Investor Presentation Investor Presentation July, 2014 0 NPI.TO - - PowerPoint PPT Presentation

Intelligent energy for a greener planet

Investor Presentation Investor Presentation

July, 2014

NPI.TO

Overview

• Canadian‐based Global Power Producer in business since 1987
• Full lifecycle developers, owners, and operators of our facilities
• Generate long‐term stable cash flows; committed to dividend sustainability

and ongoing value creation for our shareholders and ongoing value creation for our shareholders

• Developing thermal, wind, and solar projects in Canada, Europe, and U.S.

1,335 MW

i ti

39%

M

in operation (14 facilities)

$1 08

Management Ownership

$1.08 dividend

(6 0% i ld)

1

(6.0% yield)

Long Term Focus Delivers Value g

Northland’s full life cycle commitment

• Captures development profits and provides stable cash flows over the life of facilities

Captures development profits and provides stable cash flows over the life of facilities to service the dividend

• Preferred by power off‐takers and lenders
• Ensures quality projects are constructed to achieve performance and reliability

Development and

• rigination

feasibility confirmed signed PPA financial close commercial

• perations date
• Ensures quality projects are constructed to achieve performance and reliability

Development and construction value Operations cashflow to create value to service dividends

Reward

Initial risk Greatest exposure Diminishing risk

Risk/

OPERATIONS

IN DEVELOPMENT ADVANCED DEVELOPMENT

UNDER CONSTRUCTION

2

Stage

Diversification by Geography and Technology

1 Cochrane 32 MW* 2 Kirkland Lake 101 MW*

y g p y gy

2 Kirkland Lake 101 MW 3 Iroquois Falls 120 MW 4 Kingston 110 MW 5 Kavelstorf 7 MW 9 10 12 6 EckolstIädt 15 MW 7 Jardin d’Éole 128 MW 8 Thorold 265 MW 1 2 3 7 16 9 Mont Louis 100 MW 10 Spy Hill 86 MW 11 Roof‐top solar 1 MW* 12 North Battleford 260 MW 2 4 5 17 11 13 14 15 12 North Battleford 260 MW 13 Ground‐Mount Solar 130 MW** 14 McLean’s Mountain 30 MW* 15 Grand Bend 50 MW* 6 8 16 Frampton 16 MW* 17 Gemini 360 MW* Under construction Thermal Wind In operation In advanced development

3 *Represents Northland’s economic interest **Ground‐mount solar: 80 MW in operations and 50 MW under construction.

Biomass Solar p

Diversified Adjusted EBITDA Portfolio of Assets

By Facility

j

2013 ‐ $263M 2015 ‐ $380‐400M

Germany Mt L i McLean's Mtn Spy Hill 6% Cochrane 1% Kirkland Lake 6% Germany 1% Jardin Cochrane Kirkland Lake 2% Germany 1% Jardin 4% Mt Louis 4% 3% Gemini 4% North Battleford 18% Jardin 6% Mt Louis 6% l Spy Hill 4% 2% Solar (13 solar sites) 20% Iroquois Falls 13% Kingston Thorold 20% Solar (6 sites) 5% Iroquois Falls 9% North Battleford 22% 20% Kingston 18% 9% Kingston 12% Th ld

4

12% Thorold 13%

Producing and Maintaining Stable Cash Flows – Long‐term Focus

Remaining PPA Term for Each Operating Facility

g

Kingston Iroquois Falls

Weighted average 13.9 years^

(without extension options**)

Extension options**

Kingston Cochrane* Kirkland Lake*

Cochrane* Spy Hill Thorold

Iroquois Falls Germany Jardin

Mt Louis Kirkland* Cochrane

Weighted average 15.7 years**

(with extension options**)

Thorold Mont Louis G d M t S l ***

Ground Mounted Solar** Jardin Germany

Ground‐Mount Solar*** North Battleford

5 10 15 20 25

North Battleford** Ground Mounted Solar

Spy Hill McLean’s Mtn

5 *Represents Northland’s economic interest in the facilities ** Facilities with dashed bar graph represent option to extend the power contract for additional period *** 5 of 13 ground mounted solar projects remain in construction ^ The weighted average PPA life is weighted by respective MW capacity. The weighted average PPA life of 13.9 years includes projects currently under

