Executing on Growth Investor Presentation September 2016 0 NPI.TO
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 2015 Annual Report and 2015 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 otherwise. All figures are presented in Canadian dollars unless otherwise indicated. 1
Northland Overview Canadian-based Global Power Producer in business since 1987 Full lifecycle developers, owners, and operators of our facilities 1,394 MW * in operation (thermal, wind, and solar facilities) 932 MW (642 MW* net) under construction Stability Growth Commitment Well-diversified geographically and by Developing thermal, Management has a technologies wind, and solar vested interest projects in North through a 35% $7.7 billion of assets America, Europe, and ownership interest Generate long-term Mexico. stable cash flows Adjusted EBITDA expected to double by 98% of revenues 2018 from long-term 2 power contracts * Represents Northland’s economic interest
Evolution of Northland Grown from a local Canadian-based developer to an International Power Producer Local Developer Income Fund Era Post-Merger / International Player (1987 – 1997) (1997 – 2009) (2009 – Current) Private Entity Public Entity Private Developer 1987 1997 2009 2016 Publically Listed Income Fund Merger Income Fund Founding IPO Northland’s Operating Capacity 2,000 1,600 1,200 MW* 800 400 0 1987 1991 1997 2004 2008 2009 2010 2011 2012 2013 2014 2015 2016F 2017F 3 Thermal Solar Onshore Wind Offshore Wind *Megawatts represent NPI’s net economic interest
Northland’s Asset Diversification In operation Under construction Geographic Under Under Regions: Operating* Construction* Technologies: Operating* Construction* Canada 1,372 MW - Thermal 943 MW - The Netherlands - 360 MW Wind 336 MW 642 MW Germany 22 MW 282 MW Solar 115 MW - Total 1,394 MW 642 MW Total 1,394 MW 642 MW 4 *Represents Northland’s economic interest
Long Term Focus Delivers Value Northland’s full life cycle commitment 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 origination feasibility signed financial commercial confirmed PPA close operations date Development and construction value Risk/Reward Operations cashflow to create value to service dividends Initial risk Greatest exposure Diminishing risk ADVANCED UNDER OPERATIONS IN DEVELOPMENT DEVELOPMENT CONSTRUCTION Stage 5
Project Level Debt: Key Risk Mitigation Tool Northland finances projects using primarily fixed-rate non-recourse project level debt Provides Northland and shareholders with reduced risk profile and added security as project financing creates added discipline Ensures quality projects are constructed to achieve performance and reliability over the long term Total Project Debt Project Equity (70-80%) Financing Project Financing Leads to Risk Profile Reduction • Project is pledged as collateral; corporate entity not affected if Non-Recourse project in difficulty • An independent engineer & legal counsel conduct thorough due Independent Reviews diligence on each projects construction and operations Strict debt service coverage • Ensures high quality cash flows. This emphasizes the need to lock ratio & covenants into long-term fixed contracts in advance of construction Protection for future capital • Requires Major Maintenance Reserves to be established upgrades Debt fully repaid after • Debt repayment occurs over the life of the power contract contract period Adequate Insurance 6 • Requires business interruption insurance Protection 6
Development – Our Pipeline Operating Development Construction* Assets* Pipeline Advanced 642 1,394 > 2,200 Development MW MW MW D E G R E E O F P R O J E C T C E R T A I N T Y Highest L o w e s t Evaluate and focus Power contracts Ensure projects Operations and on opportunities in hand are delivered on time, maintenance that meet our and on budget Finalizing supply Thermal 943 MW* investment criteria agreements Wind 336 MW* * Represents Northland’s economic interest Solar 115 MW* Financing 7
Focus on Executing Construction Projects Nordsee One Gemini 332 MW offshore wind farm 600 MW offshore wind farm COD: 2017 COD: End of 2017 60% interest 85% interest Nordsee One 60 kilometers apart Offshore Wind Europe Project Costs: Over € 4 billion Gemini Management focused on executing 932MW * of projects currently under construction 8 * Northland’s economic interest totals 642 MW.
Offshore Wind Projects – Construction timeline Today Install Foundations Install Offshore Substation Installation of Cable Turbine Installation First Power COD 2015 2016 2017 Install Foundations Install Offshore Substation Installation of Cable Turbine Installation First Power COD 9 Construction continues to progress well
Gemini – Project Overview Offshore Wind Project Location North Sea, Netherlands Capacity 600 MW (2 sites x 300 MW) Capital Cost € 2.8 billion Northland interest 60% (360 MW) Power contract Fixed price; 15-year contract with the Dutch government Operations & maintenance Siemens (15-year contract) Partners Siemens (20%), Van Oord (10%), HVC (10%) COD 2017, pre-completion revenues started in March 2016 All 150 turbines have been installed in August 2016 10
Gemini – Offshore Substation 11
Gemini – Nacelles, Towers, and Blades at Port 12
Gemini – Turbine Installation August 2016 – All turbines Installed 13 13
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