Earnings call: Boralex reports growth and strategic progress in Q2

In the second quarter of 2024, Boralex (BLX.TO) announced a solid financial performance with increased EBITDA, operating income, and net earnings in comparison to the previous year. The company is advancing with 851 megawatts of secured projects, including the Apuiat project in Quebec and the Limekiln project in Scotland.

Despite challenges such as unfavorable weather and curtailments in France, Boralex generated a combined EBITDA of $152 million and AFFO of $17 million. The company remains positive about the renewable energy market’s demand and maintains a strong financial position with $621 million in available cash resources.

Key Takeaways

• Boralex experienced growth in EBITDA, operating income, and net earnings year-over-year.
• The company is progressing with 851 megawatts of secured projects in Quebec and Scotland.
• Financing for the Limekiln project is complete, and construction will begin on battery projects in Ontario.
• Boralex is developing solar and wind projects in New York State and the UK.
• The company has a robust financial standing, with significant cash resources and authorized financing.
• Executives discussed opportunities arising from policy changes in the UK and investment tax credits in Canada.

Company Outlook

• Optimistic about the demand for renewable energy in Canada, the US, Europe, and France.
• Positive financial performance expected to continue with a strategic focus on forward contracts over spot market exposure.
• Actively seeking acquisition opportunities in the UK and US markets.

Bearish Highlights

• Lower production due to unfavorable weather conditions and curtailments in France.
• No plans to invest in battery solutions for curtailment issues in France.
• Challenges in enforcing a contract in California for proper payment.

Bullish Highlights

• Secured financing and contracts position the company well in the UK market.
• Submitted two projects in the UK totaling 115 megawatts.
• Anticipating upcoming RFPs in Quebec, Ontario, and France.

Misses

• Experiencing curtailments in France due to high hydrogeneration and low demand.
• Enforcing contracts in California remains a challenge.

Q&A Highlights

• The new UK government policies have increased the budget for onshore wind and lifted the previous ban, creating more opportunities.
• The company is preparing for significant RFPs across Quebec, Ontario, and British Columbia, as well as in Europe with a focus on the supergrid.
• Boralex is looking to accelerate the development of early-stage projects to be ready for future RFPs.

Boralex’s second-quarter results demonstrate the company’s commitment to growth and strategic positioning in the renewable energy sector. With significant secured projects and a clear focus on strategic markets, Boralex is poised to capitalize on the evolving landscape of renewable energy demand. The company’s executives are actively pursuing opportunities for expansion through mergers and acquisitions, particularly in the UK and US, and are prepared to meet the demands of upcoming RFPs in various regions. Despite some operational challenges, Boralex’s financial health and strategic initiatives indicate a strong outlook for the future.

Full transcript – None (BRLXF) Q2 2024:

Operator: [Foreign Language] Good morning, ladies and gentlemen, and welcome to Boralex Second Quarter of 2024 Financial Results Conference Call. Note that all lines are in listen-only mode. Following the presentation, we will conduct a question-and-answer session [Operator Instructions] Please also note that the conference call is being recorded. For webcast participants, you can also ask questions during the conference, but they will be answered by e-mail after the call. Finally, media representatives are invited to contact Camille Laventure, Advisor, Public Affairs and External Communications. Her contact information is provided at the end of the quarterly press release. I will now turn the conference over to Stephane Milot, Vice President, Investor Relations for Boralex. Please go ahead.

Stephane Milot: [Foreign Language] So, thank you, operator. Good morning, everyone. Welcome to Boralex second quarter results conference call. So, joining me today on the call Patrick Decostre, our President and Chief Executive Officer; Bruno Guilmette, our Executive Vice President and Chief Financial Officer; and other members of our management and finance teams. Mr. Decostre will begin with comments about market conditions and the highlights of the quarter. Afterwards, Mr. Guilmette will carry on with financial highlights, and then we will be available to answer your questions. As you know, during this call, we will discuss historical as well as forward-looking information. When talking about the future, there is a variety of risk factors that have been listed in our different filings with securities regulators, which can materially change our estimated results. These documents are all available for consultation at sedarplus.ca. In our webcast presentation document, the disclosed results are presented both on a consolidated basis and on a combined basis. When talking about the results we generally refer to combined numbers and when referring to cash flow and balance sheet we generally refer to consolidated numbers. So please note that the combined is a non-GAAP financial measure and does not have a standardized meaning under IFRS. Accordingly, combined may not be comparable to similarly named measures used by other companies. For more details, see the non-IFRS and other financial measures section in the MD&A. So, the press release, the MD&A, the consolidated financial statements and a copy of today’s presentations are all posted on the Boralex website at boralex.com under the Investors section. If you wish to receive a copy of these documents, please contact me directly. Mr. Decostre will now start with his comments. So, please go ahead, Patrick.

