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    Innergex Renewable Energy Inc. - Quarterly report (Q1) for the period ended March 31, 2022


    May 11, 2022 - Canadian Equity Markets (Alternative Disclosure) via PUBT

     

      For more than 30 years now, Innergex Renewable Energy Inc. has believed in a world where abundant renewable energy promotes healthier communities and creates shared prosperity. As an independent renewable power producer that develops, acquires, owns and operates hydroelectric facilities, wind farms, solar farms and energy storage facilities, Innergex is convinced that renewable energy will lead the way to a better world. Innergex operates in Canada, the United States, France and Chile and follows a sustainable development philosophy that balances people, our planet and prosperity. The Corporation's shares are listed on the Toronto Stock Exchange (''TSX'') under the symbols INE, INE.PR.A and INE.PR.C and its convertible debentures are listed under the symbols INE.DB.B and INE.DB.C.

      KEY FIGURES

      Innergex measures its performance using key performance indicators ("KPIs"). Innergex believes that these indicators are important, as they provide management and the reader with additional information about its production and cash-generating capabilities, its ability to pay dividends and fund its growth.

      These indicators are not recognized measures under IFRS, have no standardized meaning prescribed by IFRS and therefore may not be comparable to those presented by other issuers. Please refer to the "Non-IFRS Measures" section for more information.

      Production KPIs

      Financial KPIs

      Production in comparison with Long-Term Average ("LTA") in megawatt/hours ("MWh") and gigawatt/hours ("GWh")

      Revenues and Revenues Proportionate

      Production and Production Proportionate

      Adjusted EBITDA, Adjusted EBITDA Margin and Adjusted EBITDA Proportionate

      Adjusted Net Earnings (Loss)

      Free Cash Flow

      Payout Ratio

      Operational Key Performance Indicators

      As at May 10, 2022, the Corporation has four geographic segments and three operating segments.

      Gross Installed Capacity by Country

      Chile 8.3%USA 32.5%

      Canada 50.8%France 8.4%

      Gross Installed Capacity by Source of

      Energy (MW)*

      2016

      1,571

      2017

      1,840

      2018

      3,549

      2019

      3,488

      2020

      3,694

      2021

      3,800

      2022

      3,852

      Hydro

      Wind

      Solar

      * For 2021, Gross Installed Capacity for continued operations, excluding the Shannon facility due to the project's assets and liabilities being classified as disposal group held for sale, following the February 2021 Texas Events.

      Introduction and Key Figures p2

      BUSINESS STRATEGY

      Innergex develops, acquires, owns and operates renewable power-generating facilities with a focus on hydroelectric, wind and solar production as well as energy storage technologies. The Corporation's fundamental goal is to create wealth by efficiently managing its high-quality renewable energy assets and successfully pursuing its growth.

      Innergex is committed to producing energy from sustainable renewable sources exclusively and to providing energy storage capacity, guided by its philosophy that balances investing in people, caring for our planet and generating prosperity by sharing economic benefits with local communities and creating shareholder value. Innergex is committed to developing, acquiring, owning and operating renewable energy facilities exclusively that generate sustainable cash flows, provide an attractive risk-adjusted retuon invested capital and enable the distribution of a sustainable dividend.

      Innergex owns interests in 40 hydroelectric facilities drawing on 33 watersheds, 32 wind farms and 8 solar farms. The expertise and innovation developed by our skilled team in various energies and different locations can be leveraged and shared across the Corporation to maximize returns from our high-quality assets.

      INFORMATION ON COVID-19

      The Corporation continues to closely monitor the impacts of COVID-19 and is actively managing its response by placing a priority on the health and safety of our employees, suppliers, business partners and the broader community. Innergex is adhering to pandemic response plans and is following guidance from government health departments with respect to conducting operations safely. To the extent possible, and as permitted by local guidelines, the Corporation is facilitating vaccination of its employees against COVID-19.

      Power production activities have continued in all segments, as they have been deemed essential services in every region where the Corporation operates. Innergex's renewable power production is sold mainly through power purchase agreements, which include sufficient protection to prevent material reduction in demand, to financially solid counterparties, and no credit issues are anticipated. As such, the Corporation does not intend to make any changes to its workforce and intends to maintain salaries and benefits.

      Only BC Hydro sent curtailment notices in May 2020 for six hydro facilities that were disputed by the Corporation on the basis that, under its Electricity Purchase Agreements with BC Hydro, BC Hydro can exercise this right but is required to compensate Innergex for energy that would have been produced at the facilities in the absence of the curtailment. For the period from May 22, 2020, to July 20, 2020, actual eligible energy revenue that would have been produced at the facilities in the absence of the curtailment amounts to $12.5 million ($14.2 million on a Revenues Proportionate basis). The dispute was settled in the first quarter of 2022 to Innergex's satisfaction ("BC Hydro Curtailment Payment") (please refer to the "Capital and Liquidity" section of the Management's Discussion and Analysis for more information).

