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Good morning, ladies and gentlemen, and welcome to Boralex's Second Quarter of 2023 Financial Results Conference Call. Note that all lines are in a listen-only mode. Following the presentation, we will conduct a question-and-answer session in which financial analysts, shareholders, and investors will be invited to ask questions. [Operator Instructions] Also note that the call is being recorded.
For webcast participants, you could also ask your questions during the conference, but they will be answered by e-mail after the call. Finally, media representatives are invited to contact Camille Laventure, Advisor, Public Affairs and External Communications at Boralex. Her contact information is provided at the end of the quarterly press release.
I would now like to turn the conference over to Stephane Milot, Vice President, Investor Relations for Boralex. Please go ahead.
Well, thank you, operator, and good morning, everyone. So welcome to Boralex's second quarter results conference call. Joining me today on the call, Patrick Decostre, our President and Chief Executive Officer; Bruno Guilmette, our Executive Vice President and Chief Financial Officer; and other members of our management and finance teams.
So Decostre will begin with comments about market conditions and the highlights of the quarter. Afterwards, Mr. Guilmette will carry on with financial highlights, and then we'll be available to answer your questions. As you know, during this call, we will discuss historical as well as forward-looking information. When talking about the future, there are a variety of risk factors that have been listed in our different filings with securities regulators, which can materially change our estimated results. So these documents are all available for consultation at sedarplus.ca.
In our webcast presentation document, the disclosed results are presented both on a consolidated basis and on a combined basis. When talking about the results, we generally refer to combined numbers and we -- when referring to cash flow and balance sheet, we generally refer to consolidated numbers. Please note that the combined is non-GAAP financial measure and does not have standardized meaning under IFRS.
Accordingly, combined may not be comparable to similarly named measures used by other companies. For more details, see the non-IFRS and other financial measures section in the MD&A. The press release, the MD&A, the consolidated financial statements and a copy of today's presentations are all posted on the Boralex website at boralex.com under the Investors section. If you wish to receive a copy of these documents, please contact me.
Mr. Decostre will now start with his comments. So please go ahead, Patrick.
Thank you, Stephane, and good morning, everyone. It's a pleasure for me to present our results and achievements for the second quarter. Before going over the highlights of the quarter, I would like to reiterate our strong confidence in the future of our sector. There has been a lot of negative press in the past few months about some parts of our industry, notably the offshore wind sector.
Many projects were stopped in this sector because of the important issues with selling price and supply chain. As an integrated developer and operator of onshore wind, solar, hydro and storage technologies, we're not going through some of these issues in the same magnitude. We experienced very limited impact on our operations and development activities. Yes, we are facing some challenge, but we have been able, through our agility and innovative approach, to overcome them.
All our projects under construction -- under construction are delivering the expected returns, and we expect the same for upcoming projects. We will continue to develop our business and be a strong contributor to the energy transition. We are more than ever confident we will execute our plan with discipline in markets we know well and are able to adapt rapidly.
Going back to the highlights. In the second quarter, our teams continued to make significant progress in our growth and diversification strategy while pursuing our financial discipline. Our balance sheet remains strong with over $300 million in cash resources and authorized financing facilities, providing significant flexibility to fund our growth. 369 megawatts of projects were added to our pipeline in the quarter, now representing over 6.2 gigawatts of capacity.
We were also selected for 380 megawatts of storage projects under the Ontario RFP and for 40 megawatts of wind projects in the France latest wind RFP. Total production increased by 28% in the second quarter compared to 2022, as we benefited from contributions from the integration of wind farms we acquired in the U.S., the commissioning of assets and comparable production in France. This helped offset the impact of unfavorable weather conditions in North America in June.
Our business continued to perform well, generating an EBITDA of $143 million, up $10 million or 7% over 2022, reflecting the contribution from the U.S. acquisition and commissioning of assets in France, which more than compensated the decrease relating to lower production of our Canadian wind farms. Please note that the comparable figure in the second quarter of 2022 included a $14 million positive effect coming from certain feed-in premium contract in France, which was taken out in the third quarter of 2022 after the enactment of the Supplementary Budget Act.
