Q1 2022 Northland Power Inc Earnings Call
Yeah.
Yeah.
Ladies and gentlemen, thank you for standing by welcome to the Northland Power Conference call to discuss the 2022.
First quarter results during the presentation, all participants will be in a listen only mode.
Afterwards, we will conduct a question and answer session at that time. If you have a question. Please press star one on your telephone.
And at any time during the conference you need to reach an operator, Please press star zero as.
As a reminder, this conference is being recorded Wednesday May 11, 2022 at 10, a M eastern time.
Conducting this call for Northland power are mark or Mike Crawley, President and Chief Executive Officer, Pauline Oliver Chen Donnie Chief Financial Officer, and washing him a collegial senior director of Investor Relations and strategy before we begin our fence management has asked me to them.
Mind listeners that all figures presented are in Canadian dollars and to caution that certain information presented and responses to questions may contain forward looking statements that include assumptions and are subject to various risks actual results may differ materially from management's expected or forecasted.
Results. Please read the forward looking statements section in yesterday's news release announcing Northland.
Power's results and be guided by its contents and making investment decisions or recommendations. This release is available at www Dot Northland power Dot com.
Now I'll turn the call over to Mike Crowley. Please go ahead.
Thank you Catherine and good morning, everyone.
Thanks for joining us today. This morning, we will review our financial and operating results for the first quarter of 2022. Following our prepared remarks, we will take questions from analysts and look forward to addressing all of your questions.
Kick things off as we always do I want to reiterate that the health and safety of our employees and stakeholders always comes first a rigorous adherence to our health and safety protocols in all respects ensure safety of our employees, while allowing us to maintain a high level of availability at our facilities.
We delivered strong results in the quarter on the back of higher production at higher market prices and our offshore wind segment, a stronger wind resource in the North sea compared to this time last year across our three.
Facilities, coupled with continued strength in energy prices in Europe resulted in very good performance for offshore wind segment.
Along with the continued strength across our remaining portfolio. This has set us up for a very good start to the year.
Looking at the headline numbers in the quarter, we delivered adjusted EBITDA of $420 million, which was an increase of 17% or $16 million compared to the same period last year. Similarly, the adjusted free cash flow per share and free cash flow per share, we achieved 84 cents and 77 cents respectively.
In the quarter, representing increases of 15% and 17% respectively compared to the same period a year ago.
We will go into the details of the quarter shortly.
We continue to progress our key development projects and our teams are sourcing new growth opportunities and identified markets. As we've noted previously the acceleration in the global energy transition will require a substantial build out of renewable energy over the next decade to realize government decarbonization policies and corporate net zero.
Charges.
With the recent energy crisis in Europe . We are also seeing a renewed focus on energy security and the commitment to accelerate the development of renewable energy in Europe . These commitments include higher targets for renewable generation in countries, such as Germany, The U K and the Netherlands, and specifically higher targets for offshore wind.
Germany has committed to increasing offshore wind capacity by 10 Gigawatts to a total of 30 Gigawatts by 2030, and then Netherlands has committed to doubling its offshore wind capacity by 2030, adding over 10 gigawatts of incremental capacity in a bid to meet its climate goals and reduces dependence on fossil fuels.
Also seeing commitments to streamline the regulatory process with the aim of reducing the approval times for projects, thereby accelerating the development and the build out of projects.
As evidenced by the recent announcement from the UK government committing to planning reforms that will see its growth in offshore wind access.
Accelerate to 50, Gigawatts by 2030, including five eight gigawatts, specifically a floating offshore wind.
With several key projects in operation or under development across Europe , Northland, we'd leave us well positioned to help achieve these objectives.
In January we expanded our presence in the German offshore wind market with the formation of the one three gigawatt North sea cluster with our partner R. W. E. The offshore wind segment is all about size and scale and the formation of the cluster provides us with both and is expected to allow for the realization of synergies and development.
Struction and on operations.
So in January we announced the successful bid for two offshore wind leases totally totaling two three gigawatts off the coast of Scotland. The two leases one fixed in one floating foundation are a foundation project are early stage offshore wind development opportunities that will extend our development pipeline into the next decade.
And with our position in the one two gigawatt Baltic power offshore wind project in Poland. We are solidifying our position as a key player in this offshore wind build out across Europe , and indeed around the world.
