Q1 2022 Boralex Inc Earnings Call
Your conference call is scheduled to begin momentarily once again, ladies and gentlemen, please standby your conference call will begin momentarily.
[music].
Good morning, ladies and gentlemen, and welcome to the Biologics first quarter 2022 financial results Conference call.
Note that all lines are in a listen only mode. Following the presentation. We will conduct a question and answer session and one financial analysts shareholders and investors will be invited to ask their questions to ask a question during that session. You will need to press star one on your telephone I also note that this call is being recorded for webcast.
Since you can also ask questions during the conference, but they will be answered by email. After the call. Finally media Representatives are invited to contact board elected director of Public Affairs and communications is it all Fontaine to contact her contact information is provided at the end of our quarterly press release I would now.
Like to turn the conference over to Stefan Mellow Senior director of Investor Relations of Boralex. Please go ahead.
Mass table, that's cool. Thank you operator, so good morning, everyone and welcome to Bionics first quarter results Conference call. Joining me today from our head office in Montreal are.
President and Chief Executive Officer.
I will get them at the Vice President and Chief Financial Officer, and other members of our management and finance team. Mr that gas will begin with comments about market conditions and the highlights of the quarter afterwards.
So getting that will carry on with financial highlights and then we will be available to answer your questions. As you know during this call. We will be discussing is sorry, I called out as well as forward looking information so when talking about the future. There are a very few 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 in our webcast presentation document. The disclosed results are presented both on a consolidated basis and on a combined basis. So unless otherwise stated all comments made in this presentation will refer to combined basis figures. So please note that combined is non <unk>.
GAAP financial measures and do not have standardized meaning under IRS.
Accordingly, combined may not be comparable to similar named measure used by other companies for more detail see Dan and I FRS and other financial measures section N D M D and in the press release, the MD&A the consolidated financial statements and a copy yesterday's presentations are all posted on the biotechs website.
At <unk> Dot com under the investors section.
If you wish to receive a copy of these documents. Please contact me so Mr. Jack Ashwin I'll start with his comments. Please go ahead, Patrick Thank you and good morning, everyone most of them.
It's a pleasure for me to present, our vessels and achievement for the first quarter I'm very proud of all the artwork our teams in Europe and North America have put together in the past few months everyone. In your organization contributed to these 13 person gross you need be D and <unk>.
8% increase in consolidated I guess, a fool, but also the closure of two significant partnerships and the additions of projects to our pipeline as well as the selection of wind project in the most recent request for proposal in France.
That being said the market conditions continue to rapidly evolve during the quarter.
In the U S.
Investment in renewable energy have been integrated into a plan aimed at bringing back manufacturing to the United States and reduce inflationary pressures.
The federal government's he's also quickly commiting infrastructure investment and job Act funds to deploy 7.5 billion U S daughter in electrical vehicle recharging infrastructure.
The increased adoption of electrical vehicles is expected to increase power consumptions by a thousand and 425 Terawatt hour in the United States by 2050.
An increase of 36 person compared to the 3930 terawatt hours consumed in 2021 called considering only the electrification of Transportations.
In Canada.
Quebec made public its 2022 'twenty 'twenty six strategic plan, taking into account the energy transition underway and the government's ambition reflected in the in its 2030 planned for a green economy.
Hydro, Quebec expect that more than 110 kilowatt hour of power will be required in Quebec by 2050.
Among the avenues identify to reach this objective hydro, Quebec intends to rely on the development of wind energy by building with partners.
3000 megawatt portfolio of wind energy projects by 'twenty 'twenty six to be developed as and when the need arises.
Hydro, Quebec also announce recently request for proposals 4000 megawatts of wind and a 1300 megawatts of renewable energy.
In Europe .
The job well political context reinforce the need to ensure security of energy supply and sovereignty.
The sharp rise in energy prices in France may.
Mainly due to maintenance and corrosion problems to solve them nuclear reactors could also significantly favor the development of renewable project and corporate P. P in the coming years.
And we know review the main variances you know, we're a portfolio of project.
The 73 megawatt Inc. Crees indeed.
In the early stage was due primarily to the addition of three new wind power projects and two new solar projects totaling 75 megawatt in Europe as well as the addition of two new solar projects totaling 25 megawatts in North America.
This was sparky offset by the inclusion of a wind and solar.
Through a power project totaling nine megawatts in Europe under the mid stage fees and change in the expected capacity of a solar power project as well as the discontinuation of a wind power project for a total of 18 megawatts in Europe .
The 159 megawatt increase in the mid stage was due primarily to the addition.
The wind project and adjustment to the pipeline following the announcement of the partnership agreement with Hydro, Quebec and universities, representing a total of 167 megawatt.
The increase also comes from the inclusion of a wind power project in solar power project on under the mid stage phase and change in the expected capacity of a solar and wind.
