Northland Power Inc

TSX:NPI

Earnings Call Transcript 2024-Q1

[Operator]

Welcome to the Northland Power conference call to discuss the first quarter 2024 results. As a reminder, this conference is being recorded on Thursday, May 16, 2024, at 10:00 a.m. Eastern Standard Time. Conducting this call for Northland Power are Mike Crawley, President and Chief Executive Officer; John Brace, Executive Chair; and Adam Beaumont, Interim Chief Financial Officer. Before we begin, Northland's management has asked me to remind listeners that all figures presented are in Canadian dollars and to caution that certain information presented and responses to questions may contain forward-looking statements that include assumptions and are not subject to various risks. Actual results may differ materially from management's expected or forecasted results. Please read the forward-looking statements section in yesterday's press release announcing Northland Power's results and regarded by its content when making investment decisions or recommendations. The release is available at www.northlandpower.com. I will now turn the call over to Mr. Mike Crawley.

[Mike Crawley, executive]

Okay. Thank you very much, and thanks to everybody for joining us this morning. As always, I'd like to start by taking a moment to emphasize that the health and safety of our people is our top priority at Northland. We have 3 construction projects now well underway, and we are now close to 50 well-trained health and safety professionals working closely with our project teams, our contractors and our partners to ensure that our health and safety program is best in class. So now jumping to our quarterly updates. We've had a strong start in 2024 with first quarter financial results better than expected. Our results were higher than last year, primarily due to higher wind resources across all offshore wind facilities as well as the contribution from our New York onshore wind facilities, which began operating in October of 2023. All our operating offshore wind facilities experienced strong electricity production in the first quarter with our Deutsche -- but offshore wind farm in Germany achieving an all-time high production level. The strong operating performance resulted in our first quarter adjusted EBITDA of over $450 million. It's an increase of close to 30% or approximately $100 million compared to the same quarter of 2023. On adjusted free cash flow and free cash flow per share, they were $0.88 and $0.85 per share, respectively, in the quarter compared to $0.72 and $0.62 per share, respectively, during the same period the year earlier. As noted in our press release yesterday, we are reaffirming our 2024 financial guidance and outlook. Adam Beaumont, will provide more details on financial information later in the call. So moving into construction updates. We continue to make good progress on our construction program to the 2 large offshore wind projects in Taiwan and Poland and the battery storage project in Canada. As you recall in our Investor Day, we provided a great level of detail on what has been done and what are some of the critical milestones for all our 3 construction projects. To illustrate how advanced the projects were, we gave a percentage of completion as we wanted to outline what had already been achieved as of December 31, 2023, as a baseline. Moving forward, we'll report on the status of our key milestones on each of the 3 projects. This will give our investors and stakeholders a very good and ongoing overview of our construction progress. With that, I'm going to start with our Hailong project in Taiwan. This 1 gigawatt offshore wind project, which is 30.6% owned by Northland continues to progress well. The project continues to make progress with fabrication of foundations, cables and the onshore and offshore substations well underway. Turbine component manufacturing has also commenced offshore construction work has continued to advance with the installation of both offshore substation jacket foundations and pintiles, which was used to anchor in the foundations at multiple turbine locations. Other major components of the wind park are arriving in Taiwan, including turbine jackets in the first offshore substation topside substantial structure. Full commercial operations are expected to commence in 2026, 2027, according to the schedule. Overall cost continues to be aligned with original expectations. Once operational, Hailong will be one of the largest offshore wind facilities in Asia and will provide enough clean energy to power more than 1 million Tianese households standard metric used to measure output from a wind farm a renewable energy facility. And of course, a lot of the demand growth and demand for energy in Taiwan is actually fueled by the technology sector there.Moving to Baltic Power, our 1.1 gigawatt offshore wind project in Poland, which is 49% owned by Northland. On that project, it is -- well, Baltic Power is one of the first large-scale offshore wind projects. Indeed, it's the first offshore wind project to go to construction in Poland, and it will play a key role in the country's energy transition and in the country's decarbonization program. The project continues to make progress on the fabrication of onshore and offshore substations, foundations, export cables and intra cables. Turbine manufacturing as well has commenced, and the onshore substation construction is well underway. The full commercial operations are expected to commence in the latter half of 2026, which is according to the schedule, and overall project cost continues to be aligned with the original expectations. So lastly, the [Indiscernible] battery energy project -- storage projects in Ontario, which is 72% owned by Northland. This project is one of the largest battery storage projects in the world and will provide essential bridge services and reliability to the Ontario electricity system. It's also important to note that this is an asset class that is expected to see lots of growth over the next decade as bridge seek to balance intermittent renewables. The project continues to make progress with its construction activities, all foundations for the battery pack and transformers have been installed. All battery packs, this is important, have been delivered to site and medium voltage transformers have started to arrive as well. Full commercial operations are expected to commence in 2025, which again, is according to the schedule. Overall, project costs continues to be aligned with original expectations for this project. As you can tell, we have good momentum on our construction program, but we do continue to be vigilant, disciplined and focused on these programs to ensure that these projects come in on time, on budget and deliver the material boost in cash flow that NPI is expecting. As such, project execution for the company does remain our #1 priority. Moving on to other significant first quarter events. In March, we entered into an agreement to sell 100% of the 130-megawatt La Lucha solar facility in Mexico. The sale is expected to close in 2024 on satisfaction of customary closing conditions. Now this transaction is all about rationalization of the markets that we're in as well as recycling capital. And as we said at Investor Day recently, we remain disciplined and prudent in managing our capital and financing needs, and we have no further requirement to access equity or debt markets for additional growth, and we will continue to be highly disciplined and selective in pursuit of any new opportunities to only move forward on such opportunities that demonstrate value accretion to shareholders. Now before I finish, as most of you are aware from our announcement at the end of March, the Board and I came to a decision in March that Northland would undergo a well-planned leadership transition over the next several months. So as such, I will be transitioning out of my role as President and CEO effective September 30. And -- now it's not good bye quite yet, but I do want to say on this call that it has been a great honor to work with such a talented and dedicated team at Northland over the last 9 years, including 6 as CEO. We've all achieved a lot working together. And I'd like to thank all of our shareholders, partners, lenders and employees for their trust and support over the years. All of these projects, these investments and the strong availability that we've been able to deliver consistently from our operating facilities that involves not just the employees of Northland, but a lot of our partners and suppliers as well. As part of the transition plan, John Brace, who many of you know, has served as CEO of Northland from 2003 to 2018, and as Board Chair since 2019 will take on the role of Executive Chairman until the next CEO is selected and starts. Now I've known John for over 20 years, and I think a number of you on the call would know John as well. He's been a key figure in Northland's history and will provide strong leadership and guidance as Interim Executive Chair during this transition period to act as a bridge between myself and the next President and CEO. It's almost like a relay race with me handing that one to John and then John handing that off to the next President and CEO  all to ensure that this transition moves as smoothly as possible with no impact on the business, no impact on employees. So on that note, I'll hand things over to John.

