Q3 2020 Brookfield Renewable Partners LP Earnings Call

Standing by and welcome to the <unk> third quarter 2020 results conference call and webcast.

At this time all participants are in listen only mode. After the speaker presentations, there will be a question and answer session.

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Please be advised that todays conference is being recorded.

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It is now my pleasure to introduce <unk>, Chief Executive Officer Conor Chesky.

[music]. Thank you operator.

Good morning, everyone and thank you for joining us for our third quarter 2020 conference call.

Before we begin we would like to remind you that a copy of our news release Investor supplement and letter to shareholders can be found on our website we.

We also want to remind you that we may make forward looking statements on this call.

These statements are subject to known and unknown risks and our future results may differ materially from.

For more information you are encouraged to review our regulatory filings available on SEDAR and Edgar and our website.

To kick off todays call, we would like to provide an outlook on the business and an update on our recent growth initiatives.

After my remarks, why it will provide an update on our operating results as well as an overview of our balance sheet and funding plan.

Following our prepared remarks, we look forward to taking your questions and comments.

We continue to establish ourselves as the pre eminent renewable franchise and are playing a significant role in assisting the world to achieve its de carbonization goals.

Over the last 20 years, we have developed and scaled our renewable power platform.

38000 megawatts operating and development assets globally, and we have established deep expertise across all major renewable technologies.

Our focus continues to be on building, a leading differentiated business.

And fostering relationships with governments and businesses around the world to support their transition to a greener future.

Our strategy is simple and remains unchanged we.

We acquire for value.

We financed our businesses on an investment grade basis.

And we enhance value of our assets through our operational capabilities.

This strategy has proven to be effective over many years and through economic cycles.

Looking ahead, we believe that the global trend towards de Carbonization will continue to accelerate leading to increased adoption of renewable technologies.

As this occurs market conditions will increasingly favor investors such as ourselves with.

With a diversified business that can drive value using both our global scale and our GAAP operating expertise.

We are currently seeing increasing opportunities in our strategies additionality and energy transition.

This includes growing asset classes and technologies that leverage our existing knowledge, such as distributed generation green hydrogen and flexible capacity and.

And we expect this trend to continue moving forward.

We would now like to take a few minutes to talk through the broad range of transactions, we executed recently.

Which we believe highlight the unique strengths and differentiated value of our business.

In total.

We agreed to transactions, which will see us invest approximately $900 million of equity or $250 million next about.

Our largest transaction with the completion of the previously announced merger of Terraform power on an all stock basis.

This transaction was immediately cash accretive expands our wind and solar business in North America, and Europe, and further enhances our position as one of the largest publicly traded pure play renewables businesses globally.

Concurrent with that merger. We also completed the special distribution of Brookfield Renewable Corporation.

Which has led to increased demand and enhance liquidity for our security.

We also recently closed the acquisition of a 1200 megawatt shovel ready solar project in Brazil.

One of the largest solar projects globally.

This project is now over 75% contracted under long term agreements and we intend to leverage our local power marketing expertise to contract the remaining generation.

And we also intend to use our global scale to drive down equipment procurement and operating costs to deliver value over time.

Next week we.

We announced our intention to launch an offer to privatized pull energy.

Scale renewable business in Europe in partnership with the current majority shareholder.

The investment represents an opportunity to invest in a leading onshore wind platform and provides an attractive entry into the offshore wind sector in Europe through a 3000 megawatt development pipeline, which we expect to construct over the next five to seven years in partnership with an experienced offshore wind.

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We also recently acquired a portfolio of loans from from one of the largest nonbank financial companies in India for approximately $200 million.

The investment, which is secured by approximately two and a half gigawatts of operating assets is expected to earn returns in excess of 15% and further expands our presence in the region.

We also recently funded.

The final 400 million dollar tranche of the $750 million convert convertible securities investment, we agreed to make into Transalta Corporation at the beginning of 2019.

These convertible securities provide us with the option to convert into an interest in Transaltas 813 megawatt portfolio of high quality hydro facilities in Alberta.

We can make the conversion at our own election between 2025 and 2028 based on a multiple of 13 times. The average annual EBITDA for the three years prior to conversion.

The investment, which was the culmination of a multiyear dialogue.