Power project in Europe for total of 12 megawatts.
The increase was partially compensated by a 20 megawatt solar power project in Europe moving to securities.
The hundred and 16 megawatt increase to advent stage west primarily really due to the addition of a project and adjustments in the pipeline. Following the announcement of the part ownership agreement with Hydro, Quebec and <unk> for a total of 133 megawatts.
Change to the expected capacity of wind project in Europe also at nine megawatts. What this was partly offset by the inclusion of a 26 megawatt wind project in Europe into securities.
In total we are no developing a portfolio of wind and solar project of 3.6 gigawatt and the 177 megawatts of stalled for each project.
Let's review changes to the growth path now.
38 megawatt inquiries into secured stage was driven by the inclusion of two wind projects totaling 46 megawatts and that dish and capacity addition of six megawatt to existing project.
This was partly offset by the inclusion of a 14 megawatt wind project.
Two the under construction and ready to build face crew.
Project under construction or ready to build face increased by 14 megawatts by the addition of Wahid <unk> wind project.
As shown in the gross baths, we add assets in operation with.
2000, and 492 megawatts of installed capacity as at March 31st 2022, the same as at December 31st 2021 and an installed capacity of 2000 and 447 megawatt has at May 10, 2022 <unk>.
Following the disposal of two <unk>.
Power stations after the end of the quarter.
Commissioning of secured phase secured facilities and project under construction is expected to bring our installed capacity.
<unk> 3146 megawatt.
In conclusion as you can see on the slide 12, we are showing the execution, although were strategic plan and are making good progress on all the four strategic orientations I won't cover indeed days or progress as I already have highlighted our main achievements.
One last point for my part earlier this week, we announced the resolute, although were must recent CSR, scoring by equal values for our French operations.
I'm very proud to see that we got the gold medal being classified in the top 95 percentile of corporations in our industry evaluated by equal valleys.
This shows the dedication of all our employees to constantly improve on CSR and brings.
One step closer to our goal of being recognized as a CSR referenced by our different stakeholders.
This complete my part I will know, let Bruno cover the financial portion in more detail and we'll be back later for the question period Reno.
Thank you Patrick good morning, everyone.
I will start with a review of the progress made in light of our 2025 corporate objectives.
As mentioned by Patrick earlier capacity decreased slightly following the sale of our last terminal plant.
Total capacity now stands at 2.4 gigawatt of 100% pure renewable energy.
Last 12 months a bit D. A N a S F O increased due to strong results for the first quarter.
Our reinvestment ratio now stands at 55%, which is in line with our 50% to 70%.
About our CSR strategy, we continued to make good progress with the launch of the quantitative assessment of visits physical impacts of climate change. According to the recommendations of a T. C. M D.
We released our commitment made as part of D equal dietary campaign to increase women in management positions and added a diverse city targets and variable compensation.
Finally, we published our sustainability procurement charter and the assessment of ESG practices at and with our key suppliers.
Taking a look at our debt objective now.
Our corporate debt to total debt ratio increase.
Slightly compared to the end of 2021.
We are pursuing to work to our objective to obtained an investment grade rating.
And adjust accordingly, the proportion of our corporate debt.
I will now cover the financial results for the quarter starting with production.
First quarter wind conditions were good in Canada.
But slightly weaker in France.
Wind production in Canada, whereas 5% higher than anticipated production and 6% higher than in the same quarter last year.
In France wind production was 6% lower than anticipated and 4% lower than in the same quarter last year.
Overall total wind production for the quarter, combining Canada, and France was in line with anticipated production and 1% higher than last year.
Turning to eye drill now.
It was another strong quarter for our U S assets with production floor, 4% higher than anticipated and 39% higher than in the same quarter last year.
Canadian hydro at production, 6% higher than anticipated, but 18% lower than last year.
Total production for the hydro sector was therefore, 5% higher than anticipated and 10% higher than in the same quarter last year.
Finally production from solar assets was particularly strong at 15% higher than anticipated.
In summary, total production for the quarter was 4% higher than anticipated and 2% higher than last year.
First quarter combined revenues were up 9% compared to last year, mostly due to the high pricing level in France and to the increase in wind production in Canada.
Well as hydro and solar production in the U S.
For the first quarter.
2022 combined operating income was up 16% and EBITDA.
At 183 million compared to $162 million for the same quarter of 2021 at 13% increase.
We generated $137 million of consolidate in net cash flows related to operating activities, 3% higher than last year's first quarter.
Cash flows from operations.
Were 136 million in the first quarter at 21 million increase over the same quarter last year E. F. F O was $77 million compared to 60 million at 28% increase.
Our financial position remains solid with our net debt to total market capital ratio of 43% on March 31st.
Compared to 48% on December 31st 2021.
In conclusion, it's a strong start for bottlenecks year to date.
Two significant partnerships one in France.
