All right, good morning and welcome to Northland Power's 2024 Investor Day. So my name is Dario Neimarlija, and I'm a Vice President of FP&A and Investor Relations here in Northland. We're excited to be hosting this event, live in Toronto as well as this webcast, so thank you all for being here today and all of you that are attending virtually. So we have a full agenda today, so, I'll let Mike actually introduce our agenda this morning. But before we start, we have a couple of housekeeping items to note. So I'd like to cover the, the evacuation procedures for the building. So in case of emergency alert, please follow the instructions of the event staff. Exits from the venue are from the main entrance and to the corner to the right of the stage.
The venue staff will direct you to the stairwells and await further instructions from building security. Please do not use the elevators. And lastly, we would like to remind you that comments today may refer to forward-looking information and Non-GAAP measures, so please refer to slides 2 and 3 of our presentation today for more information. Now I'll turn it over to Mike.
All good?
Yep.
Okay. Thanks, Dario, and thanks for everybody for showing up today. It's a big crowd. These things always have a little bit of a, timeshare pitch vibe to me with you guys eating your breakfast and stuff, so I hope you stay around for the free lunch. So first of all, I wanna start with an acknowledgment of, the land that we're on today. We're on the land of the Mississaugas of the Credit, the Anishinabeg, the Chippewa, the Haudenosaunee, and the Wendat peoples. So 2023, if we look back at 2023, it certainly was a huge year for Northland. We locked in funding on three large projects: Baltic Power, Hai Long, and the 250MW Oneida battery storage project, CAD 16 billion in total CapEx, 2.4 GW, and all of those together will deliver CAD 600 million of EBITDA, incremental EBITDA, by 2027 once they all come online.
So 2024 is also gonna be a big year for Northland as well, but in a different way. It's all about execution, about delivering these projects on time, on budget, and so that's a lot of what today is gonna be about. We've got two project directors on the two offshore wind projects, Jens Poulsen for Baltic Power, Tim Kittelhake on Hai Long. They're gonna take you through the projects in a lot of detail and be around to answer all of your questions. As well, we have Michelle Chislett, who is the head of our onshore business unit, and she's gonna take you through the Oneida battery storage project as well.
We're gonna give you a status, but we're also gonna give you a sense of what the future milestones are for those projects, so you'll be able to track the progress of those projects against those milestones as we move forward with construction. So that's gonna be the core of the presentation. So at the bookends, there's gonna be me at the beginning. I'm gonna give you a bit of a market overview and a strategy overview on Northland, and then at the end, Adam Beaumont, who I think most of you know in the audience who's our Interim CFO, he's gonna wrap up with the financial overview on Northland Power.
We'll have, like I said, lots of time for questions and answers at the end, and there's a lunch following as well, so we're all gonna hang around at the lunch, and take one-on-one questions or have discussions with you. You won't be able to shake us through the rest of the morning. So let's get on with it. So if you look at Northland Power, we began about 36 years, this is how we always begin these presentations every year, we began about 36 years ago, which was really the cradle, the beginning of the IPP sector in Canada.
If you look at how we grew over those 36 years, we really followed the energy transition from doing gas-fired generation initially up in northern Ontario, a little bit of biomass, moving into onshore wind, solar, and then into offshore wind in Europe, and then most recently doing battery storage projects, including building the Oneida project in Ontario. In terms of looking at us as a listed entity or as a public entity, we went from the late 1990s being an integrated IPP with 6 GW of operating and construction projects under construction, globally. So over this period of time, we've moved into some new asset classes, some new markets, certainly, but if you look at what we've done through that whole period, the one thing that has remained constant is our focus on contracted cash flow.
With these additional three projects, our average contract life will extend from eight years to 16 years. 90% of our cash flows, once all these projects come online, will be contracted. And through all of this growth, through all of the expansion over the last 36 years, we've maintained a BBB credit rating, which is really fundamental to how we run the business. So the last year, certainly, has been challenging for listed IPPs, and I acknowledge the experience that a lot of the shareholders in the room have had through the last year. But I would say that the value of our assets, what we operate and our development assets as well, has held up through this period.
When you look at our sell-downs, that evidences it, but also when you look at some other transactions, you look at the Parkwind transaction in Europe, the sale of all of their offshore wind assets in Belgium and their development portfolio, and you look at the valuation that they were able to secure in 2023, it demonstrates the value of renewable energy assets onshore, offshore, has held up well over the last year. So in terms of onshore renewables, we have 1.2 GW of operating capacity primarily in Canada, New York, and Spain, and we've got teams on the ground in each one of those markets, so we wanna grow more in each one of those markets, and we see opportunity in each one as well.
In offshore wind, we're probably one of 10 companies globally that can take a project from beginning all the way through construction and into operations, so we think that's a real competitive advantage. We currently operate 1.4 GW of offshore wind, and we've got a strong pipeline behind that as well. Our gas facilities, our legacy gas facilities, they continue to deliver reliable cash flow, and what's new about them in the last year, we've seen some really good opportunities to optimize, to even expand those gas facilities as the system operators, in our case, in Ontario and Saskatchewan, look to increase capacity fairly urgently. Then with the 250 MW Oneida project, we are now it's, it's the largest battery storage project being built in Canada, one of the largest in North America, I think, Michelle.
We are a leader in battery storage, and we wanna leverage that moving forward 'cause we see a lot of opportunity in Alberta, in Ontario, in New York. So the story of 2023 was really locking down our funding, securing our supply chain, and launching construction on 2.4 GW gross of projects. What those projects will deliver is a 7%-10% CAGR on EBITDA from 2023 to 2027, which is a step up from the 5% CAGR that we would have seen over the last five, four years. When you look at what's going on in the sector, and we'll talk about it in a second, there really are some promising signals for how the sector is starting to turn around, and some of the headwinds are starting to turn into tailwinds.
But the most important thing for you to take away today, in my view, is that Northland doesn't have to do anything else for the next 2-3 years. We have locked in all the growth that we need to meet our targets by 2027. We don't need to tap any supply chains. We don't need to tap in equity markets. We don't need to tap debt markets. We don't need to do any M&A. We just need to execute on these projects, which is what we're gonna talk to you about today. Anything else that we do, and we think that there will be opportunities to do more, is purely discretionary, and it will be upside to everything that you're seeing presented today in terms of numbers.
As we dig a bit deeper into 2023, we're gonna run a bit of a highlight video to give you a sense of what went on, and then I'm gonna give a few more points. Okay. As you can see from the video, we certainly brought 3 big projects into construction last year, but we did more than that. We brought some, some projects into operations, so brought some new cash flow into the business as we brought 220 MW of wind in New York State into operations in the fourth quarter of last year. We also moved forward on our sell-down strategy, bringing partners into our projects at different stages.
So on Hai Long, we brought Gentari into that project as a $1 billion deal, so it certainly helped fund the projects, $1 billion of funding, but it also strengthened the sponsorship group by bringing all the skills, the background that Gentari and its parent, Petronas, has in terms of doing business in Asia, in terms of executing on marine projects. It also allowed us to recycle some DevEx, so taking the DevEx out that we had put into Hai Long, some of the DevEx, and being able to redeploy it in other opportunities elsewhere in the world where we're developing projects. In Scotland, our ScotWind projects, there's one, a floating project and a fixed foundation project, we brought ESB, an Irish utility, into that, into that project at the 25% interest last year.
So ESB, large Irish utility, but they've also been developing and building projects in Scotland, onshore renewables and offshore, so they're adding value to that project as a partner. And again, it allowed us to recycle some DevEx, so all of our costs that we had put into that project, what we had paid for the leases, the DevEx that we had put into those projects up to that point, we got back. And all of that, we can put into other development projects elsewhere, or we can use it to fund our, our costs going forward on the ScotWind projects. Our operations teams last year did incredibly well. They got 97% availability across all of our fleet globally. It's a really high value.
And in terms of how we organize ourselves, how we do business, Northland restructured at the beginning of 2023 into business units, so an offshore wind business unit, an onshore renewables business unit, which Michelle heads up, and we put our gas facilities and ESB into a third business unit. And that's all about getting all of the financial, technical, commercial skill sets within one business unit, recognizing that the technologies are different and that you need different skill sets, and having accountability to actually run each one of these businesses. It allows me to delegate down decision-making. It allows the business to scale up over time, and it's really important in terms of our go-forward strategy in terms of how we grow Northland. We also created a project management office. We got Pierre-Emmanuel Front here. He's sitting right up at the front.
You're gonna be able to chat to him at lunch. That cuts across all of the business units. Pierre-Emmanuel reports up to me. He has a team which tracks the progress of all of our projects in each one of the business units, forecasts trends, identifies things that we should be concerned about, problems that we should get ahead of. He gives the projects tools to allow them to better manage their business, and he also has a line up to the board as well to make sure the board has line of sight in terms of what's going on with the projects. So, already said that 2023 was a tough year for renewables.
It was a particularly tough year for offshore wind, whether it's looking at the restart of the economy after all the COVID shutdown, the Ukraine conflict, the tensions spiking up a year ago in the Taiwan Strait, all of that played havoc with market conditions. So it caused costs to build to spike up. It caused permitting times and from regulators to be much less predictable than they had been before. And of course, interest rates spiked up, so that increased our cost of financing, our cost of debt, but it also affected the valuation of IPPs, more broadly speaking. So I say, despite all of that, Northland ended the year, 2023, stronger than how we began. So how did we do that? Well, first of all, it is what we did. So we had to move quickly.
We had to make decisions quickly as market conditions turned on us. So number one, on the revenue contracts that we had on these larger projects, we went back and renegotiated them. So on the Baltic Power project, we were able to renegotiate that offtake agreement to move the indexation reference date back by one year to capture a lot of the post-COVID inflation in the tariff. On Hai Long, we went back twice, I think, Adam, twice, and renegotiated the corporate PPA that we have on, on that project, on 744 MW of that. On the Oneida battery storage project, we went back again twice to renegotiate with the system operator, with the government, to account for the rising price of lithium and the rising costs overall on that project. We also restructured the project financings, the financings on those three projects.
So if you look at Hai Long, we increased the ECA coverage. We brought in more ECAs. We increased the coverage that we were offering to lenders, the guarantees that we were offering to lenders. That kept our lender group intact. It kept the cost of debt from those lenders, at a reasonable level. And then if you flip over to Baltic Power, we also went back and got the CFD with our partner, ORLEN, got the CFD, the revenue contract, redenominated into euros, which brought a whole bunch of liquidity into the financing, more lenders into the financing, which allowed us to keep the borrowing costs down and allowed us to get better terms and also allowed us to get more leverage on the project to absorb some of those cost increases as well.
On Oneida, we were always working with the Canada Infrastructure Bank on that, and they proved to be a very good partner as market conditions changed, and we were able to negotiate a really good outcome with them on the financing on that project as well to make sure that it went away. Secondly, it's also what we didn't do, and sometimes those are the tougher choices. So we had a project in Germany, the Nordseecluster, partnership with RWE. The economics started turning downwards on that project as costs went up. We couldn't find revenue offsets for it, so we withdrew from that project, and we were able to sell our interest to RWE. We got all of our development costs to date back and a little bit of a premium. In Japan, we pulled out of an early-stage offshore wind project.
