Boralex Inc.

Hello, ladies and gentlemen, and welcome to the telephone conference on the financial results of the second quarter of 2023 of Boralex. Please note that all lines are in listening mode only. At the end of the presentation, there will be a period of questions and answers during which financial analysts, shareholders and investors will be invited to ask their questions. If you have asked a question, please press the star following the number 1 and 1 on your phone. To cancel your question, please press star 1 and 1 again. You will then hear an automated message informing you that you raised your hand to ask your question. Please also note that this conference is recorded. For web dissemination participants, you can also ask questions during the conference, but these will be answered by mail after the call. Enfin, les représentants des médias qui ont des questions sont invités à contacter directement Camille L'Aventure, conseillère, affaires publiques et communications externes chez Boralex, aux coordonnées indiquées à la fin du communiqué trimestriel. J'aimerais maintenant passer la parole à Stéphane Milot, vice-président relations avec les investisseurs de Boralex. Good morning, ladies and gentlemen. And welcome to Boralek's second quarter of 2023 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 the session, you will need to press star 1 and 1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1 and 1 again. Also note that the call is being recorded. For webcast participants, you can also ask your questions during the conference, but they will be answered by email after the call. Finally, media representatives are invited to contact Camille Aventure, advisor, public affairs and external communications at Boralex. Her contact information is provided at the end of the quarterly press release. I would now like to turn the conference over to Stéphane Milot, Vice President, Investor Relations for Boralex. Please go ahead.

