Northland Power Inc. (NPI) Earnings Call Transcript & Summary

Good morning. My name is John Brace, and I'm the Chair of the Board of Northland Power. I would like to welcome you to Northland Power's 2021 Investor Day in what has turned out to be a very unusual time of COVID for us all. I hope everyone is keeping safe and healthy. While we would normally have hosted this event in person, under the current circumstances and as a precautionary measure to ensure the health and safety of our shareholders, employees and other stakeholders, we are holding the meeting in a virtual-only format. I would like to start by acknowledging my fellow directors who are joining us on the call today. In particular, I would like to acknowledge Jim Temerty, who, as all of you know, has retired from Northland's Board of Directors. As you also all know, Jim was the Co-Founder of Northland back in 1987. It was his vision and his entrepreneurial drive that created this leading company in the energy space. The rest of society is now catching up to what Jim believed in the beginning: that we can make the world a greener and better place. Jim, thank you for your leadership. We will continue growing what you started. On to the business of the day. As part of the theme today, Mike Crawley, our President and CEO, along with other members of the management team, will give presentations that will provide you with a sense of what makes Northland strong. I think today's big takeaway is that Northland is doing well and will continue to do well with a significant growth anchored in our offshore wind development ambitions over the near, medium and long term. I will leave it to Mike and the team to provide you with the details. As Northland continues to grow and diversify its business globally, developing, financing, building, owning and operating projects across 4 continents, so does the need to ensure that we maintain the highest standards of corporate governance, corporate responsibility and Board leadership. We have spent considerable time and effort reviewing and improving ourselves in these areas as we believe that an effective Board is a major contributor to long-term performance and investor confidence. To do so, we undertook a detailed analysis of opportunities to enhance the corporation's governance policies as well as strengthen our environmental, social and governance, or ESG, performance. Significant progress was made on these initiatives with the adoption of certain key policies intended to enhance our governance best practices, including commitments to meeting minimum diversity targets for both the Board and management levels and to ensure that we create an inclusive environment where different views and ideas lead to innovation and a stronger organization. As you will note, I am pleased to report that we already performed very well here with 37% female Board and female executive management participation. We also introduced age and term limits for our directors to ensure that the Board remains effective and balanced, while providing for new perspectives and ideas. We attracted new and impressive independent directors to the Board, and now 7 of our 8 directors are independent. We implemented a Director Professional Development Program. We improved our director assessment process and a number of other enhancements, including the design and oversight of executive compensation. Lastly, while we have always felt that our business was rooted fundamentally in the essence of ESG, we have elevated our ESG profile and formally integrated ESG into our Board mandate, with oversight of Northland's ESG initiatives and activities. We believe that this is important and that investors want to know that we are integrating environment, social and governance criteria into Northland's strategic planning and business execution processes. We are confident that the changes made will make us a stronger and more resilient company as we continue our global growth. These continue to be exciting times for Northland. I'm sure that you will see that reflected in the presentations that follow. With that, I will turn the floor over to Mike Crawley to take us through the day's agenda. Mike?

Thank you, John, and thanks to all of you for connecting to our Investor Day. I'm sure you've had your fill of Zoom and Teams conferences by now. So we will do our best to keep things interesting and well paced. As you know, we have a number of new faces on the Northland Power senior executive team. Today is a chance for you to get to know them a little bit better, albeit virtually. We are going to give you an overview of our corporate strategy, drill down on the growth pipeline with David Povall and then go one step further by having 3 of our regional development managing directors highlight specific opportunities, including the just announced Baltic Power Offshore Wind joint venture. Morten and Pauline will respectively take you through how we are going to execute on these growth projects and fund them. Troy will present to you how we are leveraging our operations experience to add further value as a partner on large projects and continuously improve how we operate all of our projects. Finally, one of the relatively new faces today is Wendy Franks, our Executive Vice President, Strategy and Investment Management. She will introduce you to the 3 elements of our mandate: firstly, finding ways to get more contribution from our current assets; secondly, closely tracking and monitoring risk in our new and prospective markets as we continue to expand globally; and third, and perhaps most importantly, being foot forward in finding the next big growth area for Northland Power. As part of the logistics for the day, we ask that you hold on to your questions until the end of the formal presentations. We have allotted 30 minutes for questions, and we will open the floor to questions at the end. These questions can be submitted through the questions panel on your screen. Since COVID-19 emerged, we have put the health and safety of our employees and stakeholders above all else. Through diligent planning and rigorous adherence to health protocols, we have also maintained high levels of facility availability, delivering essential energy supply to consumers and industry in Europe, Canada and Colombia. Looking ahead, offshore wind promises to accelerate the growth that Northland has consistently delivered over its 34-year history. This decade, we'll see global efforts to decarbonize electricity grids ramp-up, which will create a huge need for new renewable power capacity with the growth of offshore wind outstripping onshore wind and solar. We have the market position, the growth pipeline, the talent and the balance sheet to seize this opportunity. And as we did with offshore wind, we are now looking to position ourselves in what will be the next big waves in decarbonization of energy, renewable fuels and storage. Our senior executive team brings extensive experience and a record of success in the energy sector and development in general. As CFO, Pauline Alimchandani is the other hand on the tiller at Northland. Through her previous role as a CFO at one of Canada's leading listed real estate development and asset management firms, she has successfully balanced rapid growth with financial prudence. Wendy Franks told me one of the first times we met that she loves the challenge of solving complex problems. She's done exactly that in earning her doctorate in Bioelectronics and then helping their clients chart their path forward at McKinsey, and more recently, choosing lucrative and successful investments as a senior principal at CPPIB. Since joining Northland in 2017, Morten Melin has drawn on his prior experience as Vice President, Engineering, Procurement and Construction at rsted to build up Northland's project execution team. He is based in Hamburg with our offshore wind hub. In the coming decade, Asia is going to be huge for renewables in general, but in particular, for offshore wind. Choosing a global Head of Development who had spent most of the last 20 years developing power projects in Asia was quite deliberate. David Povall's global outlook and disciplined approach to development has seen our growth pipeline expand and advance significantly in the last year. Troy Patton has been with Northland for a few years now, and he brought to the company deep technical knowledge from his senior roles at both Vestas and General Electric's Power Generation arm. His technical depth is key as we take on more asset management and service functions on certain projects and start looking a bit further ahead to repowering opportunities. As General Counsel since 2011, Michael Shadbolt has been part of the biggest period of growth in Northland's history after a successful career in private practice. His legal and commercial knowledge spans all our power generation technologies and markets. The newest member of the senior executive team is Chief People Officer, Rachel Stephenson. As our growth and global footprint accelerates, workforce planning and both talent recruitment and retention will be critical. And with Northland, Rachel is finally coming back to Canada after several years abroad in senior roles in human resources in the United States, U.K. and France. This chart tells the whole story of Northland. Starting out as a pioneer in the Canadian private power sector, the company built up a portfolio of high-quality assets in Ontario, Qubec and Saskatchewan before the Ontario renewables expansion and European offshore wind dramatically accelerated our growth. An investor who came in on the 1997 IPO and reinvested their dividends would have realized a better than 2800% return on that investment. Offshore wind has driven huge growth at Northland by all measures. Since 2014, our net capacity has nearly doubled, adjusted EBITDA has tripled and free cash flow per share has seen a 19% CAGR. The majority of our EBITDA now comes from offshore wind. The direction of travel for power generation grids globally is now unmistakable. Carbon-intensive generation will be largely replaced with new renewable power capacity. Projections show that this will require USD 3.4 trillion in investment by 2030, with the bulk in offshore wind being much -- with the growth in offshore wind, rather, being much greater than solar or onshore wind. Now let's focus on where the bulk of those investments will go. Europe and the Americas will continue to see lots of growth in renewables, but take a look at Asia. Almost half of the projected investments will be there as Asian countries catch up and maybe surpass the renewables build-out that we've seen in the West. With offshore wind outstripping other renewables in terms of growth on a percentage basis, Northland is already well positioned as a top 10 global player. This chart only refers to installed offshore wind capacity. David and his team will give you insight into our much larger growth pipeline. I would also highlight that on this list, only rsted offers investors as clear an exposure to offshore wind's expected growth in the decade to come. Our decision to set up regional development offices over the last 3 years was directly tied to where we saw the growth in renewables and offshore winds specifically, happening through the 2020s. We have boots on the ground in the markets that matter, and those teams have already secured investment and growth opportunities. I think we all know that there is no lack of capital chasing renewable power assets anymore. With the Paris Accord and both country and corporate renewable power targets, what will be scarce are viable projects. Offshore wind is a big part of the solution given the scale that can be achieved offshore, particularly for any country or region with land constraints. However, it is true for all renewables, the value creation will be in creating the projects. Northland Power is a developer. We have the experience and the talent to both conceive of and develop large, complex renewal power projects. This talent includes 2 teams of much sought after offshore wind engineers and project management professionals, one in Taipei and the other in Hamburg. I've already spoken to our growth in offshore wind. And as we look to capital allocation in the coming decade, that growth -- that exposure will only increase further. We intend to be present in most new markets that emerge for offshore wind. We have an advantage that we intend to press. Offshore wind has scale and uniquely still offers long-term, high-quality government-backed PPAs in most markets. With onshore renewables, our exposure will also grow, but recognizing how competitive it is, our approach is much more targeted to markets where we have or can create an advantage. Now we continue to see good value in regulated transmission and distribution assets in South America. These assets offer stable cash flows, more akin to baseload gas-fired facilities in that respect. We benefit from the transmission expansion required to facilitate renewables growth in those markets, and they also connect to the platform for our own renewable power investments in those countries. While attractive for all those reasons, we see these investments in transmission and distribution assets, settling around a contribution of 15% of EBITDA to Northland. We will not be deploying any new capital into gas-fired generation and, therefore, growth elsewhere will reduce the relevance of these assets to Northland, although their cash flow continues to support the growth of our renewables growth pipeline. We are looking to establish positions both in energy storage and renewable fuels, and there's more to come on that later this morning in the presentations. A single offshore wind project can deliver significant cash flow. However, their scale and complexity means that the development and construction period is longer than for onshore renewables. As we look at this decade, near-term growth will come from onshore renewables and M&A. Cash flow from these opportunities will, in part, fund the growth of the larger offshore wind projects that will come online between 2025 and 2030. We would also expect to see investments in new initiatives such as renewable or green fuels ramp up during this latter period. By the end of the decade, we aim to again double the size of the company. We have 4 to 5 gigawatts of identified development projects that we already have development teams advancing, and they would create overall $15 billion to $20 billion in investments, which is about $10 billion to $14 billion net to Northland. Pauline will provide more details later in her presentation on this. It is important to note that this does not consider new projects just now being considered or M&A activity. Rolling back the clock again to 2014, and you see a much smaller Northland with mostly Canadian thermal generation capacity. A look ahead to 2030, and the change is remarkable, a much larger and far more diversified Northland with almost all of our estimated 7 gigawatts capacity comprising our current operating assets and those identified projects referred to already, being renewables across Asia, Europe and the Americas. Finally, sustainability has always been fundamental to Northland's approach to growth. Our annual long-term planning process continually reassesses and looks to enhance the long-term viability of the business. The long-dated government-backed PPAs from offshore wind are a big factor in that. Sustainability does, of course, go much beyond financial metrics. Our corporate value is tightly aligned with the United Nations' Sustainability Development goals. We look at everything we do through the lenses of our planet, our community, our people and our company. Any otherwise successful business today that is failing in even one of these areas will probably not be around a few years from now. This broad view of sustainability has always been core to Northland. Our specific sustainability rallying cry at Northland is our commitment to develop a carbon-free world. Carbon is offset by projects that are created, not those that are simply acquired. We will be doing a much better job on reporting what we are already doing with respect to ESG measures. This year, we begin reporting according to SASB. And in 2022, we will align our reporting with the TCFD standard. Our investments in renewable power will continue to reduce our carbon intensity. Health and safety and community engagement are always top priorities at Northland. And finally, we have made great strides in governance in the last few years, both in terms of gender diversity, but also transparency. Now David Povall will take you on a deeper dive into our growth plans.

