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Yield Inc 06.30.15 10-Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q



x		Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

		For the Quarterly Period Ended: June 30, 2015

o		Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Commission File Number: 001-36002

NRG Yield, Inc.

(Exact name of registrant as specified in its charter)



Delaware (State or other jurisdiction of incorporation or organization)		46-1777204 (I.R.S. Employer Identification No.)

211 Carnegie Center, Princeton, New Jersey (Address of principal executive offices)		08540 (Zip Code)

(609) 524-4500

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes x No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o No x

As of July 31, 2015, there were 34,586,250 shares of Class A common stock outstanding, par value $0.01 per share, 42,738,750 shares of Class B common stock outstanding, par value $0.01 per share, 62,784,250 shares of Class C common stock outstanding, par value $0.01 per share, and 42,738,750 shares of Class D common stock outstanding, par value $0.01 per share.

TABLE OF CONTENTS

Index



CAUTIONARY STATEMENT REGARDING FORWARD LOOKING INFORMATION	3
GLOSSARY OF TERMS	4
PART I — FINANCIAL INFORMATION	6
ITEM 1 — FINANCIAL STATEMENTS AND NOTES	6
ITEM 2 — MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS	34
ITEM 3 — QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	49
ITEM 4 — CONTROLS AND PROCEDURES	50
PART II — OTHER INFORMATION	51
ITEM 1 — LEGAL PROCEEDINGS	51
ITEM 1A — RISK FACTORS	51
ITEM 2 — UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS	51
ITEM 3 — DEFAULTS UPON SENIOR SECURITIES	51
ITEM 4 — MINE SAFETY DISCLOSURES	51
ITEM 5 — OTHER INFORMATION	51
ITEM 6 — EXHIBITS	52
SIGNATURES	54

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

This Quarterly Report on Form 10-Q of NRG Yield, Inc., together with its consolidated subsidiaries, or the Company, includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. The words "believes," "projects," "anticipates," "plans," "expects," "intends," "estimates" and similar expressions are intended to identify forward-looking statements. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the Company's actual results, performance and achievements, or industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. These factors, risks and uncertainties include the factors described under Item 1A — Risk Factors in Part I, Item 1A of the Company's Annual Report on Form 10-K for the year ended December 31, 2014, and the following:


•	The Company's ability to maintain and grow its quarterly dividend;


•	The Company's ability to successfully identify, evaluate and consummate acquisitions from third parties;


•	The Company's ability to acquire assets from NRG;


•	The Company's ability to raise additional capital due to its indebtedness, corporate structure, market conditions or otherwise;

•

Hazards customary to the power production industry and power generation operations such as fuel and electricity price volatility, unusual weather conditions, catastrophic weather-related or other damage to facilities, unscheduled generation outages, maintenance or repairs, unanticipated changes to fuel supply costs or availability due to higher demand, shortages, transportation problems or other developments, environmental incidents, or electric transmission or gas pipeline system constraints and the possibility that the Company may not have adequate insurance to cover losses as a result of such hazards;


•	The Company's ability to operate its businesses efficiently, manage maintenance capital expenditures and costs effectively, and generate earnings and cash flows from its asset-based businesses in relation to its debt and other obligations;


•	The willingness and ability of counterparties to the Company's offtake agreements to fulfill their obligations under such agreements;


•	The Company's ability to enter into contracts to sell power and procure fuel on acceptable terms and prices as current offtake agreements expire;


•	Government regulation, including compliance with regulatory requirements and changes in market rules, rates, tariffs and environmental laws;


•	Operating and financial restrictions placed on the Company and its subsidiaries that are contained in the project-level debt facilities and other agreements of certain subsidiaries and project-level subsidiaries generally, in the NRG Yield Operating LLC revolving credit facility, in the indenture governing the Senior Notes and in the indenture governing the Company's convertible notes; and


•	The Company's ability to borrow additional funds and access capital markets, as well as the Company's substantial indebtedness and the possibility that the Company may incur additional indebtedness going forward.

Forward-looking statements speak only as of the date they were made, and the Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. The foregoing review of factors that could cause the Company's actual results to differ materially from those contemplated in any forward-looking statements included in this Quarterly Report on Form 10-Q should not be construed as exhaustive.

GLOSSARY OF TERMS

When the following terms and abbreviations appear in the text of this report, they have the meanings indicated below:



2014 Form 10-K		NRG Yield, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2014
2019 Convertible Notes		$345 million aggregate principal amount of 3.50% Convertible Notes due 2019
2020 Convertible Notes		$287.5 million aggregate principal amount of 3.25% Convertible Notes due 2020
Alta TE Holdco		Alta Wind X-XI TE Holdco LLC
Alta Wind Portfolio		Seven wind facilities that total 947 MW located in Tehachapi, California and a portfolio of associated land leases
AOCL		Accumulated Other Comprehensive Loss
ASC		The FASB Accounting Standards Codification, which the FASB established as the source of authoritative U.S. GAAP
ASU		Accounting Standards Updates – updates to the ASC
Buffalo Bear		Buffalo Bear, LLC, the operating subsidiary of Tapestry Wind LLC, which owns the Buffalo Bear project
CAFD		Cash Available For Distribution
COD		Commercial Operations Date
DGPV Holdco		NRG DGPV Holdco 1 LLC
Distributed Solar		Solar power projects, typically less than 20 MW in size, that primarily sell power produced to customers for usage on site, or are interconnected to sell power into the local distribution grid
Drop Down Assets		Collectively, the June 2014 Drop Down Assets and the January 2015 Drop Down Assets
El Segundo		NRG West Holdings LLC, the subsidiary of Natural Gas Repowering LLC, which owns the El Segundo Energy Center project
EME		Edison Mission Energy
ERCOT		Electric Reliability Council of Texas, the Independent System Operator and the regional reliability coordinator of the various electricity systems within Texas
EWG		Exempt Wholesale Generator
Exchange Act		The Securities Exchange Act of 1934, as amended
FASB		Financial Accounting Standards Board
FERC		Federal Energy Regulatory Commission
GenConn		GenConn Energy LLC
GHG		Greenhouse Gases
HLBV		Hypothetical Liquidation of Book Value
ISO		Independent System Operator, also referred to as RTO
January 2015 Drop Down Assets		The Laredo Ridge, Tapestry and Walnut Creek projects, which were acquired from NRG on January 2, 2015
June 2014 Drop Down Assets		The TA High Desert, Kansas South and El Segundo projects, which were acquired from NRG on June 30, 2014
Kansas South		NRG Solar Kansas South LLC, the operating subsidiary of NRG Solar Kansas South Holdings LLC, which owns the Kansas South project
Laredo Ridge		Laredo Ridge Wind, LLC, the operating subsidiary of Mission Wind Laredo, LLC, which owns the Laredo Ridge project
LIBOR		London Inter-Bank Offered Rate
Marsh Landing		NRG Marsh Landing LLC, formerly GenOn Marsh Landing LLC
MMBtu		Million British Thermal Units
MW		Megawatt
MWh		Saleable megawatt hour, net of internal/parasitic load megawatt-hour
MWt		Megawatts Thermal Equivalent
NERC		North American Electric Reliability Corporation



Net Exposure		Counterparty credit exposure to NRG Yield, Inc. net of collateral
NOLs		Net Operating Losses
NRG		NRG Energy, Inc.
NRG Yield		Accounting predecessor, representing the combination of the projects that were acquired by NRG Yield LLC
NRG Yield, Inc.		NRG Yield, Inc., together with its consolidated subsidiaries, or the Company
NRG Yield LLC		The holding company through which the projects are owned by NRG, the holder of Class B and Class D common units, and NRG Yield, Inc., the holder of the Class A and Class C common units
NRG Yield Operating LLC		The holder of the project assets that are owned by NRG Yield LLC
OCI/OCL		Other comprehensive income/loss
Pinnacle		Pinnacle Wind, LLC, the operating subsidiary of Tapestry Wind LLC, which owns the Pinnacle project
PPA		Power Purchase Agreement
PUCT		Public Utility Commission of Texas
PURPA		Public Utility Regulatory Policies Act of 1978
QF		Qualifying Facility under PURPA
ROFO Agreement		Amended and Restated Right of First Offer Agreement between the Company and NRG
RTO		Regional Transmission Organization
RPV Holdco		NRG RPV Holdco 1 LLC
SEC		U.S. Securities and Exchange Commission
Senior Notes		NRG Yield Operating LLC's $500 million of 5.375% unsecured senior notes due 2024
TA High Desert		TA-High Desert LLC, the operating subsidiary of NRG Solar Mayfair LLC, which owns the TA High Desert project
Taloga		Taloga Wind, LLC, the operating subsidiary of Tapestry Wind LLC, which owns the Taloga project
Tapestry		Collection of the Pinnacle, Buffalo Bear and Taloga projects
Thermal Business		The Company's thermal business, which consists of thermal infrastructure assets that provide steam, hot water and/or chilled water, and in some instances electricity, to commercial businesses, universities, hospitals and governmental units
U.S.		United States of America
U.S. GAAP		Accounting principles generally accepted in the U.S.
Utility Scale Solar		Solar power projects, typically 20 MW or greater in size (on an alternating current, or AC, basis), that are interconnected into the transmission or distribution grid to sell power at a wholesale level
VaR		Value at Risk
VIE		Variable Interest Entity
Walnut Creek		NRG Walnut Creek, LLC, the operating subsidiary of WCEP Holdings, LLC, which owns the Walnut Creek project

PART I - FINANCIAL INFORMATION

ITEM 1 — FINANCIAL STATEMENTS

NRG YIELD, INC.

CONSOLIDATED STATEMENTS OF INCOME



	Three months ended June 30,						Six months ended June 30,
(In millions, except per share amounts)	2015			2014 ^(a)			2015			2014^(a)
Operating Revenues
Total operating revenues	$	217		$	173		$	397		$	313
Operating Costs and Expenses
Cost of operations	67			53			142			113
Depreciation and amortization	59			54			113			78
General and administrative — affiliate	3			2			6			4
Acquisition-related transaction and integration costs	1			—			1			—
Total operating costs and expenses	130			109			262			195
Operating Income	87			64			135			118
Other Income (Expense)
Equity in earnings of unconsolidated affiliates	9			14			10			15
Other income, net	—			—			1			1
Loss on debt extinguishment	(7		)	—			(7		)	—
Interest expense	(44		)	(34		)	(114		)	(61		)
Total other expense, net	(42		)	(20		)	(110		)	(45		)
Income Before Income Taxes	45			44			25			73
Income tax expense	4			2			—			5
Net Income	41			42			25			68
Less: Pre-acquisition net income of Drop Down Assets	—			17			—			25
Net Income Excluding Pre-acquisition Net Income of Drop Down Assets	41			25			25			43
Less: Net income attributable to noncontrolling interests^(b)	31			19			20			33
Net Income Attributable to NRG Yield, Inc.	$	10		$	6		$	5		$	10
Earnings Per Share Attributable to NRG Yield, Inc. Class A and Class C Common Stockholders
Weighted average number of Class A and Class C common shares outstanding - basic and diluted	35			23			35			23
Earnings per Weighted Average Class A and Class C Common Share - Basic and Diluted	$	0.15		$	0.13		$	0.07		$	0.21
Dividends Per Class A Common Share	0.20			0.35			0.59			0.68
Dividends Per Class C Common Share	$	0.20		N/A			$	0.20		N/A

^(a) Retrospectively adjusted as discussed in Note 1, Nature of Business.

^(b) The calculation of income attributable to noncontrolling interests excludes pre-acquisition net income of the Drop Down Assets.

See accompanying notes to consolidated financial statements.

NRG YIELD, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)



	Three months ended June 30,					Six months ended June 30,
	2015		2014 ^(a)			2015			2014 ^(a)
	(In millions)
Net Income	$	41	$	42		$	25		$	68
Other Comprehensive Income (Loss), net of tax
Unrealized gain (loss) on derivatives, net of income tax benefit (expense) of ($4), $0, $4 and $0	21		(22		)	4			(34		)
Other comprehensive income (loss)	21		(22		)	4			(34		)
Comprehensive Income	62		20			29			34
Less: Pre-acquisition net income of Drop Down Assets	—		17			—			25
Less: Comprehensive income attributable to noncontrolling interests	46		1			31			8
Comprehensive Income (Loss) Attributable to NRG Yield, Inc.	$	16	$	2		$	(2	)	$	1

^(a) Retrospectively adjusted as discussed in Note 1, Nature of Business.

See accompanying notes to consolidated financial statements.

NRG YIELD, INC.

CONSOLIDATED BALANCE SHEETS



	June 30, 2015			December 31, 2014^(a)
ASSETS	(In millions)
Current Assets
Cash and cash equivalents	$	281		$	406
Restricted cash	38			45
Accounts receivable — trade	98			85
Accounts receivable — affiliate	1			—
Inventory	29			27
Derivative instruments	4			—
Notes receivable	7			6
Deferred income taxes	14			16
Prepayments and other current assets	19			21
Total current assets	491			606
Property, plant and equipment
In service	4,919			4,796
Under construction	8			8
Total property, plant and equipment	4,927			4,804
Less accumulated depreciation	(449		)	(338		)
Net property, plant and equipment	4,478			4,466
Other Assets
Equity investments in affiliates	549			227
Notes receivable	13			15
Intangible assets, net of accumulated amortization of $64 and $36	1,389			1,423
Derivative instruments	4			2
Deferred income taxes	140			118
Other non-current assets	144			108
Total other assets	2,239			1,893
Total Assets	$	7,208		$	6,965

^(a) Retrospectively adjusted as discussed in Note 1, Nature of Business.

See accompanying notes to consolidated financial statements.

NRG YIELD, INC.

CONSOLIDATED BALANCE SHEETS (Continued)



	June 30, 2015			December 31, 2014^(a)
LIABILITIES AND STOCKHOLDERS’ EQUITY	(In millions, except share information)
Current Liabilities
Current portion of long-term debt	$	407		$	214
Accounts payable	23			20
Accounts payable — affiliate	60			46
Derivative instruments	43			48
Accrued expenses and other current liabilities	37			61
Total current liabilities	570			389
Other Liabilities
Long-term debt	4,336			4,573
Derivative instruments	44			69
Other non-current liabilities	52			49
Total non-current liabilities	4,432			4,691
Total Liabilities	5,002			5,080
Commitments and Contingencies
Stockholders' Equity
Preferred stock, $0.01 par value; 10,000,000 shares authorized; none issued
Class A, Class B, Class C and Class D common stock, $0.01 par value; 3,000,000,000 shares authorized (Class A 500,000,000, Class B 500,000,000, Class C 1,000,000,000, Class D 1,000,000,000); 182,848,000 (Class A 34,586,250, Class B 42,738,750, Class C 62,784,250, Class D 42,738,750) and 154,650,000 (Class A 34,586,250, Class B 42,738,750, Class C 34,586,250, Class D 42,738,750) shares issued and outstanding at June 30, 2015 and December 31, 2014	1			—
Additional paid-in capital	1,852			1,240
Retained earnings	8			3
Accumulated other comprehensive loss	(16		)	(9		)
Noncontrolling interest	361			651
Total Stockholders' Equity	2,206			1,885
Total Liabilities and Stockholders' Equity	$	7,208		$	6,965

^(a) Retrospectively adjusted as discussed in Note 1, Nature of Business.

See accompanying notes to consolidated financial statements.

NRG YIELD, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS



	Six months ended June 30,
	2015			2014 ^(a)
	(In millions)
Cash Flows from Operating Activities
Net income	$	25		$	68
Adjustments to reconcile net income to net cash provided by operating activities:
Distributions in excess of equity in earnings of unconsolidated affiliates	18			(8		)
Depreciation and amortization	113			78
Amortization of financing costs and debt discount/premiums	6			5
Amortization of intangibles and out-of-market contracts	26			1
Adjustment for debt extinguishment	7			—
Changes in deferred income taxes	—			5
Changes in derivative instruments	(35		)	(5		)
Changes in other working capital	(72		)	(69		)
Net Cash Provided by Operating Activities	88			75
Cash Flows from Investing Activities
Acquisition of businesses, net of cash acquired	(37		)	—
Acquisition of Drop Down Assets, net of cash acquired	(489		)	(336		)
Capital expenditures	(8		)	(29		)
Decrease in restricted cash	7			49
Decrease in notes receivable	3			5
Proceeds from renewable energy grants	—			137
Investments in unconsolidated affiliates	(313		)	(15		)
Other	—			11
Net Cash Used in Investing Activities	(837		)	(178		)
Cash Flows from Financing Activities
Contributions from noncontrolling interests	119			—
Capital contributions from NRG	—			2
Distributions and return of capital to NRG	—			(25		)
Proceeds from the issuance of common stock	600			—
Payment of dividends and distributions to shareholders	(61		)	(44		)
Proceeds from issuance of long-term debt	575			386
Payment of debt issuance costs	(11		)	(13		)
Payments for long-term debt	(598		)	(154		)
Net Cash Provided by Financing Activities	624			152
Net (Decrease) Increase in Cash and Cash Equivalents	(125		)	49
Cash and Cash Equivalents at Beginning of Period	406			59
Cash and Cash Equivalents at End of Period	$	281		$	108

^(a) Retrospectively adjusted as discussed in Note 1, Nature of Business.

See accompanying notes to consolidated financial statements.

NRG YIELD, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Note 1 — Nature of Business

NRG Yield, Inc., or the Company, is a dividend growth-oriented company formed as a Delaware corporation on December 20, 2012, to serve as the primary vehicle through which NRG owns, operates and acquires contracted renewable and conventional generation and thermal infrastructure assets. The Company owns 100% of the Class A units and Class C units of NRG Yield LLC, including a controlling interest through its position as managing member. NRG Yield LLC, through its wholly owned subsidiary, NRG Yield Operating LLC, or Yield Operating, is the holder of a portfolio of renewable and conventional generation and thermal infrastructure assets, primarily located in the Northeast, Southwest and California regions of the U.S.

The Company consolidates the results of NRG Yield LLC through its controlling interest, with NRG's interest shown as noncontrolling interest in the financial statements. On May 14, 2015, the Company completed a stock split in connection with which each outstanding share of Class A common stock was split into one share of Class A common stock and one share of Class C common stock, and each outstanding share of Class B common stock was split into one share of Class B common stock and one share of Class D common stock. The stock split is referred to as the Recapitalization and all references to share or per share amounts in the accompanying consolidated financial statements and applicable disclosures have been retrospectively adjusted to reflect the Recapitalization. In addition, on June 29, 2015, NRG Yield, Inc. completed the issuance of 28,198,000 shares of Class C common stock for net proceeds of $600 million. See further discussion in Note 10, Changes in Capital Structure. The holders of the Company's outstanding shares of Class A and Class C common stock are entitled to dividends as declared. NRG receives its distributions from NRG Yield LLC through its ownership of NRG Yield LLC Class B and Class D units.

The following table represents the structure of the Company as of June 30, 2015:

As of June 30, 2015, the Company's operating assets are comprised of the following projects:



Projects	Percentage Ownership		Net Capacity (MW)^(a)	Offtake Counterparty	Expiration
Conventional
GenConn Middletown	49.95	%	95	Connecticut Light & Power	2041
GenConn Devon	49.95	%	95	Connecticut Light & Power	2040
Marsh Landing	100	%	720	Pacific Gas and Electric	2023
El Segundo	100	%	550	Southern California Edison	2023
Walnut Creek	100	%	485	Southern California Edison	2023
			1,945
Utility Scale Solar
Alpine	100	%	66	Pacific Gas and Electric	2033
Avenal	49.95	%	23	Pacific Gas and Electric	2031
Avra Valley	100	%	25	Tucson Electric Power	2032
Blythe	100	%	21	Southern California Edison	2029
Borrego	100	%	26	San Diego Gas and Electric	2038
Roadrunner	100	%	20	El Paso Electric	2031
CVSR	48.95	%	122	Pacific Gas and Electric	2038
Kansas South	100	%	20	Pacific Gas and Electric	2033
TA High Desert	100	%	20	Southern California Edison	2033
Desert Sunlight 250	25	%	63	Southern California Edison	2035
Desert Sunlight 300	25	%	75	Pacific Gas and Electric	2040
			481
Distributed Solar
AZ DG Solar Projects	100	%	5	Various	2025 - 2033
PFMG DG Solar Projects	51	%	5	Various	2032
			10
Wind
Alta I	100	%	150	Southern California Edison	2035
Alta II	100	%	150	Southern California Edison	2035
Alta III	100	%	150	Southern California Edison	2035
Alta IV	100	%	102	Southern California Edison	2035
Alta V	100	%	168	Southern California Edison	2035
Alta X^(b)	100	%	137	Southern California Edison	2038^(c)
Alta XI ^(b)	100	%	90	Southern California Edison	2038^(c)
South Trent	100	%	101	AEP Energy Partners	2029
Laredo Ridge	100	%	80	Nebraska Public Power District	2031
Taloga	100	%	130	Oklahoma Gas & Electric	2031
Pinnacle	100	%	55	Maryland Department of General Services and University System of Maryland	2031
Buffalo Bear	100	%	19	Western Farmers Electric Co-operative	2033
Spring Canyon II ^(b)	90.1	%	31	Platte River Power Authority	2038
Spring Canyon III ^(b)	90.1	%	26	Platte River Power Authority	2039
			1,389
Thermal
Thermal equivalent MWt^(d)	100	%	1,310	Various	Various
Thermal generation	100	%	124	Various	Various

Total net capacity (excluding equivalent MWt)			3,949

(a) Net capacity represents the maximum, or rated, generating capacity of the facility multiplied by the Company's percentage ownership in the facility as of June 30, 2015.

(b) Projects are part of tax equity arrangements, as further described in Note 2, Summary of Significant Accounting Policies.

(d) For thermal energy, net capacity represents MWt for steam or chilled water and excludes 134 MWt available under the right-to-use provisions contained in agreements between two of the Company's thermal facilities and certain of its customers.

Substantially all of the Company's generation assets are under long-term contractual arrangements for the output or capacity from these assets. The thermal assets are comprised of district energy systems and combined heat and power plants that produce steam, hot water and/or chilled water and in some instances, electricity at a central plant. Three of the district energy systems are subject to rate regulation by state public utility commissions while the other district energy systems have rates determined by negotiated bilateral contracts.

In connection with its initial public offering in 2013, the Company entered into a management services agreement with NRG for various services, including human resources, accounting, tax, legal, information systems, treasury, and risk management. Costs incurred by the Company under this agreement were $6 million and $4 million for the six months ended June 30, 2015, and 2014, respectively, which included certain direct expenses incurred by NRG on behalf of the Company.

Stockholders' equity represents the equity associated with the Class A and Class C common stockholders, with the equity associated with the Class B and Class D common stockholder, or NRG, classified as noncontrolling interest.

As described in Note 3, Business Acquisitions, on January 2, 2015, the Company acquired the Laredo Ridge, Tapestry, and Walnut Creek projects, or the January 2015 Drop Down Assets, for total cash consideration of $489 million, including $9 million for working capital, plus assumed debt of $737 million. Additionally, on June 30, 2014, the Company acquired the TA High Desert, Kansas South, and El Segundo projects, or the June 2014 Drop Down Assets, from NRG for total cash consideration of $357 million plus assumed project level debt. These acquisitions were accounted for as transfers of entities under common control. The accounting guidance requires retrospective combination of the entities for all periods presented as if the combination has been in effect since the inception of common control. Accordingly, the Company prepared its consolidated financial statements to reflect the transfer as if it had taken place from the beginning of the financial statements period, or from the date the entities were under common control, which was April 1, 2014, for the January 2015 Drop Down Assets, which represents the date these entities were acquired by NRG.

The accompanying unaudited interim consolidated financial statements have been prepared in accordance with the SEC’s regulations for interim financial information. Accordingly, they do not include all of the information and notes required by U.S. GAAP for complete financial statements. The following notes should be read in conjunction with the accounting policies and other disclosures as set forth in the notes to the Company’s annual financial statements for the year ended December 31, 2014. Interim results are not necessarily indicative of results for a full year.

In the opinion of management, the accompanying unaudited interim consolidated financial statements contain all material adjustments consisting of normal and recurring accruals necessary to present fairly the Company's consolidated financial position as of June 30, 2015, and the results of operations, comprehensive income and cash flows for the six months ended June 30, 2015, and 2014.

Note 2 — Summary of Significant Accounting Policies

Use of Estimates

The preparation of consolidated financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions. These estimates and assumptions impact the reported amount of assets and liabilities and disclosures of contingent assets and liabilities as of the date of the consolidated financial statements. They also impact the reported amount of net earnings during the reporting period. Actual results could be different from these estimates.

Tax Equity Arrangements

Certain portions of the Company’s noncontrolling interest in subsidiaries represent third-party interests in the net assets under certain tax equity arrangements, which are consolidated by the Company, that have been entered into to finance the cost of wind facilities eligible for certain tax credits. Additionally, certain portions of the Company’s investments in unconsolidated affiliates reflect the Company’s interests in tax equity arrangements that are not consolidated by the Company that have been entered into to finance the cost of solar energy systems under operating leases eligible for certain tax credits. The Company has determined that the provisions in the contractual agreements of these structures represent substantive profit sharing arrangements. Further, the Company has determined that the appropriate methodology for calculating the noncontrolling interest and investment in unconsolidated affiliates that reflects the substantive profit sharing arrangements is a balance sheet approach utilizing the hypothetical liquidation book value, or HLBV, method. Under the HLBV method, the amounts reported as noncontrolling interests and investment in unconsolidated affiliates represent the amounts the investors that are party to the tax equity arrangements would hypothetically receive at each balance sheet date under the liquidation provisions of the contractual agreements, assuming the net assets of the funding structures were liquidated at their recorded amounts determined in accordance with GAAP. The investors’

interests in the results of operations of the funding structures are determined as the difference in noncontrolling interests and investment in unconsolidated affiliates at the start and end of each reporting period, after taking into account any capital transactions between the structures and the funds’ investors. The calculations utilized to apply the HLBV method include estimated calculations of taxable income or losses for each reporting period.

Noncontrolling Interests

The following table reflects the changes in the Company's noncontrolling interest balance:



	(In millions)
Balance as of December 31, 2014	651
Payment to NRG for acquired January 2015 Drop Down Assets	(489		)
Contributions from noncontrolling interest for Alta Wind X-X1 TE Holdco	119
Noncontrolling interest acquired in Spring Canyon acquisition	74
Comprehensive income	31
Non-cash contributions	9
Cash distributions to NRG	(34		)
Balance as of June 30, 2015	$	361

On June 30, 2015, the Company sold an economic interest in Alta Wind X-XI TE Holdco, holder of the Alta Wind X and Alta Wind XI projects, to a financial institution in order to monetize cash and tax attributes, primarily production tax credits. The net proceeds of $119 million are reflected as noncontrolling interest in the Company's balance sheet.

As described in Note 3, Business Acquisitions, the Company acquired Spring Canyon on May 7, 2015. The Company owns 90.1% of the Class B shares of Spring Canyon. The seller, Invenergy, owns the remaining 9.9% of the Class B shares and the Class A shares are owned by a tax equity investor. The interests of Invenergy and the tax equity investor of $74 million are shown as noncontrolling interests.

On January 2, 2015, the Company acquired the January 2015 Drop Down Assets, as discussed in Note 3, Business Acquisitions. The difference between the cash paid of $489 million and the historical value of the entities' net assets of $61 million, as well as $23 million of AOCL, was recorded as a distribution to NRG and reduced the balance of its noncontrolling interest. In addition, as the January 2015 Drop Down Assets were owned by NRG until January 2, 2015, the pre-acquisition earnings of such projects are recorded as attributable to NRG's noncontrolling interest.

Distributions

On August 4, 2015, NRG Yield LLC announced the declaration of a distribution on its units of $0.21 per unit payable on September 15, 2015 to unit holders of record as of September 1, 2015. On May 20, 2015, NRG Yield LLC declared a distribution on its units of $0.20 per unit, which was paid on June 15, 2015. On February 17, 2015, NRG Yield LLC declared a distribution on its units of $0.39 per unit, which was paid on March 16, 2015. The portion of the distributions paid by NRG Yield LLC to NRG was recorded as a reduction to the Company's noncontrolling interest balance.

Recent Accounting Developments

ASU 2015-03 — In April 2015, the FASB issued ASU No. 2015-03, Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs, or ASU No. 2015-03. The amendments of ASU No. 2015-03 were issued to reduce complexity in the balance sheet presentation of debt issuance costs. ASU No. 2015-03 requires that debt issuance costs be presented in the balance sheet as a direct deduction from the carrying amount of debt liability, consistent with debt discounts or premiums. The recognition and measurement guidance for debt issuance costs are not affected by the amendments in this standard. The guidance in ASU No. 2015-03 is effective for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. Early adoption is permitted for financial statements that have not been previously issued. Had the Company adopted this guidance early, other assets would have been lower by $66 million and $67 million with corresponding decreases in debt as of June 30, 2015, and December 31, 2014, respectively. The adoption of this standard will have no impact on the Company's results of operations, cash flows or net assets.

ASU 2015-02 — In February 2015, the FASB issued ASU No. 2015-02, Consolidation (Topic 810): Amendments to the Consolidation Analysis, or ASU No. 2015-02. The amendments of ASU No. 2015-02 were issued in an effort to minimize situations under previously existing guidance in which a reporting entity was required to consolidate another legal entity in which that reporting entity did not have: (1) the ability through contractual rights to act primarily on its own behalf; (2) ownership of the majority of the legal entity's voting rights; or (3) the exposure to a majority of the legal entity's economic benefits. ASU No. 2015-02 affects reporting entities that are required to evaluate whether they should consolidate certain legal entities. All legal entities are subject to reevaluation under the revised consolidation model. The guidance in ASU No. 2015-02 is effective for periods beginning after December 15, 2015. Early adoption is permitted. The Company adopted the standard effective January 1, 2015 and the adoption of this standard did not impact the Company's results of operations, cash flows or financial position.

ASU 2014-16 — In November 2014, the FASB issued ASU No. 2014-16, Derivatives and Hedging (Topic 815): Determining Whether the Host Contract in a Hybrid Financial Instrument Issued in the Form of a Share Is More Akin to Debt or to Equity, or ASU No. 2014-16. The amendments of ASU No. 2014-16 clarify how U.S. GAAP should be applied in determining whether the nature of a host contract is more akin to debt or equity and in evaluating whether the economic characteristics and risks of an embedded feature are "clearly and closely related" to its host contract. The guidance in ASU No. 2014-16 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. Early adoption is permitted. The Company adopted the standard effective January 1, 2015 and the adoption of this standard did not impact the Company's results of operations, cash flows or financial position.

ASU 2014-09 — In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606), or ASU No. 2014-09. The amendments of ASU No. 2014-09 complete the joint effort between the FASB and the International Accounting Standards Board, or IASB, to develop a common revenue standard for U.S. GAAP and International Financial Reporting Standards, or IFRS, and to improve financial reporting. The guidance in ASU No. 2014-09 provides that an entity should recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled to in exchange for the goods or services provided and establishes the following steps to be applied by an entity: (1) identify the contract with a customer; (2) identify the performance obligations in the contract; (3) determine the transaction price; (4) allocate the transaction price to the performance obligations in the contract; and (5) recognize revenue when (or as) the entity satisfies the performance obligation. On July 9, 2015, the FASB voted to defer the effective date by one year to make the guidance of ASU No. 2014-09 effective for annual reporting periods beginning after December 15, 2017, including interim periods therein. Early adoption is permitted, but not prior to the original effective date, which was for annual reporting periods beginning after December 15, 2016. The Company is currently evaluating the impact of the standard on the Company's results of operations, cash flows and financial position.

Note 3 — Business Acquisitions

2015 Acquisitions

Desert Sunlight — On June 29, 2015, the Company acquired 25% of the membership interest in Desert Sunlight Investment Holdings, LLC, which owns two solar photovoltaic facilities that total 550 MW, located in Desert Center, California from EFS Desert Sun, LLC, an affiliate of GE Energy Financial Services for a purchase price of $285 million. Power generated by the facilities is sold to Southern California Edison and Pacific Gas and Electric under long-term PPAs with approximately 20 years and 25 years of remaining contract life, respectively. The Company accounts for its 25% investment as an equity method investment.

Spring Canyon — On May 7, 2015, the Company acquired a 90.1% interest in Spring Canyon II, a 34 MW wind facility, and Spring Canyon III, a 29 MW wind facility, each located in Logan County, Colorado, from Invenergy Wind Global LLC. The purchase price was funded with cash on hand. Power generated by Spring Canyon II and Spring Canyon III is sold to Platte River Power Authority under long-term PPAs with approximately 24 years of remaining contract life.

University of Bridgeport Fuel Cell — On April 30, 2015, the Company completed the acquisition of the University of Bridgeport Fuel Cell project in Bridgeport, Connecticut from FuelCell Energy, Inc. The project added an additional 1.4 MW of thermal capacity to the Company's portfolio, with a 12 year contract, with the option for a 7-year extension. The acquisition is reflected in the Company's Thermal segment.

January 2015 Drop Down Assets from NRG — On January 2, 2015, the Company acquired the following projects from NRG: (i) Laredo Ridge, an 80 MW wind facility located in Petersburg, Nebraska, (ii) Tapestry, which includes Buffalo Bear, a 19 MW wind facility in Buffalo, Oklahoma; Taloga, a 130 MW wind facility in Putnum, Oklahoma; and Pinnacle, a 55 MW wind facility in Keyser, West Virginia, and (iii) Walnut Creek, a 485 MW natural gas facility located in City of Industry, California, for total cash consideration of $489 million, including $9 million for working capital, plus assumed project-level debt of $737 million. The Company funded the acquisition with cash on hand and drawings under its revolving credit facility. The assets and

liabilities transferred to the Company relate to interests under common control by NRG and were recorded at historical cost in accordance with ASC 805-50, Business Combinations - Related Issues. The difference between the cash paid and the historical value of the entities' equity of $61 million, as well as $23 million of AOCL, was recorded as a distribution to NRG and reduced the balance of its noncontrolling interest. Since the transaction constituted a transfer of assets under common control, the guidance requires retrospective combination of the entities for all periods presented as if the combination has been in effect since the inception of common control. NRG acquired the majority of EME's assets, including Laredo Ridge, Tapestry and Walnut Creek, on April 1, 2014.

The following table presents the historical information summary combining the financial information for the January 2015 Drop Down Assets transferred in connection with the acquisition:



	December 31, 2014
	As Previously Reported		Walnut Creek		Tapestry		Laredo Ridge		As Currently Reported
			(In millions)
Current assets	$	539	$	46	$	14	$	7	$	606
Property, plant and equipment	3,487		575		286		118		4,466
Non-current assets	1,726		57		61		49		1,893
Total assets	5,752		678		361		174		6,965


Debt	4,050		437		192		108		4,787
Other current and non-current liabilities	222		62		5		4		293
Total liabilities	4,272		499		197		112		5,080
Net assets	$	1,480	$	179	$	164	$	62	$	1,885

Supplemental Pro Forma Information

As described above, the Company's acquisition of the January 2015 Drop Down Assets was accounted for as a transfer of entities under common control and all periods were retrospectively adjusted to reflect the entities as if they were transferred on the date the entities were under common control, which was April 1, 2014, the date NRG acquired Walnut Creek, Laredo Ridge and Tapestry. The following unaudited supplemental pro forma information represents the results of operations as if the Company had acquired the January 2015 Drop Down Assets on January 1, 2014, including the impact of acquisition accounting with respect to NRG's acquisition of the projects. While the financial statements have been retrospectively adjusted, all net income or losses prior to the Company's acquisition of the projects is reflected as attributable to NRG and accordingly, no pro forma impact to earnings per Class A and Class C common share was calculated.



	For the six months ended
(In millions)	June 30, 2014

Operating revenues	$	339
Net income	65

Since the acquisition date, the January 2015 Drop Down Assets contributed $73 million in operating revenues and $23 million in net income.

2014 Acquisitions

Alta Wind Portfolio Acquisition — On August 12, 2014, the Company acquired 100% of the membership interests of Alta Wind Asset Management Holdings, LLC, Alta Wind Company, LLC, Alta Wind X Holding Company, LLC and Alta Wind XI Holding Company, LLC, which collectively own seven wind facilities that total 947 MW located in Tehachapi, California and a portfolio of associated land leases, or the Alta Wind Portfolio. Power generated by the Alta Wind Portfolio is sold to Southern California Edison under long-term PPAs, with 21 years of remaining contract life for Alta Wind I-V. The Alta X and XI PPAs begin in 2016 with a term of 22 years and currently sell energy and renewable energy credits on a merchant basis.

