Capital Power Corporation · TSX:CPX
Capital Power — Investor Presentation (January 2024)
51 slides from Capital Power's investor presentation, January 2024
Slide 1: Building the leading power producer in North America
Building the leading power producer in North America Investor Presentation January 2024 1
Slide 2: Table of Contents
Table of Contents • Strategic Focus • Alberta Market • Ontario Market • U.S. WECC Market • Growth Opportunities • Financial Strategy • CPX Investment Case • Appendix 2
Slide 3: Capital Power's strategic imperatives
Capital Power's strategic imperatives A balanced approach to energy transition DELIVER BUILD CREATE 1 2 3 Reliable & affordable Decarbonized power Real net-zero power power today systems for tomorrow solutions for our customers Optimize existing power Develop renewable and lower Invest in technologi
Slide 4: Building the leading power producer in North America
Building the leading power producer in North America 1 DELIVER Dispatchable gas 2 BUILD Renewables Generation 3 CREATE Net-Zero Power Solutions 7.8GW Gas Operating Capacity1,2 3.4 GW Renewables Pipeline 2.3 GWh Storage Pipeline Approximate annual 5 TH Largest Gas IPP1,2 1.5GW Renewables Operating Ca
Slide 5: North American footprint
North American footprint 30 Operating Facilities In Operation Wind 7 700 Solar Gas ~ Gas / Coal* , Waste Heat Landfill Gas Megawatts Battery Storage Development and Construction *Genesee 1, 2, 3 shown as one facility 5
Slide 6: Sources of adjusted EBITDA from growth since 2013
Sources of adjusted EBITDA(1) from growth since 2013 ($M) $900 $800 $700 $600 $500 $400 $300 $200 $100 $0 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023E Natural Gas Renewables 1) Adjusted EBITDA is averaged over the periods starting with the first full year of operations after commissioning
Slide 7: Alberta Market
Alberta Market 7
Slide 8: Strong positioning in the Alberta power market
Strong positioning in the Alberta power market • New supply (thermal and renewables) under construction adds ~6,300 MW over the next few years • New renewables and efficient gas supply will displace less efficient thermal units • Demand expected to increase modestly year-over- year • Capital Power w
Slide 9: Genesee 1&2 Repowering project
Genesee 1&2 Repowering project • Transition from dual-fuel to gas resulting in 58% increase in generating capacity to 1,332 MW • ~40% decrease in absolute annual emissions • ~60% decrease in GHG intensity • Attractive proforma economics • Following completion, Genesee 1&2 will be the most efficient
Slide 10: Genesee repower timelines/assumptions
Simple Cycle Completion Combined Cycle Completion Genesee repower Unit #1 Q2 2024 Unit #2 Q3 2024 Unit #1 Q4 2024 Unit #2 Q4 2024 timelines/assumptions Simple Cycle Completion – 411 MWs capacity • Unit 1 Q2 2024 • Unit 2 Q3 2024 • Output during commissioning will range between 0 MWs and 411 MWs • Ex
Slide 11: Repowering of Genesee 1&2 Preserves Competitive Market Position
Repowering of Genesee 1&2 Preserves Competitive Market Position Retired Asset Capacity (MW) Battle River 3 149 Keephills 1 395 Sundance 1 280 Sundance 2 280 Sundance 3 368 Sundance 4 406 Sundance 5* 406 Sundance 6** 401 Battle River 4** 155 Battle River 5** 385 Sheerness 1** 400 Sheerness 2** 400 Ke
Slide 12: Genesee Carbon Capture Project
Genesee Carbon Capture Project Positive technical assessment complete • Pre-final investment decision (FID) work finalized with positive results including FEED study Commercial and financing progress • Productive discussions with government entities ongoing • Strong support for project to advance Al
Slide 13: Ontario Market
Ontario Market 13
Slide 14: 5 successful Ontario projects adding ~350 MW
