Operator: Good morning, ladies and gentlemen. Thank you for standing by. Welcome to Innergex Renewable Energy’s 2021 Second Quarter Results Conference Call and Webcast. I would like to remind everyone that this conference call is being recorded. I will now turn the conference over to Karine Vachon, Senior Director, Communications.

Please go ahead.

Karine Vachon: Thank you. Hello, everyone and thank you for joining us. I would like to specify that this conference will be held in English. Members of the media are invited to ask their questions by phone after this call.

A presentation supporting today’s discussion is available as we speak on the homepage page of our website at www.innergex.com. This call contains forward-looking statements within the meaning of applicable securities laws. Although the corporation believes that the expectations and assumptions on which forward-looking statements are based are reasonable under the current circumstances, listeners are cautioned not to rely unduly on these forward-looking statements as no assurance can be given that it will prove to be correct. Forward-looking information contained herein is made as of the date of this call and the corporation does not undertake any obligation to update or revise any forward-looking information whether as a result of events or circumstances occurring after the date hereof unless so required by law. During this call, we will refer to financial measures that are not recognized according to International Financial Reporting Standards.

Please refer to the non-IFRS measures section of the MD&A for more information. Our speakers today will be Mr. Jean-François Neault, Chief Financial Officer, who will present Q2 results and Mr. Michel Letellier, President and Chief Executive Officer, who will review our operational highlights. I will now turn over the conference to Mr.

Neault.

Jean Neault: Good morning, everyone. Before presenting the financial results, I want to provide you an update following the February 21, Texas event. The Flat Top and Shannon facilities have been excluded from our result from April 1 and onwards due to the project assets and liabilities been classified as disposal groups held for sale. Therefore, the balance sheet value remains at zero and no result have been recorded while we removed them from our number of operating facilities.

As for Phoebe, we have reached an agreement after the end of the quarter to settle the amount that remained unpaid. We have disbursed US $24 million US dollars representing the net amount of these three elements. The agreed upon settlement on the disputed amount the payment on the project tracking account minus the unpaid energy sold during the negotiation process. Therefore, we consider the February 21, 2021 Texas event impacts to be concluded. On page 8.

Our second quarter results posted growth over the same period last year mostly due to higher contribution from Hydro facilities in BC and the contribution of the Salvador and Mountain Air acquisitions completed in May and July last year. Revenues proportionate and adjusted EBITDA proportionate were up by 3% and 4% respectively. For the quarter ended June 30, 2021, Production and revenues were up 10% and 13% respectively, compared to the same quarter last year. Adjusted EBITDA was up by 16%. This increase was mainly attributable to a higher contribution from the facilities in BC because of higher production in 2021 whereas the 2020 figures were negatively impacted by the BC Hydro curtailment.

The increase is also attributable to the contribution of the Mountain Air and Salvador acquisitions. The higher contribution from the wind facilities in France and the ramp up of production at the Hillcrest solar facility that reaches PPA commercial operation on May 11. The increase was partially offset by a lower contribution from the Quebec wind facilities and by higher general administrative expense and prospective expense. On page 9, for the three months ended June 30, 2021, Hydro electric power generation segment generated $63 million in adjusted EBITDA representing a 21% increase compared to the same quarter last year, due to a higher contribution from the facilities in British Columbia. This increase was partly offset by lower average selling price at some facility in British Columbia and in Quebec.

The wind power generation segment generated $57.6 million in adjusted EBITDA, representing a 3% increase compared to the same quarter last year. This increases mainly due to the Mountain Air acquisition and to a higher contribution from the facilities in France explained by higher revenues from higher production. These items were partly offset by lower contribution from the Quebec facilities explained by lower revenues from lower production and by a lower contribution from Foard City facility due to lower revenue. The solar power generation segment generated $19.4 million in adjusted EBITDA, representing a 71% increase compared to the same quarter last year. This increase is mainly explained by the ramp up of production at the Hillcrest solar facility in Ohio and by the contribution of the Salvador acquisition in May 2020.

The increase is also explained by higher contribution from the Phoebe solar facility attributable to higher revenues from higher average selling price despite the lower generation. On page 10, for the quarter ended June 30, 2021, the joint ventures and associates contributed $13.8 million to adjusted EBITDA proportionate compare with the contribution of $15.2 million in the same quarter last year. The decrease in the hydro segment was mainly due to the lower revenue from the Umbata Falls facility and our higher operating expenses in Chile. This decrease was partly offset by a higher contribution from Jimmie Creek facility due to higher revenues from higher production compared to 2020 figures that included the impact of the BC Hydro curtailment. In the wind segment, the decrease is explained by a lower contribution from Dokie facility due to lower revenues and higher operating expense and the lower revenue from Viger-Denonville facility.

