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Operator
To raise your hand during Q&A, you can dial star 1 1.
Pauline
Ladies and gentlemen, thank you for standing by. Welcome to this Northland Power Conference call to discuss the 2022 third quarter results. During the presentation, all participants will be in a listen-only mode. Afterwards, we will conduct a question and answer session. At that time, if you have a question, please press star 1-1 on your telephone. As a reminder, this conference is being recorded Thursday, November 10, 2022 at 10 a.m. Conducting this call for Northland Power are Mike Crawley, President and Chief Executive Officer, Pauline Alamchandani, Chief Financial Officer, and Nwasim Khalil, Senior Director of Investor Relations and Strategy. Before we begin, Northland's management has asked me to remind listeners that all figures presented are in Canadian dollars and to caution that certain information presented and responses to questions may contain forward-looking statements. that include assumptions and are subject to various risks. Actual results may differ materially from management's expected or forecasted results. Please read the forward-looking statements section in yesterday's news release announcing Northland Power's results and be guided by its contents in making investment decisions or recommendations. The release is available at www.northlandpower.com. I will now turn the call over to Mike Crawley, Please go ahead.
Mike Crawley
Thank you, Josh, and good morning, everyone. Thanks for joining us today. Also joining us on the call is David Pavel, Executive Vice President of Development, to answer any of your questions on our development activities. This morning we will review our financial and operating results for the third quarter of 2022. Following our prepared remarks, we're going to take questions from analysts and look forward to addressing your questions. To kick things off, as we always do, I want to reiterate that the health and safety of our employees and stakeholders always comes first. Our rigorous adherence to our health and safety protocols ensures the safety of our employees while also allowing us to maintain high levels of availability at our facilities. We continued our strong performance in the third quarter, delivering solid operating and financial results supported by high power prices in Europe that benefited our offshore wind facilities in the North Sea strength across the rest of our portfolio as well. Looking at the headline numbers in the quarter, we delivered adjusted EBITDA of $290 million, which was an increase of 38% or $79 million compared to the same period last year. Similarly, for adjusted free cash flow per share and free cash flow per share, we achieved $0.28 and $0.19 respectively in the quarter compared to $0.15 and $0.05 in the same period a year ago. Our financial and operating performance in the quarter continues the strong pattern of performance we've delivered thus far in 2022. And as noted in our press release yesterday, we are reaffirming our full year 2022 financial guidance, which we've previously updated and moved up in August, along with our second quarter results at the time. A key driver behind this has been our strong operational performance, not only in the quarter, but year to date, and the strength in European power prices during the quarter. We've utilized the higher power prices and the resulting higher realized cash flow across our portfolio to reinvest this cash flow in the development of additional renewable energy capacity and to proactively deleverage some of our assets to enhance the long-term cash flow and economic returns of those facilities. In aggregate, we refinance over $3 billion Canadian dollars of project debt at our Gemini and Spain facilities, using the higher cash flows generated in 2022. These actions will ensure the performance of these assets remain resilient going into the next several years. While power prices in Europe have retreated somewhat in the near term, the emphasis on long-term energy security and the need to accelerate the move from reliance on fossil fuels towards renewable energy sources remains unchanged. As a global leader in renewable energy development with a significant operational and development footprint in Europe, Northland remains ready to contribute to the growth in renewable energy and energy security for the continent. And indeed, we're doing that with our North Sea cluster, Scott Wind, Baltic Power, and other projects that we have under development in Europe. Turning to our development activities, at our high long project in Taiwan, we continue to progress the project closer to the start of construction. We executed substantially all of the key contracts for suppliers for various elements of the project, including turbines, foundations, cable arrays, and both onshore and offshore substations. The project also signed supply agreement for the Siemens 14 megawatt turbine that it will be using, along with a 15-year service contract covering offshore wind logistics and operations and maintenance. Following the signing of the corporate PPA for Heilong 2B, and three in July, efforts have focused on securing non-recourse project level debt finance, which has garnered strong lender interest from various global and local financial institutions. While the project continues to progress, delays in finalizing that corporate PPA and longer than expected negotiations related to the supply contracts pushed back the launch of project finance and slowed its initial progress. The project finance, however, is now progressing well, and we expect financial close to occur, though, in 2023 rather than in 2022. The delay in financial