Q2 2021 Boralex Inc Earnings Call
Good morning, ladies and gentlemen, and welcome to do a boy like second quarter 'twenty 'twenty..1 results. It is your debt you did gypsy missed it didn't need a vault.
At this time all lines are a listen only mode. Following the presentation. We will conduct a question and answer session. If at any time to discuss with you quite a immediate assistance. Please press star zero for the operator.
This call is being recorded on a Friday August 6.2 on each what do you what I would now like to turn the conference over to Mr. Stefan <unk>. Please go ahead.
Well, thank you operator, and a good morning, everyone welcome to <unk> second quarter results Conference call joining me today.
And the office here with a pig that cash.
And we also have the know how to get them.
Net Uh Huh, Vice President and Chief Financial Officer, and other members of our management and finance.
Alright, and finance team on the line Mr.
Mr debt cost will begin with comments about the highlights of the quarter afterwards, Mr. Guilmette will carry on with financial highlights.
And then will be available to answer your question. So as you know during this call we will be discussing a historical as well as forward looking information went.
When talking about the future day are a verity of risk factors that have been listed in our different filings with securities regulators, which can materially change. Our estimated results. These documents are all available for consultation at SEDAR Dot com. So on a webcast presentation document the disclosed results are presented.
Bolt on the IRS and on a combined basis unless otherwise stated all comments made in this presentation will refer to combined basis figures. So the press release the MD&A the consolidated financial statements and a copy of today's presentations are all posted on <unk> website at Boralex dotcom on dirt.
<unk> investors section. So if you wish to receive a copy of these documents. Please contact me directly be a pleasure to send the information to you. So Mr. <unk> will now start with his comments on please go ahead Patrick.
Thank you Stefan and good morning, everyone I am very pleased to present GTD physically from our office in downtown Montreal.
Our second quarter resolute.
Production in the quarter significantly increased compared to the same quarter last year with the growth being attributable to acquisitions and commissioning production a waiver.
As a weather lower than anticipated production, mainly due to unfavorable conditions in the hydro sector EBITDA for the quarter was 10% higher than the same quarter last year.
The growth came from a 24 million contribution from the acquisition of participation of <unk> in 3 wind farms in Quebec, the acquisition of participation in 7 solar farms in the U S and the commissioning of assets the.
The highlight of the quarter is the addition of 553 megawatts of solar and wind project.
And 190 megawatts of storage project to our pipeline.
7 project totaling 137 megawatts also progressed within our gross baths somewhere added to just secure stage and others move to ready to build stage 1.
1 last point as you all know in June we launched our 2025 strategic plan, including new corporate objectives, we got very positive feedback from all our stakeholders. We are very proud of the outcome of this plan.
I can assure you debt all teams are working hard to achieve our goals in a timely and disciplined manner.
I will now cover changes in our pipeline.
As you can see on slide 5 of our presentation. We added 510 megawatts of U S. Solar project you know were preliminary phase simultaneously. We also add some smaller wind and solar project in France, and the solar project in France progressed.
The mid stage phase.
Other wind and solar project in France will show progress from mid stage to advanced stage and from advanced each 2 hour gross baths. We added 4 project to do secured stage of a gross pass for a total of 41 megawatt. Please note that 1 of these projects is a repowering, which is not add.
<unk> capacity, but the wind farm will benefit from a high performance equipment.
And a new 20 year contract.
Finally, 3 project were added to the ready to build stage fruit total of 96 megawatts as you can see on slide 7.
With all these movements in our pipeline and gross baths, we're making very good progress towards our objective of doubling our capacity by 2025.
Moving no no.
Our strategic orientations on slide 8.
Will not cover growth and diversification is a covered most of it already but I would like to highlight that we're still seeing importing demand for corporate PPE.
As mentioned at our Investor day.
With the approaching end of contract that started 15 years ago in France, additional corporate Ppas and Repowering projects are expected in the future day.
These represent valuable projects, providing interesting returns for a fraction of the time required to execute compare to a where traditional greenfield project in France.