In general, demand for renewable energy in our markets remain high, creating a positive environment for the operation and the development of our activities. Favorable programs are being discussed or put in place, in particular, the ITC in Canada, which is similar to the IRA in the U.S. Legislative measures were recently published, and we are expecting the new law to come into effect by the end of the year.
Also, many requests for proposals are planned in the next six months. Hydro-Quebec RFP for 1.5 gigawatt, Ontario's second request for proposal for energy storage and capacity, and the NYSERDA station in the state of New York. In France, a 500-megawatt technology-neutral tender and two 925-megawatt onshore wind tenders are also expected. U.K. also restarted their RFP program for wind solar. It will now -- I will not rapidly review the main variances in our portfolio of projects and growth path.
The change in the early stage was mainly due to three factors: first, the addition of two new wind projects, seven new solar project and one storage project in Europe and one wind project and one storage project in North America, for a total of 369 megawatts; second, the progression of two storage energy -- two energy storage projects, sorry, that were selected in the Ontario RFP to the secure stage for a reduction of 380 megawatts; and lastly, the progression of two wind projects, two solar projects and one storage project in Europe to the mid-stage phase for a reduction of 64 megawatts.
In the mid-stage, the progression of the 64 megawatts of projects were offset by the change in the expected capacity of one wind project in Europe for a decrease of 10 megawatts and the progression of one wind project in Europe to the advanced stage phase for a reduction of 52 megawatts. In total, our pipeline now comprises projects totaling 5.3 gigawatts of wind, solar and storage projects.
In the growth path, the secured stage increased with the progression of two energy storage projects selected in the Ontario RFP totaling 380 megawatts. In the U.S., we continue to work on the optimization of our solar project and are expecting feedback from NYSERDA in the coming months. In France, the capacity of projects under construction decreased by 32 megawatts due to the commissioning of two wind farms and the storage unit.
I won't cover in detail the progress made in our growth and diversification strategic direction, as I already talked about the major highlights. On the customer strategic direction, we continue to have discussions with numerous corporations in France as the demand for renewable energy contracted at attractive price remained high. In terms of optimization, we internalized the service and maintenance of six U.S. solar power station with a total installed capacity of 200 megawatts.
This completes my part. I will now let Bruno cover the financial portion in more detail, and we'll be back later for the question period. Bruno?
Thank you, Patrick. Good morning, everyone. I will start with a review of the progress made in light of our 2025 corporate objectives. As mentioned earlier by Patrick, our balance sheet remains solid, with more than $300 million in available cash and authorized financing. We continue to make good progress on the EBITDA and AFFO when taking into account the $14 million effect mentioned by Patrick earlier, the reinvestment ratio is in line with our target at 53%.
About our CSR strategy, we continued our efforts on the environment, social and governance fronts, as presented on Slide 16. Among the highlights of the quarter, Boralex was recently awarded an EcoVadis Gold Medal for the second year in a row. For more detailed information, including data on CO2 emissions and work done in relation to climate change and the TCFD initiative, I invite you to read our third CSR report, which was published in February.
I will now cover the financial results for the second quarter, starting with production. Overall, total wind production for the quarter, combining Canada, the U.S. and France, was 42% higher than last year, but 6% lower than anticipated. Good conditions in April and May did not compensate completely for unfavorable conditions in June, especially in North America.
Total production for the hydro sector was 3% lower than last year and 8% lower than anticipated. Both markets, Canada and the U.S., had unfavorable weather conditions. Finally, production from solar assets was 12% lower than the same quarter last year and 18% lower than anticipated, mainly due to a curtailment request on the Five Point solar farm in California. In summary, total production for the quarter was 28% higher than last year and 8% lower than anticipated.
Second quarter combined revenues were up 28% compared to last year, mostly due to the integration of our acquisition in the U.S., the commissioning of assets in France as well as high prices of electricity in France. EBITDA increased by 7% in the second quarter, and operating income increased by 6%.
Please note that the $6 million increase in corporate and general expenses is related to an increase in the workforce related to the growth of the corporation. AFFO was $3 million compared to $13 million in the same quarter last year. As mentioned by Patrick, the second quarter of 2022 included a positive $14 million effect related to feed-in premium contracts. Excluding this amount, AFFO this quarter would have increased quarter-over-quarter by $4 million.
