Algonquin Power gives guidance for the next five years

Algonquin Power gave a press release on December1, 2015 that outlined it's five year investment program.They expanded their old program and stated that they would invest $4 billion over the next five years.It may not have gotten much attention because most investors will regard this as merely "pie in the sky".Or more clearly nobody will remember this promise five years from now.But this blog believe that this is an accurate prediction of what will happen.Algonquin also states in the same press release that they will be investing $180 million in a solar project called the Great Bay Solar project in Maryland.And a possible further $207 million for a 10% share of the North East Supply Path in U.S.A.
        Facts versus Fantasy
  Algonquin has already outlined  plans for another $400 million over the next two years.This is in addition to the investment in their two major projects coming up in the next two years.Their two large projects are the Park water System in United States and the O'dell wind farm in  Utah.These are both billion dollar projects;the Park water System will be in operation before the O'dell wind farm.But Algonquin has already lined up it's financing for both projects.In fact, Algonquin has just completed a $150 million equity issue and had another one completed for $150 million about two months ago. This diluted the stock price for a month or so but now investors appear to believe that Algonquin will carry out some of these investment plans.While investors are waiting for these projects to be completed Algonquin already has new solar operations coming onstream in the next quarter.In fact, Algonquin has a steady stream of projects coming onstream through 2015 and 2016.But their two big projects will have a major impact on their income stream.
        The Last five Years 
  The best indicator of whether Algonquin will be able to carry out these ambitious plans is the last five years.Did Algonquin show indications that it would be able to carry out these kind of plans in the last five years?In 2011 revenues were $270 million and in 2014 they were $943 million;operating income was $53 million in 2011 and were $137 million in 2014.Revenues increased to $900 million for the first nine months of 2015 and operating income increased to $180 million.This also is up from 2014.This pattern of rapidly increasing revenues and operating income is evident in the last five years.Management has done it in the past and should be able to do it again.Especially if their two big projects work out well.
       Possible Glitches
  This blog believes that Algonquin Power will be able to carry out this ambitious investment program in the next five years just as it has in the  past five years.However it is their tendency to buy distressed projects and renovate them in the jurisdiction of American regulators that has worried this blog.It has put itself in the hands of a few American regulators.And they cannot continue to count on quick and healthy rate decisions as they have received in the past.However Algonquin has invested recently in a number of wind and solar projects with power contracts as well as a joint venture in  a gas transmission projectThis blog finds this as a healthy trend and will help to diversify risks for it's shareholders..
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