NPI.TO. Annual General Meeting. May 23, 2018

Transcription

1 NPI.TO Annual General Meeting May 23, 2018

2 Board Members Recent Additions James C. Temerty Chairman The Right Honourable John N. Turner, Q.C. Linda L. Bertoldi John Brace Marie Bountrogianni Barry Gilmour Russell Goodman 1

3 Executive Team Current John Brace Chief Executive Officer Industry Experience: 31 years Northland Experience: 29 years Paul Bradley Chief Financial Officer Recent Additions Morten Melin Executive Vice President, Construction Over 15 years in the Power and Energy Industry; Formerly VP Construction for Orsted (Formerly DONG Energy Wind Power) Industry Experience: 26 years Northland Experience: 7 years Troy Patton Chief Operations Officer Mike Crawley Executive Vice President Development Over 20 years in the Power and Energy Industry; Formerly held positions at Northern Power Systems, Vestas and General Electric Industry Experience: 15 years Northland Experience: 3 years Michael Shadbolt Vice President and General Counsel John Hannah Global Head of Human Resources Over 25 years in the Human Resources; Formerly held positions at Purolator and Brinks Industry Experience: 26 years Northland Experience: 7 years 2

4 Agenda 1. Formal Meeting 2. Management Presentation 3

5 Formal Meeting Call to Order Offshore Wind Notice of Meeting Quorum and Voting Procedure Presentation of Financial Statements and Auditor s Report Nomination / Election of Directors Thermal Solar Termination of Formal Meeting Onshore Wind 4

6 Executive Team Effective August 4, 2018 Mike Crawley Chief Executive Officer Industry Experience: 15 years Northland Experience: 3 years Morten Melin Executive Vice President, Construction Industry Experience: 15 years Northland Experience: <1 year Paul Bradley Chief Financial Officer Industry Experience: 26 years Northland Experience: 7 years Troy Patton Chief Operations Officer Industry Experience: 20 years Northland Experience: <1 year Michael Shadbolt Vice President and General Counsel Industry Experience: 26 years Northland Experience: 7 years John Hannah Global Head of Human Resources Industry Experience: <1 year Northland Experience: <1 year 5

7 Agenda 1. Formal Meeting 2. Management Presentation 6

8 Forward-Looking Statements Disclaimer This written and accompanying oral presentation contains certain forward-looking statements which are provided for the purpose of presenting information about management s current expectations and plans. Readers are cautioned that such statements may not be appropriate for other purposes. Forward-looking statements include statements that are predictive in nature, depend upon or refer to future events or conditions, or include words such as expects, anticipates, plans, believes, estimates, intends, targets, projects, forecasts or negative versions thereof and other similar expressions, or future or conditional verbs such as may, will, should, would and could. These statements may include, without limitation, statements regarding future adjusted EBITDA or adjusted EBITDA, cash flows and dividend payments, the construction, completion, attainment of commercial operations, cost and output of development projects, plans for raising capital, and the future operations, business, financial condition, financial results, priorities, ongoing objectives, strategies and outlook of Northland and its subsidiaries. This information is based upon certain material factors or assumptions that were applied in developing the forward-looking statements, including the design specifications of development projects, the provisions of contracts to which Northland or a subsidiary is a party, management s current plans, its perception of historical trends, current conditions and expected future developments, as well as other factors that are believed to be appropriate in the circumstances. 7

9 Northland Overview Over 30 years of successfully developing, constructing and operating independent power projects Well-diversified, 2,458 MW (gross) modern fleet of high-quality assets 550+ MW in development (252 MW Deutsche Bucht in-construction; 300 MW of grid allocation secured in Taiwan) Enterprise value of approximately $12 billion Significant development opportunities across multiple markets and technologies Management alignment through a 34% ownership interest 1987-Present Over 30 Years of Excellence 8

10 Track Record of Innovation and Early Market Penetration Northland Firsts 1 st Canadian IPP to Enter European Offshore Wind Largest Project Financing for Renewables Project 1 1 st Offshore Wind Project Financing With Only Commercial Financing One of the First Power Income Trusts One of the First IPPs to Enter Saskatchewan, Canada, with Gas Generation 1 st Long-Term Service Agreement With General Electric 1 st Utility-Scale Biomass to Electricity Facility in Ontario Cochrane Power 1 st to Use LifeCo Financing for a Power Project in Canada Cochrane Was 1 st IPP in Canada to Attract Institutional Financing One of the 1 st Wind Farms Developed in Quebec, Canada (Mont Miller) 2 1 st to Successfully Match Western Canadian Natural Gas Supply With Ontario Electricity Market, Cochrane Power (Gas Component) Pioneer in Structuring Equity Partnerships With First Nations in Power Generation Projects McLean s Mountain/Grand Bend/ Cochrane Solar 1. At Financial Close 2. Assets were subsequently sold after five years of operations 9

