Brookfield Renewable Corp 6-K, filed Nov 12, 2024
Brookfield Renewable Corp (BEPC)
6-K
2024-11-12
For: 2024-09-30
View Original
Added on
April 12, 2026
About this 6-K
Brookfield Renewable Corp filed this 6-K on November 12, 2024.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_____________________________________________________________________________________________________________________
Form 6-K
_____________________________________________________________________________________________________________________
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13A-16 OR 15D-16
OF THE SECURITIES EXCHANGE ACT OF 1934
For the month of November 2024
Commission File Number: 001-39355
BROOKFIELD RENEWABLE
CORPORATION
(Translation of registrant's name into English)
_____________________________________________________________________________________________________________________
250 Vesey Street, 15th Floor
New York, New York 10281
(Address of principal executive office)
_____________________________________________________________________________________________________________________
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.
Form 20-F ý Form 40-F ¨
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ¨
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ¨
The information contained in Exhibits 99.1 and 99.2 of this Form 6-K is incorporated by reference into (i) the registrant’s registration statement on Form S-8 that became effective with the Securities and Exchange Commission ("SEC") on August 3, 2020 (File No. 333-240282), and (ii) the registrant’s registration statement on Form F-3 (File No. 333-278523) that was declared effective by the SEC on April 17, 2024.
EXHIBIT LIST
| Exhibit | |||||
| 99.1 | |||||
| 99.2 | |||||
| 99.3 | |||||
| 99.4 | |||||
- 2 -
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| BROOKFIELD RENEWABLE CORPORATION | ||||||||
Date: November 8, 2024 | By: | /s/ Jennifer Mazin | ||||||
| Name: Jennifer Mazin Title: General Counsel and Corporate Secretary | ||||||||
- 3 -
BROOKFIELD RENEWABLE CORPORATION
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
UNAUDITED (MILLIONS) | Notes | September 30, 2024 | December 31, 2023 | ||||||||||||||
| Assets | |||||||||||||||||
| Current assets | |||||||||||||||||
| Cash and cash equivalents | 13 | $ | 619 | $ | 627 | ||||||||||||
| Restricted cash | 14 | 77 | 165 | ||||||||||||||
| Trade receivables and other current assets | 15 | 875 | 955 | ||||||||||||||
| Financial instrument assets | 4 | 165 | 124 | ||||||||||||||
| Due from related parties | 18 | 1,322 | 1,427 | ||||||||||||||
| Assets held for sale | 3 | 1,388 | — | ||||||||||||||
| 4,446 | 3,298 | ||||||||||||||||
| Financial instrument assets | 4 | 128 | 301 | ||||||||||||||
| Equity-accounted investments | 12 | 631 | 644 | ||||||||||||||
| Property, plant and equipment, at fair value | 7 | 36,678 | 44,038 | ||||||||||||||
| Goodwill | 11 | 734 | 854 | ||||||||||||||
| Deferred income tax assets | 116 | 102 | |||||||||||||||
| Other long-term assets | 142 | 184 | |||||||||||||||
| Total Assets | $ | 42,875 | $ | 49,421 | |||||||||||||
| Liabilities | |||||||||||||||||
| Current liabilities | |||||||||||||||||
| Accounts payable and accrued liabilities | 16 | $ | 628 | $ | 807 | ||||||||||||
| Financial instrument liabilities | 4 | 458 | 441 | ||||||||||||||
| Due to related parties | 18 | 514 | 456 | ||||||||||||||
| Non-recourse borrowings | 8 | 1,166 | 1,891 | ||||||||||||||
| Provisions | 15 | 19 | |||||||||||||||
| Liabilities directly associated with assets held for sale | 3 | 848 | — | ||||||||||||||
| BEPC exchangeable and class B shares | 10 | 5,062 | 4,721 | ||||||||||||||
| 8,691 | 8,335 | ||||||||||||||||
| Financial instrument liabilities | 4 | 386 | 1,376 | ||||||||||||||
| Non-recourse borrowings | 8 | 12,606 | 14,181 | ||||||||||||||
| Deferred income tax liabilities | 5,439 | 5,819 | |||||||||||||||
| Provisions | 18 | 470 | 926 | ||||||||||||||
| Due to related parties | 18 | 672 | 930 | ||||||||||||||
| Other long-term liabilities | 425 | 725 | |||||||||||||||
| Equity | |||||||||||||||||
| Non-controlling interests | |||||||||||||||||
| Participating non-controlling interests – in operating subsidiaries | 9 | 9,081 | 11,070 | ||||||||||||||
| Participating non-controlling interests – in a holding subsidiary held by the partnership | 9 | 229 | 272 | ||||||||||||||
| The partnership | 10 | 4,876 | 5,787 | ||||||||||||||
| Total Equity | 14,186 | 17,129 | |||||||||||||||
| Total Liabilities and Equity | $ | 42,875 | $ | 49,421 | |||||||||||||
The accompanying notes are an integral part of these interim consolidated financial statements.
| Approved on behalf of Brookfield Renewable Corporation: | |||||
 |  | ||||
Patricia Zuccotti Director | David Mann Director | ||||
| Brookfield Renewable Corporation | Interim Consolidated Financial Statements and Notes | September 30, 2024 | ||||||
Page 2 | ||||||||
BROOKFIELD RENEWABLE CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
UNAUDITED (MILLIONS) | Three months ended September 30 | Nine months ended September 30 | |||||||||||||||||||||||||||
| Notes | 2024 | 2023 | 2024 | 2023 | |||||||||||||||||||||||||
| Revenues | 18 | $ | 1,041 | $ | 934 | $ | 3,155 | $ | 2,901 | ||||||||||||||||||||
| Other income | 29 | 95 | 96 | 147 | |||||||||||||||||||||||||
Direct operating costs(1) | (407) | (388) | (1,310) | (1,000) | |||||||||||||||||||||||||
| Management service costs | 18 | (28) | (26) | (71) | (94) | ||||||||||||||||||||||||
| Interest expense | 8 | (328) | (308) | (1,032) | (929) | ||||||||||||||||||||||||
| Share of (loss) from equity-accounted investments | 12 | — | (7) | (22) | (7) | ||||||||||||||||||||||||
| Foreign exchange and financial instruments gain (loss) | 4 | 12 | 21 | 78 | 129 | ||||||||||||||||||||||||
| Depreciation | 7 | (313) | (320) | (970) | (953) | ||||||||||||||||||||||||
| Other | (31) | 3 | (29) | 14 | |||||||||||||||||||||||||
| Remeasurement of BEPC exchangeable and class B shares | 10 | (612) | 1,393 | (341) | 710 | ||||||||||||||||||||||||
| Income tax (expense) recovery | |||||||||||||||||||||||||||||
| Current | 6 | (34) | (7) | (63) | (79) | ||||||||||||||||||||||||
| Deferred | 6 | 7 | (20) | (3) | (29) | ||||||||||||||||||||||||
| (27) | (27) | (66) | (108) | ||||||||||||||||||||||||||
| Net income (loss) | $ | (664) | $ | 1,370 | $ | (512) | $ | 810 | |||||||||||||||||||||
| Net income (loss) attributable to: | |||||||||||||||||||||||||||||
| Non-controlling interests | |||||||||||||||||||||||||||||
| Participating non-controlling interests – in operating subsidiaries | 9 | $ | 10 | $ | 29 | $ | 12 | $ | 240 | ||||||||||||||||||||
| Participating non-controlling interests – in a holding subsidiary held by the partnership | 9 | — | 1 | 1 | 4 | ||||||||||||||||||||||||
| The partnership | 10 | (674) | 1,340 | (525) | 566 | ||||||||||||||||||||||||
| $ | (664) | $ | 1,370 | $ | (512) | $ | 810 | ||||||||||||||||||||||
The accompanying notes are an integral part of these interim consolidated financial statements.
(1) Direct operating costs exclude depreciation expense disclosed below.
| Brookfield Renewable Corporation | Interim Consolidated Financial Statements and Notes | September 30, 2024 | ||||||
Page 3 | ||||||||
BROOKFIELD RENEWABLE CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
UNAUDITED (MILLIONS) | Three months ended September 30 | Nine months ended September 30 | |||||||||||||||||||||||||||
| Notes | 2024 | 2023 | 2024 | 2023 | |||||||||||||||||||||||||
| Net income (loss) | $ | (664) | $ | 1,370 | $ | (512) | $ | 810 | |||||||||||||||||||||
| Other comprehensive income (loss) that will not be reclassified to net income: | |||||||||||||||||||||||||||||
| Revaluations of property, plant and equipment | 7 | (2) | — | (123) | (49) | ||||||||||||||||||||||||
| Actuarial (loss) gain on defined benefit plans | — | (3) | 2 | (8) | |||||||||||||||||||||||||
| Deferred income taxes on above item | (1) | (8) | (1) | 5 | |||||||||||||||||||||||||
| Total items that will not be reclassified to net income | (3) | (11) | (122) | (52) | |||||||||||||||||||||||||
| Other comprehensive income (loss) that may be reclassified to net income: | |||||||||||||||||||||||||||||
| Foreign currency translation | 35 | (6) | (732) | 826 | |||||||||||||||||||||||||
| Gains (losses) arising during the period on financial instruments designated as cash-flow hedges | 4 | (28) | 3 | (92) | 168 | ||||||||||||||||||||||||
| Unrealized gain (loss) on foreign exchange swap net investment hedges | 4 | (16) | 20 | 66 | (21) | ||||||||||||||||||||||||
| Reclassification adjustments for amounts recognized in net income | 4 | (23) | (7) | (88) | (87) | ||||||||||||||||||||||||
| Deferred income taxes on above items | 18 | (7) | 29 | (17) | |||||||||||||||||||||||||
| Equity-accounted investments | 12 | 1 | 2 | (5) | 2 | ||||||||||||||||||||||||
| Total items that may be reclassified subsequently to net income | (13) | 5 | (822) | 871 | |||||||||||||||||||||||||
| Other comprehensive income (loss) | (16) | (6) | (944) | 819 | |||||||||||||||||||||||||
| Comprehensive income (loss) | $ | (680) | $ | 1,364 | $ | (1,456) | $ | 1,629 | |||||||||||||||||||||
| Comprehensive income (loss) attributable to: | |||||||||||||||||||||||||||||
| Non-controlling interests | |||||||||||||||||||||||||||||
| Participating non-controlling interests – in operating subsidiaries | 9 | $ | 1 | $ | 84 | $ | (584) | $ | 818 | ||||||||||||||||||||
| Participating non-controlling interests – in a holding subsidiary held by the partnership | 9 | 2 | (3) | (19) | 21 | ||||||||||||||||||||||||
| The partnership | 9 | (683) | 1,283 | (853) | 790 | ||||||||||||||||||||||||
| $ | (680) | $ | 1,364 | $ | (1,456) | $ | 1,629 | ||||||||||||||||||||||
The accompanying notes are an integral part of these interim consolidated financial statements.
| Brookfield Renewable Corporation | Interim Consolidated Financial Statements and Notes | September 30, 2024 | ||||||
Page 4 | ||||||||
BROOKFIELD RENEWABLE CORPORATION
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
| Accumulated other comprehensive income | Non-controlling interests | ||||||||||||||||||||||||||||||||||||||||||||||
UNAUDITED THREE MONTHS ENDED SEPTEMBER 30 (MILLIONS) | The partnership | Foreign currency translation | Revaluation surplus | Other | Total | Participating non-controlling interests – in a holding subsidiary held by the partnership | Participating non-controlling interests – in operating subsidiaries | Total equity | |||||||||||||||||||||||||||||||||||||||
| Balance, as at June 30, 2024 | $ | (3,422) | $ | (1,494) | $ | 10,393 | $ | 51 | $ | 5,528 | $ | 232 | $ | 9,079 | $ | 14,839 | |||||||||||||||||||||||||||||||
| Net income (loss) | (674) | — | — | — | (674) | — | 10 | (664) | |||||||||||||||||||||||||||||||||||||||
| Other comprehensive income (loss) | — | 23 | (2) | (30) | (9) | 2 | (9) | (16) | |||||||||||||||||||||||||||||||||||||||
| Capital contributions | — | — | — | — | — | — | 95 | 95 | |||||||||||||||||||||||||||||||||||||||
| Return of capital | — | — | — | — | — | — | (44) | (44) | |||||||||||||||||||||||||||||||||||||||
| Dividends declared | — | — | — | — | — | (5) | (52) | (57) | |||||||||||||||||||||||||||||||||||||||
| Other | 8 | — | 1 | 22 | 31 | — | 2 | 33 | |||||||||||||||||||||||||||||||||||||||
| Change in period | (666) | 23 | (1) | (8) | (652) | (3) | 2 | (653) | |||||||||||||||||||||||||||||||||||||||
| Balance, as at September 30, 2024 | $ | (4,088) | $ | (1,471) | $ | 10,392 | $ | 43 | $ | 4,876 | $ | 229 | $ | 9,081 | $ | 14,186 | |||||||||||||||||||||||||||||||
| Balance, as at June 30, 2023 | $ | (3,930) | $ | (1,335) | $ | 10,587 | $ | 62 | $ | 5,384 | $ | 289 | $ | 10,821 | $ | 16,494 | |||||||||||||||||||||||||||||||
| Net income | 1,340 | — | — | — | 1,340 | 1 | 29 | 1,370 | |||||||||||||||||||||||||||||||||||||||
| Other comprehensive income (loss) | — | (42) | (8) | (7) | (57) | (4) | 55 | (6) | |||||||||||||||||||||||||||||||||||||||
| Capital contributions | — | — | — | — | — | — | 32 | 32 | |||||||||||||||||||||||||||||||||||||||
| Disposal | — | — | — | — | — | — | (30) | (30) | |||||||||||||||||||||||||||||||||||||||
| Dividends declared | — | — | — | — | — | (13) | (103) | (116) | |||||||||||||||||||||||||||||||||||||||
| Other | 1 | (1) | 7 | 2 | 9 | — | 5 | 14 | |||||||||||||||||||||||||||||||||||||||
| Change in period | 1,341 | (43) | (1) | (5) | 1,292 | (16) | (12) | 1,264 | |||||||||||||||||||||||||||||||||||||||
| Balance, as at September 30, 2023 | $ | (2,589) | $ | (1,378) | $ | 10,586 | $ | 57 | $ | 6,676 | $ | 273 | $ | 10,809 | $ | 17,758 | |||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these interim consolidated financial statements.
| Brookfield Renewable Corporation | Interim Consolidated Financial Statements and Notes | September 30, 2024 | ||||||
| Page 38 | ||||||||
BROOKFIELD RENEWABLE CORPORATION
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
| Accumulated other comprehensive income | Non-controlling interests | ||||||||||||||||||||||||||||||||||||||||||||||
UNAUDITED NINE MONTHS ENDED SEPTEMBER 30 (MILLIONS) | The partnership | Foreign currency translation | Revaluation surplus | Other | Total | Participating non-controlling interests – in a holding subsidiary held by the partnership | Participating non-controlling interests – in operating subsidiaries | Total equity | |||||||||||||||||||||||||||||||||||||||
| Balance, as at December 31, 2023 | $ | (3,477) | $ | (1,255) | $ | 10,437 | $ | 82 | $ | 5,787 | $ | 272 | $ | 11,070 | $ | 17,129 | |||||||||||||||||||||||||||||||
| Net income (loss) | (525) | — | — | — | (525) | 1 | 12 | (512) | |||||||||||||||||||||||||||||||||||||||
| Other comprehensive loss | — | (216) | (52) | (60) | (328) | (20) | (596) | (944) | |||||||||||||||||||||||||||||||||||||||
| Capital contributions | — | — | — | — | — | — | 220 | 220 | |||||||||||||||||||||||||||||||||||||||
Disposal (Note 2,18) | (84) | — | 6 | 15 | (63) | — | (1,305) | (1,368) | |||||||||||||||||||||||||||||||||||||||
| Return of capital | — | — | — | — | — | — | (44) | (44) | |||||||||||||||||||||||||||||||||||||||
| Dividends declared | — | — | — | — | — | (24) | (297) | (321) | |||||||||||||||||||||||||||||||||||||||
| Other | (2) | — | 1 | 6 | 5 | — | 21 | 26 | |||||||||||||||||||||||||||||||||||||||
| Change in period | (611) | (216) | (45) | (39) | (911) | (43) | (1,989) | (2,943) | |||||||||||||||||||||||||||||||||||||||
| Balance, as at September 30, 2024 | $ | (4,088) | $ | (1,471) | $ | 10,392 | $ | 43 | $ | 4,876 | $ | 229 | $ | 9,081 | $ | 14,186 | |||||||||||||||||||||||||||||||
| Balance, as at December 31, 2022 | $ | (3,186) | $ | (1,582) | $ | 10,615 | $ | 26 | $ | 5,873 | $ | 271 | $ | 10,680 | $ | 16,824 | |||||||||||||||||||||||||||||||
| Net income (loss) | 566 | — | — | — | 566 | 4 | 240 | 810 | |||||||||||||||||||||||||||||||||||||||
| Other comprehensive income (loss) | — | 201 | (8) | 31 | 224 | 17 | 578 | 819 | |||||||||||||||||||||||||||||||||||||||
| Capital contributions | — | — | — | — | — | — | 135 | 135 | |||||||||||||||||||||||||||||||||||||||
| Disposal | 34 | — | (34) | — | — | — | (418) | (418) | |||||||||||||||||||||||||||||||||||||||
| Dividends declared | — | — | — | — | — | (17) | (420) | (437) | |||||||||||||||||||||||||||||||||||||||
| Other | (3) | 3 | 13 | — | 13 | (2) | 14 | 25 | |||||||||||||||||||||||||||||||||||||||
| Change in period | 597 | 204 | (29) | 31 | 803 | 2 | 129 | 934 | |||||||||||||||||||||||||||||||||||||||
| Balance, as at September 30, 2023 | $ | (2,589) | $ | (1,378) | $ | 10,586 | $ | 57 | $ | 6,676 | $ | 273 | $ | 10,809 | $ | 17,758 | |||||||||||||||||||||||||||||||
The accompanying notes are an integral part of these interim consolidated financial statements.
| Brookfield Renewable Corporation | Interim Consolidated Financial Statements and Notes | September 30, 2024 | ||||||
| Page 38 | ||||||||
BROOKFIELD RENEWABLE CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
| UNAUDITED | Three months ended September 30 | Nine months ended September 30 | |||||||||||||||||||||||||||
| (MILLIONS) | Notes | 2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||||||
| Operating activities | |||||||||||||||||||||||||||||
| Net income (loss) | $ | (664) | $ | 1,370 | $ | (512) | $ | 810 | |||||||||||||||||||||
Adjustments for the following non-cash items: | |||||||||||||||||||||||||||||
Depreciation | 7 | 313 | 320 | 970 | 953 | ||||||||||||||||||||||||
| Unrealized financial instruments (gain) loss | 4 | (39) | (27) | (105) | (119) | ||||||||||||||||||||||||
| Share of loss from equity-accounted investments | 12 | — | 7 | 22 | 7 | ||||||||||||||||||||||||
| Deferred income tax (recovery) expense | 6 | (7) | 20 | 3 | 29 | ||||||||||||||||||||||||
Other non-cash items | 53 | (56) | 99 | (27) | |||||||||||||||||||||||||
| Remeasurement of BEPC exchangeable shares and class B shares | 10 | 612 | (1,393) | 341 | (710) | ||||||||||||||||||||||||
| Dividends received from equity-accounted investments | 12 | 4 | 4 | 11 | 6 | ||||||||||||||||||||||||
| 272 | 245 | 829 | 949 | ||||||||||||||||||||||||||
| Changes in due to or from related parties | (23) | 25 | 30 | 28 | |||||||||||||||||||||||||
| Net change in working capital balances | 59 | 18 | (154) | 155 | |||||||||||||||||||||||||
| 308 | 288 | 705 | 1,132 | ||||||||||||||||||||||||||
| Financing activities | |||||||||||||||||||||||||||||
| Proceeds from non-recourse borrowings | 938 | 516 | 2,418 | 1,212 | |||||||||||||||||||||||||
| Repayment of non-recourse borrowings | 8 | (848) | (483) | (2,229) | (1,485) | ||||||||||||||||||||||||
| Capital contributions from non-controlling interests | 9 | 95 | 32 | 220 | 135 | ||||||||||||||||||||||||
| Return of capital to non-controlling interests | (44) | (30) | (80) | (30) | |||||||||||||||||||||||||
| Exchangeable share issuance | — | — | — | 251 | |||||||||||||||||||||||||
| Distributions paid: | |||||||||||||||||||||||||||||
| To participating non-controlling interests | 9 | (57) | (116) | (321) | (437) | ||||||||||||||||||||||||
| Related party borrowings, net | 18 | (250) | (229) | (119) | (549) | ||||||||||||||||||||||||
| (166) | (310) | (111) | (903) | ||||||||||||||||||||||||||
| Investing activities | |||||||||||||||||||||||||||||
| Acquisitions, net of cash and cash equivalents, in acquired entity | — | — | — | (81) | |||||||||||||||||||||||||
| Acquisition of equity-accounted investments | 12 | — | (4) | — | (7) | ||||||||||||||||||||||||
| Investment in property, plant and equipment | 7 | (162) | (185) | (638) | (505) | ||||||||||||||||||||||||
| Proceeds from disposal of assets, net of cash and cash equivalents disposed | 2,18 | — | 106 | (8) | 109 | ||||||||||||||||||||||||
| Proceeds from disposal of securities | 4 | 86 | 31 | 172 | 134 | ||||||||||||||||||||||||
| Restricted cash and other | (42) | (1) | (66) | (25) | |||||||||||||||||||||||||
| (118) | (53) | (540) | (375) | ||||||||||||||||||||||||||
| Foreign exchange gain (loss) on cash | 8 | (10) | (31) | 17 | |||||||||||||||||||||||||
| Cash and cash equivalents | |||||||||||||||||||||||||||||
| Increase (decrease) | 32 | (85) | 23 | (129) | |||||||||||||||||||||||||
| Net change in cash classified within assets held for sale | (27) | 3 | (31) | — | |||||||||||||||||||||||||
| Balance, beginning of period | 614 | 595 | 627 | 642 | |||||||||||||||||||||||||
| Balance, end of period | $ | 619 | $ | 513 | $ | 619 | $ | 513 | |||||||||||||||||||||
| Supplemental cash flow information: | |||||||||||||||||||||||||||||
Interest paid | $ | 319 | $ | 272 | $ | 1,037 | $ | 872 | |||||||||||||||||||||
Interest received | $ | 29 | $ | 42 | $ | 67 | $ | 71 | |||||||||||||||||||||
| Income taxes paid | $ | 19 | $ | 25 | $ | 46 | $ | 138 | |||||||||||||||||||||
The accompanying notes are an integral part of these interim consolidated financial statements.
| Brookfield Renewable Corporation | Interim Consolidated Financial Statements and Notes | September 30, 2024 | ||||||
Page 7 | ||||||||
BROOKFIELD RENEWABLE CORPORATION
NOTES TO THE UNAUDITED INTERIM CONSOLIDATED FINANCIAL STATEMENTS
Brookfield Renewable Corporation (“BEPC” or the “company) and its subsidiaries, own and operate a portfolio of renewable power and sustainable solution assets primarily in North America, South America and Europe. BEPC was formed as a corporation established under the British Columbia Business Corporation Act on September 9, 2019 and is a subsidiary of Brookfield Renewable Partners L.P. (“BEP”), or, collectively with its controlled subsidiaries, including BEPC (“Brookfield Renewable”, or, collectively with its controlled subsidiaries, excluding BEPC, (the “partnership”). Brookfield Corporation (“Brookfield Corporation” or together with its controlled subsidiaries, other than Brookfield Renewable, and unless the context otherwise requires, includes Brookfield Corporation, “Brookfield”) is our company’s ultimate parent. The term “Brookfield Holders” means Brookfield, Brookfield Wealth Solutions (formerly Brookfield Reinsurance) and their related parties.
