Good day, and thank you for standing by. Welcome to Brookfield Renewable's First Quarter 2024 Results Conference Call and Webcast. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Connor Teskey, Chief Executive Officer. Please go ahead.

Thank you, operator. Good morning, everyone, and thank you for joining us for our first quarter 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. For more information, you are encouraged to review our regulatory filings available on SEDAR, EDGAR, and on our website. On today's call, we will provide a review of our first quarter performance, our role as a key enabler in the growth of digitalization and AI, and our recently announced agreement with Microsoft. Then we will hand it over to Esper Nemi, 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. 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. We had a strong start to the year, generating record funds from operations in the first quarter, 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 continued 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 in recent history. The leading global technology companies that reported results over the past two 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. But 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 and 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 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. This first-of-its-kind agreement between us and Microsoft is a natural development in the long-standing and well-established relationships between one 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 two 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.S. and Europe and beyond to other regions, including Asia Pacific, 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. We are also uniquely positioned to provide a tailored solution to help address our customers' needs. Our ability to provide scale 24/7 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 the 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.

Thank you, Connor, 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 Connor mentioned, electricity demand is accelerating as a result of growth in digitalization, 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. However, renewable power developers and operators who were not prepared for a higher interest rate environment or are unable to manage through supply chain challenges have seen their business models disrupted. This has created an opportunity to invest for value, where for 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 few viable partners, and risk-adjusted returns can therefore be very attractive. Larger companies can also 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. We'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 from 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 through 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. 2023 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, nonrecourse financing and pipeline of derisked projects are in high demand from lower cost of capital buyers, where 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 derisked nature of the assets. In aggregate, we are targeting to generate $3 billion of proceeds or $1.3 billion net to BEP this year at attractive returns. With that, I'll pass it on to Wyatt to discuss our operating results and financial position.

Thanks, 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 million 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. Our wind and solar segments benefited from our recently closed acquisitions including Dervia, formerly Duke Energy's unregulated renewable business, and On Path, our U.K. wind, solar, and storage platform. Our Distributed Energy & 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 Westinghouse. Our financial position remains excellent with a strong balance sheet and robust liquidity, positioning us to be opportunistic through the cycle. Over the quarter, we executed almost $6 billion in financing, taking advantage of pricing with spreads near historic lows. In January, we issued CAD 400 million of 30-year notes at 5.3%, and meaningfully extended our debt maturity profile. Later in the quarter, we issued $150 million 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 million over the next five years. We ended the quarter with $4.4 billion of available liquidity, enabling us to deploy significant capital into growth. Considering 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 nine months, we repurchased over 4 million 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 derisk our business. On behalf of the Board and management, we thank all of our unitholders and shareholders for the ongoing support. We are excited about Brookfield Renewable's future, and look forward to updating you on our progress throughout the 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.

Our first question comes from Sean Steuart with TD Cowen.

A couple of questions on the Microsoft agreement to start with. Connor, can you give us more detail on the focus between North America versus Europe for this initial 5 years? And within the U.S., specifics on target regions and how your pipeline lines up with what Microsoft is targeting for their demand growth?

Sean, thanks for the question. Certainly. So we're thrilled about this arrangement with Microsoft. It's incredibly beneficial in helping us to further optimize and grow our development activities. In terms of the breakdown between Europe and the United States, the balance of it is certainly in the United States. This just layers very logically with where you are seeing the greatest amount of data center build-out around the world. That pairs 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. These 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 to support that build out. So there's no secret sauce here. 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.

Okay. 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?

Certainly. 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, such as increasing our procurement from domestic manufacturers within the U.S., and our investment in Avaada, which is beginning to produce solar panels itself in India, puts 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 is 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, cheaper today than they've been at any point in history. This really is a tale of two 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 down dramatically. And that is obviously very, very constructive to our broader business and the economics we can get out of our projects.

Our next question comes from the line of Rupert Merer with National Bank.

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. How much of that growth do you think can come from data?