5 successful Ontario projects adding ~350 MW Contracts executed for all projects with Ontario IESO; COD targeted in 2025 Expedited Long-Term RFP ($655M cost) Project Contracted Capacity Term East Windsor Expansion (106 MW) 81 MW summer To 2040 (~15 years) 100 MW winter York Battery Energy Storage Sy
Slide 15: U.S. WECC Market
U.S. WECC Market 15
Slide 16: Favourable Market Dynamics in U.S. WECC
Favourable Market Dynamics in U.S. WECC1 • Strong Fundamentals • Market size (766 TWh in annual demand)2 • Favourable demand growth outlook of 7% from 2020 to 20293 • Annual electric consumption in California is expected to increase from ~280 TWh to ~550 TWh by 20454 • Phoenix is a rapidly growing d
Slide 17: Frederickson 1 acquisition
Frederickson 1 acquisition Strategic diversification in Pacific Northwest Frederickson 1 Generating Station • Fully contracted with credit-worthy counterparties to October 2030 • High-quality, reliable baseload generation asset in the Puget Sound Region diversifies our geographic footprint • Well-po
Slide 18: La Paloma and Harquahala acquisitions
La Paloma and Harquahala acquisitions Positioning Capital Power as a Leading Power Producer in North America • La Paloma and Harquahala are critical infrastructure assets in their respective markets Key Gas Assets in 1 • Amplifies the opportunity for further growth through a new "hub" in the WECC1 m
Slide 19: Attractive valuation and re-contracting opportunity
Attractive valuation and re-contracting opportunity Recent Capital Power Gas Acquisitions (EV / Adj. EBITDA1) AFFOPS1 6% 7% 6%2 6% 7%2 n/d3 8%2 Accretion 9.8x 9.1x 8.6x 7.9x 7.6x 6.7x 4.8x Decatur Energy East Windsor / York Arlington Valley Goreway Midland Frederickson Harq. & La Paloma Centre Energ
Slide 20: Market leading position in energy security
Market leading position in energy security Energy Security Champion Top 10 North American Non-Reg. Gas Operators1 (Net GW, Gas-Fired Capacity Only) • Acquisitions will create 5th largest reliable and flexible gas power generation fleet in Vistra 24.2 North America1,2 Calpine 21.1 Geographic Diversif
Slide 21: Capital Power Emerges as One of the Largest and Most Diversified Power Generators in North America
Capital Power Emerges as One of the Largest and Most Diversified Power Generators in North America Capital Power's North American Strategic "Hubs" A Diversified North American Company Net Operating Capacity by Region U.S. WECC1 Current2 Pro Forma3 Alberta Acquisition of a Other Other 50.15% interest
Slide 22: Growth Opportunities
Growth Opportunities 22
Slide 23: Robust growth opportunities
Robust growth opportunities • Growth strategy aligns with our sustainability goals • Decarbonization is an immense opportunity for gas and renewable technologies • Strong renewables growth pipeline in Western Canada and the United States 23
Slide 24: Key trends and market drivers
Key trends and market drivers Key criteria we look for in energy markets that we invest in includes: Strong Fundamentals • Positive economic outlook with growing population and energy demand resulting in opportunities for development, contracting and re-contracting assets Transparent and Stable Mark
Slide 25: Our growth pipeline: 4,700 MW and growing
Our growth pipeline: 4,700 MW and growing Significant near-term growth opportunities in Western Canada, Ontario, North Carolina and MISO market 924 MW wind 2,486MW 295 MW solar 700 MW gas Wind 583 MW / Solar Gas 2,300 MWh Battery Storage Solar + Battery Storage battery storage 25
Slide 26: Our midlife natural gas strategy in action
Our midlife natural gas strategy in action Acquire Enhance Re-contracting Leverage brownfield midlife gas value advantages • Accretive & contracted • CT upgrades • Island Generation Ontario facilities: • Advantaged location • Carbon mitigation extended through 2026 • Efficiency upgrades: • Competiti
Slide 27: Natural gas strategy: a blueprint for success
