Innergex Renewable Energy Inc Q3 2024 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Rupert Merer - National Bank Financial - Analyst : Hi, good morning, everyone. If I could start with the US election, given how topical it is right now. So I understand you're not too concerned about potential changes in US policy. But if we look at your development pipeline, there is that one project, Palomino, that has some promise for next year. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 07, 2024 / 2:00PM, INE.TO - Q3 2024 Innergex Renewable Energy Inc Earnings Call Do you have any comments on how changes to tax credits or tariffs could impact that project in particular? And maybe any comments you might have on impact of tax cuts broadly across your portfolio, too?

Question: Rupert Merer - National Bank Financial - Analyst : Okay, great. And if I could turn to Chile. I'm wondering if you can remind us just broadly about your thesis on that market. How do you see competition building with competitors, batteries coming into that market? And what's the outlook for the decline in thermal generation there? I know the thermal generation is still quite significant compared to what we see coming from batteries off-peak?

Question: Rupert Merer - National Bank Financial - Analyst : So just a quick follow-up. If you do look to expand battery plants, what's the scale of the opportunity beyond 62 megawatts?

Question: Nelson Ng - RBC Capital Markets - Analyst : Great. Thank you and good morning. Just a quick follow-up on the battery storage projects in Chile. I know the MD&A indicates that procurement contracts have been signed for the two projects. Does that mean you've secured the battery supplies and locked in a large portion of the project costs already?

Question: Nelson Ng - RBC Capital Markets - Analyst : Okay. So like when you compare -- I'll call these ones Phase 2, but Phase 1 that were completed last year versus these projects, can you just talk about what you're seeing in terms of, I guess, project costs? And then also just compare what you're seeing on the pricing arbitrage. I think you meant -- like last year, you want to finish those projects as quickly as possible because the pricing was pretty large. But can you just talk about the differences between Phase 1 versus Phase 2? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 07, 2024 / 2:00PM, INE.TO - Q3 2024 Innergex Renewable Energy Inc Earnings Call

Question: Nelson Ng - RBC Capital Markets - Analyst : Can I just interrupt you?

Question: Nelson Ng - RBC Capital Markets - Analyst : Will they be at the same site or very close by? So they could share any of the --

Question: Nelson Ng - RBC Capital Markets - Analyst : Okay. Got it. And like you said earlier, you're still seeing pretty strong arbitrage in terms of the pricing --

Question: Nelson Ng - RBC Capital Markets - Analyst : Great. Thanks for that. And then my next question is a bit different. So when you changed your strategy, the focus has been on development rather than M&A. I know you had a particular situation in Chile where you found it pretty attractive to acquire a small hydro facility. But would you look at future M&A opportunities, whether it's hydro or other types of assets in North America?

Question: Nelson Ng - RBC Capital Markets - Analyst : Okay. Yeah, that's a very attractive price. I just know that there's obviously some hydro assets in Canada that are up for sale.

Question: Nick Boychuk - Cormark Securities Inc. - Analyst : Thanks. Good morning, guys. Coming back to the dynamic in Chile, how are you thinking about capital allocation from a return perspective? Obviously, with resources not unlimited, if you're comparing this to the opportunity in BC, for example, what would the return profile look like on these batteries in a base case scenario? And how would that compare with something that's more traditional like a BC wind project?

Question: Nick Boychuk - Cormark Securities Inc. - Analyst : Okay. Thank you. And sticking with battery energy storage for a second here, it was interesting to see in the development pipeline that the 100-megawatt project went straight to the mid-stage in the US. Can you give a little bit of color, please, on that project, the opportunity set, kind of how that came up and why it went directly into the mid-stage?

Question: Mark Jarvi - CIBC World Markets Inc. - Analyst : Yeah, thanks. Good morning, everyone. Just on the US projects, you talked about Palomino, but maybe the Wautoma Solar Project or this battery storage project, where would you be on safe harboring of equipment to ensure you can get as much tax credits in case there was some repeal or changes down the road?

Question: Mark Jarvi - CIBC World Markets Inc. - Analyst : But is there no reason why you couldn't procure some transformers or something like that just to ensure that you could get safe harbor? And then if you never use them in the US, you can move them to projects in Canada? Is there not that flexibility?

Question: Mark Jarvi - CIBC World Markets Inc. - Analyst : Okay. And then what are you seeing in terms of wind turbine pricing on imports into Canada for projects and then balance the plant? And specifically, on the BC RFP, can you remind us again whether or not there's any protection on any sort of inflation pressures around equipment costs?

Question: Mark Jarvi - CIBC World Markets Inc. - Analyst : And then with the strengthening of the US dollar, does that impact at all what you're seeing in terms of actual build costs here in Canada?

Question: John Mould - TD Securities, Inc. - Analyst : Hi. Good morning, everybody. Just a couple of things on your assets in Eastern Canada, I guess -- or sorry, in the Eastern side in North America. On Curtis Palmer, I think PPAs there is volumes based. So I think that's up 2026 or maybe late next year, depending on performance. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. NOVEMBER 07, 2024 / 2:00PM, INE.TO - Q3 2024 Innergex Renewable Energy Inc Earnings Call Just wondering what your re-contracting options look like there in terms of corporate off-takers. And I think when you made the acquisition, you highlighted the strength of Hydro-Quebec's marketing franchise there. And I'm just wondering how their involvement potentially factors into that process.

Question: John Mould - TD Securities, Inc. - Analyst : Okay. Those are all good points. Thanks for that. And maybe just on Quebec and the plans for procurement and development of larger wind projects there, it would be great to get an update on your thoughts around where IPP partnerships in those larger projects are potentially going and when you're hoping to get a better sense of how that -- whether it's an RFP process or however else it's going to be managed is going to play out?