Investor Presentation November 2014 0 NPI.TO Forward-Looking - - PowerPoint PPT Presentation

Investor Presentation

November 2014

Executing on Growth

NPI.TO

Executing on Growth

1

Forward-Looking Statements Disclaimer

This written and accompanying oral presentation contains certain forward-looking statements which are provided 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-looking statements include statements that are predictive in nature, depend upon or refer to future events or conditions, or

include words such as “expects”, “anticipates”, “plans”, “believes”, “estimates”, “intends”, “targets”, “projects”, “forecasts” or negative versions thereof and other similar expressions, or future or conditional 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 and dividend payments, the construction, completion, attainment of commercial operations, cost and output of development 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. This information is based upon certain material factors or assumptions that were applied in developing the forward-looking statements, including the design specifications of development projects, the provisions of contracts to which Northland or a subsidiary is a party, management’s current plans, its perception of historical trends, current conditions and expected future developments, as well as other factors that are believed to be appropriate in the circumstances. Although these forward-looking statements are based upon management’s current reasonable expectations and assumptions, they are subject to numerous risks and uncertainties. Some of the factors that could cause results or events to differ from current expectations include, but are not limited to, construction risks, counterparty risks, operational risks, the variability of revenues from generating facilities powered by intermittent renewable resources and the other factors described in the “Risks and Uncertainties” section of Northland’s 2013 Annual Report and 2013 Annual Information Form, which are both filed electronically at www.sedar.com and Northland’s website www.northlandpower.ca. Northland’s actual results could differ materially from those expressed in, or implied by, these forward-looking statements and, accordingly, no assurances can be given that any of the events anticipated by the forward-looking statements will transpire or occur. The forward-looking statements contained in this presentation are based on assumptions that were considered reasonable at time of delivery. Other than as specifically required by law, Northland undertakes no obligation to update any forward-looking statements to reflect events or circumstances after such date or to reflect the occurrence of unanticipated events, whether as a result of new information, future events or results, or

• therwise.

All figures are presented in Canadian dollars unless otherwise indicated.

2

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

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

1,345 MW

in operation

$1.08 dividend

(~6% yield)

38%

Management Ownership

2

3

• Well diversified: developing thermal, wind, and solar

projects in Canada, Europe, and U.S. with 98% of revenues from long-term power contracts

Stability

• Strategic and disciplined organic growth platform
• Pipeline of development projects with power contracts
• Seize opportunities that create attractive returns and

sustainable growth over the long-term

Northland’s Focus

Growth Long-term

4

History of Northland Since 1987

1987 Founded Northland Power Inc. 1997 IPO to NPI.UN $10/unit

NPI.UN TSX

Publically Traded Income Trust Fund Acquired

• Kingston
• Panda Brandywine
• German Wind Farms

Cochrane Kirkland Lake Iroquois Falls Ontario FITs Mont Louis Spy Hill, North Battleford

Northland

Private Developer Constructed

• Thorold
• Jardin d’Éole

2009 Merger 2011 Corporatization NPI TSX

Gemini

~$17/share

Nordsee One

5

Past and Present

History of Northland as Public Company

EBITDA (Millions) Productive Capacity (MW)

6

Strong and Growing Financial Results

$0 $100 $200 $300 $400 2011 2012 2013 2014F

Adjusted EBITDA

Millions

CAGR:

33%

Prior Growth Initiatives Have Shown Results

Expected to generate over $350 million of Adjusted EBITDA in 2014

$0 $100 $200 $300 $400 $500 $600 $700 2011 2012 2013 2014F

Revenues

Millions

CAGR:

23%

7

Diversification by Geography and Technology

1 Cochrane 32 MW* 2 Kirkland Lake 101 MW* 3 Iroquois Falls 120 MW 4 Kingston 110 MW 5 Kavelstorf 7 MW 6 EckolstIädt 15 MW 7 Jardin d’Éole 128 MW 8 Thorold 265 MW 9 Mont Louis 100 MW 10 Spy Hill 86 MW 11 Roof-top solar 1 MW* 12 North Battleford 260 MW 13 Ground-Mount Solar 130 MW** 14 McLean’s Mountain 30 MW* 15 Grand Bend 50 MW* 16 Frampton 16 MW* 17 Gemini 360 MW* 18 Nordsee One 282 MW*

*Represents Northland’s economic interest **Ground-mount solar: 90 MW in operations and 40 MW under construction.

