Northland Power has new projects
Northland Power is a utility and it produces clean power- both natural gas and green (wind,solar and hydro)power.They own or have an interest in 1345 MW of power and 600MW under construction.This compares to 1100MW that Algonquin Power owns or has an interest in.Recently it announced that it had an interest in Gemini which is a wind installation in the North Sea.Gemini will not likely come onstream until 2017.Northland has placed $286 million for the project but only funded $167 million.Nothland expects that the payout ratio will exceed 100% for periods of time but will still pay the dividend during this period.There was no mention of increasing the dividend but Northland says it is safe.Now Northland(NPI) announced that it has taken on another large project called Nordsee One,Two and Three.There is no mention yet of the total cost but Northland(NPI) does say that it bought an 85% stake in Nordsee One and Nordsee Two and the combined capacity is 670MW of power.This project is situated 40 km. off Germany's Juist Island.NPI states that they believe that this diversifies their risk by having assets in European jurisdictions.And they are right here.
The new project
NPI says that closing and final investment accord for Nordsee One will be in the first half of 2015 and the final investment cost is $1.6 billion.They will start construction offshore in 2016 and it will be a commercial operation at the end of 2017.NPI has not given us a cost breakdown nor the timing of the expenditures.
Better guidance
NPI has solar power installations in Canada and these two large wind installations make a nice balance with them.NPI has completed recently $240 million of project financing for these projects.These projects will be accretive right away.But NPI has only funded $167 million on their project Gemini.Now they have a new $1.6 billion wind project.NPI has stated that they expect their payout ratio to exceed 100% for periods of time and they will cover their dividend.They have also stated that EBITDA will be $345 to $355 million for 2014 and $380 to $400 million in 2015.This is very close to that of Capital Power and it is priced at $25 to $28.Shareholders realize that NPI is borrowing money in a period of low interest rates and is growing it's asset base too.But in the next quarterly report shareholders need a better breakdown on costs to these two new projects and capital requirements plus will there be a forthcoming equity issue to help cover the cost of the new projects.Once this has been done effectively Northland Power may catch up to the price per share of Capital Power.After all their dividend yield is now better than Capital Power and Algonquin Power.
The new project
NPI says that closing and final investment accord for Nordsee One will be in the first half of 2015 and the final investment cost is $1.6 billion.They will start construction offshore in 2016 and it will be a commercial operation at the end of 2017.NPI has not given us a cost breakdown nor the timing of the expenditures.
Better guidance
NPI has solar power installations in Canada and these two large wind installations make a nice balance with them.NPI has completed recently $240 million of project financing for these projects.These projects will be accretive right away.But NPI has only funded $167 million on their project Gemini.Now they have a new $1.6 billion wind project.NPI has stated that they expect their payout ratio to exceed 100% for periods of time and they will cover their dividend.They have also stated that EBITDA will be $345 to $355 million for 2014 and $380 to $400 million in 2015.This is very close to that of Capital Power and it is priced at $25 to $28.Shareholders realize that NPI is borrowing money in a period of low interest rates and is growing it's asset base too.But in the next quarterly report shareholders need a better breakdown on costs to these two new projects and capital requirements plus will there be a forthcoming equity issue to help cover the cost of the new projects.Once this has been done effectively Northland Power may catch up to the price per share of Capital Power.After all their dividend yield is now better than Capital Power and Algonquin Power.
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