Northland Power Inc.

John Brace - Chief Executive Officer Paul Bradley - Chief Financial Officer Mike Crawley - Executive Vice President of Business Development Adam Beaumont - Director of Finance

Nelson Ng - RBC Capital Markets Sean Steuart - TD Securities Paul Lechem - CIBC Ben Pham - BMO David Quezada - Raymond James Jeremy Rosenfield - Industrial Alliance Steven Paget - FirstEnergy

Thank you very much, operator, and good morning, everyone. Thank you for joining us today as we review the results of the first quarter 2016.

I am pleased to report that Northland demonstrated significant progress in several important areas. I'll begin with our financial highlights and will then provide an update on the progress of our construction projects.

Paul will provide a more thorough update on our financial results, however, it is worth noting that during the first quarter, our operating results were very strong, driven by positive contributions from our thermal and renewable facilities. We did have some extraordinary positive items in the first quarter of last year.

So, year-over-year, our results from operations look a bit flatter than they actually are. Due to this fact, our outlook for the year remains positive and we continue to reaffirm our 2016 adjusted EBITDA and free cash flow per share guidance that we closed in February subject to some positive caveats, all we'll discuss further in a few moment.

Turning to our construction portfolio, we continue to make steady, good progress. I'm happy to share that our 100 megawatt Grand Bend wind farm declared commercial operations on April 19, and we're awaiting confirmation of this from the Independent Electricity System Operator.

I would like to acknowledge our team for bringing the project to completion on schedule and on budget. Commercial operations was ahead of previously disclosed timing due to our contractors and suppliers taking an advantage of favorable weather conditions and providing additional staff to advance commissioning.

I would also like to thank our First Nations partners with whom we share 50:50 ownership of the project for their cooperative spirit and allowing us great milestone to happen. This brings Northland's interest in megawatts in operation in completed projects to a total of 1,388.

Across the Atlantic Ocean, construction on our Gemini and Nordsee One projects in the North Sea continues to move along well. Our 600 megawatt Gemini project continues to make great progress.

In February, we achieved a significant milestone. Our first turbine was a record and commenced producing power.

Today, we've installed a total of 50 turbines with 27 commissioned and producing powers. We've also starting earning pre-completion revenues on the project, which will help fund the remainder of the construction process.

Turbine installation will continue throughout the rest of 2016 and possibly into early 2017. The pace being largely set by Siemens manufacturing schedule.

The project remains on time and on budget. Our second offshore wind project Nordsee One is also advancing on schedule.

In April, we completed the installation of all 54 foundations to the turbines. As for Gemini, the foundations are comprised of monopoles and transition pieces.

Earlier this week, we announced another milestone for Nordsee One. That being the successful installation of the jacket foundation for the offshore substation.

Construction of the substation top side is nearing completion and is expected to be installed early in the summer. The project remains on budget and is on its way to be completed in 2017 as planned.

I'm very pleased with our progress on Gemini and Nordsee One and would like to thank the project teams for their continued dedication and efforts. Importantly throughout the quarter, our operating facilities continued to perform safely and efficiently.

As you may already be aware, on April 19, the Ontario Court of Appeal released its decision in which had upheld the lower court's decision in favor of Northland and several other power producers regarding the interpretation of Northland's and the other power producers, power purchase agreements with the Ontario Electricity Financial Corporation or OEFC with respect to the price escalator for power sold under the respective agreements. We estimate a Northland share of past and future loss revenue over the life of the relevant agreements would have been in the range of $225 million, which we originally estimated and communicated to be $200 million, should the courts not have ruled in our favor.

Furthermore, we estimate that approximately $90 million relating to amounts owed to Northland prior to February 2015 will be received in the coming months. It is important to note, however, that the OEFC does have the right to seek leave to appeal, the court's decision to the Supreme Court of Canada.

The Supreme Court reviewed the case if it is convinced that the matter is of national or public importance. Looking ahead, we continue to pursue growth opportunities in priority markets, including Europe, Mexico and select areas in Canada and the United States.