And the other one in Quebec will allow us to accelerate growth and DS strong drawing markets.
Three projects totaling 65 megawatts selected in the most recent request for proposal in France.
These announced Smiths combined with the strong growth in our results.
I liked the motivation and dedication of our teams to deliver our 2025 strategic plan.
We are in excellent position to pursue our development in a context of particularly strong needs in the short and medium.
<unk> term for renewable energy.
Thank you for your attention we are now ready to take your questions.
Thank you if you have a question at this time. Please press Star then one on your Touchtone telephone. If your question has been answered or you wish to remove yourself from the queue. Please press the pound key.
And our first question comes from the line of Mike Harvey.
With CIBC capital markets. Your line is open. Please go ahead.
Thanks, Albert Good morning, Ron.
First question is just on the New York solar projects in terms of the projects.
Already have secured contracts in the ones you did.
Airlines in terms of your plan for sourcing power given obviously the ongoing tariff dispute.
Yeah, Hello, Mark This Jason is as you know.
Listless limit students who source panel today for these project we have no <unk>.
Short term Cliff date on this project that that's an important point. So we will wait for the situation too to settle down and understand the what are the different possibility.
For sure.
We will have like many industry per year, we will have for power price conversation with the with the off taker.
Who said that will be needed, but on the other side, what I think is.
That specifically New York State has a strong commitment for 2030 once two achieved a commitment and then and then they will have to solve the things we see some trends on the on the P. P. H generally speaking in the U S. So sue I presume that we will see the same trend in <unk>.
In New York.
So essentially that's what we do we continue to develop the project because the fundamentals of the project argued they're well located well accepted and and and and have a we have applied for grid connection and so we are optimizing that.
So a couple a couple of questions to clarify have you secured any panel then for any of the projects that are in yet secured project list.
And then the second.
Is this uncertainty impacting all of the length of the current RFP results in meeting this update on what the expected timing on Boulder.
Is.
The second question by second question, sorry, Mark.
Penguins kind of thing.
On the pending RFP result, we I think we expected some announcement by now we haven't had anything.
The solar tariff dispute impacting that at all or do you have a sense of what's taking a bit longer to get the results on the pending RFP.
Okay on the on the first point, we have not secured panel for the 20th 19 project and on the Penny or F E M.
We should be very close to the disclosure.
But I cannot see more we are waiting for the official disclosure of the tender resins.
Okay and then last question for me, it's just France, obviously very high spot prices, we heard from one of your peers about breaking contract with your updated views on potentially an early termination and locking in some corporate or long term.
You can term hedges and then I guess second would be prospects for continued development of projects with corporate Ppas as opposed to the competitive tenders.
Our approach.
That's cleared at a thing which.
Completely changed the situation in Europe , and in France, specifically because of the of the specific frame, which constrained on nuclear so the answer is we are working to come to optimize the contract was a small a remaining tail.
And discussing two to optimize these sports. So I think you have all the figures after the power all the code to be totally transparent all the contract.
It does do not to have a free.
Termination, okay. Some of the contract at some termination clause, which are not for free. So we need also to analyze and we have to soliris and we will come back to the market when it would be accepted in and settled also.
And just the second part of your question in light of the high spot prices are you seeing obviously.
Expectation would either be strong corporate PPA demand.
Are you seeing opportunities to accelerate some projects can go that route.
Yeah.
Yeah, Yeah sure sorry.
In the past Corporation, where essentially signing corporate PPE for our green.
Greening gear portfolio of procurement and Ford there he is G commitments.
Judy it's clearly a question of economical interest and and economical points of Youtube too.
A part of their power, which is where the prices secure on a long term basis. So the answer is yes, we have a lot of demand and I think it's a very good news for for us as a fundamental.
And the expectation is.
There are some announcements at some point maybe this year.
Where has you know we are.
I I I, we're working hard to optimize our portfolio of sales.
The price are very high for the last quarter of the year in the next the first quarter of next year. So if we can do something before we will.
Got it okay.
Thank you and our next question comes from the line of Nelson Wang with RBC capital markets. Your line is open. Please go ahead.
Great. Thanks, good morning, everyone.
My My first question is if the fall up so did you say that all so I guess some of your older French facilities have contracts that do have termination.
Fees and others don't have break fees to the break the P. P E and then for the ones, where there are no termination fees your.
Working on looking at opportunities to optimize those facilities is that right.
Yeah. The answer is yes to both questions that are in Essen.
Okay got it.
And then the other just kind of switching gears a bit can you give a bit of a.
Can you give an update on the limekiln a wind project I saw the press release, the other day, but can you just talk about.
Ah I guess, but the expansion got a green light and can you just talk about next steps for that project.
Yes.
I think like we mentioned probably.
Five six quarters.
In the past that.
There was a change to the transmission use of system charge and so we have decided at that time and the project was affected by that so we have decided to do two things firstly is to increase the size of the.
