May 11, 2022
Operator
Ladies and gentlemen, thank you for standing by. Welcome to the Northland Power Conference Call to discuss the 2022 First Quarter results.
During the presentation, all participants will be in a listen-only mode. Afterwards, we will conduct a question-and-answer session.
[Operator Instructions] As a reminder, this conference is being recorded Wednesday, May 11, 2022 at 10:00 AM Eastern Time. Conducting this call for Northland Power are Mike Crawley, President and Chief Executive Officer, Pauline Alimchandani, Chief Financial Officer, and Wassem Khalil, Senior Director of Investor Relations and Strategy.
Before we begin, Northland's management has asked me to remind listeners that all figures presented are in Canadian dollars, and to caution that certain information presented and responses to questions may contain forward-looking statements that include assumptions, and are subject to various risks. Actual results may differ materially from management's expected or forecasted results.
Please read the forward-looking statements' section in yesterday's news release announcing Northland Power's results, and be guided by its contents in making investment decisions or recommendations. This release is available at www.northlandpower.com.
I will now turn the call over to Mike Crawley, please go ahead.
Mike Crawley
Thank you Catherine, and good morning everyone. Thanks for joining us today.
This morning, we will review our financial and operating results for the first quarter of 2022. Following our prepared remarks we will take questions from analysts and look forward to addressing all of your questions.
To kick things off as we always do, I want to reiterate that the health and safety of our employees and stakeholders always comes first, our rigorous adherence to our health and safety protocols in all respects ensures safety of our employees while allowing us to maintain a high level of availability at our facilities. We delivered strong results in the quarter on the back of higher production and higher market prices in our offshore wind segment.
A stronger wind resource in the North Sea compared to this time last year across our three facilities, coupled with continued strength in energy prices in Europe, resulted in very good performance for our offshore wind segment. Along with the continued strength across our remaining portfolio, this has set us up for a very good start to the year.
Looking at the headline numbers in the quarter we delivered adjusted EBITDA of CAD420 million, which was an increase of 17% or CAD60 million compared to the same period of last year. Similarly, the adjusted free cash flow per share and they -- and the free cash flow per share we achieved CAD0.84 and CAD0.77 respectively in the quarter, representing increases of 15% and 17% respectively compared to the same period a year-ago.
Pauline will go into the details of the quarter shortly. We continue to progress our key development projects, and our teams are sourcing new growth opportunities in identified markets.
As we've noted previously, the acceleration in the global energy transition will require a substantial build-out of renewable energy over the next decade to realize government decarbonization policies and corporate net zero targets. With the recent energy crisis in Europe, we're also seeing a renewed focus on energy security, and a commitment to accelerate the development of renewable energy in Europe.
These commitments include higher targets for renewable generation in countries such as Germany, the UK, the Netherlands and, specifically, higher targets for offshore wind. Germany has committed to increasing offshore wind capacity by 10 gigawatts to a total of 30 gigawatts by 2030.
And then Netherlands has committed to doubling its offshore wind capacity by 2030, adding over 10 gigawatts of incremental capacity in a bid to meet its climate goals and reduce its dependence on fossil fuels. We're also seeing commitments to streamline the regulatory process with the aim of reducing the approval times for projects, thereby accelerating the development and the build-out of projects.
As evidenced by the recent announcement from the UK government committing to planning reforms that will see its growth in offshore wind accelerate to 50 gigawatts by 2030, including five-gig gigawatts specifically of floating offshore wind. With several key projects in operation and under development across Europe, Northland, we believe, is well-positioned to help achieve these objectives.
In January, we expanded our presence in the German offshore wind market with the formation of the 1.3 gigawatt North Sea Cluster with our partner RWE. The offshore wind segment is all about size and scale, and the formation of the cluster provides us with both and is expected to allow for the realization of synergies in development, construction, and on operations.
