Q3 2023 Northland Power Inc Earnings Call
Yeah.
Welcome to the Northland Power conference call to discuss the third quarter 2020 at this time all participants are in a listen only mode. After the speaker's presentation there'll be a question and answer session to ask a question. During this session you'll need to press star one on your telephone you will then hear an automated message advice.
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To withdraw your question. Please press Star one again as a reminder, this conference is being recorded on Friday November 10th 2023 at 10, a M Eastern standard time.
Conducting this call from northern power are Mike Crawley, President and Chief Executive Officer, Pauline Alan China, Donnie Chief Financial Officer before we begin orphans management has asked me to remind listeners that all figures.
Presented.
Canadian dollars and art.
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 press release.
Announcing Northland Power's results and be guided by its contents and making investment decisions or recommendations. The release is available at www Northland power Dot Com I would now turn the call over to Mike Crawley.
Thank you very much and good morning, everyone and welcome to Northland third quarter 2023 earnings call.
Before we start I want to reiterate that the health and safety of our employees and stakeholders always comes first.
This is particularly important now that we have.
These significant projects in construction.
As always I will provide you with the business updates before passing things over to Ali who will walk you through our financial results.
Let me first start with an update on our offshore wind business.
No question that it's been a tough year for the offshore wind sector.
Supply chain constraints and macroeconomic conditions have hit offshore wind the most of all of the different renewable technologies.
Despite the challenges facing the sector I am pleased to announce that in September we signed and closed the financing on both the Baltic tower and high long offshore wind projects, representing over two gigawatts of additional offshore wind.
Capacity.
These are significant milestones for Northland and a big positive marker for the offshore wind sector.
Were particularly proud to have financed both projects for more than 20 year terms totaling over $10 billion of nonrecourse project level debt, but to support from a global financial partners had a competitive all in rate of 5%.
What is important to notice that we have already secured funding for our portion of equity for these projects under construction, including <unk>.
Both Baltic power and high long are progressing well in construction, which I'll speak to shortly.
Once they reach full commercial operations in 2026, and 27 with first turbines generating power in 2025, they will provide a material amount of EBITDA and free cash and cash flow growth for our business.
Recognizing the adversities within this sector, we identified an action several measures early to counter changing dynamics in the space to limit potential negative impacts to our projects. For example, we locked in the supply chain early unsecured enhancements to the revenue contracts.
Baltic power. This included moving inflation indexation back one year in the 25 year PPA that we have on the project and changing the base currency from Polish zloty to euros, which enabled increased amount of liquidity from debt lenders.
Suddenly on how long, we were able to secure changes to the corporate PPA, including moving to churn from 20% to 30 years, which helped us offset the impact of cost increases. We also secured other opportunity op optimizations on the project itself.
We already have an attractive.
Visible growth profile once we achieve commercial operations for Baltic power and high launch by 2026, and 27, respectively and remain disciplined on our.
Pipeline to ensure that the growth we pursue is profitable and balanced.
Earlier in the year, we did not hesitate to walk away from projects like the North Sea cluster that no longer met our investment criteria.
Market conditions changed and we were also able to recover our sunk cost on that project and secure a premium. We also exited early stage noncore offshore wind projects like Cabot gummy in Japan.
As well deciding not to participate in any offshore wind development in the U S with Nathan supply chain and expensive upfront lease payments is just another example of us remaining selective and disciplined in our approach to growth.
As I alluded to at our offshore wind Investor update in September we are focused squarely on execution of our projects under construction to be delivered on time and on budget.
This is the same as we have done.
In the past, we will continue to take a diligent and disciplined approach to capital allocation, ensuring that we invest in high quality profitable for projects that drive value for our shareholders.
A large and diversified development pipeline, including solar onshore wind and energy storage provides us the ability to dedicate our resources at any time to the <unk>.
Jackson the investments that are most attractive.
This is what makes north and positioned well for success over the long term.
How long and Baltic tower, our advanced projects, the secured construction contracts and financing cost locked down.
Therefore, north line does not see any further offshore wind procurement.
Financing for the next three years that enables us the flexibility to wait for not just the supply chain bottlenecks to be resolved, but also for a more stable interest rate environment.