The turbines from the first project.
Projected life and can't project as we call it that at that time to have a.
To reduce D. A C O E. One thing and on the other side, we have applied for an extension of the project and so we have obtained the green light for the extension already we have good news to come on the the.
The optimization of the size of the turbine.
And so we will be in the right position no two negotiated corporate PPE and in during this period. The other good news is that the price in the U K. He is also inquiries a lot Stu so the demand for greener electricity is even now you are on the Limekiln project.
Why we have not go further than the the the power which is a 105 they get what they think is it correct nickel out yet and it's because of the.
This D interconnection.
The limitation, but we have the interconnection we have paid for it.
In advance the necessary payments. So we have an interconnection for the project, which is all Suez limited resource. So as you can imagine in northern Scotland.
So next step is to obtain.
The the modification of the size.
And and negotiated corporate PPA, we have already some conversation on that with the team and then finalized financing and procurement and all those things and they'll juicy weird discussing with turbine suppliers. So about the supply the power I'm, sorry, I said wound within five years 110 megawatts.
Okay. Thanks for the additional color and then my next question relates to them.
I guess, France all of your projects that are going to be completed or built over the next two years are located in France, and obviously everyone's talking about project cost inflation.
Can you talk about your project costs in France, while they were seeing inflation, there and then I guess the other big picture is that does it really matter given that I believe some of those projects you will be receiving the merchant power price. So I guess it's.
Probably it doesn't really matter if you have to pay more to get those projects built.
Yeah.
Yeah for essentially for all the projects, which are already under constructions.
Hi, confirm and a lot like last quarter that we have no issue because we have frozen the costs are at the start of the construction and we are if like nuts EPC contract, but the lumps.
Lump sum contracts for all the different part of the construction. So this is the first fund in the first good news and its the case even for the large project of Malanje doable.
The second point of your question is interesting and the answer is yes, we have optimize also a little bit like Lion King and we have optimized the size of different project.
Obtained the building permit modification to a bigger turbine lower C U E.
At equal cost and then since the cost of inquiries, we have still a project with acceptable return and this would be somewhere the worst case scenario because abuse D. We are we have the experience since so no five years to sell electricity merchant in France, and we will try to be agile.
Trustable to catch it could be through journey merchants for the first year, and then corporate P P off through that or or or or Steve Steve merger in the longer period. The final corporate PPA from day, one other than acceptable price. So all those things is underway.
What it shows strategically is that that will move to working to commercialization I think we mentioned years ago that we we start dispart thinking that it will be useful one day or another and the day to day.
Okay got it and then just one last question.
Big picture on Quebec, I, obviously, there is a lot of opportunities there and you're also working with heidrick backend entered here. So can you talk about your strategy in Quebec, whether it will be working with your partners and Jarrod Hydro, Quebec, whether it'll be bidding on the upcoming rfps with partners or on your own.
Just big picture.
I can tell you that.
Yeah.
Yes.
Essentially we will.
And we have announced that we have this important partnership was in nearly even hydro, Quebec fault tree 400 megawatt project.
We will continue to work on on the two possibility, which is continue to try to two.
<unk>.
Proposed project to Hydro, Quebec, India, three gigawatt, what they announced three Gigawatts of project with partners.
And also abuse need the one are the different RFP, the one which is coming in July and the other one we will we would work on the East project and it's a it's a very good news that the I think what has changed if you go back from the E. R. F P in Quebec years ago.
Is is essentially the size of the Tau by you know when you you bid in in 'twenty 14, 2013 are the size of the turbine was not what it is today. So you can this open at the reason the bullets you. We other area of Quebec, which is also very interesting.
Okay. Thanks, I guess, if I can add.
To that comment also that Patrick mentioned, the 300 and the 450 to says for this year, but also it has been announcement for a 1000.
When after that and 1.3 for renewable energy. So I think that there's there and this is really separate from the three.
3000, okay.
Angie there dairy are two processes right now in Quebec, So the market is really strong.
And you might participate in.
More than obviously more than one yeah.
Yeah again again, we didn't stop in 2018, when the market close we didn't stop developing we continue to nurture over project.
And and today, we are we are ready to to to you and to accelerate on that.
Okay got it thanks a lot.
Thank you and our next question comes from the line of Sean Steuart with TD Securities. Your line is open. Please go ahead.
Thank you good morning.
Couple of questions just to follow on on New York.
And wonder.
I'm wondering if you can remind us of when the next schedule for our P is there and.
Does everything that's going on with trade restrictions and supply chain disruptions.
Et cetera investigations does that potentially delay the next RFP from your perspective or not.
I think I think.
There is a small it's the same time me first.
It's the same timing every year. So so that's the that's a that will be end of August beginning of September .
The point is <unk>.
