Boralex Inc.

Good morning, ladies and gentlemen, and welcome to the Borlux First Quarter 2022 Financial Results Conference Call. Note that all lines are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session in which financial analysts, shareholders, and investors will be invited to ask their questions. To ask a question during that session, you will need a press star 1 on your telephone. Also note that this call is being recorded. For webcast participants, you can also ask questions during the conference, but they will be answered by email after the call. Finally, media representatives are invited to contact Boralex's Director of Public Affairs and Communications, Isabel Fontaine. Her contact information is provided at the end of the quarterly press release. I would now like to turn the conference over to Stephan Milo, Senior Director, Investor Relations of Boralex. Please go ahead.

Merci beaucoup. Thank you, operator. So, good morning, everyone. Welcome to Barrelex's first quarter resolve conference call. So, joining me today from our head office in Montreal are Patrick Dacoste, President and Chief Executive Officer, Bruno Guilmette, Vice President and Chief Financial Officer, and other members of our management and finance team. So, Mr. Dacoste will begin with comments about market conditions and the highlights of the quarter. Afterwards, will carry on with financial highlights and then we will be available to answer your questions. As you know, during this call, we will be discussing historical as well as forward-looking information. So when talking about the future, there are a variety of risk factors that have been listed in our different filings with securities regulators, which can materially change our estimated results. These documents are all available for consultation at CDAR.com. So in our webcast presentation document, the disclosed results are presented both on a consolidated basis and on a combined basis. So unless otherwise stated, all comments made in this presentation will refer to combined basis figures. So please note that combined is non-GAAP financial measures and do not have standardized meaning under IFRS. Accordingly, combined may not be comparable to similar name measures used by other companies. For more details, see the Non-IFRS and Other Financial Measures section in the MD&A. The press release, the MD&A, the consolidated financial statements, and a copy of today's presentations are all posted on the Boralex website at boralex.com under the Investor sections. If you wish to receive a copy of these documents, please contact me. So Mr. Dacasse, when I start with his comments, please go ahead, Patrick.

Thank you, Stéphane. Good morning, everyone. Bonjour à vous. It's a pleasure for me to present our results and achievement for the first quarter. I'm very proud of all the hard work our teams in Europe and North America have put together in the past few months. Everyone in the organization contributed to this 13% growth in ABDA and a 28% increase in consolidated IFFO, but also to the closure of two significant partnerships and the additions of projects to our pipeline as well as the selection of wind projects in the most recent request for proposal in France. That being said, the market conditions continue to rapidly evolve during the quarter. In the U.S., investments in renewable energy have been integrated into a plan aimed at bringing back manufacturing to the United States and reduce inflationary pressures. The federal government is also quickly committing infrastructure investment and Job Act funds to deploy 7.5 billion U.S. dollars in electrical vehicle recharging infrastructure. The increased adoption of electrical vehicles is expected to increase power consumptions by 1,425 TWh in the United States by 2050, an increase of 36% compared to the 3,930 TWh consumed in 2021, considering only the electrification of transportations. In Canada, Hydro-Québec made public its 2022-2026 strategic plan, taking into account the energy transition underway and the government's ambition reflected in its 2030 plan for a green economy. Hydro-Québec expects that more than 100 TWh of power will be required in Québec by 2050. Among the avenues identified to reach this objective, Hydro-Québec intends to rely on the development of wind energy by building with partners a 3,000 MW portfolio of wind energy projects by 2026 to be developed as and when the need arises. Hydro-Québec also announced... recently requests for proposals for 1,000 MW of wind and 1,300 MW of renewable energy. In Europe, the geopolitical context reinforces the need to ensure security of energy supply and sovereignty. The sharp rise in energy prices in France mainly due to maintenance and corrosion problems to some nuclear reactors could also significantly favor the development of renewable project and corporate ppa in the coming years i will now review the main variances in our portfolio of project the 73 megawatt increase in the early stage was due primarily to the addition of three new wind power projects and two new solar projects totaling 75 megawatts in europe as well as the addition of two new solar projects totaling 25 megawatts in north america this was partly offset by the inclusion of a wind and solar power project totaling 9 MW in Europe under the mid-stage phase and changed in the expected capacity of a solar power project as well as the discontinuation of a wind power project for a total of 18 MW in Europe. The 159 MW increase in the mid-stage was due primarily to the addition of a wind project and adjustment to the pipeline following the announcement of the partnership agreement with Hydro-Québec and Énergir representing a total of 167 MW. The increase also comes from the inclusion of a wind power project and a solar power project under the mid-stage phase and change in the expected capacity of a solar and wind power project in Europe for a total of 12 MW. The increase was partly compensated by a 20 MW solar power project in Europe moving to secured phase. The 116 MW increase to advanced stage was primarily due to the addition of a project and adjustment in the pipeline following the announcement of the partnership agreement with Hydro-Québec and Énergir for a total of 133 MW. Change to the expected capacity of wind project in Europe also at 9 MW. This was partly offset by the inclusion of a 26 MW wind project in Europe in the secured phase. In total, we are now developing a portfolio of wind and solar projects of 3.6 GW and 177 MW of storage projects. Let's review changes to the growth path now. The 38 MW increase in the secured stage was driven by the inclusion of two wind projects totaling 46 MW and capacity addition of 6 MW to existing projects. This was partly offset by the inclusion of a 14 MW wind project to the under-construction and ready-to-build phase. Project under construction, or ready-to-build phase, increased by 14 MW by the addition of Bois-Ricard wind project. As shown in the growth path, we had assets in operation with 2,492 MW of installed capacity as at March 31, 2022, the same as at December 31, 2021, and an installed capacity of 2,447 MW as of May 10, 2022, following the disposal of two power stations after the end of the quarter. Commissioning of secured facilities and projects under construction is expected to bring our installed capacity to 3,146 MW. In conclusion, as you can see on the slide 12, we are pursuing the execution of our strategic plan and are making good progress on all the four strategic orientations. I won't cover in detail our progress as I already have highlighted our main achievements. One last point for my part. Earlier this week, we announced the results of our most recent CSR scoring by Ecovadis for our French operations. I'm very proud to say that we got the gold medal being classified in the top 95 percentile of corporations in our industry evaluated by Ecovadis. This shows the dedication of all our employees to constantly improve on CSR and brings one step closer to our goal of being recognized as a CSR reference by our different stakeholders. This completes my part. I will now let Bruno cover the financial portion in more detail, and we'll be back later for the question period. Bruno?