Thank you, Mike. As Mike mentioned, I will now provide you with further details on our growth plans and how we are positioned to take a leadership role in the further deployment of offshore wind and other renewable technologies around the world. As Mike has introduced, Northland has a growing footprint of regional offices around the world in our key target markets. I am pleased to have included Warsaw on this map with the office opening in 2021 on the back of our partnership with ORLEN announced last week. More on that later from Nigel. A key to Northland's approach to development is to establish a local market presence with local expertise, working in partnership with local companies. This will continue to be our approach, which has led to the success we have enjoyed to date. As Mike suggested, I can share with you here an indication of our growth pipeline being between 13 gigawatts to 14 gigawatts. This represents the total pipeline across all technologies and all stages from site origination and the early entry in greenfield development projects through continued development works on to projects approaching later stages of their development, like our New York wind projects. The breakdown across the 4 regions is shown, and I would note, offshore wind projects account for the largest portion of this, being around 12 gigawatts. I talked before about a key success factor for Northland is through us having a local market presence and being led by an experienced industry professional. I'm pleased to say we at Northland have composed our team with strong industry leaders in each of the regional growth offices and key business streams. We have seen significant growth in the team since the last Investor Day. And I'm pleased to introduce them to you and invite Nigel, Michelle and Javier to present to you today. Nigel leads the European development business. He has nearly 30 years working on energy and infrastructure, with the last 10 years focused in Europe on renewable and green infrastructure, leading offshore wind from the U.K. to Germany. Nigel was, therefore, the perfect person to lead the Baltic Power transaction, which we were pleased to announce last week, and Nigel will tell you more about it shortly. Michelle leads the Canadian and U.S. development team with a focus on renewable energy for more than 15 years across solar and onshore wind. Michelle is applying this expertise, leading her team through the acquisition last year of the New York wind projects and taking them through the mid into late-stage development and financial close later this year. Michelle will tell you more about these projects and why we are positive on further growth in New York and other specific regions in the U.S. Javier is an experienced professional in the Latin American markets and leads our LatAm business. With almost a quarter of a century leading energy investments in the region from Mexico to South America, he was instrumental in the EBSA transaction that closed early in 2020 and will later present to you more on EBSA and the growth potential in Colombia and utility investment opportunities more generally. Not presenting today, but no less important are the team on the ground in Japan and Korea, where in markets which we don't have a long history -- which don't have a long history of renewable investment, I'm pleased to say through Hisayuki-san and Seungsoo, we have locals with offshore wind experience and track record, which are implementing with good success today to progress our projects and secure new offshore wind projects. Of course, we have the Hai Long project team led by our Project Director, Felipe Montero. Alongside the regional growth teams are the 2 teams that operate globally with John Pires leading the M&A team. And more recently, in 2020, a global team to focus on offtake originations headed by Carsten Hansen. Recognizing that our projects will increasingly be considering corporate PPAs as their offtake, Carsten brings many years of experience to Northland to lead this business. I have 2 maps for you today to show the global development footprint alongside our operating assets. The first here shows the offshore projects. As Mike mentioned earlier, with our leading position in offshore wind, we are adding to the portfolio, particularly in Asia and Europe. In Asia, our local market presence continues to grow across our 3 key markets of Japan, South Korea and Taiwan with a 2-gigawatt development pipeline in addition to our Hai Long, Dado Ocean and Chiba projects. In Europe, addition of Baltic Power to the portfolio with an opportunity of up to 1.2 gigawatts, we have a further 5 gigawatts of projects in early development across Northern and Southern Europe. I thought it would be helpful to show you here how we see the offshore wind markets and, hence, where we see the offshore wind growth potential for Northland. The stars show the markets where we have our existing projects in operation or development. We have categorized the list into existing and growth markets and as you would expect for Northland, we are having success in securing an early position in and delivering development projects in the growth markets. We will continue to look for offshore development projects in the established markets, where we can see value for Northland and we'll continue [Audio Gap] a world approach, understanding of the local market and deployment of local expertise supported by our global teams and in partnership with local companies. Onshore wind brings the opportunity to secure near-term growth and cash flow for our business. It is a targeted approach, building on existing development pipelines and market presence to unlock further growth opportunities in the near term. The onshore wind operating assets and development pipeline is focused on Canada, U.S. and LatAm regions. I would draw your attention to New York, where in addition to the circa 300 megawatts of onshore wind, we see further growth potential in the development of solar with a pipeline of 200 megawatts and growing. Also in Mexico, we have a pipeline of projects that we will further invest in as the market dynamics support. To note, 2 things not shown on the map. Firstly, the European team is seeing onshore renewable opportunities in specific countries where we can see value and are assessing the best way to enter these markets. And in Colombia, on the back of the EBSA investment and our first solar project, Helios, which is heading into construction very shortly, we are seeing further renewable projects in Colombia. Our targeted approach to onshore renewable development is summarized in these 3 key areas. Firstly, while the offshore wind pipeline with its longer development process will deliver in most cases for the second half of this decade, onshore renewables with their shorter development process, such as those we are progressing through greenfield origination or acquisition can achieve commercial operation over the next 5 years. Secondly, the focus is on leveraging our position to deploy our in-house expertise across the technical, commercial and financial elements through to construction and operation stages. And finally, we are focusing on markets where we can deploy equity at scale and look at markets where we have an existing footprint and see the opportunity to expand and also a selection of new markets in, for example, Eastern and Southern Europe. As I introduced earlier, Northland's global M&A team sits alongside the regional businesses with a focus on securing visible equity deployment opportunities through larger scale platform acquisitions or corporate transactions that bring in near-term meaningful cash flow. We are seeing opportunities across renewable platforms that will accelerate development growth in a target region, seeking further operating utilities in attractive regulatory regimes. And also, as Wendy will talk to later, the team is supporting with the acquisition of platforms related to other technologies such as hydrogen and storage. Also, as I mentioned earlier, with the further maturing of the renewable energy sector, particularly in the more mature markets, corporate PPAs are increasingly becoming a feature of our offtake mix, and we have a newly created dedicated team focused for this. We continue to look for long-term sovereign backed offtake across the portfolio, and the table below shows this remains the case for the majority of our existing and growth projects. Alongside this, ESG-driven renewable power demand from the corporates is now creating opportunities for onshore and offshore renewable projects, both at the origination stage and also for recontracting of existing assets at the end of their initial offtake terms. This is shown in the right column of the table across the existing and growth projects. I would now like to move us to focus on the 4 regional growth businesses. Before handing over to the team, I am happy to present the Asia business to you. As Mike mentioned in his introduction, it is a region I know very well, having been developing energy projects in Asia for over 20 years now. I suspect we are all familiar with the important role Asia is going to play in the future when it comes to where the investment demand is being driven from. As BNEF research reports, 50% of all renewable energy investment will be in the Asia region. We have a perfect scenario of decarbonation targets set by a number of the countries across the region, which has led to specific ambitious wind targets. And for Northland's 3 existing markets with active offshore wind development pipelines, Taiwan, Japan and Korea, have a combined target in excess of 30 gigawatts by 2030. And in addition to this, a number of the Asian countries are still early in their adoption of renewables, providing significant greenfield development opportunities. More on that later. Northland today has a pipeline of offshore wind projects totaling in excess of 4.5 gigawatts in Asia. Our strategy remains to be an early mover, leveraging our existing presence in Taiwan, Japan and South Korea, to expand our pipeline and markets. I mentioned earlier the importance of partnerships to success in these markets, and I see this will continue as we build in these locations. Also, when looking at our new initiatives, which Wendy will talk about later, we see Asia, including Australia, as offering significant potential, which we are well placed to capitalize on from our market presence in the region today. Securing projects is, of course, the key to successful growth. Alongside purchasing an interest in existing development project that was started by someone else, similar to Chiba, Northland has the in-house expertise to originate projects ourselves, adding an important additional dimension to how we intend to grow our pipeline. The team doing this has a track record of success, which we are applying today in Asia and across the globe with success. I look forward to reporting more on this through 2021. As mentioned earlier, we continue to invest in local expertise and now have in Asia in excess of 70 people, and we will continue to invest in building these teams. With the existing presence in the market and an understanding of the local culture and business and development approach, we believe we will continue to leverage this through unlocking local partnerships. Our Asia portfolio continues to make good progress through the key development stages. In Taiwan, the team is making good progress on project optimization, working alongside our partners as well as with the government on our localization plan. In Korea, key work with the local stakeholders and wind measurement continues as we move towards the next key milestone being the electricity business license to secure site rights. And in Japan, discussions with the local fisherman, wind measurements and offshore surveys are progressing. In addition, in all these markets, we are expanding our footprint through securing further offshore wind development opportunities, which I hope to be able to announce later this year. I now have the pleasure of handing over to Nigel, who will present Europe and the Baltic Power project.

