Capital Power Corporation · TSX:CPX
Capital Power — Investor Day (April 2024)
87 slides from Capital Power's investor day presentation, April 2024
Slide 1: Investor Day
Reliable Affordable Clean Investor Day 2024 | Edmonton, Alberta
Slide 2: Territorial Acknowledgement
Territorial Acknowledgement In the spirit of reconciliation, Capital Power respectfully acknowledges that we operate within the ancestral homelands, traditional and treaty territories of the Indigenous Peoples of Turtle Island, or North America. Capital Power’s head office is located within the trad
Slide 3: Presentation Team
Presentation Team Avik Dey Bryan DeNeve Steve Wollin Jason Comandante Sandra Haskins President and Chief SVP, Chief SVP, Operations SVP, Head of Canada SVP, Finance and Executive Officer Commercial Officer Chief Financial Officer 3
Slide 4: Agenda
Agenda 1 A Leading North American Power Producer | Avik Dey 2 Deliver • Acquire and Optimize | Bryan DeNeve • Operational Excellence | Steve Wollin 3 Build – Positioned to Grow | Jason Comandante 4 Create – Balanced Energy Solutions | Jason Comandante 5 A Proven Approach to Funding Growth | Sandra H
Slide 5: We are a leading North American power producer
Reliable Affordable Clean We are a leading North American power producer 5
Slide 6: We are built from a history of power generation expertise and innovation
Overview We are built from a history of power generation expertise and innovation 1928 1931 1941 1970 2005 2009 2024 One of the first Canada’s Canada’s First spring First Capital Power Canada’s 10,000 KW largest steam largest thermal supported supercritical IPO largest and turbo boiler plant foundat
Slide 7: We are uniquely positioned to excel in the North American power industry
Overview Reliable Affordable Clean We are uniquely positioned to excel in the North American power industry – today and tomorrow 7
Slide 8: Our core businesses position us to deliver, build and create balanced energy solutions
Overview Our core businesses position us to deliver, build and create balanced energy solutions FlexGen Renewables Trading & Origination • Critical, dispatchable • Affordable and clean • Active trading platform (9 markets) supply • Carbon market • Environmental credit • Reliable and affordable oppor
Slide 9: Our strategic priorities build on our existing capabilities
Overview 1 Expand our FlexGen fleet Our strategic priorities 2 Grow our renewables portfolio build on our existing Enhance returns through trading capabilities 3 4 Create balanced energy solutions 9
Slide 10: Proven track record of growth, diversification, asset optimization and financial performance
Overview Proven track record 12.5% of growth, diversification, 10-year total shareholder return1 asset optimization and financial performance 4x 40% Increase in total Reduction in emission capacity intensity 200+ MW $6 B Site upgrades M&A transactions2 10-year snapshot 1. As of December 31, 2023 2.
Slide 11: We are unique in our capabilities to create value for shareholders
We are unique in our capabilities to create value for shareholders within the power sector 11
Slide 12: Clear competitive advantage
Overview Clear competitive advantage 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 • Operational excellence
Slide 13: Superior fleet: Our FlexGen fleet is well positioned to deliver
Overview Superior fleet: 4% Our FlexGen fleet is More efficient than U.S. fleet average well positioned to deliver reliable, efficient and 7 years affordable power across Younger than U.S. fleet average North America Source: Evercore and SNL, SNL (4/27/24), U.S. power plants with operating capacity
Slide 14: Access to capital: Investment grade, access to partners, capital markets and financing
Overview ~$4.0 B 1 Debt financing Access to capital: Investment grade, access to partners, capital markets and financing ~$1.1 B 2 Partner capital 1. Includes project debt financing on announced projects between 2014-2023 2. Represents partner share of acquisitions or jointly owned projects complete
Slide 15: Operational excellence: Execute high standards for asset planning, performance and safety
Overview Operational excellence: People Execute high standards for asset planning, performance and safety Execution Planning 15
Slide 16: Asset optimization: Expanding fleet capacity, and reducing our carbon intensity
Overview Asset optimization: 866 MW Expanding fleet capacity, Expanded capacity 2024-2026 and reducing our 40% carbon intensity Emissions reduction1 1. Over the 10-year period from 2014-2023 16
Slide 17: Decreasing risk and increasing value
Overview Decreasing risk and increasing value Deep commercial expertise: Value creation through financial management and commercial optimization 1. Budget 2024 17
Slide 18: Long-term electricity demand growth is driving increased need for FlexGen
Long-term electricity demand growth is driving increased need for FlexGen 18
Slide 19: The energy expansion is changing the power industry
Overview The energy expansion is changing the power industry 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 20: A focus on renewables growth has created a need for firm supply
Overview A focus on Energy transition Energy expansion renewables growth has created a need for firm supply expansion Unmet firm power demand Today 20
Slide 21: North American power demand will double by 2050
Overview 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 21
Slide 22: Secular demand growth driven by multiple forces
Overview • Data centres Secular demand growth • EV mandates driven by multiple forces • Electrification • Reshoring • Economic growth 22
Slide 23: Generative AI is accelerating data center power demand growth in the U.S.
