Project Highlights
* Hai Long is a 1.0 gigawatt (GW) offshore wind project being developed as a
joint venture between Northland (60 per cent) and Mitsui & Co. (40 per
cent).
* The project is Northland's first offshore wind project in Asia and fifth in
Northland's offshore wind portfolio.
* Hai Long 2A (294 MW) benefits from a 20-year PPA with Taipower, and Hai Long
2B and 3 (728 MW) benefits from a 30-year Corporate Power Purchase Agreement
(CPPA) with an investment grade counterparty (S&P: AA-).
* Upon completion of Hai Long and the Baltic Power project, the company's
gross installed offshore wind capacity will nearly triple from 1.2 GW to
3.3 GW.
* The total capital cost of the project is projected to be approximately $9
billion. Northland has secured all necessary equity funding required for the
project. Financial close is expected to follow shortly, upon satisfaction of
all relevant conditions precedent to the financing being achieved.
* The project is expected to provide strong Free Cash Flow and Adjusted EBITDA
(non-IFRS measures)(4) upon achieving full commercial operations in
2026/2027.
* The project has achieved significant milestones, including in-water
construction and fabrication activities, all environmental approvals, major
permits and construction contracts.
* Once completed, Hai Long is expected to power the equivalent of over one
million Taiwanese households and make a significant contribution to Taiwan's
renewable energy targets.
TORONTO, Sept. 21, 2023 (GLOBE NEWSWIRE) -- Northland Power Inc. (Northland)
(TSX: NPI) today announced that its Hai Long offshore wind project (Hai Long or
the project) in Taiwan has signed a credit agreement to secure 118 billion New
Taiwan Dollars long-term over 20 year non-recourse financing (equivalent of $5
billion CAD). The weighted average all-in interest cost for the term of the
financing is expected to be approximately five per cent.
The non-recourse project financing will be provided by over 15 international and
local lenders with support from multiple Export Credit Agencies (ECAs) from six
different countries. The project is expected to reach financial close shortly,
upon satisfaction of all relevant conditions precedent to the financing being
achieved. Upon the achievement of financial close, total debt and equity
required for the project are expected to be fully funded, which includes future
cash flows expected to be received from sell-down proceeds and pre-completion
revenues.
"Today's announcement is a major achievement for Northland, our partners, and
the offshore wind industry, globally and in Taiwan," said Mike Crawley,
President and Chief Executive Officer of Northland. "We are progressing yet
another world-class offshore wind project despite a challenging market
environment. The project will produce high quality and stable cashflow over a
30-year period with further optimization opportunities. Offshore wind is
necessary to meet global renewable energy demand in the years ahead and
Northland is one of the few companies able to originate, develop, finance,
construct, and operate such facilities."
Hai Long's total cost is projected to be approximately $9 billion, with funding
from its $5 billion of non-recourse debt by the project lenders, approximately
$1 billion of pre-completion revenues, and the remaining equity investment
contributed by the project's partners. Northland's equity investment has been
fully secured through funds raised under its At-the-Market equity (ATM) program
in 2022 and its minority stake sale to Gentari International Renewables Pte.
Ltd. (Gentari), which is anticipated to close during the fourth quarter of
2023, subject to satisfaction of all closing conditions pursuant to the terms of
the purchase and sale agreement. Upon closing of the sell-down transaction,
Gentari will hold a 29.4 per cent indirect equity interest in the project and
Northland will own 30.6 per cent and will continue with the lead role in
construction and operation.
"This financing is Northland's first in Asia and, once closed, will be the
largest non-recourse offshore wind project financing to date in the region,"
said Pauline Alimchandani, Northland's Chief Financial Officer. "We would like
to thank the project team, our partners, and all the financial and capital
providers for working together to achieve this significant milestone. Once
operational, Hai Long is expected to provide significant, long-term contracted
Adjusted EBITDA and Free Cash Flow to our business and shareholders."
Northland's interest in Hai Long is expected to generate a five-year average of
approximately $230 to $250 million of Adjusted EBITDA (a non-IFRS measure)(4
)and $75 to $85 million of Free Cash Flow (a non-IFRS measure)(4) per year once
operational, delivering significant long-term value for Northland's
shareholders. Hai Long's project financing is denominated primarily in New
Taiwan Dollars, along with Japanese yen and European euros. Interest rate
exposures are being managed with a combination of fixed rate tranches and long-
term interest rate hedges in line with Northland's risk management strategy and
project finance terms. Hai Long is also entering into currency hedges to manage
foreign exchange exposures associated with certain construction contracts. In
addition, Northland will use currency hedges to stabilize the Canadian dollar
equivalent for a large portion of its projected repatriated cash distributions,
projected through 2033, and will enter into additional hedges beyond this time
period, on an ongoing basis.
