Northland
Power
ANNUAL REPORT
Intelligent Energy. Greener Planet.
Northland Power Annual Report | 2024
3
4
Corporate Profile
5
Message from the Board Chair
7
Message from our President and CEO
9
Message from our Interim CFO
10
Financial Highlights
11
2024 Key Accomplishments
12
Northland at a Glance
14
Management’s Discussion and Analysis
58
Consolidated Financial Statements
59
Management’s Responsibility
60
Independent Auditors’ Report
65
Consolidated Statements of Financial Position
66
Consolidated Statements of Income (Loss)
67
Consolidated Statements of Comprehensive Income (Loss)
68
Consolidated Statements of Changes in Equity
70
Consolidated Statements of Cash Flows
71
Notes to the Consolidated Financial Statements
117
Corporate Information
Table of Contents
Northland Power Annual Report | 2024
4
Corporate Profile
Northland Power is a Canadian-owned global power producer dedicated to
accelerating the global energy transition. Founded in 1987, with almost four
decades of experience, Northland has a long history of developing, owning
and operating a diversified mix of energy infrastructure assets including
offshore and onshore wind, solar, natural gas and battery energy storage.
Northland also supplies energy through a regulated utility.
Headquartered in Toronto, Canada, with global offices in seven countries,
Northland owns or has an economic interest in 3.2 GW of gross
operating generating capacity and a significant inventory of early to mid-
stage development opportunities encompassing approximately 10 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.
$14 B
2.4 GW
3.2 GW
95%+
BBB
37+
Total
Assets
In
Construction1
Operating
Capacity1
Contracted/
Regulated Revenue
Credit
Rating2
Years of
Success
1. Gross capacity gigawatts (GW)
2. S&P Global and Fitch ratings reaffirmed in 2024
Nordsee One Employees, Germany
Mont Louis, Quebec
Belleville South, Ontario
5
Northland Power Annual Report | 2024
Dear Shareholders,
I’m pleased to share Northland’s 2024 Annual Report
highlighting our commitment and success in delivering our
strategy. We achieved our full year financial guidance, further
strengthened our already robust balance sheet, and delivered
strong results across our diverse global portfolio.
In 2024, we entered the largest execution phase in
Northland’s history with 2.4 GW of capacity in construction
across three projects, totalling $16 billion. With relentless focus
and disciplined oversight, we delivered critical milestones for
our 1.0 GW Hai Long offshore wind project in Taiwan, our 1.1
GW Baltic Power offshore wind project in Poland, and our 250
MW/1,000 MWh Oneida energy storage project in Canada.
Critical to our success were the contributions from our talented
teams on the ground and the support from our project partners:
Mitsui and Gentari in Taiwan, ORLEN in Poland, and Oneida’s
partnership group including Indigenous equity partners Six
Nations of the Grand River Development Corporation, NRStor
and Aecon. Our partners’ expertise complements Northland’s
depth of experience in developing, financing and delivering
large-scale infrastructure projects.
Beginning with the expected commercial operations of Oneida
in 2025 and through to Hai Long’s completion in early 2027,
the successful delivery of these three projects is expected to
generate an aggregate Adjusted EBITDA of $570 – 615 million1
and Free Cash Flow of $185 to $210 million1 for the business,
delivering value and accretion for Northland, our shareholders,
and powering the next phase of our growth.
In parallel to our focus on execution, we continued to
advance strategic priorities for growth and expansion, and
progressed development on several high-quality projects within
our ~10 GW pipeline, including our 900 MW fixed-bottom
Spiorad na Mara offshore wind project in Scotland, our late-stage
80 MW Jurassic battery energy storage project in Alberta
to name only a few. Global demand for energy is growing,
highlighting the importance of energy security, reliability and
affordability. In response, governments as well as commercial
and industrial customers are looking to strengthen and stabilize
electricity grids, procuring renewable, natural gas and storage
capacity to meet supply-demand gaps. Harnessing the power
of our exceptional teams, our rich history as experienced global
energy providers, and our diverse portfolio across renewable,
natural gas and storage technologies and markets, Northland
is ready to capitalize on the next phase of growth, supporting
global energy needs while creating long-term value for our
shareholders.
Providing the consistency required to support this forward
momentum, our operations teams across facilities in North
America and Europe continued to deliver excellence in 2024,
ensuring our assets ran safely and smoothly, addressing
challenges head-on, and delivering revenues necessary to
support our business. As long-term owners and operators, this
is a critical part of Northland‘s business.
Message from
the Board Chair
1. Based on a 5-year annual average from completion date.
Northland Power Annual Report | 2024
6
Alongside all of our progress, this year brought with it significant
reminders of the importance of our people in all that we do. In
August of last year, project subcontractors responsible for work
on the Hai Long onshore substation experienced a tragic incident
that resulted in the loss of three of their employees, forever
impacting their families. This was a deeply difficult moment for
all of us. The importance of the health, safety and well-being of
all people working across our projects and facilities cannot be
overstated and remains our top priority. The lessons we carry
forward from this incident have strengthened our safety protocols
to ensure our global workforce, including our contractors,
are protected and always supported. I am confident that we
are better prepared to prevent similar tragedies in the future.
A Future of Potential and
Our 2025 Focus
With our near-term priorities firmly in place and a robust,
diversified portfolio that will fuel quality growth opportunities
for the business, Northland enters 2025 in a stronger position
than ever before at an exciting time for the industry with global
demand for energy growing.
The safe and successful completion of Hai Long, Baltic Power
and Oneida remains a core focus for the business in 2025 and
will power future growth. Our diverse pipeline including wind,
solar, storage and natural gas sets us apart and allows us to be
technology and market-agnostic in our approach to building
flexible energy solutions that meet the needs of today and
tomorrow.
As global markets and the industry react and settle into new
macroeconomic and geopolitical dynamics, I am confident
Northland’s proven track record and position as a trusted,
experienced global energy provider will differentiate us as a
partner of choice in any market. Signals highlighting the need
for more electricity have never been stronger and quality
opportunities are at our doorstep.
Finally, I’m excited to usher in new leadership and direction as
Northland embarks on its next chapter, welcoming Christine
Healy as Northland’s new President and CEO. Christine’s
extensive experience across the energy industry and proven
leadership in driving value creation, combined with the strength
of our existing executive team, will bring renewed momentum
across the organization.
On behalf of Northland, I thank you for your ongoing support
and confidence. The future is full of potential, and I am excited
for what lies ahead.
Watch our 2024 Recap
John Brace
Board Chair, Director
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Northland Power Annual Report | 2024
As I step into the role of President and CEO, I am honoured
to lead a company that stands at the forefront of the energy
transition.
Northland’s rich history, nearly four decades of experience and
a robust portfolio spanning technologies and markets, uniquely
positions the business to capitalize on emerging opportunities
to support the build out of energy infrastructure globally. Our
diversified technology mix – ranging from wind and solar to
energy storage and natural gas – provides us with a resilient
platform, enabling us to adapt to evolving market conditions
and leverage growth across multiple sectors. This flexibility is
especially valuable as global energy demand is growing at a
rapid pace and energy consumption could more than double
in slower energy transition scenarios, and nearly triple in faster
scenarios, driven largely by ongoing electrification.
I look forward to driving growth, enhancing our capabilities, and
creating long-term value for our shareholders as we continue to
innovate and lead in this critical era of change. Together, we will
capitalize on the momentum of this transition, building a future
that is not only profitable but also sustainable for generations
to come.
Christine Healy
President and CEO
Message from
our President
and CEO
2000
2050
2040
2030
2023
2010
Global Energy Consumption*
Thousand TWh
Actual
Forecast
+3%
per annum
+3.5%
per annum
13,000
18,000
25,000
31,000
64,000
Existing
operating
capacity
*McKinsey & Company, Global Energy Perspective 2024
1. Includes current projects under construction.
Projects in
construction¹
3.2 GW
2.4 GW
~6 GW
Northland’s Gross Capacity Growth
2024
2027
~10 GW
Growth
Projects
8
Northland Power Annual Report | 2024
“Our diversified
technology mix – ranging
from wind and solar
to energy storage and
natural gas – provides us
with a resilient platform,
enabling us to adapt
to evolving market
conditions and leverage
growth across multiple
sectors.”
Christine Healy - President & CEO
Monopiles being transported to Poland.
Telsa megapacks and medium-voltage transformers
in Jarvis, Ontario.
The Green Jade (vessel) installing jacket foundations
in the Taiwan Strait.
9
Northland Power Annual Report | 2024
Dear Shareholders,
In 2024, Northland delivered another strong financial
performance with our full year results at the higher end of
our financial guidance. This performance is the result of the
stability and predictability of our business that demonstrates
our ability to operate assets effectively, responsibly fund our
projects, and deliver on our objectives in a challenging market
environment. This is a testament to the strength and resilience of
Northland’s business and the quality of its management team
and our people.
We delivered on our key objective of advancing our three
construction projects, Hai Long, Baltic Power and Oneida to
critical milestones. The growth from these three projects will
be substantial, increasing our capacity by 75%, adding 20 to
30 years of contracted cash flows and further diversifying our
revenues. To date, Northland and project partners have invested
50% or $8 billion of the total $16 billion in project costs. These
projects continue to progress on track, and we look forward
with excitement to the significant milestones to come in 2025,
including commercial operations on Oneida and receiving first
power on Hai Long.
Northland has nearly four decades of experience executing on
projects with disciplined risk management practices through
dedicated functions such as project finance, risk management
and our project management office. This is a key differentiator
of Northland’s business model and fundamental to ensure
we deliver on our commitments and have flexibility to create
opportunities for future optimizations. These capabilities enable
us to fully surface the value of our assets while contracted, and
maximize the optionality they afford us when revenue contracts
expire and as we look at re-contracting.
At our Investor Day in March 2024, we outlined a clear strategy
centered on four key strategic pillars: Resilience, Execution,
Prudent Growth and Optimization, designed to propel us into
the next phase of growth beyond 2027. Over the course of the
year, we doubled our focus on operational excellence and the
pursuit of only the highest quality opportunities that generate
strong accretion and long-term value.
Looking forward, we’ve issued our 2025 financial guidance,
underpinned by significant milestones we expect to achieve
on our construction projects and further supported by positive
energy market indicators tied to forecasted growth in demand.
Our robust investment grade balance sheet and available
liquidity of $1.1 billion positions us well to fund the high-quality
projects in our development pipeline and profit from new
opportunities in the future.
Over the course of 2025, we will remain focused on continuing
to deliver on our commitments, executing on our projects in
construction and optimizing our capital structure to drive long-
term shareholder value.
With Northland’s strong foundation and diversified portfolio,
the future is bright.
Thank you for your continued support.
Adam Beaumont
Interim Chief Financial Officer
Message from our
Interim CFO
10
Northland Power Annual Report | 2024
Financial Highlights
Received industry recognition and accolades for project financing on
Hai Long and Baltic Power including:
Strong financial results delivered in alignment with our key strategic pillars.
Execution
Northland and project partners reached 50% investment
($8 billion) of $16 billion total spend on project costs for Hai
Long, Baltic Power and Oneida.
Executed underwater repair campaign on 1 of 2 export cables
within 60 days at the 600 MW Gemini offshore wind project.
Completed 23 MW capacity upgrade at our Thorold natural
gas facility on time and on budget.
Optimization
Increased corporate liquidity to $1.1 billion.
Successfully reduced general and administrative costs.
Prudent Growth
Secured Corporate Power Purchase Agreement
(CPPA) in Alberta on Jurassic BESS.
Advanced development and focus in priority
markets and added natural gas power
development focus.
In alignment with our refocus on core
markets, we strategically exited Japan and
Mexico in 2024.
Resilience
Achieved 2024 full-year financial guidance.
Maintained BBB investment grade credit rating.
Completed the sale of La Lucha solar facility in
Mexico, resulting in $250 million in liquidity.
Northland Power Annual Report | 2024
11
Key Accomplishments in 2024
Hai Long (1.0 GW)
Installation of several critical components complete including the offshore substation and
export cables at Hai Long 2, as well as pin pile and jacket foundations at all 37 turbine
locations on Hai Long 2A and 2B. Manufacturing of wind turbines including blade and
nacelle components continues into 2025 in preparation for installation.
Continued to advance key milestones across Hai Long, Baltic Power, and Oneida, and successfully
completed of expansion work at our Thorold natural gas facility.
Baltic Power (1.1 GW)
Steady progress on the fabrication and manufacturing of key project infrastructure including
the onshore and offshore substation and operations base, wind turbine foundations, export
cables and inter-array cables. The newly upgraded installation vessel Svanen arrived in
Poland in preparation for installation of the first monopile turbine foundations.
Oneida (250 MW/1,000 MWh)
Completion of all major project works on megapack batteries, transformers (medium and
high voltage), cabling and the onshore substation. Backfeed power successfully reached
in December 2024 and early commissioning work now underway and continuing until
Commercial Operation Date (COD) in the first half of 2025.
Thorold (265 MW)
Successfully completed the 23 MW capacity expansion work at our Thorold natural gas facility
in Ontario. This work allows for a potential five-year extension of the contract. The extension
of the PPA remains conditional upon the successful completion of an upgrade test scheduled
for 2025.
Business Highlights:
Advanced development work on quality projects in our
~10 GW pipeline.
Maintained strong performance of our operating fleet.
Completed optimization and expansion work at
several operating facilities to strengthen balance
sheet and streamline operations.
Strengthened leadership through the appointment of
Christine Healy as New President and CEO.
Hai Long offshore substation in the
Taiwan Strait.
Monopile loadout on the Svanen
vessel in Poland.
Onshore substation at Oneida in
Jarvis, Ontario.
Thorold natural gas facility in
Ontario
12
Northland Power Annual Report | 2024
Northland at a Glance
Our Global Footprint
Operating
Assets (Gross)
Assets Under
Construction (Gross)
Canada:
United States:
Colombia:
Operating:
In Construction:
Operating:
Operating Utility:
Operating:
1,261 MW
220 MW
500,000+ customers
16 MW
250 MW
Europe:
Spain:
Taiwan:
Operating:
In Construction:
Operating:
In Construction:
1,192 MW
559 MW
1,022 MW
1,140 MW
Our diversified global portfolio includes 3.2 GW of operating wind, solar and natural gas
capacity, 2.4 GW of projects in construction, and a ~10 GW pipeline of high-quality projects
spanning technologies and select markets.
“As global markets and the industry react and settle into
new macroeconomic and geopolitical dynamics, I am
confident Northland’s proven track record and position
as a trusted, experienced global energy provider will
differentiate us as a partner of choice in any market.”
John Brace -Board Chair, Director
1.3 GW
1.2 GW
0.7 GW
0.3 GW
2.2 GW
Onshore
Wind/Solar
Offshore
Wind
Natural Gas
Energy
Storage
Offshore
Wind
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Northland Power Annual Report | 2024
Our Technologies
Origination &
Development
Financing
Construction and
Execution
Owner-Operator
With nearly four decades of experience,
we specialize in the origination and
development of new energy projects
across global markets and have ~10
GW of projects in our development
pipeline. We know how to effectively
identify opportunities, manage regulatory
processes source and secure global supply
chains and build innovative solutions
that deliver on short-term needs while
supporting global transition efforts.
With award-winning expertise in project
financing and capital markets, we bring
deep in-house knowledge to structure
and secure optimal financial solutions with
approximately ~$20 billion in financing
secured to date. Our team excels in
navigating complex transactions, ensuring
successful funding and long-term financial
sustainability for energy projects.
With a strong track record of successfully
delivering projects on time and within
budget, we excel in managing all phases of
construction. Our team prioritizes safety,
efficiency, and quality, ensuring projects
are executed to the highest standards and
exceed expectations.
Offshore Wind
As one of the top global producers of offshore
wind, we operate three offshore wind farms
in Europe (1.2 GW) and have 2.2 GW under
construction in Taiwan and Poland. With a high-
quality development pipeline, we are driving the
future of renewable energy through scalable,
impactful offshore wind projects.
Onshore Wind
With over a decade of experience in developing
and operating onshore wind assets, we currently
manage seven wind farms across Canada, the
United States, and Spain, with approximately
1 GW of operating capacity. Our diverse
development pipeline continues to offer various
opportunities for expanding renewable energy
capacity in key markets.
Solar
As an owner-operator of 13 ground-mounted
solar facilities in Canada, along with a portfolio
of photovoltaic and concentrated solar facilities
in Spain, we manage a total capacity of 0.3 GW.
Our strategic investments support the growth
of sustainable energy through high-performing
solar assets across diverse regions.
Storage
We are constructing the Oneida energy storage
(250 MW/1,000 MWh) project, Canada’s first
utility-scale storage facility, and advancing a
strong pipeline of additional storage projects
across North America. These initiatives are key
to enhancing grid reliability and supporting the
transition to renewable energy.
Natural Gas and Utilities
We are trusted and experienced providers of
natural gas facilities across Canada, operating
four facilities that deliver over 0.7 GW of
energy capacity in Ontario and Saskatchewan.
Additionally, we supply energy through our
regulated electric distribution utility, EBSA, in
Colombia, contributing to reliable and sustainable
energy solutions in the country.
With a long history as a committed owner-
operator, we take pride in the long-term
success and sustainability of our projects.
Our hands-on approach ensures efficient
operation, ongoing optimization, and the
continued growth of our energy assets
throughout their lifecycle.
Our Capabilities
Management’s
Discussion &
Analysis
The Green Jade (vessel) loading jacket foundations
NORTHLAND POWER INC.
Management’s Discussion and Analysis
Table of Contents
SECTION 1: OVERVIEW . . . . . . . . . . . . . . . . . . . . . . . . . . .
16
SECTION 6: CHANGES IN FINANCIAL POSITION . . . . . .
41
SECTION 2: STRATEGY AND KEY FACTORS SUPPORTING
SUSTAINABLE PERFORMANCE & GROWTH . . . . . . . . . . .
19
SECTION 7: EQUITY, LIQUIDITY AND CAPITAL
RESOURCES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
42
SECTION 3: NORTHLAND’S BUSINESS . . . . . . . . . . . . . . .
21
SECTION 8: SUMMARY OF QUARTERLY
CONSOLIDATED RESULTS . . . . . . . . . . . . . . . . . . . . . . .
49
SECTION 4: CONSOLIDATED HIGHLIGHTS . . . . . . . . . . . .
23
SECTION 9: CONSTRUCTION, DEVELOPMENT AND
ACQUISITION ACTIVITIES . . . . . . . . . . . . . . . . . . . . . . .
50
4.1: Significant Events . . . . . . . . . . . . . . . . . . . . . . . .
23
SECTION 10: OUTLOOK . . . . . . . . . . . . . . . . . . . . . . . . .
52
4.2: Operating Highlights . . . . . . . . . . . . . . . . . . . . . .
25
SECTION 11: LITIGATION, CLAIMS AND
CONTINGENCIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
53
SECTION 5: RESULTS OF OPERATIONS . . . . . . . . . . . . . . .
27
SECTION 12: SUSTAINABILITY STRATEGY . . . . . . . . . . .
53
5.1: Operating Results . . . . . . . . . . . . . . . . . . . . . . . .
28
SECTION 13: FINANCIAL RISKS AND UNCERTAINTIES .
54
5.2: General and Administrative Costs . . . . . . . . . .
33
SECTION 14: CRITICAL ACCOUNTING ESTIMATES . . . .
56
5.3: Growth Expenditures . . . . . . . . . . . . . . . . . . . . .
33
SECTION 15: FUTURE ACCOUNTING POLICIES . . . . . . .
57
5.4: Consolidated Results . . . . . . . . . . . . . . . . . . . . .
35
SECTION 16: CONTROLS AND PROCEDURES OVER
FINANCIAL REPORTING . . . . . . . . . . . . . . . . . . . . . . . . .
57
5.5: Adjusted EBITDA . . . . . . . . . . . . . . . . . . . . . . . . .
37
5.6: Adjusted Free Cash Flow and Free Cash Flow . .
38
This Management’s Discussion and Analysis (“MD&A”), dated February 26, 2025, compares Northland’s financial results
and financial position for the year ended December 31, 2024, with those for the year ended December 31, 2023. 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.
I NORTHLAND POWER INC.I
I 2024 ANNUAL REPORT I
15
SECTION 1: OVERVIEW
Introduction
The purpose of this 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, 2024, and 2023, and Northland’s
most recent Annual Information Form for the year ended December 31, 2024, dated February 26, 2025 (“2024 AIF”). These
materials are available on the Company’s SEDAR+ profile at www.sedarplus.ca and on Northland’s website at
www.northlandpower.com.
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 26, 2025; 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, including respective per share amounts, dividend payments and dividend payout ratios, the
timing for and attainment of the Hai Long and Baltic Power offshore wind, Oneida energy storage projects and other
renewables growth activity and the anticipated contributions therefrom to Adjusted EBITDA, Adjusted Free Cash Flow and
Free Cash Flow, the expected generating capacity of certain projects, guidance, anticipated dates of full commercial
operations, forecasts as to overall project costs, the completion of construction, acquisitions, dispositions, whether partial or
full, investments or financings and the timing thereof, the timing for and attainment of financial close and commercial
operations for each project, the potential for future production from project pipelines, cost and output of development
projects, the implementation of the DRIP changes, the all-in interest cost for debt financing, the impact of currency and
interest rate hedges, litigation claims, anticipated results from the optimization of the Thorold Co-Generation facility and the
timing related thereto, future funding requirements, and the future operations, business, financial condition, financial
results, priorities, ongoing objectives, strategies and the outlook of Northland, its subsidiaries and joint ventures.
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, satisfy any
project finance lender conditions to closing sell-downs 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 that
could cause results or events to differ from current expectations include, but are not limited to, risks associated with further
regulatory and policy changes in Spain which could impair current guidance and expected returns, risks associated with
merchant pool pricing and revenues, risks associated with sales contracts, the emergence of widespread health emergencies
or pandemics, Northland’s reliance on the performance of its offshore wind facilities at Gemini, Nordsee One and Deutsche
Bucht for over 50% of its Adjusted EBITDA, counterparty and joint venture risks, contractual operating performance,
variability of sales from generating facilities powered by intermittent renewable resources, wind and solar resource risk,
unplanned maintenance risk, offshore wind concentration, natural gas and power market risks, commodity price 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, integration and acquisition risks,
procurement and supply chain risks, financing risks, disposition and joint-venture risks, competition risks, interest rate and
refinancing risks, liquidity risk, inflation risks, commodity availability and cost risk, construction material cost 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, climate change, health and worker safety risks, market compliance
16
I NORTHLAND POWER INC.I
I 2024 ANNUAL REPORT I
risk, government regulations and policy risks, utility rate regulation risks, international activities, cybersecurity, data
protection and reliance on information technology, labour relations, labour shortage risk, management transition risk,
geopolitical risk in and around the regions Northland operates in, large project risk, reputational risk, insurance risk, risks
relating to co-ownership, bribery and corruption risk, terrorism and security, litigation risk and legal contingencies, and the
other factors described in this MD&A and the 2024 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 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 date 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.
Certain forward-looking information in this MD&A may also constitute a “financial outlook” within the meaning of
applicable securities laws. Financial outlook involves statements about Northland’s prospective financial performance,
financial position or cash flows and is based on and subject to the assumptions about future economic conditions and
courses of action and the risk factors described above in respect of forward-looking information generally, as well as any
other specific assumptions and risk factors in relation to such financial outlook noted in this MD&A. Such assumptions are
based on management’s assessment of the relevant information currently available and any financial outlook included in
this MD&A is provided for the purpose of helping readers understand Northland’s current expectations and plans. Readers
are cautioned that reliance on any financial outlook may not be appropriate for other purposes or in other circumstances
and that the risk factors described above, or other factors may cause actual results to differ materially from any financial
outlook. The actual results of Northland’s operations will likely vary from the amounts set forth in any financial outlook and
such variances may be material.
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.
Adjusted EBITDA
Adjusted EBITDA represents the 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 net finance costs;
interest income from Gemini; the provision for (recovery of) income taxes; depreciation of property, plant and equipment;
amortization of contracts and other intangible assets; fair value (gain) loss on derivative contracts; foreign exchange (gain)
loss; impairment/write-off of capitalized growth projects and operating assets; (gain) loss on sale of operating facilities;
(gain) loss on full divestiture of development facilities; including gain (loss) on dilution of controlled development assets;
exclusion of Northland’s share of (profit) loss from equity accounted investees, net of sell-downs; including Northland’s
share of Adjusted EBITDA from equity accounted investees; costs attributable to an asset or business acquisition;
elimination of non-controlling interests 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 of 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.
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Adjusted Free Cash Flow
Adjusted Free Cash Flow represents the cash generated from the business before discretionary investment-related
decisions (refer to Section 5.3: Growth Expenditures), and available to pay dividends. 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; major maintenance, decommissioning and debt reserves; interest incurred on
outstanding debt (except for the interest on corporate-level debt raised to finance the capitalized growth project);
scheduled principal repayments and net up financing proceeds; funds set aside (utilized) for scheduled principal
repayments; preferred share dividends; elimination of non-controlling interests; Northland’s share of Adjusted Free Cash
Flow from equity accounted investees; interest income from Northland’s subordinated loan to Gemini (“Gemini sub-debt”);
repayment of Gemini sub-debt; proceeds from government grants; gain (loss) from the sale of operating and development
facilities 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; growth expenditures; 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, the Adjusted Free Cash Flow reflects Northland’s
portion 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
ongoing obligations to reinvest in growth and fund dividend payments.
Free Cash Flow
Free Cash Flow is calculated by deducting growth-related expenditures and adjusting for historically incurred growth
expenditures’ recovery due to sell-down, 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.
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.
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SECTION 2: STRATEGY AND KEY FACTORS SUPPORTING SUSTAINABLE
PERFORMANCE & 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. Northland aims to deliver this objective by (i) owning and operating high-quality
contracted assets that deliver long-term cash flow and (ii) growing its asset base by efficiently deploying capital into
accretive investments through prudent market selection and disciplined project development.
Business Strategy
Northland’s business strategy is centered on delivering energy and capacity in key strategic markets in Canada and
internationally, with a primary focus on offshore wind, onshore solar and wind, battery storage and natural gas power
generation.
As a global developer with extensive expertise in developing renewable and natural gas power assets, Northland has a
global outreach with an operating, construction and development footprint spanning across four continents: North
America, South America, Europe and Asia.
•
Offshore Wind
Northland currently operates 1.2 gigawatts (“GW”) of gross offshore wind capacity from three operating offshore
wind facilities, Gemini, Nordsee One and Deutsche Bucht, located off the coasts of the Netherlands and Germany,
respectively.
Northland also has 2.2 GW of generating capacity under construction, comprised of its 30.6% equity stake in the
1,022 megawatts (“MW”) Hai Long project and its 49% stake in the 1,140 MW Baltic Power offshore wind project, in
Taiwan and Poland, respectively. Baltic Power is expected to achieve commercial operations in the second half of
2026 and Hai Long in 2026/2027.
•
Onshore Renewables
Northland owns and operates 1.3 GW of gross onshore wind and solar capacity in Canada, the United States of
America (the “United States”) and Spain. Northland also has a 250 MW battery storage facility under construction,
comprised of its 72% equity stake in the Oneida energy storage project (“Oneida”) located in Ontario, Canada. The
project is expected to be completed in the first half of 2025.
•
Natural Gas & Utilities
Northland owns and operates 737 MW of gross natural gas assets located in the Canadian provinces of Ontario and
Saskatchewan. Refer to “Natural Gas Facilities” section for more information.
Northland is strategically diversified both technologically and geographically, that separates it from some of its peers. It
currently has a 10 GW development pipeline in Canada, the United States, Europe and Asia.
With its capabilities to develop offshore wind, onshore renewables, battery storage, and natural gas power generation,
Northland is well positioned to capitalize on emerging global energy trends in years to come. A large part of its success lies
within its resources including human capital and their capability to successfully originate, develop, construct and operate
power generation infrastructure.
To successfully execute on its strategy, Northland has developed a comprehensive set of strategic pillars to guide the
organization towards successful delivery of its objectives:
(i) Resiliency
With almost 40 years of history, Northland has the experience to weather market cycles and deliver on our commitment to
high standards of excellence. To uphold this stability and quality, Northland’s objectives are to maintain an investment
grade credit rating, continue to pay dividends to its shareholders, deliver on its financial guidance and ensure successful
construction and development of natural gas and renewable energy projects to increase shareholder value. As Northland
continues to progress its approximately $16 billion construction program ($7 billion net to Northland) for the Hai Long,
Baltic Power and Oneida projects, maintaining financial strength remains its key priority. Northland will continue to
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maintain sufficient financial buffers to ensure delivery of its strategic priorities while maintaining its strong balance sheet.