      Although our business is considered essential services, different government decisions in each region may have an impact on the ability of Innergex's employees, customers, suppliers and other business partners to conduct business activities as usual, and this could last for an extended period. This could have a material effect on our operating results, financial condition, liquidity, capital expenditures and the trading value of our securities, in particular:

      • ? Impact of supply chain disruption on construction and development activities;

      • ? Impact on employees and cybersecurity;

      • ? Impact on liquidity;

      • ? Impact on capital expenditures and costs;

      • ? Impact on general electricity demand and on merchant prices.

      The effects of COVID-19 on business may continue for an extended period, and the ultimate impact on the Corporation of the pandemic will depend on future developments that are uncertain and cannot be predicted including, and without limitations, the duration and severity of the pandemic, the duration of government mitigation measures, the effectiveness of the actions taken to contain and treat the disease, and the length of time it takes for normal economic and operating conditions to resume.

      Since March 2020, Innergex has implemented numerous measures to protect employees, suppliers and business partners from COVID-19. In addition to standard operating procedures designed to maintain safe operations, the Corporation has implemented Communicable Disease Prevention Plans in each of its locations to provide guidance on health and safety measures to adopt regarding the COVID-19 pandemic. The Corporation is engaged in ongoing communications with employees, apprising them on its response to the pandemic. Innergex believes that its employees and suppliers can access its facilities safely and in compliance with relevant directives.

      Business Strategy p3

      PORTFOLIO OF ASSETS

      The Corporation owns interests in three groups of projects at various stages: the Operating Facilities, the Development Projects and the Prospective Projects.

      As at May 10, 2022, the Corporation owns and operates 80 facilities in commercial operation (the "Operating Facilities"). Commissioned between 1986 and July 2021, the facilities have a weighted average age of approximately 9.6 years.

      They mostly sell the generated power under long-term power purchase agreements, power hedge contracts1and short- and long-term industrial contracts (each, a "PPA") to rated public utilities or other creditworthy counterparties or on the open market. The PPAs have a weighted average remaining life of 13.9 years (weighted average based on gross long-term average production).

      For most Operating Facilities in Canada and in France, PPAs include a base price and, in some cases, a price adjustment depending on the month, day and hour of delivery. For most Operating Facilities in the United States, power generated is sold through PPAs or on the open market mainly supported by financial or physical power hedges. In Chile, Operating Facilities sell the power generated through PPAs to industrial customers or on the open market.

      The Corporation also holds interests in projects under development that are either at an advanced development stage or under construction (the "Development Projects").

      1. A power hedge contract is deemed a PPA regardless of whether it is subjected to hedge accounting or accounted for as a financial derivative at fair value through earnings (loss).

      The table below outlines Operating Facilities and Development Projects as at May 10, 2022.

      Number of Facilities1

      Gross2Installed Capacity

      Net3Installed Capacity

      Storage Capacity

      (MW)

      (MW)

      (MWh)

      Operating

      Facilities

      HYDRO

      Canada

      33

      1

      United States

      3

      -

      Chile

      4

      2

      Subtotal

      40

      3

      WIND

      Canada

      8

      -

      France

      16

      2

      United States

      8

      1

      Subtotal

      32

      3

      SOLAR

      Canada

      1

      -

      United States

      4

      5

      Chile

      3

      -

      Subtotal

      8

      5

      STORAGE

      France

      -

      1

      Chile

      -

      2

      Subtotal

      -

      3

      Total

      80

      14

      Development

      Operating

      Projects

      Facilities

      1,019

      8

      70

      -

      170

      112

      1,259

      120

      908

      -

      324

      38

      714

      332

      1,946

      370

      27

      -

      467

      280

      153

      -

      647

      280

      -

      -

      -

      -

      -

      -

      3,852

      770

      Development

      Operating

      Projects

      Facilities

      713

      4

      40

      -

      166

      85

      919

      89

      714

      -

      226

      32

      662

      332

      1,602

      364

      27

      -

      466

      280

      138

      -

      631

      280

      -

      -

      -

      -

      -

      -

      3,152

      733

      96

      Development

      Operating

      Development

      Projects

      Facilities

      Projects

      -

      -

      -

      -

      -

      -

      -

      -

      -

      -

      -

      -

      -

      -

      -

      -

      -

      -

      -

      320

      150

      150

      --

      4257

      - 434

      150754

      • 1. The number of Operating Facilities includes all facilities owned and operated by the Corporation, including non-wholly owned subsidiaries and joint ventures and associates.

