Enbridge Inc

TSX:ENB

Earnings Call Analysis

Enbridge's Strong Growth Outlook: Continued Investments and Solid Financial Performance

Enbridge reported a robust third quarter, achieving a record EBITDA and DCF per share of $1.19, driven by solid demand across its diverse asset base. The company finalized the acquisition of three U.S. gas utilities, projecting a steady 5-9% EBITDA growth annually, supported by a balanced $27 billion secured backlog. Enbridge anticipates placing around $5 billion into service by the end of 2024, bolstered by long-term contracts with major corporations like Amazon, AT&T, and Toyota in its renewable projects. Furthermore, the firm aims to maintain its dividend aristocrat status amidst a favorable landscape for gas and power needs.

Strong Financial Performance and Continued Growth

Enbridge reported a solid third quarter, reaching record EBITDA driven by strong demand across its asset base. The company's DCF (Distributable Cash Flow) per share stood at $1.19, including the impacts from recent expansions in U.S. gas utilities. Enbridge's gas transmission business has shown resilience, growing year-over-year despite previous divestitures, largely supported by strategic acquisitions and rising demand for gas storage. The company anticipates full-year utility contributions to be significant, positioning itself to meet its EBITDA guidance for the 19th consecutive year, amid expectations of EBITDA growth of 7% to 9% over the next few years.

Strategic Acquisitions and Market Positioning

Enbridge has completed the acquisition of three U.S. gas utilities, significantly boosting its market presence and enabling a return to an equity self-funded model. This shift is expected to benefit investors through steady capital returns. Moreover, the firm is focused on positioning itself strategically within the gas and power markets, enhancing market operations through new investments in infrastructure. The company is set to invest approximately $6 billion to $7 billion in low-risk, high-return opportunities, underpinning sustainable dividend growth.

Expansion into Renewable Energy

On the renewable front, Enbridge announced the completion of Phase 2 of the Fox Squirrel Solar project, with Phase 3 underway and expected to be operational by the end of the year. Additionally, the initiation of the Sequoia solar project in Texas, with a capacity of approximately 800 megawatts, is backed by long-term contracts with notable partners such as AT&T and Toyota. These expansions fit into a larger framework of developing 2 gigawatts of renewable projects set for completion by 2026, reinforcing the company’s commitment to green energy and expected mid-teens returns on these initiatives.

Diversified Growth Drivers and Future Opportunities

Looking ahead, Enbridge's diversified portfolio provides unique growth opportunities across its business segments. The company is on track to place $5 billion into service by the end of 2024, fueling near-term growth commitments through 2026. Additionally, the company’s strategic positioning means it is well-placed to meet rising gas demand from data centers, electric power, and industrial growth. Enbridge expects to see an average of 8% annual growth in its U.S. gas utilities in the coming years, positioning it for robust market performance.

Commitment to Delivering Shareholder Value

Enbridge prides itself on being a 'dividend aristocrat,' having grown its dividend for 29 consecutive years. The company aims for a DCF payout ratio of 60% to 70%, aligning with its sustainable growth model. By maintaining an attractive dividend yield above that of comparable investments, Enbridge emphasizes its commitment to shareholder value. Thus, despite ongoing investments in expansion, the company remains focused on delivering consistent returns, showing minimal volatility in its cash flows.

Operational Resilience and Financial Stability

Operationally, Enbridge has effectively managed recent challenges, including the impacts of Hurricane Helene, without material disruptions to its services. All systems are functional, and the company has shown a commendable ability to adapt to environmental challenges while maintaining reliability. The organization’s strong investment-grade ratings across multiple credit agencies further reinforce its stable financial outlook and operational resilience.

Earnings Call Transcript 2024-Q3

[Rebecca Morley, executive]

Good morning, and welcome to the Enbridge Third Quarter 2024 Financial Results Conference Call. My name is Rebecca Morley, and I'm the Vice President of Investor Relations.

Joining me this morning are Greg Ebel, President and CEO; Pat Murray, Executive Vice President and Chief Financial Officer; and the heads of each of our business units, Colin Gruending, Liquids Pipelines; Cynthia Hansen, Gas Transmission and Midstream; Michele Harradence, Gas Distribution and Storage; and Matthew Akman, Renewable Power.

[Operator Instructions] Note that this conference is being recorded.

As per usual, the call is being webcast, and I encourage those listening on the phone to follow along with supporting slides. We'll try to keep the call to roughly 1 hour and in order to answer as many questions as possible, we'll be limiting questions to one plus a single follow-up, if necessary. We'll be prioritizing questions from the investment community.

So if you're a member of the media, please direct your inquiries to our communications team, who will be happy to help you. As always, our Investor Relations team will be available following the call for any follow-up questions.

On Slide 2, where I'll remind you that we'll be referring to forward-looking information on today's presentation and Q&A. By its nature, this information contains forecasts, assumptions and expectations about future outcomes, which are subject to the risks and uncertainties outlined here and discussed more fully in our public disclosure filings.

We'll also be referring to non-GAAP measures summarized below. And with that, I'll turn it over to Greg Ebel.

[Gregory Ebel, executive]

Well, thank you, Rebecca, and good morning, everyone. Thanks for joining us on the call today, and I'm pleased to be here to recap another strong quarter.

Before I get into the quarterly update, I want to acknowledge everyone affected by the devastating impacts caused by Hurricane Helene and Milton. We extend our sympathies to our partners, our customers and the communities impacted and wish to reiterate Enbridge's commitment to support during this challenging time.

While we've seen limited interruption of our operations and no material financial impact, safety remains our #1 priority in ensuring communities have safe and reliable energy necessary for everyday activities.