Thank you, Patrick. Good morning, everyone. I will start with a review of the progress made in light of our 2025 corporate objectives. As mentioned by Patrick earlier, capacity decreased slightly following the sale of our last thermal plant. Total capacity now stands at 2.4 gigawatts of 100% pure renewable energy. Our last 12 months EBITDA and AFFO increased due to strong results for the first quarter. Our reinvestment ratio now stands at 55%, which is in line with our 50% to 70% target. About our CSR strategy, we continued to make good progress with the launch of a quantitative assessment of physical impacts of climate change according to the recommendations of TCFD. We released our commitment made as part of the Equal Deterity Campaign to increase women in management positions and added diversity targets in variable compensation. Finally, we published our sustainability procurement charter and the assessment of ESG practices at and with our key suppliers. Taking a look at our debt objective now. Our corporate debt to total debt ratio increased slightly compared to the end of 2021. We are pursuing the work to our objective to obtain an investment grade rating and adjust accordingly the proportion of our corporate debt. I will now cover the financial results for the quarter starting with production. First quarter wind conditions were good in Canada but slightly weaker in France. Wind production in Canada was 5% higher than anticipated production and 6% higher than in the same quarter last year. In France Wind production was 6% lower than anticipated and 4% lower than in the same quarter last year. Overall, total wind production for the quarter combining Canada and France was in line with the anticipated production and 1% higher than last year. Turning to hydro now, it was another strong quarter for U.S. assets with production 4% higher than anticipated and 39% higher than in the same quarter last year. Canadian hydro had production 6% higher than anticipated but 18% lower than last year. Total production for the hydro sector was therefore 5% higher than anticipated and 10% higher than in the same quarter last year. Finally, production from solar assets was particularly strong at 15% higher than anticipated. In summary, total production for the quarter was 4% higher than anticipated and 2% higher than last year. First quarter combined revenues were up 9% compared to last year, mostly due to the high pricing level in France and to the increase in wind production in Canada as well as hydro production. and solar production in the US. For the first quarter of 2022, combined operating income was up 16% and EBITDA at $183 million compared to $162 million for the same quarter of 2021, a 13% increase. We generated $137 million of consolidated net cash flows related to operating activities 3% higher than last year's first quarter. Cash flows from operations were $136 million in the first quarter, a $21 million increase over the same quarter last year. AFFO was $77 million compared to $60 million, a 28% increase. Our financial position remains solid with our net debt-to-total market capital ratio of 43% on March 31st compared to 48% on December 31st, 2021. In conclusion, it's a strong start for Boralex year-to-date. Two significant partnerships, one in France and the other one in Quebec, will allow us to accelerate growth in these strong growing markets. three projects totaling 65 megawatts selected in the most recent request for proposal in France. These announcements, combined with the strong growth in our results, highlight the motivation and dedication of our teams to deliver our 2025 strategic plan. We are in excellent position to pursue our development in the context of particularly strong needs in the short and medium term for renewable energy. Thank you for your attention. We're now ready to take your questions.

