Powering the Future – Northland Power's Diverse Asset Portfolio

Speaker 1:
Welcome to TD Cowen Insights, a space that brings leading thinkers together to share insights and ideas shaping the world around us. Join us as we converse with the top minds who are influencing our global sectors.
Sean Steuart:
Welcome to TD Cowen Insights podcast series. I'm Sean Steuart, I'm responsible for equity research coverage of the renewable power developers and operators here at TD Cowen. We're very fortunate today to have Christine Healy, the president and CEO of Northland Power, in for a discussion around the company's growth path and broader power industry trends.
Northland is a successful and diverse developer and operator of power assets, spanning renewable, storage, and gas-fired thermal technologies across the Americas, Europe, and Asia. The company has three and a half gigawatts of capacity in operation and another 2.2 gigawatts under construction. When the current construction pipeline is complete, more than 60% of Northland's capacity will be offshore wind, but growth aspirations are spread across technologies going forward.
Christine took over as Northland's CEO in January. She has extensive experience with large-scale infrastructure project management, including time with Atkins Realis, and before that, TotalEnergies. Thank you, Christine, for joining us today. We appreciate your participation in the series.
Christine Healy:
Well, Sean, I'm happy to be here. So let's get talking about Northland Power.
Sean Steuart:
Let's go. Let's start with your background, how you and Northland found each other. What attributes attracted you to the opportunity? What sets Northland up for success going forward? And how does your prior experience inform the company's strategy?
Christine Healy:
This is going to be a long podcast because I'm going to start talking, who knows when we might stop. But I can give you a bit of context about how I came to be at Northland and fundamentally why I'm so excited about the opportunity here with us at Northland.
So I come from Newfoundland, I'm a proud Canadian. I was the beneficiary of oil and gas companies active in Newfoundland and Labrador. And they had to invest in local content, and I'm the product of some of that local content investment. So a lot of my career, I grew up in oil and gas and I was working internationally. I left Canada for what was supposed to be an 18-month assignment. It turned into more than a decade internationally, living in a bunch of different countries.
Through the jigs and the reels, as we say in Newfoundland, I wound up working with Total, which became TotalEnergies, and I was a senior executive with Total. We were really interested in energy transition and profitable energy transition and how you can move from being sort of oil and gas to multi-energy. Total is one of the largest electricity producers in Europe, and so I had the great opportunity. I came to Canada for a while and led Total in Canada. I was the CEO here. Then I went back to France and I had the great opportunity to be sort of at the front line of that. And I was the global head of carbon neutrality, where we were looking at all of these multi-energies and how this can all fit together. So it got me really interested in how you allocate capital amongst different types of projects and how you solve energy problems in different geographies, because the answers are different everywhere.
So through all of that, super fascinating, really fun, but I found myself getting more and more frustrated that I wasn't seeing as many Canadians in the international forum as I had before. And my husband challenged me and he said, "Instead of complaining about this all the time, maybe you should do something about it." So I started to look for some opportunities that would get me back here to Canada.
In fact, originally, Northland approached me and I had just accepted a role with Atkins Realis, so I had to say, "Sorry, bad timing. I wish you had called me a month ago." But then I loved being with Atkins Realis, but I realized very quickly I missed being the owner of the infrastructure. So being the advisor and the engineering services and all the phenomenal things that Atkins Realis does, I just really missed being right there, owning the infrastructure.
So I found out that Northland was still looking and I was really happy to take up that conversation, and so it's been, I think, a perfect match. For me, Northland, I feel like this company, I feel like it's just like a tiger by the tail. There's just so many opportunities in front of us. The company is really great at delivering on big projects. And we'll talk more about it I'm sure, but that is just so rare. And to be able to come into a company that has that capability, that has the international reach. We're active in Europe, we're active in Asia, we're active in Canada. We have that global reach and the capability to be able to do that, just gives us so many more growth opportunities than maybe other companies who have less experience in the international sphere.
So I'm super excited. I think Northland just has an unbelievable set of opportunities in front of it.