Now on to the quarter. I'm going to start by sharing some highlights for Q3, then I'd like to spend a minute or so highlighting Enbridge's value proposition and how we are positioned to return capital to shareholders in all market cycles. I'll then review how Enbridge is ideally situated to serve increasing gas demand stemming from data centers, electric power, LNG, coal retirement and industrial growth.

I'll also provide updates from our business units before turning it over to Pat. Pat will walk you through our third quarter results, key drivers supporting our reaffirmed financial outlook and our capital allocation priorities.

I will then close with a few key messages and highlight some important events coming up in the calendar.

Following our presentation, the Enbridge management team will be pleased to answer any questions you may have.

Throughout the third quarter, our assets again experienced continued strong utilization across the business, which drove solid financial results. We are well positioned to deliver full year results near the top end of our EBITDA guidance. On DCF per share, we continue to expect to be near the midpoint of the range despite fully prefunding the utilities acquisition before they're closing.

Our leverage is within our target range of 4.5 to 5x debt-to-EBITDA after closing PSNC, and we expect to trend down over the next few quarters. With the acquisitions closed and the funding completed, we have successfully concluded the acquisition of 3 U.S. gas utilities, which perfectly fit Enbridge's low-risk business model. And so we have returned to an equity self-funded model. This has been a well-executed major transaction that investors will benefit from for years to come.

In Liquids, we closed the previously announced acquisition of additional docks and land adjacent to our state-of-the-art crude export facility at Ingleside. We continue to see high utilization and expect to unlock future growth opportunities there.

Across the businesses, we're on track to place $5 billion of secured capital into service in 2024.

On growth, the team has done a great job, and I'm pleased to highlight 4 new accretive investments in growth. In Gas Transmission, we further executed our Permian strategy by acquiring a 15% interest in the highly contracted DBR gathering system. The assets enhance our natural gas value chain and serve as a key feeder system for the Whistler pipeline.

In Renewable Power, we sanctioned Sequoia Solar, an up to 815-megawatt project in Texas. Sequoia is backed by long-term PPAs with AT&T and Toyota for the vast majority of production.

We're also excited to announce participation in the third and final phase of Fox Squirrel Solar following a successful completion of the second phase during the quarter.

In Gas Transmission, we also sanctioned offshore oil and gas pipelines to serve BP's new deepwater U.S. Gulf of Mexico development.

All in all, we've added $7 billion to our secured growth program so far this year. As you can see, our scale and connectivity continue to provide competitive advantages in sanctioning new opportunities. This growth in our business continues to underpin our stable and growing dividend.

At Enbridge, we have built a low-risk business that is designed to succeed in all market cycles. This is how we've been able to deliver growing dividends for 29 years, making us one of the very few dividend aristocrats. Looking longer term, we expect to steadily grow the business by 5% annually and will remain financially disciplined to support sustainably returning capital to shareholders.

Enbridge offers an attractive dividend yield, which sits above the return of many alternative investments. The Canadian and U.S. 10-year treasuries are sitting at about 3% and 4%, respectively, while broad equity indices, like the TSX 60 and the S&P 500 are at approximately 3% and 1%, respectively. It's worth noting key drivers that enable us to be considered a dividend aristocrat and underpin that 29 years of dividend growth.

Our highly contracted cash flows experienced minimal volatility, allowing us to predictably pay and grow the dividend. Investment-grade credit ratings across the 4 major rating agencies highlight the strength of our balance sheet and the low-risk nature of our businesses.

We have negligible commodity price exposure, which sets us apart from many of our midstream peers. And then on EBITDA growth, we expect that to be higher through the next few years at 7% to 9% due to base business performance, new assets entering service, tuck-in M&A and contributions from the acquired utilities. Enbridge outpaces Canadian large peers by making up approximately 10% of the total dividends paid by the TSX 60 companies today.

All told, our business is designed to succeed in all market cycles and deliver predictable results. Despite a volatile world, Enbridge is seeing increased visibility of our long-term growth, supported by strong energy infrastructure fundamentals, and in particular, rising power demand.

Enbridge is well positioned to serve increased gas and power demand over the next decade. S&P is forecasting up to 20 Bcf per day of incremental gas demand growth by 2030. We are ideally situated to participate in new growth opportunities related to this increased demand. Our gas footprint is within 50 miles of approximately 45% of all gas-fired generation in North America today.

Importantly, for investors today, we are already sanctioning additional growth opportunities to support natural gas power demand. Like our Tennessee Ridgeline project, where we're investing USD 1.1 billion to expand our East Tennessee pipeline to support TVA's planned retirement of 9 coal-fired units in favor of 1.5 gigawatts of gas-fired generation.

Our utilities are situated in high-growth power markets with North Carolina being a top destination for onshoring due to its affordable power and favorable corporate tax rates.

In that regard, Enbridge Gas, North Carolina is investing USD 600 million to expand our gas lines to serve Duke's Roxboro gas-fired generation plant, which will have capacity of at least 1.4 gigawatts. We expect that project to be completed in 2027.

We also have exciting developments within our Renewables segment with over 2 gigawatts in development or under construction across the U.S. Beyond the electric power sector, we own over 620 Bcf of strategically located natural gas storage, and this position is growing. Our portfolio represents 25% of the U.S. Gulf Coast deliverability, and we own the only underground natural gas storage facility in British Columbia, which will provide essential flexibility for Canadian LNG operations.

Of course, our Great Lakes storage position of 300 Bcf at Dawn is a critical hub for North American natural gas users like power generators and utilities and continues to expand each year. Dawn represents over 20% of deliverability in the region.

On the LNG front, our pipelines are strategically connected to more than 30% of existing and announced LNG export capacity and will continue to serve global demand growth. We also have a preferred interest in Woodfibre LNG, which is expected to be the world's first net zero export facility through utilizing hydropower and is expected to produce 2.1 million tonnes per annum.