Under construction Thermal Biomass Wind Solar In operation In advanced development 1 2 3 4 5 6 7 8 17 9 10 12 11 13 14 15 16 18

8

Development Pipeline

* Represents Northland’s economic interest

Development Pipeline Advanced Development* Operating Assets*

1,345

MW

> 2,200

MW

348

MW Construction*

390

MW

• Power contracts

in hand

• Finalizing supply

agreements

• Financing

Thermal 974 MW Wind 280 MW Solar 91 MW

• Evaluate and focus
• n opportunities

that meet investment criteria

• Ensure projects

delivered on time,

• n budget
• Operations and

maintenance

highest lowest

DEGREE OF CERTAINTY

9

Northland’s Growth Strategy

• Northland has been evaluating more opportunities outside of

Canada

• The focus has been on jurisdictions and technologies that satisfy
• ur investment criteria:
• Long-term contract availability
• Stable economical and political jurisdictions (more mature

markets)

• Credit worthy off-takers
• Conducive to project finance execution
• Northland also evaluates areas with faster growth prospects and

increasing demand (while employing risk-mitigating strategies)

10

Development Focus

Larger projects Target specific markets Contracted power Utilize preferred technologies Appropriate project return thresholds Stable High-Quality Projects with Attractive Returns

• Canada
• U.S.
• Latin America
• Europe
• Natural gas
• Wind
• Large solar

11

Turbine installation: Handling at the base port

Development Focus in Offshore Wind

5,000 10,000 15,000 20,000

Megawatts (MW) Offshore Wind Development and Milestones in Europe* New Build Previously Installed Capacity

London Array (630 MW) delivered on time, on budget 1st commercial

• ffshore wind farm

Vindeby (Denmark) 4.95 MW

*Source: National Renewable Energy Actions Plans, European Wind Association **Source: GlobalData

Offshore wind expected to quadruple in Europe by 2020, quintuple internationally**

12

Development Focus in Offshore Wind

• Independent Power Producers’ (like Northland Power) access to project financing

markets are key to future expansion – European utilities under balance sheet stress – Multiple projects financed recently with non-recourse project debt – Five multilateral financing institutions involved, including the European Investment Bank, the UK Green Investment Bank, and various export credit agencies

• Offshore wind Opportunities for Northland

– European Market continues to provide opportunities to capture returns commensurate with Northland’s investment criteria – Northland can utilize competitive advantage of relationships to partner with Utilities to grow offshore wind portfolio before new entrants drive down returns

Offshore wind industry is maturing and strategic investors with financial

strength are well positioned to get involved and establish expertise and a presence

9

13

Offshore Wind 60% Solar 9% Thermal 17% Original NUGs** 6% Onshore Wind 8%

By Segment

2018

Illustration Adjusted EBITDA Diversification

Ontario 24% Saskatchewan 11% Quebec 4% Europe 61%

By Geography

*The above charts are illustrative of managements objectives. They are based upon Northland’s operating facilities continuing to perform in a manner consistent with operations in 2013 and 2014, with additions to Adjusted EBITDA from projects under construction or advanced development, and other adjustments resulting from power contract renewals primarily in Ontario all as described in our MD&A and 2013 AIF. The illustrations do not constitute a financial forecast, projection or guidance and are based upon assumptions that are subject to change. **Original NUGs refers to the Cochrane, Kirkland Lake, Kingston & Iroquois Falls power generating facilities.

14

Project Gemini - Overview

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

– €2.8B total capital cost – 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

Off-shore wind project, North Sea, Netherlands

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Project Gemini – Update

Construction Vessel - Launched, June 2014

CHECKLIST

Power contract obtained



Turbine supply



Construction contractor



Receipt of final permits



Financing



Commence Construction



COD (expected in 2017)

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Project Gemini - Construction Update

CHECKLIST Completed In Progress Installation Vessels



Cabling

91km completed 130km in production

Onshore Substation

Construction Commenced

Offshore Substation and Directional Drilling

Construction Commenced

Monopile Foundations

46 completed 58 in production

Transition Pieces

Nov 2014 83 in production

Turbines

Starting construction in 2015

17 ∅130m

Statue of Liberty (93 m)

Turbine height including foundation (225m)

1

Project Gemini - Turbines

Airbus 380 (70m)