The purchase price for the Alta Wind Portfolio was $923 million, which consisted of a base purchase price of $870 million, as well as a payment for working capital of $53 million, plus the assumption of $1.6 billion of non-recourse project-level debt. In order to fund the purchase price, the Company completed an equity offering of 12,075,000 shares of its Class A common stock at an offering price of $54.00 per share on July 29, 2014, which resulted in net proceeds of $630 million, after underwriting discounts and expenses. In addition, on August 5, 2014, NRG Yield Operating LLC issued $500 million of Senior Notes, which bear interest at a rate of 5.375% and mature in August 2024.

The acquisition was recorded as a business combination under ASC 805, with identifiable assets acquired and liabilities assumed provisionally recorded at their estimated fair values on the acquisition date. The initial accounting for the business combination is not complete because the evaluation necessary to assess the fair values of certain net assets acquired is still in process. The provisional amounts are subject to revision until the evaluations are completed to the extent that additional information is obtained about the facts and circumstances that existed as of the acquisition date. The allocation of the purchase price may be modified up to one year from the date of the acquisition as more information is obtained about the fair value of assets acquired and liabilities assumed. The following table summarizes the provisional amounts recognized for assets acquired and liabilities assumed as of December 31, 2014, as well as adjustments made through June 30, 2015.

The purchase price of $923 million was provisionally allocated as follows:



	Acquisition Date Fair Value at December 31, 2014		Measurement period adjustments			Revised Acquisition Date
(In millions)
Assets
Cash	$	22	$	—		$	22
Current and non-current assets	49		(2		)	47
Property, plant and equipment	1,304		6			1,310
Intangible assets	1,177		(6		)	1,171
Total assets acquired	2,552		(2		)	2,550

Liabilities
Debt	1,591		—			1,591
Current and non-current liabilities	38		(2		)	36
Total liabilities assumed	1,629		(2		)	1,627
Net assets acquired	$	923	$	—		$	923

Fair value measurements

The fair values of the property, plant and equipment and intangible assets were measured primarily based on significant inputs that are not observable in the market and thus represent a Level 3 measurement as defined in ASC 820. Significant inputs were as follows:

•

Property, plant and equipment — The fair values were determined primarily based on an income method using discounted cash flows and validated using a cost approach based on the replacement cost of the assets less economic obsolescence. The income approach was applied by determining the enterprise value for each acquired entity and subtracting the fair value of the intangible assets and working capital to determine the implied value of the tangible fixed assets. This methodology was primarily relied upon as the forecasted cash flows incorporate the specific attributes of each asset including age, useful life, equipment condition and technology. The income approach also allows for an accurate reflection of current and expected market dynamics such as supply and demand and regulatory environment as of the acquisition date.

•

Intangible Assets - PPAs — The fair values of the PPAs acquired were determined utilizing a variation of the income approach where the incremental future cash flows resulting from the acquired PPAs compared to the cash flows based on current market prices were discounted to present value at a weighted average cost of capital reflective of a market participant. The values were corroborated with available market data. The PPA values will be amortized over the term of the PPAs, which approximate 22 years.

•

Intangible Assets - Leasehold rights — The fair values of the leasehold rights acquired, which represent the contractual right to receive royalty payments equal to a percentage of PPA revenue from certain projects, were determined utilizing the income approach. The values were corroborated with available market data. The leasehold rights values will be amortized over a period of 21 years, which is equal to the average term of the contracts.

June 2014 Drop Down Assets — On June 30, 2014, the Company acquired from NRG: (i) El Segundo, a 550 MW fast-start, gas-fired facility located in Los Angeles County, California; (ii) TA High Desert, a 20 MW solar facility located in Los Angeles County, California; and (iii) Kansas South, a 20 MW solar facility located in Kings County, California. The Company paid total cash consideration of $357 million, which represents a base purchase price of $349 million and $8 million of working capital adjustments. In addition, the acquisition included the assumption of $612 million of project-level debt. The assets and liabilities transferred to the Company relate to interests under common control by NRG and were recorded at historical cost in accordance with ASC 805-50. The difference between the cash proceeds and the historical value of the net assets was recorded as a distribution to NRG and reduced the balance of its noncontrolling interest. Since the transaction constituted a transfer of entities under common control, the guidance requires retrospective combination of the entities for all periods presented as if the combination has been in effect since the inception of common control. Accordingly, the Company prepared its consolidated financial statements to reflect the transfer as if it had taken place from the beginning of the financial statements period.

Note 4 — Property, Plant and Equipment

The Company’s major classes of property, plant, and equipment were as follows:



	June 30, 2015			December 31, 2014			Depreciable Lives
	(In millions)
Facilities and equipment	$	4,832		$	4,709		2 - 40 Years
Land and improvements	87			87
Construction in progress	8			8
Total property, plant and equipment	4,927			4,804
Accumulated depreciation	(449		)	(338		)
Net property, plant and equipment	$	4,478		$	4,466

Note 5 — Variable Interest Entities, or VIEs

Entity that is Consolidated

Alta TE Holdco — On June 30, 2015, the Company sold an economic interest in Alta TE Holdco to a financial institution in order to monetize certain cash and tax attributes, primarily production tax credits. The financial institution, or Investor, receives 99% of allocations of taxable income and other items until the flip point, which occurs when the Investor obtains a specified return on its initial investment, at which time the allocations to the Investor change to 5%. The Company receives 100% of cash available for distribution in the first year and subsequently receives 94.34% until the flip point, at which time the allocations to the Company of cash available for distribution change to 97.12%, except if the flip point has not occurred by a specified date, which would result in 100% of cash available for distribution allocated to the Investor until the flip point occurs. Alta TE Holdco is a VIE and the Company is the primary beneficiary, through its position as managing member, and consolidates Alta TE Holdco. The net proceeds of $119 million are reflected as noncontrolling interest in the Company's balance sheet.

The summarized financial information for Alta TE Holdco consisted of the following:



(In millions)	June 30, 2015
Other current and non-current assets	$	11
Property, plant and equipment	493
Intangible assets	287
Total assets	791
Current and non-current liabilities	8
Total liabilities	8
Noncontrolling interest	130
Net assets less noncontrolling interests	$	653

Entities that are not Consolidated

The Company has interests in entities that are considered VIEs under ASC 810, Consolidation, but is not considered the primary beneficiary. The Company accounts for its interests in these entities under the equity method of accounting.

NRG DGPV Holdco 1 LLC — On May 8, 2015, NRG Yield DGPV Holding LLC, a subsidiary of the Company, and NRG Renew LLC, a subsidiary of NRG, entered into a partnership by forming NRG DGPV Holdco 1 LLC, or DGPV Holdco, that will own or purchase solar power generation projects and other ancillary related assets via intermediate funds. On June 12, 2015, DGPV Holdco invested in a tax equity portfolio of distributed solar projects acquired from NRG Renew LLC. The portfolio agreed to pay NRG Renew LLC approximately $32 million for the acquired projects, of which approximately $7 million was paid in June 2015. The Company's initial investment in this portfolio was $4 million in cash and a $15 million payable into the portfolio, which it expects to pay during the third quarter of 2015. The Company's maximum exposure to loss is limited to its equity investment, which was $19 million as of June 30, 2015.

NRG RPV Holdco 1 LLC — On April 9, 2015, NRG Yield RPV Holding LLC, a subsidiary of the Company, and NRG Residential Solar Solutions LLC, a subsidiary of NRG, entered into a partnership, by forming NRG RPV Holdco 1 LLC, or RPV Holdco, that will invest in and hold operating portfolios of residential solar assets developed by NRG Home Solar, a subsidiary of NRG, including: (i) an existing, unlevered portfolio of over 2,200 leases across nine states representing approximately 17 MW with a weighted average remaining lease term of approximately 17 years; and (ii) in-development, tax equity financed portfolios of approximately 13,000 leases representing approximately 90 MW, with an average lease term for the existing and new leases of approximately 17 to 20 years. The following illustrates the structure of RPV Holdco:

The Company invested $26 million in RPV Holdco in April 2015 related to the existing, unlevered portfolio of leases. The Company also invested $14 million of its $150 million commitment in the tax equity financed portfolios through June 30, 2015. Its maximum exposure will be limited to its equity investment. RPV Holdco is considered a VIE under ASC 810, however the Company is not the primary beneficiary, and will account for its investment under the equity method. The Company's maximum exposure to loss is limited to its equity investment, which was $40 million as of June 30, 2015.

GenConn Energy LLC — The Company has a 49.95% interest in GCE Holding LLC, the owner of GenConn, which owns and operates two 190 MW peaking generation facilities in Connecticut at the Devon and Middletown sites. Each of these facilities was constructed pursuant to a 30-year cost of service type contract with the Connecticut Light & Power Company. GenConn is considered a VIE under ASC 810, however the Company is not the primary beneficiary, and accounts for its investment under the equity method.

The project was funded through equity contributions from the owners and non-recourse, project-level debt. As of June 30, 2015, the Company's investment in GenConn was $113 million and its maximum exposure to loss is limited to its equity investment. Additionally, GenConn has a $237 million project note with an interest rate of 4.73% and a maturity date of July 2041, and a 5-year, $35 million working capital facility that matures in 2018, which can be used to issue letters of credit at an interest rate of 1.875% per annum. As of June 30, 2015, $224 million was outstanding under the note and nothing was drawn on the working capital facility. The note is secured by all of the GenConn assets.

The following table presents summarized financial information for GCE Holding LLC:



	Three months ended June 30,				Six months ended June 30,
(In millions)	2015		2014		2015		2014
Income Statement Data:
Operating revenues	$	18	$	18	$	40	$	44
Operating income	11		10		20		20
Net income	$	8	$	7	$	14	$	14



	June 30, 2015		December 31, 2014
Balance Sheet Data:	(In millions)
Current assets	$	37	$	33
Non-current assets	424		438
Current liabilities	16		20
Non-current liabilities	$	219	$	223

Note 6 — Fair Value of Financial Instruments

For cash and cash equivalents, restricted cash, accounts receivable, accounts payable, accounts payable — affiliate, accrued expenses and other liabilities, the carrying amounts approximate fair value because of the short-term maturity of those instruments and are classified as Level 1 within the fair value hierarchy.

The estimated carrying amounts and fair values of the Company’s recorded financial instruments not carried at fair market value are as follows:



	As of June 30, 2015				As of December 31, 2014
	Carrying Amount		Fair Value		Carrying Amount		Fair Value
(In millions)
Assets:
Notes receivable, including current portion	$	20	$	20	$	21	$	21
Liabilities:
Long-term debt, including current portion	$	4,743	$	4,813	$	4,787	$	4,873

The fair value of notes receivable and long-term debt are based on expected future cash flows discounted at market interest rates, or current interest rates for similar instruments and are classified as Level 3 within the fair value hierarchy.

Fair Value Accounting under ASC 820

ASC 820 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three levels as follows:


•	Level 1—quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access as of the measurement date.


•	Level 2—inputs other than quoted prices included within Level 1 that are directly observable for the asset or liability or indirectly observable through corroboration with observable market data.


•	Level 3—unobservable inputs for the asset or liability only used when there is little, if any, market activity for the asset or liability at the measurement date.

In accordance with ASC 820, the Company determines the level in the fair value hierarchy within which each fair value measurement in its entirety falls, based on the lowest level input that is significant to the fair value measurement.

Recurring Fair Value Measurements

The Company records its derivative assets and liabilities at fair market value on its consolidated balance sheet. The following table presents assets and liabilities measured and recorded at fair value on the Company's consolidated balance sheets on a recurring basis and their level within the fair value hierarchy:



	As of June 30, 2015		As of December 31, 2014
	Fair Value ^(a)		Fair Value ^(a)
(In millions)	Level 2		Level 2
Derivative assets:
Commodity contracts	$	4	$	—
Interest rate contracts	4		2
Total assets	8		2
Derivative liabilities:
Commodity contracts	3		3
Interest rate contracts	84		114
Total liabilities	$	87	$	117

^(a) There were no assets or liabilities classified as Level 1 or Level 3 as of June 30, 2015, or December 31, 2014.

Derivative Fair Value Measurements

A majority of the Company's contracts are non-exchange-traded and valued using prices provided by external sources. For the Company’s energy markets, management receives quotes from multiple sources. To the extent that multiple quotes are received, the prices reflect the average of the bid-ask mid-point prices obtained from all sources believed to provide the most liquid market for the commodity. The remainder of the assets and liabilities represent contracts for which external sources or observable market quotes are not available. These contracts are valued using various valuation techniques including but not limited to internal models that apply fundamental analysis of the market and corroboration with similar markets. As of June 30, 2015, there were no contracts valued with prices provided by models and other valuation techniques.

The fair value of each contract is discounted using a risk free interest rate. In addition, a credit reserve is applied to reflect credit risk, which is calculated based on credit default swaps. To the extent that the net exposure is an asset, the Company uses the counterparty’s default swap rate. If the exposure is a liability, the Company uses its default swap rate. The credit reserve is added to the discounted fair value to reflect the exit price that a market participant would be willing to receive to assume the liabilities or that a market participant would be willing to pay for the assets. As of June 30, 2015, the credit reserve resulted in a $1 million increase in fair value which is composed of a $1 million gain in OCI. It is possible that future market prices could vary from those used in recording assets and liabilities and such variations could be material.

Concentration of Credit Risk

In addition to the credit risk discussion as disclosed in Note 2, Summary of Significant Accounting Policies, to the Company's audited consolidated financial statements included in the Company's 2014 Form 10-K, the following item is a discussion of the concentration of credit risk for the Company's financial instruments. Credit risk relates to the risk of loss resulting from non-performance or non-payment by counterparties pursuant to the terms of their contractual obligations. The Company monitors and manages credit risk through credit policies that include: (i) an established credit approval process; (ii) a daily monitoring of counterparties' credit limits; (iii) the use of credit mitigation measures such as margin, collateral, prepayment arrangements, or volumetric limits; (iv) the use of payment netting agreements; and (v) the use of master netting agreements that allow for the netting of positive and negative exposures of various contracts associated with a single counterparty. Risks surrounding counterparty performance and credit could ultimately impact the amount and timing of expected cash flows. The Company seeks to mitigate counterparty risk by having a diversified portfolio of counterparties.

Counterparty credit exposure includes credit risk exposure under certain long-term agreements, including solar and other PPAs. As external sources or observable market quotes are not available to estimate such exposure, the Company estimates the exposure related to these contracts based on various techniques including but not limited to internal models based on a fundamental analysis of the market and extrapolation of observable market data with similar characteristics. Based on these valuation techniques, as of June 30, 2015, credit risk exposure to these counterparties attributable to the Company's ownership interests was approximately $2.4 billion for the next five years. The majority of these power contracts are with utilities with strong credit quality and public utility commission or other regulatory support, as further described in Note 11, Segment Reporting, to the Company's audited consolidated financial statements included in the Company's 2014 Form 10-K. However, such regulated utility counterparties can be impacted by changes in government regulations, which the Company is unable to predict.

Note 7 — Accounting for Derivative Instruments and Hedging Activities

This footnote should be read in conjunction with the complete description under Note 7, Accounting for Derivative Instruments and Hedging Activities, to the Company's audited consolidated financial statements included in the Company's 2014 Form 10-K.

Energy-Related Commodities

As of June 30, 2015, the Company had forward contracts with an NRG subsidiary, hedging the sale of power from the Alta X and Alta XI wind facilities extending through the end of 2015 and forward contracts for the purchase of fuel commodities relating to the forecasted usage of the Company’s district energy centers extending through 2017. At June 30, 2015, these contracts were not designated as cash flow or fair value hedges.

Interest Rate Swaps

As of June 30, 2015, the Company had interest rate derivative instruments on non-recourse debt extending through 2031, most of which are designated as cash flow hedges.

Volumetric Underlying Derivative Transactions

The following table summarizes the net notional volume buy/(sell) of the Company's open derivative transactions broken out by commodity as of June 30, 2015, and December 31, 2014.



		Total Volume
		June 30, 2015		December 31, 2014
Commodity	Units	(In millions)
Natural Gas	MMBtu	3		2
Interest	Dollars	$	1,841	$	2,817

The decrease in the interest rate position is primarily the result of settling the Alta X and Alta XI interest rate swaps in connection with the repayment of the outstanding project-level debt, as further described in Note 8, Long-term Debt.

Fair Value of Derivative Instruments

The following table summarizes the fair value within the derivative instrument valuation on the balance sheet:



	Fair Value
	Derivative Assets				Derivative Liabilities
	June 30, 2015		December 31, 2014		June 30, 2015		December 31, 2014
	(In millions)
Derivatives Designated as Cash Flow Hedges:
Interest rate contracts current	$	—	$	—	$	37	$	40
Interest rate contracts long-term	4		2		42		49
Total Derivatives Designated as Cash Flow Hedges	4		2		79		89
Derivatives Not Designated as Cash Flow Hedges:
Interest rate contracts current	—		—		3		5
Interest rate contracts long-term	—		—		2		20
Commodity contracts current	4		—		3		3
Total Derivatives Not Designated as Cash Flow Hedges	4		—		8		28
Total Derivatives	$	8	$	2	$	87	$	117

The Company has elected to present derivative assets and liabilities on the balance sheet on a trade-by-trade basis and does not offset amounts at the counterparty master agreement level. As of June 30, 2015, there was no outstanding collateral paid or received. The following table summarizes the offsetting of derivatives by counterparty master agreement level:



	Gross Amounts Not Offset in the Statement of Financial Position
As of June 30, 2015	Gross Amounts of Recognized Assets/Liabilities			Derivative Instruments			Net Amount
Commodity contracts:	(In millions)
Derivative assets	$	4		$	(1	)	$	3
Derivative liabilities	(3		)	1			(2		)
Total commodity contracts	1			—			1
Interest rate contracts:
Derivative assets	4			(3		)	1
Derivative liabilities	(84		)	3			(81		)
Total interest rate contracts	(80		)	—			(80		)
Total derivative instruments	$	(79	)	$	—		$	(79	)



	Gross Amounts Not Offset in the Statement of Financial Position
As of December 31, 2014	Gross Amounts of Recognized Assets/Liabilities			Derivative Instruments			Net Amount
Commodity contracts:	(In millions)
Derivative assets	$	—		$	—		$	—
Derivative liabilities	(3		)	—			(3		)
Total commodity contracts	(3		)	—			(3		)
Interest rate contracts:
Derivative assets	2			(2		)	—
Derivative liabilities	(114		)	2			(112		)
Total interest rate contracts	(112		)	—			(112		)
Total derivative instruments	$	(115	)	$	—		$	(115	)

Accumulated Other Comprehensive Loss

The following table summarizes the effects on the Company’s accumulated OCL, balance attributable to interest rate swaps designated as cash flow hedge derivatives, net of tax:



	Three months ended June 30,						Six months ended June 30,
	2015			2014			2015			2014
	(In millions)
Accumulated OCL beginning balance	$	(69	)	$	(12	)	$	(52	)	$	—
Reclassified from accumulated OCL to income due to realization of previously deferred amounts	5			4			7			7
Mark-to-market of cash flow hedge accounting contracts	16			(26		)	(3		)	(41		)
Accumulated OCL ending balance, net of income tax benefit of $10, and $1, respectively	$	(48	)	$	(34	)	$	(48	)	$	(34	)
Accumulated OCL attributable to NRG	(32		)	(25		)	(32		)	(25		)
Accumulated OCL attributable to NRG Yield, Inc.	$	(16	)	$	(9	)	$	(16	)	$	(9	)
Losses expected to be realized from OCL during the next 12 months, net of income tax benefit of $3	$	(14	)				$	(14	)

Amounts reclassified from accumulated OCL into income and amounts recognized in income from the ineffective portion of cash flow hedges are recorded to interest expense. There was no ineffectiveness for the three or six months ended June 30, 2015, and 2014.

Impact of Derivative Instruments on the Statements of Operations

The Company has interest rate derivative instruments that are not designated as cash flow hedges. The effect of interest rate hedges is recorded to interest expense. For the three months ended June 30, 2015, and 2014, the impact to the consolidated

statements of operations was a gain of $31 million and a loss of $3 million, respectively. For the six months ended June 30, 2015, and 2014, the impact to the consolidated statements of operations was a gain of $19 million and a loss of $6 million, respectively.

A portion of the Company’s derivative commodity contracts relate to its Thermal Business for the purchase of fuel commodities based on the forecasted usage of the thermal district energy centers. Realized gains and losses on these contracts are reflected in the fuel costs that are permitted to be billed to customers through the related customer contracts or tariffs and accordingly, no gains or losses are reflected in the consolidated statements of operations for these contracts.

Commodity contracts also hedge the forecasted sale of power for the Alta X and Alta XI wind facilities until the start of the PPAs on January 1, 2016. The effect of these commodity hedges is recorded to operating revenues. For the three months ended June 30, 2015, and 2014, the impact to the consolidated statements of operations was an unrealized loss of $4 million and $0 million, respectively. For the six months ended June 30, 2015, and 2014, the impact to the consolidated statements of operations was an unrealized gain of $3 million and $0 million, respectively.

See Note 6, Fair Value of Financial Instruments, for discussion regarding concentration of credit risk.

Note 8 — Long-term Debt

This footnote should be read in conjunction with the complete description under Note 9, Long-term Debt, to the Company's 2014 Form 10-K. Long-term debt consisted of the following:



	June 30, 2015		December 31, 2014		June 30, 2015, interest rate % ^(a)
	(In millions, except rates)
Senior Notes, due 2024	$	500	$	500	5.375
Convertible notes, due 2019 ^(b)	328		326		3.50
NRG Yield LLC and NRG Yield Operating LLC Revolving Credit Facility, due 2019	267		—		L+2.50
Convertible notes, due 2020 ^(c)	264		—		3.25
Project-level debt:
Alta Wind I, lease financing arrangement, due 2034	255		261		7.015
Alta Wind II, lease financing arrangement, due 2034	200		205		5.696
Alta Wind III, lease financing arrangement, due 2034	208		212		6.067
Alta Wind IV, lease financing arrangement, due 2034	138		138		5.938
Alta Wind V, lease financing arrangement, due 2035	215		220		6.071
Alta Wind X, due 2021	—		300		L+2.00
Alta Wind XI, due 2021	—		191		L+2.00
Alta Realty Investments, due 2031	33		34		7.00
Alta Wind Asset Management, due 2031	19		20		L+2.375
NRG West Holdings LLC, due 2023 (El Segundo Energy Center)	489		506		L+1.625 - L+2.25
NRG Marsh Landing LLC, due 2017 and 2023	454		464		L+1.75 - L+1.875
Walnut Creek Energy, due 2023	381		391		L+1.625
Tapestry Wind LLC, due 2021	185		192		L+1.625
NRG Solar Alpine LLC, due 2014 and 2022	161		163		L+1.75
NRG Energy Center Minneapolis LLC, due 2017 and 2025	112		121		5.95 -7.25
Laredo Ridge LLC, due 2026	106		108		L+1.875
NRG Solar Borrego LLC, due 2025 and 2038	74		75		L+ 2.50/5.65
South Trent Wind LLC, due 2020	63		65		L+2.75
NRG Solar Avra Valley LLC, due 2031	62		63		L+1.75
TA High Desert LLC, due 2020 and 2032	54		55		L+2.50/5.15
WCEP Holdings LLC, due 2023	46		46		L+3.00
NRG Roadrunner LLC, due 2031	41		42		L+2.01
NRG Solar Kansas South LLC, due 2031	34		35		L+2.00
NRG Solar Blythe LLC, due 2028	22		22		L+2.75
PFMG and related subsidiaries financing agreement, due 2030	31		31		6.00
NRG Energy Center Princeton LLC, due 2017	1		1		5.95
Subtotal project-level debt:	3,384		3,961
Total debt	4,743		4,787
Less current maturities	407		214
Total long-term debt	$	4,336	$	4,573

(a) As of June 30, 2015, L+ equals 3 month LIBOR plus x%, except for the NRG Marsh Landing term loan, Walnut Creek term loan, and the Revolving Credit Facility where L+ equals 1 month LIBOR plus x% and Kansas South where L+ equals 6 month LIBOR plus x%.

(b) Net of discount of $17 million and $19 million as of June 30, 2015, and December 31, 2014, respectively.

The financing arrangements listed above contain certain covenants, including financial covenants that the Company is required to be in compliance with during the term of the respective arrangement. As of June 30, 2015, the Company was in compliance with all of the required covenants.

The discussion below lists changes to or additions of long-term debt for the six months ended June 30, 2015.

Convertible Senior Notes due 2019

In connection with the Recapitalization, the Company adjusted the conversion rate of its 2019 Convertible Notes. Effective on May 15, 2015, the conversion rate was adjusted to 42.9644 shares of Class A common stock per $1,000 principal amount of 2019 Convertible Notes in accordance with the terms of the related indenture.

NRG Yield LLC and NRG Yield Operating LLC Revolving Credit Facility

On June 26, 2015, the Company amended the revolving credit facility to, among other things, increase the availability from $450 million to $495 million. As of June 30, 2015, $267 million of borrowing and $32 million of letters of credit were outstanding. In July 2015, the Company repaid $190 million utilizing proceeds from the issuance of the 2020 Convertible Notes and the Class C common stock, both completed on June 29, 2015.

Convertible Senior Notes due 2020

On June 29, 2015, the Company closed on its offering of $287.5 million aggregate principal amount of 3.25% Convertible Senior Notes due 2020, or the 2020 Convertible Notes. The 2020 Convertible Notes are convertible, under certain circumstances, into the Company’s Class C common stock, cash or a combination thereof at an initial conversion price of $27.50 per Class C common share, which is equivalent to an initial conversion rate of approximately 36.3636 shares of Class C common stock per $1,000 principal amount of notes. Interest on the 2020 Convertible Notes is payable semi-annually in arrears on June 1 and December 1 of each year, commencing on December 1, 2015. The 2020 Convertible Notes mature on June 1, 2020, unless earlier repurchased or converted in accordance with their terms. Prior to the close of business on the business day immediately preceding December 1, 2019, the 2020 Convertible Notes will be convertible only upon the occurrence of certain events and during certain periods, and thereafter, at any time until the close of business on the second scheduled trading day immediately preceding the maturity date.

The 2020 Convertible Notes are accounted for in accordance with ASC 470-20. Under ASC 470-20, issuers of convertible debt instruments that may be settled in cash upon conversion, including partial cash settlement, are required to separately account for the liability (debt) and equity (conversion option) components. The application of ACS 470-20 resulted in the recognition of $23 million as the value for the equity component with the offset to debt discount. The debt discount will be amortized to interest expense using the effective interest method over the term of the Notes.

Alta Wind X and Alta Wind XI Due 2021

On June 30, 2015, the Company entered into a tax equity financing arrangement through which Yield Operating received $119 million in net proceeds, as described in Note 5, Variable Interest Entities, or VIEs. These proceeds, as well as proceeds obtained from the June 29, 2015, common stock issuance, as described in Note 10, Changes in Capital Structure, and 2020 Convertible Notes issuance, as described above, were utilized to repay all of the outstanding project indebtedness associated with the Alta Wind X and Alta Wind XI wind facilities. The Company also settled interest rate swaps associated with the project level debt for the Alta Wind X and Alta Wind XI wind facilities at a value of $17 million.

Laredo Ridge

On July 27, 2010, Laredo Ridge entered into a credit agreement with a group of lenders for a $75 million construction loan that was convertible to a term loan upon completion of the project, a $53 million cash grant loan and a $3 million working capital loan facility. The project met the conditions to convert to a term loan on March 18, 2011. The cash grant loan was repaid in July 2011 with proceeds of the cash grant. The credit agreement also included a letter of credit facility on behalf of Laredo Ridge of up to $9 million. Laredo Ridge paid a fee equal to the applicable margin on issued letters of credit.

On December 17, 2014, Laredo Ridge amended the credit agreement to increase its term loan borrowings by an additional $41 million to reduce the working capital facility by $1 million, to increase the letter of credit facility by $1 million and to reduce the related interest rate to LIBOR plus 1.875% through December 31, 2018, LIBOR plus 2.125% from January 1, 2019 through December 31, 2023 and LIBOR plus 2.375% from January 1, 2024 through the maturity date. The fee on the working capital facility was reduced to 0.5%. In addition, the maturity date was extended to March 31, 2028. The proceeds were utilized to make a distribution of $33 million to NRG Wind LLC, an NRG subsidiary, with the remaining $8 million utilized to fund the costs of the amendment. As of June 30, 2015, $106 million was outstanding under the term loan, nothing was outstanding under the working capital facility, and $10 million of letters of credit in support of the project were issued.

In connection with the amendment to the credit agreement, Laredo Ridge entered into a series of fixed for floating interest rate swaps that would fix the interest rate for a minimum of 75% of the outstanding notional amount. Laredo Ridge pays its counterparty the equivalent of a 2.31% fixed interest payment on a predetermined notional value, and quarterly, Laredo Ridge will receive the

equivalent of a floating interest payment based on the three-month LIBOR calculated on the same notional value through December 31, 2028. All interest rate swap payments by Laredo Ridge and its counterparties are made quarterly and LIBOR is determined in advance of each interest period.

Tapestry Wind LLC

On December 21, 2011, Tapestry Wind LLC entered into a credit agreement with a group of lenders for a $214 million term loan and an $8 million working capital loan facility. The term loan matures in December 2021. It is secured by Tapestry Wind LLC's interest in the Buffalo Bear, Taloga, and Pinnacle projects. The term loan amortizes based upon a predetermined schedule. The working capital facility is available to fund the operating needs of Tapestry Wind LLC. The commitment fee on this facility is 0.75%. The credit agreement also includes a letter of credit facility on behalf of Tapestry Wind LLC of up to $20 million. Tapestry Wind LLC pays a fee equal to the applicable margin on issued letters of credit.

Under the terms of the agreement, Tapestry Wind LLC entered into a series of fixed for floating interest rate swaps that would fix the interest rate for a minimum of 90% of the outstanding notional amount. Tapestry Wind LLC will pay its counterparty the equivalent of a 2.21% fixed interest payment on a predetermined notional value, and quarterly, Tapestry Wind LLC will receive the equivalent of a floating interest payment based on a three-month LIBOR calculated on the same notional value through December 21, 2021. All interest rate swap payments by Tapestry Wind LLC and its counterparties are made quarterly and the LIBOR is determined in advance of each interest period. Swaps became effective December 30, 2011, and amortize in proportion to the term loan. At the same time Tapestry Wind LLC entered into a series of forward starting swaps to hedge the refinancing risk. The swaps are effective December 21, 2021. Tapestry Wind LLC will pay its counterparty the equivalent of a 3.57% fixed interest payment on a predetermined notional value, and quarterly, Tapestry Wind LLC will receive the equivalent of a floating interest payment based on a three-month LIBOR calculated on the same notional value through December 21, 2029.

On November 12, 2014, Tapestry Wind LLC amended the credit agreement to reduce the related interest rate to LIBOR plus 1.625% through December 20, 2018 and LIBOR plus 1.75% from December 21, 2018 through the maturity date. As of June 30, 2015, $185 million was outstanding under the term loan, nothing was outstanding under the working capital facility and $20 million of letters of credit in support of the project were issued.

Walnut Creek

On July 27, 2011, Walnut Creek entered into a credit agreement with a group of lenders for a $442 million construction loan that was convertible to a term loan upon completion of the project, and a $5 million working capital loan facility. The project met the conditions to convert to a term loan on June 21, 2013 and matures in May 2023. The term loan amortizes based upon a predetermined schedule. The working capital facility is available to fund the operating needs of Walnut Creek. The commitment fee on this facility is 0.625%. The Walnut Creek agreement also includes a letter of credit facility on behalf of Walnut Creek of up to $117 million. Walnut Creek pays a fee equal to the applicable margin on issued letters of credit.

Under the terms of the agreement, Walnut Creek entered into a series of fixed for floating interest rate swaps that would fix the interest rate for a minimum of 90% of the outstanding notional amount. Walnut Creek will pay its counterparty the equivalent of a 3.54% fixed interest payment on a predetermined notional value, and quarterly, Walnut Creek will receive the equivalent of a floating interest payment based on a three-month LIBOR calculated on the same notional value through May 31, 2023. All interest rate swap payments by Walnut Creek and its counterparties are made quarterly and the LIBOR is determined in advance of each interest period. Swaps became effective June 28, 2013, and amortize in proportion to the term loan.

On October 21, 2014, Walnut Creek amended the credit agreement to increase its term loan borrowings by an additional $10 million, and to reduce the related interest rate to LIBOR plus 1.625% through September 30, 2018, LIBOR plus 1.75% from October 1, 2018 through September 30, 2022, and LIBOR plus 1.875% from October 1, 2022, through the maturity date. The fee on the working capital facility was reduced to 0.5%. The proceeds were utilized to make a distribution of $6 million to WCEP Holdings LLC with the remaining $4 million utilized to fund the costs of the amendment. In addition Walnut Creek entered into an additional interest rate swap to maintain the minimum of 90% of the outstanding notional amount being swapped to a fixed interest rate. Walnut Creek pays its counterparty the equivalent of a 4.0025% fixed interest payment on a predetermined notional value, and quarterly, Walnut Creek receives the equivalent of a floating interest payment based on a three-month LIBOR calculated on the same notional value through July 31, 2020. All interest rate swap payments by Walnut Creek and its counterparties are made quarterly and the LIBOR is determined in advance of each interest period. Swaps became effective June 28, 2013 and amortize in proportion to the term loan. As of June 30, 2015, $381 million was outstanding under the term loan, nothing was outstanding under the working capital facility, and $61 million of letters of credit were issued.

WCEP Holdings LLC

On July 27, 2011, WCEP Holdings LLC entered into a credit agreement with a group of lenders for a $53 million construction loan that was convertible to a term loan upon completion of the Walnut Creek project. The Walnut Creek project met the conditions for the WCEP Holdings LLC loan to convert to a term loan on June 21, 2013. The term loan has an interest rate of LIBOR plus an applicable margin of 4%. The term loan matures in May 2023. The term loan amortizes based upon a predetermined schedule.

Under the terms of the credit agreement, WCEP Holdings LLC entered into two fixed for floating interest rate swaps that would fix the interest rate for a minimum of 90% of the outstanding notional amount. WCEP Holdings LLC will pay its counterparty the equivalent of a 4% fixed interest payment on a predetermined notional value, and quarterly, WCEP Holdings LLC will receive the equivalent of a floating interest payment based on a three-month LIBOR calculated on the same notional value through May 31, 2023. All interest rate swap payments by WCEP Holdings LLC and its counterparties are made quarterly and the LIBOR is determined in advance of each interest period. Swaps became effective June 28, 2013, and amortize in proportion to the term loan.

On October 21, 2014, WCEP Holdings LLC amended the credit agreement to reduce the related interest rate to LIBOR plus 3%. The proceeds of the distribution from Walnut Creek were utilized to make an optional repayment of $6 million on the term loan. In addition, WCEP Holdings LLC partially terminated the interest rate agreements so that at least 90% and no more than 100% of the aggregate principal amount of the loans then outstanding will be subject to interest rate agreements. As of June 30, 2015, $46 million was outstanding under the term loan.

Avenal Solar Holdings LLC

On March 18, 2015, Avenal Solar Holdings LLC, one of the Company's equity method investments, amended its credit agreement to increase its borrowings by $43 million and to reduce the related interest rate from 6 month LIBOR plus an applicable margin of 2.25% to 6 month LIBOR plus 1.75% from March 18, 2015 through March 17, 2022 and 6 month LIBOR plus 2.00% from March 18, 2022 through March 17, 2027 and 6 month LIBOR plus 2.25% from March 18, 2027 through the maturity date. As a result of the credit agreement amendment, the Company received net proceeds of $20 million after fees from its 49.95% ownership in Avenal.

NRG West Holdings LLC

On May 29, 2015, NRG West Holdings LLC amended its financing agreement to increase borrowings under the Tranche A facility by $5 million and to reduce the related interest rate to LIBOR plus an applicable margin of 1.625% from May 29, 2015 to August 31, 2017, LIBOR plus an applicable margin of 1.75% from September 1, 2017, to August 31, 2020, and LIBOR plus 1.875% from September 1, 2020 through the maturity date; to reduce the Tranche B loan interest rate to LIBOR plus an applicable margin of 2.250% from May 29, 2015, to August 31, 2017, LIBOR plus 2.375% from September 1, 2017, to August 31, 2020, and LIBOR plus an applicable margin of 2.50% from September 1, 2020 through the maturity date and to reduce the working capital facility by $9 million. The proceeds of the increased borrowing were used to pay costs associated with the refinancing. Further, the amendment resulted in a $7 million loss on debt extinguishment.