In solar, we canceled one project. We deferred another project. In wind, we handed back a PPA, which we're now gonna rebid, now that clearing prices and auctions seem to be moving back up again. So the point of all of this is having a big pipeline, having a strong, a diverse pipeline allows you to have choices, gives you options when market forces change, and that's what we did. A lot of things had to happen in 2023 within a very tight window. And I'd say this, that when you've got a tailwind, when you've got good market conditions like maybe five or six or 10 years ago in renewables, everybody looks smart. Everybody looks like a hero. It's when you hit some headwinds, like we did last year, that you can really see the strength of a team.
And I gotta say, I am so impressed with everything that everybody at Northland was able to do. You're gonna see some of the presenters today, and all of them were integral to making these projects not just work, but making these projects really attractive investment opportunities for Northland and really meaningful for Northland's growth going forward. So obviously, all of this hasn't yet been reflected in the share price, but let's talk now about some of the tailwinds that we're seeing emerging in the last month or two. On rate cuts, I mean, your bet is as good as mine in terms of when that's gonna happen, so I'm not gonna speculate on that. But what is clear, of course, is that inflation has come down. Commodity prices have come down. Steel is now trading within its historical range.
Supply chain constraints are easing, so with project deferrals, project cancellations, you're seeing vessels become available. You're seeing more capacity even added into the supply chain now. And if you look at the two offshore wind OEMs through 2023, Vestas and SGRE, our biggest nemesis through, through 2023, right, right, Jens, they are ending the year 2023 and starting 2024 in much, much stronger positions than they were six or even 10 months ago. But the biggest tailwind of all, the biggest tailwind of all is the rising demand for power. And it's not really anymore about climate policy. It's not really about government policy or incentives for renewables. It's about a need for a huge volume of electrons and principally green electrons. So let's unpack a bit of what's driving that.
Number one is reshoring, so you're seeing a lot of manufacturing coming back to North America, coming back to Europe. Electrification of industrial processes is driving a lot more demand for power. A big one is AI and cloud, data center and cryptocurrency data center, demand, huge demand for power. Even if you look at Hai Long, we, we signed a 744MW corporate PPA on Hai Long. It's huge. I think it was the biggest ever at the time, corporate PPA that had been signed. You look at what's going on in Taiwan right now, and they need even more power for the tech center there, even more green power. The piece that's circular on all, all of this is critical minerals, right, the critical minerals that are needed for the data centers, and for AI. That takes power to extract those minerals.
It takes power to process those minerals. So let's dig a bit deeper into the data centers and AI. One NVIDIA GPU or chip uses up the same amount of energy per capita that the average U.S. household uses up. So if you take a figure for 2023 and 2024, I think around NVIDIA's gonna sell around 3.5 million of these GPUs in 2024 in those over those two years. That will end up being about the same power consumption of the state of Lithuania or the country of Georgia. The International Energy Agency out of Paris estimates that in two years, data center power consumption could double, and that would end up equating to the total power consumption of Japan. So let's look at reshoring. U.S. manufacturing has hit a 50-year, rather, high.
Looking at Canada, if you look at Northvolt or Volkswagen, there's other lesser-known names. When they look to site a factory or a facility, one of the top criteria is, will there be enough energy? Will there be enough renewable energy to power that facility going forward? So if you look at a country, a province, a state, when they're looking at how to grow their economy, how to expand, how to create prosperity, the biggest determinant's gonna be for them over the next 10, 20 years, do they have enough power? Do they have enough power to attract the manufacturing, to attract the data centers to come? And to get that kind of growth, they need power projects that can be built at scale. That's what we do. That's what Northland does. We build large, complex power projects. We've got the pipeline.
We've got the talent to do it. There's certainly gonna be challenges moving forward. There's gonna be constraints, transformers. Will there be enough transformers? What's the wait time for transformers? Transmission capacity. We'll have to get ahead of all of this and anticipate all of that. But fundamentally, the one thing I wanna leave you with today is Northland is in the right business for the next decade. And I think we're in some of the better markets too going forward to be able to benefit from this growth. So you look at home in Ontario and Quebec, the system operators in both of those provinces in the last few months have announced that they're gonna need to double, double their power generation capacity by 2050.
A lot of noise, a lot of attention paid to the IRA, the Inflation Reduction Act in the U.S., and it's certainly a big driver of the growth in renewables in that country. But, if you look more broadly at what's going on in the U.S., it is really a much bigger industrial policy involving reshoring, incentivizing reshoring of manufacturing. And also looking at the CHIPS Act is all about bringing data centers within the U.S. territory. All of that is driving a lot of demand for power, and that policy crosses party lines. It's not partisan. The U.K., very small island, huge need for power. That's why they've got an offshore wind target of 50 GW by 2030. So they're running annual procurements that we'll participate in to secure that offshore wind capacity.
Now, in Taiwan, our focus right now is just on Hai Long. But if you look at what they need to do over the next decade, what they've announced they're gonna do, they need an additional 13 GW of offshore wind that they're gonna procure over that period of time to feed the demands of their tech sector. Poland, it's one of the most carbon-intensive grids in Europe and in the EU, and that's why they're targeting 11 GW of offshore wind that they're gonna have to get built by 2040. They'll need projects of scale, big offshore wind projects. We are building the first offshore wind project in Poland. There's others that are gonna follow over the next two or three years, and we wanna do more in Poland. South Korea, I'll wrap up with South Korea.
It's a big export-oriented industrial economy, a lot of heavy industry. They are paying very close attention to carbon border adjustment mechanisms as they emerge in Europe and elsewhere, very conscious of doing what they have to do to maintain access to these markets, which means decarbonizing what is right now a very carbon-intensive grid. So the government's got a target by 2036 of turning that carbon-intensive grid into one-third renewables, and they've got offshore wind legislation that's working its way through the legislature and up through the executive branch. And it's not just about targets, about objectives, and about supply or capacity. It's also, if you look at the bottom part of that slide, it's about what governments are doing to accelerate permitting and to provide support.
This is really in the last 6-10 months, support to the supply chain to make sure that there is an adequate supply to build all of these projects that need to get built. So the result of all of these dynamics is, once again, rising prices for renewable PPAs. So you look at this curve and where it started with some of the original PPAs or subsidy contracts that we got in Europe, price came down dramatically, and what we're seeing in the last 6 months is prices now coming back up significantly. So in the U.K., they raised the ceiling price for offshore wind auctions by 66% in the fall. They ran an onshore procurement that saw prices increase significantly from what the previous procurement had.
In New York State, the last few procurements, two procurements, have seen clearing prices go up 30%-50% from what they were previously. Even just last week, Ørsted and Equinor, which had handed back PPAs on their two offshore wind projects in the fall, rebid, and they rebid at, I think, a 40% or 50% premium to what the previous PPA was at and got awarded contracts at that level. All of this is good for investment in renewable energy capacity. It's a signal of how much the market, how much governments need the capacity, that they're willing to pay up and pay the right price to get these projects built.
But it's also really good for supply chain constraints 'cause it's a signal to the supply chain that they should invest in more capacity because the whole value chain in terms of onshore renewables, offshore wind, is gonna be profitable. So with all of these macro factors in mind, let's talk a bit about what Northland's go-forward strategy is. We've got four pillars: resilience, execution, prudent growth, and optimization. And these four pillars underpin our 2024 business plan, which I'll give you a, a couple of points on right now. So the first pillar, as I said, resilience, is and was really a defining trait of Northland through 2023. We made tough decisions. We made them at the right time. We were able to make big things happen with governments, with suppliers that had to happen to mean make sure that these projects were still successful.
Now, in 2024, what that means is that we've got $16 billion in projects that we have to construct, the total CapEx. So we need, over and above everything else, to make sure that we maintain a strong balance sheet. And this is really, out of the four priorities, one of the top two. And it's also important in terms of looking forward, when we talk about all these tailwinds, about the opportunities that we think are gonna come, we wanna make sure that Northland is in as strong a financial position as possible so that we can take advantage of those opportunities. So we've locked down about 95% of our debt with fixed interest rates. We've secured stable cash flows.
As I said before, we've taken our average contract life with these three additional projects from eight years out to 16 years, giving us much more predictability in terms of our cash flows moving forward. Our BBB credit rating is not just foundational to how we've been running the business. It's fundamental to how we're gonna run the business moving forward as well. The second pillar is all about flawless execution on Hai Long, Baltic Power, Oneida. I'm gonna say that a lot today. We say that a lot internally at Northland. It's kind of our mantra this year. So these 2.4 GW of projects, we have to bring on time, on budget, and without incident, that is the other top priority. We've got two experienced project directors on the offshore wind projects you'll hear from shortly who have delivered for Northland before.
Beyond that, we've got three layers of oversight. Each of these projects has their own project board, which we're on, our partners are on that meet monthly. The project management office, which I referred to earlier, reports up to me, provides another layer of oversight for me, for the management team, but also for the board of directors. Then the Northland Power Board of Directors has established its own subcommittee to oversee the execution of these three projects, recognizing how significant they are to the company. And that's really what today's gonna be about. Development is still core to Northland. We're a development company. We're here to take advantage and, and benefit from the growth in renewable energy over the next decade. But over the next two to three years, we are referring to it in this pillar as prudent growth.
As I said earlier, we don't have to do anything. Anything that we do will be discretionary. It'll be based on the economics, the attractiveness of any given opportunity. If we don't see an opportunity that we like, we don't need to move forward on it. We're also gonna focus on a narrower set of markets. We wanna double down in the markets that have worked for us, that have delivered for us, that we understand well, where we've got good teams on the ground. If you look at our pipeline, onshore renewables in Alberta, we've got 1.2 GW of solar, most of that with our AUC permits already in place, 700MW battery storage portfolio in that province. It's a province with a lot of renewables. Now, it's gonna need a lot of battery storage and other forms of storage to balance out those renewables.
In Ontario, we have just under 1 GW of battery storage projects, and the team in Ontario is also starting to look at power projects, energy projects as well, anticipating future procurements in that area. New York State, we've got 550 MW of solar and wind projects at different stages that we'll be able to bid into procurements over the next few years. NYSERDA's running annual procurements. And the team on the ground there is also looking at utility-scale storage as NYSERDA starts indicating that there's gonna be opportunities there as well. Offshore wind, a lot of where our DevEx dollars are still gonna be going over the next few years. In Poland, as I said, we're a first mover in Poland. There's a lot happening in Poland. We would like to do more offshore wind in that country. In ScotWind or Scotland, our ScotWind projects are about 2.3 GW.
About 1 GW of that is a fixed foundation project, which could move ahead over the next few years. In South Korea, we've got about 1 GW of mid-stage projects and then 2 GW behind that of early-stage offshore wind projects and a GW and a very good team on the ground in Seoul. But we've also deprioritized some markets. So we've backed away from Japan. We've pulled back doing renewable energy development in Colombia, in Romania. We announced last year that we were pulling back from hydrogen export projects. And today, you would have seen with the announcement last night that we sold the La Lucha project in Mexico, and that's really the second step in us pulling back from the Mexican market. We sold our qualified supplier last December, and now we've sold the 130MW La Lucha project at a good valuation.
So overall, we've got about a 12-GW development portfolio. Again, what that gives us is options. It allows us to be selective in what we move forward with. It allows us to bring partners in on some of these projects. We're not necessarily gonna fund all of these projects ourselves, but we think it's a real strength for the company. Funding growth certainly used to be 10 years ago about doing a debt deal right around when we're reaching financial close, issuing some shares, raising the equity, funding the project. It's different now. A good part of how we fund growth going forward is gonna be about recycling capital. There's three reasons why we do that. One is to enhance returns. So if you look at the ScotWind project, we've got a plan to do a two-stage sell-down. We've sold down 25% already to ESB.