From time to time, this may include Northland’s decision to reduce exposure to or exit certain markets and repurpose
capital towards more accretive opportunities or use the funds to strengthen its financial position, especially during intensive
construction periods where it may be prudent to maintain such financial flexibility.
(ii) Execution
Following successful financial close and securing of funding for the Hai Long, Baltic Power and Oneida projects, Northland
has advanced construction of each facility. One of Northland’s strategic pillars over the next two years is the continued
successful execution and delivery of these projects to their full completion between 2025-2027. Northland has a track
record in successful project construction and its Project Management Office and Business Unit (“BU”) structure ensure strict
focus on delivering on construction milestones aligning tools, reporting methods and processes in order to provide timely
and accurate reporting. Northland will continue to manage and oversee construction of these projects against their
targeted milestones to ensure successful delivery and execution.
(iii) Prudent Growth
Northland aims to increase shareholder value by developing high-quality projects that earn recurring income from long-
term sales contracts with creditworthy counterparties (i.e. government or investment grade corporate offtakers), focusing
on growth opportunities in jurisdictions that meet its risk management criteria. Northland exercises judgment, discipline
and acumen in its development activities to continually assess opportunities against its investment criteria and capital
allocation framework. Northland seeks to manage its development processes prudently by regularly balancing the
probability of success against associated costs and risks and ensuring that only those projects that meet its investment
criteria are actively pursued. This may result in full or partial exits from certain existing or prospective opportunities or
assets and directing focus, resources and capital towards more strategic markets.
(iv) Optimization
Northland aims to maximize returns through a focus on efficient and effective facility operations, longer-term asset
management, and structuring power supply and maintenance agreements to maximize profits, 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.
As Northland continues to develop and grow its asset base and shareholder value, management will continue to develop
plans to further optimize its operations. This may include asset optimization strategies such as operating and maintenance
(“O&M”) contract consolidations, opportunities to add incremental growth or investments to existing assets or grow in
other markets through synergies, opportunities to re-contract asset bases near the end of power purchase agreement
(“PPA”) arrangements and the improvement of internal processes to gain efficiencies.
20
I NORTHLAND POWER INC.I
I 2024 ANNUAL REPORT I
SECTION 3: NORTHLAND’S BUSINESS
As of December 31, 2024, Northland owns or has a net economic interest in 2,840 MW of power-producing facilities with a
total gross operating capacity of approximately 3,248 MW and a regulated utility. 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 business 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, Colombia, Germany, the
Netherlands, Spain, and the United States of America (the “United States”). Northland’s significant assets under
construction and development are located in Canada, Poland, South Korea, Scotland, Taiwan, and the United States. Refer
to the 2024 AIF for additional information on Northland’s key operating facilities as of December 31, 2024, and refer to
SECTION 9: CONSTRUCTION, DEVELOPMENT AND ACQUISITION ACTIVITIES for additional information on Northland’s key
development projects.
Northland’s MD&A and audited consolidated financial statements include the results of its operating facilities, as
summarized in the following table:
Gross Production
Capacity (MW) (1)
Net Production
Capacity (MW) (1) (2)
Offshore Wind
1,192
902
Onshore Renewable
Wind
1,057
968
Solar
262
247
Natural Gas
737
723
Utility
n/a
n/a
Total
3,248
2,840
(1) As at December 31, 2024, Northland’s economic interest changed from December 31, 2023, due to the sale transaction close of La Lucha solar facility
(130 MW) in June 2024, and grid connection capacity increase to approximately 260 MW from 252 MW at Deutsche Bucht offshore wind facility.
(2) Presented at Northland’s economic interest.
In addition to operational assets, summarized below are Northland’s most significant projects under construction and
development, as well as other identified projects. Management continuously assesses the development project pipeline to
determine their feasibility, alignment with the Company’s investment criteria, and development stage. For this reason, the
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I 2024 ANNUAL REPORT I
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development pipeline below and the respective gross production capacities will change as projects move through various
stages of their development cycles and are added or removed from the list.
Project
Geographic
Region
Technology
Gross
Capacity
(GW)
Current
ownership
Development
Stage
Contract type
Estimated
COD
Construction Projects
Hai Long
Taiwan
Offshore Wind
1.0
31% (1)
Under
construction
30-year PPA (2)
2026/2027
Baltic Power
Poland
Offshore Wind
1.1
49%
Under
construction
25-year CfD (3)
2026
Oneida
Canada
Energy Storage
0.3
72%
Under
construction
20-year capacity
contract
2025
Total Construction Projects
2.4
Growth Projects (4)
2026 - 2030+
Onshore
Renewables
Canada and
United States
Wind, Solar and
Energy Storage
3.0
Early/mid/late-
stage
Offshore Wind
Europe and
Asia
Offshore Wind
6.0
Early-stage
Natural Gas &
Utilities (5)
Canada
Natural Gas
1.0
Early-stage
Total Growth Projects
10.0
Total Pipeline
12.4
(1) Northland holds a 31% effective economic interest in the Hai Long offshore wind projects indirectly through a joint venture.
(2) Hai Long 2A (0.3 GW) has a Feed-In-Tariff (“FIT”) for 20 years. Hai Long 2B (0.2 GW) and Hai Long 3 (0.5 GW) have a Corporate Power Purchase
Agreement (“CPPA”) for 30 years.
(3) CfD means Contract for Difference, a subsidy mechanism in which the difference between a fixed reference price and the market revenue is paid to
the project.
(4) In the fourth quarter of 2024, this section has been changed to show the cumulative total of both “Identified Growth Projects” and “Additional
Pipeline”.
(5) Includes natural gas projects identified but not yet secured.
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I 2024 ANNUAL REPORT I
SECTION 4: CONSOLIDATED HIGHLIGHTS
4.1: Significant Events
Significant events during 2024 and through the date of this MD&A are described below. Refer to SECTION 9:
CONSTRUCTION, DEVELOPMENT AND ACQUISITION ACTIVITIES of this MD&A for additional relevant information.
Growth updates:
Northland remains disciplined in prioritizing projects within its development pipeline that are strategically and financially
consistent with its investment approach. The successful achievement of commercial operations of selected projects within
the Company’s pipeline 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 of Northland’s active growth initiatives.
Thorold Natural Gas Facility Upgrade
In November 2024, Northland completed a 23 MW capacity upgrade on time and on budget; demonstrating Northland’s
continued technical expertise and ability to deliver on natural gas assets. In the second quarter of 2023, Northland secured
an amended PPA for the Thorold Co-Generation facility located in Ontario, Canada. This agreement allows for an increase in
generating capacity and a five-year extension of the contract. The extension of the PPA remains conditional upon the
successful completion of an upgrade test scheduled for 2025.
Hai Long Offshore Wind Project
The Hai Long project has completed over 50% of construction. During the fourth quarter of 2024, fabrication of key
components that are required for the 2025 installation campaign progressed. For the full year, the project completed the
installation of pin piles and turbine jacket foundations at approximately half of the turbine locations, which are ready for
turbine installation in 2025. The fabrication of turbine components continues, including completion of the first sets of
towers, generators and nacelles. On August 20, 2024, an incident occurred at the onshore substation due to a leak of
carbon dioxide from the fire suppression system, which resulted in three fatalities. The onshore substation construction
work was suspended during the investigation of the incident by the local authorities. Upon completion of the investigation,
the work on the onshore substation resumed safely according to recovery plans. First power is expected in the second half
of 2025. The project is on track to achieve full commercial operations expected in 2027 with overall project cost aligned
with original expectations.
Baltic Power Offshore Wind Project
The Baltic Power project continues to make progress on fabrication of onshore and offshore substations, foundations,
export cables, multiple turbine components and inter-array cables. Major in-water construction activity commenced in
January 2025 with the first monopile foundation installation. The offshore substation installation commenced and the first
load of transition pieces have been delivered to the project. Construction of the onshore substation and the operations and
management building are progressing according to the plan. The project is on track to achieve full commercial operations
expected in the latter half of 2026 with overall project cost aligned with original expectations.
Oneida Energy Storage Project
The Oneida project is being commissioned with all major construction activities completed. The project is on track to
achieve full commercial operations expected in the first half of 2025 with overall project cost aligned with original
expectations.
Other Growth Activity
Northland continues to make progress on its development activities in its core markets. For example, Northland signed a
15-year offtake agreement for 100% of the battery energy storage capacity from the Jurassic BESS project in Alberta with
members of the Alberta Schools Commodities Purchasing Consortium. This is the first offtake agreement of its kind in
Canada for a battery storage project. More recently, the Jurassic BESS project signed its key equipment supplier and
construction contracts, and received a key permit to begin construction.
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Balance Sheet:
Changes to Dividend Reinvestment Plan ("DRIP")
In February 2025, Northland approved a change in the discount on DRIP issuances from 3% to 0% and confirmed the
intention to source shares through secondary market purchases rather than treasury issuances. Such changes will be
effective from and as of April 15, 2025 and for the dividend payable thereon to shareholders of record on March 31, 2025.
Pursuant to the terms of the DRIP, Northland has the discretion, from time to time, to change the applicable discount and
source of shares.
Refinancing of EBSA’s Credit Facility
In November 2024, Northland extended the maturity of the non-recourse credit facility associated with EBSA (the “EBSA
Facility”) to November 2027 and upsized the facility by $35 million. The financing marginally improved debt terms, and the
proceeds were largely used to fund capital investments in EBSA and settle foreign currency maturity hedges.
Increase in Corporate Credit Facility
During the third quarter of 2024, Northland increased the size of its corporate revolving credit facility from $1.0 billion to
$1.25 billion to continue to enhance available liquidity and support future growth opportunities in its core markets.
Northland currently has available liquidity of $1.1 billion.
Corporate Credit Rating Re-affirmed
Credit rating agencies Standard & Poor and Fitch Ratings re-affirmed Northland’s investment grade corporate credit rating
in 2024 at BBB (Stable).
Other:
Executive Updates
On December 2, 2024, Northland announced that Christine Healy would be appointed as President and Chief Executive
Officer. In addition to serving as President and CEO, Ms. Healy was also appointed as a director of the Company. Ms. Healy’s
start date was January 20, 2025.
On October 1, 2024, John Brace assumed the role of Interim President and CEO following former President and CEO Mike
Crawley’s planned departure from the Company on September 30, 2024. Mr. Brace continued to serve as Chair of the Board
and Ian Pearce continued as Lead Independent Director.
La Lucha Solar Facility Sale
On June 28, 2024, Northland completed the sale of its 100% stake in the La Lucha solar facility to Cometa Energía, S.A. de
C.V., wholly owned by Saavi Energía (“Saavi”) for approximately $215 million in cash after taxes, transaction fees and other
customary adjustments.
During the fourth quarter of 2024, Northland received the entire amount relating to a value added tax claim of $42 million
(equivalent to MXN 604 million).
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I NORTHLAND POWER INC.I
I 2024 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,
2024
2023
2022
FINANCIALS
Revenue from energy sales
$
2,346,264 $
2,232,779 $
2,448,815
Operating income
812,892
577,988
1,050,784
Net income (loss)
371,389
(96,132)
955,457
Net income (loss) attributable to shareholders
271,825
(175,194)
827,733
Adjusted EBITDA (a non-IFRS measure) (2)
1,261,951
1,239,871
1,398,176
Cash provided by operating activities
1,028,968
810,699
1,832,983
Adjusted Free Cash Flow (a non-IFRS measure) (2)
394,420
497,978
460,892
Free Cash Flow (a non-IFRS measure) (2)
327,579
423,744
380,472
Cash dividends paid
200,488
205,072
196,845
Total dividends declared (1)
$
309,024 $
303,469 $
284,582
Total assets (3)
13,604,338
13,626,298
14,222,609
Total non-current liabilities (3)
$
7,716,830 $
7,867,559 $
7,589,484
Per Share
Weighted average number of shares — basic and diluted (000s)
257,300 $
252,710
236,157
Net income (loss) attributable to common shareholders — basic and
diluted
$
1.03 $
(0.72) $
3.46
Adjusted Free Cash Flow — basic (a non-IFRS measure) (2)
$
1.53 $
1.97 $
1.95
Free Cash Flow — basic (a non-IFRS measure) (2)
$
1.27 $
1.68 $
1.61
Total dividends declared
$
1.20 $
1.20 $
1.20
ENERGY VOLUMES
Electricity production in gigawatt hours (GWh)
11,046
10,380
10,139
(1) Represents total dividends paid to common shareholders, including dividends in cash or in shares under Northland’s dividend reinvestment plan.
(2) See Forward-Looking Statements and Non-IFRS Financial Measures above.
(3) As at December 31.
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The following charts provide the contribution of each technology into Adjusted EBITDA and Adjusted Free Cash Flow
reported by facilities:
26
I NORTHLAND POWER INC.I
I 2024 ANNUAL REPORT I
SECTION 5: RESULTS OF OPERATIONS
The following table summarizes operating results by technology and geography:
Three months ended December 31,
2024
2023
2024
2023
2024
2023
2024
2023
2024
2023
2024
2023
Electricity
production (GWh)
Revenue from
energy sales
Operating
costs (5)
Operating
income
Adjusted
EBITDA (2)
Adjusted
Free Cash Flow (1) (2)(4)
Offshore Wind Facilities
1,272
1,444 $ 279,756 $ 341,104 $ 44,632 $ 47,111 $ 136,252 $ 190,723 $ 181,137 $ 218,203 $ 29,105 $ 58,219
Onshore Renewable Facilities
North America (3)
542
451 $ 69,980 $ 55,275 $ 13,351 $
9,867 $ 30,844 $ 15,891 $ 44,630 $ 34,891 $ 21,722 $ 12,750
Spain
251
287
53,764
48,810
13,900
14,481
18,994
11,184
38,431
33,858
13,000
29,637
793
738 $ 123,744 $ 104,085 $ 27,251 $ 24,348 $ 49,838 $ 27,075 $ 83,061 $ 68,749 $ 34,722 $ 42,387
Natural Gas Facilities
Canada
764
961 $ 79,135 $ 88,455 $ 30,474 $ 49,008 $ 39,346 $ 30,405 $ 46,493 $ 44,265 $ 16,763 $ 22,152
Utilities
Colombia
n/a
n/a $ 91,797 $ 85,352 $ 48,647 $ 51,038 $ 32,640 $ 25,157 $ 41,194 $ 32,451 $ 18,494 $ 21,467
Year ended December 31,
2024
2023
2024
2023
2024
2023
2024
2023
2024
2023
2024
2023
Electricity
production (GWh)
Revenue from
energy sales
Operating
costs (5)
Operating
income
Adjusted
EBITDA (2)
Adjusted
Free Cash Flow (1) (2)(4)
Offshore Wind Facilities
4,471
4,438 $ 1,182,754 $ 1,140,015 $ 233,095 $ 201,187 $ 551,119 $ 540,737 $ 716,842 $ 691,675 $ 167,234 $ 153,800
Onshore Renewable Facilities
North America (3)
1,784
1,311 $ 259,937 $ 217,938 $ 45,641 $ 33,331 $ 105,074 $ 91,550 $ 172,313 $ 143,525 $ 66,001 $ 50,467
Spain
985
991 218,073 216,963
50,064
50,830
80,314
79,761 158,889 162,777
67,749
36,271
2,769
2,302 $ 478,010 $ 434,901 $ 95,705 $ 84,161 $ 185,388 $ 171,311 $ 331,202 $ 306,302 $ 133,750 $ 86,738
Natural Gas Facilities
Canada
3,611
3,430 $ 318,039 $ 339,848 $ 129,783 $ 155,242 $ 151,377 $ 148,474 $ 191,536 $ 195,764 $ 80,386 $ 100,813
Utilities
Colombia
n/a
n/a $ 356,781 $ 302,241 $ 195,711 $ 176,452 $ 114,849 $ 88,007 $ 149,678 $ 117,196 $ 64,003 $ 78,870
(1) Adjusted Free Cash Flow and Free Cash Flow are the same for operating facilities.
(2) See Forward-Looking Statements and Non-IFRS Financial Measures above.
(3) Onshore Renewables Facilities – North American geographical segment excludes Mexican La Lucha solar project because Northland monitors the financial performance of La Lucha separately for its
financial and operational decision-making. In June 2024, Northland completed the sale transaction of La Lucha. Please refer to Section 4.1: Significant Events for further information.
(4) During the first quarter of 2024, Northland reclassified how the effects of the foreign exchange rate hedges are recorded in Adjusted Free Cash Flow at the corporate level, rather than in the respective
operating segment, primarily because these arrangements are undertaken at the corporate level and are not always asset-specific. Previously, the effect of these foreign exchange rate hedges were
recorded in the operating segments’ Adjusted Free Cash Flow. The total Adjusted Free Cash Flow for previously reported prior periods on a consolidated basis shall not change but instead will be re-
allocated within the respective operating segment and corporate. Adjusted Free Cash Flow for the comparative period has been represented using the new reporting approach.
(5) During the fourth quarter of 2024, Northland revised the presentation of the consolidated statements of income (loss) which reclassified ‘cost of sales’ within ‘operating cost’ mainly relating to natural gas
facilities and utilities.
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27
5.1: Operating Results
Offshore Wind Facilities
Northland’s three operating offshore wind facilities, Gemini, Nordsee One and Deutsche Bucht, are located off the coasts of
the Netherlands and Germany, respectively. 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 the first and fourth quarters due to denser air and higher winds compared to the second and third
quarters, the effect of which is reflected in the respective fiscal quarter’s results. In addition, variability in offshore wind
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. For the year ended December 31, 2024 Gemini,
Nordsee One and Deutsche Bucht contributed approximately 20%, 17% and 15%, respectively, to Northland’s reported
Adjusted EBITDA from facilities.
Variability within Operating Results
Each of the offshore wind facilities participates in the power market and receives pool prices for their generation, which are
then topped-up through a subsidy mechanism to the target subsidy price, if the market revenue is below the subsidy target
price:
•
Gemini has revenue agreements with the Government of the Netherlands which expire in 2031. Under these
agreements, the subsidy mechanism (“SDE”) effectively tops up the revenue to €169/MWh for 2,385 GWh of
generation.
•
Nordsee One and Deutsche Bucht have revenue contracts with the German government under the German
Renewable Energy Sources Act (the “EEG”), whereby the top-up mechanism ensures a minimum fixed unit price of
€194 and €184, respectively, per MWh generated.
The subsidy mechanisms comprise other provisions that can impact the facilities’ results:
•
The SDE is subject to an annual contractual floor price (the “SDE floor”), thereby exposing Gemini to market price
risk if the Dutch wholesale market price (“APX”) falls below the effective annual SDE floor of €51/MWh. As of
December 31, 2024 the APX price for the year was €77/MWh.
•
The SDE fixes the revenue at €169/MWh for 2,385 GWh of generation, but due to the settlement’s formula, it is
paid on the first 1,908 GWh. As a result, typically the revenue per MWh reported is higher in the first three quarters
and lower in the last quarter of the year. However, it is only a matter of timing and the revenue averages to €169/
MWh on an annual basis.
◦
If the facility produces more than 2,385 GWh in the year, the additional volume produced earns the yearly
average captured price (“CP”).
◦
If the facility produces less than 2,385 GWh in the year, the asset effectively receives the subsidy for a
volume higher than the actual volume produced.
The subsidy received on 1,908 GWh is equal to [(€169 * 1.25) — (CP * 1.25)]. This calculation is applicable for every
MWh up to 1,908 GWh. The yearly average CP is effectively calculated by reducing the APX with the Profile and
Imbalance (“P&I”) factor, that accounts for the profile of the generation and the costs associated with grid
balancing. The annual P&I factor is adjusted quarterly based on Gemini’s own data. The final P&I factor number is
officially published by the Netherlands Enterprise Agency in the subsequent year.
•
Under the EEG mechanism, the tariff compensates for most of the production curtailments the system operator
requires. However, the facilities do not receive revenue for periods where the market power price remains negative
for longer than six consecutive hours (“negative prices”).
•
Under the EEG, 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 significantly
affect earnings depending on the season in which the outages occur.
28
I NORTHLAND POWER INC.I
I 2024 ANNUAL REPORT I
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:
Three months ended December 31,
2024 (1)
2023 (1)
Historical
Average (2)
Historical
High (2)
Historical
Low (2)
Electricity production (GWh)
Gemini
700
832
773
832
700
Nordsee One
331
379
338
379
298
Deutsche Bucht
241
233
288
326
233
Total
1,272
1,444
Year ended December 31,
2024 (1)
2023 (1)
Historical
Average (2)
Historical
High (2)
Historical
Low (2)
Electricity production (GWh)
Gemini
2,394
2,476
2,383
2,496
2,193
Nordsee One
1,130
1,090
1,072
1,130
968
Deutsche Bucht
947
872
946
1,003
872
Total
4,471
4,438
(1) Includes GWh produced and attributed to paid curtailments.
(2) Represents the historical power production 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.
In June 2024, one of Gemini’s export cables was damaged and taken out of service. On September 4, 2024, the cable was
successfully repaired and energized, bringing Gemini back to full operations safely and without incident. During the repair,
Gemini’s production continued via the second export cable. This was determined to be an isolated event and had a minimal
impact on the Adjusted EBITDA and Adjusted Free Cash Flow for the full year, respectively, net of insurance claim.
In December 2024, Deutsche Bucht signed a settlement agreement with counterparties related to its two mono-bucket
demonstrator foundations. Proceeds of €25 million ($37 million) net of taxes have been recorded in income but excluded
from non-IFRS financial measures.
Electricity production for the three months ended December 31, 2024 decreased 12% or 172 GWh compared to the same
quarter of 2023, primarily due to lower offshore wind resource, partially offset by lower unpaid curtailments related to
negative prices and grid outages at our German offshore wind facilities. Electricity production for the year ended December
31, 2024 increased 1% or 33 GWh compared to 2023, primarily due to higher wind resource across all offshore wind
facilities, partially offset by export cable damage at Gemini.
Revenue from energy sales of $280 million for the three months ended December 31, 2024 decreased 18% or $61 million,
compared to the same quarter of 2023, primarily due to the lower production by $32 million, and P&I factor adjustment
and various other items by $29 million. Revenue from energy sales of $1,183 million for the year ended December 31, 2024
increased 4% or $43 million compared to 2023, primarily due to higher production by $21 million, and P&I factor
adjustment and various other items by $22 million. Further details are set forth in the table below.
Operating costs of $45 million for the three months ended December 31, 2024 decreased 5% or $2 million compared to the
same quarter of 2023, primarily due to Gemini’s export cable insurance claim relating to the third quarter repair costs,
partially offset by higher maintenance costs across all offshore wind facilities. Operating costs of $233 million for the year
ended December 31, 2024 increased 16% or $32 million compared to 2023, primarily due to higher maintenance costs
across all offshore wind facilities.
Operating income and Adjusted EBITDA of $136 million and $181 million, respectively, for the three months ended
December 31, 2024 decreased 29% or $54 million and 17% or $37 million compared to the same quarter of 2023, due to the
same factors noted above. Operating income and Adjusted EBITDA of $551 million and $717 million, respectively, for the
year ended December 31, 2024 increased 2% or $10 million and 4% or $25 million compared to 2023, due to the same
factors noted above.
I NORTHLAND POWER INC.I
I 2024 ANNUAL REPORT I
29
Revenue per MWh of each facility
For the year ended December 31, 2024, the revenue per MWh from the offshore wind facilities was in line with
expectations:
•
Revenue per MWh on Nordsee One and Deutsche Bucht was stable for the non-curtailed production.
•
Revenue per MWh for Gemini averaged to approximately €169/MWh annually. However, as described above, due
to the timing of the subsidy payment, revenue per MWh was higher in the first ten months of this year.
The following table summarizes operating results by facility:
Three months ended December 31, 2024
Total
Gemini
Nordsee One
Deutsche Bucht
Production
GWh
1,272
700
331
241
Non-curtailed production
GWh
1,136
693
248
195
Revenue per MWh (1) (2)
€/MWh
139
108
190
183
From market
€/MWh
85
70
112
103
From subsidy
€/MWh
54
38
78
80
Year ended December 31, 2024
Total
Gemini
Nordsee One
Deutsche Bucht
Production
GWh
4,471
2,394
1,130
947
Non-curtailed production
GWh
4,131
2,354
937
840
Revenue per MWh (1) (2)
€/MWh
177
167
192
182
From market
€/MWh
89
63
128
118
From subsidy
€/MWh
88
104
64
64
Subsidy price
€/MWh
169
194
184
(1) Revenue from non-curtailed production only.
(2) Revenue from curtailed production amounted to $39 million (2023: $29 million) and $87 million (2023: $109 million) for the three months and the
year ended December 31, 2024, respectively.
The following table summarizes the unpaid curtailments in German offshore wind facilities at 100% share:
Three months ended December 31,
Year ended December 31,
2024
2023
2024
2023
Unpaid curtailment production
Due to negative prices
GWh
(16)
(40)
(96)
(94)
Due to grid outages
GWh
(57)
(105)
(112)
(129)
(73)
(145)
(208)
(223)
Adverse impact on revenue
Due to negative prices
$
4,585
$
11,064
$
27,011
$
26,077
Due to grid outages
15,599
28,003
30,507
34,626
$
20,184
$
39,067
$
57,518
$
60,703
Onshore Renewable Facilities
Northland’s onshore renewables comprise 1,215 MW (at Northland’s share) of onshore wind and solar facilities located in
Canada, the United States 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 second and third quarters than in the
first and fourth quarters. For the year ended December 31, 2024, Northland’s onshore renewable facilities in North America
and Spain contributed approximately 12% and 11%, respectively, to Northland’s reported Adjusted EBITDA from facilities.
30
I NORTHLAND POWER INC.I
I 2024 ANNUAL REPORT I
Spain revenue structure and regulatory changes
Northland’s Spanish portfolio is comprised of onshore wind (435 MW), solar photovoltaic (66 MW) and concentrated solar
(50 MW) assets located throughout Spain. The Spanish portfolio operates under a regulated asset base framework that
guarantees a specified pre-tax rate of return of 7.4% for 20 sites and 7.1% for 12 sites, over the full regulatory life of the
facilities, regardless of settled wholesale power price (“pool price”). During the first quarter of 2024, the regulatory period
of one 50 MW onshore wind facility ended, which resulted in the facility receiving the merchant revenue. During the first
quarter of 2025, the facility secured a 10-month CPPA providing a stable revenue stream for the most of 2025.
The revenue for each facility has four components:
•
The return on investment (“Ri”), sized to complete the target return based on the market revenue assumed ex-ante
(the “posted price”);
•
The return on operations (“Ro”), sized to compensate a facility when its operating costs are higher than its market
revenues. To note, Ro is not being received in the current environment;
•
The market revenue, at pool prices; and
•
The “band adjustments”, which are an ex-post positive or negative settlement to compensate for the difference
between the market revenue, at pool prices and the revenue at the regulatory posted price. If the pool price is
lower than the regulatory posted price, the band adjustment mechanism adds the additional revenue to achieve a
reasonable return. Conversely, if the pool price is higher than the posted pool price, the band adjustment
mechanism reduces revenues in the period.
For a given year, both market revenue and the corresponding band adjustment are recognized in Adjusted EBITDA,
Adjusted Free Cash Flow and Free Cash Flow. However, the band adjustments are paid in the following years. Accordingly,
the current year’s cash distributions depend only on the pool prices, capture rate, Ri and Ro components of revenue.
The table below outlines revenue components from the Spanish asset portfolio included in the consolidated results:
Three months ended December 31,
Year ended December 31,
2024
2023
2024
2023
Ri revenue
€
10,244 €
9,920
€
40,202
€
40,655
Market revenue
16,360
16,431
46,468
68,649
Band adjustment
9,438
6,967
60,507
39,382
Total revenue
€
36,042 €
33,318
€
147,177
€
148,686
Regulated Posted price per MWh
€
109 €
109
€
109
€
109
Market Revenue per MWh
€
65 €
57
€
47
€
69
Production (GWh)
251
287
985
991
Three months ended December 31,
Year ended December 31,
2024
2023
2024
2023
Ri revenue
$
15,281 $
14,532
$
59,567
$
59,324
Market revenue
24,404
24,070
68,852
100,172
Band adjustment
14,079
10,208
89,654
57,467
Total revenue
$
53,764 $
48,810
$
218,073
$
216,963
Operating Performance
Electricity production at the onshore renewable facilities for the three months ended December 31, 2024 was 7% or 55
GWh higher than the same quarter of 2023, primarily due to higher wind and solar resource at the Canadian and New York
onshore renewable facilities, partially offset by lower wind resource at the Spanish onshore renewable facilities. Electricity
production for the year ended December 31, 2024 was 20% or 467 GWh higher than 2023, primarily due to full year
contribution from the New York onshore wind projects, in addition to higher wind resource at the Canadian and Spanish
onshore renewable facilities, partially offset by lower solar resource at the Spanish onshore renewable facilities.
