Brookfield Renewable Partners Lp · TSX:BEP.UN
Brookfield Renewable Partners Lp — Investor Day (September 2019)
71 slides from Brookfield Renewable Partners Lp's investor day presentation, Sep 26, 2019
Slide 1: Brookfield Renewable Partners Investor Day
Brookfield Renewable Partners I N V E S T O R D AY SEPTEMBER 26, 2019
Slide 2: Agenda
Agenda Track Record and Outlook 3 Sachin Shah, Managing Partner & CEO Investment Capabilities 27 Connor Teskey, Managing Partner & CIO Proven Financial Strength 42 Wyatt Hartley, Managing Director & CFO Summary and Q&A 68 Sachin Shah, Managing Partner & CEO 2
Slide 3: Track Record and Outlook
Track Record and Outlook Sachin Shah Managing Partner & CEO 3
Slide 4: Brookfield Renewable is a leading global owner, operator and developer of renewable power assets
Brookfield Renewable is a leading global owner, operator and developer of renewable power assets SMOKY MOUNTAIN HYDRO UNITED STATES $50B 18,900 MW 15 COUNTRIES 5 SECTORS TOTAL POW ER INSTALLED GLOBALLY MULTI- ASSETS CAPACITY¹ DIVERSIFIED TECHNOLOGY Includes transactions signed but not yet closed. 1.
Slide 5: We have a consistent, proven and repeatable strategy
We have a consistent, proven and repeatable strategy 5
Slide 6: Underpinned by our key pillars: 12% to 15% returns
…Underpinned by our key pillars 12% to 15% returns Value Operating Capital Investing Expertise Discipline Our business generates stable, attractive returns over the long-term 6
Slide 7: Key priorities over the last five years
This playbook allows us to set objectives and deliver Key priorities over the last five years Deploy $3.5 billion of equity at our target returns Grow scale in wind and solar Build a distributed generation business Globalize our operations Maintain an investment grade balance sheet Reduce payout rat
Slide 8: We have a consistent track record of strong performance
We have a consistent track record of strong performance BBB (HIGH) BBB (HIGH) / BBB+ $2.06 PER UNIT DISTRIBUTION 16% $1.25 BEP TOTAL PER UNIT RETURN DISTRIBUTION Total Returns $0.71 Alerian MLP Index: 11% PER UNIT DISTRIBUTION S&P Utilities Index: 8% S&P 500 Index: 6% 1999 2000 2001 2002 2003 2004 2
Slide 9: Growth of renewables will be larger than anyone expected
Growth of renewables will be larger than anyone expected 9
Slide 10: In the last five years: $1.5 trillion invested in new renewables
In the last five years… $1.5 trillion 1 million INVESTED IN MEGAWATTS OF NEW NEW RENEWABLES RENEWABLE CAPACITY 20% HYDRO 42% SOLAR 5% OTHER 33% W IND Source: Bloomberg New Energy Finance, Brookfield estimates of large hydro investment. Note: Pie chart reflects breakdown of capacity additions. 10
Slide 11: What has driven this growth?
What has driven this growth? 1 Competitive cost structure 2 Carbon reduction targets 11
Slide 12: Wind and solar are now the most economic sources of bulk power
Wind and solar are now the most economic sources of bulk power Levelized Cost of Energy $/MWh 140 Forecast Forecast 120 100 $/MWh 80 60 40 20 0 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 Solar PV Solar OnshoreWind Onshore Wind Gas CCGT Source: Bloomberg New Energy Finance. 12
Slide 13: Carbon reduction is universal
Carbon reduction is universal Current Renewable Power Generation is Below 2030 Targets 70% 60% 55% 50% 40% 31% 26% 34% 15% 27% California New York U.K. India China Current Renewables Generation Other Generation 2030 Renewables Target Source: Bloomberg New Energy Finance. Note: China and India renewa
Slide 14: Coal is gone and gas is going
Coal is gone and gas is going… Coal and Gas Generation: North America & Europe TWh Forecast 4,500 4,000 3,500 3,000 TWh 2,500 2,000 1,500 1,000 500 0 2012 2014 2016 2018 2020 2022 2024 2026 2028 2030 Coal Gas Source: Bloomberg New Energy Finance. Markets: Canada, France, Germany, Iberia, Italy, Nort
Slide 15: And in North America and Europe alone
And in North America and Europe alone… 2.5 million MW OF INSTALLED CAPACITY¹ Today, 45% OF CAPACITY IS COAL AND GAS¹ IF THAT FALLS BY HALF IN 10 years… There is $500 billion² of investment that would be disrupted 1. Source: Bloomberg New Energy Finance. 2. Assumes $1,000/kW remaining value for coal
Slide 16: The global opportunity set is growing
The global opportunity set is growing $10T $5T $1.5T INVESTMENT IN RANGE OF INVESTMENT OVER THE THE LAST NEXT DECADE 5 YEARS Source: Bloomberg New Energy Finance 16
Slide 17: Our strategy in this environment will not change
Our strategy in this environment will not change 17
Slide 18: Rising renewable penetration will increase disruption