Next year, likely, we would sell down another interest, maybe 25%. And on that sell-down, we would look to get a premium given how much we've advanced or matured that project, and that will help enhance our returns on that investment overall. The other is to manage our exposure to a single project or exposure to a single market. The sell-down to Gentari in Taiwan is a good example of that. Hai Long is a very large project, and it allowed us to manage our exposure to that project by dialing back from 60% interest to 30% interest and also manage our exposure to Taiwan overall. And the third reason to do a sell-down is to or to recycle capital and do a sell-down is to improve a project's chances of success. And certainly, ESB, Gentari, they also play into that as well.
If you look at the Mitsui partnership in Taiwan, it was absolutely essential last year in terms of making that financing work. Their relationships with Asian banks, their relationships with the two ECAs in Japan that played a big role on that financing really made that project successful. And they've done business in Taiwan for 100 years, so they also had a good sense of how to make things happen in Taiwan. In terms of use of proceeds on a sell-down, number one is to strengthen the balance sheet. It allows flexibility, allows options. So you look at what we're doing with the proceeds from La Lucha. That capital will come back to corporate, probably stay there for a bit until we see the right opportunity to move forward.
Second is to be able to eventually or maybe immediately sometimes redeploy that capital into new investments in our core markets where we wanna focus our growth going forward. So flipping over to ESG just quickly, we've made a lot of progress over the last few years in terms of both setting goals, being clear to the market in terms of what our targets are, being clear in terms of our reporting. And we've also been doing a good job, I think, in the last two years in terms of moving ourselves gradually towards those targets. This is Yonni's area of responsibility or one of Yonni's areas of responsibility. So in 2023, we committed to net-zero emissions by 2040, and we also committed to working towards diversity and inclusion metrics related to gender, race, and pay parity.
We also revamped our supplier and partner code of conduct and our human rights policy, so that not only can Northland adhere to the highest standards, but we can also get our partners, our suppliers to similarly adhere to the same standards. Now, sustainability is also a big emphasis or a big priority at the project levels. If we just look at these three projects that we're talking principally about today, each one of them will make meaningful impact on decarbonization in each of their countries, each one of their markets, so Taiwan, Poland, and Canada. If you look at Baltic Power, because of the size of the project, Baltic Power, and because of the carbon intensity of the grid in Poland, Baltic Power alone will help avoid more CO2 emissions in a year, 2.8 million tons, than all of our onshore renewable fleet did in 2023.
Earlier this year, you would have seen our announcement that we are to be the first offshore wind project ever to use low-emission steel in the towers on the Baltic Power project. So 52 of Baltic Power's 76 towers will use recycled materials, so low-emission steel, and that'll account for 15% of the total steel used on those towers. So it's an important first step. We think it's a model for what we wanna do moving forward in terms of lowering the carbon content of these projects, decarbonizing projects, but lowering the carbon content of the projects. And we also hope it'll be a model for other offshore wind and onshore wind projects moving forward as well. Okay. The next hour is gonna be about construction and execution.
I'm gonna give you a very high-level summary, and then we're gonna dig into a bit more detail on it. So here's a quick overview of where we're tracking against Hai Long, Baltic Power, Oneida. One thing to note is that there's obviously no in-water construction on Oneida, but that project is very well progressed. 45%, I think it's almost 50% complete at present. Michelle will give you more details on that. If you look at the two offshore wind projects, so in 2023, the delays in the financings because of market conditions certainly increased the exposure for Northland and our spot partners on those projects. But once you flip past financial close in September on those projects, what that meant is that both projects were really quite well advanced, more advanced than any project that we had at financial close.
So if you look at Baltic Power, it's about 10% complete, and Hai Long, it is actually 30% complete. Overall, all three projects are progressing on time and on budget. A big enabler for our project's success is the partners and suppliers that we bring in. So partners help unlock relationships with governments, suppliers, and lenders on Hai Long. I talked about Mitsui already and what they did with Asian lenders and the Japanese ECAs. Gentari, through their parent, Petronas, brings a lot of knowledge just, but not just about marine construction, but how to do business in Asia given all of the experience and the relationships that Petronas has there. On Baltic Power, ORLEN, the oil and gas company in Poland, our partner on that project, is one of the largest companies in Central Europe. I think it's the largest company in Poland.
They were absolutely integral last year in terms of renegotiating the CFD, the revenue contract, and in managing stakeholdering and permitting processes, as we move that project through to financial close. Oneida, the project is actually on Six Nations territory. So the partner on the project, and one of the original developers on the project is the Six Nations of the Grand River Development Corporation. So they continue to be a partner and investor in the project. Aecon, our contractor on the project, is also an investor in the project. NRStor, who some of you may be familiar with, kind of a pioneer in battery storage and storage technology in general and developing those projects in Canada, they were one of the original developers along with Six Nations. They flipped their sweat equity into real equity in the project.
So you look at all of that, we think it creates a really great alignment of interests on Oneida moving forward. So, if you look at the right side and some of our contractors, we think that we've been able to pick some of the top-tier contractors on each one of these projects. We ran procurement processes, competitive processes, but in some cases, we didn't pick the lowest-cost provider. We picked the one that we knew we could rely on, that would be dependable, would be able to deliver. A lot of these suppliers that you see there are ones that we've worked with before: DEME, Van Oord, Siemens Gamesa, that we've had very good experiences with. So, on downside risk, Northland project finances, all of our projects, that's how we, that's our methodology for developing projects.
So project financers, they're independent engineers, provide an additional layer of scrutiny on each one of these projects that we think really provides some good downside risk mitigation. So we must, on each one of these projects, hedge interest rates and FX on the construction costs, but also the distributions of cash flow that come back to us. The lenders push us to put schedule buffers in, which you'll hear more about in the upcoming presentations. Cost overrun contingencies, substantial cost overrun contingencies have to be embedded, and we have to fix all of our supplier contracts to the extent possible. On returns, Northland has a reference rate methodology that we use that ensures that we always target a return on any investment that is comfortably above our cost of capital.
If you look at optimizations that we see going forward on some of these projects, particularly on the two offshore wind projects, they have revenue contracts that go from 20-30 years. The debt tenor is shorter than that. So we see an opportunity, number one, at COD to re-amortize that debt, to resculpt that debt, which would help pull some cash flow forward and enhance the returns on those projects. We also would see an opportunity at COD once the risk profile on the project has come down to refinance the project, which we've done on all three of our previous offshore wind projects. I think on Gemini, Adam, we were able, through two refinancings, to get about 100 basis points reduction in the spread on that project.
And then, of course, on execution, we always talk about delivering these projects on time, on budget, but we're also pushing to see if we can get ahead of schedule and do better than budget. And if we are able to do that on either of the projects or all any of the three projects, that obviously is upside to our returns. Across all three projects at present, we are targeting to get double-digit returns, looking at the three projects in aggregate. And moving forward, for any new investment that we would be pursuing in the current market environment, we would also be looking to get low double-digit returns as well. And finally, this is the last slide. This is a leadership team that will oversee all of our construction program. Toby Edmonds isn't here. You would have seen the announcement of Toby, a couple of months ago.
He is our new head of the Offshore Wind Business Unit, our EVP of Offshore Wind. He's got about 15 years in offshore wind experience. He comes from Maple Power, the CPP, an Enbridge offshore wind partnership in Europe. Previous to that, he spent many years at RWE. He was a project director on two large offshore wind projects in the U.K.. He'll be joining around the middle of May; that's when he starts. Tim Kittelhake will be presenting shortly. He's the CEO of Hai Long. He's got 18 years' experience in offshore wind. He was responsible for the construction of our Nordsee One project, which came in on time, on budget. He also took that project through into operations and asset management. Jens Poulsen will speak to you about Baltic Power shortly. He's the project director, 14 years' experience in offshore wind.
He delivered Deutsche Bucht for Northland, again, on time, on budget. Then moving to Michelle Chislett, head of our Onshore Renewables Business Unit. She's got 18 years' experience in the renewable energy sector, 8 of those with Northland. She was part of the team that developed, financed, and constructed, I think, the first utility-scale solar project in Canada, First Light. I know Michelle from before at AIM and, our successor companies, IPC and GDF Suez, as we, we sold the company forward. She headed up renewables for us. I think you had a supplier go actually, you had a solar panel supplier go insolvent heading to financial close, and you managed to bring the project in on schedule and actually with better economics. And the last thing you did before Northland was you were at SunEdison as a country manager.
Within your team, you've got Nick Sjolshagen and Bill Small. So Nick is the head of our storage business or storage unit within Michelle's business unit. He has a background in doing storage projects for a smaller developer, Saturn Power, but a real pioneer in doing storage projects. We pulled him into Northland Power because we wanted to have that talent as we saw the opportunity in storage develop. Bill Small has been doing leading construction on energy projects for, I think, 20, 25 years, 30 years, and most recently, he did battery storage projects in Texas, so he's been able to bring that skill set to Oneida. Pierre-Emmanuel Front, as I said earlier, is in the audience. He can talk to you about the project management office. You previously had done the same thing at Schneider Electric for many years.
Yonni Fushman, our CAO and Chief Legal Officer, joined Northland 15 months ago from Aecon Construction. So you can see, the theme here is really about strengthening our bench in terms of project execution and construction capability as we head into a pretty intense construction period. So with that, I'm gonna flip it over to Tim to talk about Hai Long.
Thank you, Mike, and welcome. Yeah, my name is Tim Kittelhake. Please feel free to call me Tim. It's much easier. Yeah, as Mike mentioned, 18 years in the offshore industry, 25 years in renewable before I was in the onshore business, a little bit solar as well in Germany. In my career, I've overseen the development of 10 offshore projects in the North Sea, in the Baltic Sea, now as well in the Taiwan Strait. And, I'm since 10 years with Northland Power this year. And I have the opportunity today to give you a little bit of an oversight of our project in Taiwan. Why are we on Taiwan? Taiwan has some good opportunities. First of all, it has an extremely good wind regime.
This is related to the situation that Taiwan has high mountains and creates towards the mainland China a nice wind channel, which speeds up the average wind speed above the Asian normal market, and it's even higher than in the North Sea and the Baltic Sea. We have, in addition, we have good shallow water with solid soil condition, which allow us fixed foundation to use, which brings down the construction cost. We have, on top, a good feed-in tariff with the government for our 300 MW wind farm part, the first part, Hai Long 2 COD, and a strong off-taker market, as Mike explained before, from the semiconductor industry with a good rating. We have good government support. The relationship with the government is extremely good. If you see any delay, any issue in permitting, we get direct access up to minister level.
So that's an excellent support, which we see in Taiwan. In general, the project will be in the range of 1,000 megawatts, slightly more, 1,044. It will power 1 million households per year, and it will provide stable cash flow and stable income to our investors. Our investors are, as Mike mentioned, 30% NPI, 30% Gentari, and 40% Mitsui. Mitsui stepped up last year. Our construction schedule, as you see on this slide, is, has built in a lot of winter buffer. Why is this? Because, as explained, we have strong wind conditions, and we have seen that these wind constructions exceed quite, highly the installation capacity of the vessels. During wintertime, this means we would have a lower workability. And to avoid long standstill time of the vessels, we have decided to build only in the summertime.
