Q4 2019 Earnings Call

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[music].

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Thank you Hello, everyone and thank you for joining us today.

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They shouldn't supporting today's discussion is available as we speak on the on page over website, a true, though do you know Jackson.

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Listeners are cautioned not to rely unduly on these forward looking statements as most times can can be given that it would prove to be correct.

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During this girl, who will refer to financial measures that are not personalized according to the international financial reporting standards.

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Our speakers today will be missed there's also no chief financial Officer will present, Q4, and yearend results and Mr. mission at the <unk>, President and Chief Executive Officer will be viewer personalized and our Q1 parity.

And I'll send a conference over to Mr. and.

Thank you, Kevin and good morning, everyone.

I'm proud to report strong results for the year 2019.

Production revenues adjusted EBITDA, and adjusted EBIT da proportionate.

Slide 28, 16, 16, and 21% respectively.

Before going further I'd like to stress that we are reporting on a continued operation basis, which exclude HSR <unk> result.

In the fourth quarter revenue were up 4% mainly explained by the contribution of the commissioning of the Port City, and Phebe Fed city peas, and by all your production the French wind facilities.

These positive factors were partly offset by lower production in BC and lower average selling price and production at some hydro facilities in Quebec.

Adjusted EBITDA was flat compared to last year, mainly due to higher contribution from the wind and solar segment almost completely offset by lower generation. Indeed, I drove segment.

Our adjusted EBIT da proportionate increase in the quarter, mainly due to higher contribution from the wind facility in Texas, NBC, partially offset by lower revenues in Chile, and then Terry.

The increase in adjusted EBIT Deep proportionate is also due to production tax credit called Ptcs generated by the Ford C.D. facility as well as our share ownership of Ptcs generated by our Shannon and flat up joint venture with.

In farm in Texas.

And that no.

As you can see on page eight.

We elected to account on a consolidated basis on there I FRS all of our wholly owned and joint venture toxic with the investment as long term loans and borrowings which are amortized over time by the BDC generated during production.

The investment tax credit called I T C.

For solar farm.

And all other tax attribute allocated to the toxic with <unk> and best or.

For Ford City deep on almost ties balance of the toxic with the investment recorded as long term loans and borrowings at year end is 285 million compared to the initial investment at the end of Q3 of 373 million.

Here the I'm authorization of the loan included in the quarter over 11 million up Ptcs duct was recorded under other revenues.

No for Phebe I want to remind you that sort of project in the U.S. are eligible for ITC versus bdcs.

And this project toxic with the investment recorded as long term loans and borrowings at year end was 53 million compared to the initial funding amount up 244 million financial close during the quarter.

Yeah, the large reduction within the quarter of the loan is due to the ITC I'm authorization profile being accelerated in the first year of clothing.

[noise] in this case do you have come thing come through part of the loan amortization is accounted in redemption of the property plant and equipment that you have the project instead of other revenue in the profit than last statement.

For this quarter only the total BDC contribution from Port City, and our proportion of Shannon at flat up was 17.8 million.

Port City by itself contributed 11 million in the quarter and we estimate that did.

Could be contributed around 42 million on a yearly basis, depending on generation.

In summary.

Bdcs dollar value earned by our three wind farm in Texas are now and going forward B. I counted as other read the news and added back to our adjusted EBIT da proportionate since it provides a better measurement of our valuation multiple when toxic with.

Investment alone are added to our total enterprise valuation.

Continuing on page nine the adjusted EBIT da Ken again be explained by the contribution of the wind and solar segment, partially upset by below average water flows nbcs and lower revenue I've cubic facility.

For the year, Yeah, just said if indeed proportionate on page 10 increased 21% since most of our joint ventures and associated facilities contributed positively during the year.

Also the BDC contribution from shot planning and shut up and and flipped up was higher due to the higher production and commissioning of Fort City. In September also contributed to increased bdcs during the quarter.

As shown on next slide the variation in long term debt is mainly due to draw made under construction and toxic with deep bridge loan during the construction of Phoebe and Fort City project.

Reimbursed by a combination of terminal and funding from tax equity investors net of Itcs Ptcs and tax attribute other kids.

And cash distribution made.

The variation is also due to the convertible debenture.

These items were partially offset by the net prepayment made on the corporate revolving facilities, including repayment made with the proceeds received from the sale of HSR.

On the next page changes in the financial position items that mainly from the sale of HSR.