close is not expected to impact commercial operations for the project. In Poland, our 1,200-megawatt Baltic Power Offshore Wind project has also been making significant progress in securing key elements within its supply chain. The project signed several preferred supplier agreements for wind turbines, export cables, and the offshore and onshore substations. The project will utilize 76 turbines, each with a capacity of 15 megawatts to be supplied by Vestas. These turbines are currently the largest turbines available on the market. The project continues to work on securing the remaining key elements and service contracts for the wind facility. At the North Sea cluster, North Sea Two, one of the projects within the cluster, was also preselected for funding by the EU Innovation Fund and was awarded a grant of 95 million euros. The grant was awarded to projects driving technological advancements as part of their development. This grant will be used at North Sea Two to demonstrate the technical and commercial feasibility of producing hydrogen at sea. Now, shifting gears to our construction activities, our two onshore wind projects in New York State, Ball Hill and Bluestone, which are currently in construction, have experienced delays that impact their construction timelines. At Bluestone, all turbines have been delivered, all foundations are complete, and turbine installations, which are well advanced, continued through the quarter and are expected to be completed by the end of the year. However, interconnection and final commissioning are now expected to follow in early 2023. At Ball Hill, supply chain issues have resulted in a delay of turbine deliveries, and as a result, commercial operations is now expected to occur in 2023. All the turbines, however, have been delivered to port. We also finalized a tax equity commitment for the two projects, the first ever for Northland as part of the long-term funding plan for the projects. We continue to be active in New York state, having assembled a strong team on the ground to grow our development ambitions in the United States and in particular in that state. Turning to operations, we are particularly proud of our German operations team in leading a very successful bearings replacement campaign at North Sea One. The team was able to replace all 54 turbines, main bearing assemblies on all 54 turbines on budget and ahead of schedule, thus maximizing the potential for revenue generation in the fourth quarter of 2022. The costs for the campaign were fully covered by the warranty bond settlement proceeds received in 2020 relating to the warranty obligations of North Sea One's turbine manufacturer. To conclude, despite the global uncertainty and macroeconomic pressures we are facing, we continue to deliver strong operating and financial results and continue to execute on our strategic plan with our key projects achieving milestones as we move the projects closer to their financial close. Northland plays a key role in helping our markets around the world achieve energy security and our development teams are working hard to identify additional opportunities in our current markets to help accelerate the build out of renewable energy projects and capacity overall and help Northland scale up. With that, I will now turn the call over to Pauline for a more detailed review of our financial results.
Josh
Thank you, Mike, and good morning, everyone. Last night, Northland Power released operating and financial results for the third quarter of 2022. Our financial performance in the quarter was solid, where we generated healthy results for adjusted EBITDA, adjusted free cash flow, and free cash flow. These results were supported by strong performance across our operating portfolio and higher market prices in Europe, which benefited our offshore wind facilities as well as our onshore facilities in Spain. Looking at our financial results in the quarter, we generated adjusted EBITDA of approximately $290 million, representing an increase of 38% or $79 million compared to the same period last year. The key factors that contributed to the higher EBITDA year over year included a $72 million increase in operating results at our offshore wind facilities in the North Sea, primarily due to higher realized market prices and a stronger wind resource compared to one year ago. A $9 million increase in operating results, primarily due to rate escalations at EBSA and higher wind resource at the Canadian renewable facilities, and a $6 million increase in contribution from the Spanish renewables portfolio as a result of a full quarter of contribution compared to a partial quarter in 2021. This strength was slightly tempered by a $17 million decrease in operating results due to the loss in contribution from the expiry of the PPA and subsequent sale of the Iroquois Falls Natural Gas Facility in April of 2022. With respect to our free cash flow and adjusted free cash flow, Northland generated approximately $44 million and $66 million in the quarter respectively. This compares to $11 million and $35 million in the same period a year ago. As a reminder, our definition of adjusted free cash flow excludes early-stage growth-related expenditures as we believe this provides a better representation of our long-term run rate for free cash flow before investment decisions. The significant contributors to higher cash flow in the quarter resulted were a $79 million increase in overall contributions across all facilities leading to a higher adjusted EBITDA and a $10 million increase primarily from the net proceeds of the EBSA refinancing and these increases were primarily offset by a $27 million increase in current taxes primarily at our offshore wind facilities