We have durations of each of these shown sequences in the range of 109 days. So this means we still have a good buffer compared to the long-term average wind, current, and wave conditions. And despite of this buffer, which we have in the summer and in the springtime, we still have the wintertime. And yesterday, Siemens announced that they finalized one of their projects overwinter in Taiwan. They installed there the 8MW turbine even in wintertime. This shows that we have here quite some good buffer. What we do at the moment is we do the foundation fabrication is ongoing. The installation has meanwhile started. This means we are preparing the seabed and will start piling in end of March and installing then the first jackets in the end of first half year.
In parallel, we will install the foundation of the offshore substation to allow that the export cables can be laid from onshore into the foundation of the offshore substation, and then later the year, the first offshore substation will be installed. Details on the progress of the different fabrication I will give later. Oops. How wind farm looks like. First of all, the picture shows the full assets, which are employed for operations and as well for constructions. On one side, we have the onshore substation. The onshore substation is collecting all the power from the wind farm, and it feeds into the grid. And there are the m. This is the grid connection point. In our case, the grid connection for Hai Long 2, the 300MW, which will be the first part, which will go in operations, is existing.
The second part for the 744 for the auction wind farm is under construction, ahead of schedule, will be in operation next year, even if we only need it in 2026. Then you have the onshore cable. It's a relatively short cable in our case because our offshore substation onshore substation is very close to the seawall, very close to shore. From there, there's a connection point to the so-called export cable. The export cable is a roughly 12 in cable, a very big one to transport the power. It has a level of 220 kV. That's a very high voltage level. This is used to reduce the transmission losses, and it's the best optimum between leverage of the increase of the power level, meaning high voltage, and cost. The export cables go into the offshore substation. We have two of them, each more than 500 MW capacity.
Both are in the final outfitting status at the moment. We'll see later some pictures. From there, like a spider net, the cables go into each turbine, and we have lines of turbines, up to five in one line. And these inter-array cables and the export cables will be laid into the seabed, though not laying on the sand. They will be laid into the seabed, and all these preparation works are at the moment ongoing. Then we have the foundations. The foundation, in our case, is a jacket. It's like a lattice tower. It is different to Baltic Power or what we have used in the North Sea so far, which is a monopile. The lattice tower has advantages because we can go into deeper water. We can have a more stable fixation in the ground.
This is necessary due to the environmental challenges which we are facing. We see risk of earthquakes. We see risk of typhoons and tsunamis. All of this is the reason why we are using these lattice towers or called jackets. The jackets will be fixed with three piles on each corner. It's a three-legged jacket. It will be fixed with long piles into the seabed. They are one of the longest, 90-95 m long. That's a quite long steel tube, which is hammered into the seabed, and then the jacket is installed. On top, we have a turbine from Siemens, a 40.7 MW turbine, which is a direct-driven turbine, latest design. It's an upscale of the existing, well-running, and well-known fleet of Siemens' 8 MW turbine.
It's a Danish design, so it has nothing to do with being highlighted, nothing to do with a Gamesa gearbox-driven turbine. It's a direct-drive turbine with an extremely good track record in regard to reliability. And now we see one of the pictures of the construction. This is the jacket for the offshore sub for the offshore substation. The jacket sailed out end of February from our Vietnamese supplier, PTSC. It's an oil and gas service company. The jacket is as high as we are at the moment above ground. So it's 75 m. So we are on the 16th floor here.
So to give you an image how big these, these foundations are. It's a four-legged jacket compared to the three-legged jacket, which we are using for the turbine, to be a little bit more stable because on top, there comes a 3,000-ton topside, which is roughly a house of 10 apartments, each 100 sq m, four floors high, to give you an image how big these, these jackets and how big our offshore substations are. And you see as well on the barge the pin piles, so-called pin piles, in our case, a four-meter diameter. So that's as wide as the stage here. And they are 85 m long. And each will be then fixed into piled into the corner sections of the jacket and then, with a special concrete fixed with the foundation. This is a picture of our onshore substation.
You see it's very close to shore. It's, again, reducing transmission losses because here it's our meter. And from there, the grid connector takes over, and the offtaker takes over, and the further losses towards the grid is with them. It's only some 100 m to the point where the export cables will be, will be connected. This is a two-month-old picture. The onshore substation, meanwhile, is in outfitting status. So we have moved in the major, major transformers, the main transformers. The main transformers have fast FAT. We, we have moved in as well the gearboxes and the switch wheels not gearboxes. These are switch boxes to connect and disconnect the power. And we are doing at the moment the cabling. All is at time and as planned. You see as well here a lattice tower, white and red striped.
This is a data connection, which is a fallback scenario if the fiber cable would not work. Here, we can steer as well the wind farm with a direct data connection, which is a radio link. The next slide shows the newly enlarged facility of Siemens. Siemens has built in the last years several hundred turbines of the 8 MW size. To fit our 14 MW turbine, which is nearly close to two times bigger than the 8 MW, they have enlarged the site. The site was opened, together with the Prime Minister of Taiwan mid-February. It's at the moment in the outfitting, though all the materials and all the equipment for assembling the nacelles is coming in from Europe. The team was trained for assembling the 8 MW turbine, then the Taiwanese team sent to Europe, to Brandenburg and Cuxhaven, to learn how to assemble our turbine.
The advisor and supervisor from Siemens will move into Taiwan earlier spring this year to be the supervisor for the construction of our turbine. We do not expect any ramp-up because the team has been trained in the past. It is trained on our new turbine, and the turbine itself is in serial production in Europe and is used in other wind farms before our wind farm. This is now the so-called jacket. You see it is it looks here quite, quite small, but it's, again, 75-meter high. It is the corner sections are 3.5 meter in diameter. So that's, yeah, two times my, my size, I can name it. It's a weight of 2,100-2,300 tons. So this is equal to 1,500 Tesla cars. You stack together, and then you have the same weight like our like these foundations.
These foundations are only what you see above sea level, and they stick out 20 m out of the water. On top, we have these pin piles, which will be installed upfront. The pin piles are 3.5 m in diameter, up to 95 m long. These are the longest so far used in the wind industry. All of them have been, meanwhile, produced in Korea. A small portion is under local content requirements, which is ongoing in the south of Taiwan. They are as well ahead of schedule. This shows that even in a relatively new market like Taiwan, suppliers step up if the demand is correct and as well if you choose the right ones. On top of these three-legged jackets, there's a transition piece, which you see on the left side of the picture.
And transition piece is there to distribute the loads from the turbine in the tower into the foundation. So it is a special designed piece of equipment, transition piece. the monopiles have different kinds transition piece, but it's a standard use. But it gives you only an idea, what we are talking about. transition piece itself is in the range of 20 m high by itself. How we install this. We are using a heavy crane vessel, which has several propellers to be stable in the position, so-called DP2 and DP3. This vessel is a new-built vessel, built in Taiwan as well to support our local content requirements. It's under the regime of DEME. DEME is one of the main installation companies. We have used DEME as well in North Taiwan.
I worked even with DEME in 2008 to 2012 in another German project. So it's a well-established, well-known contractor, which teamed up with the state-owned steel company, CSBC, where as well our pin piles are produced. And this vessel was built in the last years, launched mid-last year, and has installed in another wind farm 31 of these jackets, similar to others, a little bit smaller. And they did it over the wintertime because the jacket supply was slightly delayed. And they finalized as well last week. So the DEME announced that they did a good job, and it's done. And I can confirm they had as well no ramp-up phase. Why they did not have a ramp-up phase, even a new vessel? Because they have a sister vessel called Orion. It's the same vessel.
It's a copy of this one, which is in operation in Europe and the U.S. since some years. The team has been trained on the vessel. On top, DEME has a simulator. It's one of the only companies which has a full simulator to run and train the personnel. How we install the pin piles. We use this very big yellow frame you see there. It's a 2,500-ton heavy piece of equipment. And this is a three-legged frame. And we install on each corner, we install later on then the piles. And this is placed on the seabed, and then the piles are piled in. It's an equipment which was as well, developed for us, which fits our footprint of the jackets. It has passed, the acceptance tests and all the testing in Vietnam where it was produced as well by PTSC, our, fabricator for the offshore substation.
It works well. Everyone is working here hand in hand. This is, meanwhile, picked up by Green Jade in Vietnam, and it's on the way to support our installation. Yeah, that's. Oh, we have a video. Sorry, I missed it. We have a video of the loadout. Here you can see the loadout in Korea of our produced pin piles, as mentioned, 3.5 m long, roughly between 75 and 95 m long and 3.5 m in diameter. These pin piles are all designed for the use per site. Each site, we have done a proper soil investigation. We have done an analysis. We designed each pile to the optimum in regard to length and as well in regard to stability. The loadouts happened earlier this year. They are now shipped to Anping, which is a harbor in the south of Taiwan, close to our site.
They are stored interim for use in springtime this year. So it is, shows only that we are, meanwhile, in full operation. Even we only have closed financial close in September. But due to the support of our shareholders, we have started fabrication of all this stuff a year ago. Thank you. Yeah, hand over to Jens.
Thank you, Tim. Good morning, everybody. I'm really pleased to be here to, do a presentation of the Baltic Power Project and the progress we, have at the moment. And as mentioned, my name is Jens Poulsen. And, Mike already gave an input to, you can say, my background. But my first offshore wind farm was for Ørsted, the Gode Wind Project, in the German waters, where I acted as EPCI director. So at that time, I was responsible for, you can say, all the technical design but also all the procurement.
If you look at Baltic Power now, I better push the button. Yes, thanks. The Baltic Power is a 1.1 GW project in the Polish waters, or the Baltic Sea, as it's called. It's operated as a JV between Northland Power and ORLEN. There is a large and huge, energy and oil gas company in Poland. The way we operated it, and as we agreed in the very beginning when we established the JV, was that we will take the benefit from each partner. Northland is bringing technical experience, commercial experience, while our partner is bringing local, local knowledge. ORLEN is 30% owned by the state of Poland. Therefore, they also have a strong influence securing permit and securing all content so we can secure the progress for the project.
If you look at the total costs for Baltic Power, it's CAD 6.5 billion. It's fully funded through our successful financial close last year in September. If you look at our construction schedule, you will recognize that it's somewhat different. We don't have winter breaks. We like to continue construction and not have breaks. That's because it's a very different water we operate in. So we can operate all the way through winter. We have much better winter conditions, so lower wind. And the weather days, as you might be familiar with when you're doing construction, so these are the days where you cannot operate, is much, much less during the wintertime compared to also the North Sea in Europe. By entering the construction phase, we have started fabrication of all main components. Somewhat behind what Tim just showed us, we are at 10%, as mentioned.
But it means that we have started all fabrication of foundations to top, sub, two offshore substations and all the cabling. And we have started construction of the onshore substation plus the operations building. To put a flavor on some of the key milestones we are looking ahead of us the next 2.5 years, then we have kicked off all main contracts back in October shortly after financial close. We will start the offshore installation Q1 2025. And that will first be installation of the foundations, followed by cable installation, combining all the, the foundations in the wind park, wind turbines, and finally the two offshore substations. Commissioning is planned to start Q1 2026 with planned first power shortly hereafter, so in first quarter 2026.
COD is scheduled, so to finalize the full wind farm, end of Q2 2026 with a final handover to operations. If you look at the layout, you will recognize that it looks very similar to what Tim just went through. So I'm not gonna repeat everything Tim mentioned. But the main part or the difference you can see is the foundations. We are utilizing monopiles. That's both for the 76 turbines but also for the 2 offshore substations. The reason for using monopiles is, first of all, it's cheaper. So we have different conditions. We have water depths of between 25-35 m, where it differs in Hai Long. At the same time, we don't have, let's call it, wind, weather, and fronts and other, you can say, huge impact on the project.