Overview 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 24: Data centres need firm supply and will challenge the supply mix
Overview 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) 24
Slide 25: Renewable energy will play a larger role in the energy supply mix
Overview 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 26: Intermittent nature of solar and wind requires FlexGen to maintain reliability
Overview 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 27: Aging transmission infrastructure and weather events increasingly contribute to outages
Overview ~25-30% of transmission and distribution Aging transmission infrastructure at end of useful life1 infrastructure and weather events increasingly contribute to outages 13% annual increase in outages2 1. Assets less than 30-years old are considered within useful life 2. 2000-2021 Source: ABB
Slide 28: Supply, demand and external forces driving demand for more firm supply
Overview Supply, demand and external forces Strong future for driving demand for FlexGen assets more firm supply 28
Slide 29: The need for more FlexGen and balanced energy solutions is here today
The need for more FlexGen and balanced energy solutions is here today 29
Slide 30: Our balanced energy solutions create a market-ready strategy
Overview 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
Slide 31: Our Strategy
Overview Our Strategy We have a DELIVER Established business BUILD Greenfield & brownfield CREATE Commercial solutions for clear strategy with cash flow expansion wholesale customers Description in a growing Optimize current fleet, Expand firm capacity, 1 FLEXGEN acquire new FlexGen assets build uti
Slide 32: We are an ESG leader committed to clean power and active stakeholder engagement
Overview ESG achievements We are an ESG leader committed to clean power 40% E and active stakeholder reduction in emission intensity1 while growing our fleet engagement Going Beyond | We are evolving 50% our targets and going beyond women on our executive team2 carbon accounting to reach our 2045 ne
Slide 33: We are uniquely positioned to excel in the North American power industry
Overview Proven track record We are uniquely positioned to Competitive advantage excel in the North American power industry – today and tomorrow Market opportunity Market-ready strategy 33
Slide 34: Deliver: Acquire and Optimize
Reliable Affordable Clean Deliver Acquire and Optimize 34
Slide 35: Delivering shareholder value through M&A, commercial and operational excellence
Deliver 659 MW Delivering Renewable capacity growth shareholder value through M&A, commercial and $1.8 B 5,660 MW Development Thermal capacity operational projects growth excellence $6 B 11 Transactions M&A transactions1 10-year snapshot 1. Denotes full transaction value inclusive of partner working
Slide 36: We have a diverse portfolio anchored in our core markets
Deliver We have a diverse portfolio anchored in our core markets U.S. WECC Alberta Ontario MISO 36
Slide 37: Our core markets need grid-firming solutions to meet demand growth
Deliver Capacity by market Adjusted 2024 EBITDA by geography Our core markets Other 17% 13% need grid-firming AB 7% 31% MISO solutions to meet 46% 12% 19% demand growth from ON 14% multiple sources U.S. WECC 26% 15% Canada West ON U.S. Southwest U.S. Renewables U.S. Other 37
Slide 38: We are well positioned to create value through upgrades and expansions at existing sites
Deliver 30-50% lower We are well positioned to upgrade vs build (cost/MW) create value through upgrades and expansions at existing sites 15-25% lower brownfield vs build (cost/MW) Ranges reflect Capital Power’s actual cost of greenfield and brownfield projects relative to an estimated generic new bu
Slide 39: We have a proven track record of M&A value creation
Deliver 6-9% AFFO per share accretion We have a proven track record of M&A value creation 3-10 years PPA extension 39
Slide 40: We have strong contracted gross margins across our portfolio
Deliver We have strong contracted gross margins across our portfolio 86% 75% Alberta California Contracted gross margins represent 2025 estimated figures Contracting % based on forward expectations as of March 31, 2024 40
Slide 41: We deliver value through our existing asset base
Deliver Established position in key markets We deliver value Strong fundamentals drive demand for our assets through our existing Commercial focus converts demand into asset base tangible returns Multiple paths to creating value through trading and origination 41
Slide 42: Deliver: Operational Excellence
Reliable Affordable Clean Deliver Operational Excellence 42
Slide 43: Operational excellence
Deliver Operational excellence Enhanced shareholder value 43
Slide 44: Bigger Better Cleaner
Deliver & Going Bigger Better Cleaner beyond Increasing output and Leading reliability More efficient and Utilizing brownfield sites enabling higher capacity responsible to their full potential factors 44
Slide 45: We are reliably delivering growth and contracting opportunities
Deliver 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 45
Slide 46: How do we do it better than the rest?
