategy and may have a materially adverse effect on our business, financial condition, results of operation and cash flows.

Furthermore, development and construction activities conducted with partners or on our own 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, licenses and permits; the acceptance of local communities; the ability to secure transmission interconnection access or agreements; the ability to successfully integrate new projects into existing assets; the ability to acquire suitable labor, equipment and construction services on acceptable terms; the ability to attract project financing, including tax equity; 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.

In addition, the construction and development of new projects is subject to environmental, engineering and construction risks that could result in cost over-runs, delays and reduced performance. A number of factors that could cause such delays, cost over-runs or reduced performance include, changes in local laws or difficulties in obtaining permits, rights of way or approvals, changing engineering and design requirements, construction costs exceeding estimates for various reasons, including inaccurate engineering and planning, failures to properly estimate the cost of raw materials, components, equipment, labor or the inability to timely obtain them, unanticipated problems with project start-up, the performance of contractors, labor disruptions, inclement weather, defects in design, engineering or construction and project modifications. A delay in the projected completion of a project can result in a material increase in total project construction costs through higher capitalized interest charges, additional labor and other expenses, and a delay in the commencement of cash flow.

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If we co-invest with partners, or on our own, in assets under development or construction, we cannot guarantee that the development and construction of the asset will be successful and that we end up owning an operational asset.

In order to grow our business, we may invest in or acquire assets or businesses which have a higher risk profile or are less ESG-friendly than certain assets in our current portfolio.

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. Availability of assets with long-term contracts has decreased over the last few years, competition to acquire contracted assets in operation has been high in recent years and is expected to continue being so. We intend to increase our investments in assets which are not currently in operation, and which are subject to development and construction risk. Construction of renewable assets, among others, is subject to risk of cost over-runs and delays. There can be no assurances that assets under development and construction will perform as expected or that the returns will be as expected. 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 and which are therefore subject to merchant risk. 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 with partners or on our own in new technologies which do not have for the moment a long history track record as proven as our current assets, such as storage, district heating, geothermal, offshore wind or hydrogen. We may also consider investing in distributed generation in smaller commercial and industrial facilities. Furthermore, we may consider investing in assets 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. In addition, these type of assets and businesses could present a higher variability in the cash flows they generate. We may also acquire assets which may be considered as less ESG-friendly than certain assets in our current portfolio by current and potential investors. For example, considering the competitive landscape for renewable assets in recent years, we may acquire additional natural gas assets. Although we have set a target to maintain at least 80% of our Adjusted EBITDA generated by low carbon footprint assets, some investors with a focus on ESG may consider this target insufficient, which could cause us to become less attractive to investors.

As a result, the consummation of investments and acquisitions may have a material adverse effect on our ability to grow, our business, financial condition, results of operations and cash flows.

We cannot guarantee the success of our recent and future investments.

Acquisitions of and investments in companies and assets are subject to substantial risks, including unknown or contingent liabilities (including violations of environmental, antitrust, anticorruption, anti-bribery and anti-money laundering laws, and tax and labor disputes), the failure to identify material problems during due diligence (for which we may not be indemnified post-closing) or the risk of over-paying for assets (or not making acquisitions on an accretive basis). In some of our acquisitions the former owners agreed, or may agree, to indemnify us for certain of these matters. However, such indemnification obligations are often subject to materiality thresholds and guaranty limits, and such obligations are generally time limited. For certain acquisitions, we may not be able to successfully negotiate for such indemnification obligations. As a result, we may not recover any amounts with respect to losses due to unknown or contingent liabilities or breaches by the sellers of their representations and warranties. All this may adversely affect our business, financial condition, results of operations and prospects.

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Furthermore, the integration and consolidation of acquisitions require substantial human, financial and other resources and, ultimately, our acquisitions may divert management’s attention from our existing business concerns, disrupt our ongoing business or not be successfully integrated at all. As a result, the consummation of acquisitions may have a material adverse effect on our ability to grow, our business, financial condition, results of operations and cash flows.

We may be unable to complete all, or any, such transactions that we may analyze. Even where we consummate investments, we may be unable to achieve projected cash flows or we may encounter regulatory complications arising from such transactions. Furthermore, the terms and conditions of financing for such investments could restrict the manner in which we conduct our business. These risks could have a material adverse effect on our business, financial condition, results of operations and cash flows.

We may also make acquisitions or investments in assets that are located in different jurisdictions and are different from, and may be riskier than, those jurisdictions in which we currently operate (Canada, the United States, Mexico, Peru, Chile, Colombia, Uruguay, Spain, Italy, South Africa and Algeria). See “—VI. Risks Related to the Markets in Which We Operate—We have international operations and investments, including in emerging markets that could be subject to economic, social and political uncertainties.” These changes may have a material adverse effect on our business, financial condition, results of operations and cash flows.

Our cash dividend policy may limit our ability to grow and make investments through cash on hand.

Our dividend policy is to distribute a high percentage of our cash available for distribution, after corporate general and administrative expenses and cash interest payments and less reserves for the prudent conduct of our business, and to rely primarily upon external financing sources, including the issuance of debt and equity securities as well as borrowings under credit facilities to fund our acquisitions, investments and potential growth capital expenditures. In addition, Algonquin may terminate the Shareholders Agreement if dividend payment is lower than 80% of the cash available for distribution. Our Board of Directors may change our dividend policy at any time. We may be precluded from pursuing otherwise attractive investments if the projected short-term cash flow from the acquisition or investment does not meet our minimum expectations.

Because of our dividend policy, our growth may not be as fast as that of businesses that re-invest their available cash to expand ongoing operations. To the extent we issue additional equity securities in connection with any acquisitions or growth capital expenditures, the payment of dividends on these additional equity securities may increase the risk that we will be unable to maintain or increase our per share dividend. There are no limitations in our articles of association on our ability to issue equity securities, including convertible bonds, preferred shares or other securities ranking senior to our shares.

In addition, our Board of Directors may decide at any time to change our strategy and may agree on measures to foster our ability to grow which could include, for example, to acquire a large development company to have a larger pipeline of projects under development and construction or to reduce our dividend to re-invest in growth a larger part of the cash we generate.

VI.	Risks Related to the Markets in Which We Operate

Difficult conditions in the global economy and in the global capital markets have caused, and may continue to cause, a negative impact on our business.

Our results of operations have been, and continue to be, materially affected by conditions in the global economy. Capital markets have been experiencing high volatility during 2022 both in the United States and Europe. Concerns over the COVID-19 pandemic, high inflation, interest rate increases, war in Ukraine, energy crisis in Europe, volatile gas prices, high electricity prices particularly in Europe, tensions between the U.S., Russia and China, the availability and cost of credit, and the instability of the euro have contributed to increased volatility in capital markets and worsened expectations for the economy.

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After the sharp recession caused by the COVID-19 pandemic in 2020, the recovery in demand during the year 2021 caused disruptions in the supply chain with global shortages of some products and materials and high inflation rates. Supply chain issues persisted in 2022. Further disruptions in the supply chain could limit the availability of certain parts required to operate our facilities and could adversely impact our ability (or our operation and maintenance suppliers’ ability) to operate our plants or to perform maintenance activities. If we were to experience a shortage of or inability to acquire critical spare parts, we could incur significant delays in returning facilities to full operation, which could negatively impact our business, financial condition, results of operations and cash flows. Supply chain tensions may also affect our projects in development and construction where we can experience delays or an increase in prices of equipment and materials required for the construction of new assets, which may cause a material adverse effect on our business, financial condition, results of operations and cash flows. Prolonged inflation may also cause a material adverse effect on our business, financial condition, results of operations and cash flows

Adverse events and continuing disruptions in the global economy and capital markets may have a material adverse effect on our business, financial condition, results of operations and cash flows. Moreover, even in the absence of a market downturn, we are exposed to risk of loss due to market volatility and other factors, including volatile oil and gas prices, increasing electricity prices, interest rates swings, changes in consumer spending, business investment, government spending, and rising inflation, among others, that could affect the economic and financial situation of our concession agreements’ counterparties and, ultimately, the profitability and growth of our business. In the past, including in 2022, the price of shares in certain sectors including companies paying a high dividend and companies with a strategy focused on growth has been inversely correlated with interest rates. If interest rates continued to raise, this may have a negative impact on the price of our shares.

Generalized or localized downturns or inflationary pressures in our key geographical areas could also have a material adverse effect on our business, financial condition, results of operations and cash flows. A significant portion of our business activity is concentrated in the United States, Spain, Mexico and Peru. Consequently, we are significantly affected by the general economic conditions in these countries. To the extent uncertainty regarding the European economic recovery continues to negatively affect government or regional budgets, our business, financial condition, results of operations and cash flows could be materially adversely affected.

Global geopolitical tensions, including from the February 2022 Russian military actions across Ukraine, may rise further and create heightened volatility in the electricity market that could negatively affect both our ability to execute our business and growth strategy. Such military actions, and sanctions in response thereof as well as escalation of conflict, could significantly affect worldwide electricity market prices and demand and cause turmoil in the capital markets and generally in the global financial system. This could have a material adverse effect on our business, financial condition, results of operations and cash flows, making it difficult to execute our growth strategy.

We have international operations and investments, including in emerging markets that could be subject to economic, social and political uncertainties.

We operate our activities in a range of international locations, including North America (Canada, the United States and Mexico), South America (Peru, Chile, Colombia and Uruguay), 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 favorable 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 and business. As a result, we can provide no assurance that our future international operations and investments will remain profitable.

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A significant portion of our current and potential future operations and investments are conducted in various emerging countries worldwide. Our activities and investments in these countries involve a number of risks that are more prevalent than in developed markets, such as economic and governmental instability, the possibility of significant amendments to, or changes in, the application of governmental regulations, the nationalization and expropriation of private property, payment collection difficulties, social unrest or protests, substantial fluctuations in interest and exchange rates, changes in the tax framework or the unpredictability of enforcement of contractual provisions, currency control measures, limits on the repatriation of funds and other unfavorable interventions or restrictions imposed by public authorities. Countries like Mexico, Peru and Chile currently have governments which are favorable to increase public spending and tax pressure. In addition, the current government in Mexico is proposing regulation which intends to benefit local business rather than foreign investors. In Peru, after an attempt by the former president to dissolve congress and replace it with an “exceptional emergency government”, the president was replaced. Political uncertainty may persist in the upcoming months. In countries such as Algeria or South Africa, a change in government can cause instability in the country and a new government may decide to change laws and regulations affecting our assets or may decide to expropriate such assets. All this may have a material adverse effect on our business, financial condition, results of operations and cash flows.

Our U.S. dollar-denominated contracts in several assets are payable in local currency at the exchange rate of the payment date and in some cases include portions in local currency. In the event of a rapid devaluation or implementation of exchange or currency controls, we may not be able to exchange the local currency for the agreed dollar amount, which could affect our cash available for distribution. Likewise, our contracts in South Africa and Colombia are payable in local currency. Governments in Latin America and Africa frequently intervene in their economies and occasionally make significant changes in policy and regulations. Governmental actions aimed to control inflation and other similar policies and regulations have often involved, among other measures, price controls, currency devaluations, capital or exchange controls and limits on imports. Such devaluation, implementation of exchange or currency controls or governmental involvement may have a material adverse effect on our business, financial condition, results of operations and cash flows.

VI.	Risks Related to Regulation

We are subject to extensive governmental regulation in a number of different jurisdictions, and our inability to comply with existing regulations or requirements in applicable regulations or requirements may have a negative impact on our business, financial condition, results of operations and cash flows.

We are subject to extensive regulation of our business in the countries in which we operate. Such laws and regulations require licenses, 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. The power plants, transmission lines and other assets that we own are subject to strict international, national, state and local regulations relating to their operation and expansion (including, among other things, leasing and use of land, and corresponding building permits, landscape conservation, noise regulation, environmental protection and environmental permits and electric transmission and distribution network congestion regulations). Non-compliance with such regulations could result in reputational damage, the revocation of permits, sanctions, fines, criminal penalties or affect our ability to satisfy applicable ESG standards. Compliance with regulatory requirements may result in substantial costs to our operations that may not be recovered. All the above could have a negative impact on us and a material adverse effect on our business, financial condition, results of operations and cash flows.

Our business is subject to stringent environmental regulation.

We are subject to significant environmental regulation, which, among other things, requires us to obtain and maintain regulatory licenses, permits and other approvals and comply with the requirements of such licenses, permits and other approvals and perform environmental impact studies on changes to projects. In addition, our assets need to comply with strict environmental regulation on air emissions, water usage and contaminating spills, among others. Our policy is to maintain environmental insurance policies. We can give no assurance that we will be able to maintain such policies in the future. Additionally, as a company with a focus on ESG and most of the business in renewable energy, environmental incidents can also significantly harm our reputation. There can be no assurance that:

•	public opposition will not result in delays, modifications to or cancellation of any project or license;

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•

laws or regulations will not change or be interpreted in a manner that increases our costs of compliance or require new investments and may have a material adverse effect on our business, financial condition, results of operations and cash flows, including preventing us from operating an asset if we are not in compliance; or

•	governmental authorities will approve our environmental impact studies where required to implement proposed changes to operational projects.

We believe that we are currently in material compliance with all applicable regulations, including those governing the environment. In the past, we have experienced some environmental accidents and we have been found not to be in compliance with certain environmental regulations and have incurred fines and penalties associated with such violations which, to date, have not been material in amount. At any point in time, we are subject to review and in some cases challenges regarding our compliance that might result in future fines and penalties or other remediation measures. At this point in time, we believe that such reviews will not result in a material financial impact. In one of our plants in Spain we have a difference of interpretation with an agency which may result, if the agency, and eventually the court, decided against our position in an eventual modification of the plant several years from today with a cost that we do not expect to be material. We can give no assurance, however, that we will continue to be in compliance or avoid material fines, penalties, sanctions and expenses associated with compliance issues in the future. Violation of such regulations may give rise to significant liability, including fines, damages, fees and expenses, additional taxes and site closures. The costs of compliance as well as non-compliance may have a material adverse effect on our business, financial condition, results of operations and cash flows.

Government regulations could change at any time and such changes may negatively impact our current business and our growth strategy.

Our assets are subject to extensive regulation. Changes in existing energy, environmental and administrative laws and regulations may have a material adverse effect on our business, financial condition, results of operations and cash flows, including on our growth plan and investment strategy. Also, such changes may in certain cases, have retroactive effects and may cause the result of operations to be lower than expected, or increase the size and number of claims and damages asserted against us or subject us to enforcement actions, fines and even criminal penalties. Our business may also be affected by additional taxes imposed on our activities or changes in regulations, reduction of regulated tariffs and other cuts or measures.

Changes in laws and regulations could increase the size and number of claims and damages asserted against us or subject us to enforcement actions, fines and even criminal penalties. In addition, changes in laws and regulations may, in certain cases, have retroactive effect and may cause the result of operations to be lower than expected. In particular, our activities in the energy sector are subject to regulations applicable to the economic regime of generation of electricity from renewable sources and to subsidies or public support in the benefit of our production of energy from renewable energy sources, which vary by jurisdiction, and are subject to modifications that may be more restrictive or unfavorable to us.

Furthermore, in some of our assets such as the solar plants in Spain and one of our transmission lines in Chile, revenues are based on existing regulation. We may also acquire in the future additional assets or businesses with regulated revenues. For these types of assets and businesses, if regulation changes, it may have a material adverse effect on our business, financial condition, results of operations and cash flows.

In addition, our strategy to grow our business through investments in renewable energy projects partly depends on current government policies that promote and support renewable energy and enhance the economic viability of owning solar and wind energy projects. Renewable energy projects currently benefit from various U.S. federal, state and local governmental incentives, such as ITCs, PTCs, loan guarantees, RPS programs, or MACRS along with other incentives. These incentives make the development of renewable energy projects more competitive. These policies have had a significant impact on the development of renewable energy, and they could change at any time. A loss or reduction in such incentives or the value of such incentives, a change in policy away from limitations on coal and gas electric generation or a reduction in the capacity of potential investors to benefit from such incentives could decrease the attractiveness of renewable energy projects to project developers, and the attractiveness of renewable assets to utilities, retailers and customers. Such a loss or reduction could reduce our investment opportunities and our willingness to pursue renewable energy projects due to higher operating costs or lower revenues from off-take agreements. See also “—Risks Related to Taxation.”

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Additionally, some U.S. states with RPS targets have met, or in the near future will meet, their renewable energy targets. For example, California, which has among the most aggressive RPS laws in the United States will be required to meet the higher renewable energy mandate of 60.0% by 2030 and 100% by 2045 that was adopted in 2018. If, as a result of achieving these targets, these and other U.S. states do not increase their targets in the near future, demand for additional renewable energy could decrease. In addition, the substantial increase of grid connected intermittent solar and wind generation assets resulting from the adoption of RPS targets has created significant technical challenges for grid operators. As a result, RPS targets may need to be scaled back or delayed in order to develop technologies or infrastructure to accommodate this increase in intermittent generation assets.

In addition, regulations recently approved in the United States in relation with the import of solar equipment from China and Southeast Asia, including the Antidumping and countervailing duties and the Uyghur Forced Labor Prevention Act has hindered the ability of developers to acquire equipment for the construction of new assets. If this situation persisted in the future and a domestic alternative industry was not able to develop, our growth in the U.S. through the development and construction of new assets may be negatively affected.

Subsidy regimes for renewable energy generation have been challenged in the past on constitutional and other grounds (including that such regimes constitute impermissible European Union state aid) in certain jurisdictions. In addition, certain loan-guarantee programs in the United States, including those which have enabled the DOE to provide loan guarantees to support our Solana and Mojave projects in the United States, have been challenged on grounds of failure by the appropriate authorities to comply with applicable U.S. federal administrative and energy law. If all or part of the subsidy and incentive regimes for renewable energy generation in any jurisdiction in which we operate were found to be unlawful and, therefore, reduced or discontinued, we may be unable to compete effectively with conventional and other renewable forms of energy. We currently have two financing arrangements with the Federal Financing Bank for the Solana and Mojave assets, repayment of which to the Federal Financing Bank by those projects is with a guarantee by the DOE. Additionally, these projects benefitted from the ITCs. Unilateral changes to these agreements or the ITC regime may have a material adverse effect on our business, financial condition, results of operations and cash flows.

Revenues in our solar assets in Spain are mainly defined by regulation and some of the parameters defining the remuneration are subject to review periodically.

According to Royal Decree 413/2014, solar electricity producers in Spain receive: (i) the pool price for the power they produce, (ii) a payment based on the standard investment cost for each type of plant (without any relation whatsoever to the amount of power they generate) and (iii) an “operating payment” (in €/MWh produced).

The principle driving this economic regime is that the payments received by a renewable energy producer should be equivalent to the costs that they are unable to recover on the electricity pool market where they compete with non-renewable technologies. This economic regime seeks to allow a “well-run and efficient enterprise” to recover the costs of building and running a plant, plus a reasonable return on investment (project investment rate of return). The rate applicable during the first regulatory period was 7.398%.

The first review of this rate was at the end of 2018 applicable for the second regulatory period 2020-2025. On November 2, 2018, CNMC (the state-owned regulator for the electricity system in Spain) issued its final report with a proposed reasonable rate of return of 7.09%. In December 2018, the government issued a draft project law proposing a reasonable rate of return of 7.09%, with the possibility of maintaining the 7.398% reasonable rate of return under certain circumstances. On November 24, 2019, the Spanish government approved Royal Decree-law 17/2019 setting out a 7.09% reasonable rate of return applicable from January 1, 2020 until December 31, 2025, as a general rule and the possibility, under certain circumstances including not having any ongoing legal proceeding against the Kingdom of Spain ongoing, of maintaining the 7.398% reasonable rate of return for two consecutive regulatory periods. The reasonable rate of return was calculated by reference to the weighted average cost of capital (WACC), the calculation method that most of the European regulators apply to determine the return rates applicable to regulated activities within the energy sector. As a result, some of the assets in our Spanish portfolio are receiving a remuneration based on a 7.09% reasonable rate of return until December 31, 2025, while others are receiving a remuneration based on a 7.398% reasonable rate of return until December 31, 2031.

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If the payments for renewable energy plants are revised to lower amounts in the next regulatory period starting on January 1, 2026 until December 31, 2031, or starting on January 1, 2032, depending on each asset, this could have a material adverse effect on our business, financial condition, results of operations and cash flows. As a reference, taking into account that the reasonable rate of return will be revised only for part of our portfolio on January 1, 2026, assuming our assets in Spain continue to perform as expected and assuming no additional changes of circumstances, with the information currently available, a reduction of 100 basis points in the reasonable rate of return set by the Spanish government from 2026 could cause a reduction in its cash available for distribution of approximately €6 million per year. This estimate is subject to certain assumptions, which may change in the future.

In addition, the regulation includes a mechanism under which regulated revenues are reviewed every three years to reflect the difference between expected and actual market prices over the remaining regulatory life if the difference is higher than a pre-defined threshold. Given that since mid-2021 electricity prices in Spain have been, and may continue to be, significantly higher than expected, it will cause lower regulated revenue and lower cash flows over the remaining regulatory life of our solar assets. On March 30, 2022, the Royal Decree Law 6/2022 introduced certain temporary changes to the detailed regulated components of revenue received by our solar assets in Spain, which is applicable from January 1, 2022. The proposed remuneration parameters for the year 2022 were published on May 12, 2022 and were declared final on December 14, 2022. The remuneration parameters for the next semi-regulatory period, starting on January 1, 2023 were published on December 28, 2022 in draft form and are subject to final publication. In addition, from an accounting perspective, in 2021 and 2022 we recorded a negative provision with no cash impact on the current period that lowered revenue and Adjusted EBITDA in this geography. Volatility in electricity market prices can cause volatility in our results of operations.

Furthermore, the government of Spain has recently announced a new temporary levy which is expected to be in force during the fiscal years 2023 and 2024, and to be applicable to revenues obtained in fiscal years 2022 and 2023 by large operators of the electric and oil and gas sectors with revenue in Spain exceeding €1,000 million. The levy is not expected to be applicable to our assets in Spain since we are out of the proposed scope. Similarly, there have been discussions around potential caps to electricity prices that we do not expect to affect the net value of our assets since these assets are regulated, but which could have a negative impact on short-term collections. Similar potential measures adopted in the future may have a negative impact on our business, financial condition, results of operations and cash flows.

If approved, the proposed electricity constitutional reform in Mexico may have a negative impact on our current assets and might impact negatively on our ability to grow in that country.

On March 9, 2021, Mexico’s President proposed a preferential reform to the Electricity Industry Law (Ley de la Industria Eléctrica). In broad terms, the reform aimed for the Federal Electricity Commission, or CFE, to expand its impact in the energy generation sector. Additionally, on September 30, 2021, Mexico’s President submitted an amendment proposal to the Constitution. On April 17, 2022, the House of Representatives in Mexico rejected the constitutional amendment proposal submitted by the Mexican President aimed at approving a reform to the Electricity Industry Law and granting the state-owned Federal Electricity Commission priority over private sector companies. Although the Mexican President has stated that he does not intend to re-submit a modified amendment proposal for approval again, at this point we cannot guarantee that he will not pursue other changes to the electricity sector in Mexico, since this has been an important component of his political agenda.

In addition, in December 2021, the Mexican Energy Regulatory Commission approved an amendment to the existing regulation on the isolated supply, which may affect our Monterrey asset, in which we have a 30% equity ownership. We have filed appeals for protection before specialized courts and we expect this situation to be solved without significant impact. However, we cannot guarantee that this change in regulation will not have any negative impact on our business, financial condition, results of operations and cash flows.

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Our international operations require us to comply with anti-corruption and other laws and regulations of the United States government and various non-U.S. jurisdictions.

Doing business in multiple countries requires us and our subsidiaries to comply with the laws and regulations of the United States government and various non-U.S. jurisdictions. Our failure to comply with these rules and regulations may expose us to liabilities. These laws and regulations may apply to us, our subsidiaries, individual directors, officers, employees and agents, and may restrict our operations, trade practices, investment decisions and partnering activities.

In particular, our non-U.S. operations are subject to United States and foreign anti-corruption laws and regulations, such as the Foreign Corrupt Practices Act of 1977, as amended (the “FCPA”), and similar laws and regulations. The FCPA prohibits United States companies and their officers, directors, employees and agents acting on their behalf from corruptly offering, promising, authorizing or providing anything of value to foreign officials for the purposes of influencing official decisions or obtaining or retaining business or otherwise obtaining favorable treatment. The FCPA also requires companies keep books, records and accounts that accurately and fairly reflect transactions and dispositions of assets and to maintain a system of adequate internal accounting controls. As part of our business, we deal with state-owned business enterprises, the employees and representatives of which may be considered foreign officials for purposes of the FCPA. As a result, business dealings between our employees, agents, intermediaries, subcontractors or similar business parties, and any such foreign official could expose us to the risk of violating anti-corruption laws even if such business practices may be customary or are not otherwise prohibited between the us and a private third party. Violations of these legal requirements are punishable by criminal fines and imprisonment, civil penalties, disgorgement of profits, injunctions, debarment from government contracts as well as other remedial measures.

We have established policies and procedures designed to assist us and our personnel in complying with applicable United States and non-U.S. laws and regulations; however, we cannot assure you that these policies and procedures will completely eliminate the risk of a violation of these legal requirements, and any such violation (inadvertent or otherwise) could have a material adverse effect on our business, financial condition, results of operations and cash flows.

VII.	Risks Related to Ownership of Our Shares

We may not be able to pay a specific or increasing level of cash dividends to holders of our shares in the future.

The amount of our cash available for distribution principally depends upon the amount of cash we generate from our operations, which will fluctuate from quarter to quarter based on, among other things:

•	operational performance of our assets;

•

maintenance capital expenditures in our assets and other potential capital expenditure requirements in our assets in the case there were technical problems, requirements by insurance companies, environmental or regulatory requirements, capital expenditures necessary to increase safety of our employees, or unanticipated increases in construction and design costs;

•	adverse weather;

•	our debt service requirements and other liabilities;

•	fluctuations in our working capital needs;

•	fluctuations in foreign exchange rates;

•	the level of our operating and general and administrative expenses;

•	seasonal variations in revenues generated by the business;

•	losses experienced not covered by insurance;

•	shortage of qualified labor;

•	restrictions contained in our debt agreements (including our project-level financing);

•	our ability to borrow funds, including intercompany loans;

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•

changes in our revenues and/or cash generation in our assets due to delays in collections from our off-takers, legal disputes regarding contact terms, adjustments contemplated in existing regulation or changes in regulation or taxes in the countries in which we operate, or adverse weather conditions;

•	other business risks affecting our cash levels;

•	unfavorable regional, national or global economic and market conditions; and

As a result of all these factors, we cannot guarantee that we will have sufficient cash generated from operations to pay a specific or increasing level of cash dividends to holders of our shares. Furthermore, holders of our shares should be aware that the amount of cash available for distribution depends primarily on our cash flow, and is not solely a function of profitability, which is affected by non-cash items.

We are a holding company whose sole material assets consist of our interests in our subsidiaries. We do not have any independent means of generating revenue. We intend to cause our operating subsidiaries to make distributions to us in an amount sufficient to cover our corporate debt service, corporate general and administrative expenses, all applicable taxes payable and dividends, if any, declared by us. To the extent that we need funds for a quarterly cash dividend to holders of our shares or otherwise, and one or more of our operating subsidiaries is restricted from making such distributions under the terms of its financing or other agreements or applicable law and regulations or is otherwise unable to provide such funds, it could materially adversely affect our liquidity and financial condition and limit our ability to pay dividends to shareholders. Our project-level financing agreements generally prohibit distributions to us unless certain specific conditions are met, including the satisfaction of financial ratios. The ability of our operating subsidiaries to make distributions could also be limited by legal, regulatory or other restrictions or limitations applicable in the various jurisdictions in which we operate, such as exchange controls or similar matters or corporate law limitations. Our ability to pay dividends on our shares is also limited by restrictions under the Revolving Credit Facility, the 2020 Green Private Placement, the Note Issuance Facility 2020 and the Green Senior Notes.

Our cash available for distribution will likely fluctuate from quarter to quarter, in some cases significantly, due to seasonality. See “Item 4.B—Business Overview—Seasonality.” As result, we may reduce the amount of cash we distribute in a particular quarter to establish reserves to fund distributions to shareholders in future periods. If we fail to establish sufficient reserves, we may not be able to maintain our quarterly dividend with a respect to a quarter adversely affected by seasonality.

Dividends to holders of our shares will be paid at the discretion of our Board of Directors. Our Board of Directors may decrease the level of or entirely discontinue payment of dividends. Our Board of Directors may change our dividend policy at any point in time or modify the dividend for specific quarters following prevailing conditions. For a description of additional restrictions and factors that may affect our ability to pay cash dividends, please see “Item 8.A—Consolidated Statements and Other Financial Information—Dividend Policy.”

Future dispositions of our shares by substantial shareholders or the perception thereof may cause the price of our shares to fall.

Future dispositions of substantial amounts of the shares and/or equity-related securities in the public market, or the anticipation or perception by the market that such dispositions could occur, could adversely affect prevailing trading prices of the shares and could impair our ability to raise capital through future offerings of equity or equity-related securities.

Further, Algonquin is the beneficial owner of approximately 42.2% of our ordinary shares some of which have been and may be encumbered in the future to secure debt or other obligations of Algonquin, its subsidiaries or affiliates. The market price of our shares could decline as a result of future dispositions of our shares by Algonquin, its secured creditors or other significant stockholders whether in public or private transactions (whether in a single transaction, a series of related organized transactions or otherwise), or the perception that these dispositions could occur.

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Liberty GES has a secured credit facility in the amount of $306,500,000 maturing on January 26, 2024. Such loan is collateralized by a pledge over most of the Atlantica shares held indirectly by Algonquin through certain of its subsidiaries. A collateral shortfall under that facility would occur if the quotient of the net obligations of Liberty GES, divided by the aggregate collateral share value is equal to or greater than 50% in which case the creditors under that facility may sell Atlantica shares to eliminate the collateral shortfall. In addition, a default by Liberty GES under such facility may result in its creditors having the right to foreclose on the shares and sell the shares.

Many factors may influence Algonquin’s operations, plans, or strategy (including with respect to the holding or disposition of all or any portion of our shares), and we have limited knowledge and/or visibility with respect to Algonquin’s operations, plans, or strategy. In January 2023 Algonquin announced a number of actions, including a plan to divest approximately $1 billion in assets. As one of the assets in Algonquin's portfolio, it is possible that Algonquin may have a potential 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.

We cannot predict whether future sales of our shares, or the increase in the availability of our shares for sale, will occur and the impact thereof on the market price for our shares and our ability to raise capital by offering equity or equity-related securities.

As a “foreign private issuer” in the United States, we are exempt from certain rules under the U.S. securities laws and are permitted to file less information with the SEC than U.S. companies.

As a “foreign private issuer,” we are exempt from certain rules under the Exchange Act that impose certain disclosure obligations and procedural requirements for proxy solicitations under Section 14 of the Exchange Act. In addition, our officers, directors and principal shareholders are exempt from the reporting and “short-swing” profit recovery provisions of Section 16 of the Exchange Act and the rules under the Exchange Act with respect to their purchases and sales of our shares. Moreover, we are not required to file periodic reports and financial statements with the SEC as frequently or as promptly as U.S. companies whose securities are registered under the Exchange Act. In addition, we are not required to comply with Regulation FD, which restricts the selective disclosure of material information.

If we were to lose our “foreign private issuer” status, we would no longer be exempt from certain provisions of the U.S. securities laws we would be required to commence reporting on forms required of U.S. companies, and we could incur increased compliance and other costs, among other consequences.

The rights of our shareholders may differ from the rights typically offered to shareholders of a U.S. corporation organized in Delaware.

We are incorporated under the laws of England and Wales. The rights of holders of our shares are governed by the laws of England and Wales, including the provisions of the UK Companies Act 2006, and by our articles of association. These rights differ in certain respects from the rights of shareholders in typical U.S. corporations organized in Delaware. The principal differences are set forth in “Item 10.B—Memorandum and Articles of Association.”

There are limitations on enforceability of civil liabilities against us.

We are incorporated under the laws of England and Wales. A majority of our officers and directors reside outside the United States. In addition, a significant portion of our assets and a significant portion of the assets of our directors and officers are located outside the United States. As a result, it may be difficult or impossible to effect service of process within the United States upon us or such officers and directors, with respect to matters arising under U.S. federal securities law, or to force us or them to appear in a U.S. court. It may also be difficult or impossible to enforce a judgment of a U.S. court against persons outside the United States, predicated upon civil liability provisions under U.S. federal securities law, or to enforce a judgment of a foreign court against such persons in the United States. We believe that there may be doubt as to the enforceability against persons in England and Wales and in Spain, whether in original actions or in actions for the enforcement of judgments of U.S. courts, of civil liabilities predicated solely upon the laws of the United States, including its federal securities laws. In addition, punitive damages in actions brought in the United States or elsewhere may be unenforceable in England and Wales or in Spain.

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Shareholders in certain jurisdictions may not be able to exercise their pre-emptive rights if we increase our share capital.

Under our articles of association, holders of our shares generally have the right to subscribe and pay for a sufficient number of our shares to maintain their relative ownership percentages prior to the issuance of any new shares in exchange for cash consideration. Holders of shares in certain jurisdictions may not be able to exercise their pre-emptive rights unless securities laws have been complied with in such jurisdictions with respect to such rights and the related shares, or an exemption from the requirements of the securities laws of these jurisdictions is available. To the extent that such shareholders are not able to exercise their pre-emptive rights, the pre-emptive rights would lapse, and the proportional interests of such holders would be reduced.

In addition, under the Shareholders Agreement, Algonquin may subscribe to capital increases in cash for (i) up to 100.0% of our ordinary shares if the purpose of the issuance is to fund our acquisition of assets under Algonquin or the Liberty GES ROFO Agreement. If we issue ordinary shares for any other purpose, Algonquin may subscribe in cash for our ordinary shares in a pro rata amount of such Algonquin’s holding in us. The Shareholders Agreement may be terminated or modified in the future. In any case, Algonquin has the right but not the obligation to subscribe for our shares.

Provisions in the UK City Code on Takeovers and Mergers may have anti-takeover effects that could discourage an acquisition of us by others, even if an acquisition would be beneficial to our shareholders.

The UK City Code on Takeovers and Mergers, or the Takeover Code, applies, among other things, to an offer for a public company whose registered office is in the U.K. and whose securities are not admitted to trading on a regulated market in the U.K. if the company is considered by the Panel on Takeovers and Mergers, or the Takeover Panel, to have its place of central management and control in the U.K. This is known as the “residency test.” The test for central management and control under the Takeover Code is different from that used by the UK tax authorities. Under the Takeover Code, the Takeover Panel will determine whether we have our place of central management and control in the United Kingdom by looking at various factors, including the structure of our Board of Directors, the functions of the directors and where they are resident.

If at the time of a takeover offer the Takeover Panel determines that we have our place of central management and control in the U.K., we would be subject to a number of rules and restrictions, including, but not limited to, the following: (1) our ability to enter into deal protection arrangements with a bidder would be extremely limited; (2) we may not, without the approval of our shareholders, be able to perform certain actions that could have the effect of frustrating an offer, such as issuing shares or carrying out acquisitions or disposals; and (3) we would be obliged to provide equality of information to all bona fide competing bidders.

VII.	Risks Related to Taxation

Changes in our tax position can significantly affect our reported earnings and cash flows.

We have assets in different jurisdictions, which are subject to different tax regimes. Changes in tax regimes such as the reduction or elimination of tax benefits could adversely affect our assets. Limitations on the deductibility of interest expense could adversely affect our ability to deduct the interest we pay on our debt. These and other potential changes in tax laws and regulations could have a material adverse effect on our results and cash flows. In addition, a reduction in corporate tax rates could make investments in renewable projects less attractive to potential tax equity investors, in which case we may not be able to obtain third-party financing on terms as beneficial as in the past, or at all, which could limit our ability to grow our business.

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Changes in corporate tax rates and/or other relevant tax laws in the United Kingdom, the United States, Spain, Mexico or the other countries in which our assets are located may have a material impact on our future tax rate and/or our required tax payments. Such changes may include measures enacted in response to the ongoing initiatives in relation to fiscal legislation at an international level, such as the Action Plan on Base Erosion and Profit Shifting of the Organization for Economic Co-operation and Development (“OECD”). The final determination of our tax liability could be different from the forecasted amount, which may have a material adverse effect on our business, financial condition, results of operations and cash flows. Changes to the U.K. controlled foreign company rules or adverse interpretations of them, could have an impact on our future tax rate and/or our required tax payments. With respect to some of our projects, we must meet defined requirements to apply favorable tax treatment, such as lower tax rates or exemptions. We intend to meet these requirements in order to benefit from the favorable tax treatment; however, there can be no assurance that we will be able to comply with all of the necessary requirements in the future, or the requirements could change or be interpreted in another manner, which could give rise to a greater tax liability and which may have a material adverse effect on our business, results of operations, financial condition and cash flows.

In addition, the governments of some countries where we operate could implement changes to their tax laws and regulations, the content of which are largely uncertain currently. These potential changes to applicable tax laws and regulations could have a negative impact on our financial condition, results of operations and cash flows. Furthermore, tax laws and regulations are subject to interpretation. Our tax returns in each country are subject to inspection and even if we believe that we are complying with all tax laws and regulations in each country, a tax inspector could have a different view, which may result in additional tax liabilities and may have a negative impact on our financial condition, results of operations and cash flows.

In December 2022, the UK government confirmed the increase of the corporation tax rate up to 25% for fiscal years beginning on April 1, 2023. We do not expect this increase to result in significant impacts in our tax position in the UK.

In addition, the government of South Africa approved in 2022 new limitations for tax years ending on or after March 31, 2023. The net interest expense will be limited to 30% of the EBITDA and the NOLs carried forward may only be applied against 80% of taxable income of the corporate income tax. These new limitations may have a negative impact in our cash flows.

As of November 2021, 137 countries agreed to implement the “Two Pillars Solution”, an OECD/ G20 Inclusive Framework initiative, which aims to reform the international taxation policies and ensure that multinational companies pay taxes wherever they operate and generate profits. “Pillar Two” of this initiative generally provides for an effective global minimum corporate tax rate of 15% on profits generated by multinational companies with consolidated revenues of at least €750 million, calculated on a country-by country basis. This minimum tax would be applied on profits in any jurisdiction wherever the effective tax rate, determined on a jurisdictional basis, is below 15%. Any additional tax liability resulting from the application of this minimum tax will be payable by the parent entity of the multinational group to the tax authority in such parent’s country of residence. The OECD and its members are still working on the coordinated implementation of the minimum tax. Although this initiative is still subject to further developments in the countries where we operate, it is expected to be in force in the UK and the EU for fiscal years commencing on January 1, 2024. The global minimum tax may have a negative impact on our financial condition, results of operations and cash flows.

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 include 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.

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Although we expect these NOLs will be available as a future benefit, in the event that they are not generated as expected, or are successfully challenged by the local tax authorities, such as the IRS or His Majesty’s Revenue and Customs among others, by way of a tax audit or otherwise, or are subject to future limitations as discussed below, our ability to realize these benefits may be limited. A reduction in our expected NOLs, a limitation on our ability to use such NOLs or the occurrence of future tax audits may result in a material increase in our estimated future income tax liability and may have a material adverse effect on our business, financial condition, results of operations and cash flows.

Our ability to use U.S. NOLs to offset future income may be limited.

We have generated significant NOLs. For purposes of U.S. federal income taxation, NOLs generated on or before December 31, 2017, can generally be carried back two years and carried forward for up to twenty years and can be applied to offset 100% of taxable income in such years. As a result of the CARES Act, NOLs incurred between January 1, 2018, and December 31, 2020 may be carried forward indefinitely and carried back five years. Losses arising after December 31, 2020, cannot be carried back and are subject to limitations on their deductibility that may prevent us from using the NOLs to offset all taxable income in future years.

Our NOL carryforwards and certain recognized 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. An ownership change may be triggered if Algonquin sold all or part of its equity interest in Atlantica or if there was a significant ownership change in the Algonquin shareholder base. In the event of an ownership change, NOLs that exceed the Section 382 limitation in any year will continue to be allowed as carryforwards for the remainder of the carryforward period and will be available to offset taxable income for years within the carryforward period subject to the Section 382 limitation in each year. Nevertheless, if the carryforward period for any NOL were to expire before that loss had been fully utilized, the unused portion of that loss would be lost. Our use of new NOLs arising after the date of an ownership change would not be affected by the Section 382 limitation (unless there were another ownership change after those new losses arose).

We have experienced ownership changes in the past. Future sales by our largest shareholder, future equity issuances and in general the activity of our direct or indirect shareholders may limit further our ability to use net operating loss carryforwards in the United States, which could have a potential adverse effect on cash flows from U.S. assets expected in the future. In 2019, the Internal Revenue Service (“IRS”) issued proposed regulations concerning the calculation of built-in gains and losses under Section 382. After receiving public comments, in May 2022 the IRS announced that they will issue new proposed regulations on calculating built in gains and losses following an ownership change. If the proposed regulations are enacted and depending on its final outcome, they may significantly limit our annual use of pre-ownership change U.S. NOLs in the event a new ownership change occurs after the new rule is in place.

In addition, because we have recorded tax credits for the U.S. tax losses carryforwards in the past, a limit to our ability to use U.S. NOLs could result in writing off tax credits, which could cause a substantial non-cash income tax expense in our financial statements.

If we are a passive foreign investment company for U.S. federal income tax purposes for any taxable year, U.S. Holders of our shares could be subject to adverse U.S. federal income tax consequences.

If we were a PFIC for any taxable year during which a U.S. Holder held our shares, certain adverse U.S. federal income tax consequences may apply to the U.S. Holder. We do not believe that we were a PFIC for our 2021 taxable year and do not expect to be a PFIC for U.S. federal income tax purposes for the current taxable year or in the foreseeable future. The application of the PFIC rules is, however, subject to uncertainty in several respects, and we must make a separate determination after the close of each taxable year as to whether we were a PFIC for such year. PFIC status depends on the composition of a company’s income and assets and the fair market value of its assets (including certain equity investments) from time to time, as well as on the application of complex statutory and regulatory rules that are subject to potentially varying or changing interpretations. Accordingly, there can be no assurance that we will not be considered a PFIC for any taxable year.

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If we were a PFIC, U.S. Holders of our shares may be subject to adverse U.S. federal income tax consequences, such as taxation at the highest marginal ordinary income tax rates on capital gains and on certain actual or deemed distributions, interest charges on certain taxes treated as deferred, and additional reporting requirements. See “Item 10.E—Taxation—U.S. Federal Income Tax Considerations—Passive foreign investment company rules.”

IX.	Other Risks

Our suppliers may have lower ethical standards than we do and may not comply with all laws and regulations, which may adversely impact our business.

We have suppliers in different geographies. Although we have policies and procedures in place, including a Supplier Code of Conduct, we do not control our suppliers and their business practices. As a result, we cannot guarantee that they follow ethical business practices, such as fair wage practices and compliance with environmental, safety, and other local laws. In case our existing suppliers had a demonstrated lack of compliance, we may need to change suppliers, which may result in increased costs. Unethical practices and lack of compliance by our suppliers may also have a negative impact on our reputation, which may in turn have an adverse effect on our business, results of operations and cash flows.

We may not satisfy the standards of our existing or future ESG certifications or those of investors or regulators for assets with sustainability characteristics.

There can be no assurance of the extent to which we will be successful in satisfying the requirements or standards of our existing or future ESG certifications or those of investors or regulators for assets with sustainability characteristics. In addition, there is no assurance that any future investments we make will meet investor expectations or any standards for investment in assets with sustainability characteristics, or standards regarding sustainability performance, in particular with regard to any direct or indirect environmental, sustainability or social impact. Failure to maintain any existing or future ESG certification or those of investors or regulators for assets with sustainability characteristics may adversely affect our business, financial condition, results of operations and prospects.

Further, adverse environmental, regulatory, political or social changes may occur during the design, construction and operation of any action we may take in furtherance of our sustainability goals, making it less likely, more expensive or impracticable for us to achieve such goals, or such actions may become controversial or criticized by activist groups or other stakeholders.

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ITEM 4.

INFORMATION ON THE COMPANY

A.	History and Development of the Company

Atlantica Sustainable Infrastructure plc was incorporated in England and Wales as a private limited company on December 17, 2013. On June 18, 2014, we completed our IPO and our shares are listed on the NASDAQ Global Select Market under the symbol “AY.” The address of our principal executive offices is Great West House, GW1, 17^th floor, Great West Road, Brentford, TW8 9DF, United Kingdom, and our phone number is +44 203 499 0465. Our current agent in the U.S. is Atlantica North America LLC, a Delaware limited liability company with its principal office located at 850 New Burton Road, Suite 201, Dover, Delaware 19904, United States.

Prior to the consummation of our IPO, Abengoa transferred ten assets to us and since then our portfolio has grown through acquisitions and investments. On November 1, 2017, Algonquin agreed to acquire 25.0% of our shares from Abengoa and upon completion of the relevant share sale, became our largest shareholder. On November 27, 2018, Algonquin acquired from Abengoa the remaining 16.5% of our shares previously held by Abengoa and in 2019, Algonquin progressively increased its stake in our shares up to 44.2% as of December 31, 2019. As of the date of this annual report, Algonquin owns 42.2% of our shares.

Investments

We refer to “Item 5. —Operating and Financial Review and Prospects” for the description of our recent investments. Apart from these investments, there have been no material capital expenditures or divestitures in the last three years.

The SEC maintains an internet site that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC, which can be found at http://www.sec.gov. Our internet address is https://www.atlantica.com/web/en/. The URLs included in this annual report on Form 20-F are intended to be an inactive textual reference only. They are not intended to be an active hyperlink to the applicable website. The information contained on our website is not incorporated by reference and does not form part of this annual report on Form 20-F.

Recent Developments

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 maximize 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.

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. See “Cautionary Statements Regarding Forward-Looking Statements” and “Item 3.D—Risk Factors” in this annual report.

B.	Business Overview

Overview

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 investing in and managing sustainable infrastructure assets, while creating long-term value for our investors and the rest of our stakeholders. In 2022, our renewable sector represented 75% of our revenue with solar energy representing 64%. 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 44 assets with 2,161 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, 2022, we estimate that our assets had a weighted average remaining contract life of approximately 14 years³.

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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.

Current Operations

Our assets are organized into the following four business sectors: Renewable Energy, Efficient Natural Gas and Heat, Transmission Lines and Water. The following table provides an overview of our current assets:

Assets	Type	Ownership	Location	Currency⁽⁹⁾	Capacity (Gross)	Counterparty Credit Ratings⁽¹⁰⁾	COD*	Contract Years Remaining⁽¹⁷⁾

Solana	Renewable (Solar)	100%	Arizona (USA)	USD	280 MW	BBB+/A3/BBB+	2013	21
Mojave	Renewable (Solar)	100%	California (USA)	USD	280 MW	BB-/--/BB	2014	17
Coso	Renewable (Geothermal)	100%	California (USA)	USD	135 MW	Investment grade ⁽¹¹⁾	1987/ 1989	16
Elkhorn Valley⁽¹⁶⁾	Renewable (Wind)	49%	Oregon (USA)	USD	101 MW	BBB/Baa1/--	2007	5
Prairie Star⁽¹⁶⁾	Renewable (Wind)	49%	Minnesota (USA)	USD	101 MW	--/A3/A-	2007	5
Twin Groves II⁽¹⁶⁾	Renewable (Wind)	49%	Illinois (USA)	USD	198 MW	BBB/Baa2/--	2008	3
Lone Star II⁽¹⁶⁾	Renewable (Wind)	49%	Texas (USA)	USD	196 MW	N/A	2008	N/A
Chile PV 1	Renewable (Solar)	35%⁽¹⁾	Chile	USD	55 MW	N/A	2016	N/A
Chile PV 2	Renewable (Solar)	35%⁽¹⁾	Chile	USD	40 MW	Not rated	2017	8
Chile PV 3	Renewable (Solar)	35%⁽¹⁾	Chile	USD	73 MW	N/A	2014	N/A
La Sierpe	Renewable (Solar)	100%	Colombia	COP	20 MW	Not rated	2021	13
La Tolua	Renewable (Solar)	100%	Colombia	COP	20 MW	Not rated	2023	10
Tierra Linda	Renewable (Solar)	100%	Colombia	COP	10 MW	Not rated	2023	10
Albisu	Renewable (Solar)	100%	Uruguay	UYU	10 MW	Not rated	2023	15
Palmatir	Renewable (Wind)	100%	Uruguay	USD	50 MW	BBB/Baa2/BBB-⁽¹²⁾	2014	11
Cadonal	Renewable (Wind)	100%	Uruguay	USD	50 MW	BBB/Baa2/BBB-⁽¹²⁾	2014	12
Melowind	Renewable (Wind)	100%	Uruguay	USD	50 MW	BBB/Baa2/BBB-⁽¹²⁾	2015	13
Mini-Hydro	Renewable (Hydraulic)	100%	Peru	USD	4 MW	BBB/Baa1/BBB	2012	10
Solaben 2 & 3	Renewable (Solar)	70%⁽²⁾	Spain	Euro	2x50 MW	A/Baa1/A-	2012	15/15
Solacor 1 & 2	Renewable (Solar)	87%⁽³⁾	Spain	Euro	2x50 MW	A/Baa1/A-	2012	14/14

³ Calculated as weighted average years remaining as of December 31, 2022 based on CAFD estimates for the 2023-2026 period, including assets that have reached COD before March 1, 2023.

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PS 10 & PS 20	Renewable (Solar)	100%	Spain	Euro	31 MW	A/Baa1/A-	2007& 2009	9/11
Helioenergy 1 & 2	Renewable (Solar)	100%	Spain	Euro	2x50 MW	A/Baa1/A-	2011	14/14
Helios 1 & 2	Renewable (Solar)	100%	Spain	Euro	2x50 MW	A/Baa1/A-	2012	14/15
Solnova 1, 3 & 4	Renewable (Solar)	100%	Spain	Euro	3x50 MW	A/Baa1/A-	2010	12/12/13
Solaben 1 & 6	Renewable (Solar)	100%	Spain	Euro	2x50 MW	A/Baa1/A-	2013	16/16
Seville PV	Renewable (Solar)	80%⁽⁴⁾	Spain	Euro	1 MW	A/Baa1/A-	2006	13
Italy PV 1	Renewable (Solar)	100%	Italy	Euro	1.6 MW	BBB/Baa3/BBB	2010	8
Italy PV 2	Renewable (Solar)	100%	Italy	Euro	2.1 MW	BBB/Baa3/BBB	2011	8
Italy PV 3	Renewable (Solar)	100%	Italy	Euro	2.5 MW	BBB/Baa3/BBB	2012	9
Italy PV 4	Renewable (Solar)	100%	Italy	Euro	3.6 MW	BBB/Baa3/BBB	2011	9
Kaxu	Renewable (Solar)	51%⁽⁵⁾	South Africa	Rand	100 MW	BB-/Ba2/BB-⁽¹³⁾	2015	12
Calgary	Efficient natural gas & Heat	100%	Canada	CAD	55 MWt	~41% A+ or higher⁽¹⁴⁾	2010	18
ACT	Efficient natural gas & Heat	100%	Mexico	USD	300 MW	BBB/ B1/BB-	2013	10
Monterrey	Efficient natural gas & Heat	30%	Mexico	USD	142 MW	Not rated	2018	23
ATN ⁽¹³⁾	Transmission line	100%	Peru	USD	379 miles	BBB/Baa1/BBB	2011	18
ATS	Transmission line	100%	Peru	USD	569 miles	BBB/Baa1/BBB	2014	21
ATN 2	Transmission line	100%	Peru	USD	81 miles	Not rated	2015	10
Quadra 1 & 2	Transmission line	100%	Chile	USD	49 miles/ 32 miles	Not rated	2013-2014	12/12
Palmucho	Transmission line	100%	Chile	USD	6 miles	BBB/-/BBB+	2007	15
Chile TL 3	Transmission line	100%	Chile	USD	50 miles	A/A2/A-	1993	N/A
Chile TL 4	Transmission line	100%	Chile	USD	63 miles	Not rated	2016	49
Skikda	Water	34.2%⁽⁶⁾	Algeria	USD	3.5 M ft3/day	Not rated	2009	11
Honaine	Water	25.5%⁽⁷⁾	Algeria	USD	7 M ft3/day	Not rated	2012	15
Tenes	Water	51%⁽⁸⁾	Algeria	USD	7 M ft3/day	Not rated	2015	17

Notes:

(1)	65% of the shares in Chile PV 1, Chile PV 2 and Chile PV 3 are indirectly held by financial partners through the renewable energy platform of the Company in Chile. Atlantica has control over these entities under IFRS 10, Consolidated Financial Statements.