Thank you. If you have a question at this time, please press star then 1 on your touchtone telephone. If your question has been answered or you wish to remove yourself from the queue, please press the pound key. And our first question comes from the line of Mark Harvey with CIBC Capital Markets. Your line is open. Please go ahead.

Thanks, Robert. Good morning, everyone. First question is just on the New York solar projects. In terms of the projects that you already have secured contracts and the ones you bid, can you give us some outlines in terms of your plan for sourcing panels, given obviously the ongoing tariff dispute in the U.S.? ?

Yeah. Hello, Marc. The situation is, as you know, limits us to source panel today for this project. We have no short-term cliff date on this project. That's an important point. So we will wait for the situation to settle down and understand what are the different possibilities. For sure, We will have, like many industry players, we will have a power price conversation with the off-taker because that will be needed. But on the other side, what I think is... that specifically New York State has a strong commitment for 2030, wants to achieve this commitment, and then they will have to solve the things. We see some trend on the PPH, generally speaking, in the U.S., so I presume that we will see the same trend in New York. So essentially that's what we do. We continue to develop the project because the fundamentals of the project are good. They are well located, well accepted, and we have applied for great connection, and so we are optimizing that.

So a couple of questions to clarify. Have you secured any panels then for any of the projects that are in the secured project list? And then the second – Is this uncertainty impacting at all the release of the current RFP results? And maybe you can give us an update on what the expected timing of those are.

The second question? Second question. Sorry, Mark.

Your line was kind of cutting. On the pending RFP results, I think we expected some announcement by now. We haven't had anything. Is the solar tariff dispute impacting that at all, or do you have a sense of what's taking a bit longer to get the results on the pending RFP?

Okay. On the first point, we have not secured panel for the 2019 project. And on the pending RFP, we should be very close to the disclosure, but I cannot say more. We are waiting for the official disclosure of the tender results.

Okay. And then the last question for me is just, France, obviously very high spot prices. We heard from one of your peers about breaking contracts. What's your updated views on potentially an early termination and locking in some corporate or long-term or medium-term hedges? And then I guess second would be prospects for continued development of projects with corporate PPAs as opposed to the competitive tenders approach.

Yeah, that's clear that something which completely changed the situation in Europe and in France, specifically because of the specific French constraint on nuclear. So the answer is we are working to control. to optimize the contract with a small remaining tail and discussing to optimize this part. So I think you have all the figures of the power. To be totally transparent, all the contracts do not have a free termination contract. Okay, some of the contracts have some termination clause which are not for free, so we need also to analyze, and we have this analysis, and we will come back to the market when it will be accepted and settled also.

And just in the second part of the question, in light of the high spot prices, are you seeing expectations of either strong corporate PPA demand? Are you seeing opportunities to accelerate some projects and go that route versus the competitive RFP?

Yeah, yeah, sure. Sorry. In the past, corporations were essentially signing corporate PPA for greening their portfolio of procurement and for their ESG commitment. Today, it's clearly a question of economical interest and an economical point of view to... have a part of their power, which is where the price is secure on a long-term basis. So the answer is yes, we have a lot of demand, and I think it's a very good news for us as a fundamental.

And the expectation is we could hear some announcements at some point maybe this year?

As you know, we are working hard to optimize our portfolio of sales. Prices are very high for the last quarter of the year and the first quarter of next year. So if we can do something before, we will.

Got it. Okay. Thanks, everyone.

Thank you. And our next question comes from the line of Nelson Wong with RBC Capital Markets. Your line is open. Please go ahead.

Great, thanks. Good morning, everyone. My first question is just a follow-up. So did you say that all, so I guess some of your older French facilities have contracts that do have termination fees and others don't have break fees to break the PPA, and then for the ones where there are no termination fees, you're working and looking at opportunities to optimize those facilities? Is that right?

Yeah, the answer is yes to both questions, Nelson.