We are also actively seeking opportunities in other jurisdictions, which meet our investment criteria. I look forward to updating you on our development pipeline as it progresses.

Before turning over the call to Paul, I would like to take this opportunity to congratulate Peter Harder, who was appointed as the Liberal Government Representative in the Canadian Senate. Unfortunately, for Northland, this tremendous appointment required his resignation from Northland's Board.

On behalf of everyone at Northland, we thank Peter for his wise counsel and years of service to Northland and wish him the very best in the Senate. Now, over to you, Paul.

Thank you, John, and good morning, everyone. Last night, Northland Power released its 2016 first quarter results.

As John mentioned, we had a strong first quarter. Gross profit was in line with the first quarter of 2015, reflecting positive contributions in the operating projects.

Our sales were 12% lower, primarily due to the nature of certain market conditions, probably this should not have an impact on our profitability overall. Northland's planned operations exceeded our expectations for the quarter producing $104 million of adjusted EBITDA which represent 7% increase over 2015.

The key factors resulting in the increased adjusted EBITDA for the year include first, a $5 million in operating results from Northland's thermal facilities, largely due to the contribution from Iroquois Falls facility associated with the OEFC court's decision and its revision to the price escalator of the PPA rates. Secondly, the establishment of decommissioning reserves in 2015 related to the Cochrane facility that did not repeat in 2016.

These favorable factors were partially offset by $1 million increase in corporate management and administration cost in 2016. On a reminder note, you will see that Gemini produced its first revenues, which is included in our income statement.

As turbines continued to be installed, they need certain operational tests, they will begin to be included in our operating results. This worth noting the project is currently receiving only the market price for production sold and we're in the fully subsidy once triggered at the projects discussion based on an economic analysis.

The project will likely operate at a loss until such time as the subsidy is triggered likely in Q4. But the subsidy can be made retroactive to July 1, so we just expect any of the accounting losses in Q2 and Q3 to be largely offset in Q4.

Please note that these operating losses are already factored into our 2016 guidance. Northland generated free cash flow of $45 million for the quarter, and 11% decrease over 2015.

This had as much to do with the extraordinary gains in 2015 than our performance this quarter. The factors contributing to lower free cash flow include, first, $8 million of net proceeds received in 2015 from the sale of the Frampton wind farm and land leases and options associated with early stage development projects; second, a $4 million planned net interest expense increase primarily due to the inclusion of additional Ground-Mounted Solar project debt, and a $4 million planned increased in schedule debt repayments also related to the Ground-Mounted Solar projects.

These net decreases in free cash flow over 2015 were partially offset by the positive events in 2016 such as $7 million higher adjusted EBITDA from Northland's operating facilities reduced by $1 million of investment income from Gemini, which will be included in free cash flow only when cash is received and $1 million decrease in funds set aside for future maintenance. Quarterly free cash flow per share was $0.26 in the first quarter of 2016 versus $0.33 in the first quarter of 2015, primarily due to factors just mentioned combined with the full quarter of additional shares that were issued in March 2015.

The GAAP net loss of $92 million increased from the loss $31 million for the prior year, primarily due to the large non-cash fair value losses associated with Northland's derivative contracts. These fair value adjustments are non-cash items that will reverse over time, and do not reflect the economic substance of the projects.

For financial outlook for 2016, Northland continues to expect our adjusted EBITDA to be in the range of $500 million to $530 million, probably this guidance is not include the lump sum retroactive payments to Northland from the amounts owned by OEFC pursuing to the global adjustment decision, we just estimated that $90 million. The settlement is pending a decision by the OEFC to appeal with the Supreme Court of Canada as John previously described.

We will update our guidance, once we have a better understanding of the path OEFC will take. Commensurate with the adjusted EBITDA guidance, management continues to estimate the free cash flow per share range of $0.93 to a $1.08 per share.