We're making good progress on the optimization orientation true we sign a new contract with the staffing, France, which is expected to provide competitive operating costs combined with production improvement incentives in line with our optimization strategy.
We also continue to optimize maintenance in North America, and became a hundreds per person renewable with the sale of overblown debt facilities.
This completes my part I will let I will know, let Bruno covered a financial portion in more detail and we'll be back later for the question period.
Thank you Patrick.
Morning, everyone.
First.
Although without a topic, let me recognize and congratulate all the athletes that are going to be competing at the Olympics or the best in a world.
And we certainly share values.
Great discipline.
Hard to work and teamwork with these athletes.
Congratulations to a Canadian a women's soccer team or their gold medal a day, 1 just a few minutes ago.
A lot now back to a our main topic Hell of a sites with a review of the progress made in light of a new 2025 corporate objectives.
We recently increased our capacity by 26 megawatt following the commissioning of our bedroom share a wind farm on May 1st and next a feel Glen <unk> wind farm on August 1st.
These capacity additions were partially offset by the disposal of the floor deck cogeneration plant.
Resulting in a net capacity addition of 14 megawatts.
I would also like to take this up what you need to you mentioned that our 4.4 gigawatt target in 2025 represents capacity as we have been defining it in our financial reporting for a few years now.
This means a 100% of capacity if we control the assets on our share of it if we don't control.
Moving to our last 12 months EBITDA.
And therefore, you can see on slide 10 debt, we continued to make progress on these 2 measures thanks to our acquisitions and commissioning of new assets.
Our reinvestment ratio stands at 55%.
In line with a 50% to 70% target.
Moving on to CSR.
Most of the achievements mentioned on slide 11, we're covered at our Investor Day, I would Oliver like to highlight that we are making good progress with the production of our carbon footprint reports.
With the addition of a CSR expert to our team and a creation of a formal CSR Committee. We are moving ahead with a lot a rigor on our a different ESG initiatives.
We will have more to report on this front in the coming quarters.
I will now cover the financial results for the quarter starting with production.
Wind production on a combined basis in Canada was in line with our anticipated production and 5% higher than in the same quarter last year.
Driven by the acquisition on the Quebec assets.
Comparable production was lower than last year, reflecting less favorable wind conditions.
Then in the second quarter last year.
In France wind production was 2% lower than anticipated and 23% higher than the same quarter last year with growth coming.
Coming from higher comparable production and new commissioning.
Overall total combined wind production for the acquired the quarter, combining Canada, and France was only 1% lower than they anticipated production and 12% higher than last year.
Turning to hydro now it was a difficult quarter for both Canada and the U S. Hydro hydro conditions were unfavorable during the quarter, resulting in production, 24% lower than anticipated and 13% lower than in the same quarter last year.
Finally for solar a U S acquisition continued to perform well with production, 4% above anticipated production.
In summary, total combined production for the quarter was only 4% lower than anticipated, but 22% higher than last year.
Second quarter revenues were up 9% compared to last year.
For a second quarter of 2021, combined EBITDA was $117 million compared to 1.7 million for the same quarter of 2020, a 10% increase.
Net loss was $9 million in a second quarter compared to a net plus a $5 million last year.
We generated $66 million of ifr as cash flow from operations in the second quarter compared to $51 million in the same quarter last year.
<unk> was a negative $7 million compared to a negative $14 million in second quarter last year, reflecting the improvement in cash flow from operations and also the seasonality of our operations.
As indicated on slide 19, our financial position remains solid with our net debt to total market capital ratio of 40%, 46% on June 30th.
Compared to 41% on December 30.
First 2020.
In conclusion, we received.
Positive response from our stakeholders to our 2025 strategic plan.
We continue to make good progress towards the execution of our 4 strategic orientations and fixed corporate objectives with our team fully mobilized.
We're putting the final touch to a bit in the upcoming tier 1 RFP in New York do you at the end of this month.
And we have a solid financial position to pursue our growth initiatives.
And finally, we are working on the optimization of our capital structure to further improve our financial flexibility and lower our costs. Thank you for your attention we are now.
Now ready to take your questions.
