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Annual General Meeting May 23, 2018 NPI.TO
Annual General MeetingMay 23, 2018
NPI.TO
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James C. TemertyChairman
The Right HonourableJohn N. Turner, Q.C.
Linda L. Bertoldi
Marie Bountrogianni Barry Gilmour Russell Goodman
Board Members
Recent Additions
John Brace
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Executive Team – Current
Morten MelinExecutive Vice President, Construction
Over 15 years in the Power and Energy Industry; Formerly VP Construction for Orsted (Formerly DONG
Energy Wind Power)
Troy PattonChief Operations Officer
Over 20 years in the Power and Energy Industry; Formerly held positions at Northern Power Systems,
Vestas and General Electric
Mike Crawley Executive Vice President
Development
Industry Experience: 15 yearsNorthland Experience: 3 years
Paul Bradley Chief Financial Officer
Industry Experience: 26 yearsNorthland Experience: 7 years
John BraceChief Executive Officer
Industry Experience: 31 yearsNorthland Experience: 29 years
Michael ShadboltVice President and
General Counsel
Industry Experience: 26 yearsNorthland Experience: 7 years
Recent Additions
John Hannah Global Head of Human Resources
Over 25 years in the Human Resources;Formerly held positions at Purolator and Brinks
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Agenda
1. Formal Meeting
2. Management Presentation
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▪ Call to Order
▪ Notice of Meeting
▪ Quorum and Voting Procedure
▪ Presentation of Financial Statements and Auditor’s Report
▪ Nomination / Election of Directors
▪ Termination of Formal Meeting
Formal Meeting
Offshore Wind
Thermal
Solar
Onshore Wind
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Executive Team – Effective August 4, 2018
Morten MelinExecutive Vice President, Construction
Industry Experience: 15 yearsNorthland Experience: <1 year
Troy PattonChief Operations Officer
Industry Experience: 20 yearsNorthland Experience: <1 year
Mike Crawley Chief Executive Officer
Industry Experience: 15 yearsNorthland Experience: 3 years
Paul Bradley Chief Financial Officer
Industry Experience: 26 yearsNorthland Experience: 7 years
Michael ShadboltVice President and General Counsel
Industry Experience: 26 yearsNorthland Experience: 7 years
John Hannah Global Head of Human Resources
Industry Experience: <1 yearNorthland Experience: <1 year
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Agenda
1. Formal Meeting
2. Management Presentation
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Forward-Looking Statements Disclaimer
This written and accompanying oral presentation contains certain forward-looking statements which areprovided for the purpose of presenting information about management’s current expectations and plans.Readers are cautioned that such statements may not be appropriate for other purposes. Forward-lookingstatements include statements that are predictive in nature, depend upon or refer to future events orconditions, or include words such as “expects”, “anticipates”, “plans”, “believes”, “estimates”, “intends”,“targets”, “projects”, “forecasts” or negative versions thereof and other similar expressions, or future orconditional verbs such as “may”, “will”, “should”, “would” and “could”. These statements may include,without limitation, statements regarding future adjusted EBITDA or adjusted EBITDA, cash flows anddividend payments, the construction, completion, attainment of commercial operations, cost and output ofdevelopment projects, plans for raising capital, and the future operations, business, financial condition,financial results, priorities, ongoing objectives, strategies and outlook of Northland and its subsidiaries. Thisinformation is based upon certain material factors or assumptions that were applied in developing theforward-looking statements, including the design specifications of development projects, the provisions ofcontracts to which Northland or a subsidiary is a party, management’s current plans, its perception ofhistorical trends, current conditions and expected future developments, as well as other factors that arebelieved to be appropriate in the circumstances.
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▪ Over 30 years of successfully developing, constructing and operating independent power projects
▪ Well-diversified, 2,458 MW (gross) modern fleet of high-quality assets
▪ 550+ MW in development (252 MW Deutsche Bucht in-construction; 300 MW of grid allocation secured in Taiwan)
▪ Enterprise value of approximately $12 billion
▪ Significant development opportunities across multiple markets and technologies
▪ Management alignment through a 34% ownership interest
Northland Overview
1987-Present
Over 30 Years of Excellence
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Track Record of Innovation and Early Market Penetration
One of the First IPPs to Enter Saskatchewan, Canada, with Gas
Generation
One of the 1st Wind Farms Developed in Quebec, Canada (Mont Miller)2
One of the First Power Income Trusts
1st to Use LifeCo Financing for a Power Project in Canada
Cochrane Was 1st IPP in Canada to Attract Institutional Financing
1st Utility-Scale Biomass to Electricity Facility in Ontario
Cochrane Power
1st Long-Term Service Agreement With General Electric
1st to Successfully Match Western Canadian Natural Gas Supply With Ontario Electricity
Market,Cochrane Power (Gas Component)
Pioneer in Structuring Equity Partnerships With First Nations in Power Generation
ProjectsMcLean’s Mountain/Grand Bend/
Cochrane Solar
1. At Financial Close 2. Assets were subsequently sold after five years of operations
Largest Project Financing for Renewables Project1
1st Offshore Wind Project Financing With Only Commercial Financing
1st Canadian IPP to Enter European Offshore Wind
Northland Firsts
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Total Shareholder Returns
6%
21%
11%14%
-20%
-10%
0%
10%
20%
30%
40%
YTD 3-year 5-year 10-year
Peer Group*
S&P/TSX Capped Utilities Index
Northland Power
3-Year 5-Year 10-YearYTD
Total Shareholder Returns
Northland has consistently delivered superior returns to shareholders over the years
* Includes Algonquin Power, Boralex, Brookfield Renewable, Capital Power, Innergex, TransAltaNote: Total return includes dividend plus appreciation over the specified period.Source: Bloomberg, May 11, 2018
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Note: The above chart is illustrative of Management’s objectives. They are based upon Northland’s operating facilities continuing to perform in a manner consistent with operations in 2017, with additions to Adjusted EBITDA and Free Cash Flow from projects under construction and other adjustments resulting from power contract renewals primarily in Ontario as described in our MD&A and 2017 AIF. The illustrations do not constitute a financial forecast, projection or guidance and are based upon assumptions that are subject to change.
