INNERGEX RENEWABLE ENERGY INC. FOR THE YEAR ENDED
DECEMBER 31, 2016INNERGEX RENEWABLE ENERGY INC.
FEBRUARY 23, 2017TABLE OF CONTENTS
CAUTIONARY STATEMENT ON FORWARD-LOOKING INFORMATION 3
GENERAL DEVELOPMENT OF THE BUSINESS 5
INDUSTRY OVERVIEW AND MARKET TRENDS 9
RENEWABLE POWER GENERATION INDUSTRY 9
RENEWABLE POWER IN SOME OTHER MARKETS 10
REGULATORY FRAMEWORK OF AND MARKET FOR RENEWABLE POWER IN THE CORPORATION'S KEY MARKETS 11
Hydroelectric Power Generating Process 12
Wind Power Generating Process 13
Solar Photovoltaïc Power Generating Process 13
FACTORS AFFECTING RENEWABLE ELECTRICITY PRODUCTION PERFORMANCE 14
SEASONALITY AND CYCLICALITY 15
DESCRIPTION OF THE BUSINESS AND ASSETS OF THE CORPORATION 16
GENERAL OVERVIEW - SEGMENT INFORMATION 16
OPERATING HYDROELECTRIC FACILITIES 18
Hydroelectric Facilities Located in Québec 18
Hydroelectric Facilities Located in Ontario 19
Hydroelectric Facilities Located in British Columbia 20
Hydroelectric Facility located in Idaho, USA 22
Wind Farms Located in Québec 22
Wind Farms Located in France 23
Solar Farm Located in Ontario 24
HYDROELECTRIC DEVELOPMENT PROJECTS 24
Boulder Creek Project (BC - 66.67% ownership) 24
Upper Lillooet River Project (BC - 66.67% ownership) ... 25 PROSPECTIVE PROJECTS 26
FINANCIAL AND OPERATIONAL EFFECTS OF ENVIRONMENTAL PROTECTION REQUIREMENTS 26
SOCIAL AND ENVIRONMENTAL PROTECTION POLICIES 26
DESCRIPTION OF CAPITAL STRUCTURE 36
GENERAL DESCRIPTION OF CAPITAL STRUCTURE 36
4.25% CONVERTIBLE DEBENTURES 40
DIRECTORS AND EXECUTIVE OFFICERS 41
BANKRUPTCY, INSOLVENCY, CEASE TRADE ORDER AND PENALTIES
............................................................................................ 42
LEGAL PROCEEDINGS AND REGULATORY ACTIONS 43
INTEREST OF MANAGEMENT AND OTHERS IN MATERIAL TRANSACTIONS 43
TRANSFER AGENT AND REGISTRAR 43
SCHEDULE A - CORPORATE STRUCTURE SCHEDULE B - CHARTER OF THE AUDIT COMMITTEE INTRODUCTIONThe information set out in this Annual Information Form is stated as at December 31, 2016 and all money-related amounts are stated in Canadian dollars, unless otherwise specified.
Unless otherwise indicated or the context otherwise requires, all reference to the "Corporation", to "Innergex, "we" "our" and "us" refers to Innergex Renewable Energy Inc. and its subsidiaries. Terms not otherwise defined have the meaning set forth in the "Glossary of Terms" included at the end of this document.
CAUTIONARY STATEMENT ON FORWARD-LOOKING INFORMATIONTo inform readers of the Corporation's future prospects, this Annual Information Form contains forward-looking information within the meaning of applicable securities laws ("Forward-Looking Information"). Forward-Looking Information can generally be identified by the use of words such as "approximately", "may", "will", "could", "believes", "expects", "intends", "should", "plans", "potential", "project", "anticipates", "estimates", "scheduled" or "forecasts", or other comparable terminology that state that certain events will or will not occur. It represents the projections and expectations of the Corporation relating to future events or results as of the date of this Annual Information Form.
Future-Oriented Financial Information: Forward-Looking Information includes future-oriented financial information or financial outlook within the meaning of securities laws, such as expected production and estimated project costs, to inform readers of the potential financial impact of expected results, of the expected commissioning of Development Projects, of the potential financial impact of the French Acquisitions and the Corporation's ability to fund its growth. Such information may not be appropriate for other purposes.
Assumptions: Forward-Looking Information is based on certain key assumptions made by the Corporation, including, without restriction, those concerning hydrology, wind regimes and solar irradiation, performance of operating facilities, financial market conditions and the Corporation's success in developing new facilities.