Okay, got it. And then the other, just kind of switching gears a bit, can you give a bit of, can you give an update on the lime kiln wind project? I saw the press release the other day, but can you just talk about, I guess, the expansion got a green light, and can you just talk about next steps for that project?

Yeah, I think like we mentioned probably five, six quarters in the past that there was a change to the transmission use of system charge, and so we have decided at that time, and the project was affected by that, so we have decided to do two things. Firstly is to increase the size of the turbines from the first – project, the Lion King project, as we called it at that time, to reduce the LCOE, one thing. And on the other side, we have applied for an extension of the project. And so we have obtained the green light for the extension already. We have good news to come on the optimization of the size of the turbine. And so we will be in the right position now to negotiate a corporate PPA. And during this period, the other good news is that the price in the UK has also increased a lot. So the demand for green electricity is even higher. On the lime kiln project, why we have not go further than the power, which is 105 megawatts, I think. Is it correct, Nicolas? Yeah. And it's because of the the interconnection limitation, but we have the interconnection. We have paid for it in advance, the necessary payments, so we have an interconnection for the project, which is also a limited resource, as you can imagine, in northern Scotland. So the next step is to obtain the... modification of the size, and to negotiate corporate PPA. We have already some conversation on that with the team, and then finalized financing and procurement and all those things. And obviously we're discussing with turbine suppliers about the supply. The power, I'm sorry, I said 105, it's 110 megawatt. Okay, thanks for the additional color.

And then my next question relates to, I guess, France. All of your projects that are going to be completed or built over the next two years are located in France, and obviously everyone's talking about project cost inflation. Can you talk about your project costs in France, whether you're seeing inflation there? And then I guess the other big picture is, does it really matter, given that I believe some of those projects you will be receiving the merchant power price, so... Like I said, it probably doesn't really matter if you have to pay more to get those projects built.

Yeah, for essentially for all the projects which are already under constructions, I confirm and I like last quarter that we have no issue because we have frozen the cost at the start of the construction and we have like not EPC contract but the lump sum contract for all the different part of the construction. So this is the first point and the first good news. And it's the case even for the large project of Moulin du Louant. The second point of your question is interesting, and the answer is yes. We have optimized, also a little bit like Leinchen, we have optimized the size of different technologies. project to obtain the building permit modification to have bigger turbine, lower LCOE at equal cost and then since the cost has increased we have still a project with acceptable return and this will be somewhere the worst case scenario because obviously we have the experience since five years to sell electricity merchant in France and we will try to be as agile as possible to catch It could be through purely merchant for the first year and then corporate PPA after that or stay merchant a longer period or find a corporate PPA from day one at an acceptable price. So all those things is underway. What it shows strategically is that our move to work into commercialization, I think we mentioned years ago that we start this part thinking that it will be useful one day or another and the day is today.

Okay, got it. And then just one last question. Big picture on Quebec, obviously there's a lot of opportunities there, and you're also working with Hydro-Quebec and Energear. So can you talk about your strategy in Quebec, whether it will be working with your partners, Energear, Hydro-Quebec, whether you'll be bidding on the upcoming RFPs with partners or on your own? Can you just big picture talk to me, tell us about your approach there?

Yeah. Essentially, we will, and we have announced that we have this important partnership with Énergir and Hydro-Québec for three, four hundred megawatt project. We will continue to work on the two possibilities, which is continue to try to propose project to Hydro-Québec in their three gigawatt, what they announced, three gigawatt of project with partners. Uh, and also, uh, obviously the, the one, uh, the different RFP, the one which is coming in July and the other one, we will, we will work on this project and it's a, it's a very good news that I think what has changed. If you go back from the RFP in Quebec years ago, uh, is, uh, is essentially the size of the turbine. You know, when you bid in 2014, 2013, the size of the turbine was not what it is today. So you can... This opened at a reasonable LCOE other area of Quebec, which is also very interesting.

Okay, thanks.

I can add to that comment also. Patrick mentioned the 300 and the 450. This is for this year, but also... There's been an announcement for 1,000 of wind after that and 1.3 for renewable energy. And this is really separate from the 3,000 that I mentioned. There are two processes right now in Quebec, so the market is really strong.

And you might participate in it. Obviously, more than one stream.

Yeah, in both. Again, we didn't stop. In 2018, when the market closed, we didn't stop developing. We continued to nurture our project, and today we are ready to continue and to accelerate on that.

Okay, got it. Thanks a lot.