Subsequent to the high long financial crowd, both our teams have been focused on closing the sale of the $29 four stake interest in high long, Jim Carrey announced last last year in December the sell down transaction is currently targeted for the fourth quarter of 2023 subject to the satisfaction of certain closing conditions.
And an extension of the strategic partnership formed with Jim Carrey during the third quarter. We also closed on a 49% sell down in two early stage offshore wind development projects in Taiwan, North wind in Kennewick.
<unk> participation in these projects further demonstrates strong interest in the Taiwanese offshore wind sector and in the longer term broader partnership with Northland overall and beyond Taiwan.
Now shifting to the onshore renewables business last quarter, we achieved financial close on Oneida one of North America's largest energy storage projects totaling 250 gigawatts.
Sure.
Construction is progressing as planned with commercial operations expected in 2025, the contracted portion of the project project is partially deflation projected protected subs.
Subsequent to the end of the quarter, our bluestone and ball Hill project in New York commenced early revenue both projects totaling 220 megawatts have 20 year revenue contracts with inflation protection.
And are expected to contribute an aggregate of $42 million and $15 million of adjusted EBITDA and free cash flow respectively.
Okay.
We are presently working towards substantial completion at which point, we will finalize our tax equity funding with all this expected to be completed in the fourth quarter of the year.
We've achieved a great deal this year across both our offshore wind and onshore renewables business. The 2023 goals. We stated at our Investor Day earlier. This year are being achieved and we are looking to close on a few more before the end of the year.
Now looking at the headline numbers in the quarter, we delivered adjusted EBITDA of $267 million in the third quarter, along with adjusted free cash flow and free cash flow of 25.
14th.
Share respectively.
<unk> will provide a more detailed look into the financial numbers later in the call.
Moving to updates on the construction progress for our three projects under construction, how long Baltic power and Oneida.
At a high long fabrication of key components and in water horizontal drilling has commenced.
<unk> has already logged 5 million working hours, while adhering to strong health and safety standards foundations for the turbines and offshore substation.
Work has significantly advanced in the offshore jacket foundations are in final outfitting and close to being ready to sail out to Taiwan.
Fabrication of key components have also begun at Baltic power.
At the Oneida energy storage project the road and upon construction and equipment Foundation has commenced along with preparation of site for receiving major equipment in the spring.
Execution of these three projects is our top priority, we maintained very close communications with the major contract contractors in our supply chain at both project and corporate level. This is crucial to ensure the quality of construction and that our projects are delivered on time and on budget.
Contractors in our supply chain, a repeatable with strong track record and expertise in most cases, we have worked with them on previous projects. Most of you may have seen recent media reports on Siemens energy.
There is no indication that this will impact the delivery of turbines to a high long project SUV have reiterated and confirmed the high long that the program remains unaffected and is currently tracking on schedule for material deliveries that theyre fully and that they are fully underway for the plant installation in 2025 and of course there were some further.
The news yesterday on discussions between Siemens energy and the German government in the in the news.
Delivering these three projects into operation they are expected to collectively generate in aggregate adjusted EBITDA and free cash flow of $570 million to $615 million and $185 million to $210 million, respectively. On a five year average basis, resulting in significant value creation and accretion.
For Northland shareholders.
With that I will turn the call over to <unk> for more detailed review of our financial results.
<unk>, Mike and good morning, everyone before diving into the quarterly results I wanted to take a moment to emphasize the immense quarter. We have had with the closing of the financings and more than two gigawatts of offshore wind projects.
The team work with more than 20 financial institutions, each for how long and Baltic power, which included building new relationships with over 15 commercial global banks and export credit agencies.
Developing these new relationships and bolstering existing ones will go a long way in building an ecosystem of partners for future project financings for Northland globally.
Closing over $10 billion at project financings in the current market is a testament of the high quality projects, we own and is a positive reflection on the capability of our teams our partners our reputation as a sponsor leading both financing on behalf of the project and our partners.
As Mike noted all projects and construction have been funded through approximately $900 million in proceeds raised on our ATM program in 2022 and through the $500 million corporate hybrid debt at a net cost of approximately six 2%.
Meaning elements of the funding plan is the closing of the 49% south out of high long to Gen <unk>, which is targeted for the fourth quarter subject to achieving closing conditions as Mike discussed.