This free cash flow per share guidance includes $28 million of expected proceeds from the sale of 37.5% of four Ground-Mounted Solar projects to local First Nations and this is subject to meeting certain conditions. Similar to adjusted EBITDA guidance, free cash flow per share guidance excludes the impact from the expected lump sum retroactive payments pursuant to the global adjustment settlement.

I'll now turn the call back to John for concluding remarks.

Thank you, Paul. Today, 2016 has been very productive for Northland.

In the first quarter, we accomplished a number of key milestones on our construction projects, achieved sound operational and financial results and saw our share price reach an all-time high, all strong indicator of continued growth in progress. I look forward to providing you with a more detailed update on our progress at our Annual General Meeting on May 25.

As always, thank you for your continued support of our business. We will now be pleased to take your questions.

Operator, can you please handle the questions.

Great. Thanks.

A quick question on the global adjustment payments, so is there a deadline in terms of when the OEFC needs to appeal the case to the Supreme Court of Canada or have they already indicated their intention and is it whether the Supreme Court will hear the case?

It's the several stage processes, Nelson. The first stage is a 60-day time window, the deal we have seen has right to submit request to appeal and their justifications for the Supreme Court to accept that request.

That 60 days is up sometime in June, unfortunately I can't remember the exact date.

Mid June.

Mid June. Thank you, Paul.

We then have 30 days to file our comments on that and should it actually be submitted. And then so the Supreme Court has a period of time that's subject to its discretion to consider the request to appeal and the response from that should that actually happen.

So, it's defined at very beginning, should it - were to happen, Nelson, then it becomes up to the Supreme Court. Second part of your question, we do not know of the OEFC's attentions in this matter.

Okay. Thanks.

And in terms of, I guess, just moving on to Gemini. After all the turbines are installed, generally what needs to be done to commission the project?

Is it mainly testing and how long does that process typically takes?

Basically, once the turbines are installed, they're done. The substations onshore and offshore, all the cables and such are basically tested, there is a little bit of [indiscernible] work going on.

And the turbines as they're installed, they're commissioned individually. There is probably a little bit of stuff to do with the farm as a whole.

But basically once all the turbines are installed or commissioned, we're finished.

Okay.

Also a number of good compliance issues that are just more check the box and sometimes the grid operator takes a little bit of time to respond to certain things and we have a couple of loops to go through. But it doesn't impact the income generated from the plant, but maybe an official COD could come sometime later.

It always amazes me, how long it takes to get those done. But from an income perspective as soon as the turbines are accepted, were good to go.

Okay. Got it.

And then, I guess some one other question, more broader question, in the European offshore wind side, what type of opportunities are you pursuing, like is your focus, like are you looking to bid on RFPs or do you want to mainly get involved in projects that already have PPAs, that are in advance development? Like, I am aware that, do you want to kind of bid in the projects for North Sea 2 and North Sea 3 but I was just wondering what the focus is, whether it's earlier stage or late stage?

Ken, we've been looking at number of opportunities in Europe. Certainly, the way that we entered the offshore market in Europe was through entering at a late stage, but we have learnt enough and that the team is build up and acknowledge that we now feel comfortable looking at bids as well as you point out and we'll be bidding in North Sea 2 and North Sea 3 next year.

So we displaying earlier entry points including bidding into auctions if we feel that we've got a competitive advantage and those are obtained in those auctions.

Okay. And then just follow-up on that, like, obviously, I think Enbridge was recently replaced as long as there as [indiscernible] offshore wind partner.

I was just wondering whether that was - it's not like a type of transaction you guys would contemplate? And then also, I guess Denmark, they have their offshore wind tender premises and I don't think you guys are participating in that process, if I am not - if am correct?

Yeah. So, Nelson, this is Paul.

The type of process that Enbridge looked at, we tend to look at most things, run, run, pretty much everyone's radar. But as you can appreciate a lot of times and pretty much most of the times, we are under NDAs that we're not able to allow to disclose the dialog or the existence of our participation in some of these.

So we tend to be quite careful about what we say, but suffice to say that those are the types of processes that we're very well aware of and had our say on internally.

