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spk01: Welcome to the Northland Power Conference call to discuss the third quarter 2023 results. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you'll need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. As a reminder, this conference is being recorded on Friday, November the 10th, 2023 at 10 a.m. Eastern Standard Time. Conducting this call for Northland Power are Mike Crawley, President and Chief Executive Officer, Pauline Alamchanidani, Chief Financial Officer. 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 statement section in yesterday's news press release announcing Northland Power's results and be guided by its contents and making investment decisions or recommendations. The release is available at www.northlandpower.com. I will now turn the call over to Mike Crawley.
spk05: Thank you very much and good morning everyone and welcome to Northland's third quarter 2023 earnings call. Before we start, I want to reiterate that the health and safety of our employees and stakeholders always comes first. This is particularly important now that we have three significant projects in construction. As always, I will provide you with the business updates before passing things over to Pauline, who will walk you through our financial results. Let me first start with an update on our offshore wind business. There's no question that it's been a tough year for the offshore wind sector. Supply chain constraints and macroeconomic conditions have hit offshore wind the most of all of the different renewable technologies. Despite the challenges facing the sector, I'm pleased to announce that in September we signed and closed the financing on both the Baltic Power and Heilong offshore wind projects, representing over 2 gigawatts of additional offshore wind capacity. These are significant milestones for Northland and a big positive marker for the offshore wind sector. We are particularly proud to have financed both projects for more than 20-year terms, totaling over $10 billion of non-recourse project-level debt, with the support from our global financial partners at a competitive all-in rate of 5%. What is important to note is that we have already secured funding for our portion of equity for these projects under construction, including Oneida. Both Qualtic Power and Heilong are progressing well in construction, which I'll speak to shortly. Once they reach full commercial operations in 2026 and 2027, with first turbines generating power in 2025, they will provide a material amount of EBITDA and cash flow growth for our business. Recognizing the adversities within the sector, we identified and actioned several measures early to counter changing dynamics in the space to limit potential negative impacts to our projects. For example, we locked in the supply chain early and secured enhancements to the revenue contracts. On Baltic Power, this included moving inflation indexation back one year in the 25-year PPA that we have on the project and changing the base currency from Polish Zloty to Euros, which enabled increased amount of liquidity from debt lenders. Similarly, on Heilong, we were able to secure changes to the corporate PPA, including moving the term from 20 to 30 years which helped us offset the impact of cost increases. We also secured other optimizations on the project itself. We already have an attractive visible growth profile once we achieve commercial operations for Baltic Power and Heilong by 2026 and 2027, respectively, and remain disciplined on our pipeline to ensure that the growth we pursue is profitable and balanced. Earlier in the year, we did not hesitate to walk away from projects like the North Sea Cluster that no longer met our investment criteria as market conditions changed. And we were also able to recover our sunk cost on that project and secure a premium. We also exited early-stage non-core offshore wind projects like Katagami in Japan. As well, deciding not to participate in any offshore wind development in the U.S. with a nascent supply chain and expensive upfront lease payments is just another example of us remaining selective and disciplined in our approach to growth. As I alluded to at our offshore wind investor update in September, we are focused squarely on execution of our projects under construction to be delivered on time and on budget. This is the same as we have done in the past. We will continue to take a diligent and disciplined approach to capital allocation, ensuring that we invest in high-quality, profitable projects that drive value for our shareholders. A large and diversified development pipeline, including solar, onshore wind, and energy storage, provides us the ability to dedicate our resources at any time to