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INTELLIGENT ENERGY for a GREENER PLANET

Perspectives 2011

Cranes are used to assemble a turbine at Northland’s Mont Louis wind farm,

• ne of three major new facilities under

construction at the close of 2010.

This report highlights Northland Power Income Fund’s significant events in 2009 and 2010 and management’s plans for the future. Northland’s annual report, including consolidated financial statements and management’s discussion and analysis, is available on the company’s site, www.northlandpower.ca. Forward-Looking Statements The contents of this document contain forward-looking statements based on assumptions management considered reasonable when it was prepared

• n March 16, 2011. These statements, by their nature, are subject to risks and uncertainties beyond management’s control. Northland’s actual results could differ materially from these

forward-looking statements for reasons including, but not limited to, those described in the “Risks and Uncertainties” section of the company’s 2010 annual report. For these reasons, readers are cautioned against relying on forward-looking statements in making investment decisions.

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Leadership ~ Seizing new opportunities, doing the right thing Stability ~ Managing for a sustainable future Expertise ~ Leveraging clean and green technologies Performance ~ Delivering on our commitment to investors

Northland Power develops, owns, and operates facilities that produce and sell clean and green power.

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Northland Power’s intelligent energy leverages our experience and expertise to create sustainable value for customers, shareholders, communities and employees – and a greener future for our planet.

What does that mean? For us, it’s several things:

• Working ahead of the curve to identify energy

needs, policies and opportunities

• Constantly exploring, testing and applying a range
• f new technologies that promise cost-efgective

energy with the lowest possible impact and carbon footprint

• Harnessing our technical expertise and creativity

to develop more effjcient solutions – such as the demand-responsive combined heat and power plant we opened last year in Thorold

• Seeing an abandoned mine like the one at

Marmora as an opportunity to develop pumped storage that will shift energy production from

• fg-peak to on-peak periods
• Avoiding ineffjcient, high-impact and dirty energy

technologies to focus on promising new areas, such as TREK low-impact hydro technology

• Running our business with an eye to the future –

managing risk, amortizing assets, upgrading our equipment, improving our processes and evaluating

• pportunities to ensure Northland will remain stable

and profjtable for years to come

INTELLIGENT ENERGY for a GREENER PLANET

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Perspectives 2011 › JAMES C. TEMERTY

Northland breaks new ground – again

In many ways, 2010 continued a remarkable run for Northland

• Power. In April 2009, when we announced plans to merge the income

fund with its external management company, the fund had 742 MW in operation or construction and a unit price of about $10. At the end of 2010, as we converted to a fully inte- grated power corporation, we had $1 billion in projects under construction and another $1 billion under contract, and our unit price was close to $16. Our price in part reflects growth that will double

• ur pre-merger capacity by 2014.

The merger was a significant milestone for Northland. It created a business with both the operating discipline needed to deliver consistent performance and reliable shareholder returns and the strategic perspective and development expertise needed to sustain growth. Northland Power has led the way. In merging the management company and income fund, we showed the way for other power trusts that benefited from Northland’s heavy lifting in modelling their own transitions. This is a familiar role for us. We were one of Canada’s first independent power producers (IPPs) and the first to obtain public finan cing for a Canadian power project. More recently, Northland has been at the forefront of IPP wind and solar development, and

• ur teams have forged important agreements with First Nations
• n wind and hydro.

We keep finding new and creative energy solutions, even in thermal technology, where we began. Our Thorold cogeneration facility combines high energy efficiency with rapid response

• capability. Looking forward, we have strong contenders to respond

to the need for new power facilities in a number of jurisdictions. For all we’ve accomplished, credit goes to the men and women

• f Northland Power. They have shown imagination, intelligence and

persistence in merging our two entities, finding and developing new opportunities, winning power purchase agreements (PPAs), bringing new facilities on stream and raising more than $1 billion in tough financial markets. Governance is keeping pace. Our Board has also evolved with Northland’s needs. Linda Bertoldi, Dr. Marie Bountrogianni and Peter Harder joined the Board in 2010, replacing retiring members Warren Moysey and David Rounthwaite. As part of their responsibilities, all Board members participate in regular information sessions about Northland and its business. To provide succession potential, former WestJet CEO Sean Durfy is attending Board meetings and information sessions as an observer. Northland’s horizon holds more growth. With the completion of

• ur projects currently under construction, we will have 1,264 MW of
• perating assets. Our new Thorold facility, Saskatchewan projects

Leadership

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under construction and proposed Ontario facilities showcase Northland’s expertise in the full range of thermal technologies. These, plus new solar and wind capacity both under and ready for construction and exciting opportunities in pumped storage, hydro kinetics and run-of-river hydro, will provide years of profitable growth. Steady returns plus wider investor appeal. Northland has delivered average annual investor returns of 12.5% since inception – a 13-year record few can match. Going forward as a dividend- paying corporation, our combination of reliable returns and bright prospects will attract new investors in Canada and abroad. We look forward to a bright future together as Northland fulfills its promise of intelligent energy for a greener planet. James C. Temerty Chairman

Growing capacity and value 742 MW 1,264 MW April 2009 December 2010 Generating capacity Unit price $10 $16

Recent growth: Since Northland’s merger announcement in April 2009, generating capacity has grown nearly 70% and unit price by 60% to the end of 2010.

