Investor Presentation May 2015 0 NPI.TO Forward-Looking - - PowerPoint PPT Presentation

Investor Presentation

May 2015

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 2014 Annual Report and 2014 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

CAD$1.08 dividend

(~6% yield)

35%

Management Ownership

2

Solar 91 MW Thermal 974 MW Wind 280 MW

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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 Gemini 360 MW* 17 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 1 2 3 4 5 6 7 8 16 9 10 12 11 13 14 15 17

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Strong and Growing Financial Results

$0 $100 $200 $300 $400 $500 2012 2013 2014 2015F

Adjusted EBITDA

CAGR:

29%

$0 $100 $200 $300 $400 $500 $600 $700 $800 2012 2013 2014 2015F

Revenues

CAGR:

28%

Millions of CAD Millions of CAD

Prior Growth Initiatives Have Shown Results

Expected to generate over CAD$380 million of Adjusted EBITDA in 2015

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Development Pipeline

Development Pipeline Advanced Development Operating Assets*

1,345

MW

> 2,200

MW Construction*

732

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 974 MW Wind 280 MW Solar 91 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

2015 Focus

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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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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 with creditworthy offtakers – Stable economical and political jurisdictions (more mature markets) – Ability to project finance (non-recourse) – Produces appropriate project returns

8

Development Focus Areas

• Canada – Thermal, renewables
• North Sea – continue developing
• ffshore wind opportunities
• Mexico/Latin America –

establish a local presence (Mexico) to take advantage of longer-term opportunities

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Development Strategy

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

• Canada
• U.S.
• Latin America
• Europe
• Natural gas
• Wind
• Solar

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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**

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Development Focus in European Offshore Wind

• Offshore wind a compelling opportunity for Northland

– European utilities under balance sheet stress – Offshore wind industry has been significant de-risked over the last decade – Multiple projects financed recently with non-recourse project debt – 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

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Offshore Wind 62% Solar 8% Thermal 17% Original NUGs** 6% Onshore Wind 7%

By Segment

2018

Illustrative Adjusted EBITDA Diversification

Ontario 23% Saskatchewan 12% Quebec 3% Europe 62%

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 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 2014 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.

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Focus on Executing Construction Projects

* Northland announced plans to sell a 37.5% interest in these projects to First Nations pending certain conditions being met

Offshore Wind Europe

Project Costs: Over €4 billion

Onshore Canada Renewables

Project Costs: Over $700 million

Gemini

600 MW offshore wind farm COD: 2017 60% interest

Nordsee One

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

Grand Bend

100 MW onshore wind farm COD: 2016 50% interest

Ground Mounted Solar

4 x 10 MW solar farms COD: 2015 100%* interest

Management focused on executing 1,072 MW of projects currently under construction.

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Project Update – Gemini

Monopiles Transition Pieces Gemini

Location North Sea, Netherlands Capacity 600 MW (2 sites x 300 MW) Capital Cost €2.8 billion Northland interest 60% (360 MW) Power contract 15-year contract with the Dutch government Operations & maintenance Siemens (15 years) Partners Siemens (20%), Van Oord (10%), HVC (10%) COD 2017 Additional facts Will be largest wind farm in the North Sea and 2nd largest offshore wind farm in the world.

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Project Update – Gemini

Two party EPC contracting strategy

Clear contracting strategy that minimizes interface risk

Monopile Installations Vessel - Launched, June 2014 Cable Laying Vessel - Launched 2014

16 ∅130m

Statue of Liberty (93 m) Turbine height including foundation (225m)

1

Gemini – Turbines

Airbus 380 (70m) Length of blade (65 m) Over twice as long as a new Toronto streetcar

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Project Update – Gemini

• 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

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Project Update – Gemini

Risk Mitigation

Ground Risk Extensive surveys carried out Cabling Using experienced contractor to bury and install cable Weather risk Balance of Plant contractor accepts risk Realistic plans with contingency Construction delays Early intervention, realistic planning, experienced staff Managing Interfaces Two-contract strategy with experienced contractors Experience Competent staff/contractors with experience in building offshore wind parks Operation & Availability 15 year contract with Siemens with availability guarantee

GEMINI

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Project Update – Nordsee One

Nordsee One

Location North Sea, Germany Capacity 332 MW Capital Cost €1.2 billion Northland interest 85% (282 MW) Power contract Feed-in-tariff subsidy under the German Renewable Energy Act with a fixed price for 10 years Operations & maintenance Senvion (10 years) Partners RWE Innogy (15%) COD 2017 Additional facts Northland retains the rights to develop two additional projects (Nordsee Two & Three) over the next decade.