[John Bruce, executive]

Thank you, Mike, and good morning, everyone. I would like to start by expressing my gratitude to Mike for his outstanding leadership and immense contribution to Northland. As the Board and I continue to attest, Mike has been instrumental in expanding our global presence, diversifying our portfolio and developing our long-term growth pipeline. As Mike mentioned, the company is in a position of strength with growth locked in through 2027 and our major construction programs for high long, Ultipower and Anido, well underway and all progressing according to schedule. As mentioned already, there are no changes to guidance or outlook for the year. And Northland remains extremely well placed for the future as governments and corporations globally work towards their energy transition targets. And as Mike mentioned, through discussions between him and the Board about the future, we felt that this was the right time to initiate a leadership transition given the strong position of the company. As we go through this transition period, I want to emphasize that we remain committed to our strategy and priorities as presented at our recent Investor Day. We will continue to focus on enhancing shareholder value and fostering strategic accretive growth and builds on Mike's many successes. We are progressing with a comprehensive global search for our new President and CEO with a top-tier executive search firm actively leading these efforts. We are targeting a leader to align with our company's values, complement the exceptional talent that we have at Northland and drive shareholder value as we prepare for our next phase of growth. On behalf of the Board and everyone at Northland, I would once again like to thank Mike for his dedication and service and wish him all the very best. Northland has a best-in-class leadership team who I've known for some time in my role as Chairman and who I have now had the closure of working more closely with over the past month. Supplementing our leadership strength, we have welcomed our newest addition to the executive team earlier this week, Toby Edmonds. Toby is the new Executive Vice President of our offshore wind business unit, whose primary focus will be on the successful project execution of Hailong and Baltic Power. Toby has an outstanding track record in offshore wind, and we are both fortunate and delighted to have on board. With that, I will now turn the call over to Adam, who will provide a more detailed review of our financial results.