The decrease is also attributable to the exclusion of the result from the Flat Top and Shannon joint ventures facility from April 1, 2021 onwards as mentioned before. In addition, the proportionate PDCs, Production Tax Credit decreased from $19.4 million to $9.5 million was due to the exclusion of the results from Flat Top and Shannon. This decrease is also attributable to a lower PTCs earned at the Foard City facility due to lower production. Continuing on page 11, compared to December 31, 2020, the increase in long term debt is related largely to the draws made toward the construction of Griffin Trail project. In addition, the corporate revolver credit facility was used for reimbursing the outstanding balance of the Alterra term loan on January 11, 2021.

On page 12, compared to December 31, 2020, changes in the total assets results largely from the share of loss in joint ventures and associate due mainly to the February 2021 Texas event and the impairment loss at the Shannon and Flat Top facility. Changes in total liabilities stem mainly from the decrease in derivative financial instruments due to a general upward shift in interest rate curves, which were partly offset by an increase in long-term debt. The change in shareholder equity is explained by the total comprehensive loss of $139.8 million. The dividends declared common and preferred shares totaling $65.7 million, and by $11.6 million in distribution to non controlling interest. As shown on the next page, the normalized free cash flow is increased by $18.6 million on a trailing 12 month basis.

This increase in free cash flow was due mainly to the contribution of the Salvador and Mountain Air acquisition achieved during mid-2020. And from the Hillcrest facility, which started delivering energy during the second quarter of 2021. A decrease in interest payments on the corporate revolving credit facility concurrent with the hydro Quebec private placement in February 2020, and a decrease in interest payments related to the Alterra loan reimbursement in full in January 2021. Also an increase in revenue from the facilities affected by the BC Hydro and post curtailment, which mainly impacted the second quarter of last year. And an increase in distribution from joint ventures and associates, primarily due to a distribution received from Energy Llaima in the second quarter of 2021 ahead of the closing of the transaction.

These items were partly offset by an increase in debt principal payments coming from the Phoebe and Foard City facilities commission in late 2019. And from the Mountain Air acquisition in July 2020, an increase in free cash flow attributable to non controlling interest stemming mainly from the Mountain Air acquisition and a decrease in cash flow from operating activities before change in non cash operating working cap from the Phoebe facility commission in late 2019 due mostly to an unfavorable difference between sales at the Phoebe node and purchase at the air cut sub up compare with a favorable difference in the comparative period. For the trailing 12 months ended June 30, 2021, the normalized payout ratio amounted to 136% of free cash flow compared with 150% for the corresponding period last year. On that note, I would give the floor to Michel Letellier for the operational review of the past quarter. Thank you.

Michel Letellier: Good morning, everybody. Busy subsequent event, we have been quite active lately, you have seen that we have completed the acquisition of Llaima in Chile. So, we now own 100% of the activities in Chile. We did that in a sense that we like what we were seeing in Chile; we have now been there for almost three years, got to know the management and got to know also the lay of the land. And I must say that we have now a good team in order to continue the development and also some M&A activity.

As you seen also we we've made this little acquisition, Lican, not a big acquisition and for some of you that have questioned perhaps the price or the multiple of EV over EBITDA, we have been quite conservative in the next few years in terms of merchant pricing, these forecasts are using something around $35 per megawatt hour as we speak the spot market in Chile is in the range of $100 to $115 per megawatt hour. So there is some volatility in that market. I think that on a long range price will go forward in perhaps stabilizing around $60 to $60 per megawatt hour. The reason behind this and the reason why we are bullish on Chile, as I mentioned in the past is the fact that Chile doesn't have any fossil fuel in its territory, rely on import especially natural gas, and also coal. Now coal has been targeted by government agencies to be shut down.

Initially they were talking to shut it down by 2035. Now there are a lot of rumors in the Congress to pass a law to speed up this to 2025, which is big because in Chile, almost 30% of their production comes with coal. So that's why we're bullish in the sense that we think that having coal being removed will actually bring the merchant pricing or even the PPA opportunity to a higher level and we want be there, we want to increase our presence in Chile in the sense that we want to have more diversified portfolio with solar, hydro, and potentially some wind as well. If we go also, we -- quite a great news. Great team effort for the full commissioning of Griffin Trail on time and on budget, so very happy to report that now we will be producing and potentially taking advantage of the good pricing in Texas in summer time, this facility is merchant for the time being, we would love to have a structure like Foard City where we would have a as-produced PPA for the majority of the output, and then stay exposed on some of the volume into the spot market to take advantage of the volatility in Texas.

It's also showing our strategy to go away from these financial instruments the power hedge, which if you remember creates such a liability for us in last winter. So I think that Griffin Trail will give us some natural hedge against potential problems with Phoebe with the ongoing power hedge. We will try to get out of that arrangement as we said earlier on. But right now Texas is a little bit busy. There are a lot of activities regarding these power hedges.

So we will be patient and now that we have Griffin Trail fully merchant, I think we are well protected for future event. Also, unfortunately, you have all seen the fire in BC; you've seen also the sad story about the little town Lytton. Lytton is a small town close to Kwoiek, our facility. Now unfortunately that fire has grown and is now affecting some portion of our transmission line. We expect most of the cost be covered by insurance.

