Brookfield Renewable Corporation Q3 FY2025 earnings call

BEP had a strong quarter with solid financial results. They generated $302 million of FFO, up 10% year-over-year. They advanced commercial priorities, signing contracts to deliver 4,000 gigawatt hours per year of generation and commissioning 1,800 megawatts of new projects. They made strategic investments in critical technologies. The partnership with the U.S. government was announced, where the U.S. government will support Westinghouse with at least $80 billion investment in new nuclear reactors. Westinghouse has three business segments, with operating plant services and nuclear fuel generating roughly 85% of earnings. The Hydroelectric segment benefited from growing demand for scale baseload power. Wind and solar segments had growth from acquisitions but were offset by asset sales. Distributed energy, storage and sustainable solutions segments had solid results from the Neoen acquisition and Westinghouse performance. BEP maintained strong liquidity of $4.7 billion and a BBB+ investment-grade rating.

During the third quarter, BEP generated $302 million of FFO, or $0.46 per unit, a 10% year-over-year increase. The Hydroelectric segment had FFO of $119 million, up over 20% from the prior year, driven by solid generation from Canadian and Colombian fleets, higher pricing in U.S. operations, and increased earnings from commercial and operational activities. The wind and solar segments combined generated $177 million of FFO, supported by acquisitions and organic development but offset by the sale of some wind assets. The distributed energy, storage and sustainable solutions segments delivered FFO of $127 million, up from the prior year, with growth from the Neoen acquisition and strong performance at Westinghouse.

BEP continues to expect to deliver on its 10% plus FFO per unit growth target for 2025. The partnership with the U.S. government is expected to drive significant growth for Westinghouse over the long term, with revenues from the partnership starting as soon as the next couple of quarters and ramping up in the 3- to 4-year time frame. BEP anticipates an acceleration of opportunities to deploy capital through M&A and within existing businesses.

There are risks related to regulatory changes, such as potential stricter FEOC definitions, but BEP expects to manage them as they have with other regulatory changes. There are also risks associated with cost overruns in nuclear projects, which BEP will address by structuring investments to have appropriate protections.

Q: Just in the U.S., can you talk about improvements in the pace of permitting?

A: Incrementally, but the intent to remedy the situation is there though progress to date is limited.

Q: Expected timeline for U.S. build-out associated with the Westinghouse agreement?

A: First projects expected to begin development process in next quarter or two, with revenues starting soon and ramping up in 3-4 years.

Q: Factors in contracting existing hydro asset with Microsoft versus building new wind and solar?

A: Broader demand for hydro generation and framework agreement always included hydro, with potential for more hydro deals in future.

Q: Changes in perspective regarding eligibility of U.S. projects for federal tax credits?

A: Safe harbored U.S. development pipeline out to 2029, monitoring FEOC definitions which are expected to be manageable.