Q3 2024 Brookfield Renewable Corp Earnings Call

November 8, 2024

Operator: Thank you for standing by, and welcome to the Brookfield Renewable's Q3 2024 Results Conference Call and Webcast. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during this session, you'll need to press star one one on your telephone. If your question has been answered and you'd like to remove yourself from the queue, simply press star one one again. As a reminder, today's program is being recorded. Now I'd like to introduce your host for today's program, Connor Teskey, Chief Executive Officer. Please go ahead, sir.

Okay.

Thank you for standing by and welcome to the Brookfield Renewables third quarter 2024 results conference call and webcast. At this time all participants are in a listen only mode. After the speaker's presentation. There will be a question and answer session to ask a question. During this session you will need to press star one on your telephone if your question has been.

Answered and you'd like to remove yourself from the queue simply press Star One again as a reminder, today's program is being recorded.

Like to introduce your host for today's program.

Speaker Change: Chief Executive Officer. Please go ahead Sir.

Connor Teskey: Thank you, operator. Good morning, everyone, and thank you for joining us for our Q3 2024 Conference Call. Before we begin, we'd like to remind you that a copy of our news release, investor supplement, and letter to unitholders can be found on our website. 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.... For more information, you are encouraged to review our regulatory filings available on SEDAR, EDGAR, and on our website. On today's call, we will provide a review of our Q3 performance and how we are able to both successfully monetize assets at great returns in the current environment, as well as find opportunities to deploy significant capital into growth at good value.

Speaker Change: Thank you operator.

Speaker Change: Good morning, everyone and thank you for joining us for our third quarter 2024 conference call.

Speaker Change: Before we begin we'd like to remind you that a copy of our news release Investor supplement and letter to unit holders can be found on our website. 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 for more information you are encouraged to review our regular.

20 filings available on SEDAR, Edgar and on our website.

Speaker Change: On today's call, we will provide a review of our third quarter performance and how we are able to both successfully monetize assets at great returns in the current environment.

Speaker Change: Well, let's find opportunities to deploy significant capital into growth at good value.

Connor Teskey: Then, Ignacio Gomez-Acebo from our investment team will speak to some of our successful asset monetizations announced this past quarter. Lastly, Wyatt Hartley will conclude the call by discussing our operating results and financial position. Following our remarks, we look forward to taking your questions. We had a successful quarter with the business performing well. We delivered record funds from operations for the Q3, benefiting from asset development, recent acquisitions, and strong all-in pricing. On the back of our strong results year-to-date and our outlook for the remainder of the year, we continue to expect to achieve our 10%+ FFO per unit growth target for 2024. We have continued to diversify our business across the most attractive power markets globally, while concentrating on the lowest-cost, mature technologies, which today represent the most promising and viable solutions to meet accelerating electricity demand growth from digitalization and electrification.

Speaker Change: Then Ignacio Gomez from our investment team will speak to some of our successful asset monetization as announced this past quarter.

Speaker Change: Lastly, why it will conclude the call by discussing our operating results and financial position.

Speaker Change: Following our remarks, we look forward to taking your questions.

Speaker Change: Yeah.

Speaker Change: We had a successful quarter with the businesses performing well, we delivered record funds from operations for the third quarter.

Speaker Change: Benefiting from asset development recent acquisitions and strong all in pricing.

Speaker Change: On the back of our strong results year to date and our outlook for the remainder of the year. We continue to expect to achieve our 10% plus <unk> per unit growth target for 2024.

Speaker Change: We have continued to diversify our business across the most attractive power markets globally, while concentrating on the lowest cost mature technologies, which today represent the most promising and viable solutions to meet accelerating electricity demand growth from digitalization and electrification.

Speaker Change: Sure.

Connor Teskey: The outlook for our business continues to improve, driven by increasing demand for clean power, as the robust investment by the large global technology players in data centers and semiconductor chips is now extending to energy capacity. Power is increasingly the bottleneck to enable data center and AI development, and we are seeing these businesses ramp up their efforts to lock in supply to ensure that they can achieve their own growth targets. This accelerating increase in demand for new power is being driven by corporate off-takers and requires a significant build-out of renewable generation, given its position as the most cost-competitive source of bulk power in most markets, irrespective of incentive schemes. Our scale and geographical and technologically diversified business is uniquely positioned to meet this insatiable demand in all political environments.

Speaker Change: The outlook for our business continues to improve driven by increasing demand for clean power.

Speaker Change: The robust investment by the large global technology players in data centers and semiconductor chips is now extending to energy capacity.

Speaker Change: Power is increasingly the bottleneck to enabled data center and AI development and we are seeing these businesses ramped up their efforts to lock in supply to ensure that they can achieve their own growth targets.

This accelerating increasing demand for new power is being driven by corporate off takers and requires a significant build out of renewable generation given its position as the most cost competitive source of bulk power in most markets irrespective of incentive schemes.

Speaker Change: Our scale and geographical and technologically diversified business is uniquely positioned to meet this insatiable demand in all political environments.

Connor Teskey: To reinforce this point, because our business is focused on markets which are seeing the greatest amount of corporate demand and is focused on the technologies that are most cost-effective, that are the most cost-effective electricity solutions, we are largely insulated from any potential regulatory or subsidy changes, and we do not expect the recent election results to change our business model or growth outlook. This past quarter saw several agreements announced by global technology players to restart or enable the development of nuclear capacity. These agreements are a powerful indication, not only of the magnitude of demand for clean electricity over the coming years, but of the types of solutions that are needed.

Speaker Change: To reinforce this point.

Speaker Change: Because our business is focused on markets, which are seeing the greatest amount of corporate demand and it's focused on the technologies that are most cost effective that are the most cost effective electricity solutions we.

Speaker Change: We are largely insulated from any potential regulatory or subsidy changes and we do not expect the recent election results to change our business model or growth outlook.

Speaker Change: This past quarter saw several agreements announced by global technology players to restart or enable the development of nuclear capacity.

Speaker Change: These agreements are a powerful indication not only of the magnitude of demand for clean electricity over the coming years, but the types of solutions that are needed.

Connor Teskey: The technology leaders require reliable, low-cost, 24/7 scale power solutions, and they are increasingly looking to a small number of partners who they trust to deliver what they need, where they need it, and when they need it. This environment is very constructive for the development platforms we have acquired in recent years, and we are well-positioned to continue as one of the partners of choice to these companies. We are differentiated with our diverse 200,000MW renewable power project development pipeline, approximately 90% of which is located in the top 10 data center markets globally. Added to that, with our Westinghouse nuclear business, which has design and engineering capabilities to deliver micro, small modular, and utility-scale nuclear solutions, we are in an enviable position globally.

Speaker Change: The technology leaders require reliable low cost 24, seven scale power solutions and they are increasingly looking to a small number of partners, who they trust to deliver what they need where they need it and when they need it.

Speaker Change: This environment is very constructive for the development platforms that we have acquired in recent years and we are well positioned to continue as one of the partners of choice to these companies.

Speaker Change: We are differentiated with our diverse 200000 megawatt renewable power project development pipeline, approximately 90% of which is located in the top 10 data center markets globally.

Speaker Change: Added to that with our Westinghouse nuclear business.

Speaker Change: Which has design and engineering capabilities to deliver micro small modular and utility scale nuclear solutions, we are in an enviable position globally.

Connor Teskey: As outlined at our Investor Day at the end of September, this year will be our largest for both asset recycling and investment into growth. To date, we have generated approximately $2.3 billion of proceeds from asset monetizations, resulting in returns of 2.5x our invested capital and IRRs on these investments of greater than 20%, well in excess of our corporate targets. Given other ongoing sales processes, the bids we are seeing in the market, and our pipeline of assets that will be ready for sale in the coming quarters, we expect to deliver incremental strong monetizations in the future.

Speaker Change: As outlined at our Investor day at the end of September this year will be our largest for both asset recycling and investment into growth.

Speaker Change: To date, we have generated approximately $2 3 billion of proceeds from asset monetization, resulting in returns at two five times, our invested capital and IRR on these investments are greater than 20% well in excess of our corporate targets.

Speaker Change: Given other ongoing sales processes. The bids we are seeing in the market and our pipeline of assets that will be ready for sale in the coming quarters, we expect to deliver incremental strong monetization in the future.

Connor Teskey: During the same year-to-date time frame, we have committed and deployed over $11 billion of equity into growth, including our proposed acquisition of Neoen, which remains on track to close on our expected timelines as we continue to progress through the regulatory approvals and anticipated undertakings, which are all well advanced. We recognize that some may question how a market can be attractive for deployment and monetization at the same time. While every transaction has its own dynamics, and there will be exceptions to any broad-based generalizations, we see a simple bifurca- bifurcation in the current market. High quality, de-risked, and cash-generative assets are seeing very strong bids, while large businesses with ongoing capital needs for development and construction are seeing a scarcity of capital to fund their growth pipeline....

Speaker Change: During the same year to date timeframe, we've committed and deployed over $11 billion of equity into growth, including our proposed acquisition of nailing, which remains on track to close on our expected timelines as we continued to progress through the regulatory approvals and anticipated undertaking.

Speaker Change: Which are all well advanced.

