Northland Power Inc T.NPI.PR.B

Primary Symbol: T.NPI Alternate Symbol(s): NPIFF | T.NPI.PR.A | NPICF

Utilities Utilities - Independent Power Producers

Northland Power Inc. is a Canada-based global power producer focused on helping the clean energy transition by producing electricity from clean renewable resources. The Company owns and manages a diversified generation mix, including onshore renewables, natural gas energy, as well as supplying energy through a regulated utility. Its facilities produce electricity from clean-burning natural gas and renewable resources such as wind and solar. The Company’s segments include offshore wind facilities, onshore renewable facilities, efficient natural gas facilities, and utilities. The Company’s natural gas facilities use turbines to produce electricity. It owns or has an economic interest in approximately 3.4 GW (net 2.9 GW) of operating capacity. The Company also has an inventory of projects in construction and in various stages of development encompassing approximately 12 GW of potential capacity. It operates power infrastructure assets in Asia, Europe, Latin America, and North America.

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Northland Power Inc

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Post by retiredcfon Mar 29, 2023 10:05am

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Post# 35366739

TD Notes

Canadian Budget Confirms Refundable ITC for Renewables

30% ITC Will Remain in Place Until 2034
Other Supplementary Support Programs Announced

TD Investment Conclusion

Yesterday's Federal budget confirmed a 30% refundable investment tax credit for Canadian renewable power capital costs - the "Clean Technology Investment Tax Credit". This support system was previously articulated in the Fall Economic Statement (November 2022), takes effect immediately, and covers all technologies that are not carbon-emitting plus battery storage. Other supplementary incentives for hydrogen, carbon capture, biomaterials, and extraction/processing/ recycling of critical minerals were also announced/confirmed.

Although not surprising, these measures are expected to help level the playing field for Canada in attracting capital for renewable power development. The program mimics elements of the U.S. Inflation Reduction Act (IRA) passed last year. We anticipate that all Canadian IPPs will increase activity levels in the domestic market, most of which (excluding Alberta) require a government-led procurement process to drive contract awards.

Details

The 30% ITC incentive takes effect immediately and will remain in place until 2034 (phase-out starts then and the credit would not be available in 2035). This aligns with the Federal government net-zero emissions target by 2035. Previously, a gradual ITC phase-out was scheduled from 2032-2034. It is important to note that these are refundable credits - a key distinction from U.S. ITCs. With a less robust potential tax equity funding infrastructure in Canada than the U.S., we believe that refundability is needed to support this incentive.
In a separate initiative, the government announced a 15% "Investment Tax Credit for Clean Electricity". Crown corporations, publicly owned utilities, and other entities are eligible for this program that applies to renewables, abated gas- fired power, nuclear, storage, and transmission equipment. This program cannot be combined with the 30% ITC announced in November; as such, we expect companies in our coverage universe to focus on the initial program.
Quebec and Ontario have already announced RFPs for renewable power and storage capacity; we expect that other provinces will eventually follow suit. Bloomberg New Energy Finance (BNEF) forecasts that installed Canadian non-hydro renewable power and storage capacity will grow at a 9% CAGR from 2022-2050, with growth led by solar and storage.
All companies in our IPP coverage universe are considering mid- to long- term clean power development opportunities in Canada. Canadian share of advanced and under-construction organic pipelines for our coverage universe varies from company-to-company (average 26% of those capacity additions across the IPP sector), but in general, Canada is a focus for long-term expansion, led by a robust ITC program. BLX and NPI have established platforms and transparent growth opportunities in Canada. Although NPI does not have substantial secure capacity growth in Canada, the company is advancing pumped storage projects in Ontario and recently acquired a renewable development platform in Alberta.