the projects and the investments that are most attractive. This is what makes Northam positioned well for success over the long term. Heilong and Baltic Power are advanced projects with secured construction contracts and financing, cost locked down. Therefore, Northland does not see any further offshore wind procurement or financings for the next three years that enables us its flexibility to wait for not just the supply chain bottlenecks to be resolved, but also for a more stable interest rate environment. Subsequent to the Heilong financial close, our teams have been focused on closing the sale of the 29.4 stake interest in Heilong to Gentari announced last year in December. The sell-down transaction is currently targeted for the fourth quarter of 2023, subject to the satisfaction of certain closing conditions. In an extension of the strategic partnership formed with Juntari during the third quarter, we also closed on a 49% sell-down in two early-stage offshore wind development projects in Taiwan, Northwind and Tanwind. Juntari's participation in these projects further demonstrates strong interest in the Taiwanese offshore wind sector, and in a longer-term, broader partnership with Northland overall and beyond Taiwan. Now, shifting to the onshore renewables business. Last quarter, we achieved financial close on Oneida, one of North America's largest energy storage projects, totaling 250 gigawatts. Construction is progressing as planned, with commercial operations expected in 2025. The contracted portion of the project is partially inflation protected. Subsequent to the end of the quarter, our Bluestone and Balls Hill projects in New York commenced early revenue. Both projects, totaling 220 megawatts, have 20-year revenue contracts with inflation protection and are expected to contribute an aggregate of $42 million and $15 million of adjusted EBITDA and free cash flow, respectively. We are presently working towards substantial completion, at which point we will finalize our tax equity funding, with all this expected to be completed in the fourth quarter of the year. We've achieved a great deal this year across both our offshore wind and onshore renewables business. The 2023 goals we stated at our investor day earlier this year are being achieved, and we are looking to close on a few more before the end of the year. Looking at the headline numbers in the quarter, we delivered adjusted EBITDA of $267 million in the third quarter, along with adjusted free cash flow and free cash flow of $0.25 and $0.14 per share, respectively. Colleen will provide a more detailed look into the financial numbers later in the call. Moving to updates on the construction progress for our three projects under construction, Heilong, Baltic Power, and Oneida, At Heilong, fabrication of key components and in-water horizontal drilling has commenced. Heilong has already logged 5 million working hours while adhering to strong health and safety standards. Foundations for the turbines and offshore substation work has significantly advanced, and the offshore jacket foundations are in final outfitting and close to being ready to sail out to Taiwan. Fabrication of key components have also begun at Baltic Power. At the Oneida Energy Storage Project, the road and the pond construction and equipment foundation has commenced along with preparation of site for receiving major equipment in the spring. Execution for these three projects is our top priority. We maintain very close communications with the major contractors in our supply chain at both project and corporate level. This is crucial to ensure the quality of construction and that our projects are delivered on time and on budget. The contractors in our supply chain are reputable with strong track record and expertise. In most cases, we have worked with them on previous projects. Most of you may have seen recent media reports on Siemens Energy. There is no indication that this will impact the delivery of turbines to our Heilong project. SRE have reiterated and confirmed to Heilong that the program remains unaffected and is currently tracking on schedule for material deliveries and that they are fully underway for the planned installation in 2025. And, of course, there was some further news yesterday on discussions between Siemens Energy and the German government in the news. Delivering these three projects into operation, they are expected to collectively generate an aggregate adjusted EBITDA at free cash flow of $570 to $615 million annually. and $185 to $210 million, respectively, on a five-year average basis, resulting in significant value creation and accretion for Northland's shareholders. With that, I will turn the call over to Pauline for a more detailed review of our financial results.
