Boralex Inc

TSX:BLX

Earnings Call Transcript 2024-Q3

[Operator]

[Foreign Language] Good morning. Ladies and gentlemen, and welcome to the Boralex Third Quarter of 2024 Financial Results Conference Call. [Operator Instructions] Please also note that the conference is being recorded. For webcast participants, we can also ask questions during the conference, but they will be answered by e-mail after the call. Finally, media representatives are invited to contact Camilla Laventure, Senior Adviser, Public Affairs and External Communications. Her contact information is provided at the end of the quarterly press release.

I would now like to turn the conference over to Stéphane Milot, Vice President, Investor Relations for Boralex. Please go ahead.

[Stéphane Milot, executive]

All right. Thank you, operator, and good morning, everyone. So welcome to Boralex Third Quarter Results Conference Call. So joining me today on the call are 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 Mr. 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 will 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 when referring to cash flow and balance sheet, we generally refer to consolidated numbers. So please note that combined is a non-GAAP financial measure and does not have a standardized meaning under IFRS.

So accordingly, combined may not be comparable to similarly named measures used by other companies. For more detail, see the non-IFRS and other financial measures sections in the MD&A. So the press release, the MD&A, the consolidated financial statements and a copy of today's presentation 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 his comment. Patrick, you can go ahead.

[Patrick Decostre, executive]

Thank you. Thank you, Stéphane, and good morning, everyone. It's a pleasure for me to present our results and accomplishments. During this quarter, the third quarter of 2024, we actively pursued our development and diversification activities in the period affected by adverse weather conditions in Canada and France, which impacted our results. On a year-to-year basis, we observed an improvement in all our financial metrics. We have increased our EBITDA by 7%, our operating income by 15% and our net earnings by 32% compared to the first 9 months of 2023.

During the quarter, we continued to make good progress on the construction of our Apuiat project in Quebec and our Limekiln project in Scotland. We are very happy with what our teams have achieved on both sites. These 2 projects should be commissioned as planned by the end of the year. We have also started the construction of our 2 storage projects, Hagersville and Tilbury in Ontario, both projects are anticipated to be commissioned by the end of 2025. Additionally, our Des Neiges Sud wind project and Oxford storage projects are advancing as planned with commissioning scheduled in 2026.

Lastly, in North America, we are currently awaiting for the final results of the NYSERDA request for proposals in the New York state, which are expected to be announced soon. In Europe, we are very pleased to announce the acquisition of Sallachy project, a 50-megawatt advanced stage wind project in Scotland. This transaction adds another exciting project to our strong onshore wind portfolio in Scotland and represents a key step toward achieving our goal of strengthening our presence in the strong growth potential market of the United Kingdom. This quarter, we also achieved significant milestones in our customer strategic direction by signing 2 long-term renewable energy purchase agreements in France with leading industrial company, Nestle and Saint-Gobain.

This achievement demonstrates the expertise of the creativity and the creativity of our marketing team to support new clients in their energy transition through tailored solution. It also shows the growing competitiveness and appeal of renewable energy even for industrial players.

In terms of market conditions, demand for renewable energy in our markets continues to be strong, fostering a favorable environment for both the operation and the development of our activities. In the United States, we understand that the implications of the elections on the renewable energy sector are a key area of focus. We will continue to develop our pipeline and produce cost-competitive renewable energy in markets driven by increasing demand in clean power and strong support at state level.

In Europe, the labor party election in the U.K. is very promising with several encouraging measures for renewable energy, such as lifting the ban on onshore wind power in England. The government has also announced the creation of the state-owned entity great British energy to drive the deployment of clean energy and boost energy independence. I will now rapidly cover the main variances in our portfolio of projects and growth paths. The change in the pipeline was mainly due to the addition of wind, solar and storage projects in Europe and North America in the early stage.

The withdrawal of nonstrategic solar projects in Scotland, transition of wind and solar projects through the pipeline to the mid- and advanced stages in Europe. In total, our pipeline of early mid and advanced stages projects do consist of projects totaling 6.4 gigawatts of wind, solar and storage projects.