Deliver How do we do it better than the rest? 450+ years of experience across 22 plant managers with integrated Engineering, HSSE and Supply Chain People functions within Operations 93% average Optimized turnaround availability over planning and execution, past 5 years supply chain management and co
Slide 47: We make the right decisions to extract maximum performance and value from our fleet
Deliver Reliable Affordable Clean We make the right decisions to extract maximum performance and value from our fleet 47
Slide 48: Track record of success: FlexGen
Deliver Track record of success FlexGen & Going Goreway Bigger Better Cleaner beyond Actual CT upgrades Low-load Water treatment Utility-scale optimization upgrades batteries & Going Harquahala Bigger Better Cleaner beyond In Process Cooling pond Comprehensive Managing cooling Stay tuned... upgrade
Slide 49: Track record of success: Renewables
Deliver Track record of success Renewables Bigger Better Cleaner & Going beyond Controls Vestas LTSA Smart curtailment Kingsbridge 1 Wind optimization partnership green hydrogen and storage study Lightning protection upgrade 49
Slide 50: Why does operational excellence matter?
Deliver Reliable Affordable Clean Why does operational excellence matter? 50
Slide 51: It creates and drives enhanced value
Deliver It creates and drives enhanced value & Going Bigger Better Cleaner beyond 200+ MW 93% ~$190 M ~$60 M of site upgrades and fleetwide availability avoided in carbon annual EBITDA $40 M+ fuel savings vs. NERC average compliance costs improvement through efficiency of high-80% range over 10 year
Slide 52: Build: Positioned to Grow
Reliable Affordable Clean Build Positioned to Grow 52
Slide 53: Building balanced energy solutions by executing
Build 590 MW Expanded our U.S. Building balanced energy renewables portfolio solutions by executing North American 2024 YE 10 sites development projects Genesee Repowering Battery storage complete potential 9 sites Expansion and optimization opportunities 10-year snapshot 53
Slide 54: Building on our successful history: Genesee Repowering
Build 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 54
Slide 55: Executing balanced energy solutions: Genesee Repowering
Build Executing balanced energy solutions: Genesee Repowering Simple cycle completion Combined cycle completion Unit #1 Unit #2 Unit #1 Unit #2 Q2 2024 Q2 2024 Q4 2024 Q4 2024 Unit 1 Simple Cycle is operational Unit 2 Simple Cycle firing targeted by end of May 2024 Genesee, Capital Power and Alberta
Slide 56: Building balanced energy solutions: East Windsor Cogeneration Expansion
Build Building balanced energy solutions: East Windsor Cogeneration Expansion 100 MW 2026 14 years Additional net Expected Contracted capacity completion cashflow 56
Slide 57: Building balanced energy solutions: York and Goreway utility scale batteries
Build 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 57
Slide 58: Building balanced energy solutions: Maple Leaf Solar
Build Building balanced energy solutions: Maple Leaf Solar 73 MW 2026 25 years Net capacity Expected Contracted completion cashflow 58
Slide 59: Positioned for further growth
Build Development pipeline1 (MW) 600 900 Positioned Wind for further growth 700 Total 4,700 MW Solar FlexGen Battery storage 2500 1. Diversified by fuel type and geography; various stages of development 59
Slide 60: We are building balanced energy solutions
Build Prudent and proven process for portfolio growth We are building Genesee Repowering a shining example balanced energy of our ambition solutions Pipeline of diverse development opportunities 60
Slide 61: Create: Balanced Energy Solutions
Reliable Affordable Clean Create Balanced Energy Solutions 61
Slide 62: We create balanced energy solutions for wholesale customers
Create FlexGen We create balanced energy solutions for Renewables Market & Regulatory wholesale Expertise customers by delivering an integrated platform Trading & Origination 62
Slide 63: FlexGen Renewable Power
Create Physical + Firm Power + + = Trading & Balanced Renewable FlexGen Origination Energy Power Solutions Virtual Power + Financial Solutions 63
Slide 64: Beyond today: Decarbonize and establish new pathways across the power value chain
Create Evaluation Framework • Supportive policy Beyond today: • Technical readiness Decarbonize and establish new pathways across the • Scalability power value chain • Competitive economics • Commercial underpinning 64
Slide 65: We are creating opportunities for the future
Create 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 65
Slide 66: A Proven Approach to Funding Growth