Our financial position is solid, with our net debt to total market capital ratio of 40% in line with the ratio at the end of 2022. In conclusion, we continued the disciplined execution of our strategic plan in the second quarter of 2023. We made good progress along our four strategic orientations. We continue to grow and diversify by adding 369 megawatts of wind, solar and storage projects to our pipeline, which reached over 6.2 gigawatts of capacity.
The market environment continues to be highly favorable to development activities, with several requests for proposals ongoing in our markets. EBITDA and operating income increased compared to the second quarter of 2022. And finally, we maintain a solid financial position with more than $300 million in available cash and authorized financing.
Thank you very much for your attention. We're now ready to take your questions.
[Operator Instructions] And our first question comes from the line of Sean Steuart from TD Securities. Please go ahead, sir. Your line is open.
Sean? Operator, can we switch to...
Sorry about that. Sorry. Sorry, guys. I want to start with a question on your balance sheet. I hope -- wondering if you can qualify the comfort with your existing available liquidity, given the growth path going forward? And if you can go through options to bolster balance sheet flexibility going forward between asset recycling or other financing options.
Thank you, Sean. So qualifying our balance sheet position is solid. We're in a good position to continue to fund our growth. We have options, as we've had in the past. We generate cash. We have additional leverage possible on different fronts, either corporately or at the project level. And we're in a good position for the next year to continue to fund our growth without an equity raise. So notwithstanding, not taking into account large M&A, obviously, as I always put as a qualifier.
Any thoughts to further asset sales down the road? And I appreciate you're not going to issue equity now, but looking out a year from now, if valuations aren't cooperating, can you speak to potential for further asset sales?
As you know, we've looked at the past at either selling assets but also and most often or more often, partnering with people like other investors, other financial investors as we did in France. So these are options that we continue to look at. We continue to consider different parts of our portfolio as potential partnerships with other investors. We have good assets at good valuations, but we're looking for the right conditions, size and right valuations to enter into a transaction. It's not a lack of demand, but it's mostly our option, when we feel it's the right time. But that's a possibility and additional possibility on the financing front, yes.
Okay. Next question, New York solar projects, can you give us a -- an idea of what is being done there to advance those projects, discussions with respect to, I guess, PPA amendments. What's the path forward for those projects?
Yes. Sean, it's Patrick. The alliance for clean energy has put a request in front of the Public Service Commission to provide an inflation adjustment from the time of the award to the time of, I think, COD. And know it's expected that in their October session, the PSC will come back with their decision on that, which is, to my understanding, supported by NYSERDA, but it's the PSC decision. So this -- this is where we are. And in the same time, what we are doing is we're working with suppliers to optimize as much as possible the -- the project that we have and to be ready to take the decision when it pull -- the planet will align.
Thank you. We will now take our next question. Please stand by. Your next question comes from the line of Nelson Ng from RBC Capital Markets. Please go ahead.
Congrats on a pretty good quarter. So just a big picture question on your 2025 target of hitting 4.4 gigawatts of capacity and call it, $250 million of discretionary cash flows. Like obviously, you can hit the numbers by simply doing M&A, but from an organic growth perspective, it doesn't look that easy to achieve, particularly on the discretionary cash flow side. Can you just talk about M&A versus development? And also, I guess, the importance of hitting your 2025 target?
Yes, we are -- thank you, sorry, Nelson. I'm Patrick. We are executing our plan. We are focusing specifically on the project that will create cash flow in 2025, and -- so all the team is concentrated on that. And I think we are also concentrating on expenses and all the things to achieve this target. The M&A market today, yes, it seems that it's becoming more buyers' market, but it's not where we want it yet. So we will continue to execute. And yes, nothing more to say today.
Okay. And then you mentioned the focus on the cost side. So on the -- on G&A. I think you were about $32 million this quarter. That's about 23% higher than last year. So do you expect your G&A to continue to trend a bit higher? Or are you trying to manage G&A lower in the coming year? Like obviously, you have a number of upcoming bids to focus on. But can you just talk about -- yes, about your G&A trend and whether that's something you're trying to manage lower or not?
Yes. Well, on the -- thank you, Nelson. On the G&A front, we -- we will shortly -- we had a bump, which is we consider temporary, and we're working towards getting this in terms of percentage, relative percentage, getting this back in line. So we don't expect continuing growth in percentage.