• construction. For operating projects only, the weighted average PPA life is 13.9 years. The thickness of each bar represents each facilities respective
• verall contribution to 2015 forecasted EBITDA

Development Pipeline

Development Pipeline consists of construction and development assets

p p

lowest longer

T

• tal: > 2,500

MW

lowest longer

Development pipeline

> 2,200 MW

DEGREE OF CERTAINTY TIME TO COMPLETION

2,200 MW P j t ith t t (PPA)

Under construction

410MW*

Projects with contract (PPA)

66 MW*

highest shorter

410MW

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1,335 MW* Operating

* Represents Northland’s economic interest

Recent Projects Recent Projects

North Battleford, Saskatchewan

• 260 MW gas‐fired combined cycle plant

Frampton

260 MW gas fired combined cycle plant

• 20‐year power contract
• Final project cost: $641 million
• Started operation on June 5, 2013

ed y Complete Phases 1 & 2 Ground‐Mount Solar, Ontario

• 8X10 MW ground‐mount solar farms
• 20‐year power contract
• Final project cost: $387 million

Crosby Belleville South

Recently

Final project cost: $387 million

• Started operation in 2013‐2014

McLean’s Mountain, Manitoulin Island, Ontario

• 60 MW (net interest 30 MW) wind farm
• 20‐year power contract
• Expected project cost: ~$185 million
• 50/50 partnership with First Nations

St t d ti i M 2014

• Started operation in May 2014

Phase 3 Ground‐Mount Solar, Eastern Ontario

• 5X10 MW ground‐mount solar farms

er uction

7

g

• 20‐year power contract
• Expected project cost: ~$295 million
• Operation expected in 2014‐2015

Unde Constru

6

Upcoming Projects to be Constructed Upcoming Projects to be Constructed

Advancements on Contracted Projects:

Grand Bend Frampton

100 MW wind farm Project cost: $385M COD: 2015‐2016

50/50 partnership

24 MW wind farm Project cost:$75M COD: 2015

66% partnership 50/50 partnership with First Nations 66% partnership with Municipality

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Strong and Growing Financial Results Strong and Growing Financial Results

$300

ADJUSTED EBITDA

Millions

$200 $250

CAGR:

28%

$100 $150 $0 $50 2009 2010 2011 2012 2013

2013 Highlights

9

• Adjusted EBITDA of $263M by 47% from 2012
• Free cash flow of $130M more than doubled that of 2012

*Includes dividends reinvested in common shares issued as part of the DRIP.

Positioning for Growth Positioning for Growth

Appointed Sean Durfy as President and Chief Appointed Sean Durfy as President and Chief Development Officer to lead Northland’s development activity in North America and internationally

• Ex‐CEO of WestJet and ENMAX Energy Corporation

Ex CEO of WestJet and ENMAX Energy Corporation with significant prior experience in the power industry bl h f

• WestJet revenues doubled during his tenure from

$1B (2004) to $2B (2009)

• Previously a member of Northland’s

1,950

Current Pipeline of Capacity Growth

Previously a member of Northland s Board of Directors for 3 years

950 1,450

10

450 '08 '09 '10 '11 '12 '13 '14F '15F '16F 'F17

Northland’s Growth Strategy gy

• Northland has been evaluating more opportunities outside of
• Northland has been evaluating more opportunities outside of

Canada

• The focus has been on jurisdictions and technologies that satisfy
• The focus has been on jurisdictions and technologies that satisfy
• ur investment criteria:
• Long‐term contract availability

Long term contract availability

• Stable economical and political jurisdictions (more mature

markets)

• Credit worthy off‐takers
• Conducive to project finance execution

p j

• Northland also evaluates areas with faster growth prospects and

increasing demand (while employing risk‐mitigating strategies)

11

g ( p y g g g g )