We are very confident that these accelerated policies and targets will result in the advancement of existing development projects, but are also mindful that investments also need to be made to alleviate pressure on the European and global offshore wind supply chain and its ability to invest in ramping up capacity, which is pressed in the face of rise.
Inflation and rising commodity prices.
The focus by these countries on enabling a large scale build out of offshore wind towards and beyond 2030, bodes well for companies like North and we welcome the opportunity to accelerate this buildout.
Turning to our construction activities.
Construction at our New York onshore wind projects is progressing well on schedule and on budget. The two projects ball hail and bluestone have a combined operating capacity of 220 megawatts and commercial operations are expected later in the year.
The two projects benefited from 20 year indexed renewable energy certificate agreements with nice startup.
In Colombia, we celebrated the inauguration of the first phase of our 16 megawatt Hello Solar farm in February construction and amortization of the 10 megawatt first phase is complete and is expected to provide enough electricity to meet the needs of 15000 homes annually.
Structured on the remaining fixed megawatts continued with full commercial operations expected by the end of the year Helios will benefit from a 12 year power purchase agreement.
On the development front, our 1044 megawatt high long project in Taiwan is preparing to move to financial close. It later this year.
<unk> team is diligently completing revenue struction financing and other necessary contractual arrangements, including supplier agreements for all of the key construction construction contracts, which will allow commencement of construction activities. Once the project achieved financial close.
On our other near term development projects, including Baltic power North Sea too.
As part of the North Sea cluster and Sue, but we continue progressing the projects with the team securing the permanent some contracts necessary to keep advancing these projects closer to their respective financial close dates.
We are very excited about the new opportunities that are rising as a result of rising electricity prices and the European push for energy security our teams across our global development offs are working hard to identify opportunities for Northland to help accelerate the build out of renewable energy projects, which we hope to share with you in due course with that.
I will now turn the call over to Pauline for a more detailed review of our financial results.
Thank you, Mike and good morning, everyone.
Last night Northland Power released operating and financial results for the first quarter of 2022.
Our financial performance in the quarter with solid where we generated healthy results for adjusted EBITDA adjusted free cash flow and free cash flow.
These results were supported by stronger performance across our offshore wind segment due to an improved wind resource in the quarter compared to a year ago.
Coupled with higher market prices that benefited Archer Gemini wind farm.
Financial results from our onshore renewable segments were also very strong year over year, reflecting consistent performance across our Canadian onshore assets, coupled with the contribution from the spin assets acquired in 2021.
However, these results were tempered by weakness in the Spanish assets during the quarter, primarily due to a lower wind resource.
Looking at our financial results in the quarter, we generated adjusted EBITDA of approximately $420 million.
Presenting an increase of 17% or $60 million compared to the $360 million generated in the same period last year.
Key factors that contributed to the higher EBITDA year over year included.
$63 million contribution from the <unk> portfolio, which is not included in our first quarter results the red though.
$91 million increase in operating results from our offshore wind segment, resulting from higher wind resource increase ATX market pricing that benefited the results at Gemini and fewer periods of uncompensated outages and negative pricing.
This strength was slightly tempered by the reduced turbine availability at North Sea one due to the Rotary Assembly replacement campaign, which recommenced in late March.
The stronger results were also partially offset by a couple of other key items, including a $25 million decrease in operating results from our efficient natural gas portfolio in Canada stemming from the expiry of the air call false PPA in December of 2021.
Nowadays, we subsequently sold aircraft false alongside our Kingston facility early in the second quarter.
Also offsetting the strength in EBITDA was at $9 million increase in our G&A costs and growth expenditures to support global growth.
With respect to free cash flow and adjusted free cash flow Northland generated approximately $174 million and $192 million in the quarter respectively.
This represents an increase of 40 million and $45 million or 30% compared to the same period a year ago.
As a reminder, our definition of adjusted free cash flow excludes growth related expenditures and we believe there's probably a better representation of our long term run rate for free cash flow.
Overall, the key items, leading to higher cash flow in the quarter compared to a year ago included a 36 million dollar contribution from the <unk> portfolio, coupled with a $13 million contribution from the net proceeds of the refinancing and an additional 6 million dollar contribution resulting from lower interest costs due to the <unk>.
Principal repayments on facility level loans.
These increases were partially offset by an $8 million increase in current taxes that are offshore wind facilities, resulting from better operating performance year over year.
Digging into upset a bit more in December we restructured and Upsized. It says long term nonrecourse debt financing, resulting in $35 million to $45 million of incremental net cash proceeds to Northland.
