Q2 2020 Capital Power Corp Earnings Call
Welcome to capital powered.
Order changed any results conference call.
Currently all participants are in listen only mode.
Following the presentation conference calls they'll be open for questions.
Call is being recorded today July Thirtyth 2020.
I'll now turn the call over to Mr., Randy <unk>, the director of Investor Relations. Please go ahead Sir.
Good morning, Thank you for joining us today to reveal capital power second quarter, 2020 result, which we were at least prior this morning.
Second quarter report and the presentation for this conference call or post on our website at <unk> Dot com.
Joining me on the call is Brian Jones, President and CEO and Brian Denise will be doing this last quarterly call the CFO before moving onto his new role.
Well, let's start with opening comments and then open up the last to take your question.
Before we start we'd like to remind everyone that certain statements about future. If that's made on the call are forward looking in nature and are based on certain assumptions and analysis made by the company.
Actual results could differ materially from the company's expectations due to various risks and uncertainty associated with our business. Please refer to the cautionary statement all forward looking information on slide two.
In today's discussion, we will be referring to various non-GAAP financial measures as noted on slide number three these measures are not to find financial measures. According to GAAP and do not have standardized meetings prescribed by gap and therefore are unlikely to be comparable to similar measures to use by other enterprises.
These measures are provided to compliment the GAAP measures, which are provided in the analysis with the company's results from management's perspective.
Reconciliations of these non-GAAP financial measures to their nearest GAAP measures can be found in our second quarter 2020, Mdna I'll now turn call over to Brian Fastenal for his remarks, starting on slide four.
Thanks, Randy and good morning, I'll start off with the highlights in the quarter.
Overall, our second quarter results were solid and were in line with our expectations with no material changes to our outlook, we're maintaining our financial guidance for 2020, there was announced at our Investor Day last December.
Consistent with our annual dividend growth guidance, we've increased the common share dividend by 6.8% to $2.05 per year, which represents the seventh consecutive annual increase the dividend increase is effective with the third quarter 2020 dividend.
We're also maintaining our dividend guidance for 70% annual increasing 2021 and 5% for 2022.
And we're making very good progress on our renewable and girls strategy, which I'll discuss shortly.
Finally, I'll comment on the changes and the alignment of the executive team. So were announced this morning.
The last couple of months, we've announced to renewable development projects in Alberta as shown on slide five.
This includes phase three of the Whitlow wind facility that will add 54 megawatts in late 2021.
And as expected capital cost at an expected capital cost of $92 million construction activities.
And discussions for renewable off take agreements with commercial and industrial customers oral kareena concurrently for with lot of 203 once all three phases of the when well when facility are completed at the end of 2021, it will be Alberta, its largest wind facility with 300 and.
53 megawatts of generation capacity.
Today, we are announcing our first solar development project in Canada that Strathmore solar projects that'll add 40.5 megawatts in early 2022.
Then expected capital cost $50 million to $55 million, we expect a portion of the output to be sold at a renewable offtake contracts you average annual adjusted EBITDA and therefore.
For the Strathmore solar are expected to be approximately 5 million over the first five years.
Slide six shows their realigned capital power executive I'll take a moment to introduce you to the new executives and comment on the significant other realignment.
On the far left we advocate Chisholm will continue into the role of cheap sustainability off that's there and we are adding planning to her responsibilities, we felt that our strategic planning needs to evolve to have more of an E.S.G. lands.
Next is Brian Denise who returned to the commercial business development girl.
Brian.
Has modified the structure to focus more clearly and efficiently on the commercial and growth initiatives.
Sandra Hopkins is promoted to senior Vice President Finance, and Chief Financial Officer, who in an 18 year history with US that's held all the major senior positions in the CFO area, including a recent condition of vice President and Treasurer.
Many of you have met Sandra in the past actually is often pinch hitting for Brian or try and investor meetings.
Fiscal package promoted to senior Vice President and Chief Legal Officer, Chief Chris joined US as the lawyer in the U.S. 12 years ago, but for the last five years, it's headed up or U.S. commercial and business development activities.