Enhances our strategic relationship with the company to help it in advancing its goal of transitioning to a low carbon energy future.

Lastly today.

Today, we announced a split of our units in shares on a three for two basis.

Well splitting the units and chairs has no effect on the value of the company and costs, that's virtually nothing to do it keeps the unit in share prices within a reasonable range for investors.

In conclusion.

She'd been up the world's de carbonization goal will require significant capital and operating expertise.

This plays to our strength and as a result, we believe there will continue to be significant growth opportunities for our business for many years ahead.

With that I will turn the call over to white to discuss our operating results and financial position.

Thank you Connor.

Our business performed well in the quarter supported by strong asset availability and contributions from organic growth and recent acquisitions, most notably the privatization of terraform power.

Additionally, we had bad key strategic priority like the special distribution of Brookfield Renewable Corporation and maintained a robust balance sheet and access to capital.

During the quarter, we generated FFO of $157 million or 38 cents per unit, a 12, <unk>, 12% increase from the prior year.

On a normalized basis, our results were up 28%.

Turning to our segment results during the quarter, our hydro electric business delivered FFO of $113 million.

Well generation for the quarter was below the long term average driven by drier conditions across our fleet year to date generation has been roughly in line with long term average.

As we have consistently emphasized we.

We do not manage the business on under or over performance of generation relative to the long term average in any given period.

Instead, we remain focused on diversifying the business from both a geographic and technology perspective, which mitigates short term exposure to reserve volatility and regional or market disruption.

Across our hydroelectric portfolio, we continue to focus on securing contracts the value the uniqueness of our fleet as a generator of dispatchable carbon free electricity and ancillary services.

Subsequent to the quarter end, we agreed to supply 100% renewable energy to one of the first plant industrial scale Green hydrogen production plant in North America.

And over 90% of JP Morgans real estate operations in New York.

These transactions demonstrate our ability to address diverse customer needs for renewable supply across both wholesale and retail energy market.

Additionally, in South America, we signed 25 contracts in the quarter with high quality credit worthy Counterparties for a total of almost 2000 gigawatt hours per year.

Subsets substantially contract in our recently acquired solar development assets in the region.

Next our wind and solar businesses continued to generate stable revenues and benefit from the diversification of our fleet and highly contracted cash flows with long duration power purchase agreement.

During the quarter. These segments generated a combined $126 million of Oh, representing a 70% increase over the prior year.

As we benefited from contributions from acquisitions, including our increased ownership in terraform power and a 33 megawatt development of solar projects commissioned during the quarter.

Finally, we continue to advance our global development activities, including progress in our almost 2700 megawatts of assets under construction diversified across distributed distributed and utility scale solar wind and storage and hydro and eight different countries.

We're also progressing 1100 megawatts of advanced stage projects through final permitting and contracting.

In total we expect these projects to contribute over $150 million enough for FFO annually.

Our financial position continues to be in excellent shape.

We have $3.3 billion of total available liquidity and our investment grade balance sheet has no material maturities over the next five years.

And approximately 90% of our financing are non recourse to bat.

During the quarter, we continued to take advantage of the low interest rate environment and executed on $900 million of investment grade financing, including a 425 million Canadian dollar 30 year corporate greed bond issuance, which brings our total green finances to date over.

Our $4 billion and extends our average corporate debt duration to 14 years.

We also continued to execute on our capital recycling program of monetizing mature de risk asset.

During the quarter, we closed the sale of the final project in our South African portfolio.

Since acquiring these assets as part of a broader global transaction in 2017.

We have returned almost $200 million of capital representing over two and a half times our initial event investment.

Following the quarter, we also executed the sale of a 40% equity interest in the 850 megawatt wind portfolio in the U.S. and 47 megawatts of operating wind assets in Ireland for total proceeds of over $400 million.

Given the robust market environment for de risk renewable assets, we are increasingly seen opportunities to monetize our mature assets, where we have completed our business plan.

At attractive values.

We will only do so when we feel the value of being offered is greater than that we would gain by holding the assets.

And only to the extent, we expect to recycle that capital into more attractive investment opportunities over time.