Hai Long is located approximately 45 - 70 kilometers off the Changhua coast in
the Taiwan Strait and consists of two phases, Hai Long 2 and Hai Long 3, with an
expected combined generating capacity of 1,022 MW. Hai Long 2A was awarded up to
300 MW of grid capacity under a Feed-in-Tariff, while Hai Long 2B and 3 were
awarded up to 744 MW of grid capacity in Taiwan's first competitive price-based
auction in 2018. Hai Long subsequently signed a CPPA for the 744 MW auction
portion in 2022. The project has obtained all environmental approvals and its
major construction permit and has commenced with early construction work and
fabrication for components. Completion of construction activities and full
commercial operations are expected in 2026/2027. In addition, the project
secured a 15-year operations and maintenance agreement with the turbine
supplier, with options to extend.
Hai Long will play an important role in helping the Government of Taiwan achieve
its renewable energy target of 15 GW of offshore wind to be constructed between
2026 and 2035. Once operational, Hai Long will be one the largest offshore wind
facilities in Asia, and provide enough clean energy to power more than one
million Taiwanese households.
Project Overview
+----------------------------------------+-------------+-----------------------+
|(C$) |Total Project|Northland's Interest(1)|
+----------------------------------------+-------------+-----------------------+
|Installed Capacity |1,022 MW |313 MW |
+----------------------------------------+-------------+-----------------------+
|Hai Long 2A |294 MW |n/a |
+----------------------------------------+-------------+-----------------------+
|Hai Long 2B & 3 |728 MW |n/a |
+----------------------------------------+-------------+-----------------------+
|Contracted Life | | |
+----------------------------------------+-------------+-----------------------+
|Hai Long 2A |20 years |n/a |
+----------------------------------------+-------------+-----------------------+
|Hai Long 2B & 3 |30 years |n/a |
+----------------------------------------+-------------+-----------------------+
| | | |
+----------------------------------------+-------------+-----------------------+
|Total Capital Costs |$9 billion |$2.7 billion |
+----------------------------------------+-------------+-----------------------+
|Non-Recourse Project Financing |$5 billion |$1.5 billion |
+----------------------------------------+-------------+-----------------------+
|Total Equity |$3 billion |$0.9 billion |
+----------------------------------------+-------------+-----------------------+
|Pre-Completion Revenues used to fund| | |
|Capital costs |$1 billion(3)|$0.3 billion(3) |
+----------------------------------------+-------------+-----------------------+
| | | |
+----------------------------------------+-------------+-----------------------+
|5-year Average Annual Adjusted EBITDA (a| | |
|non-IFRS measure)(4) |n/a |$230 -250 million(2) |
+----------------------------------------+-------------+-----------------------+
|5-year Average Annual Free Cash Flow (a| | |
|non-IFRS measure)(4) |n/a |$75-85 million |
+----------------------------------------+-------------+-----------------------+
| | | |
+----------------------------------------+-------------+-----------------------+
|Estimated annual net production |4,500 GWh |n/a |
+----------------------------------------+-------------+-----------------------+
|Non-Recourse Debt Term |Over 20 years|n/a |
+----------------------------------------+-------------+-----------------------+
|Weighted Average All-in Interest Cost |-5 per cent |n/a |
+----------------------------------------+-------------+-----------------------+
Northland's interest reflects sell-down of a 49% interest to Gentari
1. expected in the fourth quarter of 2023, resulting in net interest of 30.6%.
2. Assumed NTD/CAD exchange rate at 0.046.
It is projected a total of $1.1 billion Pre-Completion Revenues will be
generated prior to full commercial operations. $1.0 billion of those Pre-
Completion Revenues will be assumed to be part of Hai Long's funding plan
with the remainder to be distributed to sponsors at commercial operations
3. (approximately $30 million net to Northland).
4. See Non-IFRS Financial Measures and Forward-Looking Statements below.
Expected Financial Contribution from Oneida, Baltic Power and Hai Long
In 2023, Northland has achieved or expects to achieve financial close on three
projects: Oneida, Baltic Power and Hai Long. These projects have and/or will be
funded through an aggregate equity investment by Northland, net of sell-down
proceeds, of $1.75 billion. The net proceeds have been fully secured primarily
through: ATM proceeds in 2022, corporate hybrid issuance in 2023, and available
cash and liquidity on hand. Once all three projects are fully operational,
anticipated by 2027, they are expected to collectively generate an aggregate
Adjusted EBITDA and Free Cash Flow (non-IFRS measures)(4) of $570 to $615
million (5) (6) and $185 to $210 million (5)( 6), respectively, resulting in
significant value creation and accretion for Northland's shareholders.
5. Based on a 5-year annual average from the completion date.
The projected Adjusted EBITDA and Free Cash Flow are presented to provide
additional information relating to the projects' contributions to the
Company's results of operations. This information may not be appropriate
6. for other purposes.
ABOUT NORTHLAND POWER
Northland Power is a global power producer dedicated to helping the clean energy
transition by producing electricity from clean renewable resources. Founded in
1987, Northland has a long history of developing, building, owning and operating
clean and green power infrastructure assets and is a global leader in offshore
wind. In addition, Northland owns and manages a diversified generation mix
including onshore renewables, efficient natural gas energy, as well as supplying
energy through a regulated utility.
