Good day and thank you for standing by. Welcome to the Algonquin Power & Utilities Corp. First Quarter 2021 Earnings Webcast and Conference Call. At this time all participants are in a listen-only mode. After the speaker's presentation there will be a question-and-answer session.

I would now like to hand the conference over to your speaker today, Amelia Tsang, Vice President of Investor Relations. Please go ahead..

Good morning, everyone. Thanks for joining us this morning for our first quarter earnings conference call. Presenting on the call today is Arun Banskota, our President and CEO and Arthur Kacprzak, our Chief Financial Officer.

Also joining us this morning for the question-and-answer part of the call will be Jeff Norman, our Chief Development Officer; and Johnny Johnston, our Chief Operating Officer. To accompany our earnings call today, we have a supplemental webcast presentation available on our website algonquinpowerandutilities.com.

Our financial statements and management discussion and analysis are also available on the website, as well as on SEDAR and EDGAR.

Before continuing the call, we would like to remind you that our discussion during the call will include certain forward-looking information, including but not limited to our expectations regarding future earnings and capital expenditures.

At the end of the call, I will a read notice regarding both forward-looking information and non-GAAP financial measure. Please also refer to our most recent MD&A filed on SEDAR and EDGAR and available on our website for additional important information on these items. On our call this morning, Arun will provide an overview of our Q1 performance.

Arthur will follow with the financial results, and then Arun will conclude with an update on our strategic plan for the business. We will then open the lines for questions. And I ask that you restrict your questions to two and then re-queue, if you have any additional questions to allow others the opportunity to participate.

And with that, I’ll turn it over to Arun..

Thank you, Amelia, and a very good morning to those who've been able to join us on the call and online. I'm pleased to report solid year-over-year growth in our key financial metrics for the first quarter of the year.

Q1 adjusted EBITDA was $282.9 million, or 17% increase year-over-year and our Q1 adjusted net earnings per share was $0.20 an increase of 5% compared to last year's $0.19. You also note that our Board has approved a 10% increase in the dividends, beginning with the Q2 dividend payable on July 15 of this year.

This increase marks the 11th year of consistently increasing dividends by 10% each year. This demonstrates our collective confidence in and the resiliency of our business model. This dividend increase is supported by the groundwork that has been laid down in 2020.

As we expect to benefit from the addition of approximately 1400 megawatts of new renewable generation projects that were in construction in 2020..

Thank you, Arun, and good morning everyone. Our Q1 financial results continue to demonstrate the benefit from Algonquin's diversified and resilient business model, consisting of stable regulated utility services provided across 16 jurisdictions, a portfolio of long-term contracted renewable power assets and an extensive development pipeline.

Our first quarter 2021 consolidated adjusted EBITDA was 282.9 million, which is up approximately 17% and was 242.2 million we reported in the previous year. The Regulated Services Group delivered 204.8 million in operating profit in the current quarter. This compares to 170.2 million in the same quarter last year.

The improvement primarily reflects the first full quarter contribution from BELCO, our Bermuda electric utility, and ESSAL, our Chilean water utility as both acquisitions closed in Q4 last year, as well as from the contribution of Norco bridge, the first of our three wind facilities that was placed in service as part of the greening the fleet initiative that Arun spoke to earlier.

Results also benefited from new rates implemented at our Energy North Gas, Peach State Gas, Granite State Electric and CalPeco Electric System they were partially offset by higher operating expenses. The regulated services group was also negatively impacted by warmer than usual weather in the central region for the majority of the first quarter.

The renewable energy group reported Q1 divisional operating profit of 96.3 million, which compares to 88.4 million in the same quarter last year. The increase was primarily due to the addition of the Sugar Creek and Maverick Creek wind facilities, the Great Bay two solar facility and the Texas coastal wind portfolio.

This was partially offset by increased costs incurred at the Maverick Creek and incremental basis costs at the Texas wind portfolio, both related to the extreme weather experienced during February.