Thank you. And our next question comes from the line of Sean Stewart with TD Securities. Your line is open. Please go ahead.

Thank you. Good morning. A couple of questions. Just follow on on New York. And wondering if you can remind us of when the next schedule for RFP is there. And does everything that's going on with trade restrictions, supply chain disruptions, et cetera, investigations. Does that potentially delay the next RFP from your perspective or not?

I think there is a small... It's the same timing. First, it's the same timing every year. So that will be end of August, beginning of September. The point is, during the last 10 years in renewable, it was interesting... to obtain a contract, develop the project, because in between, the LCOE has gone down a little bit. Today, with the inflation context and the insurgency context, since there is clear commitment and target from the different states, we think it's good to invest in the right project with the right fundamentals and then bid when we are more closer to the possibility of financing and ordering the equipment. So the strategy is potentially a little bit different, potentially for some years, so that's what we will do. But since the fundamental remains strong, we think that developing the right projects will still create value for the company.

Thanks for that, Patrick. The second question I had is on Europe more broadly beyond France and what you're doing in the UK. Can you speak to how strong the current spot price environment is in the continent in general? Does that accelerate potential interest in expanding your footprint out of France predominantly? Does it expedite your initiatives to broaden the footprint for the company in Europe?

Yeah, sorry. That's clearly in our strategic plan and for sure the signal of... energy independence of Europe which is important in every country and the difficulty of the nuclear industry again this is pushing I don't see when yes the price would not stay at the level of the next winter But for the next three years, there will be a higher price, and I'm pretty sure that it will not land around 40 euros in the near future. So the answer is yes. We will know since we have closed the transaction in France. We have a good partner, the right partner in France, and the engine is working well there. the team will have more time to dedicate to look to opportunity outside France in the near future.

Okay, thanks for that, Patrick. That's all I have.

Thank you. And our next question comes from the line of Rupert Muir with National Bank. Your line is open. Please go ahead.

Good morning. A couple of questions on France. Firstly, with the strong performance you have there right now and maybe getting stronger if you can optimize the contracts, do you see any risk of windfall taxes? And if not, maybe if you can give us an update on what the outlook for cash taxes looks like right now. What's your tax horizon?

I'm not sure that... This could take the form of a windfall tax, but you never know. Just as the information is available, there was yesterday in Les Echos, the French newspaper, an article saying that the French state is trying to find a way to... finance a part of what they call the bouclier tarifaire, which is probably in English something that the limitation of the men in the street tariff by getting some of our improved revenue. So they are thinking the way to do it. It's clear they have not find it yet. And we have contracts which have been signed. We have a contractual agreement which clearly stipulates what is the situation today. So the answer is there is a risk, but we will continue to work with the state if needed. If they bring compensation... serious compensation. There could be an industry agreement, but I don't know where it will go. I think globally there is We mentioned that with some previous questions. The environment will remain good for us. It could be through corporate PPA. It could be for a new project. It could be ending existing projects. So I think we need to be very nimble. And also, if there is any move from the French state, do what we have to do.

Great, thank you. And do you have a sense of where you sit on the horizon for cash taxes now, just as a normal course?

We didn't hear your question right, Robert. Could you just repeat it, please?

What is the outlook for cash taxes in the French business today? What do your tax shelters look like today?

We're paying taxes in France at the moment, Rupert.

Okay, excellent. And then just one final one on France.

A lot of your construction... Sorry, just an add-on, Rupert. Just an add-on, mostly because of minimum taxes.

Okay, great. Thank you. If I look at your construction in France, it's largely repowering today. How are you going to stagger the repowering? Are you able to, let's say, remove a few turbines at a time, or are you taking the entire project offline while it gets rebuilt? And does this high spot power price impact your behaviors when you're repowering?

Yeah, that's a good point. We are trying to... optimize when, when, when a contract comes to an end, we are trying to really optimize, uh, the, the duration of the, of the reparring in the past when the price of the, the spot price was lower, it was not interesting, interested, interesting, sorry, to, to, to remain in operation because, and, and we try to reduce the, the replacement time as much as possible. Uh, Today, we try to be flexible. On the other side, we have ordered turbine some months ago, so we're not able to change everything. But the answer is we are trying to manage our portfolio as much as possible. And it could be possible, linked with the supply chain difficulty, the high price that we maintain in existing assets, for months or two, three years, and then the authorization of repairing will remain available and valid, and then do the repairing when it will be the time if the prices are going down. So all this is on the table and analyzed by the team.