Revenue from energy sales of $124 million for the three months ended December 31, 2024 increased 19% or $20 million
compared to the same quarter of 2023, primarily due to higher revenue from the Canadian, New York and Spanish onshore
renewable facilities. Revenue from energy sales of $478 million for the year ended December 31, 2024 increased 10% or
I NORTHLAND POWER INC.I
I 2024 ANNUAL REPORT I
31
$43 million compared to 2023, primarily due to the full year contribution from the New York onshore wind projects, in
addition to higher revenue from the Canadian onshore renewable facilities.
Operating income and Adjusted EBITDA of $50 million and $83 million, respectively, for the three months ended December
31, 2024 increased 84% or $23 million and 21% or $14 million, respectively, compared to the same quarter of 2023,
primarily due to the same factors noted above. Operating income and Adjusted EBITDA of $185 million and $331 million for
the year ended December 31, 2024 increased 8% or $14 million and 8% or $25 million, respectively, compared to 2023,
primarily due to the same factors noted above.
Natural Gas Facilities
The contractual structures of Northland’s 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 revenue
agreements, the facility is reimbursed for certain costs of sales, including the cost of natural gas, by the counterparty. For
the year ended December 31, 2024, Northland’s natural gas facilities contributed approximately 14% of reported Adjusted
EBITDA from facilities, with the two largest facilities, North Battleford and Thorold accounting for approximately 12%.
Electricity production of 764 GWh for the three months ended December 31, 2024 decreased 21% or 197 GWh compared to
the same quarter of 2023, primarily due to lower operating availability because of outages at the natural gas facilities
including the planned capacity upgrade at Thorold. Electricity production for the year ended December 31, 2024 increased
5% or 182 GWh compared to 2023, primarily due to higher market demand for dispatchable power, partially offset by lower
operating availability because of outages at the natural gas facilities.
Revenue from energy sales of $79 million for the three months ended December 31, 2024 decreased 11% or $9 million as
compared to the same quarter of 2023, primarily due to lower operating availability because of outages at the natural gas
facilities. Revenue from energy sales of $318 million for the year ended December 31, 2024 decreased 6% or $22 million
compared to 2023, primarily due to lower natural gas prices resulting in lower energy rates, in addition to lower operating
availability because of outages at the natural gas facilities.
Adjusted EBITDA of $46 million for the three months ended December 31, 2024 was largely in line with the same quarter of
2023. Adjusted EBITDA of $192 million for the year ended December 31, 2024 was largely in line with 2023.
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 just over 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. For the year ended December 31, 2024, EBSA contributed approximately 11% 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 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 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.
Revenue from energy sales of $92 million for the three months ended December 31, 2024 increased 8% or $6 million
compared to the same quarter of 2023, primarily due to the growth in asset base and rate escalations. Revenue from
energy sales of $357 million for the year ended December 31, 2024 increased 18% or $55 million compared to 2023,
primarily due to foreign exchange changes, in addition to the same factors noted above.
Operating income and Adjusted EBITDA of $33 million and $41 million, respectively, for the three months ended December
31, 2024 increased 30% or $7 million and 27% or $9 million respectively, compared to the same quarter of 2023, primarily
due to the same factors noted above. Operating income and Adjusted EBITDA of $115 million and $150 million,
respectively, for the year ended December 31, 2024 increased 30% or $27 million and 28% or $32 million, respectively,
compared to 2023, primarily due to the same factors noted above.
32
I NORTHLAND POWER INC.I
I 2024 ANNUAL REPORT I
5.2: General and Administrative Costs
The following table summarizes Northland’s general and administrative (“G&A”) costs:
Three months ended December 31,
Year ended December 31,
2024
2023
2024
2023
Corporate G&A
$
21,264
$
24,178
$
85,476
$
77,921
Operations G&A (1)
5,967
14,257
27,624
37,245
Total G&A costs
$
27,231
$
38,435
$
113,100
$
115,166
(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.
Corporate G&A costs of $21 million for the three months ended December 31, 2024 were 12% or $3 million lower
compared to the same quarter of 2023, primarily due to restructuring of operating and corporate functions earlier in the
year. Corporate G&A costs of $85 million for the year ended December 31, 2024 were 10% or $8 million, higher, compared
to the same period of 2023, primarily due to higher one-time personnel cost and restructuring of operating, development
and corporate functions in addition to the same factors noted as above.
Operations G&A costs of $6 million for the three months ended December 31, 2024 were 58% or $8 million lower compared
to the same quarter of 2023, primarily due to the timing of expenditures in 2023 and La Lucha solar project entering
commercial operations in 2023, which was sold in the second quarter of 2024. Operations G&A costs of $28 million for the
year ended December 31, 2024 were 26% or $10 million lower compared to 2023, primarily due to the same factors as
noted above.
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,
2024
2023
2024
2023
Business development (4)
$
2,530
$
6,674 $
5,868
$
35,698
Project development (1)
7,457
7,661
14,533
28,978
Development overhead
9,515
12,680
42,707
49,504
Development costs
$
19,502
$
27,015 $
63,108
$
114,180
Joint venture project costs (2)
6,285
958
8,164
3,355
Growth expenditures (3)
$
23,054
$
26,635 $
66,841
$
112,786
(1) Includes successful acquisition costs for the three months and the year ended December 31, 2024 of $0.1 million and $0.6 million, respectively.
Excluded from growth expenditures.
(2) Includes Northland’s share of development costs incurred at Baltic Power, Hai Long and other joint venture projects.
(3) Excludes acquisition costs but includes share of project development costs incurred by joint ventures. Excludes non-controlling portion of the
development costs for the three months and the year ended December 31, 2024 of $2.6 million and $3.9 million, respectively.
(4) During the first quarter, Northland was reimbursed for business development costs relating to certain early-stage development activity from prior
years.
To achieve its long-term growth objectives, Northland deploys early-stage investment capital (growth expenditures) to
advance projects in its pipeline.
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 are expected to deliver sustainable growth in Free Cash
Flow over the long-run.
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. These may include
costs incurred for projects that ultimately may not be pursued to acquisition or to completion. Business development costs
for the year ended December 31, 2024 were lower compared to 2023, primarily due to lower growth activities in the
onshore renewables business as a result of a disciplined market strategy.
I NORTHLAND POWER INC.I
I 2024 ANNUAL REPORT I
33
Project development costs are attributable to identified early- to mid-stage development projects 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,
2024 project development costs were lower than 2023, primarily due to disciplined spending on priority development
activities, as planned, and timing of the expenditures. Development costs incurred included activities mainly related to
offshore and onshore renewable power opportunities being pursued. Refer to SECTION 9: CONSTRUCTION, DEVELOPMENT
AND ACQUISITION 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, 2024 were lower than 2023, primarily due to restructuring of development and corporate
functions.
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I NORTHLAND POWER INC.I
I 2024 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, 2024.
Three months ended December 31,
Year ended December 31,
2024
2023
2024
2023
Electricity production (GWh)
2,836
3,353
11,046
10,380
Revenue from energy sales
$
571,867
$
626,221
$
2,346,264
$
2,232,779
Finance lease income
2,551
2,670
10,383
10,899
Total income
$
574,418
$
628,891
$
2,356,647
$
2,243,678
Expenses
Operating costs (1)
147,584
172,510
649,936
620,560
General and administrative costs
27,231
38,435
113,100
115,166
Development costs
19,502
27,015
63,108
114,180
Impairment of non-financial assets
—
163,169
—
163,169
Fair value adjustment relating to the disposal
group classified as held for sale
—
—
43,884
—
Depreciation of property, plant and equipment
148,796
156,619
615,343
595,600
Amortization of contracts and intangible assets
14,734
14,510
58,384
57,015
Total expenses
$
357,847
$
572,258
$
1,543,755
$
1,665,690
Operating income
$
216,571
$
56,633
$
812,892
$
577,988
Finance costs
(97,116)
(136,149)
(392,022)
(383,328)
Finance income
17,358
25,036
71,388
61,516
Foreign exchange gain (loss)
(6,353)
3,570
716
39,732
Fair value gain (loss) on financial instruments
9,797
(190,198)
(93,695)
(303,898)
Share of profit (loss) from joint ventures
23,105
(265,599)
43,734
(279,849)
Other income (expense)
53,722
183,212
120,543
230,836
Income (loss) before income taxes
$
217,084
$
(323,495)
$
563,556
$
(57,003)
Income taxes (provision) recovery
Current
(65,419)
(49,112)
(198,035)
(143,554)
Deferred
(1,196)
104,689
5,868
104,425
Total income taxes
$
(66,615)
$
55,577
$
(192,167)
$
(39,129)
Net income (loss)
$
150,469
$
(267,918)
$
371,389
$
(96,132)
Net income (loss) attributable to common
shareholders per share - basic and diluted
$
0.49
$
(1.13)
$
1.03
$
(0.72)
(1) During the fourth quarter of 2024, Northland revised the presentation of the consolidated statements of income (loss) which reclassified ‘cost of
sales’ within ‘operating cost’ mainly relating to natural gas facilities and utilities.
Fourth Quarter
Revenue from energy sales of $572 million decreased 9% or $54 million compared to the same quarter of 2023, primarily
due to lower production at offshore wind facilities and lower operating availability because of outages at the natural gas
facilities. This decrease was partially offset by higher revenue from Canadian, New York and Spanish onshore renewables
facilities, and higher revenue from EBSA due to growth in asset base and rate escalations.
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I 2024 ANNUAL REPORT I
35
Operating costs of $148 million decreased 14% or $25 million compared to the same quarter of 2023, primarily due to
Gemini’s export cable insurance claim relating to third quarter repair cost, lower natural gas prices and lower operating
availability because of outages at the natural gas facilities, partially offset by higher maintenance costs across all offshore
wind facilities.
Corporate and Operational G&A costs of $27 million decreased 29% or $11 million compared to the same quarter of 2023,
primarily due to restructuring of operating and corporate functions, and La Lucha solar project entering commercial
operations in 2023.
Development costs of $20 million decreased 28% or $8 million compared to the same quarter of 2023, primarily due to
disciplined spending on priority development activities, as planned, and timing of the expenditures.
Finance costs of $97 million decreased 29% or $39 million primarily due to one-time debt modification loss resulting from
optimization of Spanish portfolio debt agreement in 2023 and scheduled principal repayments on facility-level loans.
Fair value gain on financial instruments was $10 million primarily due to net movement in the fair value of derivatives
related to interest rate and foreign exchange contracts.
Foreign exchange loss of $6 million was primarily due to fluctuations in the foreign exchange rates.
Share of profit from joint ventures was $23 million primarily due to gain on fair value of derivatives at the joint ventures.
Other income was $129 million lower than the same quarter of 2023, primarily due to the gain on partial sell-down of Hai
Long offshore wind projects in 2023, partially offset by the proceeds relating to Deutsche Bucht construction.
Net income of $150 million in the fourth quarter of 2024 compared to a net loss of $268 million in the same quarter of
2023, was primarily as a result of the factors described above.
2024
Revenue from energy sales of $2,346 million increased 5% or $113 million compared to 2023, primarily due to higher wind
resource across all offshore wind facilities, full year contribution from the New York onshore wind projects, and higher
revenue from EBSA due to growth in asset base, foreign exchange changes and rate escalations, partially offset by the
export cable damage at Gemini and lower operating availability because of outages at the natural gas facilities.
Operating costs of $650 million increased 5% or $29 million compared to 2023, primarily due to higher maintenance costs
across all offshore wind facilities, full year contribution from the New York onshore wind facilities, and higher maintenance
and administrative expenses at EBSA, partially offset by lower natural gas prices and lower operating availability because of
higher outages at the natural gas facilities.
Corporate and Operational G&A costs of $113 million for the year ended December 31, 2024 was largely in line with 2023,
as one-time management changes were offset by restructuring of operating and corporate functions.
Development costs of $63 million decreased 45% or $51 million compared to 2023, primarily due to disciplined spending on
priority development activities, as planned, and timing of the expenditures.
Fair value adjustment relating to disposal group classified as held for sale was $44 million due to a fair value adjustment
upon classification of the La Lucha solar facility as a disposal group held for sale. Please refer to Section 4.1: Significant
Events for further information.
Finance costs of $392 million for the year ended December 31, 2024 was largely in line with 2023.
Fair value loss on financial instruments was $94 million, primarily due to net movement in the fair value of derivatives
related to interest rate and foreign exchange contracts.
Foreign exchange gain of $1 million was primarily due to fluctuations in the foreign exchange rates.
Share of profit from joint ventures was $44 million primarily due to gain on fair value of derivatives at the joint ventures.
Other income was $110 million lower than 2023, primarily due to gains associated with the sale of offshore wind assets in
Europe and Asia in 2023, partially offset by gain on disposal of La Lucha solar facility and the proceeds relating to Deutsche
Bucht construction.
Net income of $371 million in the year ended December 31, 2024 compared to net loss of $96 million in 2023 was primarily
as a result of the factors described above.
36
I NORTHLAND POWER INC.I
I 2024 ANNUAL REPORT I
5.5: Adjusted EBITDA
The following table reconciles net income (loss) to Adjusted EBITDA:
Three months ended December 31,
Year ended December 31,
2024
2023
2024
2023
Net income (loss)
$
150,469
$
(267,918)
$
371,389
$
(96,132)
Adjustments:
Finance costs, net
79,758
111,113
320,634
321,812
Provision for (recovery of) income taxes
66,615
(55,577)
192,167
39,129
Depreciation of property, plant and equipment
148,796
156,619
615,343
595,600
Amortization of contracts and intangible assets
14,734
14,510
58,384
57,015
Fair value (gain) loss on derivative contracts
(11,333)
187,830
87,592
294,544
Foreign exchange (gain) loss
6,353
(3,570)
(716)
(39,732)
Impairment of non-financial assets / Fair value
adjustment relating to disposal group classified
as held for sale
—
163,169
43,884
163,169
Elimination of non-controlling interests
(62,892)
(71,813)
(267,108)
(258,202)
Finance lease (lessor)
(1,053)
(1,291)
(4,577)
(5,609)
Share of (profit) loss from joint ventures
(23,105)
265,599
(43,734)
279,849
Others (1)
(56,203)
(110,013)
(111,307)
(111,572)
Adjusted EBITDA (2)
$
312,139
$
388,658
$
1,261,951
$
1,239,871
(1) Others primarily include Northland’s share of Adjusted EBITDA from equity accounted investees, gain on sale of La Lucha solar facility, proceeds
relating to Deutsche Bucht construction, Gemini interest income and other expenses (income).
(2) See Forward-Looking Statements and Non-IFRS Financial Measures above.
Fourth Quarter
Adjusted EBITDA of $312 million for the three months ended December 31, 2024 decreased 20% or $77 million compared
to the same quarter of 2023. The significant factors decreasing Adjusted EBITDA include:
•
$74 million in gains from the partial sell-down of Hai Long offshore wind project in 2023; and
•
$37 million decrease in operating results at the offshore wind facilities, primarily due to lower offshore wind resource,
partially offset by lower unpaid curtailments related to negative prices and grid outages at our German offshore wind
facilities, as described above.
The factor partially offsetting the decrease in the Adjusted EBITDA was:
•
$23 million increase due to higher operating results from onshore renewable facilities and EBSA, as described above.
Full Year
Adjusted EBITDA of $1,262 million for the year ended December 31, 2024 increased 2% or $22 million compared to the
same period of 2023. The significant factors increasing Adjusted EBITDA include:
•
$25 million increase in operating results at the offshore wind facilities, primarily due to higher wind resource across all
offshore wind facilities, partially offset by export cable damage at Gemini, as described above;
•
$57 million increase due to higher operating results from onshore renewable facilities and EBSA, as described above;
and
•
$53 million decrease in development expenditures, as described above.
The factor partially offsetting the increase in the Adjusted EBITDA was:
•
$115 million in gains from partial sell-down of development assets in 2023.
I NORTHLAND POWER INC.I
I 2024 ANNUAL REPORT I
37
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:
Three months ended December 31,
Year ended December 31,
2024
2023
2024
2023
Cash provided by operating activities
$
359,631
$
161,354
$
1,028,968
$
810,699
Adjustments:
Net change in non-cash working capital balances
related to operations
(43,309)
205,865
305,084
440,828
Non-expansionary capital expenditures
(1,789)
(1,947)
(5,272)
(3,215)
Restricted funding for major maintenance, debt
and decommissioning reserves
(8,532)
(8,200)
(20,677)
(11,435)
Interest
(61,913)
(142,890)
(263,499)
(325,841)
Scheduled principal repayments on facility debt
(340,184)
(323,800)
(714,051)
(705,119)
Funds set aside (utilized) for scheduled principal
repayments
148,788
158,020
—
—
Preferred share dividends
(1,500)
(1,573)
(6,162)
(6,103)
Consolidation of non-controlling interests
(19,810)
(22,194)
(93,254)
(87,380)
Investment income (1)
6,791
7,374
26,888
29,685
Others (2)
19,423
159,439
69,554
281,625
Free Cash Flow (3)
$
57,596
$
191,448
$
327,579
$
423,744
Add Back: Growth expenditures
23,054
26,635
66,841
112,786
Less: Historical growth expenditures’ recovery
due to sell-down
—
(26,794)
—
(38,552)
Adjusted Free Cash Flow (3)
$
80,650
$
191,289
$
394,420
$
497,978
(1) Investment income includes Gemini interest income and repayment of Gemini subordinated debt.
(2) Others mainly include the effect of foreign exchange rates and hedges, interest rate hedge, Nordsee One interest on shareholder loans, share of joint
venture project development costs, acquisition costs, lease payments, interest income, Northland’s share of Adjusted Free Cash Flow from equity
accounted investees, gain on sale of La Lucha solar facility, interest on corporate-level debt raised to finance capitalized growth projects and other
non-cash expenses adjusted in working capital excluded from Free Cash Flow in the period.
(3) See Forward-Looking Statements and Non-IFRS Financial Measures above.
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 and adjusting for historically
incurred growth expenditures’ recovery due to sell-down, 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.
Scheduled principal repayments on facility debt reflect repayments as paid. Funds set aside (utilized) for scheduled principal
repayments allocate 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.
38
I NORTHLAND POWER INC.I
I 2024 ANNUAL REPORT I
Select Scheduled Principal Repayments (at Northland’s share)
2025
2024
2023
Gemini
€
100,840
€
96,383
€
88,497
Nordsee One
84,093
88,119
86,767
Deutsche Bucht
83,291
78,853
78,071
Spanish portfolio
39,721
37,524
63,854
Total
€
307,945
€
300,879
€
317,189
The following table reconciles Adjusted EBITDA to Adjusted Free Cash Flow.
Three months ended December 31,
Year ended December 31,
2024
2023
2024
2023
Adjusted EBITDA (2)
$
312,139
$
388,658
$
1,261,951
$
1,239,871
Adjustments:
Scheduled debt repayments
(151,576)
(129,002)
(578,563)
(579,445)
Interest expense
(48,611)
(52,309)
(193,575)
(195,328)
Current taxes
(47,131)
(46,558)
(175,112)
(137,460)
Non-expansionary capital expenditure
(2,015)
(1,938)
(5,078)
(3,016)
Utilization (funding) of maintenance and
decommissioning reserves
(7,845)
(6,816)
(18,716)
(10,044)
Lease payments, including principal and interest
(2,908)
(2,365)
(12,586)
(8,677)
Preferred dividends
(1,500)
(1,574)
(6,162)
(6,103)
Foreign exchange hedge gain (loss)
(307)
5,873
12,584
36,908
Others (1)
7,350
37,479
42,836
87,038
Free Cash Flow (2)
$
57,596
$
191,448
$
327,579
$
423,744
Add back: Growth expenditures
23,054
26,635
66,841
112,786
Less: Historical growth expenditures’ recovery due
to sell-down
—
(26,794)
—
(38,552)
Adjusted Free Cash Flow (2)
$
80,650
$
191,289
$
394,420
$
497,978
(1) Others mainly include repayment of Gemini subordinated debt, gain on sale of La Lucha solar facility, interest rate and foreign currency hedge
settlements, and interest received on third-party loans to partners.
(2) See Forward-Looking Statements and Non-IFRS Financial Measures above.
Fourth Quarter
Adjusted Free Cash Flow of $81 million for the three months ended December 31, 2024 was 58% or $111 million lower than
the same quarter of 2023.
The significant factors decreasing Adjusted Free Cash Flow were:
•
$53 million decrease in Adjusted EBITDA (gross of growth expenditures) primarily due to the factors described above;
•
$36 million decrease from foreign exchange and interest rate hedges, and other settlements; and
•
$23 million increase in scheduled debt repayments on facility-level loans, mainly at Spanish portfolio.
Free Cash Flow, which is reduced by growth expenditures, totaled $58 million for the three months ended December 31,
2024, and was $134 million lower than the same quarter of 2023, due to the same factors as Adjusted Free Cash Flow.
I NORTHLAND POWER INC.I
I 2024 ANNUAL REPORT I
39
Full Year
Adjusted Free Cash Flow of $394 million for the year ended December 31, 2024, was 21% or $104 million lower than 2023.
The significant factors decrease Adjusted Free Cash Flow were:
•
$80 million decrease from foreign exchange and interest rate hedges, and other settlements;
•
$38 million increase in current taxes as a result of higher operating results;
•
$11 million decrease from gain on sale of offshore wind development assets in Europe in 2023; and
•
$9 million increase in funds set aside for maintenance reserves.
The factors partially offsetting the decrease in Adjusted Free Cash Flow include:
•
$15 million increase in Adjusted EBITDA (gross of growth expenditures) primarily due to the factors described above;
and
•
$20 million increase from gain on disposal of La Lucha solar facility.
Free Cash Flow, which is reduced by growth expenditures, totaled $328 million for the year ended December 31, 2024, and
was 23% or $96 million lower than the same period of 2023, due to the same factors as Adjusted Free Cash Flow.
The following table summarizes the ordinary dividends paid, payout ratios as well as per share amounts:
Three months ended December 31,
Year ended December 31,
2024
2023
2024
2023
For the period
Cash dividends paid to shareholders
$
49,284
$
51,740 $
200,488
$
205,072
Total dividends paid to shareholders (1)
$
77,686
$
76,253 $
308,512
$
302,976
Weighted avg. number of shares — basic and
diluted (000s)
259,166
254,368
257,300
252,710
Per share ($/share)
Dividends paid
$
0.30 $
0.30 $
1.20
$
1.20
Adjusted Free Cash Flow — basic and diluted (2)
$
0.31 $
0.75 $
1.53
$
1.97
Free Cash Flow — basic and diluted (2)
$
0.22 $
0.75 $
1.27
$
1.68
Pay-out ratios on a rolling four-quarter basis
Adjusted Free Cash Flow payout ratio — cash
dividends (2)
51 %
41 %
Free Cash Flow payout ratio — cash dividends (2)
61 %
48 %
Adjusted Free Cash Flow payout ratio — total
dividends (1) (2)
78 %
61 %
Free Cash Flow payout ratio — total dividends (1) (2)
94 %
71 %
(1) Represents dividends paid in cash and in shares under the DRIP.
(2) See Forward-Looking Statements and Non-IFRS Financial Measures above.
At December 31, 2024 the rolling four quarter Adjusted Free Cash Flow and the Free Cash Flow net payout ratio were 51%
and 61%, respectively, calculated on the basis of cash dividends paid, compared to 41% and 48% for the same period ending
December 31, 2023. At December 31, 2024 the rolling four quarter Adjusted Free Cash Flow and the Free Cash Flow net
payout ratio were 78% and 94%, respectively, calculated on the basis of total dividends paid, compared to 61% and 71% for
the same period ending December 31, 2023.
40
I NORTHLAND POWER INC.I
I 2024 ANNUAL REPORT I
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, 2024 and December 31, 2023:
As at
December 31, 2024
December 31, 2023
Assets
Cash and cash equivalents
$
613,319
$
740,244
Restricted cash
59,073
73,257
Trade and other receivables
535,961
396,014
Other current assets
119,730
97,468
Property, plant and equipment, net
8,879,101
9,179,933
Contracts and other intangible assets, net
393,886
446,870
Derivative assets
312,848
388,997
Deferred tax asset
38,174
44,726
Investment in joint ventures
1,023,068
899,885
Other assets (1)
1,629,178
1,358,904
Total assets
$
13,604,338
$
13,626,298
Liabilities
Trade and other payables
$
368,791
$
449,461
Loans and borrowings
7,009,899
7,065,534
Derivative liabilities
228,311
127,895
Deferred tax liability
557,826
590,259
Other liabilities (2)
883,098
910,425
Total liabilities
$
9,047,925
$
9,143,574
Total Equity
4,556,413
4,482,724
Total liabilities and equity
$
13,604,338
$
13,626,298
(1) Includes goodwill, finance lease receivable and other non-current assets.
(2) 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 decreased by $127 million, primarily due to investments in Hai Long offshore wind projects,
partially offset by proceeds from sale of La Lucha solar facility.
•
Trade and other receivables increased by $140 million, primarily due to higher SDE revenue at Gemini, partially offset
by receipt of VAT claim as per La Lucha’s sale agreement.
•
Property, plant and equipment decreased by $301 million, primarily due to a depreciation expense and sale of the La
Lucha solar facility, partially offset by construction-related activities and fluctuations in the foreign exchange rates.
•
Net derivative assets decreased by $177 million from a net derivative asset at December 31, 2023, primarily due to the
effect of interest rates in Canada, the US and Europe, and the net movement in Euro and COP exchange rates against
the Canadian dollar.
•
Investment in joint ventures increased by $123 million, primarily due to the investment in Hai Long offshore wind
project and share of profit from joint ventures.
•
Other assets increased by $270 million, primarily due to long-term shareholder loans provided to Hai Long offshore
wind project.
•
Loans and borrowings decreased by $56 million, mainly due to the scheduled principal repayments on facility-level
loans, partially offset by construction related drawdowns, refinancing of EBSA’s credit facility and fluctuations in the
foreign exchange rates.
I NORTHLAND POWER INC.I
I 2024 ANNUAL REPORT I
41
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, and debt and equity issuances from time to time.
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.
DRIP
Northland offers a Dividend Reinvestment Plan which provides shareholders with the right to reinvest the dividends on
their common shares. Northland approved a change in the discount on its DRIP issuances from 3% to 0% and confirmed the
intention to source shares through secondary market purchases rather than treasury issuances. Such changes will be
effective from and as of April 15, 2025 and for the dividend payable thereon to shareholders of record on March 31, 2025.
Pursuant to the terms of the DRIP, Northland has the discretion, from time to time, to change the applicable discount and
source of shares.
Equity
The change in common shares during 2024 and 2023 was as follows:
As at
December 31, 2024
December 31, 2023
Common shares
Shares outstanding, beginning of year
254,939,822
250,017,357
Equity offering
—
1,210,537
Shares issued under the LTIP
—
10,286
Shares issued under the DRIP
5,007,504
3,701,642
Total common shares outstanding, end of period
259,947,326
254,939,822
Preferred shares outstanding as at December 31, 2024, and December 31, 2023 were as follows:
As at
December 31, 2024
December 31, 2023
Preferred shares outstanding
Series 1
4,762,246
4,762,246
Series 2
1,237,754
1,237,754
Total
6,000,000
6,000,000
In September 2024, Northland’s corporate investment grade credit rating was reaffirmed at BBB (stable) by Fitch Ratings, in
addition to Standard & Poor’s BBB (stable) rating which was reaffirmed in June 2024.
At December 31, 2024, Northland had 259,947,326 common shares outstanding (as at December 31, 2023 - 254,939,822)
with no change in preferred shares Series 1 and Series 2 outstanding from December 31, 2023.
As of February 26, 2025, Northland has 261,000,107 common shares outstanding with no change in preferred shares Series
1 and Series 2 outstanding from December 31, 2024.
42
I NORTHLAND POWER INC.I
I 2024 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,
2024
2023
2024
2023
Cash and cash equivalents, beginning of period
$
596,233
$
856,530
$
740,244
$
1,364,309
Cash provided by (used in) operating activities
359,631
161,354
1,028,968
810,699
Cash provided by (used in) investing activities
74,010
431,260
(448,811)
(1,170,053)
Cash provided by (used in) financing activities
(418,827)
(748,050)
(720,248)
(254,239)
Effect of exchange rate differences
2,272
39,150
13,166
(10,472)
Cash and cash equivalents, end of period
$
613,319
$
740,244
$
613,319
$
740,244
Fourth Quarter
Cash and cash equivalents for the fourth quarter of 2024 increased $17 million from September 30, 2024, due to cash
provided by operations of $360 million, $74 million by investing activities, $2 million effect of foreign exchange translation,
partially offset by cash used in financing activities of $419 million.