Now let's jump into the exciting updates on each of the business units, starting with Liquids. Mainline is on track to exceed our full year forecast of 3 million barrels per day. The system was an apportionment in July and August, and we continue to see strong customer demand, evidenced by the fact that the Mainline is back in apportionment for November. We're advancing discussions with customers for additional Western Canadian Sedimentary Basin pipeline capacity in 2026 and beyond. You should think of these as brownfield opportunities that will be very capital efficient and provide customers with critical insurance egress to deliver barrels to downstream markets.

As producers grow into available egress out of Western Canada, we've also recently started advancing a number of capital-efficient, low multiple expansion opportunities on our regional oil sands pipes. In the Permian, we continue to see strong volumes this quarter. At Ingleside, we set a single-day volume record of 2.6 million barrels and a monthly average record of 1.2 million barrels per day. It's noteworthy, Ingleside recently hit 3 billion, with a B, barrels of volumes exported, underscoring the competitive advantage of the facility and strong customer demand that attracted us to purchase of the facility in 2021.

We are seeing continued growth there with 2.5 million barrels of storage under construction with in-service expected in 2025.

We also closed the acquisition of new docks and adjacent lands at Ingleside, which will provide further growth opportunities and allow us to optimize existing dock capacity. Work is already underway to integrate these new assets.

And now let's look a little bit deeper at our gas transmission business. I'm excited to highlight how we are connecting new supply to key demand centers and extending our Permian natural gas value chain. We sanctioned close to $1 billion in offshore pipelines during the quarter to serve BP's new deepwater development plans in the Gulf. These pipelines strengthen and diversify our offshore business while expanding our footprint in the region, backed by long-term contracts with in-service expected in 2029, adding secured capital to our backlog at the end of the decade.

We acquired a 15% interest in DBR system. It extends our natural gas value chain and further demonstrates strategic value and growth opportunity being unlocked through the Whistler JV we announced earlier this year.

As a reminder, we also previously announced sanctioning the Blackcomb pipeline, which will add up to 2.5 billion cubic feet per day of egress for our Permian customers and serve growing natural gas demand in the area in 2026. We are progressing in our development of 6.5 Bcf expansion in our Tres Palacios gas storage facility which we acquired in early 2023 at an attractive price. Demand for recontracting continues to increase. And since acquisition, rates have about doubled for the strategically located asset, providing accretion beyond our original model expectations.

The Venice Extension project, which serves Venture Global's Plaquemines LNG export facility is now flowing gas, and we expect it to be fully in service by year-end.

So now let's move on to our Gas Distribution segment. As I mentioned earlier, we have now welcomed all 3 U.S. gas utilities into Enbridge, and I couldn't be more proud of the team's dedication and commitment to execution. We are now the largest natural gas utility in North America, delivering over 9 billion cubic feet per day and serving approximately 7 million customers. The team has been hard at work integrating each of the utilities, and we expect that to continue in the months ahead.

With our 4 utilities now in-house, I thought I'd spend a minute highlighting the key growth drivers across the franchise. In Ontario, we expect new customer hookups and additional power generation to drive growth, including new investment in storage and transmission. The utility has a strong track record of predictable growth and consistent returns. The Ontario government just released their long-term vision for the province's energy industry and future in response to the ISO's updated demand forecast, which predicts a 75% increase in electricity demand by 2050. We are pleased to see the Minister of Energy acknowledging the vital role natural gas plays in Ontario's first integrated energy resource plan to ensure customer affordability and reliability across industrial, residential, commercial and agricultural sectors.

In combination with the ISO's forecast, we believe that Enbridge Gas Ontario is primed to benefit from major tailwinds of gas demand. The province is procuring up to 1,300 megawatts of new gas-fired generation and have reported that there are over 7,000 megawatts of data center interconnection inquiries across more than 30 unique sites.

In Ohio, growth will largely be driven by pipeline replacement, modernization and system enhancement under program such as the pipeline infrastructure replacement plan. Over 80% of capital spend in Ohio is expected to be quick cycle under these rider programs and provide attractive risk-adjusted returns.

That said, we are also evaluating opportunities to serve new demand related to data centers and natural gas power plant expansion. Growth in Enbridge Gas Utah will be driven by increased population and data center power demand and modernization of the system. We're excited about the data center opportunities we're seeing there so far. We've recently contracted supply to serve 200 megawatts of power for data centers and are evaluating inquiries for another 600 megawatts.

Finally, Enbridge Gas in North Carolina has a very healthy population growth, and we'll be expanding to serve Duke's 1.4 gigawatt Roxboro gas-fired generation plant, which I mentioned a few minutes ago, and constructing a 2 Bcf LNG facility for system reliability.

North Carolina is also opportunity-rich as the state is positioned to be one of the primary beneficiaries of industrial growth from onshoring of manufacturing in the region.

Overall, we see an average of 8% annual rate base growth across our U.S. gas utilities over the coming years.

Now let's turn to the renewables business. Our strategic and disciplined approach has resulted in sanctioning additional growth with blue-chip partners. We're excited to announce that we've completed Phase 2 of Fox Squirrel Solar project. Phase 3 is under construction and is expected to be in service by year-end. Consistent with the other phases, Phase 3 is backed by a long-term PPA with Amazon for 100% of the energy production.

We also sanctioned the approximately 800-megawatt Sequoia solar project in Texas with a staggered in-service date expected in '25 and '26. This will be one of the largest solar facilities in North America by capacity and is backed by long-term PPAs with AT&T and Toyota for substantially all of the production. This marks further execution on the opportunities laid out at Investor Day as we developed 2 gigawatts of renewable projects in-service dates by the end of 2026.