11 Total Shareholder Returns Total Shareholder Returns 40% Peer Group* S&P/TSX Capped Utilities Index 30% Northland Power 21% 20% 10% 6% 11% 14% 0% -10% YTD 3-Year 5-Year 10-Year -20% YTD 3-year 5-year 10-year Northland has consistently delivered superior returns to shareholders over the years * Includes Algonquin Power, Boralex, Brookfield Renewable, Capital Power, Innergex, TransAlta Note: Total return includes dividend plus appreciation over the specified period. Source: Bloomberg, May 11,

12 Continued Growth in Financial Results The following chart illustrates Northland s growing Adjusted EBITDA and Free Cash Flow Per Share profile Adjusted EBITDA Growth Free Cash Flow Per Share Growth Growth ~200% Growth ~80% 2012A 2014A 2016A 2018F 2020F 2012A 2014A 2016A 2018F 2020F Significant and visible growth in the future from projects in operations and in construction Note: The above chart is illustrative of Management s objectives. They are based upon Northland s operating facilities continuing to perform in a manner consistent with operations in 2017, with additions to Adjusted EBITDA and Free Cash Flow from projects under construction and other adjustments resulting from power contract renewals primarily in Ontario as described in our MD&A and 2017 AIF. The illustrations do not constitute a financial forecast, projection or guidance and are based upon assumptions that are subject to change. 11

13 Invested Capital Deployment of Project Equity Capital Since 2014 Includes Operating and In- Construction Projects Capital: $1.7 Billion Projects: $8.0 Billion Since 2014, Northland has deployed over $1.7 Billion of capital, translating into $8.0 Billion of successful projects 12

14 Northland s Successes in the Past Year $ Results Operations FY 2017: Adj. EBITDA of $765 million, a 22% increase over 2016; and Free Cash Flow per share of $1.46, a 4% increase over 2016 FY 2017: Operating income of $632 million, a 24% increase over 2016 Q1 2018: Adj. EBITDA of $290M (47% ) and Free Cash Flow per share of $0.84 (250% ) Increased common share dividend by 11% to $1.20 per share as of December 2017 Operating generating capacity increased to 2,029 MW (net), a 46% increase or 2,458 MW (gross), a 61% increase over 2016 Maintained operational excellence across 27 facilities Continued health and safety track record of no lost time incidents Northland Europe internalized management for strategic and financial reasons Construction European offshore wind projects totaling 4B achieved project completion: o 600 MW (net 360 MW) Gemini reached commercial operations on Apr o 332 MW (net 282 MW) Nordsee One reached commercial operations on Dec Deutsche Bucht (DeBu) project achieved Financial Close and construction is underway Development Secured 300 MW (net 180 MW) of grid allocation under FIT for Taiwan project (Hai Long 2) Advanced and positioned other projects in the development pipeline Established strong international presence with our head office in Toronto plus five international locations 13

15 Operations Highlights Addition of Gemini and Nordsee One to operating portfolio Operational assets with gross generating capacity of 2,458 MW (net 2,029 MW) exceeded Management s expectations Overall availability of 95% across 27 operating facilities Zero lost time incidents 14

16 World Class Offshore Wind Projects Gemini Nordsee One 600 MW 60% Interest COD Apr MW 85% Interest COD Dec km apart DeBu 252 MW 1 100% Interest COD Late 2019 Project Capital Costs of Over 5B Gemini 60 km DeBu Nordsee One With the successful completion of Gemini and Nordsee One projects, Management is focused on construction of the Deutsche Bucht project 1. Excludes the 17MW opportunity for two additional demonstration turbines utilizing suction bucket foundations. Final Investment Decision is subject to achieving certain development milestones. 15

17 Deutsche Bucht (DeBu) Construction Update DeBu Offshore Wind Project Location North Sea, Germany Capacity 252 MW 1 Capital Cost 1.3 billion 1 Northland Interest Power Contract Ops & Maintenance 100% (252 MW) 13y FIT subsidy under German REA MHI Vestas (~13y) guarantees high op. availability Commercial Ops Date End of 2019 Manufacturing Foundations Installation Cable Installation Turbine Installation Commercial Ops Date Fin Close DeBu Construction Timeline Today Aug 17 Jan 18 Jan 19 Dec 19 Finish % Completion 2 Monopile = 25% T. Pieces = 25% Cable = 5% Structural Design= 100% Electrical Design = 100% Offshore Substation = 33% On-Time, On-Budget 1. Excludes the 17MW opportunity for two additional demonstration turbines utilizing suction bucket foundations. Final Investment Decision is subject to achieving certain development milestones 2. % completion with respect to manufacturing, transport and installation 16