Sean Steuart:
Before we get to those opportunities, let's talk about the current construction pipeline. You have two major offshore wind projects, Hai Long in Taiwan and Baltic Power in Poland. These projects have been under development and under construction for some time. It's been arguably a bumpy road up until this point, but can you give us an update on where those projects are in the construction timeline? What are the major milestones yet to come? And your perspective on how de-risked those projects are at this point for the company going forward?
Christine Healy:
Love it, Sean. So I'm going to say before I get there, when I started in January, we actually had three major projects under construction at the same time. The third, which has now been delivered, is the Oneida battery storage facility here in Ontario, which is about two hours west of us, hour and a half west of us. And that project, Canada's largest battery energy storage facility and fourth largest in the world right now. But new battery facilities getting installed every day, so who knows how long we'll be able to say that. But very, very exciting project.
Here's a proof point for the Northland capabilities. This is a project that was delivered ahead of schedule, under budget. It is a big deal. I can tell you in my career, I can count on less than one hand the number of times I've experienced that. And this is just a team that really delivered. We have super Indigenous partners. The originator of that opportunity, NRStor, been a great partner. Aecon was a super partner, just really phenomenal teamwork.
And that project was online, that facility online this summer when we had such a huge heat wave here in Toronto, made a difference in the grid, made a difference in the available electricity for all of us who are living here in Toronto. So really proud of the work that's done. And while it gets less attention, I would say, than the offshore projects, but it was a big deal. And it's the first time we ever did a large-scale battery storage project. And the fact that we were able to deliver it so well, I'm really proud of.
If we were doing that project again tomorrow, we would do it even better because now we've learned from the first time round. So again, I just think it's a good example of Northland can deliver and we know how to do that, and I think we're very credible. It opens a lot of doors for us around the world because people see that track record.
So now, we do, we have two big offshore projects that are in construction right now, one, Hai Long, offshore Taiwan. The other one, Baltic Power, offshore Poland. Talk a bit about those because they're pretty exciting. We update all the time on our website and on our LinkedIn with pictures because it's just spectacular to see what's happening and the activity. And this is really just, this has been the summer of construction on these projects, which is how it was designed. So it's going exactly as it was supposed to.
So Hai Long is an offshore wind project in Taiwan. It's a gigawatt plus. We already have pre-completion revenues from that project, which is as it was intended to happen. So basically, it's in phases. We have a weather window we operate in in Taiwan, so the weather conditions, we install when the weather conditions are suitable. So that weather window will soon be closing now towards the end of October. That is exactly as planned. So now we have a set of activities we intended to get done in this construction season. We pick it up again in the spring and next construction season. So that's going along, we're on track with that. Really happy with that.
And you talked about de-risking. One of the things that was very important for me about de-risking this project was that we build these turbines. So for offshore wind, I don't know how familiar your listeners are with it, but there's a couple of different ways to build these offshore turbines. For this project, they're a little bit like Lego, if I'm oversimplifying it. They're a little bit like Lego. But these pin piles go deep into the ground. They go 40 meters below the seabed. Huge piece of steel, but this is sort of the foundation and we hammer that into the seabed.
That interface between us and the seafloor is a really important one. And we do a lot of survey work, we do a lot of good technical work to support that. But until those pin piles actually get installed, we don't know. There's always a certain amount of irreducible uncertainty, if I can call it that. So now all of the pin piles for Hai Long have been installed. So really important moment in the project to de-risk it. Little bit of a nerd out for me because it's just a really important thing.
But when you look internationally, this is something that projects sometimes run into trouble with. And you know what? Everybody's doing the best they can. Everybody is getting all of the available technical information. It's just it's not done until it's done. So that piece now, really important de-risking.
So the rest of it, not nothing, we continue to build up. So those pin piles, we put a foundation on top of that and then we build the turbine on top of that. So that's ongoing. And we've got 33 turbines installed, I think, ish out of 73. That's chugging along exactly the way that we intend, so very pleased with that and the project is on track.