And but it's a little bit too early to quantify the amount of work that we'll have to do. But the teams are getting busy to have all the spare part being delivered on site. And we will assess the damage as the fire recedes eventually. Construction activities, we've been quite active as well. We have advanced almost finished Hillcrest.

As you've seen we have achieved the COD. And we're trying now to report that we can talk about our offtaker in so pretty happy to have reached through the last quarter. And we only meeting the substantial completion for the construction will be met in the next few weeks. It's just a matter of finalizing all the tests on site. But the production is at full capacity.

We are just finalizing all the remaining small tasks and the punch list with the contractor. The construction has started again we have received the first delivery by boat for the supplies for the summer. So things are going well. We're still forecasting the COD for the late Q4 of next year. Also, Tonnerre, the 9 megawatt storage in France.

Our first, I would say our first commercial activities with EVLO, the subsidiary of Hydro-Quebec is advancing very well. We have received the first container in France and we're forecasting on service date, late Q4, and potentially the first week of January. So things are going well on that aspect as well. Development activities, we've been very busy. We have advanced Hawaii project, construction should start fairly soon in high Hale Kuawehi.

Paeahu also later on this year, we should start construction. And the two other, Kahana, Barbers Point are advancing pretty well, people even if we had some restriction with COVID the activities around our permitting has been going pretty well. Development activities, we're glad to report that actually, we've been talking about it for a long time, we just received our first construction permit for Bois Régnier, and it's our first fully developed project from our team. So pretty happy to see this. That's the first; we've been talking about this for quite a bit.

Remember that France Greenfield project are a long process, it can take roughly five to six years to develop. So this is the first of hopefully, regular flow of projects that will be coming out from our perspective and development activities in France. Also, we have Lazenay, it's a nine megawatt that has signed a PPA, but we only own 25%. Nonetheless, it's great to see France advancing and delivering these types of projects. So the idea there is to get one or two of these projects per year.

And also activities around solar development have picked up and we have made some good advancement also on that front. So pretty happy with what's going on in France, not the big market in a sense the project are fairly small in France, but they will be steadily now coming from this pipeline, as we were expecting. Frontera in Chile has been fairly slow activities in a sense that we have all the permits, if you remember, for Frontera, we are now concentrating in our development in which is another hydro facility, just up stream from Frontera on the same river. San Carlos as we mentioned a little bit in the past has this great advantage of potentially having a five hours storage capacity, which is great if you remember Chile is a market where we will see a lot of solar. And when you're talking about solar, obviously the evening and night hours of the day are interesting in the sense that usually you see some more pricing in these five books of the day.

So we think that having a capacity just like Lican has a 3.5 and 4 hours capacity is a great tool to play in that market. Also very interesting to see that the price as I mentioned is coming up, especially for off taker and the spot market is also quite active. And we're seeing more and more interest in these two projects. So we're confident that we will be able to reach an agreement eventually to sign PPA that would be supporting the decision to start the construction on Frontera and eventually San Carlos. On prospective project, also, as you know, we have been busy in the US quite a bit.

We have now been selected for our project Boswell; it's a 330 megawatt wind project. I think that we were perhaps not so clear at when we issued the press release. We've been selected, final selection to sign a PPA so there's no more selection on the price. We've been selected for 30 years PPA is just that we have to sit down with them negotiate the terms in the PPA usually it takes a bit of time. We don't expect any big issue there.

And then PacifiCorp has to go through their regular PUC approval. That should go through by the middle of the year next year. And so we could be building Boswell sometime in Q, we could start construction in Q4 2022 or in 2023 so pretty happy on that aspect. Also Palomino, we have been advancing. We have had a lot of public meetings on Palomino things are going pretty good.

We have also advanced our term sheet with two off taker for that project as well. So on the sides of the US things are advancing very well. We also have been advancing other projects earlier stage project for solar and wind in the US in as well. And, of course, getting ready for the future RFP in Quebec, the announcement was made and we're getting ready to be in a position to submit some project in that RFP. On a general more common, I would say that we've been seeing some extreme event lately from the west, the forest fire in the West, and you've seen also the big freezing Texas, more flooding in the north part of Europe and Asia.

I think that all these events are showing that we are definitely seeing some global warming effect. And I would say that the Innergex is never been focused more into trying to participate to solve this problem or to reduce fossil fuel use in producing electricity. It's sad to see these things. And obviously, we have a human part of these events that we're seeing all in the use. But we're definitely seeing a great potential for us to take advantage of the new government incentive in order to have the fossil fuel being reduced to produce electricity and Innergex will be there to meet these challenges.

So on this I would open up the question floor.

Operator: The first question comes from Sean Steuart with TD Securities. SeanSteuart: Thank you. Good morning. Michel, you touched on the RFPs coming in Quebec.

And I'm hoping you can give us some more contexts on the scale of projects you might anticipate submitting to that process as it evolves in the coming months. MichelLetellier: Well, the RFP is not that big. So obviously, project in Quebec, we have project starting from just an addition to our existing one. So those can be 25 to 50 megawatts. And we have project up to 300 - 400 megawatts that we can work and submit to these.

