LONGUEUIL, QC, May 7, 2018 /PRNewswire/ - Innergex
Renewable Energy Inc. (TSX: INE) ("Innergex" or the "Corporation")
is pleased to announce that it has signed a 12-year power purchase
agreement ("PPA") with an affiliate of Luminant, a large
Texas-based power company, for
300 MW of its Foard City wind
project located in Foard County,
Texas. Sales under the PPA will start upon the facility
reaching commercial operation.
Development of the Foard City
wind project is progressing very well and Innergex expects to issue
full notice to proceed with construction in the fourth quarter of
2018. Site control is complete, as well as other development
milestones such as environmental impact assessments and the signing
of local property tax abatement agreements. Innergex has also
recently executed an interconnection agreement for Foard City with Electric Transmission Texas,
LLC. Commercial operation is expected in the third quarter of 2019.
Upon completion of the project, the facility should reach an
installed capacity of approximately 350 MW.
Additionally, Innergex believes that the on-site activities
performed since 2016 should qualify the Foard City wind project for USA renewable tax incentives (production tax
credits or "PTCs"). Discussions with financiers to secure tax
equity and debt financing for the project are currently
underway.
"With all of our ongoing development activities in the US, we
are very pleased to have developed a new relationship with a strong
offtaker such as Luminant," said Michel
Letellier, President and Chief Executive Officer of
Innergex. "Innergex is on a growth trajectory and, thanks to our
dedicated team of talented people, we intend to seize every sound
opportunity to pursue our development in Canada, the United
States, France and in
Latin America. We are on track to
reach and exceed a net installed capacity of over 2,000 MW by
2020."
About Innergex Renewable Energy Inc.
The
Corporation develops, acquires, owns and operates run-of-river
hydroelectric facilities, wind farms, solar photovoltaic farms and
geothermal power generation plants. As a global player in the
renewable energy sector, Innergex conducts operations in
Canada, the United States, France and Iceland. Innergex manages a large portfolio of
assets currently consisting of interests in 64 operating facilities
with an aggregate net installed capacity of 1,604 MW (gross
2,886 MW), including 34 hydroelectric facilities, 25 wind farms,
three solar farms and two geothermal facilities. Innergex also
holds interests in two projects under development with a net
installed capacity of 355 MW (gross 360 MW) one of which is
currently under construction and prospective projects at different
stages of development with an aggregate net capacity totalling
8,180 MW (gross 8,850 MW). Innergex Renewable Energy Inc. is rated
BBB- by S&P. The Corporation's strategy for building
shareholder value is to develop or acquire high-quality facilities
that generate sustainable cash flows and provide an attractive
risk-adjusted return on invested capital and to distribute a stable
dividend.
Forward-Looking Information Disclaimer
In
order to inform readers of the Corporation's future prospects, this
press release contains forward-looking information within the
meaning of applicable securities laws ("Forward-Looking
Information). Forward-Looking Information can generally be
identified by the use of words such as "projected", "potential",
"expect", "will", "should", "estimate", "forecasts", "intends", or
other comparable terminology that states that certain events will
or will not occur. It represents the estimates and expectations of
the Corporation relating to future results and developments as of
the date of this press release
Forward-Looking Information in this press release is based on
certain key expectations and assumptions made by the Corporation.
The following table outlines Forward-Looking Information contained
in this press release, the principal assumptions used to derive
this information and the principal risks and uncertainties that
could cause actual results to differ materially from this
information.
|
Principal
Assumptions
|
Principal Risks and
Uncertainties
|
|
Expected
Production
For each facility,
the Corporation determines a long-term average annual level of
electricity production ("LTA") over the expected life of the
facility, based on engineers' studies that take into consideration
a number of important factors: for wind energy, the historical wind
and meteorological conditions and turbine technology. Other factors
taken into account include, without limitation, site topography,
installed capacity, energy losses, operational features and
maintenance. Although production will fluctuate from year to year,
over an extended period it should approach the estimated long-term
average.