So that's Hai Long. And we've got a supply and service community that we're working with there. We have very close connection with our supply and service community there and a great team on the ground, so shout out to any of the Hai Long team who might be listening because they're doing fantastic work. I get to visit them a number of times a year. And every time I'm there, I'm just blown away by the level of preparation and the planning, planning, planning that they have within that team, it's great.
So then Baltic Power in Poland. So I was just actually in Poland two weeks ago visiting that project team. It was supposed to be the second offshore wind project in Poland. We're going to be the first, which is a testament again that the teams are doing really, really good work. So they're delivering according to the plan.
We don't have a weather window for Poland, so we're able to do construction year round. So a bit of a different way of planning a project, different way of approaching a project. Might sound small, but it's actually a pretty big difference in terms of how you approach it and how you do your procuring, how you do your installing, how you do your planning.
But with Baltic, we're on track and we're aiming to have commercial operations by the end of 2026. That one's a bit different. Whereas in Taiwan, we had designed it that there would be sort of each turbine sequentially installed as providing energy into the grid, the project in Poland has an interconnection at shore. It's a bit more the typical profile I would say, that we'll complete the whole wind farm and then we'll connect it in.
So that's how we planned it, that's how it's going. That interconnection is being delivered by a Polish state company. They're doing a super job of that, we're really pleased.
So we're in the process of installing the foundations. They're a bit different than the ones that we use in Taiwan, different geography, different needs. So we've got about, I think we're at about 52 of those installed right now, but I might not be up to the minute on that. The turbines now are going to get installed sequentially. I think we've got five or six of them so far installed, and that's exactly, we're going along the way that we intend.
Lots and lots of construction ahead of us. Now that the first installation is over, now it's just the team's getting better and better at installing. And as they're working together more, you start to see the improvement in the times and the delivery, and the overall quality of the work just continues to improve as everybody learns. I'm very pleased with both projects. We're not done yet, but I think in a good place with them right now,
Sean Steuart:
That's a tremendous update. And I'd like to pivot to offshore wind as a growth focus going forward. The company has extensive expertise in building these projects, and not just Hai Long and Baltic, but your three previous projects in the North Sea in Europe. These are substantially more complex than onshore renewable or storage power projects.
On a case-by-case basis, there have been obstacles, and this is mostly in US with respect to policy reform, especially as Trump has pulled a lot of the policy support in the US for the technology. Can you give a broader perspective on offshore winds growth potential globally? How you expect that Northland will be able to participate in that growth going forward? And specifically, which regions might make the most sense for the company to continue to build these types of projects?
Christine Healy:
It's a super question. A lot of folks now are suddenly finding stories about offshore wind in their news feeds that maybe they didn't have before. So that raises everybody's interest level.
If I take three steps back, the global demand for electricity is growing. Over the last 40 years, I think we can pick out only two years that electricity demand didn't grow, and one of those was a pandemic year. So overall, the trajectory is very strong. And all the forecasts, at least in the markets that we're in, are that electricity demand is increasing.
So then it's a question of how are you going to meet that demand? We model that, right? We spend time looking at our target markets and saying, "Okay, where are the sources? Where's the demand? How do these match up? Where's the space for us in there?" And I've done this for a lot of my career, in my previous jobs as well, modeling the supply and demand and understanding where are things going in the future?
And every country is different. This is very important. So for all the Canadian listeners out there, I imagine there's going to be hopefully a good few. Canada's in a really different position because it has the fourth-greenest grid in the world and it has abundant subsurface resources. So it's just there's almost no other country similarly situated to Canada in that regard. So it's not actually the easiest test case when we're talking about energy systems in other parts of the world.
