Q2 2020 Innergex Renewable Energy Inc Earnings Call
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Our speakers to they wouldn't be self Watson, Chief Financial Officer, who will present Q2 results and this I'm sure that that he president and Chief Executive Officer will need your personal or life, and or Q3 priorities and I'll turn the conference over to Mr., though.
Thank you got him Hello, everyone.
The recent commissioning in the wind and solar segment contributed to increase result, this quarter compared to the same period last year. Despite the curtailment imposed by beside drove in D. I drink segment.
Production and read the news pulled the three month period ended June Thirtyth, 2020 were up 25% and 4%, respectively and adjusted EBITDA was stable at 105 million compared to last year.
Production proportionate revenue proportionate and I, just said he'd be de proportionate were up by 29 at 21, nine and 10% respectively.
Before going further I'd like to stress that 2019 figures are still reported on a continued operation basis, which exclude HSR.
On page eight production for the three month period ended June 30 it.
It was 25% are your due mainly to their contribution of the Port City wind farm and the Phebe solar facility, which were commissioned respectively. On September 27, and November 19 2019.
It was also driven by higher production from the cubic wind facilities and I drove facilities NBC that were not affected by the curtailment imposed by BC hydro, which impacted five consolidated facilities.
Partially offsetting told on increased production.
On page nine revenues were up 4% and the increase is mainly due to the commissioning of the port City and Phebe Fat City D.
Higher revenues at the Qubec wind facilities and two D. acquisition of the Salvador Solar farm in Chile on May 14, 2020.
These I'd done were partly offset by lower revenues from the hydro facilities NBC, primarily due to the beside drew curtailment, along with lower average selling price that some facilities as well as lower revenues at some qubec hydro facilities and friends wind farm.
[music].
Our next page adjusted EBIT da remain stable compared to the same quarter last year, mainly due to higher revenues and lower operational expenses.
At the cubic when capacities, the commissioning of Phoebe and Ford City.
Higher contribution from the Ontario sort of precedent t. and thought about acquisition.
However, these I'd tell him were offset almost exclusively by the BC hydro curtailment.
The 10% increase in adjusted EBIT da proportionate compared to the same quarter last year is mainly driven by the Ptcs generated by Ford City. Following its commissioning in September and a higher contribution from Dokey to a bubble holes and the Chilean facility.
It was partly offset by a lower contribution from the flat up and Shannon and Jimmy Creek facilities, which in this case was also impacted by Dickerson [noise].
Continuing on page 12.
The 278 million decrease in long term debt is mainly due to a net trended a 9 million repayment of the corporate credit facility from the proceeds of idle can make private placement and then objects common shares.
This high then was partly offset by drawing related to the handcrafts construction and other cash requirements.
On the next page change and total assets.
Mainly from the increase in property plant and equipment attributable mainly to his Chris and thought about all acquisition.
Change in total liabilities then from the decrease in long term.
The change in shoulder equity is explained by a drill cubic private placement up 34.6 million shares partly offset by dividend declared on common then prop and preferred chair.
As shown on the next slide the free cash flow available for distribution of 74 million represent a decrease of 41.9 million when comparing the current trading 12 month to the same period a year ago.
The unfavorable free cash flow variances due mainly to the lost in free cash flow attributable to it just took off including the recovery of maintenance capital expenditure and unfavorable impact from the BC hydro impose curtailment the timing of certain project loan interest payments, which resulted in the.
Corporation that being made five quarterly payments during the trailing four quarters and a lower generation due to unfavorable weather condition.
These items were partially offset by the pre cash flow contribution of recently commissioned project and lower interest payment on the corporate revolving facilities concurrent with the hydro Qubec private placement.
Combined with these items higher dividend from Q1 in Q2, following hydro Qubec private placement has increased the payout ratio to 150%.
Now that being said, let me bring you to page 15.
We have normalized the payout ratio far better appreciation of our run rate capacity.
Starting from the reported 74 million free cash flow and the 150%.
And when taking into account the 11 million from BC Hydro curtailment detour team million due to timing of interest payments, the 5 million decrease in corporate revolving facilities interest payments.
And the 13 million in additional dividend payment.
Normalized free cash flow and payout ratio would have respectively reach 93 million and 105%.
Furthermore, on a forward looking basis when considering.
A full year contribution of our two recently announced acquisition and the contribution of the Hillcrest project.