Also in January, we announced the successful bid for two offshore wind leases totaling 2.3 gigawatts off the coast of Scotland. The two leases, one fixed and one floating foundation, are -- foundation project, are early-stage offshore wind development opportunities that will extend our development pipeline into the next decade.
And with our position in the 1.2 gigawatt Baltic Power offshore wind project in Poland, we're solidifying our position as a key player in this offshore wind build-out across Europe, and indeed around the world. We are very confident that these accelerated policies and targets will result in the advancement of existing development projects, but are also mindful that investments also need to be made to alleviate pressure on the European and global offshore wind supply chain and its ability to invest in ramping up capacity, which is pressed in the face of rising inflation and rising commodity prices.
The focus by these countries on enabling a large-scale build-out of offshore wind towards and beyond 2030 bodes well for companies like Northland, and we welcome the opportunity to accelerate this build-out. Now turning to our construction activities, construction at our New York onshore wind project is progressing well, on schedule, and on budget.
The two projects, BallHill and Bluestone have a combined operating capacity of 220 megawatts, and commercial operations are expected later in the year. The two projects benefit from 20 year indexed renewable energy certificate agreement with NYSERDA.
In Colombia, we celebrated the inauguration of the first phase of our 16 megawatt Helios solar farm in February. Construction and amortization of the 10 megawatt first phase is complete, and is expected to provide enough electricity to meet the needs of 15,000 homes annually.
Construction on the remaining six megawatts continued with full commercial operations expected by the end of the year. Helios will benefit from a 12-year Power Purchase Agreement.
On the development front, our 1044 megawatts Hai Long Project in Taiwan is preparing to move to financial close that later this year, the project team is diligently completing revenue, construction, financing, and other necessary contractual arrangements including supplier agreements for all of the key construction contracts, which will allow commencement of construction activities once the project achieves financial close. On our other near-term development projects, including Baltic Power, Nordsee Two, which is part of the North Sea Cluster and Suba, we continue progressing the projects with the team, securing the permanent and contracts necessary to keep advancing these projects closer to their respective financial close dates.
We're very excited about the new opportunities that are rising as a result of rising electricity prices, and the European push for energy security. Our teams across our global development office are working hard to identify opportunities for Northland to help accelerate the build-out of renewable energy projects, which we hope to share with you in due course.
With that, I will now turn the call over to Pauline for a more detailed review of our financial results.
Pauline Alimchandani
Thank you, Mike, and good morning, everyone. Last night, Northland Power released operating and financial results for the first quarter of 2022.
Our financial performance in the quarter was solid, where we generated healthy results for adjusted EBITDA, adjusted free cash flow, and free cash flow. These results were supported by stronger performance across our offshore wind segment due to an improved wind resource in the quarter compared to a year ago, coupled with higher market prices that benefited our Gemini wind farm.
Financial results from our onshore renewable segments were also very strong year-over-year, reflecting consistent performance across our Canadian onshore assets coupled with the contributions from the Spain assets acquired in 2021. However, these results were tempered by weakness in the Spanish assets during the quarter, primarily due to a lower wind resource.
Looking at our financial results in the quarter, we generated adjusted EBITDA of approximately CAD420 million representing an increase of 17% or CAD60 million compared to the CAD360 million generated in the same period last year. The key factors that contributed to the higher EBITDA year-over-year included a CAD63 million contribution from the Spain portfolio, which was not included in our first-quarter results the year ago a CAD21 million increase in operating results from our offshore wind segment, resulting from higher wind resource, increased APX market pricing that benefited the results at Gemini, and fewer periods of uncompensated outages and negative pricing.
This strength was slightly tempered by the reduced turbine availability at Nordsee One, due to the rotary assembly replacement campaign which recommenced in late March. The stronger results were also partially offset by a couple of other key items, including a CAD25 million decrease in operating results from our efficient natural gas portfolio in Canada, stemming from the expiry of the Iroquois Falls PPA in December of 2021.