In many countries, when you look at how are they going to deliver their future energy, they want that energy to be clean, affordable, reliable, secure. And it's very tough to do all of those things at the one time. But renewables, onshore and offshore, is a key part of the solution almost everywhere. And for those countries that are lucky enough to have a strong offshore wind resource, it is a super solution because it stays away from people's day-to-day lives. And we get a bit of NIMBYism. People don't want to see any kind of development out their window. Totally get it. But at the same time, we need energy. So this, we can do large-scale developments offshore that are a bit out of people's day-to-day interactions, but that deliver much-needed energy. So it's a great solution for those countries that have the resource.
That in parallel though, we continue to do onshore wind, onshore solar, battery storage, gas-fired power, because the solution sets are different in different geographies. And I think it's a real competitive advantage for Northland that we're able to do and pivot amongst those different solutions depending on where we are.
So then it's a question of can we get the right rates of return? Well, that's all about choosing your geographies, choosing your projects, and being very, very selective about how you do that. So we start with kind of a wide-open funnel, a lens, what's this full set of opportunities in the world? And then we filter, filter, filter, filter, filter. And then we make sure that the projects that we invest in are the very best use of capital and that they're value-accretive for our investors, but they also deliver energy solutions in our host countries.
So for me, that's sort of the special sauce is to find those projects that fit that magic zone. And fortunately, we have a lot of opportunities like that in our portfolio. So then we have sort of an internal competition for capital to choose which of those projects are going to proceed.
Sean Steuart:
Let's drill into that a little bit then. With the last quarterly earnings release, the company's prospective development pipeline beyond the current construction pipeline, it was shrunk from 10 gigawatts to eight and a half gigawatts, arguably high-grading, I suppose, the portfolio of projects you might advance with. Can you give some perspective on what types of projects were dropped off that prospective development list?
Christine Healy:
Yeah, so totally normal, Sean, and I would say for anyone who's following Northland, and for all of our investors, thank you very much for your support and we hope it continues. But you're going to see more of that. That is what we're doing all the time. And frankly, that's my job as CEO. It is the job of all of the project managers in the company to bring forward their projects and to advocate for their projects. And it's my job, with my executive team, to choose which of the projects are going to move forward.
And we have to regularly sort of surface all of those. So we have a decision-gate process inside the company and we make sure that there's nothing kind of languishing. We're constantly looking at that. So at least every quarter, and for higher priority projects every month, we're looking very closely at what we're doing with them and what's the timeline.
So yes, in our most recent quarterly update, we announced that we had relinquished a couple of licenses and those were in South Korea. Now, the wind resource there is fantastic. So we were very pleased with that. From a technical perspective, it was a great opportunity. But then layered on top of that, is it the right commercial opportunity for us? And when we look at the set of opportunities, I think that South Korea may, in the future, be a very exciting place to be, but right now the conditions are not ones that would enable us to invest.
So then the question is with these licenses, if we have a low-cost way of retaining a license, then that's optionality for us for the future, and I'm interested in doing that. But as the costs of retaining that license start to go up or we have to start doing some work that doesn't make a lot of financial sense, then we have to make the difficult decision to say, "Okay, you know what? That's not for us."
So right now, for that license, we had a license that was requiring an investment in order to keep it. And when we had a hard look at it, we said, "Is this going to reach the top of the pile in terms of the things we can invest in in the company right now?" And the reality is we have other better things to invest in right now. So unfortunately, that means that we relinquish that license.
I think if you read sort of, okay, well, the pipeline has shrunk, no, the pipeline is high-graded and it's going to continue to high-grade. I would rather have a pipeline of excellent, clear, actionable projects rather than sort of an amorphous who knows what's going to happen.
Now, but there's a balance in that, right? Because some of the things in the pipeline, they're not mature yet. We're working on them. And we work with our host governments, we work with the conditions, we work with suppliers, technical. There's a lot of components that need to come together. So we have different levels of maturity in that pipeline. And then we just are regularly reviewing. And the hard question is what are the conditions we need to make this investment decision? And how likely are we to get the answers we need on that in the next X amount of months? And then if we can't find the right answer to that, then we should relinquish it and some other developer might be a better owner for that.
Sean Steuart:
That makes sense. I like the articulation that this is a high-grading of the opportunity set and keeping that competitive tension within that opportunity set makes a lot of sense.