Patrick Decostre: Thank you, Stephane, and good morning everyone. It’s a pleasure for me to present our results and achievement for the second quarter and first half of 2024. I’m very proud of the work of our team have done since the start of the year. During the first half we increased our EBITDA by 11%, our operating income by 21% and our net earnings by 41%. We have 851 megawatt of project in secured, ready to build and construction phases that are progressing as planned. Turbines are being installed in our project Apuiat in Quebec and Limekiln in Scotland, which are getting closer to their expected commissioning date scheduled for the end of the year. I would also like to point out we started to record accounts receivable for the investment tax credit related to the Apuiat project based on the qualifying property as at the end of the quarter. Bruno will elaborate on this later. Regarding Limekiln, we also closed the financing of the project during the quarter as our first financing in the UK. In the next few weeks, we will start the construction of the Hagersville and Tilbury battery project in Ontario. These two projects are expected to be commissioned in 2025. Our Des Neiges Sud project is also progressing well with commissioning expected in 2026. In the near-term, our teams have been working on the recent submissions of solar project under the NYSERDA request for proposal in New York State and of wind project under the AR6, Allocation Round 6 request for proposal in the UK. As you can see, a lot has been accomplished so far this year and there is more to come. Going back to the quarterly results, production was lower than expected due to unfavorable weather conditions and the increase in curtailments in France, mainly due to negative market electricity prices resulting from an unusually strong imbalance between supply and demand in May and June. Nevertheless, our business performed well, generating a combined EBITDA of $152 million, up $9 million, and AFFO of $17 million, up $13 million compared to the second quarter of 2023. The impact of the lower production was offset by the positive impact of our strategy to optimize electricity selling prices and the contribution of commissioning in France. Regarding markets conditions, the demand for renewable energy in our markets remain high, creating a positive environment for the operation and the development of our activities. In Canada, the clean energy investment tax credit received Royal Assent and was enacted last June. This will have very positive impact on our project in Quebec and in Ontario. Both markets also represent strong growth potential with a goal Hydro-Québec to increase production capacity in Quebec by 10 gigawatts and the upcoming RFP plan for Ontario. We are very well positioned with a strong competitive edge in both of these markets. In the United States, the federal government is concerned about the increase in Chinese production of green product and is therefore imposing tariffs on important green technologies, including solar panels to protect U.S. industries. The market remains highly promising and we continue to develop and bid our project. In Europe, the election of the Labor Party in the UK is very promising considering the ambition of the new government for accelerating the development of renewable energy. Our goal is to accelerate our development in this market. Finally, in France, we are still waiting for a new government following the dissolution of the assembly in June. In the meantime, we continue to develop our project for upcoming request for proposal and in light of strong demand from corporation for corporate PPA. I will now rapidly cover the main variances in our portfolio of projects and Growth paths. The change in the pipeline was mainly due to the addition of solar and wind project in Europe in early stage changes to the expected capacity of wind and solar project in Europe and North America, transition of solar and wind project through the pipeline to the mid and advanced stages in Europe. In total, our pipeline of early, mid and advanced stages project now consists of project totaling nearly 6 gigawatts of wind, solar and storage project. In the second quarter. The Growth path represents a capacity of 851 megawatt down 34 megawatt compared to previous quarter following the commissioning of 21 megawatt wind project and 13 megawatts solar project in France. I won’t go into detail through the progress made in our Growth and the diversification strategic direction as I have already talked about the major highlights. On the customer strategic direction, we signed a three year PPA with Statkraft in the UK for the Limekiln project to secure pricing on a portion of the wind farm production before the start of its 15 year CfD. We also continue to have advanced discussion with different corporations in France as the demand for renewable energy contracted at attractive price remains high. This completes my part. I will now let Bruno cover the financial portion in more detail and we’ll be back later for the question period. Bruno?

