NYSE:BEPC Brookfield Renewable Q1 2024 Earnings Report $27.14 +0.72 (+2.74%) Closing price 04/17/2025 03:59 PM EasternExtended Trading$27.12 -0.02 (-0.07%) As of 04/17/2025 05:55 PM Eastern Extended trading is trading that happens on electronic markets outside of regular trading hours. This is a fair market value extended hours price provided by Polygon.io. Learn more. Earnings HistoryForecast Brookfield Renewable EPS ResultsActual EPS-$0.23Consensus EPS -$0.18Beat/MissMissed by -$0.05One Year Ago EPSN/ABrookfield Renewable Revenue ResultsActual Revenue$1.49 billionExpected Revenue$1.49 billionBeat/MissMet ExpectationsYoY Revenue GrowthN/ABrookfield Renewable Announcement DetailsQuarterQ1 2024Date5/3/2024TimeN/AConference Call DateFriday, May 3, 2024Conference Call Time8:30AM ETUpcoming EarningsBrookfield Renewable's Q1 2025 earnings is scheduled for Friday, May 2, 2025, with a conference call scheduled at 9:00 AM ET. Check back for transcripts, audio, and key financial metrics as they become available.Q1 2025 Earnings ReportConference Call ResourcesConference Call AudioConference Call TranscriptSlide DeckPress ReleaseEarnings HistoryCompany ProfileSlide DeckFull Screen Slide DeckPowered by Brookfield Renewable Q1 2024 Earnings Call TranscriptProvided by QuartrMay 3, 2024 ShareLink copied to clipboard.There are 9 speakers on the call. Operator00:00:00Good day, and thank you for standing by. Welcome to Brookfield Renewables' First Quarter 2024 Results Conference Call and Webcast. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Connor Teske, Chief Executive Officer. Operator00:00:32Please go ahead. Speaker 100:00:34Thank you, operator. Good morning, everyone, and thank you for joining us for our Q1 2024 conference call. Before we begin, we would 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. Speaker 100:00:58For 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 Q1 performance, our role as a key enabler in the growth of digitalization and AI and our recently announced agreement with Microsoft. And then we will hand it over to Esbernemi, a Senior Vice President on our investment team, to discuss the growth opportunities we are seeing in the current market as well as our asset recycling initiatives. And then lastly, Wyatt will conclude the call by discussing our operating results and financial position. Following our prepared remarks, we look forward to taking your questions. Speaker 100:01:44We had a strong start to the year, generating record funds from operations in the Q1, benefiting from our development activities and acquisitions. Our operating business continues to grow and diversify, helping to improve the durability of our results and deliver on our distribution growth target. As the accelerating global trends of cloud computing, digitalization and the adoption of AI continue to drive significant growth in the demand for power, we are fortunate to be a key enabler of one of the most significant growth trends history. The leading global technology companies who reported results over the past 2 weeks all highlighted significant increases in their capital budgets to fund cloud and AI infrastructure growth. The role that computer chips play in delivering the compute power behind AI is well understood by the market. Speaker 100:02:42But to execute on the number of computations that make AI such a powerful tool, you also need an immense amount of energy. The market is only starting to understand this need, and power demand estimates to supply the growth in cloud computing and the adoption of AI have grown significantly in recent months and quarters. However, existing energy infrastructure is simply not adequate to meet the demand from AI, meaning sourcing sustainable renewable power at scale is now on the critical path to delivering the rollout of AI globally. In this regard, we recently signed a landmark renewable energy framework agreement with Microsoft, where we expect to deliver them over 10.5 gigawatts of new renewable energy capacity in the United States and Europe between 2026 2030. Our strategy of building a business with leading platforms across the most important power markets globally, supported by our centralized teams, provides us with a unique development and operating capabilities, whereby we are able to leverage local relationships for permitting and interconnection and our global relationships for procurement and contracting to deliver a volume of capacity that is difficult to match. Speaker 100:04:05This first of its kind agreement between us and Microsoft is a natural development in the long standing and well established relationship between 1 of the largest buyers of power and one of the largest renewable power developers and operators globally. The agreement supports Microsoft on a path to achieving their energy procurement needs to support the rapidly growing business in a sustainable manner, while also enhancing our position to achieve or exceed our targeted growth by identifying the key requirements for new capacity, including the location of the capacity and the timeline to deliver. Through the agreement, we have identified projects that are in various stages of development that can be offered to Microsoft under a pre agreed standard form power purchase agreement. With the well defined framework that aligns the 2 parties to work together, we are confident in the potential of expanding on this agreement going forward and furthering our position as a key partner to support the growth of Microsoft's business. This agreement already includes provisions to increase its scope to deliver additional renewable energy capacity within the U. Speaker 100:05:17S. And Europe and beyond to other regions, including Asia Pac, India and Latin America. The partnership is a testament to our differentiated offering, which is characterized by our access to capital and credibility to deliver scale clean power solutions from our extensive pipeline of advanced stage projects, which are well positioned from an interconnection and permitting perspective in many key data center markets globally. While this partnership is a first of its kind, given the significant scale of investment required to meet the increase in energy demand, we believe we are uniquely positioned to be a key enabler of growth for the largest technology players through similar arrangements. Our access to scale capital sizable development pipeline, which is now almost 160 gigawatts and our ability to commission significant capacity concurrently to meet this demand, altogether differentiate us as a partner. Speaker 100:06:21We are also uniquely positioned to provide a tailored solution to help address our customers' needs. Our ability to provide scale 20 fourseven clean power solutions through the combination of our large portfolio of existing hydro assets, our leading nuclear business and other renewable power capacity from across technology spectrum also distinguishes our offering. This is translating into favorable contracting opportunities. With that, we would now like to turn the call over to Esper to discuss our robust growth pipeline as well as our asset recycling initiatives. Speaker 200:06:59Thank you, Conor, and good morning, everyone. Our pipeline of attractive growth opportunities is as robust as ever, given our access to scale capital, strong operating business and market conditions where not all counterparties are necessarily as well situated, creating a favorable environment for new investments. In the foreseeable future, there is a need for greater amounts of capital for renewables than is available. As Conor mentioned, electricity demand is accelerating as that is a result of growth in digitalization and electrification and renewables, which are the lowest cost source of bulk power generation in most regions and countries now and they're aligned with net zero targets, are among the most likely sources to meet this growth. In 2023, renewable capacity additions globally grew by 50% compared to the prior year. Speaker 200:07:55However, renewable power developers and operators who were not prepared for a higher interest rate environment or unable to manage through supply chain challenges have seen their business models disrupted. This has created an opportunity to invest for value. With our business, which remains insulated from such headwinds, we are ideally situated at the clean energy center between capital and opportunities. Our access to scale capital means we can execute on large opportunities where there are fewer viable partners and risk adjusted returns can therefore be very attractive. Larger companies can offer attract stronger management teams and have embedded growth opportunities, which when combined with our capital and capabilities can allow us to unlock additional value creation that others cannot. Speaker 200:08:43We're excited about the opportunity to add scale businesses and platforms in