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Perspectives 2011 ›

• Merger makes Northland a fully integrated independent power producer
• Thorold and Jardin d’Éole open, adding 365 MW in generating capacity
• Projects under construction total $1 billion at 2010 year-end
• New power purchase agreements total 586 MW
• Northland raises over $1 billion since merger in July 2009
• Northland units return 68% since merger announcement
• Development pipeline swells to 2,500 MW, with 708 MW under contract
• Fund becomes Northland Power Inc. at midnight December 31, 2010

Strong returns: At 424%, Northland’s total return since inception doubled that of the TSX. The compounded annual return was 12.5%.

Highlights

2009–10

97 00 98 99 01 02 04 03 06 05 07 09 08 10 TSX Total Return Index Northland Power Return on NPI vs. TSX Total Return Index Per cent 500% 400% 300% 200% 100% 0%

Northland Power is run by three leaders who have worked closely together for more than a decade. Each has a significant equity stake in the company, ensuring that their interests are aligned with Northland investors’ interests.

John W. Brace Salvatore Mantenuto Anthony F. Anderson

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Perspectives 2011 ›

• V. Peter Harder

Director since 2010, Compensation Committee Chair, member of Audit Committee Linda L. Bertoldi Director since 2010, member of Governance Committee The Right Honourable John N. Turner, Q.C. Director since 1997, Governance Committee Chair, member of Audit Committee James C. Temerty, C.M. Chairman and Director since 1997, member of Compensation Committee Pierre Gloutney Director since 1997, Audit Committee Chair, member of Governance Committee

• Dr. Marie Bountrogianni

Director since 2010, member of Compensation Committee Sean Durfy Board observer since 2010 James C. Temerty, John N. Turner, Q.C. James C. Temerty, James C. Temerty,

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Our Board of Directors

James C. Temerty, C.M.

Founder, Northland Power; honoured as Ernst & Young’s Canadian Entrepreneur of the Year in 2010 “Since our IPO in 1997, Northland Power has delivered average annual investor returns of 12.5%. Tiat’s a 13-year record few can match.”

Linda L. Bertoldi

Chair of the National Electricity Group at Borden Ladner Gervais; director of the Association of Power Producers of Ontario “I’ve been involved with Northland in its various forms since

• 1987. It’s always been a recognized industry leader for its

innovation, integrity and management quality. Northland's also been a solid investment since the beginning.”

• Dr. Marie Bountrogianni

Former president and executive director of the Royal Ontario Museum governors; Ontario Member of Provincial Parliament 1999 through 2007 “I’ve been very impressed with the people I’ve met at

• Northland. Starting from the top, I’ve found everyone

to be intelligent, ethical and committed to achieving the highest performance standards.” Sean Durfy Former president and CEO of WestJet; previously president of ENMAX Energy Corporation “Despite having an energy background, I didn’t know Northland until Jim approached me. So I did some research within my investment community network. I heard only good things – later confjrmed by my experience.” Pierre R. Gloutney Former chair of the Derivatives Committee of the Investment Dealers Association; former governor of the Canadian Derivatives Clearing Corporation “Northland has always been a fjnancially prudent company. It does a remarkably good job of mitigating risks in both project fjnancing and operations to ensure it continues to deliver reliable dividends.”

• V. Peter Harder

Former federal deputy minister at Industry Canada and at Foreign Affairs and International Trade; president of the Canada China Business Council “What attracts me to Northland is its commitment to the clean and green technologies we need to reduce our car- bon footprint. In that sense, Northland’s business model is highly innovative.” Tie Right Honourable John N. Turner, Q.C. Former minister of finance and prime minister of Canada; member of the House of Commons for almost 25 years “I’ve been most impressed by Northland’s leadership in my 15 years as trustee and director. Jim Temerty is a committed Canadian, and he’s recruited a strong board and management.”