The class A exchangeable subordinate voting shares (“BEPC exchangeable shares”) of Brookfield Renewable Corporation are listed on the New York Stock Exchange and the Toronto Stock Exchange under the symbol “BEPC”.
The registered head office of Brookfield Renewable Corporation is 250 Vesey Street, New York, NY, United States.
| Notes to the consolidated financial statements | Page | |||||||
| 1. | Basis of presentation and material accounting policy information | |||||||
| 2. | Disposal of assets | |||||||
| 3. | Assets held for sale | |||||||
| 4. | Risk management and financial instruments | |||||||
| 5. | Segmented information | |||||||
| 6. | Income taxes | |||||||
| 7. | Property, plant and equipment | |||||||
| 8. | Borrowings | |||||||
| 9. | Non-controlling interests | |||||||
| 10. | BEPC Exchangeable shares, BEPC Class B shares and BEPC Class C shares | |||||||
| 11. | Goodwill | |||||||
| 12. | Equity-accounted investments | |||||||
| 13. | Cash and cash equivalents | |||||||
| 14. | Restricted cash | |||||||
| 15. | Trade receivables and other current assets | |||||||
| 16. | Accounts payable and accrued liabilities | |||||||
| 17. | Commitments, contingencies and guarantees | |||||||
| 18. | Related party transactions | |||||||
| Brookfield Renewable Corporation | Interim Consolidated Financial Statements and Notes | September 30, 2024 | ||||||
Page 8 | ||||||||
1. BASIS OF PRESENTATION AND MATERIAL ACCOUNTING POLICY INFORMATION
(a) Statement of compliance
The interim consolidated financial statements have been prepared in accordance with IAS 34, Interim Financial Reporting.
Certain information and footnote disclosures normally included in the annual audited consolidated financial statements prepared in accordance with International Financial Reporting Standards (“IFRS”), as issued by the International Accounting Standards Board (“IASB”), have been omitted or condensed. These interim consolidated financial statements should be read in conjunction with the company’s December 31, 2023 audited consolidated financial statements. The interim consolidated statements have been prepared on a basis consistent with the accounting policies disclosed in the December 31, 2023 audited consolidated financial statements.
The results reported in these interim consolidated financial statements should not be regarded as necessarily indicative of results that may be expected for an entire year. The policies set out below are consistently applied to all periods presented, unless otherwise noted.
These interim financial statements were authorized for issuance by the Board of Directors of the company and authorized of issue on November 8, 2024.
Certain comparative figures have been reclassified to conform to the current year’s presentation.
References to $, €, R$, and COP are to United States (“U.S.”) dollars, Euros, Brazilian reais, and Colombian pesos, respectively.
All figures are presented in millions of U.S. dollars unless otherwise noted.
(b) Basis of presentation
The interim consolidated financial statements have been prepared on the basis of historical cost, except for the revaluation of property, plant and equipment and certain assets and liabilities which have been measured at fair value. Cost is recorded based on the fair value of the consideration given in exchange for assets.
(c) Consolidation
These interim consolidated financial statements include the accounts of the company and its subsidiaries, which are the entities over which the company has control. An investor controls an investee when it is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Non-controlling interests in the equity of the company’s subsidiaries are shown separately in equity in the interim consolidated statements of financial position.
(d) Recently adopted accounting standards
International Tax Reform - Amendments to IAS 12 - Pillar Two model rules
The company operates in countries, including Canada, which have enacted new legislation to implement the global minimum top-up tax, effective from January 1, 2024. The company has applied a temporary mandatory relief from recognizing and disclosing deferred taxes in connection with the global minimum top-up tax and will account for it as a current tax when it is incurred. There is no material current tax impact for the nine months ended September 30, 2024. The global minimum top-up tax is not anticipated to have a significant impact on the financial position of the company.
Amendments to IAS 1 – Presentation of Financial Statements (“IAS 1”)
The amendments clarify how to classify debt and other liabilities as current or non-current. The amendments to IAS 1 apply to annual reporting periods beginning on or after January 1, 2024. The company has assessed the impact of these amendments and have noted no impact to its financial statements.
| Brookfield Renewable Corporation | Interim Consolidated Financial Statements and Notes | September 30, 2024 | ||||||
Page 9 | ||||||||
(e) Future changes in accounting policies
IFRS 18 – Presentation and Disclosure in Financial Statements (“IFRS 18”)
In April 2024, the IASB issued IFRS 18, Presentation and Disclosure of Financial Statements. IFRS 18 is effective for periods beginning on or after January 1, 2027, with early adoption permitted. IFRS 18 is expected to improve the quality of financial reporting by requiring defined subtotals in the statement of profit or loss, requiring disclosure about management-defined performance measures, and adding new principles for aggregation and disaggregation of information. The company has not yet determined the impact of this standard on its disclosures.
There are currently no other future changes to IFRS with potential impact on the company.
2. DISPOSAL OF ASSETS
On May 28, 2024, the company completed the sale of a 30 MW hydro asset in the U.S. for proceeds of approximately $67 million ($15 million net to the company) net of transaction fees. As a result of the disposition, the company derecognized $42 million of total assets, $4 million of total liabilities from the consolidated statements of financial position. This resulted in a gain on disposition of $29 million ($6 million net to the company) recognized within Other income in the consolidated statements of income (loss). As a result of the disposition, the company's post-tax portion of the accumulated revaluation surplus of $28 million was reclassified from accumulated other comprehensive income directly to equity and presented as a Disposals item in the consolidated statements of changes in equity.
On May 31, 2024, the company completed the sale of a 85 MW portfolio of biomass facilities in Brazil for proceeds of approximately R$251 million ($48 million) (R$95 million ($18 million) net to the company). As a result of the disposition, the company derecognized $86 million of total assets and $2 million of total liabilities from the consolidated statements of financial position. This resulted in loss on disposition of $24 million ($9 million net to the company) recognized through other comprehensive income and $12 million ($5 million net to the company) recognized within Other in the consolidated statements of income (loss).
3. ASSETS HELD FOR SALE
As at September 30, 2024 assets held for sale includes a 90 MW portfolio of hydroelectric assets in Brazil, a 30 MW biomass facility in Brazil, a 682 MW portfolio of wind assets in Spain and Portugal and a 63 MW portfolio of solar assets in Spain.
The following is a summary of the major items of assets and liabilities classified as held for sale:
| (MILLIONS) | September 30, 2024 | |||||||||||||
| Assets | ||||||||||||||
| Cash and cash equivalents | $ | 30 | ||||||||||||
| Restricted cash | 1 | |||||||||||||
| Trade receivables and other current assets | 23 | |||||||||||||
| Property, plant and equipment | 1,247 | |||||||||||||
| Goodwill | 63 | |||||||||||||
| Other long-term assets | 24 | |||||||||||||
| Assets held for sale | $ | 1,388 | ||||||||||||
| Liabilities | ||||||||||||||
| Current liabilities | $ | 16 | ||||||||||||
| Non-recourse borrowings | 637 | |||||||||||||
| Financial instrument liabilities | 5 | |||||||||||||
| Deferred tax liability | 99 | |||||||||||||
| Other long-term liabilities | 91 | |||||||||||||
| Liabilities directly associated with assets held for sale | $ | 848 | ||||||||||||
| Brookfield Renewable Corporation | Interim Consolidated Financial Statements and Notes | September 30, 2024 | ||||||
Page 10 | ||||||||
4. RISK MANAGEMENT AND FINANCIAL INSTRUMENTS
RISK MANAGEMENT
The company’s activities expose it to a variety of financial risks, including market risk (i.e., commodity price risk, interest rate risk, and foreign currency risk), credit risk and liquidity risk. The company uses financial instruments primarily to manage these risks.
Fair value disclosures
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
Fair values determined using valuation models require the use of assumptions concerning the amount and timing of estimated future cash flows and discount rates. In determining those assumptions, management looks primarily to external readily observable market inputs such as interest rate yield curves, currency rates, commodity prices and, as applicable, credit spreads.
A fair value measurement of a non-financial asset is the consideration that would be received in an orderly transaction between market participants, considering the highest and best use of the asset.
Assets and liabilities measured at fair value are categorized into one of three hierarchy levels, described below. Each level is based on the transparency of the inputs used to measure the fair values of assets and liabilities.
Level 1 – inputs are based on unadjusted quoted prices in active markets for identical assets and liabilities;
Level 2 – inputs, other than quoted prices in Level 1, that are observable for the asset or liability, either directly or indirectly; and
Level 3 – inputs for the asset or liability that are not based on observable market data.
The following table presents the company's assets and liabilities including energy derivative contracts, power purchase agreements accounted for under IFRS 9 (“IFRS 9 PPAs”), interest rate swaps, foreign exchange swaps and tax equity measured and disclosed at fair value classified by the fair value hierarchy:
| September 30, 2024 | December 31, 2023 | ||||||||||||||||||||||||||||
| (MILLIONS) | Level 1 | Level 2 | Level 3 | Total | Total | ||||||||||||||||||||||||
| Assets measured at fair value: | |||||||||||||||||||||||||||||
| Cash and cash equivalents | $ | 619 | $ | — | $ | — | $ | 619 | $ | 627 | |||||||||||||||||||
Restricted cash(1) | 130 | — | — | 130 | 202 | ||||||||||||||||||||||||
Financial instrument assets(1) | |||||||||||||||||||||||||||||
| IFRS 9 PPAs | — | — | 7 | 7 | 9 | ||||||||||||||||||||||||
| Energy derivative contracts | — | 163 | — | 163 | 86 | ||||||||||||||||||||||||
| Interest rate swaps | — | 101 | — | 101 | 159 | ||||||||||||||||||||||||
| Foreign exchange swaps | — | 22 | — | 22 | — | ||||||||||||||||||||||||
| Investments in equity securities | — | — | — | — | 171 | ||||||||||||||||||||||||
| Property, plant and equipment | — | — | 36,678 | 36,678 | 44,038 | ||||||||||||||||||||||||
| Liabilities measured at fair value: | |||||||||||||||||||||||||||||
Financial instrument liabilities(1) | |||||||||||||||||||||||||||||
| IFRS 9 PPAs | — | (46) | (83) | (129) | (500) | ||||||||||||||||||||||||
| Energy derivative contracts | — | (207) | — | (207) | (74) | ||||||||||||||||||||||||
| Interest rate swaps | — | (18) | — | (18) | (24) | ||||||||||||||||||||||||
| Foreign exchange swaps | — | (233) | — | (233) | (284) | ||||||||||||||||||||||||
| Tax equity | — | — | (257) | (257) | (935) | ||||||||||||||||||||||||
Liabilities for which fair value is disclosed: | |||||||||||||||||||||||||||||
BEPC exchangeable and class B shares(2) | (5,062) | — | — | (5,062) | (4,721) | ||||||||||||||||||||||||
Non-recourse borrowing(1) | (1,813) | (12,023) | — | (13,836) | (16,243) | ||||||||||||||||||||||||
| Total | $ | (6,126) | $ | (12,241) | $ | 36,345 | $ | 17,978 | $ | 22,511 | |||||||||||||||||||
(1)Includes both the current amount and long-term amounts.
(2)BEPC class C shares are also classified as financial liabilities due to their cash redemption feature. As discussed in Note 10 – BEPC Exchangeable shares, BEPC Class B shares and BEPC Class C shares, the BEPC class C shares meet certain qualifying criteria and are presented as equity.
| Brookfield Renewable Corporation | Interim Consolidated Financial Statements and Notes | September 30, 2024 | ||||||
Page 11 | ||||||||
There were no transfers between levels during the nine months ended September 30, 2024.
Financial instruments disclosures
The aggregate amount of our company's net financial instrument positions are as follows:
| September 30, 2024 | December 31, 2023 | ||||||||||||||||||||||
| (MILLIONS) | Assets | Liabilities | Net Assets (Liabilities) | Net Assets (Liabilities) | |||||||||||||||||||
| IFRS 9 PPAs | $ | 7 | $ | 129 | $ | (122) | $ | (491) | |||||||||||||||
| Energy derivative contracts | 163 | 207 | (44) | 12 | |||||||||||||||||||
| Interest rate swaps | 101 | 18 | 83 | 135 | |||||||||||||||||||
| Foreign exchange swaps | 22 | 233 | (211) | (284) | |||||||||||||||||||
| Investments in equity securities | — | — | — | 171 | |||||||||||||||||||
| Tax equity | — | 257 | (257) | (935) | |||||||||||||||||||
| Total | 293 | 844 | (551) | (1,392) | |||||||||||||||||||
| Less: current portion | 165 | 458 | (293) | (317) | |||||||||||||||||||
| Long-term portion | $ | 128 | $ | 386 | $ | (258) | $ | (1,075) | |||||||||||||||
(a) Tax equity
The company owns and operates certain projects in the United States under tax equity structures to finance the construction of utility-scale solar, distributed generation and wind projects. In accordance with the substance of the contractual agreements, the amounts paid by the tax equity investors for their equity stakes are classified as financial instrument liabilities on the interim consolidated statements of financial position.
Gain or loss on the tax equity liabilities are recognized within foreign exchange and financial instruments gain (loss) in the interim consolidated statements of income (loss).
(b) Energy derivative contracts and IFRS 9 PPAs
The company has entered into long-term energy derivative contracts primarily to stabilize or eliminate the price risk on the sale of certain future power generation. Certain energy contracts are recorded in the company's interim consolidated financial statements at an amount equal to fair value, using quoted market prices or, in their absence, a valuation model using both internal and third-party evidence and forecasts.
(c) Interest rate hedges
The company has entered into interest rate hedge contracts primarily to minimize exposure to interest rate fluctuations on its variable rate debt or to lock in interest rates on future debt refinancing. All interest rate hedge contracts are recorded in the interim consolidated financial statements at fair value.
(d) Foreign exchange swaps
The company has entered into foreign exchange swaps to minimize its exposure to currency fluctuations impacting its investments and earnings in foreign operations, and to fix the exchange rate on certain anticipated transactions denominated in foreign currencies.
(e) Investments in debt and equity securities
The company’s investments in debt and equity securities consist of investments in securities which are recorded on the statement of financial position at fair value.
| Brookfield Renewable Corporation | Interim Consolidated Financial Statements and Notes | September 30, 2024 | ||||||
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The following table reflects the gains (losses) included in foreign exchange and financial instruments gain (loss) in the interim consolidated statements of income for the three and nine months ended September 30:
| Three months ended September 30 | Nine months ended September 30 | ||||||||||||||||||||||
| (MILLIONS) | 2024 | 2023 | 2024 | 2023 | |||||||||||||||||||
| IFRS 9 PPAs | $ | 24 | $ | 42 | $ | 39 | $ | 42 | |||||||||||||||
| Energy derivative contracts | 17 | (45) | 18 | 14 | |||||||||||||||||||
| Interest rate swaps | (4) | 8 | 18 | 15 | |||||||||||||||||||
| Foreign exchange swaps | (1) | 5 | 21 | (2) | |||||||||||||||||||
| Tax equity | (12) | 19 | 4 | 43 | |||||||||||||||||||
| Investments in equity securities | — | 2 | 2 | 9 | |||||||||||||||||||
| Foreign exchange gain (loss) | (12) | (10) | (24) | 8 | |||||||||||||||||||
| $ | 12 | $ | 21 | $ | 78 | $ | 129 | ||||||||||||||||
The following table reflects the gains (losses) included in other comprehensive income (loss) in the interim consolidated statements of comprehensive income (loss) for the three and nine months ended September 30:
| Three months ended September 30 | Nine months ended September 30 | ||||||||||||||||||||||
| (MILLIONS) | 2024 | 2023 | 2024 | 2023 | |||||||||||||||||||
| IFRS 9 PPAs | $ | 9 | $ | (5) | $ | (61) | $ | 20 | |||||||||||||||
| Energy derivative contracts | 18 | (26) | 33 | 164 | |||||||||||||||||||
| Interest rate swaps | (55) | 18 | (63) | (12) | |||||||||||||||||||
| Foreign exchange swaps | — | 16 | (1) | (4) | |||||||||||||||||||
| (28) | 3 | (92) | 168 | ||||||||||||||||||||
| Foreign exchange swaps - net investment | (16) | 20 | 66 | (21) | |||||||||||||||||||
| $ | (44) | $ | 23 | $ | (26) | $ | 147 | ||||||||||||||||
The following table reflects the reclassification adjustments recognized in net income in the interim consolidated statements of comprehensive income (loss) for the three and nine months ended September 30:
| Three months ended September 30 | Nine months ended September 30 | ||||||||||||||||||||||
| (MILLIONS) | 2024 | 2023 | 2024 | 2023 | |||||||||||||||||||
| Energy derivative contracts | $ | (22) | $ | 3 | $ | (81) | $ | (86) | |||||||||||||||
| Interest rate swaps | (1) | — | (7) | — | |||||||||||||||||||
| Foreign exchange swaps | — | (10) | — | (1) | |||||||||||||||||||
| $ | (23) | $ | (7) | $ | (88) | $ | (87) | ||||||||||||||||
5. SEGMENTED INFORMATION
The company’s Chief Executive Officer and Chief Financial Officer (collectively, the chief operating decision maker or “CODM”) review the results of the operations, manage the operations, and allocate resources based on the type of technology, in conjunction with other segments of Brookfield Renewable.
The operations of the company are segmented by – 1) hydroelectric, 2) wind, 3) utility-scale solar, 4) distributed energy & sustainable solutions (distributed generation, pumped storage, carbon capture and storage, and biomass) and 5) corporate. This best reflects the way in which the CODM reviews the results of the company.
In accordance with IFRS 8, Operating Segments, the company discloses information about its reportable segments based upon the measures used by the CODM in assessing performance. The accounting policies of the reportable segments are the same as those described in Note 1 – Basis of presentation and material accounting policy information.
Reporting to the CODM on the measures utilized to assess performance and allocate resources is provided on a proportionate basis. Information on a proportionate basis reflects the company’s share from facilities which it accounts for using consolidation and the equity method whereby the company either controls or exercises significant influence or joint control over the investment, respectively. Proportionate information provides shareholders perspective that the CODM considers important when performing internal analyses and making strategic and operating decisions. The CODM also believes that providing proportionate information helps investors understand the impacts of decisions made by management and financial results allocable to the company’s shareholders.
| Brookfield Renewable Corporation | Interim Consolidated Financial Statements and Notes | September 30, 2024 | ||||||
Page 13 | ||||||||
Proportionate financial information is not, and is not intended to be, presented in accordance with IFRS. Tables reconciling IFRS data with data presented on a proportionate consolidation basis have been disclosed below. Segment revenues, other income, direct operating costs, interest expense, current income taxes, and other are items that will differ from results presented in accordance with IFRS as these items (1) include the company’s proportionate share of earnings from equity-accounted investments attributable to each of the above-noted items, (2) exclude the proportionate share of earnings (loss) of consolidated investments not held by the company apportioned to each of the above-noted items, and (3) other income includes but not limited to our proportionate share of settled foreign currency and other hedges, income earned on financial assets and structured investments in sustainable solutions, transferable tax credits and realized disposition gains on non-core assets and on recently developed assets that we have monetized to reflect the economic value created from our development activities as we design, build and commercialize new renewable energy capacity and sell these assets to lower cost of capital buyers which may not otherwise be reflected in our consolidated statements of income.
The company does not control those entities that have not been consolidated and as such, have been presented as equity-accounted investments in its consolidated financial statements. The presentation of the assets and liabilities and revenues and expenses does not represent the company’s legal claim to such items, and the removal of financial statement amounts that are attributable to non-controlling interests does not extinguish the company’s legal claims or exposures to such items.
The company reports its results in accordance with these segments and presents prior period segmented information in a consistent manner.
The company analyzes the performance of its operating segments based on Funds From Operations. Funds From Operations is not a generally accepted accounting measure under IFRS and therefore may differ from definitions of Funds From Operations used by other entities, as well as the definition of funds from operations used by the Real Property Association of Canada (“REALPAC”) and the National Association of Real Estate Investment Trusts, Inc. (“NAREIT”).