During the last 10 years in renewable it was interests thing to obtain a contract developed the project because in between D. S. T O years gone down a little bit.
Today was the.
The inflation context, then in.
Children to context.
Since there is clear commitment and target from the different states. We think it's good to invest in the right project with the right fundamentals and then bid when we are more closer to the possibility of a financing.
<unk> and ordering the equipment. So it's the strategy is potentially a little bit different potentially for some years. So that's what we will do.
And but but but since the fundamentals remain strong.
We think that developing the right project.
It will still create value for the company.
Thanks for that Patrick.
Second question I had is on Europe , more broadly beyond France and.
And what Youre doing in the U K.
Can you speak to just how strong the current.
Spot pricing environment is in the continent in general.
Does that accelerate potential interest in expanding your footprint.
<unk> predominantly.
Does it expedite your initiatives too.
Broaden the footprint for the company.
Yes, sorry.
That's clearly in our <unk>.
Our strategic plan and and for sure.
Signal.
Off.
Uh huh.
Energy independence.
Independence of Europe , which is which is important in every country.
<unk>.
And and and and the difficulty of the nuclear industry again this.
This is this is pushing I don't see.
When the yes, the price would not stay at the level off the next winter.
But for the next two to three years, there will be a higher price and I'm pretty sure that it will not plan to route around the fall to Europe in the near future. So the answer is yes, we will know since we have.
Close the transaction in France, we have a good partner the right partner in France, and this is the N genius working well there the team will have more time to dedicate to look to opportunities outside France in the near future.
Okay. Thanks for that Patrick that's all I have.
Thank you.
And our next question comes from the line of Rupert <unk> with National Bank. Your line is open. Please go ahead.
Hello, Good morning, a couple of questions on France, Firstly with the strong performance you have there right now and maybe getting stronger if you can optimize the contracts.
Any risk of windfall taxes, and if not.
Maybe if you can give us an update on what the outlook for cash taxes. It looks like right now what's your your tax horizon.
Yeah.
I'm not I'm not sure that this could take the form of the windfall tax, but you never knew Ah.
What is just just.
As the information is available there was yesterday the AR in the Lizak, who are the French newspaper articles, saying that the French state is trying to find a way.
To.
Finance apart of what it cool.
The <unk>, which is probably in English some thing that the limitation of the men and the St tariff.
By getting some of our improved revenue so.
Dr trial, they are getting all the way to do it.
It's geared to have not find it yet.
And we have contracts.
Which are have been signed we have a contractual agreement, which clearly stipulate.
What what what is distribution today. So so so the answer is there is a risk.
But we will we will.
Continue to you know two two to work on with the state if needed.
The green compensation.
The Sirius compensation, there could be an industry agreement, but I'm not I don't know where it will it will go.
I think globally.
There is there is we mentioned that with some previous question the environment will remain good for us.
It could be through corporate P. P could be for new project could be ending existing project.
Sure I think we need to be very nimble and <unk> and also.
If there is any move from the French state.
Do what we have to do.
Great. Thank you and do you have a sense of where you sit on the horizon for cash taxes now just as a normal course.
And we didn't and.
Hear your question right.
Could you just repeat it please.
What is the outlook for cash taxes.
The French business today right what is it what are your tax shelters look like today.
Where are where our taxable we're paying taxes in France at the moment Trowbridge.
Okay excellent and then just one final one on France.
A lot of your collateral.
Just an add on Irobot, just an add on supposedly because of minimum taxes.
Okay, great. Thank you.
If I look at your construction in France, it's largely repowering today.
How are you going to stagger the Repowering are you able to.
Let's say remove a few turbines at a time or are you taking the entire project offline while it gets rebuilt and does this high spot power price impact your behaviors when you're when you're repowering.
Yeah, that's a good point.
We are trying to.
Optimize when when the when a contract comes through and then we're trying to really optimize.
The duration of the of the Repowering in the past when the price of the spot price was lower it was nothing trustee interested interesting sorry, Jude to remain in operation because and we try to reduce the the replacement time.
As much as possible.
Judy we tried to be flexible on the other side, we have ordered turbine.
Some months ago, So we cannot.
We're not able to change everything but the answer is we are trying to manage a work portfolio as much as possible and we can could be possible.
Linked with.
The supply chain difficulty the high price that we maintain an existing assets for mom or two or three years, and then and the authorization of Repowering will remain available and valid and then do the repowering when it will be.
When if the price are going down.
Social all of this is on the table and ally and analyzed by the team.
So what does it mean disruption looked like to the.
Operating wind farms as Hugh Repower them do take them offline completely or are you able to stagger the turbine replacement tenant repowering.
Yeah.
It depends of the site.
For example, simple in showrooms when we did it two years ago. It's on the rage in the mountain and we were not able to.
Build foundations.
In another please because the authorization was like this because of many constrained we were not able to build a foundation next to wind turbine in operation in our.
