Northland Power Annual Report 2022

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FY2022 Annual Report · Northland Power

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2022
Annual
Repor t

Intelligent Energy. Greener Planet.

Table of
Contents

Letter to Shareholders

11 Management’s Discussion and Analysis

55 Management’s Responsibility

Independent Auditors’ Report

Consolidated Financial Statements

Consolidated Statements of Financial Position

Consolidated Statements of Income (Loss)

Consolidated Statements of Comprehensive Income (Loss)

Consolidated Statements of Changes in Equity

Consolidated Statements of Cash Flows

Notes to the Consolidated Financial Statements

112 Corporate Information

Northland Annual Report | 2022Table of

Contents

Letter to Shareholders

At Northland, we
are building a
sustainable and
carbon-neutral
world together

Fellow shareholders,

Northland saw a very active 2022, delivering strong financial
results, maintaining top facility performance, and advancing
on our strategic priorities. We also enriched our talent pool
across the organization, adding key capabilities across the
company including in offtake origination, hydrogen, energy
storage and risk management.

Globally, this past year has seen considerable volatility.
Geopolitical tensions and increasing global supply chain
challenges are a few of the headwinds that faced the
industry. However, significant tailwinds also emerged to
accelerate the need for more renewable power capacity to
be built around the world. Energy security concerns are fast-
tracking renewable energy growth in Europe, Northeast Asian
electricity grid decarbonization is picking up steam, and
the United States and Canada both announced significant
initiatives to drive renewable energy investment.

Northland is well-positioned to be a significant contributor
to this growth, thanks largely to the way we’ve established
ourselves in the right markets. With growth in offshore wind
set to outpace all other renewables, we have focused our
efforts in some of the most attractive markets for offshore
wind, including mature markets like the UK, but also emerging
markets such as Poland and Asia. With onshore renewables,
we have set up development teams in countries with
ambitious renewable energy targets and strong commercial
regimes in some of the best places in the world to do business
including Europe, North America and Colombia. Being at the
forefront of emerging technologies has always been a part of
Northland’s DNA. As we look ahead to future growth in the
renewable energy sector, we see interesting opportunity in
green hydrogen and energy storage.

Northland Annual Report | 2022Net Zero by 2040

in which we operate

Beyond our tangible and financial growth in 2022,
we’re incredibly proud of how we’ve helped transform
the communities
through
our Environmental, Sustainability and Governance
commitments. We are on track to reduce our GHG
emissions intensity from Scope 1 & 2 by 65 per cent (from
a 2019 baseline) by 2030 and to reach a science-aligned
net zero measure over all emissions scopes (Scope 1, 2 &
3) by 2040. We’ve seen a 30 per cent reduction in CO2/
MWh since 2019, and this year we’ve joined the United
Nations Global Compact in line with our commitment to
human and labour rights across our value chain.

While our business powers communities around the
globe, we are powered by our people. In last year’s annual
report, we highlighted how our growth ambitions require
a robust human capital strategy to ensure we have the
necessary competencies and capabilities to deliver on
our strategy. We have since brought in key talent that
will both enable growth and further enhance our risk
management.

In 2022 we also undertook an initiative to realign our
business and change the way we work to create clearer
accountability, delegate decision-making, and allow
Northland to scale up. Effective January 2023, Northland
formally commenced operating under a business unit (BU)
structure focused by technology. The BU’s encompass
Offshore Wind, Onshore Renewables, Efficient Natural
Gas and Utilities, and Hydrogen/Renewable Fuels. This
new operating structure will result in a more streamlined
business that is better oriented towards the expected
growth by technology. Each BU is led by an experienced
executive, with a dedicated chief financial officer (CFO),
operations head, project execution head, and legal and
human resource leads.

The following are some of our top
accomplishments over the past year.

Financial
Accomplishments
•

Through our commitment to operational excellence,
we exceeded our guidance expectations for both
Adjusted EBITDA and Free Cash Flow, with the
results coming in at $1.4 billion, and $1.61 pershare,
respectively.

• We executed $4 billion in financings, including

the refinancing of our Gemini and Spain portfolios
to unlock more value in these assets, enhancing
Free Cash Flow in the years to come.

• We established an at-the-market equity program

(ATM program) and successfully raised $871
million through the issuance of common shares
from treasury to fund our growth and materially de-
risk our capital program.

Renewables Growth

• We advanced our offshore wind growth and

development pipeline by forming the 1.6 GW
Nordsee Cluster in partnership with RWE, securing
2.3 GW in leases in the Scotland Wind lease auction,
and by gaining further offshore wind site exclusivity
in Korea.

•

In Canada, we focused on opportunities at
home by securing a 1.6 GW solar portfolio and
development team in Alberta, and secured
majority interest in the 250 MW Oneida Energy
Storage Project in Ontario.

• We secured one of the biggest corporate PPAs
ever for our Hai Long project and announced
our first project-level sell-down by executing
an agreement to bring in Gentari International
Renewables Pte. Ltd. as a 29.4% partner in our Hai
Long project.

• We made great progress in locking down our

supply chain for our two most advanced offshore
wind projects, Hai Long and Baltic Power, as those
projects advance towards financial close.

Northland Annual Report | 2022Being at the forefront
of emerging
technologies has
always been a part of
Northland’s DNA

Looking Ahead

As we look ahead to the rest of 2023, we’re excited about
the opportunities that lie ahead. Our offshore and onshore
renewables BUs will see a shift in emphasis from project
origination to project execution. With 3 GW of gross operating
capacity and a robust development pipeline, Northland is
well-positioned for an accelerating global energy transition.
We intend to be selective and pursue only projects within
our pipeline that meet out strategic objectives and targeted
returns to help achieve our stated growth in Adjusted EBITDA
by 2027. With over 3.5 GW of projects in construction and/or
scheduled for financial close and start of construction within
the next two years, Northland’s total gross capacity will nearly
double to more than 6.5 GW pending project completion
by 2027. Achievement of these milestones are expected to
create long-term value for shareholders.

On behalf of our employees and directors, we thank you for
your confidence. We look forward to updating you on our
progress.

Sincerely,

Mike Crawley
President and Chief Executive Officer

Northland Annual Report | 2022Why invest in
Northland

Experienced
player with
proven track record

• Over 35 years of success developing, constructing and operating

renewable power projects across a range of technologies

• Significant depth of management experience across a number of
disciplines including renewable power project development, project
finance, construction and operations.

• Strong environmental and health & safety record

A growth mindset with a
focus on execution

• 6.5GW by 2027 and 7-10% CAGR EBITDA

• Healthy total shareholder return, 13% CAGR total shareholder

annualised return since IPO

• Partnership philosophy and forward-thinking culture

• Track record of successful growth

Diversified global
portfolio

• Well-diversified portfolio of high-quality power infrastructure assets:

over 3 GW of gross operating capacity

• Significant development opportunities across multiple markets and
technologies: >20 GW development pipeline to support growth

1,339
Expert

12
Countries with

27
Projects

employees

active development

2.4M
Million tons of
avoided CO2e

3GW
Of gross

operating capacity

Northland Annual Report | 2022Financial & Operational
Highlights

Regional Development
Offices
Toronto, Mexico City, Glasgow, Seoul,
Madrid, Houston, Bogota, Amsterdam,
Tokyo, Warsaw

Offshore Wind
Management Centers
Hamburg, Taipei

Onshore Renewable
Management Centers
Toronto

Adjusted EBITDA $1.4B – Record
highest annual EBITDA for NPI

2022 Adjusted FCF/Share of
$1.95 and FCF/Share of $1.61

Other 10%

Solar 25%

Europe 40%

North
America 30%

Offshore
Wind 60%

Technology
20GW

Onshore
Wind 5%

Geography
20GW

Latin
America 5%

Asia 25%

Northland Annual Report | 2022Northland’s

Global Reach

Facility and
Office Types

Offshore Wind

Offshore Under Construction and
Advanced Development

Onshore Wind

Onshore Under Construction and
Advanced Development

Electricity Distribution Utility

Solar

Solar: Under Construction

Thermal

Office

Management’s
Discussion and
Analysis

Northland Annual Report | 2022Management’s Discussion and Analysis

of Northland Power’s Financial Position and Operating Results

Table of Contents

SECTION 1: OVERVIEW . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

SECTION 2: STRATEGY AND KEY FACTORS SUPPORTING SUSTAINABLE PERFORMANCE AND GROWTH . . . . . . . . . . . . . . . . . .

SECTION 3: NORTHLAND’S BUSINESS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

SECTION 4: CONSOLIDATED HIGHLIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

4.1: Significant Events . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

4.2: Operating Highlights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

SECTION 5: RESULTS OF OPERATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

5.1: Operating Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

5.2: General and Administrative Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

5.3: Growth Expenditures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

5.4: Consolidated Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

5.5: Adjusted EBITDA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

5.6: Adjusted Free Cash Flow and Free Cash Flow . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

SECTION 6: CHANGES IN FINANCIAL POSITION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

SECTION 7: EQUITY, LIQUIDITY AND CAPITAL RESOURCES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

SECTION 8: SUMMARY OF QUARTERLY CONSOLIDATED RESULTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

SECTION 9: DEVELOPMENT, ACQUISITION AND CONSTRUCTION ACTIVITIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

SECTION 10: OUTLOOK . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

SECTION 11: LITIGATION, CLAIMS AND CONTINGENCIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

SECTION 12: ESG AND CLIMATE CHANGE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

SECTION 13: FINANCIAL RISKS AND UNCERTAINTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

SECTION 14: CRITICAL ACCOUNTING ESTIMATES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

SECTION 15: FUTURE ACCOUNTING POLICIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

SECTION 16: CONTROLS AND PROCEDURES OVER FINANCIAL REPORTING . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

I NORTHLAND POWER INC.I

I 2022 ANNUAL REPORT I

SECTION 1: OVERVIEW

Introduction

The purpose of this Management’s Discussion and Analysis (“MD&A”) is to explain the financial results of Northland Power
Inc. (“Northland” or the “Company”) and to assist the reader in understanding the nature and importance of changes and
trends as well as the risks and uncertainties that may affect the operating results and financial position of the Company.
This MD&A should be read in conjunction with Northland’s audited consolidated financial statements for the year ended
December 31, 2022, and 2021, and Northland’s most recent Annual Information Form dated February 23, 2023 (“2022
AIF”). These materials are available on the Company’s SEDAR profile at www.sedar.com and on Northland’s website at
www.northlandpower.com.

This MD&A, dated February 23, 2023, compares Northland’s financial results and financial position for the year ended
December 31, 2022, with those for the year ended December 31, 2021. Certain prior period disclosures have been
reclassified for consistency with the current period presentation. Northland’s Audit Committee reviewed this MD&A and
the associated audited consolidated financial statements and notes, and its Board of Directors approved these documents
prior to their release.

All dollar amounts set out herein are in thousands of Canadian dollars, unless otherwise stated.

Forward-Looking Statements

This MD&A contains forward-looking statements that are based on certain estimates and assumptions that were considered
reasonable on February 23, 2023; actual results may differ materially. Forward-looking statements are provided for the
purpose of presenting information about management’s current expectations and plans. Readers are cautioned that such
statements may not be appropriate for other purposes. Northland’s actual results could differ materially from those
expressed in, or implied by, these forward-looking statements and, accordingly, the events anticipated by the forward-
looking statements may or may not transpire or occur. Forward-looking statements include statements that are not
historical facts and are predictive in nature, depend upon or refer to future events or conditions, or include words such as
“expects,” “anticipates,” “plans,” “predicts,” “believes,” “estimates,” “intends,” “targets,” “projects,” “forecasts” or negative
versions thereof and other similar expressions or future or conditional verbs such as “may,” “will,” “should,” “would” and
“could.” These statements may include, without limitation, statements regarding future Adjusted EBITDA, Adjusted Free
Cash Flow and Free Cash Flow, respective per share amounts, dividend payments and dividend payout ratios, guidance, the
completion of construction, acquisitions, dispositions, investments or financings and the timing thereof, attainment of
commercial operations, the potential for future production from project pipelines, cost and output of development projects,
litigation claims, plans for raising capital, and the future operations, business, financial condition, financial results, priorities,
ongoing objectives, strategies and the outlook of Northland and its subsidiaries. These statements are based upon certain
material factors or assumptions that were applied in developing the forward-looking statements, including the design
specifications of development projects, the provisions of contracts to which Northland or a subsidiary is a party,
management’s current plans and its perception of historical trends, current conditions and expected future developments,
the ability to obtain necessary approvals, satisfy any closing conditions, or obtain adequate financing regarding
contemplated construction, acquisitions, dispositions, investments or financings, as well as other factors, estimates and
assumptions that are believed to be appropriate in the circumstances. Although these forward-looking statements are based
upon management’s current reasonable expectations and assumptions, they are subject to numerous risks and
uncertainties. Some of the factors include, but are not limited to, risks associated with sales contracts, Northland’s reliance
on the performance of its offshore wind facilities at Gemini, Nordsee One and Deutsche Bucht for approximately 50% of its
Adjusted EBITDA, counterparty risks, contractual operating performance, variability of sales from generating facilities
powered by intermittent renewable resources, offshore wind concentration, natural gas and power market risks, operational
risks, recovery of utility operating costs, Northland’s ability to resolve issues/delays with the relevant regulatory and/or
government authorities, permitting, construction risks, project development risks, acquisition risks, financing risks,
disposition and joint-venture risks, competition risks, interest rate and refinancing risks, liquidity risk, inflation risks, impacts
of regional or global conflicts, credit rating risk, currency fluctuation risk, variability of cash flow and potential impact on
dividends, taxation, natural events, environmental risks, health and worker safety risks, market compliance risk, government
regulations and policy risks, utility rate regulation risks, international activities, reliance on information technology, labour
relations, reputational risk, insurance risk, risks relating to co-ownership, bribery and corruption risk, legal contingencies,
and the other factors described in this MD&A and the 2022 AIF. Northland has attempted to identify important factors that
could cause actual results to materially differ from current expectations, however, there may be other factors that cause
actual results to differ materially from such expectations. Northland’s actual results could differ materially from those
expressed in, or implied by, these forward-looking statements and, accordingly, no assurances can be given that any of the

I NORTHLAND POWER INC.I

I 2022 ANNUAL REPORT I

events anticipated by the forward-looking statements will transpire or occur, and Northland cautions you not to place undue
reliance upon any such forward-looking statements. The forward-looking statements contained in this MD&A are, unless
otherwise indicated, stated as of the dated hereof and are based on assumptions that were considered reasonable as of the
date hereof. Other than as specifically required by law, Northland undertakes no obligation to update any forward-looking
statements to reflect events or circumstances after such date or to reflect the occurrence of unanticipated events, whether
as a result of new information, future events or results, or otherwise.

Non-IFRS Financial Measures

This MD&A includes references to the Company’s adjusted earnings before interest, income taxes, depreciation and
amortization (“Adjusted EBITDA”), Adjusted Free Cash Flow, Free Cash Flow and applicable payout ratios and per share
amounts, which are measures not prescribed by International Financial Reporting Standards (“IFRS”), and therefore do not
have any standardized meaning under IFRS and may not be comparable to similar measures presented by other companies.
Non-IFRS financial measures are presented at Northland’s share of underlying operations. These measures should not be
considered alternatives to net income (loss), cash flow from operating activities or other measures of financial performance
calculated in accordance with IFRS. Rather, these measures are provided to complement IFRS measures in the analysis of
Northland’s results of operations from management’s perspective. Management believes that Northland’s non-IFRS
financial measures and applicable payout ratio and per share amounts are widely accepted and understood financial
indicators used by investors and securities analysts to assess the performance of a company, including its ability to generate
cash through operations. For reconciliations of these non-IFRS financial measures to their nearest IFRS measure, refer to
Section 5.5: Adjusted EBITDA for a reconciliation of consolidated net income (loss) under IFRS to reported Adjusted EBITDA
and Section 5.6: Adjusted Free Cash Flow and Free Cash Flow for a reconciliation of cash provided by operating activities
under IFRS to reported Adjusted Free Cash Flow and Free Cash Flow.

Adjusted EBITDA

Adjusted EBITDA represents core operating performance of the business excluding leverage, income tax and non-core
accounting items. Adjusted EBITDA is calculated as Northland’s share of net income (loss) adjusted for the provision for
(recovery of) income taxes; depreciation of property, plant and equipment; amortization of contracts and other intangible
assets; net finance costs; interest income from Gemini; fair value (gain) loss on derivative contracts; unrealized foreign
exchange (gain) loss; (gain) loss on sale of development assets; equity accounting; costs attributable to an asset or business
acquisition and other adjustments as appropriate, such as management and incentive fees earned by Northland from non-
wholly owned assets. For clarity, Northland’s Adjusted EBITDA reflects a reduction for its share of general and
administrative costs during development and construction that do not qualify for capitalization.

Management believes Adjusted EBITDA is a meaningful measure of Northland’s operating performance because it excludes
certain items included in the calculation of net income (loss) that may not be appropriate determinants of long-term
operating performance.

Adjusted Free Cash Flow

Adjusted Free Cash Flow represents the cash generated from the business, before investment-related decisions (refer to
Section 5.3: Growth Expenditures), and available to pay dividends, while preserving the long-term value of the business.
Adjusted Free Cash Flow is calculated as Northland’s share of cash provided by operating activities adjusted for short-term
changes in operating working capital; non-expansionary capital expenditures; growth expenditures, interest incurred on
outstanding debt; scheduled principal repayments and net upfinancing proceeds; major maintenance and debt reserves;
interest income from Northland’s subordinated loan to Gemini; proceeds from government grants; preferred share
dividends; net proceeds from sale of development assets and where net proceeds are received in respect of certain
transactions entered in to generate cash flow as part of an active asset management strategy of the overall portfolio; and
other adjustments as appropriate. Adjusted Free Cash Flow excludes pre-completion sales required to service debt and
related operating costs for projects under construction and excludes costs attributable to an asset or business acquisition.

Where Northland controls the distribution policy of its investments, Adjusted Free Cash Flow reflects Northland’s share of
the investment’s underlying Adjusted Free Cash Flow, otherwise, Northland includes the cash distributions received from
the investment. Adjusted Free Cash Flow from foreign operations is translated to Canadian dollars at the exchange rate
Northland realizes on cash distributions.

Management believes Adjusted Free Cash Flow is a meaningful measure of Northland’s ability to generate cash flow, after
on-going obligations, to reinvest in growth and fund dividend payments.

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I 2022 ANNUAL REPORT I

Free Cash Flow

Free Cash Flow is calculated by deducting growth-related expenditures from Adjusted Free Cash Flow. Management
believes Free Cash Flow is a meaningful measure of Northland’s ability to generate cash flow, after growth-related costs, to
fund dividend payments.

For clarity, Northland’s Free Cash Flow includes a reduction for expenditures on development activities until an advanced
project qualifies for capitalization under IFRS. The Adjusted Free Cash Flow and Free Cash Flow payout ratios, calculated
using the respective financial measure, demonstrate the proportion of the respective measure paid as dividends, whether
in cash, or in shares under Northland’s dividend reinvestment plan (“DRIP”). The net payout ratios indicate the proportion
of Free Cash Flow paid as cash dividends. The payout ratios generally reflect Northland’s ability to fund growth-related
expenditures and sustain dividends.

SECTION 2: STRATEGY AND KEY FACTORS SUPPORTING SUSTAINABLE
PERFORMANCE AND GROWTH

Business Objective

Northland’s objective is to provide its Shareholders with a total return comprising dividends and share value growth from
the successful management of its assets, businesses and investments related to the production, delivery and sale of energy-
related products.

Vision

At Northland, we are building a sustainable and carbon-neutral world together: Our work is grounded in our vision to
become a global leader in the development of sustainable infrastructure assets. We are pushing the energy sector forward
by creating innovative solutions that build a net-positive business. This translates to driving socio-economic value in the
communities where we operate, bringing local markets closer to a carbon-neutral future, and preserving our natural
resources through power generation. As developers, owners and operators of energy facilities across the globe, we are
poised to transform how the world is powered to produce long-term impact for our people and our planet.

Business Strategy

Northland’s business strategy is centered on establishing a significant global presence as a sustainable power provider with
a primary focus on offshore wind. Northland aims to increase Shareholder value by leveraging its expertise and early mover
advantage to create and operate high-quality, sustainable projects in key target markets that are supported by long-term
sales contracts that deliver predictable cash flows. Northland utilizes its operational knowledge and the application of
appropriate technology to optimize the performance of its operating facilities to ensure delivery of essential power to its
offtake counterparties.

To successfully execute its strategy, Northland focuses on each of the following strategic objectives:

(i) Winning Business

The global shift to renewable energy is accelerating as government de-carbonization and energy security polices and
corporate net-zero targets are expected to drive significant growth in renewable development over the next decade. This
creates significant opportunities for renewable energy developers, like Northland, who are seeking to accelerate the energy
transition to help reduce greenhouse gas emissions and meet de-carbonization targets. Northland is well positioned
through its business units and regional development offices to capture development opportunities that should help
facilitate the global advancement of renewable energy targets. Northland develops, constructs, and operates sustainable
infrastructure projects across a range of clean and green technologies, such as wind (offshore and onshore), solar, battery
storage, as well as supplying energy through a regulated utility. Northland is focused on pursuing renewable growth
opportunities in jurisdictions that meet its risk management criteria such as North America, Europe, Latin America, and
Asia. Northland seeks to manage its development processes prudently by regularly balancing the probability of success
against associated costs and risks.

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I 2022 ANNUAL REPORT I

(ii) Building Facilities

Northland aims to increase Shareholder value by creating high-quality projects that earn recurring income from long-term
sales contracts with creditworthy counterparties (i.e. government or corporate offtakers). Northland exercises judgment,
discipline and acumen in its construction activities to ensure maximum success. Northland’s successful record of project
execution results from these core strengths and contributes to consistent investor returns.

(iii) Operating Facilities

A core element of Northland’s strategy is the optimization of sales and predetermined costs through sales contracts with
creditworthy counterparties. For renewable power generation facilities, Northland does not incur an associated cost of
sales, and generally enters into long-term operating and maintenance (“O&M”) contracts with leading service providers at
predetermined rates. For the efficient natural gas generation facilities, the key terms of our operating facilities’ long-term
power purchase agreements (“PPA”) and fuel supply contracts are aligned such that revenues and cost escalations are
substantially linked for each facility. Northland’s utility asset operates under a regulatory framework with the vast majority
of sales derived from its regulated methodology, which provides it with substantially fixed remuneration and pass-through
of major costs to customers. This approach provides largely predictable operating income and cash flow, while ensuring
ongoing environmental sustainability and the health and safety of stakeholders.

Northland’s management aims to maximize returns through a focus on efficient and effective facility operations; longer-
term asset management; and structuring sales supply and maintenance agreements to maximize sales, while carefully
managing risk. In addition, Northland applies an active approach to overall portfolio management, which may result in
optimizations from asset sales and financing/re-financing opportunities as part of its return objectives and funding strategy.

With a commitment to continuous improvement, Northland’s operations group shares its experiences with the
development, engineering and construction groups on an ongoing basis, to ensure all knowledge gained is factored into the
development and construction of any new project Northland undertakes.

(iv) Organizational Effectiveness

Underpinning Northland’s strategy is a focus on strong management of key corporate functions such as: human resources
and talent management; construction; environmental management; health and safety; finance and accounting;
management
information systems, Environmental, Social and Governance (“ESG”) strategy and reporting, and
communications. Our growth ambitions require a robust human capital strategy to ensure we have the necessary
competencies and capabilities to delivery on our strategy. Within offshore wind, a key differentiator will be attracting and
retaining the best talent to develop, construct, and operate large complex projects. Management is committed to
organizational effectiveness as an essential component of Northland’s long-term success and continued growth.

Effective January 2023, Northland formally commenced operating under a business unit (“BU”) structure focused by
technology. The BU’s encompass Offshore Wind, Onshore Renewables, Efficient Natural Gas and Utilities, and Hydrogen/
Renewable Fuels. The offshore wind BU accounts for 1.2GW of operating assets and 12GW of development assets in Europe
and Asia. The onshore renewables BU accounts for 1.1GW of operating assets and nearly 8GW of development assets in
North America, Colombia and Europe, while the efficient natural gas and utility BU accounts for 0.7GW of operating assets.

This new operating structure will result in a more streamlined business that is better oriented towards the expected growth
by technology. Each BU is led by an experienced executive, with a dedicated chief financial officer (“CFO”), operations head,
project execution head, legal and human resource leads. The hydrogen BU is at an earlier stage in its formation compared
to the other BUs, but with experienced hydrogen talent already in place.

SECTION 3: NORTHLAND’S BUSINESS

As of December 31, 2022, Northland owns or has a net economic interest in 2,616 megawatts (“MW”) of power-producing
facilities with a total gross operating capacity of approximately 3,026MW and a regulated utility (refer to Section 4.1:
Significant Events of this MD&A for disclosures regarding the two facilities disposed of in April 2022). Northland’s facilities
produce electricity from clean energy sources for sale primarily under long-term PPAs or other revenue arrangements with
creditworthy counterparties. Northland’s utility is a distributor and retailer of electricity compensated under a regulated
framework. These operating assets provide stable cash flow and are primarily located in Canada, Germany, the
Netherlands, Spain and Colombia. Northland’s significant assets under construction and development are located in
Canada, Mexico, Taiwan, Poland, Germany, Colombia and the United States. Refer to the 2022 AIF for additional
information on Northland’s key operating facilities as of December 31, 2022, and refer to SECTION 9: DEVELOPMENT,
ACQUISITION AND CONSTRUCTION ACTIVITIES for additional information on Northland’s key development projects.

I NORTHLAND POWER INC.I

I 2022 ANNUAL REPORT I

Northland’s MD&A and audited consolidated financial statements include the results of its operating facilities, as
summarized in the following table:

Offshore Wind
Onshore Renewable
Canadian Wind
Canadian Solar
Spanish Wind
Spanish Solar
Colombian Solar
Efficient Natural Gas

Canada (2)

Utility

Colombia

Total

Gross Production
Capacity (MW)
1,184

Net
Production
Capacity (MW) (1)
894

394
130
443
116
16

743

n/a
3,026

314
115
435
116
16

726

n/a
2,616

(1) Presented at Northland’s economic interest.

(2) As at December 31, 2022, Northland’s economic interest was changed from December 31, 2021 due to the sale of two efficient natural gas facilities in
April 2022 (refer to Section 4.1: Significant Events of this MD&A for more information).

I NORTHLAND POWER INC.I

I 2022 ANNUAL REPORT I

In addition to operational assets, summarized below are Northland’s most significant projects under construction and under
development as well as other identified projects. The table below excludes the Company’s larger pipeline of earlier stage
development opportunities which may or may not be secured.

Project

Geographic
Region

Technology

Gross
Capacity
(MW)

Current
ownership

Development
Stage

Contract type

Estimated
COD

Construction Projects

Ball Hill

United States

Onshore wind

Bluestone

United States

Onshore wind

La Lucha

Total

Mexico

Solar

Capitalized Growth Projects

Suba

Oneida

Hai Long (1)
Baltic Power

Nordsee Two

Godewind

Total

Colombia

Solar

Canada

Taiwan

Poland

Germany

Battery Energy
Storage

Offshore wind

Identified Growth Projects

Jurassic

Alberta Solar

Nordsee Three

Nordsee Delta

Chiba

Canada

Germany

Solar

Offshore wind

Japan

Offshore wind

108

112

130

350

130

250

1,044

1,200

433

225

3,282

220

1,400

420

480

600

Dado Ocean

South Korea

Offshore wind

Up to 1,000

ScotWind

Hecate

CanWind

Bobae

Wando

Scotland

Offshore wind

2,340

Canada

Taiwan

Offshore wind

South Korea

Offshore wind

400

500

600

South Korea

Offshore wind

Up to 1,800

100%

Under
construction

20-year PPA

2023

20-year PPA

2023

TBD

2023

50%

Late-stage

15-year PPA

TBD

Majority Mid/late-stage

20-year PPA

2025

60%

49%

100%

49%

50%

100%

Late-stage

20-year PPA

2026/2027

Late-stage

Mid-stage

25-year CfD
TBD (2)
TBD (2)

2026

2026/2027

2025

2027 - 2030+

Mid/late-stage

Mid-stage

Early/mid-stage

Early-stage

Total
Total Pipeline (3) (4)
(1) Subject to a reduction to a 30.6% stake as Northland has agreed to sell a 29.4% indirect equity interest in Hai Long pending transaction close.

13,392

9,760

(2) Nordsee Two and Godewind have secured interconnection rights for zero subsidy bid, with the intention to secure a long-term corporate PPA.

(3) Excludes ~6,800MW of other pipeline projects.

(4) On February 17, 2023, Northland entered into an agreement to sell 100% stake in Highbridge. The transaction is expected to close in the second half

of 2023.

I NORTHLAND POWER INC.I

I 2022 ANNUAL REPORT I

SECTION 4: CONSOLIDATED HIGHLIGHTS

4.1: Significant Events

Significant events during 2022 and through the date of this MD&A are described below. Refer to SECTION 9:
DEVELOPMENT, ACQUISITION AND CONSTRUCTION ACTIVITIES of this MD&A for additional relevant information.

Balance Sheet:

Redemption of Series 3 Preferred Shares

On January 3, 2023, Northland redeemed all 4,800,000 of its issued and outstanding Cumulative Rate Reset Preferred
Shares, Series 3 (the “Series 3 Preferred Shares”) at a price of $25.00 per Series 3 Preferred Share together with all accrued
and unpaid dividends of $0.3175 per Series 3 Preferred Share for an aggregate total of $121.5 million.

Amendment to Spain Debt Facilities

In November 2022, Northland restructured the multiple long-term debt facilities of its Spanish portfolio in order to optimize
the structure into a single facility-level loan as well as to optimize the tax structure. The restructuring resulted in the
reduction in the size of the debt to €613 million from €675 million and extended the loan maturity date to 2042. The
restructured loan continues to be denominated in Euros, with the all-in interest rate similar at 2.0% versus 2.1% previously.
The reduction in the loan size to €613 million resulted in a one-time principal payment upon the restructuring of €61 million
($82 million) which reduced Adjusted Free Cash Flow and Free Cash Flow in the fourth quarter of 2022. Northland funded
the principal payment from the cash flow realized from higher realized pool prices and consequently, the payment did not
affect Northland’s available liquidity. The restructuring of the debt is expected to result in enhanced cash flows in the
coming years primarily due to lower debt service costs and from tax optimizations, as well as enhanced project economics.
The restructured debt qualifies as a green financing in accordance with Northland’s green financing framework.

Amendment to Gemini Debt Facilities

In October 2022, Northland successfully restructured €1.6 billion of its senior and junior debt relating to Gemini. The key
elements of the restructuring included: (i) partially replacing higher-cost junior debt with lower-cost senior debt; (ii)
decreasing senior debt loan margins; (iii) replacing the cash Debt Service Reserve Account with a Debt Service Reserve
Facility, resulting in additional liquidity of €32 million ($30 million at Northland’s share); and (iv) accelerating repayment of
the Northland junior debt portion. The restructuring will improve Adjusted Free Cash Flow to Northland over the next
several years and reflects the strong and consistent operational and financial performance of Gemini. The restructured
facility continues to be denominated in Euros, with the all-in interest rate at 3.5%. The restructuring reduced Adjusted Free
Cash Flow and Free Cash Flow in 2022 by €72 million ($68 million at Northland’s share), which was funded with available
cash flow generated from higher energy prices and, accordingly, did not impact Northland’s available liquidity. The
restructured debt qualifies as green financing in accordance with Northland’s green financing framework.

At-The-Market Equity Program

On September 7, 2022, Northland renewed its ATM program to issue up to an additional $750 million of common shares
from treasury, at the Company’s discretion. The ATM program was renewed following the termination of the previous ATM
program as a result of having exercised the full allotment permitted under the program. The proceeds raised to date are
intended to be used to fund projects that are expected to achieve financial close in 2023.

During the year ended December 31, 2022, Northland issued 20.9 million Common Shares under the ATM program at an
average price of $41.31 per Common Share for gross proceeds of $863 million (net proceeds $852 million). As at
February 23, 2023, Northland has issued a total of 21.1 million Common Shares at an average price of $41.27 per Common
Share for gross proceeds of $871 million (net proceeds $860 million).

I NORTHLAND POWER INC.I

I 2022 ANNUAL REPORT I

Kirkland Lake Refinancing

On June 2, 2022, Northland restructured and upsized its Kirkland Lake credit facility (the “Kirkland Lake facility”), resulting
in Northland receiving one-time management fee income of $34 million, net of closing costs. The aggregate amount of the
financing was upsized to $47 million, and the Kirkland Lake facility maturity date was extended by eight years to March 31,
2030. The restructured Kirkland Lake facility continues to be denominated in Canadian dollars, with the applicable interest
rate increasing to 4.2% (all-in interest rate) from the previous rate of 2.8%.

Sale of Two End-of-Contract Efficient Natural Gas Facilities

On April 7, 2022, Northland completed the sale of its Iroquois Falls and Kingston efficient natural gas facilities in Ontario.
The two facilities had a combined operating capacity of 230MW, and the sale resulted in a 24% reduction in Northland’s
gas-fired capacity. The sale repatriated capital to fund the growth of our renewable development projects around the
globe. Both facilities had operated under long-term PPAs with the provincial system operator, which expired at the end of
2021 and 2017, respectively. The net proceeds from the sale have been recorded in Adjusted Free Cash Flow and Free Cash
Flow for 2022.

Corporate Credit Ratings Re-affirmed

In November 2022, Northland’s corporate credit rating was reaffirmed at BBB (stable) by Fitch Ratings Inc., a global rating
agency, in addition to S&P’s BBB (stable) rating which was reaffirmed in May 2022.

Renewables Growth updates:

To achieve its long-term growth objectives, Northland has established BUs with regional development offices to secure
certain growth opportunities across the globe. The activity from these offices has generated a robust portfolio of projects at
various stages of development and construction. The successful achievement of commercial operations of these projects is
expected to deliver long-term, sustainable growth in the Company’s Adjusted EBITDA, Adjusted Free Cash Flow and Free
Cash Flow. The following provides updates on the progress being made on Northland’s active development portfolio.

CanWind Offshore Wind Project

In December 2022, Taiwan’s Ministry of Economic Affairs (the “MOEA”) announced the results of the first round of the
country’s Phase 3 Zonal Development offshore wind auction. Northland’s CanWind project, a 100% owned early-stage
development project, was awarded a total of 500MW of capacity under the auction. Northland is evaluating the viability of
the project.

Oneida Battery Storage Project

In December 2022, Northland entered into an agreement to acquire a majority interest in the Oneida Battery Storage
Project, a late-stage, grid-connected battery energy storage project in southern Ontario, Canada. The Oneida Energy
Storage Project is a 250MW/1GWh battery storage facility and is being developed in partnership with NRStor Inc. and the
Six Nations of the Grand River Development Corporation. The 1GWh is the total quantity of energy stored with 250MW of
highest capacity rating/output at any given moment. The project will benefit from a 20-year fixed price contract for revenue
payments with the Independent Electricity System Operator (“IESO”) in Ontario for the majority of the capacity from the
project. Financial close for the project is expected in 2023 with full commercial operations to commence in 2025.

Alberta Portfolio

In December 2022, Northland acquired a development platform in Alberta, Canada, continuing its growth and leadership in
renewable energy in Canada, which establishes Northland as a leading developer in the province. The acquisition adds a
solar and battery energy storage pipeline encompassing over 1.6GW and 1.2GWh, respectively, of which the 220MW
Jurassic Project could reach commercial operations as early as 2025.

Hai Long Offshore Wind Project

At Hai Long, the project has executed all the contracts with suppliers for various elements of the project and has
commenced with early construction works including starting the fabrication of key components. The financing of the project
is progressing, albeit slower and more challenging than expected due to market specific factors. On December 14, 2022,
Northland signed a share purchase agreement (the “Hai Long SPA”)with Gentari International Renewables Pte. Ltd
(“Gentari”) to sell 49% of Northland’s ownership interest in Hai Long, which upon closing, subject to various conditions, will
result in Gentari holding a 29.4% indirect equity interest in Hai Long, with Northland holding a 30.6% interest.