Thanks, Rupert. Maybe let's 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. 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, but 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. 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. The nature of the current environment is that incremental demand from the tech sector is really lifting all boats. One thing that we are seeing across all of our businesses is that incremental demand from the tech sector, 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. Quite frankly, they're dragging the rest of the market with them and creating a 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.

All 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?

Yes, certainly. The way the framework agreement works is it aligns one of the largest, if not the largest, corporate procurer of green power with one of the largest producers and providers of green power. 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. The final prices in these PPAs and terms in these PPAs will be negotiated 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 of transactions we've done with them in recent times. Therefore, 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-prone prices that allow us to achieve our target returns.

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?

No doubt. That is a question for Microsoft. We wouldn't want to speak for them. But perhaps what we can share is what we are seeing in the market, which is that the supply-demand imbalance for power is very dramatic right now. Therefore, 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. That's creating a constructive environment for us as renewable power developers. The important thing to recognize about the product that we do offer to Microsoft, all technology companies, and all of our broader power marketing clients is that renewables are the cheapest form of bulk electricity. So even while this is a constructive market 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 supportive for their businesses.

Our next question comes from the line of Nelson Ng with RBC Capital Markets.

Congrats on the Microsoft agreement. So no surprise one further question on the Microsoft arrangement. 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 offtaker in the U.S.?

So I'll maybe come at that in reverse order. Absolutely, we could do other framework agreements or multiple 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 offtakers of power, we would be able to contract and build out those pipelines. Therefore, as we sit today, while we are thrilled about this agreement with Microsoft, we fully expect to not only expand this agreement but also to initiate other similar arrangements with other major buyers around the world. To give some directional numbers, we currently have a run rate of producing 7,000 to 8,000 megawatts of new generation capacity from organic development within our current business. Those numbers will naturally grow as our existing businesses get built out over time. Obviously, we are a growth company, and we are going to consistently add other developers and other pipelines as we move through the remainder of this decade. It's conceivable that by the period of 2026 to 2030, we will be producing well over 10 gigawatts a year, if not more. Therefore, while our arrangement with Microsoft takes derisks a good portion of that, it still is expected to only be a minority within our broader portfolio.

That's great color. So do you see this type of framework agreement as potentially being a template for, I guess, further project developments going forward?

Perhaps the way we'd answer that is we have numerous arrangements with different customers, and those arrangements are always tailored to meet the needs of that specific customer. While this agreement with Microsoft is certainly unique in its scale, we have many existing partnerships throughout our business, and we will continue to forge other partnerships going forward. This agreement is precedent-setting, and we do think will trigger other similar types of agreements at its scale. However, what we would expect is that they will all look a little bit different because one of the unique things we bring is not simply scale, but the ability to tailor the energy solutions to meet that specific client's needs. Therefore, these broad framework agreements tend to be fit for purpose depending on who the counterparty is.

Okay. 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 $1.3 billion 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 involved in several solar projects and a few wind projects going on in the Asia Pacific region.

Sure. To take a step back, and this wasn't your specific question, one thing that we often get asked is if this is a better market for investing or a better market for capital recycling. More so than probably any point in recent history, we think the market is heavily bifurcated, and it is a good market for both investing and recycling. Thus, we are seeing very attractive opportunities to deploy capital at scale at attractive returns. At the same time, we are also seeing a robust bid for high-quality derisked assets. Tying that back to your question, is some of this perhaps a little pent-up demand from last year? Maybe. We think the key drivers of it are there is still a broad institutional bias towards adding more exposure to this space. With the stabilization of interest rates, there is still significant access to capital in this industry, creating a robust bid from both strategics and financials. As for where we are seeing opportunities for capital recycling, it is very broad-based; we are seeing opportunities in Asia Pacific, as you mentioned, North America, and we are also seeing significant opportunities for capital recycling in Europe.

Our next question comes from the line of Mark Jarvi with CIBC.

