Brookfield Renewable Partners I N V E STO R D AY S E P T E MB ER 2 7, 2 0 17
Table of Contents Building a Leading Renewables Business Sachin Shah Page 3 Balance Sheet Strength Nick Goodman Page 12 Surfacing Value From Our Operations Nick Goodman Page 19 Strategic Outlook Sachin Shah Page 28 2
Building a Leading Renewables Business 3
We are a leading, globally diversified renewable power company $26B TOTAL POWER ASSETS ~11 million HOMES POWERED 3 continents OPERATING EXPERTISE >80% SHARE OF HYDRO 4
January 2000 = 0 With a strong track record of value creation 1,400 Total Return¹ 1,200 1,000 800 16% TOTAL ANNUALIZED RETURN 600 400 200 0-200 BEP.UN S&P/TSX 1) Bloomberg; CAD return including re-investment of dividends as at 31 August 2017 5
This has been underpinned by our 6
Focus on high quality assets acquired on a value basis U.S. Hydros (2012-2016) $3 billion EV 1,500 MW Bord Gais (2014) $1 billion EV 320 MW Isagen (2016) $5 billion EV 3,000 MW TerraForm (2017e)¹ $8 billion EV 3,600 MW Acquired at the bottom of the market Irish government sale in the midst of the economic downturn Drawn-out, 2 year process with no competition by auction date Highly complex transaction with distressed sponsor 1) TerraForm Power and Global transactions announced March 2017 7
Applying our operating expertise to enhance value U.S. Hydros Ireland/ Bord Gais Colombia/ Isagen TerraForm¹ 20-25% increase in cash flow margin Perpetual assets with operating costs growing below inflation Developed 170 MW of new capacity Selling green attributes across transmission lines into the UK Rationalize costs Developing 100 MW of new hydro Optimize capital structure Signed 10 year PPA with utility Internalize operating capabilities De-risk balance sheet 1) TerraForm Power and Global transactions announced March 2017 8
Discipline on de-risking our balance sheet Investment grade balance sheet since inception Consistently grown our distribution Hedge our currencies and interest rates Conservative financing strategy Opportunistic capital recycling 9
Ability to adapt Since 1999, we have grown from: 950 MW to 13,700 MW 1 country to 9 1 technology to 6 China Colombia North America Brazil North America Europe Brazil North America Colombia Europe Brazil North America India Brazil Europe North America 1999 2003 2005 2006 2014 2015 2016 2017 Note: Pro forma position assuming the closing of the TerraForm Power and Global transactions which were announced in March 2017 10
We are positioning the business for growth over the next 20 years Maintaining the lowest risk balance sheet in the sector Surfacing cash flow and value appreciation from our assets Broadening the business once again to take advantage of global trends We target a 12% 15% return over the long run 11
Balance Sheet Strength 12
Polling Question Do balance sheet health and credit ratings matter in relation to your investment criteria? a) Yes b) Somewhat c) Not really d) No 13
BEP offers the lowest risk investment proposition What we do What we don t do Invest countercyclically in out-offavor assets for value to retain upside Finance conservatively (BBB+ rating) Use operating capabilities and patient, long-term approach to drive returns Portfolio of mostly perpetual hydro assets that grow in value Don t participate in well-attended auctions Compete for assets based on our cost of capital Use higher corporate leverage to drive returns Buy mostly finite life assets with limited value drivers Investing at the bottom is NOT risky 14
We have a perpetual asset base meaning there is minimal annual investment required to maintain cash flows BEP Distributions Technology Quality Assumes: Perpetual life for hydro assets in North America and Colombia 40/30 year life for authorization/concession based hydro assets in Brazil respectively with a recovery of undepreciated replacement cost at expiry Straight line depreciation based on a useful life of 25 years for wind assets with a terminal value equal to ~15% of construction cost 15
And we have outperformed our target returns since inception Dividend Yield Unit Price Increase Credit Rating Total Return BEP 6% 10% BBB+ 16% Peer Average 5% 3% BB- to BBB 8% We have the lowest risk and longest track record of strong returns in the sector Source: Bloomberg; includes reinvestment of dividends As at 15 September 2017 16
In the current environment, the market is disconnecting risk & reward BEP trades at a higher yield than the peer average 5.7% BEP YIELD 1 5.1% PEER AVERAGE YIELD 1 yet has the lowest risk profile As an investor you are not only buying the underlying projects, you are buying the corporate balance sheet 1) As at 15 September 2017. 17