Bruno Guilmette: Thank you, Patrick. Good morning everyone. I will start with a review of the progress made in light of our 2025 corporate objectives. Our balance sheet is solid with $621 million in available cash resources and authorized financing, up $46 million from the previous quarter. In addition, $21 million are accounted for in trade and other receivables, representing nearly one third of the investment tax credit to be received for the Apuiat project – construction project in Quebec. We are also in negotiation with financial institutions to pre-finance these credits. From a cash flow perspective, we should therefore receive cash from financing when this is finalized and reimburse this financing when we receive the payment of credit from the government, normally about 12 to 18 months after commissioning. Please note that from a P&L point of view, on a combined basis, these credits will be amortized over the term of the contract starting from the date of commissioning and presented as other revenues in combined. Total debt remains stable in the second quarter of 2024 with project debt now representing 89% of the total. The reinvestment ratio is in line with our target. Lastly, on our corporate objectives, we continue to make good progress on our CSR strategy as presented in our webcast presentation. We improved our position among the best Canadian Corporate Citizens in their Corporate Knights’ ranking, climbing from the 21st to the 15th position. We also raised our ESG corporate rating from the Institutional Shareholder Services group of companies, ISS ESG, from a B- to a B+ with prime status. For more detailed information, including data on CO2 emissions and work done in relation to climate change and the TCFD initiatives, I invite you to read our latest CSR report, which was published in February 2024. I will now cover the financial results for the second quarter, starting with production. In North America, total production on a combined basis for the quarter was 2% higher than last year, but 7% lower than anticipated. Production for the hydro sector was 4% lower than last year and 9% lower than anticipated due to unfavorable weather conditions in Canada. Production from solar assets was 8% lower than the same quarter last year and 25% lower than anticipated, mainly due to curtailment requests in California. In Europe, total production was 2% lower than last year and 12% lower than anticipated, attributable to unfavorable weather conditions and the increase in curtailments in France. Overall total production for the quarter was 1% higher than last year, but 8% lower than anticipated. The quarter combined revenues were down 12% compared to last year, mostly due to lower prices in France. As mentioned by Patrick, we continue to make good progress on the EBITDA and AFFO numbers. Our financial position remains very solid with a net debt to total market capital ratio of 42%. In conclusion, it’s a good second quarter for 2024 as we continue the disciplined execution of our strategic plan delivering on results and numbers. We increased our EBITDA and AFFO compared to 2023. We further increased our financial flexibility resulting in a solid financial position and we continue to deliver on our four strategic orientations. Thank you for your attention. We are now ready to take your questions.

Operator: Thank you. [Operator Instructions] Thank you. We are now going to proceed with our first question. The questions come from the line of Nicholas Boychuk from Cormark Securities. Please ask your question.

Nicholas Boychuk: Thanks. Good morning, guys. You mentioned that you can be looking to accelerate development of projects in the UK. Can you just expand a little bit on what your expectations are for this market over the coming years?

Patrick Decostre: Yes. Good morning, Nick. Essentially, with the new government, in the first few days of them taking office, they lift the ban on the wind project in England, which was there since almost 10 years, I think. So, this opened lots of potential projects in England. First point. The second point, they increased significantly the allocation of the budget for the part of budget dedicated to onshore wind. So, this increased the likelihood of a better price – cleaning price for the AR6. So, this is two signals. And last week, Rachel Reeves, the chancellor, was in Toronto and I was there and she just confirmed they will accelerate planning, consent for generation onshore and offshore, and also for grid connection and do whatever they can to accelerate the investment in the grid. So, I think this is all different possibilities of acceleration. And I think it’s great news and we are very exciting. And since we have, I just mentioned, finalized the first financing, finalized the first contract with Statkraft, plus the CFD we obtained one year ago in AR5, I think, we are very well positioned to do more of the same in the UK in the next years.

Nicholas Boychuk: Okay. That was good comment on energy and their resources. What more would you have to add to that team in order to really take advantage of this opportunity? And if you can comment on that, the size of the pipeline.