attractive markets where we can compound our competitive advantages. We're also able to leverage the expertise of our global investment teams and our operating capabilities to strategically enter new markets, which enables us to look at a broader range of opportunities. Thus far this year, we have advanced several growth initiatives that when closed would add operating capacity and near term growth to our development pipeline. And based on our current pipeline, we are optimistic that capital deployment will accelerate throughout the rest of the year. On asset recycling, the market for the right type of renewable power asset continues to strengthen as the outlook for interest rates have stabilized. Speaker 200:09:292023 was a very strong year for capital rotation and we expect to continue that trend this year. Our large and growing portfolio of contracted operating assets with fixed rate non recourse financing and pipeline of derisked projects are in high demand from lower cost of capital buyers. But for scaling development activities, we have a growing pool of projects to monetize and crystallize strong returns. We are fortunate to have launched a significant pipeline of asset sales into this environment, which we are advancing across technologies and geographies with the consistent characteristic being the de risked nature of the assets. In aggregate, we are targeting to generate $3,000,000,000 of proceeds or $1,300,000,000 net to BEP this year at attractive returns. Speaker 200:10:16With that, I'll pass it on to Wyatt to discuss our operating results and financial position. Speaker 300:10:23Thanks, Esper, and good morning, everyone. Our operating business had a strong start to the year, delivering record funds from operations as we benefited from our diverse operating assets and contributions from our growth and development activities. We generated FFO of $296,000,000 in the quarter, up 8% year over year or $0.45 per unit. These results position us well to deliver on our 10% plus FFO per unit growth target for the year. Our hydro assets exhibited strong cash flow resiliency, a reflection of our diversified asset base, inflation linked power purchase agreements and ability to realize strong power prices. Speaker 300:11:12Our wind and solar segments benefited from our recently closed acquisitions including Dereva, formerly Duke Energy's unregulated renewable business and Onpath, our U. K. Wind, solar and storage platform. Our Distributed Energy and Storage segment benefited from recent development activities and our Sustainable Solutions segment performed well as we felt the impact from a full quarter of contributions from in house. Our financial position remains excellent with a strong balance sheet and robust liquidity positioning us to be opportunistic through the cycle. Speaker 300:11:52Over the quarter, we executed almost $6,000,000,000 in financing, taking advantage of pricing with spreads near historic lows. In January, we issued CAD400 1,000,000 of 30 year notes at 5.3 percent and meaningfully extended our debt maturity profile. Later in the quarter, we issued $150,000,000 of fixed rate perpetual preferred equity with proceeds being used to refinance outstanding preferred shares that were scheduled to reset in early April. The newly issued notes are 70 basis points cheaper than the reset rate of the outstanding shares we redeemed, saving us almost $5,000,000 over the next 5 years. We ended the quarter with $4,400,000,000 of available liquidity enabling us to deploy significant capital into growth. Speaker 300:12:50Considering public market conditions, our strong conviction in the intrinsic value of our business and our healthy balance sheet position, we allocated capital to repurchase our units in the quarter. In the last 9 months, we repurchased over 4,000,000 units under our normal course issuer bid. Looking forward, we will continue to allocate capital based on where we are seeing the best risk adjusted returns and remain confident we will continue to create meaningful value for our investors. In closing, we remain focused on delivering 12% to 15% long term total return for our investors, leveraging our deep funding sources and operational capabilities to enhance and de risk our business. On behalf of the Board and management, we thank all of our unitholders and shareholders for the ongoing support. Speaker 300:13:45We are excited about Brookfield Renewables future and look forward to updating you on our progress throughout 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. Operator00:14:02Thank you. Our first question comes from the line of Sean Steuart with TD Cowen. Your line is now open. Speaker 400:14:23Thank you. Good morning, everyone. A couple of questions on the Microsoft agreement to start with. Conor, can you give us more detail on the focus between North America versus Europe for this initial 5 years? And within the U. Speaker 400:14:39S, specifics on target regions and how your pipeline lines up with what Microsoft is targeting for their demand growth? Speaker 100:14:51Good morning, Sean. Thanks for the question. Certainly, so we're thrilled about this arrangement with Microsoft. It's incredibly beneficial in how it will help us to further optimize and grow our development activities. In the terms of the breakdown between Europe and the United States, the balance of it is certainly in the United States. Speaker 100:15:18And this just layers very logically with where you are seeing the greatest amount of data center build out around the world. That pairs very, very well with our business. As many may know on the call, the vast majority of our near term development pipeline is in the United States and pairs very well with that growing demand. In terms of where within the individual regions, we'll probably avoid the specifics. But the comment that can be made is it's very well known where the largest data center markets are. Speaker 100:16:00These tend to be the areas where there is the most robust grid in order to support the build out and where there is the greatest amount of development capacity in order to support that build out. So there's no secret sauce here. This is the locations where this activity will take place are primarily in the U. S. Because that's where data centers are built mostly and then within that in the biggest data center markets within the United States. Speaker 400:16:32Okay. Thanks for that detail, Connor. One other question before I get back in the queue. The Biden administration advancing trade action on solar panel imports from China and it sounds like other Southeast Asian countries. Can you give us perspective on how BEP is positioned, any possible impact on project economics as you see it going forward, how does this affect your growth plans in the technology? Speaker 100:17:02Certainly. So one of the competitive advantages and something we've been very proud of over the last several years is the performance of our centralized procurement approach. And via that group, we've been constantly diversifying our ability to procure panels from different sources that give us a lot of flexibility as we manage through what is a very fluid situation in terms of tariffs and trade actions to the United States. We've certainly done some obvious things, increasing our procurement from domestic manufacturers Avada, which is beginning to produce solar panels itself in India, put us in a unique position where we don't see the current environment slowing our growth profile in any way. The one additional point that I think it's important to recognize when it comes to the headlines around equipment procurement and solar panels is around the world, solar panels are in markets outside the United States, solar panels are cheaper today than they've been at any point in history. Speaker 100:18:24This really is a tale of 2 worlds, if you will. You've got the dynamics in the United States that are impacted by the trade discussions and the tariffs. In the United States, solar panel prices have come down materially in the last 12 months. But outside of the United States, solar panel prices have come back come down dramatically. And that is obviously very, very constructive to our broader business and the economics we can get out of our projects. Speaker 400:18:56That's useful detail. Thanks very much. That's all I have for now. Operator00:19:00Thank you. Our next question comes from the line of Rupert Merer with National Bank. Your line is now open. Speaker 500:19:08Hi, good morning, everyone. Thanks for taking the question. Can you give us a little more color on the scale of the market opportunity for power and data? And how much of your growth could come from data markets in the future? And I suppose if you look at the overall market for power, we're seeing drivers from reshoring, electrification, population growth. Speaker 500:19:32How much of that growth do you think can