So as you know, we don't like to talk too much about our strategy when we are getting prepared for RFPs. But I think that the real positive aspect is that Hydro-Quebec and the government is saying that this is the first of hopefully many more RFP in the future. So we're very positive that at the end of the day, some of our project will be able to win in these future RFPs. SeanSteuart: Thanks for that. And you also address Griffin Trail, and you touched on opportunities to augment the revenue stream and supplement the merchant exposure and we're just wondering how comfortable are you going ahead with merchant exposure short term? How can we think about potentially changing the revenue stream for that project? What timeframe might that evolve? How hard are you working on supplementing that merchant exposure?
MichelLetellier: Well, as you know, Sean, we now have a team that can market and be more proactive looking for PPA.

So we're seeing definitely more and more corporate America desire to do sign long term PPA. We, Texas is a little bit of a particular market as we all know, but we are more confident that price for long-term PPA are getting more, I would say attractive for us. Remember that one of the reason why we went merchant in this case is that getting the PTC and the volume of new project that were developed in that area, long term PPA will offer around $13 per megawatt hour. So I mean it's a little bit hard to commit on that type of PPA knowing that on an average the merchant is giving you a lot more than that. So as long as we could find some good pricing and that we can make sense of other PPA, we would definitely be looking and again we will be looking for as produce PPA, we don't want to get into a situation where we have to deliver and not being producing and hence being forced to cover or sell on the market.

So that's why we are more comfortable right now to home Griffin Trail on a merchant basis but definitely if we can find an attractive level of PPA we would be of course happy to do to engage in such a PPA. SeanSteuart: Thanks and one last quick one for me and I don't like to focus on quarterly hydrology but it seems it's an extreme summer in BC and beyond the transmission issues that should be covered by insurance. Can you speak to how hydrology is trending in the third quarter relative to LTA?
MichelLetellier: Yes, well in July was fairly good. But August is the driest month in BC. And we've seen the super hit that we have experienced in end of June and beginning of July have melted a lot of low altitude snow.

So I guess that August is looking a little bit dry in BC for the next few weeks. The forecast for rain is not that great either. So I would think that probably August will be lowered in our long term forecast for BC.

Operator: Your next question comes from Nelson Ng with RBC Capital Markets. NelsonNg: Great.

Thanks. I just want to follow up on Sean's question in terms of merchant exposure. So the last acquisition, the 18-megawatt hydro facility in Chile, is like that's fully merchant, right? And then Energia Llaima, those assets are now merchant as well, is that right?
MichelLetellier: No, Duqueco, we still have some contract until 2022. Lican is fully merchant but what we want to do in Chile is to build up a portfolio where we can rely on a few assets in order to sign long term PPA, there's always possibility in Chile to sign off taker in a range of 4, 6, 7, 8 years, there's always on a weekly basis, some small RFPs that are happening, price right now are around $40, $42, $43 per megawatt hour for these two, three, four or five years PPA. We think that it's a little bit weak and we think that the market will improve and we're waiting for the good opportunity to sign some long term PPA long term five to 10 years PPA.

I'm not that concerned about this possibility. If we really want to sign PPA, there is PPA available in Chile, it's just, and I think that we want to be patient. The coal facility will be taken out and we have seen this summer the effect of one decommissioning of coal and the difficulties also to receive LNG has created a really hot market this summer, well, their winter in Chile. And we've seen pricing over -- price over $100 per megawatt hour. So we think that eventually, Chile will see their PPA pricing to come up.

And like I said, we will be willing to sign PPA when we think there are attractive, and I think that $45 to $55 per megawatt hour is probably a good level for Chile. NelsonNg: Okay. So you're going to put like several merchant facilities together, and then market it together as a, I guess, a more stable energy source to. Okay. Got it.

And then just a quick question on the last acquisition, the 18-megawatt Lican hydro facility. Can you give a bit of background on that sales process? Like was it a distressed asset? Or was it a like competitive process? The reason I ask is, I know you assumed a very conservative power price, but using the $35 power price, I think the debt -- the implied debt is about like 11x EBITDA. And I think the press release indicated that some of the purchase price went to pay down debt. So I just want to try to understand some background on the sales process?
MichelLetellier: Well, the sell was -- it was some I would say friend from Energia Llaima management, so we were able to have a direct negotiation with them. It seems to work when you look at the next couple of years, it seems to be expensive, although we could have chosen to show you numbers with $55 or $60 per megawatt hour, and you would have seen a more regular and reasonable multiple is that when we made this acquisition, we were very conservative in the next few years, if you look at the curve in Chile, the power curve, the power pricing, are showing the next four years to be weak, because some of the old, not all but prior RFPs have or are going to be putting in COD.

But I think some of those projects won't be built. And I don't think these pricing will be reflecting the actual market. We like I said we rather are conservative in the numbers we're giving you and it's not a big acquisition, of course. But it's a great small, almost brand new asset, very well built in the region little bit south third than our existing facility. So I think when we have the ability to acquire hydro at a reasonable pricing, with a good design and well built, I think that we were going to act on it.