      • 2. Gross installed capacity is the total capacity of all Operating Facilities of Innergex, including non-wholly owned subsidiaries and joint ventures and associates.

      • 3. Net installed capacity is the proportional share of the total capacity attributable to Innergex based on its ownership interest in each facility.

      • 4. Capacity related to the hot water storage of the Pampa Elvira thermal solar facility.

      • 5. Battery storage capacity related to Hale Kuawehi (30 MW/120 MWh (4 hours)), Paeahu (15 MW/60 MWh (4 hours)), Kahana (20 MW/80 MWh (4 hours)) and Barbers Point (15 MW/60 MWh (4 hours)) solar projects.

      • 6. Tonnerre standalone battery storage project (9 MW/9 MWh (1 hour)).

      7.Salvador battery storage capacity of 50 MW/250 MWh (5 hours) and San Andrés battery storage capacity of 35MW/175 MWh (5 hours).

      More information on the Corporation's Prospective Projects is available in the "Prospective Projects" section of the Management's Discussion and Analysis.

      Portfolio of Assets p4

      MANAGEMENT'S DISCUSSION AND ANALYSIS

      This Management's Discussion and Analysis ("MD&A") is a discussion of the operating results, cash flows and financial position of Innergex Renewable Energy Inc. ("Innergex" or the "Corporation") for the three-month period ended March 31, 2022, and reflects all material events up to May 10, 2022, the date on which this MD&A was approved by the Corporation's Board of Directors.

      The MD&A should be read in conjunction with the unaudited condensed interim consolidated financial statements and the accompanying notes for the three-month period ended March 31, 2022.

      The unaudited condensed interim consolidated financial statements attached to this MD&A and the accompanying notes for the three-month period ended March 31, 2022, along with the 2021 comparative figures, have been prepared in accordance with International Financial Reporting Standards ("IFRS"). However, some measures referred to in this MD&A are not recognized measures under IFRS and therefore may not be comparable to those presented by other issuers. Please refer to the "Non-IFRS Measures" section for more information.

      All tabular dollar amounts are in thousands of Canadian dollars, except amounts per share or unless otherwise indicated. Some amounts included in this MD&A have been rounded to make reading easier, which may affect some calculations.

      To inform readers of the Corporation's future prospects, this MD&A contains forward-looking information within the meaning of applicable securities laws ("Forward-Looking Information"). Please refer to the "Forward-Looking Information" section for more information.

      Additional information relating to Innergex, including its Annual Information Form, can be found on the Canadian Securities Administrators' System for Electronic Document Analysis and Retrieval ("SEDAR") at sedar.com or on the Corporation's website at innergex.com. Information contained in or otherwise accessible through our website does not form part of this MD&A and is not incorporated into the MD&A by reference.

      TABLE OF CONTENTS

      1- Highlights........................................................................5

      First Quarter 2022 - Operating Performance.........7

      First Quarter 2022- Capital and Resources..........8 First Quarter 2022 - Growth and Development

      Initiatives......................................................................8

      Subsequent Events...................................................9

      2- Overview of Operations................................................9

      Business Environment..............................................9

      Operating Facilities....................................................10

      Construction Activities...............................................11

      Development Activities..............................................12

      Prospective Projects..................................................14

      3- Financial Performance and Operating Results.........15

      Hydroelectric Segment..............................................16

      Wind Segment............................................................17

      Solar Segment............................................................18

      Consolidated Margin..................................................19

      Net Earnings (Loss)...................................................20

      Adjusted Net Loss......................................................20

      Non-Controlling Interests..........................................21

      4- Capital and Liquidity......................................................22

      Capital Structure........................................................22

      Tax Equity Investment...............................................23

      Financial Position.......................................................25

      Cash Flows.................................................................29

      Free Cash Flow and Payout Ratio..........................30

      Information on Capital Stock....................................32

      Dividends.....................................................................32

      5- Non-IFRS Measures.....................................................34

      6- Additional Consolidated Information...........................39

      Geographic Segments..............................................39

      Historical Quarterly Financial Information..............39

      February 2021 Texas Events...................................40

      7- Accounting Policies and Disclosure Controls............46

      Significant Accounting Policies................................46

      Disclosure Controls and Procedures......................46 Entities excluded from the Corporation's control

      policies and procedures............................................47

      8- Forward-Looking Information......................................48

      Management's Discussion and Analysis p5

      This is an excerpt of the original content. To continue reading it, access the original document here.

      Disclaimer

      Innergex Renewable Energy Inc. published this content on 10 May 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 10 May 2022 16:45:57 UTC.

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