Digital is a fine Hermes the weakness will we are building the foundation not exactly at the same position. So we are building from the nation wide. The existing turbines are still in operation, but when do we start.
We want to start to build to erect and Youtube have to dismantle the other before abuses. So so there is we are really working under the logistics on that then we have I think it's the we have nowhere for project in this situation plus all the total so we have already experience.
And and we have experience also with our suppliers or buying the turbine.
And reuse them, a spare parts or to reinstall them. So too. So that's also something that is improved and I think we are no with a good organization of the team.
Great. Thank you for the color.
Thank you.
Thank you and our next question comes from the line of Ben Pham with BMO. Your line is open. Please go ahead.
Okay excuse.
Excuse me good morning, I wanted to go back to that.
Hi, good morning I.
I wanted to go back to your your sort projects only because it's it's a relatively large chunks 200 megawatts or so.
Do you think.
That.
I know the tariff situation is unclear on timing and outcome, but when you work backwards here.
Permitting and construction do you think there's still a chance that you can put those projects then.
By 2025.
Yes, the answer is.
Uh huh.
100 megawatts of this project are in California.
We are waiting for the upgrades after grit of existing grid connection on existing solar site.
When I look to the <unk>.
The pattern of the Californian market. The last the last weeks I think they need more storage. That's my understand knowing because they they have so much a soldier in some part of the D.
But the the grid, operator to which we apply for them.
Grid connection modification is is taking its time.
So that's one thing so so it's it's essentially depend on this part of the of the project with organization because we have the land we know what we want to do.
And we just have to give these this confirmation.
I think we apply almost one year ago and at that time, we said it was it was Q2 last year and we said it's 18 months. There is some constrain on grid operator generally speaking in the U S with staff. They don't have the necessary staff to to work on the queue.
So this is this is the slowing the oil industry. The other project 77 megawatt project is in New York.
It depend when we will have to the commercial confirmation of this project Sue them.
I think there is nothing which oppose which is which is against the bus with you to connect the full 2025, Ah, but I cannot confirm that.
That we have everything to start construction.
Okay.
Is this.
The solar projects are referencing right Patrick of that.
Okay.
So the storage Patrick was talking about the storage.
Jack.
Your question about storage with solar.
Yeah, I apologize, but it's about the solar the solar projects that are corners Bald mountain.
Okay, sorry, we we we the line was bad this morning, and so we have 62 to understand some of the awards.
Yeah. The main the main points on these project is.
It will depend of the the present inquiry on Asian supply in the U S. A I think I think we have to view it also.
You know bought X as diverse a side, we have we have a wind project in France, where solar project in France, We have wind project in the UK, we have wind project in Quebec.
If there is something which is delaying U S more than than than some than than a confirmation by the end of this year about the new rules in the U S. A.
It will not hurt tumor Butch to company and we will be able to restart when when the market will really restart Sue I think that's a we would keep all the interest to the U S. But I cannot guarantee you that we are we will be able to.
To connect before 2025.
Okay. So just wanted to ask.
Yes.
Ben just so sorry, I can adult beta there's one more thing I'd like to add on the U S market.
Given our financial position given our cash position.
This sort of market volatility and disruption to a certain extent is in our view also an opportunity for us.
Less capitalized less well capitalized companies me.
You may find out there theyre still getting a little bit in the short term.
So certainly that could be an opportunity for us to.
Two to look at some of these companies are to look at and have discussions with some of these developers for our.
Medium term growth.
Okay. So it sounds like I mean, it goes to my second question at you.
Or to take a very pessimistic view of the U S seller I'll tell you. This just wiped out.
All of these projects and I assume there's no U S seller growth for Boralex.
Do you think you have enough stuff no.
Cut back.
I'm, not saying that happens Patrick I'm, just saying I guess he does.
My question is why do you do you have enough projects in France in Quebec, and maybe M&A too to get to 4400 megawatt.
Yes, yes, yes, yes, <unk>, yes, and we will.
I think there was a question to see do we want to celebrate elsewhere in Europe . This is also part of the strategy. There is other there is potentially other opportunity.
In other provinces in Canada also if we if we think that the U S market is slowing down for a period on the long term.
The U S market will be a good market for sure.
So who like like get happened in Canada in 2018.
We continue to to develop or wind project in two D. We're very happy to have them already almost already developed so I think it's the same diversification of risk.
Maybe if I could add one point on that.
Is the fact that we need to continue to develop those projects optimize that project look at opportunities like Bruno said in the U S. B.
Because there will be some opportunities and we have the capital in place to be to act rapidly. So we're not giving up on this market that's for sure and when we have.
Conversation was nice ruda the last weeks days.
Hey, Scott.
They are aware of UC of distillation. They are committed for 2030, 70% of green electricity.
