Earnings Call Transcript - BEPC Q4 2024

Operator, Operator

Good day, and thank you for joining us. Welcome to the Brookfield Renewable Partners Fourth Quarter 2024 Results Conference Call and Webcast. At this moment, all participants are in listen-only mode. After the presentation by the speakers, we will have a question-and-answer session. I would now like to turn the conference over to your speaker today, Connor Teskey, Chief Executive Officer. Please continue.

Connor Teskey, CEO

Thank you, operator, and good morning, everyone, and thank you for joining us for our fourth quarter 2024 conference call. Before we begin, we would like to remind you that a copy of our news release, investor supplement, and letter to unitholders can be found on our website. We also want to remind you that we may make forward-looking statements on this call. These statements are subject to known and unknown risks and our future results may differ materially. For more information, you are encouraged to review our regulatory filings available on SEDAR, EDGAR, and on our website. Before starting, we would like to welcome Patrick Taylor, our newly appointed CFO, to the call. We are thrilled to have Patrick on the team as we continue to add depth and talent to our leadership group. On today's call, we will provide a review of our 2024 performance and then Wyatt will discuss our growth outlook in the US and globally. Lastly, Patrick will conclude the call by discussing our operating results, recent asset recycling activities, and our financial position. Following our prepared remarks, we look forward to taking your questions. Now, before going through our 2024 results, we wanted to comment briefly on the current environment. Following several decades of modest electricity demand growth, we are experiencing a dramatic shift in demand driven by the AI revolution, one of, if not the most significant advancement in technology in our lifetime. This is driving a significant step change in demand for our product, supporting our continued and accelerating growth. While the renewable sector has traded down in the public markets on weaker sentiment stemming from the new US administration's announced executive orders and potential policy changes for renewables, the simple fact is that the fundamentals for energy have never been better. The low-cost renewable technologies that we have built our business on are the cheapest form of electricity production and are seeing greater demand than ever before. As a result, we believe that low-cost renewables, which are readily available to deploy, will play a leading role in the requirements for any and all increases in generation capacity that we are already seeing unfold. Our focus on the lowest cost, most mature renewable technologies that have the greatest demand from corporate customers and are not reliant on government subsidy has positioned us well to benefit in the current environment. We have no exposure to the sectors of the market that are seeing the greatest headwinds and we feel we are best positioned across the industry to capture the accelerating corporate demand. With our extensive 200,000-megawatt development pipeline, which is highly concentrated in the top data center markets globally, executing our business plan will create significant value for our company, and as market sentiment passes, we expect to see that translate into the price of our shares. The current market dislocation is also presenting significant investment opportunities for us. Our strong liquidity and robust funding model, combined with lower public share prices across the sector and increased uncertainty for private market investors, could also create the opportunity to acquire assets for value and further grow our business. Turning now to our results, 2024 was another record year for our business. We delivered our strongest operating and financial results ever and positioned the business for significant further growth and value creation in the future. We delivered 10% FFO per unit growth year-on-year as we benefited from our inflation-linked and contracted cash flows, contributions from acquisitions, and the execution of various organic growth and value-creation initiatives across our business, including the sale of derisked operating assets and platforms which generated strong returns and are now very much a regular and ongoing part of our business. We exceeded our capital deployment targets, investing $12.5 billion in outstanding businesses, including our investment in global renewable operator and developer, Neoen. During the year, we advanced our commercial initiatives and continued to partner with the largest buyers of clean power globally, signing contracts for almost 19,000 gigawatt hours per year of generation, again another record performance and indicative of the incredible supply-demand imbalance in favor of our product. We also signed the landmark renewable energy framework agreement with Microsoft in May, agreeing to deliver 10.5 gigawatts of new renewable energy capacity between 2026 and 2030 in the US and Europe, and today, we are on track to not only meet but exceed our delivery targets. This agreement will assist Microsoft's data center growth and support its investment in AI-powered cloud services, which continue to accelerate. The global hyperscalers are significantly ramping up investment in their data center infrastructure and are expected to continue to increase investment tremendously through the remainder of the decade. Power is increasingly a bottleneck to this planned data center development and we are seeing these businesses ramp up their efforts to secure supply to ensure the delivery of their growth. Our agreement with Microsoft is a testament to our differentiated capabilities and we expect to continue to partner with the largest buyers of power going forward. This year, we commissioned a record 7,000 megawatts of new capacity globally, almost seven times the capacity we brought online just three years ago. With our expanding development capabilities, we have successfully grown our asset rotation activities. We generated a record $2.8 billion of proceeds in 2024 at an average return of 25% IRR and approximately 2.5 times our invested capital, crystallizing strong returns for our shareholders and generating significant capital to fund future growth. Again, this positions us well in the current market. We have continued to be uncompromising in how we fund our business and our balance sheet remains among the strongest in the sector. We executed record financings this past year and finished the year with $4.3 billion of liquidity to opportunistically fund our growth. With our record results and in conjunction with our strong liquidity and robust outlook for our business, we are pleased to announce an over 5% increase in our annual distribution to $1.492 per unit. Since Brookfield Renewable was publicly listed in 2011, we have delivered 14 consecutive years of annual distribution growth of at least 5% per year. With that, we will now turn it over to Wyatt to further discuss our growth outlook in the US and globally and how we are positioned to capitalize in the current market.