|
Improper assessment
of wind resources and associated electricity production
Variability in
hydrology, wind regimes and solar irradiation
Equipment failure or
unexpected operations & maintenance activity
Natural
Disaster
|
|
Estimated project
costs, expected obtainment of permits, start of construction, work
conducted and start of commercial operation for Development
Projects or Prospective Projects
For each development
project, the Corporation provides an estimate of project costs
based on its extensive experience as a developer, directly related
incremental internal costs, site acquisition costs and financing
costs, which are eventually adjusted for the projected costs
provided by the engineering, procurement and construction ("EPC")
contractor retained for the project.
The Corporation
provides indications regarding scheduling and construction progress
for its Development Projects and indications regarding its
Prospective Projects, based on its extensive experience as a
developer.
|
Performance of
counterparties, such as the EPC contractors
Delays and cost
overruns in the design and construction of projects
Obtainment of
permits
Equipment
supply
Interest rate
fluctuations and financing risk
Relationships with
stakeholders
Regulatory, tax and
political risks
Higher-than-expected
inflation
Natural
disaster
Outcome of insurance
claims
|
|
Projected
Revenues
For each facility,
expected annual revenues are estimated by multiplying the LTA by a
price for electricity stipulated or hedged in the power purchase
agreement secured with a public utility or other creditworthy
counterparty. These agreements stipulate a base price and, in some
cases, a price adjustment depending on the month, day and hour of
delivery. In most cases, power purchase agreements also contain an
annual inflation adjustment based on a portion of the Consumer
Price Index.
|
Production levels
below the LTA caused mainly by the risks and uncertainties
mentioned above
Unexpected seasonal
variability in the production and delivery of
electricity
Lower-than-expected
inflation rate
Changes in the
purchase price of electricity upon renewal of a PPA
Ability to secure new
PPA or power hedge agreement
|
|
Expected project
financing
The Corporation
provides indications of its intention to secure project-level debt
and tax equity financing for its Development Projects, based on the
expected costs and revenues of each project, the expected remaining
PPA term, and the Corporation's extensive experience in project
financing and knowledge of capital markets.
|
Customary risks
related to project-level debt and tax equity financing
Interest rate
fluctuations
Financial leverage
and restrictive covenants governing current and future
indebtedness
|
|
Qualification for
PTCs
For certain
Development Projects in the United States, the Corporation has
conducted on and off-site activities expected to qualify its
Development Projects for PTCs at the full rate and to obtain tax
equity financing on such basis. To assess the potential
qualification of a project, the Corporation takes into account the
construction work performed and the timing of such work.
|
Risks related to U.S.
Production Tax Credit, Changes in U.S. Corporate Tax Rates and
Availability of Tax Equity Financing
Regulatory and
political risks
Delays and cost
overruns in the design and construction of projects
Obtainment of
permits
|
The material risks and uncertainties that may cause actual
results and developments to be materially different from current
expressed Forward-Looking Information are referred to in the
Corporation's Annual Information Form in the "Risk Factors" section
and include, without limitation: the ability of the Corporation to
execute its strategy for building shareholder value; its ability to
raise additional capital and the state of capital markets;
liquidity risks related to derivative financial instruments;
variability in hydrology, wind regimes and solar irradiation;
delays and cost overruns in the design and construction of
projects; uncertainty surrounding the development of new
facilities; variability of installation performance and related
penalties; and the ability to secure new power purchase agreements
or to renew existing ones.
Although the Corporation believes that the expectations and
assumptions on which Forward-Looking Information is based are
reasonable, readers of this press release are cautioned not to rely
unduly on this Forward-Looking Information since no assurance can
be given that they will prove to be correct. The Corporation does
not undertake any obligation to update or revise any
Forward-Looking Information, whether as a result of events or
circumstances occurring after the date of this press release,
unless so required by legislation.
innergex.com
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SOURCE Innergex Renewable Energy Inc.