Northland had access to $563 million of available liquidity at September 30th, including $63 million of cash on hand, and approximately $500 million of capacity on its corporate revolving credit facilities as of today.
Northland also had a $500 million short term corporate credit facility to help fund its equity contribution and high long of which 344 million was utilized at September 30th. This facility is intended to be repaid subject to the receipt of the proceeds from the sell down a pile on to Gen. Sorry, the facility matures.
At the end of November of 2023, and may need to be extended or refinance if there is a delay in the closing of the southeast. In addition, Northland has secured a 1 billion dollar high long related corporate LC facility to support high long credit requirements during construction.
Hi, long Northland, Taiwan related letter of credit obligations and this facility with decreased by 49% upon closing of the Gentile he felt that.
Looking at financial results released last night, our third quarter 2023 results were lower compared to Q3 last year, but were in line with our expectations. We generated adjusted EBITDA of approximately $267 million in the quarter, representing a decrease of approximately 8% or $23 million compared to the same period last.
The key factors that contributed to the lower EBITDA year over year included.
$50 million decrease in operating results at the offshore wind facilities, primarily due to the non recurrence of the unprecedented spike in market prices realized in 2022.
This decline was partially offset by higher turbine availability at North Sea. One following the completion of the RSA replacement campaign in 2022, and the effect of foreign exchange fluctuations due to the strengthening of the euro and other items and a $14 million increase in G&A cost and development expenditures, primarily due to higher <unk>.
To support operating projects and the latter driven by the timing of the spend.
Factors, partially offsetting the decrease in adjusted EBITDA were $29 million increase in the contribution from the Spanish renewables portfolio, primarily due to the increase in band adjustments, partially offset by the decrease in both merchant revenue and <unk> <unk>.
$19 million in gains and partial asset sell downs with respect to our free cash flow and adjusted free cash flow Northland generated approximately $36 million and $64 million in the quarter respectively.
This compares to $44 million and $66 million in the same period a year ago.
Significant contributors, resulting to the lower adjusted free cash flow and free cash flow in the quarter were a decrease in contribution from the operating facilities, leading to lower adjusted EBITDA a decrease in the result.
The decrease is a result of higher net proceeds from the <unk> refinance that were recognized last year and the decreases were partially offset from partial asset sell down gains and lower finance costs.
On a per share basis. These figures translated into free cash flow of 14, and adjusted free cash flow of 25 cents in the quarter compared to free cash flow of 19, <unk> and adjusted free cash flow of 28 cents per share in the same time last year.
These results generated a rolling four quarter adjusted free cash flow and free cash flow net payout ratios of 59% and 82% respectively calculated on the basis of cash dividends paid compared to 32% and 37% for the same period ending September 30 of 2022, we continue to focus on managing our balance sheet and we are.
We'll commit to new projects in future periods, only being convinced of locking down financing and returns and Thats a more uncertain environment.
As Mike mentioned in addition to working on the closing of the high long sell down transactions with Gen. Torrey that is targeted for the fourth quarter. We also closed on a 49% sale sale of four of Northland and can win to Gen <unk>, which.
Which is reflected in our third quarter financial results. We continue to have a very active working relationship with the Gen <unk> as a long term partner.
Turning to our 2023 financial guidance as noted in our press release, despite the regulatory changes in Spain, which materially impacted our results last quarter and the macro economic challenges posed this year, we are reaffirming reaffirming our 2023 financial guidance I'll be it at the lower end of the range for adjusted EBITDA, We expect.
To generate the low end of the range of one two and $1 $3 billion. This year for free cash flow, we expect the range to be.
At the low end of $1 30, and $1 50 per share while for adjusted free cash flow, we expect to be at the lower end of the range of $1 $72 90 per share.
The low end of the ranges include sell downs gains.
Conclude it has been a significant quarter for Northland with de risking and the achievement of financial calls of our two marquee offshore wind projects going forward. Our focus remains on the execution of our three projects under construction within schedule and budget, which will allow us to potentially enhance project returns further with the optimization levers we have.
That were discussed on our offshore wind investor call last month, I will now turn the call back over to Mike for his concluding remarks.