The nonrecurring curtailment imposed by BC hydro the timing of interest payments the production at 100% of LT levels.
Market softening assumption and the additional dividend.
Free cash flow would reach 128 million tough, bringing the payout ratio just below 100% in the next 12 month estimate.
Moreover, this forecast does not take into consideration Griffin trail or any other potential acquisition that could be achieved with the remaining unused proceeds of d. I do get back private placement.
In conclusion, considering our current outlook and the additional cash generating capacity to be derived from our growth strategy, which combine acquisition and project development. We are confident to attain a payout ratio of under 100% in the near future.
On that note I will give the floor to Michel unfold the operational review of the past water well. Thank you very much.
I was on Francois.
First and foremost I'd like to thank all our employees for their dedication during this crisis I'm very very proud of.
All the team we've been very busy.
And as a possible I mentioned we.
We did they the acquisition and we are advancing the.
If laufman portfolio.
Very well so I think that are in the context Cove in 19.
Our team did a fantastic job and then last a few months.
And as a corporation without even the color coded 19, and I'm very excited though on the development side and the acquisition execution. So just to coming back on the company 19 as you know we have been managing our asset.
On on a different aspects in a sense that we have our health and safety in mind for our employees, we're still working from a from a distance from home.
For the time being everything works very well, that's a little bit challenging in the says that we are welcoming new employees as we grow and this.
This is a little bit of.
Well the challenge of course, but we are adapting our.
Leadership style to take into consideration. This all this new.
Reality that we all phase.
Now for the acquisition side, you have seen the acquisition of the sounds let art the solar plant in Chile.
We are we're very happy to have been able to complete it. This acquisition mind you that a jump on US. We mentioned, we have a add a little bit of a delay in the execution of those acquisition that were announced after the investment of hydro, Quebec, but I think we were a little bit costs.
Just using the prices.
And we took our time to assess the situation and in this case, we were able also to renegotiate a little bit the.
Acquisition price. So all is always the best and we maintain our power would say, we're prudent approach of deploying the our liquidity.
And that's why also we will be talking also with month inherit the wind farm that we just bought in Idaho. So those those two acquisition are part of our strategy to balance the the cash flows alfonse west has been talking about the payout ratio.
We're mindful that we have to bring the payout ratio below a 100% and into a better sustainable.
That level. Thanks.
And and the one of the strategy that we want to do and I mentioned at the few times is to use M&A as a tool to rebalance.
Our cash flow because we are very successful im proud to.
The report and then I'll explain little bit the advancement, we've done in the into development sector. So I think we can create a lot of value for our shareholder going forward in our own Greenfield development projects and a in order to help also.
The cash on cash and the earlier cash flow.
Contribution we will be using M&A as a focused the tools to help rebalance our portfolio and sounds about all in on generic ARQ <unk>. Two. Good example of what we want to do and of course, we our team is focused to deliver on that strategy.
So construction activities is also very important and as you know we have a few project under construction and the biggest one is the hill crest and we have started the construction in the middle of the crisis or last January a beginning of February.
Very proud again of the team that we have we have been able to manage and advanced the the construction.
Almost asked plan. So we have perhaps for four weeks of delay or that we intend to catch up with having little bit more personal on on the ground as of.
Today, we have a just over two or 320.
Workers on site and the plan is to bring.
These this number to about 400 by the end of demand and so we're very confident that we'll be able to achieve the few the date by the end of the year again so.
Pretty pretty proud of what we have been doing over there given the coated prices.
And the good surprise the economic Hydro project last time I was talking to you we were.
Not so optimistic of being able to go in the north of Quebec.
Given this sensitivity of these village too.
To a potential.
I don't think nation with Covey 19, but.
The local government.
We're looking into having some economic activities and we found that a good.
Compromise on security in health and economic developments so.
Construction restart in early July and so we will be able to meet the CD the or the.
Original acuity so.
Be to report on this as well.
He on two wind project.
Is that advancing very very fast.
We're hoping to be in fueled by the end of the year old. So it's a it's a small project, but I would say that it's a first a giant step for us in France, because it's the first a.
Greenfield project that the team has put together and its differs of an awfully many France, France is a priority for us we're growing our team over there in terms of did laufman.
We are seeing the European Commission.
Putting a lot of of their strategy to restart the economy towards a green economy.
So we're quite.
Happy to put little bit more effort in France, and our pipeline is is growing and hopefully like I said, a young is only the first.