So what does the disruption look like to the team? operating wind farms as you repower them? Do you take them offline completely, or are you able to stagger the turbine replacement in a repowering?

Yeah, it depends on the site. For example, in Chamblon, when we did it two years ago, it's on a ridge in the mountain. We were not able to build foundations In another place, because the authorization was like this, because of many constraints, we were not able to build a foundation next to a wind turbine in operation. In Évité-Josepha and Remise-de-Réclinville, we are building the foundation not exactly at the same position. So we are building foundation while the existing turbines are still in operation. But when we start... We want to start to build, to erect the new turbine. We have to dismantle the other before, obviously. So we are really working on the logistics on that. And we have, I think, we have now four projects in this situation, plus Champs-Élysées. So we have already experience. And we have experience also with suppliers who are buying the turbine back and reuse them as spare parts or to reinstall them. So that's also something that has improved, and I think we are, you know, with a good organization of the team.

Great. Thank you for the call.

Thank you.

Thank you. And our next question comes from the line of Ben Pham with BMO. Your line is open. Please go ahead.

Okay, thanks. Good morning. I want to go back to the Good morning. I wanted to go back to your solar project, only because it's a relatively large chunk, 200 megawatts or so. Do you think that I know the tariff situation is unclear on timing and outcome, but when you work backwards here, permitting and and construction, do you think there's still a chance that you can put those projects in by 2025?

David Lamont Wilson Yeah, the answer is 100 megawatts of these projects are In California, we are waiting for the upgrade of existing grid connection on existing solar site. When I look to the pattern of the Californian market the last weeks, I think they need more storage. That's my understanding because they have so much solar in some part of the day. But the grid operator to which we apply for grid connection modification is taking its time. So that's one thing. So it essentially depends on this part of the project authorization, because we have the land, we know what we want to do, and we just have to give this confirmation. I think we applied almost one year ago, and at that time we said, It was Q2 last year, and we said it's 18 months. There is some constraint on grid operators, generally speaking, in the U.S. with staff. They don't have the necessary staff to work on the queue, so this is slowing the whole industry. The other project, the 77-megawatt project, is in New York. It depends when we will have the the commercial confirmation of this project. So I think there is nothing which is against the possibility to connect before 2025, but I cannot confirm today that we have everything to start construction.

Okay. This is the solar projects you're referencing, right, Patrick, is that? Yeah.

The storage. Patrick was talking about the storage project. Was your question about storage or solar?

Yeah, apologies. It's about the solar projects, the green corners, Bald Mountain.

Okay, sorry. The line is bad this morning, and so we have to understand some of your words sometimes. No problem. Yeah, the main point on this project is it will depend on the present inquiry on Asian supply in the U.S. I think we have to view it also, you know, Boralex is diversified. We have wind project in France. We have solar project in France. We have wind project in the U.K. We have wind project in Quebec. If there is... something which is delayed in the U.S. more than a confirmation by the end of this year about the new rules in the U.S., it will not hurt too much the company, and we will be able to restart when the market will really restart. So I think that's – we keep – all the interest to the US, but I cannot guarantee you that we will be able to connect before 2025.

There's one more thing I'd like to add on the US market.

Given our financial position, given our cash position, This sort of market volatility and disruption to a certain extent is, in our view, also an opportunity for us as less capitalized, less well-capitalized companies may find that they're struggling a little bit in the short term. So certainly that could be an opportunity for us to to look at some of these companies or to look and have discussions with some of these developers for medium-term growth.

Okay, so it sounds like, I mean, it goes to my second question. If you were to take a very pessimistic view of U.S. solar, let's say you just wiped out all of these projects and you assume there's no U.S. solar growth for Barlux, you think you have enough stuff in Quebec? I'm not saying that happens. I'm just saying, like, my question is more, do you have enough projects in France and Quebec and maybe M&A to get to 4,400 megawatts?

Yes, yes, yes, yes. The answer is yes, and we will... I think there was a question to see, do we want to accelerate elsewhere in Europe? This is also part of the strategy. There is potentially other opportunity in other provinces in Canada also if we think that the U.S. market is slowing down for a period. On the long term, the U.S. market will be a good market for sure. So, like it happened in Canada in 2018, we continue to develop our wind project, and today we're very happy to have them already, almost already developed. So, I think it's the same diversification of risk.