The results also include the impact of the market, the results do not include the impact of the market disruption related to Storm Uri on Senate Wind facility.

The facility was forced to settle under its financial hedge and highly elevated pricing as a result of extensive disruption in the electricity market and extreme lighting conditions which impacted the operations. We view this impact as unusual and not reflective of the ongoing operations.

Our Q1 adjusted net earnings per share came in at $0.20, which is up 5% from last year.

Despite the increase, the results were slightly below our expectations, again, primarily due to the on average, warmer than expected weather conditions experienced during the quarter and in our regulated group, as well as the incremental costs partially related to Storm Uri.

Moving on to provide some updates on our financing activities and progress on our 2021 capital plan. As you heard me say before, we are highly committed to maintaining our triple B flat capital structure, which we believe optimizes our cost of capital, benefiting shareholders and retaining our competitive position.

The benefits of balance sheet discipline were demonstrated this quarter, as the renewable energy group issued its fifth bond under its well established financing platform, we continue to get $400 million, at a low coupon of 2.85% for 10 years.

This is also the second bond bills qualified as green by the group and the third by the company showcasing our ongoing commitment to environmental and sustainability targets. During the quarter, Algonquin reestablished this ATM program, allowing for cost effective and opportunistic issuance of our common stock.

This reestablishment of the program last year, we issued 11.2 million of revolving shares where total proceeds of 178 million. With respect to our capital plan, during the quarter Algonquin deployed approximately 1.9 billion of capital pertaining to previously discussed initiative.

The renewable energy group completed the buy out of the Maverick Creek and Sugar Creek wind facilities from our joint venture partners, as well as closed the acquisition of three of the four Texas coastal wind projects from.

The Regulated Services Group acquired from our joint venture partners in North Folk Ridge Wind project , which is part of our greening the fleet initiative. I’m glad to say that subsequent to the quarter, we completed the acquisition for the remaining two projects the Kings Point and Neosho Ridge Wind facility.

Also subsequent to the quarter, we completed the acquisition of the 80 megawatt Altavista solar project from our JV partner. The preponderance of this financing for these initiatives is being funded by tax equity investments.

Algonquin's balance sheet remains strong with approximately 1.5 billion of available liquidity at the end of the quarter because we continue to monitor the debt and equity capital markets and expect to fulfill our remaining capital needs for the year through a combination of various debt and equity or equity like instruments to maintain our target capital structure.

Before turning things over to Arun, I'd like to provide a brief update on our 2021 guidance. As discussed we have already delivered on our plan adding approximately 1400 megawatts of new renewable generation capacity which will benefit 2021 results.

In addition, we expect to benefit from the first full year of operations Algonquin South and the Texas Coastal wind portfolio. Excluding the impact of the market disruption on the Senate Wind facility that I discussed earlier, we expect our 2021 adjusted net earnings per share to be within the range of $0.71 to $0.76 as communicated previously.

With that, I will now hand it back to Arun to outline our growth plans..

Thank you, Arthur. Before we close out our prepared comments this morning. I want to give an update on our growth initiatives. With society and economies working hard to minimize carbon emissions and many countries coalescing around a net zero carbon by 2050 goal.

Algonquin's regulated and renewables businesses are very well positioned to contribute to and benefit from this decarbonisation transition. We remain encouraged by the Biden administration's focus on clean energy in their infrastructure bill, and the potential for expanded investment opportunities.

Several climate bills are pending in the House and Senate and we see exciting potential opportunities in this legislation and the administration's commitment to a clean energy economy. The potential extension of ITC and PTC credits would benefit our 3400 megawatt pipeline of greenfield opportunities.

Looking at long-term growth, our 9.4 billion five-year investment plan from 2021 through 2025, has identified projects that make up the entire $9.4 billion, with most of them now in operation, under construction, or in advanced stages of development.

This core $9.4 billion investment plan does not include any further M&A beyond previously announced transactions, or any success from our 3400 megawatt pipeline of greenfield opportunities.

