Release Date: November 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Innergex Renewable Energy Inc (INGXF, Financial) reported strong operational availability of its plants, ensuring readiness to capitalize on natural resources.
- The company successfully submitted a portfolio of projects in British Columbia, demonstrating effective project management and strategic growth.
- Innergex is expanding its presence in Chile with new projects, including battery installations to leverage market opportunities.
- The company executed a refinancing initiative for its hydro portfolio, exceeding initial financial expectations and enhancing financial flexibility.
- Innergex's hydro facilities in British Columbia are performing in line with long-term expectations, reversing previous years' dry conditions.
Negative Points
- The quarter was impacted by below-average wind regimes and lower water flows, affecting overall production.
- Free cash flow per share decreased compared to the previous year, influenced by lower EBITDA and higher interest payments.
- The company is tracking towards the lower end of its 2024 guidance due to industry-wide wind resource issues.
- There is uncertainty regarding the recontracting of the Curtis Palmer hydro facility, with potential impacts on future revenue.
- The BC RFP process presents challenges due to inflation pressures and the need for contingencies in project pricing.
Q & A Highlights
Q: How might changes in US policy, particularly regarding tax credits or tariffs, impact the Palomino project and your broader portfolio?
A: Michel Letellier, President and CEO, stated that they have secured solar panels from a local supplier, minimizing tariff concerns. While potential reductions in corporate tax rates could affect PTC and ITC suppliers' appetites, the project is well-positioned for a long-term PPA in Ohio. The flexibility of not having committed to a fixed price yet allows them to adjust to any policy changes.
Q: Can you elaborate on your strategy and outlook for the Chilean market, especially with the introduction of more batteries and the decline in thermal generation?
A: Michel Letellier explained that coal capacity in Chile is decreasing, necessitating replacement with renewable energy and batteries. They anticipate needing 2,000-3,000 MW of batteries over the next few years. Current arbitrage opportunities are favorable, with expected capacity payments and high arbitrage rates. The strategy is to integrate batteries into their long-term portfolio to support 24/7 renewable energy contracts.
Q: Regarding the battery storage projects in Chile, have you secured the necessary supplies and locked in project costs?
A: Michel Letellier confirmed that procurement contracts for the battery storage projects have been signed, securing supplies and locking in a significant portion of project costs. They expect slight improvements in costs due to efficiencies gained from previous projects and the current market conditions.
Q: How do you prioritize capital allocation between opportunities in Chile and BC, considering return profiles?
A: Michel Letellier noted that while capital is limited, Chilean investments offer quicker returns and cash flow contributions. BC projects, although compelling, are longer-term, with interconnections expected post-2030. They plan to balance resources and ensure projects are accretive, aiming for double-digit returns.
Q: What are your plans for recontracting the Curtis Palmer facility, and how does Hydro Quebec's involvement factor into this?
A: Michel Letellier mentioned that they are exploring options with Hydro Quebec's assistance. The current contract is volume-based, expiring in late 2025 or 2026. They are optimistic about securing better pricing due to the declining competitiveness of offshore wind and potential changes in PTC policies.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