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Perspectives 2011 › JOHN W. BRACE

Strong growth plus continued stability

Over the past couple of years, as companies across the globe struggled through an economic downturn, we continued to add to our generating capacity, win new power purchase agreements and grow shareholder value. Our new Jardin d’Éole and Thorold facilities boosted Northland’s 2010 net year- end generating capacity to 819 MW. At $87 million, net income was up 35% over

• 2009. And since the merger

in 2009 we have announced 586 MW in new power contracts in Ontario, Saskatchewan and Quebec. In themselves, these results are impressive. But our share- holders can also be confi dent that our growth is not sacrifi cing Northland’s stability. From the very beginning, we decided to build a business that would be good for our investors, customers, communities, partners and employees – not just in the short term, but for decades to

• come. Balancing our twin commitments to consistent cash fl
• w

and a sustainable future is our most important responsibility. It guides decisions and actions throughout our business. Northland’s unbroken record of unitholder distributions since 1997 demonstrates the success of this formula. Going forward as Northland Power Inc., we remain committed to the current level

• f dividends – and to the policies and actions that support them.

Long-term sales agreements with investment-grade customers have been central to our strategy of assuring dependable revenues. When signed, contracts for our operating facilities had terms

• f 20 years or more; their current average term is 14 years. Our

projects under construction and in advanced development have

PPAs ranging from 20 to 40 years. So, as our generating capacity

doubles in the coming years, the average PPA term will continue to be 14 years or greater. These long-term PPAs make Northland’s revenue stream highly stable and predictable.

Stability

Near-term profi ts: Projects under construction will double EBITDA by 2014.

EBITDA growth In millions

2014 2010 2009 2008 2007 2006 Estimated $0 $50 $100 $150 $200 $250 $300

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Operating reliability and effi ciency enable us to generate equally stable and predictable cash fl

• ws as we fulfi

ll our sales contracts. In 2010 our thermal facilities were available 97% of the time; our wind farms’ combined availability was 98%. We achieve consistency in part through a combination of contracts and actions that stabilize and reduce major costs. Equally important are the efforts of our facilities’ operating personnel and the head offi ce staff who support them. Northland’s largest single expense is natural gas for its ther- mal facilities. All of our PPAs ensure that the cost of natural gas is fully covered by our electricity sales, locking in operating margins. Major operating equipment risks are managed under compre- hensive OEM maintenance agreements that guarantee high levels

• f availability and extend economic life. The agreements them-

selves stabilize cash fl

• w by substituting fi

xed monthly expenses for uncertain capital expenditures. New construction stays on schedule and on budget. Successful facilities begin with meeting construction budgets and completion

• dates. Northland has an enviable record of on-time, on-budget proj-

ects and incident-free start-ups. In 2010, we broke ground on three major new facilities with combined capital costs of more than $1 billion. Two are in Saskatche wan, new operating territory for Northland. Spy Hill is an 86 MW natural-gas-fi red peaking project about 225 kilometres east of Regina. The North Battleford Energy Centre is a 260 MW natural-gas-fi red baseload plant about 140 kilometres northwest

• f Saskatoon. Our 100 MW Mont Louis wind farm project is in

the Gaspésie region of Quebec. All three of these projects are on budget and well within

• schedule. Spy Hill and Mont Louis will become operational in late

2011, North Battleford in mid-2013. All three will sell energy under long-term PPAs. In addition, we have another $1 billion in projects under contract that we expect to complete over the next fi ve years.

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Motivated, capable Northlanders are the key to making our stra tegies and plans unfold. Our leadership team has been together almost since the company began, as have many senior executives, managers and staff. Together they have the experience, judgment, leadership and operating skills to deliver results. On the front lines, our facilities teams show remarkable dedi- cation to continuous improvement while working safely and main- taining Northland’s excellent environmental record. Supporting the facilities are teams of analysts and accountants who analyze monthly operating data and work with plant personnel to identify and implement performance improvement opportunities. Our recent and projected growth is creating new career

• pportunities. In the past year, we’ve added Northlanders at every

level and made internal moves to recognize performance and position us for the future. We have also evolved a new structure to optimize management of concurrent construction projects.

David Dougall Steve Collings Jim Mulvale Bill Bilsborough

Operations vice president and 20-year Northlander David Dougall is responsible for the operational and financial performance of all generating facilities. Also pictured: Jim Mulvale, manager of environmental health and safety; Steve Collings, Kingston plant manager; and Bill Bilsborough, Thorold plant manager. Plant operating performance benefits greatly from the work

• f Northland analysts, who monitor performance and identify

improvement opportunities.

2013 14 years 2010 14 years Secure revenue stream 1,600 MW 1,200 MW 800 MW 400 MW 0 MW

Revenue security: As Northland’s capacity grows to 1,450 MW in 2013, its average PPA term to maturity will remain constant at 14 years even if no new power agreements are signed.