1 Rising renewable penetration will increase disruption 18
Slide 19: Margins will be further compressed as lower cost renewables penetrate the system
2 Margins will be further compressed as lower cost renewables penetrate the system 19
Slide 20: ...which plays to our strengths
3 This level of change and disruption will be global… …which plays to our strengths 20
Slide 21: This capability allows us to generate attractive, risk-adjusted returns
This capability allows us to generate attractive, risk-adjusted returns RISK Capital Scarcity Operational Complexity Technological Disruption VALUE- ENHANCING TOOLKIT Contracted Brookfield Renewable wind and solar RETURNS 21
Slide 22: We have global renewable operations
We have global renewable operations NORTH AMERICA EUROPE 9,500MW 4,000MW SOUTH AMERICA ASIA 4,800MW 620MW Includes capacity from transactions signed but not yet closed, including assets currently under construction at X-Elio which are expected to be commissioned by the end of 2019. 22
Slide 23: We invest in scale across all major renewable technologies
We invest in scale across all major renewable technologies HYDRO UTILITY SOLAR WIND 7,900 MW 2,600 MW 4,300 MW DISTRIBUTED STORAGE GENERATION (DG) 2,700 MW 730 MW Note: Brookfield Renewable also owns a ~580 megawatt portfolio of biomass and co-generation facilities. Note: Includes capacity from tran
Slide 24: ~3,000 Operating Employees
~3,000 Operating Employees ENGINEERING & DEVELOPMENT H E ALT H , S AF E T Y, S E C U R I T Y AN D E N V I R O N M E N T G E N E R AT I O N M AN AG E M E N T, P L AN N I N G & D I S PAT C H N AT I O N AL S Y S T E M C O N T R O L S TAK E H O L D E R E N G AG E M E N T X-ELIO DEVELOPMENT SITE 24
Slide 25: In the last five years: $3.5B equity deployed
In the last five years… CAPITAL SCARCITY Energisa Saeta Isagen Bord Gais TerraForm Power Axis TerraForm Global FINANCIAL X-Elio $3.5B First Hydro OPERATIONAL DISCIPLINE EQUITY COMPLEXITY DEPLOYED¹ Distributed U.S. Merchant Generation Hydros TransAlta TECHNOLOGICAL DISRUPTION 1. Includes transactions
Slide 26: Looking ahead: one of the few future-proof stocks today
Looking ahead… The number of We have a proven Decarbonization value-enhancing and repeatable is taking over opportunities strategy the world is growing We are one of the few future-proof stocks today 26
Slide 27: Investment Capabilities
Investment Capabilities Connor Teskey Managing Partner & CIO 27
Slide 28: We have executed on a repeatable growth strategy
We have executed on a repeatable growth strategy for over 20 years We are value-oriented investors who seek opportunities where we can differentiate ourselves using something other than cost of capital ENDURING COMPETITIVE ADVANTAGES CONSISTENT RETURN TARGETS SIZE Remain disciplined in our GLOBAL RE
Slide 29: While our strategy has not changed, our capabilities have grown
While our strategy has not changed, our capabilities have grown... ACCESS GEOGRAPHIC TECHNOLOGY OPERATIONAL TO CAPITAL DIVERSITY DIVERSITY DEPTH ...Giving us access to the largest spectrum of growth opportunities globally 29
Slide 30: Capital deployed across a growing number of technologies
And we have deployed capital across a growing number of technologies… $1B $3.5B EQUITY DEPLOYED EQUITY DEPLOYED¹ Storage & Other 5% Solar 16% Wind 36% 2014-2019 Hydro 47% 2009-2013 Wind Hydro 32% 64% 1. Includes transactions signed but not yet closed. 30
Slide 31: And geographies
…And geographies $1B $3.5B EQUITY DEPLOYED EQUITY DEPLOYED¹ Canada 5% Asia U.S. 12% 20% Canada 12% Brazil 2014-2019 15% Brazil 2009-2013 U.S. 26% 62% Europe 25% Colombia 23% 1. Includes transactions signed but not yet closed. 31
Slide 32: Playbook refined over the last two decades
These diverse transactions are underpinned by a playbook that we have refined over the last two decades 32
Slide 33: Value-enhancement toolkit in practice
Value-enhancement toolkit in practice… TOOLKIT Carve-out Partnership Government Privatization Development Take-private Multi-technology Development Pipeline Platform Bankruptcy Restructuring Structured Transaction 33
Slide 34: European YieldCo: The Opportunity
European YieldCo: The Opportunity • Spanish renewables temporarily out-of-favor due to regulatory uncertainty • Market price providing significant downside protection • Improving Spanish economic and renewables backdrop 1,028 MW 100% $1.2B¹ SOLAR AND WIND CONTRACTED SCALE PORTFOLIO CASH FLOWS TRANSA
Slide 35: European YieldCo: new geography and growth platform in Europe