resulting from better operating performance. Cash flows were also reduced by higher debt repayments in the quarter associated with the restructuring of our Gemini and Spanish portfolio debt facilities. The incremental debt payments amounted to $41 million in the quarter and were funded from cash flow generated as a result of higher realized power prices. On a per share basis, these figures translated into free cash flow of 19 cents and adjusted free cash flow of 28 cents in the quarter compared to free cash flow of 5 cents and adjusted free cash flow of 15 cents the same time last year. With respect to our balance sheet, Northland remains in a strong position with ample liquidity to fund our current projects. As at November 9th, we had access to approximately $1.2 billion of cash and liquidity comprising $700 million of liquidity available in a revolving facility and $5 million of corporate cash on hand to help us pursue our growth initiatives. We continue to prudently manage our balance sheet, taking proactive actions to further enhance our cash flow, bolster our corporate liquidity, and ensure that Northland remains in a good position to weather the impacts from economic uncertainty. As noted previously, Northland uses additional sources of liquidity to fund growth and capital investments, including proceeds from our ATM program. In early September, we renewed the program, which allows us to issue up to $750 million of common shares at the company's discretion. Since instituting the program in early March of this year, we have generated over $700 million of additional liquidity at an average price of $42.11 to fund projects that are expected to achieve financial close in 2023. As Mike alluded to earlier and subsequent to quarter end, we proactively restructured $3.1 billion of debt, including our Gemini offshore wind facility and our Spanish onshore portfolio. The restructuring will optimize the debt profile for each facility, resulting in compression of loan margins, enhanced cash flow profiles in the coming years, and improvements in the economic values for the two assets. As a result of the restructuring, both facilities incurred higher debt repayments in 2022 with an $82 million increase payment at the Spanish portfolio, while in Gemini the debt repayment will reduce our adjusted free cash flow by $68 million at Northland's share. In both instances, the repayments were fully made from higher cash flow generated as a result of the higher market prices realized in the year and will not impact Northland's available liquidity. We pursued these financings on accretive terms to Northland also de-leveraging and de-risking our future cash flow profile on the two assets. Both restructurings are also considered green financings in accordance with Northland's green financing framework. Full details on each facility restructuring is available in our third quarter press release and within the MD&A in our financial report, both of which can be accessed on our website. We also successfully finalized our first-ever tax equity financing for Northland, securing an equity commitment with a leading U.S. financial institution for the 108-megawatt Ball Hill and 112-megawatt Bluestone onshore wind projects in New York State. The commitment will provide tax equity investment of up to U.S. $190 million, or approximately $250 million Canadian, to assist with funding the projects. Following the conclusion of the tax equity investment at commercial operations, the long-term structure of the projects will be comprised of tax equity, levered non-recourse debt, and equity to fund approximately Canadian $600 million of capital costs for the projects. Turning to our 2022 financial guidance, as noted in our press release, with the strong operating and financial performance in the quarter and year to date, we are reaffirming our financial guidance for 2022. For adjusted EBITDA, we expect to generate between $1.25 billion and $1.35 billion this year. For free cash flow per share, we expect the range to be $1.40 to $1.60, while for adjusted free cash flow, we expect to generate $1.85 to $2.05 per share. These ranges include the higher debt repayments mentioned earlier relating to the restructuring of the Gemini and Spain portfolio debt. The revised ranges factor in the potential impacts from the implementation of price caps on wholesale electricity prices in Europe. The price caps are being implemented in response to the surge in wholesale electricity markets. The EU Council established the cap on market revenues of 180 euros per megawatt hour affected December 1st, 2022 through to at least June 30th of 2023. Each member state within the EU has an obligation to implement the cap and the flexibility to adapt the EU structure based on the structure of their individual markets. Depending on how each EU state member finalizes its implementation mechanism, there is potential for impact to Northland's financial results. Our 2022 financial guidance has been reaffirmed and includes management's interpretations of the current proposed legislative and regulatory changes, even though they are subject to change and have not yet been finalized or enacted into law. In conclusion, we delivered strong results in the quarter through the first nine months of the year. This performance has allowed us to maintain our financial guidance for 2022 despite all the puts and takes. We continue to proactively manage our balance sheet, implementing various initiatives to increase our financial flexibility, enhance future cash flows, and ensure that we remain in good financial shape despite economic uncertainties in the global markets. I will now turn the call back over to Mike for his concluding remarks.
