Q1 2024 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 premier trimestre 2024 de Boralex. Please note that all of the readings are in listening mode only.

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Operator: À la fin de la présentation, il y aura une période de questions-réponses au cours de laquelle les analystes financiers, actionnaires et investisseurs seront invités à poser leurs questions en appuyant sur étoile 1 et 1 sur leur téléphone. Please note that this conference is being recorded. Pour les participants à la webdiffusion, vous pouvez également poser des questions au cours de cette conférence, mais celles-ci obtiendront réponse par courriel après l'appel. Enfin, les représentants des médias qui ont des questions sont invités à contacter directement Camille L'Aventure, conseillère affaires publiques et communications externes, aux coordonnées indiquées à la fin du communiqué trimestriel. J'aimerais maintenant passer la parole à Stphane Milot, vice-président relations avec les investisseurs de Boralex.

Speaker Change: Good morning, ladies and gentlemen, and welcome to Boral X. The first quarter of 2020 full financial results Conference call.

Operator: Good morning, ladies and gentlemen, and welcome to Boralex's first quarter 2024 Financial Results Conference call. 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 this call is being recorded. For webcast participants, you can also ask questions during this conference, but they will be answered by email after the call.

Speaker Change: Note that all lines are in listen only mode.

Speaker Change: Following the presentation, we will conduct a question and answer session in which financial analyst shareholders and investors will be invited to ask their questions by pressing star one and one on the telephone.

Speaker Change: Also note that this call is being recorded.

Speaker Change: For webcast participants you can also ask questions. During this 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. Her contact information is provided at the end of the quarterly press release. And I would like to turn the conference over to Stphane Milot, Vice President, Investor Relations, for Boralex. Please go ahead.

Speaker Change: Finally media Representatives I invite you to come to contact cabinet level, Cheol advisor public affairs and external communications.

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

Speaker Change: And I would like to turn the conference over to Stephane Bello Vice President Investor Relations for Blacks. Please go ahead.

Stphane Milot: Thank you, Operator, and good morning, everyone. Welcome to Boralex's first quarterly results conference call. Joining me today on the call are Patrick Decostre, 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. Afterward, Mr. Guilmette will carry on with financial highlights, and then we'll be available to answer your questions.

Stphane Milot: Well, thank you operator, and good morning, everyone. Welcome to <unk> first quarter results Conference call joining me today on the call.

Speaker Change: President and Chief Executive Officer, because I know getting met executive Vice President and Chief Financial Officer, and other members of our management and finance teams. So Mr. Dr. Katz 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: As you know, during this call, we will discuss historical as well as forward-looking information. When talking about the future, there are a variety of risk factors that have been listed in our different findings with securities regulators, which can materially change our estimated results.

Speaker Change: As you know during this call we will discuss historical as well as forward looking information.

Speaker Change: When talking about the future there are a verity of risk factors that have been listed in our different filings with securities regulators, which can materially change our estimated results.

Stphane Milot: These documents are all available for consultation at CDARplus.com. In our webcast presentation document, the disclosed results are presented both on a consolidated basis and on a combined basis. When talking about the results, we generally refer to combined numbers, and we refer to cash flow and balance sheet, and when referring, sorry, to cash flow and balance sheet, we generally refer to consolidated numbers. So please note that combined is a non-GAAP financial measure and does not have a standardized meaning under IFR. Accordingly, combined may not be comparable to similarly named measures used by other companies.

Speaker Change: Documents are all available for consultation at SEDAR plus dossier.

Speaker Change: And our webcast presentation document the disclosed results are presented both on a consolidated basis and on a combined basis when talking about the results. We generally refer to come by numbers and were you referring to cash flow and balance sheet, and when referring sorry to cash flow and balance sheet, we generally refer to.

Speaker Change: <unk> numbers. So please note that combined is a non-GAAP financial measure and does not have standardized meaning under ifr us.

Accordingly, combined may not be comparable to similarly, similarly named measures used by other companies for more details see the non ferrous and other financial measures section in the MD&A.

Stphane Milot: For more details, see the Non-IFRS and Other Financial Measures section in the MDM. The press release, the MD&A, the consolidated financial statements, and a copy of today's presentations are all posted on the Boralex website at boralex.com under the investor section. If you wish to receive a copy of this document, please contact me directly. Mr. Decostre will now start with his comments, so please go ahead.

Speaker Change: Press release, the MD&A, the consolidated financial statements and a copy of today's presentations are all posted under Brian likes website at <unk> Dot com under the investors section.

She received a copy of these documents please contact me directly.

Speaker Change: Mr. Nat gas will now start with his comments. So please go ahead.

Patrick Decostre: Thank you, Stphane. And good morning, everyone.

Speaker Change: Stefan and good morning, everyone. It's a pleasure for me to present, our residence and achievements for the first quarter.

Patrick Decostre: It's a pleasure for me to present our results and achievements for the first quarter. Boralex had a good start to the year, delivering strong growth overall while continuing the disciplined development of our project. Combined MBDA for the first quarter was $218 million, up $28 million or 14% over the same quarter last year. We benefited from strong production of wind farms and hydroelectric assets in North America, the commissioning of new assets in France, and our strategy to optimize electricity selling prices in France. Net earnings were $73 million, up 62% compared to the first quarter of 2023. And the AFFO under IFRS was $78 million, up 16%.

Speaker Change: Well, Alex had a good start to the year delivering strong gross overall, while continuing the disciplined development of our project.

Speaker Change: EBITDA for the first quarter was 218 million up 28 million or 14% over the same quarter last year.

Speaker Change: We benefited from strong production of wind farms and I draw electric assets in North America, the commissioning of new assets in France.

Speaker Change: D G to optimize electricity selling prices in France.

Speaker Change: Net earnings was 73 million.

Speaker Change: 62% compared to the first quarter of 2023 and D. E F. A fool under IFA rich was $78 million.

Patrick Decostre: We continue to strengthen our balance sheet with $575 million in available cash resources and authorized financing, providing significant flexibility to fund our future. On the development side, our teams have continued to make significant progress in our growth and diversification strategy. Our main projects under construction and ready to build progress according to the plan, with our WIND project in Quebec and Limeken in Scotland expected to start operating at the end of 2024, as well as our first two battery storage projects in Ontario, Agersville and Tilbury, expected to be commissioned in 2025.

Speaker Change: 16 persons.

Speaker Change: We continue to strengthen our balance sheet was 575 million in available cash resources and authorize financing providing significant flexibility to fund our future growth.

Speaker Change: On the development side, our teams continued to make significant progress in our growth and diversification strategy.

Speaker Change: The main project under construction and ready to build progress according to the plan.

Speaker Change: With our wind project in Quebec, and Lion King in Scotland.

Speaker Change: <unk> to start operating at the end of 2024 as well as our first two battery storage project in Ontario, eager to Bill and Tilbury expected to be commissioned in 2025.

Patrick Decostre: Finally, 239 megawatts of projects were added to our pipeline in the quarter, now representing over 6.7 gigawatts of capacity. Regarding market conditions, 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 footprints and strong demand from corporations. In Canada, the government has scheduled the adoption of the ITC for June 2024.

Speaker Change: Finally, 239 megawatt of project were added to our pipeline in the quarter no representing over six seven gigawatt of capacity.

Speaker Change: Regarding market conditions.

Speaker Change: Would see the demand for renewable energy remains high in all of our core markets with strong commitments from the government to reduce their carbon footprints and strong demand from corporations.

Patrick Decostre: This will have a very positive impact on our projects in Quebec and in Ontario. I'm also very pleased to highlight our most recent win, announced last week, of a 125 megawatt storage project in Ontario. In a very short period of time, we became the leader of this technology in Ontario and in Canada as well. We are very proud of our team, and there is more to come.

Speaker Change: In Canada. The government has scheduled the adoption of the ITC for June 2024. This will have a very positive impact on our project in Quebec.

Speaker Change: Are you.

Speaker Change: I'm also very pleased to highlight.

Speaker Change: Our most recent win announced last week off of 125 megawatt storage project in Ontario in the very short period of time, we became the leader of this technology in Ontario, and in Canada as well, we're very proud of our team.

Speaker Change: And there is more to come.

Patrick Decostre: After our success in the recent RFPs, our teams are already preparing responses to upcoming tenders in Quebec and in Ontario, in the United States. NYSERDA announced the conclusion of the expedited RFP, but did not publish the list of companies selected. The projects that won are expected to be disclosed as contracts or signed. NYSERDA, however, indicated to Boralex that the projects it had submitted totaling 240 megawatts were not selected.

Speaker Change: After our success in the recent Rfps. Our teams are already preparing response says two upcoming tender in Quebec and Ontario.

Speaker Change: In the United States Nicer announced the conclusion of the expedited RSP, but did not publish the list of companies selected.

Speaker Change: A project that one are expected to be disclosed to us contract our son nicer.