Our customer relationships and disciplined track record of development and contracting should allow us to continue delivering solid growth in this segment with strong risk-adjusted returns.

With this, I'll turn it over to Pat to discuss our third quarter financial results.

[Patrick Murray, executive]

Thanks, Greg, and welcome, everyone. Continued strong demand across our asset base drove record third quarter EBITDA and we earned DCF per share of $1.19, which includes the impact of prefunding of the U.S. gas utilities. Liquids EBITDA is up year-over-year, primarily due to the first of our annual OpEx inflation and power cost escalators, which increased the mainline toll. As a reminder, they take effect on July 1 of each year.

Our gas transmission business is up compared to last year despite the sale of our interest in Alliance & Aux Sable. This is driven by the acquisition of Tomorrow RNG, the 19% interest in the Whistler joint venture and our gas storage assets outperforming.

We continue to see solid demand for our gas storage and benefit from elevated rates in the contracts we entered into since last year.

I'm also happy to announce that we once again have recontracted 100% of our GTM Evergreen contracts illustrating the high demand for these great assets.

Our gas distribution business includes a full quarter of EBITDA from both Enbridge Gas Ohio and Enbridge Gas Utah, which drove the majority of the step-up in 2023.

Our renewables business earned development fees in the third quarter of 2023, which can be lumpy, and their absence this quarter is driving the decrease year-over-year.

Below the line, we have higher maintenance capital from the U.S. gas utility acquisitions as well as higher interest expense and weighted average shares from the associated prefunding of those same U.S. gas utilities.

All in all, our third quarter results have set us up to achieve our guidance range for the 19th consecutive year.

Let's dive a little deeper into that guidance. As a reminder, we recast our financial guidance in the second quarter to include the U.S. gas utilities, and I'm pleased to reaffirm those ranges for both adjusted EBITDA and DCF per share. In fact, we expect to close 2024 with another quarter of strong operating performance, which would push Enbridge near the top of our EBITDA guidance range.

For DCF per share, we expect to finish the year around the midpoint of guidance, which is a great outcome when you consider the prefunding of the utility acquisition we did this year while not benefiting from a full year of EBITDA.

Looking ahead, full year utility contribution, coupled with continued operational excellence and in-footprint initiatives should drive growth over the near and medium term. Our balanced and diversified secured backlog sits at $27 billion today, and we expect to place approximately $5 billion of that into service by the end of 2024. Both projects are expected to drive new EBITDA and underpin our near-term growth commitments through 2026.

Now let's turn to our capital allocation priorities. Our capital allocation philosophy is guided by our financial guardrails, which remain firmly in place. Our target leverage of 4.5 to 5x is a sweet spot for Enbridge and the DCF payout of 60% to 70% aligns with our cash flow-oriented view of the business.

We're proud of our dividend aristocrat status become a hallmark of our value proposition and growing our dividend annually is a key consideration when deploying our $8 billion to $9 billion of annual growth investment capacity.

For the next few years, we've earmarked approximately $6 billion to $7 billion in the form of low capital intensity expansion, modernization capital and rate base investment. The remaining $2 billion to $3 billion of investment capacity can be opportunistically deployed either into new accretive organic projects, tuck-ins or debt reduction.

Within that framework, we capitalize on the best available opportunities with our equity self-funding model. Our outlook and growth will continue to revolve around low-risk, long-life investments that support ratable dividend increases.

I want to again thank the teams for their hard work this quarter, bringing the last of the LDCs and ensuring another great operational and financial showing here at Enbridge.

With that, I'll pass it back to Greg to finish off the presentation.

[Gregory Ebel, executive]

Thanks very much, Pat. Enbridge continues to be positioned to succeed in all market conditions with a low-risk business model and visible growth outlook. The scale and diversification of our business is driving key competitive advantages across complementary business franchises. Our businesses are already in front of and will continue to be in front of dramatic secular changes in power demand, both gas and renewables, reindustrialization in the key jurisdictions we serve in North America and, of course, growing energy exports from North America.

Our industry-leading asset footprint and a solid track record of execution has allowed us to take advantage of attractive growth opportunities to meet rising global demand for energy.

Returning capital to shareholders through a sustainable and growing dividend continues to be a core pillar of our value proposition and positions us as the first choice investment opportunity.

Now before I turn it over to the operator for questions, I'd like to share the dates of some exciting events coming up on the calendar. We expect to issue a news release with our 2025 financial guidance on December 3, 2024.

And then on March 4, 2025, we will be hosting our Annual Investor Day in New York, and we hope that you can all join us is in person.

With that, I'd like to thank you all for listening. And operator, please open the lines for questions.

[Operator]

[Operator Instructions]

Your first question comes from the line of Jeremy Tonet from JPMorgan.

[Jeremy Tonet, analyst]

Just wanted to start off, I guess, looking down the future, you outlined some of the expansion potential for the Mainline, but it seems like we've filled up pretty quick here.

Just wondering, I guess, what's possible on the egress front down the road as it seems like producers are eager to fill any space you can provide?

[Colin Gruending, executive]

Jeremy, it's Colin. Yes, I think your read is right on this. Production is ramping nicely. And yes, we're back into apportionment here in November. I don't expect us to be in the apportionment every month going forward here. But seasonally, I think you're going to see a lot of demand for the Mainline. And we have commenced commercial discussions with industry. We spent the quarter engineering the expansion. It's really more of an optimization, I think. It's not a trenching or a new path. It's in the right of way in terminals and quite executable.