As Mike noted, we subsequently sold Iroquois Falls alongside our Kingston facility early in the second quarter. Also offsetting the strength in EBITDA was a CAD9 million increase in our G&A costs and growth expenditures to support global growth.
With respect to free cash flow and adjusted free cash flow, Northland generated approximately CAD174 million and CAD192 million in the quarter respectively. This represents an increase of CAD40 million and CAD45 million, or 30%, compared to the same period a year ago.
As a reminder, our definition of adjusted free cash flow excludes growth-related expenditures, and we believe this provides a better representation of our long-term run rate for free cash flow. Overall, the key items leading to higher cash flow in the quarter compared to a year-ago included a CAD36 million contribution from the Spain portfolio, coupled with a CAD13 million contribution from the net proceeds of the Epsa refinancing and an additional CAD6 million contribution, resulting from lower interest costs due to the scheduled principal repayments on facility-level loans.
These increases were partially offset by an CAD18 million increase in current taxes at our offshore wind facilities resulting from better operating performance year-over-year. Digging into Epsa a bit more, in December we restructured and upsized Epsa's long-term non-recourse debt financing, resulting in CAD35 million to CAD45 million of incremental net cash proceeds to Northland.
Their financing was completed on the basis of growth in Epsa's projected EBITDA growth for 2022, based on increases in the rate base. For the quarter we have included net upsizing proceeds of CAD13 million in our free cash flow and expect to amortize the remaining proceeds across the three quarters in 2022, weighted more towards the latter half.
These proceeds have already been included in our financial guidance for 2022. Under the terms of the Epsa facility, Northland intends to execute reoccurring upsizing of Epsa's debt supported by continued growth in its EBITDA, as market conditions permit.
On a first year basis, these figures translated into free cash flow of CAD0.77 and adjusted free cash flow ofCADCAD0.84 in the quarter compared to free cash flow of CAD0.66 and adjusted free cash flow of CAD0.73 per share same time last year. These results generated a rolling four-quarter adjusted free cash flow and free cash flow net payout ratios of 42% and 52% respectively, calculated on the basis of cash dividends paid, compared to 58% and 73% for the same period ending March 31, 2021.
The improvement in both net payout ratios was due to higher reported adjusted free cash flow. With respect to our balance sheet, Northland remains in a very strong position with ample liquidity to help fund our development initiatives.
As at May 10, 2022, Northland had access to approximately CAD890 million of cash and liquidity, comprising CAD590 million of liquidity available on a revolving facility, and CAD300 million of corporate cash on-hand to help us pursue our growth initiatives. In addition to free cash flow generated, Northland utilizes additional sources of liquidity to fund growth and capital investments, including proceeds from strategic debt refinancing and debt optimization.
I want to take a moment and discuss the recent announcements in Spain that could impact our current portfolio. In response to the unprecedented high energy prices for consumers in 2022, in March of this year, Spanish authorities announced the approval of an exceptional update to the regulatory framework for calendar 2022 to mitigate the effects of higher energy prices.
Under the Spanish framework, the majority of Northland's Spanish facilities are entitled to receive a guaranteed rate of return over the regulatory life of the assets. Revenue from the Spanish facilities is primarily comprised of two main components; return on investment, or our subsidy, as well as the larger component based on pool prices.
The measures introduced will result in the semi-regulatory period from Jan 1, 2020 to December 31, 2022, being divided into two periods; one from Jan 1, 2020, December 31, 2021 and the second one running from Jan 1, 2022, to December 31 2022. The update was done earlier than expected and these amendments remain to be finalized but are not expected to affect the long-term financial performance of the Spanish portfolio.
As of now, our expectation is that the changes will not have an impact on the returns that will stay at 7.4% over the regulatory life of the asset. We continue to assess any financial impacts on the assets once any further amendments are finalized and issued.
Currently, we do not expect any significant impact to our 2022 IFRS revenue although we're still continuing to assess impacts to current and future years with our advisors and expect to have clarity in the coming months. Turning to our 2022 financial guidance as noted in our press release, we reaffirmed financial guidance for this year.