Wyatt Hartley, Chief Development Officer

Thank you, Connor, and good morning, everyone. As Connor outlined in his remarks, there has been elevated volatility in public markets, reflecting uncertainty on potential regulatory changes affecting the renewable sector in the US. While we see potential for regulatory changes, we do not expect any material adjustments to the policies that have the greatest impact on our business, as these largely have bipartisan support. More important to our business are the current fundamentals for power. Globally, and in the US specifically, the demand for electricity continues to accelerate at an incredible rate, driven by broad-based electrification of major industries and the global energy grid, as well as a generational step change in demand for power to drive the AI revolution. We also expect that supportive fiscal policy in the US will drive further growth in manufacturing, data center development, and industry in the country, which will in turn drive further electricity demand. As a result, the growth prospects for low-cost, mature renewable technologies are better than at any point in history, as they play a leading role in any and all increase in generation capacity. Simply put, offtakers of power will naturally take as much of the lowest cost solutions, renewable, before turning to other forms of generations to meet their needs. As growing energy demand is being met with the new build capacity, it is creating two challenges: transmission availability and grid stability. We see large-scale battery systems and distributed generation as increasingly important parts of the solution. The grid-scale batteries being developed today are able to charge when the sun is shining and when the wind is blowing, and then discharge power at other times, enabling a more consistent power supply. Further, by charging when power is cheap and plentiful and distributing when power is scarce and in demand, batteries are increasingly lucrative. Distributed generation is also able to reduce demand during peak hours and provide backup power when grids are strained. The modular nature of both these technologies also makes them relatively easy to deploy almost anywhere. As batteries become more cost-effective, with costs declining over 90% in the past decade, we expect that they will become a significant component of stabilizing the world's transmission grids and supporting the accelerated buildout of low-cost, mature renewable technologies. At the end of 2024, we made our largest investment ever in our Renewable Power & Transition business with our investment in Neoen, a leading global renewable platform with best-in-class management and market-leading positions in each of France, Australia, and the Nordics. What may not be appreciated is that Neoen is also a leading global operator and developer of battery energy storage systems, a technology that we are increasingly investing in. With growing demand, lower capital costs, and higher potential revenues from stabilizing services, we are focused on deploying capital into battery energy storage solutions in almost all markets. With this investment, we are one of the largest battery developers globally, with 3,300 megawatts of operating and under-construction capacity and an additional 35,000 megawatts in our pipeline. With the supportive demand backdrop and the combination of our global scale, significant access to capital, and our combined operating and development capabilities across multiple suites of technologies, including hydro, wind, utility-scale solar, distributed generation, and storage, to name a few, we can deliver differentiated solutions to our customers, few others can, thereby generating significant value for our shareholders over the long term. With that, I'll pass it on to Patrick to discuss our operating results, recent capital recycling initiatives, and financial position.

