Investor Presentation September 2016 0 NPI.TO Forward-Looking - - PowerPoint PPT Presentation

Investor Presentation

September 2016

NPI.TO

Executing on Growth

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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

• therwise.

All figures are presented in Canadian dollars unless otherwise indicated.

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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

* Represents Northland’s economic interest

Stability Growth Commitment

• Well-diversified

geographically and by technologies

• $7.7 billion of assets
• Generate long-term

stable cash flows

• 98% of revenues

from long-term power contracts

• Developing thermal,

wind, and solar projects in North America, Europe, and Mexico.

• Adjusted EBITDA

expected to double by 2018

• Management has a

vested interest through a 35%

• wnership interest

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Evolution of Northland

*Megawatts represent NPI’s net economic interest 2009 2016 1997

Founding Income Fund IPO Merger

1987 Private Developer Publically Listed Income Fund Private Entity Public Entity

Local Developer (1987 – 1997) Income Fund Era (1997 – 2009) Post-Merger / International Player (2009 – Current)

• Grown from a local Canadian-based developer to an International Power Producer

MW*

400 800 1,200 1,600 2,000 1987 1991 1997 2004 2008 2009 2010 2011 2012 2013 2014 2015 2016F 2017F

Northland’s Operating Capacity

Thermal Solar Onshore Wind Offshore Wind

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Technologies: Operating* Under Construction* Thermal 943 MW

• Wind

336 MW 642 MW Solar 115 MW

• Total

1,394 MW 642 MW

Northland’s Asset Diversification

*Represents Northland’s economic interest

Under construction In operation

Geographic Regions: Operating* Under Construction* Canada 1,372 MW

• The Netherlands
• 360 MW

Germany 22 MW 282 MW Total 1,394 MW 642 MW

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Development and construction value Operations cashflow to create value to service dividends Initial risk Greatest exposure Diminishing risk

• rigination

OPERATIONS

IN DEVELOPMENT ADVANCED DEVELOPMENT

UNDER CONSTRUCTION feasibility confirmed signed PPA financial close commercial

• perations date

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

Risk/Reward Stage

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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

• Project is pledged as collateral; corporate entity not affected if

project in difficulty

Non-Recourse

• An independent engineer & legal counsel conduct thorough due

diligence on each projects construction and operations

Independent Reviews

• Ensures high quality cash flows. This emphasizes the need to lock

into long-term fixed contracts in advance of construction

Strict debt service coverage ratio & covenants

• Requires Major Maintenance Reserves to be established

Protection for future capital upgrades

• Debt repayment occurs over the life of the power contract

Debt fully repaid after contract period

• Requires business interruption insurance

Adequate Insurance Protection

Project Financing Leads to Risk Profile Reduction Total Project Financing Project Debt (70-80%) Equity

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Development – Our Pipeline

Development Pipeline Advanced Development Operating Assets*

1,394

MW

> 2,200

MW Construction*

642

MW

Power contracts in hand Finalizing supply agreements Financing Evaluate and focus

• n opportunities

that meet our investment criteria Ensure projects are delivered on time, and on budget Operations and maintenance Thermal 943 MW* Wind 336 MW* Solar 115 MW*

L o w e s t * Represents Northland’s economic interest Highest D E G R E E O F P R O J E C T C E R T A I N T Y

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Focus on Executing Construction Projects

Gemini

600 MW offshore wind farm COD: 2017 60% interest

Nordsee One

332 MW offshore wind farm COD: End of 2017 85% interest

Management focused on executing 932MW * of projects currently under construction

Offshore Wind Europe

Project Costs: Over €4 billion

*Northland’s economic interest totals 642 MW.

Gemini Nordsee One

60 kilometers apart

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Offshore Wind Projects – Construction timeline

2015 2016 2017

Install Foundations

Install Offshore Substation

Installation of Cable Turbine Installation COD

First Power

Install Foundations

Install Offshore Substation

Installation of Cable Turbine Installation COD

First Power

Construction continues to progress well

Today

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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

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Gemini – Offshore Substation

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Gemini – Nacelles, Towers, and Blades at Port

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Gemini – Turbine Installation

August 2016 – All turbines Installed

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• Gemini started to generate operating revenues in March 2016
• Once all 150 turbines are in operations (expected in 2017), the project is

expected to deliver stable cash flows due to:

Excellent, proven wind resource

• High capacity factor with

average wind speeds of approximately 10 m/s.

• Offshore wind seasonal

profile Fixed Price*

• SDE* mechanism is a

contract-for-differences that tops up market- based revenues to ~€169/MWh for defined amount of annual production Primarily fixed Operations & Maintenance contracts

• 15-year O&M contracts

for turbines and balance

• f plant maintenance

(underwater, land substation etc.)

• Guarantees 95%

availability

Gemini – Looking to Operations

Mar May Oct

Subsidy (TenneT - Utility) Market Price (Spot Market) Fixed price: €169/MWh

* Stimulering Duurzame Energieproductie (SDE) is a contract with the Dutch government (AAA rated by S & P) that subsidizes market revenue. If the average annual market price is below €44/MWh the subsidy is reduced by the difference.

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Nordsee One – Project Overview

Offshore Wind Project

Location North Sea, Germany Capacity 332 MW Capital Cost €1.2 billion Northland interest 85% (282 MW) Power contract A fixed price Feed-in-tariff subsidy for 10 years. Operations & maintenance Senvion (10 years) – guarantees high operating availability Partners RWE Innogy (15%) COD 2017 Additional facts Rights to develop two additional projects (Nordsee Two & Three)

• ver the next decade.