In addition to the commercial sense, Chris will bring to his new role. He will also bring us by U.S. perspective to our executive table.
Jackie Poliniak adds culture, and information technology to our existing people or human resources responsibility.
Capital Power has an outstanding culture with excellent engagement as we move into the new world that were.
Maintaining our culture will be critical so highlighting it and aligning it but people it's very important.
Information systems will be increasingly important to lever our employees skill sets across the company.
During the truth in his role of senior Vice President operations Engineering, and construction will continue on changed.
For the past few months, we've drilled down into the organization to develop a more efficient and effective hawaiianmiles, which has resulted in over 20 changes in roles and responsibilities and then that reduction of over 12 positions.
This positions the organization very well for the coming years I'll now turn the call over to Brian Denise.
Thanks, Brian.
I'll review the financial highlights starting on slide seven.
Overall, the second quarter financial results were in line with our expectations.
Trading desks captured at an average realized power price $53 per megawatt hour in the second quarter that was 77% higher than the average price up $30 per megawatt hour.
The low power price in the second quarter reflected lower market demand from reduced oil <unk> gas production in the impact some cold like team.
And softer pricing from a stable baseload supply strong hydro and wind generation and moderate temperatures.
In the second quarter, we recorded 3 million for the estimated that liability because allied last real preceding that increased the overall provision to 18 million.
The provision was updated to reflect updated information from the ISO.
We expect the timing of the three invoice payments to begin in 2020 continue into the first half the 2021.
We have reinstated our dividend reinvestment plan, which was previously suspended in June 2015 to raise equity towards renewable development projects under construction.
With respect to our credit ratings, both DBRS and SMP I've now one from guard investment grade credit rating of the past few months.
On July 14th S&P affirmed our triple B low rating with a stable outlook, well DBRS affirmed our triple B low rating and stable outlook in their April 7th report.
Moving to slide eight revenues and other income in the second quarter were 435 million up 19% compared to second quarter of 2019.
Mainly due to the acquisition of go away in June of 2019.
Adjusted EBITDA was 217 million up 14% year over year that was largely driven by the acquisition of core weight and where doable additions.
Normalized hearing to 17 cents per share were up 21% compared to 14 cents per share in the second quarter of 2019.
We generated 97 billion if that full that was 14% higher than the 85 billion in the second quarter of last year.
Good day, a thoughtful per share was 92 cents up 12% from the second quarter 2019.
[noise] slide nine shows our financial performance in the first half the year compared to the same period in 2019.
Revenues in other income were 968 million up 27% year over year.
These are the acquisition of go away and strong portfolio optimization revenues.
Adjusted EBITDA was 451 million.
15% compared to 2019.
Nearly due to the acquisition of go away and renewable addition, boxboard Cardinal point as well with.
Normalized earnings of 44 cents per share were unchanged from a year ago, we continue to generate strong CFO, including 215 billion in the first six months that was up 6% year over year.
At the full per share with $2 of course, that's up 4% from the same period in 2018.
Turning to slide Ted I'll provide an update on her commercial portfolio positions.
For the remainder of 2020 are Baseload generation is substantially hedged.
At the end of June were 10% hedged for 2021 at an average contract price in the high $50 per megawatt outreach, we expect liquidity to increase during the remainder of this year that will facilitate increased hedging for 2021.
For 2022 in 2023 were 16% at 11% hedged at an average contract price into low $50 per megawatt hour rage for both years current forward prices are below $50 per megawatt hour for 2001 to 2023.
I'll now turn the call back to bright.
Brian you might be on mute.
Thanks, Brian Thanks, Randy I'll review, our six months performance versus our 2020 annual targets as shown on slide 11.
The average facility availability in the first six months is 92% compared to that 93% annual target.
With most of our planned major outages already completed in the first half a year and with a deferral of the Genesee two planned outage and 220 21, we expect the average availability to be slightly above our target for 2020.
Sustaining capex were 34 million in the first half of the here with the deferral. Other genotype two outage, we expect sustaining capex will be below that 90 to 100 million dollar annual target.