I NORTHLAND POWER INC.I

I 2022 ANNUAL REPORT I

Baltic Power Offshore Wind Project

At Baltic Power, preferred supplier agreements for key elements of the project, have been signed as well as agreements for
the transport and installation of the turbines and for the foundations of all substation elements and offshore substations.
The project’s 25-year Contract for Difference (“CfD”) offtake agreement, which was initially denominated in Polish Zloty will
now be denominated in Euros at effectively the same rate and inflation indexation will commence with a base year of 2022
(from 2023 previously), providing offsetting benefits to the higher inflationary price pressures experienced. The project
continues to advance towards financial close, expected in 2023. Northland holds a 49% interest in the project with PKN
Orlen holding 51%.

New York Onshore Wind Projects

Construction activities at the 112MW Bluestone project and the 108MW Ball Hill project continue, with commercial
operations for both projects expected in 2023.

On February 17, 2023, Northland entered into an agreement to sell the entire stake in the Highbridge project. The
transaction is expected to close in the second half of 2023.

ScotWind Offshore Wind Auction Success

In January 2022, Northland announced that it was awarded two offshore wind leases in the Crown Estate Scotland auction
with a total combined capacity of 2,340MW, comprised of one fixed foundation (840MW) and one floating foundation
(1,500MW). Commercial operations are expected at the end of 2029/2030 for the fixed and early 2030s for the floating.

Nordsee Offshore Wind Cluster

In January 2022, Northland and its German partner, RWE Renewables GmbH (“RWE”), announced the formation of a
1,558MW Nordsee Offshore Wind Cluster partnership (the “Cluster”) encompassing Nordsee Two (433MW), Nordsee Three
(420MW), Nordsee Delta (480MW) and Godewind (22MW). Development of the Cluster in Germany is progressing, with the
team working towards securing CPPA and preferred supplier agreements for key aspects of the projects. Commercial
operations are expected between 2026 and 2028. Northland holds a 49% interest in the Cluster and RWE holds a 51%
interest.

South Korean Offshore Wind Projects

The Dado offshore wind project has been awarded its Electricity Business License (“EBL”) for 900MW of the 1,000MW
capacity, providing exclusivity on the leases for the project. Northland’s second project, the 600MW Bobae project, has
been awarded EBLs for approximately 400MW and work continues on securing EBLs for the remaining 200MW. Northland is
pursuing additional early-stage development opportunities located in South Korea’s Wando County for multiple projects
with the potential for up to 1.8GW of operating capacity.

Colombian Solar Projects

Development progress at the 130MW Suba solar projects in Colombia continues. As previously communicated, certain
environmental permits are needed to move the projects toward financial close, which is expected to occur by 2024.
Northland effectively holds a 50% of economic interest in Suba and its partner, EDF Renewables holds the remaining 50%.

La Lucha Mexican Solar Project

Northland continues to work to achieve commercial operations at its 130MW La Lucha solar project in Mexico. In January
2023, the relevant Mexican permitting authority approved extension of the generation permit for La Lucha. The Company is
now coordinating with the appropriate regulatory authorities to initiate testing of the project in order to achieve
commercial operations in the second half of 2023.

I NORTHLAND POWER INC.I

I 2022 ANNUAL REPORT I

4.2: Operating Highlights

The following table presents key IFRS and non-IFRS financial measures and operational results:

Summary of Consolidated Results

Year ended December 31,

FINANCIALS

Sales
Gross profit
Operating income
Net income (loss)
Net income (loss) attributable to common shareholders
Adjusted EBITDA (a non-IFRS measure)

Cash provided by operating activities
Adjusted Free Cash Flow (a non-IFRS measure)
Free Cash Flow (a non-IFRS measure)
Cash dividends paid
Total dividends declared (1)

Total assets (2)
Total non-current liabilities (2)

Per Share

2022

2021

2020

2,448,815 $
2,178,389
1,051,307
955,457
827,733
1,398,176

1,832,983
460,892
380,472
196,845
284,582 $

2,093,255 $
1,879,762
785,366
269,879
189,559
1,137,004

1,609,295
386,366
307,401
172,755
264,200 $

2,060,627
1,858,298
856,852
485,057
381,076
1,170,097

1,321,601
415,398
343,588
217,918
245,067

14,222,609

12,871,816

7,589,484 $

8,501,560 $

11,399,470
8,336,835

Weighted average number of shares - basic (000s)
Net income (loss) attributable to common shareholders - basic
Net income (loss) attributable to common shareholders - diluted
Adjusted Free Cash Flow - basic (a non-IFRS measure)
Free Cash Flow - basic (a non-IFRS measure)
Total dividends declared (3)

236,157

218,861

$
$
$
$
$

3.46 $
3.46 $
1.95 $
1.61 $
1.20 $

0.82 $
0.82 $
1.77 $
1.40 $
1.20 $

198,774
1.86
1.89
2.09
1.73
1.20

ENERGY VOLUMES

Electricity production in gigawatt hours (GWh)

10,139

8,757

9,449

(1) Represents total dividends paid to common shareholders including dividends in cash or in shares under the DRIP.

(2) As at December 31.

(3) Excludes the dividend equivalent payment of $0.40 paid upon conversion of 14,289,000 subscription receipts on January 14, 2020.

I NORTHLAND POWER INC.I

I 2022 ANNUAL REPORT I

SECTION 5: RESULTS OF OPERATIONS

The following table summarizes operating results by technology and geography:

Three months ended December 31,

2022

2021

2022

2021

2022

2021

2022

2021

2022

2021

2022

2021

Electricity
production (GWh)

Sales

Operating
costs

Operating
income (1)

Adjusted
EBITDA

Adjusted
Free Cash Flow (2)

Offshore Wind Facilities

1,482

1,396 $ 339,248 $ 334,034 $ 45,079 $ 36,224 $ 193,115 $ 215,725 $ 220,960 $ 205,972 $ 71,436 $ 80,145

Onshore Renewable Facilities
Canada
Spain

Efficient Natural Gas Facilities
Canada

Utilities
Colombia

375
258
633 $

8,423 $ 19,032 $ 17,204 $ 29,426 $ 28,363 $ 10,991 $ 10,119
331 $ 49,115 $ 47,344 $
267
27,018
9,343
66,963
48,276
598 $ 132,323 $ 113,623 $ 21,809 $ 17,766 $ 67,308 $ 58,547 $ 96,389 $ 83,692 $ (55,654) $ 37,137

(66,645)

8,648 $

83,208

13,161

66,279

41,343

55,329

895

834 $ 110,645 $ 127,475 $ 14,211 $ 14,787 $ 36,483 $ 50,606 $ 48,742 $ 83,159 $ 11,585 $ 60,535

n/a

n/a $ 64,018 $ 58,949 $ 14,628 $ 14,939 $ 19,683 $ 16,221 $ 27,272 $ 24,112 $ 31,716 $ 16,532

Year ended December 31,

2022

2021

2022

2021

2022

2021

2022

2021

2022

2021

2022

2021

Electricity
production (GWh)

Sales

Operating
costs

Operating
income (1)

Adjusted
EBITDA

Adjusted
Free Cash Flow (2)

Offshore Wind Facilities

4,486

4,088 $ 1,259,247 $ 1,107,236 $ 169,756 $ 173,742 $ 703,479 $ 553,235 $ 800,404 $ 665,351 $ 228,813 $ 142,466

Onshore Renewable Facilities
Canada
Spain

Efficient Natural Gas Facilities
Canada

Utilities
Colombia

1,364
981
2,345

1,236 $ 216,606 $ 207,015 $ 31,013 $ 28,876 $ 100,147 $ 88,970 $ 144,509 $ 137,726 $ 53,207 $ 50,729
30,122
1,603 $ 485,857 $ 299,325 $ 73,845 $ 45,532 $ 243,855 $ 133,009 $ 364,439 $ 211,591 $ 48,382 $ 80,851

143,708

269,251

219,930

(4,825)

42,832

16,656

92,310

44,039

73,865

367

3,308

3,066 $ 425,572 $ 433,554 $ 43,215 $ 51,483 $ 169,279 $ 165,910 $ 245,652 $ 274,155 $ 118,923 $ 168,580

n/a

n/a $ 269,692 $ 225,349 $ 64,785 $ 57,137 $ 85,153 $ 58,982 $ 114,006 $ 91,510 $ 100,018 $ 45,659

(1) Included amortization of contracts and other intangible assets in the operating income.

(2) Adjusted Free Cash Flow and Free Cash Flow are the same for operating facilities.

I NORTHLAND POWER INC.I

I 2022 ANNUAL REPORT I

5.1: Operating Results

Offshore Wind Facilities

Northland’s three offshore wind facilities, Gemini, Nordsee One and Deutsche Bucht, are located off the coasts of the
Netherlands and Germany. Wind power generation harnesses renewable wind energy by converting the kinetic energy of
wind into electrical energy. Wind facilities are subject to seasonality, and accordingly, tend to produce more electricity
during winter due to denser air and higher winds compared to summer, the effect of which is reflected in the respective
fiscal quarter’s results. In addition, variability in offshore wind facilities results in similar fluctuations in quarter-to-quarter
financial results. Factors such as exposure to market prices, and turbine or grid availability can also have a significant effect
on financial results, though typically to a lesser extent than variability in wind resource. For the year ended December 31,
2022, Gemini, Nordsee One and Deutsche Bucht contributed approximately 20%, 16% and 16%, respectively, of Northland’s
reported Adjusted EBITDA from facilities.

Results for Northland’s offshore wind facilities are also affected by foreign exchange rate fluctuations between the Euro and
Canadian dollar, which primarily affect sales, net income and Adjusted EBITDA. Northland has entered into long-term
foreign exchange rate hedges, at an average rate of $1.59/€ for 2022 compared to $1.60/€ for 2021 for a substantial
portion of anticipated euro-denominated Adjusted Free Cash Flow, mitigating the effects of foreign exchange rate
fluctuations with respect to this metric. 2023 is hedged at a similar rate to 2022.

Variability within Operating Results

Gemini has revenue agreements with the Government of the Netherlands which expire in 2031. Under these agreements,
revenue is earned through a combination of annual average Dutch wholesale market price (“APX”), corrected for profile
and imbalance (“P&I”) costs which are variable from year to year, generally ranging between 10-20%, and a revenue top-up
(“SDE”) to effectively €211/MWh. The SDE mechanism is designed to top-up the APX for up to 1,908 gigawatt hours of
annual production (“Gemini Production Cap”) and is designed to ensure the full subsidy is received by Gemini annually, or
an equivalent amount from market price. For production beyond the Cap of 1,908GWh, revenue is earned at the APX less
P&I costs. However, if full year APX exceeds €211/MWh, Gemini’s revenue is earned at APX less P&I costs for the entire
production.

The SDE is subject to an annual contractual floor price (the “SDE floor”), thereby exposing Gemini to market price risk if the
APX falls below the effective annual SDE floor of €51/MWh. At December 31, 2022, APX of €242/MWh for 2022 was higher
than the SDE price, hence the revenue was recognized at the APX less P&I costs for the entire production (“Revenue
Price”). Recent regulatory market price cap changes by the EU Council established in September 2022 and January 2023 are
detailed below.

Nordsee One and Deutsche Bucht have a Feed-In Tariff contract (“FIT”) with the German government whereby the
associated tariff is added to the German wholesale market price (“wholesale price”), effectively generating a fixed unit
price for energy sold, except when the monthly wholesale price exceeds the contractual FIT rate for the facility. The realized
wholesale rate is reduced by various capture costs between 10% to 20% of the rate.

Under the German Renewable Energy Sources Act (“EEG”), while the tariff compensates for most production curtailments
required by the system operator, the facilities do not receive revenue for periods where the market power price remains
negative for longer than six consecutive hours (“negative prices”). The facilities are also subject to unpaid curtailments by
the German system operator for scheduled and unscheduled grid repairs (“grid outages”) of up to 28 days annually at each
facility, which can have a significant effect on earnings depending on the season.

Regulatory Market Price Cap Changes Effective from December 1, 2022 to June 30, 2023

In September 2022, in response to the surge in wholesale electricity markets, the EU Council established a cap on market
revenues on renewable energy producers effective from December 1, 2022, to June 30, 2023 (the “EU price cap”). EU
member states have flexibility to adapt the EU price cap for their markets.

In January 2023, the mechanism for the EU price cap was finalized by the majority of member states. Gemini will be eligible
to receive merchant revenue of up to €211/MWh and Nordsee One and Deutsche Bucht will be eligible to receive merchant
revenue up to €30/MWh above their respective FIT plus 6% of the wholesale price. In both countries, only 10% of any
revenue above the cap can be earned and retained by the facilities.

I NORTHLAND POWER INC.I

I 2022 ANNUAL REPORT I

Gemini APX Hedges

In 2021, Northland entered into financial derivatives, resulting in the crystallization of financial losses for 2022 and 2023
(“APX hedge losses”) of APX related hedges entered into in 2020 when prices were declining.

Nordsee One Component Issue (Bearings Replacement Campaign)

In 2021, Northland identified a component defect on wind turbines at Nordsee One affecting the main rotor shaft assembly
(“RSA”) and promptly commenced replacement of the RSA of all turbines. Through a proactive replacement program,
Northland was successful in replacing the RSAs on all 54 turbines ahead of schedule and within cost expectations. This
allowed for the full availability of the turbines heading into the fourth quarter, seasonally one of the stronger quarters for
offshore wind resource. The costs were effectively covered by the warranty bond settlement proceeds of €58 million ($67
million at Northland’s share) received in 2020 relating to then-outstanding warranty obligations of Nordsee One’s turbine
manufacturer.

Over the course of the replacement campaign, Nordsee One curtailed the performance of certain turbines to briefly extend
their life, which reduced production (“turbine availability”). Nordsee One incurred lost sales due to turbine availability of
€7 million ($8 million at Northland’s share) for the year ended December 31, 2022.

Gemini Refinancing

During the three months ended December 31, 2022, Northland successfully restructured €1.6 billion of its senior and junior
debt relating to Gemini. The restructuring will improve Adjusted Free Cash Flow to Northland over the next several years
and reflects the strong and consistent operational and financial performance of Gemini. The restructuring reduced Adjusted
Free Cash Flow in 2022 by €72 million ($68 million at Northland’s share), which was funded with available cash flow
generated from higher energy prices and, accordingly, did not impact Northland’s available liquidity. The restructured debt
qualifies as green financing in accordance with Northland’s green financing framework.

Operating Performance

An important indicator for performance of offshore wind facilities is the current and historical average power production of
the facility. The following tables summarize actual electricity production and the historical average, high and low for the
applicable operating periods of each offshore facility:

Electricity production (GWh)

Gemini
Nordsee One
Deutsche Bucht
Total

Electricity production (GWh)

Gemini
Nordsee One
Deutsche Bucht
Total

Three months ended December 31,

2022 (1)

2021 (1)

Historical
Average (2)

Historical
High (2)

Historical
Low (2)

794
362
326
1,482

743
333
320
1,396

775
332
314

824
362
326

739
298
300

Year ended December 31,

2022 (1)

2021 (1)

Historical
Average (2)

Historical
High (2)

Historical
Low (2)

2,396
1,087
1,003
4,486

2,193
968
927
4,088

2,365
1,057
962

2,496
1,087
1,003

2,193
968
927

(1) Includes GWh produced and attributed to paid curtailments.

(2) Represents the historical power production for the period since the commencement of commercial operation of the respective facility (2017 for

Gemini and Nordsee One, and 2020 for Deutsche Bucht) and excludes unpaid curtailments.

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I 2022 ANNUAL REPORT I

Electricity production for the three months ended December 31, 2022, increased 6% or 86GWh compared to the same
quarter of 2021, primarily due to higher wind resource, higher turbine availability at Nordsee One due to the completion of
the RSA replacement campaign ahead of schedule and fewer uncompensated grid outages at the German facilities, partially
offset by higher unpaid curtailments related to negative prices in Germany. Electricity production for the year ended
December 31, 2022, increased 10% or 398GWh compared to 2021 primarily due to higher wind resource, fewer unpaid
curtailments related to negative prices and grid outages in Germany.

Sales of $339 million for the three months ended December 31, 2022, increased 2% or $5 million compared to the same
quarter of 2021, primarily due to higher market prices and electricity production across all offshore wind facilities, partially
offset by the foreign exchange rate fluctuations due to weakening of the Euro. Adjusted Free Cash Flow and Free Cash Flow
are largely hedged and therefore virtually unaffected by foreign exchange rate fluctuations. Sales of $1,259 million for the
year ended December 31, 2022, increased 14% or $152 million compared to 2021, primarily due to the same factors above.
Higher wholesale market prices exceeding the FIT and the SDE at the offshore wind facilities allowed for the realization of
$126 million (at Northland’s share) of higher revenues for the year ended December 31, 2022.

Sales were also adversely affected by factors other than wind resource, as summarized in the following table:

Three months ended December 31,

Year ended December 31,

Effect of Gemini APX hedge losses (1)
Lower turbine availability at Nordsee One (due to
RSA campaign)
Unpaid curtailment due to negative prices in
Germany
Unpaid curtailment due to grid outages in Germany $
(1) Realized APX hedge losses are not reported in Sales but do affect Adjusted EBITDA and Adjusted Free Cash Flow.

3,125

1,966

3,462

3,142

630

632

2022
6,513

2021
13,773

2022
21,647

8,112

4,270

2021
37,215

8,887

8,418

9,266

13,425

Operating costs of $45 million for the three months ended December 31, 2022, increased 24% or $9 million, compared to
the same periods of 2021 primarily due to higher operating cost at Gemini, partially offset by the effect of foreign exchange
rate fluctuations. Operating costs of $170 million for the year ended December 31, 2022, decreased 2% or $4 million,
compared to 2021 primarily due to the effect of foreign exchange rate fluctuations.

Operating income of $193 million for the three months ended December 31, 2022, decreased 10% or $23 million compared
to the same quarter of 2021 primarily driven by higher amortization of contract assets and foreign exchange rate
fluctuations due to weakening of the Euro, partially offset by higher wind resource and higher market prices across all
offshore wind facilities. Operating income of $703 million for the year ended December 31, 2022, increased 27% or $150
million compared to 2021 due to a higher wind resource, higher market prices across all offshore wind facilities and fewer
unpaid curtailments related to negative prices and grid outages in Germany, partially offset by higher amortization of
contract assets and foreign exchange rate fluctuations due to weakening of the Euro.

Adjusted EBITDA of $221 million for the three months ended December 31, 2022, increased 7% or $15 million compared to
the same quarter of 2021, due to higher wind resource, higher market prices across all offshore wind facilities and fewer
unpaid curtailments related to grid outages in Germany, partially offset by foreign exchange rate fluctuations due to
weakening of the Euro. Adjusted EBITDA of $800 million for the year ended December 31, 2022, increased 20% or $135
million compared to 2021 due to similar factors.

Onshore Renewable Facilities

Northland’s onshore renewables comprise 996MW (at Northland’s share) of onshore wind and solar facilities located in
Canada and Spain. Onshore wind facilities are similar in nature operationally to offshore wind; however, with lower
operating costs and generally lower wind resource. Solar power facilities have lower fixed operating costs per unit of
capacity than other renewable power technologies. Electricity production from solar facilities tends to be less variable than
wind but is limited to available sunlight, which is generally higher in the summer than in the winter. For the year ended
December 31, 2022, Northland’s onshore renewable facilities in Canada and Spain contributed approximately 9% and 14%,
respectively, of reported Adjusted EBITDA from facilities.

The Spanish portfolio, acquired in August 2021, is comprised of onshore wind (435MW), solar photovoltaic (66MW), and
concentrated solar (50MW) assets located throughout Spain. The Spanish portfolio operates under a regulated asset base

I NORTHLAND POWER INC.I

I 2022 ANNUAL REPORT I

framework that guarantees a specified pre-tax rate of return of 7.4% for 23 sites and 7.1% for 10 sites, over the full
regulatory life of the facilities, regardless of settled wholesale power price (“pool price”).

Revenue from the Spanish facilities is primarily comprised of two main components, return on investment (“Ri”) as well as a
larger component based on pool prices. While a renewables operator may collect the settled pool price per MWh produced,
under IFRS, until the facilities have earned their guaranteed pre-tax rate of return, revenue is only recognized at the pool
price originally forecasted by the Spanish regulator at the start of the regulatory semi-period (the “posted price”). Under
IFRS, any pool price revenue collected significantly in excess of (or below) the posted price in the current regulatory semi-
period is deferred and recognized over the remaining regulatory periods (known as “band adjustments”). Once the facilities
have earned their guaranteed pre-tax rate of return, revenue is recognized at the settled pool price. Band adjustments from
prior regulatory periods continue to be recognized over the remaining regulatory periods. Two of the Spanish portfolio’s
onshore wind assets (100MW) have earned their guaranteed pre-tax rate of return as of the end of 2022.

Spain regulatory changes

In response to the unprecedented high energy prices for consumers, in early 2022, Spanish authorities enacted an
exceptional update to the regulatory framework for the calendar year 2022 as well as the next regulatory semi-period
2023-2025. Effective mid-2022, these regulatory amendments raised the posted price from €49/MWh to €122/MWh,
retroactive from January 1, 2022, thus allowing generation facilities to realize higher sales in 2022. In addition, there were
also changes to the band adjustments for 2022 that permitted the recognition of deferred revenue from 2020 and 2021 into
2022, earlier than the original regulation allowed for. However, these increases will be partially offset by a reduction in
regulated revenue from Ri.

As noted above, in addition to the consolidation of the Spanish debt facilities, during the fourth quarter of 2022, a €61
million ($82 million) one-time principal payment was made in relation to the deleveraging of the Spain portfolio, which
reduced Adjusted Free Cash Flow and Free Cash Flow in the fourth quarter of 2022. The principal repayment was entirely
funded from the cash flow realized to date from the higher pool prices since acquisition of the portfolio in 2021. The long-
term financial performance of the Spanish portfolio continues to be underpinned by the regulated return associated with
the facilities, with a revised debt service profile that is aligned with the cash flow forecast of the portfolio.

Northland entered into long-term Euro denominated foreign exchange hedges, at an average rate of $1.42/€1 for 2022
compared to $1.73/€1 for 2021, which hedges the majority of projected distributions from the Spanish portfolio to mitigate
foreign exchange rate volatility, consistent with its corporate risk mitigation strategy. The hedged rate applicable for 2023 is
$1.52/€1.

Electricity production at the onshore renewable facilities for the three months ended December 31, 2022, was 6% or
34GWh higher than the same quarter of 2021, due to higher wind resource across all onshore facilities, partially offset by
lower solar resource at the Spanish facilities. Electricity production for the year ended December 31, 2022, was 46% or
741GWh higher than 2021, due to higher onshore wind and solar resources generally across all onshore facilities, in
addition to the Spanish Portfolio contributing to twelve months of results in 2022 compared to five months of contributions
in 2021. For the three months ended December 31, 2022, the Spanish portfolio generated 233GWh and 25GWh from wind
and solar facilities, respectively. For the year ended December 31, 2022, Spanish portfolio generated 791GWh and 190GWh
from wind and solar facilities, respectively.

Adjusted EBITDA for the three months ended December 31, 2022, of $96 million was 15% or $13 million higher than 2021
primarily due to the increased contribution from the Spanish portfolio. Adjusted EBITDA for the year ended December 31,
2022, of $364 million was 72% or $153 million higher than 2021 primarily due to similar factors. Excluding the contribution
from the Spanish portfolio, for the three months ended December 31, 2022, sales and Adjusted EBITDA were 4% and 4%
higher, respectively, compared to the same quarter of 2021, primarily due to higher wind and solar resource. For the year
ended December 31, 2022, sales and Adjusted EBITDA from the Canadian onshore facilities were 5% and 5% higher,
respectively, compared to 2021, due to the same reason above. Spanish portfolio’s sales and Adjusted EBITDA for the three
months ended December 31, 2022, were $83 million and $67 million, respectively and for the year ended December 31,
2022 were $269 million and $220 million, respectively.

Efficient Natural Gas Facilities

The contractual structures of Northland’s efficient natural gas facilities ensure each facility’s gross profit is generally stable,
within a seasonal profile, regardless of production or sales levels, so long as the plant is available. Under certain PPAs, the
facility is reimbursed for certain costs of sales by the counterparty. For the year ended December 31, 2022, Northland’s
efficient natural gas facilities contributed approximately 16% of reported Adjusted EBITDA from facilities, with the two
largest, North Battleford and Thorold accounting for approximately 12%.

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I 2022 ANNUAL REPORT I

In April 2022, Northland completed the sale of Iroquois Falls and Kingston, with a combined operating capacity of 230MW,
that previously operated under long-term PPAs which expired at the end of 2021 and 2017, respectively.

Electricity production for the three months ended December 31, 2022, increased 7% or 60GWh, compared to the same
quarter of 2021, mainly due to higher market demand. Electricity production for the year ended December 31, 2022,
increased 8% or 243GWh, compared to 2021, due to the effect of planned maintenance outages last year at North
Battleford and Thorold.

Sales of $111 million decreased 13% or $17 million compared to the same quarter of 2021, primarily due to the sale of
Iroquois Falls.

Adjusted EBITDA for the three months ended December 31, 2022, of $49 million decreased 41% or $34 million compared to
the same period of 2021, primarily due to the sale of Iroquois Falls. Adjusted EBITDA for the year ended December 31,
2022, of $246 million decreased 10% compared to the same period of 2021, primarily due to the sale of Iroquois Falls.

Utility

Empresa de Energía de Boyacá S.A E.S.P (“EBSA”) holds the sole franchise rights for electricity distribution in the Boyacá
region of Colombia and is an electricity retailer for the regulated residential sector in the region. EBSA owns and operates
an extensive distribution network, serving about half a million customers. EBSA’s net sales are almost entirely regulated, of
which the vast majority is earned from its distribution business and the remainder primarily from its electricity retail
business. EBSA’s results are affected by exchange rate fluctuations between the Canadian dollar and the Colombian peso.
For 2022, Northland has hedged the foreign exchange rate at COP$3,128:CAD$1 (2021: COP$2,880:CAD$1) for nearly all of
the anticipated Colombian peso-denominated cash flow, mitigating the effects of fluctuations in the foreign exchange rate
on Adjusted Free Cash Flow. For the year ended December 31, 2022, EBSA contributed approximately 7% of reported
Adjusted EBITDA from facilities.

EBSA earns revenue by charging customers a rate approved under the regulatory framework administered by the local
regulator, the Comisión de Regulación de Energía y Gas (“CREG”). The rate charged is set for an expected five-year period
and includes amounts retained by EBSA, as retailer and distributor, and amounts passed through to other electricity system
participants, such as the transmission operator. EBSA’s portion of the rate is determined based on its asset base (i.e. the
“rate base”), inflation indexation per the established Colombian producer price index and a regulated weighted average
cost of capital (“WACC”) of approximately 12.09% for an expected five-year period. The rate base takes into account the
depreciated cost of existing equipment and anticipated future investments for maintenance and growth. EBSA’s portion of
the rate also includes standardized allowances set by the regulator intended to cover fixed and variable operating costs. The
rate is designed to ensure EBSA earns a predictable and stable return.

Sales and gross profit of $64 million and $43 million for the three months ended December 31, 2022, increased 9% or $5
million and 7% or $3 million, respectively, compared to the same quarter of 2021 primarily due to rate escalations, driven
by a higher Colombian producer price index, positively affecting EBSA’s financial performance, partially offset by foreign
exchange fluctuations due to weakening of Colombian Peso. Sales and gross profit of $270 million and $186 million for the
year ended December 31, 2022, increased 20% or $44 million and 19% or $30 million, respectively, compared to 2021,
primarily due to the same factors.

Operating income of $20 million for the three months ended December 31, 2022, increased 21% or $3 million compared to
the same periods of 2021, due to the factors described above. Operating income of $85 million for the year ended
December 31, 2022, increased 44% or $26 million, compared to the same periods of 2021, due to the factors described
above.

Adjusted EBITDA of $27 million for the three months ended December 31, 2022, increased 13% or $3 million compared to
the same periods of 2021, due to the factors described above. Adjusted EBITDA of $114 million for the year ended
December 31, 2022, increased 25% or $22 million, compared to the same periods of 2021, due to the factors described
above.

In December 2021, Northland restructured and upsized EBSA’s long-term, non-recourse financing (the “EBSA Facility”),
resulting in $84 million of incremental cash proceeds to Northland, net of closing costs (the “EBSA Refinancing”). The
upsizing of the EBSA Facility was completed on the basis of growth in EBSA’s projected EBITDA growth for 2022, based on
increases in the rate base. Net upsizing proceeds of $47 million, in excess of EBSA’s expansionary capital expenditure needs
were included in Adjusted Free Cash Flow and Free Cash Flow for the year ended December 31, 2022.

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I 2022 ANNUAL REPORT I

For EBSA, non-expansionary capital expenditures are required to maintain its regulated asset base under the requirements
of the local regulator. Such expenditures are largely driven by the requirements of the regulatory framework, though the
timing of the capital expenditures can vary from year to year and can be seasonal, therefore, affecting Adjusted Free Cash
Flow as reported.

5.2: General and Administrative Costs

The following table summarizes general and administrative (“G&A”) costs:

Three months ended December 31,

Year ended December 31,

Corporate G&A
Operations G&A (1)
Total G&A costs
(1) Operations G&A is included in the respective segment’s Adjusted EBITDA and Adjusted Free Cash Flow presented in Section 5.1 Operating Results.

54,820

16,848

83,963

29,143

25,312

21,939

8,464

5,611

24,380

67,683

2022

2021
16,328

2021
43,303

Corporate G&A costs of $17 million and $55 million for the three months and the year ended December 31, 2022, were 3%
or $1 million and 27% or $12 million, higher, respectively, compared to the same periods of 2021 primarily due to increased
personnel costs and other costs supporting Northland’s global growth, in-line with management’s expectations.

Operations G&A costs of $8 million and $29 million for the three months and the year ended December 31, 2022, were 51%
or $3 million and 20% or $5 million, higher, respectively, compared to the same periods of 2021 primarily due to full year
administrative expenses from the Spanish portfolio.

5.3: Growth Expenditures

The following table summarizes development costs (charged to expense under IFRS) and growth expenditures for non-IFRS
financial measures:

Three months ended December 31,

Year ended December 31,

Business development

Project development

Development overhead
Acquisition costs (1)

Development costs

2022

11,365

6,789

6,219

138

2021
—

13,861

11,229

1,659

2022

26,859

15,824

34,639

895

24,511

26,749

78,217

Joint venture project development costs (2)

273

581

3,098

Growth expenditures (3)
Growth expenditures on a per share basis
(1) Relates to successful acquisition costs only. Excluded from growth expenditures.

24,646

25,671

80,420

0.34

2021
21,756

14,968

33,270

7,666

77,660

8,971

78,965

0.36

(2) Includes Northland’s share of development costs incurred at Baltic Power, Chiba and other joint venture projects.

(3) Excludes acquisition costs but includes share of project development costs incurred by joint ventures.

To achieve its long-term growth objectives, Northland deploys early-stage investment capital (growth expenditures) to
advance projects in its pipeline. In 2022, the Company’s growth expenditures amounted to $80 million to fund key projects
including Nordsee Cluster, CanWind, ScotWind and South Korean projects. With regional development offices in Europe,
Asia, North America and Latin America fully functional and with a pipeline of growth opportunities currently secured,
Northland expects to incur higher growth expenditures and capital investments in future years to fund its identified
development pipeline and opportunities sourced through the regional development offices.

Growth expenditures are excluded from Adjusted Free Cash Flow. However, these growth expenditures reduce near-term
Free Cash Flow until projects achieve capitalization under IFRS but should deliver sustainable growth in Free Cash Flow over
the long-run.

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I 2022 ANNUAL REPORT I

Business development costs are incurred to identify and explore prospective business and development opportunities,
which are expected to result in identifiable development projects intended to be pursued to completion, and include costs
incurred for projects not ultimately pursued to the acquisition or to completion. Business development costs for the year
ended December 31, 2022, were higher compared to 2021 due to the timing of development activities pursuing
opportunities.

Project development costs are attributable to identified early- to mid-stage development projects under active development
that are likely to generate cash flow over the long-run, though do not yet meet capitalization criteria under IFRS. For the
year ended December 31, 2022, project development costs were largely in line with 2021. Refer to SECTION 9:
DEVELOPMENT, ACQUISITION AND CONSTRUCTION ACTIVITIES for additional information on identified development
projects.

Development overhead primarily relates to personnel, rent and other office costs not directly attributable to specific
development projects. Development overhead reflects Northland’s resources and development offices in key target
jurisdictions focused on securing long-term growth opportunities in those jurisdictions. Development overhead costs for the
year ended December 31, 2022, were higher than 2021 primarily due to higher personnel and other costs in support of
Northland’s global growth.

Acquisition and transaction costs are generally third-party transaction-related costs directly attributable to an executed
business acquisition.

I NORTHLAND POWER INC.I

I 2022 ANNUAL REPORT I

5.4: Consolidated Results

The following discussion of the significant factors contributing to the consolidated financial results should be read in
conjunction with Northland’s audited consolidated financial statements for the year ended December 31, 2022.

Electricity production (GWh)

Sales
Less: Cost of sales

Gross profit

Expenses

Operating costs

General and administrative costs

Development costs
Depreciation of property, plant and equipment
Amortization of contracts and intangible assets

Investment (loss) income

Finance lease income

Operating income

Finance costs, net

Impairment

Foreign exchange (gain) loss

Fair value (gain) loss on derivative contracts

Other expense (income)

Three months ended December 31,

Year ended December 31,

2022

3,009

2021
2,828

2022

10,139

2021
8,757

641,115

640,090

2,448,815

2,093,255

67,544

60,212

270,426

213,493

573,571

579,878

2,178,389

1,879,762

96,123

25,312

24,511
146,645

13,966

83,716

21,939

26,749
155,356
(5,594)

351,995

83,963
78,217

571,090

53,611

327,894

67,683

77,660
612,755
23,284

306,557

282,166

1,138,876

1,109,276

(599)

2,780

482

2,880

523

11,271

3,218

11,662

269,195

301,074

1,051,307

785,366

86,578

—

(69,073)

(140,901)

(2,321)

99,611

—

29,429

(53,021)

15,639

323,632

—

(41,792)

(460,704)

(29,948)

Income (loss) before income taxes

394,912

209,416

1,260,119

Provision for (recovery of) income taxes

Current

Deferred

Provision for (recovery of) income taxes

Net income (loss)

Net income (loss) attributable to common
shareholders per share - basic and diluted

77,785

(6,795)

70,990

323,922

1.12

35,112

44,776

79,888

129,528

0.45

203,376

101,286

304,662

955,457

3.46

342,417

29,981

81,318

(116,621)

25,040

423,231

84,410

68,942

153,352

269,879

0.82

Fourth Quarter

Sales of $641 million were in line compared to the same quarter of 2021.

Gross profit of $574 million was in-line compared to the same quarter of 2021.

Operating costs of $96 million increased 15% or $12 million compared to the same quarter of 2021 primarily due to higher
running and maintenance costs at the Gemini and the Spanish portfolio, partially offset by the effect of foreign exchange
rate fluctuations.

G&A costs of $25 million increased 15% or $3 million primarily due to personnel costs and other costs supporting
Northland’s global growth, in-line with management’s expectations.

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I 2022 ANNUAL REPORT I

Development costs of $25 million decreased 8% or $2 million compared to the same quarter of 2021 primarily due to higher
capitalization of development cost relating to development projects, as a result of projects advancing to required
milestones.

Finance costs, net (primarily interest expense) of $87 million decreased 13% or $13 million compared to the same quarter of
2021 primarily due to scheduled repayments on facility-level loans.

Fair value gain on derivative contracts was $141 million compared to a $53 million gain in the same quarter of 2021
primarily due to net movement in the fair value of derivatives related to commodity, interest rates and foreign exchange
contracts.

Foreign exchange gain of $69 million was primarily due to unrealized gains from fluctuations in the closing foreign exchange
rates.

Other income was $18 million higher than the same period of 2021 primarily due to non-cash write-downs of receivables
and the higher share of joint venture development costs in 2021.

Net income of $324 million in the fourth quarter of 2022 compared to $130 million in the same quarter of 2021 primarily as
a result of the factors described above.

2022

Sales of $2,449 million increased 17% or $356 million compared to 2021 primarily due to higher market prices and higher
production across all offshore wind facilities and full year contribution from the Spanish Portfolio, which was acquired in
August 2021, partially offset by the sale of Iroquois Falls and foreign exchange rate fluctuations.

Gross profit of $2,178 million increased 16% or $299 million compared to 2021 primarily due to the same factors affecting
sales in the period.

Operating costs of $352 million increased 7% or $24 million compared to 2021 primarily due to higher running and
maintenance costs at the Gemini and the Spanish portfolio, partially offset by the effect of foreign exchange rate
fluctuations.

