Brookfield Renewable Partners (BEP)
C O R P O R AT E P R O F I L E
M AY 2 0 1 7
Cautionary Statement Regarding Forward-Looking Statements
This presentation contains forward-looking statements and information within the meaning of Canadian provincial securities laws and “forward-looking statements” within the meaning
of Section 27A of the U.S. Securities Act of 1933, as amended, Section 21E of the U.S. Securities Exchange Act of 1934, as amended, “safe harbor” provisions of the United States
Private Securities Litigation Reform Act of 1995 and in any applicable Canadian securities regulations. The words “will,” “should,” “could,” “potential,” “tend to,” “target” “future,”
“growth,” “expect,” “believe,” “goal,” “plan,” derivatives thereof and other expressions which are predictions of or indicate future events, trends or prospects and which do not relate to
historical matters identify the above mentioned and other forward-looking statements. Forward-looking statements in this presentation include statements regarding the quality of
Brookfield Renewable’s business, the expectation for future cash flows and distribution growth, the availability of acquisition opportunities, liquidity, and the timing and completion of
current acquisitions, dispositions and development projects. Although Brookfield Renewable believes that these forward-looking statements and information are based upon
reasonable assumptions and expectations, the reader should not place undue reliance on them, or any other forward looking statements or information in this presentation. The future
performance and prospects of Brookfield Renewable are subject to a number of known and unknown risks and uncertainties. Factors that could cause actual results of Brookfield
Renewable to differ materially from those contemplated or implied by the statements in this presentation include economic conditions in the jurisdictions in which we operate; our
ability to sell products and services under contract or into merchant energy markets; weather conditions and other factors which may impact generation levels at our facilities; changes
to government regulations, including incentives for renewable energy; our ability to grow within our current markets or expand into new markets; our ability to complete development
and capital projects on time and on budget; our inability to finance our operations or fund future acquisitions due to the status of the capital markets; the ability to effectively source,
complete and integrate new acquisitions and to realize the benefits of such acquisitions; health, safety, security or environmental incidents; regulatory risks relating to the power
markets in which we operate, including relating to the regulation of our assets, licensing and litigation; risks relating to our internal control environment; we do not have control over all
of our operations; contract counterparties not fulfilling their obligations; and other risks associated with the construction, development and operation of power generating facilities.
We caution that the foregoing list of important factors that may affect future results is not exhaustive. The forward-looking statements represent our views as of the date of this
presentation and should not be relied upon as representing our views as of any date subsequent to the date of this presentation. While we anticipate that subsequent events and
developments may cause our views to change, we disclaim any obligation to update the forward-looking statements, other than as required by applicable law. For further information
on these known and unknown risks, please see “Risk Factors” included in our Form 20-F.
Cautionary Statement Regarding Use Of Non-IFRS Measures
This presentation contains references to Adjusted EBITDA, Funds From Operations and Adjusted Funds From Operations, which are not generally accepted accounting measures
under IFRS and therefore may differ from definitions of Adjusted EBITDA, Funds From Operations and Adjusted Funds From Operations used by other entities. We believe that
Adjusted EBITDA, Funds From Operations and Adjusted Funds From Operations are useful supplemental measures that may assist investors in assessing the financial performance
and the cash anticipated to be generated by our operating portfolio. Neither Adjusted EBITDA, Funds From Operations nor Adjusted Funds From Operations per LP Unit should be
considered as the sole measure of our performance and should not be considered in isolation from, or as a substitute for, analysis of our financial statements prepared in accordance
with IFRS.
References to Brookfield Renewable are to Brookfield Renewable Partners L.P. together with its subsidiary and operating entities unless the context reflects otherwise.
All amounts are in U.S. dollars and presented on a consolidated basis unless otherwise specified.