The additional construction activities at Ford and Phoebe and the initial application of I FRS Sixty's.

As shown on the next slide our free cash flow which include HSR.

Decreased to $93.3 million. This can be explained by greater debt payment and decrease in cash flow from operating activities.

Our payout ratio chains negatively at 102 per cent compared to 86% a year ago.

Also work mentioning that in the quarter, we have recorded the cash loss of 11 million on a basis edge financial instruments due to higher congestion in Texas than anticipated.

For the purpose of calculating that payout ratio and giving the limited ocu rents over a two year period, we have added back the loss on this financial instrument in our free cash flow, none I, if I Miss measure and recorded as well and noncash mark to market loss up 47 million on there.

Unrealized loss on financial instruments for the Red.

On slide 14.

Our financial performance for 2019 was aligned with the projection made at the time of the sale of HSR.

We exceeded our projection in terms of power generated an adjusted TBD proportional while we were close in terms of I'd, just IDBD and not far beyond the in terms of redbird.

On that note I would give the flow through Michelle for the operational review of the past few Michelle.

Thank you don't Francois.

Hi, good morning, everybody. Its this time of the year that we'd like to just go back and look on the achievement. We've done in 2019, I must say them a pretty proud of what we've done a in achieved in the last 12 months or just as a reminder, the year started with deep in the best.

One of the well the sale of a our participation in each at saga.

We were proud to be able to generate a profit on that sale.

That asset as you remember was part of the Altaira acquisition, and we did read deployed that that money to reimburse the good loan bridge that we have it.

Taken on our books for the acquisition of the remaining shares of the can see a facility in Quebec.

So pretty I'm pretty happy on that transaction also on the develop inside.

It's not a big project a young number too it's a seven megawatt wind farm in ER in France, but it's the first of hopefully many to come so way. It's if you remember we have a started the development of our project in France, our own project a few years ago.

So this is the one the first one too.

Be in.

In a phase to start construction and we're hoping that.

We'll talk about it little bit later, but we're hoping to bring one or two projects every years starting in 2021.

In a ready to start construction.

[noise] also we've been active in Ah why you know when that our strategy to.

To the lump solar and battery has been the why it's been started a few years ago and we were happy to win to project in that why.

We are advancing these projects and also we have participated in the existing RFP.

In a wife were sold and battery again, and we have for projects that have been retain forward. The last section of the RFP, we should know.

About these project by the end of June.

In terms of construction, we're just put ourselves in a position to start construction on the old crest.

We have signed a long term p. at the end of the year. We also signed the 40 years before right in a big this small seven and a half megawatt hydro facility.

It's small but in a in a sense. It's it's a project that is displacing diesels sold the cost to replace that diesel is very high. So that's project. It's a it's going to be quite profitable. It's a project that we love in a sense it its profitable, but it's also really in the spirit of our Tripi.

He did loveman, which is the person.

The planet and prosperity as you remember we are sharing the investment with the local community in the North and we have we have made quite of advancement also in terms of permitting and this construction is starting a I start.

As we speak in a in the north.

We also have been very busy in construction. We just added 600 megawatt Oh, that's why it was talking about CB and fourth city, that's quite an achievement of 600 megawatt in one year.

And we we we've made the deadline, we may discuss the schedule and that together with deals to project. We we were on target in terms of of total budget. So why not be on that side for the construction team.

Also a just due to we haven't mentioned, but also happy on the way. These project has been operating in the last in the last quarter.

CB got the full commissioning and GE machine are performing quite well.

We have reached 102% of the long term average on that a quarter and for CB, we reach 98%, so pretty pretty solid quarter for these two new.

Project.

Also well it was not last year, but were work quite a bit on the on it a if you go on page 17, it's the announcement of the strategic Alliance with Hydro Qubec of course, we announce it at the beginning of the year, but it took a bit of time in 2019 too.

That make the discussion and align the strategic alliance with Hydro Qubec as you recall hydro Qubec has taken the a position in energy mix of about 20%.

The private <unk>, a private equity placement of 661 million dollar.

And also there onto Quebec.

As an option to follow up and keep this 20% in the near future, if we're making a future equally.

Insurance. Thank you.

Also quite interesting in this in this alliance is the fact that we would like to do some joint venture with them. They have put 500 million dollar.

Aside for the future development of renewable energy.

And as we mentioned early on its mainly on the same.