Okay. And you're not participating in the Denmark process, right?

Well, we can't comment on that at the moment.

Okay. All right.

I'll get back in the queue. Thanks.

Thanks.

Thanks. Good morning, everyone.

A couple of questions, the Gemini subsidy in the wording that you'll invoke it when it's economically attractive to do so and I gather it will be fourth quarter. Can you just go through some of the technicalities of why that timing works just maybe walk through that process a little bit?

Yeah. Hi, Sean.

What happens is basically there is an optimum time to switch on the subsidy and you chew it kind of when you got a critical mass, you turn on too early, you're just burning off unnecessary PPA months or sub-years on there. So what happens is, as we expect, the turbines go in kind of straight line, there is a bit of a sweet spot when a certain number go one.

And we've kind of notionally said that would probably around July 1. If you had all of those and a big slow down and that didn't happen to get to a certain quantity by August 1.

Then you might say, hey, it's much more economically attractive to switching on August 1 instead of July 1. You could also be impacted by wind resource, where you just didn't get the wind resource in July that you thought you're going to get and in August it's going crazy and you might say well jeez may be September 1 is an optimal date to put it on though.

The nice feature of this is that we can retroactively assign it to July 1 as late as November 1. So we're probably going to wait till November 1 in any event to trigger at unless it's just so patently obvious at some point earlier that it's time to invoke it.

Got it. Okay.

Thanks, Paul. And the sales staking in Cochrane seller, when does that happen as you guys see it.

When we've got the agreements, we are just waiting for a number of conditions precedents to occur in order to have that funded by the First Nations and closed up officially.

So, second half for of the year presumably?

Well, there's number of things that the timing is a bit out of our - bit out of our hands relating to some issues with the First Nations themselves, but we're confident that it will occur, it will happen kind of - we do expect that happen this year and it could any happen any time.

Okay.

Hey, Sean, just to add the deals done, we're just waiting for the money to flow as it were.

Got it. Thanks, John.

Last question. Any update you can give on discussions with your OSE regarding Kingston and any thoughts on timing there?

I think there's not a lot that we are able to report or could report at this point in time, Sean. We continue to make the case for Kingston.

We continue to think it's an important part of Ontario's electricity mix and we're in the midst of trying to come to terms with the government on that.

Okay. Thanks, guys.

I will get back in the queue.

Thanks, Sean.

Thanks, good morning. Just returning to the European offshore wind market.

And when I look at the pricing, it's been - the contract pricing has been given out now versus what you've got for Gemini and Nordsee, it's come down a quite bit when I look at the Wärtsilä. The next round of Dutch projects, I think a €124 is the sealing price, which about 25% what you got for Gemini.

So I just wondering given that how costs come down the same amount such that you are in the same kind of returns. What are you seeing in terms of returns right now?

How do you compete and get decent returns in that market these days?

I think it's probably safe to say that from what we're seeing costs are declining in all parts of the supply chain and construction chain for offshore projects and as well as the industry gets more competitive. There's some pressure on equity returns as well.

So, everybody is contributing their part to building projects, result in lower rates for the end consumer, which is actually a fantastic thing from the longevity of the industry. It has to deliver that in order to continue to have the political support and the public support to be a viable long-term solution for Europe.

Paul, I'll also point out. You may not be aware on Wärtsilä, the government is actually building an offshore converter platform like they do in Germany and other countries, whereas Gemini, we have to build the cable although we are ensure in building onshore substation.

So you've got a massive cost differential just right there alone.

Got you. So, how do compete then nowadays.

What is the competitive advantage that you can bring? Is that the site when you talk about getting in Nordsee Two and Nordsee Three, because you own the site that you can get an advantage?

How do you actually compete and get these returns?

Just for in tenders are conducted differently in the case of Wärtsilä, which you brought up, the government has defined where the project will be and has provided some information in about the site to perspective bidders. So, I suspect, from what I've heard about what's happening out there on Wärtsilä that various groups are getting together and trying to collectively come up with an approach that's more competitive than other groups that are bidding on those projects.

