disciplined growth in key marketsjun 18, 2019 · combined basis – non-ifrs measure . the...

BLX and BLX.DB.A – Toronto Stock ExchangeJune 18, 2019

Disciplined Growth in Key MarketsStrategic Plan and Financial Objectives for 2023

2019 Investor Day

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Agenda9:30 Welcome

9:35 Pursuing Development the Boralex wayby Patrick Lemaire

9:55 Development and Optimizationby Patrick Decostre

Development and Optimization in Europe by Nicolas Wolff

Development and Optimization in North America by Hugues Girardin

Key Takeaways from the Development and Operations Teamby Patrick Decostre

Q&A Session

11:00 Break

11:15 Our ESG Approach by Julie Lajoye

Q&A Session

11:35 Financeby Bruno Guilmette

11:55 Closing Remarks by Patrick Lemaire

Q&A Session

Pursuing Developementthe Boralex Way

by Patrick LemairePresident and CEO

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Disclaimer

Forward-looking statementsCertain statements contained in this presentation, including those regarding future results and performance, are forward-looking statements based on current expectations. The accuracy of such statements is subject to a number of risks, uncertainties and assumptions that could lead to a material difference between actual results and the projections, including, but not limited to, the general impact of economic conditions, currency fluctuations, volatility in the selling prices of energy, the Corporation’s financing capacity, competition, changes in general market conditions, regulations governing the industry, raw material price increases and availability, regulatory disputes and other issues related to projects in operation or under development, as well as other factors listed in the Corporation’s filings with different securities commissions.

Combined basis – Non-IFRS measure The combined information (“Combined”) presented in this presentation results from the combination of the financial information of Boralex Inc.(“Boralex” or the “Corporation”) under IFRS and the share of the financial information of the Interests. The Interests represent significant investmentsby Boralex and although IFRS does not permit the consolidation of their financial information within that of Boralex, management considers thatinformation on a Combined basis is useful data to assess the Corporation’s performance. In order to prepare the Combined information, Boralex firstprepared its financial statements and those of the Interests in accordance with IFRS. Then, the Interests in the Joint Ventures and associates, Sharein earnings (losses) of the Joint Ventures and associates and Distributions received from the Joint Ventures and associates line items are replaced byBoralex’s respective share (ranging from 50% to 59.96%) in the financial statement items of the Interests (revenues, expenses, assets, liabilities, etc.).We refer you to the Non-IFRS measures section for more information.

Other non-IFRS measuresThis presentation contains certain financial measures that are not in accordance with International Financial Reporting Standard ("IFRS"). In order toassess the performance of its assets and reporting segments, Boralex uses the terms "EBITDA", "EBITDA(A)", "EBITDA(A) margin" "cash flowsfrom operations", "net debt ratio", "discretionary cash flows", "payout ratio" and "dividends paid per common share" . For more information, pleaserefer to Boralex’s MD&A.

GeneralThe data in this presentation is in Canadian dollars, unless otherwise specified.

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Experienced Leadership Team

• Complementary backgroud, leadership style and experience• New CFO brings additional expertise in transactions and financing• New Vice President and General Manager, Boralex Europe brings additional

expertise in sales development, operations and supplier relationships

Guy D’AoustVice President, Finance

Marie-Josée ArsenaultCorporateDirector,HumanRessources

Patrick DecostreVice Presidentand Chief Operating Officer

Alain PouliotGeneralManager,Operations

GabrielOuelletDirector, Biomass

Patrick LemairePresident andChief ExecutiveOfficer

PierreTrahanIT Director

Julie CussonDirector, Public Affairs and Communications

Hugues GirardinVice President,Development

Bruno GuilmetteVice Presidentand Chief Financial Officer

NicolasWolffVice Presidentand General Manager, Boralex Europe

PascalHurtubiseVice President, Chief LegalOfficer and Corporate Secretary

Main Achievements2013-2018

7

2020 Objectives Update

2,000 MW CAPACITY GOAL A YEAR AHEAD OF SCHEDULE

WELL UNDERWAY TO

$480-500M EBITDA(A) TARGET

8

Critical Mass Achieved as Planned

2018

+510 MW organic9% average yearly growth

2013

652 MW

1,942 MW+1,290 MW

+780 MW acquisition16% average yearly growth

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Strong Growth in Wind and in France