The company uses Funds From Operations to assess the performance of the company before the effects of certain cash items (e.g., acquisition costs and other typical non-recurring cash items) and certain non-cash items (e.g., deferred income taxes, depreciation, non-cash portion of non-controlling interests, unrealized gain or loss on financial instruments, non-cash gain or loss from equity-accounted investments, and other non-cash items) as these are not reflective of the performance of the underlying business, and including investment tax credits not allocated to tax equity partners. The company includes realized disposition gains and losses on assets that we developed and/or did not intend to hold over the long-term within Funds From Operations in order to provide additional insight regarding the performance of investments on a cumulative realized basis, including any unrealized fair value adjustments that were recorded in equity and not otherwise reflected in current period net income.
| Brookfield Renewable Corporation | Interim Consolidated Financial Statements and Notes | September 30, 2024 | ||||||
Page 14 | ||||||||
The following table provides each segment's results in the format that management organizes its segments to make operating decisions and assess performance and reconciles the company's proportionate results to the consolidated statements of income on a line by line basis by aggregating the components comprising the earnings from the company's investments in associates and reflecting the portion of each line item attributable to non-controlling interests for the three months ended September 30, 2024:
| Attributable to the partnership | Contribution from equity-accounted investments | Attributable to non- controlling interests | As per IFRS financials(1) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (MILLIONS) | Hydroelectric | Wind | Utility-scale solar | Distributed energy & sustainable solutions | Corporate | Total | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Revenues | $ | 276 | $ | 46 | $ | 83 | $ | 33 | $ | — | $ | 438 | $ | (15) | $ | 618 | $ | 1,041 | |||||||||||||||||||||||||||||||||||||||||
| Other income (loss) | 7 | 2 | — | 2 | — | 11 | — | 18 | 29 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Direct operating costs | (126) | (19) | (14) | (14) | (1) | (174) | 8 | (241) | (407) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Share of revenue, other income and direct operating costs from equity-accounted investments | — | — | — | — | — | — | 7 | — | 7 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| 157 | 29 | 69 | 21 | (1) | 275 | — | 395 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Management service costs | — | — | — | — | (28) | (28) | — | — | (28) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Interest expense(1) | (58) | (10) | (17) | (4) | 8 | (81) | 2 | (185) | (264) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Current income taxes | (9) | — | — | — | — | (9) | — | (25) | (34) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Share of interest and cash taxes from equity-accounted investments | — | — | — | — | — | — | (2) | — | (2) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Share of Funds From Operations attributable to non-controlling interests | — | — | — | — | — | — | — | (185) | (185) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Funds From Operations | 90 | 19 | 52 | 17 | (21) | 157 | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Depreciation | (313) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Foreign exchange and financial instrument gain (loss) | 12 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Deferred income tax recovery | 7 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other | (31) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Dividends on BEPC exchangeable shares(1) | (64) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Remeasurement of BEPC exchangeable and BEPC class B shares | (612) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Share of earnings (loss) from equity-accounted investments | (5) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net income (loss) attributable to non-controlling interests | 175 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net income (loss) attributable to the partnership | $ | (674) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(1)Share of loss from equity-accounted investments of nil is comprised of amounts found on the Share of revenue, other income and direct operating costs, Share of interest and cash taxes and Share of earnings lines. Net income attributable to participating non-controlling interests of $10 million is comprised of amounts found on Share of Funds From Operations attributable to non-controlling interests and Net Income attributable to non-controlling interests. Total interest expense of $328 million is comprised of amounts on Interest expense and Dividends on BEPC exchangeable shares.
| Brookfield Renewable Corporation | Interim Consolidated Financial Statements and Notes | September 30, 2024 | ||||||
Page 15 | ||||||||
The following table provides each segment's results in the format that management organizes its segments to make operating decisions and assess performance and reconciles the company's proportionate results to the consolidated statements of income on a line by line basis by aggregating the components comprising the earnings from the company's investments in associates and reflecting the portion of each line item attributable to non-controlling interests for the three months ended September 30, 2023:
| Attributable to the partnership | Contribution from equity-accounted investments | Attributable to non- controlling interests | As per IFRS financials(1) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| (MILLIONS) | Hydroelectric | Wind | Utility-scale solar | Distributed energy & sustainable solutions | Corporate | Total | |||||||||||||||||||||||||||||||||||||||||||||||
| Revenues | $ | 291 | $ | 28 | $ | 33 | $ | 33 | $ | — | $ | 385 | $ | (12) | $ | 561 | $ | 934 | |||||||||||||||||||||||||||||||||||
| Other income | 4 | 28 | — | 1 | 3 | 36 | — | 59 | 95 | ||||||||||||||||||||||||||||||||||||||||||||
| Direct operating costs | (123) | (12) | (9) | (11) | (3) | (158) | 7 | (237) | (388) | ||||||||||||||||||||||||||||||||||||||||||||
| Share of revenue, other income and direct operating costs from equity-accounted investments | — | — | — | — | — | — | 5 | — | 5 | ||||||||||||||||||||||||||||||||||||||||||||
| 172 | 44 | 24 | 23 | — | 263 | — | 383 | ||||||||||||||||||||||||||||||||||||||||||||||
| Management service costs | — | — | — | — | (26) | (26) | — | — | (26) | ||||||||||||||||||||||||||||||||||||||||||||
Interest expense(1) | (65) | (8) | (10) | (7) | 5 | (85) | 2 | (164) | (247) | ||||||||||||||||||||||||||||||||||||||||||||
| Current income taxes | (2) | — | 1 | — | — | (1) | — | (6) | (7) | ||||||||||||||||||||||||||||||||||||||||||||
| Share of interest and cash taxes from equity-accounted investments | — | — | — | — | — | — | (2) | — | (2) | ||||||||||||||||||||||||||||||||||||||||||||
| Share of Funds From Operations attributable to non-controlling interests | — | — | — | — | — | — | — | (213) | (213) | ||||||||||||||||||||||||||||||||||||||||||||
| Funds From Operations | 105 | 36 | 15 | 16 | (21) | 151 | — | — | |||||||||||||||||||||||||||||||||||||||||||||
| Depreciation | (320) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Foreign exchange and financial instrument loss | 21 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Deferred income tax recovery | (20) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other | 3 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Dividends on BEPC exchangeable shares(1) | (61) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Remeasurement of BEPC exchangeable and BEPC class B shares | 1,393 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Share of earnings from equity-accounted investments | (10) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net income attributable to non-controlling interests | 183 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net income attributable to the partnership | $ | 1,340 | |||||||||||||||||||||||||||||||||||||||||||||||||||
(1)Share of earnings from equity-accounted investments of $7 million is comprised of amounts found on the Share of revenue, other income and direct operating costs, Share of interest and cash taxes and Share of earnings lines. Net income attributable to participating non-controlling interests of $30 million is comprised of amounts found on Share of Funds From Operations attributable to non-controlling interests and Net Income attributable to non-controlling interests. Total interest expense of $308 million is comprised of amounts on Interest expense and Dividends on BEPC exchangeable shares.
| Brookfield Renewable Corporation | Interim Consolidated Financial Statements and Notes | September 30, 2024 | ||||||
Page 16 | ||||||||
The following table provides each segment's results in the format that management organizes its segments to make operating decisions and assess performance and reconciles the company's proportionate results to the consolidated statements of income (loss) on a line by line basis by aggregating the components comprising the earnings from the company's investments in associates and reflecting the portion of each line item attributable to non-controlling interests for the nine months ended September 30, 2024:
| Attributable to the partnership | Contribution from equity-accounted investments | Attributable to non- controlling interests | As per IFRS financials(1) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (MILLIONS) | Hydroelectric | Wind | Utility-scale solar | Distributed energy & sustainable solutions | Corporate | Total | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Revenues | $ | 917 | $ | 162 | $ | 210 | $ | 99 | $ | — | $ | 1,388 | $ | (52) | $ | 1,819 | $ | 3,155 | |||||||||||||||||||||||||||||||||||||||||
| Other income (loss) | 18 | 16 | 20 | 8 | 43 | 105 | — | (9) | 96 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Direct operating costs | (380) | (64) | (50) | (41) | (5) | (540) | 22 | (792) | (1,310) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Share of revenue, other income and direct operating costs from equity-accounted investments | — | — | — | — | — | — | 30 | — | 30 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| 555 | 114 | 180 | 66 | 38 | 953 | — | 1,018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Management service costs | — | — | — | — | (71) | (71) | — | — | (71) | ||||||||||||||||||||||||||||||||||||||||||||||||||
Interest expense(1) | (173) | (34) | (51) | (18) | 8 | (268) | 8 | (579) | (839) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Current income taxes | (17) | (2) | — | — | — | (19) | — | (44) | (63) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Share of interest and cash taxes from equity-accounted investments | — | — | — | — | — | — | (8) | — | (8) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Share of Funds From Operations attributable to non-controlling interests | — | — | — | — | — | — | — | (395) | (395) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Funds From Operations | 365 | 78 | 129 | 48 | (25) | 595 | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Depreciation | (970) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Foreign exchange and financial instrument gain (loss) | 78 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Deferred income tax expense | (3) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other | (29) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Dividends on BEPC exchangeable shares(1) | (193) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Remeasurement of BEPC exchangeable and BEPC class B shares | (341) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Share of earnings (loss) from equity-accounted investments | (44) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net income (loss) attributable to non-controlling interests | 382 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net income (loss) attributable to the partnership | $ | (525) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(1)Share of loss from equity-accounted investments of $22 million is comprised of amounts found on the Share of revenue, other income and direct operating costs, Share of interest and cash taxes and Share of earnings lines. Net loss attributable to participating non-controlling interests of $13 million is comprised of amounts found on Share of Funds From Operations attributable to non-controlling interests and Net Income attributable to non-controlling interests. Total interest expense of $1,032 million is comprised of amounts on Interest expense and Dividends on BEPC exchangeable shares.
| Brookfield Renewable Corporation | Interim Consolidated Financial Statements and Notes | September 30, 2024 | ||||||
Page 17 | ||||||||
The following table provides each segment's results in the format that management organizes its segments to make operating decisions and assess performance and reconciles the company's proportionate results to the consolidated statements of income on a line by line basis by aggregating the components comprising the earnings from the company's investments in associates and reflecting the portion of each line item attributable to non-controlling interests for the nine months ended September 30, 2023:
| Attributable to the partnership | Contribution from equity-accounted investments | Attributable to non- controlling interests | As per IFRS financials(1) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| (MILLIONS) | Hydroelectric | Wind | Utility-scale solar | Distributed energy & sustainable solutions | Corporate | Total | |||||||||||||||||||||||||||||||||||||||||||||||
| Revenues | $ | 939 | $ | 107 | $ | 122 | $ | 102 | $ | — | $ | 1,270 | $ | (36) | $ | 1,667 | $ | 2,901 | |||||||||||||||||||||||||||||||||||
| Other income | 19 | 34 | 20 | 6 | 19 | 98 | (3) | 52 | 147 | ||||||||||||||||||||||||||||||||||||||||||||
| Direct operating costs | (344) | (32) | (28) | (31) | (5) | (440) | 17 | (577) | (1,000) | ||||||||||||||||||||||||||||||||||||||||||||
| Share of revenue, other income and direct operating costs from equity-accounted investments | — | — | — | — | — | — | 22 | — | 22 | ||||||||||||||||||||||||||||||||||||||||||||
| 614 | 109 | 114 | 77 | 14 | 928 | — | 1,142 | ||||||||||||||||||||||||||||||||||||||||||||||
| Management service costs | — | — | — | — | (94) | (94) | — | — | (94) | ||||||||||||||||||||||||||||||||||||||||||||
Interest expense(1) | (195) | (21) | (38) | (16) | 5 | (265) | 6 | (490) | (749) | ||||||||||||||||||||||||||||||||||||||||||||
| Current income taxes | (18) | (2) | (1) | — | — | (21) | — | (58) | (79) | ||||||||||||||||||||||||||||||||||||||||||||
| Share of interest and cash taxes from equity-accounted investments | — | — | — | — | — | — | (6) | — | (6) | ||||||||||||||||||||||||||||||||||||||||||||
| Share of Funds From Operations attributable to non-controlling interests | — | — | — | — | — | — | — | (594) | (594) | ||||||||||||||||||||||||||||||||||||||||||||
| Funds From Operations | 401 | 86 | 75 | 61 | (75) | 548 | — | — | |||||||||||||||||||||||||||||||||||||||||||||
| Depreciation | (953) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Foreign exchange and financial instrument gain | 129 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Deferred income tax expense | (29) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other | 14 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Dividends on BEPC exchangeable shares(1) | (180) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Remeasurement of BEPC exchangeable and BEPC class B shares | 710 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Share of earnings (loss) from equity-accounted investments | (23) | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net income attributable to non-controlling interests | 350 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| Net loss attributable to the partnership | $ | 566 | |||||||||||||||||||||||||||||||||||||||||||||||||||
(1)Share of earnings from equity-accounted investments of $7 million is comprised of amounts found on the Share of revenue, other income and direct operating costs, Share of interest and cash taxes and Share of earnings lines. Net loss attributable to participating non-controlling interests of $244 million is comprised of amounts found on Share of Funds From Operations attributable to non-controlling interests and Net Income attributable to non-controlling interests. Total interest expense of $929 million is comprised of amounts on Interest expense and Dividends on BEPC exchangeable shares.
| Brookfield Renewable Corporation | Interim Consolidated Financial Statements and Notes | September 30, 2024 | ||||||
Page 18 | ||||||||
The following table presents information on a segmented basis about certain items in our company's statements of financial position and reconciles the company's proportionate results to the consolidated statements of financial position by aggregating the components comprising the company's investments in associates and reflecting the portion of each line item attributable to non-controlling interests:
| Attributable to the partnership | Contribution from equity- accounted investments | Attributable to non- controlling interests | As per IFRS financials | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| (MILLIONS) | Hydroelectric | Wind | Utility-scale solar | Distributed energy & sustainable solutions | Corporate | Total | |||||||||||||||||||||||||||||||||||||||||||||||||||||
| As at September 30, 2024 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Cash and cash equivalents | $ | 125 | $ | 43 | $ | 74 | $ | 18 | $ | — | $ | 260 | $ | (8) | $ | 367 | $ | 619 | |||||||||||||||||||||||||||||||||||||||||
| Property, plant and equipment | 13,370 | 1,833 | 1,632 | 1,233 | — | 18,068 | (740) | 19,350 | 36,678 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total assets | 15,270 | 2,329 | 1,996 | 1,309 | 226 | 21,130 | (213) | 21,958 | 42,875 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total liabilities | 7,441 | 1,398 | 1,750 | 563 | 5,098 | 16,250 | (213) | 12,652 | 28,689 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| As at December 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Cash and cash equivalents | $ | 89 | $ | 89 | $ | 68 | $ | 12 | $ | — | $ | 258 | $ | (5) | $ | 374 | $ | 627 | |||||||||||||||||||||||||||||||||||||||||
| Property, plant and equipment, at fair value | 13,914 | 2,713 | 2,422 | 1,312 | — | 20,361 | (752) | 24,429 | 44,038 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total assets | 15,899 | 2,986 | 2,604 | 1,370 | 392 | 23,251 | (222) | 26,392 | 49,421 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Total liabilities | 7,748 | 2,206 | 2,154 | 589 | 4,766 | 17,463 | (222) | 15,051 | 32,292 | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Brookfield Renewable Corporation | Interim Consolidated Financial Statements and Notes | September 30, 2024 | ||||||
Page 19 | ||||||||
Additional Segment Information
The following table presents consolidated revenue split by technology for the three and nine months ended September 30:
| Three months ended September 30 | Nine months ended September 30 | ||||||||||||||||||||||
| (MILLIONS) | 2024 | 2023 | 2024 | 2023 | |||||||||||||||||||
| Hydroelectric | $ | 640 | $ | 597 | $ | 1,942 | $ | 1,862 | |||||||||||||||
| Wind | 146 | 111 | 512 | 406 | |||||||||||||||||||
| Utility-scale solar | 222 | 169 | 567 | 459 | |||||||||||||||||||
| Distributed energy & sustainable solutions | 33 | 57 | 134 | 174 | |||||||||||||||||||
| Total | $ | 1,041 | $ | 934 | $ | 3,155 | $ | 2,901 | |||||||||||||||
The following table presents consolidated property, plant and equipment and equity-accounted investments split by geographical region:
| (MILLIONS) | September 30, 2024 | December 31, 2023 | |||||||||
| North America | $ | 21,761 | $ | 26,082 | |||||||
| Colombia | 9,626 | 10,585 | |||||||||
| Brazil | 4,032 | 4,888 | |||||||||
| Europe | 1,890 | 3,127 | |||||||||
| $ | 37,309 | $ | 44,682 | ||||||||
6. INCOME TAXES
The company's effective income tax rate was (14.8)% for the nine months ended September 30, 2024 (2023: 11.8%). The effective tax rate is different than the statutory rate primarily due to rate differentials, non-recognition of the benefit of current year tax losses, and non-controlling interests' income or loss not subject to tax.
| Brookfield Renewable Corporation | Interim Consolidated Financial Statements and Notes | September 30, 2024 | ||||||
Page 20 | ||||||||
7. PROPERTY, PLANT AND EQUIPMENT
The following table presents a reconciliation of property, plant and equipment at fair value:
| (MILLIONS) | Hydroelectric | Wind | Solar | Other(1) | Total(2)(3) | ||||||||||||||||||||||||||||||
| Property, plant and equipment, at fair value | |||||||||||||||||||||||||||||||||||
| As at December 31, 2023 | $ | 26,591 | $ | 7,172 | $ | 8,302 | $ | 197 | $ | 42,262 | |||||||||||||||||||||||||
| Additions, net | 7 | (5) | 10 | — | 12 | ||||||||||||||||||||||||||||||
| Transfer from construction work-in-progress | 9 | 228 | 134 | — | 371 | ||||||||||||||||||||||||||||||
| Transfer to assets held for sale | (143) | (807) | (285) | (11) | (1,246) | ||||||||||||||||||||||||||||||
Disposals(4) | (38) | (1,933) | (1,596) | (39) | (3,606) | ||||||||||||||||||||||||||||||
| Items recognized through OCI: | |||||||||||||||||||||||||||||||||||
| Change in fair value | (76) | — | — | (23) | (99) | ||||||||||||||||||||||||||||||
| Foreign exchange | (1,038) | (99) | (164) | (15) | (1,316) | ||||||||||||||||||||||||||||||
| Items recognized through net income: | |||||||||||||||||||||||||||||||||||
| Change in fair value | (26) | — | — | (30) | (56) | ||||||||||||||||||||||||||||||
| Depreciation | (380) | (295) | (282) | (13) | (970) | ||||||||||||||||||||||||||||||
| As at September 30, 2024 | $ | 24,906 | $ | 4,261 | $ | 6,119 | $ | 66 | $ | 35,352 | |||||||||||||||||||||||||
| Construction work-in-progress | |||||||||||||||||||||||||||||||||||
| As at As at December 31, 2023 | $ | 221 | $ | 803 | $ | 741 | $ | 11 | $ | 1,776 | |||||||||||||||||||||||||
| Additions | 66 | 152 | 244 | 47 | 509 | ||||||||||||||||||||||||||||||
| Transfer to property, plant and equipment | (9) | (228) | (134) | — | (371) | ||||||||||||||||||||||||||||||
| Transfer to assets held for sale | (1) | — | — | — | (1) | ||||||||||||||||||||||||||||||
Disposals(4) | — | (148) | (390) | (3) | (541) | ||||||||||||||||||||||||||||||
| Items recognized through OCI: | |||||||||||||||||||||||||||||||||||
| Foreign exchange | (5) | (26) | (15) | — | (46) | ||||||||||||||||||||||||||||||
| As at September 30, 2024 | $ | 272 | $ | 553 | $ | 446 | $ | 55 | $ | 1,326 | |||||||||||||||||||||||||
| Total property, plant and equipment, at fair value | |||||||||||||||||||||||||||||||||||
As at December 31, 2023(2)(3) | $ | 26,812 | $ | 7,975 | $ | 9,043 | $ | 208 | $ | 44,038 | |||||||||||||||||||||||||
As at September 30, 2024(2)(3) | $ | 25,178 | $ | 4,814 | $ | 6,565 | $ | 121 | $ | 36,678 | |||||||||||||||||||||||||
(1)Includes biomass.
(2)Includes right-of-use assets not subject to revaluation of $36 million (2023: $43 million) in our hydroelectric segment, $114 million (2023: $143 million) in our wind segment, $123 million (2023: $277 million) in our solar segment, and nil (2023: nil ) in other.
(3)Includes land not subject to revaluation of $202 million (2023: $217 million) in our hydroelectric segment, $12 million (2023: $13 million) in our wind segment, $46 million (2023: $58 million) in our solar segment, and $1 million (2023: $1 million) in other.
(4)Includes $4,067 million transferred to a subsidiary of Brookfield Renewable. Refer to Note 18 - Related party transactions for more details.
8. BORROWINGS
Non-recourse borrowings
Non-recourse borrowings are typically asset-specific, long-term, non-recourse borrowings denominated in the domestic currency of the subsidiary. Non-recourse borrowings in North America and Europe consist of both fixed and floating interest rate debt indexed to the Secured Overnight Financing Rate (“SOFR”), the Sterling Overnight Index Average (“SONIA”), the Euro Interbank Offered Rate (“EURIBOR”) and the Canadian Overnight Repo Rate Average (“CORRA”). Brookfield Renewable uses interest rate swap agreements in North America and Europe to minimize its exposure to floating interest rates. Non-recourse borrowings in Brazil consist of floating interest rates of Taxa de Juros de Longo Prazo (“TJLP”), the Brazil National Bank for Economic Development’s long-term interest rate, or Interbank Deposit Certificate rate (“CDI”), plus a margin. Non-recourse borrowings in Colombia consist of both fixed and floating interest rates indexed to Indicador Bancario de Referencia rate (“IBR”), the Banco Central de Colombia short-term interest rate, and Colombian Consumer Price Index (“IPC”), Colombia inflation rate, plus a margin.
| Brookfield Renewable Corporation | Interim Consolidated Financial Statements and Notes | September 30, 2024 | ||||||
Page 21 | ||||||||
The company has completed an assessment and implemented its transition plan to address the impact and effect changes as a result of amendments to the contractual terms for the replacement of the Canadian Dollar Offered Rate (“CDOR”) with CORRA referenced floating-rate borrowings, interest rate swaps, and updating hedge designations. The adoption did not have a significant impact on The company’s financial reporting.
As at September 30, 2024, the company’s floating rate borrowings have not been materially impacted by SOFR and CORRA reforms.
The composition of non-recourse borrowings is presented in the following table:
| September 30, 2024 | December 31, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||
| Weighted-average | Weighted-average | ||||||||||||||||||||||||||||||||||||||||||||||
| (MILLIONS EXCEPT AS NOTED) | Interest rate (%) | Term (years)(3) | Carrying value | Estimated fair value | Interest rate (%) | Term (years) | Carrying value | Estimated fair value | |||||||||||||||||||||||||||||||||||||||
Non-recourse borrowings(1)(2) | |||||||||||||||||||||||||||||||||||||||||||||||
| Hydroelectric | 8.1 | 6 | $ | 7,069 | $ | 7,192 | 8.9 | 7 | $ | 7,413 | $ | 7,451 | |||||||||||||||||||||||||||||||||||
Wind | 6.2 | 8 | 2,252 | 2,198 | 6.2 | 7 | 3,260 | 3,249 | |||||||||||||||||||||||||||||||||||||||
| Utility-scale solar | 6.1 | 11 | 3,769 | 3,711 | 6.0 | 12 | 4,808 | 4,820 | |||||||||||||||||||||||||||||||||||||||
| Distributed energy & sustainable solutions | 5.3 | 9 | 758 | 735 | 5.3 | 10 | 736 | 723 | |||||||||||||||||||||||||||||||||||||||
| Total | 7.1 | 8 | $ | 13,848 | $ | 13,836 | 7.3 | 9 | $ | 16,217 | $ | 16,243 | |||||||||||||||||||||||||||||||||||
Add: Unamortized premiums(3) | 4 | (77) | |||||||||||||||||||||||||||||||||||||||||||||
Less: Unamortized financing fees(3) | (80) | (68) | |||||||||||||||||||||||||||||||||||||||||||||
| Less: Current portion | (1,166) | (1,891) | |||||||||||||||||||||||||||||||||||||||||||||
| $ | 12,606 | $ | 14,181 | ||||||||||||||||||||||||||||||||||||||||||||
(1)Includes $4 million (2023: $149 million) borrowed under a subscription facility of a Brookfield sponsored private fund.
(2)Includes $13 million (2023: $14 million) outstanding to an associate of Brookfield. Refer to Note 18 - Related party transactions for more details.
(3)Unamortized premiums and unamortized financing fees are amortized over the terms of the borrowing.
Supplemental Information
The following table outlines changes in the company's borrowings as at September 30, 2024:
| (MILLIONS) | As at December 31, 2023 | Net cash flows from financing activities | Non-cash | ||||||||||||||||||||||||||||||||||||||
| Transfer to Held for sale | Other(1)(2) | As at September 30, 2024 | |||||||||||||||||||||||||||||||||||||||
| Non-recourse borrowings | $ | 16,072 | 189 | (637) | (1,852) | $ | 13,772 | ||||||||||||||||||||||||||||||||||
(1)Includes foreign exchange and amortization of unamortized premium and financing fees.
(2)Includes $1,507 million transferred to a subsidiary of Brookfield Renewable. Refer to Note 18 - Related party transactions for more details.