come from data? Speaker 100:19:37Thanks, Rupert. Maybe let us tackle this a slightly different way. The dynamic in the market today is very simply there is an imbalance between supply and demand. There is far more demand for incremental new build, in particular clean power, than there are available projects. And that is a dynamic that we do not expect to change for years or potentially decades to run Because as you say, we've had these long standing enduring trends that were driving electricity demand, whether it be energy security, whether it be the electrification of industry, transport, residential. Speaker 100:20:20But all of that has just been multiplied in the last 12 to 24 months with this huge incremental driver of demand, which is data centers to support AI and cloud compute. And therefore, in terms of how much of our growth is going to go towards supporting the tech sector, I would say a very meaningful component. But our business continues to be very, very well diversified. But the nature of the current environment is that incremental demand from the techs is really lifting all boats. And one thing that we are seeing on the ground across all of our businesses is that incremental demand from the techs for whom procuring power is on the critical path to growth, those companies are getting a lot more constructive around price and terms in how they procure power. Speaker 100:21:23And quite frankly, they're dragging the rest of the market with them and creating a really, really robust and constructive environment to be a renewables developer, whether you're contracting with a tech company or anyone else. So while we do expect a very large and growing portion of our business to be supplying this incremental tech demand, The point that we like to highlight is this incremental tech demand is supporting the entire sector regardless of who your counterparty is. Speaker 500:21:57All right, great. And looking at your framework agreement with Microsoft, any color you can give on the typical terms you might expect in your contracts, maybe looking at contract duration or ability to index your power price? Any color? Speaker 100:22:16Yes, certainly. So the way the framework agreement works is it aligns one of the largest, if not the largest corporate procure of Green Power with 1 of the, if not the largest producer and provider of green power. And it makes it very, very efficient, for us to work together because we have essentially agreed on a framework PPA under which we can offer Microsoft projects to meet their demand going forward. The important thing we would highlight about this agreement is it's really in line with our historic development approach. We the final prices in these PPAs and terms in these PPAs will be negotiated with between us and Microsoft to reflect the cost of construction and financing at the time and to ensure that they are within our target returns as we have done with Microsoft over the gigawatt we've done with them in recent times. Speaker 100:23:27Therefore, we expect the contracts that we execute under this agreement to be very much in line with what we've done in the past, long term contracts, 15 to 20 years plus inflation linked at agreed upon prices that allow us to achieve our target returns. Speaker 500:23:47And my final question here may be a question for Microsoft. But when you're working with Microsoft to develop power solutions to support data centers, how important is the cost of power? Meaning, are they looking to develop data centers where power is cheap? Or do you think there are more important considerations for the location? Speaker 100:24:10No doubt. That is a question for We wouldn't want to speak for them. But perhaps what we can share is what we are seeing in the market, which is and again, apologies to really be driving on this point. The supply demand imbalance for power is very dramatic right now. And therefore, the accessibility to power, having comfort that the power is going to be delivered on time at scale in order to not compromise your growth trajectory certainly seems to be the priority in the market today. Speaker 100:24:48And that's creating a really constructive environment for us as renewable power developers. But the important thing to recognize about the product that we do offer to Microsoft, all the technology companies, all of our broader power marketing clients is renewables are the cheapest form of bulk electricity. So even while this is a constructive market and it's allowing us to develop in a very attractive way, The power that we are offering them is long duration power at a discount to retail rates, which is obviously supportive for their businesses. Speaker 500:25:30Thank you very much. I'll leave it there. Operator00:25:33Thank you. Our next question comes from the line of Nelson Ng with Capital Market RBC Capital Markets. Your line is now open. Speaker 600:25:42Great, thanks and congrats on the Microsoft agreement. So no surprise, one further question on the Microsoft arrangement. So I was just wondering whether the Microsoft transaction takes up a lot of your current development capacity in the U. S. Over that 5 year period and whether there's room for, let's say, another framework agreement with another off taker in the U. Speaker 600:26:11S? Speaker 100:26:14So I'll maybe come at that in reverse order. Absolutely, we could do other framework agreements or multiple other framework agreements, given the capacity we have and the pipeline we've assembled. I think it's important to understand, the strategy that we have been pursuing, which is we have been acquiring and building a portfolio of leading renewable power developers with attractive pipelines in major core markets around the world because we had confidence that given our relationships with the large off takers of power, we would be able to contract and build out those pipelines. And therefore, as we sit today, while we are thrilled about this agreement with Microsoft, we fully expect to not only expand this agreement, but do other similar arrangements with other major buyers around the world. And maybe just to give some directional numbers around this, We are currently have a run rate of producing 7000 to 8000 megawatts of new generation capacity from organic development within our current businesses get built out over time. Speaker 100:27:43And obviously, we are a growth company. We are going to consistently add other developers and other pipeline as we move through the remainder of this decade. It's very conceivable that by the period of 26 to 30, we will be producing well over 10 gigawatts a year, if not more. And therefore, while our arrangement with Microsoft takes de risks a good portion of that, it still is expected to only be a minority within our broader portfolio. Speaker 600:28:19Great. That's great color. So you do see this type of framework agreement as potentially being a template for, I guess, further project developments going forward? Speaker 100:28:35Perhaps the way we'd answer that is we have a lot of arrangements with different customers. And those arrangements are always tailored to meet the needs of that specific customer. And while this agreement with Microsoft is certainly unique in its scale, we have lots of existing partnerships without our throughout our business, and we will continue to do other partnerships going forward. Where this one is precedent setting and we do think will trigger other similar types agreements is in its scale. But what we would expect is they all look a little bit different, because one of the unique things that we can bring is not simply the scale, but the ability to tailor the energy solutions to meet that specific client's needs. Speaker 100:29:27And therefore, these broad framework agreements, I would say, tend to be fit for purpose depending on who the counterparty is. Speaker 600:29:35Okay, great. And then just shifting gears a bit on the capital recycling side, you mentioned that you're expecting net proceeds to Brookfield Renewable of about $1,300,000,000 this year. Are you seeing some of that pent up demand from last year kind of shift into this year? And then also, is it safe to assume that most of that capital recycling would happen in North America or maybe other parts like Asia Pacific? I know that you're you'd have a lot of, I think, solar projects and a few wind projects going on in the Asia Pacific region? Speaker 100:30:17Sure. So maybe to take a step back, and this wasn't your specific question, but one thing that we often get asked is this a better market for investing or a better market for capital recycling? And more so than probably any point in recent history, we would say right now the market is heavily, heavily bifurcated, and we think it is a very, very good market for both. And therefore, we are seeing very, very attractive opportunities to deploy capital at scale at attractive returns. But on the