Northland Power Inc. · TSX:NPI
Northland Power — Investor Day (February 2022)
56 slides from Northland Power's investor day presentation, Feb 8, 2022
Slide 1: Northland Power 2022 Investor Day
Northland Power 2022 Investor Day February 8, 2022 Northland Power 2022 Investor Day 1
Slide 2: Agenda
Agenda 1 Mike Crawley Corporate Overview 2 David Povall Executing on Growth and Pipeline 3 Pauline Alimchandani Financial Overview 4 Mike Crawley Closing Remarks and Q&A Northland Power 2022 Investor Day 2
Slide 3: Corporate Overview
Corporate Overview Mike Crawley President & CEO
Slide 4: Northland Power Investor Day 2022 topics
1. Re-Cap on 2021 Investor Day Objectives 2. Renewables Market Growth Northland Power 3. Northland Corporate Strategy Update Investor Day 2022 4. Becoming a Leader in Sustainability 5. Executing on Growth and Pipeline 6. Financial Overview 7. Closing Remarks and Questions 4
Slide 5: 2021 Investor Day Objectives
2021 Investor Day Objectives How did we do on our objectives from last year? Advance Growth Pipeline • Closed acquisition of 1.2 GW Baltic Power project and secured CfD (PPA) • Progress offshore wind pipeline • Formed 1.3 GW German Nordsee cluster with RWE • Create storage and hydrogen capacity • Ad
Slide 6: Global Renewables Growth Accelerates
Global Renewables Growth Accelerates The need for more renewable power capacity continues to grow Global Forecast for Renewables Growth sees Annual 102GW 250GW Additions of of new wind of new solar per year per year Offshore Wind alone will require US $380 billion of investments 2021 – 2030 1. Sourc
Slide 7: Building a Global Asset Management and Growth Platform
Building a Global Asset Management and Growth Platform Ensuring Northland’s Competitiveness and Resilience Strategy Market Analysis Corporate Offtake Project Management Group Office Global Procurement Hamburg & Taipei Group Offshore Wind Centres Investment Human Capital Management Group Management N
Slide 8: Growth Pipeline Moves to Construction and Operations
La Lucha 2021 3,240 Helios MW Ball Hill Current Project Pipeline Bluestone Growth Pipeline Moves 2022 Hai Long Suba to Construction and High Bridge Operations Baltic Power 2023 2,907 MW reach financial close in next 24 months as pipeline matures Nordsee Two Over the next two years Northland’s operat
Slide 9: TOP 10 Incumbent in Offshore Wind Strategy
Offshore Wind Strategy Leveraging our global leadership position TOP 10 Incumbent in Global Offshore Wind 1.2 GW in operations and 2.7 GW1 of projects which will achieve financial close within the next 2 years Fastest Growing Renewables Technology 1. Includes Hai Long, Baltic Power and Nordsee Two N
Slide 10: Global Offshore Wind
Global Offshore Wind Northland is a top 10 incumbent in global offshore wind Installed Capacity (GW) Northland is the 4th largest operator globally measured by operating capacity 7.5 4.4 2.5 1.2 1.1 0.9 0.8 0.8 0.8 0.8 IPP Integrated Utility Integrated Utility IPP Integrated Utility Integrated Utili
Slide 11: Offshore Wind Strategy
Offshore Wind Strategy Projects and teams in top global markets for offshore wind National offshore wind targets by 2035 Australia: 2GW Brazil: 3GW France: 11GW Germany: 23GW Ireland: 6GW India: 8GW Japan: 10GW Netherlands: 16GW Poland: 11GW Spain: 2GW S. Korea: 12GW Taiwan: 21GW UK: 44GW US: 40GW V
Slide 12: Onshore Renewables Strategy
Spain • 57 GW market growth by 2030 • Northland is top ten operator • Focus on development and M&A to grow platform Onshore Renewables EU Eastern Europe • 22 GW market growth by 2030 • Capitalise on Northland “brand” created by Baltic Strategy Power • Focus on development Targeted Approach North Eas
Slide 13: Delivering Growth – New Initiatives
Delivering Growth – New Initiatives A way to tap higher-value end markets for our electrons There is a isclear There need a clear for for need • Peaker • plantplant Peaker replacements replacements • Managing • Managing thethe grid grid with with How do we capture increasing intermittent increasing
Slide 14: 2030 Target Cash Flow
2030 Target Cash Flow New cash flow comes online throughout this decade % of Annual Growth Investment Timing of Operating Cash Flow 60% Offshore renewables Cash flow 2026+ 25% Onshore renewables Cash flow 2022/2023+ 15% Utilities 2023/2024 5% New technologies Cash flow 2024+ Northland Power 2022 Inv
Slide 15: Inflation and Cost Certainty