G&A costs of $84 million increased 24% or $16 million compared to 2021 primarily due to personnel costs and other costs
supporting Northland’s global growth, in-line with management’s expectations.

Development costs of $78 million compared to 2021 were largely in line with last year.

Finance costs, net (primarily interest expense) of $324 million decreased 5% or $19 million compared to 2021 as a result of
scheduled repayments on facility-level loans.

Fair value gain on derivative contracts was $461 million compared to a $117 million gain in the same period of 2021
primarily due to net movement in the fair value of derivatives related to commodity, interest rates and foreign exchange
contracts.

Foreign exchange gain of $42 million was primarily due to unrealized gain from fluctuations in the closing foreign exchange
rates.

There was no impairment in 2022, whereas, in the same period of 2021, an impairment of goodwill totaling $30 million was
recorded for Iroquois Falls due to the expiry of its PPA in December 2021.

Other income was $55 million higher than the same period of 2021 primarily due to the gain on sale of two efficient natural
gas facilities and non-cash write-downs of receivables in 2021, partially offset by the share of increasing joint venture
development costs.

Net income increased $686 million for the year ended December 31, 2022, compared to the same period in 2021 primarily
due to the factors described above, partially offset by a $151 million higher tax expense.

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I 2022 ANNUAL REPORT I

5.5: Adjusted EBITDA

The following table reconciles net income (loss) to Adjusted EBITDA:

Three months ended December 31,
2021
129,528

2022
323,922

Net income (loss)
Adjustments:

Finance costs, net
Gemini interest income
Acquisition costs
Provision for (recovery of) income taxes
Depreciation of property, plant and equipment
Amortization of contracts and intangible assets
Fair value (gain) loss on derivative contracts
Foreign exchange (gain) loss
Impairment loss
Elimination of non-controlling interests
Finance lease (lessor)
Others (1)

Adjusted EBITDA

86,578
2,265
138
70,990
146,645
13,966
(147,414)
(69,073)
—
(73,692)
(1,511)
256
353,070

99,611
3,843
1,659
79,888
155,356
(5,594)
(78,047)
29,429
—
(74,593)
(1,113)
23,681
363,648

Year ended December 31,
2021
269,879

2022
955,457

323,632
13,065
895
304,662
571,090
53,611
(482,351)
(41,792)
—
(272,407)
(6,352)
(21,334)
1,398,176

342,417
15,810
7,666
153,352
612,755
23,284
(153,536)
81,318
29,981
(260,567)
(7,137)
21,782
1,137,004

(1) Others primarily include share of results from equity investments, loss (gain) on sale of assets and share of joint venture project development costs.

Gemini interest income reflects interest earned on Northland’s €117 million subordinated debt to Gemini. Under the terms
of the Gemini debt amendment completed in the fourth quarter, quarterly principal payments to Northland commenced in
December 2022 until maturity in 2031. Northland consolidates the financial results of Gemini and, as a result, Northland’s
loan balances, investment income, and interest expense are eliminated upon consolidation. Gemini interest income is
included in Northland’s consolidated Adjusted EBITDA because it reflects returns generated from an investment in core
assets.

Fourth Quarter

Adjusted EBITDA of $353 million for the three months ended December 31, 2022, decreased 3% or $11 million compared to
the same quarter of 2021. The significant factor decreasing Adjusted EBITDA includes:

•

$25 million decrease in operating results due to the loss in contribution as a result of the expiry of the PPA and
subsequent sale of Iroquois Falls in April 2022.

Factors partially offsetting the decrease in Adjusted EBITDA were:

•

$15 million increase in operating results at the offshore wind facilities primarily due to higher turbine availability at
Nordsee One, strong wind resource and high APX above the SDE at Gemini; and

$12 million higher contribution from the Spanish renewables portfolio primarily resulting from higher regulated posted
prices for the portfolio at €122/MWh compared to €52/MWh in 2021.

Full Year

Adjusted EBITDA of $1,398 million for the year ended December 31, 2022, increased 23% or $261 million compared to the
same period of 2021. The significant factors increasing Adjusted EBITDA include:

•

$146 million mainly due to the contribution from Spanish portfolio for twelve months of results in 2022 compared to
five months of contributions in 2021 after its acquisition, and favourable regulatory changes in Spain retroactive to
January 1, 2022;

$135 million increase in operating results at offshore wind facilities primarily due to higher market prices and higher
wind resource;

$37 million increase in contribution from a one-time management fee of $33 million from Kirkland Lake that followed
the restructuring and upsizing of its credit facility completed during the period and other operating optimizations; and

I NORTHLAND POWER INC.I

I 2022 ANNUAL REPORT I

•

$22 million increase in operating results primarily due to rate escalations at EBSA.

The factor partially offsetting an increase in Adjusted EBITDA was:

•

$84 million decrease in operating results due to the loss in contribution as a result of the expiry of the PPA and
subsequent sale of Iroquois Falls in April 2022.

5.6: Adjusted Free Cash Flow and Free Cash Flow

The following table reconciles cash flow from operations to Adjusted Free Cash Flow and Free Cash Flow:

Cash provided by operating activities
Adjustments:

Net change in non-cash working capital balances
related to operations
Non-expansionary capital expenditures
Restricted funding for major maintenance, debt
and decommissioning reserves
Interest
Scheduled principal repayments on facility debt
Funds set aside (utilized) for scheduled principal
repayments
EBSA Refinancing proceeds, net of growth capital
expenditures
Preferred share dividends
Consolidation of non-controlling interests
Investment income (1)
Proceeds under NER300 and warranty
settlement at Nordsee One
Others (2)

Free Cash Flow

Add Back: Growth expenditures

Three months ended December 31,
2021
559,368

2022
550,689

Year ended December 31,
2021
1,609,295

2022
1,832,983

(141,244)

(111,986)

(289,875)

(292,499)

(10,675)

(6,531)

(112,927)
(439,185)

170,661

20,078

(2,954)
(31,707)
12,214

14,530

(7,734)

2,294

(100,842)
(278,667)

119,951

3,827

(2,710)
(40,240)
4,750

10,764

(56,248)

(17,857)

(336,356)
(839,614)

—

46,974

(11,206)
(75,217)
24,880

70,317

(40,558)

(7,505)

(277,908)
(635,901)

635

3,827

(10,811)
(90,022)
20,153

38,636

(7,066)
15,883
24,646
40,529

(2,434)
156,341
25,671
182,012

31,691
380,472
80,420
460,892

(9,941)
307,401
78,965
386,366

Adjusted Free Cash Flow
(1) Investment income includes Gemini interest income.
(2) Others mainly include effect of foreign exchange rates and hedges, Nordsee One interest on shareholder loans, share of joint venture project
development costs, acquisition costs, lease payments, interest income, and other non-cash expenses adjusted in working capital excluded from Free
Cash Flow in the period.

Adjusted Free Cash Flow, is a supplementary non-IFRS cash flow measure including associated per share amounts and
payout ratios. Adjusted Free Cash Flow is calculated by excluding growth-related expenditures from Free Cash Flow.
Management believes this measure provides a relevant presentation of cash flow generated from the business before
investment-related decisions (refer to Section 5.3: Growth Expenditures for additional information). Management believes
Adjusted Free Cash Flow is a meaningful measure of Northland’s ability to generate cash flow, after on-going obligations, to
reinvest in growth and fund dividend payments. Reinvesting in growth is a key part of Northland’s long-term strategy.

I NORTHLAND POWER INC.I

I 2022 ANNUAL REPORT I

Scheduled principal repayments on facility debt reflect repayments as paid. Funds set aside (utilized) for scheduled principal
repayments allocates repayments across the quarters in order to more clearly reflect the Company’s performance. Gemini’s
principal repayment schedule is weighted towards the first payment of the year to align with Gemini’s expected annual cash
flow profile, while Nordsee One, Deutsche Bucht and the Spanish portfolio’s principal repayments are equally weighted.
Northland’s share of scheduled principal repayments for Gemini, Nordsee One, Deutsche Bucht and the Spanish portfolio
are presented in the table below.

Scheduled Principal Repayments (at Northland’s share)
Gemini
Nordsee One
Deutsche Bucht
Spanish Portfolio
Total

2023
88,497
86,767
78,071
85,334
338,669

€

2022
127,103
88,411
76,507
124,603
416,624

€

2021
83,283
86,502
78,168
23,438
271,391

€

Interest expense is reflected each quarter as accrued in net income and working capital or paid.

Others mainly include net proceeds from sale of two efficient natural gas facilities and interest income of $30 million and
$13 million, respectively, partially offset by the foreign exchange rates and hedges of $18 million.

In 2014, Nordsee One was awarded a grant under the European Commission’s NER 300 program. The total grant value of
€70 million was recorded as a reduction in property, plant and equipment upon completion of the project. Cash proceeds
from the grant are based on production volumes, and final cash payments are expected in 2023 for the production ceiling
under the program met in 2022. Proceeds accrued under Adjusted Free Cash Flow are based on production during the
period. For the year ended December 31, 2022, and December 31, 2021, proceeds from this program, based on production,
totaled $14 million and $16 million, respectively.

The following table reconciles Adjusted EBITDA to Adjusted Free Cash Flow.

Adjusted EBITDA
Adjustments:

Three months ended December 31,

Year ended December 31,

2022
353,070

2021
363,648

2022
1,398,176

2021
1,137,004

Scheduled debt repayments
Interest expense
Current taxes
Non-expansionary capital expenditure
Utilization (funding) of maintenance and
decommissioning reserves
Lease payments, including principal and interest
Preferred dividends
Foreign exchange hedge gain (loss)
Proceeds under NER300 and warranty settlement
at Nordsee One
EBSA Refinancing proceeds, net of growth capital
expenditures
Others (1)

Free Cash Flow

Add Back: Growth expenditures

(225,131)
(37,235)
(70,309)
(9,266)

(6,092)

(2,996)
(2,954)
(18,730)

12,349

20,078

(128,450)
(61,992)
(32,205)
(7,051)

2,667

(1,570)
(2,710)
10,844

9,956

3,827

(684,630)
(220,347)
(192,953)
(48,094)

(16,550)

(10,353)
(11,206)
37,486

59,769

46,974

3,099
15,883
24,646
40,529

(623)
156,341
25,671
182,012

22,200
380,472
80,420
460,892

(507,759)
(243,597)
(74,957)
(36,695)

(6,195)

(7,169)
(10,811)
23,053

33,648

3,827

(2,948)
307,401
78,965
386,366

Adjusted Free Cash Flow
(1) Others mainly include Gemini interest income, shareholder loan to Kirkland Lake and interest received on third-party loans to partners.

Fourth Quarter

Adjusted Free Cash Flow of $41 million for the three months ended December 31, 2022, was 78% or $141 million lower
than the same quarter of 2021.

The significant factors decreasing Adjusted Free Cash Flow were:

I NORTHLAND POWER INC.I

I 2022 ANNUAL REPORT I

•

$97 million increase in scheduled and one-time refinancing related debt repayments on facility-level loans, mainly at
Gemini and the Spanish portfolio;

$38 million increase in current taxes primarily at the offshore wind facilities and the Spanish portfolio as a result of
better financial results; and

$11 million decrease in contribution from the efficient natural gas facilities leading to lower Adjusted EBITDA, partially
offset by higher contribution from offshore wind and onshore renewable facilities.

The factor partially offsetting the decrease in Adjusted Free Cash Flow was:

•

$20 million increase primarily from the proceeds of the EBSA refinancing net of expansionary capital expenditures.

Free Cash Flow, which includes growth expenditures, totaled $16 million for the three months ended December 31, 2022,
and was 90% or $140 million lower than the same quarter of 2021, due to the same factors as Adjusted Free Cash Flow.

Full Year

Adjusted Free Cash Flow of $461 million for the year ended December 31, 2022, was 19% or $75 million higher than 2021.

The significant factors increasing Adjusted Free Cash Flow were:

•

$97 million increase in overall contribution across all facilities, excluding the Spanish portfolio, primarily due to better
operating results, as described above in Adjusted EBITDA;

$28 million increase in contribution from a one-time management fee from Kirkland Lake that followed the
restructuring and upsizing of its credit facility completed during the year and other operating optimizations;

$30 million net proceeds from the sale of two efficient natural gas facilities in April 2022; and

$35 million decrease in interest costs as a result of scheduled principal repayments on facility-level loans, excluding the
Spanish portfolio.

The factors partially offsetting the increase in Adjusted Free Cash Flow were:

•

$84 million increase in current taxes primarily at the offshore wind facilities as a result of better financial results; and

$35 million decrease in contribution from the Spanish portfolio primarily due to the one-time principal payment upon
the debt restructuring.

Free Cash Flow, which includes growth expenditures, totaled $380 million for the year ended December 31, 2022, and was
24% or $73 million higher than the same period of 2021 due to the same factors as Adjusted Free Cash Flow.

The following table summarizes dividends paid, payout ratios as well as per share amounts;

Cash dividends paid to shareholders
Adjusted Free Cash Flow payout ratio - cash
dividends (1)
Free Cash Flow payout ratio - cash dividends (1)
Total dividends paid to shareholders (2)
Adjusted Free Cash Flow payout ratio - total
dividends (1) (2)
Free Cash Flow payout ratio - total dividends (1)
Weighted avg. number of shares - basic and diluted
(000s)
Per share ($/share)
Dividends paid
Adjusted Free Cash Flow — basic and diluted
Free Cash Flow — basic and diluted
(1) On a rolling four-quarter basis.

Three months ended December 31,

Year ended December 31,

2022
51,337

2021
44,688

73,584

67,938

2022
196,845

43 %

52 %
282,269

61 %

74 %

2021
172,755

45 %

56 %
261,730

67 %

84 %

246,378

226,568

236,157

218,861

$
$
$

0.30
0.16
0.06

$
$
$

0.30
0.80
0.69

$
$
$

1.20
1.95
1.61

$
$
$

1.20
1.77
1.40

(2) Represents dividends paid in cash and in shares under the DRIP.

I NORTHLAND POWER INC.I

I 2022 ANNUAL REPORT I

At December 31, 2022, the rolling four quarter Adjusted Free Cash Flow and the Free Cash Flow net payout ratio improved
to 43% and 52%, respectively, calculated on the basis of cash dividends paid, compared to 45% and 56% for the same period
ending December 31, 2021. The improvement in both net payout ratios was due to higher reported Adjusted Free Cash
Flow. The Free Cash Flow net payout ratio was similarly improved compared to the same period ending December 31, 2021.

SECTION 6: CHANGES IN FINANCIAL POSITION

The following table provides a summary of account balances derived from the audited consolidated statements of financial
position as at December 31, 2022 and December 31, 2021.

As at
Assets

Cash and cash equivalents
Restricted cash
Trade and other receivables
Other current assets
Property, plant and equipment, net
Contracts and other intangible assets, net
Net derivative assets (2)
Investment in joint ventures
Other assets (1)

Liabilities

Trade and other payables
Facility-level loans and borrowings
Net derivative liabilities (2)
Net deferred tax liability (2)
Other liabilities (3)

Total equity

December 31, 2022

December 31, 2021

1,299,833
160,142
397,771
242,381
9,377,584
515,775
646,000
441,565
1,008,343
14,089,394

1,001,773
6,961,955
—
670,337
731,056
9,365,121
4,724,273
14,089,394

673,692
155,631
383,308
77,950
9,586,466
497,635
—
138,726
1,024,806
12,538,214

504,583
7,592,214
215,618
470,015
790,073
9,572,503
2,965,711
12,538,214

(1) Includes goodwill, finance lease receivable, long-term deposits and other assets.

(2) Presented on a net basis.

(3) Includes dividends payable, corporate credit facilities, provisions and other liabilities.

Significant changes in Northland’s audited consolidated statements of financial position were as follows:

•

Cash and Cash Equivalents increased by $626 million primarily due to proceeds from the ATM program.

• Other current assets increased by $164 million primarily due to deposit for redemption of Series 3 Preferred Shares.

•

Investment in joint ventures increased by $303 million primarily due to the investment in Hai Long.

Property, plant and equipment decreased by $209 million primarily due to depreciation and foreign exchange
fluctuation partially offset by construction-related activities.

Net derivative assets increased $862 million from a net derivative liability at December 31, 2021, primarily due to the
effects of higher interest rates in Canada, the US and Europe and strengthening of the Canadian dollar against the Euro.

Facility-level loans and borrowings decreased by $630 million mainly due to scheduled principal repayments on facility-
level debt, one-time debt repayments resulting from the Gemini and the Spanish portfolio debt facility amendments
and foreign exchange fluctuation partially offset by construction related drawdowns.

• Other liabilities decreased by $59 million primarily due to repayments of the revolving corporate credit facility

outstanding from the proceeds of the ATM program.

I NORTHLAND POWER INC.I

I 2022 ANNUAL REPORT I

SECTION 7: EQUITY, LIQUIDITY AND CAPITAL RESOURCES

Northland maintains sufficient liquidity to meet short- and medium-term cash needs and ensures that it has access to
sufficient resources to capitalize on investment opportunities and to meet growth expenditure commitments, monthly cash
dividend requirements and other needs in the normal course of operations. Northland finances these commitments
through cash flow from operations, non-recourse project financing, securing partnerships and partner contributions,
corporate credit facilities, convertible debentures and equity, such as common and preferred shares.

Dividends

Northland’s Board of Directors and management are committed to maintaining the current monthly dividend of $0.10 per
share ($1.20 per share on an annual basis) and are confident that Northland has adequate access to funds to meet its
dividend commitment, including operating cash flows and corporate funds. The Board of Directors reviews the dividend
policy at least annually as part of Northland’s overall capital allocation strategy to balance growth requirements and
investor preferences.

Dividend Reinvestment Plan (“DRIP”)

The DRIP provides shareholders the right to reinvest their dividends in shares at a 3% discount to the market price as
defined in the DRIP. Shares issued under the DRIP can be sourced from treasury or purchased on the secondary market at
the election of Northland’s Board of Directors. Northland’s Board of Directors has the discretion to alter the discount or
source of shares issued under the DRIP.

Equity

The change in shares during 2022 and 2021 was as follows:

As at
Common shares
Shares outstanding, beginning of year

Equity offering
Shares issued under the LTIP
Shares issued under the DRIP

Total common shares outstanding, end of period

December 31, 2022

December 31, 2021

226,882,751
20,894,982
14,974
2,224,650
250,017,357

202,171,075
22,500,500
21,967
2,189,209
226,882,751

Preferred shares outstanding as at December 31, 2022, and December 31, 2021 were as follows:

As at
Preferred shares outstanding
Series 1
Series 2
Series 3
Total

December 31, 2022

December 31, 2021

4,762,246
1,237,754
4,800,000
10,800,000

In November 2022, Northland’s corporate credit rating was reaffirmed at BBB (stable) by Fitch Ratings Inc., a global rating
agency and BB+ for Northland’s preferred shares. In May 2022, S&P reaffirmed its BBB (stable) rating for Northland.

At December 31, 2022, Northland had 250,017,357 common shares outstanding (as at December 31, 2021 - 226,882,751)
with no change in preferred shares outstanding from December 31, 2021.

As of February 23, 2023, Northland has 250,728,253 common shares outstanding with no change in preferred shares Series
1 and Series 2 outstanding from December 31, 2022.

On January 3, 2023, Northland redeemed all 4,800,000 issued and outstanding Series 3 Preferred Shares at a price of $25.00
per Series 3 Preferred Share together with all accrued and unpaid dividends of $0.3175 per Series 3 Preferred Share for an
aggregate total of $121.5 million. As of December 31, 2022, Series 3 Preferred Shares had been reclassified from equity to
current liabilities.

I NORTHLAND POWER INC.I

I 2022 ANNUAL REPORT I

Liquidity and Capital Resources

The following table reconciles Northland’s opening cash and cash equivalents to closing cash and cash equivalents:

Three months ended December 31,

Year ended December 31,

2022

2021

2022

2021

Cash and cash equivalents, beginning of period

1,533,904

533,079

673,692

434,989

Cash provided by operating activities

Cash (used in) investing activities

Cash (used in) provided by financing activities

Effect of exchange rate differences

550,689

(311,826)

(526,310)

53,376

559,368

178,262

(151,112)

(25,341)

1,832,983

(629,683)

(604,837)

27,678

1,609,295

(1,030,863)

(225,679)

(114,050)

Cash and cash equivalents, end of period

1,299,833

1,094,256

1,299,833

673,692

Fourth Quarter

Cash and cash equivalents for the fourth quarter of 2022 decreased $234 million from September 30, 2022, due to cash
provided by operations of $551 million, partially offset by cash used by investing activities of $312 million, cash used in
financing activities of $526 million and $53 million effect of foreign exchange translation.

The decrease in cash and cash equivalents during the quarter was largely due to construction-related activities at
Northland’s identified projects, amendment of debt at Gemini and the Spain facilities, partially offset by higher cash
provided by operations and foreign exchange rate differences.

2022

Cash and cash equivalents for the year ended December 31, 2022, increased $626 million due to cash provided by
operations of $1,833 million and $28 million effect of foreign exchange translation, partially offset by $630 million of cash
used in investing activities and $605 million in financing activities.

Cash provided by operating activities for the year ended December 31, 2022, was $1,833 million comprising:

•

$955 million of net income;

$588 million in non-cash and non-operating items such as depreciation and amortization, finance costs, changes in fair
value of financial instruments and deferred taxes; and

$290 million in changes in working capital due to the timing of payables, receivables and deposits.

Cash used in investing activities for the year ended December 31, 2022, was $630 million, primarily comprising:

•

$453 million used for the purchase of property, plant and equipment, mainly for the Nordsee One RSA replacement
campaign and ongoing construction at New York Wind and other projects;

$203 million used mainly for the investment in the Hai Long Offshore Wind project;

$38 million used mainly for the acquisition of the Oneida Battery Storage project and the Alberta Portfolio; and

$33 million used for the acquisition of the contractual assets of the ScotWind Offshore Wind project.

Factor partially offsetting cash used in investing activities includes:

•

$39 million of other mainly related to net proceeds from the sale of two efficient natural gas facilities.

Cash used in financing activities for the year ended December 31, 2022, was $605 million, primarily comprising:

•

$2,681 million in scheduled principal repayments on the facility-level debt, in addition to the repayments resulting from
the amendments to the Gemini and the Spanish portfolio debt facilities;

$336 million in interest payments;

$302 million of common and preferred share dividends as well as dividends to non-controlling interest (“NCI”);

$122 million in advance payment made for the redemption of preferred shares; and

$45 million in net repayment under the corporate syndicated revolving facility.

I NORTHLAND POWER INC.I

I 2022 ANNUAL REPORT I

Factors partially offsetting cash used in financing activities include:

•

$852 million received from common shares issued under the ATM program; and

$2,019 million of draws on project debt primarily for construction of the projects, in addition to the drawdown as a
result of the amendment to the Gemini and the Spanish portfolio debt facilities.

Movement of foreign currencies, including primarily the Euro, U.S. dollar and Colombian peso, against the Canadian dollar
increased cash and cash equivalents by $28 million for the year ended December 31, 2022. Northland aims to mitigate the
effects of exchange rate fluctuations through a variety of mechanisms, including foreign exchange hedges and natural
hedges by corporate debt denominated in USD or Euro for operating expenditures.

Property, Plant and Equipment

The following table provides a continuity of the cost of property, plant and equipment for the year ended December 31,
2022:

Operations:
Offshore wind
Onshore renewable
Efficient natural gas(2)
Utility
Construction:
Onshore renewable
Corporate (3)
Total

Balance as at
Jan 1, 2022

Additions

Provisions,
disposals and
other (1)

Exchange rate
differences

Balance as at
Dec 31, 2022

6,644,941 $
3,295,996
1,777,927
528,970

54,610 $
9,685
3,664
34,527

(5,390) $
(4,738)
(462,641)
(2,615)

58,709.5 $
13,642
—
(53,420)

6,752,871
3,314,585
1,318,950
507,462

527,894
176,486
12,952,214 $

280,287
77,648
460,421 $

5,581
(154,891)
(624,694) $

56,246
1,004
76,182 $

870,008
100,247
12,864,123

(1) Includes disposal of assets and amounts accrued under the long-term incentive plan (“LTIP”). In April 2022, Northland completed the sale of two
efficient natural gas facilities in Ontario, Canada.

(2) Excludes Spy Hill lease receivable accounting treatment.

(3) During the fourth quarter, capitalized development cost incurred on behalf of Hai Long’s project entity was reclassified to investment in joint venture
(Hai Long).

Long-term Debt

Northland’s operating facilities and projects under construction are financed primarily with non-recourse project debt with
fixed or hedged interest rates and repayment schedules tied to the terms of the project offtake agreement. Following the
commercial operations date, each project is structured as a special-purpose entity so that an adverse event at one facility
would not affect Northland’s other facilities. By owning and operating high-quality assets and applying its deep, long-term
experience, Northland expects to continue to enjoy a competitive cost of capital, which maximizes returns from growth
opportunities.

I NORTHLAND POWER INC.I

I 2022 ANNUAL REPORT I

The following table provides a continuity of Northland’s debt for the year ended December 31, 2022:

Balance as at
Jan 1, 2022

Financings,
net of costs Repayments

Amort. of
costs/fair
value

Exchange
rate
differences

Balance as at
Dec 31, 2022

Operations:
Offshore wind
Onshore renewable
Efficient natural gas
Utility
Construction:
Onshore renewable
Corporate (1)
Total

4,010,027 $
2,031,908
902,558
518,096

962,507 $ (1,509,384) $
834,297 (1,108,531)
(63,360)
—

34,697
—

13,688 $
1,261
1,422
807

6,421 $
(1,463)
—
(56)

3,483,259
1,757,472
875,317
518,847

129,625
41,825

187,984
770,021
7,634,039 $ 2,789,506 $ (3,496,308) $

—
(815,033)

(8,425)
80
8,833 $

17,876
290
23,068 $

327,060
(2,817)
6,959,138

(1) Deferred financing cost associated with the syndicated revolving facility is included within the other assets in the consolidated statement of financial
position.

Additionally, as at December 31, 2022, $104 million of letters of credit were outstanding under non-recourse project-level
credit facilities for operational use.

During the year ended December 31, 2022, Northland entered into multiple financing activities. Refer to Section 4.1:
Significant Events for additional information.

Debt Covenants

Northland generally conducts its business indirectly through separate subsidiary legal entities and is dependent on the
distribution of cash from those subsidiary entities to fund development expenses, defray its corporate expenses, repay
corporate debt and pay cash dividends to shareholders. Most operating subsidiaries hold non-recourse debt, which typically
prohibits distributions if the loan is in default (notably for non-payment of principal or interest) or if the entity fails to
achieve a benchmark debt service coverage ratio, which is the ratio of EBITDA to scheduled principal and interest payments
over a specified time period. As of December 31, 2022, Northland and its subsidiaries were in compliance with all debt
covenants.

Corporate Credit Facilities and Letters of Credit

Northland’s corporate credit facilities are available for general corporate purposes, to support operational, construction
and development opportunities and to provide letters of credit issued on behalf of Northland. The corporate credit facilities
are summarized in the following table:

As at December 31, 2022
Sustainability linked loan syndicated revolving facility
(1)

Bilateral letter of credit facility (2)
Export credit agency backed letter of credit facility (3)
Export credit agency backed letter of credit facility (4)
Total
Less: deferred financing costs (5)
Total, net

Facility
size

Amount
drawn

Outstanding
letters of
credit

Available
capacity

Maturity
date

$ 1,000,000 $

— $

417,236 $

582,764

Sep. 2027

150,000
100,000
100,000

$ 1,350,000 $

—
—
—
— $

137,911
76,442
39,277
670,866 $

12,089
23,558
60,723
679,134

Sep. 2024
Mar. 2023
n/a

2,817
(2,817)

(1) During the fourth quarter, the maturity date of the syndicated revolving facility was extended to September 2027.

(2) During the fourth quarter, the maturity date of the bilateral letter of credit facility was extended to September 2024.

(3) During the first quarter, the maturity date of the credit facility was extended to March 2023.

(4) The $100 million facility does not have a specified maturity date. During the fourth quarter, the letter of credit facility size was increased from $50
million to $100 million.

(5) Deferred financing cost associated with the syndicated revolving facility is included within the other assets in the consolidated statement of financial
position.

I NORTHLAND POWER INC.I

I 2022 ANNUAL REPORT I

• Of the $671 million of corporate letters of credit issued as at December 31, 2022, $475 million relates to projects under

advanced development or construction.

•

During the year ended December 31, 2022, Northland made net repayments of $45 million on the syndicated revolving
facility.

Northland’s corporate credit facilities include provisions that allow for renewals at Northland’s option, subject to approval
by the lenders.

Exposure to LIBOR and EURIBOR

LIBOR and EURIBOR are the two key global benchmark rates used to determine interest rates and value government and
corporate bonds, loans, currency and interest rate swaps and many other financial products. Global regulators have been
working with industry groups and policymakers over the past several years to identify and transition to more robust
reference rates. In Europe, regulators have transitioned to a hybrid calculation methodology for EURIBOR. In the United
States, regulators have identified the secured overnight financing rate (“SOFR”) as the successor rate for USD LIBOR.
Effective December 31, 2021, USD LIBOR will not be used for new loans, and interest rate swaps will be converted to SOFR
by June 30, 2023. In Canada, regulators have announced that the Canadian Overnight Repo Rate Average (“CORRA”) will be
the successor rate for the Canadian Dollar Offered Rate (“CDOR”). Effective June 30, 2023, CDOR will not be used for
interest rate derivatives, and all loans referencing CDOR will transition to CORRA by June 28, 2024.

As at December 31, 2022, Northland had borrowings and derivatives of €2.8 billion and US$265 million linked to EURIBOR
and LIBOR, respectively, that extend beyond 2022.

Management is monitoring industry developments and has developed a transition plan, which includes a comprehensive
review of financial exposures, proactive discussion with lenders and amendments to its corporate credit agreement and
applicable project-level financing agreements to preserve the intended economics. Management does not currently expect
a material financial impact to Northland and continues to monitor and manage the transition.

I NORTHLAND POWER INC.I

I 2022 ANNUAL REPORT I

Financial Commitments and Contractual Obligations

In the ordinary course of business, Northland enters into financial and derivative contracts. The contractual maturities of
Northland’s material financial liabilities as at December 31, 2022, are summarized in the following table:

2023

2024

2025

2026

2027

>2027

Derivative liabilities (1)

Euro foreign exchange contracts

$ 180,350 $ 158,668 $ 158,362 $ 146,746 $ 161,017 $ 655,475

Colombian peso foreign exchange contracts

485,275

3,735

US dollar foreign exchange contracts

US dollar cross currency swap

US dollar La Lucha interest rate swaps

Power financial contracts

Facility-level debt at Northland’s share

139,013

4,224

672

8,494

—

626

788

—

570

—

517

—

460

—

1,201

—

Gemini

Nordsee One

Deutsche Bucht

Spain

Total in Euro

New York Wind
Total in Canadian dollar (2)
EBSA (3)

All other facilities (4)

€

80,696 €

88,583 €

93,040 € 101,896 € 109,242 € 350,361

76,587
78,001

76,753
78,853

71,079
91,091

70,972
92,824

60,089
93,875

—
299,316

60,554

84,969

324,392
€ 320,253 € 304,743 € 303,313 € 305,823 € 299,583 € 974,069
— US$ — US$ — US$ —
US$ 69,121 US$ 178,779 US$

48,103

36,377

40,131

567,749

692,867

449,308

453,027

443,783 1,442,923

—

520,600

—

121,835

132,577

132,153

146,744

151,729

870,661

Total facility-level debt at Northland’s share

$ 689,585 $ 1,346,045 $ 581,462 $ 599,772 $ 595,513 $ 2,313,585

Interest payments including swap derivative
contracts

Total
(1) Derivative liabilities are reported at 100% ownership.

(2) Using long-term foreign exchange rates.

(3) EBSA Facility is expected to be renewed annually.

181,317

166,497

119,873

106,172

90,337

226,866

$ 1,688,930 $ 1,676,359 $ 860,267 $ 853,207 $ 847,327 $ 3,197,127

(4) Other includes debt service costs of the efficient natural gas and onshore renewable facilities.

Non-Financial Commitments and Contractual Obligations

The following table summarizes all material fixed contractual commitments and obligations as at December 31, 2022, for
non-financial contracts. The amounts are based on long term inflation rate, where applicable, of 2% to 3.9%, a Canadian
dollar/Euro exchange rate of $1.48 and Canadian dollar/US dollar exchange rate of $1.35. The table includes maintenance
and services agreements and natural gas transportation demand charges for which Northland is liable whether or not
natural gas is shipped. The construction commitment relates to the construction of the New York Onshore Wind projects.
The cash obligations related to the leases for land and buildings, dismantlement and management fees to NCI partners are
also included.

Maintenance agreements

$ 201,663 $ 200,467 $ 203,674 $ 190,610 $ 198,902 $ 1,989,199

Construction and others; excluding debt, interest
and fees

1,852

1,878

1,905

1,932

1,960

59,445

Natural gas supply and transportation, fixed portion

29,881

27,496

27,348

27,594

27,833

124,107

2023

2024

2025

2026

2027

>2027

Leases
Decommissioning liabilities

Management fees
Total

14,517
15,246

13,798
15,246

13,356
15,246

12,172
15,246

12,297
8,990

215,092
152,977

4,711

21,096
$ 267,870 $ 260,772 $ 263,452 $ 249,516 $ 251,985 $ 2,561,916

2,003

1,923

1,962

1,887

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I 2022 ANNUAL REPORT I

Except in circumstances where the cancellation of the agreements would result in material penalties, the above table does
not include variable contractual obligations of Northland (which typically relate directly to production or meeting
performance criteria). Such obligations include natural gas purchase costs, variable natural gas transportation costs and
variable payments to maintenance providers. Except for certain onshore renewable and efficient natural gas facilities’ PPAs,
the electricity supply contracts contain no penalties for failure to supply.

As at December 31, 2022, Northland issued letters of credits and the parental guarantees, in favor of the joint ventures, of
$652 million.

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I 2022 ANNUAL REPORT I

Operating income
Net income (loss) (1)
Adjusted EBITDA
Cash provided by operating activities

Adjusted Free Cash Flow

Free Cash Flow

Per share statistics

Net income (loss) attributable to common
shareholders - basic (2)
Net income (loss) attributable to common
shareholders - diluted (2)
Adjusted Free Cash Flow - basic

Free Cash Flow - basic

Total dividends declared

SECTION 8: SUMMARY OF QUARTERLY CONSOLIDATED RESULTS

Northland’s consolidated financial results are affected by seasonal factors, contract provisions and extraordinary items,
which result in quarterly variations. Northland’s quarterly net income (loss) also varies due to any non-cash impairments/
recoveries and foreign exchange adjustments required to translate euro, US dollar and Colombian peso denominated
balances to the appropriate quarter-end Canadian dollar equivalent and due to fair value movements of financial derivative
contracts.

Accounting policies and principles have been applied consistently for all periods presented in the following table.

In millions of dollars, except per share
information

2022

2021

Total sales

641 $

556 $

557 $

695 $

640 $

432 $

269

324

353
551

202

290
523

216

268

335
312

162

364

288

420
447

192

301

130

364
559

182

(5)

211
280

16 $

45 $

146 $

174 $

156 $

11 $

6 $

408

108

(6)

203
361

613

296

151

360
408

147

134

$ 1.12 $ 0.33 $ 1.01 $ 0.99 $ 0.45 $ (0.03) $ (0.06) $ 0.49

1.12

0.16

0.06

0.33

0.28

0.19

1.01

0.70

0.63

0.99

0.84

0.77

0.45

0.80

0.69

(0.03)

(0.06)

0.15

0.05

0.10

0.03

0.49

0.73

0.66

$ 0.30 $ 0.30 $ 0.30 $ 0.30 $ 0.30 $ 0.30 $ 0.30 $ 0.30

(1) Included amortization of contracts and other intangible assets in the operating income.

(2) Net income (Loss), basic and diluted per share are adjusted due to correction of historical net income allocated to common shareholders and NCI in

2021.

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I 2022 ANNUAL REPORT I

SECTION 9: DEVELOPMENT, ACQUISITION AND CONSTRUCTION ACTIVITIES

In addition to completed acquisitions and investments made this year, summarized below are Northland’s most significant
projects under construction and under development as:

CanWind Offshore Wind Project

South Korean Offshore Wind Projects

The Dado offshore wind project has been awarded its EBLs for 900MW of the 1,000MW capacity, providing exclusivity on
the leases for the project. The project is expected to advance to mid-stage development and will begin progressing
engineering surveys and securing grid capacity. Northland’s second project, the 600MW Bobae project, has been awarded
EBLs for approximately 400MW and work continues on securing EBLs for the remaining 200MW. Northland is pursuing
additional early-stage development opportunities located in South Korea’s Wando County for multiple projects with the
potential for up to 1.8GW of operating capacity.