In Chile also, which is great. You own the facility, meaning that you own the land. So these facilities are perpetual in the sense that as long as you are maintaining this hydro, there'll be lasting forever. NelsonNg: Okay. That's great color.

And then just one last question before I get back in the queue. Your Investor Day on September 15, I don't remember the last time you had an Investor Day. This might be the first, or --
MichelLetellier: That would be first. Your memory is good. NelsonNg: Yes, I was trying to think back to see if you had one previously.

But yes. So that's your first Investor Day. So should we be expecting any kind of new announcements? Or is this more of an update on strategy? Could you just give some color on what we should expect on the Investor Day?
MichelLetellier: I think that we are going to dig down a little bit more on our development activities, the market we're working on, there's not going to be a big announcement or a change of strategy. It's just that we want to explain you what we're doing. And I think that we have been investing a lot in our team to build up our capacity to develop project and grow our portfolio of development activities.

And I personally, I'm very, very unenthusiastic about the latest development that we have reached at Boswell and then Palomino are two good example. Those are a fairly big project; we're also advancing quite well in France. So I think that the message there is to show you our strategy on and the amount of effort we're doing in the development so that you could understand a little bit more our growth and reaffirming how 2025 financial guidance will be met.
JeanNeault: Yes. And also give additional colors on our ability to go even beyond the 2025 guidance we provide due to the fact that we have Hydro-Quebec here with us working as a partner for the JV we have announced last year, so we'll give more color on to that.

So that would be around the 2025 start plan, deeper dive on how we will accomplish the plan, finance and everything that should be around that and give a bit of a color on the potential upside with Hydro-Quebec.

Operator: Your next question comes from Mark Jarvi with CIBC. MarkJarvi: Thanks. Good morning, everyone. I want to go back to Chile and question around the debt side, some of it around Lican but now that you own 100% of energy in this asset, is there a plan to re optimize the debt.

And if you do, and you stay merchant for a while, like what's the appropriate leverage going forwards maybe a bit of color in terms of the debt financing plans in Chile for time being. MichelLetellier: For the time being those two project Duqueco, and while the three project at hydro facility have existing non recourse, that are not necessarily optimal. So I think that also in the Investor Day, I think we will, review a little bit of our views on our ability to create a little bit more synergy out of these existing debts and some other debt that we have in our portfolio, I think that it will be interesting to see a little bit of our strategy towards some of our mix of project finance, corporate level. So I think that owning 100% of these will give us a little bit more flexibility also in that aspect and create little bit more cash on cash distribution out of these existing facility.
JeanNeault: We're early innings into reorganizing Chile to make all that possible.

And we'll give more color in mid September. And we should start to see some synergies on our corporate structure, maybe 2022 and forward so we'll provide more color in September. MarkJarvi: And until you re optimize the debt is Lican is that actually add positive free cash flow because they seem to have projections. I know you're using conservative pricing. But if you took your pricing and the debt service, are you cash flow positive right now?
JeanNeault: Yes, we cover, yes, we're slightly positive for the first five years we provide.

But again, we're very conservative on the EBITDA for the first five years, we see on an average 10 year is much better. And but yes, with the current debt structure and amortization schedule, we're free cash flow accretive, did not big but --
MichelLetellier: There's also something also in Chile that you guys have to remember, there is a good system where the reward capacity. And in the case of Lican, we're receiving roughly 25% of the total revenue are coming from capacity payments. And I'm saying that also because it's creating also some opportunity for potential investment in batteries in Chile, recently the rules that have been updated to include battery for full recognition of capacity contribution to the system. There will be -- the recognition will be subject to five hours capacity batteries in Chile for receiving 100% of the capacity payment.

So that's going to create potentially some opportunity for us to make solar and battery in Chile in order to have, I would say in access to this capacity payment. And of course trying to take advantage of the arbitrage between solar hours and evening and night pricing. MarkJarvi: And I know you probably don't want to say a question on Texas, Michel, but I'm going to come back to it quickly at some point Flat Top and Shannon. I know that one option is a foreclosure. The other one is maybe the tactic we read other partners buy you out.

Is there a different scenario as one of them, I mean now you take impairment? I mean, the hedge losses are pretty substantial is, just to try to help us understand if it goes either the foreclosure road or the like an asset sale or you shared your equity. Is there any change in terms of our view of what the impact is?
JeanNeault: So Mark, I mean, I doubt that foreclosure is an option for the tax equity and city. So this, I doubt that this is an option for now. So those assets are held for sale. So guys only see what could happen from Shannon and Flat Top as a bonus for us.

Okay, so either foreclose or sale will not bring any more write offs or impairments or anything. So this is all done. So anything that can happen from the sales process is going to be a bonus for us. So we don't want to provide more on this. Michel, you want to get into it, that we don't want to provide more color on the outcome of the sales process.