spk02: Thank you, Mike, and good morning, everyone. Before diving into the quarterly results, I want to take a moment to emphasize the immense quarter we have had with the closing of the financings on more than 2 gigawatts of offshore wind projects. The team worked with more than 20 financial institutions each for Heilong and Baltic Power, which included building new relationships with over 15 commercial global banks and export credit agencies. Developing these new relationships and bolstering existing ones will go a long way in building an ecosystem of partners for future project financings for Northland globally. Closing over $10 billion of project financings in the current market is a testament of the high quality projects we own and is a positive reflection on the capability of our teams, our partners, our reputation as a sponsor, leading both financing on behalf of the project and our partners. As Mike noted, all projects in construction have been funded through approximately $900 million in proceeds raised on our ATM program in 2022 and through the $500 million corporate hybrid debt at a net cost of approximately 6.2%. The remaining element of the funding plan is the closing of the 49% sell-down of Heilong to Gentari, which is targeted for the fourth quarter, subject to achieving closing conditions, as Mike discussed. Northland had access to $563 million of available liquidity at September 30th, including $63 million of cash on hand and approximately $500 million of capacity on its corporate evolving credit facilities as of today. Northland also had a $500 million short-term corporate credit facility to help fund its equity contribution in Heilong, of which $344 million was utilized at September 30th. This facility is intended to be repaid subject to the receipt of the proceeds from the sell-down of Heilong to Gentari. The facility matures at the end of November of 2023 and may need to be extended or refinanced if there is a delay in the closing of the sell-down. In addition, Northland has secured a $1 billion Heilong-related corporate LC facility to support Heilong credit requirements during construction. Northland's Heilong-related letter of credit obligations and this facility would decrease by 49% upon closing of the Gentari sell-down. Looking at financial results released last night, our third quarter 2023 results were lower compared to Q3 last year, but were in line with our expectations. We generated adjusted EBITDA of approximately $267 million in the quarter, representing a decrease of approximately 8% or $23 million compared to the same period last year. The key factors that contributed to the lower EBITDA year over year included inflation, a $50 million decrease in operating results at the offshore wind facilities, primarily due to the non-recurrence of the unprecedented spike in market prices realized in 2022. This decline was partially offset by higher turbine availability at North Bay 1, following the completion of the RSA replacement campaign in 2022 and the effect of foreign exchange fluctuations due to the strengthening of the euro and other items, and a $14 million increase in G&A costs and development expenditures primarily due to higher costs to support operating projects and the latter driven by the timing of the spend. The factors partially offsetting the decrease in adjusted EBITDA were a $29 million increase in the contribution from the Spanish renewables portfolio, primarily due to the increase in band adjustments partially offset by the decrease in both merchant revenue and RI, $19 million in gains from partial asset sell-downs, With respect to our free cash flow and adjusted free cash flow, Northland generated approximately $36 million and $64 million in the quarter, respectively. This compares to $44 million and $66 million in the same period a year ago. The significant contributors resulting to the lower adjusted free cash flow and free cash flow in the quarter were a decrease in contribution from the operating facilities leading to lower adjusted EBITDA, a decrease as a result of higher net proceeds from the EPSA refinancing that were recognized last year, and the decreases were partially offset from partial asset sell-down gains and lower finance costs. On a per-share basis, these figures translated into free cash flow of 14 cents and adjusted free cash flow of 25 cents in the quarter, compared to free cash flow of 19 cents and adjusted free cash flow of 28 cents per share in the same time last year. These results generated a rolling four-quarter adjusted free cash flow and free cash flow net payout ratios of 59% and 82%, respectively, calculated on the basis of cash dividends paid, compared to 32% and 37% for the same period ending September 30th of 2022. We continue to focus on managing our balance sheet, and we will commit to new projects in future periods only being convinced of walking down financing and returns amidst a more uncertain environment. Further, as Mike mentioned, in addition to working on the closing of the high-long sell-down transaction with Gentari that is targeted for the fourth quarter, we also closed on the 49% sale of Northwind and Candwind to Gentari, which is reflected in our third quarter financial results. We continue to have a very active working relationship with Gentari as a long-term partner. Turning to our 2023 financial guidance, as noted in our press release, despite the regulatory changes in Spain, which materially impacted our results last quarter, and the macroeconomic challenges posed this year, we are reaffirming our 2023 financial guidance, albeit at the lower end of the range. For adjusted EBITDA, we expect to generate the low end of the range of $1.2 and $1.3 billion this year. For free cash flow, we expect the range to be at the low end of $1.30 and $1.50 per share, while for adjusted free cash flow, we expect to be at the lower end of the range of $1.70 to $1.90 per share. The low end of the ranges include sell-down gains. To conclude, it has been a significant quarter for Northland with de-risking and the achievement of financial goals of our two Mark A offshore wind projects. Going forward, our focus remains on the execution of our three projects under construction within schedule and budget, which will allow us to potentially enhance project returns further with the optimization levers we have available that were discussed on our offshore wind investor call last month. I will now turn the call back over to Mike for his concluding remarks.
