Brookfield Renewable Partners L.P.
Highlights from the RBC Global ESG Virtual Conference
Our View: Today we hosted Conner Teskey, Managing Partner, Head of Brookfield’s Renewable Power & Transition Group, and Chief Executive Officer of Brookfield Renewable Partners (BEP), for a discussion on energy transition, decarbonization, and the role BEP will play as one of the largest operators and developers of renewable assets. The key highlights from the discussion are below:
Helping other businesses decarbonize. Brookfield Renewable's strategy has been consistent for decades, but the growth opportunities continue to change. Beginning as a pure play hydro company, BEP has expanded into wind and solar as they became large opportunity sets, and is now expanding into new technologies, including offshore wind, distributed generation, and storage. Today, management sees the largest opportunity set as providing solutions to help other businesses reach their decarbonization objectives. Increasingly, corporate customers are looking for more customized solutions, and BEP has been successful in pairing new wind and solar developments (corporate PPAs) with its existing hydro portfolio to provide 24/7 renewable power solutions.
Investment opportunity set accelerating. Management continues to view wind and solar as the cheapest form of bulk electricity in most markets around the world, and expects increased market penetration particularly as global supply chain issues improve, permitting processes become more efficient, and storage technologies mature. The battery storage technologies are currently cost-effective in some regions, and management believes green hydrogen could become economic within the next decade. BEP has made a number of acquisitions which include portfolios of development assets, and management expects these investments will generate returns in excess of its target of 12-15% (after tax equity return). BEP currently has ~9 GW (gross) of developments that are currently under construction or in the construction-ready stage that they plan to build out over the next three years.
Well capitalized to execute on growth. Brookfield Asset Management (Covered by RBC Capital Markets Analyst Geoffrey Kwan) is in the process of raising a $15 billion (first close completed) Global Transition Fund that will target large and attractive decarbonization opportunities. BEP expects to invest alongside (~25%) the fund in almost every investment the fund makes. We note BEP is well capitalized to participate in this opportunity with $4.1 billion in available liquidity with the target to deploy $1.0-1.2 billion of equity investment per year.
ESG is complementary to creating value. Management highlighted the importance of stakeholder management, taking a regional approach to make a positive impact on the communities they operate in, while also promoting diversity in all parts of the business. BEP views ESG initiatives as complementary to creating value in its existing assets and its future investments. With the increased focus on decarbonization globally, BEP is well positioned to help organizations achieve their objectives.