(2)	Itochu Corporation holds 30% of the shares in each of Solaben 2 and Solaben 3.

(3)	JGC holds 13% of the shares in each of Solacor 1 and Solacor 2.

(4)	Instituto para la Diversificación y Ahorro de la Energía (“Idae”) holds 20% of the shares in Seville PV.

(5)	Kaxu is owned by the Company (51%), Industrial Development Corporation of South Africa (“IDC”, 29%) and Kaxu Community Trust (20%).

(6)	Algerian Energy Company, SPA owns 49% of Skikda and Sacyr Agua, S.L. owns the remaining 16.8%. Atlantica has control over it under IFRS 10, Consolidated Financial Statements.

(7)	Algerian Energy Company, SPA owns 49% of Honaine and Sacyr Agua, S.L. owns the remaining 25.5%.

(8)

Algerian Energy Company, SPA owns 49% of Tenes. The Company has an investment in Tenes through a secured loan to Befesa Agua Tenes (the holding company of Tenes) and the right to appoint a majority at the board of directors of the project company. Therefore, the Company controls Tenes since May 31, 2020, and fully consolidates the asset from that date.

(9)	Certain contracts denominated in U.S. dollars are payable in local currency.

(10)	Reflects the counterparty’s credit ratings issued by Standard & Poor’s Ratings Services, or S&P, Moody’s Investors Service Inc., or Moody’s, and Fitch Ratings Ltd, or Fitch. Not applicable (“N/A”) when the asset has no PPA.

(11)	Refers to the credit rating of two Community Choice Aggregators: Silicon Valley Clean Energy and Monterrey Bar Community Power, both with A Rating from S&P and Southern California Public Power Authority. The third off-taker is not rated.

(12)	Refers to the credit rating of Uruguay, as UTE (Administración Nacional de Usinas y Transmisoras Eléctricas) is unrated.

(13)	Refers to the credit rating of the Republic of South Africa. The off-taker is Eskom, which is a state-owned utility company in South Africa.

(14)	Refers to the credit rating of a diversified mix of 22 high credit quality clients (~41% A+ rating or higher, the rest is unrated).

(15)	Including ATN Expansion 1 & 2.

(16)	Part of Vento II portfolio.

(17)	As of December 31, 2022.

(*)	Commercial Operation Date.

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Our Business Strategy

Our strategy focuses on climate change solutions in the power and water sectors. We intend to provide clean electricity, transmission capacity and desalinated water in a safe, reliable and environmentally responsible way. We believe our value creation capability is significantly enhanced by investing in sustainable sectors and managing our assets in a sustainable manner to the benefit of our shareholders and other stakeholders.

We intend to take advantage of, and leverage our growth strategy on, favorable trends in clean power generation, energy scarcity and the global focus on the reduction of carbon emissions. We believe that we are well positioned to benefit from the expected transition towards a more sustainable power generation mix in our markets. In addition, we believe that water is going to be the next frontier in a transition towards a more sustainable world.

We seek to grow our cash available for distribution and our dividends to shareholders through organic growth and by investing in new assets, while ensuring the ongoing stability and sustainability of our business. We intend to grow our business maintaining renewable energy as our main segment with a primary focus on North America and Europe.

We believe we can achieve organic growth through the optimization of the existing portfolio, escalation factors at many of our assets, as well as the repowering and hybridization with other technologies of some of the renewable energy facilities and the expansion of our existing transmission lines.

Additionally, we expect to continue investing in the development and construction of new assets, in some cases on our own and in other cases with partners. We have entered into and intend to continue to enter into agreements or partnerships with developers.

We also expect to acquire assets from third parties leveraging the local presence and network we have in geographies and sectors in which we operate.

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

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Focus on stable assets in the power and water sectors, including renewable energy, storage, efficient natural gas and heat, transmission assets as well as water assets, 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 provides us with access to different sources of growth.

Grow our business through the optimization 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 optimization 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 hybridization of existing assets with other complementary technologies including storage, particularly in our renewable energy assets and transmission lines.

Grow our business by developing new projects and investing in new assets in the business sectors where we are present.

We will seek to grow our business by investing in new assets, generally totally or partially contracted or regulated. We intend to develop new assets and in some cases to invest in assets under development or construction either directly or with partners. We currently own a pipeline of assets under development and construction in North America, Europe and South America with approximately 2.0 GW of renewable energy projects and approximately 5.6 GWh of storage projects under development⁴. We also expect to acquire assets from third parties leveraging the local presence and network we have in the geographies and sectors in which we operate. 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 provided by being a listed company will assist us in achieving our growth plans.

Foster 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. A large majority of our revenue is contracted or regulated. 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.

Additionally, our policies and management systems include thorough risk analysis and risk management processes applied on an ongoing basis. Our policy is to insure all of our assets whenever economically feasible, retaining in some cases part of the risk in house.

⁴ Only includes projects estimated to be ready to build before or in 2030 of approximately 3.3 GW, 2.0 GW (gross) of renewable energy and 1.3 GW (gross) of storage (equivalent to 5.6 GWh). Gross capacity measured by multiplying the size of each project by Atlantica’s ownership. Potential expansions of transmission lines not included.

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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 amortized 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, 2022, 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 14⁵ years as of December 31, 2022, providing long-term cash flow visibility. In 2022, approximately 51% 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 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.

Furthermore, due to the fact that we are a U.K. registered company, we should benefit from a more favorable treatment than if we were a corporation based in the U.S. when receiving dividends from our subsidiaries that hold our international assets because they should generally be exempt from U.K. taxation due to the U.K.’s distribution exemption. Based on our current portfolio of assets, which includes renewable assets that benefit from an accelerated tax depreciation schedule, and tax regulations benefits permitted in the jurisdictions in which we operate, under current regulations we do not expect to pay significant income tax in the upcoming years in most of our geographies due to existing net operating losses, or NOLs. See “Item 3.D—Risk Factors—Risks Related to Taxation—Our future tax liability may be greater than expected if we do not use sufficient NOLs to offset our taxable income,” “Item 3.D—Risk Factors—Risks Related to Taxation—Our ability to use U.S. NOLs to offset future income may be limited” and “Item 3.D—Risk Factors—Risks Related to Taxation—Changes in our tax position can significantly affect our reported earnings and cash flows.” Furthermore, based on our existing portfolio of assets, we believe that there is limited repatriation risk in the jurisdictions in which we operate. See “Item 3.D—Risk Factors—Risks Related to Our Business and the Markets in Which We Operate—We have international operations and investments, including in emerging markets that could be subject to economic, social and political uncertainties.”

⁵ Calculated as weighted average years remaining as of December 31, 2022 based on CAFD estimates for the 2023-2026 period, including assets that have reached COD before March 1, 2023.

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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 2022, renewable energy is expected to account for the majority of new investments in the power sector in most markets. In Bloomberg’s economic transition scenario, 22.9 TW of new capacity additions are expected by 2050. Solar PV, wind and battery storage see the largest deployment with 19.5 TW, collectively capturing 85% of this new power capacity. Total required investment in energy infrastructure over the next three decades tops $119 trillion. To achieve this, annual investment will need to more than double from around $2.0 trillion, to $4.1 trillion.

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.

Well positioned to capture growth opportunities

Our current portfolio of assets offers growth opportunities through the expansion and repowering of existing assets and through hybridization 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. In addition, we have in-house development capabilities and partnerships with third parties to co-develop new projects.

Well positioned in ESG

In 2022, 74% 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 89.4%, including renewable energy, transmission infrastructure, as well as water assets. We have set a target to maintain over 80% of our Adjusted EBITDA generated from low-carbon footprint assets.

In addition, we have set a target to reduce our scope 1 and scope 2 GHG emissions per unit of energy generated⁶by 70% by 2035, with 2020 as base year. This target was validated in 2021 by the Science Based Targets initiative.

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

⁶ Including thermal generation.

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Our Operations

Renewable energy

Solana

Overview. Solana is a 250 MW net (280 MW gross) solar plant, wholly owned by us, located in Maricopa County, Arizona, approximately 70 miles southwest of Phoenix. Solana uses a conventional parabolic trough solar power system to generate electricity, including a 22-mile 230kV transmission line and a molten salt thermal energy storage system. Solana reached COD in October 2013.

PPA. Solana has a 30-year, fixed-price PPA with Arizona Public Service Company, or APS, for at least 110% of the output of the project. The PPA provides for the sale of electricity at a fixed base price approved by the Arizona Corporation Commission (“ACC”) with annual increases of 1.84% per year. The PPA includes on-going performance obligations. The PPA expires in October 2043.

O&M. We perform O&M for Solana with our own personnel.

Operations. Solana has not yet achieved its technical capacity on a continuous basis. During the last few years, repairs, replacements and improvements were conducted on the heat exchangers, the water plant, the storage system and more recently the solar field. In 2021 and 2022, availability in the storage system was lower than expected due to the repairs and replacements that we have been carrying out. These works have impacted production in 2021 and 2022 and may impact production in 2023.

Project Level Financing. Solana received a loan from the Federal Financing Bank (“FFB”) in December 2010, with a guarantee from the DOE. The FFB loan is payable over a 29-year term and has an average fixed interest rate of 3.69%. As of December 31, 2022, the outstanding balance of the loan was $722.8 million. The FFB loan permits dividend distributions on a semi-annual basis as long as the debt service coverage ratio is at least 1.2x.

Mojave

Overview. Mojave is a 250 MW net (280 MW gross) solar plant wholly-owned by us located in San Bernardino County, California, approximately 100 miles northeast of Los Angeles. Mojave relies on a conventional parabolic trough solar power system to generate electricity. Mojave reached COD in December 2014.

PPA. Mojave has a 25-year, fixed-price PPA with Pacific Gas & Electric Company, for 100% of the output of Mojave which began on COD. The PPA provides for the sale of electricity at a fixed base price with seasonal adjustments and adjustments for time of delivery. Mojave can deliver and receive payment for at least 110% of contracted capacity under the PPA. The PPA expires in 2039.

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O&M. We perform O&M for Mojave with our own personnel.

Project Level Financing. Mojave received a loan from the FFB in September 2011, with a guarantee from the DOE. The FFB loan is payable over a 25-year term and has an average fixed interest rate of 2.75%. As of December 31, 2022, the outstanding balance of the loan was $605.4 million. The financing arrangement permits dividend distributions on a semi-annual basis as long as the debt service coverage ratio is at least 1.20x.

Coso

Overview. Coso is a platform of nine geothermal units with a total net capacity of approximately 135 MW located in Inyo County, California. This asset provides baseload renewable generation to CAISO.

PPAs. We have three PPAs with fixed prices:

Two PPAs representing approximately 85% of the revenues until 2026 and 60% from 2027 until 2036 with two Community Choice Aggregators (“CCAs”), Silicon Valley Clean Energy and Central Coast Community Energy (formerly Monterrey Bay Community Power), both with an “A” credit rating from S&P.

A PPA for approximately 15% of the revenues until 2026, 40% from 2027 until 2036 and 50% from 2037 until 2041 with Southern California Public Power Authority (“SCPPA”), which is not rated.

O&M. Operation and maintenance is performed in-house.

Project Level Financing. In December 2020, before the acquisition of Coso was closed, the asset entered into a $273 million financing agreement. On July 15, 2021, we prepaid $40 million, and the notional amount was reduced to $233 million. From the total amount, $93 million is progressively repaid following a theoretical 2036 maturity, with a legal maturity in 2027. The remaining $140 million are expected to be refinanced on or before 2027. Interest has been hedged until 2027 such that the total annual interest rate is 2.99% until 2027. As of December 31, 2022, the outstanding balance of the loan was $200.9 million. The financing agreement permits cash distributions to shareholders subject to a debt service coverage ratio of at least 1.20x.

Vento II

Vento II is a portfolio of four wind assets located in the states of Illinois, Texas, Oregon and Minnesota in the United States in which Atlantica has a 49% equity interest. The portfolio does not currently have any debt. Operation and maintenance services are provided by EDP Renewables North America (“EDPR”) for the four assets.

•

Elkhorn Valley

Overview. Elkhorn Valley is a 101 MW wind asset in Union County, Oregon, which entered into operation in November 2007.

PPA. Elkhorn Valley has a PPA with Idaho Power Company at a fixed price, expiring in December 2027. Base price increases annually with a 3% escalation factor.

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Prairie Star

Overview. Prairie Star is a 101 MW wind asset in Filmore County, Minnesota, which entered into operation in December 2007.

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PPA. Prairie Star has a PPA with Great River Energy. The PPA expires in December 2027 with the option to extend it until 2036.

•

Twin Groves II

Overview. Twin Groves II is a 198 MW wind asset in McLean County, Illinois, which entered into operation in March 2008.

PPA. Twin Groves II has a PPA with Exelon Generation Co LLC at a fixed price, expiring in March 2026.

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Lone Star II

Overview. Lone Star II is a 196 MW wind asset in Albany, Texas, which entered into operation in May 2008.

PPA. Lone Star II had a PPA with EDPR North America, LLC at a fixed price that expired in January 2023. Together with our partner EDPR we have decided to sell electricity at market prices in the short-term and re-evaluate in the future the option to repower the asset.

Chile PV 1, Chile PV 2 and Chile PV 3

In April 2020 we made an investment in the creation of a renewable energy platform in Chile, together with financial partners, where we now own approximately a 35% stake and have a strategic investor role. The platform intends to make further investments in renewable energy in Chile and sign PPAs with credit-worthy off-takers.

Overview. Chile PV 1, Chile PV 2 and Chile PV 3 are three solar plants with 55 MW, 40 MW, and 73 MW, respectively. Chile PV 1 reached COD in May 2016, Chile PV 2 reached COD in August 2017 and Chile PV 3 reached COD in December 2014.

PPA. Chile PV 1 and Chile PV 3 sell their production to the Chilean power market. Chile PV 2 has PPAs signed for part of its production.

O&M. Chile PV 1, Chile PV 2 and Chile PV 3 have O&M agreements with third parties.

Project Level Financing. Two of the three assets have long-term project finance agreements in place in U.S. dollars, with a total outstanding balance of $72.0 million as of December 31, 2022. Payments are made semi-annually. The debt agreements bear interest based on six-month LIBOR and more than 75% has been hedged. The financing arrangements permit dividend distributions at least once per year subject to meeting the debt service coverage ratios required by contract.

La Sierpe

Overview. La Sierpe is a 20 MW solar PV plant in Colombia, wholly owned by us, which reached COD in October 2021.

PPA. La Sierpe has a 15-year, fixed-price PPA in local currency with Coenersa, the largest independent electricity wholesaler in Colombia. The PPA provides for the sale of electricity at a fixed base price indexed to local Consumer Price Index.

O&M. We perform O&M for La Sierpe with our own personnel.

Project Level Financing. The asset has no project finance debt.

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La Tolua

Overview. La Tolua is a 20 MW solar PV asset in Colombia, wholly owned by us.

PPA. The asset has a 10-year PPA (commencing on COD) in local currency with Coenersa, the largest independent electricity wholesaler in Colombia. The PPA provides for the sale of electricity at a fixed base price indexed to local Consumer Price Index.

O&M. La Tolua has an O&M agreement in place with a third party.

Project Level Financing. The asset has no project finance debt.

Tierra Linda

Overview. Tierra Linda is a 10 MW solar PV asset in Colombia, wholly owned by us.

O&M. Tierra Linda has an O&M agreement in place with a third party.

Project Level Financing. The asset has no project finance debt.

Albisu

Overview. Albisu is a 10 MW solar PV asset near the city of Salto, in Uruguay, wholly owned by us, which reached COD in January 2023.

PPA. The asset has a 15-year PPA, for approximately 60% of the plant’s capacity, starting in July 2023, with Montevideo Refrescos, S.R.L, a subsidiary of Coca-Cola FEMSA, S.A.B. de C.V. The PPA is denominated in local currency with a maximum and minimum price in U.S. dollars and is adjusted monthly based on a formula referring to U.S. Producer Price Index (PPI), Uruguay’s Consumer Price Index (CPI) and the applicable UYU/U.S. dollar exchange rate.

O&M. The O&M services are performed by a third party.

Project Level Financing. The asset has no project finance debt.

Palmatir

Overview. Palmatir is an onshore, 50 MW wind farm facility wholly owned by us, located in Tacuarembo, 170 miles north of the city of Montevideo, Uruguay. Palmatir has 25 wind turbines supplied by Siemens, and each turbine has a capacity of 2 MW. The plant reached COD in May 2014.

PPA. Palmatir signed a PPA with UTE in September 2011 for 100% of the electricity produced. UTE pays a fixed tariff under the PPA, which is denominated in U.S. dollars and is partially adjusted annually based on a formula referring to U.S. PPI, Uruguay’s PPI and the applicable UYU/U.S. dollar exchange rate.

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O&M. We perform O&M with our own personnel, and we have wind turbines O&M agreement with Siemens that covers scheduled and unscheduled turbine maintenance, a supply of spare parts, wind farm monitoring and reporting services.

Project Level Financing. On April 11, 2013, Palmatir entered into a financing agreement for a U.S. dollar-denominated 19-year loan in two tranches in connection with this project. This financing agreement was subsequently amended to, among others, add an additional tranche. The first tranche is a $73 million loan with a fixed interest rate of 3.16%. The second tranche is a $33 million loan with a fixed interest rate of 6.35%.The third tranche is a $6.6 million loan with a floating interest rate of six-month U.S. LIBOR plus 4.13%. The combined outstanding balance of the three tranches as of December 31, 2022 was $72.0 million. The financing arrangements of the plant permits cash distributions to shareholders once per year subject to, among other things, a historical debt service coverage ratio for the previous twelve-month period of at least 1.25x and a projected debt service coverage ratio of at least 1.30x for the following twelve-month period.

Cadonal

Overview. Cadonal is an onshore, 50 MW wind farm facility wholly owned by us, located in Flores, 105 miles north of the city of Montevideo, Uruguay. Cadonal has 25 wind turbines of 2 MW each which were supplied by Siemens. The plant reached COD in December 2014.

PPA. Cadonal signed a PPA with UTE on December 28, 2012, for 100% of the electricity produced. UTE pays a fixed tariff under the PPA, which is denominated in U.S. dollars and is partially adjusted annually based on a formula referring to U.S. PPI, Uruguay’s PPI and the applicable UYU/U.S. dollar exchange rate.

Project Level Financing. In June 2020 we refinanced Cadonal’s debt for a total amount of $77.6 million and in March 2022 we prepaid $12.3 million, resulting in a loan principal comprised of:

−	Tranche A: $29.7 million loan with maturity in 2034 and a floating interest rate of six-month LIBOR plus 2.9%, 81% hedged with a swap set at approximately 3.29% strike.

−	Tranche B: $21.1 million loan with maturity in 2032 and a floating interest rate of six-month LIBOR plus 2.65%, 99% hedged with a swap set at approximately 3.16% strike.

The combined outstanding balance of these two tranches as of December 31, 2022 was $46.6 million.

The financing arrangements of the plant permits cash distributions to shareholders twice a year subject to, among other things, a senior debt service coverage ratio for the previous twelve-month period of at least 1.20x and a total debt service coverage ratio for the previous twelve-month period being at least 1.10x.

Melowind

Overview. Melowind is an onshore, 50 MW wind farm facility wholly owned by us, located in Cerro Largo, 200 miles north of the city of Montevideo, Uruguay. Melowind has 20 wind turbines supplied by Nordex, each with a capacity of 2.5 MW. The asset reached COD in November 2015.

PPA. Melowind signed a PPA with UTE in August 2012, for 100% of the electricity produced. UTE pays a fixed tariff under the PPA, which is denominated in U.S. dollars and is partially adjusted every year based on a formula referring to U.S. PPI, Uruguay’s PPI and the applicable UYU/U.S. dollar exchange rate.

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O&M. We perform O&M with our own personnel, and we have a wind turbines O&M agreement with Nordex that covers scheduled and unscheduled turbine maintenance.

Project Level Financing. On December 13, 2018, Melowind entered into a financing agreement payable over a period of 16 years. The financing consists of a $76 million loan with a floating interest rate based on six-month LIBOR plus a margin of 2.25% until December 2021, 2.5% from January 2022 to December 2024, 2.75% from January 2025 to December 2027 and 3.0% from January 2028 to December 2034. LIBOR exposure was 75% hedged with a swap at a rate of 3.26% with the financing bank. As of December 31, 2022, the outstanding balance of the loan was $68.6 million. The financing arrangement permits cash distributions to shareholders semi-annually subject, among other things, to a historical debt service coverage ratio for the previous twelve-month period of at least 1.15x.

Mini-hydro Peru

Overview. Mini-hydro Peru is a 4 MW mini-hydroelectric power plant located approximately 99 miles from Lima. The plant reached COD in April 2012.

Concession Agreement. It has a 20-year fixed-price concession agreement denominated in U.S. dollars with the Peruvian Ministry of Energy and Mines and the price is adjusted annually in accordance with the U.S. Finished Goods Less Foods and Energy Index as published by the U.S. Department of Labor.

O&M. We perform O&M for Mini-hydro Peru with our own personnel.

Project Level Financing. The asset does not have any project level financing.

Solar Assets in Spain

We own a portfolio of solar assets in Spain which are all subject to the same regulation. Renewable assets in Spain sell the power they produce into the wholesale electricity market and receive additional payments from the CNMC, the Spanish state-owned regulator. Solar power plants receive, in addition to the revenue from the sale of electricity in the market, two monthly payments. These payments consist of: (i) a fixed monthly payment based on installed capacity, and (ii) a variable payment based on net electricity produced.

There is a maximum number of production hours per year beyond which no variable payment is received. The regulation also includes a minimum number of yearly hours of generation, under which the plant would receive no regulated payments for that year and another higher threshold below which regulated payments would be reduced for a certain year. Those numbers are 35.0% and 60.0% of the maximum yearly hours, respectively. None of our plants has failed to meet these thresholds since our IPO in 2014. See “—Regulation—Regulation in Spain.”

The portfolio of solar assets in Spain consists of solar platforms generally of two 50 MW solar plants, with the exception of Solnova 1, 3 & 4, (which has three 50 MW solar plants) and PS 10 & 20 (which is a 31 MW solar power complex). Except for PS 10 & PS 20 and Seville PV, all the assets rely on a conventional parabolic trough solar power system to generate electricity, which is similar to the technology used in other solar power plants that we own in the U.S.

O&M. We perform O&M for Solaben 2 & 3, Solaben 1 & 6, Helioenergy 1 & 2 and Seville PV with our own personnel, and Abengoa performs O&M for Solacor 1 & 2, PS 10 & 20, Helios 1 & 2 and Solnova 1, 3 & 4. As of the date of this annual report, we are in the process of transitioning the operation and maintenance services for those assets in Spain where Abengoa performs the O&M services, from an Abengoa subsidiary to a Company’s subsidiary.

These assets benefit from the tax accelerated depreciation regime established by the Spanish Corporate Income Tax Act.

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Solaben 2 & 3

Overview. Solaben 2 and Solaben 3 are two 50 MW solar plants located in Extremadura, Spain. Atlantica owns 70% of each asset and Itochu, a Japanese trading company, owns the remaining 30%. The assets reached COD in June and October 2012, respectively.

O&M. We perform O&M for Solaben 2 & 3 with our own personnel since June 2022.

Project Level Financing. In December 2010, Solaben 2 and Solaben 3 each entered into a euro denominated 20-year loan agreement with a syndicate of banks. The loan for Solaben 2 was for €169.3 million and the loan for Solaben 3 was for €171.5 million. The interest rate for each loan is a floating rate based on six-month EURIBOR plus a margin of 1.5%. We hedged our EURIBOR exposure:

−	40% through a swap set at approximately 3.7% for the duration of the loans.

−	60% through a cap set at approximately 1% until 2025. From January 2026, 40% through a cap with approximately 3.75% strike price for the duration of the loans.

The outstanding balance of these loans as of December 31, 2022 was $100.2 million for Solaben 2 and $102.4 million for 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 that has a notional of €140 million of which 25% is progressively amortized over its five-year term and the remaining 75% is expected to be refinanced at maturity. The Green Project Finance is guaranteed by the shares of Logrosan and its lenders have no recourse to Atlantica corporate level. Interest accrue at a rate per annum equal to the sum of 6-month EURIBOR plus a margin of 3.25% and we hedged the EURIBOR with a 0% cap for the total amount and the entire life of the loan. The outstanding balance of this facility as of December 31, 2022, was $127.5 million. 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.

Solacor 1 & 2

Overview. Solacor 1 & 2 are two 50 MW solar plants located in Andalusia, Spain. Atlantica owns 87% and JGC Corporation, a Japanese engineering company, holds the remaining 13%. The assets reached COD in February and March 2012, respectively.

O&M. Abengoa currently provides O&M services under an all-in contract. As of the date of this annual report, we are in the process of transitioning the O&M services of Solacor 1 & 2 from an Abengoa subsidiary to a Company’s subsidiary.

Project Level Financing. In October 2022, we refinanced Solacor 1 & 2 project debt. The new financing is a green euro-denominated loan with a syndicate of banks for a total amount of €205.0 million with maturity in 2037. Interest accrue at a rate per annum equal to the sum of six-month EURIBOR plus a margin of 1.50% between 2022-2027, 1.60% between 2027-2032 and 1.70% between 2032-2037. We hedged our EURIBOR exposure:

−	71% through a swap set at 2.36% for the life of the financing.

−	19% by maintaining the existing 1% strike caps with maturity in 2025.

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The total outstanding balance of this loan as of December 31, 2022 was $212.8 million. This financing arrangement permits cash distribution to shareholders twice per year if the debt service coverage ratio is at least 1.15x.

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 every six months.

PS 10 & 20

Overview. PS 10 & 20 is a 31 MW solar complex wholly owned by us located in Andalusia, Spain. PS 10 reached COD in 2007 and PS 20 reached COD in 2009.

O&M. Abengoa provides currently O&M services under an all-in contract. As of the date of this annual report, we are in the process of transitioning the O&M services of PS 10 & 20 from an Abengoa subsidiary to a Company’s subsidiary.

Project Level Financing. The asset has no project finance debt. In November 2022, we repaid in full the project finance that was in place for PS 20.

Helios 1 & 2

Overview. Helios 1 and Helios 2 are two 50 MW solar plants wholly owned by us located in Castilla-La Mancha, Spain. The assets reached COD in March and June 2012, respectively.

O&M. Abengoa provides currently O&M services under an all-in contract. As of the date of this annual report, we are in the process of transitioning the O&M services of Helios 1 & 2 from an Abengoa subsidiary to a Company’s subsidiary.

Project Level Financing. On July 14, 2020, we refinanced Helios 1 & 2. We entered into a senior secured note facility with a group of institutional investors as purchasers of the notes issued thereunder for a total amount of €325.6 million ($370.2 million approximately). The notes were issued on July 23, 2020 and have a 17-year maturity. Interest accrues at a fixed rate per annum equal to 1.90%. Debt repayment is semiannual over the 17-year tenor of the debt. The outstanding balance of the debt as of December 31, 2022 was $290.8 million. The note facility permits cash distributions to shareholders twice per year if the debt service coverage ratio is at least 1.15x.

Helioenergy 1 & 2

Overview. Helioenergy 1 and Helioenergy 2 are two 50 MW solar plants wholly owned by us located in Andalusia, Spain. They reached COD in April and August 2011, respectively.

O&M. We perform O&M for Helioenergy 1 & 2 with our own personnel since June 2022.

Project Level Financing. On June 26, 2018, Helioenergy 1 & 2 entered into:

−

a 15-year loan agreement of €218.5 million with a syndicate of banks. The interest rate for the loans is a floating rate based on six-month EURIBOR plus a margin of 2.25% until December 2025 and 2.50% until maturity. The banking tranche is 95.5% hedged through a swap set at approximately 3.8% strike and 3% hedged through a cap with a 1% strike.

−

a 17-year, fully amortizing loan agreement with an institutional investor for a €45 million with a fixed interest rate of 4.37%. In July 2020, we added a new $43 million notional amount long dated tranche of debt from the same institutional investor with 15-year maturity and with a fixed interest rate of 3.00%.

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The outstanding balance of these loans as of December 31, 2022 was $243.5 million. The financing arrangements permit cash distributions to shareholders semi-annually based on a debt service coverage ratio of at least 1.15x.

Solnova 1, 3 & 4

Overview. Solnova 1, Solnova 3 and Solnova 4 are three 50 MW solar plants wholly owned by us located in Andalusia, Spain, in the same complex as PS-10 and PS-20. Solnova 1, 3 & 4 projects reached COD in February, June, and July 2010, respectively.

O&M. Abengoa provides currently O&M services under an all-in contract. As of the date of this annual report, we are in the process of transitioning the O&M services of Solnova 1, 3 & 4 from an Abengoa subsidiary to a Company’s subsidiary.

Project Level Financing. In December 2022 we refinanced Solnova 1, 3 & 4. We entered into a green senior euro-denominated loan agreement for the three assets with a syndicate of banks for a total amount of €338.5 million. The new project debt replaced the previous three project loans and maturity was extended from 2029 and 2030 to June 2035.

The interest rate for the loan accrues at a rate per annum equal to the sum of six-month EURIBOR plus a margin of 1.50% between 2023-2027, 1.65% between 2028-2032 and 1.80% from 2033 onwards. The principal is 90% hedged for the life of the loan through a combination of the following instruments:

−	a swap with a 3.23% strike with initial notional of €170.3 million starting in December 2022 and decreasing over time until maturity.

−	a cap with a 1.0% strike with initial notional of €134.2 million starting in December 2022 and decreasing over time until December 2025.

−	a cap with a 2.0% strike with initial notional of €64.9 million starting June 2026 and decreasing over time until December 2030.

As of December 31, 2022, the outstanding balance of this loan was $354.9 million. The financing arrangement permits cash distributions to shareholders twice per year if the debt service coverage ratio is at least 1.10x from 2023 to 2032 and 1.15x from 2032 onwards.

Solaben 1 & 6

Overview. Solaben 1 and Solaben 6 are two 50 MW solar plants wholly owned by us located in Extremadura, Spain, in the same complex as Solaben 2 & 3. Solaben 1 & 6 reached COD in September and October 2013, respectively.

O&M. We perform O&M for Solaben 1 & 6 with our own personnel since June 2022.

Project Level Financing. On September 30, 2015, Solaben Luxembourg S.A., a holding company of the two project companies, issued a project bond for €285 million (approximately $324 million) with maturity in December 2034. The bonds have a coupon of 3.76% with interest payable in semi-annual instalments on June 30 and December 31 of each year. The principal is amortized over the life of the financing. The outstanding balance as of December 31, 2022 was $188.0 million. The bonds permit cash distributions to shareholders twice per year if the debt service coverage ratio is at least 1.650x.

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Seville PV

Overview. Seville PV is a 1 MW photovoltaic farm located alongside PS 10 & 20 and Solnova 1, 3 & 4, in Andalusia, Spain. Seville PV reached COD in 2006.

O&M. We perform O&M for Seville PV with our own personnel since May 2022.

Project Level Financing. Seville PV does not have any project level financing.

Italy PV 1, 2, 3 & 4

Overview. We own 7 PV assets in Italy which have a combined capacity of 9.8 MW. Italy PV 1 is a 1.6 MW solar PV plant which reached COD in December 2010. Italy PV 2 is a 2.1 MW solar PV plant which reached COD in April 2011. Italy PV 3 is a portfolio of 4 PV assets with a total capacity of 2.5 MW which reached COD between March and May 2012. Italy PV 4 is a 3.6 MW solar PV plant which reached COD in July 2011.

PPA. The assets have contracted revenues through a regulated feed in premium in addition to merchant revenues for the energy sold to the wholesale market.

O&M. O&M agreements with third parties.

Project Level Financing. The assets have non-recourse project financing in place for a total amount outstanding of $3.3 million as of December 31, 2022.

−	In June 2011, Italy PV 1 entered into a 15-year loan agreement for €6.0 million with maturity in 2026. The interest rate for the loan is a floating rate based on six-month EURIBOR plus a margin of 1.30%. As of December 31, 2022, the outstanding balance of this loan was $1.5 million.

−	In July 2016, Italy PV 3 entered into a 10-year loan agreement for €1.2 million with maturity in 2026. The interest rate for the loan is a fixed rate of 3.80%. As of December 31, 2022, the outstanding balance of this loan was $0.5 million.

−	In March 2022, Italy PV 4 entered into a 10-year loan agreement for €1.3 million with maturity also in 2031. The interest rate for the loan is a fixed rate of 1.00%. As of December 31, 2022, the outstanding balance of this loan was $1.3 million.

These financing arrangements permit dividend distributions any time throughout the year and regardless of any minimum debt service coverage ratios.

Kaxu

Overview. Kaxu is a 100 MW solar plant located in Pofadder, Northern Cape Province, South Africa. The project company is currently 51% owned by Atlantica South Africa (Pty) Ltd, which we fully own, while the remaining is owned by Industrial Development Corporation of South Africa (29%) and Kaxu Community Trust (20%). Kaxu relies on a conventional parabolic trough solar power system to generate electricity. This technology is similar to the technology used in solar power plants that we own in the U.S. and Spain. In addition, Kaxu has a molten salt thermal energy storage system. The asset reached COD in January 2015.

PPA. Kaxu has a 20-year PPA with Eskom, under a take-or-pay contract for the purchase of electricity up to the contracted capacity of the facility, which expires in February 2035. Eskom purchases all the output of the Kaxu plant under a fixed-price formula in South African Rand subject to indexation to local inflation.

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Eskom is a state-owned, limited liability company, wholly owned by the Republic of South Africa. Eskom’s payment guarantees are underwritten by the South African Department of Mineral Resources and Energy, under the terms of an implementation agreement. Eskom’s credit ratings are currently CCC+ from S&P, Caa1 from Moody’s and BB- from Fitch. The Republic of South Africa’s credit ratings are currently BB- from S&P, Ba2 from Moody’s and BB- from Fitch.

In addition, in 2019, we entered into a political risk insurance agreement with the Multinational Investment Guarantee Agency for Kaxu. The insurance provides protection for breach of contract up to $58 million in the event of the South African Department of Mineral Resources and Energy not complying with its obligations as guarantor. This insurance policy does not cover credit risk.

O&M. Since February 1, 2022, and following an agreement with Abengoa, the personnel performing the operation and maintenance of the plant have been transferred to an Atlantica subsidiary, so the O&M services are performed internally since such date.

Project Level Financing. Kaxu entered into a long-term financing agreement with a lenders’ group for a total initial amount of approximately $367.4 million. The loan consists of senior and subordinated long-term loans payable in South African rand over an 18-year term with the cash generated by the project. The interest rate exposure was initially 100% hedged through a swap with the same banks providing the financing, and the coverage progressively reduces over the life of the loan. Current effective annual interest rate is approximately 11.1% considering the hedge in place. As of December 31, 2022, the outstanding balance of these loans was ZAR 4,728 million, or $277.5 million.

The financing arrangement permits dividend distributions on a semi-annual basis after the first repayment of debt has occurred, provided that the historical and projected debt service coverage ratios are 1.2x or above.

Efficient Natural Gas and Heat

Calgary District Heating

Overview. Calgary is a 55MWt district heating facility located in the city of Calgary in Alberta, Canada which reached COD in 2010. Calgary District Heating is a wholly owned subsidiary of Atlantica.

Thermal Off-take Agreements. The asset has capacity-based thermal heat revenue with inflation indexation, investment grade off-takers and an 18-year average contract life remaining. Contracted capacity and pass-through volume payments represent approximately 80% of the total revenue. Calgary District Heating is well-positioned to provide a pathway to reduced GHG heat.

O&M. We perform O&M for Calgary District Heating with our own personnel.

Project Level Financing. The asset does not have any project level financing.

ACT

Overview. ACT is a gas-fired cogeneration facility 99.99% owned by us through ACT Energy Mexico, S. de R.L. de C.V., or ACT Energy Mexico. The asset is located inside the Nuevo Pemex Gas Processing Facility near the city of Villahermosa in the State of Tabasco, Mexico. It has a rated capacity of approximately 300 MW and between 550 and 800 metric tons per hour of steam. ACT reached COD in 2013.

Conversion Services Agreement. On September 18, 2009, ACT entered into the Pemex Conversion Services Agreement, with Pemex (“Pemex CSA”), under which ACT is required to sell all of the plant’s thermal and electrical output to Pemex. The Pemex CSA has an initial term of 20 years from the in-service date and will expire on March 31, 2033. The Pemex CSA requires Pemex to supply the facility, free of charge, with the fuel and water necessary to operate ACT, and the latter has to produce electrical energy and steam requested by Pemex based on the expected levels of efficiency. The Pemex CSA is denominated in U.S. dollars. The price is fixed and is adjusted annually, according to a mechanism agreed in the contract that establishes that the average adjustments over the life of the contract should reflect the expected inflation. Pemex has the possibility to terminate the Pemex CSA under certain circumstances paying an indemnity.

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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. As of December 31, 2022 these delays were shorter than in previous quarters.

O&M. GE provides services for the maintenance, service and repair of the gas turbines and NAES is responsible for the O&M. The O&M agreement with NAES expires upon the expiration of the Pemex CSA, although we may cancel it with no penalty at any time.

Project Level Financing. In December 2013 ACT Energy Mexico entered into a $660.0 million senior loan agreement with a syndicate of banks. In March 2014, after the loan’s first repayment, additional banks entered the syndicate, leading to a $655.4 million senior loan comprised of:

−	Tranche 1: $205.4 million with 10-year maturity.

−	Tranche 2: $450.0 million with an 18-year maturity. The interest rate on each tranche is a floating rate based on the three-month LIBOR plus a margin of 3.5% from January 2019 to December 2024 and 3.75% from January 2025 to December 2031. The loan is 75% hedged at a weighted average rate of 3.94%.

The combined outstanding balance of these two tranches as of December 31, 2022 was $441.0 million. The senior loan agreement permits cash distributions to shareholders provided that the debt service coverage ratio is at least 1.20x.

Monterrey

Overview. Monterrey is a 142 MW gas-fired engine facility including 130 MW installed capacity and 12 MW battery capacity. We own 30% of Monterrey through Pemcorp S.A.P.I. de C.V., while Arroyo Energy owns the remaining 70%. The asset is located in Mexico and reached COD in the third quarter of 2018. The power plant is configured with seven Wärtsilä natural gas internal combustion engines.

PPA. It is a U.S. dollar-denominated PPA with two international large corporations engaged in the car manufacturing industry. The PPA had originally a 20-year term starting at COD. In May 2022, together with our partner, we entered into a 7.5-year PPA extension with the same off-takers, such that the PPA now ends in 2046. The extension will involve an investment to achieve improvements in the asset to provide, among other things, additional battery capacity and additional redundancy of electric power supply. The PPA includes price escalation factors. The asset also has a 20-year contract for the natural gas transportation. It has limited commodity risk since a majority of the gas cost is a pass-through to our clients.

O&M. Wärtsilä performs the O&M for Monterrey under a contract renewed in 2020 for five years. In addition, the asset has in place a Generator Maintenance Agreement with Wärtsilä for the seven generators for a period of 15 years from COD.

Project Level Financing. Monterrey has a loan of $159.4 million outstanding balance as of December 31, 2022, which matures in September 2027. The interest rate of the loan is a floating rate based on the three-month LIBOR plus a margin of 2.75% with a 0.25% increase after three years. The LIBOR exposure was 85% hedged with a swap rate of 2.26% with the financing bank. The loan agreement permits cash distributions after the asset reached COD provided that the debt service coverage ratio is at least 1.20x.

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Transmission Lines

ATN

Overview. ATN is a 365 miles transmission line located in Peru wholly owned by us, which is part of the Guaranteed Transmission System and comprises several sections of transmission lines and substations. ATN reached COD in 2011. On December 28, 2018, ATN S.A. completed the acquisition of a power substation and two small transmission lines to connect our line to the Shahuindo (ATN expansion 1) mine located nearby. In October 2019, we also closed the acquisition of ATN Expansion 2.

Concession Agreement. Pursuant to the initial concession agreement, the Peruvian Ministry of Energy and Mines, on behalf of the Peruvian Government, granted ATN a concession to construct, develop, own, operate and maintain the transmission line and substations. ATN owns all assets that it has acquired to construct and operate ATN for the duration of the concession. The ownership of these assets will revert to the Peruvian Ministry of Energy and Mines upon termination of the initial concession agreement.

ATN has a 30-year fixed-price tariff base denominated in U.S. dollars that is adjusted annually in accordance with the U.S. Finished Goods Less Foods and Energy Index as published by the U.S. Department of Labor. Our receipt of the tariff base is independent from the effective utilization of the transmission lines and substations. In addition, ATN Expansion 1 has a 15-year Transmission Service Agreement (“TSA”) and ATN Expansion 2 has two 20-year TSAs and one 30-year TSA denominated in U.S. dollars.

O&M. ATN has an O&M agreement with Omega Peru Operación y Mantenimiento S.A., one of the main O&M providers in Peru.

Project Level Financing. ATN has a project bond in place which was issued in September 2013 and which currently has three tranches outstanding:

−	1^st tranche had a principal amount of $50 million with a 15-year term with quarterly amortization and bears interest at a rate of 6.15% per year.

−	2^nd tranche had a principal amount of $45 million with a 26-year term and bears interest at a rate of 7.53% per year. The second tranche has a 15-year grace period for principal repayments.

−	3^rd tranche had a principal amount of $10 million with a 15-year term and bears interest at a rate of 6.88% per year.

As of December 31, 2022, the outstanding balance of this loan was $87.2 million. The project bond agreement permits cash distributions subject to a debt service coverage ratio for the last six months of at least 1.10x.

ATS

Overview. ATS is a 569 miles transmission line located in Peru wholly owned by us. ATS is part of the Guaranteed Transmission System and comprises several sections of transmission lines and substations. ATS reached COD in 2014.

Concession Agreement. The initial concession agreement became effective on July 22, 2010 and will expire 30 years after achieving COD. Pursuant to the initial concession agreement, ATS will own all assets it has acquired to construct and operate the ATS Project for the duration of the concession. These assets will revert to the Peruvian Ministry of Energy and Mines upon termination of the initial concession agreement.

The concession agreement has a fixed-price tariff base denominated in U.S. dollars and is adjusted annually in accordance with the U.S. Finished Goods Less Foods and Energy Index as published by the U.S. Department of Labor. Our receipt of the tariff base is independent from the effective utilization of the transmission lines and substations related to the ATS Project.

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O&M. ATS has an O&M agreement with Omega Peru Operación y Mantenimiento S.A. that we can terminate every five years.

Project Level Financing. On April 8, 2014, ATS issued a project bond denominated in U.S. dollars with a 29-year term with semi-annual amortization and which bears a fixed interest rate of 6.875%. As of December 31, 2022, $391.5 million was outstanding. The project bond agreement permits cash distributions every six months subject to a trailing historical debt service coverage ratio for the previous two quarters of at least 1.20x.

ATN 2

Overview. ATN 2, is an 81 miles transmission line located in Peru wholly owned by us, which is part of the Complementary Transmission System. ATN 2 reached COD in June 2015.

ATN 2 has an 18-year, fixed-price tariff base contract denominated in U.S. dollars with Minera Las Bambas. The tariff is partially adjusted annually in accordance with the U.S. Finished Goods Less Foods and Energy Index as published by the U.S. Department of Labor. Our receipt of the tariff base is independent from the effective utilization of the transmission lines and substations related to ATN 2.

Minera Las Bambas is owned by a partnership consisting of a China Minmetals Corporation subsidiary (62.5%), a wholly owned subsidiary of Guoxin International Investment Co. Ltd (22.5%) and CITIC Metal Co. Ltd (15.0%).

O&M. ATN 2 has an O&M agreement with Omega Peru Operación y Mantenimiento S.A. until 2027.

Project Level Financing. In 2011 and 2014, a 15-year loan agreement was executed for a commitment of $50.0 million and $31.0 million, respectively. All debt has a fixed interest rate amounting to 4.85% on a weighted average basis and matures in 2031. As of December 31, 2022, the outstanding balance of the ATN 2 project loan was $45.3 million. The loan agreement permits cash distributions subject to a debt service coverage ratio of at least 1.15x.

Quadra 1 & Quadra 2

Overview. Quadra 1 is a 49-mile transmission line in Chile. Quadra 1 connects to the Sierra Gorda substation owned by Sierra Gorda SCM, a mining company and is located in the commune of Sierra Gorda. Quadra 2 is a 32-mile transmission asset that provides electricity to the seawater pump stations owned by the Sierra Gorda SCM in Chile. Quadra 1 and Quadra 2 reached COD in December 2013 and January 2014, respectively.

Concession Agreement. Both projects have concession agreements with the Sierra Gorda SCM mining company, which is owned by Sumitomo Corporation, Sumitomo Metal Mining and KGHM Polska Mietz. The concession agreement is denominated in U.S. dollars and has a 21-year term that began on the COD. The contract price is indexed mainly to the U.S. CPI.

The concession agreement grants in favor of Sierra Gorda a call option over the transmission lines, exercisable at any time during the life of the contract. According to the call option, Sierra Gorda is entitled to purchase the transmission line at an agreed price and with a six-month prior written notice.

O&M. Enor performs operations services at Quadra 1 under a contract expiring in 2027 and at Quadra 2 under a contract expiring in 2029 with an option to renew each O&M agreement for five additional years. Maintenance services at Quadra 1 and Quadra 2 are performed by a group of tier-1 suppliers.

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Project Level Financing. In June 2019, we refinanced the project debt of our Chilean assets Palmucho, Chile TL 3, Quadra 1 and Quadra 2. This financing agreement consists of a single loan agreement for all these assets for an original amount of $75 million with a syndicate of local banks. The loan is denominated in U.S. dollars and matures on September 30, 2031. It has a semi-annual amortization schedule and accrues interest at a variable rate based on the six-month LIBOR plus 3.60%. We contracted an interest rate swap at an approximate fixed rate of 2.25% to hedge 75% of the amount nominal during the entire debt term. As of December 31, 2022, the outstanding balance was $57.4 million. The financing agreement is cross collateralized jointly between the Chilean assets and permits cash distributions twice per year if the combined debt service coverage ratio for the three assets is at least 1.20x.

Palmucho

Palmucho is a transmission line in Chile of approximately 6 miles. Palmucho has a 14-year concession contract with Enel Generacion Chile, whereby both parties are obliged to enter into a four-year valid toll contract at the end of the term of the concession contract and the valid toll contract will be renewed for three periods of four years each until one of the parties decides not to renew. O&M services are provided by Energysur.

Project Level Financing. See Project Level Financing section for Quadra 1 and Quadra 2 above.

Chile TL 3

Overview. Chile TL 3 is a 50-mile transmission line in operation in Chile which reached COD in 1993. It generates revenue under the current regulation in Chile. The asset has a fixed-price tariff determined by the regulator and is partially adjusted annually in accordance with the U.S. and Chilean Consumer Price Indexes and currency exchange rates.

O&M. We perform O&M for Chile TL 3 with our own personnel. Energysur performs maintenance services under a three-year contract expiring on January 1, 2025.

Project Level Financing. See Project Level Financing section for Quadra 1 and Quadra 2 above.

Chile TL 4

Overview. Chile TL 4 is a 63-mile transmission line in operation in Chile which reached COD in 2016. The asset has fully contracted revenues in U.S. dollars, with inflation escalation and 50-year contract life. The off-takers are several mini-hydro plants that receive contracted or regulated payments from third parties.

O&M. The asset has O&M agreements with third parties.

Project Level Financing. Chile TL 4 does not have any project level financing.

Water

Honaine

Overview. Honaine is a water desalination plant of 7 M ft3 per day capacity located in Taffsout, Algeria. We indirectly own 25.5% through Myah Bahr Honaine Spa (“MBH”), Algerian Energy Company, or AEC, owns 49% and Sacyr owns the remaining 25.5% of Honaine.

Honaine reached COD in July 2012. AEC is the Algerian agency in charge of delivering Algeria’s large-scale desalination program. The technology used in the Honaine plant is currently the most commonly used in this kind of asset. It consists of desalination using membranes by reverse osmosis.

Honaine had a corporate income tax exemption until 2021. After that period, the tariff was adjusted accordingly.

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Concession Agreement. The water purchase agreement is a 25-year take-or-pay contract with Sonatrach/Algerienne des Eaux, or ADE, from COD. The tariff structure is based upon plant capacity. Tariffs are adjusted monthly based on the indexation mechanisms that include local inflation, U.S. inflation and the exchange rate between the U.S. dollar and local currency.

O&M. Honaine has a 25-year contract from COD with a specialized O&M supplier.

Project Level Financing. In May 2007, MBH signed a financing agreement for $233 million which accrues interest at a fixed-rate of 3.75%. The repayment of the Honaine facility agreement consists of quarterly payments, ending in April 2027. As of December 31, 2022, the outstanding balance of the Honaine project loan was $43.6 million. The financing arrangement permits cash distributions to shareholders once per year under certain conditions, including that the audited financials for the prior fiscal year indicate a debt service coverage ratio of at least 1.25x.

Skikda

Overview. The Skikda project is a 3.5 M ft3 per day capacity water desalination plant located in Skikda, Algeria. Skikda is located 510 km east of Algiers. We indirectly own 34.2% of Skikda through Aguas de Skikda, or ADS, AEC owns 49% and Sacyr owns the remaining 16.8%. We own a 67% of the holding company which in turns has a 51% equity stake in Skikda, as a result we fully consolidate the asset.

Skikda reached COD in 2009 and uses the same technology as Honaine.

Skikda had a corporate income tax exemption until 2019. After that period, and the tariff was adjusted accordingly.

Concession Agreement. The water purchase agreement is a 25-year take-or-pay contract with Sonatrach/ADE from COD. The tariff structure is based upon plant capacity. Tariffs are adjusted monthly based on the indexation mechanisms that include local inflation, U.S. inflation and the exchange rate between the U.S. dollar and local currency.

O&M. Skikda has a 25-year contract from COD with a specialized O&M supplier.

Project Level Financing. In July 2005, ADS signed a financing agreement for $108.9 million which accrues interest at a fixed-rate of 3.75%. The repayment of the Skikda facility agreement consists of sixty quarterly payments, ending in May 2024. As of December 31, 2022, the outstanding balance of the Skikda project loan was $7.4 million. The financing arrangement permits cash distributions to shareholders once per year under certain conditions, including that the audited financials for the prior fiscal year indicate a debt service coverage ratio of at least 1.25x.

Tenes

Overview. Tenes is a 7 M ft3 per day capacity water desalination plant located 208 km west of Algiers, in Algeria. Tenes uses the same technology as Honaine and Skikda and has been in operation since 2015.

Since January 2019, we have an investment in Befesa Agua Tenes, the owner of 51.0% stake in Tenes, through a secured loan to be reimbursed by Befesa Agua Tenes, together with 12% per annum interest, through a full cash-sweep of all the dividends to be received from the asset. On May 31, 2020, we entered into a new agreement which provides us with certain additional decision rights, including the right to appoint a majority of directors at the board of directors of Befesa Agua Tenes. Therefore, through the loan and these decision rights, we control Tenes since May 31, 2020 and as a result we have fully consolidated the asset from that date.

Tenes has a corporate income tax exemption until 2025. After that period, in case the exemption is not extended, a claim may be made under the water purchase agreement for compensation in the tariff.

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Concession Agreement. The water purchase agreement is a 25-year take-or-pay contract with Sonatrach/ADE from COD. The tariff structure is based upon plant capacity. Tariffs are adjusted monthly based on the exchange rate between the U.S. dollar and local currency and yearly based on indexation mechanisms that include local inflation and U.S. inflation.

O&M. Tenes has a 25-year contract from COD with a company owned by Abengoa.

Project Level Financing. Tenes signed a financing agreement for $211 million. The loan accrues a fixed interest rate of 3.75%. The repayment of the facility agreement consists of sixty quarterly payments, ending in August 2031. As of December 31, 2022, the outstanding balance of the Tenes project loan was $79.3 million. The financing arrangements permit cash distribution to shareholders subject to a debt service coverage ratio of at least 1.10x.

Geographies and business sectors

We refer to “Item 5. Operating and Financial Review and Prospects” and to Note 4 to our Consolidated Financial Statements for a breakdown of our revenue by geography and by business sector.

