Capital Power Corporation · TSX:CPX

Capital Power — Investor Presentation (September 2020)

40 slides from Capital Power's investor presentation, September 2020

  1. Slide 1: Investor Presentation September 2020

    Investor Presentation September 2020 Brian Vaasjo, President & CEO Sandra Haskins, SVP Finance & CFO 1

  2. Slide 2: Growth-oriented North American power producer

    Growth-oriented North American power producer • 6,680 MWs of owned capacity including two wind and a solar project in advanced development • Strong pipeline of contracted growth opportunities • Highly-contracted, young and diversified portfolio • Committed to investment grade credit rating • History

  3. Slide 3: Managing effectively during COVID-19

    Managing effectively during COVID-19  Early implementation of business continuity and risk management plans  Commitment to health and safety of our employees and all other stakeholders • Working from home for office and all non-essential plant employees • Extensive hygiene and social distancing pr

  4. Slide 4: Our business is evolving to cleaner energy

    Our business is evolving to cleaner energy Today Tomorrow Investing in emission • Building new facilities • Integration of storage free renewables in Canada and U.S. technologies Investing in critical • Acquiring key facilities • Reduce emissions natural gas generation in Canada and U.S. profile thr

  5. Slide 5: Strategically evolving our portfolio

    Strategically evolving our portfolio Generation Contracted North American AFFO per share(2) technology(1,2) capacity(1,2) footprint(1,2) 2014 33% Gas and renewables 58% Contracted 76% Alberta $2.51 Gas and 2020T 71% renewables 79% Contracted 50% Alberta $4.98(3) Renewables and gas Greater visibility

  6. Slide 6: Young fleet with long asset lives

    Young fleet with long asset lives Average age 14 years(1) Cardinal Point Wind Whitla Wind 1 Buckthorn Wind of current generation New Frontier Wind Bloom Wind 2% portfolio expected to retire this decade Beaufort Solar Shepard Energy Centre Port Dover & Nanticoke Halkirk Quality Wind York Energy Avera

  7. Slide 7: 10-year tolling agreement extension for Decatur Energy

    10-year tolling agreement extension for Decatur Energy Provides immediate benefits on current agreement  Since the acquisition of Decatur Energy in 2017, combustion turbines (CT) have been upgraded to increase capacity, improve heat rate and fuel efficiency, and maintain reliability • 2 of 3 CT hav

  8. Slide 8: Continued EBITDA growth from new assets

    Continued EBITDA growth from new assets(1-5) ($M) $700 Buckthorn Cardinal Point Whitla $600 Goreway Arlington Valley 2019 toll $500 Arlington Valley New Frontier Decatur Energy Centre $400 EnPower East Windsor $300 York Energy Centre Bloom $200 Beaufort Macho Springs Kingsbridge 2 $100 Shepard Port

  9. Slide 9: Growing AFFO per share

    Growing AFFO(1,3) per share Forecasting 5-year CAGR of ~9% for 2015-2020 $5.32 $4.98 $4.94 $3.85 $3.58 $3.20 $3.02 2015 2016 2017 2018 2019 2020T AFFO/share normalized² AFFO/share 1) Represents Adjusted FFO (2018 method), less the portion allocated to the non-controlling interest (calculated consist

  10. Slide 10: Dividend growth guidance to 2022

    Dividend growth guidance to 2022 Annualized dividend $2.30 $2.19 per share(1,2) $2.05 5% $1.92 7% $1.79 $1.67 $1.56 $1.46 $1.36 $1.26 2013 Y/E 2014 Y/E 2015 Y/E 2016 Y/E 2017 Y/E 2018 Y/E 2019 Y/E 2020 Y/E 2021T 2022T 7th consecutive annual dividend increase effective Q3/20 dividend; maintained divi

  11. Slide 11: Alberta Power Market

    Alberta Power Market • COVID-19 pandemic and low oil prices have impacted economy and demand for electricity • Supply has responded to lower demand with other market participants announcing the retirement of Sundance 3 and delays on some cogen and renewable projects • Starting in 2021, all output co

  12. Slide 12: Alberta power market fundamentals

    Alberta power market fundamentals  Electricity demand has declined ~5% due to COVID-19 pandemic and low crude oil prices  Demand expected to recover to 2019 levels within the next 18 months  Disciplined supply response expected to mitigate impact from reduced demand  Positive medium-term outlook

  13. Slide 13: Portfolio optimization

    Portfolio optimization Alberta commercial portfolio positions  Substantially all of baseload generation hedged for the remainder of 2020  Expect liquidity to increase during remainder of this year to facilitate increased hedging for 2021 2021 2022 2023 % sold forward(1) 10% 16% 11% Contracted pric