Oneida Battery Storage Project

In December 2022, Northland entered into an agreement to acquire a majority interest in a late-stage, grid-connected
battery energy storage project in southern Ontario, Canada. The Oneida Energy Storage Project is a 250MW/1GWh battery
storage facility and is being developed in partnership with NRStor Inc. and the Six Nations of the Grand River Development
Corporation. Northland will be the majority owner and take the lead role in its construction, financing and operation. The
project will benefit from a 20-year fixed price contract for revenue payments with the Independent Electricity System
Operator in Ontario, for the majority of the capacity from the project. The remaining capacity will earn market revenues
through sales into the wholesale market. The project has finalized a Battery Supply Agreement and a Long-Term Service
Agreement with Tesla Inc. for the supply of key components and services and finalized an engineering, procurement, and
construction agreement with Aecon Group Inc. for designing engineering and construction of the facility. Financial close for
the project is expected in 2023 with full commercial operations to commence in 2025.

Alberta Portfolio

In December 2022, Northland acquired a development platform in Alberta, Canada, continuing its growth and leadership in
renewable energy in Canada, which establishes Northland as a leading developer in the province. Alberta is an attractive
market for renewable development, being Canada’s only deregulated electricity market, offering clear pricing to generators
and strong consumer and industrial demand for offtake. The acquisition adds a solar and battery energy storage pipeline
encompassing over 1.6GW and 1.2GWh, respectively, of which 220MW Jurassic Project could reach commercial operations
as early as 2025. The projects are expected to be accretive to Free Cash Flow per share as they reach commercial operation.
All projects will be funded with non-recourse debt, in accordance with Northland’s typical investment-grade financing
approach. As part of the transaction, key members of the development team originating the portfolio will be joining
Northland to help execute development of the current portfolio and also accelerate growth in Alberta and across Canada.

ScotWind Offshore Wind Project

In January 2022, Northland announced that it was awarded two offshore wind leases in the Crown Estate Scotland auction
with a total combined capacity of 2,340MW. The two leases, one fixed foundation (840MW) and one floating foundation
(1,500MW), will extend Northland’s development runway into the next decade, with commercial operations expected at
the end of 2029/2030 for the fixed and early 2030s for the floating. In April 2022, Northland entered into an Option Lease
Agreement with the Scottish government which provides the Company with development exclusivity over the two awarded
sites for a period of up to 10 years. Northland secured its right to the offshore region through the payment of £20 million.

Nordsee Offshore Wind Cluster

In January 2022, Northland and its German partner, RWE, announced the formation of a 1,333MW Nordsee Offshore Wind
Cluster partnership encompassing Nordsee Two (433MW), Nordsee Three (420MW), and Nordsee Delta (480MW). To
further enhance the size and scale of the Cluster and to realize additional synergies, Northland and RWE agreed to include a
fourth project, resulting in the total size of the Cluster growing to over 1.6GW. The fourth project, Godewind, will have
production capacity of 225MW and is within proximity to the other projects. Development of the Cluster in Germany is

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I 2022 ANNUAL REPORT I

progressing with the team working towards securing CPPA and preferred supplier agreements for key aspects of the
offshore projects. In addition, two of the projects within the Cluster, Nordsee Two and Godewind, achieved a key regulatory
milestone after receiving Conformity Statements required for operations under German offshore wind law. In July, Nordsee
Two was pre-selected for funding by the EU Innovation Fund as a result of driving technological advancements. The project
was awarded a grant of €95 million to demonstrate the technical and commercial feasibility of producing hydrogen at sea.
Subject to the Cluster securing commercial offtake agreements and further assessment of the commercial viability of
proceeding, the Cluster is expected to be developed and managed on a joint basis by Northland and RWE with commercial
operations expected between 2026 and 2028. Northland holds a 49% interest in the Cluster and RWE holds a 51% interest.

Colombian Solar Projects

In November 2021, Northland, in partnership with EDF Renewables, a subsidiary of Électricité de France S.A. (EPA:EDF),
successfully submitted a joint-bid into the renewables auction in Colombia and was awarded the right to build two solar
projects with a total combined capacity of 130MW. The solar projects will benefit from a 15-year PPA with multiple energy
distribution and commercial entities in Colombia, starting in 2023. The PPA will be denominated in Colombian pesos and
will have annual indexation to the Colombian Producer Price index (“PPI”). In addition, the projects will receive a reliability
charge in US dollars, which is expected to account for approximately 10% of total revenues of the projects. Development
progress at the Suba projects continues. Certain environmental permits are needed to move the projects toward financial
close and eventually commercial operations. Northland effectively holds a 50% of economic interest in Suba and its partner,
EDF Renewables holds the remaining 50%.

New York Onshore Wind Projects

Construction activities at the 112MW Bluestone project progressed, with all turbines installed by the end of 2022.
Interconnection and final commissioning are expected to follow in early 2023. At the 108MW Ball Hill project, delays in
turbine delivery to the fourth quarter of 2022 have impacted the project’s construction timeline. Commercial operations for
both projects are expected in 2023. Northland expects to mitigate the impacts of these delays, wherever possible. The
projects were previously awarded 20-year indexed REC agreements with the New York State Energy Research and
Development Authority.

Northland finalized its first ever tax equity commitment with a leading U.S. financial institution for Ball Hill and Bluestone.
The commitment will provide tax equity investment of up to US$190 million (approximately $250 million) 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, back-levered non-recourse debt and equity to fund the
approximate US$0.6 billion of capital costs.

On February 17, 2023, Northland entered into an agreement to sell the entire stake in the Highbridge project. The
transaction is expected to close in the second half of 2023.

Helios Colombian Solar Project

Northland’s 16MW Helios solar project in Colombia achieved full commercial operations in the fourth quarter of 2022. The
project achieved financial close in 2021 and secured a 12-year PPA with EBSA, which, in turn, will secure offtake agreements
with non-regulated customers.

Baltic Power Polish Offshore Wind Project

In March 2021, Northland completed its acquisition of a 49% interest in the Baltic Power offshore wind project in the Polish
Baltic Sea with a total capacity of 1,200MW of offshore wind generation, for total cash consideration of PLN 255 million
($82 million). Progress continues with the signing of preferred supplier agreements for key elements of the project,
including wind turbines, export cables and the offshore and onshore substations. In addition, agreements for the transport
and installation of the turbines and for the foundations of all substation elements and offshore substations have been
signed.

In June 2021, Baltic Power secured a 25-year CfD from Poland’s Energy Regulatory Office under the Polish Offshore Wind
Act at a guaranteed price of PLN 319.60 per MWh, which is adjusted to annual indexation by Poland’s annual average
consumer price index. The project’s 25-year CfD offtake agreement, which was initially denominated in Polish Zloty will now
be denominated in Euros at effectively the same rate and inflation indexation will commence with a base year of 2022
(from 2023 previously), providing offsetting benefits to the higher inflationary price pressures experienced. Baltic Power
continues to advance towards financial close, expected in 2023. Northland holds a 49% interest in the project with PKN
Orlen holding 51%. Upon successful achievement of all necessary approvals, construction of Baltic Power is expected to
commence in 2023 following financial close, with commercial operations anticipated in 2026.

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I 2022 ANNUAL REPORT I

La Lucha Mexican Solar Project

The 130MW La Lucha solar project in the State of Durango, Mexico, completed its activities relating to the physical
construction in 2022. Northland continues to work to achieve commercial operations at its 130MW La Lucha solar project in
Mexico. In January 2023, the relevant Mexican permitting authority approved extension of the generation permit for La
Lucha. The Company is now coordinating with the appropriate regulatory authorities to initiate testing of the project in
order to achieve commercial operations in the second half of 2023.

Hai Long Offshore Wind Project

In July 2022, Northland announced the signing of a Corporate Power Purchase Agreement (the “CPPA”) that covers 100
percent of the power generated from Hai Long 2B and 3, which have a combined capacity of 744MW. The agreement is
with an investment grade counterparty (S&P: AA-) and is for a 20-year period at a fixed-price, commencing once Hai Long
reaches full commercial operations in late 2026. The contracted price under the CPPA is more favourable than the fixed
auction rate originally awarded in 2018 and is a key accomplishment as Northland progresses Hai Long towards financial
close. In addition, the PPAs with Taipower are not affected by the signing of the CPPA and provide a backstop to the CPPA.

To date, the project has executed the majority of the key contracts with suppliers for various elements of the project
including turbines, foundations, cable arrays and both the offshore and onshore substations. The project signed an
agreement for the deployment of the Siemens 14MW turbine along with a 15-year service contract covering offshore wind
logistics and operations and maintenance. The project also signed a jacket foundation fabrication and pin pile fabrication
contract for the supply of foundations. Following the signing of the CPPA for Hai Long 2b and 3 in July, efforts have focused
on securing non-recourse project level financing, which has garnered lender interest from various global and local financial
institutions in lending to the project for the long term. While the project continues to progress, delays in finalizing the CPPA,
longer than expected negotiations relating to supply contracts and certain market conditions pushed back the launch of the
project financing and slowed its initial progress. The project financing is progressing towards financial close in 2023, albeit
at a slower pace and more challenging conditions than initially expected due to market specific factors. Financial close is
expected to occur in 2023 rather than in 2022. The delay in financial close is currently not expected to impact commercial
operations for the project, which remain targeted for 2026-2027. On December 14, 2022, Northland signed a share
purchase agreement (the “Hai Long SPA”) with Gentari to sell 49% of Northland’s ownership interest in Hai Long at an
equity consideration of approximately NT$18 billion ($0.8 billion), subject to the closing terms of the agreement. This
transaction will result in Gentari holding a 29.4% indirect equity interest in Hai Long, with Northland holding a 30.6%
interest and continuing to take the lead role in its construction and operation. Pursuant to the Hai Long SPA, the completion
of the sale to Gentari is expected to occur following the achievement of financial close of Hai Long and remains subject to
receipt of customary regulatory approvals and satisfaction of all closing conditions pursuant to the terms of the Hai Long
SPA.

Hai Long is currently owned 60% by Northland and 40% by Mitsui & Co. Ltd and Enterprize Energy Group. The project was
allocated a total of 1,044MW (626MW net to Northland) by the Bureau of Energy of Taiwan under a FIT program and an
auction process in 2019. Key aspects of the Hai Long project are presented in the following table:

Sub-project
Hai Long 2A

Hai Long 2B

Hai Long 3

Total

Gross Capacity (MW)
300

Net Capacity (MW) (1)
180

Year of Grid Connection
2024

Type of Procurement
FIT

232

512

1,044

139

307

626

2025

Auction

(1) Represents Northland’s current 60% economic interest.

SECTION 10: OUTLOOK

Adjusted EBITDA

For 2023, management expects Adjusted EBITDA to be in the range of $1.20 billion to $1.30 billion.

Adjusted Free Cash Flow and Free Cash Flow

In 2023, management expects Adjusted Free Cash Flow to be in the range of $1.70 to $1.90 per share and Free Cash Flow to
be in the range of $1.30 to $1.50 per share.

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I 2022 ANNUAL REPORT I

Adjusted Free Cash Flow excludes approximately $100 million (approximately $0.40 per share) in growth expenditures that
support growth and new initiatives. These growth expenditures are expected to support secured projects including:
Scotwind, Nordsee 3 and Delta within the Nordsee Cluster, the Korean projects, the recently acquired Alberta solar
portfolio, in addition to other Canadian and US opportunities.

The Company remains well positioned to fund its growth objectives. Northland has access to $1,014 million of available
liquidity, including $431 million of cash on hand and an approximately $583 million of capacity on its corporate revolving
credit facility as at December 31, 2022, which can be utilized to fund growth projects that ultimately advance to financial
close.

Northland’s global activities are exposed to general economic and business conditions, including elevated inflation levels,
higher interest rates and capital costs, fluctuations in currency, economic conditions in the countries and regions in which
the Company conducts business, and potential interruptions to the global supply chains. The Company’s activities are also
subject to regulatory risks and changes in regulation or legislation affected by political developments and by national and
local laws and regulations. This could include restrictions on production, changes in taxes, and other amounts payable to
governments or governmental agencies, price or rate controls that result in changes to market prices for power generated,
reduced revenues or cash flows for operating assets, higher cost of operations, and the introduction of legal and
administrative hurdles. The Company’s ability to execute on large development projects is also dependent on its ability to
secure project financing, which may not always be available or available on terms acceptable to Northland. Should one or
more of these risks or uncertainties materialize, or should any of the Company’s assumptions prove incorrect, actual results
may vary in material respects from those projected in the forward-looking statements.

The Company continues to monitor these and other developments and is taking actions intended to minimize exposure to
and impact of these global macroeconomic events. These actions include, but are not limited to, conducting targeted debt
refinancing for existing operating facilities to enhance cash flows and corporate liquidity, and implementing hedging
strategies on development assets to provide certainty to costs and to preserve economic returns of the projects. In
addition, the Company consistently looks for opportunities to optimize its portfolio to create value, enhance financial
flexibility and drive enhanced performance in line with its strategic objectives.

Northland also intends to execute a selective partnership strategy of partial interests of certain of its development projects
on or before financial close. The Company will assess each opportunity individually and intends to remain a long-term
owner in the renewable projects it develops. Any gains and losses from the future sell-down of ownership interests in
development assets would be included in Free Cash Flow and Adjusted Free Cash Flow as they relate to capturing
development profits at key milestones. Currently, the Company has two sell-downs in progress and expects to launch more
processes in 2023. The expected net proceeds from these sell-downs would increase reported Free Cash Flow in the event
they occur in 2023.

Northland is focused on achieving financial close on the Baltic Power and Hai Long offshore wind projects in 2023. Both
projects are progressing towards financial close in 2023, though Hai Long continues to be more challenging than expected
due to market specific factors.

Over the longer-term, Northland remains in a strong position to achieve substantial growth in Adjusted EBITDA by 2027.
With 3 gigawatts (GW) of gross operating capacity and a robust development pipeline of nearly 20GW, the Company is well
positioned for an accelerating global energy transition. Northland intends to be selective and pursue only the projects
within its pipeline that meet its strategic objectives and targeted returns. With growth in offshore wind set to outpace all
other renewables, Northland’s leading position in offshore wind positions the Company to be a significant player in this
segment through the decade. As the Company was with offshore wind, Northland intends to continue to be at the forefront
of emerging renewable energy asset classes.

The following table summarizes Northland’s sources of liquidity that have been sourced by the management to fund
dividends, and growth and capital investments, including Adjusted Free Cash Flow generated:

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I 2022 ANNUAL REPORT I

December 31, 2021
88,973
Dividend Reinvestment Program
Release of funds from debt service reserve (1)
73,723
39,600
Proceeds from Canadian facility up-financing(s)
83,959
EBSA financing, net of prior debt repayment and costs
Equity offering (net proceeds) (2)
949,597
1,235,852
Liquidity Generated Before Adjusted Free Cash Flow
386,366
Adjusted Free Cash Flow
1,622,218
Total Liquidity Generated
(1) In 2022 cash release was sourced to fund Gemini and Spain refinancings. 2021 represents the release of cash from Deutsche Bucht’s debt service

December 31, 2022
85,424
33,813
—
—
851,610
970,847
460,892
1,431,739

reserve account following the implementation of a debt service reserve facility when the senior debt was restructured.

(2) 2022 net proceeds resulting from activity under the ATM program.

Management continues to monitor global developments and their potential impact on Northland’s business and financial
results.

SECTION 11: LITIGATION, CLAIMS AND CONTINGENCIES

Litigation, claims and other contingencies arise from time to time in the ordinary course of business for Northland. None of
these contingencies, individually or in aggregate, are expected to result in a liability that would have a material adverse
effect on Northland. Refer to Note 27 of the audited consolidated financial statements for additional information including
any contingencies arising as a result of completed acquisitions.

SECTION 12: ESG AND CLIMATE CHANGE

ESG at Northland

Northland’s primary focus of its ESG strategy is to support a just transition towards a sustainable and carbon-free world.
Northland’s ability to achieve its objectives is based on its ability to safely supply reliable, affordable, and clean energy while
delivering long-term economic value for shareholders. This has been Northland’s commitment for over 35 years and
continues to be core to how projects are developed, constructed, and operated.

The focus of Northland’s ESG framework is on continued decarbonization efforts through our renewable energy
developments, while effectively managing our resources. This entails developing and empowering our people, creating
meaningful and collaborative relationships and partnerships with local and Indigenous communities, and upholding the
highest standards of good and responsible governance.

Northland continues to identify climate-related opportunities for access to capital, growth opportunities in new areas
(energy storage and hydrogen), markets and human capital growth. Northland is looking to achieve a 65% reduction of its
greenhouse gas (“GHG”) emissions intensity by 2030 (from 2019 baseline) and to achieve net zero emissions across its
scope 1, 2 and 3 GHG emissions by 2040.

Climate-related risks and opportunities

As a growth company with a significant pipeline of development projects, Northland is focused on growing its renewable
energy portfolio to support ongoing global de-carbonization efforts. Building on its history of providing clean energy
solutions, Northland’s strategy reflects the demands and complexities of this transition in the short-, medium- and long-
term. Over the next 1 to 5 years Northland will leverage its existing portfolio and expertise to build out its pipeline of
greenfield and brownfield offshore and onshore development projects in key markets across North America, Latin America,
Europe and Asia. Refer to the 2022 AIF for a summary of regulatory developments in the markets where Northland
operates.

Longer-term, the Company’s efforts are centered on expanding its offshore wind presence through continued development
of early-stage projects in Europe and Asia. In addition, Northland is also focused on establishing and expanding a position in
new emerging technologies such as energy storage and green hydrogen. The goal is to create sustainable renewable and
green infrastructure assets that meet the energy demands for accessible and reliable energy, while supporting global

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I 2022 ANNUAL REPORT I

emissions reduction targets. Northland has also committed to reducing its own carbon intensity through the growth of its
renewable energy portfolio and its commitment towards making no further investment in efficient natural gas assets.

Northland recognizes the risks associated with climate (both from the transition to a lower carbon economy and from
changes in weather). Climate-related risks are assessed throughout the project lifecycle.

Northland prioritizes risks as part of its decision-making process and incorporates them into its planning assumptions,
investment decision process, project development and operational processes. Northland employs a strategy that focuses on
identifying opportunities in key markets through project management, operations, market analysis, regulatory assessments,
and monitoring.

Northland continues to identify opportunities for access to capital, growth opportunities in new areas (energy storage and
hydrogen), markets and human capital growth. Northland continues to view the climate-related risks as being associated
with the variability of results, risks from acute, chronic weather changes on its physical assets and the potential for
increasing costs due to more stringent regulatory and policy requirements.

Risk Management

Identification and assessment of climate-related risks are done throughout the project life cycle as well as considered as
part of the Enterprise Risk Management process and as part of the ESG Steering Committee. Northland’s risk identification,
assessment, response planning, reporting and monitoring are integrated into routine business activities, with ownership of
key risks delegated to the functional leads throughout the organization. Any identified risks are escalated to the Executive
Team, and Board of Directors, and are monitored to ensure appropriate responses.

SECTION 13: FINANCIAL RISKS AND UNCERTAINTIES

Northland’s activities expose it to a variety of risks. Refer to the 2022 AIF for a summary of factors in addition to those
discussed below that could significantly affect the operations and financial results of Northland.

Northland’s risk management objective, as it relates to financial risks and uncertainties, is to mitigate fluctuations in cash
flows and ensure stable cash levels available to pay dividends to shareholders and fund growth. Northland does not seek to
mitigate fair value risk. Northland classifies financial risks into market risk, counterparty risk and liquidity risk. Northland
manages financial risks by identifying, evaluating and mitigating in compliance with internal policies and external
requirements under non-recourse project financing arrangements. Northland uses derivative financial instruments to
manage certain financial risks but does not engage in speculative activity. Material financial risks are monitored and
reported regularly to the Audit Committee of the Board of Directors. The risks associated with Northland’s financial
instruments and Northland’s policies for mitigating these risks are described below.

Market Risk

Market risk is the risk that the fair value of Northland’s future cash flows from financial instruments will fluctuate because
of changes in market prices. Financial instruments affected by market risk include loans and borrowings and derivative
financial instruments. Types of market risk to which Northland is exposed are discussed below.

(i) Interest Rate Risk

Interest rate risk refers to the risk that the value of a financial instrument or cash flows associated with the instrument will
fluctuate due to changes in market interest rates. Northland manages this risk by securing fixed-rate debt or entering into
interest rate swap agreements prior to or around the time of financial close that effectively convert floating rate interest
exposures to a fixed rate. In certain jurisdictions, such as Taiwan, Northland is unable to secure interest rate swaps for the
full tenor of underlying debt; in those cases Northland intends to manage this risk with rolling hedge strategies.

Changes in the fair value of interest rate swap contracts designated for hedge accounting are recorded in Northland’s
consolidated statements of comprehensive income (loss) to the extent that the hedge arrangements are effective. The fair
values for these interest rate swap contracts are based on calculations and valuation models using observable market rates.

(ii) Credit Spread Risk

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| 2022 ANNUAL REPORT |

defined credit spreads over the amortization period whenever possible; (ii) ensuring loans are fully amortized (repaid) by
maturity; and (iii) monitoring credit markets and making prudent decisions about the timing and method of original
financings, refinancing and repricing opportunities.

(iii) Currency Risk

Currency risk arises because the Canadian dollar equivalent of transactions, assets or liabilities denominated in foreign
currencies may vary due to changes in foreign exchange rates. Northland is exposed to changes in the euro, US dollar,
Colombian peso, Taiwan dollar, Polish Zloty, and to a lesser degree, Pound sterling, Japanese yen and Korean won for the
early-stage projects in those countries. Primary exposure to Northland arises from the euro-denominated financial
statements and cash distributions at Gemini, Nordsee One, Deutsche Bucht, and the Spanish Portfolio, and Colombian peso-
denominated financial statements and cash distributions from EBSA, and development spending at the pipeline projects.
Management manages this risk by hedging material net foreign currency cash flows to the extent practical and economical
to minimize material cash flow fluctuations.

Northland has entered into long-term foreign exchange contracts to fix foreign exchange conversion rates on the majority
of forecasted euro-denominated cash inflows from Gemini, Nordsee One, Deutsche Bucht, and the Spanish Portfolio.
Northland has entered into a short-term rolling hedge program to fix foreign exchange conversion rates on a portion of
distributions from EBSA.

(iv) Commodity Price Risk

Commodity price risk arises where: (i) PPA revenues or components of PPA revenues depend upon certain electricity
market indices; (ii) government subsidiary or feed-in-tariff programs define a floor price but electricity market prices may
exceed those floors; (iii) a portion of revenue is not contracted and subject to changes in electricity prices; (iv) PPA revenues
for efficient natural gas facilities are fixed, not linked to natural gas prices or the cost of natural gas is not substantively
passed through to the off-taker; or (v) the value of a financial instrument or cash flows associated with the instrument
fluctuates due to changes in commodity prices.

Northland manages this risk by: (i) entering into PPAs that provide a fixed price for all, or substantially all, electricity
production, provide a price linked to commodity prices or include pass-through of commodity costs to the offtaker; (ii)
entering into financial power and natural gas hedges to stabilize contractual economics or protect against a specific risk,
including natural gas costs and electricity prices. Northland has entered into derivatives on Dutch wholesale power prices.

Northland has exposure to Dutch electricity market prices under Gemini’s PPA when the market price falls below the
contractual floor price. For the year ended December 31, 2022, the average wholesale market price was above the
contractual floor price, so the revenue was not impacted by this floor.

Northland has indirect exposure to German electricity market prices under the Nordsee One and Deutsche Bucht PPAs
whereby the facilities do not receive revenue for periods where the market power price remains negative for longer than
six consecutive hours.

Financial Counterparty Risk

Counterparty risk is the risk that a counterparty fails to perform its contractual obligations which could result in losses in
financial assets. Northland is exposed to counterparty risk in several areas including: (i) cash and cash equivalents held with
banks and financial institutions; (ii) counterparty exposures arising from: (a) contractual obligations, which include but are
not limited to sales contracts, equipment supply, delivery, installation and maintenance contracts, fuel supply and fuel
transportation agreements, energy marketing contracts and construction contracts, (b) derivative financial instruments, (c)
trade receivables due from customers, (d) loan receivables due from partners and other entities, and (e) claims payable by
an insurer; and (iii) unfunded loan commitments from financial institutions for the construction of projects. The maximum
exposure to counterparty risk, other than for the loan commitments, is equal to the carrying value of the financial assets.

Northland manages counterparty risk by contracting with highly creditworthy counterparties wherever possible, such as
government-related entities and large financial institutions. Northland’s cash, derivative financial instruments, unfunded
loan commitments and insurance policies are contracted with creditworthy financial institutions and/or cleared on
exchanges. Northland’s gas, transportation, equipment supply/ installation, maintenance and construction contracts are
with highly rated and/or large, well-capitalized counterparties wherever possible. Northland also manages counterparty risk
by conducting comprehensive initial credit analyses on potential counterparties to material and/or long-term contracts and
monitoring counterparties over time.

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| 2022 ANNUAL REPORT |

The nature of Northland’s business and contractual arrangements, and the quality of its counterparties generally serves to
minimize counterparty risk.

Liquidity Risk

Liquidity risk is the risk that Northland: (i) may not have sufficient funds to settle a transaction on the due date; (ii) may be
forced to sell financial assets or terminate financial liabilities at a value that is not the fair market value; or (iii) may be
unable to settle or recover a financial asset at all. Liquidity risk arises through an excess of financial obligations over
available financial assets at any point in time.

Northland manages liquidity risk to maintain sufficient cash or readily available funding in order to meet expected liquidity
requirements. Northland achieves this by: (i) maintaining prudent cash balances, availability under committed credit
facilities and access to capital markets; (ii) implementing financing structures and derivatives or hedging strategies that
minimize the risk of material cash flow impacts; and (iii) actively monitoring open positions to assess and proactively adapt
to possible market liquidity concerns.

Northland is also subject to internal liquidity risk because it conducts its business activities through separate legal entities
(subsidiaries and affiliates) and is dependent on cash distributions from those entities to defray corporate expenses and pay
dividends. Most operating subsidiaries hold non-recourse debt. Such non-recourse financing agreements typically prohibit
distributions if the loan is in default (notably for non-payment of principal or interest) or if the entity fails to achieve a
benchmark debt service coverage ratio, which is the ratio of Adjusted EBITDA to scheduled loan principal and interest
payments over a specified time period. For the year ended December 31, 2022, Northland and its subsidiaries were in
compliance with all debt covenants.

Northland will be required to refinance, renew or extend debt instruments as they become due. The ability to refinance,
renew or extend debt instruments is dependent on the capital markets up to the time of maturity, which may affect the
availability, pricing or terms and conditions of replacement financing.

Refer to Note 27 in the audited consolidated financial statements for the year ended December 31, 2022, for additional
information related to Northland’s commitments and obligations.

Taxation

During 2021 & 2022, new tax pronouncements were released which could have an adverse effect on Northland and its
subsidiaries. Pronouncements include, but are not limited to:

•

The Dutch Ministry of Finance reducing the threshold of deductible interest starting January 1, 2022, from 30% to
20% of tax EBITDA;

The release of draft legislation by the Canadian Department of Finance to address hybrid mismatch arrangements.
This draft legislation was not substantively enacted as of December 31, 2022;

The release of revised draft legislative proposals by the Canadian Department of Finance to implement interest
limitation rules. The revised draft legislation deferred Northland’s effective date of the Canadian interest limitation
rules to January 1, 2024 at which point Canadian interest deductions will be limited to 30% of tax EBITDA.
Disallowed interest can be carried forward indefinitely. This draft legislation was not substantively enacted as of
December 31, 2022;

The European Union member states announcing in December 2022 that they had reached an agreement in
principle on the introduction of a 15% global minimum tax effective January 1, 2024, and

The Colombian government implementing a tax reform law effective January 1, 2023, which introduces a 15%
minimum effective tax rate on Colombian resident corporations, changes to certain tax credits and an increase in
capital gains rates from 10% to 15%.

Northland may also enter into financing structures that could be challenged by the local tax authority. Before entering into
a financing structure, legal and tax experts are engaged to ensure all laws, rules and regulations are being followed. A
successful challenge by a tax authority may have an adverse effect on Northland and its Adjusted Free Cash Flow.

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| 2022 ANNUAL REPORT |

SECTION 14: CRITICAL ACCOUNTING ESTIMATES

Preparing the consolidated financial statements in conformity with IFRS requires management to make estimates and
assumptions that affect the reported amounts of assets, liabilities, income and expenses. Northland’s operating facilities
and investments primarily operate under long-term contracts with creditworthy counterparties. As a result, management
believes it is not exposed to critical accounting estimates to the same degree as merchant businesses of comparable size.
For Northland, the amounts recorded for depreciation of property, plant and equipment and contracts, fair value of
financial assets and financial liabilities, decommissioning liabilities, deferred development costs, leases, LTIP, impairment of
non-financial assets, income taxes and accounting for non-wholly owned subsidiaries are based on estimates and
management’s judgment. By their nature, these estimates are subject to measurement uncertainty, and changes in these
estimates may affect the audited consolidated financial statements of future periods. Estimates and accounting judgments
are based on historical experience, current trends and other assumptions that are believed to be reasonable under the
circumstances.

In making these estimates and judgments, management relies on external information and observable conditions where
possible, supplemented by internal analysis as appropriate. These estimates and judgments have been applied in a manner
consistent with that in the past two years and there are no known trends, commitments, events or uncertainties that
management believes will materially affect the methodology or assumptions utilized in this annual report.

Additional information on the significant estimates, judgments and assumptions that have the most significant effect on the
recognition and measurement of assets, liabilities, income and expenses are discussed in Note 3 in the audited consolidated
financial statements for the year ended December 31, 2022.

SECTION 15: FUTURE ACCOUNTING POLICIES

Management assesses each new IFRS or amendment to determine whether it may have a material impact on Northland’s
consolidated financial statements. As at December 31, 2022, there have been no accounting pronouncements by the
International Accounting Standards Board expected to materially affect Northland’s consolidated financial statements
beyond those described in Note 2.18 of the annual audited consolidated financial statements.

SECTION 16: CONTROLS AND PROCEDURES OVER FINANCIAL REPORTING

Disclosure Controls and Procedures

Disclosure controls and procedures are designed to provide reasonable assurance that all relevant information is gathered
and reported to senior management, including the Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), on a
timely basis so that appropriate decisions can be made regarding public disclosure.

An evaluation of the effectiveness of the design and operation of Northland’s disclosure controls and procedures was
conducted as of December 31, 2022, by and under the supervision of management, including the CEO and CFO. Based on
this evaluation, the CEO and CFO have concluded that Northland’s disclosure controls and procedures, as defined in
National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings (“NI 52-109”), were effective as
of December 31, 2022.

Internal Controls over Financial Reporting

Management is responsible for establishing and maintaining adequate internal controls over financial reporting to provide
reasonable assurance regarding the reliability of financial reporting and the preparation of audited financial statements for
external purposes in accordance with IFRS.

Northland’s internal controls over financial reporting are designed to provide reasonable assurance regarding: (i)
prevention or timely detection of unauthorized transactions that could have a material effect on Northland’s audited
consolidated financial statements, and (ii) the reliability of financial reporting and preparation of audited consolidated
financial statements for external use purposes in accordance with policies, procedures and IFRS.

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| 2021 ANNUAL REPORT |

In designing such controls, it should be recognized that due to inherent limitations, any control, no matter how well
designed and operated, can provide only reasonable assurance, not absolute, and may not prevent or detect all
misstatements. Further, projections of any evaluation of effectiveness to future periods are subject to the risk that controls
may become inadequate because of changes in conditions. Additionally, management is required to use judgment in
evaluating controls and procedures.

An evaluation of the effectiveness of the design and operation of Northland’s internal controls over financial reporting was
conducted as of December 31, 2022, by and under the supervision of the management, including the CEO and CFO using
the framework established in Internal Control – Integrated Framework published by the Committee of Sponsoring
Organizations of the Treadway Commission in 2013.

Based on this evaluation, the CEO and CFO have concluded that Northland’s internal controls over financial reporting were
effective as at the end of the fiscal year ended December 31, 2022.

Changes In Internal Control over Financial Reporting

During the quarter and the year ended December 31, 2022, no changes were made to Northland’s policies and procedures
and other processes that comprise its internal controls over financial reporting, that have materially affected, or are
reasonably likely to materially affect, Northland’s internal controls over financial reporting.

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| 2022 ANNUAL REPORT |

MANAGEMENT’S RESPONSIBILITY

Management is responsible for the preparation of Northland’s consolidated financial statements and annual report.
Management has prepared the accompanying consolidated financial statements in accordance with International Financial
Reporting Standards, and the financial information included in the annual report is consistent with the consolidated
financial statements. Where appropriate, these consolidated financial statements reflect estimates based on the
judgements of management. When alternative methods exist, management has chosen those it deems most appropriate in
the circumstances in order to ensure that the consolidated financial statements are presented fairly, in all material respects.

Management is responsible for the development and maintenance of systems of internal accounting and administrative
cost controls of high quality, consistent with a suitable cost. Such systems are designed to provide reasonable assurance
that the financial information is accurate, relevant and reliable and that Northland and its subsidiaries’ assets are
appropriately accounted for and adequately safeguarded.

The Board of Directors and Audit Committee (consisting of independent directors) are responsible for reviewing the
consolidated financial statements of Northland and the accompanying management’s discussion and analysis and ensuring
that management fulfills its responsibilities for financial reporting.

Ernst & Young LLP, the independent auditor, have examined the consolidated financial statements of Northland. The
independent auditor’s responsibility is to express a professional opinion on the fairness of the consolidated financial
statements. The auditor’s report outlines the scope of their examination and sets forth their opinion on the consolidated
financial statements. Their report as auditor is set out on page 54.

The Audit Committee of Northland meets periodically with management and the independent auditor to discuss internal
controls, auditing matters and financial reporting issues and to satisfy itself that each party is properly discharging its
responsibilities. The Audit Committee also reviews the consolidated financial statements, management’s discussion and
analysis and the external auditor’s report; examines the fees and expenses for audit services; and considers the
engagement or reappointment of the external auditor. The Audit Committee reports its findings to the Board of Directors
for consideration prior to the issuance of the Northland consolidated financial statements to the shareholders. Ernst &
Young LLP have full access to the Audit Committee and meet with the committee both in the presence of management and
separately.

(signed, Mike Crawley)

Mike Crawley

President and Chief Executive Officer

(signed, Pauline Alimchandani)

Pauline Alimchandani

Chief Financial Officer

Toronto, Canada

February 23, 2023

| NORTHLAND POWER INC. | | 2022 ANNUAL REPORT |

INDEPENDENT AUDITOR’S REPORT

To the Shareholders of Northland Power Inc.

Opinion

We have audited the consolidated financial statements of Northland Power Inc. and its subsidiaries (the “Group”), which
comprise the consolidated statements of financial position as at December 31, 2022 and 2021, and the consolidated
statements of income (loss), consolidated statements of comprehensive income (loss), consolidated statements of changes
in equity and consolidated statements of cash flows for the years then ended, and notes to the consolidated financial
statements, including a summary of significant accounting policies.

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated
financial position of the Group as at December 31, 2022 and 2021, and its consolidated financial performance and its
consolidated cash flows for the years then ended in accordance with International Financial Reporting Standards (“IFRS”).

Basis for Opinion

We conducted our audit in accordance with Canadian generally accepted auditing standards. Our responsibilities under
those standards are further described in the Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
section of our report. We are independent of the Group in accordance with the ethical requirements that are relevant to
our audit of the consolidated financial statements in Canada, and we have fulfilled our other ethical responsibilities in
accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in the audit of the
consolidated financial statements of the current period. These matters were addressed in the context of the audit of the
consolidated financial statements as a whole, and in forming the auditor’s opinion thereon, and we do not provide a
separate opinion on these matters. For each matter below, our description of how our audit addressed the matter is
provided in that context.