Continued Growth in Financial Results
Significant and visible growth in the future from projects in operationsand in construction
▪ The following chart illustrates Northland’s growing Adjusted EBITDA and Free Cash Flow Per Share profile
Adjusted EBITDA Growth Free Cash Flow Per Share Growth
2012A 2014A 2016A 2018F 2020F 2012A 2014A 2016A 2018F 2020F
Growth ~200% Growth ~80%
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Invested Capital
Capital:
$1.7 Billion
Projects:
$8.0 Billion
Deployment of Project Equity Capital Since 2014
Since 2014, Northland has deployed over $1.7 Billion of capital, translating into $8.0 Billion of successful projects
Includes Operating and In-Construction Projects
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Northland’s Successes in the Past Year
▪ FY 2017: Adj. EBITDA of $765 million, a 22% increase over 2016; and Free Cash Flow per share of $1.46, a 4% increase over 2016
▪ FY 2017: Operating income of $632 million, a 24% increase over 2016
▪ Q1 2018: Adj. EBITDA of $290M (47% ) and Free Cash Flow per share of $0.84 (250% )
▪ Increased common share dividend by 11% to $1.20 per share as of December 2017
▪ Operating generating capacity increased to 2,029 MW (net), a 46% increase or 2,458 MW (gross), a 61% increase over 2016
▪ Maintained operational excellence across 27 facilities
▪ Continued health and safety track record of no lost time incidents
▪ Northland Europe internalized management for strategic and financial reasons
▪ European offshore wind projects totaling €4B achieved project completion:
o 600 MW (net 360 MW) Gemini reached commercial operations on Apr. 2017
o 332 MW (net 282 MW) Nordsee One reached commercial operations on Dec. 2017
▪ Deutsche Bucht (DeBu) project achieved Financial Close and construction is underway
▪ Secured 300 MW (net 180 MW) of grid allocation under FIT for Taiwan project (Hai Long 2)
▪ Advanced and positioned other projects in the development pipeline
▪ Established strong international presence with our head office in Toronto plus five international locations
$ Results
Development
Construction
Operations
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▪ Addition of Gemini and Nordsee One to operating portfolio
▪ Operational assets with gross generating capacity of 2,458 MW (net 2,029 MW) exceeded Management’s expectations
▪ Overall availability of 95% across 27 operating facilities
▪ Zero lost time incidents
Operations Highlights
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World Class Offshore Wind Projects
1. Excludes the 17MW opportunity for two additional demonstration turbines utilizing suction bucket foundations. Final Investment Decision is subject to achieving certain development milestones.
