Boralex develops and operates renewable energy power plants in Canada, France, the UK and the USA. It is the largest independent producer of onshore wind power in France.
The operating segments include wind (82% of the portfolio), solar (9%), hydropower (7%) and heating (2%) with a total installed capacity of 2,455 MW. From a geographical perspective, Canada and France are the largest markets with 46% and 42% respectively of total capacity, followed by the USA (12%).
More than 98% of Boralex’s sales come from contracted energy sales that ensure stable and predictable cash flow. With more than 30 years of experience, the company has built strong expertise and built diversified businesses.
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Sales growth and market presence
Over the years, Boralex has built up extensive expertise in developing small and medium-sized projects. The wind power segment is its main growth vector. As a leading provider in the Canadian market and France’s largest independent producer of onshore wind power, Boralex’s net installed capacity was 2,455 MW in February 2020.
Over the past five years, the company has seen installed capacity grow by 17% annually. The company will expand and continue its development activities in attractive markets in Europe and North America. These are high-growth energy markets and projects with an installed capacity of more than 2,800 MW in 2023.
Boralex continues to explore new business models to sell energy directly to businesses and provide complementary services to energy transmission networks and large electricity consumers. The projects under development have an output of more than 544 MW, including 64 MW of the projects under construction or completed, which are expected to be commissioned in the period 2021-2023.
Boralex also has a strong pipeline of wind and solar projects totaling 2,502 MW. Boralex has more than doubled both organically and through acquisitions. In 2020, the company acquired three wind farms in Quebec with a total installed capacity of 296 MW and has entered into agreements with Centaurus Renewable Energy to acquire shares in seven solar plants in the USA
Renewable energy systems continued to operate even during the COVID-19 crisis as they are a must. Energy generation is an essential service. Most of Boralex’s production is done under contracts that contain preset terms. Total production in 2020 increased 5% year over year. The company is on track to meet its financial targets for 2023.
Boralex is a dividend aristocrat with a history of decent dividend growth. The company has maintained sustained dividend growth since its launch in 2014. The company has increased its payout at a rate of more than 6% annually for the past three years. Most recently, it increased its dividend by 4.7% in 2018 and currently offers a dividend yield of 1.5% but a high payout ratio. The AFFO for 2020 rose 22% year over year.
In order to further improve cash flow visibility, Boralex is concentrating on entering into long-term, indexed energy sales contracts at a fixed price. Most of the company’s cash flow comes from long-term contracts (~ 98% of capacity is under contracts with an average remaining term of 13 years), which also allow limited risk of interest rate fluctuations.
The company’s goal is to generate discretionary cash flow of $ 140 million to $ 150 million in 2023 and maintain a payout ratio of 40 to 60 percent. Year-over-year, Boralex is making good progress on its financial targets, driven by improved results in the wind and hydropower segments. The strong balance sheet continues to provide financial flexibility to support growth.
The company’s target markets are 30,500 MW. Boralex is well positioned to take advantage of the favorable environment for renewable energy growth, particularly in the wind power sector. The favorable trends in the cost reduction of renewable energies and storage technologies as well as the worldwide increase in the consumption of renewable energies are also a considerable tailwind for Boralex.
Boralex operates in a very competitive environment. It competes with large utility companies, large independent energy producers, as well as small independent electricity producers. Brookfield Renewable Partners, Algonquin Power & Utilities, Northland Power, TransAlta Renewables and Innergex Renewable Energy are Boralex’s strong competitors. The company’s development is focused on key markets with more complex processes that create entry barriers for larger companies. Boralex operates in a very competitive environment. It competes with large utility companies, large independent energy producers, as well as small independent electricity producers. Brookfield Renewable Partners, Algonquin Power & Utilities, Northland Power, TransAlta Renewables and Innergex Renewable Energy are Boralex’s strong competitors.
The energy market is undergoing a rapid transformation of the industry, which is being driven by strong innovations and technological changes. Renewable energies are now cheaper than most conventional power sources.
The company’s efforts to diversify and optimize its business and revenue streams in this area should continue to support growth. Boralex assumes that 96% of its sales are generated with long-term contracts, which will further secure earnings.
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