We recorded 451 million in adjusted EBITDA in the first half of the here versus the 935 million that 985 million target based on our current forecast, we expect a full year adjusted EBIT the EBITDA to be above the midpoint of the range.
We generated 215 million of half that fall in the first six months compared to 500 million to 550 million target range. We are on track to be near the midpoint of the FFO range, excluding the impacts of the line loss will exceed it.
Slide 12 outlines our development and construction targets for 2020. This includes the construction of to win projects. We completed our Cardinal wind project on schedule in March and within the U.S. dollar budget range. Following the start of the commercial operations, we received 221 million.
And that tax equity financing from to U.S. financial institutions.
Cardinal point has now operating under a 12 year PPA for 85% of its output.
The other wind project under construction is whitlock too, which is currently tracking on budget and on schedule for commercial operations in the first quarter of 2021.
Moving to slide 13, we haven't annual target of 500 million how committed capital for growth.
That's far this year, we've committed approximately 330 million for growth.
This includes the acquisition a buck for and win in Texas, but a 15 year weighted average contract life remaining life into renewable development projects in Alberta Whitlow when three in the Strathmore solar projects that I mentioned earlier.
In summary, strong quarter and year to date operations.
And results are very good construction has gone very well and growth in renewables. Likewise has been very good thus far this year.
Now turn the call back over to Randy.
Alright, Thanks, Brian Karl we're ready to start that question answer session.
Certainly sir.
We will now begin to question answer session did join the question Q You May Press Star then one and your telephone keypad.
You will hear its own acknowledging your request.
If you're using a speakerphone please pick up your handset before passing any key.
It was a draw your question. Please press Star then too.
First question comes from Maurice Choi from RBC capital markets. Please go ahead.
Thank you and good morning. My first question is on the <unk> you discuss your thought process on how you came about this decision to reinstate.
The program recognizing of course that S&P with your from your Triple B minus rating.
As well could you discuss a your expectations as to what does it take up of this or how much equity you would expect to raise over the next 12 months.
Yes.
You know we looked at reinstating the trapped in the context of our ongoing development activity. We have so as Brian mentioned what lot two and three are currently under construction and we've now added.
Strathmore solar so in terms of that build out over the next year.
Oh, you know, we're going to be looking to finance that but we also believe there's.
A number of potential opportunities out there that could be a good fit for capital power strategically.
So given the volatility of the markets. We felt it would be prudent to a utilized drip is a way to access some equity financing over that period.
We anticipate to about a 30% job participation rate a in it which would.
Generate about 16 million of equity per quarter. So we don't see it as being a hugely dilutive, but it does give us.
Access to that equity sort of on a measured basis in what is a fairly call will tell period.
And just a follow up to that as you mentioned volatile period and I assume that one of those.
Items, Syncrude, where the Alberta power price.
It's at the moment.
Should we see a recovery of that market should we then.
Automatically assume that the trip would be turned off or is this a longer term and almost permanent feature of your.
Sources of funding.
You know.
Yes, the answer to that I think it's largely driven by.
The nature of the growth opportunities, we see that become available over the next.
12 to 18 months.
No we're not gonna grow for grow sake, they have to fit with us strategically it meet our financial objectives.
But again you know we feel there will be a number of opportunities out there we are pursuing that number of thought development opportunities.
That you know will require a potentially.
A higher financing than we've experienced previously to extent, we exceed our typical growth target. So.
But to your coins asked if we see I'm a strong recovery in Alberta prices, which is what our expectations are.
You know certainly that will generate a materially more cash flow. It we would reevaluate the drip at that point in time.
Thanks, and my second question, then and this relates to obviously gross initiatives that you have a very quick succession of witless, three and Strathmore sold our announcements alongside a matter of renewable project by way of Bucks or.
Assists I suppose a trend that we should be looking at and tens of what's in your pipeline.
Obviously high contracted percentage for for EBITDA purposes, but also predominantly renewable energy.
And the mixture of a U.S. and Alberta, specifically.
So yeah, yeah yeah.
Yeah.