Speaker Change: <unk> whoever indicated two bottlenecks that the project E that submitted totaling 240 megawatt were not selected.

Patrick Decostre: The next solicitation is expected to be launched in May 2024. Boralex will review the request for information document and will establish its strategy for this RFP. In Europe, our team is also working on the upcoming RFPs in France and in the UK. I will now rapidly cover the main variances in our portfolio of projects and growth paths. The change in the pipeline was mainly due to the addition of solar and storage projects in North America at the early stage, the addition of solar and wind projects in Europe at the early stage, and the transition from the early stage to the advanced stage of storage projects totaling 525 megawatts in North America.

Speaker Change: Next solicitation is expected to be launched in May 2024.

Speaker Change: <unk> will review the request for information document and we lost at least its strategy for this request for proposals.

Speaker Change: In Europe. Our teams are also working on the upcoming Rfps in France and in the U K.

Speaker Change: I wouldn't know rapidly cover the main variances you know, we're a portfolio of project and gross baths.

Speaker Change: The change in the pipeline was mainly due to the addition of solar and storage project in North America in the early stage. The addition of solar and wind projects in Europe in your early stage and the transition from the early stage for the advanced stage of storage project.

Speaker Change: <unk> 525 megawatts in North America.

Patrick Decostre: In total, our pipeline in early, mid, and advanced stages now comprises projects totaling 5.8 gigawatt of wind, solar, and storage projects. There were not a lot of changes in our growth path during the first quarter, except the commissioning of a 21 megawatt wind project in France. I won't go in detail about the progress made in our growth and diversification strategic direction, as I have already talked about the major highlights in the customer strategic direction.

Speaker Change: In total our pipeline in early mid and advanced stages project No comprises project totaling five eight gigawatt of wind solar and storage project.

Speaker Change: There were not a lot of change in our growth path during the first quarter, except the commissioning of a 21 megawatt wind project in France.

Speaker Change: I won't go in detail through the progress made in our growth and diversification strategy direction as IV.

Speaker Change: Already talk about the major highlights on.

Patrick Decostre: We continue to have advanced discussions with different corporations in France, as the demand for renewable energy contracted at an attractive price remains high. This completes my part. I will now let Bruno cover the financial portion in more detail, and we'll be back later for the question period. Bruno? Thank you, Patrick.

Speaker Change: On the customer strategic direction, we continue to have advanced discussion with different corporations in France as the demand for renewable energy contracted at attractive price remains high.

Bruno: This complete my part I will let brito covered the financial portion in more detail and we'll be back later for the question period Bruno. Thank you Patrick good morning, everyone.

Bruno Guilmette: Thank you, Patrick. Good morning, everyone.

Bruno Guilmette: I will start with a review of the progress made in light of our 2025 corporate objectives. As mentioned earlier by Patrick, our balance sheet is solid with $575 million in available cash resources and authorized financing; total debt remains stable in the first quarter of 2024 with project debt representing 85% of the total. We continue to make good progress on EBITDA and AFFL-FROM. The reinvestment ratio is in line with our target. Lastly, on our corporate objectives, we continue to make good progress on our CSR strategy, as presented on slide 17. We are also preparing for the CSRD and ISSB regulations.

Brito: I will start with a review of the progress made in light of our 2025 corporate objectives.

Bruno: As mentioned earlier by Patrick our balance sheet is solid with $575 million in available cash resources and authorized financing.

Brito: Total debt remained stable in the first quarter of 2024 with project debt, representing 85% of the total.

Speaker Change: We continue to make good progress on the EBITDA and <unk> fronts.

Speaker Change: Reinvestment ratio is in line with our target.

Patrick: Lastly on our corporate objectives, we continued to make good progress on our CSR strategy as presented on slide 17.

Patrick: We are also preparing for CSR D and ISS be regulations and have just started our double materiality analysis.

Bruno Guilmette: And I've just started our double materiality. For more detailed information, including data on CO2 emissions and work done in relation to climate change and the TCFD initiative, I invite you to read our fourth CSR report, which was published in February. I will now cover the financial results for the first quarter, starting with production. Overall, total wind production for the quarter combining Canada, the US, and France was 4% higher than last year, but 2% lower than anticipated; total production for the hydro sector was 9% higher than last year and 27% higher than anticipated. Both markets Canada and the US had favorable weather conditions.

Patrick: For more detailed information, including Scott on C. O two emissions and worked on in relation to climate change and the T. Cfd initiative invite you to read our fourth CSR report, which was published in February.

Bruno Guilmette: Finally, production from solar assets was 19% lower than the same quarter last year, 22% lower than anticipated, mainly due to curtailment at the Five Points Solar Farm in California. In summary, total production for the quarter was 3% higher than last year, 1% lower than anticipated. The combined revenues for the quarter were down 11% compared to last year, mostly due to lower merchant prices in France.

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

Patrick: Yeah.

Patrick: Overall total wind production for the quarter, combining Canada, the U S and France was 4% higher than last year, but 2% lower than anticipated.

Patrick: Total production for the hydro sector was 9% higher than last year, and 27% higher than anticipated both markets, Canada and U S on favorable weather conditions.

Patrick: Finally production from solar assets was 19% lower than the same quarter last year, 22% lower than anticipated mainly due to curtailment at five points solar farm in California.

Speaker Change: In summary, total production for the quarter was 3% higher than last year at 1% lower than anticipated.

Speaker Change: The quarter combined revenues were down 11% compared to last year, mostly due to lower merchant prices in France.

Bruno Guilmette: EBITDA increased by 14% in the first quarter, and operating income increased by 31%. As mentioned by Patrick, the growth came from higher production in North America, new assets commissioned in France, and the positive effect of our commercialization strategy in France. On this last point, please note that the major contributor was the price effect of newly commissioned assets, notably Moulin du Loire, which benefited from higher selling prices in the first quarter of this year, compared to the first quarter of last year, thanks to our commercialization strategy. To a lesser extent, assets impacted by the French price gap made a small positive contribution to EBIT. On a consolidated basis, FFO was 78 million compared to 66 million in the same quarter last year.

Speaker Change: EBITDA increased by 14% in the first quarter and operating income increased by 31%.

Speaker Change: As mentioned by Patrick the growth came from higher production in North America.

Speaker Change: Assets commissioned in France, and the positive effect of our commercialization strategy in France.

Speaker Change: On this last point. Please note that the major contributor was the price effect of newly commissioned assets, notably <unk>, which benefited from higher selling price in the first quarter of this year.

Speaker Change: Compared to the first quarter of last year, thanks to our commercialization strategy.

Speaker Change: To a lesser extent assets impacted by difference price gap at a small positive contribution to EBITDA.

Speaker Change: On a consolidated basis.

Speaker Change: <unk> was 78 million compared to $66 million in the same quarter last year.

Bruno Guilmette: Our financial position remains very solid with a net debt to total market capital ratio of 44%. In conclusion, it's a good first quarter for 2024 as we continue the disciplined execution of our strategic plan. We increased combinability, NetEarnings, and EFFO compared to 2023. We maintain a solid financial position with $575 million in available cash resources and authorized financing to support our growth. And, finally, we have made good progress on our forest strategic orientation.

Speaker Change: Our financial position remains very solid with a net debt to total market capital ratio of 44%.

Speaker Change: In conclusion, it's a good first quarter for 'twenty 'twenty four as we continue the disciplined execution of our strategic plan.

Speaker Change: We increased combined EBITDA.

Speaker Change: Net earnings in <unk> compared to 2023.

Speaker Change: We maintained a solid financial position with $575 million in available cash resources in <unk> financing to support our growth.

Speaker Change: And finally, we made good progress along our four strategic orientations.

Bruno Guilmette: Thank you for your attention. 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.

Thank you for your attention we are now ready to take your questions.

Operator: 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. Once again, please press star 1 and 1 on your telephone to ask a question, and to withdraw your question, please press star 1 and 1 again. Please stand by while we compile the Q&A roster. This will take a few moments. Thank you. We are now going to proceed with our first question. And the questions come from the line of Nelson Ng from RBC Capital Markets. Please ask your question. Great, thanks.

Speaker Change: 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 to ask a question and to withdraw your question. Please press star one and one again.

Speaker Change: These standby, while we compile the Q&A roster. This will take a few madmen. Thank you.

Speaker Change: Operator.

Speaker Change: We are not going to proceed with our first question.

Speaker Change: Okay.

Speaker Change: And the questions come from the line of Nelson <unk> from RBC capital markets. Please ask your question.

Nelson Ng: Great. Thanks, and good morning, everyone. My first question relates to New York. Just a quick question. Was the NYSERDA expedited bid where you submitted 240 megawatts purely based on price?

Great. Thanks, and good morning, everyone.

Nelson Ng: First question relates to New York.

Speaker Change: The quick question was the nice start a expedited bad debt, where you submitted 240 megawatts was that purely based on price.

