Brookfield Renewable Partners (BEP) C O R P O R AT E P R O F I L E J U N E

Transcription

1 Brookfield Renewable Partners (BEP) C O R P O R AT E P R O F I L E J U N E

2 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

3 Who We Are 3

4 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 POWER ASSETS 10,600 MEGAWATTS OF CAPACITY 88% HYDROELECTRIC GENERATION Z 260 power generating facilities 15 markets in 7 countries Situated on 82 river systems 4

5 Diversified Operating Portfolio Cash flows are supported by a strong contract profile and are well diversified by technology and geography Hydro Focused 11% 1% Growing Global Footprint 15% 5% Contracted Cash Flows 8% 15% 88% 65% 92% Hydro Wind Other North America Brazil Colombia Europe Contracted Merchant Based on LTA generation, proportionate to BEP 5

6 Attractive Risk-Adjusted Returns ~$9 Billion MARKET CAPITALIZATION BEP / BEP.UN NYSE / TSX DUAL LISTING ~6% DIVIDEND YIELD 5% 9% DISTRIBUTION GROWTH Annual Distribution Price Performance $ % CAGR $1.66 $1.78 $1.87 Annualized Total Return 1 1 yr 3 yr 5 yr BEP.UN (TSX) 19% 17% 16% BEP (NYSE) 15% 9% 9% $1.38 $1.45 S&P/TSX Composite 12% 5% 9% S&P % 10% 15% ) Source: Bloomberg, including reinvestment of dividends. At May 31, 2017 Our objective is to deliver long-term total returns of 12% 15% to shareholders annually 6

7 Multiple Levers to Drive Growth Targeted annual distribution increases of 5% 9% are supported by organic cash flow growth and proprietary project development Organic levers to grow cash flow Inflation escalation embedded in our revenues Track record of margin expansion Proprietary development pipeline that we continue to build out at premium returns Projected to deliver 5% - 9% annual per share cash flow growth Position the business for revenue growth Manage power and ancillary sales to benefit from market volatility Power Purchase Agreements rolling off at below market prices Opportunity to capture revenue upside from our merchant US hydro generation Opportunity to further grow per share cash flows Deploying capital into global renewable opportunities Large investible universe We leverage our global footprint to source accretive transactions Adopt a contrarian approach, taking advantage of capital scarcity, to earn outsized returns Target $600 million of annual BEP equity deployment Underpinned by an investment grade balance sheet, significant liquidity and proven access to capital 7

8 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 90% contracted revenue profile, with 17 year proportionate, inflation-linked, contract term 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, supported by perunit cash flow growth, delivering a 15% annualized total return since inception 8

9 High Quality Assets 9

10 Global Operations with Local Presence We have integrated operating platforms on three continents with local operating and power marketing expertise 4,800MW 840MW 215MW NORTH AMERICA $16 Billion AUM 1,100 employees 460MW EUROPE $1 Billion AUM 115 employees 2,700MW 300MW COLOMBIA $5 Billion AUM 680 employees 900MW 150MW 175MW BRAZIL $3 Billion AUM 430 employees Legend: Hydro Wind Other 10

11 High Quality Assets and Low Risk Profile Diversified Operations Scarce, Irreplaceable Assets with High Barriers to Entry Predictable Cash Flows Real Assets, Proven Technologies 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 EBITDA margins > 70% Low sustaining CAPEX 90% contracted cash flows with creditworthy counterparties Contract escalation linked to local inflation indices Perpetual hydroelectric dams Utility scale wind farms Biomass as a complementary technology 11

12 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) Contracted Remaining PPA Counterparty Ratings Hydroelectric 13,821 16,966 15,514 13,032 11,213 Wind 1,754 2,399 2,399 2,345 2,323 Other ,787 19,671 18,217 15,682 13,788 Merchant 1,425 3,790 5,244 7,891 9,785 84% 5% 11% LTA 17,212 23,461 23,461 23,573 23,573 % of generation 92% 84% 78% 67% 58% Investment Grade Non-Investment Grade Not Rated Amounts proportionate to BEP 12

13 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 Optimization of resource through storage and ability to sell during peak demand periods Pezzi Rio Grande do Sul, Brazil Geographic diversity spread over 82 river systems Significant barriers to entry requiring deep operational knowledge and marketing expertise White Pine, United States 13

14 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 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 Prince Wind Farm, Canada 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 ~1,400 MW in six countries Sorne Wind Farm, Ireland 14