I want to switch to Canada. Prime Minister Carney has obviously outlined ambitious plans for growth and diversification of the Canadian economy, including large infrastructure build-out and interprovincial project opportunities. How do you think this could translate into opportunities for Northland going forward, whether it's offshore wind or other onshore power opportunities?
Christine Healy:
Well, Sean, I'm a proud Canadian. Part of the reason I came back to Canada is because I really believe in what Canada can offer. But from an international perspective, Canada needs to understand that it is an international competition for capital. So for me as a developer, as an operator, Canada is a focus area for us, and I would like to grow more in Canada, but those projects have to compete against other international opportunities because my investors want to see a good rate of return on the money that they invest with us. And that's, I think, absolutely fair and right.
Overall, policies that are driving Canada towards more competitiveness, faster cycle times on permitting, building out more interconnection, breaking down the interprovincial trade barriers, nobody's going to argue with any of those things. I would say underlying economic growth in Canada is, I'll be polite, tepid at best, and we need to really have a step change in order to adjust that.
When you look at where we are as a country, we have so much potential, we just need to really get going on it. And the world needs what we do. The world needs a lot of Canadian expertise and Canadian resources. So I think any policies that start driving Canada towards higher growth, more economic activity is helpful.
Key part of that for me, I would say, I've done a bunch of work recently because we're getting ready for our investor day and we're working on our strategy, we look at things like development cost per megawatt hour, or per megawatt I'll say. We had some benchmarking work done to compare Canada versus some of the jurisdictions we're active in, in Europe for instance, and different provinces in Canada against that. And the cost that we have to incur in Canada prior to knowing if we have an investable project or not are many times higher than what we have to incur in almost all of our jurisdictions in Europe.
So then that's money at risk. That's my investor's money at risk. So I'm engaged with the government, both in different provincial governments and the federal government, talking to them about that to say, "From an investor perspective, from a developer perspective, we move forward with good projects. Help me have the right conditions for investment in Canada."
So I'm hoping that there's sort of a big push on that now because the opportunities in Canada are tremendous, but the obstacles in Canada are pretty significant too. So if you hear me a bit muted on that, it's a bit of a [inaudible 00:22:47], if I can say that. I just really, I want to spend investment dollars in Canada, but those projects, they need to be more competitive.
Sean Steuart:
Understood. I won't go down the rabbit hole of offshore wind in the Atlantic then and potential interests in that opportunity. The US, it's an interesting market right now, arguably a large and growing disconnect between accelerating power demand and constrained supply. But we have an administration in the US which has taken a hostile approach on renewable power specifically.
Northland, to this point, has done well to avoid the US as a major focus. Can you give perspective on interest in that market over the long term? The current rhetoric and noise aside, how interesting a market is the US for Northland over the long run?
Christine Healy:
So the US is a great place to make money. It's a very business-friendly environment. And I lived and worked in the US for five years. I have great love for the United States, and I know that's an odd thing to say in Canada these days, but you know what? We've been friends for a very long time, Canada and the United States. And in fact, our economies are very closely linked. But the reality is that Canada's economy is much more closely linked to the United States than vice versa. That's just life. But it's a great place to do business overall.
So you mentioned policies related to renewables. So yes, right now there's not a clear path on some policies in the United States, and we've seen some participants in the industry get really burned by that. And frankly, that's not great for anybody. So anytime I'm engaged with any of the policymakers in the US, I would say the same thing as I say when I'm talking to policymakers in Canada or in Europe, business needs stability. Investors need stability, we need to understand that and know. So when permits on projects get yanked very late in the process, that doesn't aid in stability and help us make investment decisions for the future.
So yes, we don't have a big exposure to the US in Northland, and it was something that when I came in the door, I had some views about, and I've been investigating since I got here. I spent some time visiting all of our assets, talking with all of our people. I think if you want to be a player in the US, you have to be at scale in the United States. And then the question is how could Northland get to be at scale in the US?