We have financing was completed on the basis of growth and absence of projected EBITDA growth for 2022 based on increases in the rate base for the quarter. We have included that upsizing proceeds at $13 million and our free cash flow and expect to amortize the remaining proceeds across the three quarters in 2022 weighted more towards the latter.
Her house.
These proceeds have already been included in our financial guidance for 2022.
Under the terms of the absolute facility Northland intends to execute reoccurring upsizing of absence, yet supported by continued growth in its EBITDA as market conditions permit.
On a per share basis. These figures translated into free cash flow of 77 cents and adjusted free cash flow of 84 cents in the quarter compared to free cash flow of 66, and adjusted free cash flow of 73 cents per share same time last year.
These results generated a rolling four quarter adjusted free cash flow and free cash flow net payout ratio was at 42% and 52% respectively calculated on the basis of cash dividends paid compared to 58% and 73% for the same period ending March 31 2021.
Proven and both net parent ratios was due to higher reported adjusted free cash flow.
With respect to our balance sheet North mine remains in a very strong position with ample liquidity to help fund our development initiatives.
That may 10, 2020 to Northland had access to approximately $890 million of cash and liquidity comprising $590 million of liquidity available on our revolving facility and $300 million of corporate cash on hand to help us pursue our growth initiatives.
In addition to free cash flow generated nor fine utilize this additional sources of liquidity to fund growth and capital investments, including proceeds from strategic debt refinancings and debt optimization.
I wanted to take a moment and discuss the recent announcements in Spain that could impact our current portfolio.
In response to the unprecedented high energy prices for consumers in 2022 in March of this year, a Spanish authorities announced the approval of an exceptional update to the regulatory framework for calendar 2022 to mitigate the effects of higher energy prices.
The Spanish framework, the majority of Northland Spanish facilities are entitled to receive a guaranteed rate of return over the regulatory life of the assets.
Revenue from the Spanish facilities is primarily comprised of two main components return on investment or our eye subsidy as well as a larger component based on pool prices.
<unk> introduced will result in the semi regulatory period from Jan One 2020 to December 31, 2022 being divided into two periods. One from Jan one 2020 to December 31st 2021, and the second one running from Jan One 2020 to December 31 2022.
The update was done earlier than expected and these amendments remain to be finalized but are not expected to affect the long term financial performance of the Spanish portfolio.
As of now our expectation is that the changes will not have an impact on the returns that we'll stay at seven 4% over the regulatory life of the assets. We continue to assess any financial impacts on the assets. Once any further amendments are finalized an issue currently we do not expect any significant impact to our 2022 I FRS revenue.
Though we are still continuing to assess impacts to current and future years with our advisors and expect to have clarity in the coming months.
Turning to our 2022 financial guidance as noted in our press release, we reaffirmed our financial guidance for this year.
For adjusted EBITDA, we expect to generate between 1.15 billion and one point to $5 billion. This year.
Given the variability of the offshore wind performance and uncertainty with respect to the macro factors, including energy prices our viewpoint on the 2022 guidance remains unchanged for free cash flow per share and adjusted free cash flow per share, we expect to generate $1 20 to $1 40.
And one dollar and 65 cents to $1.80 respectively.
As a growth company with a significant pipeline of development projects Northern is committed to unlocking value by deploying early stage investment capital or Dev acts to advance their projects as such in 2022, we are still expecting our development expenditures to match, a $100 million or around 45 cents per share defined expenditures to advance.
C cluster, Scotland, and our Japan, and Korea strategies in addition to others.
I would like to point out that our 2022 guidance ranges for free cash flow and adjusted free cash flow do not incorporate any sell down proceeds and as such net proceeds from sell downs would increase our reported free cash flow in the event that they occur.
In conclusion, we delivered very strong first quarter results to start the year, leaving us on solid footing for to achieve our full year financial guidance I will now turn the call back over to Mike for his concluding remarks.
Thank you Pauline and has Pauline mentioned, we had a very good start to the year and looking ahead, we see some big opportunities to further accelerate our growth we have an operating portfolio of over three gigawatts of which the majority is under long term revenue contracts.
And a 14 gigawatt development pipeline to fuel our growth going forward. Our teams continue to actively source new growth opportunities to help accelerate the build out of renewable projects and further grow our global position as a leading renewable energy producer.
This concludes our prepared remarks, we'd now be happy to take your questions. Catherine. Please open the line for questions and just a reminder, that we have David Paul will here as well the executive Vice President of development for Northland.
