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BLX and BLX.DB.A – Toronto Stock ExchangeJune 18, 2019
Disciplined Growth in Key MarketsStrategic Plan and Financial Objectives for 2023
2019 Investor Day
2
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
4
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.
5
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
9
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%
11
BORALEX’S STRATEGIC PLAN
12
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
13
14
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)
15
GROWTH
DIVERSIFICATION
CUSTOMERS
OPTIMIZATION
BORALEX’S STRATEGIC PLAN
16
GROWTHThrive in our current geographic markets and sectors of activities.
BORALEX’S STRATEGIC PLAN
17
Growth in Well Known Key Markets
FRANCE UNITED STATESCANADA
20232018 20232018 20232018
48% 48% 4%52% 40% 8%
18
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
19
DIVERSIFICATIONSpeed up our development in new technologies and enter
promising geographic markets.
BORALEX’S STRATEGIC PLAN
20
Prices are decreasingwhile installed capacities are booming
$m/MW2018 real GW
28% averageannualdecrease
11% 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
21
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.
18% averageannualdecrease
Li-ion battery pack priceand demand
22
Growth Focused on Wind and Solar
89%
1%8% 2%
83%
8%7%
2%
2018 2023
WIND
HYDRO
SOLAR
THERMAL
23
CUSTOMERSCreate new business models that meet
the emerging needs of customers and electricity markets.
BORALEX’S STRATEGIC PLAN
24
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
25
OPTIMIZATIONMaximize the value of
our assets and diversify our financing sources.
BORALEX’S STRATEGIC PLAN
Development and OptimizationBy Patrick DecostreVice President and COO
June 18, 20192019 Investor Day
27
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
28
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
29
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
30
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
June 18, 20192019 Investor Day
32
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
33
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
34
BORALEX is today the first independant player in FranceTotal French MW installed per operator (top 20 operators) end of 2018
802
941
Source: FEE
35
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
36
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?
37
Third French Wind Auction Results-13th of June 2019
BORALEX secures 68.2 MW, with a 60% success rate
38
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
100% on bid price 71
6 June 20 752 Authorized3 years from
tender awarding
Due to gridconnection delay
100% on bid price 68
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
39
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
BORALEX’S STRATEGIC PLAN
40
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
41
A Strong Pipeline in Key Markets2019-2023 DEVELOPMENT AND OPTIMIZATION PLANIN MW
42
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
June 18, 20192019 Investor Day
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
45
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
BORALEX’S STRATEGIC PLAN
46
• 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
47
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
50
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
51
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
55
A Strong Pipeline in Key Markets2019-2023 DEVELOPMENT AND OPTIMIZATION PLANIN MW
56
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
58
A Strong Pipeline in Key Markets2019-2023 DEVELOPMENT AND OPTIMIZATION PLANIN MW
59
Short-term Committed Projects
Q&A Session
Break Time