Risks and Uncertainties: Forward-Looking Information involves risks and uncertainties that may cause actual results or performance to be materially different from those expressed, implied or presented by the Forward-Looking Information. These are referred to in the "Risk Factors" section of this Annual Information Form and include, without limitation: the ability of the Corporation to execute its strategy for building shareholder value; its ability to raise additional capital and the state of the capital markets; liquidity risks related to derivative financial instruments; variability in hydrology, wind regimes and solar irradiation; delays and cost overruns in the design and construction of projects; the ability to secure new power purchase agreements or renew any power purchase agreement; health, safety and environmental risks; uncertainties surrounding the development of new facilities; obtainment of permits; equipment failure or unexpected operations and maintenance activity; interest rate fluctuations and refinancing risk; financial leverage and restrictive covenants governing current and future indebtedness; the possibility that the Corporation may not declare or pay a dividend; changes in governmental support to increase electricity to be generated from renewable sources by independent power producers; variability of installation performance and related penalties; the ability to attract new talent or to retain officers or key employees; litigation; performance of major counterparties; social acceptance of renewable energy projects; relationships with stakeholders; equipment supply; exposure to many different forms of taxation in various jurisdictions; changes in general economic conditions; regulatory and political risks; ability to secure appropriate land; reliance on PPAs; availability and reliability of transmission line; foreign market growth and development risks; foreign exchange fluctuations; increases in water rental cost or changes to regulations applicable to water use; assessment of water, wind and sun resources and associated electricity production; dam failure; natural disasters and force majeure; cybersecurity; sufficiency of insurance coverage limits and exclusions; a credit rating that may not reflect actual performance of the Corporation or a lowering (downgrade) of the credit rating; potential undisclosed liabilities associated with acquisitions; integration of the facilities and projects acquired and to be acquired; failure to realize the anticipated benefits of acquisitions; reliance on shared transmission and interconnection infrastructure and the fact that revenues from the Miller Creek facility will vary based on the spot price of electricity.
Although the Corporation believes that the expectations and assumptions on which Forward-Looking Information is based are reasonable under the current circumstances, readers are cautioned not to rely unduly on this Forward- Looking Information as no assurance can be given that it will prove to be correct. Forward-Looking Information contained herein is made as at the date of this Annual Information Form and the Corporation does not undertake any obligation to update or revise any Forward-Looking Information, whether as a result of events or circumstances occurring after the date hereof, unless so required by law.
The following table outlines the Forward-Looking Information contained in this Annual Information Form which the Corporation considers important, to better inform readers about its potential financial performance, together with the principal assumptions used to derive this information and the principal risks and uncertainties that could cause actual results to differ materially from this information.
Principal Assumptions | Principal Risks and Uncertainties |
Expected production For each facility, the Corporation determines a long-term average annual level of electricity production over the expected life of the facility, based on engineers' studies that take into consideration a number of important factors: for hydroelectricity, the historically observed flows of the river, the operating head, the technology employed and the reserved aesthetic and ecological flows; for wind energy, the historical wind and meteorological conditions and turbine technology; and for solar energy, the historical solar irradiation conditions, panel technology and expected solar panel degradation. Other factors taken into account include, without limitation, site topography, installed capacity, energy losses, operational features and maintenance. Although production will fluctuate from year to year, over an extended period it should approach the estimated long-term average. | Improper assessment of water, wind and sun resources and associated electricity production Variability in hydrology, wind regimes and solar irradiation Equipment failure or unexpected operations and maintenance activity Natural disaster |
Estimated project costs, expected obtainment of permits, start of construction, work conducted and start of commercial operation for development projects or prospective projects For each development project, the Corporation provides an estimate of project costs based on its extensive experience as a developer, directly related incremental internal costs, site acquisition costs and financing costs, which are eventually adjusted for the projected costs provided by the engineering, procurement and construction contractor retained for the project. The Corporation provides indications regarding scheduling and construction progress for its Development Projects and indications regarding its Prospective Projects, based on its experience as a developer. | Performance of counterparties, such as suppliers or contractors Delays and cost overruns in the design and construction of projects Obtainment of permits Equipment supply Interest rate fluctuations and financing risk Relationships with stakeholders Regulatory and political risks Higher-than-expected inflation Natural disaster |
Intention to Submit Projects Under Requests for Proposals The Corporation provides indications of its intention to submit projects under requests for proposals ("Request for Proposals" or "RFP") based on the state of readiness of some of its Prospective Projects and their compatibility with the announced terms of these RFPs. | Regulatory and political risks Ability of the Corporation to execute its strategy for building shareholder value Ability to secure new power purchase agreements ("PPA") |
Intention to gain a foothold in target markets internationally The Corporation provides indications of its intention to establish a presence in target markets internationally in the coming years, based on its growth strategy. | Regulatory and political risks Ability of the Corporation to execute its strategy for building shareholder value Ability to secure new PPAs Foreign exchange fluctuations |
Innergex Renewable Energy Inc. published this content on 23 February 2017 and is solely responsible for the information contained herein.
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