And they are considering biologics is a very good developer in trim off a weak consult local communities municipalities and in how we develop our pud Jake because the one project to be connected in.
In the next the next year, so I think.
We have signaled that we it's good to continue to develop and we are we have the right team to do this.
That's very helpful. Thank you.
Thank you and our next question comes from the line of Andrew <unk> with Credit Suisse. Your line is open. Please go ahead.
Thank you good morning, maybe if you could just give us some perspective on how your risk management approach has changed or maybe evolved most recently and I guess, there's a few elements to it. There's there's obviously just from a financial standpoint.
With the volatility that we've seen maybe heightened volatility for a number of reasons and then also from an operational standpoint.
You're dealing with supply chain issues from the Oems and then just a bunch of issues that happened in the industry from an EPS standpoint, so any thoughts on risk management would be appreciated.
I think Patrick Cat, Patrick alluded a bit to add to it but certainly.
From a from an opry eating in and contracting.
Our position, we're very nimble and Uh huh.
Constant discussions with supply tires.
This clearly.
Clearly data that the our financial position in <unk> and our.
Large projects.
That are coming up are a plus in those discussions and having those discussions being able to secure the equipment when we need it.
So we contract.
More quickly from from that perspective.
And from a financial perspective, we also.
Also look at how we can for example edge interest rates.
Quaker earlier in our in the process.
Because we see those are potential.
Potential additional Hyatt X and in interest rates coming so that's that's certainly a few things we've done.
Where.
In a good position, having a quite a bit of our portfolio on a long term fixed fixed rates for on our debt positions.
And we continue to optimize on that front also reducing our debt with the cash we received recently will reduce some of our most expensive debt.
Reducing our financial burden.
Other areas of risk management that need desire disorder is sort of the key ones. Thank.
Making sure that we are we.
<unk> security equipment fact quickly and.
That we manage our financial goal.
Our exposure.
I mean that would be the two key points come to mind.
Okay.
Excuse me.
And then maybe just a.
On a related question when you think about.
Just your hybrid model that <unk> been operating on the maintenance, where you've had some done externally some done in house.
The au pulled a few more in house.
Do you see this as a growing competitive advantage or is it just you get better price tension with some of your OEM providers.
Essentially that the it's a question off of.
Cost of optimization of production and revenue and AR and also on the on the the risk to have.
Big.
Instant seems in Trinity because we have to manage all those things. So so we have internalized for a very long period in France.
And then last year, we have externalized to vest ask backs some divest S. French fleet.
Because we felt that the the contract and the.
And the risk sharing in the contract and how we can transfer a part of this risk to vist S and have the right the right performance.
Yeah.
Mentions from them was was good.
But we are continuing to internalize other.
Men's knits are.
The dimensions of other assets typically the inept gone ones in Canada and in France that the movies all inner carton.
Because there is a there is a gap between cost.
Boston performance by doing ourself in cost and performance by remaining contract with nickel and then I think.
In the environment of a.
Hi, Bryce.
A 0.5 person of availability at the right time has more value than the 0.5 portion of availability.
When you reboot or under contract. So we are looking to maintenance also differently.
On contracted assets and merchant assets.
Okay. Thank you that's very helpful.
Yeah.
Thank you and our next question comes from the line of Nikolay check with.
Cormack Securities. Your line is open. Please go ahead.
Hi, Nick.
Are you there.
Hey, guys.
To the next.
Okay, Yeah, we can hear you.
Good morning, guys. Just two quick follow ups first on storage Patrick you mentioned that the California opportunities could get developed by 2025 are you seen any additional demand notes instead of baseload generation storage capabilities any other geographies or project types and could add to the backlog.
Yes.
Yes, Sir he is new.
Not in Europe .
But yes in North America and every play.
Place. There is there is a need for storage in New York State or in New York grid.
It could be a need of storage in Quebec for peak shaving, which is not the same than displacing our solar production in California, and I presume.
With my experience of grid, operator that in Ontario, there will be need for storage also in there is one project, which is a known which is not the baltics project, which is.
Lobbying in Ontario, So the answer is yes in North America, I think there will be more need of storage.
Specifically.
With you a new.
Wind and solar capacity connected to the grid and the difficulty of doing big injured connections between the different system, which are intra connected but not mesh like like the win in Europe .
Got it. Thank you and then coming back to your question about are you talking about.
M&A opportunities is something that was going to ask.
Are there any other details you can provide on the types of projects. You are currently seeing that could be under capitalized or that could be attractive opportunities for you either by fuel type or region in the U S.
Oh, where are we really are trying to stay as opportunistic as we can looking at looking at our targets.
We did talk today, a little bit or quite a bit about the.
Changes in the market in the U S, especially.
So I wish it.
We're trying to stay open but the combination of <unk> of our assets that we can optimize improve.
Operating or in your near operation and.
And as I mentioned.