Well in respect of Ah the gross a nice initiatives that we've been successful. This year I would say that is indicative of our development pipeline, we are finding that through.
Increasing search for effect sites.
And efficient development sites are we've been fairly successful over the over the last a year or so and we do anticipate that you can expect more.
And on the development side in terms of a renewable projects in both Canada and the United States.
So again the this isn't indicative of what you can expect over the next little while we have found that we are tending to be increasingly competitive in the market in terms of delivering oh relatively low cost.
Megawatt hour.
<unk>.
Does that mean that thermo generation beyond obviously, you what you currently have in your portfolio thermal generation is.
Hello, and pecking order if not entirely off.
No no I wouldn't say that I mean, it's a lot of it is dependent upon you know the results or the up the opportunities that we see in front of ourselves you know through the pandemic a lot of the development activities have can continue whereas the number of opportunities too.
Acquire midlife natural gas assets decline temporarily fairly significantly so a lot of it is is dependent upon the the opportunities we see in trend.
Having said that our general preference.
He is to build or develop build renewable projects.
That makes sense. Thank you very much.
Thank you.
The next question comes from David Cassata from Raymond James. Please go ahead.
Thanks morning, everyone. My first question here I, just a follow up on Strathmore.
I'm wondering if there's any color you could provide them on the percentage of capacity that you'll look to to contract there.
And and wondering if there's any potential for you to include Strathmore in contracting discussions on the west La projects that you're looking to find an off taker for right now and as the combination of those the generation profile those assets to that that bucket and I haven't you could persist.
So with those a with the projects you know there's a there's a number of opportunities emerging and you know Alberta.
For a longer term contracts or with the cnine customers and they are all over the math in terms of time period in terms of some of them want both wind and solar some just want when someone just want solar.
And though we believe our projects are competitive and what we've seen in the market confirms that we have no target percentage on either of these projects.
Or or I guess, the three wed love to three and and Strathmore solar.
We have proceeded with those projects based on them meeting or the hurdle rates for merchant generation in the province, we felt that it needed to meet that standard so that we were comfortable with.
Then pursuing a.
Contract that opportunities around them. So again, we'll see what percentage, we can get contracted on those facilities, but Ah you know and.
Again, we seem to be pretty competitive in the market right now and but again, we have no specific target as to how much we want to add to a two a hub.
Ah contracted with obviously like them all to be 100% contract and then we'll see a where we get too.
Okay, great. Thank you that's helpful. And then just maybe one more for me.
Please go ahead.
[noise] [noise] [noise] research RV. Your line is my please go ahead Sir.
Sorry head to head business that I couldn't hear that.
Maybe just a Brian Badger begins to come back to the management.
Shuffle, and just talk a little bit about how that shapes. Your view on capital allocation asset mix and maybe just kind of elaborate a bit more on on his or her.
You know when you then for for where a couple of pires going in terms of top appointment.
So in terms of capital deployment the.
Realignment in terms of our executive responsibilities I don't believe he was impacted by a forward view of capital deployment, certainly Oh with Oh stronger focus on T.S.G. and our commitment to know the various areas Uh huh.
Yes G.
Does result in time, you know some influence towards greater renewables lower emissions profile, whether that be true carbon capture and storage or.
More carbon conversion or renewables they'll certainly we expect some growing a direction from that perspective and again, that's why we've you know reinforce that area and in fact, given it significantly more focus in the organization, but it doesn't it's not worth.
Like that or a more immediate change in terms of capital allocation.
What it does signal, though is that you know we believe that we will be more efficient and effective as we go for it of course, we believe we were so again very efficient and effective historically, but we think this will take us to a higher level.
Given that they natural alignment between the areas and greater focuses.
And Brian Deniers area. He was restructured and so that there is a very sort of laser focused.
Group looking at development and and acquisitions going forward and then another group that again is laser focused on the enhancing the value of existing assets as well as some development opportunities on the commercial side. So.
For example, one other things, though that it reflects an increase and focus on.
Origination.
And their pursuit of Cnine customers for an example, so it does have some implications, but it's a it's more of the focus and again enhancement in some areas that we think will results in greater performance as we move forward.