Patrick Decostre: Uh, yeah, the answer is yes. It was there was there was a sorry. Good morning, Nelson.

Speaker Change: Yes. The answer is yes. It was there was there was.

Hudson: Sorry, good morning Hudson first.

Hudson: Yes and.

Speaker Change: We don't know exactly what was the the last accepted seed price by nicer death.

Speaker Change: And we wouldn't know that when it would be when it would be.

Patrick Decostre: First, the answer is yes. And we don't know exactly what the last accepted price by Nasrdaq was, say, and we will know that when it will be published. And as I mentioned in my speech, we're waiting to see what the rules for the next tender will be and to decide the strategy of paid for this Okay.

Speaker Change: Published.

Speaker Change: And as I mentioned in my in my speech, we are waiting to see what will be the rules for the next tender and to decide the.

Speaker Change: Our strategy of peaceful discipline.

Speaker Change: Okay. So I guess.

Nelson Ng: Regardless of the strategy, does it imply that you would need a lower price in the next round? And then I guess the other question is, historically, have RFPs had a big non-financial component to make the bids more competitive?

Speaker Change: Regardless of the strategy does it imply that you would need a lower price and in the next round.

Speaker Change: And then I guess the other question is I historically has rfps.

Speaker Change: Got it.

Speaker Change: Non financial components to make the base more competitive.

Patrick Decostre: What we will do is we will remain disciplined in the way we bid. I am obviously disappointed not to be selected, but I'm not disappointed to have respected our limit of return and acceptable return for Boralex.

Speaker Change: Okay.

Speaker Change: What we will do is we will remain disciplined in the way we will bid.

Abuse, the disappointed not being selected but I'm not disappointed with respect to Delaware our limit of return an acceptable return for behind the extent we have more.

Patrick Decostre: And we have many opportunities in our targeted geographies, Quebec, Ontario, France, the UK, and NYSERDA, obviously. But if NYSERDA, if the price in New York remains lower than the one we think we should get to have an acceptable return, we will review our strategy. What I think, too, is on the different projects we bid last time, there was one, say, large project of 140 megawatts, but there were also some smaller projects of 20 megawatts. I have more questions about the 20 megawatt project than about the other one. But definitely, we will see what will be the, you know, the competition for the next stage.

Speaker Change: Many opportunities in our.

Speaker Change: Targeted geographies, Quebec, Ontario, France, the UK and nicer doubt you see but if nicer adapt if the pricing New York.

Speaker Change: It remains lower than the one we think we should get to have an acceptable return.

Speaker Change: We will we will review of our strategy what I think too is on the different project. We bid last time there was one.

Speaker Change: See large project of 140 megawatt.

Speaker Change: But there was also some smaller project of 20 megawatt I have more question of the 20 megawatt project and on the other one.

Speaker Change: But definitely we will we will see what will be the.

Patrick Decostre: And NYSERDA has reconfirmed their objective of 70% of renewable energy in 2030. So they need to have projects online for this time, and our projects are able to do it. There are also lots of projects that are ready to build. And there are also lots of difficulty on the offshore side. So they do not have a lot of alternatives to catch their 70% in 2020.

Speaker Change: You know the convention for the next stage.

Speaker Change: Nicer dice reconfirm their objective of 70% of renewable energy in 'twenty three so they need to have project online for this time and our project are.

Speaker Change: Able to do it.

Speaker Change: There is also lots of theyre ready to build and.

Speaker Change: And they are also lots of difficulty on the offshore sites. So they have not a lot of alternatives.

Speaker Change: To catch deer, 70% in 'twenty three.

Nelson Ng: I see that's a great color. And then just shifting to Ontario. So you have two battery storage projects that are due to be commissioned next year and a third one in, I think, 2027 or 2028. Can you just provide a bit of an update on your battery procurement strategy? And also, are you kind of factoring in any economies of scale for whether it's the construction or operations of the facilities?

Speaker Change: That's great color and then just shifting to Ontario, and so you have.

Speaker Change: <unk> projects that are our two battery storage projects that our database Commission next year and a third one and I think 27 or 28.

Speaker Change: Can you just provide a bit of an update on your.

Speaker Change: Battery procurement strategy and and also are you factoring in any.

Speaker Change: The economies of scale for whether it's construction or operations of the facilities.

Patrick Decostre: Yeah, essentially, on Agersville and Tilbury, we have secured all the procurement, meaning batteries and balance of plant. Batteries have been contracted with Tesla. So we are going for, I would say, number one technologically and number one in knowledge of the Ontario system and rules. So that's, that's, that's not, there is no risk on this side.

Yeah, essentially on the on the acres the lend and Tilbury, we have secured all the procurement meaning.

Speaker Change: Batteries and balance of plant batteries have been contracted with Tesla.

Speaker Change: So we are going for I would say number one technologically and number one in knowledge of the Ontario system and rules. So that's that's that's not there is no.

Patrick Decostre: The balance of the plant has been contracted to at prices which are totally in line with our budget. So that's why I'm confident we will reach the expected return on these projects when they are connected next year. Yes, there will certainly be economies of scale with Oxford since Oxford is not far away from Ayresville, it's the same First Nation partner, the same area for operation, and it's in the area of the Niagara Peninsula, where we already operate a large wind farm, as you know, of 230 megawatts. So yes, there is more to come, and we are preparing for the LT2, to continue in Ontario, for the LT2 Okay.

Speaker Change: No risk on this side balance of plant has been contracted Chu at a price which are totally in line with our budget. So so that's why I'm confident we will we will reach.

Speaker Change: The expected return on these projects when they would be connected next year.

Speaker Change: Yes, there will certainly be economies of scale with.

Speaker Change: Squeeze Oxfords is since oxfords is not far away from your Seville is the same first nation partners. The same area for operation and it's in the area of Niagara Peninsula, where we already operate.

Speaker Change: A large wind farm as you know a 230 megawatt. So so so yes, there is more to come and we are preparing for the LTE too.

Speaker Change: To continue on the on those how are you for the <unk> procurement do next RFP that will come for production for different production and see hybrid project.

Nelson Ng: Okay, and there's just one last question. You mentioned that it's, everything's kind of on budget. Can you provide a bit more color on the rough project costs for the two batteries?

Speaker Change: Okay and then just one last question you mentioned that it's everything's kind of on budget.

Speaker Change: Can you provide a bit more color on like the rough project cost for the two battery storage projects.

Nelson Ng: It's pretty much in line with what we've said in the past, Nelson. So, if I recall, we were looking at two Ontario projects for about 800 million.

Speaker Change: It's pretty much in line with with what we've said in the past.

Nelson Ng: Nelson so.

Nelson Ng: If I recall we were.

Speaker Change: The two Ontario projects were about $800 million exactly.

Patrick Decostre: Great. Thank you very much. I'll get back to you.

Speaker Change: Okay, great. Thank you very much I'll get back in the <unk>.

Operator: Thank you. 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. Good morning, everyone.

Speaker Change: Yeah.

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

Speaker Change: And the questions come from the line of Mark Jarvi from CIBC. Please ask your question.

Mark Thomas Jarvi: Good morning everyone. Coming back to the bids in New York, was there anything in terms of supply chain costs or tax equity assumptions that made you bid more conservatively and will impact sort of how you bid in the next potential RFPs?

Mark Thomas Jarvi: Hey, good morning, everyone.

Mark Thomas Jarvi: Coming back to the bids in New York was there anything in terms of supply chain costs tax equity assumptions that made you a bit more conservatively and will impact sort of how you bid in the next potential rfps.

Patrick Decostre: No, I-I-I-I-I-I-I-I- I'm not I'm not I'm not sure that we have taken to see conservative assumptions. When I'm looking to, you know, accepted price by NYSERDA last year in offshore, which are public, last year in solar, which are also public, I think we have, you know, the right strategy. I we need we need to have to have more details of the results to be able to really understand why we have not been selected.

Mark Thomas Jarvi: No.

Yeah.

Speaker Change: I'm not I'm not I'm not sure that we we have taken to see conservative assumptions.

Speaker Change: When I'm looking to ask.

Accepted price by <unk> last year.

Speaker Change: In offshore which are public.

Speaker Change: Last year in in Sorter, which are also public I think we have.

Speaker Change: No.

Speaker Change: The right strategy.

Speaker Change: We need we need to.

Speaker Change: Do you have more details of the resolution to be able to really understand why we have not been selected.

Patrick Decostre: But I definitely think the balance of plant is quite expensive in New York when you compare it to other jurisdictions. My comments on smaller projects, Rupert Merer, John Mould, Andrew Kuske, Benjamin Pham, Nelson Ng, Naji Baydoun, Sean Steuart, Bruno Guilmette, Patrick DeCostre, Boralex Inc. Class A There are some fixed costs, typically grid connection costs, even if it's in low voltage, which is also there is no economies of scale on this.

Speaker Change: Definitely the balance of plant is quite expensive in New York when you compare to other jurisdiction.