2
Who We Are
3
Leader in Renewable Generation
One of the largest public pure-play renewable businesses globally
100 years of experience in power generation
Full operating, development and power marketing capabilities
Over 2,000 operating employees
$25 billion
10,600
88%
POWER ASSETS
MEGAWATTS OF CAPACITY
HYDROELECTRIC GENERATION
Z
260 power generating facilities
15 markets in 7 countries
Situated on 82 river systems
4
Global Operations with Local Presence
We have integrated operating platforms on three continents with local operating and
power marketing expertise
EUROPE
$1 Billion AUM
500 MW
115 employees
NORTH AMERICA
$16 Billion AUM
5,900 MW
1,100 employees
COLOMBIA
$5 Billion AUM
3,000 MW
680 employees
BRAZIL
$3 Billion AUM
1,200 MW
430 employees
5
Diversified Operating Portfolio
Cash flows are supported by a strong contract profile and are diversified by
technology and geography
Hydro
Focused
Contracted
Cash Flows
Global
Footprint
1%
5%
11%
8%
15%
15%
65%
88%
Hydro
Wind
Other
North America
Brazil
92%
Colombia
Europe
Contracted
Merchant
Based on LTA generation, proportionate to BEP
6
Real Return Assets with Strong Downside Protection
~90% Contracted
Revenue Profile
Operational
Focus
Conservative
Capitalization
•
17 year proportionate contract term, inflation-linked escalation
•
Primary investment grade counterparties
•
Cash flow stability across economic cycles
•
High asset availability and reliability
•
Robust sustaining capital program to protect investments
•
Strong cash margins
•
Over $1 billion of available liquidity
•
BBB investment grade credit rating from S&P
•
~80% of debt is non-recourse to BEP
7
Attractive Risk-Adjusted Returns
~$9 Billion
BEP / BEP.UN
~6%
5% ‒ 9%
MARKET CAPITALIZATION
NYSE / TSX DUAL LISTING
DIVIDEND YIELD
DISTRIBUTION GROWTH
Annual Distribution
6.2%
CAGR
Price Performance
$1.87
$1.78
Annualized Total Return1
1 yr
3 yr
5 yr
BEP.UN (TSX)
7%
13%
15%
BEP (NYSE)
6%
7%
9%
S&P/TSX Composite
19%
6%
8%
S&P 500
17%
10%
13%
$1.66
$1.55
$1.45
$1.38
1) Source: Bloomberg, including reinvestment of dividends. At March 31, 2017
2012
2013
2014
2015
2016
2017
Our objective is to deliver long-term total returns of 12% ‒ 15%
to shareholders annually
8
Multiple Levers to Drive Growth
Targeted annual distribution increases of 5% ‒ 9% are supported by
organic cash flow growth and proprietary project development
Protect our balance
sheet and maintain
significant liquidity
•
Investment grade balance sheet
•
Diverse sources and access
to capital
Position the business
for economic growth
•
•
•
Inflation protected revenues
•
Track record of cost control
•
Manage power and ancillary
sales to benefit from market
volatility
Deploy capital into global
renewable opportunities
•
Leverage our established
continental platforms
•
Continue to focus on hydro
opportunities
•
Expand our track record of
accretive M&A growth while
taking advantage of capital
scarcity
Lock in value through long-term
Power Purchase Agreements
Build out our proprietary
development pipeline at
premium returns
9
High Quality Assets
10
High Quality Assets and Low Risk Profile
Diversified
Operations
•
•
Scarce, Irreplaceable
Assets with High
Barriers to Entry
•
•
•
•
Invested in 7 countries over 3 continents
‒ Geographic diversity reduces exposure to regulatory risk and
currencies
260 generating stations spread across 82 river systems
‒ Low correlation between watersheds limits exposure to hydrology
‒ Market mechanisms in place to provide volume stability
•
Highly regulated environment
Significant build / replacement cost
Site availability limited by physical and environmental constraints
Significant operating expertise required
‒ Power marketing, scheduling / dispatch, regulatory compliance
Long term customer contracts
Predictable
Cash Flows
•
•
•
•
EBITDA margins > 70%
Low sustaining CAPEX
90% contracted cash flows with creditworthy counterparties
Contract escalation linked to local inflation indices
Real Assets,
Proven Technologies
•
•
•
Perpetual hydroelectric dams
Utility scale wind farms
Biomass as a complementary technology
11
Best in Class Hydro Portfolio
We have a strong track record as a responsible owner, operator and