Looking ahead, we continue to focus on growing our business and executing on our key operational priorities, including maintaining a robust balance sheet, maintaining access to diverse sources of capital and surfacing value through enhanced cash flows from our existing portfolio.

We believe that we have established ourselves as one of the few entities. This scale track record and global capabilities to partner with governments and businesses to help them achieve their goal of greening the global electricity grid while.

While earning a strong total return of 12% to 15% for our investors over the long term.

That concludes.

Their formal remarks for today's call. Thank you for joining us this morning, and with that I'll pass it back to our operator for questions.

[noise]. Thank you that's it.

A reminder to ask a question you will need to press star one on your telephone to withdraw your question press the pound key.

Please standby, we compiled the culinary roster.

[noise] [noise] <unk> first question comes from the line of Shyam Stewart with TD Securities.

Thanks, Good morning few questions on the the pull energy.

Transaction.

And I guess more with respect to the the development pipeline than than the existing asset base.

I guess first corner management. Its previously articulated a cautious approach approached offshore wind can you give us some detail on how that thinking has evolved and when you look at the 3000 megawatts. How do you envision the returns for those development projects.

Comparing to something like the the solar project in Brazil.

Certainly thanks, Sean.

So we have been looking for for an entry point into offshore for several years, but we've obviously been very patient and disciplined and waiting for a call at the right value entry point, and an opportunity where we could be differentiated as an investor.

In the situation with pull energy guys here the incumbent shareholder the majority shareholder was looking for a partner such as Brookfield renewable who could one bring global renewables expertise, but.

But also provide the required capital to build out a very sizable development pipeline in the business.

You know in the past when we talked about making an entry into offshore what we have been very focused on is doing so in a situation, where we would earn attractive returns without having to make a long term debt on high power prices in the back end.

The Polish support regime for offshore wind and is currently being finalized we expect that to be finalized in the early part of next year, but we are expecting the contracts to be about a long term duration that certainly fit the profile. We are looking for and to your question about returns.

This is development and construction so we expect to generate a high teens type return on the build out of these assets.

Okay, and just a couple of follow ups. The 3000 megawatts is that all in the Baltic or is there anything elsewhere in Europe.

No no.

The full pipeline is there in northern Europe, and I think what's important to recognize about the pipeline itself it's across three projects.

Two of those projects, which represent approximately half the pipeline are two of the most advanced projects in the country and we would expect to be the first ones built out in the region.

Okay and the ownership breakdown for the portion that's just Brookfield.

Typical 70, 30% equity to tobacco.

We should think about it.

Certainly so this will be made through our fun. So we would expect to be just a little bit north of 25% of the investment that's about.

Okay.

That's all I have for now I'll get back in the queue. Thanks.

Thank you.

Thank you.

Your next question comes from the line of Rupert Merer with National Bank.

Hi, good morning, gentlemen.

I was wondering looking at the the Brazilian solar development approach actually say call. It 75% contracted now Oh, well can you leverage your existing operations in Brazil to improve the returns on the on the and the contract profile for that asset.

Thanks Rupert.

I think it's important to to look at not just Hubble, but what we've done across the region.

In in the last call. It six to 12 months, we've acquired a number of ready to build assets in Brazil.

One of them a project called Air at Tangguh, We're now over 90% contracted and then on Hubble on Phase one we are now 100% contracted.

Expecting to start construction later this year and we expect to contract the remainder a phase twob affording before starting construction in the near future.

I think it's important to recognize that our ability to buy these projects.

For they are fully contracted really differentiates us in the region, we have a significant power marketing and contracting expertise and we have hundreds of counterparties that come to us for power in the region and Thats. How we are able to buy these these projects that are not yet contracted and de risk them, even before we start.

Our construction.

Our contracting activities are really accelerated in the quarter and we're very pleased with the pace of contracting at the rates that we're seeing we expect that to continue on our current projects and it also gives us confidence to continue to invest in that strategy going forward.

So your your contracts on that development project or they isolated only two that that project in the energy provided by the solar assets are you able to provide some capacity leveraging your and your other operations in Brazil.

So it's a we contract on a project by project basis in general.

And what we have seen obviously, depending on and our underwriting and the cost of building. It out we have different price objectives in order to hit our underwriting returns and what we're excited about is the contract. We signed in recent quarters have all been at or above those rates that we have.