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To build leadership depth, Michael Shadbolt has come on board as general counsel, and Paul Bradley joined Northland April 1 as our new CFO. Despite Paul’s arrival, outgoing CFO Tony Anderson will remain a full member of our leadership team as chief investment

• fficer, responsible for directing new investments. Tony joined

Northland in 1989 and has been a big part of our success ever since. Close third-party relationships leverage Northland’s effectiveness in every aspect of our business. We enjoy strong ties with world- class equipment, construction and financing partners, governments and their agencies, First Nations and communities. Relations with Northland host communities are especially

• strong. Our plants pay taxes, provide secure, well-paying jobs

and create opportunities for local companies. As an example, our Kirkland Lake facility contributes about $6.5 million annually to the local economy. When invited, we readily support community initiatives and activities. When we can, we do a little extra. For example, steam from

• ur Cochrane facility heats a nearby community centre, eliminating

a significant expense for the town. Stability is a core Northland value. Stability – in how we perform and how we plan for our future – is important to us. It’s a key part of what makes Northland a good company to work for, to invest in and to rely on. John W. Brace President and CEO

EBITDA by facility In millions

2010 2009 2008 2007 2006 Corporate – general Mont Miller Corporate – development Kingston Iroquois Falls Panda-Brandywine Germany Jardin d’Éole Thorold

• $50

$0 $50 $100 $150 $200

Revenue diversification: EBITDA derives from several geographic areas and regulatory regimes and will continue to diversify.

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Leadership and expertise: The 265 MW Thorold Generating Station is Northland’s most

complex facility – and its contract obligations are equally demanding.

Thorold uses combined-cycle cogeneration to deliver electricity to Ontario’s grid, plus 24/7 process steam to an adjacent Abitibi- Bowater recycled newsprint plant. Cogeneration produces more energy per unit of fuel consumed than other natural gas techno-

• logies. That also means lower greenhouse gas emissions for any

given energy output. How it works: Thorold receives a dispatch signal from the Ontario electricity system operator whenever its cost-driven price per megawatt is competitive in the electricity market. Its contract with the Ontario Power Authority (OPA) provides for a capacity payment that is automatically reduced by the amount Thorold is assumed to earn during dispatch periods.

1 Natural gas fires a General Electric gas turbine to produce

up to 177 MW of electricity. The turbine is enclosed to contain noise.

2 Turbine exhaust gases at about 600°C pass into a heat

recovery steam generator (2A) that drives a steam turbine (2B), producing as much as 95 MW of additional electricity.

3 Medium-pressure steam (up to 158 tonnes per hour at 2,900

kilopascals) goes to the AbitibiBowater plant, where a back- pressure steam turbine reduces it to working pressures. The pressure reduction produces more electricity, up to 10 MW.

4 Electricity generated by the turbines flows to Ontario’s grid

and to the AbitibiBowater plant. Thanks to Thorold’s steam and electricity, the AbitibiBowater plant is much more competitive than before.

5 Welland Canal water is used for process makeup and to cool

spent steam. Waste-water treatment and cooling systems ensure that return water meets Ministry of Environment purity and temperature requirements.

6 Thorold’s stacks emit just nine parts per million of nitrous

• xide, compared with Ontario’s Drive Clean emissions limit
• f 400 for a car tailpipe.

7 Thorold is dispatched about 10 hours a day. Two auxiliary

boilers, fired by landfill and natural gas, produce process steam for AbitibiBowater during all non-dispatch periods. The Thorold Generating Station supports Ontario’s grid, enabling greater use of intermittent renewable energy such as wind and solar. It’s a powerful example of Northland’s ability to deliver intelligent energy for a greener planet.

13 1 5 5 6 7 3 4 4 AbitibiBowater 2A 2B Legend

— Natural gas

Landfi ll gas

— Steam — Cooling/makeup water — Treated water

Condensed water

— Electricity

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Perspectives 2011 › SALVATORE MANTENUTO

Thriving in changing markets

Just two or three decades ago, government utilities managed almost all electricity generation and distribution and developed all new power resources in Canada. Land could be expropriated for new generation projects, and environmental permitting was often fast-tracked. Nonetheless, project delays and cost

• verruns were common.

Today the landscape is very

• different. Independent

power producers – of which Northland was among the first in Canada – now develop, build, own and operate much of the new power generation across North America. IPPs assemble land, compete to win long-term PPAs, negotiate energy sales agreements, conduct impact assessments and involve multiple stakeholders in a public process before each new project gets approval to proceed. Today, Northland understands the cost and performance profiles for a full range of clean and green technologies, anticipates chang- ing customer and stakeholder demands and knows how to thrive in evolving contracting environments. Northland’s development strategy focuses our efforts on oppor

• tu

ni ties that meet three criteria:

• Intelligent energy: Early on, we anticipated that government

policies would increasingly favour clean and renewable energy

• sources. That bet has paid off, earning us a strong reputation

and technical expertise in our sector, plus early positioning for specific opportunities.

• PPA availability: We pursue only projects for which long-term

contracts are available with government entities or other credit- worthy counterparties. This focus protects our ability to sustain shareholder dividends at their current level or better.