We have a site with a good average wind speed, meaning that we can utilize the monopiles for the installation. The main vessels we are utilizing is also a bit different. So the size of the monopiles is 9 m in diameter and 80-90 m long. So what you're gonna do is you upend the monopiles. And then you—it sounds simple, but you have a vessel you jack up on four legs so you can control it. And then you hammer the monopile into the soil approximately 40 m. All steel cut of the fabrication work has commenced. And the two offshore substations are expected to be fabricated and finalized Q3 2025, whereafter installation vessel will install them October the following months shortly after. The wind turbines we are using is Vestas. And that is the latest 15-megawatt.
That is designed on the previous V164 platform, which is similar to the story told for Siemens, has been produced and operated in a lot of previous projects. The type certificate was secured December last year and, in December. The serial production has already started. We will not be the first project. So we have a project that will start installation of these turbines three months earlier than us. So we foresee that we will have the upside of all the learning of ramping up for installing a new type of turbine. Then there was mentioned a spiderweb before. So that's why I brought, you can say, this drawing to give a flavor on how the layout looks for offshore wind farm, in this case, Baltic Power. You can recognize all the white dots. These are representing each of the turbines. We have the two offshore substations.
We have the export cables leading from each of the substations to shore. The reason why we have four cables is to have the possibility if we would have failure in one of the cables, then we can run approximately 75% of the production on one cable. So that gives a good backup. The cable is running all the way through to shore, where we will have onshore export cables leading them into the onshore substation. One comment on the layouts. You will probably say, "How have you managed to deliver this layout? It does not look very structured." If you compare it to one of the early offshore wind farms, it was really straight lines when you installed them. The reason why it looks as it is is because you have main wind directions for a wind farm.
So you do the design and optimize it with the maximum output effect with a minimum, minimum of losses. So there have been a lot of design behind this layout. So it's not a coincidence. It looks like it does. And at the same time, you also look into that if you have a single turbine, then and you have the wind speed coming from here, obviously, that will block some of the wind for the next one. So that is the reason why the layout looks there, like it does. And it's optimized as far as possible. I would also like to share a few pictures, not as interesting as Tim's, again, because he is a bit further with production. But I would like to start to share the first picture of the onshore cabling.
The cable we are looking at is being produced in total of 30 km. And we will has a diameter of 30 cm. At the same time, we are also producing the offshore export cable, where we in total reproduce 120 km. And we have already produced 3 of those. The inter-array cable, so from the previous picture, all the lines you saw between the turbines leading into the onshore substations, we will produce 76 cables in total with a total length of 125 km. Next picture is from Steelwind in Germany, where we produce all the monopiles, so the 76 for the turbines and the two for the substations. And the section you're looking at is the first part of the installation with a flange. If you look to the left, it can be a bit difficult. But there's actually sitting a flange there.
Finally, we'll connect it to what we call transition piece. so if you have seen a turbine, you normally would see the pile like, the monopile, you will have what's called transition piece. and then you connect the turbine on top of it. And to give an idea with the 76, each monopile will consist of approximately 20 cans. So a can is each of these sections. So we're gonna produce more than 2,000 cans in total to fulfill the, all in all, 78 monopiles. Next one. Next one, I'm cheating a bit. This is not how our future operation building is gonna look like. Like, it is how it's gonna look like, but it's not how it looks like right now because we have just started the construction of the building.
What's worth to mention here is that, it's gonna be approximately 25 km from the offshore site. So that's where we're gonna operate the wind farm the next 35 years. And we can enter this building with what's called crew transfer vessels, so smaller vessels that can carry around between 12 and 24 people to do service and operate the wind farm in general. And we, as a construction project, will already start utilizing it in spring 2025 or summer 2025, where we will install the marine coordination. And the marine coordination is the control for all the vessels that are gonna enter the offshore site for installation. Furthermore, we will operate all the commissioning of the wind farm from this location before we finally gonna hand it over to operations for the next 30 - 35 years of operation.
Last picture is from our onshore substation. As you can recognize, the 20% difference between Hai Long and Baltic Power is very easy to see. This is approximately a couple of months back, heavy winter in Poland. What that is definitely important to mention is that we were a bit concerned with the winter we have had, whether the contractor could operate in these conditions. But they are still fully on track, as planned. It's very clear that they used to operate in it. As mentioned, it's located 8 km inshore, where we go through a forest, where we need to take trees down for the offshore cabling. And it will be fully concluded Q4 2025 to secure the grid connection for 2026 so we can have the first power, again, first quarter in 2026.
At the same time, we are across Europe currently fabricating all the electrical components, power panels, etc., breakers. And this will all start arriving to site, autumn this year to be installed in the future buildings. At last, I would like to show a small video from a drone. So you can see there's a bit more. This is only a few weeks back. And now you can see the winter conditions has changed to, yeah, I will call it mud, basically. But still, we are happy about the progress, even though obviously, it's different conditions, difficult conditions to operate in. But clearly, we are entering into spring, where we expect it to be muddish, easier. I would like to hand over the stage to Michelle. Thank you.
Okay. Morning, everybody.
I'm gonna take us through the status of construction for our Oneida battery storage project. So Oneida is a 250MW four-hour battery storage project. And as some of you might know, we talk about batteries a little bit differently than we do about generation. We have to talk about its capacity but also the amount of storage time that is installed. So for Oneida, 250 MW times four hours, it's about 1,000MWh project. It is located in southwestern Ontario and more specifically in Haldimand County, about 45 minutes outside of Hamilton. The project currently has a 20-year capacity contract with Ontario's Independent Electricity System Operator, or the IESO. And that was actually a bilateral process for this project. And that was pretty significant because it set the stage for all subsequent procurements in this province. You might be familiar with the Expedited RFP or Long-Term 1 RFP.
That was all built off of the contract that was done on Oneida. So from an ownership perspective, Mike walked us through our partners. And I would really say we have a complementary set of partners on this project. Northland, we are a 72% owner. Of course, Six Nations of the Grand River Development Corporation. This is actually Canada's largest Indigenous economic development Corp. also, Aecon, as Mike mentioned, is not just our contractor but a co-owner, which we feel is really good in terms of alignment. And then, of course, the original developer with the vision, and NRStor. So this project total cost is about CAD 800 million. And again, that is fully funded. We hit financial close back in May of 2000 excuse me. That's off by a decade of 2023. And, the debt for this project was done through the Canada Infrastructure Bank.
Total, I guess where I'll go here is I'll just make a comment that this project is really gonna be the largest in Canada, one of the largest in North America. For us at Northland, it's our first. So we're pretty proud of all of our teams that have been working to make this project a reality. I'll talk a bit more about construction and status, but ultimately, it is putting to test and making the energy transition a reality. Construction's progressing well. And on that front, I will do a bit of an overview of where we stand, from a timeline perspective. So right now, what's going on on site is a lot of civil work. So these projects have a lot of grounding or, excuse me, leveling of the ground to make it flat.
What we're doing right now is installing a heck of a lot of concrete foundation. So each one of these batteries has gotta come on site and sit on a flat foundation. We've got medium voltage transformers and high voltage transformers, which again are really heavy and need to be put on a solid foundation. So we've got about 140 Megapack foundations. Out of the 140, as of yesterday, we have about 113 complete and ready to receive batteries. From the medium voltage transformer perspective, there's 70 of those foundations. 55 are currently installed. Megapacks actually arriving in a couple of days from now, which is Thursday. So Thursday, we'll have our very first Megapack batteries coming on site. So we're building a lot of foundations. We're about to receive a lot of batteries.
The medium voltage equipment and the high voltage equipment will all be on site this summer. Ultimately, all the installation of that will come together by the end of the year so that through the first part of 2025, we are really focused on testing and commissioning with Tesla. Overall, I'm really pleased with the status of construction and our contractor, Aecon, on this project. Overall, I think Mike had up on his slide we're about 45% complete. But as of the end of February, we're actually just over 50%-55% complete on project. Okay. I'll walk you through the main building blocks of a storage project and make it a bit interesting here. So I'm gonna start from the end. That's the way I think about it. So, we start with the battery packs.
So each one of these battery packs, as I mentioned, is arriving on site this Thursday. They're not a lot to look at. So the bottom left-hand side of your screen is just like a long white shipping container. And, as mentioned, those need to be sort of installed on foundations. And so 278 of those will be arriving on site. The foundations, we have 140 Megapack transformer foundations. And if you do that math, it's about 2 per foundation. So they sit right beside one another. I'll then move to the medium voltage transformers. Again, there are 70 of these. They each have their own foundation. And then, of course, you have to connect it all with cables. So we've got the conduit on site being installed underground. And the cabling will come on site this spring, summer for ultimate installation.
In addition to the medium voltage transformers, we've got our grid substation transformers. There's actually two of them. And they connect to two separate 230 kV circuits. A bit of that's for redundancy, but, ultimately for connecting into the Hydro One grid. This site is immediately adjacent to Hydro One's Jarvis Transformer Station. And I think that's the other important thing about batteries is, you know, you gotta pick a really good site that you can obviously build and have flat. But the real magic for batteries is the locational value. So what does that mean? That means, it's really resilience for the grid. So when the grid has too much energy, you wanna be able to absorb it. And you wanna be able to put it in a place of the grid where that's gonna be the most impactful.
On the flip side of that, as we always hear when our air conditioners are running in the summer at full tilt and the grid needs more energy, these batteries can be dispatched. And so as a resident of Ontario, I can say that I'm really glad to be building this project. And that Ontario will be building more. So we're gonna make this real now with some pictures. And I'll try not to stand in the way. So here is a crew the end of last year installing one of the many Megapack foundations. I will mention that Aecon, our subcontractor, has a partnership with the Six Nations of the Grand River Development Corporation, SNGRDC. And what they do is employ it's a partnership, jointly owned, I think 51% by the First Nation.
But the point here is that we've got quite a few First Nation staff that is on site building this project for us. Here's a really exciting picture about conduits. So this is all being installed underground. Eventually, the cabling will be run through that. But it's important to get this done properly and have it protected, 'cause all of the electricity runs through it. Here's a more finished product. So as you can see, on both sides of here, these are the foundations for the Megapack. So two of those go on each one of these. And the center is the medium voltage transformers. And these are important because we like to step up the voltage so that when the rest of the cabling on site, we minimize losses within the project site. So these are pretty important.
And then here, this gives a bit of an aerial view. So again, you'll see each one of each one of these large rectangular items is a Megapack foundation, two Megapacks per foundation. Each medium voltage transformer takes four Megapacks. So you got a two on the top, two on the bottom, and then repeat and repeat and repeat again. And then here lastly, this is just an overview of the whole site. All in all, it's about 10 acres. It doesn't take up a ton of land. But you can see how, grading and the civil works is really important. And that big open space in the middle is actually where the, the substation will be and those two high voltage transformers will be ultimately connecting to the grid. There's some transmission lines just to the south of here. So I, too, have a video.
We'll play that now. So the, the phase that we're about to enter into right now is one of a lot of material handling with all the batteries arriving on site. So it was really important for us to make sure that we had the foundations ready. You don't wanna be moving these batteries several times. You wanna take them off the, the truck when it arrives and place it on its forever home. See some of the civil that's going on. Also important to make sure that the drainage and the stormwater management on these sites is done properly so you don't have ponding in the wrong, wrong spot. I, I get excited looking at this. It is just a bunch of concrete and shipping containers eventually. So that's really it for me. I believe we are now at break.
