Brookfield Renewable Partners L.P. Limited Partnership Units

Good day and thank you for standing by. Welcome to the BEP fourth quarter 2021 results conference call and webcast. At this time, all participants are in listen only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you'll need to press star then one on your telephone keypad. Please be advised today's conference may be recorded. If you require operator assistance during the call, please press star then zero. I'd now like to hand the conference over to Connor Teske, Chief Executive Officer. Please go ahead.

Thank you, Operator. Good morning, everyone, and thank you for joining us for our fourth quarter 2021 conference call. Before we begin, we would 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 would like 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 CDAR, EDGAR, and on our website. To kick off today's call, we will provide an update on the business and our recent growth initiatives. After those remarks, Wyatt will provide an overview of our operating results, as well as our balance sheet and liquidity. Following those prepared remarks, we look forward to taking your questions. 2021 was another very strong year for our business. We achieved record FFO per unit, continuing our track record of double-digit annual growth for over a decade. We agreed to deploy capital in line with our targets, growing in every major market we operate, and had a record year for development. Today, we have over 15,000 megawatts of capacity under construction or in late-stage development and now have an overall global development pipeline of approximately 62,000 megawatts. We also maintained a strong balance sheet and executed over $13 billion of financings, generating $1.5 billion in proceeds from up-financings net to Brookfield Renewable, bolstering our liquidity, enhancing our self-funding business model, and minimizing our exposure to increasing interest rates or near-term maturities. Looking ahead, decarbonization is now firmly established as an objective of the global economy. As one of the preeminent clean energy companies with a global presence, deep operating capabilities, and scale, we are uniquely positioned to execute on the most attractive decarbonization investment opportunities around the world. As we enter 2022, we continue to be one of the largest owners, operators, and builders of clean energy globally, with best-in-class growth prospects and inflation-linked cash flows that are supported by double-digit years of weighted average contract life. Given our strong financial and operating performance, robust liquidity, and positive outlook for the business, we are pleased to announce a 5% increase to our distribution to $1.28 per share on an annualized basis. This is the 11th consecutive year of at least 5% distribution growth since 2011 when Brookfield Renewable was spun out. Some of the highlights for the year include We generated FFO of $934 million, or $1.45 per unit, a 10% increase from 2020, or a 17% increase on a normalized basis. This resulted from the stability of our high-quality inflation-linked contracted cash flows, organic growth and commercial initiatives, and contributions from acquisitions. We advanced key commercial priorities, securing contracts to deliver 11,000 gigawatt hours of clean energy annually, including 6,000 hours to corporate off-takers, and we also completed saving initiatives that have delivered $20 million of savings on an annualized basis. We commissioned approximately 1,000 megawatts of new capacity and have progressed over 15,000 megawatts through construction and advanced stage development. We also agreed to invest approximately $4.3 billion, or approximately $1.1 billion net to Brookfield Renewable, of growth capital across various transactions in every major market and technology we operate in. We further diversified our business with our first investment in offshore wind, and we expanded both our hydroelectric and and battery storage portfolios. And finally, we maintained a robust investment-grade balance sheet and ended the year with over $4 billion of available liquidity and access to significant sovereign and institutional capital that we can invest alongside of, which provides enhanced flexibility for future growth. Next, we would like to spend a few minutes providing a spotlight on three important topics. First, the outlook for renewable energy, inflation, and global supply chains. Second, our recent acquisition to acquire Urban Grid. And third, the strong growth in our distributed generation business. First off, we want to reiterate our enthusiasm about the macroeconomic trends we are seeing for global clean energy supermajors. It is projected that up to $5 trillion of annual investment will need to be spent over the next 30 years to support the decarbonization of energy systems. In addition, clean energy and electrification are the first, largest, and most impactful steps to achieving net zero. Why? Put simply, because roughly three-quarters of global emissions can be attributed back to power generation and the energy sector. This will lead to an unprecedented build-out of wind, solar, and other clean energy solutions over the next decade, the growth of which will dramatically outpace what we have seen over the past 10 years. And as mentioned earlier, we believe we are uniquely positioned to execute on not only the most attractive, but also the largest decarbonization investment opportunities in this environment. Secondly, over the past couple of years, there has been a lot of discussion about global supply chains and inflation. There is no doubt that both have impacted our broader industry. However, our globally diversified business and strong relationship with Tier 1 suppliers mean