But I would say my view is more likely to be a sale or consensual hand over if you will verse forecloses, but that's our view, no change. MarkJarvi: Okay. And then a lot of questions around inflation and solar panel cost increases. You didn't mention Hillcrest CapEx up a little bit. Is that from a cost increase on the supply chain? Or is that just something to think about Palomino and the projects in Hawaii? Where are you guys in terms of procuring things and trying to lock in prices at this point?
MichelLetellier: That's a very good point.

Hillcrest not necessarily some costs were related to accelerated means to deliver some component but not that much, I think it was a little unfortunate, because it's PCL, a Canadian contractor, a big Canadian contractor was using also a Canadian subcontractor for electrical component. And then I would say that they had some difficulties in managing the site from their perspective of using Canadian going into the US while we have those restrictions. And it created a lot of inefficiency throughout the construction periods. And just I guess, very unfortunate to have seen that, but they had to have also a lot of people, not necessarily skilled people. And that might not have been the greatest strategy neither to complete this facility, because at one point, they had more than 900 people on site.

So all-in-all, I would say that we were finalizing these negotiation with PCL, but a lot of inefficiency is at the bottom of this increase, I would say. MarkJarvi: And then in terms of paid pressure on cost increases for projects you're working in terms of your ability, pass that on to the PPA, or just where you guys are in terms of locking in prices on some of the projects you want to complete in the next couple of years. MichelLetellier: We were quite advance in NOI and we have updated our construction costs for NOI. We're okay I guess the worst there is the transportation costs. We're hoping that we have an agreement with the supplier to share some of the risk on the transportation; we're seeing some real relief on that aspect.

And most of the component will have to be delivered in the first quarter next year. So we're hoping that by that time, the pressure on transportation would have ease a little bit. Other than not it's not huge. I think that we're still in line with our initial budget with some small increase. And for Boswell as an example or Palomino and all that stuff, we have had some update before agreeing with the PPA pricing.

So I think we're in a good spot on that aspect. We're not too exposed on these. I would say increasing in pricing and for future RFP price of equipment are more expensive, we'll definitely adjust them in the PPA pricing that we will be submitting.

Operator: Your next question comes from Rupert Merer with National Bank. RupertMerer: Good morning, everyone.

In your disclosures, there's some discussion about curtailments on Foard City, wondering if you can give us an update on what you're seeing in Texas on curtailments? What's the outlook for future curtailments not just on Foard but on the other projects Griffin Trail and Phoebe?
MichelLetellier: Well, it's a tough question, some curtailments are economic or sometimes they can be related to some upgrades on lines. I summer time, usually they don't work on the transmission unless it's an urgent repair. I would say that we were seeing some curtailment, economic curtailment in Phoebe, but remember that Phoebe, we can -- when does that -- when this happened we can buy on the market and then deliver on our obligation on the power hedge. Usually when we have economic curtailment in Phoebe is because prices are below zero. And hence we can take advantage of buying at zero and selling at our agreed price under the power hedge.

For Griffin Trail and Foard, we're not expecting too many curtailments we're actually we're seeing a little bit of improvement on the long term basis in terms of Griffin Trail. I think that also the last crises in Texas are putting a lot more focus on the reliability of the system of ERCOT. I think our planning to upgrade their distribution system to take into consideration the new built that is going on in Texas. But, Rupert, it's difficult to answer that question. We, of course we are asking some expert to give us some guidance on those.

We're using also our new team that specializes in trading to try to understand more what's going on in the grid in Texas. But we're hopeful that over time the grid will get upgraded in order to take advantage of their great natural resources. And, no, we're still positive about these I would say basis story in Texas, but it is volatile. It's a market that pretty volatile. RupertMerer: Okay, great.

Thanks. And then getting back to the Phoebe, you settled the contracts following the storms earlier this year, how do you view the contracts that you have on Phoebe now and the risk to that project going forward?
MichelLetellier: Well, it's -- we've said it, we didn't change our view. We don't like these power hedges. They're not that easy to get rid of. We're working on it.

We have to have also the blessing of the tax equity, which is sometimes a little bit of a challenge. If we can switch that at a reasonable price we will. We're a little bit more comfortable knowing that we now have Griffin Trail on the spot market. So we think it's a little bit of a natural hedge for us, not a perfect hedge because sometimes wind and solar are not match in terms of natural resources. But we think we were better protected this way than before.

And we settled with the hedge provider for Phoebe because we think there's still some value economic value in the Phoebe. So it made sense. We have more difficulty to find some economical value in Shannon and Flat Top.
RupertMerer: Great, thanks and can you remind me how long are the hedge contracts they have in Phoebe, how much longer will they go on?
JeanNeault: The business hedge contract is ending this December. But the power hedges lasting few more years.

MichelLetellier: I think 9.5 years left or --
JeanNeault: So we'll get, I'll get back to you precisely on that, Rupert. Or if we find the answer during the meeting, we'll let you know.

Operator: The next question comes from Ben Pham with BMO. BenjaminPham: Hi, thanks, Mark. Just a couple of questions.