European YieldCo: new geography and growth platform in Europe • Local presence and existing knowledge of Spanish market from previous due diligence • Existing relationships provided opening to engage with shareholders • Able to provide a binding offer in under one month TOOLKIT Carve-out Partnership
Slide 36: Alberta Hydro: The Opportunity
Alberta Hydro: The Opportunity • Counterparty was seeking capital for coal to gas conversion • Large-scale hydro portfolio, providing critical grid-stabilizing services to the Alberta power market • Transitioning energy market favoring experienced operators 813 MW 90%¹ C$750M² HYDRO MARKET SHARE OF
Slide 37: Alberta Hydro: large-scale, perpetual asset portfolio
Alberta Hydro: large-scale, perpetual asset portfolio • Multi-year discussions with management regarding potential partnership opportunities • Structured a “win-win” transaction • Attractive economics of convertible securities act as downside protection TOOLKIT Carve-out Partnership Government Priva
Slide 38: Global Solar Developer: The Opportunity
Global Solar Developer: The Opportunity • Global development at an inflection point as subsidies disappear • High-quality portfolio of operating assets, visible pipeline of assets under construction and strong future pipeline • Experienced management team with global development pipeline, and best-i
Slide 39: Global Solar Developer: market-leading solar development platform
Global Solar Developer: market-leading solar development platform • Seller sought like-minded strategic partner with operational capabilities and industry experience • Significant growth optionality over the long-term • Self-funded model predicated on pipeline build-out with asset sales to capture a
Slide 40: We expect to earn our target returns with significant downside protection
We expect to earn our target returns with significant downside protection RISK Capital Scarcity Operational Complexity Technological Disruption VALUE- ENHANCING TOOLKIT • European YieldCo Contracted wind and solar • Alberta Hydro • Global Solar Developer RETURNS 6% to 9% IRR 12% to 20% IRR 40
Slide 41: Looking ahead, we will look to
Looking ahead, we will look to… Invest $4 billion into M&A and development over the next five years Grow all our regional platforms and achieve scale in Asia Build a leading distributed generation platform Continue to enhance our development capabilities across technologies Prioritize a disciplined
Slide 42: Proven Financial Strength
Proven Financial Strength Wyatt Hartley Managing Director & CFO 42
Slide 43: Our business has delivered strong results through economic cycles
Our business has delivered strong results through economic cycles 43
Slide 44: The lowest risk balance sheet in the sector
This is underpinned by the lowest risk balance sheet in the sector BBB+ 80% 10-year INVESTMENT GRADE NON-RECOURSE DEBT AVERAGE DEBT DURATION 44
Slide 45: And $2.5 billion of available liquidity
…And $2.5 billion of available liquidity $0.3B CASH & MARKETABLE SECURITIES $2.2B CREDIT FACILITIES 45
Slide 46: We have the highest quality cash flows in the sector
We have the highest quality cash flows in the sector 46
Slide 47: We have simultaneously grown and de-risked our cash flows
We have simultaneously grown and de-risked our cash flows $1.32 ~$2.50¹ FFO PER UNIT FFO PER UNIT 10% CAGR 2% 2% 5%2% 11% 11% 20% 6% 3% New York 12% 6% New England 10% 2012 6% 2019 21% 31% MISO 6% 6% PJM 3% 10% 43% 15% Today a ~20% below LTA-hydrology year in any single market would have less than a
Slide 48: And diversified our foreign currency exposure
…And diversified our foreign currency exposure 2012 FX Exposure 2019 FX Exposure Post-Hedging Post-Hedging Brazil Brazil 15% 29% Colombia 10% 26% India 1% Fully Hedged Fully 71% Hedged 74% In the event of a 10% depreciation in any single currency, we have only 1% FFO exposure 48
Slide 49: We have access to flexible and diverse funding sources
We have access to flexible and diverse funding sources 49
Slide 50: Almost $3.5 billion of growth funded in the last five years
In the last five years, we have funded almost $3.5 billion of growth through… Growth Capital Funding Sources Other Asia TerraForm Global North America Non-Recourse Hydro Up-financings Common Equity TerraForm Power Corporate ~$3.5B Brazil Debt ~$3.5B Europe Preferred Capital Recyling Equity Isagen 50
Slide 51: In the last year alone, we have raised $1.6 billion
And in the last year alone, we have raised $1.6 billion 51
Slide 52: Monetizing assets for value through capital recycling