We have fulfilled the responsibilities described in the Auditor’s Responsibilities for the Audit of the Consolidated Financial
Statements section of our report, including in relation to these matters. Accordingly, our audit included the performance of
procedures designed to respond to our assessment of the risks of material misstatement of the consolidated financial
statements. The results of our audit procedures, including the procedures performed to address the matters below, provide
the basis for our audit opinion on the accompanying consolidated financial statements.

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Key audit matter

How our audit addressed the key audit matter

Impairment of Goodwill, Contracts and other intangible assets, and Property, plant and equipment

As at December 31, 2022, the Group’s goodwill, contracts and
other intangible assets, and property, plant, and equipment were
$713 million, $516 million and $9,378 million, respectively. At
each reporting date, management assessed whether indicators of
impairment exist for any cash generating units (“CGUs”). Further,
for CGUs with goodwill and other intangible assets with indefinite
lives, management assesses at least annually, or at any time if an
indicator of impairment exists, whether there has been an
impairment loss in the carrying value of these CGUs. When
performing
the
recoverable amount for each CGU or group of CGUs using the
higher of: (i) the value-in-use method; or (ii) the fair value less
costs of disposal method. The Group discloses significant
judgements, estimates and assumptions and the results of their
analysis in respect of impairment, in Notes 3 and 23 to the
consolidated financial statements.

the Group estimates

impairment

tests,

Auditing management’s impairment tests was complex, given the
degree of judgement and subjectivity in evaluating management’s
estimates and assumptions
in determining the recoverable
amounts of CGUs or group of CGUs. The significant assumptions
and inputs noted in the models whereby the net cash flow is
determined based on current business plans and budgets
approved by management were revenues, operating costs,
terminal values, capital expenditures and discount rates.

Based on our risk assessment, with assistance from our
valuation specialists, we performed the following
sample of
procedures, among others, on a
management’s cash generating unit impairment tests:

•

Assessed the appropriateness of revenues,
operating costs, capital expenditures and
terminal values by comparing them to executed
or expected power generation contracts and
regulatory power distribution rates, historical
results,
industry,
third-party data, current
market or economic trends and evidence
obtained in other areas of the audit;

the discount

Evaluated
management, which
comparable market data;

rates utilized by
assessing

involved

Performed
assumptions
recoverable amount of the CGU; and

sensitivity analysis on
to evaluate changes

certain
the
in

Assessed the adequacy of the disclosures
in Note 23 of the accompanying
included
consolidated financial statements in relation to
this matter.

Other Information

Management is responsible for the other information. The other information comprises:

• Management’s Discussion and Analysis

•

The information, other than the consolidated financial statements and our auditor’s report thereon, in the Annual
Report

Our opinion on the consolidated financial statements does not cover the other information and we do not express any form
of assurance conclusion thereon.

In connection with our audit of the consolidated financial statements, our responsibility is to read the other information,
and in doing so, consider whether the other information is materially inconsistent with the consolidated financial
statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.

We obtained Management’s Discussion and Analysis and the Annual Report prior to the date of this auditor’s report. If,
based on the work we have performed, we conclude that there is a material misstatement of this other information, we are
required to report that fact in this auditor’s report. We have nothing to report in this regard.

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Responsibilities of Management and Those Charged with Governance for the Consolidated Financial
Statements

Management is responsible for the preparation and fair presentation of the consolidated financial statements in
accordance with IFRS, and for such internal control as management determines is necessary to enable the preparation of
consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, management is responsible for assessing the Group’s ability to continue
as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of
accounting unless management either intends to liquidate the Group or to cease operations, or has no realistic alternative
but to do so.

Those charged with governance are responsible for overseeing the Group’s financial reporting process.

Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with
Canadian generally accepted auditing standards will always detect a material misstatement when it exists. Misstatements
can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be
expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

As part of an audit in accordance with Canadian generally accepted auditing standards, we exercise professional judgment
and maintain professional skepticism throughout the audit. We also:

•

Identify and assess the risks of material misstatement of the consolidated financial statements, whether due to
fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is
sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement
resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional
omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
Group’s internal control.

•

Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and
related disclosures made by management.

Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based on the
audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast
significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty
exists, we are required to draw attention in our auditor’s report to the related disclosures in the consolidated
financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on
the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may
cause the Group to cease to continue as a going concern.

Evaluate the overall presentation, structure and content of the consolidated financial statements, including the
disclosures, and whether the consolidated financial statements represent the underlying transactions and events
in a manner that achieves fair presentation.

• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business
activities within the Group to express an opinion on the consolidated financial statements. We are responsible for
the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

We communicate with those charged with governance regarding, among other matters, the planned scope and timing of
the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our
audit.

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We also provide those charged with governance with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other matters that may
reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determine those matters that were of most
significance in the audit of the consolidated financial statements of the current period and are therefore the key audit
matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure about the
matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report
because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of
such communication.

The engagement partner on the audit resulting in this independent auditor’s report is Scott Kerr.

Toronto, Canada

February 23, 2023

| NORTHLAND POWER INC. | | 2022 ANNUAL REPORT |

Consolidated Financial Statements
Table of Contents

Consolidated Statements of Financial Position . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Statements of Income (Loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Statements of Comprehensive Income (Loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Statements of Changes in Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Consolidated Statements of Cash Flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Notes to the Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Business

1. Description of Northland's Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2. Summary of Significant Accounting Policies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3. Significant accounting Judgments, Estimates and Assumptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4. Business Combinations and Acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Financial Position

5. Property, Plant and Equipment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6. Contracts and Other Intangible Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7. Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
8. Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9. Investment in Joint Ventures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
10. Other Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
11. Trade and Other Payables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
12. Management of Capital . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
13. Project Loans and Borrowings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
14. Corporate Credit Facilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
15. Provisions and Other Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
16. Pension and Post-Employment Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
17. Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
18. Non-controlling Interests . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
19. Financial Risk Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
97
20. Financial Instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100

Performance

21. Net Income (Loss) per Share . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104
22. Finance costs, net . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104
23. Impairment of Property, Plant and Equipment, Intangible Assets and Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105
24. Income Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 105
25. Operating Segment Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 108

Other

26. Related-party Disclosures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111
27. Litigation, Claims, Contingencies and Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111

| NORTHLAND POWER INC. |

| 2022 ANNUAL REPORT |

Consolidated Statements of Financial Position

In thousands of Canadian dollars

As at

Assets
Cash and cash equivalents
Restricted cash (Note 18)
Trade and other receivables
Other current assets (Note 10.1)
Derivative assets (Note 20.2)
Total current assets
Property, plant and equipment (Note 5)
Contracts and other intangible assets (Note 6)
Goodwill (Note 7)
Finance lease receivable (Note 8.1)
Derivative assets (Note 20.2)
Long-term deposits (Note 10.2)
Deferred tax asset (Note 24)
Investment in joint ventures (Note 9)
Other assets (Note 10.3)
Total assets

Liabilities and equity
Trade and other payables (Note 11)
Project loans and borrowings (Note 13)
Dividends payable (Note 17.4)
Derivative liabilities (Note 20.2)
Total current liabilities
Project loans and borrowings (Note 13)
Corporate credit facilities (Note 14)
Provisions and other liabilities (Note 15)
Derivative liabilities (Note 20.2)
Deferred tax liability (Note 24)
Total liabilities

Equity
Common shares (Note 17.1)
Preferred shares (Note 17.3)
Contributed surplus
Accumulated other comprehensive income (loss)
Deficit
Equity attributable to shareholders
Non-controlling interests (“NCI”) (Note 18)
Total equity
Total liabilities and equity
See accompanying notes.

(signed, John W. Brace)

John W. Brace
Director and Chair of the Board

December 31,
2022

December 31,
2021

1,299,833 $
160,142
397,771
242,381
248,829
2,348,956 $
9,377,584
515,775
712,618
125,938
503,146
114,789
27,240
441,565
54,998
14,222,609 $

1,001,773 $
784,114
25,669
97,296
1,908,852 $
6,177,841
—
705,387
8,679
697,577
9,498,336 $

673,692
155,631
383,308
77,950
124,112
1,414,693
9,586,466
497,635
753,373
131,280
148,559
99,697
60,931
138,726
40,456
12,871,816

504,583
677,378
24,946
197,638
1,404,545
6,914,836
41,825
723,302
290,651
530,946
9,906,105

4,945,983 $
144,843
5,536
(4,040)
(701,140)
4,391,182 $
333,091
4,724,273 $
14,222,609 $

4,005,462
260,880
3,586
(279,964)
(1,233,085)
2,756,879
208,832
2,965,711
12,871,816

$
$

(signed, Russell Goodman)

Russell Goodman
Director and Chair of the Audit Committee

| NORTHLAND POWER INC. |

| 2021 ANNUAL REPORT |

Consolidated Statements of Income (Loss)

In thousands of Canadian dollars except per Share and Share information

Sales

Electricity and related products
Regulated electricity
Other
Total sales
Cost of sales

Fuel purchases
Regulated electricity purchases

Total cost of sales
Gross profit

Expenses
Operating costs
General and administrative (“G&A”) costs
Development costs
Depreciation of property, plant and equipment (Note 5)
Amortization of contracts and other intangible assets (Note 6)
Total expenses
Investment income
Finance lease income (Note 8.1)
Operating income

Finance costs, net (Note 22)
Impairment (Note 7, 23)
Foreign exchange (gain) loss
Fair value (gain) loss on derivative contracts (Note 20)
Other (income) expense
Income (loss) before income taxes

Provision for (recovery of) income taxes (Note 24)

Current
Deferred

Total income taxes
Net income (loss)

Net income (loss) attributable to:

Non-controlling interests (“NCI”) (Note 18)
Shareholders of the Company

Net income (loss)

Weighted average number of shares outstanding - basic and diluted (000s) (Note 21)
Net income (loss) attributable to common shareholders per share - basic and diluted
(Note 17, 21)
See accompanying notes.

| NORTHLAND POWER INC. |

| 2022 ANNUAL REPORT |

Year ended December 31,
2021
2022

1,916,571 $
531,489
755
2,448,815 $

186,767
83,659

270,426 $
2,178,389 $

351,995
83,963
78,217
571,090
53,611
1,138,876 $
523
11,271
1,051,307 $

323,632
—
(41,792)
(460,704)
(29,948)
1,260,119 $

203,376
101,286
304,662 $
955,457 $

127,724
827,733
955,457 $

1,781,785
309,312
2,158
2,093,255

144,570
68,923
213,493
1,879,762

327,894
67,683
77,660
612,755
23,284
1,109,276
3,218
11,662
785,366

342,417
29,981
81,318
(116,621)
25,040
423,231

84,410
68,942
153,352
269,879

80,320
189,559
269,879

236,157

218,861

3.46 $

0.82

$
$

Consolidated Statements of Comprehensive Income (Loss)

In thousands of Canadian dollars

Net income (loss)

Items that may be re-classified into net income (loss):

Exchange rate differences on transaction of foreign operations

Change in fair value of hedged derivative contracts (Note 20)

Deferred tax recovery (expense) (Note 24)

Items that will not be re-classified into net income (loss):

Re-measurement of pension obligation

Other comprehensive income (loss)

Total comprehensive income (loss)

Total comprehensive income (loss) attributable to:

Non-controlling interests (Note 18)

Shareholders of the Company

Total comprehensive income (loss)

See accompanying notes.

Year ended December 31,

2022
955,457 $

2021
269,879

31,076

425,702

(98,444)

3,161
361,495 $
1,316,952 $

(168,934)

214,196

(30,691)

(3,832)
10,739

280,618

213,295

1,103,657
1,316,952 $

97,344

183,274
280,618

| NORTHLAND POWER INC. |

| 2021 ANNUAL REPORT |

Consolidated Statements of Changes in Equity

In thousands of Canadian dollars

December 31, 2021

4,005,462 $

260,880 $

(1,233,085) $

3,586 $

(279,964) $

2,756,879 $

208,832 $

2,965,711

Common
shares

Preferred
shares

Deficit

Contributed
surplus

Accumulated
other
comprehensive
income (loss)

Equity
attributable
to
shareholders

Non-
controlling
interests

Total
equity

Net income (loss)

Deferred tax recovery (expense) (Note 24)

Exchange rate differences on translation of

foreign operations

Change in fair value of hedged derivative

contracts (Note 20)

Re-measurement of pension obligation

Total comprehensive income (loss)

Long term incentive plan (Note 17.1)

Non-controlling interest disposal (Note 18)

Additional contribution provided by NCI

Common shares issued, net of costs (Note

17.1)

Deferred tax on share issuance cost (Note

17.1, 24)

Dividends to NCI (Note 18)

Common share and dividends declared

(Note 17.1, 17.4)

Preferred shares transfer to current-

liabilities (Note 17.3)

Preferred share dividends (Note 17.3)

December 31, 2022

See accompanying notes.

—

— $

591

—

851,610

2,896

—

85,424

—

— $

—

827,733

—

827,733 $

—

(284,582)

(116,037)

—

(11,206)

—

827,733

127,724

955,457

(96,521)

(1,923)

(98,444)

22,067

9,009

31,076

—

347,260

78,442

425,702

—

— $

1,950

—

3,118

3,161

275,924 $

1,103,657 $

213,295 $

1,316,952

—

2,541

—

3,446

1,320

2,541

3,446

1,320

851,610

—

851,610

2,896

—

2,896

—

(93,802)

(199,158)

—

(199,158)

(116,037)

(11,206)

—

(116,037)

(11,206)

4,945,983 $

144,843 $

(701,140) $

5,536 $

(4,040) $

4,391,182 $

333,091 $

4,724,273

| NORTHLAND POWER INC. | | 2022 ANNUAL REPORT |

Consolidated Statements of Changes in Equity - continued

In thousands of Canadian dollars

December 31, 2020

2,955,840 $

260,880 $

(1,147,633) $

3,225 $

(279,418) $

1,792,894 $

209,877 $

2,002,771

Common
shares

Preferred
shares

Deficit

Contributed
surplus

Accumulated
other
comprehensive
income (loss)

Equity
attributable
to
shareholders

Non-
controlling
interests

Total
equity

Net income (loss)

Deferred tax recovery (expense) (Note 24)

Exchange rate differences on translation of

foreign operations

Change in fair value of hedged derivative

contracts (Note 20)

Re-measurement of pension obligation

Total comprehensive income (loss)

Long term incentive plan (Note 17.1)

Non-controlling interest disposal (Note 18)

Non-controlling interest acquired (Note 4)

Recognition of put option

Common shares issued, net of costs (Note

17.1)

Deferred tax on share issuance cost (Note

17.1, 24)

Dividends to NCI (Note 18)

Common share and dividends declared

(Note 17.1, 17.4)

Preferred share dividends (Note 17.3)

December 31, 2021

See accompanying notes.

—

— $

911

—

949,597

10,141

—

88,973

—

— $

—

189,559

—

189,559 $

—

(264,200)

(10,811)

—

189,559

80,320

269,879

(30,036)

(655)

(30,691)

(157,925)

(11,009)

(168,934)

—

185,485

28,711

214,196

—

— $

293

—

(3,809)

(23)

(3,832)

(6,285) $

183,274 $

97,344 $

280,618

—

5,739

1,204

5,739

949,597

—

(8,521)

7,850

—

1,204

(2,782)

7,850

949,597

10,141

—

10,141

—

(97,718)

(175,227)

(10,811)

—

(175,227)

(10,811)

—

4,005,462 $

260,880 $

(1,233,085) $

3,586 $

(279,964) $

2,756,879 $

208,832 $

2,965,711

| NORTHLAND POWER INC. | | 2022 ANNUAL REPORT |

Consolidated Statements of Cash Flows

In thousands of Canadian dollars

Operating activities
Net income (loss)

Items not involving cash or operations:

Depreciation of property, plant and equipment

Amortization of contracts and other intangibles

Impairment of goodwill

Finance costs, net

Fair value (gain) loss on derivative contracts (Note 20)

Unrealized foreign exchange (gain) loss

Deferred tax expense (recovery)

Other

Net change in working capital related to operations

Cash provided by operating activities

Investing activities

Purchase of property, plant and equipment

Acquisition of and investments in joint ventures

Acquisitions, net (Note 6, 4)

Purchase of contracts and other intangible assets

Restricted cash utilization (funding)

Other

Cash used in investing activities

Financing activities

Proceeds from borrowings, net of transaction costs

Repayment of borrowings

Interest paid
Restricted cash utilization (funding)

Common share dividends

Dividends to NCI (Note 18)

Preferred share dividends (Note 17.3)

Advance payment for redemption of preference shares (Note 10.1, 17.3)

Common shares issued, net of costs (Note 17.1)

Other

Cash used in financing activities

Effect of exchange rate differences on cash and cash equivalents

Net change in cash and cash equivalents during the period

Cash and cash equivalents, beginning of period

Cash and cash equivalents, end of period
See accompanying notes.

| NORTHLAND POWER INC. | | 2022 ANNUAL REPORT |

Year ended December 31,

2022

2021

955,457 $

269,879

571,090

53,611

—

323,632

(460,704)

5,588

101,286

(6,852)
1,543,108 $
289,875
1,832,983 $

(452,576)

(203,479)

(37,771)
(32,780)

47,405

612,755

23,284

29,981

312,537

(116,621)

81,318

68,942

34,721
1,316,796

292,499

1,609,295

(469,793)

(81,171)
(420,563)

—

(55,456)

49,518
(629,683) $

(3,880)
(1,030,863)

2,789,506

889,796

(3,496,308)

(1,571,765)

(336,356)
2,855

(196,845)

(93,802)

(11,206)
(121,524)

851,610

7,233
(604,837) $
27,678

626,141 $

673,692
1,299,833 $

(281,479)
76,064

(172,755)

(97,718)

(10,811)
—

949,597

(6,608)

(225,679)

(114,050)
238,703

434,989

673,692

Notes to the Consolidated Financial Statements

1. Description of Northland's Business

Northland Power Inc. (the “Company” or “NPI”) owns or holds net economic interests, through its subsidiaries (together
referred in here as “Northland” or the “Group”), in power-producing facilities and a power distribution utility, as well as in
projects under construction or development phases. Northland’s facilities produce electricity from clean energy sources for
sale primarily under long-term Power Purchase Agreements (“PPAs”) or other revenue arrangements with creditworthy
counterparties. Northland’s utility is a distributor and retailer of electricity compensated under a regulated framework.
These operating assets provide stable cash flow and are primarily located in Canada, Germany, the Netherlands, Spain and
Colombia. Northland’s significant assets under construction and development are located in Canada, Mexico, Taiwan,
Poland, Germany, Colombia and the United States.

Northland is incorporated under the laws of Ontario, Canada, with common shares (“Shares”), Series 1 cumulative rate
reset preferred shares (“Series 1 Preferred Shares”), Series 2 cumulative floating rate preferred shares (“Series 2 Preferred
Shares”), and Series 3 cumulative rate reset preferred shares (“Series 3 Preferred Shares”) that are publicly traded on the
Toronto Stock Exchange (“TSX”). Northland is the parent company for the subsidiaries that operate Northland’s business.
Northland’s registered office is located in Toronto, Ontario.

These audited consolidated financial statements (“Consolidated Financial Statements”) include the results of Northland
and its subsidiaries, of which the most significant are listed in the following table:

Geographic region

% voting ownership
as at Dec. 31, 2022 (1)

Offshore Wind

Buitengaats C.V. and ZeeEnergie C.V. (“Gemini”)
Nordsee One GmbH (“Nordsee One”)
Northland Deutsche Bucht GmbH (“Deutsche Bucht”)

Onshore Renewable

Northland Power Spain Holdings, S.L.U. ("Spanish portfolio")

Efficient Natural Gas

North Battleford Power L.P. (“North Battleford”)
Thorold CoGen L.P. (“Thorold”)

Utility

Empresa de Energía de Boyacá S.A E.S.P (“EBSA”)

The Netherlands
Germany
Germany

Spain

Canada
Canada

Colombia

60.0 %
85.0 %
100.0 %

98.5 %

100.0 %
100.0 %

99.4 %

(1) As at December 31, 2022, Northland’s economic interest remain unchanged from December 31, 2021. Northland owns 100% ownership interest in all

the facilities within the Spanish Portfolio, except for Elecdey Lezuza, S.A. (a wind facility), where Northland’s ownership interest is at 66.2%.

2. Summary of Significant Accounting Policies

2.1 Basis of Preparation and Statement of Compliance

These Consolidated Financial Statements have been prepared in accordance with International Financial Reporting
Standards (IFRS) as issued by the International Accounting Standards Board (IASB) and are presented in Canadian dollars.
All values are presented in thousands except when otherwise indicated. The comparative financial information has been
reclassified from the previously presented to conform to the 2022 Consolidated Financial Statements presentation.

The Consolidated Financial Statements for the year ended December 31, 2022, were approved by the Board of Directors on
February 23, 2023.

2.2 Basis of Consolidation

The Consolidated Financial Statements include Northland’s direct and indirect subsidiaries, which are fully consolidated on
the date that Northland obtains control and continue to be consolidated until the date that such control ceases. Northland
determines that it has control over an investee if facts and circumstances indicate that Northland is exposed, or has rights
to variable returns from its involvement with the investee and has the ability to affect those returns through its power. All
intra-group balances and transactions are eliminated on consolidation.

| NORTHLAND POWER INC. | | 2022 ANNUAL REPORT |

2.3 Business Combinations and Goodwill

Business combinations are accounted for using the acquisition method. The acquired identifiable assets, liabilities and
contingent consideration that meet the conditions for recognition under IFRS 3, “Business Combinations” are recognized at
their fair values at the acquisition date, except for (i) income taxes, which are measured in accordance with IAS 12, “Income
Taxes”; (ii) share-based payments, which are measured in accordance with IFRS 2, “Share-based Payment”; and (iii) non-
current assets that are classified as held for sale, which are measured at fair value less costs to sell in accordance with IFRS
5, “Non-Current Assets Held for Sale and Discontinued Operations.” Northland did not designate any assets as held for sale
in 2022 and 2021. Any goodwill arising from business combinations is, from the date of acquisition, allocated to each of
Northland’s cash-generating units (CGUs) that are expected to benefit from the synergies of the combination, irrespective
of whether other assets or liabilities of the acquiree are assigned to those units and tested annually for impairment (see
Note 2.8). Goodwill is initially measured at cost, being the excess of the purchase price over Northland’s share in the net fair
value of the acquiree’s identifiable assets, liabilities and contingent liabilities.

2.4 Investment in Joint Ventures and Associates

An associate is an entity over which Northland has significant influence, which is the ability to participate in the financial
and operating policy decisions, but without controlling or jointly controlling the investee.

A joint venture is a type of joint arrangement whereby, the parties that have joint control of the arrangement have rights to
the net assets of the joint venture. Joint control is the contractually agreed sharing of control of an arrangement, which
exists only when decisions about the relevant activities require unanimous consent of the parties sharing control. Judgment
is required when assessing the classification of a joint arrangement as a joint venture. When making this assessment,
Northland considers the structure of the arrangements, the legal form of any separate vehicles, the contractual terms of the
arrangements, and other facts and circumstances.

Northland’s investments in a joint venture or an associate are accounted for under the equity method of accounting,
whereby, the carrying value of interest in a joint venture or an associate is initially recognized at cost, which includes
transaction costs and subsequently adjusted for Northland’s share of net income, other comprehensive income (“OCI”),
distributions by a joint venture or an associate and other adjustments to Northland’s proportionate interest in a joint
venture or an associate.

The Consolidated Financial Statements include Northland’s share of the income (loss) and other comprehensive income of
the joint venture, after adjustments to align the accounting policies of the joint venture with those of Northland, from the
date that joint control commences, until the date that joint control ceases.

In addition, when there has been a change recognized directly in the equity (other than due to other comprehensive
income) of the joint venture, Northland recognizes its share of any changes, when applicable, in the consolidated statement
of comprehensive income (loss) and corresponding effect would be reflected in the net carrying value of interest in the joint
venture.

When Northland’s share of losses exceeds its interest in the joint venture, the carrying amount of that interest (including
any long term investments) is reduced to $nil and the recognition of further losses is discontinued except to the extent that
Northland has a constructive or legal obligation to contribute to such losses or has made payments on behalf of the Joint
venture. Currently, Northland does not have an investment in associate.

2.5 Property, Plant and Equipment

Property, plant and equipment (PP&E) are recorded at cost, net of accumulated depreciation and any accumulated
impairment losses. The cost of PP&E includes the cost of replacing part of the PP&E and borrowing costs for long-term
construction projects, if the recognition criteria are met. Likewise, when a major overhaul as described below is performed,
its cost is recognized in the carrying amount of the related PP&E as a replacement if the recognition criteria are met. All
other repair and maintenance costs are recognized in the consolidated statement of income (loss) as incurred. The present
value of the expected cost for decommissioning is included in the cost of the related asset if the recognition criteria for a
provision are met. See Note 2.9 for further information about the measurement of the decommissioning liabilities.

| NORTHLAND POWER INC. | | 2022 ANNUAL REPORT |

Depreciation expense is recognized on a straight-line basis over its estimated useful lives of the asset primarily as follows:

Description of Asset class
Plant and operating equipment
Buildings and foundations
Lease ROU asset
Leasehold improvements
Other equipment - Vehicles and meteorological towers
Other equipment - Office equipment, furniture and fixtures
Other equipment - Computers and computer software

Useful Lives
10 to 35 years
20 to 40 years
1 to 50 years
Over the term of the lease
5 years
5 years
2 years

In general, Northland expects to use its PP&E to their full useful lives and considers residual values, where appropriate, in
calculating depreciation.

Assets included in construction-in-progress (CIP) are transferred to the appropriate PP&E category and amortized once the
assets are available for use, such as when the test period ends and / or the PP&E begins commercial operations.

The costs of all maintenance provided under long-term, fixed-price contracts are charged to the consolidated statements of
income (loss) based on the terms of the contract. All major overhaul expenditures that are not incurred under long-term
maintenance contracts are capitalized and amortized over the average expected period between major overhauls.

An item of PP&E is derecognized upon disposal or when no future economic benefits are expected from its use or disposal.
Any gain or loss arising on derecognition of an asset is included in the consolidated statements of income (loss) in the
period of derecognition.

Government grants related to the construction of capital assets are recorded as a reduction to the cost of the related asset
and amortized over the useful life of the related asset.

2.6 Intangible Assets

The cost of intangible assets acquired is initially recorded at their fair value at the date of acquisition. Intangible assets
acquired separately are measured on initial recognition at cost. Internally generated intangible assets, other than deferred
development costs, are not capitalized, and the expenditure is reflected the consolidated statements of income (loss).

Intangible assets with finite lives are amortized over their useful economic lives and assessed for impairment whenever
there is an indication that the intangible asset may be impaired.

Development costs

Development expenditures on an individual project are recorded as assets on the consolidated statements of financial
position when Northland can demonstrate:

•
•
•
•
•

The technical feasibility of completing the project so that it will be available for use or sale;
The intention to complete, and ability to use or sell, the project;
The project will generate future economic benefits;
The availability of resources to complete the project; and
The ability to measure reliably the expenditures during development.

During the period of development, the asset is tested annually for impairment or if any indicators of impairment are
identified.

Deferred development costs include pre-construction costs directly related to new projects and are presented under PP&E
as CIP. Capitalization begins once it is determined by management that a given project has a high likelihood of being
pursued through to completion. Costs are capitalized up to the closing of project financing and/or the start of construction,
at which time they are reclassified to the appropriate PP&E category from CIP or recorded as intangible assets, as
appropriate. All indirect research and development costs not eligible for asset recognition are expensed as “development
costs” on the consolidated statements of income (loss).

Contracts

Contracts relate primarily to the fair value of PPAs and management agreements when they were acquired by Northland
and are recorded net of accumulated amortization. Contract amortization is recorded on a straight-line basis over the term
of the agreement.

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2.7 Leases or Arrangements Containing a Lease

Lessee accounting

At the inception of a contract, Northland assesses whether the arrangement is, or contains, a lease in accordance with IFRS
16, “Leases”. If the arrangement meets the definition of a lease, a lease obligation and a related right-to use (ROU) asset
will be recorded on the applicable lease commencement date. A lease liability initially measured at the present value of the
unpaid lease payments discounted using the interest rate implicit in the lease (if readily determinable) or otherwise on
Northland’s incremental borrowing rate. A ROU asset is initially measured based on the initial amount of the related lease
obligation, subject to certain adjustments. The lease obligation is remeasured when there are adjustments to future lease
payments arising from a change in applicable indices or rates or changes in lease terms. Upon any such remeasurement, a
corresponding adjustment is made to the carrying amount of the related ROU asset.

Northland applies the cost model to subsequently measure lease ROU assets and applies the same impairment policy as
other PP&E. Lease ROU assets are depreciated over the shorter period of the lease term and useful life of the underlying
asset. The lease term includes any renewal or termination Northland is reasonably certain to exercise. In the case of land
leased for future development, Northland assumes an initial lease term of 5 years. Where leased assets are required for the
operation of the facility, Northland assumes the lease will be renewed to match the term of the facility’s PPA. Northland
reassesses the lease term in response to significant events or changes in circumstances. If a lease transfers ownership of the
underlying asset or Northland expects to exercise a purchase option, the related ROU asset is depreciated over the useful
life of the underlying asset.

Lessor accounting

Northland enters into PPAs to provide electricity and electricity-related products at predetermined prices. At inception of
the contract, Northland assesses whether it is, or contains, a lease in accordance with IFRS 16. If the PPA meets the
definition of a lease and the terms of the contract do not transfer substantially all of the benefits and risks of ownership of
PP&E, it is classified as an operating lease. Where the terms do transfer substantially all of the benefits and risks of
ownership, it is classified as a finance lease.

Finance lease receivables are initially measured at amounts equal to the present value of the net investment in the lease.
Finance lease income is recognized in a manner that produces a constant rate of return on Northland’s net investment in
the lease and is included in operating income.

At the commencement of the lease, which generally coincides with start of commercial operations of the facility, Northland
separates payments and other consideration required by such an arrangement into those for the lease and those for other
elements on the basis of their relative fair values.

2.8 Impairment of Non-financial Assets

Northland assesses at each reporting date whether there is an indication that an asset may be impaired or that previously
recognized impairment losses may no longer exist or have decreased. If any indication exists or when annual impairment
testing for an asset is required, Northland estimates the asset’s or CGU’s recoverable amount. The estimated recoverable
amount is the higher of (i) an asset’s or CGU’s estimated fair value less costs to sell or (ii) its value in use. Where the
carrying amount of an asset or CGU exceeds its estimated recoverable amount, the asset is considered impaired and is
written down to its estimated recoverable amount. When the recoverable amount exceeds the carrying amount for an
asset or CGU previously impaired, the reversal is limited to ensure the carrying amount of the asset does not exceed the
carrying amount that would have been determined, net of depreciation, had no impairment been previously recognized.

In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate
that reflects current market assessment of the time value of money and risk specific to the asset. In determining fair value
less costs to sell, an appropriate valuation model is used and calculations are corroborated by valuation multiples or other
available fair value indicators.

Goodwill

Goodwill is tested for impairment annually and when circumstances indicate that the carrying value may be impaired.
Impairment is determined for goodwill by assessing the recoverable amount for each CGU to which the goodwill relates.
Where the estimated recoverable amount of the CGU is less than its carrying amount, an impairment loss is recognized.
Impairment losses relating to goodwill cannot be reversed in future periods.

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2.9 Provisions

General

Provisions are recognized when Northland has a present obligation (legal or constructive) as a result of a past event and
where it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation.
Where Northland expects some or all of a provision to be reimbursed (for example, under an insurance policy or warranty
agreement), the reimbursement is recognized as a separate asset but only when the reimbursement is virtually certain. The
expense relating to any provision is presented in the consolidated statement of income (loss) net of any reimbursement.

Decommissioning liabilities

Provisions for decommissioning costs are recorded at the present value of expected costs to settle the obligation using
estimated cash flows and are recognized as part of the cost of the related asset. The cash flows are discounted at a current
pre-tax rate. Where the estimated cash flows reflect the risks specific to the decommissioning liability, a risk-free discount
rate is used; otherwise, a discount rate reflective of the risks specific to the decommissioning liability is used. The unwinding
of the discount is expensed as incurred and recognized in the consolidated statements of income (loss) as a finance cost.
The estimated future costs of decommissioning are reviewed annually and adjusted as appropriate. Changes in the
estimated future costs or in the discount rate applied are added to or deducted from the cost of the asset.

2.10 Share-based Compensation

As part of Northland’s share-based compensation plans, Northland provides incentives to management and certain
employees when projects achieve predetermined milestones (“Development LTIP”) or to recognize achievements, attract
and retain executives (“Deferred Rights”). For Development LTIP awards, the cost of the shares awarded is recognized over
the estimated vesting period and is capitalized for employees providing services directly involved in the development and
construction of the project. The awards vest when the associated project meets established performance expectations.
Grants of Deferred Rights vest over a maximum of a three-year period, and the expected cost is expensed over the vesting
period. In addition to the Development LTIP and Deferred Rights, share-based compensation in the form of Performance
Share Unit (PSU), Restricted Share Units (RSU) and Deferred Share Units (DSU), are granted by Northland to certain
executives and directors.

These awards, except for DSU are settled in cash or shares, at Northland’s discretion, whereas, DSUs are settled in cash.
Accordingly, these are accounted for as a liability until settled. The fair value of the awards is based on the grant date share
price and, to the extent that services are provided in advance of the grant date, Northland’s reporting date share price. The
estimated forfeiture rate reflects the shares that will vest upon achieving project milestone and is revised if there is any
indication that the number of shares expected to vest has changed.

2.11 Cash and Cash Equivalents and Restricted Cash

Cash equivalents comprise only highly liquid investments with maturities of less than 90 days. Restricted cash comprises
amounts contractually restricted for specific uses including amounts funded against future maintenance, debt service and
construction costs at certain Northland subsidiaries. As of December 31, 2022, cash and cash equivalents are comprised of
cash balances and a short term deposit held with the banks of $1,275 million (2021 - $674 million) and $25 million (2021 -
$nil), respectively.

2.12 Financial Instruments

(a) Financial assets and liabilities

Northland recognizes financial assets and financial liabilities initially at fair value and subsequently remeasure these at
either fair value or amortized cost based on their classification as described below. Financial assets are derecognized when
the rights to receive cash flows from the financial assets have expired or have been transferred and Northland has
transferred substantially all the risks and rewards of ownership.

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Fair value through profit and loss:

Financial assets with the intention of generating earnings in the near term, and derivatives other than cash flow hedges, are
classified as fair value through profit and loss (FVPL). A gain or loss on a financial asset measured at FVPL that is not part of
a hedging relationship is recognized in consolidated statement of income (loss) and presented on a net basis in the period in
which it arises. For derivative financial assets, gains and losses are shown within “fair value (gain) loss on derivative
contracts”. Northland classifies loans provided to First Nations partners at FVPL due to the fact that they do not meet the
criteria for classification as amortized cost because the contractual cash flows are not solely payments of principal and
interest. This is the only non-derivative financial asset measured at FVPL and related gains and losses are shown within
“other (income) expense” in the consolidated statements of income (loss). Interest income from FVPL financial assets is
included in “investment income”.

Financial liabilities held for trading, such as those acquired for the purpose of selling in the near term, and derivative
financial instruments entered into by Northland that do not meet hedge accounting criteria are classified as fair value
through profit and loss. Gains or losses on this type of liabilities are recognized in the consolidated statement of income
(loss).

Amortized cost:

Financial assets held for collection of contractual cash flows that represent solely payments of principal and interest are
measured at amortized cost, and include Northland’s trade receivables, term deposits and other receivables. Interest
income from these financial assets is included in “finance costs, net” using the effective interest rate method.

All other financial liabilities are classified as amortized cost using the effective interest rate method. Gains and losses are
recognized in consolidated statements of income (loss) when the liabilities are derecognized as well as through the
amortization process. The calculation takes into account any premium or discount on acquisition and includes transaction
costs and fees that are an integral part of the effective interest rate. This category includes trade and other payables,
dividends payable, interest-bearing loans and borrowings, corporate credit facilities, convertible debentures and
subscription receipts.

A third category, fair value through other comprehensive income (FVOCI), is available; however, Northland has not
classified any financial assets or financial liabilities in this category.

(b) Offsetting of financial instruments

Financial assets and financial liabilities are offset and the net amount reported in the consolidated statements of financial
position if and only if there is a currently enforceable legal right to offset the recognized amounts and an intention to settle
on a net basis or to realize the assets and settle the liabilities simultaneously.

The individual derivative financial instruments, that a subsidiary enters into, will not be realized or settled simultaneously,
and therefore derivative assets and derivative liabilities are not offset on the consolidated statements of financial position.