<unk> wrote when making the investments.

All right great. Thanks, and then following up on the.

Investment into the Polish offshore market, how how far along are you in discussions with other development Parkinson, bringing bringing on board.

An entity that has experience in building offshore.

Sure. So so hold energy at the company that we have announced our intention to launch a tender offer for which that offer will be launched later this week.

They called their JV development pipeline.

In a 50 50, JV with Ecuador, who is one of the largest and most experienced developers and operators of offshore already so as we as a as a shareholder of blending g. I love to build out that that pipeline will be doing it in concert with with a very experienced developer and operator.

Okay, Great and so you mentioned that BP would have had a 25% stake in Brookfields investment.

How much of an ownership stake do you anticipate Brookfield will have.

With these partners.

Rupert I'm I'm not sure I fully understand your question, but the way. It will work is the entirety of our investment in pull energy will be made through through our fun and Brookfield renewable is a slightly north of 25% investor.

And not funds of Brookfield renewable will take down a little bit north of 25% of the entirety of the investment in pull energy.

All right I'll leave it there. Thank you congratulations on your new applicant corner.

Thank you.

Thank you and our.

Next question comes from the line of Mark Jarvi would see RBC capital markets.

Part of me markets check your mute button.

Yes, sorry, but that yeah.

Going back to the offshore opportunity on pull energy.

Maybe I missed it but can you walk through the pop securing contracts or or sort of the strategy. There in terms of the revenue uptick for the different projects that you're looking to develop.

Yes, sure so Poland has announced.

Gary and best shifts.

Renewables target, where they are looking to develop up to 11 gigawatts of offshore wind over the next decade.

The expectation there is six gigawatts, a little bit more than half will be offered under and Cfds long term Cfds and then the remaining five gigawatts, which will be the ones built later in the decade will be done through competitive auction.

Well well the form of that subsidy is still being finalized and expected to be announced that early next year, we expect it to be quite long term in nature.

And as you know modest to reasonable price point and given that two of pull energy as three projects are two of the most advanced projects in the region.

We are hopeful they would be you know near the top of the queue for those that first tranche of Cfd.

Okay and from my quick scan or other asset sales on some other non Jerry assets, some distribution assets and is that something you'd be willing to hold on to.

Or would there be sort of a divestment thesis to this.

Take care.

Yeah sure. So so when you look at solar energy.

Today, there are more than 90% renewables and then with the build out of their their offshore wind and that percentage is going to go up north of 95. So this is almost a pure play renewables company. They do have a couple other very modest business is trading business that supports that.

Their generation platform.

A very small distribution business.

And they also have a small CHP business, but it's interesting to us because they have announced a cooperation agreement with Siemens to see at those can be converted to hydrogen. So at this point, we're comfortable with all those assets, but I think it's important to recognize that they make up an absolute tiny portion.

<unk> of the business versus the renewable generation platform, which we expect will be north of 95% of cash flow once the offshores built out.

Okay that makes sense.

Then my last question is just around the disclosure on the loans in India can you guys tell us a little bit about the types of assets that those are the longer tied to answer what the end game might be in terms of taking on those loans.

Sure. So there there's nothing.

To a unique about what we what we have done here.

In in India right now there is a period a capital scarcity and certain lenders are looking to shore up their balance sheets.

One of those Nbfcs was looking to sell a portfolio of renewables loans that they had on their books.

We thought this was a really attractive investment for us because the underlying renewables companies are ones that we knew very very well and ones that we have worked with or or diligenced in the past and you know I would say the structure of the investment it's simply indicative of one our flexibility and to.

Staying true to our value investing principles through that structure. We think we can generate kind of mid to high teens U.S. dollar returns, but obviously, we've entered higher in the capital stack than we normally would through through an equity investment. So it so really a fantastic proposition from a risk reward per se.

Correct.

In terms of what it means for us in India, We continue to view it as a significant growth market.

The government has very very ambitious renewables targets and we'll continue to look to be flexible and try and gain more exposure to the region.

[noise] Pep than when you talk about the 15% return potential that's not satisfied.

Huh.

Buying the bonds at a discount to par or is there some other angle to the opportunity to create returns there.