The increase in cash and cash equivalents during the quarter was largely in line compared to September 30, 2024.
2024
Cash and cash equivalents for the year ended December 31, 2024, decreased $127 million due to cash provided by
operations of $1,029 million, $13 million effect of foreign exchange translation, partially offset by cash used in investing
activities by $449 million and $720 million by financing activities.
Cash provided by operating activities for the year ended December 31, 2024, was $1,029 million comprising:
•
$1,070 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
•
$371 million of net income.
Factors partially offsetting cash provided by operating activities include:
•
$305 million in changes in working capital due to the timing of payables, receivables and deposits;
•
$44 million share of profit from joint ventures; and
•
$64 million accounting gain on sale of La Lucha solar facility.
Cash used in investing activities for the year ended December 31, 2024, was $449 million, primarily comprising:
•
$310 million used mainly for the investment in the Hai Long offshore wind projects; and
•
$552 million used mainly for construction at Oneida energy storage project.
Factors partially offsetting cash used in investing activities include:
•
$136 million mainly from interest income and other investing activities; and
•
$257 million from the sale proceeds of La Lucha solar facility.
Cash used in financing activities for the year ended December 31, 2024, was $720 million, primarily comprising:
•
$374 million in interest and other payments;
•
$776 million in scheduled principal repayments on the facility-level debt; and
•
$235 million of common and preferred share dividends as well as dividends to non-controlling interest.
I NORTHLAND POWER INC.I
I 2024 ANNUAL REPORT I
43
Factors partially offsetting cash used in financing activities were:
•
$611 million of draws on project level debt primarily for construction of Oneida energy storage project; and
•
$56 million in net drawdown under the corporate syndicated revolving facility.
Movement of foreign currencies, including primarily the Euro, U.S. dollar and Colombian peso, against the Canadian dollar
increased cash and cash equivalents by $13 million for the year ended December 31, 2024. Northland aims to mitigate the
effects of exchange rate fluctuations through a variety of mechanisms, including foreign exchange hedges and natural
hedges from having 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,
2024:
Balance as at
Jan 1, 2024
Additions
Provisions,
disposals,
transfers and
other (1) (3)
Exchange rate
differences
Balance as at
Dec 31, 2024
Operations:
Offshore wind
$
6,821,288 $
1,395 $
(9,209) $
122,604 $
6,936,078
Onshore renewable
4,159,680
6,238
(313,337)
39,820
3,892,401
Natural gas (2)
1,327,528
14,866
(823)
—
1,341,571
Utility
692,306
32,964
(1,939)
(32,724)
690,607
Construction:
Onshore renewable
143,453
485,628
(23,787)
—
605,294
Corporate
127,147
16,576
508
1,861
146,092
Total
$
13,271,402 $
557,667 $
(348,587) $
131,561 $
13,612,043
(1) Includes amounts accrued under the long-term incentive plan (“LTIP”).
(2) Excludes Spy Hill lease receivable accounting treatment.
(3) Includes $262 million relating to sale of La Lucha solar facility completed in June 2024.
44
I NORTHLAND POWER INC.I
I 2024 ANNUAL REPORT I
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.
The following table provides a continuity of Northland’s debt for the year ended December 31, 2024:
Balance as at
Jan 1, 2024
Financings,
net of costs Repayments
Amort. of
costs/fair
value
Exchange
rate
differences
Others
Balance as at
Dec 31, 2024
Operations:
Offshore wind
$
3,080,780 $
68,368 $ (525,055) $
21,393 $
54,444 $
— $
2,699,930
Onshore renewable (2)
1,915,250
17,663
(154,973)
4,126
37,022
(10,427)
1,808,661
Natural gas
846,839
12,916
(87,736)
2,787
—
—
774,806
Utility
716,618
44,783
(8,585)
126
(567)
(918)
751,457
Construction:
Onshore renewable
15,000
467,600
—
—
—
—
482,600
Corporate:
Green Notes
491,049
—
—
1,396
—
—
492,445
Corporate Credit
Facilities (1)
110,988
625,115
(569,239)
—
5,586
—
172,450
Total
$
7,176,524 $ 1,236,445 $ (1,345,588) $
29,828 $
96,485 $
(11,345) $
7,182,349
(1) Deferred financing cost associated with the syndicated revolving facility is included within the other non-current assets in the consolidated statements
of financial position.
(2) As at December 31, 2024, Onshore renewable - Operations includes tax equity financing in relation to New York onshore wind projects amounting to
$27 million.
Additionally, as at December 31, 2024, $541 million of letters of credit were outstanding under non-recourse project-level
credit facilities for operational use.
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, 2024
Facility
size
Amount
drawn (2)
Outstanding
letters of
credit (3)
Available
capacity
Maturity
date
Sustainability linked syndicated revolving facility (1)
$ 1,250,000 $
175,919 $
116,918 $
957,163
Aug. 2029
Bilateral letter of credit facility
150,000
—
135,060
14,940
Jun. 2026
Export credit agency backed letter of credit facility I
100,000
—
72,037
27,963
Mar. 2026
Export credit agency backed letter of credit facility II (4)
200,000
—
140,043
59,957
n/a
Hai Long related letter of credit facility
500,000
—
483,440
16,560
Sep. 2027
Total
$ 2,200,000 $
175,919 $
947,498 $
1,076,583
(1) During the third quarter of 2024, the sustainability linked syndicated revolving facility was increased by $250 million and maturity was also extended
to August 2029.
(2) Deferred financing cost, as at December 31, 2024, associated with the syndicated revolving facility amounting to $3 million (December 31, 2023 - $5
million) is included within the other non-current assets in the consolidated statements of financial position.
(3) As at December 31, 2024, outstanding letters of credit include LCs issued in favor of a joint venture amounting to $672 million.
(4) This facility does not have a specified maturity date.
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Of the $947 million of corporate letters of credit issued as at December 31, 2024, $776 million relates to projects under
advanced development or construction.
Northland’s corporate credit facilities include provisions that allow for renewals at Northland’s option, subject to approval
by the lenders.
Northland had access to $1,066 million of available liquidity at December 31, 2024, including $109 million of cash on hand
and approximately $957 million of capacity on its corporate revolving credit facilities.
Debt Covenants
Northland generally conducts its business activities 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 its 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, 2024, Northland and its subsidiaries were in compliance with all
financial covenants under the applicable credit agreements.
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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, 2024, are summarized in the following table:
2025
2026
2027
2028
2029
>2029
Derivative liabilities (1)
Euro foreign exchange contracts
$ 111,690 $
97,724 $
204,137 $ 207,350 $ 174,298 $ 1,471,453
Colombian peso foreign exchange contracts
800,579
16,205
—
—
—
—
US dollar foreign exchange contracts
58,057
15,015
18,312
21,149
20,287
207,907
Taiwan dollar foreign exchange contracts
—
—
147,748
64,454
65,846
345,316
Cross currency interest rate contracts
42,392
42,392
42,392
537,474
—
—
Facility-level debt at Northland’s share
Gemini
€
93,040 € 101,896 €
109,241 € 111,698 € 114,769 € 151,451
Nordsee One
71,079
75,921
—
—
—
—
Deutsche Bucht
69,978
71,444
67,828
61,747
64,973
217,665
Spain
49,622
41,004
42,727
41,761
42,112
297,255
Total in Euro
€ 283,719 € 290,265 €
219,796 € 215,206 € 221,854 € 666,371
New York Wind
US$ 14,543 US$ 14,720 US$ 7,815 US$ 8,422 US$ 8,250 US$ 143,847
Total in Canadian dollar (2)
449,266
459,413
343,226
337,134
346,943 1,208,429
EBSA (3)
2,018
2,018
745,837
2,018
504
—
All other facilities (4)
138,114
157,168
162,879
175,081
188,756
901,657
Total facility-level debt at Northland’s share
$ 586,351 $ 618,599 $ 1,251,942 $ 514,233 $ 536,203 $ 2,110,086
Interest payments including swap derivative
contracts
206,156
186,592
167,070
108,611
88,266
275,712
Corporate liabilities
Corporate credit facilities, including interest
6,295
5,999
6,102
6,244
175,919
—
Convertible debentures, including interest
46,250
46,250
46,250
523,125
—
—
Total
$ 1,857,770 $ 1,028,776 $ 1,883,953 $ 1,982,640 $ 1,060,819 $ 4,410,474
(1) Derivative liabilities are reported at 100% ownership.
(2) Using long-term foreign exchange rates.
(3) EBSA Facility is expected to be renewed annually.
(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, 2024, for
non-financial contracts. The amounts are based on long term inflation rate, where applicable, of 2.0% and 2.99%, a
Canadian dollar/Euro exchange rate of $1.51 and Canadian dollar/US dollar exchange rate of $1.40. 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
I NORTHLAND POWER INC.I
I 2024 ANNUAL REPORT I
47
Wind projects. The cash obligations related to the leases for land and buildings, dismantlement and management fees to
NCI partners are also included.
2025
2026
2027
2028
2029
>2029
Maintenance agreements
$ 221,854 $ 229,242 $ 199,638 $ 175,223 $ 176,244 $ 1,626,356
Construction and others; excluding debt, interest
and fees
73,856
23,782
20,463
—
—
—
Natural gas supply and transportation, fixed portion
26,321
26,216
26,671
27,134
27,566
143,761
Leases
13,590
12,115
12,129
12,138
11,645
138,685
Decommissioning liabilities
—
—
—
—
—
576,936
Management fees
5,437
5,613
5,727
5,843
5,962
98,616
Total
$ 341,058 $ 296,968 $ 264,628 $ 220,338 $ 221,417 $ 2,584,354
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, 2024, Northland issued letters of credits and the parental guarantees, in favor of the joint ventures, of
$739 million in favor of the joint ventures.
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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
Q4
Q3
Q2
Q1
Q4
Q3
Q2
Q1
2024
2024
2024
2024
2023
2023
2023
2023
Revenue from energy sales
$
572 $
491 $
529 $
755 $
626 $
513 $
472
$
622
Operating income (1)
217
98
152
346
57
146
103
273
Net income (loss)
150
(191)
262
149
(268)
43
22
107
Adjusted EBITDA
312
228
268
454
389
267
232
352
Cash provided by operating activities
360
196
171
294
136
148
204
297
Adjusted Free Cash Flow
81
19
69
226
191
64
63
180
Free Cash Flow
$
58 $
1 $
51 $
217 $
191 $
36 $
41
$
155
Per share statistics
Net income (loss) attributable to common
shareholders — basic
$
0.49 $ (0.70) $
0.95 $
0.29 $ (1.13) $
0.14 $
0.01
$
0.27
Net income (loss) attributable to common
shareholders — diluted
0.49
(0.70)
0.95
0.29
(1.13)
0.14
0.01
0.27
Adjusted Free Cash Flow — basic
0.31
0.08
0.27
0.88
0.75
0.25
0.25
0.72
Free Cash Flow — basic
0.22
0.00
0.20
0.85
0.75
0.14
0.16
0.62
Total dividends declared
$
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.
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SECTION 9: CONSTRUCTION, DEVELOPMENT AND ACQUISITION ACTIVITIES
Summarized below are Northland’s most significant projects under construction and under development:
Hai Long Offshore Wind Project
Since 2016, Northland has developed, financed and is currently in the process of constructing the 1,022 MW offshore wind
project in Taiwan with its partners. Hai Long is owned 60% by Northland and Gentari International Renewables Pte. Ltd.,
and 40% by Mitsui & Co. Ltd., and Enterprize Energy Group.
The project was allocated a total of 1,022 MW (313 MW 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
Gross Capacity (MW)
Net Capacity (MW) (1)
Type of Procurement
Estimated COD
Hai Long 2A
294
90
FIT
2026/2027
Hai Long 2B
224
69
Auction
2026/2027
Hai Long 3
504
154
Auction
2026/2027
Total
1,022
313
(1) Northland holds a 31% effective economic interest in the Hai Long offshore wind projects indirectly through a joint venture.
Hai Long 2B and 3, which have a combined capacity of up to 744 MW, signed a CPPA that covers 100% of the power
generated. The agreement is with an investment grade counterparty (S&P: AA-) and is for a 30-year period at a fixed-price,
commencing once Hai Long reaches full commercial operations. The contracted price under the CPPA is more favourable
than the fixed auction rate originally awarded in 2018 and is a key accomplishment. In addition, the PPAs with Taipower are
not affected by the signing of the CPPA and provide a backstop to the CPPA.
On December 28, 2023, Northland closed the sale of 49% of Northland’s 60% ownership in the Hai Long offshore wind
project to Gentari International Renewables Pte. Ltd., a subsidiary of clean energy solutions company Gentari Sdn Bhd
(“Gentari”). Northland now holds a 30.6% ownership interest in the overall project and will continue to take the lead role in
Hai Long’s construction and operation.
Please refer to Section 4.1: Significant Events for further information.
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 1,140 MW of offshore wind generation. Northland continues to hold a 49% ownership
interest in Baltic Power, with its partner Orlen S.A. holding the remaining 51%.
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, is denominated in Euros and includes an inflation
indexation feature commencing with the base year 2021.
Please refer to Section 4.1: Significant Events for further information.
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Oneida Energy Storage Project
The Oneida Energy Storage Project is a 250 MW/1 GWh energy storage facility located in Ontario, Canada. Northland is the
majority owner and taking the lead role in its construction, financing and operation.
On December 21, 2022, the project successfully executed a 20-year Energy Storage Facility Agreement with the
Independent Electricity System Operator (“IESO”) that offers monthly capacity payments.
Northland currently owns 72% of the project, which is being developed in partnership with NRStor Inc., Six Nations of the
Grand River Development Corporation and Aecon Group Inc.
Please refer to Section 4.1: Significant Events for further information.
Thorold Natural Gas Facility Upgrade
Please refer to Section 4.1: Significant Events for further information.
South Korean Offshore Wind Projects
Electricity Business Licenses (“EBLs”) for up to 1,270 MW capacity at Dado have been secured, providing exclusivity over the
development areas. In addition, Northland’s second project, the 690 MW Bobae project, has also been awarded the
requisite EBLs.
ScotWind Offshore Wind Project
Northland was awarded two offshore wind leases in the Crown Estate Scotland auction with a total combined capacity of
2,340 MW in 2022. The two leases, one fixed foundation (840 MW) and one floating foundation (1,500 MW), will extend
Northland’s development runway into the next decade. In 2023, Northland signed a partnership agreement with ESB, a
leading Irish energy company, for a 24.5% interest in the two offshore wind projects.
Alberta Portfolio
In December 2022, Northland acquired a development platform and a portfolio of solar and energy storage development
projects in Alberta, Canada, with a combined pipeline encompassing approximately 1.4 GW.
Jurassic BESS project
Please refer to Section 4.1: Significant Events for further information.
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SECTION 10: OUTLOOK
2025 is a year of delivering key milestones on three large construction projects: Baltic Power, Hai Long and Oneida. Cash
generation from some of these projects will be a significant milestone for Northland and is expected to start contributing to
Northland’s earnings in 2025, continuing through 2026, with full realization in 2027.
Northland anticipates generating pre-completion revenue from Hai Long in the second half of this year. However, this cash
flow is used to fund the construction of the Hai Long project and will not be included in Adjusted Free Cash Flow or Free
Cash Flow metrics until the project reaches commercial operations, expected in 2027. Additionally, Northland incurs
development expenditures in pursuit of its 10 GW development pipeline. These expenditures will reduce near-term Free
Cash Flow until the projects achieve commercial operations but are expected to deliver accretive long-term growth in
earnings and cash flow in future years.
Adjusted EBITDA
For 2025, management expects Adjusted EBITDA to be in the range of $1.30 billion to $1.40 billion, with the guidance mid-
point being higher than 2024 Adjusted EBITDA of $1.26 billion. The major factors expected to increase Adjusted EBITDA
include (all amounts are approximate):
•
Adjusted EBITDA contributions from Hai Long’s pre-completion revenues, expected in the second half of 2025, and
Oneida energy storage project achieving the commercial operations in the first half of 2025 ($80 million);
•
Higher Adjusted EBITDA for onshore renewables excluding Spain ($20 million); and
•
Other various items ($25 million).
Increase in Adjusted EBITDA is expected to be partially offset by:
•
Lower band revenue adjustments at Spain from lower posted regulatory price ($30 million); and
•
Lower contributions from Nordsee One following a scheduled step down in its power contracts, partially offset by
impact from the Gemini cable issue and TenneT outage in 2024 ($25 million).
Adjusted Free Cash Flow and Free Cash Flow
In 2025, management expects Adjusted Free Cash Flow to be in the range of $1.30 to $1.50 per share, with the guidance
mid-point being lower than 2024 Adjusted Free Cash Flow of $1.53 per share. The major factors expected to decrease
Adjusted Free Cash flow include (all amounts are approximate):
•
Decreased regulatory feed in tariffs at Nordsee One following a scheduled step down in its power contracts and
lower band adjustment at Spain ($45 million); and
•
Impact from prior year’s La Lucha operating results including the gain on its sale and other items ($25 million).
Decrease in Adjusted Free Cash Flow is expected to be partially offset by:
•
Higher contribution from natural gas facilities and utilities performance and lower net debt service and taxes
across existing assets ($30 million); and
•
Contribution from Oneida battery storage project and onshore renewable assets excluding Spain ($10 million).
Corporate G&A costs are expected to be approximately $70 million in 2025, compared to $85 million in 2024.
Northland has assumed development expenditures will be approximately $60 million.
Management expects 2025 Free Cash Flow, which includes growth expenditures, to be in the range of $1.10 to $1.30 per
share, consistent with last year’s guidance. Free Cash Flow reflects the level of spending on growth initiatives and the equity
capital raised for our projects currently under construction, for which material corresponding cash flows will not be
received until 2026 and 2027. The development expenditures would include offshore wind opportunities in Europe and Asia
and a further allocation towards onshore renewable projects, and natural gas power development opportunities.
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In addition, any gains from the future sell-down of ownership interests in development assets would be included in
Adjusted EBITDA, Adjusted Free Cash Flow and Free Cash Flow as they relate to capturing development profits at key
milestones. Currently, the 2025 financial outlook does not incorporate any sell-down proceeds and as such, net proceeds
from any sell-down would increase reported Adjusted EBITDA, Adjusted Free Cash Flow, and Free Cash Flow in the event
they occur in 2025.
Northland continues to implement a selective partnership strategy to sell interests in certain development projects on or
before financial close. In certain situations, Northland may decide to exit certain markets or reduce development activities
within certain jurisdictions. Northland will assess each opportunity individually and intends to remain a long-term owner of
the renewable power assets it develops.
Over the longer term, Northland remains positioned to achieve substantial growth in Adjusted EBITDA and Adjusted Free
Cash Flow by 2027, upon achieving targeted commercial operations of Oneida, Baltic Power and Hai Long, each with long-
term contracted revenues of between 20 to 30 years.
Once the projects under construction, including Hai Long, Baltic Power, and Oneida battery storage, are fully completed,
they are collectively expected to deliver on a five-year annual average basis, approximately $570 million to $615 million of
Adjusted EBITDA and $185 million to $210 million of Adjusted Free Cash Flow by 2027.
Northland management expects that the Company will continue to pay dividends annually at the rate of $1.20 per share.
With over 3 gigawatts (GW) of current gross operating capacity, 2.4 GW under construction and a pipeline under
development of approximately 10 GW, the Company is well-positioned to deliver on the global energy transition. Northland
intends to be selective and pursue only projects within its pipeline that meet its strategic objectives and targeted returns
and closely monitor macroeconomic conditions. Management continues to assess its development pipeline as projects
move through their development cycles.
The information in this Outlook constitutes forward-looking information within the meaning of applicable Canadian
securities laws, is based on several assumptions and is subject to risks and uncertainties. See Forward-Looking Statements
in this document as well as the Risk Factors in the 2024 AIF.
SECTION 11: LITIGATION, CLAIMS AND CONTINGENCIES
Litigation, claims and other contingencies arise from time to time in the ordinary course of business for Northland. There
are no legal or regulatory proceedings that involve a claim for damages or penalty exceeding 10% of Northland's current
assets in respect of which Northland is or was a party, or in respect of which any of Northland's property is or was the
subject during the year ended December 31, 2024, nor are there any such proceedings known to Northland to be
contemplated. 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 28 of the audited consolidated financial statements for additional
information including any contingencies arising as a result of completed acquisitions.
SECTION 12: SUSTAINABILITY STRATEGY
The focuses of Northland’s Sustainability strategy are on continued energy transition and decarbonization efforts through
increasing our renewable energy portfolio, protecting and supporting biodiversity, continuously improving as an equitable
employer where a talented, diverse and committed group of people want to build their careers, creating meaningful and
collaborative relationships and partnerships with local and Indigenous communities, ensuring human rights are respected in
our supply chain 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
technologies (such as energy storage) and human capital growth. Northland is committed to achieving 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 by 2040. For further information on Northland’s climate-related goals and objectives, please refer to the
Company’s most recent sustainability report, which can be found at https://www.northlandpower.com/en/about-
northland/sustainability.aspx, and the Climate-Related Target Risk in the “Risk Factors” section of 2024 AIF.
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SECTION 13: FINANCIAL RISKS AND UNCERTAINTIES
Northland’s activities expose it to a variety of risks. Refer to the 2024 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, noting that
these risks can be impacted by geopolitical or regulatory uncertainties. Northland manages financial risks by identifying,
evaluating and mitigating such risks, 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. Refer to Note 18 of the 2024 Annual Report for additional information on Northland’s risk
management approach.
For information on Northland’s key risks, uncertainties, financial instruments and contractual commitments, refer to
Northland’s 2024 Annual Report and the 2024 AIF filed electronically at www.sedarplus.ca under Northland’s profile.
Management does not believe there have been material changes in the business environment or risks faced by Northland
during the period that have not been disclosed in the 2024 Annual Report or 2024 AIF.
Market Risk
Market risk is the risk that the future cash flows and returns will fluctuate because of changes in market prices and rates.
Financial instruments affected by market risk include loans and borrowings and derivative financial instruments as well as
Northland’s preferred shares and the Green Notes. Revenue and supply contracts can also be affected by market risk. 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 an instrument will
fluctuate due to changes in market interest rates. Northland endeavors to manage 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 manages the 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
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, US dollar,
Colombian peso, Taiwan dollar, Polish Zloty, and to a lesser degree, other currencies on construction projects with expenses
in currencies different than the funding currency, or development expenses on early-stage projects in other jurisdictions.
Primary exposure to Northland arises from the Euro-denominated financial statements and cash distributions at Gemini,
Nordsee One, Deutsche Bucht, and the Spanish Portfolio, 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.
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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, the Spanish Portfolio, and Baltic
power, and on a portion of the forecasted Taiwanese Dollar cash inflows from Hai Long. Power. 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 subsidy or feed-in-tariff programs define a floor price but electricity market prices may be
lower than 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; (v) the value of a financial instrument or cash flows associated with the
instrument fluctuates due to changes in commodity prices; or (vi) the price of a component in a supply agreement is linked
to the price of one or several commodities.
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, when practical and economical; (iii) including contingencies in construction
budgets when they are exposed to commodity prices; (iv) passing through the commodity risk to the offtaker, whenever
possible.
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, 2024, 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. 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.
The nature of Northland’s business and contractual arrangements, and the quality of its counterparties generally serve 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
I NORTHLAND POWER INC.I
I 2024 ANNUAL REPORT I
55
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, 2024, 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 and any credit ratings for
Northland at the relevant time, which may affect the availability, pricing or terms and conditions of replacement financings.
Refer to Note 28 in the audited consolidated financial statements for the year ended December 31, 2024, for additional
information related to Northland’s commitments and obligations.
Taxation
Northland’s operations are complex, and located in several countries, and the computation of the provision for income
taxes involves understanding and interpreting tax legislation and regulations, jurisprudence and administrative policies that
are continually changing. While Northland believes that Northland’s tax filings have been made in material compliance with
all applicable laws, Northland cannot provide assurance that the Canadian or other relevant taxing authorities will agree
with tax positions taken by Northland and its subsidiaries, including with respect to expenses and renewable energy tax
incentives claimed and the cost of depreciable assets. In particular, in some cases of new legislation, tax authorities have
not yet developed administrative policies or issued interpretative guidance. A successful challenge by an applicable taxing
authority regarding such tax positions could adversely affect the operations and financial position of Northland.
Income, withholding and sales tax laws in the jurisdictions in which Northland and its subsidiaries do business could change
in a manner that adversely affects Northland and its shareholders. There also can be no assurance that renewable energy
tax incentives will continue to be available or on what terms. Northland and its subsidiaries are also subject to various
uncertainties concerning the interpretation and application of domestic and international tax laws that could affect its
profitability and cash flows.
Northland undertakes all transactions for commercial reasons and strives to structure them in a tax-efficient manner. These
transactions and financing structures could be challenged by the Canadian and/or local tax authority. Before entering into
these transactions and structures, legal and tax experts are engaged to ensure these transactions and structures are in
compliance with all tax laws, rules and regulations. A successful challenge by the Canadian or local tax authority to
transactions and structures entered into by Northland and its subsidiaries may have an adverse effect on Northland and its
Adjusted Free Cash Flow.
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.
56
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I 2024 ANNUAL REPORT I
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, 2024.
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, 2024, 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 2.19 of the annual audited consolidated financial statements.
SECTION 16: CONTROLS AND PROCEDURES OVER FINANCIAL REPORTING
Disclosure Controls and Procedures and Internal Controls over Financial Reporting
Management, including the President and Chief Executive Officer (“CEO”) and the Interim Chief Financial Officer (“CFO”),
are responsible for establishing and maintaining adequate disclosure controls and procedures (“DC&P”) and internal
controls over financial reporting (“ICFR”) as defined under National Instrument 52-109 – Certification of Disclosure in
Issuers’ Annual and Interim Filings of the Canadian Securities Administrators (“NI 52-109”).
DC&P are designed to provide reasonable assurance that all relevant information is gathered and reported to senior
management, including the CEO and CFO, on a timely basis so that appropriate decisions can be made regarding public
disclosure. ICFR are designed to provide reasonable assurance regarding the reliability of financial reporting and the
preparation of consolidated financial statements for external purposes in accordance with IFRS.
Management of Northland, including the CEO and CFO, have evaluated the design and operating effectiveness of
Northland’s DC&P and ICFR. Based on the evaluation, the CEO and CFO concluded that the design and operation of
Northland’s DC&P and ICFR were effective as at December 31, 2024.
In designing and evaluating 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, or that the degree of compliance with the policies and
procedures may change. Additionally, management is required to use judgment in evaluating controls and procedures.
Changes In Internal Control over Financial Reporting
There were no changes made to Northland’s ICFR in the year ended December 31, 2024 that have materially affected, or
are reasonably likely to materially affect, Northland’s ICFR.
I NORTHLAND POWER INC.I
I 2024 ANNUAL REPORT I
57
Consolidated
Financial
Statements
Grand Bend Onshore Wind Farm, Substation
Management’s Responsibility
Management is responsible for preparing Northland’s consolidated financial statements and annual report. The
accompanying consolidated financial statements have been prepared in accordance with International Financial Reporting
Standards, and the financial information in the annual report is consistent with these statements. Where appropriate, these
consolidated financial statements reflect estimates based on management’s judgement. When alternative methods are
available, management has selected the ones it considers most appropriate under the circumstances 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 controls, including accounting and administrative policies and
procedures that 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 are responsible for reviewing these consolidated financial statements 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 these consolidated financial statements. The independent
auditor’s responsibility is to express an 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 these consolidated financial statements. Their
report as auditor is set out on page 60.
The Audit Committee of Northland meets periodically with management, internal auditors 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 independent auditor’s report; examines the fees and expenses for audit and related
services; and considers the engagement or reappointment of the independent auditors. The Audit Committee reports its
findings to the Board of Directors for consideration prior to the issuance of the consolidated financial statements to the
shareholders. Ernst & Young LLP have full access to the Audit Committee and meet with the Audit Committee both in the
presence of management and separately.
(signed, Christine Healy)
Christine Healy
President, and Chief Executive Officer
(signed, Adam Beaumont)
Adam Beaumont
Chief Financial Officer (Interim)
Toronto, Canada
February 26, 2025
| NORTHLAND POWER INC. |
| 2024 ANNUAL REPORT |
59
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, 2024 and 2023, 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 material accounting policy information.
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, 2024 and 2023, 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 the 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 this matter. 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 matter below, provide
the basis for our audit opinion on the accompanying consolidated financial statements.
60
| NORTHLAND POWER INC. |
| 2024 ANNUAL REPORT |
Independent Auditor’s Report (continued)
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, 2024, the Group’s goodwill, contracts and
other intangible assets, and property, plant, and equipment were
$618 million, $394 million and $8,879 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 impairment tests, the Group estimates 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 24 to the
consolidated financial statements.
