Brookfield Renewable Corporation · NYSE:BEPC
Brookfield Renewable — Investor Day (September 2020)
60 slides from Brookfield Renewable's investor day presentation, Sep 24, 2020
Slide 1: Brookfield Renewable Investor Day
Brookfield Renewable INVESTOR DAY SEPTEMBER 24, 2020
Slide 2: Agenda
Agenda Looking Ahead 3 Sachin Shah, Chief Executive Officer Our Long-Term Approach 24 Connor Teskey, Chief Investment Officer Financial Update 41 Wyatt Hartley, Chief Financial Officer Key Takeaways and Q&A 56 Sachin Shah, Chief Executive Officer
Slide 3: Looking Ahead
Looking Ahead SACHIN SHAH CHIEF EXECUTIVE OFFICER 3
Slide 4: Decarbonization is a global objective
Decarbonization is a global objective 4
Slide 5: Carbon reduction is universal
Carbon reduction is universal There is still a long path to meeting carbon-free targets globally NET-ZERO CARBON 32% 38% 37% 28% 28% 19% California New York E.U. U.K. India China Current Renewables Generation Other Generation 2050 Renewables Target Source: Bloomberg New Energy Finance 5
Slide 6: Increasingly ambitious corporate targets
Increasingly ambitious corporate targets 2025 2040 Amazon, Wal-Mart, and Nike: Amazon: net zero carbon emissions 100% renewable General Motors: 100% renewable 2030 2050 Microsoft: carbon negative Microsoft: remove historical carbon emissions H&M: 100% renewable Johnson & Johnson: 100% renewable 6
Slide 7: Wind and solar are the cheapest sources of bulk generation
Wind and solar are the cheapest sources of bulk generation LEVELIZED COST OF ENERGY 140 120 100 80 $/MWh 60 40 20 0 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 PV Solar Onshore Wind CCGT Source: Bloomberg New Energy Finance 7
Slide 8: How has the recession impacted these trends?
How has the recession impacted these trends? 8
Slide 9: U.S. electricity generation is down 5%
U.S. electricity generation is down 5% Source: U.S. Energy Information Administration (EIA). 9
Slide 10: Fossil fuel generation is down 10%
Over the same period, fossil fuel generation is down 10% Source: U.S. Energy Information Administration (EIA). 10
Slide 11: Renewable generation is up 14%
Renewable generation is up 14% Source: U.S. Energy Information Administration (EIA). 11
Slide 12: Investors signed up to Principles for Responsible Investment
Investors signed up to Principles for Responsible Investment $100 AUM (TRILLIONS USD) $80 20%+ $60 $40 $20 $- 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Source: UNPRI; Scotiabank GBM. 12
Slide 13: Significant capital will be invested into renewables
Significant capital will be invested into renewables $10T $5T $2T INVESTMENT IN PROJECTED RANGE OF INVESTMENT OVER THE THE LAST NEXT DECADE 5 YEARS Source: Bloomberg New Energy Finance.
Slide 14: Our leading and differentiated business is very well positioned
Our leading and differentiated business is very well positioned… 14
Slide 15: With over $50 billion of operating renewables
…with over $50 billion of operating renewables 15
Slide 16: Growing distributions
Growing distributions $1.74 6% CAGR $0.57 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Note: distribution amounts have been adjusted for the special distribution of BEPC shares effective July 30, 2020. 16
Slide 17: Strong balance sheet
Strong balance sheet BBB+ $3.4B Investment grade Available balance sheet liquidity 17
Slide 18: Best-in-class carbon avoidance
Best-in-class carbon avoidance 6 Million Nearly All 5 Million Vehicles off the London’s Homes’ annual road annually annual electricity use generation Note: figures above equivalent to BEP’s operating portfolio, which avoids 28 million tons of CO2 annually. 18
Slide 19: A simple, repeatable strategy
A simple, repeatable strategy 19
Slide 20: Invest on a value basis
Invest on a value basis Operational turnarounds Carve-out transactions Development Restructuring Capital solutions 20
Slide 21: Use our operating expertise to help businesses thrive
Use our operating expertise to help businesses thrive Sustainability Additionality Transition 21
Slide 22: Our approach
Our approach 1 Invest on a value basis 12–15% Returns Long-term Impact 3 2 Monetize Sustain mature Add assets Transition 22
Slide 23: 20+ year track record