Inflation and Cost Certainty Cost Certainty for Northland’s Operating assets and development projects % of 2022 Operating Facilities EBITDA Development Projects Efficient Natural Gas Majority of thermal input costs are pass through costs with 16% New York Wind capacity payments indexed • New York pr
Slide 16: Sustainability
Sustainability Significant improvement across all measures Accomplishments ESG Rankings Current1 Previous2 E 4-5 GW 65% of additional energy Reduction B- D generation from Carbon intensity +1.3 GW renewable sources across our portfolio >- 20% CO2/MWh by 2024 AA A S highest A positive and standards o
Slide 17: Looking Forward
Looking Forward Northland’s identified development projects to deliver substantial growth Total Pipeline 14 Identified Devt GW Projects3 9.0 Capitalized Devt GW Projects2 Capacity 6.5 Existing Projects GW 2x > 3.2 By 2030 GW1 9% CAGR 2030e 2021 2027 2021 2027e 1. Based on installed gross capacity an
Slide 18: Funding Growth
De-Carbonizing World 1,122 GW of additional renewables Capacity needed By 2030 Funding Growth Creating Value By Creating Northland: Offshore & Onshore Developer Renewable Capacity Creating and de-risking 14 GW renewables pipeline Project Funding Northland Equity Sell-Down Partner Equity Sell-Down Pr
Slide 19: Executing on Growth Strategy and Pipeline
Executing on Growth Strategy and Pipeline David Povall EVP Development
Slide 20: Global Company with Local Presence
Global Company with Local Presence Established Regional Presence Provides Competitive Advantage Regional Development Teams Continue to deliver competitive advantage Regional teams have built up a robust growth pipeline of approximately 14 GW • Significant growth opportunities delivered by regional t
Slide 21: Sustainable growth
Sustainable growth Offshore wind –88% Technology Strong Growth Portfolio Across Multiple Technologies 14 Onshore wind – 3% Continue to target Europe and Asia as key markets for offshore wind development GW Solar – 6% Other – 3% Expand onshore footprint in Northeast United States and Colombia as well
Slide 22: Northland Growth Pipeline
Northland Growth Pipeline Significant Growth to be delivered over next decade 10+ GW Wind Solar Hai Long 1,044 MW Baltic Power 1,200 MW 6,513 MW Wind SUBA 130 MW Nordsee Two 433 MW High Bridge 100 MW Solar Ball Hill 112 MW Bluestone 108 MW 3,606 MW La Lucha 130 MW 2x Helios 16MW 3,240 MW Early/Mid-S
Slide 23: Offshore Wind
Offshore Wind Success Achieved in 2021 to advance our offshore wind strategy Poland Germany Scotland Korea Taiwan Japan • Secured • Exercised step-in • Executed site • Secured first Energy • Preparations in • Progressed on partnership for 1.2 rights to retain selection and Business Licence anticipat
Slide 24: Hai Long
Hai Long Progressing to financial close 1.0GW • Hai Long comprises two adjacent sites: 532 MW Hai Long 2 and 512 MW Hai Long 3 • Localization plan obtained in 2021 HL3 HL2 • Tendering for main components concluded, preferred supplier agreements signed • EIA amendment approved, allowing for 14MW turb
Slide 25: Baltic Power
Baltic Power Established position in Eastern Europe through Baltic Power offshore wind project Up to 1.2GW Baltic Power • Poland is an attractive new country within the EU, with growth potential in onshore and offshore • Granted a 25-year fixed price Contract for Differences (“CfD”) • Partnership pr
Slide 26: Nordsee Cluster Offshore Wind
Nordsee Cluster Offshore Wind Building Scale and Size in German Offshore Wind Nordsee Delta Nordsee Two 480 MW 433 MW 1.3GW Nordsee Three Nordsee One 420 MW • Partnership provides scale resulting in enhanced returns due to synergies in development, construction and operation of the cluster projects
Slide 27: Scotwind Offshore Wind
Scotwind Offshore Wind Executing on our strategy to Extend our Offshore wind runway 2.3 GW N3 N2 N1 • Successfully awarded two leases in recent Crown Estate Scotland offshore wind process • Lease N4 – 840 MW fixed bottom foundation • Lease N2 – 1,500 MW floating foundation • Continuation of Northlan
Slide 28: Asia Offshore Wind Development
Asia Offshore Wind Development Advancing milestones to facilitate growth and opportunities for future offshore wind Expanded in-country team to progress the portfolio, opened new offices for the Japan and regional team in Tokyo. Key skills include government relations, finance, project development,