For adjusted EBITDA, we expect to generate between CAD1.15 billion and CAD1.25 billion this year. Given the variability of the offshore wind performance, and uncertainty with respect to the macro factors including energy raises, our viewpoint on the 2022 guidance remains unchanged.
For free cash flow per share and adjusted free cash flow per share, we expect to generate CAD1.20 to CAD1.40, and CAD1.65 to CAD1.80, respectively. As a growth company with a significant pipeline of development projects, Northland is committed to unlocking value by deploying early-stage investment capital or Devex to advance our projects.
As such, in 2022 we are still expecting our development expenditures to match to CAD100 million or around CAD0.45 per share, to fund expenditures to advance the North Sea Cluster, Scotland and our Japan and Korea strategies in addition to others. I would like to point out that our 2022 guidance ranges for free cash flow and adjusted free cash flow do not incorporate any sell-down proceeds, and as such net proceeds from sell-downs would increase our reported free cash flow in the event that they occur.
In conclusion we delivered very strong first-quarter results to start the year, leaving us on solid footing for -- to achieve our full-year financial guidance. I will now turn the call back over to Mike for his concluding remarks.
Mike Crawley
Thank you, Pauline. And, as Pauline mentioned, we had a very good start to the year, and looking ahead, we see some big opportunities to further accelerate our growth.
We have an operating portfolio of over three gigawatts, which the majority is under long-term revenue contracts, and a 14-gigawatt development pipeline to fuel our growth going forward. Our teams continue to actively source new growth opportunities to help accelerate the build-out of renewable projects and further grow our global position as a leading renewable energy producer.
This concludes our prepared remarks. We'd now be happy to take your questions.
Catherine, please open the line for questions. And just a reminder that we have David Povall here as well, the Executive Vice President of Development for Northland.
Operator
Thank you. [Operator Instructions] One moment, please, for the first question.
Our first question comes from Nelson Ng with RBC Capital Markets. Your line is open.
Nelson Ng
Thanks, Ann. Good morning, everyone.
My first question relates to Hai Long in Taiwan. I believe you're still working with, I guess a number of parties on a potential corporate PPA.
Can you just give some color on the corporate PPA market in Taiwan? Obviously, oil and gas prices are higher and I think that's supportive of higher power prices.
But can you just talk big picture about how the current power price environment is in Taiwan and your progress on corporate PPA.
Mike Crawley
Yes. The driver, Nelson of the corporate PPA market, which really is emerged in the last two years in Taiwan in ACE is these global Corporate net zero targets, renewable energy targets, whatever you want to call it, that are filtering down through the supply chain.
So a lot of the suppliers to the technology sector are based in Taiwan, and so they're looking to procure renewable power directly. A lot of the energy or the electricity coming out of the grid in Taiwan is still quite carbon-intensive, so they have to procure renewable power directly through contract.
And the government certainly has been creating all the regulatory changes to make that possible. So obviously Nelson, lots of electricity in procuring renewable power from corporates in Taiwan.
Nelson Ng
Okay. And then just on the big picture in terms of inflationary costs, higher interest rates and supply chain, I guess issues.
How have things changed I guess since your Investor Day update? Are you still pretty comfortable with the rough estimate in terms of project costs?
Mike Crawley
Yeah. I think we're generally in that same ballpark that we announced at Investor Day.
Nothing locks in till financial close, or shortly prior to financial close, and commodity prices in some of the contracts are indexed so they move around until financial close. But there's no material change from what we had disclosed at Investor Day in terms of capital costs.
Nelson Ng
Okay, that's great. And then just on financial close, I know back then you were talking about a Q3 financial close.
Are you now looking at a financial close closer to Q4?
Mike Crawley
Yeah. I'd say more likely late Q3, but drifting into early Q4.
Nelson Ng
Okay. And then just one final question.