We have multiple levers of growth across our two businesses that I have spoken throughout today's call, which gives me further confidence on our ability to execute and deliver on our five-year investment and growth plan. Before we open the lines for the question-and-answer period, we remain very excited about Algonquin's businesses and prospects.

We welcome you to hear more at our upcoming Annual General Meeting. Similar to last year, and given the protocols related to the ongoing pandemic, we will be hosting our AGM virtually this year. We welcome your participation on June 3 at 4pm Eastern.

In closing, 2021 has been a very productive start to the year as we continued to execute and deliver on the company's largest construction program in its history, with nearly 1400 megawatts of the 1600 megawatts already placed in service.

Our three strategic pillars of operational excellence, growth and sustainability will be a key foundation as we continue to build the business and deliver steady earnings and dividend growth, creating long-term shareholder value. With that, I will turn the call over to the operator for any questions from those on the line..

Thank you. Our first question comes from Nelson Ng with RBC Capital Markets..

My first question relates to the blade manufacturing error.

So can you just give us a bit more color in terms of, I think there were like 83 turbines that were impacted? Like did you have to like shut all of those turbines down or do they still -- can they still partly operate? And then, can you just give more color in terms of what this financial impact is and whether the downtime in Q1 and through the rest of this year would be covered by ?.

Nelson, good morning. With me this morning, I also have Johnny Johnston, our Chief Operating Officer and Jeff Norman, our Chief Development Officer, and I think Johnny will respond to that question.

Johnny?.

Probably the most important part of the question is, despite the impact from the turbines, we don't expect there to be a financial impact that we've got availability guarantees as part of the turbines bio green and so that's going to sort of cover the financial aspects, I think from an operational perspective, that the impact of types of Mavericks and Sugar we have plans in place and are expecting the turbines to be up and running again, till the end of the year..

Okay.

Are you able to give a bit more color in terms of what needed to be done with the with the blades?.

And so, we're taking a mixed approach. So in some instances we are just replacing them and in others we're effectively going through the repair process to have them operational. I think you're aware this is a safety related issue. So until blades are being replaced, repaired, the turbines are out of operation..

Okay, thanks. And then, my second question relates to the Senate facility and the force majeure declaration. So I presume the counterparty hasn't, I guess can you give some color as to whether the counterparty has accepted the force majeure declaration. I presume they wouldn't have, but that could just be their default response.

But were the hedges settled, is cash out the door? And you're looking to get some back or is it still pending?.

Nelson, thanks. There seems to be a lot of cracking on the line for some reason. To respond to your question, we have obviously submitted our force majeure to the counterparty. And obviously, since this may be turning into a dispute, or potential litigation, there's only so much I can talk about.

But in any case, what we have earlier talked about is a maximum $45 million to $55 million of exposure. And any mitigation would obviously reduce that level of exposure..

Our next question comes from Julien Dumoulin-Smith of Bank of America, Merrill Lynch..

Listen, I suppose, let me start with a high level question for you. Obviously, we've seen some M&A have led across the space and perhaps more elevated valuation than perhaps was perceived coming into the year, especially for gas utilities.

How do you think about your own positioning for M&A at this point in light of that, and I'm thinking specifically here set of points, gas LDC deal, but any open comments that I know you, you once again, at least put it on the table as being upside but curious on your latest perspectives here? Are you still a buyer maybe said differently?.

And, Julian, is your question, particularly only for gas utilities or is it a general?.

Broadly, certainly the observation at least the empirical ones are on gas, but more broadly?.

Sure. So on a broader context, Julian, you are very aware that this acquisition is something one of our big growth levers. And I believe so in the last 20 years, we've in fact completed exactly 20 utility acquisitions. And we're always in the mix when there's a discussion around M&A.

To specifically respond to your question, yes, we have seen elevated pricing. And but again, that's, I think that there is a lot of capital out there right now chasing targets. So I think it remains a fairly frothy market. In respect to your other question on gas LDCs.