We will now take the next question. Please stand by. Your next question comes from the line of Nicholas Boychuk from Cormark Securities. Please go ahead. Your line is open.
Just a follow-on to Nelson's question there regarding the 2025 growth path. Regarding the opportunity to expand in Europe, there's a comment in the MD&A that suggests that work's ongoing there to determine where new markets might be best to expand. Can you comment on that work and whether the partnership with EIP has any impact on the trajectory for you guys into the Nordics or any other markets there?
Yes, good morning, Nicholas. In Europe, we will definitely concentrate on France and the U.K. for the next two, three years. I think it's the best market. There is a lot of opportunity in the U.K., and we have a significant in pipeline in France producing project, I would say, every quarter. So you have also seen that the price, the average price of the last tender in France was north of €85 a megawatt hour. So it's also a good signal. It's 42% higher than it was in 2020. So this is good for the inflation of the cost. So we continue in these two markets presently.
Understood. And speaking about the U.K. opportunity, can you comment at all on what you're seeing in the local market right now from a supply chain standpoint to get the Limekiln developed on time and within budget? And what that might mean for future growth in the market?
Sorry, could you just repeat your question, Nick? It's -- Patrick did not get all the parts of the question.
That's no problem. Within the U.K., how robust is the supply chain in order for you to get new onshore wind projects developed, just specifically Limekiln. Do you have everything that you need to get everything developed on time and on budget?
Yes, we have ordered our turbine for Limekiln by the end of last year. And I'm happy when I'm seeing the increase of cost from the suppliers. So this is going in the right, say, direction. On the balance of plant, they are good. We are almost finalizing the contract for the balance of plant of the project. And so no issue on this side. And there is one smaller project that will also be authorized in the next six months probably. And then we will say, continue probably to work with the same bunch of suppliers. And I think -- I do not expect a problem in the next project in the U.K. presently.
Excellent. And then if I could just...
And maybe another comment on the U.K. You have seen all the questions from the offshore wind. That was one of my comments at the beginning, there is roughly 7.4 gigawatts of projects that have got a price of £37 a megawatt hour. At the last RFP in the U.K., they are all -- almost all except one, I think, 800 megawatt stopped presently and frozen and we'll have to re-bid in new tenders. So this open many opportunities for new onshore projects. And that shows also to the government that being diversified is not good for IPPs, but it's also good for systems and government.
Got it. That's excellent color. The last, if I can sneak one in, is just on the corporate PPA market. It seems as though you're seeing a lot of opportunities there to get attractive pricing from corporates. Is that going to become a much more prevalent use of refinancings and also new contracts for assets that are under development?
Yes, there is some opportunity for sure in the U.K. There is opportunity in France. We have signed some in France that will be announced in the fall, specifically for marketing question of our customers, but it's interesting price for us, and it's a good return for the project that will be built with that. Or when it's renewed, it's interesting price. In the U.K., we're less known than in France.
So, we're starting with that, but we have had some negotiation conversation with different potential counterparties. And there is also the option, as I mentioned, there is a new RFP presently in the U.K. So we're not comment, but it's another option for our project to get an interesting price. Because the RFP for wind has been reopened for onshore wind so that's also something interesting for our project.
Thank you. We will now take our next question. Please stand by. Our next question comes from the line of Rupert Merer from National Bank. Please go ahead. Your line is open.
Good morning, everyone. On your U.S. wind assets, you've had those for a couple of quarters now. How are they performing relative to your expectations? And with what you've learned, what are your thoughts on expanding that platform?
I'm sorry, Rupert, we had the difficulties to hear you. You sounded weak. Can you just repeat the question?
I catch it. Rupert, sorry. Sorry, Stephane. The resource was lower in the -- in the wind resource in Texas for our assets was lower during the quarter, and the price was also lower on the two -- the two projects that we -- which are merchant there. So we have been affected, but you cannot draw any conclusion on the long term. We're still confident with the assets we bought and the project and as we have there.
And we're seeing in Texas right now, very strong power prices this month in particular. I know you have some uncontracted exposure there, some spot exposure. How do you manage that asset? Are you selling spot? Or are you selling in the day-ahead markets? Are you seeing all the upside, capturing the upside we're seeing in that spot market?