15 Deep Operational Expertise Asset Integration Generation Management, Planning and Dispatch 2,000 EXPERIENCED OPERATORS Regulatory Asset Integration Expertise Energy Marketing Expertise 140 POWER MARKETING EXPERTS 4 REGIONAL CONTROL CENTERS National Asset System Integration Control Engineering and Development Health, Safety, Asset Security and Integration Environmental Stakeholder Asset Engagement Integration 15

16 Organic Growth 16

17 Organic Cash Flow Growth BEP is focused on delivering 5% to 9% cash flow growth annually on a per unit basis Growth target can be achieved from organic initiatives and fully funded by internally generated cash flow We do not rely on M&A to achieve cash flow growth targets This does not account for the embedded optionality of our 2.5 TWh merchant hydro portfolio in the United States where each $10/MWh increase in revenue translates to $25 million in incremental FFO Embedded Inflation Escalation (1% to 2%) Expected Margin Expansion (1% to 2%) Advanced Development Pipeline + + = (3% to 5%) FFO per Unit Growth Potential (5% to 9%) 17

18 Development Pipeline Development Stage Technology Region 10% 20% 30% 40% 5,800 6,800 MW 1,000 50% 50% Early Advanced Hydro Wind Other North America LATAM Europe Focused on growing and advancing our development pipeline as a source of future growth at outsized returns 18

19 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 Cavalinhos 1 Brazil Hydro 25 Q Crockandun Europe Wind 15 Q Shantavny Europe Wind 16 Q Silea Verde 4A Brazil Hydro 28 Q Slievecallan Europe Wind 28 Q Ballyhoura Europe Wind 19 Q Silea Verde 4 Brazil Hydro 19 Q Tralorg Europe Wind 19 Q 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 19

20 Growth 20

21 Strong Track Record of Growth Targeting annual equity deployment of ~$500 - $600 million in high quality assets that present the opportunity to deliver 12% to 15% annual returns Continued global investment in renewables is creating a large investible universe We utilise our global network of investment professionals to originate acquisition opportunities Adopt a contrarian approach, identifying value opportunities where scarcity of capital reduces competition Leverage our deep operating expertise to diligence and underwrite assets Seeking to enhance our footprint in existing technologies while cautiously expanding into new technologies and geographies Since 2012, we have developed and acquired 6,300MW, deploying over $2.4 billion of BEP equity at accretive returns 21

22 Financial Profile 22

23 Robust Balance Sheet Significant Liquidity $1.7 billion committed corporate credit facility through % long-term target FFO payout ratio, significant free cash flows Diverse funding sources with access to public and private markets Staggered Debt Maturities No material near-term maturities Project debt has an average remaining term of 9 years on a proportionate basis ~80% fixed rate with minimal floating rate exposure funded in local currency $5.5 $5.0 $4.5 $4.0 $3.5 $3.0 $2.5 $2.0 Debt Maturity Ladder ($BILLIONS) 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 $1.5 $1.0 $0.5 $ After Non-Recourse Maturities Recourse Maturities 23

24 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% DEBT TO TOTAL CAPITALIZATION ~7.0X REMITTED CASH FLOW / INTEREST COVERAGE ~3.0X CONSOLIDATED EBITDA / INTEREST COVERAGE 4.5% AVERAGE INTEREST RATE ON CORPORATE BORROWINGS BBB BBB(high) 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. BEP has adequate sources of liquidity to cover its needs by 1.2x or more in the next 12 months. The company has wellestablished and solid relationships with banks. Also, it benefits from a high standing in the credit markets. * S&P Research Update: December 30, 2015 The Company s long-term power sales contract (91% of generation on a proportionate basis in 2016) are expected to continue to provide stability and support in earnings over the medium term while renewable resources and production volume will continue to be key drivers of revenue and profit. BEP s key deconsolidated credit metrics remain supportive of the current rating. This reflects relatively low debt at the corporate level and solid gross operating cash flow from projects * DBRS Rating Report: May 17,

25 Investment Recap Best in class renewable portfolio providing stable cash flow growth and long-term capital appreciation with strong downside protection Largest independently owned renewable 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 identified margin expansion 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