Assets under construction

We currently have the following assets under construction or ready to start construction in the short-term:

Asset	Type	Location	Capacity (gross)¹	Expected COD	Expected Investment ($ million)	Off-taker
Coso Batteries 1	Battery Storage	California, US	100 MWh	2024	40-50	N.A.
Chile PMGD²	Solar PV	Chile	80 MW	2023 – 2024	30³	Regulated
Honda 1⁴	Solar PV	Colombia	10 MW	2023	11	Enel Colombia
Honda 2⁴	Solar PV	Colombia	10 MW	2023	11	Enel Colombia
Apulo 1⁴	Solar PV	Colombia	10 MW	2023	11	Enel Colombia
Solana C&I PV	Solar PV (behind the meter)	Arizona, US	2.5 MW	2023	3	Solana
Raurapata	Transmission Line	Peru	3.9KM 220Kv	2024	12	Conelsur⁴

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.

(5)

The contract is in the process of being transferred to Conelsur.

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.

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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, including both repowering or expansion opportunities of existing assets and greenfield development, of approximately 2.0 GW⁷ of renewable energy and 5.6 GWh⁷ of storage. Approximately 40% of the projects are PV, 40% storage and 19% wind, while 18% of the projects are expected to reach ready to build (“Rtb”) in 2023 or 2024, 17% are in an advanced development stage and 65% are in early stage. 27% correspond to expansion or repower opportunities of existing assets and 73% to greenfield developments.

	Renewable Energy (GW)⁷	Storage (GWh)⁷
North America	1.0	4.1
Europe	0.4	1.3
South America	0.6	0.2
Total	2.0	5.6

Customers

We derive our revenue from selling electricity, electric transmission capacity, water desalination capacity and heat. Our customers are mainly comprised of electrical utilities and corporations, with which we typically have entered into PPAs. We also employ concession contracts, typically ranging from 20 to 30 years. We also have regulated assets in Spain, Chile (Chile TL 3) and Italy. Chile PV 1, Chile PV 3 and Lone Star II, which represent less than 2% of our Adjusted EBITDA for the year 2022, sell electricity at market prices. Additionally, we have other assets that sell a percentage of their production at market prices. See the description of each asset under “—Our Operations” for more detail on each concession contract.

Our main contracts in our business also include the project finance contracts with banks or financial institutions and the operation and maintenance contracts of each of our assets. See description of financing and operation and maintenance contracts under “—Our Operations.”

⁷ Only includes projects estimated to be ready to build before or in 2030 of approximately 3.3 GW, 2.0 GW of renewable energy and 1.3 GW of storage (equivalent to 5.6 GWh). Capacity measured by multiplying the size of each project by Atlantica’s ownership. Potential expansions of transmission lines not included.

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Competition

Renewable energy, storage, efficient natural gas and heat transmission lines are all capital-intensive and commodity-driven businesses with numerous industry participants. We compete based on the location of our assets in various countries and regions; however, because most of our assets typically have long-term contracts, competition with other asset operations is limited with respect to existing assets until the expiration of the PPAs. Power generation and transmission are highly regulated businesses in each country in which we operate and are currently highly fragmented and have a diverse industry structure. Our competitors have a wide variety of capabilities and resources. Our competitors include, among others, regulated utilities and transmission companies, other independent power producers and power marketers or trading companies and state-owned monopolies.

We also compete to develop or acquire new projects with developers, independent power producers and financial investors, including pension funds and infrastructure funds and other dividend growth-oriented companies, as well as utilities and oil and gas companies which are targeting to have a presence in renewables. Competitive conditions may vary over time depending on capital market conditions and regulation, which may affect the costs of constructing and operating projects.

Seasonality

Our operating results and cash flows can be significantly affected by weather in some of our most relevant projects, such as the solar power plants. We expect to derive a majority of our annual revenue in the months of May through September, when solar generation is the highest in the majority of our markets and when some of our off-take arrangements provide for higher payments to us. See “Item 3.D — Risk Factors—Risks Related to Our Business and Our Assets—The generation of electric energy from renewable energy sources depends heavily on suitable meteorological conditions, and if solar or wind conditions are unfavorable, or if the geothermal resource is lower than expected our electricity generation, and therefore revenue from our renewable energy generation facilities using our systems, may be substantially below our expectations.”

Environmental and Social Information

Environment

Environmental management is a key priority in our business and operations. Our facilities and operations are subject to significant government regulation, including stringent and comprehensive federal, provincial and local laws, statutes, regulations, guidelines, policies, directives and other requirements governing or relating to, among other things: air emissions; discharges into water; storage, handling, use, disposal, transportation and distribution of dangerous materials and hazardous, residual and other regulated materials, such as chemicals; the prevention of releases of hazardous materials into the environment; the presence and remediation of hazardous materials in soil and groundwater, both on and offsite; the protection of natural resources; land use and zoning matters; and workers’ health and safety matters. We consider environmental protection as an area of performance and as such, environmental issues are included among the responsibilities of our key executives.

Employees and Human Resources

As December 31, 2022, we had 978 employees. Following the internalization of the operations and maintenance services in our solar assets in the United States in 2019, in South Africa in 2022 and in part of our solar assets in Spain also in 2022, part of the recently hired employees of the relevant O&M companies belong to previously existing labor unions. We believe that the relationship between the Company and its labor union is good. We have not experienced any strikes or work stoppages among our workforce. One of our plants has experienced strikes by employees working for one of our operation and maintenance suppliers in the past.

Health & Safety

Within our values, the first one is “Integrity, Compliance and Safety”. We are committed to prioritizing and actively promoting health and safety as a tool to protect the integrity and health of our employees, subcontractors and partners involved in our business activity. We promote a safe operating culture across Atlantica and encourage a preventive culture in the O&M activities of our subcontractors as reflected in our corporate health and safety policy.

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Annually, we conduct internal and external audits to evaluate our health and safety management system in accordance with the ISO 45001 standard requirements. Our ISO 45001 certification is valid until 2024. The external audit is carried out by an independent third party. Additionally, we perform periodic health and safety audits of our asset contractors to monitor their compliance with legal regulations, contractual requirements and our safety best practices. We also develop an annual training program to train managers and employees on safety awareness. This annual plan is designed in accordance with local regulations and risk assessment at every work position and work center.

On an annual basis, we establish key safety metrics targets in all our assets which include both Atlantica and subcontractor employees, which were achieved in 2022:

−

Our Total Recordable Incident Rate (TRIR) has been calculated following Sustainable Accounting Standards IF-EU-320a.1. It represents the total number of recordable accidents with and without leave (lost time injury) recorded in the last 12 months on 200 thousand hours worked. We ended 2022 at 1.0, compared to 1.2 in 2021.

−	Our Lost Time Injury Rate (LTIR) represents the total number of recordable accidents with leave (lost time injury) recorded in the last 12 months on 200 thousand of hours worked. We ended 2022 at 0.6, compared to 0.5 in 2021.

LTIR increased in 2022 compared to the previous year because we had more assets under construction in 2022, as the accident rates are typically higher in construction activities than in operation and maintenance activities. If we consider only our assets in operation, LTIR decreased to 0.3 in 2022 from 0.5 in 2021. Similarly, TRIR decreased in 2022, but the decrease is higher if we look only at our assets in operation, where TRIR decreased to 0.8 in 2022 compared to 1.2 in 2021. In 2023, we will focus on developing best practices in our assets under construction, working closely with our EPC contractors, while we maintain or improve our ratios in assets in operation.

Operation and Maintenance

In terms of operational efficiency, we focus on ensuring long-term availability, reliability and asset integrity with maintenance and monitoring. The suppliers of our solar panels, turbines, transmission towers and equipment are selected through a detailed evaluation process, focusing on their commercial track record and regular availability of components and replacement parts for the proper functioning and maintenance of our assets and facilities. Our corporate operations team identifies best practices and controls which are implemented in all our assets. Additionally, we require all our suppliers to comply with our Suppliers’ Code of Conduct.

We currently perform internally the O&M for a majority of our assets. In 2022, Abengoa performed O&M services for assets that represented approximately 20% of our consolidated revenue for that year. As of the date of this annual report, we are in the process of transitioning the operation and maintenance services for these assets in Spain from an Abengoa subsidiary to a Company’s subsidiary. Once this transfer is completed, we expect Abengoa to provide O&M services for assets representing less than 5% of our consolidated revenue in 2022. See “Item 3.D—Risk Factors— III. Risks Related to Our Relationship with Algonquin and Abengoa”.

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Legal Proceedings

In 2018, an insurance company covering certain Abengoa obligations in Mexico claimed certain amounts related to a potential loss. Atlantica reached an agreement under which Atlantica’s maximum theoretical exposure would in any case be limited to approximately $35 million, including $2.5 million to be held in an escrow account. In January 2019, the insurance company called on this $2.5 million from the escrow account and Abengoa reimbursed us for this amount. The insurance company could claim additional amounts if they faced new losses after following a process agreed between the parties and, in any case, Atlantica would only make payments if and when the actual loss has been confirmed and after arbitration if the Company initiates it. In the past we had indemnities from Abengoa for certain potential losses, but such indemnities are no longer valid following the insolvency filing by Abengoa S.A. in February 2021.

In addition, during 2021 and 2022, several lawsuits were filed related to the February 2021 winter storm in Texas against among others Electric Reliability Council of Texas (“ERCOT”), two utilities in Texas and more than 230 individual power generators, including Post Oak Wind, LLC, the project company owner of Lone Star I, one of the wind assets in Vento II where we currently have a 49% equity interest. The basis for the lawsuit is that the defendants failed to properly prepare for cold weather, including failure to implement measures and equipment to protect against cold weather, and failed to properly conduct their operations before and during the storm.

Atlantica is not a party to any other significant legal proceedings Atlantica is party to various administrative and regulatory proceedings that have arisen in the ordinary course of business.

While Atlantica does not expect the above noted proceedings, either individually or in combination, to have a material adverse effect on its financial position or results of operations, because of the nature of these proceedings Atlantica is not able to predict their ultimate outcomes, some of which may be unfavorable to Atlantica.

Regulation

Overview

We operate in a significant number of highly regulated markets. The degree of regulation to which our activities are subject varies by country. In a number of the countries in which we operate, regulation is carried out mainly by national regulatory authorities. In others, such as the United States and, to a certain degree, Spain, there are various additional layers of regulation at the state, regional and/or local level. In countries with these additional layers of regulatory agencies, the scope, nature and extent of regulation may differ among the various states, regions and/or localities.

While we believe the requisite authorizations, permits and approvals for our assets have been obtained and that our activities are operating in substantial compliance with applicable laws and regulations, we remain subject to a varied and complex body of laws and regulations that both public officials and private parties may seek to enforce. The following is a description of the primary industry-related regulations applicable to our assets that are currently in force in the principal markets in which we operate.

Regulation in the United States

In the United States, our electricity generation project companies are subject to extensive federal, state and local laws and regulations that govern the development, ownership, business organization and operation of power generation facilities. The federal government regulates wholesale sales, operation and interstate transmission of electric power through the FERC and through other federal agencies, and certain environmental, health and safety matters. State and local governments regulate the siting, permitting, construction and operation of power generation facilities, the retail sale of electricity and certain other environmental, health, safety and permitting matters.

United States Federal Regulation of the Power Generation Facilities and Electric Transmission

The United States federal government regulates the wholesale sale of electric power and the transmission of electricity in interstate commerce through FERC, which draws its jurisdiction from the FPA, as amended, and from other federal legislation.

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Federal Regulation of Electricity Generators

The FPA provides FERC with exclusive ratemaking jurisdiction over all public utilities that engage in wholesale sales of electricity and/or the transmission of electricity in interstate commerce. The owners of renewable energy facilities selling at wholesale are therefore generally subject to FERC’s ratemaking jurisdiction. FERC may authorize a public utility to make wholesale sales of electric energy and related products at negotiated or market-based rates if the public utility can demonstrate that it does not have, or that it has adequately mitigated, horizontal and vertical market power and that it cannot otherwise erect barriers to market entry. Entities granted market-based rate approval face ongoing filing and compliance requirements. Failure to comply with such requirements may result in a revocation of market-based rate authority, disgorgement of profits, civil penalties or other remedies that FERC finds appropriate based on the specific underlying facts and circumstances.

FERC also implements the requirements of the Public Utility Holding Company Act of 1935 (“PUHCA”) applicable to “holding companies” having direct or indirect voting interests of 10% or more in companies that (among other activities) own or operate facilities used for the generation of electricity for sale, which includes renewable energy facilities. PUHCA imposes certain record-keeping, reporting and accounting obligations on such holding companies and certain of their affiliates, subject to certain exceptions.

Federal Reliability Standards

EPACT amended the FPA to grant FERC jurisdiction over all users, owners and operators of the bulk power system for the purpose of enforcing compliance with certain standards for the reliable operation of the bulk power system. Pursuant to its authority under the FPA, FERC certified the North American Electric Reliability Corporation (“NERC”) as the entity responsible for developing reliability standards, submitting them to FERC for approval, and overseeing and enforcing compliance with them, subject in each case to FERC review. NERC, in turn, has delegated certain monitoring and enforcement powers to regional reliability organizations. Users, owners, and operators of the bulk power system meeting certain materiality thresholds are required to register with the NERC compliance registry and comply with FERC-approved reliability standards.

Federal Environmental Regulation, Permitting and Compliance

Construction and operation of power generation facilities, including solar power plants, and the generation and electric transmission of renewable energy from such facilities are subject to environmental regulation at the federal, state and local level. At the federal level, environmental laws and regulations typically require a lengthy and complex process for obtaining licenses, permits and approvals prior to construction, operation or modification of a generation project or electric transmission facilities. Prior to development, permitting authorities may require that project developers consider and address, among other things, the impact on water resources and water quality, endangered species and other biological resources, compatibility with existing land uses and zoning, agricultural resources, archaeological, paleontological, recreational and cultural considerations, environmental justice and cumulative and visual impacts. In an effort to identify and minimize the potential impacts to these resources, power generation facilities may be required to comply with a myriad of federal regulatory programs and applicable federal permits under various federal laws.

In addition, various federal environmental, health and safety regulations applicable during the construction phase are also applicable to the operational phase of power generation facilities. During the operational phase, obtaining certain federal permits or federal approval of certain operating documents (e.g., O&M plans, the spill prevention, control and countermeasure plan, and an emergency and preparedness response plan), as well as maintaining strict compliance with such permits or operating documents, is mandatory. Failure to maintain compliance may result in the revocation of any applicable permit or authorization, civil and criminal charges and fines or potentially the closure of the plant.

U.S. Federal Considerations for Renewable Energy Generation Facilities

The United States provides various federal, state and local tax incentives to stimulate investment in renewable energy generation capacity, including solar power. These tax incentives are subject to change and, possibly, elimination in the future. Certain U.S. federal income tax incentives are described below.

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Section 1603 U.S. Treasury Grant Program

In lieu of claiming certain U.S. federal income tax credits, in particular, the ITC, owners of eligible solar energy property were eligible for a period of time to receive a cash grant from U.S. Treasury equal to 30% of the tax basis of the eligible property. Solana received its 1603 Cash Grant final award from the U.S. Treasury in October 2014, and Mojave received its 1603 Cash Grant final award from the U.S. Treasury in September 2015.

Federal Loan Guarantee Program

The DOE was authorized to grant guarantees with respect to certain loans to renewable energy projects and related manufacturing facilities and electric power transmission projects under Section 1703 of EPACT. The senior debt for Solana and Mojave is guaranteed by the DOE pursuant to the Section 1705 loan guarantee program.

Inflation Reduction Act

On August 16, 2022, U.S. President Biden signed into law the U.S. Inflation Reduction Act (IRA). The provisions of the IRA are intended to, among other things, incentivize clean energy investment, clean energy production and manufacturing of necessary components. The IRA includes, among other incentives, (i) the expansion and extension of ITCs to 30% (subject to satisfying the eligibility requirements under the IRA) for solar projects to be built until 2032, (ii) the expansion and extension of PTCs for wind projects to be built until 2032, (iii) a 30% ITC (subject to satisfying the eligibility requirements under the IRA) for standalone storage projects to be built until 2032, (iv) a new tax credit that will award up to $3/kg for low carbon hydrogen and a three-year extension and modification of PTCs for facilities that begin construction before December 31, 2024, and (v) the increase in total funds available for the U.S. Department of Energy’s Title 17 loan guarantee program by $3.6 billion, bringing the total to $40 billion. The IRA also includes transferability options for the ITCs and PTCs, which should allow an easier and faster monetization of these tax credits. Such credits will reduce the cost of renewable investments in the U.S.

We expect to claim ITCs or any other tax credits or benefits available under IRA for the projects currently under development and construction in the U.S. and for any other qualifying project that we develop and start construction in the U.S.

In determining ITC eligibility, we will rely upon applicable tax law and published IRS guidance. However, the application of law and guidance regarding ITC eligibility to the facts of particular solar energy and standalone storage projects is subject to a number of uncertainties, in particular with respect to the new IRA provisions for which Department of Treasury regulations (“Treasury Regulations”) are forthcoming, and there can be no assurance that the IRS will agree with our approach in the event of an audit. The Department of Treasury is expected to issue Treasury Regulations and additional guidance with respect to the application of the newly enacted IRA provisions, and the IRS and Department of Treasury may modify existing guidance, possibly with retroactive effect. Any of the foregoing could reduce the amount of ITCs or, if applicable, PTCs available to us. In this event, we could be required to seek alternative sources of funding for solar energy projects, which could have a material adverse effect on our business, financial condition, results of operations and prospects.

The ITC and PTC amount can be increased if certain domestic content requirements are satisfied or if a project is located in (i) an “energy community” or (ii) low-income community, each as defined in the IRA.

The full impact of the IRA cannot be known with certainty. However it is expected that, many of these provisions will reduce the cost of renewable investments in the U.S. due to the extensions and expansions of tax credits.

Trade Restrictions and Supply Chain

UFLPA

On December 23, 2021, U.S. President Biden signed into law the Uyghur Forced Labor Prevention Act (the “UFLPA”), which creates forced labor-related import restrictions that took effect on June 21, 2022 and seeks to block the import of products made with forced labor in certain areas of China. This may lead to certain suppliers being blocked from importing solar cells and panels to the U.S. While our assets and projects to start construction in the U.S. have not been impacted, further disruptions may impact our suppliers’ ability or willingness to meet their contractual agreements or to continue to supply cells or panels into the U.S. market on terms that we deem satisfactory.

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We cannot currently predict what, if any, impact the UFLPA will have on the overall supply of solar panels into the U.S. and the related timing and cost of solar projects, future disruption and their effect on U.S solar project development and construction activities are uncertain.

AD/CVD

In August 2021, a group of anonymous domestic solar manufacturers filed a petition (“AD/CVD”) with the U.S. Department of Commerce (“DOC”) seeking to impose new tariffs on solar panels and cells imported from several countries, including Malaysia, Vietnam, and Thailand. The petitioners claimed that Chinese solar manufacturers were shifting products to these countries to avoid the tariffs required on products imported from China. In November 2021, the DOC rejected this petition. In denying the petition, the DOC cited the anonymous group’s refusal of the DOC’s request to provide more detail and identify its members due to concerns about retribution from the dominant Chinese solar industry.

In February 2022, a California based company filed an AD/CVD petition with the DOC seeking to impose new tariffs on solar panels and cells imported from multiple countries, including Malaysia, Vietnam, Thailand, and Cambodia. While the petition is similar to the one rejected by the DOC in November 2021, there are notable differences. The group added Cambodia to the petition and is requesting that the DOC conduct a country-wide inquiry into each of the four countries. In March 2022, the DOC decided to act on the February petition and investigate the claim. A DOC decision is expected by May 2023. If the DOC determines that the petition has merit, it would be able to apply any final tariffs retroactively to November 4, 2021. If imposed, the new tariffs are expected to further disrupt the supply of solar modules to the United States and could impact the cost and timing of our solar projects.

In June 2022, the Biden Administration used its executive powers to issue a 24-month tariff moratorium on solar panels manufactured in Cambodia, Malaysia, Thailand, and Vietnam. The moratorium comes as a direct response to concerns raised about the adverse impact from the ongoing DOC complaint on the U.S. solar industry. As the DOC will continue its investigation discussed above, companies may still be subject to tariffs after the moratorium ends; however, U.S. companies will reportedly be exempt from any retroactive tariffs that previously could have applied. The Biden Administration also announced that it plans to invoke the Defense Production Act to accelerate the production of solar panels in the U.S.

If the investigation results in additional taxes, tariffs, duties, or other assessments on renewable energy or the equipment necessary to generate or deliver it, such as antidumping and countervailing duty rates, such developments could result in, among other items, lack of a satisfactory market for the development and/or financing of our U.S. renewable energy projects, abandonment of the development of certain U.S. renewable energy projects, a loss of our investments in projects in the U.S., and/or reduced project returns.

State and Local Regulation of the Electricity Industry in the United States

State regulatory agencies in the United States have jurisdiction over the rates and terms of electricity service to retail customers. Regulated investor-owned utilities often must obtain state approval for the contracts through which they purchase electricity, including renewable energy, if they seek to pass along the costs of these contracts to their retail ratepayers. Different states apply different standards for determining acceptable prices for utility procurement contracts, including PPAs. Our electricity generation project companies operate in Arizona and California. Information about the regulatory frameworks in Arizona and California is provided below.

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United States State-Level Incentives

In addition to federal legislation, many states have enacted legislation, principally in the form of RPS, which generally require electric utilities to generate or purchase a certain percentage of their electricity supplied to consumers from renewable resources. In certain states, it is not only mandatory to meet these percentages, which in general are on the increase from renewable resources, but also electric utilities may be required to generate or purchase a percentage of their electricity supplied to consumers from specific renewable energy technologies, including solar technology.

Arizona

The Arizona Corporation Commission has complete and exclusive jurisdiction over the rates and terms under which regulated utilities may provide electricity service to retail customers in Arizona. Under Arizona’s Renewable Energy Standard & Tariff (the “REST”) regulated electric utilities must supply an increasing percentage of their retail electric energy sales from eligible renewable resources, including solar, wind, biomass, biogas and geothermal technologies. The renewable energy requirement was 10% of retail electric sales in 2020 and increases annually until it reaches 15% in 2025.

Unlike many other state regulatory commissions, the ACC does not approve PPAs executed by regulated utilities, nor does it issue rulings of “prudency” regarding PPAs. In the case of Solana, however, the power purchaser, Arizona Public Service Company, or APS, voluntarily sought a hearing before the ACC to request its informal opinion of the prudency of the Solana PPA and the ACC affirmed that the PPA should be deemed “a reasonable means” by which APS could meet its requirements under the REST, thereby providing greater assurance of APS’s successful rate recovery request.

Various state and county regulations, mostly related to the environment and public health and safety are applicable during the operational phase of a solar power plant located in Maricopa County, Arizona. Obtaining a permit or requesting the approval of certain operating plans, as well as strict compliance with such permits and plans, is mandatory. Failure to comply may result in the revocation of the permit or authorization, civil and criminal charges and fines, or potentially the closure of Solana.

In addition, in accordance with the NEPA designation of a Finding of No Significant Impact (FONSI) issued by the DOE, Solana must comply with certain water requirements due to the reduction in tail water runoff being contributed to a wash located near the site. Failure to comply with the regulation in place could cause temporary closure of the plant until the non-compliance condition is cured.

Many of the permits obtained for Solana carry specific conditions that must be complied with and which are continuously monitored, measured, and documented by the Solana plant operators, including those related to reliability, emergency response, potential hazards of waste disposal, and human health and safety. These requirements originate with federal laws, and in many cases are enforced via delegated authority from the appropriate federal agency to a state or county agency.

California

The California Public Utilities Commission, or the CPUC, governs, among other entities, California’s investor-owned utilities, including Pacific Gas & Electric Company. The CPUC reviewed Mojave’s PPA and approved the contract by issuing a formal decision in November 2011.

Mojave must maintain compliance with the California Energy Commission (CEC) decision conditions of certification. These conditions of certification address, among others, biological resources, health and safety, cultural resources, fire safety, and water. The conditions require Mojave to provide plans, notifications, and other reports on an ongoing basis. Such compliance is monitored by CEC staff. Per the CEC decision, “failure to comply with any of the Conditions of Certification or the compliance conditions may result in reopening of the case and revocation of Energy Commission certification; an administrative fine; or other action as appropriate.” Additional regulations are administered by the California Independent System Operator and under the terms of the federally administered Large Generator Interconnection Agreement.

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Regulation in Mexico

Overview

Until December 2013, under the Electricity Public Service Law (Ley del Servicio Público de Energía Eléctrica) enacted in 1975 and amended in 1992, the electricity industry in Mexico was entirely controlled by the federal government, acting through the CFE, an entity wholly owned and controlled by the Mexican government, and legally independent from the Mexican Ministry of Energy, or Secretaría de Energía or SENER. CFE was the only entity authorized to provide electricity directly to the public and to supply services to the Mexican wholesale market. CFE was also responsible for the construction and maintenance of infrastructure necessary for the delivery of electricity, such as the national electric grid, the Sistema Eléctrico Nacional, or SEN.

Notwithstanding the foregoing, private entities were allowed to participate in the following activities not considered public utility services, as defined by the aforementioned law:

•	Cogeneration. The electricity produced is used to supply power to the establishments associated with the cogeneration process and/or the shareholders of the cogeneration company;

•	Self-Supply Generation. The electricity produced is used for the self-supply purposes of the holder of the relevant self-supply power generation permit and/or its shareholders;

•	Independent Power Production. All the electricity produced is delivered to CFE;

•	Small-Scale Production. The electricity produced does not exceed 30 MW and is used for export purposes or the supply of all power output is sold to CFE;

•	Exports. The electricity produced is exported in its entirety; and

•	Imports for Independent Consumption. The import of power is used for self-supply purposes.

Since the energy reform of December 2013 and the enactment of the Electric Industry Law (Ley de la Industria Eléctrica), the power generation sector has been more open to private participation and investment, creating a competitive spot market in power generation, although electric transmission and distribution remain public services to be provided exclusively by CFE. The national electric grid is a responsibility of the Centro Nacional de Control de Energía, or the CENACE, which became a decentralized public agency, an Independent System Operator, or ISO.

Since commencement of the energy reform process, secondary legislation and regulation was enacted and changes were implemented through a substantial modification of the legal framework that had governed the development of the energy industry in the country.

However, on March 9, 2021, Mexico´s President proposed a preferential reform to the Electric Industry Law. In broad terms, the reform aimed for CFE to re-instate its significance in the energy generation sector with the constitutional reform of 2013 by, among others, (i) changing the dispatch criteria from economic merit to CFE´s assets; (ii) giving CFE the ability to enforce the termination of grandfathered self-supply contracts; (iii) allowing any renewable generator to get clean energy certificates (which will create a surplus and therefore will undermine their purpose); (iv) eliminating CFE´s obligation to buy energy through auctions; and (v) granting the Energy Ministry the possibility to decide which generation permits are granted by the FERC.

Several legal defense mechanisms were activated and filed before Mexican courts, arguing that the aforementioned reform was against constitutional principles, which have resulted in Mexican District Courts suspending the application of the reform until constitutional proceedings are definitely resolved, thus leaving the Electric Industry Law of 2014 effective.

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On September 30, 2021, the Mexican President submitted before the House of Representatives a new bill pursuant to which articles 25, 27 and 28 of the Mexican Constitution are proposed to be amended. On April 17, 2022, the Electricity Reform did not reach the qualified majority required for its approval by the House of Representatives in Mexico, and was therefore dismissed. Although the Mexican President has stated that he does not intend to re-submit a modified amendment proposal for approval again, at this point we cannot guarantee that he will not pursue other changes to the electricity sector in Mexico, since this has been an important component of his political agenda. However, as several experts in the field have explained, the Mexican Energy regulatory Commission (Comisión Reguladora de la Energía), or CRE, still has failed to provide a response to permit applications, modifications and other requests, which has created uncertainty in the market and further delayed the development of projects.

Additionally, on December 31, 2021, CRE published in DOF the new rules for the grid code (Código de Red) on aspects of efficiency, quality, reliability, safety and sustainability of the National Electric System (Sistema Eléctrico Nacional).

Conventional Electricity Generation in Mexico

Electric Industry Law

The Electric Industry Law regulates planning activities, the control of the national electric grid, the public services of transmission and distribution of electricity, and all other activities related to the Mexican energy industry, in order to promote the sustainable development of the industry and to ensure its continuous, efficient, and secure operation for the benefit of all users, as well as the fulfillment of the obligations to provide a general and public service of electricity, to develop clean energies, and to reduce harmful emissions.

Pursuant to the Electric Industry Law, the government holds the operational control of the national electric grid, through the CENACE, and CENACE, as an ISO, indicates the elements for the national transmission grid and the related operations which may correspond to the wholesale market.

Regulations of the Electric Industry Law

The Regulations of the Electric Industry Law provide details for the application of the Electric Industry Law. These regulations expand on certain administrative procedures in the electric industry, such as the development of public bidding procedures by CFE, for private sector contracts for activities related to the national electric grid; the specific requirements for the application for power generation and power supply permits with CRE; the process for infrastructure contributions by the private sector to the State; and the registration of participants in the wholesale spot market with CENACE.

Permits and Authorizations

Pursuant to the Electric Industry Law, all power plants with a capacity greater than or equal to 0.5 MW require a generation permit granted by CRE. The Electric Industry Law also provides for several requirements which generators who represent power plants interconnected to the national electric grid have to comply with, including, among others, the execution of the corresponding interconnection agreements, issued by CRE.

CRE may also issue a supply permit for private parties, which will allow companies to participate in the Mexican Wholesale Electricity Market (Mercado Eléctrico Mayorista), or by carrying out transactions with final users, which are called “qualified users.” In this sense, private parties may supply power directly to consumers through bilateral long-term agreements, which will be partially regulated by the CRE.

Consequently, the Mexican power industry is divided into two main areas: (i) the public service of electricity under CFE’s control, and (ii) the activities where private parties may be involved (such as where CFE actively promoted private investment in the construction and operation of power plants for supplying CFE and private parties under self-supply and cogeneration schemes).

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While power generated in Mexico is still predominantly generated by CFE, there is a large amount of electricity generated by private energy producers, which generally fall under the categories of independent power production and self-supply generation, although cogeneration has come to be a relevant source of power as a result of certain amendments enacted in 2006 which allowed Pemex to develop new cogeneration projects independently and in collaboration with CFE. These amendments allowed Pemex to enter into the Pemex conversion services agreement and to receive the power generated by ACT.

As a consequence of the corresponding reforms the issuance of a new class of permit available to those interested in generating electricity is provided for pursuant to the Electric Industry Law. This permit expanded the ways in which entities are allowed to participate as energy producers under the Electric Industry Law and is within the scope of the CRE’s regulatory control.

The permits provided for in the Electric Industry Law are, as aforementioned, granted and issued by CRE, upon prior submission of the corresponding application, payment of the corresponding duties, all relevant legal and technical information, and project description. Such permits will be terminated or revoked pursuant to the different scenarios indicated in the Electric Industry Law and its regulations, and as determined by CRE.

Transmission and Distribution of Electricity in Mexico

Pursuant to the Electric Industry Law, regarding conventional energy generation, dispatchers and distributors are responsible for the national transmission grid and the general distribution grids and will operate their grids pursuant to the instruction provided by CENACE.

CFE is required by law to provide its wheeling (the transfer of electrical power through transmission and distribution lines to another utility), dispatch and backup services to all permit holders whenever the requested service is technically feasible on a first-come, first-served basis. CFE’s wheeling services are provided pursuant to an interconnection agreement and a transmission services agreement entered into between CFE and the relevant permit holder (in ACT’s case, these were executed by Pemex). Those agreements follow model contracts approved by the CRE, which also approves the methodology used to calculate the applicable tariffs. The permit holders must build their own transmission lines for self-use in order to connect to the power grid. In addition, permit holders are required to enter into a back-up services agreement with CFE, which also follow a model agreement approved by the CRE.

The Electric Industry Law incorporates requirements to carry out the sale and purchase of electricity. Aside from being classified as a generator or qualified user, along with the need to comply with the rules issued by CRE for the execution of the corresponding agreements, there are requirements for the interconnection to the transmission grid owned by CFE.

Open Access

Both the Electric Industry Law and in the regulations thereunder establish that CFE is obligated to grant non-discriminatory open access to all users of the national electric grid. Open access is a crucial component of the electric industry since CFE, as owner of the grid, competes directly with other private sector participants in several activities of the industry, which could lead to a monopoly by CFE. In order to avoid such situation, the CENACE, as an independent system operator, will ensure competitive conditions for all users who want to use CFE’s infrastructure.

Pursuant to the regulations, CRE issued the general guidelines regarding open access conditions, the procedure for users to request such open access and the procedure to which the CENACE will be subject to grant this open access, among others.

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Wholesale Spot Market, Mercado Eléctrico Mayorista

MEM participants can be (i) generators, (ii) suppliers, (iii) non-supplier traders, or (iv) qualified users, prior to execution of the corresponding agreement with CENACE. Transactions carried out within the MEM must be formalized through “electric coverage agreements” executed by and between such MEM participants. Generators, as MEM participants may, sell their generated energy and both traders and qualified users may purchase such energy through CENACE, which is the independent operator of the electric system.

CENACE is responsible for managing the supply and demand of MEM participants, conducting transactions and continuously generating prices. The price to be paid in MEM transactions has to be a “competition price” in terms of the Electric Industry Law and has to reflect elements such as electricity generation costs and other operating costs, as well as the amount of electricity demanded by and supplied within the MEM. Such competition price serves as a reference for long-term supply agreements between providers and qualified users, partially replacing the CFE-published tariffs.

Even though the Electric Industry Law provides the general guidelines to which the operation of the MEM is subject, on September 8, 2015, the Mexican Ministry of Energy published the Guidelines of the Market (Bases del Mercado Eléctrico), or the Guidelines as the general administrative provisions which establish the principles for the design and operation of the MEM. The regulations list certain topics which are described in depth in the Rules of the Market (Reglas del Mercado), such as the methodology that is used to forecast the level of demand in the spot market, information on market participants, and the methodology to determine the price of the electricity sold and purchased within the spot market.

The Guidelines are part of the Rules of the Market, which are administrative provisions of general application that specifically detail different aspects of the operation of the MEM, and determine the rules that all market participants, such as generators, traders, suppliers, non-supplier traders or qualified users, as well as the competent authorities must comply with.

Current Regulatory Framework

The following laws and regulations are among the main provisions that include constitutional, legal and regulatory provisions applying to the development of cogeneration projects in Mexico, according to the recently enacted regulatory framework:

•	Political Constitution of the United Mexican States (Constitución Política de los Estados Unidos Mexicanos).

•	Electric Industry Law (Ley de la Industria Eléctrica).

•	Regulation of the Electric Industry Law (Reglamento de la Ley de la Industria Eléctrica)

•	Energy Regulatory Bodies Law (Ley de los Órganos Reguladores Coordinados en Materia Energética).

•	Energy Transition Law (Ley de Transición Energética).

•	Federal Electricity Commission Law (Ley de la Comisión Federal de Electricidad).

•	Regulations of the Federal Electricity Commission Law (Reglamento de la Ley de la Comisión Federal de Electricidad).

•	Terms for the strict legal segregation of the Federal Electricity Commission (Términos para la estricta separación legal de la Comisión Federal de Electricidad).

•	Geothermal Energy Law (Ley de Energía Geotérmica).

•	Guidelines that regulate the criteria for granting clean energy certificates (Lineamientos que establecen los criterios para el otorgamiento de certificados de energía limpia) which have been recently amended and which relevant implications will be further mentioned below.

•	Guidelines of the Market (Bases del Mercado Eléctrico).

•	Grid Code 2.0 (Código de Red 2.0).

•	General Administrative Provisions that establish the terms for the operation of the Register of Qualified Users (Disposiciones administrativas de carácter general que establecen los términos para la operación y funcionamiento del registro de Usuarios Calificados).

•

Resolution by means of which the Energy Regulatory Commission issues the general administrative provisions that establish the general conditions for the provision of the energy supply (Resolución por la que la Comisión Reguladora de Energía expide las Disposiciones administrativas de carácter general que establecen las condiciones generales para la prestación del suministro eléctrico).

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•

Mechanism to request the modification of the permits granted under the Electricity Public Service Law for generation permits, as well as the criteria under which the permit holders of such regime may execute an interconnection contract while the Wholesale Electricity Market becomes effective (Mecanismo para solicitar la modificación de los permisos otorgados bajo la Ley del Servicio Público de Energía Eléctrica por permisos con carácter único de generación, así como los criterios bajo los cuales los permisionarios de dicho régimen podrán celebrar un contrato de interconexión en tanto entra en operación el mercado eléctrico mayorista).

•

General administrative provisions for the operation of the certificate procurement system and the compliance with the clean energy obligations (Disposiciones administrativas de carácter general para el funcionamiento del sistema de gestión de certificados y cumplimiento de obligaciones de energías limpias).

•

General administrative provisions that establish the minimum requirement to be met by suppliers and qualified users participating in the Electricity Market to acquire energy demand in terms of article 12, section XXI, of the Electric Industry Law (Disposiciones administrativas de carácter general que establecen el Requisito mínimo que deberán cumplir los suministradores y los usuarios calificados participantes del mercado para adquirir potencia en términos del artículo 12, fracción XXI, de la Ley de la Industria Eléctrica).

•

General administrative provisions regarding open access and provision of services in the National Transmission Network and the General Distribution Networks (Disposiciones administrativas de carácter general en materia de acceso abierto y prestación de los servicios en la Red Nacional de Transmisión y las Redes Generales de Distribución de Energía Eléctrica).

•

General administrative provisions that establish the requirements and minimum amounts of electricity coverage contracts that suppliers must hold regarding electric power, energy demand and clean energy certificates that they will supply to the represented load centers and their verification (Disposiciones administrativas de carácter general que establecen los requisitos y montos mínimos de contratos de cobertura eléctrica que los suministradores deberán celebrar relativos a la energía eléctrica, potencia y certificados de energía limpia que suministrarán a los centros de carga que representen y su verificación).

•	Policy on Reliability, Safety, Continuity and Quality on the National Electric System (Política de Confiabilidad, Seguridad, Continuidad y Calidad en el Sistema Eléctrico Nacional).

•

Decree to guarantee the Efficiency, Quality, Reliability, Continuity and Safety of the National Electric System, due to the recognition of the epidemic of the SARS-CoV2 virus disease (COVID-19) (Decreto para garantizar la Eficiencia, Calidad, Confiabilidad, Continuidad ySeguridad del Sistema Eléctrico Nacional, con motivo del reconocimiento de la epidemia de la enfermedad por el virus SARS-CoV2 (COVID-19)).

•

Resolution by means of which CFE announced the new wheeling tariffs to owners of Legacy Interconnection Agreements with renewable energy sources (Resolución por medio de la cual CFE dio a conocer las nuevas tarifas de transmisión a los titulares de Contratos de Interconexión Legados con fuentes de energía renovable).

•	Decree number A/037/2021 of the Energy Regulatory Commission by means of which decree number A/049/2017 is amended, regarding the interpretation criteria of the concept self-needs and the general aspects applicable to the isolated supply activity.

•	Resolution number RES/550/2021 of the Energy Regulatory Commission by means of which the General Administrative Provisions regarding the efficiency, quality, reliability, continuity, safety and sustainability standards of the National Electric System are published: Grid Code.

Regulation in Peru

The Electric Transmission Sector

The Peruvian electric system serves energy to a large area of the country through its national grid, the SEIN (the Sistema Eléctrico Interconectado Nacional).

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Pursuant to Law 28832, which is applicable to any transmission project commissioned after July 2006, the transmission facilities integrating the transmission grid are classified as those belonging to: either (i) the Guaranteed Transmission System (Sistema Garantizado de Transmisión or SGT), for transmission facilities that are included in the transmission plan and developed pursuant to a concession agreement granted by the Peruvian government to the winner of a public tender, or (ii) the Complementary Transmission System(Sistema Complementario de Transmisión or SCT), for transmission facilities that are either (a) included in the transmission plan and developed by the private entity that was awarded a concession as a result of the successful review of a private initiative proposal, or (b) not included in the transmission plan. ATN and ATS are part of the Guaranteed Transmission System. ATN2 is part of the Complementary Transmission System.

Under Law 28832, the projected expansions of the transmission system identified in the Peruvian transmission plan are part of the SGT. The government organizes tender procedures to call private investors interested in building the projected lines of the SGT and award a SGT concession agreement (see further information regarding SGT Concession Agreements below).

Transmission lines of interest to generation plants, distribution networks or large consumers are part of the SCT. The lines of the SCT included in the Peruvian transmission plan and certain projects that exclusively serve the demand, as defined by the government, may be subject to tenders for the granting of SCT Concession Agreements up to 30 years. The rest of the SCT projects are subject to the general regime in which the owners of the SCT lines (for example, the generation companies building them to connect their plants to the system) are the holders of the respective Definitive Transmission Concession and own the transmission assets through the term of the concession.

Tariff Regime

The SGT is compensated through the tariff base, which is the authorized annual remuneration for facilities belonging to the SGT. The tariff base is established in annual amounts and includes the following: (i) remuneration of investments (including adjustments), which is calculated based on a 30-year recovery period applying a 12% rate of return, (ii) efficient operating and maintenance costs, and (iii) the liquidation of imbalances between the authorized tariff base for the previous year and the proceeds obtained during that year.

The tariff base will be paid through the (i) tariff income and (ii) the transmission toll. The tariff income is paid monthly by the electricity generation companies in proportion to their respective capacity income. The transmission toll is paid by the electricity generation companies based on their collection of the transmission toll paid by their respective customers pursuant to the Transmission Rules (Reglamento de Transmision).

The SCT is remunerated on the basis of the annual average cost of the corresponding facilities approved by OSINERGMIN. The applicable tariffs and their respective actualization formulas are approved by OSINERGMIN every four years.

Penalties

The concessionaires must maintain certain quality, safety and maintenance standards of the facilities. The failure to meet the quality standards established by applicable industry regulations, such as the technical rules of quality for power services, and the National Electricity Code, may result in the imposition of penalties, fines and restrictions. In addition to these penalties, fines and restrictions, if our concession is terminated due to the breach of obligations under the Concession Agreements, the Peruvian Ministry of Energy and Mines may appoint an intervenor to supervise the operations related to the concession to ensure the continuity in the provision of the service, and the compliance with applicable laws and regulations.

If a concessionaire suspends or interrupts the service for reasons other than regular maintenance and repairs, force majeure events, or failures caused by third parties, such concessionaire may be required to indemnify those who were affected for the damages caused by any such service interruption, in accordance with applicable regulations. In addition, the OSINERGMIN could impose penalties, including, among others, (a) admonishment, (b) successive fines, depending on the nature and effect of the interruption and its frequency, (c) temporary suspension of activities, and (d) definitive suspension of activities and the provisional administration of operations by an intervenor, if a termination event occurs and the Peruvian Ministry of Energy and Mines notifies of its desire to terminate the SGT Concession Agreement.

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Electricity Legal Framework

The principal laws and regulations governing the Peruvian energy sector, or the Electricity Legal Framework, are: (i) the Electricity Concessions Law (Ley de Concesiones Electricas, PCL), and its implementing rules; (ii) the Law 28832, Law to Ensure the Efficient Development of Electricity Generation (Ley para Asegurar el Desarrollo Eficiente de la Generacion Electrica), (iii) the Transmission Rules (Reglamento de Transmision), or the Transmission Rules; (iv) the General Environmental Law; (v) the Regulations for the Environmental Protection in Power Activities; (vi) the Laws creating OSINERGMIN; (vii) the OSINERGMIN Rules ; (viii) the Regulatory Agencies of Private Investment in Public Services Framework Law; and (ix) the Legislative Decree that promotes investment in the generation of power through renewable resources and its regulations.

These rules regulate how to enter the electricity sector (applicable permits and licenses); the main obligations of the different participants of the electricity market (generators, transmission companies and distribution companies); remuneration systems for the different market participants; rights of electricity consumers and the attributions of the competent authorities.

Some of the main aspects of Peru’s regulatory framework concerning its power sector are: (i) the separation between the power generation, transmission and distribution activities; (ii) unregulated prices for the generation of power supplied to unregulated customers; (iii) regulated prices for the generation of power supplied to regulated customers; (iv) regulated prices applicable to transmission and distribution of power for both regulated and unregulated customers; and (v) the private administration of the SEIN, according to the principles of efficiency, cost reduction, guaranty of quality and reliability in the provision of services.

All entities that generate, transmit or distribute power to third parties in Peru, including self-generators and co-generators that sell their excess capacity and energy in the SEIN are regulated by the Energy Legal Framework.

The Peruvian government retains ultimate oversight and regulatory control. In addition, the Peruvian government owns and controls various generation and distribution companies in Peru.

During 2020, OSINERGMIN approved a new Annual Liquidation Procedure for the SGT Electricity Transmission Service, which applies to all concessionaires that have transmission facilities subject to the SGT Contracts regime. The regulation specifies that the Liquidation Procedure to be carried out in 2021 will comprise a Liquidation Period of ten months, from March 1, 2020 to December 31, 2020. By means of this procedure, the base tariff for the transmission service cannot be modified; however, this is relevant as it determines the monthly disbursements to be made in favor of the agents of the electricity market.

Additionally, OSINERGMIN has approved certain procedure applicable to electricity agents (including transmission agents) including the Procedure named “Conditions for the application of electricity generation and transmission tariffs”, by means of which, the conditions for the application of the generation and transmission prices were established for certain electric energy supplies as further detailed in the Electrical Concessions Law.

In addition, the same way it was approved the Procedure for the Auditing of Contracts and Authorizations of the Electricity Subsector and Concession Contracts in Natural Gas Activities was approved (Resolution No. 166-2020-OS/CD), having as the purpose of this regulation is to audit the obligations contained in concession contracts, authorizations and investment commitment contracts in the electricity sub-sector, including the transmission service, which are under the competence of OSINERGMIN. For the electric transmission systems, the following aspects are subject to audit: (i) the Electric Power Transmission Systems Concession Contract (SGT and SCT); (ii) Electric Power Transmission System Expansions; (iii) Concession Contract to Develop the Electric Power Transmission Activity.

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In March of 2020, the Presidency of the Council of Ministers ordered the reorganization of OSINERGMIN passed through a Supreme Decree No. 023-2020-PCM in order to evaluate the administrative, organizational and management situation of the entity, as well as to propose the necessary reform measures. In such context, in December 2020, OSINERGMIN approved a new Regulations for the Inspection and Sanctioning of Energy and Mining Activities under the responsibility of OSINERGMIN, by means of Resolution No. 208-2020-OS/CD, issued on December, 2020. Such new regulations are applicable to the transmission sector and will come into effect with the publication of other pending norms in charge of the entity. Regarding the sanctioning power of OSINERGMIN in the electric sector, a new Fine Application Limit has been adopted.

During 2021, the OSINERGMIN issued Resolution No. 069-2021-OS-CD that approved the calculation of the annual settlement corresponding to the transmission concessionaires for the income obtained from the transmission tolls of the Secondary Transmission Systems and the Complementary Transmission Systems. Said resolution was subsequently amended by Resolution No. 242-2021-OS/CD, in order to change the procedure for the determination, collection, settlement of the Annual Average Cost and the unit value of the Transmission Toll of the projects included in the Transmission Investment Plans for the periods 2013-2017, 2017-2021 and 2021-2025 that have been reallocated through the mechanism of expression of interest of the transmission concessionaires. Likewise, it regulates the form of payment of such amounts and the corresponding information reporting. In addition, Resolution 083-2021-OS/CD approved the new technical procedure No. 20 of the COES related to the entry, modification and withdrawal of electric facilities in the SEIN and established a new regulation for the treatment of facilities connected to distribution facilities.

Moreover, during 2021, OSINERGMIN approved a modification to the Technical Procedure No. 31 of the COES regarding the calculation of the Variable Costs of the Generation Units, which had an impact on the energy business due to its impact on the marginal cost. Also, during 2022 such Procedure was (once again) modified through Resolution No. 171-2022-OS/CD.

In December 2022, through Supreme Decrees No. 154-2022-PCM and 157-2022-PCM, certain provisions related to the regime of the Contribution for Regulation in the electricity sub-sector in favor of OSINERGMIN and the Environmental Evaluation and Inspection Agency (OEFA) were approved. Specifically, in both cases, the rates of the Contribution for Regulation of the electric transmission concessionaires were updated for years 2023, 2024 and 2025.

By means of the Ministerial Resolution No. 227-2022-MINEM-DM, the Peruvian Ministry of Energy and Mines published for comments a draft of an amendment to the Law 28832. Among other topics, such resolution proposes: (i) a modification of some aspects related to the procedures to call for auctions for the execution of a SGT; (ii) the recognition of firm capacity for energy plants that produces with renewal energy resources, and (iii) the development of complementary services in the system (for example, based in the provision of frequency regulation services with battery energy storage systems).

Finally, regarding the existing limitations to vertical integration of the electric activities, Law No. 31112, “Law that establishes the prior control for corporate concentration operations” and its relevant implementing rules (Supreme Decree No. 039-2021-PCM) became effective on June 14, 2021.

Regulation for Environmental Protection in Electrical Activities

In accordance with the current environmental legal framework, as a general rule, prior to the construction and beginning of any electrical activities (i.e. generation, transmission or distribution) the holder must obtain from the Peruvian Ministry of Energy and Mines an instrument for environmental management (“IEM”), which after its approval is mandatory for implementation. In that sense, electricity companies are obliged to submit, on a yearly basis, an Annual Environmental Report with information on their level of compliance with environmental commitments (as established in the IEM) and other legal obligations that may result applicable. During 2022, guidelines for the filing of such Report were approved.

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The guaranteed Transmission System—SGT Concession Agreement

ATN and ATS, as concessionaires, have SGT Concession Agreements granted by the Peruvian government as a result of a public tender. Under the SGT Concession Agreement, the Peruvian Ministry of Energy grants the concession necessary to construct, develop, own, operate, and maintain the transmission lines and substations comprising a project to provide electricity transmission services that has been included in the Peruvian transmission plan.

The SGT Concession Agreement must specify the works schedule of the project and the corresponding guaranties of compliance. It also specifies the causes of termination of the agreement. The SGT concessionaires are not obliged to pay the grantor any consideration for the SGT Concession Agreement.

Under the SGT Concession Agreement, the concessionaire shall build the lines and be responsible for their operation and maintenance. The recovery of the investment during the term of the contract (30 years) is guaranteed thereunder. The concessionaire owns the transmission assets during the term of the contract. Upon expiry of the contract the assets return to the state, which shall call a new tender if the lines are required at such time for the operation of the system.

The revenues of the project are established under the terms of the SGT Concession Agreement. In addition, the revenues of the project are funded by the users of electricity system. Related to this, the compensation for facilities that are part of the SGT is allocated to customers by OSINERGMIN according to the amounts of investment, operational and maintenance costs set forth in the SGT Concession Agreement. The SGT will receive monthly compensation from the generation companies that collect the tariff base from their customers. Their compensation will be paid on a monthly basis and these monthly payments are liquidated by the COES, following the tariffs established annually by OSINERGMIN.

Regulation in Chile

Current Regulatory Framework

The general regulatory framework of the Chilean electricity sector, focused on photovoltaic solar plants, consists of:

•	Decree with force of law no. 4, that fixes consolidated, coordinated, and systematized text of Decree with force of law no. 1, of Mining, of 1982, on General Law of Electric Services, in matters of electric energy, the “General Law of Electric Services”,

•	Law No. 19.300, March 9, 1994, on General Bases of the Environment, modified by Law No. 20.417, January 26, 2010, which creates the Ministry, the Environmental Evaluation Service and the Superintendence of the Environment;

•	Supreme Decree No. 327/1997 of the Ministry of Mining, published in the Official Gazette on September 10, 1998, modified by Supreme Decree No 68/2021, which contains “Regulation of General Law of Electric Services”;

•	Supreme Decree No. 125/2019 of the Ministry of Energy, published in the Official Gazette on December 20, 2019, which contains “Regulation of coordination and operation of the national electricity system”;

•	Supreme Decree No. 62/2006 of the Ministry of Economy, Development and Reconstruction, published in the Official Gazette on June 16, 2006, modified by Supreme Decree No 42/2020, which contains “Regulation of power transfers between companies regulated by General Law of Electric Services”;

•	Supreme Decree No. 88/2019 of the Ministry of Energy, published in the Official Gazette on October 8, 2020, modified by Supreme Decree No 27/2022, which contains “Regulation on Small Means on Distributed Generation” (PMGD).