Our operational know-how has allowed us to monetize assets for value… $780M CAPITAL RECYCLING $1.6B • Select Canadian Hydro • Scottish Wind Development • South Africa Wind & Solar • Northern Ireland Wind¹ • Portugal Wind¹ • Thailand Solar¹ • Malaysia Solar¹ 1. Reflects transactions signed but not ye
Slide 53: Significant liquidity at the corporate level
We generated significant liquidity at the corporate level… $1.6B $315M CORPORATE DEBT …Including issuing 10-year and 30-year non-amortizing, green bonds at an interest rate of 3.38% and 4.29%, respectively 53
Slide 54: Opportunistically issued preferred units
Opportunistically issued preferred units… $130M PREFERRED EQUITY $1.6B 54
Slide 55: Prudently up-financing our perpetual hydro assets
…And continue to prudently up-finance our perpetual hydro assets $340M NON-RECOURSE UP-FINANCINGS $65 million W IND UP-FINANCING $275 million H YD R O U P - F I N A N C I N G $1.6B 55
Slide 56: Our financial strength allows us to be patient
Our financial strength allows us to be patient and target value enhancing growth opportunities 56
Slide 57: We do not use excess leverage to achieve our target returns
We do not use excess leverage to achieve our target returns 57
Slide 58: Our risk-reward proposition is aligned with investors
Meaning our risk-reward proposition is aligned with investors BEP Peers Target Return 12% to 15% 8% to 10% Credit Rating Investment Grade Sub-Investment Grade Average Corporate 10 years 5 years¹ Debt Maturity Non-Amortizing Debt Backed by perpetual hydros Mismatch with underlying asset profile Use o
Slide 59: Well positioned to fund growth through diverse pools of capital
Looking ahead, we are well positioned to fund growth through diverse pools of capital 59
Slide 60: Our priority funding sources over the next five years
Our priority funding sources over the next five years ~$800M ~$500M CORPORATE DEBT PREFERRED UNITS FFO YIELD: 5.0%¹ FFO YIELD: 6.5%¹ ~$1,000M ASSET-LEVEL UP-FINANCINGS FFO YIELD: 4.5% $4B ~$1,500M 5.5% ASSET SALES AVERAGE FFO YIELD FFO YIELD: 7.0% ~$200M RETAINED CASH FLOW S While maintaining our in
Slide 61: Broadening our investor base
We are also facilitating the broadening of our investor base 61
Slide 62: BEP and BEPC structure
Including a similar structure to the newly-announced BIPC …This will give shareholders the option to invest in our business either through a Partnership or through a newly created Canadian Corporation Identical Fully exchangeable Dividends/distributions at any time BEP BEPC (LIMITED PARTNERSHIP) (CA
Slide 63: Benefits of creating BEPC
We believe the creation of BEPC could lead to increased demand and enhanced liquidity for Brookfield Renewable We see a number of benefits to establishing BEPC: EXPANDED INVESTOR BASE Unlock potential investment from currently restricted investors BROADER INDEX INCLUSION Allow Brookfield Renewable t
Slide 64: The number of value-enhancing opportunities is increasing
The number of value-enhancing opportunities is increasing And our stable financial profile positions us well to take advantage • Investment grade balance sheet and significant liquidity • Lowest risk and highest quality cash flows • Access to diverse pools of capital 64
Slide 65: Significant growth visibility over the next five years
…Which supports significant growth visibility over the next five years 10%+ FFO PER UNIT GROW TH 3-5% 3-5% 10%+ CAGR 2-4% 1-2% 2012 2019 Inflation Margin Development Acquisitions¹ 2024 Escalation Enhancement & Repowering 1. Assumes $4 billion deployed between development and M&A investments at targe
Slide 66: The most attractive total return in the sector
This translates into the most attractive total return in the sector ~5% 10%+ ~15% DISTRIBUTION CASH FLOW TOTAL YIELD GROWTH RETURN 66
Slide 67: Significant upside from yield compression
…With significant upside from yield compression Yield Unit Price 5.5% $37 5.0% $41 +25% 4.5% $46 RENEWABLES INTEREST RATE GROWING PRUDENT TAILWINDS ENVIRONMENT INVESTOR BASE PAYOUT RATIO 67
Slide 68: Summary and Q & A
Summary and Q & A Sachin Shah Managing Partner & CEO 68
Slide 69: In summary
In summary… 1 We have a large opportunity set 2 We have a unique capability to execute on value-enhancement opportunities 3 We have a stable financial profile that facilitates our growth 69
Slide 70: Brookfield
Brookfield
Slide 71: Notice to Recipients
Notice to Recipients All amounts are in U.S. dollars unless otherwise specified. Unless the regulation of water supply; advances in technology that impair or to hold its ownership interests in Brookfield Renewable; and otherwise indicated, the statistical and financial data in this eliminate the com
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