[Adam Beaumont, executive]

Thank you, John, and good morning, everyone. Before jumping into the financial details for the quarter, I would like to echo John's remarks and thank Mike for his leadership. On a personal level, his mentorship has been invaluable, and his achievements will continue to fuel Northland's future success. Turning to the quarter. We are pleased with our strong results to start the year. Strong wind resources in the North Sea was the primary driver with our projects in Germany experiencing one of the highest wind production quarters since it began commercial operations. The strong wins also continued into April. As a result, our financial results were better than the same quarter last year on all 3 of our key financial reporting metrics, adjusted EBITDA, adjusted free cash flow and free cash flow. We generated adjusted EBITDA for the quarter of over $450 million, representing an increase of nearly 30% compared to last year. The key factors contributing to the higher adjusted EBITDA included a $71 million increase at our offshore wind facilities, primarily due to the higher wind resources a $10 million decrease in development expenditures, partially offset by higher G&A costs. The focusing of our growth efforts in our key -- our identified key markets has enabled the reduction in development expenditures compared to the prior year, and the higher G&A relates to some onetime nonrecurring costs. Results were higher by $9 million from the New York Onshore wind facilities, which achieved commercial operations in October of last year and an $8 million increase in operating results at EPSA, primarily related to inflation escalation and the appreciation of the Colombian peso. The results were partially offset by a $6 million lower results from our Spanish renewable portfolio, primarily due to the lower market prices experienced across Europe as a result of the warmer winter. With respect to adjusted free cash flow and free cash flow, Northland generated approximately $226 million and $217 million, which is an increase of 25% and 41% from last year. The increase in adjusted free cash flow was primarily due to $85 million higher EBITDA from operations, net of growth expenses, which was offset by a $23 million increase in current taxes resulting from higher results at our offshore wind projects and a $15 million decrease primarily from foreign hedge -- foreign exchange had settlements realized last year. On a per share basis, these figures translated into adjusted free cash flow of $0.88 and free cash flow of $0.85 in the quarter. This compares to adjusted free cash flow of $0.72 and free cash flow of $0.62 per share last year. As Mike noted earlier, we announced the sale of the Lucia project in March. Upon closing, Northland expects to receive $205 million in cash after taxes and transaction fees. This will result in a small cash-on-cash gain. The proceeds are planned to be used to repay amounts drawn on our corporate credit facility and for general corporate purposes. Looking further to the balance sheet. As of today, Northland continues to be in a strong position with access to approximately $760 million of cash and liquidity. The liquidity is comprised of funds available on our revolving facility and corporate cash on hand. As Mike and John noted, we reaffirmed our 2024 financial guidance, which is adjusted EBITDA in the range of $1.2 billion to $1.3 billion, adjusted free cash flow per share of $1.30 to $1.50 and free cash flow per share of $1.10 to $1.30. Overall, it has been a good quarter underpinned by strong results and continued progress being made on the 3 construction projects. I will now turn the call back over to Mike for his concluding remarks.

[Mike Crawley, executive]