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
procedures,
among
others,
on
a
sample
of
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, third-party data, current industry,
market or economic trends and evidence
obtained in other areas of the audit;
•
Evaluated the discount rates utilized by
management,
which
involved
assessing
comparable market data;
•
Performed
sensitivity
analysis
on
certain
assumptions to evaluate changes in the
recoverable amount of the CGU; and
•
Assessed the adequacy of the disclosures
included in Note 24 of the accompanying
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.
| NORTHLAND POWER INC. |
| 2024 ANNUAL REPORT |
61
Independent Auditor’s Report (continued)
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.
•
Plan and perform the group audit to obtain sufficient appropriate audit evidence regarding the financial
information of the entities or business units within the Group as a basis for forming an opinion on the consolidated
financial statements. We are responsible for the direction, supervision and review of the work performed for the
purposes of the group audit. We remain solely responsible for our audit opinion.
62
| NORTHLAND POWER INC. |
| 2024 ANNUAL REPORT |
Independent Auditor’s Report (continued)
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.
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 26, 2025
| NORTHLAND POWER INC. |
| 2024 ANNUAL REPORT |
63
Consolidated Financial Statements
Table of Contents
Primary Statements
Consolidated statements of financial position . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
65
Consolidated statements of income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
66
Consolidated statements of comprehensive income (loss) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
67
Consolidated statements of changes in equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
68
Consolidated statements of cash flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
70
Notes to the Consolidated Financial Statements
1. Description of Northland's business . . . . . . . . . . . . . . .
71
16. Equity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
97
2. Summary of accounting policies . . . . . . . . . . . . . . . . . .
72
16.1 Common shares . . . . . . . . . . . . . . . . . . . . . . . . . . .
97
3. Significant accounting judgments, estimates and
assumptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
83
16.2 Preferred shares . . . . . . . . . . . . . . . . . . . . . . . . . . .
98
16.3 Ordinary dividends . . . . . . . . . . . . . . . . . . . . . . . . .
99
Financial Position
17. Non-controlling interests . . . . . . . . . . . . . . . . . . . . . .
99
4. Property, plant and equipment . . . . . . . . . . . . . . . . . .
85
18. Financial risk management . . . . . . . . . . . . . . . . . . . . 100
5. Contracts and other intangible assets . . . . . . . . . . . . .
86
19. Financial instruments . . . . . . . . . . . . . . . . . . . . . . . . . 104
6. Goodwill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
86
19.1 Classification and fair value hierarchy . . . . . . . . . . 104
7. Leases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
87
19.2 Derivative financial instruments . . . . . . . . . . . . . . 105
7.1 Northland as lessor . . . . . . . . . . . . . . . . . . . . . . . . .
87
7.2 Northland as lessee . . . . . . . . . . . . . . . . . . . . . . . . .
87 Performance
8. Trade and other receivables . . . . . . . . . . . . . . . . . . . .
88
20. Revenue from sale of energy and related products . 108
9. Other non-current assets . . . . . . . . . . . . . . . . . . . . . . .
88
21. Operating, G&A and Development costs . . . . . . . . . . 109
9.1 Loans receivable from joint ventures . . . . . . . . . . .
88
22. Net income (loss) per share . . . . . . . . . . . . . . . . . . . . 109
10. Investment in joint ventures . . . . . . . . . . . . . . . . . . . .
89
23. Finance costs (income), net . . . . . . . . . . . . . . . . . . . . 109
10.1 Hai Long offshore wind project . . . . . . . . . . . . . . .
91
24. Impairment of non-financial assets . . . . . . . . . . . . . . 110
10.2 Baltic Power offshore wind project . . . . . . . . . . .
91
25. Income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110
11. Trade and other payables . . . . . . . . . . . . . . . . . . . . . .
92
26. Operating segment information . . . . . . . . . . . . . . . . 113
12. Management of capital . . . . . . . . . . . . . . . . . . . . . . . .
92
13. Loans and borrowings . . . . . . . . . . . . . . . . . . . . . . . . .
93 Others
13.1 Tax-equity financing . . . . . . . . . . . . . . . . . . . . . . .
94
27. Related-party disclosures . . . . . . . . . . . . . . . . . . . . . . 114
13.2 Project level non-recourse borrowing . . . . . . . . .
94
28. Litigation, claims, contingencies and commitments . 115
13.3 Green Subordinated Notes . . . . . . . . . . . . . . . . . .
95
29. Other income (expenses) . . . . . . . . . . . . . . . . . . . . . . 116
14. Corporate credit facilities . . . . . . . . . . . . . . . . . . . . . .
95
15. Provisions and other liabilities . . . . . . . . . . . . . . . . . .
96
15.1 Decommissioning liabilities . . . . . . . . . . . . . . . . .
96
15.2 Pension and post-employment benefits . . . . . . .
97
64
| NORTHLAND POWER INC. |
| 2023 ANNUAL REPORT |
Consolidated statements of financial position
In thousands of Canadian dollars
As at
December 31, 2024
December 31, 2023
Assets
Cash and cash equivalents
$
613,319
$
740,244
Restricted cash
59,073
73,257
Trade and other receivables (Note 8)
535,961
396,014
Other current assets
119,730
97,468
Derivative assets (Note 19.2)
63,979
139,711
Total current assets
$
1,392,062
$
1,446,694
Property, plant and equipment (Note 4)
8,879,101
9,179,933
Contracts and other intangible assets (Note 5)
393,886
446,870
Goodwill (Note 6)
617,607
639,347
Finance lease receivable (Note 7.1)
113,884
120,191
Derivative assets (Note 19.2)
248,869
249,286
Deferred tax asset
38,174
44,726
Investment in joint ventures (Note 10)
1,023,068
899,885
Other non-current assets (Note 9)
897,687
599,366
Total non-current assets
$
12,212,276
$
12,179,604
Total assets
$
13,604,338
$
13,626,298
Liabilities and equity
Trade and other payables (Note 11)
$
368,791
$
449,461
Loans and borrowings (Note 13)
862,626
744,812
Dividends payable (Note 16.3)
26,657
26,150
Current portion of provision and other liabilities (Note 15)
32,114
28,236
Derivative liabilities (Note 19.2)
40,907
27,356
Total current liabilities
$
1,331,095
$
1,276,015
Loans and borrowings (Note 13)
6,147,273
6,320,722
Corporate credit facilities (Note 14)
175,919
115,656
Provisions and other liabilities (Note 15)
648,408
740,383
Derivative liabilities (Note 19.2)
187,404
100,539
Deferred tax liability
557,826
590,259
Total non-current liabilities
$
7,716,830
$
7,867,559
Total liabilities
$
9,047,925
$
9,143,574
Equity
Common shares (Note 16.1)
$
5,193,412
$
5,085,387
Preferred shares (Note 16.2)
144,843
144,843
Contributed surplus
6,281
5,976
Accumulated other comprehensive income (loss)
43,620
107,653
Deficit
(1,202,043)
(1,158,682)
Equity attributable to shareholders
$
4,186,113
$
4,185,177
Non-controlling interests (“NCI”) (Note 17)
370,300
297,547
Total equity
$
4,556,413
$
4,482,724
Total liabilities and equity
$
13,604,338
$
13,626,298
See accompanying notes.
(signed, John W. Brace)
(signed, Kevin Glass)
John W. Brace
Kevin Glass
Director and Chair of the Board
Director and Chair of the Audit Committee
| NORTHLAND POWER INC. |
| 2024 ANNUAL REPORT |
65
Consolidated statements of income (loss)
In thousands of Canadian dollars except for Share and per Share information
Year ended December 31,
2024
2023
Income
Revenue from sale of energy and related products (Note 20)
$
2,346,264
$
2,232,779
Finance lease income (Note 7.1)
10,383
10,899
Total Income
$
2,356,647
$
2,243,678
Expenses
Operating costs (Note 21)
649,936
620,560
General and administrative (“G&A”) costs (Note 21)
113,100
115,166
Development costs (Note 21)
63,108
114,180
Impairment of non-financial assets (Note 6 and 24)
—
163,169
Fair value adjustment relating to the disposal group held for sale (Note 29)
43,884
—
Depreciation of property, plant and equipment (Note 4)
615,343
595,600
Amortization of contracts and other intangible assets (Note 5)
58,384
57,015
Total expenses
$
1,543,755
$
1,665,690
Operating income
$
812,892
$
577,988
Finance costs (Note 23)
(392,022)
(383,328)
Finance income (Note 23)
71,388
61,516
Foreign exchange gain (loss)
716
39,732
Fair value gain (loss) on financial instruments (Note 19.1 and 19.2)
(93,695)
(303,898)
Share of profit (loss) from joint ventures (Note 10)
43,734
(279,849)
Other income (expense) (Note 29)
120,543
230,836
Income (loss) before income taxes
$
563,556
$
(57,003)
Income taxes (provision) recovery (Note 25.1)
Current
(198,035)
(143,554)
Deferred
5,868
104,425
Total income taxes
$
(192,167) $
(39,129)
Net income (loss)
$
371,389
$
(96,132)
Net income (loss) attributable to:
Non-controlling interests (“NCI”)
99,564
79,062
Shareholders of the Company (Note 22)
271,825
(175,194)
Net income (loss)
$
371,389
$
(96,132)
Weighted average number of Shares outstanding - basic and diluted (000s)
(Note 22)
257,300
252,710
Net income (loss) attributable to common shareholders per Share - basic and
diluted (Note 22)
$
1.03
$
(0.72)
See accompanying notes.
66
| NORTHLAND POWER INC. |
| 2024 ANNUAL REPORT |
Consolidated statements of comprehensive income (loss)
In thousands of Canadian dollars
Year ended December 31,
2024
2023
Net income (loss)
$
371,389
$
(96,132)
Items that may be re-classified into net income (loss):
Exchange rate differences on translation of foreign operations
(14,150)
248,539
Share of other comprehensive loss of a joint venture
7,937
—
Change in fair value of derivative contracts (Note 19.2)
(78,162)
(164,204)
Deferred tax recovery (expense) (Note 25)
19,147
19,713
Items that will not be re-classified into net income (loss):
Re-measurement of pension obligation
2,394
(6,076)
Other comprehensive income (loss)
$
(62,834) $
97,972
Total comprehensive income (loss)
$
308,555
$
1,840
Total comprehensive income (loss) attributable to:
Non-controlling interests
100,763
65,341
Shareholders of the Company
207,792
(63,501)
Total comprehensive income (loss)
$
308,555
$
1,840
See accompanying notes.
| NORTHLAND POWER INC. |
| 2024 ANNUAL REPORT |
67
Consolidated statements of changes in equity
In thousands of Canadian dollars
Share capital
Preferred
shares
Deficit
Contributed
surplus
Accumulated
other
comprehensive
income (loss)
Equity
attributable
to
shareholders
Non-
controlling
interests
Total
equity
December 31, 2023
$
5,085,387 $
144,843 $ (1,158,682) $
5,976 $
107,653 $
4,185,177 $
297,547 $
4,482,724
Net income (loss)
—
—
271,825
—
—
271,825
99,564
371,389
Deferred tax recovery (expense) (Note 25)
—
—
—
—
18,829
18,829
318
19,147
Exchange rate differences on translation of
foreign operations
—
—
—
—
(24,140)
(24,140)
9,990
(14,150)
Share of other comprehensive income (loss) of a
joint venture
—
—
—
—
7,937
7,937
—
7,937
Change in fair value of derivative contracts
(Note 19)
—
—
—
—
(69,034)
(69,034)
(9,128)
(78,162)
Re-measurement of pension obligation
—
—
—
—
2,375
2,375
19
2,394
Total comprehensive income (loss)
$
— $
— $
271,825 $
— $
(64,033) $
207,792 $
100,763 $
308,555
Share-based compensation reserve (Note 16.1)
—
—
—
305
—
305
—
305
Additional contribution by NCI (Note 17)
—
—
—
—
—
—
782
782
Dividends to NCI (Note 17)
—
—
—
—
—
—
(28,792)
(28,792)
Common shares issued under DRIP and
dividends declared (Note 16.1 and 16.3)
108,025
—
(309,024)
—
—
(200,999)
—
(200,999)
Preferred share dividends (Note 16.2)
—
—
(6,162)
—
—
(6,162)
—
(6,162)
December 31, 2024
$
5,193,412 $
144,843 $ (1,202,043) $
6,281 $
43,620 $
4,186,113 $
370,300 $
4,556,413
See accompanying notes.
68
| NORTHLAND POWER INC. |
| 2024 ANNUAL REPORT |
Consolidated statements of changes in equity (continued)
In thousands of Canadian dollars
Share capital
Preferred
shares
Deficit
Contributed
surplus
Accumulated
other
comprehensive
income (loss)
Equity
attributable
to
shareholders
Non-
controlling
interests
Total
equity
December 31, 2022
$ 4,945,983 $
144,843 $
(701,140) $
5,536 $
(4,040) $
4,391,182 $
333,091 $ 4,724,273
Net income (loss)
—
—
(175,194)
—
—
(175,194)
79,062
(96,132)
Deferred tax recovery (expense) (Note 25)
—
—
—
—
19,002
19,002
711
19,713
Exchange rate differences on translation of foreign
operations
—
—
—
—
245,319
245,319
3,220
248,539
Change in fair value of derivative contracts (Note 19)
—
—
—
—
(146,588)
(146,588)
(17,616)
(164,204)
Re-measurement of pension obligation
—
—
—
—
(6,040)
(6,040)
(36)
(6,076)
Total comprehensive income (loss)
$
— $
— $
(175,194) $
— $
111,693 $
(63,501) $
65,341 $
1,840
Share-based compensation reserve (Note 16.1)
279
—
—
440
—
719
—
719
Non-controlling interest disposal (Note 17)
—
—
—
—
—
—
(10,750)
(10,750)
Increase in NCI arising on dilution of interest in
subsidiaries (Note 17)
—
—
27,224
—
—
27,224
29,808
57,032
Common shares issued, net of costs (Note 16.1)
40,908
—
—
—
—
40,908
—
40,908
Deferred tax on share issuance cost
(Note 16.1)
313
—
—
—
—
313
—
313
Dividends to NCI (Note 17)
—
—
—
—
—
—
(119,943)
(119,943)
Common shares issued under DRIP and dividends
declared (Note 16.1 and 16.3)
97,904
—
(303,469)
—
—
(205,565)
—
(205,565)
Preferred share dividends (Note 16.2)
—
—
(6,103)
—
—
(6,103)
—
(6,103)
December 31, 2023
$ 5,085,387 $
144,843 $ (1,158,682) $
5,976 $
107,653 $
4,185,177 $
297,547 $ 4,482,724
See accompanying notes.
| NORTHLAND POWER INC. |
| 2024 ANNUAL REPORT |
69
Consolidated statements of cash flows
In thousands of Canadian dollars
Year ended December 31,
2024
2023
Operating activities
Net income (loss)
$
371,389
$
(96,132)
Items not involving cash:
Depreciation of property, plant and equipment (Note 4)
615,343
595,600
Amortization of contracts and other intangible assets (Note 5)
58,384
57,015
Fair value adjustment relating to the disposal group held for sale (Note 29)
43,884
—
Impairment of non-financial assets (Note 6 and 24)
—
163,169
Finance costs, net (Note 23)
320,634
321,812
Fair value (gain) loss on financial instruments (Note 19.2)
93,695
303,898
Unrealized foreign exchange (gain) loss
611
(32,407)
Loss (gain) on divestment or change of ownership interest in subsidiaries and
joint ventures
(63,901)
(204,902)
Deferred tax expense (recovery) (Note 25.1)
(5,868)
(104,425)
Share of (profit) loss from joint ventures (Note 10)
(43,734)
279,849
Others
(56,385)
(31,950)
$
1,334,052
$
1,251,527
Net change in working capital related to operations
(305,084)
(440,828)
Cash provided by (used in) operating activities
$
1,028,968
$
810,699
Investing activities
Purchase of property, plant and equipment
(552,218)
(441,111)
Additional equity contribution to the joint ventures
(82,101)
(1,014,615)
Purchase of contracts and other intangible assets
—
(1,050)
Proceeds from divestment of ownership interest in subsidiaries and joint
ventures
257,249
510,115
Restricted cash utilization (funding)
20,740
36,738
Loans provided to joint ventures
(228,021)
(389,509)
Others
135,540
129,379
Cash provided by (used in) investing activities
$
(448,811) $
(1,170,053)
Financing activities
Proceeds from borrowings, net of transaction costs (Note 12)
1,236,445
2,214,977
Repayment of borrowings (Note 12)
(1,345,588)
(1,875,332)
Interest paid
(345,784)
(325,841)
Restricted cash utilization (funding)
(2,582)
(14,329)
Common share dividends
(200,488)
(205,072)
Dividends to NCI (Note 17)
(28,792)
(119,943)
Preferred share dividends (Note 16.2)
(6,162)
(6,103)
Common shares issued, net of costs (Note 16.1)
—
40,908
Equity contribution by NCI (Note 17)
782
—
Proceeds from NCI for the issuance of shares in subsidiaries that does not
involve loss of control
—
62,187
Others
(28,079)
(25,691)
Cash provided by (used in) financing activities
$
(720,248) $
(254,239)
Effect of exchange rate differences on cash and cash equivalents
13,166
(10,472)
Net change in cash and cash equivalents during the year
$
(126,925) $
(624,065)
Cash and cash equivalents, beginning of the year
740,244
1,364,309
Cash and cash equivalents, end of the year
$
613,319
$
740,244
See accompanying notes.
70
| NORTHLAND POWER INC. |
| 2024 ANNUAL REPORT |
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 and joint
ventures (together referred in here as “Northland” or the “Group”), in power producing facilities and a power distribution
utility, as well as in the 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 business 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, Colombia, Germany, the Netherlands, Spain, and the United States of America (the “United States”). Northland’s
significant assets under construction and development are located in Canada, Poland, South Korea, Scotland, Taiwan, 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”) and Series 2 cumulative floating rate preferred shares (“Series 2
Preferred Shares”) that are publicly traded on the Toronto Stock Exchange (“TSX”). Northland’s registered office is located
in Toronto, Ontario.
These audited consolidated financial statements (the “consolidated financial statements”) include results of the Group, of
which the most significant subsidiaries and joint ventures, as of December 31, 2024 are listed in the following table:
Name of the entities
Geographic region
Relationship
Effective
ownership %(1)
Offshore Wind
Buitengaats C.V. and ZeeEnergie C.V. (“Gemini”)
The Netherlands
Subsidiary
60%
Nordsee One GmbH (“Nordsee One”)
Germany
Subsidiary
85%
Northland Deutsche Bucht GmbH (“Deutsche Bucht”)
Germany
Subsidiary
100%
Baltic Power Offshore Wind Project (“Baltic Power”)
Poland
Joint Venture
49%
NP Hai Long Holding BV (“Hai Long”) (2)
Taiwan
Joint Venture
31%
Onshore Renewable
Northland Power Spain Holdings, S.L.U. ("Spanish portfolio")(3)
Spain
Subsidiary
99%
Natural Gas
North Battleford Power L.P. (“North Battleford”)
Canada
Subsidiary
100%
Thorold CoGen L.P. (“Thorold”)
Canada
Subsidiary
100%
Utility
Empresa de Energía de Boyacá S.A E.S.P (“EBSA”)
Colombia
Subsidiary
99%
(1) As at December 31, 2024, Northland’s economic interest remained unchanged from December 31, 2023.
(2) Northland holds 51% (December 2023: 51%) shareholding in NP Hai Long Holding BV (“Hai Long”) which holds 60% (December 2023:
60%) investment in the underlying offshore wind projects (the “Hai Long Project”). As a result, Northland’s economic interest in the
Hai Long Project, is 31% (December 2023: 31%).
(3) 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%.
| NORTHLAND POWER INC. |
| 2024 ANNUAL REPORT |
71
2. Summary of 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 current year presentation.
The consolidated financial statements for the year ended December 31, 2024, were approved by the Board of Directors on
February 26, 2025.
2.2 Basis of consolidation
The consolidated financial statements include Northland’s direct and indirect subsidiaries, which are fully consolidated on
the date when Northland obtains control and continue to be consolidated until the date such control ceases. Northland
determines that it has control over an investee if facts and circumstances indicate that Northland is exposed to, 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.
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”. Any goodwill arising from business combinations is,
from the date of acquisition, allocated to each of Northland’s cash-generating units (CGUs) or a group of CGU 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 (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
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.
An associate is an entity over which Northland has significant influence. Significant influence is the ability to participate in
the financial and operating policy decisions of the investee without controlling or jointly controlling it.
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 OCI 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 OCI) of the joint venture,
Northland recognizes its share of any changes, when applicable, in the consolidated statements of changes in equity and
corresponding effect would be reflected in the net carrying value of interest in the joint venture.
72
| NORTHLAND POWER INC. |
| 2024 ANNUAL REPORT |
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 statements 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. Refer note 2.9 for further information about the measurement of the decommissioning liabilities.
Depreciation expense is recognized on a straight-line basis over estimated useful lives of the underlying assets, grouped
under various asset classes, as follows:
Description of asset class
Useful Lives
Plant and operating equipment
10 to 35 years
Buildings and foundations
20 to 40 years
Lease ROU asset
1 to 50 years
Leasehold improvements
Over the term of the lease
Other equipment - vehicles and meteorological towers
5 years
Other equipment - office equipment, furniture and fixtures
5 years
Other equipment - computers and computer software
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 and other tax credits 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.
| NORTHLAND POWER INC. |
| 2024 ANNUAL REPORT |
73
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.
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 is initially measured at the present value of
the unpaid lease payments and discounted using the interest rate implicit in the lease (if readily determinable) or otherwise
using Northland’s incremental borrowing rate. 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. ROU assets are depreciated over a period, which is shorter of the lease term and useful life of the underlying
asset. The lease term includes any renewal or termination options, which 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 that 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 the PPA 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.
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| NORTHLAND POWER INC. |
| 2024 ANNUAL REPORT |
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 or a group of CGUs to which the
goodwill relates. Where the estimated recoverable amount of the CGU or a group of CGU is less than its carrying amount,
an impairment loss is recognized. Impairment losses relating to goodwill are not reversed in future periods.
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 statements 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 expected cash inflows associated with
the residual or scrap values of the assets are not considered in arriving at decommissioning cost. 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
Northland’s share-based compensation plans provide incentives to executive management and select non-executive
employees through "Deferred Rights" and "Development Project LTIP" to attract and retain talent or recognize
achievements upon identified projects reaching predetermined milestones. Additionally, Performance Share Units (PSU),
Restricted Share Units (RSU), and Deferred Share Units (DSU) are granted to the Board of Directors and staff. For
Development Project LTIP awards, the cost is recognized over the vesting period and capitalized for employees working
directly on projects. These awards vest when performance expectations are met. Deferred Rights, PSU, RSU, and DSU vest
over a maximum of three years, and their expected cost is expensed over the vesting period.
The above awards, are settled in cash or shares, at Northland’s discretion, except DSUs and Development Project LTIP which
are settled in cash only. 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 original maturities on acquisition of 90 days or less.
Restricted cash comprises amounts which are not readily available, on demand, to fund Northland’s operations, including
the amounts set aside for specific uses such as amounts funded against future maintenance, debt service and construction
costs at certain Northland subsidiaries.
As of December 31, 2024, cash and cash equivalents are comprised of cash balances and a short term deposit held with the
banks of $613 million (December 2023 - $682 million) and nil (December 2023 - $58 million), respectively.
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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. A financial liability is derecognized when the obligation
under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the
same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an
exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The
difference in the respective carrying amounts is recognized in the consolidated statements of income (loss).
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 statements 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 financial
instruments”. Northland classifies loans provided to First Nations partners at FVPL as 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 recognized as
“Finance 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 these type of instruments are recognized in the consolidated statements of
income (loss).
For financial instruments classified as fair value through OCI (FVOCI), refer below to note 2.12 (d) - Derivatives and hedging
activities).
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 income” 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.
Tax equity financing:
Northland owns and operates certain renewable projects in the United States under tax-equity structures with the project
investors, commonly referred to as the “Tax-Equity Investors”, that have financed the construction of these renewable
projects. Such tax-equity structures are used to allocate renewable tax incentives, such as Investment Tax Credits (ITCs),
cash grants, and accelerated tax depreciation, as applicable, to the Tax-Equity Investors.
Generally, these Tax-Equity Investors, in return for purchasing equity stakes in these renewable projects, receive a
substantial portion of earnings, tax benefits and cash flows from the projects financed with a tax-equity structure, until the
projects have yielded an agreed-upon target rate of return to the Tax-Equity Investors (the "Flip Point"). The Flip Point is
generally dependent on the project’s performance. However, from time to time, the Flip Point dates may be contractually
determined. Immediately after the Flip Point, the structures flip such that the Northland will receive the majority of
earnings, tax benefits and cash flows from the projects financed with tax-equity structures.
When a tax-equity partnership is formed, Northland assesses whether the project company should be consolidated based
on Northland's right to variable returns and its ability to influence the financial and operational decisions impacting those
returns. Due to the operational and financial nature of the projects, and the protective nature of the rights given to the Tax-
Equity Investors, Northland may retain the control to consolidate the project entity.
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In accordance with the terms of the tax equity structure, the contribution by the Tax-Equity Investors has the characteristics
of liability. These contributions are repayable and are subject to an agreed-upon rate of return. Additionally, the Tax Equity
Investors do not share the risks of the renewable project in the same manner as Northland. Accordingly, the amounts
contributed by the Tax-Equity Investors for their equity stakes are classified as loans and borrowings in the consolidated
financial statements until the respective Flip Point of the projects. Subsequent to the Flip Point, the Tax-Equity Investors’
equity investments will be accounted for as non-controlling interests.
The loans and borrowings as disclosed in note 13.1 of these consolidated financial statements, associated with the tax-
equity structures are measured at amortized cost using the effective interest method.
Tax Equity financing is settled over time through the following components:
Key Components
Description
ITCs
Allocation of ITCs to the tax-equity investor derived from the power generated by the
respective renewables facility during the period and recognized as an offset against the cost
of the related asset.
Taxable income (loss), including
tax attributes such as accelerated
tax depreciation
Allocation of taxable income (loss) and other tax attributes to the Tax-Equity Investor
recognized in other income as earned.
Interest Expense
Interest expense using the effective interest rate method recognized in finance costs as
incurred and as an increase in tax-equity financing.
Pay-go-contributions
Upon exceeding the annual production thresholds, the Tax-Equity Investor is required to
contribute additional cash amounts. The cash amounts paid increase the value of the tax-
equity financing.
Cash distributions
Cash distribution and projected ITCs allocated to tax-equity financing in lieu of cash discounted
at the internal rate of return to its present value.
(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.
(c) Fair value of financial instruments
Northland determines the fair value of its financial instruments at each consolidated statements of financial position 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 upon the settlement all unfavorable outstanding contracts or the amount that would be received upon the
settlement of all favorable contracts at the consolidated statements of financial position date. 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 19.1.
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.
Embedded derivatives are separated from the host contract and accounted for separately if the host contract is not a
financial asset and certain criteria are met.
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 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 financial instruments”.
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 consolidated statements of
comprehensive income (loss) 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 financial
instruments”. 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 periodically 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 20 and 26 for details on revenue streams disaggregated by
geography and technology, respectively.
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.
Renewable energy credits revenue is recognized at the time when the electricity is generated by the facility and delivered to
the grid, when all performance obligations have been delivered. Revenues are based on actual output and contractual sale
prices set forth in long-term contracts.
(b) Regulated revenue from electricity generation and utility
From electricity generation:
The revenue for each facility has four components:
•
The return on investment (“Ri”), sized to complete the target return based on the market revenue assumed ex-ante
(the “posted price”);
•
The return on operations (“Ro”), sized to compensate a facility when its operating costs are higher than its market
revenues. To note, Ro is not being received in the current environment;
•
The market revenue, at pool prices; and
•
The “band adjustments”, which are an ex-post positive or negative settlement to compensate for the difference
between the market revenue, at pool prices and the revenue at the regulatory posted price. If the pool price is
lower than the regulatory posted price, the band adjustment mechanism adds the additional revenue to achieve a
reasonable return. Conversely, if the pool price is higher than the posted pool price, the band adjustment
mechanism reduces revenues in the period.
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 non-current 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 statements of financial position. The deferred revenue is recognized as revenue over the remaining regulatory
periods and presented under regulated electricity in the consolidated statements 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 “Trade and other receivables” or “Other non-current assets”, as the case may be, in the consolidated statements of
financial position. Collectively known as “Band adjustments” mechanism.
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From utility distribution:
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).
(c) Other sources of revenue
Northland recognizes management fees and operations-related incentive fees as earned based on the terms of its
respective facility agreements as the work is performed.
