Mr. Avik Dey reports

CAPITAL POWER EXECUTES CONTRACTS FOR SOLAR, NATURAL GAS AND BATTERIES AND PROVIDES AN UPDATE ON THE GENESEE REPOWERING PROJECT

Capital Power Corp. has:

• Executed three long-term contracts in North Carolina and Ontario, totalling 287 megawatts (MW) of additional generation and energy storage capacity;
• Executed a contract in the Ontario Independent Electric System Operator's (IESO) same technology upgrade solicitation;
• Successfully bid in the Ontario IESO's expedited long-term RFP (request for proposal); and
• Updated on the timing and costs of the Genesee repowering project in Alberta.

These announcements demonstrate the value of the company's balanced approach to net zero that supports the increase of renewable generation to enhance the sustainability of Capital's power system, while complementing the variability of these assets with battery energy storage systems (BESS) and reliable natural gas generation.

"The executed contracts, with an average duration of nearly 21 years, increase our contracted cash flows and deliver on our commitment to provide reliable power for our communities and responsibly reach net zero by 2045," said Avik Dey, president and chief executive officer of Capital Power. "Maple Leaf Solar is our fourth solar development project, leveraging our established expertise in building power projects. We see attractive growth opportunities in North Carolina where we have six additional well-positioned solar development sites totalling approximately 270 MW. In Ontario, the five contracts reaffirm Capital Power's approach to meeting growing electricity demand. Our midlife natural gas assets continue to provide critical generation capacity to Ontarians as we also build out low-carbon solutions for our energy future."

Maple Leaf solar awarded 25-year contract

The company executed a 25-year, fixed price renewable power purchase agreement (PPA) for 100 per cent of the output from its Maple Leaf solar project with Duke Energy Progress (DEP) as part of the 2022 Duke Energy solar procurement program. Maple Leaf is a 73 MWAC (megawatts alternate current) (92 MWDC (megawatts direct current)) solar development project in Selma, N.C. The construction of the project is planned to begin in 2025 at a total cost of approximately $165-million (U.S.) with an expected commercial operations date in the fourth quarter of 2026, pending completion of the Duke interconnection upgrades. Local zoning approvals were obtained in May, 2023, and detailed design and permitting are under way.

Five new contracts from Ontario IESO bids

Capital Power has been an active participant in the Ontario IESO's expedited call for new power generation and capacity in high-priority areas to help address the IESO's forecasted shortfall, which has resulted in five successful bids. Capital Power has:

• Executed two long-term contracts for the East Windsor expansion (81 MW summer and 100 MW winter contracted capacities) with a term to 2040 (approximately 15 years) and the York BESS (battery energy storage system) project (114 MW contracted capacity) which is contracted until 2047 (approximately 22 years) as part of the IESO's expedited long-term RFP process (selection by the IESO previously announced on May 16, 2023). Both projects are expected to begin commercial operations in 2025.
• Executed a three-year contract extension for the York Energy Centre associated with its successful bid in the same technology upgrade solicitation for approximately 38 MW. The upgrade will increase York's contracted capacity from 394 MW to 431 MW. The contract extension applies to the new contracted capacity of 431 MW (from the COD of the upgrades expected in 2025) and extends the current contract from 2032 to 2035.
• Previously been awarded a six-year contract extension through the same technology upgrade solicitation for the Goreway power station (40 MW upgrade).
• Been selected as a successful proponent for an approximately 22-year contract to 2047 for the Goreway BESS project as part of category 2 of the IESO's expedited long-term RFP. Capital Power expects to execute this contract by July 25, 2023. The project is expected to enter service in 2025.

With the addition of these contracts, the company will have more than 1,500 MW of contracted capacity in Ontario that support this key market's critical power needs and significantly increase Capital Power's contracted cash flow profile.

"Our success in securing three new projects in the Ontario IESOs expedited long-term RFP, as well as securing two new up-rates with contract extensions is an embodiment of Capital Power's mid-life gas strategy of acquiring well-positioned assets in markets with strong fundamentals, enhancing, upgrading and expanding the facilities, and extending their contracts with investment-grade offtakers," said Chris Kopecky, senior vice-president, and chief legal, development and commercial officer of Capital Power. "Furthermore, the deployment of BESS solutions on existing natural gas sites demonstrates the strategic value of these sites for new technologies beyond simply natural gas generation."

Updates to Genesee repowering project schedule and costs

As a result of construction delays on the repowering project, the company is modifying the commissioning timelines for the repowered units. Simple cycle commissioning of unit 1 is expected to commence in December, 2023, approximately 60 days later than initially anticipated. Simple cycle commissioning for unit 2 is expected to be further delayed and will begin in March, 2024. Combined cycle commissioning is expected to begin in April, 2024 (unit 1), and June, 2024 (unit 2). The total capital costs for the repowering project have increased to $1.35-billion as a result of cost escalations and increased labour costs.

The delay in commissioning is expected to have a modest impact on the full year 2023 AFFO (adjusted free funds flow) and adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) guidance, as the unfavourable impact will be offset across the portfolio. The company expects to be above the midpoint of the guidance range despite an unforced outage at Genesee during periods of high pricing in June that dampened a strong start to the second quarter relative to the guidance provided in the company's first quarter 2023 report. Management is currently evaluating the impact of commissioning delays on the company's target of being off coal in 2023, and expects to provide additional information on the 2023 outlook and its off-coal target with the second quarter 2023 earnings release.

Territorial acknowledgment

In the spirit of reconciliation, Capital Power respectfully acknowledges that it operates within the ancestral homelands, traditional and treaty territories of the indigenous peoples of Turtle Island, or North America. Capital Power's head office is located within the traditional and contemporary home of many indigenous peoples of the Treaty 6 territory and Metis Nation of Alberta Region 4. The company acknowledges the diverse indigenous communities that are located in these areas and whose presence continues to enrich the community.

About Capital Power Corp.

Capital Power is a growth-oriented North American wholesale power producer with a strategic focus on sustainable energy headquartered in Edmonton, Alta. It builds, owns and operates high-quality, utility-scale generation facilities that include renewables and thermal. The company has also made significant investments in carbon capture and utilization to reduce carbon impacts. Capital Power owns approximately 7,500 megawatts of power generation capacity at 29 facilities across North America. Projects in advanced development include approximately 151 MW of owned renewable generation capacity in Alberta and 512 MW of incremental natural gas combined cycle capacity, from the repowering of Genesee 1 and 2 in Alberta.