Patrick Taylor, CFO

Thanks, Wyatt, and good morning to everyone on the call. Our business performed well this year, delivering record results. In the fourth quarter, we delivered FFO of $304 million or $0.46 per unit, up from $0.38 per unit in the same quarter last year, representing a 21% increase year-on-year. On a full-year basis, we delivered FFO of $1.2 billion or $1.83 per unit, up 10% year-on-year. Looking now at our segments, our hydroelectric business generated solid results, benefiting from a strong second half of the year from our Colombian business, Isagen, helping offset weaker hydrology in North America. Our wind and solar segments generated record funds from operations, which were up 30% from last year, as we benefited from a full-year contribution from our recent acquisitions. Our distributed energy, storage, and sustainable solutions segments also generated record results, up 78% year-on-year, with a full-year contribution from Westinghouse where we continue to see positive momentum. On the capital recycling front, the strong fundamentals for power are benefiting our business as we are able to sell our derisked operating assets and portfolios to lower-cost capital buyers who are looking for long-life real assets delivering reliable cash flows. Since 2020, we have generated almost $6 billion in proceeds at an average IRR of approximately 22% and a 2.1 times multiple on invested capital. This year, we closed the sale of Saeta where we realized the significant value we created through operational enhancements and the build-out of their development function, generating three times our invested capital over a relatively short hold period. We also closed the sale of a 50% interest in Shepherds Flat, where we executed one of the largest wind repowering projects ever, crystallizing significant value. Asset recycling will continue as a reliable and consistent way for us to deliver strong returns for our shareholders and generate capital to fund growth. We expect to build off this strong momentum in 2025 and deliver even larger and more recurring monetizations in the future at similarly healthy returns. Looking now at our financial position, our balance sheet remains strong, and we continue to execute well within our self-funding model. We finished the year with $4.3 billion in liquidity, providing us with significant flexibility to deploy capital opportunistically to support the growth of the franchise. During the year, we successfully completed nearly $27 billion in financings, opportunistically extending duration and optimizing our portfolio's capital structure, including executing $800 million of upfinancings to support growth initiatives. With our staggered contract profile, we also have a healthy pipeline of generation coming up for recontracting over the next five years. This should create significant additional upfinancing capacity within this portfolio. In closing, we remain focused on delivering 12% to 15% long-term total returns for our investors while remaining disciplined allocators of capital, leveraging our deep funding sources and operational capabilities to enhance and derisk our business. On behalf of the Board and management, we thank all our unitholders and shareholders for their ongoing support. We are excited about Brookfield Renewable's future and look forward to updating you on our progress throughout 2025. That concludes our formal remarks for today's call. Thank you for joining us this morning. And with that, I'll pass it back to the operator for questions.

Operator, Operator

Our first question comes from Sean Steuart with TD Cowen.

Sean Steuart, Analyst

Thanks. Good morning, everyone. Congratulations to Wyatt and Patrick. A couple of questions, Connor, with respect to the Microsoft framework agreement, you referenced exceeding targets and I'm wondering if you can give a little more context there. Is that more capacity potentially being built into that agreement or is it an expedited development timeline? Any detail you can give us there?

Connor Teskey, CEO

Hi, Sean. Yes, there are two things there. That agreement is structured to deliver 10.5 gigawatts between 2026 and 2030. The first point that we would make is, on the back of structuring that agreement in 2024, we expect to deliver significant capacity to Microsoft ahead of 2026. That's additional to the 10.5 that we'll deliver over the five years in the latter half of the decade. Second, with the broader growth of our business in the latter half of the decade, we would say the 10.5 gigawatts is increasingly the floor, not the ceiling. We continue to add advanced development pipelines in key data center markets worldwide, and we are seeing tremendous demand from Microsoft and the other hyperscalers for that product and offtake to pull those projects out of the ground. So, we expect that in those five years, we'll deliver well more than 10.5 gigawatts.