(d) Interest income
Interest income is recognized as earned in accordance with the terms of the underlying financial contracts.
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
(a) Current income tax
Income tax assets and liabilities are measured at the amount expected to be recovered from or paid to tax authorities,
based on the tax rates and tax laws that are enacted or substantively enacted at the consolidated statements of financial
position date. Current income tax relating to items recognized directly in equity is recognized in equity and not in the
consolidated statements of income (loss).
(b) Deferred income tax
Deferred income tax is determined using the asset and liability method at the consolidated statements of financial position
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.
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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 consolidated statements of financial position date.
Deferred income tax relating to items recognized directly in equity is recognized in equity, not the consolidated statements
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.
(c) 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, located outside of Canada (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 they operate and includes the 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 rates for consolidated
statements of financial position date 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 consolidated statements of
comprehensive income (loss) and presented in consolidated statements of changes in equity. On disposal of a foreign
operation, the cumulative amount recognized in equity relating to the foreign operation is recognized in the consolidated
statements 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 Non-current assets and disposal group held for sale and discontinued operations
The Group classifies non-current assets and disposal groups as held for sale if their carrying amounts will be recovered
principally through a sale transaction rather than through continuing use. Non-current assets and disposal groups classified
as held for sale are measured at the lower of their carrying amount and fair value less costs to sell. Costs to sell are the
incremental costs directly attributable to the disposal of an asset (disposal group), excluding finance costs and income tax
expense. The criteria for held for sale classification is regarded as met only when the sale is highly probable, and the asset
or disposal group is available for immediate sale in its present condition. Actions required to complete the sale should
indicate that it is unlikely that significant changes to the sale will be made or that the decision to sell will be withdrawn.
Management must be committed to the plan to sell the asset and the sale is expected to be completed within one year
from the date of the classification.
Property, plant and equipment and intangible assets are not depreciated or amortized once classified as held for sale.
Interest and other expenses attributable to the liabilities of a disposal group classified as held for sale continue to be
recognized. Assets and liabilities of disposal group, classified as held for sale, are presented separately as current items in
the consolidated statements of financial position.
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A disposal group qualifies as discontinued operation if it is a component of an entity that either has been disposed of, or is
classified as held for sale, and a) represents a separate major line of business or geographical area of operations; b) is part
of a single coordinated plan to dispose of a separate major line of business or geographical area of operations; or c) is a
subsidiary acquired exclusively with a view to resale. Discontinued operations are excluded from the results of continuing
operations and are presented as a single amount as profit or loss after tax from discontinued operations in the consolidated
statements of comprehensive income (loss).
2.19 New standards or amendments and forthcoming requirements
Northland assesses new standards or amendment to the existing standards to determine whether it may have a material
impact on its consolidated financial statements. The following standards and or amendments to the existing standards
apply for the first time to financial reporting periods commencing on or after January 1, 2024:
•
Amendments to IAS 1, Presentation of Financial Statements (effective 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.
•
Amendments to IAS 7 and IFRS 7, Supplier Finance (effective on or after January 1, 2024) – These amendments require
disclosures to enhance the transparency of supplier finance arrangements and their effects on an entity’s liabilities,
cash flows and exposure to liquidity risk.
•
Amendment to IFRS 16, Leases on sale and leaseback (effective on or after January 1, 2024) – These amendments
include requirements for sale and leaseback transactions in IFRS 16 to explain how an entity accounts for a sale and
leaseback after the date of the transaction. Sale and leaseback transactions where some or all the lease payments are
variable lease payments that do not depend on an index or rate are most likely to be impacted.
Northland adopted the above amendments as of January 1, 2024, and there has been no significant impact on the
consolidated financial statements as of and for the year ended December 31, 2024.
IASB has issued following new amendments to the standards before December 31, 2024, with an effective date for
accounting periods ending on or after January 1, 2025:
•
Amendment to IAS 21, Lack of Exchangeability (effective on or after January 1, 2025) – The amendment specifies how
an entity should assess whether a currency is exchangeable and how it should determine a spot exchange rate when
exchangeability is lacking. An entity is impacted by the amendments when it has a transaction or an operation in a
foreign currency that is not exchangeable into another currency at a measurement date for a specified purpose.
•
Amendments to IFRS 7 and IFRS 9 (effective on or after January 1, 2026) – These proposed amendments require that a
financial liability be derecognized on the ‘settlement date’ and introduced an accounting policy choice to derecognize
financial liabilities settled using an electronic payment system before the settlement date.
•
IFRS 18, Presentation and Disclosure in Financial Statements (effective on or after January 1, 2027) – This is a new
standard on the presentation and disclosure in financial statements with a focus on changes to the structure of the
statement of profit or loss, required disclosures in the financial statements for management defined performance
measures that are reported outside an entity’s financial statements and enhanced principles on aggregation and
disaggregation which apply to the primary financial statements and notes to the financial statements.
Management is currently assessing the impact of these amendments on the consolidated financial statements of Northland.
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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 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 the projects in early, mid and advanced stage development phases though an
internally developed framework developed. 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, which
generally occurs during mid-to-advanced staged development phase. Early stage development costs are expensed as
incurred.
Determination of which projects continue to be pursued and when to commence deferring costs for the 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 any development project is no longer feasible, the
deferred costs are expensed in the period such decision 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 17 for details on significant non-wholly owned subsidiaries and note 10 for investment in joint
ventures.
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 the information 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.
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, such as but not limited to goodwill. The carrying amounts of PP&E and intangible assets are analyzed in note 4 and
note 5, respectively.
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| 2024 ANNUAL REPORT |
83
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. Refer to 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. Refer to note 19.1 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 24.
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.
84
| NORTHLAND POWER INC. |
| 2024 ANNUAL REPORT |
4. Property, plant and equipment
The table below summarizes the changes in the consolidated property, plant, and equipment of the Group, excluding its
joint ventures, categorized by asset class:
Construction-
in-progress
Plant and
operating
equipment
Land, buildings
and leasehold
improvements
Lease ROU
asset
(Note 7.2)
Other
equipment (1)
Total
Cost
January 1, 2023
$
841,299 $
9,909,974 $
1,874,529 $
190,524 $
47,797 $ 12,864,123
Additions
375,632
56,684
10,960
46,521
665
490,462
Transfer from CIP
(1,024,683)
850,776
160,136
2,796
10,975
—
Exchange rates changes
36,222
162,486
8,438
600
2,293
210,039
Disposals and other movements (2)
(10,777)
(277,112)
(69)
(4,697)
(567)
(293,222)
December 31, 2023
$
217,693 $ 10,702,808 $
2,053,994 $
235,744 $
61,163 $ 13,271,402
Additions
549,852
1,902
820
3,827
1,266
557,667
Transfer from CIP
(64,427)
51,827
9,412
48
3,140
—
Exchange rates changes
2,748
121,760
5,371
6,324
(4,642)
131,561
Disposals and other movements (2)
(34,478)
(459,236)
156,355
(12,536)
1,308
(348,587)
December 31, 2024
$
671,388 $ 10,419,061 $
2,225,952 $
233,407 $
62,235 $ 13,612,043
Accumulated depreciation
January 1, 2023
$
— $
2,798,629 $
607,740 $
40,537 $
39,633 $ 3,486,539
Exchange rates changes
—
33,355
4,492
13
1,707
39,567
Depreciation
—
422,904
151,819
17,039
3,838
595,600
Disposals and other movements
—
(20,372)
(4,793)
(420)
(4,652)
(30,237)
December 31, 2023
$
— $
3,234,516 $
759,258 $
57,169 $
40,526 $ 4,091,469
Exchange rates changes
—
31,349
10,564
1,113
347
43,373
Depreciation
—
450,172
145,874
15,511
3,786
615,343
Disposals and other movements
—
25,023
(35,699)
(6,373)
(194)
(17,243)
December 31, 2024
$
— $
3,741,060 $
879,997 $
67,420 $
44,465 $ 4,732,942
Net book value
December 31, 2023
217,693
7,468,292
1,294,736
178,575
20,637
9,179,933
December 31, 2024
$
671,388 $
6,678,001 $
1,345,955 $
165,987 $
17,770 $ 8,879,101
(1) Other equipment includes vehicles, meteorological towers, office equipment, furniture and fixtures, and computer software.
(2) Includes disposal and transfers of assets, adjustments related to ARO assets, and recognition of accruals, net of amounts paid, under
the LTIP.
(a) Disposals and other movements include property, plant and equipment with the net book value of $253 million, relating
to the La Lucha Solar facility that was disposed of during the year (note 29).
(b) As at December 31, 2024, construction-in-progress primarily relates to the Oneida Energy Storage project in Canada and
other routine capital maintenance work on certain operational projects in Canada and Colombia.
(c) As at December 31, 2024, the grant received from Natural Resource Canada, to support the development and
construction of the Oneida Energy Storage Project, amounting to $45 million (net of 10% holdback) has been recognized as
an offset to the carrying value of construction in progress.
(d) As disclosed in note 13.1 the Investment Tax Credit, amounting to $41 million (December 2023 - $239 million), earned
by the New York Wind projects, during the year has been recognized as an offset to the property, plant, and equipment.
| NORTHLAND POWER INC. |
| 2024 ANNUAL REPORT |
85
Geographical Information
Northland operates in various geographic locations worldwide. The table below presents the consolidated property, plant,
and equipment of its subsidiaries, excluding joint ventures, across these significant locations:
As at
December 31, 2024
December 31, 2023
The Netherlands
$
2,271,477
$
2,419,327
Germany
2,102,684
2,218,653
Canada
2,092,886
1,750,106
Spain
1,345,518
1,406,339
United States
496,853
538,465
Colombia
539,581
567,807
Others
30,102
279,236
Total
$
8,879,101
$
9,179,933
5. Contracts and other intangible assets
The following table summarizes the movement in contracts and intangible assets:
Year ended December 31,
2024
2023
Cost
As at January 1
$
714,295
$
723,522
Additions
—
1,050
Disposals
(2,579)
(18,224)
Exchange rates changes
11,527
7,947
December 31,
$
723,243
$
714,295
Accumulated amortization
As at January 1
$
(267,425) $
(207,747)
Amortization
(58,384)
(57,015)
Exchange rates changes
(3,548)
(2,663)
December 31,
$
(329,357) $
(267,425)
Net book value
$
393,886
$
446,870
6. Goodwill
Changes in the goodwill during the years ended December 31, 2024, and 2023 are summarized below:
Year ended December 31,
2024
2023
Cost
As at January 1
$
910,597
$
820,699
Exchange rates changes
(18,794)
89,898
December 31,
$
891,803
$
910,597
Accumulated impairment
As at January 1
$
(271,250) $
(108,081)
Impairment (Note 24)
—
(163,169)
Exchange rates changes
$
(2,946) $
—
December 31,
$
(274,196) $
(271,250)
Net Book Value
$
617,607
$
639,347
86
| NORTHLAND POWER INC. |
| 2024 ANNUAL REPORT |
7. Leases
7.1 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 the period 25 years ending in 2036. The amounts
receivable under finance lease are summarized as follows:
As at
December 31, 2024
December 31, 2023
Minimum lease payments
Minimum lease
payments
Present value of
minimum lease
payments
Minimum lease
payments
Present value of
minimum lease
payments
Within one year
$
16,182 $
6,302
$
16,183 $
5,800
After one year but not more than five years
64,806
31,236
64,806
28,753
More than five years
109,071
82,648
125,258
91,438
$
190,059 $
120,186
$
206,247 $
125,991
Less: Unearned finance income
(69,873)
—
(80,256)
—
Total finance lease receivable
$
120,186 $
120,186
$
125,991 $
125,991
Current portion (Note 8)
6,302
5,800
Non-current portion
$
113,884
$
120,191
The interest rate embedded in the lease was set for the term at the inception of the lease at approximately 8.4% per
annum.
For the year ended December 31, 2024, finance lease income of $10 million (December 2023 - $11 million) was recognized
in the consolidated statements of income (loss).
7.2 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 up to 50 years.
The amount of the lease ROU asset and associated depreciation by type of underlying asset as at December 31, 2024 are as
follows:
Land
Vehicle
Equipment
Building
Total
January 1, 2023
$
123,854 $
(337) $
10,287 $
16,183 $
149,987
Additions
29,523
1,406
—
15,592
46,521
Other movements (1)
67
5,096
(5,047)
(1,597)
(1,481)
Depreciation expense
(9,912)
(1,727)
(1,807)
(3,593)
(17,039)
Exchange rates changes
313
188
36
50
587
December 31, 2023
$
143,845 $
4,626 $
3,469 $
26,635 $
178,575
Additions
3,067
5
453
302
3,827
Other movements (1)
(6,992)
(164)
(381)
1,422
(6,115)
Depreciation expense
(6,982)
(1,615)
(1,693)
(5,221)
(15,511)
Exchange rates changes
4,874
(3)
37
303
5,211
December 31, 2024
$
137,812 $
2,849 $
1,885 $
23,441 $
165,987
(1) Other movements include disposal and transfers of leased assets.
The lease ROU asset balance is included in PP&E 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, 2024, lease expense of $4 million (December 2023 - $7 million) was recognized and presented within the
G&A and operating costs lines in the consolidated statements of income (loss).
| NORTHLAND POWER INC. |
| 2024 ANNUAL REPORT |
87
The following table summarizes the movements in Northland’s lease liabilities:
Year ended December 31,
2024
2023
January 1
$
187,226
$
155,212
Additions
3,827
46,521
Accretion of interest (Note 23)
5,178
4,073
Payments
(19,207)
(19,613)
Disposals
(5,615)
—
Exchange rates changes
5,754
1,033
December 31,
$
177,163
$
187,226
Current
18,469
16,141
Non-current
158,694
171,085
Total lease liabilities (Note 15)
$
177,163
$
187,226
8. Trade and other receivables
As at
December 31, 2024
December 31, 2023
Trade receivables
$
272,914
$
298,221
SDE subsidy receivable
213,161
—
Indirect taxes receivable
7,753
58,923
Finance lease receivable (current portion) (Note 7.1)
6,302
5,800
Others (1)
35,831
33,070
Total
$
535,961
$
396,014
(1) Included in others are amounts due from the joint ventures relating to the cost recharges for the project management services
provided by Northland, aggregating to $27 million (December 2023: nil) (Note 27.2).
9. Other non-current assets
As at
December 31, 2024
December 31, 2023
Loan receivable from joint ventures (Note 9.1)
$
682,069
$
405,368
Long-term deposits (a)
146,033
133,620
Band adjustments
34,562
—
Receivable related to terminated derivative contracts
—
16,631
Trade receivables - Non current portion
16,879
20,490
Other (1)
18,144
23,257
Total
$
897,687
$
599,366
(1) Other includes deferred financing costs amounting to $3 million (December 2023 - $5 million), associated with the syndicated
revolving facility (Note 14).
(a) Long-term deposits include decommissioning deposits relating to offshore wind facilities, amounting to $140 million
(December 2023 - $123 million). Additionally, in connection with the decommissioning deposits, 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 of $61 million (December 2023 - $59 million), held by project lenders in a money market fund with
the maturity in 2042 and earns interest at a rate of 6-month EURIBOR plus 0.8%.
9.1 Loans receivable from joint ventures
As at
December 31, 2024
December 31, 2023
Hai Long (Note 10.1)
$
465,476
$
208,075
Baltic (Note 10.2)
216,593
197,293
Total (Note 27.2)
$
682,069
$
405,368
The above loan receivable balances, as of December 31, 2024, from Hai Long and Baltic, also include accrued interest
amounting to $26 million (December 2023 - $6 million) and $21 million (December 2023 - $4 million), respectively.
88
| NORTHLAND POWER INC. |
| 2024 ANNUAL REPORT |
10. Investment in joint ventures
Below are Northland’s significant joint ventures as at December 31, 2024 and 2023. The entities have share capital consisting solely of ordinary shares, which are held
directly or indirectly by Northland.
Name of joint ventures
Carrying amount as at
Share of profit (loss) for the year ended
December 31, 2024
December 31, 2023
December 31, 2024
December 31, 2023
Hai Long (Note 10.1)
$
652,770 $
526,282 $
47,310 $
(42,877)
Baltic Power (Note 10.2)
356,852
360,747
197
(220,490)
Others
13,446
12,856
(3,773)
(16,482)
Total
$
1,023,068 $
899,885 $
43,734 $
(279,849)
The country of incorporation or registration is the same as their principal place of business. Northland’s ownership interest is the same as the proportion of voting
rights held. Northland’s ownership and the place of business/country of incorporation of Baltic Power and Hai Long are disclosed in note 1 of the consolidated
financial statements.
The table below provides reconciliation of the carrying amounts of significant joint ventures to the underlying net assets of the joint ventures:
a) Reconciliation to equity investments carrying amounts
Opening net
assets
Equity
contribution
Total
comprehensive
income (loss)
for the year
Currency
translation
gain (loss)
Adjustments(1) Closing net
assets
Northland’s
share in %
Northland’s
share in net
assets
Other
adjustments(2)
Carrying
amount at
Northland’s
share
As at December 31, 2024
Hai Long
$ 1,031,926 $
161,807 $
108,328 $
— $
— $ 1,302,061
51%
$
664,051 $
(11,281) $
652,770
Baltic Power
738,327
—
404
11,556
—
750,287
49%
366,590
(9,738)
356,852
Total
$ 1,770,253 $
161,807 $
108,732 $
11,556 $
— $ 2,052,348
$ 1,030,641 $
(21,019) $ 1,009,622
As at December 31, 2023
Hai Long
$
329,858 $ 1,117,024 $
(71,461) $
3,142 $
(346,637) $ 1,031,926
51%
$
526,282 $
— $
526,282
Baltic Power
254,814
903,951
(451,268)
30,830
—
738,327
49%
360,747
—
360,747
Total
$
584,672 $ 2,020,975 $
(522,729) $
33,972 $
(346,637) $ 1,770,253
$
887,029 $
— $
887,029
(1) This represents adjustments, recognized as a result of Northland’s change in the ownership interest in Hai Long during 2023.
(2) These represent the elimination of Northland’s share in the interest expense on the Shareholder’s loans provided to these joint ventures.
In addition to the above, Note 10 (d) summarizes Northland’s share of commitments and contingencies related to its joint ventures.
| NORTHLAND POWER INC. |
| 2024 ANNUAL REPORT |
89
Summarized below is the financial information for the significant joint ventures. The disclosed information is comprised of the amounts presented in the financial
statements of the respective joint ventures, reflecting their 100% financial information and not Northland’s share of those amounts. They have been amended to
reflect adjustments made by Northland when applying the equity method of accounting, including acquisition date fair value adjustments and differences in
accounting policies.
b) Summarized statement of financial position, at 100%
Current assets
Non-current
assets
Current liabilities
Non-current
financial
liabilities
Net assets
Cash and
cash
equivalents
Other current
assets
Total
current
assets
Financial
liabilities
Other
current
liabilities
Total
current
liabilities
As at December 31, 2024
Hai Long
$
2,060 $
924 $
2,984 $ 2,216,718 $
1,793 $
— $
1,793 $
915,848 $ 1,302,061
Baltic Power
49,499
106,999
156,498
3,228,233
208,422
89,815
298,237
2,336,207
750,287
Total
$
51,559 $
107,923 $
159,482 $ 5,444,951 $
210,215 $
89,815 $
300,030 $ 3,252,055 $ 2,052,348
As at December 31, 2023
Hai Long
$
1,417 $
424 $
1,841 $ 1,438,150 $
134 $
— $
134 $
407,931 $ 1,031,926
Baltic Power
276,359
189,411
465,770
1,805,022
209,805
134,874
344,679
1,187,786
738,327
Total
$
277,776 $
189,835 $
467,611 $ 3,243,172 $
209,939 $
134,874 $
344,813 $ 1,595,717 $ 1,770,253
c) Summarized statement of comprehensive income, at 100%
Interest
income /
(expense)
G&A
Depreciation
and
amortization
Fair value
changes
Share of
profit (loss)
Income tax
expense
Net income
(loss)
Other
comprehensive
income (loss)
Total
comprehensive
income (loss)
Year ended December 31, 2024
Hai Long
$
9,116 $
(1,945) $
— $
15,779 $
74,912 $
(5,097) $
92,765 $
15,563 $
108,328
Baltic Power
(692)
(5,237)
(551)
6,884
—
—
404
—
404
Total
$
8,424 $
(7,182) $
(551) $
22,663 $
74,912 $
(5,097) $
93,169 $
15,563 $
108,732
Year ended December 31, 2023
Hai Long
$
— $
4,659 $
— $
(75,188) $
— $
(932) $
(71,461) $
— $
(71,461)
Baltic Power
4,396
(3,560)
(483)
(451,621)
—
—
(451,268)
—
(451,268)
Total
$
4,396 $
1,099 $
(483) $ (526,809) $
— $
(932) $ (522,729) $
— $
(522,729)
90
| NORTHLAND POWER INC. |
| 2024 ANNUAL REPORT |
d) Letters of credit and parental guarantees issued by Northland
The table below summarizes letters of credit and the parental guarantees, issued by Northland, in favor of the joint
ventures as their sponsor to support the credit obligations associated with the development and construction activities of
these projects.
As at
December 31, 2024
December 31, 2023
Hai Long
$
672,323
$
830,429
Baltic Power
66,895
32,145
Other joint ventures
—
2,626
Total
$
739,218
$
865,200
As of December 31, 2024, Hai Long's material commitments included capital commitments of $1.1 billion (December 2023 -
$2 billion). Northland’s share of the above commitments for Hai Long amounts to $323 million (December 2023 - $627
million)
As of December 31, 2024, Baltic Power's material commitments comprised letters of credit and capital commitments of
$2.1 billion (December 2023 - $2.2 billion) and $685 million (December 2023 $1.5 billion), respectively. Northland’s share of
the above commitments for Baltic Power amounts to $1.4 billion (December 2023 - $1.9 billion).
10.1 Hai Long offshore wind project
Northland holds 51% (December 2023 - 51%) shareholding in NP Hai Long Holding BV (“Hai Long”) which has 60%
(December 2023 - 60%) investment in the underlying offshore wind projects (the “Hai Long Project”). As a result,
Northland’s economic interest in the Hai Long Project, is 31% (December 2023 - 31%). Certain key activities of the Hai Long
Project are jointly controlled by Northland together with other shareholders of the Hai Long Project. Consequently,
Northland recognized its investment in the Hai Long Project as a jointly controlled investment and, accounted for using the
equity method in accordance with IAS 28 (Investment in Associates and Joint venture).
During the year ended December 31, 2023, Hai Long Project signed and closed a credit agreement to secure a $5 billion
(NTD $117 billion) 20-year long-term non-recourse project financing. As of December 31, 2024, the Hai Long Project has
drawn down $2 billion (December 2023 - nil) of project debt.
Northland has provided a long-term shareholder loan aggregating $440 million (December 2023 - $203 million) to the Hai
Long Project. The loan carries interest at the rate of 6% per annum. The loan has a contractual maturity of 20 years with
repayments commencing upon the Hai Long Project achieving commercial operations. It will be made in semi-annual
installments, due on 30 June and 31 December each year. The carrying value of this shareholder loan approximates its fair
value. In the consolidated statements of financial position, this loan, together with the accrued interest, is carried at
$465 million (December 2023 - $208 million). The loan is classified as non-current and presented under other non-current
assets (Note 9.1).
For the year ended December 31, 2024, Northland provided services to the Hai Long Project amounting to $41 million
(December 2023 - $26 million).
10.2 Baltic Power offshore wind project
Northland holds a 49% interest in the Baltic Power Offshore Wind Project ("Baltic Power”). 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 in accordance with IAS 28 (Investment
in Associates and Joint venture).
During the year ended December 31, 2023, Baltic Power signed and closed a credit agreement to secure 20-year long-term
non-recourse project financing amounting to CAD $5 billion (Euro equivalent €4 billion). As of December 31, 2024, Baltic has
drawn down $1 billion (December 2023 - nil) of project debt.
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91
Northland has provided a long-term shareholder loan aggregating to $196 million (December 2023 - $193 million) to Baltic
Power. The loan carries interest at the rate of EURIBOR plus 3.8%. The loan has a contractual maturity of 23 years with
repayments commencing upon Baltic Power Project achieving commercial operations and will be made in semi-annual
installments, due in February and August each year. The carrying value of this shareholder loan approximates its fair value.
In the consolidated statements of financial position, this loan, together with the accrued interest, is carried at $217 million
(December 2023 - $197 million). The loan is classified as non-current and presented under other non-current assets (Note
9.1).
For the year ended December 31, 2024, Northland provided services to Baltic Power, amounting to $15 million (December
2023 - $11 million).
11. Trade and other payables
Northland’s trade and other payables are summarized as follows:
As at
December 31, 2024
December 31, 2023
Trade payables
$
169,026
$
161,638
Tax payable
64,531
88,365
Short-term loans payable to joint ventures (a)
15,977
14,999
SDE subsidy payable
—
25,756
Other payables and accrued liabilities (b)
119,257
158,703
Total
$
368,791
$
449,461
(a) The short-term loans payable to the joint ventures carried interest at an annual rate of 3-month EURIBOR plus 1.1% and
has a contractual maturity date of April 2025 (Note 27.2).
(b) Other payables and accrued liabilities include accruals in relation to operational costs, development and construction
projects amounting to $104 million (December 2023 - $103 million), and accrued interest amounting to nil (December 2023
- $26 million).
12. Management of capital
Northland’s strategy for funding general development efforts and investing in project entities employs a mix of internally
generated cash flows, equity issuances, corporate debt, hybrid capital issuances, borrowings from corporate credit facilities,
sell-downs and asset recycling, along with other capital sources such as US tax equity financing. For additional information,
refer to note 13 and note 14.
Northland defines capital as the total of its equity, encompassing non-controlling interests, interest-bearing loans and
borrowings, corporate credit facilities, and net proceeds from asset sales. Northland’s objectives in managing capital are to
(i) ensure the stability and long-term sustainability of dividends for shareholders and (ii) finance assets with non-recourse
debt that is fully amortized throughout the duration of the underlying sales arrangements.
Northland exercises discretion regarding the amount of dividends declared to shareholders, the terms of its Dividend
Reinvestment Plan (DRIP), the issuance of new shares, and the issuance or redemption of preferred shares.
Northland’s strategy has been to finance its operating entities (subsidiaries of Northland) primarily through non-recourse
debt, whether at the subsidiary level or at the holding company level in the case of EBSA, New York Wind, and the Spanish
Portfolio. The interest rate on such non-recourse debt is largely fixed (or effectively fixed using interest rate swaps), and the
principal is fully repaid (amortized) generally over each facility’s PPA term. This ensures that each power generation facility
is debt-free at the expiration 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 throughout the lending period; the
repayment date is expected to be regularly extended, and the principal amount is regularly upsized due to the perpetual
and growing nature of the utility business.
As at December 31, 2024, total managed capital was $11.7 billion (December 2023 - $11.7 billion), comprising equity of $4.6
billion (December 2023 - $4.5 billion), non-recourse facility-level loans and borrowings totaling $6.5 billion (December 2023
- $6.6 billion) and corporate borrowings, net of deferred financing cost, aggregating to $665 million (December 2023 - $602
million).
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Changes in loans and borrowings (Note 13) and corporate credit facilities (Note 14) are summarized in the table below:
Year ended December 31, 2024
Project level
borrowings
Tax equity
financing(2)
Green
Subordinated
Notes
Corporate
credit
facilities(3)
Total
Total, beginning of the year
$
6,531,526 $
42,959 $
491,049 $
110,990 $
7,176,524
Financings, net of fees
611,330
—
—
625,115
1,236,445
Repayments
(770,393)
(5,955)
(569,240)
(1,345,588)
Other non-cash (1)
29,859
(12,772)
1,396
—
18,483
Exchange rate differences
88,331
2,569
—
5,585
96,485
Total, end of the year
$
6,490,653 $
26,801 $
492,445 $
172,450 $
7,182,349
Year ended December 31, 2023
Project level
borrowings
Tax equity
financing(2)
Green
Subordinated
Notes
Corporate
credit
facilities(3)
Total
Total, beginning of the year
$ 6,971,722
—
— $
(2,817) $
6,968,905
Financings net of fees paid
331,326
287,003
490,016
1,106,632
2,214,977
Repayments
(879,285)
—
—
(996,047)
(1,875,332)
Other non-cash (1)
65,426
(243,498)
1,033
1,918
(175,121)
Foreign exchange
42,337
(546)
—
1,304
43,095
Total, end of the year
$ 6,531,526 $
42,959 $
491,049 $
110,990 $
7,176,524
(1) Other non-cash changes include amortization of fair value adjustments and deferred financings costs.
