Brookfield Renewable Partners Q2 Earnings Call Highlights

Key Points

• Brookfield Renewable reported record Q2 results, with FFO rising 13% year over year to $421 million, or $0.62 per unit. The company commissioned 1.3 GW of capacity, signed PPAs for 2.6 GW and committed $5 billion to growth investments.
• The planned $3 billion acquisition of Aypa will significantly expand Brookfield’s battery-storage platform, adding roughly 3 GW of operating and construction assets, 3.5 GW of contracted projects and a development pipeline exceeding 20 GW.
• Management highlighted growth opportunities in nuclear power through Westinghouse and proposed combining BEP and Brookfield Renewable Corporation into one publicly traded entity, with shareholder votes expected in October and a potential closing by year-end.

Brookfield Renewable Partners NYSE: BEP reported record second-quarter financial results, highlighting growth in funds from operations, continued development activity, expanded battery-storage investments and capital recycling initiatives.

Chief Executive Officer Connor Teskey said the company generated second-quarter FFO of $421 million, or $0.62 per unit, representing increases of 13% and 11%, respectively, from the prior-year period. Over the past 12 months, FFO totaled $1.444 billion, or $2.14 per unit, up 14% in total and 11% per unit year over year.

The company commissioned 1.3 gigawatts of capacity during the quarter and signed power purchase agreements for 2.6 gigawatts from its advanced development pipeline. Brookfield Renewable deployed or committed $5 billion toward growth investments, or $760 million net to BEP, while agreeing to or closing asset sales expected to produce approximately $2.2 billion of proceeds, or $630 million net to BEP.

Battery Storage Expansion Through Aypa

Chief Investment Officer Jay Varena said Brookfield Renewable’s planned acquisition of Aypa, described as North America’s largest standalone battery-storage platform, reflects the increasing role of storage in providing flexible and reliable electricity supply.

The $3 billion acquisition, representing approximately $420 million net to BEP, includes about 3 gigawatts of highly contracted operating and under-construction assets, another 3.5 gigawatts of contracted projects and a development pipeline exceeding 20 gigawatts.

Following the acquisition, Brookfield Renewable expects to double its operating and under-construction battery capacity to about 6 gigawatts and expand its development pipeline by more than 30% to over 80 gigawatts. Varena said Aypa, together with the company’s acquisition of Neoen at the end of 2024, establishes Brookfield Renewable as a leading global battery-storage platform.

Management said the acquisition is immediately accretive and could offer additional value through accelerated development, capital-structure and commercial optimization, and asset recycling. The company also expects Aypa to broaden its ability to offer customers energy solutions spanning hydro, solar, wind, storage and nuclear power.

Responding to a question on battery supply, Teskey said batteries are Brookfield Renewable’s fastest-growing technology. He said the company has relationships with major domestic and international equipment suppliers and is pursuing large-scale global framework agreements for battery equipment, similar to arrangements it has used for wind and solar equipment.

Teskey said battery levelized costs of energy have declined substantially over the past 24 months. While input costs could create short-term fluctuations, he said the company expects battery LCOEs to continue declining over the longer term as supply chains scale and technology improves.

Nuclear Opportunity and Westinghouse

Teskey said global electricity demand is accelerating while new power capacity and grid infrastructure have not kept pace. He said the company’s portfolio of hydro, wind, solar, storage and nuclear capabilities positions it to serve customers seeking reliable, scalable and integrated power solutions.

Brookfield Renewable’s nuclear-services business, Westinghouse, is positioned to benefit from increased global nuclear investment, according to management. Teskey said Westinghouse provides fuel, services and maintenance for approximately half of the current global nuclear fleet.

During the quarter, the U.S. Department of Energy issued a commitment for up to $17.5 billion in loan facilities to support procurement of long-lead equipment for deployment of up to 10 Westinghouse AP1000 reactors in the United States. Teskey said the program could accelerate deployment timelines by as much as three years by enabling purchases of long-lead items before final investment decisions.

The company is working with seven utility partners that have identified project sites and are progressing toward long-lead equipment orders, Teskey said. Westinghouse is also pursuing opportunities internationally, including in Saudi Arabia following a U.S.-Saudi nuclear cooperation agreement.

Segment Performance, Financing and Asset Sales

Patrick, who leads Brookfield Renewable’s financial review, said hydroelectric operations generated $336 million of FFO in the second quarter. Results reflected strong generation in Canada, continued strength in Colombia and increased ownership in Isagen, partly offset by weaker hydrology in U.S. operations. The segment also included realized gains from the sale of an additional 25% interest in a non-core hydro portfolio in Maine.

Solar and wind operations generated $166 million of FFO, benefiting from recently commissioned projects and realized gains from asset sales. Distributed energy, storage and sustainable solutions contributed $84 million of FFO. Westinghouse FFO increased more than 60% from the prior year, excluding a large new-reactor licensing fee received in the second quarter of last year, Patrick said.

Brookfield Renewable completed about $12 billion of financings during the quarter and ended the period with more than $5.1 billion of available liquidity. Financing activity included a $1.2 billion refinancing of the Safe Harbor hydro portfolio after it signed a 20-year contract with Google last year. The refinancing generated aggregate up-financing of $700 million, or $200 million net to BEP.

The company also cited a €650 million bond issuance by Neoen and a C$200 million preferred-unit issuance at the corporate level. It is advancing hydro contracting in Ontario under a provincial system operator program that management expects could enable meaningful up-financings in coming quarters.

On capital recycling, Patrick said the company agreed to sell a 570-megawatt European solar and wind portfolio to a newly formed European renewable-power platform. It also closed two-thirds of the sale of 2.1 gigawatts of assets to Northview Energy, with the remaining third completed after quarter-end.

Proposed Corporate Simplification

Brookfield Renewable is proceeding with a proposed transaction to combine BEP and Brookfield Renewable Corporation into a single publicly traded corporation, subject to approvals. Management said the transaction is expected to be tax-deferred for Canadian and U.S. investors and could improve trading liquidity, broaden the investor base and simplify analysis and governance.

Patrick said no changes are planned to dividends, Brookfield’s ownership, management fees, preferred units or public debt. Votes are expected in October, with closing targeted by year-end if approvals are obtained. He said approval requires a two-thirds vote, and the transaction would proceed if BEP unitholders approve it even if BEPC shareholders do not.

About Brookfield Renewable Partners (NYSE:BEP)

Brookfield Renewable Partners L.P. is a leading global owner, operator and developer of renewable power assets. Listed on the New York Stock Exchange under the ticker BEP, the partnership focuses on generating clean electricity from a diversified mix of hydroelectric, wind, solar and energy storage facilities. As part of the Brookfield Asset Management group, Brookfield Renewable leverages a long-term, asset-backed approach to investing in sustainable energy projects that support the transition to a low-carbon economy.

The company’s platform encompasses approximately 23,000 megawatts of installed capacity across four continents.

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