652 MW 1,942 MW

2013 2018

WIND

HYDRO

SOLAR

THERMAL

CANADA

FRANCE AND OTHER

UNITED STATES

10

High Visibility on Cash Flow Generation

2013 2018

UNDER CONTRACTS

MARKET PRICES

Average Length of Contract15 years

3% 2%

98%

Average Length of Contract13 years

97%

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BORALEX’S STRATEGIC PLAN

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Electric vehicles

Industry

Offices

Localsolar farms

Local wind farm

Baseload power generation

Dispatch balancingsettlement

Large scalewind generation

Solar generation

Transmissionand distribution automation

Utility scale storage

Home

Market Environment is Tipping

Birth of a new distributedenergy system

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Pursuing Development the Boralex Way

Boralex DNA

1. Success in developing small to mid-size projects

2. Development focused in key markets with more complexprocesses creating barriers to entry for larger players

3. Boots-on-the-ground approach with development team deeply involved from day one

4. Experience with strategic and financial partnerships

5. Strong values and culture of respect for employees, communities and environment (ESG-focused by nature)

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GROWTH

DIVERSIFICATION

CUSTOMERS

OPTIMIZATION


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GROWTHThrive in our current geographic markets and sectors of activities.


17

Growth in Well Known Key Markets

FRANCE UNITED STATESCANADA

20232018 20232018 20232018

48% 48% 4%52% 40% 8%

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Market Environment is Tipping

: Past value creation (indicative bar size)

: Current value creation (indicative bar size-orange: lower than yesterday / green: higher than yesterday)

XYZ

XX % / XX %

Procurement and Optimization

Prospection and Development

Repowering &revamping

Des

crip

tion

Call for tenders on equipment

Finding fieldsDealing with plant connection to the gridLand leasessecurisationBuilding andoperations authorizations

Asset repowering or revamping

Valu

eC

reat

ion

/

Value captured by the project

developer

Energy Saleand services

Value creation early in the process and in complementary services

HighMedium LowHigh Low High ?

Financing Construction Operation

Construction supervision and cost optimization

Optimizationof existing assetsRefinancing

PPA or support mechanismDebt andEquity financingSales

Med

ium

LowLowLow Med

ium

Med

ium

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DIVERSIFICATIONSpeed up our development in new technologies and enter

promising geographic markets.


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Prices are decreasingwhile installed capacities are booming

$m/MW2018 real GW

28% averageannualdecrease


Source: 2019 LCOE (Levelized Cost of Energy) Update BloombergNEFNote: the global benchmark is country weighed-average using the latest annual capacity additions. The storage LCOE is reflective of a utility-scale Li-ion battery storage system running at a daily cycle and includes charging costs assumed to be 60% of wholesale base power price in each country.

PV module cost and installed capacity

$m/MW2018 real GW

Wind turbine index and installed capacity

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Storage is becoming much more affordable and suitable to complement wind and solar projects

$m/kWh2018 real GWh

Source: 2019 LCOE (Levelized Cost of Energy) Update BloombergNEFNote: the global benchmark is country weighed-average using the latest annual capacity additions. The storage LCOE is reflective of a utility-scale Li-ion battery storage system running at a daily cycle and includes charging costs assumed to be 60% of wholesale base power price in each country.


Li-ion battery pack priceand demand

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Growth Focused on Wind and Solar

89%

1%8% 2%

83%

8%7%

2%

2018 2023

WIND

HYDRO

SOLAR

THERMAL

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CUSTOMERSCreate new business models that meet

the emerging needs of customers and electricity markets.


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New technologies and business models for renewable energy players

1

2,2

4,64,1

5,4

7,1

0

10,2 0,3 0,1 0,3 0,3

2

3

4

5

6

7

8

APACEMOAAMER

Source: Bloomberg New Energy Finance

Developer Client Techno. Features

132 MW15 years

61 MW15 years

81 MW

294 MW15 years

70 MW15 years

Corporate PPAs annual volumes by region (GW)

Examples of recent Corporate PPAs deals

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OPTIMIZATIONMaximize the value of

our assets and diversify our financing sources.


