At its 14th annual Investor Day event, themed “Powered by Purpose”,
being held in Brampton, Ontario today, Capital Power Corporation
(TSX: CPX) (“Capital Power” or “the Company”) will provide updates
on its strategy, sustainability targets, operations, construction
projects, renewable growth pipeline, market outlook and 2023
operational and financial targets.
“Capital Power continues to deliver on its strategy of operating
the best assets in the Alberta power market and investing in
renewables and strategically located natural gas assets while
pursuing pathways to be net zero by 2045,” said Brian Vaasjo,
President and CEO of Capital Power. “This strategy has proven to be
resilient with 2022 being another strong year for the company. We
expect to finish the year at the upper ends of our revised
financial guidance ranges, which are significantly higher than our
original targets and 2023 will see continued strong financial
performance.”
“Our growth outlook remains excellent given political support
for renewable energy both in the United States and in Canada and
the 4,000 megawatts (MW) incremental capacity required in Ontario.
We are well positioned to participate in the accelerating build out
of renewables and storage with our robust development pipeline of
wind, solar and storage opportunities as well as potential
expansion and contract extension for our three natural gas assets
in Ontario. Overall, we see significant near-term growth
opportunities in Western Canada, Ontario and the Midcontinent
Independent System Operator (MISO) region,” stated Mr. Vaasjo.
“Our Genesee CCS project has reached a major milestone with a
limited noticed to proceed (LNTP),” said Mr. Vaasjo. “Our decision
to move to LNTP reflects the positive interim results from the
front-end engineering design (FEED) study and continued progress on
the programs the Alberta and Federal governments have taken to
encourage and accelerate deployment of CCS technology. CCS is an
essential part of the pathway to accelerating and achieving
decarbonization of Alberta's power sector while maintaining
reliability and affordability. Our Genesee CCS project is the most
advanced in the sector and would position our Genesee Generating
Station to be a near-zero emitting source of reliability and other
services to support increasing levels of renewable generation and
an evolving Alberta power grid.”
Strategic Developments
Limited notice to proceed on Genesee Carbon Capture and
Storage (CCS) project
Capital Power continues to advance its Genesee CCS project with
the Board of Directors approval of a LNTP for the $2.3 billion
project. Progress on funding programs from the Alberta and Federal
governments such as the Alberta CCS Hub initiative, Emissions
Reduction Alberta support for the FEED study, the Federal CCUS
Investment Tax Credit, the Canada Infrastructure Bank, the Canada
Growth Fund and the Strategic Innovation Fund supported our LNTP
decision. Proceeding with LNTP allows the Company to move into the
next stage of final due diligence and commercial, financing and
technical assessment in advance of a final investment decision
expected by the third quarter of 2023 with commercial operations as
early as 2027. Once operational, Genesee CCS is expected to capture
up to 3 million tonnes of CO2 per year, which would be transported
and stored through Enbridge’s Open Access Wabamun Carbon Hub. This
will position Genesee 1 and 2 amongst the cleanest baseload thermal
generation facilities in the world.
Accelerating net zero target
In action of our purpose, to power a sustainable future for
people and planet, Capital Power has accelerated its net zero
target to 2045 from 2050. The growing government support for CCS
and other carbon reduction technologies, including direct air
capture, and Capital Power’s commitment to reducing its carbon
footprint supported accelerating its target to achieve net zero by
2045.
Genesee 1 and 2 Repowering Project
on-schedule
Progress on the Genesee 1 and 2 repowering project continues and
is on schedule for the Company to meet its off-coal commitment in
2023. Genesee 1 and 2 is expected to achieve simple cycle
commissioning in late 2023, followed by combined cycle
commissioning in 2024. The repowering project cost has been revised
to $1.1 billion compared to the $997 million budget largely due to
significantly higher interconnection costs.
