Northland Power Inc. · TSX:NPI
Northland Power — Investor Day (March 2024)
68 slides from Northland Power's investor day presentation, March 2024
Slide 1: 2024 Investor Day
2024 Investor Day Nordsee One, North Sea
Slide 2: Forward looking statement
Forward looking statement This written and accompanying oral presentation contains certain forward-looking statements and information within the meaning of Canadian securities laws concerning the business and operations of Northland Power Inc. and are provided for the purpose of presenting informati
Slide 3: Reporting of Non-IFRS Financial Measures
Reporting of Non-IFRS Financial Measures This investor presentation includes references to Northland’s Adjusted EBITDA, Adjusted Free Cash Flow and Free Cash Flow and applicable payout ratios and per share amounts, which are measures not prescribed by International Financial Reporting Standards (IFR
Slide 4: Agenda
Agenda 9:30 – 11:00 a.m. Formal Presentation Begins Corporate and Market Overview Strategy and Execution Hai Long Update Baltic Power Update Oneida Update 11:00 - 11:15 a.m. Break 11:15 - 12:15 p.m. Financial Overview Looking Ahead & Closing Remarks Q&A Lunch to follow Q&A Ball Hill, New York State
Slide 5: Corporate and Market Overview
Corporate and Market Overview Mike Crawley President & CEO
Slide 6: Northland Overview
Northland Overview Northland Overview 36+ 1,344 16yrs Years of success Weighted average Employees1 contracted revenue life2 Onshore Renewables 2.4 GW 3.4 GW 90%+ Under Contracted revenue construction3 In operations3 Natural Gas & Utilities 722 MW of natural gas across four projects in Canada and a U
Slide 7: Global Footprint
Global Footprint Operating Assets (Gross) 1.2 GW 1.4 GW Offshore Wind Onshore Wind/Solar 0.7 GW Natural Gas Assets under Construction (Gross) Canada: Mexico: Europe (Offshore Wind): • Operating: 1,246 MW • Operating: 130 MW • Operating: 1,184 MW • Construction: 250 MW • Construction: 1,140 MW Colomb
Slide 8: Significant Construction Pipeline Growth Secured Financial Growth
Significant Construction Pipeline Growth Secured Financial Growth 2.4 GW of growth Investment grade balance sheet with fully secured through 2027 Including funded construction program Construction 1,140 MW Projects ~6.0 GW1 1,022 2 MW Adjusted EBITDA Baltic 250 MW Power 7-10% $1.6-1.8b Hai CAGR Long
Slide 9: 2023 Highlights
2023 Highlights Delivered over Executed on Commenced construction on 300 MW of projects into commercial $15b 2.4 GW of projects of financings operations Executed on over Achieved over Established protocols for $1 billion 96% success of asset level partnerships operating with the introduction of avai
Slide 10: Headwinds Tailwinds
Headwinds Tailwinds 2023 Industry challenges Positive trends taking shape in 2024 Supply chain constraints Growth in demand for renewables Higher interest rates Increased government support Inflation and commodity prices Rising contracted power prices Improving economic outlook 10
Slide 11: Growth in Demand for Renewables
Growth in Demand for Renewables Global Power Generation Share by Fuel Type 100% 2030: Global offshore wind capacity 90% expected to reach >300GWs 80% 70% 60% Global onshore wind and solar expected to 50% reach 4.7 TW and 8.2 TW by 2050, respectively 40% 30% 20% Nearly two-thirds of new capacity addi
Slide 12: Increased Government Support
Increased Government Support Canada United States Europe Taiwan Korea Poland • 13 GW of renewables by 2030, Net-zero by 2050 11 GW of offshore wind by 2040 20% of electricity United Kingdom produced from Ontario: 5 GW of New York State Targets • 50 GW of offshore wind capacity renewables by 2025 21.