We are, as you know, in all three sectors, the modalities, water, electric and gas, and we do look at the potential acquisition across all three modalities. But on the gas side, we will be disciplined in terms of making sure that it needs our sustainability goals as well..

I was going to ask you a little bit more detailed question, as you're thinking about the latest impacts from the Biden tax efforts here. How do you think about that specifically to your company? I bet there's a lot of different puts and takes here.

How would you frame the tax side as well as obviously the other perhaps more beneficial sides on especially direct pay, etc?.

Julian, good morning. So on the tax side, I mean, in general, the comment is, I mean, it's obviously positive for the renewables industry, in terms of everything that's proposed, both on the Biden and some of the other proposals that are out there, as well.

On the tax rate side, that we've talked about that in the past, I mean, basically on the tax rate is a flow through for utilities, such as basically neutral and probably a little bit of -- maybe a slight negative from the -- on the renewable side of the business. But in general, it's basically neutral from a tax rate perspective.

Some of the other proposals that are floating out there, but that's way too early to tell what we're monitoring. And we'll see what, which one of them actually prevails..

Jeff, you might want to comment also on the -- some of the tax proposals and how they could potentially benefit us as well on the….

Happy too. And so, definitely a ton of excitement in the industry about the American jobs plan, in particular, in terms of the ITC, PTC extension, for potentially five years, and also the extension of that to potentially impact storage without generation happening to be co-located. So although it's a little early to tell, it's certainly exciting.

And I can't help but think there's going to be positive developments that do make it through into the legislation..

Our next question comes from Rupert Merer with National Bank..

If I could start with a housekeeping question for Arthur.

Can you remind us how much of a financial benefit you expect to see from the 600 megawatts of wind you will have in the regulated utility and maybe you can give us a little color on the EBITDA run rate changes we might see in Q2 and Q3 relative to Q1 from those assets?.

Most of the benefit from the 600 megawatts of generation actually will be important -- will be through basically our PESA adjustments that will be put in place as we look to get these projects approved through rates over the next year or so..

Okay.

Are able to quantify what we could see for the remainder of the year with these adjustments?.

Can I get back to you on that one, I can provide a little bit more quantification, maybe you want to follow..

Okay. Very good. And then, secondly, then more of a high level question on the organic growth. Maybe a question for Jeff.

So you've come through this big growth spurt, 1600 megawatts, can give us a little more color on what we can anticipate the next couple of years? And what pace of growth can we expect to come from your organic development? I know you've got a 3400 megawatt pipeline and we had some goals laid out in the Investor Day.

Can you can you exceed the targets in the Investor Day or should we look at the Investor Day is a good proxy for what we can expect next?.

Well, actually maybe before turning it over to Jeff, the first thing I would say is that we are very confident in meeting the $9.4 billion five-year plan, like I said, in my prepared remarks, it is very front-end loaded. And many of those projects are actually already in commercial operations already. So that gives us high confidence.

And again, as we said, in Investor Day, and after that $9.4 billion program does not include the 3400 megawatt greenfield pipeline, or any incremental M&A activity. So we are confident in meeting and potentially exceeding that $9.4 billion capital plan.

But, Jeff, do you want to add more color?.

Yes, certainly. And Rupert, you mentioned, the 3400 gigawatt or megawatt pipeline. And we continue to advance. We see opportunity with a number of C&I customers who have set sustainability targets and renewable targets that need to be contracted 23, 24, 25.

And if you look back at that 9.4 billion pipeline, it was fairly light on the global event section. And so we don't have anything that we can announce at this time. But the development team is certainly focused on originating projects to populate that prior to the for business..

Our next question comes from David Quezada with Raymond James..

My first question here just on your capital plan and appreciate the comments around the growth opportunities over and above it. I'm curious on the regulated side of things now that the initial round of green the fleet has happened.

How do you see things developing on the regulated side in the outer years of your CapEx plan when the CapEx spend is a bit lower than the pace today?.