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•	Technical standard for the connection and operation of PMGD in medium voltage installations fixes by the National Energy Commission (“NTCO-PMGD” July 2019).

General Law of Electric Services

The purpose of the General Law of Electric Services is to establish a regulatory framework containing the rules applicable to the generation, transmission and distribution of electric power in Chile. This law is complemented by a series of technical regulations and standards.

In turn, for the electricity generation business, the applicable regulations establish a competitive market that seeks to supply the demand at minimum cost, so that the result is the economically efficient allocation of resources to and within the electric sector. To accomplish this, the National Electric Coordinator (“CEN”) determines the generation costs of each power plant and schedules the operation, according to the rules contained mainly in the “Regulation of coordination and operation of the national electricity system”.

The operation of electricity distribution companies require the granting of a concession by the authority and is usually a monopoly market. Pursuant to the General Law of Electric Services, the electric power distribution companies should provide public distribution services to all the customers located in their concession areas and are obliged to supply to all those who request it within such area. On the other hand, the regulations of the aforementioned law establish the duty of the distribution companies to ensure compliance with the obligation to provide supply. To comply with this, they must have a permanent supply of energy that, added to their own generation capacity, allows them to meet their total projected needs for a time horizon of at least three years.

Regulation applicable to transmission lines

The General Law of Electric Services establishes a medium and long term planning procedure for the most important transmission lines, to then publicly tender the construction of the works. In turn, the owners of the transmission lines are entitled to receive a remuneration called “tolls” as compensation for the investment and maintenance of the lines.

Regulation applicable to photovoltaic plants (“PV”)

The General Law of Electric Services establishes freedom to build, install or purchase photovoltaic plants, thus a previous state concession is not required to perform such activities. However, once a PV enters into operation, it must comply with the instructions given by the CEN for the entire National Electric System (“SEN”) regarding energy production. Such instructions will determine which plants must produce electricity in the next few days, depending on their production costs and the availability of the power plants, among other aspects. If the plant is “dispatched” by the CEN, it must operate and its energy will be injected into the National Electric System, from where the companies that have customers will obtain the electricity necessary to supply their consumption.

According to the General Electric Services Law, all owners of generation facilities synchronized to the SEN shall have the right to sell the energy they produce at the instantaneous marginal cost, as well as their power surpluses at the node price of the power. As a result, in the generation market there are forced sales of electricity power between the different plants, the price of which is determined by CEN and corresponds to the instantaneous marginal cost. The valuation of energy and power transfers between the different companies is carried out by CEN, according to the rules contained mainly in “Regulation of coordination and operation of the national electricity system” and “Regulation of power transfers between companies regulated by General Law of Electric Services”.

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Regulation applicable to PMGDs

The General Electric Services Law provides that a regulation will establish the procedures for the determination of prices, when the generation facilities are directly connected to distribution system, as well as the price stabilization mechanisms applicable to the energy injected by power plants whose surplus of power that can be supplied to the electricity system does not exceed 9 MW. For that reason, Supreme Decree No. 244/05 (“DS 244”) was approved to incorporate a regulation for small-scale generation facilities (PMG and PMGD). Moreover, on October 8, 2020, Supreme Decree No. 88 (DS 88) was published in the Official Gazette, incorporating a new regulation for small-scale generation facilities (PMG and PMGD) which was recently amended in March 2022.

Any owner or operator of a small-scale generation facility must choose to sell the energy it injects into the system at the instantaneous marginal cost or under a stabilized price regime. This option must be communicated at least one month prior to the entry into operation. The minimum period of permanence in each regime will be four years and the option to change regime must be communicated to CEN at least six months in advance.

The price stabilization mechanism (or “Stabilized Price”) was incorporated in the General Law of Electric Services with Law No. 19,940/2004, with the intention of encouraging the construction of small non-conventional renewable energy generating plants, whose power surpluses do not exceed 9MW. The aim was to reduce the entry barriers faced by these plants, normally located close to consumption centers, stabilize their cash-flows, and diversify the energy matrix. Supreme Decree No. 244/05 (“DS 244”) regulated this matter and allowed the owners of such facilities if they sold the energy produced at the instantaneous marginal cost or at the Stabilized Prices set by Supreme Decree by the Ministry of Energy. The Stabilized Price would be determined by the National Energy Commission for a 4-year horizon, based on a projection of the marginal cost for that period. If the Stabilized Price was chosen, the plant had to remain for the same period of 4 years in the price stabilization mechanism. This Supreme Decree was replaced 15 years later by Supreme Decree No. 88/2019 (“DS 88”).

The new scheme set by DS 88 modifies the stabilized price regime for projects up to 9MW that are directly connected to low and medium voltage transmission lines and introduces adjustments aimed at streamlining the connection process. Regarding the new stabilized price regime, the calculation now considers six four-hour time intervals with independent prices during a given day, in contrast to the previous regime, which did not make distinctions based on the time of energy injection.

At the same time, in order to avoid a negative impact on the market of the PMGDs that had already used this mechanism, DS 88 created a grandfathering period for PMGDs that were (i) already in operation, (ii) declared under construction and/or (iii) with their sectorial environmental approvals granted. Under such grandfathering period, the facilities that met any of the abovementioned criteria can choose if they want to benefit from the Stabilized Price regime of DS 244 for a term of 165 months since the publication of DS 88, until July 2034. Given that Atlantica’s Chile PMGDs were already declared under construction when DS 88 became applicable, Atlantica chose to benefit from the grandfathering period and therefore receiving the stabilized price set by DS 244. Once the term of the grandfathering period elapses, all PMGDs will follow the new scheme set forth by DS 88.

DS 88 establishes a regulated procedure for the authorization of PMGDs. Such procedure begins with the presentation of a request for connection to the grid belonging to a distribution company, accompanying a schedule of works, and a deposit of 20% of the costs corresponding to the connection studies. If declared admissible by the distribution company, it issues a Connection Criteria Report (ICC), which will be valid for 9, 12 or 18 months, with no possibility of extension, depending on the installed capacity of the project, as well as whether it has a significant impact on the grid. Moreover, in order to receive the authorizations required for construction, PMGDs must submit their “declaration under construction” to the CNE, at which time the CNE will analyze if their power surplus is less than or equal to 9MW, being a requirement to access to the special conditions defined exclusively for small-scale generation facilities, such as connection conditions, operation, price level and billing.

It is important to note that the electricity distribution companies must allow the connection to their distribution facilities to the PMGD, complying with the specifications contained in the Technical Standards issued by the CNE, at present “NTCO-PMGD” July 2019 and shall guarantee access to their network for PMGD with the same quality of service applicable to Regulated customers.

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Regulation in Spain

Primary Rights and Obligations under the Spanish Electricity Act

The Electricity Act recognizes the following rights for producers with facilities that use renewable energy sources:

•

Priority off-take. Producers of electricity from renewable sources have priority over conventional generators in transmitting to off takers the energy they produce under equal market conditions, without prejudice to the requirements relating to the maintenance of the reliability and safety of the national electricity system and based on transparent and non-discriminatory criteria, in terms to be determined by the Government in a regulatory manner.

•

Priority of access and connection to transmission and distribution networks. Without prejudice to the security of supply and the efficient development of the system, producers of electricity from renewable energy sources have priority in obtaining access and connecting to the grid, subject to the terms set forth in the regulations, on the basis of objective, transparent and non-discriminatory criteria.

•

Entitlement to a specific payment scheme: under the system established by Royal Decree 413/2014, the sale of electricity at market price is complemented with a specific regulated remuneration that allows these technologies to compete on an equal basis with the rest of the technologies on the market. This specific complementary remuneration will be sufficient to reach the minimum level necessary to cover the costs and enables them to compete on a level playing field with the other, non-renewable technologies on the market while achieving a reasonable return on investment. In case of new facilities, the Spanish government can establish a specific remuneration through an auction process.

The significant obligations of the renewable energy electricity producers under the Electricity Act include, inter alia, a requirement to:

•	Offer to sell the energy they produce through the market (daily and intra-daily market managed by the market operator) or via a bilateral or forward contract (which makes them consequently excluded from the bidding system managed by the market operator).

•	Maintain the plant’s planned production capacity. Power lines, which include connections with the transmission or distribution network and transformers are considered part of the production facility.

Remuneration System for Renewable Plants

According to Royal Decree 413/2014, producers receive (i) the electricity market price for the power they produce and (ii) a specific remuneration.

The specific remuneration system established by Royal Decree 413/2014 applies to production facilities using renewable energy sources, high-efficiency cogeneration and waste that do not reach the minimum level necessary to cover the costs. It allows them to compete on an equal footing with the rest of the technologies on the market, obtaining a reasonable return.

In order to determine the specific remuneration system applicable in each case, each installation, depending on its characteristics, will be assigned a standard installation which will be established according to technology, installed power, age, electrical system, etc. The specific remuneration of each installation will be obtained from the remuneration parameters of the corresponding standard installation and from the characteristics of the installation itself. For the calculation of the remuneration parameters of the standard installation, the values resulting from the competitive competition procedure shall be applied.

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This specific remuneration system shall consist of the following two concepts for remuneration:

A remuneration per unit of installed power, which shall be called Remuneration on Investment (Rinv) and shall be expressed in €/MW. To determine this parameter, the standard value of the initial investment resulting from the competitive tendering procedure established to grant the specific remuneration system to each installation will be considered. For the calculation of the annual income from the remuneration for the investment of an installation, the Remuneration on Investment (Rinv) of the associated typical installation shall be multiplied by the power entitled to the specific remuneration system, without prejudice to the correction according to the number of equivalent hours of operation.

A Remuneration on Operation (Ro), which shall be calculated in accordance with the provisions of Article 17 of the Royal Decree 413/2014, expressed in €/MWh. In order to calculate the income from the Remuneration on Operation (Ro) of an installation, the Remuneration on Operation (Ro) of the associated typical installation shall be multiplied, for each settlement period, by the energy sold on the production market in any of its forms of contracting in said period, attributable to the fraction of power entitled to a specific remuneration system, without prejudice to the correction based on the number of equivalent hours of operation.

For the granting of the specific remuneration system, the conditions, technologies or group of specific facilities that may participate in the competitive competition mechanism are established. Nevertheless, the granting of this specific remuneration system for existing facilities is regulated in the first transitory provision of Royal Decree 413/2014, that establishes that they will be automatically registered on a date to be determined by order of the Minister for Ecological Transition and Demographic Challenge. In any case, it contemplates the possibility of requesting the modification of the inaccuracies that could contain the data of the registry after the referred automatic inscription.

According to article 14 of the Electricity Act, the remuneration shall not exceed the minimum level necessary to cover the costs that allow production facilities from renewable energy sources, high-efficiency cogeneration and waste to compete on an equal level with the other technologies on the market and that allows reasonable return to be obtained in relation to the standard installation in each applicable case (“reasonable rate of return”).

The Royal Decree 413/2014 establishes statutory periods of six years, with the second regulatory period beginning in January 2020. Each statutory period is divided into two statutory half-periods of three years. This “statutory period” mechanism aims to set forth how and when the Ministry for Ecological Transition and Demographic Challenge is entitled to revise the different payment factors (which include the cyclical situation of the economy, the electricity demand and the appropriate profitability) used to determine the specific remuneration to be received by the standard facilities. At the end of each statutory half-period (three years) the Ministry for Ecological Transition and Demographic Challenge may revise (i) the electricity market price estimates and (ii) the adjustment value for electricity market price deviations in the preceding statutory half-period.

The second regulatory period began on January 1, 2020. Following the recommendations of the CNMC, the reasonable return was calculated by reference to the weighted average cost of capital (WACC). The WACC is the calculation method that most of the European regulators apply in most of the cases to determine the return rates applicable to regulated activities within the energy sector. For the second regulatory period, the Royal Decree-Law 17/2019 updated the reasonable rate of return that applies to standard renewable energy facilities in the period 2020-2025. The reasonable return applicable over the remaining regulatory life of standard facilities applicable during the second regulatory period, is 7.09%.

In addition, the Royal Decree-Law introduced a third final provision in Law 24/2013, of 26 December, on the Electricity Sector, which exceptionally, gave the option to the owners of renewable facilities that were recognized as having primary remuneration before the entry into force of Royal Decree-Law 9/2013, to maintain the value of the reasonable return fixed for the first regulatory period for two consecutive regulatory periods starting on January 1, 2020. In other words, these owners are able to maintain a reasonable return for their facilities of 7.398% until 2031. However, this new measure shall not be applicable when an arbitration or judicial proceeding based on the modification of the special remuneration system after Royal Decree 661/2007 is initiated or has previously been initiated by any current or previous shareholders unless it is proven that the arbitration or legal proceedings have been early terminated and the resumption or continuation of the proceedings and the receipt of compensation or indemnification has been duly waived. According to public information, current minority shareholders and previous shareholders of six of our solar plants have arbitration process outstanding.

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In addition, in 2022 measures to adjust the regulated revenue component for renewable energy plants, following the increase since mid-2021 in the billings of these plants for the sale of electricity in the market. On March 30, 2022, the Royal Decree Law 6/2022 was published, adopting urgent measures in response to the economic and social consequences of the war in Ukraine. This Royal Decree Law contains a bundle of measures in diverse fields, including those targeted at containing the sharp rise in the prices of gas and electricity. It includes temporary changes to the detailed regulated components of revenue received by our solar assets in Spain, which are applicable from January 1, 2022. Specifically, prior to the entry into force of these new regulation, the level of remuneration under that specific remuneration system depended on the market price estimates used to calculate it, which are revised in each regulatory semi-period. Now, under article 5 of Royal Decree Law 6/2022, an extraordinary measure has been taken to subdivide the current regulatory semi-period, so as to create a new semi-period between January 1, 2022 and December 31, 2022 and the remuneration will be reviewed also taking into account future prices of OMIP. Further on May 14, 2022, the Royal Decree Law 10/2022 was published, including the so-called “Iberian mechanism”, which is the temporary production cost adjustment mechanism for reducing the price of electricity in the wholesale market. The main changes included by these regulations are:

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The statutory half-period of three years from 2020 to 2022 has been split into two statutory half-periods (1) from January 1, 2020 until December 31 2021 and (2) calendar year 2022. As a result, the fixed monthly payment based on installed capacity (Remuneration on Investment or Rinv) for calendar year 2022 was revised in the new Order TED/1232/2022. The proposed Rinv is detailed in the table below.

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The electricity market price assumed by the regulation for calendar year 2022 was changed from €48.82 per MWh to an expected price of €121.9 per MWh, i.e., the remuneration parameters of 2022 have been updated with real prices of 2020 (33.94 €/MWh) and 2021 (111.90 €/MWh) and the future prices of OMIP for 2022 (value of second semester 2021: 121.9 €/MWh). As a result, the variable payment based on net electricity produced (Remuneration on Operation or Ro), was also adjusted. The proposed Ro for the year 2022 is zero €/MWh for most of our assets reflecting the fact that market prices for the power sold in the market are significantly higher.

Following the mandate contained in Royal Decree Law 6/2022 and Royal Decree Law 10/2022, which main measures have been exposed above, the remuneration parameters have been updated for the year 2022 by the recent Order TED/1232/2022, of December 2, 2022, that was published in final form on December 14, 2022.

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According to such regulation, the remuneration parameters applicable to our plants for 2022 are as follows, as approved by Order TED/1232/2022:

	Useful Life	Remuneration on Investment 2022 (euros/MW)		Remuneration on Operation 2022 (euros/GWh)		Maximum Hours		Minimum Hours		Operating Threshold
Solaben 2	25 years		390,453		0		2,008		1,205		703
Solaben 3	25 years		390,453		0		2,008		1,205		703
Solacor 1	25 years		390,453		0		2,008		1,205		703
Solacor 2	25 years		390,453		0		2,008		1,205		703
PS 10	25 years		543,185		7,580		1,840		1,104		644
PS 20	25 years		401,296		1,777		1,840		1,104		644
Helioenergy 1	25 years		385,014		0		2,008		1,205		703
Helioenergy 2	25 years		385,014		0		2,008		1,205		703
Helios 1	25 years		398,498		0		2,008		1,205		703
Helios 2	25 years		398,498		0		2,008		1,205		703
Solnova 1	25 years		404,292		0		2,008		1,205		703
Solnova 3	25 years		404,292		0		2,008		1,205		703
Solnova 4	25 years		404,292		0		2,008		1,205		703
Solaben 1	25 years		395,304		0		2,008		1,205		703
Solaben 6	25 years		395,304		0		2,008		1,205		703
Seville PV	30 years		696,418		0		2,041		1,225		714

For the three-year half period starting on January 1, 2023 and ending on December 31, 2025, the adjustment for electricity price deviations in the preceding statutory half period will be progressively modified to take into account a mix of actual market prices and future market prices.

In addition, on December 28, 2022 the proposed parameters for the year 2023 were published in draft form. They are subject to review (the public information phase ended on January 20, 2023) and are as follows:

	Useful Life	Remuneration on Investment 2023(euros/MW)		Remuneration On Operation 2023 (euros/GWh)		Maximum Hours		Minimum Hours		Operating Threshold
Solaben 2	25 years		358,562		0		2,004		1,202		701
Solaben 3	25 years		358,562		0		2,004		1,202		701
Solacor 1	25 years		358,562		0		2,004		1,202		701
Solacor 2	25 years		358,562		0		2,004		1,202		701
PS 10	25 years		509,713		0		1,837		1,102		643
PS 20	25 years		373,114		0		1,837		1,102		643
Helioenergy 1	25 years		351,751		0		2,004		1,202		701
Helioenergy 2	25 years		351,751		0		2,004		1,202		701
Helios 1	25 years		365,595		0		2,004		1,202		701
Helios 2	25 years		365,595		0		2,004		1,202		701
Solnova 1	25 years		368,603		0		2,004		1,202		701
Solnova 3	25 years		368,603		0		2,004		1,202		701
Solnova 4	25 years		368,603		0		2,004		1,202		701
Solaben 1	25 years		363,530		0		2,004		1,202		701
Solaben 6	25 years		363,530		0		2,004		1,202		701
Seville PV	30 years		654,194		0		2,030		1,218		711

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Electricity Sales Tax

On December 27, 2012, the Spanish Parliament approved Law 15/2012, which became effective on January 1, 2013. The aim of Law 15/2012 was to try to resolve the issue with so-called tariff deficit. Law 15/2012, as amended, provides for an electricity sales tax which is levied on activities related to electricity production. The tax is triggered by the sale of electricity and affects ordinary energy producers and those generating power from renewable sources. The tax, at a flat rate of 7%, is levied on the total income received from the power produced at each of the facilities, which means that every calendar year, solar power plants will be required to pay 7% of the total amount which they are entitled to receive for production and incorporation into the electricity system of electric power, measured as the net output generated.

In January 2021, the Spanish Courts referred a preliminary ruling to the Court of Justice of the EU related to the validity of the electricity sales tax. The Court of Justice of the EU declared the conformity of this tax to the EU legislation in March 2021.

However, the Royal Decree-Law 12/2021 and the Royal Decree-Law 17/2021 included an exemption from this tax, for the electricity produced and incorporated into the electricity system during the third and last calendar quarter of 2021. This entails modifying the calculation of the tax base and of the fractioned payments regulated in the tax regulations. The Royal Decree-Law 29/2021 extended those measures to the first calendar quarter of 2022. These measures were further extended to 2022 and 2023.

In any case, in this situation we expect that the remuneration received by our assets in Spain would be adjusted for the same amount, as a result we do not expect any impact.

Tax Incentive of Accelerated Depreciation of New Assets

Under provisions of the Spanish Corporate Income Tax Act, tax-free depreciation is permitted on investments in new material assets and investment properties used for economic activities acquired between January 1, 2009 and March 31, 2012. Taxpayers who made investments during such period and have amounts pending to be deducted for this concept may apply such amounts with certain limitations.

Taxpayers who made investments from March 31, 2012 through March 31, 2015 in new material assets and investment properties used for economic activities are permitted to take accelerated depreciation for those assets subject to certain limitations. The accelerated depreciation is permitted if:

•

40% of the tax base before the amortization or depreciation and before the offset of tax loss carryforwards for taxpayers (subject to requirements to keep up employment levels); or

•

20% of the tax base before the amortization or depreciation and before the offset of tax loss carryforwards for taxpayers (without employment requirements).

Most of the investment in our Spanish assets was undertaken within the regime that applied between January 1, 2009 and March 31, 2012.

These limitations do not apply in respect of companies that meet the requirements set forth in article 108.1 of the Spanish Corporate Income Tax Act related to the special rules for enterprises of a reduced size.

C.	Organizational Structure

The following summary chart sets forth our ownership structure as of the date of this annual report:

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Assets under development and construction

Assets in operation

Notes:—

(1)	Atlantica Sustainable Infrastructure plc directly holds one share in Palmucho and 10 shares in each of Quadra 1 and Quadra 2

(2)	ATIS directly holds one share in each of Atlantica Peru S.A. (AP), ATN S.A. and ATS S.A.

(3)	30% owned by Itochu, a Japanese company

(4)	13% owned by JGC, a Japanese company

(5)	AEC holds 49% of Honaine and Skikda. Sacyr holds 25.5% of Honaine and 16.8% of Skikda

(6)	20% of Seville PV owned by IDEA, a Spanish state-owned company

(7)	ATN holds a 75% stake in ATS

(8)	ATN holds a 25% stake in ATN 2

(9)	87.5% owned by Starwood

(10)	49% owned by Industrial Development Corporation, a South African Government company

(11)	70% owned by Arroyo Energy

(12)	100% indirectly owned by Arroyo Energy Netherlands II

(13)	70% held by Algonquin

(14)	Solar and wind projects under development in Uruguay

(15)	65% held by financial partners

(16)	Solar projects 100% owned by Chile Platform

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(17)	Simplified structure

(18)	51% held by EDPR

(19)	Simplified structure

(20)	Solar and battery project under development in the US

(21)	Solar projects under development in Colombia including (Honda 1, Honda 2 and Apulo 1)

(22)	Coso Batteries 1, the standalone battery storage project of 100 MWh (4 hours) capacity

(23)	49% in solar projects in Chile. Simplified structure. 51% held by Akuo Energy Chile

(25)	ATN also owns a transmission line and substation under development in Peru

D.	Property, Plant and Equipment

See “Item 4.B—Business Overview.”

ITEM 4A.

UNRESOLVED STAFF COMMENTS

Not Applicable.

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ITEM 5.

OPERATING AND FINANCIAL REVIEW AND PROSPECTS

The following discussion should be read together with, and is qualified in its entirety by reference to, our Annual Consolidated Financial Statements. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs, which are based on assumptions we believe to be reasonable. Our actual results could differ materially from those discussed in these forward-looking statements as a result of various factors, including those set forth under “Item 3.D—Risk Factors” and elsewhere in this annual report.

A.	Operating Results

Overview

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 investing in and managing sustainable infrastructure, while creating long-term value for our investors and the rest of our stakeholders. In 2022, our renewable sector represented 75% of our revenue, with solar energy representing 64%. We complement our portfolio of renewable assets with storage, efficient natural gas and heat 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. For a detailed discussion, please see “Item 4—Information on the Company—Business Overview—Overview” and “Item 4—Information on the Company—Business Overview—Our Business Strategy”.

Significant Events in 2022

Investments

•

In January 2022, we closed the acquisition of Chile TL4, a 63-mile transmission line and 2 substations in Chile for a total equity investment of $38.4 million. We expect to expand the transmission line in 2023-2024, which would represent an additional investment of approximately $8 million. The asset has fully contracted revenues in U.S. dollars, with annual inflation adjustments and a 50-year remaining contract life. The off-takers are several mini-hydro plants that receive contracted or regulated payments.

•	In April 2022, we closed the acquisition of Italy PV 4, a 3.6 MW solar portfolio in Italy for a total equity investment of $3.7 million. The asset has regulated revenues under a feed-in tariff until 2031.

•

In May 2022, together with our partner, we closed a 7.5-year PPA extension for Monterrey with our current off-takers. The extension will involve an investment that is expected to be financed with cash available at the asset level. The main objective of the investment is to achieve improvements in the asset to provide, among other things, additional battery capacity and additional redundancy of electric power supply. The PPA, which is denominated in U.S. dollars, now ends in 2046.

•

In July 2022 we closed a 12-year transmission service agreement denominated in U.S. dollars that will allow us to build a substation and a 2.4-mile transmission line connected to our ATN transmission line serving a new mine in Peru. The substation is expected to enter in operation in 2024 and the investment is expected to be approximately $12 million.

•

In September 2022, we closed the acquisition of Chile PV 3, a 73 MW solar PV plant through our renewable energy platform in Chile. The equity investment corresponding to our 35% equity interest was $8 million, and we expect to install batteries with a capacity of approximately 100 MWh in 2023-2024. Total investment including batteries is expected to be in the range of $15 million to $25 million depending on the capital structure. Part of the asset’s revenue is currently based on capacity payments. Adding storage would increase the portion of capacity payments.

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•

In September 2022, we agreed our first investment in a standalone battery storage project of 100 MWh (4 hours) capacity located inside Coso, our geothermal asset in California. Our investment is expected to be in the range of $40 million to $50 million. This project is at an advanced stage and we are preparing to start construction, with COD expected in 2024.

•

In November 2022, we closed the acquisition of a 49% interest, with joint control, in an 80 MW portfolio of solar PV projects in Chile which is currently starting construction (Chile PMGD). Our economic rights are expected to be approximately 70%. Total investment in equity and preferred equity is expected to be approximately $30 million and COD is expected to be progressive in 2023 and 2024. Revenue for these assets is regulated under the Small Distributed Generation Means Regulation Regime (“PMGD”) for projects with a capacity equal or lower than 9 MW which allows to sell electricity through a stabilized price.

•	In addition, we have finished construction of the three assets that we had under construction during 2022 and have reached or are about to reach COD:

Albisu, the 10 MW PV asset wholly owned by us reached COD in January 2023. Albisu is located in Uruguay and has a 15-year PPA with Montevideo Refrescos, S.R.L, a subsidiary of Coca-Cola Femsa., S.A.B. de C.V. The PPA is denominated in local currency with a maximum and minimum price in U.S. dollars and is adjusted monthly based on a formula referring to the U.S. Producer Price Index (PPI), Uruguay’s Consumer Price Index (CPI) and the applicable UYU/U.S. dollar exchange rate.

La Tolua and Tierra Linda are two solar PV assets in Colombia with a combined capacity of 30 MW. Each plant has a 10-year PPA (commencing on COD) in local currency with Coenersa, the largest independent electricity wholesaler in Colombia.

Corporate Financing Activities

On February 28, 2022, we established an “at-the-market program” 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. For the year ended December 31, 2022, we issued and sold 3,423,593 ordinary shares under such program at an average market price of $33.57 per share pursuant to our Distribution Agreement, representing gross proceeds of $114.9 million and net proceeds of $113.8 million. This program replaced our previous “at-the market program” with J.P. Morgan Securities, LLC.

Project Debt Refinancing

In October 2022, we refinanced the project debt of Solacor 1 & 2 and in December 2022, we refinanced the project debt of Solnova 1, 3 & 4 (see “Item 4— Information on the Company— Our Operations —Renewable Energy”)

Regulation in Spain

As expected, in 2022 the Administration in Spain approved measures to adjust the regulated revenue component for renewable energy plants, following the increase since mid-2021 in the billings of these plants for the sale of electricity in the market. On March 30, 2022, Royal Decree Law 6/2022 was published, adopting urgent measures in response to the economic and social consequences of the war in Ukraine. This Royal Decree Law contains a bundle of measures in diverse fields, including those targeted at containing the sharp rise in gas and electricity prices. It includes temporary changes to the detailed regulated components of revenue received by our solar assets in Spain, which are applicable from January 1, 2022. The proposed remuneration parameters for the year 2022 were published on May 12, 2022 in draft form and became final on December 14, 2022 (see “Item 4 — Information on the Company— Regulation in Spain”).

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Inflation Reduction Act

On August 16, 2022, the U.S. Inflation Reduction Act (“IRA”) was signed into law. The provisions of the IRA are intended to, among other things, incentivize clean energy investment. The IRA includes, among other incentives, a 30% solar ITC for solar projects to be built until 2032, that can be increased for projects that meet certain criteria, a PTC for wind projects to be built until 2032, a 30% ITC for standalone storage projects to be built until 2032 and a new tax credit that will award up to $3/kg for low carbon hydrogen. The IRA also includes transferability options for the ITCs and PTCs, which should allow an easier and faster monetization of these tax credits (see “Item 4 — Information on the Company—Regulation —Regulation in the United States”).

Recent Developments

On February 21, 2023, Atlantica’s board of directors commenced a strategic review process (see “Item 4 — Information on the Company—Recent Developments).

Factors Affecting the Comparability of Our Results of Operations

Investments, Acquisitions, New Assets and Non-recurrent Projects

The results of operations of Coso, Calgary District Heating, Italy PV 1, Italy PV 2, La Sierpe, Italy PV 3, Chile TL4, Italy PV 4 and Chile PV 3 have been fully consolidated since April 2021, May 2021, August 2021 for Italy PV 1 and Italy PV 2, November 2021, December 2021, January 2022, April 2022 and September 2022, respectively. Vento II has been recorded under the equity method since June 2021. These investments and acquisitions represent additional revenue for $30.4 million and additional Adjusted EBITDA of $26.2 million for the year ended December 31, 2022, when compared to the year ended December 31, 2021.

In addition, the results of operations of Rioglass have been fully consolidated since January 2021. For the year ended December 31, 2021, most of Rioglass operating results relate to a specific solar project which ended in October 2021, and which represented $85.3 million in revenue and $1.0 million in Adjusted EBITDA, included in our EMEA and Renewable energy segments for the year ended December 31, 2021, and which are non-recurrent.

Impairment

Considering the delays in the repairs and replacements that we are carrying out in the storage system at Solana and their impact on production in 2022, as well as an increase in the discount rate, we identified an impairment triggering event in accordance with IAS 36 (Impairment of Assets). As a result, an impairment test has been performed which resulted in the recording of an impairment loss of $41.2 million in 2022 in the line “Depreciation, amortization, and impairment charges”. In 2021, we recorded an impairment loss of $43.1 million at Solana.

In addition, in 2022, considering that expected electricity prices in Chile over the remaining useful life of Chile PV1 and Chile PV2 have decreased and are currently lower than the prices assumed at the time of the acquisition, 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 $20.4 million in 2022 in the line “Depreciation, amortization, and impairment charges”.

Furthermore, IFRS 9 requires impairment provisions to be based on expected credit losses on financial assets rather than on actual credit losses. For the year ended December 31, 2022 we recorded an expected credit loss impairment provision of $4.0 million which is reflected in the line item “Depreciation, amortization, and impairment charges”. In 2021, we recorded a reversal of the expected credit loss impairment provision at ACT for $24.9 million following an improvement of its client’s credit risk metrics.

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Electricity market prices

In addition to regulated revenue, our solar assets in Spain receive revenue from the sale of electricity at market prices. Electricity prices increased significantly since mid-2021 and revenue from the sale of electricity at current market prices represented $142.9 million for the year ended December 31, 2022, compared to $129.1 million for the year ended December 31, 2021, resulting in higher short-term cash collections. 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. Current higher market prices in Spain will therefore cause lower regulated revenue to be received progressively over the remaining regulatory life of our solar assets. As a result, we increased our provision by $25.3 million for the year ended December 31, 2022, with no cash impact on the current period, compared to an increase of $77.1 million for the year ended December 31, 2021.

On May 12, 2022 remuneration parameters in Spain for the year 2022 were published and became final on December 14, 2022. Revenue from the sale of electricity at market prices plus Ro (Remuneration on operation) less incremental market price provision was $117.6 million for the year ended December 31, 2022, compared to $107.7 million for the year ended December 31, 2021. 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, as the new parameters became final on December 14, 2022, while revenue for the year ended December 31, 2022, was recorded in accordance with the new parameters. Collections have started to be regularized in 2023, see “Item 4 — Information on the Company— Regulation in Spain”.

Exchange rates

We refer to “Item 5—Operating and Financial Review and Prospects —Significant Trends Affecting Results of Operations—Exchange Rates” below.

Significant Trends Affecting Results of Operations

Acquisitions and New Assets

If the acquisitions recently closed and new assets recently built perform as expected, we expect these assets to positively impact our results of operations in 2023 and upcoming years.

Solar, wind and geothermal resources

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.

Capital markets conditions

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.

Exchange rates

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, 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 US dollars.

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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 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 recognized 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.

Impacts associated with fluctuations in foreign currency are discussed in more detail under “Item 11—Quantitative and Qualitative Disclosure about Market Risk—Foreign exchange risk.”

Interest rates

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, 2022, approximately 92% of our project debt and close to 96% 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, LIBOR, SOFR or over the alternative rates replacing these.

Electricity market prices

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. Given that since mid-2021 electricity prices in Spain have been, and may continue to be, significantly higher than expected, it will cause lower regulated revenue over the remaining regulatory life of our solar assets. On December 28, 2022, the parameters applicable for the year 2023 were published in draft form and are subject to final publication (see “Item 4 —Information on the Company — Regulation — Spain”). 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.

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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 2% of our portfolio⁸ in terms of Adjusted EBITDA. In Lone Star II we are analyzing, together with our partner, the option to repower the asset in the context of the IRA, at a point in time to be determined.

Key Financial Measures

Our revenue and Adjusted EBITDA by geography and business sector for the years ended December 31, 2022, 2021 and 2020 are set forth in the following tables:

Revenue by geography

	Year ended December 31,
	2022					2021					2020
	$ in millions		% of revenue			$ in millions		% of revenue			$ in millions		% of revenue
North America	$	405.1		36.8	%	$	395.8		32.7	%	$	330.9		32.6	%
South America		166.4		15.1	%		155.0		12.8	%		151.5		15.0	%
EMEA		530.5		48.1	%		660.9		54.5	%		530.9		52.4	%
Total revenue	$	1,102.0		100.0	%	$	1,211.7		100.0	%	$	1,013.3		100.0	%

Revenue by business sector

	Year ended December 31,
	2022					2021					2020
	$ in millions		% of revenue			$ in millions		% of revenue			$ in millions		% of revenue
Renewable Energy	$	821.4		74.5	%	$	928.5		76.6	%	$	753.1		74.3	%
Efficient natural gas & Heat		113.6		10.3	%		123.7		10.2	%		111.0		11.0	%
Transmission Lines		113.2		10.3	%		105.6		8.7	%		106.1		10.5	%
Water		53.8		4.9	%		53.9		4.5	%		43.1		4.2	%
Total revenue	$	1,102.0		100.0	%	$	1,211.7		100.0	%	$	1,013.3		100.0	%

Adjusted EBITDA by geography

	Year ended December 31,
	2022					2021					2020
	$ in millions		% of Adjusted EBITDA			$ in millions		% of Adjusted EBITDA			$ in millions		% of Adjusted EBITDA
North America	$	310.0		38.9	%	$	311.8		37.8	%	$	279.4		35.1	%
South America		126.5		15.9	%		119.6		14.5	%		120.0		15.1	%
EMEA		360.6		45.2	%		393.0		47.7	%		396.7		49.8	%
Total Adjusted EBITDA	$	797.1		100.0	%	$	824.4		100.0	%	$	796.1		100.0	%

⁸ Calculated as a percentage of our Adjusted EBITDA in 2022.

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Adjusted EBITDA by business sector

	Year ended December 31,
	2022					2021					2020
	$ in millions		% of Adjusted EBITDA			$ in millions		% of Adjusted EBITDA			$ in millions		% of Adjusted EBITDA
Renewable Energy	$	588.0		73.8	%	$	602.6		73.1	%	$	576.3		72.4	%
Efficient natural gas & Heat		84.6		10.6	%		100.0		12.1	%		101.0		12.7	%
Transmission Lines		88.0		11.0	%		83.6		10.2	%		87.3		11.0	%
Water		36.5		4.6	%		38.2		4.6	%		31.5		3.9	%
Total Adjusted EBITDA	$	797.1		100.0	%	$	824.4		100.0	%	$	796.1		100.0	%

Note:

Adjusted EBITDA is calculated as profit/(loss) for the year attributable to the parent company, after adding back loss/(profit) attributable to non-controlling interest, income tax expense, financial expense (net), depreciation, amortization and impairment charges of entities included in the Annual Consolidated Financial Statements and depreciation and amortization, financial expense and income tax expense of unconsolidated affiliates (pro-rata of our equity ownership). Adjusted EBITDA is not a measure of performance under IFRS as issued by the IASB and you should not consider Adjusted EBITDA as an alternative to operating income or profits or as a measure of our operating performance, cash flows from operating, investing and financing activities or as a measure of our ability to meet our cash needs or any other measures of performance under generally accepted accounting principles. We believe that Adjusted EBITDA is a useful indicator of our ability to incur and service our indebtedness and can assist securities analysts, investors and other parties to evaluate us. Adjusted EBITDA and similar measures are used by different companies for different purposes and are often calculated in ways that reflect the circumstances of those companies. Adjusted EBITDA may not be indicative of our historical operating results, nor is it meant to be predictive of potential future results. See “Presentation of Financial Information—Non-GAAP Financial Measures.”

Reconciliation of profit/(loss) for the year to Adjusted EBITDA

The following table sets forth a reconciliation of Adjusted EBITDA to our net cash generated by or used in operating activities:

	Year ended December 31,
	2022			2021			2020
	($ in millions)
Profit/(loss) for the year attributable to the parent company	$	(5.4	)	$	(30.1	)	$	11.9
Profit/(loss) attributable to non-controlling interest		3.3			19.2			4.9
Income tax expense		(9.7	)		36.2			24.9
Financial expense, net		310.9			340.9			331.8
Depreciation, amortization and impairment charges		473.6			439.4			408.6
Depreciation and amortization, financial expense and income tax expense of unconsolidated affiliates (pro-rata of our equity ownership)		24.4			18.7			13.9
Adjusted EBITDA	$	797.1		$	824.4		$	796.1

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Reconciliation of net cash generated by operating activities to Adjusted EBITDA

	Year ended December 31,
	2022			2021			2020
	($ in millions)
Net cash flow provided by operating activities	$	586.3		$	505.6		$	438.2
Net interest /taxes paid		277.3			342.3			287.2
Variations in working capital		(78.8	)		3.1			10.9
Non-monetary items and other		(33.5	)		(57.7	)		45.3
Share of profit/(loss) of entities carried under the equity method, depreciation and amortization, financial expense and income tax expense of unconsolidated affiliates (pro-rata of our equity ownership)		45.8			31.1			14.5
Adjusted EBITDA	$	797.1		$	824.4		$	796.1

Operational Metrics

In addition to the factors described above, 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.

•

MW in operation in the case of Renewable energy and Efficient natural gas and heat assets, miles in operation in the case of Transmission lines and Mft³ per day in operation in the case of Water assets, are indicators which provide information about the installed capacity or size of our portfolio of assets.

•	Production measured in GWh in our Renewable energy and Efficient natural gas and heat assets provides information about the performance of these assets.

•

Availability in the case of our Efficient natural gas and heat assets, Transmission lines and Water assets also provides information on the performance of the assets. In these business segments revenues are based on availability, which is the time during which the asset was available to our client totally or partially divided by contracted availability or budgeted availability, as applicable.

Key Performance Indicators

	As of and for the year ended December 31,
	2022			2021			2020
Renewable Energy
MW in operation⁽¹⁾		2,121			2,044			1,551
GWh produced⁽²⁾		5,319			4,655			3,244
Efficient natural gas & Heat
MW in operation⁽³⁾		398			398			343
GWh produced⁽⁴⁾		2,501			2,292			2,574
Availability (%)		98.9	%		100.6	%		102.1	%
Transmission lines
Miles in operation		1,229			1,166			1,166
Availability (%)		100	%		100.0	%		100.0	%
Water
Mft³ in operation⁽¹⁾		17.5			17.5			17.5
Availability (%)		102.3	%		97.9	%		100.1	%

Note:

(1)	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.

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

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

(4)	GWh produced includes 30% of the production from Monterrey.

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Production in the renewable business sector increased by 14.3% in 2022, compared to 2021. The increase was largely due to the contribution from the recently acquired renewable assets Coso, Vento II, Italy PV 1, Italy PV 2, Italy PV 3, Italy PV 4, Chile PV 3 and La Sierpe bringing approximately 812 GWh of incremental electricity generation.

In our solar assets in the U.S. solar radiation was higher in 2022 than in 2021, and production increased by 0.7% compared to the same period in the previous year. In our wind assets in the U.S., wind resource was mostly in line with expectations in the year ended December 31, 2022.

In Chile, production at our PV assets in 2022 was in line with the previous year, with an increase in Chile PV 1 mainly caused by better solar radiation largely offset by a decrease in Chile PV 2 resulting from larger curtailments. In our wind assets in Uruguay, production decreased by 3.8% mainly due to lower wind resource in the second and third quarters of 2022 compared to the same periods of the previous year.

In Spain, production decreased by 13.1% in 2022, partly due to lower solar radiation compared to 2021. In addition, some of our assets experienced significant technical curtailments by the grid operator during the second quarter and the beginning of third quarter of 2022. At Kaxu, production increased in spite of lower solar radiation during the year mainly due to the scheduled maintenance stop performed in the third quarter of 2021.

Efficient natural gas and heat availability and production levels during 2022 were higher than in the same period of the previous year due to the scheduled maintenance stops performed in the first quarter of 2021 and to higher demand from our off-taker in 2022 compared to 2021.

In Water, availability in 2022 was higher than in 2021, with very good performance in all the assets. Our transmission lines, where revenue is also based on availability, continue to achieve high availability levels.

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Results of Operations

The table below illustrates our results of operations for the years ended December 31, 2022, 2021 and 2020.

	Year ended December 31,
	2022			2021			2020
	($ in millions)
Revenue	$	1,102.0		$	1,211.7		$	1,013.3
Other operating income		80.8			74.6			99.5
Employee benefit expenses		(80.2	)		(78.7	)		(54.4	)
Depreciation, amortization and impairment charges		(473.6	)		(439.4	)		(408.6	)
Other operating expenses		(351.3	)		(414.3	)		(276.7	)
Operating profit/(loss)	$	277.7		$	353.9		$	373.1
Financial income		5.6			2.7			7.1
Financial expense		(333.3	)		(361.2	)		(378.4	)
Net exchange differences		10.3			1.9			(1.4	)
Other financial income/(expense), net		6.5			15.7			40.9
Financial expense, net	$	(310.9	)	$	(340.9	)	$	(331.8	)
Share of profit/(loss) of entities carried under the equity method		21.4			12.3			0.5
Profit/(loss) before income tax	$	(11.8	)	$	25.3		$	41.8
Income tax expense		9.7			(36.2	)		(24.9	)
Profit/(loss) for the year	$	(2.1	)	$	(10.9	)	$	16.9
Profit attributable to non-controlling interests		(3.3	)		(19.2	)		(4.9	)
Profit / (loss) for the year attributable to the parent company	$	(5.4	)	$	(30.1	)	$	12.0
Weighted average number of ordinary shares outstanding (thousands) – basic		114,695			111,008			101,879
Weighted average number of ordinary shares outstanding (thousands) – diluted		118,501			114,523			103,392
Basic earnings per share attributable to the parent company (U.S. dollar per share)		(0.05	)		(0.27	)		0.12
Diluted earnings per share attributable to the parent company (U.S. dollar per share)		(0.05	)		(0.27	)		0.12
Dividend paid per share⁽¹⁾		1.77			1.72			1.66

Note:

(1)

On February 25, 2022, May 5, 2022, August 2, 2022 and November 8, 2022 our board of directors approved a dividend of $0.44, $0.44, $0.445 and $0.445 per share, respectively, corresponding to the fourth quarter of 2021, the first quarter of 2022, the second quarter of 2022 and the third quarter of 2022 which were paid on March 25, 2022, June 15, 2022, September 15, 2022, and December 15, 2022 respectively. On February 26, 2021, May 4, 2021, July 30, 2021 and November 9, 2021 our board of directors approved a dividend of $0.42, $0.43, $0.43 and $0.435 per share, respectively, corresponding to the fourth quarter of 2020, the first quarter of 2021, the second quarter of 2021 and the third quarter of 2021, which were paid on March 22, 2021, June 15, 2021, September 15, 2021, and December 15, 2021 respectively.

Comparison of the Years Ended December 31, 2022 and 2021

The significant variances or variances of the significant components of the results of operations are discussed in the following section.

Revenue

Revenue decreased to $1,102.0 million for the year 2022, which represents a decrease of 9.1% compared to $1,211.7 million for the year 2021. On a constant currency basis, revenue in 2022, was $1,159.2 million, which represents a decrease of 4.3% compared to 2021. Additionally, on a constant currency basis and excluding the Rioglass non-recurrent solar project accounted for in 2021, revenue increased by 2.9% in 2022.

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This increase (on a constant currency basis and excluding the Rioglass non-recurrent solar project) was mainly due to the contribution of the recently acquired and consolidated assets which represent a total of $30.4 million of additional revenue in 2022 compared to 2021. Revenue increased in the U.S. and at Kaxu due to higher production during 2022 compared to 2021, as previously explained. In addition, revenue remained stable at our solar assets in Spain (0.4% increase on a constant currency basis and excluding the non-recurrent solar project), in spite of lower production during the year primarily due to higher electricity prices net of its corresponding accounting provision (see “Item 5— Operating and Financial Review and Prospects —Factors Affecting our Results of Operations—Electricity market prices”). In our wind assets in Uruguay, revenue increased in spite of lower production as a result of the inflation adjustment. These effects were partially offset by a decrease in revenue at ACT in 2022 compared to the previous year (due to the factors described under “—Revenue and Adjusted EBITDA by business sector — Efficient natural gas & heat” below).

Other operating income

The following table sets forth our other operating income for the years ended December 31, 2022 and 2021:

	Year ended December 31,
	2022		2021
Other operating income	($ in millions)
Grants	$	59.1	$	60.7
Insurance proceeds and other		21.7		13.9
Total	$	80.8	$	74.6

Other operating income increased by 8.3% to $80.8 million for the year ended December 31, 2022, compared to $74.6 million for the year ended December 31, 2021.

“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 for the year 2022 compared to the previous year.

“Insurance proceeds and other” for the year ended December 31, 2022 included an insurance income of $9.5 million which corresponded to previous years. In December 2022, a Spanish court dictated in favor of our solar assets in a legal proceeding against our former insurance company. This is the main reason for the increase when compared to the year ended December 31, 2021.

Employee benefit expenses

Employee benefit expenses increased by 1.9% to $80.2 million for the year ended December 31, 2022, compared to $78.7 million for the year ended December 31, 2021. The increase was mainly due to the consolidation of Coso and the internalization of the operation and maintenance services at Kaxu and in part of our solar assets in Spain. During 2022, we transferred the employees performing the operation and maintenance services at Kaxu and in part of our solar assets in Spain from an Abengoa subsidiary to an Atlantica subsidiary. As a result, the O&M cost is now recorded under “Employee Benefit Expenses” from the dates of such transfer. The increase was partially offset by a decrease in the number of employees who were working for the Rioglass non-recurrent solar project previously mentioned once it was completed.

Depreciation, amortization and impairment charges

Depreciation, amortization and impairment charges increased by 7.8% to $473.6 million for the year ended December 31, 2022, compared to $439.4 million for the year ended December 31, 2021. The increase was mainly due to the expected credit loss impairment provision recorded 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 an expected credit loss impairment provision of $4.0 million in 2022, while in 2021, there was a reversal of the expected credit loss provision of $24.9 million. In addition, in 2022, we recorded an impairment loss of $41.2 million in Solana, as previously described, compared to a $43.1 million impairment in 2021. In 2022 we also recorded an impairment of $20.4 million at Chile PV 1 and Chile PV 2. Depreciation, amortization and impairment charges also increased due to the consolidation of recent acquisitions. On the other hand, depreciation, amortization and impairment charges decreased in our solar assets in Spain mainly due to the depreciation of the euro against the U.S. dollar.

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Other operating expenses

The following table sets forth our other operating expenses for the years ended December 31, 2022 and 2021:

	Year ended December 31,
	2022					2021
Other operating expenses	$ in millions		% of revenue			$ in millions		% of revenue
Raw Materials	$	19.7		1.8	%	$	70.7		5.8	%
Leases and fees		11.5		1.0	%		9.3		0.8	%
Operation and maintenance		140.4		12.7	%		154.0		12.7	%
Independent professional services		38.9		3.6	%		39.2		3.2	%
Supplies		59.3		5.4	%		40.8		3.4	%
Insurance		45.8		4.2	%		45.4		3.8	%
Levies and duties		19.8		1.8	%		29.9		2.5	%
Other expenses		16.0		1.3	%		25.0		2.1	%
Total	$	351.3		31.8	%	$	414.3		34.2	%

Other operating expenses decreased by 15.2% to $351.3 million for the year ended December 31, 2022, compared to $414.3 million for the year ended December 31, 2021. Additionally, on a constant currency basis and excluding the Rioglass non-recurrent solar project accounted for in the year ended December 31, 2021, other operating expenses in 2022 increased by 8.4%. The increase was mainly due to higher cost of supplies primarily in Spain, due to the increase of the electricity market prices since mid-2021. This increase was partially offset by a decrease of levies and duties since the Spanish government granted an exemption from the 7% electricity sales tax in our Spanish assets. On the other hand, our operation and maintenance costs decreased mainly due the internalization of operation and maintenance at Kaxu and in part of our solar assets in Spain. These services are now provided by a subsidiary of Atlantica, with the cost classified in “Employee benefit expenses”.

Operating profit

As a result of the previously above-mentioned factors, operating profit decreased by 21.5% to $277.7 million for the year ended December 31, 2022, compared with $353.9 million for the year ended December 31, 2021.

Financial income and financial expense

	Year ended December 31,
Financial income and financial expense	2022			2021
	($ in millions)
Financial income	$	5.6		$	2.7
Financial expense		(333.3	)		(361.2	)
Net exchange differences		10.3			1.9
Other financial income/(expense), net		6.5			15.7
Financial expense, net	$	(310.9	)	$	(340.9	)

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Financial expense

The following table sets forth our financial expense for the years ended December 31, 2022 and 2021:

	Year ended December 31,
Financial expense	2022			2021
	($ in millions)
Interest on loans and notes	$	(292.1	)	$	(302.6	)
Interest rates losses derivatives: cash flow hedges		(41.2	)		(58.7	)
Total	$	(333.3	)	$	(361.3	)

Financial expense decreased by 7.7% to $333.3 million for the year ended December 31, 2022, compared to $361.3 million for the year ended December 31, 2021.

“Interest on loans and notes” expense decreased primarily due to the repayment of project and corporate debt in accordance with the financing arrangements and to the depreciation of the euro against the U.S. dollar.

Under “Interest rate losses on derivatives designated as cash flow hedges” we record transfers from equity to financial expense when the hedged item impacts profit and loss for hedging instruments classified as cash-flow hedges from an accounting perspective. The decrease was mainly due to lower losses in swaps hedging loans indexed to EURIBOR, SOFR and LIBOR primarily due to the increase in the reference rates in 2022, compared to 2021, and to lower notional amounts, as we progressively repay our project debt.

Net exchange differences

Net exchange differences increased to $10.3 million in 2022 compared to $1.9 million income in 2021. The increase was mainly due the impact of foreign exchange caps hedging our net cash flow in Euros, resulting from the appreciation of the U.S. dollar against the Euro.

Other financial income/(expense), net

	Year ended December 31,
Other financial income/(expense), net	2022			2021
	($ in millions)
Other financial income	$	27.9		$	32.3
Other financial expense		(21.4	)		(16.6	)
Total	$	6.5		$	15.7

Other financial income/(expense), net decreased to a net income of $6.5 million for the year ended December 31, 2022 compared to a net income of $15.7 million for the year ended December 31, 2021.

Other financial income in 2022 include $6.2 million income corresponding to the change in fair value of interest rate derivatives at Kaxu, for which hedge accounting is not applied, and $12.0 million income corresponding the mark-to-market of the derivative liability embedded in the Green Exchangeable Notes. Residual items primarily relate to interest on deposits and loans, including non-monetary changes to the amortized cost of such loans. The decrease of other financial income for the year ended December 31, 2022, was mainly due to a one-time non-cash income of $10.4 million recorded in 2021 and corresponding to the reversal of a potential earn-out which was finally not payable.

Other financial expense includes expenses for guarantees and letters of credit, wire transfers, other bank fees and other minor financial expenses and the non-monetary financial component of the long-term provision related to electricity market prices in Spain and other long-term liabilities. The increase is 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.