Thank you, ladies and gentlemen will begin the question and answer session should you have any questions. Please press star followed by a 1 on you touched on film.
You'll hear a threefold brown at the mileage on your request a question will be bold in the other day received should you wish a decline from the polling process police price stifle a bite you if you're using a speaker phone. Please lift your handset or a Brexit Eddie keys.
A moment for your first question. Your first question comes from David <unk> with Raymond James. Please go ahead.
Thanks, Good morning, everyone.
My first question here just on the 190 megawatts a storage you added to the early stage pipeline I appreciate that it's a you know on early early development category, but just wondering if theres any color you could provide a be it in terms of a timeline do you expect for those projects and maybe even a number and size of them.
I'll start with that.
Yeah, David Good morning, it's Patrick.
A part of this project a 100 megawatts is in California, where we apply to.
Optimization finally of the assets.
Vote closed in February we announced that the earlier, but nodes. Then we have applied you knew you know debt Californian.
California in process force grid connection is long Sue so probably something like 18 months 24 months.
Right a good answer to it.
The other project are in the New York State and it will be in our pipeline to be.
Is there a bit door adds to some some production project Sue less less view on.
On this and dream of a.
At a time.
Okay excellent. Thank you for that.
And then maybe just a question regarding France I understand that there was.
Not a huge number of megawatts, but theres an alternative connection offer.
That has been announced a with which I guess has faster central interconnection I'm curious if you have any projects that could benefit from that.
David could you be more specific on what you're referring to just wanted to make sure we on.
Understand exactly what a yes.
Yes, I saw a news report of a 750 megawatts of alternative connection offer in France.
That had been announced I think in the past couple of weeks.
To be tried it on I'm not aware of this specific point, what I can tell you its book, possibly my team a surgeon you my team is aware in France.
We are we have a.
A different stress.
Strategy off of securing an interconnection and depending on where you are on distribution network or on the transport.
Yeah.
The large transmission grid, sorry, I was searching the word.
But I don't know this question.
We have the constant conversation with the grid operators to improve the <unk>.
I'm sure that my team is a is aware of debt.
Okay, great appreciate the color I'll get back in queue.
Thank you.
Your next question comes from Nelson <unk> with RBC. Please go ahead.
Great. Thanks, Good morning, everyone. Just a quick clarification on the storage question from from David So or are you proposing to add storage on your existing assets or are these new sites with just storage or.
You also grew your solar pipeline by I think slightly over 500 megawatts. So.
Like is your storage is going to be Standalone. It's a.
Or the country attached to a new solar plus storage projects or are you looking to add a add them to the existing assets.
Yes. Good question Nelson Good morning, Inc.
California, It's a it's a really on the site within defense after of the solar plants existing solar plants and with an existing grid connection. So you have to change a do grid connection agreement to put storage on top of the of the of the <unk>.
Solar.
Existing assets in New York the other project as I mentioned are in New York in New York you can have.
You don't have the limitation to be on the same sites was the same grid connection.
This is a this is already something which is available in the in the nicer.
A.
Framework for the next tender share.
It's a I.
It's not it's not a question you virtually you will be combined but you will not be a you don't have to be on the same site and 2.
Understand your question is a about the developments.
These developments are in the U S and a and we already as a window mentioned 2 to beat.
And I will abuse the nuts.
Declare in and go into details about what we will be there at the end of the months, but we are ready to be a significant amount of a projected forward.
Okay. Thanks, Patrick.
D N. A indicates that you have 840 megawatts that you could bid so I presume you're a bit.
A subset of that later this month.
Yeah, we have a yeah. Yeah. There is always a strategy behind is in Malden strategy. Some tactics. So yes that would be a we are confident that there would be a.
You know this round and other rounds. Afterwards, so we will we will we would manage debt and decided a next days.
Yes, yes sat on that is it doesn't necessarily mean debt because we have on a 840 and go that's ready to bid that will all of a bid them. The next auction.
At the end of the day, we want to.
The best return on these projects so.
As Patrick mentioned, it's a question on a strategy knowing that there are other bids coming in the day approach is different same as it is in France.