Yes sure. So so it gives us exposure to these underlying companies, we really view ourselves as a partner with these companies and if they're able to pay US back. We still think we would get close to those 15% returns, but obviously it puts us in a position to partner with those underlying companies.

To to either maybe facilitate future growth from them or it needed potentially acquire assets, but we're now engaged with those counter parties and.

Being viewed as a constructive a constructive partner.

Okay, that's great and then finally to calculations color on the quarter.

Thank you.

Thank you and our next question comes from the line of Nelson Gee with RBC capital markets.

Great. Thanks.

Cotter again congratulate congratulations on the new role just a quick follow up on Mark's question in terms of the Indian loans.

So is it fair to say that.

Got it.

Oh I think it's a portion of that debt is distressed to some degree.

And you're looking to.

Potentially own some of the underlying assets or or or take a stake in.

Some of those companies that you've made the loans too.

Is that a fair statement.

Nelson that's a great question and maybe maybe we'd look at it slightly differently.

The loans were made available to us we weren't able to make an investment.

Not because of distress in the underlying renewables companies necessarily.

But but distress in the lending sector in India and that allowed us to acquire the loans are at an attractive value on the underlying renewables companies. These are some of the leading renewable companies in the region.

We expect on on some of these loans and they'll pay us back, but what this really does is it puts us in.

In a position at the table with these companies to help them going forward.

These underlying companies are leading developers with significant growth plans, they're going to continue to need capital going forward not necessarily because they're distressed, but rather because they havent vicious growth plans in a high growth renewables region.

So I think the only way we would characterize it is it wasn't distressed in the underlying companies. It was more distress in the lending factor that gave us the opportunity.

Okay that makes sense and then just in terms of the whole energy a privatization.

I'm not sure whether I've I'm seeing it right, but as the offer price not really much of a premium to the current share price or or does the current share price already reflects or.

Like does that already reflect the privatization.

And the price can you just give a bit of color in terms of.

The process.

Yeah sure so I absolutely correct.

But I'm sure what you're looking at is the offer price versus that's brought pricing you know yesterday or last week, it's important to recognize that the share price for the company is up 75 or 80% on the year already.

And it is a very very thinly traded stock.

We believe the offer we are putting on the table is very attractive and offers an all cash liquidity event for some of the minority shareholders to get out and but if you look at the share price on on a premium too.

You know the share price earlier in the year or 60, or 90 day view apps that the premium it is quite significant.

Okay. Thanks, and then just one last question.

You mentioned the sale of 47 megawatts of wind in Ireland I'm not sure. If the reports I'm seeing are correct, but is.

Is there an ongoing process and Ireland to divest additional assets there.

Certainly so so why it has mentioned that that asset recycling and we've been saying it for several quarters now is really core to our strategy and given our AR increased growth plans will becoming a more important part of our funding plan going forward what we.

I've been doing out of our Irish business for call. It the last 12 or 18 months.

He is selling some of the highly contracted long term contracted assets that are very very attractive.

Attractive to a low cost of capital financial investors and the 47 megawatts that we announced.

It was part of that program.

We are in the process the early stages of launching a process to sell the remainder of our Irish platform.

That is something that we expect would conclude at some point in 2021.

Okay, Thanks kind of Hollywood there.

Thank you and our next question comes from the line of Ben Pham with BMO capital markets.

Okay. Thanks, Good morning, I wanted to.

Pick your brain on a couple of one long term kind of trends I know youve been pretty good luck with that in the past you mentioned some of the more positive.

Transom solar on the last call.

So my question.

Really is.

I'm curious how do you see the.

The counterparties.

Renewable power assets that changing or transitioning over time, you mentioned some corporate.

Okay. So you're you're engaging in and then in turn how do you. How do you kind of think about contract duration is here since 10 years from now we were going to be at 15 years for dentistry or for some different number.

And to add like where do you see the spot prices.

Going as well.

Certainly and so so there there is no doubt around the world that are.

Corporates are increasingly becoming active players and setting their own de carbonization goals and looking to be major procurers of green power and not as a significant benefit for our business and what you are seeing is a long term shift here as.