Thank you.
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One moment please for the first question.
Yeah.
Our first question comes from Nelson <unk> with RBC capital markets. Your line is open.
Thanks, and good morning, everyone.
My first question relates to high long in Taiwan.
I believe you are still working with the I guess, a number of parties on a potential corporate PPA.
Can you just give some color on the corporate PPA market in Taiwan that obviously oil and gas prices are higher.
And I think thats supportive of higher power prices, but can you just.
Talk Big picture about how they are the current power price environment is in Taiwan, and your progress on a corporate PPA.
Yeah, I mean, the driver Nelson of the corporate PPA market, which really has emerged in the last two years in.
Taiwan.
Ace is is global.
Ah corporate net zero targets have renewable energy targets, whatever you want to call it that.
That are filtering down through our through the supply chain right. So a lot of the <unk>.
Suppliers to.
The technology sector.
They are based in Taiwan, and so they're looking to procure renewable power directly a lot of the energy or the electricity coming out of the grid in Taiwan is still a.
Quite carbon intensive so they're looking to they have to procure renewable power directly through contract.
And the government certainly has been creating all the regulatory changes to make that possible. So.
Now I'll, just say Nelson lots of interest.
In securing renewable power from.
From corporates in in Taiwan.
Okay, and then just on the Big picture.
In terms of inflationary costs.
Higher interest rates.
And supply chain.
I guess issues.
How have how have things changed I guess since your Investor Day update are you still pretty comfortable with the.
With the rough estimate in terms of the project costs yeah.
Yeah, I think what we're where we're generally in that same ballpark that we are.
<unk> that we announced at Investor day.
Is nothing locks until financial close or shortly prior to financial close and commodity prices and then some of the contracts are indexed so they move around until financial close, but but theres no material change from what we had disclosed at our Investor day in terms of capital costs.
Okay. That's great and then just on financial close I know back then you were talking about the Q3 financial close.
Or are you now looking at a financial close closer to Q4.
Yeah, and then I'd say kind of a more likely late Q3, but drifting into early Q4.
Okay, and then just one final question.
In terms of Spain.
The results were.
Pretty good in Q1 was that generally consistent with your expectations.
Into the year or.
Are things going to change due to some of the regulations that are going to put in place.
So for this year and Q1 is a strong contributor to the overall annual performance with Spain, I would say that they were slightly behind expectations due to lower wind resource experienced in the first quarter, which we do not perceive to be anything beyond temporary.
Okay, Thanks, Paul and I'll leave it there.
Thank you. Our next question comes from Rupert Mirror with National Bank. Your line is open.
Good morning, everyone pulling first just to follow up on Nelson's question. If we look at the average price you reported in the quarter.
For Spain that say 200, maybe Canadian dollars a megawatt hour.
Should we expect any change to that or the the rest of the year or is that consistent with.
So the average price we could expect with the changes that you're seeing this thing yeah and it is very difficult for us to provides sort of better guidance or color on that because there is that.
And adjustment component per say and it depends on where the prices ultimately are for the balance of the quarters.
You know as of now you know.
You know I would say that that's a good assumption, but subject to change.
Across all of our European assets to in all the markets that we're in the forwards you can even take a look at the forward say they remain quite a quite high quite strong but.
We'll have to see what the actuals ended up being in the Theres not always have a direct relationship.
Okay very good.
Ching gears.
When you talk about Mexico can you give us an update on la Lucha and maybe what are we seeing in the Mexican market with higher energy prices and how that might impact future.
Good question, So I mean the.
A quick update on what's going on with the sector in Mexico, and how that impacts value chip.
So so two things occurred over the last month and in Mexico with respect to energy policy.
One.
We saw the.
Referral from the Senate to the Supreme Court.
Of Mexico get get get hurt and decided upon oh.
In the last month and so the there's a the vote was I think seven to four.
By the court.
I guess against the.
The.
Legislation that the administration that tried to pass a year ago right past a year ago to try and.
Basically reverse some of the energy reforms that had been constitutionally embedded by the previous administration. So.
While the majority of the Justice is.
Would have declared that that that legislation was unconstitutional.
<unk> eight are to make it a formal declaration from the court that it was unconstitutional. So it ends up leaving you in a bit of an ambiguous situation. So it it means that all of the injunctions that had been filed by <unk>.
Private power producers, including Northland.
