• FFO (Funds From Operations) Q4 2024: $304 million or $0.46 per unit, up 21% year-on-year.
• FFO Full Year 2024: $1.2 billion or $1.83 per unit, up 10% year-on-year.
• Capital Deployment: $12.5 billion invested in 2024.
• New Capacity Commissioned: 7,000 megawatts globally in 2024.
• Asset Rotation Proceeds 2024: $2.8 billion with an average return of 25% IRR.
• Liquidity: $4.3 billion at year-end 2024.
• Annual Distribution Increase: Over 5% to $1.492 per unit.
• Contracts Signed: 19,000 gigawatt hours per year of generation.
• Investment in Neon: Largest investment in renewable and power transition business.
• Financings Completed: Nearly $27 billion in 2024.

• Warning! GuruFocus has detected 6 Warning Signs with BEP.

Release Date: January 31, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Brookfield Renewable Partners LP (NYSE:BEP) delivered a record year in 2024 with a 10% growth in FFO per unit year-on-year.
• The company exceeded its capital deployment targets, investing $12.5 billion in high-quality businesses, including a significant investment in Neon.
• BEP signed a landmark renewable energy framework agreement with Microsoft to deliver 10.5 gigawatts of new renewable energy capacity between 2026 and 2030.
• The company commissioned a record 7,000 megawatts of new capacity globally, significantly increasing its development capabilities.
• BEP's balance sheet remains strong with $4.3 billion in liquidity, providing flexibility to fund growth opportunistically.

Negative Points

• The renewable sector has faced weaker sentiment in public markets due to potential policy changes from the new US administration.
• There is elevated volatility in public markets reflecting uncertainty on potential regulatory changes affecting the renewable sector in the US.
• The company faces challenges related to transmission availability and grid stability as energy demand grows.
• There is a significant bifurcation in the market between demand for renewables in private versus public markets, with public sentiment being weaker.
• Potential changes to US tax credits and tariffs could impact project economics, although BEP expects to pass these costs through to PPA prices.

Q & A Highlights

Q: Can you provide more context on the Microsoft framework agreement and whether it involves more capacity or an expedited timeline? A: Connor Teskey, CEO: The agreement is structured to deliver 10.5 gigawatts between 2026 and 2030. We expect to deliver significant capacity to Microsoft ahead of 2026, and the 10.5 gigawatts is increasingly the floor, not the ceiling. We are seeing tremendous demand from Microsoft and other hyperscalers.

Q: Are there efforts to replicate the Microsoft framework deal with other corporates? A: Connor Teskey, CEO: We are in discussions with other potential partners. While we may sign similar agreements, the demand is already showing up in our development activities on a project-by-project basis.

Q: How do you view the spread for returns between asset recycling and organic development? A: Connor Teskey, CEO: There is robust demand for high-quality operating assets, while less capital is available for development. We expect to continue asset recycling, capitalizing on the demand for private market exposure to renewables, despite weaker public market sentiment.

Q: What are your thoughts on developing or acquiring gas-fired generation to firm up your portfolio? A: Connor Teskey, CEO: We believe gas will have a role in the transition, but we would only consider investing if it accelerates renewable build-out and offers more attractive risk-adjusted returns than renewables.

Q: Can you discuss the structure of contracts in your development pipeline, especially regarding tax subsidies? A: Connor Teskey, CEO: We lock in contracts with CapEx, revenue, and financing upfront to avoid basis risk. Many PPAs now include adjusters to maintain development margins if tax credits change, reflecting strong demand from off-takers.

Q: How do you view your own share price in terms of capital allocation and buybacks? A: Connor Teskey, CEO: Despite lower share prices, we see strong fundamentals in our business. We will continue to execute our strategy and consider share buybacks, similar to our approach 15 months ago.

Q: How are you managing potential impacts from tariffs and higher equipment costs? A: Connor Teskey, CEO: We plan to pass any increased costs through higher PPA prices. Our centralized procurement and framework agreements with manufacturers allow us to source equipment from various locations, minimizing tariff impacts.

Q: How much of the data center growth is driven by AI versus cloud and crypto? A: Connor Teskey, CEO: AI is the primary driver of data center growth, ahead of cloud and crypto. Despite new energy-efficient technologies, the supply-demand imbalance remains in favor of power producers.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.