On the off take of renewable power will lessen last the government's through the form a government subsidies that are winding down and increasingly will be at utilities energy companies or other corporate that we are really seeing accelerate in terms of their appetite.

Procuring Green energy on a long term basis, we think we're still in the early days of that shift in it and it has a long way to run at corporates ramp up the amount of green energy that they look to contract for their business.

In terms of duration.

We've been in an environment for a number of years, where where government contract durations have been shortening and interestingly enough corporate contract durations are lengthening. So I wouldn't suggest that this point that we see any major shift in the near term in terms of the duration of those.

Contracts and certainly nothing that we would report today when we look at some of our regions around the world, Brazil, It's something we've talked about already on this call. They continue to contract for 15 to 20 years.

Corporate counterparties in the region.

And then lastly, I believe the final part of your question, which was around power prices.

It's important to think about power prices in that in the context of one what is the cost to produce the power and then two what is the price for the power that can be achieved.

Wind and solar prices continue to decline the cost of producing not power. They have been declining for several years, but the trajectory is still downwards.

Even if they are flat towing and wind and solar now in most major developed markets around the world is the lowest cost form of power generation. We would expect that this does create an environment where power prices.

Maybe on the on the lower side, but what's important to realize as you can still make very significant margin from either in place businesses or by building, new wind and solar because the cost of that construction is declining as well.

All right Thats, great. Thanks for answering that 333, and one question on Conor I just want to ask why SEC just quickly the next 12.

12 months through 2021, you talked about refinancing.

And more recently a can you quantify the refinancing opportunity you see it if any and also the.

Financing.

For 10 as well.

Yeah, Thanks, Ben so.

What I'd say look we're in a really good position from a balance sheet perspective, we have no material maturities over that they've ever made.

And our 2021, and then even down 2022 and 2023, we have some very modest maturities. We are already actively working on refinancing knows.

As a result of the.

Low interest rate environment, our expectation is that we will.

Refinance those at lower rate and.

As a result, and a lot of cases will actually generate some some financing given what that the lower rates mean on a coverage basis and all while maintaining our strong investment grade rating.

Incrementally across our fleet.

Both our hydro fleet, both in North America, and Brazil, we have a number of our financing Cape opportunities that we can execute at that will generate meaningful proceeds that can be used.

And I should say that meaningful proceeds is done again that investment grade rating.

Rated and so those proceeds could then be used to put it into growth and our perspective on.

Yes.

Completing those will really depend on.

What is our investment pipeline.

We're targeting $800 million billion of outgrowth of equity growth equity capital into growth annually.

Annually and so between the asset sales, we have between those that financing capabilities.

Between.

The.

The issuance of preferred equity perpetual preferred equity, which are very attractive a market issue and right now as well as a corporate debt that we regularly issue between those four sources.

Feel we can very comfortably fund our growth and so how we how we balance on those four leverage will be dependent on kind of.

The various.

Markets in those regions, but we feel that the robustness and that diversity of funding sources puts us in a very good position to access all of those markets.

Okay. That's great. Thanks for the color.

Thank you and our next question comes from the line of Andrew.

With credit Suisse.

Thanks, Good morning, I guess, a question for Conor to start with and it's really just a degree of confidence in the pipeline that you've got.

And ask the question in part because have you secured turbines and advance part.

Part of your construction program and as part of your supply chain issues and just driving the cost down because you are a large global player.

With scale in multiple markets around the world.

Yeah sure Great question, Andrew and so when we look at our development pipeline and it's that different stages in different regions around the world and obviously then there are procurement.

Whether it be solar panels on the solar side, our turbines on the web wind side is happening at different times, what we are doing as an organization as a cost saving initiative is we are centralizing those procurement functions such that no matter where in the world.

As we are acquiring panels or where in the world we are acquiring turbines.

We are doing it Pat with the strength and scale of our entire global platform and that really helps us in two different ways. One is it ensures that we get the best pricing simply due to the economies of scale, but two it allows us to build very large strong relationships with the tier one.

Equipment manufacturers and therefore and.

We obviously have a good working relationships with those companies to ensure that we can get the appropriate parts.

In the regions, we need done at the time, we need them. So the scale of our business and our programs to procure centrally are really paying dividends one on a cost perspective, but two in ensuring that we can deliver our projects kind of on time and on budget.