Speaker Change: My comment on smaller project.

Patrick Decostre: So, there are some small points, but I, I, I, we will see. We need more analysis to answer your question. Definitely. Your question, Mark. Okay.

Speaker Change:

Speaker Change: There are some fixed costs typically grid connection cost even if it's in low voltage which is also.

Speaker Change: There is no economies of scale on this so so there are some some small points per die.

Mark Thomas Jarvi: We will see we need more analyses to winter definitely your question Mark Okay, and then with the new tariffs announced.

Mark Thomas Jarvi: Okay, and then with the new tariffs announced by the Biden administration this week on solar panels from China, how does that impact in terms of how you're thinking about sourcing solar equipment in the U.S.?

Mark Thomas Jarvi: From the bite administration this week solar panels from China.

Speaker Change: That impact in terms of how youre thinking about sourcing solar equipment in the U S.

Patrick Decostre: That's potentially one answer to your first question, that we looked to be protected from this type of risk in our last bid. So, we anticipated that such action was forthcoming from the U.S. government, and we have identified domestic production, but it's definitely not the cost of Chinese production. So, I don't know. I think we are, you know, our team is up to date on this, and this is also something that may be an uncertainty on the stock market, the nicer that previews bit.

Speaker Change: Yes.

Speaker Change: That's potentially one when the answer to your first question.

That we have look to.

To be protected from this type of risk in Delaware last bid. So we have anticipated that such action was forthcoming from the U S government.

Speaker Change: And we have identified.

Speaker Change: Domestic production.

Speaker Change: Production, but it's definitely not the cost of Chinese so I don't know I think we are we are you know our team is up to date on this and this is also something that may be an uncertainty on the on the.

Mark Thomas Jarvi: Last question for me, just an updated outlook for M&A, any updated view in terms of geographies, asset types, or even size of deals where you're finding maybe a sweet spot to be able to option this, to be able to buy assets, and is the focus sort of on a combination of operating development pipelines, operating or more on our development side.

Speaker Change: The nicer that previews bid.

Good.

Speaker Change: Last question for me just.

Speaker Change: Updated outlook for M&A.

Speaker Change: Any update you in terms of geographies asset types or even size of deals where you're finding may be a sweet spot to be tabletop, Mississippi by assets and is the focus.

Speaker Change: On combination of operating development pipelines are operating or more on our development side.

Bruno Guilmette: Hi Mark. The ideal target would certainly be a mix of operating assets, which we can improve on with our experience, a good pipeline of projects that currently we see those pipelines as a more attractive valuation, and some team and expertise, especially where we're developing a bit more either in the US or UK, where we have less people on the ground compared to Canada and France. So that would be the ideal target. The M&A market, in our view, is interesting.

Speaker Change: Hi, Mark.

Speaker Change: The ideal target, which certainly be a mix of of operating.

Speaker Change: Assets, which we can which we can improve on that with our experience.

Speaker Change: Good pipeline of projects set I'm currently we see those those pipelines.

Mark Thomas Jarvi: At a more attractive valuation and some.

Mark Thomas Jarvi: Some team and expertise, especially where we're developing a bit more either app for example, U S U K or digital retail.

Bruno Guilmette: There are probably more sellers than buyers at the moment, which means that there are potentially attractive valuations, and we keep a close eye on the market. Having said that, we do not need to make an acquisition if it's not strategic and if it's not at the right return. So we'll just continue to look for the right target.

Mark Thomas Jarvi: We have less people on the ground compared to Canada, and France, so that would be the ideal target the M&A market.

Mark Thomas Jarvi: In our view.

Mark Thomas Jarvi: It's interesting there is probably more sellers than buyers at the moment.

Mark Thomas Jarvi: Which means that potentially attractive valuations and we keep we keep a close eye on the on the market.

Mark Thomas Jarvi: Having said that we do not need to make an acquisition if it's a if it's not strategic and if it's if it's not at the right return. So we'll just.

Mark Thomas Jarvi: Continue to look for the right.

Mark Thomas Jarvi: Have you made any binding offers on any portfolios?

Mark Thomas Jarvi: The right target.

Speaker Change: Have you made any binding offers on any portfolios and missed out.

Bruno Guilmette: We're not going to disclose our non-events or non-announced events. Thank you. I guess my question would be, do you have a sense of where clearing prices are today on processes in terms of where you think return hurdles are right now to get a successful bid? And we certainly, we certainly continue to talk to people in our core markets. And so we have a good idea of the market boss.

Speaker Change: We're not going to disclose that.

Speaker Change: Our non or non events are a non announced thank you I guess my question would be do you have a sense of where clearing prices are today on processes in terms of where you think return hurdles are right now to get a successful bid.

Speaker Change: Yeah. We are we certainly we certainly continue to talk to people in our core markets and so we have a we have a good idea on.

Mark Thomas Jarvi: And is that at a level that's comparable to organic returns, or slightly lower given that maybe there's less risk in development and you're buying some operating cash-flowing assets?

Speaker Change: The market pause.

Speaker Change: And is that a level, that's comparable to organic returns or slightly lower given maybe there's less risk on development and you're buying some operating cash flow and assets.

Bruno Guilmette: We continue to believe that organic development offers a premium. It's essentially a risk premium, and we're good at taking those kinds of risks. So we continue to favor, in general, our organic development and allocate more dollars towards that. And we see a lot of opportunities on the organic side. Sounds good. Thanks for the time.

Speaker Change: We continue to believe that organic development offers a premium it said essentially a risk premium.

Speaker Change: And then and we were taking dose schedule risks. So we continue to favor in general our organic development and allocate more dollars towards that and we see a lot of opportunities on organic on the organic side.

Mark Thomas Jarvi: Sounds good. Thanks for your time this morning.

Speaker Change: Sounds good thanks for the time this morning.

Mike: Thanks, Mike.

Operator: Thank you. We are now going to take our next question, and the questions come from the line of Robert Hope from Scotiabank. Please ask your question. Your line is open.

Speaker Change: Thank you we are not going to take our next question.

Robert <unk>: And the question is come from the line of Robert <unk> from Scotia Bank. Please ask your question. Your line is open.

Robert Hope: Good morning, everyone. I want to go back to the battery conversation. I guess, more broadly, how do you think about Boralex's competitive advantage or key points of differentiation in standalone storage assets, similar to what you just did in Ontario?

Speaker Change: Alright, good morning, everyone I want to go back to the battery conversation I guess more broadly.

Speaker Change: How would you think about <unk> competitive advantage are key points of differentiation.

Speaker Change: Standalone storage asset similar to what you just did in Ontario.

Patrick Decostre: Yeah, thank you, Robert. The first point is we started redeveloping in Ontario before all others. And we started, probably two years before, to analyze where the system would need something. And I want to say something we discussed: is it battery storage? Is it? Is it a hybrid site? Or is it production?

Speaker Change: Yes. Thank you Robert the first point is.

Speaker Change: We start Redeveloping tour, you before all others.

Speaker Change: And we started.

Patrick Decostre: And so we identify our battery storage portfolio before the others, make the partnership with the First Nations, make the partnership with the municipality. And, and so that's one thing. And that's important because there are no some non-price points in the RFPs. The second point is, I think we have to work a lot on the modernization of the revenue of the 30% which are not covered by the contract, of the 22-year contract with the ISO.

Speaker Change: Probably two years before to analyze where.

Speaker Change: The system will need something and then when you see something we discuss about is it battery storage as it is it a hybrid sites or is it production and so we identified.

Speaker Change: Battery storage portfolio before the others make the partnership with first nations make the partnership with the municipality and and so that's what one thing and Thats important because there is no some non price points in these rfps.

Speaker Change: Second point is.

Speaker Change: I think we have work also a lot.

Speaker Change: The modernization of the revenue.

Speaker Change: Of the 30%, which are not covered by the contract.

Patrick Decostre: And I think this is the second one. We have analyzed a project in Ontario that is well known before. And so we have gone into all the models before the RFP. And I think, last but not least, the way we are doing our partnership with First Nations is something which gives us a real advantage in Ontario.

Speaker Change: Of the 22 year contract with the ISO and I think this is a second one.

Speaker Change: We have we have analyzed a.

Speaker Change: A project called <unk>, which is well known.

Speaker Change: Before and.

Speaker Change: And so we have gone into all of the model.

Speaker Change: For the RFP.

Speaker Change: And I think last but not least the way we are doing our partnership with first nations is something which give us.

Speaker Change: The real advantage.

Speaker Change: On the <unk> project.

Robert Hope: Alright, thanks for that. And then maybe just taking a look at the development pipeline, you know, as you know, it seems like grant overall demand is kind of pivoting upwards across, you know, many jurisdictions. Where do you think you need to add some development projects? And, you know, can you just walk us through kind of your, your, you know, just the number of projects that you could be adding to the development pipeline?