Okay. That's clear and then just 1 last question on energy storage.
Does it make economic sense right now to add.
Batteries to any of your solar sites.
In the U S or are you or do you need to wait for a process.
Yeah.
It's a good question it depends it depends on the contract that we have and the off taker.
Our interest to do you have a shift of production within the day.
And this is already a somewhere into contract some are not so sure. So the question is the answers are a true question as a mix depending on the site and there is already some opportunity to EBITDA.
If the grid connection are obtained.
The commercial part is a.
Would be probably a something.
Not so difficult.
Okay. So if I'm trying to read between the lines, maybe in California, It would make economic sense too to add batteries.
Yes.
Okay. Okay.
And then.
My last question before I get back in the queue.
Is agriculture tax so I think a few months ago. There was announcement that you guys have this arrangement with Sun Agri.
On.
Okay.
Just from looking at some of the pictures.
It looks like these are like solar projects on stilts that are more kind of spaced out and they they sit above crops.
Are any of those per like our U R.
Are there any near term projects that you're working on for like on the agriculture side right now.
In the near term I think I think this partnership.
Help us to have a solution in some constrained area between friends for a moment.
On the agricultural part because it's a.
The country is smaller than in the big countries on North America, and then a and then it's a part of the solution that we can bring to municipalities or a farmers so but it's not it's not the big game changer football highlights. It's important I think in sustainability of development of <unk>.
<unk> in France.
Okay. So it might just make more a land available for you to to develop solar in France is that is that fair to say.
Yes, yes, yes, and nothing specifically in the short term, but its important to have this solution in nowhere where a proposal.
Okay. That's great. Thanks, I'll get back in the queue.
Thank you.
Thank you.
Our next question comes from John Mould with TD Securities. Please go ahead.
Good morning, everybody I'd, just like to start with the permitting process in a in France.
I know there was some.
Some movement to allow municipalities to potentially.
Vetoed the location a wind turbines, but my understanding is that ended up getting change simply to requiring consultation in.
Just wondering what the state of how Youre thinking about the state of the permitting.
Process more broadly in France.
Whether this consultation requirement has any potential to slow down a permitting a projects there.
Yes, good morning, essentially a my view with a with a 18 years of experience of development in France. It's we have had.
Many things like this in the past like a newer doles and dense simplification and then another 1. So so we are used in nowhere team there he's used to to make this we are already have you see not starting when the project enter the preliminary stage in our pipeline the headaches it's already.
Because we have a first not formal but sometimes formal but a first agreement of the municipalities where we are developing so so I think it's not a big issue a.
But a but it could depend on the wheat will be implemented a.
And as I mentioned 10 years ago, there was something like this we went through it and then the modified just think so so it's a it's classical development in France, I think it's a it's important globally for France as a.
Social acceptability of the project.
And and and and.
And that's that's not bad, but we're used to play was this kind of conditions.
Okay, No that makes sense and then maybe just moving to Quebec in the planned Rfps there.
I appreciate it you don't want to get into details just like the New York process, but can.
Can you, maybe just give us a sense a scale of of.
The projects you might be able to submit or that youre working to advance there in <unk>.
Maybe a sense of how much capacity could be remaining on the senior a double play.
Lance.
I think I think I will force and you read a book here I will refer to you to produce disclosure of a boralex. A you know there is a there is room for for a development in trim off a connection there.
There is a if you go back to some years ago, we I think we announce a.
Another potential gigawatt on the site, which is in true of connection.
In between the size of the turbine as increases with a number of turbines has decreased for the same power. So so it's definitely a good site for for a development.
On on the D RFP.
We have started.
More than 1 year ago to 2 negotiate the up which project was a with the government. So we were somewhere in form a after off and have division debt. These door off new RFP will open again, so we are prepared.
And a an hour side are prepared with di I don't want to true to give the figures today, but we are we are happy with it.
And we are prepared to bid when it will come.
Okay, Great I'll leave it there. Thank you very much for taking my questions. Thank.
Thank you. Thank you.
Thank you.