Mike Crawley
Thank you, Pauline. As Pauline walked you through, we had a very good quarter and a strong first nine months of the year in 2022. We look forward to finishing off the year strong with projects nearing key milestones over the coming months, and we're very excited about the continued growth of Northland. Longer term, our teams continue to actively source new growth opportunities to help accelerate the build out of renewable energy capacity and further grow our global position as a leading renewable energy producer. This concludes our prepared remarks. We'd now be happy to take your questions. Josh, please open the line for questions.
Pauline
Thank you. Ladies and gentlemen, if you would like to register a question, please press star 1-1 on your telephone. If you are using a speakerphone, please lift your handset before entering your request. One moment, please, for the first question. Our first question comes from Rupert Mayer with National Bank. You may proceed.
Rupert Mayer
Hi. Good morning, everyone. Hi, Rupert. You discussed your liquidity position in the prepared remarks. Is this enough to fund your equity needs for construction next year, including Heilong and Baltic, if we don't see sell-downs? And would you still consider doing sell-downs?
Mike Crawley
It is enough to fund all of the capital requirements for high long with or without sell downs in terms of our current liquidity position. And we haven't yet kind of talked to the market about what our funding plan is for Baltic Power beyond that.
Rupert Mayer
Okay, great. How much equity do you anticipate you will need going forward for high long then?
Josh
I don't think we've stated an exact amount. I think, as Mike noted, I think what he stated was that we have the equity we need for Heilong under various different scenarios.
Rupert Mayer
Okay. And what can you say about potential for sell-downs? Is everything still on the table, and are you seeing any evolution in the market demand for investment into development assets?
Josh
I think the demand is stronger than ever. I think we're seeing very solid demand for the assets in our portfolio, both early-stage assets and assets that are approaching financial close. So we're very encouraged by the demand that we're seeing and the conversations that we're having globally in our various markets. And I think in our public disclosures, we did say that we're still working towards achieving this sell-down. to bolster liquidity and monetize the value. Timing is, in this type of market, timing is tougher to pin down, but we're still aiming towards 2022, 2023. All right. Excellent. I'll leave it there.
Rupert Mayer
Thank you very much.
Josh
Thank you.
Pauline
Thank you. One moment for questions. Our next question comes from Sean Stewart with TD Securities. You may proceed.
Sean Stewart
Thank you. Good morning. Question for Pauline with respect to the price cap in Europe. You mentioned the potential to impact results and this being factored into the guidance. I'm just trying to understand, does that envision any potential clawback in the Netherlands or in Spain for revenues you would have collected so far this year?
Josh
Yeah. So the one thing I will caveat is that the situation is changing daily. Every day we get a piece of new information that results in a slightly different calculation of what the outcomes may be. And at this point, it's maybe because we're interpreting what hasn't yet been proposed or finalized. So I think at this time, based on the scenarios that we've run, we have reaffirmed guidance. based on the knowledge that we have.
Mike Crawley
Most reasonable assessment of all of the information that's available in the market at this point.
Sean Stewart
Okay. So are there, can you say if there's a clawback envisioned in that or not?
Josh
I think we'd prefer not to say. I think, you know, whether it's a clawback or a change in, you know, how we can get access to market prices. I mean, there's a whole, there's a bunch of different scenarios where that would impact your financial results. So I think all we're saying is we've contemplated various different scenarios and reaffirmed our guidance.
