Innergex Announces Signature of a 12-Year Power Purchase Agreement for Foard City Wind Project in Texas, USA
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.
SOURCE Innergex Renewable Energy Inc.
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