Natural gas strategy: a blueprint for success Capital Power's Capacity Over Time (Net MW, All Fuel Types) 16% CAGR +795 MW (Decatur) +1,062 MW (La Paloma) +580 MW +875 MW +817 MW +546 MW (Harquahala) Acquisitions +200 MW (York) (Arlington) (Goreway) (Midland) +84 MW (East Windsor) +133 MW (Frederick
Slide 28: U.S. solar growth
U.S. solar growth North Carolina • Maple Leaf Solar – executed 25-year, fixed price renewable PPA with Duke Energy Progress for 100% of output • 73 MWac (92 MWdc) capacity with a cost of $219M and expected COD in Q4/26 • 2 well-positioned solar projects bid into Duke’s Sep/23 Solar North Carolina Si
Slide 29: Financial Strategy
Financial Strategy 29
Slide 30: Executing on our financial strategy
Executing on our financial strategy • Strong and resilient cash flow funds growth capex and maintains investment grade credit rating • Strong track record of annual dividend increases with dividend growth guidance of 6% per year to 2025 • 5-year TSR of 123%(1) (trailing 5-year period ending Jun/23)
Slide 31: Stable financial strategy
Stable financial strategy Maintain financial Funding growth Maintain Deliver annual stability towards a net investment grade dividend growth zero future credit rating • Strong liquidity • Internally generated • Credit metrics meet or • 6% annual dividend available on $1B of cash flow funds exceed ra
Slide 32: Alberta commercial portfolio
Alberta commercial portfolio Reducing volatility and risk through hedging GWh Power Hedged Volume 10,000 2024 2025 2026 9,000 Power 8,000 Hedged volume (GWh) (3) 9,500 8,500 7,500 7,000 6,000 Weighted average hedged prices(1) ($/MWh) (3) Mid-$70s Mid-$70s Mid-$70s 5,000 4,000 Forward Alberta power p
Slide 33: Delivering a decade of dividend growth
Delivering a decade of dividend growth Annual dividend guidance of 6% per year to 2025 6% per year ~7% CAGR $2.46 $1.26 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024E 2025E 1) Subject to market conditions, economic outlook, cash flow forecast, and Board approval at the time. 2) 2013 to
Slide 34: 2024 Operational and Financial Targets
2024 Operational and Financial Targets Facility availability Sustaining capex ($M) Adjusted EBITDA ($M) AFFO ($M) $1,450 to $1,405 to $800 to $770 to 94% 93% $180 to $200 $810 $870 $1,460 $1,505 $135 to $145 2023T 2024T 2023T 2024T 2023T 2024T 2023T 2024T • Facility availability reflects Genesee rep
Slide 35: 2024 Adjusted EBITDA Compared to 2023 Guidance
2024 Adjusted EBITDA Compared to 2023 Guidance Increase of over 9% in year-over-year adjusted EBITDA on normalized basis ($M) AB Commercial Other Coal Acquisitions Compensation 2023T(1) Normalized 2024T 2023T 1) 2023T expected to be low end of the guidance range of $1,455M - $1,515M 35
Slide 36: 2024 Guidance Summary
2024 Guidance Strong Financial Performance Summary • Over 9% increase over 2023 in normalized Adjusted EBITDA Genesee Repower project complete • Most efficient combined cycle unit in Canada • Reduces approximately $200M in carbon tax Acquisitions diversify portfolio and cashflow resiliency • Canada/
Slide 37: Delivering reliable, affordable and decarbonized electricity solutions
Delivering reliable, affordable and decarbonized electricity solutions Reliable Operational Net Zero Power Excellence by 2045 Stable and growing Well maintained ESG leader cash flows from a and efficiently committed to highly contracted operated plants decarbonization generation portfolio Balance Sh
Slide 38: Appendix
Appendix • • Alberta power market – supply Alberta power market – fuel source breakdown • Credit rating metrics • Debt maturity profile • Political and environmental regulations • Corporate profile 38
Slide 39: Alberta power market