In the second quarter, the growth path represent a capacity of 867 megawatts, up 16 megawatt compared to the previous quarter. This increase was mainly attributable to the progression of solar projects in Europe to the secure stage. Our total pipeline of projects in development, secured and under construction now stands at 7.2 gigawatt. Regarding the progress made in our growth and diversification strategies, I already covered the key highlights in the introduction. On the optimization direction, we were pleased to announce the closing of a $95 million financing for the Témiscouata II wind farm in Quebec.

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?

[Bruno Guilmette, executive]

Thank you, Patrick. Good morning, everyone. I will start with the financial highlights of the quarter. Total combined production was down 1% compared to the same quarter last year and 11% lower than expected due to unfavorable weather conditions and the increase in power curtailments in France. As a result, our combined EBITDA amounted to $109 million, down $4 million and the FFO amounted to $16 million, down $7 million compared to the third quarter of 2023.

I will now review the progress made in light of our 2025 corporate objectives. Our balance sheet remains quite strong with $608 million in available cash resources and outraised financing. In addition, $51 million are accounted for in trade and other receivable representing approximately 85% of the ITC to be received based on the qualifying property acquired for the Apuiat project under construction in Quebec. Total debt remained stable in the third quarter of 2024, with project debt accounting for 90% of the total. The reinvestment ratio is consistent with our target at 66%.

Finally, regarding our corporate objectives, we have made significant progress on our CSR strategy and are proud to announce that Boralex is among the first renewable energy producers to have its greenhouse gas emission reduction targets validated by the SBTI, science-based targets initiative. This certification is a great achievement and demonstrate that our CSR strategy creates value through effective management and the differentiation we bring to the renewable energy sector.

I will now provide more detailed information on our financial results for the third quarter, starting with production. In North America, Total combined production for the quarter was in line with the same quarter last year but 10% lower than anticipated. Production from the wind assets was 5% higher compared to the same quarter last year, but 10% lower than anticipated due to weak resources conditions in Canada. Production for the hydro sector was 20% lower than last year and 5% lower than anticipated due to unfavorable weather conditions in Canada, and a comparison with a strong 2023 third quarter.

Production from solar assets was 2% higher than the same quarter last year, but 15% lower than anticipated mainly due to curtailment requests in California. In Europe, total production was 3% lower compared to the same quarter last year and 12% lower than anticipated, attributable to unfavorable weather conditions and the increase in curtailments in France. As mentioned at the beginning of my presentation, the decrease in production affected our revenues, EBITDA and AFFO, with the contribution for new sites and our selling strategy optimization partially offsetting the decrease. Our financial position remains very solid with a net debt to total market capital ratio of 43%.

In conclusion, we remain focused on the disciplined execution of our strategic plan. We have -- as mentioned by Patrick, we have delivered strong results year-to-date, significant increases in key metrics such as operating income, EBITDA and net earnings. So far this year compared to last year. The outlook for the end of the year is quite promising with the commissioning of Apuiat in Quebec and Limekiln in Scotland. We are also actively working on the financings of our Hagersville and Tilbury battery projects in Ontario. We continue to develop our activities with discipline in attractive markets driven by increasing demand for renewable energy and remain very positive for Boralex's future and our ability to generate the expected return on our investments.

Thank you for your attention. We are now ready to take your questions.

[Operator]

[Operator Instructions] We are now going to proceed with our first question. The questions come from the line of Nelson Ng from RBC Capital Markets.

[Nelson Ng, analyst]

My first question relates to France, and I have a multi-part question. So can you just talk about your corporate PPA strategy for new projects under development. I was just wondering whether the preference is to participate in the government RFPs or sign PPAs? And also, I presume the corporate PPAs have a higher power price given the lower offtake credit. And then just finally, if you are unsuccessful, if a project is unsuccessful in a government bid, is it like can you just go and try to get a corporate PPA to get that project developed?

[Patrick Decostre, executive]

Yes, good morning, Nelson, so indeed, the strategy on corporate PPA for us is to target the specific clients with specific needs. And each client we have in France, there is a specific need, and we understand that and we provide value. So the consequences, generally speaking, it's a better return for us when we have this type of opportunity because we are providing a specific service to a client. There is always for the project, a safety net of government RFP and we just received yesterday the confirmation that we won another 21, it's not in the document because it was coming early yesterday, a 21-megawatt project in France in the last RFP from the commission regulation energy. The average price on this is almost EUR 88 megawatt hour.