Speaker Change: Alright, Thanks for that and then maybe just taking a look at the development pipeline.

Speaker Change: It seems like granite.

Speaker Change: Overall demand is kind of pivoting upwards across many jurisdictions, where do you think.

Speaker Change: You need to add some development projects and.

Speaker Change: Can you just walk us through kind of your your.

Speaker Change: Just the amount of projects that you could be adding to the development pipeline.

Patrick Decostre: I think essentially, starting in Canada, since we have been very successful in Quebec and in Ontario, we are working hard to have new projects for the next RFP. There will be, but it's, you know, when you're successful, by definition, you empty a little bit your funnel of projects. So we are working on this.

Speaker Change: I think I think essentially.

Speaker Change: Starting in in Canada.

Since we have been very successful in Quebec, and he knows how are you.

Speaker Change: Are working hard to have new project for the next RFP and there will be but it's you know.

Speaker Change: When you were successful by definition you empty a little bit your your funnel of project. So we are working on this end.

Patrick Decostre: And I'm confident potentially there will be other places in Canada, but I will not go further today, but where we're thinking that the condition could be of interest. In Europe, specifically, we are pushing hard in the UK, which is the promote a person, Julie Cusson, who was on my executive team to supervise and lead the UK development operation, and all the UK team to accelerate there. It's a large market; there is a lot of need for electricity.

Speaker Change: Im confident.

Speaker Change: Potentially there will be.

Speaker Change: Other places in Canada, but I would not go further today, but where we are thinking that it's the condition could be of interest.

Speaker Change: In Europe, specifically, we are pushing hard in the U K, we just.

Speaker Change: We just.

Speaker Change: Remote the person is unique so who was of my executive team to to supervise and lead you key development operation.

Speaker Change: All the older UK team to accelerate there. It's a large market there is a lot of need of electricity.

Speaker Change: The nuclear fleet in the U K the old EG, our nuclear fleet guests cooled reactor will be closed in early 2027 and the new.

Patrick Decostre: The nuclear fleet in the UK, the old AGR nuclear fleet gas-cooled reactor will be closed in probably 2027, and the new reactor will be there just in 2030 or 2032. So there is lots of room for new production. And, and, and finally, you know, France. I'm not. We would not invest more than what we're investing today; we have a good pipeline, and we've been there for 20 years. And finally, in the UK, we will continue to see our disciplined approach, analyze NYSERDA's RFP proposal for the next round, and see how much we have to invest in the US for the next

Speaker Change: Reactor will be there just in 'twenty three 'twenty 32, so there is lots of room for new production.

Speaker Change: And finally, you know.

Speaker Change: France.

Speaker Change: Not.

Speaker Change: We would not.

Speaker Change: Invest more than what we are investing today, we have a good pipeline, where theyre since 20 years and find it in the U K, we will continue to see our disciplined approach.

Speaker Change: Lies nicer.

Speaker Change: If peak proposal for the next round and and see Oh, much we have to invest in the U S.

Speaker Change: For the next the next to the next year.

Robert Hope: Thank you. I'll hop back in the queue.

Speaker Change: Thank you I'll hop back in the queue.

Operator: Thank you. We are now going to proceed with our next question. The questions come from the line of Rupert Merer from NBS. Please ask your question.

Speaker Change: Thank you.

Speaker Change: Thank you we are not going to proceed with our next question.

Speaker Change #100: The question has come from the line of Rob <unk> from MBS. Please ask your question.

Rupert M. Merer: Hi. Good morning, everyone.

Speaker Change #101: Hi, good morning, everyone.

Rupert M. Merer: So we've seen the results of RFP processes in Ontario, Quebec, and New York. You had some projects that were accepted in Quebec and Ontario, and, of course, some that were not in Ontario and New York. Just wondering if you can comment on your return targets in those markets if they are at about the same level and if you will adjust your return targets at all in the future based on results that you've seen.

Speaker Change #101: Yeah.

Speaker Change #102: So regarding results of.

Speaker Change #103: <unk> of RFP processes in Ontario, Quebec, and New York, you've had some projects that are being accepted in Quebec, and Ontario and of course, some that kind of not in Ontario, and New York.

Speaker Change #103: Was wondering if you can comment on.

Speaker Change #104: Your return targets in those markets if they if they are at about the same level.

Speaker Change #104: If you will adjust your return targets at all in the future based on results that you've seen.

Bruno Guilmette: Yeah, we keep monitoring that, Rupert. Clearly, we consider, overall, the potential returns we can see in our different markets. Looking at Ontario, we've been successful in doing what we wanted, and it's normal that we'll win our fair share of projects, but we've been able to continue to do that, which means that our return expectations are generally competitive, and at the same time, very much reflect our disciplined approach. They'll be 10% plus, and in certain cases, they'll be even more than 12%.

Okay.

Speaker Change #105: Yeah, we keep monitoring Nacho Britt clearly.

Speaker Change #105: We are.

Speaker Change #106: We consider overall the potential returns we can see in our different markets.

Speaker Change #106: Looking at had Ontario, we've been we've been successful on what we are we wanted.

Speaker Change #106: And it's normal that we will win.

Speaker Change #106: Fair share of projects, but we've been able to continue to do that which means that our return expectations are generally.

Speaker Change #106: <unk> and at the same time very much reflects our disciplined approach so there'll be a 10% plus.

Bruno Guilmette: We're comfortable with the returns in Ontario and Quebec. We continue to be comfortable with the returns we see in Europe, and, as Patrick mentioned, the New York projects were not successful, and we're analyzing that. It's fairly recent, and we're analyzing that with the team to see how the RFP winners made those kinds of returns. At the end of the day, we want to make sure that we offer competitive projects which we can build, and that's important.

Speaker Change #106: In certain cases, there'll be even more than 12%. So we're comfortable with the returns are in Ontario.

Speaker Change #106: <unk>, Quebec.

Speaker Change #106: We're comfortable with we continue to be comfortable with with the returns we see in Europe.

Speaker Change #107: And as Patrick mentioned.

Speaker Change #107: The New York.

Speaker Change #108: The New York projects were not successful and we're analyzing that that's fairly recent were analyzing depth with the team to see.

Speaker Change #109: What are the <unk> of the RFP.

Speaker Change #109: Winners made.

Speaker Change #109: <unk> made those kinds of returns at the end of the day, we want to make sure that we offer a competitive projects, which we can built and it's important for us.

Bruno Guilmette: So, looking at your own

Speaker Change #109: So looking at.

Rupert M. Merer: Sorry, go ahead. Yeah, no, no, no.

Speaker Change #109: Yeah.

Speaker Change #110: Sorry go ahead.

Speaker Change #111: No no I know, but generally speaking the demand is stronger than ever in our business and so we can be.

Bruno Guilmette: But, generally speaking, demand is stronger than ever in our business. And so we can be, you know, more selective and disciplined. And so, as we know, between is that we have a ladder of expected return when we are able to bid on many projects at the same time. So we are working hard to be ready to have projects for the next bid because we have been so

Speaker Change #111: You know more selective and disciplined and so we we have fast Bruno.

Speaker Change #111: <unk> seen.

Speaker Change #111: Seen between us that we have a ladder of off of expected return when we are able to bid. Many project at the same time. So they are we are working hard to be ready to have projects within next beat it goes.

Speaker Change #111: We have been so successful.

Bruno Guilmette: Great. And so based on the information you have on bids into those markets, it seems like the Canadian market is a little less competitive than the US market today. Are you seeing that in your returns? Are you able to get better returns here? Is there less competition in Canada? And does that inform your future strategy of where you want to allocate capital?

Speaker Change #112: Great and so based on the information you have with bids into those markets.

Speaker Change #113: It seems like the Canadian market is a little less competitive than the U S market today.

Speaker Change #114: Or are you seeing that in in your returns are you able to get.

Speaker Change #114: Better returns here.

Speaker Change #115: Is there less competition in Canada, and does that inform your future strategy of where you want to allocate capital.

Rupert M. Merer: It's our view today. I think normally, in the textbook, what it says is when a market is less competitive, it doesn't last forever. So we need to be to remain really good and in development. And but yes, today, the Canadian market is a little bit less competitive because it's, it's, it's, it's complex to make partnership with municipalities, First Nations, and definitely, the US market attracts more international investors than in the past. So So I think the volume of the US market attracts more people.

Speaker Change #115: Yes.

Speaker Change #116: It's our view today I think.

Speaker Change #115: Yeah.

Speaker Change #115: Normally in the textbook what it said is when the market is less competitive it doesn't last forever. So we need to be to remain.

Speaker Change #115: Really good and in development and but yesterday, the Canadian market is a little bit less competitive because it's it's it's it's complex to make partnership with municipality first nations and definitely feed the U S market attract more.

Speaker Change #115: National investors in the past so so so I think the volume of the U S market attract more people but.

