Maxim valuation based on Capital Power acquisition price Capital Power purchased 50% of a 295 MW, mid life, combined-cycle generating station in Puget Sound, near Tacoma, for $137 million (C$183 million). Average contracted EBITDA is $15 million per year (C$20) over the first five years of operation. They paid 9.1X EV/EBITDA for the plant. A normal ratio.
Maxim owns the 300MW, Milner combined-cycle generating plant in Grand Cache, Alberta. It should produce around $100 million+ per year in EBITDA . On an equivalent basis Maxim’s plant is worth C900 million. Maxim’s shares would be worth $14.28, if we project to 2024, when Maxim will have operated the expanded plant for 12-months.
On an EV/EBITDA basis, Capital Power’s acquisition appear reasonable. However, there is something odd about the contract they have that generates US$15 million from a 285 MW plant. One interpretation is that the plant does not produce base load power, but generates intermittently.
The 30 day RAvg price for power in Alberta is currently $97.72/MW. A month ago it was running at $150/MW. The average price in the first six months of the year was $160/MW, Q3 in 2022 was $221/MW, so the price is volatile.
Wind and solar are now major components of Alberta’s grid. When it is dark, there is no wind, or if it is -25 C, these sources of power don’t work. Advocates of wind power gloss over Alberta’s cold winters. Extreme cold weather shut down wind power in Texas a couple of years ago - a cautionary tale.
Maxim appears to be undervalued at $4.40, with a new plant, low natural gas prices and healthy demand for electric power.
https://www.capitalpower.com/media/media_releases/capital-power-announces-agreement-to-acquire-50-15-interest-in-frederickson-1-generating-station/