Patrick Decostre: Yes, someone of my exec team is now dedicated to the UK and she is working presently from Montreal and working with the team there. We have people also coming from the French team and putting more resource there. So, we have also higher different people in the UK from the outside, and we are also chasing potential M&A and our fully consented project or project in development, because I think it’s the right time to be in the UK and I think with the team we have there and the rest of the corporation bringing support to them, that’s a great opportunity.

Nicholas Boychuk: Excellent. Thanks, Patrick.

Patrick Decostre: Thank you.

Operator: Thank you. We’re now going to proceed with our next question. The questions come from the line of Mark Jarvi from CIBC. Please ask your question.

Mark Jarvi: Hey, good morning everyone. Just following up on the conversation on the UK, are you able to share how – sorry how many projects you submitted? And what types of projects you’re submitting in the UK right now?

Patrick Decostre: Hi, Mark. We have submitted two projects which are – were already in our pipeline for aggregated power of 115 megawatt. We have a very disciplined approach of the bid because we will have other possibility next year and the year after to bid this project in the following round. And this will not delay them since there is some grid time of construction. We know when these projects will be connected, but we have no issue of delaying if we win them next year. And as I mentioned, the budget it’s a little bit different than last year. Last year there was only one part of budget for project and offshore was not in. So, there is different part for onshore and offshore. But the onshore part has been increased significantly by the government. So, the clearing price should be higher than what we could have expected in June. So that’s also a good news.

Mark Jarvi: Just following up on the expectations of higher clearing price, how would you see return? The potential for returns are squaring up in UK versus the other markets you’re focused on. Are they comparable, better, maybe…

Bruno Guilmette: They are better than what we can get in France presently. And projects are larger. Two projects for 115 megawatt. It’s a significant project, as you understand, compared to France, I mean. And what I see also is that with the mechanism of being able to choose the window to start typically on Limekiln, we will start the CFD beginning of 2028, but we have this merchant note which has contracted at a very interesting price, pay as produced contract with Statkraft. We can benefit from a little bit like the 18 months in France, but in this case it would be 36 months contracted pay as produced with a high price today. So, this is a good optimization. And we have been – the team of Bruno has been able to negotiate very attractive financing for debt, taking into account these 18 years of generation contracts in general.

Mark Jarvi: All right coming back to investment tax credit in Canada you mentioned Apuiat. What about the other projects, the Ontario battery projects, the other wind projects in Quebec to come? Do you have a sense of what percentage of the CapEx you’ll be able to receive? Is there anything that you have to give back to the counterparty? And are you able to quantify roughly what you think the total net proceeds from tax credits would be to Boralex?

Patrick Decostre: Generally speaking, Mark will have. I’m not going to give an exact number right now, but certainly a few hundred million overall in the projects that we’re building that you’re aware of. So that includes our grid Hagersville, Tilbury, Des Neiges and am I missing one? No, I think that’s it and the future Des Neiges. The key element is for the Apuiat, Hagersville especially and Des Neiges, when we started negotiations and discussions with the off taker, we did not – and when we bid on Hagersville, we did not take into account the ITC in our return so that subside on the base case of these projects. In the future we expect each sort of counterparty in the discussion and the suppliers and so on will all take into account the ITC. So, we get upside from these early projects where the final project law was not enacted, and therefore, there was risk. And the fact that we did not take into account the ITC, so we did not take the risk of the ITC not being implemented. So, it represents an upside, given that it’s now been enacted in June.

Mark Jarvi: But then, if you look at something like…

Bruno Guilmette: Yes, go ahead.

Mark Jarvi: I was going to say something like Tilbury and Oxford, which you probably had some clarity that the ITC would be coming through. Is there like a partial recovery of the ITC with some of it being handed back to the counterparty? I appreciate Hagersville was more advanced, and you probably keep all that. Just wondering about that. The subsequent projects in Ontario and even the wind projects where you secured one in the RFP, most recently.

Patrick Decostre: We get the credit for the eligible expenses. So that’s not – the question is whether in the different contracts, and that will continue to evolve, but whether we have to give back a portion to the utility, for example, or whether the suppliers will adjust their pricing accordingly, which we’ve seen in the U.S., for example. So that’s really what I was saying about the future projects where we do get the credit, but eventually it might be more shared amongst the different players in the chain.