Note 9 — Earnings Per Share

Basic and diluted earnings per common share are computed by dividing net income by the weighted average number of common shares outstanding. Shares issued during the year are weighted for the portion of the year that they were outstanding. The number of shares and per share amounts for the prior periods presented below have been retrospectively restated to reflect the Recapitalization as further described in Note 10, Changes in Capital Structure.

The reconciliation of the Company's basic and diluted earnings per share is shown in the following tables:



	Three months ended June 30,
	2015				2014
(In millions, except per share data) ^(a)	Common Class A		Common Class C		Common Class A		Common Class C
Basic and diluted earnings per share attributable to NRG Yield, Inc. common stockholders
Net income attributable to NRG Yield, Inc.	$	5	$	5	$	3	$	3
Weighted average number of common shares outstanding	35		35		23		23
Earnings per weighted average common share — basic and diluted	$	0.15	$	0.15	$	0.13	$	0.13



	Six months ended June 30,
	2015				2014
(In millions, except per share data) ^(a)	Common Class A		Common Class C		Common Class A		Common Class C
Basic and diluted earnings per share attributable to NRG Yield, Inc. common stockholders
Net income attributable to NRG Yield, Inc.	$	3	$	3	$	5	$	5
Weighted average number of common shares outstanding	35		35		23		23
Earnings per weighted average common share — basic and diluted	$	0.07	$	0.07	$	0.21	$	0.21

^(a)Net income attributable to NRG Yield, Inc. Class A common stock and Class C common stock, as well as basic and diluted earnings per share might not recalculate due to rounding.

With respect to the Class A common stock, there were a total of fifteen million and seven million of anti-dilutive outstanding equity instruments for the three months ended June 30, 2015, and 2014, respectively, and fifteen million and six million of anti-dilutive outstanding equity instruments for the six months ended June 30, 2015, and 2014, respectively, related to the 2019 Convertible Notes. With respect to the Class C common stock, there was an immaterial amount of anti-dilutive outstanding equity instruments for the three and six months ended June 30, 2015, related to the 2020 Convertible Notes.

Note 10 — Changes in Capital Structure

Recapitalization

On May 5, 2015, the Company's stockholders approved amendments to the Company's certificate of incorporation that adjusted the Company’s capital structure by creating two new classes of capital stock, Class C common stock and Class D common stock, and distributed shares of Class C and Class D common stock to holders of the Company's outstanding Class A and Class B common stock, respectively, through a stock split. The Recapitalization became effective on May 14, 2015.

The Class C common stock and Class D common stock have the same rights and privileges and rank equally, share ratably and are identical in all respects to the shares of Class A common stock and Class B common stock, respectively, as to all matters, except that each share of Class C common stock and Class D common stock is entitled to 1/100th of a vote on all stockholder matters. The par value per share of the Company’s Class A common stock and Class B common stock remains unchanged at $0.01 per share after the effect of the stock split described above. Accordingly, the stock split was accounted for as a stock dividend. The Company recorded a transfer between retained earnings and common stock equal to the par value of each share of Class C common stock and Class D common stock that was issued. The Company also retrospectively adjusted all prior period share and per share amounts in the consolidated financial statements for the effect of the stock dividend, so that all periods are comparable.

Class C Common Stock Issuance

On June 29, 2015, the Company closed on its offering of 28,198,000 shares of Class C common stock at a price of $22 per share, which included 3,678,000 shares of Class C common stock purchased by the underwriters through the exercise of an over-allotment option. Net proceeds to the Company from the sale of the Class C common stock were $600 million, net of underwriting discounts and commissions of $20 million. The Company utilized the proceeds of the offering to acquire 28,198,000 additional Class C units of NRG Yield LLC and, as a result, it currently owns 53.3% of the economic interests of NRG Yield LLC, with NRG retaining 46.7% of the economic interests of NRG Yield LLC.

Dividends to Class A and Class C common stockholders

The following table lists the dividends paid on the Company's Class A common stock and Class C common stock during the six months ended June 30, 2015:



	Second Quarter 2015		First Quarter 2015
Dividends per Class A share	$	0.20	$	0.39
Dividends per Class C share	0.20		N/A

Dividends on the Class A common stock and Class C common stock are subject to available capital, market conditions, and compliance with associated laws, regulations and other contractual obligations.

On August 4, 2015, the Company announced the declaration of quarterly dividends on its Class A common stock and Class C common stock of $0.21 per share payable on September 15, 2015, to stockholders of record as of September 1, 2015.

The Company also has authorized 10,000,000 shares of preferred stock, par value $0.01 per share. None of the shares of preferred stock have been issued.

Note 11 — Segment Reporting

The Company’s segment structure reflects how management currently operates and allocates resources. The Company's businesses are primarily segregated based on conventional power generation, renewable businesses which consist of solar and wind, and the thermal and chilled water business. The Corporate segment reflects the Company's corporate costs. The Company's chief operating decision maker evaluates the performance of its segments based on operational measures including adjusted earnings before interest, taxes, depreciation and amortization, or Adjusted EBITDA, and cash available for distribution, or CAFD, as well as net income (loss).



	Three months ended June 30, 2015
(In millions)	Conventional Generation			Renewables			Thermal			Corporate			Total
Operating revenues	$	85		$	90		$	42		$	—		$	217
Cost of operations	15			21			31			—			67
Depreciation and amortization	21			34			4			—			59
General and administrative — affiliate	—			—			—			3			3
Acquisition-related transaction and integration costs	—			—			—			1			1
Operating income (loss)	49			35			7			(4		)	87
Equity in earnings of unconsolidated affiliates	4			5			—			—			9
Loss on debt extinguishment	(7		)	—			—			—			(7		)
Interest expense	(13		)	(16		)	(2		)	(13		)	(44		)
Income (loss) before income taxes	33			24			5			(17		)	45
Income tax expense	—			—			—			4			4
Net Income (Loss)	$	33		$	24		$	5		$	(21	)	$	41
Total Assets	$	2,153		$	4,223		$	434		$	398		$	7,208



	Three months ended June 30, 2014
(In millions)	Conventional Generation			Renewables			Thermal			Corporate			Total
Operating revenues	$	87		$	43		$	43		$	—		$	173
Cost of operations	16			7			30			—			53
Depreciation and amortization	34			15			5			—			54
General and administrative — affiliate	—			—			—			2			2
Operating income (loss)	37			21			8			(2		)	64
Equity in earnings of unconsolidated affiliates	4			10			—			—			14
Interest expense	(15		)	(11		)	(2		)	(6		)	(34		)
Income (loss) before income taxes	26			20			6			(8		)	44
Income tax expense	—			—			—			2			2
Net Income (Loss)	$	26		$	20		$	6		$	(10	)	$	42



	Six months ended June 30, 2015
(In millions)	Conventional Generation			Renewables			Thermal			Corporate			Total
Operating revenues	$	161		$	147		$	89		$	—		$	397
Cost of operations	36			41			65			—			142
Depreciation and amortization	42			62			9			—			113
General and administrative — affiliate	—			—			—			6			6
Acquisition-related transaction and integration costs	—			—			—			1			1
Operating income (loss)	83			44			15			(7		)	135
Equity in earnings of unconsolidated affiliates	7			3			—			—			10
Other income, net	1			—			—			—			1
Loss on debt extinguishment	(7		)	—			—			—			(7		)
Interest expense	(25		)	(59		)	(4		)	(26		)	(114		)
Income (loss) before income taxes	59			(12		)	11			(33		)	25
Net Income (Loss)	$	59		$	(12	)	$	11		$	(33	)	$	25



	Six months ended June 30, 2014
(In millions)	Conventional Generation			Renewables			Thermal			Corporate			Total
Operating revenues	$	143		$	62		$	108		$	—		$	313
Cost of operations	26			11			76			—			113
Depreciation and amortization	47			22			9			—			78
General and administrative — affiliate	—			—			—			4			4
Operating income (loss)	70			29			23			(4		)	118
Equity in earnings of unconsolidated affiliates	7			8			—			—			15
Other income, net	—			1			—			—			1
Interest expense	(26		)	(23		)	(4		)	(8		)	(61		)
Income (loss) before income taxes	51			15			19			(12		)	73
Income tax expense	—			—			—			5			5
Net Income (Loss)	$	51		$	15		$	19		$	(17	)	$	68

Note 12 — Income Taxes

Effective Tax Rate

The income tax provision consisted of the following:



	Three months ended June 30,						Six months ended June 30,
	2015			2014			2015			2014
	(In millions, except percentages)
Income before income taxes	$	45		$	44		$	25		$	73
Income tax expense	4			2			—			5
Effective income tax rate	8.9		%	4.5		%	—		%	6.8		%

For the three and six months ended June 30, 2015, the overall effective tax rate was different than the statutory rate of 35% primarily due to taxable earnings allocated to NRG resulting from its interest in NRG Yield LLC and production tax credits generated from certain wind facilities.

For the three and six months ended June 30, 2014, the overall effective tax rate was different than the statutory rate of 35% primarily due to taxable earnings allocated to NRG resulting from its interest in NRG Yield LLC.

The Company records NRG's ownership as a noncontrolling interest in the financial statements. For tax purposes, NRG Yield LLC is treated as a partnership; therefore, the Company and NRG each record their respective share of taxable income or loss.

The Company's deferred tax balances reflect the difference in book and tax basis of the Company's assets primarily due to an increase in the tax basis of property, plant and equipment. The change in tax basis resulted in non-cash additions of $32 million during the six months ended June 30, 2015, and $65 million during the year ended December 31, 2014, to the Company's additional paid-in capital.

Note 13 — Related Party Transactions

Management Services Agreement by and between NRG and the Company

NRG provides the Company with various operation, management, and administrative services, which include human resources, accounting, tax, legal, information systems, treasury, and risk management, as set forth in the Management Services Agreement. As of June 30, 2015, the base management fee was approximately $7 million per year, subject to an inflation-based adjustment annually at an inflation factor based on the year-over-year U.S. consumer price index. The fee is also subject to adjustments following the consummation of future acquisitions and as a result of a change in the scope of services provided under the Management Services Agreement. During the six months ended June 30, 2015, the fee was increased by approximately $1 million per year in connection with the acquisition of the January 2015 Drop Down Assets. Costs incurred under this agreement were $6 million and $4 million for the six months ended June 30, 2015, and 2014, respectively, which included certain direct expenses incurred by NRG on behalf of the Company in addition to the base management fee. There was a balance of $3 million due to NRG in accounts payable — affiliate as of June 30, 2015.

Operation and Maintenance Services (O&M) Agreements by and between NRG and Thermal Entities

On October 1, 2014, NRG entered into Plant O&M Services Agreements with certain wholly-owned subsidiaries of the Company. NRG provides necessary and appropriate services to operate and maintain the subsidiaries' plant operations, businesses and thermal facilities. NRG is to be reimbursed for the provided services, as well as for all reasonable and related expenses and expenditures, and payments to third parties for services and materials rendered to or on behalf of the parties to the agreements. NRG is not entitled to any management fee or mark-up under the agreements. Prior to October 1, 2014, NRG provided the same services to the Thermal Business on an informal basis. Total fees incurred under the agreements were $15 million and $14 million for the six months ended June 30, 2015, and 2014, respectively. There was a balance of $28 million and $22 million due to NRG in accounts payable — affiliate as of June 30, 2015, and December 31, 2014, respectively.

Administrative Services Agreement by and between Marsh Landing and GenOn Energy Services, LLC

Marsh Landing is a party to an administrative services agreement with GenOn Energy Services, LLC, a wholly owned subsidiary of NRG, which provides invoice processing and payment on behalf of Marsh Landing. Marsh Landing reimburses GenOn Energy Services, LLC for the amounts paid by it. The Company reimbursed costs under this agreement of approximately $9 million for the six months ended June 30, 2015, and 2014. There was a balance of $0 million and $4 million due to GenOn Energy Services, LLC in accounts payable — affiliate as of June 30, 2015, and December 31, 2014, respectively.

O&M Services Agreements by and between NRG and GenConn

GenConn incurs fees under two O&M agreements with wholly-owned subsidiaries of NRG. The fees incurred under the agreements were $2 million and $3 million for the six months ended June 30, 2015, and 2014, respectively.

ITEM 2 — Management's Discussion and Analysis of Financial Condition and the Results of Operations

The following discussion analyzes the Company's historical financial condition and results of operations, which were recast to include the effect of the June 2014 Drop Down Assets and January 2015 Drop Down Assets on June 30, 2014, and January 2, 2015, respectively. As further discussed in Note 1, Nature of Business, to the Consolidated Financial Statements, the purchase of these assets was accounted for in accordance with ASC 850-50, Business Combinations - Related Issues, whereas the assets and liabilities transferred to the Company relate to interests under common control by NRG and, accordingly, were recorded at historical cost. The difference between the cash proceeds and historical value of the net assets was recorded as a distribution to NRG and reduced the balance of its noncontrolling interest. The guidance requires retrospective combination of the entities for all periods presented as if the combination has been in effect since the inception of common control.

As you read this discussion and analysis, refer to the Company's Consolidated Statements of Operations to this Form 10-Q, which present the results of operations for the six months ended June 30, 2015, and 2014. Also refer to the Company's 2014 Form 10-K, which includes detailed discussions of various items impacting the Company's business, results of operations and financial condition.

The discussion and analysis below has been organized as follows:


•	Executive Summary, including a description of the business and significant events that are important to understanding the results of operations and financial condition;


•	Results of operations, including an explanation of significant differences between the periods in the specific line items of the consolidated statements of operations;


•	Financial condition addressing liquidity position, sources and uses of cash, capital resources and requirements, commitments, and off-balance sheet arrangements;


•	Known trends that may affect the Company’s results of operations and financial condition in the future; and


•	Critical accounting policies which are most important to both the portrayal of the Company's financial condition and results of operations, and which require management's most difficult, subjective or complex judgment.

Executive Summary

Introduction and Overview

The Company is a dividend growth-oriented company formed as a Delaware corporation on December 20, 2012, to serve as the primary vehicle through which NRG owns, operates and acquires contracted renewable and conventional generation and thermal infrastructure assets. The Company believes it is well positioned to be a premier company for investors seeking stable and growing dividend income from a diversified portfolio of lower-risk high-quality assets.

The Company owns a diversified portfolio of contracted renewable and conventional generation and thermal infrastructure assets in the U.S. The Company’s contracted generation portfolio collectively represents 3,825 net MW. Each of these assets sells substantially all of its output pursuant to long-term offtake agreements with creditworthy counterparties. The average remaining contract duration of these offtake agreements was approximately 17 years as of June 30, 2015, based on cash available for distribution. The Company also owns thermal infrastructure assets with an aggregate steam and chilled water capacity of 1,310 net MWt and electric generation capacity of 124 net MW. These thermal infrastructure assets provide steam, hot water and/or chilled water, and in some instances electricity, to commercial businesses, universities, hospitals and governmental units in multiple locations, principally through long-term contracts or pursuant to rates regulated by state utility commissions.

Significant Events During 2015

The following significant events have occurred to date during 2015:


•	NRG offered the Company the opportunity to purchase 75% of NRG Wind TE Holdco LLC, which owns a portfolio of 12 wind facilities totaling 814 net MW.

•

On June 30, 2015, the Company sold an economic interest in the Alta X and Alta XI wind facilities through a tax equity financing arrangement and received $119 million in net proceeds. These proceeds, as well as proceeds obtained from the Company's recently completed equity and debt offerings discussed below, were utilized to repay all of the outstanding project indebtedness associated with the Alta X and Alta XI wind facilities.

•

On June 29, 2015, the Company issued 28,198,000 shares of Class C common stock for net proceeds, after underwriting discounts and expenses, of $600 million. The Company utilized the proceeds of the offering to acquire 28,198,000 additional Class C units of NRG Yield LLC and, as a result, it currently owns 53.3% of the economic interests of NRG Yield LLC, with NRG retaining 46.7% of the economic interests of NRG Yield LLC. Additionally, on June 29, 2015, the Company completed an offering of $287.5 million aggregate principal amount of 3.25% Convertible Notes due 2020.

•

On June 29, 2015, the Company acquired 25% of the membership interest in Desert Sunlight Investment Holdings, LLC, which owns two solar photovoltaic facilities totaling 550 MW, located in Desert Center, California, from EFS Desert Sun, LLC, a subsidiary of GE Energy Financial Services, for a purchase price of $285 million, utilizing a portion of the proceeds from the Class C common stock issuance. The Company's pro-rata share of non-recourse project level debt was $287 million as of June 30, 2015.

•

Effective May 14, 2015, the Company amended its certificate of incorporation to create two new classes of capital stock, Class C common stock and Class D common stock, and distributed shares of the Class C common stock and Class D common stock to holders of the Company's outstanding Class A common stock and Class B common stock, respectively, through a stock split. The Recapitalization enhances the Company’s ability to focus on growth opportunities without the constraints of NRG’s capital allocation to the Company, while maintaining the Company’s relationship with NRG. The Recapitalization preserves NRG’s management and operational expertise, asset development and acquisition track record, financing experience and provides flexibility for the Company to raise capital to fund its growth.

In connection with the amendments described above, the ROFO Agreement was amended to make additional assets available to the Company should NRG choose to sell them, including (i) two natural gas facilities totaling 795 MW of net capacity that are expected to reach COD in 2017 and 2020, (ii) an equity interest in a wind portfolio

that includes wind facilities totaling approximately 934 MW of net capacity, and (iii) up to $250 million of equity interests in one or more residential or distributed solar generation portfolios developed by affiliates of NRG.

•

On May 7, 2015, the Company acquired a 90.1% interest in Spring Canyon II, a 34 MW wind facility, and Spring Canyon III, a 29 MW wind facility, each located in Logan County, Colorado, from Invenergy Wind Global LLC. The purchase price was funded with cash on hand. Power generated by Spring Canyon II and Spring Canyon III is sold to Platte River Power Authority under long-term PPAs with approximately 24 years of remaining contract life.

•

In May 2015, the Company and NRG formed a partnership that will invest in and hold operating portfolios of distributed solar assets developed by NRG Renew, a subsidiary of NRG. The partnership will allow NRG to periodically monetize its distributed solar investments and the Company to invest in a growing segment of the solar market. Under the terms of the partnership agreement, the Company will receive 95% of the economics until achieving a targeted return, expected to be achieved commensurate with the end of the customer contract period, after which NRG will receive 95% of the economics. The Company has initially committed to invest up to $100 million of cash contributions into the partnership over time. The partnership is expected to be fully invested over the next 18 months.


•	On April 30, 2015, the Company completed the acquisition of the University of Bridgeport Fuel Cell project in Bridgeport, Connecticut from FuelCell Energy, Inc. The project added an additional 1.4 MW of thermal capacity with a 12 year contract, with the option for a 7-year extension.

•

On April 9, 2015, NRG and the Company entered into a partnership that will invest in and hold operating portfolios of residential solar assets developed by NRG Home Solar, a subsidiary of NRG, including: (i) an existing, unlevered portfolio of over 2,200 leases across nine states representing approximately 17 MW with a weighted average remaining lease term of approximately 17 years, in which the Company invested $26 million in April 2015; and (ii) in-development, tax equity financed portfolios of approximately 13,000 leases representing approximately 90 MW, with an average lease term for the existing and new leases of approximately 17 to 20 years, in which the Company invested $14 million of its $150 million commitment through June 30, 2015.

•

On January 2, 2015, NRG Yield Operating LLC acquired the following projects from NRG: (i) Laredo Ridge, an 80 MW wind facility located in Nebraska; (ii) the Tapestry projects, which include Buffalo Bear, a 19 MW wind facility in Oklahoma; Taloga, a 130 MW wind facility in Oklahoma; and Pinnacle, a 55 MW wind facility in West Virginia; and (iii) Walnut Creek, a 485 MW natural gas facility located in California, for total cash consideration of $489 million including adjustments of $9 million for working capital, plus assumed project level debt of $737 million. The Company funded the acquisition with cash on hand and approximately $210 million borrowed under the Company's revolving credit facility.

El Segundo Forced Outage

In January 2015, El Segundo experienced a steam turbine water intrusion resulting in a forced outage on Units 5 and 6. The units returned to service in April 2015. The Company completed a root cause analysis and has implemented steps to prevent a recurrence of the event. The company continues to review the financial impact of repair costs and lost capacity revenue to determine amounts available for recovery through insurance or warranty claims.

Wind Resource Availability

In the first and second quarters of 2015, the Company's results were impacted by lower than normal wind resource availability. While the Company's wind facilities were available, adverse weather had a negative impact on wind resources. The Company cannot predict the impact of wind resource availability on future performance or results.

Regulatory Matters

The Company’s regulatory matters are described in the Company’s 2014 Form 10-K in Item 1, Business — Regulatory Matters.

As owners of power plants and participants in wholesale and thermal energy markets, certain of the Company's subsidiaries are subject to regulation by various federal and state government agencies. These include FERC and the PUCT, as well as other public utility commissions in certain states where the Company's assets are located. Each of the Company's U.S. generating facilities qualifies as an EWG or QF. In addition, the Company is subject to the market rules, procedures and protocols of the various ISO and RTO markets in which it participates. Likewise, the Company must also comply with the mandatory reliability requirements imposed by NERC and the regional reliability entities in the regions where the Company operates.

The Company's operations within the ERCOT footprint are not subject to rate regulation by FERC, as they are deemed to operate solely within the ERCOT market and not in interstate commerce. These operations are subject to regulation by PUCT.

Environmental Matters

The Company’s environmental matters are described in the Company’s 2014 Form 10-K in Item 1, Business — Environmental Matters and Item 1A, Risk Factors.

The Company is subject to a wide range of environmental laws in the development, construction, ownership and operation of projects. These laws generally require that governmental permits and approvals be obtained before construction and during operation of facilities. The Company is also subject to laws and regulations surrounding the protection of wildlife, including migratory birds, eagles and threatened and endangered species. Environmental laws have become increasingly stringent and the Company expects this trend to continue.

Basis of Presentation

The acquisitions of the June 2014 Drop Down Assets from NRG on June 30, 2014, and the January 2015 Drop Down Assets on January 2, 2015, were accounted for as a transfer of entities under common control. The guidance requires retrospective combination of the entities for all periods presented as if the combination has been in effect since the inception of common control. Accordingly, the Company prepared its consolidated financial statements to reflect the transfer as if it had taken place on January 1, 2014, or from the date the entities were under common control, which was April 1, 2014, for the January 2015 Drop Down Assets. Members' equity represents NRG's equity in the subsidiaries, and accordingly, in connection with their acquisition by the Company, the balance was reclassified to noncontrolling interest. The Company reduces net income attributable to its Class A and Class C common stockholders by the pre-acquisition net income for the June 2014 Drop Down Assets and January 2015 Drop Down Assets, collectively, the Drop Down Assets, as it is not available to the stockholders.

Consolidated Results of Operations

The following table provides selected financial information:



	Three months ended June 30,								Six months ended June 30,
(In millions, except otherwise noted)	2015			2014			Change %		2015			2014			Change %
Operating Revenues
Operating revenues	$	235		$	174		35		$	420		$	314		34
Contract amortization	(14		)	(1		)	N/M		(26		)	(1		)	N/M
Mark-to-market economic hedging activities	(4		)	—			(100	)	3			—			100
Total operating revenues	217			173			25		397			313			27

Operating Costs and Expenses
Cost of fuels	17			18			(6	)	38			53			(28	)
Other costs of operations	50			35			43		104			60			73
Depreciation and amortization	59			54			9		113			78			45
General and administrative — affiliate	3			2			50		6			4			50
Acquisition-related transaction and integration costs	1			—			100		1			—			100
Total operating costs and expenses	130			109			19		262			195			34
Operating Income	87			64			36		135			118			14
Other Income (Expense)
Equity in earnings of unconsolidated affiliates	9			14			(36	)	10			15			(33	)
Other income, net	—			—			—		1			1			—
Loss on debt extinguishment	(7		)	—			100		(7		)	—			100
Interest expense	(44		)	(34		)	29		(114		)	(61		)	87
Total other expense, net	(42		)	(20		)	110		(110		)	(45		)	144
Income Before Income Taxes	45			44			2		25			73			(66	)
Income tax expense	4			2			100		—			5			(100	)
Net Income	41			42			(2	)	25			68			(63	)
Less: Pre-acquisition net income of Drop Down Assets	—			17			(100	)	—			25			(100	)
Net Income Excluding Pre-acquisition Net Income of Drop Down Assets	41			25			64		25			43			(42	)
Less: Net income attributable to noncontrolling interests	31			19			63		20			33			(39	)
Net Income Attributable to NRG Yield, Inc.	$	10		$	6		67		$	5		$	10		(50	)

N/M - Not meaningful



	Three months ended June 30,		Six months ended June 30,
Business metrics:	2015	2014	2015	2014
Renewable MWh sold (in thousands) ^(a)	1,181	563	1,904	774
Thermal MWt sold (in thousands)	434	442	1,051	1,109
Thermal MWh sold (in thousands)	83	52	127	124

^(a) Volumes sold do not include the MWh generated by the Company's equity method investments.

Management’s Discussion of the Results of Operations for the Three Months ended June 30, 2015, and 2014

Gross Margin



	Conventional			Renewables		Thermal			Total
(In millions)
Three months ended June 30, 2015
Operating revenues	$	86		$	107	$	42		$	235
Cost of fuels	—			—		(17		)	(17		)
Gross margin	$	86		$	107	$	25		$	218

Three months ended June 30, 2014
Operating revenues	$	87		$	43	$	44		$	174
Cost of fuels	(2		)	—		(16		)	(18		)
Gross margin	$	85		$	43	$	28		$	156

Gross margin increased by $62 million during the three months ended June 30, 2015, compared to the same period in 2014, primarily due to the acquisition of the Alta Wind Portfolio in August 2014.

Contract amortization

Contract amortization increased by $13 million due primarily to the amortization of the PPAs acquired in the acquisitions of the Alta Wind Portfolio in August 2014.

Mark-to-market for economic hedging activities

Mark-to-market results represent the unrealized losses on forward contracts with an NRG subsidiary hedging the sale of power from the Alta X and Alta XI wind facilities extending through the end of 2015.

Other Operating Costs



	Conventional		Renewables		Thermal		Total
(In millions)
Three months ended June 30, 2015	$	16	$	20	$	14	$	50
Three months ended June 30, 2014	14		7		14		35

Other operating costs increased by $15 million during the three months ended June 30, 2015, compared to the same period in 2014, due to:



(In millions)
Increase due to operations and maintenance expense and property tax expense, primarily for the Alta Wind Portfolio acquired in August 2014	$	13
Increase in costs primarily associated with operations and maintenance expense due to the forced outage at El Segundo in the first half of the year, returning to service in April 2015	2
	$	15

Depreciation and Amortization

Depreciation and amortization increased by $5 million during the three months ended June 30, 2015, compared to the same period in 2014, due primarily to the acquisition of the Alta Wind Portfolio in August 2014, partially offset by the impact of the final adjustments to acquisition accounting for the January 2015 Drop Down Assets.

Equity in Earnings of Unconsolidated Affiliates

Equity in earnings of unconsolidated affiliates decreased by $5 million during the three months ended June 30, 2015, compared to the same period in 2014, due primarily to reduced equity in earnings from CVSR.

Interest Expense

Interest expense increased by $10 million during the three months ended June 30, 2015, compared to the same period in 2014, due primarily to:



(In millions)
Increase due to acquisition of the Alta Wind Portfolio in August 2014	$	12
Increase due to the Senior Notes due 2024 issued in August 2014 and borrowings under the Company's revolving credit facility	7
Decrease from repricing of project-level financing arrangements and principal repayments	(2		)
Decrease from changes in the fair value of interest rate swaps	(7		)
	$	10

Income Tax Expense

For the three months ended June 30, 2015, the Company recorded income tax expense of $4 million on pretax income of $45 million. For the same period in 2014, the Company recorded income tax expense of $2 million on pretax income of $44 million. For the three months ended June 30, 2015, the Company's overall effective tax rate was different than the statutory rate of 35% primarily due to taxable earnings allocated to NRG resulting from its interest in NRG Yield LLC and production tax credits generated from certain wind facilities. For the same period in 2014, the Company's overall effective tax rate was different than the statutory rate of 35% primarily due to taxable earnings allocated to NRG resulting from its interest in NRG Yield LLC.

Income Attributable to Noncontrolling Interest

For the three months ended June 30, 2015, the Company had income of $24 million attributable to NRG's interest in the Company and $7 million of income attributable to other non-controlling interests. For the three months ended June 30, 2014, the Company had income of $19 million attributable to NRG's interest in the Company.

Management’s Discussion of the Results of Operations for the Six Months ended June 30, 2015, and 2014

Gross Margin



	Conventional			Renewables		Thermal			Total
(In millions)
Six months ended June 30, 2015
Operating revenues	$	163		$	167	$	90		$	420
Cost of fuels	(1		)	—		(37		)	(38		)
Gross margin	$	162		$	167	$	53		$	382

Six months ended June 30, 2014
Operating revenues	$	143		$	62	$	109		$	314
Cost of fuels	(3		)	—		(50		)	(53		)
Gross margin	$	140		$	62	$	59		$	261

Gross margin increased by $121 million during the six months ended June 30, 2015, compared to the same period in 2014 due to:



(In millions)
Increase in Renewables gross margin due to the acquisition of the Alta Wind Portfolio in August 2014, and the Tapestry and Laredo Ridge projects, which were acquired by NRG in April 2014 and sold to the Company on January 2, 2015	$	105
Increase in Conventional gross margin due to Walnut Creek, which was acquired by NRG in April 2014 and sold to the Company on January 2, 2015, partially offset by reduced revenues at El Segundo due to the forced outage in the first half of 2015, returning to service in April 2015	22
Decrease in Thermal gross margin due to milder weather conditions in the first half of 2015 compared to 2014	(6		)
	$	121

Contract amortization

Contract amortization increased by $25 million due to the amortization of the PPAs acquired in the acquisitions of the Alta Wind Portfolio in August 2014, and the January 2015 Drop Down Assets, which were acquired by NRG in April 2014 and sold to the Company on January 2, 2015.

Mark-to-market for economic hedging activities

Mark-to-market results represent the unrealized gains on forward contracts with an NRG subsidiary hedging the sale of power from the Alta X and Alta XI wind facilities extending through the end of 2015.

Other Operating Costs



	Conventional		Renewables		Thermal		Total
(In millions)
Six months ended June 30, 2015	$	35	$	41	$	28	$	104
Six months ended June 30, 2014	23		11		26		60

Other operating costs increased by $44 million during the six months ended June 30, 2015, compared to the same period in 2014, due to:



Increase primarily due to operations and maintenance expense for the Alta Wind Portfolio acquired in August 2014 and the January 2015 Drop Down Assets, which were acquired by NRG in April 2014 and sold to the Company on January 2, 2015	$	36
Increase in operations and maintenance expense related to El Segundo's forced outage in the first half of 2015, returning to service in April 2015	6
Other	2
	$	44

Depreciation and Amortization

Depreciation and amortization increased by $35 million during the six months ended June 30, 2015, compared to the same period in 2014, due primarily to the acquisition of the Alta Wind Portfolio in August 2014 and the January 2015 Drop Down Assets, which were acquired by NRG in April 2014 and sold to the Company on January 2, 2015, partially offset by the impact of the final adjustments to acquisition accounting for Walnut Creek, Tapestry and Laredo Ridge.

Equity in Earnings of Unconsolidated Affiliates

Equity in earnings of unconsolidated affiliates decreased by $5 million during the six months ended June 30, 2015, compared to the same period in 2014, due primarily to reduced equity in earnings from CVSR.

Interest Expense

Interest expense increased by $53 million during the six months ended June 30, 2015, compared to the same period in 2014, due to:



(In millions)
Increase due to the acquisition of the Alta Wind Portfolio in August 2014 and the acquisition of the January 2015Assets, which were acquired by NRG in April 2014 and sold to the Company on January 2, 2015	$	47
Increase from the issuance of the 2019 Convertible Notes issued in first quarter 2014 and the Senior Notes due 2024 issued in August 2014	15
Increase from borrowings under the Company's revolving credit facility	3
Decrease from repricing of project-level financing arrangements and principal repayments	(5		)
Decrease from changes in the fair value of interest rate swaps	(7		)
	$	53

Income Tax Expense

For the six months ended June 30, 2015, the Company recorded no income tax expense on pretax income of $25 million. For the same period in 2014, the Company recorded income tax expense of $5 million on pretax income of $73 million. For the six months ended June 30, 2015, the overall effective tax rate was different than the statutory rate of 35% primarily due to taxable earnings allocated to NRG resulting from its interest in NRG Yield LLC and production tax credits generated from certain wind facilities. For the same period in 2014, the Company's overall effective tax rate was different than the statutory rate of 35% primarily due to taxable earnings allocated to NRG resulting from its interest in NRG Yield LLC.

Income Attributable to Noncontrolling Interests

For the six months ended June 30, 2015, the Company had income of $13 million attributable to NRG's interest in the Company and $7 million of income attributable to other non-controlling interests. For the six months ended June 30, 2014, the Company had income of $33 million attributable to NRG's interest in the Company.

Liquidity and Capital Resources

The Company's principal liquidity requirements are to meet its financial commitments, finance current operations, fund capital expenditures, including acquisitions from time to time, to service debt and to pay dividends. Historically, the Company's predecessor operations were financed as part of NRG's integrated operations and largely relied on internally generated cash flows as well as corporate and/or project-level borrowings to satisfy its capital expenditure requirements. As a normal part of the Company's business, depending on market conditions, the Company will from time to time consider opportunities to repay, redeem, repurchase or refinance its indebtedness. Changes in the Company's operating plans, lower than anticipated sales, increased expenses, acquisitions or other events may cause the Company 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.

Liquidity Position

As of June 30, 2015, and December 31, 2014, the Company's liquidity was approximately $515 million and $863 million, respectively, comprised of cash, restricted cash, and availability under the Company's revolving credit facility. The decrease primarily relates to the acquisition of the January 2015 Drop Down Assets. The Company's various financing arrangements are described in Note 8, Long-term Debt.

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 financial commitments, debt service obligations, finance growth, operating and maintenance capital expenditures, and to fund dividends to holders of the Company's Class A common stock and Class C common stock, both in the near and longer term. Management continues to regularly monitor the Company's ability to finance the needs of its operating, financing and investing activity within the dictates of prudent balance sheet management.

Credit Ratings

Credit rating agencies rate a firm's public debt securities. These ratings are utilized by the debt markets in evaluating a firm's credit risk. Ratings influence the price paid to issue new debt securities by indicating to the market the Company's ability to pay principal, interest and preferred dividends. Rating agencies evaluate a firm's industry, cash flow, leverage, liquidity, and hedge profile, among other factors, in their credit analysis of a firm's credit risk.

The following table summarizes the credit ratings for the Company and the Senior Notes as of June 30, 2015:



	S&P	Moody's
NRG Yield, Inc.	BB+	Ba1
5.375% Senior Notes, due 2024	BB+	Ba1

Sources of Liquidity

The Company's principal sources of liquidity include cash on hand, cash generated from operations, borrowings under new and existing financing arrangements and the issuance of additional equity securities as appropriate given market conditions. As described in Note 8, Long-term Debt, the Company's financing arrangements consist of the revolving credit facility, the 2019 Convertible Notes, the 2020 Convertible Notes, the Senior Notes and project-level financings for its various assets.

Recapitalization

As discussed in Significant Events During 2015 in this Item 2 above, amendments to the Company's certificate of incorporation were approved by the Company's stockholders at the Annual Meeting of Stockholders held on May 5, 2015 and the Recapitalization became effective on May 14, 2015.

Uses of Liquidity

The Company's requirements for liquidity and capital resources, other than for operating its facilities, are categorized as: (i) debt service obligations, as described more fully in Note 8, Long-term Debt; (ii) capital expenditures; (iii) acquisitions and investments; and (iv) cash dividends to investors.

Capital Expenditures

The Company's capital spending program is mainly focused on maintenance capital expenditures, or costs to maintain the assets currently operating, such as costs to replace or refurbish assets during routine maintenance. The Company develops annual capital spending plans based on projected requirements for maintenance capital. For the six months ended June 30, 2015, and 2014, the Company used approximately $8 million and $29 million, respectively, to fund capital expenditures. The capital expenditures in the first half of 2015 primarily related to maintenance expense. During the six months ended June 30, 2015, the Company did not incur significant growth capital expenditures related to the construction of new assets and/or the completion of the construction of new assets if already in process.