Before all of these things started happening with renewables in the US, I had reached the conclusion that for us right now, we have other places that are a better fit for us to grow. We do have two projects operating in New York state. Those are great projects and great teams on the ground there doing good work and I'm really happy with that. But we probably are not going to be developing new projects in the US in the near term, I would say. There's a bit of uncertainty there, and I have other investment opportunities with less uncertainty, so I'm going to pick those instead.
In offshore, we're not in the offshore in United States. And whether that was by good analysis or just by luck or some combination of the two, I'm happy for that. I think that it was not a good fit for Northland. Again, we're in jurisdictions where we found the right investment conditions for us and we need to have a fair amount of certainty. We don't move forward with projects unless we know we can finance them, unless we know we can partner them the way that we want to and we're able to find that in other jurisdictions.
So for us, the United States had already dropped out of our top rankings of opportunities right now, but could we be back in the US in the future? Definitely, we could. But right now, no, we have other more interesting places to be.
Sean Steuart:
Understood. You touched earlier on gas-fired power as a potential opportunity. And the company has experienced building and operating gas-fired power in Saskatchewan and Ontario. It has not been a growth focus for Northland for years now. How important might gas-fired power be in this company's growth path going forward? Are there specific regions where you see a clear path towards development and that being an opportunity for the company?
Christine Healy:
Well, I like gas-fired power. It really meets a lot of needs within electricity systems. Right now, you're right, we operate gas-fired facilities in Ontario and in Saskatchewan. And they perform really valuable, important functions in the grid.
So here in Ontario, we operate a peaker plant, which means that we're called into service at peak demand. So in many ways, the battery and the peaker plant kind of are doing complementary things. But the battery is short-cycle, kind of instantaneous on-off. But if you have a long-term multi-hour or day gap that you need to fill, the battery is not going to be able to do that. And that's where the peaker plant is exactly the right solution because we all want stable electricity. When you plug into the wall, you want the juice to be there. We don't want to have to plan around brownouts. That makes for a very, very unhappy society. So we need that.
And my time in Europe maybe gave me a different perspective because there's a lot of time we spent on the green taxonomy in the EU, and natural gas is part of the green taxonomy for good reason. Natural gas is really important in terms of stable systems and that affordable, reliable, clean energy. Natural gas hits all of the things that we need with that.
And Canada's had this unusual situation where it's kind of underinvested in natural gas for good reasons for the last number of years. So that creates an opportunity now because I think we've seen that eliminating natural gas from electricity systems has a price tag attached to it that I'm not sure anybody is willing to take on. And we can do natural gas effectively. We can do this in a way that meets our overall climate goals. So for me, natural gas just is a, we need to do it.
And frankly, in Western Canada, in Canada generally, but in Western Canada, natural gas pricing is just completely dislocated from global pricing. So how can we not be trying to figure out all of the ways that we can use this incredible resource? So I'm a big believer in natural gas. I see the opportunity set in Canada.
We get asked about a lot of opportunities globally for natural gas, and I would say I'll keep my powder dry on that maybe because I see an opportunity set in Canada that I like better right now. And as you mentioned, it has not been sort of a growth area in Canada for a number of years. So I have a small but mighty team who really have great skills. Again, part of our benchmarking just demonstrates to me that we're sort of top of the class within Northland on that. So I would like to deploy them to the best opportunities, and right now I see those near term in Canada.
Sean Steuart:
And would that be exclusive to organic development? Could M&A factor into your growth aspirations at all?
Christine Healy:
I think all of the above, but it has to be the right match. And from an M&A perspective, we're always looking. And right now is a really interesting time because there's lots of things out there. So then the question always that I have with the teams when we spend time on this is we need to get under the hood and understand the asset and then can we bring more value to this? Are we a good owner for this asset? Are we ultimately going to be, through operations, are we going to drive really good value there?