Mark Jarvi: When do you think you’d have clarity on those projects in terms of the sharing split?

Patrick Decostre: Well, when we sign – when we finally signed different contracts, so it will keep evolving. So, on Tilbury we took into account when we priced, so obviously, we gave a little bit of it in the pricing, but we do get the credit.

Mark Jarvi: Okay. All right, I’ll leave it there today. Thank you.

Bruno Guilmette: I’m not sure if I’m clear, Mark.

Patrick Decostre: Just to be very clear on these projects, we are not sharing the credit after the contracts are signed and the contracts are signed already. And it was not an assumption when we bid, except on Tilbury, because we have decided at that time to be a little bit more aggressive in terms of risk, we have been right. But these two projects also have very good news in term of CapEx themselves, battery and BOP compared to the business plan. So, they are really a good return, expected return today.

Mark Jarvi: Understood. Yes. No, that makes sense. Thank you.

Bruno Guilmette: Thank you.

Operator: We are now going to proceed with our next question. The questions come from the line of Sean Steuart from TD Cowen. Please ask your question.

Sean Steuart: Thank you. Good morning. A couple of questions. With respect to the progress on optimizing the selling prices in France, can you give us a sense of any expected incremental progress on this front over the next few quarters, or has most of those gains been crystallized already?

Bruno Guilmette: Yes, essentially we have a strategy to fix the price with the off taker. There is – when we typically – we have two streams of projects under this. We have the early terminated contract that we early terminate in the fall of 2022, and we signed a contract for all these projects with Expo. And we have fixed as much as possible the price at that time for the years also 2025 and 2026 when it was possible. For the 18 months merchant knows we have done that in Q1 last year for the remaining period of the 18 months, and the 18 months will be finished by the end of this year. The first group of projects are subject to the price gap. As you know, the second group of project are not, are exempt of the price gap. So going forward, what we’re doing, we’re doing exactly the same. We are continuing to fix and define in advance when we think it’s opportunistically interesting, the price of the electricity that will be sold to Expo, and we have a clear policy of doing that, not to sign too much and not – we have a path example three years in advance, we want to have 25% fixed; two years in advance, we’ll have to have 50% fixed; and one year in advance, we want to have at least 75% fixed. And we are exactly following this track to be sure we are not overexposed and we are nothing doing something which is erratic.

Stephane Milot: Sean, this is Stephane.

Sean Steuart: Hey Stephane.

Stephane Milot: Sean.

Sean Steuart: Yes.

Stephane Milot: Just an additional comment on that to show you some kind of trend, like in Q1 of this year we had a positive variance of $15 million at the EBITDA level coming from this strategy; Q2 is $11 million; and Q3 going forward should be going with the lower variances, because just as the fact that we fixed price gradually over time and this price was coming down. So the effect will be still good in coming quarters, but not as strong as what we’ve seen in Q1 and Q2 of this year. I don’t know if it helps you in terms of what you asked.

Sean Steuart: That’s great. Thanks, Stephane.

Patrick Decostre: And also, as I mentioned again, we try to avoid to be exposed to the spot market because if you look to the last quarter, the wholesale market price average in France was €31 megawatt hours, which was very low. But if you want to contract end of this year or next year, the forward product are still around €90 a megawatt hour. So if you have a smart strategy not to be exposed day ahead or week ahead, when you know the generation, the wind and the status of everything, you have better opportunity to reach a good price. And this is also what we do.

Sean Steuart: That’s great. Thanks for that. The second question for Bruno, you referenced the bills of exchange as helping bolster your liquidity position this quarter. I’m just wondering if you can explain the terms for that source versus extra borrowing capacity against your revolvers? Maybe a bit more context on that liquidity lever for the company.

Bruno Guilmette: Yes, I guess the example, I would use is sort of trade financing. So, it’s recorded as short term, but it’s a facility that’s a separate facility with a French bank, which helps us clearly finance this type of equipment. So, it’s in addition to our other sources of financing. It’s not a – it’s not a restriction on other financing, it’s just an addition.

Sean Steuart: Okay, thanks for that, Bruno. That’s all I have. Thanks.

Bruno Guilmette: Thank you.

Operator: We’re now going to proceed with our next question. The question is come from the line of Rupert Merer from NBF. Please ask your question.