same time, we are also seeing a very robust bid for high quality de risked assets. Speaker 100:31:07Now tying that back to your question, is some of this perhaps a little bit of pent up demand from last year? Maybe. But we really think that the key drivers of it is there is still a broad institutional bias to adding more exposure to this space. And with the stabilization of interest rates, there is still significant access to capital in this industry. And that is creating a very, very robust bid from both strategics and financials. Speaker 100:31:38In terms of where we are seeing opportunities for capital recycling, it is very broad based. We are seeing opportunities in Asia Pac. As you mentioned, we are seeing opportunities in North America. The one that I would highlight that you didn't mention is we're also seeing significant opportunities for capital recycling in Europe. Speaker 600:32:00Okay, that's great. Thanks Connor. I'll leave it there. Operator00:32:04Thank you. Our next question comes from the line of Mark Jarvi with CIBC. Your line is now open. Speaker 700:32:11Yes, thanks. Good morning, everyone. So just staying on the asset sales, that $1,300,000,000 net to bep, how much line of sight do you have on that? Like how would you put your conviction level on, hey, net number? Is there an opportunity to exceed that number this year? Speaker 100:32:28Hi, Mark. We feel very good about that number. We started the year by launching a few fairly meaningful sales processes that at this point are well advanced and are seeing strong traction. So in terms of hitting the number we've guided to, I would say we have a very, very high degree of comfort. And if we continue to see that robust bid for high quality de risked assets, as we mentioned on the previous question, I think we would just continue to add to that pipeline of capital recycling because that is where our business can really When we're able to sell high quality de risked assets at a lower cost of capital and reinvest that capital into very attractive higher returning investments, that drives really great returns for our business. Speaker 100:33:25So if we continue to see the market play out as we're seeing it today, we'll certainly look to add to that pipeline throughout the year. Speaker 700:33:36Just coming back to your comment about normalization and stabilization of interest rates, we did see a move back up in the 10 year. Did that slow any processes down or does that actually just push some sellers to have to transact just given where their own balance sheets are right now? Speaker 100:33:52Certainly. So maybe the way I would position it is in 2023, and I'm clearly being a little bit illustrative here, interest rates went from 2% to 4% to 6%, and there was a concern they'd go even higher than that. Now interest rates have stabilized in a very constructive level. If they end up 50 basis points higher or 50 basis points lower, it is still a very constructive environment for investing and we wouldn't expect the recent movement in interest rates to derail our plans for the year. What we would say is on the investing side, we are seeing some opportunities in the market where that move in interest rates from 0% to 2% to, let's say, 4% to 5%, there are some market participants whose capital structures or growth strategies were not well prepared for that move in interest rates. Speaker 100:34:58And that is one of the things that's driving opportunities for us to deploy capital at really attractive returns in this environment. Speaker 700:35:07Understood. And then just lastly, on the framework agreement with Microsoft and obviously had a relationship with Amazon and thinking about big buyers from the tech side of things. How does that factor into sort of your M and A pursuits, whether it's operating assets, you might be able to recontract or repowering or development pipelines? Has anything changed? Or have you seen this coming and that's already kind of factored into how you've been pursuing your acquisitions both on development side and operating side? Speaker 100:35:39So we very much appreciate the way you frame that question because if anything, perhaps what the agreement with Microsoft, given its somewhat public nature, does is it kind of demonstrates why we've been doing what we've been doing, which is very constructively and thoughtfully acquiring high quality pipeline in critical markets around the world. So we absolutely will continue to do that going forward. And the demand that we are seeing gives us incredible conviction to continue to lean into that strategy. What the demand we are seeing and what the agreement with Microsoft does is it does really derisk a meaningful component of our development activities for the remainder of the decade. And it also allows us to move with a lot of conviction to expand and develop in areas and geographies that match where we are seeing demand from our portfolio of customers. Speaker 100:36:54And when you have such strong visibility on tens or multiple tens of gigawatts of offtake, it really allows you to move with more confidence in things like putting shovels in the ground and getting development permits. It allows you to lean into looking to source equipment, looking to source financing because you know that demand is going to be there. So we simply see this as a first step in accelerating into the strategy that we've been executing on for a number of years now. Speaker 700:37:35Okay. Thanks, Connor. Operator00:37:38Thank you. Our next question is from the line of Jessica Hoyle with Scotiabank. Your line is now open. Speaker 800:37:47Great. Thanks so much for taking my question. So just to start thinking about the Microsoft deal and dealing with large tech companies, just how narrow is the competition to provide these types of renewable packages, just given they are across multiple geographies and are quite large? Speaker 100:38:08Thanks, Jessica. The arrangement we have been able and are fortunate to be partnered with Microsoft on, and similar with some of our other very large customers, is there is a very significant differentiation. In order to be a credible partner of scale, 1, you need the capital and the amount of capital to support these types of partnerships is very limited to a small number of participants in the marketplace today. So we would certainly see that as a major limiting factor and one that differentiates us. But the other important things that we would highlight is you need the operating capabilities. Speaker 100:38:59This is bringing on multiple projects across multiple geographies concurrently. And therefore, you need that best in class development and construction capability. And then the last point is, even if you are large and have the capital and have the capabilities, you actually need the assets. You need the pipeline. And this is where our approach of acquiring pipeline over the last 2 or 4 or 5 years is really coming to fruition because we have the projects and the assets to meet this growing demand already. Speaker 100:39:35This is a very real opportunity today and really lends itself to those that have that pipeline already, not those who are going to start developing it today in order to deliver it several years from now. Speaker 800:39:51Thanks for that. That's helpful. And then you talked a little bit on this, but maybe can you talk a little bit more about the opportunity set out there just in terms of buy versus build? There seem to be a lot of packages out there. So just want to get your overall thoughts on these dynamics in the market. Speaker 100:40:10Great. Back to the comment that we think it is a bifurcated market where you can be both a very active capital recycler. We do expect there to be a lot of transactions this year for the same reasons. Banks are lending again. The institutional bid is back. Speaker 100:40:34The strategic bid is back. And there is certainly a lot of capital available in the space. Given the very robust pipeline that Esper highlighted, We mean this with absolutely no sensationalization. Our pipeline for growth is probably larger today than it's been at any point in history. And as a result of the scale of that pipeline, it is quite diversified. Speaker 100:41:02It is across both operating assets and development opportunities, really across all markets around the world that we're active in. Speaker 800:41:17Thanks for that. Operator00:41:19Thank you. And I'm currently showing no further questions at this time. I'd like to hand the call back over to Connor Teske for closing remarks. Speaker 100:41:27Great. Well, thank you, everyone, for joining us on today's call. As always, we greatly appreciate your interest and support of Brookfield Renewable, and we look forward to giving you an update following our Q2 results. Thank you, and have a great day. Operator00:41:43This concludes today's conference call. Thank you for your participation. You may now disconnect.Read morePowered by Conference Call Audio Live Call not available Earnings Conference CallBrookfield Renewable Q1 202400:00 / 00:00Speed:1x1.25x1.5x2x Earnings DocumentsSlide DeckPress Release Brookfield Renewable Earnings HeadlinesVivos Therapeutics announces agreement to acquire operating assets of SCNApril 17 at 11:52 AM | markets.businessinsider.comVivos Opens New Sleep CenterApril 16 at 11:58 AM | baystreet.caWhat to do with your collapsing portfolio…There might be only one way to save your retirement in this volatile time. After watching investors lose $6 trillion in market cap in a matter of DAYS... And after seeing businesses bleeding dry as trade tensions spiral out of control... 