18

Project Gemini - Milestones

• Directional Drilling / Onshore Substation

2014

• Export Cables / Infield Cables
• Offshore Substations / Onshore

Substation ready

• All foundations installed

2015

• Grid connection/ Infield Cables
• Installation Turbines & Commissioning
• First Power

2016

• Commercial operations

2017

Milestones

19

• Location: 40 km off the coast of the North Sea

in German territorial waters (26-29m water depth)

• Capacity: 332MW (282MW net to Northland)
• Estimated Project Costs: €1.2 billion
• Target Financial Close: First half of 2015
• COD: Q4-2017
• Northland interest: 85% of Nordsee projects
• Partner (15%): RWE Innogy, a global leader in

renewable energy and subsidiary of one of Germany’s largest utilities

• Additional Development Rights: Includes rights to develop two additional projects

(Nordsee Two & Three) over the next decade

• Power Contract: Feed-in-tariff subsidy approximates a Contract for Difference (CFD) under

the German Renewable Energy Act that ensures a fixed-price for approximately ten years in which all capital costs (including cost of capital) will be re-paid

Nordsee One - Overview

Off-shore wind project, North Sea, Germany

20

Nordsee One – Update

• The Nordsee One project will be

constructed under five key contracts

• The grid connection will be already

built and Nordsee interfaces with the Transmission System Operator – TenneT – at the substation

Turbine Supply & Installation Substation & Installation Offshore Converter Station (TenneT) Onshore Substation Foundation Supply Cable Supply & Installation Export Cables Export Cables Nordsee I Transmission System Operator

CHECKLIST Guaranteed Revenue Pricing



Turbine supply Near Final Supply and Installation Agreements  Permits Underway Financing 

21

Nordsee One – Illustrative Financing Plan

~EUR 1.2B Total Capital Costs

~70% Senior Debt ~25-26% Equity

Northland 85% RWE 15% Investors Investors European Investment Bank Commercial Banks Export Credit Agencies

Nordsee One Capital Cost Breakdown

~4-5% Pre-Completion Revenues

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

Potential Sources

22

Illustrative Payout Ratio with Nordsee One

• Following COD of North Battleford and Ground-Mount Solar, Northland’s payout ratio would have

returned to 100% for fiscal year 2014

• Gemini elevated the payout ratio above 100% and Nordsee One will further elevate until commercial
• perations in 2017
• Northland’s investment in Nordsee One and Gemini reduces the payout ratio to significantly below

100% once the projects reach commercial operations and provides significant support to the long-term perpetuation of the dividend

This chart was compiled by management for illustrative purposes based on current financing expectations that are subject to change. The illustrations do not constitute a financial forecast, projection or guidance and are based upon assumptions that are subject to change 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Payout Ratio Status-Quo Payout Ratio Pro-Forma (Nordsee) North Battleford & Ground- Mount Solar achieve COD Normal payout ratio level prior to servicing dividends for growth projects Project Nordsee One and Gemini achieve COD Impact of Nordsee One far smaller than impact of North Battleford and Ground-Mount Solar

600 MW Build-Out Program Off-shore Wind Build-Out

100% Payout Ratio

Cash Inflow from Build-Out Programs

ILLUSTRATIVE Gemini equity raise 100%

23

Grand Bend

• Location: Grand Bend, Ontario
• Capacity: 100 MW (50 MW net to NPI)
• Power Contract: PPA under Ontario FIT

program

• Estimated Project Costs: $385 million
• Partner: 50/50 Partnership with

Aamjiwnaang and Walpole Island First Nations

• Target Financial Close: early to

mid-2015

• COD: 2016

24

Other Development Opportunities

• Canada

–Hydro Quebec 450MW Wind RFP expected by end of 2014 –Frampton wind farm to be financed in early 2015 –Marmora, Queen’s Quay

• North Sea – continue developing
• ffshore wind opportunities with

Utilities

E UR O PE

Offshore Wind in: France Germany Netherlands United Kingdom

LA T A TIN A AME R E R IC A

Mexico Chile

NO R TH AME R I R IC A C A

In Canada: BC Ontario Quebec In the US: California Illinois Kansas Oklahoma Texas New York

• United States – continue to evaluate several opportunities
• Mexico/Latin America – establish a local presence (Mexico) to

take advantage of changes resulting from recently announced energy reforms and prospecting projects in support of large mining/industrial power requirements