So I'd say early response from industry is quite positive for obvious reasons, as Greg said in his remarks. And I think as everybody knows, the last barrel -- egress prices all 5 million barrels in the basin. So it's very economically important that basin is not constrained. So we're continuing to develop that. I'd say it's trending in the right direction. And I don't think we have any capital cost estimates for you at this point, kind of refine those a little bit, but looking at in-service dates in late '26, '27.

[Gregory Ebel, executive]

The other nice thing I'd add to that, Jeremy, is that they'll be very solid from a build multiple perspective, which obviously means the returns will be very satisfactory for both us and investors.

[Jeremy Tonet, analyst]

That's great to hear. And then pivoting to the LDC side. Now that Enbridge is the largest natural gas LDC in North America that we can tell. Just wondering, how you think about future growth here. Obviously, a lot of organic initiatives that can be had on your existing platform, but we also see some other LDC assets on the block out there for sale. How do you think about organic versus inorganic growth going forward?

[Gregory Ebel, executive]

Just to start, Jeremy, thanks for the question. Michele is here, so I'll let her go at that. In terms of other LDCs, look, we've made some big purchases here with 3 of what we think are the best ones out there. So I would say our focus is very much on integration of these 3, not looking at other LDCs at this point in time.

But in terms of the growth, may I'll turn it over to Michele.

[Michele Harradence, executive]

Yes, you bet. Jeremy. So first, I think what I have to say now being able to really look under the hood of these beyond what we did through the due diligence period is, these are every bit as good as we thought they were in terms of the utilities. They're just excellent utilities in great jurisdictions that really are focused on the access to affordable energy driving their economic growth. And that means that they're really well positioned for growth.

Certainly, Greg outlined the different ways that we see them growing. In terms of population growth, super strong in places like Utah and North Carolina, strong modernization program with quick capital in Ohio. I think we also talked about our projects that we have going on in North Carolina. I'd say all of those we knew as we went in. The big thing that's come up in the last year that really didn't factor in is the data center growth that we're seeing, and that's coming across the board. I mean, we -- I think last quarter, we mentioned 50 megawatts we had signed up in Utah. That's -- or at least the gas to produce that 50 megawatts and that's been increased to about another 200 megawatts in terms of the gas to produce that and lots of inquiries along that, they call it the Wasatch front. So that Salt Lake-Provo area. Similarly, North Carolina, a big decarbonization program from Duke, lots of data centers going into that Raleigh tech hub.

And even in Ohio, where we thought it was a little further out, we're just seeing that demand for power. And then, of course, in our original utility in Ontario, as Greg mentioned, 75% growth by 2050, government and a Minister of Energy that's very clear about the need for all of the above when it comes to energy and the need for natural gas as meeting part of the generation that they're looking for from what's been the largest ever procurement in the Ontario ISO's history. So we're feeling very good about that growth.

[Gregory Ebel, executive]

Yes. So Jeremy, the only other thing I'd add is that at 8% rate base growth we talked about a year ago, remember, that did not take into account. We didn't have knowledge or good insight into some of the benefits we're seeing from data centers, power growth, reindustrialization, reshoring. So obviously, I'll be looking for Michele and the team to even do better than what we originally thought.

[Operator]

Your next question comes from the line of Robert Catellier from CIBC.

[Robert Catellier, analyst]

I'd like to start with the rate of capital deployment into onshore renewables, particularly in the U.S. You've accomplished a lot in a short period of time, but I'm wondering how much capital is needed to be deployed to meaningfully bridge the gap between EBITDA and the DCF per share growth rate, understanding that these investments stand on their own merits and not just for the tax attributes.

[Matthew Akman, executive]

Yes. Rob. It's Matthew. We're really, really pleased with our progress, as you noted, on the onshore, and I think our pivot there is really paying off. We've got a lot of great projects.

And as I said at Investor Day, especially in solar, there's this rich theme here where panel prices went down quite a lot. And so companies like ours that had interconnection agreements, ready-to-go projects are capitalizing on the very high demand out there, not only from data centers, but all kinds of blue-chip corporates. As you see here, we got AT&T and Toyota and the Sequoia project. And there's lots of great data center conversations going on, as you can imagine.

So we're really able to capitalize on that and achieve returns, frankly, above what we even expected on these. We're talking like mid-teens type returns, very solidly accretive, right out of the chute, quick-cycle capital on these. We're going to be bringing these in-service starting in next year. So we're not tying up a lot of capital for a long period.

So look, this is really beneficial across the board. And we got a good pipeline behind us. We've probably got another couple of gigawatts here anyway that we can roll out into the strong demand and strong return environment.

[Gregory Ebel, executive]

Robert, I wouldn't -- it's Greg. I wouldn't downplay the tax benefits, too, right? I mean, that does get to your per-share metrics. So everything that Matthew said is bang on, but we look at it both from an EBITDA perspective, but obviously, the bottom line impact as well, right?

[Robert Catellier, analyst]

That's what I was getting at. It seems like there's an opportunity to bridge the gap between your lower DCF per share outlook and what you have on the EBITDA on the EPS front.

But second question I had is maybe for Colin, we've been hearing, reading media reports about potential additional asset sales to indigenous groups. And I wondered if there was any update you had for us there.

[Colin Gruending, executive]

Yes. Robert. So as you know, Enbridge is committed to reconciliation and has had some success partnering with communities already. I think we have 3 partnerships, working on some other ones. We're early innings on the one that the media picked up.

So I'd ask you to be patient with us. We're going to work through it. But you can probably imagine the types of relationships and communities we're dealing with. And there's a capital recycling element to it as well, right?

So we're excited about it. We'll keep working it, but please be patient with us.

[Operator]

Our next question comes from the line of Ben Pham from BMO.