Strategy market that we are so friends and nearby in Europe, Latin America, we have been focusing on Chile, Peru, and potentially Colombia as we as we speak and hydro Qubec has done also a lot of studies in these markets. So we think that the two GITR and putting our force.

And competencies to get or we should be successful in these in these markets. So quite a quite happy with this great transaction and of course, it's going to be a few months before we can put the full team together and make the first acquisition, but.

Everybody is now focused on creating some synergy and be successful on that alliance.

Now on page 18, it's not a big project, but as you know.

Storage is part of our future development and we're proud to announced that we have a win eight nine megawatt.

Storage.

The project in France, its own it's going to be installed in our.

Substation of yawn, So I'm quite happy it's not a big project gets a total cost will be around the 5 million euros.

Have a seven year contract with our T E.

And just to give you little bit of.

Guidance.

We should be doing on that period of the seven years. So the first seven years, we should have a need be D.A.

Double digit return on a total assets, we will probably won't put any any financing on this and cash on cash will also be in double digit for these these periods. So not a big project, but a profitable one and one that will also help us get.

Maybe even better in storage, which is a big portion of the joint venture with under Quebec.

If we go on page 19, we'd like to focus on 2020 of course on construction side, we want to deliver hill crest in time in in budget and we also have started the NPV project.

He projects should take both two years in assets to to get a into C.D. and we are and beating D.C. The appeal craft in Q4 at the end of the year.

This year, so again, a 200 megawatt of solar project.

That could be built in less than a year pretty impressive and of course in terms of that Laufman has you know we will be putting a lot of effort in developing solar in the U.S.

We have bought if you remember some solar panel in order to help us.

Prequalify. These these panel and project for the ITC.

Quite confident that we will have some project by the end of the year ready to you.

Go in a finalized permitting de ideas do you have.

At least couple of hundred megawatts per year for the next a future in order to take a near future in order to take advantage of the full ITC.

We will be focusing on Texas, but also on PGN Delta Dania in Ohio.

We will be.

Successful in in Pennsylvania, we are hoping to have at least two projects over there and at least one project in Ohio to complete and diversify our investment in solar.

In the U.S.

Wind and solar project in France will be also to focus as I mentioned the team now has the pipeline of projects and we are still did lumping some new.

Prospective projects, but the idea is do you have at least one or two project.

Ready to submit in RFP and ready to eat or some is also on to fit a fit program in France.

Development opportunities in Chile, we're seeing a lot of potential activities in terms of M&A, but we're focusing also on to develop in the front. There now and then noted project that will also be put forward is is calls and kallos. It's a project upstream upfront era.

It's still a money in early little bit earlier stage than frontier of course, if we decide to did love. This project keeps going to take about a couple of years of permitting but this project would be around 150 megawatt and it wouldn't have some storage capacity for about four and five hours.

So that project could help also regulate the water from four Frontera and help it and help make frontera.

More profitable in the future given the fact that Chile will benefit from these four or five hours of capacity being able to be displays during the.

The only hours.

Of course.

We will also focused on developing and making sure that the joint venture with Hydro, Quebec will create some great opportunity for us.

Be patient it'll be a it will be you will be a few months before we can be fully operative in this joint venture.

But like I said I am very positive on the.

Near future outcome.

So if you if we go on page 20.

Projected the financial performance for the year end, we think that we'll be able to generate more than 25% in terms of generation over the 2019 result in their most revenue we're aiming at at least 10% more I've just it'd be a if indeed.

5% and adjusted proportionate it'd be D by about 10%.

And I would say that are these the these numbers don't include any further acquisition. If you remember in the last press release, when we announced the strength inject alliance with Hydro Qubec.

We made reference due to acquisition.

We are advancing with these two they're not they're not really fully ready to close but it's.

In the first one is the only matters of a few weeks and a turn toward the end. The second one will follow very closely.

In the next a few weeks after that so those numbers don't take into consideration. These two acquisition and as we mentioned those will be accretive on in terms of cash on cash for 2020.

So on those note we would open the question period.

Thank you ladies and gentlemen, you have a question. Please press the star followed by one on your stock stones.

Yeah its own acknowledging your request your questions would be pulled into although they are received please ensure you leave the handset if you're using a speaker phone before pricing any Keith.

Your first question comes on the line of Sean job of TD Securities. Please go ahead.

Thank you good morning.

Good morning, quite a few questions.