The first step toward the putting more project out of our Greenfield pipeline front.
From an order a completely.
Different a part of the world we've been very active in not why very happy to report that we've been shortlisted on two.
New project 15 in a 20 megawatt coupled with the batteries for 60, an 80 megawatt hour battery. So this is the we now have four projects under development in Hawaii.
Pretty happy on on that aspect because as you know this is the sector that we wanted this law.
And we won't have a more project being developed in this type of approach with storage and we also happy to report that we won the project.
Nine megawatt hour battery storage only in France that project is call today.
It's interesting in a sense that it's our first.
Investment in storage only.
Again, hopefully not the the first but we will be.
Successful in the future developing more of those type of projects, especially.
With our alliance with Hydro, Quebec as you know how to go back has.
Very good battery and they want to deploy that bathree around the world and we will be trying to team up with Dan and be successful in promoting.
Those storage projects around the world So a ton there's differs.
Interesting project, we won some we won into an RFP any will be installed in our E. On facility. So it's just an extension of our existing substation, so pretty pretty exciting about this project not because it's a it's a big project, but because it's a first of a new segment of business that we want to deploy.
Okay.
And perhaps one of the surprise the that we came up and.
I would tell you that the it was not a surprise for us because we knew about refund trail, but we've been given the very nice gift by the treasury of the U.S. government when the extended the tax the PTC.
In the U.S. Griffin Trail has had some work done in the past and we were able to.
I remind you that the PTC in the U.S.
Are starting to be about 2.5 cents.
And it has an escalation and it's good for 10 years. So although this.
Project will be starting to be merchant.
I consider that receiving for a period of at least 10 years, a 2.5 cents us.
Per kilowatt hour produce.
Coming from indirectly Huish surgery is in a form of that PA remind you that in Quebec in Saskatchewan in Alberta project were one and in that 33 cents 3.5 cents.
Per kilowatt hour and people were happy to receive that sold 2.5 cents you Wes is almost the equivalent and we haven't inflator there also.
We will be selling electricity in the spot market in their call, even though we're seeing a weak market. These days because of the call it the demanding or call. It has come.
Come down by about 5%, which is not.
Offset.
Compared to other markets, Quebec is the in that range and BC hydro is in that range as well so no specific.
Really downturn in ERCOT other than the it's a full merchant market so it might react.
Differently than than another market, but just to give you a little bit of and I'd why we changed its a this approach is the fact that a as an example forest city, we have signed a PPA for 18 $18 per megawatt hour or 1.8 cents per kilowatt hour. So this is the the rate of pp that we're seeing inner core.
And of course, you don't get to have the potential update.
Ups upside when the market the are peaking or even when the.
The future.
Market would.
We'd be better in generic off.
It's a those PPH are nice.
But again I think that going merchant is giving us quite a bit of upside and we still have the option to sign a PPA if a good good offer come across our.
Our board so I'm very happy on on on that aspect in the sense it.
It's a project that we're in our pipeline, but we're basically on highs and having this gift from the U.S treasury enable us to on wind. This this value that was it didnt in our pipeline into team did a fantastic job because of course, a lot of people got weak tough.
By this.
Extension of PTC. So we were able to seek your same good team that works going forward, we have secure Gi and blattner.
For the Houston of this project can we're very confident that this project will be in few the by Q3 2021, we're finalizing the.
Tax equity term short term sheet as we speak so pretty a pretty enthusiast about this project that basically is unlocking some some value that was it in in our pipeline.
Also on finishing with mountain Air acquisition in the high that whole with we just announced a.
Few weeks ago. So again the same same I'd there is that a good quality project that will help rebalanced the cash flow of the company.
It's not the change of mentality in their Jack's we are a long term investor.
But this is our way to mitigate the fact that we are paying a dividend and we are growing company. So we have to do you have a tools to rebalance the the distribution of the cash flow and a this is one way to do it and we're quite a quite happy on on the.
Acquisition and like I said the team is focused on the M&A team is focused on finding.
These type of as much as it was of acquisition and near near time.
Chile is also quite active we're seeing some good deal flow and perhaps we will be able to do some some other acquisition like Salvador, So I'm pretty a pretty upbeat in a sense that we've been doing a lot of activities a lot of construction and a lot of.
They've laufman.
Witter was not on our side and this quarter and be Seattle was not agree.