20+ year track record BBB BBB+ 18% BEP Total Return Total Return S&P 500 Index: 6% Total Return S&P 500 ESG Index: 11% 1999 2020 BEP S&P 500 S&P 500 ESG 1. Source: Bloomberg 2. Chart indicates share price performance including reinvestment of dividends. 3. BEP and S&P 500 Index returns since 11/30/1
Slide 24: Our Long-Term Approach
Our Long-Term Approach CONNOR TESKEY CHIEF INVESTMENT OFFICER 24
Slide 25: Increasing targeted annual equity deployment to $800M–1B
Over the next five years… Consistent Expanded Growing Approach Capabilities Market …we are increasing our targeted annual equity deployment to $800M–1B 25
Slide 26: A consistent and balanced approach
Doing this through a consistent and balanced approach CAPITAL ALLOCATION OPERATIONAL APPROACH • Deep value • Long-term focus • Contrarian • Partnership approach • Complex or large-scale transactions • ESG-oriented • Perpetual improvement 26
Slide 27: Value and growth through decarbonization
Value and growth through decarbonization Sustainability Additionality Transition 27
Slide 28: Sustainability: preserve and enhance existing renewable assets
Sustainability | Preserve and enhance existing renewable assets Sustainability Additionality Transition Improved cash flows and de-risked investments through long-term sustainable operating principles 28
Slide 29: Sustainability: a differentiated approach to ownership
Sustainability | A differentiated approach to ownership Operating expertise Global standards Ongoing investment Social focus Strongly capitalized Enhanced returns Stable sponsor 29
Slide 30: Not in the community, but part of the community
Sustainability | Not in the community, but part of the community Maintaining a social license to operate is central to preserving capital, mitigating risk and creating long-term value KIDWIND PROGRAM ‘NAMGIS FIRST NATIONS LA GUAJIRA WIND PROJECT IRELAND PARTNERSHIP COLOMBIA CANADA 30
Slide 31: Additionality: accretively growing our assets
Additionality | Accretively growing our assets Sustainability Additionality Transition Expanding and delivering our 18,000 MW development pipeline at premium returns 31
Slide 32: Additionality: enhancing our development capabilities
Additionality | Enhancing our development capabilities Local development teams 2015 3 GW across the globe Delivery from concept to commercialization Flexible commercial strategy focused on relationships 2020 18 GW Ability to manage large-scale projects Advantage from global North America Latam Asia
Slide 33: Strong track record of development activities
Additionality | Strong track record of development activities ~$4B 2 GW 50M developed invested trees planted 15–20% returns 8% 17% 16% 4% 28% 2 GW 2 GW 46% 34% 47% Solar Wind Hydro Storage & Other North America Latam Asia Europe Note: 50 million trees planted is equivalent to 2 GW developed, which a
Slide 34: Ramped up our solar development activities
Additionality | Ramped up our solar development activities 2015 2020 Utility scale 0 GW 9 GW C&I rooftop 0 GW 1 GW Total solar pipeline 0 GW 10 GW 15–20%+ returns 34
Slide 35: Additionality: best-in-class carbon avoidance
Additionality | Best-in-class carbon avoidance 5 Million 100% 100% Vehicles off the Paris’ annual CO2 generated by road annually generation Apple or half of BP Note: figures above equivalent to BEP’s development pipeline, which would avoid 23 million tons of CO2 annually. 35
Slide 36: Transition: accelerate energy transition initiatives
Transition | Accelerate energy transition initiatives Sustainability Additionality Transition Provide capital and solutions to drive carbon reduction initiatives 36
Slide 37: Transition: investing in key sectors and businesses
Transition | Investing in key sectors and businesses Distributed TransAlta New Asset Generation Investment Classes Local businesses Corporations seeking Green hydrogen looking to to transition and green decarbonize businesses data centers 37
Slide 38: Transition: global partners in decarbonization
Transition | Global partners in decarbonization 38
Slide 39: Partner of choice for decarbonization goals
We are the partner of choice to support governments and businesses in achieving their decarbonization goals 39
Slide 40: In summary
In summary 1 Invest on a value basis 12–15% Returns Long-term Impact 3 2 Monetize Sustain mature Add assets Transition 40
Slide 41: Financial Update