we can manage supply chain disruptions such that they have not had any material impact on our business. Our scale and centralized procurement function help us ensure that we are a priority client for solar panel and wind turbine manufacturers and give us operational flexibility. We have had to adjust the development programs for a small number of select assets. But we have held the commercialization dates of all of our projects, and none of those adjustments have had a material impact on our business or the returns of those investments. We believe many of these supply chain challenges are transitory. However, we are confident that we are uniquely positioned to manage any challenges going forward to the extent that they persist. Now moving to inflation. Whether we are in a period of transitory or sustained inflation, our business performs well in either environment. First, in terms of our operating assets, we foresee inflation as a tailwind to our business. This is due to the fact that a significant portion of our business has inflation indexation. In fact, today, over 70% of our contracts are indexed to inflation. Further, we have a largely fixed cost structure with limited exposure to rising labor costs and capital expenditures. This, together with the fact that we have effectively no direct exposure to rising interest rates, means the compounding effect of inflating revenues should drive operating leverage across our platform. Second, in our under-construction assets, we have always focused on avoiding basis risk, by locking in major CapEx components at the same time we sign PPAs for projects, so we have matched our costs and revenues and locked in at our attractive returns. Finally, for our future development pipeline, to the extent there is inflation that impacts project costs, for the most part, we have seen a willingness from buyers of clean energy to share these costs through PPA price, as the benefits that our corporate clients see from decarbonization far outweigh the small cost increase they could start to face. Unequivocally, we don't think inflation will meaningfully slow the adoption of clean energy, if at all. Next, we will spend a few minutes talking about our recent acquisition of UrbanGrid in North America. Urban Grid is a leading utility-scale solar developer in the United States with 20,000 megawatts of development pipeline and a leading position in the high-value PJM market. With this transaction, we have grown our global pipeline to approximately 62,000 megawatts. Urban Grid's pipeline includes 2,000 megawatts of under-construction or ready-to-build solar projects, In addition, there are 4,000 megawatts of de-risk advanced stage build-out opportunities that we expect to back with corporate contracts and build out over the next six years. Further, there is also significant additional upside based on the depth of its remaining and growing pipeline. The purchase price for the acquisition was $650 million dollars, and we view it as an opportunity to invest hundreds of millions of dollars into further growth in the future. The reasons we are excited about this transaction are numerous, but to highlight a few, this was a bilaterally sourced opportunity where our ability to transact quickly and leverage our existing commercial relationships enabled us to transact with Urban Grid at attractive terms. These relationships, when combined with the construction-ready and advanced-stage pipeline, allow us to increase the scale of service to our largest customers as they look to achieve their own net-zero ambitions through the use of new-build solar. We are also extremely excited to work alongside the experienced urban grid management team and build out their development pipeline of projects that are in high-value U.S. markets such as PJM, MISO, and TBA. All 13,000 megawatts of solar development in this pipeline have interconnection queue positions, which is specifically valuable in the PJM market given the high demand for clean energy driven by significant data center load and increasing ambitious RPS targets and limited supply of sites given that the market is undergoing significant interconnection queue reform. As such, we are well positioned to contract these projects, which are significantly de-risked from an interconnection perspective with our deep list of corporate customers. As a result of these dynamics, our target returns on this investment are in excess of our 12% to 15% return target. Lastly, we also continue to execute on our growth plans for our distributed generation business in the fourth quarter. With leading capabilities in North America, South America, Europe, and Asia, we are uniquely positioned to be a global solutions provider for clean on-site generation and decarbonization solutions. Our global DG business is 1,400 megawatts of operating capacity, and our global DG development pipeline has now increased to approximately 6,500 megawatts. Over the past three years, our distributed generation portfolio grew revenue by approximately 40% annually, bolstered by the acquisitions and strategic partnerships we have signed. In the quarter, we expanded our portfolio by acquiring 780 megawatts of operating and development assets in Europe and South America, and we also signed a strategic agreement with Scholes Technology Group, a leading provider of balance of system solutions for storage, solar, and e-mobility to pursue distributed renewable energy generation and EV charging solutions across the United States. We are uniquely positioned with leading capabilities across four continents and to provide global solutions for those looking for clean on-site or behind-the-meter generation. With that, I'll turn the call over to Wyatt to discuss our operating results and financial position.

