Northland Power Inc. ("Northland")
(TSX:NPI)(TSX:NPI.DB.A)(TSX:NPI.PR.A)(TSX:NPI.PR.C) today announced it has
entered into agreements for the rights to acquire a majority equity stake in
Gemini, a 600MW offshore wind project currently in advanced development. Gemini
is located 85 kilometres off the coast of the Netherlands in the North Sea,
which combines one of the strongest and most reliable wind resources in the
world with favourable sea bed conditions.
Northland has entered into agreements with a highly qualified team of offshore
developers and contractors. The team includes Typhoon Offshore B.V., an
experienced Netherlands-based developer of offshore wind projects in the North
Sea; Siemens, the world's leading supplier of offshore wind turbines (via
Siemens Financial Services); Van Oord Dredging and Marine Contractors B.V. (Van
Oord), a leading Netherlands-based international marine contractor with an
excellent track record in offshore wind farm construction and a leading position
as EPC contractor in offshore wind projects; and HVC N.V., a joint venture of 48
Dutch municipalities and six water regulatory authorities.
In 2010, Gemini was granted two 15-year agreements with the Government of The
Netherlands through a competitive tender under the government's Sustainable
Energy Production Incentive (Stimulering Duurzame Energieproductie, "SDE")
program. These agreements provide a premium price for the large majority of the
wind farm's output for 15 years and incorporate mechanisms that reduce revenue
exposure to wind production volatility.
Northland intends to actively participate in Project Gemini by taking a lead
role during the remainder of development as well as construction and operations.
Northland's final investment is subject to meeting conditions for closing,
formal documentation and the approval of Northland's Board of Directors.
Siemens' final investment is also subject to approval by their Board of
Directors. Northland has appointed a Committee of its Board to oversee
Northland's involvement in the project consisting of James C. Temerty, Linda L.
Bertoldi, Sean Durfy, Pierre R. Gloutney. Upon closing, Northland will acquire a
55% interest in Gemini.
Gemini will play an important role in helping the Government of Netherlands'
achieve renewable energy targets mandated by the European Union's Renewable
Energy Directive, which calls for all Member States to reach a 20% share of
energy from renewable sources by 2020. There is currently 5 GW of installed
capacity in 58 operating offshore wind farms in
European waters with another 5.5 GW in construction or advanced development.
According to the European Wind Energy Association (EWEA), it is anticipated that
there will be up to 150 GW of installed offshore wind power in the EU by 2030,
meeting 14% of the EU's electricity demand.
As nations around the world increase their use of renewable energy sources,
offshore wind has become one of the fastest growing sectors. With offshore wind
projects also underway in several other jurisdictions, including the United
Kingdom, Japan, and the U.S., it is projected
(http://www.rolandberger.com/media/pdf/Roland_Berger_Offshore_Wind_Study_20130506.pdf)
by Roland Berger to become a $177 billion global market by 2020.
Once operational, Gemini will be one of the largest wind farms in the world, and
will produce approximately 2.5TWh annually - enough electricity to power more
than 785,000 households. According to a July 2013 report
(http://www.ewea.org/fileadmin/files/library/publications/reports/Deep_Water.pdf)
by the EWEA, offshore wind power in the North Sea alone has the potential to
meet the European Union's electricity consumption four times over and the
technology enjoys significant support, given its reputation for being a clean,
renewable, efficient and safe power source.
Gemini is well advanced, having received its major environmental permits, and is
close to finalizing its major contracts for turbine supply and balance of plant
engineering, construction and procurement. The project will be constructed under
a two-contract strategy involving Siemens and Van Oord to reduce interface
risks. Siemens Wind Power was selected as the preferred supplier for the wind
turbines; it is intended that they will install, and then operate and maintain
them, under a long-term service contract. Van Oord will be responsible for
supply and installation of the wind turbine foundations and the entire
electrical infrastructure, including the offshore high voltage substation and
electrical cable, as well as the transmission infrastructure and installation of
the turbines.
"Today's announcement underscores Northland's commitment to fostering
sustainable growth and delivering steady returns to our shareholders," said
James Temerty, Chairman of Northland Power's Board of Directors. "Northland's
entry into the burgeoning offshore wind sector is consistent with our strategy
of developing and investing in opportunities with long-term secured revenue
contracts with creditworthy counterparties that yield attractive rates of
return."
Project Gemini's total cost is projected to be $3.8 billion, and is expected to
be financed with a combination of non-recourse project debt, mezzanine financing
and equity from the consortium. Northland's total net investment will be
approximately $400 million, consisting of mezzanine and equity financing, in
addition to credit support in the amount of approximately $32 million to secure
the project revenue SDE agreements with the Dutch government.
Construction of Gemini is expected to start in late 2014; it is expected to
reach commercial operations in 2017. The project is expected to be accretive on
a free cash flow per share basis upon its completion, and provide project
returns commensurate with Northland's investment criteria.
"As offshore wind becomes a more significant contributor to meeting the world's
need for renewable energy, Northland's involvement in Gemini will position us
very well for future opportunities and continued growth, noted John Brace,
President and CEO of Northland Power. "This project provides an exceptional
opportunity for Northland to integrate offshore wind into its diverse portfolio
of clean and green technologies, while helping the Netherlands to achieve its
renewable energy targets. We are already impressed by the high degree of support
received from the Dutch government and the expertise of our partners. Together,
we look forward to harnessing the enormous power of offshore wind, while helping
to further advance the offshore wind sector."