Okay.
And then you know there's been some reports out there that this cost guidance not her megawatt combined cycle plant might move forward and there's certainly some financing it you can't control what others do from adding new supply, but from your contacts what do you think this can mean for.
Power prices are at or the standard for best gas and implications for your own fleet.
So.
Certainly we thought.
We monitor the Alberta market very closely in terms of.
How new supply is progressing through the development process.
No.
We're we're we're confident in the Alberta market that.
That's the price signals there will will result in you know the most competitive generation being built.
But also that.
You will see other decisions made in terms of watch economical to do with some of the older generation in the province so.
We're in a much better place, where we're gonna see supply decisions being made on a commercial basis in response to what seem being built is as new facilities. So.
Not if Cascade does proceed we believe that'll have a follow on effect in terms of our decisions that are made up with some of the older generation, which will be further out as the market as a result to that and we'll see their utilization dropped dramatically. So very confident that the market will mean.
Pain, Oh, it appropriate supply demand balance and we'll continue to produce.
A proper price signals as we move forward.
Fair enough to say then on her comments are buying that you think where you sit on America West, Tennessee units, you're far enough away from whatever incremental or what kind of generation kind of market can be displaced by this facility. If it came online.
Yes, that's correct you know degeneracy units with the exception that Keephills three are the.
Youngest Ah Ah units in the fleet I believe moved to.
Dual fuel capability to dual fuel capability, which allows us to optimize around fuel cost between.
Natural gas and coal, but it's the age of the facility that is critical so they you know out of the a legacy fleet or they have the lowest heat rate in our most efficient and lowered its lowest in the stack. So I think gives you have new supply come on such as Cascade, That's gonna have implications for those.
As older units that are higher in the stack and we would see a modest impact on the utilization of.
Our geneseek facility.
Okay, and then coming back to the implementation of the drip and.
Prior common thing you guys could largely internally finance up to $500 million investments a year, you kind of put the strathmore and budget in a way for budgets together here does that are and then also putting any third party M&A aside it.
Can you exceed 500 million on an organic investment basis over the next 12 months from other development activity. As you guys have on the go here is that the return rather than on the rationale for the drip or is it. The fact, we think there will be some M&A coupled with an increased development activity.
Well certainly on the development side as Brian <unk>. The actual was mentioning where we're pursuing opportunities has a number fronted believe there's a high probability that we'll see some of those come to fruition, but also we are all.
So I'm looking at opportunities on the M&A side so.
Again, we believe over the next 12 to 18 months it will be fairly active on the growth side and the good chance that we could.
Exceed that 500 million target I'm, so a hands why were.
Taken those steps with the drip.
Okay and my last question is on Decatur, any update on status and timelines for maybe getting a new contract extension does.
You the do the protest has continued.
And I would say that what we would expect to come to conclusion, almost any day now.
Okay, all right well watch that that thanks, guys.
Thank you.
Once again, if you have a question. Please press Star then one on your telephone keypad now.
The next question comes from Patrick Kenny National Bank Financial Please go ahead.
Yeah, good morning, everybody and congrats to Sandra Brian and the rest of the team.
On Strathmore can you just remind us if the 40 megawatts is the ultimate capacity of the site or can you explore phase two phase three opportunities.
Depending on the level of interest in offtake contracts and.
Maybe the ultimate value of carbon credits and maybe you can confirm if there's any upside.
To that $5 million EBITDA guidance, if the carbon tax does go up to $50 a ton from 30 today.
So that the the 40 megawatt capacity pretty much takes a figure out though footprint at the site you know there may be opportunity for for a modest increase but.
Again that that generally is Ah Ah psych capacity.
In terms of.
And as a sort of look forward and the increasing potentially increasing in carbon tax et cetera, obviously, it's as the carbon tax goes up it it does create a bit of upside associated with a with the returns on that facility.
Okay, Yes, it sounds like you can grind down on that 10 times build multiple a little bits and.
I guess coming back to other questions around the drip.
It was with you guys trading at.
Let's say 70 times today I mean.