The 2020 guidance you provided on revenue and EBITDA growth.

Can you give us some context of how you're thinking about free cash flow growth, whether absolute dollar figures or on a per share basis for 2020 as well.

Well they'll they'll be growing.

If you look into basically the our payout ratio the idea at the end of the year is to be below 100% for sure.

Well, we break the 90, we'll we'll we'll see but with the two new acquisition will definitely be.

And in a range between.

[music].

Very close to 90, perhaps a little bit lowered and 90, depending on timing of exemption on goes yes.

So obviously Sean.

Cash flow available for distribution will increase lots on a continued operation basis, excluding HSR cotton 2020, given the I do get bank financing and the debt reduction.

And but like we should mention on the payout ratio we executed on the two X acquisition, we should range between 90 and 100% in terms of payout ratio.

Yes.

Thanks for that.

Question on I guess potential for further asset sales, you've you've surface some value already through the hydro Quebec partnership.

Any any thoughts with respect to other potential mature assets sales to further realize.

Value and returns in a in a pretty frothy valuation environment right now.

Always a on to look out but.

Not willing to sell our core hydro asset.

But we said that we might recycle some of the U.S. asset depending on.

Ill passwords lumping.

Other project.

And also we always monitoring our total exposure to certain market.

Of course, we like takes this but depending on how successful we are in the solar development, we might be willing to.

Diversify the little bit but.

Not so keen in selling our base, a Canadian getting assets, especially the long term hydro I think.

Even though there might create a lot of value in terms of a sale.

But in a in a in a portfolio.

We think it's quite important to have the diversification in the technology, but also in the in countries or.

Area of investment so.

We'll be up to the not optimistic but.

We'll be looking for creating value a outs in selling assets potentially divest some of of or portion of our asset, but not necessarily into income in Canada.

Okay. Thanks, Michelle I'll get back in the Q.

Your next question comes from the line of Smart Shafi ill see IVC capital markets. Please go ahead.

Good morning.

I wanted to touch on Fotopunch sandwich.

The next step up in revenue implied pricing, so maybe talk about what happened in the quarter and whether or not that's sustainable.

Yes, so Shannon and flat with regards to.

The power hedge there now.

Being recorded more as a mark to market potential instrument than we we have the step up in average revenue and that.

Exist so it should be recorded more.

On a merchant basis going forward that you look on the revenue side, so difficult to predict from quarter to quarter, but we should see a little bit more.

In the revenue side, so we will give more color as we go into the year.

Mark but difficult to predict.

Given the nature.

Of those project.

You know if we if you look at the historical.

Cycle in Texas.

You know the.

Quarter the shoulder quarter.

Might be lower but summertime should be quite.

Lucrative in terms of the.

But market or merchant merchant exposure.

We also have the 50 megawatt of 42 to 300 350 megawatt we have secured.

300 megawatt of contract with the piece for us, but we have 50 megawatt of.

Of merchant exposure and we should see.

Summertime being quite.

Lucrative in Texas, and the order quarter, all little bit more volatile.

But we think that in the overall.

Portfolio things will be balance out with the dose a there was exposure.

But it's difficult to two critical plus with it.

Okay.

And then on those pending acquisitions that you're pursuing.

Exclusively operating assets or either them come with a redevelopment opportunities.

On those the to the two acquisition, we're talking a are exclusively operating asset and de ideas that we want to use the M&A as a tool to rebalance also to cash flow.

In our long term forecast.

When we have a lot of laufman in solar and Ptcs. As you you you've seen we are basically amortizing a lot of the tax equity investment in the first few years and hand state cash on cash on those assets are a little bit under pressure so by using M&A to rebound.

Since I think that.

You will see a very I would say.

Fast rebalancing of our cash flow and this is something we as management are committed to do is making sure that.

As we develop projects as we grow project and growing those projects create a lot of value.

Our perspective.

But of course, we want it balanced our payout ratio and our growth of dividend. So M&A can be a tool to rebalance. These these.

Profile of cash flow.

Is it fair to say then that to rebalance the cash flow you.

Mike sacrifice, a better return an MPV.

Sort of value creation to out to pull forward cash flows in the near term.

In terms of the NPV not so much in terms of internal rate of return adjusted for risk.

You know my perspective on my in my view in internal rate of return, we as a portfolio one to have the total.

It internal rate of return that gets close to about 10%. That's what we want to create key value to our shareholder that see it's 600 800 basis.