9. NON-CONTROLLING INTERESTS
The company`s non-controlling interests are comprised of the following:
| (MILLIONS) | September 30, 2024 | December 31, 2023 | |||||||||
| Non-controlling interests | |||||||||||
Participating non-controlling interests – in operating subsidiaries | $ | 9,081 | $ | 11,070 | |||||||
| Participating non-controlling interests – in a holding subsidiary held by the partnership | 229 | 272 | |||||||||
| $ | 9,310 | $ | 11,342 | ||||||||
| Brookfield Renewable Corporation | Interim Consolidated Financial Statements and Notes | September 30, 2024 | ||||||
Page 22 | ||||||||
Participating non-controlling interests – in operating subsidiaries
The net change in participating non-controlling interests – in operating subsidiaries is as follows:
(MILLIONS) | Brookfield Americas Infrastructure Fund | Brookfield Infrastructure Fund II | Brookfield Infrastructure Fund III | Brookfield Infrastructure Fund IV | Brookfield Infrastructure Fund V | Isagen Institutional partners | Isagen public non-controlling interests | The Catalyst Group | TerraForm Power | Other | Total | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| As at As at December 31, 2023 | $ | 75 | $ | 2,462 | $ | 2,658 | $ | 1,007 | $ | 917 | $ | 2,704 | $ | 17 | $ | 122 | $ | 188 | $ | 920 | $ | 11,070 | |||||||||||||||||||||||||||||||||||||||||||
| Net income (loss) | 21 | (7) | 8 | (30) | (2) | 58 | — | 13 | (11) | (38) | 12 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other comprehensive income (loss) | — | (112) | (114) | (112) | (40) | (220) | (1) | — | (9) | 12 | (596) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Capital contributions | — | — | — | 44 | 54 | — | — | — | — | 122 | 220 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Return of capital | — | — | — | — | — | — | — | — | — | (44) | (44) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Disposal | (21) | (14) | — | — | (940) | — | — | — | — | (330) | (1,305) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Dividends declared | (31) | (48) | (63) | — | — | (122) | (1) | (6) | — | (26) | (297) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Other | — | (1) | 4 | 1 | 11 | 1 | — | — | 3 | 2 | 21 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| As at September 30, 2024 | $ | 44 | $ | 2,280 | $ | 2,493 | $ | 910 | $ | — | $ | 2,421 | $ | 15 | $ | 129 | $ | 171 | $ | 618 | $ | 9,081 | |||||||||||||||||||||||||||||||||||||||||||
| Interests held by third parties | 75% - 78% | 43% - 60% | 23% - 71% | 75 | % | 53 | % | 0.3 | % | 25 | % | 19 | % | 0.3% - 80% | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Brookfield Renewable Corporation | Interim Consolidated Financial Statements and Notes | September 30, 2024 | ||||||
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10. BEPC EXCHANGEABLE SHARES, BEPC CLASS B SHARES AND BEPC CLASS C SHARES
The BEPC exchangeable shares and class B shares are classified as liabilities due to their exchange and cash redemption features. As at September 30, 2024, the BEPC exchangeable shares and class B shares were remeasured to $28.18 per share to reflect the NYSE closing price of a BEP unit. Remeasurement gains or losses associated with these shares are recorded in the interim consolidated statements of income (loss).
During the three and nine months ended September 30, 2024, our shareholders exchanged 193 and 10,335 BEPC exchangeable shares, respectively, for an equal number of BEP units resulting in a decrease of less than $1 million to our financial liability (2023: 5,150 and 7,725 shares, respectively resulting in a decrease of less than $1 million). During the three and nine months ended September 30, 2024, the company declared dividends of $64 million and $193 million, respectively (2023: $61 million and $180 million, respectively) on its BEPC exchangeable shares outstanding. Dividends on BEPC exchangeable shares are presented as interest expense in the interim consolidated statements of income (loss).
The following table provides a continuity schedule of outstanding BEPC exchangeable and class B shares along with the corresponding liability and remeasurement gains and losses.
| BEPC exchangeable shares outstanding (units) | BEPC class B shares outstanding (units) | BEPC exchangeable and BEPC class B shares ($ million) | |||||||||||||||||||||
| Balance, as at December 31, 2023 | 179,651,526 | 165 | $ | 4,721 | |||||||||||||||||||
| Share exchanges | (10,335) | — | — | ||||||||||||||||||||
| Remeasurement of liability | — | — | 341 | ||||||||||||||||||||
| Balance, as at September 30, 2024 | 179,641,191 | 165 | $ | 5,062 | |||||||||||||||||||
Similar to BEPC exchangeable shares and BEPC class B shares, BEPC class C shares are classified as liabilities due to their cash redemption feature. However, BEPC class C shares, the most subordinated class of all common shares, meet certain qualifying criteria and are presented as equity instruments given the narrow scope presentation exceptions existing in IAS 32. There are 194,460,874 BEPC class C shares issued and outstanding as at September 30, 2024 (December 2023: 194,460,874).
As at September 30, 2024, Brookfield Holders held a direct and indirect interest of approximately 25% of the company. Brookfield Holders own, directly and indirectly, 44,813,835 BEPC exchangeable shares on a combined basis and the remaining is held by public investors.
In December 2023, the company renewed its normal course issuer bid for its outstanding BEPC exchangeable shares. The company is authorized to repurchase up to 8.9 million BEPC Exchangeable shares, representing 5% of its issued and outstanding BEPC exchangeable shares. The bids will expire on December 17, 2024, or earlier should the company complete its repurchases prior to such data. There were no BEPC exchangeable shares repurchased during the three and nine months ended September 30, 2024.
11. GOODWILL
The following table provides a reconciliation of goodwill:
| (MILLIONS) | Total | |||||||
| Balance, as at December 31, 2023 | $ | 854 | ||||||
| Transfer to assets held for sale | (63) | |||||||
| Foreign exchange and other | (57) | |||||||
| Balance, as at September 30, 2024 | $ | 734 | ||||||
| Brookfield Renewable Corporation | Interim Consolidated Financial Statements and Notes | September 30, 2024 | ||||||
Page 24 | ||||||||
12. EQUITY-ACCOUNTED INVESTMENTS
The following are the company’s equity-accounted investments for the nine months ended September 30, 2024:
| (MILLIONS) | Total | |||||||
| Balance, as at December 31, 2023 | $ | 644 | ||||||
| Investment | 50 | |||||||
Disposal(1) | (25) | |||||||
| Share of net income (loss) | (22) | |||||||
| Share of other comprehensive income (loss) | (5) | |||||||
| Dividends received | (11) | |||||||
| Balance, as at September 30, 2024 | $ | 631 | ||||||
(1)Includes $25 million transferred to a subsidiary of Brookfield Renewable. Refer to Note 18 - Related party transactions for more details.
13. CASH AND CASH EQUIVALENTS
The company’s cash and cash equivalents are as follows:
| (MILLIONS) | September 30, 2024 | December 31, 2023 | |||||||||
| Cash | $ | 282 | $ | 393 | |||||||
| Cash subject to restriction | 289 | 186 | |||||||||
| Short-term deposit | 48 | 48 | |||||||||
| $ | 619 | $ | 627 | ||||||||
14. RESTRICTED CASH
The company’s restricted cash is as follows:
| (MILLIONS) | September 30, 2024 | December 31, 2023 | |||||||||
| Operations | $ | 63 | $ | 163 | |||||||
| Credit obligations | 49 | 39 | |||||||||
| Development projects | 18 | — | |||||||||
| Total | 130 | 202 | |||||||||
| Less: non-current | (53) | (37) | |||||||||
| Current | $ | 77 | $ | 165 | |||||||
15. TRADE RECEIVABLES AND OTHER CURRENT ASSETS
The company's trade receivables and other current assets are as follows:
| (MILLIONS) | September 30, 2024 | December 31, 2023 | |||||||||
| Trade receivables | $ | 517 | $ | 503 | |||||||
Collateral deposits(1) | 120 | 169 | |||||||||
| Prepaids and other | 70 | 76 | |||||||||
| Income tax receivables | 20 | 57 | |||||||||
| Inventory | 30 | 65 | |||||||||
Other short-term receivables | 118 | 85 | |||||||||
| $ | 875 | $ | 955 | ||||||||
(1)Collateral deposits are related to energy derivative contracts the company enters into in order to mitigate the exposure to wholesale market electricity prices on the future sale of uncontracted generation, as part of the company's risk management strategy.
The company primarily receives payments monthly for invoiced PPA revenues and has no significant aged receivables as of the reporting date. Receivables from contracts with customers are reflected in Trade receivables.
| Brookfield Renewable Corporation | Interim Consolidated Financial Statements and Notes | September 30, 2024 | ||||||
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16. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
The company's accounts payable and accrued liabilities are as follows:
| (MILLIONS) | September 30, 2024 | December 31, 2023 | |||||||||
| Operating accrued liabilities | $ | 204 | $ | 365 | |||||||
| Accounts payable | 215 | 184 | |||||||||
| Interest payable on non-recourse borrowings | 126 | 152 | |||||||||
| Current portion of lease liabilities | 25 | 31 | |||||||||
BEPC exchangeable shares distributions payable(1) | 16 | 16 | |||||||||
| Income tax payable | 8 | 35 | |||||||||
| Other | 34 | 24 | |||||||||
| $ | 628 | $ | 807 | ||||||||
(1)Includes amounts payable only to external shareholders. Amounts payable to Brookfield and the partnership are included in due to related parties.
17. COMMITMENTS, CONTINGENCIES AND GUARANTEES
Commitments
In the course of its operations, the company has entered into agreements for the use of water, land and dams. Payment under those agreements varies with the amount of power generated. The various agreements can be renewed and are extendable up to 2089.
In the normal course of business, the company will enter into capital expenditure commitments which primarily relate to contracted project costs for various growth initiatives. As at September 30, 2024, the company had $397 million (2023: $865 million) of capital expenditure commitments of which $306 million is payable in 2024, $32 million is payable in 2025, $58 million is payable in 2026 to 2028, and $1 million thereafter.
An integral part of the company’s strategy is to participate with institutional partners in Brookfield-sponsored private equity funds that target acquisitions that suit the company’s profile. In the normal course of business, the company has made commitments to Brookfield-sponsored private equity funds to participate in these target acquisitions in the future, if and when identified. From time to time, in order to facilitate investment activities in a timely and efficient manner, the company will fund deposits or incur other costs and expenses (including by use of loan facilities to consummate, support, guarantee or issue letters of credit) in respect of an investment that ultimately will be shared with or made entirely by Brookfield sponsored vehicles, consortiums and/or partnerships (including private funds, joint ventures and similar arrangements), the company, or by co-investors.
Contingencies
The company and its subsidiaries are subject to various legal proceedings, arbitration and actions arising in the normal course of business. While the final outcome of such legal proceedings and actions cannot be predicted with certainty, it is the opinion of management that the resolution of such proceedings and actions will not have a material impact on the company’s consolidated financial position or results of operations.
The company’s subsidiaries themselves have provided letters of credit, which include, but are not limited to, guarantees for debt service reserves, capital reserves, construction completion and performance.
The company, along with institutional partners, has provided letters of credit, which include, but are not limited to, guarantees for debt service reserves, capital reserves, construction completion and performance as it relates to interests in the Brookfield Americas Infrastructure Fund, the Brookfield Infrastructure Fund II, Brookfield Infrastructure Fund III, Brookfield Infrastructure Fund IV, Brookfield Infrastructure Fund V, Brookfield Global Transition Fund and Brookfield Global Transition Fund II. The company’s subsidiaries have similarly provided letters of credit, which include, but are not limited to, guarantees for debt service reserves, capital reserves, construction completion and performance.
Letters of credit issued by the company’s subsidiaries as at September 30, 2024 were $909 million (December 31, 2023: $1,135 million).
| Brookfield Renewable Corporation | Interim Consolidated Financial Statements and Notes | September 30, 2024 | ||||||
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Guarantees
In the normal course of operations, the company executes agreements that provide for indemnification and guarantees to third-parties of transactions such as business dispositions, capital project purchases, business acquisitions, power marketing activities such as purchase and sale agreements, swap agreements, sales and purchases of assets and services, and the transfer of tax credits or renewable energy grants from tax equity partnerships. The company has also agreed to indemnify its directors and certain of its officers and employees. The nature of substantially all of the indemnification undertakings and guarantee agreements prevents the company from making a reasonable estimate of the maximum potential amount that the company could be required to pay third parties as the agreements do not always specify a maximum amount and the amounts are dependent upon the outcome of future contingent events, the nature and likelihood of which cannot be determined at this time.
Two direct and indirect wholly-owned subsidiaries of our company have fully and unconditionally guaranteed (i) any and all present and future unsecured debt securities issued by Brookfield Renewable Partners ULC, in each case as to payment of principal, premium (if any) and interest when and as the same will become due and payable under or in respect of the trust indenture under which such securities are issued, (ii) all present and future senior preferred shares of Brookfield Renewable Power Preferred Equity Inc. (“BRP Equity”) as to the payment of dividends when due, the payment of amounts due on redemption and the payment of amounts due on the liquidation, dissolution or winding up of BRP Equity, (iii) certain of BEP’s preferred units, as to payment of distributions when due, the payment of amounts due on redemption and the payment of amounts due on the liquidation, dissolution or winding up of BEP, (iv) the obligations of all present and future bilateral credit facilities established for the benefit of Brookfield Renewable, and (v) notes issued by Brookfield BRP Holdings (Canada) Inc. under its U.S. commercial paper program. BRP Bermuda Holdings I Limited (“BBHI”) and BEP Subco Inc. subsidiaries of the company have guaranteed the perpetual subordinated notes issued by Brookfield BRP Holdings (Canada) Inc. These arrangements do not have or are not reasonably likely to have a material current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.
18. RELATED PARTY TRANSACTIONS
The company’s related party transactions are recorded at the exchange amount. The company’s related party transactions are primarily with the partnership and Brookfield.
Brookfield has provided a $400 million committed unsecured revolving credit facility maturing in December 2024 and the draws bear interest at SOFR plus a margin. During the current period, there were no draws on the committed unsecured revolving credit facility provided by Brookfield. Brookfield may from time to time place funds on deposit with the company which are repayable on demand including any interest accrued. There were nil funds placed on deposit with the company as at September 30, 2024 (December 31, 2023: nil). The interest expense on the Brookfield revolving credit facility and deposit for the three and nine months ended September 30, 2024 totaled nil and nil, respectively (2023: nil and nil, respectively).
On March 26, 2024, as part of normal course organizational structuring initiatives of our group, the company transferred 100% of its interest in a portfolio of 5,900 MW of operating and under construction assets, with a 6,100 MW development pipeline in the U.S. to a subsidiary of Brookfield Renewable, for a nominal amount of consideration, to achieve the optimal holding structure for tax purposes. As a result of the disposition, the company derecognized $4.5 billion of total assets, $3.2 billion of total liabilities and $1.3 billion of non-controlling interest from the consolidated statements of financial position. This resulted in a loss on disposition of $63 million recognized within contributed surplus in the consolidated statements of changes in equity.
Brookfield Wealth Solutions
From time to time Brookfield Wealth Solutions and its related entities may participate in capital raises undertaken by the company. These financings are typically provided at the market rates and as at September 30, 2024, $13 million of non-recourse borrowings (December 31, 2023: $14 million) were due to Brookfield Wealth Solutions. As at September 30, 2024, the company had $186 million (December 31, 2023: $184 million) of borrowings from Brookfield Wealth Solutions classified as due to related party. Subsidiaries of Brookfield Wealth Solutions may from time to time decide to participate in the company’s equity offerings.
| Brookfield Renewable Corporation | Interim Consolidated Financial Statements and Notes | September 30, 2024 | ||||||
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Subsequent to the quarter, the company, the partnership, Brookfield Corporation and 1505127 B.C. Ltd. (the “New BEPC”) entered into an agreement (the “Arrangement Agreement”) to implement a reorganization (the “Arrangement”) that maintains the benefits of Brookfield Renewable’s business structure, while addressing proposed amendments to the Income Tax Act (Canada) that are expected to result in additional costs to the company if no action is taken. The Arrangement is expected to be tax-deferred for the vast majority of investors, including Canadian and U.S. shareholders. Following the Arrangement, the company’s shareholders will continue to own an economically equivalent security that provides the same economic benefits and governance as investing in Brookfield Renewable today.
Pursuant to the Arrangement, amongst other things, (i) holders of BEPC exchangeable shares other than Brookfield Corporation and its subsidiaries (the “Public Shareholders”) will receive one (1) new exchangeable subordinate voting share in the capital of New BEPC (“New Exchangeable Shares”) for each BEPC exchangeable share held; (ii) the company’s articles will be amended to create class A.1 exchangeable subordinate voting shares (the “Class A.1 Shares”) and class A.2 exchangeable non-voting shares (the “Class A.2 Shares”); (iii) New BEPC will transfer the BEPC exchangeable shares it receives from Public Shareholders to the company in exchange for Class A.1 Shares and Brookfield Corporation and its subsidiaries will transfer its BEPC exchangeable shares to the company in exchange for Class A.2 Shares; (iv) the BEPC exchangeable shares will be cancelled; (v) New BEPC will be renamed “Brookfield Renewable Corporation” and the company will be renamed “Brookfield Renewable Holdings Corporation”; and (vi) the New Exchangeable Shares will be listed and posted for trading on the New York Stock Exchange and the Toronto Stock Exchange under the symbol “BEPC” (the current ticker symbol for the company).
The Arrangement remains subject to the receipt of court and shareholder approval, and the satisfaction of certain other customary conditions, and is expected to be completed in the fourth quarter of 2024.
The following table reflects the related party agreements and transactions for the three and nine months ended September 30 in the interim consolidated statements of income:
| Three months ended September 30 | Nine months ended September 30 | ||||||||||||||||||||||
| (MILLIONS) | 2024 | 2023 | 2024 | 2023 | |||||||||||||||||||
| Revenues | |||||||||||||||||||||||
| Power purchase and revenue agreements | $ | 22 | $ | 6 | $ | 76 | $ | 67 | |||||||||||||||
| Direct operating costs | |||||||||||||||||||||||
| Energy purchases | $ | (8) | $ | (6) | $ | (19) | $ | (16) | |||||||||||||||
| Energy marketing fee & other services | (1) | (1) | (2) | (7) | |||||||||||||||||||
| $ | (9) | $ | (7) | $ | (21) | $ | (23) | ||||||||||||||||
| Interest expense | |||||||||||||||||||||||
| Borrowings | $ | (37) | $ | (4) | $ | (71) | $ | (14) | |||||||||||||||
| Other | |||||||||||||||||||||||
| Interest income | $ | 15 | $ | 6 | $ | 29 | $ | 11 | |||||||||||||||
| Dividend income | $ | — | $ | 2 | $ | 3 | $ | 6 | |||||||||||||||
| Other related party services | $ | (1) | $ | 2 | $ | (4) | $ | — | |||||||||||||||
| Financial instrument gain | $ | — | $ | 2 | $ | 2 | $ | 9 | |||||||||||||||
| Management service agreement | $ | (28) | $ | (26) | $ | (71) | $ | (94) | |||||||||||||||
| Brookfield Renewable Corporation | Interim Consolidated Financial Statements and Notes | September 30, 2024 | ||||||
Page 28 | ||||||||
The following table reflects the impact of the related party agreements and transactions on the consolidated statements of financial position:
| (MILLIONS) | Related party | September 30, 2024 | December 31, 2023 | ||||||||||||||
| Current assets | |||||||||||||||||
| Due from related parties | |||||||||||||||||
| Amounts due from | Brookfield | $ | 33 | $ | 39 | ||||||||||||
| The partnership | 1,275 | 1,366 | |||||||||||||||
| Equity-accounted investments and other | 14 | 22 | |||||||||||||||
| $ | 1,322 | $ | 1,427 | ||||||||||||||
| Non-current assets | |||||||||||||||||
| Financial instrument asset | Brookfield | $ | — | $ | 170 | ||||||||||||
| Due from related parties | |||||||||||||||||
| Amounts due from | The partnership | $ | 9 | $ | 9 | ||||||||||||
| Current liabilities | |||||||||||||||||
| Due to related parties | |||||||||||||||||
| Amounts due to | Brookfield | $ | 38 | $ | 26 | ||||||||||||
| The partnership | 286 | 238 | |||||||||||||||
| Equity-accounted investments and other | 4 | 8 | |||||||||||||||
| Brookfield Wealth Solutions and associates | 186 | 184 | |||||||||||||||
| $ | 514 | $ | 456 | ||||||||||||||
| Non-current liabilities | |||||||||||||||||
| Due to related parties | |||||||||||||||||
| Amounts due to | Brookfield | $ | 79 | $ | 79 | ||||||||||||
| The partnership | 589 | 850 | |||||||||||||||
| Equity-accounted investments and other | 4 | 1 | |||||||||||||||
| $ | 672 | $ | 930 | ||||||||||||||
| Non-recourse borrowings | Brookfield Wealth Solutions and associates | $ | 13 | $ | 14 | ||||||||||||
| Brookfield Renewable Corporation | Interim Consolidated Financial Statements and Notes | September 30, 2024 | ||||||
Page 29 | ||||||||
GENERAL INFORMATION | ||||||||
Corporate Office 250 Vesey Street 15th Floor New York, NY, 10281 United States Tel: (212) 417-7000 https://bep.brookfield.com/bepc Officers of Brookfield Renewable Corporation Connor Teskey Chief Executive Officer Wyatt Hartley Chief Financial Officer Transfer Agent & Registrar Computershare Trust Company of Canada 100 University Avenue 8th floor Toronto, Ontario, M5J 2Y1 Tel Toll Free: (800) 564-6253 Fax Toll Free: (888) 453-0330 www.computershare.com | Directors of Brookfield Renewable Corporation Jeffrey Blidner Eleazar de Carvalho Filho Scott Cutler Dr. Sarah Deasley Nancy Dorn Lou Maroun Randy MacEwen Patricia Zuccotti Stephen Westwell Exchange Listing NYSE: BEPC (exchangeable shares) TSX: BEPC (exchangeable shares) Investor Information Visit Brookfield Renewable Corporation online at https://bep.brookfield.com/bepc for more information. For detailed and up-to-date news and information, please visit the News Release section. Additional financial information is filed electronically with various securities regulators in United States and Canada through EDGAR at www.sec.gov and through SEDAR+ at www.sedarplus.ca. Shareholder enquiries should be directed to the Investor Relations Department at (416) 649-8172 or enquiries@brookfieldrenewable.com | |||||||
| Management’s Discussion and Analysis for | ||
| the three and nine months ended September 30, 2024 | ||
The following Management’s Discussion and Analysis (“MD&A”) for the three and nine months ended September 30, 2024 is provided as of November 8, 2024. Unless the context indicates or requires otherwise, the terms, “we”, “us”, and “our company” mean BEPC and its controlled entities. BEPC is an indirect controlled subsidiary of Brookfield Renewable Partners L.P. ("BEP", or collectively with its subsidiaries, including our company, "Brookfield Renewable") (NYSE: BEP; TSX:BEP.UN). Unless the context indicates or requires otherwise, the "partnership" means Brookfield Renewable and its controlled subsidiaries, excluding our company. The ultimate parent of Brookfield Renewable and Brookfield Renewable Corporation is Brookfield Corporation (“Brookfield Corporation”). Brookfield Corporation and its subsidiaries, other than Brookfield Renewable and Brookfield Renewable Corporation, and unless the context otherwise requires, includes Brookfield Asset Management Ltd (“Brookfield Asset Management”), are also individually and collectively referred to as “Brookfield” in this Management’s Discussion and Analysis. The term “Brookfield Holders” means Brookfield, Brookfield Wealth Solutions (formerly Brookfield Reinsurance) and their related parties.