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

Thank you Stéphane and good morning everyone. It's a pleasure for me to present our results and achievements for the second quarter. Before going over the highlights of the quarter, I would like to reiterate our strong confidence in the future of our sector. There has been a lot of negative press in the past few months about some parts of our industry, notably the offshore wind sector. Many projects were stopped in this sector because of the important issues with selling price and supply chain. As an integrated developer and operator of onshore wind, solar, hydro and storage technologies, we're not going through some of these issues in the same magnitude. We experience very limited impact on our operations and development activities. Yes, we're facing some challenge, but we have been able through our agility and innovative approach to overcome them. All our projects under construction are delivering the expected returns and we expect the same for upcoming projects. We will continue to develop our business and be a strong contributor to the energy transition. We are more than ever confident we will execute our plan with discipline in markets we know well and are able to adapt rapidly. Going back to the highlights, in the second quarter, our teams continued to make significant progress in our growth and diversification strategy while pursuing our financial discipline. Our balance sheet remains strong with over 300 million in cash resources and authorized financing facilities providing significant flexibility to fund our growth. 369 megawatts of projects were added to our pipeline in the quarter, now representing over 6.2 gigawatts of capacity. We were also selected for 380 MW of storage projects under the Ontario RFP and for 40 MW of wind project in the France latest wind RFP. Total production increased by 28% in the second quarter compared to 2022 as we benefited from contributions from the integration of wind farms we acquired in the US, the commissioning of assets and comparable production in France. This helped offset the impact of unfavorable weather conditions in North America in June. Our business continued to perform well, generating an EBITDA of 143 million, up 10 million or 7% over 2022, reflecting the contribution from the U.S. acquisition and commissioning of assets in France which more than compensated the decrease relating to lower production of our Canadian wind farms. Please note that the comparable figure in the second quarter of 2022 included a 14 million positive effect coming from certain feed-in premium contract in France, which was taken out in the third quarter of 2022 after the enactment of the Supplementary Budget Act. In general, demand for renewable energy in our markets remains high, creating a positive environment for the operation and the development of our activities. Favorable programs are being discussed or put in place, in particular the ITC in Canada, which is similar to the IRA in the US. Legislative measures were recently published and we are expecting the new law to come into effect by the end of the year. Also, many requests for proposals are planned in the next six months. Hydro-Québec RFP for 1.5 gigawatts, Ontario's second request for proposal for energy storage and capacity, and the NYSERDA solicitation in the state of New York. In France, A 500 megawatt technology neutral tender and two 925 megawatt onshore wind tenders are also expected. UK also restart their RFP program for wind solar. I will now rapidly review the main variances in our portfolio of projects and growth paths. The change in the early stage was mainly due to three factors. First, the addition of two new wind projects, seven new solar projects and one storage project in Europe, and one wind project and one storage project in North America for a total of 369 megawatts. the progression of two energy storage projects that were selected in the Ontario RFP to the secure stage for a reduction of 380 megawatts, and lastly, the progression of two wind projects, two solar projects, and one storage project in Europe to the mid-stage phase for a reduction of 64 megawatts. In the mid-stage, the progression of the 64 megawatts of projects were offset by the change in the expected capacity of one wind project in Europe for a decrease of 10 MW and the progression of one wind project in Europe to the advanced stage phase for a reduction of 52 MW. In total, our pipeline now comprises projects totaling 5.3 GW of wind, solar and storage projects. In the growth path, the secured stage increased with the progression of two energy storage projects selected in the Ontario RFP, totaling 380 megawatts. In the US, we continue to work on the optimization of our solar project and are expecting feedback from NYSERDA in the coming months. In France, the capacity of projects under construction decreased by 32 megawatts. due to the commissioning of two wind farms and a storage unit. I won't cover in detail the progress made in our growth and diversification strategic direction, as I already talked about the major highlights. On the customer strategic direction, we continue to have discussions with numerous corporations in France as the demand for renewable energy contracted at attractive price remain high. In terms of optimization, we internalized the service and maintenance of six U.S. solar power station with a total installed capacity of 200 megawatts. 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 earlier by Patrick, our balance sheet remains solid with more than $300 million in available cash and authorized financing. We continue to make good progress on the EBITDA and EFFO when taking into account the $14 million effect mentioned by Patrick earlier. The reinvestment ratio is in line with our target at 53%. About our CSR strategy, we continued our efforts on the environment, social and governance fronts as presented on slide 16. Among the highlights of the quarter, Boralex was recently awarded an EcoVedis Gold Medal for the second year in a row. For more detailed information, including data on CO2 emissions and work done in relation to climate change and the TCFD initiative, I invite you to read our third CSR report, which was published in February. I will now cover the financial results for the second quarter, starting with production. Overall, total wind production for the quarter, combining Canada, the US and France, was 42% higher than last year. but 6% lower than anticipated. Good conditions in April and May did not compensate completely for unfavorable conditions in June, especially in North America. Total production for the hydro sector was 3% lower than last year and 8% lower than anticipated. Both markets, Canada and the US, had unfavorable weather conditions. Finally, production from solar assets was 12% lower than the same quarter last year and 18% lower than anticipated, mainly due to a curtailment request on the Five Points solar farm in California. In summary, total production for the quarter was 28% higher than last year and 8% lower than anticipated. Second quarter combined revenues were up 28% compared to last year, mostly due to the integration of our acquisition in the US, the commissioning of assets in France, as well as high prices of electricity in France. EBITDA increased by 7% in the second quarter and operating income increased by 6%. Please note that the $6 million increase in corporate and general expenses is related to an increase in the workforce related to the growth of the corporation. EFFO was 3 million compared to 13 million in the same quarter last year. As mentioned by Patrick, the second quarter of 2022 included a positive 14 million effect related to feed-in premium contracts. Excluding this amount, EFFO this quarter would have increased quarter over quarter by 4 million. Our financial position is solid with our net debt to total market capital ratio of 40% in line with the ratio at the end of 2022. In conclusion, we continued the disciplined execution of our strategic plan in the second quarter of 2023. We made good progress along our four strategic orientations. We continue to grow and diversify by adding 369 megawatts of wind solar and storage projects to our pipeline, which reached over 6.2 gigawatts of capacity. The market environment continues to be highly favorable to development activities with several requests for proposals ongoing in our markets. EBITDA and operating income increased compared to the second quarter of 2022. And finally, we maintain a solid financial position with more than $300 million in available cash and authorized financing. Thank you very much for your attention. We're now ready to take your questions.

Merci. Si vous souhaitez poser une question, veuillez appuyer sur l'étoile suivie du chiffre 1 et 1 sur votre téléphone et attendre l'annonce de votre nom. Pour annuler votre question, veuillez appuyer à nouveau sur l'étoile 1 et 1. As a reminder, to ask a question, you will need to press star 1 and 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 and 1 again. Please stand by while we compile the Q&A roster. And our first question comes from the line of Sean Stewart from TD Securities. Please go ahead so your line is open.