I'm gonna turn it over to Dario to just give a few, a few words on that. Thanks very much.
All right. Thank you, Michelle. Hope everyone's been enjoying presentation so far. We're actually doing really well for time. So we'll take a 15-minute break. And then, after that, Adam Beaumont, our interim chief financial officer, will take us through financial update. So please feel free to get some coffee in the back or use washrooms. All right. We're all back here. So, I'm gonna pass it over to Adam Beaumont, who's gonna take us through the financial update section.
Thank you, Dario. And good morning, everyone. Thank you very much for being here today with us. My name is Adam Beaumont. I'm acting as the interim CFO for Northland. And today, I'm gonna provide you with three main updates. The first one is an update on our commitments since our last investor day. The second is how our balance sheet is in great shape.
Our finance and risk management strategy, we really think, is positioned well for the future execution on the construction side and future growth. Now, it's not as exciting. I don't have as many pictures and videos here. But we wanna make sure that we were letting everybody know that what our fundamental practice is, is to lock down the key risks and create opportunity for future upsides, which you'll hear from, in a little bit. And lastly, I what we wanna talk about is providing an outlook on our 2027, just getting a little more into the details and why we're really excited about the cash flow that will come to the business. First, to quickly recap on our 2023 financing objectives that we disclosed at the last investor day.
I won't get into the details because we did provide an update on these on our earnings call two weeks ago. What matters and what's important is that we executed on our financings and our commitments that we set out last year in a pretty challenging environment. In addition, we also onboarded new business unit CFOs, which will align with the new structure and make sure that we're more focused as a finance team by technology and closer to the projects. We also undertook the largest hedging and insurance programs and campaigns on these projects in Northland's history, which we will further give us confidence that we can deliver on the returns that we set out to achieve.
Through closing the multiple transactions, we expanded our relationships with many new and existing financial partners, including hedge advisors, insurers, investment banks, export credit agencies, and asset-level investors that are gonna be critical for Northland going forward as we have a very capital-intensive business. We are proud of the accomplishments in 2023, and we look forward to 2024. Prudently managing our balance sheet and maintaining financial flexibility will be key to our success, as Mike alluded to. We have the liquidity available, and we have our investment-grade rating, which is not common for independent power producers, but we believe is a real seal of approval of the quality of our business. We finance our projects, our large projects, through non-recourse asset-level financings, which drives discipline and underpins our risk management practices. The project finance debt typically amortizes over the life of the revenue contracts.
An independent set of eyes ensures that we build our projects with the utmost quality. Project financing also enables us to capture future optimizations. As Mike noted, especially when market conditions are a little more volatile, lenders really require you to make conservative underwriting, assumptions so that when the market conditions improve or projects are further de-risked, you can see upside through refinancings or potentially debt reprofilings in the future as time goes on. This funding strategy at the project level drives a prudent usage of corporate debt and also mitigates our exposure to interest rates. As you can imagine, over the last two years, with the high interest rate volatility, Northland really hasn't been impacted from the corporate interest side, which others have.
At the corporate level, we take informed and measured risks and maintain operating guardrails to ensure that we have ample liquidity in the event that there are material impacts to any one of our projects. With such a large construction program underway, protecting our balance sheet from any unforeseen risks is our top priority. The three projects under construction have a total cost of $6 billion. We outlined this exact pretty, pretty close to the exact chart at our investor update in the fall. And what it shows you is the total spend of that profile over the years. And as a reminder, we fully raised all the equity that we require in 2023.
And for 2024, the portion that you see showing there is the equity contribution to the project level for Hai Long that us and our partners, Mitsui and Gentari, will be making shortly before or sorry, before first draw, which is expected very shortly. Going forward, all the project costs from these projects will be funded by project finance debt but and also the pre-completion revenues on Hai Long, which will be start to be produced power in the second half of 2025. The $1 billion of pre-completion revenues from Hai Long are because of its size and length of construction. The cash flows that will be generated prior to commercial operations will be used to fund the project.
Banks, again, require us to be very conservative in our assumptions from a time perspective and as well as just the wind profile during that time. So, yeah, as you can imagine, as we've proven on our Gemini project, there could be an opportunity for further upside. Baltic Power also has pre-completion revenues, but it's much smaller and for a shorter period of time, as Jens alluded to, in terms of the construction schedule. Turning to our risk management practices, we have a comprehensive and effective hedging program in place to stabilize our cash flow, preserve our project economics, and mitigate key market risks. The goal is to lock down risk and then look for opportunities for upside. Today, we are focusing on just the three projects under construction, which I will touch on quickly. From a foreign exchange side, there's two risks.
There is the risk, for foreign exchange changes on CapEx and also on your operating distributions. For CapEx, almost all of our construction costs are matched to the currencies of project financing or hedged over the construction period. For the operating cash flows, similar to our three operating projects right now in Europe, we look to lock down and hedge effectively 80% of the cash distributions that will be coming back to Northland for the longer period. On the interest rate side, we are fully hedged on Baltic Power. And for Hai Long, we are hedged for a 10-year pay period, which based on local market conditions, that's what you're able to do. And obviously, there's another opportunity for some future upside as you look to roll the hedges moving forward. And lastly, on Oneida, we have locked in all the interest rate costs over the life of the loan.
We are very pleased with our hedging program. It takes a lot of work from our treasury team. We would like to focus as we focus, really, to protect the returns of our projects. We think that our lenders, our credit agencies, and our shareholders really like this as well. Sorry. Just go one for me. No problem. There we go. Thank you. As part of our 2023 guidance that we issued at the end of February, we announced our 2024 financial guidance: Adjusted EBITDA of CAD 1.2-CAD 1.3 billion, adjusted free cash flow of CAD 1.30-CAD 1.50 per share, and free cash flow of CAD 1.10-CAD 1.30 per share. Approximately half of our EBITDA will come from offshore wind, which is consistent with the past and also looking to the future.
On this slide, we wanted to provide a bridge of the major factors contributing to the year-over-year change in free cash flow. The biggest change is due to the lower amount of transactional and hedge gains that we experienced in 2023, as last year, we sold down, as Mike alluded to, a number of our assets, our development assets. We don't guide to gains going forward in the future. This is offset by the contributions from a full year of operating from our New York onshore wind projects that reached full commercial operations in the fourth quarter of last year and a reduction in our development expenditures, which we, as Mike alluded to, will be focused on construction execution and our core markets. On one of the prior slides, we talked about how Northland has significantly grown our EBITDA over the last four years.
Looking forward, with secured and fully funded projects, we are looking to increase our EBITDA further by 40% or 7-10 CAGR. But we also wanted to make sure people didn't expect it all to come in 2027. We have some near-term milestones as well, which, of course, we wanna highlight. In 2025, Oneida is expected to come online. Pre-completion revenues from Hai Long are expected to start in the second half. And as a reminder, although we're gonna be producing the first turbine will go in, we'll start earning a return or having earnings. But because the cash flow is being used to fund the construction of the project, it will not be reflected in our free cash flow definition. In 2026, Baltic Power is expected to be fully online, and Hai Long will follow shortly in 2027.
In this forecast, we assume Nordsee One will earn market revenues as the original subsidy expires in 2027, but we hope to be able to contract that cash flow for a longer period of time. Of course, this forecast is only with those projects in construction. As Mike alluded to, we'll look to opportunistically potentially add to this forecast. In addition to the meaningful cash flow that'll come by 2027, we wanted to also highlight two key benefits. Number one is the geographical diversification. So today, 50% of our EBITDA comes from one area, the North Sea, which is subject to the wind conditions and any grid, grid issues in that particular area. By 2027, although our exposure in offshore wind will increase to approximately 60%, we'll have three distinct areas being the Taiwan Strait, the North Sea, and the Baltic Sea.
We think that this will add to the quality of the cash flow. The second benefit is the contracted revenue. With Oneida having a contract for 20 years, Baltic Power for 25 years, and Hai Long for 20-30 years, that will add a significant amount of contracted cash flow, which will double our weighted average PPA life from 8-16 years. Again, by 2027, once these projects are expected to be online, our EBITDA will be more geographically diverse but also have a much longer contracted horizon. Turning to my final slide, we wanted to address the payout ratio expectations for the next two years. If you look at history - and those might remember this slide from many, many years ago - we experienced elevated payout ratios in 2011 and 2015 when we had very large construction programs relative to Northland's size.
This was last experienced in 2015 when we were constructing the Nordsee One and Gemini projects. Given we raised the capital upfront, our payout ratio was elevated until the cash flows from these projects came online in 2016 and 2017. Over the next couple of years, our payout ratios will be elevated again, largely reflecting the projects in our current pipeline under construction, which until 2026 and 2027 will improve as the projects become fully operational. Despite this construction pipeline being significantly larger than those in 2015 and 2011, the payout ratio will not be as high, reflecting Northland's larger size. Turning to 2024, we will focus to execute our business plan, continue to maintain financial flexibility in our funding tools, and as you have heard today, provide you with further updates on our construction progress. We definitely look forward to doing that with you.
And I will pass it over to Mike for concluding remarks. Okay. We, we spoke about the, CAD 16 billion in CapEx that we had to fund for these projects, about CAD 11 billion in project debt. Just embarrass Adam for but one moment. He's here as the Interim CFO today. Last year, he was head of capital markets for Northland. So all of that all of that was led by Adam last year in a very challenging market.
And for everybody at Northland, as soon as we heard Adam's voice on a call, saw a text, an email from him, we knew that he was on top of it, and we had absolute confidence that he was gonna deliver. And he did. So, just to wrap up the, the presentation today, as we said, we think Northland is coming out of 2023 in a stronger position than when, when we began.
We've got 2.4 GW of growth locked in, which will deliver around CAD 600 million of incremental EBITDA by 2027. Top two priorities overall: executing on this construction program, bringing everything in on time, on budget, without incident, and also maintaining our strong financial position throughout. We see some really strong tailwinds emerging. We talked about declining inflation, stabilizing supply chains. But the biggest one is rising power prices and the demand for power increasing. And we really think that over the next decade, what's gonna differentiate how fast a country, a province, a state grows is gonna be their ability to develop the necessary power generation to facilitate that growth going forward. It's kinda like 130-140 years ago with the initial industrialization of Canada and the U.S. I think it's gonna be the same in Canada, in North America, and in Europe going forward.
So for that, the world is gonna need a lot more renewable energy, a lot more power facilities, a lot more large-scale power facilities. That's what Northland does. We have the engineering talent, the commercial talent, the finance talent, the project management talent to make these projects happen. And we are really excited about, first and foremost, delivering these three projects. Then beyond that, all of the growth that we think will be in front of us. So we're gonna take a quick pause and reorient the stage so that we can set up for Q&A. So probably about two minutes or so. Jessica, Dario? Okay. That's where you're going. It's gonna be obvious I've been swinging. I had a belt off for it. I didn't have it. I heard you go. Oh my gosh. So I guess everybody knows where I was. Okay.
So Vic, you're gonna start the questions off, or you're gonna start off, Dario?
Yeah. I think we can open up the floor for questions. Before you ask a question, could you please introduce yourself and mention which firm you're with? Then, you can go ahead and ask your question.