So, David, very good morning to you. The first thing I will say is that on the regulated side of the business as well, we do have multiple levers, right.

And so when you look at some of the levers on the regulated side, the biggest one, in fact, is organic growth and when you say organic growth that refers to more our regular improvements in infrastructure, leading to better safety and reliability and security, right? And that is really the bulk of that.

Then the other one is obviously some of the utility there. And I think the third one we referring to, is our greening the fleet. And really proud of the team to say that, that all of the 600 megawatts that was part of that greening the fleet initiative are now fully commercial and online.

It is a lot of work from a lot of people on the teams and to get that on. And as part of that, we also closed down our Asbury 200 megawatt coal facility, so and reducing our carbon intensity by almost a million tons a year.

Now, the greening of fleet initiative is something that is somewhat unique to us I believe we are carrying that out in our CalPeco utility as well and we will be looking at places like and others -- for some of those other greening the fleet initiative as well.

Did that answer your question David?.

It does, absolutely. Thanks for that Arun. And then, maybe just one other question for me, looking at the Missouri rate case.

I'm curious if you'll look to revisit certain items like revenue decoupling or do you prefer to just go forward with the PESA accounting that you have in place now?.

Let me turn that over to Johnny..

Yes, David, in the way that we effectively opted to go down the PESA route, following the last rate case, means that we're with that through, certainly until 2023, there's then an opportunity for us since we extended through, I think 2028.

And so, but for now, revenue decoupling is something that we'll have to wait in Missouri, certainly making the most of the PESA legislation when you think about some of the investments we've been making through central region in the last few months..

Our next question comes from Stephen Byrd with Morgan Stanley..

Thanks for the really thorough ESG update at the beginning, was really helpful, I kind of go thorough everything. But a lot has been covered, I wanted to perhaps go back to the potential for U.S.

tax reform, and focus a little bit more specifically on some corporate tax elements, the impact to all of power corporate tax rates, potential for things like minimum taxes, guilty, etc those sorts of dynamic.

Would you mind just talking in a little more depth about those sort of corporate taxation elements and the impact to you?.

Arthur?.

So on the tax rate, as I mentioned, to the previous question, it's basically a pass through on the regulated side, maybe it's a slight like negative on the renewable side.

But I mean, as we look at some of the other noise that is getting out, proposed there, whether it's the shield or looking at whether these remains are some or the other proposals, but it's really early to tell which one is going to wait out, are they going to interact between themselves, whether it would be, the minimum tax we put in and the peak will be repealed, what's going to be creditable that we have to beat.

So it really, really too early to make a determination in terms of where what the impacts will be. I'll say on the guilty, we're generally not impacted by any of the guilty proposals that have been put forth. But everything else we continue to watch closely..

That's fair. We have a lot to figure out in terms of what this is going to really look like. And then, maybe just one other for me on renewals growth there, you gave us a thorough update and a number of questions around that.

When you think about kind of the biggest limiting factors or sort of risks that you think about with respect to renewables growth curious, just whether that's supply chain availability, financing tax equity, whatever might be, how do you kind of see, I mean, we're obviously in a very supportive environment overall.

So I completely respect that I'm just trying to think about we often get asked about, some practical issues and growth, whether it's a shortage of people, shortage of equipment or increased costs, just any other colleague might be able to provide on sort of what you see is some of the limiting factors?.

Jeff, you want to take that?.

No, I'm happy to. Stephen, I think it's a great question, because I think that excitement obviously comes with a downside. And I say, a couple of stress points would be one, there probably will be a battle for talent and resources.

We do see our location with a lot of development activities here in Huntsville as being a strategic advantage it’s a good team. But we need to be cognizant of that team being very attractive to others and to keep building. That would be one. The other one is on interconnection. There's such a demand for renewable build out in the key markets.

And it's always been important, but it's going to be even more important over the coming months..

Stephen, it's really the pace, right, I mean, what I like to point out is that in 2020, which was normal than the most friendly -- poor renewables administration was, where we saw our largest construction project in our pipeline history, in our history right, our 1600 megawatts.