Nordsee Two and Nordsee Three are a little bit different because it's going to be a competition on price, but not location. Because there are a number of projects each with their own locations and attributes of those locations.

Nordsee Two and Nordsee Three I think, we think they're pretty good because they're big types, and we'll be able to build big projects. And there is certainly an economy of scale in this industry.

I don't know, Mike, kind of intruding on your daily livelihood here, just anything else you'd like to add?

No. I think that's exactly.

I mean, there is two models that are emerging for procurement, one as John said, what's being done in the next round in Germany where you - you can't differentiate yourself by a site - the site that you control either by scale as John pointed out or by its conditions, it's geotechnical seabed conditions so if that give you some kind of an advantage over other sites. And then the other models where you've seen with Wärtsilä and the Danish process with the specific site and where it's really about driving the cost out of - out of your project, which obviously helps you in the first model as well.

So, it's increasingly competitive. But it does mean that those players that have experience in the offshore market, not only as investors, but also having seen projects through construction, we think we'll have an advantage going forward.

Okay. Thank you.

Last question if I may, I know you can't speak for the board per se. But the dividend and I think you after this point in time, you sort of been that ones that major projects offshore wind projects in operation in 2017 and the dividend can be revisited in 2018, but given that you're already generating revenues with Gemini, that it's going to ramp up through the year, especially when the contract gets turned on.

Do you think there is an opportunity for the Board to see an increase before that 2018 time period?

Well, Paul, I can say as - I'll probably kind of go off with your first statement, which is that's prerogative to our Board and I really cannot speak for them or commit further.

Okay. Thank you.

Good morning, everyone. This is Ryan filling in for Rupert.

I just have a quick question for you, given that the offshore wind market is becoming more competitive, how do you acquisition stack up against development projects and what kind of returns are you seeing?

Well, this is one of the most and one of the important things in acquisition whether its offshore wind or onshore projects is to look at what kind of development fee you're burdening the project with to the original developer and that obviously affects your competitiveness versus other projects. So that something we always keep a close eye on if you're going to be competing in, going into as competitive projects, your PPAs for contracts and projects.

Certainly understanding what risk remains in the project is important and being able to gauge how much we can manage and control that risk is important when we look at whatever the price events we would be on the project at that stage

Okay. Thank you very much.

That's my only question.

Hi. Thanks.

Good morning. I had a question on Gemini and it's been a couple of years since you've started up project since I think 2013 and as you head towards the tail end of this project, it seems like you are - you come out of it with pretty much no wounds at all, become the construction side and which is can't be really said for some other offshore developers.

So I'm just wondering, are you kind of - you guys kindly look back the last three years and I want your advantages is building on cost experience and passing onto the future. I mean is there anything, you guys could have done little bit differently in terms of just how you set it up and maybe CapEx is in line, but any insight that would be helpful?

Thanks.

Ben, I hesitated, I can't state here, but as you observe yesterday is going well and we're getting closer to the end, but there is certainly is the ways to go. So, we hope nothing and to what is going to happen yet.

We certainly don't expect anything until what to happen. When we started Gemini, the structure of the project, we had already been defined by previous organizations.

So that the two contract approach with Siemens being responsible for the supply and installation of the turbines and Van Oord being responsible for everything else was a very attractive thing to us and was pretty new to the industry. The more difficult projects since you alluded too were generally undertaken and what they call - I'll call it a multi-contract structure where the owner acted as the general contractor and may had 300 to 400 contracts with various companies to do various components of the project and the complexity and difficulty of working offshore meant that if something went wrong in one spot, it could greatly poison the project, and all of the other components of it.

And the cost of €250,000 a day ship out to see, sitting there waiting for somebody to do something adds up pretty quickly over time. So, the approach that Van Oord and Siemens had and the prior developers of Gemini had was to us one of the key attributes that are attracted us to the project.

So I don't think frankly we would change that. I mean, there are subtle changes.