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Email Address About Brookfield RenewableBrookfield Renewable (NYSE:BEPC) owns and operates a portfolio of renewable power and sustainable solution assets primarily in the United States, Europe, Colombia, and Brazil. It operates hydroelectric, wind, solar, and distributed energy and sustainable solutions with an installed capacity of approximately 19,161 megawatts. The company was incorporated in 2019 and is headquartered in New York, New York. 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There are 9 speakers on the call. Operator00:00:00Good day, and thank you for standing by. Welcome to Brookfield Renewables' First Quarter 2024 Results Conference Call and Webcast. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Connor Teske, Chief Executive Officer. Operator00:00:32Please go ahead. Speaker 100:00:34Thank you, operator. Good morning, everyone, and thank you for joining us for our Q1 2024 conference call. Before we begin, we would 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. Speaker 100:00:58For 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 Q1 performance, our role as a key enabler in the growth of digitalization and AI and our recently announced agreement with Microsoft. And then we will hand it over to Esbernemi, a Senior Vice President on our investment team, to discuss the growth opportunities we are seeing in the current market as well as our asset recycling initiatives. And then lastly, Wyatt will conclude the call by discussing our operating results and financial position. Following our prepared remarks, we look forward to taking your questions. Speaker 100:01:44We had a strong start to the year, generating record funds from operations in the Q1, benefiting from our development activities and acquisitions. Our operating business continues to grow and diversify, helping to improve the durability of our results and deliver on our distribution growth target. As the accelerating global trends of cloud computing, digitalization and the adoption of AI continue to drive significant growth in the demand for power, we are fortunate to be a key enabler of one of the most significant growth trends history. The leading global technology companies who reported results over the past 2 weeks all highlighted significant increases in their capital budgets to fund cloud and AI infrastructure growth. The role that computer chips play in delivering the compute power behind AI is well understood by the market. Speaker 100:02:42But to execute on the number of computations that make AI such a powerful tool, you also need an immense amount of energy. The market is only starting to understand this need, and power demand estimates to supply the growth in cloud computing and the adoption of AI have grown significantly in recent months and quarters. However, existing energy infrastructure is simply not adequate to meet the demand from AI, meaning sourcing sustainable renewable power at scale is now on the critical path to delivering the rollout of AI globally. In this regard, we recently signed a landmark renewable energy framework agreement with Microsoft, where we expect to deliver them over 10.5 gigawatts of new renewable energy capacity in the United States and Europe between 2026 2030. Our strategy of building a business with leading platforms across the most important power markets globally, supported by our centralized teams, provides us with a unique development and operating capabilities, whereby we are able to leverage local relationships for permitting and interconnection and our global relationships for procurement and contracting to deliver a volume of capacity that is difficult to match. Speaker 100:04:05This first of its kind agreement between us and Microsoft is a natural development in the long standing and well established relationship between 1 of the largest buyers of power and one of the largest renewable power developers and operators globally. The agreement supports Microsoft on a path to achieving their energy procurement needs to support the rapidly growing business in a sustainable manner, while also enhancing our position to achieve or exceed our targeted growth by identifying the key requirements for new capacity, including the location of the capacity and the timeline to deliver. Through the agreement, we have identified projects that are in various stages of development that can be offered to Microsoft under a pre agreed standard form power purchase agreement. With the well defined framework that aligns the 2 parties to work together, we are confident in the potential of expanding on this agreement going forward and furthering our position as a key partner to support the growth of Microsoft's business. This agreement already includes provisions to increase its scope to deliver additional renewable energy capacity within the U. Speaker 100:05:17S. And Europe and beyond to other regions, including Asia Pac, India and Latin America. The partnership is a testament to our differentiated offering, which is characterized by our access to capital and credibility to deliver scale clean power solutions from our extensive pipeline of advanced stage projects, which are well positioned from an interconnection and permitting perspective in many key data center markets globally. While this partnership is a first of its kind, given the significant scale of investment required to meet the increase in energy demand, we believe we are uniquely positioned to be a key enabler of growth for the largest technology players through similar arrangements. Our access to scale capital sizable development pipeline, which is now almost 160 gigawatts and our ability to commission significant capacity concurrently to meet this demand, altogether differentiate us as a partner. Speaker 100:06:21We are also uniquely positioned to provide a tailored solution to help address our customers' needs. Our ability to provide scale 20 fourseven clean power solutions through the combination of our large portfolio of existing hydro assets, our leading nuclear business and other renewable power capacity from across technology spectrum also distinguishes our offering. This is translating into favorable contracting opportunities. With that, we would now like to turn the call over to Esper to discuss our robust growth pipeline as well as our asset recycling initiatives. Speaker 200:06:59Thank you, Conor, and good morning, everyone. Our pipeline of attractive growth opportunities is as robust as ever, given our access to scale capital, strong operating business and market conditions where not all counterparties are necessarily as well situated, creating a favorable environment for new investments. In the foreseeable future, there is a need for greater amounts of capital for renewables than is available. As Conor mentioned, electricity demand is accelerating as that is a result of growth in digitalization and electrification and renewables, which are the lowest cost source of bulk power generation in most regions and countries now and they're aligned with net zero targets, are among the most likely sources to meet this growth. In 2023, renewable capacity additions globally grew by 50% compared to the prior year. Speaker 200:07:55However, renewable power developers and operators who were not prepared for a higher interest rate environment or unable to manage through supply chain challenges have seen their business models disrupted. This has created an opportunity to invest for value. With our business, which remains insulated from such headwinds, we are ideally situated at the clean energy center between capital and opportunities. Our access to scale capital means we can execute on large opportunities where there are fewer viable partners and risk adjusted returns can therefore be very attractive. Larger companies can offer attract stronger management teams and have embedded growth opportunities, which when combined with our capital and capabilities can allow us to unlock additional value creation that others cannot. Speaker 200:08:43We're excited about the opportunity to add scale businesses and platforms in attractive markets where we can compound our