Remain in effect and further injunctions can still be filed.
And the certainly the lower court decisions have been similar by in terms of being a determining that the legislation that was passed a year ago.
<unk> Ah was unconstitutional.
So that's the one piece of it that's gone well.
That happened the second piece is that the administration tried to.
Meet the two thirds requirement in a congressional vote, two constitutionally embed the changes that they wanted to make to reverse.
Deliberate liberalization of electricity markets in Mexico, and they failed to get that threshold and the administration seem to signal out to that that they were going to move on to other priorities.
So that are in the medium to long term. It is a we would view as a good result for la Lucha and for the power generation sector in Mexico in general They certainly are seeing higher energy prices in Mexico as a result of higher gas prices.
Which Ah is.
Typically on the margin and the Mexican power market.
I think again in the medium to long term that could bode well in the near term. We're just working closely with all of the regulatory bodies to get.
The final permits are required to get a project are interconnected along with other private generators.
In Mexico.
<unk> is moving it's just moving slowly.
Okay. So the outlook for that is that still a.
'twenty two event that should be producing online before the end of the year.
I mean, our best view on it is to look at how long it has taken others to move through this process to get an F N.
Claim approved and then move on to getting interconnected.
And so based on how long it took other projects to move through we would expect to be able to move through by the summer, but but that's.
Simply looking at the as I said other projects in that how long it took them and applying that to la lucha.
Excellent thanks for the color.
Thank you. Our next question comes from Ben Pham with BMO. Your line is open.
Hi, Thanks, Good morning, I had a couple of questions on Spain and.
I'm wondering are.
You're just disclosing disclosing this quarter.
I think it's 65 million herself EBITDA from Spain, and correct me if I'm wrong. It on an end and then you've you've said that's been to add 75, knowing for a full year.
Are you are you well above.
Cracking on Spain, so far it's only been one quarter.
On them.
Can get back to you one on EBITDA, but on I sort of have the free cash flow number is better off the top of my head. So there is seasonality right and in the portfolio. So Q2, and Q3 are going to be.
Sort of lower contribution quarters, and the way that the debt amortization. Currently works is not quite match to be at cash flow generation of the portfolio I think in time, we would like to hopefully change that so there should be some lower contribution quarters upcoming.
And we'll get back to you on me on the EBITDA question.
Okay, and then the way you're you're booking to the merchant upside now is because you're spreading out over the next 12 to 14 years or so versus book in the current quarter.
So actually the way that the Ifr S revenue treatment works and.
At least under the that the previous method of accounting, which we're still holding and is that most of the adjustments. So we experienced a more benefit in 2021. So in Q4, we had stronger results and then it will be a push forward.
Our recognition into 2023, so there really wasn't that much of the historical pool prices being reflected in 2022, what where there's uncertainty astellas is like.
What the prices are for this year.
Okay Gotcha and.
Your comment Paul weigh in in a moat around.
The.
A review of the high spot price and the impact on consumers is is essentially get it its more really how to deal with the merchant prices versus looking at the the Roe's, which.
Should be moving higher and in this environment versus going well there.
I guess the way to think about it is.
Over.
Over the lifecycle of the assets, we are guaranteed a return what splitting up the regulatory period does is the resets happen sooner versus over a long period of time. So it gives them opportunity to course correct.
And get more discrete shorter term periods versus over a longer term three to six year period, which was that the.
The regulatory cycle currently.
Okay got you and then one final one on upside can you remind me how that inflation works he had his rate base.
Adjusted each year by by inflation is that how that works that's right. That's how it worked minimum yes, okay got it okay. Thank you.
No problem.
Thank you we have a question from Mark <unk>.
<unk> from CIBC capital markets. Your line is open.
Thanks, Good morning, everyone.
Question is just on Taiwan, and a potential sell down as you move through that process are you set on a specific percentage.
Just based on pricing and they can bid handle or just how much equity you want to ultimately commit to those.
<unk>.
So should we I mean, we have disclosed that we are looking going forward at doing sell downs are across our portfolio globally at different stages of development to bring in third party equity and to monetize some of the.
Development value that we've created in our portfolio, which and use that as part of the essentially part of the capital stack to fund our equity contribution to the projects in general.
We haven't said anything.
Specific on on.
On on Taiwan or high long.
At this point yet on a on any kind of a sell down.
But can you just comment on whether or not once you start the process you kind of have that you know very well defined process in terms of the amount we're going to sell or is it something that can evolve and.