Slide 29: Asia Offshore Wind Development
Asia Offshore Wind Development Advancing milestones to facilitate growth and opportunities for future offshore wind • Expanded in-country team to progress the portfolio, opened new office in Seoul alongside project offices. Key skills include government relations, finance, project development, engin
Slide 30: Asia Offshore Wind Development
Asia Offshore Wind Development Advancing milestones to facilitate growth and opportunities for future offshore wind Expanded the in-country dedicated team to progress the project to auction bid in 2022 and 2023 • Early-stage development, fixed-foundation project • Commenced early stage site identifi
Slide 31: Onshore Renewables
Onshore Renewables Our onshore renewables strategy Onshore renewables present an attractive growth opportunity for Northland • The industry is expected to grow at upwards of 10% per annum over the next decade. • We continue to build local capabilities in development to ensure that sufficient resourc
Slide 32: Onshore Renewables
Onshore Renewables Success Achieved in 2021 to advance our onshore strategy Spain Colombia United States • Acquired 551 MW onshore wind and solar • Utilized EBSA platform to expand portfolio • Achieved financial close on 220 MW Ball Hill portfolio • Achieved financial close on 16 MW Helios and Blues
Slide 33: Onshore Renewables
Onshore Renewables Achieving Success in onshore renewables Execution on M&A strategy to secure near-term cash flow and establish new market • Acquired a portfolio of 551 MW (net) of onshore renewables with a regulated tariff • Delivers near-term cash flow which helps fund the development of Northlan
Slide 34: Onshore Renewables
Onshore Renewables Achieving Success in onshore renewables New York Wind - 320 MW Suba Solar - 130 MW Execution on development Success in competitive milestones to progress projects auctions to grow existing forward platforms • 320 MW potential capacity • Secured two solar projects in (Bluestone, Hi
Slide 35: Onshore Renewables
Onshore Renewables Our onshore business continues to grow to supplement growth in offshore wind Project Technology Size Status COD Our onshore strategy will Spain Solar and wind 551MW Operational provide nearly 1.2GW of La Lucha Solar 130MW Construction 2022 near-term growth to complement growth fro
Slide 36: Project Pipeline
Project Pipeline Nearly 8 GW of capitalized and identified projects to support growth to 2030 Northland Current Project Location Technology Size Status Contract Type Est. COD Ownership Capitalized Growth Projects Hai Long Taiwan Offshore Wind 1,044MW 60% Late-Stage Development 20-yr PPA 2026/2027 Ba
Slide 37: Financial overview
Financial overview Pauline Alimchandani Chief Financial Officer
Slide 38: Northland's Finance Team
Northland’s Finance Team Expanding the Team and our Capabilities to Support Continued Global Growth Over the last 12 months we have: Focused & added capability to support Investing in capabilities for Establishing strong finance leadership in our the transaction teams with dedicated asset/M&A integr
Slide 39: We Delivered on our Promises
We Delivered on our Promises Finance Objectives As Per Last Investor Day Launch Green Financing Framework and first steps to green the balance sheet Executed Northland’s largest $1Bn equity raise to fund Spain acquisition, New York Wind and Baltic Power purchase price Continue to grow and diversify
Slide 40: Long-term financial objectives
BBB (Stable) Long-term financial Maintain investment grade balance sheet to support growth objectives $12-15B1 pipeline Maintain flexibility to fund Capitalized Projects costs Maintaining flexibility, adding corporate funding tools to diversify sources of capital, preserving low cost of capital and
Slide 41: Annual Growth Investments >2x
Last vs. Next 5 Years Annual Growth Onshore Renewables (Suba Investments and High Bridge) >2x Nordsee Two Increasing our Investment Pace to Drive Value Baltic Power Deutsche Bucht EBSA & Helios La Lucha Spain NY Wind Hai Long 2 Next 5-yr capital plan is expected to grow by over 2x 2017-2021 2022-202
Slide 42: Growth Capital Funding Requirements
Growth Capital Funding Requirements Projects that have been Capitalized on Northland’s Balance Sheet Capitalized Financial Gross Capital Net Capital Commercial Commercial Northland Gross Advanced Development Close Investment Investment Operations Operations Ownership Capacity Development Projects1 D