I want to start with a question on your balance sheet. I'm wondering if you can qualify the comfort with your existing available liquidity given the growth path going forward and if you can go through options to bolster balance sheet flexibility going forward between asset recycling or other financing options.

Thank you, Sean. So, qualifying our balance sheet position is solid. We're in a good position to continue to fund our growth. We have options, as we've had in the past. We generate cash. additional leverage possible on different fronts, either corporately or at the project level. And we're in a good position for the next year to continue to fund our growth without an equity raise. So notwithstanding, not taking into account large M&A, obviously, as I always put as a qualifier.

Any thoughts to further asset sales down the road? I appreciate you're not going to issue equity now, but looking out a year from now, if valuations aren't cooperating, can you speak to potential for further asset sales?

As you know, we've looked at the past as either selling assets, but also and most often or more often partnering with people like other investors, other financial investors, as we did in France. So these are options that we continue to look at. We continue to consider different parts of our portfolio as potential partnerships. with other investors. We have good assets, good valuations, but we're looking for the right conditions, size, and right valuations to enter into a transaction. It's not lack of demand, but it's mostly our option when we feel it's the right time. But that's a possibility, an additional possibility on the financing front, yes.

Okay. Thanks, Bruno. Next question. New York solar projects. Can you give us an idea of what is being done there to advance those projects, discussions with respect to, I guess, PPA amendments? What's the path forward for those projects?

Yeah. Hi, Sean. It's Patrick. Allianz for Clean Energy has put a request in front of the Public Service Commission to provide an inflation adjustment from the time of the award to the time of, I think, COD. And now it's expected that in their October session, the PSC will come back with their decision on that, which is, to my understanding, supported by NYSERDA, but it's the PSC decision. So this is where we are. And in the same time, what we're doing is we're working with suppliers to optimize as much as possible the project that we have and to be ready to take the decision when the planet will align.

Understood. Okay. Thanks very much, Patrick. That's all I have.

Thank you, Usain.

Thank you. We will now take our next question. Please stand by. Your next question comes from the line of Nelson Engie from RBC Capital Markets. Please go ahead.

Great. Thanks and congrats on a pretty good quarter. So just a big picture question on your 2025 target of hitting 4.4 gigawatts of capacity and about call it 250 million of discretionary cash flows. Like obviously you can hit the numbers by simply doing M&A but from an organic growth perspective it doesn't look that easy to achieve particularly on the discretionary cash flow side. Can you just talk about M&A versus development and and also, I guess, the importance of hitting your 2025 target?

Thank you, Nelson and Patrick. We are executing our plan. We are focusing specifically on the project that will create cash flow in 2025. And so all the team is concentrated on that. And I think we are also concentrating on expenses and all the things to achieve this target. The M&A market today, yes, it seems that it's becoming more a buyer's market, but it's not where We want it yet, so we will continue to execute. And yeah, nothing more to say today.

Okay, thanks. And you mentioned focus on the cost side. So on G&A, I think you were about at $32 million this quarter. That's about 23% higher than last year. So do you expect your G&A to continue to trend a bit higher, or are you trying to manage... G&A lower in the coming year? Obviously, you have a number of upcoming bids to focus on, but can you just talk about your G&A trend and whether that's something you're trying to manage lower or not?

Yeah, well, on the G&A front, we had a bump which is we consider temporary and we're working towards getting this in terms of percentage, relative percentage, getting this back in line. So we don't expect continuing growth in percentage.

Okay, got it. Thanks. I'll leave it there.

Thank you. Thank you. We will now take our next question. Please stand by. Your next question comes from the line of Nicola Boychuk from Cormac Securities. Please go ahead. Your line is open.

Thanks. Good morning, guys. Just a follow-on to Nelson's question there regarding the 2025 growth path. Regarding the opportunity to expand in Europe, there's a comment in the MD&A that suggests that work's ongoing there to determine where new markets might be best to expand. Can you comment on that work and whether the partnership with EIP has any impact on the trajectory for you guys to enter the Nordics or any other markets there?