And I think we see some opportunities where the answer to that is clearly yes, and we're going to go after that. Then it's always the magic question of price. And of course, then we see some opportunities where we could build ourselves. If they, in the LT2 process here in Ontario, for your listeners who don't know what that is, that's a big energy procurement process that's ongoing here in Ontario. We will likely bid into that. If those things clear at the price that we need to see, super. And if not, then the projects will still be there for the future. They're not going to go bad in the fridge.
We see a lot of opportunities. But yes, M&A is part of that, selectively, and it has to be value accretive or I'm not interested in it. But I think that there's some good opportunities out there.
And within our existing footprint, we also have some expansion opportunities. So being able to expand within an existing facility is generally relatively low CapEx, high return, shorter cycle, so I like those things too. So we're working with our host governments on those opportunities as well. So there's sort of a combination of things going on there.
Sean Steuart:
That's great context. I want to conclude with a couple of questions on the financial front. And I want to start with how returns in this sector have evolved, and I'm thinking mainly of organic development returns. How do you handicap the spectrum of what returns are available across jurisdictions and technologies? How have those return parameters evolved over the last five to 10 years for the company? And what do you see as the potential going forward? And I guess what this comes down to is what types of returns make sense to proceed with value accretive investment in this industry?
Christine Healy:
Sure. Well, I think part of the reason that I really love renewables is that renewables is in a really interesting cycle that's relatively new-ish for renewables. But having come from oil and gas, I've lived through this cycle quite a few times.
So the reality is that you need to drive value from your assets and you need to be able to deliver returns. So that's the key. And sometimes we can get caught in a growth cycle where we're so focused on just grow, grow, grow, that we forget some of those underlying fundamentals. So not to be excessively boring, but I'm very focused on the fundamentals. So how do we make money? And how do we drive value? So that's within our existing operations. And Sean, we're going to be, hopefully at our investor day, talking a bit more about within our existing fleet, I see some investment opportunities where we can drive more value from our existing fleet, which we need to be doing that. That's value, frankly, lying on the floor. So we need to be doing that.
Then there are growth opportunities, but then not every growth opportunity is going to be a winner. So context-wise, this space is quite interesting because largely, when we sign up for these contracts, the kinds of projects that Northland does, we contract for the long-term so we have price certainty. We know the revenue stream that we're going to have, which frankly, you don't get in very many sectors, to know what your revenue is going to be. Whether you're in manufacturing or oil and gas or mining, you don't know what your price is going to be. For us, we're more than 90% contracted. So for 90% of our revenue, we know what it's going to be, largely.
So because of that, then what are the things we need to know? We need to know the terms of that contract so we know our price. We need to know that we can have permits and that we get them in a timely way. It's an important part of our investment. We need to know that we can finance the projects. And we need to know basically the costs that are coming from our major suppliers for the key components that we need.
Once we have those components, then the risk profile comes down dramatically. So then when we look across, we look for then the opportunities that are going to give us the best rates of return. So we like to see strong double digits. I would say I like for that double digit to end in a teen if it can, that would be even better. We like that because we still do have to take project execution risk, construction risk we need to take, and operationally, we have to deliver operationally. And while we have certainty as to the price, we also, we don't have certainty as to what our contractors and suppliers are going to charge us 20 years from now for replacement parts, so we have to take risk and uncertainty related to all of that too. We bake all of that in, and I think that that's a fair risk return balance for us and for our investors, so we like to see that.
Now, if we have some things that might turn the dial down or up on our expectations of a project, depending on what's happening in the overall risk picture. In environments where we can get things done very quickly, where we have very supportive policies, maybe there's a different thesis in jurisdictions where we know the permitting is going to be very slow, very uncertain. We might want to see a bit more.
So there's a bit of a judgment call in there. I would say every project that comes to my investment committee always wants to know what's the magic number? What's the magic set of things they need to show? There is no magic number. If there were, we would do all of this by algorithm. It's all judgment, so we have to sort of throw it all into the mix and then collectively decide.
