Q4 2023 Boralex Inc Earnings Call

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Operator: Bonjour Mesdames et Messieurs et bienvenue à la conférence téléphonique portant sur les résultats financiers du quatrième trimestre et de l'exercice 2023 de Boralex. Please note that all lines are in listening mode only.

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Operator: la fin de la présentation, il y aura une période de questions-reponses au cours de laquelle les analysts financiers, actionnaires, et investisseurs seront invités à poser leurs questions en appuyant étoiles 1 et 1 sur votre téléphone. Pour les participants à la webdiffusion, vous pouvez également poser des questions au cours de la conférence, mais celles-ci obtien Enfin, représentants des médias qui ont des questions sont invités directement à contacter Camille L'Aventure, conseiller en matière de politiques et de communications externes chez Boralex, à la coordonnée indiquée à la fin du communiqué trimestriel. J'aimerais maintenant passer la parole à Stphane Milot, vice-président des relations avec les investisseurs de Boralex.

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Operator: Good morning, ladies and gentlemen, and welcome to the Boralex fourth quarter and fiscal 2023 financial results conference call. Please note that all lines are in listen-only mode. Following the presentation, we will conduct a question and answer session in which financial analysts, shareholders, and investors will be invited to ask their questions by pressing star 1 and 1 on the telephone. Please also note that the conference is being recorded. For webcast participants, you can also ask questions during the conference, but they will be answered by email after the call.

Good morning, ladies and gentlemen, and welcome to <unk> fourth quarter and fiscal 2020 free financial results Conference call.

Note that all lines are in listen only mode. Following the presentation. We will conduct a question answer session in which financial analyst shareholders and investors will be invited after questions by pressing star one and one on the telephone.

Also note that the conference is being recorded.

For webcast participants you can also ask questions during the conference, but they will be answered by email after the call.

Operator: Finally, media representatives are invited to contact Camille L'Aventure, Advisor, Public Affairs and External Communications at Boralex. Her contact information is provided at the end of the quarterly press release. I would now like to turn the conference over to Stphane Milot, Vice President, Investor Relations at Boralex. Please go ahead.

Finally media Representatives I invite you to contact me level Chill advise our public affairs and external communications Oddball Alex.

Her contact information is provided at the end of the quarterly press release.

I would now like to turn the conference over to Stefan Malone, Vice President Investor Relations for Boralex. Please go ahead.

Stphane Milot: Thank you, operator, and good morning, everyone. Welcome to Boralex's fourth quarter and year-end results conference call. Joining me today on the call are Patrick Decostre, our President and Chief Executive Officer, Bruno Guilmette, Executive Vice President and Chief Financial Officer, and other members of our management and finance team. Mr. Decostre will begin with comments about market conditions and the highlights of the quarter.

Well, thank you operator, and good morning, everyone. So welcome to <unk> fourth quarter and year end results conference call. Joining me today on the call, but I think the costs are our president and Chief Executive Officer.

Executive Vice President.

And Chief Financial Officer, and other members of our management and finance teams. So Mr. <unk> will begin with comments about market conditions and the highlights of the quarter afterwards, Mr. Guilmette will carry on with financial highlights and then will be available to answer your questions.

Stphane Milot: Afterward, Mr. Guilmette will carry on with financial highlights, and then we'll be available to answer your questions. As you know, during this call, we'll discuss historical as well as forward-looking information. So, when talking about the future, there are a variety of risk factors that have been listed in our different filings with securities regulators, which can materially change our estimated results. These documents are available for consultation at CDARplus.ca. So, in our webcast presentation document, the disclosed results are presented both on a consolidated basis and on a combined basis. So, when talking about the results, we generally refer to combined numbers, and when referring to the cash-to-inbalance sheet, we generally refer to consolidated numbers. So, please note that the combined is a non-gap financial measure and does not have standardized meaning under the IFRS. Consequently, it may not be comparable to similarity name measures used by other companies.

So as you know during this call we will discuss historical as well as forward looking information so when talking about the future. There is a very a T. As the risk factors that have been listed in our different filings with securities regulators, which can materially change our estimated results. So these documents are available for consultation at SEDAR.

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So in our webcast presentation document the disclosed results are presented both on a consolidated basis and on a combined basis. So when talking about the results, we generally refered to come by numbers and when referring to gastro and balance sheet. We generally refer to consolidated numbers. So please note that the combined is a non-GAAP financial measure and does not have standardized.

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Starting may combined may not be comparable to similarly named measures used by other companies for more detail C. D E F or S and other financial measures section in the MD&A. So the press release the MD&A the consolidated financial statements and a copy of today's presentations are all posted on <unk> website at <unk> Dot com under the investors section.

Stphane Milot: For more details, see the Non-IFRS and Other Financial Measures section in the MD&A. A copy of today's presentations is also posted on the Boralex website at boralex.com under the Investors section. If you wish to receive a copy of these documents, please contact me. So Mr. Decostre will now start with his comment. Please go ahead, Patrick.

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If you wish to receive a copy of these documents. Please contact me so that Mr. <unk> will now start with his comments. Please go ahead Patrick thank.

Thank you Stefan and good morning, everyone.

It's a pleasure for me to present, our restaurants and achievements for the fourth quarter and fiscal year 2023.

22, and 23 was a record year for Boralex on several part of meters combined EBITDA of 675 million up 22% on 2022 net income of 115 million yeah.

Patrick Decostre: Thank you, Stphane, and good morning, everyone. It's a pleasure for me to present our results and achievements for the fourth quarter and fiscal year 2020. 2023 was a record year for Boralex on several parameters. Combining BDA of 675 million, up 22% on 2020, net income of $115 million, AFFO of $179 million, and AFFO per share of $1.75. We also added 1.5 gigawatts of projects to our pipeline, now representing 6.8 gigawatts of solar, wind, and storage. In a challenging environment, we demonstrated that our agility, disciplined approach, and sound management have consistently proven effective.

407 to 9 million <unk> per share of one point 75 dollar.

We also added one five gigawatt of project to our pipeline no representing six eight gigawatt of solar wind and storage projects.

In a challenging environment, we demonstrated that our agility disciplined approach and sound management has consistently proven ethics is resulting in improved financial resins, and making good progress on our strategic plan execution.

Looking ahead, we're in a solid financial position with close to $550 million in available cash resources and authorized financing facilities.

<unk> significant flexibility to fund our growth.

This last quarter, we continue to focus on our main projects under construction and ready to build.

Patrick Decostre: Resulting in improved financial results and making good progress on our strategic plan execution. Looking ahead, we're in a solid financial position with close to $550 million in available cash resources and authorized financing facilities, providing significant flexibility to fund our growth. This last quarter, we continue to focus on our main projects under construction and ready to go. They are progressing according to plan, with our wind project Apuit in Quebec and Lime Kiln in Scotland expected to start operations at the end of 2024, as well as our two battery storage projects in Ontario expected to be commissioned in 2025. In the fourth quarter, we have also been very active in the development of our projects in North America. We're very proud that our two projects, Tabasca and Mont-Noir, totaling 315 megawatts, were selected in the Hydro-Québec SARES program, which chose both our competitiveness in this market and our ability to work closely with local partners. Our team is working full steam ahead to further develop projects in Quebec.

They are progressing according to plan with our wind project in Quebec, and lime Kim in Scotland expected to start operation at the end of 2024.

Well as our two battery storage projects in Ontario expected to be commissioned in 2025.

In the fourth quarter, we have also been very active in the development of our projects in North America.

We're very proud that our two project are Tabasco and Manoir totaling 315 megawatt were selected in the hydro, Quebec, sorry speed.

He chose both our competitiveness in this market and our ability to work closely with local partners.

Our team is working full steam ahead to further develop project in Quebec.

Ontario is also a very promising market for biologics was strong clean energy needs identified in the coming years.

Ontario's ISO is projecting energy shortfalls before 2030 and is planning a series of procurements to meet demand.

Patrick Decostre: Ontario is also a very promising market for Boralex with strong clean energy needs identified in the coming year. Ontario's ISO is projecting energy shortfalls before 2030 and is planning a series of procurements to meet demand; after 2020, Ontario intends to mitigate the growing shortfall by building small modular reactors, SMRs, and refurbishing Pequim B nuclear power station and other measures. Even under SMRs and the peaking refurbishment scenario, with all associated cost and schedule risk, the demand gap still exists.

Through 2000 2030.

Ontario intends to mitigate the growing shortfall by building small modular reactors SA Mars.

And refurbishing pequine be nuclear power station and other measures.