Good morning, good afternoon, good evening, everybody. My name is Nigel Slater. I'm in charge of Northland's development activities in Europe. Today, I'd like to focus on our latest transaction, the Baltic Power offshore wind project that we signed and announced towards the end of last week. Just to frame the transaction, Baltic Power is a mid-stage offshore wind development project to be built in the Polish Baltic Sea in the middle of this decade. We will be in a joint venture partnership with PKN ORLEN, the Polish oil and gas company, in this development. So firstly, why did we come to Poland? As you know, we've had success in offshore wind in the Netherlands and Germany. We're now looking to expand from that critical mass and that base of expertise that we've established in Western Europe to look for further offshore wind opportunities in Europe. Europe has changed a bit since we first came to the Netherlands. There are more developers and more investors in the sector. Virtually everything is now awarded by competitive tender, often in so-called centralized auctions. That's the model used by the Danes and then the Dutch and now also in France and soon to be used in Germany. Nonetheless, we believe that there are pockets of value in European offshore wind where Northland can continue to grow and to win attractive business in markets that we know. For example, later this year, we will have a right to match in one of the upcoming German auctions, also in emerging offshore wind markets and in markets where the auctions are not centralized. Poland offers as much of that. It's an emerging offshore wind market. Its first round of revenue support will not be competitively tendered. And thereafter, it has plans for, what I would call, decentralized auctions, more akin to the U.K.'s highly successful CfD auctions. Moreover, Poland is an attractive investment destination. It is a sizable country with an investment-grade credit rating. It has a growing economy with increasing electricity demand. It also has its structural imperatives for bringing new cleaner generation online. It has a clear energy policy that foresees a lot of renewable investment, including double-digit gigawatt developments in offshore wind. The Baltic Power project has a number of these advantages and benefits. It gives us a scale entry into this new market, alongside a very strong and influential local partner. It is mid-stage development, which gives us a healthy balance between reducing the risks of new market entry on the one hand and still leaving development to be done and value to be extracted on the other. And Poland is probably unique in that it is offering developers a 25-year revenue support agreement, a tenor probably unmatched in power generation anywhere. And this investment is also a good strategic fit for Northland. There are early mover advantages in entering Poland at this juncture, and we are entering a new market with a strong local partner to assist us in navigating our path, a route we've also taken in Asia. The secure revenue stream offered by the 25-year Contract for Differences fits with our aim of seeking to secure stable certain cash flows. This slide shows you a little more detail about the project itself. The project capacity is up to 1.2 gigawatts. And Northland is acquiring a 49% stake in the joint venture, so close to 600 megawatts of net development capacity. We expect to reach financial close no later than the middle of 2023 and to reach commercial operations and start full generation in 2026. You have just seen and heard about our offshore wind expansion in Asia, building out from our success in Taiwan. In similar vein here, we are building out from our platform in Germany and the Netherlands and continuing to grow our global offshore wind portfolio. And this success in Poland was probably largely down to 2 key factors: one, our top 10 global position in offshore wind. It is that knowledge and that expertise that local developers like PKN ORLEN are seeking to help them develop offshore wind in their domestic markets. The second factor is partnership. That probably can't be overstated. ORLEN wanted a true partner, one with whom they could work on an equal footing in an open and collaborative framework. We believe that Northland is a good partner. We share our knowledge and insights, and we are happy to let our partners learn from our experience. We like to think that we're good at fitting in and molding ourselves to complement the local players in overseas markets. Finding a genuine partner was a key criterion for ORLEN. And it is what I personally believe won Northland the competition to become ORLEN's partner on Baltic Power. That willingness to act as a genuine partner will continue to bring us success in the global offshore wind industry. As offshore wind moves to ever more countries, there will be more national champions and more local entrepreneurs who are seeking an open equitable cooperation with members of the global top 10 in offshore wind. We prequalify for that by virtue of our top 10 position. But we can succeed by virtue of our real partnership credentials and ethos. And now coming to my final slide. What lies for Northland beyond Baltic Power? Baltic Power now gives us a beachhead from which we can seek to grow in Poland and in the wider Baltic region. In Poland specifically, there will be future decentralized auctions for offshore wind that will give us an opportunity to add to Baltic Power. Further east in Estonia and Lithuania, there are offshore wind developments planned. In fact, Wind Europe estimates the total offshore wind potential of the Baltic Sea to be around 83 gigawatts. So this is definitely a sea in which we can keep fishing for offshore wind for several years to come. And beyond offshore wind, we are already exploring opportunities in onshore wind and solar in Poland and also in some of the nearby Baltic states. Not only does Poland have an energy policy that envisages double-digit gigawatts investments in offshore wind, but it foresees even greater investment in solar PV. And Poland and the Baltics still offer some of the best remaining onshore wind sites in the European Union. So in 5 years' time, we hope to have secured more offshore wind developments in the Baltic region and to have invested in and be operating land-based renewable generation in Poland and the Baltics, too, in addition to closing in on the end of construction on Baltic Power. Thank you for your attention. And with that, I'd now like to hand on to Michelle.

Okay. Thank you very much, Nigel, and good morning, everyone. I am really pleased to be able to speak with you today about Northland's recent investment in the U.S. and more specifically in New York. So I'd like to start off speaking a bit about why the U.S.? Firstly, it is just a tremendous opportunity to deploy renewables. Goldman Sachs estimates in a recent market report that it expects about 460 gigawatts of new renewable generation by 2035. So this is just a tremendous opportunity. Secondly, the U.S. has advanced market structures that help enable renewable growth. And these markets are well developed, and several of them have renewable portfolio standards, RPSs, and these enable renewable deployment. And finally, the U.S. provides just a jurisdictional balance to Northland's global portfolio through its U.S.-denominated cash flows. Now a bit more specifically about why we like New York. First, it has a strong clean energy standard, and that's via the Clean Leadership and Community Protection Act that was put forward by New York state. This enables the attractive contractual structures. And for example, NYSERDA is contracting for renewables under a 20-year index REC contract. Secondly, there's access to multiple revenue offtake strategies. So as I mentioned, NYSERDA has this index REC contract, but there are others doing something similar, like NYPA and SUNY. SUNY is a conglomeration of universities. In addition to these long-term contracts, there are hedge products that can be put in place. There can be hedges for energy, environmental attributes or the RECs. And all of these are examples of the multiple offtake options, which we like. Next, New York represents a liquid energy market with strong fundamentals and transparent pricing mechanisms, and this allows for payback of our capital within the contracted period. And lastly, the geographic proximity of New York to our Toronto Northland headquarters just makes for ease of access to the sites, of course, outside of these COVID times that we're in today. So this articulates the reasons why Northland sees the U.S. and, more specifically, New York as strong strategic fit for us. And we expanded this past year into the U.S. market with the acquisition of 3 onshore wind assets in New York. We really see this as an opportunity to leverage this presence, build a platform and expand into solar and storage as well as new jurisdictions, such as New England, PJM or California as others. Now I'd like to talk in more detail about the New York market. So first, on the energy policy side. So New York is a rapidly evolving market for renewables and that's driven by aggressive policy targets, which translates into approximately 26 gigawatts of incremental new build by 2030. So again, this is the Clean Leadership and Community Protection Act at the New York state -- that New York state has put in place. And it has a target of 70% renewable energy by 2030 and 100% zero emissions by 2040. In addition, the state recently revamped their renewable permitting regime to enable more deployment of projects in order to meet their goals and also NYSERDA recently updated their contracting mechanism. It went from a 20-year fixed REC mechanism, which is basically an environmental attribute-only PPA, and it transitioned to what's now called an index REC mechanism, which is basically an all-in 20-year contract for energy, REC and capacity. And now I'd like to highlight the high-growth potential of the New York market. So firstly, NYSERDA will be procuring approximately 4,500 gigawatt hours per year in annual solicitations starting this year, 2021, all the way up to 2026 in order to meet the state renewable targets that I just mentioned by 2030. And these are the largest clean energy solicitations in U.S. history, which is just an example of the sheer amount of build-out and growth that will occur in New York. Additionally, New York has a target of 9 gigs of offshore wind by 2035; 3 gigs of energy storage by 2030; and 6 gigs of solar by 2025. And all this is shown in the graphic time line below. And lastly, the regional team is planning to grow this development pipeline of onshore wind projects by adding solar, storage, in-state and then expanding to other markets. And we plan to leverage Northland's strong development experience working in complicated markets. So we're used to markets like Ontario and Qubec, where permitting regimes are more complicated and this is similar to New York. So I'd now like to talk a bit more about the projects themselves. They do have names after all. So the first is Ball Hill, which is approximately 105 megawatts. The next is Bluestone at, again, approximately 105 megawatts. And then High Bridge, which is about 100 megawatts. So all 3 of these projects were acquired and closed in 2020. We own 100% of them. Capital cost for all 3 is approximately CAD 900 million, and they all qualify for federal tax credits under the tax equity partnership structure. Also noteworthy, currently, all projects have 20-year fixed REC PPAs, so for the environmental attributes only. And recently, New York State Commission ordered NYSERDA to convert all of those fixed REC contracts into index REC contracts, which is basically a Contract for Difference. And so this is expected to happen for all 3 of these projects on or before February 19 of this month. And the last thing I'd like to point out on this slide is that we are expecting to hit financial close on both Ball Hill and Bluestone later this year, with High Bridge following shortly after in 2022 and then commercial operation for Ball Hill and Bluestone by the end of 2022 and High Bridge the following year in 2023. Okay. So I've addressed why we like the U.S., why we like New York, some details about our 3 onshore wind projects. And so where do we go from here? So we plan to leverage our platform of New York onshore wind projects and continue to grow that into an in-state solar storage and wind pipeline. And then we want to take this presence and expand it into another identified priority market, markets which -- that have similar characteristics as New York. So things that I mentioned earlier, liquid markets, multiple offtake options as well as strong renewable portfolio standards. And we see some of these markets, as an example, New England, PJM, California -- California and others and so we're constantly doing our assessment and evaluating that. We also plan to target a platform of about 1 gigawatt of projects over the next few years by either acquisition and/or greenfield development. And this scale is important because we need to utilize that platform to unlock further synergies from an operational perspective, procurement perspective and development perspective. And this portfolio, combined with Northland's strong development skills, will set us up to be successful. So I'm really pleased to be here today to speak a bit more about our New York projects and where we see things going from here. And I'm just personally really excited about these projects, and I look forward to continued momentum in the years to come. So thanks very much. And I will now pass things over to my colleague, Javier Chavarria.