Slide 13: Rising Contracted Power Prices
Rising Contracted Power Prices Change from prior auctions across regions 194 200** 179 180** Awarded 25% offshore wind Solar 162*** & market prices OnW 145 103 103*** 100 66% OfW 83 86 86 30% 73 70*** 71 Solar 64 64 60 50 47*** 47.5 46*** 55 44 44.9 NY State Offshore 0 <0* 29% Winning bid price (€/M
Slide 14: Strategy and Execution
Strategy and Execution Nordsee One worker, North Sea
Slide 15: 2024 Business Plan Strategic Pillars
2024 Business Plan Strategic Pillarss 1 2 3 4 Resilience Execution Prudent Growth Optimization Financial strength, On-time, on-budget Strategic growth Building value for the stability and risk and without in priority long-term across management. incident. markets. facilities. 15
Slide 16: Resilience
1 Resilience BBB Stable 16 Year Prudent Growth ~$0.9 billion Optimization credit rating by S&P and Available liquidity protects average PPA tenure (as of Execution Fitch1 against construction and 2027 including Hai Long, operating surprises Baltic Power, and Oneida) ~95% Low Corporate Debt debt with
Slide 17: Execution
2 Execution 2.4 GW PMO Oversight Prudent Growth Optimization in construction across Hai Implementation of PMO from PMO, Business Unit, Long, Baltic Power and processes and toolbox PF Lenders and Board of Resilience Oneida Directors Stakeholders Timelines Quality Coordination with various Adhering to
Slide 18: Prudent Growth
3 Prudent Growth Optionality through diverse ~12 GW portfolio Optimization Resilience Execution Priority Markets Deprioritized Markets Canada Scotland Japan U.S. Taiwan Mexico Poland Korea Colombia Spain 4 2 1 18
Slide 19: Optimization
4 Optimization Prudent Growth Revenue Increase asset revenue Improving Resilience Execution through optimizations, new partnerships Improving delegation and and contracting/re-contracting accountability Budget Asset Budget rationalization Technology and process and cost reductions improvements 3 2 1
Slide 20: Capital Recycling – Core Pillars of Partnership Process
Capital Recycling – Core Pillars of Partnership Process Manage jurisdiction or single Secure partners to enable Enhance investment returns asset exposure project success ScotWind partnership with ESB Gentari Partnership in Taiwan Mitsui Partnership in Taiwan Proceeds from capital recycling may be us
Slide 21: ESG Commitments
ESG Commitments 67% 65% In 2023 In 2023 Achieve 31% +2.6M Net Achieve Zero tonnes reduction in GHG emissions intensity of gross energy over scope reduction of GHG emissions (Scope1+2 tCO₂e/MWh) generation from 1-3 emissions intensity (Scope1+2 tCO₂e/MWh) since 2019 of avoided emissions renewables by
Slide 22: Sustainable Impact from our Projects
Sustainable Impact from our Projects Green Steel at Baltic Power • First offshore wind farm in the world to be built using Low-emission steel produced almost entirely from recycled Hai Long Baltic Power Oneida raw material in an electric arc furnace powered by renewable energy • Expected to reduce •
Slide 23: Construction & Execution
Construction & Execution Mike Crawley President & CEO
Slide 24: Construction Progress Milestones
Construction Progress Milestones Hai Long Baltic Power Oneida 1GW Offshore Wind, Taiwan 1.1GW Offshore Wind, Poland 250MW Battery Storage, Canada Executed Revenue Contract Executed EPC Construction Contracts Executed Financing Starts In-water Construction 2024 N/A Battery Delivery/ Foundation 2024/2
Slide 25: Partners and Contractors
Partners and Contractors Partner(s) High Quality Contractors Hai Long Baltic Power Oneida 25
Slide 26: Projects are Structured to Mitigate Downside Risk
Projects are Structured to Mitigate Downside Risk Beyond financial close, returns are protected through a variety of risk mitigation measures Several factors could contribute to optimizing our current return profile Potential Risks: Mitigated Via: Elements that could Long-term interest rate swaps on
Slide 27: Experienced Team of Project Leaders
Experienced Team of Project Leaders Toby Edmonds Tim Kittelhake Jens Poulsen Michelle Chislett Nick Zsofcsin Bill Small EVP Offshore Vice President, Offshore Project Director, EVP Onshore Project Director, Director, Construction Wind Project Execution Baltic Power Renewables Oneida Oneida Previously
Slide 28: Construction Update: Hai Long
Construction Update: Hai Long Tim Kittelhake Vice President, Offshore Project Execution
Slide 29: Hai Long (1.0 GW)
Hai Long (1.0 GW) • Stable revenue through 20-year FIT and 30-year Corporate Power Purchase Agreement with S&P AA- rated counterparty • Construction is fully funded, with long-term non-recourse project financing secured • Major construction programs running as planned HL3 HL2 • Material contribution