spk05: Thank you, Pauline. And picking up on Pauline's point, going forward, we intend to focus on the construction and execution of our projects in progress. In these uncertain times, it's especially crucial to stay constantly engaged with our suppliers throughout the management, through management and the project teams. level conversations to ensure we are on track to stay on schedule and on our budget and manage the impact of any setbacks. Northland has no further committed equity for the subsequent years and we intend to take full advantage of the optionality provided by our growth pipeline. We are focused on being disciplined and selecting the right growth projects that meet our investment criteria in the current environment. This concludes our prepared remarks and we'd be happy to take your questions. Please open up the lines.
spk01: Thank you. As a reminder, to ask a question, you'll need to press star 11 on your telephone. To withdraw your question, please press star 11 again. Please wait for your name to be announced. Please stand by while we compile the Q&A roster. One moment for our first question, please. Our first question comes from the line of Nicholas Boychuk with Cormark Securities. Your line is open.
spk08: Thanks. Good morning, everyone. Could you please expand a little bit on the curtailment issue seen in Germany this quarter and whether anything can be done to improve transmission or maybe even add battery energy storage to monetize that production?
spk05: So we understand there's still further transmission upgrades being pursued over the coming years in Germany. There's also other enhancements to the grid being proposed, including, I think, some announcements recently of adding additional gas capacity to the German grid as well. So all of that, in our view, would reduce curtailment in the years ahead or at least be a positive factor in terms of curtailment risk in the years ahead. We have a storage team which looks at all of our assets in terms of whether or not storage can be added to our projects to manage or mitigate curtailment, but I don't have anything further to say at this point.
spk08: Okay, thanks Mike. On the development costs in that earlier stage segment of the pipeline, is it fair to say that some heavy lifting was done with projects this year and that project development and development overhead costs might roll over a little bit into 2024 or are you expecting a similar investment to be made in the coming year?
spk05: I think you should expect to see a smaller investment in the next couple of years just given that we're moving more into an execution phase than a development phase. We still have some development activities going on, but the weighting will be more towards execution on projects that are, of course, now capitalized.
spk08: Got it. Thanks. And then last for me, it seems like a lot of regulatory bodies are becoming more open to revising and revisiting previously awarded PPA prices just to better reflect cost of developing new projects. I'm curious if you're seeing the same dynamic in the Colombian market and whether or not you might be able to rebid SUBA or other solar projects over the coming years.
spk05: We haven't seen anything in Colombia or in the Colombian market. What we have seen is in the northeast of the U.S., there's a recent, as you know, maybe offshore wind auction, which came in at, I think, $140 USD per megawatt hour, I think, on average price. I could be wrong on that exact price, but it came in substantially higher than previous auctions. There's recent news out of the U.K., around potentially lifting the ceiling on offshore wind bids going forward in future auctions by, I think, 30% or 40%. I can't remember the exact amount, but by a substantial amount. So all of those, for us, are indications that energy prices and PPA prices are adjusting to the new capital costs and cost of capital in the sector.
spk04: Great. Thanks, Matt.
spk01: Thank you. One moment for our next question, please. Our next question comes from the line of Rupert Mayer with National Bank. Your line is now open.
spk00: Hi. Good morning, everyone. With the equity investment from Gentari, can you give us more color on the closing conditions to get that deal done? And what's your comfort level with completing it this quarter?
spk02: So as part of the transaction, Gentari needs to meet certain requirements in order to be part of the debt financing, which is taking more time to finalize given they are multi-party arrangements. Also, as you know, we've got ECAs involved. So right now, I mean, the discussions and the work streams are progressing, and we're still targeting to complete that in the fourth quarter.
spk00: And Pauline, if it is delayed, is there anything you have to do regarding the financing that's in place?
spk02: Yeah, we've got short-term bridge financing that's currently in place. So I think the simplest thing to do would be likely to extend that financing that we have in place.
spk00: Okay, thank you. And Mike, I know you've given us some color on Siemens already. It does remain a topic of interest with investors today. And with that, I wonder if you can give us a little more color on the plan for producing turbines for HiLong. I know they're not supposed to be delivered until 2025, but can you give us some color on where they're going to be assembled, anything unique to the supply chain for those turbines, and again, remind us of the carrots and the sticks that you have with Siemens to ensure delivery?