Maybe maybe just as a flare up a follow up in a clarification, but you haven't.

Secured say 500 megawatts of onshore wind turbines for the next in each of the next five years.

No we wouldn't look to preemptively and secure that much equipment ahead of time, we would separate out and just as a clarification point out one thing we've been doing in our operating business around the world is.

And this has been for a couple of years now is we have a very strong spare parts program to ensure that in all of our regions around the world if for whatever reason equipment needs to be replaced or something breaks.

We can do that using our local operating teams in all of our regions around the world to ensure that our project availability you know remains at an industry, leading high but when it's hot when you talk about development.

And procuring we wouldn't do that on a full scale years in advance we would do that on a project by project basis, but that's because we feel very secure with the relationships we have with large equipment manufacturers.

Okay. That's very helpful. And then if I may the second question really just.

Turns on Poland.

And I believe group wise, it's basically or near market on what goes on its central operations of any sort of across the entire group and it's a bit of hybrid market. How do you think about it is it more developed market to you or is it more of an emerging market as it does one but then the sort of in between category for many people.

Definitely so it's a great question and when we look out Poland. We assess it the same way, we would assess any geography around the world and we see Poland as an easy you country with a stable currency.

Very strong historical growth and equally strong growth prospects going forward low levels of national debt and probably most importantly, a government that is supportive of growing in renewables to help the country deliver on its E U mandate to your point.

This is a market where we don't have operations at this point, but we're very excited to be partnering with a strong local partner who has been the majority shareholder of this business for several years knows the business well ended local to the market. So we think it's a great entry point into.

A new market with strong growth prospects, but we're doing it with the benefits of a strong local partner.

That's great. Thank you.

Thank you.

Next question comes from the line of Rob Hope with Scotiabank.

Good morning, everyone and congratulations on the new equipment.

Two long term questions here, just when you take a look at the potential for offshore and Brookfield. How do you think this will play out do you want to get a sense of how the technology in the permitting process will work.

Next year before you expanded out to potential other jurisdictions or do you think you have an understanding of all the nuts and bolts. So far that if the opportunity does arrive with a good contracting structure you could move forward in other jurisdictions.

Thanks, Rob it's a great question and I.

I would say, it's certainly more the latter than than the former and well we have been and we have not entered the offshore space until now we have been tracking it for several years, it's obviously a very.

Meaningful and growing renewable technology, and we feel that particularly in Europe, where there is the highest degree of offshore globally. The industry in the technology has been largely de risked and is very mature.

Our.

Peaks of entry into offshore has not been dictated Bonnie.

The Oh, our our our knowledge of the technology, but simply rather us staying true to call. It our value investing principles and wanting to ensure that we are entering the technology and an attractive point on the risk reward spectrum and we think we now have that through the pull energy acquisition.

And if we see other opportunities that are attractive on in offshore wind, we would happily invest in them.

Other regions as well, but it really comes down to the risk reward proposition of the investment we're very comfortable with the technology.

Okay, perfect and then maybe a.

A little bit broader and a little bit longer term.

With some of the changes within the Brookfield infrastructure, our Brookfield organization, including kind of the bring your own investor Carney no longer term could you see be PD, not only invest into like that four five but other specialized yesterday funds or specialized renewable funds longer term and Joe.

How are we.

On that path currently.

Certainly so it's a great question then one thing we've been focused on for several years as Sachin what has been doing it is we are constantly looking to broaden our business.

You know, we have a very long track record and a leadership position in the wind solar and hydro in most major renewables markets around the world, but increasingly we are seeing opportunities that leverage our knowledge of renewables and leverage our knowledge of clean energy markets today.

Capture this accelerating theme of de carbonization.

I would say we are going to look to broaden our business to to invest in those areas.

Areas, but.

The important thing to focus on there is if these aren't large step outside of what we're currently doing there are some major sent trends around de carbonization and decentralized power that we are already participating in today, we have one of the largest DG businesses in the United States, we see that as a.

View.

Around energy transition.

Obviously this quarter, we announced the agreement with plug power, which will gives us great visibility into the production of green hydrogen that's.