Thank you, Adam. And nobody joined the call to hear a bunch of executives talk about each other. But I will say one thing about Adam, is that the company is in very good hands with Adam as interim CEO. Nobody at Northland knows the company better than Adam has a deeper knowledge of how the company makes money, how the company operates and is able to navigate across the company and pull people together to make things happen. And that was abundantly clear last year. We had a lot to get done. We achieved it all. And all of those, including you would never have been able to get that done without Adam standing with us. And that's going to be very important for the company moving forward. And Adam is also, as you would know, in the call, very well connected to the market and is always a voice of the market within any discussion that we have at Northland. So we've got a very solid start to the year. Both our strategy and long-term guidance remain unchanged. We feel good about the progress on our construction program so far as you can probably tell, and it's going to materially increase our cash flow, but we do remain very focused and vigilant on execution. Our growth is locked in for the next 3 years to achieve a 7% to 10% EBITDA CAGR through 2027. And this is important because it means we don't need to tap equity markets that market, supply chains or originate new investment opportunities to reach our new term growth targets. You need to execute on our construction program, but we don't need to go out and find anything else new. Anything further that we may do will be discretionary, incremental and discipline. And this is different than some of our other peers in the sector. We'll only pursue additional projects, as I said earlier, that are accretive to our shareholders during this period. We have an established and talented team and the progress we're making on constructing 2 large and complex offshore wind projects, evidence the strength of that team. We're also in the process, as I said earlier, of constructing one of North America's largest energy battery storage facilities. Our in-house talent demonstrates that we continue to have what it takes to be a leader in originating, developing, constructing and operating large and complex renewable energy projects. You'll all have seen the recent announcements some of our peers related to AI and data center growth, demand growth for power. And like our peers, we see this as a very positive trend and trajectory for the industry overall. In 2022, data centers consumed approximately 2.5% of total electricity in the U.S., just to give you one stat and data center portion of this is expected to triple to 7.5% by 2030. Now this equates to electricity consumption of about 40 million U.S. households, which is almost a third the the total nation households in the U.S., a number of households in the U.S. So we are tracking this growing demand for power closely, and we do have the talent to execute large and complex PPAs, as has already been demonstrated by the 744-megawatt corporate PPA that we entered into on the Hailong offshore wind project, which at the time, I think, was one of the largest of the largest corporate PPA in the world. We have a large and exciting pipeline of which 2 gigawatts is currently under construction. The world needs a lot more power generation built over the next 10 to 15, 20 years and that's exactly what we do, and that's what we do at scale. We are excited about the future. This brings to Northland, our shareholders and our stakeholders. This concludes our prepared remarks, and we'd now be happy to take your questions. Please open the line.

[Operator]

[Operator Instructions] One moment for our first question, please -- our first question will come from the line of Eli Rodney with National Bank Financial.

[Eli Rodney, analyst]

 Congrats on a great quarter. Just filling in for Rupert here. On the offer projects, Hailong in particular, it sounds like you're making great progress. And correct me if I'm wrong, but it seems that work has continued through that winter buffer period outlined in the project schedule. Is there any room for upside in construction and commissioning if you continue at the current pace there?

[Mike Crawley, executive]

What we've disclosed is that we're continuing to progress according to the schedule and that cost for the project remain in line with our expectations. And I think we just leave it at that at this point. I mean we obviously always look for opportunities to secure projects and secure cash flow sooner than forecast. But at this point, we're just reiterating that the projects are progressing according to schedule and according to the original cost estimates.

[John Bruce, executive]

I would just maybe add to that, that the buffers primarily apply to offshore work, and there's lots of things that happen in factories and onshore that continue on through that period of time.

[Eli Rodney, analyst]

And then maybe moving over to Devex then, obviously, way down year-over-year at roughly $8 million with the focus on the in construction projects now and that being the #1 priority. Is that a good run rate level to assume going forward?

[Mike Crawley, executive]

I think Devex moves up and moves down depending on where the business is at. So right now, the business is harvesting on some opportunities that were developed over the last few years by converting them into projects and into cash flow within a short period of time. So certainly, for this year, we've disclosed what Devex is -- and going forward, we would include that as part of our guidance for future years.

[Adam Beaumont, executive]

Yes. No, we have the details disclosed in our February results and when we're setting out our guidance, and we're in line with that.Â

[Operator]

One moment for your next question, please. Our next question will come from the line of Nicholas Boychuk with Cormak Securities.

[Nicholas Boychuk, analyst]

Coming back to that question about the project development costs. I wonder if you guys can expand a little bit just on how you're thinking about the pace of that and whether or not the correct read through is that kind of looking into the future, you've got the Alberta renewables Scott wind round 3 Taiwan and subscreen offshore opportunities. Is it fair to say that once you finish this current round of execution, those would be the primary focuses and then you'll try to back fill additional development projects afterwards?