Friendly to lower cost, but of course, we are like I said in the past the fighting back and we will defend our rights against BC Hydro for de Spa.
Very confident that we'll we'll succeed in defending our rights under the Spa.
But other than that pretty very very proud again on my team and I. Thank all the energy Exteme for.
This great success in the last few months given the club in 19, China and show on that would open the floor.
Thank you ladies and gentlemen, if you have a question. Please press star followed by the number one on your Touchtone phone.
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Your first question comes from David that asked from Raymond James Your line is open.
Thanks, Good morning, everyone.
Good morning, My first question here just on the.
Curtailments of BC Hydro I believe when the news first came out there was a 20 million expected revenue hit and I think you saw 11 million in in the current quarter or in Twoq should we expect the balance of that to fall in Threeq, you or or has something changed there potentially no no you're right. It's just the fact that we.
The containment was effective until July 2000, yes. So we will see is still at 20 days of July being being under control.
And then still around 20 million yes.
Okay, great. Thank you and then maybe maybe just a question on your on your U.S. development pipeline.
I know that I think last call, we mentioned or color you mentioned a couple of the solar projects in PJM in Ohio.
Megawatts, but you are trying to.
Get more Atlanta, and potentially increase the size of those I'm wondering if you have any update there.
Yes, I'm, sorry, I didn't mention it.
At the team is also quite active there we.
We are expanding on the land a we're just cautious on the on starting project for 2021 into you, which given the fact that those with benefits from ITC, an ITC is a little bit different than PTC in a sense it.
You get the benefit the tax advantage on the year. The project is putting few D and perhaps some tax equity provider might be a little bit more nervous in 2021, given the fact of the state of the economy. So we're cautious on.
On putting solar in 2021.
Hence we're happy to have now Griffin trail being developed for 2021 and this is at PTC. So less of a concern is a sense that.
The tax pro tax equity provider half 10 years to take advantage of those tax equity.
Credit.
No. The team is very active we're also.
Opening up.
A good development platform in the northwest of the you Wes.
A lot of.
Of these area have.
I have to develop some aggressive.
Policy towards having more reasonable in their portfolio. So we're getting ready also to answer some RFP that read.
Region of the states as well.
Excellent. Thank you very much I'll get back into queue. Thank you.
Thank you.
Your next question comes from Nelson Ng from RBC capital markets. Your line is open.
Great. Thanks, just my first question relates to Gryphon, so in terms of.
I'm going.
Merchants, thanks, what what's your.
Are you also assuming that you're obviously you had to decide whether you want to hedge or go merchant and you have various kind of ex return expectations.
From your perspective.
What is the the return premium for merchant versus versus hedging.
Well, it's very difficult to.
To answer that in a sense that the this is driven a lot by a future price of electricity and you could have a few a few curve.
We're quite comps conservative when we're proposing these project to our board were taking with wood Mackenzie without Carbone has the kind of a reference. So this is probably one of the most conservative curve in Oh, there and we're basing our decision financial decision on.
That but I'll give you little bit of a have a very very.
General and rough numbers, the project will probably be cost around 280 million dollar roughly.
PTC just the PTC, we were going to get something around $21 million to $22 million of PTC as a run rate and I'm not thinking into the inflation in a in in a in consideration.
And of course.
We expect a to invest something around 110, one under then.
16.
Million dollars, our share of liquidity the rest will be a tax equity.
We expect to have something around a $10 million of distribution from a from that project.
In different ways.
Ways, we were going to half Paygo, where we're going to whole so have.
Some some some some revenue from a us the spot price, but I think that.
We are looking into something around 8% to 10% cash on cash and for a tactic with the deal.
This is not bad and we've seen a lot of older bigger player doing just that in and walking away from very cheap pp aid that was basically flat or levelize for 10 years 12 years.
At a range of 15 to $18 per megawatt hour. That's what we're seeing now in the market that's what we're getting from.
Merchant portion of CB and Ford and so it's hard to think that the market will be a lot lower than these range.
Even considering the closer to 19 situation in Texas.
So I think that we keep the upside.
Going forward so even if.
If there were to be some carbon.
Introduce the tax introduce or limitation, introducing in United States I think that a these type of project, we will see a very good upside and we'll see also with the.
U.S. election in November is the Democratic Bidens get in I think that a U.S. a investment will benefit Green Green energy will benefit from a from a his election and if trump stays in the in there it cannot be worse than what do we have seen it'll hatch for you here. So.