Patrick Decostre: But, But I don't think it will last forever. So we need to continue to be very good, and I'm very confident in the capacity of our team to do this.

Speaker Change #115: But I'm not I don't think it will last forever. So we need to continue to be very good and I'm very confident in the capacity of our team to do this.

Rupert M. Merer: Great. Thank you. I'll leave it there.

Speaker Change #117: Great. Thank you I'll leave it there.

Operator: Thank you. We are now going to proceed with our next question, and the questions come from the line of Nicola Boychuk from Cormac Securities. Please ask your question.

Speaker Change #119: Thank you.

Speaker Change #118: Thank you and I are going to proceed with our next question.

And the question is coming from the line of Nicola Wojciech from Comex Securities. Please ask your question.

Nicholas Boychuk: Thanks. Good morning, everyone.

Speaker Change #120: Thanks, Good morning, everyone coming back to the battery energy storage Engel.

Patrick: Patrick I think you mentioned that the batteries for the initial projects are going to be secured by Tesla could you comment on the depth of the supply chain and what Youre seeing is Tesla that you identified as the primary opportunity that you'd want to deal with.

Speaker Change #121: If you were to put say a.

Speaker Change #122: A bit of provide more batteries this will be a very competitive market with potentially cost declining a lot over the coming years.

Nicholas Boychuk: Coming back to the battery energy storage angle, Patrick, I think you mentioned that the batteries for the initial projects are going to be secured by Tesla. Can you comment on the depth of the supply chain that you're seeing? Is Tesla now identified as the primary opportunity that you would want to deal with? Or if you were to put, say, a bid out to buy more batteries, this would be a very competitive market with potentially lower costs declining a lot over the coming year?

Speaker Change #123: What I would say our experience on on the RFP off of procurement.

Patrick Decostre: And I think our experience in the, you know, the RFP for procurement was that there was lots of interest for our project because it is significant in terms of power, the size, and also in terms of hours. It's four hours, not two hours. So it's double the size of the number of batteries.

Speaker Change #124: Was that there was lots of interest for our project because they are significant interim off power the size and also in terms of hours. It's four hours not two hours. So it's doubled the size of the number of batteries. So we had.

Patrick Decostre: So we had quite a customer-oriented RFP, and we have been able to negotiate. So I think again, I, I, I have no clue what the future exactly looks like. But my understanding is that in recent times, the battery supply chain is strong, specifically North America, so we don't have the same issues we can have with on solar panels in the US. And so that's good news. And, and commercially, it was not easy, but it was it was a very correct negotiation.

Speaker Change #124: A quite see customer oriented RFP and we have been able to negotiate so I think.

Speaker Change #124: Again.

Speaker Change #124: I have no clue for the future exactly but that my understanding is that in the recent time the battery supply.

Speaker Change #124: Supply chain is strong specifically in North America for the.

Speaker Change #125: We don't have the same issue then we can have on solar panel in the U S.

Speaker Change #125: So that's a good news and.

Speaker Change #125: Commercially.

Speaker Change #125: It was not easy, but it was a it was a it was a very correct negotiation.

Nicholas Boychuk: Okay, and if you're thinking of the duration there, you mentioned four hours, is there a key tipping point where you would maybe start to explore other alternatives, other types of technologies other than lithium?

Okay, and if youre thinking of the duration. There you mentioned four hours is there.

Speaker Change #126: I keep tipping point, where you would maybe start to explore other alternatives other types of technologies other than lithium.

Patrick Decostre: The four hours, in that case, is part of the rules of the RFP. So it really depends on the needs of the electricity system. In Ontario, that was four hours. If there is, you know, it will depend on the RFP rules, and And we will not go, you know, on the other side. Boralex will not develop a battery project where it's not significantly contracted like we have in Ontario. I think the Ontario business is a very good one. We have our fair share of it, and we are very prudent in the business model on which we finance our battery storage project.

Speaker Change #126: The four hours in that case is.

Speaker Change #126: A part of the rules of the RFP. So it really depend of the need of the electricity system.

Speaker Change #127: <unk> that was four hours if there is a you know.

Speaker Change #127: It will depend on the on the on the RFP rules and and we would not go on the other side.

Speaker Change #127: <unk> will not develop.

Speaker Change #127: Battery project, where it's not seeking.

Speaker Change #127: Significant.

Speaker Change #127: And if we can see contracted like we have in Ontario, I think Youll try you business is a very good one.

Speaker Change #127: We have our fair share of it.

Speaker Change #127: And and we are very prudent on the business model of on which do we finance our battery storage project.

Nicholas Boychuk: Got it. And that perfectly leads to the next question about the similarities or differences between the battery energy storage markets that you're seeing elsewhere. I think in Europe and France, you've got some battery energy storage projects in the early and mid stage. Can you comment on the similarities and differences between Ontario versus, say, France or any other European market?

Speaker Change #128: Got it and that particularly leads to the next question about the similarities or differences between the battery energy storage markets that you are seeing elsewhere I think in Europe in France, you've got some battery energy storage projects in the early and mid stage.

Speaker Change #129: Can you comment on the similarities and the differences between the Ontario versus a French or any other European market.

Speaker Change #129: Yes.

Patrick Decostre: But, you know, without going into all the technical details, but the European system is synchronized from the south of Portugal to the east of Poland. So it makes the system more reliable, and there is less demand because there is more interconnection in a bigger system than when you look at, say, Ontario or Quebec or the UK. So you can have local demand, like we have in Brittany, or what could happen in northern UK or southern UK because, you know, you have a smaller system and you have to transport the electricity. So it's really a question that is very, very technical to analyze where you want to connect.

Speaker Change #129: Yeah.

Speaker Change #130: But without going into all the technical details, but the European system is synchronized from source of Portugal to the east of Poland. So its seats makes the system more reliable and and there is less demand for that because there is more interconnection in a bit.

Speaker Change #130: Assistant and then when you look to see Ontario, or Quebec, or the U K.

Speaker Change #130: So you can have.

Speaker Change #130: Local demand like we have in Brittany alike can happen in northern UK ourselves in U K because you know.

Speaker Change #130: You have a smaller system and you have to transport the electricity. So it's really a question, which is very very technical.

Speaker Change #130: To analyze where you want to connect.

Patrick Decostre: And typically, the two small projects we have in France have been financed in a completely different way. We are supporting the frequency regulation of the grid on one side. We bought it at a very cheap price because it was an R&D project and we bought it at the end of the program, for I think 120th of the initial price. It was very early.

Speaker Change #130: And typically the two small project we have in France.

Speaker Change #130: <unk> finance two completely different way, we are supporting the frequency regulation of the grid on one side, we bought it at a very cheap price because it was an R&D project and we bought it at the end of the of the program.

Patrick Decostre: It was almost 10 years ago that we did this, and in Brittany, we have been supported because we have the system for voltage regulation on top of frequency regulation, so it's a completely different system. So it's very important to analyze this. And typically, we're analyzing [inaudible]

Speaker Change #131: For I think one.

Speaker Change #131: 120th.

Speaker Change #131: Off of the initial price. It was very early it was almost 10 years ago that we did this and in <unk>. We have been supported because we help the system on voltage regulation on top of frequency regulation. So so it's completely different systems. So it seem very important to analyze this and typically we're in analyzing.

Speaker Change #131: To put battery storage on on project in Texas, but it's completely different and we're just at the.

Speaker Change #132: The Liza to things because the model is is less.

Speaker Change #132: Less.

Speaker Change #132: I'll, just say predictable business model that is less predictable than <unk>.

Nicholas Boychuk: I understand. Thanks so much for the call, Patrick.

Speaker Change #133: Understood. Thanks, a lot for the color Patrick.

Speaker Change #134: Thank you.

Operator: Thank you. We are now going to proceed with our next question. The questions come from the land of John Mould from TD Securities. Please ask your question.

Speaker Change #133: Okay.

Speaker Change #135: We are now going to proceed with our next question.

Speaker Change #136: Two questions come from the line of John Mould from TD Securities. Please ask your question.

John Mould: Good morning. Thanks.

John Mould: Good morning. Thanks.

Speaker Change #138: Bruno maybe just starting with <unk>.

Speaker Change #139: The equity needs of the company can you maybe just.

John Mould: Bruno, maybe just starting with, you know, the equity needs of the company, can you maybe just speak to how far out you're looking at this point before you may need external equity, just given that you don't have now, you know, having not won in the NYSERDA RFPs, you don't have what might have been an accelerated US solar build. I think you've been talking about those projects potentially being online and, you know, certainly in early 2026. So, you know, can you give us a sense of where that stands?

Speaker Change #140: Speak to how how.

Speaker Change #141: How far out you are looking at this point before you may need external equity just given that you don't have now having got one in the nicer to Rfps you don't have what might have been an accelerated.

So were build I think you've been talking about are those projects potentially being online and certainly.

Speaker Change #141: Early 2026 so.

Speaker Change #142: Can you give us a sense of where that stands at this point.