• Profitability: We set firm return thresholds and make realistic
• forecasts. Projects are fully costed, and revenues are estimated
• conservatively. Our development process includes frequent “off-

ramps,” ensuring we continually reassess each project’s antici- pated returns and chance of success in securing a PPA. This discipline has enabled us to develop expertise in multiple energy technologies, squeeze maximum results from Northland’s development dollars and pursue only projects that will grow shareholder value. Early-mover advantage is crucial, so Northland developers work years ahead of official policy and contract opportunities. Competition is fierce for available sites that are priced right, are close to demand, have good grid access and are approvable for power generation. These and other factors affect a project’s capital cost and the costs of connecting and delivering its power. Together they determine whether a project is doable. Today’s competitive market rewards a delicate balance of speed and patience. We identified the potential of our Thorold facility twelve years prior to its construction and completion in April 2010. The McLean’s Mountain wind farm, which Northland is developing in partnership with First Nations, has been in development since

• 2003. Other projects have similar records.

Expertise

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Northland tracks North American energy requirements by jurisdiction, as well as shifts in attitudes toward IPPs, changes in energy policy, new requests for proposals and special incentives and offers, such as Ontario’s Feed-In Tariff (FIT) Program for renew- able energy. Every day, Northland development teams are scouting new

• pportunities while patiently nurturing projects in our pipeline,

sometimes for several years. Northland has chosen to build expertise across a broad range

• f clean and green technologies. This gives us great flexibility in

pursuing opportunities. In addition to high-efficiency gas genera- tion, we’ve developed wind and solar installations and have low- impact hydro projects, including run-of-river and hydrokinetics, in development. Northland is fortunate to have in-house engineering capability to support development, construction and operations. Since 1987

• ur engineering team has been involved in every Northland devel-
• pment project, from conceptual and detailed design to project
• management. Engineering input from career Northlanders improves

confidence in our operating projections and provides corporate memory to benefit future decision-making. The permit process demands its own expertise. Some power developers view the public consultation process needed for new facilities as a necessary evil. We don’t. Because we aim to own the facilities we develop, Northland works with host communities and

• ther stakeholders from the outset in a spirit of trust and openness.

We enter each permitting process willing to listen, working with input from our future neighbours to strengthen a project’s long-term success. Development relies on trust. Third parties, such as constructors, invest heavily when preparing large project bids in partnership with Northland. Our reputation for expertise, transparency and fair dealing has attracted world-class builders, OEMs and financial institutions as project partners.

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Companies and communities also become partners. A manu- facturer who needs 24/7 process steam thinks carefully before out- sourcing this supply. AbitibiBowater has made the decision twice; it started taking steam from our Iroquois Falls plant in 1996 and is now the steam host at Thorold. Our 15-year record as a depend- able steam provider has also attracted two Toronto-area companies to partner with us in developing two combined heat and power projects in our pipeline. In rooftop solar, Loblaws and others have chosen Northland as their partner. Some PPA offers require the participation of communities or First Nations. In the past year, Northland has partnered on wind projects with the town of Frampton, Quebec, and the United Chiefs and Councils of Mnidoo Mnising First Nations in Ontario. Constance Lake First Nation is Northland’s partner on four run-

• f-river hydro projects under the Ontario FIT Program, and we

are ensuring that First Nations members have meaningful

• pportunities to participate in the construction of our North

Battleford Energy Centre. PPAs eliminate market risk but not contracting complexity. As power authorities use thermal generation to supplement renew- ables and to respond to seasonal and daily demand fluctuations, thermal energy PPA requirements have become more demanding. In this environment, Northland’s 20 years of contracting experi- ence are increasingly valuable. Northland’s development capabilities are evident in our robust portfolio of projects under construction, under contract and in earlier stages of development. In the past two years, we’ve added new capacity and expanded our development portfolio to over 2,500 MW. By 2014, we expect our net generating capacity will grow to more than 1,450 MW. Salvatore (Sam) Mantenuto Chief Operating Officer and Chief Development Officer

Senior Northland developers include Tim Richardson, Boris Balan, John Wright, Scott Stevens and David Cheung Atkinson. Developers aggressively seek out

• pportunities across North America and then often

cultivate their most promising prospects for years before securing a power contract.

John Wright Scott Stevens Boris Balan Tim Richardson David Cheung Atkinson

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Intelligent energy in action

Northland’s proposed Marmora pumped-storage project is a perfect fi t for Ontario’s grid:

• Extremely competitive – one of the lowest-cost sources

for new peaking capacity

• Able to respond to instantaneous changes in wind and

solar output, improving system operations and lowering

• verall electricity costs
• Peaking power at one-fj

fth the cost of natural gas generation

• Available instantly – even in blackout situations, since

it needs no external electricity to start up

• A renewable resource with zero emissions
• Meets the desire of Ontario’s Independent Electricity

System Operator for more pumped storage in its mix

How it works Marmora time-shifts electrical energy by pumping water into an upper reservoir when demand (D, see inserts) is low (and electricity is plentiful and inexpensive) and allowing it to fl

• w through generator turbines to a lower reservoir when

demand is high. Its design uses the natural features of an abandoned mine, including a ready-made and water-fi lled lower reservoir and material to create an upper reservoir.

