Brookfield Renewable signed a series of deals in the fall of 2020 that highlight its expertise in nurturing clean electricity grids and acquiring assets in an era of fighting climate change.Courtesy of manufacturer
When Brookfield Renewable Partners LP (BEP-UN-T) formed in 2011, its balance sheet showed US$14-billion in clean electricity assets that it managed.
Back then, 89 per cent of those assets were in hydroelectricity, 10.5 per cent in wind power and a slim 0.5 per cent in other green energy. Geographically, the company’s assets were spread across Canada, the United States and Brazil.
Less than a decade later, Brookfield Renewable now has assets under management that have surged to US$52-billion. As one of the largest operators of renewable electricity in the world, it has a geographically diversified portfolio that features hydroelectricity, wind power, solar, distributed generation and storage from hydro and battery assets.
New chief executive officer Connor Teskey said the company’s growth is far from peaking. “We’re in the very, very early days of what we think will be a multidecade-long transition to cleaner energy grids and more decarbonized businesses going forward,” Mr. Teskey said in an interview.
The Canadian company has moved beyond North America and Brazil by adding assets over the past nine years in countries such as Colombia, Chile, Ireland, Spain, China and India.
Mr. Teskey, who grew up in Vancouver, became Brookfield Renewable’s CEO in October. He first joined the parent company, Toronto-based investment giant Brookfield Asset Management Inc., or BAM, in 2012.
Renewable power assets, underpinned by long-term generation contracts, have proven to be resilient during the pandemic. “Renewables continued to produce all the way through the lockdowns,” Mr. Teskey said. “We were generating the expected revenues that we thought we would.”
In the first nine months of 2020, Brookfield Renewable garnered US$2.86-billion in revenue, down 5 per cent from US$3-billion in the same period of 2019. A financial performance indicator called “funds from operations” climbed to US$606-million for the nine months ended Sept. 30, up 3 per cent from US$590-million for the year-earlier period.
“This massive global disruption really showed what happens to certain businesses when markets turn downwards,” Mr. Teskey said. “It really showed the resiliency of renewables and how they are high-quality assets that perform well under both good market conditions and bad market conditions.”
Brookfield Renewable has been able to expand steadily in the clean electricity sector since its formation in late 2011, after BAM merged its hydro and wind assets with a power income fund in which it held a 34-per-cent stake.
North America recently accounted for 56 per cent of Brookfield Renewable’s power assets, South America and Europe each had a 21-per-cent portion and Asia had the remaining 2 per cent.
BAM owns 51 per cent of Brookfield Renewable, which has partnership units and related shares that trade on the Toronto Stock Exchange and New York Stock Exchange.
Based in London since 2016, Mr. Teskey is also continuing in his role as BAM’s head of European operations. He formerly served as Brookfield Renewable’s chief investment officer.
“Why you’re seeing renewables grow so much is not only could the business stand alone purely on economics and attract capital that way, it also has this massive additional tailwind of, around the world, people trying to go green,” said Mr. Teskey, who replaced Sachin Shah as Brookfield Renewable CEO. Mr. Shah is now BAM’s chief investment officer and a vice-chairman at Brookfield Renewable.
Brookfield Renewable signed a series of deals in the fall of 2020 that highlight its expertise in nurturing clean electricity grids and acquiring assets in an era of fighting climate change.
In October, the company inked a five-year pact in New York state to sell renewable energy certificates, or RECs, to JPMorgan Chase & Co. and its real estate operations.
“RECs were created as a way to track renewable electricity,” said Saeed Kaddoura, a senior analyst at the Pembina Institute, a think tank for clean energy. “What you’re tracking are the certificates, which represent the renewable electricity, and it’s a way for JPMorgan to meet its corporate commitments.”
Ruth Kent, chief operating officer at BAM’s renewable group, said intricate transactions for tracing electricity such as the one with JPMorgan show “the art of the possible” that allows Brookfield Renewable to help corporate customers meet their sustainability goals of supporting clean electricity.
Brookfield Renewable recently had 19,300 megawatts of power capacity, located in 27 markets in 17 countries. “We have a mix of renewable sources that are all carbon-neutral,” Ms. Kent said.
Hydro accounts for 41 per cent of those total megawatts, followed by wind at 24 per cent, storage and solar at almost 14 per cent each and other sources at 7 per cent.
A further 18,300 megawatts in power assets are under development, including 2,700 megawatts under construction.
In December, Brookfield Renewable and its partners reached an agreement to buy distributed solar assets in the United States from Exelon Generation Co. of Chicago for US$810-million.
Distributed generation, also known as on-site generation of electricity, is growing in importance, said Brookfield Renewable chief financial officer Wyatt Hartley.
While solar has grabbed the spotlight in recent years for distributed generation, some paper mills have historically relied on dedicated, on-site hydro facilities. Brookfield Renewable’s portfolio includes hydro generation stations that formerly belonged to paper mills. “In a way, hydro was the original distributed generation,” Mr. Hartley said.
In August, BAM named Mark Carney as its vice-chairman and global head of environmental, social and governance investing strategy.
Mr. Carney, the former governor at the Bank of Canada and Bank of England, has served as a vice-chairman at Brookfield Renewable since October.
BAM reckons that the market for renewable investing will be worth trillions of dollars in the coming years.
BAM is in the early stages of preparation for its new Global Transition Fund, which would overlap in some instances with Brookfield Renewable’s own green agenda.
Mr. Teskey, Ms. Kent and Mr. Hartley are expected to play key roles in helping to spot potential transactions for the new impact fund that will focus on the green investment opportunities as an array of countries strive for net-zero carbon emissions by 2050.
“Now you’re increasingly getting corporates setting their own voluntary objectives,” Mr. Teskey said. “We’re now seeing lenders, as well, look to be very specific about where they lend capital, focusing more on green and sustainable industries and less on carbon-intensive ones.”
Brookfield Renewable units trade under the ticker symbol BEP.
“We continue to rank BEP as a pre-eminent renewables franchise and are confident it will play a critical role in helping the world meet its ambitious decarbonization goals,” Raymond James Ltd. analyst Frederic Bastien said in a research note after the Exelon announcement.
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