Do you expect your future growth opportunities that you're going after two you know to bring down that weighted average capital deployment multiple more towards.
Where you're trading or is the strategy simply too you know absorber modest level of dilution today as you said.
In exchange for accelerating the business mix more towards renewables.
And the hope that you know the market will rewrite your evaluation.
Up towards your build multiple.
[noise], Yeah, certainly it's a it's a combination of those factors that you've mentioned patch.
To extent Oh, we have been focused on contracted opportunities and development opportunities you know one of the things we demonstrated.
Over the last Ah Ah five years or or even longer is our ability to bring in development project.
Below budget target budget and and at times it up I bring them on early relative to schedule. So that's a that's a value add that we typically bring to the table and results on those projects that are lifts. The economics. The other thing is is a yeah, we see that benefit sub.
ER, increasing contracting percent engine and increased diversification that you know will increase our trading multiple in the market and will ultimately get realized two out through a higher share price. So you know that that is the effect, we're looking for as as we do.
Or add more contracted or opportunities to our portfolio.
Okay got it.
And just last question for me guys I see the decommissioning provision is up another 30 million or so since the end of March looks like 100 million.
445 million from year end levels.
Couple 355 can you just confirm how much of that increase is related to say an uptick on the obligations related to the coal mine.
Versus just simply adding new assets to the portfolio.
Yeah Boateng 6 million of that is is a result at the addition of the the buckthorn facility earlier this year. The the balance of it is really driven by a lower discount rates as a result at the low interest rate environment. So just a.
Increasing those future obligations.
When you discount.
Yeah, right, Okay that makes sense. Thanks Brent.
Thank you.
The next question comes from Andy Husky from Credit Suisse.
Go ahead Sir.
Thanks, Good morning.
Question as it relates to any of the current environment, where I'm going to covert 19, and just the impact of pad on demand curves by multiple markets, but just to the question is really focused on.
There been any fundamental change to your outlook in Alberta his own power market transition was regarded appears into a more competitive market.
And then the second part of the question really relates to.
Contracting facilities God.
More outside of Alberta, and I know you mentioned earlier on about the cater maybe coming within a few days, but has anything really structurally changed on that side of it to the current environment.
Yeah. So you know.
In terms of or the impact of demand in Alberta.
We we have seen that's a kit.
The the Highpoint demand destruction and certainly we're starting to see that come back now as the province reopens.
There is some that demand just structure courses is related to the oil and gas industry, a that may take a little bit longer to come back.
But I think are a key element here is like you were saying Andrew is.
<unk>, how the market will function a once we have the full expiry the PPS at the end of this year. So.
Certainly.
For those of you little bit watching the Alberta market over the last several days.
We've had a fairly high temperatures in the province, and a very strong pricing and you know and I think that.
That is what you can see is as the market working providing signals that.
There's a shortage and supply there's some D rates and that is a dynamic we would expect will continue I into 2021, and we'll get a amplified it's as the lastly, the P.P.S. expire at the end of this year. So.
You know that is one of the key reasons why we view 2021 on a more bullish perspective, then then worker forward you're trading.
Okay, that's great and I guess, that's also I'm not not as a job, but that's fairly high weather and pile how high degrees by our Alberta standards.
[laughter] [noise].
So I I guess, what sort of a alberta as it relates to Alberta, I mean that explains why you're just so open on your contracted position and commercial portfolio.
That's right now you know we've seen.
If you go back I think about 12 months ago, Oh, we saw fair fairly low prices like a sub fiftys in 2021 and [noise].
There was a very large gap between our views on 2021, where forwards where so that that was a factor in decisions, we're making on selling forward. So fortunately we've seen a those prices.
Recover back into the 50, so certainly not not the same degree of a gap that we saw so as we expect a as liquidity improves and build through the year that'll put upward further upward pricing on 2021 and create additional opportunity self forward.
Okay, that's great greatly appreciate it.
Thank you.
The next question comes from John moved from TD Securities.
Please go ahead.