In terms of Spain, the results were pretty good in Q1, was that generally consistent with your expectations heading into the year, or are things going to change due to some of the regulations they're going to put in place?
Pauline Alimchandani
So for this year, Q1 is a strong contributor to the overall annual performance in Spain. I would say that they were slightly behind expectations due to lower wind resource experienced in the first quarter, which we do not perceive to be anything beyond temporary.
Nelson Ng
Okay. Thanks, Pauline.
I'll leave it there.
Operator
Thank you. Our next question comes from Rupert Merer with National Bank.
Your line is open.
Rupert Merer
Good morning, everyone. Pauline, first just to follow-up on Nelson's question.
If we look at the average price you reported in the quarter for Spain at, say, CAD280 a megawatt hour, should we expect any change to that for the rest of the year, or is that consistent with, say, the average price we could expect with the changes that you are seeing in Spain?
Pauline Alimchandani
Yeah. It's very difficult for us to provide better guidance or color on that because there is an adjustment component per se, and it depends on where the prices ultimately are for the balance of the quarters.
As of now, I would say that that's a good assumption, but subject to change.
Mike Crawley
I mean, across all of our European assets in all the markets that we're in, the forwards -- you need to take a look at the forwards. They remained quite high, quite strong, but we'll just have to see what the actuals end up being, and there's not always a direct relationship.
Rupert Merer
Okay. Very good.
And switching gears, you talked about Mexico. Can you give us an update on La Lucha?
And maybe what are we seeing in the Mexican market with higher energy prices, and how that might impact La Lucha?
Mike Crawley
Good question. So I mean the quick update on what's going on with the sector in Mexico and how that impacts La Lucha.
So two things occurred over the last month in Mexico with respect to energy policy. 1.
We saw the rough referral from the Senate to the Supreme Court of Mexico get heard and decided upon in the last month, and so the vote was seven to four by the court, I guess against the legislation that the administration had tried to pass a year ago, or passed a year-ago to try and basically reverse some of the energy reforms that had been constitutionally embedded by the previous administration. So while a majority of the justices would've declared that that legislation was unconstitutional, they needed eight to make it a formal declaration from the court that it was unconstitutional.
So it ends up leaving you in a bit of an ambiguous situation, so it means that all of the injunctions that have been filed by private power producers including Northland, remain in effect and further injunctions can still be filed. And certainly the lower court decision have been similar in terms of being determining that the legislation that was passed a year ago by Congress was unconstitutional.
So that's the one piece that's gone that happened. The second piece is that the administration tried to meet the two-thirds requirement in a congressional vote to constitutionally embed the changes that they wanted to make to reverse the liberalization of electricity markets in Mexico and they failed to get that threshold and the administration seemed to signal after that that there were going to move on to other priorities.
So that in the medium to long term we view as a good result for La Lucha, and for the power generation sector in Mexico in general. There certainly are seeing higher energy prices in Mexico as a result of higher gas prices, which is typically on the margin in the Mexican power market.
I think again in the medium to long-term that could bode well. In the near-term, we're just working closely with all of the regulatory bodies to get the final permits required to get our project interconnected along with other private generators.
In Mexico the process is moving. It's just moving slowly.
Rupert Merer
Okay. So the outlook for that, is that still a 22 event or that should be producing online before the end of the year?
Mike Crawley
Our best view on it is to look at how long it has taken others to move through this process to get an FM claim approved, and then move on to getting interconnected. And so based on how long it took other projects to move through, we would expect to be able to move through by the summer.
But that's simply looking at the, as I said, other projects and then how long it took them, and applying that to La Lucha.
Rupert Merer
Okay. Excellent.
Thanks for the color.
Operator
Thank you. Our next question comes from Ben Pham with BMO.
Your line is open.
Ben Pham
Hi. Thanks.
Good morning. I had a couple of questions on Spain.
And I'm wondering, you're disclosing this quarter, I think, at CAD65 million or so EBITDA from Spain, and correct me if I'm wrong. And then you've said that Spain will add CAD75 million for the full-year.