Even under assay Morris M. P cream refurbishment scenario with all associated cost and scheduled risk demand gap still exists.

We are therefore rapidly developing cost effective solution to meet demand in Ontario.

In December we submitted bids for 525 megawatts of storage projects and now our team is working on the diversified array of wind solar and storage project to pursue our growth in this region.

Patrick Decostre: We are therefore rapidly developing cost-effective solutions to meet demand in Ontario. In December, we submitted bids for 525 megawatts of storage projects, and our team is working on a diversified array of wind, solar, and storage projects to pursue our growth in this region. Finally, we submitted 240 megawatt of solar projects in New York, an expedited RFP in January 2024; results should be announced in April, and another RFP is expected in the future. Given our experience and the strengths of our balance sheet, we're confident that we can successfully complete these various projects, which are well spread over. Before covering market conditions, I would like to highlight our achievements in the past five years for some key metrics. First, our installed capacity went from 1.9 gigawatts in 2018 to 3.1 gigawatts at the end of 2023, a 10% CAGR, while our pipeline of projects increased significantly and more than doubled in the last three years. This growth was achieved while maintaining our depth level almost flat at 3.3 billion. Our AFFO and AFFO per share grew by a CAGR of respectively 25% and 19% during this five-year period. I'm very proud of these results...

Finally, we submitted 240 megawatt of solar project in New York Expedited RFP in January 2024.

<unk> should be announced in April and other artists and another RFP is expected in the fall.

Even though our experience and the strength of our balance sheet. We're confident that we can successfully complete theres various project, which are well spread over time.

Before covering markets conditions, I would like to highlight our achievements in the past five years for some key metrics.

First.

Our installed capacity went from one nine gigawatts in 2018 to 3.1 Gigawatts at the end of 2023.

10 person KAR Wai at our pipeline of project increased significantly and more than double in the last three years.

This growth was achieved while maintaining our debt level almost flat at $3 3 billion.

Our <unk> <unk> per share grew by your key garre of respectively, 25% and 19% during this five year period.

I am very proud of these results and we'd like to take this opportunity to thank all <unk> employees for their commitment and hard work during these years.

I also take this opportunity to thank our partners you know we're a different project.

Patrick Decostre: I would like to take this opportunity to thank all Boralex employees for their commitment and hard work during these years. I would also like to thank our partners in our different programs. I won't go into all the details of market conditions, but in general, I would say the demand for renewable energy remains high in all our core markets, with strong commitments from governments to reduce their carbon footprint, leading to investment in renewable energy sources. Even if some political parties are not highly favorable to the development of renewable energy, one thing is sure; the transition will continue.

I won't go in all the details of market conditions, but in general I would say the demand for renewable energy remains high in all our core markets with strong commitments from the government to reduce their carbon footprint leading to investment in.

<unk> energy sources.

Even if some political parties are not the highly favorable to the development of renewable energy. One think is sure. The transition will continue its based on strong demand forecast with a clear lack of supply in the short to medium term.

Patrick Decostre: It's based on strong demand forecasts with a clear lack of supply in the short to medium term. In Canada, we still expect legislation around ITC to get final approval sometime in the first half of 2020. We had positive news from the 2024 Budget Act, with the price cap raised to 105 euros per megawatt hour, and the level of revenue shared with the government and above this threshold is increased to 50% versus 10% in 2022 and 2023. Even if merchant prices are lower than 105 euros per megawatt hour right now, we still have some upside in 2024 coming from our short-term contract signed in 2022 for periods between Q4 2022 and 2026. I will now rapidly review the main variances in our portfolio of projects and growth.

In Canada, we still expect legislation around the ITC to get final approval sometime in the first half of 2024 in.

In France.

We had positive news from the 'twenty 'twenty four budget Act with the price gap race to 105 year rule for Omega one hour.

And the level of revenue shared with the government.

And above this threshold, which is increase from 250% versus 10% in 2022 and 2023.

Even if merchant prices are lower than the 105 year rule.

Our right now we still have some upside in 2024 coming from our short term contracts signed in 2022 for periods between Q4, 2022 and 'twenty 'twenty six.

I will know rapidly review the main variances in our portfolio of projects and growth that.

The increase in the early stage was mainly due to first.

Patrick Decostre: The increase in the early stage was mainly due, first, to the addition of one new wind project and one storage project in North America, as well as two wind power projects and five solar power projects in Europe for a total of 454 megawatts. Then the transition to the mid-stage phase of five wind projects and five solar projects in Europe for a reduction of 126 megawatts. In the mid stage, the progression of these 126 megawatt projects was offset by the transition to the advanced stage of three wind projects in North America and three wind projects and two solar projects in Europe for a reduction of 500 megawatts.

The addition of one new wind project and one storage project in North America, as well as two wind power projects and five solar power project in Europe for a total of 454 megawatt.

And then the transition to the mid stage phase of five wind project and five solar project in Europe for a reduction of the 126 megawatt.

In the mid stage the progression of these 126 megawatts of project was offset by the.

The transition to.

Through the advanced stage of three wind project in North America, and three wind project and two solar project in Europe for reduction of 500 megawatts.

Patrick Decostre: In the advanced stage, the changes were mainly due to the progression of this 500 megawatt, but also the transition to the secured phase of one wind power project in North America for a reduction of 133 megawatt and the inclusion of two wind projects in Europe, in the under construction stage for a reduction of 29. In total, our pipeline now comprises projects totaling 5.9 gigawatt of wind, solar, and storage projects. In the growth path, the secured stage increased with the progression of one wind project in North America for an increase of 133 megawatts. The construction and ready-to-build stage increased by 2 MW with the progression of the wind projects Fontaine-les-Boulons and Seine-Saint-Vin-Palsar in France, and the commissioning of two other wind projects in France, totaling 27.

In the advanced stage.

The change were mainly due to the progression of these 500 megawatt but also the transition to the secured phase of one power Windpower project in North America for a reduction of 133 megawatt and the inclusion of two wind project in Europe.

The under construction stage for a reduction of 29 megawatts.

In total our pipeline no comprises project totaling 549, gigawatts of wind solar and storage project.

In the growth path.

Secured stage increase with the progression of one wind project in North America for an increase of 133 megawatts.

Construction and ready to build stage increase by two megawatt with the progression of the wind project fault and they below and thin film <unk> pallet far in France, and the commissioning of two other wind project in France.

<unk> 27 megawatt.

Patrick Decostre: I won't cover in detail the progress made in our four strategic directions, as I have already talked about the major highlights, but you can find all the details in the slide of the webcast and in our MD&E. This completes my part. I will know that Bruno covered the financial portion in more detail, and we'll be back later for the question period.

I won't cover in detail the progress made in our four strategic directions as I can.

I've already talked about the major highlights, but you can find all the details in the slide of the webcast and in our MD&A.

This completes my part I will know that Bruno cover the financial portion in more detail and we'll be back later for the question periods Bruno.

Bruno Guilmette: 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, our balance sheet is strong with close to $550 million available cash and authorized financing, which is about $150 million more than in the previous quarter. Total debt remained stable in 2023, with project debt now representing 85%, down from 90% in 2020.

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.

<unk> sheet is strong with close to $550 million available cash and arthritis, financings, which is about $150 million more than in the previous quarter.

Total debt remained stable in 2023 with project debt now representing 85%.

Down from 90% in 2022.

E F F O and reinvestment ratio are progressing according to plan.

Combined EBITDA at a strong 22% increase in 2023.

Bruno Guilmette: AFFO and the reinvestment ratio are progressing according to plan, while combined EBITDA had a strong 22% increase in 2023. Lastly, on our corporate objectives, we continue to make good progress on our CSR strategy, as presented on slide 17 of the webinar. In 2023, we significantly improved on our CO2 avoided emissions, to over 1 million tons.

Lastly, on our corporate objectives, we continue to make good progress on our CSR strategy as presented on slide 17 over the webcast.

In 2023, we significantly improved on our C O two avoided emissions.

Two over 1 million tons, we increased our initiatives around health safety and diversity and continued to improve our governance on different fronts like compensation ethics and risk management.

Bruno Guilmette: We increased our initiatives around health, safety, and diversity and continued to improve our governance on different fronts like compensation, ethics, and Risk Management. For more detailed information, I invite you to read our 2023 CSR report, which was published earlier this morning. I will now cover the financial results for the quarter, starting with production. Overall, total combined wind production for the quarter combining Canada, the US, and France was slightly higher than anticipated production and 33% higher than the same quarter last year. The availability of wind farms and strong wind conditions in France compensated for less favorable wind conditions in Canada. Total production for the hydro sector was 4% higher than anticipated and 18% higher than the same quarter last year. This is attributed to favorable weather conditions in the U.S.