Yeah, good morning, Nicolas. In Europe, we will definitely concentrate on France and the UK for the next two, three years. I think it's the best market. There is a lot of opportunity in the UK and we have a significant pipeline in France producing projects, I would say, every quarter. So you have also seen that the The average price of the last tender in France was north of 85 euro a megawatt hour. So it's also a good signal. It's 42% higher than it was in 2020. So this is good for the inflation of the cost. So we continue in days to market presently.

Understood, thanks. And speaking about the UK opportunity, can you comment at all on what you're seeing in the local market right now from a supply chain standpoint to get the McKelan developed on time and within budget and what that might mean for future growth in the market?

Sorry, could you just repeat your question, Nick? Patrick did not get all the parts of the question.

No, that's no problem. Within the UK, how robust is the supply chain in order for you to get new onshore wind projects developed, specifically lime kiln? Do you have everything you need to get everything developed on time and on budget?

Yeah, we have ordered our turbine for lime kiln by the end of last year. And I'm happy when I'm seeing the increase of costs from the suppliers. So this is going in the right direction. On the balance of plant, we are almost finalizing the contract for the balance of plant of the project. And so no issue on this side. And there is one smaller project that will so be authorized in the next six months probably. And then we will say continue probably to work with the same bunch of suppliers. And I think I do not expect problem in the next project in the UK presently. Excellent. Thank you. And maybe another comment on the UK. You have seen all the questions from the the offshore wind, that was one of my comments at the beginning. There is roughly 7.4 gigawatts of project that have got a price of 37 pounds a megawatt hour. The last RFP in the UK, they are all, almost all, except one, I think, 800 megawatts, stopped presently and frozen and will have to rebid in new vendors. So this open many opportunities for new onshore projects. And that shows also to the government that being diversified is not only good for IPPs, but it's also good for systems and government.

Got it. That's some excellent clarity. Thanks, Patrick. The last, if I can sneak one in, is just on the corporate PPA market. It seems as though you're seeing a lot of opportunities there to get attractive pricing from corporates. Is that going to become a much more prevalent use of refinancings and also new contracts for assets that are under development?

Yeah, there is some opportunity for sure in the UK. There is opportunity in France. We have signed some In France, that will be announced in the fall, specifically for marketing question of our customers, but it's an interesting price for us and it's a good return for the project that will be built with that, or when it's renewed, it's an interesting price. In the UK, we're less known than in France, so we're starting with that, but we have had some negotiation, conversation with with different potential counterparties. And there is also the option, as I mentioned, there is a new RFP presently in the UK, so I will not comment, but it's another option for our project to get an interesting price. Because the RFP for wind has been reopened for onshore wind, so that's also something interesting for our project. Okay, excellent. Thank you very much.

Thank you. We will now take our next question. Please stand by. Our next question comes from the line of Rupert Mayra from National Bank. Please go ahead. Your line is open.

Hi. Good morning, everyone. On your U.S. wind assets, you've had those for a couple of quarters now. How are they performing relative to your expectations? And with what you've learned, what are your thoughts on expanding that platform?

I'm sorry, Rupert. We had difficulties to hear you. You sounded weak. Can you just repeat the question?

Rupert, sorry. Sorry, Stéphane. The resource was lower in the wind resource in Texas for our assets was lower during the quarter, and the price was also lower on the two projects, which are merchant there. So we have been affected, but you cannot draw any conclusion on the long term. We're still there. confident with the assets we bought and the projection that we had there.

And we're seeing in Texas right now very strong power prices this month in particular. I know you have some uncontracted exposure there, some spot exposure. How do you manage that asset? Are you selling spot or are you selling in the day ahead markets? Are you seeing all the upside, capturing the upside we're seeing in that spot market?

Yeah, we are exposed on two assets, but essentially one is, you know, you have to remind that before the flip date of these assets was the tax equity. We are not really affected upwards or downwards because of the tax equity contract that we have on these assets. So I'm not going to detail presently, but I think it's... It's another sign that it's, you know, all the markets where we are, the price are going in the right direction on the long term. But I think before 2025 on these assets, essentially the cash flow is up or down is going to mainly to the tax equity.