Reliable Affordable Clean A Proven Approach to Funding Growth 66
Slide 67: Exceptional financial stewardship and capital management
Funding Growth ~$5 B Exceptional financial Market capitalization stewardship and capital management BBB- / ~90% BBB (low) A-rated PPA counterparties Investment grade credit rating ~40% / ~60% ~75% U.S. / Canada Contracted 2024E 2024 adjusted adjusted EBITDA EBITDA 67
Slide 68: We deliver superior total shareholder returns
Funding Growth We deliver superior Total shareholder return (10-Year) Updated target total shareholder range 12-14% returns and are ~6.0% ~12.5% well positioned to Historical target range 10-12% enhance returns as we grow ~6.5% Price Compounded Total return appreciation dividend 1. Total shareholder
Slide 69: Stable weighted average contract life
Funding Growth 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 contrac
Slide 70: Low-risk capitalization
Funding Growth Low-risk capitalization Locked in low-cost debt $600 Disciplined debt maturity profile1 $500 USD $65 $50 $400 $160 $300 $450 $450 $200 $400 $350 $350 $300 $275 $100 $210 USD $150 $65 - 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 Capital Markets CAD Private Placement USD Pri
Slide 71: We will continue to be prudent stewards of capital
Funding Growth Reliable Affordable Clean We will continue to be prudent stewards of capital as we look to execute our long-term vision of changing power 71
Slide 72: Capital investment screening criteria
Funding Growth 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
Slide 73: We have a disciplined approach to capital allocation
Funding Growth 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% 73
Slide 74: We are focused on markets we understand and with the right fundamentals
Funding Growth We are focused Our core businesses on markets we FlexGen Renewables Trading & understand and Origination with the right Our core markets today Alberta, Ontario, MISO, WECC All markets in North America to fundamentals Growth support our generation fleet markets we Southeast, WECC, PJM,
Slide 75: Our high quality portfolio drives multiple sources of funding
Funding Growth 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 2% • Asset recycling 45% • Common equity Internal Cash Flows Debt1 Hybrids 3 Partnerships Asset
Slide 76: We are a partner of choice for leading global investors
Funding Growth We are a partner of choice for leading global investors 76
Slide 77: We are driving shareholder value through a low-risk and balanced approach to growth
Funding Growth Reliable Affordable Clean We are driving shareholder value through a low-risk and balanced approach to growth 77
Slide 78: We have a strong track record of AFFO and dividend per share growth
Funding Growth AFFO per share Dividend per share ~13% CAGR ~7% CAGR $6.99 We have a strong track record of AFFO $3.85 $2.39 and dividend per $1.73 share growth 2018 2023 2018 2023 78
Slide 79: Continued dividend growth
Funding 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
Slide 80: We have a proven approach to funding growth
Funding Growth Stable, low-risk cash flows from our diverse portfolio We have a Strong track record of per share growth proven approach Multiple sources of low-cost funding to funding growth Prudent capital allocation drives per share growth Ability to deliver targeted TSR of 12-14% 80
Slide 81: Why invest in Capital Power?
Reliable Affordable Clean Why invest in Capital Power? 81
Slide 82: Capital Power is best positioned to lead the North American energy expansion
Why CPX Reliable Affordable Clean Capital Power is best positioned to lead the North American energy expansion 82
Slide 83: Strong foundation
Why CPX Strong Market Market-ready foundation opportunity strategy We are market ready Demand for grid- Grow FlexGen and with a unique firming supply renewables competitive advantage Superior fleet Power demand FlexGen underpins will double by 2050 economic, population Access to capital and clean en
Slide 84: Our platform is proven. We are ready to win.
Why CPX Our platform is proven. We are ready to win. FlexGen Renewables Trading & Origination • Critical, dispatchable • Affordable and clean • Active trading platform (9 markets) supply • Carbon market • Environmental credit trading (North • Reliable and affordable opportunities America) • Value cr
Slide 85: Questions & Answers
Reliable Affordable Clean Questions & Answers 85
Slide 86: 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 87: Investor Relations
Reliable Affordable Clean Investor Relations Roy Arthur VP, Investor Relations capitalpower.com 1-403-736-3315 investor@capitalpower.com 87