So we're obviously very excited now, all of the tailwinds we're seeing from this Biden administration. And it's really that as the -- with scaling the challenges are going to be across the board, in terms of, supply chain in terms of permitting, speed, in terms of the interconnection, access, how fast that can move.

So it's really going to be felt throughout the different parts of the value chain. But again, we have been very good at managing that even through COVID last year, and even through that largest construction period in our history. So we're confident that we're going to be able to manage our way through..

So that's a fair point. And these kinds of issues strike me as high class problems. So no point, I will make..

Exactly. Right..

Our next question comes from Sean Stewart with TD Securities..

Just a couple of questions, Arthur wondering, following up in the last question, can you speak specifically to tax equity, availability, how that's changed in recent months, if at all.

And everyone your predecessor used to talk about Obama and becoming its own tax equity partner, once you get that taxable position? Any thoughts on that horizon and how that impacts your funding considerations?.

So in terms of tax equity availability, we have not seen a constraint from our side, I mean, that part of it probably speaks to the fact that we have a well established relationships, strong balance sheets. And so far what we've seen tax equity is there for good projects.

And to some extent, I would also say the tax equity market is, in some instances, even lightening up or looking at loosening up some of their rules, whether it would be continuous effort, so looking at potentially financing those types of projects and so forth. The tax equity is there and I think it continues to be there for strong sponsors.

For the second part of your question with respect to self monetizing that's something that continues to be on the table and with respect to -- even some of the tax changes that are being out there, it is always beneficial to be a company that is able to generate its own tax attributes and be able to use it to offset income intrinsically.

So for us that continues to be an option. And we also look at some of the other things that are out there, obviously direct pay of it then ever since for some of our projects as well, so all-in-all, I think, positive developments in this area..

Thanks for that Arthur. You gave a little bit of an update Arun with respect to New York American Water.

Can you just review the hearings that are upcoming and an update on your comfort closing that acquisition in advance of the state, completing its review with respect to the municipal ownership potential? Any updated thoughts there?.

Sure. And look, there's obviously a lot of political noise around this. But at the end of the day, we're really focused on two things, right? The first is, we continue to believe that we are the best owners and operators of New York American Water. And so we are focused very much on closing that transaction.

And second of all, there is something unique with New York in regard to the special franchise tax, which is a burden on New York American Waters customers.

And we've been working with different parties to try to see and make that much more equitable for our customers, right? So beyond that, really, our discussions with the commission have continued as usual. We have now hearings, slated for late-June. That's the target probably.

And in the midst of that, there's been a lot of other activity on both legislating front around municipalization studies and as things are restored. But at the end of the day, I think what is also very important to focus on is that the largest base of customer is in the Hampstead.

And the Town of Hampstead has come out very strongly against municipalization. So I think with all of that we do continue to have high degree of confidence and we will be able to close out this transaction.

Johnny, is there anything you want to add to that?.

I think you have covered Arun..

Our next question comes from Richard Sunderland with JPMorgan..

Just two questions on Missouri here.

Curious for the first one, if could provide more color around the proposed recovery timing and bill impacts of the incremental commodity costs out of the February weather?.

Sure.

Johnny?.

So our normal process, we have a fuel adjustment clause where our fuel costs get passed back over a six month period, whether the delta to normality, because of the materiality of the impact of on energy costs, I think if we were to pass those straight through in the normal fashion, it would have raised our customer bills, probably north of 60% as a result.

And clearly that would have been a huge burden for them. So we have filed with the commission to have those pick up over a longer period of time and to address that through our upcoming rate case. So there'll be more to come.

But clearly, our ambition here is to try and find the right balance between phasing those costs down, covering our costs of managing that, but making it manageable for our customers as we go through that. So there's more conversations to be had with the regulators and our stakeholders in terms of the exact timing.

But that's sort of where we are in the process..