In addition to historical information, this MD&A contains forward-looking statements. Readers are cautioned that these forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from those reflected in the forward-looking statements. See “Cautionary Statements Regarding Forward-Looking Statements”.
BEPC’s unaudited interim consolidated financial statements are prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”), which require estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities as at the date of the financial statements and the amounts of revenue and expense during the reporting periods.
References to $, C$, €, R$, and COP are to United States (“U.S.”) dollars, Canadian dollars, Euros, Brazilian reais and Colombian pesos, respectively. Unless otherwise indicated, all dollar amounts are expressed in U.S. dollars.
For a description on our operational and segmented information and for the non-IFRS financial measures we use to explain our financial results see “Part 8 – Presentation to Stakeholders and Performance Measurement”. For a reconciliation of the non-IFRS financial measures to the most comparable IFRS financial measures, see “Part 4 – Financial Performance Review on Proportionate Information – Reconciliation of non-IFRS measures”. This Management’s Discussion and Analysis contains forward-looking information within the meaning of U.S. and Canadian securities laws. Refer to – “Part 9 – Cautionary Statements” for cautionary statements regarding forward-looking statements and the use of non-IFRS measures. Our Annual Report and additional information filed with the Securities Exchange Commission (“SEC”) and with securities regulators in Canada are available on our website (https://bep.brookfield.com), on the SEC’s website (www.sec.gov/edgar.shtml), or on SEDAR+ (www.sedarplus.ca).
| Part 1 – Overview | Part 5 – Liquidity and Capital Resources Continued | |||||||||||||
| Consolidated statements of cash flows | ||||||||||||||
| Part 2 – Financial Performance Review on Consolidated Information | Shares and units outstanding | |||||||||||||
| Contractual obligations | ||||||||||||||
| Off-statement of financial position arrangements | ||||||||||||||
| Part 3 – Additional Consolidated Financial Information | ||||||||||||||
| Summary consolidated statements of financial position | Part 6 – Selected Quarterly Information | |||||||||||||
| Related party transactions | ||||||||||||||
| Part 7 – Critical Estimates, Accounting Policies, and Internal Controls | ||||||||||||||
| Part 4 – Financial Performance Review on Proportionate Information | ||||||||||||||
| Part 8 – Presentation to Stakeholders and Performance Measurement | ||||||||||||||
| Proportionate results for the three months ended September 30 | ||||||||||||||
| Reconciliation of non-IFRS measures | Part 9 – Cautionary Statements | |||||||||||||
| Part 5 – Liquidity and Capital Resources | ||||||||||||||
| Available liquidity | ||||||||||||||
| Dividend policy | ||||||||||||||
| Borrowings | ||||||||||||||
| Capital expenditure | ||||||||||||||
PART 1 – OVERVIEW
BUSINESS OVERVIEW
BEPC is a Canadian corporation incorporated on September 9, 2019 under the laws of British Columbia. Our company was established by Brookfield Renewable to be an alternative investment vehicle for investors who prefer owning securities through a corporate structure. While our operations are primarily located in the United States, Brazil, Colombia, and Europe, shareholders will, on economic terms, have exposure to all regions BEP operates in as a result of the exchange feature attaching to the Class A exchangeable subordinate voting shares ("BEPC exchangeable shares"), whereby BEPC will have the option to meet an exchange request by delivering cash or non-voting limited partnership units of BEP (“LP units”).
The BEPC exchangeable shares of our company are structured with the intention of being economically equivalent to the LP units. We believe economic equivalence is achieved through identical dividends and distributions on the BEPC exchangeable shares and the LP units and each BEPC exchangeable share being exchangeable at the option of the holder for one LP unit at any time. Given the economic equivalence, we expect that the market price of the BEPC exchangeable shares will be significantly impacted by the market price of the LP units and the combined business performance of our company and Brookfield Renewable as a whole. In addition to carefully considering the disclosure made in this document, shareholders are strongly encouraged to carefully review the partnership’s periodic reporting. The partnership is required to file reports, including annual reports on Form 20-F, and other information with the United States Securities and Exchange Commission (the “SEC”). The partnership’s SEC filings are available to the public from the SEC’s website at http://www.sec.gov. Copies of documents that have been filed with the Canadian securities authorities can be obtained at www.sedarplus.ca. Information about the partnership, including its SEC filings, is also available on its website at https://bep.brookfield.com. The information found on, or accessible through, https://bep.brookfield.com is not incorporated into and does not form a part of this MD&A.
Our company, our subsidiaries and Brookfield Renewable (together our “Group”), target a total return of 12% to 15% per annum on the renewable assets that we own, measured over the long-term. Our group intends to generate this return from cash flows from our operations plus growth through investments in upgrades and expansions of our asset base, as well as acquisitions and capital recycling initiatives. Brookfield Renewable determines its distributions based primarily on an assessment of its operating performance. Our group uses Funds From Operations (“FFO”) to assess operating performance which can be used on a per unit basis as a proxy for future distribution growth over the long-term. For further details, see the “Performance Disclosures” section of this MD&A.
| Brookfield Renewable Corporation | Management’s Discussion and Analysis | September 30, 2024 | ||||||
Page 3 | ||||||||
PART 2 – FINANCIAL PERFORMANCE REVIEW ON CONSOLIDATED INFORMATION
The following table reflects key financial data for the three and nine months ended September 30:
| Three months ended September 30 | Nine months ended September 30 | ||||||||||||||||||||||
| (MILLIONS, EXCEPT AS NOTED) | 2024 | 2023 | 2024 | 2023 | |||||||||||||||||||
| Revenues | $ | 1,041 | $ | 934 | $ | 3,155 | $ | 2,901 | |||||||||||||||
| Direct operating costs | (407) | (388) | (1,310) | (1,000) | |||||||||||||||||||
| Management service costs | (28) | (26) | (71) | (94) | |||||||||||||||||||
| Interest expense | (328) | (308) | (1,032) | (929) | |||||||||||||||||||
| Depreciation | (313) | (320) | (970) | (953) | |||||||||||||||||||
| Remeasurement of BEPC exchangeable and BEPC class B shares | (612) | 1,393 | (341) | 710 | |||||||||||||||||||
| Income tax expense | (27) | (27) | (66) | (108) | |||||||||||||||||||
| Net income (loss) | $ | (664) | $ | 1,370 | $ | (512) | $ | 810 | |||||||||||||||
| Average FX rates to USD | |||||||||||||||||||||||
| € | 0.91 | 0.92 | 0.92 | 0.92 | |||||||||||||||||||
| R$ | 5.55 | 4.88 | 5.24 | 5.01 | |||||||||||||||||||
| COP | 4,095 | 4,048 | 3,979 | 4,413 | |||||||||||||||||||
Variance Analysis For The Three Months Ended September 30, 2024
Revenues totaling $1,041 million represents an increase of $107 million over the same period in the prior year due to the growth of our business and inflation escalation on our contracted generation and high asset availability. Recently acquired and commissioned facilities contributed 412 GWh of generation and $14 million to revenue, which was partly offset by our recently completed asset sales that reduced generation by 150 GWh and revenues by $13 million. On a same store, constant currency basis, revenues increased by $121 million as the benefits from inflation escalation on our contracted generation, strong pricing on recent recontracting initiatives at our hydroelectric assets, higher resources at our Brazil and Colombia hydroelectric assets, and higher contributions from our regulated Spanish assets were partially offset by lower resources at our U.S. hydroelectric portfolio.
The weakening of the Colombian peso and Brazilian real relative to the U.S. dollar compared to the same period in the prior year was partially offset by the relative strengthening of the Euro,decreasing revenues by $15 million, which was partly offset by $10 million favorable foreign exchange impact on our direct operating costs and interest expense for the quarter.
Direct operating costs totaling $407 million represents an increase of $19 million over the same period in the prior year primarily due to additional costs from our recently acquired and commissioned facilities which were partially offset by our recently completed asset sales.
Management service costs totaling $28 million represents an increase of $2 million over the same period in the prior year.
Interest expense totaling $328 million represents an increase of $20 million over the same period in the prior year due to financing initiatives to fund development activities and the above noted foreign exchange fluctuations.
Remeasurement of BEPC exchangeable shares resulted in a $612 million loss due to the movement in the LP unit price during the period.
Depreciation expense totaling $313 million represents a decrease of $7 million over the same period in the prior year primarily related to recently completed asset sales.
Net loss totaling $664 million represents a decrease of $2,034 million over the prior year due to the above noted items and a gain on sale of non-core wind assets that benefited the prior year.
| Brookfield Renewable Corporation | Management’s Discussion and Analysis | September 30, 2024 | ||||||
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Variance Analysis For The Nine Months Ended September 30, 2024
Revenues totaling $3,155 million represents an increase of $254 million over the same period in the prior year due to the growth of our business and inflation escalation on our contracted generation. Recently acquired and commissioned facilities contributed 3,886 GWh of generation and $150 million to revenue which was partly offset by recently completed asset sales that reduced generation by 805 GWh and revenue by $61 million. On a same store, constant currency basis, revenue increased by $82 million as the benefits from inflation escalation on our contracted generation were offset by lower resources at our hydroelectric portfolio.
The strengthening of the Colombian peso relative to the U.S. dollar compared to the same period in the prior year was partially offset by the relative weakening of the Brazilian real increasing revenue by $83 million, which was partly offset by a $69 million unfavorable foreign exchange impact on our operating and interest expense for the year.
Direct operating costs totaling $1,310 million represents an increase of $310 million over the same period in the prior year primarily due to additional costs from our recently acquired and commissioned facilities and higher power purchases in Colombia, which are passed through to our customers and the above noted foreign exchange fluctuations partly offset by our recently completed asset sales.
Management service costs totaling $71 million represents a decrease of $23 million over the same period in the prior year.
Interest expense totaling $1,032 million represents an increase of $103 million over the same period in the prior year due to recent acquisitions, financing initiatives to fund development activities and the above noted foreign exchange fluctuations.
Remeasurement of BEPC exchangeable shares resulted in a $341 million loss due to the movement in the LP unit price during the period.
Depreciation expense totaling $970 million represents an increase of $17 million over the same period in the prior year due to the growth of our business and the strengthening of the Colombian peso relative to the U.S. dollar.
Net loss totaling $512 million represents a decrease of $1,322 million over the prior year due to the above noted items.
| Brookfield Renewable Corporation | Management’s Discussion and Analysis | September 30, 2024 | ||||||
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PART 3 – ADDITIONAL CONSOLIDATED FINANCIAL INFORMATION
SUMMARY CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
The following table provides a summary of the key line items on the unaudited interim consolidated statements of financial position:
| (MILLIONS) | September 30, 2024 | December 31, 2023 | |||||||||
| Assets held for sale | $ | 1,388 | $ | — | |||||||
| Current assets | 4,446 | 3,298 | |||||||||
| Equity-accounted investments | 631 | 644 | |||||||||
| Property, plant and equipment, at fair value | 36,678 | 44,038 | |||||||||
| Total assets | 42,875 | 49,421 | |||||||||
| Liabilities directly associated with assets held for sale | 848 | — | |||||||||
| Non-recourse borrowings | 13,772 | 16,072 | |||||||||
| Deferred income tax liabilities | 5,439 | 5,819 | |||||||||
| BEPC exchangeable shares and class B shares | 5,062 | 4,721 | |||||||||
| Total equity in net assets | 14,186 | 17,129 | |||||||||
| Total liabilities and equity | 42,875 | 49,421 | |||||||||
| Spot FX rates to USD | |||||||||||
| € | 0.90 | 0.91 | |||||||||
| R$ | 5.45 | 4.84 | |||||||||
| COP | 4,164 | 3,822 | |||||||||
Property, plant and equipment
Property, plant and equipment totaled $36.7 billion as at September 30, 2024 compared to $44.0 billion as at December 31, 2023, representing a decrease of $7.3 billion. Our continued investments in the development of power generating assets increased property, plant and equipment by $0.5 billion. The increase was offset by $4.1 billion related to the transfer of our 100% interest in a portfolio of 5,900 MW of operating and under construction assets, with a 6,100 MW development pipeline in the U.S. to a subsidiary of Brookfield Renewable, $1.2 billion related to property, plant and equipment disposed and being classified as held for sale, $1.5 billion related to the strengthening of the U.S. dollar versus most currencies, and $1.0 billion related to depreciation expense.
Assets held for sale and Liabilities directly associated with assets held for sale
Assets held for sale and Liabilities directly associated with assets held for sale totaled $1,388 million and $848 million, respectively, as at September 30, 2024 compared to nil and nil, respectively, as at December 31, 2023.
In the second quarter of 2024, the company, together with its institutional partners, completed the sale of a 30 MW hydroelectric asset in the U.S.
In the second quarter of 2024, the company, together with its institutional partners, completed the sale of a 85 MW portfolio of biomass facilities in Brazil.
As at September 30, 2024, assets held for sale include a 90 MW portfolio of hydroelectric assets in Brazil, a 30 MW biomass facility in Brazil, a 682 MW portfolio of wind assets in Spain and Portugal and a 63 MW portfolio of solar assets in Spain.
| Brookfield Renewable Corporation | Management’s Discussion and Analysis | September 30, 2024 | ||||||
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RELATED PARTY TRANSACTIONS
Our company’s related party transactions are in the normal course of business, are recorded at the exchange amount, and are primarily with the partnership and Brookfield.
Our company sells electricity to Brookfield through a single long-term PPA across our New York hydroelectric facilities.
Brookfield has provided a $400 million committed unsecured revolving credit facility maturing in December 2024 and the draws bear interest at the Secured Overnight Financing Rate (“SOFR”) plus a margin. During the current period, there were no draws on the committed unsecured revolving credit facility provided by Brookfield. Brookfield may from time to time place funds on deposit with the company which are repayable on demand including any interest accrued. There were nil funds placed on deposit with the company as at September 30, 2024 (December 31, 2023: nil). The interest expense on the Brookfield revolving credit facility and deposit for the three and nine months ended September 30, 2024 totaled nil and nil, respectively (2023: nil and nil, respectively).
On March 26, 2024, as part of normal course organizational structuring initiatives of our group, the company transferred 100% of its interest in a portfolio of 5,900 MW of operating and under construction assets, with a 6,100 MW development pipeline in the U.S. to a subsidiary of Brookfield Renewable, for a nominal amount of consideration, to achieve the optimal holding structure for tax purposes. As a result of the disposition, the company derecognized $4.5 billion of total assets, $3.2 billion of total liabilities and $1.3 billion of non-controlling interest from the consolidated statements of financial position. This resulted in a loss on disposition of $63 million recognized within contributed surplus in the consolidated statements of changes in equity.
Subsequent to the quarter, the company, the partnership, Brookfield Corporation and 1505127 B.C. Ltd. (the “New BEPC”) entered into an agreement (the “Arrangement Agreement”) to implement a reorganization (the “Arrangement”) that maintains the benefits of Brookfield Renewable’s business structure, while addressing proposed amendments to the Income Tax Act (Canada) that are expected to result in additional costs to the company if no action is taken. The Arrangement is expected to be tax-deferred for the vast majority of investors, including Canadian and U.S. shareholders. Following the Arrangement, the company’s shareholders will continue to own an economically equivalent security that provides the same economic benefits and governance as investing in Brookfield Renewable today.
Pursuant to the Arrangement, amongst other things, (i) holders of BEPC exchangeable shares other than Brookfield Corporation and its subsidiaries (the “Public Shareholders”) will receive one (1) new exchangeable subordinate voting share in the capital of New BEPC (“New Exchangeable Shares”) for each BEPC exchangeable share held; (ii) the company’s articles will be amended to create class A.1 exchangeable subordinate voting shares (the “Class A.1 Shares”) and class A.2 exchangeable non-voting shares (the “Class A.2 Shares”); (iii) New BEPC will transfer the BEPC exchangeable shares it receives from Public Shareholders to the company in exchange for Class A.1 Shares and Brookfield Corporation and its subsidiaries will transfer its BEPC exchangeable shares to the company in exchange for Class A.2 Shares; (iv) the BEPC exchangeable shares will be cancelled; (v) New BEPC will be renamed “Brookfield Renewable Corporation” and the company will be renamed “Brookfield Renewable Holdings Corporation”; and (vi) the New Exchangeable Shares will be listed and posted for trading on the New York Stock Exchange and the Toronto Stock Exchange under the symbol “BEPC” (the current ticker symbol for the company).
The Arrangement remains subject to the receipt of court and shareholder approval, and the satisfaction of certain other customary conditions, and is expected to be completed in the fourth quarter of 2024.
In addition, our company has executed, amended, or terminated other agreements with the partnership and Brookfield that are described in Note 27 - Related party transactions in the company’s December 31, 2023 audited consolidated financial statements.
| Brookfield Renewable Corporation | Management’s Discussion and Analysis | September 30, 2024 | ||||||
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The following table reflects the related party agreements and transactions in the unaudited interim consolidated statements of income for the three and nine months ended September 30:
| Three months ended September 30 | Nine months ended September 30 | ||||||||||||||||||||||
| (MILLIONS) | 2024 | 2023 | 2024 | 2023 | |||||||||||||||||||
| Revenues | |||||||||||||||||||||||
| Power purchase and revenue agreements | $ | 22 | $ | 6 | $ | 76 | $ | 67 | |||||||||||||||
| Direct operating costs | |||||||||||||||||||||||
| Energy purchases | $ | (8) | $ | (6) | $ | (19) | $ | (16) | |||||||||||||||
| Energy marketing fee & other services | (1) | (1) | (2) | (7) | |||||||||||||||||||
| $ | (9) | $ | (7) | $ | (21) | $ | (23) | ||||||||||||||||
| Interest expense | |||||||||||||||||||||||
| Borrowings | $ | (37) | $ | (4) | $ | (71) | $ | (14) | |||||||||||||||
| Other | |||||||||||||||||||||||
| Interest income | $ | 15 | $ | 6 | $ | 29 | $ | 11 | |||||||||||||||
| Distribution income | $ | — | $ | 2 | $ | 3 | $ | 6 | |||||||||||||||
| Other related party services | $ | (1) | $ | 2 | $ | (4) | $ | — | |||||||||||||||
| Financial instrument gain | $ | — | $ | 2 | $ | 2 | $ | 9 | |||||||||||||||
| Management service agreement | $ | (28) | $ | (26) | $ | (71) | $ | (94) | |||||||||||||||
| Brookfield Renewable Corporation | Management’s Discussion and Analysis | September 30, 2024 | ||||||
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The following table reflects the impact of the related party agreements and transactions on the consolidated statements of financial position:
| (MILLIONS) | Related party | September 30, 2024 | December 31, 2023 | ||||||||||||||
| Current assets | |||||||||||||||||
| Due from related parties | |||||||||||||||||
| Amounts due from | Brookfield | $ | 33 | $ | 39 | ||||||||||||
| The partnership | 1,275 | 1,366 | |||||||||||||||
| Equity-accounted investments and other | 14 | 22 | |||||||||||||||
| $ | 1,322 | $ | 1,427 | ||||||||||||||
| Non-current assets | |||||||||||||||||
| Financial instrument assets | Brookfield | $ | — | $ | 170 | ||||||||||||
| Due from related parties | |||||||||||||||||
| Amounts due from | Equity-accounted investments and other | $ | 9 | $ | 9 | ||||||||||||
| Current liabilities | |||||||||||||||||
| Due to related parties | |||||||||||||||||
| Amounts due to | Brookfield | $ | 38 | $ | 26 | ||||||||||||
| The partnership | 286 | 238 | |||||||||||||||
| Equity-accounted investments and other | 4 | 8 | |||||||||||||||
| Brookfield Wealth Solutions and associates | 186 | 184 | |||||||||||||||
| $ | 514 | $ | 456 | ||||||||||||||
| Non-current liabilities | |||||||||||||||||
| Due to related parties | |||||||||||||||||
| Amounts due to | Brookfield | $ | 79 | $ | 79 | ||||||||||||
| The partnership | 589 | 850 | |||||||||||||||
| Equity-accounted investments and other | 4 | 1 | |||||||||||||||
| $ | 672 | $ | 930 | ||||||||||||||
| Non-recourse borrowings | Brookfield Wealth Solutions and associates | $ | 13 | $ | 14 | ||||||||||||
| Brookfield Renewable Corporation | Management’s Discussion and Analysis | September 30, 2024 | ||||||
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PART 4 – FINANCIAL PERFORMANCE REVIEW ON PROPORTIONATE INFORMATION
SEGMENTED DISCLOSURES
Segmented information is prepared on the same basis that our company's chief operating decision maker, which we refer to as "CODM" manages our company, evaluates financial results, and makes key operating decisions. See "Part 8 – Presentation to Stakeholders and Performance Measurement" for information on segments and an explanation on the calculation and relevance of proportionate information.
PROPORTIONATE RESULTS FOR THE THREE MONTHS ENDED SEPTEMBER 30
The following chart reflects the generation and summary financial figures on a proportionate basis for the three months ended September 30:
| (GWh) | (MILLIONS) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Actual Generation | Revenues | Adjusted EBITDA(1) | Funds From Operations | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2024 | 2023 | 2024 | 2023 | 2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Hydroelectric | 2,910 | 3,123 | $ | 276 | $ | 291 | $ | 157 | $ | 172 | $ | 90 | $ | 105 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Wind | 544 | 376 | 46 | 28 | 29 | 44 | 19 | 36 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Utility-scale solar | 453 | 289 | 83 | 33 | 69 | 24 | 52 | 15 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Distributed energy & sustainable solutions | 247 | 282 | 33 | 33 | 21 | 23 | 17 | 16 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Corporate | — | — | — | — | (1) | — | (21) | (21) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total | 4,154 | 4,070 | $ | 438 | $ | 385 | $ | 275 | $ | 263 | $ | 157 | $ | 151 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(1)Non-IFRS measures. For reconciliation to the most directly comparable IFRS measure see "Reconciliation of Non-IFRS Measures" in this Management's Discussion and Analysis.
| Brookfield Renewable Corporation | Management’s Discussion and Analysis | September 30, 2024 | ||||||
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HYDROELECTRIC OPERATIONS ON PROPORTIONATE BASIS
The following table presents our proportionate results for hydroelectric operations for the three months ended September 30:
| (MILLIONS, EXCEPT AS NOTED) | 2024 | 2023 | |||||||||
| Revenue | $ | 276 | $ | 291 | |||||||
| Other income | 7 | 4 | |||||||||
| Direct operating costs | (126) | (123) | |||||||||
Adjusted EBITDA(1) | 157 | 172 | |||||||||
| Interest expense | (58) | (65) | |||||||||
| Current income taxes | (9) | (2) | |||||||||
| Funds From Operations | $ | 90 | $ | 105 | |||||||
Generation (GWh) - actual | 2,910 | 3,123 | |||||||||
Average revenue per MWh(2) | 84 | 85 | |||||||||
(1)Non-IFRS measures. For reconciliations to the most directly comparable IFRS measure see “Reconciliation of Non-IFRS Measures” in this Management’s Discussion and Analysis.
(2)Average revenue per MWh was adjusted to net the impact of power purchases and any revenue with no corresponding generation.