So just staying on the asset sales, that $1.3 billion net to BEP, how much line of sight do you have on that? How would you put your conviction level on hitting that number? Is there an opportunity to exceed that number this year?

Mark, we feel very good about that number. We started the year by launching a few fairly meaningful sales processes that are well advanced and seeing strong traction. In terms of hitting the number we've guided to, I would say we have a very high degree of comfort. If we continue to see that robust bid for high-quality derisked assets, as we mentioned in the previous question, I think we would continue to add to that pipeline of capital recycling because that is where our business can really hum. When we're able to sell high-quality derisked assets at a lower cost of capital and reinvest that capital into very attractive higher returning investments, that drives great returns for our business. 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.

Just coming back to your comment about normalization and stabilization of interest rates, we did see a move back up in the 10 years. 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?

Certainly. The way I would position it is in 2023, and I'm clearly being a little illustrative here, interest rates went from 2% to 4% to 6%, and there was a concern they would go even higher. Now interest rates have stabilized at a very constructive level. If they end up 50 basis points higher or lower, it is still a very constructive environment for investing and transacting. 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 4% to 5% has led to some market participants whose capital structures or growth strategies were not well prepared for that move in interest rates. That is one of the things that's driving opportunities for us to deploy capital at really attractive returns in this environment.

Understood. And then just lastly on the framework agreement with Microsoft, and obviously you had a relationship with Amazon. How does that factor into your M&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 the development side and operating side?

We appreciate your framing of the question because if anything, what the agreement with Microsoft does, given its somewhat public nature, is it demonstrates why we've been doing what we've been doing: constructively and thoughtfully acquiring high-quality pipeline in critical markets around the world. We will continue to do that going forward, and the demand we are seeing gives us incredible conviction to lean into that strategy. The demand we're seeing and the agreement with Microsoft really derisks a meaningful component of our development activities for the remainder of the decade. It allows us to execute with confidence in areas and geographies that match where we see demand from our portfolio of customers. With such strong visibility on multi-gigawatt offtake, it allows us to move with more confidence when putting shovels in the ground and obtaining development permits, sourcing equipment, and financing because we know that demand will be there. We see this as a first step in accelerating into the strategy we have been executing on for years now.

Our next question is from the line of Jessica Hoyle with Scotiabank.

So just to start thinking about the Microsoft deal and dealing with large tech companies, how narrow is the competition to provide these types of renewable packages just given they are across multiple geographies and are quite large?

Thanks, Jessica. The arrangement we are fortunate to be partnered with Microsoft on, and similar arrangements with some of our other very large customers, features significant differentiation. To be a credible partner of scale, one, you need the capital, and the number of participants in the marketplace today that have the amount of capital to support these types of partnerships is very limited. This is a major limiting factor that differentiates us. The other important requirement is you need the operating capabilities. This involves bringing on multiple projects across multiple geographies concurrently. Therefore, you need best-in-class development and construction capability. Lastly, even if you are large and have the capital and capabilities, you actually need the assets; you need the pipeline. This is where our approach of acquiring pipelines over the last two, four, or five years is paying off as we have the projects and assets to meet this growing demand already. This is a very real opportunity today and lends itself to those who have that pipeline already, not those who are going to start developing it today to deliver it several years from now.

That's helpful. And then you talked a little bit on this, but 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 I just want to get your overall thoughts on these dynamics in the market.

Great. Back to the comment that we think it is a bifurcated market where you can be both a very active buyer and a very active capital recycler. We expect there to be many transactions this year for the same reasons. Banks are lending, the institutional bid is back, and there’s certainly a lot of capital available in the space. Given the robust pipeline that Esper highlighted, we believe our pipeline for growth is probably larger today than it's been at any point in history. As a result of the scale of that pipeline, it is quite diversified. It encompasses both operating assets and development opportunities across all markets where we're active.

I'm currently showing no further questions at this time. I'd like to hand the call back over to Connor Teskey for closing remarks.

Great. 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.

This concludes today's conference call. Thank you for your participation. You may now disconnect.