[Benjamin Pham, analyst]

Maybe just to go back to the comment on the solar returns being in the mid-teens. Can you clarify that a bit because we're hearing from industry on renewables side that returns in solar have been quite challenging within the renewable technologies. I know you referenced panel prices, but is that more exclusive to Enbridge there?

[Matthew Akman, executive]

Well, I think -- Ben, it's Matthew again. I think it really depends how you're positioned. And it's a couple of things. One is having the interconnection agreements. The other is being able to navigate the supply chain. And companies like ours that are large and the supply chain wants to do business with us and we get very solid terms and conditions there. And the buyers, too, these are the kinds of buyers, this is Enbridge type customers. These large data center type customers and blue-chip corporates, they're going to want to do business with us.

And so we think we got industry best-in-class terms and conditions. And we also know how to build and operate stuff efficiently.

So all that combined, Ben, I'm not sure what you're hearing, but you'll see these are going to be right out of the chute, very cash flow accretive and kick out great returns over the life of the project. So yes, I think that mid-teens return level is solidly in sight here.

[Benjamin Pham, analyst]

Okay. That's good to hear. And maybe on the regional pipeline expansion commentary, are you thinking that's more lateral connections into [indiscernible] asset basket? Are you thinking more of those 2 pipes could get potentially expanded?

[Colin Gruending, executive]

Yes, Ben, Colin here. So generally, I'd say the basin is overpiped. I think there's a lot of competitors up there. But there are a number of bottlenecks in the system. We have 7 pipelines in the region, right? You'll recall them. And these would be, again, horsepower, DRA, lateral, some long-haul pipes in scope there, too. But debottlenecking, a very capital-efficient returns here in short cycle.

So the production growth we talked about earlier is showing up on the mainline and downstream, but also at home locally. So it's fairly imminent here. We're looking at this in the next few quarters.

[Operator]

Your next question comes from the line of Maurice Choy from RBC Capital Markets.

[Maurice Choy, analyst]

Just want to stick with the Mainline theme here. Greg and Colin, you both mentioned that November is a portion, but may not be a portion every month from here on in.

Maybe if you look at things on an annual basis, can you talk to any factors that would cause you to think this year's volume level wouldn't improve in 2025 and beyond, whether that be expectations like commodity prices or production shut-ins, just keen to hear your thoughts on that.

[Colin Gruending, executive]

Sure, Maurice. Yes. So last, let's call it, 2023's annual volume throughput through the Mainline was basically full. I think it was [indiscernible], all-time record. This year, we're trending to over 3 million, probably not [ 380 ], but over 3 million. And next year, I think you should think about a comparable number.

We think we'll have more definition for you in a few weeks, but lots of factors. But each year, there's turnarounds embedded in that. There's outages embedded in that. There's supply growth. There's demand growth. I think the competitor pipelines are performing well, but generally at a run rate level.

We continue to find and optimize our own capacity. Our outage management has gotten a lot better. We have optimizations that we're doing monthly and quarterly to add a little bit of capacity.

So we remain pretty bullish on the utilization. Like the numbers we're talking about are 98%, 99% full. So there's some variation around that. I don't want to give anybody the impression that it's locked, but there's a multiplicity of supply sources. We're connected to 40 different refineries. So there's a diversity that stabilizes it generally.

[Gregory Ebel, executive]

I love the question, Maurice, because it's only a couple of years ago where people worried, oh, how are you going to hit 3 million. And there we are continuing to do that. And as you hear from Colin, yes, it's 3 million, and then let's look at other opportunities down the road.

So it's a good question, right, because I think a lot of people were dead wrong on this issue. And I think we've proven that outcome different cycles, but also even the arrival of TMX.

[Maurice Choy, analyst]

TMX ramp-up definitely has been much better than anyone anticipated, to be honest. So that's good. Maybe finishing up on a question on the secured growth plan. From the prepared remarks and even from Michele's comments, there seems to be quite a bit of growth in the U.S. and possibly even in Ontario through the integrated energy resource planning. And we obviously heard from Matthew's mid-teens return commentary just now on renewables.

So Greg, as you look across your various businesses you have today, can you speak to the trends -- maybe since Enbridge Day, can you speak to trends in terms of where you see the greatest opportunity set? And separately, where the risk-adjusted returns that are most attractive?

[Gregory Ebel, executive]

Yes, sure. I mean, look, you're absolutely right. I think the arrival of the U.S. utilities into the portfolio put a new opportunity set. And then as Michele said, you throw on the data center elements of that, and really, it's the electric elements of that. These things need to be powered. I think that allows incremental opportunities on the renewables side. Very careful, certain jurisdictions, quick cycle just like GDS. So I see that opportunity there.

And then let's not forget GTM. GTM is filling up on the power side, the storage side, all the LNG facilities. So as I said in my comments, there really are cyclical trends that we are in front of right now, whether it's on the power side, whether it's on the reindustrialization side and nearshoring or whether it's on the export side, which you heard the numbers and the record numbers on Ingleside, and you're going to see things kick up on the LNG side as well.

So I would say, to your base question, we have an opportunity-rich environment and everybody has got to compete for that. Even amongst the utilities, we will invest our capital in the best returning utilities. If that's Ontario, it's Ontario. If it's Ohio, it's Ohio or Utah. And the same thing on the gas side. Is it going to be B.C.? Or is it going to be the Gulf Coast or the Northeast?

And so I think we've got the capacity, as Pat has laid out in the past, that $8 billion or $9 billion of capacity each year, and I expect we'll use it. And so it comes down to risk-adjusted returns. How quick can you take that capital, turn it into earnings for shareholders, which allows us to continue to drive the dividend forward.

So if anything, I would just say the markets since Investor Day, and we look forward to coming back to you all in March, has got even better, both externally for our growth, but internally for competition for capital. I like that dynamic for growth.