For more detailed information I invite you to read our 2023 CSR report, which has been published earlier this morning.

I will now cover the financial results for the quarter starting with production.

Overall total combine wind production for the quarter, combining Canada, and France was slightly higher than the anticipated production and 33% higher than the same quarter last year.

Hi, availability of wind farms and strong wind conditions in France.

Compensated for that.

Favorable wind conditions in Canada.

The total production for the hydro sector.

<unk>, 4% higher than anticipated and 18% higher than the same quarter last year attributable to favorable weather conditions in the U S.

Finally production from solar assets was 3% lower than the same quarter last year and 16% lower than anticipated.

Bruno Guilmette: Finally, production from solar assets was 3% lower than the same quarter last year and 16% lower than anticipated. In summary, total production for the quarter was 1% higher than anticipated, but 30% higher than the same quarter last year. The fourth quarter combined revenues were stable compared to the same quarter last year, while EBITDA increased by 32%, which was mainly attributable to the U.S. acquisition. Higher Production and Commissioning of Assets in France, and also to a positive Euro CAD exchange rate effective for 9 million in Q4. Capacity revenues of $8 million as part of short-term contracts signed in Q4 2022, and tight controls on overall cost. Operating Income amounted to $119 million compared to operating income of $14 million for the same quarter of 2022. This significant increase is mainly attributable to the increase in EBITDA and the decrease in impairment. Net income was $58 million, a $65 million improvement compared to the net loss of $7 million for this same quarter last year. On a consolidated basis, AFFO was 90 million compared to 77 million in the same quarter last year.

In summary, total production for the quarter was 1% higher than anticipated, but 30% higher than the same quarter last year.

Fourth quarter combined revenues were stable compared to the same quarter last year, while EBITDA increased by 32%.

EBITDA growth.

Was mainly attributable to the U S acquisition.

Higher production and commissioning of assets in France.

And also to positive Euro cat exchange rate effect of $9 million in Q4 capacity revenues of $8 million.

As part of short term contracts signed in Q4 2022.

And tight controls on overall costs.

Operating income at.

Amounted to $119 million.

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Operating income of $14 million for the same quarter of 2022.

This significant increase is mainly attributable to the increase in EBITDA and the decrease in impairment.

Yeah.

Net income was $58 million is $65 million improvement compared to the net loss of $7 million for the same quarter of 2022.

On a consolidated basis, <unk> was $90 million compared to $77 million in the quarter same quarter last year.

Bruno Guilmette: Our financial position remains very solid with the net debt to total market capital ratio of 42%. Finally, I would like to highlight that overall for the year. We generated an extra $20 million in EBITDA thanks to our commercial strategy and our friends by exiting some contracts at the end of 2022 and recontracting the vast majority of this volume at a better condition. Please note that this amount is net of the inframarginal rent or the price cap formula.

Our financial position remains very solid with a net debt to total market capital ratio of 42%.

Finally, I would like to highlight that overall for the year.

We generated an extra $20 million and EBITDA, thanks to our commercial strategy in France.

By exiting some contracts at the end of 2022 and re contracted the vast majority of this volume at better conditions.

<unk> 2026.

Please note that this amount is net of the marginal rents or the price cap formula.

Bruno Guilmette: This clearly demonstrates that we have created value with our Exiting Assets or Exiting Contracts in France in 2020. In conclusion, fiscal year 2023 and the fourth quarter were strong periods in which we continue the disciplined execution of our plan. We increased combined EBITDA and EFFO compared to 2022.

This clearly demonstrate.

We have created value with our.

Exiting or by exiting assets are exiting contracts in France in 2023.

In conclusion.

Fiscal year 2023, and the fourth quarter were strong periods in which we continued.

Our disciplined execution of our plan.

We increased combined EBITDA <unk> compared to 2022.

Operator: We continue to be very active in the development of new projects in North America, with two new projects totaling 315 megawatts selected in the Idle Quebec RFP. We recently submitted bids for 525 megawatts of storage in Ontario and 240 megawatts of solar projects in the New York Expedited Art. Finally... We maintained a solid financial position with close to $550 million in available cash resources and authorized finance to support our growth. Thank you for your attention.

We continue to be very active in the development of new projects in North America.

Two new projects totaling.

315 megawatt selected under the Idaho, Quebec RFP.

We recently submitted bids for 525 megawatts of storage in Ontario, and 240 megawatt of solar projects.

And the New York Expedited RFP.

And finally.

We maintained a solid financial position with close to $550 million in available cash resources and <unk> financing.

To support our growth.

For your attention we are now ready to take your questions.

Operator: We are now ready to take your questions. Thank you. As a reminder, to ask a question, please press star 1 and 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 and 1 again.

Thank you as a reminder to ask a question. Please press star one and one on your telephone and wait for your name to be announced two weeks ago. Your question. Please press star one and one again once again, please press star one and one on your telephone and wait for your name to be announced thank you.

Operator: Once again, please press star 1 and 1 on your telephone and wait for your name to be announced. Thank you. We are now going to proceed with our first question. The questions come from the line of David Quezada from Raymond James. Please ask a question. Your line is open. Good morning, everyone.

We are now going to proceed with our first question.

And the question comes from the line of David Quezada from Raymond James. Please ask your question. Your line is open.

Thanks, Good morning, everyone.

Maybe I could just start off with a high level question here just thinking about.

David Quezada: Maybe I could just start off with a high-level question here, just thinking about, you know, capital allocation and your growth priorities. I know that you've got quite a few exciting emerging opportunities and then come back to Ontario. I'm just wondering, you know, how you allocate capital between those and other things that you've looked at in the past, some of your growth projects in the US outside of New York and, I guess, potential M&A. Is there a way that you'd prioritize those opportunities, or will it just come down to returns at the end of the day? Yeah, hi David.

Capital allocation and your growth priorities I know that you've got now quite a few exciting emerging opportunities in Quebec, and Ontario, I'm just wondering how you allocate.

Allocate capital between those and other things that you've looked at in the past.

Some of your growth projects in the U S outside of New York, and I guess potential M&A.

Is there a way that you would prioritize those opportunities or will it just come down to returns at the end of the day.

Yes, Hi, David Thank you for the question essentially indeed on Tayo and somewhere Quebec arrive.

As a new interesting market from 2021 strategic plan, so and we are able to catch.

Very interesting rate of return in both of these market.

And with long term contract on <unk> 22 year contracts in Quebec is 25 to 30 years contract. So it's very interesting markets. So indeed, yes, we have reallocate some development people. We are we have also increased thanks to our good position we have also incur.

Patrick Decostre: Thank you for the question. Essentially, indeed, Ontario and Quebec arrive as a new interesting market from the 2021 strategic plan. So, and we are able to catch very interesting rates of return in both of these markets. And with long-term contracts, Ontario is a 22-year contract, and Quebec is a 25 to 30 years contract.

<unk>.

A little bit our budget for 2024 in terms of development to continue to invest in the four jurisdiction, where we are and last but not least.

Patrick Decostre: So, it's a very interesting market. So, indeed, yes, we have reallocated some development people. We have also increased, thanks to our good position, we have also increased a little bit our budget for 2024 in terms of development to continue to invest in the four jurisdictions where we are. And last but not least, if we continue to be successful, and that's why I expect in this market, we will have to work on a way to finance this project with some potentially capital recycling minority sales like we did in France. And also, The project is also, as I mentioned in my speech, well spread in time, so we don't have any difficulty financing it. Okay, excellent. Thank you for that.

If we continue to be successful and Thats. Why you are you expecting these market, we will have to work on that.

To finance these project with some.

Potentially capital recycling minority sales like we did in France and and also.

The project are also as I mentioned in my speech.

Spread in the in time, so we don't have.

Any difficulty to find instead.

Okay.

Okay excellent. Thank you for that and then just.

Maybe.

Thinking about the upcoming RFP in New York for the fall.

I'm just curious.

How you expect that.

That to shape up like is there any sort of guidepost you could provide on the volume of projects that you think you could bid on there just in terms of <unk>.

How advanced that.

<unk> stage projects you have in this data.

Yeah.

Would you say, it's always difficult to commence before knowing the exact rules of the tender.

Patrick Decostre: And then, just maybe, I'm thinking about the upcoming RFP in New York for the fall. Just curious how you expect that to shape up. Like, is there any sort of guideposts you could provide on the volume of projects that you think you could bid on there just in terms of how advanced the development stage projects you have in the state are? Yeah, it's, I can't say, it's always difficult to comment before knowing the exact rules of the tender.