For example, North Sea has five contracts, instead of two, but the principle is the same to get offshore contractors who are experienced in doing offshore work, responsible for doing [indiscernible] of the scope and to us that's the way to do offshore, the way to control, mitigate risk from the owners point of view and end up with successful projects. And I think we see that being more and more commonly adopted by other companies in the offshore industry.

So it's a long winded way of saying that I think the way did it is a way we would do it in the future.

Right. I think that, yeah, just to add to that.

A lot of the little things that we're in there that maybe we didn't appreciate, but some of the people more experienced we had at that time did appreciate, we've come to dock that and really understand why another deal would want to really make sure that feature was in the contract or in the EPC arrangement or something like that. I think for sure, having been through Gemini and Nordsee One has made us much sharper.

And it gives us, I think a competitive advantage versus some folks that are kind of like us, we're new entrants into it. Over the course of time, it's going to become like onshore, where it's going to be a lot of folks with experience.

But I think with offshore wind, you're always going to have an order of magnitude, more complexity and complication. And also, it's going to require bigger balance sheets to play.

So, we don't see this kind of really ever getting to the level of competition that you see onshore wind and solar. But costs are coming down as John mentioned earlier, and that needs to happen.

The competition is kind of need to happen. But what we need to do is to make sure, we always have the best knowledge.

And sometimes, the best knowledge you have is you need to walk away from the project and we've certainly done our share of that and we hold our head up high when we do it. And which though is that take certain ones on a lot of luck to just to get them done.

So we don't want to see anybody really having trouble, it's not good for the industry. But that's just the way we look at it.

So, when you update your model for Gemini with the credits purchasing versus issuance and maybe just looking a bit more visibility on the pre-completion, what do you think about the capital structure of Gemini today and what's the update on the utility potential sale portion?

Yeah. We're - the capital structure today as John mentioned, a lot of it was a feature of kind of where the project was, we entered in the momentum that was there.

And it served us pretty well over the course of construction, we are in the process of looking at our options for refine and in the early you should probably have to really want to do it is probably right add or just after completion all those. So, we don't want to be distracting the people building the project.

But we do have our refi team and we've been in touch with the most of the major institutions who would be accounted to help us out with that and look at it.

And the utility assets?

Well, it'll get kind of wrapped up in the same equation.

Okay.

To be - may be - I will give you a little bit a lead on that, we're not unhappy on that asset ourselves at the time being, it's a - it is kind of a nice feature to the overall pictures, but there is map different views and we'll certainly consider those as we go through the refi process.

Okay. Sounds good.

Thanks everybody.

Thanks good morning, guys. I wonder if you could switching gears a little, talk about what kind of projects if any you might still be contemplating in Alberta and if those would be limited to the renewable side or if say would include potential thermal facility?

Sure, so I mean we are taking a look at Alberta. I think we're like others, we're waiting to see a couple of issues to drop, number one is to get some more detail around the procurement program that the government has proposed for primarily [indiscernible] wind but I suppose it could also be used for solar as well and hydro.

And then secondly we're waiting for the coal retirement schedule, which as you know the government hired a negotiator due to work with the incumbents and come up with some kind of more explicit schedule than what they provided so far on when those assets will come offline. So those are two - for us two important pieces of the puzzle.

So, I think, at the present time we see that the more clear opportunities being in renewable in wind and perhaps over time in solar in Alberta. However, depending on how the coal retirements schedule comes out that will influence what value there is for those wind assets in the early years since there will be some level of merchant exposure.

And secondly, it will give some insight into how that are looking to replace the portion of the coal with likely some baseload gas generation and what role the incumbents will play on that. It's a bit of a - to be determined picture on the thermal side and also on the wind side to an extent as well.

Okay. Great.

That's helpful. Thank you.

That's all I had.

Thanks. Good morning, everyone.

Just a few questions on guidance. Guidance hasn't changed here, but the timing for certain things, I think, have moved around Grand Bend a little bit sooner, sale of the solar project.