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Share of profit/(loss) of entities carried under the equity method

Share of profit of entities carried under the equity method increased to $21.4 million in the year ended December 31, 2022, compared to $12.3 million in the year ended December 31, 2021 primarily due to the contribution of Vento II.

Profit/(loss) before income tax

As a result of the previously mentioned factors, we reported a loss before income tax of $11.8 million for the year ended December 31, 2022, compared to a profit before income tax of $25.3 million for the year ended December 31, 2021.

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 recognized in the consolidated income statements for the years ended December 31, 2022 and 2021, is as follows:

	For the year ended December 31,
	2022			2021
	($ in millions)
Consolidated profit / (loss) before taxes		(11.8	)		25.3
Average statutory tax rate¹		25	%		25	%
Corporate income tax at average statutory tax rate		2.9			(6.3	)
Income tax of associates, net		5.4			3.1
Differences in statutory tax rates		(4.3	)		(3.4	)
Unrecognized NOLs and deferred tax assets		(10.9	)		(11.2	)
Other Permanent Differences		4.0			(4.1	)
Other non-taxable income/(expense)		12.7			(14.3	)
Corporate income tax		9.7			(36.2	)

Note:

(1)	The average statutory tax rate was calculated as an average of the statutory tax rates applicable to each of our subsidiaries weighted by the income before tax.

For the year ended December 31, 2022 the overall effective tax rate was different than the statutory rate of 25% primarily due to unrecognized tax losses carryforwards, mainly in the Chilean entities. For the year ended December 31, 2021, the overall effective tax rate was different than the statutory rate of 25% primarily due to unrecognized tax losses carryforwards, mainly in UK entities and to provisions recorded for potential tax contingencies in some jurisdictions.

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Profit attributable to non-controlling interests

Profit attributable to non-controlling interests was $3.4 million for the year ended December 31, 2022 compared to $19.2 million for the year ended December 31, 2021. 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 decrease is due to the losses in our PV assets in Chile which were primarily caused by the impairment previously discussed.

Profit/(loss) attributable to the parent company

As a result of the previously mentioned factors, loss attributable to the parent company was $5.4 million for the year ended December 31, 2022, compared to a loss of $30.1 million for the year ended December 31, 2021.

Comparison of the Years Ended December 31, 2021 and 2020

The significant variances or variances of the significant components of the results of operations between the years ended December 31, 2021 and December 31, 2020, are discussed in the annual report on Form 20-F filed with the SEC on February 28, 2022.

Segment Reporting

We organize 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.

Comparison of the Years Ended December 31, 2022 and 2021

Revenue and Adjusted EBITDA by geography

The following table sets forth our revenue, Adjusted EBITDA and volumes for the years ended December 31, 2022 and 2021, by geographic region:

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Revenue by geography

	Year ended December 31,
	2022					2021
Revenue by geography	$ in millions		% of revenue			$ in millions		% of revenue
North America	$	405.1		36.8	%	$	395.8		32.7	%
South America		166.4		15.1	%		155.0		12.8	%
EMEA		530.5		48.1	%		660.9		54.5	%
Total revenue	$	1,102.0		100	%	$	1,211.7		100.0	%

Adjusted EBITDA by geography

	Year ended December 31,
	2022					2021
Adjusted EBITDA by geography	$ in millions		% of Adjusted EBITDA			$ in millions		% of Adjusted EBITDA
North America	$	310.0		38.9	%	$	311.8		37.8	%
South America		126.5		15.9	%		119.6		14.5	%
EMEA		360.6		45.2	%		393.0		47.7	%
Adjusted EBITDA⁽¹⁾	$	797.1		100	%	$	824.4		100	%

Note:

(1)

Volume by geography

	Volume produced/availability
	Year ended December 31,
Volume / availability by geography	2022			2021

North America (GWh)⁽¹⁾		5,743			4,818
North America availability		98.9	%		100.6	%
South America (GWh)⁽²⁾		799			722
South America availability		99.9	%		100.0	%
EMEA (GWh)		1,278			1,407
EMEA availability		102.3	%		97.9	%

Note:

(1)	GWh produced includes 30% of the production from Monterrey and our 49% of Vento II wind portfolio production since its acquisition.

(2)	Includes curtailment production in wind assets for which we receive compensation.

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North America

Revenue increased by 2.3% to $405.1 million for the year ended December 31, 2022, compared to $395.8 million for the year ended December 31, 2021, while Adjusted EBITDA remained stable, with a 0.6% decrease for the year ended December 31, 2022, compared to 2021. The increase in Revenue was mainly due to the contribution from the recently acquired assets, Coso and Calgary. Revenue also increased at our solar assets in North America due to higher production. The increase was partially offset by lower revenue at ACT where revenue is recorded under IFRIC 12 – financial asset model (see “—Revenue and Adjusted EBITDA by business sector—Efficient natural gas & heat” below). Adjusted EBITDA decreased mainly due to lower Adjusted EBITDA in ACT, resulting mostly from lower revenue, higher operating and maintenance expenses at our solar assets in North America mostly due to higher costs related to the scheduled major maintenance at Solana and higher supply costs, mainly driven by higher electricity prices. This decrease was partially offset by the contribution from the recently acquired assets Coso, Calgary and Vento II.

South America

Revenue increased by 7.4% to $166.4 million for the year ended December 31, 2022, compared to $155.0 million for the year ended December 31, 2021. The increase was mainly due to the contribution from the recently acquired assets, La Sierpe, Chile TL4 and Chile PV 3. Revenue at our wind assets in Uruguay also increased slightly in spite of lower wind resource as a result of the inflation adjustment to revenue. Adjusted EBITDA increased by 5.8% to $126.5 million for the year ended December 31, 2022, compared to $119.6 million for the year ended December 31, 2021, mostly due to the same reasons.

EMEA

Revenue decreased to $530.5 million for the year ended December 31, 2022, which represents a decrease of 19.7% compared to $660.9 million for the year ended December 31, 2021. On a constant currency basis, revenue for the year ended December 31, 2022, was $587.4 million, which represents a decrease of 11.1% compared to the year ended December 31, 2021. Additionally, on a constant currency basis and excluding the non-recurrent solar project accounted for in the year ended December 31, 2021, revenue in 2022, increased by 2.0%.

The increase was mainly due to higher revenue at Kaxu caused by higher production during the year ended December 31, 2022, compared to the same period of previous year and to the indexation of our PPA to local inflation. The increase was also due to the contribution of the recently acquired assets in Italy. Revenue remained stable at our solar assets in Spain (0.4% increase on a constant currency basis and excluding the non-recurrent solar project), since the negative impact of lower production was offset by higher electricity prices net of its corresponding accounting provision (see “Item 2— Operating and Financial Review and Prospects —Factors Affecting our Results of Operations—Electricity market prices”).

Adjusted EBITDA decreased to $360.6 million for the year ended December 31, 2022, which represents a decrease of 8.2% compared to $393.0 million for the year ended December 31, 2021. On a constant currency basis, Adjusted EBITDA in 2022, was $399.1 million which represents an increase of 1.5% compared to 2021. Additionally, on a constant currency basis and excluding the non-recurrent solar project accounted for in the year ended December 31, 2021, Adjusted EBITDA in 2022 increased by 1.8%. This increase was mainly due to higher EBITDA at Kaxu and to the contribution of the recently acquired assets in Italy as previously explained. In our solar assets in Spain, Adjusted EBITDA decreased mainly due to higher costs of supplies largely caused by higher electricity prices.

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Revenue and Adjusted EBITDA by business sector

The following table sets forth our revenue, Adjusted EBITDA and volumes for the years ended December 31, 2022 and 2021, by business sector:

	Year ended December 31,
	2022					2021
Revenue by business sector	$ in millions		% of revenue			$ in millions		% of revenue
Renewable energy	$	821.4		74.5	%	$	928.5		76.6	%
Efficient natural gas & Heat		113.6		10.3	%		123.7		10.2	%
Transmission lines		113.2		10.3	%		105.6		8.7	%
Water		53.8		4.9	%		53.9		4.5	%
Revenue	$	1,102.0		100	%	$	1,211.7		100.0	%

	Year ended December 31,
	2022					2021
Adjusted EBITDA by business sector	$ in millions		% of Adjusted EBITDA			$ in millions		% of Adjusted EBITDA
Renewable energy	$	588.0		73.8	%	$	602.6		73.1	%
Efficient natural gas & Heat		84.6		10.6	%		100.0		12.1	%
Transmission lines		88.0		11.0	%		83.6		10.2	%
Water		36.5		4.6	%		38.2		4.6	%
Adjusted EBITDA⁽¹⁾	$	797.1		100	%	$	824.4		100.0	%

Note:

(1)

Volume by business sector

	Volume produced/availability
	Year ended December 31,
Volume / availability by business sector	2022			2021
Renewable energy (GWh)⁽¹⁾		5,319			4,655
Efficient natural gas & Heat (GWh)⁽²⁾		2,501			2,292
Efficient natural gas & Heat availability		98.9	%		100.6	%
Transmission availability		100.0	%		100.0	%
Water availability		102.3	%		97.9	%

Note:

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

(2)	GWh produced includes 30% of the production from Monterrey.

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Renewable energy

Revenue decreased to $821.4 million for the year ended December 31, 2022, which represents a decrease of 11.5% compared to $928.5 million for the year ended December 31, 2021. On a constant currency basis, revenue in 2022 was $878.5 million, which represents a decrease of 5.4% compared to 2021. Additionally, on a constant currency basis and excluding the non-recurrent solar project accounted for in 2021, revenue in 2022 increased by 4.2%. The increase in revenue was primarily due to the contribution from the recently acquired assets Coso, La Sierpe, our PV assets in Italy and Chile PV 3. Revenue also increased at Kaxu, as well as at our solar assets in North America. Revenue also increased at our wind assets in Uruguay in spite of lower wind resources as previously described.

Adjusted EBITDA decreased to $588.0 million for the year ended December 31, 2022, which represents a decrease of 2.4% compared to $602.6 million for the year ended December 31, 2021. On a constant currency basis, Adjusted EBITDA in 2022 was $626.7 million which represents an increase of 4.0% compared to 2021. Additionally, on a constant currency basis and excluding the non-recurrent solar project accounted for in 2021, Adjusted EBITDA increased by 4.2%. Adjusted EBITDA increased mainly due to the increase in Revenue and the contribution of Vento II. This increase was partially offset by lower Adjusted EBITDA at our solar assets in North America and Spain, as previously discussed.

Efficient natural gas & heat

Revenue decreased by 8.2% to $113.6 million for the year ended December 31, 2022, compared to $123.7 million for the year ended December 31, 2021, while Adjusted EBITDA decreased by 15.4% to $84.6 million for the year ended December 31, 2022, compared to $100.0 million for the year ended December 31, 2021. Revenue at ACT is recorded under IFRIC 12 – financial asset model. Although billings to clients increased in 2022 compared to 2021 as a result of inflation indexation, accounting revenue decreases progressively over time. Revenue at ACT also decreased due to lower operation and maintenance costs, since there is a portion of revenue related to operation and maintenance services plus a margin. Operation and maintenance costs were higher in 2021 as it happens in the quarters preceding any major maintenance works. Adjusted EBITDA decreased largely for the same reasons.

Transmission lines

Revenue increased by 7.2% to $113.2 million for the year ended December 31, 2022, compared to $105.6 million for year ended December 31, 2021, while Adjusted EBITDA increased by 5.2% to $88.0 million for the year ended December 31, 2022 compared to $83.6 million for the year ended December 31, 2021. The increase in revenue and Adjusted EBITDA was mainly due to the contribution of the recently acquired asset Chile TL 4 and to lower operation and maintenance costs at some of our transmission lines in 2022 after a renegotiation with the supplier of these services.

Water

Revenue remained stable at $53.8 million for the year ended December 31, 2022, compared to $53.9 million for the year ended December 31, 2021. Adjusted EBITDA decreased by 4.5% to $36.5 million for the year ended December 31, 2022, compared to $38.2 million for year ended December 31, 2021. Operating expenses were higher in 2022 mostly due to higher availability in Tenes, which caused the decrease in Adjusted EBITDA. Revenue follows the IFRIC 12- financial model and did not increase accordingly.

Comparison of the Years Ended December 31, 2021 and 2020

The significant variances in the revenue and volume, by geographic region and business sector, between the years ended December 31, 2021 and December 31, 2020, are discussed in the Form 20-F filed with the SEC on February 28, 2022.

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B.	Liquidity and Capital Resources

Our principal liquidity and capital requirements consist of the following:

•	debt service requirements on our existing and future debt;

•	cash dividends to investors; and

•	investments in new assets and companies and operations (see “Item 4.B—Business Overview—Our Business Strategy”).

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 “Item 3.D—Risk Factors” and other factors may also significantly impact our liquidity.

Liquidity position

	Year ended December 31,
	2022		2021
	($ in millions)
Corporate Liquidity
Cash and cash equivalents at Atlantica Sustainable Infrastructure, plc, excluding subsidiaries	$	60.8	$	88.3
Revolving Credit Facility availability		385.1		440.0
Total Corporate Liquidity(¹⁾	$	445.9	$	528.3
Liquidity at project companies
Restricted Cash		207.6		254.3
Non-restricted cash		332.6		280.1
Total cash at project companies	$	540.2	$	534.4

Note:

(1)	Corporate Liquidity means cash and cash equivalents held at Atlantica Sustainable Infrastructure plc as of December 31, 2022, and available revolver capacity as of December 31, 2022.

Cash at the project level includes $207.6 million and $254.3 million restricted cash balances as of December 31, 2022 and 2021, 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, 2021, restricted cash also included Kaxu’s cash balance, given that the project financing of this asset was under a theoretical event of default which was resolved as of March 31, 2022 (see “Item 4—Information on the Company—Our Operations—Renewable energy—Kaxu.”).

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.

As of December 31, 2022, $34.9 million of letters of credit were outstanding under the Revolving Credit Facility and we had $30 million of borrowings. As a result, as of December 31, 2022 $385.1 million was available under the Revolving Credit Facility. As of December 31, 2021, we had $10.0 million of letters of credits outstanding, and we had no borrowing. As a result, $440.0 million was available under our Revolving Credit Facility as of December 31, 2021.

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.

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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 summarizes our credit ratings as of December 31, 2022. The ratings outlook is stable for S&P and Fitch.

	S&P	Fitch
Atlantica Sustainable Infrastructure Corporate Rating	BB+	BB+
Senior Secured Debt	BBB-	BBB-
Senior Unsecured Debt	BB	BB+

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 program”, other credit lines and our commercial paper program.

		As of December 31, 2022		As of December 31, 2021
	Maturity	($ in millions)
Revolving Credit Facility	2024		29.4		-
Other Facilities⁽¹⁾	2023-2026		30.1		41.7
Green Exchangeable Notes	2025		107.0		104.3
2020 Green Private Placement	2026		308.4		327.1
Note Issuance Facility 2020	2027		147.2		155.8
Green Senior Notes	2028		395.1		394.2
Total Corporate Debt		$	1,017.2	$	1,023.1
Total Project Debt		$	4,553.1	$	5,036.2

Note:

(1)	Other facilities include the commercial paper program issued in October 2020, accrued interest payable and other debts.

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.

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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 and the Green Exchangeable Notes.

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 Green Exchangeable 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 and the Green Senior Notes.

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 ($150 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 3-month EURIBOR plus a margin of 5.25% with a floor of 0% for the EURIBOR. We have entered into a cap at 0% for the EURIBOR with 3.5 years maturity to hedge the variable interest rate risk.

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 and the Green Senior Notes. 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 ($310 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.

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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 and the Green Senior Notes. 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 5, 2022, the maturity of the Revolving Credit Facility was extended to December 31, 2024. 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 euro dollar 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 and the Green Senior Notes. 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.

Other Credit Lines

In July 2017, we signed a line of credit with a bank for up to €10.0 million ($10.7 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 3-month EURIBOR or LIBOR, plus a margin of 2%, with a floor of 0% for the EURIBOR or LIBOR. On July 1, 2022, the maturity was extended to July 1, 2024. As of December 31, 2022, we had $6.4 million drawn under this line of credit.

In December 2020 and January 2022, we also entered into two different loans with banks for €5 million ($5.4 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.

Commercial Paper Program

On October 8, 2019, we filed a euro commercial paper program with the Alternative Fixed Income Market (MARF) in Spain. The program had an original maturity of twelve months and has been extended twice, for annual periods. The program allows Atlantica to issue short term notes for up to €50 million, with such notes having a tenor of up to two years. As of December 31, 2022, we had €9.3 million ($10.0 million) issued and outstanding under the Commercial Paper Program at an average cost of 2.21% maturing on or before March 7, 2023.

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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.

At-The-Market Program

Project debt refinancing

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Uses of liquidity and capital

A)	Debt service

Principal payments on debt as of December 31, 2022, are due in the following periods according to their contracted maturities:

Principal debt repayment schedule

	Total		2023		2024		2025		2026		2027		Subsequent years
	$ in millions
Solana		577.4		23.0		24.2		26.8		29.5		32.4		441.5
Mojave		493.8		36.4		36.9		38.1		39.4		40.7		302.3
Coso		200.8		14.1		14.6		14.2		14.7		143.2		-
ACT		441.1		41.5		37.6		42.3		54.6		59.0		206.1
North America		1,713.1		115.0		113.3		121.4		138.2		275.3		949.9
Chile PV 1		50.5		2.0		1.1		1.0		1.1		1.5		43.8
Chile PV 2		21.4		1.2		0.8		1.4		2.4		2.1		13.5
Palmatir		72.0		6.9		6.2		6.6		7.0		7.5		37.8
Cadonal		46.6		3.3		3.0		3.1		3.4		3.6		30.2
Melowind		68.6		2.8		4.8		5.0		5.1		4.8		46.1
ATN		87.0		5.7		6.0		6.4		6.8		7.3		54.8
ATS		391.5		12.6		7.4		8.3		9.5		10.7		343.0
ATN 2		45.3		4.8		5.0		5.1		5.3		5.4		19.7
Quadra 1&2 and Palmucho		58.7		5.0		5.3		5.9		6.5		7.2		28.8
South America		841.6		44.3		39.6		42.8		47.1		50.1		617.7
Solaben 2&3⁽¹⁾		330.4		31.4		32.4		138.1		28.7		31.2		68.6
Solacor 1&2		212.8		10.3		14.0		14.6		15.0		15.4		143.5
Helios 1&2		290.8		20.7		21.3		21.7		21.1		21.5		184.5
Helioenergy 1&2		243.5		17.4		18.7		19.9		18.8		20.1		148.6
Solnova 1,3&4		354.9		28.1		30.0		30.6		32.1		31.9		202.2
Solaben 1&6		188.0		13.9		13.9		14.8		15.4		15.8		114.2
Rioglass		10.3		5.2		1.7		1.9		1.3		0.1		0.1
Italy PV 1&3		3.4		0.7		0.7		0.7		0.5		0.2		0.6
Kaxu		277.6		26.7		27.5		28.0		31.6		34.4		129.4
Skikda		7.4		4.9		2.5		-		-		-		-
Tenes		79.3		8.0		8.1		8.4		8.7		9.0		37.1
EMEA		1,998.4		167.3		170.8		278.7		173.2		179.6		1,028.8
Total project debt	$	4,553.1		326.6		323.7		442.9		358.5		505.0		2,596.4
Corporate debt	$	1,017.2		16.7		38.9		110.2		309.1		147.3		395.0
Total	$	5,570.3		345.3		362.6		553.1		667.6		652.3		2,989.4

Note:

(1)	Includes the outstanding amount of the Green Project Finance from the sub-holding company of Solaben 1 & 6 and Solaben 2 & 3. This facility is 25% progressively amortized over its 5-year term and the remaining 75% is expected to be refinanced before maturity.

The project debt maturities will be repaid with cash flows generated from the projects in respect of which that financing was incurred.

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B)	Contractual obligations

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.

	Total		Up to one year		Between one and three years		Between three and five years		Subsequent years
	$ in millions
Purchase commitments		823.9		96.8		154.3		107.9		464.8
Accrued interest estimate during the useful life of loans		1,821.9		264.6		477.9		383.3		696.0

Purchase obligations include agreements for the purchase of goods or services that are enforceable and legally binding and that specify all significant terms. In 2022, we reached an agreement to internalize some of our long-term operation and maintenance contracts at Kaxu and at part of our solar assets in Spain and to reduce the duration of other contracts. As a result, purchase commitments have decreased with respect to December 31, 2022. In addition, as of the date of this report we are in the process of transitioning the operation and maintenance services for the rest of our assets in Spain from an Abengoa subsidiary to an Company’s subsidiary. The information in the table above is as of December 31, 2022 and includes purchase commitments with Abengoa, which are no longer binding after such transfer.

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.

C)	Cash dividends to investors

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 “Item 8 — Financial Information—Consolidated Statements and Other Financial Information—Dividend Policy.”).

D)	Investments and Acquisitions

The investments detailed in “Significant events in 2022” have been part of the use of our liquidity in 2022. We expect to continue making investments in assets in operation or under construction or development to grow our portfolio.

E)	Capital Expenditures

In 2022, we invested $39.1 million in maintenance capital expenditures in our assets. From this amount, $20.5 million corresponded to investments in the storage system in Solana. In 2021, we invested $19.2 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.

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Cash flow

The following table sets forth cash flow data for the years ended December 31, 2022, 2021 and 2020:

	Year ended December 31,
	2022			2021			2020
	($ in millions)
Gross cash flows from operating activities
Profit/(loss) for the year	$	(2.1	)	$	(10.9	)	$	16.9
Adjustments to reconcile after-tax profit to net cash generated by operating activities		786.9			861.9			719.5
Profit for the year adjusted by non-monetary items	$	784.8		$	851.0		$	736.4
Net interest/taxes paid		(277.3	)		(342.3	)		(287.3	)
Variations in working capital		78.8			(3.1	)		(10.9	)
Total net cash flow provided by/ (used in) operating activities	$	586.3		$	505.6		$	438.2
Net cash flows from investing activities
Acquisitions of subsidiaries and entities under equity method		(50.5	)		(362.4	)		2.5
Investments in operating concessional assets⁽¹⁾		(39.1	)		(19.2	)		(1.4	)
Investments in assets under development or construction		(36.8	)		(7.0	)		-
Distributions from entities under the equity method		67.7			34.8			22.2
Other non-current assets/liabilities		1.3			2.7			(29.2	)
Total net cash flows (used in)/ provided by investing activities	$	(57.4	)	$	(351.2	)	$	(5.9	)
Net cash flows used in financing activities	$	(535.0	)	$	(380.1	)	$	(137.3	)
Net increase / (decrease) in cash and cash equivalents		(6.1	)		(225.7	)		295.0	)
Cash, cash equivalents and bank overdraft at beginning of the year		622.7			868.5			562.8
Translation differences cash or cash equivalents		(15.6	)		(20.1	)		10.7	)
Cash and cash equivalents at the end of the period	$	601.0		$	622.7		$	868.5

Note:

(1)	Includes proceeds for $20.5 million and $17.4 million in 2021 and 2020 respectively. See Note 6 of the Annual Consolidated Financial Statements.

Net cash flows provided by/ (used in) operating activities

Net cash provided by operating activities in 2022 was $586.3 million, a 16.0% increase compared to $505.6 million for the previous year. The increase was due to an improvement of changes in working capital and lower interest and income tax paid. Changes in working capital improved in the year ended December 31, 2022, mostly due to better collections from Pemex in ACT and better collections in Spain. In Spain, in 2022 we collected revenue in line with the parameters corresponding to the regulation in place at the beginning of the year 2022, as the new parameters became final on December 14, 2022, while revenue for the year ended December 31, 2022 was recorded in accordance with the new parameters. Collections have started to be regularized in 2023 (see “Item 4— Information on the Company—Regulation— Regulation in Spain”). Net interest and income tax paid were lower in the year ended December 31, 2022 compared to the same period of the previous year due to the impact of foreign exchange rate and because interest paid typically decrease in each asset as we progressively repay our project debt.

The significant variances in the net cash flows provided by or used in operating activities for the year ended December 31, 2021 compared to the year ended December 31, 2020 are discussed in the Form 20-F filed with the SEC on February, 2022.

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Net cash provided by/ (used in) investing activities

For the year ended December 31, 2022, net cash used in investing activities amounted to $57.4 million and included mainly to $50.5 million paid for acquisitions consisting mainly of Chile TL4, Chile PV 3, Chile PMGD and Italy PV4, investments in assets under construction for $36.8 million and other investments in existing assets for $39.1 million, including the investments and replacements in Solana. These cash outflows were partially offset by $67.7 million of dividends received from entities under the equity method, of which $26.9 million corresponded to Amherst Island Partnership by AYES Canada, most of which were paid to our partner in this project.

For the year 2021, net cash used in investing activities amounted to $351.2 million and corresponded mainly to $362.0 million paid for the acquisitions of Vento II, Coso, Calgary, Chile PV2, Rioglass, Italy PV 1, Italy PV 2, Italy PV 3 and La Sierpe, net of the initial cash contribution from these entities. Net cash used in investing activities also includes investments in concessional assets for $19.2 million, mainly corresponding to capital expenditures and equipment replacements at Solana for $24.5 million and in Spain for $8.5 million, partially offset by $20.5 million of proceeds from the sale of real state assets owned by Rioglass. These cash outflows were partially offset by $34.8 million of dividends received from associates under the equity method, of which $15.8 million corresponded to Amherst Island Partnership by AYES Canada, most of which were paid to our partner in this project.

Net cash provided by/ (used in) financing activities

For the year ended December 31, 2022, net cash used in financing activities amounted to $535.0 million and includes the repayment of principal of our project financing for $426.4 million and dividends paid to shareholders for $203.1 million and non-controlling interests for $39.2 million. These cash outflows were partially offset by the proceeds from the equity raised under the “at-the-market program” for a net amount of $113.2 million and by net proceeds from corporate debt of $20.6 million, corresponding mainly to the increase of the amount drawn under our Revolving Credit Facility.

For the year 2021, net cash used in financing activities amounted to $380.1 million and includes the repayment of principal of our project financing agreements for an approximate amount of $418.3 million and $218.7 million of dividends paid to shareholders and non-controlling interests. These cash outflows were partially offset by the proceeds from the equity private placement closed in January 2021 for a net amount of $130.6 million and equity raised under the previous “at-the-market program” for a net amount of $58.8 million, net of transaction costs. In addition, in the second quarter of 2021 we prepaid the Note Issuance Facility 2019 for $354.2 million with the proceeds of the Green Senior Notes issued, amounting to $394.0 million, which created a net cash inflow of $39.8 million.

C.	Research and Development

As of December 31, 2022, we own 31 patents and technology licenses 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, as well as 6 patents currently in process. We also have an Operations Department that dedicates time and effort to identifying potential measures to improve asset performance, reducing operating costs and developing tools to manage our assets more efficiently. In addition, we have an in-house advanced analytics team to improve the performance of our existing technologies. The advanced analytics team focuses on data analytics and machine learning technologies to provide accurate energy production forecasts, predict equipment breakdowns or malfunctions, and reduce the risk of major outages as well as health and safety and environmental risks, among others.

D.	Trend Information

Other than as disclosed elsewhere in this annual report on, we are not aware of any trends, uncertainties, demands, commitments or events for the year ended December 31, 2022 that are reasonably likely to have a material adverse effect on our revenues, income, profitability, liquidity or capital resources, or that caused the disclosed financial information to be not necessarily indicative of future operating results or financial conditions.

E.	Critical Accounting Estimates

The preparation of our Annual Consolidated Financial Statements in conformity with IFRS requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. We base our estimates on historical experience and on various other assumptions we believe to be reasonable under the specific circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

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For an understanding of the accounting policies for these items it is important to understand the Annual Consolidated Financial Statements. The following discussion provides more information regarding the estimates and assumptions used for these items in accordance with IFRS and should be considered in conjunction with the Annual Consolidated Financial Statements.

The most critical accounting policies, which reflect significant management estimates and judgment to determine amounts in our Annual Consolidated Financial Statements, are as follows:

Estimates:

-	Impairment of contracted concessional, Property, Plant and Equipment (PP&E) and other intangible assets

Impairment exists when the carrying value of an asset or cash generating unit exceeds its recoverable amount, which is the higher of its fair value less costs of disposal and its value in use. The value in use calculation is based on a discounted cash flow model, which is sensitive to the discount rate used as well as the expected future cash-inflows. The significant assumptions which required substantial estimates used in management’s impairment calculation are discount rates and projections considering real data based on contract terms and projected changes in selling prices, energy generation and costs.

-	Recoverability of deferred tax assets

Deferred tax assets are recognized for unused tax losses to the extent that it is probable that taxable profit will be available against which the losses can be utilized. Significant management estimates are required to determine the amount of deferred tax assets that can be recognized, based upon the likely timing and the level of future taxable profits together with future tax planning strategies.

-	Fair value of derivative financial instruments

When the fair values of financial assets and financial liabilities recorded in the statement of financial position cannot be measured based on quoted prices in active markets, their fair value is measured using valuation techniques including the discounted cash flow model. The inputs to these models are taken from observable markets where possible, but where this is not feasible, a degree of estimate is required in establishing fair values. Estimates include considerations of inputs such as liquidity risk, credit risk and volatility. Changes in assumptions relating to these factors could affect the reported fair value of financial instruments

-	Fair value of identifiable assets and liabilities arising from a business combination

The assets aquired and liabilites assumed on a business combination are recognised at the fair values of the underlying items. The estimates that have a significant risk of causing a material adjustment to the carrying amounts of the assets and liabilities are the ones considered when performing impairment review of operating assets (see above).

Judgements:

-	Assessment of contracted concessional agreements.

By evaluating the terms and conditions of each contracted concessional agreement, we determine the accounting category to which the asset belongs (e.g. IAS 16, IFRIC 12 or IFRS 16).

-	Assessment of control.

Judgement is required in determining the nature of Atlantica´s interest in another entity and in determining if it has control, joint control or significant influence over it.

Some of the accounting policies applied require the application of significant judgment by management to select the appropriate assumptions to determine these estimates. These assumptions and estimates are based on our historical experience, advice from experienced consultants, forecasts and other circumstances and expectations as of the close of the financial period. The assessment is considered in relation to the global economic situation of the industries and regions where we operate, considering future development of our businesses. By their nature, these judgments are subject to an inherent degree of uncertainty; therefore, actual results could materially differ from the estimates and assumptions used. In such cases, the carrying values of assets and liabilities are adjusted.

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As of the date of preparation of our Annual Consolidated Financial Statements, no relevant changes in the estimates made are anticipated and, therefore, no significant changes in the value of the assets and liabilities recognized at December 31, 2022, are expected.

Although these estimates and assumptions are being made using all available facts and circumstances, it is possible that future events may require management to amend such estimates and assumptions in future periods. Changes in accounting estimates are recognized prospectively, in accordance with IAS 8, in the consolidated income statement of the year in which the change occurs. Our significant accounting policies are more fully described in Note 2 to our Annual Consolidated Financial Statements, presented elsewhere in this annual report.

Contracted concessional, Property, Plant and Equipment (PP&E) and other intangible assets

The assets accounted for by Atlantica as contracted concessional assets under IFRIC 12 (either intangible model or financial model) as PP&E under IAS 16 or as other intangible assets under IAS 38 or under IFRS 16 (as “Lessee” or “Lessor”), include renewable energy assets, transmission lines, efficient natural gas assets and water plants.

a)	Contracted concessional assets under IFRIC 12

The infrastructure used in a concession accounted for under IFRIC 12 can be classified as an intangible asset or a financial asset, depending on the nature of the payment entitlements established in the agreement. The application of IFRIC 12 requires extensive judgement in relation to, among other factors, (i) the identification of certain infrastructures and contractual agreements in the scope of IFRIC 12, (ii) an understanding of the nature of the payments in order to determine the classification of the infrastructure as a financial asset or as an intangible asset and (iii) the timing and recognition of revenue from construction and concessionary activity.

Under the terms of contractual arrangements within the scope of this interpretation, the operator shall recognize and measure revenue in accordance with IFRS 15 for the services it performs.

The useful life of these assets is approximately the same as the length of the concession arrangement.

-	Intangible asset

We recognize an intangible asset to the extent that it receives a right to charge final customers for the use of the infrastructure. This intangible asset is subject to the provisions of IAS 38 and is amortized linearly, taking into account the estimated period of commercial operation of the infrastructure which coincides with the concession period.

Once the infrastructure is in operation, the treatment of income and expenses is as follows:

-	Revenues from the updated annual revenue for the contracted concession, as well as operations and maintenance services are recognized in each period according to IFRS 15.

-	Operating and maintenance costs and general overheads and administrative costs are recorded in accordance with the nature of the cost incurred (amount due) in each period.

-	Financial asset

We recognize a financial asset when demand risk is assumed by the grantor, to the extent that the concession holder has an unconditional right to receive payments for the asset. This asset is recognized at the fair value of the construction services provided, considering upgrade services in accordance with IFRS 15, if any.

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The financial asset is subsequently recorded at amortized cost calculated according to the effective interest method. Revenue from operations and maintenance services is recognized in each period according to IFRS 15.

Allowance for expected credit losses (financial assets)

According to IFRS 9, we recognize an allowance for expected credit losses (ECLs) for all debt instruments not held at fair value through profit or loss. ECLs are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that we expect to receive.

There are two main approaches to applying the ECL model according to IFRS 9: the general approach which involves a three-stage approach, and the simplified approach, which can be applied to trade receivables, contract assets and lease receivables. We have elected to apply the simplified approach. Under this approach, there is no need to monitor for significant increases in credit risk and entities will be required to measure lifetime expected credit losses at the end of each reporting period.

The key elements of the ECL calculations, based on external sources of information, are the following:

-	the Probability of Default (“PD”) is an estimate of the likelihood of default over a given time horizon. We calculate PD based on Credit Default Swaps spreads (“CDS”);

-	the Exposure at Default (“EAD”) is an estimate of the exposure at a future default date; and

-	the Loss Given Default (“LGD”) is an estimate of the loss arising in the case where a default occurs at a given time. It is based on the difference between the contractual cash flows due and those that we would expect to receive. It is expressed as a percentage of the EAD.

b)	Property, plant and equipment (PP&E) under IAS 16

Property, plant and equipment is measured at historical cost, including all expenses directly attributable to the acquisition, less depreciation and impairment losses, with the exception of land, which is presented net of any impairment losses. Such cost includes the cost of replacing part of the plant and equipment and borrowing costs for long-term installation projects if the recognition criteria is met. Repair and maintenance costs are recognized in profit or loss as incurred.

Depreciation is calculated on a straight-line basis over the estimated useful lives of the assets.

We review the estimated residual values and expected useful lives of assets at least annually. In particular, we consider the impact of health, safety and environmental legislation in its assessment of expected useful lives and estimated residual values.

An item of property, plant and equipment and any significant part initially recognized is derecognized upon disposal (i.e., at the date the recipient obtains control) or when no future economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the statement of profit or loss when the asset is derecognized.

c)	Right of uses under IFRS 16

We assess at contract inception whether a contract is, or contains, a lease. That is, if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration.

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Atlantica as a lessee:

We apply a single recognition and measurement approach for all leases, except for short-term leases and leases of low-value assets. We recognize lease liabilities to make lease payments and right-of-use assets representing the right to use the underlying assets.

Main right of use agreements corresponds to land rights. We recognize right-of-use assets at the commencement date of the lease (i.e., the date the underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities (see Note 2.3 to our Annual Consolidated Financial Statements). The cost of right-of-use assets includes the amount of lease liabilities recognized, initial direct costs incurred, and lease payments made at or before the commencement date less any lease incentives received. Right-of-use assets are depreciated on a straight-line basis over the shorter of the lease term and the estimated useful lives of the assets.

d)	Other intangible assets

Other intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in a business combination is their fair value at the date of acquisition. Following initial recognition, intangible assets are carried at cost less any accumulated amortization and accumulated impairment losses. Intangible assets are amortized over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired.

An intangible asset is derecognized upon disposal (i.e., at the date the recipient obtains control) or when no future economic benefits are expected from its use or disposal. Any gain or loss arising upon derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the statement of profit or loss.

Research and development costs:

Research costs are expensed as incurred. Development expenditures on an individual project are recognised as an intangible asset when we can demonstrate:

the technical feasibility of completing the intangible asset so that the asset will be available for use or sale

its intention to complete and its ability and intention to use or sell the asset

how the asset will generate future economic benefits

the availability of resources to complete the asset

the ability to measure reliably the expenditure during development

Following initial recognition of the development expenditure as an asset, the asset is carried at cost less any accumulated amortization and accumulated impairment losses. Amortization of the asset begins when development is complete, and the asset is available for use. It is amortized over the period of expected future benefit. During the period of development, the asset is tested for impairment annually.

Revenue Recognition

According to IFRS 15, Revenue from Contracts with Customers, we assess the goods and services promised in the contracts with the customers and identifies as a performance obligation each promise to transfer to the customer a good or service (or a bundle of goods or services).

In the case of contracts related to intangible or financial assets under IFRIC 12, the performance obligation of the Company is the operation of the asset. The contracts between the parties set the price of the service in an orderly transaction and therefore corresponds to the fair value of the service provided. The service is satisfied over time. The same conclusion applies to concessional assets that are classified as tangible assets under IAS 16 or leases under IFRS 16. All of the transaction prices of assets under IFRIC 12 are fixed and included as part of the long-term PPAs of the Company as disclosed in Appendix III-2.

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In the case of financial asset under IFRIC 12, the financial asset accounts for the payments to be received from the client over the residual life of the contract, discounted at a theoretical internal rate of return for the project. In each period, the financial asset is reduced by the amounts received from the client and increased by any capital expenditure that the project may incur and by the effect of unwinding the discount of the financial asset at the theoretical internal rate of return. The increase of the financial asset deriving from the unwinding of the discount of the financial asset is recorded as revenue in each period. Revenue will therefore differ from the actual billings made by the asset to the client in each period.

In the case of Spain, according to Royal Decree 413/2014, solar electricity producers receive: (i) the market price for the power they produce, (ii) a payment based on the standard investment cost for each type of plant (without any relation whatsoever to the amount of power they generate) and (iii) an “operating payment” (in €/MWh produced). The principle driving this economic regime is that the payments received by a renewable energy producer should be equivalent to the costs that they are unable to recover on the electricity pool market where they compete with non-renewable technologies. This economic regime seeks to allow a “well-run and efficient enterprise” to recover the costs of building and running a plant, plus a reasonable return on investment (project investment rate of return). Some of the Company´s Spanish assets are receiving a remuneration based on a 7.09% reasonable rate of return until December 31, 2025 while others are receiving a remuneration based on a 7.398% reasonable rate of return until December 31, 2031.

Impairment of intangible assets and property, plant and equipment

We review our contracted concessional assets to identify any indicators of impairment at least annually. When impairment indicators exist, we calculate the recoverable amount of the asset.

The recoverable amount of an asset is the higher of its fair value less costs to sell and its value in use, defined as the present value of the estimated future cash flows to be generated by the asset. In the event that the asset does not generate cash flows independently of other assets, we calculate the recoverable amount of the cash generating unit, or CGU to which the asset belongs.

When the carrying amount of the CGU to which these assets belong is higher than its recoverable amount, the assets are impaired.

Assumptions used to calculate value in use include a discount rate and projections considering real data based on the contract terms and projected changes in both selling prices and costs. The discount rate is estimated by management, to reflect both changes in the value of money over time and the risks associated with the specific CGU.

For contracted or concession revenue assets with a defined useful life and with a specific financial structure, cash flow projections until the end of the project are considered and no terminal value is assumed. Contracted revenue assets have a contractual structure that permits to estimate quite accurately the costs of the project and revenue during the life of the project.

Projections take into account real data based on the contract terms and fundamental assumptions based on part in specific reports prepared internally and supported by third-party reports, assumptions on demand and assumptions on production. Additionally, assumptions on macroeconomic conditions are also considered, such as inflation rates, future interest rates and sensitivity analysis are performed over all major assumptions, which can have a significant impact on the value of the asset.

Cash flow projections of CGUs are calculated in the functional currency of those CGUs and are discounted using rates that take into consideration the risk corresponding to each specific country and currency.

Taking into account that in most CGUs the specific financial structure is linked to the financial structure of the projects that are part of those CGUs, the discount rate used to calculate the present value of cash-flow projections is based on the weighted average cost of capital (WACC) for the type of asset, adjusted, if necessary, in accordance with the business of the specific activity and with the risk associated with the country where the project is performed.

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In any case, sensitivity analyses are performed, especially in relation with the discount rate used and fair value changes in the main business variables, in order to ensure that possible changes in the estimates of these items do not impact the recovery of recognized assets.

In the event that the recoverable amount of an asset is lower than its carrying amount, an impairment charge for the difference would be recorded in the income statement under the item “Depreciation, amortization and impairment charges”.

An assessment is made at each reporting date to determine whether there is an indication that previously recognized impairment losses no longer exist or have decreased. If such indication exists, we estimate the CGU’s recoverable amount. A previously recognized impairment loss is reversed only if there has been a change in the assumptions used to determine the asset’s recoverable amount since the last impairment loss was recognized. The reversal is limited so that the carrying amount of the asset does not exceed its recoverable amount, nor exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognized for the asset in prior years. Such reversal is recognized in the income statement.

Assessment of control

Control over an investee is achieved when we have power over the investee, we are exposed, or have rights, to variable returns from our involvement with the investee and have the ability to use its power to affect its returns. We reassess whether or not we control an investee when facts and circumstances indicate that there are changes to one or more of these three elements of control.

We use the acquisition method to account for business combinations of companies controlled by a third party. According to this method, identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. Any contingent consideration is recognized at fair value at the acquisition date and subsequent changes in its fair value are recognized in accordance with IFRS 9 either in profit or loss or as a change to other comprehensive income. Acquisition-related costs are expensed as incurred. We recognize any non-controlling interest in the acquired entity either at fair value or at the non-controlling interest’s proportionate share of the acquirer’s net assets on an acquisition-by-acquisition basis.

All assets and liabilities between entities within the group, equity, income, expenses and cash flows relating to transactions between entities of the group are eliminated in full.

Derivative financial instruments and fair value estimates

Derivatives are recognized at fair value in the statement of financial position. We maintain both derivatives designated as hedging instruments in hedging relationships, and derivatives to which hedge accounting is not applied.

When hedge accounting is applied, hedging strategy and risk management objectives are documented at inception, as well as the relationship between hedging instruments and hedged items. Effectiveness of the hedging relationship needs to be assessed on an ongoing basis. Effectiveness tests are performed prospectively at inception and at each reporting date. We analyze on each date if all these requirements are met:

-	there is an economic relationship between the hedged item and the hedging instrument;

-	the effect of credit risk does not dominate the value changes that result from that economic relationship; and

-	the hedge ratio of the hedging relationship is the same as that resulting from the quantity of the hedged item that we actually hedge and the quantity of the hedging instrument that we use to hedge that quantity of hedged item.

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Ineffectiveness is measured following accumulated dollar offset method.

In all cases, current Company’s hedging relationships are considered cash flow hedges. Under this model, the effective portion of changes in fair value of derivatives designated as cash flow hedges are recorded temporarily in equity and are subsequently reclassified from equity to profit or loss in the same period or periods during which the hedged item affects profit or loss. Any ineffective portion of the hedged transaction is recorded in the consolidated income statement as it occurs.

When interest rate options are designated as hedging instruments, the time value is excluded from the hedging instrument as permitted by IFRS 9. Changes in the effective portion of the intrinsic are recorded in equity and subsequently reclassified from equity to profit or loss in the same period or periods during which the hedged item affects profit or loss. Any ineffectiveness is recorded as financial income or expense as it occurs. Changes in options time value is recorded as cost of hedging. More precisely, considering that the hedged items are, in all cases, time period hedged item, changes in time value is recognized in other comprehensive income to the extent that it relates to the hedged item. The time value at the date of designation of the option as a hedging instrument, to the extent that it relates to the hedged item, is amortized on a systematic and rational basis over the period during which the hedge adjustment for the option’s intrinsic value could affect profit or loss.

When the hedging instrument matures or is sold, or when it no longer meets the requirements to apply hedge accounting, accumulated gains and losses recorded in equity remain as such until the forecast transaction is ultimately recognized in the income statement. However, if it becomes unlikely that the forecast transaction will actually take place, the accumulated gains and losses in equity are recognized immediately in the income statement.

Any change in fair value of derivatives instruments to which hedge accounting is not applied is directly recorded in the income statement.

The inputs used to calculate fair value of our derivatives are based on inputs other than quoted prices that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices), through the application of valuation models (Level 2). The valuation techniques used to calculate fair value of our derivatives include discounting estimated future cash flows, using assumptions based on market conditions at the date of valuation or using market prices of similar comparable instruments, among others. The valuation of derivatives requires the use of considerable professional judgment. These determinations were based on available market information and appropriate valuation methodologies. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts.

Income taxes and recoverable amount of deferred tax assets

The current income tax provision is calculated on the basis of relevant tax laws in force at the date of the statement of financial position in the countries in which the subsidiaries and associates operate and generate taxable income.

Determining income tax provision requires judgment in assessing the timing and the amount of deductible and taxable items, as well as the interpretation and application of tax laws in different jurisdictions. Due to this fact, contingencies or additional tax expenses could arise as a result of tax inspections or different interpretations of certain tax laws by the corresponding tax authorities.

We recognize deferred tax assets for all deductible temporary differences and all unused tax losses and tax credits to the extent that it is probable that future taxable profit will be available against which they can be utilized. We consider it probable that we will have sufficient taxable profit available in the future to enable a deferred tax asset to be recovered when:

There are sufficient taxable temporary differences relating to the same tax authority, and the same taxable entity is expected to reverse either in the same period as the expected reversal of the deductible temporary difference or in periods into which a tax loss arising from the deferred tax asset can be carried back or forward.

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It is probable that the taxable entity will have sufficient taxable profit, relating to the same tax authority and the same taxable entity, in the same period as the reversal of the deductible temporary difference (or in the periods into which a tax loss arising from the deferred tax asset can be carried back or forward).

-	Tax planning opportunities are available to the entity that will create taxable profit in appropriate periods.

Our management assesses the recoverability of deferred tax assets on the basis of estimates of future taxable profit. These estimates are derived from the projections of each of our assets. Based on our current estimates, we expect to generate sufficient future taxable income to achieve the realization of our current tax credits and tax loss carryforwards, supported by our historical trend of business performance.

In assessing the recoverability of our deferred tax assets, our management also considers the foreseen reversal of deferred tax liabilities and tax planning strategies. To the extent management relies on deferred tax liabilities for the recoverability of our deferred tax assets, such deferred tax liabilities are expected to reverse in the same period and jurisdiction and are of the same character as the temporary differences giving rise to the deferred tax assets. We consider that the recovery of our current deferred tax assets is probable without counting on potential tax planning strategies that we could use in the future.

F.	Off-Balance Sheet Arrangements

As of December 31, 2022, the overall sum of the Bank and Surety Insurances Bonds directly deposited by subsidiaries of Atlantica as a guarantee to third parties (clients, financial entities and other third parties) was $88.0 million. In addition, Atlantica issued guarantees amounting to $216.9 million as of December 31, 2022 ($174.2 million as of December 31, 2021). Guarantees issued by us correspond mainly to guarantees provided to off-takers in PPAs, guarantees for debt service reserve accounts and guarantees for interconnection requests or agreements for renewable energy projects.

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ITEM 6.

DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

A.	Directors and Senior Management

Board of Directors of Atlantica

The Board of Directors of Atlantica comprises the following eight members:

Name	Position	Year of birth
William Aziz	Director, Independent	1956
Arun Banskota	Director	1961
Debora Del Favero	Director, Independent	1964
Brenda Eprile	Director, Independent	1954
Michael Forsayeth	Director, Independent	1954
Edward C. Hall	Director, Independent	1959
Santiago Seage	Chief Executive Officer and Director	1969
George Trisic	Director	1960
Michael Woollcombe	Director and Chair of the Board, Independent	1968

The business address of the members of the Board of Directors of Atlantica is Great West House, GW1, 17^th floor, Great West Road, Brentford, TW8 9DF, United Kingdom.

There are no family relationships among any of our executive officers or directors. There are no potential conflicts of interest between the private interests or other duties of the members of the Board of Directors listed above and their duties to Atlantica, except in the case of Mr. Arun Banskota who serves on Algonquin’s board as President and Chief Executive Officer and Mr. George Trisic, who served until April 2022 as Chief Governance Officer and Corporate Secretary of Algonquin. Mr. Edward C. Hall has been an independent director since he was appointed on August 2, 2022.

The following is the biographical information of members of our Board of Directors.

William Aziz, Director

William Aziz is the President and Chief Executive Officer of BlueTree Advisors Inc., a private management advisory firm focused on improving the performance of global client companies by providing expertise to manage operational, financial and organizational challenges. Mr. Aziz is a director and Chair of the Audit Committee of TSX-listed Maple Leaf Foods Inc. and a member of the Advisory Board for Fengate Real Assets. From 2009 to 2019, Mr. Aziz was a Director of the Cdn. $100 billion Ontario Municipal Employees’ Retirement System, where he was Chair of its Investment Committee and a member of its Human Resources Committee. Mr. Aziz has served as a director of a number of publicly-traded companies. Mr. Aziz is a graduate of the Ivey School of Business at Western University in Honors Business Administration and is a Chartered Professional Accountant. Mr. Aziz has also completed the Institute of Corporate Directors Governance College at the Rotman School of Business, University of Toronto and holds the ICD.D designation and is a member of the Insolvency Institute of Canada.

Arun Banskota, Director

Mr. Banskota is the President of Algonquin and its President and Chief Executive Officer. Mr. Banskota joined Algonquin in February 2020 and has 30 years of experience in senior roles from a combination of industries such as renewable energy development, construction, financing, and operations. He has also served as manager of multiple large business units and three start-ups in the clean-tech space. Mr. Banskota holds a Master of Arts (University of Denver) and a Master of Business Administration (University of Chicago).

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Debora Del Favero, Director

Debora Del Favero is a senior executive with extensive international mergers and acquisition and corporate finance experience including in the renewables sector. She is a Co-Founder of CMC Capital Limited, a U.K.-based corporate finance advisory boutique established in 2011 that specializes in M&A and corporate advisory. Previously, for over 17 years, Ms. Del Favero held progressively senior roles in both the London and New York offices of the investment banking division of Credit Suisse. This included approximately seven years as a Managing Director and member of the Energy Group and M&A Group of Credit Suisse in London. Ms. Del Favero also served on the European investment banking committee of Credit Suisse. Prior to joining Credit Suisse, Ms. Del Favero was a Senior Analyst at Analitica based in Milan, Italy, a start-up specializing in equity research on Italian publicly-listed companies. Ms. Del Favero holds a Masters of Arts in Economics and Business Administration from Bocconi University in Milan, Italy, with a focus on corporate finance and commercial law.

Brenda Eprile, Director

Brenda Eprile is a corporate director and sits on a variety of public and private company boards. She currently chairs the board of Global Container Terminals Inc. which operates 2 marine terminals in Vancouver and 2 marine terminals in the Port of New York/New Jersey. She is also a board member and chair of the Audit Committee of Westport Fuel Systems Inc., a TSX and NASDAQ-listed company that invents, engineers, builds and supplies clean alternative fuel systems and components. Ms. Eprile has been a director of Westport since 2013, and previously served as Chair of the Board from February 2017 to April 2020. From 2016 to 2018, Ms. Eprile served as a director TSX-listed alternative mortgage lender Home Capital Group Ltd., where she became Chair of the Board in 2017 and was part of leading Home Capital’s efforts in responding to a severe liquidity and regulatory crisis and in obtaining the support of Berkshire Hathaway Inc. as a major strategic investor. From 2000 to 2012, Ms. Eprile was a Senior Partner at PricewaterhouseCoopers LLP and led its Canadian Risk Advisory Services practice. From 1998 to 2000, Ms. Eprile led the Canadian Regulatory Risk practice at Deloitte LLP. From 1985 to 1997, Ms. Eprile had a distinguished career as a securities regulator in Canada, holding the positions of both Executive Director and Chief Accountant at the Ontario Securities Commission. Ms. Eprile is a Fellow Chartered Professional Accountant and holds the ICD.D designation. Ms. Eprile earned an MBA from the Schulich School of Business at York University.