Northland determines the fair value of its financial instruments at each balance sheet date based on the following
hierarchy:

•

Level 1 - Where financial instruments are traded in an active financial market, fair value is established by reference to
the appropriate quoted market price at the reporting date. Active markets are those in which transactions occur with
significant frequency and volume to provide pricing information on an ongoing basis.

Level 2 - If there is no active market, fair value is established using valuation techniques, including discounted cash
flow models. The inputs to these models are taken from observable market data where possible, including recent
arm’s-length market transactions, and comparisons to the current fair value of similar instruments; but where this is
not feasible, inputs such as liquidity risk, counterparty risk and volatility are used.

•

Level 3 - Valuations at this level are those with inputs that are not based on observable market data.

Assessment of the significance of a particular input to the fair value measurement requires judgment; any changes in
assumptions may affect the reported fair value of financial instruments.

The fair value of derivative financial instruments reflects the estimated amount that Northland would have been required
to pay if forced to settle all unfavourable outstanding contracts or the amount that would be received if forced to settle all
favourable contracts at year-end. The fair value represents a point-in-time estimate that may not be relevant in predicting
Northland’s future earnings or cash flows.

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(d) Derivatives and hedging activities

Derivatives are initially recognized at fair value on the date a derivative contract is entered into and are subsequently re-
measured to their fair value at the end of each reporting period. The accounting for subsequent changes in fair value
depends on whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged
and the type of hedge relationship designated.

Northland designates its derivatives as hedges of:

•

Foreign exchange risk associated with the cash flows of highly probable forecast transactions (cash flow hedges);

Foreign exchange risk associated with net investment in foreign operations (net investment hedges);

Floating interest rate risk associated with payments of debts (cash flow hedges); and

Commodity risk associated with payments under PPAs (cash flow hedges).

The fair values of various derivative financial instruments used for hedging purposes and movements in the hedge reserve
within equity are shown in Note 20.1.

When a hedging instrument expires, is sold, is terminated, or no longer meets the criteria for hedge accounting, any
cumulative deferred gain or loss and deferred costs of hedging in equity at that time remain in equity until the forecasted
transaction occurs. When the forecasted transaction is no longer expected to occur, the cumulative gain or loss and
deferred costs of hedging are immediately reclassified to consolidated statements of income (loss).

If the hedge ratio for risk management purposes is no longer optimal but the risk management objective remains
unchanged and the hedge continues to qualify for hedge accounting, the hedge relationship will be rebalanced by adjusting
either the volume of the hedging instrument or the volume of the hedged item so that the hedge ratio aligns with the ratio
used for risk management purposes. Any hedge ineffectiveness is calculated and accounted for in consolidated statements
of income (loss) at the time of the hedge relationship rebalancing.

Cash flow hedges that qualify for hedge accounting

The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is
recognized in other comprehensive income (OCI) and accumulated in reserves in equity, limited to the cumulative change in
fair value of the hedged item on a present value basis from the inception of the hedge. The gain or loss relating to the
ineffective portion is recognized immediately in the consolidated statements of income (loss), within “fair value (gain) loss
on derivative contracts”.

Gains and losses relating to the effective portion of the change in fair value of the entire forward contract are recognized in
the cash flow hedge reserve within equity. Amounts accumulated in equity are reclassified in the period when the hedged
item affects the consolidated statements of income (loss).

Net investment hedges that qualify for hedge accounting

Hedges of net investments in foreign operations are accounted for similarly to cash flow hedges. Any gain or loss on the
hedging instrument relating to the effective portion of the hedge is recognized in OCI and accumulated in reserves in equity.
The gain or loss relating to the ineffective portion is recognized immediately in the consolidated statements of income (loss)
within “fair value (gain) loss on derivative contracts”. Gains and losses accumulated in equity will be reclassified to the
consolidated statements of income (loss) when the foreign operation is partially disposed of or sold.

Hedge ineffectiveness

Northland’s hedging policy only allows for the use of derivative instruments that form effective hedge relationships. Hedge
effectiveness is determined at the inception of the hedge relationship and through periodic prospective effectiveness
assessments to ensure that an economic relationship exists between the hedged item and hedging instrument. Northland
enters into hedge relationships where the critical terms of the hedging instrument match exactly with the terms of the
hedged item, and so a qualitative assessment of effectiveness is performed. If changes in circumstances affect the terms of
the hedged item such that the critical terms no longer match exactly with the critical terms of the hedging instrument,
Northland uses the hypothetical derivative method to assess effectiveness.

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(e) Impairment of Financial assets:

Northland accounts for impairment of financial assets based on a forward-looking expected credit loss (ECL) approach. ECL
are measured as the difference in the present value of the contractual cash flows due to Northland under the contract and
the cash flows that Northland expects to receive. Northland assesses all information available, including past due status,
credit ratings, the existence of third-party insurance and forward-looking macro-economic factors in the measurement of
the ECL associated with its assets carried at amortized cost and FVOCI. Northland measures ECL by considering the risk of
default over the contract period and incorporates forward-looking information into its measurement.

Impairment of cash and cash equivalents and restricted cash is evaluated by reference to the credit quality of the
underlying financial institution or investee.

Trade receivables are reviewed qualitatively on a case-by-case basis to determine if impairment exists.

2.13 Revenue Recognition

(a) Electricity generation and related products

Electricity related revenue is recognized over time as electricity and related products are delivered. Each of Northland’s
PPAs contain a distinct performance obligation for the delivery of electricity, delivery of capacity (i.e. availability of
generation), or a combination of the two. Determining what goods or services promised to the customer constitute a
distinct performance obligation requires significant management judgment. Northland considered all goods and services
promised in its PPA contracts and determined that while certain promises do have standalone value to the customer, they
are not distinct in the context of the contract. Refer to Note 25 for details on revenue streams disaggregated by technology
and geography.

Northland views each megawatt hour (MWh) of electricity and/or capacity delivered to be a series of distinct goods that are
substantially the same and have the same pattern of transfer to the customer as measured using an output method. The
amount that Northland has a right to bill the customer reflects the pattern of transfer and value of the completed
performance to the customer. As a result, Northland applies the “right to invoice” practical expedient under IFRS 15,
“Revenue from Contracts with Customers”, to measure and recognize revenue.

(b) Regulated revenue from electricity generation and utility

Any pool price revenue collected significantly in excess of the assumed pool price in the current regulatory semi-period is
recognized as deferred revenue. The long-term portion of deferred revenue is presented under provisions and other
liabilities, whereas, the short-term portion of deferred revenue is presented under trade and other payables in the
consolidated statement of financial position. The deferred revenue is recognized as revenue over the remaining regulatory
periods and presented under regulated electricity in the consolidated statement of income (loss). Any pool price revenue
collected less than the assumed pool price in the current regulatory semi-period is recognized as a receivable and presented
under other assets in the consolidated statement of financial position. Collectively known as “Band Adjustments”
mechanism.

During the year ended December 31, 2022, the Spanish authorities enacted changes to the above regulatory framework
that raised the assumed price retroactively from January 1, 2022, thus allowing renewables operators to recognize higher
revenue in the year. In addition, there were also changes to the Band Adjustments for 2022 that permitted the recognition
of deferred revenue from 2020 and 2021 into 2022, earlier than the original regulation allowed for.

Regulated utility revenues from generation, transmission, distribution and commercialization (i.e. retail) tariffs are
recognized as electricity is delivered to customers. Revenues include amounts billed or billable to customers for generation
and transmission tariffs, which are passed through to third parties. Northland records these revenues on a gross basis since
Northland is responsible for procuring electricity and has collection risk for these amounts.

Payments to customers are recorded as an expense when the payments relate to a separate good or service provided by
the customer and recorded as a reduction in revenue when the payments relate to Northland’s performance obligations
under the contract (e.g. liquidated damages penalties).

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Northland recognizes management fees and operations-related incentive fees as earned based on the terms of its
respective facility agreements as work is performed.

(d) Interest and investment income

Interest and investment income are recognized as earned in accordance with the terms of the underlying financial
contracts. Interest income earned on third-party loans is included in “investment income” while interest income earned on
cash and cash equivalents balances is included in “finance costs, net” in the consolidated statements of income (loss).

2.14 Borrowing Costs

Borrowing costs directly attributable to the acquisition or construction of a qualifying asset that takes a substantial period
of time to prepare for its intended use or sale are capitalized as part of the cost of the asset. All other borrowing costs are
expensed as incurred. Borrowing costs consist of interest and other costs incurred in connection with the borrowing of
funds.

2.15 Taxes

Current income tax

Income tax assets and liabilities are measured at the amount expected to be recovered from or paid to tax authorities. Tax
rates and tax laws that are enacted or substantively enacted at the reporting date are used in the computations.

Current income tax relating to items recognized directly in equity is recognized in equity and not in the consolidated
statements of income (loss).

Deferred income tax

Deferred income tax is determined using the asset and liability method at the reporting date on temporary differences
between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

Deferred income tax liabilities are recognized for all taxable temporary differences except:

• Where the deferred income tax liability arises from the initial recognition of goodwill or of an asset or liability in a
transaction that is not a business combination and at the time of the transaction affects neither the accounting income
nor taxable income or loss and does not give rise to equal taxable and deductible temporary differences; and

• Where the deferred income tax liability relates to taxable temporary differences associated with investments in
subsidiaries, associates and interests in joint ventures, where the timing of the reversal of the temporary differences
can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.

Deferred income tax assets are recognized for all deductible temporary differences, carryforward of unused tax credits and
unused tax losses to the extent that it is probable that taxable income will be available against which the deductible
temporary differences, carry forward of unused tax credits and unused tax losses can be utilized except:

• Where the deferred income tax asset relating to the deductible temporary difference arises from the initial recognition
of goodwill or of an asset or liability in a transaction that is not a business combination and at the time of the
transaction affects neither the accounting income nor taxable income or loss and does not give rise to equal taxable
and deductible temporary differences; and

• Where the deferred income tax asset relates to deductible temporary differences associated with investments in
subsidiaries, associates and interests in joint ventures, deferred income tax assets are recognized only to the extent
that it is probable that the temporary differences will reverse in the foreseeable future and taxable income will be
available against which the temporary differences can be utilized.

Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the
asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted
at the reporting date.

Deferred income tax relating to items recognized directly in equity is recognized in equity, not the consolidated statement
of income (loss).

Deferred income tax assets and deferred income tax liabilities are offset if a legally enforceable right exists to offset and the
deferred income taxes relate to the same taxable entity and the same taxation authority.

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Sales taxes

Sales, expenses and assets are recognized net of the amount of sales tax except:

• Where the sales tax incurred on a purchase of assets or services is not recoverable from the taxation authority, in
which case the sales tax is recognized as part of the cost of acquisition of the asset or as part of the expense item, as
applicable; and

• Where receivables and payables are stated with the amount of sales tax included.

The net amount of sales tax recoverable from or payable to the taxation authority is included in the consolidated
statements of financial position.

2.16 Foreign Currency Translation

Northland’s Consolidated Financial Statements are presented in Canadian dollars, which is Northland’s functional currency.
For each subsidiary or a joint venture (referred herein as “foreign operations”) Northland determines the functional
currency and measures items included in the financial statements of such foreign operations in that functional currency.
The functional currency of Northland’s significant foreign operations reflects the primary economic environment in which
each they operate and includes the Canadian Dollar United States Dollar, Pound Sterling, Euro, Mexican Peso, New Taiwan
Dollar, Polish Zloty, Korean Won, Japanese Yen and Colombian Peso.

The assets and liabilities of foreign operations are translated into Canadian dollars at the closing rate at the date of
respective statement of financial position and their income and expenses are translated at the average exchange rate for
each quarterly period. The exchange differences arising on the translation are recognized in accumulated OCI in equity. On
disposal of a foreign operation, the cumulative amount recognized in equity relating to the foreign operation is recognized
in the consolidated statement of income (loss).

2.17 Contingencies and Commitments

Liabilities for loss contingencies arising from environmental remediation, claims, assessments, litigation, fines, penalties and
other sources are recorded when it is probable that a liability has been incurred and the amount can be reasonably
estimated. Legal costs incurred in connection with loss contingencies are expensed as incurred.

2.18 New Standards or Amendments and Forthcoming Requirements

Northland assesses each new IFRS or amendment to determine whether it may have a material impact on its Consolidated
Financial Statements. The following standards and amendments to the standards apply for the first time to financial
reporting periods commencing on or after January 1, 2022:

•

Amendments to IAS 16, Property, Plant and Equipment – IASB has issued amendments prohibiting a company from
deducting from the cost of property, plant and equipment amounts received from selling items produced while the
company is preparing the asset for its intended use and instead recognizing the same in the income (loss) account.

Amendments to IFRS 3, Business Combinations – Updates to a reference in IFRS 3 to the conceptual framework for
financial reporting without changing the accounting requirements for business combinations.

Amendments to IAS 37, Provisions, Contingent Liabilities and Contingent Assets – Specifies what costs an entity
considers in assessing whether a contract is onerous. Amendments specify that the ‘cost of fulfilling’ a contract
comprises the ‘costs that relate directly to the contract.’ Costs that relate directly to a contract can either be
incremental costs of fulfilling that contract or an allocation of other costs that relate directly to fulfilling contracts.

Northland adopted the above amendments as of January 1, 2022, and there has been no impact on the Consolidated
Financial Statements as of and for the year ended December 31, 2022.

IASB has issued following new amendments to the standards before December 31, 2022, with an effective date for
accounting periods ending on or after January 1, 2023:

•

Amendments to IAS 1, Presentation of Financial Statements (effective from the annual period beginning on or after
January 1, 2024) – These narrow-scope amendments to IAS 1 clarify that liabilities are classified as either current or
non-current, depending on the rights that exist at the end of the reporting period. Classification is unaffected by the
expectations of the entity or events after the reporting date. The amendment also clarifies what IAS 1 means when it
refers to the ‘settlement’ of a liability.

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•

Amendments to IAS 8, Accounting Policies, Changes in Accounting Estimates and Errors (effective from the annual
period beginning on or after January 1, 2023) – Introducing a definition of ‘accounting estimates’. The amendments
clarify the distinction between changes in accounting estimates and changes in accounting policies, and the correction
of errors. Also, they clarify how entities use measurement techniques and inputs to develop accounting estimates. The
amendments apply to changes in accounting policies and changes in accounting estimates that occur on or after the
start of that period.

Amendment to IAS 12, Income Taxes (effective from the annual period beginning on or after January 1, 2023) –
Requiring companies to recognize deferred tax on transactions that, on initial recognition, give rise to equal amounts of
taxable and temporary deductible differences.

The amendments are not expected to have a material impact on the Consolidated Financial Statements of Northland.

3. Significant accounting Judgments, Estimates and Assumptions

When preparing the Consolidated Financial Statements, management undertakes a number of judgments, estimates and
assumptions about recognition and measurement of assets, liabilities, income and expenses and in applying accounting
policies. The actual results are likely to differ from the judgments, estimates and assumptions and will seldom precisely
equal the estimated results.

The significant judgments, estimates and assumptions that have the most significant effect on the recognition and
measurement of assets, liabilities, income and expenses are discussed below.

3.1 Judgements

In the process of applying Northland’s accounting policies, management has made the following judgements, which have
the most significant effect on the amounts recognized in the Consolidated Financial Statements:

a) Deferred development costs

Management monitors the progress of development projects in the prospecting, development and advanced development
phases using a project management system. Advanced development costs are recognized as an asset in accordance with
IFRS once management determines a project is economically feasible and risks to project completion have been sufficiently
mitigated. In contrast, prospecting and development phase project costs are expensed as incurred.

Determining which projects will continue to be pursued and when to begin deferring costs for advanced development
phase projects requires judgment. Management regularly reviews the feasibility of each project that is being developed,
and should management determine that the development of a particular project is no longer feasible to be pursued to
completion, the deferred costs are expensed in the period the determination is made.

b) Accounting for investments in non-wholly owned subsidiaries

Management exercises judgment in determining whether non-wholly owned subsidiaries are controlled by Northland.
Management’s judgment included the determination of (i) how the relevant activities of the subsidiary are directed (either
through voting rights or contracts); (ii) whether Northland’s rights are substantive or protective in nature; and (iii)
Northland’s ability to influence the returns of the subsidiary. In addition, where subsidiaries are subject to joint control,
Management applies judgment in determining whether Northland’s rights are to the net assets or individual assets and
liabilities of the joint arrangement, which results in accounting for the subsidiary as a joint venture or joint operation,
respectively. Refer to Note 18 for details on significant non-wholly owned subsidiaries.

3.2 Accounting Estimates and Assumptions

The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date that have
a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial
year are described below. Management based its assumptions and estimates on parameters available when the
Consolidated Financial Statements were prepared. However, existing circumstances and assumptions about future
developments may change due to market changes or circumstances arising beyond management's control. Accordingly,
such changes are reflected in the assumptions when they occur.

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a) PP&E and intangible assets

PP&E and intangible assets are depreciated over their useful lives, taking into account estimated residual values, where
appropriate. Residual values and useful lives are reviewed annually and adjusted prospectively, if appropriate. In assessing
residual values, Northland considers the remaining life of the asset, its projected disposal value and future market
conditions. Useful lives take into account factors such as technological innovation, maintenance programs, relevant market
information and management considerations. Management judgment is also required when Northland acquires entities and
must allocate the purchase price to the fair value of the assets and liabilities acquired, which includes PP&E and intangible
assets. See Note 4.1 for additional details. The carrying amounts of PP&E and intangible assets are analyzed in Notes 5 and
Note 6, respectively.

b) Decommissioning liabilities

Northland’s decommissioning liabilities relate to wind, solar and closed efficient natural gas facilities. Future remediation
costs, whether required under contract or by law, are recognized based on best estimates. These estimates are calculated
at completion of construction and reviewed annually or more often if there is reason to believe the estimate has changed.
Cost estimates depend on labour costs, efficiency of site restoration and remediation measures, inflation rates and, where
possible, risks specific to the liability. Estimates of pre-tax interest rates that reflect current market conditions, the time
value of money and, where applicable, the risks specific to the liability also affect the liability. Northland estimates the
timing of expenses, which may change depending on the viability of continuing operations. Expected future costs are
inherently uncertain and could materially change over time. Subject to plant closures, Northland expects to use assets at
the efficient natural gas facilities and regulated utility operations for an indefinite period due to continuing equipment
overhauls and rights to the underlying land. As a result, management considers that a reasonable estimate of the value of
any related decommissioning liability cannot be made until it is known that the facility will be closed. See Note 15.1 for
additional details.

c) Fair value of financial assets and financial liabilities

Where the fair values of financial assets and financial liabilities cannot be derived from active markets, they are determined
using valuation techniques, including discounted cash flow models. The inputs to these models are taken from observable
markets where possible, but where this is not feasible, a degree of judgment is required in establishing fair values. The
judgments include consideration of inputs such as liquidity risk, credit risk and volatility. Changes in assumptions about
these factors could affect the reported fair value of financial instruments, see Note 20.1 for additional details on fair values
of financial instruments.

d) Impairment of non-financial assets

Northland tests impairment of goodwill, other intangible assets and PP&E based on value-in-use calculations using a
discounted cash flow model. The cash flows are derived from forecasts over the remaining useful lives of the assets of the
CGUs, less an allocation of forecasted corporate costs. The estimated recoverable amount is sensitive to the discount rate
used for the discounted cash flow model as well as the expected future cash inflows. The key assumptions used to estimate
the recoverable amount for the different CGUs are further explained in Note 23.

For certain assets, Northland also uses fair value less cost to sell (FVLCS) method in which most recent market transactions
are taken into account. If no such transactions can be identified, an appropriate valuation model is used. These calculations
are corroborated by valuation multiples for similar transactions or other available fair value indicators. FVLCS approach is
most sensitive to EBITDA multiples and price per megawatts.

e) Income taxes

Preparation of the Consolidated Financial Statements requires an estimate of income taxes in each of the jurisdictions in
which Northland operates. The process involves an estimate of Northland’s current tax exposure and an assessment of
temporary differences resulting from differing treatment of items such as depreciation and amortization for tax and
accounting purposes. These differences result in deferred tax assets and liabilities that are included in Northland’s
consolidated statements of financial position.

An assessment is also made to determine the likelihood that Northland’s deferred income tax assets will be recovered from
future taxable income.

Judgment is required to continually assess changing tax interpretations, regulations and legislation to ensure liabilities are
complete and to ensure assets, net of valuation allowances, are realizable. The impact of different interpretations and
applications could be material.

| NORTHLAND POWER INC. | | 2022 ANNUAL REPORT |

4. Business Combinations and Acquisitions

4.1 Spanish Renewables Acquisition

On August 11, 2021, Northland completed its previously announced acquisition of a Spanish operating portfolio of 33
onshore wind, solar photovoltaic, and concentrated solar renewable projects (the “Spanish acquisition”). The transaction
included the acquisition of 100% of the shares in 40 operating entities and 66.2% of the shares in one entity, and was
treated as a business combination under IFRS 3 - Business Combinations. Total cash consideration transferred was
€348 million ($511 million) after certain working capital, net debt and other adjustments, and was funded from the net
proceeds of Northland’s common share equity offering completed in April 2021.

The fair value of the assets acquired and liabilities assumed as of the date of acquisition is as follows:

As at

Cash

Restricted cash

Trade and other receivables

Other current assets

Property, plant and equipment (Note 5)

Goodwill (Note 7)

Other long-term assets

Deferred tax asset

Trade and other payables

Facility-level loans and borrowings (Note 13)

Provisions and other liabilities

Deferred tax liability

Derivative liabilities

Total identifiable net assets acquired

Less: Non-controlling interests (Note 18)

Net assets acquired

August 11, 2021

90,154

7,262

44,472

4,011

1,573,274

161,010

6,418

43,266

(31,535)

(1,124,187)

(111,685)

(124,409)

(19,483)

518,568

(7,850)

510,718

The Spanish Renewables Acquisition’s Contribution to Northland’s Results

The Spanish acquisition’s results are consolidated in Northland’s financial results, effective August 11, 2021. For the year
ended December 31, 2021, the Spanish acquisition contributed approximately $92 million and $37 million to Northland’s
consolidated sales and net income, respectively. If the Spanish acquisition had occurred on January 1, 2021, Northland
estimates that consolidated sales and net income for the year ended December 31, 2021, would have been $92 million
higher and $32 million lower, respectively. In determining these amounts, management has assumed that the fair value
adjustments that arose on the date of acquisition would have been the same if the acquisition had occurred on January 1,
2021. Transaction costs of approximately $7 million were included in “Development costs” in the consolidated statements
of income (loss). Refer to the Onshore Renewable segment in Note 25 for details on the Spanish acquisition’s assets and
results.

| NORTHLAND POWER INC. |

| 2022 ANNUAL REPORT |

5. Property, Plant and Equipment

The following table summarizes movements in Northland’s property plant and equipment by category:

Cost
January 1, 2021

Acquired (Note 4)
Additions
Transfer from CIP
Exchange rate differences
Provisions, disposals and other (2)

December 31, 2021

Additions
Transfer from CIP
Exchange rate differences
Provisions, disposals and other (2)

December 31, 2022

Accumulated depreciation
January 1, 2021

Exchange rate differences
Depreciation
Disposals and others

December 31, 2021

Exchange rate differences
Depreciation
Disposals and others

December 31, 2022

Construction-
in-progress

Plant and
operating
equipment

Land, buildings
and leasehold
improvements

Lease ROU
asset

Other
equipment (1)

Total

212,481 $ 9,113,678 $

2,097,362 $

—
442,190
(24,057)
(9,034)
609

1,515,247
35,322
22,344
(561,824)
(7,864)
622,189 $ 10,116,903 $

84
811
1,551
(109,496)
(108)

1,990,204 $

374,936
(83,677)
52,841
(124,990)
841,299 $ 9,909,974 $

69,936
78,033
10,694
(365,592)

1,414
3,252
10,282
(130,623)
1,874,529 $

— $ 2,270,045 $
—
—
—
— $ 2,673,684 $

(91,514)
496,775
(1,622)

21,528
461,088
(357,671)

—
—
—
— $ 2,798,629 $

555,498 $
(23,201)
98,511
—

630,808 $

5,997
89,020
(118,085)
607,740 $

84,112 $
57,943
42,774
—
(4,374)
(1,162)
179,293 $

11,552
—
3,995
(4,316)
190,524 $

16,947 $
(351)
11,768
(1,123)
27,241 $

657
15,661
(3,022)
40,537 $

43,737 $ 11,551,370
1,573,274
—
527,153
6,056
—
162
(689,461)
(4,733)
(1,597)
(10,122)
43,625 $ 12,952,214

2,583
2,392
(1,630)
827

460,421
—
76,182
(624,694)
47,797 $ 12,864,123

28,921 $ 2,871,411
(115,767)
612,755
(2,651)
34,015 $ 3,365,748

(701)
5,701
94

(637)
5,321
934

27,545
571,090
(477,844)
39,633 $ 3,486,539

Net book value
December 31, 2021
December 31, 2022
(1) Other equipment includes vehicles, meteorological towers, office equipment, furniture and fixtures, and computer software.

622,189
841,299 $ 7,111,345 $

1,359,396
1,266,789 $

152,052
149,987 $

7,443,219

9,586,466
9,610
8,164 $ 9,377,584

(2) Provisions, disposals and other includes disposal and transfers of assets and recognition of accruals, net of amounts paid, under the LTIP.

As at December 31, 2022, construction-in-progress is primarily comprised of construction projects including, the New York
Wind projects in the United States, and the La Lucha project in Mexico.

For the year ended December 31, 2022, provision, disposals and others includes derecognition of capitalized project cost of
$91 million, which is contributed by Northland to the Hai Long project (Refer to Note 9(a)).

On April 7, 2022, Northland completed the sale of its two efficient natural gas facilities in Ontario, Canada, with a net book
value of $5 million as at the date of sale. The respective costs and the accumulated depreciation for these facilities have
been included in the provision, disposal and other lines above.

| NORTHLAND POWER INC. |

| 2022 ANNUAL REPORT |

6. Contracts and Other Intangible Assets

The following table illustrates movements in Northland’s intangible asset contract balances:

Cost
As at January 1
Acquired
Additions
Disposals
Foreign exchange
December 31,

Accumulated Amortization
As at January 1
Disposals
Amortization
Foreign exchange
December 31,

Net book value

2022

2021

797,719 $

37,771
32,780
(148,925)
4,177
723,522 $

300,084 $
(148,882)
53,611
2,934
207,747 $

817,057
23,278
—
—
(42,616)
797,719

283,886
—
23,284
(7,086)
300,084

515,775 $

497,635

Acquired represents contracts assets capitalized as a part of the acquisition of a majority equity interest in a late-stage
lithium-ion battery energy storage project in southern Ontario (the “Oneida Energy Storage Project”), Canada and the
acquisition of 100% equity interest in certain early to late-stage development projects in Alberta (the “Alberta Portfolio”),
Canada.

Additions during the year ended December 31, 2022, include $33 million (£20 million) in relation to an Option Lease
Agreement entered with the Scottish government, which provides Northland with development exclusivity over the
awarded sites for a period of up to 10 years (Note 25).

On April 7, 2022, Northland completed the sale of its two efficient natural gas facilities in Ontario, Canada. Disposals include
the respective costs and the accumulated depreciation for these facilities (Note 5).

7. Goodwill

Acquired goodwill was allocated to CGUs expected to benefit from the synergies of the acquisition. Changes in the goodwill
during the years ended December 31, 2022, and 2021 are summarized below:

Cost
As at January 1
Acquisition of business (Note 4)
Foreign exchange
December 31,

Accumulated Impairment
As at January 1
Impairment (Note 23)
December 31,

Net Book Value

2022

2021

861,454 $
—
(40,755)
820,699 $

786,806
161,010
(86,362)
861,454

(108,081) $

—

(108,081) $

(78,100)
(29,981)
(108,081)

712,618 $

753,373

During the year ended December 31, 2021, Northland wrote off $30 million of goodwill relating to the Iroquois Falls facility
as a result of the expiry of its PPA in December 2021. Refer to Note 23 for additional information on impairment.

| NORTHLAND POWER INC. |

| 2022 ANNUAL REPORT |

8. Leases

8.1 Northland as Lessor

Spy Hill’s long-term PPA is classified as a finance lease arrangement, whereby Northland is considered to have leased the
Spy Hill facility to Saskatchewan Power Corporation (“SaskPower”) for 25 years ending in 2036. For the year ended
December 31, 2022, finance lease income of $11 million (2021 - $12 million) was recognized.

The amounts receivable under finance lease accounting are as follows:

As at

December 31, 2022

December 31, 2021

Minimum lease payments

Within one year
After one year but not more than five years
More than five years

Less: Unearned finance income
Total finance lease receivable
Current portion (Note 10.1)
Long-term

Minimum lease
payments

Present value of
minimum lease
payments

Minimum lease
payments

Present value of
minimum lease
payments

16,188 $
64,749
141,445
222,382 $
(91,101)
131,281 $

5,343 $

26,410
99,528

131,281 $
—
131,281 $
5,343
125,938

16,189 $
64,750
157,630
238,569 $
(102,371)
136,198 $

4,918
24,308
106,972
136,198
—
136,198
4,918
131,280

The interest rate inherent in the lease was fixed for the entire lease term at the lease inception date at approximately 8.4%
per annum.

8.2 Northland as Lessee

Northland and several of its subsidiaries have entered into leases for land with private and public landowners, buildings,
and operating equipment. The original terms of these leases range from one to 50 years.

The amount of the lease ROU asset and associated depreciation by type of underlying asset as at December 31, 2022 are as
follows:

January 1, 2021
Acquired
Additions
Provisions, disposals and other (1)
Depreciation expense
Foreign exchange
December 31, 2021
Additions
Provisions, disposals and other (1)
Depreciation expense
Foreign exchange
December 31, 2022
(1) Provisions, disposals and other includes disposal and transfers of leased assets.

Land
33,500 $
57,943
38,657
—
(4,326)
(1,903)
123,871 $
4,668
(673)
(7,277)
3,265
123,854 $

Vehicle

Equipment

429 $
—
961
(39)
(348)
(91)
912 $
655
(3)
(1,833)
(68)
(337) $

19,073 $

—
191
—
(4,788)
(1,113)
13,363 $
2,034
(427)
(4,810)
127
10,287 $

Building
14,163 $
—
2,965
—
(2,306)
(916)
13,906 $
4,195
(191)
(1,741)
14
16,183 $

Total
67,165
57,943
42,774
(39)
(11,768)
(4,023)
152,052
11,552
(1,294)
(15,661)
3,338
149,987

The lease ROU asset balance is included in “property, plant and equipment” in the consolidated statements of financial
position.

Northland expenses payments for leases that are short-term (i.e. term of 12 months or less) and low value, as well as
variable payments that are excluded from lease payments, such as usage-based fees or utility charges. For the year ended
December 31, 2022, lease expense of $6 million (2021 - $5 million) was recognized in “general and administrative costs”
and “operating costs” in the consolidated statements of income (loss).

| NORTHLAND POWER INC. |

| 2022 ANNUAL REPORT |

The following table illustrates movements in Northland’s lease liabilities:

As at January 1
Acquired
Additions
Accretion of interest (Note 22)
Payments
Foreign exchange
December 31,
Current (included in “Trade and other payables”- Note 11)
Non-current (included in “Provision and other liabilities”- Note 15)

2022
150,982 $
—
11,552
3,382
(14,834)
4,130
155,212 $

16,748

138,464 $

2021
67,473
57,943
42,774
2,108
(15,363)
(3,953)
150,982
12,918
138,064

| NORTHLAND POWER INC. |

| 2022 ANNUAL REPORT |

9. Investment in Joint Ventures

Below are Northland’s significant joint ventures as at December 31, 2022. The entities have share capital consisting solely of ordinary shares, which are held directly
or indirectly by Northland. The country of incorporation or registration is also their principal place of business, and the proportion of ownership interest is the same as
the proportion of voting rights held.

Name of Joint Venture

Baltic Power (Note 9.1)

Hai Long (Note 9.2)

Others (Note 9.3 and 9.4)
Total investments in joint ventures

Place of business/
Country of incorporation

Poland

Taiwan

Ownership %

Carrying Amount as of

Dec. 31, 2022

Dec. 31, 2021

Dec. 31, 2022

49%

60%

49%

—

128,341 $

280,668

32,556
441,565 $

Dec. 31, 2021
128,111

—

10,615
138,726

The table below provides reconciliation of the carrying amounts of significant joint venture to the underlying net assets of the joint ventures:

a) Reconciliation to equity investments carrying amounts

As of December 31, 2022
Baltic Power
Hai Long (a)
Total

As of December 31, 2021
Baltic Power

Opening
Net assets

FV of net
assets
acquired

Equity
contribution

Net income
(loss) for the
period

Currency
translation
gain (loss)

Closing Net
assets

Northland’s
share in %

Northland’s
share in net
assets

Other
adjustments

Carrying
amount

$ 257,077 $

—

$ 257,077 $

— $
—
— $

— $

324,426
324,426 $

(1,691) $
(28)
(1,719) $

(572) $
5,460
4,888 $

254,814
329,858
584,672

49 % $
60 %

123,738 $
197,915
321,653 $

4,603 $

82,753
87,356 $

128,341
280,668
409,009

— $ 139,065 $

131,738 $

(5,148) $

(8,578) $

257,077

49 % $

124,837 $

3,274 $

128,111

a) The other adjustments in the carrying amount of Hai long also includes an amount of $91 million, representing capitalized development cost contributed to Hai
Long by Northland (Note 5).

In addition to the above, Northland’s share in commitments and contingencies in relation to its joint ventures are summarized in Note 9(d).

| NORTHLAND POWER INC. |

| 2022 ANNUAL REPORT |

Summarized below is the financial information for significant joint ventures. The disclosed information reflects the amounts presented in the financial statements of
the relevant joint venture and not Northland’s share of those amounts. They have been amended to reflect adjustments made by Northland when using the equity
method, including acquisition date fair value adjustments and differences in accounting policies.

b) Summarized statement of financial position

As of December 31, 2022
Baltic Power
Hai Long
Total

As of December 31, 2021
Baltic Power

Cash and
cash
equivalents

Current assets
Other
current
assets

Current liabilities

Total
current
assets

Non-
current
assets

Financial
liabilities*

Other
current
liabilities

Total
current
liabilities

Non-current liabilities
Other non-
current
liabilities

Total non-
current
liabilities

Net
Assets

44,358 $

107,151
$ 151,509 $

20,137 $
3,373

64,495 $ 211,118 $

110,525

262,931

23,510 $ 175,020 $ 474,049 $

— $
—
— $

18,813 $
42,967
61,780 $

1,986 $
631
2,617 $

1,986 $ 254,814
329,858
2,617 $ 584,672

631

52,520 $

42,399 $

94,919 $ 177,719 $

15,414 $

147 $

15,561 $

— $

— $ 257,077

* Financial liabilities exclude trade payables, which are included within the other liabilities.

c) Summarized statement of comprehensive income

Year Ended December 31, 2022
Baltic Power
Hai Long
Total

Year Ended December 31, 2021
Baltic Power

Interest income

Depreciation and
amortization

Interest expense

Development
expenses

Net income (loss)

Total comprehensive
income (loss)

920 $
—
920 $

(224) $
—
(224) $

(61) $
—
(61) $

— $
—
— $

(1,691) $
(28)
(1,719) $

(1,691)
(28)
(1,719)

299 $

— $

(135) $

(3,379) $

(5,148) $

(5,148)

d) Letters of credit and parental guarantees issued by Northland

The table below summarizes the letters of credit and the parental guarantees issued by Northland in favor of the joint ventures:

As at December 31,

Baltic Power

Hai Long

Other joint ventures

Total

2022

203,696 $

328,268

120,171

2021

130,948

—

761

652,135 $

131,709

| NORTHLAND POWER INC. |

| 2022 ANNUAL REPORT |

9.1 Polish Offshore Wind Development Project in Baltic Sea "Baltic Power"

On March 24, 2021, Northland completed its acquisition of a 49% interest in the Baltic Power offshore wind project in the
Baltic Sea for a an initial cash consideration of PLN255 million ($82 million). In June 2021, Baltic Power secured a 25-year
Euro-denominated Contract for Differences (“CfD”) offtake agreement from Poland’s Energy Regulatory Office under the
Polish Offshore Wind Act. Baltic Power is structured as a standalone legal entity, and Northland has an interest in the net
assets of Baltic Power. Accordingly, Northland has classified its interest in Baltic power as a joint venture, accounted for
under the equity method.