Thank you Pauline and picking up on <unk> point and going forward, we intend to focus on the construction and execution of our projects in progress.
These uncertain times is especially crucial to stay constantly engaged with our suppliers throughout the management.
So assume management and the project team level conversations to ensure we are on track to stay on schedule and our budget on a budget and manage the impact of any setbacks Northland has no further committed equity for the subsequent years and we intend to take full advantage of the Optionality provided by our growth pipeline. We are focused on being disciplined in selecting the <unk>.
Growth projects that meet our investment criteria in the current environment.
This concludes our prepared remarks, and we'd be happy to take your questions. Please open up the lines.
Thank you.
As a reminder to ask a question you will need to press star one on your telephone withdraw. Your question. Please press star one again, please wait for your name to be announced please standby, while we compile the Q&A roster.
One moment for your first question. Please.
Our first question comes from the line of Nicholas Boardwalk with Cormack Securities. Your line is open.
Thanks, Good morning, everyone.
If you could expand a little bit on the correct on the curtailment issue seen in Germany, this quarter and whether anything can be done.
Improved transmission or maybe even about battery energy storage to monetize their production.
So we're we understand there is still further transmission upgrades being pursued over the coming years in Germany and there is also other enhancements to the grid being proposed including.
I think some announcements recently of adding additional gas capacity to the German grid as well.
So all of that in our view would would reduce curtailment in the years ahead or at least be a positive factor in terms of curtailment risk in the years ahead.
We have a storage team, which looks at all of our assets in terms of whether or not storage can be added.
Two.
Our projects to manage or mitigate.
Curtailment.
Anything further to say at this point.
Okay. Thanks, Mike.
On the development costs.
Earlier stage segment of the pipeline is it fair to say that some heavy lifting was done with projects this year and that project development and development overhead costs might roll over a little bit into 2024 are you expecting a similar investments we made in the coming year.
I think you should expect to see a smaller investment in the next couple of years, just given that we're moving.
More into an execution phase than a development phase, we still have some development activities going on but the weighting will be more towards execution on projects that are of course no capitalized.
Got it thanks, and then last for me it seems like a lot of regulatory bodies are becoming more open to revising and revisiting previously awarded PPA prices.
Better reflect the cost of developing new projects Im curious if youre seeing the same dynamic in the Colombian market and whether or not you might be able to rebid suba or other solar projects over the coming years.
We haven't seen anything in Colombia or in.
And in the Colombian market, what we have seen is in the.
The northeast of the U S. There is a reason as you know maybe offshore wind auction, which came in at I think.
140, USD per megawatt hour on average price I could be wrong on that is that exact price, but it came in substantially higher than previous options.
There is recent news out of the UK.
Around potentially lifting the.
The ceiling.
<unk>.
Sure win bids going forward in future auctions by 30% to 40% I can't remember the exact amount, but by a substantial amount. So all of those for us are indications.
Energy prices and PPA prices are adjusting to.
The new capital costs and cost of capital in the sector.
Okay.
Great. Thanks, Mike.
Thank you one moment for our next question. Please.
Our next question comes from the line of Rupert <unk> with National Bank. Your line is now open.
Hi, good morning, everyone.
With the equity investment from Jim Terry can you give us more color on the closing conditions to get that deal done.
What's your comfort level with completing it this quarter.
So as part of the transaction Centauri needs to meet certain requirements in order to be part of the debt financing, which is taking more time to finalize given they are multi party arrangements also as you know we've got ECA is involved so right now I mean, the the discussions and the work streams are progressing and where we're still target.
To complete that.
In the fourth quarter.
If it is delayed or is there anything you have to do.
Regarding the financing thats in place.
Yes, we've got short term bridge financing. That's currently in place. So I think the simplest thing to do would be likely to extend that financing that we have in place.
Okay. Thank you and Mike I know, you've given us some color on Siemens already it does remain a topic of interest with investors and with that I Wonder if you can give us a little more color on the plan for producing turbines for how long I know, they're not supposed to be delivered until 2025.
Can you give us some color on where they are going to be assembled.
Unique to the supply chain for those turbines and again remind us of the carrots and sticks that you have with Siemens to ensure delivery.
Yeah, so the the.