Clydesdale Solar on-schedule for commercial operations
by year-end
An additional 75 MW from Clydesdale Solar (formerly Enchant
Solar), located in the Municipal District of Taber, Alberta, is
expected to begin commercial operations on schedule in December
2022. The total project cost is expected to be $124 million
compared to the original budget of $102 million due to
Covid-related supply chain pressures and significant increases in
transportation costs. The facility currently has a 15-year
renewable energy agreement with Labatt Breweries of Canada for 51%
of the output and expect that most of the remaining capacity will
be contracted.
2022 OutlookThe financial outlook for 2022 is
trending to be in the upper end of the revised financial guidance
provided in the third quarter 2022 report. This includes adjusted
EBITDA of $1,300 million to $1,340 million and adjusted funds from
operations (AFFO) of $770 million to $810 million.
2023 TargetsOperational
targets
- Capacity-weighted average facility availability of 94%,
reflecting planned outages for Genesee 1 and 2 repowering, and
other thermal facilities,
- Sustaining capital expenditures of $135 million to $145
million.
Financial and dividend targetsThe 2023
financial targets are based on various assumptions including:
10,000 gigawatt hours of the Alberta commercial generation
portfolio sold forward at an average contract price in the high-$70
per megawatt hour (MWh) range, average forward Alberta spot power
price of approximately $136/MWh, and forward AECO natural gas price
of approximately $4.60/GJ.
- Adjusted EBITDA of $1,455 million to $1,515 million,
- AFFO of $805 million to $865 million, and
- Annual dividend growth guidance of
6% from 2023 to 2025 with an expected average AFFO payout of
approximately 40% through 2025 compared to the 45% to 55% target
range.
Growth targets
- Continue progress on the Genesee 1 and 2 Repowering project
based on revised schedule and forecast,
- Advancement of Genesee CCS Project and Genesee Carbon
Conversion Centre,
- Proceed with two renewable projects,
- Continued progress on Halkirk 2 on time and on budget, and
- Target $600 million of committed capital for growth for
2023.
Investor Day event webcastToday’s event is
scheduled to start at 9:00 am (ET) and can be accessed on the
Company’s website at www.capitalpower.com. The webcast will be
archived and accessible for replay.
Non-GAAP Financial Measures and RatiosThe
Company uses (i) adjusted EBITDA, (ii) AFFO, and (iii) normalized
earnings attributable to common shareholders as financial
performance measures.
The Company also uses AFFO per share and normalized earnings per
share as performance measures. These measures are non-GAAP ratios
determined by applying AFFO and normalized earnings attributable to
common shareholders, respectively, to the weighted average number
of common shares used in the calculation of basic and diluted
earnings per share.
These terms are not defined financial measures according to GAAP
and do not have standardized meanings prescribed by GAAP and,
therefore, are unlikely to be comparable to similar measures used
by other enterprises. These measures should not be considered
alternatives to net income, net income attributable to shareholders
of the Company, net cash flows from operating activities or other
measures of financial performance calculated in accordance with
GAAP. Rather, these measures are provided to complement GAAP
measures in the analysis of the Company’s results of operations
from management’s perspective.
Additional disclosure around the Company’s non-GAAP financial
measures and ratios, including reconciliations of these non-GAAP
financial measures to their nearest GAAP financial measures are
disclosed in the Company’s Management’s Discussion and Analysis
prepared each quarter, most recently prepared as of October 28,
2022 for the third quarter of 2022, which is available under the
Company’s profile on SEDAR at SEDAR.com and on the Company’s
website at capitalpower.com.
Forward-looking InformationForward-looking
information or statements included in this press release are
provided to inform the Company’s shareholders and potential
investors about management’s assessment of Capital Power’s future
plans and operations. This information may not be appropriate for
other purposes. The forward-looking information in this press
release is generally identified by words such as will, anticipate,
believe, plan, intend, target, and expect or similar words that
suggest future outcomes.