25

• Stability and Growth: The track record and ability to

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 Summary

26

Appendix

27

Reporting of Non-IFRS Financial Measures

This investor presentation includes references to Northland’s adjusted EBITDA and free cash flow, measures not prescribed by International Financial Reporting Standards (IFRS). Adjusted EBITDA and free cash flow, as presented, may not be comparable to other similarly-titled measures presented by other publicly-traded companies, as these measures do not have a standardized meaning under IFRS. These measures should not be considered in isolation or as alternatives to net income, cash flow from operating activities or other measures of financial performance calculated in accordance with IFRS. These measures are also not necessarily indicative of operating income or cash flows from

• perating activities as determined under IFRS. Rather, these measures are provided to complement IFRS measures in the analysis of

Northland’s results of operations, and are used by management to evaluate the performance of the company for internal assessment

• purposes. Management believes that adjusted EBITDA and free cash flow are widely-accepted financial indicators used by investors to assess

the performance of a company. These measures provide investors with additional information to assist them in understanding these critical components of the company’s financial performance, including its ability to generate cash through its current operations. These measures have been applied consistently for all periods presented in this document. Adjusted EBITDA Adjusted EBITDA provides investors with an indication of Northland’s capacity to generate income from operations and investments before taking into account management’s financing decisions and the costs of consuming tangible and intangible capital assets, which vary according to asset type and management’s estimate of their useful lives. Adjusted EBITDA is calculated as income (loss) before income taxes adjusted for depreciation of property, plant and equipment, amortization of contracts and other intangible assets, net finance costs, Gemini subordinated debt earned by Northland, fair value losses (gains) on derivative contracts, fair value losses (gains) on convertible shares, unrealized foreign exchange losses (gains), gain on the sale of chipping facility, write- down of Panda-Brandywine investment, elimination of non-controlling interests and finance lease and equity accounting. Free cash flow Free cash flow is calculated as cash flow provided by operating activities adjusted for net change in non-cash working capital balances, capital expenditures, interest paid, scheduled principal repayments on term loans, funds set aside for scheduled principal repayments and for asset purchases, restricted cash (funding) for major maintenance, write-off of deferred development costs, consolidation of managed facilities, income from equity accounted investments, proceeds from sale of assets, corporate credit facility renewal costs, and preferred share

• dividends. This measure, along with cash flow provided by operating activities, is considered to be a key indicator for investors to understand

Northland’s ability to generate cash flow from its current operations. Readers should refer to our MD&As accompanying our financial statements for an explanation of adjusted EBITDA and free cash flow, and for a reconciliation of Northland’s reported adjusted EBITDA to its consolidated income (loss) before taxes and a reconciliation of Northland’s free cash flow to its cash provided by operating activities. These are filed from time to time on our company’s website www.northlandpower.ca.

APPENDIX

24

28

Operating Facilities

Project Location Size Ownership Technology PPA Term Gas Term Thorold ON, CA 265 MW 100% Natural gas cogeneration 2030 2030 Kingston ON, CA 110 MW 100% Natural gas combined cycle 2017* 2017 Iroquois Falls ON, CA 120 MW 100% Natural gas cogeneration 2021* 2021 Spy Hill SK, CA 86 MW 100% Natural gas peaking plant 2036 n/a^ Kirkland Lake ON, CA 132 MW 68%** Biomass and natural gas combined cycle and peaking 2015* 2015 Cochrane ON, CA 42 MW 68%** Biomass and natural gas combined cycle 2015 2016 Mont Louis QC, CA 100 MW 100% Wind 2031 n/a Jardin d’Éole QC, CA 128 MW 100% Wind 2029 n/a Kavelstorf and Eckolstadt Germany 22 MW 100% Wind n/a*** n/a Roof-top Solar ON, CA 2 MW 75% Solar 2031 n/a North Battleford SK, CA 260 MW 100% Natural gas combined cycle 2033 n/a^ Ground-Mount Solar (Sites #1-9) ON, CA 90 MW 100% Solar 2033- 2034 n/a McLean’s Mountain ON, CA 60 MW 50% Wind 2034 n/a

* 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

APPENDIX

29

Construction & Development Projects

Project Location Size Ownership Technology Expected COD PPA Term Expected Capital Cost Ground-Mount Solar (Sites #10-13) ON, CA 40 MW 100% Solar 2015 20 years $247 million Gemini