spk05: Yeah, so the bulk of the components are coming from European manufacturing facilities. There is a nacelle fabrication facility in Taiwan as well where some of the nacelles are going to be sourced. We have typical LDs and penalties in the contract, supply contract, to incentivize on-time delivery by Seamless to Mesa. We also have buffers in the contract schedule to give us further assurance in terms of being able to make sure there's no knock-on effects in terms of delays. I think I'd probably leave it at that. Other than the fact that we are, as you can imagine, have been in regular contact with Siemens Gamesa, including me with my equivalent at Siemens Gamesa, given the news of one or two months ago, to ensure that our services order was still moving ahead on schedule and we've been given every assurance and confirmation at my level but also at the project level that that is the case and of course we take some comfort from the news yesterday in like a Reuters story around where discussions were at with the German government obviously that's to be confirmed in the days and weeks ahead I presume but generally We are confident in CMIS's ability to deliver and in CMIS Energy's long-term viability.
spk00: All right, great. Thanks, Nicola. I'll get back into the queue.
spk01: Thank you. One moment for our next question, please. Our next question comes from the line of Sean Stewart with TD Securities. Your line is now open.
spk07: Thank you. Good morning. Mike, wondering if you can give any general commentary on the potential for rationalization of the existing operating platform to backstop liquidity. Any new thoughts with respect to the thermal portfolio, potentially EBSA, streamlining the portfolio? Is that at all on the radar at this point?
spk05: Yeah, it's a fair question, Tonya. Listen, we've been clear in the last six months and last year that we are looking for ways to simplify the business moving forward. The business did a lot of prospecting over the last few years, and some markets have turned out very well for us, and we've either, like Poland, developing a very attractive project and constructing a very attractive project in that market, and other areas like Alberta where we've secured a strong pipeline of projects that can be built out at our discretion over the next five, six, seven years. But other markets perhaps have turned out to be less attractive, and so I think what you'll see is us pulling back from some markets that have been proven less attractive and looking to simplify the business moving forward. But in terms of specific assets, I wouldn't have anything to comment on the call right now on that.
spk07: Okay. Thanks for that.
spk05: Um, I would say on the thermal assets, uh, I mean, they are an important part of our fleet, uh, and they do still deliver meaningful cashflow.
spk07: Yeah. Okay. Um, and then any comments on, in appreciating your shifting to more of an execution versus development phase, uh, at least in the midterm, uh, the comfort with the overall liquidity position adjusted for the Gentari proceeds to come, um, do you feel comfortable that whatever equity investment needs you might have, your balance sheet is set up appropriately right now?
spk05: On investment decisions, anything that we do on investment decisions is completely discretionary moving forward. One of the points I think we made at our investor call in September is that We're in a position now where we've got three large projects through financial flows into construction over the last year that will deliver meaningful cash flow in two to three years' time as they come online. We don't need to source new growth. We don't need to fund new growth over that next two to three years. If we do, it will be if market conditions are favorable, if the projects have attractive economics. But we don't need to pursue any projects during that period of time. So anything we do, like I said, would be entirely discretionary. I'll leave it to Pauline to answer the rest of the question.
spk02: Yeah, I mean, I think as Mike mentioned, we are looking at simplifying the business overall, which will include either further sell-downs and or asset sales. So that would be a focus over the next one to two years. which will, of course, generate some liquidity for the business, and how we deploy that will be in the best interest of the company, the balance sheet, ongoing liquidity, and what's most accretive for us at the time.
spk07: Okay, that's all I have. Thanks very much.
spk01: Thank you. One moment for our next question, please. Our next question comes from the line of Mark Javi with CIBC. Your line is now open.
spk03: Good morning. I saw that you guys are winding down the hydrogen initiatives. Obviously, it's very early days and not a lot of meaningful capital, but just what does that mean for any future options around the existing offshore wind farms in Germany? I think at one point there was talks about you know, using sort of that power to move towards green hydro production, or even some of the efforts in Atlantic Canada, any thoughts on those two aspects where you were looking at green hydrogen?