Speaker Change: We recognize that some may question, how a market can be attractive for deployment and monetization at the same time.

Speaker Change: Well every transaction has its own dynamics and there will be exceptions to any broad based generalizations, we see a simple bifurcated bifurcation in the current market.

Speaker Change: High quality de risked and cash generative assets are seeing very strong bids.

Speaker Change: While large businesses with ongoing capital needs for development and construction are seeing a scarcity of capital to fund their growth pipelines.

Connor Teskey: This creates a tremendous opportunity for those equipped to deploy capital at attractive value entry points to acquire growing businesses or fund existing operations. This constructive environment also allows us to monetize more mature assets and recycle the proceeds back into accretive new investments under an attractive and high-returning self-funding model. We feel this market is particularly attractive for a number of the renewable development platforms we have acquired in recent years. Last week, we announced a new partnership with Ørsted, a global leader in offshore wind, making our first direct investment into this technology. We have always taken a thoughtful approach to investing in technologies that are new to our platform. For example, almost a decade ago, we were consciously not a first mover into solar, because we believed that much of the initial capital invested in the space was subject to return drivers outside of our control.

Speaker Change: This creates a tremendous opportunity for those equipped to deploy capital at attractive value entry points to acquire growing businesses or fund existing operations.

Speaker Change: This constructive environment also allows us to monetize more mature assets and recycle the proceeds back into accretive new investments under an attractive and high returning self funding model.

Speaker Change: We feel this market is particularly attractive for a number of the renewable development platforms. We have acquired in recent years.

Speaker Change: Last week, we announced a new partnership with <unk>.

Speaker Change: Global leader in offshore wind, making our first direct investments into this technology.

We have always taken a thoughtful approach to investing in technologies that are new to our platform.

Speaker Change: For example, almost a decade ago, we were consciously not a first mover into solar because we believe that much of the initial capital invested in this space was subject to return drivers outside of our control.

Connor Teskey: Notably, the pace of technological improvement and cost declines, the ramp-up of supply chain, and the assumed trajectory of growth. While some players got these initial bets right and others wrong, we waited until we felt the sector was more appropriately de-risked. Once the sector matured, we moved with conviction, securing attractive value entry points, often capitalizing on situations of capital scarcity, where some of those earlier investments didn't go as planned. Despite our cautious initial approach to the asset class, we have since found no shortage of opportunities, and today are one of the largest solar developers in the world, if not the largest. We have taken a similar approach to investing in offshore wind.

Speaker Change: Notably the pace of technological improvement and cost declines the ramp up the supply chain and the assumed trajectory of growth.

Speaker Change: While some players got these initial bets right and others wrong, we waited until we felt the sector was more appropriately de risked.

Speaker Change: Once the sector matured, we moved with conviction securing attractive value entry points, often capitalizing on situations of capital scarcity, where some of those earlier investments didn't go as planned.

Speaker Change: Despite our cautious initial approach to the asset class we have since found no shortage of opportunities and today are one of the largest solar developers in the world if not the largest.

Speaker Change: We have taken a similar approach to investing in offshore wind.

Connor Teskey: We view offshore wind as a mature, fast-growing, and scale renewable technology with critical attributes for certain markets, such as providing a differentiated energy load profile, high capacity factors, and limited onshore land requirements. However, up until recently, many of the opportunities we looked at faced long lead times between capital outlays for development and project commissioning. These challenges deterred us from investing over the past several years, especially given the other opportunities we were seeing in the market. Today, we are seeing more opportunities to invest in projects that are operating or where the cash flows are more significantly de-risked at attractive risk-adjusted returns. We agreed to partner with Ørsted, a global leader in offshore wind, to acquire a 12% interest in a portfolio of 3,500MW of operating capacity in the UK for an enterprise value of $2.3 billion.

We view offshore wind as a mature fast growing in scale renewable technology with critical attributes for certain markets, such as providing a differentiated energy energy load profile.

Speaker Change: High capacity factors and limited onshore land requirements.

Speaker Change: However.

Speaker Change: Up until recently many of the opportunities we looked at face long lead times between capital outlays for development and project commissioning.

Speaker Change: These challenges deterred us from investing over the past several years, especially given the other opportunities we were seeing in the market.

Speaker Change: Today, we are seeing more opportunities to invest in projects that are operating or where the cash flows are more significantly derisked at attractive risk adjusted returns.

Speaker Change: We agreed to partner with <unk>, a global leader in offshore wind to acquire a 12% interest in a portfolio of 3500 megawatts of operating capacity in the U K for an enterprise value of $2 3 billion.

Connor Teskey: The portfolio is, 1, secured by long-term government-backed inflation-linked Contracts for Difference. 2, has approximately 90% of operating costs fixed through long-term O&M, transmission, and lease contracts. And 3, comes with no development or construction risk. We are thrilled to partner with Ørsted, a global leader in offshore wind, who will continue to own a 38% interest and operate the portfolio, which we expect to generate returns in line with our targets. With that, we will now turn it over to Ignacio to discuss our recent asset monetizations.

Speaker Change: The portfolio was one secured by long term government and government backed inflation linked contracts for difference.

Speaker Change: Two has approximately 90% of operating cost fixed through long term O&M transmission and lease contracts.

Speaker Change: And three comes with no development or construction risk.

Speaker Change: We are thrilled to partner with <unk>, a global leader in offshore wind, who will continue to own 38% to 38% interest and operate the portfolio, which we expect to generate returns in line with our targets.

Speaker Change: With that we.

We will now turn it over to Ignacio to discuss our recent asset monetization.

Ignacio Gómez-Acebo: Thank you, Connor, and good morning, everyone. As Connor noted, this will be our most successful year for asset recycling ever, as we have already generated record proceeds year-to-date and continue to see robust demand for high-quality, cash-generative operating platforms, and in particular, those with embedded growth opportunities and capabilities. While we underwrite our investments on a whole maturity basis to deliver our target 12 to 15% returns, we can often enhance these returns by monetizing mature assets to buyers with a lower cost of capital, who value the long life, de-risked, infrastructure-light cash flows of renewable power projects. Asset recycling also represents a highly accretive way to fund our business and contributes to our sustainable self-funding model. Important to successful asset monetizations is the strength of our balance sheet, which enables us to be patient and sell assets when markets are constructed.

Ignacio Gomez: Thank you Conor and good morning, everyone.

Ignacio Gomez: Garner noted this will be our most successful year for asset recycling ever.

Ignacio Gomez: So we have already generated record proceeds year to date and continue to see robust demand for high quality cash generative operating platforms and in particular, those with embedded growth opportunities and capabilities.

Ignacio Gomez: While we underwrite our investments on a hold to maturity basis to deliver our targeted towards the 15% returns.

Ignacio Gomez: Often enhance these returns by monetizing mature assets to buyers with a lower cost of capital who value the non life de risked infrastructure like cosmos of renewable power projects.

Asset recycling also represents a highly accretive way to fund our business and contribute to our sustainable self funding model.

Ignacio Gomez: Important to successful asset monetization is the strength of our balance sheet, which enables us to be patient and sell assets where markets are constructed.

Ignacio Gómez-Acebo: Throughout 2024, we have seen a very robust bid for high-quality assets and platforms, and against this market demand, we have been successfully recycling capital from our existing asset base and returned significantly above our targets. While every investment is different, in each case, these results were driven by acquiring for value, improving the assets through the execution of our business plan, and monetizing opportunistically. In September, we reached an agreement to sell Saeta, which we acquired in 2018 to take private during a period of market uncertainty that created an attractive value entry point. The portfolio consisted of high-quality, contracted assets, where we saw an opportunity to add value, leveraging our scale and operating capabilities.

Ignacio Gomez: Throughout 2024, we have seen a very robust bid for high quality assets and platforms.

Ignacio Gomez: And against this market demand.

We have been successfully recycling capital from our existing asset base, our returns significantly above our targets.

Ignacio Gomez: Every investment is different in each case. These results were driven by our quality our value improving the assets to the execution of our business plan.

Ignacio Gomez: Monetizing opportunistically.

In September we reached an agreement to sell side.

Ignacio Gomez: Which we acquired in 2018, so they take private during a period of market uncertainty that created an attractive value entry point.

Ignacio Gomez: The portfolio consisted of high quality contracted assets, when we saw an opportunity to add value leveraging our scale and operating capabilities.

Ignacio Gómez-Acebo: Following the acquisition, which we executed on a bilateral basis, we implemented our business plan, divesting non-core assets and bringing over best practices from our experience operating renewable assets globally to enhance operations and reduce costs. We also optimized the capital structure and established a development function to focus on growth. With the in-house development team that we built and supplemented by our access to capital, we were able to grow the business and develop a very attractive pipeline of projects. The development team remains in place, and we continue to carry out Saeta's strategic growth plan going forward with the new owners....

Ignacio Gomez: Following the acquisition, which we executed on a bilateral basis, we implemented our business plan divesting non core assets and bringing over best practices from our experience operating renewable assets globally to enhance operations and reduce costs.

Ignacio Gomez: We also optimized the capital structure and established a development function to focus on growth.

Ignacio Gomez: With the in-house development team that we built, and supplemented by our access to capital, we're able to grow the business and develop a very attractive pipeline of projects. The development team remains in place, and we continue to carry out CERETA's strategic growth plan going forward with the new owners.