Next question comes from Mark Jarvi with CIBC. Please go ahead.
Thanks, everyone.
A question on France in terms of you added some more projects identified growth path.
How many more megawatts of projects exists from a.
We're successful on prior RFP, but don't have full permitting that could get on to the identified growth path just wondering.
How many more of these projects that might be in the queue to get into that identified growth path from price.
Thank you so much.
Uh huh.
Mark just a P. J a question, we kind of missed a part of it yes, so sometimes 1 contracts through RFP, but they don't immediately show up in the identified growth because you need to get board approval based on some permitting so I'm just wondering how many projects that we're successful on prior RFP still arent in your eye.
<unk> growth path just wondering.
What we can see in the coming quarters from projects sort of I guess price certainty, but not full.
Authorization to move ahead with a projects.
Okay. So you mean projects that would be just to make sure that we get it right that would be lagging in advanced stage.
So not exactly ready to go into the growth pattern and a secured stage, but having a contract yes.
Yes, that's what you.
Yes, I'd say I think I think we have actually but we will defend it will come back with the exact figures, but I think we have to project at least which have been whichever obtain a.
A contract.
And and are still in the advanced stage, because soft a development stage of the authorization itself.
Seen from today would not will not we will not be able to connect before 2025. So that's also another another point a.
When we put a project in secured stages, because we think we will be able to connected before 2020 end of 'twenty 5.
So that's the thing.
Got it and then the important point important point is.
This project.
Net.
There are some period of development typically when you have because this is the case of the 2 project dimension.
It's a project on which there is a third party recourse, but we think we will when there is no reason, we get the authorization from the state and a third party challenged a project the period of the challenge.
Before the course before the court.
Our frozen so there is no question of a cliff date to lose the contract we will we have already obtained a.
And a fold the next tender in France, I mentioned it was the.
You know the last tender was the 8 rounds.
There would be other rounds, the definition to conditions of the rounds are under discussion for the moment, but they will continue to have a 1.85 gigawatt per year off of tender and a and we will have some projects to bid a into next the Knicks tenders.
Okay, and we are also playing.
Project between tenders RFP and C. R. A 2017 at 72.
Maybe on what they'll work, which is still a.
Available available available a 4 project, although power up to 18 megawatt.
Okay, and then burn off.
You hinted at this opt.
Optimization of capital structure is that something that you can give us a bit more detail in terms of what's on your way our guests and can't.
Hey, guys on detail.
Are you expecting sort of an update in terms of what youre trying to do on a financing side of things.
We certainly expect to a to be able to give an update.
Before the end of the year or not.
Not not that it will be.
A final, but we expect to be on their way.
<unk> of our.
A variability to get on investment grade rating.
During the call.
So that's a.
As a.
Thank you.
We explained before youre not youre not certain on telling you actually go to a.
Credit a quicker.
Agencies, so since we've never.
So they need.
A recent past.
We have to to go through a process before before we can give you an answer but that process a while.
During the fall a K.
Internally.
Is there anything about any other existing credit agreements are at project level debt or non recourse debt that makes that a mortality.
Accomplish part of it seems like so far things are progressing.
Exactly.
Well there is there is no it is.
More of a process and analysis again with liquidity agencies.
Which we have not to be cleared contacted yet.
So it's more of a process than a seeing challenges.
Got it and then a question for Patrick.
Around.
The upcoming RFP for solar projects in New York last year, and you always think sort of a disciplined approach and they don't want a paid on non turned around I can see extension now we're seeing a lot of chatter on the discussion around inflation.
Transient or a longer term pressures on on module cost per solar. So just wondering you guys have enough visibility on costs and so on.
Sort of indicative pricing that you can bid with conviction or where does that kind of play into your thinking in terms of your ability to be aggressive.
Other competitors being more aggressive than you this fall on the Rfps.
Yes, it's a good question, but.
There is a.
An important difference between the 2 situations because last year. It was like on the on <unk>.
Off.
The ITC and we.
We but we today, we are more used to manage a.
Inflation or in the past it was a kind of deflation the reduction of the cost of the turbine and then we'd have a bidding some RFP with the with a view of a potential.