The bulk of the components are coming from.
European manufacturing facilities.
There is a nacelle fabrication facility in Taiwan as well.
There is some of the sales are going to be sourced.
Have typical LDS.
And penalties.
In the contract to supply contract to incentivize on time delivery by Mr. Mesa, We also have buffers in the contract schedule.
That give us further assurance in terms of being able to make sure. There's no knock on effects in terms of delays.
The.
Ah.
I think I'd, probably leave it at that other than the fact that we are as you can imagine have been in regular contact with.
Seamless can mesa, including me with.
The equivalent it seem as can be.
Given the news.
One or two months ago to ensure that that ours.
There was still moving ahead on schedule and we've been given every assurance and confirmation.
At my level, but also at the project level debt that is the case.
Of course, we take some comfort from the news yesterday.
A reuters story around we're discussing throughout with the German government, obviously thats.
To be confirmed in the days and weeks ahead, I presume, but but generally.
We are confident in seamless <unk> ability to deliver and in Siemens Energy's long term liability.
Alright, great. Thanks for the color I'll get back in the queue.
Thank you one moment for our next question. Please.
Our next question comes from the line of Sean Stewart with TD Securities. Your line is now open.
Thank you and good morning.
Mike I'm wondering if you can give any general commentary on.
The potential for rationalization of the existing operating platform to backstop liquidity.
Any new thoughts with respect to the thermal portfolio potentially ebbs.
Streamlining.
Portfolio is that at all on the radar at this point.
Yes fair question listen we've been clear in the.
The last six months in last year that we are looking to.
For ways to simplify the business moving forward.
The business did a lot of the prospecting over the last few years in some markets have turned out very well for us and we've either like Poland developing very attractive project and constructing a very attractive project in that market.
Other areas like Alberta, where we've just secured a strong pipeline of projects that can be built out at our discretion over the next.
567 years so.
Other markets.
Perhaps had been turned out to be less attractive and so I think what youll see is that as pulling back from some markets that have been for the.
Less attractive.
And looking to simplify the business moving forward, but in terms of specific assets I wouldnt have anything.
To comment on the call right now on that.
Okay. Thanks for that I would say on the thermal assets.
They are an important part of our fleet.
They do sell deliver meaningful cash flow.
Yes, okay.
And then any comments on appreciating you're shifting to more of an execution versus development phase at least in the midterm.
The comfort with the overall liquidity position adjusted for the Gen Torrey proceeds to come.
Yeah.
Do you feel comfortable that whatever equity investment needs you might have your your balance sheet is set up appropriately right now.
Let me just on investment decisions anything that we do on investment decisions is completely discretionary moving forward. So.
And then one of the points I.
I think we've made at our.
Investor call in September.
Is that we have.
We're in a position now where we've got three large projects.
Three financial close into construction over the last year that will deliver meaningful cash flow.
In two to three Years' time as they come online we don't need to source new growth you don't need to fund new growth over the next two to three years.
If we do it will be if market conditions are favorable if the projects have attractive economics.
And but we don't need to pursue any any any protests during that period of time. So anything we do like I said, we'd be entirely discretionary, but I'll leave it to pulling to answer the rest of the question, Yes, I mean, I think as Mike mentioned.
And we are looking at that.
Simplifying the business overall, which.
We'll include either further sell downs in our asset sales so that would be.
Yes.
Our focus over the next.
One to two years, which will of course generate some liquidity for the business and how we deploy that will be the best.
And in the best interest of the company the balance sheets.
Ongoing liquidity.
And what's most accretive for us.
At the time.
Okay, Alright, Thats all I have thanks very much.
Thank you one moment for our next question. Please.
Our next.
Comes from the line of Mark Jarvi with CIBC. Your line is now open.
Yes, good morning.
So I think you guys are winding down the hydrogen initiatives and obviously, it's very early days and no need for capital, but just what does that mean for any future options around the existing offshore wind farms, Jeremy I think at one point there was talks about.
Sorry, the power to move towards Green hydro production or even some of the efforts in Atlantic Canada.
And those two aspects, where you're looking at green hydrogen.
Yes, that's a good question Mark.
So we we folded in flops, the hydrogen business unit and as we said I think in the last quarter, we would no longer be looking at.
