Capital Power Corporation · TSX:CPX
Capital Power — Investor Presentation (May 2024)
35 slides from Capital Power's investor presentation, May 2024
Slide 1: Building the leading power producer in North America
Reliable Affordable Clean Building the leading power producer in North America May, 2024
Slide 2: Our core businesses uniquely position us to excel in the North American power industry
Our core businesses uniquely position us to excel in the North American power industry FlexGen Renewables Trading & Origination • Critical, dispatchable • Affordable and clean • Active trading platform (9 markets) supply • Carbon market • Environmental credit • Reliable and affordable opportunities
Slide 3: Proven track record of growth, diversification, asset optimization and financial performance
Proven track record 12.5% of growth, diversification, 10-year total shareholder return1 asset optimization and financial performance 40% ~$5 B reduction in emission intensity Market capitalization 4x increase total capacity ~40% / ~60% $6 B U.S. / Canada M&A transactions2 2024 adjusted EBITDA 1. As
Slide 4: We have a diverse portfolio anchored in our core markets
We have a diverse portfolio anchored in our core markets Core markets | Capacity U.S. WECC | ~30% Alberta | ~30% Ontario | ~15% MISO | ~15% Other | ~10% 4
Slide 5: We are focused on markets we understand
Our core businesses We are focused FlexGen Renewables Trading & on markets we Origination understand and Our core markets today Alberta, Ontario, All markets in with the right MISO, WECC North America to support our generation fleet fundamentals Growth markets we Southeast, WECC, PJM, ERCOT are eval
Slide 6: We are an ESG leader committed to clean power and active stakeholder engagement
ESG achievements We are an ESG leader committed to clean power and 40% E active stakeholder engagement reduction in emission intensity1 while growing our fleet Going Beyond | We are evolving our targets and going beyond 50% carbon accounting to reach our women on our executive team2 2045 net zero ta
Slide 7: Our balanced energy solutions create a market-ready strategy
Our balanced energy solutions create a market-ready strategy Resources • Superior fleet • Access to capital Market opportunity Market-ready strategy • Long-term and growing need for • Delivering balanced grid-firming FlexGen supply energy solutions through Capabilities deliver-build-create strategy
Slide 8: Operational excellence: Execute high standards for asset planning, performance and safety
Operational excellence: Execute high standards for asset planning, performance and safety 450+ years of experience across 22 plant managers with integrated Engineering, HSSE and Supply Chain People functions within Operations Optimized turnaround 93% average planning and execution, availability ove
Slide 9: A focus on renewables growth has created a need for firm supply
A focus on Energy transition Energy expansion renewables growth has created a need for firm supply expansion Unmet firm power demand Today 9
Slide 10: North American power demand will double by 2050
North American power Annual energy consumption from electricity in North America (QBTU1) demand will double 90 by 2050 80 78 70 60 51 50 38 40 30 20 10 0 2025 2035 2050 1. Quadrillion British Thermal Units Source: EIA, BCG Analysis 10
Slide 11: Our Strategy
Our Strategy DELIVER BUILD CREATE Established business Greenfield & brownfield Commercial solutions for with cash flow expansion wholesale customers Description We have a 1 FLEXGEN Optimize current fleet, acquire new FlexGen assets Expand firm capacity, clear strategy build utility-scale storage in
Slide 12: We have a proven track record of M&A value creation
6-9% AFFO per share accretion We have a proven track record of M&A value creation 3-10 years PPA extension 12
Slide 13: We are reliably delivering growth and contracting opportunities
We are reliably delivering growth and contracting opportunities 7.8 GW 1.36 GW 130 MW 19 facilities 10 facilities 3 facilities 63 turbines 540 turbines 350k panels 13
Slide 14: Building on our successful history: Genesee Repowering
Building on our successful history: Genesee Repowering Most efficient natural gas 512 MW Up to 3.4 Mt combined cycle plant in Additional net Annual emission Canada capacity reduction Value creation through increased efficiency, higher capacity and decarbonization 14
Slide 15: Building balanced energy solutions: Maple Leaf Solar
Appendix Building balanced energy solutions: Maple Leaf Solar 73 MW 2026 25 years Net capacity Expected Contracted completion cashflow 15
Slide 16: FlexGen Renewable Power
Physical + Firm Power + + = Trading & Balanced Renewable FlexGen Origination Energy Power Solutions Virtual Power + Financial Solutions 16
Slide 17: We are creating opportunities for the future
We are ready today We are creating Established customer relationships opportunities Proven trading and origination platform for the future Established market and regulatory expertise across North America 17
Slide 18: We are a leading North American power producer with a low-risk capitalization