Hi. I'm Rupert Merer from National Bank. Tim, if I could start with you. Looking at the schedule for Hai Long, you've laid it out well with winter buffers. How flexible is that schedule, or how flexible are your contractors? If you're running ahead of schedule, can you accelerate things easily? And conversely, if you fall behind, you hit the winter, and you're not quite up to speed, how easy is it to catch up?
Yeah. Thank you for the very good question. I mean, I looked on it. I thought maybe we have built a little bit too much buffer in it. Nevertheless, it is our strategy to construct these wind farms in a very solid and a very conservative manner. All the setup is that our vessels are contracted for 2-3 years. Depends on, for example, the foundation installation vessel is contracted for two years. Even we only need the vessel for 109-110 days per summer season. So we have time. We will lay it down in wintertime to reduce cost. But if needed, if, for example, one foundation would be delayed, we can continue in wintertime. The similar is it with cable installation and as well with the turbine installation vessel. So we have the vessels secured, and we are flexible.
On the other side, we have the supply chain side. As mentioned, we have the two offshore substations. They have been in construction for now 15 months, and they are nearly done. They are at the moment in hot commissioning. This means all the equipment is in. They are in a stage of finalizing the testing, and then they are ready for sail out. The jackets, you've seen the first one sailed out last week. The other one is waiting on quayside for installation. So this is all built up in a way that we have a good buffer to be flexible on one side and having as well the vessels available on the other side.
If I could ask a follow-up. Is that buffer, is it only because of the, the weather, the severity of the weather? Do you have that buffer versus Poland, or is it in part because of the complexity on the foundations as well?
both. On one side, we have this complexity because we have the local content suppliers, and we have the international suppliers. This gives us as well flexibility because both started at the same point in time. So if one would be delayed, which is the case at the moment, we could use material from international if the local supplier would be late and vice versa. But nevertheless, we have, instead of one foundation supplier, we have five. We have two for the pin piles. We have two for the jackets. And in the jackets, there's an additional one with the so-called jacket pile gripper. Comes from Netherlands. They are meanwhile done, but it was a relatively complex construction. And this is as part of our mitigation strategy. We are building buffers in and having on the other side an early fabrication to be flexible.
Thank you.
Thanks. Nick Boychuk from Cormark Securities. So Mike, how do you think about maximizing the value of asset sell-downs? Kinda using ScotWind and the potential to sell that down by another 25%. When's the ideal point in the process to do that, and how do you think about maximizing it?
I think our view on sell-downs has changed a bit over the last two or three years. If you look at Hai Long, we were waiting to sell down, at least close the sell-down until financial close. If we look back at 2023, given how market conditions changed through the year and what that did to the timing of financial close, it really did ramp up the exposure pre-financial close to Northland and our partner, Mitsui, on that project to a level which I don't think we would wanna repeat. One of the lessons learned coming out of 2023 is to maybe look at doing our sell-downs in two stages like we're doing on ScotWind. We did a relatively early sell-down on ScotWind. We managed to recover the cost that we had paid for the leases, all of our DevEx.
So we were able to recycle all of that. And then we will likely do another sell-down, as I said in the presentation, in 2025, maybe 2026, once the project is further de-risked. And on that second sell-down for an additional whatever it is, 25%, we would look to get more of a premium as well as recovering some sunk costs.
Hey, everyone. Sean Steuart, TD Securities. Mike, I guess by design, you haven't referenced any projects beyond the three big ones you're working on. You've got, adjusting for La Lucha, almost CAD 800 million of available liquidity. So you've got a nice cushion. Can you talk about advancing onshore renewables or storage projects beyond Oneida, the cadence for potentially bringing those types of projects to fruition and any areas that offer better relative potential?
Yeah. I mean, when you when you look at where we're gonna source new cash flow, incremental cash flow beyond those three projects we talked about today, in the next few years, it's gonna be primarily from onshore renewables, right? So what we're doing in Canada, New York State, Spain, so on those projects, some of them, are in a position where they could go soon, but we are gonna make sure that we move forward at the right time both for the projects but also for Northland and where we're at in terms of executing on particularly the two big offshore wind projects. We wanna make sure that the first priority is the, the resilience of the company at the corporate level. But then we would be able to move quite quickly on some of those other opportunities, particularly in Alberta, and possibly in New York State as well.
Can you touch on Alberta? I know many of your projects or some of your projects that were advanced, but in light of the news last week, how your pipeline there fits into the overall scheme.
Well, I mean, I'll turn it over to Michelle 'cause I mean, I think most of our projects there, or at least the majority, had the AUC permit in place. The announcement for us is less about enabling our projects 'cause they were already in pretty good position. It's more about a signal of what the government's intent is with respect to renewables. It was, our view, I think, a very positive signal.
Yeah. That's right. So, as you recall, we made a transaction at the end of 2022 where we have quite a substantial presence in Alberta. And what was nice about that is, as Mike said, they had the AUC generator permit, which is the important thing and the announcement that happened over these past couple of weeks. So, fortunately, because we have all of that, all the new announcements are not retroactive to the majority of our pipeline. And so what we're looking at this next few years is to actually bring those to fruition. Similar to what Mike said, right, we have to use a prudent growth approach, ensuring that our priorities of execution and resilience come first. And so certainly, Alberta will play a role in that.
It's Nelson, hello, can you hear me? It's Nelson Ng from RBC Capital Markets. So the first question is for all three projects under construction. It sounds like you have all the risks buttoned down quite well. But for 2024, what do you see as the biggest risks to the schedule and the budget?
I can start from my side. Obviously, we started fabrication on all main components at the moment. Therefore, we have ramped up the team, both when it comes to quality but obviously also HSE, to make sure that we get off on the right foot and we follow the program as planned. If I look at the overall, it's a new market where we are not familiar with the TSO. The grid connection, that's a part where I always, you would say, I've been concerned and following it closely because it's outside my control. That's really where we are following it closely, see that they build as planned, and obviously get all the insights through our partners, Orlen to make sure that they are gonna deliver, meeting the program as agreed.
On Oneida, I'd say two things for 2024. As I mentioned, there's a lot of material handling that's about to happen with all these batteries arriving on site. So a big part of that was making sure that the site was prepared to receive them. So I think we're in a really good position that way. Now, it's a focus on health and safety to make sure that all of that happens seamlessly and only, you know, ideally, things only get placed once. So that's the first thing. I'd say the second item is around transformer materials that will be delivered this summer.
We've got a whole we ourselves do, as well as our contractors, Aecon, have a whole expediting process where they are in the factories where these things are being produced so we can see, touch, feel, be present for the testing so that when they eventually arrive on site, they do so on time and with the quality that we expect them to be.
Yeah. From my side, we, as mentioned, we will install this year the export cables and half of the inter-array cables. The cables have not passed so far FAT, other than one of the export cables. We will start. But it's a risk that it they fail. It's one to a million, I would say, that one of these cables blows up, but blows up in the high-voltage test. But nevertheless, we have quite some flexibility on time-wise. It is more a question, can we get everything this year, or we have to move something into next year, maybe utilizing as well winter period.
Thanks. And the next question's more for Mike and Adam. In terms of your 2027 outlook, it doesn't include any new projects, but it sounds like any incremental projects will come from potentially Alberta and New York. So I guess if you were to move forward with any projects in Alberta, New York, is the expectation that you would do sell-downs, to internally fund projects, or do you already have or is it to just draw down on your available liquidity to fund, any, additional growth?
Yeah. No, I think, as we said, we're only gonna be pursuing opportunities that that's the right one in terms of the different profile and market. So I think likelihood is we do have multiple tools in our funding chest, including the revolver, which could be part of that. So I mean, it will be a TBD at that point in time, but the likelihood is that is correct.
The opportunity the next two or three years and we put the slide up, deliberately on capital recycling is really to take a look while we build these three projects out at our portfolio globally and look at how we should realign that to where we really want the company to be in two or three years. First step certainly is what we did with La Lucha, what was announced yesterday, brings some capital back into the corporation, pulls it out of a market that changed dramatically since we entered it. But there's other decisions that we could make too over the next two to three years. So the first place we would look for capital for new growth, would be, funds that we have on hand and capital that we could recycle from, our existing facilities.
Yes.
Okay. Maybe we're gonna take a couple of questions from our virtual audience, before we go back to the floor. So we have a couple of questions here. So first one is from Prab Sidhu from Leith Wheeler Investment Counsel. Are there still other buffers added into the Baltic Power schedule since there aren't any winter buffers?
Yes. There is absolutely planned float, and I would say all projects also known in Europe. You will not see having winter buffers, especially for Taiwan. I would say that's not normal for a wind farm built in Europe. But yes, we definitely have float built in. And we constantly also challenge ourselves because obviously, if possible, if we can accelerate anywhere, we're gonna do it. But obviously, we first of all, we wanna see that we get all the components fabricated, and then we can start playing, optimizing further, potentially. But to make it short, yes, there are necessary floats. And I'm confident that we can meet the schedule as laid out.
Okay. Great. Thank you. Thanks, Jens. Okay. This one's probably for Michelle. Do you think the new rules in Alberta provide you with some barriers to entry relative to new players that may try to enter Alberta as a renewable player?
Yeah. So just to take that for a second, it's become more restrictive in Alberta. I just wanna take a step back that most jurisdictions that see a large buildout of renewables do have this inflection point where they need to be more deliberate about what they put and where and some of the rules around that. So I would say part of what happened in Alberta is not unique. We see that in other jurisdictions. As it pertains to our portfolio, I would say that there certainly is an advantage to us being through that permitting process and in particular the AUC generator's permit. And I think it will make it more difficult for new projects that haven't received their permit.
In a sense, I think I'm pretty pleased with the status of our portfolio and excited to what's next out there.
Great. Okay. We can go back to the floor.
Mark Jarvi from CIBC. In the presentation today, you guys talked about construction completion of projects, and gate percentages, which are a bit different than how you framed the CapEx or budget timelines in the October presentation. So you talked about making progress. How should we then evaluate you going forward here? Is there a number that we should look for at the end of 2024 in terms of percentage of construction or percentage of CapEx to be completed on the key offshore wind projects?
Do you wanna pick that up?
Yeah. Absolutely. So no, I think what we wanted to do is make sure we were giving the right benchmark to really provide how much the projects have progressed. And I think, with the, the challenge with the actual spend to date is sometimes you're making, you know, material deposits for turbines or, or things which are skewing the numbers, which are not really reflecting the true milestones that are being achieved. So I think in that scorecard that Mike presented, that's kind of like our playbook of how we wanna provide an update on our progress moving forward and that which would be the percentage of completion for each of the projects. And those numbers that were shown on the slide were actually as of December 30th of last year. So obviously, we've made some improvements since then already.
Okay. And then Mike, Mike, maybe this is for you. You made a comment that you didn't think the share price reflects some of the value that you're creating here or the current assets. And so I'm just curious would be, you know, do you just stay patient here as you execute and look for that to recovery to take place? Is there other conversations that you or the board have been making to try to highlight the value of the portfolio or business and development pipeline that you see today?
Well, I mean, there's certain things outside of our control, macroeconomic conditions that will have some impact on all of the players in our sector. So that's outside our control. In terms of what we can do, I think we need to communicate clearly on both the value that these projects will be bringing to Northland over the in through 2025, 2026, 2027 as they come online. And number two, what we did today is really take investors through the milestones as these projects get de-risked, so as they approach commercial operation, and really get the market to understand how the risk is diminishing and how that cash flow is approaching. And then the third thing is we do have to start talking about a bit more about what's next, where Northland's going next, and giving the market a better understanding of that.