Yes, we are exposed on two assets, but essentially, one is -- you have to remind that before the flip date of these assets was the tax equity, we are not really affected upwards or downwards because of the tax equity contract that we have on these assets. So not going to detail presently, but I think it's another sign that it's -- all the markets where we are, the price are going in the right direction on the long term. And -- but I think before 2025 on these assets, essentially, the cash flow is -- up or down, is going to mainly to the tax equity.
I see. So given all that you know about this market and the experience you've had so far, what are your thoughts on organic growth in that market or future M&A basically, any opportunity to grow that platform?
Not presently, because as I answered to Nelson, we are really focused on the main project that will deliver cash flow for 2025 in the jurisdiction that we know. So France, U.K., New York, Quebec and Ontario.
And so, we will not start something there. I know that there is lots of things moving specifically in storage there, but it's -- it's not the same storage in Ontario. In Ontario, we have up to 22 years contract for capacity. You cannot find that in Texas.
So in terms of risk/reward, yes, you can make development. But presently, I prefer to put our efforts in Quebec, Ontario and all the places where we can get long-term contract. And New York, it's still interesting than in Texas. And start something.
Thank you. We will now take our next question. Please stand by. And the next question comes from the line of David Quezada from Raymond James. Please go ahead. Your line is open.
Maybe a first question here, just going back to France. I know that it's kind of been a long running source of speculation when things could get sped up from a permitting perspective. Have you seen any progress on that? And I guess maybe on a related note, do you think that the number of new projects coming online in France is sufficiently slow that it's creating a shortfall? And does that cause you to expect pricing to continue to trend higher there?
Yes. I think there is -- thank you, David. There is a clear mindset from the government. There is a lot of acceleration. And we see some changes locally because, as I mentioned many times in the past, it's good to have a framework from the government that it's important too to have something locally because the -- the administration who is permitting the project is local. So we see some changes there.
But when I'm looking to the fact that there would be two tender for 925 megawatts in September and one in December, just for wind, and another neutral tender for wind and solar in October, it's probably a little bit too much for the number of authorization available in France. Good news also, the last tender was -- we will be able to give you the exact figures, but it was oversubscribed, but over allocated too.
So the power expected by the government, they award more contract than they asked at the beginning. So, it's -- again, it's showing that the system need more electricity in France. And so, I think we are -- there is an interesting equilibrium there between the fact that there is a lot of demand. There would be more authorization, and this will certainly create more value in our -- from our organic pipeline in France.
Okay. Excellent. Patrick, that's great color. And then maybe just one more for me. I'm just curious if you have any thoughts or view on negotiations around the renewable energy directive in Europe. I understand there's -- some of those discussions are playing out now.
Could you be more precise on what you're referring to?
Yes. But the general point on -- on European framework is -- there is no country, no electric system in Europe who is oversupplied in the next years. So -- and there is a queue, a backlog of permitting in every country that has to be settled and accelerate. So I think, again, that's two good news for us. And -- and there is no other competition from -- nuclear would be 12 years, 15 years, I don't know. There is no -- so there is a lot of opportunity coming from this.
And when you see, for example, the -- the big tender in Germany, when the big oil and gas company are betting to -- to put 12 billion to 13 billion on the table just to be authorized to produce offshore, they're not doing that for no return. They're doing that to make money. So their expectations is high price for the long-term in Europe. So I think that's good news.
Thank you. We'll now take our next question. Please stand by. Our next question comes from the line of Mark Jarvi from CIBC. Please go ahead. Your line is open.
Bruno, you mentioned earlier, you do have other options for funding beyond retain cash and leverage, including partnerships and sell downs. How would you say valuations compare between us -- a partial stake sale like you did last year in France versus outright sale portfolio assets? Is there a meaningful difference in valuations on those types of transactions right now?
You mean between a minority position and control or full?
Exactly. Yes.
Well, as you know, we tend to concentrate a little bit more on partnerships, so selling minority positions. But if I look at the valuation we got in France, it was certainly well valued, even though it was a minority position. So I think there's -- there are some types of partners that value what we can bring as an operator, as a manager of the asset. And therefore, they're willing to pay a fairly sizable minority position valuation. In general, when we look as a buyer at potential M&A transactions, we see valuations tend to be slowly reducing as a potential buyer.