Acquisitions and Investments

The Company intends to acquire generation assets developed and constructed by NRG in the future, as well as generation and thermal infrastructure assets from third parties where the Company believes its knowledge of the market, operating expertise and access to capital provides a competitive advantage, and to utilize such acquisitions as a means to grow its cash available for distribution. As described above in Significant Events in 2015, the following acquisitions and investments occurred in 2015:


•	On June 29, 2015, the Company acquired 25% of the membership interest in Desert Sunlight Investment Holdings, LLC, which owns two solar photovoltaic facilities that total 550 MW located in Desert Center, California, from EFS Desert Sun, LLC, a subsidiary of GE Energy Financial Services for a purchase price of $285 million.


•	On May 7, 2015, the Company acquired a 90.1% interest in Spring Canyon II, a 34 MW wind facility, and Spring Canyon III, a 29 MW wind facility, each located in Logan County, Colorado, from Invenergy Wind Global LLC. The purchase price was funded with cash on hand.


•	On April 30, 2015, the Company completed the acquisition of the University of Bridgeport Fuel Cell project in Bridgeport, CT from FuelCell Energy, Inc. The project added an additional 1.4 MW of thermal capacity with a 12 year contract, with the option for a 7-year extension.

•

On April 9, 2015, NRG and the Company entered into a partnership that will invest in and hold operating portfolios of residential solar assets developed by NRG Home Solar, a subsidiary of NRG, including: (i) an existing, unlevered portfolio of over 2,200 leases across nine states representing approximately 17 MW with a weighted average remaining lease term of approximately 17 years, in which the Company invested $26 million in April 2015; and (ii) in-development, tax equity financed portfolios of approximately 13,000 leases representing approximately 90 MW, with an average lease term for the existing and new leases of approximately 17 to 20 years, in which the company invested $14 million of its $150 million commitment through June 30, 2015. Its maximum exposure will be limited to its equity investment.


•	On January 2, 2015, the Company acquired the January 2015 Drop Down Assets for total cash consideration of $489 million including adjustments of $9 million for working capital, plus assumed project level debt of $737 million.

Cash Dividends to Investors

The Company intends to use the amount of cash that it receives from its distributions from NRG Yield LLC to pay quarterly dividends to the holders of its Class A common stock and Class C common stock. NRG Yield LLC intends to distribute to its unit holders in the form of a quarterly distribution all of the cash available for distribution that is generated each quarter less reserves for the prudent conduct of the business, including among others, maintenance capital expenditures to maintain the operating capacity of the assets. Cash available for distribution is defined as earnings before income taxes, depreciation and amortization, excluding contract amortization, cash interest paid, income taxes paid, maintenance capital expenditures, investments in unconsolidated affiliates, growth capital expenditures, net of capital and debt funding, and principal amortization of indebtedness, and including cash distributions from unconsolidated affiliates. Dividends on the Class A common stock and Class C common stock are subject to available capital, market conditions, and compliance with associated laws, regulations and other contractual obligations. The Company expects that, based on current circumstances, comparable cash dividends will continue to be paid in the foreseeable future.

As a result of the Recapitalization, the Company adjusted its dividend policy to reflect the additional number of shares of Class C common stock outstanding. The following table lists the dividends paid on the Company's Class A common stock and Class C common stock during the six months ended June 30, 2015:



	Second Quarter 2015		First Quarter 2015
Dividends per Class A share	$	0.20	$	0.39
Dividends per Class C share	$	0.20	N/A

On August 4, 2015, the Company announced the declaration of quarterly dividends on its Class A common stock and Class C common stock of $0.21 per share payable on September 15, 2015 to stockholders of record as of September 1, 2015.

Cash Flow Discussion

The following table reflects the changes in cash flows for the six months ended June 30, 2015, compared to 2014:



Six months ended June 30,	2015			2014			Change
	(In millions)
Net cash provided by operating activities	$	88		$	75		$	13
Net cash used in investing activities	(837		)	(178		)	(659		)
Net cash provided by financing activities	624			152			472

Net Cash Provided By Operating Activities



Changes to net cash provided by operating activities were driven by:	(In millions)
Higher net distributions from unconsolidated affiliates	$	26
Decrease in operating income adjusted for non-cash items and changes in working capital	(13		)
	$	13

Net Cash Used In Investing Activities



Changes to net cash used in investing activities were driven by:	(In millions)
Payments to acquire businesses, net of cash acquired	$	(37	)
Increase in payments made to acquire January 2015 Drop Down Assets on January 2, 2015, compared to the payments made on June 30, 2014, for the June 2014 Drop Down Assets	(153		)
Decrease in capital expenditures due to several projects being placed in service in early 2014	21
Changes in restricted cash	(42		)
Proceeds from renewable grants in 2014	(137		)
Increase in investments in unconsolidated affiliates in 2015, compared to 2014, primarily due to the investment in Desert Sunlight made on June 29, 2015	(298		)
Other	(13		)
	$	(659	)

Net Cash Provided by Financing Activities



Changes in net cash provided by financing activities were driven by:	(In millions)
Contributions from non-controlling interests in 2015	$	119
Payment of dividends and returns of capital to NRG, partially offset by contributions from NRG in the first six months of 2014	23
Increase in dividends and distributions paid	(17		)
Proceeds from Class C equity offering on June 29, 2015, net of underwriting discounts and commissions	600
Increase in payments for long-term debt, partially offset by an increase in proceeds from long-term debt	(255		)
Decrease in debt issuance costs paid	2
	$	472

NOLs, Deferred Tax Assets and Uncertain Tax Position Implications, under ASC 740

As of June 30, 2015, the Company has a cumulative federal NOL carry forward balance of $219 million for financial statement purposes, which will begin expiring in 2033. As a result of the Company's tax position, and based on current forecasts, the Company does not anticipate significant income tax payments for federal, state and local jurisdictions in 2015.

The Company is subject to examination by taxing authorities for income tax returns filed in the U.S. federal jurisdiction and various state jurisdictions. The Company is not subject to U.S. federal or state income tax examinations for years prior to 2013.

As of June 30, 2015, the Company has net deferred tax assets of $154 million, which the Company believes is realizable primarily through the generation of future income before income taxes. In order to be able to consider future earnings in the assessment of the realizability of deferred tax assets, generally accepted accounting principles indicate the Company should not have cumulative losses in the recent past. Should the Company determine it cannot utilize estimates of future earnings in its assessment, it could be required to establish a valuation allowance for up to the full amount of its deferred tax asset.

The Company has no uncertain tax benefits.

Off-Balance Sheet Arrangements

Obligations under Certain Guarantee Contracts

The Company may enter into guarantee arrangements in the normal course of business to facilitate commercial transactions with third parties.

Retained or Contingent Interests

The Company does not have any material retained or contingent interests in assets transferred to an unconsolidated entity.

Obligations Arising Out of a Variable Interest in an Unconsolidated Entity

Variable interest in equity investments — As of June 30, 2015, the Company has several investments with an ownership interest percentage of 50% or less in energy and energy-related entities that are accounted for under the equity method. One of these investments, GenConn Energy LLC, is a variable interest entity for which the Company is not the primary beneficiary.

The Company's pro-rata share of non-recourse debt held by unconsolidated affiliates was approximately $866 million as of June 30, 2015. This indebtedness may restrict the ability of these subsidiaries to issue dividends or distributions to the Company. See also Note 5, Variable Interest Entities, or VIEs.

Contractual Obligations and Commercial Commitments

The Company has a variety of contractual obligations and other commercial commitments that represent prospective cash requirements in addition to our capital expenditure programs, as disclosed in the Company's 2014 Form 10-K. See also Note 8, Long-term Debt, for additional discussion of contractual obligations incurred during the six months ended June 30, 2015.

Fair Value of Derivative Instruments

The Company may enter into fuel purchase contracts and other energy-related financial instruments to mitigate variability in earnings due to fluctuations in spot market prices and to hedge fuel requirements at certain generation facilities. In addition, in order to mitigate interest rate risk associated with the issuance of variable rate and fixed rate debt, the Company enters into interest rate swap agreements.

The tables below disclose the activities that include non-exchange traded contracts accounted for at fair value in accordance with ASC 820. Specifically, these tables disaggregate realized and unrealized changes in fair value; disaggregate estimated fair values at June 30, 2015, based on their level within the fair value hierarchy defined in ASC 820; and indicate the maturities of contracts at June 30, 2015. For a full discussion of the Company's valuation methodology of its contracts, see Derivative Fair Value Measurements in Note 6, Fair Value of Financial Instruments.



Derivative Activity Gains/(Losses)	(In millions)
Fair value of contracts as of December 31, 2014	$	(115	)
Contracts realized or otherwise settled during the period	38
Changes in fair value	(2		)
Fair Value of Contracts as of June 30, 2015	$	(79	)



	Fair Value of Contracts as of June 30, 2015
	Maturity
Fair value hierarchy Gains/(Losses)	1 Year or Less			Greater Than 1 Year to 3 Years			Greater Than 3 Years to 5 Years			Greater Than 5 Years		Total Fair Value
	(In millions)
Level 2	$	(39	)	$	(39	)	$	(7	)	$	6	$	(79	)

The Company has elected to disclose derivative assets and liabilities on a trade-by-trade basis and does not offset amounts at the counterparty master agreement level. As discussed below in Quantitative and Qualitative Disclosures about Market Risk -Commodity Price Risk, NRG, on behalf of the Company, measures the sensitivity of the portfolio to potential changes in market prices using VaR, a statistical model which attempts to predict risk of loss based on market price and volatility. NRG's risk management policy places a limit on one-day holding period VaR, which limits the net open position.

Critical Accounting Policies and Estimates

The Company's discussion and analysis of the financial condition and results of operations are based upon the consolidated financial statements, which have been prepared in accordance with U.S. GAAP. The preparation of these financial statements and related disclosures in compliance with U.S. GAAP requires the application of appropriate technical accounting rules and guidance as well as the use of estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities. The application of these policies necessarily involves judgments regarding future events, including the likelihood of success of particular projects, legal and regulatory challenges, and the fair value of certain assets and liabilities. These judgments, in and of themselves, could materially affect the financial statements and disclosures based on varying assumptions, which may be appropriate to use. In addition, the financial and operating environment may also have a significant effect, not only on the operation of the business, but on the results reported through the application of accounting measures used in preparing the financial statements and related disclosures, even if the nature of the accounting policies has not changed.

On an ongoing basis, the Company evaluates these estimates, utilizing historic experience, consultation with experts and other methods the Company considers reasonable. In any event, actual results may differ substantially from the Company's estimates. Any effects on the Company's business, financial position or results of operations resulting from revisions to these estimates are recorded in the period in which the information that gives rise to the revision becomes known.

The Company's significant accounting policies are summarized in Note 2, Summary of Significant Accounting Policies. The Company identifies its most critical accounting policies as those that are the most pervasive and important to the portrayal of the Company's financial position and results of operations, and that require the most difficult, subjective and/or complex judgments by management regarding estimates about matters that are inherently uncertain. The Company's critical accounting policies include income taxes and valuation allowance for deferred tax assets, impairment of long lived assets and other intangible assets and acquisition accounting.

Recent Accounting Developments

See Note 2, Summary of Significant Accounting Policies, for a discussion of recent accounting developments.

ITEM 3 — Quantitative and Qualitative Disclosures About Market Risk

The Company is exposed to several market risks in its normal business activities. Market risk is the potential loss that may result from market changes associated with the Company's power generation or with an existing or forecasted financial or commodity transaction. The types of market risks the Company is exposed to are commodity price risk, interest rate risk, liquidity risk, and credit risk.

Commodity Price Risk

Commodity price risks result from exposures to changes in spot prices, forward prices, volatilities, and correlations between various commodities, such as electricity, natural gas and emissions credits. The Company manages the commodity price risk of its merchant generation operations by entering into derivative or non-derivative instruments to hedge the variability in future cash flows from forecasted power sales or purchases of fuel. The portion of forecasted transactions hedged may vary based upon management's assessment of market, weather, operation and other factors.

Based on a sensitivity analysis using simplified assumptions, the impact of a $0.50 per MMBtu increase or decrease in natural gas prices across the term of the derivative contracts would cause no change to the net value of derivatives as of June 30, 2015.

Interest Rate Risk

The Company is exposed to fluctuations in interest rates through its issuance of variable rate debt. Exposures to interest rate fluctuations may be mitigated by entering into derivative instruments known as interest rate swaps, caps, collars and put or call options. These contracts reduce exposure to interest rate volatility and result in primarily fixed rate debt obligations when taking into account the combination of the variable rate debt and the interest rate derivative instrument. NRG's risk management policies allow the Company to reduce interest rate exposure from variable rate debt obligations.

Most of the Company's project subsidiaries enter into interest rate swaps, intended to hedge the risks associated with interest rates on non-recourse project level debt. See Note 9, Long-Term Debt, to the Company's audited consolidated financial statements included in the Company's 2014 Form 10-K, and Note 8, Long-term Debt, to this Form 10-Q for more information about interest rate swaps of the Company's project subsidiaries.

If all of the above swaps had been discontinued on June 30, 2015, the Company would have owed the counterparties $83 million. Based on the investment grade rating of the counterparties, the Company believes its exposure to credit risk due to nonperformance by counterparties to its hedge contracts to be insignificant.

The Company has long-term debt instruments that subject it to the risk of loss associated with movements in market interest rates. As of June 30, 2015, a 1% change in interest rates would result in an approximately $3 million change in interest expense on a rolling twelve month basis.

As of June 30, 2015, the fair value of the Company's debt was $4,813 million and the carrying value was $4,743 million. The Company estimates that a 1% decrease in market interest rates would have increased the fair value of its long-term debt by $269 million.

Liquidity Risk

Liquidity risk arises from the general funding needs of the Company's activities and in the management of the Company's assets and liabilities.

Counterparty Credit Risk

Credit risk relates to the risk of loss resulting from non-performance or non-payment by counterparties pursuant to the terms of their contractual obligations. The Company monitors and manages credit risk through credit policies that include: (i) an established credit approval process; and (ii) the use of credit mitigation measures such as prepayment arrangements or volumetric limits. Risks surrounding counterparty performance and credit could ultimately impact the amount and timing of expected cash flows. The Company seeks to mitigate counterparty risk by having a diversified portfolio of counterparties.

ITEM 4 — Controls and Procedures

Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures

Under the supervision and with the participation of the Company's management, including its principal executive officer, principal financial officer and principal accounting officer, the Company conducted an evaluation of the effectiveness of the design and operation of its disclosure controls and procedures, as such term is defined in Rules 13a-15(e) or 15d-15(e) of the Exchange Act. Based on this evaluation, the Company's principal executive officer, principal financial officer and principal accounting officer concluded that the disclosure controls and procedures were effective as of the end of the period covered by this Quarterly Report on Form 10-Q.

Changes in Internal Control over Financial Reporting

There were no changes in the Company’s internal control over financial reporting (as such term is defined in Rule 13a-15(f) under the Exchange Act) that occurred in the second quarter of 2015 that materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II - OTHER INFORMATION

ITEM 1 — LEGAL PROCEEDINGS

None.

ITEM 1A — RISK FACTORS

Information regarding risk factors appears in Part I, Item 1A, Risk Factors in the Company's 2014 Form 10-K. There have been no material changes in the Company's risk factors since those reported in its 2014 Form 10-K.

ITEM 2 — UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3 — DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4 — MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5 — OTHER INFORMATION

None.

ITEM 6 — EXHIBITS



Number	Description	Method of Filing
2.1*^	Purchase and Sale Agreement, dated as of June 17, 2015, between EFS Desert Sun, LLC and NRG Yield Operating LLC.	Filed herewith.
3.1	Second Amended and Restated Certificate of Incorporation of NRG Yield, Inc., dated as of May 14, 2015.	Incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K filed on May 15, 2015.
3.2	Certificate of Correction to Second Amended and Restated Certificate of Incorporation of NRG Yield, Inc., dated as of June 9, 2015.	Incorporated by reference to Exhibit 3.1 to the Company's Current Report on Form 8-K filed on June 9, 2015.
4.1	Fourth Supplemental Indenture, dated as of May 8, 2015, among NRG Yield Operating LLC, the guarantors named therein and Law Debenture Trust Company of New York.	Incorporated herein by reference to Exhibit 4.1 to the Company's Current Report on Form 8-K filed on May 8, 2015.
4.2	Third Amended and Restated Limited Liability Company Agreement of NRG Yield LLC, dated as of May 14, 2015.	Incorporated herein by reference to Exhibit 10.4 to the Company's Current Report on Form 8-K filed on May 15, 2015.
4.3	Indenture, dated June 29, 2015, among NRG Yield, Inc., the Guarantors and the Trustee.	Incorporated herein by reference to Exhibit 4.1 to the Company's Current Report on Form 8-K filed on June 29, 2015.
4.4	Form of 3.25% Convertible Senior Note due 2020.	Incorporated herein by reference to Exhibit 4.2 to the Company's Current Report on Form 8-K filed on June 29, 2015.
10.1*	Amended and Restated Limited Liability Company Agreement of NRG RPV Holdco 1 LLC, dated as of April 9, 2015.	Filed herewith.
10.2*	Amended and Restated Limited Liability Company Agreement of NRG DGPV Holdco 1 LLC, dated as of May 8, 2015.	Filed herewith.
10.3	Amended and Restated Exchange Agreement, dated as of May 14, 2015, by and among NRG Energy, Inc., NRG Yield, Inc., and NRG Yield LLC.	Incorporated herein by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K filed on May 15, 2015.
10.4	Amended and Restated Registration Rights Agreement, dated as of May 14, 2015, by and between NRG Energy, Inc. and NRG Yield, Inc.	Incorporated herein by reference to Exhibit 10.2 to the Company's Current Report on Form 8-K filed on May 15, 2015.
10.5	NRG Yield, Inc. Amended and Restated 2013 Equity Incentive Plan, dated as of May 14, 2015.	Incorporated herein by reference to Exhibit 10.5 to the Company's Current Report on Form 8-K filed on May 15, 2015.
10.6	Amendment No. 3 to Credit Agreement, dated as of January 27, 2014, by and between NRG West Holdings LLC and Credit Agricole Corporate and Investment Bank.	Filed herewith.
10.7	Amendment No. 4 to the Credit Agreement and Amendment No. 1 to the Collateral Agreement, dated as of May 16, 2014, by and between NRG West Holdings LLC, El Segundo Energy Center LLC and Credit Agricole Corporate and Investment Bank.	Filed herewith.
10.8	Amendment No. 5 to Credit Agreement, dated as of May 29, 2015, by and between NRG West Holdings LLC and ING Capital LLC.	Filed herewith.
10.9	First Amendment to Amended & Restated Credit Agreement, dated June 26, 2015, by and among NRG Yield Operating LLC, NRG Yield LLC, Royal Bank of Canada and the Lenders party thereto.	Filed herewith.
31.1	Rule 13a-14(a)/15d-14(a) certification of David Crane.	Filed herewith.
31.2	Rule 13a-14(a)/15d-14(a) certification of Kirkland B. Andrews.	Filed herewith.
31.3	Rule 13a-14(a)/15d-14(a) certification of David Callen.	Filed herewith.
32	Section 1350 Certification.	Filed herewith.
101 INS	XBRL Instance Document.	Filed herewith.
101 SCH	XBRL Taxonomy Extension Schema.	Filed herewith.
101 CAL	XBRL Taxonomy Extension Calculation Linkbase.	Filed herewith.
101 DEF	XBRL Taxonomy Extension Definition Linkbase.	Filed herewith.
101 LAB	XBRL Taxonomy Extension Label Linkbase.	Filed herewith.
101 PRE	XBRL Taxonomy Extension Presentation Linkbase.	Filed herewith.

* Confidential Treatment has been requested for certain provisions omitted from this Exhibit pursuant to Rule 24b-2 promulgated under the Securities Exchange Act of 1934. The omitted information has been filed separately with the Securities and Exchange Commission.

^ Schedules omitted pursuant to Item 601(b)(2) of Regulation S-K. The Company will furnish copies of such schedules to the U.S. Securities and Exchange Commission upon request.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.



	NRG YIELD, INC. (Registrant)

	/s/ DAVID CRANE
	David Crane
	Chief Executive Officer (Principal Executive Officer)


	/s/ KIRKLAND B. ANDREWS
	Kirkland B. Andrews
	Chief Financial Officer (Principal Financial Officer)


	/s/ DAVID CALLEN
	David Callen
Date: August 4, 2015	Chief Accounting Officer (Principal Accounting Officer)

Yield Inc EX 2.1 2015 Q2 (DS PSA + Exhibits)

EXHIBIT 2.1

Execution Version

PURCHASE AND SALE AGREEMENT

dated as of

June 17, 2015

between

EFS Desert Sun, LLC,

as Seller

and

NRG Yield Operating LLC,

as Buyer

Portions of this Exhibit, indicated by the mark “[***],” were omitted and have been filed separately with the Secretary of the Commission pursuant to the Registrant’s application requesting confidential treatment pursuant to Rule 24b-2 of the Securities Exchange Act of 1934.

TABLE OF CONTENTS



		Page
ARTICLE 1 DEFINITIONS AND INTREPRETATION		2
1.1	Defined Terms	2
1.2	Interpretation	14

ARTICLE 2 SUMMARY OF TRANSACTIONS		15
2.1	Sale and Purchase of Assigned Interests	15
2.2	Purchase Price	15
2.3	Purchase Price Payment	15

ARTICLE 3 CLOSING AND CLOSING CONDITIONS		15
3.1	Time and Place of the Closing	15
3.2	Actions at the Closing	16
3.3	Conditions Precedent to Obligations of Buyer	16
3.4	Conditions Precedent to Obligations of Seller	18
3.5	Update of Disclosure Schedules, Election Not to Closer	20
3.6	Amendments of this Agreement	20

ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF SELLER		22
4.1	General Representations and Warranties Regarding Seller	22
4.2	Representations and Warranties Regarding Each Sunlight Company and the Projects	25

ARTICLE 5 REPRESENTATIONS, WARRANTIES AND ACKNOWLEDGEMENTS OF BUYER		29
5.1	Representations and Warranties of Buyer	30
5.2	No Further Representations	33

ARTICLE 6 COVENANTS		32
6.1	Covenants of All Parties	34
6.2	Covenants of Seller	34
6.3	Transfers	36
6.4	Tax Matters; Cash Grants	36
6.5	Further Assurances	37

ARTICLE 7 INDEMNIFICATION AND REMEDIES		37
7.1	General Indemnity	37
7.2	Payment of Claims	39
7.3	Other Limitations on Indemnities	39
7.4	Procedure for Indemnifications With Respect to Third-Party Claims	40
7.5	Treatment of Payments	42
7.6	Waiver of Breaches	42

ARTICLE 8 TERMINATION		42
8.l	Termination	42
8.2	Effect of Termination	43



ARTICLE 9 MISCELLANEOUS		43
9.1	Notices	43
9.2	Entire Agreement; Amendments	44
9.3	Successors and Assigns	45
9.4	Currency Matters; Set-Off	45
9.5	Governing Law	45
9.6	Consent to Jurisdiction; Waiver of Jury Trial	45
9.7	Expenses	45
9.8	Confidential Information	45
9.9	Joint Effort	46
9.10	Waiver of Consequential Damages	46
9.11	Captions	46
9.12	Severability	46
9.13	Counterparts	46
9.14	Third Parties	46
9.15	No Waiver	46
9.16	Deliver by Facsimile or PDF	46

EXHIBITS



Exhibit A	Form of Assignment Agreement
Exhibit B	Form of Buyer 1603 Cash Grant Recapture Indemnity Agreement (Desert Sunlight 250, LLC)
Exhibit C	Form of Buyer 1603 Cash Grant Recapture Indemnity Agreement (Desert Sunlight 300, LLC)
Exhibit D	Form of Amended and Restated Seller Cash Grant Guarantee (Desert Sunlight 250, LLC)
Exhibit E	Form of Amended and Restated Seller Cash Grant Guarantee (Desert Sunlight 300, LLC)
Exhibit F	[Intentionally Omitted]
Exhibit G	Form of Cash Grant Letter Agreement
Exhibit H	Form of Company LLCA Amendment
Exhibit I	Form of Investment Agreement Amendment
Exhibit J	Form of Seller Parent Guarantee
Exhibit K	Form of Non-Foreign Certificate
Exhibit L	Form of Managing Member Request Letter

SCHEDULES

Seller Disclosure Schedules



Schedule 1	Assigned Agreements

Schedule 1.1	Knowledge Persons (Seller)

Schedule 1.2	Swap Agreements

Schedule 2.2	Estimated Working Capital Amount

Schedule 3.4.11	Certain Project Agreements to be Terminated

Schedule 4.1.4	Approvals, Consents, Filings, Waivers and Notices

iii



Schedule 4.2.3(a)	Material Contract Defaults

Schedule 4.2.3(b)	Insurance Notifications

Schedule 4.2.6	Litigation

Schedule 4.2.7	Tax Returns

Schedule 4.2.12	Material Adverse Effect Events

Schedule 4.2.14	Material Contracts and Governmental Approvals

Buyer Disclosure Schedule



Schedule 1.3	Knowledge Persons (Buyer)

Schedule 5.1.16.8	Company LLCA Representations

PURCHASE AND SALE AGREEMENT

THIS PURCHASE AND SALE AGREEMENT, dated as of June 17, 2015 (the “Effective Date”), is entered into by and between EFS Desert Sun, LLC, a Delaware limited liability company (“Seller”), and NRG Yield Operating LLC, a Delaware limited liability company (“Buyer”) (Seller and Buyer being sometimes hereinafter referred to individually as a “Party” and collectively as the “Parties”), with reference to the following:

RECITALS

A. Seller owns fifty percent (50%) of the issued and outstanding Class B membership interests (the “Class B Interests”) in Desert Sunlight Investment Holdings, LLC, a Delaware limited liability company (the “Company”), which constitutes twenty-five percent (25%) of the membership interests in the Company.

B. Seller desires to sell one hundred percent (100%) of the Class B Interests owned by Seller to Buyer and to delegate (i) any and all rights, duties, obligations, responsibilities, claims, demands and other commitments in connection with Seller’s Class B Interests (such Class B Interests, the “Assigned Interests”) and, (ii) to the extent relating to the Assigned Interests, the agreements set forth in Schedule 1 (the “Assigned Agreements”), as applicable, unto Buyer, and Buyer wishes to purchase the Assigned Interests from Seller and Seller is willing to accept and assume such rights, duties and obligations, responsibilities, claims, demands and other commitments in connection with the Assigned Agreements.

C. The Company owns one hundred percent (100%) of the issued and outstanding membership interests of Desert Sunlight Holdings, LLC, which owns one hundred percent (100%) of the issued and outstanding membership interests of Desert Sunlight 250, LLC (“Sunlight 250”) and Desert Sunlight 300, LLC (“Sunlight 300”, and together with Sunlight 250, the “Sunlight Project Companies” and each, a “Sunlight Project Company”; and, together with the Company and Desert Sunlight Holdings, LLC (“DS Holdings”), each a “Sunlight Company” and collectively, the “Sunlight Companies”), each of which respectively owns, operates and maintains the Desert Sunlight 250 Project and the Desert Sunlight 300 Project (each a “Project” and collectively, the “Projects”), respectively.

D. The Sunlight Project Companies filed multiple Cash Grant applications with the United States Department of Treasury (“Treasury”) claiming a Cash Grant with respect to the Projects. As of the Effective Date, Treasury has paid the Sunlight Project Companies a Cash Grant in an amount less than the amount requested on the Cash Grant applications, resulting in a shortfall equal to approximately two hundred fourteen million Dollars ($214,000,000) (the “Grant Shortfall”). The members of the Company, who are members prior to giving effect to the sale of the Assigned Interests, intend to exercise remedies available to the Sunlight Companies to recover payment of the Grant Shortfall, including pursuing ongoing negotiations with Treasury and, if necessary, commencing a cause of action in any appropriate judicial or administrative venue (collectively, the “Cash Grant Proceeding”).

E. From and after the sale of the Assigned Interests, Seller desires to retain the rights to any future distributions of Cash Grant proceeds and all of its notice rights, participation rights, consent rights and dispute resolution rights with respect to any Cash Grant Proceeding, in each case, in connection with the Assigned Interests (the “Excluded Cash Grant Interests”).

NOW, THEREFORE, in consideration of the mutual covenants and agreements in this Agreement and for other good and valuable consideration, the sufficiency of which is hereby acknowledged, the Parties agree as follows:

ARTICLE 1
DEFINITIONS AND INTERPRETATION

1.1 Defined Terms. Capitalized terms used in this Agreement (including in the Recitals hereto) without other definition shall have the following meanings, unless the context clearly requires otherwise:

“Accepted Update” has the meaning given in Section 3.5.3.

“Action” means any litigation, cause of action, arbitration, suit, written complaint, investigation, inquiry or other proceeding (whether civil, criminal, administrative, or investigative) commenced, brought, conducted, or heard by or before, or otherwise involving, any Governmental Person or arbitrator.

“Affiliate” means, with respect to a Person, any other Person that, directly or indirectly through one or more intermediaries, Controls, is Controlled by or is under common Control with such first Person.

“Agreement” means this Purchase and Sale Agreement, dated as of the Effective Date, between the Parties, including all Exhibits and Schedules, as amended, restated or otherwise modified from time to time.

“Amended and Restated Seller Cash Grant Guarantees” means the guarantees to be delivered by GECC, substantially in the forms attached as Exhibits D and E hereto, and otherwise subject to approval in accordance with Schedule 4.1.4.

“Anti-Terrorism Order” means Executive Order No. 13,224, 66 Fed. Reg. 49,079 (Sept. 25, 2001), issued by the President of the United States of America (Executive Order Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism).

“Assigned Agreements” has the meaning given in the Recitals.

“Assignment Agreement” means an assignment and assumption agreement substantially in the form attached as Exhibit A hereto.

“Assigned Interests” has the meaning given in the Recitals.

“Bankruptcy Event” means, with respect to any Person, the occurrence of one or more of the following events: (a) such Person (i) admits in writing its inability to pay its debts as they become due, (ii) files, or consents by answer or otherwise to the filing against it of, a petition for relief or reorganization or arrangement or any other petition in bankruptcy, for liquidation or to take advantage of any bankruptcy, insolvency, reorganization, moratorium or other similar law of any jurisdiction, (iii) makes an assignment for the benefit of its creditors, (iv) consents to the appointment of a custodian, receiver, trustee or other officer with similar powers with respect to it or with respect to any substantial part of its property, (v) is adjudicated as insolvent or to be liquidated, or (vi) takes action for the purpose of any of the foregoing; or (b) a court or Governmental Person of competent jurisdiction enters an Order appointing, without consent by such Person, a custodian, receiver, trustee or other officer with similar powers with respect to it or with respect to any substantial part of its property, or constituting an Order for relief or approving a petition for relief or reorganization or any other petition in bankruptcy or for liquidation or to take advantage of any bankruptcy or insolvency law of any jurisdiction, or ordering the dissolution, winding-up or liquidation of such Person, or any such petition shall be filed against such Person, and such petition or Order entered against such Person shall not have been dismissed, withdrawn or vacated within sixty (60) days.

“Books and Records” means all files, documents, instruments, papers, books and records in Seller’s possession that are material to the ownership, business or condition of the Sunlight Companies or the Projects, including those non-income Tax Returns (but including Seller’s Schedule K-1s to Form 1065), related material work papers, and all related material letters from accountants that have been provided to Seller, and computer records and electronic copies of such information (but excluding electronic mail and other computer-based communications).

“Business Day” means any day other than a Saturday, Sunday or other day on which commercial banks in New York, New York are required or authorized by Law to close.

“Buyer” has the meaning given in the preamble to this Agreement.

“Buyer 1603 Cash Grant Recapture Indemnity Agreements” means the indemnity agreements to be delivered by Buyer, substantially in the forms attached as Exhibits B and C hereto, and otherwise subject to approval in accordance with Schedule 4.1.4.

“Buyer Cash Grant Event” shall mean any of the following events: (a) Buyer becoming or transferring its Class B Interests to a Cash Grant Disqualified Person or (b) all or any portion of a 1603 Grant received by any Sunlight Company in respect of any Project being “recaptured” or disallowed by the Treasury, which recapture or disallowance would not have occurred but for Buyer’s consent or withheld consent under the Company LLCA Amendment to authorize directly or indirectly the Company, the Managing Member or any Sunlight Company to take a certain action or to refrain from taking a certain action (assuming for such purposes that an action for which Buyer’s consent was required and was withheld would have been completed if Buyer had given such consent).

“Buyer Closing Certificates” has the meaning given in Section 3.4.8.

“Buyer Closing Documents” has the meaning given in Section 3.4.10.

“Buyer Disclosure Schedules” means the schedules to Buyer’s representations and warranties provided pursuant to Article 5.

“Buyer Fundamental Representations” has the meaning given in Section 7.1.2.1.

“Buyer LLCA Certification” has the meaning given in Section 3.4.9.

“Buyer Tax Representations” means those representations made in Section 5.1.13.

“Buyer’s Knowledge” means the actual and current knowledge (as opposed to any constructive or imputed knowledge) of the persons set forth for Buyer on Schedule 1.1, after exercise of due inquiry.

“Cash Grant” means a Treasury cash grant in lieu of the available renewable energy tax credits pursuant to section 48 of the Code under the terms of Section 1603 of the Recovery Act and the Cash Grant Guidance.

“Cash Grant Disqualified Person” shall mean at any time during the Recapture Period (as defined in the Company LLCA), (a) a federal, state or local government (or political subdivision, agency or instrumentality thereof), (b) an organization described in Section 501(c) of the Code and exempt from tax under Section 501(a) of the Code, (c) an entity described in paragraph (4) of Section 54(j) of the Code, (d) a real estate investment trust, as defined in Section 856(a) of the Code or a person described in Section 50(d)(1) of the Code, (e) a regulated investment company, as defined in Section 851(a) of the Code, (f) any Person who is not a United States person as defined in Section 7701(a)(30) of the Code (other than a foreign partnership or foreign pass-through entity) unless such person is subject to U.S. federal income tax on more than fifty percent (50%) of the gross income derived by such person from the Company, or (g) a partnership or other “pass-through entity” (within the meaning of paragraph (g)(4) of Section 1603 of division B of the Recovery Act, including a single member disregarded entity and a foreign partnership or foreign pass-through entity) any direct or indirect partner (or other holder of an equity or profits interest) of which is an organization described in (a) through (f) above unless such person owns an indirect interest in such partnership or pass-through entity through a “taxable C corporation” (other than a real estate investment trust or regulated investment company), as that term is used in the Cash Grant Guidance.

“Cash Grant Guidance” means the program guidance publication entitled “Payments for Specific Energy Property in Lieu of Tax Credits under the American Recovery and Reinvestment Act of 2009” dated July 2009 (as revised March 2010 and further revised April 2011), and any other guidance (including frequently asked questions and answers), instructions or terms and conditions published or issued by the Treasury in respect of a Cash Grant or any application therefor and the terms and conditions that the Company must agree to in order to receive a Cash Grant.

“Cash Grant Recapture Indemnity Agreements” means (a) the Buyer 1603 Cash Grant Recapture Indemnity Agreements, (b) that certain Cash Grant Recapture Indemnity Agreement, dated as of the September 29, 2011, entered into by the NextEra Member, in favor of Sunlight 250, DS Holdings, the Company, Collateral Agent (as defined in the Master Agreements) and the Secured Parties (as defined in the Master Agreements) and that certain Cash Grant Recapture Indemnity Agreement, dated as of the September 29, 2011, entered into by the NextEra Member, in favor of Sunlight 300, DS Holdings, the Company, Collateral Agent (as defined in the Master Agreements) and the Secured Parties (as defined in the Master Agreements); (c) that certain Cash Grant Recapture Indemnity Agreement, dated as of the September 27, 2012, entered into by the Sumitomo Member, in favor of Sunlight 250, DS Holdings, the Company, the Collateral Agent (as defined in the Master Agreements) and the Secured Parties (as defined in the Master Agreements) and that certain Cash Grant Recapture Indemnity Agreement, dated as of the September 27, 2012, entered into by the Sumitomo Member, in favor of Sunlight 300, DS Holdings, the Company, the Collateral Agent (as defined in the Master Agreements) and the Secured Parties (as defined in the Master Agreements); and (d) that certain Cash Grant Recapture Indemnity Agreement, dated as of the September 29, 2011, entered into by Seller, in favor of Sunlight 250, DS Holdings, the Company, Collateral Agent (as defined in the Master Agreements) and the Secured Parties (as defined in the Master Agreements) and that certain Cash Grant Recapture Indemnity Agreement, dated as of the September 29, 2011, entered into by Seller, in favor of Sunlight 300, DS Holdings, the Company, Collateral Agent (as defined in the Master Agreements) and the Secured Parties (as defined in the Master Agreements).