So are you well above tracking on Spain so far? It's only been one quarter.
Pauline Alimchandani
On -- we can get back to you on EBITDA, but on sort of have the free cash flow numbers better off the top of my head. So there is seasonality, right?
In the portfolio. So Q2 and Q3 are going to be sort of lower contribution quarters.
And the way that the debt amortization currently works, it's not quite match to be a cash-flow generation of the portfolio. I think in time we would like to hopefully change that.
So there should be some lower contribution quarters upcoming and we'll get back to you on the EBITDA question.
Ben Pham
Okay. And the way you're booking the merchant upside now is you're spreading out over for the next 12 to 10 years versus booking the current quarter?
Pauline Alimchandani
So actually the way that the IFRS revenue treatment works, at least under the previous method of accounting which we're still holding, is that most of the adjustments -- so we experienced more benefit in 2021, so in Q4 we had stronger results. And then it will be pushed forward for recognition to 2023.
So there really wasn't that much of the historical pool prices being reflected in 2022. Where there's uncertainty still is what the prices are for this year.
Ben Pham
Okay. Got you.
And your comment, Pauline, and note around the review of the highest bought price impact on consumers is -- it essentially gets -- it's more really how to deal with the merchant prices versus looking at the ROEs, which should be moving higher in this environment versus going lower.
Pauline Alimchandani
I guess the way to think about it is, over the life cycle of the assets, we are guaranteed a return. What splitting up the regulatory period does is the resets happen sooner versus over a long period of time.
So it gives them opportunity to course correct in indeed more discrete shorter-term periods versus over a longer-term three-year to six-year period, which was the regulatory cycle currently.
Ben Pham
Okay. Got you.
And one final one on Epsa. Can you remind me how that inflation works?
Is rate base adjusted each year by inflation? Is that how that works?
Pauline Alimchandani
That's right. That's how it works, yes.
Ben Pham
Okay. Got it.
Okay. Thank you.
Pauline Alimchandani
No problem.
Operator
Thank you. We have a question from Mark Jarvi from CIBC Capital Markets.
Your line is open.
Mark Jarvi
Thanks. Good morning, everyone.
My question is just on Taiwan and the potential sell-down as we move through that process, are you set on a specific percentage or do you adjust based on pricing indicative bids and or just how much equity you want to ultimately commit to those projects?
Mike Crawley
So we have disclosed that we are looking going forward at doing sell-downs across our portfolio globally at different stages of development to bring in third-party equity and to monetize some of the development value that we've created in our portfolio and use that essentially part of the capital stack to fund our equity contribution to the projects in general. We haven't said anything specific on Taiwan or Hailong at this point yet on any kind of sell-down.
Mark Jarvi
Can you comment on whether or not once you start the process, you kind of have that very well-defined process in terms of them never going to sell or is it something that can evolve and the sizing of it can change through that process?
Pauline Alimchandani
I think any sell-down pursued would be a negotiation. And as we're -- just general commentary, in terms of you're mostly discussing sell-down opportunities of mature assets with financial investors who generally want to deploy larger amounts of equity into renewables.
So, obviously the percentage ultimately is a factor, but it's also the equity that they wish deploy. So ultimately it's a negotiation and it's not going to be set on each and every sell-down that we pursue.
Mark Jarvi
Got it, okay. And then just in terms of the corporate PPA market, as we look ahead and there's a tender this year for new projects.
Is that an option for those projects in terms of different ways, in terms of giving a sort of maximizing the revenue for any of those projects you might bid in in terms of bid to tender and type power and then you can step-out opportunities on core PPAs and whether or not that's feasible?
Mike Crawley
Sorry, I didn't quite get the question, the thing is -- sorry, maybe Pauline, did you figure that?
Pauline Alimchandani
Could you repeat it? We -- you sort of broke up a little bit.
Mike Crawley
Got kind of -- yes.