Development and OptimizationBy Patrick DecostreVice President and COO

June 18, 20192019 Investor Day

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Role of New COO

• Supervising a team of seasoned managers with complementary backgrounds

• Deployment of the strategic plan• Optimization of asset base• Coordination of the best practices shared

organization-wide• Harmonization of processes between Europe and

North America• Integration of acquisitions

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Optimization

• Global coordination of equipment’s purchases (turbines and solar systems) as well as spare parts purchases

• Optimization of $26M maintenance opex and $8M maintenance capex

• Deployment of a new integrated computerized maintenance management system

• Upgrade of our control centres in Québec and France in order to continue to improve turbines performance

• Refinancing underway in France: significant streamlining of the structure

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Update on Recent Transactions

• Invenergy transaction:– 201 MW of installed capacity acquired in September 2018– Q1-2019 production 31% above LTA– Maintenance and operations synergies to be gradually realized

from end of 2019 to 2022

• Kallista transaction:– Acquisition in June 2018 of 163 MW of operating assets, 10 MW

under construction and 158 MW of projects to be developed– 10 MW project Noyers Bucamps commissioned in 2018– Q1-2019 production 4% above LTA– Gradual optimization of the maintenance contracts in place (from

full services with OEM to optimized structure) in 2019 and 2020– Leveraging relationships with equipment manufactures

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Development

Robust market potential in Europe and North AmericaGrowth

Diversification

Customers

Gradual development in solar and storage handed in the Boralex way

Corporate PPA under development and complementary services to be gradually developed

Development and Optimization in EuropeBy Nicolas WolffVice President and General Manager Europe


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BORALEX Europe Management Team

Elsa BaillyHR Manager

Pascal BrouyèreDeputy General ManagerOperations

Benoît MagrinDeputy General ManagerFinance Europe

Eric BonnaffouxDeputy General Manager Development

Benjamin HurietInnovation & New Business Development Manager

Sophie DelasnerieLegal Europe Manager

Jean-Christophe Dall’AvaGreenfield development and energy markets Manager

Emmanuelle RicaudM&A Europe Manager

Nicolas WolffVice President & General Manager Europe

• 8 Direct Reports and 200 employees in total

• A good mix of long time Boralex employees, experienced newcomers and youngemployees with high potential

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French Connected Global Capacity in MWIn 10 years the market has tripled

0

2 000

4 000

6 000

8 000

10 000

12 000

14 000

16 000

18 000

0

200

400

600

800

1 000

1 200

1 400

1 600

1 800

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Annual capacity connected Cumulated capacity connected

MW

con

nect

ed/ y

ear

Cum

ulatedM

W connected

Source: FEE

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BORALEX is today the first independant player in FranceTotal French MW installed per operator (top 20 operators) end of 2018

802

941

Source: FEE

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Attractive Market Outlook in Francesupported by the Energy programmation law 2019

2019 2023 2028WIND Around2 GW/year 15,3 GW 24,6 GW 35 GWSOLAR PVAround2 GW/year 9 GW 20 GW 37 GW

Solid growth expected in the Renewable field over the 10 coming years

WIND CAPACITY X 2,5

SOLAR PV CAPACITY X 5

Massive nuclear power reduction till 203550% of nuclear power by 2035 versus 75% today14 nuclear plants to be closed by 2035

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3 Remuneration Shemes Running in ParallelProgressive implementation of the auctions process –global potential of around 2GW per year

March 1st 201836

1 Jan 2017

1 Jan 2018

1 Jan 2019

1 Jan 2020

1 Jan 2021

1 Jan 2022

1 Jan 2023

1 Jan 2016

Extens. of time?Time to completion

Extension of time?

Extension of timeGrid or recourse

Time to completionCfD 201682€ | 15y 2400h rule

CfD 201772€ + 2.8€ | 20yAnnual MWh ceiling

Auctions72€ + 2.8€ cap | 20y500MW twice a year – 6 rounds

6 WTG max& 3.0MW maxSmall projects

Large projects7+ WTGor 3MW+ MW

Contract for differenceDirect

FiT 2015

AuctionPipeline GW

500 MWAPRIL 2019

118 MWAPRIL 2019

500 MWJULY 2019

630 MWNOV 2019

752 MWJUNE 2019

2 GW2021

2 GW2022

Time to completion?