Funds From Operations at our hydroelectric business was $90 million versus $105 million in the prior year as the benefit of higher average revenue per MWh due to recontracting initiatives at our U.S. and Colombia portfolio and inflation indexation, and higher generation at our South American assets were offset by lower resources in the U.S.
WIND OPERATIONS ON PROPORTIONATE BASIS
The following table presents our proportionate results for wind operations for the three months ended September 30:
| (MILLIONS, EXCEPT AS NOTED) | 2024 | 2023 | |||||||||
| Revenue | $ | 46 | $ | 28 | |||||||
| Other income | 2 | 28 | |||||||||
| Direct operating costs | (19) | (12) | |||||||||
Adjusted EBITDA(1) | 29 | 44 | |||||||||
| Interest expense | (10) | (8) | |||||||||
| Funds From Operations | $ | 19 | $ | 36 | |||||||
| Generation (GWh) - actual | 544 | 376 | |||||||||
(1)Non-IFRS measures. For reconciliations to the most directly comparable IFRS measure see “Reconciliation of Non-IFRS Measures” in this Management’s Discussion and Analysis.
Funds From Operations at our wind business was $19 million versus $36 million in the prior year. Excluding a gain that benefited the prior year, Funds From Operations increased due to the benefit from newly acquired and commissioned facilities, stronger year on year generation, and higher contributions from our Spanish assets as a result of adjustments to the regulated price earned by these assets in the prior year.
| Brookfield Renewable Corporation | Management’s Discussion and Analysis | September 30, 2024 | ||||||
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UTILITY-SCALE SOLAR OPERATIONS ON PROPORTIONATE BASIS
The following table presents our proportionate results for utility-scale solar operations for the three months ended September 30:
| (MILLIONS, EXCEPT AS NOTED) | 2024 | 2023 | |||||||||
| Revenue | $ | 83 | $ | 33 | |||||||
| Direct operating costs | (14) | (9) | |||||||||
Adjusted EBITDA(1) | 69 | 24 | |||||||||
| Interest expense | (17) | (10) | |||||||||
| Current income taxes | — | 1 | |||||||||
| Funds From Operations | $ | 52 | $ | 15 | |||||||
Generation (GWh) – actual | 453 | 289 | |||||||||
(1)Non-IFRS measures. For reconciliations to the most directly comparable IFRS measure see “Reconciliation of Non-IFRS Measures” in this Management’s Discussion and Analysis.
Funds From Operations at our utility-scale solar business was $52 million versus $15 million in the prior year due to stronger year on year generation and higher contributions from our Spanish assets as a result of adjustments to the regulated price earned by these assets in the prior year.
DISTRIBUTED ENERGY & SUSTAINABLE SOLUTIONS OPERATIONS ON PROPORTIONATE BASIS
The following table presents our proportionate results for distributed energy & sustainable solutions for the three months ended September 30:
| (MILLIONS, EXCEPT AS NOTED) | 2024 | 2023 | |||||||||
| Revenue | $ | 33 | $ | 33 | |||||||
| Other income | 2 | 1 | |||||||||
| Direct operating costs | (14) | (11) | |||||||||
Adjusted EBITDA(1) | 21 | 23 | |||||||||
| Interest expense | (4) | (7) | |||||||||
| Funds From Operations | $ | 17 | $ | 16 | |||||||
Generation (GWh) – actual | 247 | 282 | |||||||||
(1)Non-IFRS measures. For reconciliations to the most directly comparable IFRS measure see “Reconciliation of Non-IFRS Measures” in this Management’s Discussion and Analysis.
Funds From Operations at our distributed energy & sustainable solutions business was $17 million, which is in line with the prior year.
| Brookfield Renewable Corporation | Management’s Discussion and Analysis | September 30, 2024 | ||||||
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RECONCILIATION OF NON-IFRS MEASURES
The following table reconciles the non-IFRS financial measures to the most directly comparable IFRS measures. Net income (loss) is reconciled to Adjusted EBITDA for the three months ended September 30, 2024:
| (MILLIONS) | Hydroelectric | Wind | Utility-scale Solar | Distributed energy & sustainable solutions | Corporate | Total | |||||||||||||||||||||||||||||
| Net income (loss) | $ | 105 | $ | (49) | $ | (5) | $ | (17) | $ | (698) | $ | (664) | |||||||||||||||||||||||
| Add back or deduct the following: | |||||||||||||||||||||||||||||||||||
| Depreciation | 127 | 96 | 70 | 20 | — | 313 | |||||||||||||||||||||||||||||
| Deferred income tax expense (recovery) | (2) | (11) | 9 | (5) | 2 | (7) | |||||||||||||||||||||||||||||
| Foreign exchange and financial instrument loss (gain) | (22) | (6) | 18 | (1) | (1) | (12) | |||||||||||||||||||||||||||||
Other(1) | (8) | 7 | 11 | 20 | 2 | 32 | |||||||||||||||||||||||||||||
Dividends on BEPC exchangeable shares(2) | — | — | — | — | 64 | 64 | |||||||||||||||||||||||||||||
| Remeasurement of BEPC exchangeable and BEPC class B shares | — | — | — | — | 612 | 612 | |||||||||||||||||||||||||||||
| Management service costs | — | — | — | — | 28 | 28 | |||||||||||||||||||||||||||||
Interest expense(2) | 144 | 53 | 51 | 16 | — | 264 | |||||||||||||||||||||||||||||
| Current income tax expense (recovery) | 32 | 1 | 1 | — | — | 34 | |||||||||||||||||||||||||||||
Amount attributable to equity accounted investments and non-controlling interests(3) | (219) | (62) | (86) | (12) | (10) | $ | (389) | ||||||||||||||||||||||||||||
| Adjusted EBITDA attributable to the partnership | $ | 157 | $ | 29 | $ | 69 | $ | 21 | $ | (1) | $ | 275 | |||||||||||||||||||||||
(1)Other corresponds to amounts that are not related to the revenue earning activities and are not normal, recurring cash operating expenses necessary for business operations. Other also includes derivative and other revaluations and settlements, gains or losses on debt extinguishment/modification, transaction costs, legal, provisions, amortization of concession assets and the company’s economic share of foreign currency hedges and other hedges, income earned on financial assets and structured investments in sustainable solutions, transferable tax credits and realized disposition gains and losses on assets that we developed and/or did not intend to hold over the long-term that are included within Adjusted EBITDA.
(2)Total interest expense of $328 million is comprised of amounts on Interest expense and Dividends on BEPC exchangeable shares.
(3)Amount attributable to equity accounted investments corresponds to the Adjusted EBITDA to the company that are generated by its investments in associates and joint ventures accounted for using the equity method. Amounts attributable to non-controlling interest are calculated based on the economic ownership interest held by non-controlling interests in consolidated subsidiaries. By adjusting Adjusted EBITDA attributable to non-controlling interest, our company is able to remove the portion of Adjusted EBITDA earned at non-wholly owned subsidiaries that are not attributable to our company.
| Brookfield Renewable Corporation | Management’s Discussion and Analysis | September 30, 2024 | ||||||
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The following table reconciles the non-IFRS financial measures to the most directly comparable IFRS measures. Net income (loss) is reconciled to Adjusted EBITDA for the three months ended September 30, 2023:
| (MILLIONS) | Hydroelectric | Wind | Utility-scale Solar | Distributed energy & sustainable solutions | Corporate | Total | |||||||||||||||||||||||||||||
| Net income (loss) | $ | 89 | $ | — | $ | 41 | $ | (21) | $ | 1,261 | $ | 1,370 | |||||||||||||||||||||||
| Add back or deduct the following: | |||||||||||||||||||||||||||||||||||
| Depreciation | 136 | 83 | 78 | 23 | — | 320 | |||||||||||||||||||||||||||||
| Deferred income tax expense (recovery) | (5) | 37 | (16) | 4 | — | 20 | |||||||||||||||||||||||||||||
| Foreign exchange and financial instrument loss (gain) | (7) | (18) | (5) | 2 | 7 | (21) | |||||||||||||||||||||||||||||
Other(1) | 10 | 8 | (32) | 10 | (7) | (11) | |||||||||||||||||||||||||||||
Dividends on BEPC exchangeable shares(2) | — | — | — | — | 61 | 61 | |||||||||||||||||||||||||||||
| Remeasurement of BEPC exchangeable and BEPC class B shares | — | — | — | — | (1,393) | (1,393) | |||||||||||||||||||||||||||||
| Management service costs | — | — | — | — | 26 | 26 | |||||||||||||||||||||||||||||
Interest expense(2) | 156 | 33 | 49 | 10 | (1) | 247 | |||||||||||||||||||||||||||||
| Current income tax expense | 8 | 2 | (3) | — | — | 7 | |||||||||||||||||||||||||||||
Amount attributable to equity accounted investments and non-controlling interests(3) | (215) | (101) | (88) | (5) | 46 | $ | (363) | ||||||||||||||||||||||||||||
| Adjusted EBITDA attributable to the partnership | $ | 172 | $ | 44 | $ | 24 | $ | 23 | $ | — | $ | 263 | |||||||||||||||||||||||
(1)Other corresponds to amounts that are not related to the revenue earning activities and are not normal, recurring cash operating expenses necessary for business operations. Other also includes derivative and other revaluations and settlements, gains or losses on debt extinguishment/modification, transaction costs, legal, provisions, amortization of concession assets and the company’s economic share of foreign currency hedges and other hedges, income earned on financial assets and structured investments in sustainable solutions, transferable tax credits and realized disposition gains and losses on assets that we developed and/or did not intend to hold over the long-term that are included within Adjusted EBITDA.
(2)Total interest expense of $308 million is comprised of amounts on Interest expense and Dividends on BEPC exchangeable shares.
(3)Amount attributable to equity accounted investments corresponds to the Adjusted EBITDA to the company that are generated by its investments in associates and joint ventures accounted for using the equity method. Amounts attributable to non-controlling interest are calculated based on the economic ownership interest held by non-controlling interests in consolidated subsidiaries. By adjusting Adjusted EBITDA attributable to non-controlling interest, our company is able to remove the portion of Adjusted EBITDA earned at non-wholly owned subsidiaries that are not attributable to our company.
| Brookfield Renewable Corporation | Management’s Discussion and Analysis | September 30, 2024 | ||||||
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The following table reconciles non-IFRS financial measures to the most directly comparable IFRS measures. Net income (loss) is reconciled to Funds From Operations for the three months ended September 30:
| (MILLIONS, EXCEPT AS NOTED) | 2024 | 2023 | |||||||||
| Net income (loss) | $ | (664) | $ | 1,370 | |||||||
| Add back or deduct the following: | |||||||||||
| Depreciation | 313 | 320 | |||||||||
| Foreign exchange and financial instruments gain (loss) | (12) | (21) | |||||||||
| Deferred income tax expense (recovery) | (7) | 20 | |||||||||
Other(1) | 32 | (11) | |||||||||
| Dividends on BEPC exchangeable shares | 64 | 61 | |||||||||
| Remeasurement of BEPC exchangeable and BEPC class B shares | 612 | (1,393) | |||||||||
Amount attributable to equity accounted investments and non-controlling interest(2) | (181) | (195) | |||||||||
| Funds From Operations | $ | 157 | $ | 151 | |||||||
(1)Other corresponds to amounts that are not related to the revenue earning activities and are not normal, recurring cash operating expenses necessary for business operations. Other also includes derivative and other revaluations and settlements, gains or losses on debt extinguishment/modification, transaction costs, legal, provisions, amortization of concession assets and the company’s economic share of foreign currency hedges and other hedges, income earned on financial assets and structured investments in sustainable solutions, and transferable tax credits and realized disposition gains and losses on assets that we developed and/or did not intend to hold over the long-term that are included in Funds From Operations.
(2)Amount attributable to equity accounted investments corresponds to the Funds From Operations that are generated by its investments in associates and joint ventures accounted for using the equity method. Amounts attributable to non-controlling interest are calculated based on the economic ownership interest held by non-controlling interests in consolidated subsidiaries. By adjusting Funds From Operations attributable to non-controlling interest, our company is able to remove the portion of Funds From Operations earned at non-wholly owned subsidiaries that are not attributable to our company.
| Brookfield Renewable Corporation | Management’s Discussion and Analysis | September 30, 2024 | ||||||
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PART 5 – LIQUIDITY AND CAPITAL RESOURCES
AVAILABLE LIQUIDITY
Our company assesses liquidity on a group-wide basis, consistent with the partnership, because shareholders have exposure to a broader base of renewable investments by virtue of the exchange feature of BEPC exchangeable shares. Our group-wide liquidity consisted of the following:
| (MILLIONS) | September 30, 2024 | December 31, 2023 | ||||||||||||
| Our company's share of cash and cash equivalents | $ | 260 | $ | 249 | ||||||||||
| Authorized credit facilities | 2,450 | 2,375 | ||||||||||||
| 2,710 | 2,624 | |||||||||||||
| Available portion of subsidiary credit facilities | 85 | 104 | ||||||||||||
| Brookfield Renewable group liquidity on a proportionate basis | 1,762 | 1,393 | ||||||||||||
| Available liquidity | $ | 4,557 | $ | 4,121 | ||||||||||
We operate with sufficient liquidity to enable us to fund growth initiatives, capital expenditures, distributions and withstand sudden adverse changes in economic circumstances or short-term fluctuations in generation. We maintain a strong, investment grade balance sheet characterized by a conservative capital structure, access to multiple funding levers including a focus on capital recycling on an opportunistic basis, and diverse sources of capital. Principal sources of liquidity are cash flows from operations, our credit facilities, upfinancings on non-recourse borrowings and proceeds from the issuance of various securities through public markets.
DIVIDEND POLICY
The BEPC board may declare dividends at its discretion. However, the BEPC exchangeable shares have been structured with the intention of providing an economic return equivalent to the LP units and it is expected that dividends on the BEPC exchangeable shares will be declared at the same time and in the same amount as distributions made on the LP units. In the event dividends are not declared and paid concurrently with a distribution on the LP units, then the undeclared or unpaid amount of such BEPC exchangeable share dividend will accrue and accumulate. Pursuant to the equity commitment agreement, the partnership has also agreed not to declare or pay any distribution on the LP units if on such date our company does not have sufficient funds or other assets to enable the declaration and payment of an equivalent dividend on the BEPC exchangeable shares. See Item 7.B “Related Party Transactions – BEPC relationship with the partnership – Equity Commitment Agreement” of our Form 20-F for the annual period ended December 31, 2023. Brookfield Renewable’s distributions are underpinned by stable, highly regulated and contracted cash flows generated from operations. Brookfield Renewable’s objective is to pay a distribution that is sustainable on a long-term basis and has set its target payout ratio at approximately 70% of Brookfield Renewable’s Funds From Operations.
The board of directors of the general partner of Brookfield Renewable approved a 5.2% increase in its annual distribution to $1.42 per LP unit, or $0.355 per LP unit quarterly, starting with the distribution paid in March 2024, an increase from $1.35 per LP unit in 2023. This increase reflects the forecasted contribution from Brookfield Renewable's recently commissioned capital projects, as well as the expected cash yield on recent acquisitions. Brookfield Renewable targets a 5% to 9% annual distribution growth in light of growth it foresees in its operations.
| Brookfield Renewable Corporation | Management’s Discussion and Analysis | September 30, 2024 | ||||||
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BORROWINGS
The composition of debt obligations, overall maturity profile, and average interest rates associated with our borrowings and credit facilities on a proportionate basis is presented in the following table:
| September 30, 2024 | December 31, 2023 | ||||||||||||||||||||||||||||||||||
| Weighted-average | Weighted-average | ||||||||||||||||||||||||||||||||||
| (MILLIONS EXCEPT AS NOTED) | Interest rate (%)(1) | Term (years) | Total | Interest rate (%)(1) | Term (years) | Total | |||||||||||||||||||||||||||||
Proportionate non-recourse borrowings(2) | |||||||||||||||||||||||||||||||||||
| Hydroelectric | 7.0 | % | 6 | $ | 3,038 | 7.2 | % | 6 | $ | 3,013 | |||||||||||||||||||||||||
| Wind | 6.4 | % | 9 | 705 | 6.3 | % | 10 | 1,088 | |||||||||||||||||||||||||||
| Utility-scale Solar | 5.8 | % | 11 | 1,332 | 5.9 | % | 14 | 1,786 | |||||||||||||||||||||||||||
| Distributed energy & sustainable solutions | 5.4 | % | 10 | 308 | 5.6 | % | 12 | 312 | |||||||||||||||||||||||||||
| 6.5 | % | 8 | 5,383 | 6.6 | % | 9 | 6,199 | ||||||||||||||||||||||||||||
| Proportionate unamortized financing fees, net of unamortized premiums | (33) | (45) | |||||||||||||||||||||||||||||||||
| 5,350 | 6,154 | ||||||||||||||||||||||||||||||||||
| Equity-accounted borrowings | (198) | (204) | |||||||||||||||||||||||||||||||||
Non-controlling interests and other(3) | 8,620 | 10,122 | |||||||||||||||||||||||||||||||||
| As per IFRS Statements | $ | 13,772 | $ | 16,072 | |||||||||||||||||||||||||||||||
(1)Includes cash yields on tax equity.
(2)See “Part 9 - Presentation to Stakeholders and Performance Measurement” for information on proportionate debt.
(3)Includes tax equity adjustments.
The following table summarizes our undiscounted principal repayments and scheduled amortization on a proportionate basis as at September 30, 2024:
| (MILLIONS) | Balance of 2024 | 2025 | 2026 | 2027 | 2028 | Thereafter | Total | |||||||||||||||||||||||||||||||||||||
| Debt Principal repayments | ||||||||||||||||||||||||||||||||||||||||||||
| Non-recourse borrowings | ||||||||||||||||||||||||||||||||||||||||||||
| Hydroelectric | 4 | 280 | 253 | 124 | 91 | 1,239 | 1,991 | |||||||||||||||||||||||||||||||||||||
| Wind | 19 | 8 | 1 | 1 | 125 | 205 | 359 | |||||||||||||||||||||||||||||||||||||
| Utility-scale solar | — | 15 | 12 | 1 | 107 | 171 | 306 | |||||||||||||||||||||||||||||||||||||
| Distributed energy & sustainable solutions | — | — | — | 26 | 61 | 71 | 158 | |||||||||||||||||||||||||||||||||||||
| 23 | 303 | 266 | 152 | 384 | 1,686 | 2,814 | ||||||||||||||||||||||||||||||||||||||
| Amortizing debt principal repayments | ||||||||||||||||||||||||||||||||||||||||||||
| Non-recourse borrowings | ||||||||||||||||||||||||||||||||||||||||||||
| Hydroelectric | 25 | 92 | 111 | 92 | 106 | 621 | 1,047 | |||||||||||||||||||||||||||||||||||||
| Wind | 17 | 37 | 31 | 29 | 30 | 202 | 346 | |||||||||||||||||||||||||||||||||||||
| Utility-scale solar | 22 | 83 | 81 | 82 | 80 | 678 | 1,026 | |||||||||||||||||||||||||||||||||||||
| Distributed energy & sustainable solutions | 5 | 17 | 16 | 12 | 13 | 87 | 150 | |||||||||||||||||||||||||||||||||||||
| 69 | 229 | 239 | 215 | 229 | 1,588 | 2,569 | ||||||||||||||||||||||||||||||||||||||
| Total | $ | 92 | $ | 532 | $ | 505 | $ | 367 | $ | 613 | $ | 3,274 | $ | 5,383 | ||||||||||||||||||||||||||||||
| Brookfield Renewable Corporation | Management’s Discussion and Analysis | September 30, 2024 | ||||||
Page 17 | ||||||||
We remain focused on refinancing near-term facilities on acceptable terms and maintaining a manageable maturity ladder. We do not anticipate material issues in refinancing our borrowings through 2028 on acceptable terms and will do so opportunistically based on the prevailing interest rate environment.
Proportionate debt is presented to assist investors in understanding the capital structure of the underlying investments of our company that are consolidated in its financial statements but are not wholly-owned. When used in conjunction with Funds from Operations, proportionate debt is expected to provide useful information as to how our company has financed its businesses at the asset-level. The only difference between consolidated debt presented under IFRS and proportionate debt is the adjustment to remove the share of debt of consolidated investments not attributable to our company and the adjustment to include share of debt attributable to the equity-accounted investments of our company. Management utilizes proportionate debt in understanding the capital structure of the underlying investments that are consolidated in its financial statements but are not wholly-owned. Proportionate debt provides useful information as to how our company has financed its businesses at the asset-level and provides a view into the return on the capital that it invests at a given degree of leverage.
CAPITAL EXPENDITURES
We fund growth capital expenditures with cash flow generated from operations, supplemented by non-recourse debt sized to investment grade coverage and covenant thresholds. This is designed to ensure that our investments have stable capital structures supported by a substantial level of equity and that cash flows at the asset level can be remitted freely to our company. This strategy also underpins our investment grade profile.
To fund large scale development projects and acquisitions, we will evaluate a variety of capital sources including proceeds from selling mature businesses, in addition to raising money in the capital markets through equity, debt and preferred share issuances. Furthermore, our company has $2.45 billion of committed revolving credit facilities available for investments and acquisitions, as well as funding the equity component of organic growth initiatives. The facilities are intended, and have historically been used, as a bridge to a long-term financing strategy rather than a permanent source of capital. We believe these capital sources will be sufficient to permit us to deploy the necessary capital for our contractual commitments (see Note 17 - Commitments, contingencies and guarantees in the audited annual consolidated financial statements) and our company’s share of anticipated transactions by our group.
CONSOLIDATED STATEMENTS OF CASH FLOWS
The following table summarizes the key items in the unaudited interim consolidated statements of cash flows:
| Three months ended September 30 | Nine months ended September 30 | ||||||||||||||||||||||
| (MILLIONS) | 2024 | 2023 | 2024 | 2023 | |||||||||||||||||||
| Cash flow provided by (used in): | |||||||||||||||||||||||
| Operating activities before changes in due to or from related parties and net working capital change | $ | 272 | $ | 245 | $ | 829 | $ | 949 | |||||||||||||||
| Changes in due to or from related parties | (23) | 25 | 30 | 28 | |||||||||||||||||||
| Net change in working capital balances | 59 | 18 | (154) | 155 | |||||||||||||||||||
| Operating activities | 308 | 288 | 705 | 1,132 | |||||||||||||||||||
| Financing activities | (166) | (310) | (111) | (903) | |||||||||||||||||||
| Investing activities | (118) | (53) | (540) | (375) | |||||||||||||||||||
| Foreign exchange gain (loss) on cash | 8 | (10) | (31) | 17 | |||||||||||||||||||
| Increase (decrease) in cash and cash equivalents | $ | 32 | $ | (85) | $ | 23 | $ | (129) | |||||||||||||||
Operating Activities
Cash flows provided by operating activities before changes in due to or from related parties and net working capital change for the three and nine months ended September 30, 2024 totaled $272 million and $829 million, respectively, compared to $245 million and $949 million in 2023, reflecting strong operating performance of our business during both periods.
| Brookfield Renewable Corporation | Management’s Discussion and Analysis | September 30, 2024 | ||||||
Page 18 | ||||||||
Financing Activities
Cash flows used in financing activities totaled $166 million and $111 million for the three and nine months ended September 30, 2024. The strength of our balance sheet and disciplined access to diverse sources of capital to fund growth as discussed below allowed us to generate net proceeds of approximately $90 million and $189 million from non-recourse financings that were offset by repayment of related party financings of $250 million and $119 million for the three and nine months ended September 30, 2024.