(2) Other non-cash adjustments for Tax Equity Financing also include a reduction in the Tax Equity liability, as a result of allocation of ITC
to the tax equity partner (Note 13.1).
(3) The balance of corporate credit facilities, as of December 31, 2024 is presented net of deferred financing cost amounting to $3 million
(December 2023 - $5 million). This deferred financing cost is included within the other assets in the consolidated statements of financial
position (Note 9 and 14).
13. Loans and borrowings
Northland’s loans and borrowings, excluding the corporate credit facilities, as disclosed in note 14, are comprised of the
following:
As at
December 31, 2024
December 31, 2023
Project level non-recourse borrowings (Note 13.2)
$
6,490,653
$
6,531,526
Tax equity financing (Note 13.1)
26,801
42,959
Loans and borrowings at the project level
$
6,517,454
$
6,574,485
Green Subordinated Notes (Note 13.3)
492,445
491,049
Total loans and borrowings
$
7,009,899
$
7,065,534
Less: Current portion of loans and borrowings (a)
862,626
744,812
Non-current portion of loans and borrowings
$
6,147,273
$
6,320,722
(a) Current portion of the loans and borrowings, as at December 31, 2024, is comprised of $848 million and $15 million
(December 2023 - $745 million and nil), relating to project level borrowings (Note 13.2) and tax equity financing (Note
13.1), respectively.
(b) The estimated fair value of loans and borrowings, including Tax Equity Financing and Green Subordinated Notes, as at
December 31, 2024 is $7.1 billion (December 2023 - $7.2 billion).
As at and for the year ended December 31, 2024, and as at the approval date of these consolidated financial statements,
Northland has complied with all the applicable financial covenants under the respective loan agreements.
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93
13.1 Tax-equity financing
In 2023, the funding of tax-equity financing, in relation to the New York Wind, was completed and as a result the project
received $287 million, net of transaction cost of $10 million, representing 100% of the total tax equity commitment. Tax-
equity financing is denominated in US Dollar and the implied interest cost on this financing reflects the agreed targeted rate
of return with the tax equity investor. Furthermore, upon project achieving the commercial operations in 2023,
management determined that the Investment Tax Credits (“ITC”) were deemed to have been earned as at December 31,
2023 and therefore the tax equity liability was reduced by the ITC amount of $239 million with a corresponding reduction in
property, plant and equipment.
During the year, the US IRS issued new guidelines that increased the Bonus Tax Credit (“ITC Adder”) for projects in Energy
Community Areas. As a result, the Bluestone project within the New York Wind portfolio qualified for a $41 million ITC.
Consequently, the tax-equity financing agreement was amended this year to incorporate the ITC Adder, reducing the tax
equity liability by the ITC amount, with an offset to property, plant, and equipment (Note 4). This adjustment allows the tax
equity investor to achieve the targeted rate of return by 2027, instead of 2029. Management has determined that this
amendment constitutes a loan extinguishment under IFRS 9. Accordingly, a $20 million loss on extinguishment was
recognized and recorded under “Finance Cost” in the consolidated statements of income (loss).
13.2 Project level non-recourse borrowings
Northland generally finances projects and its operating facilities through non-recourse, secured credit arrangements at the
subsidiary level. These loans and borrowing are summarized in the table below:
Name of the Projects
Rate (1)
Maturity
December 31, 2024
December 31, 2023
New York Wind (3)
2.2%
2026
$
256,264
$
241,556
Nordsee One (3)
2.3%
2026
254,900
397,458
EBSA (NPCDI) (3)
4.6%
2027
751,468
716,618
Jardin (3)
6.0%
2029
46,529
61,741
Thorold (3)
6.3%
2030
202,089
199,337
Kirkland Lake(3)
4.3%
2030
41,741
44,235
Gemini (3)
3.6%
2031
1,638,939
1,750,305
Deutsche Bucht (3)
2.4%
2031
806,093
933,017
Mont Louis
6.6%
2031
47,144
54,346
North Battleford (3)
5.0%
2032
422,620
483,730
Solar Phase I (3)(4)
4.4%
2032
120,901
135,028
Solar Phase II (4)
4.5%
2034
91,598
100,060
McLean's
6.0%
2034
86,647
93,419
Grand Bend
4.2%
2035
246,245
264,074
Cochrane Solar (3)
4.6%
2035
128,816
139,195
Spy Hill (3)
4.1%
2036
108,350
114,229
Spanish Portfolio (3)
2.0%
2042
757,709
788,178
Oneida Storage (3)
2.4%
13.2 (b)
482,600
15,000
Weighted average and total
3.5%
$
6,490,653
$
6,531,526
Current
847,658
744,812
Non-current
$
5,642,995
$
5,786,714
(1) The weighted average all-in interest rates of the subsidiary borrowings.
(2) Amounts drawn under the above project level non-recourse borrowings, as at December 31, 2024 and December 31, 2023, exclude
letters of credit secured by the facilities or project-level credit agreements.
(3) Net of transaction costs and/or fair value adjustments.
(4) Solar Phase I and Solar Phase II include nine entities that comprise Canadian Solar facilities.
(a) As at December 31, 2024, $177 million of letters of credit secured by facility or project-level credit agreements were
outstanding (December 2023 - $115 million).
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(b) The project financing for the Oneida Battery Storage Project consists of a non-revolving construction and term loan
credit facility. This includes Tranche A and Tranche B, amounting to $148 million and $356 million, respectively, designated
for funding the project’s construction costs. Additionally, a non-revolving credit facility, represented by Tranche C, provides
$15 million to cash collateralize letters of credit. During the year ended December 31, 2024, an amount of $112 million and
$356 million has been drawn under Tranche A and Tranche B respectively. Additionally, the entire amount of Tranche C had
been utilized to provide letter of credit in favor of IESO relating to Interconnection Bid security. The term maturity dates of
Tranche A and C are linked with the project’s commercial operations date, which is expected in 2025. The term maturity
date of Tranche B is May 2045.
(c) On September 20, 2024, Bluestone Ball Hill Class B, LLC, amended its current loan agreement, in relation to New York
Wind projects, resulting in an extension of loan maturity date by 12 months to February 2026. Based on the terms of the
revised loan agreement, Northland has assessed this amendment as modification of the loan, as defined under IFRS 9.
(d) On November 14, 2024, Northland restructured EBSA’s long-term loan (“EBSA Loan”) resulting in additional proceeds of
$34 million, net of transaction cost, to a total of $746 million. The facility's maturity date was extended to November 14,
2027, accompanied by an increase in the applicable all-in annual rate to 4.6%, from the previous rate of 4.2%. Based on the
terms of the amended loan agreement, Northland assessed EBSA Loan restructuring as a modification of a loan as defined
under IFRS 9.
13.3 Green Subordinated Notes
Series 2023-A: On June 21, 2023, Northland issued $500 million ($490 million, net of transaction costs) of Fixed-to-Fixed
rate Green Subordinated Notes, Series 2023-A, with a maturity date of June 30, 2083 (the “Green Notes”). The Green Notes
carry a fixed coupon rate of 9.250% per annum until the first reset date on June 30, 2028. Thereafter, the coupon rate
resets at 5-year Government of Canada yield plus i) 5.844% for the period from June 30, 2028, until June 30, 2033, ii)
6.094%, for the period from June 30, 2033, to June 30, 2048, and iii) 6.844% for the period from June 30, 2048, to the
maturity date on June 30, 2083.
14. Corporate credit facilities
The composition of Northland’s corporate credit facilities are summarized in the table below:
Facility
size
Amount
drawn
Outstanding
letters of
credit(3)
Available
capacity
Maturity
As at December 31, 2024
Sustainability linked syndicated revolving facility (1)
$ 1,250,000 $
175,919 $
116,918 $
957,163 Aug. 2029
Bilateral letter of credit ("LC") facility
150,000
—
135,060
14,940 Jun. 2026
Export credit agency backed LC facility I
100,000
—
72,037
27,963 Mar. 2026
Export credit agency backed LC facility II
200,000
—
140,043
59,957
n/a
Hai Long related LC Facility
500,000
—
483,440
16,560 Sep. 2027
Total
$ 2,200,000 $
175,919 $
947,498 $ 1,076,583
As at December 31, 2023
Sustainability linked syndicated revolving facility (1)
$ 1,000,000 $
115,656 $
361,057 $
523,287
Sep. 2028
Bilateral letter of credit ("LC") facility
$
150,000 $
— $
133,746 $
16,254
Sep. 2024
Export credit agency backed LC facility I
$
200,000 $
— $
89,291 $
110,709
Mar. 2025
Export credit agency backed LC facility II
$
200,000 $
— $
42,168 $
157,832
n/a
Hai Long related LC Facility
$
500,000 $
— $
475,936 $
24,064
Sep. 2027
Total
$ 2,050,000 $
115,656 $
1,102,198 $
832,146
(1) As at December 31, 2024, the amounts drawn under the syndicated revolving facility are denominated in Canadian Dollars amounting
to $100 million and Euro amounting to €51 million (CAD equivalent of $83 million, converted at the period-end exchange rates).
(2) Deferred financing cost, as at December 31, 2024, associated with the syndicated revolving facility amounting to $3 million
(December 2023 - $5 million) is included within the other non-current assets in the consolidated statements of financial position (Note 9).
(3) As at December 31, 2024, outstanding LC include those issued in favor of joint ventures, amounting to $672 million (December, 2023:
$830 million).
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Amounts drawn and letters of credit under the syndicated revolving facility, bilateral letter of credit and Hai Long related LC
facility are collateralized by a general security agreement that constitutes a first-priority lien on all of Northland’s real
property, present and future property and assets.
As at and for the year ended December 31, 2024, and as at the approval date of these consolidated financial statements,
Northland has complied with all the applicable financial covenants under the respective corporate credit facility
agreements.
15. Provisions and other liabilities
Details of Northland’s provisions and liabilities are summarized below:
As at
December 31, 2024
December 31, 2023
Decommissioning liabilities (Note 15.1)
$
415,201
$
429,165
Lease liability (Note 7.2)
177,163
187,226
Loan payable to the non-controlling shareholder of a subsidiary (a)
35,196
43,498
Pension and benefits (Note 15.2)
30,045
34,654
Band adjustments
13,647
66,648
Others
9,270
7,428
Total provisions and other liabilities
$
680,522
$
768,619
Less: Current portion of provisions and other liabilities
(32,114)
(28,236)
Non- current portion of provisions and other liabilities
$
648,408
$
740,383
(a) Loan payable to a shareholder represents amount owed by Nordsee One under a shareholder loan arrangement on
which interest is accrued at an annual rate of 10% 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 on lands leased from the private and public landowners. Under the terms of the leases, upon expiration or termination
of leases, Northland is obligated to restore the leased lands to near to their original condition and remove all wind 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. No decommissioning liabilities are recognized for utility and the
efficient natural gas facilities until the time Northland determines that the facility will no longer be operated or maintained
and should be decommissioned.
As of December 31, 2024, the gross undiscounted total decommissioning liabilities aggregates to $637 million (December
2023 - $656 million). Northland estimates the present value of its total decommissioning liabilities, based on estimated
future cash flows required to decommission the respective facilities. The discounted value of the decommissioning liabilities
was calculated using long-term discount rates ranging between 2.7% and 4.39% (December 2023 - 2.2% and 4.1%) and long-
term inflation rates, ranging between 2.0% and 2.99% (December 2023 - 2.2% and 4.1%).
The following table reconciles the movements in Northland’s total decommissioning liabilities:
Year ended December 31,
2024
2023
Total, beginning of year
$
429,165
$
372,747
Additions (1)
2,802
71,906
Accretion
11,294
7,131
Disposals
(4,637)
—
Other movements (1)
(30,534)
(25,767)
Exchange rates changes
7,111
3,148
Total, end of year
$
415,201
$
429,165
(1) Additions during the year primarily reflect the recognition of additional provisions relating to new facilities or as a result of periodic
updates to existing cost estimates. Other movements involve changes in decommissioning provisions due to annual revisions of the
underlying inflation and discount rates for all applicable facilities.
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15.2 Pension and post-employment benefits
Northland’s utilities business, EBSA, operates a defined benefit pension plan ("pension plan”) that has been closed to new
members since 2010, with only a limited number of plan members still active as employees of EBSA. The pension plan
calculates the retirement benefit an employee will receive based on factors such as age, years of service, and compensation
levels during their employment.
The accounting for the pension plan involves estimating the cost of the benefits to be paid in the future and allocating this
cost over the expected period during which each employee is anticipated to receive a pension according to the plan's
conditions. This process requires extensive use of estimates and assumptions regarding inflation, mortality, employee
turnover, discount rates, and other factors.
The liability recognized in the consolidated statements of financial position regarding defined benefit pensions represents
the present value of the defined benefit obligation as of December 31, 2024, along with adjustments for actuarial gains or
losses that have not been recognized. Actuarial gains and losses are recorded against net equity in the consolidated
statements of comprehensive income (loss) during the period they occur.
The present value of the defined benefit obligation is calculated by independent actuaries, who discount the estimated cash
outflows using the interest rate yield curve of Colombia's Public Debt Securities, adjusted for inflation, for terms that
approximate the remaining pension obligations.
The movement of the pension obligation balances, as included within provisions and other liabilities in the consolidated
statements of financial position, was as follows:
Year ended December 31,
2024
2023
Total, beginning of year
$
34,654
$
22,565
Interests net cost
2,347
2,297
Actuarial adjustments
(2,417)
6,474
Payments made directly by the Company
(2,984)
(2,838)
Foreign exchange
(1,555)
6,156
Total, end of year
$
30,045
$
34,654
16. Equity
16.1 Common shares
Northland is authorized to issue an unlimited number of Shares. Changes in the Shares issued and outstanding during the
year ended December 31, 2024 and 2023 are summarized as follows:
December 31, 2024
December 31, 2023
Shares
Amount
Shares
Amount
Shares outstanding, beginning of year
254,939,822 $
5,085,387
250,017,357 $
4,945,983
Shares issued under equity offering
—
—
1,210,537
40,908
Shares issued under the Deferred Rights (Note 27.1)
—
—
10,286
279
Shares issued under the DRIP
5,007,504
108,025
3,701,642
97,904
Change in deferred taxes (1) (Note 25)
—
—
—
313
Total common shares outstanding, end of year
259,947,326 $
5,193,412
254,939,822 $
5,085,387
(1) This represents the deferred tax on transaction costs related to Northland's equity offering program.
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97
Dividend Reinvestment Plan (DRIP)
Northland offers a Dividend Re-investment Plan (DRIP) which provides shareholders the right to reinvest their dividends in
shares at a 3% discount to the market price as defined in the DRIP. Northland has issued shares from treasury to satisfy the
DRIP requirements and reserves the right to source shares through market purchases. Northland’s Board of Directors has
the discretion to alter the DRIP discount or where to source of shares issued under the DRIP. The DRIP has allowed
Northland to reinvest cash dividends to fund growth initiatives.
Share-based Compensation
Northland’s share-based compensation plans allow for a maximum of 3.1 million shares to be reserved and granted to
employees of Northland and its subsidiaries. As at December 31, 2024, 1.2 million shares remain available for future
issuance under these compensation plans.
For the year ended December 31, 2024, Northland expensed $5 million (December 2023 - $2.8 million) of costs under the
share-based compensation plans. No forfeitures are assumed to occur.
For the year ended December 31, 2024 and 2023, settlements under the share-based compensation plans are summarized
below:
Year ended December 31,
2024
2023
Restricted Share Units
$
1,554 $
1,054
Deferred Shares Units
869
460
Development Project LTIP
808
635
Deferred Rights
351
1,372
Performance Share Units
156
542
Total
$
3,738
$
4,063
16.2 Preferred shares
As at December 31, 2024 and 2023, the outstanding balance of preferred shares, comprising of Series 1 and Series 2
Preferred Shares are summarized as follows:
December 31, 2024
December 31, 2023
Shares
Amount
Shares
Amount
Series 1 Preferred Shares
4,762,246 $
113,675
4,762,246 $
113,675
Series 2 Preferred Shares
1,237,754
31,168
1,237,754
31,168
Total preference shares outstanding, end of year
$
144,843
$
144,843
Series 1 Preferred shares
The annual dividend rate of Series 1 Preferred Shares resets every five years, based on the current five-year Government of
Canada bond yield plus 2.80%. The holders of the Series 1 Preferred Shares are entitled to a fixed cumulative dividend,
payable quarterly, as and when declared by the Board of Directors. On August 31, 2020, Northland announced a fixed
quarterly dividend of 3.2% per annum for Series 1 Preferred Shares, amounting to $0.2001 per share per quarter, until
September 29, 2025. Holders had the option to convert their shares, on a one-for-one basis, to another series.
Consequently 1.2 million Series 1 Preferred Shares were converted into Series 2 Preferred Shares effective September 30,
2020.
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 bond yield plus 2.80% (December 2023: 2.80%). 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.
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For the year ended December 31, 2024, the preferred share dividends, excluding tax, were paid as follows:
Year ended December 31,
2024
2023
Series 1 Preferred Shares
$
3,812
$
3,812
Series 2 Preferred Shares
2,350
2,291
Total
$
6,162
$
6,103
16.3 Ordinary dividends
Ordinary dividends declared per share and in aggregate were as follows:
Year ended December 31,
2024
2023
Ordinary dividends declared per Share
$
1.20 $
1.20
Aggregate dividends declared
Dividends in cash
200,657
205,828
Dividends in shares, under DRIP
108,367
97,641
Total
$
309,024 $
303,469
Dividends amounting to $27 million, remained unpaid as at December 31, 2024 (December 2023 - $26 million).
17. Non-controlling interests
Non-controlling interests (NCI) 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 GMS Solar
(37.5%). Summarized financial information for these subsidiaries (representing 100% ownership) is as follows:
As at December 31, 2024
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Gemini
$
275,769 $
2,376,260 $
359,247 $
1,590,757
Nordsee One (1)
77,196
1,142,276
159,549
536,139
GMS Solar
231,586
196,328
235,105
125,013
Others (2)
319,436
1,999,436
240,679
1,163,754
Total
$
903,987 $
5,714,300 $
994,580 $
3,415,663
As at December 31, 2023
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Gemini
$
415,334 $
2,558,225 $
588,368 $
1,834,117
Nordsee One (1)
147,020
1,223,466
194,260
767,631
GMS Solar
208,403
216,681
189,903
156,887
Others (2)
258,790
1,605,210
160,853
663,592
Total
$
1,029,547 $
5,603,582 $
1,133,384 $
3,422,227
(1) As at December 31, 2024, restricted cash of nil (December 2023 - $29 million) for Nordsee One where the availability of funds is
intended for debt repayments.
(2) Others include McLean’s (50%), Grand Bend (50%), CEEC (61.6%), EBSA (0.6%), Oneida (27.6%), ScotWind Projects (24.5%) and
Elecdey Lezuza, S.A under the Spanish portfolio (33.8%).
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| NORTHLAND POWER INC. |
99
An analysis of changes in NCI during the year ended December 31, 2024, and 2023 is as follows:
Gemini
Nordsee One
GMS Solar
Others
Total
As at January 1, 2024
$
219,509 $
67,935 $
18,774 $
(8,671) $
297,547
Additional contribution by NCI
—
—
—
782
782
Net income (loss) attributable to NCI (1)
79,013
12,908
420
7,223
99,564
Dividends distributions attributable to NCI (1)
(17,547)
—
(2,950)
(8,295)
(28,792)
Allocation of other comprehensive income (loss) (1)
(446)
600
(949)
1,994
1,199
As at December 31, 2024
$
280,529 $
81,443 $
15,295 $
(6,967) $
370,300
As at January 1, 2023
$
267,869 $
57,172 $
33,081 $
(25,031) $
333,091
Increase in NCI arising on dilution of interest in
subsidiaries
—
—
—
29,808
29,808
Net income (loss) attributable to NCI (1)
69,233
11,605
1,505
(3,281)
79,062
Dividends distributions attributable to NCI (1)
(106,737)
—
(4,250)
(8,956)
(119,943)
Allocation of other comprehensive income (loss) (1)
(10,856)
(842)
(1,434)
(589)
(13,721)
Disposal and other adjustments (2)
—
—
(10,128)
(622)
(10,750)
As at December 31, 2023
$
219,509 $
67,935 $
18,774 $
(8,671) $
297,547
(1) Net income (loss), dividends distributions, and allocation of other comprehensive income (loss) are presented at the respective NCI’s
ownership interest.
(2) Disposal of NCI relates to de-recognition of NCI interest of Energia in 2023.
18. Financial risk management
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, noting that
these risks can be impacted by geopolitical or regulatory uncertainties. Northland manages financial risks by identifying,
evaluating and mitigating such risks, 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.
18.1 Market Risk
Market risk is the risk that the future cash flows and returns will fluctuate because of changes in market prices and rates.
Financial instruments affected by market risk include loans and borrowings and derivative financial instruments as well as
Northland’s preferred shares and the Green Notes. Revenue and supply contracts can also be affected by market risk. 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 an instrument will
fluctuate due to changes in market interest rates. Northland endeavors to manage 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 manages the 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.
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For the year ended December 31, 2024, 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 $201 million (December 2023 - $233 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, US dollar,
Colombian peso, New Taiwan Dollar, Polish Zloty, and to a lesser degree, other currencies on construction projects with
expenses in currencies different than the funding currency, or development expenses on early-stage projects in other
jurisdictions. Primary exposure to Northland arises from:
i.
Euro-denominated operations and cash distributions from Gemini, Nordsee One, Deutsche Bucht, the Spanish
Portfolio and Baltic Power;
ii.
Colombian peso-denominated operations and cash distributions from EBSA, and;
iii.
New Taiwan Dollar denominated operations at Hai Long.
Management mitigates this risk by hedging material net foreign currency cash flows to the extent practical and economical
to minimize material cash flow fluctuations.
Northland enters into long-term foreign exchange contracts to secure foreign exchange conversion rates for a majority of
forecasted Euro-denominated cash inflows from Gemini, Nordsee One, Deutsche Bucht, the Spanish Portfolio, and Baltic
power, as well as a portion of the anticipated New Taiwan Dollar cash inflows from Hai Long. Additionally, Northland has
established a short-term rolling hedge program to maintain foreign exchange conversion rates on a portion of distributions
from EBSA.
Fair value gain or loss on the foreign exchange contract designated as hedged instrument, that was previously recognized in
OCI is recycled to the consolidated statements of income (loss) in the same period during which the underlying forecast
transaction is materialized.
At December 31, 2024, 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 $76 million (December 2023 - $96 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 $40 million (December 2023 - $31 million) lower or higher. 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 $1 million
(December 2023 - $2 million) higher or lower.
The counterparties to Northland’s currency derivative contracts are well-capitalized financial institutions with strong credit
ratings. See “Counterparty Risk” below.
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101
(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 subsidy or feed-in-tariff programs define a floor price but electricity market prices may be
lower than 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; (v) the value of a financial instrument or cash flows associated with the
instrument fluctuates due to changes in commodity prices; or (vi) the price of a component in a supply agreement is linked
to the price of one or several commodities.
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)
when practical and economical 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, (iii) including contingencies in construction
budgets when they are exposed to commodity prices; (iv) passing the commodity risk to the offtaker, whenever possible.
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, 2024, 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.
In Spain, Northland is subject to electricity prices under the regulated asset base framework, which allows its Spanish
facilities to earn their designated guaranteed pre-tax rate of return (Note 2.13). However, during the year ended December
31, 2024, one of the wind assets completed its regulated life, directly exposing it to fluctuations in merchant market
electricity prices.
18.2 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 joint ventures, 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. 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.
The nature of Northland’s business and contractual arrangements, and the quality of its counterparties generally serve to
minimize counterparty risk.
As at December 31, 2024, approximately 66.0% (December 2023 - 53.5%) of Northland’s consolidated trade receivables,
excluding third-party partner loan receivable, were due from creditworthy government-related entities.
In 2024, approximately 75.2% (December 2023 - 66.9%) 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, 2024.
18.3 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
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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 unplanned cash outflows; and (iii) actively monitoring open positions to assess and proactively
adapt to possible market liquidity concerns.
As at December 31, 2024, NPI and its subsidiaries were holding cash and cash equivalents of $613 million (December 2023 -
$740 million), including $64 million held by NPI (December 2023 - $65 million), and had available borrowing capacity under
the syndicated revolving facility of $957 million (December 2023 - $523 million).
The contractual maturities of Northland’s financial liabilities at December 31, 2024 are as follows:
2025
2026-2027
2028-2029
>2029
Total
Derivative contracts
Euro foreign exchange contracts
$
111,690 $
301,861 $
381,648 $
1,471,453 $
2,266,652
Colombian peso foreign exchange contracts
800,579
16,205
—
—
816,784
US dollar foreign exchange contracts
58,057
33,327
41,436
207,907
340,727
New Taiwan dollar foreign exchange contracts
—
147,748
130,300
345,316
623,364
Cross currency interest rate contracts
42,392
84,784
537,474
—
664,650
Interest-bearing loans and borrowings
Project level non-recourse borrowings -
Outstanding principal
$
586,351 $ 1,870,541 $
1,050,436 $
2,110,086 $
5,617,414
Project level non-recourse borrowings - Interest,
including interest rate swaps
206,156
353,662
196,877
275,712
1,032,407
Corporate credit facilities, including interest
6,295
12,101
182,163
—
200,559
Green Subordinated Notes, including interest
46,250
92,500
523,125
—
661,875
Leases
13,590
24,244
23,783
138,685
200,302
Trade and other payables
304,260
—
—
—
304,260
Provisions and other liabilities
219,560
—
—
—
219,560
Total
$ 2,395,180 $ 2,936,973 $
3,067,242 $
4,549,159 $ 12,948,554
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.
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 and any credit ratings for
Northland at the relevant time, which may affect the availability, pricing or terms and conditions of replacement financings.
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103
19. Financial instruments
19.1 Classification and fair value hierarchy
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. The carrying values of financial instruments as at
December 31, 2024 and 2023, along with the respective fair value hierarchy are as follows:
As at December 31, 2024
Level 1
Level 2
Level 3 (3)
Total
Financial assets at amortized cost (1)
$
672,392 $
1,517,893 $
— $
2,190,285
Financial assets at fair value through profit and loss
—
266,603
—
266,603
Financial assets at fair value through OCI
—
46,245
—
46,245
Financial liabilities at fair value through profit and loss
—
(111,733)
(108,245)
(219,978)
Financial liabilities at fair value through OCI
—
(8,333)
—
(8,333)
Financial liabilities at amortized cost (2)
$
— $
(7,768,409) $
— $
(7,768,409)
As at December 31, 2023
Level 1
Level 2
Level 3 (3)
Total
Financial assets at amortized cost (1)
$
813,501 $
1,031,248 $
— $
1,844,749
Financial assets at fair value through profit and loss
—
238,476
26,106
264,582
Financial assets at fair value through OCI
—
124,415
—
124,415
Financial liabilities at fair value through profit and loss
—
(118,379)
—
(118,379)
Financial liabilities at fair value through OCI
—
(9,516)
—
(9,516)
Financial liabilities at amortized cost (2)
$
— $
(7,841,242) $
— $
(7,841,242)
(1) Includes cash and cash equivalents, restricted cash, trade and other receivables, finance lease receivable, long-term deposits and
certain other assets.
(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 and capacity components, linked to the market in 20-year indexed
Renewable Energy Certificate (REC) agreement with the New York State Energy Research and Development Authority (NYSERDA) for
the New York Wind projects.
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
Sensitivity of input
to the fair value
(In CAD)
Embedded derivatives
Long-term price
forecast
Average illiquid
forward energy
prices (per MWh)
US$ 52.89-US
$55.20
5% increase / (decrease)
in Average forward
energy prices
27,782
Additional details of Northland’s income and expenses with respect to its financial instruments are as follows:
Year ended December 31,
2024
2023
Income (expense) on financial assets at amortized cost
$
81,771
$
72,415
Income (expense) on financial liabilities at amortized cost
(380,728)
(376,197)
Income (expense) on net financial liabilities at fair value through profit and loss
$
(93,695) $
(303,898)
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19.2 Derivative financial instruments
The derivative financial instruments consist of the following:
As at December 31, 2024
Current
assets
Current
liabilities
Non-current
assets
Non-current
liabilities
Total
Derivatives designated for hedge accounting
Interest rate contracts
$
16,499 $
(2,314) $
28,971 $
(6,019) $
37,137
Foreign exchange contracts
—
—
775
—
775
Derivatives not designated for hedge accounting
Interest rate contracts
23,629
(3,040)
129,515
(28,413)
121,691
Foreign exchange contracts
19,549
(29,042)
89,608
(30,558)
49,557
Cross currency interest rate contracts
4,302
—
—
(20,680)
(16,378)
Embedded derivatives (1)
—
(6,511)
—
(101,734)
(108,245)
Total
$
63,979 $
(40,907) $
248,869 $
(187,404) $
84,537
(1) Represents embedded derivative relating to the energy price and capacity components, linked to the market in 20-year indexed
Renewable Energy Certificate (REC) agreement with the New York State Energy Research and Development Authority (NYSERDA) for
the New York Wind projects.