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Third French Wind Auction Results-13th of June 2019

BORALEX secures 68.2 MW, with a 60% success rate

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Upcoming Auctions in details

Round Application deadline

Volume (MW)

Eligibility as of current

tender rules

Completiondeadline

Completiondeadline

extension

Awardingcriteria

Bid priceCap

(€/MWh)

4 Aug. 19 500 Authorized3 years from

tender awarding

Due to gridconnection delayand/or recourse

100% on bid price 71

5 Dec. 19 630 Authorized3 years from

tender awarding

Due to gridconnection delay


6 June 20 752 Authorized3 years from

tender awarding

Due to gridconnection delay


Current tender rules

Potentiel changes tender rules for rounds 5 and/or 6• Eligibility: project under instruction (as for rounds 1 & 3) in case applied volumes would not

be enough• Completion deadline extension: due to recourse (as for rounds 1, 3 and 4) in case applied

volumes would not be enough• Bid price cap decrease

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OptimizationCustomersDiversification

EUR

OPE

STR

ATEG

Y

TechnologyDiversify in Solar PVTarget over 140 MW by 2023Implement a first Battery storage

GeographyExpand in the UK, thanks to our Scottish developments

Expanding beyond our traditional utility EDF

Corporate PPA’s currently under negotiations in France with industrial organizations

Cost optimization initiative, to increase competitiveness

1 GW operating fleet OPEX optimization, internalized maintenance team

Growth

Attack the auction segmentPotential:1,600 MW in 2019 &1,000 MW in 2020

Our Strategic Objectives in Europe

Keep on developingour pipe of projectssecured with CR 2016 and 2017Target:around 250 MW

Organic growthStart greenfield development

Routes to market

JV/ partnershipsCo-development approach

AcquisitionsAcquire small players


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Action PlanSecuring our current business streams• Optimizing our current pipeline of “heritage projects” and tackling the auctions

scheme (1,6 GW in 2019, 1 to 2 GW during the coming years)

Strengthening our Development & Commercial capabilities• Reinforce our Solar development teams (7 hires in 2019)• Further develop our New Markets structure: selling a service

rather than electricity• Increase our Corporate PPA’s portfolio

Optimizing our development process • Include competitiveness in our development process• Speed up the development time / Co-developments

Asset enhancement program• Systematic output optimization, supported by our internal maintenance teams• Repowering initiatives

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A Strong Pipeline in Key Markets2019-2023 DEVELOPMENT AND OPTIMIZATION PLANIN MW

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Ready to capture our future growth

In conclusion

• Boralex offers a proven track record with almost 1 GW of installed capacity in France

• Experienced team of leaders

• Established market potential till 2023- 9,5 GW of wind- 11 GW of solar

• Favorable remuneration schemes (CfD 2016 and 2017 / auctions)

• Various ways to market (organic growth/ co dev and acquisitions)

• Multiple diversification in technologies, geographies and selling platforms (corporate PPA’s)

Development and Optimization in North AmericaBy Hugues GirardinVice President Development


44

Development TeamNorth America

Hugues GirardinVice President, Development

Samuel RichardProject Director

Jean-Frédérick FaureDirector, Services and Procurement

Adam RossoDirector, Project Development

Martin St-PierreTechnical Director

Sébastien FaucherProject Controller

Strengths of the team- Strong community relation- In-house strong project expertise- Team priorities- Greenfield development

Asier AniaInnovation and New Technologies Manager

8 Direct Reports and 29 employees in total in development

Andrew BuckleyDevelopment Manager

Rodrigo MouraCoordinator, Development

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Summary

OptimizationCustomersDiversification

NO

RTH

AM

ERIC

ANST

RAT

EGY

Maintain position of leadership in Canada

Technology- Solar PV- Battery storage

Geography- Expand outside of Canada

Expanding beyond utilities- ISOs- NYSERDA- C&I- Financ. hedges- Municipalities,

Universities, Schools and Hospitals

Use partnerships to increase competitivity

Growth

CAN

NY

Grow US participation in Boralex’s installed capacity from 4% to ~8% in 2023

Expansion Strategy


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• Political environment: Uncertain, but the province will soon need energy