We're still very positive both our investment in U.S.
Okay. That's good color and then in terms of raising tax equity does tax equity typically require hedges for projects or do you think they become more comfortable with unhedged.
Well the were requiring it then and we I think at a given the fact that we have now delivered good project in time and in budget.
That was helping also so we have some good relationship with some few tax equity provider that.
We have leveraging now and <unk> that are accepting the fact that you know checks can do that type of project. So.
It's a I think it's a it's a it's a great.
I would say outcome because the two years ago, we wouldn't probably we would not have been able to they'd love to project in this way enhance Ford City, we had to access at PPG of about $18 flat for 12 years.
So we were happy to have it at the time because it is unlock the tax equity, but I think that Griffin trail proposal is a better.
I want to make proposal for us going forward.
Okay.
And then just moving over to.
Mountain Air.
You guys mentioned that you only bought the one class of I think the class B shares.
Equity rather than the tax equity.
Given that the project is.
About eight or even half years old.
Is that once a expected flip date for for tax equity and what had and <unk>.
Yeah. It has already happened.
The flip so now it's a straight a partnership where metlife get the turn of the cash flow and we get to have.
68% of up to cash flow.
We do we may have some discussion in the future to acquired the remaining portion of that the project gets.
But it'll be a negotiation with metlife they don't have to sell we don't have to buy but Steve.
If we can find a this weve bought between the two of US we might execute on that as well.
Okay got it.
So there so metlife has already taken up most of the like the tax attributes has already been realized for that project is what you're saying, yes, yes. Okay.
Okay, and then one last question before I get back into queue I'm in terms of the French energy storage or battery project.
Yes, so you've got to contract for differences for seven years. So should we think of it as your EBITDA is gonna be.
Essentially fixed for seven years, and then I will be somewhat merchant.
Thereafter, and what should we think about.
How the merchant.
The cash flows are after seven years like if today's market.
Remains unchanged for seven years like like how do the cash flows look after seven year contract.
Well, that's that's a little bit part will it again it all depends on how the market than the penetration of our green energy and how would the north earlier would have fade away.
So it's a little bit hard to answer, but the guys that have a.
Put forward all those assumption like I said we.
We tend to be conservative on those assumption and if we if we own lock value in the future were happier.
I don't have to specific a number at year end 11 for Fourq, Tony or maybe we maybe I will tell us what can you give an update follow up on on that.
I don't have the exact number.
Sure thing that's good for now thanks Michelle.
Sure.
Your next question comes from Sean Stewart from TD Securities. Please go ahead.
Thank you good morning.
Two questions.
With respect to the BC curtailments can you give us an update on the arbitration process.
Expected timing of any resolution with BC hydro on that front.
We're not allowed to to talk about an arbitration with to according to our contract but the of course, we can say that we're in the dispute.
And the dispute is ER.
It's kind of take four months five months, maybe perhaps six months due to see TCPC. The the end of this this process.
Certainly less than a year, but but anywhere between four to eight months that would I would guess.
Okay.
And follow up question on Grissom Trail.
Can you give us some context on the interconnection for that project and we know that in North, Texas, there's been some congestion issues.
Any any details you can give on that project specifically well that project is this just a few.
Few miles south of for city, so enforce city, we haven't seen too much.
Problem with congestion.
Or coffee is always a funding to funny plays because you know he changed quite a bit but that region, that's not been hurt that much actually.
The plays that were quite bad is the north.
Wes the pen no less she as we all know looked forward to we had the experience of last year and it with the it was not bad <unk> I think it was.
And hence we're fairly positive the boat dislocation.
It's the wind or is not as attractive as the northwest.
But we know the regime of the when their books. We we had study a forward and we had some met massed in a in Gryphon drill is like I said, it slipped or worry about not even 100 Ks out of forward.
I can't remember exactly but I think it's 40 50 cave seldom forward. So we know the area pretty well and no were slightly positive both the those.
Congestion in that area.
Okay. That's all I have thanks Michelle.
Your next question comes from marked RV Fancy RBC capital markets. Please go ahead.
Good morning, everyone.
In the passengers and talk a little bit of though maybe changing your exposure, Texas over time selling down in our interests with another project in Gryphon trail any updated views on that.
And how you guys think about potentially optimizing exploit here in Texas and does the congestion issues. There are issues with the basis hedges I mean, you from doing in the near term.