Development Focus

Larger projects Larger projects

• Canada
• U.S.
• Latin America
• Europe

Target ifi Target ifi Appropriate project Appropriate project specific markets specific markets project return thresholds project return thresholds Stable High‐Quality Projects with j Attractive Returns Contracted power Contracted power Utilize preferred Utilize preferred

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power power p technologies p technologies

• Natural gas
• Wind
• Large solar

Disciplined Development Remains p p

Criteria

Power sales

• Long‐term power contracts
• Creditworthy counterparties
• Predictable economics
• Power off‐taker assumes fuel risks, where fuel

cannot be otherwise hedged

• Non‐recourse single project

Project financing

Non recourse single project

• Fully amortizing
• Term matched to PPA

d f h h d

• Interest rate and foreign exchange hedging

Construction

• Fixed price guarantee
• Penalty provisions

Equipment and supply

• Fixed price guarantee
• Comprehensive maintenance contracts

Insurance

• Comprehensive insurance program

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Insurance

• “Loss prevention” mindsets

Project Gemini ‐ Overview Project Gemini Overview

• 600 MW (2 sites x 300 MW) offshore wind farm

Off‐shore wind project, North Sea, Netherlands

• 600 MW (2 sites x 300 MW) offshore wind farm

– €2.8B total capital cost – Will be largest wind farm in the North Sea Will be largest wind farm in the North Sea and 2nd largest offshore wind farm in the world

• 15 year revenue contract with the Dutch

government

• 15 year operations and maintenance contract

with Siemens

• Northland owns 60% of the project
• Project partners: Siemens, Van Oord, HVC

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Project Gemini – Offshore Wind Industry: Lessons Learned Offshore Wind Industry: Lessons Learned

• Offshore wind industry has matured since inception over 15 years ago.

As of June 2013, 6,040 MW have been installed in 58 projects in Europe Historical Industry Issues Gemini Approach

• Grid connection delays by local
• Build own connection

, , p j p

transmission utility

• Multi‐contract approach has significant

interface risk

• 2‐contract structure
• Fixed price, guaranteed schedule and

interface risk p , g performance

• Inexperienced contractors and owner
• Experienced contractors and owner
• Weather delays
• Weather allowances in fixed price contracts,

healthy project contingency, modern purpose‐built installation vessels

• Permitting delays
• Permits in hand
• Equipment failures
• Modern purpose‐built installation vessels,

fixed‐price contract under warranty and long‐

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p y g term maintenance contracts

Project Gemini – Illustrative Financing Plan Project Gemini Illustrative Financing Plan

Project Gemini Capital Cost Breakdown ~EUR 2.8B Total Capital Costs

~70% Senior Debt ~7% Junior Debt ~15‐16% Equity ~7‐8% Pre‐Completion Revenues

Northland 60% Investors Investors European Investment Bank Investors Northland Power EUR80M Siemens 20% Van Oord 10% Commercial Banks Export Credit Agencies PKA Pension Fund EUR120M Van Oord 10% HVC 10% Commercial Banks

16 *This slide is for illustrative purposes. The financing structure will be finalized at financial close

Project Gemini – Update Project Gemini Update

CHECKLIST

Power contract obtained



Turbine supply



Construction contractor



Construction contractor Receipt of final permits



Financing



Commence Construction



Construction Vessel ‐ Launched, June 2014

Commence Construction



COD (expected in 2017)

17

Illustrative Payout Ratio with Gemini Illustrative Payout Ratio with Gemini

• Following COD of North Battleford and Ground‐Mount Solar, Northland’s payout ratio falls below

100% for fiscal year 2014 % y

• Gemini or any large project is likely to temporarily elevate the payout ratio above 100%
• Northland’s investment in Gemini reduces the payout ratio to significantly below 100% once the

project reaches commercial operations and provides significant support to the long‐term perpetuation of the dividend

600 MW Build‐Out Program Gemini Build‐Out

• Normal payout ratio level

prior to servicing dividends Impact of Gemini far smaller th i t f N th B ttl f d

Cash Inflow from Build‐Out Programs

Payout Ratio prior to servicing dividends for growth projects Project Gemini achieves COD than impact of North Battleford and Ground‐Mount Solar 100% Payout Ratio North Battleford & Ground‐ Mount Solar achieve COD 100% Payout Ratio

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2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Status‐Quo Payout Ratio Pro‐Forma (Gemini) This chart included in Northland’s investor day deck on September 18, 2013, was compiled by management for illustrative purposes based on financing expectations at that time.