[Operator]

Your next question comes from the line of Manav Gupta from UBS.

[Manav Gupta, analyst]

Congrats on a strong quarter. In early October, you announced a project which adds to your growing pipeline in Gulf of Mexico to support BP operations. Can we get some more details about this project and why it's a good return on investment?

[Cynthia Hansen, executive]

Yes. Manav, it's Cynthia Hansen here. We're really excited about the Canyons pipeline supporting the BP Kaskida. So as was noted, it's about $700 million of investment and that will be in service in 2029. What we really like is that it ties into our existing infrastructure that we have there.

You may know this or may not, that we actually transport 40% of all the natural gas that comes in the Gulf Coast. And this particular field, we have a lot of experience and expertise in this area, supporting this infrastructure. It's going to tie in the gas pipeline, that 12-inch is going to tie into our existing field, Magnolia gas platform. And then the other oil pipeline ties into the Shell infrastructure. And of course, last year, we had announced our project there to support the ongoing development for Sparta.

So it really does tie in, and we're getting the long-term return with really strong contracts. So the contracts allow us to get that return on our investment in that first 10-year period. So it's really exciting for us to continue to support that build out in the Gulf of Mexico.

[Gregory Ebel, executive]

Well, what it really does also, Cynthia, as you said, coming in '29, it's adding to that growth profile beyond our current 3- or 4-year look. Now you're talking about into '29 and beyond, which filling up that hopper is important for us, and this really adds to that.

[Operator]

Your next question comes from the line of Rob Hope from Scotiabank.

[Robert Hope, analyst]

And I want to kind of follow up on the filling the hopper comment. As you take a look at that $8 billion to $9 billion of annual investment capacity, when you take a look out over the next couple of years, how full are you on that? Do you have a wealth of opportunities in front of you that you are, we'll call it, cherry-picking the best projects?

And kind of where do you think you have the most room to kind of backfill the capital plan?

[Gregory Ebel, executive]

Yes. Maybe I'll start, and then maybe Pat will want to add. Yes, I mean, we do have a wealth of opportunities. So it goes back to that issue of which -- there's different elements, right? So if I look at our projects in Western Canada, we've got some great projects there, but they're a little bit further out. When I look at things like GDS or some of the regional activities that Colin was just talking about or the projects we just announced on the solar side, they're coming in, in '25 and '26.

So I think we've been able to pick off the ones with the best returns, soonest additions to EBITDA while still being able to look at, well, let's face it, long-haul pipelines take longer to build. And those are actually filling up the hopper outside of our numbers. So I think when you look at it, Pat, we're in a good spot to be able to fund all that as well as the ongoing maintenance capital to keep the business running reliably with integrity.

[Patrick Murray, executive]

Yes, I think we've still got a little bit of capacity in the next 2 years here to do things like, Matthew -- to do some of the stuff Michele's group is doing within the utilities. I think this third quarter is kind of a microcosm of what we should see over the next little while, the diversity of the opportunities. We've got the quick-turn capital, high returning capital coming out of Matthew's green power business. We've got the start of a bunch of real projects within Michele's that's helping to serve the data center and increasing electrification. And then we've got a long-term end-of-decade type of project in Cynthia's business.

So I like the fact that it's diverse from a spend profile, diverse from when they come into service, helping to extend our growth and reaffirm the growth over 2026. So we still got a little bit of capacity in '25 and '26 to continue to do stuff and lots in the back part of the decade. So really excited about the opportunities here. And we're going to try and pick the best of the best as we go forward.

[Gregory Ebel, executive]

Rob, if you think about it -- it's probably on our website from last year, I think we've got that $8 billion to $9 billion capacity slide. We're utilizing $6 billion to $7 billion which leaves us a couple of billion dollars for these opportunities to come along. So that's a good one to refresh, take a look at.

[Robert Hope, analyst]

And then maybe to follow up there, like as you take a look at the tuck-in M&A market, could this be an opportunity to give you that data -- that $8 billion to $9 billion? And what opportunities are you seeing to be most interesting in the tuck-in market?

[Gregory Ebel, executive]

Definitely something we're always watching. We're big, so we get to see those, but they got to compete against the organic stuff. So when you've got a couple of billion dollars or more a year of opportunities that come up, again, whether it's distribution, renewables, regional pipes, they're going to have to compete both from an accretion perspective and from a balance sheet perspective, right?

So I would argue in 2023, we picked off some really great assets, whether it's storage stuff, whether it's the utility work or some of the pieces we picked up on the renewable side, that was a good time to make those moves.

So we'll be picky going forward because that's helped build up the hopper at really nice multiples relative to what I would suggest you'll see today, which will still be higher multiples as people look at the value of these assets and some of those secular changes I talked about really make the value of all these assets from liquids right through to renewables more valuable than they were a year ago.

[Operator]

Your next question comes from the line of Theresa Chen from Barclays.

[Theresa Chen, analyst]

First, would you be able to provide an updated outlook on the Rio Bravo Pipeline project given that the D.C. Circuit vacated the FERC authorization for the liquefaction facility in early August. Does this change the time line for the pipeline project? And what are your general expectations for next steps and time line to resolve the legal issue?

[Cynthia Hansen, executive]

So Theresa, it's Cynthia again. We're extremely disappointed by the D.C. Circuit's vacature of Rio Bravo Section 7 certificate. And basically, that Rio Bravo is now held by the Whistler parent JV. So we're supporting that ongoing work through our JV partnership.