Points over the 10 years bond, but as a portfolio any any investment has to look into the return versus the risk. So we think that any any transaction that we will do.

We might have some difference in terms of internal rate of return of course, if you're buying something with the long term contract in operation a that provides a good cash on cash you may have a little bit of a lower internal rate of return, but when you mix that with a development of.

Project that create a lot more value, but the more on the long term basis.

Ddos included all like I like I said.

We look at the portfolio approach not necessarily on one single asset horse, we're doing our due diligence and we're making sure that we're creating value for the risk interested that we're taking but we look we look to balanced portfolio on a long term basis and one maybe point that can have the margin.

Charlotte is on also what we look on the internal rate of return, we look to have a greater proportion of that internal rates of return under contract.

So that outsize wells on the cash on cash.

That makes sense.

And my last question is just with the share ownership of Hydro Qubec just.

It's sort of I'm not sure if the governance agreements I mean, how do you manage things like future re contracting.

The province, those assets that are contract with them or like what sort of the.

Any agreements in place on how that's relationship works down the road.

Well I think that it is not the CEO of like Okay made it very clear and there's definitely.

Some.

Some governance in place in the Hydro Qubec and also into province of go back to manage these contracts most of our contract our with idle, Quebec distribution hydrophobic distribution has to come up with our species in the future in order to secured there.

There clubs again, we see there as thing.

[laughter] sourcing of power.

And hydro Qubec distribution has to go through let as you did in LNG in order to have their dose can track and our fee being a overlooked so it's completely independent from the other arms of the hydro Qubec.

So on that basis, I think tidal Quebec has made the that very clear to the industry that the governments in place, we'll we'll make sure that theres no pray for preferred the treatment to six in terms of the.

Any future contract.

Okay.

Your next question comes from the line of Mill Sun and GE of RBC capital. Please go ahead.

Great. Thanks. My first question is relates to your 2020 guidance.

So the guidance does not include the.

Potential acquisition of the two projects. So when you were talking about the free cash flow.

Range is it fair to assume that without the acquisitions the free cash flow would be maybe close to 100% and with the two acquisitions.

Hosted a 90% obviously, depending on timing yeah fair. So in terms of payout ratio I would say without the acquisition and on the taking benefit on the debt reimbursement from hydro qubec and to share issue, we would be slightly above 102% in terms of payout ratio but.

This is excluding the two transaction, but Michelle commented earlier were far advance on that and we commented under press release that those two acquisition our highly accretive.

Cash flow per share so were strongly confident that depending on the execution of do some transaction that we could.

And the year in terms of payout ratio between 90% in 100%, but you're right.

Okay, and then on on that acquisition.

So and when you initially announced the.

Strategic Alliance with Hydro Qubec I think.

Interjects would put in 275 million of equity into that acquisition and then I presume.

It is hydro qubec buying the like remaining portion like is this no joint investment or is that 100%.

Being purchased by Interjects.

That's 100% being purchased by Hydro Quebec.

Yes.

[laughter] Zixone [laughter] sorry.

No. So so these are where.

Or part of the existing.

Laufman of or M&A.

We've seen our generics and.

Given the fact that the investment of idle, Quebec comes with a dividend. So it was important for us to make sure that we would have a use of proceeds to deploy.

Some of the.

Investment that hydro Qubec has made in interjects.

Got it Okay, and then I'm just moving.

To just a quick clarification on the shutdown and flat top comments earlier so.

Are you, saying that going forward the revenues will reflect merchants prices, but then would you net off the I guess are realized.

Hedging gains or losses like in the EBITDA line or how does that work yeah. Yeah. Nothing is actually and we we've provided guidance on the CBS willpower hedge on that you can find this on page.

26 of the Mdna, something like that but you're right portion in the class Duck you will remember for the first three quarter of the year, we were impacted negatively by business risks related to those power hedge and now we're going to record going forward.

Change in.

The mark to market bundles power hedge as financial instrument below we'd be diesel will not impact any more revenues. So we have a pickup in the fourth quarter in China in flat to up just one a cautious just wanted to be cautiously optimistic that it could well it would be more qualify as we move into different quadrants mission.

I mentioned, so yes to answer your question. This is what's going on with China.

Okay got it and then just one last question and it's on Hillcrest solar.

So I'm not sure if I'm doing the math right, but in general you get a 30% tax credit on your project cost.