Sean Stewart
Okay. Thanks for that. There's mention in the MD&A around a realignment of the business units, and it sounds like there's more to come on that. Mike, can you give us any sense of what you're thinking with respect to that and how this restructuring of segments might look?
Mike Crawley
Yeah, I would describe it more as evolutionary than revolutionary in terms of how we're reorganizing the business. It's a bit of a continuing evolution over the last four or five years as the company has grown globally and has grown in different asset classes to organize ourselves in a way to both operate and develop more efficiently. So more to come in the new year, but simply spoken, it's looking at... reorganizing some teams more along the lines of asset classes or into asset types or types of generation so that they can work more closely together and collaborate more closely together to even better developer projects and even better operator projects as well and get more end-to-end, better end-to-end accountability as well. Okay. Thanks for that.
Sean Stewart
I will get back in the queue.
Pauline
Thank you. One moment for questions. Our next question comes from Nelson Nguyen with RBC Capital Partners. Markets, you may proceed.
Nelson Nguyen
Great, thanks. Just a quick question on Heilong. So you mentioned that it's being delayed to 2023. Are you talking about just like a few months delay going into Q1 or something potentially longer in terms of the delay?
Mike Crawley
I think what we're indicating is that there's a delay, and if you look back to halfway through the year, I think there was a lot of anticipation around the corporate offtake, and it did take longer to negotiate, so that added a bit of time before we could actually launch the financing. What I can say clearly now is that the financing is moving along well, lots of interest. from international and local banks. But all we can say at this point is we expect it to move into 2022 rather than being finished at the end of 2022. Okay, thanks.
Nelson Nguyen
And then you mentioned that you've pretty much signed the majority of equipment contracts and supplies. So are the equipment contracts in euros or... U.S. dollars? I know currency has moved a lot over the past year, and there's a lot of moving parts, so I'm not sure if a stronger or weaker euro or U.S. dollar helps or hurts the economics in any way.
Mike Crawley
Supply contracts are in multiple currencies, so there's not a pronounced impact one way or another with movement in one currency and weakening in another currency because they are spread out across multiple currencies. Okay, got it.
Josh
Typically also when contracts are executed, hedges are put on at the same time as well.
Nelson Nguyen
Yep. Okay, got it. So no hedges, nothing's kind of locked in today, but on financial close, everything will be locked in in terms of effects and interest rates.
Josh
So to be clear, I think there's two components. One is the FX on the cost side, which we know once we sign into contracts, we would look to enter into hedges simultaneously. The other piece is working on the financing right now. Obviously, as we get closer to securing finance commitments is when we can put on the hedges in place.
Nelson Nguyen
Okay, got it. And then just moving to a Nord C2, can you give a bit more color on the hydrogen project or are you essentially adding a, are you getting paid to add a electrolyzer and can you just give us a bit more details in terms of what you're looking at there?
Mike Crawley
Yeah, it's, it's to, to add an electrolyzer, to produce hydrogen offshore, uh, to offset fuels that are used for vessels and, uh, and for backup generation at the turbine locations. So it's taking a zero carbon form of generation that some ancillaries use the carbon-based fuels to decarbonize it even further. Okay.
Nelson Nguyen
And then just sticking on the hydrogen topic, I know the Canadian government has a tax credit for hydrogen and the Canadian government has talked about exporting hydrogen, I guess, longer term. Are you exploring hydrogen opportunities in Canada and particularly the East Coast in terms of looking at opportunities there for hydrogen development and export?
Mike Crawley
Yeah, I think there have been news reports about some of our development activities and activities along the east coast of Canada, looking at different opportunities out there, both in Newfoundland and Nova Scotia, and it's an area where we would have interest.
Nelson Nguyen
Okay, great. And just finally, in terms of the investment tax credit more generally for Canada, are you shifting or adding additional bodies into Canada in terms of focusing on developments, whether it's in Quebec or Ontario? or other regions? Has that shifted your focus in terms of geographies?