Slide 30: Hai Long Construction Schedule
Hai Long Construction Schedule • All construction contracts secured with experienced high-quality contractors • Hai Long will be built over three construction seasons, assuming no construction activities takes place during the winter • Scheduled buffers between construction phases/contracts • To dat
Slide 31: Construction Highlights (On Track)
Construction Highlights (On Track) Turbines 8 Offshore Grid Onshore Substation 5 Substation Substation 1 6 Onshore cables 2 7 Foundations Offshore export cables 3 Inter Array Cables 4 Onshore Onshore 2 Export 3 Inter Array Cable 4 Turbines 8 1 Substation cables cables Fabrication has started and on
Slide 32: Jacket sailing out, February 2024
Jacket sailing out, February 2024
Slide 33: Onshore substation, 2024
Onshore substation, 2024
Slide 34: Siemens nacelle factory, January 2024
Siemens nacelle factory, January 2024
Slide 35: Transition pieces mated with upper jackets
Transition pieces mated with upper jackets Transition piece of jackets are being completed and ready for final paint coat
Slide 36: Vessel – Green Jade; Load out of piling frame
Vessel – Green Jade (launched in 2023) Load out of pilling frame in Vietnam, February 1st, 2024
Slide 37: Construction Update: Baltic Power
Construction Update: Baltic Power Jens Poulsen Project Director
Slide 38: Baltic Power (1.1 GW)
Baltic Power (1.1 GW) • Construction is fully funded and long-term project financing with 25 financial Baltic Power institutions is secured • Stable cash flow from 25-year Contract for Differences (CfD) revenue contract that has indexation based on the Polish CPI commencing in 2022 • Currency: In 20
Slide 39: Baltic Power - Construction Schedule
Baltic Power - Construction Schedule • All construction contracts secured with experienced high-quality contractors • Project will be built over three construction years on a continuous basis, with buffers factored in all-seasons • Schedule provides for ample buffers between EPC contracts • Leverage
Slide 40: Construction Highlights (On Track)
Construction Highlights (On Track) Turbines 8 Offshore 5 Grid Onshore 1 Substation Substation Substation 6 7 Foundations Onshore cables 2 Offshore export cables 3 Inter Array Cables 4 Onshore Onshore 2 Export 3 Inter Array Cable 4 Turbines 8 1 Substation cables cables Early fabrication activities ha
Slide 41: Wind farm layout
wan ‘woen Dey: "2" Kilometre Post (KP) © Hooks = = Possible old power cable wate — Central route [J offshore Grid Connection survey area ‘Onshore Grid Connection survey area CO ower =
Slide 42: Project Cables, February 2024
Project Cables, February 2024
Slide 43: Foundation Monopiles, February 2024
Foundation Monopiles, February 2024
Slide 44: Operations & Maintenance Base in Łeba (image render)
Operations & Maintenance Base in Łeba (image render)
Slide 45: Onshore Substation, February 2024
Onshore Substation, February 2024
Slide 46: Construction Update: Oneida
Construction Update: Oneida Michelle Chislett Executive Vice President, Onshore Renewables
Slide 47: Oneida (250 MW)
Oneida (250 MW) • 250 MW (4-hour duration) Lithium-Ion Battery Storage in Oneida Southwestern Ontario Battery • Largest battery storage project in Canada and one of the largest in Storage North America • 20-year capacity contract with the IESO • Strong group of equity partners with Six Nations of th
Slide 48: Oneida - Construction Schedule
Oneida - Construction Schedule • Leverage Northland’s experience in Ontario building on-time & on-budget construction programs • Experienced contractor with equity ownership • Construction is fully funded with project finance secured 2023 2024 2025 Battery & Transformer Fabrication Foundation Instal
Slide 49: Construction Highlights (On Track)
Construction Highlights (On Track) Grid Substation 1 2 5 MV Transformers Battery Packs Concrete Foundations 4 Cables 3 Grid 1 Transformer 2 Cables 3 Battery 4 Substation Conduit currently being Foundations 70 x Medium voltage installed, and cabling 2 x High-voltage Each foundation holds two transfor
Slide 50: Megapack foundation pour, Q4 2023
Megapack foundation pour, Q4 2023
Slide 51: Conduit lines, March 2024
Conduit lines, March 2024
Slide 52: Conduits and Foundations, March 2024
Megapack foundation pour, Q4 2023 Conduits and Foundations, March 2024
Slide 53: Megapack Foundations, February 2024
Megapack Foundations, February 2024
Slide 54: Financial Overview