So if I look at hill crest, and compare the project costs like after a 30% discount relative to the EBITDA.

I'd like a multiple of about 17 times.

Is that a fair way of thinking about it in terms of like are you building the project at roughly.

17 times EBITDA.

In terms of Eagle crest.

It's it's getting around that.

But we we would have to give you little bit more Ah guidance on how the tax equity get repaid but out of about 116 tactically contribution.

The first year or the first moment to almost at the this the perfect consistency with the that get repaid around $95 million to $100 million are right away in terms of taking advantage of the ITC. Yeah. You see also if you remember there's a there's also a common.

Practice in the U.S. to have.

Project being revalued or re assets.

Or four for valuation purposes, just before SKU D and that usually heads up in the old kras.

A bump in into the value of around $50 million that he's also.

Being part of the ITC contribution so from the direct cost of construction of a and then soffe costs of around $279 million.

US dollar.

You could add up in order 50 something to.

Three turret 335, and this is the amount that is used to calculate the tax.

Contribution of the ITC, so it's still slightly higher than perhaps what do you have taken into consideration, but not huge so the multiple would be little bit lower than the 17 times.

Okay, and then can you just I presumed will be financed similar to phebe in terms of.

Tax equity.

That an equity could do you have a rough split of the.

Three components for Hillcrest.

Yes.

We.

Comparing through TV.

However round, we plan around 150 170 million enough spectrum liquidity out of 279 in their cost structures, which should.

Don't have pulls by phebe compression sensible TB 344.

To be.

344 out of what is.

So [noise].

Well, yes, it's 120 out of 279 vessels.

Chris.

The year.

120 of tax equity.

Yep.

Okay great.

And then you have put.

Project debt or Holdco project in there as well right.

The small yes on all with a small portion of about a 90 just over $90 million of back leverage.

Okay, Thanks, I get back into queue.

Your next question comes from the line of repair Morocco National Bank. Please go ahead.

Morning, everyone.

Morning morning, if we can go back to the Texas market and congestion can you give us an updated view on on the outlook for congestion in the in the areas you're operating.

Well, if maybe we think the TV or it's a it's a place where a lot of a new demand a have a rise with the shale gas and the shale oil so dear caught distribution system have not yet finalized.

They're upgrades, what we know in the area is that there's.

Hey, reinforcement of existing 138 key kv line that will be doubled and.

Also another 138 kv line will be twinned with this one plus a 345 kv line is schedule to to be online before year end, so 2020 might still might.

Still be a little bit busy until these line or a fully operational but we think that 2021 should should be a lot a lot better.

In term of a basis point in the area.

For a for the we we're hopeful that the air cost will also be a active in building lines.

I think that we can see in Texas some.

Some short term disturbance Weve I think it's known that.

It's a little bit difficult to forecast basis point in a in Texas everything is changing fast the demand and also the supply being solar or wind.

But I think that the wind and takes us will slow down in terms of new project being introduced and solar will pick up just because of the PTC and the ITC a split and what we understand more in Texas is that it's more of the short term problem because their costs.

It is very active in trying to mitigate any congestion but of course, a it can be layby. It can be delayed between 18 months due to a couple of years before things are being put together because of permitting and of course construction time, but they're very pro.

Active users that Texas is so active in terms of new demand because Texas is only well.

There's not that many market in North America that it's growing in terms of demand and takes us is growing fast because it's super active in the shale gas and the shale oil. So you have both new capacity and new demand and the distribution system and try and transportation system.

It's just slagging 18 months three years behind so this is short term pain for hopefully long term gain in the into in terms of Texas.

Great. Thanks for color and then on on storage.

So you are looking at some storage projects in Hawaii and knew about this new project in France. If you look at the economics of the project in France do you think at.

It makes sense on a standalone basis.

Can you just look at the cost of energy coming out of that battery or or is this more of a sort of a demonstration project or is there some benefit from from capacity how do you view the economics.

Well. This is that was an RFP and we have the seven years guaranteed payment from our key E. Plus we have also some somewhat or actually service that are provided by the.

The operator.

And frankly, they these perfect looked pretty good.

For the first for for the seven years a contract that we have I just give it a guidance of a double digit cash on cash and double digit could be da on it's not big investment its $5 million 5 million Euro.

But the de should be a just slightly over 600.

Thousand a euro on on that specific projects. So.