Good morning, I'd like to go back to mid life gas acquisitions on you know we've all seen the Joe Biden is proposing a carbon emission free electricity system by 2035 and that doesn't include support for carbon capture and utilization technology, but I'm wondering how this potential politician policy shifts informs how you look at potential middle.
Life gas acquisitions in the U.S.
So certainly we're watching fairly closely and again a lot of that is dependent on.
You know the specific asset and the specific market I would say you know a broad sweeping drive in the U.S.
Politically driven through going incentives or can have an impact on some markets are very significantly in other cases.
You know, it's where you don't have a natural renewable base, where you where you are dependent on natural gas for no specific types of service to either the grid or you know time of day, Oh, we expect that you know those assets will.
Well definitely have prevailing life and if you look at 2035 and you know one other reasons why we're looking at mid life assets. It's simply because we don't see that you know that the timeframe will would you know without things such as carbon capture and utilization, we don't see a life.
Well well beyond 2030 fiber 2050, or so that's again why we are focused on you know mid life.
Natural gas half that in specific markets and with specific characteristics. So again, a those policies can have in the impact of a natural gas fleet.
We don't believe that it would have material impact on the assets that we have nor the kinds of assets that when we look at.
Okay, and then maybe moving along on that utilization front I don't think I saw anything updating us in the report on C. CNT and its progress is the expected one quarter delay, but you articulated I mean Q1.
Called resulting from Cowen 19, still consistent with your expectations there.
Ah, yes, yes, I mean, it might slip another month or so but.
The professor Licked and his team are back on site.
They're moving forward a with the ramping up of the manufacture of of carbon attitude that at a higher scale and that's well in progress work is continuing to develop the appropriate carbon managed to ban medium or associated with the.
ER cement business or concrete business. So you know everything is sort of back on track or getting back on track.
But again, it and it will be up three or four months delay relative to our initial expectations.
Okay. Thanks, and maybe just one last thing on the East Windsor steam contract I appreciate that P. doesnt expire until the end of the decade are there any opportunities on the Cogen front for that facility given the the contract for Dean expired in Q2.
[noise] Oh, we don't look go ahead right.
Yeah, No I would say I've said it goes going to stay the same thing Hubert Brian Yeah.
Probably not a alternative suddenly cogen side so.
But we are looking at other which is due to optimize the operation that facility.
Okay, Great I'll leave it there thank you very much.
Thank you.
The next question comes from Nahi Beijing from industrial align Securities. Please go ahead.
[noise] Hi, good morning, just one question on renewable power projects.
Historically, you've been focused more on on the when side of things now when the stock more project them.
Your earlier comment on maybe accelerating investments in renewables can you give us any detailed on what your solar pipeline looks like today and what are the opportunities that you're pursuing and the solar space or you will be pursuing in that space going forward.
[noise] so on the solar side, we've been cautious you know I think as we've been commenting for the last.
18 months or actually longer or we do see that that solar is obviously a very significant.
Source of energy in North America, and increasingly so and you know we've we felt that we needed to be part of a that development. So we have been slowly or trying to develop the expertise become competitive both in terms of.
You know and construction processes and our approach to a putting projects together.
And so as it sits today, obviously, we're moving forward with Strathmore, which in the Alberta contacts is a very competitive we've participated in some activities in that in the U.S. and no. We're feeling that the we are definitely moving forward and there will be competitive in the U.S. as well.
So.
We don't have a large pipeline of renewable projects again simply because you know we thought we'd make sure that we were competitive.
And although our pipeline is growing and certainly isn't as robust today as it is on the wind side, but it will grow and says we prove our competitiveness Oh, we will be significantly expanding a pipeline that game simply we didn't want to get out over our skis before weve proven or so.
He said, though we were competitive.
Thank you if a detailed [noise].
Thank you.
This concludes the question answer session I.
I'd now like to turn the conference back over to Mr., Randy Mall for any closing remarks.
Thank you Carl if there are no more questions. We will conclude our conference call. Thanks again for joining US this morning and for your interest in capital power have a good day everyone.
Thank you Sir.
This concludes today's conference call you may disconnect. Your lines. Thank you for participating and have a pleasant thing.
[music].