Sean Steuart:
That's great perspective. And I'll just wrap up with a question on the funding platform. Your current construction projects are fully funded. You have large-scale growth ambitions though. Can you speak to the funding plan over the long run, your comfort with the current balance sheet, and I suppose how asset recycling might fit into the funding plan for non-core operations?
Christine Healy:
Well, as you mentioned in your opening, our platform as a company changes pretty dramatically with Hai Long and Baltic coming on, and Oneida having already come on, right? That's a 250-megawatts four-hour storage, and plus it opens up a whole new business area for us. We're going to be doing more battery storage in the future. We're already building our next project in Alberta, so that's ongoing. But the platform is growing as a company. And then from that bigger platform, it gives us something with a bit bigger reach.
Now, we also have the benefit that when we do these large-scale projects, we partner them and we have some excellent partners. So in Hai Long, we're partnered with Mitsui, big Japanese, phenomenal company. And we're partnered with Gentari, who's the renewables arm of Petronas, the state energy company of Malaysia. Phenomenal group of people, they bring such huge insight, excellent partners.
In Baltic Power, we're partnered with ORLEN, who's the state energy company in Poland. Again, deep insight capabilities, just accelerates all the things that we can do.
So when we partner well, there's a couple of things. These partners bring in their expertise and I think it makes our projects better. But they also bring funding and they pay their way. And that also helps us in terms of funding future projects. So when we're funding a project, we're funding our part of the project and they're funding their part of the project. And that, first of all, makes sense.
Then we do have good revenue streams to use to deploy into value-accretive development. And we do have opportunities in the portfolio, as you say, asset recycling. I guess that's the way we phrase it. But yes, of course we have opportunities to do that within the portfolio, but I want to do that in a way that it has to be value-accretive.
The assets we hold in the portfolio now are generating well for us. We're operating them well, we're getting good value from them. So then the question is, can we deploy that capital elsewhere for a higher return? Where we see that we can, we will. Of course, we will, because that also helps us sort of fund our growth aspirations.
We have big growth in front of us with these two projects, and one already delivered, two more coming. That's a great growth story that takes us out over the next two years. And then we have our own organic pipeline that we have projects that are maturing. Probably a bit less flashy than the two big offshore projects because onshore, the projects tend to be smaller and it takes more of them to make the same impact. But we have a lot of things that are developing and coming through. And we have these gas opportunities we were just talking about, battery storage opportunities, and then we also have sort of a longer horizon set of opportunities where we're going to be growing further.
So we could jam the accelerator on growth at all costs, but that's not where I am. I would rather do moderate growth, growth that's value-accretive. I think it's a solid, solid investment thesis, and right now probably is where the market wants us to be as well. The market has questions around are companies really driving returns in this space? I think they're good questions. I think the answer at Northland is yes, we absolutely are. And I'm prepared to talk to anybody about that.
But I understand the trepidation around it, and so we're going to deliver these projects. People are going to see that we can deliver these projects. And then from there, I think it just gives us a great platform to do super things in the future.
People are already seeing it, Sean, because we get a lot of calls from companies wanting us to partner with them, seeing that Northland would bring value in their projects. It's a great place to be in, and right now I'm looking, I'm always looking at other people's projects to say, "Look, hey, if that project's good, maybe we should be doing that instead of something that we've got in our own portfolio." So we're always looking at that.
And there's such a great set of opportunities in front of us. I have no doubt we're going to be able to deliver on growth. We're going to be able to deliver on it in a good way, value-accretive way. And you know what? If the market sentiment changes and people want to see more aggressive growth, we'll be able to deliver that too. But right now, I think I'm just trying to sort of stick to our knitting, deliver on the things that we're great at, prove it, prove it, prove it, and then I think the future is just exciting for us.
Sean Steuart:
That is a great way to wrap this up. Thank you very much for your time, Christine. We look forward to the investor day in a couple of months for lots of detail on this growth path going forward.
Christine Healy:
Thanks, Sean. Great talking with you.
Speaker 1:
Thanks for joining us. Stay tuned for the next episode of TD Cowen Insights.