Michael Forsayeth, Director

Michael Forsayeth is an experienced business leader having held Chief Executive Officer, Chief Financial Officer and other senior executive positions in several large public and private real estate, hospitality, foodservice and other businesses over his career. Most recently, Mr. Forsayeth was Chief Executive Officer and a director of TSX and NYSE-listed Granite Real Estate Investment Trust, a large Canadian-based REIT with industrial, warehouse and logistics properties in North America and Europe. Prior to being appointed as Granite’s CEO, Mr. Forsayeth served as Granite’s Chief Financial Officer from 2011 to 2015. From 2007 to 2011, Mr. Forsayeth was Chief Financial Officer of Intrawest ULC, a significant developer and manager of resort properties in North America and Europe, following its $3 billion privatization by a private equity group. From 1999 to 2007, Mr. Forsayeth was the Chief Financial Officer of Cara Operations Limited (now Recipe Unlimited), a leading Canadian foodservice business, where Mr. Forsayeth played a key leadership role in Cara Operation’s successful going-private transaction. Previously, Mr. Forsayeth held senior executive positions with TSX and NYSE-listed Laidlaw Inc., and TSX-listed Derlan Industries Limited. Mr. Forsayeth is a CPA and CA and spent nine years with Coopers & Lybrand (now Pwc) in various areas including the audit practice and a secondment in its London, England office. Mr. Forsayeth holds a Bachelor of Commerce (Honors) from Queen’s University.

Edward C. Hall, Director

Mr. Hall is an active independent director and advisor with 35 years of experience in all facets of the electricity industry. Mr. Hall brings a deep understanding of electricity markets, power generation technologies, utility operations and commercial structuring. Mr. Hall serves as Chairman of Cypress Creek Renewables, Vice Chairman of Japan Wind Development Company and as a Director of Wellesley Municipal Light. Mr. Hall spent 25 years of his career with AES Corporation, where he was a member of the AES Executive Leadership Team and served as Chief Operating Officer of AES’s global generation. Mr. Hall has previously served on the boards of General Cable, Globeleq, TerraForm Power and Green Conversion Systems. Mr. Hall earned a B.S. in Mechanical Engineering from Tufts University and M.S. in Finance and Technology Innovation from the MIT Sloan School of Management.

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Santiago Seage, Chief Executive Officer and Director

Mr. Seage has served as a director since our formation in 2013 until March 2018 and from December 2018. Mr. Seage has served as our Chief Executive Officer since our formation, except for the six-month period between May and November 2015, while he was Chair of our Board and Chief Executive Officer of Abengoa. Prior to the foregoing, he served as Abengoa Solar’s CEO beginning in 2006. Before that, he was a partner with McKinsey & Company. Mr. Seage holds a degree in Business Management from ICADE University in Madrid.

George Trisic, Director

Mr. Trisic was the Chief Governance Officer of Algonquin until April 2022. In his role, Mr. Trisic was responsible for leading the sustainability and government affairs. He has broad experience managing high growth, start up and expanding businesses across multiple sites and regions. His skill set includes leading multi-functional groups in finance, human resources, legal and information technology in a senior executive role. Mr. Trisic holds a Bachelor of Laws Degree from the University of Western Ontario. Additionally, he holds a Chartered Director certification from the Directors College (McMaster University).

Michael Woollcombe, Director and Chair of the Board

Michael Woollcombe has been a Partner of Voorheis & Co. LLP and Executive Vice-President of VC & Co. Incorporated for more than 20 years. Since 2011, Mr. Woollcombe has also been President of VWK Capital Management Inc., the investment manager for VWK Partners Fund LP, a long-short investment fund. Mr. Woollcombe is one of the leading special situations advisors in Canada and has been centrally involved in directing numerous high-profile shareholder disputes, proxy contests, M&A transactions, special committee mandates, internal and independent corporate investigations and complex restructurings. Mr. Woollcombe regularly serves as a trusted strategic advisor to institutional and other significant shareholders, boards of directors and chief executive officers to address their most important opportunities and crisis situations. Mr. Woollcombe has acted as a director and as member of special board committees of a number of publicly-traded companies. Previously, Mr. Woollcombe practiced corporate and securities law at a major law firm in Toronto, Canada. Mr. Woollcombe holds a Bachelor of Commerce (Honors) from Queen’s University and an LLB from the University of Western Ontario.

Board Diversity Matrix

On August 6, 2021 the SEC approved NASDAQ’s Board Diversity Rule, requiring Nasdaq-listed companies to, subject to certain transition periods and exceptions (1) publicly disclose board-level diversity statistics in its annual report or on its website and in an aggregated form, using a standardized template and (2) have or explain why they do not have at least two diverse directors.

Atlantica, as a listed foreign private issuer, is required to have, or explain why it does not have, at least two diverse directors, including one who self-identifies as female, and one who self-identifies as either female, LGBTQ+ or an underrepresented individual. Foreign private issuers shall, starting by the later of (i) August 8, 2022, or (ii) the date when the annual report for the year ended 2022 is filed with the SEC, publish board level diversity statistics annually using either the U.S. domestic issuers prescribed matrix or the foreign private issuers prescribed matrix, and have, or explain why they do not have, one diverse director in 2023, and two diverse directors in 2025.

Considering that Atlantica voluntarily follows many U.S. domestic issuers reporting requirements, we report board diversity information following the U.S. domestic issuers prescribed matrix. The Company believes that it is presently in compliance with the diversity requirements pursuant to NASDAQ’s listing rules.

The information provided below is based on the voluntary self-identification of each member of the Company’s Board of Directors as of December 31, 2021 and December 31, 2022:

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Board Diversity Matrix as of December 31, 2022 and 2021

	2022	2021
Total Number of Directors	9	8

	Female				Male				Non-Binary				Did not disclosed Gender
	2022		2021		2022		2021		2022		2021		2022		2021
Part I: Gender Identity
Directors		2		2		7		6		-		-		-		-
Part II: Demographic Background
African American or Black		-		-		-		-		-		-		-		-
Alaskan Native or Native American		-		-		-		-		-		-		-		-
Asian¹		-		-		1		1		-		-		-		-
Hispanic or Latinx²		-		-		1		1		-		-		-		-
Native Hawaiian or Pacific Islander		-		-		-		-		-		-		-		-
White³		2		2		5		4		-		-		-		-
Two or More Races or Ethnicities		-		-		-		-		-		-		-		-
LGBTQ+		-		-		-		-		-		-		-		-
Did Not Disclose Demographic Background		-		-		-		-		-		-		-		-

Note: NASDAQ demographic background definitions include:

(1)	Asian – A person having origins in any of the original peoples of the Far East, Southeast Asia, or the Indian subcontinent, including, for example, Cambodia, China, India, Japan, Korea, Malaysia, Pakistan, the Philippine Islands, Thailand, and Vietnam.

(2)

Hispanic or Latinx – A person of Cuban, Mexican, Puerto Rican, South or Central American, or other Spanish culture or origin, regardless of race. The term Latinx applies broadly to all gendered and gender-neutral forms that may be used by individuals of Latin American heritage, including individuals who self-identify as Latino/a/e.

(3)	White (not of Hispanic or Latinx origin) – A person having origins in any of the original peoples of Europe, the Middle East, or North Africa.

Senior Management of Atlantica

We have a senior management team with extensive experience in developing, financing, managing and operating contracted assets.

Our senior management comprises the following members:

Name	Position	Year of birth
David Esteban	Vice President EMEA	1979
Emiliano Garcia	Vice President North America	1968
Irene M. Hernandez	General Counsel and Chief of Compliance	1980
Francisco Martinez-Davis	Chief Financial Officer	1963
Antonio Merino	Vice President South America	1967
Stevens C. Moore	Vice President Corporate Development	1973
Santiago Seage	Chief Executive Officer and Director	1969

The business address of the members of the senior management of Atlantica is Great West House, GW1, 17 floor, Great West Road, Brentford, TW8 9DF, United Kingdom.

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There are no potential conflicts of interest between the private interests or other duties of the members of the senior management listed above and their duties to Atlantica. There are no family relationships among any of our executive officers or directors.

Below are the biographies of those members of the senior management of Atlantica Sustainable Infrastructure who do not also serve on our Board of Directors.

David Esteban, Vice President EMEA

Mr. Esteban has served as Vice President of our operations in EMEA since July 2014. He had previously served at Abengoa’s Corporate Concession department for two years. Before joining Abengoa, David worked for the management consulting firm Arthur D. Little for seven years in the industries of Telecoms & Energy and then moved to a private equity firm specialized in renewable energy investments in Europe for three years.

Emiliano Garcia, Vice President North America

Mr. Garcia serves as Vice President of our North American business. Based in Phoenix, Arizona, he is responsible for managing two of our key assets, Solana and Mojave. Mr. Garcia was previously the General Manager of Abengoa Solar in the United States and of the Solana Power Plant. Before that, he held a number of managerial positions in various Abengoa companies over two decades. Mr. Garcia holds a Bachelor’s degree in Engineering from Madrid Technical University.

Irene M. Hernandez, General Counsel and Chief Compliance Officer

Ms. Hernandez has served as our General Counsel since June 2014 and also serves as Chief Compliance Officer and Head of People and Culture. Prior to that, she served as head of our legal department since the date of our formation. Before that, Ms. Hernandez served as Deputy Secretary General at Abengoa Solar since 2012. Before joining Abengoa, she worked for several law firms. Ms. Hernandez holds a law degree from Complutense Madrid University and a Master’s degree in law from the Madrid Bar Association (Colegio de Abogados de Madrid (ICAM)).

Francisco Martinez-Davis, Chief Financial Officer

Mr. Martinez-Davis was appointed as our Chief Financial Officer on January 11, 2016. Mr. Martinez-Davis has more than 30 years of experience in senior finance positions both in the United States and Spain. He has served as Chief Financial Officer of several large industrial companies. Most recently, he was Chief Financial Officer for the company responsible for the management and operation of metropolitan rail service of the city of Madrid where he was also member of the Executive Committee. He has also worked as CFO for a retailer and as Deputy General Manager in Finance and Treasury for Telefonica Moviles. Prior to that, he worked for different investment banks in New York City and London for more than 10 years, including J.P. Morgan Chase & Co. and BNP Paribas. Mr. Martinez-Davis holds a Bachelor of Science, cum laude, in Business Administration from Villanova University in Philadelphia and an MBA from The Wharton School at the University of Pennsylvania.

Antonio Merino, Vice President South America

Mr. Merino serves as Vice President of our South American business. Previously, he was the Vice President of Abengoa’s Brazilian business, as well as the head of Abengoa’s commercial activities and partnerships in South America. Mr. Merino holds an MBA from San Telmo International Institute.

Stevens C. Moore, Vice President Corporate Development

Mr. Moore has more than 25 years of experience in finance positions in Spain, the United Kingdom and the United States. He has worked in various positions in structured and leveraged finance at Citibank and Banco Santander, and vice president of M&A at GBS Finanzas. Most recently, he was director of corporate development and investor relations at Codere, the Madrid stock exchange listed international gaming company. He holds a B.A. degree in history from Tulane University of New Orleans, Louisiana.

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Lead Independent Director

Our corporate governance guidelines provide that one of our independent directors shall serve as a lead independent director at any time when an independent director is not serving as the chair of our Board of Directors.

B)	Compensation

Compensation of the Board of Directors and Chief Executive Officer

Each independent non-executive director is entitled to receive annual compensation of $150.0 thousand. The Chair of the Board and Chairs of the committees of the Board are entitled to receive additional compensation as detailed in the table below.

Non-independent non-executive directors are entitled to be compensated on the same terms as independent non-executive directors. In 2021, non-independent non-executive directors declined compensation. In 2022, Mr. Banskota also declined compensation. Since April 2022, Mr. Trisic has received compensation after retiring from a senior executive role at Algonquin Power Utilities Corp.

The following table sets out the fee schedule for 2022 and 2021:

In thousands of U.S. Dollars	2022		2021
Annual Director Retainer
Non-Executive Director		150.0		150.0
Annual Committee Chair Retainer
Chair of the Board		75.0		75.0
Chair of the Audit Committee		15.0		15.0
Chair of the Nominating and Corporate Governance Committee		10.0		10.0
Chair of the Compensation Committee		10.0		10.0

The table below summarizes the total annual compensation of the executive and non-executive directors who received remuneration during 2022 and 2021.

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In thousands of U.S. Dollars	Salary and Fees in Cash				Salary and Fees in DRSUs²				Annual Bonuses				Long-Term Incentive Awards³ (Vested)				Deferred Restricted Share Units Dividend Equivalents ³				Total Fixed Remuneration				Total Variable Remuneration				Total
Name¹	2022		2021		2022		2021		2022		2021		2022		2021		2022		2021		2022		2021		2022		2021		2022		2021
William Aziz		160.0		160.0		-		-		-		-		-		-		-		-		160.0		160.0		-		-		160.0		160.0
Debora Del Favero		112.0		128.5		48.0		31.5		-		-		-		-		2.5		0.3		162.5		160.3		-		-		162.5		160.3
Brenda Eprile		165.0		165.0		-		-		-		-		-		-		-		-		165.0		165.0		-		-		165.0		165.0
Michael Forsayeth		75.0		100.8		75.0		49.2		-		-		-		-		4.0		0.5		154.0		150.5		-		-		154.0		150.5
Edward C Hall⁵		62.5		-		-		-		-		-		-		-		-		-		62.5		-		-		-		62.5		-
Santiago Seage⁶		727.2		816.6		-		-		931.3		1,056.3		2,992.4		1,879.8		-		-		727.2		816.6		3,923.7		2,936.1		4,651.0		3,752.7
George Trisic⁷		-		-		110.0		-		-		-		-		-		1.6		-		111.6		-		-		-		111.6		-
Michael Woollcombe		-		77.5		225.0		147.5		-		-		-		-		11.9		1.5		236.9		226.5		-		-		236.9		226.5
Total		1,301.7		1,448.5		458.0		228.1		931.3		1,056.3		2,992.4		1,879.8		20.0		2.3		1,779.7		1,679.0		3,923.7		2,936.1		5,703.5		4,615.1

1 None of the Directors received any pension entitlement and/or taxable benefits in 2022 or 2021.

2 Non-executive directors receive salary and fees via a mix of cash and Deferred Restricted Share Units (DRSUs). Following the Annual General Meeting held in May 2021, the Company determined, and Ms. Del Favero, Mr. Forsayeth, and Mr. Woollcombe agreed that 30%, 50% and 100% respectively of the annual fee payable to the director by the Company from May 31, 2021 shall be irrevocably substituted for the grant of DRSUs.

3 Long-term Incentive Awards includes awards under both the Long-term Incentive Plan (LTIP) and the One-Off Plan which vested in the year, calculating amounts using the share price at vesting date. In 2022, from the $2,992.4 thousand vested, $1,490.1 corresponded to share appreciation. In 2021, from the $1,879.8 thousand vested, $1,549.1 corresponded to share appreciation.

4 Dividend equivalent rights accumulated on the DRSUs corresponding to the amount of dividends paid for one share in the period between the DRSU effective date and December 31, 2022 and 2021, respectively, multiplied by the number of DRSUs held on that date. Such rights are only payable on vesting of the DRSUs.

5 Mr. Hall was appointed to the Board on August 2, 2022 as an independent non-executive Director. Mr. Hall’s 2022 fee was prorated for the year based on the annual directors’ retainer.

6 The CEO’s compensation is approved in Euros. It has been converted to U.S. dollars for reporting purposes, at the average exchange rate of each year, which is 1.05 $/€ in 2022 and 1.18 $/€ in 2021.

- In 2022, the CEO’s total pay amounted to €4,401.7 thousand ($4,651.0 thousand). Fixed salary amounted to €690.0 thousand ($727.2 thousand), annual bonus to €870.0 thousand ($931.3 thousand) and long-term incentive awards to €2,841.7 thousand ($2,992.4 thousand).

- In 2021, the CEO’s total pay amounted to €3,148.6 thousand ($3,752.7 thousand). Fixed salary amounted to €690.0 thousand ($816.6 thousand), annual bonus to €892.5 thousand ($1,056.3 thousand) and long-term incentive awards to €1,566.1 thousand ($1,879.8 thousand).

7 Mr. Trisic, non-independent non-executive director, has received compensation since April 6, 2022. Mr. Trisic’s 2022 fee was prorated for the year based on the annual directors’ retainer. The Company determined and Mr. Trisic agreed that 100% of his fee shall be irrevocably substituted for the grant of DRSUs.

The Compensation Report is presented in U.S. dollars since remuneration of all directors except the CEO is defined in U.S. dollars and the functional currency of the Company is also the U.S. dollar. None of the directors received any pension entitlement and/or taxable benefits in 2022 or 2021. Each member of our Board of Directors will be indemnified for his or her actions associated with being a director to the extent permitted by law.

The increase in the remuneration of the CEO in 2022 corresponds mainly to the vesting of restricted share units granted under the LTIP in 2019, as we explain below.

Chief Executive Officer Long-Term Incentives awards vested

1) One-off plan

An award in the form of restricted stock units (RSUs) was granted under a One-off plan to the CEO in 2019. In June 2022 and 2021, the second and third tranches vested, and shares were transferred to the CEO in accordance with the terms of the plan. The One-off plan RSUs are now fully vested.

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The value of the shares transferred have been included in the Single Total Figure of Remuneration table above in their vesting period.

One-Off Plan¹	One-Off Plan Vesting	Number of Restricted Stock Units (RSUs)		Share Price on Vesting Date (US$)		RSUs Value at Vesting Date ($ thousand)²
2019	June 2022³		14,535		31.30		528.6
2019	June 2021		14,535		36.50		578.8

1 Additional information on the One-off plan is disclosed in the Remuneration Policy section.

2 On each vesting date, one third of the RSUs vest (14,535 RSUs) plus dividend equivalent rights corresponding to the amount of dividends paid on one share in the period between the One-off plan effective date and the date on which the RSU vests ($5.07 per RSU for 2022 and $3.32 per RSU for 2021), multiplied by the number of RSUs vesting on that date.

3 In June 2022 the final tranche of RSUs vested. As a result, there are no other awards outstanding under this plan.

2) Options vested under the LTIP

One-third of each of the CEO’s share options awarded in 2019, 2020 and 2021 under the LTIP vested during 2022. The 2019 and 2020 share options were exercised, and shares were transferred to the CEO in accordance with the terms of the plan. The 2021 share options vested, but they were not exercised. The 2021 share options were underwater on the vesting date.

The share options value have been included in the Single Total Figure of Remuneration table above in their vesting period.

LTIP Share Option Grant Date¹	Share Option Vesting Date	Number of Share Options Vesting (#)		Share Price on Vesting Date (USD)		Exercise Price per Share Option (USD)		Share Options Value at Vesting Date (000’s USD)²
2021	2022		24,948		32.53		37.98		-
2020	2022		34,494		34.48		26.39		279.1
2020	2021		34,494		44.17		26.39		613.3
2019	2022		40,693		31.30		19.60		476.1
2019	2021		40,693		36.50		19.60		687.7

1 Additional information on the LTIP is disclosed in the Remuneration Policy section.

2 The value of the share options on the vesting date is calculated using the number of share options multiplied by (the share price on the vesting date minus the exercise price per share option).

3) Restricted Stock Units vested under the LTIP

In June 2022 restricted stock units (RSUs) awarded in 2019 under the LTIP vested and shares were transferred to the CEO in accordance with the terms of the plan. In 2021 no units vested under the LTIP. The value of the vested RSUs have been included in the Single Total Figure of Remuneration table above in their vesting period.

RSU Grant Date	RSU Vesting Date		Number of Restricted Stock Units Vesting (#)				Share Price on Vesting Date (USD)				RSUs Value at Vesting Date (000’s USD)¹
2019	2022			46,987				31.10				1,708.7

1 RSU vesting under the LTIP in 2019 includes RSUs (46,987 RSUs) plus dividend equivalent rights corresponding to the amount of dividends paid on one share RSU between the LTIP 2019 effective date and the date on which the RSU vests ($5.07 per RSU).

In 2022, most of the objectives defined for the Chief Executive Officer’s variable bonus were met or exceeded and the Compensation Committee decided to approve a bonus corresponding to 102.35% of the target variable compensation, which will be payable in 2023.

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	Percentage weight			Achievement
CAFD (cash available for distribution) – Equal or higher than the CAFD budgeted in the 2022 budget		35	%	99%
Adjusted EBITDA– Equal or Higher than the Adjusted EBITDA budgeted in the 2022 budget		15	%	98%
Close sustainable value accretive investments		15	%	85%
Achieve health and safety targets – (Frequency with Leave / Lost Time Index below 3.9 and General frequency index below 10.1) based on reliable targets and consistent measure metrics		10	%	120%
Management of relationships with key shareholders and partners		10	%	120%
Continued executive talent development		10	%	120%
Disclosure best standards		5	%	85%

1 Cash Available for Distribution (CAFD) refers to the cash distributions received by the Company from its subsidiaries, minus cash expenses of the Company, including debt service and general and administrative expenses.

In 2021, most of the objectives defined for the Chief Executive Officer’s variable bonus were met or exceeded and the Compensation Committee decided to approve a bonus corresponding to 105.0% of the target variable compensation, which was paid in 2022.

The Chief Executive Officer’s maximum potential bonus is 120% of such bonus, which is approximately $1,092 thousand (approximately €1,020 thousand).

No element of the Chief Executive Officer’s annual bonus is deferred.

Deferred Restricted Shares Units (“DRSU”) Plan

The following table sets out the total compensation received by non-executive directors via a mix of cash and DRSUs in 2022:

Name	Total Remuneration (000’s USD)				Total Remuneration in Cash and/or Deferred Restricted Stock Units (DRSU)
					Remuneration in Cash (000’s USD)					Remuneration in DRSUs
					Remuneration in Cash (000’s USD)					DRSUs (000’s USD)					Number of DRSUs (#)⁴
	2022		2021			2022		2021			2022		2021			2022		2021
William Aziz		160.0		160.0			160.0		160.0			-		-			-		-
Debora Del Favero¹		160.0		160.0			112.0		128.5			48.0		31.5			1,619		878
Brenda Eprile		165.0		165.0			165.0		165.0			-		-			-		-
Michael Forsayeth¹		150.0		150.0			75.0		100.8			75.0		49.2			2,530		1,372
Edward C. Hall²		62.5		-			62.5		-			-		-			-		-
George Trisic³		110.0		-			-		-			110.0		-			3,901		-
Michael Woollcombe¹		225.0		225.0			-		77.5			225.0		147.5			7,589		4,117
Total		1,032.5		860.0			574.5		631.9			458.0		228.1			15,638		6,367

1 Following the Annual General Meeting held in May 2021, the Company determined, and Ms. Del Favero, Mr. Forsayeth, and Mr. Woollcombe agreed that 30%, 50% and 100% respectively of the annual fee payable to the director by the Company from May 31, 2021 shall be irrevocably substituted for the grant of DRSUs.

2 Mr. Hall was appointed to the Board on August 2, 2022 as an independent non-executive Director. Mr. Hall’s 2022 fee was prorated based on the annual director’s retainer.

3 Mr. Trisic, non-independent non-executive director, has received compensation since April 6, 2022. Mr. Trisic’s 2022 fee was prorated based on the annual directors’ retainer. The Company determined and Mr. Trisic agreed that 100% of his fee shall be irrevocably substituted for the grant of DRSUs.

4 The number of DRSUs granted is determined by dividing the amount of the annual compensation to be substituted for DRSUs by the market value of an ordinary share at the time of grant.

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Remuneration of the Chief Executive Officer

The information provided in this part of the report is subject to audit.

Details for Mr. Seage, who serves in the role of the Chief Executive Officer, are set out in the “Single Total Figure of Remuneration for Each Director” section above.

In 2022, Mr. Seage was awarded $931.3 thousand as a bonus payment in accordance with his service agreement, payable in 2023. In 2021, Mr. Seage was awarded $1,056.3 thousand in accordance with his service agreement, which was paid in 2022. The CEO’s bonus is approved in Euros and converted to U.S. dollars for reporting purposes at the average exchange rate of each year. The decrease in amount is due in part to the fluctuation of the Euro-Dollar exchange rate.

Scheme Interests Awarded During 2022:

LTIP		Number of Restricted Stock Units		Restricted Stock Units Face Value¹ (000’s USD)		Performance Criteria
2022		35,202²		1,197.2		RSU: 5% minimum Total Shareholder Return performance stock unit over a three year period

1 Face Value means the maximum number of shares that would vest if performance measures are met using the share price at the grant date. The face value for the restricted stock units (RSUs) is calculated using the share price at the grant date.

2 RSUs will vest on the third anniversary of the grant date, subject to the satisfaction of the performance criteria.

If the total shareholder return (“TSR”) performance condition has not been met during the vesting period, the participant’s Restricted Stock Units will lapse in full on the vesting date.

The value of the RSUs granted to the CEO is equal to 70% of the previous year total annual compensation (fixed + target annual bonus) at the grant date. Further information including a description of each type of interest awarded and the basis on which the award is made is provided in the Remuneration Policy section below.

The following information provided in this part of the report is not subject to audit (unless otherwise indicated).

Total Shareholder Return and Chief Executive Officer Pay

The chart below shows the Company’s total shareholder return since June 2014, the date of our Initial Public Offering (“IPO”), until the end of 2022 compared with the TSR of the companies in the Russell 2000 Index. The chart represents the progression of the return, including investment, starting from the time of the IPO at a 100%-point. In addition, dividends are assumed to have been re-invested at the closing price of each dividend payment date.

We believe the Russell 2000 Index is an adequate benchmark as it represents a broad range of companies of similar size.

TSR is calculated in U.S. dollars.

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The table below shows the total remuneration of the Chief Executive Officer, his bonus and his long-term incentive awards expressed as a percentage of the maximum he is likely to be awarded.

	Bonus								LTIP awards⁽³⁾
	(In thousands of U.S. Dollars)
Year	Total Pay⁽¹⁾			Percentage of target			Amount of Bonus⁽²⁾		Percentage of maximum			Value
2022		4,651.0			102.4	%		931.3		100	%		2,992.4
2021		3,752.7			105.0	%		1,056.3		100	%		1,879.8
2020		2,524.1			102.7	%		996.4		100	%		770.9
2019		1,685.4			100.7	%		957.7		-			-
2018		2,511.1			101.8	%		992.2		22.0	%		751.1
2017		1,602.0			96.3	%		924.2		-			-
2016		1,499.4			100	%		940.5		-			-
2015		1,597.6	⁽⁴⁾		-			-		-			-
2014		174.1			-			-		-			-

1 The CEO’s compensation is approved in Euros. It has been converted to U.S. dollars for reporting purposes at the average exchange rate each year. The total pay received by the CEO in thousands of Euros was €4,401.7 in 2022, €3,148.6 in 2021, €2,222.2 in 2020, €1,505.5 in 2019, €2,170.3 in 2018, €1,418.1 in 2017, €1,329.1 in 2016, €1,440.9 in 2015, and €130.9 in 2014.

2 Amount of bonus earned by the CEO at year-end and paid the next year. For example: In 2021, the CEO earned a bonus of $1,056.3 thousand, which was paid to the Chief Executive Officer in 2022.

3 Long-Term Incentive Awards includes awards granted under both the LTIP and One-Off Plan which vested in the year.

4 Includes a €1,189.5 thousand (approximately $1,319.6 thousand) termination payment received by Mr. Garoz after his leaving the Company on November 25, 2015.

The Chief Executive Officer did not receive any variable remuneration for services provided to the Company for the years ended December 31, 2015 and 2014. Mr. Seage occupied that office between January and May 2015, and again from late November 2015. Mr. Garoz held that position between May and November 2015, when Santiago Seage left the Company.

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Directors’, Chief Executive Officer’s and Employee’s Pay

The table below sets out the percentage change between 2021 and 2022 in salary and, bonus for executive and non-executive directors who received remuneration and the average per capita change for employees of the Company’s group as a whole, excluding the Chief Executive Officer.

	2022 (% Change from 2021 to 2022)						2021 (% Change from 2020 to 2021)						2020 (% Change from 2019 to 2020)
Name	Salary and fees (Cash and DRSU)			Bonus			Salary and fees (Cash and DRSU)⁽¹⁾			Bonus			Salary			Bonus
Non-executive directors
William Aziz²		-			-			-			-			-			-
Debora Del Favero²		-			-			-			-			-			-
Brenda Eprile²		-			-			-			-			-			-
Michael Forsayeth²		-			-			-			-			-			-
Edward C. Hall³		-			-			-			-			-			-
George Trisic⁴		-			-			-			-			-			-
Michael Woollcombe²		-			-			-			-			-			-
Andrea Brentan⁵		-			-			-			-			3	%		-
Robert Dove⁵		-			-			-			-			3	%		-
Francisco J. Martinez⁵		-			-			-			-			3	%		-
Jackson Robinson⁵		-			-			-			-			3	%		-
Daniel Villalba⁵		-			-			-			-			3	%		-
Executive director
Santiago Seage (CEO)		0	%⁷		-3	%⁷		4	%⁷		2	%⁷		2	%		2	%
Employees (excluding CEO)⁶		4	%		9	%		4	%		8	%		5	%		8	%

Notes:

None of the non-executive directors received any bonus, and/or taxable benefits in 2022, 2021 or 2020.

2 Mr. Aziz, Mrs. Del Favero, Mrs. Eprile, Mr. Forsayeth and Mr. Woollcombe joined the Board of Directors on May 5, 2020 as independent non-executive Directors.

3 Mr. Hall was appointed to the Board on August 2, 2022 as an independent non-executive Director.

4 Mr. Trisic, non-independent non-executive director, has received compensation since April 6, 2022. The Company determined and Mr. Trisic agreed that 100% of his fee shall be irrevocably substituted for the grant of DRSUs.

5 Mr. Villalba, Mr. Dove, Mr. Martinez and Mr. Robinson were directors until May 5, 2020, and were Chair of the Board of Directors, Chair of the Nominating and Corporate Governance Committee, Chair of the Audit Committee, and Chair of the Compensation Committee, respectively, until such date. Their percentage of salary change was calculated on a full-time equivalent basis for 2020, hence based on their total remuneration received in 2019 compared to their 2020 entitled compensation. Mr. Brentan was a director until May 5, 2020.

6 The salary and bonus percentage change for employees (excluding the CEO) has been calculated considering the same average number of employees and the same average exchange rate in both 2022 and 2021. This is the most appropriate methodology to reflect how much the salary and potential bonus changed on a year-to-year basis as it excludes the effect of employee hires and turnover.

7 The Compensation Committee approved (i) fixed remuneration of €690 thousand ($727 thousand converted to U.S. dollars at the December 31, 2022 average exchange rate, which is 1.05 $/€) for the Chief Executive Officer for 2022 (in 2021, the CEO’s fixed remuneration was also €690 thousand), and (ii) variable remuneration of €870 thousand ($931.3) thousand) for 2022 compared to €893 thousand ($1,056 thousand) for 2021, representing a 3% decrease in Euros on a year-to-year basis.

The Compensation Committee approved (i) fixed remuneration of €690 thousand ($817 thousand) for the Chief Executive Officer for 2021 compared to €663 thousand ($757 thousand) for 2020, representing a 4% increase in Euros on a year-to-year basis, and (ii) variable remuneration of €893 thousand ($1,056 thousand) for 2021 compared to €873 thousand ($996 thousand) for 2020, representing a 2% increase in Euros on a year-to-year basis.

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Pay Ratio Information

The average number of employees in the U.K. is below 250 employees. Following the U.K. pay ratio disclosure requirements, Atlantica is exempt from disclosing U.K. pay ratio-related information.

Relative Importance of Spend on Pay

The following table sets out the change in overall employee costs, directors’ compensation and dividends.

$ in Millions	2022		2021		Difference
Spend on Pay for All Employees		80.2		78.8		1.4
Total Remuneration of Directors		5.6		4.6		1.0
Total Remuneration of employees and directors		85.9		83.4		2.5
Dividends Paid		203.1		190.4		12.7

The Company has not made any share repurchases during 2022 or 2021.

The average number of employees in 2022 in Atlantica was 874 employees, compared to 655 employees in 2021. The $1.4 million increase in spend on pay and the increase in the average number of employees is mostly due to the internalization of the operation and maintenance activities at Kaxu and at part of our solar assets in Spain.

The increase in total remuneration of directors is mainly due to the vesting of the CEO’s stock units awarded under the LTIP 2019, the appointment of Mr. Hall to the Board in August 2022 and the fee received by Mr. Trisic since April 2022.

Termination Payments (Audited)

No termination payments were made to the Chief Executive Officer or any other director in 2022 nor 2021. The policy for termination payments is detailed under the section “Policy on payments for loss of office” of this report.

Statement of Implementation of Policy in 2022

The targets for bonuses are detailed under the section “Remuneration Policy” of this Directors’ Remuneration Report. The current policy was approved at our 2021 Annual General Meeting, held in May 2021.

For 2023, the bonus measures for the remuneration of the Chief Executive Officer, will focus on five areas: financial targets, capital allocation, ESG including health and safety, management of relationships with key shareholders and partners and, continued executive talent development.

This approach is intended to provide a balanced assessment on how the business has performed over the course of the year against stated objectives. Targets are aligned with the annual plan and strategic and operational priorities for the year.

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For 2023 the bonus objectives are:

	Percentage weight
CAFD (cash available for distribution) – Equal or higher than the CAFD budgeted in the 2023 budget	35%
Adjusted EBITDA– Equal or Higher than the Adjusted EBITDA budgeted in the 2023 budget	15%
Capital allocation management on a value accretive basis	20%
Achievement of ESG metrics including health and safety targets (Frequency with leave/ lost time index below 3.7 and General Frequnecy index below 9.5)	10%
Management of relationships with key shareholders and partners	10%
Continued executive talent development	10%

Remuneration Policy

The current policy was approved at our 2021 Annual General Meeting. Shareholders will be asked to approve amendments to the remuneration policy at our 2023 Annual General Meeting to be held in April 2023.

The changes to the policy consist of (1) extending to executive directors the vesting conditions of the LTIP currently applicable to the rest of executives, so that 33% of future awards granted under the LTIP will be subject to continuing employment and 67% of the award will be subject to continuing employment and achievement of a minimum 5% average annual TSR, (2) amending the performance measures applicable to the annual bonus, (3) approving a strategic review bonus and (4) updates to the change of control and delisting for future awards granted under the LTIP, and all past awards granted under the LTIP to executives participating in strategic review bonus, to reflect the assessment of performance conditions under such events.

Non-Executive Directors:

The Company’s policy is to compensate non-executive directors via cash or Deferred Restricted Share Units (“DRSUs”) for the time dedicated to promoting greater alignment of interests between directors and shareholders subject to a maximum total annual compensation for non-executive directors in aggregate of two million dollars. Once a year, the Compensation Committee reviews compensation practices for non-executive directors in similar companies and the skills and experience required and may propose an adjustment in the current compensation.

The DRSU plan provides a means for directors to accumulate a financial interest in the Company and to enhance Atlantica’s ability to attract and retain qualified individuals with the experience and ability to serve as directors. Pursuant to the DRSU Plan, the Company shall determine, and the directors shall agree, the percentage of their fees, starting on May 31, 2021, that shall be irrevocably substituted for the grant of Deferred Restricted Stock Units.

The number of DRSUs credited to a participant’s account is determined by dividing the amount of the annual compensation to be received in DRSUs by the market value of an ordinary share at the time of the grant. Upon a participant ceasing to be a member of the Board, for any reason whether voluntary or involuntary, the DRSUs will vest. The Company shall transfer to the director a number of shares equal to the number of vested DRSUs and a number of shares equal in value to any dividends which would have been paid or payable, on such number of ordinary shares equal to the vested DRSUs, from the grant date until the vesting date. The director shall not have any shareholders’ rights other than the dividend equivalent rights until the DRSUs vest and are settled by the issuance of shares.

None of the non-executive directors receive bonuses, long-term incentive awards, pension or other benefits in respect of their services to the Company.

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Executive Directors:

The policy for executive directors, only applicable to the Chief Executive Officer as the only executive director, is as follows:

Name of component	Description of component	How does this component support the company’s (or Group’s) short and long- term objectives?	What is the maximum that may be paid in respect of the component?	Framework used to assess performance
Salary/fees	Fixed remuneration payable monthly.	Helps to recruit and retain executive directors and forms the basis of a competitive remuneration package.	Maximum amount €800 thousand (approximately $850 thousand), may be increased by 5% per year. Salary levels for peers are considered.	Not applicable. No retention or clawback.
Benefits	Opportunity to join existing plans for employees but without any increase in remuneration.			Not applicable. No retention or clawback.
Annual Bonus	Annual bonus is paid following the end of the financial year for performance over the year. There are no retention or forfeiture provisions.	Helps to offer a competitive remuneration package and align it with the Company’s objectives.	200% of base salary.	25%-50% of CAFD. 10-15% of Adjusted EBITDA. 40%-50% of other operational or qualitative objectives. No retention. Clawback policy.
Strategic Review Bonus	One-time bonus related to the strategic review process and payable upon closing of a potential strategic transaction as such term is defined by the Board of Directors.	Helps retain executive directors who are relevant for the success of the strategic review process.	110% of 2023 target annual remuneration (including fixed salary + target annual bonus).	Closing of a strategic transaction as such term is defined by the Board of Directors.
Long Term Incentive Awards	Restricted Stock Units subject to certain vesting periods and in part to minimum TSR.	Align executive directors and shareholders interests.	70% of target annual remuneration (including fixed salary + target annual bonus).	Restricted Stock Units granted after the approval of the proposed amendments to the Policy in 2023 subject to - Continuing employment for 33% of the award and - Continuing employment and achievement of a minimum 5% average annual TSR for 67% of the award. If the TSR performance condition has not been met during the vesting period, the participant’s Restricted Stock Units subject to minimum annual TSR condition will lapse on the vesting date. Restricted Stock Units granted prior to the approval of the proposed amendments to the Policy in 2023 subject to - Continuing employment and achievement of a minimum 5% average annual TSR for 100% of the award. If the TSR performance condition has not been met during the vesting period, the participant’s Restricted Stock Units will lapse in full on the vesting date. Share units. Clawback policy.

CAFD, Adjusted EBITDA and TSR have been selected as key parameters to measure the Company’s performance due to their importance for our shareholders. These measures are considered standard indicators of financial performance in our sector.

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Clawback Policy

The Company has an incentive compensation recoupment, or clawback policy since 2021. The policy is aimed at allowing the Company to recover performance-based compensation for three years after short-term variable compensation and/or long-term compensation awards are granted. The clawback policy is applicable to all executives who participate in long term incentive arrangements.

The clawback policy is applicable in the event of the occurrence of either of the following triggering events: material financial restatement, including a restatement resulting from employee misconduct, or in the case of fraud, embezzlement or other serious misconduct that is materially detrimental to the Company. The Compensation Committee shall retain discretion regarding application of the policy. The policy is incremental to other remedies that are available to the Company.

If a triggering event occurs, unless otherwise determined by the Compensation Committee and/or if the Company is required to prepare a material restatement of its financial statements as a result of misconduct, and the Compensation Committee determines that the executive knowingly engaged in the misconduct or acted knowingly or with gross negligence in failing to prevent the misconduct, or the Compensation Committee concludes that the participant engaged in fraud, embezzlement or other similar activity (including acts of omission) that the Compensation Committee concludes was materially detrimental to the Company, the Company may require the participant (or the participant’s beneficiary) to reimburse the Company for, or forfeit, all or any portion of any short or long term variable compensation awards.

Long-Term Incentive Awards

The purpose of the LTIP is to attract and retain the best talent for positions of substantial responsibility in the Company, to encourage ownership in the Company by the executive team whose long-term service the Company considers essential to its continued progress and, thereby, encourage recipients to act in the shareholders’ interest and to promote the success of the Company.

The long-term incentive plan permits the granting of Restricted Stock Units (“Awards”) to the executive team of the Company (the “Executives”). The LTIP applies to approximately 13 Executives and the Chief Executive Officer.

In addition, the management has discretion to grant additional LTIPs to a certain group of employees and decide the value up to the 50% of the participant´s total annual compensation for the year closed before the date upon which an Award is granted.

The aggregate number of shares which may be reserved for issuance under the LTIP must not exceed 2% of the number of the shares outstanding at the time of the Awards are granted but is expected to be significantly less. In addition, total equity-based awards will be limited to 10% of the Company’s issued share capital over a 10-year rolling period, in order to assure shareholders that dilution will remain within a reasonable range. In any case, the Compensation Committee may decide that, instead of issuing or transferring shares, the Executives may be paid in cash.

The value of the Awards will be defined as 50% of the Executives’ total annual compensation for the year closed before the date upon which an Award is granted and, in the case of the Chief Executive Officer, would be 70% of the same previous year total annual compensation at the grant date. The award will be granted in Restricted Stock Units.

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Main terms of the LTIP after the approval of the proposed amendments to the Policy in 2023:

	Main terms of the LTIP for awards granted to all Executives after the approval of the proposed amendments to the Policy in 2023
Nature	Conditions shall be based on: - Continuing employment (or other service relationship) for 33% of the award and - Continuing employment and achievement of a minimum 5% average annual TSR for 67% of the award.
Exercisability and Vesting Period	33% of the shares will vest on the third anniversary of the grant date and 67% of the shares will vest on the third anniversary of the grant date but only if the annual TSR has been at least a 5% yearly average over such 3-year period. If the TSR has not met such threshold during the period, the participant’s relevant Restricted Stock Units for the 67% portion will lapse on the vesting date. The Company will decide at vesting if cash or shares are given as payment.
Ownership and Dividends	The participant will be entitled to receive, for each Restricted Stock Unit held, a payment equivalent to the amount of any dividend or distribution paid on one share between the grant date and the date on which the Restricted Stock Unit vests.

Main Terms of the LTIP before the approval of the proposed amendments to the policy in 2023:

	Main Terms of the LTIP before the approval of the proposed amendments to the policy in 2023 – Restricted Stock Units
	Executives who are not Directors	Executives who are Directors
Nature	Conditions shall be based on: - Continuing employment (or other service relationship) for 33% of the award and - Continuing employment and achievement of a minimum 5% average annual TSR for 67% of the award.	Conditions shall be based on continuing employment (or other service relationship) and achievement of a minimum 5% average annual TSR.
Exercisability and Vesting Period	33% of the shares will vest on the third anniversary of the grant date and 67% of the shares will vest on the third anniversary of the grant date but only if the annual TSR has been at least a 5% yearly average over such 3-year period. If the TSR has not met such threshold during the period, the participant’s relevant Restricted Stock Units for the 67% portion will lapse on the vesting date. The Company will decide at vesting if cash or shares are given as payment.	The shares will vest on the third anniversary of the grant date but only if the annual TSR has been at least a 5% yearly average over such 3-year period. If the TSR has not met such threshold during the period, the participant’s relevant Restricted Stock Units will lapse on the vesting date. The Company will decide at vesting if cash or shares are given as payment.
Ownership and Dividends	The participant will be entitled to receive, for each Restricted Stock Unit held, a payment equivalent to the amount of any dividend or distribution paid on one share between the grant date and the date on which the Restricted Stock Unit vests.	The participant will be entitled to receive, for each Restricted Stock Unit held, a payment equivalent to the amount of any dividend or distribution paid on one share between the grant date and the date on which the Restricted Stock Unit vests.

Effect on Termination of Employment

If a participant’s employment terminates by reason of involuntary termination (death, disability, redundancy, constructive dismissal or retirement dismissal rendered unfair), any portion of his/her Award shall thereafter continue to vest and become exercisable according to the terms of the LTIP but such participant shall no longer be entitled to be granted Awards under the LTIP.

If a participant incurs a termination of employment for cause or voluntary resignation or withdrawal, share options that have vested at the termination date will be exercisable within the period of 30 days from such termination date (after which they will lapse) but any unvested Awards (options or Restricted Stock Units) shall lapse.

Change of Control

If there is a change of control, all Awards granted under the LTIP after the approval of the amendments to the Policy in 2023 and all past awards granted under the LTIP to executives participating in the strategic review bonus shall vest based on the satisfaction of performance conditions as at the time of the change in control. All Awards granted to other employees prior to this shall vest in full on the date of the change in control. The participants must exercise their share options within a period of 30 days following receipt of a change of control notice from the Company without which, the options will lapse.

Delisting

If the Company is delisted, all outstanding Awards granted under the LTIP after the approval of the amendments to the Policy in 2023 and all past awards granted under the LTIP to executives participating in the strategic review bonus shall vest based on the satisfaction of performance conditions as at the time of delisting and will be settled in cash. All Awards granted to other employees prior to this shall vest in full on the date of delisting and will be settled in cash. The cash payment for Restricted Stock Units will be the last quoted share price of the Company and the cash payment for any outstanding share options will be the difference between the last quoted share price and the exercise price for the applicable option. Such cash payments will be made after applicable tax deductions within 30 days of the delisting.

One-Off Plan

The one-off plan grants Restricted Stock Units to certain members of the management and certain members of middle management¹, consisting of approximately 25 managers including the Chief Executive Officer. The value of the award was defined as 50% of 2019 target remuneration (including salary and variable bonus). The share units vested over 3 years, one third each year starting in 2020, provided that the manager is still an employee of the Company. This was approved by shareholders at the 2019 Annual General Meeting. In 2022, the last third of stock units vested and the one-off plan ended.

Strategic review bonus

On February 21, 2023, Atlantica announced the initiation of a process to explore and evaluate potential strategic alternatives that may be available to Atlantica to maximize shareholder value. In connection to this process, the purpose of the strategic review bonus is to retain talent for certain positions in the organization which are relevant for the success of this process. The strategic review bonus applies to ten executives and the CEO. The value of the bonus is defined as 75% of the target annual remuneration for 2023 (including fixed salary + target annual bonus for 2023) (110% in the case of the CEO) and will become payable upon closing of a potential strategic transaction, as such term is defined by the Board of Directors. In the case of the CEO, the strategic review bonus is subject to the approval of Shareholders at the Annual General Meeting to be held in April 2023.

¹ Middle Management consists of employees who: (i) manage a specific area, (ii) supervise a group of employees, or (iii) are considered key personnel within the organization.

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Pension

The executive director does not receive any pension contributions.

None of the non-executive directors receive bonuses, long-term incentive awards, pension or other benefits in respect of their services to the Company.

There are no provisions for the recovery of sums paid or the withholding of any sum, except for those potentially derived from the application of the clawback provision.

Chief Executive Officer Remuneration Policy

The Compensation Committee approved a fixed remuneration of €738 thousand ($790 thousand converted to U.S. dollars at the December 31, 2022 exchange rate, which is 1.07 $/€) for the Chief Executive Officer for 2023 a 7% increase versus 2022.

Total remuneration of the only executive director for a minimum, target and maximum performance in 2023 is presented in the chart below.

Assumptions made for each scenario are as follows:

Minimum:	Fixed remuneration only, assuming performance targets are not met for the annual bonus nor for the RSU and assuming no value for the options vesting in the year.
Target:	Fixed remuneration, plus half of target annual bonus and the LTIP vesting in 2023 at face value, using share price at grant date for units and option value at grant date for options, not including dividends, and assuming that the minimum annual TSR of at least a 5% yearly average over the 3-year period is met for the units.
Maximum:	Fixed remuneration, plus maximum annual bonus and LTIP vesting in 2023 at face value, using share price at grant date for units and option value at grant date for options not including dividends, and assuming that the minimum annual TSR of at least a 5% yearly average over the 3-year period is met for the units.

In addition, if we assume a 50% appreciation of the share price with respect to the grant date, maximum remuneration for 2022 including vesting long-term awards would be approximately $4,138 thousand. If we assume a 50% appreciation of the share price with respect to the December 31, 2022 share price, maximum remuneration for 2022 including vesting long-term awards would be approximately $3,959 thousand.

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This approach is intended to provide a balanced assessment of how the business has performed over the course of the year against stated objectives. Targets are aligned with the annual plan and strategic and operational priorities for the year.

The CEO’s 2023 bonus objectives are disclosed under the section Annual Report on Remuneration.

Approach to Recruitment

The remuneration policy reflects the composition of the remuneration package for the appointment of new executive and non-executive directors. We expect to offer a competitive fixed remuneration, an annual bonus (for executive directors) not exceeding 200% of the fixed remuneration and participation in the LTIP. Whenever needed, the Company can contract an external advisor to hire key personnel.

Policy on Payments for Loss of Office

The Company has an agreement in-place with certain executives with strategic and key responsibilities in the Company (“Key Managers”), including the Chief Executive Officer, to protect the Company’s know-how and to ensure continuity in terms of attainment of business objectives, the policy approved by our shareholders at the 2019 Annual General Meeting, introduced certain termination payments to key executives, including the Chief Executive Officer.

No payments would be made to Key Managers for dismissal for breach of contract, breach of fiduciary duties or gross misconduct, determined (in the event of a dispute) by a court of competent jurisdiction to reach a final determination.

The Company agreed with Key Managers, including the CEO, the Company would make payments for loss of office or employment in addition to the severance payment under the prevailing labour and legal conditions in their contracts or countries where they are employed if they should leave (by loss of office or employment) the Company within 2 years of a change in control. The payment would represent six months of remuneration and will be adjusted to ensure that total payment including severance payment required under prevailing laws represent at least 12 months of remuneration (including salary, benefits, long term incentive plans and variable pay), but never more than 24 months of remuneration, unless required by local law.

A change of control means that a third party or coordinated parties (i) acquire directly or indirectly by any means a number of shares in the Company which (together with the shares that such party may already hold in the Company) amount to more than 50% of the share capital of the Company; or (ii) appoint or have the right to appoint at least half of the members of the Board of Directors of the Company.

Consideration of Employee Conditions Elsewhere

Our policy is to use external consultants to estimate market conditions for specific roles of a similar level in terms of fixed and variable remuneration and, as a general rule, based on a performance appraisal, set target remuneration within that market practice.

The annual variable remuneration payment is calculated with reference to the achievement of a number of specific measurable targets defined in the previous year. Each specific target is measured on a performance scale of 0%-120%.

For the rest of its employees, the Company establishes predefined remuneration ranges for different positions and reviews each individual remuneration depending on performance appraisal within two ranges without employee consultation.

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The remuneration of all employees, including the members of the management team, may be adjusted periodically in the framework of the annual salary review process which is carried out for all employees.

Overall, we expect that, following the implementation of our policies, remunerations of the Company’s employees will increase in line with the market with the exception of individuals that have recently been promoted or whose remuneration is above market conditions.

Statement of Consideration of Shareholder Views

There are no comments in respect of directors’ remuneration expressed to the Company by shareholders. The last Annual General Meeting was held in May 2022.

Summary of Policy for Non-Executive Directors

Name of component	How does the component support the company’s objective?	Operation	Maximum
Fees and/or Deferred Restricted Share Units (DRSU)	Attract and retain high-performing non-executive directors. Align interests of non-executive directors with interests of shareholders.	Reviewed annually by the Compensation Committee and Board. The chair of the Board and the chair of each committee (except the Related Parties Committee) receive additional fees. DRSUs: the Company and the Directors shall agree the percentage of their fees that shall be paid in DRSUs. The number of DRSUs credited is determined using the market value of an ordinary share at the time of the grant. Upon a participant ceasing to be a member of the Board the DRSUs will vest. The Company shall transfer to the director a number of shares equal to the number of vested DRSUs and a number of shares equal in value to any dividends which would have been paid or payable, or such number of ordinary shares equal to the vested DRSUs, from the grant date until the vesting date. Minimum share ownership: within a period of five years, directors receiving remuneration from the Company should have a minimum share ownership in the Company of 3 times their annual compensation.	Annual total compensation for non-executive directors, in any case, the fees or DRSUs will not exceed two million dollars.
Benefits	Reasonable travel expenses to the Company’s registered office or venues for meetings.	Customary control procedures.	Real costs of travel with a maximum of one million dollars for all directors.

Non-independent, non-executive directors are entitled to the same compensation as independent non-executive directors.

In 2021, the Board of Directors adopted minimum share ownership guidelines for directors receiving remuneration from the Company (see the Directors’ Shareholdings section). Within a period of five years, non-executive directors receiving remuneration from the Company should have a minimum share ownership in the Company of 3 times their annual compensation.

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In addition, the directors may elect to receive compensation via a mix of cash and DRSUs. The DRSUs shall vest upon the date on which the director ceases to be a member of the Board due to a voluntary or involuntary separation from service. The director shall not have any rights of a shareholder unless and until the DRSUs vest and are settled by the issuance of shares (see further detail in the Current remuneration policy section above).