A reduction of the cost of the turbine.
And it was it was and everybody we're doing debt. So soon so I think it's a it's a risk that we know.
Better than the 1 last year and on top of this I think there is also different.
A potential optimization.
Off of the development during the development of the project them self after having obtained the contract.
Can that can compensate if we have to compensate inflation was the ITC question. It was a.
A binary a binary situation sue so it was not possible to compensate ITC was a witch project optimizations.
Okay.
All I had thank you.
Thank you. Your next question comes from Nigel, but you're doing with I a capital. Please go ahead.
Hi, good morning.
But I just wanted to follow up on Mike's question about financial priorities, but I appreciate the corporate credit rating processes is going to get underway, but.
Any other significant progress you can a report on maybe related to a minority stake sales our other priorities.
Well, we're always looking at.
On our portfolio.
So just to see if theres a theres other refinancings, we we can look at.
Also in terms of.
Partnerships.
Our asset sales.
<unk> seen that we sold the bond debt facility in France.
We will continue to look at.
Assets to see whether there are.
On a fit with our a long term view.
And a strategically.
That's for selling.
Al assets, and then in terms of financial partnerships.
It is it is a key element as we've mentioned it a few times so for US it's really too.
To find the right approach.
A 2 to be with.
2 to create these partnerships on the right approach the right pool of assets.
In which region.
And then and have discussions with potential partners.
That is certainly 1 of the key elements.
We look forward to a.
To develop more.
Okay got it.
And just maybe on a on New York on other focuses on the tier 1 programs, but can you maybe talk about how you're thinking a but.
But spending on some of the other or the different tiers of for a clean energy procurement in the state.
Okay.
Yeah.
I think I think this create opportunity a we opened we hope a hydro Quebec typically will a will be 1 of the of day awarded a candidate for a tier 4.
Because it.
There is an indirect.
The impact on the demand in Quebec, and a and the electricity available here shows you a I.
I think it's a my personal view, it's a could be a a good thing for New York State New York City in a in Quebec in Canada. So sue so hopefully a with an indirect impact on behind X or for developing a win here.
Okay, Okay great.
And just maybe 1 last question on asset optimization a C.
You are in housing some of them in Canada.
You've done a 15 year contract investors in France.
I guess, 1 can you quantify maybe what the potential savings from these initiatives could be and then maybe just how you're thinking about the tradeoff between.
What are you on Canada.
What are you doing in France, and how that fits within your strategy.
On the.
A key element with the diverse dos contract is.
As a.
The competitive the.
Competitive aspect of that offer which we hadn't seen before from from a.
From a manufacturer.
On O&M contract.
So they really they came to US this does came to us with a.
Again pricing debt towards much more competitive than than previously in.
In general the key element to that contract is a guaranteed availability.
We divest us so they take the risk.
Yeah.
And they also have an incentive to exceed this minimum on the database availability threshold.
I Unfortunately cannot give you the precise number.
Guaranteed availability, but I can tell you it's a.
Vantages 4 for us.
And that's the key element.
It's hard to give a precise numbers, we expect debt certainly because.
Otherwise, we would not find this kind of a agreements.
We expect added value from a from this contract.
It also allows us to a.
Deploy our workforce on other women.
Work on on other types of assets so.
Again, it's a over the life of the contract we get a.
Get a very positive number but we just wanted to go on to disclose on a year by year basis, because it really depends on the availability of the difference.
Debt, we're going to get.
And maybe maybe I could add it's it's good to have to ask the window mentioned to manage over a risk and to have a part which is in sourced in a part which is outsourced.
And it depend of the competitive situation of suppliers in the area typically 2 day in Quebec, there is new.
Comparison, except boralex itself to a.
On to perform maintenance on on Nf contour lines.
It's it's not a situation in France a.
People like first us or GE or Siemens Gamesa are a.
Proposing S a.
T a turbines Ms T a brand.
Maintenance and competition is a completely different but it was not the case 5 years ago and it was even not the case 10 years ago. So we did the right think to in source during a certain period and create the skills and training to be able to challenge that.