Why is this important? Access to Cash Flow Investment grade debt sizing combined with investment grade covenant packages provide access to cash flows through the cycle Rising Interest Rates FX Volatility Concentration Risk Predominantly fixed rate debt mitigates impact of rising interest rates Every 100 bps increase in interest rates impacts FFO by $2 million Currency hedging strategy reduces impact of FX fluctuations 10% move in the USD vs. the CAD, BRL, COP & EUR would have a less than 5% impact on FFO Geographic diversification across 7 countries and 15 power markets No single plant represents more than 8% FFO Maintaining a low risk profile provides strong downside protection, safeguards cash flows and provides a strong base to fund growth 18
Surfacing Value From Our Operations 19
Global operating scale We have integrated operating platforms on three continents with local operating and power marketing expertise 4,850MW 840MW 215MW NORTH AMERICA 1,100 employees $17 Billion in total power assets 525MW 480MW EUROPE 115 employees $1 Billion in total power assets 2,700MW 300MW COLOMBIA 680 employees $5 Billion in total power assets 900MW 150MW 175MW BRAZIL 430 employees $3 Billion in total power assets Hydro Wind Other 1) As at 31 August 2017 20
BEP is focused on surfacing value from organic growth initiatives Leverage in-house expertise as a fully integrated renewable company to grow cash flows Operating Scale: Streamline processes and reduce costs Customer Origination: Contracting at premium prices Asset Management: Optimize capital structure Engineering & Development: Identify and advance greenfield projects to operation Embedded Inflation Escalation Expected Margin Expansion Advanced Development Pipeline FFO per Unit Growth Potential (1% to 2%) (2% to 4%) (3% to 5%) (6% to 11%) 21
Inflation: $50 million FFO contribution over five years Our revenues are indexed to inflation providing for 1% 2% annual FFO growth Proportional Basis Brazil North America Colombia Annual Total Revenues 1 ($ million) $200 $1,000 $190 $1,390 % Indexed to inflation 100% 30% 100% Estimated long-term inflation 4.5% 2.0% 3.5% Expected annual revenue uplift ($ million) $9 $6 $6 $21 Expected FFO margin 60% 50% 35% 48% Expected annual FFO uplift ($ million) $5 $3 $2 $10 1) Normalized 2016 revenues 22
Re-contracting: $44 million FFO contribution over five years Limited downside risk to PPA maturities in North America plus exposure to rising power prices in Brazil and Colombia providing for 1% 2% annual FFO growth Annual Generation Current Contract Price ($/MWh) Current Market Price 1 ($/MWh) Expected FFO Impact ($ million) Quebec 1,470 GWh $55 $50 ($7) New England 1,000 GWh $39 $50 $11 Other 1,620 GWh $53 $50 ($5) North America re-contracting 4,090 GWh $51 $50 ($1) Brazil re-contracting 1,400 GWh $72 $86 $20 Colombia re-contracting 2,800 GWh $76 $85 $25 Total re-contracting 8,290 GWh $44 Note: shown on a proportional basis 1) All-in price 23
Cost reduction: $50 million FFO contribution over five years Targeted cost reduction of $2 per MWh would add $50 million to FFO over the next five years or 1% 2% annual FFO growth Economies of Scale Optimize Structuring Streamlining Processes Operational Efficiencies North America Brazil Colombia Europe Savings: $2.00 / MWh Savings: $2.00 / MWh Savings: $2.00 / MWh Savings: $2.00 / MWh $30 million $10 million $10 million $1 million Note: shown on a proportional basis 24
Project development: $125 million FFO contribution over five years Developed 725 MW in the past five years contributing $75 million to FFO Expect to develop another 1,000 MW over the next five years, adding $125 million to FFO or 3% 5% annual FFO growth Region Technology Capacity (MW) Expected Annualized FFO ($ million) Delivery by 2021 Europe Wind 283 $22 Brazil Hydro & Wind 202 $37 North America Hydro & Wind 110 $9 Sub-Total 595 $68 Delivery by 2023 Europe Wind 130 $18 Brazil Hydro & Wind 225 $31 North America Hydro & Wind 50 $7 Sub-Total 405 $56 Total 1,000 $125 Note: Capacity stated on a consolidated basis. FFO stated on a proportional basis. As such, historical and projected FFO from development are not comparable due to different ownership levels. 25
Sustainable Organic Cash Flow Growth Levers North America Europe Brazil Colombia 6% to 11% CAGR Inflation Escalation Re-Contracting Cost Reduction Project Development 1% 2% 1% 2% 1% 2% 3% 5% Supports target annual distribution growth of 5% - 9% 26
To recap Lowest risk profile offering best investment proposition Clear path to surfacing value from existing operations 5% 9% annual distribution growth target 27
Strategic Outlook 28
Growth over the next five years will build on our strengths Invest $3.0 to $3.5 billion in hydro, wind and solar globally Deploy $700 million in our project development backlog to build 1,000 MW at premium returns Grow our distribution at 5% to 9% annually and compound capital at 12% to 15% per unit 29
And build for the future The global move to decarbonize energy is creating a growing investible universe 30