Distributions paid during the three and nine months ended September 30, 2024 to participating non-controlling interest in operating subsidiaries was $57 million and $321 million, respectively (2023: $116 million and $437 million, respectively). Our non-controlling interest contributed capital, net of capital returns, of $51 million and $140 million in the three and nine months ended September 30, 2024 (2023: $2 million and $105 million).
Cash flows used in financing activities totaled $310 million and $903 million for the three and nine months ended September 30, 2023, respectively. The strength of our balance sheet and disciplined access to diverse sources of capital allowed us to generate proceeds of approximately $1.5 billion for nine months ended September 30, 2023, including $251 million from equity financing net of transaction fees through a bought deal of BEPC exchangeable shares during the second quarter. The proceeds raised to fund the growth of our business through the investing activities noted below were offset by the repayment of borrowings.
Investing Activities
Cash flows used in investing activities totaled $118 million and $540 million for the three and nine months ended September 30, 2024. Our continued investment in our property, plant and equipment, including the construction and development of approximately 300 MW of solar and storage development projects in the U.S. and 660 MW of wind and solar development projects in Brazil, totaled $162 million and $638 million for the three and nine months ended September 30, 2024. Proceeds generated from the sale of a 30 MW hydroelectric asset in the U.S., a 85 MW portfolio of biomass facilities in Brazil assets, and securities were offset by cash and cash equivalents transferred alongside our 100% interest in a portfolio of 5,900 MW of operating and under construction assets, with a 6,100 MW development pipeline in the U.S. to a subsidiary of Brookfield Renewable resulting in proceeds of $86 million and $164 million for the three and nine months ended September 30, 2024.
Cash flows used in investing activities totaled $53 million and $375 million for the three and nine months ended September 30, 2023. During the year, we invested $81 million into growth, including a 136 MW portfolio of operating wind assets in Brazil. Our continued investment in our property, plant and equipment, including the construction of a 1,200 MW solar facility in Brazil, a 226 MW wind facility in Brazil and a 57 MW wind facility in California, was $185 million and $505 million for the three and nine months ended September 30, 2023, were partially offset by proceeds of $137 million and $243 million generated from the sale of non-core wind assets and financial securities for the three and nine months ended September 30, 2023.
SHARES AND UNITS OUTSTANDING
Our company’s equity interests include BEPC exchangeable shares held by the public shareholders and BEPC class B and BEPC class C shares held by the partnership. Dividends on each of our BEPC exchangeable shares are expected to be declared and paid at the same time and in the same amount per share as distributions on each LP unit of the partnership. Ownership of BEPC class C shares will entitle holders to receive dividends as and when declared by our board.
| Brookfield Renewable Corporation | Management’s Discussion and Analysis | September 30, 2024 | ||||||
Page 19 | ||||||||
Our company’s capital structure is comprised of the following shares:
| (UNITS) | September 30, 2024 | December 31, 2023 | |||||||||||||||
| BEPC exchangeable shares | |||||||||||||||||
| Balance, beginning of year | 179,651,526 | 172,218,098 | |||||||||||||||
| Issuance | — | 7,441,893 | |||||||||||||||
| Exchanged for BEP LP units | (10,335) | (8,465) | |||||||||||||||
| Balance, end of period | 179,641,191 | 179,651,526 | |||||||||||||||
| BEPC class B shares | 165 | 165 | |||||||||||||||
| BEPC class C shares | |||||||||||||||||
| Balance, beginning of year | 194,460,874 | 189,600,000 | |||||||||||||||
| Issuance | — | 4,860,874 | |||||||||||||||
| Balance, end of period | 194,460,874 | 194,460,874 | |||||||||||||||
In the three and nine months ended September 30, 2024, our company declared dividends of $64 million and $193 million, respectively (2023: $61 million and $180 million, respectively) on its outstanding BEPC exchangeable shares. Dividends on our BEPC exchangeable shares are presented as interest expense in the unaudited interim consolidated financial statements. No dividends were declared on BEPC class B shares or BEPC class C shares during the three and nine months ended September 30, 2024.
As at September 30, 2024, Brookfield Holders held a direct and indirect interest of approximately 25% of the company. Brookfield Holders own, directly and indirectly, 44,813,835 BEPC exchangeable shares on a combined basis and the remaining is held by public investors.
Our company may from time-to-time, subject to applicable law, purchase shares for cancellation in the open market, provided that any necessary approval has been obtained.
In December 2023, the company renewed its normal course issuer bid for its outstanding BEPC exchangeable shares. The company is authorized to repurchase up to 8.9 million BEPC Exchangeable shares, representing 5% of its issued and outstanding BEPC exchangeable shares. The bids will expire on December 17, 2024, or earlier should the company complete its repurchases prior to such data. There were no BEPC exchangeable shares repurchased during the three and nine months ended September 30, 2024.
As at the date of this report, Brookfield Holders, including the partnership, through its ownership of BEPC exchangeable shares and BEPC class B shares, holds an approximate 81.2% voting interest in our company. Holders of BEPC exchangeable shares, excluding Brookfield Holders, including the partnership, hold an approximate 18.8% aggregate voting interest in BEPC.
CONTRACTUAL OBLIGATIONS
Please see Note 17 – Commitments, contingencies and guarantees in the unaudited interim consolidated financial statements, for further details on the following:
•Commitments – Water, land, and dam usage agreements, and agreements and conditions on committed acquisitions of operating portfolios and development projects;
•Contingencies – Legal proceedings, arbitrations and actions arising in the normal course of business, and providing for letters of credit; and
•Guarantees – Nature of all the indemnification undertakings and guarantees to third-parties for certain transactions.
OFF-STATEMENT OF FINANCIAL POSITION ARRANGEMENTS
Our company does not have any off-statement of financial position arrangements that have or are reasonably likely to have a material current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.
| Brookfield Renewable Corporation | Management’s Discussion and Analysis | September 30, 2024 | ||||||
Page 20 | ||||||||
Our company issues letters of credit from its corporate credit facilities for general corporate purposes which include, but are not limited to, security deposits, performance bonds and guarantees for reserve accounts. As at September 30, 2024, letters of credit issued amounted to $909 million (2023: $1,135 million).
Two direct and indirect wholly-owned subsidiaries of our company have fully and unconditionally guaranteed (i) any and all present and future unsecured debt securities issued by Brookfield Renewable Partners ULC, in each case as to payment of principal, premium (if any) and interest when and as the same will become due and payable under or in respect of the trust indenture under which such securities are issued, (ii) all present and future senior preferred shares of Brookfield Renewable Power Preferred Equity Inc. (“BRP Equity”) as to the payment of dividends when due, the payment of amounts due on redemption and the payment of amounts due on the liquidation, dissolution or winding up of BRP Equity, (iii) certain of BEP’s preferred units, as to payment of distributions when due, the payment of amounts due on redemption and the payment of amounts due on the liquidation, dissolution or winding up of BEP, (iv) the obligations of all present and future bilateral credit facilities established for the benefit of Brookfield Renewable, and (v) notes issued by Brookfield BRP Holdings (Canada) Inc. under its U.S. commercial paper program. BRP Bermuda Holdings I Limited (“BBHI”) and BEP Subco Inc. subsidiaries of the company have guaranteed the perpetual subordinated notes issued by Brookfield BRP Holdings (Canada) Inc. These arrangements do not have or are not reasonably likely to have a material current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.
PART 6 – SELECTED QUARTERLY INFORMATION
HISTORICAL OPERATIONAL AND FINANCIAL INFORMATION RELATED TO THE PARTNERSHIP
As the market price of BEPC exchangeable shares is expected to be significantly impacted by the market price of the LP units and the combined business performance of Brookfield Renewable as a whole, we are providing the following historical operational and financial information regarding Brookfield Renewable. For further details please review the partnership’s periodic reporting referenced in the introductory section of this MD&A.
| 2024 | 2023 | 2022 | |||||||||||||||||||||||||||||||||||||||||||||
| (MILLIONS, EXCEPT AS NOTED) | Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | Q4 | |||||||||||||||||||||||||||||||||||||||
| Revenues | $ | 1,470 | $ | 1,482 | $ | 1,492 | $ | 1,323 | $ | 1,179 | $ | 1,205 | $ | 1,331 | $ | 1,196 | |||||||||||||||||||||||||||||||
| Net income (loss) to Unitholders | (181) | (154) | (120) | 35 | (64) | (39) | (32) | (82) | |||||||||||||||||||||||||||||||||||||||
| Basic and diluted income (loss) per LP unit | (0.32) | (0.28) | (0.23) | 0.01 | (0.14) | (0.10) | (0.09) | (0.16) | |||||||||||||||||||||||||||||||||||||||
| Funds From Operations | 278 | 339 | 296 | 255 | 253 | 312 | 275 | 225 | |||||||||||||||||||||||||||||||||||||||
| Funds From Operations per Unit | 0.42 | 0.51 | 0.45 | 0.38 | 0.38 | 0.48 | 0.43 | 0.35 | |||||||||||||||||||||||||||||||||||||||
| Distribution per LP Unit | 0.36 | 0.36 | 0.36 | 0.34 | 0.34 | 0.34 | 0.34 | 0.32 | |||||||||||||||||||||||||||||||||||||||
SUMMARY FINANCIAL INFORMATION
The following is a summary of unaudited quarterly financial information of our company for the last eight consecutive quarters:
| 2024 | 2023 | 2022 | |||||||||||||||||||||||||||||||||||||||||||||
| (MILLIONS, EXCEPT AS NOTED) | Q3 | Q2 | Q1 | Q4 | Q3 | Q2 | Q1 | Q4 | |||||||||||||||||||||||||||||||||||||||
| Revenues | $ | 1,041 | $ | 989 | $ | 1,125 | $ | 1,066 | $ | 934 | $ | 901 | $ | 1,066 | $ | 956 | |||||||||||||||||||||||||||||||
| Net income (loss) | (664) | (339) | 491 | (502) | 1,370 | 360 | (920) | 1,078 | |||||||||||||||||||||||||||||||||||||||
| Net income (loss) attributable to the partnership | (674) | (342) | 491 | (747) | 1,340 | 291 | (1,065) | 953 | |||||||||||||||||||||||||||||||||||||||
| Brookfield Renewable Corporation | Management’s Discussion and Analysis | September 30, 2024 | ||||||
Page 21 | ||||||||
PROPORTIONATE RESULTS FOR THE NINE MONTHS ENDED SEPTEMBER 30
The following chart reflects the generation and summary financial figures on a proportionate basis for the nine months ended September 30:
| (GWh) | (MILLIONS) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Actual Generation | Revenues | Adjusted EBITDA(1) | Funds From Operations | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| 2024 | 2023 | 2024 | 2023 | 2024 | 2023 | 2024 | 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Hydroelectric | 10,339 | 11,230 | $ | 917 | $ | 939 | $ | 555 | $ | 614 | $ | 365 | $ | 401 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Wind | 2,110 | 1,107 | 162 | 107 | 114 | 109 | 78 | 86 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Utility-scale Solar | 1,374 | 899 | 210 | 122 | 180 | 114 | 129 | 75 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Distributed energy & sustainable solutions | 757 | 668 | 99 | 102 | 66 | 77 | 48 | 61 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Corporate | — | — | — | — | 38 | 14 | (25) | (75) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total | 14,580 | 13,904 | $ | 1,388 | $ | 1,270 | $ | 953 | $ | 928 | $ | 595 | $ | 548 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||
(1) Non-IFRS measures. For reconciliation to the most directly comparable IFRS measure see "Reconciliation of Non-IFRS Measures" in this Management's Discussion and Analysis.
| Brookfield Renewable Corporation | Management’s Discussion and Analysis | September 30, 2024 | ||||||
Page 22 | ||||||||
RECONCILIATION OF NON-IFRS MEASURES
The following table reconciles the non-IFRS financial measures to the most directly comparable IFRS measures. Net income (loss) is reconciled to Adjusted EBITDA for the nine months ended September 30, 2024:
| (MILLIONS) | Hydroelectric | Wind | Utility-scale Solar | Distributed energy & sustainable solutions | Corporate | Total | |||||||||||||||||||||||||||||
| Net income (loss) | $ | 259 | $ | (96) | $ | (56) | $ | (3) | $ | (616) | $ | (512) | |||||||||||||||||||||||
| Add back or deduct the following: | |||||||||||||||||||||||||||||||||||
| Depreciation | 389 | 295 | 220 | 66 | — | 970 | |||||||||||||||||||||||||||||
| Deferred income tax expense (recovery) | 19 | (23) | 13 | (9) | 3 | 3 | |||||||||||||||||||||||||||||
| Foreign exchange and financial instrument loss (gain) | (66) | (41) | 27 | 2 | — | (78) | |||||||||||||||||||||||||||||
Other(1) | (3) | (13) | (43) | (35) | (19) | (113) | |||||||||||||||||||||||||||||
Dividends on BEPC exchangeable shares(2) | — | — | — | — | 193 | 193 | |||||||||||||||||||||||||||||
| Remeasurement of BEPC exchangeable and BEPC class B shares | — | — | — | — | 341 | 341 | |||||||||||||||||||||||||||||
| Management service costs | — | — | — | — | 71 | 71 | |||||||||||||||||||||||||||||
Interest expense(2) | 467 | 178 | 145 | 35 | 14 | 839 | |||||||||||||||||||||||||||||
| Current income tax expense | 53 | 8 | 1 | — | 1 | 63 | |||||||||||||||||||||||||||||
Amount attributable to equity accounted investments and non-controlling interests(3) | (563) | (194) | (127) | 10 | 50 | $ | (824) | ||||||||||||||||||||||||||||
| Adjusted EBITDA attributable to the partnership | $ | 555 | $ | 114 | $ | 180 | $ | 66 | $ | 38 | $ | 953 | |||||||||||||||||||||||
(1)Other corresponds to amounts that are not related to the revenue earning activities and are not normal, recurring cash operating expenses necessary for business operations. Other also includes derivative and other revaluations and settlements, gains or losses on debt extinguishment/modification, transaction costs, legal, provisions, amortization of concession assets and the company’s economic share of foreign currency hedges and other hedges, income earned on financial assets and structured investments in sustainable solutions, transferable tax credits and realized disposition gains and losses on assets that we developed and/or did not intend to hold over the long-term that are included within Adjusted EBITDA.
(2)Total interest expense of $1,032 million is comprised of amounts on Interest expense and Dividends on BEPC exchangeable shares.
(3)Amount attributable to equity accounted investments corresponds to the Adjusted EBITDA to the company that are generated by its investments in associates and joint ventures accounted for using the equity method. Amounts attributable to non-controlling interest are calculated based on the economic ownership interest held by non-controlling interests in consolidated subsidiaries. By adjusting Adjusted EBITDA attributable to non-controlling interest, our company is able to remove the portion of Adjusted EBITDA earned at non-wholly owned subsidiaries that are not attributable to our company.
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The following table reconciles the non-IFRS financial measures to the most directly comparable IFRS measures. Net income (loss) is reconciled to Adjusted EBITDA for the nine months ended September 30, 2023:
| (MILLIONS) | Hydroelectric | Wind | Utility-scale Solar | Distributed energy & sustainable solutions | Corporate | Total | |||||||||||||||||||||||||||||
| Net income (loss) | $ | 395 | $ | 14 | $ | 41 | $ | (12) | $ | 372 | $ | 810 | |||||||||||||||||||||||
| Add back or deduct the following: | |||||||||||||||||||||||||||||||||||
| Depreciation | 400 | 248 | 235 | 70 | — | 953 | |||||||||||||||||||||||||||||
| Deferred income tax expense (recovery) | 5 | 41 | (17) | 4 | (4) | 29 | |||||||||||||||||||||||||||||
| Foreign exchange and financial instrument loss (gain) | (90) | (46) | (1) | 7 | 1 | (129) | |||||||||||||||||||||||||||||
Other(1) | 27 | 29 | (14) | 21 | 4 | 67 | |||||||||||||||||||||||||||||
Dividends on BEPC exchangeable shares(2) | — | — | — | — | 180 | 180 | |||||||||||||||||||||||||||||
| Remeasurement of BEPC exchangeable and BEPC class B shares | — | — | — | — | (710) | (710) | |||||||||||||||||||||||||||||
| Management service costs | — | — | — | — | 94 | 94 | |||||||||||||||||||||||||||||
Interest expense(2) | 463 | 101 | 153 | 35 | (3) | 749 | |||||||||||||||||||||||||||||
| Current income tax expense | 67 | 6 | 6 | — | — | 79 | |||||||||||||||||||||||||||||
Amount attributable to equity accounted investments and non-controlling interests(3) | (653) | (284) | (289) | (48) | 73 | $ | (1,201) | ||||||||||||||||||||||||||||
| Adjusted EBITDA attributable to the partnership | $ | 614 | $ | 109 | $ | 114 | $ | 77 | $ | 7 | $ | 921 | |||||||||||||||||||||||
(1)Other corresponds to amounts that are not related to the revenue earning activities and are not normal, recurring cash operating expenses necessary for business operations. Other also includes derivative and other revaluations and settlements, gains or losses on debt extinguishment/modification, transaction costs, legal, provisions, amortization of concession assets and the company’s economic share of foreign currency hedges and other hedges, income earned on financial assets and structured investments in sustainable solutions, transferable tax credits and realized disposition gains and losses on assets that we developed and/or did not intend to hold over the long-term that are included within Adjusted EBITDA.
(2)Total interest expense of $929 million is comprised of amounts on Interest expense and Dividends on BEPC exchangeable shares.
(3)Amount attributable to equity accounted investments corresponds to the Adjusted EBITDA to the company that are generated by its investments in associates and joint ventures accounted for using the equity method. Amounts attributable to non-controlling interest are calculated based on the economic ownership interest held by non-controlling interests in consolidated subsidiaries. By adjusting Adjusted EBITDA attributable to non-controlling interest, our company is able to remove the portion of Adjusted EBITDA earned at non-wholly owned subsidiaries that are not attributable to our company.
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The following table reconciles non-IFRS financial measures to the most directly comparable IFRS measures. Net income is reconciled to Funds From Operations for the nine months ended September 30:
| (MILLIONS, EXCEPT AS NOTED) | 2024 | 2023 | |||||||||
| Net income (loss) | $ | (512) | $ | 810 | |||||||
| Add back or deduct the following: | |||||||||||
| Depreciation | 970 | 953 | |||||||||
| Foreign exchange and financial instruments gain | (78) | (129) | |||||||||
| Deferred income tax expense | 3 | 29 | |||||||||
Other(1) | (113) | 67 | |||||||||
| Dividends on BEPC exchangeable shares | 193 | 180 | |||||||||
| Remeasurement of BEPC exchangeable and BEPC class B shares | 341 | (710) | |||||||||
Amount attributable to equity accounted investments and non-controlling interest(2) | (209) | (652) | |||||||||
| Funds From Operations | $ | 595 | 548 | ||||||||
(1)Other corresponds to amounts that are not related to the revenue earning activities and are not normal, recurring cash operating expenses necessary for business operations. Other also includes derivative and other revaluations and settlements, gains or losses on debt extinguishment/modification, transaction costs, legal, provisions, amortization of concession assets and the company’s economic share of foreign currency hedges and other hedges, income earned on financial assets and structured investments in sustainable solutions, and transferable tax credits and realized disposition gains and losses on assets that we developed and/or did not intend to hold over the long-term that are included in Funds From Operations.
(2)Amount attributable to equity accounted investments corresponds to the Funds From Operations that are generated by its investments in associates and joint ventures accounted for using the equity method. Amounts attributable to non-controlling interest are calculated based on the economic ownership interest held by non-controlling interests in consolidated subsidiaries. By adjusting Funds From Operations attributable to non-controlling interest, our company is able to remove the portion of Funds From Operations earned at non-wholly owned subsidiaries that are not attributable to our company.
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PART 7 – CRITICAL ESTIMATES, JUDGEMENTS IN APPLYING ACCOUNTING POLICIES, AND INTERNAL CONTROLS
CRITICAL ESTIMATES AND CRITICAL JUDGMENTS IN APPLYING ACCOUNTING POLICIES
The unaudited interim consolidated financial statements are prepared in accordance with IFRS, which require the use of estimates and judgments in reporting assets, liabilities, revenues, expenses and contingencies. In the judgment of management, none of the estimates outlined in Note 1 – Basis of presentation and material accounting policy information in the audited consolidated financial statements are considered critical accounting estimates with the exception of the estimates related to the valuation of property, plant and equipment, financial instruments, deferred income tax liabilities, decommissioning liabilities and impairment of goodwill. These assumptions include estimates of future electricity prices, discount rates, expected long-term average generation, inflation rates, terminal year, the amount and timing of operating and capital costs, and the income tax rates of future income tax provisions. Estimates also include determination of accruals, provision, purchase price allocations, useful lives, asset valuations, asset impairment testing and those relevant to the defined benefit pension and non-pension benefit plans. Estimates are based on historical experience, current trends and various other assumptions that are believed to be reasonable under the circumstances.
In making estimates, management relies on external information and observable conditions where possible, supplemented by internal analysis, as required. These estimates have been applied in a manner consistent with that in the prior year and there are no known trends, commitments, events or uncertainties that we believe will materially affect the methodology or assumptions utilized in this MD&A. These estimates are impacted by, among other things, future power prices, movements in interest rates, foreign exchange volatility and other factors, some of which are highly uncertain, as described in the “Risk Factors” section of our Form 20-F for the annual period ended December 31, 2023. The interrelated nature of these factors prevents us from quantifying the overall impact of these movements on our company’s financial statements in a meaningful way. These sources of estimation uncertainty relate in varying degrees to substantially all asset and liability account balances. Actual results could differ from those estimates.
NEW ACCOUNTING STANDARDS
International Tax Reform - Amendments to IAS 12 - Pillar Two model rules
The company operates in countries, including Canada, which have enacted new legislation to implement the global minimum top-up tax, effective from January 1, 2024. The company has applied a temporary mandatory relief from recognizing and disclosing deferred taxes in connection with the global minimum top-up tax and will account for it as a current tax when it is incurred. There is no material current tax impact for the nine months ended September 30, 2024. The global minimum top-up tax is not anticipated to have a significant impact on the financial position of the company.
Amendments to IAS 1 – Presentation of Financial Statements (“IAS 1”)
The amendments clarify how to classify debt and other liabilities as current or non-current. The amendments to IAS 1 apply to annual reporting periods beginning on or after January 1, 2024. The company has assessed the impact of these amendments and have noted no impact to its financial statements.
FUTURE CHANGES IN ACCOUNTING POLICIES
IFRS 18 – Presentation and Disclosure in Financial Statements (“IFRS 18”)
In April 2024, the IASB issued IFRS 18, Presentation and Disclosure of Financial Statements. IFRS 18 is effective for periods beginning on or after January 1, 2027, with early adoption permitted. IFRS 18 is expected to improve the quality of financial reporting by requiring defined subtotals in the statement of profit or loss, requiring disclosure about management-defined performance measures, and adding new principles for aggregation and disaggregation of information. The company has not yet determined the impact of this standard on its disclosures.
There are currently no other future changes to IFRS with potential impact on the company.