Ignacio Gómez-Acebo: We agreed to sell the company, excluding the contracted 350MW of concentrated solar power assets, which we continue to own and operate, to a leading global renewable energy company as part of their strategic entry into the Iberian region, for an equity value of $730 million. With the sale, we generate total proceeds of over three times our invested capital over a six-year hold period, crystallizing strong, strong returns for our shareholders. In 2017, we acquired a 25% interest in First Hydro, the leading UK hydro business, providing approximately 75% of the pumped storage capacity and 45% of the hydro capacity in the market. We recognize an opportunity to use our decades of experience in owning and operating hydro assets to implement several value-generative initiatives.

Ignacio Gomez: We agreed to sell the company, excluding the contracted 350 megawatt of concentrated solar power assets, which we continue to own and operate, to a leading global renewable energy company, as part of their strategic entry into the Iberian region, for an equity value of $730 million.

Ignacio Gomez: With the sale, we generate total proceeds of over three times our invested capital over a six-year hold period, crystallizing strong returns for our shareholders.

Ignacio Gomez: In 2017, we acquired a 25% interest in First Hydro, the leading UK hydro business, providing approximately 75% of the pump storage capacity and 45% of the hydro capacity in the market.

Ignacio Gomez: We recognize an opportunity to use our decades of experience in owning and operating hydro assets to implement several value-generative initiatives.

Ignacio Gómez-Acebo: Upon acquisition, we helped execute and de-risk an asset refurbishment program that extended the life of the pumped storage facilities by over 40 years. We optimized the capital structure by refinancing the long-term debt of the business and enhanced the commercial strategy. We recognize the favorable market dynamics and increasing importance of energy storage and scale dispatchable clean power, which led us to an increase in revenues and record earnings under our ownership. In September, we reached an agreement to sell our interest in First Hydro for $350 million, generating over 3.5 times our invested capital since acquisition, and are delivering the buyer a highly strategic asset that will continue to provide critical grid services for decades to come.

Ignacio Gomez: Upon acquisition, we helped execute and de-risk an acid refurbishment program that extended the life of the pump storage facilities by over 40 years.

Ignacio Gomez: We optimize the capital structure by refinancing the long-term debt of the business and enhance the commercial strategy.

Ignacio Gomez: We recognize the federal market dynamics and increasing importance of energy storage and scale dispatchable clean power, which led us to increasing revenues and record earnings under our ownership.

Ignacio Gomez: In September, we reached an agreement to sell our interest in Tres Hydro for $350 million.

Ignacio Gomez: generating over three and a half times our invested capital since acquisition and are delivering the buyer a highly strategic asset that will continue to provide critical grid services for decades to come.

Ignacio Gómez-Acebo: During the quarter, we also agreed to sell a 50% interest in our separate fleet wind portfolio, where we executed one of the largest wind repowering projects globally, increasing generation by approximately 25% and extending the asset's useful life by approximately 10 years. We completed this repowering project on time and on budget during the pandemic, when the sector was being impacted by supply chain challenges, a testament to our procurement and development teams. On closing, we will generate almost 2x our invested capital on the portion sold for $415 million, while still retaining a 50% interest and operating the asset, where we are completing other value-enhancing initiatives.

Ignacio Gomez: During the quarter, we also agreed to sell a 50% interest in our separate flood wind portfolio, where we executed one of the largest wind repowering projects globally, increasing generation by approximately 25% and extending the asset's useful life by approximately 10 years.

Ignacio Gomez: We completed this reporing project on time and on budget during the pandemic, when the sector was being impacted by supply chain challenges, a testament to our procurement and development teams.

Ignacio Gomez: On closing, we generate almost two times our invested capital on the portion sold for $415 million, while still retaining a 50% interest and operating the asset, where we are completing other value enhancing initiatives.

Ignacio Gómez-Acebo: And finally, today, we're one of the leading renewable energy operators and developers in India, having prudently built a regional presence since entering the market in 2017 off the back of the Brookfield business in the country. This week, we signed an agreement to complete our first full-cycle investment in the country by selling a 1,600MW portfolio of operating and under-construction wind and solar assets to a large renewable player at our target returns. We expect to close the transaction in parts in Q1 2025 and 2026, subject to customary closing conditions. We were able to add value to this portfolio through the optimization of the capital structure, operational and working capital improvements, and through organic development. With that, I will pass it on to Wyatt to discuss our operating results and financial position.

Ignacio Gomez: And finally, today we're one of the leading renewable energy operators and developers in India, having currently built a regional presence in centering the market in 2017 off the back of the broader Brookfield business in the country.

Ignacio Gomez: This week, we signed an agreement to complete our first full-cycle investment in the country by selling a 1,600-megawatt portfolio operating and under construction wind and solar assets to a large renewable player at our target returns.

Ignacio Gomez: We expect to close the transaction in parts in the first quarter of 2025 and 2026, subject to customary closing conditions.

Ignacio Gomez: We were able to add value to this portfolio through the optimization of the capital structure, operational and working capital improvements, and through organic development.

Speaker Change: With that, I will pass it on to Wyatt to discuss our operating results and financial position.

Wyatt Hartley: Thanks, Ignacio, and good morning, everyone. Our operating business had a strong quarter, delivering record funds from operations, generating $278 million in the quarter, or $0.42 per unit, up 11% year-over-year. With an increasingly diversified portfolio of operating assets, limited offtaker concentration risk, and a strong contract profile, our cash flows are highly resilient. These results and our outlook for the remainder of the year have us positioned well to deliver on 10%+ FFO per unit growth. Our hydroelectric segment benefited during the quarter from solid generation, and we continue to see strong demand for these assets. This quarter, we successfully executed 2 contracts with US utilities at an average price of almost $90 per megawatt hour for an average duration of almost 15 years.

Thanks, Ignacio, and good morning, everyone.

Wyatt: Our operating business had a strong quarter, delivering record funds from operations, generating $278 million in the quarter, or $0.42 per unit, up 11% year-over-year.

Wyatt: With an increasingly diversified portfolio of operating assets, limited offtaker concentration risk, and a strong contract profile, our cash flows are highly resilient.

Wyatt: These results and our outlook for the remainder of the year have us positioned well to deliver on 10% plus FFO per unit growth.

Wyatt: Our hydroelectric segment benefited during the quarter from solid generation and we continue to see strong demand for these assets.

Wyatt: This quarter, we successfully executed two contracts with U.S. utilities at an average price of almost $90 per megawatt hour for an average duration of almost 15 years.

Wyatt Hartley: The favorable contracts will result in a significant uplift in revenue per year and are expected to result in up financing proceeds of up to $500 million, which, when redeployed at our target returns, is expected to generate meaningful incremental annual FFO for the business. With an additional 6,000 gigawatt hours of generation available for recontracting over the next 5 years, and an increasingly constructive pricing environment for our hydro portfolio, we have significant capacity across our fleet to execute on similar contracts that we expect to contribute additional FFO and generate a highly accretive funding source for our growth. Our wind, solar, distributed energy, and sustainable solution segments generated results benefiting from our acquisitions and development activities, as well as continued tailwinds at our nuclear services business, Westinghouse.

Wyatt: The favorable contracts will result in a significant uplift in revenue per year and are expected to result in up financing proceeds of up to $500 million, which when redeployed at our target returns, is expected to generate meaningful incremental annual FFO for the business.

Wyatt: With an additional 6,000 gigawatt hours of generation available for recontracting over the next five years,

Wyatt: and an increasingly constructive pricing environment for our hydro portfolio, we have significant capacity across our fleet to execute on similar contracts that we expect to contribute additional FFO and generate a highly accretive funding source for our growth.

Wyatt: Our Wind, Solar, Distributed Energy and Sustainable Solutions segments generated results, benefiting from our acquisitions and development activities, as well as continued tailwinds at our nuclear services business, Westinghouse.

Wyatt Hartley: Our balance sheet continues to strengthen as we ended the quarter with $4.6 billion of available liquidity, and our funding model is working well. As Ignacio noted, we were successful in executing on our asset recycling initiatives this quarter, generating record proceeds so far this year, and have a positive outlook to continue to rotate capital and generate strong returns going forward. In addition, we expect to execute a total of $30 billion in financing this year, generating $700 million in total up-financings, positioning us well to fund our growth activities going forward.

Wyatt: Our balance sheet continues to strengthen as we ended the quarter with $4.6 billion of available liquidity and our funding model is working well.

Speaker Change: As Ignacio noted, we were successful in executing on our asset recycling initiatives this quarter, generating record proceeds so far this year and have a positive outlook to continue to rotate capital and generate strong returns going forward.

Speaker Change: In addition, we expect to execute a total of $30 billion in financing this year, generating $700 million in total up-financing, positioning us well to fund our growth activities going forward.

Connor Teskey: ... In closing, we remain focused on delivering 12 to 15% long-term total return for our investors by prudently deploying capital and executing on our operating initiatives. On behalf of the board and management, we thank all of our unit holders and shareholders for the ongoing support. We are excited about Brookfield Renewable's future, and look forward to updating you on our progress throughout the remainder of the year. That concludes our 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.