Well, it's a very good question, we Oh I I definitely want to go and diversified into US just happened that we were well positioned in Texas and Griffin trade, which is a which just a very nice gift that we receive from the U.S Treasury you know, it's a it's hard to walk away.
Wave from a from a 100% PTC like I said, it's 2.5 cents per kilowatt hours for 10 years with inflator. So this will pay 70 be sinise, 70% to 75% of the project in the next 10 years.
I think that we will be looking to perhaps sell down a portion of the portfolio in their costs.
Is today, a bed to best the best timing to sell it probably not.
One way also to diminish <unk> to diminish the our exposure to air costs is to grow the rest of the business and Thats. What we are intended to do.
And we will be.
Opportunistic to basically divest the if we find that a good.
Hey, good price for our equity given the fact that perhaps or call. It has been seen as a weak market to given the recent.
Sibelius weakness in the spot market price, but it's a it's a place where there's a lot of growth and a high thing that having good assets that are fully amortized and be a should launch any so subsidized by the a treasury.
Are you as Treasury is not that you have on the portfolio basis meter.
Okay, and then on slide 16, when you talk about more of a normalized payout ratio, there's a line of though.
Market softening assumptions can you just airline and what that entails and what what you guys are expecting on flux 12 month. There you sure I think it's a little bit of a cautious in our number making sure that we you don't want to disappoint you guys.
We we have some exposure in Texas and to some degree in TV. So given the could be 19, a uncertainty. We we have put this this type of a buffer we don't know exactly what it is just we we did puts a little bit of a buffer in a in our calculation, but you're right.
Sure, it's mostly mark related to our exposure in the in or cost I would say for most of it and we have seen dotting. The result, you know what would the average price in Texas being a bit softer than a year ago when.
I'll leave you with the order to amend their.
Thats exactly.
The reason for being Conservative view.
And does that tougher than any expected losses on the basis hedge or all that you.
You know on on that side, I mean, the basis and all the basis.
[music].
Unfavorable variance, we used to out slow down over the last so the nodal price decrease but the I'll do the volatility on the basis have reduced as well so.
On that flip side, it's that's been positive like the business it would phebe.
Even created some value during the quarter. So we were happy about that so would we lose on the average nodal selling price day today because of.
Reduced demand but.
Terms of volatility and the business risk it has been reduce fortunately and the condition may have an impact as well on that mark.
Okay, that's very helpful color.
Last question is just now.
Mountain aired on and Salvador solar what sort of the expectations here on on the pace of further M&A capacity for further acquisitions, given where are you guys are acting liquidity.
We like I said, we it's a tool the more did laufman, we're going to do we have to balance it with with good acquisition like modern Aaron Salvador into team is focused in finding some good.
Opportunity there there there is a lot of volume of deal you shouldn't we have to find one that fits us and and and have a good return in.
Part of.
The equation is also a big portion of Oh, the quality of a deal so.
The team is there a we have some friends out there that no what we're looking for so we're very confident that.
We'll be able to match.
Our development with those type of acquisitions on the road.
So if you think about what you're going to development side and Hillcrest as the next project, which really is 2021 can you still feel.
Desire to rebalance current mix or would you hills more like again compensating for maybe a little less cash flow from Hillcrest next year I'm going to tax equity.
But we like.
We like the fact that the if you if you look at Salvador and month in Air If we can do one of those every year.
It helps you unless that's that's roughly the the DQ room that we were looking for so it's not like we're going to.
Go out and then be nuts about the M&A, but.
The type of of activities that you've seen the in month in air and Salvador weekend replete lip reflect that.
Every year and if we can come up with Twothree hundred megawatt of new pipeline.
Project.
Coming from our own pipeline like you'll crest is 200 megawatt and Griffin Trey will be 225 megawatts. So just next year, we'll be putting a over 400 megawatt of new projects in the coming from our own construction activities. So this is ratio that we want to we want to keep and.
This is in line with the 10% growth of our EBITDA that we have a giving you as a guidance.
That's that's good color inertial may last question, Jeff how much remaining Capex at Hill crest.
Three years.
Remaining capex ideal CRO, let's get this or maybe I call you up to that calls for sure.
So let me follow up on that precise question enough to call, but it's a good king.
And the first the tax equity a diverse meant is scheduled to be mid.
In September and that basis.
Still still alone.
Construction here.
So.
I'll get to you up protocols.