On the expedited RFP.

Hold of development, meaning development license.

Operating license and grid connection was quite high.

That's what favorable for <unk>, because we had.

The advanced project to bid.

I also expect somewhere.

Patrick Decostre: On the expedited RFP, the threshold for development, meaning development licence, you know, operating licence, and grid connection, was quite high. And that was favourable for Boralex because we had an advanced project to bid on. I also expect somewhere, but I have no crystal ball, that the next RFP will also have a quite high threshold for authorisation and development advancement. And in this case, we would be able to bid for a big part of the contract we obtained in 2021. But again, it's with the disclaimer of not knowing the new RFP rules. Thanks, Patrick. That's a great color.

But I have no crystal ball that the next RFP will have also a quite high <unk> on <unk>.

<unk>.

In development.

Advancement.

And in this case, we would be able to bid.

We're a big part of the contract we are obtaining 2021.

But again.

It was all to the <unk>.

Claimer of not knowing the nu.

The RFP rules.

Okay.

Thanks, Patrick that's great color I'll turn it over.

Thank you.

Thank you we are now going to proceed with our next question.

And the question is come from the line of Robert Mirror from an BS. Please ask your question. Your line is open.

David Quezada: I'll turn it over to you. Thank you. Thank you. We are now going to proceed with our next question, and the questions come from the line of Rupert Merer from NBS. Please ask your question. Your line is open. Hi, good morning, everyone.

Hi, good morning, everyone.

Good morning, if we can if we can start with the changes to the regulation in France. The 2020 for Finance Act.

Can you give us some color on how your contract prices are changing in 2024 on those assets, which you exited the contract roughly.

Rupert M. Merer: Let's start with the changes to the regulation in France, the 2024 Finance Act. Can you give us some color on how your contract prices are changing in 2024 on those assets for which you have exited the contract, roughly where that price will be? And with the change in the regulation, what do you see as the year over year impact on your operating performance? Very interesting question.

That price will be and with the change in the regulation.

Do you see as the year over year impact on your operating performance.

Very interesting question the first point.

You can assume that all.

<unk>.

And the power we exited in.

2022 has been signed for 2024.

Higher than the 105, that's the first point so five euro as is there already for megawatt hour on top of this.

Patrick Decostre: The first point, if you can assume that all the energy the power we exited in 2022 has been signed for 2024 at a price higher than 105. That's the first. So five euros is already there per megawatt hour. On top of this, I will not comment on the average price, but the fact that we share no 50% over the 105 will have some significant improvement on our AFFO this year. And I will let you see that in the next result of the first quarter, I think. Bruno, I don't know if you want to comment more.

Hi.

I will not comment of the average price, but the fact that we share no 50% over the 105.

We'll have some.

Significant improvement of our <unk>.

For this year.

And I will let you see that in the next president of the of the first quarter I think renew I don't know if you want to comment more.

Bruno Guilmette: No, the amount I mentioned, I guess, which indirectly addresses your question, Rupert, is... this today, this year, and 2023. Last year, we had an impact of 20 million. And, you can see with current prices, we'll have a... Current prices are lower, market prices are lower in 2024, expected to be lower in 2024 than in 2023, but the finance law helps us on the flip side by taking less to the government in terms of tax. So we won't be more precise than that, but All right, I guess we'll have to roll up our sleeves. That's pretty much it.

The amounts I mentioned I guess switch doses.

Indirectly your question or operators.

Does this today this year in 2023 last year, we had an impact of $20 million.

And.

You can see with what current prices will have.

Current prices are lower market prices are lower and 24 are expected to be lower than 24, then 'twenty three but.

So that helps us on the on the flip side by taking.

Less.

To the government.

In terms of taxes.

So we won't be more precise on that but.

Alright, I guess I'll have to roll up our sleeves.

[laughter], that's pretty much it.

Rupert M. Merer: Alright, well, if I can maybe turn to Quebec and Ontario and the recent RFPs, it seems from looking at those processes, the ones we've had so far, where you've been quite successful, that there hasn't been a huge amount of international competition. I wonder if you can comment on, maybe, what your competitive strengths are and any challenges that international players might have getting a foothold in this market, and do you see any changes in that competitive landscape in future RFPs here? Yeah, that's interesting. There is, I think there are two answers.

Well, if I can maybe turn to to Quebec, and Ontario, and the recent rfps that it seems from looking at those processes are the ones. We've had so far where you've been quite successful.

But there hasn't been a huge amount of international competition I Wonder if you can comment on.

Maybe what your competitive strengths are and any challenges that international players might might have getting a foothold in this market and do you see any any changes in that competitive landscape in the future Rfps here.

Yeah, Yeah. That's interesting there is I think there is two answers the first is.

In Ontario, we restart development.

Patrick Decostre: The first is, in Ontario, we restarted development two and a half years ago when no one was thinking about developing in Ontario. So this gave us a quite advantageous position when it was time to bid in February and in December, in very good partnership with First Nations and with municipalities. So I think Ontario was more a story of saying, okay, the demand gap is there, the storage and system regulation gap is there, and we should invest before even knowing that there would be a tender. So that's one thing. And in Quebec, at the same time, I think we have been very good locally. I think I mentioned on different previous calls that I was confident in Quebec because yes, there was three gigawatts of bid, but Boralex was the only one with a bid on nodes where there was no competition. On some nodes in Quebec, there were two players, even three players.

Two and a half year ago, when no one with thinking about development, who will talk to you soon.

This gave us.

Whites advantages position when it was time to bid in in February and in December with.

Very good partnership with first nations and with municipalities. So I think I think Ontario was more story of.

Okay.

The demand gap is there.

Storage and system regulation gap is there we should invest before even knowing that there would be a tender. So that's one thing and in Quebec. All at the same time I think we have been also very good locally.

I think I mentioned of on different previews call that I was confident.

In Quebec because.

Yes, there was three gigawatt of bid.

But <unk> was the only one with bid on.

Nodes, where there was no competition on some nodes in Quebec that was two players even three players too.

Patrick Decostre: So on the node where we bid, there was only Boralex. So this is, this allows us to be a little bit more aggressive in terms of bidding with a price which is a little bit higher than the final average price of the tender. So that's the first part of my answer, local presence and a good vision of the market. And the second part, indeed, I think lots of international players have opportunities in other markets, and that's because the global energy transition is there. And some American players are playing in big projects in America.

On the notes, where we bid there was on the bottlenecks. So this is this.

Although has to be a little bit more aggressive in term of bidding with a price, which is a little bit higher than at the end of the average price off of.

The tender so.

The first part of my answer is local presence and good vision of the market and the second part is indeed.

I think lots of international players have opportunity in other markets and that's because.

The global energy transition easier and some American players are playing Big project team in America. Some European players are playing Big project in Europe, and so we are all.

Patrick Decostre: Some European players are playing big projects in Europe. And so we are all quite busy, which is good in terms of competition because it's reducing competition. Do you see that situation changing at all? The next few bidding rounds, you think we'll see more international presence? It's a possibility, but my last comment is there, you know, there is lots of potential projects in the US, there is lots, there is, BC will, seems to, that they will open also, they announced some things, so there will be also projects in BC, so competition between, there is a tender coming in the UK, there is many tenders, in Germany, if you look to Germany, they were permitting one gigawatt per year, they are now permitting five gigawatt per year, so if you are RWE or another German company, you don't have to go in Quebec and to have interest in Quebec and Ontario, because you have a lot of things to do in Germany and in France and in the UK and in the US, so I have no crystal ball, but I think that competition is, will be probably less than it was in the past when renewable was highly supported by government. Great, thank you. I'll get back in a, Thank you.

Quite busy which is good.

In terms of convention, because it's reducing conviction.

Do you see that situation changing at all the next few.

A few bidding round, so I think we'll see more international presence.

It's a possibility, but my lifes come in these there you know there is lots of.

Potential project in the U S. There was lots there is BC will seems to Oh.

That they would open also they announced some things. So there would be also project NBC. So comparison between there is there is a tender coming in the UK. There is many tendered in Germany, if you look to Germany the wear.

Sure.

Sure.

Permitting one gigawatt per year, there are no permitting five U S per year. So so if you are arguably we or or another German company. You don't call them you don't have to go in Quebec and to have interest in Quebec, and Ontario. Because you are you have a lot of things to do in Germany, and in France and in the UK and in the.