Rupert Merer: Hi, good morning everyone. Just to follow up on the RFP activity, I believe you had some bids into New York as well. Can you give us some color on the scale of that opportunity with this round of RFPs and any updates you can give on your strategy going into this round?

Patrick Decostre: Yes. Morning, Rupert. Actually, we bid three projects to NYSERDA for an aggregate power of 590 megawatt. So, it’s larger project than what we bid in the previous RPFs. And this is clearly where we are going because we think it’s the best way to have a better levelized cost of energy and be able to bid with a good return at the better price for NYSERDA. So that’s where we are. As you know, there is no news from the previous RFP of the winners and in between there was all this question of Chinese product and tariff on Chinese imported panel. So, we have taken everything of that into account. And there was also a good news on one side, which is the IRA implementation and the incentive for domestic content. So, we have worked a lot and the team has worked a lot on specifically the panel and also the BOP evaluation to be at a good cost. So that’s where we are and we will see what NYSERDA will decide to select with the project we bid.

Rupert Merer: So, your previous rounds in New York, I believe you had some large projects. How much overlap is there between this 590 megawatt and the previous portfolios that you bid and how much of it would be new?

Patrick Decostre: There is just one project, which is the smallest of this round that we bid, which was the largest of the previous round that we bid. I don’t want to give you more information than that, but just to show you that the overlap is just on one of the three projects. And it was just really a strategy to be able to bid of the best price.

Rupert Merer: Right. Very good. And then secondly, we can talk a little about curtailments you saw in the last quarter. I think you saw some in France and some on your solar, imagine California, how are you thinking about the curtailments? Are there opportunities to install batteries or look at storage alongside any of your systems? Or do you think that others will take care of that for you in the future? How do you see that evolving?

Patrick Decostre: Essentially the cause of the curtailment are quite different. In France is essentially due to the fact that there is a very, very good hydrogeneration. If you look to French hydrogeneration, I think it’s the highest since probably the last six years or seven years. It’s really high. And the nuclear is there is back too. So – and the demand was low. So, we experienced twice, just in the quarter, we experienced twice the number of negative price of 2023, essentially in Q2. So, it’s a little bit going down in July, but it’s still there. But I think it’s not – I’m not sure it will last in France because it really depends on hydrology of this year and the demand will go up. So that’s one thing. So, I’m not convinced that an investment is the right solution for us. The right solution is to sign the right contract like we are doing, pay as produced and get a compensation. And on many of the contract mechanisms that we have CR17, the contract won in previous RFP, we see the [indiscernible] in France and the utility PPE that we have with Expo, there is a compensation. On the California situation, it’s different. It’s just one contract and we have a different interpretation of the contract between us and the off-taker, and we will enforce the contract to receive the proper payment. And the team is working on this with the off-taker presently. So, it’s a little bit different situation.

Rupert Merer: All right, very good. How much of your….

Bruno Guilmette: We’ve recorded the revenues for the French contracts that Patrick mentioned, which are offering compensation, but we have not recorded revenues for the California situation.

Rupert Merer: Perfect. So, the curtailment in France is in revenue, but not in production, is that right?

Patrick Decostre: The compensation is there.

Bruno Guilmette: It’s not of the compensation.

Patrick Decostre: Yes.

Rupert Merer: Very good. Well, thank you very much. I’ll leave it there.

Patrick Decostre: Thank you.

Operator: We are now going to proceed with our next question. The question is come from the line of Benjamin Pham from BMO. Please ask your question.

Benjamin Pham: Hi. Thanks. Good morning. Can you expand on your comments around looking at acquisitions? Is there maybe some color on ideal size, technology, strategic priorities, and just what do you think fits it best for Boralex today?

Patrick Decostre: Well, certainly we continue to look carefully at acquisition opportunities. Our teams are active both in looking at good opportunities in both North America and potentially in Europe. Strategically, we keep focusing on the same markets, especially, I’d say, a bit even more on the UK and U.S. markets. But we want to find something that’s strategic, sizeable and where we can add value. So, it’s not dry assets, but it’s good operating assets, where we can add value as the Boralex team, and also potentially with a team with development assets that we would not pay too much for. So ideally, it’s sort of a package strategically, as I said, a couple of markets that where we have more needs because we’re growing a bit faster in the U.S. and the UK.