Additional purchase price commitments

Pursuant to a joint venture agreement, Northland has made additional purchase price commitments of $46 million (€33
million) to be funded over the next two years from the acquisition date, of which $35 million (€26 million) have been
invested as of December 31, 2022. The remaining commitment, amounting to $11 million (€8 million) have been recognized
within the other payables in these Consolidated Financial Statements (Note 11).

For the year ended December 31, 2022, Northland recharged expenses, including staff costs of $14 million (2021 -
$3 million) to Baltic Power.

9.2 Hai Long Offshore Wind Project

On July 18, 2022, Northland entered into a Shareholders’ Agreement (SHA) with Yushan Energy Co. Ltd (YECL), a jointly
owned company by Mitsui & Co. and Yushan Energy PTE. LTD. Pursuant to the terms of the SHA, both Northland and YECL
established Special Purpose Vehicles (the “Project Entities”) with an ownership interest of 60% and 40%, respectively in the
Hai Long Offshore Wind Projects (the “Hai Long Projects”). In accordance with the contractual terms of SHA, certain key
activities of the Hai Long Projects are jointly controlled by Northland and YECL. Accordingly, management concluded its
investment in the Hai Long Projects as a jointly controlled investment and, therefore, accounted for using the equity
method.

On December 14, 2022, Northland signed a share purchase agreement with Gentari International Renewables Pte. Ltd
(“Gentari”) to sell 49% of Northland’s ownership interest in the Hai Long Projects. This transaction will result in Gentari
acquiring 29.4% indirect equity interest in the Hai Long projects. As of December 31, 2022, the transaction has not closed.
The completion of the sale to Gentari is expected to occur following the achievement of financial close of Hai Long and
remains subject to receipt of customary regulatory approvals and satisfaction of all closing conditions pursuant to the terms
of the agreement.

For the year ended December 31, 2022, Northland recharged expenses, including staff costs of $9 million (2021 - $nil) to Hai
Long Projects.

9.3 Nordsee Offshore Wind Cluster

In January 2022, Northland and its German partner, RWE Renewables GmbH (“RWE”), announced the formation of a
Nordsee Offshore Wind Cluster (the “Cluster”) partnership encompassing Nordsee Two GmbH (“N2”), Nordsee Three GmbH
(“N3”) and Offshore-Windpark Delta Nordsee GmbH (“Delta”). As a result, Northland reduced its ownership interest in N2
and N3 from 85% to 49% and acquired a 49% interest in Delta. The change of control in N2 and N3 resulted in a gain of
$15 million, which is included in the “Other (income) expense” line within the Consolidated Statement of income (loss) for
the year. Subsequent to the loss of control, since Northland and RWE jointly control N2, N3 and Delta under the terms of
the agreement, the three projects are accounted for using the equity method. As a part of this transaction, Northland also
committed to paying $20 million to RWE on the date of the final investment decision taken for Delta, expected in 2026, to
fund the historical development expenses of Delta.

On August 10, 2022, Northland entered into a Shares Purchase Agreement (“SPA”) with RWE for the purchase of a 49%
stake in RWE Renewables Offshore Development Two GmbH (“Godewind”), which has been integrated as a part of the
Cluster. Pursuant to the terms of SPA, management concluded Godewind as a jointly controlled investment and, therefore,
accounted for using the equity method. As of December 31, 2022, the carrying value of the investment in Cluster amounts
to $18 million.

| NORTHLAND POWER INC. |

| 2022 ANNUAL REPORT |

9.4 Colombian Solar Project (Suba)

On July 29, 2022, Northland entered into a Trust Agreement with EDF Renewables Colombia S.A.S (“EDFR”) to jointly
develop, construct, operate, and decommission two solar power projects, with aggregate production capacity of 130 MW
(“Suba”) in Colombia. While EBSA owns 99.9% of the fiduciary rights in the Trust, in accordance with the contractual terms
of the Trust Agreement, Northland has a right to 50% economic benefits in Suba. Accordingly, management concluded Suba
was a jointly controlled investment and, therefore, accounted for using the equity method. As of December 31, 2022, the
carrying value of the investment in Suba amounts to $7 million.

10. Other Assets

10.1 Other Current Assets

The current assets consist of the following:

As at December 31,
Short term deposits
Spare parts and other inventory

Prepaid expenses

Finance lease receivable (current portion) (Note 8.1)

Natural gas inventory

Total

2022
146,524 $

43,061

46,731

5,343

722
242,381 $

2021
—
35,945

36,423

4,918

664

77,950

Short term deposits include an advance payment, amounting to $122 million, made to Northland’s share registrar in
relation to the Series 3 Preferred shares which were redeemed on January 3, 2023 (Note 17.3) and a short term bank
deposit amounting to $25 million, held with a reputable Canadian bank and carried an interest rate of 5.01% with the
maturity of November 2023.

10.2 Long-term Deposits

Long-term deposits consist of the following:

As at December 31,
Decommissioning deposit

Other

Total

2022
108,104 $
6,685
114,789 $

2021
93,197

6,500

99,697

Gemini provided a letter of credit to the Dutch government to secure future decommissioning liability for Gemini. The letter
of credit is collateralized by a long-term deposit amounting to $57 million (2021 - $55 million), held by project lenders in a
money market fund due in 2042 and earns interest at a rate of 6-month EURIBOR plus 0.8%.

10.3 Other Assets

Other assets consist of the following:

As at December 31,

Receivable related to terminated derivative contracts

Tax Receivable on Band Adjustments

Prepaid expenses
Government grant receivable (a)
Other (1)
Total

2022

32,608 $

7,125
7,765
—

7,500

54,998 $

2021

—

7,362

7,663

21,403

4,028
40,456

(1) Other mainly include deferred financing cost amounting to $3 million, associated with the syndicated revolving facility (Note 14).

| NORTHLAND POWER INC. |

| 2022 ANNUAL REPORT |

(a) In 2014, Nordsee One was awarded a grant under the European Commission’s NER 300 program. The total grant value of
€70 million was recorded as a reduction in property, plant and equipment upon completion of the project. Cash proceeds
from the grant are based on production volumes, and final cash payments are expected in 2023 for the production ceiling
under the program met in 2022. As at December 31, 2022, Nordsee One had an accrued government grant relating to its
construction, in amount of $22 million (2021 - $39 million). Out of this, an amount equal to $nil (2021 - $21 million) is
included in “Other Assets” above, and the remaining balance of $22 million (2021 - $18 million) is classified as current and
included in “Trade and Other Receivables”.

11. Trade and Other Payables

Northland’s trade and other payables are summarized as follows:

As at December 31,
Trade Payables

SDE Subsidy payable

Tax Payable

Provision for redemption of Series 3 Preferred Shares

Current portion of provision for additional equity contributions
Current portion of lease liability

Current Portion of Band Adjustments

Other Payables and Accrued Liabilities

Total

2022
163,339 $
327,519

130,742

121,524

11,464

16,748

16,044

214,393
1,001,773 $

2021
138,327

106,776

20,720

—

27,915
12,918

2,578

195,349

504,583

SDE subsidy is payable to the Government of Netherlands on account revenues earned in excess of higher annual average
Dutch wholesale market (“APX”) prices.

12. Management of Capital

Northland’s strategy to finance general development efforts and investments in project entities utilizes internally generated
cash flows, equity issuances, corporate debt, and notably corporate credit facility borrowings. Refer to Note 14 for
additional information.

Northland defines capital that it manages as the aggregate of its equity, including non-controlling interests, interest-bearing
loans and borrowings, corporate credit facilities and net proceeds from the sale of assets. Northland’s objectives when
managing capital are to (i) ensure the stability and long-term sustainability of dividends to shareholders and (ii) finance
assets with non-recourse debt that is fully amortized over the term of the underlying sales arrangements.

As at December 31, 2022, total managed capital was $11.7 billion (2021 - $10.6 billion), comprising equity of $4.7 billion
(2021 - $3.0 billion), non-recourse facility-level loans and borrowings totaling $7.0 billion (2021 - $7.6 billion) and corporate
credit facilities totaling $nil (2021 - $42 million).

Northland exercises discretion in the amount of dividends declared to shareholders, the terms of its Dividend Reinvestment
Plan (DRIP), the level of issuances under its At-The-Market Equity Program (“ATM Program”), return of capital to
shareholders, issuance of new Shares and the issuance or redemption of preferred shares.

Northland’s strategy has been to finance its operating entities (which are subsidiaries of Northland) primarily using non-
recourse debt, either at the subsidiary level or holding company level in the case of EBSA and the Spanish Portfolio. The
interest rate on the debt at Northland’s power generation facilities is fixed (or effectively fixed using interest rate swaps)
and principal is fully repaid (amortized) generally over each facility’s PPA term. This ensures a power generation facility is
debt-free at the expiry of its original sales arrangement, after which its economics become less predictable. For EBSA, the
interest rate on the non-recourse debt at its holding company is effectively fixed over the lending period, but the principal is
expected to be extended and upsized regularly due to the perpetual and growing nature of its utility business.

| NORTHLAND POWER INC. |

| 2022 ANNUAL REPORT |

13. Project Loans and Borrowings

Northland generally finances projects and its operating facilities through non-recourse, secured credit arrangements either
at the subsidiary or at the holding company level. These loans and borrowing are summarized in the table below:

EBSA (3)
New York Wind (3)
Nordsee One (3)
Jardin (3)
Kirkland Lake(3)
Thorold (3)
Gemini (3)(5)
Mont Louis
Deutsche Bucht (3)
Solar Phase I (3)(4)
North Battleford (3)
Solar Phase II (4)
McLean's
Cochrane Solar (3)
Grand Bend
Spy Hill (3)
Spanish Portfolio (3)
Weighted average and total

Current

Long-term

Rate (1)

Maturity

3.7%

1.4%

2.3%

6.0%

4.2%

6.7%

3.5%

6.6%

2.4%

4.4%

5.0%

4.5%

6.0%

4.6%

4.2%

4.1%

2.0%

3.4%

2024

2026

2029

2030

2031

2032

2034

2035

2036

2042

Balance as at
Dec. 31, 2022 (2)

518,847 $
327,059

535,382

65,796

45,955

206,980

1,919,470

58,482

1,028,411

148,763

502,797

108,187

100,143

149,261

281,136

119,584

845,702
6,961,955 $
784,114
6,177,841 $

Balance as at
Dec. 31, 2021 (2)
518,096

129,625

678,059

73,223

11,800

227,137

2,206,204

63,723

1,125,771

162,121

539,032

116,026

106,587

159,084

297,469

124,584

1,053,673
7,592,214

677,378

6,914,836

(1) The weighted average all-in interest rates of the subsidiary borrowings.

(2) Excludes letters of credit secured by facility or project-level credit agreements.

(3) Net of transaction costs and/or fair value adjustments.

(4) Solar Phase I and Solar Phase II include the nine entities that comprise Canadian Solar facilities.

(5) Balance as of December 31, 2021, includes the amount drawn on the senior debt and the third-party portion of subordinated debt. In October 2022,
the third-party subordinated debt was repaid as a part of Gemini debt amendment.

As at December 31, 2022, $104 million of letters of credit secured by facility or project-level credit agreements was
outstanding (December 31, 2021 -$94 million).

On June 2, 2022, Northland restructured and upsized its Kirkland Lake credit facility (the “Kirkland Lake facility”). The
aggregate amount of the financing was upsized by $34 million, net of closing costs, to $47 million, and the loan maturity
date was extended by eight years to March 31, 2030. The restructured Kirkland Lake facility continues to be denominated in
Canadian dollars, with the all-in interest rate increasing to 4.2% from 2.8% previously.

On September 20, 2022, Northland finalized a tax equity commitment for the Ball Hill and Bluestone onshore wind projects
in New York State. This commitment provides tax equity investment of approximately $250 million (US$190 million) to
these projects. As at December 31, 2022, no investment has been received by these projects from the tax equity investor.

On October 18, 2022, Northland restructured Gemini’s debt. The key elements of the restructuring included: (i) increasing
the aggregate amount of senior debt by $238 million (€177 million) (net); (ii) repaying the third-party subordinated debt
and reprofiling the amortization of the remaining subordinated debt provided by a Northland subsidiary; (iii) reducing the
loan margins and decreasing the all-in borrowing cost from 4.0% to 3.5%; (iv) releasing $43 million from the Debt Service
Reserve Account; and (v) extending the maturity of the commercial term portion of the senior debt by one year to June 30,
2031. The restructured debt continues to be denominated in Euros.

| NORTHLAND POWER INC. |

| 2022 ANNUAL REPORT |

On November 3, 2022, Northland restructured the long-term debt of its Spanish portfolio by consolidating non-recourse
debt across multiple facilities into a single holdco financing. The restructuring resulted in the reduction in the size of the
debt to $821 million (€613 million) from $902 million (€675 million) and extended the loan maturity date to 2042 from
existing maturities ranging between 2026 and 2041. The restructured debt continues to be Euro-denominated, with the all-
in interest rate reduced to 2.0% from 2.1%.

In December 2021, Northland restructured and upsized EBSA’s long-term, non-recourse financing (the “EBSA Facility”),
resulting in $84 million of incremental cash proceeds to Northland, net of closing costs. The aggregate amount of the
financing was upsized to $533 million, driven primarily by expected growth in EBSA’s EBITDA. The EBSA Facility is structured
as a $521 million term loan and a $12 million debt service reserve credit facility. The restructured facility is denominated in
Canadian dollars, and the principal amount is currently 100% hedged against the Colombian peso. The interest rate on the
debt facility, before foreign exchange hedging costs is 3.7%. In addition, the EBSA Facility has a longer term (3 years
compared to 2 years previously). The upsizing proceeds provided Northland with additional liquidity to fund its Capitalized
Growth Projects.

In March 2021, Deutsche Bucht amended its debt facility agreement to reduce the interest rate on the facility’s senior debt
to 2.3% (from approximately 2.6%). The amendment also included the addition of a debt service reserve facility, which
released €50 million ($74 million) from funds previously restricted for debt service.

In June 2021, Northland entered into non-recourse construction loan, tax equity bridge loan and term loan for Ball Hill and
Bluestone onshore wind projects in New York, amounting to US$381 million (approximately $475 million), at a 1.45%
interest rate during construction. The maturity date of the loan is December 31, 2024.

Changes in facility-level loans and borrowings and corporate credit facilities (Note 14) are summarized in the table below:

Year ended December 31, 2022

Total, beginning of the year

Financings, net of fees

Repayments
Other non-cash (1)
Exchange rate differences

Total, end of the year

Project loans and
borrowings

Corporate credit
facilities(2)

7,592,214 $

2,019,485

(2,681,275)

8,753

22,778

41,825 $

770,021

(815,033)

290

Total

7,634,039

2,789,506

(3,496,308)

8,833

23,068

6,961,955 $

(2,817) $

6,959,138

(1) Other non-cash changes include amortization of fair value adjustments and amortization of deferred financings costs.
(2) The balance of corporate credit facilities, as of December 31, 2022, is represented by the deferred financing cost associated with the syndicated

revolving facility. This is included within the other assets in the consolidated statement of financial position (Note 10.3 and 14).

Year ended December 31, 2021

Total, beginning of the year

Acquired debt (Note 4.1)

Financings net of fees paid

Repayments
Other non-cash (1)
Foreign exchange

Project loans and
borrowings

Corporate credit
facilities

7,237,200 $

1,124,187

518,481

(897,332)

24,044

(414,366)

351,402 $

—

371,315

(674,433)

(127)

(6,332)

Total, end of the year
(1) Other non-cash changes include amortization of fair value adjustments and amortization of deferred financings costs.

7,592,214 $

41,825 $

Total

7,588,602

1,124,187

889,796

(1,571,765)

23,917

(420,698)

7,634,039

The estimated fair value of facility-level loans and borrowings and corporate credit facilities as at December 31, 2022 is $7.0
billion (2021 - $7.8 billion).

| NORTHLAND POWER INC. |

| 2022 ANNUAL REPORT |

As of December 31, 2022, Northland is in compliance with all applicable contractual covenants. For the year ended
December 31, 2022, Northland complied with all applicable contractual covenants, except for: (i) the requirement to fully
fund certain debt service reserve and unplanned maintenance reserve accounts; and (ii) the covenants restricting the
making of a distribution prior to ensuring those applicable reserves were fully funded, which were identified during the
period. The foregoing matters do not constitute events of default under the applicable credit agreements if cured in
accordance with the terms of such agreements. The required corrective actions were taken in accordance with the
applicable agreements in April 2022. Accordingly, Northland continues to have an unconditional right to defer the payment
of the loan over the contractually agreed term.

14. Corporate Credit Facilities

The corporate credit facilities are summarized in the table below:

Facility
size

Amount drawn
as at
December 31,
2022 (5)

Outstanding
letters of
credit (6)

Available
capacity

Maturity

Amount
drawn as at
December 31,
2021

Sustainability linked loan (SLL)
syndicated revolving facility (1)
Bilateral letter of credit facility (2)
Export credit agency backed
letter of credit facility (3)
Export credit agency backed
letter of credit facility (4)
Total
Less: deferred financing costs
Total, net

$ 1,000,000 $

— $

417,236 $

582,764

Sep. 2027 $

44,722

150,000

100,000

—

137,911

12,089

Sep. 2024

76,442

23,558

Mar. 2023

39,277

60,723

n/a

—

$ 1,350,000 $

— $

670,866 $

679,134

2,817
(2,817)

44,722
2,897
41,825

(1) The amount drawn on the syndicated revolving facility as at December 31, 2022 was $nil (December 31, 2021 - US$30 million, CAD $nil and €5 million
converted to CAD at the period-end exchange rates). During the year ended December 31, 2022, the maturity period of syndicated revolving facility
was extended to September 2027.

(2) During the year ended December 31, 2022, maturity date for Bilateral LC facility was extended to September 2024.

(3) During the year ended December 31, 2022, maturity date for Export credit agency backed LC facility was extended to March 2023.

(4) This facility does not have a specified maturity date. During the year ended December 31, 2022, the facility size increased to $100 million.
(5) Deferred financing cost associated with the syndicated revolving facility is included within the other assets in the consolidated statement of financial

position (Note 10.3 and 13).

(6) As of December 31, 2022 outstanding letters of credit include LCs issued in favor of joint ventures amounting to $401 million (Note 9 (d)).

During the year ended December 31, 2022, Northland made net repayment of $45 million on the syndicated revolving
facility.

Amounts drawn and letters of credit under the syndicated revolving facility and bilateral letter of credit are collateralized by
a debenture security and general security agreement that constitutes a first-priority lien on all of the real property and
present and future property and assets of Northland.

| NORTHLAND POWER INC. |

| 2022 ANNUAL REPORT |

15. Provisions and Other Liabilities

Details of Northland’s long term provisions and liabilities are summarized below:

As at December 31,
Decommissioning liabilities (Note 15.1)

Non-current portion of lease liability (Note 8.2)

Non-current portion of Band Adjustments

Loan payable to third party share holder

Pension and post employment benefits (Note 16)

Provisions and other long term liabilities

Total

2022
372,747 $
138,464

105,479

57,228

22,565

8,904
705,387 $

2021
357,621

138,064

98,873

72,476

30,675

25,593

723,302

Loan payable to a third party share holder represents amount owed by Nordsee One under a shareholder loan arrangement
on which interest is accrued at an annual rate in the range of 10% to 11% and repayments are made based on the partner’s
share of distributable funds from operations.

15.1 Decommissioning Liabilities

Decommissioning liabilities are recognized for renewable facilities. A portion of Northland’s onshore wind and solar facilities
are located on lands leased from private and public landowners. Upon the expiration of the leases, Northland is obligated to
restore the leased lands to near to their original condition and remove all turbines, solar panels and equipment. Northland’s
obligations for decommissioning of its offshore wind facilities are based on the government regulations in the applicable
jurisdictions.

Northland expects to use its installed assets for an indefinite period. No decommissioning liabilities are recognized for utility
facilities and efficient natural gas facilities until the time Northland determines the facility will no longer be operated or
maintained and should be decommissioned.

As of December 31, 2022, the gross undiscounted total decommissioning liabilities aggregates to $489 million (2021 -
$433 million). Northland estimated the discounted value of its total decommissioning liabilities to be $373 million (2021 -
$358 million), based on an estimated total future liability. A long term discount rate of 0.5% to 3.9% (2021 - 0.5% to 3.9%)
and a long term inflation rate, where applicable, of 2% to 3.9% (2021 - 2%) was used to calculate the discounted value of
the decommissioning liabilities.

The following table reconciles Northland’s total decommissioning liabilities activity:

Year ended December 31,
Total, beginning of year
Acquired (2)
Additions (1)
Accretion

Foreign exchange

Total, end of year

2022
357,621 $
—

8,431

3,820

2,875
372,747 $

2021
364,573

11,377

153

4,292

(22,774)

357,621

(1) Additions during the year, primarily reflects the decommissioning liability recognized in respect of NY Wind projects.

(2) Related to the Spanish portfolio acquired on August 11, 2021.

| NORTHLAND POWER INC. |

| 2022 ANNUAL REPORT |

16. Pension and Post-Employment Benefits

One of Northland’s facilities, EBSA, has a defined benefits pension plan (“pension plan”) which has been closed to new
members since 2010, and only a small portion of plan members remain active employees of EBSA. The pension plan
establishes the pension an employee will receive upon retirement based on factors such as employee age, years of service
and compensation levels when employed.

The accounting of pensions involves estimating the cost of the benefit that will be paid in a remote time horizon and
attributes this cost through the expected period in which each employee is expected to receive a pension in accordance
with the plan conditions; this requires the extensive use of estimates and assumptions on inflation, mortality, employee
turnover and discount rates, among other factors.

The liability recognized in the consolidated statements of financial position, in respect of the defined benefits pensions, is
the present value of the defined benefit obligation at December 31, 2022, together with the adjustments of actuarial gains
or losses not recognized. The actuarial gains and losses are recorded against the net equity in other comprehensive income,
in the period they arise.

The present value of the defined benefit obligation is calculated by independent actuaries by discounting the estimated
cash outflows using the interest rates yield curve of the Public Debt Securities of the Government of Colombia adjusted for
inflation for terms approximating the remaining pension obligations.

The movement of the pension obligations balances, as included within provision and other liabilities in the consolidated
statements of financial position, for the year ended December 31, 2022, was as follows:

Change in pension obligations, year ended December 31,

Total, beginning of year
Interests net cost

Actuarial adjustments

Payments made directly by the Company

Foreign exchange

Total, end of year

17. Equity

17.1 Common Shares

2022

30,675 $

2,013

(4,764)

(2,731)

(2,628)
22,565 $

2021

45,054

2,077

(6,405)

(3,223)

(6,828)

30,675

Northland is authorized to issue an unlimited number of Shares. The change in shares outstanding during 2022 and 2021
was as follows:

Shares outstanding, beginning of year

226,882,751 $

4,005,462

202,171,075 $

Amount

Amount
2,955,840

Shares issued under equity offering (Note 17.2)

20,894,982

851,610

22,500,500

949,597

December 31, 2022

December 31, 2021

Shares issued under the Deferred Rights (Note 26)

Shares issued under the DRIP
Change in deferred taxes (1)
Total common shares outstanding, end of year

(1) Relate to difference in treatment between tax and IFRS.

Dividend Reinvestment Plan

14,974

2,224,650

—

591

85,424

2,896

21,967

2,189,209

—

911

88,973

10,141

250,017,357 $

4,945,983

226,882,751 $

4,005,462

| NORTHLAND POWER INC. |

| 2022 ANNUAL REPORT |

Share-based Compensation

Northland’s share-based compensation plans provides for a maximum of 3,100,000 shares to be reserved and available for
grant to employees of Northland and its subsidiaries. As at December 31, 2022, 1,163,329 shares remain available for future
issuance under the LTIP. Shares may be awarded based on development profits, which arise from new projects or
acquisitions. The costs recognized for LTIP in the period depend on management’s best estimate of a project’s expected
development profit and expected timing of project milestones.

For the year ended December 31, 2022, Northland expensed $6 million (2021 - $4 million) of costs under the share-based
compensation plans. No forfeitures are assumed to occur. The balance of accrued awards related to the Development LTIP
is included in liabilities since these awards are expected to be settled in cash.

For the year ended December 31, 2022, settlements under the share based compensation plans are summarized below:

Year ended December 31,

Development Long Term Incentive Plan

Restricted Share Units

Deferred Rights

Performance Share Units

Deferred Shares Units

Total

2022

2,029 $
1,680

1,377

992

789

2021

1,120
3,238

2,068

—

6,867 $

6,426

Deferred Rights include an amount of $1 million (2021 - $1 million), which were settled in Northland’s Shares.

17.2 Equity offering

On March 1, 2022, Northland established an at-the-market equity program (“ATM program”) that allowed Northland to
issue up to $500 million of common shares from treasury, at Northland’s discretion. On September 7, 2022, Northland
renewed its ATM program to issue up to an additional $750 million of common shares from treasury, at the Company’s
discretion. The ATM program was renewed following the termination of the previous ATM program as a result of having
exercised the full allotment permitted under the program.

Any Common Shares sold under the ATM program will be sold through the TSX. The ATM Program will be effective until the
earlier of July 16, 2023, and the date that all of the common shares issuable under the ATM program have been issued,
unless terminated prior to such date.

During the year ended December 31, 2022, Northland issued 20,894,982 common shares under the ATM program at an
average price of $41.31 per common share for gross proceeds of $863 million (net proceeds $852 million). Under the ATM
program, as at February 23, 2023, Northland has issued a total of 21,111,582 common shares at an average price of $41.27
per share for gross proceeds of $871 million (net proceeds $860 million).

In April 2021, Northland completed a equity offering for 22,500,500 common shares (“Bought deal”) for net proceeds of
$950 million. The net proceeds of the bought deal equity offering were used to fund the cash purchase price of the Spanish
portfolio and equity capital requirements.

17.3 Preferred Shares

Northland’s preferred shares balance contains Series 1, Series 2 and Series 3 Preferred Shares.

Series 1 and 2 Preferred Shares

In 2010, Northland issued 6,000,000 Series 1 Preferred Shares at a price of $25.00 per share, for gross proceeds of $150
million. The annual dividend rate resets every five years at a rate equal to the then five-year Government of Canada bond
yield plus 2.80%. The holders of the Series 1 Preferred Shares are entitled to fixed cumulative dividends, payable quarterly,
as and when declared by the Board of Directors.

On August 31, 2020, Northland announced that the fixed quarterly dividends on the Series 1 Preferred Shares will be
payable at an annual rate of 3.2% ($0.2001 per share per quarter) until September 29, 2025.

| NORTHLAND POWER INC. |

| 2022 ANNUAL REPORT |

Holders of Series 1 Shares and the cumulative rate reset preferred shares, series 2 (“Series 2 Preferred Shares”) had the
right, at their option to convert all or part of their Series 1 Shares or Series 2 Shares, as applicable, on a one-for-one basis,
into shares of the other series, effective September 30, 2020. Accordingly, 1,237,754 Series 1 Preferred Shares were
converted in to equal number of Series 2 Preferred Shares.

The Series 2 Preferred Shares carry the same features as the Series 1 Preferred Shares, except that holders are entitled to
receive quarterly floating-rate cumulative dividends, as and when declared by the Board of Directors, at an annual rate
equal to the then three-month Government of Canada treasury bill yield plus 2.80% (2.80% as of December 31, 2021). The
holders of Series 2 Preferred Shares have the right to convert their shares into Series 1 Preferred Shares on September 30,
2025, and on September 30 of every fifth year thereafter.

As at December 31, 2022 there were 4,762,246 (2021 - 4,762,246) Series 1 Preferred Shares outstanding, representing
equity of $114 million (2021 - $114 million).

As at December 31, 2022 there were 1,237,754 (2021 - 1,237,754) Series 2 Preferred Shares outstanding, representing
equity of $31 million (2021 - $31 million).

Series 3 Preferred Shares

In 2012, Northland issued 4,800,000 Series 3 Preferred Shares at a price of $25.00 per share, for gross proceeds of $120
million. The annual dividend rate resets every five years at a rate equal to the then five-year Government of Canada Bond
yield plus 3.46%. The holders of the Series 3 Preferred Shares are entitled to fixed cumulative dividends, payable quarterly,
as and when declared by the Board of Directors. Series 3 Preferred Shares, provided the holders a right, at their option, to
convert these shares into Series 4 Preferred Shares on December 31, 2022, and on December 31 of every fifth year
thereafter, subject to certain conditions.

On November 25, 2022, Northland announced that it intends to redeem all of its 4,800,000 issued and outstanding Series 3
Preferred Shares on January 3, 2023 (the “Redemption Date”) at a price of $25.00 per Series 3 Preferred Share together
with all accrued and unpaid dividends of $0.3175 per Preferred Share for an aggregate redemption value of $122 million
(Note 10.1). Accordingly, the outstanding Series 3 Preferred Shares, with the aforementioned redemption value were
represented as current liability and included in Trade and Other payables (Note 11).

As at December 31, 2022, there were 4,800,000 (2021 - 4,800,000) Series 3 Preferred Shares outstanding, amounting to
$116 million (2021 - $116 million) (net of historic transaction cost) .

Subsequently, on January 3, 2023, all issued and outstanding Series 3 Preferred Shares were redeemed. None of the holders
of Series 3 Preferred Shares, exercised their right to covert their shared in to Series 4 Preferred Share.

Preferred share dividends, excluding tax, were paid as follows:

Year ended December 31,
Series 1

Series 2

Series 3
Total (Note 21)

17.4 Dividends

Dividends declared per Share and in aggregate were as follows:

Year ended December 31,
Dividends declared per Share

Aggregate dividends declared

Dividends in cash

Dividends in shares

Total

2022
3,811 $
1,299

6,096

2021
3,811

904

6,096

11,206 $

10,811

2022
1.20 $

196,523 $

88,059

284,582 $

2021
1.20

175,966

88,234

264,200

Dividends declared during the year include dividends amounting to $26 million (2021 - $25 million), which remained unpaid
as of December 31, 2022.

| NORTHLAND POWER INC. |

| 2022 ANNUAL REPORT |

18. Non-controlling Interests

Non-controlling interests relate to the interests not owned by Northland. Subsidiaries with non-controlling interests that
are material to Northland’s consolidated financial statements include Gemini (40%), Nordsee One (15%) and Canadian
Environmental Energy Corporation (CEEC) (32%). CEEC has voting control of Kirkland Lake but ownership interest of 38.4%
as a result of non-voting ownership interest held by third-parties.

Summarized financial information for subsidiaries with material non-controlling interests in the consolidated statements of
financial position (shown at 100% totals) are as follows:

Current assets (1)

Long-term assets

Current liabilities

As at December 31, 2022
Gemini
Nordsee
GMS Solar
Other (2)
Total

As at December 31, 2021
Gemini
Nordsee
GMS Solar
Other (2)
Total

492,971 $
181,466
187,257
196,597
1,058,291 $

2,772,390 $
1,254,491
235,972
1,368,388
5,631,241 $

349,101 $
114,737
169,581
162,223
795,642 $

2,891,749 $
1,205,921
252,420
1,364,535
5,714,625 $

550,943 $
176,012
169,789
95,759
992,503 $

Long-term liabilities
2,050,265
921,553
165,338
634,940
3,772,096

394,389 $
181,720
179,225
114,522
869,856 $

Long-term liabilities
2,451,059
984,941
169,332
533,757
4,139,089

Current assets (1)

Long-term assets

Current liabilities

(1) As at December 31, 2022, restricted cash of $1 million (Dec 2021 - $47 million) is included for Gemini, $29 million (Dec 2021 - $29 million) for Nordsee

where the availability of funds is intended for debt repayments.

(2) Other includes subsidiaries with non-controlling interests that are not individually material to Northland’s consolidated financial statements,

including: McLean’s (50%), Grand Bend (50%), CEEC (61.6%), Energia (12%), EBSA (0.6%) and Elecdey Lezuza, S.A under the Spanish portfolio (33.8%).

The change in material non-controlling interests during 2022 and 2021 is as follows:

As at January 1, 2022

Gemini
149,464 $

Nordsee (3)

GMS Solar

Other (2)

32,988 $

30,225 $

(3,845) $

Additional contribution by NCI
Net income (loss) attributable (1)
Dividends and distributions declared (1)
Allocation of other comprehensive income (loss) (1)
Disposal of non-controlling interests (4)

—
116,210
(71,441)
73,636
—

As at December 31, 2022

267,869 $

—
14,133
—
6,605
3,446
57,172 $

—
921
(3,113)
5,048
—

1,320
(3,540)
(19,248)
282
—

33,081 $

(25,031) $

As at January 1, 2021

Gemini
138,188 $

Nordsee (3)

GMS Solar

Other (2)

30,474 $

35,487 $

5,728 $

Total
208,832

1,320
127,724
(93,802)
85,571
3,446
333,091

Total
209,877

Non-controlling interest acquired (Note 4.1)
Net income (loss) attributable (1)
Dividends and distributions declared (1)
Allocation of other comprehensive income (loss) (1)
Disposal of non-controlling interests (5)

—
72,559
(73,988)
12,705
—

—
6,613
(4,296)
197
—

—
(943)
(8,475)
4,156
—

7,850
2,091
(10,959)
(34)
(8,521)
(3,845) $

7,850
80,320
(97,718)
17,024
(8,521)
208,832

As at December 31, 2021
(1) Net income (loss), dividends and distributions, and other comprehensive income (loss) are shown at the respective non-controlling interest share.

149,464 $

32,988 $

30,225 $

(2) Other includes subsidiaries with non-controlling interests that are not material to Northland’s consolidated financial statements, including: McLean’s

(50%), Grand Bend (50%), CEEC (61.6%), Energia (12%), EBSA (0.6%) and Spanish portfolio (1.5%).

(3) As of January 1, 2022, Nordsee was comprised of NCI balances relating to Nordsee One, N2 and N3.

(4) Disposal of NCI relates to de-recognition of NCI interest of N2 and N3 due to formation of Nordsee Offshore Wind Cluster partnership, as disclosed in

note 9.3. As of December 31, 2022, Northland holds a 49% interest in N2 and N3, and accounts them under equity method of accounting (Note 9.3).

(5) Disposal of NCI relates to NPI’s purchase of NCI interest in one of the subsidiary of CEEC.

| NORTHLAND POWER INC. |

| 2022 ANNUAL REPORT |

19. Financial Risk Management

19.1 Market Risk

(i) Interest rate risk

For the year ended December 31, 2022, if interest rates had been 100 basis points higher or lower with all other variables
held constant, income before income taxes from the change in fair value of the interest rate swaps prior to the application
of hedge accounting would have been $282 million higher or lower. This change would have had no impact on Northland’s
cash flows.

The counterparties to Northland’s interest rate derivative contracts are well-capitalized financial institutions with strong
credit ratings. See “Counterparty Risk” below.

(ii) Credit spread risk

Credit spread risk as it affects Northland refers to the risk that the loan margin charged by current or future lenders (a
borrower-specific margin added to the underlying interest rate) will increase, making the cost of debt capital more
expensive. Credit spread risk cannot be hedged. Northland manages this risk by: (i) entering into long-term financings with
defined credit spreads over the amortization period whenever possible; (ii) ensuring loans are fully amortized (repaid) by
maturity; and (iii) monitoring credit markets and making prudent decisions about the timing and method of original
financings, refinancing and repricing opportunities.

(iii) Currency risk

Currency risk arises because the Canadian dollar equivalent of transactions, assets or liabilities denominated in foreign
currencies may vary due to changes in foreign exchange rates. Northland is exposed to changes in the Euro, U.S. dollar,
Colombian peso, Taiwan dollar, Polish Zloty, and to a lesser degree, British Pound Sterling, Japanese Yen and Korean Won.
Primary exposure to Northland results from the euro-denominated financial statements and cash distributions at Gemini,
Nordsee One, Deutsche Bucht and Spanish portfolio, Colombian peso-denominated financial statements, cash distributions
and non recourse financing structure at EBSA, construction contracts at Hai Long and Baltic Power and global development
spending. Management manages this risk by matching the currency of revenue, non-recourse debt financing and major
construction contracts and hedging majority of net foreign currency cash flows over the contracted period to the extent
practical and economical to minimize material cash flow fluctuations.