developer of hydroelectric generation facilities
•
Started investing in hydro over 20 years ago, prior to market
deregulation in North America
•
Hydroelectric generation is the highest value renewable asset
class
•
Our operating platform positions us to create value:
‒
Centralized system control
‒
Ability to sell power in multiple markets
Pezzi Rio Grande do Sul, Brazil
‒
Optimization of resource through storage and ability to
sell during peak demand periods
‒
Geographic diversity spread over 82 river systems
• Significant barriers to entry requiring deep operational
knowledge and marketing expertise
White Pine, United States
12
Modern Portfolio of High Quality Wind Assets
Wind energy is one of the fastest growing and lowest cost sources of new
renewable generation which complements our hydro portfolio
•
Prince Wind Farm, Canada
Since developing our first wind farm in 2006, we have built a
high-quality wind business
‒
Focused in areas with scarcity value
‒
Located in high-value power markets
‒
Benefit from long-term, utility-grade PPAs
‒
Tier 1 turbine equipment (GE, Siemens, Vestas,
Enercon, Nordex)
‒
In-house and full-scope turbine maintenance strategies
•
Strategy has been to focus on developments or buy
for value
•
Brookfield now operates 35 wind facilities with an installed
capacity of ~1,500 MW in six countries
Sorne Wind Farm, Ireland
13
Deep Operational Expertise
Asset
Asset
Integration
Integration
Generation
Management,
Planning
and Dispatch
Regulatory
Asset
Expertise
Integration
2,000
EXPERIENCED
OPERATORS
Energy
Marketing
Expertise
National
Asset
System
Control
Integration
140
3
POWER MARKETING
EXPERTS
REGIONAL CONTROL
CENTERS
Health, Safety,
Asset
Security and
Integration
Environmental
Engineering
and
Development
Stakeholder
Asset
Engagement
Integration
14
Construction and Advanced Projects
We have ~300 MW of construction and construction-ready assets expected
to contribute $45-50 million of annualized FFO once commissioned
Project
Region
Technology
Capacity (MW)
Expected
Commissioning
Expected
Annualized FFO
Serra dos Cavalinhos1
Brazil
Hydro
25
Q1-2017
5.7
Crockandun
Europe
Wind
15
Q2-2017
1.5
Shantavny
Europe
Wind
16
Q2-2017
1.0
Brazil
Hydro
28
Q3-2017
2.8
Slievecallan
Europe
Wind
28
Q3-2017
2.8
Ballyhoura
Europe
Wind
19
Q4-2017
1.5
Brazil
Hydro
19
Q3-2018
2.0
Europe
Wind
19
Q4-2018
3.4
Silea – Verde 4A
Silea – Verde 4
Tralorg
Total
169
~$21 M
1. Commissioned January 25, 2017
In addition to the assets listed above, we have 127 MW of construction-ready projects
expected to contribute an additional $25 to $30 million to FFO annually
15
Financial Profile
16
Robust Balance Sheet
Significant Liquidity
Debt Maturity Ladder
($BILLIONS)
•
$1.7 billion committed corporate credit facility through 2021
•
70% long-term target FFO payout ratio, significant free cash flows
•
Diverse funding sources with access to public and private markets
$5.5
$5.0
$4.5
Staggered Debt Maturities
$4.0
•
No material near-term maturities following completion of recent
financings
$3.5
•
Project debt has an average remaining term of 9 years and
rate of 6.2% on a proportionate basis
•
~80% fixed rate with minimal floating rate exposure funded in
local currency
$3.0
$2.5
$2.0
$1.5
Conservative Capitalization
•
38% consolidated debt-to-capitalization ratio
•
Primarily asset level debt, 79% of which is non-recourse to BEP
•
Investment grade credit ratings with S&P and DBRS
$1.0
$0.5
$2017 2018 2019 2020 2021 After
Non-Recourse Maturities
Recourse Maturities
17
Conservative Capitalization
•
BEP has maintained a conservative debt to
capitalization ratio over the long-term
•
Our high quality cash flow and strong remittance
characteristics underscore our investment
grade ratings
•
The use of primarily non-recourse, fixed rate
financings provides strong protection and credit
stability to BEP lenders and investors
38%
~3.0X
DEBT TO TOTAL
CAPITALIZATION
CONSOLIDATED EBITDA /
INTEREST COVERAGE
~7.0X
4.5%
REMITTED CASH FLOW /
INTEREST COVERAGE
AVERAGE INTEREST RATE ON
CORPORATE BORROWINGS
BBB
•
“The satisfactory business risk profile reflects our view of the
partnership's diverse portfolio and strong contractual profile.