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Nordsee One – Construction Update

Monopiles and Transition Pieces at port

As at December 2015

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Nordsee One – Foundation Installation

First foundation installed in December 2015

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Nordsee One – Offshore Substation

April 2016 – All foundations installed

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Nordsee One – Offshore Substation

May 2016 – Jacket foundation installed

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Nordsee One – Offshore Substation Installed

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Offshore Wind 57% Solar 8% Thermal 19% Original NUGs 8% Onshore Wind 8%

2015

Adjusted EBITDA Diversification

2018

*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 2015, with additions to Adjusted EBITDA from projects under construction and other adjustments resulting from power contract renewals primarily in Ontario all as described in

• ur MD&A and 2015 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 Kirkland Lake, Kingston & Iroquois Falls power generating facilities.

Solar 15% Thermal 39% Original NUGs 34% Onshore Wind 12%

EBITDA expected to more than double by 2018

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40% 80% 120% 160% 200% 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Payout Ratio Payout Ratio 100% Payout Ratio

Payout Ratio Headroom on the Way

• Northland undertakes major capital programs that elevates its short-term payout ratio
• Last cycle included North Battleford, Spy Hill, and Ground-mounted Solar (2009-2013)
• As Gemini and Nordsee One are constructed, the payout ratio will be elevated again by design

until construction is completed in 2017

• Both offshore wind projects reaching commercial operations will provide significant support to

the long-term stability and future of Northland

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 Gemini equity raise 100% Normal payout ratio level prior to servicing dividends for growth projects

600 MW Build-Out Program Off-shore Wind Build-Out Cash Inflow from Build-Out Programs

North Battleford & Ground- Mount Solar achieve COD Project Nordsee One and Gemini achieve COD

Payout Ratio Headroom

Nordsee One equity raise

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Where To Next?

Development Focus

 Stable jurisdictions  Attractive risk profile  Larger, contracted opportunities  Primarily organic and late-stage development opportunities

ASIA

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• Use disciplined approach to capture strategic

development opportunities

• Visible pipeline of growth

Experienced development team

• Operating availability over 96%
• Strong health and safety record

Strong operating foundation

• On time, on budget focus
• Constructed over $2 billion in assets since inception
• Over $4 billion currently under construction

Construction expertise

• Stable and growing results
• $1.08 dividend
• BBB stable credit rating
• 98% revenues from long-term power contracts

Robust financials

• 35% ownership interest underscores management

alignment

• Combined over 200 years of experience

Committed management team

Why Invest in Northland?

• Over 25 years of developing and executing on operating projects and

delivering superior returns to our shareholders since inception

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Appendix

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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

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5 10 15 20 25

North Battleford** Ground Mounted Solar** Jardin Germany Mt Louis Kirkland* Cochrane* Spy Hill Thorold Kingston Iroquois Falls

Extension options**

Weighted average 13.2 years^

(without extension options**)

Remaining PPA Term for Each Operating Facility

*Represents Northland’s economic interest in the facility ** Facilities with dashed bar graph represent option to extend the power contract for additional period ^The weighted average PPA life is weighted by respective MW capacity. The thickness of each bar represents each facilities respective overall contribution to 2018 forecasted Adjusted EBITDA

Producing and Maintaining Stable Cash Flows – Long-term Focus

Weighted average 13.8 years**

(with extension options**)

Iroquois Falls Kingston Thorold Spy Hill Kirkland Lake* Germany Jardin North Battleford McLean’s Mtn Grand Bend Gemini Nordsee Ground-Mount Solar Mont Louis

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Operating Facilities

* Facilities have option to extend power contracts. ** Northland has an effective 77% residual economic interest *** 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

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 2030 2030 Mont Louis QC, CA 100 MW 100% Wind 2031 n/a Jardin d’Éole QC, CA 134 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 #1-13) ON, CA 130 MW 100% (90 MW) 62.5% (40 MW) Solar 2033- 2035 n/a McLean’s Mountain ON, CA 60 MW 50% Wind 2034 n/a Grand Bend ON, CA 100 NW 50% Wind 2036 n/a

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Construction & Development Projects

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

Netherlands

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

Germany

332 MW 85% Offshore wind 2017

~10 years

€1.2 billion*

Under Construction

*Represents full cost of the project (100%)

APPENDIX

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FINANCIAL SUMMARY Recent Share Price (TSX: NPI) $23.88 Shares (Common + Class A) 172 million Institutional Ownership ~29% Management Ownership ~35% Annual Dividend $1.08 Annual Dividend Yield 4.5% Total Debt, Net of Cash $5,347 million Convertible Debentures (NPI.DB.B, NPI.DB.C) $228 million Preferred Shares (NPI.PR.A, NPI.PR.B, NPI.PR.C) $261 million Market Capitalization (Common + Class A) $4,101 million Enterprise Value $10,164 million Credit Rating (S&P) BBB Stable Outlook

Financial Summary

APPENDIX

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Gemini – Project Structure

Two party EPC contracting strategy

Power sold to grid

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Nordsee One – Project Structure

Five party EPC contracting strategy and the grid connection built by Utility (TenneT)

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 Foundation Installation Power sold

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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