Letter to Shareholders

Northland Power’s vision is to be a top clean and green power producer, inspiring our people to achieve a sustainable and prosperous future for all of our stakeholders.

For us, success means delivering measured growth and strong financial results. It also means a commitment to excellence and sustainability by all definitions – environmental, financial and operational. For over 25 years, we have delivered on our promises, and 2015 was no exception.


Our past investments into growth, along with our operational excellence, drove robust financial results for our shareholders in 2015. The numbers speak for themselves – an increase in free cash flow of 10% and adjusted EBITDA of 11% during the year. And, true to our promise, we continued to pay dividends of $1.08 per share.

Operational Excellence

This has been a pivotal year for Northland. We once again delivered on our promise of superior returns with a total shareholder return of 30%. Our strong financial results tell only a small part of our story. Over the course of 2015, we made many great strides toward achieving our vision to become a top clean and green power producer.

We made significant progress on our construction portfolio of approximately $6 billion. We increased our total net generating capacity to 1,338 megawatts (MW). Overall, our operating assets – comprising 26 facilities located across Canada and in Europe – met or exceeded management’s expectations. We continued to expand our team and expertise as we evolve into a successful manager of multiple international and large-scale projects. We grew our internal capabilities and continued to build an organization of increasing scale.

It goes without saying that our success is the result of our people. We would like to thank the Northland team for bringing their best efforts and enthusiasm each and every day.

Financial Results

For Northland, 2015 proved to be a financially solid year. Total adjusted EBITDA grew by over 11% to $402 million, as a result of additions from the ground-mounted solar facilities and court decision on the Global Adjustment case. We generated $182 million in free cash flow and maintained a payout ratio below 100% despite raising a significant amount of capital to fund our current construction portfolio. Throughout the year, five debt and equity financings, totalling $1.9 billion, were completed.



Northland’s portfolio of operating assets comprises a diverse, sustainable technology mix, with 70% thermal, 21% wind and 9% solar. We are proud to report that our operating facilities, the backbone of our enterprise, ran safely and efficiently in 2015, with no lost-time incidents.

With overall availability of 96% across our 26 operating facilities, we met or exceeded industry averages. Availability is a key measure for Northland; it represents the percentage of time that a facility is able to produce power. Our strong results indicate that each facility is reaching its fullest potential, which, in turn, maximizes shareholder value.

GRAND BEND Turbine blades en route to be installed on the Grand Bend wind farm.

Long-term contracts contribute to lasting returns. In 2015, we successfully finalized an amendment to the power purchase agreement (PPA) for the baseload gas-fuelled portion of our Kirkland Lake facility. All three components of Kirkland Lake (biomass, peaking and baseload) are now contracted through 2030 and, in the case of the peaking facility, to 2035.

Unfortunately, after 25 years of generating electricity from a combination of natural gas and wood waste sourced from local forestry operations, in May we were forced to shut down our Cochrane, Ontario, facility. We are very grateful for the outpouring of support from the community and local industries and are disappointed for our employees, suppliers, investors and the people of Cochrane.

Letter to Shareholders

NORDSEE ONE Northland CEO John Brace inspects the offshore substation for Nordsee One.

Northland defines itself by two core commitments:
building a more sustainable future through the delivery of clean and green energy while creating long-term value for our shareholders.


While keeping our feet firmly planted in the present, we also continued to build for our future. Northland’s 100 MW Grand Bend wind project in Ontario, Canada, a 50/50 partnership with two First Nations, is progressing on schedule and is expected to be completed in 2016.

Farther away in the North Sea, the 600 MW Gemini offshore wind project in the Netherlands is proceeding according to plan. We are very pleased to report the first two wind turbines were erected in February 2016. All foundations, consisting of a steel monopile and a transition piece each, have been installed. Other critical infrastructures such as cables and offshore and on-land high voltage stations have already been completed and tested, which derisks the project significantly. Construction will continue throughout 2016 in anticipation of full commercial operation in 2017.

Not far from Gemini, the 332 MW Nordsee One offshore wind project in Germany is also progressing well, with the first of 54 wind turbine foundations installed in December 2015 and the production of other major equipment well under way. Construction will continue throughout 2016, and we expect to achieve full commercial operation in 2017.

Once all three projects are completed, they will add a net capacity of 692 MW to our operating portfolio, representing an increase of approximately 50% over 2015. Like the rest of our operating facilities, these projects are expected to deliver stable cash flows through the duration of their power purchase agreements.

With our business growing at a vigorous pace, we invested in our people and our company, adding top talent who will support key business functions. In July, we welcomed Mike Crawley to our executive management team. A highly accomplished executive who has played a prominent role in the development of the Canadian independent renewable power sector, Mike has already made great strides in advancing Northland’s global business development activities.

We have significantly increased our level of activity in Europe and Mexico, positioning ourselves for strategic growth in these priority markets. Concurrently, we are making investments in technology that will automate, streamline and integrate several core business processes, empowering our people to effectively manage an increasingly international business and establish a more robust platform to make informed decisions in support of our growth targets. These initiatives will ensure that we remain agile and effective in a time of rapid growth.

2016 and Beyond

Our approach to identifying and executing new projects has not changed. We will continue to focus on increasing shareholder value by developing high-quality projects supported by long-term revenue contracts, while carefully managing and mitigating risks. Of course, the world is changing around us, and we are aware that we need to change with it. As such, an important facet of our strategy is to continue to seek out technologies and jurisdictions where we can apply an early-mover advantage. We balance this agility with a keen emphasis on effectively managing risk.

With the Paris Agreement coming out of COP21, there is an increased likelihood for further renewable energy development opportunities in additional markets. In Canada, with a national focus on decarbonization, we are seeing some encouraging signals for new generation procurements. In Ontario, where there is already a significant amount of wind and solar generation, we are seeing increased momentum for energy storage projects that help optimize the value of these renewable assets. With these dynamics in play, we continue to see the potential for development opportunities over the next few years in the Canadian renewable energy sector.

Looking abroad, we continue to see attractive opportunities for large-scale offshore wind in Europe as a result of European Union targets for renewable energy. Mexico and parts of Latin America also provide opportunities, stemming from load growth resulting from economic and demographic shifts. We are also monitoring other jurisdictions that meet Northland’s investment criteria that may offer opportunities resulting from increased government focus on energy independence, sustainability and security.


Letter to Shareholders

The year 2015 has been pivotal for Northland. We delivered on our promise of superior returns this year – and on average over the last five years – with a total shareholder return of 30% and 10%, respectively.


Our success is the direct result of our winning formula – an entrepreneurial spirit tempered by disciplined management with a long-term focus. We will continue to make prudent investments in target markets in order to grow the Company, while creating shareholder value by delivering the same level of high-quality, stable and sustainable cash flows we have returned for over 25 years.

As we continue to evolve and pursue new opportunities, we will remain true to our core values. Achieving excellence in all that we do remains a top priority, as does challenging ourselves to find new ways to enhance the efficiency and quality of our businesses.

We are committed to delivering exceptional results for our shareholders, guided by our Board of Directors, and working collaboratively with our partners, suppliers and stakeholders. We look forward to lighting up Europe in 2016 with the first electricity generated from our offshore wind farms, to keeping you informed on our progress and to continuing to build a Northland that creates value for you while delivering intelligent energy for a greener planet.


James C. Temerty, C.M.
Director and Chairman
of the Board

John W. Brace
Chief Executive Officer


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