Benjamin Pham: And I know you mentioned also acquisitions of potentially just development projects. Could you comment on, is there an increased wellness to pay more for development now than you have in the past?

Patrick Decostre: Well, there’s been probably a peak a few years ago already and probably a trough more recently, a down. So likely we’re getting back a little bit in terms of value, which is also good for us, but I think not the extent of the excitement we’ve seen and paying too much in the past. So, I’d say we’re still in a comfortable zone in terms of valuation, where we would look at acquisitions, we feel there’s still good value to be found, in part to your question, in part in development pipeline valuation.

Benjamin Pham: Okay, maybe just a cleanup question. The reference to the Canadian ITC projects that were ground foddered. Are you effectively, since you finance these projects 80/20, aren’t you effectively getting your equity back and more just the way that you structure? Or am I thinking about…

Patrick Decostre: It certainly reduces our equity by a good chunk. There’s timing issues, as we mentioned, which we try to bridge with the financing I talked about. So, all in the lenders are, as you say, reluctant to finance. All of that could be labeled as equity. But it certainly helps quite a bit on the IRR [ph] of these projects and the need for equity is reduced significantly.

Benjamin Pham: Okay, thank you.

Operator: We are now going to proceed with our next question. The question is come from the line of Jessica Hoyle from Scotiabank. Please ask your question.

Jessica Hoyle: Great. Thanks so much for taking my question. Maybe just to start more broadly, can you comment on what you’re seeing in the RFP environment? Have you seen some early signs of acceleration just given electric demand is increasing across several of your geographies?

Patrick Decostre: Yes, first of all, there is clearly, there is not yet RFPs, but there is clearly a big program in Quebec for 10 gigawatt plus that will come. We know that this will, Hydro-Québec will make RFP to select partner, private partner per project to develop. We don’t know exactly how this RFP would be defined. There is discussion between the industry and Hydro-Québec on this essentially it will be on the track record, the skills of the operator in terms of development, operation, maintenance, capability to deploy and experience with them. And we are well positioned since we are their partner on the Danish [ph] project. If you look to Ontario, there is an RFP coming next year, the LT2. And again, it will be a significant RFP for generation and generation and storage. So that’s an important point. We are also looking something coming in BC, but we will see where it goes. It’s due for mid-September, so that’s for Canada. And we are also very well positioned with our relation with First Nations in terms of development in Quebec, Ontario and potentially in BC too. And you have seen that we just also had a new board member who is an accountant with a lot of experience and also from [indiscernible] origin. So, bringing lots of expertise and another view to the board. In Europe as just mentioned at the beginning, the increase of the budget from the UK government is a big signal to show that they want to accelerate and there will be an AR7 next year and it just also confirmed a big investment in the supergrid to bring power from the northern UK to the demand area. So, and there is a bunch of RFP of 0.9 gigawatt coming in France in the fall. So that’s there is a lot of things moving.

Jessica Hoyle: Appreciate that. And then just thinking more about the growth path, could you really look to accelerate development of some early stage projects just to be ready for some future RFPs?

Patrick Decostre: Yes, that’s exactly what we are doing in Ontario and Quebec. Takes a little bit more time in France and the UK, because in France and the UK, the condition to bid you need to be fully permitted. So, you do the development work before and not after obtaining the contract in Quebec and Ontario, it’s a little bit different. But yes, the team are working a lot and we have had resources the last years, because we were seeing that coming and I think that’s a good news because it’s now.

Jessica Hoyle: Thanks very much.

Patrick Decostre: Thank you. Thank you. We have no further questions on the phone line. I hand back to you for any web questions that you may have. Thank you.

Stephane Milot: All right. Thanks a lot everyone for your attention. If you have any additional questions, please call me. As you know, same number, 514-213-1045. I’ll make sure I quickly answer your questions before getting on vacation. So, our next call to announce third quarter results will be on Thursday, November 14 at 11:00 a.m. So, a nice day, everyone, and good vacation for those who are waiting for the quarterly season to go on vacation.

Patrick Decostre: Thank you.

Stephane Milot: Thank you.

Operator: This concludes today’s conference call. Thank you all for participating. You may now disconnect your lines. Thank you and have a great day.

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