Any export hydrogen export projects or large scale standalone hydrogen projects.
Have retained some talent.
In hydrogen within the company, which is now embedded within the.
The thermal team, which I understand fuel as well.
To look at.
Opportunities like you described in terms of whether or not there's an offtake.
Re contracting opportunity that could involve hydrogen going forward for any of our facilities you referenced in one but.
Over the next decade for any of our facilities. So we thought it was important to retain.
Some expertise and knowledge in that area.
And it's for that reason.
So just to clarify Mike you are saying that there is still some auctions and north sea one.
Using that.
Power supply system.
It comes around Green hydrogen.
Other option for offtake.
So did you have to be clear. So we would we certainly will be exploring opportunities to sell electrons.
Two a hydrogen producer depending on how that market develops in the coming years so understanding.
Green hydrogen in the market for Green hydrogen is important in that respect as as projects over the next 10 years like with all of the IPP start to gradually come off their initial contract and need to be re contracted so it's about having different options and making sure we have the full knowledge and expertise.
Ts of.
Markets that you could sell the electrons to.
Marketer you could sell the electrons to corporate off taker.
Some cases, maybe rebid them in for sovereign contract.
Or possibly green hydrogen market develops over the next few years, you could sell them to a green hydrogen producer as well. So we just wanted to make sure that we understand the market and are in touch with what's going on in the market. So that we can.
Choose the most profitable and the most attractive opportunity for re contracting any of our projects over the next 10 years, including EMC won.
Okay makes sense and then.
A handful of years ago, there was some conversation around north of maybe getting paid towards development and asset management capabilities, so sort of an asset light.
Sort of on a consulting development expertise model.
Obviously in light of.
There are some new capital or I guess the discipline you are selling now are you getting any inbounds has capacity was your teams to do any of those sorts of initiatives.
Or is that just something that's really not on your radar at this point.
I didn't quite hear it all was it to do development on a fee for service basis is that what it was.
Yes, yes, exactly yes.
So effectively what we're doing in a way with the sell downs and by bringing in partner equity into some of that project is developing projects and and getting a premium for.
The sweat equity in the Derisking and the value creation that we do through development. So in a way that's what we're doing we're still retaining a portion on those projects for our own capital.
And also as we look at our development pipeline and rationalizing our development pipeline, if we divest certain development assets effectively that's what we're doing is.
Monetizing the value created by those development pipelines, if we decided that there is a better <unk>.
Owner or a better constructor and operator of that asset then we certainly would be looking at those types of opportunities as well.
We haven't looked at at this point at doing kind of almost just a pure development model, where we're developing projects with.
With no intention of deploying our capital.
At the end of those projects at any time, I mean like I say in some cases the pieces may change and we may decide that there's a better owner for that asset and we'll be disciplined in that respect.
But not not at this point in terms of doing fee for service development.
Yes, I'm, just trying understand and there's obviously been some disruption and some firms backing a little bit away from offshore wind.
I'd, rather not your skill set without extending yourselves from a balance sheet perspective could be leveraged going forward I think it could be and I think the question.
Maybe it fell down to sell down on any project as it could be it could be 25%, 50% sell down it could be even greater right.
And so I suppose to your point it could be all the way to zero given our skill set that we have.
I think those decisions don't necessarily have to be made at this point in time, but there is as you point I think as you're alluding to.
A lot of large players with.
Significant balance sheets, and a lot of capital that want to deploy.
Capital into offshore wind, but don't have the expertise.
To develop those projects and arguably maybe there may be there may be an opportunity there for sure.
Okay. Thanks for the time today.
One moment for our next question please.
Yeah.
Our next question comes from the line of Nelson <unk> with RBC capital markets. Your line is now open.
Great. Thanks.
Quick question on the Penguin North when sell down.
So can you just give a bit more color in terms of the mechanics of how the cell.
L down once and how you recognize.
$19 million of gains did any.
Past change pans or will it get Tara just mainly fund.
A chunk of it.
Development costs.
Cash did did change hands and we received that cash in the quarter.
And I would say that that followed a very typical valuation process for an early stage development.
Okay got it and going forward.
We will share the costs going forward.
Okay makes sense.