  14. Slide 14: Transformation of Genesee

    Transformation of Genesee  Genesee Performance Standard (industry-leading carbon reduction program) • CO2 intensity reduced 12% by 2021 • Intensity levels of subcritical Genesee1 & 2 below that of supercritical units • Includes supercritical Genesee 3 turbine upgrade • Heat rate/CO2 improvements fl

  15. Slide 15: Capital Power is well-positioned in Alberta

    Capital Power is well-positioned in Alberta Energy-only market supports market-driven power prices Young Assets High Availability Advantaged Conversion Market Locations Optionality Knowledge  Very high availability  Competitive fixed and variable costs  High capture prices due to high availabilit

  16. Slide 16: Growth Strategy

    Growth Strategy • Strong renewable pipeline including 1,200 MW of wind development in Alberta and in the U.S. • Potential natural gas plant acquisitions 16

  17. Slide 17: Growth opportunities

    Growth opportunities Strong renewable pipeline of wind and solar development Near-Term or In-Construction In development Terrace Thermal CBEC Expansion Klo Wind Halkirk 2 SK Wind 1&2 Frederickson 2 Strathmore Solar Whitla 2&3 KWCG Madoc Solar Willow Creek Nolin Hills Garrison Butte Tisch Mills Green

  18. Slide 18: Growth in Alberta renewables

    Growth in Alberta renewables Whitla 3(1)  Proceeding with phase 3 of Whitla Wind that will add 54 MW in late 2021 with an expected capital cost of $92M  Construction activities and discussions for renewable offtake contracts with commercial and industrial customers will occur concurrently for Whit

  19. Slide 19: Progress on 2020 growth target

    Progress on 2020 growth target $500M of committed capital for growth Buckthorn Wind (Texas) • ~$187M acquisition Committed Capital ($M) • 101 MW $500 ~$330 Whitla Wind 3 (Alberta) • $92M development • 54 MW, COD Q4/21 Q2/20 YTD Target Strathmore Solar (Alberta) • $50M-$55M development • 40.5 MW, COD

  20. Slide 20: Financial Highlights

    Financial Highlights • Disciplined growth with focus on contracted cash flows • AFFO growth supports dividend growth • Maintain investment grade credit rating 20

  21. Slide 21: Strong financial position and liquidity

    Strong financial position and liquidity  Strong cash flow generation with majority contracted • Expect to generate $300M+ in discretionary cash flow(1) in 2020 • Majority of cash flows contracted with an average PPA life remaining of 11 years • Contracts with largely investment grade counterparties

  22. Slide 22: AFFO continues to support dividend growth

    AFFO(1) continues to support dividend growth Discretionary cash flow is forecast to be $315M in 2020 $555 $525 $510 $397 $361 $324 $292 Discretionary cash flow Gross common dividends(2) 41% 49% 44% 44% 34% 40% (3) 2015 2016 2017 2018 2019 2020T Long-term AFFO payout ratio target is 45-55% 1) Histori

  23. Slide 23: 6-month performance versus 2020 annual targets

    6-month performance versus 2020 annual targets Facility availability Sustaining capex ($M) Adjusted EBITDA ($M) AFFO ($M) $90 to $100 $500 to $550 $935 to $985 93% 92% $451 $215 $34 Q2/20 YTD Target Q2/20 YTD Target Q2/20 YTD Target Q2/20 YTD Target 2020 Adjusted EBITDA 2020 AFFO expected to be expe

  24. Slide 24: Sustainability and Investment Opportunity

    Sustainability and Investment Opportunity 24

  25. Slide 25: Sustainability Reporting

    Sustainability Reporting Our inaugural Integrated Annual Report, combining our financial and environmental, social and governance (ESG) reporting –––––––––––––––––––––––––––––––––––––––––––––––– Our 2019 Climate Change Disclosure Report (1) –––––––––––––––––––––––––––––––––––––––––––––––– Strong sco

  26. Slide 26: Sustainability Targets

    Sustainability Targets  Constructing all new natural gas generation units to be carbon capture and/or hydrogen-ready  Reducing carbon emissions at Genesee by 50% by 2030 from 2005 levels  Reducing carbon emissions by 10% and our emission intensity by 65%, in 2030 from 2005 levels  Invest in carb

  27. Slide 27: Sustainability: Creating Responsible Energy for Tomorrow

    Sustainability: Creating Responsible Energy for Tomorrow Environmental Social Governance ––––––––––––––––––––––––––––––––––––––––– ––––––––––––––––––––––––––––––––––––––––– ––––––––––––––––––––––––––––––––––––––––– One of Canada’s 50 Best Corporate Board mandate includes sustainability as a 100% dua