Sean Steuart, Analyst

Thanks for that. And further to that, it's been nine months since you announced that agreement. Can you give broader updates on efforts to replicate that type of framework deal with other corporates?

Connor Teskey, CEO

Absolutely. We would frame it in two different ways. Following that agreement, we are having discussions with everyone you would expect when it comes to potential broad-based power generation agreements. It's important to recognize that those discussions can show up two different ways that are both beneficial for our business. What we did with Microsoft is we announced an agreement that we will fill up over time over the five-year period that governs it. The other thing that we can do, which is happening in real-time, is we can just do more activity with the hyperscalers on a project-by-project basis, even outside a global framework agreement. We are absolutely seeing that in real-time across our business. We've delivered more projects and more power to them in 2024 than in 2023 and we'll deliver more power and projects to the hyperscalers in 2025 than in 2024, even absent those agreements. So while we are in discussions and may sign similar framework agreements in the future, the demand is showing up in our development activities on a project-by-project basis regardless.

Sean Steuart, Analyst

Thanks for that, Connor. And then just one last one. Asset recycling is an ongoing focus for funding. We've seen lots of valuation pressure for public equities, but it sounds like returns for your asset recycling initiatives have held in. Just interested in your perspective on how that spread for returns between asset recycling and organic development could shift. Those spreads have been strong for you over the last five years and in 2024. Any expectations on how that could shift in the near to midterm?

Connor Teskey, CEO

Sean, it's a very topical question, and we approach this from two different ways. Absolutely, one of the themes that we were quite strong about in 2024 is a very, very strong bifurcation of the market, where there is robust demand and incredible amounts of capital for high-quality operating cash-generative assets, particularly those that still have a growth angle to them, while there is far less capital available for construction, development, and the building out and ongoing investment in the growth of platforms. That bifurcation remains very strong in the market today. We expect our asset recycling activities to continue, and we expect to lean into that bifurcation, looking to sell those high-quality cash-generative operating derisked assets. We also note a very clear market bifurcation between the demand for exposure to renewables in private markets versus public markets. We continue to see significant private capital demand for renewable power space despite weaker sentiment in public markets today. Given our business model, we will look to capitalize on that in 2025.

Sean Steuart, Analyst

Thanks for that detail, Connor. That's all I have.

Operator, Operator

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

Nelson Ng, Analyst

Great. Thanks, and congratulations to Wyatt and Patrick. My first question relates to the data center theme. With the increasing demand for firm power and gas generation in the market, Connor, what are your thoughts on developing or acquiring gas-fired generation? Could it strengthen your portfolio?

Connor Teskey, CEO

Thanks, Nelson. Thinking macro and then our approach to it, we believe that this step change increase in energy demand is good for all forms of power generation. Any and all or all of the above would apply. The demand for electricity generation is going to support and grow across a number of different technologies, whether that's renewables, gas, or nuclear. Importantly, offtakers will always take as much renewables as they can because it is the cheapest, and then they will look to fill out the remainder of their demand with other forms of power generation. Our business will continue to focus on renewable power. Gas will have a role in the transition and will see greater demand, but we would only consider investing in gas if it results in the acceleration of renewable build-out and reduces carbon intensity of the broader grid. Any such investment would need to show a more attractive risk-adjusted return proposition than what we see in renewables today, which is very attractive. We wouldn't rule out thermals as part of a broader portfolio, but our focus remains on renewables for the greatest demand growth and attractive returns.

Nelson Ng, Analyst

That's great insight, Connor. For my next question, I recognize your point about renewables being the most affordable energy source even in the US. Given the current uncertainties in the US, could you elaborate on your development pipeline? It looks like you have around 2 gigawatts of projects scheduled for commissioning in 2025 and another 3.4 gigawatts in 2026. Can you explain how these contracts are structured regarding risk allocation? In the event of changes to tax subsidies, will they be passed through, or how are they generally organized?