Our development pipeline, which are which are.
Could come under pressure at the right the right price or acquisition, because we want to stay disciplined on the acquisition. So this is what we're looking for.
Size size is also a factor that we look at when we are when we look at our acquisitions.
Has to be the right the right size for us and our markets our team.
Is this focused on looking at the search in certain states.
So yes.
Yep.
I mean, we've seen quite a bit of a menu of opportunities lately and we expect that to.
Only increase in the coming months.
Especially in the U S. But we're also looking at possibilities to expand in the other European markets says that that Patrick mentioned before.
Through development, but also also on M&A.
Okay. Thank you very much because we will have.
I mean, we've we've completed deterrent the transaction with our partner and are in Europe , and France EAP and.
Basically we are you have the cash in the bank by now.
And we are certainly in a in an attractive buyer for for.
These kinds of assets and companies that we've talked about.
Perfect. Thank you.
Thank you and our next question comes from the line of Nudge, our Baytown with.
Capital markets. Your line is open. Please go ahead.
Hi, good morning.
Just wanted to go back to Quebec.
Can you just clarify what the expectations are for the Nash projects with the announcement of hydro, Quebec are those going to be developed outside the RFP processes or in addition to those.
Yes, yes, it's a it's a clear you're a project we have developed.
The block and we have for <unk>.
Terms of agreement on owned the power price for for for these three different project and this is totally outside of the RFP.
His insight.
The 3000 megawatt hydro, Quebec, a known says.
The partnership they want to do.
With the C.
Could be private player.
Could be.
First nations could be municipality, but.
But we have a we have signed.
Part of this.
Okay got it.
Fantastic and I think.
So one third partnership.
And each project and I think that some of your filings you had them potentially starting construction at the end of next year with the commissioning sometime.
Sometime at the end of 2025 so.
It sounds like you already have the power price agreements.
Mostly locked up what are some of the next steps of the milestones for those projects.
Essentially.
Project will be.
The construction will be triggered by two things is first obtaining D.
The building authorization and this is the consultation process is underway and the second point is the confirmation by hydro Quebec of their need.
And they could trigger.
One project and then the second one and then the third wind depending of their need but it's it's on their table.
It's available and we are ready and we have full giusti.
Since it's a significant.
Volume of turbine.
Our at least our Irvine says, it's less because it speaks to a button today, but but it's so it's a significant amount of power we have the interest of the the large turbine OEM.
OEM and we are discussing directly at the top of these companies too.
To settle the contract tools.
Project, when when it would be needed by hydro Quebec.
Okay understood. So.
<unk>.
You could develop them sort of in a staggered fashion one after the other and maybe sort of.
<unk> sometime later this year early next year once you have all the authorizations on the confirmations.
Yes.
Okay.
One last question for me.
Obviously, youre going to try to have more capacity coming offline or not offline sorry off contract in the next few years and I think in the past you've talked about trying to find a balanced mix of Repowering. This corporate ppas, but now with the current power price environment, how does that dynamic sort of impacted your how you approach those types of decisions for for the.
Projects coming off contracts.
Yeah, it's a good it's a good point essentially the.
The development costs off.
Obtaining.
Hum.
Modified authorization too.
Repower sites is not very very very weak and this is one of the interest recovery.
That being said.
I think and we think we should continue to invest in days the goffman caused us to have an option and when we have a repowering authorization.
It last for you is that it for a certain period the potentially three years I think we can make and we can extend that also.
And with European situation.
There is also a clear signal from.
The European Commission I think it comes just yesterday do you see that they will push globally in Europe different.
Countries too to accelerate Repowering authorization.
And shortened the time of instruction, but and on and on the other side abuse D.
If the price remain over 200, new rope a megawatt hour, it's better to operate the existing site.
As long as the price remained there I don't think it's sustainable to have a price over 200 euro per megawatt hour for years. So it will go down one day or another and at that time, we will have we will have to.
We will have the possibility to triggered the option to trigger the repowering quickly because we have the authorization with the perimeter with us and and and also we were discussing with off takers for the repowering because it could be.
Through tenders or.
Tariff system like today, but it could be also corporate PPA.
Okay, I guess, what youre, saying repowering at a very small cost looks like a free option gives you more optionality in what you want to do with those assets within a certain time window of several years.
Okay got it thank you very much for those vehicles.
Thank goodness.
Thank you and I'm showing no further questions at this time and I would like to turn the conference back over to Stefan Melo for any further remarks.
Alright. So thank you everyone for your attention if you have any additional questions. So please call me at Taiwan 421310 of our five they'll all make sure. We quickly answer your questions. So our next call to announce second quarter results will be on Wednesday August the third.
At 11, a M. So how people are I mean, I'll have a nice day everyone on thank you.
Yep.
This concludes today's conference call. Thank you for participating you may now disconnect everyone have a great day.
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