Its profitable and a it's giving us a lot of learning curve in trying to understand on the long term basis, what will be the dynamic on tank on extraordinary service and capacity and this one.

Might be interesting because the.

We don't have much costs to interconnect, it's a it's fits a directly in one of our existing substation that happened to have some capacity left on.

On the on the grid to interconnect. So there's no upgrades on the distribution system to be.

Charged with the project.

I understand the economics look attractive for interjects, how did the economics look for.

For the French grid as far as say the cost of capacity or the cost of energy and how it might compete with other solutions I'm just trying to get a fuel for.

How big the opportunity could be forced storage today or or if this is really.

More of a long term proposition.

I think that it all depends on and you know I don't want to go to deepen the French politics.

[laughter] visit sleep free.

But is this in Italy.

Directly related to.

The ability of government to maintain or not the the nuclear is the new here goes down this definitively difference the big need to have a storage and different part of a of the trends, although Europe being a market are more and more interconnected.

But as you introduce more renewable energy in the mix I think that storage has had very good and long term potential as long as a you don't want entry news introduce or maintain.

All the nuclear.

I think that the the Paul is in France is to reduce definitely the new here by roughly 25%.

So I think that there's a definitely a.

A long term investment pieces in a in Europe that.

We will support some more investment in storage.

And we'll hydro Qubec Reinfeldt in this project in France.

This is this is definitely a potential joint venture investment.

For them, it's not big a 5 million euros for affords a joint venture, but we would love to be able to see if we can deployed there a new technology their new batteries. So a definitely a will present that to a the joint venture of ER hydrocodone and of course will try to.

To maximize the.

The learning curve on the the storage technology.

Thank you I'll leave it there.

Thank you.

Your next question comes from the line those basically said that off Raymond James. Please go ahead.

Thanks, Good morning, guys.

My first question just here on an you asked on the when side I know you don't it doesn't seem like you have actively any projects that you're looking to develop their anymore.

I'm, just wondering what what happens to while whatever projects that you previously hadn't development. If you decide not to go forward with them is there any opportunity to monetize those.

There's a good point well, we haven't talked a month, but we have one little one project still quite a live it's called Griffin Trail, it's just a close to four city.

With the new PTC.

Extension of 60% for 2022 in 2023, we Oh, we are reevaluating the possibility of Ah did lumping refund trail.

We have.

Bought one Vestas Nashville too.

That's a new strategy to pre qualified project for P.D.C. So.

We will be resisting Griffin trail, that's a 200 megawatt it has the most of its permits in place.

It's just the fact that we had missed the a window of PTC for 2020 in 2021.

We had and putting into the forefront of our development strategy, but we still have this this project is pretty good decent project at 200 megawatts and Boswell, We're still trust.

We're still trying to get some traction there.

Remember that we have to renegotiate with the Pacificor before the interconnection, but.

To be core past announced a big RFP for a 2023 and we're looking into our option to see if boswell can be a fit it into this RSP.

Yes, so I have some smaller.

Well development that or earlier.

Stage development to be who is a potential project that we still have on our books, but we have more.

Focused on solar and ITC.

But it's definitely something that we are in has in mind to keep developing and.

Putting that you on our existing a project that we have owned and for wind in the U.S.

That's interesting. Thank you for that comments just just one other one from me wondering if there's any update on the scatter an RFP if theres anything moving forward there.

Well the we will have we have three project ready to use submitted to this RFP will be participating.

Its just that a it will be competitive again, but we think that we have.

Adjusted our aim a little bit instance, catch one and a.

Getting the last RFP.

Resolved.

We thought that the first nation component would have been treated differently and it was not so we have readjusted the the product that.

Saskpower is looking for so I think that this time project that we are going to submit will be more competitive.

Great. Thank you very much that's it for me.

My pleasure.

Ladies and gentlemen, if there any additional questions. So this time. Please press star followed by one actually remind them if you're using a speaker phone business to have said before pricing to keys.

Your next question comes from the line have been from BMO. Please go ahead.

Okay. Thanks, good morning.

Good morning, good morning.

I'm just wondering.

Your dividend increase.

I know you've been.

You've been saying last few years, you why don't you want more of a consistent increase each year by inflation.

I guess like your payout ratio has been going up.

As long as it doesn't look like it that's getting any better than 90% to 100%.

So how do you think about.

Just I guess the rationale for raising the dividend when.

You guys have so much growth ahead and development activities I guess, that's my my first question.