Connor Teskey, CEO

Sure. There are really two important points here. One, across our business, we've always taken an approach of only locking in contracts when we can lock in CapEx, revenue, meaning PPA, EPC, and financing upfront. We don’t have basis risk exposure where we've locked in either CapEx or revenue, and one of the other variables could change and affect our returns. The one aspect we are seeing currently, due to topical discussions in the US, is that in many of the PPAs we are locking in right now, we are increasingly adding adjusters in those PPAs to keep our development margins whole in case of retroactive changes or near-term changes to tax credits. This adjustment mechanism is becoming more market standard, reflecting the demand for power where offtakers are committed to ensuring project viability.

Nelson Ng, Analyst

It's encouraging to see that it's essentially a pass-through. I have one last question. You mentioned the differences in valuations between the public and private markets. Given your significant experience with acquisitions and developments, can you share your thoughts on your capital allocation strategy over the past few years in comparison to your expectations moving forward? Your development pipeline is growing, but with the recent public market valuations in mind, do you anticipate increasing your pace for acquiring or investing in public entities?

Connor Teskey, CEO

To answer that bluntly and directly, we expect to be very active this year from a growth perspective given where public market valuations are and the current market environment playing in our favor. We are fortunate to have a strong balance sheet and liquidity, while others may not have the capital resources to take advantage of the attractive growth opportunities available at low entry points. So we expect 2025 to be another attractive and active year for us. In terms of bias between public and private investments, it'll be assessed on a case-by-case basis as we allocate capital where we see the best risk-adjusted returns. Given what we see today, public markets do look attractive, so we are certainly evaluating multiple opportunities in that space.

Nelson Ng, Analyst

Great. Thanks, Connor. I'll leave it there.

Operator, Operator

Our next question comes from Robert Hope with Scotiabank.

Robert Hope, Analyst

Good morning, everyone. First question is on the development pipeline. When we take a look at the build-out of renewables in your pipeline, can you help us parse out how much is wind in the near term versus the long term, just given it does appear that there's a little bit more uncertainty or perceived uncertainty on wind out there in the market?

Connor Teskey, CEO

You are absolutely right, Rob. I can provide clear numbers here. About two-thirds of our development pipeline is outside of the United States, which is seeing tremendous corporate demand and is not subject to regulatory uncertainty. For what is in the United States, around 25% to 30% of that is wind. Our broader portfolio shows that wind in the United States is a modest portion of it. Despite the uncertainties surrounding wind projects in the United States, we do not expect it to change our growth trajectory or strategic approach in the short term. To clarify, we have zero exposure to US offshore wind and almost zero exposure to federal lands. Most of our onshore wind exposure in the US is on private lands. We are prepared to manage potential uncertainties around federal permitting. We believe no government wants to deny access to cheap electricity, particularly when it provides a competitive advantage. While some short-term uncertainty exists, given our focus and land holdings, we expect it to resolve relatively quickly.

Robert Hope, Analyst

All right, appreciate that. And then maybe just keeping with the US theme. In the letter, you speak about how there could be potential regulatory changes in the renewable sector in the US. However, adjustments to policies that have the greatest impact on your business, you don't think that those will occur. Can you maybe just add a little bit more color there? What changes do you think you could see in the US, and it seems to allude that you don't expect ITCs or PTCs to change?

Connor Teskey, CEO

Certainly. Given that we are not engaged in offshore projects and our business focuses on the most mature, lowest-cost technologies, the most impactful changes to our business would be to the tax credits you mentioned, but thus far, no changes have been announced. Even in the event of changes, these asset classes are already the cheapest electricity sources by a wide margin, meaning we would expect to pass through any loss of tax credits in the form of higher PPA prices without affecting our development margins or demand.

Robert Hope, Analyst

Appreciate that. Thank you.

Operator, Operator

Our next question comes from Rupert Merer with National Bank.

