Algonquin Power & Utilities Corp T.AQN

RBC

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This Month’s Additions and Removals from Energy Best Ideas List

Exhibit 1 - This Month’s Additions

Algonquin Power & Utilities (AQN)

Nelson Ng, Analyst [phone] [e-mail]

 Strong growth profile. Algonquin has a $9.4 billion 5-year capital investment program focused on growing its regulated utility rate base and renewable energy generation capacity, supporting management’s forecast 8-10% EPS growth profile. The company has been successful in growing its regulated utility business organically and through M&A, and the company also has a large renewable energy development pipeline. Management has a good track record of adding renewable energy capacity inside (greening the grid) and outside (on a contracted basis) of its regulated utility footprint.

 Very supportive greening initiatives in the U.S. can drive upside. Algonquin has a large regulated utility and renewable energy footprint in the U.S. that should benefit from the Biden Administration’s decarbonization objectives. Biden has a 2050 carbon net zero target, and a very ambitious target of a carbon-free electricity grid by 2035. The company has signed power purchase agreements with corporations to green their energy consumption, and have partnered with Chevron to jointly develop some renewable projects.

 A good balance of regulated utility and renewable energy operations. Algonquin operates a diversified regulated utility business providing electric/gas/water services to over 1 million customers primarily in the U.S. In addition, Algonquin has a renewable energy division with ~2.3 GW of generation capacity in North America with ~80% of the electricity generated contracted over an average term of 13 years. The regulated utility division contributed about two-thirds of the company’s EBITDA in 2020.