And the sizing of it.
Can change to that process I think any sell down pursued would be a negotiation and you know as were.
Just just general commentary in terms as you know you're mostly discussing them sell that opportunities of mature assets with financial investors, you know, who generally wanted to deploy larger amounts of equity into renewables. So you know obviously the percentage ultimately.
<unk> is a factor, but it's also the equity that they wish to deploy them. So you know ultimately, it's a negotiation and it's not going to be set them on each and every felt that in that we pursue.
Okay, and then just in terms of the corporate PPA market as you look ahead and there isn't at the tenure of this.
Here for new projects.
Is that an option for those projects in terms of different ways in terms of getting the sort of maximizing revenue for any any of those projects that might be in in terms of.
Bid tender type power and then okay.
And whether or not that that's feasible.
Right.
Sorry, I didn't quite get the question, but sorry, maybe did you figured out could you repeat it. We you said it broke up a little bit.
Yeah. It was just on the bidding that could happen this year with in Taiwan.
RFP, whether or not Oh, yes, yes, corporate ppas or an auction on top of whatever you could procure in that RFP I think yeah. I mean, I think certainly looks features kind of kind of.
Market speculation and so on and round round three right around the next round this year and next year for offshore wind procurement in Taiwan.
There is a.
Did there could very well be a corporate offtake involved as you saw in Germany, where.
The market evolve to where there were Ah corporate offtake assumptions underwriting our bids into the procurement there.
Great and then you mentioned earlier on in your opening remarks about the high spot prices and energy independence being supportive and our team is working hard to find the opportunity is there is that a hint that we could see something later this year in terms of some new onshore renewable growth whether an.
In existing markets or new markets.
Well I mean, I think we've talked about an interest in general on an onshore renewables in eastern Europe .
Certainly wouldn't want to give the impression of anything a large.
Large coming I think it's more kind of anything that we would do in onshore renewables in our EU Eastern Europe would be.
Modest sized projects in terms of kind of contribution so kind of more incremental.
Growth Likewise in Spain, likely which is our other target market for onshore renewables in Europe .
For offshore are where.
We are seeing.
And as I said in my remarks at the beginning different countries in Europe looking to find ways to either increase their overall target for offshore wind.
And or look at ways to accelerate the permitting if current projects that are being proposed so we're tracking that closely and obviously trying to see how we can be part of the solution for what Europe is looking at in terms of getting more renewable power to reduce their.
Reliance on on Russian gas.
And just to clarify are you.
Are the North Sea cluster project potentially something that again sooner.
Yeah.
I don't know I mean, like I said, it's early days, but but.
But I would just be speculating if I answer that question.
Okay. Thanks, Ron.
Thank you we have a question from John mould with TD Securities. Your line is open.
Good morning, everyone a couple of questions on behalf of Shawn.
Maybe just looking at your Canadian development opportunities and starting with Ontario.
You've divested a couple of gas fired units with expiring ppas and it looks like there's a sizable need for supply emerging after the Pickering closure in 2025, how are you looking to position yourself positioning yourself in the Ontario market in terms of future growth opportunities and maybe more specifically what could a potential path forward look like for the Marmora pump storage.
Sure Dave.
Well, we have been tracking what's going on with the system operator in Ontario in terms of their their forecast for both.
Capacity in energy so as you are.
Seem to be close to a two there's there's an increasing awareness of the need for capacity.
Capacity.
Ontario Post 2025, and and I think the that you'll start seeing Ah I think they'll also be an emerging need for energy in Ontario, as well going forward, maybe not as early as the need for capacity. So yeah. So we were always actively looking for ways to advanced.
Marmor project.
We think it is an excellent asset in terms of providing.
<unk> flexible capacity to the system.
And we're also looking at other ways to.
Be able to contribute to the the what we see as growing needs for incremental capacity and possibly energy and in Ontario.
Okay. Thanks for that and maybe just tell me to come back you've got a couple of operating wind farms there and.
As I'm sure you're aware the government has announced two three gigawatts of tender opportunities have you got any expansion opportunities at existing sites and are you looking to be.
Active in that market more broadly are you essentially happy with what you've got operating there at this point.
Our main focus in Quebec is on extending the contract life of those assets the power purchase agreement on those are facilities in Quebec.
Certainly believed that Oh, we're in a much better position than we would've been five years ago.
Given the signals that our hydro Quebec in the Quebec government are putting out in terms of meeting additional renewable energy capacity.