And then I don't make mentioned that you guys are not looking to close any new.
Offshore wind projects in the next few years, but for headwind in North wind.
Are you still actively developing that project or is it on.
On hold or can you just give us an update on timing and process for those two projects.
Yes, I think theres still.
Some clarity and information.
That everybody who has any of the next round projects in Taiwan is waiting for from the.
The Taiwanese government in terms of what the rules are going to be when the auction is going to be when the bid is going to be so.
Still a lot of information missing to determine even if.
The projects or something to that.
We would want to proceed with so.
It's pretty early days.
Okay got it.
And then my next question relates to the New York Wind projects Congrats on completing those projects.
I think previously you guys talked about a project cost of about $600 million U S.
Or is it still around that level or is it a bit higher given that there was some delay and then also can you just talk about the.
Funding our capital structure, I think there was about $190 million of tax equity or so.
Yes, no change to the capital cost from the prior disclosures. So all of that is still in line the tax equity piece.
U S $150 million.
Okay got it.
And then last question.
Hi.
Heard a lot of.
So I guess first of all I think it's you guys made the right decision to not get involved in any of the U S northeast offshore wind development.
And I know a lot of companies are.
No longer pursuing it or or just getting out of there out of those developments.
But.
Are you are.
Are you currently looking at any opportunities in the U S. Northeast given that are like maybe it's the right time to get involved.
As others are exiting the sector can you give some comments on the potential or opportunity.
No we're not we're not looking at anything there.
I mean, our focus.
Not I think I, probably said it about 20 times in my script, but our focus is really truly on executing on the three projects that we have in front of us.
I think the as we've already seen it in reference to the.
Future round auction prices in the northeast of the U S. Certainly will rise up and move up I think and you've already seen some evidence of that.
So I think the market will improve and I think it's good in the long run for offshore wind that the projects in the northeast of the U S. Eventually get built it will take longer and there'll be built maybe different forms and maybe there'll be different capital in different ownerships coming to owners coming into some of the questions I don't know, but thats.
But for the near term, we wouldn't be prospecting around looking for that.
Okay. Thanks, Mike I'll leave it there.
Thank you one moment for our next question.
Our next question comes from the line of Ben Pham with BMO. Your line is now open.
Alright, great.
Hey, thanks.
Some of the optimizations you've mentioned.
Hey on the offshore wind.
Ross.
A little bit too.
Quantify our directory point to.
Where returns could be in that 10% to 14% targeted range.
I didn't quite hear the question can you Ben can you repeat it please.
Here at <unk>, I think you're looking for us to quantify the direction of the optimizations.
Sorry, that's right.
Hi long yes.
So I think what we did.
What we what we did at the Investor Day was we tried to say how much in terms of basis points, we were able to get.
North sea or some of the other projects on the on the debt optimization, which is probably the most significant optimization.
That would be PCR is would be an optimization for high long, which again.
Just realize on the on the project being built on schedule.
On or ahead of budget.
And then last one always remains as is.
Net of sell Downs, and then construction optimizations, but I think on the debt refinancing side I think we recorded 50% to 75 basis points is what we've been able to achieve historically so.
Obviously, we just closed the financing.
As of today, I mean, I think that's a fair assumption teeth and the only thing we didn't we only spoke to but we didnt give any ranges too because it.
Everybody would have to come up with their own view on it is.
On any re amortization of the debt to take advantage of the longer tenor on the PPA as well.
Okay.
Can you also talk about.
Your exposure to the carbon tax in Canada with your gas fleet.
Do you think about.
Governments.
Clean scattered out into next year.
So I believe and we'll follow up with you after the call on most of our facilities. It is a pass through I think it is on a couple of our facilities that it is not but.
But.
I think the one I'm thinking of it doesn't run all the time.
If we can get back to you on that just to confirm that one on one.
Okay alright, thank you.
Thank you I'm currently showing no further questions at this time I would like to hand, the conference back over to Mr. Mike Crawley for closing remarks.
Yes.
Well, thanks for everybody for joining the call today, and we look forward to re engaging with you on our Q4 call coming up in February. Thank you.
This concludes today's conference call. Thank you for your participation you may now disconnect everyone have a wonderful day.
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