Mark Jarvi
It was just on the bidding that can happen this year with -- in Taiwan there's no upcoming RFP, whether or not --
Mike Crawley
Oh yes.
Mark Jarvi
-- yeah, corporate PPAs are an option on top of whatever you could procure and that RFP?
Mike Crawley
I think -- yeah, I mean I think certainly [indiscernible] market speculation and so on and around round 3, right around the next round this year and next year for offshore wind procurement in Taiwan and I think there could very well be corporate off take involved jut as you saw in Germany, where the market evolve to where there were corporate off take assumptions underwriting bids into the procurements there.
Mark Jarvi
Great, Mike. And then you mentioned earlier on in your remarks about the high spot prices and energy independent being supportive and teams working hard to find the opportunities.
Is that -- is that a hint that we can see something on later this year in terms of some new onshore renewable growth, whether in the existing markets or new markets?
Mike Crawley
Well, I think we've talked about an interest in general on onshore renewables in Eastern Europe. I certainly wouldn't want to give the impression of anything large coming.
I think it's more of anything that we would do in onshore renewables in E.U. Eastern Europe would be modest size projects in terms of contribution, so more incremental growth.
Likewise, in Spain, likely, which is a rather target market for onshore renewables in Europe. For offshore, we are seeing, as I said in my remarks at the beginning, different countries in Europe looking to find ways to either increase their overall target for offshore wind, and/or look at ways to accelerate the permitting of current projects that are being proposed.
So we're tracking that closely and obviously trying to see how we can be part of the solution for what Europe is looking at in terms of getting more renewable power to reduce their reliance on Russian gas.
Mark Jarvi
Just to clarify, are you -- are the Nordsee Cluster projects potentially something that can advanced sooner?
Mike Crawley
I don't know. I mean, like I said, it's early days but -- yeah, I would just be speculating if I answered that question.
Mark Jarvi
Okay. Thanks, everyone.
Operator
Thank you. We have a question from John Moore with TD Securities.
Your line is open.
John Moore
Morning, everyone. A couple of questions on behalf of Sean.
Maybe just looking at your Canadian development opportunities and starting with Ontario, you divested a couple of gas units with expired PPAs and it looks like there's a sizable need for supply emerging after the Pickering closure in 2025, how are you looking to position ourselves in Ontario market in terms of future growth opportunities and any more specifically, what could have potential path forward look like for the Marmora Pumped Storage Initiatives?
Mike Crawley
Well, we've been tracking what's going on with system operator in Ontario in terms of their forecast for both capacity and energy, so as you seem to be close to it too, there's an increasing awareness or the need for capacity in Ontario post 2025, and I think that you'll start seeing I think they'll also be an emerging need for energy in Ontario as well going forward, maybe not as early as the need for capacity. So yes, we're always actively looking for ways to advance the monomer project, we think it is an excellent asset in terms of providing flexible capacity to the system.
And we're also looking at other ways to be able to contribute to what we see as growing needs for incremental capacity and possibly energy in Ontario.
John Moore
Okay. Thanks for that.
And maybe just Germany Quebec, you've got a couple of operating wind farms there and -- so I'm sure you're aware the government announced 2.3 gigawatts of tender opportunities. Have you got any expansion opportunities of existing sites?
And are you looking to be active in that market more broadly, or are you essentially happy with what you've got operating there at this point?
Mike Crawley
Our main focus in Quebec is on extending the contract life of those assets, the Power Purchase Agreement on those facilities in Quebec. And we certainly believe that we are in a much better position than we would've been five years ago given the signals that Head of Quebec and the Quebec government are putting out in terms of needing additional renewable energy capacity.
John Moore
Okay. Thanks.
I'll leave it there. Thank you.
Operator
Thank you. [Operator Instructions] We have a question from Andrew Kuske with Credit Suisse.
Your line is open.
Andrew Kuske
Thanks. Good morning.