Got it. Thank you for the color there. And then separately around the wind facility.

Could you speak to the network upgrades required for that facility and maybe just provide a little bit more color around the performance there, including if there are any kind of performance obligations owed around those wind farms in general?.

Sure. Richard, it's Jeff, I'm happy to take that question. And you're referring to the data as to results which came out and impacting at North Fork Ridge, Kings Point and Neosho, I would say we're quite pleased that for Kings Point and North Fork rates that those confirms that there were no upgrades. For Neosho, it is an interesting process.

They are indicating that there is a need to upgrade about 18 miles of line. But we are currently generating a connection agreement and operating that facility. We expect to continue doing that moving forward and we know that there are some errors in report that pointed out that we'll continue to move forward as expected.

In terms of financing, we have moved forward and projects end up operation in the. So happy to answer other questions on that if I didn't get right to the hub of your question..

Our next question comes from Rob Hope with Scotiabank..

Two questions for me. First one, just on the Chevron agreement moving from evaluation development, can you just maybe add a little bit more color on kind of the potential timelines we can see on those projects in the Permian.

And then, also just given, how are these agreements structured? Do you have a kind of set going in prices are targeted to return that you both agree with just from the fact that, it does seem like that a number of these projects are still in flux?.

Sure, so let me start off and I'll probably turn it to Jeff. Just to give you a little bit of context. So first of all, we signed a framework agreement with Chevron just last year in July, and it was for over 500 megawatts, right.

And so that was just a framework agreement that really governs our partnership, who develops what, who takes the lead on what, all those kinds of details around our framework agreement, right.

And so now, ever since that time, we have been scoping each of their facilities and looking at what is the best technology, what is the best size, all of those kinds of things and running the numbers.

And now we've really moved from that first phase, to a much more of a development phase, because we now have a much higher level of confidence that on these four sites, we're going to be able to come to an agreement on all things like pricing and all those kinds of things.

At the end of the day, obviously, the both parties need to be able to have confidence that, the project we're doing needs both the hurdles and other requirements on both sides. And that's what we're working towards.

We are also working towards what we're calling in an agreement, a final investment decision, which will then start construction on these projects. And we're hoping to get to that sometime towards the end of the year or so timeframe.

Jeff, anything you can any further color on that?.

I think you've covered everything except maybe one item, which is just a little bit of color on the discussions in terms of returns. And so there's certainly been a exchange of the expected costs of the facilities and the returns that would be required, make sense for both parties. And so those will be confirmed through the investment decision.

But the discussions around those have gone..

And just to give you some more comfort around that. And we've even started procurement activities, right, in order to safeguard safe harbor and those kinds of elements. So, we remain -- both sides remain fairly confident that we are going to be able to execute on that framework agreement..

Okay.

And then maybe it's a follow up question just in terms of kind of, capital out the door for Q1, the MD&A says that you've done $1.9 billion of CapEx so far this year, cash flow statements quite a bit below that, as we look through the rest of the year, how are you thinking about your cash requirements to fund the rest of the capital plan to get to that $4 billion to $4.5 billion as well, as you know, is there a timing mismatch here? Or is it mainly just related to the accounting treatment and tax equity?.

The simple answer is, it's an accounting treatment and the real reason is how these investments actually have been held prior to being bought off, if we hold them as a joint venture. Joint venture partners needs investments, so buying utility become an equity buyout.

What we're bringing on to our balance sheet, to the cash flow statement is really the net investment that comes in. So these previous projects, some construction financing that was brought on a net basis, and we look to repay that construction financing through our long-term bond platforms and overall, in accordance with the capital structure.

Is that response helpful?.

Our next question comes from Andrew Kuske from Credit Suisse..

Maybe two related questions.

When you look at the construction program you did on the renewable side in the last little while, what do you do for an Encore? And what were the lessons learned from the program?.

Great question, Andrew. I'm going to pass it over to Jeff..