Polling Question Which renewable technology is best positioned to prosper in the growing low-carbon environment? a) Hydro b) Storage (pumped hydro & batteries) c) Wind d) Solar e) Distributed Generation 31
We are investing capital in the power grid of the future Storage On-shore Wind Distributed Generation (DG) Markets globally are de-carbonizing Off-shore Wind Hydro Utility Solar Demand Management 32
Where are we today? Storage On-shore Wind Distributed Generation (DG) Opportunities in sectors that are ancillary to our core business are growing Off-shore Wind Hydro Demand Management Utility Solar 33
Where could we be after TerraForm Power (TERP)? Storage On-shore Wind Distributed Generation (DG) Hydro The TERP¹ acquisition would mark our first investment into utility and DG-scale solar Off-shore Wind Demand Management Utility Solar 1) TerraForm Power transaction announced March 2017 34
$325 billion is invested annually in renewables in our target markets 400 Global Clean Energy Investment $ in billions 300 200 100 0 W. Europe U.S. & Canada Australia LatAm China India And we are tapping into this growing universe by seeking out opportunities in new sectors and geographies Source: Bloomberg New Energy Finance; excludes hydroelectric plants larger than 50MW 35
Of that, over $155 billion is in sectors we don t currently invest in 200 Global Clean Energy Investment $ in billions 150 100 50 0 Off-Shore Wind Solar (Utility & Distributed) Geothermal Source: Bloomberg New Energy Finance 36
The private sector is better positioned to provide bulk green power Global Ownership of Wind, Solar, Small Hydro¹ 4% 96% Governments/SOEs Private Sector Over the next 20 years, this funding gap will grow as consumers continue to shift to newer sources of power 1) Bloomberg New Energy Finance; small hydro defined as a hydroelectric plant with a capacity of 50MW or less 37
Our Growth Priorities 1 Sector Expertise 2 Geographic Expansion Distributed Generation New Technologies India China 38
Our Approach 1 2 Establish scalable platforms Develop local operating teams 3 Look for accretive development and opportunistic acquisitions 39
The U.S. Commercial and Industrial (C&I) Distributed Generation (DG) Landscape
C&I Solar PV Capex Cost ($/Wdc) Dramatic Cost Declines 3.0 2.5 2.0 1.5 30% decline in costs 1.0 0.5 0.0 2012 2016 Source: Bloomberg New Energy Finance 41
Installed capacity of U.S. C&I DG (MW) A Rapidly Growing Market 7,000 6,000 5,000 4,000 3,000 150% growth in capacity 2,000 1,000 0 2012 2016 Source: Bloomberg New Energy Finance 42
But with fragmented ownership 100% 75% 50% All Other Players 25% Top 5 Owners 0% C&I DG Market Share We aim to invest $500 million into this sector over the next five years Source: GTM Research 43
India the fastest growing major economy in the world Strong Macro Fundamentals Significant Power Deficit Growing renewable demand 44
Our progress in India so far We are pursuing the TerraForm Global¹ acquisition which includes: A 300 MW portfolio in India of high-quality cash flows that would provide us with an experienced operating team on the ground and a meaningful platform for future growth 102MW WIND 200MW SOLAR 1) TerraForm Global transaction announced March 2017 45
China the largest power market in the world Significant Demand Growth Government Focus on Pollution Reduction Strategic Domestic Industry 46
Solar is a nascent technology in China s coal-dominated supply stack 90 China Cumulative Solar Installed Capacity GW 80 70 60 50 132% CAGR 40 30 20 10 0 Utility PV Residential Commercial & Industrial Source: Bloomberg New Energy Finance 47
Our progress in China so far We have hired a small team in the country, led by an experienced investment professional, to source opportunities The closing of the TerraForm Global¹ transaction would give us a 170MW renewable portfolio in China 149MW WIND 18MW SOLAR 1) TerraForm Global transaction announced March 2017 48
Pulling it all together Long track record of exceeding our return target Lowest risk balance sheet in the sector Significant operational levers to deliver 5% to 9% distribution growth annually We have a large and growing investible universe We are singularly focused on delivering 12% to 15% total returns per share 49
Q&A 50