A manufacturer and when the SaaS came was these offer we look at it we say okay. We are agnostic to have it in or out, but we're not agnostic to the risk and the reward and a contract as interesting as I believe you mentioned, we will be able to concentrate our team where we think we can create more value and have trends.
For a risk to best asking disgrace for a long period, which is also a good into your mouth.
Planning.
Understood. That's a good day. Thank you.
Thank you.
Your next question comes from Andrew Cusco, <unk> with Credit Suisse. Please go ahead.
Thank you good morning, Thanks, a question for Patrick and it really revolves around carbon pricing.
And just the potential impacts you're seeing from carbon pricing and I guess just a question is how much benefit do you think you'll see on the future from carbon prices escalating in most jurisdictions and so the state of play in Canada is fairly clear.
How do you think about U S opportunity as it relates to a carbon price now which is uncertain at this point and then things like the cross border taxes that are being proposed in Europe.
Yeah, It's a it's a good question a we have.
My view a specific I always start with a was.
Europe Continental Europe, and U K, it's really.
Creates an opportunity because you have seen to the commitment of <unk>.
Of the proposal actually from the European Commission about a fitful 55, a this.
This is a this is a goal to reduce by 55 version.
The emission in Europe compared to 1990. So this is a it was it was faulty nodes 55 to a dispute pressure on on the carbon pricing.
And this has an impact on the electricity costs for when you're producing with gas and even more was called a theres still some cool so.
Factors that.
This create this is an opportunity for us for different reason the short term.
Increase the price of the corporate PPE and because the alternative for the corporation to buy electricity on the market has a at a higher price instead of buying a green electricity from Baltic. So this is this is a short term impact the long term impact as discrete also some opportunity and we are into a discussion with a wish.
Some corporation a.
Where it could be of interest to build a.
Project with a counterpart, which is not a.
Typically in France, EDF, but which is a solid corporation. That's also sometimes it's a good opportunity instead of going to an RFP with a lot of competition in solar GPT and friends. So I think that's good that's also a good.
4 in the U K you have seen the price of I think it's a more than 45 pound for Tom a this.
This is also a good sign for our project in Scotland to find a corporate PPA wind a project will be a re optimize a I think we mentioned debt previously that we are optimizing the limekiln project.
In the U S. A clearly I have no view, but I think the same koos.
Koos will create the same effect, it's a it's a the main question with my experience I I'm following 2 European ETS a markets since 2005 a.
It's a domain question as a.
It's the policy should be maintained on the long term otherwise you have volatility and you cannot do something on the long term I think was the general trend after the fighting against climate change and even tough the last the last months in North America and Europe.
We'll hopefully put long term policy on carbon pricing.
That's my view.
That's very helpful color and then maybe just on the corporate ppas in a bit of a flavor around that are you having a.
<unk> with a greater number of corporates or is it really the current roster of corporate clients that you have but they want more power and they want larger ppas on larger engagements with you.
Yeah.
2 day Uh huh.
The demand.
I said that 3 months ago before the increase of the price of the gas and carbon demand was already higher than the off for some months ago. So the trend is dear and a we are discussing with different corporation.
And we have made a kind of a.
Segmentation of the potential customers.
Customers are because.
The price of electricity they have a.
The fact that they are or not in connection with the end customers. The fact that you have or not on a real E. G. A plan. So all this makes a difference when you were speaking about the customer and so we are we're discussing that and I think I.
I am a quite optimistic about the fact that we will be able to to build project with another counterpart in the future with a was a corporate PPA.
Okay. That's very helpful. Thank you.
Okay.
Thank you. Thank you.
Your next question comes from Justin strong with Scotiabank. Please go ahead.
Thanks, Hi, guys. Just a quick question on tax equity in the proposals and a U S.
Infrastructure bills.
Typically around the questions that relate to our debt payments and expanding eligibility to storage projects I just wanted to get your outlook.
Other these.
We're going to make it into law and what.
What the implications would do for Boralex and your development class.
Yeah.
Oh.
On just.
1 comment Patrick.