Bruno Guilmette: Yeah, thank you. Clearly, we're well positioned from a balance sheet perspective. And from a financing perspective, we're looking at this, at the moment, we're certainly looking 18 months ahead. Without a need to issue equity, we continue to look at potentially continuing to do recycling of capital, recycling of assets, and sell down either non-strategic or just sell-down of minorities to financial partners. So we have different options

Speaker Change #143: Yes. Thank you.

Speaker Change #143: Clearly.

Speaker Change #144: We're well well positioned enough from a balance sheet perspective from a financing perspective, we're looking at this at the moment, we're suddenly looking 18 months ahead.

Speaker Change #144: Without a need to issue equity we continue to look at potentially.

Speaker Change #144: Continuing to.

Two two.

Speaker Change #144: Recycling of capital recycling of assets.

Speaker Change #144: The sell down in it.

Speaker Change #144: Either non strategic or just sell down of minorities to financial partners. So we have different options the market for project finance is quite strong.

Bruno Guilmette: The market for project finance is quite strong. We're advancing very well on the financing of our Limeken project and battery storage. So overall, if I look 18 months down the road, we're very well financed. And if I look even beyond that, as I said, with the other opportunities we have in the portfolio, we can continue to finance. It will really depend on the next RFPs. As you know, we have many RFPs coming in our different markets.

Speaker Change #144: We are advancing very well on the financing of our Limekiln project.

Speaker Change #144: And.

Speaker Change #144: And the battery storage.

So overall.

Speaker Change #144: If I look kind of if I look at 18 months down the road.

Speaker Change #144: Is.

Speaker Change #144: We're very well financed and if I look even beyond that as I said with the other the other opportunities we have in our portfolio.

Speaker Change #144: We can continue to do.

Speaker Change #144: Finance it will really depend on the next Rfps as you know we have many rfps coming in our different markets. So it will really depend if we.

Bruno Guilmette: So it will really depend if we continue like that. But certainly, and the ITC, which is, hopefully, the ITC should be finalized at the Canadian federal level before the end of May or early June. So with all of these different optionalities for financing, we're comfortable on the equity side.

Speaker Change #144: We continue like that.

Speaker Change #144: But certainly in the ITC, which is.

Speaker Change #144: Touched touchwood, the ITC should be should be finalized that deaf Canadian federal level.

Speaker Change #145: Therefore at the end of May or early June.

Speaker Change #145: So with all of these these different optionality as for financing or we're comfortable on.

Speaker Change #146: On the equity side.

John Mould: Okay, that's, that's great context. Maybe just, you know, following up on your comments on capital recycling, just given that that equity need horizon, you know, seems to have been at least consistent, if not kind of pushed out a little bit, does that reduce focus on capital recycling or the need for it? Or are you really, you know, looking at that also on an opportunistic basis? And if you see the right transaction coming, you know, coming along, you might move ahead with one even though your equity needs aren't there?

Speaker Change #147: Okay. That's that's great context, maybe just following up on your comments on capital recycling just given that that.

Speaker Change #147: That equity need horizon seems to have been.

Speaker Change #147: At least consistent if not kind of pushed out a little bit.

Speaker Change #147: Does that reduce.

Speaker Change #148: The focus on capital recycling or the need for it or are you really looking at that also in an opportunistic basis and I can see the REIT transaction coming come along you might move ahead with one even though your equity needs aren't immediately.

Bruno Guilmette: It's both opportunistic and the best way, the lowest cost to finance. So we'll look at our different opportunities, whether it be asset recycling, whether it be corporate debt, whether it be project finance. We always look at measures, and we're looking at, and we're actually active in a few refinancings. So we're always looking to find ways to finance within our portfolio, first, if it makes sense, again, from a timing perspective, as I think you're alluding to just making sure it's the right time.

Speaker Change #149: No. It's it's both opportunistic and the best are the lowest cost to finance. So we'll look at our different opportunities whether it be asset recycling, whether it be core.

Speaker Change #149: Corporate debt and it would be project finance.

Speaker Change #150: Always like to measures and we're looking and we're actually active on a few.

Speaker Change #150: Refinancings.

Speaker Change #150: So where we're always looking to find ways to finance within our portfolio.

Speaker Change #150: First if it makes sense again from us.

Speaker Change #150: A timing perspective, as I think you're alluding to just making sure it's.

John Mould: So having options, which we do, is great. Having options on the financing side is great. We have those options because we look ahead and try to plan for our future needs. And we do factor in a few projects that we expect to win, which at the moment is generally quite good.

Speaker Change #150: The right time, so having options, which we do.

Speaker Change #150: His great having options on the financing side is great. So.

Speaker Change #150: And we're not.

Speaker Change #150: We are.

Speaker Change #150: We have those options because we look ahead and try to plan for far future needs and.

Speaker Change #150: We do factor in a few a few projects that that we expect to win.

Speaker Change #150: Which which at the moment is generally are generally quite quite good.

John Mould: Thanks for all that color. And then, maybe just one on US growth. You know, Patrick, more broadly, you just mentioned you were in the early stages of analyzing batteries in ERCOT. Beyond your New York efforts, could you maybe give us a sense of where you're seeing the best opportunities to spend development dollars in the US and, you know, what might be the next market or areas of the country that are the most interesting markets for Boralex right now?

Speaker Change #151: Thanks for all that color and then maybe just one on U S growth.

Speaker Change #152: Hatrick more broadly you just mentioned.

Speaker Change #153: Early stages of analyzing.

Speaker Change #154: Not everything in ERCOT.

Speaker Change #155: Beyond your New York efforts.

Speaker Change #156: Maybe give us a sense of.

Right now where youre seeing the best opportunities to spend development dollars in the U S and what might be the next market or areas of the country that are the most interesting markets for Boralex right now.

Patrick Decostre: But yeah, essentially, we are looking to optimize our assets in Texas and New Mexico, there is lots of demand for, there is new demand coming there can go from, you know, the buzzwords of AI and data centers, but also ethanol or other things which are coming from low electricity prices. We have assets, we need to optimize them, we can repower them. So we're working around this.

Speaker Change #156: But.

Speaker Change #157: Essentially we are looking to.

Speaker Change #157: The optimization of our assets in Texas, and New Mexico. There are there are lots of demand for there is new demand coming dear.

Speaker Change #157: Go from the buzzword of AI and data center, but also ethanol or are there things, which are coming from low electricity price.

Patrick Decostre: And so that's the first thing outside of New York. And we have also looked, as I mentioned previously, to other states, Pennsylvania and Illinois, but on the other side, there is so much interesting business to do in Canada, in Quebec and Ontario, then we are looking to, you know, allocate our development resources, cost cash, and people to today's jurisdiction more than we expected two years ago. So that's where we are today with the US. And definitely, if we have, as Bruno mentioned, an opportunity for M&A, which is interesting because it brings organic team development, we will look at that precisely in the US.

Speaker Change #157: Assets, we need to optimize them, we can repower them. So we are working around this.

Speaker Change #157: And so that's the first things outside of New York and we have also Luca as I mentioned previously two other two other states, Pennsylvania, and Illinois, but on the other side there is so much interesting.

Speaker Change #157: The business to do in Canada, and Quebec, and we'll talk to you then than we are we are looking to allo.

Speaker Change #158: Allocate our development resource.

Speaker Change #158: Cost.

Speaker Change #158: And people too.

Speaker Change #158: Two days jurisdiction more than we expect two years ago. So so that's where we are today.

Speaker Change #158: The U S.

Speaker Change #158: And <unk>.

Speaker Change #159: Definitely P. If if we have as Bruno mentioned an opportunity.

Speaker Change #159: One on the M&A, which is interesting because it brings.

Speaker Change #159: Organic teams development.

Speaker Change #159: We are looking to that.

Speaker Change #159: Precisely in the U S too.

John Mould: Okay, those are my questions. Thank you very much.

Speaker Change #160: Okay. Those are my questions. Thank you very much thank.

Speaker Change #161: Thank you. Thank you.

Operator: As a reminder, to ask a question, please press star 1 and 1 on your telephone and wait for your name to be announced. Once again, it's star 1 and 1 on your telephone and wait for your name to be announced if you have any questions or comments. We are now going to proceed with our next question. The questions come from the line of Ben Pham from BMO. Please ask your question.

Speaker Change #162: As a reminder to ask a question. Please press star one and one on your telephone and wait for your name to be announced once again, it's Tal one and one on your telephone and wait for your name to be announced if you have any questions or comments.

Speaker Change #162: We are now going to proceed with our next question.

Speaker Change #163: Two questions come from the line of Ben Pham from BMO. Please ask your question.

Benjamin Pham: Hi, thanks for the update. Maybe just to start off, could you share your overall thoughts on the data center opportunity. I know you mentioned New Mexico. [inaudible] You're positioning your assets outside of New Mexico for that. And can you also remind us what assets are uncontracted either today or coming off contract in the next few years?