BC wildfires, is that impacting any of your other assets?
MichelLetellier: No, not for the time being. We're early in the season, of course. But our crews are working also to get prepared tried to clean up as much as possible the right away to have the minimal fuel around our transmission line. But no, the fires are more present in the interior. And most of our facilities are more on the coast, where it's a little bit more, it's less of an issue these days, but for -- we're early in the season.

So I can't say that we wouldn't be affected anywhere else. But for the time being there's no other threat. BenjaminPham: Okay. And then going back to Texas Shannon, Flat Top, if you end up looking to sell these assets. Let's say that's the relative -- would you consider adding any other Texas assets in the mix maybe to improve the sale price?
MichelLetellier: I think it would be difficult to do this, in order to have I would say to manage the timing and the process.

It would be difficult because in the case of Flat Top and Shannon, we have to go with the timeline of city. And we don't want to get caught into being forced to a certain timeline that we would not control for another sale process. So but I wouldn't -- I would say how do we say that. I will not say that we are not looking into or be willing to sell some more assets in Texas in the near future. But it would be very difficult to have those while we're talking about Shannon and Flat Top.

JeanNeault: Yes. And we do have partners. Also, we are partners in Shannon and Flat Top. So if anything's happened, it's not going to be bundled. I don't foresee that as a possibility.

BenjaminPham: Okay. Makes sense. You mentioned Hydro-Quebec in some of your commentary. Could you maybe share any sort of progress year-to-date on projects that you're looking at? Will the HQ anything you've agreed on a lot, did not agree on? Did you pass on some projects? Any additional color would be helpful. MichelLetellier: Well, I guess it as we said we, the teams are starting to work very well together and starting, it's not a good word, because we didn't add it for a year and a half.

But it takes; of course it takes a little bit of time right to develop a good chemistry between two companies that are very different. I'm very, very happy to see how the evolutions of the strategy, the way we have been working in some due diligence together are very positive. I think that the confidences between the team are getting stronger and stronger. So we can rely on each other instead of sometime doing twice the same due diligence and things that can happen when you have a partner. In this case, we are working very well in and then sharing some responsibility on due diligence.

So it's just a matter of time. I think that we'll see some success out of these efforts. And again, very, very positive relationship with Hydro-Quebec in these processes. And also looking into deploying more battery with them, is -- there some effort also on that on that ground. It just, sometimes it takes a little bit of time before we can announce some success, but I have no doubt that seeing the team working so hard together, we'll be successful in the near term.

JeanNeault: Yes, if I can add, Ben, the process is well tuned right now; with bid together three to four processes. We're like in interest and everything. So I agree with you, Michel. I mean, it's just a matter of time, and we still are both of us discipline looking into this. So you have to be, but I'm confident.

Operator: Your next question comes from Andrew Kuske with Credit Suisse. AndrewKuske: Thank you. Good morning. I think it's on page 20 of your presentation where you've got perspective projects by region. And those projects are really skewed to Canada at this point in time.

And is that really a function of just legacy competitive positioning and comfort with the market? And then I guess the follow up question really is when do we see the larger markets like the US and just certain degree Chile, where you've started to build quite a platform become bigger elements of prospective projects. MichelLetellier: Andrew, that's a very good point and you are right on, it's a little bit of a legacy work that we have done in Canada. Just in Quebec, we have I guess, 1000s of megawatts in wind resources that we have measured. We still have some wind also in BC and some hydro in BC. So you're right.

It's a little bit of a legacy effort from the past. And sometimes these project doesn't cost that much to keep them on our portfolio. And we're happy to have kept some active or semi active project in Quebec now that the RFP are coming back. But you will see a lot more project being developed in the United States, we're not -- we have started the United States in the last two or three years to be more and more active. So yes, you will see US being a big driver for future prospective project.

Good example is Boswell and Palomino. But we're still developing, we have this strategy to grow in solar in the states and also some wind, you'll see numbers coming up soon, Andrew, and in Chile, prospective project, we have some, like I said, we have Frontera. And we have San Carlos working also on the possibility of the developing our own pipeline of new projects order and win. But lately, it has been I would say in Chile, a market where we could have acquired existing facility at the discount. Remember Salvador, I won't say that Lican is a discount.

But building brand new hydro facility, these days are costing anywhere between $2.5 million to $3.5 million per megawatt. So when you can act quarter one fully permitted and very good design at the lower price than building a brand new one, we were taking advantage of these markets right now in Chile. But that doesn't mean that we wouldn't be able to eventually develop our own pipeline of solar and wind and batteries, I would say. AndrewKuske: Okay, that's helpful color and context. And then maybe just a follow up do see yourself having a higher win rate, if we're going to call it that processes in Canada versus that's in the US at this stage in time.

And then when does that start to equalize?
MichelLetellier: Well, wind definitely in Quebec, right, solar in Quebec is, well, I wouldn't say that we will not develop solar in Quebec in the near future, but definitely wind is less expensive to develop in Quebec, so definitely more wind in Quebec, the stake would be probably half enough. It depends on some of the opportunity, but we're working hard on trying to develop solar. In France, it will be wind, more wind but actually we were making good progress on solar in France as well. So you will see some solar project being developed in France. And in Chile, it'll be a mix.