So you see exactly like in your question you were asking, there is different options, and we are going to the best option for Boralex. And on the 6 projects that are under construction in France, 6 are with corporate PPA. And I think it's an interesting trend of the market there.

[Nelson Ng, analyst]

Okay. That's pretty interesting. So are those corporate PPAs in that 15- to 20-year term?

[Patrick Decostre, executive]

Yes. Yes, it depends. Nestle is 15 years, and Saint-Gobain is 20 years. All the others like [indiscernible] were 20 years contract. So -- and it's -- we backed on them a finance, project finance, which is also an important criteria. So the bank who are financing the project and were used for the last 20 years to just finance EDF PPA backed financing are now going through this corporate PPA. So this is also an important move of the financing market in France.

[Nelson Ng, analyst]

Just one last one on that. So like obviously, corporate PPAs have a lower credit rating. So from a financing perspective, would you expect like a wider margin than potentially a shorter [indiscernible]?

[Patrick Decostre, executive]

It's the case. It's the case. But globally, what we look is we have a better return for Boralex. And we -- obviously, we don't go for bad contra parties. We all have blue-chip companies and -- who are in good situation in long-term companies. So I think, yes, it's cost is a little bit higher, but at the end, the return is significantly better for us. Otherwise, we don't go for this project with -- if we can go for an EDF contract.

[Nelson Ng, analyst]

Got it. Okay. And then I have a few questions on the Ontario battery projects. So Hagersville and Tilbury, so I think it looks like the total cost of those 2 projects is about $770 million. Can you just talk about how those costs have -- how battery costs have trended? And do you expect to see any cost savings when you start your Oxford battery project potentially next year?

[Patrick Decostre, executive]

Yes, I don't have the exact figure before me for the cost of the battery of Hagersville in Ontario and Tilbury. But to the second point, yes, the -- it's not completely, say, finalized and public, but the Oxford battery cost are lower than the Hagersville ancillary battery cost at the time when we order the battery. So that's going in the south and in the right side for us.

[Nelson Ng, analyst]

Okay. And then...

[Stéphane Milot, executive]

Just maybe -- sorry, Nelson, just a point on that, like, well, because as you mentioned, those projects are now in the growth that has been under construction, you can see the investment. I guess that's what you're referring to. So the amount is, in fact, slightly lower than what we were expecting originally. And it's a mix of few elements like the battery cost, for sure, but also BOP and a few savings here and there. But -- so generally speaking, better conditions than when we initially undertook this project.

[Nelson Ng, analyst]

Okay. And then can you just talk about how the partnership with the First Nations work? Is it like a 50-50 split? And then can you also talk about the funding plan and also the run rate EBITDA from the first 2 battery projects?

[Stéphane Milot, executive]

Do you want to talk about, Bruno, the funding for Hagersville and -- yes.

[Bruno Guilmette, executive]

So the funding -- the financings for the 2 battery projects, Hagersville and Tilbury, we expect good news before the end of the year. So we're actively working, as I mentioned, on those financings. And it looks on track for us to finish and close on that this year. On run rate EBITDA. Do you want -- run rate EBITDA for those 2 specific site, do you mean, is that your question?

[Nelson Ng, analyst]

Yes, sort of. Correct, relative to the $770 million CapEx. I was wondering what the EBITDA would be roughly?

[Stéphane Milot, executive]

Yes, it's part of our disclosure in the MD&A, we would invite you to look at this or we could talk about it after the call, if you want a more precise number.

[Nelson Ng, analyst]

Sure. I'll have a look. And then just finally on the First Nations partnership. Is it a 50-50 partnership? Or is there a different arrangement?

[Patrick Decostre, executive]

Yes. It's both 50-50 partnership. Hagersville is with the 6 nations of the Grand River. So we already did a partnership with them in 2016 or even before for the development of Niagara. In Hagersville -- sorry, in Tilbury is with the Walpole Island. It's 50-50. And it was their first partnership, but it was going very well in the negotiation, and we're very good partners, so very long-term partner on Hagersville a new partner, but very successful on the Walpole and Tilbury.