Important Cautionary Notes All amounts are in U.S. dollars unless otherwise specified. Unless otherwise indicated, the statistical and financial data in this presentation is presented as of June 30, 2017, and on a consolidated basis. CAUTIONARY STATEMENT REGARDING FORWARD- LOOKING STATEMENTS AND INFORMATION This presentation contains forward-looking 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. Forward-looking statements include statements that are predictive in nature, depend upon or refer to future events or conditions, and include statements regarding our and our subsidiaries operations, business, financial condition, expected financial results, performance, growth prospects and distribution profile, growth of FFO (defined below), priorities, targets, ongoing objectives, strategies and outlook, as well as the outlook for North American and international economies for the current fiscal year and subsequent periods, and include, but are not limited to, statements regarding our asset management. In some cases, forward-looking statements can be identified by terms such as expects, plans, estimates, seeks, targets, projects, grow or negative versions thereof and other similar expressions, or future or conditional verbs such as may, will, should, would and could. Although we believe that our anticipated future results, performance or achievements expressed or implied by the forward-looking statements and information are based upon reasonable assumptions and expectations, the reader should not place undue reliance on forwardlooking statements and information because they involve known and unknown risks, uncertainties and other factors, many of which are beyond our control, which may cause our and our subsidiaries actual results, performance or achievements to differ materially from anticipated future results, performance or achievements expressed or implied by such forward-looking statements and information. Factors that could cause actual results to differ materially from those contemplated or implied by forward-looking statements include, but are not limited to: changes to hydrology at our hydroelectric stations or changes to weather generally, the impact or unanticipated impact of general economic, political and market factors in the countries in which we do business; the behavior of financial markets, including fluctuations in interest rates and foreign exchanges rates; changes in inflation rates in North America and international markets; the performance of global equity and capital markets and the availability of equity and debt financing and refinancing within these markets; the competitive market for acquisitions and other growth opportunities; our ability to close announced acquisitions; our ability to realize the expected benefits of acquisitions and of our organic growth initiatives; the outcome and timing of various regulatory, legal and contractual issues; changes in accounting policies and methods used to report financial condition (including uncertainties associated with critical accounting assumptions and estimates); the effect of applying future accounting changes; business competition; operational and reputational risks; technological change; our ability to diversify into new technologies; changes in government regulation and legislation within the countries in which we operate; changes in tax laws; catastrophic events, such as earthquakes and hurricanes; the possible impact of international conflicts, including terrorist acts and cyberterrorism; and other risks and factors detailed from time to time in our documents which can be found on our website or filed with the securities regulators in Canada and the United States. We caution that the foregoing list of important factors that may affect future results is not exhaustive. When relying on our forward-looking statements, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. Except as required by law, we undertake no obligation to publicly update or revise any forward-looking statements or information in this presentation, whether as a result of new information, future events or otherwise. CAUTIONARY STATEMENT REGARDING USE OF NON-IFRS MEASURES This presentation contains references to financial metrics that are not calculated in accordance with, and do not have any standardized meaning prescribed by, International Financial Reporting Standards ( IFRS ). We believe such non-ifrs measures including, but not limited to, funds from operations ( FFO ) and FFO per unit, are useful supplemental measures that may assist investors and others in assessing our financial performance and the financial performance of our subsidiaries. As these non-ifrs measures are not generally accepted accounting measures under IFRS, references to FFO and FFO per unit, as examples, are therefore unlikely to be comparable to similar measures presented by other issuers and entities. These non-ifrs measures have limitations as analytical tools. They should not 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. For a more fulsome discussion regarding our use of non-ifrs measures and their reconciliation to the most directly comparable IFRS measures refer to our documents which can be found on our website or filed with the securities regulators in Canada and the United States. References to Brookfield Renewable are to Brookfield Renewable Partners L.P. together with its subsidiary and operating entities unless the context reflects otherwise. 51