Rupert Merer, Analyst

Hi. Sorry, I might have missed that. I think it's maybe my turn. Rupert here. Just wanted to follow up on that last question. You've talked about the potential to offset the impact from tax credit changes. How much exposure do you think you have from tariffs and the potential for higher equipment costs or higher steel costs? And how are you covered off on that?

Connor Teskey, CEO

Rupert, it's an excellent question. If you consider tax credits' effects on renewables project economics, they lower projects’ costs, which allows us to offer them at attractive development returns. Without tax credits, we would need to offer higher PPAs to maintain development returns, and we have the cushion to do that. The same logic applies to tariffs. If tariffs are added to the equipment needed for renewables, we will transfer those costs into our PPA prices. Demand remains strong from our corporate offtakers, allowing us to account for any potential changes in project economics in PPA pricing. We believe our competitive advantage stems from our centralized procurement across our business, with framework agreements with leading manufacturers to source equipment flexibly, maximizing our ability to work with tariff-preferred suppliers and retain project economics.

Rupert Merer, Analyst

Great. Thanks for the color. And second will be a follow-up on the data center market. Of course, we've seen a lot of market volatility driven by changing expectations for power demand growth from AI. When you talk to your corporate customers like Microsoft, how much of the data center growth you see is driven by expectations for growth in demand from AI versus cloud and crypto? Any comments on that changing landscape for AI power demand?

Connor Teskey, CEO

It's quite a broad topic, but two key things to mention: the largest demand driver is AI, significantly ahead of cloud or crypto. AI will be the primary growth factor for the medium term. However, recent discussions about new, more energy-efficient technologies could create more demand rather than suppress existing growth. The strong supply-demand imbalance still exists because we currently lack enough power to support all anticipated AI growth. Any efficiencies resulting from new technology should reduce costs and increase prevalence, fueling further growth in demand for electricity. While we are following all changes closely, the roots of supply-demand imbalance remain firmly in our favor.

Rupert Merer, Analyst

Great. Excellent. Thanks for the color. I'll leave it there.

Operator, Operator

Our next question comes from Mark Jarvi with CIBC.

Mark Jarvi, Analyst

Thanks. Good morning, everyone. Maybe just following up on the tariffs and the tax credit conversation. Has anything dramatically changed in what you're hearing around that? If there's an adjustment, will that impact development opportunities in the next couple of years, or do you think there's enough safe harbor in the goings-on for a three to five-year adjustment period for project timelines?

Connor Teskey, CEO

We are closely monitoring this situation. We can't predict specific actions from the new administration, and they haven't made announcements regarding tax credits yet. Historically, changes have disproportionately affected Republican states. Although executive orders may change many areas, tax credits remain untouched. In terms of our development pipeline, we have been preparing by structuring our contracts and procurement strategies, expecting such uncertainty in the market over the past few years. We believe larger players, like us, that can manage uncertainty will be favored going forward. While there may be minor disruptions, our growth trajectory remains unchanged.

Mark Jarvi, Analyst

Okay. And then just coming back to the Microsoft agreement, are you able to share how many megawatts you've signed today and what's the expected amount of volume you have contracted by the end of this year? Just to gauge progress through that 10.5 gigawatts.

Connor Teskey, CEO

We can follow up later with an exact figure. The 10.5-gigawatt agreement with Microsoft applies to 2026 through 2030, so it hasn't started yet. However, we are contracting significant amounts of new wind and solar capacity with Microsoft in advance of 2026. They are one of our largest offtakers, and we're doing more business with them ahead of that agreement starting. I would say our activity prior to the agreement is already above expectations from 18 months ago, and we expect to exceed 10.5 gigawatts in the five-year period.

Mark Jarvi, Analyst

Understood. And then, Connor, you mentioned that there's dislocation between private and public markets with some weakness in share prices. How do you view your own share price right now in terms of capital allocation? Do you favor buybacks versus other investment opportunities?