18 Taiwan Overview Current Market Themes Site Location FIT Program currently in place to support renewable policy targets FIT program designed to kick-start offshore wind sector with 20 year FIT contracts Current Taiwan Procurement Allocations o GW (FIT no local content) o GW (FIT with local content) o Beyond 1.7GW (price competitive auction) Water Depth: 0 20 m Water Depth: m Taiwan Strait Taipei City Pacific Ocean Current Last estimate of upcoming major milestones o Mid 2018 FIT allocation o Q Price competitive auction Hai Long 2 was allocated 300 MW grid allocation under FIT Development Strategy Established a meaningful presence in Taiwan Northland and its partners are currently in advanced site development Continue all required regulatory/permit work in order to secure approvals / secure FIT PPA Seek opportunities for further projects Status: Capacity: Contract: Type: Ownership: Hai Long 2 Project Snapshot Awarded 300MW of grid allocation for 2024 COD 300 MW (gross) 20-year PPA under FIT with TaiPower Offshore wind Northland 60% Yushan 40% 17

19 Multiple Development Markets & Technologies Canada & United States Europe South Korea Japan Taiwan Mexico & Latin America Actionable Opportunities Potential Markets Asia Northland Office (Toronto, Mexico City, London, Amsterdam, Hamburg, Taipei) Market and Technology Assessment Criteria Long Term Revenue Stability Stable Economic and Political Jurisdictions Credit Worthy Off-Takers Conducive to Project Finance Execution Attractive Project Returns 18

20 Significant Development Opportunities Total Opportunity in Target Markets >150 GW Identify and qualify potential markets with attractive fundamentals Development Pipeline ~6,000 MW Source and evaluate opportunities that meet our investment criteria 269 MW MW Construction & Advanced Development Includes achievement of major milestones / power contracts, supply agreements finalized and/or project financing secured >DeBu 269 MW >Taiwan 300 MW 1. Includes the 17MW opportunity for two additional demonstration turbines utilizing suction bucket foundations. Final Investment Decision is subject to achieving certain development milestones 19

21 Development Approach Northland captures development profits and provides stable cash flows over the project life Investment methodology nimble to pivot through different development stages based on market dynamics Development Approach Late Stage Acquisitions Greenfield Development Partner / Greenfield Purchase late stage projects with power contracts in hand prior to financial close and construction In markets with longterm growth prospects, develop new competitive projects from inception Joining forces with local development partner can help position us for opportunities Development focus drives long-term value 20

22 Power Markets are Changing Our industry has changed immensely over the past 10 years Supportive Government Policies Governments have taken real action to reduce carbon Industry Evolution & Technological Advancement Renewables are now a cost-effective and feasible alternative to add new power Market Liberalization and Competition New Increased demand has attracted new players ready to deploy capital in competition with traditional IPPs The global investment opportunity set for Northland, driven by economic growth and decarbonization, has never been greater 21

23 Global Movement Towards Sustainability Source: United Nations Department of Economic and Social Affairs 22

24 Sustainability Reporting Frameworks The sustainability reporting landscape is continuously evolving. Currently, the focus is on updating guidance and frameworks to emphasize the information needed by investors to support their decision-making We have considered all of these frameworks in developing our report 23

25 Our Sustainability Pillars Northland s vision is to be a top clean and green power producer, inspiring our people to achieve a sustainable and prosperous future for all stakeholders We will achieve this through our three strategic pillars: Inspired Workforce Top Clean & Green Power Producer Prosperity for Stakeholders Prioritizing health and safety Fostering our values and culture Providing meaningful career development opportunities Hiring locally and providing international opportunities Focusing on clean and green technologies Delivering strong and sustainable financial results Generating and distributing economic value Capitalizing on revenue generating opportunities through the transition to a low-carbon future Supporting sustainable economies through clean energy and responsible business practices Investing in our communities Partnering with First Nations Preserving the natural environment 24

26 Looking Ahead in 2018 Objectives: Development Focus Continue to advance and secure high quality projects Diversify across locations and technologies Be a leading player in the global transition towards decarbonization Construction Execution Continue track record: on-time, on-budget Continue to execute on DeBu project construction Operational Excellence Maintain excellent operating track record Excellent health and safety and environmental record Continue to improve operating portfolio We will build on the success of our first 30 years and continue to deliver on our promises and create long-term value for our shareholders 25

27 Investor Relations Contacts Barb Bokla Manager, Investor Relations Sarah Charuk Director of Communications