~$5 B We are a leading Market capitalization North American power producer with a low-risk BBB- / ~90% capitalization BBB (low) A-rated PPA counterparties Investment grade credit rating ~7% ~75% Dividend growth CAGR Contracted 2024E over 10-years adjusted EBITDA 18
Slide 19: Continued dividend growth
Continued dividend growth 6% growth to 2025 Near-term We are committed Target payout ratio: 45-55% to growing our 5-year historical average payout ratio: 36%1 dividend per share, as we invest in growth 2-4% growth beyond 2025 Long-term Target payout ratio: 30-50% 1. Represents simple average of 2019
Slide 20: We have a disciplined approach to capital allocation
Equity hurdle rates We have a FlexGen 12-14% disciplined 5-year target growth approach 70% capital allocation (2025 – 2029) 20% Renewables 10-12% to capital allocation Other 15-20% 10% Targeted total shareholder return of 12-14% 20
Slide 21: Our strategic priorities build on our competitive advantages
1 Expand our FlexGen fleet Our strategic priorities 2 Grow our renewables portfolio build on our competitive Enhance returns through trading advantages 3 4 Create balanced energy solutions 21
Slide 22: Capital Power is best positioned to lead the North American energy expansion
Capital Power is best positioned to lead the North American energy expansion Strong Market Market-ready foundation opportunity strategy We are market ready with Demand for grid Grow FlexGen a unique competitive advantage firming supply and renewables 22
Slide 23: Appendix I: Power Industry Fundamentals
Reliable Affordable Clean Appendix I Power Industry Fundamentals 23
Slide 24: From 2.5% to 6-7.5%
Appendix From 2.5% to 6-7.5% Data centre share of U.S. electricity consumption Data centre electricity consumption in the U.S., TWh (2022-30) Generative AI is 2.5x 3.1x accelerating data 390 center power demand 320 growth in the U.S. 126 2022 2030 original 2030 with estimate GenAI max BCG est. 2.5%
Slide 25: Data centres need firm supply and will challenge the supply mix
Appendix Renewables + battery resources required to replicate an efficient 1,000 MW gas plant: Data centres need firm supply and will challenge ~10x ~9x ~1,000x the supply mix Capital Capacity Land Source: National Renewable Energy Lab (NREL) 25
Slide 26: Renewable energy will play a larger role in the energy supply mix going forward
Appendix 18% 28% 32% 36% 40% 43% Renewable energy will play a larger role 48% 37% 33% in the energy supply 31% 28% 26% mix going forward 34% 36% 35% 33% 32% 30% 2023 2030 2035 2040 2045 2050 Renewables2 Other sources3 Natural gas Forecasted NAMR1 electricity net generation, by source (TWh, % share)
Slide 27: Intermittent nature of solar and wind requires FlexGen to maintain reliability
Appendix Firm supply or storage required Power profile (MW) Solar output 40,000 Intermittent nature 20,000 Electricity demand of solar and wind 0 0 2 4 6 8 10 12 14 16 18 20 22 24 requires FlexGen to Time of day (24 - hour scale) Wind output maintain reliability Power profile (MW) 5,000 Solar output
Slide 28: Appendix II: Additional CPX Details
Reliable Affordable Clean Appendix II Additional CPX Details 28
Slide 29: We deliver superior total shareholder returns
Appendix Total shareholder return (10-Year) Updated target range 12-14% We deliver superior ~6.0% ~12.5% total shareholder Historical target range 10-12% returns and are well positioned to ~6.5% enhance returns as we grow Price Compounded Total return appreciation dividend 1. Total shareholder retur
Slide 30: Capital investment screening criteria
Appendix Capital investment screening criteria 1 Attractive markets Ability to grow, aligned with our competitive advantages 2 Compelling risk-adjusted returns Sound contractual underpinning, exceeds return hurdle rates 3 Optimization and development potential Commercial and operational upside 4 Cor
Slide 31: Stable weighted average contract life
Appendix Stable weighted average contract life1 Dec 2019 – Whitla Aug 2020 – Decatur Jan 2022 – extended June 2023 - extended Future contracts: Wind begins Energy Center Arlington Valley Goreway and York Halkirk 2 Wind operations with contract extension to contract by 6 years to Energy contracts to
Slide 32: Our high quality portfolio drives multiple sources of funding
Appendix Our high quality portfolio drives multiple sources of funding 13% • Internally generated cash flows 20% 4% • Corporate and asset level debt • Hybrids and preferred shares 16% • Partnerships • Asset recycling 2% • Common equity 45% Internal Cash Flows Debt1 Hybrids 3 Partnerships Asset Sales
Slide 33: Building balanced energy solutions: York and Goreway utility scale batteries
Appendix Building balanced energy solutions: York and Goreway utility scale batteries York Goreway 114 MW 22 years 48 MW 22 years Net capacity Contracted cash flows Net capacity Contracted cash flows 33
Slide 34: Forward-looking information
Reliable Affordable Clean Forward-looking information Forward-looking information or statements included in this presentation are provided to inform our • electricity and other energy and carbon prices; shareholders and potential investors about management’s assessment of Capital Power’s future plan
Slide 35: Investor Relations
Reliable Affordable Clean Investor Relations Roy Arthur VP, Investor Relations capitalpower.com 1-403-736-3315 investor@capitalpower.com 35