D

D

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Perspectives 2011 ›

Our development team and process

Northland has been developing energy generation projects since 1987 and has evolved a highly disciplined process. All develop ment activities, including initial facilities design and engineering, are done in-house. Northland developers manage several proj

• ects at various stages with varying probabilities of success.

Together with Northland’s leadership, they constantly evaluate each project’s feasibility until the PPA is signed and construction contracts are in place.

Tom Hockin Greg Lennox Michael Lord Florence Au

1987 and has evolved a highly disciplined process. All develop ment are done in-house. Northland developers manage several proj

• 1987 and has evolved a highly disciplined process. All develop

ment are done in-house. Northland developers manage several proj

• Tom Hockin

Florence Au Florence Au

Feasibility 3 to 12 months Initial Development 3 to 24 months Site identifi cation Site acquisition/control Environmental constraints Applying for permits: environmental and social consultations Interconnection Preliminary engineering: design and technology Fuel/wind/water supply/solar insolation Agreements with critical parties: power off-taker and steam host Project rationale Project economics and fi nancing plan

› › › › › › › › › ›

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Vice president of engineering Dino Gliosca and Greg Lennox, general manager, construction, are shown with members of Northland’s solar development team, led by Mike Lord. Dino and his team have been closely involved in every Northland Power project since 1987, providing design, costing and technical input to underpin development decisions and contracting and engineering management services for projects under construc-

• tion. The engineering services team is one of several specialist

groups supporting Northland’s development activities.

Laura Schreiner Rich Hanson Luke Kupczyk Dino Gliosca Monica Zhang Dino Gliosca Luke Kupczyk

Advanced Development 6 to 24 months Construction 12 to 48 months Site lease(s) or purchase Wind: 12 to 24 months Gas-fi red: 18 to 32 months Hydro: 24 to 48 months Solar: up to 12 months Permits completed: environmental and social Detailed engineering Contracting equipment/balance of plant: fuel supply and operations Financing (equity and debt): deposits and long-lead-time orders

› › › › › › › › › ›

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Perspectives 2011 ›

2,500 MW pipeline to the future

Since its launch in 1987, Northland has been constantly on the hunt for opportunities to develop profitable clean and renewable energy projects that will attract long-term power purchase agreements from creditworthy off-takers. Successful development takes a unique mix of strategy, agility and patience. With a primary focus on Canada and a growing presence in the United States, Northland pursues a disciplined development process with the goal of owning and operating high-quality assets with long-term PPAs.

Early development Advanced development In construction Operation

This diagram shows Northland’s commitment to a full range of clean and green energy technologies, including projects under construction, under contract and in development in thermal, wind, solar and hydro. Northland makes a serious commitment to project

• pportunities, leveraging in-house capabilities in:
• Site acquisition
• Design engineering
• Non-recourse fjnancing
• Permit management
• Community relations
• Construction management

› › › › ›

Wind Solar Thermal Hydro

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At the frontier of hydro technology

TREK is a new turbine system that captures energy directly from river fl

• w. Each

250 KW unit is mounted on supports that rest on the riverbed. A grid-connected prototype unit has been producing energy in the St. Lawrence River near Montreal since July 2010. Northland has exclusive rights to develop TREK sites over 8 MW across North

• America. It is in the process of licensing a number of suitable U.S. river sections

and is exploring others in Canada and the U.S. Since no dam or other structure is required and TREK units produce no measurable environmental impact, Northland expects the engineering and environmental approval process for TREK installations will be relatively fast and simple.

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Perspectives 2011 ›

Northland builds for the long term

Northland Power is one of the few North American power developers that owns and operates the facilities it builds for the long term. Because developing with a long view guides Northland’s approach at every step, the company:

• Leverages 20-plus years of in-house

design and operational experience to develop projects that will per- form reliably

• Is prepared to invest more at a

project’s front end to increase economic life, minimize future maintenance costs, optimize operating efficiency and lessen disruptions for our neighbours

• Works closely with off-takers to meet all requirements and

with gas suppliers to ensure reliable and economic supply

• Identifjes and transfers construction and performance risks to

strong, capable partners, such as Kiewit Power Constructors and General Electric, two of Northland’s supplier-partners on the North Battleford Energy Centre (opposite)

• Negotiates construction and equipment supply contracts

that eliminate responsibility gaps and avoid disputes among contractors/suppliers