I see. So given all that you know about this market and the experience you've had so far, what are your thoughts on organic growth in that market or future M&A? Basically, any opportunity to grow that platform?

Not presently, because as I answered to Nelson, we are... really focused on the main project that will deliver cash flow for 2025 in the jurisdiction that we know. So France, UK, New York, Quebec, and Ontario. And so we will not start something there. I know that there is lots of things moving specifically in storage there, but it's not the same storage in Ontario. In Ontario, we have a up to 22 years contract for capacity. You cannot find that in Texas. So in terms of risk-reward, yes, you can make development, but presently I prefer to put our efforts in Quebec, Ontario, and all the places where we can get long-term contracts, and New York, it's still interesting, than in Texas, and start something.

I'll get back to you. Thank you.

Thank you.

Thank you. We will now take our next question. Please stand by. And the next question comes from the line of David from Raymond James. Please go ahead. Your line is open.

Thanks. Morning, everyone. Maybe first question here, just going back to France. I know that it's kind of been a long running source of speculation when things could get sped up from a permitting perspective. Have you seen any progress on that? And I guess maybe on a related note, do you think that the number of new projects coming online in France is sufficiently slow that it's creating a shortfall? And does that cause you to expect pricing to continue to trend higher there?

Yeah, I think there is a... Thank you, David. There is a clear... mindset from the government, there is a low of acceleration and we see some changes locally because as I mentioned many times in the past, it's good to have a framework from the government. It's important to have something locally because the administration who is permitting the project is local. So we see some changes there. But when I'm looking to the fact that there would be two tenders for 925 megawatts in September and one in December just for wind, and another neutral tender for wind and solar in October, it's probably a little bit too much for the number of authorizations available in France. Good news also, the last tender we will be able to give you the exact figures, but it was oversubscribed, but over-allocated too. So the power expected by the government, they award more contracts than they asked at the beginning. So again, it's showing that the system needs more electricity in France. And so I think there is an interesting equilibrium there between the fact that there's a lot of demand, there will be more authorization, and this will certainly create more value from our organic pipeline in France.

Okay, excellent. Thanks for that, Patrick. That's great, Keller. And then maybe just one more for me. I'm just curious if you have any thoughts or a view on negotiations around the Renewable Energy Directive in Europe. I understand there's You know, some of those discussions are playing out now.

Could you be more precise on what you're referring to?

Yeah. But the general point on European, you know, framework is, you know, There is no country, no electric system in Europe who is oversupplied in the next years. And there is a backlog of permitting in every country that has to be settled and accelerate. So I think, again, that's too good news for us. Other competition from nuclear would be in 12 years, 15 years. I don't know. There is no... So there is a lot of opportunity coming from this. And when you see, for example, the... The big tender in Germany when the big oil and gas company are betting to put 12 to 13 billion on the table just to be authorized to produce offshore. They're not doing that for no return. They're doing that to make money. So their expectations is high price for the long term in Europe. So I think that's good news.

Appreciate the call. Thanks. I'll turn it over.

Thank you.

Thank you. We'll now take our next question. Please stand by. Our next question comes from the line of Mark Jarvie from CIBC. Please go ahead. Your line is open.

Thanks. Good morning, everyone. Bruno, you mentioned earlier you do have other options for funding beyond retain cash and leverage, including partnerships and sell-downs. How would you say valuations compare between a partial stake sale, like you did last year in France, versus outright sale portfolio assets? Is there a meaningful difference in valuations on those types of transactions right now?

You mean between a minority position and control or full?

Yeah, exactly. Yep.

Well, as you know, we tend to concentrate a little bit more on partnerships, so selling minority positions. But if I look at the valuation we got in France, it was certainly well-valued, even though it was a minority position. So I think there are some types of partners that value what we can bring as an operator, as a manager of the asset. and therefore they're willing to pay a fairly sizable minority position valuation. In general, when we look as a buyer, as potential M&A transactions, we see valuations tend to be slowly reducing. as a potential buyer. So I think we'll continue to apply our discipline approach to see if it's a better time for us to buy or to sell. But again, on the sell-down, if we are interested in selling down partnerships, then we'll wait for the right time and the right assets for us to to enter into a partnership. And those have to be at the right valuation. So we won't do it if it's not the right valuation. And on the buy side, it potentially offers a bit more opportunities today than it did a year ago.