Speaker Change: In closing, we remain focused on delivering 12 to 15% long-term total return for our investors by prudently deploying capital and executing on our operating initiatives.

Speaker Change: On behalf of the board and management, we thank all of our unit holders and shareholders for the ongoing support. We are excited about Brookfield Renewables' future and look forward to updating you on our progress throughout the remainder of the year.

Speaker Change: That concludes our 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.

Operator: Certainly. Our first question for today comes from the line of Sean Steuart from TD Securities. Your question, please.

Speaker Change: Certainly, and our first question for today comes from the line of Sean Stewart from TD Securities. Your question, please. Thank you.

Sean Steuart [Managing Director, Equity Research: Thanks. Good morning, everyone. I wanna start with the US. It's a big part of your advanced organic pipeline. And Connor, you referenced comfort that growth will remain a growth focus for Brookfield Renewable. I'm wondering, though, if you can give us more detailed thoughts on the US return profile and growth potential of tax credits are changed or repealed in the events that the Republicans take the House and Trump can advance that agenda?

Sean Steuart: Thanks. Good morning, everyone. I wanna start with the US. It's a big part of your advanced organic pipeline. And Connor, you referenced comfort that growth will remain a growth focus for Brookfield Renewable. I'm wondering, though, if you can give us more detailed thoughts on the US return profile and growth potential of tax credits are changed or repealed in the events that the Republicans take the House and Trump can advance that agenda?

Speaker Change: Good morning, everyone. I want to start with the U.S. It's a big part of your advanced organic pipeline. Connor, you referenced comfort that it will remain a growth focus for Brookfield Renewable. I'm wondering, though, if you can give us

Speaker Change: More detailed thoughts on the U.S. return profile and growth potential of tax credits are changed or appealed in the events that the Republicans take the House.

Trump can advance that agenda.

Connor Teskey: Great. Good morning, Sean. Certainly, no doubt, a big topic this week. Maybe let's come at this two different ways. We'll come at it from the macro, and then we'll come at it from the perspective of our business in particular. From the macro perspective, we would suggest that the government support and regulatory processes and procedures that most commonly touch our business generally have very strong bipartisan support. And yes, while a new government may tweak or make changes to that, our expectation is it would not be material. However, what's probably more important from the macro side is two things.

Speaker Change: Great, good morning Sean. Certainly, no doubt a big topic this week. Maybe let's come at this two different ways. We'll come at it from the macro and then we'll come at it from the perspective of our business in particular.

So, from the macro perspective,

We would suggest that the

Speaker Change: Government support and regulatory processes and procedures that most commonly touch our business.

Speaker Change: generally have very strong bipartisan support. And yes, while a new government may tweak or make changes to that, our expectation is it would not be material. However, what's probably more important from the macro side is two things. One...

Connor Teskey: Anytime a new administration comes in, and this one we expect to be no different, we expect to see a period of tremendous fiscal support to drive industry, manufacturing, and data centers in the United States, and all those things are gonna need incremental power. And that's going to be very beneficial for renewables, that's gonna be beneficial for gas, that's gonna be beneficial for nuclear. Further, a Republican administration with a focus on domestic growth, should no doubt provide longer-term tailwinds that will increase power demand, which again, renewables, as the lowest cost provider of that power, should be well-positioned to benefit from that incremental demand. Now, maybe then switching gears to talk about our business. For years now, we've been growing and diversifying our business.

Speaker Change: Any time a new administration comes in, and this one we expect to be no different,

Speaker Change: We expect to see a period of tremendous fiscal support to drive industry and manufacturing and data centers in the United States. And all those things are going to need incremental power.

Speaker Change: And that's going to be very beneficial for renewables, that's going to be beneficial for gas, that's going to be beneficial for nuclear.

further.

a Republican administration with a focus on domestic growth.

should no doubt provide

Speaker Change: longer-term tailwinds that will increase power demand, which again, renewables as the lowest cost provider of that power should be well positioned to benefit from that incremental demand.

Now, maybe then switching gears to talk about our business.

Speaker Change: For years now, we've been growing and diversifying our business. We're proud that we have one of, if not the most, globally diversified renewables business across both geographies and technologies.

Connor Teskey: We're proud that we have one of, if not, the most globally diversified renewables business across both geographies and technologies. But in particular, for years, we've been positioning our business to rely on corporate demand and low-cost energy production, not government subsidy, to ensure that in periods of regulatory uncertainty, our business will continue to perform. Today, our business is highly focused in both the lowest-cost technologies and the regions that are seeing the greatest growth in electricity demand, which ensures that we are largely insulated from any potential regulatory or subsidy changes. And therefore, we don't expect the recent election results to change our business model, our growth outlook, or the return profile we will seek to achieve when deploying capital into growth.

Speaker Change: But in particular, for years, we've been positioning our business to rely on corporate demand and low-cost energy production, not government subsidy, to ensure that in periods of regulatory uncertainty, our business will continue to perform.

Today.

Speaker Change: Our business is highly focused in both the lowest cost technologies.

Speaker Change: and the regions that are seeing the greatest growth in electricity demand.

which ensures that we are largely insulated from.

Speaker Change: any potential regulatory or subsidy changes, and therefore we don't expect the recent election results to change our business model, our growth outlook.

Speaker Change: or the return profile we will seek to achieve when deploying capital into growth.

Connor Teskey: Maybe just to finish by putting it bluntly, we are the low-cost producer of a critical commodity that the world, particularly the United States, is going to need more of. And therefore, we feel that our position is very strong, particularly, as we move forward and see more growth in the United States.

Maybe just to finish by putting it bluntly.

We are the low-cost producer.

Speaker Change: of a critical commodity that the world, particularly the United States,

Speaker Change: is going to need more of, and therefore we feel that our position is very strong, particularly as we move forward and see more growth in the United States.

Sean Steuart [Managing Director, Equity Research: That's great detail. Thanks for that. Second question relates to offshore wind. It looks like the Ørsted transaction is, I, I would say, more of a focused financing deal with a fixed horizon for you guys, more so that, as opposed to a strategic push into the asset class. Can you, can you speak to larger growth aspirations in offshore wind, having referenced the, the risk profile now fitting into parameters that work for you guys?

Sean Steuart: That's great detail. Thanks for that. Second question relates to offshore wind. It looks like the Ørsted transaction is, I, I would say, more of a focused financing deal with a fixed horizon for you guys, more so that, as opposed to a strategic push into the asset class. Can you, can you speak to larger growth aspirations in offshore wind, having referenced the, the risk profile now fitting into parameters that work for you guys?

Speaker Change: That's great detail. Thanks for that. Second question relates to offshore wind. It looks like the Orsted transaction is, I would say, more of a focused financing deal with

Speaker Change: a fixed horizon for you guys, more so that as opposed to a strategic push into the asset class. Can you speak to larger growth aspirations in offshore wind, having referenced the risk profile now fitting into parameters that work for you guys?

Connor Teskey: For sure. Maybe just to put some context on the Ørsted transaction. First and foremost, we are thrilled to be partnered with Ørsted, who are the global leader in offshore wind. And we are thrilled to be partnered with the global leader in perhaps what is one of their highest quality, largest, and most established offshore wind platforms around the world. And the quality of the assets and the quality of the partner here is really what attracted us to the investment. In terms of the broader asset class, we're very bullish on offshore wind. We think it is a large, fast-growing asset class, it's critical in many markets around the world, and it needs significant amounts of capital.

For sure.

Speaker Change: Maybe just to put some context on the Orsted transaction, first and foremost,

Speaker Change: We are thrilled to be partnered with Orsted, who are the global leader in offshore wind.

Speaker Change: And we are thrilled to be partnered with the global leader and perhaps what is one of their highest quality, largest and most established offshore wind platforms around the world.

Speaker Change: The quality of the assets and the quality of the partner here is really what attracted us to the investment.

In terms of the broader asset class,

We're very bullish on offshore wind.

Speaker Change: We think it is a large, fast-growing asset class, it's critical in many markets around the world, and it needs significant amounts of capital. And perhaps some of the headwinds in the asset class over the last two or three years

Connor Teskey: Perhaps some of the headwinds in the asset class over the last 2 or 3 years position us as a capital provider who can support some businesses that maybe have less access to capital today than they had in the past. We will review opportunities in offshore wind the same way we review opportunities in any asset classes, judging the risk and return. But what I would say is, we see far more attractive opportunities in that asset class today than probably at any point in the last 5 or 6 years. Therefore, we hope there will be more to come.

Speaker Change: position us as a capital provider who can support some businesses that maybe have less access to capital today than they have in the past.

Speaker Change: We will review opportunities in offshore wind the same way we review opportunities in any asset classes.

Speaker Change: judging the risk and return, but what I would say is we see far more attractive opportunities in that asset class today than probably at any point in the last five or six years, and therefore we hope there will be more to come.

Nelson Ng: Thanks for that, Connor. That's all I have for now.

Thanks for that, Connor. That's all I have for now.

Operator: Thank you. And our next question comes from the line of Robert Hope from Scotiabank. Your question, please.

Speaker Change: Thank you. And our next question comes from the line of Robert Hope from Scotiabank. Your question, please.