Maybe if I could add one point on that, is the fact that we need to continue to develop those projects, optimize the project, look at opportunities like Bruno said in the US because there will be some opportunities and we have the capital in place to be to act rapidly so we're not giving up on this market that's for sure no no and when we have conversation with NYSERDA the last weeks they are aware obviously of the situation

They are committed for 2030, 70% of green electricity, and they are considering Parallax as a very good developer in terms of how we consult local communities, municipalities, and how we develop our project because they want the project to be connected in the next year. So I think we have signaled that it's good to continue to develop, and we have the right team to do this. That's very helpful.

Thank you.

Thank you. And our next question comes from the line of Andrew Koska with Credit Suisse. Your line is open. Please go ahead.

Thank you. Good morning. Maybe if you could just give us some perspective on how your risk management approach has changed or maybe evolved most recently. And I guess there's a few elements to it. There's obviously just from a financial standpoint with the volatility that we've seen, maybe heightened volatility for a number of reasons. And then also from an operational standpoint, as you're dealing with supply chain issues from your OEMs, and then just a bunch of issues that happen in the industry from an EPC standpoint. So any thoughts on risk management would be appreciated.

I think Patrick alluded a bit to it, but certainly from an operating and contracting position, we're very nimble, and I have constant discussions with suppliers. Clearly, our financial position and our large projects that are coming up are a plus in those discussions and having those discussions, being able to secure the equipment when we need it. So we contract more quickly from that perspective. And from a financial perspective, we also look at how we can, for example, edge interest rates quicker earlier in the process because we see those potential additional hikes in interest rates coming. So that's really a few things we've done. We're in a good position having quite a bit of our portfolio on long-term fixed rates. on our debt positions, and we continue to optimize on that front. Also, reducing our debt with the cash we've received recently will reduce some of our most expensive debt, so we're reducing our financial burden. Other areas of risk management, these are sort of the key ones, making sure that we we secure the equipment quickly and that we manage our financial exposure. I mean, that would be the two key points that come to mind.

Okay. Excuse me. That's helpful. And then maybe just a kind of related question. When you think about just your hybrid model that you've been operating on the maintenance where you've had some done externally, some done in-house, I think in the MD&A you pulled a few more in-house. Do you see this as a growing competitive advantage, or is it just you get better price tension with some of your OEM providers?

Essentially, it's a question of cost, of optimization, of production and revenue. and also on the risk to have big maintenance teams internally because we have to manage all those things. So we have internalized for a very long period in France, and then last year we have externalized to Vestas back the Vestas French fleet, because we thought that the contract and the risk sharing in the contract and how we can transfer a part of this risk to Vestas and have the right performance of maintenance from them was good. But we are continuing to internalize other maintenance of other assets, typically the Enercon ones in Canada and in France, that the move is all Enercon, because there is a gap between cost and performance by doing it ourselves and cost and performance by remaining in a contract with Enercon. And I think in the environment of high price, A 0.5% of availability at the right time has more value than a 0.5% of availability one year ago or under a contract. So we are looking to maintenance also differently on contracted asset and merchant asset.

Okay, thank you. That's very helpful.

Thank you. And our next question comes from the line of Nick Boychuk with Cormark Securities. Your line is open. Please go ahead.

Hey, Nick. Are you there?

Hey, guys. Are you there? I think we'll move to the next. Oh, okay. Yeah, we can hear you.

Sorry. Good morning, guys. Just two quick follow-ups. First on storage, Patrick, you mentioned that the California opportunities could get developed by 2025. Are you seeing any additional demand, though, for this type of base load generation or storage capabilities? Any other geographies or project types that you could add to the backlog?

Yeah. The answer is not in Europe, but yes, in North America and every place. There is There is a need for storage in New York State or New York grid. There could be a need of storage in Quebec for peak shaving, which is not the same than displacing solar production in California. And I presume, with my experience of a grid operator, that in Ontario there will be need for storage also. There is one project which is... known, which is not the BOHALEX project, but which is developing in Ontario. So the answer is yes, in North America, I think there will be more need of storage, specifically with new wind and solar capacity connecting to the grid and the difficulty of doing big interconnections between the different systems, which are interconnected but not meshed like the one in Europe.

Got it. Thank you. And then, Bruno, coming back to your question or your comment about the M&A opportunities, it's something I was going to ask. Are there any other details you can provide on the types of projects that you're currently seeing that could be undercapitalized or that could be attractive opportunities for you either by fuel type or region in the U.S.? ?