With the successful completion of Gemini and Nordsee One projects, Management is focused on construction of the Deutsche Bucht project
600 MW 60% Interest
COD Apr 2017
252 MW1
100% Interest COD Late 2019
Gemini Nordsee One
60 km
DeBu
77 km apart
Project Capital Costs of Over €5B
332 MW 85% InterestCOD Dec 2017
Gemini Nordsee One
DeBu
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Location North Sea, Germany
Capacity 252 MW1
Capital Cost €1.3 billion1
Northland Interest 100% (252 MW)
Power Contract 13y FIT subsidy under German REA
Ops & Maintenance MHI Vestas (~13y) – guarantees high op. availability
Commercial Ops Date End of 2019
Deutsche Bucht (DeBu) – Construction Update
DeBu Construction Timeline
DeBu Offshore Wind Project
Aug 17 Jan 18 Jan 19 Dec 19
20192018
TodayFin Close
Manufacturing
Foundations Installation
Cable Installation
Turbine Installation
Commercial Ops Date
• Monopile = 25%
• T. Pieces = 25%
• Cable = 5%
• Structural Design= 100%
• Electrical Design = 100%
• Offshore Substation = 33%
% Completion2
On-Time, On-Budget
Finish
1. Excludes the 17MW opportunity for two additional demonstration turbines utilizing suction bucket foundations. Final Investment Decision is subject to achieving certain development milestones 2. % completion with respect to manufacturing, transport and installation
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Taiwan Overview
FIT Program currently in place to support renewable policy targets
▪ FIT program designed to kick-start offshore wind sector with 20 year FIT contracts
▪ Current Taiwan Procurement Allocationso 2020 – 0.7GW (FIT no local content)o 2021-2025 – 3.1GW (FIT with local content)o Beyond – 1.7GW (price competitive auction)
▪ Current Last estimate of upcoming major milestones
o Mid 2018 – FIT allocationo Q3 2018 – Price competitive auction
Water Depth: 0–20 m
Water Depth: 20–50 m
Pacific Ocean
Taiwan Strait
TaipeiCity
▪ Established a meaningful presence in Taiwan
▪ Northland and its partners are currently in advanced site development
▪ Continue all required regulatory/permit work in order to secure approvals / secure FIT PPA
▪ Seek opportunities for further projects
Current Market Themes Site Location
Hai Long 2 was allocated 300 MW grid allocation under FIT
Development Strategy Hai Long 2 Project Snapshot
Status:• Awarded 300MW of grid allocation for
2024 COD
Capacity: • 300 MW (gross)
Contract: • 20-year PPA under FIT with TaiPower
Type: • Offshore wind
Ownership:• Northland 60%• Yushan 40%
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Multiple Development Markets & Technologies
Conducive to Project Finance
Execution
Credit Worthy Off-Takers
Stable Economic and Political Jurisdictions
Long Term Revenue Stability
Attractive Project Returns
Market and Technology Assessment Criteria
Northland Office (Toronto, Mexico City, London, Amsterdam, Hamburg, Taipei)
Actionable Opportunities Potential Markets
Japan
South Korea
Taiwan
Canada & United States
Mexico & Latin America Asia
Europe
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>150 GW
Total Opportunity in Target Markets
Development Pipeline
Construction & Advanced Development
Identify and qualify potential markets with attractive fundamentals
Source and evaluate opportunities that meet our investment criteria
Includes achievement of major milestones / power contracts, supply agreements
finalized and/or project financing secured
>DeBu – 269 MW >Taiwan – 300 MW
Significant Development Opportunities
~6,000 MW
1. Includes the 17MW opportunity for two additional demonstration turbines utilizing suction bucket foundations. Final Investment Decision is subject to achieving certain development milestones
300 MW
269 MW1
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Development Approach
▪ Northland captures development profits and provides stable cash flows over the project life
▪ Investment methodology nimble to pivot through different development stages based on market dynamics
Development focus drives long-term value
Late Stage Acquisitions
▪ Purchase late stage projects with power contracts in hand prior to financial close and construction
Greenfield Development
▪ In markets with long-term growth prospects, develop new competitive projects from inception
Partner / Greenfield
▪ Joining forces with local development partner can help position us for opportunities
Development Approach
1 2 3
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Power Markets are Changing
Our industry has changed immensely over the past 10 years
▪ Supportive Government Policies – Governments have taken real action to reduce carbon
▪ Industry Evolution & Technological Advancement – Renewables are now a cost-effective and feasible alternative to add new power
▪ Market Liberalization and Competition – New Increased demand has attracted new players ready to deploy capital in competition with traditional IPPs
The global investment opportunity set for Northland, driven by economic growth and decarbonization, has never been greater
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Global Movement Towards Sustainability
Source: United Nations Department of Economic and Social Affairs
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Sustainability Reporting Frameworks
▪ The sustainability reporting landscape is continuously evolving. Currently, the focus is on updating guidance and frameworks to emphasize the information needed by investors to support their decision-making
▪ We have considered all of these frameworks in developing our report
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▪ Focusing on clean and green technologies
▪ Delivering strong and sustainable financial results
▪ Generating and distributing economic value
▪ Capitalizing on revenue generating opportunities through the transition to a low-carbon future
▪ Supporting sustainable economies through clean energy and responsible business practices
▪ Investing in our communities
▪ Partnering with First Nations
▪ Preserving the natural environment
Our Sustainability Pillars
▪ Northland’s vision is to be a top clean and green power producer, inspiring our people to achieve a sustainable and prosperous future for all stakeholders
▪ We will achieve this through our three strategic pillars:
Inspired Workforce
Top Clean & Green Power Producer
Prosperity for Stakeholders
▪ Prioritizing health and safety
▪ Fostering our values and culture
▪ Providing meaningful career development opportunities
▪ Hiring locally and providing international opportunities
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Looking Ahead in 2018
Objectives:
We will build on the success of our first 30 years and continue to deliver on our promises and create long-term value for our shareholders
▪ Continue to advance and secure high quality projects
▪ Diversify across locations and technologies
▪ Be a leading player in the global transition towards decarbonization
▪ Continue track record: on-time, on-budget
▪ Continue to execute on DeBu project construction
ConstructionExecution
▪ Maintain excellent operating track record
▪ Excellent health and safety and environmental record
▪ Continue to improve operating portfolio
Operational Excellence
Development Focus
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Investor Relations Contacts
Barb BoklaManager, Investor Relations 647.288.1438
Sarah Charuk Director of Communications647.288.1105