Material forward-looking information in this press release
includes expectations around: [our company-wide targets specific to
climate-related performance, including reduction of emissions and
emission intensity and achieving net zero by 2045, investment in
carbon capture and utilization technology, completion of the
Genesee Carbon Conversion Centre, and commercial application of
carbon conversion, capture and storage technologies; implementation
of our approach to decarbonization, and our pathway to net zero by
2045 and the expected reduction of carbon from our operations; our
2023 targets and outlook for 2022, including for facility
availability, sustaining capital expenditures, AFFO, adjusted
EBITDA, growth targets, sustainability targets; expectations around
timing and costs associated with our upgrades, projects, timelines,
and repowering plans at our Genesee facility with addition of
battery storage, including being off coal in 2023; expectations of
timing, funding, costs, and financial impacts for existing,
planned, and potential growth projects and acquisitions, including
the acquisition; expectations around future growth opportunities;
AFFO payout ratio; future dividend growth; future pricing of
electricity and market fundamentals in existing and target markets;
sources of funding, adequacy and availability of committed bank
credit facilities and future borrowings; and future cash
requirements, including debt repayments, capital expenditures,
dividends and distributions.
These statements are based on certain assumptions and analyses
made by the Company in light of its experience and perception of
historical trends, current conditions, expected future
developments, and other factors it believes are appropriate
including its review of purchased businesses and assets. The
material factors and assumptions used to develop these
forward-looking statements relate to: electricity and other energy
prices and carbon prices; performance; business prospects
(including potential re-contracting of facilities) and
opportunities including expected growth and capital projects;
status of and impact of policy, legislation and regulations;
effective tax rates; the development and performance of technology;
foreign exchange rates; including the timing and recovery from
appropriate parties; and other matters discussed under the
Performance Overview, Outlook and Risks and Risk Management
sections.
Whether actual results, performance or achievements will conform
to the Company’s expectations and predictions is subject to a
number of known and unknown risks and uncertainties which could
cause actual results and experience to differ materially from the
Company’s expectations. Such material risks and uncertainties are:
changes in electricity, natural gas and carbon prices in markets in
which the Company operates and the use of derivatives; regulatory
and political environments including changes to environmental,
climate, financial reporting, market structure and tax legislation;
disruptions, or price volatility within the Company’s supply
chains; generation facility availability, wind capacity factor and
performance including maintenance expenditures; ability to fund
current and future capital and working capital needs; acquisitions
and developments including timing and costs of regulatory approvals
and construction; changes in the availability of fuel; ability to
realize the anticipated benefits of acquisitions; limitations
inherent in the Company’s review of acquired assets; changes in
general economic and competitive conditions, including inflation;
changes in the performance and cost of technologies and the
development of new technologies, new energy efficient products,
services and programs; and risks and uncertainties discussed under
the Risks and Risk Management section. See Risks and Risk
Management in the Company’s 2021 Integrated Annual Report and in
the Company’s third quarter 2022 MD&A for further discussion of
these and other risks.
Readers are cautioned not to place undue reliance on any such
forward-looking statements, which speak only as of the news release
date. The Company does not undertake or accept any obligation or
undertaking to release publicly any updates or revisions to any
forward-looking statements to reflect any change in the Company’s
expectations or any change in events, conditions or circumstances
on which any such statement is based, except as required by
law.
About Capital PowerCapital Power (TSX: CPX) is
a growth-oriented North American wholesale power producer with a
strategic focus on sustainable energy headquartered in Edmonton,
Alberta. We build, own, and operate high-quality, utility-scale
generation facilities that include renewables and thermal. We have
also made significant investments in carbon capture and utilization
to reduce carbon impacts and are committed to be off coal in 2023.
Capital Power owns approximately 7,400 MW of power generation
capacity at 28 facilities across North America. Projects in
advanced development include approximately 385 MW of owned
renewable generation capacity in North Carolina and Alberta and 512
MW of incremental natural gas combined cycle capacity, from the
repowering of Genesee 1 and 2 in Alberta.
For more information, please
contact:
Media Relations:Katherine Perron(780)
392-5335kperron@capitalpower.com |
Investor
Relations:Randy Mah(780) 392-5305 or (866) 896-4636
(toll-free)investor@capitalpower.com |
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