That's obviously a technology that remains in a very nascent stage today, but now as a result of that agreement we have a great vantage point to see how it progressed as going forward and we'll be well positioned to invest if at some point in the future and it becomes commercially cost effective on a broader scale. So.

So in summary, absolutely we will look to broaden our business, but these aren't large steps from what we're doing today, there they're very big Tam.

And gentle and I would say incremental to the business, we have that weve been broadening out for a long period of time, and we'll continue to broaden in the future.

All right appreciate the color. Thank you.

Thank you.

Next question comes from the line of Naji Baidu with industrial Alliance.

Hi, Good morning, just a couple of follow up questions on me a pull in the offshore wind projects I think the press release, some pull in and just stated the <unk> hundred 50 million euros of equity injections that are going to be made over the next three years, but beyond those what are some of the other capital.

Requirements that you expect to make to develop the offshore wind projects in the Baltic.

Very good so as part of our partnership here. The transaction structure is we will launch a tender offer to privatized or the public float.

In partnership with with the incumbent major shareholder.

Field has also committed as part of the transaction to invest an additional 150 million euros to build out the companies in place our construction pipeline of onshore wind and solar that already exist in the business. In addition to that there will be the opportunity to invest in.

The build out of the offshore pipeline as well. So the reason why we are so attracted to this investment today is obviously, there's a great portfolio of in place asset that is cash generative. There is a very visible pipeline for growth, both onshore and offshore and together with our partner will invest.

To build that out and Brookfield books to expect to put at least our share if not more of that capital and on a go forward basis.

Okay, and then when you say.

Maybe even more than your share is the do you have the view of once the projects are completed of either divesting your ownership or or maybe it sounds like the flip side of that even acquire I can or stake in the project.

We wouldn't want to speculate the you know that that's obviously several years down the road our focus right now in our business plan with the partner is simply building out.

The very large construction pipeline that they have in front of them and we think our investment holds together very well on a buy or sorry, a build and hold a business plan and therefore, our focus with the partner will simply be ensuring that the business has the right the right amount of capital.

To take advantage of the growth prospects it has in front of us.

Okay. Thank you for the details and congratulations a color on the neural.

Thank you.

Thank you and our next question comes from the line of Matt Taylor with Tudor Pickering.

Hey, Thanks for taking my question here I'm just following up on the shift from contracting to two more corporate so are you seeing a need from those customers as corporate customers to want to directly connect in tier normals and thinking about distributed generation right at this stage in the game or corporates comfortable just procuring the green energy as an offset to their power.

And if so do you see this shifting over time, where they bought that direct connectivity.

Thanks, Matt It's a great question.

Really what we're seeing here is I quite a major shift.

If you go back.

Five or seven years, the main stakeholders that we're pushing the world's de carbonization agenda, where governments and now increasingly corporations around the world are setting their own voluntary targets.

For procuring green power and Decarbonizing their own businesses and that is leading for that shift that we've spoken about.

Two more corporate contracts going forward I would say the waves that corporates are doing that are quite broad based on some corporate are looking for unique 24, seven green power that is very tough to supply purely with wind and solar and we're looking to.

Support those corporate by using our hydro portfolio that has a differentiated ability.

To provide continuous power throughout the day.

Other corporates are looking for distributed generation as you said, where they can seek to to disconnect from the local grid, where it where they might be procuring power from from centrally located thermal Jarrett generation two two on site renewables, where they can perhaps.

Get a discount to retail prices and then the third.

That aspect is is this concept of additionality that we keep seeing in our business. We're increasingly we are seeing the most advanced.

Advanced corporate not only looking to procure green power, but looking to procure green power from new development assets, and that's where our 18000 megawatt development pipeline really partners well with our power contracting and commercial expertise around the world to give corporates.

Green power, while at the same time, bringing new renewables capacity onto the grid and that's where we really are seeing the greatest change in the market in the last call that months and years.

Excellent. Thanks for the color there I'll just leave it there thanks for taking my question.

Thank you and I'm showing no further questions. So with that I will turn the call back over to CEO Conor Chesky for any further remarks.

Perfect and as always we want to thank everyone for your continued support and we look forward to updating you at the end of the year with our full year 2020 results. Thank you and have a good day.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating and you may now disconnect.

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