[Mike Crawley, executive]

I think -- I mean what we've said in the remarks at the beginning is that we will be disciplined in any new investment opportunities that we pursue during this construction period. It doesn't mean we won't necessarily pursue anything, but it would have to be a meaningful investment that would have -- that would be accretive to shareholders. A lot of the pipeline that we described at Investor Day would be delivering cash flow after these projects come online. But I guess I'll leave it at that. Do you have anything else to say, John?

[John Bruce, executive]

I just like to add or elaborate a bit in the sense that development continues. We are trying to be very focused on what we do and pursuing projects that will deliver meaningful value to our shareholders. As we focus on construction. There's a deemphasis of development naturally as a consequence. But we do have to think of the future. We do have to think about continuing on and as the construction projects mature, and we have additional opportunity and appropriate financial resources to invest in development, we will perhaps ramp up to higher levels than we anticipate over the next shortish period of time.

[Mike Crawley, executive]

And we did signal Nick at Investor Day that we would be looking at opportunities to potentially recycle capital. La-Lucha is the first example of that as we focus in on markets that we see better prospects moving forward with than others and pull back from markets where we've seen more headwinds. So La-Lucha is the first example, but there is always the opportunity to gradually prudently reconfigure the business over the next few years by recycling capital as well.

[Nicholas Boychuk, analyst]

 And kind of in that thought of recycling capital, can you kind of share your thoughts on how you're thinking about EBSA right now? Obviously, you had a great quarter. I'm curious if you could break down the 36% year-over-year gain on the top line between volume price FX, the sustainability of that and how you're thinking about that segment moving forward?

[Mike Crawley, executive]

Adam can talk to the results maybe?

[Adam Beaumont, executive]

Yes. In terms of the results, I think when you're looking year-over-year, you're seeing the increase, which is related to inflation escalation, which is inherent in the regulated return and as well as the appreciation of the Zumba peso. I don't have the specific numbers in front of me, but those are the 2 drivers for the increase year-over-year.

[Mike Crawley, executive]

And on any transactions or anything that we're looking at, we wouldn't comment on those at this stage. I think what we said at Investor Day, which we would say again, is that we will always -- you should not be surprised that we would be testing the market on various different options moving forward, but I would not read through that we necessarily will pursue every option that we test.

[Operator]

One moment for our next question. Our next question comes from the line of Mark Jarvii with CIBC.

[Mark Jarvi, analyst]

 Just coming back to the comment about asset sales and CapEx I know you don't want to talk about specific assets, but just walking you through your thought process in terms of if you did sell someone sort of the triage of where those proceeds would go today? Is it onshore growth? Is it tighten the balance sheet just to have some buffer for any contingencies? Is there any other uses? And given there's a CEO transition going right now, how do you think about proceeds coming in before they're actually deployed during that period?

[Mike Crawley, executive]

Let me start, and then I'll hand it off to Adam. So I mean during the construction period, we are very much focused on ensuring strength of balance sheet that we have adequate pumpers in case on anything unexpected happens and so that we can continue forward with the construction and bring it to a conclusion. So that's important just from a simple resilience standpoint and prudent management of the business. Otherwise, there are -- we have a robust pipeline, a diversified pipeline across offshore, onshore. We have a team that is dedicated and focused on looking at ways actually to optimize the existing facilities we have and extract more value out of those, which arguably should be kind of your first stop in terms of allocation of capital. So there's a lot of pots. I'll turn it over to Adam.

[Adam Beaumont, executive]

 Yes. I mean, as  said in the comments, I think that our current liquidity position is strong with $760 million of liquidity. And as Mike said, we won't -- we're exploring asset recycling as -- to create options for the future and how we redeploy it will depend and we'll just make sure that we have the right interest of the company outlined at that time.

[Mark Jarvi, analyst]

Just to make sure that the balance sheet is well protected, if you did sell an asset, some foregone free cash flow, you'd be fine with that for a temporary period as you see through the major projects and then look to deploy that capital to bring back the free cash flow?

[Mike Crawley, executive]

Yes. I think, again, it would be a part of the consideration. So any cash that would be lost from a sale will be part of the factor when we're looking at it and making sure we're making the right decision going forward. So I think that's what's important looking ahead.