Okay, and guys I'm very sorry, I have a hard stop because I am I'm on an order board and unfortunately feed the timing of the it has been a little bit of overlap. So I would take another question and then I'll call. So we'll see a will stand to answer the question.
Your next question comes from Robert Mer from National Bank. Your line is open.
Hi, good morning, everyone.
Hey at Roper.
So we haven't talked about.
So I don't believe you had some shutdowns there in the quarter given some color on what happened and is that going.
Yeah, we had the on more shine and I'd be.
Two well to two event, where a blade failed and those are vistas.
The first time.
We were able to come back in in work.
And then restart with the local government in France, the equivalent of the the held in safety.
Department is very very.
I would say peculiar there they're there the their own every a incident like that and so the first time it was not so bad but the second time.
Only a few months softer then they took that very very seriously so.
It's not a debt it was a big deal to replace of late we you know we have played that over the our fleet that breaks a now and then but the problem is that the French government are shutting down the old part that have the same.
Blades or just same type of machine and this is why it did hurt we were.
We were Ah, we have insurance coverage for that.
We are in discussion intense discussion with Vista us do fine the the problem with these blades.
What we understand it's a it's a it's one it's one of the first batch of a new design that were introduced for their blades and.
They don't necessarily have found.
A big problem with them, but a you know this this is the issue is that the local government in France. Once you have insert and find a the cause of the break.
And now we have reintroduce a production in those two sites, but with some kind of.
Total coal, where we want to minimize the exposure to certain level of power to do is to do is made so we're working very closely with the best us.
But obviously, it's a it's it's a it's a priority for the operating team to find the.
The salute the long term solution for.
Slates in in France.
Okay. Thank you and on Phebe, you had some curtailment there.
You've talked a little about Texas and congestion already but can you give some color on.
How much curtailment you saw here and maybe what the outlook is for for Phebe going forward whether it be.
We've seen that that's for production curtailment.
In in the we were little bit surprised to see these economy local curtailment in phebe. It didnt accounted for almost 6% of the production group or are we were surprised to see that for Ah.
At a time being a that didnt happen in in only a few months a those are for in SAP in in a few months. So sometimes its do you have outage on on the system most well when they are working on the distribution and and transport a transportation system. So lately, we haven't seen any any.
Procurement economy killed feminine phebe.
Hopefully that is behind us but.
Yeah, I was almost 6%.
All right I'll turn it on live there thanks very much.
Thank you so very sorry, guys.
Do this but I have two to leave so I'll outside wins for the rest of the question.
Thank you very much.
Your next question comes from Ben Pham from BMO. Your line is open.
Hi, Thanks.
I wanted to ask you.
Hi, Thanks, Thanks for your numbers on congrats again.
I don't think when you get a quick math there.
Oh reporting going either.
So that's probably be all clockers kind of your EBITDA pro forma.
So is your use your merchant appetite now more moving to under 10% now versus on their side is that.
Actually where you are comfortable color.
Yes, I mean.
You mean around just picking IR been sorry, I missed the question.
Oh, I thinking more about you've always something warm up commodity exposure like you've always been almost like your first direct commodity exposure.
Yes.
555%, Yeah, just speaking about.
Yes.
Total mix.
So let me show weren't with us.
Sure well.
Now I just think it's typical going up overtime.
Yeah like Michelle said of course going merchant would Griffin is is a portion of the Griffin will get us more exposed to merchants revenue definitively, but also as Michelle mentioned when you look at our.
Contract to book of business on the revenue proportion basis.
When you you asked to consider to Ptcs as being contracted would be.
Treasury, So it's kind of a informant and shape, we'll get to a measurements of our contracted portion of the business with including also the portion of the Pdcs, which is in formal.
A secure contract with government with this condition, so, but you're right. It. Nevertheless, I mean, the nodal sale at Griffin will be merchants, we wrap our mind around that and we're comfortable that so that will have an overall impact on our exposure globally.
More merchant.
Market, yes right.
Okay.
And.
So so really like it.
Griffin has 8% to 10%.
Project then.
That does that mean like these are projects you have Gordon and TV that.
Actually it looks like it's mark 5% to 6%.
Correct near term.
Yes, so PV, obviously as we mentioned.
A recent recency the market.
Sauce.
After a bit in Texas, So we have seen pressure on on the.