competitive advantages. We're also able to leverage the expertise of our global investment teams and our operating capabilities to strategically enter new markets, which enables us to look at a broader range of opportunities. Thus far this year, we have advanced several growth initiatives that when closed would add operating capacity and near term growth to our development pipeline. And based on our current pipeline, we are optimistic that capital deployment will accelerate throughout the rest of the year. On asset recycling, the market for the right type of renewable power asset continues to strengthen as the outlook for interest rates have stabilized. Speaker 200:09:292023 was a very strong year for capital rotation and we expect to continue that trend this year. Our large and growing portfolio of contracted operating assets with fixed rate non recourse financing and pipeline of derisked projects are in high demand from lower cost of capital buyers. But for scaling development activities, we have a growing pool of projects to monetize and crystallize strong returns. We are fortunate to have launched a significant pipeline of asset sales into this environment, which we are advancing across technologies and geographies with the consistent characteristic being the de risked nature of the assets. In aggregate, we are targeting to generate $3,000,000,000 of proceeds or $1,300,000,000 net to BEP this year at attractive returns. Speaker 200:10:16With that, I'll pass it on to Wyatt to discuss our operating results and financial position. Speaker 300:10:23Thanks, Esper, and good morning, everyone. Our operating business had a strong start to the year, delivering record funds from operations as we benefited from our diverse operating assets and contributions from our growth and development activities. We generated FFO of $296,000,000 in the quarter, up 8% year over year or $0.45 per unit. These results position us well to deliver on our 10% plus FFO per unit growth target for the year. Our hydro assets exhibited strong cash flow resiliency, a reflection of our diversified asset base, inflation linked power purchase agreements and ability to realize strong power prices. Speaker 300:11:12Our wind and solar segments benefited from our recently closed acquisitions including Dereva, formerly Duke Energy's unregulated renewable business and Onpath, our U. K. Wind, solar and storage platform. Our Distributed Energy and Storage segment benefited from recent development activities and our Sustainable Solutions segment performed well as we felt the impact from a full quarter of contributions from in house. Our financial position remains excellent with a strong balance sheet and robust liquidity positioning us to be opportunistic through the cycle. Speaker 300:11:52Over the quarter, we executed almost $6,000,000,000 in financing, taking advantage of pricing with spreads near historic lows. In January, we issued CAD400 1,000,000 of 30 year notes at 5.3 percent and meaningfully extended our debt maturity profile. Later in the quarter, we issued $150,000,000 of fixed rate perpetual preferred equity with proceeds being used to refinance outstanding preferred shares that were scheduled to reset in early April. The newly issued notes are 70 basis points cheaper than the reset rate of the outstanding shares we redeemed, saving us almost $5,000,000 over the next 5 years. We ended the quarter with $4,400,000,000 of available liquidity enabling us to deploy significant capital into growth. Speaker 300:12:50Considering public market conditions, our strong conviction in the intrinsic value of our business and our healthy balance sheet position, we allocated capital to repurchase our units in the quarter. In the last 9 months, we repurchased over 4,000,000 units under our normal course issuer bid. Looking forward, we will continue to allocate capital based on where we are seeing the best risk adjusted returns and remain confident we will continue to create meaningful value for our investors. In closing, we remain focused on delivering 12% to 15% long term total return for our investors, leveraging our deep funding sources and operational capabilities to enhance and de risk our business. On behalf of the Board and management, we thank all of our unitholders and shareholders for the ongoing support. Speaker 300:13:45We are excited about Brookfield Renewables future and look forward to updating you on our progress throughout 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. Operator00:14:02Thank you. Our first question comes from the line of Sean Steuart with TD Cowen. Your line is now open. Speaker 400:14:23Thank you. Good morning, everyone. A couple of questions on the Microsoft agreement to start with. Conor, can you give us more detail on the focus between North America versus Europe for this initial 5 years? And within the U. Speaker 400:14:39S, specifics on target regions and how your pipeline lines up with what Microsoft is targeting for their demand growth? Speaker 100:14:51Good morning, Sean. Thanks for the question. Certainly, so we're thrilled about this arrangement with Microsoft. It's incredibly beneficial in how it will help us to further optimize and grow our development activities. In the terms of the breakdown between Europe and the United States, the balance of it is certainly in the United States. Speaker 100:15:18And this just layers very logically with where you are seeing the greatest amount of data center build out around the world. That pairs very, very well with our business. As many may know on the call, the vast majority of our near term development pipeline is in the United States and pairs very well with that growing demand. In terms of where within the individual regions, we'll probably avoid the specifics. But the comment that can be made is it's very well known where the largest data center markets are. Speaker 100:16:00These tend to be the areas where there is the most robust grid in order to support the build out and where there is the greatest amount of development capacity in order to support that build out. So there's no secret sauce here. This is the locations where this activity will take place are primarily in the U. S. Because that's where data centers are built mostly and then within that in the biggest data center markets within the United States. Speaker 400:16:32Okay. Thanks for that detail, Connor. One other question before I get back in the queue. The Biden administration advancing trade action on solar panel imports from China and it sounds like other Southeast Asian countries. Can you give us perspective on how BEP is positioned, any possible impact on project economics as you see it going forward, how does this affect your growth plans in the technology? Speaker 100:17:02Certainly. So one of the competitive advantages and something we've been very proud of over the last several years is the performance of our centralized procurement approach. And via that group, we've been constantly diversifying our ability to procure panels from different sources that give us a lot of flexibility as we manage through what is a very fluid situation in terms of tariffs and trade actions to the United States. We've certainly done some obvious things, increasing our procurement from domestic manufacturers Avada, which is beginning to produce solar panels itself in India, put us in a unique position where we don't see the current environment slowing our growth profile in any way. The one additional point that I think it's important to recognize when it comes to the headlines around equipment procurement and solar panels is around the world, solar panels are in markets outside the United States, solar panels are cheaper today than they've been at any point in history. Speaker 100:18:24This really is a tale of 2 worlds, if you will. You've got the dynamics in the United States that are impacted by the trade discussions and the tariffs. In the United States, solar panel prices have come down materially in the last 12 months. But outside of the United States, solar panel prices have come back come down dramatically. And that is obviously very, very constructive to our broader business and the economics we can get out of our projects. Speaker 400:18:56That's useful detail. Thanks very much. That's all I have for now. Operator00:19:00Thank you. Our next question comes from the line of Rupert Merer with National Bank. Your line is now open. Speaker 500:19:08Hi, good morning, everyone. Thanks for taking the question. Can you give us a little more color on the scale of the market opportunity for power and data? And how much of your growth could come from data markets in the future? And I suppose if you look at the overall market for power, we're seeing drivers from reshoring, electrification, population growth. Speaker 500:19:32How much of that growth do you think can come from data? Speaker 100:19:37Thanks, Rupert. Maybe