Thank you, Connor. In 2021, we generated FFO of $934 million or $1.45 per unit, a 10% increase from 2020 or 17% on a normalized basis. As the business benefited from recent acquisitions, strong underlying asset availability, and execution on organic growth initiatives. During the year, our hydroelectric segment delivered FFO of $639 million. The portfolio continues to exhibit strong cash flow resiliency, giving the increasingly diversified asset base, strong price environment, and our recent recontracting initiatives delivering strong results even when generation was below long-term average. Our wind and solar segments generated a combined $581 million of FFO, representing a 55% increase over the prior year. We benefited from contributions from acquisitions and approximately 770 megawatts of solar and wind projects commissioned during the year. Our energy transition segment generated $162 million of FFO. Revenues from our pumped storage assets, as well as our distributed generation portfolio, continue to demonstrate strong growth as global electricity generation decarbonizes. Next, looking at our balance sheet and liquidity, our financial position remains robust with approximately $4.1 billion of total available liquidity at year-end, and our business model is self-funded. During the year, we executed on key financing and capital-raising initiatives aimed at maintaining robust access to capital and a prudent debt maturity ladder, as well as a low-risk, investment-grade balance sheet. During 2021, we continued to take advantage of the low-interest rate environment As Connor mentioned, we executed on $13 billion of investment-grade financing, including $1.5 billion of up-financings net to Brookfield Renewable, securing a weighted average debt maturity of 13 years with no material maturities over the next three years. With these financing activities completed, our business is well protected against the potential of rising interest rates. We have very limited exposure to near-term maturities or floating interest rates across our business. We also continue to use opportunistic capital recycling as an important lever to drive value and fund growth. During the year, we executed on agreements to sell over 1,600 megawatts, generating proceeds of $1.5 billion including an agreement in the fourth quarter to sell a 625 megawatt solar PV portfolio in Mexico at an attractive valuation of $400 million, which is more than double our underwritten value. Before we hand it over for the question and answer session, I want to spend a few minutes on two topics, our development pipeline and as well as our recent $1.2 billion Canadian dollar asset level of financing in Quebec. As Connor mentioned, we achieved a record level of development over 2021. We commissioned approximately 1,000 megawatts of new capacity and finished the year with over 15,000 megawatts of construction and advanced stage projects. These projects are diversified across distributed and utility-scale solar wind, storage, hydro, and green hydrogen in 14 different countries. In total, we expect these projects to contribute almost $180 million in annual FFO to our business once completed. We are pleased to have been able to commission nearly 1,000 megawatts of capacity on time and budget during the year, including our 360 megawatt solar project in Brazil which was delivered ahead of schedule, and our recently completed 160 megawatt wind repowering in New York State. This repowering is expected to increase generation of the facilities 25% by increasing rotor diameter to almost 120 meters and will also extend the life of the project by 30 years. The project, which was completed at a 40% discount to new build costs It's backed by revenue contracts with high-quality counterparties with a weighted average duration of 12 years that will increase revenues by approximately $10 million. We also added a 20-year full-wrap long-term service agreement with production guarantees to de-risk the project going forward. This repowering was completed on time and on budget despite the supply chain challenges facing developers around the world. We expect to earn returns on this project in line with our typical 12% to 50% return target. Looking forward, it is estimated that 200 gigawatts of global wind capacity will reach 15 years of age within the next five years, creating an attractive opportunity for developers like us who have the right skill set and scale of capital. Looking at our own portfolio, we are progressing another 1,600 megawatts of repowering opportunities in the United States, and we look forward to updating you on these in the future. Regarding our latest financing initiatives, we strategically fast-tracked our refinancing activities into 2021 due to the potential of rising rates. And as a result, as I mentioned previously, we have no material maturities in the near term and very limited exposure to interest rates. Today, I want to walk you through the LIEVA financing. This transaction reinforces the opportunity we are seeing to sign attractive contracts for large-scale hydros that appropriately value the dispatchable carbon-free natures of the assets in an increasingly intermittent grid. We signed a 40-year fixed escalating power purchase agreement for our 265 megawatt LIEV facility with Hydro-Québec. The PPA is at an attractive premium to the prices the facility has historically achieved, generating an additional 20 million of revenue from the project per annum. Given the duration of the contract and the quality of the counterparty, we have raised 1.2 billion Canadian dollars $1 billion of which was in up financing of 40-year BBB investment-grade debt on the facility at a fixed coupon of 4%. This is our largest project financing to date, and we are highly confident that we will redeploy this capital into growth, and when deployed at our target returns, it is expected to generate more than $100 million of annual net FFO for the business. Said differently, through the recontracting and up-financing of a single hydro asset, we can fund the majority of our targeted 2022 capital deployment at exceptionally attractive rates. With over 5,500 gigawatt hours of generation available for recontracting over the next five 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. On behalf of the board and management of Brookfield Renewable, we thank all our unit holders and shareholders for their ongoing support. 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.