spk05: Yeah, that's a good question, Mark. So we folded and collapsed the hydrogen business unit, and as we said, I think in the last quarter, we would no longer be looking at any export, hydrogen export project for a large-scale project. standalone hydrogen projects. We have retained some talent in hydrogen within the company, which is now embedded within the thermal team, which understands fuels well, to look at opportunities like you described in terms of whether or not there's an off-take recontracting opportunity that could involve hydrogen going forward for any of our facilities. You referenced N1, but over the next decade for any of our facilities. So we thought it was important to retain some expertise and knowledge in that area, and that's for that reason.
spk03: So just to clarify, Mike, you're saying that there still is some options in Nord C1 as using that power supply to do something around green hydrogen as another option for offtake?
spk05: Yeah, to be clear. So we certainly will be exploring opportunities to sell electrons to a hydrogen producer depending on how that market develops in the coming years. So understanding green hydrogen in the market for green hydrogen is important in that respect as projects over the next 10 years, like with all of the IPPs, start to gradually come off of their initial contract and need to be re-contracted. So it's about having different options and making sure we have the the full knowledge and expertise of markets that you could sell the electrons to a marketer, you could sell the electrons to a corporate off-taker, you could in some cases maybe re-bid them in for a sovereign contract, or possibly if the green hydrogen market develops over the next few years, you could sell them to a green hydrogen producer as well. So we just want to make sure that we understand the market and are in touch with what's going on in the market so that we can choose the most profitable and the most attractive opportunity for recontracting any of our projects over the next 10 years, including Nord C1.
spk03: Okay, makes sense. And then a handful of years ago, there was some conversation around Northland maybe getting paid for its development and asset management capabilities. So sort of an asset-like, more sort of, I don't know, consulting development expertise model. You know, obviously in light of the scarcity of capital or I guess the discipline you're showing now, Are you getting any inbounds? Do you have capacity with your teams to do any of those sorts of initiatives? Or is that just something that's really not on your radar at this point?
spk05: I didn't quite hear it all. Was it to do development on a fee-for-service basis? Is that what it was? Yeah, exactly. Effectively, what we're doing in a way with the sell-downs and by bringing in partner equity into some of our projects is developing projects and getting a premium for the sweat equity and the de-risking and the value creation that we do through development. So in a way that's what we're doing. We're still retaining a portion on those projects for our own capital. And also as we look at our development pipeline and rationalizing our development pipeline, if we divest certain development assets, effectively that's what we're doing is monetizing the value created by those development pipelines. If we decide that there's a better owner or a better constructor and operator of that asset than us. So we certainly would be looking at those types of opportunities as well. We haven't looked at, at this point, at doing kind of almost just a pure development model where we're developing projects with no intention of deploying our capital into those projects at any time. I mean, like I said, in some cases the pieces may change and we may decide that there's a better owner for that asset and we'll be disciplined in that respect. but not at this point in terms of doing fee-for-service development.
spk03: I'm just trying to understand. There's obviously been some disruption, some firms backing a little bit away from offshore wind, and I just wonder whether or not your skill set, without extending yourselves from a balance sheet perspective, could be leveraged going forward.
spk05: I think it could be, and I think the question, I mean, a sell-down on any project could be 25% sell-down, 50% sell-down. It could be even greater, right? And so, I suppose to your point, it could be all the way to zero, given our skill set that we have. I think those decisions don't necessarily have to be made at this point in time, but there is, as you point, I think as you're alluding to, a lot of large players with significant balance sheets and a lot of capital that want to deploy that capital into offshore wind, but don't have the expertise to develop those projects, and arguably there may be an opportunity there for sure.
spk03: Okay. Thanks for your time today.
spk01: Thank you. One moment for our next question, please. Our next question comes from the line of Nelson Ng with RBC Capital Markets. Your line is now open.
spk06: Thanks. Just a quick question on the CanWin and NorthWin sell-downs. So, can you just give a bit more color in terms of the mechanics of how the sell-down went and how you recognized $19 million of gains? Did any cash change hands or will Gentario just mainly fund the next chunk of development costs?
spk02: No, cash did change hands and we received that cash in the quarter. and I would say that it followed a very typical valuation process for an early stage development.
spk06: Okay, got it.
spk02: And going forward, now we will share the costs going forward.