Thank you, Michelle, and good day, everybody. Today, I will be talking about one of the components of our Latin America strategy, which is investment in utilities. Just to be clear, the main component of our strategy for the region is the development and acquisition of renewable generation projects, such as our solar project in Mexico and a new solar project in Colombia, which I will briefly describe today. In both of those markets, we intend to expand our presence in generation over the next several years. In some markets, however, we have identified opportunities in other energy sectors, such as transmission and distribution. Along the same lines of why we like the market conditions of certain Latin American countries, for example, attractive energy demand growth, diversified economic activity, et cetera, the transmission and distribution sectors also benefit from those same conditions. In addition, while valuations of stable assets have increased across the globe, in some Latin American markets, we can still find good risk return balance included in the utility space. So why utilities in the first place? Most importantly, because they provide perpetual and predictable cash flow, which is a good balance vis-a-vis our generation projects. Additionally, as a perpetual asset, utilities maintain and actually, in most cases, increase their value over time as a regulated asset base expense. Among the countries, a focus for us in the region. Colombia is an attractive destination, thanks to its investment-grade rating, long track record of support to private investment and a very robust regulatory framework, which recently implemented favorable changes to promote investment with the goal of improving the quality of service. We also like Colombia because of its successful expansion of a middle class population, which is very important for our regulated business and because it has experienced sustained growth for the past 10 years. EBSA, in particular, happened to be an excellent fit for Northland as we acquired after 7 years of ownership by Brookfield. So it came with a lot of fine-tuning already achieved by Brookfield and with a very strong management team. The company was completing its first regulatory review under the new regime. So now it has a solid business plan approved for the next 5 years. And with that, the consequent high visibility for longer-term revenues and cash flows. Finally, EBSA is a beneficiary of grandfather rights, which allow to expand into generation and transmission, qualities that we are already taking advantage of. I'll describe briefly what the company is about. EBSA has 3 main businesses. The first one and most relevant is the distribution business, which accounts for approximately 80% of the company's EBITDA. This is the regulated size of the business. It has a 5-year tariff review cycle. And under the new regime, it doesn't carry any volume risk. What that means is that the regulator approves a fixed revenue cap and the tariff is calculated based on the number of users within the system. The second segment is commercialization -- the commercialization business. It involves the actual buy and sale of energy. And it's a very important opportunity for EBSA as it had not been very active in this sector under the previous ownership. That said, they have developed very strong relationships with both industrial and commercial users, which they serve through the distribution business. The last segment is transmission. Here, EBSA has been very active already, but only within the Boyac region. This sector, however, extends far beyond Boyac. It actually covers the entire country. And it's mainly -- its main driver is the expansion of renewable projects, which require transmission infrastructure. These are perpetual assets, too, with an initial period that includes a 25 -- 25-year fixed payment followed by a regulated return. Altogether, these 3 segments contribute almost $100 million of EBITDA to Northland. As you can see in this next picture, EBSA is at the center of our Colombian platform and we can uncover several opportunities in adjacent asset classes, thanks to EBSA. On one hand, we now have a very strong in-country development, construction and operation capabilities. And on the other, we have a very valuable access to end consumers of energy. Remember, those are the nonregulated industrial and commercial clients. Our intention is to take advantage of these acquired capabilities by pursuing specific projects where we can use them as differentiators from the competition. As an example, we have just reached FID on our first solar project. It's called Helios, which was acquired by EBSA in development stage. The project is starting construction right now and has planned to start operations in January 2022. All the production from the project will be sold through EBSA to nonregulated clients with whom EBSA has already commercial relationships. In addition to this project, our plan includes other opportunities such as the acquisition of small hydro plants, development of storage, storage projects, participation in national and regional transmission projects and potentially acquisition of other smaller utilities. The important message here is that EBSA is very well positioned for the reasons that I mentioned earlier. And it's helping us unlock opportunities that otherwise would have been very difficult to access. In addition to EBSA, we believe that a few additional and select opportunities in the utility space would nicely complement our generation portfolio. At the moment, our focus is on Colombia, Chile and Brazil. And we're keeping an eye on those markets to see if some other opportunities come to the market. To summarize the benefits of this strategy. One, the perpetual nature of the utility cash flows is a perfect match to our perpetual dividend obligations. Also, utilities also provide stable cash flows to compensate for variability in our renewable generation. And these cash flows are not only stable, but they're also immediate when it -- when they come through the acquisitions of all these assets. And they will help fund longer-term development projects. And finally, utilities create additional investment opportunities in the same or, in some cases, other energy segments. Just as we mentioned, the project Helios in Colombia, which we were able to pursue, thanks to EBSA. In pursuit of these other potential transactions, we're basically following the same criteria that we applied when we made the decision to acquire EBSA. That includes focusing on markets with stable economy and robust regulatory regimes, especially if they are set up to encourage investment and if they provide an adequate return on invested capital. We also like mature and diversified and industrial bases, so that there's no dependency on a single sector, and we can reduce the impact of any economic downturns. We also look for macroeconomic metrics that support growth as GDP growth is the main driver for energy demand expansion and, consequently, for an expansion in the regulated asset base. And finally, we like to look at well-established companies, such as EBSA was. We're really not prepared or interested in getting involved in turnaround situations. So I conclude my presentation with this. Thank you very much, and I look forward to your questions later on. And now I'll leave the floor to my colleague, Wendy Franks.

Thanks, Javier. Hello, everyone. My name is Wendy Franks. And as Mike mentioned, I'm the EVP of Strategy and Investment Management. I joined this past July, and I'm delighted to be part of the Northland team. The Strategy and Investment Management is really 2 discrete groups. On the Strategy side, we're focused on new growth initiatives and longer-term strategic planning. The new initiatives team is focused on markets arising from global decarbonization. This includes areas like battery storage and renewable fuels, including hydrogen and renewable natural gas, or RNG. The markets for these technologies are expected to be quite large and could provide meaningful growth for Northland over the next decade and beyond. The Strategy team is also focused on longer-term strategic planning, also as Mike mentioned. Here we use detailed and broad analysis to develop views on specific markets. This then feeds into key considerations like capital allocation decisions. Investment management is a new function at Northland. This team's objective is to enhance asset performance through the evaluation of key performance data. To do this, we analyze operational and financial data. Additionally, we evaluate asset performance relative to our business case at financial close to extract key learnings and to refine key assumptions in our underwriting processes going forward. First, I'm going to speak about new growth initiatives. In general, we think about the markets being formed through global decarbonization in 2 main areas: decarbonization of the electricity grid and decarbonization of almost everything else, including heating, transportation and industrial processes. Decarbonization of the electricity grid will require large-scale battery storage. Renewable energy, as we all know, is intermittent. And as a result, grid stabilization and other ancillary services are needed. We're seeing a high degree of policy support and revenue mechanisms across our target markets. Further, the cost of CapEx for battery storage is declining. The net result is a market that's expected to need upwards of $500 billion of investment over the coming 2 decades. In terms of carbon abatement, decarbonization of the grid will really only get us so far. To meet the target of a global temperature rise of no more than 2 degrees Celsius, we also need to decarbonize heating, transportation and industrial processes. And some of this will be done through electrification, but certain areas like high-temperature industrial processes and heavy transportation, will need a carbon-free molecule. Again, we're seeing a lot of public and private sector support. Hydrogen is getting a lot of attention these days and indeed has huge potential. Renewable natural gas is also a low-carbon molecule and has potential to support Northland's growth in the more immediate term. The expected required investment in RNG out to 2040 is expected to be as much as $400 billion. Hydrogen has much larger longer-term potential and will require significant amounts of renewable energy to produce green hydrogen. So taking a closer look at storage. How is Northland approaching the storage opportunity? So off the top, I personally believe the market opportunity for storage is going to be much larger than current forecasts as technology advances and cost declines mean that storage increasingly takes market share from gas peaker plants. Through our development offices, we evaluate large-scale battery projects and the co-location of battery storage at our sites, as you've just heard from Michelle and Javier. The strategy team is targeting opportunities to develop a separate storage platform in the North American market, which would in turn develop projects. The benefit of this approach is to seek partners with specific battery expertise and to be able to scale more nimbly. We're proactively seeking a platform opportunity where we can partner with teams who bring core competencies such as site selection and permitting, operations and storage dispatch and technology evaluation and procurement as the platform would be technology-agnostic. Northland would provide CapEx funding to such a platform and brings our expertise in asset management to the partnership. So looking at renewable fuels. RNG is methane that is produced by the decomposition of waste. When the waste is fed into an anaerobic digester, methane is produced and captured. The biomethane can then be blended into conventional pipelines and distribution infrastructure for use for heating and cooking applications with really no change to existing infrastructure. While the methane is combusted and carbon dioxide is released, the CO2 that's released has far lower global warming impact versus the methane that would have been released into the atmosphere through the decomposition of the waste stream. This market is also being supported by policy, for example, the Low Carbon Fuel Standard in California as well as by private institutions. So for example, FortisBC offers an attractive 20-year offtake contract for RNG. Here, our approach is similar to what I described for storage in that our goal is to fund a platform, which would include resources to develop and operate the RNG projects. Recognizing the complexities associated with these types of projects, we're looking to partner with expert teams with track records in engineering, project design and operations. We're looking for opportunities with stable long-term returns, ideally supported by offtake contracts or hedging instruments, which would effectively support a floor to expected project returns. On hydrogen, we're exploring a number of potential partnerships and opportunities to develop things like pilot projects. Our focus to date has primarily been in Europe, and we're currently recruiting for a Director of Hydrogen expected to be based in our Hamburg, Amsterdam or London office. So next, I'm going to speak about our market analysis. As I mentioned in my introduction, our strategy team also focuses on market analysis, which we conduct to support long-term strategic planning and other key decisions. Our market analysis and public affairs teams track, on a regular basis, trends in 4 areas: one, commodity prices and the outlook for energy prices and other commodities that influence energy prices; two, government policies that support renewable energy; three, technology advances, which has an impact on CapEx costs and, therefore, the types of technologies that are getting built out in a given market; and last but not least, competitive dynamics and market structure. So we use this information, then we roll it all together to inform key decisions in areas like, one, the distribution of our assets across markets globally. So in other words, this helps with capital allocation decisions. Further, this is one input that supports things like our sell-down strategy, so which assets do we want to keep from a long-term perspective and where might we lighten up. And you'll hear more about our sell-down strategy from Pauline. Another area is to help with decisions regarding which new markets to enter, and you've heard from David about our ambitious development plan. Third, our market view helps with our offtake strategy. As we all know, the industry is shifting away from government-backed PPAs, in particular for onshore renewable projects. And we need to make decisions about alternative offtake agreements like corporate PPAs, which are on the rise. Lastly, we use our market view to inform our market LCOEs. You'll hear more about LCOE analysis from Morten Melin, our Head of Construction. So switching gears, we have a newly established investment management team. This team works closely with operations and finance and is tasked with the objective of supporting the optimization of asset performance. Essentially, this team leverages operational and financial data, performs analysis -- and performs analysis to look for optimizations. The analysis includes things like comparing facility performance within an asset class, understanding key cost drivers and what we might do to reduce those and leveraging external advisers and third-party benchmarks. Second, through the evaluation of actual performance over the long term versus the business case at financial close, we flow key learnings into our business development process. This basic yet critical analysis is growing in significance given the operating history being generated, for example, across our 3 operating offshore wind assets, coupled with our focus on early stage development. The bottom line is the role of the investment management team is to surface optimization to support IRRs of our existing fleet and to support the returns of our new endeavors. Now I'll pass over to Morten.

Thank you very much, Wendy. Good morning, good afternoon, good evening to all, wherever you may be participating from. I'm pleased again to be able to speak at a Northland Power Investor Day. The last time we were here, I talked about the initial progress on the Deutsche Bucht offshore wind farm, which has now been in operation for almost a year and are today contributing cash flow to support the growth we have heard about in the previous presentations. Today, I will speak to you about our La Lucha solar plant near Torren in Mexico and how we are leveraging the scale of our offshore wind portfolio. Construction of the La Lucha project commenced May 2019, and planned completion was scheduled to be second half of 2020. This does not happen for one main reason, the COVID-19 pandemic. The project is now largely completed, and we expect it to begin producing power during the month of March, with official commercial operation date to follow soon after. I am aware that we from Northland rightfully have always taken pride in delivering our projects on time, on budget, with an excellent health and safety performance. And this is what U.S. investors should expect from us. We and everyone in our generation have, however, never been faced with a global pandemic that over several times have caused the worldwide lockdowns of industries and introducing travel bans and various local and regional restrictions on transportation and workforce mobility. And as most of you are aware, Mexico has been severely struck by the brutal force of the pandemic. This has had an impact on the time schedule for the project. I am, however, proud to be able to say that we, today, have a fully constructed solar plant waiting for final grid connection. And yes, I am saying proud as construction of a 130-megawatt solar plant in a small community in the central part of Mexico under the circumstances just described in itself as an achievement. And furthermore, our team jointly with our contractors and in close collaboration with local communities, has done an excellent job in keeping not only the construction of the site a safe place to work, but at the same time, also contributing to support the local communities with preventive measures to also keep them safe of COVID. Now we will show you a short time lapse, demonstrating the progress our team has been able to make on the La Lucha solar plant. [Presentation]