  28. Slide 28: Attractive investment opportunity

    Attractive investment opportunity Long-term drivers of our business prove resilient  Young fleet with long asset lives with a focus on strong operational performance and optimizing assets  Highly contracted and diversified portfolio by geography and fuel mix  Strong cash flow generation including

  29. Slide 29: Appendices

    Appendices • Alberta portfolio optimization • Alberta’s coal fleet • Credit rating metrics • Debt maturity schedule • Summary of assets / projects under construction 29

  30. Slide 30: Maximizing the Alberta commodity portfolio

    Maximizing the Alberta commodity portfolio Creating incremental value and stability through market expertise Average realized power prices(1) have exceeded spot power prices by 20% since the Company’s inception 11 years ago $125 $100 $75 $50 $25 $0 Average AB spot power price Capital Power captured

  31. Slide 31: Alberta’s coal fleet

    Alberta’s coal fleet Retirements under federal / provincial regulations and conversion to gas AESO max Age in capacity 2020 End of Facility (MW) (yrs) coal life(1) Current Status Coal to gas conversion expectation PPA status Battle River 3 149 51 2019 Retired Jan 2020 Merchant Sundance 1 288 - 2019

  32. Slide 32: Financial strength

    Financial strength Strong balance sheet and commitment to investment grade credit ratings Agency Ratings Outlook S&P financial metrics S&P BBB- / P-3 Stable DBRS BBB(low) / Pfd-3 (low) Stable 20% Adj. FFO/Debt(1-3) 5.0 Adj. Debt/EBITDA(1-3) 15% 4.0  Both credit rating agencies 3.0 10% recently affi

  33. Slide 33: Debt maturity schedule

    Debt maturity schedule(1) Well spread-out debt maturities supported by long asset lives ($M) $600 $500 USD 65 Longer term debt reflects $400 increased confidence in Capital $160 Power’s business profile $300 $450 $200 $300 $275 $251 USD 230 $100 $210 $65 $50 $0 2020 2021 2022 2023 2024 2025 2026 202

  34. Slide 34: Summary of assets (Alberta)

    Summary of assets (Alberta) Alberta Contracted Alberta Commercial Clover Bar Joffre Energy Clover Bar Shepard Energy Genesee 1 Genesee 2 Whitla Wind 1 Genesee 3 Centre Landfill Halkirk Centre Capacity 430 MW 430 MW 202 MW 516 MW 480 MW 243 MW 5 MW 150 MW 860 MW % owned / 100 / 100 100 / 100 100 / 10

  35. Slide 35: Summary of assets (Ontario & B.C. Contracted)

    Summary of assets (Ontario & B.C. Contracted) Island Quality 150 Mile Port Dover & Generation Wind Savona House Nanticoke Kingsbridge 1 York Energy East Windsor Goreway Capacity 275 MW 142 MW 5 MW 5 MW 105 MW 40 MW 400 MW 84 MW 875 MW % owned / 100 / 100 100 / 100 100 / 0 100 / 0 100 / 100 100 / 100

  36. Slide 36: Summary of assets (U.S. Contracted)

    Summary of assets (U.S. Contracted) Macho Beaufort Arlington New Frontier Cardinal Buckthorn Roxboro Southport Springs Solar Decatur Bloom Wind Valley Wind Point Wind Wind Capacity 46 MW 88 MW 50 MW 15 MW 855 MW 178 MW 580 MW 99 MW 150 MW 101.5 MW Location Roxboro, Southport, Luna Beaufort Decatur,

  37. Slide 37: Projects in advanced development / under construction

    Projects in advanced development / under construction Alberta Contracted Whitla Wind 2 Whitla Wind 3 Strathmore Solar Capacity 97 MW 54 MW 40.5 MW % owned / operated 100 / 100 100 / 100 100 / 100 Location Medicine Hat Medicine Hat Strathmore Fuel & equipment Wind (Vestas) Wind (Vestas) Expected Comm

  38. Slide 38: Non-GAAP financial measures

    Non-GAAP financial measures The Company uses (i) earnings before net finance expense, income tax expense, depreciation and amortization, impairments, foreign exchange gains or losses, finance expense and depreciation expense from its joint venture interests, gains or losses on disposals and unrealiz

  39. Slide 39: Forward-looking information

    Forward-looking information The material factors and assumptions used to develop these forward-looking statements relate to: Forward-looking information or statements included in this presentation are provided to inform the Company’s shareholders and potential investors about management’s assessment

  40. Slide 40: Investor Relations

    Q1/20 Analyst Conference Call [Insert picture of Cardinal Point or Buckthorn for title page; other visual images in presentation to be added] Investor Relations Randy Mah 10423 101 Street NW Director, Investor Relations 11th Floor (780) 392-5305 Edmonton, Alberta rmah@capitalpower.com Canada T5H 0E9

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