So, I think we'll continue to apply our disciplined approach to see if it's a better time for us to buy or to sell. But again, on the sell down, if we are interested in selling down partnerships, then we'll wait for the right time and the right assets for us to enter into a partnership. And those have to be at the right valuation. So we won't do it if it's not the right valuation. And on the buy side, it potentially offers a bit more opportunities today than it did a year ago.
So you're not giving anything up by selling down a minority stake? Like you can still get a comparable multiple or maybe even a slight premium depending on the buyer's perspective?
That's what we would look to do.
Got it. Okay. And then I think previously, you had mentioned -- sorry.
We believe that's what we did in France.
Yes, certainly. And then I think previously, you had mentioned or at least thought with the [indiscernible] projects a bilateral negotiation, positive RFP. Do you have a sort of updated view in terms of the most likely path to get new contracts in Quebec going forward? And I guess for certain projects, can you do both paths at the same time? Can you try to do bilateral at the same time, bid those projects in the RFP to sort of hedge your bet in terms of those two pathways to getting the contracts?
It's -- we're all smiling here because it's a very interesting question, but it's a very strategic question. So like in every market, Mark, we are working on the different opportunity to have a diversified portfolio of the way of commercializing our energy. So, it could be -- we did, indeed, let's say, 1.4 gigawatt of bilateral in Quebec. So probably in the future, there will be opportunity. There will certainly be tender. There was one in September. It seems that another one would be announced by the end of the year for next year. But we are always looking to all the opportunity, and it depends on the customers and the government.
There's nothing that prohibits you from trying to negotiate while at the same time, putting a product into an RFP?
Not to my knowledge, no.
Okay. And then what's your updated views in terms of the price caps in France? We saw the European Union looked to stop those, but what's your expectation in France in terms of how long the price cap stays and whether or not they would renew it for 2024?
Yes, there is -- the European Union seems to be clear. Germany has, to my knowledge extend a little bit to the end of the next winter. Because the winter is the more important part, and they are still thinking that the winter could be, say, at risk. We will see what the French government is discussing. To my knowledge, there is no discussion today, but you never know in the finance law what could happen. We're not doing our budget on this base because we think it's the way to be disciplined, but we will see what happens.
Thank you. We will now take our next question. Please stand by. Your next question comes from the line of Ben Pham from BMO. Please go ahead. Your line is open.
On your expected returns, can you remind us what those are? Is that, 8% to 10%?
Yes. We -- in terms of our expected returns, we've certainly seen a creep up in the market into cost of equity, and we have adjusted accordingly our returns. So I say that we are at the higher end of our bracket. So we're around 10%-ish on our cost of equity today. And that's what we model when we look at projects. That's what we authorized in terms of projects. So it's -- we believe it's -- this adjustment is fair given the adjustment we've seen in the market. The projects that are going at the moment are meeting those guidelines. And just as a side note, our projects in construction are seeing very little variance from their budgets. So it's important to note that as well. So...
And you're -- I mean, it's good to hear. Can you maybe touch on -- you mentioned your returns have been somewhat protected. Is that more a function of you locking in EPC contracts ahead of inflation kick in the last few years?
Yes. There is many, many ways. The first is roughly, we are deploying 1.1 billion presently in all the construction that we have. And the cost overrun is 11 million. So it's one person. So it's very -- in a context where everything is going up, it's -- so it answers your question.
The second point is on many projects, on the return part, we have been able to adapt through the example of the 18 months in France, the example of the new tender. I mentioned the tender where the price is now 85. The average price of the last tender in France is €85.3 a megawatt hour, but it's indexed. Also, this price is indexed between the award, and I think the COD. So we are -- as I mentioned also, we're discussing, we have not started in New York because we don't have the indexation yet. So -- so you need to work on different plan.
Limekiln, if you remember, we didn't go for the first project. We wait to have the extension authorized. So we are all the time working on different plans to optimize and we also increased the size of the turbine in Limekiln. We do that also in [Napwit.] So, all this was the budget, which is protected because we have signed at the right time with good contract. On the other side, we have improved our return from the time we took the decision, so it goes north of the expectations of today for Boralex.