“Cash Grant Letter Agreement” means the letter agreement, substantially in the form of Exhibit G hereto, to be entered into as of the Closing Date by and among the Company, the NextEra Member, Buyer, Seller and the Sumitomo Member.

“Cash Grant Proceeding” has the meaning given in the Recitals.

“Claim Notice” has the meaning given in Section 7.2.1.

“Class B Interests” has the meaning given in the Recitals.

“Closing” has the meaning given in Section 3.1.

“Closing Actions” has the meaning given in Section 3.2.

“Closing Date” has the meaning given in Section 3.1.

“Closing Documents” means the Buyer Closing Documents and the Seller Closing Documents.

“Code” means the Internal Revenue Code of 1986, as amended.

“Commercially Reasonable Efforts” means the exercise of diligent efforts designed to achieve the stated goal to the extent that such efforts are commercially reasonable, considering all of the facts, circumstances and costs of undertaking such efforts.

“Company” has the meaning given in the Recitals.

“Company LLCA” means the Amended and Restated Limited Liability Company Agreement for the Company dated as of September 27, 2012 by and among Seller, NextEra Member and Sumitomo Member.

“Company LLCA Amendment” means the Second Amended and Restated Limited Liability Agreement for the Company, substantially in the form of Exhibit H hereto, to be entered into as of the Closing Date by and among Sumitomo Member, Buyer and NextEra Member.

“Contract” means any agreement, contract, lease, sublease, mortgage, indenture, promissory note, evidence of Indebtedness, purchase order, letter of credit, license or sublicense.

“Control” or “control” means the power, directly or indirectly, to direct or cause the direction of the management or business or policies of such Person (whether through the ownership of voting securities or partnership or other ownership interests, by contract, or otherwise, other than through ownership of voting securities in a publicly-held Person); and “Controlling”, “Controlled”, and similar constructions shall have corresponding meanings.

“Corrupt Practices Laws” means (i) the Foreign Corrupt Practices Act and (ii) any equivalent U.S. or foreign applicable Legal Requirement.

“Deductible Amount” has the meaning given in Section 7.1.2.2.

“Desert Sunlight 250 Project” has the meaning given in the Company LLCA.

“Desert Sunlight 300 Project” has the meaning given in the Company LLCA.

“Distributable Cash” has the meaning given in the Company LLCA Amendment.

“Dollars” and “$” mean the lawful currency of the United States of America.

“DS Holdings” has the meaning given in the Recitals.

“Encumbrances” means (a) those restrictions on transfer arising under this Agreement, or the Organizational Documents of the Company, (b) those restrictions on transfer imposed by applicable securities Laws and (c) any Liens arising under or created by the Swap Agreements, the Company LLCA or the Investment Agreement.

“Enforceability Exceptions” has the meaning given in Section 4.1.3.

“Environmental Approval” means any Governmental Approval under any Environmental Law.

“Environmental Claim” means any and all actions, suits, demands, demand letters, claims, liens, notices of non-compliance or violation, notices of liability or potential liability, investigations, proceedings, consent orders or consent agreements relating in any way to any Environmental Law or the Release of any Hazardous Material.

“Environmental Law” means, collectively, all federal, state or local Legal Requirements that relate to (a) the prevention, abatement or elimination of pollution, or the protection of the environment, natural resources, or human health (to the extent relating to exposure to Hazardous Materials), or natural resource damages; (b) the use, generation, handling, treatment, storage,

disposal, Release, transportation or regulation of or exposure to Hazardous Materials, including the Comprehensive Environmental Response Compensation and Liability Act, 42 U.S.C. §§ 9601 et seq., the Endangered Species Act, 16 U.S.C. §§ 1531 et seq., the Solid Waste Disposal Act, as amended by the Resource Conservation and Recovery Act, 42 U.S.C. §§ 6901 et seq., the Clean Air Act, 42 U.S.C. §§ 7401 et seq., the Clean Water Act, 33 U.S.C. §§ 1251 et seq., the Toxic Substances Control Act, 15 U.S.C. §§ 2601 et seq., Hazardous Materials Transportation Act, 49 U.S.C. §§1801 et seq., the Emergency Planning and Community Right to Know Act, 42 U.S.C. §§ 11001 et seq., and their state or local counterparts or equivalents, each as amended from time to time; or (c) impacts related to resources of historical, cultural or tribal significance.

“Effective Date” has the meaning given in the preamble to this Agreement.

“EPC Contracts” has the meaning given in the Company LLCA Amendment.

“EWG” means an exempt wholesale generator under PUHCA.

“Excluded Cash Grant Interests” has the meaning given in the Recitals.

“Expiration Date” has the meaning given in Section 8.1(b).

“FERC” means the Federal Energy Regulatory Commission.

“Financing Documents” means the agreements and documents listed on Part 1 of Schedule II of the Company LLCA Amendment, and any and all amendments thereto.

“FPA” means the Federal Power Act of 1935, as amended.

“Fundamental Representations” has the meaning given in Section 7.1.2.1.

“GAAP” means generally accepted accounting principles as recognized by the American Institute of Certified Public Accountants, as in effect from time to time, consistently applied and maintained on a consistent basis for a Person throughout the period indicated and consistent with such Person’s prior financial practice.

“GECC” means General Electric Capital Corporation, a Delaware corporation.

“General Indemnity” has the meaning given in Section 7.1.1.

“Governmental Approval” means any authorization, approval, consent, license, ruling, Permit, tariff, certification, exemption, Order, recognition, grant, confirmation, clearance, filing or registration by or with any Governmental Person.

“Governmental Judgment” means, with respect to any Person, any Order or any action of a similar nature, of or by a Governmental Person having jurisdiction over such Person or any of its properties.

“Governmental Person” means any national, state, or local government (whether domestic or foreign), any political subdivision thereof or any other governmental, quasi-

governmental, judicial, administrative, tribal, public or statutory instrumentality, authority, body, agency, bureau or entity (including FERC, the U.S. Securities and Exchange Commission, the Federal Deposit Insurance Corporation, the Comptroller of the Currency or the Board of Governors of the Federal Reserve System, any central bank or any comparable authority).

“Grant Shortfall” has the meaning given in the Recitals.

“Hazardous Materials” means any hazardous or toxic substances, contaminants, constituents, chemicals, materials, pollutants or wastes defined, listed, classified or regulated as such in or under any Environmental Laws, including (a) any petroleum or petroleum products (including gasoline, crude oil or any fraction thereof), flammable explosives, radioactive materials, asbestos in any form that is or could become friable, urea formaldehyde foam insulation, polychlorinated biphenyls and radon gas, and (b) any chemicals, materials or substances defined as or included in the definition of “hazardous substances,” “hazardous wastes,” “extremely hazardous wastes,” “restricted hazardous wastes,” “toxic substances,” “toxic pollutants,” “contaminants” or “pollutants,” or words of similar import, under any applicable Environmental Law.

“Indebtedness” has the meaning given in the Master Agreements.

“Indemnified Group” has the meaning given in Section 7.1.1.

“Indemnified Party” has the meaning given in Section 7.1.1.

“Indemnitor” has the meaning given in Section 7.1.1.

“Investment Agreement” means the Investment Agreement, dated as of September 29, 2011, as amended by the First Amendment to the Investment Agreement, dated as of April 25, 2012, among NextEra Energy Resources, LLC, General Electric Capital Corporation, NextEra Member, and Seller, as further amended by the Second Amendment to Investment Agreement and Joinder, dated as of September 27, 2012, among NextEra Energy Resources, LLC, General Electric Capital Corporation, Sumitomo Corporation of America, NextEra Member, Seller, and Sumitomo Member.

“Investment Agreement Amendment” means the Third Amendment and Joinder to the Investment Agreement, substantially in the form of Exhibit I hereto.

“Investment Company Act” means the Investment Company Act of 1940, as amended.

“IRS” means the U.S. Internal Revenue Service.

“Knowledge” means Buyer’s Knowledge or Seller’s Knowledge, as applicable.

“Law” means, with respect to any Person, any statute, law, rule, regulation, ordinance, Governmental Judgment, code, treaty, judgment, directive, or similar form of decision of any Governmental Person in each case applicable to and binding upon such Person or any of its properties or to which such Person or any of its property is subject.

“Leased Real Property” means any lease, option, ownership, easement, subeasement, sub-subeasement, license, access, right of way, encroachment agreement, cotenancy agreement, shared or common facilities agreement, leasehold or other rights or interests in real property required for the operation and maintenance of the Projects including all renewals, extensions, amendments, modifications or supplements to any of the foregoing or substitutions for any of the foregoing, to which any Sunlight Project Company is a party or has rights on the Closing Date.

“Legal Requirements” means, as to any Person, any requirement under a Permit, and any Law, in each case applicable to or binding upon such Person or any of its properties or to which such Person or any of its properties is subject.

“Liability” means any liability or obligation whatsoever (including, for the avoidance of doubt, Taxes), whether known or unknown, asserted or unasserted, absolute or contingent, accrued or unaccrued, liquidated or unliquidated, incurred or due or to become due.

“Lien” has the meaning given in the Master Agreements.

“Loss” means the amount of any out of pocket loss, cost, expense, damage or Liability, including interest, Taxes, fines, penalties, reasonable legal and accounting fees and expenses (including reasonable costs incurred in connection with any mitigation efforts taken in accordance with Section 7.3.1.1, but excluding any costs and expenses of internal counsel and accountants) and court costs, including any of the foregoing arising from any Action, but excluding consequential, indirect, special or punitive damages of Indemnified Parties, and reduced by any amounts (a) actually recovered by the Indemnified Party under any insurance policy with respect to such Losses and (b) of any prior or subsequent recovery by the Indemnified Party from any Person with respect to such Losses (net of out of pocket costs and expenses (including reasonable legal fees and expenses)). For the avoidance of doubt, the loss of or reduction in federal income tax benefits associated with Buyer’s interest in the Company shall not constitute consequential or indirect damages.

“Managing Member” has the meaning given in the Company LLCA.

“Managing Member Request Letter” means Seller’s letter, substantially in the form of Exhibit L.

“Master Agreements” has the meaning given in the Company LLCA.

“Material Adverse Effect” means any condition, circumstance, transaction, event or change that (individually or in the aggregate with all other such conditions, circumstances, transactions, events or changes) causes a material adverse change in the business, assets, Liabilities or financial condition of the Projects and the Sunlight Companies taken as a whole, excluding: (a) any event or condition resulting from or relating to changes or developments in the economy, financial markets or commodity markets in general; (b) changes in international, national, regional, state or local wholesale or retail markets for power transmission or fuel supply or transportation or related products, including those due to actions by competitors; (c) any changes in Laws (including Environmental Laws), or any Order or act of a Governmental Person affecting providers or users of generation, transmission or distribution of electricity generally, that imposes restrictions, regulations or other requirements thereon; (d) changes in general

regulatory or political conditions, including any acts of war or terrorist activities; (e) changes in national, regional, state or local electric interconnection, transmission or distribution procedures or systems; (f) increases in the costs of commodities or supplies, including those relating to solar energy facility components; (g) effects of weather, meteorological or geological events, to the extent that any such changes, effects, events, circumstances, occurrences, facts, conditions do not cause material physical damage or destruction, or render unusable, any material facility, property or assets of any Sunlight Company or Project; (h) strikes, work stoppages or other labor disputes of a general nature and that are not specific to any Project, any Sunlight Company, Seller or their Affiliates; (i) any effect, occurrence, development, or condition that is cured (including by the payment of money) before the earlier of the Closing Date or the termination of this Agreement; (j) any change, financial or otherwise, to the business, affairs or operations of Buyer or any of its Affiliates; or (k) any event or condition attributable to the announcement or pendency of the transactions contemplated by this Agreement, or resulting from or relating to compliance with the express terms of this Agreement. Any determination as to whether any circumstance, change or effect has a Material Adverse Effect shall be made only after taking into account all effective insurance coverage, third-party indemnifications and the quantum of any insurance or indemnity proceeds reasonably likely to be received with respect to such circumstance, change or effect.

“Material Contract” means any of the following Contracts to which any Sunlight Company is a party, or by the terms of which any Sunlight Company or its assets are subject: (a) all material Contracts for the purchase, exchange or sale of electric energy, capacity, ancillary services or related attributes, or renewable energy credits or other environmental attributes; (b) all material Contracts for the transmission of electric power; (c) all material Contracts providing for electrical interconnection or the engineering, procurement or construction of interconnection facilities or system upgrades; (d) any material Contract for the operation and maintenance of the Projects; (e) notes, debentures, bonds, mortgages, equipment trusts, letters of credit, loans or other Contracts for or evidencing material Indebtedness of any Sunlight Company; (f) any material Contract relating to the Leased Real Property; (g) all material Contracts providing any Sunlight Company with an option to acquire, or obligating any Sunlight Company to sell or transfer, any material real property or other material assets; (h) all material Contracts to which

any Sunlight Company is a party or by which it or its assets may be bound pursuant to which any Sunlight Company is obligated to pay or entitled to receive more than two million five hundred thousand Dollars ($2,500,000) in any year or ten million Dollars ($10,000,000), in each case in respect of each Project, over the life of the Contract, and (i) any Contract that provides for any non-monetary obligation on the part of any Sunlight Company or the other parties thereto, the non-performance of which obligations would have a Material Adverse Effect.

“MBR Authority” means an order from FERC (i) authorizing a Sunlight Company to sell energy, capacity and ancillary services at market-based rates; (ii) accepting a Sunlight Company’s market-based rate tariff(s) for filing without restriction or modification that would result in a Material Adverse Effect; and (iii) granting a Sunlight Company all waivers of regulations and blanket authorizations customarily granted by FERC to an entity that will sell wholesale power and ancillary services at market based rates, including blanket authorization for the issuance of securities and assumption of liabilities under Section 204 of the FPA and FERC’s Part 34 regulations thereunder.

“MIPSA” means the Membership Interest Purchase and Sale Agreement dated as of September 29, 2011 among Seller, NextEra Member and First Solar Development, Inc., as updated by the Desert Sunlight MIPSA Purchase Price Adjustment Letter, dated as of April 27, 2012 from First Solar Development, Inc. and accepted and agreed by Seller and NextEra Member, as partially assigned by Seller to Sumitomo Member, pursuant to the Assignment and Assumption Agreement, dated as of September 27, 2012, by and among Seller and Sumitomo Member.

“NextEra Member” means NextEra Desert Sunlight Holdings, LLC, a Delaware limited liability company.

“Non-Updating Party” has the meaning given in Section 3.5.2.

“Order” means any writ, judgment, order, decree, or ruling of a Governmental Person.

“Organizational Documents” means, with respect to any Person, all organizational documents, including all certificates of incorporation, bylaws, certificates of formation, limited liability company agreements, member agreements or similar Contracts relating to the ownership or governance of such Person.

“Other EPC Payments” has the meaning given that term in Exhibit A to the Assignment Agreement.

“Party” or “Parties” has the meaning given in the preamble to this Agreement.

“Permit” means any and all licenses, permits, approvals, registrations, authorizations, exemptions, and other rights, privileges and approvals that are issued by a Governmental Person under any Law, which are necessary for the ownership, use and operation of the Projects.

“Permitted Lien” has the meaning given in the Master Agreements.

“Person” means any individual, sole proprietorship, corporation, partnership, joint venture, joint stock company, limited liability partnership, limited liability company, trust, unincorporated association, institution, Governmental Person or any other entity.

“Pre-Closing Period” means the period commencing with the Effective Date and ending upon the consummation of the Closing.

“Prime Rate” means the rate of interest per annum published in the Wall Street Journal as the “prime rate” for such day and if the Wall Street Journal does not publish such rate on such day, then such rate as most recently published prior to such day.

“Principal Persons” has the meaning given in the Master Agreements.

“Prohibited Person” has the meaning given in the Master Agreements.

“Project” or “Projects” has the meaning given in the Recitals.

“Project Agreements” means the agreements and documents listed on Part 1 of Schedule II of the Company LLCA Amendment, and any and all amendments thereto.

“PUHCA” means the Public Utility Holding Company Act of 2005, as amended.

“Purchase Price” has the meaning given in Section 2.2.

“Recoveries” has the meaning given in Section 7.3.1.2.

“Recovery Act” shall mean the American Recovery and Reinvestment Act of 2009.

“Release” means, with respect to Hazardous Materials, disposing, discharging, injecting, spilling, leaking, leaching, dumping, pumping, pouring, emitting, escaping, emptying into or upon any land or water or air, or otherwise entering into the environment.

“Representatives” means, with respect to any Person, such Person’s agents, members, managers, shareholders, partners, officers, directors, employees, attorneys, accountants, lenders, professional and other advisors and consultants.

“Retained Obligations” has the meaning given to that term in the Assignment Agreement.

“Retained Rights and Obligations” has the meaning given to that term in the Assignment Agreement.

“Securities Act” means the Securities Act of 1933, as amended.

“Seller” has the meaning given in the preamble to this Agreement.

“Seller Closing Certificates” has the meaning given in Section 3.3.8.

“Seller Closing Documents” has the meaning given in Section 3.3.10.

“Seller Disclosure Schedules” means the schedules to Seller’s representations and warranties provided pursuant to Article 4.

“Seller Fundamental Representations” has the meaning given in Section 7.1.2.1.

“Seller’s Knowledge” means the actual and current knowledge (as opposed to any constructive or imputed knowledge) of the persons set forth for Seller on Schedule 1.1, after exercise of due inquiry.

“Seller LLCA Certification” has the meaning given in Section 3.3.9.

“Seller Parent” means EFS Renewables Holdings LLC, a Delaware limited liability company.

“Seller Parent Guarantee” means the guarantee given by Seller Parent to Buyer at the Closing Date to guarantee the obligations of Seller to Buyer under this Agreement, substantially in the form of Exhibit J hereto.

“Seller Parent Transfer Indemnity” means one or more indemnities that may be required to be delivered by Seller Parent on the Closing Date pursuant to Sections 7.1.6 and 7.1.7 of the Company LLCA, as applicable, in form and substance acceptable to each Party in its sole discretion.

“Seller Tax Representations” means those representations made in Section 4.2.7.

“Sumitomo Member” means Summit Solar Desert Sunlight, LLC, a Delaware limited liability company.

“Sunlight 250” has the meaning given in the Recitals.

“Sunlight 300” has the meaning given in the Recitals.

“Sunlight Company” or “Sunlight Companies” has the meaning given in the Recitals.

“Sunlight Project Company” or “Sunlight Project Companies” has the meaning given in the Recitals.

“Swap Agreements” means the documents listed in Schedule 1.2 attached hereto.

“Tax” or “Taxes” means any and all taxes, including all charges, fees, customs, duties, levies or other assessments in the nature of taxes, imposed by any federal, state, local or foreign Governmental Person, including income, gross receipts, net proceeds, excise, property, personal property (tangible and intangible), production, sales, gain, use, license, custom duty, unemployment, inheritance, corporation, capital stock, net worth, transfer, franchise, payroll, withholding, social security (or similar), estimated, minimum estimated, profit, windfall profit,

gift, severance, value added, disability, premium, occupation, service, leasing, employment, stamp, goods and services, ad valorem, fuel, excess profits, alternative or add-on minimum, turnover, utility, utility users and any other taxes, charges, fees, customs, duties, levies and other assessments in the nature of taxes.

“Taxing Authority” means the IRS and any other Governmental Person responsible for administration of Taxes under the Laws of any jurisdiction.

“Tax Representations” means the Buyer Tax Representations and the Seller Tax Representations.

“Tax Returns” means all tax returns, statements, forms and reports (including, elections, declarations, disclosures, schedules, estimates and informational tax returns) for taxes by, or with respect to, the Sunlight Companies.

“Terminating Notice Period” has the meaning given in Section 3.5.2.

“Transaction Documents” means, collectively, this Agreement, the Assignment Agreement, the Closing Documents and all other agreements between the Parties or their Affiliates entered into pursuant to the terms hereof in order to carry out the Closing Actions and the other transactions contemplated hereby.

“Transfer Taxes” has the meaning given in Section 6.4.2.

“Treasury” has the meaning given in the Recitals.

“Updating Information” has the meaning given in Section 3.5.1.

“Updating Party” has the meaning given in Section 3.5.2.

“Working Capital Amount” has the meaning given in Section 2.2.

1.2 Interpretation. Except where otherwise expressly provided or unless the context otherwise necessarily requires, in this Agreement (including in the Recitals hereto):

(a) Reference to a given Article, Section, Subsection, clause, Exhibit or Schedule is a reference to an Article, Section, Subsection, clause, Exhibit or Schedule of this Agreement, unless otherwise specified.

(b) The terms “hereof,” “herein,” “hereto,” “hereunder” and “herewith” refer to this Agreement as a whole.

(c) Reference to a given agreement, instrument, document or Law is a reference to that agreement, instrument, document or Law as modified, amended, supplemented and restated through the date as of which such reference is made, and, as to any Law, any successor Law.

(d) Reference to a Person includes its predecessors, successors and permitted assigns.

(e) The singular includes the plural and the masculine includes the feminine, and vice versa.

(f) “Includes” or “including” means “including, for example and without limitation.”

(g) References to “days” means calendar days.

(h) The word “or” shall not be exclusive.

(i) Disclosure of any item on any Schedule to this Agreement shall constitute disclosure of such item on each other Schedule to this Agreement to which its relevance to such other Schedule to this Agreement is reasonably apparent on its face.

(j) References to the execution of Transaction Documents to be in substantially the form attached as an Exhibit to this Agreement shall be subject to the acknowledgement and agreement of the Parties that certain of such forms of Exhibits have been submitted for review and approval by (i) the U.S. Department of Energy, the Agents (as defined in the Master Agreement) and the Lenders party to the Master Agreement as required by the Master Agreement, (ii) First Solar Development, Inc. as required by the MIPSA, and (iii) the NextEra Member and the Sumitomo Member as required by the Company LLCA, and that certain modifications, amendments and/or new conditions may be required by such reviewing parties. To the extent that any of the foregoing parties described in the preceding sentence requires any modifications or amendments to the forms of Exhibits attached to this Agreement as a condition of such parties to approve the proposed transactions under this Agreement, each of the Parties hereby reserves the right in its sole discretion to reject any such modifications, amendments and/or new conditions required by or imposed upon the Parties in connection with such foregoing parties’ review and approval of the Exhibits attached to this Agreement.

ARTICLE 2
SUMMARY OF TRANSACTIONS

2.1 Sale and Purchase of Assigned Interests. In accordance with the terms and conditions hereof, and subject to the satisfaction or waiver of the conditions precedent to each Party’s obligations as provided herein, as applicable, at Closing, Seller shall sell, transfer and assign to Buyer the Assigned Interests, and Buyer shall purchase, acquire, accept assignment of and pay for the Assigned Interests.

2.2 Purchase Price. The aggregate consideration to be paid to Seller for the Assigned Interests shall be two hundred eighty five million Dollars ($285,000,000) (the

“Purchase Price”), plus an amount equal to Seller’s share of the estimated working capital balance of the Company set forth on Schedule 2.2 to be paid by Buyer to Seller at the time of future quarterly distributions of Distributable Cash by the Managing Member to Members of the Company (the “Working Capital Amount”).

2.3 Purchase Price Payment. At the Closing, provided that each of the conditions precedent set forth in Article 3 is met or waived before 2:00 p.m. (Eastern time), Buyer shall pay by wire transfer of immediately available funds to accounts or payees designated by Seller an amount equal to the Purchase Price and if each of the conditions precedent in Article 3 are met or waived after 2:00 p.m. (Eastern time), Buyer shall pay by wire transfer of immediately available funds to accounts or payees designated by Seller an amount equal to the Purchase Price on the immediately following Business Day. Following Closing, Buyer and Seller shall confirm with the Managing Member the actual account balances in the identified accounts as of June 30, 2015. Buyer shall further pay by wire transfer of immediately available funds to accounts or payees designated by Seller an amount, as determined in accordance with and adjusted pursuant to Schedule 2.2, equal to the portion of the Working Capital Amount, if any, contemplated to be paid in Schedule 2.2 of future quarterly distributions of Distributable Cash by the Managing Member as and when indicated in Schedule 2.2. Buyer and Seller agree to reflect actual cash paid or received in those accounts identified as subject to true up when making wire transfers of the Working Capital Amount.

ARTICLE 3

CLOSING AND CLOSING CONDITIONS

3.1 Time and Place of the Closing. Subject to the terms and conditions hereof, the closing of the transactions contemplated by Sections 2.1 through 2.3 (the “Closing”) shall take place at the offices of Chadbourne & Parke LLP at 1301 Avenue of the Americas, New York, NY 10019-6022, upon the satisfaction or waiver of the closing conditions set forth in this Article 3 (other than conditions that can only be satisfied at the Closing), or at such other place and on such other date as the Parties mutually agree (the “Closing Date”). The Closing shall be effective for all purposes as of 12:01 a.m. Eastern Standard Time or Eastern Daylight Time, as applicable, on the Closing Date.

3.2 Actions at the Closing. At the Closing, Seller and Buyer (as applicable) shall take or cause to be taken the following actions (the “Closing Actions”), each of which shall be a condition precedent to the obligation of Seller and Buyer (as applicable) to take the other actions set forth in this Section 3.2:

3.2.1 Transfer of Assigned Interests. Buyer shall execute and deliver the Assignment Agreement to Seller, and Seller shall (a) execute and deliver the Assignment Agreement to Buyer and (b) cause Buyer to be admitted as a member of the Company with any and all rights and obligations associated with such Assigned Interests effective as of the Closing. The Parties shall deliver a copy of the fully executed Assignment Agreement to the Managing Member.

3.2.2 Closing Documents. Buyer and Seller shall have delivered to the other Party the executed copies of each of the Buyer Closing Documents and the Seller Closing Documents, respectively.

3.2.3 Additional Actions. The Parties shall execute and deliver, or cause to be executed and delivered, all other documents, and take such other actions, in each case as shall be reasonably necessary or appropriate (taking into account the relevant facts and circumstances) to consummate the transactions contemplated hereby, all in accordance with the provisions of this Agreement.

3.3 Conditions Precedent to Obligations of Buyer. The obligation of Buyer to consummate the transactions contemplated hereby shall be subject to the satisfaction, as of the Closing, of the following conditions precedent, any of which may be waived by Buyer in its sole discretion:

3.3.1 Performance of Closing Actions. Seller shall have tendered performance of its respective Closing Actions.

3.3.2 No Violations. The consummation of the transactions contemplated at the Closing shall not violate any applicable Law, except for violations that would not reasonably be expected to have a material adverse effect on the business, assets, results of operation or financial condition of Buyer.

3.3.3 Governmental Approvals. All Governmental Approvals specifically identified on Schedule 4.1.4 shall have been obtained, made or filed, as the case may be.

3.3.4 Consents, Filings, Waivers and Notices. All approvals, consents, filings, waivers and notices in addition to the Governmental Approvals specifically identified on Schedule 4.1.4 shall have been timely made or obtained, as applicable, and be in full force and effect, and in each case shall be in form and substance satisfactory to Buyer.

3.3.5 No Proceeding or Litigation. No Action shall have been instituted or threatened before any Governmental Person of competent jurisdiction by any Person (other than Buyer or any of its Affiliates) that questions or challenges the validity of, or seeks to enjoin, the consummation of the transactions contemplated by the Transaction Documents.

3.3.6 Representations and Warranties. The representations and warranties set forth in Article 4 shall be true and correct in all material respects as of the Closing Date, provided, that (a) the Seller Fundamental Representations shall be true and correct in all respects as of the Closing Date, (b) the representations and warranties set forth in Article 4 (other than the Seller Fundamental Representations) that are qualified with respect to materiality or Material Adverse Effect shall be true and correct as of the Closing Date, and (c) any representations and warranties which are as of a specific date shall be true and correct in all material respects (or true and correct, as the case may be) as of such date.

3.3.7 Covenants. The covenants and obligations of Seller hereunder to be complied with on or prior to the Closing shall have been complied with in all material respects.

3.3.8 Officer’s Certificates of Seller. Buyer shall have received (a) a certificate from Seller, dated the Closing Date and signed by a duly authorized Representative of Seller, pursuant to which such Representative certifies that the conditions described in Sections 3.3.6 and 3.3.7 have been satisfied and (b) a certificate from Seller, dated as of the Closing Date and signed by a duly authorized Representative of Seller, certifying as to (i) Seller’s authority to execute and enter into this Agreement, (ii) incumbent managers or officers of Seller, and (iii) as to the good standing and Organizational Documents of Seller, in each case in form and substance reasonably satisfactory to Buyer (collectively, the “Seller Closing Certificates”).

3.3.9 Seller LLCA Certification. Seller shall have delivered to the other members of the Company a certification or legal opinion required by Section 7.1.3.11 of the Company LLCA (the “Seller LLCA Certification”).

3.3.10 Seller Closing Documents. Seller shall have, or shall cause Seller Parent or GECC to have, executed the following documents, as applicable:

3.3.10.1 Company LLCA Amendment;

3.3.10.2 Non-Foreign Certificate, substantially in the form of Exhibit K hereto, that satisfies the requirements of Section 1445(b)(2) of the Code;

3.3.10.3 Investment Agreement Amendment;

3.3.10.4 Seller Parent Transfer Indemnity;

3.3.10.5 Amended and Restated Seller Cash Grant Guarantees;

3.3.10.6 Cash Grant Letter Agreement; and

3.3.10.7 Seller Parent Guarantee (together with the Seller Closing Certificates and the Seller LLCA Certification, the “Seller Closing Documents”).

3.3.11 Managing Member Request Letter. (a) Seller shall have delivered to Buyer a copy of the Managing Member Request Letter delivered to Managing Member and (b) the Managing Member shall have responded to the Managing Member Request Letter.

3.3.12 Updating Information. No Updating Information set forth on any Seller Disclosure Schedule has been provided by Buyer or Seller pursuant to Section 3.5.1, which could reasonably be expected to cause a Material Adverse Effect.

3.3.13 [Intentionally Omitted]

3.3.14 No Adverse Amendments To Exhibits. None of the Exhibits attached to this Agreement required to be executed by Buyer shall require amendments, modifications or new conditions that have not been agreed to by Buyer in its sole discretion.

3.4 Conditions Precedent to Obligations of Seller. The obligation of Seller to consummate the transactions contemplated hereby shall be subject to the satisfaction, as of the Closing, of the following conditions precedent, any of which may be waived by Seller in its sole discretion:

3.4.1 Performance of Closing Actions. Buyer shall have tendered performance of its applicable Closing Actions.

3.4.2 No Violations. The consummation of the transactions contemplated at the Closing shall not violate any applicable Law, except for violations that would not reasonably be expected to have a material adverse effect on the business, assets, results of operation, or financial condition of Seller.

3.4.3 Governmental Approvals. All Governmental Approvals specifically identified on Schedule 4.1.4 shall have been obtained, made or filed, as the case may be.

3.4.4 Consents, Filings, Waivers and Notices. All approvals, consents, filings, waivers and notices in addition to the Governmental Approvals specifically identified on Schedule 4.1.4 shall have been timely made or obtained, as applicable and be in full force and effect, and in each case shall be in form and substance satisfactory to Seller.

3.4.5 No Proceeding or Litigation. No Action shall have been instituted or threatened before any Governmental Person of competent jurisdiction by any Person (other than Seller or any of its Affiliates) that questions or challenges the validity of, or seeks to enjoin, the consummation of the transactions contemplated by the Transaction Documents.

3.4.6 Representations and Warranties. The representations and warranties set forth in Section 5.1 shall be true and correct in all material respects as of the Closing Date, except that (a) the Buyer Fundamental Representations shall be true and correct in all respects as of the Closing Date, (b) the representations and warranties set forth in Section 5.1 (other than the Buyer Fundamental Representations) that are qualified with respect to materiality or Material Adverse Effect shall be true and correct as of the Closing Date, and (c) any representations and warranties which are as of a specific date shall be true and correct in all material respects (or true and correct, as the case may be) as of such date.

3.4.7 Covenants. The covenants and obligations of Buyer hereunder to be complied with on or prior to the Closing shall have been complied with in all material respects.

3.4.8 Officer’s Certificate of Buyer. Seller shall have received (a) a certificate of Buyer, dated the Closing Date and signed by a duly authorized Representative of Buyer, pursuant to which such Representative certifies that the conditions described in Sections 3.4.6 and 3.4.7 have been satisfied, and (b) a certificate from Buyer, dated as of the Closing Date and signed by an authorized Representative of Buyer, certifying as to (i) Buyer’s authority to execute and enter into this Agreement, (ii) incumbent managers or officers of Buyer, and (iii) good standing and Organizational Documents of Buyer, in each case in form and substance reasonably satisfactory to Seller (the “Buyer Closing Certificates”).

3.4.9 Buyer LLCA Certification. Buyer shall have delivered to the Managing Member an officer’s certificate from a duly authorized officer of Seller in compliance with Section 7.1.3.18 of the Company LLCA (the “Buyer LLCA Certification”).

3.4.10 Buyer Closing Documents. Buyer shall have executed the following documents, as applicable:

3.4.10.1 Company LLCA Amendment;

3.4.10.2 Investment Agreement Amendment;

3.4.10.3 Buyer 1603 Cash Grant Recapture Indemnity Agreements;

3.4.10.4 Cash Grant Letter Agreement; and

3.4.10.5 all documentation requested by the lenders under the Financing Documents pursuant to the USA PATRIOT Act of 2001, and all rules and regulations adopted thereunder (together with the Buyer Closing Certificates and the Buyer LLCA Certification, the “Buyer Closing Documents”).

3.4.11 Termination of Certain Project Agreements. Seller shall have received evidence reasonably satisfactory to Seller that each of the agreements listed on Schedule 3.4.11 has been terminated.

3.4.12 Internal Approvals. Seller Parent has received all necessary internal approvals, including resolutions or other evidence of authority of its members, to enter into each of the Transaction Documents to which it is or will be a party, to consummate each of the transactions and undertakings contemplated thereby, and to perform all of the terms and conditions thereof to be performed by it.

3.4.13 Updating Information. No Updating Information set forth on any Buyer Disclosure Schedule has been provided by Buyer or Seller pursuant to Section 3.5.1, which could reasonably be expected to cause a Material Adverse Effect.

3.4.14 Project Completion Date. The “Project Completion Date” (as such term is defined in the Master Agreements) shall have occurred.

3.4.15 Repayment of A-3 Loans. The “A-3 Loans” (as such term is defined in the Master Agreements) shall have been repaid in full and there shall be no such “A-3 Loans” outstanding as of the Closing Date.

3.4.16 No Adverse Amendments To Exhibits. None of the Exhibits attached to this Agreement required to be executed by Seller or any of its Affiliates shall require amendments, modifications or new conditions that have not been agreed to by Seller and its Affiliates in their sole discretion.

3.5 Update of Disclosure Schedules; Election Not to Close

3.5.1 Updating Information and Notice of Breaches. Each Party has the continuing right and obligation (a) to supplement, modify or amend, during the Pre-Closing Period, the information set forth on the Buyer Disclosure Schedules and Seller Disclosure Schedules applicable in each case to representations made by such Party with respect to any matter as to which such information was incomplete on the Effective Date or hereafter arising or discovered which, if existing or known at the Effective Date (including, without limitation, the due inquiry being made by Seller with respect to its representations and warranties set forth in Section 4.2), would have been required to have been set forth on such Schedules and (b) if necessary or appropriate to correct any inaccuracy in a representation made by such Party, to add a schedule to, or supplement, modify or amend the Buyer Disclosure Schedules or Seller Disclosure Schedules, as applicable (such information and additional schedules collectively being called the “Updating Information”). If, during the Pre-Closing Period, a Party obtains Knowledge of a breach of any representation or warranty of another Party, the former shall promptly furnish written notice thereof to the other Party.

3.5.2 Election Not to Close. Buyer or Seller (in such capacity, the “Updating Party”) may, upon updating any schedule under Section 3.5.1, at its election, invoke the procedures set forth under this Section 3.5.2 in order to allow an early determination as to whether the Updating Information may permit the other Party (in such capacity, the “Non-Updating Party”) not to consummate the transaction contemplated herein in reliance upon the conditions to the Non-Updating Party’s obligation to consummate the transaction as set forth in this Article 3. The Non-Updating Party shall have the right to review the Updating Information for a period of five (5) Business Days after receipt thereof (the “Terminating Notice Period”). At any time within the Terminating Notice Period, the Non-Updating Party shall have the right to terminate this Agreement if, in the Non-Updating Party’s sole discretion, the Updating Information discloses that a condition to the Non-Updating Party’s obligation to consummate the transactions set out in Article 3 hereof is not capable of satisfaction within a reasonable time period. The Non-Updating Party shall exercise its termination right pursuant to the foregoing sentence by delivering notice to the Updating Party specifying in reasonable detail the Updating Information forming the basis for the decision to terminate, the condition which is not capable of satisfaction and the reason therefor. Such termination right shall be the Non-Updating Party’s sole remedy in respect of the incorrectness or a breach of a representation and warranty as disclosed by such Updating Information if the procedures

set forth in this Section 3.5.2 have been invoked by the Updating Party in connection therewith. For the avoidance of doubt, Buyer shall not be permitted to terminate this Agreement and Seller shall not otherwise be deemed to breach this Agreement as a result of any Updating Information that relates to any actions that are expressly required by this Agreement or consented to by Buyer pursuant to Section 6.2.1.