I'm just curious how those factor into the previously disclosed guidance and whether there's enough leeway in what you provided previously in the guidance range.

So we set the guidance out just after last release. So, we had probably a little better feel for the outcome of something like Grand Bend.

We are reaffirming the guidance range of $500 million to $530 million, a big wildcard there is the - whether or not we'll record that settlement from the OEFC.

Okay. So sort of faster startup for Grand Bend is already included in that bend.

Generally, yes.

Okay. Just looking also to the solar facilities in the performance in the first quarter.

The volumes were up, there is a note on that. But I was wondering if there was something may be that restricted the performance and if they would otherwise have been, you can hire in the first quarter or if really it was just been in-line with your internal forecasts wherein everything seems to be fine there?

Well, winter is an awful time to be judging solar projects. So I sort of probably deflect that and say you are much better off when you get to about a half year production to sort of put the thermometer in this area, they're doing better or worse in the year before.

It's one snowstorm - because the production is so low in the winter, one snowstorm can make a huge difference in your percentage in one quarter. So just kind of warn you off from [indiscernible] since quarter-by-quarter.

Okay, but there was anything that was exceptional that you would note?

No, no, I think as we mentioned a couple of times in the past that on overall basis we're pretty happy with performance of the solar projects.

Okay. And then just in terms of where you are tracking on development costs than relative to the guidance for sort of higher development costs going forward, are you in line with what you had thought previously and are there any changes there?

Well, I mean the reason we put our range out there is, Jeremy, it's just exactly for those reasons that we may speed up or slow down depending on, if you kind of picture us getting a big success suddenly and then we're suddenly capitalizing the costs and that we're probably also putting lot more people on that success, you might see the development expenses ramp down, but we feel like within our range of 500 to 530 on the adjusted EBITDA that we are covering variability and whatever we expect in that area.

Okay. Great.

Thanks.

Thank you, and good morning. Could you please comment on your potential new projects in Canada, for example, it appears from your math that you have no further interest in Saskatchewan despite the first current PPA.

So, yeah, so, in terms of kind of opportunities in Canada, they are less than they would have been four years ago or five years ago, but there also some particular markets that we're keeping an eye on and that were some cases pursuing some development work. And so, one of them that we're keeping an eye on right now is Saskatchewan, so the decision to replace by 2030 as a retire - some of the coal-fired generation to end up that, I think 50% renewable is the government's target in Saskatchewan means that we would see some opportunity on the renewable side to be beyond what's going on right now [indiscernible] it's unclear what future opportunities would be on the thermal side, but we're certainly keeping an eye on that as well.

But I think over the next few years, we'd see some opportunities on wind and potentially smaller opportunities on solar group, primarily wind, and a good question for us is, how in that market we would be able to differentiate ourselves against competitors and based on that, we will make a call on how aggressively we would pursue development there.

Well, thank you, Mike. There is seems to be some capital dollars chasing renewable investments and that are willing to accept single, mid-single-digit returns.

Would you look at further asset sales at these high prices or would you only sell assets when you need equity dollars?

Generally, we haven't been acquirers or divestures of operating assets that really hasn't been the world we operate in, Steven. Where it gets interesting is, as we acquire development projects like if you look at Gemini and Nordsee One and they were actually acquisitions of development projects.

And then you start saying, okay, from the person who starts the projects as a greenfield, the returns always going to be greater than anybody that takes it up further down that value chain and we may adjust where we're willing to command, because we come in later and pay a premium that also means we avoided all the risk on the development dollars today, which in particularly in offshore wind can be very substantial. And so we're constantly looking at where the right spot to jump in will be, at some point when returns go into single-digits, we definitely want to see projects being nearly completely de-risked or that's close as possible to that, but I'm sure, everybody on the call have some understanding what our cost to capital is, and at some point, we're not going to take very small margins, if we're taking particularly development risk, but even in most cases construction risk.

All right. Those were my questions.

Thank you, Paul.

Thank you, Steven.