Robert Hope [Managing Director, Equity Research: Good morning, everyone. I want to circle back on the US and maybe dive a little bit deeper into your comments about being the low-cost producer. You know, we understand that, you know, the tax benefits often do pass through to customers, but can you maybe dive in a little deeper on what asset classes could be more impacted by changes to tax policy there? And you know, could that shift more towards wind versus solar, or which asset class do you think has the best cost outlook regardless of subsidies?

Robert Hope: Good morning, everyone. I want to circle back on the US and maybe dive a little bit deeper into your comments about being the low-cost producer. You know, we understand that, you know, the tax benefits often do pass through to customers, but can you maybe dive in a little deeper on what asset classes could be more impacted by changes to tax policy there? And you know, could that shift more towards wind versus solar, or which asset class do you think has the best cost outlook regardless of subsidies?

Robert Hope: Good morning, everyone. I want to circle back on the US and maybe dive a little bit deeper into your comments about being the low-cost producer. We understand that the tax benefits often do pass through to customers,

Robert Hope: Can you maybe dive in a little deeper on what asset classes could be more impacted by changes to tax policy there, and could that shift more towards wind versus solar, or which asset class do you think has the

the best cost outlook regardless of subsidies.

Connor Teskey: Thanks, Rob. You know, in terms of which asset classes are most susceptible to change, we would purely be speculating at this point. Obviously, the Republican administration has made some comments about certain asset classes. What we would say in general, however, and how we view the business is, if you are focused in asset classes like onshore wind and solar, which are not the cheapest cost of electricity production from renewables, but the cheapest cost of electricity production, bar none. Today, if those asset classes benefit from tax credits or subsidies, all that allows us to do is simply offer a cheaper PPA to the end customer.

Thank you.

Thanks, Rob.

You know, in terms of which asset classes...

are most susceptible to change. We would purely be speculating.

Robert Hope: At this point, obviously the Republican administration has made some comments about certain asset classes. What we would say in general, however, and how we view the business is...

Robert Hope: If you are focused in asset classes like onshore wind and solar, which are not the cheapest

cost.

Robert Hope: of electricity production from renewables, but the cheapest cost of electricity production bar none. Today, if those asset classes benefit from tax credits or subsidies, all that allows us to do is simply offer a cheaper PPA to the end customer.

Connor Teskey: In the event that any of those tax subsidies are rolled back or reduced, we will simply flow the lack of those subsidies through a higher PPA price to preserve our returns, our project returns. The key point there is because onshore wind and solar are so much cheaper than the alternatives, there is room to do that and still be the cheapest form of bulk electricity production. That is why we feel the vast majority of our business, where we do almost entirely all of our renewable power development in the United States, is so insulated from any changes. Clearly, the sectors that potentially could be more exposed are higher-cost sectors or sectors that are reliant on government subsidy or government support to either make them economic or to support their go-forward growth.

Robert Hope: In the event that any of those tax subsidies are rolled back or reduced,

Robert Hope: We will simply flow the lack of those subsidies through a higher PPA price.

to preserve our returns, our project returns.

Robert Hope: The key point there is, because onshore wind and solar are so much cheaper than the alternatives,

Robert Hope: there is room to do that and still be the cheapest form of bulk electricity production. That is why we feel the vast, vast majority of our business, where we do almost entirely all of our renewable power development in the United States, is so insulated from any changes.

Clearly, the sectors that...

potentially could be more exposed.

Robert Hope: are higher cost sectors, are sectors that are reliant on government subsidy or government support to either make them economic or to support their go-forward growth. And there are a few of those sectors.

Connor Teskey: And there are a few of those sectors. We are just fortunate that it's never been part of our business focus to invest in those, and that's why we're relatively calm about any change in government today.

We are just fortunate that it's never been.

Robert Hope: part of our business focus to invest in those, and that's why we're relatively calm about any change in government today.

Robert Hope [Managing Director, Equity Research: Appreciate that color. And then maybe pivoting over to the Infinium investment. And more broadly, how are you looking at, we'll call it, non-renewable power investments, the potential to be a little bit more on the bleeding edge? And I guess overall, you know, with such a large renewable backlog, you know, how do these kind of investments fit in the framework?

Robert Hope: Appreciate that color. And then maybe pivoting over to the Infinium investment. And more broadly, how are you looking at, we'll call it, non-renewable power investments, the potential to be a little bit more on the bleeding edge? And I guess overall, you know, with such a large renewable backlog, you know, how do these kind of investments fit in the framework?

Thank you.

Speaker Change: Appreciate that, Keller. And then maybe pivoting over to the Infiniium investment, and more broadly, how are you looking at, we'll call it non-renewable power investments?

Speaker Change: the potential to be a little bit more on the bleeding edge. And I guess overall, you know, with such a large renewable backlog, you know, how do these kind of investments fit in the, in the framework?

Connor Teskey: Sure. Our business today is almost entirely renewables, and that continues to be the bulk of our growth today and our expected growth going forward. What we would say, however, is while we've, you know, dramatically enhanced the growth of our renewables business over the last several years, we've been selective in investing initially into a number of asset classes that we think will be critical to clean energy grids of the future. And the most notable ones there that we've invested in are nuclear, batteries, and biofuels. When it comes to assessing any investment into new asset classes, I would say our approach is pretty robust. And we have the luxury of investing, you know, billions, if not tens of billions of dollars into renewables growth each year.

Sure, our business today is

Speaker Change: almost entirely renewables, and that continues to be the bulk of our growth today and our expected growth going forward.

What we would say, however, is while we've

Speaker Change: you know, dramatically enhance the growth of our renewables business over the last several years. We've been selective in investing initially into a number of asset classes that we think will be critical to clean energy grids of the future.

Speaker Change: And the most notable ones there that we've invested in are nuclear, batteries, and biofuels.

Speaker Change: When it comes to assessing any investment into new asset classes, I would say our approach is pretty robust and we have the luxury of investing

Speaker Change: you know, billions, if not tens of billions of dollars into renewables growth each year. And that gives us a very strong benchmark or threshold against which to adjust the risk-adjusted returns of any other asset class or any other investment we make.

Connor Teskey: And that gives us a very strong benchmark or threshold against which to adjust the risk-adjusted returns of any other asset class or any other investment we make. And if we're investing in something that has either slightly higher construction or development risk, slightly higher revenue construct risk, you know, is a less mature technology with a less mature supply chain, we, of course, need to be significantly rewarded for taking on those exposures relative to what we could achieve by just investing further in wind and solar. And take the example of Infinium here. Infinium is a sustainable aviation fuel, is a new asset class for us. But really what we're investing here is the build-out of a facility that is not the first of its kind. It's a proven technology. Similar facilities have been built out before.

Speaker Change: And if we're investing in something that has either slightly higher construction or development risk, slightly higher revenue construct risk.

Speaker Change: You know, it is a less mature technology with a less mature supply chain. We of course need to be significantly rewarded for taking on those exposures relative to what we could achieve by just investing further in wind and solar.

Speaker Change: And take the example of Infinium here. Infinium is a sustainable aviation fuel is a new asset class for us.

Speaker Change: But really what we're investing here is the build out of a facility

Speaker Change: That is not the first of its kind. It's a proven technology. Similar facilities have been built out before, but exactly similar to our wind and solar business, we are building a facility that is back-stocked by long-term take-or-pay contracts.

Connor Teskey: But exactly similar to our wind and solar business, we are building a facility that is backstopped by long-term take-or-pay contracts with corporate, high-quality corporate off-takers. And we saw a lot of similarities to producing this sustainable aviation fuel, similar to, to how we do green power. And that's what gets us excited and gives us comfort about an investment like Infinium.

Speaker Change: with high-quality corporate off-takers, and we saw a lot of similarities to producing this sustainable aviation fuel similar to how we do green power, and that's what gets us excited and gives us comfort about an investment like Infiniium.

Rupert Merer: Great. Thank you for the color.

Great. Thank you for the call.

Operator: Thank you. And our next question comes from the line of Nelson Ng from RBC Capital Markets. Your question, please.

Speaker Change: Thank you. And our next question comes from the line of Nelson Ng from RBC Capital Markets. Your question, please.

Nelson Ng: Great. Thanks. Hey, Connor, you've talked a lot about the US sector, and I have one more question for you in terms of the US elections. So, like, obviously, with the elections outcome, we saw a big drop in the share prices of many companies, even, even companies that don't have any US exposure. Do you generally see, like, more opportunities to deploy capital now with publicly listed names or even in projects where sponsors may be pulling out? Like, do you have almost like a shopping list of companies or projects that are potentially significantly undervalued now?

Nelson Ng: Thanks. Hey Connor, you've talked a lot about the U.S. sector and I have one more question for you in terms of the U.S. elections.

Nelson Ng: So, obviously, with the elections outcome, we saw a big drop in share prices of many companies, even companies that don't have any U.S. exposure.

Nelson Ng: Do you generally see more opportunities to deploy capital now with publicly listed names or even in projects where...

Nelson Ng: responses may be pulling out. Do you have a shopping list of companies or projects that are potentially significantly undervalued now?