Right.

Do you think off and your access the capital then I mean.

I mean, the last three as had been a rhetoric in the markets I mean everyone's classic apples change and so.

Yeah.

It's really to think about really if markets close here for you guys can you guys growing the same way I thought maybe a week ago.

This too there's two components to you were a question then.

We have said that we wanted to cover at least the installation and of course, the two cents to so little bit over the inflation.

We're confident that when we look at the whole the long term forecasted to the target of roughly 80% a payout ratio is achievable.

Like I said, we will be using M&A slash that laufman. So it's not an easy task of course too.

Bring growth and also keep up with growing to dividend, it's a task that a interject says.

Taken a when we merge with the income fund both sell 10 10 years ago now so it's not easy.

But I think that we have put strategy in place and we are focused in growing the company and a growing a sustained believed the dividend so that being said the I think that like I said, we we have a good look and the good Dan Andal on the.

The long term forecast, so again I think that the that growth of the dividend is sustainable now for the excess capital I'm not so sure I understand your point in saying that the if the market close you for paying a big portion of our dividend we would have a hard times.

Lumping our hour.

Projects, if it fits what you're you're saying.

I have a hard time thinking that the vet the value of the good project in our sector.

I would diminish anytime soon.

So if market condition makes it more difficult issue stock we can divest some of our project, we're developing in order to keep up with the.

The growth and I don't think that we definitely saw a better enthusiasts.

On in terms of investment.

Community in his Gi product and I think that I'm quite confident that a this will last for the future and of course, if markets are adjusting that means that also M&A activities will be adjusting and the price of Ah those project will be adjusted.

Accordingly, and we are always always looking into making acquisition that are we it is to our ongoing.

Yield and perspective perspective.

Perspective of our a total cost of capital. So, we'll let just a ben but I'm I'm confident that the power sector.

We'll see some some capital a dedicated.

To it.

All right that's good to hear thank you.

Your next question comes from the line those Maji bedroom, hoping dose trial Alliance. Please go ahead.

Hi, good morning, good morning.

You talk about projects being somewhat into the Hawaii or.

I'm just wondering if you can talk more about the growth potential in that region for you Oh, given the ongoing procurement process now.

Well, it's a it's not a huge market, but the the market is very specific event and.

Of course, the they're very aggressive in wanting to have 100% of the island are being a renewable so its seats is creating an interesting niche market.

The development over there resemble a in a in a lot of ways BC. All you have issue with first nation and that's a.

Permitting is a little bit more complicated than a certainly in Texas.

So it's a it's a niche market for us a the project that we have submitted.

Total them out little bit more than 100 megawatt.

So it's not huge but little bit like a the French market, it's a little bit of a niche where I think our development teams.

Ah can be successful so again, it's a little bit of a portfolio approach, we're going into bigger project in Texas or PGM and solar in the in general in mainland and we're trying to have these ah interesting or.

Project in Texas that.

One of the Big advantage is that a dose project come with 25 years Spa and Oh of course, a also bring 'em the PPA with the battery storage. So we use that as a a market to learn and get a ics.

Having look more experience with.

Solar and battery and the technology in the system that incorporate and manage those two and to see what a solar in battery can do on a.

Grid that depends more on more on renewable energy. So I think that this is definitely a sector a that will be growing or in other markets a into near future. So for us we think that getting to have that experience on hand and on the field is is creating value.

416.

Okay. Thank you and that's very helpful. I'm, just maybe to finish off on Colombia, you mentioned that that's a potential target market for you. Just wondering if you can talk about the potential.

Scale and scope of investments were looking out in that market a market you'd be thinking about entering through a acquisitions potentially and then following that up with the development.

Well, we haven't studied too much Colombia hydro Qubec has done some some studies so.

Of course, if we if we get into Colombia.

We would probably be looking into acquiring some existing assets coupled with some some develop into little bit what we've done in Chile.

It's a little bit early to discuss about Colombia, but it's a it's a market that seems to be more and more.

I would say interesting in South America, Brazil is a big big market, but a little bit complicated.

We have been studying as you, perhaps no, Chile, and Peru, and Colombia or could be the next next market, where we can spend some more time.

Thank you.

Mrs. Russia, there are no further questions at this time.

Thank you very much everyone. We look forward to speaking to you have or next call in may.

Have a great day, thank you bye bye.

Ladies and gentlemen, you may now disconnect your lines.

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