20

Project Update - Nordsee One

• 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 Foundation Installation

21

Project Update – Nordsee One

• Foundation/Turbine/Offshore

Substation fabrication

2015

• All foundations installed
• Cables installed
• Substation installed
• Grid connection/ Infield Cables

2016

• Installation Turbines & Commissioning
• First Power
• Commercial operations

2017

Milestones Nordsee One construction has commenced

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Summary of Project Risks – Nordsee One

Project Risks Mitigation

Weather Risk

• Contractors assume weather risk
• Schedules include significant buffers and contingency

Construction Delays

• Early intervention, realistic planning, experienced staff

Managing Interfaces

• Large scheduled buffers between EPC contracts
• Experienced EPC contractors used and early collaboration
• Partner (RWE) is experienced offshore wind developer

Interconnection

• Off-shore grid connection is built 2 years in advance for others of

Nordsee One becoming operational

• Transmission provider responsible for cable to Nordsee One

platform and export cable to shore Operation & Availability

• Long-term contract with reputable counterparty (turbine supplier)

10 Year PPA – Future Merchant Risk

• Northland receives superior returns over 10 year contract period,

with cost of capital paid back in the period - additional is upside after 10 years

DEVELOPMENT

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Governance and Oversight – Offshore Wind Projects

Both organizations are robust and self-sufficient with traditional oversight

Board Project Executive Equity Sponsors

Northland, Siemens, Van Oord, HVC

Gemini Nordsee One

Dedicated Project Team

• f 50 professionals

Board Project Executive Equity Sponsors

Northland, RWE

Dedicated Project Team

• f 40 professionals

Equity interest NPI’s CEO & CFO sit on both boards Informational communication channels providing expertise

Northland

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2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Payout Ratio Payout Ratio Nordsee One equity raise

Illustrative Payout Ratio

• Following COD of North Battleford and Ground-Mount Solar, Northland’s payout ratio returned to below

100% for fiscal year 2013-2014, notwithstanding a large capital raise for new projects in early 2014

• The 2014 and 2015 corporate capital raises for both offshore wind projects will likely elevate

Northland’s payout ratio above 100% until Gemini is completed 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 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 100% Payout Ratio Project Nordsee One and Gemini achieve COD

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• 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 35% ownership interest Summary

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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

27

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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

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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 Under review 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* Grand Bend ON, CA 100 MW 50% Wind 2016 20 years CAD$385 million*

Under Construction

*Represents full cost of the project (100%) ** Northland announced plans to sell a 37.5% interest in these projects to First Nations pending certain conditions being met

APPENDIX

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

Management has over 250+ years of experience in the energy industry with average tenure of over 13 years.

James Temerty Chairman Darryl Bergman Corporate Treasurer Sean Durfy President and Chief Development Officer

Management Team

John Pires Vice President, M&A and Project Finance Greg Lennox Vice President, Construction

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FINANCIAL SUMMARY Recent Share Price (TSX: NPI) $17.02 Shares (Common + Class A) 169 million Institutional Ownership ~30% Management Ownership ~35% Annual Dividend $1.08 Annual Dividend Yield 6.3% Total Debt, Net of Cash $2,668 million Convertible Debentures (NPI.DB.B, NPI.DB.C) $226 million Preferred Shares (NPI.PR.A, NPI.PR.C) $261 million Market Capitalization (Common + Class A) $2,872 million Enterprise Value $6,227 million Credit Rating (S&P) BBB Stable Outlook

Financial Summary

APPENDIX

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Gemini - Electrical System

= Offshore = Near shore = Wadden Sea

• 210 km of cable required

GEMINI

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Onshore Substation

GEMINI

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Offshore Substation and Directional Drilling

GEMINI

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Other Activities in Progress

2nd HHD duct installed LHVS – Switchyard Dredging Works OHVS Jackets

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Monopile Foundations

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

GEMINI

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Transition Pieces

• 150 Transition Pieces
• Weight:

ca 190t

• Length:

21m

• Diameter:

5.5m

GEMINI

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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