Alberta power market A market in transition Unit Additions and Retirements (MW) 4000 3000 2000 Storage Coal 1000 Dual Fuel Coal / CTG Cogen 0 Gas Other -1000 Solar Wind -2000 -3000 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 Source: AESO actuals; Capital
Slide 40: Alberta power market
Alberta power market Gas provides the majority of electricity output 2023 Generation 2025 Generation 2030 Generation Hydro 2% Other 3% Hydro 2% Other 3% Other 3% Hydro 2% Solar 3% Solar 7% Solar 7% Dual Fuel / Converted Gas Converted 25% Gas 2% Converted Gas 1% Wind 27% Wind 21% Gas 56% Gas 65% Gas
Slide 41: Financial stability and strength
Financial stability and strength Strong balance sheet and continued commitment to investment grade credit ratings BBB- / Stable BBB(low) / Stable • Target FFO to Debt ≥ 20%(1) • Target cashflow to debt ≥ 20% • Target Debt to EBITDA ≤ 4x • Target EBITDA / Interest ≥ 4.5x 2024 credit metrics forecast
Slide 42: Cash Flow and Financing Outlook
Cash Flow and Financing Outlook Balanced finance plan to fund 2024 growth Expected Sources Expected Uses $75M Cash/Credit $90M(1) Facilities $110M Common dividends $320M Debt Debt repayments $1.7B $1.7B (1) Capital AFFO and other Market $820M (1) $590M (3) Transaction $650M (2) $85M Committed DRIP g
Slide 43: Debt maturity profile
Debt maturity profile(1) Well spread-out debt maturities supported by long asset lives • Strong liquidity with $1B in sustainability linked credit facilities maturing in 2028 • Underlying on refinancings in 2024 – 2026 hedged well below current rates ($M) $600 $500 USD 65 $50 $400 $160 $300 USD Priv
Slide 44: Political and environmental regulations
Political and environmental regulations Government of Canada • Confirmed Alberta, Ontario and B.C. will continue to implement their own carbon pricing systems for industrial emitters through 2030 (Nov 2022) • Budget 2023 significant funding and programs to support investment across zero/low-emitting
Slide 45: Political and environmental regulations
Political and environmental regulations Alberta • “Alberta’s Emissions Reduction and Energy Development Plan” established 2050 carbon neutrality objective. Significant role for CCUS and other technologies in achieving emissions reductions while maintaining affordability and reliability (Apr 2023) •
Slide 46: Political and environmental regulations
Political and environmental regulations Ontario / British Columbia • “Powering Ontario’s Growth” report sets out Ontario Government’s policy initiatives for long-term energy planning. Support for large- scale nuclear and SMRs, competitive procurement for renewables and storage, and recognition that
Slide 47: Political and environmental regulations
Political and environmental regulations United States • Treasury/IRS continues to release guidance on IRA tax credit implementation. US Department of the Treasury /IRS issued a Proposed Rule on Clean Hydrogen Tax Credits (Dec 2023); and a Proposed Rule on US Production of Renewable Energy Components
Slide 48: Corporate Profile
Powering a sustainable future for people and planet Corporate Profile(1) | Toronto Stock Exchange (TSX: CPX) • Trailing 12-month avg daily trading volume: 363K shares ~118M ~ $4.5B • 52-week low/high share price: ($35.11 / $46.90) • Investment grade credit rating: BBB-/stable Shares Market (S&P) / B
Slide 49: Legal Notices
Legal Notices Non-GAAP Financial Measures and Ratios A reconciliation of Adjusted EBITDA to net income resulting from the Acquisitions is as follows: This presentation contains references to certain financial measures that do not have a standardized meaning prescribed by GAAP (unaudited, $ millions)
Slide 50: Forward-looking information
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 plans and • performance; opera
Slide 51: Investor Relations
Investor Relations Kat Perron Media & Investor Relations capitalpower.com 1-780-392-5335 investor@capitalpower.com 51