Connor Teskey: Perhaps the way to answer that question is very simply, our investment pipeline remains incredibly robust. For years now, our ability to deploy scale capital has been predicated on, one, our ability to do large-scale transactions, two, our operating capabilities, particularly around power marketing, and three, our access to capital. Perhaps tying that back to your question, the variability and volatility in share prices following the election results, all that will do is reduce access to capital for those that are reliant on the public markets. I wouldn't say that's a new trend for us, but simply plays into a trend we've been seeing for a while. As a result, we're very encouraged about the investment pipeline we have today.

Speaker Change: Perhaps the way to answer that question is very simply, our investment pipeline remains incredibly robust.

Speaker Change: For years now, our ability to deploy scale capital has been predicated on, one, our ability to do large-scale transactions.

to our operating capabilities, particularly around power marketing.

And three, our access to capital, and perhaps.

Tying that back to your question,

Um, the, the...

variability and volatility in share prices following the election results.

Speaker Change: All that will do is reduce access to capital for those that are reliant on the public markets. I wouldn't say that's a new trend for us, but simply plays into a trend we've been seeing for a while. As a result, we're very encouraged about the investment pipeline we have today. As mentioned at our Investor Day a couple months ago, we continue to expect to deploy.

Connor Teskey: As mentioned at our Investor Day a couple months ago, we continue to expect to deploy increasing amounts of capital into growth in the future, and that's very simply as a result of the demand we continue to see for our product and how our business model is well-positioned to execute on that. I really think the volatility in the stock market after results just plays to that theme of less access to capital for some market participants.

Speaker Change: increasing amounts of capital into growth in the future and that's very simply as a result of the the demand we continue to see for our product and how our business model is well positioned to execute on that. I really think it just

Speaker Change: The volatility in the stock market after results just plays to that theme of less access to capital for some market participants.

Nelson Ng: Great color. Switching gears a bit, on the hydro side, in terms of the $90 per megawatt hour, and you mentioned that, I think it's contracted to US utilities. Like, going forward, when you recontract additional facilities in the US, do you expect or are you seeing more direct demand from, let's say, big tech or data centers? Or do you expect recontracting to continue to be with US utilities?

Thank you.

Speaker Change: Great color and switching gears a bit on the hydro side in terms of the $90 per megawatt hour

Speaker Change: And you mentioned that I think it's contracted to U.S. utilities.

Going forward when you re-contract additional facilities in the U.S.,

Speaker Change: Do you expect or are you seeing more direct demand from, let's say, big tech or data centers or do you expect recontracting to continue to be with U.S. utilities?

Connor Teskey: It's a great question. The point we would highlight here is, power demand is going up very, very significantly. Whether we sell that directly to an end customer, or we sell it to a utility who then passes it to an end customer, or we sell it to an end customer, but through a virtual PPA that uses the electricity grid, all of this is driven by the same theme that there is more end customer demand. And that shows up in our prices and the demand for our power, particularly the clean, dispatchable baseload power that can come from hydro or nuclear. That comes through in the contract, whether it's a direct, a virtual PPA or through a utility.

Thank you.

It's a great question.

The point we would highlight here is

Power demand is going up very, very significantly.

whether we sell that directly to an end customer

Speaker Change: or we sell it to a utility who then passes it to an end customer.

Speaker Change: or we sell it to an end customer, but through a virtual PPA that uses the electricity grid. All of this is driven by the same theme, that there is more end customer demand.

Speaker Change: And that shows up in our prices and the demand for our power, particularly the clean, dispatchable baseload power that can come from hydro or nuclear.

Speaker Change: That comes through in the contract, whether it's a direct, a virtual PPA, or through a utility.

Connor Teskey: Given what we're seeing in the market, I'd say we're going to see a mix of all those things. But the important takeaway from our perspective is, regardless of how that power gets to the end consumer, the overwhelming things is the increase in demand, the increase in volume, and how that is driving a higher price in the contracts we are seeing.

Speaker Change: Given what we're seeing in the market, I'd say we're going to see a mix of all those things. But the important takeaway from our perspective is, regardless of how that power gets to the end consumer,

Speaker Change: The overwhelming things is the increase in demand, the increase in volume, and how that is driving a higher price in the contracts we are seeing.

Nelson Ng: Great. Thanks, Connor. I'll leave it there.

Great. Thanks, Connor. I'll leave it there.

Operator: Thank you. As a reminder, ladies and gentlemen, if you do have a question at this time, please press star one one on your telephone. Our next question comes from the line of Rupert Merer from National Bank. Your question, please.

Thank you.

Speaker Change: And as a reminder, ladies and gentlemen, if you do have a question at this time, please press star 11 on your telephone. Our next question comes from the line of Rupert Muir from National Bank. Your question, please.

Rupert Merer: Hi. Good morning, everyone. Connor, you highlight the bifurcation and valuation between mature assets and more complex development assets. We're also seeing some weakness in the stock market and the volatility that you discussed, and we do seem to be seeing a wave of privatization. So I was wondering if you could quantify the difference in return expectations that you see with this bifurcation between mature and immature and between public valuations and private valuations.

Hi. Good morning, everyone.

Speaker Change: Conor, you highlight the bifurcation in valuation between mature assets and more complex development assets. We're also seeing some weakness in the stock market, the volatility.

Speaker Change: that you discussed. And we do seem to be seeing a wave of privatization. So I was wondering if you could quantify the difference in return expectations that you see with this bifurcation between mature and immature and between public valuations and private valuations.

Connor Teskey: It's a great question. It's obviously going to differ by market, by asset class, by size of transaction. But we'll try and be as constructive as we can. And we'll share a couple data points with you. Within some of our development platforms, and we have a number of scale development platforms in core markets around the world. Probably the easiest place to see the difference between development returns and the market price for contracted operating assets is when you look at the development margin within an individual developer. And I would say, in general, our best developers around the world are seeing developer margins north of 400 or 450 basis points.

Okay.

Speaker Change: It's a great question, and it's obviously going to differ by market, by asset class, by size of transaction, but we'll try and be as constructive as we can, and we'll share a couple data points with you.

Speaker Change: Within some of our development platforms and we have a number of scale development platforms and core markets around the world

Thank you.

Speaker Change: Probably the easiest place to see the difference between development returns

Speaker Change: And the market price for contracted operating assets is, when you look at the development margin,

within an individual developer.

Speaker Change: And I would say, in general, our best developers around the world are seeing developer margins north of 400 or 450 basis points, and we have some developers around the world that are consistently delivering development margins in the 500 to 600 basis point range.

Connor Teskey: And we have some developers around the world that are consistently delivering development margins in the 500 to 600 basis point range. And depending on which asset class and which geography that might be, that might mean you're developing at, call it 13% to 15%, hold to maturity returns and selling down at 8 to 10, or in other markets, that might mean you're developing at, you know, 15 to 17 and selling down at 10 or 11. So, I would say that's probably the delta we're seeing in our most high-performing and most attractive markets.

Speaker Change: And depending on which asset class and which geography that might be, that might mean you're developing at, call it, 13 to 15% hold to maturity returns.

Speaker Change: and selling down at 8 to 10, or in other markets that might mean you're developing at 15 to 17 and selling down at 10 or 11. So I would say that's probably the delta we're seeing in our most high-performing and most attractive markets.

Rupert Merer: Great. Well, thank you for the color. And Wyatt, you've highlighted the the contracts you signed recently, some attractive prices, $90 a MWh, I think you suggested. And if we look at the growth in demand in the US for power for data centers, it does seem like there's more demand than supply today. Supply is going to have a hard time keeping up. How price sensitive do you think the market is? How high can power prices go before your buyers, you think, will hit the pause button?

Thank you.

Speaker Change: Great, well thank you for the color. And Wyatt, you've highlighted the contracts you signed recently, some attractive prices, $90 a megawatt hour, I think you suggested. And if we look at the growth and demand in the U.S. for power for data centers, it does seem like

Speaker Change: There's more demand than supply today. Supply is going to have a hard time keeping up. How price sensitive do you think the market is? How high can power prices go before your buyers, you think, will hit the pause button?

Wyatt Hartley: Yeah, look, Rupert, what I would say is that I think from our perspective, you know, we thought that showing the 90 or sharing the $90 per megawatt-hour number was very, very constructive in the sense that, you know, there have been a number of transactions recently around the nuclear space that were also in and around those numbers. You know, not all of it was fully publicly disclosed, but I think the market is settled around it being around those numbers. And I think from our perspective, what we really want to highlight is that, for a dispatchable or base load clean generation, the demand for our product is, you know, as strong as ever. And it's, it...

Yeah, look, Rupert.

Speaker Change: What I would say is that I think from our perspective, you know, we thought that the showing...

Speaker Change: sharing the $90 per megawatt hour number was very constructive in the sense that there have been a number of transactions recently around the nuclear space that

Speaker Change: were also in and around those numbers. Not all of it was fully publicly disclosed, but I think the market is.

settle around it being around those numbers and I think

Speaker Change: From our perspective, what we really want to highlight is that

for a dispatchable or baseload clean generation.

The demand for our product is as strong as ever.

Wyatt Hartley: You can see it across multiple different markets with multiple different buyers. And that is obviously a very constructive thing. In terms of how high the price can go, look, we don't have a crystal ball that's any better than anyone else. But I think from our perspective, we are seeing, especially for the hydros, but on a broader basis for all of our assets, that there is a very constructive market out there, and that's what we're capitalizing on.