I hope this gave you an impression of the achievement of our team, and we're all looking forward to be adding the additional 130 megawatts to our operating portfolio, further supporting our revenues. And now from the central part of Mexico to a completely different element, namely offshore, more specifically to our portfolio of offshore wind projects across the globe. As has been spoken to earlier, offshore wind constitute a significant part of Northland growth strategy. And with the sizable portfolio of projects in development described in more details by David, and further underpinned with the recent addition here too by the Baltic Power project as described by Nigel, I want to talk about how we utilize the scale of this portfolio. Developing offshore wind projects is complex by nature, which also make the barriers of entry to this industry higher. We at Northland Power have since we first entered the offshore wind industry with the Gemini project in 2014, built a significant knowledge base in this industry. Not only have we constructed 3 offshore wind farms, we are also daily gaining experience of operating them and are able to harvest the value of our lessons learned, which we utilize to optimize the projects throughout the life cycle. We have further been developing our Hai Long project from the earliest stages and have today a mature project moving forward towards financial close, which provides us with valuable insights in how not only to develop a project, but also how to develop a new industry in a new market. These learnings we now seek to utilize in other new markets such as Korea, Japan and now, latest, also in Poland. From origination through development and construction to operations, several highly complex activities take place, ranging from regulatory and political issues to design and engineering optimizations, moving into contracting and procurement construction until commercial operation. During the project life cycle, we are working closely across the portfolio to streamline all of the above-mentioned activities. To ensure successful implementation of the projects, we apply a structural and sophisticated risk management approach where we, throughout the project life cycle, work systematically on risk identification and subsequent mitigation, ensuring we, at all time, have a robust view on the risk profile of the individual projects and the portfolio and also how we mitigate the existing risks. All of this allows us to effectively use the scale of our portfolio as leverage towards the supply chain. As was mentioned earlier, offshore wind is one of the fastest growing of the renewable technologies, hence, there can be constraints in the supply chain. Having scale will, however, ensure Northland are being perceived as a key account by the wind turbine OEMs and other critical parts of the supply chain. As we have spent the past years adding to the project portfolio, we are now focusing on developing a technology road map for the individual projects in the portfolio and implementing standard and more modularized technologies for all relevant scopes. Based on the technology road map, a supply chain and procurement strategy are being developed, providing us with volume advantages. All of this with the purpose of driving down the project levelized cost of electricity to meet project-specific targets relative to the expected market cost of electricity. Various sourcing strategies are being explored, taking into consideration the global supply chain as well as local and regional requirements, all seeking to harvest synergies across the portfolio. To execute on all of this, we need a robust and experienced organization to support the project pipeline. Based on our past experience and our operational teams in Europe as well as our strong team in Taiwan and Asia, and the addition of a number of new senior team members, we now have an organization and knowledge base across the full scope of an offshore wind farm, allowing us to compete and win in the global offshore wind market. Actually, Northland is providing 80% of the leadership team into the newly announced Baltic Power project organization. I trust this presentation has provided you good insight on our La Lucha project and how we seek to build value into our offshore wind portfolio. I will be happy to take questions during the Q&A. Thank you very much for your attention, and I will now hand you over to Troy Patton.

Thank you, Morten. So moving on to operations, where we have a global breadth of experience within Northland in power generation and power distribution. In terms of technology, our fleet employs onshore and offshore wind, of course, but also solar and gas turbines on the generation side. In power distribution, we maintain the feeder lines and the balance of the plant at all of our generation sites across North America and Europe and have the most expertise in this area in Colombia, where we maintain the transmission and distribution assets at EBSA. Northland performs power marketing for our assets in Colombia and North America and is ramping that activity in Mexico through NP Energia, our qualified supplier. The capability for marketing gets us closer to consumers of our power generation assets. This enables a stronger understanding of market fundamentals. This knowledge then informs the origination of new project offtakes as well as contract renewals for any merchant exposures at existing projects when contracts eventually expire. Looking back on 2020. It was a challenging year for a lot of people and a lot of businesses all over the globe, but particularly so for the operators and technicians at Northland Power. These folks do not have the possibility to work from home. This family of employees is literally responsible for keeping the lights on, to keep our plants and our lines operating reliably, stayed here, they had to worry about also keeping themselves safe. So together with an incredible group of health and safety professionals around the globe, we at Northland had to navigate through very different public policies to ensure that our employees and their families' health was kept paramount in all of our planning. And the results exceeded our highest hopes. We were able to manage record availability and reliability across the fleet while ensuring the safety of our workers in what was really an unprecedented challenge during the pandemic and related issues that came out of 2020. Let me turn now to an area that's seen enormous growth in capabilities for Northland in the past 2 years and for me since I joined Northland about 4 years ago. This is, of course, is offshore wind in Germany, specifically, where we brought our second wind farm, Deutsche Bucht, online in 2020. Northland brought the asset management of our Nordsee One offshore wind farm in-house in 2018. This gave us control and insight into all aspects of the day-to-day offshore wind farm management, from contracts and risk management, performance monitoring, insurance to a better understanding of all the regulatory and compliance obligations that come with operating this critical infrastructure asset in Germany. In 2019, we then stepped into the shoes of our turbine supplier, Senvion, in performing daily maintenance activities on the turbines offshore at Nordsee One. This further increased our understanding of the value drivers behind operating in offshore wind and the underlying costs associated with offshore operations. We perform the critical switching operations at our offshore substations, at both Nordsee One and Deutsche Bucht. And this together then completes our control of all the vital functions that occur offshore in a wind farm. Coming into 2020, this know-how enabled us to win a long-term extension of the maintenance contract for the Nordsee One turbines, which enables us now to plan and optimize further cost-optimized activities across the board there. These are lessons that provide vital input for David and Morten in their future offshore projects. These maintenance and cost models that we develop and continue to optimize give us the breakeven cost point at all of our assets. With a buildup from first principles of risk and opportunity, the correct quantification of these risks and costs leads to better insurance terms. This enables us to optimize coverage and correctly resize debt when possible. That, in turn, gives us enhanced returns over time on the project. Understanding these fundamental costs and the model optimizations then comes back to David and his team as they prepare bids for auctions and new projects that are able to become more competitive. These auctions seem to be the preferred method for awarding revenue contracts in new offshore markets that makes us more competitive. The same models that we use to bid into auctions are combined with an understanding of the electricity markets to enable optimizations to our existing revenue contracts, whether we're talking about capacity contracts for gas plants or the recontracting through commercial and industrial offtakers that we will need to position for in Germany and Mexico later in the 2020s. In summary, the global capabilities that Northland brings as owner-operators of our generation and transmission assets translate directly to more competitive assessments of risk and stronger modeling on future projects. On-staff engineering enables us to optimize performance at our plants, enables us to take advantage of technology improvements over time and react more quickly to issues that arise. Then we can find ways to reduce cost and the risk of operations overall. Our operators and support staff pride themselves in striving for continuous improvement in performance. And we saw, even with the global pandemic in 2020, we were able to maintain record availability and reliability for our customers. This focus on continuous improvement within the team, combined with a careful analysis of trends and benchmarking against what our competitors are doing, has resulted and continues to result in substantial avoided cost and risk in our projects while taking advantage of opportunities to increase revenues. As we think about the value of this, we can bring this knowledge to new markets, particularly for offshore. And this enables us to set ourselves apart from competitors in offshore wind. When we're trying to go to new development partners and these potential development partners want to understand what makes offshore projects unique, there's just no substitute for being able to show them what offshore wind activities actually look like up close. I mean we used to do this in person. You could do that quayside, or you can do it on -- via ship or helicopter offshore. I mean in the recent past now with COVID, Zoom videos and examples of our reporting and our businesses processes have to substitute that. But together, even then, we're able to give really potential partners an unparalleled view of what our experience looks like and the depth that Northland brings to partners in new markets. Once you take that, looking ahead, the leverage unlocked with suppliers from an ever-expanding project portfolio, as David discussed as well as really viable future projects, Dave and his team work on these, keep us competitive with the largest developers in the world. As we continue to grow, it enables me and operations and the rest of our team to bring further economies of scale to procurement. We can do this at all stages of the project. Also in operations, makes us better able to balance single- and multi-contracting strategies. These things may prove to be the key to unlocking more value as we move into new markets and the industry starts to mature in those new markets. So finally, the team in operations will continue to form the backbone of our revenue generation today and in the future, and we will be the engine that fuels Northland's future growth. Thank you very much for your attention. I'll now hand it over to Pauline Alimchandani, our CFO.