Mike Crawley
We see lots of opportunity in Canada. It's our domestic market. It's denominated cash flows. We have a lot of developers and people with expertise in in the markets, but also in creating and developing assets in those markets, whether it's in Western Canada, Eastern Canada, Ontario, or Quebec. So yeah, we're watching it closely. There's three interesting things that are going on. In a number of provinces, regulators and system operators are recognizing the need for capacity and are moving forward with procurements and different initiatives to secure more capacity. Secondly, as you pointed out, there's some interest at this point, and I don't want to overstate it, but interest at this point in Europe to import green hydrates or green ammonia from Atlantic Canada, from renewable energy facilities to be constructed in Atlantic Canada going forward. So that's of interest. And then the investment tax credit announcement, which we received, which we think was very positive, which I guess will be confirmed in the spring budget. It's helps facilitate both of those activities, right? And it puts Canada on a competitive footing globally, particularly in relation to the Inflation Reduction Act measures in the U.S. Great. Thanks, Zach. I'll leave it there.
Pauline
Thank you. One moment for questions. Our next question comes from Mark Jarvie with CIBC. You may proceed.
Mark Jarvie
Thanks. Good morning, everyone. Moving back to Heilong with a number of the contracts signed, including turbines and the balance of plant, how have costs come in relative to the $7 billion to $8 billion number you guys outlined at Investor Day? We're still in that range. Correct. And then Taiwan had an RFP for more procurement there. Is that something you guys are actively participating in, just sort of the appetite for more development in that market right now?
Mike Crawley
Yes. So I think you would expect that – I think we've already indicated that we have other projects under development in Taiwan, and there were bids submitted a couple of months ago, three months ago, and I think you – You should not be surprised if we were one of the bidders in that process.
Mark Jarvie
And then, you guys are obviously not going into a ton of detail on the sell-down, but just conceptually, would the sell-down be only tied to the high-loan projects or the development assets as well could be packaged into a potential sell-down? Or would those be completely separate processes for any partnerships or sell-downs? Yeah, I wouldn't get into that kind of detail right now. Okay, we'll leave it there. Thanks, Mike.
Pauline
Thank you. One moment for questions. Our next question comes from David Quezada with Raymond James. You may proceed.
David Quezada
Thanks. Morning, everyone. Maybe just a question for me on what you're seeing in the supply chain currently. It sounds like you're clearly out there arranging a lot of agreements for supply elements. Just wondering what you've seen over the past few months in terms of how things have developed there.
Mike Crawley
Yeah, good question. I mean, to be candid, David, I think what we saw last kind of spring was a lot of movement, a lot of dynamism in the supply chain for a number of reasons. I think over the last few months, we're seeing things kind of settle down a bit. but we're very focused on, you know, scarcity, scarcity of certain capacity for certain fabrication facilities, scarcity on vessels, so we're really trying to be proactive and make sure that we get ahead of things, particularly on some of our larger offshore wind projects, which I highlighted with respect to what we're doing on Baltic Power on the call today.
David Quezada
Excellent. Thanks for that. And maybe just one more for me. Just curious with your kind of earlier stage development projects in Korea and Japan, what kind of milestones do you think you could see there maybe over 2023?
Mike Crawley
I would say in both cases, continued development activities. I wouldn't get into a lot more detail than that. I think we've had some good progress in Korea in securing electricity business licenses, which is essentially site exclusivity, which allows you to move into exploring and negotiating interconnection and advancing your environmental permitting. So we expect to see that continue to move forward, both on the existing sites where we have EBLs moving forward with those activities and on other sites we would hope to be able to secure additional EBLs. We'll see what 2023 will brings forward, but we've got a very good team on the ground there.
David Quezada
Excellent. Thanks for that. I'll turn it over.
Pauline
Thank you. Ladies and gentlemen, as a reminder, to register for a question, press the star 1 1. Our next question comes from Justin Strong with Scotiabank. You may proceed.