We believe that these strengths provide a high degree of
stability of cash flows.”
•
“We believe BEP's hydroelectric generation enjoys strong
competitive interconnections to a diverse pool of power
markets, and the availability of water storage facilities that
enhance the partnership's operational flexibility and
profitability.”
* S&P Research Update: December 19, 2014
BBB(high)
•
“BEP’s ratings reflect its geographic and resource diversification,
and highly contracted portfolio with investment grade counterparties,
while also factoring in the inherent renewable resource risk.”
•
“BEP’s financial risk profile is based on its deconsolidated credit
metrics that have remained reasonable for the current rating, as
supported by its prudent financing strategy of predominantly funding
growth initiatives with a mix of non-recourse project level debt, equity
and capital from institutional partners.”
* DBRS Rating Report: March 27, 2015
18
Highly Contracted Cash Flows
•
•
•
Our hydro assets are spread across 82 river systems and four countries diversifying hydrology risk;
‒ Hydrology risk in Brazil is further mitigated through our participation in the country wide
balancing pool which stabilizes generation
Power is largely sold under long-term, fixed price, inflation linked contracts with an average
proportionate term of 17 years
‒ The majority of PPAs are structured as take-or-pay contracts (no minimum volume risk) with
high quality investment grade counterparties with long-standing credit histories
We expect to re-contract expiring PPAs at levels equal or higher than roll off prices
‒ Current all-in power prices exceed our underwriting targets supporting embedded upside in our
cash flows
Generation
(GWh)
Remaining
2017
2018
2019
2020
2021
13,821
16,966
15,514
13,032
11,213
Wind
1,754
2,399
2,399
2,345
2,323
Other
212
306
304
305
252
15,787
19,671
18,217
15,682
13,788
1,425
3,790
5,244
7,891
9,785
17,212
23,461
23,461
23,573
23,573
92%
84%
78%
67%
58%
PPA Counterparty Ratings
Contracted
Hydroelectric
Merchant
LTA
% of generation
Amounts proportionate to BEP
5%
84%
Investment Grade
11%
Non-Investment Grade
Not Rated
19
Investment Highlights
Best in class renewable portfolio providing stable cash flow growth and
long-term capital appreciation with strong downside protection
Largest independently owned
hydroelectric portfolio globally
Highest value renewable resource with significant
barriers to entry
Stable contracted cash flows
with growing operating margins
Upside tied to economic growth and rising
power prices
Robust balance sheet and
access to global capital markets
Over $1 billion of available liquidity to grow the
business accretively
Proven track record of value
creation for shareholders
6% compound dividend growth and 15% annualized
total return since 2011
20
Contacts
Contact
Title
E-Mail Address
Phone Number
Sachin Shah
Chief Executive Officer
[email protected]
416.369.6008
Nick Goodman
Chief Financial Officer
[email protected]
416.369.2546
Zev Korman
SVP, Investor Relations
[email protected]
416.359.1955
21
Appendix
22
BEP Generation Overview
As at December 31, 2016
River
Systems
Facilities
Capacity
(MW)
LTA
(GWh)
Storage
(GWh)
50
170
4,847
17,775
4,879
6
7
3,032
14,476
3,703
26
42
899
4,647
‒
82
219
8,778
36,898
8,582
̶
10
840
2,310
̶
Hydroelectric
North America1
Colombia2
Brazil3
Wind4
North America
Europe
̶
20
463
1,174
̶
Brazil
̶
5
150
588
̶
̶
35
1,453
4,072
̶
Other5
̶
6
390
385
Total6
82
260
10,621
41,355
̶
8,582
1)
North America hydroelectric LTA is the expected average level of generation, as obtained from the results of a simulation based on historical inflow data performed over a period of typically
30 years
2)
Colombia hydroelectric LTA is the expected average level of generation, as obtained from the results of a simulation based on historical inflow data performed over a period of typically
20 years. Colombia includes both hydroelectric and a 300 MW Co-gen facility.