Directors and Key Management Compensation for 2022

$ thousand	2022		2021
Short-term employee benefits		3,917.2		5,098.4
LTIP Awards		4,639.8		2,140.2
One-off Awards		1,212.3		1,231.5
Post-employment benefits		-		-
Other long-term benefits		-		-
Termination benefits		-		-
Share-based payment		-		-
Total		9,769.3		8,470.1

The table above includes compensation for the Directors, CEO, CFO and 5 key executives. Short-term employee benefits to management are paid in euros and have been converted to US$ using the average foreign exchange rate for each period.

“LTIP Awards” and “One-off Awards” include share options and share units, respectively, vested in 2021. The vested options and share units have been included in the remuneration table above valued using the share price at the vesting date.

Directors’ Shareholding

The following table includes information with respect to beneficial ownership of our ordinary shares as of December 31, 2022 by each of our current directors and executive officers, as well as their connected persons, in relation to any compensation paid and/or benefits granted by the Company.

Directors who do not receive remuneration from the Company are not required to comply with minimum share ownership requirements as they do not receive remuneration from the Company.

Name¹	Number of Shares		Number of Deferred Restricted Share Units²		Number of Share Units³ subject to performance measures		Investment Value ($000’s)⁴		Minimum Share Ownership Requirement	Compliance With Policy⁵	Number of Share Options Vested Unexercised⁶		Share Options Not Vested⁷
William Aziz		2,500		-		-		65	3 times annual compensation	On track		-		-
Debora Del Favero		-		2,608		-		68	3 times annual compensation	On track		-		-
Brenda Eprile		13,000		-		-		337	3 times annual compensation	On track		-		-
Michael Forsayeth		2,500		4,075		-		170	3 times annual compensation	On track		-		-
Edward Hall		1,500		-		-		39	3 times annual compensation	On track		-		-
Santiago Seage		117,491		-		105,868		5,785	6 times fixed compensation	✔		24,948		84,389
George Trisic		1,000		3,962		-		129	3 times annual compensation	On track		-		-
Michael Woollcombe		5,000		12,225		-		446	3 times annual compensation	On track		-		-

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1	Mr. Banskota, non-independent, non-executive director, does not receive remuneration from the Company. Thus, he is not required to comply with minimum share ownership requirements.

The number of DRSUs includes accumulated cash dividend equivalent rights, corresponding to the amount of dividends paid for one share in the period between the DRSU effective date and December 31, 2022 and 2021, respectively, multiplied by the number of DRSU on that date and divided by the share price of $25.90 as of December 31, 2022. The director shall not have any rights of a shareholder unless and until the DRSUs vest and are settled by the issuance of shares and dividend equivalent rights will not be payable until the DRSUs vest.

3	Non-vested Share Units as of December 31, 2022. LTIP share units subject to 5% minimum Total Shareholder Return.

4	Assuming a share price of $25.90 as of December 31, 2022.

5	Mr. Aziz, Ms. Del Favero, Ms. Eprile, Mr. Forsayeth, Mr. Seage and Mr. Woollcombe have a 5-year window starting in May 2021 to comply with this policy. Mr. Hall and Mr. Trisic have a 5-year window starting in August and April 2022, respectively.

6	2021 share options (24,948) were underwater as of December 31, 2022.

7	Share options awarded in 2020 and 2021 under the LTIP (84,389). These share options have not vested as of December 31, 2022.

C.	Board Practices

Our Board of Directors consists of nine directors, six of whom are independent. Under our articles of association, our board may consist of 7 to 13 members. All the Board Committees are formed exclusively by independent directors. Additionally, our articles of association established an office term of up to 3 years or less, as decided by the Board. In December 2020, the Board decided to establish a 1-year term for all the directors. After this period, our board members are eligible for reelection by the Annual General Meeting.

Directors will not vote on matters that represent or could represent a conflict of interests. Directors affiliated with Algonquin do not vote on matters that represent or could represent a conflict of interests, including the evaluation of assets offered to us under the ROFO Agreements. See “Item 7.B—Related Party Transactions—Procedures for Review, Approval and Ratification of Related Party Transactions; Conflicts of Interest.”

Our Board of Directors is responsible for, among other things, overseeing the conduct of our business; reviewing and, where appropriate, approving, our long-term strategic, financial and organizational goals and plans; and reviewing the performance of our Chief Executive Officer and other members of senior management.

Under English law, the Board of Directors of an English company is responsible for the management, administration and representation of all matters concerning the relevant business, subject to the company’s corporate constitution. Under English law and our constitution, the Board of Directors may delegate its powers to an executive committee or other delegated committee or to one or more persons.

None of our non-executive directors have service contracts with us or any of our businesses providing for benefits upon termination of employment.

Audit Committee

Our Audit Committee is responsible for monitoring and informing the Board of Directors on the work of external and internal auditors, control systems, key processes and procedures, security and risks. The committee comprises the following three members, each of whom is an independent director:

Name		Position
William Aziz		Member
Brenda Eprile		Chair
Michael Forsayeth		Member

The committee will meet as many times as required and a minimum of two times per year.

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Our Audit Committee is directly responsible for overseeing the work of the external auditor engaged for the purpose of preparing or issuing an auditor’s report or performing other audit, review or attest services, including the resolution of disagreements between the external auditor and management. The external auditor will report directly to our Audit Committee. Our Audit Committee is also responsible for reviewing and approving our hiring policies regarding former employees of the external auditor. In addition, the Audit Committee preapproves all non-audit services undertaken by the external auditor.

Our Audit Committee is responsible for reviewing the adequacy and security of procedures for the confidential, anonymous submission by our employees or contractors regarding any possible wrongdoing in financial reporting or other matters. Our Audit Committee is accountable to our Board of Directors and will provide a report to our Board of Directors after each regularly scheduled Audit Committee meeting outlining the results of the Audit Committee’s activities and proceedings.

Nominating and Corporate Governance Committee

Our Nominating and Corporate Governance Committee comprises the following two members, each of whom is an independent director.

Name		Position
Debora Del Favero		Chair
Michael Forsayeth		Member

The duties and functions of our Nominating and Corporate Governance Committee include, among others, regularly reviewing the structure, size and composition (including the skills, knowledge, experience and diversity) of the Board of Directors and make recommendations to the Board of Directors with regard to any changes, and keep under review corporate governance rules and developments (including ethics-related matters) that might affect us, with the aim of ensuring that our corporate governance policies and practices continue to be in line with best practices. Our Nominating and Corporate Governance Committee meets at least twice a year at appropriate intervals in the financial reporting and audit cycle and otherwise as required. The committee informs and makes proposals to the Board of Directors.

Compensation Committee

Our Compensation Committee comprises the following two members, each of whom is an independent director.

Name		Position
William Aziz		Chair
Debora Del Favero		Member
Edward C. Hall		Member

The duties and functions of our Compensation Committee include, among others, analyze, discuss and make recommendations to the Board of Directors regarding the setting of the remuneration policy for all directors as well as senior management, including pension rights and any compensation. The committee meets at least twice a year at appropriate intervals in the financial reporting and audit cycle and otherwise as required. The committee informs and makes proposals to the Board of Directors. Mr. Hall was appointed as a member of the Compensation Committee on February 3, 2023.

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Related Party Transactions Committee

Our Related Party Transactions Committee comprises the following three members, each of whom is an independent director:

Name		Position
William Aziz		Member
Brenda Eprile		Member
Michael Forsayeth		Chair

The duties and functions of our Related Party Transactions Committee include, among others, evaluating on an ongoing basis existing relationships between and among businesses and counterparties to ensure that all related parties are identified, monitoring related-party transactions, identifying changes in relationships with counterparties and overseeing the implementation of a system for identifying, monitoring and reporting related-party transactions, including a periodic review of such transactions, applicable policies and procedures.

The Related Party Transactions Committee shall meet at such times as required and where it considers appropriate. The Related Party Transactions Committee will report to the Board of Directors on the decisions and recommendations made by the committee, including, but not limited to, any conflict of interest and any procedure to manage such conflict of interest.

Employees

The following table shows the number of employees as of December 31, 2022, 2021 and 2020, on a consolidated basis:

	Year ended December 31,
Geography	2022		2021		2020
North America		312		308		243
South America		93		68		51
EMEA		443		166		55
Corporate		130		115		107
Total		978		658		456

The increase in the number of employees was mainly due to the internalization of the operation and maintenance services at Kaxu and in some of our solar assets in Spain in 2022.

E.	Share Ownership

None of our directors or members of our senior management is the owner of more than one percent of our ordinary shares, and no director or member of our senior management has voting rights with respect to our ordinary shares that are different from any other holder of our ordinary shares.

On February 26, 2021, the Board of Directors adopted minimum share ownership guidelines for directors receiving remuneration from the Company and for the executives participating in the LTIP to further align, executive and shareholder interests. Directors and executives subject to these guidelines shall achieve, within a period of five years, a minimum share ownership in the Company. In calculating the value of shares owned, shares that are issuable pursuant to the LTIP and Deferred Restricted Shares Units Plan (DRSU) vested and non-vested, are counted. Directors receiving remuneration and executives participating in the LTIP shall achieve a minimum share ownership in the Company equal in value to:

-	Non-executive directors receiving remuneration from the Company: 3 times their annual compensation;

-	Chief Executive Officer: 6 times his fixed compensation;

-	Chief Financial Officer: 3 times his fixed compensation; and

-	Other executives: 2 times their fixed compensation.

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The directors receiving remuneration from the Company and executives have a 2-year window to amend non-compliances with the minimum share ownership requirements derived from a stock price decrease.

The directors not receiving remuneration from the Company are not required to comply with minimum share ownership requirements.

F.	Disclosure of a Registrant’s Action to Recover Erroneously Awarded Compensation

Not applicable.

ITEM 7.

MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

A.	Major shareholders

The following table sets forth information with respect to beneficial ownership of our ordinary shares as of the date of this annual report by:

•	each of our directors and executive officers;

•	our directors and executive officers as a group; and

•	each person known to us to beneficially own 5% and more of our ordinary shares.

Beneficial ownership is determined in accordance with the rules and regulations of the SEC. It includes the sole or shared power to direct the voting or the disposition of the securities or to receive the economic benefit of the ownership of the securities. In computing the number of shares beneficially owned by a person and the percentage ownership of that person, we have included shares that the person has the right to acquire within 60 days of this annual report, including through the exercise of any option or other right and the vesting of restricted shares. These shares, however, are not included in the computation of the percentage ownership of any other person. The calculations of percentage ownership in the table below is based on 116,153,273 ordinary shares outstanding as of the date of this annual report.

Name	Ordinary Shares Beneficially Owned		Deferred Restricted Share Units ⁽²⁾		Shares Units ⁽³⁾		Percentage
Directors and Officers
William Aziz		2,500		-		-		-
Debora Del Favero		-		2,608		-		-
Brenda Eprile		13,000		-		-		-
Michael Forsayeth		2,500		4,075		-		-
Edward C. Hall		1,500		-		-		-
Santiago Seage		117,491		-		105,868		-
George Trisic		1,000		3,962		-		-
Michael Woollcombe		5,000		12,225		-		-

5% Beneficial Owner
Algonquin (AY Holdco) B.V. ⁽¹⁾		48,962,925		-		-		42.2	%

(1)

This information is based on the Schedule 13D filed on May 10, 2022 by Algonquin Power & Utilities Corp., a corporation incorporated under the laws of Canada, Algonquin (AY Holdco) B.V., a corporation incorporated under the laws of the Netherlands, and Liberty (AY Holdings) B.V., a corporation incorporated under the laws of the Netherlands and our outstanding shares as of December 31, 2022.

(2)

(3)	Non-vested Share Units as of December 31, 2022. LTIP share units subject to 5% minimum Total Shareholder Return.

We have one class of ordinary shares, and each holder of our ordinary shares is entitled to one vote per share.

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As of the date of this annual report, 116,153,273 of our ordinary shares were outstanding. Because some of our ordinary shares are held by brokers and other nominees, the number of shares held by and the number of beneficial holders with addresses in the United States is not fully ascertainable. As of the date of this annual report, to the best of our knowledge, one of our shareholders of record was located in the United States and held in the aggregate 108,649,817 ordinary shares representing approximately 93.5% of our outstanding shares. However, the United States shareholders of record include Cede & Co., which, as nominee for The Depositary Trust Company, is the record holder of all such ordinary shares. Accordingly, we believe that the shares held by Cede & Co. include ordinary shares beneficially owned by both United States and non-United States beneficial owners. As a result, these numbers may not accurately represent the number of beneficial owners in the United States.

We are not aware of any arrangement that may, at a subsequent date, result in a change of control of our company.

B.	Related Party Transactions

Procedures for Review, Approval and Ratification of Related Party Transactions; Conflicts of Interest

Our policy for the review, approval and ratification of related party transactions was updated and approved by the Board of Directors on February 28, 2018. Our policy requires that all transactions with related parties are subject to approval or ratification in accordance with the procedures set forth in the policy by the non-conflicted directors at the Board of Directors. With respect of any transaction with Liberty GES and Algonquin or its affiliates (other than our subsidiaries), including transactions pursuant to the ROFO Agreements, the Related Party Transactions Committee is required to review all of the relevant facts and circumstances and report its conclusions to the board. A majority of non-conflicted directors are required to either approve or disapprove of the entry into the transaction. In determining whether to approve or ratify a transaction with Liberty GES or Algonquin, the directors unaffiliated with such entity are to consider, among other factors they may deem appropriate, whether the transaction is on terms no less favorable than terms generally available to an unaffiliated third-party under the same or similar circumstances and the extent of Liberty GES’ or Algonquin’s interest in the transaction. Our Related Party Transactions Policy is available on our website at www.atlantica.com.

Arrangements for Change in Control of the Company

On May 9, 2019, Algonquin, Liberty GES and the Company entered into the Enhanced Cooperation Agreement, and on May 17, 2019, Algonquin and the Company entered into a subscription agreement pursuant to which, among other things, the Company agreed to permit Algonquin to acquire, and Algonquin agreed to purchase, 1,384,402 ordinary shares, which were fully subscribed and paid by Algonquin. After giving effect to such purchase, Algonquin was the beneficial owner of 42,942,065 ordinary shares, representing approximately 42.3% of the issued and outstanding ordinary shares. Additionally, Algonquin purchased 4,020,860 ordinary shares of the Company in a private placement, which closed on January 7, 2021, which represents the pro-rata number of shares required to maintain their previous equity ownership in the Company. On August 3, 2021, we established an “at-the-market program” (the “ATM”) and on the same date we entered into the ATM Plan Letter Agreement with Algonquin, pursuant to which we will offer Algonquin the right but not the obligation, on a quarterly basis, to purchase a number of ordinary shares to maintain its percentage interest in Atlantica (see —ATM Plan Letter Agreement below). As of the date of this annual report Algonquin is the beneficial owner of 48,962,925 ordinary shares, representing 42.2% of the issued and outstanding ordinary shares.

Agreements with Current Shareholders

We entered into the ROFO Agreements with Liberty GES and Algonquin, respectively. In addition, Algonquin, Liberty GES and the Company entered into the Enhanced Cooperation Agreement, and Algonquin and the Company entered into a subscription agreement.

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ROFO Agreements

Pursuant to the ROFO Agreements, Algonquin and Liberty GES granted us a right of first offer on any proposed sale, transfer or other disposition of the assets described thereunder, subject to the conditions and procedures set out in such agreement. Specifically, the Algonquin ROFO Agreements is applicable with respect to any assets located outside of the United States or Canada.

If either Algonquin or Liberty GES transfers interests in any asset under the ROFO Agreements, then either Algonquin or Liberty GES must require such transferee to acquire any asset under the ROFO Agreements subject to our right of first offer except under certain circumstances. The ROFO Agreements have each an initial term of ten years.

Under the ROFO Agreement, Algonquin and Liberty GES are not obligated to sell any asset and, therefore, we do not know when, if ever, these assets will be offered to us. In addition, in some of the assets under the ROFO Agreements, Algonquin and Liberty GES may have equity partners with rights regulating divestitures by either of them of their stake such as drag-along and tag-along clauses, and rights of first refusal, among others. We will consider and take into account all the clauses thereunder when deciding whether to present an offer.

Any material transaction between Algonquin or Liberty GES and us (including the proposed acquisition of any asset under the ROFO Agreements) will be subject to our related party transactions policy, which will require prior approval of such transaction by the related party transactions committee, which is composed of independent directors. See “—Procedures for Review, Approval and Ratification of Related Party Transactions; Conflicts of Interest,” “Item 3.D—Risk Factors—V. Risks Related to Our Growth Strategy— Our ability to grow organically is limited to some assets which have inflation indexation mechanisms in their revenues, to our transmission lines and to some renewable assets. We may not be able to deliver organic growth.”

Furthermore, with respect to the Liberty GES ROFO Agreement, Liberty GES may enter into agreements with other companies with the objective of jointly developing the construction of new projects consisting of concessional assets which are included in Liberty GES current or future portfolio. Pursuant to the terms of such agreement, Liberty GES may sell equity in these assets to third parties without being subject to the Liberty GES ROFO Agreement under certain circumstances in order to enhance the likelihood of success or financial prospects of such asset.

In December 2020 we reached an agreement with Algonquin to acquire La Sierpe, a 20 MW solar PV plant in Colombia for a total equity investment of approximately $23.5 million. The acquisition closed in November 2021.

Additionally, in July 2021 we acquired from Algonquin two solar projects which were under development at that time, La Tolua and Tierra Linda, where we recently ended construction.

Given the fact that in the last five years we have only closed these acquisitions under the ROFO Agreements and given that to the best of our knowledge Algonquin’s pipeline outside Canada and the U.S. is limited, we do not currently expect these ROFO Agreements to be a material source of growth for us going forward.

ATM Plan Letter Agreement

On August 3, 2021, we established an ATM program and entered into the Distribution Agreement with J.P. Morgan Securities LLC, as sales agent. On that same date, we entered into an agreement with Algonquin, pursuant to which we will offer Algonquin the right but not the obligation, on a quarterly basis, to purchase a number of ordinary shares to maintain its percentage interest in Atlantica at the average price of the shares sold under the Distribution Agreement in the previous quarter, adjusted for any dividends, distributions, reorganizations or business combinations or similar transactions as if the portion of such shares equivalent to the portion of the shares issued under the ATM prior to the record date had also been issued to Algonquin prior to the record date with respect to such event. In the event that Algonquin exercises such right, subject to certain conditions further described in the ATM Plan Letter Agreement, including that a material adverse effect in relation to the Company shall not have occurred, we and Algonquin will enter into a subscription agreement with a settlement date no earlier than three business days and no later than one hundred and eighty days from Algonquin’s notice that it is subscribing for the ordinary shares.

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Algonquin Shareholders Agreement

We entered into a Shareholders Agreement with Algonquin and Liberty GES. The Shareholders Agreement, among other things, sets forth certain corporate governance matters and rights and restrictions with respect to our ordinary shares, the main terms of which are summarized below.

Director Appointment Rights

The Shareholders Agreement provides that, if and to the extent provided in our articles, Liberty GES or Algonquin will have the right to appoint to our board the maximum number of directors that corresponds to Liberty GES’ and Algonquin’s holding of voting rights, as per articles of association but in any event no more than (i) such number of directors as corresponds to 41.5% of our voting securities; and (ii) 50% of our board less one, and if the resulting number is not a whole number, it shall be rounded up to the next whole number.

Furthermore, the Shareholders Agreement has been amended to allow Algonquin to increase its shareholding in Atlantica up to a 48.5% without any change in corporate governance. Algonquin’s voting rights and rights to appoint directors are still limited to a 41.5% and the additional shares (the difference between the actual shares beneficially owned by Algonquin and shares representing a 41.5% voting rights) will vote replicating non-Algonquin’s shareholder’s vote.

One of the directors appointed by Liberty GES and Algonquin holding in the aggregate at least 25.0% of our voting securities will have the right to be elected to any committee of our directors (except for the Audit Committee and Related Party Transactions Committee, and in those in which they are conflicted, or it is against the applicable law). In addition, so long as Liberty GES and Algonquin have the right to appoint a director and no such director is then serving on our Board of Directors, Liberty GES and Algonquin may appoint an observer to our Board of Directors and any committee thereof (except for the Audit Committee and Related Party Transactions Committee, and in those in which they are conflicted, or it is against the applicable law).

Dividend Distributions

We agreed that each of Liberty GES and Algonquin may terminate the Shareholders Agreement with respect to itself and its affiliates if, among others, our Board of Directors confirms a dividend payment objective that is lower than 80% of the cash available for distribution or our Board of Directors does not confirm any dividend payment objective at least once during any period of more than 14 consecutive months.

As of December 31, 2022, our dividend payout objective was 80%. This objective can be modified by our Board of Directors in the future.

Pre-emption right

Liberty GES and Algonquin may subscribe in cash for (i) up to 100% of our ordinary shares if the purpose of the issuance is to fund our acquisition of assets under the ROFO Agreements; and (ii) up to 66% of our ordinary shares if the purpose of the issuance is to fund our acquisition of assets under the Liberty GES ROFO Agreement. If we issue ordinary shares for any other purpose, Liberty GES and Algonquin may subscribe in cash for ordinary shares in the amount pro rata to such Liberty GES’ and Algonquin’s aggregate holding of voting rights.

In addition, if Liberty GES and Algonquin elect to subscribe for at least 50% of an offering of our ordinary shares that will be listed, the price per ordinary share for all persons that participate in such offering will be equal to 97% of the USD volume-weighted average closing price per ordinary share on NASDAQ (or other applicable stock exchange) over the 20 trading days immediately preceding the date of Liberty GES’ and Algonquin’s receipt of notice of such proposed offering from us.

Standstill

Algonquin will not acquire any of our voting securities which may result in Liberty GES and Algonquin holding in the aggregate more than 48.5% of the total voting rights or otherwise acquire control over us.

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Also, Liberty GES and Algonquin will not be in breach of the standstill restriction if the shareholding of Liberty GES and Algonquin has increased in connection with our action to reduce the number of our outstanding shares.

Termination

The Shareholders Agreement will terminate if, among others, Liberty GES and Algonquin and/or their affiliates cease to hold in the aggregate at least 10% of the total voting rights attached to our voting securities.

As described under “—Dividend Distributions” above, each of Liberty GES and Algonquin may terminate the Shareholders Agreement with respect to itself and its affiliates if, among others, our Board of Directors confirms a dividend payment objective that is lower than 80% of the cash available for distribution.

AYES Shareholder Agreement

On May 24, 2019, Atlantica and Algonquin formed AYES Canada, a vehicle to channel co-investment opportunities in which Atlantica holds the majority of voting rights. AYES Canada’s first investment was in Amherst Island, a 75 MW wind plant in Canada owned by the project company Windlectric, Inc. (“Windlectric”). Atlantica invested $4.9 million and Algonquin invested $92.3 million, both through AYES Canada, which in turn invested those funds in Amherst Island Partnership, the holding company of Windlectric. Since Atlantica has control over AYES Canada under IFRS 10 “Consolidated Financial Statements”, its consolidated financial statements show a total investment in the Amherst Island project of $97.2 million, accounted for as “Investments carried under the equity method” (Note 7 of the 2020 Consolidated Financial Statements) and Algonquin’s portion of that investment of $92.3 million as “Non-controlling interest”. In addition, and under certain circumstances considered remote by both companies, Atlantica and Algonquin have options to convert shares of AYES Canada currently owned by Algonquin into Atlantica ordinary shares in exchange for a higher stake in the plant, subject to the provisions of the standstill and enhanced collaboration agreements with Algonquin.

Code of Conduct

We have adopted a code of conduct applicable to all directors, officers and employees of Atlantica and our subsidiaries. The Code of Conduct is available on our website at www.atlantica.com, is communicated to all employees and is reviewed at least annually. All employees acknowledge and sign the Code of Conduct annually.

U.	Interests of Experts and Counsel

Not applicable.

ITEM 8.

FINANCIAL INFORMATION

U.	Consolidated Statements and Other Financial Information.

We have included the Annual Consolidated Financial Statements as part of this annual report. See “Item 18—Financial Statements.”

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Dividend Policy

Our Cash Dividend Policy

We expect to pay a quarterly dividend on or about the 7^5th day following the expiration of the first, second and third fiscal quarters to our shareholders of record on or about the 6^0th day following the last day of such fiscal quarters. A quarterly dividend corresponding to the fourth quarter is usually declared in the first quarter of the following year. We expect to pay this dividend on or about the 8²ⁿd day following the expiration of the corresponding fourth fiscal quarter to our shareholders of record in general on or about the 7²ⁿd day following the last day of such fiscal quarter. However, there might be exceptions to these dates. Additionally, our Board of Directors may change our dividend policy at any point in time or modify the dividend for specific quarters following prevailing conditions.

The table below included our historical quarterly dividends since the beginning of 2020:

Declared	Record	Payable	Amount ($) per share
February 28, 2023	March 14, 2023	March 25, 2023	0.445
November 8, 2022	November 30, 2022	December 15, 2022	0.445
August 2, 2022	August 31, 2022	September 15, 2022	0.445
May 5, 2022	May 31, 2022	June 15, 2022	0.44
February 25, 2022	March 14, 2022	March 25, 2022	0.44
November 9, 2021	November 30, 2021	December 15, 2021	0.435
July 30, 2021	August 31, 2021	September 15, 2021	0.43
May 4, 2021	May 31, 2021	June 15, 2021	0.43
February 26, 2021	March 12, 2021	March 22, 2021	0.42
November 4, 2020	November 30, 2020	December 15, 2020	0.42
July 31, 2020	August 31, 2020	September 15, 2020	0.42
May 6, 2020	June 1, 2020	June 15, 2020	0.41
February 26, 2020	March 12, 2020	March 23, 2020	0.41

We declared our first quarterly dividend in November 2014 and paid it on December 15, 2014. Recently, on February 28, 2023, our Board of Directors approved a dividend of $0.445 per share corresponding to the fourth quarter of 2022, which is expected to be paid on March 25, 2023.

We intend to distribute a significant portion of our cash available for distribution as dividend, after considering the cash available for distribution that we expect our assets will be able to generate, less reserves for the prudent conduct of our business, on an annual basis. We intend to distribute a quarterly dividend to shareholders. We intend to grow our business via organic growth through the optimization of the existing portfolio and through investments, development and construction of new assets and acquisitions. We believe this will facilitate the growth of our cash available for distribution and enable us to increase our dividend per share over time. However, the determination of the amount of cash dividends to be paid to holders of our shares will be made by our Board of Directors and will depend upon our financial condition, results of operations, cash flow, long-term prospects and any other matters that our Board of Directors deem relevant. Our Board of Directors may, by resolution, amend the cash dividend policy at any time.

Our cash available for distribution is likely to fluctuate from quarter to quarter, in some cases significantly, as a result of the seasonality of our assets, the terms of our financing arrangements and maintenance and outage schedules, among other factors. Accordingly, during quarters in which our assets generate cash available for distribution in excess of the amount necessary for us to pay our stated quarterly dividend, we may reserve a portion of the excess to fund cash distributions in future quarters. In quarters in which we do not generate sufficient cash available for distribution to fund our stated quarterly cash dividend, if our Board of Directors so determines, we may use retained cash flow from other quarters, as well as other sources of cash, to pay dividends to our shareholders.

Risks Regarding Our Cash Dividend Policy

There is no guarantee that we will pay quarterly cash dividends to our shareholders. We do not have a legal obligation to pay any dividend. While we currently intend to grow our business and increase our dividend per share over time, our cash dividend policy is subject to all the risks inherent in our business and may be changed at any time as a result of certain restrictions and uncertainties, including the following:

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•

The amount of our quarterly cash available for distribution could be impacted by restrictions on cash distributions contained in our project-level financing arrangements, which require that our project-level subsidiaries comply with certain financial tests and covenants in order to make such cash distributions. Generally, these restrictions limit the frequency of permitted cash distributions to semi-annual or annual payments, and prohibit distributions unless specified debt service coverage ratios, historical and/or projected, are met. See the sub-sections entitled “Item 4.B—Business Overview—Our Operations—Project Level Financing” under the individual project descriptions. When forecasting cash available for distribution and dividend payments we have aimed to take these restrictions into consideration, but we cannot guarantee future dividends. In addition, restrictions or delays on cash distributions could also happen if our project finance arrangements are under an event of default.

•

Additionally, indebtedness we have incurred under the Green Senior Notes, the Note Issuance Facility 2020, the 2020 Green Private Placement and the Revolving Credit Facility contain, among other covenants, certain financial incurrence and maintenance covenants, as applicable. See “Item 5.B— Operating and Financial Review and Prospects—Liquidity and Capital Resources—Corporate debt agreements.”

•

We and our Board of Directors have the authority to establish cash reserves for the prudent conduct of our business and for future cash dividends to our shareholders, and the establishment of or increase in those reserves could result in a reduction in cash dividends from levels we currently anticipate pursuant to our stated cash dividend policy. These reserves may account for the fact that our project-level cash flows may vary from year to year based on, among other things, changes in the operating performance of our assets, operational costs, capital expenditures required in the assets, collections from our off-takers, electricity market prices, compliance with the terms of project debt including debt repayment schedules and cash reserve accounts requirements, compliance with the terms of corporate debt, compliance with all the applicable laws and regulations and working capital requirements. Our Board of Directors may increase reserves to account for the seasonality that has historically existed in our assets’ cash flows and the variances in the pattern and frequency of distributions to us from our assets during the year.

•

We may lack sufficient cash to pay dividends to our shareholders due to cash flow shortfalls attributable to a number of operational, commercial or other factors, including low availability, low production, low electricity prices in our assets with exposure to merchant revenues, unexpected operating interruptions, legal liabilities, costs associated with governmental regulation, changes in governmental subsidies, delays in collections from our off-takers, changes in regulation, as well as increases in our operating and/or general and administrative expenses, maintenance capital expenditures, principal and interest payments on our and our subsidiaries’ outstanding debt, income tax expenses, inability to upstream cash from subsidiaries or to do it in an efficient manner, working capital requirements or anticipated cash needs at our project-level subsidiaries. See “Item 3.D—Risk Factors” for more information on the risks to which our business is subject.

•	We may pay cash to our shareholders via capital reduction in lieu of dividends in some years.

•

Our project companies’ cash distributions to us (in the form of dividends or other forms of cash distributions such as shareholder loan repayments) and, as a result, our ability to pay or grow our dividends, are dependent upon the performance of our subsidiaries and their ability to distribute cash to us. The ability of our project-level subsidiaries to make cash distributions to us may be restricted by, among other things, the provisions of existing and future indebtedness, applicable corporation laws and other laws and regulations

•	Our Board of Directors may, by resolution, amend the cash dividend policy at any time. Our Board of Directors may elect to change the amount of dividends, suspend any dividend or decide to pay no dividends even if there is ample cash available for distribution.

Our Ability to Grow our Business and Dividend

We intend to grow our business via organic growth through the optimization of the existing portfolio, repowering, hybridization with other technologies, expansion of our current assets and through investments in development and construction of new assets, as well as and acquisitions of new assets. We believe this will facilitate the growth of our cash available for distribution and enable us to increase our dividend per share over time.

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Our policy is to distribute a significant portion of our cash available for distribution as a dividend. We expect we will rely primarily upon external financing sources, including commercial bank borrowings and issuances of debt and equity securities in capital markets, to fund any future growth capital expenditures. To the extent we are unable to finance growth externally, our cash dividend policy could significantly impair our ability to grow because we do not currently intend to reserve a substantial amount of cash generated from operations to fund growth opportunities. If external financing is not available to us on acceptable terms, our Board of Directors may decide to finance investments with cash from operations, which would reduce or impair our ability to pay dividends to our shareholders. Our Board of Directors may also decide to finance our investments with cash generated from operations to increase the capital dedicated to finance development, construction and acquisition of new assets and foster our growth.

To the extent we issue additional shares to fund our business, our growth or for any other reason, the payment of dividends on those additional shares may increase the risk that we will be unable to maintain or increase our per share dividend level. Additionally, the incurrence of additional commercial bank borrowings or other debt to finance our growth would result in increased interest expense, which in turn may impact our cash available for distribution and, in turn, our ability to pay dividends to our shareholders.

B.	Significant Changes

There have been no significant changes since the date of the Annual Consolidated Financial Statements included in this annual report.

ITEM 9.

THE OFFER AND LISTING

A.	Offering and Listing Details

Our ordinary shares trade on the NASDAQ Global Select Market under the symbol “AY.”

B.	Plan of Distribution

Not applicable.

Markets

Our ordinary shares are traded on the NASDAQ Global Select Market under the symbol “AY.”

D.	Selling Shareholders

Not applicable.

Dilution

Not applicable.

F.	Expenses of the Issue

Not applicable.

ITEM 10.

ADDITIONAL INFORMATION

A.	Share Capital

Not applicable

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B.	Memorandum and Articles of Association

The information called for by this item has been reported previously in our Articles of Association on Form 6-K (File No. 001-36487), filed with the SEC on May 21, 2018 as exhibit 3.1 and is incorporated by reference into this annual report.

C.	Material Contracts

See “Item 4.B—Business Overview,” “Item 5.B— Operating and Financial Review and Prospects—Liquidity and Capital Resources—Corporate debt agreements”

D.	Exchange Controls

See “Item 5.A—Operating and Financial Review and Prospects—Operating Results—Factors Affecting the Comparability of Our Results of Operations—Regulation.”

Taxation

Material UK Tax Considerations

The following is a general summary of material UK tax considerations relating to the ownership and disposal of our shares. The comments set out below are based on current UK tax law as applied in England and Wales and HM Revenue & Customs, or HMRC, published practice (which may not be binding on HMRC) as at the date of this summary, both of which are subject to change, possibly with retrospective effect. They are intended as a general guide and, save where expressly stated otherwise apply to you only if you are a “U.S. Holder” (as defined in the section below entitled “—U.S. Federal Income Tax Considerations”) and if:

•	you hold Atlantica Sustainable Infrastructure shares as an investment for tax purposes, as capital assets and you are the absolute beneficial owner thereof for UK tax purposes; and

•

you are an individual, you are not resident in the United Kingdom for UK tax purposes and do not hold Atlantica Sustainable Infrastructure shares for the purposes of a trade, profession, or vocation that you carry on in the United Kingdom through a branch or agency, or if you are a corporation, you are not resident in the UK for United Kingdom tax purposes and do not hold the securities for the purpose of a trade carried on in the United Kingdom through a permanent establishment in the United Kingdom.

This summary does not address all possible tax consequences relating to an investment in the shares and is written on the basis that we do not (and will not) directly or indirectly derive 75% or more of our qualifying asset value from U.K. land. Certain categories of shareholders, including those falling outside the category described above, those carrying on certain financial activities, those subject to specific tax regimes or benefitting from certain reliefs or exemptions, those connected with us and those for whom the shares are employment-related securities may be subject to special rules and this summary does not apply to such shareholders and any general statements made in this disclosure do not take them into account.

This summary is for general information only and is not intended to be, nor should it be considered to be, legal or tax advice to any particular investor. It does not address all of the tax considerations that may be relevant to specific investors in light of their particular circumstances or to investors subject to special treatment under UK tax law.

Potential investors should satisfy themselves prior to investing as to the overall tax consequences, including, specifically, the consequences under UK tax law and HMRC practice of the acquisition, ownership and disposal of the shares in their own particular circumstances by consulting their own tax advisors.

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UK Taxation of Dividends

We will not be required to withhold amounts on account of UK tax at source when paying a dividend in respect of our shares to a U.S. Holder.

U.S. Holders who hold their shares as an investment and not in connection with any trade carried on by them will not be subject to U.K. tax in respect of any dividends. There are certain exceptions from U.K. tax in respect of dividends on shares held in connection with a trade carried on in the United Kingdom for trades conducted in the United Kingdom through independent agents, such as some brokers and investment managers.

UK Taxation of Capital Gains

An individual holder who is a U.S. Holder will generally not be liable to UK capital gains tax on capital gains realized on the disposal of his or her Atlantica Sustainable Infrastructure shares unless such holder carries on (whether solely or in partnership) a trade, profession or vocation in the United Kingdom through a branch or agency in the United Kingdom to which the shares are attributable.

A corporate holder of shares that is a U.S. Holder will generally not be liable for UK corporation tax on chargeable gains realized on the disposal of its Atlantica Sustainable Infrastructure shares unless it carries on a trade in the United Kingdom through a permanent establishment to which the shares are attributable.

An individual holder of shares who is temporarily a non-UK resident for UK tax purposes will, in certain circumstances, become liable to UK tax on capital gains in respect of gains realized while he or she was not resident in the United Kingdom.

Stamp Duty and Stamp Duty Reserve Tax

The stamp duty and stamp duty reserve tax, or SDRT, treatment of the issue and transfer of, and the agreement to transfer, Atlantica Sustainable Infrastructure shares outside a depositary receipt system or a clearance service are discussed in the paragraphs under ‘—General’ below. The stamp duty and SDRT treatment of such transactions in relation to such systems are discussed in the paragraphs under “Depositary Receipt Systems and Clearance Services” below. The discussion under the headings below applies to transactions undertaken by any holder of our shares.

General

No stamp duty, or SDRT, will arise on the issue of shares in registered form by Atlantica Sustainable Infrastructure.

An agreement to transfer our shares will normally give rise to a charge to SDRT at the rate of 0.5% of the amount or value of the consideration payable for the transfer (or, in certain circumstances and if it is higher, the market value of our shares to be transferred in accordance with the relevant agreement). SDRT is, in general, payable by the purchaser.

Instruments transferring our shares will generally be subject to stamp duty at the rate of 0.5% of the consideration given for the transfer (or, in certain circumstances and if it is higher, the market value of our shares to be transferred by the relevant instrument) rounded up to the next £5. The purchaser normally pays the stamp duty.

If a duly stamped transfer completing an agreement to transfer is produced within six years of the date on which the agreement is made (or, if the agreement is conditional, the date on which the agreement becomes unconditional) any SDRT already paid is generally repayable, normally with interest, and any SDRT charge yet to be paid is cancelled.

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Depositary Receipt Systems and Clearance Services

Following the Court of Justice of the European Union’s decision in C-569/07 HSBC Holdings Plc, Vidacos Nominees Limited v The Commissioners of His Majesty’s Revenue & Customs and the First-tier Tax Tribunal decision in HSBC Holdings Plc and The Bank of New York Mellon Corporation v. The Commissioners of His Majesty’s Revenue & Customs, HMRC has published guidance stating that 1.5% SDRT is no longer payable when new shares are issued to a clearance service or depositary receipt system. HMRC’s published guidance confirms that this remains HMRC’s position following the transition period which expired on December 31, 2020 after the withdrawal of the United Kingdom from the EU.

Where our shares are transferred (i) to, or to a nominee or an agent for, a person whose business is or includes the provision of clearance services or (ii) to, or to a nominee or an agent for, a person whose business is or includes issuing depositary receipts, stamp duty or SDRT will generally be payable at the higher rate of 1.5% of the amount or value of the consideration given or, in certain circumstances, the value of the shares. In certain circumstances, there may be no charge to stamp duty or SDRT, and holders of our shares should accordingly seek their own advice before paying or accepting such charge.

Except in relation to clearance services that have made and maintained an election under Section 97A(1) of the Finance Act of 1986 (to which the special rules outlined below apply), no stamp duty or SDRT is payable in respect of transfers or agreements to transfer within clearance services or depositary receipt systems. Accordingly, no stamp duty or SDRT should, in practice, be required to be paid in respect of transfers or agreements to transfer our shares within the facilities of The Depository Trust Company, or DTC.

There is an exception from the 1.5% charge on the transfer to, or to a nominee or agent for, a clearance service where the clearance service has made and maintained an election under section 97A(1) of the Finance Act 1986, which has been approved by HMRC. In these circumstances, SDRT at the rate of 0.5% of the amount or value of the consideration payable for the transfer will arise on any transfer of our shares into such an account and on subsequent agreements to transfer such shares within such account. It is our understanding that DTC has not made an election under section 97A(1) of the Finance Act of 1986.

Any liability for stamp duty or SDRT in respect of any transfer into a clearance service or depositary receipt system, or in respect of a transfer within any clearance service or depositary receipt system, which does arise will strictly be accountable by the clearance service or depositary receipt system operator or their nominee, as the case may be, but will, in practice, be payable by the participants in the clearance service or depositary receipt system.

U.S. Federal Income Tax Considerations

The following is a summary of the U.S. federal income tax considerations generally applicable to the ownership and disposition of shares by U.S. Holders (as defined below). Unless otherwise noted, this summary addresses only U.S. Holders that hold shares as capital assets (generally, property held for investment) for U.S. federal income tax purposes. This summary is based upon the U.S. Internal Revenue Code of 1986, as amended (the “Code”), U.S. Treasury regulations promulgated thereunder (“Regulations”), judicial decisions, administrative pronouncements, and other relevant applicable authorities, all as of the date hereof and all of which are subject to change or differing interpretations, possibly with retroactive effect.

As used herein, the term “U.S. Holder” means a beneficial owner of shares that is, for U.S. federal income tax purposes:

•	an individual who is a citizen or resident of the United States;

•	a corporation (or other entity subject to tax as a corporation for U.S. federal income tax purposes) created in or organized under the laws of the United States or any political subdivision thereof;

•	an estate the income of which is subject to U.S. federal income taxation regardless of its source; or

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a trust (i) if a court within the United States is able to exercise primary supervision over the administration of the trust and one or more U.S. persons have the authority to control all substantial decisions of the trust, or (ii) the trust has validly elected to be treated as a domestic trust for U.S. federal income tax purposes;

This summary does not address all aspects of U.S. federal income taxation that may be relevant to a particular investor in light of that holder’s particular circumstances or that may be relevant to certain types of holders subject to special treatment under U.S. federal income tax law, such as: insurance companies; tax-exempt organizations; banks and other financial institutions; pension plans; cooperatives; real estate investment trusts; dealers in securities or currencies; traders that elect to use a mark-to-market method of accounting; certain former U.S. citizens or long-term residents; persons holding shares as part of a straddle, hedge, conversion, constructive sale or other integrated transaction for U.S. federal income tax purposes; persons who acquire shares pursuant to any employee share option or otherwise as compensation; persons holding shares through an individual retirement account or other tax-deferred account; persons who actually or constructively own 10% or more of our stock (by vote or value); persons whose functional currency is not the U.S. dollar; partnerships or other entities or arrangements subject to tax as partnerships for U.S. federal income tax purposes or persons holding shares through such entities; or persons that carry on a trade, business or vocation in the United Kingdom through a branch, agency or permanent establishment to which the shares are attributable.

If a partnership (or other entity or arrangement subject to tax as a partnership for U.S. federal income tax purposes) is a beneficial owner of shares, the U.S. federal income tax treatment of a partner in such partnership will generally depend upon the status of the partner and the activities of the partnership. A partnership for U.S. federal income tax purposes that holds shares and its partners are urged to consult their tax advisors regarding an investment in the shares.

In addition, this summary does not address any U.S. state or local or non-U.S. tax considerations or any U.S. federal estate, gift, or alternative minimum tax considerations, or the Medicare tax on certain net investment income.

Taxation of distributions on the shares

The gross amount of any distributions received by a U.S. Holder on shares will generally be subject to tax as dividends to the extent paid out of our current or accumulated earnings and profits (as determined for U.S. federal income tax purposes),and will be includible in the gross income of a U.S. Holder on the day actually or constructively received. Such dividends will not be eligible for the dividends received deduction generally allowed to U.S. corporations under the Code. The following discussion assumes that any dividends will be paid in U.S. dollars. We intend to calculate our earnings and profits in accordance with U.S. federal income tax principles. If distributions exceed our current and accumulated earnings and profits, such excess distributions will generally constitute a return of capital to the extent of a U.S. Holder’s tax basis in its shares and will result in a reduction of such tax basis. To the extent such excess exceeds a U.S. Holder’s tax basis in its shares, such excess will generally be subject to tax as capital gain.

Individuals and other non-corporate U.S. Holders of shares may be eligible for reduced rates of taxation if the dividends are “qualified dividend income.” Distributions received by a U.S. Holder on shares will generally be qualified dividend income if: (i) the shares on which the distribution are paid are readily tradable on an established securities market in the United States (such as NASDAQ Global Select Market, where our shares are listed), (ii) certain holding period requirements are satisfied, and (iii) we are not classified as a PFIC for the taxable year in which the dividend is paid or the preceding taxable year. As discussed below under “—Passive foreign investment company rules,” although there can be no assurance that we were not and will not be considered a PFIC for any taxable year, we do not believe that we were a PFIC, for U.S. federal income tax purposes, for the taxable year ended December 31, 2022, and do not anticipate becoming a PFIC for the current taxable year or in any future taxable year. There can be no assurance, moreover, that the shares will be considered readily tradable on an established securities market in the current year or in future years. Individuals and other non-corporate U.S. Holders should consult their tax advisors to determine whether they are subject to any special rules that limit their ability to be taxed at these favorable rates.

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Dividends on the shares will generally be treated as income from sources outside the United States and will generally constitute passive category income for U.S. foreign tax credit purposes. Depending on the individual facts and circumstances, a U.S. Holder may be eligible, subject to a number of complex limitations, to claim a foreign tax credit not in excess of any applicable treaty rate in respect of any foreign withholding taxes imposed on dividends received on our common shares. A U.S. Holder who does not elect to claim a foreign tax credit for foreign taxes withheld may instead claim a deduction, for U.S. federal income tax purposes, in respect of such withholding, but only for a year in which such holder elects to do so for all creditable foreign income taxes. The rules governing the U.S. foreign tax credit are complex and the application thereof depends in large part on the U.S. Holder’s individual facts and circumstances. Accordingly, U.S. Holders should consult their tax advisors regarding the availability of the U.S. foreign tax credit in their particular circumstances.

Taxation upon sale or other disposition of shares

A U.S. Holder will generally recognize U.S. source capital gain or loss on the sale or other disposition of the shares, which will generally be long-term capital gain or loss if the U.S. Holder’s holding period for the shares is more than one year at the time of disposition. The amount of the U.S. Holder’s gain or loss will generally be equal to the difference between the amount realized on the disposition and the U.S. Holder’s adjusted tax basis in the shares. Individuals and certain other non-corporate U.S. Holders will generally be subject to U.S. federal income tax on net long-term capital gains at a lower rate than the rate applicable to ordinary income. The deductibility of a capital loss may be subject to limitations.

Passive foreign investment company rules

A non-U.S. corporation, such as our company, will be classified as a PFIC for U.S. federal income tax purposes for any taxable year, if either (i) 75% or more of its gross income for such year consists of certain types of “passive” income or (ii) 50% or more of the value of its assets (determined on the basis of a quarterly average) during such year produce or are held for the production of passive income. Passive income generally includes dividends, interest, royalties, rents, annuities, net gains from the sale or exchange of property producing such income and net foreign currency gains. For this purpose, cash is categorized as a passive asset and the company’s unbooked intangibles associated with active business activity are taken into account as a non-passive asset. We will be treated as owning our proportionate share of the assets and earning our proportionate share of the income of any other corporation in which we own, directly, indirectly or constructively, 25% or more (by value) of the stock.

Based on our income and assets, and the value of our shares, we do not believe that we were a PFIC, for U.S. federal income tax purposes, for the taxable year ended December 31, 2022, and do not anticipate becoming a PFIC for the current taxable year or in any future taxable year. Nevertheless, because PFIC status is a factual determination made annually after the close of each taxable year on the basis of the composition of our income and assets, there can be no assurance that we were not a PFIC for the taxable year ended December 31, 2022, or will not be a PFIC for the current taxable year or in any future taxable year. Under circumstances where revenues from activities that produce passive income significantly increase relative to our revenues from activities that produce non-passive income, or where we determine not to deploy significant amounts of cash, our risk of becoming classified as a PFIC may substantially increase. In addition, because we have valued our goodwill based on the market value of our shares, a decrease in the market value of our shares may also result in our becoming a PFIC.

If we are a PFIC for any taxable year during which a U.S. Holder holds our shares, such holder will be subject to special tax rules with respect to any “excess distribution” that such holder receives on the shares and any gain such holder realizes from a sale or other disposition (including a pledge) of the shares, unless such holder makes a “mark-to-market” election as discussed below. Distributions received by a U.S. Holder in a taxable year that are greater than 125% of the average annual distributions such holder received during the shorter of the three preceding taxable years or such holder’s holding period for the shares will be treated as an excess distribution. Under these special tax rules:

•	the excess distribution or gain will be allocated ratably over the U.S. Holder’s holding period for the shares;

•	amounts allocated to the current taxable year and any taxable years in the U.S. Holder’s holding period prior to the first taxable year in which we are classified as a PFIC (each, a “pre-PFIC year”) will be subject to tax as ordinary income; and

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amounts allocated to each prior taxable year, other than the current taxable year or a pre-PFIC year, will be subject to tax at the highest tax rate in effect applicable to the U.S. Holder for that year, and such amounts will be increased by an additional tax equal to interest on the resulting tax deemed deferred with respect to such years.

If we are a PFIC for any taxable year during which a U.S. Holder holds shares and any of our non-U.S. affiliated entities are also PFICs, such holder will be treated as owning a proportionate amount (by value) of the shares of each such non-U.S. affiliate classified as a PFIC for purposes of the application of these rules.

Alternatively, a U.S. Holder of “marketable stock” (as defined below) in a PFIC may make a mark-to-market election for such stock of a PFIC to elect out of the tax treatment discussed in the second preceding paragraph. If a U.S. Holder makes a valid mark-to-market election for the shares, the U.S. Holder will include in income each year an amount equal to the excess, if any, of the fair market value of the shares as of the close of such holder’s taxable year over such holder’s adjusted basis in such shares. The U.S. Holder is allowed a deduction for the excess, if any, of such holder’s adjusted basis in the shares over their fair market value as of the close of the taxable year. Deductions are allowable, however, only to the extent of any net mark-to-market gains on the shares included in the U.S. Holder’s income for prior taxable years. Amounts included in the U.S. Holder’s income under a mark-to-market election, as well as gain on the actual sale or other disposition of the shares, are treated as ordinary income. Ordinary loss treatment also applies to the deductible portion of any mark-to-market loss on the shares, as well as to any loss realized on the actual sale or disposition of the shares, to the extent that the amount of such loss does not exceed the net mark-to-market gains previously included in income with respect to such shares. The U.S. Holder’s basis in the shares will be adjusted to reflect any such income or loss amounts. If a U.S. Holder makes such a mark-to-market election, tax rules that apply to distributions by corporations which are not PFICs would apply to distributions by us (except that the lower applicable capital gains rate for qualified dividend income would not apply). If a U.S. Holder makes a valid mark-to-market election, and we subsequently cease to be classified as a PFIC, such holder will not be required to take into account the mark-to-market income or loss described above during any period that we are not classified as a PFIC.

The mark-to-market election is available only for “marketable stock” which is stock that is traded in other than de minimis quantities on at least 15 days during each calendar quarter (“regularly traded”) on a qualified exchange or other market, as defined in applicable Regulations. We expect that the shares will continue to be listed on the NASDAQ Global Select Market, which is a qualified exchange for these purposes, and, consequently, assuming that the shares are regularly traded, if a U.S. Holder holds the shares, it is expected that the mark-to-market election would be available to such holder were we to become a PFIC.

In addition, because, as a technical matter, a mark-to-market election cannot be made for any lower-tier PFICs that we may own, a U.S. Holder may continue to be subject to the PFIC rules with respect to such holder’s indirect interest in any investments held by us that are treated as an equity interest in a PFIC for U.S. federal income tax purposes.

We do not intend to provide information necessary for U.S. Holders to make qualified electing fund elections, which, if available, would result in tax treatment different from the general tax treatment for PFICs described above.

If a U.S. Holder owns the shares during any taxable year that we are a PFIC, such holder must generally file an annual report with the IRS regarding their ownership of shares. U.S. Holders should consult their tax advisors concerning the U.S. federal income tax considerations of holding and disposing of the shares if we are or become a PFIC, including the availability and possibility of making a mark-to-market election.

Foreign financial asset reporting

A U.S. Holder may be required to report information relating to an interest in the shares, generally by filing IRS Form 8938 (Statement of Specified Foreign Financial Assets) with the U.S. Holder’s federal income tax return. A U.S. Holder may also be subject to significant penalties if the U.S. Holder is required to report such information and fails to do so. U.S. Holders should consult their tax advisors regarding information reporting obligations, if any, with respect to ownership and disposition of the shares.