3.5.3 Effect of Updating Information. If a Party delivers Updating Information and either (a) such Party invokes the procedures set forth in Section 3.5.2 and a termination notice is not received within the Terminating Notice Period, or (b) the Closing occurs notwithstanding the Updating Information, the information constituting such Updating Information shall be deemed an “Accepted Update.” With respect to any Accepted Update, (i) any incorrectness or breach shall be deemed cured, (ii) the relevant Buyer Disclosure Schedules or Seller Disclosure Schedules, as applicable, shall be deemed to be so supplemented, modified or amended by such Updating Information as of the Effective Date and as of the Closing Date, for all purposes of this Agreement, and (iii) any applicable representations and warranties to which such disclosure schedule refers shall be deemed qualified as of the Effective Date and as of the Closing Date by such Updating Information.

3.5.4 Update of Schedule 5.1.16.8. In the event that as a condition to the receipt of the consent of the NextEra Member and the Sumitomo Member to the transfer of the Assigned Interests by Seller to Buyer contemplated in this Agreement, such Persons require Buyer to make certifications in the Buyer LLCA Certification that are more extensive than those set forth in Schedule 5.1.16.8, Buyer shall have the right to accept or reject such certifications in its sole discretion; provided, that if Buyer accepts such certifications, the Parties agree that Schedule 5.1.16.8 shall be updated to contain all certifications set forth in the Buyer LLCA Certification to be delivered by Buyer.

3.6 Amendments of this Agreement

The Parties hereby agree that if the U.S. Department of Energy determines that it will require a structure whereby the purchaser of the Assigned Interest will execute 1603 Cash Grant Recapture Indemnity Agreements in the form required by the Master Agreement and to have a creditworthy Affiliate of such purchaser execute one or more guaranties with respect to such purchaser’s 1603 Cash Grant Recapture Indemnity Agreements, then the Parties agree that this Agreement and the Exhibits attached hereto, as applicable, shall be amended and restated and expanded, as applicable, to reflect such revised structure whereby Buyer will form a special purpose entity to assume the obligations of Buyer under this Agreement and Buyer will act as the guarantor of such special purpose entity’s obligations under this Agreement and the 1603 Cash Grant Recapture Indemnity Agreements required under the Master Agreement.

ARTICLE 4

REPRESENTATIONS AND WARRANTIES OF SELLER

4.1 General Representations and Warranties Regarding Seller. Seller represents and warrants to Buyer, as of the Effective Date and as of the Closing Date, as follows:

4.1.1 Organization. Seller is a limited liability company, duly formed, validly existing and in good standing under the Laws of the State of Delaware. Seller is qualified to do business in all jurisdictions where the failure to qualify would materially and adversely affect its ability to execute or deliver, or perform its obligations under, the Transaction Documents to which it is or will be a party.

4.1.2 Authority and Power. Seller has the requisite power and authority to enter into each of the Transaction Documents to which it is or will be a party, to consummate each of the transactions and undertakings contemplated thereby, and to perform all of the terms and conditions thereof to be performed by Seller. The execution, delivery and performance of each of the Transaction Documents to which Seller is or will be a party and the consummation of each of the transactions and undertakings contemplated thereby have been duly authorized through all requisite actions by Seller.

4.1.3 Valid and Binding Obligations. Assuming the due authorization, execution and delivery of the Transaction Documents by each party thereto other than Seller, each of the Transaction Documents to which Seller is or will be a party has been, or will be when executed and delivered, duly and validly executed and delivered by Seller, and is, or will be when executed and delivered, enforceable against Seller in accordance with the terms thereof, except as such enforceability may be limited or denied by (a) applicable bankruptcy, insolvency, reorganization, moratorium or similar Laws affecting creditors’ rights and the enforcement of debtors’ obligations generally, and (b) general principles of equity, regardless of whether enforcement is pursuant to a proceeding in equity or at law (the “Enforceability Exceptions”).

4.1.4 Approvals, Consents, Filings, Waivers and Notices. Assuming that all approvals, consents, filings, waivers and notices set forth on Schedule 4.1.4 hereto have been timely made or obtained, as applicable, and are effective and valid, Seller is not, and Seller will not be, required to give any notice, make any filing, or obtain any consent or approval (including Governmental Approvals and consents or approvals of any third party) to execute, deliver or perform any of the Transaction Documents to which it is or will be a party or to consummate the transactions contemplated thereby, except where the failure to give any notice, make any filing, or obtain any consent or approval would not, individually or collectively, reasonably be expected to materially and adversely affect the ability of Seller to perform any of its obligations under the Transaction Documents to which it is or will be a party, or to consummate the transactions contemplated thereby.

4.1.5 No Violations. Assuming that all approvals, consents, filings, waivers and notices set forth on Schedule 4.1.4 hereto have been timely made or obtained, as applicable, and are effective and valid, the execution, delivery and performance by Seller of each of the Transaction Documents to which it is or will be a party does not and will not, and the consummation of the transactions contemplated thereby will not, (a) violate the Organizational Documents of Seller; (b) violate or constitute a default (or any event that, with or without due notice or lapse of time, or both, would constitute a default) under, any material contract or agreement to which Seller, or to Seller’s Knowledge, a Sunlight Company is a party or is otherwise subject to, that, in any case, would materially and adversely affect the ability of Seller to perform any of its obligations under the Transaction Documents to which it is or will be a party; or (c) violate in any material respect any applicable Law or Order.

4.1.6 No Litigation. There are no Actions pending to which Seller is a party (and, to Seller’s Knowledge, there are no Actions threatened in writing against Seller) at law or in equity before any Governmental Person or arbitral body against or affecting Seller that could reasonably be expected to have a material adverse effect on the ability of Seller to perform its obligations under the Transaction Documents or to consummate the transactions contemplated thereby.

4.1.7 Assigned Interests.

4.1.7.1 Title to Assigned Interests. Seller is the record and beneficial owner of, and holds good and valid title to, the Assigned Interests free and clear of all Liens, other than the Encumbrances. The Assigned Interests constitute fifty percent (50%) of the Class B Interests in Company. At the Closing, Seller will transfer the Assigned Interests to Buyer free and clear of all Liens, other than the Encumbrances. The Assigned Interests have been duly authorized, validly issued, are fully paid for, and the Assigned Interests are not and have not been issued in violation of any purchase option, call option, warrant, right of first refusal, subscription right, preemptive right, conversion right or any similar rights of any Person. Except as contemplated in this Agreement and as provided in Section 8.1.3 of the Company LLCA, Section 19.13 of the 250 EPC Contract (as defined in the MIPSA) and Section 19.13 of the 300 EPC Contract (as defined in the MIPSA), to the Seller’s Knowledge, there are no outstanding obligations, agreements, arrangements, understandings or commitments of the Company to issue, deliver, sell, repurchase, redeem, convert, exchange or otherwise acquire any membership interest in, other equity security issued or issuable by or other rights or

options in or to, the Company. To Seller’s Knowledge, except as set forth in the Swap Agreements, the Company LLCA and the Investment Agreement, the Company has not issued, and there are no outstanding obligations, agreements, arrangements, understandings or commitments to issue, any bonds or other debt securities of the Company.

4.1.7.2 No Other Arrangements. Seller has disclosed and, if written, provided Buyer with copies of (a) any voting or other similar agreements that Seller or any of its Affiliates has entered into with one or more of the other members of the

Company or Affiliates of such other members, which would be effective as of the Closing Date after giving effect to the transfers of the Assigned Interests to Buyer under this Agreement, in each case relating to any of the Sunlight Companies, and (b) any agreements that Seller, or to Seller’s Knowledge, any of its Affiliates, has entered into with one or more of the other members of the Company (which by the terms of such agreements would be binding upon Buyer on and after the Closing Date after giving effect to the transfers of the Assigned Interests to Buyer contemplated under this Agreement) or any of their Affiliates that were negotiated or entered into in connection with, and directly relate to the investment amount, pricing, expected return or any other material economic term of the investment in the Company by Seller or any of the other members of the Company (as of the Closing Date after giving effect to the transfers of the Assigned Interest to Buyer under this Agreement), other than any equipment supply or equipment service agreements with Seller’s Affiliates that may relate to the Projects.

4.1.8 Bankruptcy. No Bankruptcy Event has occurred and is continuing with respect to Seller.

4.1.9 Brokers. Except for a fee payable to Merrill Lynch, Pierce, Fenner & Smith Incorporated, which Seller shall be solely responsible to pay, no Person acting on behalf of Seller or under the authority of Seller shall be entitled to any broker’s, finder’s or similar fee or commission in connection with the transactions contemplated by this Agreement for which Buyer is or could become liable or obligated.

4.1.10 Offerings. Neither Seller nor anyone it has authorized to act on its behalf has offered or sold the Assigned Interests so as to bring the sale of the Assigned Interests to Buyer within the registration provisions of the Securities Act.

4.1.11 Investment Company Act. Seller is not an “investment company” or a company controlled by an “investment company” within the meaning of the Investment Company Act.

4.1.12 Capital Contributions. All Capital Contributions, including all Additional Capital Contributions (each, as defined in the Company LLCA), required to be made by Seller under the Company LLCA have been made, and no further Additional Capital Contributions are required pursuant to the terms of the Company LLCA in effect as of the Closing Date.

4.2 Representations and Warranties Regarding Each Sunlight Company and the Projects. Seller represents and warrants to Buyer with respect to each Sunlight Company and the Projects, as of the Closing Date, as follows:

4.2.1 Organization. To Seller’s Knowledge, the Company is a limited liability company, duly formed, validly existing and in good standing under the laws of the State of Delaware. To Seller’s Knowledge, each other Sunlight Company is a limited liability company, duly organized, validly existing and in good standing under the laws of the Delaware. To Seller’s Knowledge, each Sunlight Company is qualified to do business in

all jurisdictions in which the nature of the business conducted by it makes such qualification necessary and where failure to qualify would reasonably be expected to have a Material Adverse Effect. To Seller’s Knowledge, true and correct copies of the Organizational Documents of each Sunlight Company have been delivered to Buyer. To Seller’s Knowledge, none of the Sunlight Companies is in violation of any of the provisions of its Organizational Documents.

4.2.2 No Violations. Assuming (a) the accuracy of the representations and warranties of Buyer set forth herein and (b) all approvals, consents, filings, waivers and notices set forth on Schedule 4.1.4 hereto have been timely made or obtained, as applicable, and are effective and valid, the execution, delivery and performance by Seller and each Sunlight Company of each of the Transaction Documents to which it is or will be a party does not and will not, and the consummation of the transactions contemplated thereby will not, (i) to Seller’s Knowledge, violate any Organizational Document of any Sunlight Company; (ii) to Seller’s Knowledge, violate or constitute a default (or any event that, with or without due notice or lapse of time, or both, would constitute a default) under, or cause or permit the acceleration of the maturity of, or give rise to any right of termination, cancellation, imposition of fees or penalties under, any Material Contract to which any Sunlight Company is a party, in each case that would have a Material Adverse Effect; (iii) to Seller’s Knowledge, violate any Law or Order applicable to the Sunlight Companies, the violation of which would have a Material Adverse Effect; or (iv) to Seller’s Knowledge, materially and adversely affect any Governmental Approval obtained by any Sunlight Company that is necessary for the ownership, operation and/or maintenance of its respective Project in accordance with the Material Contracts.

4.2.3 Contracts. To Seller’s Knowledge, each Material Contract is in full force and effect and is valid, binding and enforceable against each party thereto in accordance with its terms, except as such enforceability may be limited or denied by the Enforceability Exceptions. To Seller’s Knowledge, except as set forth in Schedule 4.2.3(a), none of the Sunlight Companies is in default (and, to Seller’s Knowledge, no other party thereto is in default) of any material obligation of any Sunlight Company set forth in any Material Contract to which any Sunlight Company is a party and, to Seller’s Knowledge, there are no specific existing facts or circumstances which with notice, the passage of time or both would constitute a default by any Sunlight Company under any Material Contract that would have a Material Adverse Effect. To Seller’s Knowledge, the consummation of the transactions contemplated by the Transaction Documents would not give any party to any Material Contract the right to terminate or alter the terms of such Contract or a right to claim damages thereunder. None of Seller or, to Seller’s Knowledge, any Sunlight Company has received (a) from the applicable counterparty, any written notice of termination of any Material Contract or (b) except as set forth in Schedule 4.2.3(b), from any insurer, (i) any written notice of a denial of coverage under any insurance policies maintained by the Sunlight Companies or (ii) any written notice of cancellation or termination in respect of the current coverage of any such policy described in the preceding subclause (i).

4.2.4 Compliance with Laws. To Seller’s Knowledge, each of the Sunlight Companies is in compliance with all applicable Laws, except to the extent such non-compliance would not reasonably be expected to result in a Material Adverse Effect.

4.2.5 Governmental Approvals. The Sunlight Companies have obtained all material Governmental Approvals that are required to be obtained for consummation of the transactions contemplated by the Transaction Documents. To Seller’s Knowledge, the Sunlight Companies have obtained all Governmental Approvals that are required to conduct the business of the Sunlight Companies as currently conducted except for such Governmental Approvals for which failure to have would not have a Material Adverse Effect.

4.2.6 No Litigation. To Seller’s Knowledge, except as set forth on Schedule 4.2.6, there are no Actions pending to which any Sunlight Company is a party (and, to Seller’s Knowledge, there are no Actions threatened in writing against any Sunlight Company), in any case at law or in equity before any Governmental Person against or affecting any Sunlight Company or the Projects, in each case that would, individually or collectively, have a Material Adverse Effect. To Seller’s Knowledge, there are no outstanding Orders of any Governmental Person arising from litigation or arbitration proceedings against any Sunlight Company or its Affiliates that bind any Sunlight Company, the Projects or any of the Leased Real Property, in each case that would, individually or collectively, have a Material Adverse Effect.

4.2.7 Tax Matters. Except as otherwise set forth on Schedule 4.2.7:

4.2.7.1 Tax Returns. To Seller’s Knowledge, all material Tax Returns of or with respect to each Sunlight Company have been filed within the time and in the manner required by applicable Law (giving regard to valid extensions) and all such Tax Returns are and will be true, accurate and complete in all material respects. The representation in this Section 4.2.7.1 may only be relied upon for purposes of liability for Tax periods (or portions thereof) ending on or prior to the Closing Date. Nothing in this Section 4.2.7.1 shall be construed as a representation or warranty with respect to any Tax positions that Buyer or the Sunlight Companies may take in or in respect of a Tax period (or portion thereof) beginning after the Closing Date.

4.2.7.2 Taxes Paid or Accrued. To Seller’s Knowledge, all material Taxes shown to be due on all Tax Returns filed on or before the Closing Date by each Sunlight Company, and, to Seller’s Knowledge, all other material Taxes required to have been paid in respect of, or otherwise imposed upon, each Sunlight Company have been paid or will be paid in full on or before the Closing Date, and, to Seller’s Knowledge, all material Taxes that are required to be withheld or collected by each Sunlight Company have been duly withheld and collected and, to the extent required, have been paid to the appropriate Governmental Person within the time and in the manner required by applicable Law.

4.2.7.3 Assessments. To Seller’s Knowledge, no Taxing Authority has assessed or asserted or threatened to assess or to assert any deficiency or assessment, or

proposed (formally or informally) any adjustment or any examination, with respect to any Taxes against any Sunlight Company that has not been fully resolved or paid.

4.2.7.4 No Rulings. To Seller’s Knowledge, no Sunlight Company or any Affiliate thereof (a) has received any private letter ruling or closing agreement from the IRS (or any comparable ruling or agreement from any other Taxing Authority) with respect to any Sunlight Company or (b) has any requests for such a ruling or agreement pending.

4.2.7.5 Statute of Limitations. To Seller’s Knowledge, no Sunlight Company or any Affiliate thereof has waived or extended any statute of limitations in respect of Taxes of or with respect to any Sunlight Company.

4.2.7.6 Tax Sharing and Indemnification Agreements. To Seller’s Knowledge, no Sunlight Company is party to any Tax sharing, Tax indemnification or similar agreement currently in force other than the Cash Grant Recapture Indemnity Agreements, the Cash Grant Letter Agreement and customary tax indemnification provisions in contracts entered into in the ordinary course of business that do not primarily relate to Tax matters.

4.2.7.7 Tax Classification. To Seller’s Knowledge, each Sunlight Project Company and Desert Sunlight Holdings, LLC is and has at all times since formation been treated as a pass-through entity for U.S. federal and state Tax purposes, and, to Seller’s Knowledge, no election has been filed with respect to any Sunlight Project Company or Desert Sunlight Holdings, LLC to cause such entity to be treated as an association taxable as a corporation for U.S. federal Tax purposes. To Seller’s Knowledge, Company is treated as a partnership for U.S. federal and state income Tax purposes, and no election has been filed with respect to Company to cause it to be treated as an association taxable as a corporation for U.S. federal Tax purposes.

4.2.7.8 No Liens. To Seller’s Knowledge, there are no Liens for Taxes upon any of the assets of any Sunlight Company other than Permitted Liens.

4.2.7.9 No Liability for Taxes of Other Persons. To Seller’s Knowledge, no Sunlight Company has any Liability for the Taxes of any other Person as a transferee or successor, by contract or otherwise under applicable Law.

4.2.7.10 No ADS Property. To Seller’s Knowledge, none of the material assets of any Sunlight Company are property described in Section 168(g) of the Code.

4.2.8 Environmental Matters.

4.2.8.1 Compliance. To Seller’s Knowledge and except as has been cured or otherwise finally resolved in all material respects, (a) each Sunlight Company is in compliance with all applicable Environmental Laws other than such non-compliance as would not reasonably be expected to have a Material Adverse Effect, (b) no Environmental Claim has been filed, commenced or threatened in writing against any Sunlight Company alleging any violation of or any liability under an Environmental Law, which would reasonably be expected

to have a Material Adverse Effect and (c) no Release of Hazardous Material caused by any Sunlight Company has occurred at, onto, from, or under the Leased Real Property with respect to which remedial action or notice is required by any Sunlight Company under any Environmental Laws or Environmental Approvals that has not been completed and that would reasonably be expected to have a Material Adverse Effect.

4.2.8.2 Environmental Approvals. To Seller’s Knowledge, the Sunlight Companies have obtained all Environmental Approvals necessary for the ownership and operation of the Projects and the conduct of the business of the Sunlight Companies, except for any such Environmental Approvals the absence of which would not result in a Material Adverse Effect.

4.2.8.3 Sections 4.2.8.1 and 4.2.8.2 provide the sole and exclusive representations and warranties of Seller with respect to environmental matters, including any and all matters arising under Environmental Law, including with respect to compliance therewith and liabilities thereunder.

4.2.9 Personal Property. To Seller’s Knowledge, each Sunlight Company has good and valid title to, or in the case of leased assets, valid leasehold interests in, all material tangible property, machinery, equipment and other personal properties required for the operation of the Projects, in each case subject to no Liens, excepted for Permitted Liens.

4.2.10 Energy Regulatory Status.

4.2.10.1 Each of the Sunlight Project Companies has filed with FERC a notice of self-certification of its status as an EWG.

4.2.10.2 By letter order issued on September 23, 2013, in Docket Nos. ER13-1991-001 and ER13-1992-001, each of the Sunlight Project Companies was granted MBR Authority.

4.2.11 Bankruptcy. To Seller’s Knowledge, no Bankruptcy Event has occurred and is continuing with respect to any Sunlight Company.

4.2.12 Absence of Certain Changes. Except as set forth on Schedule 4.2.12, to Seller’s Knowledge and since the date of each Sunlight Company’s most recently audited annual financial statements, no event, change, fact, condition or circumstance has occurred which has had, or would reasonably be expected to result in, a Material Adverse Effect.

4.2.13 Financial Statements. To Seller’s Knowledge, true and correct copies of the audited annual financial statements of each Sunlight Company as of and for the period ended December 31, 2014 have been provided to Buyer. To Seller’s Knowledge, such financial statements (a) have been prepared from the Books and Records of the respective Sunlight Company in accordance with GAAP, or are accompanied by GAAP reconciliations, subject to normal year-end audit adjustments and the lack of footnotes,

and (b) present fairly in all material respects the financial condition and results of operations of the respective Sunlight Company for the period or as of the date set forth therein.

4.2.14 Disclosure of Documents and Information. To Seller’s Knowledge, Schedule 4.2.14 contains a true, correct and complete list of all Material Contracts, Governmental Approvals, and all amendments and supplements thereto to which any of the Sunlight Companies is a party or by which its assets are subject and Seller has provided or made available to Buyer true, correct and complete copies of all such Material Contracts and Governmental Approvals. To Seller’s Knowledge, true, correct and complete copies of any Material Contracts and Governmental Approvals or amendments thereto that had not been provided or made available to Buyer on the Effective Date have been provided to or made available to Buyer. Prior to the Closing Date, Seller has provided true, correct and complete copies of all information delivered to or requested by Seller pursuant to the Managing Member Request Letter.

ARTICLE 5

REPRESENTATIONS, WARRANTIES AND ACKNOWLEDGEMENTS OF BUYER

5.1 Representations and Warranties of Buyer. Buyer hereby represents and warrants to Seller, as of the Effective Date and as of the Closing Date, as follows:

5.1.1 Organization. Buyer is a limited liability company, duly formed, validly existing and in good standing under the Laws of the State of Delaware. Buyer is qualified to do business in all jurisdictions where the failure to qualify would materially and adversely affect its ability to execute or deliver, or perform its obligations under, the Transaction Documents to which it is or will be a party. True and correct copies of the Organizational Documents of Buyer have been delivered to Seller.

5.1.2 Authority and Power. Buyer has the requisite power and authority to enter into each of the Transaction Documents to which it is or will be a party, to consummate each of the transactions and undertakings contemplated thereby, and to perform all the terms and conditions thereof to be performed by Buyer. The execution, delivery and performance of each of the Transaction Documents to which Buyer is or will be a party and the consummation of each of the transactions and undertakings contemplated thereby have been duly authorized by all requisite action on the part of Buyer.

5.1.3 Valid and Binding Obligations. Assuming the due authorization, execution and delivery of the Transaction Documents by each party thereto other than Buyer, each of the Transaction Documents to which Buyer is or will be a party has been, or will be when executed and delivered, duly and validly executed and delivered by Buyer, and is, or will be when executed and delivered, enforceable against Buyer in accordance with the terms thereof, except as such enforceability may be limited or denied by the Enforceability Exceptions.

5.1.4 Approvals, Consents, Filings, Waivers and Notices. Assuming that all approvals, consents, filings, waivers and notices set forth on Schedule 4.1.4 hereto have been timely made or obtained, as applicable, and are effective and valid, Buyer is not, and will not be, required to give any notice, make any filing, or obtain any consent or approval (including Governmental Approvals and consents or approvals of any third party) to execute, deliver or perform any of the Transaction Documents to which it is or will be a party or to consummate the transactions contemplated thereby, except where the failure to give any notice, make any filing, or obtain any consent or approval would not, individually or collectively, be reasonably be expected to materially and adversely affect the ability of Buyer to perform its obligations under the Transaction Documents or to consummate the transactions contemplated thereby.

5.1.5 No Violations. The execution, delivery and performance by Buyer of each of the Transaction Documents to which it is or will be a party does not and will not, and the consummation of the transactions contemplated thereby will not, (a) violate the Organizational Documents of Buyer, (b) violate or constitute a default (or any event that, with or without due notice or lapse of time, or both, would constitute a default) under, any Contract to which Buyer is a party or by which any of Buyer’s properties or assets are bound that, in any case, would materially and adversely affect the ability of Buyer to perform any of its obligations under the Transaction Documents to which it is or will be a party, or (c) violate in any material respect any applicable Law or Order.

5.1.6 No Litigation. There are no Actions pending to which Buyer is a party (and, to Buyer’s Knowledge, there are no Actions threatened in writing against Buyer) at law or in equity before any Governmental Person or arbitral body against or affecting Buyer, that could reasonably be expected to have a material adverse effect on the ability of Buyer to perform its obligations under the Transaction Documents or to consummate the transactions contemplated thereby.

5.1.7 Investment Company Act. Buyer is not an “investment company” or a company controlled by an “investment company” within the meaning of the Investment Company Act and the acceptance of the Assigned Interests by Buyer does not require registration of the Company as an “investment company” under the Investment Company Act.

5.1.8 Securities Law Matters. Buyer (a) is acquiring the Assigned Interests for the Buyer’s own account, for investment and not with a view to the distribution thereof and (b) hereby acknowledges that the Assigned Interests have not been registered under the Securities Act, or registered or qualified for sale under any state securities laws, and cannot be resold without registration thereunder or exemption therefrom. Buyer is an “accredited investor,” as such term is defined in Regulation D of the Securities Act, and will acquire the Assigned Interests for its own account and not with a view to a sale or distribution thereof in violation of the Securities Act, and the rules and regulations thereunder, any applicable state “blue sky” laws or any other applicable securities laws. Buyer has sufficient knowledge and experience in financial and business matters to enable it to evaluate the risks of investment in the Assigned Interests and at the Closing

will have the ability to bear the economic risk of this investment for an indefinite period of time.

5.1.9 Experienced and Knowledgeable Investor. Buyer is an experienced and knowledgeable investor in, or is being advised by an advisor experienced and knowledgeable in, the solar electric power generation, construction and ownership businesses. Prior to entering into this Agreement, Buyer was advised by its counsel, accountants, financial advisors, and such other Persons it has deemed appropriate concerning this Agreement and has relied solely (except for the representations and warranties of Seller set forth in Article 4) on an independent investigation and evaluation of, and appraisal and judgment with respect to, the Company, each Sunlight Company, the business, assets (including the Projects), Liabilities, results of operations, condition (financial or otherwise) and prospects of each Sunlight Company, and the revenue, price, and expense assumptions applicable thereto.

5.1.10 Brokers. No broker, finder, investment banker, or other Person is entitled to any brokerage, finder’s or other fee or commission in connection with the transactions contemplated hereunder, based on the arrangements made by or on behalf of Buyer for which Seller would be responsible.

5.1.11 Bankruptcy. No Bankruptcy Event has occurred and is continuing with respect to Buyer.

5.1.12 Regulatory Status.

5.1.12.1 Buyer, apart from any authorizations already granted by regulation or order and effective as to the transactions contemplated hereunder, requires no authorization under Section 203(a)(2) of the FPA to execute this Agreement, to consummate the transactions contemplated by this Agreement, including acquiring the Assigned Interests (or the rights in or to the Assigned Agreements transferred hereunder), or to perform its obligations under this Agreement.

5.1.12.2 Buyer’s acquisition and ownership of the Assigned Interests will not (a) cause either of the Sunlight Project Companies to lose its MBR Authority, or (b) cause either Sunlight Project Company to cease to be eligible for status as an EWG.

5.1.13 Tax Matters.

5.1.13.1 United States Person. Buyer, or, if it is disregarded as separate from its owner for federal income tax purposes, the Person that is treated as its owner for federal income tax purposes, is a “United States person” (as defined in Section 7701(a)(30) of the Code) and, therefore, is not a “foreign partner” within the meaning of Section 1446(e) of the Code.

5.1.13.2 Entity Classification. Consummation of the transactions contemplated by this Agreement will not cause any assets of any Sunlight Company to be treated

wholly or partly as subject to alternative depreciation under Section 168(g) of the Code or to be “tax-exempt use property” within the meaning of Section 168(h) of the Code. Buyer is a disregarded entity for federal income tax purposes that is wholly owned by NRG Yield LLC, a partnership for federal income tax purposes, that is owned by NRG Yield, Inc., a corporation for federal income tax purposes and NRG Energy, Inc., a corporation for federal income tax purposes.

5.1.14 Opportunity for Independent Investigation. Prior to its execution of this Agreement, Buyer has conducted to its satisfaction an independent investigation and verification of the current condition and affairs of the Sunlight Companies and the Projects. In making its decision to execute this Agreement and to purchase the Assigned Interests, Buyer has relied and will rely solely upon the results of such independent investigation and verification and upon the express representations, warranties, terms and conditions contained in this Agreement and the Transaction Documents.

5.1.15 Contracts with Members of the Company. Buyer has disclosed and, if written, provided Seller with copies of (a) any voting or other similar Contracts Buyer or any of its Affiliates has entered into with one or more of the other members of the Company (as of the Effective Date and after giving effect to the transactions contemplated hereby relating to the Projects or any Sunlight Company) and (b) any material Contracts or other arrangements Buyer or, to Buyer’s Knowledge, any of its Affiliates has entered into with one or more of the other members of the Company (as of the Effective Date and after giving effect to the transfers of the Assigned Interests to Buyer under this Agreement) or any of their Affiliates that were negotiated or entered into in connection with, and directly relate to the investment amount, pricing, expected return or any other material economic term of the investment in the Company by Buyer or any of the other members of the Company (as of the Effective Date and after giving effect to the transactions contemplated hereby).

5.1.16 Additional Representations and Warranties of Buyer.

5.1.16.1 Buyer is a Permitted Equity Transferee, as such term is defined in the Master Agreements.

5.1.16.2 None of Buyer, any Person that Controls Buyer, or any of their respective Principal Persons is a Prohibited Person.

5.1.16.3 Buyer and its Principal Persons are in compliance with the Anti-Terrorism Order and have not previously violated the Anti-Terrorism Order.

5.1.16.4 Each of Buyer, any Person that Controls Buyer, and each of their respective Principal Persons, employees and agents is in compliance with the Office of Foreign Assets Control of the Treasury and all applicable Corrupt Practices Laws and has complied with and all applicable Corrupt Practices Laws in obtaining any consents, licenses, approvals, authorizations, rights or privileges with respect to the acquisition of its membership interests in the Company.

5.1.16.5 The internal management and accounting practices and controls of Buyer are adequate to ensure compliance with all Corrupt Practices Laws.

5.1.16.6 Buyer is not a Cash Grant Disqualified Person.

5.1.16.7 Buyer is not a First Solar Competitor (as defined in the MIPSA).

5.1.16.8 The sale to Buyer of the Assigned Interests will not violate any of the restrictions set forth in Schedule 5.1.16.8, and each statement set forth in the Buyer LLCA Certification, when delivered, is true and correct in all respects.

5.2 No Further Representations. Except for the representations and warranties expressly set forth in Article 4 of this Agreement, Seller expressly disclaims any representations or warranties of any kind, express or implied, relating to Seller, the Assigned Interests, the Sunlight Companies, the Projects or the transactions contemplated hereby. Without limiting the generality of the foregoing, and except for the representations and warranties expressly set forth in Article 4 of this Agreement and representations and warranties of the Seller in the Transaction Documents, Buyer acknowledges and agrees in particular as follows: (a) the Assigned Interests (and indirectly, interests in each Sunlight Company and Project), are being acquired, “as is, where is” on the Closing Date, and in their respective conditions on the Closing Date “with all faults”; (b) Buyer is relying on its own examination of the Assigned Interests, the Sunlight Companies and the Projects and no representations or warranties, whether express or implied, are given as to (i) Liabilities, development, construction or operation of the Sunlight Companies, including the Projects, (ii) the title, condition, value or quality of the Assigned Interests or the business, condition (financial or otherwise) or prospects of the Sunlight Companies, (iii) the risks or other incidents of ownership of the Assigned Interests and, indirectly, the Sunlight Companies, (iv) the Projects and the continued operation and maintenance thereof and any part thereof and (v) the merchantability, usage, suitability or fitness for any particular purpose with respect to the Sunlight Companies, the Projects, or any part thereof, or as to the absence of any defects therein, whether latent or patent; (c) no information or material provided by or communication made by Seller or any of its Representatives shall constitute, create or otherwise cause to exist any representation or warranty by Seller; and (d) prior to the Closing Date, Seller was a passive investor in the Company and accordingly Seller’s representations and warranties herein qualified as to Seller’s Knowledge are made (i) in respect of any information that Managing Member has disclosed to Seller, (ii) subject to any such information required by any Contract, or requested by Seller, to be disclosed by Managing Member and not so disclosed and (iii) in respect of any information that Seller independently obtained, or that Seller acquired or obtained in writing from any other members of the Company, any counterparties to the Material Contracts, or any other Persons involved with the Projects.

ARTICLE 6

COVENANTS

6.1 Covenants of All Parties. Each Party shall (a) subject to Section 1.2(j), use Commercially Reasonable Efforts to cause the Closing conditions set forth in Article 3 of this Agreement to be satisfied as soon as possible; provided, however, neither Party shall have any obligation to expend material funds or assume any material liabilities in connection with the foregoing, and (b) coordinate and cooperate with the other Party in providing such information and supplying such assistance as may be reasonably requested by such other Party in connection with the foregoing. Without limiting the generality of the foregoing, but subject to Section 1.2(j), or any other provision of this Agreement regarding approvals, each Party shall use Commercially Reasonable Efforts to obtain all authorizations, consents, orders, and approvals of, and to give all notices to and make all filings with, all Governmental Persons (including those pertaining to the Governmental Approvals) and third parties that may be or become necessary for its performance of its obligations under this Agreement and shall cooperate fully with the other Parties in promptly seeking to obtain all such authorizations, consents, orders, and approvals, giving such notices, and making such filings; provided, however, neither Party shall have any obligation to expend material funds or assume any material liabilities in connection with the foregoing.

6.2 Covenants of Seller.

6.2.1 Pre-Closing Period Actions. Subject to Section 6.2.2 and the constraints and limitations of applicable Organizational Documents and Law, and except as contemplated by this Agreement, during the Pre-Closing Period, Seller shall not exercise its voting rights as a member of the Company to approve or otherwise consent to (or, if necessary, affirmatively veto) the taking of any of the following actions by any Sunlight Company, in each case, without the prior written consent of Buyer, which consent shall not be unreasonably withheld, conditioned or delayed:

(a) redeem or otherwise acquire any equity ownership interests or issue any equity ownership interests or any option, warrant or right relating thereto;

(b) sell, lease, license, assign or transfer (including, without limitation, transfers to Seller or any Affiliate) any material Project assets or any Leased Real Property;

(d) incur any material Indebtedness;

(e) except in the ordinary course of business, make any loans or advances to, or guarantees for the benefit of, any Persons;

(f) subject any portion of the assets of the Sunlight Companies to any Lien (other than Permitted Liens or Encumbrances);

(g) except in the ordinary course of business, amend, modify or supplement in any material respect or terminate any Material Contract;

(h) issue, sell or transfer any equity interests of any Sunlight Company, any securities convertible, exchangeable or exercisable into equity interests of such Sunlight Company, or warrants, options or other rights to acquire equity interests of such Sunlight Company;

(i) acquire (by merger, consolidation or acquisition of stock or assets or otherwise) any corporation, partnership or other business organization or division thereof or collection of assets constituting all or substantially all of a business or business unit; or

(j) change or authorize any material change in its Organizational Documents.

6.2.2 Qualifications on Conduct. Prior to Closing, Seller may exercise its voting right under the Company LLCA to cause any Sunlight Company to take (or not take, as the case may be) any of the actions described in Section 6.2.1 above if reasonably necessary under emergency circumstances (or if required (or prohibited, as the case may be) pursuant to applicable Law), and provided Buyer is notified as soon thereafter as practicable.

6.2.3 Books and Records; Project Costs. Seller shall, reasonably promptly after the Closing, provide to Buyer all of the Books and Records of each Sunlight Company, including copies of each Governmental Approval for such Sunlight Company, that are in the possession of Seller as of the Closing Date; provided, that Seller shall be entitled to retain copies of such Books and Records delivered to Buyer pursuant to this Section 6.2.3. Seller and Buyer shall each bear fifty percent (50%) of any reasonable third-party costs and expenses in connection with providing such information. However, nothing in this Section shall obligate Seller to disclose any of its income Tax Returns.