Please note: All amounts expressed herein are in Canadian Dollars, unless
otherwise indicated. A 1.35 Canadian Dollar to the Euro exchange rate is used
herein to establish equivalent amounts.
ABOUT NORTHLAND
Northland Power is an independent power producer founded in 1987, and publicly
traded since 1997. Northland produces 'clean' (natural gas) and 'green' (wind,
solar, and hydro) energy, providing sustainable long-term value to shareholders,
stakeholders, and host communities. The company owns or has a net economic
interest in 1,309 MW of operating generating capacity, with an additional 100 MW
of generating capacity currently in construction, and another 200 MW of wind,
solar and run-of-river hydro projects with awarded power contracts. Northland's
cash flows are diversified over five geographically separate regions and
regulatory jurisdictions in Canada, Germany and the United States. Northland
Power's common shares, Series 1 and Series 3 preferred shares and convertible
debentures trade on the Toronto Stock Exchange under the symbols NPI, NPI.PR.A,
NPI.PR.C and NPI.DB.A, respectively.
ABOUT TYPHOON OFFSHORE
Typhoon Offshore is an Independent Energy Innovator with a unique expertise in
offshore wind. Typhoon Offshore acquires permitted North Sea offshore wind
projects and arranges the contracting, structuring and financing to bring the
project from paper to actual electricity generating assets. Typhoon Offshore's
team has an unprecedented track record in successfully developing, contracting,
structuring and financing renewable energy projects in general (1GW to date) and
offshore wind in particular: the team was involved in the financing of Princess
Amalia (120MW) and Belwind (165MW). The Typhoon Offshore team is currently
working on offshore wind farm Gemini.
ABOUT SIEMENS FINANCIAL SERVICES
The Financial Services unit of Siemens (SFS) is an international provider of
business-to-business financial solutions. SFS helps facilitate investments,
providing commercial finance, project and structured finance with specific asset
expertise in the energy, healthcare, industry, and infrastructure & cities
markets. Employing more than 2,900 employees worldwide, SFS supports Siemens as
well as other companies with their capital needs and acts as an expert manager
of financial risks within the Siemens Company. By leveraging its financing
expertise and its industrial know-how SFS creates value for its customers and
helps them strengthen their competitiveness. Beyond that, financing is key in
creating trust for technological solutions - and SFS acts as a key enabler when
it comes to the market launch. As of September 30, 2012, the total assets of SFS
amounted to EUR17.4 billion. For more information, visit:
www.siemens.com/finance.
ABOUT VAN OORD
Van Oord is a leading international contractor specialising in dredging, marine
engineering and offshore projects (oil, gas and wind). Marine ingenuity is what
sets Van Oord apart. Van Oord is a family-owned business and employs about 4,500
professionals worldwide. The company has been involved in such noteworthy
projects as Palm Jumeirah in Dubai and the port of Rotterdam's Maasvlakte 2
expansion. As an EPC (Engineering, Procurement, Construction) contractor, Van
Oord is rapidly expanding its track record in the offshore wind sector in
Northwest Europe, including projects such as Princess Amalia (120 MW), Belwind
(165 MW), Teesside (62 MW) and Luchterduinen (129 MW). A new offshore wind
transport and installation vessel, Aeolus, will become operational late 2013,
and will be used for Gemini. www.vanoord.com.
ABOUT HVC
HVC specializes in sustainable raw materials and energy and is located in the
Netherlands. The company operates two waste-to-energy plants, a biomass-fired
power station and two digesters, in Alkmaar, Dordrecht, Middenmeer and Zwolle,
the Netherlands. HVC is owned by 48 Dutch municipalities and six water
regulatory authorities. The company converts residual wastes and biomass to
electricity, heat and gas. The electricity generated by HVS is supplied to the
shareholders. The heat is supplied to businesses and dwellings in the vicinity
of the plants.
FORWARD-LOOKING STATEMENTS
This release contains certain forward-looking statements which 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. Forward-looking statements include statements that are
predictive in nature, depend upon or refer to future events or conditions, or
include words such as "expects", "anticipates", "plans", "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 EBITDA, free cash flows,
dividend payment and dividend payout ratios, the construction, completion,
attainment of commercial operations, cost and output of development projects,
plans for raising capital, and the operations, business, financial condition,
priorities, ongoing objectives, strategies and outlook of Northland and its
subsidiaries. These statements are based upon certain material factors or
assumptions that were applied in developing the forward-looking statements,
including the design specifications of development projects, the provisions of
contracts to which Northland or a subsidiary is a party, management's current
plans, its perception of historical trends, current conditions and expected
future developments, as well as other factors 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, construction risks, counterparty risks, operational risks, foreign
exchange rates, regulatory risks, maritime risks for construction and operation,
and the variability of revenues from generating facilities powered by
intermittent renewable resources and the other factors described in the "Risks
and Uncertainties" section of Northland's 2012 Annual Report and Annual
Information Form, both of which can be found at www.sedar.com under Northland's
profile and on Northland's website www.northlandpower.ca. 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.
The forward-looking statements contained in this release are based on
assumptions that were considered reasonable on August 1, 2013. 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.
FOR FURTHER INFORMATION PLEASE CONTACT:
Northland Power Inc.
Sarah Charuk
Director, Communications
647-288-1105
Sarah.charuk@northlandpower.ca
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