Justin Strong
Good morning, guys. Just a quick one from me. Just wondering if you could speak to kind of the market conditions that contributed to the delay in Heilong's financing and just a little bit of color on kind of more color on where you're currently at there and kind of associated the macro environment that you're looking at and whether it's improving. Okay.
Mike Crawley
Yeah, I mean, there were a few factors, right? So negotiating the CPPA, which is the first CPPA that Northland's ever negotiated, and it's a 744 megawatt corporate offtake, which I think is among the largest we've seen, if not the second largest, I think, in the world that's been negotiated so far. yeah, I think it took a bit longer than we anticipated to work it out and to work it out on terms that were both acceptable to our off-taker and acceptable to us. So we took the time to do that right and to be careful and thoughtful about how we negotiated such a large, important contract. So that took a few more months than we'd expected. And you can imagine you can't really launch financing until you have all of your revenue contracts in place. So that was Probably the major delay. I'd say on the negotiation of some of the contracts, I referred in the last question that, again, to be candid, that last spring there was kind of a fair amount of kind of movement among certain suppliers as they reacted to kind of more macroeconomic conditions globally. That did settle down, but it did take us some time to just get all of those contracts finalized longer than we would have normally seen. And finally, just given kind of what's going on with macroeconomic conditions globally, we're just finding that there's more scrutiny from lenders in the Q&A process, which is typical of any project financing, is probably a bit more rigorous than it typically is, so it's taking a bit longer. But those would be the main factors, I would say.
spk02
Great. Thanks. That's all for me.
Pauline
Thank you. One moment for questions. Our next question comes from Ben Pham with BMO. You may proceed.
Ben Pham
All right. Excuse me. Thanks. Good morning. Maybe to start off on high long post-financial close, can you walk through the next milestones, how long it takes to construct and anything else along the way?
Mike Crawley
Yeah, so, I mean, most 2023 would be primarily fabrication activities, right, for the offshore substation, for the jackets, for starting some work on the cables, and then 24 and 25 would be when you'd see the in-water construction activities move forward. That's high level.
Ben Pham
Okay. And then the laser you're seeing off High Long, which you're probably seeing at other companies as well. Is that going to be applicable to the other projects like Baltic Power and North Sea?
Mike Crawley
I don't think so. I mean, we'll see how the world unfolds over the next few months. But I think on Baltic Power, that's why in the opening remarks I wanted to highlight where we are at. in locking down our supply chain. We, I would say, are certainly further ahead on that project than we were at this same time on high long, so I think we feel much better about the schedule and getting to financial close around the timing that we've indicated to the market on that project.
Ben Pham
Okay, great. And then maybe next on the funding side, has anything changed since maybe earlier in the year you invested on that 10% or 15% composition of equity needs slash asset monetizations?
Josh
You mean the funding pie chart that we've shown? I mean the targets in terms of the equity needs and the, you know, I mean, I don't think the total has changed. I think we said within that component how we raise that equity between, you know, sell downs and new equity is a fluid situation and that remains to be the case. But we're still targeting sell downs in our business plan.
Ben Pham
Okay, so that I know it's illustrated, but I mean, assuming CapEx stays the same, it's still $1 to $2 billion through 2026? Or is that different now because of the market condition change that you noted in the quarter?
Josh
Well, I mean, as we add new projects, I mean, that number changes, right? So every investor day, we would update that number. But I think so far, if you're looking at the same project pool, yeah, I mean, that number, you know, I would say hasn't changed materially. But as we add new projects, that number does change.
Mike Crawley
And we'll give you an update at the – at a upcoming investor day. Okay, great.
spk02
Okay, thank you.
Pauline
Thank you. Mr. Carley, there are no further questions at this time. I will now turn the call back to you.
Mike Crawley
Okay, thank you again. Thank everyone for joining us today. We will hold our next call following the release of our fourth quarter and full year 2022 results in February. In the meantime, we thank you for your continued confidence and support. Have a good day, everybody.
Pauline
Ladies and gentlemen, that does conclude the conference call for today. Thank you for participating and have a pleasant day.
spk02
The conference will begin shortly.
Operator
To raise your hand during Q&A, you can dial star 1 1.
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