6.2.4 Reimbursement of Certain Expenses. Seller and Buyer shall each pay or reimburse each Sunlight Company, NextEra Desert Sunlight Holdings, LLC, Summit Solar Desert Sunlight LLC, Sumitomo Corporation and their respective Affiliates for fifty percent (50%) of all reasonable costs and expenses incurred by such entities in connection with the consummation of the transactions contemplated hereunder and the admission of Buyer as a member of the Company, on or before the tenth (10^th) day after the receipt by such Party of the Company’s or such entity’s invoices for the amount due.

6.3 Transfers. For so long as any Amended and Restated Seller Cash Grant Guarantee remains in effect, Buyer shall not transfer any of the Assigned Interests without Seller’s and GECC’s prior written consent; provided, that, for the avoidance of doubt such consent shall not be required with respect to any proposed transfer by Buyer where each Amended and Restated Seller Cash Grant Guarantee will be terminated and released as of the effective date of such proposed transfer.

6.4 Tax Matters; Cash Grants.

6.4.1 Cooperation. Seller shall, subject to the constraints and limitations of the Company LLCA and applicable Law, grant to Buyer (or its designees) access at all reasonable times to all of the material information and Books and Records relating to each Sunlight Company within the possession of Seller that are not otherwise delivered to Buyer pursuant to Section 6.2.3 (including work papers and correspondence with Taxing Authorities), and shall afford Buyer (or its designees) the right (at Buyer’s expense) to take extracts therefrom and to make copies thereof to the extent reasonably necessary to permit Buyer (or its designees) to prepare Tax Returns. Notwithstanding anything to the contrary in this Agreement or any other Transaction Document, and for the avoidance of doubt, Seller shall not be responsible for, and Buyer shall be solely responsible for and shall assume, all costs and expenses associated with obtaining such access.

6.4.2 Transfer Taxes. All sales, use, transfer, goods and services, real property transfer, value added, recording, gains, documentary, bulk sales, stock transfer, stamp duty, excise, gross receipts and other similar taxes, duties, fees and charges (“Transfer Taxes”), if any, arising out of or in connection with the purchase of the Assigned Interests shall be borne by Buyer. Buyer shall file all required Tax Returns and other documentation with respect to such Transfer Taxes within the time and manner required by applicable Law and, if required by applicable Law, the non-filing party will, and will cause its Affiliates to, join in the execution of any such Tax Returns and other documentation by the filing party.

6.4.3 Cash Grant Disputes. Buyer shall promptly advise Seller of any oral or written correspondence with Treasury or any other Governmental Person with respect to the Cash Grant for each Project. Buyer shall use Commercially Reasonable Efforts to cause Seller to maintain the same control rights with respect to any Cash Grant controversy that Seller had under the terms of the Company LLCA prior to the sale of the Assigned Interests to Buyer.

6.5 Further Assurances. From time to time after the Closing, upon the request of a Party and without further consideration, the other Party shall execute and deliver to the requesting Party such documents and take such action as the requesting Party reasonably requests to consummate more effectively the intent and purpose of the Parties under this Agreement and the transactions contemplated hereby.

ARTICLE 7

INDEMNIFICATION AND REMEDIES

7.1 General Indemnity.

7.1.1 General. To the fullest extent permitted by applicable Law, (a) Seller shall defend, indemnify and hold harmless Buyer, and Buyer shall defend, indemnify and hold harmless Seller (the applicable indemnifying party, the “Indemnitor”), including, in

the case of each non-indemnifying Party, such Party’s Affiliates and their respective Representatives, successors and assigns (each, an “Indemnified Party,” with each Party and its respective group of Indemnified Parties being referred to collectively as an “Indemnified Group”) from and against any Loss suffered or incurred by any Indemnified Party to the extent arising out of, or resulting from (i) the inaccuracy or breach of any representation or warranty of the Indemnitor contained in the Transaction Documents or the bring-down certificates provided at Closing pursuant to Section 3.3.8 or Section 3.4.8 or (ii) the breach or default by the Indemnitor of any covenant or agreement of such Indemnitor contained in the Transaction Documents, (b) to the extent not otherwise paid by GECC under any Amended and Restated Seller Cash Grant Guarantee, Seller shall indemnify Buyer for any payment obligations of Buyer under the Buyer 1603 Cash Grant Recapture Indemnity Agreements (which obligations shall bear interest at the Prime Rate plus [***] percent ([***]%) per annum from the date of payment by Buyer until the date of reimbursement by Seller), but excluding any payment obligations arising as a result of a Buyer Cash Grant Event, (c) Buyer shall indemnify GECC for any payment obligations of GECC under any Amended and Restated Seller Cash Grant Guarantee that arise as a result of a Buyer Cash Grant Event (which obligations shall bear interest at the Prime Rate plus [***] percent ([***]%) per annum from the date of payment by GECC until the date of reimbursement by Buyer), (d) (i) Buyer shall indemnify Seller for any Loss suffered or incurred to the extent directly arising out of the Assigned Agreements on or after the Closing Date, except to the extent arising out of any Retained Rights and Obligations and (ii) Seller shall indemnify Buyer for any Loss suffered or incurred to the extent directly arising out of any Retained Obligations, and (e) Buyer shall defend, indemnify and hold harmless Seller, Seller Parent and each of their Affiliates and their respective Representatives, successors and assigns from any Loss suffered or incurred by any such Person solely to the extent arising out of, or resulting from claims relating to (i) a Buyer Cash Grant Event or (ii) the breach or default by the Buyer of any covenant, agreement or representation and warranty of the Buyer contained in this Agreement or the Company LLCA Amendment, in each case only to the extent such Loss suffered or incurred results from a claim made by a beneficiary under any Seller Parent Transfer Indemnity and without duplication of any liability under clause (a)(i) above (the “General Indemnity”). Notwithstanding the foregoing, no Indemnified Party shall be entitled to any indemnification hereunder in respect of any Loss to the extent caused by the fraud, negligence, willful misconduct or failure to perform material obligations under the Transaction Documents of such Indemnified Party or any Person who is a member of its Indemnified Group.

7.1.2 Limitations on General Indemnity.

7.1.2.1 Timing of Claim. Notwithstanding the provisions of Section 7.1.1 above, no Indemnified Party shall be entitled to make any claim for indemnification as provided in Section 7.1.1(a)(i) unless such claim shall have been made in writing no later than twelve (12) months after the Closing Date, other than for breaches of (a) those representations made in Sections 4.1.1, 4.1.2, 4.1.3, 4.1.7 (the “Seller Fundamental Representations”) and Sections 5.1.1, 5.1.2, 5.1.3, 5.1.12 and 5.1.16 (the “Buyer Fundamental Representations” and

together with the Seller Fundamental Representations, the “Fundamental Representations”), as to which a claim may be made at any time prior to the expiration of the applicable statute of limitations; and (b) the Tax Representations of Seller and Buyer in this Agreement, as to which a claim may be made no later than sixty (60) days after the expiration of the applicable statute of limitations (taking into account applicable waivers and extensions). Notwithstanding the provisions of Section 7.1.1 above, Buyer shall not be entitled to make any claim for indemnification as provided in Section 7.1.1(d)(ii) in respect of Other EPC Payments unless such claim shall have been made in writing no later than the date on which the bonus payment obligations owed by any Sunlight Company to First Solar Electric (California), Inc. under the EPC Contracts are paid in full.

7.1.2.2 Deductible Amount for General Indemnity. Except for claims relating to a breach of Fundamental Representations, an Indemnified Party shall not be entitled to make any claim for indemnification under Section 7.1.1(a)(i) above with respect to the inaccuracy of any representation or warranty unless the aggregate amount of all Losses incurred by such Indemnified Party from claims arising out of, or resulting from Section 7.1.1(a)(i) exceeds an amount equal to [***] percent ([***]%) of the Purchase Price (the “Deductible Amount”), in which event an Indemnitor shall be required to indemnify the Indemnified Party only for such Losses thereof in excess of such Deductible Amount. For the avoidance of doubt, the Deductible Amounts shall not apply to any claims for indemnification under any subsection or clause of Section 7.1.1 other than Section 7.1.1(a)(i) thereof.

7.1.2.3 Overall Limitation on Liability of Parties for General Indemnity. Notwithstanding any other provision of this Agreement or any other Transaction Document, following the Closing, the aggregate Liability of the Parties under the General Indemnity or otherwise arising out of or relating to this Agreement (other than any claims relating to the Retained Obligations or for failure of a Party to pay an amount due under the Transaction Documents), and the other Transaction Documents (but excluding the Cash Grant Letter Agreement) from any and all causes (whether based in contract, tort (including negligence), strict liability, law or equity, or any other cause of action), shall not exceed [***] percent ([***]%) of the Purchase Price, except that (a) the aggregate Liability of Seller or Buyer shall not exceed [***] if such Liability arises from its breach of any of its Fundamental Representations, Tax Representations or any covenant of Seller and Buyer in this Agreement relating to Taxes, (b) the aggregate Liability of Buyer shall not be subject to any such limitations under this Section 7.1.2.3 if such Liability arises from Buyer’s obligations under Section 7.1.1(c), Section 7.1.1(d)(i), or Section 7.1.1(e), and (c) the aggregate Liability of Seller shall not be subject to any such limitations under this Section 7.1.2.3 if such Liability arises from Seller’s obligations under Section 7.1.1(b) or Section 7.1.1(d)(ii).

7.2 Payment of Claims.

7.2.1 Claim Procedure. If an Indemnified Party learns of an actual or potential indemnity claim (other than a claim by a third Person) for which such Indemnified Party may seek indemnification under Section 7.1, such Indemnified Party shall, reasonably promptly after becoming aware of such claim, notify the Indemnitor thereof in writing, specifying the nature of and specific basis for such claim and the actual or, if reasonably

practicable, the estimated amount of such claim to the extent then ascertainable (which estimate shall not be conclusive of the final amount of such indemnity claim) (such notice, a “Claim Notice”); provided, that the failure of an Indemnified Party to give timely notice shall not affect its rights to indemnification under Section 7.1, except to the extent that the Indemnitor has been actually and materially prejudiced by such failure. Within ten (10) days following receipt of the applicable Claim Notice, the Indemnitor shall notify such Indemnified Party in writing if the Indemnitor disputes that all or a portion of such indemnity claim is subject to indemnification hereunder, specifying the amount, if applicable, so disputed, and otherwise the Indemnitor shall be deemed to have agreed that any undisputed portion of such indemnity claim is subject to indemnification hereunder. Any such indemnity claim that the Indemnitor has agreed, or has been deemed to have agreed, is subject to indemnification hereunder shall be paid in accordance with Section 7.2.2. With respect to any disputed indemnity claim, after final judgment or award shall have been rendered by a court, arbitration board or administrative agency of competent jurisdiction and the expiration of the time in which to appeal therefrom, or a settlement shall have been consummated, or the Indemnified Party and the Indemnitor shall have arrived at a mutually binding agreement with respect to each separate matter indemnified by the Indemnitor, the Indemnified Party shall forward to the Indemnitor notice of any sums due and owing by the Indemnitor with respect to such matter, and such amount shall be paid as provided in Section 7.2.2.

7.2.2 Timing for Payment. Except for third party indemnity claims paid in accordance with Section 7.4.4, all indemnity claims shall be paid as follows: (a) if the Indemnitor is Buyer, by payment by Buyer of the sums so owing to the Indemnified Party in immediately available funds within twenty (20) days after the date of receipt of the corresponding claims under Section 7.1.1 and (b) if the Indemnitor is Seller, by payment by Seller of the sums so owing to the Indemnified Party in immediately available funds within twenty (20) days after the date of receipt of the corresponding claims under Section 7.1.1.

7.3 Other Limitations on Indemnities.

7.3.1 Mitigation and Limitation of Claims.

7.3.1.1 Reasonable Steps to Mitigate. Each Indemnified Party shall use Commercially Reasonable Efforts to mitigate all Losses relating to a claim, including availing itself of any defenses, limitations, rights of contribution, claims against third Persons and other rights at law or equity, and shall provide such evidence and documentation of the nature and extent of the claim as may be reasonably requested by the Indemnitor.

7.3.1.2 Subsequent Recoveries. If the amount of any Indemnified Party’s Loss, at any time subsequent to an Indemnitor’s making of a payment under this Article 7, is reduced by recovery, settlement, Tax refund or otherwise under or pursuant to any applicable insurance coverage, or pursuant to any applicable claim, recovery, settlement, or payment by or against any other Person, without duplication of any amount already reducing such Loss pursuant to clause (b) of the definition of “Loss” (collectively, “Recoveries”), the

amount of such Recoveries shall be repaid by such Indemnified Party to such Indemnitor within fifteen (15) days after receipt thereof (or credit therefor) by such Indemnified Party, up to the aggregate amount of (i) the payments made by such Indemnitor to such Indemnified Party plus (ii) any costs or expenses incurred by such Indemnitor in connection with its indemnification obligations with respect thereto.

7.3.2 Exclusive Remedy. Except as provided in the next sentence, following the Closing, the indemnification provisions of this Article 7 shall be the sole and exclusive remedy of each Party (including Indemnified Parties) against another Party (a) for any breach of any Party’s representations, warranties, covenants or agreements contained in this Agreement and (b) otherwise with respect to the Transaction Documents, the Projects or the transactions contemplated hereby. The only exceptions to the foregoing sole and exclusive remedy are claims for non-monetary relief with respect to the enforcement of Section 9.8. In furtherance of the foregoing, each Party hereby waives, to the fullest extent permitted under applicable Law, any and all rights, claims and causes of action it or any of its Affiliates may have against the other Party hereunder or under applicable Law with respect to the matters described in clauses (a) and (b) above.

7.3.3 Change in Laws; Omissions by Request. Notwithstanding anything to the contrary in this Agreement or any other Transaction Document, Seller shall not be liable for any indemnification claim in respect of any damage, loss, cost or expense to the extent that such claim would not have arisen (or the amount of the claim would not have been increased) but for (a) a change in applicable Law or Legal Requirements made after the date hereof; or (b) an act or omission made or taken by Seller pursuant to the written request, consent or approval of Buyer.

7.4 Procedure for Indemnification With Respect to Third-Party Claims.

7.4.1 Notice of Claim. If any legal proceedings shall be instituted or any claim or demand shall be asserted by any third Person (which, for the avoidance of doubt, means any Person other than a Party or a Representative of a Party) in respect of which indemnification may be sought by any Indemnified Party under Section 7.1, such Indemnified Party shall, within twenty (20) days of the actual receipt thereof by a Representative, cause written notice of such legal proceedings or the assertion of such claim or demand to be forwarded to the Indemnitor, specifying the nature of such legal proceedings, claim or demand and the amount or the estimated amount thereof to the extent then determinable, which estimate shall not be binding upon the Indemnified Party; provided, that the failure of an Indemnified Party to give timely notice shall not affect its rights to indemnification under Section 7.1, except to the extent that the Indemnitor has been actually and materially prejudiced by such failure.

7.4.2 Conduct of Claim. Subject to the constraints and limitations of the Company LLCA or the Company LLCA Amendment, as applicable, the Indemnitor shall have the right, at its option and at its own expense, to be represented by counsel of its choice and to participate in, or take control of, the defense, negotiation and/or settlement

of any proceeding, claim or demand that relates to any amounts indemnifiable or potentially indemnifiable under Section 7.1; provided, that the Indemnified Party may participate in any such proceeding with counsel of its choice, which shall be at its own expense, unless (a) the Indemnitor chooses counsel not reasonably acceptable to Indemnified Party, (b) the Indemnitor does not pursue with reasonable diligence such defense, negotiation or settlement, or (c) in the reasonable opinion of such Indemnified Party and its counsel, such action, suit or proceeding involves the potential imposition of criminal liability upon such Indemnified Party or a conflict of interest between such Indemnified Party and the Indemnitor. The Indemnitor and the Indemnified Party shall cooperate fully with each other in connection with the defense, negotiation or settlement of any such legal proceeding, claim or demand.

7.4.3 Settlement. The Indemnified Party shall have a right to notice of any settlement, and the Indemnitor shall not execute or otherwise agree to any consent decree that (a) provides for other than monetary payment without the Indemnified Party’s prior written consent, which consent shall not be unreasonably withheld, conditioned or delayed or (b) does not include as an unconditional term thereof the giving of a release from all Liability with respect to each claim made by each claimant or plaintiff against each Indemnified Party that is subject to the third-party claim, without the Indemnified Party’s prior written consent, which consent shall not be unreasonably withheld, conditioned or delayed. Notwithstanding the foregoing, the Indemnified Party shall have the right to pay or settle any such claim; provided, that in such event it shall waive any right to indemnity therefor by the Indemnitor. If the Indemnitor elects not to defend or settle such proceeding, claim or demand and the Indemnified Party defends, settles or otherwise deals with any such proceeding, claim or demand directly, the Indemnified Party shall provide fifteen (15) days’ advance written notice of any settlement to the Indemnitor and shall act reasonably and in accordance with the Indemnified Party’s good faith business judgment.

7.4.4 Payment of Third-Party Claims. After final judgment or award shall have been rendered by a court, arbitration board or administrative agency of competent jurisdiction and the expiration of the time in which to appeal therefrom, or a settlement shall have been consummated, or the Indemnified Party and the Indemnitor shall have arrived at a mutually binding agreement with respect to each separate matter indemnified by the Indemnitor, the Indemnified Party shall forward to the Indemnitor notice of any sums due and owing by the Indemnitor with respect to such matter, and such amount shall be paid in immediately available funds within twenty (20) days after the date of receipt of such notice.

7.4.5 Access to Information. If any claim is made by a third party against an Indemnified Party, the Indemnified Party shall use Commercially Reasonable Efforts to make available to the Indemnitor those partners, members, officers and employees whose assistance, testimony or presence is necessary to assist the Indemnitor in evaluating and in defending such claims; provided, that any such access shall be conducted in such a manner as not to interfere unreasonably with the operations of the business of the

Indemnified Party, and any out of pocket expenses incurred by any Indemnified Party in connection therewith shall be included in such Indemnified Party’s Losses.

7.4.6 Subrogation. Upon payment of a Loss by an Indemnitor to an Indemnified Party pursuant to this Article 7 for any claim made pursuant to Section 7.1 (other than any such payment relating to Taxes), such Indemnitor, without any further action, shall be subrogated to any and all claims and defenses that such Indemnified Party or any member of its Indemnified Group may have against third parties relating to such Loss, but only to the extent of the amount paid to such Indemnified Party or any member of its Indemnified Group by such Indemnitor in respect of such Loss, and such Indemnified Party and the members of its Indemnified Group shall use Commercially Reasonable Efforts to cooperate with such Indemnitor, at the expense of such Indemnitor in order to enable such Indemnitor to pursue such claims.

7.5 Treatment of Payments. The Parties shall treat all payments made by Seller to or for the benefit of Buyer and all payments by Buyer to or for the benefit of Seller under any indemnity provision of this Agreement as an adjustment to the Purchase Price for federal income tax purposes.

7.6 Waiver of Breaches. Notwithstanding anything to the contrary in this Agreement or any other Transaction Document, Seller shall not be liable under this Article 7 for any Losses based upon or arising out of any inaccuracy in or breach of any of the representations or warranties of Seller contained in this Agreement if (i) Seller had notified Buyer of such inaccuracy or breach prior to the Closing or (ii) Buyer had notified Seller of such inaccuracy or breach prior to the Closing.

ARTICLE 8

TERMINATION

8.1 Termination. This Agreement may be terminated at any time prior to the Closing only as follows:

(a) By mutual written agreement of Seller and Buyer.

(b) By Buyer or Seller by written notice to the other Party if the Closing shall not have occurred on or before July 31, 2015 (such date, the “Expiration Date”); provided, however, that if the Closing is delayed beyond the Expiration Date due to Seller’s failure to satisfy a condition precedent wholly within its control, the Expiration Date shall be, at Buyer’s sole discretion, extended on a day-for-day basis until such time as Seller satisfies or Buyer waives such condition precedent; provided, further, that if the Closing is delayed beyond the Expiration Date due to Buyer’s failure to satisfy a condition precedent wholly within its control, the Expiration Date shall be, at Seller’s sole discretion, extended on a day-for-day basis until such time as Buyer satisfies or Seller waives such condition precedent.

(c) By Seller upon written notice to Buyer if Buyer shall have breached in any material respect any of its covenants contained in this Agreement, but (except in the case of a failure by Buyer to pay the Purchase Price or Working Capital Amount when due) only if (i) Seller have first given written notice to Buyer identifying such breach, and (ii) Buyer has not cured or remedied such breach (including, where payment of compensation would reasonably be considered an adequate remedy, the payment of such adequate compensation) within thirty (30) days of receipt of such notice.

(d) By Buyer upon written notice to Seller if Seller shall have breached in any material respect any of its covenants contained in this Agreement, but only if (i) Buyer shall have first given written notice to Seller identifying such breach, and (ii) Seller has not cured or remedied such breach (including, where payment of compensation could reasonably be considered an adequate remedy, the payment of such adequate compensation) within thirty (30) days of receipt of such notice.

(e) By Buyer or Seller upon ten (10) Business Days’ prior written notice to the other Party in the event that (i) as provided in Section 1.2(j), Buyer or Seller, as applicable, rejects any modification, amendment and/or new condition required or imposed upon any Party with respect to the forms of Exhibits attached to this Agreement, (ii) any Seller Parent Transfer Indemnity that may be required to be delivered by Seller Parent is not in form and substance acceptable to Buyer or Seller in their respective sole discretion, or (iii) Buyer has determined, as provided in Section 3.5.4, not to provide any additional certifications in the Buyer LLCA Certification.

8.2 Effect of Termination. In the event of a termination of this Agreement as provided in Section 8.1, this Agreement shall cease to have force and effect, and there shall be no further Liability or obligation on the part of Seller or Buyer, except that (a) the provisions of Article 1, Article 7, Article 8 and Article 9 shall continue to apply following any such termination, and (b) each Party shall continue to be liable for any breach by such Party of its covenants contained in this Agreement occurring prior to such termination.

ARTICLE 9

MISCELLANEOUS

9.1 Notices. Any notice, statement, demand, claim, offer or other written instrument required or permitted to be given pursuant to this Agreement shall be in writing signed by the Party giving such notice and shall be sent by facsimile or other electronic transmission, hand messenger delivery, overnight courier service, or certified mail (receipt requested) to the other Party at the address set forth below:

(a) If to Buyer, to it at:

NRG Yield Operating LLC

211 Carnegie Center

Princeton New Jersey 08540

Attn: Office of the General Counsel

Fax: 609.524.4589

Email: ogc@nrgyield.com

(b) If to Seller, to it at:

EFS Desert Sun, LLC
c/o GE Energy Financial Services, Inc.
800 Long Ridge Road
Stamford, CT 06927
Attention: Portfolio Manager – EFS Desert Sun, LLC
Facsimile: (203) 357-4890

With a copy (which shall not constitute notice) to:

Chadbourne & Parke LLP
1301 Avenue of the Americas
New York, NY 10019
Attention: Paul L. Weber
Telephone: (212) 408-5344
Facsimile: (646) 710-5344
Email: pweber@chadbourne.com

Each Party shall have the right to change the place to which notices shall be sent or delivered or to specify one additional address to which copies of notices may be sent, in either case by similar notice sent or delivered in like manner to the other Party. Without limiting any other means by which a Party may be able to prove that a notice has been received by another Party, all notices and communications shall be deemed to have been duly given: (i) at the time delivered by hand, if personally delivered; (ii) five (5) Business Days after being deposited in the mail, postage prepaid, if mailed by first class certified mail, receipt requested; (iii) when received, if sent by facsimile or other electronic transmission, if received prior to 5:00 p.m., recipient’s time, on a Business Day, or on the next Business Day, if received later than 5:00 p.m., recipient’s time, and (iv) on the next Business Day after timely delivery to the courier, if sent by overnight air courier guaranteeing next day delivery. In any case hereunder in which a Party is required or permitted to respond to a notice from the other Party within a specified period, such period shall run from the date on which the notice was deemed duly given as above provided, and the response shall be considered to be timely given if given as above provided by the last day of the period provided for such response.

9.2 Entire Agreement; Amendments. This Agreement and the other Transaction Documents constitute the entire agreement and supersede all prior agreements and understandings, both written and oral, of the Parties with respect to the subject matter hereof. No oral representations or modifications concerning this instrument nor any course of dealing between or among any Persons having any interest in this Agreement shall be of any force or effect unless contained in a subsequent written modification signed by the Party to be charged.

This Agreement may be amended, modified or waived only by a written instrument executed by the Parties.

9.3 Successors and Assigns. This Agreement shall be binding upon, and shall inure to the benefit of, and shall be enforceable by, the Parties and their respective successors and permitted assigns. This Agreement or any right hereunder may not be assigned by any Party without the prior written consent of the other Party.

9.4 Currency Matters; Set-Off. Dollars shall be the currency of account in the case of all obligations arising under or relating to this Agreement. All payments to be made by each Party under this Agreement shall be calculated and be made without (and free and clear of any deduction for) set-off or counterclaim.

9.5 Governing Law. This Agreement, and any instrument or agreement required hereunder (to the extent not otherwise expressly provided for therein), shall be governed by, and construed under, the laws of the State of New York, without reference to conflicts of laws rules, except for Section 5.1401 of the New York General Obligations Law.

9.6 Consent to Jurisdiction; Waiver of Jury Trial. The Parties agree that any Action by or against any Party (or its Affiliates or designees) with respect to or arising out of this Agreement or any other Transaction Document shall be brought exclusively in the State or Federal Courts located in the borough of Manhattan, State of New York, as the Party instituting such Action may elect, except that actions to enforce an interim or final arbitration award may be filed in any court having jurisdiction. By execution and delivery of this Agreement, each Party (for itself, its Affiliates and its designees) irrevocably and unconditionally consents and submits to the exclusive jurisdiction of such courts and the appellate courts therefrom, and waives any right it may have to assert the doctrine of forum non conveniens or similar doctrine or to object to venue with respect to any proceeding. The Parties irrevocably consent to the service of process in any such Action or proceeding by the mailing of copies thereof by registered or certified mail, first class postage prepaid to the addresses set forth in Section 9.1, or in any other manner permitted by Law. In all cases, to the extent permitted by Law, each of the Parties hereto irrevocably waives its right to a jury trial with respect to any and all Actions, claims and disputes in connection with this Agreement, any other Transaction Document or the transactions contemplated hereby or thereby.

9.7 Expenses. Regardless of whether the transactions contemplated by this Agreement are consummated, each Party shall bear responsibility for its own costs and expenses in connection with this Agreement, the other Transaction Documents and the transactions contemplated hereby or thereby, including the fees and expenses of its legal counsel and other consultants and advisors in connection with this Agreement and the other Transaction Documents, except as may be otherwise provided herein.

9.8 Confidential Information. Section 15.10 of the Company LLCA as in effect immediately prior to Closing shall be deemed incorporated herein with respect to public announcements and the disclosure of information hereunder. For the purposes of Section 15.10 of the Company LLCA, the Transaction Documents (including this Agreement), the information

contained therein and any information provided by Seller or Buyer pursuant thereto shall be deemed to be information furnished under the Company LLCA.

9.9 Joint Effort. Preparation of this Agreement has been a joint effort of the Parties and the resulting document shall be construed without prejudice or preference to either Party.

9.10 Waiver of Consequential Damages. Notwithstanding anything to the contrary in this Agreement or any other Transaction Document, in no event shall any Party or its Affiliates, or their respective Representatives, be liable hereunder at any time for consequential, indirect, special or punitive loss or damage of the other Party or any of its Affiliates, whether in contract, tort (including negligence), strict liability or otherwise, and each Party hereby expressly releases the other Party, its Affiliates, and their respective Representatives, successors and assigns therefrom. For the avoidance of doubt, the loss or reduction of federal income tax benefits associated with Buyer’s interest in the Company shall not constitute consequential or indirect damages.

9.11 Captions. The captions contained in this Agreement are for convenience and reference only and in no way define, describe, extend or limit the scope or intent of this Agreement or the intent of any provision contained herein.

9.12 Severability. The invalidity under Law of one or more phrases, sentences, clauses, Sections or Articles contained in this Agreement shall not affect the validity of the remaining portions of this Agreement so long as the material purposes of this Agreement can be determined and effectuated.

9.13 Counterparts. This Agreement may be executed in one or more counterparts, each of which shall constitute an original but all of which, taken together, shall constitute but one agreement.

9.14 Third Parties. Except as otherwise expressly provided in this Agreement, nothing contained in this Agreement shall be construed to create any right in, duty to, standard of care with respect to, or any Liability to any Person who is not a party to this Agreement.

9.15 No Waiver. Any failure of a Party to enforce any of the provisions of this Agreement or to require compliance with any of its terms at any time during the pendency of this Agreement shall in no way affect the validity of this Agreement, or any part hereof, and shall not be deemed a waiver of the right of such Party thereafter to enforce any and each such provision.

9.16 Delivery by Facsimile or PDF. Each of this Agreement and the other Transaction Documents, and any amendments hereto or thereto, to the extent signed and delivered by means of a facsimile machine or electronic transmission in portable document format (pdf), shall be treated in all manner and respects as an original Contract and shall be considered to have the same binding legal effect as if it were the original signed version thereof delivered in person. At the request of any Party, the other Party shall re-execute original forms thereof and deliver them to the other Party. No Party shall raise the use of a facsimile machine or electronic transmission in pdf to deliver a signature or the fact that any signature was

transmitted or communicated through such means as a defense to the formation of a Contract and each Party forever waives any such defense.

(Signature pages follow)

IN WITNESS WHEREOF, the Parties have caused this Agreement to be duly executed and delivered as of the Effective Date.



SELLER
EFS DESERT SUN, LLC, a Delaware limited liability company
	By: EFS Desert Sun Holdings, LLC, its managing member
		By: EFS Renewables Holdings, LLC, its managing member

By: /s/ Walter Smith
Name: Walter Smith
Title: Vice President

[Purchase and Sale Agreement]

BUYER

NRG YIELD OPERATING LLC,

a Delaware limited liability company

By: /s/ Kirkland B. Andrews

Name: Kirkland B. Andrews

Title: EVP and Chief Financial Officer

[Purchase and Sale Agreement]

Exhibit A to the Purchase and Sale Agreement

ASSIGNMENT AND ASSUMPTION AGREEMENT

This ASSIGNMENT AND ASSUMPTION AGREEMENT (this “Agreement”) is entered into this June [●], 2015 (the “Effective Date”) by and between EFS DESERT SUN, LLC, a Delaware limited liability company (“Assignor”), and NRG YIELD OPERATING LLC, a Delaware limited liability company (the “Assignee”), and acknowledged by FIRST SOLAR DEVELOPMENT, INC. Capitalized terms used herein but not defined herein shall have the meanings ascribed to such terms in the Second A&R LLC Agreement, or if not defined therein, the Purchase and Sale Agreement (each as defined below).

WHEREAS, simultaneously with this Agreement, the Assignee is entering into that certain Second Amended and Restated Limited Liability Company Agreement of Desert Sunlight Investment Holdings, LLC (the “Second A&R LLC Agreement”) with NextEra Desert Sunlight Holdings, LLC and Summit Solar Desert Sunlight, LLC; and

WHEREAS, the Assignor has agreed to grant, convey, transfer, assign and deliver to the Assignee, and the Assignee has agreed to accept and assume, except as provided for herein, all of the rights, duties and obligations of the Assignor with respect to its Class B Membership Interests in Desert Sunlight Investment Holdings, LLC (the “Company”), pursuant to that certain Purchase and Sale Agreement, dated as of June 17, 2015, between the Assignor and the Assignee (the “Purchase and Sale Agreement”).

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged:

1. Assignment of Interests. The Assignor hereby irrevocably grants, conveys, transfers, assigns, and delivers unto the Assignee, free and clear of all Liens (as defined in the Master Agreements), fifty percent (50%) of the Class B Membership Interests, which constitutes one hundred percent (100%) of the Assignor’s Membership Interest in the Company (the “Assigned Interest”), and delegates any and all duties, obligations, responsibilities, claims, demands and other commitments in connection with the Assigned Interest and, to the extent relating to the Assigned Interest, the Second A&R LLC Agreement, the Investment Agreement, and the agreements set forth in Part I of Exhibit A (such agreements in Part I of Exhibit A, the “Assigned Agreements”), as applicable, unto the Assignee, but in each case only to the extent any of such duties, obligations, responsibilities, claims, demands and other commitments in connection with the Assigned Interest and the Assigned Agreements arise on or after the Effective Date (other than any such duties, obligations, responsibilities, claims, demands and other commitments under Section 8.3(a)(iii) of the MIPSA (as defined in Exhibit A hereto) that the Assignor assigns and delegates to the Assignee in full without regard to the time they arose or arise), except for (a) the duties, obligations, responsibilities, claims, demands and other commitments of the Assignor described in Part II of Exhibit A hereto (such obligations in Part II of Exhibit A, collectively, the “Retained Obligations”) and (b) the Excluded Cash Grant Interests (as such term is defined in the Cash Grant Letter Agreement, the “Excluded Cash Grant Interests” and, together with the Retained Obligations, the “Retained Rights and Obligations”). The Assignor hereby confirms that any Retained Rights and Obligations shall not be reduced by

the transactions hereunder. Notwithstanding the foregoing and without limiting the assignment and delegation provided in this Section 1, the Assignor shall remain obligated under Section 9.6 of the MIPSA and shall be bound by and have the rights of a Party (as defined in the MIPSA) under Sections 9.1, 9.2, 9.4, 9.5, 9.6, 9.7, 9.9, 9.10, 9.11, 9.12, 9.17 and 9.18 of the MIPSA with respect to the Assignor’s obligations under Section 9.6 of the MIPSA and its Retained Obligations described in paragraphs 1 and 2 of Part II of Exhibit A hereto.

2. Acceptance of Assigned Interests. The Assignee hereby accepts and assumes the Assigned Interest and all associated rights and obligations under the Assigned Agreements (but excluding the Retained Rights and Obligations). From the date hereof, subject to the terms of the Second A&R LLC Agreement, the Assignee agrees to perform and be bound by all the terms, conditions and covenants of the Assignor and assumes the duties and obligations (but excluding the duties, obligations, responsibilities, claims, demands and other commitments that are part of the Retained Rights and Obligations) of the Assignor with respect to the Assigned Interest (including under the Assigned Agreements).

3. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OR CHOICE OF LAWS OTHER THAN SECTION 5-1401 OF THE NEW YORK GENERAL OBLIGATIONS LAW.

4. Further Assurances. The Assignor agrees to execute, acknowledge and deliver, as appropriate, any and all such other and additional instruments, notices, and other documents and to perform such other acts as may be reasonably necessary more fully to assure the Assignee, its successors and assigns, all of the rights and interests hereby sold, assigned, conveyed and transferred or intended to be so sold, assigned, conveyed and transferred.

5. Counterparts and Headings. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original and all of which together shall constitute one and the same agreement. The headings used in this Agreement have been inserted for convenience of reference only and do not define, limit, interpret or constitute a part of this Agreement.

(Signatures on following page)

IN WITNESS WHEREOF, each of the Assignor and the Assignee has caused this Agreement to be executed and delivered by one of its duly authorized officers as of the date first above written.

EFS DESERT SUN, LLC,

as Assignor

By: _____________________________

Name:

Title:

NRG YIELD OPERATING LLC,

as Assignee

By: _____________________________

Name:

Title:

Acknowledged as to the Assignor’s confirmation in Section 1:

FIRST SOLAR DEVELOPMENT, INC.

By: _____________________________

Name:

Title:

Exhibit A

PART I

Assigned Agreements


1.	Seller Guaranty, dated September 29, 2011, by First Solar, Inc. to EFS Desert Sun, LLC and NextEra Desert Sunlight Holdings, LLC, as partially assigned by EFS Desert Sun, LLC to Summit Solar Desert Sunlight, LLC, pursuant to the Assignment and Assumption Agreement, dated as of September 27, 2012, by and among EFS Desert Sun, LLC and Summit Solar Desert Sunlight, LLC.

[Agreement Regarding Distributions, dated as of October 6, 2011, among NextEra Desert Sunlight Holdings, LLC, EFS Desert Sun, LLC, Desert Sunlight Investment Holdings, LLC, Citibank, N.A., Goldman Sachs Lending Partners LLC and J. Aron & Company, and the Letter Agreement Regarding Agreement Regarding Distributions delivered pursuant thereto, dated as of September 27, 2012, among Summit Solar Desert Sunlight, LLC, NextEra Desert Sunlight Holdings, LLC, EFS Desert Sun, LLC, Desert Sunlight Investment Holdings, LLC, Citibank, N.A., Goldman Sachs Lending Partners LLC and J. Aron & Company.]