Speaker Change: You can see it across multiple different markets with multiple different buyers, and that is obviously a very constructive thing. In terms of how high the price can go, look, we don't have a crystal ball that's any better than anyone else, but I think from our perspective we are seeing, especially for the hydros, but on a broader basis for all of our assets, that there is a very constructive market out there, and that's what we're capitalizing on.

Rupert Merer: Great. I'll, I'll leave it there. Thanks for the color.

Great. I'll leave it there. Thanks, Nikola.

Operator: Thank you. And our next question comes from the line of Mark Jarvi from CIBC. Your question, please.

Speaker Change: Thank you. And our next question comes from the line of Mark Jarvie from CIBC. Your question, please.

Mark Jarvi [Managing Director, Equity Research: Yeah, good morning, everyone. Maybe coming back to the US, election impacts and given there's some uncertainty, what do you think happens with M&A in the US market and being able valuations on development pipeline? Is there a chance that any of your ongoing asset sales in the US take a pause? What do you think you have to see for clarity before the market maybe opens up again?

Mark Jarvi: Yeah, good morning, everyone. Maybe coming back to the US, election impacts and given there's some uncertainty, what do you think happens with M&A in the US market and being able valuations on development pipeline? Is there a chance that any of your ongoing asset sales in the US take a pause? What do you think you have to see for clarity before the market maybe opens up again?

Mark Jarvie: Yeah, good morning everyone. Maybe just going back to the U.S. election impacts and...

Mark Jarvie: Given there's some uncertainty, what do you think happens on M&A in the U.S. market and female valuations on development pipeline? Is there a chance that any of your ongoing asset sales in the U.S. take a pause? What do you think you have to see for clarity before the market opens up again?

Thank you.

Connor Teskey: Hi, Mark. If they are, we don't expect it to be material. The nature of the, just speaking, sorry to be redundant, but going back to that bifurcation that we're seeing in the market, the things that we are selling are heavily contracted, de-risked, you know, high quality, cash generative, operating. These things are pretty embedded cash flow streams at this point that aren't reliant on government subsidy or support programs. So, yeah, I think everyone's probably going to digest the news of this week, but we don't expect it to have a material impact on the types of assets that we are selling in the current market.

Pretty good.

Hi, Mark.

Speaker Change: If they are, we don't expect it to be material. The nature of the, just speaking, sorry to be redundant, but going back to that bifurcation that we're seeing in the market, the things that we are selling are heavily contracted, de-risked.

high-quality, cash-generative, operating.

Speaker Change: These things are pretty embedded cash flow streams at this point that aren't reliant on government subsidy or support programs. So yeah, I think everyone's probably going to digest the news of this week, but we don't expect it to have a material impact on the types of assets.

Speaker Change: that we are selling in the current market. Where there could be opportunity, it really ties back

Connor Teskey: Where there could be opportunity, it really ties back to the question that was asked previously: does the uncertainty of a new administration and some of the positions they might take in the future reduce access to capital for those that are reliant on it, particularly in the public markets? And that could actually lead to an increase in activity for us on the investment side, but we don't really foresee any material change in what's going to happen on our asset sales side.

To the question that was asked previously is

Speaker Change: Does the uncertainty of a new administration and some of the positions they might take in the future...

Speaker Change: reduce access to capital for those that are reliant on it, particularly in the public markets. And that could actually lead to an increase in activity for us on the investment side, but we don't really foresee any material change in what's going to happen on our asset sales side.

Mark Jarvi [Managing Director, Equity Research: Okay. Just coming back to the US hydro assets, some buyers, large tech buyers, are really focused on additionality. I know Microsoft deals kind of carried that way. Are you seeing any other change in tone around other large tech buyers in terms of additionality constraints? Or, you know, do you think they are willing to step to line to contract through US Hydro to pay that premium?

Mark Jarvi: Okay. Just coming back to the US hydro assets, some buyers, large tech buyers, are really focused on additionality. I know Microsoft deals kind of carried that way. Are you seeing any other change in tone around other large tech buyers in terms of additionality constraints? Or, you know, do you think they are willing to step to line to contract through US Hydro to pay that premium?

Okay

Speaker Change: And just coming back to the U.S. Hydro assets, some buyers, large tech buyers, really focus on additionality, like in the Microsoft field, kind of carried that way. Are you seeing any other change in tone around other large tech buyers in terms of additionality constraints or, you know, do you think they are willing to step to the line to contract with the U.S. Hydros and pay that premium?

Connor Teskey: It's a great question, there's no perfect answer to this. The real key is the broader market needs more power. And yes, certain buyers are more anxious to acquire power from new build. But the broader market just needs as much generation, particularly low-cost generation, as it can get. So it doesn't matter if it's new build or existing power, there is still very significant demand.... What we would say is, given the scale of demand that we are seeing, particularly how it is accelerating going forward, different institutions, and this extends beyond simply the technology companies, different institutions are taking differing views on how much additionality is required.

Thank you.

Speaker Change: It's a great question and there's no perfect answer to this. The real key is the broader market needs more power.

And yes, certain buyers.

or more acts.

to acquire power from new build.

Um...

Speaker Change: But the broader market just needs as much generation, particularly low-cost generation, as it can get. So it doesn't matter if it's new build or existing power, there is still very significant demand.

What we would say is...

Speaker Change: Given the scale of demand that we are seeing, and particularly how it is accelerating going forward,

Thank you.

Speaker Change: Different institutions, and this extends beyond simply the technology companies, different institutions are taking differing views on how much additionality is required.

Connor Teskey: Is it a completely new build, wind and solar, or is investing hundreds of millions of dollars to enhance the capacity, extend the life of a hydro, does that meet the additionality requirements to meet their needs to sign a long-term corporate contract? So I would say it, it's not a one-size-fits-all scenario, but the broader demand is impacting both operating assets and new build assets, the same.

Speaker Change: Is it a completely new build wind and solar, or is investing hundreds of millions of dollars to enhance the capacity, extend the life of a hydro, does that meet the additionality of requirements to meet their needs to sign a long-term agreement?

Speaker Change: corporate contracts. So I would say it's not a one-size-fits-all scenario but the broader demand is impacting both operating assets and new build assets the same.

Mark Jarvi [Managing Director, Equity Research: Okay. And then the last question, just again, around the US market. Do you— on nuclear and just the Westinghouse business, would you say the election outcome is neutral, positive, to be determined at this point? Any initial perspective on that business?

Mark Jarvi: Okay. And then the last question, just again, around the US market. Do you— on nuclear and just the Westinghouse business, would you say the election outcome is neutral, positive, to be determined at this point? Any initial perspective on that business?

Speaker Change: Okay, and this last question is again on the U.S. market. Do you want on nuclear and just a Westinghouse business, would you say the election outcome is neutral, positive, to be determined at this point? Any initial perspective on that business?

Connor Teskey: Yeah, it's a pretty hard positive in our minds. Obviously, this administration has expressed support for nuclear. And maybe it's worth just taking a minute to explain Westinghouse's business and how it can benefit as nuclear grows going forward. Westinghouse really has two components of its business model. It is the largest technology product and service supplier to the nuclear power generation fleet globally, and in particular, the United States. So any growth or activity within the nuclear sector, Westinghouse will benefit, whether it's from services, capacity upgrades, life extensions, and fuel supply. Any growth or activity in the existing fleet is positive for Westinghouse. But then, in addition to that, Westinghouse has not only the leading large-scale nuclear reactor around the world, the AP1000. What might not be appreciated is Westinghouse also has the leading SMR, Small Modular Reactor technology.

Speaker Change: Yeah, it's a pretty hard positive in our minds. Obviously, this administration has expressed support for nuclear.

Speaker Change: Maybe it's worth just taking a minute to explain Westinghouse's business and how it can benefit as nuclear grows going forward.

Speaker Change: Westinghouse really has two components of its business model. It is the largest technology product and service supplier to the nuclear power generation fleet globally and in particular the United States.

Speaker Change: So, any growth or activity within the nuclear sector, Westinghouse will benefit, whether it's from services, capacity upgrades, life extensions, fuel supply, any growth or activity in the existing fleet is positive for Westinghouse.

Speaker Change: But then in addition to that, Westinghouse has not only the leading

Speaker Change: large-scale nuclear reactor around the world, the AP1000, what might not be appreciated is Westinghouse also has the leading SMR, small module reactor technology, and what's unique about Westinghouse's SMR technology is

Connor Teskey: What's unique about Westinghouse's SMR technology is almost every other, if not every other SMR technology around the world, is a first of its kind. First of its kind go through certain struggles in permitting, in design, in construction, et cetera. Westinghouse's SMR technology is the AP300. It is very simply the downsized AP1000. It is the same design, the same technology, the same fuel, and therefore, as not only the large-scale reactor market grows, as well as the SMR reactor grows, Westinghouse is exceedingly well-positioned to be a leading and major participant in any new reactor growth in the United States or more broadly around the world. So, you know, how are we viewing Westinghouse?

Speaker Change: is almost every other, if not every other, SMR technology around the world is a first-of-its-kind. And first-of-its-kinds go through certain struggles in permitting, in design, in construction, etc.