So you're not giving anything up by selling down a minority stake? Like you can still get a comparable multiple or maybe even a slight premium depending on the buyer's perspective?

That's what we would look to do.

Got it. Okay.

And then I think previously you had mentioned... We believe that's what we did in France. We believe that's what we did in France.

Yep, certainly. And then I think previously you'd mentioned or we saw with the Danege projects a bilateral negotiation plus through the RFP. Do you have a sort of updated view in terms of the most likely path to get new contracts in Quebec going forward? And I guess for certain projects, can you do both paths at the same time? Can you try to do bilateral at the same time, bid those projects in the RFP to sort of hedge your bet in terms of those two pathways to getting the contracts.

We're all smiling here because it's a very interesting question, but it's a very strategic question. So like in every market, Marc, we are working on the different opportunity to have a diversified portfolio of the way of... commercializing our energy. So it could be, you know, we did indeed, let's say, 1.4 gigawatts of bilateral in Quebec. So probably in the future, there will be opportunity. There will certainly be tender. There was one in September. You know, it seems that another one would be announced by the end of the year for next year. But we are always looking to all the opportunity and it depends on the customers and the government.

There's nothing that prohibits you from trying to negotiate while at the same time putting a project into an RFP?

Not to my knowledge, no.

Okay. And then what's your updated views in terms of the price caps in France? We saw the European Union look to stop those, but what's your expectation in France in terms of how long the price cap stays and whether or not they would renew it for 2024? Yeah, there is a...

The European Union seems to be clear. Germany, as to my knowledge, extends a little bit to the end of the next winter because the winter is the more important part and they are still thinking that the winter could be at risk. We will see what the French government is discussing. To my knowledge, there is no discussion today, but you never know in the finance law what could happen. We are not doing our budget on this base because we think it's the way to be disciplined, but we will see what happens.

Okay. Thanks, Patrick. Thanks, Bruno.

Thank you. We will now take our next question. Please stand by. Your next question comes from the line of Ben Pham from BMO. Please go ahead. Your line is open.

Hey, good morning. On your expected returns, can you remind us what those are? Is that at 8% to 10%?

Yeah. In terms of our expected returns, we've certainly seen a creep up in the market into cost of equity, and we have adjusted accordingly. Our returns, so I say that we are at the higher end of our bracket, so we're around 10%-ish on our cost of equity today. And that's what we model when we look at projects. That's what we authorize in terms of projects. So we believe this adjustment is fair given the adjustment we've seen in the markets. The projects that are going at the moment are meeting those guidelines. And just as a side note, our projects in construction are seeing very little variance from their budgets. So it's important to note that as well.

And you're, I mean, it's good to hear. Can you maybe touch on, you mentioned your returns have been somewhat protected. Is that more a function of you locking in EPC contractors ahead of inflation kicking in the last few years?

Yeah, there is many, many ways. The first is roughly we are deploying 1.1 billion presently in all the construction that we have. And the cost overrun is 11 million. So it's one person. So it's very, you know, in a context where everything is going up. So it answers your question. The second point is on many projects, on the return part, we have been able to adapt through the the example of the 18 months in France, the example of the new tender. I mentioned the tender where the price is no 85. The average price of the last tender in France is 85.3 euro megawatt hour, but it's indexed. Also, this price is indexed between the award and I think the CODE. So we are, as I mentioned also, we're discussing where we have not started in New York because we don't have the indexation yet. So you need to work on different plan. Lime kiln, if you remember, we didn't go for the first project. We wait to have the extension authorized. So we are all the time working on different plans to optimize. And we also increase the size of the turbine in Lime kiln. We do that also in Apuit. So All this was the budget which is protected because we have signed at the right time with a good contract. On the other side, we have improved our return from the time we took the decision. So it goes north of the expectations of today for Boralexo. Said another way, if we have to take the decision today with all the figures we have today, with today's expected return, we would say yes again for all the projects that are under construction.