[Operator]

We are now going to proceed with our next question. The questions come from the line of Sean Steuart from TD Cowen.

[Sean Steuart, analyst]

Question on the prospective pipeline in Quebec. And I'm wondering if you can give any updated thoughts on Hydro-Quebec's plans, which are clearly aggressive and visibility on future partnership opportunities going forward and how that feeds into your longer-term development aspirations.

[Patrick Decostre, executive]

Yes. Good morning, Sean, indeed, the Hydro-Quebec plan is very aggressive because it's doubling the size of Quebec from today to 2050 with lots of wind farms and renewable developments. So we are clearly chasing this. it's under clarification, I would say, presently by the government and Hydro-Quebec, but definitely, the government Hydro-Quebec and the public sector -- or the private sector, sorry, would be part of this. The first nations would be part of this.

And I have reconfirmation directly from Hydro-Quebec to say that the intent to -- that we have skin in the game in terms of equity in the project. And the example that they are -- they were taking already in May, and they are continuing to take is the Des Neiges project, which is the 3 phase of 400 megawatts with us, where we own 1/3, [indiscernible] own 1/3 and Hydro-Quebec own the other 1/3. So I think that's a successful partnership. And this project is going well. So I presume they will build on this type of project for the future.

What came in the press is that Hydro-Quebec is working as they were seeing to try to find agreement with the First Nations in municipality to advance larger projects. I guess that they will also continue to do the classical track of -- I don't know if it would be annual or every 2 years, tenders RFP for smaller projects. But no, it's interesting because small projects are 350-megawatt project, it's still small project in Quebec in the new language. So that's also a good signal that there is plenty of opportunities for us.

[Sean Steuart, analyst]

Thanks for that detail. And I also appreciate your comments with respect to ongoing growth opportunities in the U.S. But any updated thoughts, Patrick, big picture on risk-adjusted returns, best markets for longer-term opportunities. I think last quarter, you were indicating the U.K. feels like a particularly compelling market, is the relative pecking order shifted at all over the last 3 months in terms of your preferred focus for prospective growth?

[Patrick Decostre, executive]

Yes. I'm not changing my point. I think we have lots of opportunity in Quebec and Ontario and the U.K. That's the 3 places where for the near future, we have lots of opportunity. As you know, we bid 590 megawatts in New York last RFP. We are expecting the final result say, anytime soon, I don't know when. And this is also -- we bid with good return also in this RFP. So I think we -- the point is today there is very good, say, 10% to 12% return achievable in the different markets. The point is to develop the right project and that's exactly what we're doing in the different markets. So I don't see a big difference on the return expectations presently on our side.

[Operator]

We are now going to proceed with our next question. The questions come from the line of Jessica Hoyle from Scotiabank.

[Jessica Hoyle, analyst]

So to start diversification of your assets was mentioned as a focus just given some weak renewable resources this year. Just high level, how are you thinking about maintaining a diverse portfolio given your current pipeline of opportunities?

[Patrick Decostre, executive]

Yes, good morning, Jessica. I think what is important is we have interesting development more than expected 4 years ago in Quebec in wind. So this is not going into diversifying our portfolio. But on the other side, we have significant projects and capital deployments in Ontario in battery storage, which was completely different business model with a completely different contract duration in technology. So we bid in New York because we continue to work on the solar side. So I think the way to optimize diversification is to optimize our sell-down strategy.

And if I come back 4 years ago, we were probably a little bit too much exposed to France in terms of diversification. It's a very good market. But in terms of diversification, this was a big part of Boralex, and we sold down 30% at very attractive price. So it's a way also to at the end, have a net cash flow, which is more diversified. So we are looking forward, we will also use this way to optimize our diversification of cash flow and definitely, if we can do significant sizable project in Quebec, we will continue to do them and have partners at the right time on this project to -- not to be overexposed to somewhere. And that's also the reason why we are developing in the U.K., which is also a completely different market in terms of resource, regulation, pricing.