Financial Update WYATT HARTLEY CHIEF FINANCIAL OFFICER 41
Slide 42: Positioned to deliver solid growth through all economic cycles
Our business is well positioned to continue to deliver solid growth through all economic cycles 42
Slide 43: Strong balance sheet with ample liquidity
Underpinned by a strong balance sheet with ample liquidity BBB+ ~85% 14-year INVESTMENT NON-RECOURSE AVERAGE GRADE DEBT CORPORATE DEBT DURATION ~$3.4 billion of available liquidity 43
Slide 44: Highly resilient cash flows
Highly resilient cash flows CONTRACTED 15-year average PPA term DE-RISKED No single market >10% DIVERSIFIED 600+ investment-grade counterparties LIMITED FX EXPOSURE 75% fully hedged 44
Slide 45: A strong track record of FFO per-unit growth
A strong track record of FFO per-unit growth 10+% CAGR 2010 2020F $0.72 FFO ~$2.00+ FFO per unit per unit Note: 2020 FFO per unit reflects the last twelve months and is pro forma the TERP transaction. 45
Slide 46: Proven resilience through the current global shutdown
Proven resilience through the current global shutdown ~98% ~$1B $2B+ Executed ASSET LIQUIDITY CAPITAL STRATEGIC AVAILABILITY ADDED DEPLOYED MERGER 46
Slide 47: Merger with TERP has many immediate benefits
Merger with TERP has many immediate benefits Simplified ownership structure Immediately cash accretive Expands portfolio in North America and Western Europe Strengthens contract profile 47
Slide 48: Access to flexible and diverse sources of funding
Access to flexible and diverse sources of funding Asset-level Preferred Capital up-financings equity and recycling corporate debt Funding plan does not require common equity issuances 48
Slide 49: Leaders in sustainable finance
Leaders in sustainable finance $200M $1,300M PREFERRED SECURITIES CORPORATE GREEN BONDS >$4 $2,500M $50M PROJECT-LEVEL BILLION SUSTAINABILITY- GREEN BONDS LINKED LOAN 49
Slide 50: Broadening our investor base
Broadening our investor base We completed the launch of BEPC, which has been well received by the market Completed special Russell 2000/3000 Increased float distribution and FTSE Global through TERP merger 50
Slide 51: Development activities enhance visibility of organic cash flow growth
Growing development activities enhance the visibility of organic cash flow growth over the next five years 51
Slide 52: Target 6–11% FFO per-unit growth through operational levers
Target 6–11% FFO per-unit growth through operational levers Embedded Expected Development FFO Per-Unit Inflation Margin Pipeline Growth Escalation Expansion Potential 1–2% 2–4% 3–5% 6–11% 52
Slide 53: Increased development activities secure growth
Increased development activities secure growth SECURED • 3,500 MW commissioned • $90 million FFO annually 2% annual FFO per-unit growth • Executing on under-construction and Development advanced-stage projects Pipeline 3–5% TO BE • 3,500 MW additional development 18,000 MW DELIVERED • Up to $135 mil
Slide 54: Enhanced visibility on cash flow growth
Enhanced visibility on cash flow growth 10%+ FFO PER-UNIT GROW TH ORGANIC GROWTH 3.20 6–11% 4–5% 2.70 10%+ 3–5% CAGR 2–4% 2.20 1–2% 1.70 1.20 0.70 2010 2020 Inflation Margin Development Acquisitions¹ 2025 Escalation Enhancement Pipeline 1. $3.7 billion deployed through M&A investments at target FFO
Slide 55: In summary
In summary We offer a high-quality distribution Investment-grade balance sheet Resilient cash flows Access to diverse sources of capital Visibility on 10%+ FFO per-unit growth 55
Slide 56: Key Takeaways and Q&A
Key Takeaways and Q&A SACHIN SHAH CHIEF EXECUTIVE OFFICER 56
Slide 57: Key takeaways
Key takeaways As decarbonization accelerates, our global business is well positioned We invest and operate with a long-term view We remain focused on delivering total returns of 12–15% Our strong financial profile enables us to pursue growth 57
Slide 58: Q&A
Q&A Brookfield
Slide 59: Notice to Recipients
Notice to Recipients All amounts are in U.S. dollars unless otherwise specified. Unless otherwise indicated, to irradiance at our solar facilities or to weather generally, as a result of climate change exchangeable for LP Units, or the perception of such sales or issuances, could the statistical and
Slide 60: Brookfield Renewable Investor Day
Brookfield Renewable INVESTOR DAY SEPTEMBER 24, 2020