• Enters into maintenance agreements on major equipment

to transfer long-term operating risks

• Protects investors by using only non-recourse debt at fjxed

rates to finance new projects and repaying the debt over the life of the initial PPA

• Engages the community by involving local suppliers and First

Nations in new project construction and hiring permanent staff locally wherever possible

The 20-year results

Northland’s combination of a long view, close attention to design and contracting, and aggressive risk mitigation has produced an enviable track record:

• A 20-year record of on-time, on-budget project completion

and trouble-free start-ups

• Excellent contractor relationships (both Kiewit and General

Electric have participated in multiple Northland projects)

• Close relations with host communities and power and

steam off-takers

• Frequent opportunities to participate in attractive new

projects with strong partners Northland Power puts a little extra planning, expertise and capital into each project it builds. That difference helps it generate intel- ligent energy for a greener planet.

Northland has $600 million of ground-mounted solar projects getting set for construction and agreements with large retail chains to partner on rooftop solar projects.

Northland’s North Battleford Energy Centre Location: North Battleford, Saskatchewan Capacity: 260 MW Project cost: $700 million Commercial operations date: Q2 2013 Agreement: PPA with SaskPower to 2033 Northland roles: Developer, owner

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Perspectives 2011 › ANTHONY F. ANDERSON

Reliable returns for today and for the future

Our chairman notes two major Northland events in the past two

• years. The merger with the management company in July 2009

challenged us to find an acceptable formula for valuing Northland’s development portfolio. Then last year, we converted the merged company from an income trust to a corporation, a move we completed on January 1, 2011, just as the old income trust tax rules expired. All this was achieved while financing significant growth in 2010 and successfully maintaining investor

• confidence. As a result, Northland investors are in a much stronger

position today. As our chairman also notes, investors enthusiastically endorsed

• ur actions. As 2010 closed, response to these moves and our con-

current success at winning new projects had lifted our pre-merger unit price by 60%. Northland Power is now a share corporation. As a result

• f corporatization, Northland has become a familiar vehicle for

investors in the United States and Europe. Over time, being a dividend-paying corporation, plus growing awareness of Northland as a generator of reliable returns, should expand the market for

• ur shares.

Meanwhile, taxable Northland investors receiving a $1.08 annual dividend will find themselves better off in 2011 because dividends receive a more favourable tax treatment than the pre-corporatization distributions. Over the past two years, we raised nearly $760 million to finance construction at North Battleford, Spy Hill and Mont Louis. We also issued $161 million in convertible debentures and trust units and $150 million in preferred shares. Both these public

• fferings were oversubscribed in the financial markets.

We continued to follow our strategy of using non-recourse construction financing to minimize risk for Northland investors. The $542 million North Battleford non-recourse loan was one of the largest such power project financings in North America last

• year. Our success in raising high-leverage construction money

at low cost is evidence of Northland’s high project quality and reputation as a solid credit risk. To create predictability in our debt servicing costs, we routinely lock in interest rates for the full term of the loans. As a by-product of fundraising in 2010, Northland now enjoys even stronger banking relationships both in Canada and interna-

• tionally. These will benefit us in the coming years, as we return to

Performance

Growing market cap: Northland’s market capitalization is 70% higher than in 2006, up 47% in 2010 alone.

Market cap In billions 2010 2009 2008 2007 2006 $0.0 $0.5 $1.0 $1.5 $2.0

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fundraise for another round of new projects already under contract. These include $600 million in ground-mounted solar projects currently seeking permits. We also seized an opportunity to raise cash in an unusual way for us. In December 2010, we sold our 54 MW Mont Miller wind farm to NextEra Energy, which owns a nearly identical property next door. Consolidation of the two wind farms made operational and maintenance sense, and we determined that selling was in our best interests. We are not planning any other power asset sales – in fact, we are actively developing new projects in Quebec and other jurisdictions as described throughout this report. We’re realistic about asset amortization. In our development economics and debt management, we amortize each asset’s capital cost and permanent financing over its initial PPA. The loan that underpins Thorold, for example, will be fully paid off when the plant’s

PPA expires in 2030. The same is true for Jardin d’Éole.

We do this for two reasons. First, it’s common sense and pru- dent to avoid a large balloon debt payment and under-depreciated assets at the end of a PPA no matter how optimistic one might be about a facility’s ability to generate future income. Secondly, our policy provides future flexibility. The PPA for our Kingston facility will mature in 2017. But at that point, the plant will be fully depreciated and debt-free. As we open negotiations on how Kingston will support Ontario’s grid post-2017, having no debt and a zero cost basis strengthens our ability to make investments to attract a new PPA. Cash from operations rose 35% to $87 million in 2010. Northland’s consistent strong results are a testament to our long- term PPAs, high-quality, well-maintained plants and equipment and the dedication and expertise of our facilities’ personnel and the head office staff supporting them.