Thank you, Troy, and good afternoon, everyone. I joined Northland in April of 2020, coming into a strong and growing global finance and IT team. In 2020, we onboarded the project finance, development finance and sustainability functions as new mandates within our team. These teams worked together collaboratively with the rest of the global finance team to accomplish the finance, strategic and risk management objectives of the company. We have strong finance lead in our global offices who are supported by and work closely with our corporate functions headquartered in Toronto. This structure enables us to execute on critical finance functions and support the business to accomplish our overall objectives. Our team has executed on over $15 billion of capital transactions to date with leadership experience across a number of markets, projects and sectors. Our primary objective over the next few years is to ensure we have a strong balance sheet to support growth. As both Mike and David highlighted, we have a number of identified development projects that will require gross capital investment of approximately $15 billion to $20 billion over the next 5 years. I will discuss today how we intend to fund this growth while both greening our balance sheet and maintaining our investment-grade credit rating. As we execute on our identified projects, we expect to more than double our adjusted EBITDA from today's levels, marking significant growth for our company. Our cash flow quality and long-term sustainability and diversification will also be enhanced as we deliver on our global offshore wind projects with long-term revenue contracts in place. Maintaining our financial flexibility, building redundancy and diversification into our sources of capital, preserving our low-cost and access to capital and maintaining our investment-grade balance sheet are key to this successful growth execution of the company. Our growth capital funding requirements amount to $15 billion to $20 billion on a gross basis from the build-out of 4 to 5 gigawatts of gross capacity across our offshore wind projects in Asia, through Hai Long in Taiwan, Dado Ocean in Korea and Chiba in Japan. Our offshore wind projects in Europe through Baltic Power in Poland and Nordsee Two and Three in Germany and our onshore wind projects in New York state. Both the New York and Hai Long projects are advanced. Baltic Power is considered to be a mid-stage project, and the rest are early stage that are under active development. Most of our identified projects are expected to achieve commercial operation in the latter half of the decade. New York Wind is expected to achieve commercial operation by 2022 and 2023, as highlighted earlier by Michelle. Across all of our projects, on average, we are targeting to achieve double-digit equity return. This slide shows our illustrative funding plan over the next 5 years to support the capital requirements of our identified projects. We intend to secure approximately 70% of the capital required or $11 billion to $14 billion through long-term, nonrecourse amortizing project debt. We are able to do this due to the quality of our projects, and we'll target our future project financing to be green where possible. Northland's equity requirements are expected to be approximately 15% of the total capital required or in the range of $2 billion to $3 billion, which will be funded through a combination of common equity and proceeds from sell-downs of partial interest in some of the identified projects as they reach financial close. As a reminder, financial close is the point in time at which a project has secured full debt commitments by the project lenders, which is also the time at which equity is required to be funded. Typically, it is also the trigger point to commence a project's construction. Almost all of our projects are already owned in partnerships, either with local or existing partners, who on average amount to approximately 10% or $1 billion to $2 billion of the total capital required. And finally, we expect to use our corporate balance sheet capacity on a limited basis to secure approximately $1 billion of green corporate debt instruments, including potentially green hybrid debt to optimize funding and our returns. We believe our funding plan is achievable, and the overall principles are in line with how Northland has historically funded all of its projects and maintained its investment-grade balance sheet. What will be new for Northland going forward is the execution of partial asset sell-downs and securing green corporate debt, which I will speak about next. Effective today, Northland has launched its inaugural green financing framework. The framework has received an independent second-party opinion from Sustainalytics, which confirms the framework is credible, impactful and aligns with the core components of the green bond principles and green loan principles. As we go forward, green capital issuances will enable us to lower our cost of financing, diversify our funding sources, optimize our liquidity and allow us to better match tenor and currencies of our corporate financing to our asset base, particularly for euro-denominated green financing. There are a number of additional benefits, including an enhanced ESG positioning and name recognition in the European debt capital markets, which may also position us for future opportunities. The framework launched to date enables green financing, both at the project and corporate level that will support the development of renewable assets, enabling our capital providers and lenders to meet their ESG and green mandates as they help us finance our business. Securing nonrecourse project debt for renewable assets is a core competency for Northland. We believe securing predominantly project-level nonrecourse amortizing debt is a prudent and sustainable way to fund our business and is in line with our overall risk management principles. Through the years, we have developed a large constituent of global lending relationships who are keen to support Northland as we grow and enter new markets. We work collaboratively with our partners and lenders and are in regular dialogue with the global lending community through the regional development leads in our local markets, while also having established strong global banking relationships through Toronto to ensure that we are at the forefront of prevailing market terms and dynamics. We believe that maintaining flexibility is key to optimize financing as markets mature. We have demonstrated this by refinancing our European offshore wind projects that were originally financed in the very early days of Project Finance in Europe. Going forward, the same approaches to flexibility will be required as we pursue projects in huge jurisdictions and partial asset-level sell-downs to bring in new partners into our projects. As I mentioned previously, our strategy going forward will include selling down select partial interest in certain projects as we achieve financial close and are substantially derisked. This will enable us to meet our funding and capital recycling objectives, manage our jurisdictional exposures, crystallize some development profit prior to or at financial close, enhance our free cash flow, liquidity position and our project returns amongst other benefits. Northland will assess each opportunity individually and intends to remain a long-term owner in all of the renewable projects we develop globally. We believe we can enhance our project returns by between 200 to 400 basis points for contracted offshore wind assets to drive towards strong double-digit returns on our equity deployed. In recent marketing we have done with institutional investors, there have been numerous questions about how and why partial asset-level sell-downs enhance our returns in offshore wind and how the results may appear within our financial statements as we pursue this strategy. As a result, we put this illustrative example together. The example shows a sample offshore wind development asset requiring $25 billion of early upfront investment expenditure; $100 million of capital expenditures after the project is capitalized on our balance sheet under IFRS with both revenue and cost certainty established; and total equity required at financial close of $375 million. The example contemplated the sell-down of a 50% interest in the project timed with financial close, capturing an estimated development premium for promote of approximately 300 basis points as a result of derisking the project. As a result, the required equity investment in the project is materially reduced to $175 million from $500 million, also crystallizing a development profit of $75 million at the time of equity contribution. On an annual free cash flow run rate basis over the next 20 years, all else equal, a yield of 17% is generated on the $175 million equity investment, an improvement from the original free cash flow yield of 12% before the sell-down in this example. Over the asset life, the levered IRR improves from 10% to 14%. Within our financial statements, our free cash flow metric as defined today, would include any net gains after CapEx, taxes and other adjustments. I want to reiterate this as an illustrative example to show how sell-downs in offshore wind, at some point around financial close, generate increased returns to equity to developers, with some large sell-down transactions having recently been announced in the U.K. and Taiwan. As our business grows, we employ a consistent approach to risk management in each of our disciplines. Within financial risk, this slide outlines some of the key areas of consideration and focus as we grow. They include: proactive tax structuring and compliance, which includes hiring strong local talent and advisers who stay on top of changing tax treaties and legislation; establishing strong financial governance and controls over our processes and reporting across all our subsidiaries; implementing insurance policies and programs to mitigate risk on an asset level and at the corporate level; employing active risk management programs to assess cash flow diversity and stability; proactively managing our liquidity and financial flexibility through the corporate finance, development finance and treasury teams who are in consistent collaboration with the growth teams; minimizing our cash flow volatility through a proactive currency and interest rate hedging programs, ensuring we are maintaining strong access to lending in capital markets at all times and maintaining our credit rating and balance sheet resilience to fund growth. This morning, we released our adjusted EBITDA and free cash flow financial guidance for 2021. I will focus on describing key elements of our free cash flow guidance herein as our press release has more fulsome details. In 2021, we expect free cash flow per share to be in the range of $1.30 to $1.50 per share. This level of free cash flow per share is expected to be lower than the latest 2020 guidance of $1.60 to $1.70 per share that we disclosed in the third quarter of 2020, primarily due to the following factors: positive contributions to free cash flow year-over-year are expected from: higher contribution from our German offshore wind facilities as a result of fewer periods of negative market prices and uncompensated curtailments; higher contribution from Gemini, primarily as a result of higher market prices as we are forecasting in Netherlands; positive contributions from La Lucha as a result of achieving commercial operations in the first quarter of 2021 and from EBSA, including proceeds from anticipated debt refinancing of EBSA that is expected to occur annually based on growth in the rate base. The factors offsetting these increases include: lower anticipated contribution from our efficient natural gas facilities due to scheduled major maintenance outages that we have been planning for some time; higher expected growth expenditures relating to activities intended to advance our identified projects; as well as higher G&A and other platform costs to support this growth. This is the primary driver of the variance from the prior year. And finally, there are slightly higher scheduled principal debt repayments at Nordsee One, which are noted in our disclosures. To achieve our growth objectives, Northland will deploy increasing amounts of early-stage investment capital to advance our projects. As in 2020, with the regional development offices fully functional and growth opportunities secured, such as New York Wind and Baltic Power, we expect to incur higher development expenditures and growth investment in 2021 relative to prior years. The 2021 development expenses are expected to be $100 million or $0.50 of 2021 free cash flow per share. Commencing with our fourth quarter 2020 results, we intend to disclose a new supplementary free cash flow measure known as adjusted free cash flow. This measure will exclude growth expenditures as they are deemed to be investment-related decisions. These investment expenditures are incurred for the purposes of generating future cash flow. Excluding our total investment in growth, Northland's adjusted free cash flow for 2021 is forecast to be in the range of $1.80 to $2 per share and, in our view, allows for a better representation of free cash flow and payout ratio from the operating business, excluding investment-related spending. This slide shows both free cash flow, our total growth expenditures and adjusted free cash flow per share stated on a historical basis back to 2018. In previous years, our gross spending was much lower as our identified projects included only Hai Long. In 2021, with Hai Long now capitalized and new projects identified, we will be making growth investments and incurring development expenditures to advance Baltic Power, New York Wind, Chiba, Dado and Nordsee Two while also working to bring other new projects in our pipeline to a stage where we can identify them in future periods. We believe adjusted free cash flow as a supplemental measure enhances the understanding of the company's ability to generate cash flow after ongoing obligations to reinvest in growth and fund dividends. It also reflects the fact that reinvesting in growth and into our identified offshore wind projects is a key part of our overall strategy. This pictorial representation of our growth potential and adjusted EBITDA was also included in today's press release. We have now advanced and secured the rights to a number of offshore projects, which if successful will require total gross capital investment of approximately $15 billion to $20 billion over the next 5 years. These projects once operational by the latter half of the decade are expected to more than double our adjusted EBITDA to approximately $2.5 billion from $1.1 billion to $1.2 billion in 2020 at our ownership share. While we have the expiry of the PPA at our Iroquois Falls facility at the end of 2021, it is important to note that as we are successful in advancing our offshore wind projects to completion, the lost EBITDA will be replaced, but not right away. We believe this chart provides a good depiction of the long-term cash flow and value creation for the company that we are targeting to generate with each identified project that has been added to our portfolio. We look forward to updating this chart on an annual basis as there are material changes or as new projects and opportunities are secured. To conclude, I have highlighted the finance team's near-term objectives for 2021, all part of ultimately securing and generating our long-term growth. They include launching our green financing framework, which was completed today in order to begin to secure green financings in 2021. We are working on several initiatives to diversify our sources of capital and are targeting to execute on 1 or 2 of these initiatives in 2021. Through an active Investor Relations and capital market strategy and increasing global interest for ESG and renewables, we are targeting to grow and expand our long-term and institutional base of shareholders. We also have several nonrecourse project financing and refinancings to execute on this year, including refinancing the EUR 900 million senior project debt at DeBu to capture on lower spreads and improve our liquidity; executing on the first EBSA holdco debt financing, as I mentioned earlier; financing our La Lucha project; and securing the project debt and tax equity required for our New York Wind project. We will also be working to finalize our desired hedging strategy and program for Asia, specifically with respect to the expected future cash flows from Hai Long. And we will be commencing our analytical work and first steps to execute on sell-downs, with the first project being Hai Long. It will be a busy 2021, and we look forward to providing you with updates as we progress on these initiatives. This concludes my formal presentation. I will now turn the presentation back over to Mike Crawley to conclude our Investor Day. Thank you.

So in closing, offshore wind is expected to accelerate globally, and its growth will outstrip solar and onshore wind in percentage terms. Northland Power is a top 10 global player, with boots on the ground in the key growth markets and a robust project execution team. The Baltic Power joint venture that was just announced demonstrates our ability to press this advantage to secure new growth opportunities. Secondly, onshore renewables and regulated transmission and distribution assets in select markets offer opportunities for near-term growth for the company. And finally, as you heard today, we are beginning to now look ahead to what will be the next big growth engine for Northland moving forward. This concludes our formal presentation, and I want to thank you for your attention. We'll be happy to take questions, and please submit those questions through the online platform. Okay. Listen, I think everybody can see us now and everybody can hear us. Listen, I want to thank everybody for paying attention the last 1.5 hours or so. We would have loved to have an Investor Day where we were with you and circulating with you like we did last time. And certainly, I think the next one will be much like that. So I apologize for the remoteness, but it's the best that we could do today. And what we wanted to do is, number one, I think you got the flavor of the team, how excited we are about the opportunity that is in front of Northland. Northland is very well positioned in renewables, in general, but specifically in offshore wind. And so we've got a great opportunity ahead of us, and I think you can sense that excitement. What you maybe don't get is how the executive team kind of works together. It's a very much a hard-driving, highly collaborative team that values candor, rigor, initiative and built around all that. And I think some of those came through today. It's a real positive energy, which may be doing development for a long time. And it's a bit intangible, but it is an essential ingredient to success. And that's what this team definitely has in spades. The key thing with the opportunities that we have ahead of us is, of course, execution. And that's why we wanted to show you a broader set of the Northland team, the senior executive team, but also the people that are out in the field, leading the regional development offices and the teams. And to you give you some sense of who is going to be actually executing on these project opportunities going forward. You didn't hear from Rachel Stephenson, who's the Chief People Officer, you will in the months to come. But a big part of her mandate is workforce planning, which is key for us. So putting together these project teams that are going to be executing on these projects as we move forward, seizing the talent, securing the talent that we need is much sought after. We've got a great team of offshore wind engineers, procurement specialists, project designers, project managers. But we'll be continually adding to that team, and we think that's a real competitive advantage. So we wanted to highlight that and give you some insight on that. And that's a big part, like I said, of what Rachel's mandate will be going forward as our new Chief People Officer.

So I'm going to work through the Q&A. So one thing I would say is that, on -- get that working out right, that the presentation deck is going to be posted to the Northland website, so you're going to be able to go back to the slide deck and take a look at it, if you want to going forward. So I think what I might start off with is there is a question here, which was actually posted before the presentation. So [ Jeremy ], you're fast off the mark. But it was asking for a bit of color around the growth pipeline. And I think you got some of that from the presentation. But maybe, David, if you could just -- is there anything else you want to highlight for Jeremy? We don't need to go through what we already presented, but anything else you want to highlight would be good.