Summary

• Stability and Growth: The track record and ability to

Summary y y deliver high quality results and reliable returns

• Long‐term focus: Delivering value for shareholders

now and into the future by seizing opportunities that create attractive returns and sustainable growth

• Commitment: Management has a vested interest

through a 39% ownership interest

19

A di Appendix

20

Operating Facilities Operating Facilities

Project Location Size Ownership Technology PPA Term Gas Term Thorold ON 265 MW 100% Natural gas cogeneration 2030 2030 Kingston ON 110 MW 100% Natural gas combined cycle 2017* 2017 Iroquois Falls ON 120 MW 100% Natural gas cogeneration 2021* 2021 Spy Hill SK 86 MW 100% Natural gas peaking plant 2036 n/a^ Spy Hill SK 86 MW 100% Natural gas peaking plant 2036 n/a Kirkland Lake ON 132 MW 68%** Biomass and natural gas combined cycle and peaking 2015* 2015 Cochrane ON 42 MW 68%** Biomass and natural gas 2015 2016 Cochrane ON 42 MW 68% combined cycle 2015 2016 Mont Louis QC 100 MW 100% Wind 2031 n/a Jardin d’Éole QC 128 MW 100% Wind 2029 n/a Kavelstorf and Eckolstadt Germany 22 MW 100% Wind n/a*** n/a Roof‐top Solar ON 2 MW 75% Solar 2031 n/a North Battleford SK 260 MW 100% Natural gas combined cycle 2033 n/a^ g y / Ground‐Mount Solar (Sites #1‐8) ON 80 MW 100% Solar 2033‐ 2034 n/a McLean’s Mountain ON 60 MW 50% Wind 2034 n/a

21 * Facilities have option to extend power contracts ** Northland has an effective 77% residual economic interest in these facilities *** German electricity production is purchased by local power utilities at predetermined prices as required by German legislation ^ SaskPower effectively assumes all natural gas‐price risk under the long‐term PPA

Construction & Development Projects Construction & Development Projects

Under Construction

Project Location Size Ownership Technology Expected COD PPA Term Expected Capital Cost Ground‐Mount Solar (Sites #9‐13) ON 50 MW 100% Solar 2014‐ 2015 20 years $295 million Gemini

Netherlands

600 MW 60% Offshore wind 2017 15 years €2.8 billion*

Ad d D l t

Project Location Size Ownership Technology Expected COD PPA Term Expected Capital Cost

Grand Bend ON 100 MW 50% Wind 2015‐ 20 years $385 million*

Advanced Development

Grand Bend ON 100 MW 50% Wind 2016 20 years $385 million* Frampton QC 24 MW 67% Wind 2015 20 years $75 million*

22

*Represents full cost of the project (100%).

Financial Summary

FINANCIAL SUMMARY

y

Recent Share Price (TSX: NPI) $17.87 Shares (Common + Class A) 147 million Institutional Ownership ~29% Management Ownership ~39% Annual Dividend $1.08 Annual Dividend Yield 6.0% T t l D bt N t f C h $1 683 illi Total Debt, Net of Cash $1,683 million Convertible Debentures (NPI.DB.A, NPI.DB.B) $92 million Preferred Shares (NPI.PR.A, NPI.PR.C) $262 million ( , ) Market Capitalization (Common + Class A) $2,619 million Enterprise Value $4,792 million

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Investor Relations Contacts Investor Relations Contacts

Adam Beaumont Adam Beaumont

Director of Finance 647.288.1929

Barb Bokla

Manager, Investor Relations 647.288.1438

investorrelations@northlandpower.ca www.northlandpower.ca www.northlandpower.ca

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