It's not unprecedented to hear for the D.C. Circuit to get involved in these kind of permitting processes. And the FERC has had a strong track record of figuring out how to navigate this space in the past. Right now, it's not having a material impact on our Enbridge guidance. Now the CEO of NextDecade, Matt Schatzman, has said that they're going to continue to focus on keeping that project on track, make sure it's online to be in service in '27. And I think they've recently, both Rio Bravo and Rio Grande, have filed petitions for rehearing to make sure that we can go forward with that, and there's been strong industry support.

So a number of amicus briefs, we've supported it. Industry associations have supported that. So I think it's really important for us to get that clarity and that regulatory approval process. And there's more to come on that, but it's something that we're watching and supporting.

[Theresa Chen, analyst]

Great. And further east in the Gulf Coast, would you be able to provide an update on the Venice Extension project servicing the Plaquemines facility, just given recent concerns of delays for the start-up on the liquefaction side. Can you remind us when do you expect volumes to ramp up more significantly? And when do your commitments begin? I.e., will you be paid regardless of ramp-up with this year-end 2024 time line?

[Cynthia Hansen, executive]

Yes. Theresa. Well, great news. As of today, we are flowing through our White Castle facilities. So that's serving about 0.8 Bcf. And we think that the 2 other stations, [indiscernible] will be in service by the end of the year. And so we're already starting to receive some payments associated with those facilities.

[Operator]

And your final question comes from the line of Praneeth Satish from Wells Fargo.

[Praneeth Satish, analyst]

Just going back to solar. So it seems like interconnect agreements, that's the main driver here for moving forward with quick return -- quick-cycle projects with high returns. I guess, can you talk about how much more interconnection capacity you have that could support more of these type of projects?

And then just to clarify, the mid-teens return for the solar project that you sanctioned, is that for the first year, including the upfront ITC? Or is that the IRR over the life of the project?

[Matthew Akman, executive]

Yes. Praneeth. It's Matthew again. Just on your last part first. This is actually going to be a PTC project, not an ITC. So it's nice because it's kind of more smooth across the multiyear period. So it will provide that kind of stable contracted reliable cash flow for many years to come.

And yes, it will be immediately accretive solidly right out of the chute and then for all the years forward. So that's kind of the overall profile. And sure, when we talk about returns, it's always life of project. In terms of what else we have, yes, we've got a great pipeline. Some of that was stuff that we have been cultivating for a number of years internally. And then just over 2 years ago, we acquired Tri Global Energy and they had a bunch of stuff. So we've got probably a couple of gigawatts of -- up to a couple of gigawatts of solar with interconnection agreements. We've got great discussions going on with all the data centers, as you can imagine, and other blue chips on that. And then we've got about 1 gigawatt of wind that's interconnection ready.

So overall, we've got a few gigawatts still here that we can roll out. Again, all the stuff has to compete on returns as we always said on renewable, and we're getting those. And as long as it does continue to compete on returns in a low-risk contracted model, then we look forward to rolling a bunch more of this out in the coming years.

[Gregory Ebel, executive]

Yes, I think we said at Enbridge Day is that we might spend $1 billion a year on this. This is probably a bigger year than we said back then, and that has all to do with the returns we're seeing, the quick turn of that capital and how it competes in the early years here.

So I think if Matthew can continue to bring these types of projects with the return and quick turn that we like, we can continue to do more of them.

[Praneeth Satish, analyst]

Got it. No, that's helpful. And then you've highlighted throughout the call opportunities with data centers on the LDC side, renewables business. I guess what are you seeing along Texas Eastern and the U.S. gas pipeline assets in terms of potential discussions with utilities that are building out gas plants or data centers directly for behind-the-meter solutions? Maybe if you could just give us an update on that.

[Cynthia Hansen, executive]

Yes. Praneeth. We've said this before. We have 45% of all of the North American power generation that's within 50 miles of our Enbridge pipeline. So we are really well situated. And that's not just for data centers, but that's for other power demand. We still have coal-to-gas switching, the onshore industrialization that we're seeing.

But specifically, for that data center focus, we're seeing inbounds across that region. But also recently, in the U.S. Southeast, we have that 0.7 Bcf per day of increased demand to support about 4.5 gigawatts of new gas-fired generation.

So we're seeing a lot of inbounds. We're working through that. I think we're continuing to be really well positioned to support the data center build out.

[Gregory Ebel, executive]

Praneeth, just one thing I'd just add is that it's not just opportunities. I don't want you to take it -- these are actual things that are being done today. I hear a lot about opportunities, which is great. That's building it. But this Duke buildup is happening right now. This data center connection in Utah is happening now. Fox Squirrel with Amazon is happening right now. So yes, the opportunity is there. But I think uniquely to us versus some others, and that's because of where the assets are, the interconnection of the different businesses and how we can offer things. That stuff is happening now. So it's both current and opportunity going forward.

[Praneeth Satish, analyst]

Got it. That's helpful. And if I could just sneak one real quick, last question in here. With the recent flooding in North Carolina with Hurricane Helene, has that had any impact on your PSNC business?

[Gregory Ebel, executive]

Well, first of all, most importantly, it's had a terrible impact on people, right? And so that's -- I'm really proud of the team there and how they've stepped up and helped the community.

But operationally and financially, if you go there, no. I mean, yes, we had things to do, replacement, but all the folks are back online now. If you need gas, we're getting gas. There are some homes that were completely destroyed, those hooked up, but that's not a large number.

But Asheville is back with terms of gas service from PSNC. Any of those costs that do come up would just go into a deferral account. Again, important element of regulatory structure for utilities, right?

[Operator]

And that concludes our question-and-answer session. I will now turn the call back over to Rebecca Morley for closing remarks.

[Rebecca Morley, executive]

Great. Thank you, and we appreciate your ongoing interest in Enbridge. As always, our Investor Relations team is available following the call for any additional questions that you may have. Once again, thanks, and have a great day.

[Operator]

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