Thanks, Mike. Thank you, everybody. Hopefully, the presentation answered the question. There was some -- you may remember the world map I had in there for the offshore portfolio. And so in there, you saw the projects you're familiar with. So the projects in Asia, the Hai Long, the Dado Ocean, the Chiba projects, the projects in Europe that you're familiar with and of course, now including the Baltic Power project. So that's around 5 gigawatts of that total number. The balance is -- the pipeline, that a number of us referred to, that early-stage development project, not yet at the stage where we're announcing things, although there should be something coming over the next couple of weeks. And so that's the pipeline that hopefully we'll see coming through 2021. You'll get more detail on that later this year. But I think that's my best as regard to the details, I think.

Okay. Thanks, David. The -- there were some questions. Let me just move back so I can actually go through from the first questions in order that came in. So we got a question from [ Abe ]. Does Northland invest in R&D-stage technology development? No, no. I mean we are a developer. We certainly make sure that we're apprised of the latest technology, particularly as we look into offshore wind and start looking into renewable fuels and want to make sure that we're aware of where the technology development is at. But we deploy capital into projects, into high-quality assets. We don't invest in R&D. The next question, I've addressed. So there are a couple of questions on thermal facilities and thermal generation. And I think one of them is asking kind of what's the contribution from them. And it's right now about 20% in terms of EBITDA, and it diminishes every year as we add more and more renewable generation to the platform. But the question came in from a couple of different people was asking, would we be looking at divesting the thermal facilities in Canada? And there's different premises around that. And so we've had this question a number of times on marketing calls and with analyst calls as well. So here's what I would say on it. Northland is -- has got, as you've heard today, a big growth opportunity ahead of us, right? The offshore wind is going to grow rapidly over the next decade. We're a top 10 player. We've got a big growth pipeline already. We're intending to add more to that. We need to fund the development of those projects, which will create, we think, huge value for Northland's shareholders. These natural gas assets do contribute meaningful cash flow to Northland. Obviously, diminishing on a percentage basis, but they help fund the development of our offshore wind and our other development projects or other new renewable development projects. So we wouldn't do anything in haste or anything imprudent to sell off that cash flow because it actually is driving the growth of the company in renewables going forward. Having said that, I mean, a number of you, a number of analysts certainly have been tracking kind of -- track the different valuations of IPPs and look at kind of the relative valuations of a company like Northland versus some other purely renewable or IPPs or IPPs that have no gas-fired generation. And I think some of you have come to a certain conclusion. We certainly keep an eye on that. And we would -- yes. I think any decision on doing anything with the thermal assets would have to be done with regard to the cash flow that would -- that they contribute and with regard to how that cash flow could be replaced so that we don't choke off the development engine that is really driving the long-term growth. So I think I'd leave it at that. And I'll move on to a question on storage, renewable natural gas and hydrogen for myself and Wendy from [ Sean ]. How much does Northland intend to allocate to those different investments going forward? So I think at this stage, we don't have a specific capital allocation target. It's a bit too early stage. It's just like when Northland started looking at offshore wind. Back in 2012 or so, Northland was looking at a number of different projects, a number of different opportunities. But at that stage, they didn't have a capital allocation target for offshore wind. And so at this stage, we're at the similar kind of point where we're understanding what the technologies are, understanding how Northland could play, what some of the synergies are with our current assets, particularly with respect to hydrogen and storage. But we don't have a particular capital allocation number yet. I mean on returns, I think it's similarly uncertain. We're expecting them to be better than certainly what you see in more mature renewable technologies, but I don't know. Wendy, is there anything else you would add to that?

I think that's good, Mike. The one thing that I would add that I tried to really illustrate in the presentation is that we are looking at markets that are naturally growing is the first point. And then also that they are expected to be large relative to the size of Northland, right? So the point here is that these are, in a way, creating a natural element of growth for us. And I highlighted RNG actually very specifically [ because it doesn't get a lot of attention ] relative to something like hydrogen. But it's still expected to be a market that requires hundreds of billions of dollars of CapEx. So these are all things that we're very excited about and really looking forward to speaking more with people about this, this coming year.

Okay. Thanks, Wendy. So there's a question here on the time line for Hai Long financial close, construction, commissioning. Right now, we're targeting second half '22 for financial close and with the construction to follow and coming online around 2025, 2026. But the specific construction schedule is still being adjusted, and we're looking at different options. So it's certainly not frozen yet at this point, and we wouldn't expect it to be at this point and stage. But second half of '22 for financial close on Hai Long. Just checking. Let me check on the next question. So there's a question here from [ Steuart ] as well on the potential offtake deal for Hai Long and whether corporate -- is corporate PPA or a government FIT contract. So just to remind everybody, there's 3 projects within Hai Long. Hai Long 2 is -- has a FIT contract, which is already fully executed. That's a 300-megawatt project. Hai Long 2B and 3, they have met all of the requirements to execute a PPA with Taipower, the government utility for offshore wind. That's the 744 megawatts. We are holding off on actually executing that PPA because we've been told that there's a new version of that PPA that's being drafted, which will have some improvements particularly with respect to project financing that would be favorable. So we're waiting for that redraft to happen before we execute it, but we've met all of the requirements for it. On a corporate PPA, I think some of you would have seen what rsted did with -- and they've got similar projects from the same auction round, where they executed a corporate PPA for those projects. And essentially, their high-power PPA will still be there as a floor, but then the corporate PPA, presumably, it wasn't disclosed, it was executed at a higher tariff rate. We don't have anything to disclose with respect to our projects in that respect. But I mean, David, maybe you could share just a bit of color on what's going on with commercial offtake and corporate PPAs in Taiwan, which has been a relative recent development really.

Yes. Thanks, Mike. It's -- the rsted news was, I guess, an indication in the market that really the ESG-driven demand for green power is out and coming to Taiwan. As you already know, a significant part of the global supply chain to -- as certainly in the example from rsted's case, the semiconductor manufacturing. A lot of those manufacturing companies are based in Taiwan and they're having to green their energy to meet their requirements from their ultimate customers. And so we're seeing some demands coming in the Taiwanese market from that perspective. And I think that's really going to continue. The Taiwanese government also has the mechanisms, has sort of obligations on corporates to procure green power and is expected that's also going to increase as well. So I feel reasonably positive that, that side of the market is going to grow given those deductions to continue that.

Nelson Ng. So you've got a question on La Lucha. What are the initial thoughts on the latest proposed legislation that was announced, I guess, the last few days in Mexico that seems to favor the CFE, the government-owned power generation company. Will the proposed changes in dispatch order negatively impact La Lucha if passed? Does the legislation give you pause about further investments in Mexico? So when we came into Mexico, our thesis was twofold. Number one, that the cost of -- the cost of power and the default tariff that most industrial and commercial users have to pay was relatively high and would remain relatively high because of the generation mix in Mexico, and that there was an opportunity to offer them lower cost power. But the second piece was around renewable power. And that is becoming, in our view, even more pronounced going forward is that you've got a lot of multinationals in Mexico with manufacturing facilities, so a lot of industrial load that is governed by multinational corporations, which now increasingly have ESG mandates to procure renewable power. You're seeing a lot more of that in the last couple of years, and I think that will only ramp up. So they can't get a lot of renewable power out of the grid in Mexico because it's still very carbon-intensive. So specifically, we think there's an opportunity to sell -- to allow them to meet their ESG mandates that their parent companies have or similar to what's going on in Taiwan that David mentioned that their customers may impose on them, that the -- by selling solar power or wind power, renewable power to them, so giving them an opportunity to meet their ESG renewable power mandate. So those are 2 main opportunities. Those 2 opportunities, I think, remain, and they remain certainly in the medium and the long-term in Mexico. Nothing has changed in that respect. But we've been keeping a close eye on what the administration has been doing in Mexico, and they have been taking steps partly in relation to some of the economic disruption that COVID and the related lockdowns are causing, but -- and for other reasons. They're taking some steps to try and protect Pemex, the oil and gas company in Mexico, government-owned company and the government-owned power company, CFE. The target really seems to be some of the larger private combined cycle plants, which really do meaningfully perhaps affect some of the market share of the CFE. I mean our solar La Lucha plant doesn't. So that's kind of where we think it's going, but it's the kind of thing where we're kind of keeping a close eye. I'm going to turn it over to Javier. He's got a bit more color being closer to it. But it hasn't directly affected La Lucha to date, and we don't see it affecting, certainly, the interconnection or the commercial operations of La Lucha. But maybe Javier, I'll turn it over you to add a bit more color there.

Sure. Yes. With respect to the recent announcement earlier this week, I think the short answer is that it's too early to tell. We're still evaluating both from a technical and market standpoint, what impact this could have. Just at -- as a first look, we don't understand how the market can function efficiently if you literally apply the rules that they are trying to change, so I think everybody is scratching their heads on how they can even make that work. But on the legal side, this is not very different than other measures that the current government tried to apply last year. It was done through a different route. It was done through a decree, which some of you may know, was contested by virtually every generator in Mexico through injunctions. And everybody who filed those injunctions, including ourselves, were successful in obtaining them in permanent suspensions. So this is a new route to try to implement the same changes. Obviously, this went through a more -- through a congressional approval. But there was a recent event, actually just yesterday, where the Supreme Court in Mexico confirmed the -- that these changes that were tried before were unconstitutional, mainly because they're preventing free competition. So at least, there's now a precedent, a very strong precedent that if this was approved, the path to an injunction and suspension is likely very favorable for us in the sector. But like I said, it's early to tell. We need to wait. And I think more fundamentally, if this was implemented, we don't see how this can be sustainable with -- especially on the priority order that they're proposing for dispatch.

Thanks, Javier. So I mean, Nelson, I think the bottom line is cautiously -- still cautiously optimistic in the medium and long-term for the opportunities there for the reasons given. In the near term, maybe a bit more weighting on the caution than the optimism and just being careful and prudent and maybe a bit more weighting on maybe development and setting ourselves up for when things stabilize a bit more than maybe immediately deploying more capital would be kind of, I think, the prudent approach. So next is [ Rupert ] is asking, is asking again about thermal assets there -- I don't have much to add. The only thing I would add is, just to really put a point on it, is look at what those assets contribute in terms of cash flow. And so to the extent anything would be done with it, I know the question, I mean to be -- again, in candor, I know the question is coming from a sense that there's maybe a re-rate opportunity, which is for you to determine not for us, obviously. But the -- you look at what those assets contribute right now, and we would need to replace it, whether it's the current cash flow that they contribute, which helps fund the development pipeline, the growth of the company in the long run, whether it's the stability of the cash flow, the benefits in terms of our corporate credit rating of that type of non-intermittent resource and of that type of stable cash flow. And you can kind of see where there are other assets that perhaps could produce, I mean, EBSA is a great example that ticks all of those boxes. So I'd read through some of the -- some of the decisions that we've made in that respect. But like I said, we would not make any decision in haste in that respect. Just find my next question here. Okay. This is for Pauline. A bit more from [ Rupert ], a bit more on refinancing of the Deutsche Bucht and EBSA.