We've got a good story to tell. We were very focused on delivering on the financial close and the Gentari sell-down last year and getting these construction projects launched. But moving forward, I think we do have to allow some airtime to explain what's next too after these three projects.
Is there anything when you think about optimization of the assets to your portfolio where you think highlighting the value of certain assets that maybe don't get full value in your portfolio by doing a partial sell-down or something like that is a marker to the market to show the value across your asset base?
So I mean, we wouldn't, put it this way. There's a couple of things. One is in terms of optimizations on our current facilities. That is something that truthfully, five or 10 years ago, maybe Northland didn't look to as much as we are now. There was always another opportunity that was bigger than what we had. But as we look at where our facilities, some of the facilities are located, we do see some real opportunity to optimize them. So on Thorold, for example, we've got a 30 MW upgrade last year on a bilateral basis with the system operator, chatting at the break a bit about North Battleford where there's an opportunity with carbon capture there.
So I think we're what we're doing is creating a team that can focus much more on those opportunities and putting together a business plan for each one of our facilities, taking them all the way through over the next 10 years as the contracts expire so we can make sure that we not only maintain the value that we get from those, the cash flow we get from those, but ideally, be able to enhance it as well. We would look at doing, certainly sell-downs on development assets. If it's an operating asset, there'd have to be a fairly compelling proposition. There's certainly in the near term, a lot of value to Northland in the cash flow that we get from our operating assets.
Hi everyone. David Quezada from Raymond James. Michelle, maybe one for you. Just thinking about the opportunity going forward for storage projects in Ontario, you mentioned that the sites need to be strategically selected. I'm curious how rare those sites are. And how do you think the competitive dynamic will play out for future RFPs for storage in Ontario?
Yeah. So as I mentioned, locational value is the holy grail for storage. I would say too, you know, it's a capacity contract, right? So, you know, understanding where you source yourself on the system, it obviously has to be a benefit to the utilities. But without a doubt, I think we've seen this in the Expedited RFP and Long-Term 1. There's a lot of supply that is out there. I think in general, battery storage projects are a shorter development cycle. So I think you see a lot of, you know, early entrants that came in and were able to come in quickly, maybe in some instances too quickly. And so I think there'll be a lot of competition around that.
And so I focus really on getting Oneida done and getting it done well and operating it as well, so.
Excellent. Thanks. Maybe one more. I guess this would be for Adam. Just on the sale of La Lucha, any color you can provide there on, on how that process came about? Was it a competitive process? How competitive, if so?
Mike, do you wanna come in?
Yeah. I mean, it was certainly a competitive process. We ran it ourselves. We didn't have an advisor. Our lead for M&A within the onshore business unit knows the Mexican market very well. He's got a long history there. So he knew most of the players that are embedded in that market, that are in there for the long term, that would see value in an asset like La Lucha.
As much as all of us see, some of the noise that's come out of the power sector in Mexico over the last two to three years as the current government challenged the market reforms that the prior government had brought in, there is still another story about Mexico, which is all of the manufacturing that's still moving into Mexico, global multinationals that are moving into Mexico that have their own net-zero targets that need to source renewable power. And there's not a lot of it available in Mexico. There's not a lot of uncontracted renewable energy projects, facilities in Mexico. La Lucha's one of them. So we were fairly confident that we would be able to find a buyer, and we were fairly confident that we would be able to get good value on it. And I believe we did.
Hi. Thanks. Ben Pham, BMO Capital Markets. Slide 64, payout ratio. I think the key message I'm interpreting from this is you've had a high payout ratio before during buildout. You'll be able to manage this next buildout. So the question is, is there a constraint on your ability to grow during that period of time? And I ask that just from a perspective that the last buildout, the payout ratio was 200%, and your stock was under a lot of pressure during that, that time. And so how do you you can probably manage this, but how do you put a cap or guardrail when you think about growth and how you manage all this growth that you wanna, I guess, might double down on in your core regions?
Yeah. So I mean, I can start it, Mike, and feel free to add in. So I think I mean, top priority for Northland right now is execution of those construction projects. And I think you guys have heard a lot about that, obviously being today. But we don't want it to, as we look forward and as Mike alluded to, responding to Nelson's question, like, we are looking for other areas to continue that growth pipeline, in terms of being able to execute on New York and Alberta, and continuing to grow. So I think, you know, for us, it's a balance.
We, you know, we obviously recognize that it is a large construction program, but we're gonna be continuing to look for different financing tools that'll help us to further grow, and keep that optionality open. Because if it is the right opportunity, we want to be there and continue to grow.
And I think, Adam, like, the when we talk about an elevated payout ratio relative to what happened with the two build cycles in the 2010s, Northland was a much smaller company then. There were some particular circumstances, particularly related to North Battleford then, that really caused that payout ratio to elevate up quite high as Ben you alluded to. You got a good memory, Ben. And those circumstances I mean, Northland's a much bigger company now. So when we say an elevated payout ratio, I mean, we're talking about what we presented today in terms of 2024 guidance, so approaching 100% instead of 70% or whatever it was roughly last year, going forward, but not elevated going up to the same level, certainly, anywhere near what we saw 10 years ago.
No, absolutely. Yes.
Okay. Can I ask you to just go down memory lane a bit? The Gemini project, I think that there's a time where you were looking at selling the grid assets, like substation, bringing in private equity, and just kinda looking at these diagrams today. Is that something that you would think about again, or is that even possible in the structure you have in place?
On these two projects? The two offshore wind projects you presented?
Just more broadly.
Broadly?
Yeah.
I mean, I have to get back in a bit. I don't think from a regulatory standpoint or a market stand structure standpoint, that would be an option available. But I don't know. Adam, do you have any more insight into that?
Yeah. I mean, the financings are pretty large, and there would be a whole element to that as well, which would make it tough. But it's not to say it's not off the table, but I think it would be very challenging.
Okay. I don't think we have a question.
We're in the last second there.
Rupert Merer, National Bank Financial. The Canadian market seems a little less competitive than some of the foreign markets. I don't know if you agree with that. But when you look at doing developments here, you haven't talked much about doing offshore wind in this country, and it doesn't seem like we have a huge pipeline of offshore projects. Is it going to be an important market for offshore wind? Maybe if you can talk to us about some of the puts and takes of doing offshore in this country.
Yeah. I mean, Canada's an interesting market. It is a relatively small market, right? And it tends to go through cycles where there's a big build cycle and procurement cycle followed by a big, big, big build cycle, and then things kinda quieten down for a while. So the last 10 years, it was not a lot going on in Canada. But what we're seeing now in Alberta, certainly, but in Quebec, Ontario, and soon in B.C., is quite a lot of activity. And we expect that to continue for the next decade. So in general, we see a lot more opportunity in Canada. Initially, a lot of it with it will all be, in our view, onshore renewables and in places like Alberta and Ontario, battery storage. So we wanna do a lot more in Canada.
There's all sorts of advantages to Northland to do that at a corporate level as well. On offshore wind, there's been activity on both coasts over the last several years. I think on the British West Coast, British Columbia, we withdrew from a project that we had some involvement in there. We just took a view that it was gonna take a lot longer and left it, handed those assets back to the original developer. The East Coast, I think, in some ways, is more interesting. It'll take some time, but there's a lot of activity going on between the federal government and the Nova Scotia government to set up and the Newfoundland government to set up procurement process, particularly around Nova Scotia off towards the Sable Island for leases there.
We're expecting that those lease auctions to happen sometime, late 2025, maybe into 2026. But if you play that out, that is really for projects that would then FID towards the end of this decade, deliver energy into the next decade. But they could be sizable depending on what happens with transmission and how you can move those electrons back into Quebec, Ontario, or into the Northeast and what happens with hydrogen export projects in Nova Scotia as well.
The conditions be favorable for offshore there? Could it be competitive with offshore in Europe?
Good water depths. So I think it's kinda between 40 and 60 m in depth. Good seabed conditions for monopile foundations. The wind speeds are excellent. So it's really a question, less of that, more of finding a buyer and a home for a large volume of electrons, which is what you could generate from offshore wind off in Nova Scotia.
Maybe one final question. I'll show off my memory here. But remember when they were talking about offshore in Lake Ontario? You, do you think we could ever see that again?
I think it'll be a while if it does happen. I think what's certain is that when you look at all of the states and provinces that border the Great Lakes, and the Saint Lawrence Seaway, there is gonna be a lot of demand for power. There's gonna have to be a lot of power generation built out over the next decade for, as we talked about, for manufacturing as more manufacturing is brought back into Canada, into the U.S., data centers, all of all of what we spoke about. So you're gonna see a lot of demand. Some of it and a good portion of it can be matched through onshore renewables. That's why in New York State, you're seeing such a big target from NYSERDA to build out not just offshore but onshore renewables in New York State. So we see a good opportunity there.
You're seeing the system operator in Ontario now talk about procurements for energy, not just storage capacity in the years to come. So there's gonna be a lot of activity, all around the Great Lakes. Whether there's enough land, enough space, enough social license to build out enough renewable energy and storage capacity, also depends how quickly SMRs and nuclear power happens or doesn't happen over the next decade. Who knows what will happen with the Great Lakes and offshore wind? Maybe it'll this day will come again.
Mark Jarvi at CIBC. So, so Mike, you talked about, being selective given the fact that you had a breadth of options, especially on offshore wind, how you walked away from North Sea, Japan. You stepped back. As you look forward now, do you think you have the breadth of options as you look to the back after this decade? Is what you have in front of you in South Korea, Poland, maybe doing more, Scotland is that enough to make sure that you have that breadth and be selective on the best projects? Or do you feel like you've gotta add maybe one more region or two more regions to make sure that you're always giving yourselves the breadth of options to select upon?
I think we've got a lot of work to do in Scotland. We've got a lot of work to do in Korea over the next two to three years to advance those projects, to verify and validate the original investment thesis on developing those projects. So that would be a fair bit of work. In Poland, we'd like to do more. We've had a good experience. We've got a good partner there, to be determined what happens in the months and year ahead and years ahead on Poland. So I think for the time being, that's enough. We are always keeping our eye out for where the next growth opportunity is gonna be, both offshore and onshore as well.
So it's not like we're not looking for it, but we've got our plate fairly full with what we have onshore as well, before we start looking at offshore wind in the Great Lakes for Rupert.
Okay. We got one question, that's online here and aligns with Mark's question here. So any views on France and the offshore wind targets they've established there?
France, it's actually turned out to be a pretty good market for offshore wind. Northland looked at it, I don't know, probably eight years ago, Adam, right? We decided not to go ahead with it at the time 'cause we thought the permitting process was gonna get drawn out, which it was. It did happen. Did get drawn out. But it actually has stabilized, and there are some good opportunities there. I think we would really need a local partner or someone else to work with in France, and we don't have that right now. So that's not our top priority by any means.
Okay. Last call. Do you have any other or any more questions in the room? Okay. No more questions. That's great. Okay. Mike, I'll turn it over to you to wrap up.
Yeah. I just wanna thank everybody for coming today. Big crowd. So I really appreciate you taking time out of your work week to listen to us and, and ask some really good questions. The lunch is gonna be. Dario out up front.
That's right.
People can grab it, come back into the room. We'll spread out. So if you have any questions you didn't get a chance to ask or didn't wanna ask in front of a group, we'll, we'll be hanging around for a while. So thank you very much.