So said another way, if we have to take the decision today with all the figures we have today with the same -- with today's expected return, we would say, yes, again, for all the projects that are under construction.
Okay. And then on the storage projects you added in Ontario, the 380 megawatts, could you comment on potential CapEx for those projects? And then is the timing similar to peers at 2025 in service?
Yes. We will be in service in 2025. We are, say, running because there is -- the contract is -- and in 2047. And all the time we gained before 2025, we get -- we will get the same price so we can have a longer contract at the end. There is some bonus system in it. So -- and we're working with different suppliers, and hopefully come to a final investment decision or at least the decision to freeze the price of the equipment by -- before the end of this year.
So we are -- that's why when Nelson asked his question, I said, okay, we concentrate really on some project to be sure that we deliver this project in terms of execution, and that's typically what we do with these Ontario project. And the news on the price are on, say, on the green side for us presently. So we continue to discuss with suppliers. There is lots of interest from suppliers. There is good competition, and there is good -- how to say, industrialized country suppliers who are providing good offers.
Okay. So we'll get a CapEx figure upon FID?
Yes, yes. I will come back when everything will be settled with the suppliers and be more open on that progress. Okay?
Okay. And maybe just one last thing. Just -- can you -- maybe a little bit early on this process. But some of your peers have a storage on the tax credits that they're planning to benefit from their plan to include that in EBITDA and free cash flow in the first year. Could you comment -- are you planning to do something similar with the cutting those tax credits?
Ben, we're not there yet. We -- I mean, it's -- we'll see when we get more details on the ITC from the government.
Thank you. We will now take our next question. Please stand by. Our next question comes from the line of Andrew Kuske from Credit Suisse. Please go ahead. Your line is open.
There's some commentary in the MD&A on your sales teams trying to tap into a wider customer base. Maybe if you could just give us some color on the positioning that they take with the corporate community to try to attract PPAs and just how they're distinct in the Boralex position as distinct from, say, some of your competitors.
Essentially, we are -- we have the assets. So first of all, there is not so much assets available without contract ready to sell electricity in France. The second point is, as Bruno mentioned, we have the EcoVadis first, a silver medal and now, two gold medals, which is important because it's well renowned in France, and this was -- we started that after we sign a contract in 2019 with Orange. And so Orange is a big, known company.
And so we have an internal team with -- that somewhere we started in 2017. The first guy in this team was 2017 when I was in France, and -- and so in this team, we have people who are chasing for corporate PPA modeling, all the price of electricity for the next months and working on the tender when we make a bid on an RFP from the government. And finally, who are negotiating all the utility PPA for the 18 months before starting contractor or selling electricity or the early termination.
So in the same team, we have the intelligence to understand really what are our options. So I think on the pricing, this is good. And on the branding, we have also just hired somebody to improve our branding. She will work in public affair and marketing, specifically based in France with a lot of experience doing that. So I think it's also a way to differentiate ourselves. And like every suppliers, we have to listen to the needs of our customers.
We just signed a contract for a customer who was, how to say, asking for many projects. And we say, okay, we have one wind project, another wind project and a solar project. And they say, okay, we buy when they would be finally authorized, we would buy all the electricity for 20 years from these three projects. So, we had a very interesting negotiation with this customer. We will disclose a little bit more in the fall about that.
I appreciate that color as it relates to France, where you've built up a very good business and a very good niche. How did the same concept apply and translate into the U.S., where it's just a much bigger market and a bigger market opportunity?
Yes. We -- in our development, we don't need that presently in terms of cooperation in New York because we're still relying on the CFD. Yes, we will have and we hire a person to work more on selling on the market to be sure that we have the right price for the merchant exposure. When I say merchant, it's a part of the project covered by the CFD contract on the other side. So it's not merchant as a whole, but you have to sell the electricity on the market. So we are developing this. That's exactly how we started in France.
And then if we go in other -- and we're developing in Illinois and Pennsylvania. If there, there is some interest to sign with corporation -- my understanding is there would be RFP from the state. But if there is any need, we would follow the same path. That's exactly what we're doing in the U.K. also presently. So we need to have many options on the table. And all the team, French, U.K. and U.S. team are working together to share this intelligence and this -- the way of working and sometimes the algorithm also.