let us tackle this a slightly different way. The dynamic in the market today is very simply there is an imbalance between supply and demand. There is far more demand for incremental new build, in particular clean power, than there are available projects. And that is a dynamic that we do not expect to change for years or potentially decades to run Because as you say, we've had these long standing enduring trends that were driving electricity demand, whether it be energy security, whether it be the electrification of industry, transport, residential. Speaker 100:20:20But all of that has just been multiplied in the last 12 to 24 months with this huge incremental driver of demand, which is data centers to support AI and cloud compute. And therefore, in terms of how much of our growth is going to go towards supporting the tech sector, I would say a very meaningful component. But our business continues to be very, very well diversified. But the nature of the current environment is that incremental demand from the techs is really lifting all boats. And one thing that we are seeing on the ground across all of our businesses is that incremental demand from the techs for whom procuring power is on the critical path to growth, those companies are getting a lot more constructive around price and terms in how they procure power. Speaker 100:21:23And quite frankly, they're dragging the rest of the market with them and creating a really, really robust and constructive environment to be a renewables developer, whether you're contracting with a tech company or anyone else. So while we do expect a very large and growing portion of our business to be supplying this incremental tech demand, The point that we like to highlight is this incremental tech demand is supporting the entire sector regardless of who your counterparty is. Speaker 500:21:57All right, great. And looking at your framework agreement with Microsoft, any color you can give on the typical terms you might expect in your contracts, maybe looking at contract duration or ability to index your power price? Any color? Speaker 100:22:16Yes, certainly. So the way the framework agreement works is it aligns one of the largest, if not the largest corporate procure of Green Power with 1 of the, if not the largest producer and provider of green power. And it makes it very, very efficient, for us to work together because we have essentially agreed on a framework PPA under which we can offer Microsoft projects to meet their demand going forward. The important thing we would highlight about this agreement is it's really in line with our historic development approach. We the final prices in these PPAs and terms in these PPAs will be negotiated with between us and Microsoft to reflect the cost of construction and financing at the time and to ensure that they are within our target returns as we have done with Microsoft over the gigawatt we've done with them in recent times. Speaker 100:23:27Therefore, we expect the contracts that we execute under this agreement to be very much in line with what we've done in the past, long term contracts, 15 to 20 years plus inflation linked at agreed upon prices that allow us to achieve our target returns. Speaker 500:23:47And my final question here may be a question for Microsoft. But when you're working with Microsoft to develop power solutions to support data centers, how important is the cost of power? Meaning, are they looking to develop data centers where power is cheap? Or do you think there are more important considerations for the location? Speaker 100:24:10No doubt. That is a question for We wouldn't want to speak for them. But perhaps what we can share is what we are seeing in the market, which is and again, apologies to really be driving on this point. The supply demand imbalance for power is very dramatic right now. And therefore, the accessibility to power, having comfort that the power is going to be delivered on time at scale in order to not compromise your growth trajectory certainly seems to be the priority in the market today. Speaker 100:24:48And that's creating a really constructive environment for us as renewable power developers. But the important thing to recognize about the product that we do offer to Microsoft, all the technology companies, all of our broader power marketing clients is renewables are the cheapest form of bulk electricity. So even while this is a constructive market and it's allowing us to develop in a very attractive way, The power that we are offering them is long duration power at a discount to retail rates, which is obviously supportive for their businesses. Speaker 500:25:30Thank you very much. I'll leave it there. Operator00:25:33Thank you. Our next question comes from the line of Nelson Ng with Capital Market RBC Capital Markets. Your line is now open. Speaker 600:25:42Great, thanks and congrats on the Microsoft agreement. So no surprise, one further question on the Microsoft arrangement. So I was just wondering whether the Microsoft transaction takes up a lot of your current development capacity in the U. S. Over that 5 year period and whether there's room for, let's say, another framework agreement with another off taker in the U. Speaker 600:26:11S? Speaker 100:26:14So I'll maybe come at that in reverse order. Absolutely, we could do other framework agreements or multiple other framework agreements, given the capacity we have and the pipeline we've assembled. I think it's important to understand, the strategy that we have been pursuing, which is we have been acquiring and building a portfolio of leading renewable power developers with attractive pipelines in major core markets around the world because we had confidence that given our relationships with the large off takers of power, we would be able to contract and build out those pipelines. And therefore, as we sit today, while we are thrilled about this agreement with Microsoft, we fully expect to not only expand this agreement, but do other similar arrangements with other major buyers around the world. And maybe just to give some directional numbers around this, We are currently have a run rate of producing 7000 to 8000 megawatts of new generation capacity from organic development within our current businesses get built out over time. Speaker 100:27:43And obviously, we are a growth company. We are going to consistently add other developers and other pipeline as we move through the remainder of this decade. It's very conceivable that by the period of 26 to 30, we will be producing well over 10 gigawatts a year, if not more. And therefore, while our arrangement with Microsoft takes de risks a good portion of that, it still is expected to only be a minority within our broader portfolio. Speaker 600:28:19Great. That's great color. So you do see this type of framework agreement as potentially being a template for, I guess, further project developments going forward? Speaker 100:28:35Perhaps the way we'd answer that is we have a lot of arrangements with different customers. And those arrangements are always tailored to meet the needs of that specific customer. And while this agreement with Microsoft is certainly unique in its scale, we have lots of existing partnerships without our throughout our business, and we will continue to do other partnerships going forward. Where this one is precedent setting and we do think will trigger other similar types agreements is in its scale. But what we would expect is they all look a little bit different, because one of the unique things that we can bring is not simply the scale, but the ability to tailor the energy solutions to meet that specific client's needs. Speaker 100:29:27And therefore, these broad framework agreements, I would say, tend to be fit for purpose depending on who the counterparty is. Speaker 600:29:35Okay, great. And then just shifting gears a bit on the capital recycling side, you mentioned that you're expecting net proceeds to Brookfield Renewable of about $1,300,000,000 this year. Are you seeing some of that pent up demand from last year kind of shift into this year? And then also, is it safe to assume that most of that capital recycling would happen in North America or maybe other parts like Asia Pacific? I know that you're you'd have a lot of, I think, solar projects and a few wind projects going on in the Asia Pacific region? Speaker 100:30:17Sure. So maybe to take a step back, and this wasn't your specific question, but one thing that we often get asked is this a better market for investing or a better market for capital recycling? And more so than probably any point in recent history, we would say right now the market is heavily, heavily bifurcated, and we think it is a very, very good market for both. And therefore, we are seeing very, very attractive opportunities to deploy capital at scale at attractive returns. But on the same time, we are also seeing a very robust