26 Contacts Contact Title Sachin Shah Chief Executive Officer Nick Goodman Chief Financial Officer 26

27 Appendix 27

28 BEP Generation Overview As at December 31, 2016 Hydroelectric River Systems Facilities Capacity (MW) LTA (GWh) Storage (GWh) North America ,847 17,775 4,879 Colombia ,032 14,476 3,703 Brazil ,647 Wind ,778 36,898 8,582 North America ,310 Europe ,174 Brazil ,453 4,072 Other Total ,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 28

29 Hydro Assets We own and operate 218 hydro facilities with 8,500MW of capacity on 82 river systems North America 1,361 MW across 33 hydro facilities in Canada, fully contracted with investment grade counterparties 3,486 MW across 137 hydro facilities in the USA, over 80% currently under contract with strategic exposure to rising prices in our core markets Colombia 2,732 MW across 6 hydro facilities Modern, utility grade assets recently commissioned by the Colombian government Over 80% under contract in a short-term, mandatory rolling contract market Key attributes High cash margins Non-intermittent power Zero fuel input cost Significant barriers to entry Centrally operated by regional system control centres ~8,500GWh of storage capability Brazil 899 MW across 42 hydro facilities Predominantly small hydro (<30 MW) facilities that benefit from transmission discounts ~90% under contract with large DISCOs and industrial consumers 29

30 Wind Assets We own and operate 35 wind facilities with over 1,400MW of capacity North America 406 MW across 3 wind facilities in Canada 434 MW across 7 wind facilities in the USA Portfolio predominantly built by BEP over the past 10 years Over 95% contracted and weighted average duration of 15 years remaining Europe 340 MW across 18 wind facilities in Ireland and Northern Ireland 123 MW across 2 wind facilities in Portugal Over 95% contracted and weighted average duration of 10 years remaining Primarily contracted with government offtakes through REFIT programs Key attributes High cash margins Zero fuel input cost Centrally operated by regional system control centres Relatively low build cost and improving turbine efficiency Minimal ongoing capex requirements Simple to operate and outsourced O&M providers are available to financial buyers supporting our capital recycling program Brazil 150 MW across 5 wind facilities in Bahia Highest wind resource region in northern Brazil with above average capacity factors Average age off assets is less than 5 years Over 80% of generation under contract until

31 Corporate Structure Brookfield Asset Management (BAM) ~$36b Market Cap¹ (TSX, NYSE) 20% Management 75% 62% 61% 30% Brookfield Business Partners (BBU) Brookfield Property Partners (BPY) Brookfield Renewable Partners (BEP) 2 Brookfield Infrastructure Partners (BIP) 30%³ Private Fund 70%² LPs⁴ Company A Company B Company C Company D 1) Based on closing price on the NYSE on May 5, ) BEP funds Brookfield s commitment to renewables transactions in Private Funds 3) Subject to transaction size, co-investment, and other considerations 4) Third-party commitments 31

32 Governance SENIOR MANAGEMENT TEAM Sachin Shah Chief Executive Officer Nick Goodman Chief Financial Officer Brookfield Renewable has entered into a Master Services Agreement with Brookfield Asset Management Provides comprehensive suite of services to Brookfield Renewable Partners Base management fee of $20 million adjusted annually for inflation Equity enhancement fee equal to 1.25% of the increase in BEP s capitalization Incentive distributions based upon increases in distributions paid to shareholders over pre-defined thresholds (Master Limited Partnerships (MLP) structure) 15% participation by Brookfield in distributions over $0.375/unit per quarter 25% participation by Brookfield in distributions over $0.4225/unit per quarter Brookfield Renewable s general partner has a majority of independent directors Brookfield Renewable s governance is structured to provide significant alignment of interests with its unitholders 32

33 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. MLP 1 Comparison of Brookfield Renewable versus MLP Brookfield Renewable MLP 2 Type of entity Publicly traded partnership Publicly traded partnership UBTI 3 No Yes ECI 4 No Yes U.S. tax slip issued K1 K1 Tax profile of distributions Benefits from return of capital Benefits from depreciation Payout ratio ~70% of FFO 80%-90% of distributable cash flow 5 Incentive distributions 25% maximum 50% maximum Brookfield Renewable is committed to structuring its operations to avoid generating UBTI and ECI 1) MLP is Master Limited Partnership 2) Not all MLP s are the same. This represents Brookfield s understanding of common features with these types of vehicles 3) UBTI is unrelated business taxable income 4) ECI is effectively connected income 5) Source: Management estimates based on Barclays Capital Master Limited Partnerships MLP Trader Weekly 33

34 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. 34