Okay. And on the storage projects you added in Ontario, the 380 megawatts, could you comment on potential CapEx for those projects? And then is a timing simulator peers at 2025 in service? Yeah, we will be in service in 2025.

We are, say, running because there is... The contract ends in 2047 and all the time we gained before 2025, we will get the same price so we can have a longer contract at the end. There is some bonus system in it and we're working with different suppliers and hopefully come to a final investment decision or at least a decision to freeze the price of the equipment by before the end of this year. So we are, that's why when Nelson asked his question, I said, okay, we concentrate really on some project to be sure that we deliver this project in term of execution. And that's typically what we do with these Ontarian projects. And the news on the price are, on the green side for us presently, so we continue to discuss with suppliers. There is lots of interest from suppliers, there is good competition, and there is good industrialized country suppliers who are providing good offers.

Okay, so we'll get a CapEx figure upon FID.

Yeah, I will come back when everything will be settled with the suppliers and be more open on that, probably. Okay.

Okay. And maybe just one last thing. Maybe a little bit early on this process, but some of your peers that are storage on the tax credits that they're planning to benefit from, they're planning to include that in EBITDA and free cash flow in the first year. Can you comment, are you planning to do something similar with those tax credits?

Ben, we're not there yet. We'll see when we get more details on the ITC from the government. Thank you. All right, thank you.

Thank you. We will now take our next question. Please stand by. Our next question comes from the line of Andrew Kerska from Credit Suisse. Please go ahead. Your line is open.

Thanks. Good morning. There's some commentary in the MD&A on your sales teams trying to tap into a wider customer base. Maybe if you could just give us some color on the positioning that they take with the corporate community to try to attract PPAs and just how they're distinct and the Boralex position is distinct from, say, some of your competitors.

Essentially, we are, you know, we have the assets. So first of all, there is not so much assets available without contract ready to sell electricity in France. The second point is, as Bruno mentioned, we have the Ecovadis, first a silver middle and now two gold middle. which is important because it's well-renowned in France. And we started that after we signed a contract in 2019 with Orange. And so Orange is a big known company. And so we have an internal team that somewhere we started in 2017. The first guy in this team was 2017 when I was in France. And And so in this team, we have people who are chasing for corporate PPA, modeling all the price of electricity for the next months and working on the tender when we make a bid on an RFP from the government. And finally, who are negotiating all the utility PPA for the 18 months before starting contract or selling electricity or the early termination. In the same team, we have the intelligence to understand really what are our options. So I think on the pricing, this is good. And on the branding, we have also just hired somebody to improve our branding. She would work in public affair and marketing, specifically based in France, with a lot of experience doing that. So I think it's also a way to differentiate ourselves and Like every supplier, we have to listen to the needs of our customers. We just signed a contract for a customer who was asking for many projects and we say okay we have one wind project another wind project and a solar project and they say okay we buy when they would be finally authorized we would buy all the electricity for 20 years from these three projects so we we had a very interesting negotiation with this customer we will disclose a little bit more in the fall about that i appreciate that color as it relates to france where you've built up you know a very good business and a very good niche

How did the same concept apply and translate into the U.S., where it's just a much bigger market and a bigger market opportunity?

Yeah, in our development, we don't need that presently in terms of cooperation in New York, because we're still relying on the CFD. Yes, we will have and we hire CFDs. a person to work more on selling on the market to be sure that we have the right price for the merchant exposure you know when i say merchant is a part of the project and covered by the cfd contract on the other side so so it's not merchant as a whole but you have to sell the electricity on the market so we are developing this that's exactly how we started in france and then if we go another and we're developing in Illinois and Pennsylvania. If there is some interest to sign with a corporation, my understanding is there would be RFP from the state, but if there is any need, we would follow the same path. That's exactly what we're doing in the UK also presently. So we need to have many options on the table. And all the teams, French, UK, and US teams are working together to

share this intelligence and this the way of working and sometimes the algorithm also appreciate that and then just finally you repatriated a service contract um in a quarter and you've historically had a pretty balanced approach of using oems or third parties and then doing some work yourselves what motivated the decision on the 200 megs of solar to repatriate that in-house yeah the the