It is a great question. How do you how do you exceed the 1600 megawatts and all the 2020 with COVID. Hopefully, we will not have to repeat a COVID construction here of that magnitude. But I do think there's a great deal of opportunity going into this 22, 23, 24 just look at the C&I customers of the demand.

And we've already seen a push up in C&I PPA rate as that demand starts to deal with the supply of product out there. So I think it's going to be pretty exciting going forward, but it won't be as exciting as 2020..

Exactly. And I think it's really that combination of our C&I strategy coupled with our 3400 megawatt greenfield pipeline. And I think that's what we're really excited about..

And then maybe just follow up to that. How do you think of a pipeline replenishment? And clearly in the year-to-date, there's been a lot of turmoil as far as market prices go on renewable stocks.

What are you seeing on pipeline replenishment opportunities, in particular among, say, private developers? If you think of its color on that, that'd be great..

Yes. So there has been a consolidation of some of the larger developers, which are pushing forward winning projects. And we think it's important in our 3400 megawatts --to grow that 3400 megawatts and to make sure that there's a focus on wind, because there's a smaller subset of developers to acquire mid and late stage projects from.

On the solar side, we're actually still seeing quite a robust pipeline of opportunities. And so going forward on solar will probably see more acquisition in greenfield and wins, it'll be slightly skewed towards greenfield from acquisition..

Next question comes from Naji Baydoun with iA Capital Markets..

Appreciate it, a bit over time. But just a couple of quick questions.

Can you just remind us for your 2021 guidance, how much is baked in for the New York American Water acquisition?.

So when we did our guidance, back in Investor Day, we need to provide a range and a guidance and some assumptions with respect to that guidance. So with respect to our assumptions we did factor in that on the upper range, we would consider closing of American Water that happens around the third quarter or so.

And on the lower rates, one of the factors was later in the year closing. And both those weren't the only assumption. So I would read into that as the entire range difference. I mean, we had other things such as -- we had assumed that on the low end COVID impact similar to this year and uncertainly it hasn't taken place.

So there's various assumptions that go into that range..

Okay, appreciate that Arthur. Just another quick question on sustainability and ESG, I guess not with us very close down. And all the ongoing renewable projects here, well on your way to achieving 75 renewables target by 2023. I get to talk about C&I appetite for clean energy, which is being a tailwind for growth. I'm wondering about your own targets.

Maybe you can talk to us about potentially shifting about revising that target going forward and what the implications would be in terms of new renewable build up..

Naji, thanks, a great question. I mean, sustainability is one of our three pillars. We certainly focus on that a lot. And just to tell you, I mean, we are already starting from a very good base, right? I mean, our carbon intensity when you look at that for $1 of revenue is that 0.0017 which is well among the lowest among our peers in the industry.

And even when you look at the fact that when we acquired Empire district that came up with some thermal assets, just since 2017 until now, we have reduced our carbon intensity by 31%, right.

And so, some of the other goals we have are that 75% renewables by 2023, which is a pretty aggressive goal, but we are confident in meeting that and as we start now, meeting some of the goals that we have set out in past years targeted towards 2023, we are internally working towards, okay, what are the next set of goals so, keep your eyes open.

I mean, we are working on those and we will be coming out with more goals as we continue to meet and exceed our current set of ESG goals..

There are no further questions in queue. At this time, I'll turn the call over to our Arun Banskota for closing comments..

Thank you very much for all of the questions. Thank you for joining the investor call. Again, we remain extremely excited about the Algonquin platform and all of the opportunities in front of us. And with that, I'll turn it over to Amelia for the disclaimers..

Thanks for joining us today. Our discussion during this call contains certain forward-looking information, including but not limited to our expectations regarding earnings, capital expenditures and commercial operations.

This forward-looking information is based on certain assumptions, including those described in the most recent MD&A files on SEDAR and EDGAR and available on our website, and is subject to risks and uncertainties that could cause actual results to differ materially from historical results or results anticipated by the forward-looking information.

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That concludes today's conference call. You may now disconnect..