Westinghouse's SMR

Speaker Change: technology is the AP300. It is very simply the downsized AP1000. It is the same design, the same technology, the same fuel, and therefore as

Speaker Change: not only the large-scale reactor market grows as well as the SMR reactor grows, Westinghouse is exceedingly well positioned to be a leading and major participant in any new reactor growth in the United States or more broadly around the world.

Speaker Change: you know, how are we viewing Westinghouse? It's not only gonna benefit from the growth in nuclear in its core services business, but also in terms of new reactors. And then the additional benefit for us is we are uniquely positioned as the only renewable power player globally that can offer nuclear solutions that can compliment our wind and solar offering to our customers. And we feel that's a very, very enviable position to be in today, particularly with the largest corporate clients like the large tech companies.

Connor Teskey: It's not only gonna benefit from the growth in nuclear in its core services business, but also in terms of new reactors. And then the additional benefit for us is we are uniquely positioned as the only renewable power player globally, that can offer nuclear solutions that can complement our wind and solar offering to our customers. And we feel that's a very, very enviable position to be in today, particularly with the largest corporate clients, like the large tech companies.

Mark Jarvi [Managing Director, Equity Research: Okay. Thanks for the time today.

Mark Jarvi: Okay. Thanks for the time today.

Okay, thanks for your time today.

Operator: Thank you, and our next question comes from the line of William Grippin from UBS. Your question, please.

Speaker Change: Thank you. And our next question comes from the line of William Crippen from UBS. Your question, please.

William Grippin: Thanks very much. Good morning. Sorry to do this, but just coming back to the policy point here, obviously, there's been a lot of hand-wringing on what happens to the ITC. You know, a lot of people forget it's been around since 1978 in some form and has been extended under multiple administrations since that time, both Republican and Democratic. So I generally agree with you. I think any risk of change there is very, very low. But more to the point, I think based on our conversations over the last few days, it seems like a lot of investors have actually forgotten about the IRS guidelines around safe harboring, which potentially enable developers to lock in the current ITC level through 2029.

Speaker Change: Thanks very much. Good morning. Sorry to do this but just coming back to the policy point here, obviously there's been a lot of hand-wringing on what happens to the ITC. You know, a lot of people forget it's been around since 1978 in some form and has been extended.

Speaker Change: under multiple administrations since that time, both Republican and Democratic. So I generally agree with you. I think any risk of change there is very, very low.

Speaker Change: But more to the point, I think, based on our conversations over the last few days, it seems like a lot of investors have actually forgotten about the IRS guidelines around safe harboring, which potentially enable developers to lock in the current ITC level through 2029.

William Grippin: Just want to give you an opportunity to talk about maybe what you're doing on that front and help maybe assuage some of these concerns about the impacts of potential policy change.

Speaker Change: Just want to give you an opportunity to talk about maybe what you're doing on that front and help maybe assuage some of these concerns about the impacts of potential policy change.

Connor Teskey: Yeah, certainly. It's a good point, and I think the point we would reiterate most, most specifically, is two things. One, we would highlight your point that many of these support programs have been along a lot longer than just the previous administration. They date back far before that, and importantly, have very strong bipartisan support. You know, it's very well known that many Republican states were actually the largest beneficiaries of IRA. So while we wouldn't rule out some changes to those tax credits and things like that, if they are gonna get changed, our view is we don't expect it to be meaningful, and even if it is, as discussed previously, our business is well insulated.

Okay.

Yeah, certainly. It's a good point.

Most specifically, it is two things.

One, we would highlight your point that

Speaker Change: Many of these support programs have been along a lot longer than just the previous administration. They date back far before that.

and importantly, have very strong...

bipartisan support.

Speaker Change: It's very well known that many Republican states were actually the largest beneficiaries of IRA. So, while we wouldn't rule out some changes,

Speaker Change: to those tax credits and things like that. If they are going to get changed, our view is we don't expect it to be meaningful, and even if it is, as discussed previously, our business is well insulated.

Connor Teskey: Maybe just piggybacking on your second point, I might come at it from a slightly different perspective, which is the scale of our business, both globally and in the United States, really puts us in a favorable position, that we are extremely well-positioned to handle any changes, whatever they might be. We have globally diversified supply chains. We have one of, if not the largest, renewables business in the United States that can take advantage of any of the policies and procedures that, like the ones you mentioned. And we're always across those different initiatives to de-risk our broader business. It doesn't end solely at tax credits. It goes to things like supply chain and procurement as well.

Speaker Change: Maybe just piggybacking on your second point, I might come at it from a slightly different perspective, which is the scale of our business, both globally and in the United States,

Speaker Change: really puts us in a favorable position that we are extremely well positioned to handle any changes, whatever they might be.

We have globally diversified supply chains.

Speaker Change: We have one of, if not the largest, renewables business in the United States that can take advantage of any of the policies and procedures, like the ones you mentioned, and we're always across those different initiatives to de-risk our broader business.

and solely at tax credits.

Speaker Change: It goes to things like supply chain and procurement as well.

Connor Teskey: And regardless of what changes come, we think our business will be well-positioned, and we really struggle to see a situation where we don't continue to grow and accelerate our growth in the United States.

Speaker Change: Regardless of what changes come, we think our business will be well positioned and we really struggle to see a situation where we don't continue to grow and accelerate our growth in the United States.

William Grippin: Great. Thanks very much. Just last, small one here, but could you talk to some of the year-on-year drivers you're expecting to contribute to what appears to be accelerating fourth quarter FFO per share growth implied by the guidance?

Speaker Change: Great, thanks very much. And just last small one here, but could you talk to some of the year-on-year drivers you're expecting to contribute to what appears to be accelerating fourth quarter FFO per share growth implied by the guidance?

Connor Teskey: Yeah, sure. Perhaps I'll start, and then Wyatt, please jump in. I would say two or three things, and Wyatt, if I'm missing any of the big ones, let me know. One is, we've obviously deployed an incredibly significant amount of capital into growth, both M&A and development, over the last 12 months, and that is just increasingly run rating through our numbers. And particularly the deployment since Q4 last year and maybe even some of the transactions we'll get done in Q4 that will begin to contribute this year will be the biggest driver. There's no question. Secondly, a number of our businesses are performing very well, in particular, some of the largest, most cash-generative businesses, our hydros in Colombia, Westinghouse; they continue to provide great tailwinds to our underlying earnings.

Speaker Change: Yeah, sure. Perhaps I'll start and then Wyatt, please jump in.

I would say.

Speaker Change: Two, three things, and Wyatt, if I'm missing any of the big ones, let me know. One is, we've obviously deployed an incredibly significant amount of capital into growth.

Speaker Change: both M&A and development over the last 12 months and that is just increasingly run rating through our numbers and

Speaker Change: particularly the deployment since Q4 last year and and maybe even some of the transactions will get done in Q4 that will begin to contribute this year will be the biggest driver. There's no question.

Secondly,

Speaker Change: A number of our businesses are performing very well, in particular some of the largest, most cash-generative businesses.

Speaker Change: Our hydros in Columbia, Westinghouse, they continue to provide great tailwinds.

Connor Teskey: And then the third point I would make is we have announced some asset recycling this year. There are going to be some gains on sale that will contribute in the fourth quarter, that will provide an additional kind of modest uplift versus the two more significant drivers of growth, the first two things I mentioned. Wyatt, I don't know, am I missing anything?

to our underlying earnings.

Speaker Change: The third point I would make is we have announced some asset recycling this year. There are going to be some gains on sale that will contribute in the fourth quarter that will provide an additional kind of modest uplift versus the two more significant drivers of growth, the first two things I mentioned.

Wyatt, I don't know, am I missing anything?

Wyatt Hartley: You, you captured the big drivers. The only thing I would add is just, and this is very routine across our business, but we are continuing to capture stronger prices, both in terms of the inflation indexation that is built into our contracts, but then to the point we've referenced a number of times around the Hydros, just incrementally capturing more value in those. And so those, that is also expected to benefit in Q4.

Speaker Change: You captured the big drivers. The only thing I would add is just, and this is very routine across our business, but we are continuing to capture stronger prices, both in terms of the inflation indexation that is built into our contracts, but then to the point we've referenced a number of times around the hydros, just incrementally capturing more value in those. And so that is also expected to benefit in the fourth quarter.

William Grippin: Got it. Thanks very much. That's all for me.

Speaker Change: Got it. Thanks very much. That's all for me. Thank you. This does conclude the question-and-answer session of today's program. I'd like to hand the program back to Connor Teske-Freddy for the remarks.

Operator: Thank you. This does conclude the question and answer session of today's program. I'd like to hand the program back to Connor Teskey, Freddie, for the remarks.

Connor Teskey: Thank you, everyone, for dialing in to our earnings call. We appreciate the ongoing interest and support of our business, and we look forward to updating you with our Q4 and year-end results early in the new year. Thank you, and have a great day.

Connor Teske-Freddy: Thank you, everyone, for dialing in to our earnings call. We appreciate the ongoing interest and support of our business, and we look forward to updating you with our Q4 and year-end results early in the new year. Thank you, and have a great day.

Operator: Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.

Speaker Change: Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.

Speaker Change: [music].

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