So.

I have no crystal ball, but I think that competition.

Is would be probably less than it was in the past when renewable was highly supported by government.

Great. Thank you I'll get back in the queue.

Thank you.

Okay.

Rupert M. Merer: Thank you. We are now going to proceed with our next question, and the questions come from the line of Nick Boychuk from Cormac Securities. Please ask your question. Your line is open. Thanks. Good morning, guys.

Thank you we are now going to proceed with our next question.

And the question is come from the line of Nick Coppola, Chuck from Cormack Securities. Please ask your question. Your line is opened.

Thanks. Good morning, guys can you. Please provide some color on how your teams are faring at finding newer earlier stage projects, Patrick you mentioned that the development Sir.

Nicholas Boychuk: Can you please provide some color on how your teams are faring at finding newer, earlier stage projects? Patrick, you mentioned that the development cost of some sort might increase. What are you seeing in your core markets and technologies? And how is that impacting your 2030 goals?

Cost increase what are you seeing in your core markets and technologies and how is that impacting your outlook to 2030 goals.

Okay.

Yes.

Yes.

Essentially.

Patrick Decostre: Yeah, yeah, essentially, we are focusing on four jurisdictions, Canada, specifically Quebec and Ontario, the state of New York, the UK, and France. So if there is some opportunity elsewhere in the US with a similar potential to New York, like I mentioned in the past, Illinois, we can go. But specifically, we have a lot of work in these four jurisdictions in terms of technology; we have 380 megawatts under construction in storage, we have 525 pending, so the storage diversification is going very well, and it's interesting revenue, and I think it shows that when you look to Ontario, the UK, there would be other opportunities in storage. We need to continue and I the diversification in solar, because I think it's a very So in this jurisdiction, long-term contract, long-term contract, meaning also long-term PPA, commercial PPA, like we did in France, where we are, there is a big market for that. And I'm sure that this will come.

We are for Q seeing on <unk>.

For sea jurisdiction.

Canada, specifically, Quebec and Ontario.

State of New York.

The UK and France, So we are not.

We will if there is some opportunity elsewhere in the U S was a similar.

Potential than than than New York.

I mentioned in the past, Illinois.

We can go but specifically we have a lot of working days for jurisdiction instrument of technology.

We have we have 380 megawatt under construction in the in storage. We have we have 525 spending so the storage diversification is going very well and it's interesting revenue and I think it shows.

When you look to launch our U U K.

There would be other opportunities in storage.

We need to continue in <unk>.

The diversification in solar.

Because I think it's a it's a very interesting diversification, but these treat technology plus wind abusefully would be there. So in this jurisdiction long term contract.

Long term contracts, meaning also long term PPA commercial PPA like we did in France, where we are.

There is a big market for that and I'm sure that this will come.

Patrick Decostre: Even in jurisdictions like Quebec, we're speaking about long-term corporate PPA, even if the low is not yet there, but the low will come. So there is a lot of opportunity for long-term contracts with this jurisdiction and this technology. And does it change anything for 2030? Somewhere, it confirms that our view of 70% of our growth coming from organic growth is achievable, and we will continue in this direction because with organic growth, we're creating lots of value for Boralex. Okay, I got it.

Even in jurisdictions like Quebec, we are speaking about long term corporate PPE, even if the low it's not yet there, but the low will come. So there is a lot of opportunity for long term contract. These regions in this technology.

And I guess does it change anything does this change anything for 2030 somewhere it confirms that our view of 70% coming from of our growth coming from organic growth is reachable and and we will continue in this direction.

<unk> because.

With organic growth, we're creating lots of value for robotics.

Nicholas Boychuk: So comparing it exactly to the 2030 targets, I think, rough math, you'd have to add about just under three gigawatts in the US of new solar and about a gigawatt of onshore wind in the UK. Between the New York State and Scottish markets, you're comfortable with being able to source the vast majority of that organically. Yeah, globally. The answer is globally, yes. There is, there is more opportunity in Ontario and Quebec than expected. And, and we are definitely, you know, accelerating in the UK with the team we both needed to be great two years ago, and the success we had was lime kiln. And we will also concentrate on the accelerator once the At the end of April, we will have, The news about the New York RFP, like you have seen, NYSERDA is now progressing at the right pace, seems to be, they just approved two projects offshore wind yesterday with a high price.

Okay got it so comparing it exactly two to 2030 targets I think.

Rough math.

Out of a call it just under three Gigawatts in the U S and pay solar antibody gigawatt of onshore wind in the U K between the New York State and say Scottish markets Youre comfortable with being able to source the vast majority of that organically.

Globally the answer is globally, yes.

There is there is more opportunity in Ontario, and Quebec didn't expect it.

And and we are definitely.

Accelerating in the UK with the with the team we boat.

Integrate two years ago and the success, we had with Lion King and we will also concentrate on to accelerate once the.

At the end of April we will have.

The news about the New York RFP.

Like you have seen a nicer Dol is no progressing at the at the right pace seems to be that just approved <unk> two project offshore wind yesterday with a high price.

Nicholas Boychuk: So I think that this is a good sign that they will continue to approve projects onshore too. And that would be really the basis of our organic development in the US for the next year. Got it, thank you. And the last question, just thinking about projects in those markets moving from the earlier to the mid to the advanced stages, are you starting to identify any or see any potential bottlenecks or issues like maybe interconnection queues, timelines, delays, supply chain issues, anything that could derail this outlook? Or are you comfortable with how everything sits so far?

Sure.

Think that they are this is a good sign that they will continue to approve projects onshore too and that would be really debase off our organic developments in the U S for the next at the next years.

Got it thank you and the last for me just thinking about projects in those markets moving from the earlier to mid two that stages are you starting to identify any or see any potential bottlenecks or issues like maybe interconnection queues timelines delays supply chain issues anything that could derail this outlook or are you comfortable with however.

So far.

There is some some interconnection issues in the U S.

Patrick Decostre: There are some interconnection issues in the U.S., depending on where it is. And specifically, as I was mentioning in the previous question, on our specific project, the roughly one gigawatt pipeline we have in New York, we have secured interconnection. So I'm confident that it will. If we want to go elsewhere and accelerate, yes, there are interconnection queues there. But I'm sure that, Again, the states will have to do, like in the UK, like in France, like in Quebec, an investment plan to reduce this interconnection bottleneck and, and on the other side, in Quebec, I think we have been, and in Ontario, we have been very smart to go where no one was and not have to fight for interconnection, and we will continue to use this intelligence and understanding of the market to go there. Okay, thank you very much.

Kind of where it is on specifically as I was mentioning in the previous question.

The.

Our specific project.

Roughly one gigawatt pipeline, we have in New York, we have secured interconnection. So I'm confident in that if we want to go elsewhere and accelerate yes, there is interconnection.

Qs there.

But I'm sure that.

Again.

The states will have to do like in the UK like in France like in Quebec investment plan to reduce these soon to correction bottleneck.

And on the other side and in Quebec, I think it would have been <unk> and <unk> we have been.

Very smart to go where no one was not.

Not to have to fight for interconnection and we will continue to use this.

Intelligence in their understanding of the market to go there.

Okay. Thank you very much for the color.

Nicholas Boychuk: Thank you. Thank you. We are now going to proceed with our next question. And the questions come from the line of Nelson Ng from RBC Capital Markets. Please ask a question. Great, thanks, and congratulations on a strong quarter.

Thank you thank you Nick.

Thank you we are now going to proceed with our next question.

And the question is come from the line of Nelson <unk> from RBC capital markets. Please ask your question.

Great Thanks, and congrats on a strong quarter.

Nelson Ng: So my first question is the two battery storage projects in Ontario. I think you mentioned that they'll be commissioned in 2025.

So my first question is the two battery storage projects in Ontario, I think you mentioned that that will be commissioned.

It's 2025, so I presume you need to start construction pretty soon.

Operator: So I presume you need to start. Can you just comment on where you are in terms of like, Project Finance on those projects? Yeah, first, thank you, Nelson.

Can you just comment on where you are in terms of like racing project financing and things like that on those projects.

Yes first thank you Nelson first point is.

Patrick Decostre: First point is, We have secured the procurement of the battery, we have finalized engineering on the one of the project and we're working on the other one, and globally the news are very positive in terms of budget and then in terms of return of this project and for the financing I will let the floor, Thank you, Patrick. And so to your question on financing, Nelson, we we've started working on the financing on the project finance. We expect that in the second part of this year that we'll be able to to close the financing on this. We're quite confident. And this is also a reminder that these projects are eligible for the ITC, which we expect will be passed in terms of law also in the first semester of this year. So.