As at December 31, 2023
Current
assets
Current
liabilities
Non-current
assets
Non-current
liabilities
Total
Derivatives designated for hedge accounting
Interest rate contracts
$
48,045 $
(1,222) $
39,687 $
(8,168) $
78,342
Foreign exchange contracts
2,671
(33)
34,012
(93)
36,557
Derivatives not designated for hedge accounting
Interest rate contracts
69,275
(229)
116,292
(29,504)
155,834
Foreign exchange contracts
13,241
(25,872)
35,551
(49,078)
(26,158)
Cross currency interest rate contracts
4,117
—
—
(13,696)
(9,579)
Embedded derivatives (1)
2,362
—
23,744
—
26,106
Total
$
139,711 $
(27,356) $
249,286 $
(100,539) $
261,102
(1) Represents embedded derivative relating to the energy price and capacity components linked to the market in 20-year indexed
Renewable Energy Certificate (REC) agreement with the New York State Energy Research and Development Authority (NYSERDA) for
the New York Wind projects.
The change in derivative financial instruments for the year ended December 31, 2024 and 2023 is as follows:
Balance as at
January 1
asset
(liability)
Designated in hedge
relationships
Fair value changes
on derivatives not
designated in
hedge relationships
(2)
Foreign
exchange
gain (loss)
Balance as at
December 31
asset (liability)
Fair value changes
recognized
in OCI (1)
Fair value
changes (2)
Year ended December 31, 2024
Interest rate contracts
$
234,176 $
(50,227) $
7,767 $
(41,076) $
8,188 $
158,828
Foreign exchange contracts
10,399
(27,935)
(7,849)
78,031
(2,314)
50,332
Cross currency interest rate
contracts
(9,579)
—
—
(6,799)
—
(16,378)
Embedded derivatives
26,106
—
—
(134,351)
—
(108,245)
Total
$
261,102 $
(78,162) $
(82) $
(104,195) $
5,874 $
84,537
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| NORTHLAND POWER INC. |
105
Year ended December 31, 2023
Interest rate contracts
$
454,668 $
(101,461) $
11,915 $
(126,694) $
(4,252) $
234,176
Foreign exchange contracts
185,604
(62,743)
3,753
(116,349)
134
10,399
Commodity contracts
(8,811)
—
—
8,979
(168)
—
Cross currency interest rate
contracts
—
—
—
(9,578)
(1)
(9,579)
Embedded derivatives
14,539
—
—
11,567
—
26,106
Total
$
646,000 $
(164,204) $
15,668 $
(232,075) $
(4,287) $
261,102
(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 financial instruments” in the consolidated statements of income (loss). These
amounts represent fair value changes, net of realized gains and losses on settlements during the year. Realized gains and losses are
recorded in “Finance costs, net” for interest rate contracts and “Foreign exchange (gain) loss” for foreign exchange contracts.
The fair value changes in the above derivative financial instruments are presented net of cash payments aggregating to $3
million (December 2023 - cash received $18 million) and a realized fair value gain of $7 million (December 2023 - loss
$109 million), relating to the contracts settled or terminated during the year.
(a) Foreign exchange forward contracts, designated for hedge accounting
December 31, 2024
December 31, 2023
Carrying amount (asset/(liability))
$
775
$
36,557
Notional amount - EUR
148,259
327,286
Maturity date
January 2025 - August 2032
January 2024 - August 2032
Hedge ratio (1)
1:1
1:1
Change in discounted spot value of outstanding hedging
instruments since January 1
$
(1,005) $
(6,145)
Change in value of hedged item used to determine hedge
effectiveness
$
(7,206) $
(652)
Weighted average hedged rate for the year (including
forward points):
EUR foreign exchange forward contracts
€0.6032:CAD$1
€0.6080:CAD$1
(1) The foreign exchange forward contracts are denominated in the same currency as the highly probable future payments and the net
investment in foreign operations; therefore, the hedge ratio is 1:1.
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Foreign exchange hedge reserve
Euro contracts
Colombian Peso
contracts
Total foreign
exchange
hedge
reserve in AOCI
Cost of
hedging
Forward
component
Cost of
hedging
Forward
component
Total, beginning of the year 2023
$
38,246 $
6,394 $
(175) $
1,225 $
45,690
Add: Costs of hedging deferred during the year in OCI
(56,266)
—
189
—
(56,077)
Add: Change in fair value of hedging instrument
recognized in OCI for the year (effective portion)(1)
—
7,545
—
(1,225)
6,320
Less: Re-classified to the consolidated statements of
income (loss)
(12,972)
—
(14)
—
(12,986)
Less: Deferred Tax
—
—
—
—
—
Total, end of the year 2023
$ (30,992) $
13,939 $
— $
— $
(17,053)
Add: Costs of hedging deferred during the year in OCI
(17,806)
—
—
—
(17,806)
Add: Change in fair value of hedging instrument
recognized in OCI for the year (effective portion)(1)
—
(4,742)
—
—
(4,742)
Less: Re-classified to the consolidated statements of
income (loss)
(5,387)
—
—
—
(5,387)
Total, end of the year 2024
$ (54,185) $
9,197 $
— $
— $
(44,988)
(1) The deferred tax recovery amounting to $8 million (December 2023 - $16 million), applicable to the foreign exchange hedge reserve
has been recognized in OCI.
The hedge ineffectiveness recognized in “fair value (gain) loss on financial instruments” in the consolidated statements of
income (loss) related to foreign currency contracts (cash flow and net investment hedges) for the year ended December 31,
2024, was $25 million (December 2023 - $26 million).
(b) Interest rate swaps, designated for hedge accounting
December 31, 2024
December 31, 2023
Carrying amount (asset/(liability))
$
37,137
$
78,342
Notional amount - CAD
321,975
355,801
Notional amount - EUR
1,482,862
1,766,261
Maturity date
January 2025 - March 2035
January 2024 - March 2035
Hedge ratio (1)
1:1
1:1
Change in fair value of outstanding hedging instruments since
January 1
$
(44,992) $
(109,949)
Change in value of hedged item used to determine hedge
effectiveness
$
39,465
$
169,003
(1) The interest rate swaps mirror the interest rate of the debts; therefore, the hedge ratio is 1:1.
Interest rate hedge reserve
Canadian Dollar
interest rate
swaps
Euro interest
rate swaps
Total interest rate
hedge reserve
Total, beginning of the year 2023
$
16,927 $
156,595 $
173,522
Add: Change in fair value of hedging instrument recognized in OCI for
the year (effective portion)(1)
(7,296)
(90,697)
(97,993)
Less: Re-classified to the Consolidated statements of income (loss)
—
(3,468)
(3,468)
Total, end of the year 2023
$
9,631 $
62,430 $
72,061
Add: Change in fair value of hedging instrument recognized in OCI for
the year (effective portion)(1)
(7,139)
(24,316)
(31,455)
Less: Re-classified to the Consolidated statements of income (loss)
—
(18,772)
(18,772)
Total, end of the year 2024
$
2,492 $
19,342 $
21,834
(1) The deferred tax recovery amounting to $12 million (December 2023 - $24 million), applicable to the interest rate hedge reserve has
been recognized in OCI.
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| NORTHLAND POWER INC. |
107
The hedge ineffectiveness recognized in “fair value (gain) loss on financial instruments” in the consolidated statements of
income (loss) related to interest rate contracts (cash flow hedges) for the year ended December 31, 2024 was $1 million
(December 2023 - $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)
December 31, 2024
December 31, 2023
Cash flow hedge – interest rate risk
$
1,406
$
(38,059)
Net investment hedge – foreign currency risk
$
(1,759) $
5,448
20. Revenue from sale of energy and related products
The majority of Northland’s revenues come from sources such as energy sales and distribution in the regulated markets,
and sales of energy, capacity, and environmental attributes through PPAs with independent system operators and credit
worthy corporate customers. Northland categorizes these revenue streams into the following groups:
Year ended December 31,
2024
2023
Non-regulated energy sales and capacity
$
1,739,930
$
1,688,920
Regulated energy sales and distribution
556,285
512,458
Other revenues
50,049
31,401
Total revenues
$
2,346,264
$
2,232,779
Other revenues are mainly comprised of sale of environmental attributes earned through energy generated from Northland’s renewable
facilities.
Northland’s revenues from the sale of energy and emission credits, disaggregated by significant geographic locations are
presented as follows:
Year ended December 31,
2024
2023
The Netherlands
$
602,883
589,128
Germany
579,871
550,887
Canada
530,033
548,428
Colombia
356,781
302,241
Spain
218,073
218,411
United States
47,943
9,302
Others
10,680
14,382
Total
$
2,346,264
$
2,232,779
108
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| NORTHLAND POWER INC. |
21. Operating, G&A and Development costs
Northland’s operating, G&A and development costs are presented as follows, within the consolidated statements of income
(loss):
Year ended December 31,
2024
2023
Operating costs
$
649,936
$
620,560
General and administrative costs
113,100
115,166
Development costs
63,108
114,180
Total
$
826,144
$
849,906
Analysis of above costs by nature is presented as follows:
Year ended December 31,
2024
2023
Maintenance cost
$
244,388
$
217,288
Salaries, benefits and allowances
154,059
151,109
Purchase of regulated electricity (Note 26)
112,702
106,446
Purchase of natural gas (Note 26)
83,081
105,292
Transmission and distribution expenses
40,003
35,224
Others
191,911
234,547
Total
$
826,144
$
849,906
22. Net income (loss) per share
The basic and diluted net income (loss) is calculated as follows:
Year ended December 31,
2024
2023
Net income (loss) during the period attributable to shareholders
$
271,825
$
(175,194)
Less: preferred share dividends, net (Note 16.2)
(6,162)
(6,103)
Net income (loss) attributable to common shareholders for basic and diluted
earnings
$
265,663
$
(181,297)
Weighted average number of Shares outstanding, basic and diluted
257,299,969
252,710,386
23. Finance costs (income), net
Net finance costs consist of the following:
Year ended December 31,
2024
2023
Interest on borrowings and bank fees
$
342,930
$
339,101
Amortization of deferred financing costs
32,620
33,023
Accretion of decommissioning liabilities
11,294
7,131
Lease interest (Note 7.2)
5,178
4,073
Finance costs, gross
$
392,022
$
383,328
Less: Finance income
(71,388)
(61,516)
Finance costs, net
$
320,634
$
321,812
For the year ended December 31, 2024, finance costs of $19.9 million (December 2023 - $13.5 million) respectively, were
incurred on project financings related to the facilities under construction which were capitalized as borrowing costs under
construction-in-progress.
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109
24. Impairment of non-financial assets
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 is most sensitive to the following assumptions:
•
Growth rate: 3.44% - 8.11% (December 2023: 3.03% - 7.37%) 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
October 1, 2024
October 1, 2023
Applicable to PPA cash flows:
6.15% - 7.8%
6.0% - 9.3%
Applicable to other cash flows (1):
8.15% - 9.8%
6.0% - 11.3%
(1) Other cash flows include post-PPA cash flows and utility cash flows.
Northland has completed its annual comprehensive impairment assessment based on value-in-use estimates derived from
long-range forecasts and market values observed in the marketplace or FVLCS. Northland did not identify any impairments
of goodwill or reversals of prior impairments, during the year ended December 31, 2024 as a result of this review.
Spanish Portfolio
In 2023, a new Royal Decree-Law ("RDL") was enacted, introducing certain regulatory framework changes, that resulted in
the deferral of cash flows to beyond 2025. Consequently, upon completing the required annual impairment test, the
recoverable amount of the Spanish Portfolio decreased, prompting management to recognize an impairment charge of
$163 million, for the year ended December 31, 2023, representing all of the goodwill related to the Spanish Portfolio.
25. Income taxes
25.1 Tax expense and temporary difference
The following table summarizes the tax expense reported in the consolidated statements of income (loss):
Year ended December 31,
2024
2023
Current taxes
Based on taxable income of current year
$
195,570
$
141,113
Tax on dividend payments
2,465
2,441
Total current taxation expense
$
198,035
$
143,554
Deferred taxes
On origination and reversal of temporary differences
$
(13,426) $
(108,064)
Due to changes in tax rates
—
2,245
Prior-year under (over) provision
7,558
1,394
Total deferred tax expense (recovery)
$
(5,868) $
(104,425)
Total income tax expense (recovery)
$
192,167
$
39,129
110
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| 2024 ANNUAL REPORT |
The following table summarizes the deferred tax expense (recovery) reported directly in equity:
Year ended December 31,
2024
2023
Related to change in fair value of hedged derivative contracts
$
(19,894) $
(39,875)
Related to pension expense
1,388
(1,788)
Related to foreign exchange
(641)
21,950
Total deferred tax expense (recovery) in OCI
$
(19,147) $
(19,713)
Deferred taxes related to origination and reversal of temporary differences related
to issuance of shares (Note 16.1)
—
(313)
Total deferred tax expense (recovery) in equity
$
(19,147) $
(20,026)
The following table summarizes the reconciliation of Northland’s effective tax rate:
Year ended December 31,
2024
2023
Income (loss) before income taxes
$
563,556
$
(57,003)
Combined basic Canadian federal and provincial income tax rate
26.5 %
26.5 %
Income tax expense (recovery) based on statutory rate
$
149,342
$
(15,106)
Items giving rise to differences between accounting and tax expense
Minority interest
(23,409)
(18,071)
Adjustment for non-deductible (taxable) expenses and incentives
(22,399)
62,502
Manufacturing and processing rate reduction
(1,788)
555
Benefit not recognized
56,516
(12,750)
Rate difference related to temporary differences in foreign jurisdictions
19,078
13,227
Adjustment with respect to prior years
7,558
1,394
Tax expense associated with payment of preferred share dividends
2,465
2,441
Deferred tax expense (recovery) relating to changes in tax rates or change in legal
structure
—
2,245
Others
4,804
2,692
Total income tax expense (recovery)
$
192,167
$
39,129
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% (December 2023 - 26.5%), Germany 30.5% (December
2023 - 30.1%), Netherlands 25.8% (December 2023 - 25.8%), Luxembourg 24.9% (December 2023 - 24.9%), Mexico 30.0%
(December 2023 - 30.0%), Colombia 35.0% (December 2023 - 35.0%), United States 26.1% (December 2023 - 26.1%), and
Spain 25.0% (December 2023 - 25.0%).
The following table summarizes the components of the net deferred tax asset and liability:
As at
December 31, 2024
December 31, 2023
Deductible (taxable) temporary differences
Property, plant and equipment
$
(540,882) $
(580,402)
Contracts
(78,281)
(98,595)
Derivative financial instruments
(38,857)
(41,059)
Interest available for carryforward
78,436
84,825
Financing fees
25,747
20,064
Losses available for carryforward
24,407
53,706
Canadian renewable conservation expense
374
6,052
Other
9,404
9,876
Total (net) deferred tax asset (liability)
$
(519,652) $
(545,533)
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| 2024 ANNUAL REPORT |
111
The following table analyses the movement in net deferred tax liability for the years ended December 31, 2024 and 2023:
Year ended December 31,
2024
2023
Total, beginning of the year
$
545,533
$
670,337
Tax expense (recovery) recognized in income statement
(5,868)
(104,425)
Tax expense (recovery) in OCI
(18,507)
(41,663)
Effect of foreign exchange recognized in OCI
(640)
21,950
Tax expense (recovery) recognized in equity
—
(313)
Other
(866)
(353)
Total, end of the year
$
519,652
$
545,533
The following deductible temporary differences have not been recognized in Northland’s consolidated financial statements:
As at
December 31, 2024
December 31, 2023
Non-capital losses carried forward
$
90,215
$
113,471
Net capital loss
209,117
188,702
Fair value change in debt instrument
5,858
3,018
Other deductible temporary differences
136,578
3,386
Total deductible temporary differences
$
441,768
$
308,577
Northland has operating losses available for carry forward in Canada, Mexico, Spain, United Kingdom and Korea which are
expected to expire beginning in 2027 as follows:
Canada
UK
Korea
Mexico
Spain
2026 – 2029
$
83 $
— $
— $
3,740 $
—
2030 – 2034
122
55,175
16
1,411
—
2035 – 2039
2,677
—
36,945
—
—
2040 – 2044
42,102
—
—
—
71,626
Total
$
44,984 $
55,175 $
36,961 $
5,151 $
71,626
25.2 Temporary differences associated with Northland investments
The temporary difference associated with investments in Northland’s subsidiaries is $186 million (December 2023 - $275
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.
25.3 International tax reforms – Introduction of Pillar Two model rules
Pillar Two legislation provides for an international framework of rules aimed at ensuring that the worldwide profits of large
multinational enterprises are subject to income tax at a rate of at least 15% in every jurisdiction in which they operate. For
2024, the impact of Pillar Two income taxes on Northland’s current tax expense (income) is estimated to be nil. Northland
has adopted the temporary mandatory exemption for recognizing and disclosing information about deferred tax assets and
liabilities related to Pillar Two income taxes, as provided in the amendments to IAS 12 issued in May 2023.
112
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| 2024 ANNUAL REPORT |
26. 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, which are summarized below:
External
sales
Inter-company
sales (1)
Finance
lease
income
Total income
Operating
costs(2)
G&A and
development
costs
Depreciation
and
amortization
Other
items
Operating
income
Finance
costs, net
Year ended December 31, 2024
Offshore wind facilities
$ 1,182,754 $
— $
— $ 1,182,754 $
233,095 $
8,461 $
390,079 $
— $
551,119 $
123,589
Onshore renewable facilities
North America
259,937
—
—
259,937
45,641
4,020
105,202
—
105,074
76,536
Spain
218,073
—
—
218,073
50,064
2,262
85,433
—
80,314
17,523
$
478,010 $
— $
— $
478,010 $
95,705 $
6,282 $
190,635 $
— $
185,388 $
94,059
Natural gas facilities
Canada
318,039
—
10,383
328,422
129,783
421
46,841
—
151,377
43,045
Utilities
Colombia
356,781
—
—
356,781
195,711
11,446
34,775
—
114,849
893
Others (1)
10,680
90,249
—
100,929
(4,358)
149,598
11,397
43,884
(99,592)
59,048
Elimination
—
(90,249)
—
(90,249)
—
—
—
—
(90,249)
—
Total
$ 2,346,264 $
— $
10,383 $ 2,356,647 $
649,936 $
176,208 $
673,727 $
43,884 $
812,892 $
320,634
Year ended December 31, 2023
Offshore wind facilities
$ 1,140,015 $
— $
— $ 1,140,015 $
201,187 $
14,081 $
384,010 $
— $
540,737 $
131,116
Onshore renewable facilities
North America
217,938
—
—
217,938
33,331
1,818
91,239
—
91,550
53,756
Spain
216,963
—
—
216,963
50,830
872
85,875
(375)
79,761
19,480
$
434,901 $
— $
— $
434,901 $
84,161 $
2,690 $
177,114 $
(375) $
171,311 $
73,236
Natural gas facilities
Canada
339,848
—
10,899
350,747
155,242
406
46,625
—
148,474
46,312
Utilities
Colombia
302,241
—
—
302,241
176,452
8,638
29,144
—
88,007
(794)
Others (1)
15,774
97,942
—
113,716
3,518
203,531
15,722
163,544
(272,599)
71,942
Elimination
—
(97,942)
—
(97,942)
—
—
—
—
(97,942)
—
Total
$ 2,232,779 $
— $
10,899 $ 2,243,678 $
620,560 $
229,346 $
652,615 $ 163,169 $
577,988 $
321,812
(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) Cost of natural gas purchase and regulated electricity amounting to $83 million and $113 million (December 2023 - $105 million and $106 million), respectively has been included with
the operating costs. (Note 21).
| NORTHLAND POWER INC. |
| 2024 ANNUAL REPORT |
113
Summarized below are the key balances from each segment:
PP&E, net (1)
Contracts and
other intangibles,
net (2)
Goodwill
Investment in
joint ventures
Total assets
As at December 31, 2024
Offshore wind facilities
$
4,374,161 $
279,516 $
— $
— $
5,264,854
Onshore renewable facilities
North America
1,246,859
6,904
54,741
—
1,505,304
Spain
1,345,518
—
—
—
1,616,123
$
2,592,377 $
6,904 $
54,741 $
— $
3,121,427
Natural gas facilities
Canada
673,236
30,489
120,229
—
1,125,623
Utilities
Colombia
539,581
6,168
442,637
—
1,133,549
Others
699,746
70,809
—
1,023,068
2,958,885
Total
$
8,879,101 $
393,886 $
617,607 $
1,023,068 $
13,604,338
As at December 31, 2023
Offshore wind facilities
$
4,637,980 $
322,852 $
— $
— $
5,497,680
Onshore renewable facilities
North America
1,392,555
6,506
54,741
—
1,704,882
Spain
1,406,339
—
—
—
1,628,503
$
2,798,894 $
6,506 $
54,741 $
— $
3,333,385
Natural gas facilities
Canada
700,454
35,803
120,229
—
1,142,259
Utilities
Colombia
550,434
6,694
464,377
—
1,171,011
Others
492,171
75,015
—
899,885
2,481,963
Total
$
9,179,933 $
446,870 $
639,347 $
899,885 $
13,626,298
(1) PPE, net - Others, include cost associated with the capital work in progress related to Oneida Battery Storage Project, amounting to
$492 million (December 2023: $142 million).
(2) Contracts and other intangible - Others, includes $26 million (December 2023: $28 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.
27. Related-party disclosures
27.1 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, 2024, and 2023 is outlined in the table below:
Year ended December 31,
2024
2023
Salaries and short-term employee benefits
$
13,156
$
11,437
Share-based compensation - Shares issued under the Deferred Rights (Note 16.1)
—
279
Share-based compensation - cash component
6,862
3,654
Total
$
20,018
$
15,370
Share-based compensations are tied directly to the seniority of the executives and the success of development and
construction projects as well as acquisition activities.
114
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| 2024 ANNUAL REPORT |
27.2 Balances and transactions with joint ventures
Summarized below are the material transactions with the joint ventures for the year ended December 31, 2024 and 2023:
Year ended December 31,
2024
2023
Cost recharges to joint ventures (Note 10)
$
56,452
$
36,472
Interest income on the loans receivable from the joint ventures
38,605
9,600
Balances due from the joint ventures, relating to or arising as a result of above noted transactions are summarized below.
As at
December 31, 2024
December 31, 2023
Loans receivable from the joint ventures (Note 9.1)
$
682,069
$
405,368
Loan payable to the joint ventures (Note 11)
15,977
14,999
Amounts due from the joint ventures (Note 8)
27,223
—
28. Litigation, claims, contingencies and commitments
Litigation, claims and other contingencies arise from time to time in the ordinary course of business for Northland. There
are no legal or regulatory proceedings that involve a claim for damages or penalty exceeding 10% of Northland's current
assets in respect of which Northland is or was a party, or in respect of which any of Northland's property is or was the
subject during the year ended December 31, 2024, nor are there any such proceedings known to Northland to be
contemplated. None of these contingencies, individually or in aggregate, are expected to result in a liability that would have
a material adverse effect on Northland.
28.1 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, 2024, Northland’s best estimate of the future contingent payments is approximately
$142 million of milestone payments under its development project arrangements which are expected to be paid between
2026 and 2030. These contingent payments were not recognized in the consolidated statements of financial position.
28.2 Contingencies and commitments
The following is a summary of the material commitments that NPI and its subsidiaries have entered into as at December 31,
2024, 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, 2024, outstanding parental guarantees issued totaled $406 million (December 2023: $302 million) and
related primarily to the development, construction and operation of its facilities.
Northland’s share of contingencies and commitments in relation to its joint ventures are disclosed in (Note 10 (d)).
| NORTHLAND POWER INC. |
| 2024 ANNUAL REPORT |
115
28.3 Capital commitments
In the normal course of operations, as at December 31, 2024, Northland has committed to future spending of
approximately $118 million (December 2023 - $612 million) on capital projects, primarily relating to the construction of
Oneida Battery Storage, and other routine capital maintenance work on certain operational projects in Canada and
Colombia.
29. Other income (expenses)
Northland’s other income (expense) for the year ended December 31, 2024 and 2023 is mainly comprised of the following
items:
29.1 Gain on the sale of La Lucha Solar facility
On March 4, 2024, Northland signed an agreement to sell its 100% ownership in the La Lucha Solar Facility to Cometa
Energía, S.A. de C.V. for a base consideration of $215 million, net of transaction costs, plus $42 million for VAT claims, to be
received after completion of review by the Mexican tax authorities. The facility was classified as held for sale and measured
at fair value less costs to sell, resulting in a $44 million fair value adjustment recognized during the year ended December
31, 2024. .
The transaction was completed on June 28, 2024, with Northland receiving $215 million in net cash and recording a $64
million gain on disposal, including a non-cash gain of $41 million from the reclassification of the currency translation reserve
(CTA) from accumulated other comprehensive income (loss) to other income (expense) line in the consolidated statements
of income (loss). Moreover, in December 2024, the review of the aforementioned VAT claims was finalized by the Mexican
tax authorities and consequently, the entire amount of VAT claim was received by Northland before the year ended
December 31, 2024.
Discontinued Operations:
La Lucha Solar Facility did not represent a separate major line of business or geographical area of Northland’s operations
and hence, results of its operations and associated cash flows for the year ended December 31, 2024 and 2023 are not
separately presented as Discontinued Operations.
29.2 Others Items
a.
In December 2024, Northland received a final settlement of $53 million related to the mono-bucket foundations at its
Deutsche Bucht project (“Demonstrator Project”). The construction work on the Demonstrator Project was halted in
late 2019 due to technical issues, and the entire cost was written off in the year then ended. This settlement proceeds
have been presented under the other income (expense) line, with the associated taxes recognized as a current expense
in the consolidated statements of income (loss).
b.
During the year ended December 31, 2023, Northland completed the sale of its 49% ownership interest in NP Hai Long
Holding BV to Gentari International Renewables Pte. Ltd (“Gentari”). As a result of this transaction, Gentari acquired a
29% indirect economic interest in the downstream Hai Long Project, which was previously jointly owned by Northland
and Yushan Energy Co. Ltd ("Yushan"), with ownership stakes of 60% and 40%, respectively. After the change in
ownership, it was determined that Northland, Gentari, and Yushan jointly control the Hai Long Project. As a result,
Northland de-consolidated NP Hai Long Holding BV and reclassified its remaining ownership stake in the Hai Long
Project as an investment in a joint venture. This transaction led to a fair valuation of Northland's investment, resulting
in a gain of $192 million which was presented under the other income (expense) line in the consolidated statements of
income (loss).
c.
During the year ended December 31, 2023, Northland completed the sale of its 49% stake in the CanWind and
NorthWind projects in Taiwan to Gentari, while retaining the remaining 51% ownership. This transaction resulted in the
conversion of Northland's investments in these projects from subsidiaries to joint ventures, leading to a gain of $19
million. This gain was presented under the other income (expense) line within the consolidated statements of income
(loss).
116
| NORTHLAND POWER INC. |
| 2024 ANNUAL REPORT |
117
Northland Power Annual Report | 2024
Directors and Executive Officers
Of Northland Power Inc.
Directors
Mr. John W. Brace, Board Chair
Ms. Lisa Colnett
Mr. Kevin Glass
Mr. Keith Halbert
Ms. Helen Mallovy Hicks
Mr. Ian Pearce
Mr. Eckhardt Ruemmler
Ms. Ellen Smith
Mr. Doyle Beneby
Executive Officers
Ms. Christine Healy
President & CEO
Mr. Adam Beaumont
Interim Chief Financial Officer
Ms. Rachel Stephenson
Chief People Officer
Mr. Yonni Fushman
Chief Administrative & Legal Officer and
Corporate Secretary
Mr. Calvin MacCormack
EVP, Natural Gas & Utilities
Ms. Michelle Chislett
EVP, Onshore Renewables
Mr. Pierre-Emmanuel Frot
EVP, Project Management Office
Mr. Toby Edmonds
EVP, Offshore Wind
Corporate Information
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
Dario Neimarlija
VP, Financial Planning and Analysis & Investor Relations
investorrelations@northlandpower.com
647-288-1019
Northland Power Inc.
30 St. Clair Avenue West
Suite 300
Toronto, Ontario, Canada
M4V 3A1
416-962-6262
northlandpower.com
Intelligent Energy. Greener Planet.
30 St. Clair Avenue West
Suite 300
Toronto, Ontario, Canada
M4V 3A1
northlandpower.com
investorrelations@northlandpower.com
Global Head Office