THE PRECEDING DISCUSSION OF U.S. FEDERAL INCOME TAX CONSIDERATIONS IS INTENDED FOR GENERAL INFORMATION ONLY AND DOES NOT CONSTITUTE TAX ADVICE. U.S. HOLDERS SHOULD CONSULT THEIR TAX ADVISORS AS TO THE U.S. FEDERAL, STATE, LOCAL AND NON-U.S. TAX CONSIDERATIONS TO THEM OF THE OWNERSHIP AND DISPOSITION OF THE SHARES IN THEIR PARTICULAR CIRCUMSTANCES.

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F.	Dividends and Paying Agent

Not applicable.

G.	Statement by Experts

Not applicable.

H.	Documents on Display

Our SEC filings are available to you on the SEC’s website at http://www.sec.gov. This site contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC. The information on that website is not part of this report. We also make available on our website free of charge, our annual reports on Form 20-F and the text of our reports on Form 6-K, including any amendments to these reports , as well as certain other SEC filings, as soon as reasonably practicable after they are electronically filed with or furnished to the SEC. Our website address is www.atlantica.com. The information on that website is not part of this report.

As a foreign private issuer, we will be exempt from the rules under the Exchange Act related to the furnishing and content of proxy statements, and our officers, directors and principal shareholders will be exempt from the reporting and short-swing profit recovery provisions contained in Section 16 of the Exchange Act. In addition, we will not be required under the Exchange Act to file annual, quarterly and current reports and financial statements with the SEC as frequently or as promptly as United States companies whose securities are registered under the Exchange Act. However, for so long as we are listed on the NASDAQ, or any other U.S. exchange, and are registered with the SEC, we will file with the SEC, within 120 days after the end of each fiscal year, or such applicable time as required by the SEC, an annual report on Form 20-F containing financial statements audited by an independent registered public accounting firm. We also submit to the SEC on Form 6-K the interim financial information that we publish.

I.	Subsidiaries Information

Not applicable.

ITEM 11.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our activities are undertaken through our segments and are exposed to market risks that include foreign exchange risk, interest rate risk, credit risk, liquidity risk, electricity price risk and country risk. Our objective is to protect Atlantica against material economic exposures and variability of results from those risks. Risk is managed by our Risk Management and Finance Departments in accordance with mandatory internal management rules. The internal management rules provide written policies for the management of overall risk, as well as for specific areas, such as foreign exchange rate risk, interest rate risk, credit risk and liquidity risk, among others. Our internal management policies also define the use of hedging instruments and derivatives and the investment of excess cash. We use swaps and options on interest rates and foreign exchange rates to manage certain of our risks. None of the derivative contracts signed has an unlimited loss exposure.

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The following table outlines Atlantica´s market risks and how they are managed:

Market Risk	Description of Risk	Management of Risk
Foreign exchange risk	We are exposed to foreign currency risk – including Euro, Canadian dollar, South African rand, Colombian peso and Uraguayan peso – related to operations and certain foreign currency debt. Our presentation currency and the functional currency of most of our subsidiaries is the U.S. dollar, as most of our revenue and expenses are denominated or linked to U.S. dollars. All our companies located in North America, with the exception of Calgary, whose revenue is 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, 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 US dollars in the case of Uruguayan peso.	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. 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. The difference between the euro/U.S. dollar hedged rate for the year 2023 and the current rate reduced by 5% would create a negative impact on cash available for distribution of approximately $5.5 million. This amount has been calculated as the average net euro exposure expected for the years 2023 to 2026 multiplied by the difference between the average hedged euro /U.S. dollar rate for 2023 and the euro/U.S. dollar rate as of the date of this annual report reduced by 5%. 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, the Colombian peso and the Uruguayan Peso with respect to the U.S. dollar may also affect our operating results. Apart from the impact of these translation differences, the exposure of our income statement to fluctuations of foreign currencies is limited, as the financing of projects is typically denominated in the same currency as that of the contracted revenue agreement.
Interest rate risk	We are exposed to interest rate risk on our variable-rate debt. Interest rate risk arises mainly from our financial liabilities at variable interest rate (less than 10% of our consolidated debt). The most significant impact on our Annual Consolidated Financial Statements related to interest rates corresponds to the potential impact of changes in EURIBOR, SOFR or LIBOR on the debt with interest rates based on these reference rates and on derivative positions. In relation to our interest rate swaps positions, an increase in EURIBOR, SOFR or LIBOR above the contracted fixed interest rate would create an increase in our financial expense which would be positively mitigated by our hedges, reducing our financial expense to our contracted fixed interest rate. However, an increase in EURIBOR, SOFR or LIBOR that does not exceed the contracted fixed interest rate would not be offset by our derivative position and would result in a stable net expense recognized in our consolidated income statement. In relation to our interest rate options positions, an increase in EURIBOR, SOFR or LIBOR above the strike price would result in higher interest expenses, which would be positively mitigated by our hedges, reducing our financial expense to our capped interest rate. However, an increase in these rates of reference below the strike price would result in higher interest expenses.	Our assets largely consist of long duration physical assets, and financial liabilities consist primarily of long-term fixed-rate debt or floating-rate debt that has been swapped to fixed rates with interest rate financial instruments to minimize the exposure to interest rate fluctuations. We use interest rate swaps and interest rate options (caps) to mitigate interest rate risk. As of December 31, 2022, approximately 92% of our project debt and approximately 96% of our corporate debt either has fixed interest rates or has been hedged with swaps or caps. Our revolving credit facility has variable interest rates and is not hedged as further described in “Item 5.B— Operating and Financial Review and Prospects— Liquidity and Capital Resources— Corporate debt agreements —Revolving Credit Facility”; In the event that EURIBOR, SOFR and LIBOR had risen by 25 basis points as of December 31, 2022, with the rest of the variables remaining constant, the effect in the consolidated income statement would have been a loss of $1.3 million (a loss of $2.5 million in 2021 and a loss of $2.9 million in 2020) and an increase in hedging reserves of $18.4 million ($22.4 million increase in 2021 and $22.1 million increase in 2020). The increase in hedging reserves would be mainly due to an increase in the fair value of interest rate swaps designated as hedges.

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Credit Risk

We are exposed to credit risk mainly from operating activities, the maximum exposure of which is represented by the carrying amounts reported in the statements of financial position. We are exposed to credit risk if counterparties to our contracts, trade receivables, interest rate swaps, foreign exchange hedge contracts are unable to meet their obligations.

The credit rating of Eskom is currently CCC+ from S&P , Caa1 from Moody’s and B from Fitch. Eskom is the off-taker of our Kaxu solar plant, a state-owned, limited liability company, wholly owned by the Republic of South Africa.

In addition, Pemex’s credit rating is currently BBB from S&P, B1 from Moody’s and BB- from Fitch. We have experienced delays in collections in the past, especially since the second half of 2019, which have been significant in certain quarters. As of December 31, 2022 these delays were shorter than in previous quarters.

The diversification by geography and business sector helps to diversify credit risk exposure by diluting our exposure to a single client.

In the case of Kaxu, Eskom’s payment guarantees to our Kaxu solar plant are underwritten by the South African Department of Mineral Resources and Energy, under the terms of an implementation agreement. The credit ratings of the Republic of South Africa as of the date of this annual report are BB-/Ba2/BB- by S&P, Moody’s and Fitch, respectively.

In the case of Pemex, during 2022 we have maintained a pro-active approach including fluent dialogue with our client.

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Liquidity risk	We are exposed to liquidity risk for financial liabilities. 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.	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. As of December 31, 2022, we had $445.9 million liquidity at the corporate level, comprised of $60.8 million of cash on hand at the corporate level and $385.1 million available under our Revolving Credit Facility. We believe that the Company’s liquidity position, cash flows from operations and availability under our revolving credit facility will be adequate to meet the Company’s 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.
Electricity price risk	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). In addition, in several of the jurisdictions in which we operate including Spain, Chile and Italy we are exposed to remuneration schemes which contain both regulated incentives and market price components. In such jurisdictions, the regulated incentive or the contracted component may not fully compensate for fluctuations in the market price component, and, consequently, total remuneration may be volatile. In addition, operating costs in certain of our existing or future projects depend to some extent on market prices of electricity used for self-consumption and, to a lower extent, on market prices of natural gas. In Spain, for example, operating costs have increased during 2021 and 2022 as a result of the increase in the price of electricity and natural gas.	We manage our exposure to electricity price risk by ensuring that most of our revenues are not exposed to fluctuations in electricity prices. As of December 31, 2022, assets with merchant exposure represent less than a 2%⁹ of our portfolio in terms of Adjusted EBITDA. Regarding regulated assets with exposure to electricity market prices, these assets have the right to receive a “reasonable rate of return” (see “Item 4—Information on the Company— Regulation”). As a result, fluctuations in market prices may cause volatility in results of operations and cash flows, but it should not affect the net value of these assets.

⁹ Calculated as a percentage of our Adjusted EBITDA in 2022.

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Country risk

We consider that Algeria and South Africa, which represent a small portion of the portfolio in terms of cash available for distribution, are the geographies with a higher political risk profile.

Most of the countries in which we have operations are OECD countries.

In 2019, we entered into a political risk insurance agreement with the Multinational Investment Guarantee Agency for Kaxu. The insurance provides protection for breach of contract up to $58.0 million in the event the South African Department of Mineral Resources and Energy does not comply with its obligations as guarantor. We also have a political risk insurance in place for two of our assets in Algeria for up to $37.2 million, including two years dividend coverage. These insurance policies do not cover credit risk.

ITEM 12.

DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

A.	Debt Securities

Not applicable.

B.	Warrants and Rights

Not applicable.

C.	Other Securities

Not applicable.

D.	American Depositary Shares

Not applicable.

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PART II

ITEM 13.

DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

None.

ITEM 14.

MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS

Not applicable.

ITEM 15.

CONTROLS AND PROCEDURES.

(a)	Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) of the U.S. Exchange Act, that are designed to ensure that information required to be disclosed by the Company in reports that we file or submit under the U.S. Exchange Act is (i) recorded, processed, summarized and reported within the time period specified in the SEC’s rules and forms; and (ii) accumulated and communicated to our management, including our Chief Executive Officer (principal executive officer) and Chief Financial Officer (principal financial officer), as appropriate, to allow timely decisions regarding required disclosure. Disclosure controls and procedures, no matter how well designed, can provide only reasonable assurance of achieving the desired control objectives.

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has performed an evaluation of the effectiveness of the design and operation of its disclosure controls and procedures (as defined in Rule 13a-15 (e) under the Exchange Act) as of December 31, 2022. There are inherent limitations to the effectiveness of any control system, including disclosure controls and procedures.

Based upon their evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective.

(b)	Management’s Report on Internal Control over Financial Reporting

Pursuant to Section 404 of the United States Sarbanes-Oxley Act, management is responsible for establishing and maintaining effective internal control over financial reporting. This system is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

In accordance with guidance issued by the SEC, companies are permitted to exclude acquisitions from their annual assessment of internal control over financial reporting for the first fiscal year in which the acquisition occurred.

Our management’s evaluation of internal control over financial reporting excluded the internal control activities of the businesses acquired in 2022 (Chile TL 4, Chile PV 3, Italy PV 4, Rioglass Servicios and Atlantica South Africa Operations) in accordance with the general guidance issued by the Staff of the SEC. These businesses represented 1.0% of consolidated net assets and 0.6% of the Company’s consolidated revenues as of and for the year ended December 31, 2022.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect all misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

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Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2022, based on the framework set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control—Integrated Framework (2013). Based on this assessment, management concluded that, as of December 31, 2022, its internal control over financial reporting was effective based on those criteria.

Our internal control over financial reporting as of December 31, 2022, has been audited by Ernst & Young S.L., an independent registered public accounting firm, as stated in their report which follows below.

(c)	Attestation Report of the Independent Registered Public Accounting Firm

The report of Ernst & Young , S.L., our Independent Registered Public Accounting Firm (“EY”), on our internal control over financial reporting is included herein at page F-2 of our Annual Consolidated Financial Statements.

(d)	Changes in Internal Controls over Financial Reporting

There has been no change in our internal control over financial reporting that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

(e)	Inherent Limitations of Disclosure Controls and Procedures in Internal Control over Financial Reporting

It should be noted that any system of controls, however well-designed and operated, can provide only reasonable, and not absolute, assurance that the objectives of the system will be met. In addition, the design of any control system is based in part upon certain assumptions about the likelihood of future events. Projections regarding the effectiveness of a system of controls in future periods are subject to the risk that such controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with the policies or procedures.

ITEM 16.

RESERVED

ITEM 16A.

AUDIT COMMITTEE FINANCIAL EXPERT

See “Item 6.C.—Board Practices—Audit Committee.” Our Board of Directors has determined that the three members of the Audit Committee, Mr. William Aziz, Ms. Brenda Eprile and Mr. Michael Forsayeth qualify as “audit committee financial experts” under applicable SEC rules.

ITEM 16B.

CODE OF ETHICS

Our Board of Directors has adopted a code of conduct for our employees, officers and directors to govern their relations with current and potential customers, fellow employees, competitors, government and self-regulatory agencies, the media, and anyone else with whom we have contact. Our code of conduct is publicly available on our website at www.atlantica.com and it is under review on yearly basis. We will provide any person, free of charge, a copy of our code of ethics upon written request to our registered office.

ITEM 16C.

PRINCIPAL ACCOUNTANT FEES AND SERVICES

The following table provides information on the aggregate fees billed by our principal accountants, Ernst & Young, S.L. classified by type of service rendered in 2022:

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	EY		Other Auditors		Total
	($ in thousands)
Audit Fees		1,643		295		1,938
Audit-Related Fees		422		-		422
Tax Fees		502		-		502
Total		2,567		295		2,862

The following table provides information on the aggregate fees billed by our principal accountants, EY classified by type of service rendered in 2021:

	EY		Other Auditors		Total
	($ in thousands)
Audit Fees		1,571		289		1,860
Audit-Related Fees		651		-		651
Tax Fees		633		-		633
Total		2,855		289		3,144

“Audit Fees” are the aggregate fees billed for professional services in connection with the audit of our Annual Consolidated Financial Statements, quarterly reviews of our interim financial statements and statutory audits of our subsidiaries’ financial statements under the rules of England and Wales and the countries in which our subsidiaries are organized.

“Audit-Related Fees” include fees charged for services that can only be provided by our auditor, such as consents and comfort letters of non-recurring transactions, assurance and related services that are reasonably related to the performance of the audit or review of our financial statements. Fees paid during 2022 and 2021 related to comfort letters and consents required for capital market transactions of our largest shareholder are also included in this category ($204 thousand and $272 thousand in 2022 and 2021 respectively). These fees were re-invoiced and paid by our largest shareholder.

“Tax Fees” include mainly fees charged for transfer pricing services and tax compliance services in our US subsidiaries.

The Audit Committee approved all of the services provided by EY and by its affiliated member firms.

Audit Committee’s Policy on Pre-Approval of Audit and Permissible Non-Audit Services of the Independent Auditor

The terms of reference of Atlantica’s Audit Committee state that the Audit Committee has responsibility for overseeing the relationship with the external auditor, which includes regular assessment of the auditor’s independence and objectivity. The policy deals with the relationships between the external auditor and Atlantica and it also relates to Audit Committee pre-approval of services provided by the external auditor.

Subject to the approval of the independent auditor by our shareholders, the Audit Committee has the sole authority to appoint, retain or replace the independent auditor. The Audit Committee is also directly responsible for the compensation and oversight of the work of the independent auditor. These policies generally provide that we will not engage our independent auditors to render audit or non-audit services unless the service is specifically approved in advance by the Audit Committee. The Audit Committee’s pre-approval policy, which covers audit and non-audit services provided to us or to any of our subsidiaries, is as follows:

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•

The Audit Committee shall review and approve in advance the annual plan and scope of work of the independent external auditor, including staffing of the audit, and shall (i) review with the independent external auditor any audit-related concerns and management’s response and (ii) confirm that any examination is performed in accordance with the relevant accounting standards;

•

The Audit Committee shall pre-approve all audit services, and all permitted non-audit services (including the fees and terms thereof) to be performed for us by the independent auditors, to the extent required by law. The Audit Committee may delegate to one or more Committee members the authority to grant pre-approvals for audit and permitted non-audit services to be performed for us by the independent auditor, provided that decisions of such members to grant pre-approvals shall be presented to the full Audit Committee at its next regularly scheduled meeting;

•	The policy categorizes the audit and permitted non-audit services that are pre-approved by the Audit Committee in the following way:

o	Audit services, including audit of financial statements, limited reviews, comfort letters, other verification works requested by regulator or supervisors;

o	Audit-related services, including due diligence services, verification of corporate social responsibility report, accounting or internal control advisory and preparation courses on these topics;

o	Tax services;

o	Other specific services, such as evaluation of the design, implementation and operation of a financial information system or control over financial reporting;

•	Courses or seminars.

•	For non-audit services, the accumulated fees must remain below the threshold of 50% of the audit services fees, excluding fees reinvoiced to our major shareholder; and

•	The policy also includes a list of those services that are expressly prohibited.

Only for information purposes, all audit and non-audit services will be reported to the Audit Committee on a quarterly basis.

Any other service shall be pre-approved by the Audit Committee. However, when for reasons of urgency, it is necessary to start the provision of services prior to the next meeting of the Audit Committee, the Chair of the Audit Committee is authorized to provide such approval, which shall be communicated to the Audit Committee subsequently.

In accordance with the above pre-approval policy, all audit and permitted non-audit services performed for us by our principal accountants, or any of its affiliates, were approved by the Audit Committee of our Board of Directors, who concluded that the provision of such services by the independent accountants was compatible with the maintenance of that firm’s independence in the conduct of its auditing functions: an auditor may not function in the role of management; an auditor may not audit his or her own work; and an auditor may not serve in an advocacy role for his or her client.

The Audit Committee approved all the services provided by Ernst & Young S.L and by other member firms of EY.

ITEM 16D.

EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES

Not applicable.

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ITEM 16E.

PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS

Not applicable.

ITEM 16F.

CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT

Not applicable.

ITEM 16G.

CORPORATE GOVERNANCE

Under U.S. federal securities laws and NASDAQ rules we are a “foreign private issuer.” Under NASDAQ Stock Market Rule 5615(a)(3), a foreign private issuer may follow home country corporate governance practices instead of certain of NASDAQ’s requirements, provided that such foreign private issuer discloses in its annual report filed with the SEC each requirement of Rule 5600 that it does not follow and describes the home country practice followed in lieu of such requirement. In addition, a foreign private issuer that elects to follow a home country practice instead of NASDAQ’s requirements must submit to NASDAQ a written statement from an independent counsel in such issuer’s home country certifying that the issuer’s practices are not prohibited by the home country’s laws.

In addition, as a foreign private issuer and as a UK company, we are not required to and we do not follow the NASDAQ Stock Market Rule 5635(c) as it relates to the approval by the shareholders of the Company prior to the issuance of securities when a stock option or purchase plan is to be established or materially amended or other equity compensation arrangement made or materially amended. As permitted by the UK Companies Act 2006, any material amendment to any of our stock option or other equity compensation arrangement with respect to our Executives may be approved either by the Board of Directors or by the shareholders of the Company.

Other than the matters described above, there are no significant differences between our corporate governance practices and those followed by U.S. domestic companies under NASDAQ Stock Market Rules.

ITEM 16H.

MINE SAFETY DISCLOSURE

Not applicable.

ITEM 16I.

DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

Not applicable.

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PART III

ITEM 17.

FINANCIAL STATEMENTS

We have elected to provide financial statements pursuant to Item 18.

ITEM 18.

FINANCIAL STATEMENTS

Our Annual Consolidated Financial Statements are included at the end of this annual report.

ITEM 19.

EXHIBITS

The following exhibits are filed as part of this annual report:

Exhibit No.	Description
1.1	Amended and restated Articles of Association of Atlantica Sustainable Infrastructure plc (incorporated by reference from Exhibit 3.1 to Atlantica Sustainable Infrastructure plc’s (formerly known as Atlantica Yield plc) Form 6-K, as amended, filed with the SEC on May 21, 2018 – SEC File No. 001-36487).

2.1	Description of Securities Registered under Section 12 of the Exchange Act (incorporated by reference from Exhibit 2.1 to Atlantica Sustainable Infrastructure plc’s Form 20-F, as amended, filed with the SEC on February 28, 2022 – SEC File No. 001-36487).

4.1	Credit and Guaranty Agreement dated May 10, 2018 (incorporated by reference from Exhibit 99.1 from Atlantica Sustainable Infrastructure plc’s Form 6-K filed with the SEC on September 5, 2018– SEC File No. 001-36487).

4.2	First Amendment and Joinder to Credit and Guaranty Agreement, dated January 24, 2019 (incorporated by reference from Exhibit 4.14 from Atlantica Sustainable Infrastructure plc’s Form 20-F filed with the SEC on February 28, 2019 – SEC File No. 001-36487).

4.3	Second Amendment to Credit and Guaranty Agreement, dated August 2, 2019 (incorporated by reference from Exhibit 4.18 from Atlantica Sustainable Infrastructure plc’s Form 6-K filed with the SEC on November 7, 2019 – SEC File No. 001-36487).

4.4	Third Amendment to Credit and Guaranty Agreement, dated December 17, 2019 (incorporated by reference from Exhibit 4.19 from Atlantica Sustainable Infrastructure plc’s Form 20-F filed with the SEC on February 28, 2020 – SEC File No. 001-36487).

4.5	Fourth Amendment to Credit and Guaranty Agreement, dated August 28, 2020 (incorporated by reference from Exhibit 4.25 from Atlantica Sustainable Infrastructure plc’s Form 6-K filed with the SEC on November 6, 2020 – SEC File No. 001-36487).

4.6	Fifth Amendment to Credit and Guaranty Agreement, dated December 3, 2020. (incorporated by reference from Exhibit 4.20 from Atlantica Sustainable Infrastructure plc’s Form 20-F, as amended, filed with the SEC on February 28, 2022 – SEC File No. 001-36487).

4.7	Sixth Amendment to Credit and Guaranty Agreement, dated March 1, 2021 (incorporated by reference from Exhibit 99.1 from Atlantica Sustainable Infrastructure plc’s Form 6-K filed with the SEC on March 30, 2021 – SEC File No. 001-36487).

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4.8	Seventh Amendment to Credit and Guaranty Agreement, dated May 5, 2022 (incorporated by reference from Exhibit 4.26 from Atlantica Sustainable Infrastructure plc’s Form 6-K filed with the SEC on May 9, 2022 – SEC File No. 001-36487).

4.9	Shareholder’s Agreement dated March 5, 2018 among Atlantica Sustainable Infrastructure plc (formerly known as Atlantica Yield plc), Liberty GES and Algonquin Power & Utilities Corp. (incorporated by reference from Exhibit 4.13 from Atlantica Sustainable Infrastructure plc’s Form 6-K filed with the SEC on March 12, 2018– SEC File No. 001-36487).

4.10	Right of First Offering Agreement dated March 5, 2018 between Atlantica Sustainable Infrastructure plc (formerly known as Atlantica Yield plc) and Algonquin Power and Utilities Corp. (incorporated by reference from Exhibit 4.15 from Atlantica Sustainable Infrastructure plc’s Form 6-K filed with the SEC on March 12, 2018– SEC File No. 001-36487).

4.11	Enhanced Cooperation Agreement, dated May 9, 2019, by and among Algonquin Power & Utilities, Corp., Atlantica Sustainable Infrastructure plc (formerly known as Atlantica Yield plc) and Abengoa-Algonquin Global Energy Solutions B.V. (incorporated by reference from Exhibit 99.1 from Atlantica Sustainable Infrastructure plc’s Form 6-K filed with the SEC on August 7, 2019 – SEC File No. 001-36487).

4.12	Subscription Agreement, dated May 9, 2019, by and between Algonquin Power & Utilities, Corp. and Atlantica Sustainable Infrastructure plc (formerly known as Atlantica Yield plc) (incorporated by reference from Exhibit 99.2 from Atlantica Sustainable Infrastructure plc’s Form 6-K filed with the SEC on August 7, 2019 – SEC File No. 001-36487).

4.13	AYES Shareholder Agreement, dated May 24, 2019, by and among Algonquin Power & Utilities, Corp., Atlantica Sustainable Infrastructure plc (formerly known as Atlantica Yield plc) and Atlantica Yield Energy Solutions Canada Inc. (incorporated by reference from Exhibit 99.3 from Atlantica Sustainable Infrastructure plc’s Form 6-K filed with the SEC on August 7, 2019 – SEC File No. 001-36487).

4.14	Note Purchase Agreement, dated March 20, 2020, between Atlantica Sustainable Infrastructure plc (formerly known as Atlantica Yield plc) and a group of institutional investors as purchasers of the notes issued thereunder (incorporated by reference from Exhibit 4.20 from Atlantica Sustainable Infrastructure plc’s Form 6-K filed with the SEC on May 7, 2020 – SEC File No. 001-36487).

4.15	Memorandum and Articles of Association of Atlantica Sustainable Infrastructure Jersey Limited (incorporated by reference from Exhibit 4.21 from Atlantica Sustainable Infrastructure plc’s Form 6-K filed with the SEC on August 3, 2020 – SEC File No. 001-36487).

4.16	Indenture (including Form of Global Note) relating to Atlantica Sustainable Infrastructure Jersey Limited’s 4.00% Green Exchangeable Senior Notes due 2025, dated July 17, 2020, by and among Atlantica Sustainable Infrastructure Jersey Limited, as Issuer, Atlantica Sustainable Infrastructure plc, as Guarantor, BNY Mellon Corporate Trustee Services Limited, as Trustee, The Bank of New York Mellon, London Branch, as Paying and Exchange Agent, and The Bank of New York Mellon SA/NV, Luxembourg Branch, as Note Registrar and Transfer Agent (incorporated by reference from Exhibit 4.22 from Atlantica Sustainable Infrastructure plc’s Form 6-K filed with the SEC on August 3, 2020 – SEC File No. 001-36487). (incorporated by reference from Exhibit 4.20 from Atlantica Sustainable Infrastructure plc’s Form 20-F, as amended, filed with the SEC on February 28, 2022 – SEC File No. 001-36487).

4.17	Deed Poll granted by Atlantica Sustainable Infrastructure plc, as Guarantor, in favor of Atlantica Sustainable Infrastructure Jersey Limited, as Issuer, dated July 17, 2020, in connection with the 4.00% Green Exchangeable Senior Notes due 2025 (incorporated by reference from Exhibit 4.23 from Atlantica Sustainable Infrastructure plc’s Form 6-K filed with the SEC on August 3, 2020 – SEC File No. 001-36487).

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4.18	The Note Issuance Facility for an amount of €140 million, dated July 8, 2020, among Atlantica Sustainable Infrastructure plc, the guarantors named therein, Lucid Agency Services Limited, as facility agent, and a group of funds managed by Westbourne Capital as purchasers of the notes issued thereunder (incorporated by reference from Exhibit 4.24 from Atlantica Sustainable Infrastructure plc’s Form 6-K filed with the SEC on August 3, 2020 – SEC File No. 001-36487).

4.19	Amendment No. 1 to Note Issuance Facility Agreement, dated March 30, 2021. (incorporated by reference from Exhibit 4.22 from Atlantica Sustainable Infrastructure plc’s Form 20-F, as amended, filed with the SEC on February 28, 2022 – SEC File No. 001-36487).

4.20	Indenture (including Form of Global Notes) relating to Atlantica Sustainable Infrastructure plc’s 4.125% Green Senior Notes due 2028 dated May 18, 2021, by and among Atlantica Sustainable Infrastructure plc, 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 (incorporated by reference from Exhibit 4.28 from Atlantica Sustainable Infrastructure plc’s Form 6-K filed with the SEC on May 24, 2021 – SEC File No. 001-36487).

4.21	Distribution Agreement, dated August 3, 2021, between the Company and J.P. Morgan Securities LLC (incorporated by reference from Exhibit 1.1 from Atlantica Sustainable Infrastructure plc’s Form 6-K filed with the SEC on August 3, 2021 – SEC File No. 001-36487).

4.22	Amendment Agreement to the Distribution Agreement, dated May 9, 2022 (incorporated by reference from Exhibit 1.1 from Atlantica Sustainable Infrastructure plc’s Form 6-K filed with the SEC on May 9, 2022 – SEC File No. 001-36487).

4.23	ATM Plan Letter Agreement, dated August 3, 2021, between Atlantica Sustainable Infrastructure plc and Algonquin Power & Utilities Corp (incorporated by reference from Exhibit 4.29 from Atlantica Sustainable Infrastructure plc’s Form 6-K filed with the SEC on August 3, 2021 – SEC File No. 001-36487).

8.1	Subsidiaries of Atlantica Sustainable Infrastructure plc.

12.1	Certification of Santiago Seage, Chief Executive Officer of Atlantica Sustainable Infrastructure plc, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

12.2	Certification of Francisco Martinez-Davis, Chief Financial Officer of Atlantica Sustainable Infrastructure plc, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

13.1	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

15.1	Consent of EY

101.INS	XBRL Instance Document

101.SCH	XBRL Taxonomy Extension Schema Document

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Title of each class	Trading Symbol		Name of each exchange on which registered
Ordinary Shares, nominal value $0.10 per share	AY		NASDAQ Global Select Market

Large accelerated filer ☒	Accelerated filer ☐	Non-accelerated filer ☐
		Emerging growth company ☐

Report of Ernst and Young, S.L. (PCAOB ID 1461)	F-1
Consolidated statements of financial position as of December 31, 2022 and 2021	F-4
Consolidated income statements for the years ended December 31, 2022, 2021 and 2020	F-5
Consolidated financial statements of comprehensive income for the years ended December 31, 2022, 2021 and 2020	F-6
Consolidated statements of changes in equity for the years ended December 31, 2022, 2021 and 2020	F-7
Consolidated cash flow statements for the years ended December 31, 2022, 2021 and 2020	F-11
Notes to the annual consolidated financial statements	F-12
Appendix I: Entities included in the Group as subsidiaries as of December 31, 2022 and 2021	F-60
Appendix II: Investments recorded under the equity method as of December 31, 2022 and 2021	F-65
Appendix III-1 and Appendix III-2: Assets subject to the application of IFRIC 12 interpretation based on the concession of services as of December 31, 2022 and 2021	F-67
Appendix IV: Additional Information of Subsidiaries including material Non-controlling interest as of December 31, 2022 and 2021	F-82

			As of December 31,
	Note (1)		2022		2021
Assets
Non-current assets
Contracted concessional, PP&E and other intangible assets		6		7,483,259		8,021,568
Investments carried under the equity method		7		260,031		294,581
Other accounts receivable		8		86,431		85,801
Derivative assets		9		89,806		10,807
Other financial assets		8		176,237		96,608
Deferred tax assets		18		149,656		172,268

Total non-current assets				8,069,183		8,585,025

Current assets
Inventories				34,511		29,694
Trade receivables		11		125,437		227,343
Credits and other receivables		11		74,897		79,800
Trade and other receivables		11		200,334		307,143
Other financial assets		8		195,893		207,379
Cash and cash equivalents		12		600,990		622,689

Total current assets				1,031,728		1,166,905

Total assets				9,100,911		9,751,930

	Share capital		Share premium		Capital reserves			Other reserves			Accumulated currency translation differences			Accumulated deficit			Total equity attributable to the Company			Non- controlling interest			Total equity
Balance as of January 1, 2020		10,160		1,011,743		889,057			73,797			(90,824	)		(385,457	)		1,508,476			206,380			1,714,856

Profit for the year after taxes		-		-		-			-			-			11,968			11,968			4,906			16,874
Change in fair value of cash flow hedges net of transfer to income statement		-		-		-			31,353			-			-			31,353			756			32,109
Currency translation differences		-		-		-			-			(9,101	)		-			(9,101	)		(846	)		(9,947	)
Tax effect		-		-		-			(8,509	)		-			-			(8,509	)		(189	)		(8,698	)
Other comprehensive income		-		-		-			22,844			(9,101	)		-			13,743			(279	)		13,464

Total comprehensive income		-		-		-			22,844			(9,101	)		11,968			25,711			4,627			30,338

Capital increase		507		-		161,347			-			-			-			161,854			-			161,854

Business combinations		-		-		-			-			-			-			-			25,308			25,308

Distributions		-		-		(168,659	)		-			-			-			(168,659	)		(22,816	)		(191,475	)

Balance as of December 31, 2020		10,667		1,011,743		881,745			96,641			(99,925	)		(373,489	)		1,527,382			213,499			1,740,881

			For the year
	Note ⁽¹⁾		2022			2021			2020
I. Profit/(loss) for the year				(2,087	)		(10,918	)		16,874
Non-monetary adjustments
Depreciation, amortization and impairment charges		6		473,638			439,441			408,604
Financial expense		21		335,546			359,550			315,151
Fair value (gains)/losses on derivative financial instruments		21		(19,138	)		(16,785	)		15,308
Shares of profits from entities carried under the equity method		7		(21,465	)		(12,304	)		(510	)
Income tax		18		(9,689	)		36,220			24,877
Other non-monetary items				27,996			55,809			(43,943	)

II. Profit/(loss) for the year adjusted by non-monetary items				784,801			851,013			736,361

Changes in working capital
Inventories				(6,955	)		5,215			(4,590	)
Trade and other receivables		11		99,249			48,521			(790	)
Trade payables and other current liabilities		17		(6,158	)		(25,782	)		(9,771	)
Other current assets/liabilities				(7,331	)		(31,081	)		4,249

III. Changes in working capital				78,805			(3,127	)		(10,902	)

Income tax paid				(14,730	)		(51,684	)		(16,425	)
Interest received				9,178			2,519			5,148
Interest paid				(271,732	)		(293,098	)		(275,961	)

A. Net cash provided by operating activities				586,322			505,623			438,221

Acquisitions of subsidiaries and entities under the equity method		5&7		(50,507	)		(362,449	)		2,453
Investments in operating concessional assets		6		(39,107	)		(19,216	)		(1,361	)
Investments in assets under development or construction		6		(36,784	)		(7,028	)		(3,023	)
Distributions from entities under the equity method		7		67,695			34,883			22,246
Other non-current assets				1,265			2,655			(26,175	)

B. Net cash used in investing activities				(57,438	)		(351,155	)		(5,860	)

Proceeds from project debt		15		-			14,560			603,949
Proceeds from corporate debt		14		101,140			429,014			678,651
Repayment of project debt		15		(426,396	)		(418,265	)		(621,691	)
Repayment of corporate debt		14		(80,519	)		(376,154	)		(502,042	)
Dividends paid to Company´s shareholders		13		(203,106	)		(190,638	)		(168,659	)
Dividends paid to non-controlling interest		13		(39,209	)		(28,134	)		(22,944	)
Purchase of Liberty´s Interactive’s equity interests in Solana		21		-			-			(266,850	)
Capital increase		13		113,072			189,454			162,246

C. Net cash used in financing activities				(535,018	)		(380,163	)		(137,340	)

Net increase/(decrease) in cash and cash equivalents				(6,134	)		(225,695	)		295,021

Cash and cash equivalents at beginning of the year		12		622,689			868,501			562,795
Translation differences in cash and cash equivalents				(15,565	)		(20,117	)		10,685
Cash and cash equivalents at the end of the year		12		600,990			622,689			868,501

Note 1.- Nature of the business	F-13

Note 2.- Significant accounting policies	F-16

Note 3.- Financial risk management	F-27

Note 4.- Financial information by segment	F-28

Note 5.- Business combinations	F-33

Note 6.- Contracted concessional, PP&E and other intangible assets	F-35

Note 7.- Investments carried under the equity method	F-38

Note 8.- Financial instruments by category	F-40

Note 9.- Derivative financial instruments	F-41

Note 10.- Related parties	F-43

Note 11.- Trade and other receivables	F-44

Note 12.- Cash and cash equivalents	F-44

Note 13.- Equity	F-45

Note 14.- Corporate debt	F-46

Note 15.- Project debt	F-48

Note 16.- Grants and other liabilities	F-51

Note 17.-Trade payables and other current liabilities	F-52

Note 18.- Income tax	F-52

Note 19.- Commitments, third-party guarantees, contingent assets and liabilities	F-55

Note 20.- Employee benefit expenses and other operating income and expenses	F-56

Note 21.- Financial expense, net	F-57

Note 22.- Earnings per share	F-58

Note 23.- Other information	F-59

Appendices⁽¹⁾	F-60

	North America		South America		EMEA		Balance as of December 31, 2022
Assets allocated
Contracted concessional, PP&E and other intangible assets		3,167,490		1,241,879		3,073,889		7,483,259
Investments carried under the equity method		210,704		4,450		44,878		260,031
Other current financial assets		118,385		31,136		46,373		195,893
Cash and cash equivalents (project companies)		187,568		85,697		266,557		539,822
Subtotal allocated		3,684,147		1,363,162		3,431,697		8,479,005
Unallocated assets
Other non-current assets								325,893
Other current assets (including cash and cash equivalents at holding company level)								296,013
Subtotal unallocated								621,906
Total assets								9,100,911

	Renewable energy		Efficient natural gas & Heat		Transmission lines		Water		Balance as of December 31, 2022
Assets allocated
Contracted concessional, PP&E and other intangible assets		6,035,091		485,431		800,067		162,670		7,483,259
Investments carried under the equity method		203,420		10,034		4,450		42,128		260,031
Other current financial assets		6,706		116,366		30,582		42,240		195,893
Cash and cash equivalents (project companies)		392,577		73,673		48,073		25,498		539,822
Subtotal allocated		6,637,794		685,504		883,172		272,536		8,479,005
Unallocated assets
Other non-current assets										325,893
Other current assets (including cash and cash equivalents at holding company level)										296,013
Subtotal unallocated										621,906
Total assets										9,100,911

	Renewable energy		Efficient natural gas & Heat		Transmission lines		Water		Balance as of December 31, 2021
Assets allocated
Contracted concessional, PP&E and other intangible assets		6,533,408		517,247		805,987		164,926		8,021,568
Investments carried under the equity method		240,302		15,358		-		38,921		294,581
Other current financial assets		10,761		128,461		27,813		40,344		207,379
Cash and cash equivalents (project companies)		442,213		25,392		44,574		21,369		533,548
Subtotal allocated		7,226,684		686,458		878,374		265,560		9,057,076
Unallocated assets
Other non-current assets										268,876
Other current assets (including cash and cash equivalents at holding company level)										425,978
Subtotal unallocated										694,854
Total assets										9,751,930

	Business combinations for the year ended December 31, 2022

Property, plant and equipment under IAS 16 (Note 6)		58,002
Rights of use under IFRS 16 (Lessee) or intangible assets under IAS 38 (Note 6)		16,993
Cash & cash equivalents		1,057
Other current assets		8,283
Non-current Project debt (Note 15)		(1,301	)
Current Project debt (Note 15)		(148	)
Other current and non-current liabilities		(18,919	)
Non-controlling interests		(14,300	)
Total net assets acquired at fair value		49,667
Asset acquisition – purchase price paid		(49,667	)
Net result of business combinations		-

	Business combinations for the year ended December 31, 2021
	Coso			Other			Total
Property, plant and equipment under IAS 16 (Note 6)		383,153			137,426			520,579
Rights of use under IFRS 16 (Lessee) or intangible assets under IAS 38 (Note 6)		-			22,149			22,149
Deferred tax asset (Note 18)		-			4,410			4,410
Other non-current assets		11,024			1,943			12,967
Cash & cash equivalents		6,363			14,649			21,012
Other current assets		14,378			46,632			61,010
Non-current Project debt (Note 15)		(248,544	)		(39,808	)		(288,352	)
Current Project debt (Note 15)		(13,415	)		(25,366	)		(38,781	)
Deferred tax liabilities (Note 18)		-			(4,910	)		(4,910	)
Other current and non-current liabilities		(22,959	)		(64,922	)		(87,881	)
Non-controlling interests		-			(8,287	)		(8,287	)
Total net assets acquired at fair value		130,000			83,916			213,916
Asset acquisition – purchase price paid		(130,000	)		(80,868	)		(210,868	)
Fair value of previously held 15% stake in Rioglass		-			(3,048	)		(3,048	)
Net result of business combinations		-			-			-

Cost	Financial assets under IFRIC 12			Financial assets under IFRS 16 (Lessor)			Intangible assets under IFRIC 12			Right of use assets under IFRS 16 (Lessee) and intangible assets under IAS 38			Property, plant and equipment under IAS 16			Total assets
Total as of January 1, 2022		874,525			2,843			9,202,539			100,109			839,119			11,019,135
Additions		-			-			32,941			4,155			80,196			117,292
Subtractions		-			(57	)		(499	)		(1,350	)		(8,655	)		(10,561	)
Business combinations (Note 5)		-			-			-			16,993			58,002			74,995
Currency translation differences		1,760			1			(261,536	)		(4,531	)		(21,006	)		(285,312	)
Reclassification and other movements		(58,115	)		-			2,798			(6,200	)		8,950			(52,567	)
Total cost, as of December 31, 2022		818,170			2,787			8,976,243			109,176			956,606			10,862,982

Investments in associates and joint ventures	2022			2021
Initial balance		294,581			116,614
Share of profit		21,465			12,304
Distributions		(57,537	)		(36,877	)
Acquisitions		4,901			202,345
Others (incl. currency translation differences)		(3,379	)		195
Final balance		260,031			294,581

Company	% Shares of the Company		Non- current assets		Current assets		Project debt		Other non- current liabilities		Other current liabilities		Revenue		Operating profit/ (loss)			Net profit/ (loss)			Investment under the equity method
2007 Vento II, LLC (1)		49.00		435,029		14,198		-		57,596		11,515		103,362		42,662			40,992			181,735
Windlectric Inc (2)		30.00		278,504		3,338		-		167,519		43,227		24,996		10,560			(15	)		18,935
Myah Bahr Honaine, S.P.A.(3)		25.50		150,623		66,246		43,579		18,902		4,257		55,267		33,374			26,768			42,128
Pemcorp SAPI de CV (4)		30.00		138,931		112,352		159,382		90,474		4,328		45,625		1,680			(17,747	)		10,034
Pectonex, R.F. Proprietary Limited		50.00		2,045		-		-		-		1		-		(168	)		(168	)		1,411
Evacuación Valdecaballeros, S.L.		57.16		15,551		1,020		-		13,635		232		860		(60	)		(89	)		858
Evacuación Villanueva del Rey, S.L.		40.02		2,317		12		-		1,386		111		-		57			-			-
Liberty Infraestructuras S.L.		20.00		93		283		-		-		37		-		-			(22	)		29
Akuo Atlantica PMGD Holding S.P.A. (5)		49.00		14,814		2,828		-		8,755		326		-		-			(348	)		4,450
Fontanil Solar, S.L.U.		25.00		117		7		-		99		24		-		(1	)		(2	)		229
Murum Solar, S.L.U.		25.00		228		8		-		180		59		-		(1	)		(5	)		222
As of December 31, 2022																						260,031

	Notes		Amortized cost		Fair value through other comprehensive income		Fair value through profit or loss		Balance as of December 31, 2022
Derivative assets		9		-		-		97,381		97,381
Investment in Ten West Link				-		15,959		-		15,959
Financial assets under IFRIC 12 (short-term portion) (*)				186,841		-		-		186,841
Trade and other receivables		11		200,334		-		-		200,334
Cash and cash equivalents		12		600,990		-		-		600,990
Other financial assets				71,949		-		-		71,949
Total financial assets				1,060,114		15,959		97,381		1,173,454

Corporate debt (**)		14		1,017,200		-		-		1,017,200
Project debt (**)		15		4,553,052		-		-		4,553,052
Trade and other current liabilities		17		140,230		-		-		140,230
Derivative liabilities		9		-		-		16,847		16,847
Total financial liabilities				5,710,482		-		16,847		5,727,329

	Balance as of December 31, 2022				Balance as of December 31, 2021
	Assets		Liabilities		Assets		Liabilities
Interest rate cash flow hedge		94,192		12,159		9,550		206,763
Foreign exchange derivatives instruments		3,189		-		3,410		-
Notes conversion option (Note 14)		-		4,688		-		16,690
Total		97,381		16,847		12,960		223,453

Notionals	Balance as of December 31, 2022				Balance as of December 31, 2021
	Assets		Liabilities		Assets		Liabilities
Up to 1 year		245,147		47,029		71,386		106,191
Between 1 and 2 years		310,393		102,476		304,930		240,197
Between 2 and 3 years		217,498		112,855		262,973		271,350
Subsequent years		659,186		280,016		217,989		860,777
Total		1,432,224		542,376		857,278		1,478,515

Fair value	Balance as of December 31, 2022					Balance as of December 31, 2021
	Assets		Liabilities			Assets		Liabilities
Up to 1 year		10,868		(991	)		678		(15,039	)
Between 1 and 2 years		17,860		(2,189	)		1,810		(33,670	)
Between 2 and 3 years		12,257		(2,851	)		2,268		(39,834	)
Subsequent years		53,208		(6,128	)		4,794		(118,220	)
Total		94,192		(12,159	)		9,550		(206,763	)

	As of December 31,	Receivables (current)	Receivables (non- current)	Payables (current)	Payables (non- current)
Entities accounted for under the equity method:		$000	$000	$000	$000
Arroyo Netherland II B.V	2022	1,097	17,006	-	-
Arroyo Netherland II B.V	2021	10,000	15,768	-	-
Amherst Island Partnership	2022	-	-	-	-
Amherst Island Partnership	2021	6,279	-	-	-
Other	2022	127	-	-	-
Other	2021	-	-	-	-

Non controlling interest:
Algonquin	2022	-	-	4,762	-
Algonquin	2021	198	-	6,144	-
JGC Corporation	2022	-	-	-	6,088
JGC Corporation	2021	2,910	-	-	-
Industrial Development Corporation of South Africa and Community Trust	2022	-	-	-	-
	2021	-	-	3,309	-
Other	2022	-	-	21	-
Other	2021	-	-	41	5
Total	2022	1,224	17,006	4,783	6,088
Total	2021	19,387	15,768	9,494	5

	Balance as of December 31,
	2022		2021
Trade receivables		125,437		227,343
Tax receivables		45,680		59,350
Prepayments		11,827		9,342
Other accounts receivable		17,390		11,108
Total		200,334		307,143

	Balance as of December 31,
Currency	2022		2021
U.S. dollar		309,756		318,071
Euro		217,675		230,136
South African Rand		36,137		38,268
Mexican Peso		4,010		4,926
Algerian Dinar		24,727		21,156
Others		8,685		10,132
Total		600,990		622,689

	Project debt - long term			Project debt - short term			Total
Balance as of December 31, 2021		4,387,674			648,519			5,036,193
Increases		39,161			230,320			269,481
Payments		(73,478	)		(543,484	)		(616,962	)
Business combinations (Note 5)		1,301			148			1,449
Currency translation differences		(119,068	)		(18,041	)		(137,109	)
Reclassifications		(9,072	)		9,072			-
Balance as of December 31, 2022		4,226,518			326,534			4,553,052

Project Debt	2022			2021
Initial balance		5,036,193			5,237,614
Cash changes		(636,343	)		(636,831	)
Non-cash changes		153,202			435,410
Final balance		4,553,052			5,036,193

As of December 31, 2021	Total		2022		2023 and 2024		2025 and 2026		Subsequent years
Other liabilities and provisions		293,187		-		51,490		33,656		208,041
Total		293,187		-		51,490		33,656		208,041

	Balance as of December 31,
Item	2022		2021
Trade accounts payables		84,465		79,052
Down payments from clients		11,169		542
Other accounts payables		44,596		34,313
Total		140,230		113,907

Deferred tax assets	Balance as of December 31,
From	2022		2021
Net operating loss carryforwards (“NOL´s”)		442,415		323,115
Temporary tax non-deductible expenses		134,328		128,186
Derivatives financial instruments		3,461		55,217
Other		5,895		4,225
Total deferred tax assets		586,099		510,743

Deferred tax liabilities	Balance as of December 31,
From	2022		2021
Accelerated tax amortization		524,363		465,219
Other difference between tax and book value of assets		186,536		180,218
Derivatives financial instruments		19,034		-
Other		2,991		1,897
Total deferred tax liabilities		732,924		647,334

Consolidated balance sheets classifications	Balance as of December 31,
	2022		2021
Deferred tax assets		149,656		172,268
Deferred tax liabilities		296,481		308,859
Net deferred tax liabilities		146,825		136,591

Deferred tax assets	Amount
As of December 31, 2020		152,290
Increase/(decrease) through the consolidated income statement		46,855
Increase/(decrease) through other consolidated comprehensive income (equity)		(23,712	)
Business combinations (Note 5)		4,410
Currency translation differences and other		(7,575	)
As of December 31, 2021		172,268

Increase/(decrease) through the consolidated income statement		29,197
Increase/(decrease) through other consolidated comprehensive income (equity)		(46,344	)
Currency translation differences and other		(5,465	)
As of December 31, 2022		149,656

	For the year ended December 31,
Financial expenses	2022			2021			2020
Interest on loans and notes		(292,043	)		(302,558	)		(316,237	)
Interest rates losses derivatives: cash flow hedges		(41,220	)		(58,712	)		(62,149	)
Total		(333,263	)		(361,270	)		(378,386	)

Company name	Project name	Registered address	% of	Business
ACT Energy México, S. de R.L. de C.V.	ACT	Santa Barbara (Mexico)	100.00	(2)
AC Renovables Sol 1 S.A.S.		Bogota D.C. (Colombia)	70.00	(3)
Agrisun, Srl.	Italy PV 1	Rome (Italy)	100.00	(3)
Alcala Sviluppo Solare S.r.l		Rovereto (Italy)	99.00	(3)
Atlantica North America, LLC		Delaware (United States)	100.00	(5)
Atlantica Infraestructura Sostenible, S.L.U		Seville (Spain)	100.00	(5)
Atlantica Perú, S.A.		Lima (Peru)	100.00	(5)
Atlantica Renewable Power Mexico de R.L. de C.V		Mexico D.F. (Mexico)	100.00	(5)
Atlantica Sustainable Infrastructure Jersey, Ltd		Jersey (United Kingdom)	100.00	(5)
Atlantica Newco Limited		Brentford (United Kingdom)	100.00	(5)
Atlantica DCR, LLC		Delaware (United States)	100.00	(5)
ASHUSA Inc.		Delaware (United States)	100.00	(5)
Atlantica South Africa (Pty) Ltd		Pretoria (South Africa)	100.00	(5)
Atlantica South Africa Operations Proprietary Limited Ltd		Upington (South Africa)	92.00	(3)
ASUSHI, Inc.		Delaware (United States)	100.00	(5)
Atlantica Hidro Colombia SPA		Bogota D.C. (Colombia)	15.00*	(4)
Atlantica Holdings USA LLC		Tempe (United States)	100.00	(5)
Atlantica Energia Sostenibile Italia, Srl.		Rome (Italy)	100.00	(5)
Atlantica Colombia S.A.S.		Bogota D.C. (Colombia)	100.00	(5)
Atlantica Chile SpA		Santiago de Chile (Chile)	100.00	(5)
Atlantica y Quartux Almacenamiento de Energía S.A.P.I. de C.V.		Mexico D.F. (Mexico)	60.00	(3)
Atlantica Solutions LLC		Tempe (United States)	100.00	(3)
ATN, S.A.	ATN	Lima (Peru)	100.00	(1)
ATN 4, S.A		Lima (Peru)	100.00	(1)
Atlantica Transmisión Sur, S.A.	ATS	Lima (Peru)	100.00	(1)
ACT Holdings, S.A. de C.V.		Mexico D.F. (Mexico)	100.00	(5)
Aguas de Skikda S.P.A.	Skikda	Dely Ibrahim (Algeria)	51.00	(4)
Arizona Solar One, LLC.	Solana	Delaware (United States)	100.00	(3)
ASI Operations LLC		Delaware (United States)	100.00	(3)
ASI Vento LLC		Tempe (United States)	100.00	(5)
ASO Holdings Company, LLC.		Delaware (United States)	100.00	(5)
Atlantica Investment Ltd.		Brentford (United Kingdom)	100.00	(5)
AYES International UK Ltd		Brentford (United Kingdom)	100.00	(5)
Atlantica Energia Sostenible España, S.L.		Seville (Spain)	100.00	(5)
ATN 2, S.A.	ATN 2	Lima (Peru)	100.00	(1)
AY Holding Uruguay, S.A.		Montevideo (Uruguay)	100.00	(5)
Atlantica Yield Energy Solutions Canada Inc.		Vancouver (Canada)	10.00*	(5)
Banitod, S.A.		Montevideo (Uruguay)	100.00	(5)
Befesa Agua Tenes		Seville (Spain)	100.00	(5)