We have we have secured the procurement of the battery we have.

We have we have secured the procurement of the battery we have.

Finalize.

Engineering on the one off the project and we're working on the other one and globally. The news are very positive into your mouth, but yet and then in term of return of this project and for the financing I will let the floor to Bruno.

Thank you Patrick and to so to your question on financing Nelson.

We've started to working on the financing on the project Finance we expect.

In.

We expect that.

Second part of.

This year that we'll be able to to close the financing on this.

And we're quite confident and this also a reminder that these projects are.

Eligible for the ITC, which we expect will be passed.

In terms of law.

In the first semester.

This year. So generally speaking this the financing of these projects is well underway.

Bruno Guilmette: Generally speaking, the financing of these projects is well under way. Okay, so the financial close will be in the second half of this year. Does that mean construction will have to wait until then? Oh, we can. We can start. We already have.

Okay. So so financial close in the second half of this year does that mean construction will have to wait until the second half of this year as well.

No. We can we can start we already have.

Bruno Guilmette: We have the capacity to invest in to invest the equity needed. And, yep, we'll be fine in terms of timing for the financing, which is likely in the first part of the second half, if I can say it, http://TheBusinessProfessor.com Okay, thanks. Thanks for the additional clarification.

On the equity side.

We have the capacity to invest and to invest the equity needed and.

Yep.

It will be fine in terms of timing for the financing.

Sure.

Which is likely in the first part first part of the second half if I can say it a more precise way.

Okay. Thanks, Thanks for that clarity and then just moving on to a nice start to the.

Nelson Ng: And then just moving on to NYSERDA, the 240 megawatts bid into the expedited process. So I think previously you had about 740 megawatts of solar that was previously awarded. So technically, you could have bid a lot more than 240 megawatts into the expedited process. I guess, were the restrictions pretty high in terms of being able to construct very soon?

240 megawatts bid into the expedited process.

So I think previously you had about 740 Meg.

Megawatts of solar that was previously awarded.

So technically you could have bid.

A lot more than 240 megawatts into the expedited process.

Sure.

I guess, where the restrictions pretty high in terms of being able to construct very soon or can you just give a bit more color as to yes.

Patrick Decostre: Or can you just give a bit more color as to, relative to what was previously awarded, how you arrived at, Yeah, you're right, Nelson, the threshold for advancement of the development of the project was high, and, to be transparent, we have advocated that to NYSERDA because we think it's the best way to have a very low attrition risk on the number of projects awarded and, finally, the number of projects connected. And so this limits us to bid 240, but this also limits competition in the tender. So that's where we are.

Relative to what was previously awarded.

How did you arrive at resubmitting 240.

Yes.

Right Nelson.

The threshold of.

Our advancements of the development project was a high end.

To be transparent, we have advocated that too nicely because we think it's the best way to have.

Very low attrition risk on.

The number of project awarded in fund I need a number of project connected and so this limit.

For us to bid.

240, but this limit also competition on the tender.

So that's where we are and.

Nelson Ng: And, and I, that's why we have not been able, but we were comfortable with that, to bid all 740. But in the next round, we would be able to bid the 700, the remaining part probably in the next round this year, all 740. Okay, got it. And then my next question just relates to the fact that you maintained your 2025 target. And I think you mentioned earlier that 70% of your growth will be organic. So, in terms of hitting your 20 to 25 target, does it rely on organic growth and M&A? I hit that.

That's why we have not been able but we were comfortable with that two bid all the 740, but in the next round.

Would be able to beat the 700 <unk> the remaining part probably into next from this your older around next year.

Yeah.

Okay got it.

And then my next question just relates to.

The fact that you've maintained your 2025 target.

And I think you mentioned earlier that.

70% of your growth will be.

Organic so in terms of hitting your 2025 targets.

Does it rely on.

Any M&A.

Hit that number.

Patrick Decostre: Yeah, in 2021, what we said was for the first period of the strategic plan, meaning the 2025 target, it will be 50-50, organic and M&A, and after 2025 to 2030, it will be 70% organic, 30% M&A. Because it was not possible to say move the global average to 70% before 2025 due to the delay in development, where what I can say to you is today, we are really on the right path for the organic cash flow And we are still confident, but as I mentioned previously, this will need some M&A, and we will not do M&A at any cost; we will do it only if it's first, accretive. Secondly, creating value in the long term for Boralex and its shareholders. So, there are still almost two years to do this.

Yeah in 2021, and what we said is for the first period of the of the strategic plan, meaning the 2025 target.

It will be 50, 50, or organic and M&A and after 2025 to 2030, it would be 70% organic 30% M&A because it was not possible to see move.

Globally to 270 person before 2025 due to the delay of development.

What I can say to you is today, we are really on the right path for the organic.

Cash flows that will come for 2025 from the organic development.

We are still.

<unk>, but as I mentioned previously this will need some so many and we would not do any at any cost we will do it only if its first accretive.

Secondly, creating value on the long term for <unk> and its shareholders. So there is still almost two years to do this and so we are monitoring the market and we have we have the possibility. If it's if there is an interesting transaction with the condition that just mentioned we would do it otherwise.

Patrick Decostre: And so we're monitoring the market, and we have the possibility, if there is an interesting transaction with the condition I just mentioned, we will do it. Otherwise, we will have to see continue organic development, which is creating a very high return. Patrick, and just one last question.

We will have.

To see continue organic development, which is screening very high return presently.

Okay. Thanks, Patrick and then just one last question.

Nelson Ng: You mentioned that you're adding more people to your development team. I think the development costs in 2023 will be about $40 million. How much higher do you think 2024 will be? Will it be closer to $50 million? Yeah, that's a pretty good estimate, Nelson.

And that you're adding more people in tier development team I think the.

Development costs in 2023, it was about $40 million how much higher do you think 2024 will be it will be.

Closer to $50 million.

Yes.

It's a pretty good estimate.

Patrick Decostre: And just another point, Nelson, is that as soon as we obtain a contract and or some other condition on top of the contract in France, we can capitalize some development costs. So we are also hiring people, but paying them for specific projects, which are, you know, secured, instead of paying them on projects which had a little higher risk of development. So this is also something I see more development people in the offices; some are capitalized, and some are not.

Awesome.

And just another point Nelson is.

There is a part of.

As soon as we obtain the contract in or some other condition on top of the contract in France, we can capitalize some development costs. So we are also hiring people, but being them on specific project, which are.

Secured instead of being them on project was a little bit higher risk of development. So this is also something I see more development people in the offices some of our capitalized and some are not.

Nelson Ng: All right, okay, thanks. I'll be, We are now going to proceed with our next question. And the questions come from the line of Mark Jarvi from CIBC. Please ask your question. Hi, good morning.

Got it okay. Thanks for the clarification.

I'll leave it there.

Excellent.

Yeah.

We are now going to proceed with our next question.

And the question has come from that I know Mark Jarvi from CIBC. Please ask your questions.

Mark Thomas Jarvi: I wanted to come back to the question Rupert started with around realized pricing and trans expectations. Can you remind us again how many megawatts will be on those hedges you put in place in 2022? And then I guess the other part would be, you were going to be a vehicle merchant post-commissioning for 18 months on some assets, but given where the spot price is, should we assume that you've now locked in all your PPAs on recently commissioned assets? Yeah, the first point is, hi, Mark.

Hi, Good morning, I wanted to come back to the question referred started with around realized pricing in France expectations can you just remind us again, how many megawatts would be on those hedges we put in place in 2022.

And then I guess the other part would be you were going to be vehicle merchant post commissioning for 18 months and some assets, but given where spot prices should we assume that you know locked in all your ppas on recently commissioned assets.

Yes. The first point is hi, Mark the first point is.

Patrick Decostre: The first point is, if I'm correct, 326 megawatts were early terminated in 2022, and with we have signed exactly at the same time a contract to secure, Q4 2022, up to 2026 with the price, the forward price of this moment. And it's not, like I mentioned many times, it's no guarantee of volume.

If I am correct 326 megawatt were early terminated in 2022.

We have signed exactly at the same time contract to secured.

Q4 2022.

Two 2026 with the price the forward price of this moment and it's not.

Like I mentioned many times, it's no guarantee of volume so it's not <unk>.

Patrick Decostre: So it's not an edge, it's a new PPA, new utility PPA that we signed with another European PPA utility, sorry. The second point is in 2020, 3 and 2024, we have these 18 months of new projects, which are the projects with a future contract. And indeed, what was impossible last year in Q1, because the low was like 30th or 31st December 2022.