Great, thanks. I have a quick question on the SunEdison bankruptcy, I think you noted that they provided the panels and panel warranties for seven of your facilities.

I'm just wondering, what some of the, I guess, potential solutions are, I guess like, it too like kind of mitigate that exposure, are you looking at insurance or overseas or like a maintenance users? And I was also wondering whether that is a factor that's kind of delaying the service sale to the substations?

Okay. So, starting of just to be clear, SunEdison has a warranty on all 130 megawatts of our solar portfolio, our industrial scale ground-mounted portfolio.

It's only that seven of them are still in a bank financing where the covenants have major suppliers and a non-bankruptcy condition, the major suppliers as a covenant. So that's why we talked about the seven.

To be clear about it, there is two warranties, one is kind of a typical parts and labor from the construction. So if something is defective or workmanship isn't right, then we have claims.

We have very few claims in those warranties in the Canadian entity of SunEdison is not under any kind of CCAA or bankruptcy and they're continuing to work on our warranty claims, which are quite minor, related to something like these covers on junction box that keep falling off and this is a fleet wide issue for them. But if you had to fix yourselves, you would notice it from a financial perspective.

Probably the more important one is the long-term degradation warranty, which I won't go through on the call here, but if you pull out the perspectives on our private placements for the bonds, there is a lot of discussion there and I think in our AF there is some discussion there. Typically that's just a - what SunEdison will probably is a way out of their money type of guarantee for us and the panels are expecting to perform well better than where they put their degradation warranty.

And today, we don't have any evidence of the panels are performing other than as expected as we put them in. So we're not overly worried about it, it's just - the biggest issue, it's a technical default condition in our financing documents and we've got to do deal with that.

Now the lenders have this condition - the lenders that are in our project are in many, many projects across North America and other parts of the world. So there is - they're dealing with a number of their loan agreements that have this default condition in there and they realized that they don't want a whole bunch of loans suddenly being classified as non-performing and take the capital hit.

So, the banks are motivated to figure out something that's pretty practical. And from Northland's perspective, I mean, we see this basically as a waiver of the condition and possibly just a permit amendment at some point in time if we don't find some other option.

There is a possibility, we could go by warranty in the market, but the question is, if you buy it, that far out of the money, but the panels are performing just fine and show no evidence of facility degradation why we just spend the money. It just get to fall condition waved.

So, we see this is sort of a thorn in a lion's paw more than anything else, it's some - one of the routine type of items that we do with my group all the times. So not anything of concern.

I see. Thanks for the color.

One last question, in terms of Mexico, I think you guys didn't participate in the first round of options, are you guys looking to participate in the second round potentially or later this year?

Giving a strong consideration, I think it's probably would be a low probability that we would participate in the September. As you saw that the two things came out of the first round, right, that the solar was, I think, much more dominant than lot of other people thought would happen in that option and secondly, three things.

Secondly, the prices were very aggressively and thirdly there is a strong participation by OEMs, directly, particularly on the solar side. So, I think, we're recalibrating, taking a look at the September option and trying to decide whether it make sense to participate or not.

We do have a longer-term view on Mexico. I think that the fundamentals were strong there from a development standpoint with the strong load growth, significant asset retirement and the commitment to a fairly aggressive RPS over the next 10 years.

So all of that, it showed in our view play some significant opportunities and so we are looking at greenfield opportunities there as well as jumping into some of these earlier options that we - we have used that these earlier options are going to be too competitive, too aggressive like as I said earlier, so we can't see where we got a particular advantage, we will focus on a longer term plan in Mexico.

Yeah. And to add to what Mike said, these bids are expensive to put together and sometimes the right strategy let the first wave and the second wave goes, kind of like a marathon.

If you know that it's tough to cheer the runners and [indiscernible] let him go in the first two waves and then complete the third. So that's what we're - we're looking at there.

Okay. Great.

Thanks, those are my questions.

Well, thank you, everyone for joining us today. We will hold our next earnings call in August following the release of our second quarter results.

Thank you again.