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Part of Northland’s support structure is our energy services group, which manages electricity sales and gas supply. The group negotiates forward gas purchase contracts to align future costs with expected PPA revenues. But it also minimizes net gas and transportation costs through ongoing spot and forward purchases and sales, all within the constraints of our contractual commit-

• ments. These activities can have significant bottom-line impact,

given that gas costs can run close to 40% of a thermal plant’s sales. Strong and predictable cash flows from operations are essential to our ability to grow while sustaining investor payouts. Northland is fortunate to have seasoned people and strong systems to monitor and support our performance. Northland’s dividend pledge of $1.08 per share is rock-solid. Part of Northland’s attraction for investors has been a history of reliable cash distributions. That will not change. We have both the will and the ability to pay $1.08 per share annually going forward, despite the cash demands of new project financings.

Members of the financial performance team greet Northland’s new general counsel, Michael Shadbolt. From left: executive director, financing, Greg Keaney, vice president, energy services, Jim Cipolla, Michael Shadbolt and controller David Carruthers.

Michael Shadbolt Jim Cipolla Greg Keaney David Carruthers

Distributions and distributable cash In dollars per unit/share 2011 2010 2009 2008 2007 2006 $0.00 $0.25 $0.50 $0.75 $1.00 $1.25 $1.50 Distributions paid/dividends committed Distributable cash

Payout commitment: Northland is committed to maintaining its annual dividend

• f $1.08 per share for 2011, payable in equal monthly instalments.

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Paying out $1.08 per share during these high-growth years has increased our ratio of payouts to free cash to greater than 100%. We expect that the ratio will remain above 100% until 2013, when North Battleford begins to generate revenue. An upside of growth is the tax pools it provides. Capital cost allowances for effi- cient generating facilities are generally eligible for acceler- ated depreciation rates. The large tax pools from Thorold and Jardin d’Éole,in addition to pools that will be avail- able once the projects under construction and in advanced development come online, mean that Northland will pay minimal income tax for a number of

• years. This will help maintain dividend stability.

Our aim is to generate intelligent energy for a greener planet. Like the power facilities we operate, our financial planning and poli- cies are designed for the long term. We see no conflict between high performance and a sustainable future. In fact, we believe the two go hand in hand. Investors, employees, partners and others who count on Northland now and for their futures can have confidence in our consistent high performance going forward. After all, Northlanders have been thinking and working this way since we began. Anthony F. Anderson Chief Financial Officer

Capital structure Preferred shares Equity at market value Convertible debentures Non-recourse project debt 63% 29% 6% 3%

Tax planning: Accelerated writeoffs of large tax pools will reduce Northland’s income taxes to minimal levels for several years.

Tax pools In billions 2013 2012 2011 2010 2009 Ontario FIT projects Projects under construction Merger $0.0 $0.5 $1.0 $1.5 $2.0 $2.5 Payout ratio Per cent 2010 2009 2008 2007 2006 0% 25% 50% 75% 100% 125%

Dividend management: Northland’s planned payout ratio will remain above 100% through 2013. In 2014, revenues from North Battleford and other projects under construction will grow free cashflow to more than cover dividend payments. Long-term, Northland expects operating revenues to fully fund current or higher dividend levels.

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Perspectives 2011 ›

Net generating capacity in operation and under contract In megawatts Frampton 2015 Kabinakagami 2014 North Battleford 2013 McLean’s Mountain 2012 Ontario solar 2012 Mont Louis 2011 Spy Hill 2011 Thorold 2010 Jardin d’Éole 2009 Germany 2006 Kingston 2006 Kingston 2004 Kirkland Lake peaker 2004 Panda-Brandywine 2003 Kingston 2002 Iroquois Falls 1996 Kirkland Lake 1991 Cochrane 1990 Wind Thermal Hydr0 Solar Note: Years denote commercial

• perations dates (COD).

50 100 150 200 250 300

Growing powerhouse: Northland’s portfolio of clean and renewable power projects is diversified by both technology and geography. All generation is contracted under long-term PPAs with creditworthy off-takers. And the future promises more growth, with 1,800 MW of active development projects not shown on this graph and Northland teams working across North America to turn up new opportunities for intelligent energy.

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Perspectives 2011 ›

90 95 94 96 91 92 93 97 98 99 00 03 02 01 08 07 06 05 04 09 10 13 12 11 15 14 Cumulative growth in Northland Power generating capacity In megawatts

Northland’s Mont Louis Wind Farm Project Location: Gaspésie region of Quebec Capacity: 100 MW Project cost: $180 million Commercial operations date: Q3 2011 Agreement: PPA with Hydro-Québec to 2031 Northland roles: Developer, owner

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