bid for high quality de risked assets. Speaker 100:31:07Now tying that back to your question, is some of this perhaps a little bit of pent up demand from last year? Maybe. But we really think that the key drivers of it is there is still a broad institutional bias to adding more exposure to this space. And with the stabilization of interest rates, there is still significant access to capital in this industry. And that is creating a very, very robust bid from both strategics and financials. Speaker 100:31:38In terms of where we are seeing opportunities for capital recycling, it is very broad based. We are seeing opportunities in Asia Pac. As you mentioned, we are seeing opportunities in North America. The one that I would highlight that you didn't mention is we're also seeing significant opportunities for capital recycling in Europe. Speaker 600:32:00Okay, that's great. Thanks Connor. I'll leave it there. Operator00:32:04Thank you. Our next question comes from the line of Mark Jarvi with CIBC. Your line is now open. Speaker 700:32:11Yes, thanks. Good morning, everyone. So just staying on the asset sales, that $1,300,000,000 net to bep, how much line of sight do you have on that? Like how would you put your conviction level on, hey, net number? Is there an opportunity to exceed that number this year? Speaker 100:32:28Hi, Mark. We feel very good about that number. We started the year by launching a few fairly meaningful sales processes that at this point are well advanced and are seeing strong traction. So in terms of hitting the number we've guided to, I would say we have a very, very high degree of comfort. And if we continue to see that robust bid for high quality de risked assets, as we mentioned on the previous question, I think we would just continue to add to that pipeline of capital recycling because that is where our business can really When we're able to sell high quality de risked assets at a lower cost of capital and reinvest that capital into very attractive higher returning investments, that drives really great returns for our business. Speaker 100:33:25So if we continue to see the market play out as we're seeing it today, we'll certainly look to add to that pipeline throughout the year. Speaker 700:33:36Just coming back to your comment about normalization and stabilization of interest rates, we did see a move back up in the 10 year. Did that slow any processes down or does that actually just push some sellers to have to transact just given where their own balance sheets are right now? Speaker 100:33:52Certainly. So maybe the way I would position it is in 2023, and I'm clearly being a little bit illustrative here, interest rates went from 2% to 4% to 6%, and there was a concern they'd go even higher than that. Now interest rates have stabilized in a very constructive level. If they end up 50 basis points higher or 50 basis points lower, it is still a very constructive environment for investing and we wouldn't expect the recent movement in interest rates to derail our plans for the year. What we would say is on the investing side, we are seeing some opportunities in the market where that move in interest rates from 0% to 2% to, let's say, 4% to 5%, there are some market participants whose capital structures or growth strategies were not well prepared for that move in interest rates. Speaker 100:34:58And that is one of the things that's driving opportunities for us to deploy capital at really attractive returns in this environment. Speaker 700:35:07Understood. And then just lastly, on the framework agreement with Microsoft and obviously had a relationship with Amazon and thinking about big buyers from the tech side of things. How does that factor into sort of your M and A pursuits, whether it's operating assets, you might be able to recontract or repowering or development pipelines? Has anything changed? Or have you seen this coming and that's already kind of factored into how you've been pursuing your acquisitions both on development side and operating side? Speaker 100:35:39So we very much appreciate the way you frame that question because if anything, perhaps what the agreement with Microsoft, given its somewhat public nature, does is it kind of demonstrates why we've been doing what we've been doing, which is very constructively and thoughtfully acquiring high quality pipeline in critical markets around the world. So we absolutely will continue to do that going forward. And the demand that we are seeing gives us incredible conviction to continue to lean into that strategy. What the demand we are seeing and what the agreement with Microsoft does is it does really derisk a meaningful component of our development activities for the remainder of the decade. And it also allows us to move with a lot of conviction to expand and develop in areas and geographies that match where we are seeing demand from our portfolio of customers. Speaker 100:36:54And when you have such strong visibility on tens or multiple tens of gigawatts of offtake, it really allows you to move with more confidence in things like putting shovels in the ground and getting development permits. It allows you to lean into looking to source equipment, looking to source financing because you know that demand is going to be there. So we simply see this as a first step in accelerating into the strategy that we've been executing on for a number of years now. Speaker 700:37:35Okay. Thanks, Connor. Operator00:37:38Thank you. Our next question is from the line of Jessica Hoyle with Scotiabank. Your line is now open. Speaker 800:37:47Great. Thanks so much for taking my question. So just to start thinking about the Microsoft deal and dealing with large tech companies, just how narrow is the competition to provide these types of renewable packages, just given they are across multiple geographies and are quite large? Speaker 100:38:08Thanks, Jessica. The arrangement we have been able and are fortunate to be partnered with Microsoft on, and similar with some of our other very large customers, is there is a very significant differentiation. In order to be a credible partner of scale, 1, you need the capital and the amount of capital to support these types of partnerships is very limited to a small number of participants in the marketplace today. So we would certainly see that as a major limiting factor and one that differentiates us. But the other important things that we would highlight is you need the operating capabilities. Speaker 100:38:59This is bringing on multiple projects across multiple geographies concurrently. And therefore, you need that best in class development and construction capability. And then the last point is, even if you are large and have the capital and have the capabilities, you actually need the assets. You need the pipeline. And this is where our approach of acquiring pipeline over the last 2 or 4 or 5 years is really coming to fruition because we have the projects and the assets to meet this growing demand already. Speaker 100:39:35This is a very real opportunity today and really lends itself to those that have that pipeline already, not those who are going to start developing it today in order to deliver it several years from now. Speaker 800:39:51Thanks for that. That's helpful. And then you talked a little bit on this, but maybe can you talk a little bit more about the opportunity set out there just in terms of buy versus build? There seem to be a lot of packages out there. So just want to get your overall thoughts on these dynamics in the market. Speaker 100:40:10Great. Back to the comment that we think it is a bifurcated market where you can be both a very active capital recycler. We do expect there to be a lot of transactions this year for the same reasons. Banks are lending again. The institutional bid is back. Speaker 100:40:34The strategic bid is back. And there is certainly a lot of capital available in the space. Given the very robust pipeline that Esper highlighted, We mean this with absolutely no sensationalization. Our pipeline for growth is probably larger today than it's been at any point in history. And as a result of the scale of that pipeline, it is quite diversified. Speaker 100:41:02It is across both operating assets and development opportunities, really across all markets around the world that we're active in. Speaker 800:41:17Thanks for that. Operator00:41:19Thank you. And I'm currently showing no further questions at this time. I'd like to hand the call back over to Connor Teske for closing remarks. Speaker 100:41:27Great. Well, thank you, everyone, for joining us on today's call. As always, we greatly appreciate your interest and support of Brookfield Renewable, and we look forward to giving you an update following our Q2 results. Thank you, and have a great day. Operator00:41:43This concludes today's conference call. Thank you for your participation. You may now disconnect.Read morePowered by