Speaker Change #164: Hi, Thanks, Good morning, Thanks, Brent update.

Speaker Change #165: That's fair enough.

Speaker Change #166: Could you share your overall thoughts on.

Speaker Change #167: The data center opportunity I know you mentioned a new.

Speaker Change #168: In new Mexico.

Speaker Change #168: Talk about maybe.

Speaker Change #169: Youre positioning.

Speaker Change #169: Youre assets outside of Mexico for that.

Speaker Change #170: And then can you also remind us what assets are on contract it either today or are coming off contract in next few years.

Patrick Decostre: Yeah, essentially, when I look at our asset base, we have, indeed, one asset in New Mexico and one asset in Texas in ERCOT, which where we are, we have this possibility. There is not only data center demand; there is other demand, indeed. And when I look to assets, which are also available, for future brownfield assets in France, we have we have more demand from traditional industries like materials, commodities, supermarket, IT, telecom, then data center in France presently because there is this switch of The, the, the eye intensive energy demand to make it green, which is also a big driver of the demand.

Speaker Change #171: Yes, essentially when I look to our asset base, we have.

Speaker Change #171: Indeed wind assets in new Mexico, and one asset in the in the in Texas in ERCOT.

Speaker Change #171: Which where we are we have this possibility there is not on the data center, there's other demand indeed.

Speaker Change #171: And when I look two assets, which are also available for the future brownfield assets.

Speaker Change #171: In France.

Speaker Change #171: We have we have more demand from C.

Speaker Change #171: Traditional industry.

Speaker Change #171: Like materials.

<unk> Ts S G supermarket.

Speaker Change #171: Telecom then than data center in France presently because there is this switch off.

Speaker Change #171: D.

Speaker Change #171: The eye intensive energy demand.

Speaker Change #171: Make it green, which is also big.

Speaker Change #171: The driver of the demand and when you know.

Patrick Decostre: And when, you know, Even in, for example, Quebec, there is also a lot of energy-intensive industries, like steel production, aluminum production, and there are more drivers of demand for the long term, which is, I think, good also. And it's not just the data center and AI. I think Texas, for us, since we have this footprint, is a place where there could be opportunities. And if it brings, if we learn from this opportunity, then it can be bigger for the future. But I want to be sure that it's not just attendance and that it's just something which will, you know, last for the long term, like all the big industries.

Speaker Change #171: Even in for example in Quebec. There is also a lots of energy intensive.

Like Steve production Dominion production and there are more to drivers of the demand for the long term, which is I think good also and it's not just the data center and AI I think Texas for US since we have this footprint, it's a place where there could be opportunity and if it brings.

Speaker Change #171: <unk>.

Speaker Change #171: If we learn on this opportunity then it can be bigger for the future, but I want to be sure that its not just attendance and that is just something which will.

Speaker Change #171: Last for long term like like all the other big industry.

Benjamin Pham: And then your French uncontracted that that's mostly the 350 megawatts.

Speaker Change #171: And then.

Speaker Change #172: Your French and contract is that that's mostly a 350 megawatts.

Patrick Decostre: Yeah, it's essentially because when we, if you remember, we took the decision in 2022 to early terminate the contract, which normally naturally would end up to 2026. So there was a contract with an end and an end in all in between.

Speaker Change #173: Yes, it's essentially because when we.

If you remember we took the decision in 2022 to early terminate contract, which normally naturally would end up to 2026. So there was contract with an ending.

Patrick Decostre: So, and we recontract up to 2026 this, this, this, this, this asset. So we have roughly 350 megawatts that will be available from 2026. And after that, to sell the electricity. And we're discussing with many corporations because there is a lot of demand, and there is not so much assets on the market available. And also, to make the right contract for the IPP and the customer.

Speaker Change #173: Holding between so and we re contract up to 2026 days days. These these assets. So we have roughly <unk> 350 megawatt that would be available from 'twenty to 'twenty six and thereafter.

Speaker Change #173: For two Saturday electricity and we are discussing with the many corporation because there is a lot of demand and there is not so much assets on the market available.

Speaker Change #173: And also teams.

Speaker Change #173: Skilled like ours to be able to.

Speaker Change #173: Make the right contract for the IPP and the and the customer.

Benjamin Pham: Okay, got it. And maybe just to continue on that thought.

Speaker Change #174: Okay got it and then maybe this.

Benjamin Pham: And in Quebec, last month, IBM announced a chip plant, and I know you have some relationships with IBM. I'm just wondering, like, with something like that, is that just from a market share perspective, or is there something more? Someone like a power company could take advantage of it. It could even work for a utility like Hydro-Québec.

To continue on that thought and in.

Speaker Change #174: In Quebec.

Last month.

Speaker Change #174: <unk>.

Speaker Change #174: Plant and now you have some relationship with IBM.

Speaker Change #175: Just wondering like for something like that is that.

Speaker Change #175: From a market share perspective is that that's something more.

Speaker Change #175: Someone like a power company could take advantage of as it always maybe more tilted towards that utility like hydro Quebec.

Patrick Decostre: Hey, today, by law, it's not permitted in Quebec to make direct agreements. So yes, IBM is one of our customers in France, and there could be interest elsewhere in the world. We have that with other customers already. My understanding is that there could be a change in the law because there is a new law that will go for that and vice versa.

Speaker Change #176: Hey, today by Lou its not permitted in Quebec to do direct agreement. So yes, IBM is one of our customer in France and that could be of interest elsewhere in the world.

Speaker Change #176: We have that with other customers already.

Speaker Change #177: My understanding.

Speaker Change #177: Is that there could be change in Duluth, because there is a new low debt.

Speaker Change #177: Coming to force probably by the end of the year, it's not yet clear oh much it would be allowed to do direct agreement with customer what is clear is that.

Speaker Change #177: Get back economy globally, we need more power and maybe a way to finance them directly through private investors is to have this kind of direct agreements. So definitely if we are able to supply.

Speaker Change #177: Power to IBM in Quebec, Thanks to our relation in France, we would go for that and vice versa.

Benjamin Pham: Okay, good. And maybe the last one is... on your guidance, and you have the 2025. How are you thinking about the timing of perhaps refreshing that or even extending the time frame?

Speaker Change #178: Okay got it and maybe the last one is.

Speaker Change #179: On your guidance and you have the 2025.

Speaker Change #180: How are you thinking about the timing of.

Speaker Change #181: Perhaps refreshing that or.

Speaker Change #181: Even extending.

Speaker Change #181: The timeframe.

Patrick Decostre: Essentially, what we are doing is we are already working, you know, because the environment has changed a lot from 2021, lots of opportunities, different situations in the supply chain, different situations with RFPs, and jurisdiction in 2021. Typically, Canada was almost not on the map for development. So we are working on this. I don't know yet when we will come to the market because we have to work on this and refine and improve where we want to go, but we are already working on this.

Essentially what we are doing is we are already working.

No because environment has changed a lot from 2021 lots of lots more opportunity different situations of the supply chain difference.

Speaker Change #181: <unk> rfps and jurisdiction in 2021.

Speaker Change #182: Typically Canada wasn't one lost not not on the map.

Speaker Change #182: For development. So we are working on this I don't know yet when we will come to the market.

Speaker Change #182: Because we have to work on this and refine and improve where we Werent school, but we're already working on this.

Benjamin Pham: Okay, that's great. Thank you very much.

Speaker Change #183: Okay. That's great. Thank you very much.

Operator: Thank you. Thank you, Ben.

Speaker Change #184: Thank you you bet.

Stphane Milot: We have no further questions at this time. I will now hand it back to you for closing remarks. Thank you. All right, so thank you.

Speaker Change #184: Okay.

Speaker Change #185: We have no further questions at this time I'll now hand back to you for closing remarks. Thank you.

Stphane Milot: Alright, so thank you everyone for your attention. If you have additional questions, please call me at 514-213-1045. I'll make sure we quickly answer your questions. So our next call to announce third quarter results will be on Wednesday, August 14, at 11 a.m. Have a nice day, everyone. A great summer with exciting vacation in Paris, Noire.

Speaker Change #186: Alright. So thank you everyone for your attention. If you have additional questions. Please call me at 514 to 131045 I'll make sure. We quickly answer your question. So our next call to announce third quarter results will be on Wednesday August 14.

Speaker Change #186: At 11, a M have a nice day, everyone, a great summer with exciting vacation and <unk>.

Speaker Change #186: Thank you.

Operator: This concludes today's conference call. Thank you all for participating. You may now disconnect your lines. Thank you.

Speaker Change #187: This concludes today's conference call. Thank you all for participating you may now disconnect. Your line. Thank you.

Speaker Change #187: Okay.

Speaker Change #187: [music].

Speaker Change #187: Okay.

Speaker Change #187: Okay.

Speaker Change #187: Yeah.

Speaker Change #187: [music].