We're really trying to stay as opportunistic as we can looking at targets as we did talk today quite a bit about the changes in the market in the U.S. especially. So we're trying to stay open, but a combination of opportunities assets that we can optimize, improve operating or near operation and as I mentioned development pipeline which could come under pressure at the right price for acquisition because we want to stay disciplined on acquisitions so this is what we're looking for Size is also a factor that we look at when we look at acquisitions. It has to be the right size for us. And markets, our team is focused on looking at certain states. We've seen quite a bit of many opportunities lately, and we expect that to only increase in the coming months. especially in the U.S., but we're also looking at possibilities to expand in other European markets, as Patrick mentioned before, through development, but also on M&A. Okay. Thank you very much, Chris. Have a great day. We've completed the transaction with our partner in Europe, in France, EIP, and basically we... We have the cash in the bank by now, and we are certainly an attractive buyer for these kinds of assets and companies that we've talked about. Perfect. Thank you.

Thank you. And our next question comes from the line of Nadja Beydoun with AI Capital Markets. Your line is open. Please go ahead.

Hi, good morning. I just wanted to go back to Quebec. Can you just clarify what the expectations are for the DENESH projects in Algeria and Hydro-Quebec? Are those going to be developed outside the RFP processes or in addition to those?

Yes, yes, it's clearly a project we have developed and we have identified Terms of agreement on the power price for these three different projects, and this is totally outside of the RFP, it is inside the 3,000 megawatts that Hydro-Québec announced as the partnership they want to do with, say, Could be private player, could be First Nations, could be municipality, but we have signed a big part of this.

Okay, that's fantastic. And I think it's a one-third partnership in each project. And I think in some of your filings, you had them potentially starting construction at the end of next year with... commissioning sometime at the end of 2025. So it sounds like you already have the power price agreements mostly locked up. What are some of the next steps of the milestones for those projects?

Essentially, the project will be, the construction will be triggered by two things. It's first obtaining the building authorization, and this is the consultation process is underway. And the second point is the confirmation by Hydro-Québec of their need. And it could trigger one project, and then the second one, and then the third one, depending on their need. But it's on their table. It's available, and we're ready. And we have, obviously, since it's a significant project, volume of turbine, of power at least. It's less because it's a big turbine today, but it's a significant amount of power. We have the interest of the large turbine OEM and we're discussing directly at the top of these companies to settle the contractual project when it would be needed by Hydro-Québec.

Okay, understood. So you could develop them sort of in a staggered fashion, one after the other, and maybe sort of FID sometime later this year or early next year once you have all the authorizations and the confirmations.

Yeah, yeah, yeah.

Okay. Just one last question for me. Obviously, you're going to start to have more capacity coming offline or not offline, sorry, off contract in the next few years. And I think in the past you talked about trying to find a balanced mix of repowering the scope of PPAs, but now with the current power price environment, how does that dynamic sort of impacted your, how you approach those types of decisions for the projects coming off contracts?

Yeah, it's a good point. Essentially, the development costs of obtaining a modified authorization to repower a site is not very, very big, and this is one of the interests of repowering. That being said, I think and we think we should continue to invest in these development costs to have an option, and when we have a repowering authorization It lasts for, you know, it's valid for a certain period, potentially three years, I think, but we can extend that also. And with European situation, there is also a clear signal from Europe. The European Commission, I think it comes just yesterday, to say that they will push globally in Europe the different countries to accelerate repowering authorization and shorten the time of instruction. And on the other side, obviously, if the price remains over 200 euro per megawatt hour, it's better to operate the existing site as long as the price remains there. I don't think it's sustainable to have a price over 200 euros per megawatt hour for years, so it will go down one day or another, and at that time, we will have the possibility to trigger, the option to trigger the repowering quickly, because we have the authorization with the permit with us, and also we are discussing... with after-acres for the repowering, because it could be through tenders or tariff system like today, but it could be also corporate PPA.

Okay. I guess what you're saying is repowering at a very small cost is like a free option, and that gives you more optionality in what you want to do with those assets within a certain time window of several years. Okay. Got it. Thank you very much for those details. Thank you, Nils.

Thank you, and I'm showing no further questions at this time, and I would like to turn the conference back over to Stephan Milo for any further remarks.

All right, so thank you, everyone, for your attention. If you have any additional questions, please call me at 514-213-1045. I'll make sure we quickly answer your questions. So our next call to announce second quarter results will be on Wednesday, August 3rd at 11 a.m., so I hope you all remain healthy. Have a nice day, everyone. Thank you. Thank you.

This concludes today's conference call. Thank you for participating. You may now disconnect. Everyone have a great day.