On the average selling price year over year, that's probably in relation with the covidien the lower demand we see there. So we have seen the pressure down on our cash on cash return for sure on those projects. So we hope its temporarily and on the other side, we have seen some of the last.
Well actually tea on the are.
Is this all we're happy about above that so it as compensated.
Okay.
Okay can actually lastly, I mean it.
It sounds like HSN first hand, the sweet spot for you and whats merchant our contracted that there's there's an upside and year end wagon once tax equity.
Although BPR, taking more merchant risks and year 11.
So you got to make a calling that.
But is it isn't hard to get.
8% to 10% outside of Texas or Americrown in General I mean is that is that why you're you're selling these assets or maybe moving mortgage capital of Texas and make some other regions.
So that's that's a good wind so like Michelle mentioned, we have the view on me be eventually recycling some up.
Our capital Dad would that would kick in the 2% of.
Return in addition to hate to 10%. So that's a nice we too to get a better return definitive.
But you're right, but our but those project that 8% to 10% or less risky to develop more faster so.
That's the sweet spots, we have seen so far but we're happy to develop in Texas.
Vision that is growing so it's less risky much easier to develop it.
Griffin traders started from scratch and in the quarter, we almost have to construction status. So.
It's less risk return are a bit lower I mean is typical in any business.
Okay. That's great. Thank you very much.
Your next question comes from Nelson from RBC Capital markets. Your line is open.
Great. Thanks, I just have a quick follow up question.
Just on.
The e. on wind projects I'm, not sure whether I'm reading it right, but I think like are you financing roughly 100% other project with a non recourse amortizing debt I think the project cost is about 11 million euros, and you've raised about 11 million euros as well.
Got it.
Well.
No I mean, that's small addition to our actual projects that's a not probably representative of what we could do in the future but that's.
Because it's in addition to our project.
Not to be representative in the future.
Okay got it and then just a quick follow up on Ben's question in terms of expected returns I.
I think Michelle mentioned in the past that you guys are generally looking at a cost 6% to 8% premium over the.
The tenure risk free rate.
Should we assume that Salvador is at the higher end of that great given some of its a merchant exposure.
And mountain Air I presume is on the lower end of that range given that it's fully contracted and in the U.S.
That's a good point guided observations would I would say you're pretty much right and those.
Okay, great. Okay. That's all for me. Thank you very much. Thank you.
Your next question comes from that they do some industrial Alliance. Your line is open.
Hi, good morning.
Mhm announcement, but just maybe two quick follow ups I guess I'll follow up on bonds questions. Just maybe she can expand more your thoughts on overall merchant exposure when you're thinking about new projects that you're developing or acquiring solar wind going forward. What do you think is the right mix of merchant Asaf slight growth.
Lower Salvador versus maybe contracted assets.
How comfortable how much merchant exposure I guess are you comfortable taking on some of portfolio perspective.
Well.
I don't want to comment on then the long term targets here, we decided to move Gryphon trail in that fashion because of the knowledge. We have gained over the past few years on the Texas market I know you Should've mentioned, we're pretty confident using.
Turning to woodmac <unk> carbon curve that we are conservative so and that the Gryphon trade project will not change that much our overall mix exposure to merchants so.
It's too early but.
Course, Chilean market and your truck market.
Makes you have greater exposure on merchant, so, but commenting further dung.
It.
Would be.
No would be reasonable for me to come into long that we in our average.
Attritional here soon.
Okay, Okay, it's Tom.
Maybe just one more question can you give us more of a more details on our an update on some of your wind development activities in France are there any opportunities.
Maybe some of the ones that your co developing one vileness might be.
Getting ready to be built into that onshore wind auctions in the country.
When we're happy with the team there and maybe on the progress the I've made so all of our portfolio project, we have over 120 megawatts around.
Project I would remind you that project in principle smarter around when you may go what something like that so every quarter. We were progressing on that so we're confident so young as our first so Greenfield project very few would it so we're confident to see the life on the unsure of those a prospective.
It is in trends the team are doing good and the team also started to to reflect on maybe some solar a fortune t. as well so that's another.
Nice initiatives from the team there. So we're up you. So just wanted to remain conservative and.
With my forecast.
Okay Alright. Thank you. Thank you.
Good, especially there are no further questions at this time.
Thank you and thank you everyone. We look forward to speaking to you at our next results conference call in November. Thank you. Thank you.
Ladies and gentlemen, you may now disconnect your lines.
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