Executing on Growth Executing on Growth Investor Presentation April 2015 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 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 otherwise. All figures are presented in Canadian dollars unless otherwise indicated. 1
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. 35% 1,345 MW Management in operation Ownership CAD$1.08 dividend (~6% yield) 2 2
Diversification by Geography and Technology 1 Cochrane 32 MW* 2 Kirkland Lake 101 MW* 3 Iroquois Falls 120 MW 12 4 Kingston 110 MW 10 5 Kavelstorf 7 MW 9 6 EckolstIädt 15 MW 7 7 Jardin d’Éole 128 MW 1 8 Thorold 265 MW 3 2 9 Mont Louis 100 MW 14 16 13 17 10 Spy Hill 86 MW 4 5 11 11 Roof-top solar 1 MW* 15 12 North Battleford 260 MW 8 6 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* In operation Under construction Thermal Wind In advanced development Biomass Solar *Represents Northland’s economic interest 3 **Ground-mount solar: 90 MW in operations and 40 MW under construction.
Strong and Growing Financial Results Adjusted EBITDA Revenues $800 $500 $700 CAGR: CAGR: $400 $600 28% 29% Millions of CAD Millions of CAD $500 $300 $400 $200 $300 $200 $100 $100 $0 $0 2012 2013 2014 2015F 2012 2013 2014 2015F Prior Growth Initiatives Have Shown Results Expected to generate over CAD$380 million of Adjusted EBITDA in 2015 4
Development Pipeline Operating Assets* Development 1,345 Construction* Pipeline Advanced MW 732 Development > 2,200 MW Thermal 974 MW MW Wind 280 MW • Power contracts Solar 91 MW • Ensure projects in hand delivered on time, • Finalizing supply on budget • Operations and agreements • Evaluate and focus maintenance • Financing on opportunities that meet investment criteria highest DEGREE OF CERTAINTY lowest 5 * 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 6
Northland’s Growth Strategy Northland has been evaluating more opportunities outside of Canada The focus has been on jurisdictions and technologies that satisfy our 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 7
Development Focus Areas Canada – Thermal, renewables North Sea – continue developing offshore wind opportunities United States – continue to evaluate opportunities Mexico/Latin America – establish a local presence (Mexico) to take advantage of longer-term opportunities 8
Development Strategy • Canada Larger • U.S. projects • Latin America • Europe Appropriate Target project specific return markets thresholds Stable High-Quality Projects with Attractive Returns Utilize Contracted proven power • Natural gas technologies • Wind 9 • Solar
Turbine installation: Development Focus in Offshore Wind Handling at the base port Offshore Wind Development and Milestones in Europe* 20,000 15,000 Megawatts (MW) London Array (630 MW) delivered on time, on budget 10,000 1st commercial offshore wind farm Vindeby (Denmark) 4.95 MW 5,000 0 New Build Previously Installed Capacity Offshore wind expected to quadruple in Europe by 2020, quintuple internationally** 10 *Source: National Renewable Energy Actions Plans, European Wind Association **Source: GlobalData
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 11
Illustrative Adjusted EBITDA Diversification 2018 By Segment By Geography Solar Thermal 8% 17% Original NUGs** 6% Europe 62% Onshore Wind 7% Ontario 23% Quebec Offshore Wind 3% Saskatchewan 62% 12% * 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. 12
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