Financial Overview Adam Beaumont Interim Chief Financial Officer
Slide 55: Finance Objectives
Finance Objectives Diversifying sources of corporate capital to enhance financing flexibility while maintaining our investment grade ratings Complete per last Investor Day Onboard new Business Unit CFOs and new org structure Complete Execute on non-recourse project financings and re-financings Compl
Slide 56: Strong Balance Sheet Financing Discipline
Strong Balance Sheet Financing Discipline Project Financing • Limited Corporate Debt • Project Debt amortizes over life of revenue contracts • Balance sheet position provides significant funding flexibility • Non-recourse project financing and liquidity • Drives high quality assets with independent
Slide 57: Consolidated Construction Costs Profile
Consolidated Construction Costs Profile Fully funded $16B pipeline under construction for Hai Long, Baltic Power, and Oneida Sources of Funds Full Project Costs: Hai Long, Baltic, and CAD Oneida 5.0 Net NPI Equity ~1.8B 4.0 Pre-Completion Revenues (PCRs) ~0.9B Project Debt ~10.8B CAD Billions 3.0 Pa
Slide 58: Comprehensive Hedging Strategies Mitigate Key Risks
Comprehensive Hedging Strategies Mitigate Key Risks Foreign Exchange Interest Rate Cash Flow Repatriation Construction costs 100% of project debt is Baltic Power Majority of cash matched to project hedged for the full distributions hedged for Stabilizes Northland debt currency loan tenor 15 ye
Slide 59: 2024 Financial Guidance
2024 Financial Guidance 1 Adjusted EBITDA $1.2 to $1.3 billion Offshore Wind Utilities ~10% ~51% Adjusted Free Cash Flow 1 Efficient Natural (excl. growth expenditures) Gas ~14% 2024 $1.30 - $1.50 Adjusted Onshore Renewables EBITDA ~25% Free Cash Flow 1 (incl. growth expenditures) $1.10 - $1.30 1. S
Slide 60: 2024 Free Cash Flow Per Share Guidance Bridge
2024 Free Cash Flow Per Share Guidance Bridge1 Increased contributions from operating facilities and reduced expenses are being offset by the loss of one-time gains Midpoints Free Cash Flow Per Share (FCF/Share) 2024 2024 FCF/sh AFCF/sh Guidance Guidance $1.10-$1.30 $1.30-$1.50 Contribution Lower fr
Slide 61: Significant Adjusted EBITDA Growth
Significant Adjusted EBITDA Growth1 Fully funded incremental growth starting in 2025 ~7-10% CAGR ~$1.6-1.8B Growth Full year contribution ~$1.2B Contribution from Hai Long, Baltic Power, and Oneida in 2027 Incl. $110M of Contribution from net non- Oneida COD in 2025, recurring Hai Long PCR starting
Slide 62: Increase Adjusted EBITDA Diversification (2023-2027)
1 Increase Adjusted EBITDA Diversification (2023-2027) By 2027, cash flow growth will diversify across more regions providing higher quality and stability 2023 Adjusted EBITDA 2027 Adjusted EBITDA Utility ~9% Other2 ~8% Efficient Natural Gas North Sea Utility ~8% ~11% ~30% Offshore Efficient Weighte
Slide 63: Illustrative Payout Ratio
Illustrative Payout Ratio • Northland’s large build-out cycles in the past resulted in elevated payout ratios for short periods until they start generating FCF • Northland’s investment in Hai Long and Baltic Power is projected to result in a similar increase in payout ratio in 2024-2025 until the pr
Slide 64: Looking Ahead & Closing Remarks
Looking Ahead & Closing Remarks Mike Crawley President & CEO
Slide 65: Our Value Our Promise
Our Value Our Promise • Protect investment grade balance sheet with Experienced developer with proven track record funding strategy that ensures discipline • Focus on execution of $16 billion construction A growth mindset with a pipeline focus on execution • Deliver on our commitments • Give investo
Slide 66: Northland Power Investor Relations
Northland Power Dario Neimarlija, Vice President of 30 St. Clair Avenue West, Email: investorrelations@northlandpower.com FP&A and Investor Relations 12th Floor Website: northlandpower.com 647.288.1019 Toronto, ON Canada M4V 3A1
Slide 67: Consolidated Forecast by Business Unit (2023A, 2024F, 2027F)
Consolidated Forecast by Business Unit (2023A, 2024F, 2027F) 2023A 2023A 2024F 2024F 2027F 2027F Segment EBITDA Debt Service EBITDA Debt Service EBITDA Debt Service Offshore Wind $699M ($453M) $690-750M $515-575M Onshore 309M (196M) 335-365M 295-325M Renewables Efficient Natural 313M (125M) 320-360M
Slide 68: Construction Projects | Key Financial Metrics
Construction Projects | Key Financial Metrics Hai Long Baltic Power Oneida Capacity 1,022MW 1,140MW 250 MW Total Project Costs C$9.0 Billion C$6.5 Billion C$0.8 Billion Feed in tariff Revenue Contract Type Contract for Differences Energy Storage Facility Agreement & Corporate PPA Revenue Contract Te