Okay. Thanks, I'll leave it there thank you.
Thank you.
Ladies and gentlemen, as a reminder to register a question. Please press star one.
We have a question from Andrew Kuske with Credit Suisse. Your line is open.
Thanks. Good morning, just wondering if you could give us high level thoughts.
On the G. IP W. P D deal and what that really means for future farm Downs that you may engage and really plan to engage and just sort of generally in industry trends or maybe acceleration of offshore developments I'll.
I'll say a couple of words, then I'll turn it over to David Paul our head of development.
On the line as well.
I mean, we're certainly seeing lots of interest amongst our financial.
Investors funds like J P, but also our oil and gas majors as you know and other other.
Infrastructure and power sector investors in offshore wind, specifically and also a lot more interest in getting in.
At an earlier stage in the development of projects and as you know these projects take several years to move from inception to to operation. So.
Yeah, there there seems to be a lot of interest in its.
And you were also continuing to see new markets open up for for offshore wind. It really is the one way that you can get significant scale, which.
Which is increasingly being are becoming a priority both to decarbonize electricity grids, but also to meet kind of corporate net zero targets as we talked about earlier, but thirdly.
To be able to facilitate and this is kind of obviously at an earlier stage facilitate the production of green hydrogen you need is a significant volume of.
Of green electrons and ideally a low cost screen electron so I don't know if David you've got anything more on the closer to the W. P. D stuff in Taiwan, Yeah, No I think the bigger anything to add to what Mike said, it's a confirmation of the the trend of the the appetite for investors into the.
Into the renewable sector until offshore when you, particularly in this case you put one example, I think as you'll notice a number of others out there.
On to what Colin said before and what those essentially investors need is somebody like Northland, who of course has the ability to be generic projects and develop projects and take them through just the financial close so far as I see is there is it is a positive trend and we can work with them in the way we want to work with them in terms of the partnership and unlock projects.
And a lot of that capital for them. So I think it worked very well for us it's a good trend.
Okay. Thank you that's that's helpful and then maybe.
Kind of a related question is when do you think about just your existing asset positions.
Could you maybe talk a little bit about the tactical and strategic positioning of the existing transmission that you have to your facilities and does that give you an advantage for further expansion and just maybe accelerated efforts in Europe .
Chris offshore wind exposure.
I think the certainly I don't think the export cables are the.
The transmission infrastructure to our existing facilities offers much opportunity.
Uh huh.
Two to kind of expand our capacity where the opportunity more lives for us in Europe is to.
Build on our existing market position our relationships our partnerships.
To pursue incremental projects.
In those markets, whether it's Poland, Germany.
The U K and I think it's more more along those lines and then technically it is not much opportunity to add more capacity through the existing transmission lines. The other opportunities also just started talking to regulators about extending permits are.
And allowing us to basically extend the asset life on some of our existing facilities.
In terms of kind of adding more.
Generating capacity to existing Interconnects seats, the one market where were starting to look at that as in Spain.
In terms of hybridization, so, adding solar capacity to our existing wind facilities to try and maximize or optimize the use of an interconnect. So there's that's the one area, where we're looking at that.
Okay. That's great. Thank you.
Okay.
Thank you we have a question from Nazi Beydoun with I E capital markets. Your line is open.
Hi, Good morning, I just had one.
One question on the onshore renewables and the outlook in North America, I think you had a.
One gigabyte, one gigawatt longtime target for you know call. It in the U S. I'm just wondering if you can give us any updates on sort of solar prospects in New York and maybe some of the other markets we're thinking about.
So we've got a.
Our development team in New York State, that's actively developing a number of solar projects throughout the state. The state has got a an aggressive target for.
Onshore and offshore renewables onshore and so running annual procurements are nicer just running annual procurement. So so that's the one area of focus we've identified the northeast of the U S and California as markets, where we would like to either develop or potentially acquire renew.
LNG capacity and so nothing more to say on that but that that those are our target markets.
Okay got it thank you.
Thank you and there are no other questions at this time I'd like to turn the call back.
Back to Mr. Crowley for any closing remarks.
Okay, well, thanks to everyone for joining US again today, we will hold our next call. Following the release of our second quarter results in August and in the meantime, thanks for your continued confidence and support.
Ladies and gentlemen that does conclude the conference call for today. Thank you for participating and have a pleasant day.
You may now disconnect.
Okay.
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Yes.
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