New PPE, new utility PPE that we signed was another European PPE.

<unk> sorry.

The second point is.

In 2020.

Sure.

Three and 2024, we have these 18 months of a new project, which are the project with the with the future contract and indeed.

Impossible last year in Q1.

The law was like 30 or 31st of December 2022, and we have not been able to.

Patrick Decostre: We have not been able to edge the price at that time. This year, since it was based on the low of 2022, we have been able during 2023 to edge the part of the price of the 18 months before the price of the market comes down. So the 18 months' contract will contribute a lot in 2024 and somewhere better compared to the actual price than in 2023. So I tried to answer your question, to give you the exact price going forward, but it has been well managed by the team. I got it.

Hedged the price at that time this year.

It was based on the low of 2022, we have been able during 2023 to two edge part of the price of the 18 months before the price of the market coming down. So the 18 months contract will contribute a lot in 2024.

And see some were better compared to actual price than in 2023, So I try to answer your question.

To give you the exact price going forward, but it's being well managed by the team there.

Mark Thomas Jarvi: Now that's helpful to put those pieces together for us. And then maybe, How do you think with the tax credits in Canada on sanctioned projects versus pending or recently completed bids, like the projects that are secured in Quebec, is there a give-back if the ITC is awarded in Canada to Hydro-Quebec? Are there certain projects where you keep all the upside?

Got it that's helpful to put those pieces.

Together for us.

And then maybe.

How do you think with the tax credits in Canada.

Sanction projects versus pending our recently completed bids.

Like our projects in security and come back.

They're a give back if the ITC is awarded in Canada to Hydro Quebec.

Are there certain projects, where you keep all the upside just maybe walk us through sort of which projects can get a bigger benefit and which ones sort of shared economics with the offtake partner.

Patrick Decostre: Just maybe walk us through sort of which projects can get the bigger benefits and which ones sort of have shared economics with the offtake partner? Yeah, the first point is, on Apwit, Dainesh, and Hargersville projects in Ontario, we didn't take into account the existence of the ITC at bid time and when we signed the contract, and we have no, say, clawback or give back clause in the contract. In Tilbury, the smaller project in Ontario, we decided at that time to be a little bit more aggressive, saying we had already given back the ITC to the Ontario ISO. The good news is that we expect the ITC will come. I met with Chrystia Freeland some days ago, and she confirmed that it will come out in the first half of the year.

Yes, the first point is.

Dinesh and.

The <unk> project and also are you.

We didn't take into account the existence of the ITC.

Big time in that when we signed the contract and we have no C claw back or give back close in the contract.

Tilbury the smaller project and we'll tell you.

We decided at that time to be a little more aggressive.

Seeing.

We gave back at that time already the ITC to the Ontario ISO the good news is there.

We expect the ITC will come I met with Chrystia Freeland some day.

Days ago, and she confirmed that it will come in the first half of the year and the second point is less.

Patrick Decostre: And the second point is, the price of lithium has gone down, and the cost of the balance of the plant also has been really well managed by the team. And I have no budget with an interesting return, the double-digit return on this project, and some room of budget contingency, so a de-risk project even for Tilbury. For the last tender, we have taken into account the ITC and optimized our price, taking that into account and, and taking into account the specific Quebec rule to, to say, transfer back to HydroQuebec a significant part of the ITC, 75%. Seventy five percent.

Lithium has gone down and the cost of the balance of plant also has been really well managed by the team and I have no a budget with a with an interesting return.

The double digit return on this project and some room off budget contingency Susu Derisk project, even for <unk> for the last tender.

We have taken into account the ITC.

And.

And optimize our price taking that into account and taking into account the specific <unk>.

<unk> rule.

To see transfer back to hydro Quebec.

A significant part of the ITC, 75%.

75% Okay.

And then last question for me is as you look at the U S projects, I guess, particularly in New York update.

Bruno Guilmette: OK. And the last question for me is, yeah, as you look at the US project, I guess, particularly in New York, updated views on how you think about tax equity. We've seen some transfer deals done to, you know, monetize tax credits annually. I know, you know, you have the option now, maybe on some of those projects, picking PTC versus ITC, sort of just updated views in terms of how you want to optimize the usage of tax equity in the US going forward. Yeah, Mark, Bruno, we certainly have not spent much time changing our view. So I mean, today we still have a view. It helps us because it makes it more liquid.

Outdated views on how you think about tax equity and we've seen some transfer deals done.

Monetize tax credits annually.

I know you've got the option now maybe fundamentals projects sticking PTC versus ITC sort of just updated us in terms of.

You want to optimize and usage of tax equity.

Going forward.

Yes, Mark.

No.

We certainly have not.

Not spent much time.

Changing our view so I mean today, we still have with you it helps us.

Because it makes it more liquid at.

Certainly helps that market in general.

But we have not looked into the specifics recently.

This.

Okay. Thanks for the time today.

Thank you and I are going to proceed with our next question.

The question has come from the line of Ben Pham from BMO. Please ask your question.

Alright, thanks, good morning.

Mark Thomas Jarvi: It certainly helps the market in general, but we have not looked into the specifics recently. Okay, thanks for your time today. Thank you. We are now going to proceed with our next question. The question comes from the line of Ben Pham from BMO. Please answer the question.

I was wondering.

Thoughts on.

The capex.

The capex, but the equipment cost trends.

What is the next three to five years.

Do you think that the projects you're bidding in.

There's a potential for equipment cost potentially move lower.

Over time by the time, we have secured the equipment.

Yes, it's a good question.

Hi, Ben we are what we are doing essentially is.

We moved up we moved from from a period where.

Benjamin Pham: Hi, thanks for the morning. I was wondering your thoughts on the CAP Act. Maybe not the CapEx, but the equipment. Cost Trends, you know, what are the next three or five years? Do you think that the projects you're bidding on today have the potential for equipment costs to potentially move lower over time by the time being secured for the equipment? Yeah, it's a good question. Hi Ben, what we're doing essentially is we moved up. We moved from a period where everything was going down to going up very quickly. And we have been able to do so for the last almost two years. If you look at the French market, typically, or somewhere else, this is more confidential information.

Everything was going down to going up very quickly and we have been able during the last.

Almost two years.

If you look through the French market typically or somewhere.

It is more confidential information.

I look to the price we sign in Quebec.

For bilateral contract and the price of the average price of the of the new tender and the price that we beat the tender to transfer to the off taker of lot of the increase of the cost. So I'm comfortable that we are covered on this and definitely we have put higher content.

Nancy in our budget while bidding.

Patrick Decostre: But if I look at the price we signed for Quebec Class B, We were awarded in May, and we have frozen the price of the battery in December or even November with Tesla. So we secured this; we will do the same with others. What I think is equipment, that's my crystal ball; equipment will go down. But I'm not convinced that the North America balance of plants will go down, because this is more due to the lack of resources in this business.

What we are doing and.

That's exactly what we did.

We've been in February.

We were awarded in May and we.

Frozen the price of the battery in December.

Or even November was with the Tesla. So we secured this we would do the same on the others. What I think is equipment. That's my Crystal ball equipment will go down.

I'm not convinced that the North America balance of plant will go down because this is more due to the lack of resource in this business and that's why we are putting so much.

Patrick Decostre: And that's why we are putting so much emphasis on engineering and working on optimizing the project a lot with the team. And this is a part when I was seeing a part of the development team that had increased and is capitalized are typically these people. We put lots of emphasis on it, and we are also working with a specific contract with balance of plant companies to be incentivized both to reduce the cost of balance of plants. So we are sharing. This is what we call something like common engineering or sharing the cost of this.

Phases on engineering and working on optimizing the project a lot with the team and this is a part when I was seeing.

Part of the team of development team has increased and you skip utilized is typically these people we put lots of emphasis and we are also working with a specific contract.

With balance of plant.

Companies too.

B.

Incentivize both to reduce the cost of balance of plant. So we are sharing this is what we call. The see some thing like come in engineering or sharing the cost of the of this.

Patrick Decostre: So we can reduce and de-risk the project on this part of the cost. So that's my view. Bruno, do you have something to add? Just to limit the morons.

So we can reduce.

And Derisk the project on this part of the cost. So that's my view and then you have something to add to settlement moron.

Bruno Guilmette: It's important to shorten the period between the time that we bid on the contract and the signing of the supplier's contract, as Patrick mentioned, but also to finance it. So we're trying to keep that period as short as possible and to reduce the risk of variations between what we modelled in our bid and what we finally realized. I think we've been successful so far in doing that, and which has avoided a significant, significant loss. Speaker – Past deals and I think we have the teams to continue to be successful. Okay, that's a good cover song.

