Innergex is a leading independent Canadian renewable energy company that develops, owns and operates hydropower, wind farms and solar farms.

The company operates in Canada (53% of 2020 net installed capacity), France (8%), the US (33%) and Chile (~ 6%), which are also geographic segments.

Innergex is involved in a total of 75 plants, including 37 hydropower plants, 32 wind parks and six solar parks. The company has a balanced portfolio that is diversified by both location and technology.

The operating segments are hydropower (29% of the installed net capacity in 2020), wind power (57%) and solar energy (14%) with an installed gross capacity of 3,694 MW.

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Investment data

Sales growth and market presence

Innergex has been a focused player in renewable energy for three decades and a preferred partner in developing sustainable energy projects. The company’s asset portfolio is highly diversified by type and region. In terms of sales, hydropower is the largest with a share of almost 50% of total sales, followed by wind power (~ 46%) and solar (~ 4%).

Over the past three decades, Innergex has accumulated both the expertise and the scale to successfully launch large projects. With increasing concerns about climate change and global warming, renewable energy sources have become viable energy sources for future generations. Solar plus storage will also grow by leaps and bounds in view of the increasing demand for electricity and the temporary nature of renewable energies. The company is making good progress on its upcoming Solar Plus storage projects in Hawaii.

Innergex sells the generated electricity to rated public utilities and other creditworthy counterparties under long-term electricity purchase agreements, electricity hedging agreements or short and long-term industrial and retail contracts. The PPAs have a weighted average remaining life of 14.4 years. Innergex assets are young with a weighted average age of approximately 7.7 years.

Innergex’s quarterly production in the third quarter of 2020 was 93% of the long-term average. Innergex has a 100 megawatt development pipeline for battery storage. The company completed the acquisition of six Idaho wind farms with a total capacity of 138 MW in July and signed two long-term PPAs for solar and battery storage projects in Hawaii in September. Innergex is also making good progress on its Hillcrest Solar, Innavik Hydro, Yonne II Wind and Griffin Trail wind projects.

Dividends

Innergex Renewable has had decent dividend growth in the past. The company has increased its payout to more than 3% per year over the past five years. Most recently, it increased its dividend by 2.7% and currently offers a dividend yield of 3.3% but has a high payout ratio. Innergex Renewable is a Canadian dividend aristocrat and was this year for the eighth year in a row with annual dividend increases. There is also a share buyback program.

Innergex Renewable has a proven record of growing cash flows from a diversified wind, natural gas, hydro and solar asset base backed by long-term power purchase agreements.

Acquisitions are still an important part of the company’s business strategy. The company focuses on developing and purchasing high quality renewable energy plants that generate sustainable cash flows and create long-term shareholder value. Acquisitive acquisitions and project developments have paved the way for constant growth for the company.

The strategic alliance with Hydro-Quebec will help Innergex develop a larger industrial customer base with investments in larger and more diversified projects. The company has a balanced capital structure and an attractive investment grade rating that also supports convenient capital financing.

Innergex is currently involved in ten projects under development, four of which are under construction and expected to go into commercial operation between 2021 and 2023. The growing demand for renewable energies, a stable government policy for the procurement of renewable energies and strong acquisitions are a strong tailwind for Innergex.

The company is well positioned to benefit from the growing trends in renewable energy. Canada currently generates 80% of its electricity from clean and environmentally friendly energy sources and aims to increase to 90% by 2030. Hawaii currently has the most ambitious goal of producing 100% renewable energy by 2050, and France continues to be a very attractive market for renewable energy. The US market looks attractive even with the government’s choice of renewable energy.

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competition

Innergex has developed the know-how to participate in the growing market of cutting-edge technologies that support smart grids and facilitate the use of renewable energies. A global presence with 68 operating facilities, six projects under development and participation in numerous potential projects gives the company a competitive advantage.

Innergex competes with companies like Brookfield Renewable Partners, Algonquin Power & Utilities Corp., Northland Power Inc., TransAlta Renewables, etc. It faces competitors ranging from large utilities to small independent power producers.

Bottom line

With a growing installed net capacity of over 2,740 MW, a presence in new markets and novel technologies, Innergex is prepared for rapid future growth. The company has a strong core business with a proven track record and is in a good position to leverage its knowledge and customer relationships to develop new locations and benefit from its strong project development pipeline. Innergex will continue to grow, supported by the strategic alliance with Hydro-Quebec.

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