[Mark Jarvi, analyst]

And this question is for John. The CEO transition maybe caught the market by a bit of a surprise. You probably heard some feedback from investors. Just wondering how you've integrated any feedback from stakeholders, investors into how you're now thinking about the CEO search. Any updated views in terms of how you're seeing the candidate pool and checklist for the qualities that you'd like to see an ideal CEO.

[John Bruce, executive]

I think... The feedback, frankly, was generally focused on CEO and a CFO search going on at the same time. There are many questions related to that. And as we said then, and I'll repeat now, I think we're in good hands. As Mike has already worked eloquently about ad and his capabilities as CFO, and I certainly subscribe to everything that Mike said, Adam, is fantastic. So we will change to a permanent CFO in the due course of time. In terms of the CEO search, I kind of described it as an onion is it were -- with the other layer of the onion being finding somebody who is reflective of the high quality of management that we have already -- the next kind of layer of the onion is somebody who has demonstrated the creation of shareholder value and strong leadership of a complex organization and who has familiarity with capital markets and experience there. And finally, then you start to get into more detailed components of what kind of experience that are you looking for. And as I've said before, one might immediately assume that it would be an absolute requirement that the person have experience in the electricity industry in a very direct fashion. But when then you think about it a little bit more, you realize that there are other industries that display similar characteristics of high capital costs, long development times, long operating lives and so on, and they are what comes to mind or places like mining and oil and gas and infrastructure. That's not to say that we would like to have someone with electricity experience. So I think the feedback that we've received hasn't really modified much about the criteria that we're looking for in a CEO. The search is underway, and I think it would be inappropriate for me to comment any information about the state of the search or the progress underway while we are actively talking to people.

[Mark Jarvi, analyst]

That's helpful context John. Maybe just one follow-up, just the global sort of experience in terms of obviously, Northland's expanded all over the world, that sort of, I guess, appreciation understanding for a CEO having managed across different jurisdictions, is that key element versus someone who's maybe been a single jurisdiction, maybe on the Canadian exposure, U.S. exposure or something like that?

[John Bruce, executive]

Yes. International, global, whatever you want to call it, that's certainly one of our list of search criteria.

[Operator]

One moment for our next question. Our next question will come from the line of Jessica Hoyle with Scotia Bank.Â

[Jessica Hoyle, analyst]

So just to start maybe on offshore wind. Can you give an update or any commentary on how the supply chain is getting set up in Taiwan as it relates to the Hailong project?

[Mike Crawley, executive]

So we -- Hailong is probably the last of the original grouping of kind of round 1 project that has to move forward. So Hailong is benefiting to some extent from the establishment of a local supply chain for some of the local requirements. So there's a lot of learnings that we were able to gain by observing how the other projects engaged with the local suppliers and the supply chain also matured to some extent. Hailong is also 300 megawatts plus 744. And the 744 megawatts actually doesn't have any local content requirements. So we also have a substantial international supply chain as well, Vietnam, Korea, from Europe. And overall, as I reported in my opening remarks, we are pleased with how the fabrication is progressing whether it's the pin piles that hold the jacket foundations in place or the 2 jacket foundations for the OSS that have both been now installed actually is fabricated but installed and the OSS, one of the 2 OSS platform, which is a sixth story structure has now been fully fabricated and delivered to Taiwan for installation in the near future. So overall, we appreciate that some of the early-stage projects had some issues with the local supply chain, but I think we benefited from observing that. And also from commercially and contractually negotiating and some flexibility to our local content obligations to allow us, for example, to swing in international components, in some cases, for local components if the local supply chain is delayed just to add buffer and reduce risk on the construction program.

[Jessica Hoyle, analyst]

And then I think you mentioned that some of the strong wind conditions for offshore continued into April. So just looking at your guidance for the year, how do you think you're positioned within the range, just given the strength in Q1 and then some of that favorable -- some of those favorable conditions in April as well?

[Adam Beaumont, executive]

Yes. I think that the -- yes, like you said, the results have been pretty strong so far to start the year, but it is the first quarter, and we like to look at things on a risk-adjusted basis, and we're kind of holding forward to the guidance that we've set at this time. Obviously, for future quarters, we'll continue to revisit that, but that's where we're holding to right now.