Connor Teskey, CEO

The current market feels similar to Q3 2023, where market sentiment was low, yet our fundamentals remained strong. Our strategy has been to execute our business plan and capitalize on opportunities, which would be reflected in our share price over time. Over the past 15 months, our FFO per share has increased nearly 15%. Our development, deployment, and asset recycling activities have grown significantly. We will pursue similar strategies moving forward. With our shares currently trading where they are, we will consider buybacks, as we did in previous downturns.

Mark Jarvi, Analyst

Okay, thanks for the time, and congratulations to everyone on their promotions.

Operator, Operator

Our next question comes from William Grippin with UBS.

William Grippin, Analyst

Hi, good morning. Thanks for the time. I just wanted to see if you could provide a bit more color on some of the comments made in the press release regarding framework agreements with your suppliers. To what degree are those agreements enabling you to safe harbor your US development plans in relation to the PTC and ITC at current levels? You've talked about passing higher costs through PPA rates, but I would think some of that friction could be eliminated with safe harboring. So just trying to understand how you're thinking about that.

Connor Teskey, CEO

Absolutely. The point we want to highlight extends beyond just framework agreements. It reflects the scale of our platform, our significant development pipeline, and our robust access to capital, which differentiate us from our competitors. The value of our platform provides competitive advantages today more than ever before. Framework agreements and ongoing negotiations with our largest customers allow us to capture market demand, whether through framework agreements or individual projects. Framework agreements facilitate the process, but they are not essential. We continue to benefit from our large-scale relationships with prominent green power offtakers.

William Grippin, Analyst

Yeah, I hear you. I think the question was more focused on you specifically referenced agreements with your equipment suppliers.

Connor Teskey, CEO

Certainly. We have negotiated large arrangements with equipment suppliers over the last few years in the US. We use our scale to secure the best pricing and ensure we're prioritized in their ordering process. In an environment where tariffs could impact procurement, our established framework agreements with domestic manufacturers give us a strong position to maximize equipment sourcing advantages from the most tariff-preferential sources.

William Grippin, Analyst

Got it. Appreciate the color, Connor, and good luck in 2025.

Connor Teskey, CEO

Thank you.

Operator, Operator

Our next question comes from Anthony Crowdell with Mizuho.

Anthony Crowdell, Analyst

Hey, good morning. Apologies, I jumped in a little late. So if you've already answered this, I'm sorry. Are you surprised by the pace of data center announcements? It appears that the pace of PPAs or contracts to supply electricity to these data centers is not matching up. What are your thoughts on this? Is there a difference in tenure the tech companies want to sign versus what the power generators are offering?

Connor Teskey, CEO

You're raising a good point. The demand for power is immense, but it outpaces the availability of ready-to-build projects. The primary issue is not the willingness of corporate offtakers to sign PPAs; rather, it’s the long permitting and development timelines—the bottleneck to securing enough projects. This imbalance will last for some time because the development process takes years. The advanced pipeline of projects ready for contract is currently the most valuable thing in the market. We have strategically focused on acquiring large-scale advanced pipelines in major data center markets globally, positioning us advantageously amid the imbalance.

Anthony Crowdell, Analyst

Great. Thanks. One last question—sorry, I know you don’t enjoy talking about other companies, but regarding another renewable company, it looks like they cut back growth significantly. Is this an isolated case, or do you think the evolving structure may be more challenging?

Connor Teskey, CEO

All renewables companies are seeing strong demand. However, individual companies may face challenges due to those operating in sectors seeing headwinds, high development risks, or aggressive capital structures. Our approach, focusing on low-risk, mature technologies, has positioned us to better withstand market fluctuations. The overall sector has tremendous tailwinds, and we feel fortunate in our strategic focus and disciplined funding.

Anthony Crowdell, Analyst

Great. Thanks for taking my questions. Congrats to Patrick and Wyatt on their promotions. I look forward to working with you.

Operator, Operator

That concludes today's question-and-answer session. I'd like to turn the call back to Connor Teskey for closing remarks.

Connor Teskey, CEO

Thank you everyone for joining our call and for your interest and support of Brookfield Renewable. We look forward to updating you on our progress throughout 2025. Have a great day.

Operator, Operator

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