spk06: Okay, makes sense. And then I know Mike mentioned that you guys are not looking to close any new offshore wind projects for the next few years, but for CanWind and NorthWind projects, Are you still actively developing that project or is it on hold or can you just give us an update on timing and process for those two projects?
spk05: Yeah, I think there's still some clarity and information that everybody who has any of these next round projects in Taiwan is waiting for from the Taiwanese government in terms of what the rules are going to be, when the auction is going to be, when the bid is going to be. So there's still a lot of information missing to determine even if the projects are something that we would want to proceed with. So I think it's pretty early days.
spk06: Okay. Got it. And then my next question relates to the New York wind project. So congrats on completing those projects. I think previously you guys talked about a project cost of about $600 million U.S. Is it still around that level, or is it a bit higher, given that there was some delay? And then also, can you just talk about the funding or capital structure? I think there was about $190 million of tax equity or so.
spk02: Yeah, no change to the capital costs from the prior disclosures, so all that is still in line. The tax equity piece is about U.S., $150 million. Okay, got it.
spk06: And then the last question, we've heard a lot of – so I guess first of all, I think you guys made the right decision to not get involved in any of the U.S. Northeast offshore wind developments. And I know a lot of companies are no longer pursuing it or just getting out of those developments. But are you – Are you currently looking at any opportunities in the U.S. Northeast, given that maybe it's the right time to get involved as others are exiting the sector? Can you give some comments on that potential or opportunity?
spk05: No, we're not looking at anything there. Our focus, I think I've probably said it about 20 times in my script, but our focus is really truly on executing on the three projects that we have in front of us. I think, as we've already seen in reference to the future round auction prices in the northeast of the U.S. certainly will rise up and move up, I think, and we've already seen some evidence of that. So I think the market will improve, and I think it's good in the long run for offshore wind that the projects in the northeast of the U.S. eventually get built it'll take longer and they'll be built maybe in different forms and maybe there'll be different capital and different ownerships coming to owners coming into some of the projects i don't know but uh but for the near term we wouldn't be prospecting around looking for that okay thanks mike i'll leave it there thank you one moment for our next question our next question comes from the line of ben fam with bmo your line is now open
spk04: All right. Thanks. On some of the optimizations you've mentioned in the past, I'd say on the offshore wind roster, are you able to quantify or directly point to where returns could be in that 10% to 14% targeted range?
spk05: I didn't quite hear the question. Ben, can you repeat it, please? Did you hear it, Pauline?
spk02: I think you're looking for us to quantify the direction of the optimizations.
spk05: Is that right? That's right.
spk02: So I think what we did at the investor day was we tried to say how much in terms of basis points we were able to get when you look at Nord C or some of the other projects on the debt optimization which is probably the most significant optimization. Beyond that would be PCRs would be an optimization for high long which, again, you know, just relies on the project being built, you know, on schedule, you know, on or ahead of budget. And then, you know, the last one always remains is sort of sell-downs and then construction optimizations. But I think on the debt refinancing side, I think we quoted 50 to 75 basis points is what we've been able to achieve historically. So, you know, obviously we just closed the financings, but as of today, I mean, I think that's a fair assumption to use.
spk05: We only spoke to, but we didn't give any ranges to because everybody would have to come up with their own view on it is on any re-amortization of the debt to take advantage of the longer tenor on the PPA as well.
spk04: Okay. Can you also talk about your exposure to the carbon tax in Canada with your gas fleet? Do you think about the government's clean standard app until next year?
spk05: So I believe, and we'll follow up after the call, on most of our facilities it is a pass-through. I think on a couple of our facilities it is not, but I think the one I'm thinking of doesn't run all the time, but we can get back to you on that just to confirm that one-on-one.
spk04: Okay. All right. Thank you.
spk01: Thank you. I'm currently showing no further questions at this time. I'd like to hand the conference back over to Mr. Mike Crawley for closing remarks.
spk05: Well, thanks for everybody for joining the call today, and we look forward to reengaging with you on our Q4 call coming up in February. Thank you.
spk01: This concludes today's conference call. Thank you for your participation. You may now disconnect, everyone. Have a wonderful day.
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