Exchange rate gains and losses on the currency derivatives that have been recognized in OCI are recognized in net income in
the same period during which corresponding gains or losses arising from the translation of the consolidated financial
statements of the self-sustaining foreign operation are recognized in net income.

| NORTHLAND POWER INC. |

| 2022 ANNUAL REPORT |

At December 31, 2022, if the Canadian dollar had been 5% higher or lower against the U.S. dollar with all other variables
held constant, income before taxes from the change in fair value of the U.S. dollar foreign exchange contracts prior to the
application of hedge accounting would have been $18 million higher or lower. If the Canadian dollar had been 5% higher or
lower against the euro with all other variables held constant, income before taxes from the change in fair value of the euro
foreign exchange contracts prior to the application of hedge accounting would have been $66 million lower or higher. If the
Canadian dollar had been 5% higher or lower against the Colombian peso with all other variables held constant, income
before taxes from the change in fair value of the Colombian peso foreign exchange contracts (used to effectively hedge
equity distribution from EBSA) would have been $24 million lower or higher.

The counterparties to Northland’s currency derivative contracts are well-capitalized financial institutions with strong credit
ratings. See “Counterparty Risk” below.

(iv) Commodity price risk

Northland has exposure to Spanish electricity market prices under the Spanish Portfolio regulated asset base framework
where facilities earn their stated guaranteed pre-tax rate of return. For the year ended December 31, 2022, two wind assets
in the Spanish Portfolio have earned their guaranteed pre-tax rate of return, so are directly exposed to Spanish electricity
market prices.

19.2 Financial Counterparty Risk

As at December 31, 2022, approximately 46.3% (2021 - 34.6%) of Northland’s consolidated trade and other receivables,
excluding third-party partner loan receivable, were receivable from creditworthy government-related entities.

| NORTHLAND POWER INC. |

| 2022 ANNUAL REPORT |

In 2022, approximately 51.8% (2021 - 55.8%) of Northland’s consolidated sales were derived indirectly from the sale of
electricity to government-related entities. For electricity and other sales, Northland and its subsidiaries have not provided
allowance accounts and have not purchased credit derivatives to mitigate counterparty risk. All significant accounts
receivable amounts are current as at December 31, 2022.

The nature of Northland’s business and contractual arrangements, and the quality of its counterparties generally serves to
minimize counterparty risk.

19.3 Liquidity Risk

As at December 31, 2022, Northland and its subsidiaries were holding cash and cash equivalents of $1.3 billion (2021 -
$674 million), including $335 million held corporately (2021 - $25 million), and had available borrowing capacity under the
syndicated revolving facility of $583 million.

The contractual maturities of Northland’s financial liabilities at December 31, 2022 are as follows:

Derivative contracts
Euro foreign exchange contracts

Colombian peso foreign exchange contracts

US dollar foreign exchange contracts

US dollar cross currency swap

US dollar La Lucha interest rate swaps

Power financial swap

Interest-bearing loans and borrowings

2023

2024-2025

2026-2027

>2027

Total

180,350 $

317,030 $

307,763 $

655,475 $

1,460,618

485,275

139,013

4,224

672

8,494

3,735

—

1,196

788

—

977

—

1,201

—

489,010

139,013

4,224

4,046

9,282

Outstanding principal

805,268

2,179,040

1,473,817

2,823,094

7,281,219

Interest, including interest rate swaps

222,102

356,209

249,296

280,882

1,108,489

Leases

Total

14,517

27,154

24,469

215,092

281,232

1,859,915 $

2,885,152 $

2,056,322 $

3,975,744 $ 10,777,133

Northland is also subject to internal liquidity risk because it conducts its business activities through separate legal entities
(subsidiaries and affiliates) and is dependent on cash distributions from those entities to fund development expenses,
defray corporate expenses and pay dividends. Most operating subsidiaries hold non-recourse debt. Such non-recourse
financing agreements typically prohibit distributions if the loan is in default (notably for non-payment of principal or
interest) or if the entity fails to achieve a benchmark debt service coverage ratio, which is the ratio of Adjusted EBITDA to
scheduled loan principal and interest payments over a specified time period.

| NORTHLAND POWER INC. |

| 2022 ANNUAL REPORT |

20. Financial Instruments

20.1 Fair Value Measurement

The carrying values of Northland’s financial

instruments as at December 31, 2022 and 2021 are as follows:

As at December 31, 2022
Financial assets at amortized cost (1)
Financial assets at fair value through profit and loss

Financial assets at fair value through OCI

Financial liabilities at fair value through profit and loss

Financial liabilities at fair value through OCI
Financial liabilities at amortized cost (2)

Level 1

Level 2

Level 3 (3)

Total

1,459,975 $

830,473 $

— $

2,290,448

—

462,180

275,256

(98,408)

(7,567)

14,539

—

476,719

275,256

(98,408)

(7,567)

— $

(8,085,816) $

— $

(8,085,816)

As at December 31, 2021
Financial assets at amortized cost (1)
Financial assets at fair value through profit and loss

Financial assets at fair value through OCI

Financial liabilities at fair value through profit and loss

Level 1

Level 2

Level 3

Total

829,323 $

644,634 $

— $

1,473,957

—

222,984

49,687

(206,104)

—

222,984

49,687

(206,104)

Financial liabilities at fair value through OCI
Financial liabilities at amortized cost (2)
(1) Includes cash and cash equivalents, restricted cash, trade and other receivables, finance lease receivable, long-term deposits and certain other assets.

(8,409,656) $

(282,185)

(8,409,656)

(282,185)

— $

—

(2) Includes trade and other payables, dividends payable, interest-bearing loans and borrowings, corporate credit facilities, and other liabilities (excluding

decommissioning liabilities and taxes payable).

(3) Represents embedded derivative relating to the energy price component linked to the market price in 20-year indexed Renewable Energy Certificate

(REC) agreement with the New York State Energy Research and Development Authority (NYSERDA) for the Ball Hill and the Bluestone.

Fair Value Hierarchy of Financial Instruments

All financial instruments for which fair value is recognized or disclosed are categorized within the fair value hierarchy, based
on the lowest level input that is significant to the fair value measurement.

As of December 31, 2022, embedded derivatives are categorized as level 3. The table below sets out the significant
unobservable inputs used to value level 3 derivative financial instruments:

Derivative Financial
Instrument

Valuation
Technique

Significant
unobservable
inputs

Range

% change

Embedded derivatives

Long-term price
forecast

Average Illiquid
forward energy
prices (per MWh)

US$ 44.38 to
US$ 49.10

5% increase / (decrease)
in Average forward
energy prices

Sensitivity of input
to the fair value
(In CAD)

21,966

Additional details of Northland’s income and expenses with respect to its financial instruments are as follows:

Year ended December 31,

Income (expense) on financial assets at amortized cost

Expense (income) on financial liabilities at amortized cost

Expense (income) on net financial liabilities at fair value through profit and loss

2022

11,794 $

332,810

2021

18,451

341,696

(460,704) $

(116,621)

100

| NORTHLAND POWER INC. |

| 2022 ANNUAL REPORT |

20.2 Derivative Financial Instruments

The derivative financial instruments consist of the following:

As at December 31, 2022

Current
assets

Current
liabilities

Long-term
assets

Long-term
liabilities

Total

Derivatives designated for hedge accounting

Interest Rate Contracts
Foreign Exchange Contracts

50,756 $
6,161

(950) $
—

128,773 $
89,566

(6,439) $
(178)

172,140
95,549

Derivatives not designated for hedge accounting

Interest Rate Contracts
Foreign Exchange Contracts
Commodity Contracts
Embedded derivatives (1)

61,609
58,015
69,537
2,751
248,829 $

(9,545)
(8,453)
(78,348)
—

230,534
42,485
—
11,788
503,146 $

(70)
(1,992)
—
—

282,528
90,055
(8,811)
14,539
646,000

Total
(1) Represents embedded derivative relating to the energy price component linked to the market price in 20-year indexed Renewable Energy Certificate

(97,296) $

(8,679) $

(REC) agreement with the New York State Energy Research and Development Authority (NYSERDA) for the Ball Hill and the Bluestone.

As at December 31, 2021

Current
assets

Current
liabilities

Long-term
assets

Long-term
liabilities

Total

Derivatives designated for hedge accounting

Interest Rate Contracts
Foreign Exchange Contracts

19 $

(82,534) $

6,087

—

1,053 $

42,528

(197,931) $
(1,720)

(279,393)
46,895

Derivatives not designated for hedge accounting

Interest Rate Contracts
Foreign Exchange Contracts
Commodity Contracts

96
32,007
85,903

(12,875)
(247)
(101,982)

26,408
52,381
26,189

(57,806)
(897)
(32,297)

(44,177)
83,244
(22,187)

Total

124,112 $

(197,638) $

148,559 $

(290,651) $

(215,618)

The change in derivative financial instruments for the year ended December 31, 2022 and 2021 is as follows:

Designated in hedge
relationships

Balance as at
December 31,
2021
asset (liability)

Interest Rate Contracts
Foreign Exchange Contracts(3)
Commodity Contracts(4)
Embedded derivatives

(323,571) $
130,139

(22,186)

—

Changes in
fair value
recognized
in OCI (1)
378,218 $
47,484

—

Fair value changes
on derivatives not
designated in
hedge
relationships (2)

Foreign
exchange
gain (loss)

Balance as at
December 31,
2022
asset (liability)

Fair value
changes (2)

29,901 $
(2,297)

—

359,710 $ 10,410 $
—

10,278

13,208

14,539

167

—

454,668

185,604

(8,811)

14,539

Total

(215,618) $

425,702 $

27,604 $

397,735 $ 10,577 $

646,000

(1) Amounts recognized in “Change in fair value of hedged derivative contracts” in the consolidated statements of comprehensive income (loss),

representing the change in fair value recognized in OCI, net of amounts reclassified to the consolidated statements of income (loss) on settlement.

(2) Amounts recognized in “Fair value (gain) loss on derivative contracts” in the consolidated statements of income (loss). These amounts represent fair
value changes, net of realized gains and losses on settlements during the year ended December 31, 2022. Realized gains and losses are recorded in
“Finance costs, net” for interest rate contracts, “Foreign exchange (gain) loss” for foreign exchange contracts” and “Fair value (gain) loss on derivative
contracts” for power forward contracts.

(3) The foreign exchange contracts includes $54 million of realized gain due to partial termination of certain contracts during the year ended December

31, 2022.

(4) Power forward contracts includes $18 million of cash and accrued payment settlements during the year ended December 31, 2022.

| NORTHLAND POWER INC. |

| 2022 ANNUAL REPORT |

101

Designated in hedge
relationships

Balance as at
December 31,
2020
asset (liability)

Interest Rate Contracts
Foreign Exchange Contracts
Commodity Contracts(3)
Total

(508,099) $
(35,437)
(39,095)
(582,631) $

Changes in
fair value
recognized
in OCI (1)
133,478 $
75,363
5,355
214,196 $

Fair value changes
on derivatives not
designated in
hedge
relationships (2)

Foreign
exchange
gain (loss)

Balance as at
December 31,
2021
asset (liability)

Fair value
changes (2)

30,797 $
17,395
867
49,059 $

(14,469) $
72,963
9,068
67,562 $

34,723 $
(145)
1,618
36,196 $

(323,570)
130,139
(22,187)
(215,618)

(1) Amounts recognized in “Change in fair value of hedged derivative contracts” in the consolidated statements of comprehensive income (loss),

representing the change in fair value recognized in OCI, net of amounts reclassified to the consolidated statements of income (loss) on settlement.

(a) Foreign exchange risk

Foreign exchange forward contracts
Carrying amount (asset/(liability))
Notional amount - EUR
Notional amount - COP
Maturity date
Hedge ratio (1)
Change in discounted spot value of outstanding hedging
instruments since January 1

Change in value of hedged item used to determine hedge
effectiveness

Weighted average hedged rate for the year (including forward
points):

December 31, 2022

95,549 $

707,287
5,060,402,566
December 2023-August 2032
1:1

December 31, 2021
46,895
972,848
48,672,866
February 2022-August 2032
1:1

(2,617) $

(1,153) $

87,516

94,442

EUR foreign exchange forward contracts
COP foreign exchange forward contracts

€0.6112:CAD$1
COP$2,874:CAD$1

€0.6121:CAD$1
COP$2,880:CAD$1

(1) The foreign exchange forward contracts are denominated in the same currency as the highly probable future payments (US$) and the net

investment in foreign operations; therefore, the hedge ratio is 1:1.

102

| NORTHLAND POWER INC. |

| 2022 ANNUAL REPORT |

Foreign exchange hedge reserve

Total, beginning of the year 2021
Add: Costs of hedging deferred during the year
in OCI

Add: Change in fair value of hedging instrument
recognized in OCI for the year (effective
portion)(1)
Less: Re-classified to the consolidated
statement of income (loss)
Total, end of the year 2021
Add: Costs of hedging deferred during the year
in OCI

Euro contracts

Colombian Peso contracts

Cost of
hedging
11,342 $

Forward
component

Cost of
hedging

Forward
component

(86,830) $

(2) $

(669) $

(76,159)

Total foreign
exchange
hedge
reserve in AOCI

3,338

—

(760)

—

96,259

—

4,891

(23,370)

—

(426)

—

(8,690) $

9,429 $

(1,188) $

4,222 $

64,122

—

610

—

2,578

101,150

(23,796)
3,773

64,732

Add: Change in fair value of hedging instrument
recognized in OCI for the year (effective
portion)(1)
Less: Re-classified to the consolidated
statement of income (loss)
Less: Deferred Tax
38,246 $
Total, end of the year 2022
(1) The deferred tax recovery amounting to $12 million (2021 - $19 million), applicable to the foreign exchange hedge reserve has been recognized in
OCI.

6,139
7,364 $

2,301
6,394 $

—
(747) $

(17,186)

(5,336)

(2,997)

(169)

—

(17,355)
8,440
51,257

(8,333)

The hedge ineffectiveness recognized in “fair value (gain) loss on derivative contracts” in the consolidated statements of
income (loss) related to foreign currency contracts (cash flow and net investment hedges) for the year ended December 31,
2022, was $1.9 million (2021 - $2.5 million).

(b) Interest rate risk
Interest rate swaps
Carrying amount (asset/(liability))
Notional amount - CAD
Notional amount - EUR
Notional amount - COP
Maturity date
Hedge ratio (1)
Change in fair value of outstanding hedging instruments since January 1 $
Change in value of hedged item used to determine hedge effectiveness
$
(1) The interest rate swaps mirror the interest rate of the debts; therefore, the hedge ratio is 1:1.

December 31, 2022

172,140 $
382,776
1,917,273
29,272,480
April 2023-March 2035
1:1
415,317 $
(433,924) $

December 31, 2021
(279,393)
633,181
2,742,808
29,272,480
January 2022-March 2034
1:1
118,228
(131,569)

Canadian Dollar
interest rate
swaps
(30,864) $

Interest rate hedge reserve
Total, beginning of the year 2021
Add: Change in fair value of hedging instrument recognized in OCI for
the year (effective portion)(1)
Less: Re-classified to the consolidated statement of income (loss)
Total, end of the year 2021
Add: Change in fair value of hedging instrument recognized in OCI for
the year (effective portion)(1)
Less: Re-classified to the consolidated statement of income (loss)
Total, end of the year 2022
(1) The deferred tax recovery amounting to $86 million (2021 - $30 million), applicable to the interest rate hedge reserve has been recognized in OCI.

(1,459)
156,595 $

(195,474) $

(306,452) $

16,927 $

353,528

110,960

(9,640) $

26,566

21,226

(2)

132,186

16
(205,114)

380,094

(1,458)
173,522

Euro interest
rate swaps

Total interest rate
hedge reserve
(337,316)

| NORTHLAND POWER INC. |

| 2022 ANNUAL REPORT |

103

The hedge ineffectiveness recognized in “fair value (gain) loss on derivative contracts” in the consolidated statements of
income (loss) related to interest rate contracts (cash flow hedges) for the year ended December 31, 2022 was $4 million
(2021 - $7 million).

Power forward hedge reserve
Total, beginning of the year 2021
Add: Change in fair value of hedging instrument recognized in OCI for the year (effective portion)(1)
Less: Re-classified to the consolidated statement of income (loss)
Total, end of the year 2021 and 2022
(1) The deferred tax recovery amounting to $ nil (2021 - 1 million), applicable to the power forward hedge reserve has been recognized in OCI.

Power forward
contract
(6,925)
6,911
14
—

The hedge ineffectiveness recognized in “fair value (gain) loss on derivative contracts” in the consolidated statements of
income (loss) related to power swap contracts (cash flow hedges) for the year ended December 31, 2022 was $nil (2021 -
$0.1 million).

(d) Hedge ineffectiveness

The fair value of the hedged item used as the basis for recognizing hedge ineffectiveness for the year, by risk category, are:

Fair value of hedged items (hypothetical derivatives)
Cash flow hedge – interest rate risk
Net investment hedge – foreign currency risk

21. Net Income (Loss) per Share

The basic and diluted net income (loss) is calculated as follows:

Year ended December 31,
Net income (loss) for the period attributable to the shareholders

Less: preferred share dividends, net (Note 17.3)

Net income (loss) attributable to common shareholders for basic and diluted earnings

The basic and diluted share amounts are calculated as follows:

Year ended December 31,
Weighted average number of shares outstanding, basic and diluted

22. Finance costs, net

Net finance costs consist of the following:

Year ended December 31,
Interest on debt, borrowings and bank fees
Amortization of deferred financing costs
Discount on provisions for decommissioning liabilities
Lease interest (Note 8.2)
Finance cost for the year
Less: Finance income
Finance costs, net

December 31,
2022
(207,062) $
6,100 $

December 31,
2021
226,863
7,253

$
$

2022
827,733 $

(11,206)

816,527 $

2021
189,559

(10,811)

178,748

2022
236,156,878

2021
218,861,235

2022
305,111 $

24,317
3,820
3,382
336,630
(12,998)
323,632 $

2021
311,359
28,229
4,292
2,108
345,988
(3,571)
342,417

For the year ended December 31, 2022, $5 million of finance costs (2021 - $3 million), respectively incurred from project
financing related to facilities under construction were capitalized in construction-in-progress.

104

| NORTHLAND POWER INC. |

| 2022 ANNUAL REPORT |

23. Impairment of Property, Plant and Equipment, Intangible Assets and Goodwill

Northland's impairment tests are performed either at the facility level, which represents a CGU, or at a group of CGUs for
which goodwill is allocated and monitored. PP&E, intangible assets and goodwill have been allocated to CGUs to determine
the carrying amount.

The calculation of value-in-use for all of the above CGUs is most sensitive to the following assumptions:

•

Growth rate of 3.14% - 5.57% - The rate is used to extrapolate CGU cash flow projections in the discounted cash flow
approach. The rate is based on readily available published industry research. The rate was further adjusted to reflect
inflation rate of overseas jurisdictions where applicable.

Discount rate - Pre-tax discount rates reflect the current market assessment of the risks specific to each CGU. The
discount rate was estimated based on the weighted average cost of capital for the industry. The rate was further
adjusted to reflect the market assessment of any risk specific to the CGU for which future estimates of cash flows have
not been adjusted. The discount rates were further adjusted to reflect country specific risks for the overseas
jurisdictions where applicable.

The rates are as follows:

Pre-tax discount rates
Applicable to PPA cash flows:
Applicable to other cash flows (1):

(1) Other cash flows include post-PPA cash flows and utility cash flows.

October 1, 2022

6.0% - 8.7%

6.0% - 10.7%

October 1, 2021
6.5 %

8.5 %

Northland completed its annual comprehensive impairment assessment based on value-in-use estimates which are derived
from the long-range forecasts and market values observed in the marketplace or FVLCS. Based on the impairment
assessment performed, no impairment was identified for the year ended December 31, 2022.

Iroquois Falls

During the year ended December 31, 2021, Northland wrote off $30 million of goodwill for the Iroquois Falls facility and
accelerated depreciation of Iroquois Falls’ property plant and equipment due to the expiry of its PPA in December 2021.

24. Income Taxes

24.1 Tax Expense and Temporary Difference

The following table summarizes the tax expense reported in the consolidated statements of income (loss):

Year ended December 31,

Current taxes

Based on taxable income of current year

Tax on dividend payments

Total current taxation expense

Deferred taxes

Deferred tax on origination and reversal of temporary differences

Deferred tax due to changes in tax rates

Prior-year under (over) provision

Total deferred tax expense (recovery)

Total income tax expense (recovery)

2022

2021

198,894 $
4,482
203,376 $

80,086

4,324

84,410

99,288 $
270

1,728
101,286 $

304,662 $

57,087

12,814

(959)

68,942

153,352

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105

The following table summarizes the tax expense reported directly in equity:

Year ended December 31,

Deferred taxes related to change in fair value of hedged derivative contracts

Deferred taxes related to pension expense

Deferred taxes related to foreign exchange

Total income tax expense (recovery) in Other comprehensive Income

Deferred taxes related to origination and reversal of temporary differences related to
issuance of shares

Total income tax expense (recovery) in equity

The following table summarizes the reconciliation of Northland’s effective tax rate:

Year ended December 31,
Combined basic Canadian federal and provincial income tax rate

Income (loss) before income taxes

Income tax expense (recovery) based on statutory rate

Adjustment for non-deductible (taxable) expenses and incentives
Deferred tax expense (recovery) relating to changes in tax rates or change in legal
structure

Rate difference related to temporary differences in foreign jurisdictions

Manufacturing and processing rate reduction

Tax expense associated with payment of preferred share dividends

Benefit not recognized

Minority interest

Other

Total income tax expense (recovery)

2022

97,314 $

1,523

(393)

98,444 $

(2,896)

2021

50,615

1,378

(21,302)

30,691

(10,141)

95,548 $

20,550

2022

26.5 %

1,260,119

333,933

(27,322)

270

8,885

(2,717)

4,482

12,151

(30,970)

5,950
304,662

2021

26.5 %

423,231

112,137

(949)

12,814

5,617

(971)

4,324

40,262

(18,698)

(1,184)
153,352

Northland, while resident in Canada, operates in a number of foreign jurisdictions. The enacted blended tax rates relevant
to the computation of tax expense (recovery) are: Canada 26.5% (2021 - 26.5%), Germany 30.1% (2021 - 30.1%),
Netherlands 25.8% (2021 - 25.8%), Luxembourg 24.9% (2021 - 24.9%), Mexico 30.0% (2021 - 30.0%), Colombia 35.0% (2021
- 35%), United States 26.1% (2021 - 26.1%), and Spain 25.0% (2021 - 25.0%).

The following table summarizes the components of the deferred tax asset and liability:

As at December 31,

Deductible temporary differences
Losses available for carryforward

Derivative financial instruments

Fair value debt increments

Canadian renewable conservation expense

Financing fees

Interest available for carryforward

Other

Total deductible temporary differences

Taxable temporary differences
Contracts

Derivative financial instruments

Fair value debt increments

Property, plant and equipment

Other

Total taxable temporary differences

106

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| 2022 ANNUAL REPORT |

2022

2021

18,447 $

4,285

3,375

5,974

24,020

42,778

8,558
107,437 $

121,172 $
125,901

2,013

525,057

3,631
777,774 $

19,980

42,807

—

19,357

37,304

43,294

8,102

170,844

115,192

—

3,148

522,519

—

640,859

The following table reconciles the opening and ending balance of Northland’s net deferred tax liability:

As at December 31,

Opening balance, net deferred tax liability
Tax liability recognized in business combination

Tax expense (recovery) recognized in income statement

Tax expense (recovery) in OCI

Effect of foreign exchange recognized in OCI

Tax expense (recovery) recognized in equity

Deferred tax asset disposed on sale

Other

Ending net, deferred tax liability

2022
470,015 $
—

101,286

98,837

(393)

(2,896)

3,488

—
670,337 $

The following temporary differences have not been recognized in Northland’s Consolidated Financial Statements:

2021
300,567

81,143

68,942

51,993

(21,302)

(10,141)

—

(1,187)

470,015

2021

76,658

—

84,590

119,844

18,856

2,718

2022

91,313 $

106,828

80,461

174,734

—

3,846

457,182 $

302,666

Year ended December 31,

Non-capital losses carried forward

Net capital loss

Fair value change in debt instrument

Non-deductible interest carried forward

Property, plant, and equipment

Other deductible temporary differences

Total deductible temporary differences

Northland has operating losses available for carry forward in Canada, Mexico, Spain and Germany, of $48 million, $24
million, $67 million and $0.1 million, which expire beginning in 2026.

The operating losses are expected to expire as follows:

2025 – 2028

2029 – 2033

2034 – 2038

2039 – 2042

Total

Canada

Germany

Mexico

Spain

9,271 $

8,919

12,888

16,507

47,585 $

— $

—

89 $

2,527 $

21,644

—

24,171 $

—

66,744

24.2 Temporary Differences Associated with Northland Investments

The temporary difference associated with investments in Northland’s subsidiaries is $256 million (2021 - $87 million). A
deferred tax liability associated with these investments has not been recognized because Northland controls the timing of
the reversal and it is probable that the temporary difference will not reverse in the foreseeable future.

Northland periodically assesses its liabilities and contingencies for all tax years open to audit based upon the latest
information available. For those matters where it is probable that an adjustment will be made, Northland has recorded its
best estimate of these liabilities, including related interest charges. Inherent uncertainties exist in estimates of tax
contingencies due to implementation of changes in tax laws. Although Northland believes it has adequately provided for
the probable outcome of these matters, future results may include adjustments to these estimated tax liabilities in the
period the assessments are made or resolved or when the statute of limitation lapses. The final outcome of tax
examinations may result in a materially different outcome than assumed in the tax liabilities.

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107

25. Operating Segment Information

Northland has identified operating segments as outlined below based on the nature of operations, asset class and materiality. Northland analyzes the performance of
its operating segments based on their operating income, which is defined as sales less operating expenses.

Significant information for each segment for the consolidated statements of income (loss) is as follows:

Year Ended December 31,
2022

External
Sales

Inter company
sales (1)

Total Sales

Cost of
sales

Operating
Costs

G&A costs (2)

Depreciation
and
amortization

Other
income (3)

Operating
Income

Finance
costs, net

Offshore Wind Facilities (4)

$ 1,259,247 $

— $ 1,259,247 $

— $ 169,756 $

11,862 $

374,150 $

— $ 703,479 $ 173,150

Onshore Renewable Facilities

Canada
Spain

Efficient Natural Gas Facilities

Canada

Utilities

Colombia

Other (1)

Elimination

Total

216,606
269,251

$ 485,857 $

216,606
269,251

—
—
— $ 485,857 $

—
—
— $

31,013
42,832
73,845 $

1,546
4,635
6,181 $

83,900
78,076
161,976 $

100,147
143,708

—
—
— $ 243,855 $

50,359
20,534
70,893

425,572

—

425,572

177,316

43,215

501

46,532

(11,271)

169,279

47,173

269,692

—

269,692

83,659

64,785

6,119

29,976

—

85,153

(124)

8,447

127,708

136,155

9,451

394

137,517

12,067

(523)

(22,751)

32,540

—

(127,708)

—

(127,708)

—

$ 2,448,815 $

— $ 2,448,815 $ 270,426 $ 351,995 $

162,180 $

624,701 $

(11,794) $ 1,051,307 $ 323,632

(1) Other external sales include energy marketing activities. Other inter-segment sales include inter-company management fees, energy marketing activities and maintenance services, which are eliminated on

consolidation.

(2) General and administrative costs include development costs.

(3) Other income includes investment income and finance lease income.

(4) Offshore wind is comprised of revenue from Germany and the Netherlands amounting to $614 million and $646 million, respectively.

108

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Year Ended December 31,
2021

External
Sales

Inter company
sales (1)

Total Sales

Cost of
sales

Operating
Costs

G&A costs
(2)

Depreciation
and
amortization

Other
income (3)

Operating
Income

Finance
costs, net

Offshore Wind Facilities (4)

$ 1,107,236 $

— $ 1,107,236 $

— $ 173,742 $

9,173 $

371,086 $

— $ 553,235 $ 187,345

Onshore Renewable Facilities

Canada
Spain

Efficient Natural Gas Facilities

Canada

Utilities

Colombia

Other (1)

Elimination

Total

207,015
92,310

$ 299,325 $

207,015
92,310

—
—
— $ 299,325 $

—
—
— $

28,876
16,656
45,532 $

1,983
340
2,323 $

87,186
31,275
118,461 $

—
—
— $ 133,009 $

88,970
44,039

54,622
12,445
67,067

433,554

—

433,554

123,533

51,483

695

103,595

(11,662)

165,910

51,524

225,349

—

225,349

68,923

57,137

7,138

33,169

—

58,982

719

27,791

194,057

221,848

21,037

—

(194,057)

—

126,014

9,728

(3,218)

68,287

35,762

—

(194,057)

—

$ 2,093,255 $

— $ 2,093,255 $ 213,493 $ 327,894 $ 145,343 $

636,039 $

(14,880) $ 785,366 $ 342,417

consolidation.

(2) General and administrative costs include development costs.

(3) Other income includes investment income and finance lease income.

(4) Offshore wind is comprised of revenue from Germany and the Netherlands amounting to $534 million and $573 million, respectively.

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109

Significant information for each segment for the consolidated statements of financial position is as follows:

As at December 31, 2022

Offshore Wind Facilities (2)

Onshore Renewable Facilities

Canada
Spain

Efficient Natural Gas Facilities

Canada

Utilities

Colombia

Other (1)

Total

PP&E, net

Contracts and
other
intangibles, net

Goodwill

Investment in
joint ventures

Total Assets

4,899,741 $

367,412 $

— $

6,381,260

1,151,725
1,448,339
2,600,064 $

—
—
— $

54,731
158,825
213,556 $

—
—
— $

1,108,590
1,974,257
3,082,847

728,730

41,411

120,229

—

1,174,181

431,144

717,905

5,800

378,833

—

936,634

101,152

—

441,565

2,647,687

9,377,584 $

515,775 $

712,618 $

441,565 $ 14,222,609

(1) Other Includes $33 million (£20 million) in relation to an Option Lease Agreement, entered with the Scottish government which provides Northland

with development exclusivity over the awarded sites for a period of up to 10 years (Note 6).

(2) Offshore wind is comprised of PP&E from Germany and the Netherlands amounting to $2,285 million and $2,615 million, respectively.

As at December 31, 2021

Offshore Wind Facilities (2)

Onshore Renewable Facilities

Canada
Spain

Efficient Natural Gas Facilities

Canada

Utilities

Colombia

Other

PP&E, net

Contracts and
other
intangibles, net

Goodwill (1)

Investment in
joint ventures

Total Assets

5,166,638 $

411,482 $

— $

6,222,659

1,203,999
1,509,913
2,713,912 $

—
—
— $

54,731
157,478
212,209 $

7,592
—
7,592 $

1,280,348
1,998,286
3,278,634

771,487

45,281

120,229

—

1,261,107

486,546

447,883

5,636

420,935

—

35,236

—

131,134

1,004,008
1,004,008
1,105,408

Total
(1) $30 million of goodwill relating to Iroquois Falls facility was written off during 2021.

9,586,466 $

497,635 $

753,373 $

138,726 $ 12,871,816

(2) Offshore wind is comprised of property plant & equipment from Germany and the Netherlands amounting to $2,397 million and $2,769 million,

respectively.

110

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26. Related-party Disclosures

26.1 Compensation of Key Management Personnel

Remuneration of key management personnel, consisting of the Board of Directors and members of executive management,
expensed in the year ended December 31, 2022, and 2021 is outlined in the table below. In 2022, Northland granted Shares
to key management personnel to settle a part of share-based compensation. Share-based compensation is tied directly to
executive seniority and the success of development and construction projects as well as acquisition activities.

Year Ended December 31,

Salaries and short-term employee benefits

Share-based compensation - shares issued under the LTIP (Note 17.1)

Share-based compensation - cash component

Total

2022

9,643 $

591

4,382

2021

8,593

911

3,225

14,616 $

12,729

27. Litigation, Claims, Contingencies and Commitments

27.1 Milestone Payments for Development Project Acquisitions

In the course of business, Northland enters into acquisition agreements that may result in Northland making additional
payments to the seller and/or directly to the development project previously acquired, upon the successful completion of
certain milestones. As at December 31, 2022, Northland’s best estimate of the future contingent payments are
approximately $265 million of contingent payments under its development projects arrangements, with a maximum of
$450 million. These contingent payments were not recognized in the consolidated statements of financial position.

27.2 Contingencies and Commitments

The following is a summary of the material commitments that Northland and its subsidiaries have entered into as at
December 31, 2022, in addition to the commitments outlined in the above notes.

The majority of Northland’s revenues are earned under long-term PPAs with government-related entities. In certain
circumstances, if a facility fails to meet the performance requirements under its respective PPA, penalties may apply or the
contract may be terminated after a specified period of time.

Certain Northland gas facilities and corporate subsidiaries have entered into agreements for the purchase of natural gas and
natural gas transportation for various terms. Certain contracts include penalties for failure to purchase a minimum annual
volume of natural gas or, in the case of transportation agreements, include substantial demand charges incurred whether
or not gas is shipped.

Northland’s natural gas turbines and wind turbines are maintained under long-term contracts with the original equipment
suppliers. In certain circumstances, if Northland were to terminate any of the agreements, the termination payment would
be material.

Under certain circumstances, Northland provides parental guarantees to third-parties in respect of its subsidiaries. As at
December 31, 2022, outstanding parental guarantees issued totaled $229 million (2021: $226 million) and related primarily
to the development and construction of La Lucha and New York Wind projects.

Northland’s share of contingencies and commitments in relation to its joint ventures are disclosed in Note 9(d).

27.3 Capital Commitments

In the normal course of operations, as at December 31, 2022, Northland has committed to future spending of
approximately $69 million (2021: $65 million) on capital projects, primarily relating to the construction of New York Wind
projects.

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111

Corporate Information

Directors and Executive Officers Of
Northland Power Inc.

Directors

Mr. John W. Brace (Chair)

Ms. Linda L. Bertoldi

Ms. Lisa Colnett

Mr. Kevin Glass

Mr. Russell Goodman

Mr. Keith Halbert

Ms. Helen Mallovy Hicks

Mr. Ian Pearce

Mr. Eckhardt Ruemmler

Executive Officers

Mr. Mike Crawley
President and Chief Executive Officer

Ms. Pauline Alimchandani
Chief Financial Officer

Ms. Wendy Franks
Chief Strategy Officer & Head of Hydrogen BU

Ms. Rachel Stephenson
Chief People Officer

Mr. Yonni Fushman
Chief Legal Officer & Executive Vice President
Sustainability

Mr. David Povall
Executive Vice President, Offshore Wind

Mr. Calvin MacCormack
Executive Vice President of Thermal & Utility

Ms. Michelle Chislett
Executive Vice President of Onshore Renewables

General Information

Registrar and Transfer Agent

Computershare Trust Company of Canada

100 University Avenue

Toronto, Ontario, Canada

M5J 2Y1

Attention: Equity Services

Common Shares and
Preferred Shares

Northland’s common shares and Series 1
and Series 2 preferred shares are listed on
the Toronto Stock Exchange and trade under
the symbols NPI, NPI.PR.A and NPI.PR.B
respectively.

Tax Considerations

Northland’s common shares, preferred shares
and convertible unsecured subordinated
debentures are qualified investments for
RRSPs and DPSPs under the Income Tax Act
(Canada).

Contact Information

Investor Relations

Mr. Wassem Khalil

Senior Director, Investor Relations and
Strategy

647-288-1019

investorrelations@northlandpower.com

Northland Power Inc.

30 St. Clair Avenue West

12th floor

Toronto, Ontario, Canada

M4V 3A1

416-962-6262

northlandpower.com

112

Northland Annual Report | 2022

About Northland

Northland Power is a global power producer dedicated to
helping the clean energy transition by producing electricity
from clean renewable resources. Founded in 1987, Northland
has a long history of developing, building, owning and
operating clean and green power infrastructure assets and is
a global leader in offshore wind. In addition, Northland owns
and manages a diversified generation mix including onshore
renewables, efficient natural gas energy, as well as supplying
energy through a regulated utility.

Headquartered in Toronto, Canada, with global offices in eight
countries, Northland owns or has an economic interest in 3.0
GW (net 2.6 GW) of operating capacity. The Company also
has a significant inventory of projects in construction and in
various stages of development encompassing over 20 GW of
potential capacity.

Publicly traded since 1997, Northland’s common shares, Series
1 and Series 2 preferred shares trade on the Toronto Stock
Exchange under the symbols NPI, NPI.PR.A and NPI.PR.B
respectively.

Global Head Office
30 St. Clair Avenue West

12th Floor,

Toronto (Ontario) Canada

M4V 3A1

northlandpower.com

investorrelations@northlandpower.com

Intelligent Energy. Greener Planet.