Sure. So we have launched the DeBu refinancing. We're hoping to close on the refinancing at the end of the first quarter. There will be some savings that we're targeting to achieve to capture on lower margins. However, it will really -- we're looking at opportunities to enhance our liquidity from optimizing the way that the debt reserve facility is structured on that. So that's the update on DeBu there. And hopefully, at the end of the quarter, we can provide more of an update as it's closed. For EBSA, we're getting ready to launch the refinancing. As you recall, that loan was negotiated in the height of COVID, so we could expect to see some savings there. But again, the thesis is really to capture up financing and additional proceeds as part of our overall financing strategy to ultimately to fund growth from annual increases in EBITDA at EBSA.

Okay. And [ Rupert's ] got a question for Morten now, on the cost advantage that we can derive from scale in terms of sourcing, presumably offshore wind turbines and on the EPCI side, the balance of plant side. How much of an advantage can be derived from our in-house operating capabilities, but also from the, I guess, the scale of the pipeline, given that there's maybe some players that have been around a bit longer, I think is maybe what your point is around new entrants. So I'll turn that over to you, Morten.

Yes. Sorry, and I hope I'm getting through on audio here. I think we would be -- it will be hard to come up with a very specific number on that, but I would expect that we would be able to see savings around -- from the mid- to high teens on the actual procurement. One important part to note here also is it's not only to only obtain the savings, of course, which will be quite important, but it will also be to have the scale in order for us to be able to access and get information about the latest technology developments. Especially within the turbine OEMs and knowing that from the past, there's also that they would be reluctant to reveal too much about the new technologies if we were not having the portfolio that we are having. And for us to have that knowledge is very important to go into the markets where the [ Freeland tariffs ] will be based on auctions. Because very often, we need to put in bids based on technology that has not yet been released to the market. So I think the advantage of the portfolio is at least two or threefold. One is, of course, that we will obtain the savings that I just briefly referred to without being too specific on that. But of course, we would like to see them higher rather than smaller. And again, that's because -- any turbine vendors listening in here, so now you know what you have to deliver, of course. But also, for us to get access to the technology, but even to be basically granted the opportunity to buy the turbines because, as we demonstrated in the presentation, it's a high-growth market. And of course, there could be a risk of bottlenecks in the supply chain. Hence, the bigger customers will get access to the supply chain that are more favorable than 1 project developers. So I think we will see more than just the actual savings as an advantage. And I would say also as a needed prerequisite in order for us to grow within the offshore wind business. I hope that gave somewhat of an answer for the questions, at least.

That's great. Thanks, Morten. I mean, pipeline, particularly in offshore wind, it creates a virtuous cycle, right? Both in terms of, as Morten described, getting more attention from the turbine vendors. There's 3 main turbine vendors, that's it, right, in terms of offshore wind. And in terms of kind of insight into -- as Morten said, better than I can, into upcoming technology innovations and new platforms, but also just in terms of attention from their salespeople. But it also, in terms of talent, right, being able to secure what is now very sought-after and hard to get talent in terms of kind of engineering, more technical talent and project management talent. The bigger the pipeline you have, the more advanced the pipeline you have, the better talent you can get. The better talent you can get, the more projects you can undertake and the more dominant a position that you get in the market. So just to add that point. Mark Jarvi's got a question. Whether -- it's on Baltic power. Whether we -- what is the CapEx, particularly compared to other European markets for offshore wind on the Baltic power projects? And what's the expected CfD clearing price, presumably in this first round of more bilateral-type grants of those -- of the PPAs. So real -- I'll say this real quick. I mean the CapEx we expect to be in line with much of the rest of Europe, by and large, since it's kind of 1 supply chain overall. There's some CapEx estimates, I think, that were -- our partner put out through the media today, so you can check those out. I think it was between 3 billion and 4 billion, but it -- in terms of CAD. But you can check those out through Bloomberg, I think. It's obviously a bit early to nail down any -- with any precision exactly what that's going to be, but we certainly, of course, have our view on where it will end up. And then on the CfD clearing price, it will be -- it will come out of the discussions, the negotiations. We think that the authorities and the regulators in Poland are very knowledgeable about the sector and what the clearing price and the price needs to be to get the projects built and to attract the investments. So we're generally quite comfortable with that, but we don't have anything more to disclose around that. [ Rupert's ] got a question again for Wendy. Is it too early to comment, what analysis we've done on operations. Were you able to -- oh, yes, in terms of investment management. Have we been able to take a look back at how assets have performed versus the original underwriting assumption, which is definitely some of the work that Wendy and her team have started doing. But do you have anything in general about kind of what you've -- the work that you started in that regard, Wendy, and the purpose of it?

Yes, sure. Yes, definitely. I would say, yes, it is too early to say anything and to go in project-by-project as well. I would just say that you can look at our historic performance and the free cash flow per share and the growth that's been generated by the company. And I think that gives you a pretty good hint as to whether our performance met or indeed, in this case, exceeded our expectations. The point is not necessarily to just go in and say, look, 5, 10, 15 years ago, did we make the right decision? The point is more to come up with, what are the ways that we can think about our underwriting going forward? So are we making the right decisions? Are we making the right assumptions around OpEx, CapEx, et cetera? And it's also to -- I think also helped inform the methodology, and what I mean by that is, are we flexing on the right metrics? And I think with my background in investing, what we always tried to do when we were designing our scenarios and looking at our expected distribution of project returns or investment returns is to make sure that we're setting the boundary conditions with the guardrails to actually envision the full potential suite of outcomes. And so that's another sort of thing that we're trying to further introduce is -- this is already part of Northland's process. But to further underscore in the process, are we really looking at the breadth of expected outcomes and how do we incorporate that into our project return assumptions? And then how do we use that to make decisions about the types of projects that we go after, where, why, et cetera, how much capital we allocate, et cetera.

Okay. Thanks, Wendy. So [ James Smith ] has got the same question on La Lucha, so on the dispatch order. Again, I think it's still a bit too early to tell overall what's going to happen with these changes. And there may be some challenges like there have been on some of the other initiatives of the administration, maybe some court challenges as well, we'd expect. I think the only thing I would point out in terms of what was public is that the -- I think the renewables were ahead of the large private combined cycle plants in the dispatch order. So -- and La Lucha's 130 megawatts, so I think that, in general, would give us some comfort wherever things end up in terms of the dispatch order. Question 17, on Nordsee Two, do we have status of Nordsee Two? What are the upcoming hurdles? What conditions would you need to meet return and so on? And what about Nordsee Three? So just to get everybody on the same page, and I think there was a reference to this in the presentation as well. Nordsee One, that's our operating project, 330 megawatts. There is -- there are 2 expansions on it that are contiguous, 2 sites that are contiguous that are expansion projects, Nordsee Two and Nordsee Three. The German regulators changed how they procure offshore wind over the last 2 or 3 years, so the owners of these sites were obligated to turn those sites back to the German authorities -- to German regulators and any permitting or any kind of data that they have on those sites. In return, the owners of those sites -- or the former owners of those development sites, like Northland and our partner RWE on Nordsee Two and Three, were given a step-in right on the central procurement that Germany is going to run on those sites and inviting all bidders to bid on those sites. But we have a step-in right to, as we understand it, to match the bid -- of the winning bid on those sites. So Nordsee, I may get it in reverse, and I'll let Nigel correct me. Nordsee Two will come up for bid or auction in the fall of this year, Nordsee Three will come up in 2023. And correct me if I've got the order wrong, and Nigel, is there anything else you would add to that?

Thanks, Mike. No, not really. You've got the order right. So it's Nordsee Two later on this year and Nordsee Three in 2023. And yes, that's exactly what's happened. We have to get them back, but we have this right to match the winning bid. So as long as we're happy with the level of the winning bid, which we're expecting we probably will be, then hopefully, they'll be back in our possession later this year, and in 2 years' time for the other one.

And depending, Nigel, on turbine selection and design, the 2 sites together are in aggregate somewhere between 700 to 900 megawatts. Is that roughly right?

They're 853 megawatts to be precise. That's 433 megawatts this year in Nordsee Two and 420 megawatts for Nordsee Three.

There you go. There you go. Maybe Morten?

[indiscernible] Maybe I'll add a short comment to this also. As you can see with the Nordsee Two and then the coming Nordsee Three project, you can get there are some questions about the time line on the Hai Long project. And now you have seen sort of the overall time line on the Baltic power project. So we do have a substantial presence in the market when we are now going to procure turbines for those projects, get quotations in. So -- and there is a sort of a good sort of a sequence in the whole portfolio we have. And these projects are relatively mature projects. These are not as speculative as some of the other very, very early development projects. So there is a substantial bargaining power that we will, of course, apply to the supply chain and also to get sort of the best conditions in the contracts, of course. One thing is price, the other one would be what [ currency ] conditions can we negotiate on the back of such a substantial volume that you bring to the market together with our partners.

And on the hurdles or the economics, I mean, in German, no offshore wind procurements in the last few years. You've seen everything from zero subsidy bids, in other words, the developer intends to get the interconnection and then market the power through a power marketer, through a corporate PPA or through a utility and create their own revenue in that -- by that means and not have a subsidy. There's also been projects that are still bidding in with asking for a subsidy or with a price for a subsidy. So we don't know, obviously, how these 2 sites are going to be bid, so we're looking through our economics and trying to understand all possible outcomes. And what -- how we would approach all of those possible outcomes. Question. So question 18 we got from [ Dennis O'Keefe, ] what barriers do you foresee to investing in offshore wind in the North Sea of Scotland. That's a good question. So David Povall and Nigel, between the 2 of you, I'll let you guys bounce that one back and forth.

Nigel, do you want to do that one, your region?

I will. Thank you. I'm not quite sure what specific barriers have probably been anticipated in Scotland. Scotland is not a new market for offshore wind. There are already a couple of -- well, there's 1 very big operating project in Scottish waters. There are several more being built. It's obviously running a separate tender from other parts of the U.K., which is its prerogative. I think, as I sort of alluded to in my little spiel earlier, I think in the countries where the basis of auction is what I call decentralized, where you can bring your own project that you've developed to bid into a competitive auction, in some ways, that possibly gives you more advantages than in a centralized auction where everybody bids on the same piece of real estate effectively. And so that possibly gives us more room for maneuver. It gives us the ability to play more tricks to make us more competitive. And I sort of identified those areas as being possibly of more interest, and I'd say Poland will become 1 of those markets after this initial round. And the U.K. is the most successful. I mean the premier -- I would say this because I'm British, but it's the biggest offshore wind market in the world. And that's been built recently in the last 5 years off the back of CfD auctions on this sort of decentralized basis. So if anything, I'd say looking at somewhere like Scotland, it's arguably a less risky proposition or it's one that gives you a little bit more chance of success than, say, a straight shoot-out in a centralized auction, be that in Denmark or the Netherlands or France or wherever.

That's good, Nigel. Yes. So I mean that's what we -- generally, we like what's going on in Scotland, to a certain extent, particularly with how the Crown lease round is being structured, but don't have much more to add to it than that and what Nigel just said. [ Andrew's ] got a question. Is your offshore growth profile predicated on traditional fixed structures? Do you have floating technology expectations in the latter part of the decade? I should just say yes, and move through expeditiously. But David, you're -- I mean, you're doing some work looking at floating. And some of the RDOs are kind of starting to do more work around floating. Maybe your thoughts on that?