Membership Interest Purchase and Sale Agreement, dated as of September 29, 2011, among First Solar Development, Inc., EFS Desert Sun, LLC and NextEra Desert Sunlight Holdings, LLC, updated by the Desert Sunlight MIPSA Purchase Price Adjustment Letter, dated as of April 27, 2012 from First Solar Development, Inc. and accepted and agreed by EFS Desert Sun, LLC and NextEra Desert Sunlight Holdings, LLC, as partially assigned by EFS Desert Sun, LLC to Summit Solar Desert Sunlight, LLC, pursuant to the Assignment and Assumption Agreement, dated as of September 27, 2012, by and among EFS Desert Sun, LLC and Summit Solar Desert Sunlight, LLC (the “MIPSA”).

PART II

Retained Obligations


1.	Any obligations or liabilities, actual or contingent, of the Assignor under Section 8.3(a)(i) of the MIPSA resulting from or arising out of any inaccuracy or breach of any representation or warranty made by the Assignor in the MIPSA Agreement or any Ancillary Agreement (as defined in the MIPSA).


2.	Any obligations or liabilities, actual or contingent, under Section 8.3(a)(ii) of the MIPSA arising out of a breach by the Assignor prior to the Effective Date of any covenant or agreement contained in the MIPSA or any Ancillary Agreement (as defined in the MIPSA).


3.	Twenty five percent (25%) of the amount by which the actual out-of-pocket costs paid by the Sunlight Companies to repair the damage to the Projects caused by

that certain tornado casualty event affecting the Projects that occurred on or about April 21, 2015 exceed the sum of (a) any insurance deductible amount paid or accrued prior to the Effective Date or (b) any insurance proceeds received by the Sunlight Companies, as determined when all such insurance proceeds are received.

Liabilities and obligations resulting from or arising out of: (a) the incident described in the Event Notification and Investigation Report dated June 26, 2013 issued by First Solar Electric (California), Inc., which report is attached hereto as Exhibit B, and (b) the incident described in the Borrower’s Officer Certificates dated August 27, 2013 issued to Deutsche Bank Trust Company Americas, in its capacity as the Master Administrative Agent under the Master Agreements, which certificates are attached hereto as Exhibit C.


5.	Twenty-five percent (25%) of any bonus payment obligations owed by any Sunlight Company to First Solar Electric (California), Inc., under the EPC Contracts including without limitation such bonus payments required in connection with “Total Bonus Payments” on the “Bonus True-Up Date” (as such terms are defined under the EPC Contracts).

Twenty-five percent (25%) of any payment obligations determined to be due and owing after the Effective Date by any Sunlight Company to First Solar Electric (California), Inc. under the EPC Contracts (other than any bonus payment obligations) in respect of any work or services performed by First Solar Electric (California), Inc. under the EPC Contract or payments or charges in respect of the EPC Contract (but excluding payment obligation with respect to the completion of the Punchlist items which are covered by the Punchlist Holdback); provided that the aggregate amount of liabilities retained by the Assignor under this paragraph 6 shall not exceed $2,500,000 (such payment obligations, the “Other EPC Payments”).

Exhibit B

Report

(See attached)

Exhibit C

Officer Certificates

(See attached)

Exhibit B to the Purchase and Sale Agreement

CASH GRANT RECAPTURE INDEMNITY AGREEMENT

This CASH GRANT RECAPTURE INDEMNITY AGREEMENT, dated as of June ___, 2015 (this “Agreement”), is made and entered into by NRG YIELD OPERATING LLC, a Delaware limited liability company (“NRG Member”) in favor of DESERT SUNLIGHT 250, LLC, a Delaware limited liability company (“Borrower”), DESERT SUNLIGHT HOLDINGS, LLC, a Delaware limited liability company (“Holdings”), DESERT SUNLIGHT INVESTMENT HOLDINGS, LLC, a Delaware limited liability company (“Holdings Parent”), and DEUTSCHE BANK TRUST COMPANY AMERICAS, as collateral agent for the Secured Parties (in such capacity, together with its successors and assigns in such capacity, the “Collateral Agent”). The Collateral Agent, the other Secured Parties, Borrower, Holdings and Holdings Parent are sometimes collectively referred to herein as the “Beneficiaries” and each, individually, as a “Beneficiary”. Borrower, Holdings and Holdings Parent are sometimes collectively referred to herein as the “Sunlight Entities” and each, individually, as a “Sunlight Entity”.

RECITALS

A. On the date hereof, NRG Member shall have purchased 25% of the Equity Interests in Holdings Parent from EFS Desert Sun, LLC.

B. Holdings Parent directly owns 100% of the Equity Interests in Holdings, and Holdings directly owns 100% of the Equity Interests in Borrower.

C. Borrower owns, operates and maintains the Project.

D. In order to finance the development, design, engineering, construction, commissioning, operation and maintenance of the Project, Borrower has entered into that certain Master Agreement, dated as of September 29, 2011 (as amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “Master Agreement”), by and among Borrower, DOE, the Master Administrative Agent, the Collateral Agent, the Intercreditor Agent, the A-1 Administrative Agent, the A-2 Administrative Agent, the A-3 Administrative Agent, the LC Facility Administrative Agent, the SPV Trustee, the other Agents party thereto and the LC Issuing Banks and Lenders party thereto, pursuant to which, among other things, the Lenders and the LC Issuing Banks have made loans and other financial accommodations to, and for the benefit of, Borrower.

E. In connection with the execution of the Master Agreement, Borrower, Holdings, DOE, the Facility Administrative Agents, the Master Administrative Agent, the Collateral Agent, the Intercreditor Agent, the LC Issuing Banks, the Lenders and each Interest Rate Hedge Counterparty have entered into that certain Collateral Agency and Intercreditor Agreement, dated as of September 29, 2011 (as amended, restated, amended and restated, supplemented or otherwise modified from time to time, the “Intercreditor Agreement”).

F. It is a condition precedent to the transfer of Equity Interests under the Master Agreement that NRG Member shall have executed this Agreement.

G. For good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, NRG Member agrees as follows:

SECTION 1.Definitions. Unless otherwise defined herein, capitalized terms used in this Agreement shall have the meanings ascribed to such terms in the Master Agreement. As used in this Agreement, the following terms shall have the following meanings:

“1603 Grant” means any payment for specified energy property in lieu of tax credits under Section 1603 of the Recovery Act or any successor provision with respect to the Project.

“1603 Grant Application” means an application filed by Borrower, as an applicant, for a 1603 Grant.

“1603 Grant Audit” means an audit or examination by Treasury of the 1603 Grant Application that results in either a 1603 Grant Shortfall Liability or a 1603 Grant Recapture Liability.

“1603 Grant Code and Guidance” means (a) Section 1603 of the Recovery Act and (b) guidance issued on July 9, 2009 (as updated from time to time thereafter), by the Treasury for payment for specified energy property in lieu of tax credits under the Recovery Act and any clarification, addition or supplement thereto issued by the Treasury or any other Governmental Authority, including any similar guidance concerning a refundable tax credit that replaces the 1603 Grant program (but only to the extent specifically applicable to the 1603 Grant).

“1603 Grant Indemnity Trigger” means (a) Borrower’s disposal to a Disqualified Person of “specified energy property” (as defined in Section 1603(d) of the Recovery Act) with respect to which any 1603 Grant is received, (b) any voluntary cessation of use of “specified energy property” or voluntary change in the purpose for which “specified energy property” is used, or (c) any direct or indirect transfer by NRG Member of its Equity Interests or its profit interests in Borrower to a Disqualified Person, but only the extent that, with respect to the foregoing clauses (a), (b) and (c), at the time of such disposal, cessation, change or transfer, NRG Member was an indirect or beneficial owner of Borrower.

“1603 Grant Placed in Service Date” means, with respect to any portion of the Project, the date on which such portion of the Project is considered to be placed in service for purposes of the 1603 Grant Code and Guidance, which dates the parties hereto acknowledge and agree were as follows: with respect to Block no. 12, December 28, 2013, with respect to Block no. 13, January 22, 2014, with respect to Block no. 14, April 2, 2014, with respect to Block no. 15, September 29, 2014, with respect to Block no. 16, December 19, 2013, with respect to Block no. 17, December 19, 2013, with respect to Block no. 18, September 29, 2014, with respect to Block no. 19, November 5, 2014, and with respect to Block no. 20, December 19, 2013; for purposes of this definition, “Block” shall have the meaning set forth in the PV Power Plant EPC Contract.

“1603 Grant Recapture Liability” means any loss, liability, payment or other obligation of Borrower arising out of, resulting from or attributable to all or any portion of a 1603 Grant received by or for the benefit of Borrower in respect of the Project being “recaptured” or disallowed by the Treasury because of a 1603 Grant Indemnity Trigger including any interest and penalties related thereto as described in the 1603 Grant Code and Guidance.

“1603 Grant Recapture Period” means, with respect to any portion of the Project, the period from the 1603 Grant Placed in Service Date for such portion of the Project until the fifth anniversary thereof unless the 1603 Grant Code and Guidance extends the applicable vesting period.

“1603 Grant Shortfall Liability” means an amount equal to the amount of the outstanding A-3 Loans on the A-3 Loan Maturity Date (after giving effect to any repayments and prepayments thereof on or prior to such date), (such amount, the “1603 Grant Shortfall”), as the same shall be reduced by any 1603 Grant Proceeds received by Borrower after the A-3 Loan Maturity Date; provided, however, that the 1603 Grant Shortfall Liability shall not include any amount of the 1603 Grant Shortfall that is a result of a determination by any Governmental Authority that any component of the Project is ineligible for (or subject to a reduction of) the 1603 Grant because any such component was not placed in service or was placed in service after the deadline prescribed in the 1603 Grant Code and Guidance.

“Additional Member” has the meaning assigned to such term in Section 15.

“Agreement” has the meaning assigned to such term in the preamble to this Agreement.

“Applicable Percentage” means, (a) in respect of any Losses indemnified by NRG Member under this Agreement other than Losses for which its Applicable Percentage is 100%, at any date of determination, a ratio (expressed as a percentage) of (i) the Equity Interests of Holdings Parent held by NRG Member to (ii) all Equity Interests of Holdings Parent; provided that, for purposes of determining any Applicable Percentage, the Equity Interests of Holdings Parent held by NRG Member shall be calculated without giving effect to any transfer, sale or other disposition of Equity Interests of Holdings Parent other than Permitted Transfers and (b) in respect of any Losses arising out of, resulting from or attributable to (i) a 1603 Grant Indemnity Trigger of the type set forth in clause (c) of the definition thereof or (ii) any misstatements, misrepresentations or inaccuracies, in each case as to matters of fact, in respect of NRG Member or any direct or indirect owner of NRG Member made by Borrower in any 1603 Grant Application, 100%.

“Beneficiary” and “Beneficiaries” have the respective meanings assigned to such terms in the preamble to this Agreement.

“Borrower” has the meaning assigned to such term in the preamble to this Agreement.

“Claim” has the meaning assigned to such term in Section 2(b).

“Collateral Agent” has the meaning assigned to such term in the preamble to this Agreement.

“Holdings” has the meaning assigned to such term in the preamble to this Agreement.

“Holdings Parent” has the meaning assigned to such term in the preamble to this Agreement.

“Intercreditor Agreement” has the meaning assigned to such term in the recitals to this Agreement.

“Losses” has the meaning assigned to such term in Section 2(a).

“Master Agreement” has the meaning assigned to such term in the recitals to this Agreement.

“Member” means each Person that directly owns any Equity Interest in Holdings Parent.

“NRG Member” has the meaning assigned to such term in the preamble to this Agreement.

“Proceeding” has the meaning assigned to such term in Section 2(c).

“Process Agent” has the meaning assigned to such term in Section 5(c).

“Sunlight Entity” and “Sunlight Entities” have the respective meanings assigned to such terms in the preamble to this Agreement.

“Termination Date” has the meaning assigned to such term in Section 12.

SECTION 2. Indemnity.

(a) NRG Member hereby agrees to indemnify and hold harmless each Beneficiary from and against its Applicable Percentage of (i) any and all 1603 Grant Recapture Liabilities, (ii) any 1603 Grant Shortfall Liability, (iii) any losses, liabilities, payments or other obligations incurred by such Person arising out of, resulting from or attributable to a 1603 Grant Audit, and (iv) any losses, liabilities, payments or other obligations incurred by such Person arising out of, resulting from or attributable to any misstatements, misrepresentations or inaccuracies, in each case of a factual nature, of Borrower made in any 1603 Grant Application (items (i), (ii), (iii) and (iv) collectively, but without duplication, “Losses”) and, with respect to items (i) and (iii) (to the extent the 1603 Grant Audit results in a 1603 Grant Recapture Liability), in an aggregate amount not to exceed the amount of 1603 Grant actually received by Borrower. NRG Member’s obligations under this Section 2(a) with respect to Losses related to 1603 Grant Shortfall Liabilities shall be limited to the payment of its Applicable Percentage of the outstanding principal of and interest on the A-3 Loans at the time any payment in respect thereof is made and any such payment shall be applied solely to the repayment of such principal and interest. Losses shall exclude any indirect, consequential, punitive, special or incidental damages. All amounts paid by NRG Member pursuant to this Agreement shall constitute contributions of equity or loans to Holdings Parent, which shall in turn constitute contributions of equity by Holdings Parent to Holdings and by Holdings to Borrower; provided that the foregoing equity contributions by Holdings Parent or Holdings, as applicable, may be made in the form of loans from Holdings Parent to Holdings, as permitted by Section 6.1(i) of the Master Agreement, and loans from Holdings to Borrower, as permitted by Section 6.1(h) of the Master Agreement, and if any such loans are made, the proceeds of such loans shall constitute contributions of equity and the NRG Member shall be deemed to have made a contribution of equity in the amount of any such proceeds.

(b) For the avoidance of doubt, NRG Member shall have no obligations under this Agreement in respect of Losses arising out of, resulting from or attributable to (i) the exercise by the Collateral Agent and the Secured Parties of their remedies under the Financing Documents, including without limitation, foreclosure or (ii) the actions or identity of any direct or indirect owner of Equity Interests in Borrower other than NRG Member or direct or indirect owners of NRG Member. The NRG Member or any of its Affiliates may, in good faith and by appropriate proceedings, diligently contest any Losses hereunder (and defer payment during such contest) and the Beneficiaries shall permit the NRG Member, at its sole cost and expense, to direct and control such proceedings. If any Beneficiary recovers or otherwise receives a refund or credit against other liabilities of any 1603 Grant Recapture Liabilities in respect of which NRG Member paid a Loss hereunder, the Beneficiaries, as applicable, shall, within 10 Business Days of receipt (or receipt of notice of such a credit), pay over to NRG Member the amount so recovered, refunded, or credited, along with any interest or similar amounts paid thereon.

(c) If the Treasury or any other Governmental Authority shall make any claim, commence any audit, investigation or other action (a “Proceeding”) or otherwise seek to impose any liability that could give rise to a Loss subject to indemnification under this Section 2 (a “Claim”), NRG Member (if it has knowledge of such Claim) and each Sunlight Entity with knowledge of such Claim shall promptly notify the Beneficiaries (and, in the case of such notice by a Sunlight Entity, NRG Member), in writing of such Claim; provided, however, that the failure by NRG Member or such Sunlight Entity to so notify any Beneficiary (or, in the case of any such failure by a Sunlight Entity, NRG Member) shall not relieve NRG Member from any liability which it may have under this Section 2. NRG Member shall, without duplication and subject to Section 2(a), provide reimbursement or pay for any and all Losses no later than 30 days after receiving demand therefor. Each Beneficiary shall be entitled to make demand upon NRG Member at any time upon the incurrence of any Loss. Any demand by a Beneficiary for indemnification of any Loss shall be made in writing to NRG Member, shall specify the nature and the amount of the Loss and shall be conclusive as thereto absent manifest error. All payments to be made by NRG Member pursuant to Section 2(a)(ii) shall be made directly to the 1603 Grant Suspense Account and all other payments to be made by NRG Member under this Section 2 shall be made directly to the Revenue Account, or to such other account as the indemnified Beneficiary shall direct by notice to Borrower and NRG Member.

(d) The obligations of NRG Member under this Section 2 are absolute and unconditional, irrespective of the value, genuineness, validity or enforceability of any Financing Document or any other agreement or instrument referred to herein or therein, or any substitution, release or exchange of any other guarantee of, or security for, any of the Obligations, and, to the fullest extent permitted by law, irrespective of any other circumstance whatsoever that might otherwise constitute a legal or equitable discharge or defense of their undertakings hereunder, it being the intent of this Section 2(d) that the obligations of NRG Member hereunder shall be absolute and unconditional, under any and all circumstances. Without limiting the generality of the foregoing, it is agreed that the occurrence of one or more of the following shall not alter or impair the liability of NRG Member hereunder which shall remain absolute and unconditional as described above:

(i) at any time or from time to time, without notice to NRG Member, the time for any performance of, or compliance with, any of the Obligations or any of the

obligations of the Financing Parties under any other Financing Document shall be extended, or such performance or compliance shall be waived;

(ii) any failure or omission to assert or enforce or agreement or election not to assert or enforce, or the stay or enjoining, by order of court, by operation of law or otherwise, of the exercise or enforcement of, any claim or demand or any right, power or remedy (whether arising under the Financing Documents, at law, in equity or otherwise) with respect to the Obligations or any agreement relating thereto, or with respect to any other guaranty of or security for the payment of the Obligations;

(iii) any of the acts mentioned in any of the provisions of any Financing Document or any other agreement or instrument referred to herein or therein shall be done or omitted;

(iv) any rescission, waiver, amendment or modification of, or any consent to departure from, any of the terms or provisions (including provisions relating to events of default) hereof, any of the other Financing Documents or any agreement or instrument executed pursuant thereto, or of any other guaranty or security for the Obligations, in each case whether or not in accordance with the terms hereof or such Financing Document or any agreement relating to such other guaranty or security;

(v) the maturity of any of the Obligations shall be accelerated, or any of the Obligations or any of the obligations of any Sunlight Entity under any other Financing Document shall be modified, waived, supplemented or amended in any respect, or shall at any time be found to be illegal, invalid or unenforceable in any respect, or any right under any Financing Document or any other agreement or instrument referred to herein or therein shall be waived or any other guarantee of any of the Obligations or any of the obligations of any Sunlight Entity under any other Financing Document or any security therefor shall be released or exchanged in whole or in part or otherwise dealt with;

(vi) any lien or security interest granted to, or in favor of, the Collateral Agent or any other Secured Party or any party to a Financing Document as security for any of the Obligations (including without limitation Liens intended to be created by the Security Documents) or any of the obligations of any Sunlight Entity under any other Financing Document shall fail to be perfected or shall be released;

(vii) the performance or failure to perform by NRG Member of its obligations hereunder or by any Member or any other Borrower Party of its obligations under any other agreement, or by the condition (financial, legal or otherwise), affairs, status, nature or actions of any Sunlight Entity;

(viii) subject to Section 15, any change in ownership of any Sunlight Entity;

(ix) the voluntary or involuntary liquidation, dissolution, sale of assets, marshaling of assets and liabilities, receivership, conservatorship, custodianship,

insolvency, bankruptcy, assignment for the benefit of creditors, reorganization, arrangement, readjustment or similar proceeding affecting any Person;

(x) any defenses, set offs or counterclaims which NRG Member or any Sunlight Entity may allege or assert against any Beneficiary in respect of the Obligations, including failure of consideration, breach of warranty, payment, statute of frauds, statute of limitations, accord and satisfaction and usury; or

(xi) any other act or thing or omission, or delay to do any other act or thing, which may or might in any manner or to any extent vary the risk of NRG Member as an obligor under this Agreement.

(e) NRG Member hereby expressly waives, for the benefit of the Beneficiaries, diligence, presentment, demand of payment, protest and all notices whatsoever (other than any notices required under this Agreement) and any requirement that the Collateral Agent or any other Secured Party or any party to a Financing Document exhaust any right, power or remedy or proceed against any Sunlight Entity under this Agreement, any other Financing Document or any other agreement or instrument referred to herein or therein, or against any other Person under any other guarantee of, or security for, any of the Obligations or any of the obligations of any Sunlight Entity under any other Financing Document, or pursue any other remedy in the power of the Collateral Agent or such other Secured Party whatsoever. NRG Member hereby further expressly waives, for the benefit of the Beneficiaries, (i) any defense arising by reason of the incapacity, lack of authority or any disability or other defense of any Sunlight Entity or any Member including any defense based on or arising out of the lack of validity or the unenforceability of the Obligations or any agreement or instrument relating thereto or by reason of the cessation of the liability of any Sunlight Entity or any Member from any cause other than payment in full of the Obligations, (ii) any defense based upon any statute or rule of law which provides that the obligation of a surety must be neither larger in amount nor in other respects more burdensome than that of the principal, (iii) any defense based upon any Beneficiary’s errors or omissions in the administration of the Obligations, except behavior which amounts to bad faith, (iv) (A) any principles or provisions of law, statutory or otherwise, which are or might be in conflict with the terms hereof and any legal or equitable discharge of NRG Member’s obligations hereunder, (B) any rights to set offs, recoupments and counterclaims, and (C) promptness, diligence and any requirement that any Beneficiary protect, secure, perfect or insure any security interest or lien or any property subject thereto, (v) notices, demands, presentments, protests, notices of protest, notices of dishonor and notices of any action or inaction, including acceptance hereof, notices of default hereunder, under the other Financing Documents or any agreement or instrument related thereto, notices of any renewal, extension or modification of the Obligations or any agreement related thereto, notices of any extension of credit to any Sunlight Entity and any right to consent to any thereof, and (vi) any defenses or benefits that may be derived from or afforded by law which limit the liability of or exonerate guarantors or sureties, or which may conflict with the terms hereof.

NRG Member agrees that it will indemnify each Secured Party on demand for all reasonable costs and expenses (including reasonable and documented fees and expenses of counsel) incurred by such Secured Party in connection with such rescission or restoration. This Section 2(f) shall survive the termination of this Agreement.

(g) This Agreement is a primary obligation of NRG Member and not merely a contract for surety.

SECTION 3. Representations, Warranties and Covenants. NRG Member represents and warrants to each Beneficiary that, as of the date of this Agreement:

(a) It is duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization.

(b) It has the power and authority, and the legal right, to make, deliver and perform this Agreement and to consummate the transactions contemplated thereby. It has taken all necessary organizational (including partnership) action to authorize the execution, delivery and performance of this Agreement and to consummate the transactions contemplated thereby. This Agreement constitutes a legal, valid and binding obligation of NRG Member, enforceable against NRG Member in accordance with its terms, except as enforceability may be limited by applicable bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the enforcement of creditors’ rights generally and by general equitable principles (whether enforcement is sought by proceedings in equity or at law). The execution, delivery and performance of this Agreement will not violate any law applicable to NRG Member or any constitutive document or contractual obligation of NRG Member and will not result in, or require, the creation or imposition of any Lien on any of their respective properties or revenues pursuant to any law or any such contractual obligation, except, other than in the case of the constitutive documents, as could not reasonably be expected to have a material adverse effect on the ability of NRG Member to perform its obligations hereunder.

(c) No material action, consent or approval of, material registration or filing with, material notice to, or any other material action by, any Governmental Authority is or will be required in connection with the due execution, delivery and performance by NRG Member of this Agreement.

(d) It has not sold or transferred, and shall not sell or transfer, in each case directly or indirectly, any of its voting or economic interest in the Loan Parties to anyone but a Permitted Equity Transferee by means of a Permitted Transfer.

SECTION 4. GOVERNING LAW. This Agreement shall be construed and enforced in accordance with, and the rights of the parties shall be governed by, the laws of the State of New York excluding choice-of-law principles of such States that would permit the application of the laws of a jurisdiction other than such State.

SECTION 5. Consent to Jurisdiction; Waiver of Immunity.

(a) Each of the parties hereto irrevocably consents and agrees that any legal action, suit or proceeding against it with respect to its obligations, liabilities or any other matter

under or arising out of or in connection with this Agreement or the transactions contemplated thereby may be brought in or removed to the courts of the United States of America for the Southern District of New York or the District of Columbia, or, to the extent that such courts are not available or decline to accept jurisdiction over such legal action or proceeding, the State of New York, in and for the County of New York in respect of any actions brought against it as a defendant in any action or proceeding arising out of this Agreement, and hereby expressly and irrevocably accepts and submits to the exclusive jurisdiction of each such court with respect to any such action, suit or proceeding. Each of the parties hereto hereby waives any objection which it may now or hereafter have to the laying of venue of any of the aforesaid actions, suits or proceedings, brought in any such court and hereby further waives and agrees not to plead or claim in any such court that any such action, suit or proceeding brought therein has been brought in an inconvenient forum.

(b) Each of the parties hereto hereby irrevocably agrees that any and all legal process may be served in any such action, suit or proceeding brought in any of the aforementioned courts by delivery of such process in the manner provided in Section 8, and such service shall be deemed to be effective service of process upon it in any such action, suit or proceeding. Each of the parties hereto agrees that the failure of such agent to give notice to it of any such service shall not impair or affect the validity of such service or any judgment rendered in any action, suit or proceeding based thereon. Nothing herein shall be deemed to limit the ability of any party hereto to serve any such legal process in any other manner permitted by applicable law or to obtain jurisdiction over any other party hereto or bring actions, suits or proceedings against any other party hereto in such other jurisdictions, and in such manner, as may be permitted by applicable law.

(c) NRG Member and each Sunlight Entity hereby irrevocably appoints [CT Corporation System (the “Process Agent”), with an office on the date hereof at 111 Eighth Avenue, 13th Floor, New York, New York 10019], as its agent to receive on behalf of itself and its property service of copies of the summons and complaint and any other process that may be served in any such action or proceeding in the State of New York in connection with this Agreement (the “Process Agent”). If for any reason the Process Agent shall cease to act as such for NRG Member or any Sunlight Entity, NRG Member or such Sunlight Entity, as the case may be, hereby agrees to designate a new agent in New York City on the terms and for the purposes of this Section 5 reasonably satisfactory to the Beneficiaries. Such service may be made by mailing or delivering a copy of such process to NRG Member or such Sunlight Entity, as the case may be, in care of the Process Agent at the Process Agent's above address, and NRG Member and each Sunlight Entity hereby irrevocably authorize and direct the Process Agent to accept such service on its behalf. As an alternative method of service, NRG Member and each Sunlight Entity also irrevocably consents to the service of any and all process in any such action or proceeding by the air mailing of copies of such process to NRG Member or such Sunlight Entity, as the case may be, at its then effective notice address pursuant to Section 8. Nothing in this Agreement shall affect any right that any party may otherwise have to bring any action or proceeding relating to this Agreement or any other Financing Document in the courts of any jurisdiction.

SECTION 6. Waiver of Jury Trial. EACH PARTY TO THIS AGREEMENT HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND,

ACTION OR CAUSE OF ACTION ARISING UNDER THIS AGREEMENT OR IN ANY WAY CONNECTED WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER FOUNDED IN CONTRACT OR TORT OR OTHERWISE; AND EACH PARTY HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE SIGNATORIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.

SECTION 7. Amendments, Etc. The terms of this Agreement may be waived, altered or amended only by an instrument in writing duly executed by NRG Member, each Sunlight Entity and Collateral Agent (acting at the direction of the Master Administrative Agent). Any such waiver or consent shall be effective only in the specific instance and for the specific purpose for which given.

SECTION 8. Addresses for Notices. All notices and other communications provided for hereunder shall be (i) in writing and (ii) sent by facsimile, overnight courier (if for inland delivery) or international courier (if for overseas delivery) (with a copy, which shall not constitute notice for the purposes of this Agreement, by electronic mail) to a party hereto at its address and contact number specified in below, or at such other address and contact number as is designated by such party in a written notice to the other parties hereto:

(a) NRG Member:

NRG Yield Operating LLC

211 Carnegie Center

Princeton, New Jersey 08540

Attention: Office of the General Counsel

Facsimile: (609) 524-4589

Email: ogc@nrgyield.com

(b) Borrower:

Desert Sunlight 250, LLC
c/o NextEra Energy Resources, LLC

700 Universe Boulevard

Juno Beach, Florida 33408-0428
Attention:    Business Manager
Telephone:    (561) 304-5942
Facsimile:    (561) 691-7309
E-mail:    Tyler.Hardin@nexteraenergy.com

Desert Sunlight Holdings, LLC
c/o NextEra Energy Resources, LLC

700 Universe Boulevard

Juno Beach, Florida 33408-0428
Attention:    Business Manager
Telephone:    (561) 304-5942
Facsimile:    (561) 691-7309
E-mail:    Tyler.Hardin@nexteraenergy.com

(d) Holdings Parent:

Desert Sunlight Investment Holdings, LLC
c/o NextEra Energy Resources, LLC

700 Universe Boulevard

Juno Beach, Florida 33408-0428
Attention:    Business Manager
Telephone:    (561) 304-5942
Facsimile:    (561) 691-7309
E-mail:    Tyler.Hardin@nexteraenergy.com

(e) Collateral Agent:

Deutsche Bank Trust Company Americas
60 Wall Street, 27th Floor, MS NYC60-2710
New York, NY 10005
Attention: Project Finance, Project Desert Sunlight
Facsimile: (732) 578-4636

All notices and communications shall be effective when received by the addressee thereof during business hours on a Business Day in such Person’s location as indicated by such Person’s address in paragraphs (a) to (e) above, or at such other address as is designated by such Person in a written notice to the other parties hereto.

SECTION 9. No Waiver; Remedies. No failure or delay on the part of any Sunlight Entity or any Beneficiary in exercising any right, power or privilege hereunder or under this Agreement and no course of dealing between any Sunlight Entity or any Beneficiary, or any of their Affiliates, on the one hand, and NRG Member on the other hand, shall impair any such right, power or privilege or operate as a waiver thereof; nor shall any single or partial exercise of any right, power or privilege hereunder or preclude any other or further exercise thereof or the exercise of any other right, power or privilege hereunder. The rights, powers and remedies herein expressly provided are cumulative and not exclusive of any rights, powers or remedies which any party thereto would otherwise have. No notice to or demand on NRG Member in any case shall entitle NRG Member to any other or further notice or demand in similar or other circumstances or constitute a waiver of the rights of any Sunlight Entity or any Beneficiary to any other or further action in any circumstances without notice or demand.

SECTION 10. Severability. Any provision of this Agreement held to be invalid, illegal

or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such invalidity, illegality or unenforceability without affecting the validity, legality and enforceability of the remaining provisions hereof; and the invalidity of a particular provision in a particular jurisdiction shall not invalidate such provision in any other jurisdiction.

SECTION 11. Counterparts. This Agreement may be executed in counterparts (and by different parties hereto on different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. Delivery of an executed counterpart of a signature page to this Agreement by email or facsimile shall be effective as delivery of a manually executed counterpart of this Agreement.

SECTION 12. Termination. Notwithstanding anything herein to the contrary, this Agreement shall immediately and automatically terminate, and be of no further force and effect, upon the earlier of (a) the occurrence of the Discharge Date and (b) expiration of the 1603 Grant Recapture Period (such earlier date, the “Termination Date”); provided that the foregoing shall not limit the obligations of NRG Member under this Agreement with respect to any claim asserted prior to the Termination Date.

SECTION 13. Entire Agreement. This Agreement, together with the other Financing Documents, constitute the entire contract between and among the parties relating to the subject matter hereof and supersedes any and all previous agreements and understandings, oral or written, relating to the subject matter hereof. In the event of any conflict between the terms, conditions and provisions of this Agreement and any such agreement or understanding, the terms, conditions and provisions of this Agreement shall prevail.

SECTION 14. Benefit; Successors and Permitted Assigns.

(a) This Agreement is intended solely for the benefit of and is enforceable by the parties hereto and their respective successors or assigns and is not for the benefit of or enforceable by any other Person. This Agreement shall be binding upon NRG Member and its successors and permitted assigns and shall inure to the benefit of the successors and permitted assigns of the Beneficiaries.

(b) This Agreement and all obligations of NRG Member hereunder to the Beneficiaries shall not be assignable by NRG Member in whole or in part without the prior written consent of the Beneficiaries and each of the Lenders.

(c) NRG Member hereby consents to the assignment by each Sunlight Entity of all its right, title and interest in, to and under this Agreement to the Collateral Agent as collateral security for any and all obligations of the Sunlight Entities under the Financing Documents. Each Sunlight Entity hereby acknowledges the right of the Collateral Agent, upon the occurrence and during the continuance of an Event of Default under the Financing Agreement, to exercise and enforce all rights of each Sunlight Entity to effect any payments from NRG Member due and payable in accordance with the terms of this Agreement.

an “Additional Member”). Upon execution and delivery of any such 1603 Grant Recapture Indemnity Agreement by all parties thereto, and delivery of an executed copy thereof to NRG Member and the Collateral Agent, notice of which is hereby waived by each Sunlight Entity, the transferring Member shall not have any obligations under this Agreement solely to the extent such obligations arise after the effective date of such Permitted Transfer, except to the extent that such transferring Member retains any direct or indirect Equity Interests in any Sunlight Entity.

[Signature pages follow]

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered by their authorized representatives thereunto duly authorized as of the date first above written.

NRG YIELD OPERATING LLC

By:____________________________

Name:

Title:

DESERT SUNLIGHT 250, LLC

By:____________________________

Name:

Title:

DESERT SUNLIGHT HOLDINGS, LLC

By:____________________________

Name:

Title:

DESERT SUNLIGHT INVESTMENT HOLDINGS, LLC

By:____________________________

Name:

Title:



DEUTSCHE BANK TRUST COMPANY AMERICAS, as Collateral Agent
By:________________________
Name:
Title:

By:________________________
Name:
Title:

Exhibit C to the Purchase and Sale Agreement

CASH GRANT RECAPTURE INDEMNITY AGREEMENT

This CASH GRANT RECAPTURE INDEMNITY AGREEMENT, dated as of June ___, 2015 (this “Agreement”), is made and entered into by NRG YIELD OPERATING LLC, a Delaware limited liability company (“NRG Member”) in favor of DESERT SUNLIGHT 300, LLC, a Delaware limited liability company (“Borrower”), DESERT SUNLIGHT HOLDINGS, LLC, a Delaware limited liability company (“Holdings”), DESERT SUNLIGHT INVESTMENT HOLDINGS, LLC, a Delaware limited liability company (“Holdings Parent”), and DEUTSCHE BANK TRUST COMPANY AMERICAS, as collateral agent for the Secured Parties (in such capacity, together with its successors and assigns in such capacity, the “Collateral Agent”). The Collateral Agent, the other Secured Parties, Borrower, Holdings and Holdings Parent are sometimes collectively referred to herein as the “Beneficiaries” and each, individually, as a “Beneficiary”. Borrower, Holdings and Holdings Parent are sometimes collectively referred to herein as the “Sunlight Entities” and each, individually, as a “Sunlight Entity”.

RECITALS

A. On the date hereof, NRG Member shall have purchased 25% of the Equity Interests in Holdings Parent from EFS Desert Sun, LLC.

B. Holdings Parent directly owns 100% of the Equity Interests in Holdings, and Holdings directly owns 100% of the Equity Interests in Borrower.

C. Borrower owns, operates and maintains the Project.

F. It is a condition precedent to the transfer of Equity Interests under the Master Agreement that NRG Member shall have executed this Agreement.

G. For good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, NRG Member agrees as follows:

“1603 Grant” means any payment for specified energy property in lieu of tax credits under Section 1603 of the Recovery Act or any successor provision with respect to the Project.

“1603 Grant Application” means an application filed by Borrower, as an applicant, for a 1603 Grant.

“1603 Grant Audit” means an audit or examination by Treasury of the 1603 Grant Application that results in either a 1603 Grant Shortfall Liability or a 1603 Grant Recapture Liability.

“1603 Grant Placed in Service Date” means, with respect to any portion of the Project, the date on which such portion of the Project is considered to be placed in service for purposes of the 1603 Grant Code and Guidance, which dates the parties hereto acknowledge and agree were as follows: with respect to Block no. 1, December 19, 2013, with respect to Block no. 2, December 19, 2013, with respect to Block no. 3, December 28, 2013, with respect to Block no. 4, December 28, 2013, with respect to Block no. 5, September 29, 2014, with respect to Block no. 6, September 29, 2014, with respect to Block no. 7, September 29, 2014, with respect to Block no. 8, September 29, 2014, with respect to Block no. 9, September 29, 2014, with respect to Block no. 10, December 19, 2013 and with respect to Block no. 11, December 19, 2013; for purposes of this definition, “Block” shall have the meaning set forth in the PV Power Plant EPC Contract.

disallowed by the Treasury because of a 1603 Grant Indemnity Trigger including any interest and penalties related thereto as described in the 1603 Grant Code and Guidance.