[Stéphane Milot, executive]

I may add to your point, Patrick, also this quarter, we saw a positive impact from the U.S. acquisition we did in wind, where in a quarter where we had tough conditions in Canada and France. We got very good results in the U.S. So it's also another market where we're benefiting from diversification.

[Jessica Hoyle, analyst]

Yes. I appreciate the color. And then just moving over to storage. So you started construction on the Ontario storage project, and it looks like you've added to the early-stage storage pipeline in the quarter. So just staying on the same, could we see more resources invested to bolster as well as further advance your storage pipeline?

[Patrick Decostre, executive]

I'm not sure I get the question.

[Jessica Hoyle, analyst]

Yes. So I'm just looking for some color on the addition to the storage pipeline. Could you invest more resources...

[Patrick Decostre, executive]

Yes. Sorry, sorry. Yes, we are essentially in Ontario what is coming short term is the 3 projects, the 2 under construction, then Oxford probably next year. And then we have -- we are developing projects for the LT2. And LT2, the next RFP, there would be production, generation, energy, and there would certainly be capacity. And so storage would be a part of it or hybrid site so we are preparing ourselves to this. The answer is yes.

[Stéphane Milot, executive]

Sorry, again, it's Stéphane. Just wanted to add a point on that, Jessica. As you know, storage for us makes sense where we have long-term contracts like it is the case in Ontario. So we have a specific situation in Ontario where we -- our intention is, as Patrick mentioned, is really to continue to develop this technology in this market, not necessarily the case in other markets where the storage is more kind of a spot or like a merchant market. So this is less interesting for us at this point.

[Operator]

We are now going to proceed with our next question. The questions come from the line of Benjamin Pham from BMO.

[Benjamin Pham, analyst]

A couple more questions on Ontario storage projects. Can you confirm the CapEx cost, is that all fixed at this point?

[Stéphane Milot, executive]

Yes, what you see -- what we've presented in our growth path and the MD&A is the CapEx figure that we have right now as we speak. So this -- as you know, this number is updated every quarter. So we -- but there's no reason to believe that there would be a significant change there. It's quite easy storage, you put slabs and you put the batteries on top. So...

[Benjamin Pham, analyst]

I got you. So your whole point is you effectively locked in the battery price. So your residual exposure on any cost overruns or under runs are quite contained. And just to that point then, it sounds like even though this is probably your -- I think, your largest project you've ever built in your history, you're feeling pretty good about execution, risk and timing and how you're moving forward?

[Patrick Decostre, executive]

Yes. We're working with -- we have decided to work with Tesla, who is I think that was part of our decision last year to go with them because they have been selected by [indiscernible] to do Oneida. So if there is any learning curve for them in Ontario specifically on top of all their knowledge of the U.S., Australia and somewhere else, they will do it with Oneida and my understanding is that it's going well.

On the second part, on the balance of plan, we are working with Borea. Borea is a well-known company initially from Quebec, but have developed lots of project wind solar in Canada and the U.S. So we are in good hands, and we have a specific team. So I'm reasonably confident that -- and the project is going well. So the team is doing well. So I'm not stressed specifically on this project.

[Benjamin Pham, analyst]

Okay. That's good to hear. And my moderate question or topic is on Scotland. And can you maybe talk how well how you think Scotland transpiring next few years in terms of where do you want the development pipeline to be -- do you expect a lot more capital to be deployed? And obviously, what percent potential this could be as part of your overall business?

[Patrick Decostre, executive]

Yes. It's Scotland, but it's not just Scotland. It's also England now because the -- as I mentioned in the speech, the government lift the ban on onshore wind in England. And you know that the offshore wind is, generally speaking, delay in the U.K. So the offshore wind solution is delayed. Hinkley Point C, the large nuclear plant is also delayed and they're just starting for the next size of well C plans, the engineering, and they don't know where they will go exactly. So I think there is a great opportunity for onshore wind and solar in the U.K. globally speaking.