Slide 43: Strong annual EBITDA growth
Strong annual EBITDA growth Capitalized Growth Projects will increase EBITDA and Quality of Cash Flow through 2027+ + Ability for more $2.0 – 2.2 Bn2 growth through 6 GW Additional Pipeline $1.7 – 1.9 Bn 1 EBITDA $1.15 - 1.25 Bn 7-10% 2x ~ Capitalized By 2030 CAGR + Other Capitalized Identified proj
Slide 44: Illustrative Funding Plan for Capitalized Projects (2022-2026)
Strong Balance Sheet will Support Growth Illustrative Capital Funding Plan of Capitalized Growth projects Over Next Five Years Illustrative Funding ~$1-2Bn ~$1Bn NORTHLAND EQUITY2 + Plan for Capitalized GREEN CORPORATE DEBT (INCLUDING OFFSHORE WIND SELL-DOWNS REVOLVER/HYBRIDS) ~10-15% Projects (2022
Slide 45: Development Asset Partial Sell-downs
Development Asset Partial Sell-downs Enhance Project Returns and Cash Flows through capital recycling Enterprise Our partnering strategy Risk Management Strategic Partnerships • Align low cost of capital with high quality long-term contracted cash flows • Allows partners to meet their ESG/renewable
Slide 46: Development Asset Sell-downs
Development Asset Sell-downs Illustrative Example of Asset Sell-down at 25% and 49% Reduces absolute FCF Reduces NPI equity Crystalizes contribution over the required FC value upfront long term Illustrative Pre-FC FC Total NPI Annual FCF Ownership Net Sale Proceeds Total NPI Equity1 Recognized Value
Slide 47: Committed to prudent capital structure and investment grade
Commitment to investment grade credit rating and continued balance sheet strength Committed to prudent S&P Corporate Credit Ratings Fitch capital structure and BBB (Stable) BBB Stable investment grade (since 2013) (since fall 2021) • Strong financial condition supported by investment grade rating •
Slide 48: Sustainable Finance
Sustainable Finance Adding Financial Optionality to Portfolio Green Financing allows Northland to diversify and optimize additional sources of capital to fund growth plan Green Financings $1Bn+ Credit Facility with Green Bonds Targeting all of our project finance sustainability linked KPIs debt to b
Slide 49: 2022 Financial Guidance
2022 Financial Guidance Adjusted EBITDA and Free Cash Flow Adjusted EBITDA Utilities– 8% $1.15 to $1.25 Offshore wind – 52% Billion Efficient natural gas– 16% 2022E Free Cash Flow (incl. growth expenditures) Adjusted EBITDA $1.20 to $1.40 Onshore renewables– 24% Per Share Adjusted Free Cash Flow (ex
Slide 50: 2022 Adjusted Free Cash Flow Guidance Bridge
2022 Adjusted Free Cash Flow Guidance Bridge Summary Return to Normalized Wind Conditions and Operational/Financing Optimizations are expected to offset the impact of the Iroquois Falls PPA expiry 2021 Growth 2022 Growth Development Costs Development Costs (Baltic Power, (Nordsee Cluster, Colombia,
Slide 51: Finance Team Key Activities for 2022
Finance Team Key Activities for 2022 Diversifying sources of corporate capital to enhance financing flexibility while maintaining our investment grade ratings Execute on ESG related strategies (supply chain, climate change and enhance reporting) Execute on non-recourse Project Financings and re-fina
Slide 52: Closing remarks and Q&A
Closing remarks and Q&A Mike Crawley President & CEO
Slide 53: Northland's Competitive Positioning
Northland’s Competitive Positioning Northland is well positioned to capitalize on market growth opportunities Growth Pipeline Moves Toward Financial Close Global De-carbonization movement is accelerating Significant growth in renewables expected to offer immense opportunities for Northland 2.9 GW of
Slide 54: Q&A
Q&A Northland Power 2022 Investor Day 54
Slide 55: Forward looking statement
Forward looking statement This written and accompanying oral presentation contains certain forward-looking statements which are provided for the purpose of presenting information about management’s current expectations and plans. Readers are cautioned that such statements may not be appropriate for
Slide 56: Northland Power Contact US
Northland Power Contact US Northland Power 30 St. Clair Avenue West, 12th Floor Toronto, ON Canada M4V 3A1 Wassem Khalil Senior Director Investor Relations & Strategy 647.288.1019 Email: investorrelations@northlandpower.com Website: northlandpower.com Northland Power 2022 Investor Day 56