It's important to shorten the period between the time that we bid on the contract and the signing of the suppliers contracts as Patrick mentioned, but also the financing so where.

We're trying to keep that period as short as possible and then to reduce the risk of variations between what we modeled in our bids and what we finally realize on.

I think we've been we've been successful so far and in doing that.

Which has avoided.

Significant significant losses on.

On past deals and we think we have the teams to continue to be successful on that.

Benjamin Pham: Thank you. And then, This, my second last question is, I know you mentioned you can sell fund your sacred growth and whatnot. It's been the message for some time.

Okay. That's good color. Thank you and then.

Yes.

My second last question is.

I know you mentioned you can self fund yourself.

<unk> growth and whatnot the message for for some time.

Benjamin Pham: Are you able to maybe frame it as how much net megawatts you can sell in a year, how much free cash flow? I guess we can calculate that ourselves, how much free cash you kick out, and you can lever it up. Maybe just to frame it a little bit differently.

Are you able to maybe frame it as.

How much net megawatt chicken.

On a year how much.

Free cash flow I guess, we can calculate that ourselves. So much free cash are you kick out and you can lever up.

Maybe just to frame it a little bit different way.

Yes, I think what I mean, what we prefer to say at this time as well.

Bruno Guilmette: Yeah, I think what I mean, what we prefer to say at this time is that we were well financed this year, we can, in terms of equity or different financing tools, project debt, the market is very receptive, we've, we have, we have very good relationships with our lenders, they are, we have different, We are able to select different forms of the best offer on financing. So project that side. As I mentioned, the ITC in Canada, we expect to be coming. Partnerships is something that we'll consider. We'll continue to include and consider more in the future. The recycling of capital is something that we'll continue to work on and will see in the next. So, all in all, in the last little while, we see certainly opportunities in our portfolio to arbitrage value once we've created value to sell down a portion, and sometimes even more, of some assets.

We are well financed this year.

In terms of equity or a different financing tools.

<unk> that the market is very receptive.

We have very good relationships with our lenders they are we have different.

We are able to select different forms of different.

The best offer on financing so project debt side.

As I mentioned the ITC in Canada, we expect to be coming partnerships is something that we will consider we will continue to include and consider more.

In the future.

The.

Recycling of capital is something that will we will continue to work on and we see in the next.

While we see certainly opportunities in our portfolio.

To arbitrage value once we've created value to sell down a portion.

And sometimes even more of some some assets so with with all of these tools that we have available on financing.

Bruno Guilmette: So, with all these tools that we have available in financing, and plus the AFFO that we keep, as you've seen, we put a range of reinvestment, a ratio of 50 to 70%, and we're in that range, and we've been able to maintain that, which means that, say, call it this quarter, 62% of our AFFO is reinvested in the business. So with all this funding available, we're increasingly able to self-finance our growth. But at the moment, equity is still a need in a portfolio and a solid balance sheet.

We built and plus the <unk> that we keep is as you've seen we put a range of reinvestment ratio of 50% to 70% and we're in that range and we've been able to maintain that twitch, which means we're producing say call. It. This.

This quarter, 62% of our <unk> is reinvested in the business so with all of these financing available.

Increasingly able to self finance our growth but.

At the moment.

Equities still still a need in our portfolio and are now.

Benjamin Pham: So at some point, we'll also need to have some. Okay. All right. Thank you both. Thank you. We are now going to proceed with our next question. And the question comes from the line of John Mould from TD Securities. Please ask your question. Hi, good morning.

Yes.

Our solid balance sheet. So at some point, we'll also need to have some equity.

Okay.

Alright, Thank you Bob here.

Thank you.

Thank you and I are going to proceed with our next question.

And the question is come from the line of John Mode from TD Securities. Please ask your question.

John Mould: Maybe just going back to your projects bit into the NYSERDA RFP; you said earlier, they were well spread over time. Are you able to give us a little more of a sense just in terms of how those CODs are spread out and when they start, just to give us a flavor of what your midterm capital needs could look like from those projects if you are successful in the bulk of them in the RFP? Yeah, thank you, John. Essentially, if we are awarded the contract, since they are well developed and advanced in terms of development, we will be able to start construction quite quickly. So I think if you say, I'm not convinced 2025 is reachable, but I'm sure that 2025 to 2026 is achievable for these 240 megawatts, and that's where we are.

Hi, Good morning, maybe just going back to your projects bid into the nicer to RFP, you said earlier, they were well spread.

Over time, you're able to give us a little more of a sense just in terms of how those <unk>.

Or spread out and when they start just to give us a flavor of what your midterm capital needs could look like from those projects. If you are successful in the bulk of them in the RFP.

Yeah. Thank.

Thank you John essentially if we are.

Awarded these contracts since they are well.

Developed an advanced in term of development.

We would be able to start.

Construction.

Quite quickly.

So so I think if you if you see.

I'm not convinced.

2025 is reachable, but I'm sure that 2025 to 2026.

Is reachable for these 240 megawatt.

And.

Patrick Decostre: And as Bruno just mentioned, it will also be in our interest to go quickly, because it's the best way to secure the bid return quickly. And so our construction team and engineering team is already working hard on this project to be ready as soon as the 22nd of April, go ahead or at least go to the board in May and accelerate. Okay, and just to be clear, that's what would be like a 2026 COD non-steric construction, is that correct? Yeah, yeah, yeah. Okay, great. And then you just go back to the project financing for the Ontario storage projects you've got contracted. I'm just wondering what share of capital costs for those projects could be debt financed, just given that, you know, they do have a merchant component to the revenue model versus the typical fixed price contracts that you would have seen in most of your other project financing in Canada. It's a good point; we'll know what we expect and The Bulletproof Executive 2013. A good portion of the contracted piece will be significant or support a significant portion of project debt, and Equity and ITC will certainly help fund the more emergent parts. So, but on the contract part, there'll be a significant amount of project.

And that's where we are and as Bruno just mentioned it will be our interests or so to go quickly because it's the best way to secured debt.

The beat return quickly and so we have our construction team and engineering team is already working hard on this project to be ready as soon as the 22nd of April.

To see go ahead or at least go to the board and me and accelerating afterwards.

Okay, and just to be clear thats, a that would be like a 2000 2006 CODI not started construction is that correct.

Yeah, Yeah yeah.

Great and then maybe just going back to the project financing for the Ontario storage.

<unk> got contracted.

And I'm, just wondering what share of capital costs for those projects could be debt finance just given the.

They do have a merchant component to the revenue model versus the <unk>.

Typical fixed price.

The contracts that you would've seen in most of your other project financing for Canada.

Okay.

It's a good point we will.

What we expect and when.

But we certainly are working towards is that.

A good portion will be of the contracted piece will be.

We will have a significant or support a significant portion of <unk>.

Project debt.

And equity and ITC will certainly help fund the <unk>.

David Moore merchant part.

But on the contract alright, there'll be a significant amount of project debt.

John Mould: Okay, great, the contracted part, I think we indicated in the past that the contract was quite high. Okay, great. Terrific. Okay, those are all my questions.

Okay great.

The contracted part I think we indicated in the past that the contracted baht is about 70%.

Overall.

But which would be quite highly leveraged.

Okay great.

<unk>.

Terrific. Okay. Those are all my questions. Thank you very much.

John Mould: Thank you very much. Thank you. We have no further questions at this time. I will hand it back to you for closing remarks. Alright, so thanks a lot, everyone, and if you have additional questions, don't hesitate; you can give me a call. I'll make sure to quickly answer your questions. So our next conference call to announce the first quarter results will be on May 15th at 9 a.m., so it's going to be also the same day as our annual general meeting of investors, so looking forward to seeing you there.

Okay.

Thank you we have no further questions at this time I will now hand back to you for closing remarks.

Alright, so thanks, a lot to everyone then.

If you have additional question don't hesitate to give me a call I will make sure to quickly answer your question. So our next conference call to announce first quarter results will be made.

May 15.

At nine a M. So it's going to be also the same day Esri annual general meeting.

So looking forward to see you there.

Stphane Milot: Have a good day and a great weekend. Thank you. Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect your lines. Thank you, and have a good day. Thank you for watching!

Have a good day and a great weekend. Thank you. Thank you.

Thank you.

Ladies and gentlemen. This concludes today's conference call. Thank you for participating you may now disconnect. Your lines. Thank you and have a good day.

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