Patrick Kevin can also add certainly to that.
So certainly it's hard to know.
So yes at this moment to Seattle.
Progress will be made on on.
Whether it's.
We will make it into law.
There is also other types of discussions on on the tax equity side, which which could result on on other types of positive developments.
Such as a.
Thats a credits a direct tax tax credits as opposed to.
Going to 2 or moving a partner so I think there's there's quite a few evolutions, but timing uncertainty.
From a position is very hard to call.
Yes.
I think a I think it's why screen on what you see like it like this.
It's a globally it's interesting for us today, if there is direct payments because we don't have a big a.
Tax exposure in the U S a but.
We need to have a confirmation and see.
Great. Thanks, guys.
Thank you. Your next question comes from Vivek, Punjabi with National Bank. Please go ahead.
Hi, This is vivek on behalf of Rupert.
Could you comment on it.
Dave.
Could you comment on inflation on power prices on any benefits you might be seeing from higher power prices.
Yes sure. There are there are 2 things the first is on the on the existing assets.
It depends on the contract, but we have a we have for inflation.
A close.
Which range from from 10 person in some solar plant in France to 260 person with a I cannot give you exactly a he knew.
The weighted average inflation close but this is this is in the range and globally. It's a it protect us from increase of the cost on and sometimes it could be positive because the cost or the percentage of the of the revenue is smaller it into percentage, which is inflated. So so that's good news.
And in this inflation just to be clear is not on power price.
It is a power price into the contract which is inflated on some extra in an index like <unk> or sometimes some some some some.
Let's see in English and a.
A service and goods a.
A specific service and goods basket.
On on on.
New project as I mentioned on a speaking about corporate Ppas a day.
Inflation on power price.
<unk> is a good sign it's.
It's a good sign for corporate Ppas and it's a good sign also a because.
The subsidies.
That is a.
That is seen on the existing project or a new project through Rfps he's seen.
Smaller or sometimes negative if you when you sign a today.
A wind project debt 60, euro and friends and when the prices around the 92, even in 100 Euro sometimes you during the day 60 Euro during the night then the subsidies is going from you to just state that not from the state to use shoes. So that's also a good news and dream of public finance in the view after although.
We're sector from from the.
From yeah from the authorities.
Sure. Thank you for that color just 1 more question.
With a long projects in France, moving to construction just wanted to know a pattern.
Is there a pushback returns took a project we could see.
Even a previous attempt on construction.
Uh huh.
Yeah, well you have a frank.
Good morning, Judah on for Ed.
You referred to be answered over that I'm not sure I catch your question could you just.
So I think we lost a part of the a question could you just set a repeat the question. Please.
Sure No problem, just wondering now with a project moving to construction stage.
Is there any pushback or challenge you could see it as a project given the last time around.
There were some challenges.
No I think it's.
Every project in France is somewhere sensitive a this is a this is a.
A project, which is in a in a a.
Forest a.
That is a in operation you know, it's not a it's not a it's not a protected forest, but a but I don't see any any any more problem than than generally we have a we can have a.
In project and a and we will obviously take care of the relation with the community locally we have very good even if this project was long to develop we have long good relation wisdom municipality.
And there was on the 9 people, who or where a posing to project was a helped by an SSC Asian.
A defending landscape, which is based in a in.
In Paris, so so so it's not it's not a local a position.
But we as in every project we are doing a we will continue to communicate with your municipality with demands and with the people to be sure that this does goes the right way.
Sure. Thank you so much I'll leave it on there.
Thank you.
There are no further questions at this time Mr. A needle you may proceed.
Thank you operator and a.
Thank you Ivo on a for your attention.
You have any additional questions you know out of reach me. So a 514 to 131045.
Tommy you can text me you can E Mail me I'll make sure I'm sorry. Your question quickly so on.
Our next conference call to announce a third quarter results will be on Friday November 12.
And I hope you all remain healthy and have a great day and great vacations for those like many of us.
Who have not taken vacation, yes, and you are adding a towards a vacation. Thanks, a lot have a good day.
Thank you.
Thank you.
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