Headquartered in Toronto, Canada, with global offices in eight countries,
Northland owns or has an economic interest in approximately 3.2 GW (net 2.7 GW)
of operating capacity. The company also has a significant inventory of projects
in construction and in various stages of development encompassing approximately
16 GW of potential capacity.
Publicly traded since 1997, Northland's common shares, Series 1 and Series 2
preferred shares trade on the Toronto Stock Exchange under the symbols NPI,
NPI.PR.A and NPI.PR.B, respectively.
NON-IFRS FINANCIAL MEASURES
This press release includes references to the Company's adjusted earnings before
interest, income taxes, depreciation and amortization ("Adjusted EBITDA") and
Free Cash Flow, which are measures not prescribed by International Financial
Reporting Standards ("IFRS"), and therefore do not have any standardized meaning
under IFRS and may not be comparable to similar measures presented by other
companies. Non-IFRS financial measures are presented at Northland's share of
underlying operations. These measures should not be considered alternatives to
net income (loss), cash flow from operating activities or other measures of
financial performance calculated in accordance with IFRS. Rather, these measures
are provided to complement IFRS measures in the analysis of Northland's results
of operations from management's perspective. Management believes that
Northland's non-IFRS financial measures are widely accepted and understood
financial indicators used by investors and securities analysts to assess the
performance of a company, including its ability to generate cash through
operations. For a detailed description of each of the non-IFRS financial
measures referred to above, including the reconciliations for such non-IFRS
financial measure to their most directly comparable IFRS financial measure, see
Section 1: Non-IFRS Financial Measures, Section 4.5: Adjusted EBITDA, and
Section 4.6: Adjusted Free Cash Flow and Free Cash Flow in our MD&A for the
three and six-month periods ended June 30, 2023, which is incorporated by
reference and available under the Company's profile on SEDAR+ at
www.sedarplus.com.
FORWARD-LOOKING STATEMENTS
This press release contains certain forward-looking statements including certain
future oriented financial information that are provided for the purpose of
presenting information about management's current expectations and plans.
Northland's actual results could differ materially from those expressed in, or
implied by, these forward-looking statements and, accordingly, the events
anticipated by the forward-looking statements may or may not transpire or occur.
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," "predicts," "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 Northland's expectations for guidance, the completion of
construction, the timing for and attainment of commercial operations, the
project's anticipated contributions to Adjusted EBITDA and Free Cash Flow, the
expected generating capacity of the project, and the future operations,
business, financial condition, financial results, priorities, ongoing
objectives, strategies and outlook of Northland and its subsidiaries, all of
which may differ from the expectations stated herein. These statements are based
upon certain material factors or assumptions that were applied in developing the
forward-looking statements, including the design specifications of development
the projects, issuance of notices to proceed to contractors in accordance with
contractual milestones, the provisions of contracts to which Northland or a
subsidiary is a party, management's current plans and its perception of
historical trends, current conditions and expected future developments, as well
as other factors, estimates, and assumptions 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 include, but are not
limited to, risks associated with sales contracts, Northland's reliance on the
performance of its offshore wind facilities at Gemini, Nordsee One and Deutsche
Bucht for approximately 50% of its Adjusted EBITDA and Free Cash Flow,
counterparty risks, impacts of regional or global conflicts, contractual
operating performance, variability of sales from generating facilities powered
by intermittent renewable resources, offshore wind concentration, natural gas
and power market risks, commodity price risks, operational risks, recovery of
utility operating costs, Northland's ability to resolve issues/delays with the
relevant regulatory and/or government authorities, permitting, construction
risks, procurement and supply chain risk, project development risks, disposition
and joint venture risk, competition risks, acquisition risks, financing risks,
interest rate and refinancing risks, liquidity risk, credit rating risk,
currency fluctuation risk, variability of cash flow and potential impact on
dividends, taxation, natural events, environmental risks, climate change, health
and worker safety risks, market compliance risk, government regulations and
policy risks, utility rate regulation risks, international activities,
cybersecurity, data protection and reliance on information technology, labour
relations, reputational risk, insurance risk, risks relating to co-ownership,
bribery and corruption risk, legal contingencies, and the other factors
described in the "Risks Factors" section of Northland's 2022 Annual Information
Form, which can be found at www.sedarplus.ca under Northland's profile and on
Northland's website at northlandpower.com. Northland has attempted to identify
important factors that could cause actual results to materially differ from
current expectations, however, there may be other factors that cause actual
results to differ materially from such expectations. 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,
and Northland cautions you not to place undue reliance upon any such forward-
looking statements.
The forward-looking statements contained in this release are based on
assumptions that were considered reasonable as of the date hereof. 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.
For further information, please contact:
Mr. Adam Beaumont, Vice President
Mr. Dario Neimarlija, Vice President
647-288-1019
investorrelations@northlandpower.com
(mailto:investorrelations@northlandpower.com)
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