• 150 MW in pipeline

• Pursuing new pipeline acquisition

Ontario• Political environment:

Focused on exporting electricity surplus to the US, but support of renewable energy once there is no more surplus

• Government publicly committed to Apuiat as the next project in Québec

• Pipeline of 600 MW + Apuiat (200 MW)

Québec• Political environment:

Uncertain, but open market should provide opportunities

• 100 MW of ready-to-build projects

Alberta

Canada

150 MW 800 MW 100 MW

TOTAL: 1,050 MW

Long-term Opportunities…with Political Uncertainty

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Projected NYISO generation mix

Source: Wood Mackenzie; Bloomberg

New York energy market overview

Wholesale power prices ATC ($/MWh)

New York Market Today

48

Aging Fossil Fuel Nameplate Capacity: Gas Turbines & Steam Turbines Nearing Retirement

Planned retirements

2,000 MW + planned retirements by 2023 including Indian Point 2 and 3

source: NY-ISO

source: EIA March 2019 report

New York Market Today

MW

49

Targets and policy drivers

Mandate Current policy Green New Deal% of renewables by 2030 50% 70%

Mandate 100% renewables n/a 2040

Onshore windDoubling new large-scale solar resources through the

CES. Expected 1,500 MW-2,000 MW to be procured by NYSERDA each year until 2023.*Utility scale solar

Distributed solar 3,000 MW by 2023 6,000 MW by 2025

Battery storage 1,500 MW by 2025 3,000 MW by 2030

Offshore wind 2,400 MW by 2030 9,000 MW by 2035

*Under the previous CES order, the target was for 800-1,000 MW/year, although NYSERDA procured twice as much in the last two auctions.

New York Market is the Future

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New York as a good fit for Boralex…

New York Market is the Future

• Boralex already operates 7 power plants in New York and is well perceived in the communities in which it operates

• Proximity to Boralex’s development offices in Canada

• Boralex can create value in using its experience in complex / long development cycle projects

• Growing market with strong social and political support

• High electricity demand and prices

• Boralex’s diversification goals to solar and storage are well aligned with current and anticipated government policies

• NY is one of the most populous and affluent US regions, with a large number of potential C&I energy users, well aligned with Boralex’s goal to diversify customer base

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Focus on 20 MW project

PV standalone PV + storage (hybrid) Storage standalone

Combine PV and storage to leverage solar Investment Tax Credits (ITCs) and Balance of Plant (BOP) synergies

Quickly start developing storage expertise with 1 or 2 storage standalone pilots, but grow this segment later as ITCs phase out.

Focus efforts on NY, while monitoring other US jurisdictions

Objectives in NY

What’s in it for Boralex?

52

Organic Growth

Rethinking the Development Team

• Addition of 20 employees to the team in the next 2 years• Presence in New York

- Office in New York

• Master storage technology- Dedicated internal resources

• Commercial focus- Dedicated team- Non traditional off-taking contract experience- Market and interconnection knowledge- Strong sales capacity

• Partnership- Team focused on increasing competitivity in the market

Action Plan

53

JV and Partnerships

• LOI signed with storage developer in Ontario- Plan is to become a major player in utility scale storage in the province

• Advanced negotiations to form a JV with a utility scale solar developer in NY

- Signed agreement to co-develop 50 MW

- Started discussions to extend JV for the development of an additional 200 MW

Action Plan

54

Greenfield Development - Solar

Current Status of Implementation Plan

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Geared for Future Growth

In conclusion

• Strong position in Canada- Strong projects currently in the pipeline will be ready when the

opportunities arise in Canada- Canada is still an important market and fundamentals are in

place for a strong growth in the long term

• NY is a complex market to develop but Boralex’sstrengths are a good fit to be successful in that market

• Boralex has already made strides in the implementation plan for NY

- Strong initial position in greenfield development- Established partnerships with local players to boost market

knowledge and development capabilities

Toward 2023Key Takeaways from the Development and Operations Team

by Patrick DecostreVice President and COO

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Short-term Committed Projects

Q&A Session

Break Time

disciplined growth in key marketsjun 18, 2019 · combined basis – non-ifrs measure . the...

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