INTERNAL CONTROL OVER FINANCIAL REPORTING
No changes were made in our internal control over financial reporting during the nine months ended September 30, 2024, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
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PART 8 – PRESENTATION TO STAKEHOLDERS AND PERFORMANCE MEASUREMENT
PRESENTATION TO PUBLIC STAKEHOLDERS
Actual Generation
For assets acquired, disposed or reached commercial operation during the year, reported generation is calculated from the acquisition, disposition or commercial operation date and is not annualized. Generation on a same store basis refers to the generation of assets that were owned during both periods presented. As it relates to Colombia only, generation includes hydroelectric facilities. Distributed energy & sustainable solutions includes generation from our distributed generation, pumped storage and Brazil biomass assets.
Our risk of a generation shortfall in Brazil continues to be minimized by participation in a hydrological balancing pool administered by the government of Brazil. This program mitigates hydrology risk by assuring that all participants receive, at any particular point in time, an assured energy amount, irrespective of the actual volume of energy generated. The program reallocates energy, transferring surplus energy from those who generated an excess to those who generate less than their assured energy, up to the total generation within the pool. Periodically, low precipitation across the entire country’s system could result in a temporary reduction of generation available for sale. During these periods, we expect that a higher proportion of thermal generation would be needed to balance supply and demand in the country, potentially leading to higher overall spot market prices.
Voting Agreements with Affiliates
Our company has entered into voting agreements with Brookfield and the partnership, whereby our company gained control of the entities that own certain renewable power generating facilities in the United States and Brazil, as well as TerraForm Power. Our company has also entered into a voting agreement with its consortium partners in respect of our Colombian business. The voting agreements provide our company the authority to direct the election of the boards of directors of the relevant entities, among other things, and therefore provide our company with control. Accordingly, our company consolidates the accounts of these entities.
For entities previously controlled by Brookfield Corporation, the voting agreements entered into do not represent business combinations in accordance with IFRS 3, as all combining businesses are ultimately controlled by Brookfield Corporation both before and after the transactions were completed. Our company accounts for these transactions involving entities under common control in a manner similar to a pooling of interest, which requires the presentation of pre-voting agreement financial information as if the transactions had always been in place. Refer to Note 1((s))(ii) – Critical judgments in applying accounting policies – Common control transactions in our December 31, 2023 audited annual consolidated financial statements for our policy on accounting for transactions under common control.
PERFORMANCE MEASUREMENT
Segment Information
Our operations are segmented by – 1) hydroelectric, 2) wind, 3) utility-scale solar, 4) distributed energy & sustainable solutions (distributed generation, pumped storage, carbon capture and storage and biomass), and 5) corporate. This best reflects the way in which the CODM reviews results, manages operations and allocates resources.
We report our results in accordance with these segments and present prior period segmented information in a consistent manner. See Note 5 – Segmented information in our unaudited interim consolidated financial statements.
One of our primary business objectives is to generate stable and growing cash flows while minimizing risk for the benefit of all stakeholders. We monitor our performance in this regard through three key metrics — i) Net Income (Loss), ii) Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (“Adjusted EBITDA”), and iii) Funds From Operations.
It is important to highlight that Adjusted EBITDA and Funds From Operations do not have any standardized meaning prescribed by IFRS and therefore are unlikely to be comparable to similar measures presented by other companies and have limitations as analytical tools. We provide additional information below on how we determine Adjusted EBITDA and Funds From Operations. We also provide reconciliations to Net income (loss). See “Part 4 – Financial Performance Review on Proportionate Information – Reconciliation of Non-IFRS Measures”.
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Proportionate Information
Reporting to the CODM on the measures utilized to assess performance and allocate resources has been provided on a proportionate basis. Information on a proportionate basis reflects our company’s share from facilities which it accounts for using consolidation and the equity method whereby our company either controls or exercises significant influence or joint control over the investment, respectively. Proportionate information provides a shareholder perspective that the CODM considers important when performing internal analyses and making strategic and operating decisions. The CODM also believes that providing proportionate information helps investors understand the impacts of decisions made by management and financial results that can be allocated to shareholders.
Proportionate financial information is not, and is not intended to be, presented in accordance with IFRS. Tables reconciling IFRS data with data presented on a proportionate basis have been disclosed. Segment revenues, other income, direct operating costs, interest expense, current income taxes, and other are items that will differ from results presented in accordance with IFRS as these items (1) include our company’s proportionate share of earnings (loss) from equity-accounted investments attributable to each of the above-noted items, and (2) exclude the proportionate share of earnings (loss) of consolidated investments not held by us apportioned to each of the above-noted items, and (3) other income includes but is not limited to our proportionate share of settled foreign currency and other hedges, income earned on financial assets and structured investments in sustainable solutions, transferable tax credits and realized disposition gains on non-core assets and on recently developed assets that we have monetized to reflect the economic value created from our development activities as we design, build and commercialize new renewable energy capacity and sell these assets to lower cost of capital buyers which may not otherwise be reflected in our consolidated statements of income.
The presentation of proportionate results has limitations as an analytical tool, including the following:
•The amounts shown on the individual line items were derived by applying our overall economic ownership interest percentage and do not necessarily represent our legal claim to the assets and liabilities, or the revenues and expenses; and
•Other companies may calculate proportionate results differently than we do.
Because of these limitations, our proportionate financial information should not be considered in isolation or as a substitute for our financial statements as reported under IFRS.
Our company does not control those entities that have not been consolidated and as such, have been presented as equity-accounted investments in its financial statements. The presentation of the assets and liabilities and revenues and expenses do not represent our company’s legal claim to such items, and the removal of financial statement amounts that are attributable to non-controlling interests does not extinguish our company’s legal claims or exposures to such items.
Unless the context indicates or requires otherwise, information with respect to the MW attributable to our company’s facilities, including development assets, is presented on a consolidated basis, including with respect to facilities whereby our company either controls or jointly controls the applicable facility.
Net Income (Loss)
Net income (loss) is calculated in accordance with IFRS.
Net income (loss) is an important measure of profitability, in particular because it has a standardized meaning under IFRS. The presentation of net income (loss) on an IFRS basis for our business will often lead to the recognition of a loss even though the underlying cash flows generated by the assets are supported by strong margins and stable, long-term power purchase agreements. The primary reason for this is that accounting rules require us to recognize a significantly higher level of depreciation for our assets than we are required to reinvest in the business as sustaining capital expenditures.
Adjusted EBITDA
Adjusted EBITDA is a non-IFRS measure used by investors to analyze the operating performance of companies.
Our company uses Adjusted EBITDA to assess the performance of our operations before the effects of interest expense, income taxes, depreciation, management service costs, non-controlling interests, unrealized gain or loss on financial instruments, non-cash income or loss from equity-accounted investments, distributions to preferred shareholders, preferred limited partnership unit holders, perpetual subordinated noteholders and other typical non-recurring items. Our company adjusts for these factors as they may be non-cash, unusual in nature and/or are not factors used by management for evaluating operating performance. Our company includes other income within Adjusted EBITDA in order to provide
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additional insight regarding the performance of investments on a cumulative realized basis, including any unrealized fair value adjustments that were recorded in equity and not otherwise reflected in the current period.
Our company believes that presentation of this measure will enhance an investor’s ability to evaluate our financial and operating performance on an allocable basis.
Funds From Operations
Funds From Operations is a non-IFRS measure used by investors to analyze net earnings from operations without the effects of certain volatile items that generally have no current financial impact or items not directly related to the performance of the business.
Our company uses Funds From Operations to assess the performance of our company before the effects of certain cash items (e.g. acquisition costs and other typical non-recurring cash items) and certain non-cash items (e.g. deferred income taxes, depreciation, non-cash portion of non-controlling interests, unrealized gain or loss on financial instruments, non-cash gain or loss from equity-accounted investments, and other non-cash items) as these are not reflective of the performance of the underlying business. The company includes other income in order to provide additional insight regarding the performance of investments on a cumulative realized basis, including any unrealized fair value adjustments that were that were recorded in equity and not otherwise reflected in the current period. In the unaudited interim consolidated financial statements of our company, the revaluation approach is used in accordance with IAS 16, Property, Plant and Equipment, whereby depreciation is determined based on a revalued amount, thereby reducing comparability with peers who do not report under IFRS as issued by the IASB or who do not employ the revaluation approach to measuring property, plant and equipment. Management adds back deferred income taxes on the basis that they do not believe this item reflects the present value of the actual tax obligations that they expect our company to incur over the long-term investment horizon of our company.
Our company believes that analysis and presentation of Funds From Operations on this basis will enhance an investor’s understanding of the performance of the business.
Funds From Operations is not a generally accepted accounting measure under IFRS and therefore may differ from definitions of Funds From Operations used by other entities, as well as the definition of funds from operations used by the Real Property Association of Canada (“REALPAC”) and the National Association of Real Estate Investment Trusts, Inc. (“NAREIT”). Furthermore, this measure is not used by the CODM to assess our company’s liquidity.
Proportionate Debt
Proportionate debt is presented based on the proportionate share of borrowings obligations relating to the investments of our company in various portfolio businesses. The proportionate financial information is not, and is not intended to be, presented in accordance with IFRS. Proportionate debt measures are provided because management believes it assists investors and analysts in estimating the overall performance and understanding the leverage pertaining specifically to our company's share of its invested capital in a given investment. When used in conjunction with proportionate Adjusted EBITDA, proportionate debt is expected to provide useful information as to how our company has financed its businesses at the asset-level. Management believes that the proportionate presentation, when read in conjunction with our company’s reported results under IFRS, including consolidated debt, provides a more meaningful assessment of how the operations of our company are performing and capital is being managed.
The presentation of proportionate results has limitations as an analytical tool, including the following:
•Proportionate debt amounts do not represent the consolidated obligation for debt underlying a consolidated investment. If an individual project does not generate sufficient cash flows to service the entire amount of its debt payments, management may determine, in their discretion, to pay the shortfall through an equity injection to Brookfield Renewable Corporation to avoid defaulting on the obligation. Such a shortfall may not be apparent from or may not equal the difference between aggregate proportionate Adjusted EBITDA for all of the portfolio investments of our company and aggregate proportionate debt for all of the portfolio investments of our company; and
•Other companies may calculate proportionate debt differently.
Because of these limitations, the proportionate financial information of our company should not be considered in isolation or as a substitute for the financial statements of our company as reported under IFRS.
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PART 9 – CAUTIONARY STATEMENTS
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This report contains forward-looking statements and information, within the meaning of Canadian securities laws and “forward-looking statements” within the meaning of Section 27A of the U.S. Securities Act of 1933, as amended, Section 21E of the U.S. Securities Exchange Act of 1934, as amended, “safe harbor” provisions of the United States Private Securities Litigation Reform Act of 1995 and in any applicable Canadian securities regulations, concerning the business and operations of the group. Forward-looking statements may include estimates, plans, expectations, opinions, forecasts, projections, guidance or other statements that are not statements of fact. Forward-looking statements in this report include statements regarding the quality of our group’s assets and the resiliency of the cash flow they will generate, our anticipated financial performance, future commissioning of assets, contracted portfolio, technology diversification, acquisition opportunities, expected completion of acquisitions and dispositions, future energy prices and demand for electricity, economic recovery, achieving long-term average generation, project development and capital expenditure costs, energy policies, economic growth, growth potential of the renewable asset class, our future growth prospects and distribution profile, our access to capital and future dividends and distributions made to holders of BEPC’s exchangeable shares. In some cases, forward-looking statements can be identified by the use of words such as “plans”, “expects”, “scheduled”, “estimates”, “intends”, “anticipates”, “believes”, “potentially”, “tends”, “continue”, “attempts”, “likely”, “primarily”, “approximately”, “endeavors”, “pursues”, “strives”, “seeks”, “targets”, “believes” or variations of such words and phrases, or statements that certain actions, events or results “may”, “could”, “would”, “should”, “might” or “will” be taken, occur or be achieved. These forward-looking statements and information are not historical facts but reflect our current expectations regarding future results or events and are based on information currently available to us and on assumptions we believe are reasonable. Although we believe that our anticipated future results, performance or achievements expressed or implied by the forward-looking statements and information in this report are based upon reasonable assumptions and expectations, we cannot assure you that such expectations will prove to have been correct. You should not place undue reliance on forward looking statements and information as such statements and information involve assumptions, known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to differ materially from anticipated future results, performance or achievements expressed or implied by such forward-looking statements and information. These beliefs, assumptions and expectations can change as a result of many possible events or factors, not all of which are known to us or are within our control. If a change occurs, our business, financial condition, liquidity and result of operations and our plans and strategies may vary materially from those expressed in the forward looking statements and forward-looking information herein.
Factors that could cause actual results to differ materially from those contemplated or implied by forward-looking statements include, but are not limited to, the following: general economic conditions and risks relating to the economy, including unfavorable changes in interest rates, foreign exchange rates, inflation and volatility in the financial markets; changes to resource availability, as a result of climate change or otherwise, at any of our group’s facilities; supply, demand, volatility and marketing in the energy markets; our group’s inability to re-negotiate or replace expiring contracts (including PPA’s, power guarantee agreements or similar long-term agreements between a seller and a buyer of electrical power generation) on similar terms; an increase in the amount of uncontracted generation in our group’s portfolio or a change in the contract profile for future renewable power projects; availability and access to interconnection facilities and transmission systems; our group’s ability to comply with, secure, replace or renew concessions, licenses, permits and other governmental approvals needed for our operating and development projects; our group’s real property rights for our facilities being adversely affected by the rights of lien holders and leaseholders that are superior to those granted to our group; increases in the cost of operating our existing facilities and of developing new projects; equipment failures and procurement challenges; increased regulation of and third party opposition to our group’s nuclear service business’s customers and operations; failure of the nuclear power industry to expand; insufficient indemnification for our group’s nuclear services business; our group’s reliance on computerized business systems, which could expose our group to cyber-attacks; dam failures and the costs and potential liabilities associated with such failures; uninsurable losses and higher insurance premiums; changes in regulatory, political, economic and social conditions in the jurisdictions in which we operate; force majeure events; health, safety, security and environmental risks; energy marketing risks and our ability to
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manage commodity and financial risk; the termination of, or a change to, the MRE balancing pool in Brazil; involvement in litigation and other disputes, and governmental and regulatory investigations; counterparties to our group’s contracts not fulfilling their obligations; the time and expense of enforcing contracts against non-performing counterparties and the uncertainty of success; foreign laws or regulation to which our group becomes subject as a result of future acquisitions in new markets; our group’s operations being affected by local communities; newly developed technologies in which our group invests not performing as anticipated; advances in technology that impair or eliminate the competitive advantage of our projects; increases in water rental costs (or similar fees) or changes to the regulation of water supply; labor disruptions and economically unfavorable collective bargaining agreements; our group’s inability to finance our operations and fund growth due to the status of the capital markets or our group’s ability to complete capital recycling initiatives; operating and financial restrictions imposed on us by our group’s loan, debt and security agreements; changes to our group’s credit ratings; the incurrence of debt at multiple levels within our group’s organizational structure; restrictions on our ability to engage in certain activities or make distributions due to our indebtedness; adverse changes in currency exchange rates and our inability to effectively manage foreign currency exposure through our group’s hedging strategy or otherwise; our group’s inability to identify sufficient investment opportunities and complete transactions; political instability or changes in government policy negatively impacting our business or assets; changes to our group’s current business, including through future sustainable solutions investments; the growth of our group’s portfolio and our group’s inability to realize the expected benefits of its transactions or acquisitions; our group’s inability to develop the projects in our development pipeline; delays, cost overruns and other problems associated with the construction and operation of our facilities and risks associated with the arrangements our group enters into with communities and joint venture partners; our group does not have control over all of our group’s operations or investments, including certain investments made through joint ventures, partnerships, consortiums or structured arrangements; some of our group’s acquisitions may be of distressed companies, which may subject our group to increased risks; a decline in the value of our group’s investments in securities, including publicly traded securities of other companies; the separation of economic interest from control within our group’s organizational structure; our group’s dependence on Brookfield and Brookfield’s significant influence over our group; Brookfield’s election not to source acquisition opportunities for our group and our group’s lack of access to all renewable power acquisitions that Brookfield identifies, including by reason of conflicts of interest; the departure of some or all of Brookfield’s key professionals; Brookfield acting in a way that is not in our group’s best interests or the best interests of our shareholders; changes in how Brookfield elects to hold its ownership interests in our group; our group’s inability to terminate the Master Services Agreement and the limited liability of the Service Provider under our arrangements with them; Brookfield’s relationship with Oaktree; any changes in the market price of the BEP units and BEPC exchangeable shares; the redemption of the BEPC exchangeable shares; difference in the trading price of the BEPC exchangeable shares and BEP units; the de-listing of the BEPC exchangeable shares; future sales or issuances of our securities will result in dilution of existing holders and even the perception of such sales or issuances taking place could depress the trading price of the BEP units or BEP exchangeable shares; changes in the amount of cash we can distribute to our shareholders; the inability of our shareholders to take part in the management of BEPC; limitations on holdings of our shares due to FPA and FERC regulations; the termination of the Rights Agreement; changes in tax law and practice; limits on our shareholders’ ability to obtain favourable judicial forum for disputes related to BEPC or to enforce judgements against us; changes to government policies and incentives relating to the renewable power and sustainable solutions industries; adverse impacts of inflationary pressures; changes in regulatory, political, economic and social conditions in the jurisdictions in which we operate; health, safety, security and environmental risks; force majeure events; foreign currency risk associated with BEPC distributions; fraud, bribery, corruption, other illegal acts or inadequate or failed internal processes or systems and restrictions on foreign direct investment; increased regulation of our operations; our group is not subject to the same disclosure requirements as a U.S. domestic issuer; changes in our credit ratings; new regulatory initiatives related to sustainability and ESG; human rights impacts of our business activities; being deemed an “investment company” under the Investment Company Act; the effectiveness of our group’s internal controls over financial reporting; the redemption of BEPC exchangeable shares by us at any time or upon notice from the holder of the BEPC class B shares; the possibility that the Arrangement will not be completed on the terms and conditions, or on the timing, currently contemplated, and that it may not be completed at all, due to a failure to obtain or satisfy the required shareholder approvals and the court and other conditions of closing necessary to complete the Arrangement, or for other reason; and other factors described in our most recent Annual Report on Form 20-F, including those set forth under Item 3.D “Risk Factors”.
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We caution that the foregoing list of important factors that may affect future results is not exhaustive. The forward-looking statements represent our views as of the date of this report and should not be relied upon as representing our views as of any subsequent date. While we anticipate that subsequent events and developments may cause our views to change, we disclaim any obligation to update the forward-looking statements, other than as required by applicable law. For further information on these known and unknown risks, please see “Risk Factors” included in our most recent Annual Report on Form 20-F and other risks and factors that are described therein.
CAUTIONARY STATEMENT REGARDING USE OF NON-IFRS MEASURES
This report contains references to Adjusted EBITDA and Funds From Operations which are not generally accepted accounting measures under IFRS and therefore may differ from definitions of Adjusted EBITDA and Funds From Operations used by other entities. In particular, our definition of Funds From Operations may differ from the definition of funds from operations used by other organizations, as well as the definition of funds from operations used by the Real Property Association of Canada and the National Association of Real Estate Investment Trusts, Inc. (“NAREIT”). We believe that Adjusted EBITDA and Funds From Operations are useful supplemental measures that may assist investors in assessing our financial performance. None of Adjusted EBITDA or Funds From Operations should be considered as the sole measure of our performance and should not be considered in isolation from, or as a substitute for, analysis of our financial statements prepared in accordance with IFRS. These non-IFRS measures reflect how we manage our business and, in our opinion, enable the reader to better understand our business.
Reconciliations of each of Adjusted EBITDA and Funds From Operations to net income (loss) are presented in our Management’s Discussion and Analysis. We have also provided a reconciliation of Adjusted EBITDA and Funds From Operations to net income (loss) in Note 5 – Segmented information in the unaudited interim consolidated financial statements.
| Brookfield Renewable Corporation | Management’s Discussion and Analysis | September 30, 2024 | ||||||
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Exhibit 99.3
FORM 52-109F2
CERTIFICATION OF INTERIM FILINGS
FULL CERTIFICATE
I, Connor Teskey, Chief Executive Officer of Brookfield Renewable Corporation, certify the following:
1.Review: I have reviewed the interim financial report and interim MD&A (together, the "interim filings") of Brookfield Renewable Corporation, (the "issuer") for the interim period ended September 30, 2024.
2.No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings.
3.Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings.
4.Responsibility: The issuer's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers' Annual and Interim Filings, for the issuer.
5.Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer's other certifying officer(s) and I have, as at the end of the period covered by the interim filings
(a)designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that
i.material information relating to the issuer is made known to us by others, particularly during the period in which the interim filings are being prepared; and
ii.information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and
(b)designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer's GAAP.
5.1 Control framework: The control framework the issuer's other certifying officer and I used to design the issuer's ICFR is the Internal Control - Integrated Framework (COSO 2013 Framework) published by The Committee of Sponsoring Organizations of the Treadway Commission (COSO).
5.2 ICFR – material weakness relating to design: N/A
5.3 Limitation on scope of design: N/A
6.Reporting changes in ICFR: The issuer has disclosed in its interim MD&A any change in the issuer's ICFR that occurred during the period beginning on July 1, 2024 and ended on September 30, 2024 that has materially affected, or is reasonably likely to materially affect, the issuer's ICFR.
Date: November 8, 2024 | |||||
| /s/ Connor Teskey | |||||
| Name: | Connor Teskey | ||||
| Title: | Chief Executive Officer of Brookfield Renewable Corporation | ||||
| (Principal Executive Officer) | |||||
Exhibit 99.4
FORM 52-109F2
CERTIFICATION OF INTERIM FILINGS
FULL CERTIFICATE
I, Wyatt Hartley, Chief Financial Officer of Brookfield Renewable Corporation, certify the following:
1.Review: I have reviewed the interim financial report and interim MD&A (together, the "interim filings") of Brookfield Renewable Corporation, (the "issuer") for the interim period ended September 30, 2024.
2.No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings.
3.Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings.
4.Responsibility: The issuer's other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in National Instrument 52-109 Certification of Disclosure in Issuers' Annual and Interim Filings, for the issuer.
5.Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer's other certifying officer(s) and I have, as at the end of the period covered by the interim filings
(a)designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that
i.material information relating to the issuer is made known to us by others, particularly during the period in which the interim filings are being prepared; and
ii.information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and
(b)designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer's GAAP.
5.1 Control framework: The control framework the issuer's other certifying officer and I used to design the issuer's ICFR is the Internal Control - Integrated Framework (COSO 2013 Framework) published by The Committee of Sponsoring Organizations of the Treadway Commission (COSO).
5.2 ICFR – material weakness relating to design: N/A
5.3 Limitation on scope of design: N/A
6.Reporting changes in ICFR: The issuer has disclosed in its interim MD&A any change in the issuer's ICFR that occurred during the period beginning on July 1, 2024 and ended on September 30, 2024 that has materially affected, or is reasonably likely to materially affect, the issuer's ICFR.
Date: November 8, 2024 | |||||
/s/ Wyatt Hartley | |||||
| Name: | Wyatt Hartley | ||||
| Title: | Chief Financial Officer of Brookfield Renewable Corporation | ||||
| (Principal Executive Officer) | |||||