EQUITY RESEARCH John McIlveen, MBA, SVP Research jmcilveen@jacobsecurities.com +1 (416)866-8303 Moiz Valji, B.Math, Associate mvalji@jacobsecurities.

com +1 (416)866-8374

September 21, 2011 Stock Rating: Hold

Unchanged

Alterra Power Corp. (TSX:AXY) Reports Fiscal Q4

Event:
Alterra reported Q4 ended June. Revenue and Project EBITDA of $25 million and $14 million are in-line with our estimates. Corporate EBITDA was $3.7 million light due to one-time legal costs of $4.3 million for the merger with Plutonic and the Nordural PPA arbitration in Iceland. Q4 was proportionately consolidated under Canadian GAAP so is not directly comparable to our forecast next quarter will be under IFRS and so Dokie and Toba will be deconsolidated and reported as one-line equity method. Alterra provided guidance for 2012 of 1,518,000 MWh, over $100 million revenue and over $50 million EBITDA. The FYE will change to December from June. The guidance is based on Alterras proportionate share of each project.

Prior:

Risk Rating:
TSX:AXY 1-Year Target Price:
1-Year ROR
Snapshot Price Close 52 Wk High Low Market Cap ($000) Avg Trading Volume Fiscal Year End Shares OS (basic) (000) Shares OS (fd) (000) Float (000) Net Debt* ($000) EV ($000) Exchange Rate $USDCAD Estim ates FYE June Revenue (000) Q1 Q2 Q3 Q4 Year EBITDA (000) Q1 Q2 Q3 Q4 Year CFPS Q1 Q2 Q3 Q4 Year 2011A $8,044 A $18,751 A $18,748 A $33,280 A -$708 A $6,008 A $4,973 A $12,270 A $22,543 A $0.03 A $0.01 A $0.01 A -$0.03 A $0.02 A 2012E $39,003 $27,248 $23,421 $25,022 $25,623 $12,723 $8,235 $11,418 $58,000 $0.03 $0.01 $0.00 $0.01 $0.05

High
$0.67 26%
$0.53 $0.50 $1.53 C$246,511 873,254 Jun,30 465,116 479,289 312,216 US$525,554 C$766,862 1.01 2013E $38,845 $26,778 $28,050 $29,714 $25,488 $12,407 $10,130 $13,937 $61,962 $0.04 $0.01 $0.00 $0.01 $0.06

Impact/ Implications:
Our price target is reduced to $0.67 based on employing a 12x EV/EBITDA multiple rather than 15x to reflect the contraction of valuation multiples in the market. Our estimates are tweaked slightly higher but largely remain the same. Our forecast only includes the expansion at HS Orka by 80 MW and 50 MW at Maule Chile. Alterra reported that the potential JV partner balked at final closing and negotiations have commenced with another party. The near-term upside to our forecast is the three projects where GE is the partner; the 124 MW Upper Toba hydro project in B.C., the 156 MW Dokie II wind project in B.C. and the 50 MW ABW solar project in Ontario. The projects have PPAs and are permitted but plans are not finalized enough to include in our model.

$78,823 A $114,694 $123,387

Description: AXY is a pow er developer in geothermal, w ind and hydro assets online in Iceland, Canada and the US. $2.00

$1.50
$1.00

$0.50

Recommendation:
Our Hold recommendation is unchanged. Our price target decreases to $0.67 from $1.35.

$0.00

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JSI
v.
Analyst Certification:

Alterra Power Corp. (TSX:AXY) September 21, 2011

JACOB SECURITIES INC. EQUITY RESEARCH

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Each authoring research analyst and associate of Jacob Securities Inc. (Jacob Securities) whose name appears on the front page of this investment research hereby certifies that (i) the recommendations and opinions expressed in this investment research accurately reflect the authoring analysts personal, independent and objective views about any and all of the designated investments or relevant issuers discussed herein that are within such authoring analysts coverage universe and (ii) no part of the authoring analysts compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed by the authoring analyst in the investment research. The compensation of Research Analysts is intended to reflect the value of the services they provide to the clients of Jacob Securities. As with most other employees, the compensation of Research Analysts is impacted by the overall profitability of the firm, which may include revenues from investment banking activities of the firm's Corporate Finance department. Research Analysts' compensation is not, however, directly related to any specific corporate finance transactions. Company Disclosures: Ratings & Risk Rankings: AXY:2
2. The fundamental research analyst(s) and or associate(s) have visited material operation of this issuer.

Each analyst assigns a rating that is appropriate to the analyst`s view of how that stock will perform (total return basis) over the next 12 months on an absolute basis. At times the anticipated total returns may fall outside of the general ranges stated below due to near-term events, market conditions or stock volatility or, in some cases, company-specific corporate structures that result in consistently high yields. Ratings. Buy: Anticipate total return appreciation generally in excess of 15% over the next 12 months. Speculative Buy: Anticipate total return appreciation generally in excess of 25% over the next 12 months, however, the company is either pre-revenue, has negative cash flow, or a major unpredictable event may occur within 12 months. Hold: Anticipate limited total return (general appreciation less than 15% [or 25% for speculative rated stocks] or decline less than 10%) over the next 12 months. Reduce: Near term price outlook is for a negative return; however the long term outlook is for a positive return. Sell: Near term and long term return is expected to be negative. Risk Rankings. Low: Low financial and operations risk, high predictability of financial results, low stock volatility. Medium: Moderate financial and operations risk, moderate predictability of financial results, moderate stock volatility. High: High financial and or operation risk, low predictability of financial results, high stock volatility.

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Ratings Distributions:

Buy: Speculative Buy: Hold: Reduce: Sell: Restricted:

23% 45% 27% 0% 5% 0%

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