Netherlands

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

Under Construction

Project Location Size Ownership Technology Expected COD PPA Term Expected Capital Cost Grand Bend ON, CA 100 MW 50% Wind 2016 20 years $385 million* Frampton QC, CA 24 MW 67% Wind 2016 20 years $90 million* Nordsee One

Germany

332 MW 85% Offshore wind 2017 10 years €1.2 billion*

Advanced Development

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

APPENDIX

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FINANCIAL SUMMARY Recent Share Price (TSX: NPI) $17.13 Shares (Common + Class A) 149 million Institutional Ownership ~29% Management Ownership ~38% Annual Dividend $1.08 Annual Dividend Yield 6.3% Total Debt, Net of Cash $2,116 million Convertible Debentures (NPI.DB.A, NPI.DB.B) $88 million Preferred Shares (NPI.PR.A, NPI.PR.C) $262 million Market Capitalization (Common + Class A) $2,546 million Enterprise Value $4,960 million Credit Rating (S&P) BBB Stable Outlook

Financial Summary

APPENDIX

31

Ownership of Northland Shares

Alignment of Management and Shareholder Interests Board and Management 38% Institutional 29% Retail 33%

32

Michael Shadbolt Vice President and General Counsel Joined 2011 Sam Mantenuto Chief Operating Officer and Vice Chair Joined 1997 Paul Bradley Chief Financial Officer Joined 2011 John Brace Chief Executive Officer Joined 1988 Jim Cipolla Vice President, Gas and Electricity Marketing Joined 1999 Dino Gliosca Vice President, Engineering Joined 1987 David G. Dougall Vice President, Operations Joined 1990

Management owns approximately 38%

• f Northland equity.

Management has over 250+ years of experience in the energy industry with average tenure of over 15 years.

James Temerty Chairman Formed Northland 1987 Darryl Bergman Corporate Treasurer Joined 2013 Sean Durfy President and Chief Development Officer Joined 2014

Experienced Management Team

John Pires VP Project Finance and M&A Joined 2014

33

Project COD Location Size Budget (millions) Actual (millions) % Under On Time Iroquois Falls cogeneration plant 1997 ON 110 MW $158 $151 4.2%



Iroquois Falls gas turbine replacement 2003 ON 80 MW $24 $23 2.1%



Kirkland Lake peaker facility 2004 ON 30 MW $30 $30 1.3%



Mont Miller wind farm 2005 QC 54 MW $98 $93 5.1%



Jardin d’Éole wind farm 2009 QC 128 MW $268 $268 0.2%



Thorold cogeneration facility 2010 ON 265 MW $520 $509 2.1%



Mont Louis wind farm 2011 QC 100 MW $181 $173 4.4%



Spy Hill peaker facility 2011 SK 86 MW $141 $137 2.8%



North Battleford facility 2013 SK 260 MW $677 $641 5.3%



Ground-mounted solar phases I &II 2013 ON 80 MW $390 $387 1.1%

*

McLean’s Mountain wind farm 2014 ON 60MW $185 $183 TBD



Northland’s construction track record has been primarily one of on-time, on-budget project delivery*

The Phase III ground-mounted solar projects is currently under construction

Construction Track Record

*Ground-mounted solar phase I projects were on-time as a group however, certain individual sites started commercial

• perations slightly later than planned

34

Gemini - Installation Vessels

Aeolus Monopile Installations Vessel Nexus Cable Laying Vessel

GEMINI

35

Gemini - Electrical System

= Offshore = Near shore = Wadden Sea

• 210 km of cable required

GEMINI

36

Gemini - Onshore Substation

GEMINI

30

37

Offshore Substation and Directional Drilling

GEMINI

31

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Gemini - Monopile Foundations

• 150 Monopiles
• Weight: 670 – 916t
• Length: 59 – 73m
• Diameter: 5.5 – 7.0m

GEMINI

39

Gemini - Transition Pieces

• 150 Transition Pieces
• Weight:

ca 190t

• Length:

21m

• Diameter:

5.5m

GEMINI

33

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Adam Beaumont

Director of Finance 647.288.1929

Barb Bokla

Manager, Investor Relations 647.288.1438

investorrelations@northlandpower.ca www.northlandpower.ca

Investor Relations Contacts