I would say solar will be fairly easy to build in Chile, but solar without battery or without a different portfolio i.e. wind and hydro, just solar building solar by itself in Chile will be quite challenging economically. So solar will have to be embedded in a portfolio or match with some batteries. And Chile has still some opportunity for developing some hydro as we are mentioning, and we're always on the lookout to our prior existing hydro if it makes sense in terms of the economic.

Operator: Your next question comes from Naji Baydoun with iA Capital Markets.

NajiBaydoun: Hi, good morning. I just had a couple of questions on the M&A front to start off. I know you touched on this earlier, Michel, but maybe you can provide us more details on really the thesis behind the recent acquisitions in Chile, I mean since you originally acquired the stake in Energia Llaima, it's been really difficult getting some new projects off the ground. So in your view of what's really changed since 2018 that gives you a lot more confidence on the outlook in Chile today.
MichelLetellier: Yes, price.

Price, price, price. I think the driver for better pricing in Chile is that the commissioning of coal, Chile is working with marginal cost and the operator of the system is managing first the big hydro available. And then it was coal and thereafter it was natural gas and eventually diesel. So these were stacking in terms of marginal cost. And coal was very lowest.

I think Coal was in the range of $20- $25 per megawatt hour, mind you that they were able to be profitable, because they were receiving also the capacity payment as recognition for their contribution to the system. So that's why it was, I guess, really low. One has to understand that Chile went from energy crisis following the natural gas crisis with Argentina where Argentina stopped delivering natural gas to Chile. Then price went up to the roof in the 150 to 200 megawatt, subcontract were signed at north of $100 per megawatt hour. So a lot of project work allotted at that time given this market scenario, and it took a bit of time for the market to digest all these overbuilt, I would say following that crisis.

Remember that Salvador, we bought Salvador on that basis. Salvador was in foreclosure process with their bank. So it was a little bit about legacy of that earlier crisis where the markets and will give a lot of opportunity to renewable energy. They've offered to build the facility. But things have evolved and some LNG was ill build in and coal continues to be on the market.

So the price from, I would say five years ago, went very high to low, low, low. And I think we have hit the ground and price is now improving. So we have not developed Canelo, Canelo was just a 12 megawatt. It could have been okay, but we decided not to focus on Canelo and go for existing acquisition and having more significant investment in Chile. So I wouldn't say that the management there was not good.

They were great in developing hydro facility. Frontera is fully permitted in San Carlos is advancing very well. So I think that their ability to actually bring project to final permitting and being available for construction is great. They were not focusing on wind or solar. That was the decision of the prior owner.

And why have they decided to sell, is it, well, it was not there I would say their core business; they have a lot of other investments. Some of our past partner had a lot of real estate exposure in Peru and Chile and in other places in South America. And you understand that with the COVID, these investments suffered quite a bit. So I think that they had other opportunity to deploy their capital, and that's why we decided to acquire them in a sense that we want to continue developing. And it was becoming a little bit more difficult to have the common view and common strategy on growth for Chile.

So and the guys in Chile, the management in Chile have had some, I would say some limitation in their ability to grow. With us, I think that we will unlock their full potential and you will see some more activities in Chile that will show that they have a great ability and supported with our own team here in Montreal, I think we can do great things. NajiBaydoun: Okay, that's fantastic color, thank you for that. Then you mentioned South America, it's good segue to my other question on M&A. I think in the press release, for the Energia Llaima acquisition, you talked about having ambitions I guess, to expand further until on America, is that's something you're looking at closely today and what will be kind of the approach to entering a new market.

MichelLetellier: Well, we like to leave -- London, America is complicated. The Peru, we've seen what's happening in Peru. So it was always a country where we wanted to deploy some capital, I think we can take a little bit of a pause and look, maybe in a few months with what will be the outcome of the existing political, I wouldn't say crisis but the event. Chile, the other end, I think will come out from the renegotiation of the Constitution in a good shape, we'll see some the present -- the election for the new President in the fall, I think that it will be something centered less probably, we will win, which is a good thing. We've seen some government in the past center, center left that has done great for the economy, and I think that it would be even better to have a center to central left government to oversee the new discussion around the Constitution.

So we feel very comfortable with the political aspect in Chile. And the economy of Chile is looking great. And I mean you've seen the price of copper these days, we understand that the economy of Chile rely a lot on the copper and the future for the use of copper seems to be very bright, given the fact that electrification of transportation will consume a lot of copper for the future. So I think that Chile is a great place. It's not a big market.

We're going to have this team on the ground, so it doesn't take that much effort or time from Montreal to follow up smaller acquisition and then to continue to develop on the Chile. It's just giving us another platform to develop in another market to grow.

Operator: Miss Vachon, there are no further questions at this time.

Karine Vachon: Thank you very much, and we look forward to seeing you on first IR Day in September.

Michel Letellier: Thank you, everybody.

Jean Neault: Thank you.

Operator: Ladies and gentlemen, you may now disconnect your line.