3)
Hydroelectric assets located in Brazil benefit from a market framework which levelizes generation risk across producers
4)
Wind LTA is the expected average level of generation, as obtained from the results based on simulated historical wind speed data performed over a period of typically 10 years
5)
Includes two Co-gen plants in North America (215 MW) and four biomass facilities in Brazil (175 MW)
6)
LTA is calculated on a consolidated and an annualized basis from the beginning of the year, regardless of the acquisition or commercial operation date on a consolidated basis. On a
proportionate basis, the annualized LTA is 23,419 GWh
23
Favourable Structure Relative to MLPs
•
•
Brookfield Renewable is a Bermuda-based publicly traded partnership that owns holding
corporations in the U.S., Canada and other jurisdictions. Brookfield Renewable is not a
U.S. MLP1
Comparison of Brookfield Renewable versus MLP
Brookfield Renewable
MLP2
Publicly traded partnership
Publicly traded partnership
UBTI3
No
Yes
ECI4
No
Yes
U.S. tax slip issued
K1
K1
Benefits from return of capital
Benefits from depreciation
~70% of FFO
80%-90% of distributable cash flow5
25% maximum
50% maximum
Type of entity
Tax profile of distributions
Payout ratio
Incentive distributions
Brookfield Renewable is committed to structuring its operations to avoid
generating UBTI and ECI
1)
2)
3)
4)
5)
MLP is Master Limited Partnership
Not all MLP’s are the same. This represents Brookfield’s understanding of common features with these types of vehicles
UBTI is unrelated business taxable income
ECI is effectively connected income
Source: Management estimates based on Barclays Capital Master Limited Partnerships MLP Trader Weekly
24
Leader in Green Energy & Sustainability
BEP is the largest member by market capitalization of the S&P/TSX Renewable Energy
and Clean Technology Index.
BEP is committed to sustainable development principles that reduce the impact of our
operations and help to manage the underlying water resources efficiently. Low Impact
Hydropower Institute (LIHI) certification is a voluntary certification program designed to
help identify and provide market incentives for hydropower operations that are minimizing
their environmental impacts. BEP has received LIHI certification for 52 hydro facilities
across the US, more than any other operator, making it the U.S. leader in low impact
hydropower generation.
The Environmental Choice Program is a comprehensive national program sponsored by
Environment Canada. It certifies manufacturers and suppliers that produce products and
services that are less harmful to the environment. These bear the EcoLogo registered
trademark. 22 of our hydroelectric facilities in Ontario, Quebec, and British Columbia meet
the strict standards of the Environmental Choice Program.
The Brookfield Environmental Education Center was established in Guarani, Minas
Gerais, Brazil, from a partnership between Brookfield Energia Renovável and the local
community. The project aims to provide the entire population of the Pomba River Valley a
place to develop environmental education projects. To make the project sustainable, the
local community was trained to manage the Environmental Education Center and created
a non-governmental organization to do it.
25