[Mike Crawley, executive]

What's important when you look at the production from the first quarter, even from [Indiscernible], I guess, with those who have followed the Gemini have to see, I mean, we don't control the wind, but we control the availability of our facilities. And -- the operations team did a very good job in making sure that the facilities were operating at a high level of availability so that we could capture that resource.

[John Bruce, executive]

And finally, if I can add to that, remember that when the wind resource is generally higher in the winter than it is in the summer. So we did extremely well in the time that already was expected to do extremely well. We did better than expected. But there is a seasonality to this, and it's early in the year. So we're not trying to counter things before they're hatched or chicken before they are hatched I should say.

[Operator]

One moment for our next question. Our next question comes from the line of John Mould with TD Securities.

[John Mould, analyst]

Maybe just one question on your Alberta pipeline and the power market restructuring that's going on there. I think it's safe to say that you're not looking at an FID on something like Jurassic this year, just given the focus on construction execution. I think you've been pretty clear there. But I'm just wondering if that power market restructuring potentially pushes out the time line where you might look to move forward with a project in Alberta and just how you're thinking about your pipeline there more broadly given the potential changes we're seeing.

[Mike Crawley, executive]

Yes. I mean there's 2 sets of changes broadly speaking, in Alberta. The first was the moratorium -- and then the conclusion of the moratorium with new sets of rules around development, right? And on that, our approximately 1.5 gigawatt pipeline was largely unaffected in so far as we already had our AUC permits on about a gigawatt of it. And then we also had some battery storage projects as well within that pipeline, which are unaffected by the rule changes. So that element of the change in Alberta were neutrally you could even argue net positive to us as far as it put us in an advantageous position relative to other projects that weren't as advance in Alberta. With respect to the market redesign, it's something that we are tracking very closely and we're very much involved in the stakeholding process. Michelle Chislett, who heads up our onshore business unit is actually out in Calgary today. I think he's participating in a round table with government officials later today as well as that gets further developed, and we'll certainly be tracking to see what impact that has on the merchant market there. Our intent, if we move forward with those projects is to contract the majority of the output from them. And so there is some latitude in terms of determining how much we contract them based around the final market design and the impact that we would see that having on market prices going forward. But that's kind of where it's at right now, John.

[Operator]

 One moment for our next question. Our next question is a follow-up with Eli Rodney from National Bank Financial.

[Eli Rodney, analyst]

Yes. So back on the offshore portfolio, Germany and specific, could you give us some insight on to what level of curtailment you saw in Q1 and then maybe extrapolating that into April and May.

[Adam Beaumont, executive]

I don't unfortunately have the April main numbers, but I think you'll see in the notes the amount of revenue curtailed overall was $21 million for the 3 months ended March 31.

[Mike Crawley, executive]

Speaking broadly, unpaid curtailment tends to happen during periods of high production and particularly when they overlap with holidays or with periods of low industrial demand. So we'll see what happens over the next few months.

[Eli Rodney, analyst]

And then one more on asset recycling. I might have missed this, but it seems that the market sentiment today is broadly in favor of buyers. And I think, Adam, you mentioned taking a few year approach on your view to selling down stakes or complete asset recycling. With rates coming down now, is it fair to say that Northland is taking a bit more patient of an approach to selling down additional assets after La-Lucha, maybe 25% or 26% would be a target year -- are you still seeing good value for some of the noncore assets in the portfolio?

[Mike Crawley, executive]

I'd be very conscious on any asset recycling of value for shareholders. I mean, we have a diversified portfolio across a number of different jurisdictions. So -- what you said is perhaps broadly true. But once you start piercing into different markets and different specific assets, there could be different -- it may not necessarily always be the case. But our criteria or our screen is making sure that we do achieve what we believe is a good value on any divestment because we look at the full cycle economics on recycling from that divestment into the reinvestment into a new opportunity. And so the divestment economics are equally important to the investment economics, right?

[Operator]

I'm currently showing no further questions at this time. I'd like to turn the call back to Mr. Mike Crawley for closing remarks.

[Mike Crawley, executive]

Yes. Well, thank you for everyone for joining us today. We're going to hold our next earnings call following the results of our second quarter 2024 results in August. And in the meantime, we want to thank everybody on the call for their continued support.

[Operator]

This concludes today's conference call. Thank you for your participation. You may now disconnect. Everyone, have a wonderful day.