I appreciate that. And then just finally, you repatriated a service contract in the quarter, and you've historically had a pretty balanced approach of using OEMs or third parties and then doing some work yourselves. What motivated the decision on the 200 megs of solar to repatriate that in-house?
Yes. The -- since the beginning, we are doing that to reduce the margin of the suppliers in the OEM. In this case, and specifically in the solar business in the U.S., there was not only one margin, there was at least two because there was -- in the supply chain of the service, there was two parties. So when we take over this kind of project, we're reducing costs, definitely. And also, we will hopefully -- and this is the target.
We will improve the availability of the project because when you have too much suppliers, sometimes it's difficult. There -- typically for inverters, they are not building the right spare parts inventories, and we can do that easily. And that's what we have done in wind and in solar in France. So we will do that in the U.S. And I'm confident that this will reduce the cost and improve the availability of the assets.
Thank you. We will now take our next question. Please stand by. Our next question comes from the line of Naji Baydoun from IA Capital Markets. Your line is open. Please go ahead.
I just want to start in the U.S. and get your thoughts on key learnings and some of the markets that you're focusing on, whether it'd be New York or the jurisdictions in the past couple of years. Any thoughts about -- maybe a path that you see to accelerating development in some of those markets?
But our approach is, say, always the same. We look at the supply and demand on the market where we are developing. In the state of New York, I am very happy of the decision we took four, five years ago to go there because it's the right decision. The state, the city, they all confirmed that they want to go for net zero when they -- which is not far away, which is 2040. So this means a lot of power, a lot of demand for our product.
So in between, there is some difficulties, but that's our job to manage them. That's the reason why we have decided to start development in Illinois and Pennsylvania. When you look to this market, there is a lack of supply in some years. So there would be demand for our product. And that's the way we're doing that. And the last point, which is very important, is the ability to find a reasonably long-term contract because it's important for us to be contracted for -- to sell our electricity.
And maybe just on France. I know it's been delayed a bit, but any expectations or updated views on the PPA that we're waiting for?
The use of?
The new multi-annual...
Yes, there is lots of demand on PPAs in France, because -- and there is many reasons. The first reason is the price of electricity of the last winter and the last summer really hit many corporations. And so -- and the people also start to be affected because the government has stopped the tariff field. So people -- the consciousness of the fact that the system needs more electricity is there.
The second point is they need more -- they want more renewable, and the fact that any renewable producing in France will somewhere in France or elsewhere in Europe reduce fossil fuel -- burning fossil fuel. And so there is a lot of demand for cooperation, and many people were themselves selling to the end customers. That's clear. We have renewed some contracts with a very attractive price that we signed three years ago.
We have renewed the contract was very interesting price for us. So because people -- nobody wants to say, okay, I was buying green electricity for the last three, four, five years. And now I'm going back to buying the electricity on the market with a part of fossil fuel or nuclear electricity. No one wants to do that. So when you have signed something, the probability to renew with the customers is very high if you have done a good job, and that's what our team is doing.
And what about the multi-annual energy plan, we've been waiting for an update on that for a little bit. Any thoughts or your expectations on what might change versus the last view that was presented?
You mean in France?
Yes, correct.
Yes, yes. It's underway. There is a consultation. For sure, there is -- the French government, it's good news, do not oppose the fact that to restart building nuclear plant and at the same time building renewable because they will need both. And so, I think it's always a time of explanations also, so it's important in terms of social acceptability of the project. So, I'm very confident that, again, it will improve the value of our pipeline of projects in the next years.
Thank you. There are no further questions. Speakers, please continue.
There are no further questions, you mean?
There are no further questions at this time.
Well, thanks, everyone, and I hope that this call helped everyone understand, I think, the strength of our model and the fact that being an integrated player is paying off and the discipline we are -- we've been showing again. So you should continue to expect that from us.
So if you have any additional questions, so please call me at (514) 213-1045. I'll make sure to quickly answer your questions. We'll announce third quarter as usual, in next upcoming November. We'll provide the date later or about a month before the call.
So have a nice day, everyone, and a good vacation for those who, like me, have not yet had this opportunity. So, we'll talk again soon. Thanks a lot.
Thank you. That concludes today's conference call. Thank you for participating. You may now disconnect. Speakers, please stand by.