Since the beginning, we're doing that to reduce the margin of the suppliers in the OEM. In this case, and specifically in the solar business in the US, there was not only one margin, there was at least two because there was in the supply chain of the service, there was two parties. So when we take over this kind of project, we're reducing cost definitely. And also we will hopefully, and this is the target, we will improve the availability of the project because when you have too much suppliers, sometimes it's difficult. Typically for inverters, they're not building the right spare parts inventories, and we can do that easily. And that's what we have done in wind and in solar in France. So we will do that in the U.S. And I'm confident that this will reduce the cost and improve the availability of the assets.

Okay. Thank you very much.

Thank you.

Thank you. We will now take our next question. Please stand by. Our next question comes from the line of Najee Beydoun from IA Capital Markets. Your line is open. Please go ahead.

Hi, good morning. I just want to start in the US and get your thoughts on key learnings and some of the markets that you're focusing on, whether it be New York or other jurisdictions in the past couple of years. Any thoughts about maybe a path that you see to accelerating development in some of those markets?

But our approach is always the same. We look at the supply and demand on the market where we are developing. In the state of New York, I am very happy of the decision we took four or five years ago to go there because it's the right decision. The state, the city, they all confirmed that they want to go for transport. net zero when they are, which is not far away, which is 2040. So this means a lot of power, a lot of demand for our product. So in between, there is some difficulties, but that's our job to manage them. That's the reason why we have decided to start developing in Illinois and Pennsylvania. When you look to this market, There is a lack of supply in some years, so there would be demand for our product, and that's the way we're doing that. And the last point, which is very important, is the ability to find a reasonably long-term contract, because it's important for us to be contracted to sell our electricity.

And maybe just on France, I know it's been delayed a bit, but any expectations or updated views on the PPA that we're waiting for? The use of? The PPA? The new multi-annual?

Yeah, there is lots of demand on PPAs in France because, you know, And there is many reasons. The first reason is the price of electricity of the last winter and the last summer really hit many corporations. And the people also start to be affected because the government has stopped the tariff shield. So people, the consciousness of the fact that The system needs more electricity is there. The second point is they want more renewable and the fact that any renewable producing in France will somewhere in France or elsewhere in Europe reduce fossil fuel emission, burning fossil fuel. And so there is a lot of demand for cooperation and many people who are themselves selling to the end customers. That's clear. We have renewed some contract with a very attractive price that we signed three years ago. We have renewed the contract. It was a very interesting price for us. Nobody wants to say, okay, I was buying green electricity for the last three, four, five years, and now I'm going back to buying the electricity on the market with a part of fossil fuel or nuclear electricity. No one wants to do that. So when you have signed something, the probability to renew with the customers is very high if you have done a good job, and that's what our team is doing.

And what about the multi-annual energy plan? We've been waiting for an update on that for a little bit. And any thoughts or your expectations on what might change versus the last view that was presented?

You mean in France, huh?

Yes, correct.

Yeah, yeah. It's underway. There is a consultation for sure. There is, you know, the French government, it's good news, do not oppose the fact that to restart building nuclear plants and at the same time building renewable because they will need both. And so I think it's always a time of explanation also, so it's important in terms of social acceptability of the project. So I'm very confident that, again, it will improve the value of our pipeline of projects in the next years.

Thank you.

Thank you. There are no further questions. Speakers, please continue.

There are no further questions, you mean?

There are no further questions at this time.

Thank you. Well, thanks, everyone. And I hope that this call helped everyone understand, I think, the strength of our model and the fact that being an integrated player is paying off. and the discipline we've been showing again. So you should continue to expect that from us. So if you have any additional questions, please call me at 514-213-1045. I will make sure to quickly answer your questions. We'll announce third quarter, as usual, in upcoming November. We'll provide the date later, about a month before the call. So have a nice day, everyone, and good vacation for those who, like me, have not yet had this opportunity. So we'll talk again soon. Thanks a lot. Thank you. Thank you.

Thank you. That concludes today's conference call. Thank you for participating. You may now disconnect. Speakers, please stand by.