And as part of Boralex pipeline, we have a team of roughly 20 people today there. We -- the acquisition of Sallachy is an interesting one because it's a German developer, WKN, who wanted to exit the U.K. market to concentrate the resource as a German developer in Germany and Poland. And so they say, okay, we sell this project. It's a very nice project fully permitted, so we will optimize this. So it's very similar to what we did in France, say, 15 years ago and consolidate different organic development, mid-stage development and maybe one day operational assets to build an interesting platform, consistent platform in the U.K. So I think that's exactly the long-term vision that I have.

[Operator]

[Operator Instructions] We are now going to proceed with our next question. The questions come from the line of [indiscernible] from National Bank Financial.

[Unknown Analyst]

Just filling in for Rupert here. So for your 2025 capacity goal of 4.4 gigawatts, do you guys still expect to meet this target? And if so, what are your plans on getting there through a number of small acquisitions, large acquisitions, any detail there would be great.

[Patrick Decostre, executive]

[indiscernible]. Sorry, Bruno, go ahead.

[Bruno Guilmette, executive]

On the targets for 2025, we're still confident that we can meet them. Just a reminder that these targets included some M&A activities, some acquisitions. And that's why I think we've mentioned a few times that we're -- we've been less active voluntarily, less active on the M&A front because as prices were too high. Now the situation is better from an M&A acquisition perspective in terms of pricing and valuations. So we're active looking at opportunities mainly in the U.S. and the U.K. markets for M&A. And specifically to your question, it could be a combination of larger deals and some acquisitions like the Sallachy that we just talked about, that Patrick mentioned in the U.K. So that's really -- I mean with -- in terms of guidelines, we're maintaining our confidence on that.

[Unknown Analyst]

Great. And Boralex has a healthy liquidity already, but if you are to go through growth through M&A, what levers could you look at to support your growth? And what would you say is the most attractive for you guys that refinancing fell down? Anything there would be great.

[Bruno Guilmette, executive]

Yes. So in terms of financing, I'll start by saying right now, we're in a very good position. We expect likely our utilization of our credit corporate line to be minimal in the fourth quarter. As I mentioned, expecting some significant project financing on the upcoming large construction projects. So things are looking good on the financing of projects front. Competitive market, competitive bids from our lenders and strong interest. So looking good on the project financing side, still an important portion of our financing strategy. In terms of equity needs, given what we have right now, not taking into account M&A, for example, we still have good visibility for the next 12 to 18 months. So that's not a big concern.

But I think your point also goes to M&A. And depending on the size of M&A, it could be a combination we're looking at different possibilities, different front. I think you all know that we're very aligned with shareholders in terms of creating value in terms of growth of AFFO per share. So we issue equity only when we need to, to keep -- if it's a larger acquisition than that or an asset sell down, but we're working on different fronts. And depending on what's most value creation for shareholders, then we'd go for that if we need to finance a large acquisition.

[Unknown Analyst]

Right. And could you just remind us of your leverage ratio threshold that you have?

[Bruno Guilmette, executive]

Our leverage ratio right now, I mean if you look at our -- generally, what -- sorry, I'm running out of a voice here. In terms of leverage ratio, what I say is usually total leverage, 7x, 7.5x EBITDA is a good level in terms of being comfortable. That's [indiscernible] right now, I'd say we're underleveraged compared to that lever. So we have other opportunities to lever at either at the corporate level or at the project financing level. And we have -- I think we mentioned we have more than $600 million of available cash and financing facilities available.

[Operator]

We are now going to proceed with our next question. The questions come from the line of Mark Jarvi from CIBC.

[Mark Jarvi, analyst]

Briefly following up on acquisitions, maybe particularly on the U.S. front with the U.S. election outcome, maybe some uncertainty on tweaks to the IRA or guidance around tax credits and what not. Does that slow down any activity in that market? Does it give you some pause? How are you viewing that election outcome in terms of any appetite to do deals in the U.S.?

[Bruno Guilmette, executive]

I'll start and maybe Patrick can add some -- because there's 2 aspects to your question. M&A and M&A, if we're looking at, I mean, existing assets. It potentially is less of a concern for a few years. It may come if we're looking at repowering options. So I'd say, depending on the types of assets that we acquire. We still believe strongly in the U.S. market, election or not. If you recall, Trump was there in December 2020, and he is the one who extended the ITCs and the PTCs at that time. So we're still confident in the U.S. market, generally speaking.