Just wondering if you could give us high-level thoughts on the GIP WPD deal, and what that really means for future farm downs that you may engage in and really plan to engage in, and just generally in industry trends for maybe acceleration of offshore developments.
Mike Crawley
I'll say a couple of words then I'll turn it over to David Povall our head of development who's on the line as well. I mean, we're certainly seeing lots of interest amongst financial investors, funds like GAP, but also oil and gas majors as you know, and other infrastructure and power sector investors in offshore winds specifically.
And also a lot more interest in getting in at an earlier stage in the development of projects, and as you know these projects take several years to move from inception to operations. So yeah, there seems to be a lot of interest and we are also continuing to see new markets open up for offshore when it really is the one way that you can get significant scale, which is increasingly becoming a priority both to de-carbonize electricity grids, but also to meet corporate net zero targets as we talked about earlier.
But thirdly, to be able to facilitate and this it obviously at an earlier stage, facilitate the production of green hydrogen, you need a significant volume of green electrons and ideally, low cost green electrons. So I don't know if David, you've got anything more on this closer to the WPD stuff in Taiwan?
David Povall
Andrew, if anything, just to add to what Mike said, it's a combination of the trend of the appetite for investors into the renewable segment into offshore wind, and particularly in this case, if you quote one example I think is we all know there's a number of others out there. And to what Pauline said before, and what those financial investors need is somebody like Northland who, of course, has the ability to originate projects and develop projects and take them through just to financial close.
So for us I see it as a positive trend that we can work with them in the way we want to work with them in terms of the partnership and unlock projects and unlock their capital for them. So Angie's will work very well for us as good trend.
Andrew Kuske
Thank you. That's helpful and then maybe a related question is, when you think about just your existing asset positions, could you maybe talk a little bit about the tactical and strategic positioning of just the existing transmission that you have out to your facilities.
And does that give you an advantage for further expansions and just maybe accelerated efforts in Europe to increase offshore wind exposure.
Mike Crawley
I don't think the -- certainly I don't think the expo cables are the transmission and infrastructure to our existing facilities offers much opportunity to expand our capacity. Where the opportunity more lies for us in Europe is to build on our existing market position, our relationships, our partnerships to pursue incremental projects in those markets, whether it's Poland, German, UK, and I think it's more along those lines and technically there's not much opportunity to add more capacity through the existing transmission lines.
The other opportunities also just start talking to regulators about extending permits and allowing us to basically extend the asset life on some of our existing facilities. In terms of adding more generating capacity to existing interconnect seat that the one market where we're starting to look at that as in Spain, in terms of hybridization.
So adding solar capacity to existing wind facilities to try and maximize or optimize the use of interconnect. So that's the one area where we're looking at that.
Andrew Kuske
Okay. That's great, thank you.
Operator
Thank you. We have a question from Naji Baydoun with IA Capital Markets.
Your line is open.
Naji Baydoun
Good morning. Just had one question on onshore renewables and the outlook in North America.
I think you had a 1-gigawatt long-term target for Canada and the U.S. I'm just wondering if you can give us any updates on solar prospects in New York and maybe some of the other markets you're thinking about?
Mike Crawley
So we've got a development team in New York State that's actively developing a number of solar projects throughout the state. The state's got an aggressive target for onshore and offshore renewables, but onshore.
And so running annual procurements, nice orders running annual procurement, so that's one area focus. We've identified the North East of the U.S.
and California as markets where we would like to either develop or potentially acquire renewable energy capacity, and so nothing more to say on that, but that those are target markets.
Naji Baydoun
Thank you.
Operator
Thank you. And there are no other questions at this time.
I'd like to turn the call back to Mr. Crawley for any closing remarks.
Mike Crawley
Okay. Thanks to everyone for joining us again today.
We'll hold our next call following the release of our second quarter results in August. And in the meantime, thanks for your continued confidence and support.
Operator
Ladies and gentlemen, that does conclude the conference call for today. Thank you for participating, and have a pleasant day.
You may now disconnect.