On the development front, maybe I'll let Patrick answer that part.

[Patrick Decostre, executive]

Yes. What I think on the U.S. side is that we need to probably differentiate the noise from the signal. The signal is that there is lots of need -- the need of electricity are very important and renewable are we are able to develop and deploy project. So I think we need to obviously take care of the situation and if there is any change, but I don't think the -- I don't expect that the IRE would be completely changed. Remind that at the end, of this first term Trump extend the ITC and the PTC mechanism. And that was driven by the development of renewable in red states. So that's a fact. And we will see.

I think there is also a lot of the U.S. opportunity in development and M&A -- potential M&A, we are also looking to M&A within the U.K., like we did with Sallachy, like I mentioned, we can also try to buy project under development and our site in operation like we did in France in the past. So I think we have different opportunity on this side, too.

[Mark Jarvi, analyst]

Just to follow up on the development projects. Do you guys have equipment you can safe harbor to get the full credits on projects that you're pursuing?

[Patrick Decostre, executive]

No, we have -- what we have is we have worked in, I would say, very closely with suppliers for before we bid in New York and we have been very prudent on this when we bid. So we will see when the results will come, how we trigger this commitment with suppliers and see how we can work on this. The important point is the domestic content of the project. And we are, I think, on the safe side on this in our bid.

[Mark Jarvi, analyst]

Okay. With the French tender results that just came out, there was a media article talking about how a number of German developers were winners and they were more active in this round. Is that surprising to you? What are you seeing in terms of competition? And who's pursuing projects through the competitive tender? And does that tilt you more to the corporate PPA market going forward?

[Patrick Decostre, executive]

Yes. I have to say, I know German's developer in France since probably 23 years and just for the story, when I was alone, there was already big companies from Germany, like the WSB called VSB today or the plan back or Energy Contour or many German developers. And at the end, we are bigger than them in France. So just to remind this. So we will continue to work. And yes, we have the option of -- [indiscernible] playing the tender, the RFP from EDF and incorporate PPA and try to play on the different options that we have before us in France.

The main point in France, and we see that in the price of the tender is not -- the price is not -- the competition is not on the price, competition to get project fully permitted to be able to bid them. And that's why we are competing indeed with German developers, but since 20 years, yes.

[Mark Jarvi, analyst]

Last question for me, just on -- in the U.K., I believe they said they're going to enable repowerings to bid into the next auction. Do you think that changes the dynamic? Any way it sort of factors into how you're thinking about your positioning on your project pipeline as you look forward to bid in the next tender?

[Patrick Decostre, executive]

Yes, it's a good question. There is 2 things, I think, which are 2 very important driver for the future in the U.K., the level of competition mean in the tender is will the onshore wind be in the same subsidy basket than the solar project, like in the ARC. This is a big question mark because they did something specific for offshore wind at the last tender, which was not the case in the past. So they did something specific. And the wind industry and the Scottish players are seeing if you want to have wind projects, specifically in the North, and then just solar project in England, you should do something specific because the price will be always -- the nominal price would be always different. So that's one thing.

The other question is what would be the budget. You remember that when the government came in office, they changed the budget of the AR6 from a certain number to 50% more in very quickly, but they didn't change anything else in the tender. Now we have time before the AR7 to see some changes. And I think this will be also something important. But -- so yes, reborrowing will be there, and it could be a great opportunity. and the 2 other factors will have to be taken into account to evaluate the competitiveness of the next tender.

[Operator]

There are no further questions on this time. I will now hand back to you. Thank you.

[Stéphane Milot, executive]

Well, thanks, everyone, for your attention and good questions. So if you have any additional questions, please call me, same number as usual, 514-213-1045, I'll make sure we quickly answer your questions. So our next conference call to announce fourth quarter results will be on Friday, February 28, 2025, at the same time, 11 a.m. So have a nice day, everyone. Bye. Thank you.

[Patrick Decostre, executive]

Thank you.

[Operator]

This concludes today's conference call. Thank you all for participating. You may now disconnect your lines. Thank you.