UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM
20-F/A
(AMENDMENT NO. 1)
| ☐ | REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934 |
OR
| ☒ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the fiscal year ended December 31, 2023
OR
| ☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
OR
| ☐ | SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Commission file number:
001-35530
BROOKFIELD RENEWABLE PARTNERS L.P.
(Exact name of Registrant as specified in its charter)
Bermuda
(Jurisdiction of incorporation or organization)
73 Front Street, 5th Floor, Hamilton HM 12, Bermuda
(Address of principal executive offices)
Jane Sheere
73 Front Street, 5th Floor
Hamilton HM 12
, BermudaTelephone:
441-294-3304
enquiries@brookfieldrenewable.com
(Name, telephone,
e-mail
and/or facsimile number and address of company contact person)Securities registered or to be registered pursuant to Section 12(b) of the Act:
Title of Class | Trading Symbol(s) | Name of each exchange on which registered | ||
Limited Partnership Units | BEP, BEP.UN | New York Stock Exchange, Toronto Stock Exchange | ||
Class A Preferred Limited Partnership Units, Series 17 | BEP PR A | New York Stock Exchange | ||
4.625% Perpetual Subordinated - Notes | BEPH | New York Stock Exchange | ||
4.875% Perpetual Subordinated - Notes | BEPI | New York Stock Exchange |
Securities registered or to be registered pursuant to Section 12(g) of the Act:
None
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:
None
Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report:
287,164,340 Limited Partnership Units as of December 31, 2023
7,000,000 Series 7 Preferred Units as of December 31, 2023
10,000,000 Series 13 Preferred Units as of December 31, 2023
7,000,000 Series 15 Preferred Units as of December 31, 2023
8,000,000 Series 17 Preferred Units as of December 31, 2023
6,000,000 Series 18 Preferred Units as of December 31, 2023
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. ☒ ☐
Yes
No
If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. ☐ ☒
Yes
No
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ ☐
Yes
No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation ☒ ☐
S-T
(§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes
No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a
non-accelerated
filer, or an emerging growth company. See definitions of “accelerated filer”, “large accelerated filer”, and “emerging growth company” in Rule12b-2
of the Exchange Act (Check one):Large accelerated filer | ☒ | Accelerated filer | ☐ | Non-accelerated filer | ☐ | |||||
Emerging growth company | ☐ | |||||||||
If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.
Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒
If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐
Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officers during the relevant recovery period pursuant to
§240.10D-1(b). ☐
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:
U.S. GAAP | International Financial Reporting Standards as issued | Other | ||||||
by the International Accounting Standards Board | ☒ |
If “Other” has been checked in response to the previous question indicate by check mark which financial statement item the registrant has elected to follow. ☐ ☐
Item
17
Item
18
If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule ☐ ☒
12b-2
of the Exchange Act). Yes
N
o
| Auditor Name: Ernst & Young LLP (PCAOB ID: 1263) | Auditor Location: Toronto, Canada |
EXPLANATORY NOTE
Brookfield Renewable Partners L.P. (the “Partnership”) is filing this amendment (this “Amendment”) to its Annual Report on Form for the year ended December 31, 2023 (the “Original Form to correct typographical errors in the disclosure under the caption (i) “Management’s Report on Internal Control over Financial Reporting” under Item 15 of the Original Form and (ii) “Internal Control Over Financial Reporting Management’s Report on Internal Control over Financial Reporting” on page under Item 18 of the Original Form This Amendment restates in their entirety the following sections of the Original Form without change from the Original Form other than the correction of the errors noted above: Item 15 of Part II, “Controls and Procedures” and Item 18 of Part III, “Financial Statements”.
20-F
20-F”)
20-F
F-7
20-F.
20-F
20-F
In addition, the Partnership is including in this Amendment currently dated certifications from its Chief Executive Officer and Chief Financial Officer as required by Sections 302 and 906 of the Sarbanes-Oxley Act of 2002 as Exhibits 12.1 and 12.2 and Exhibits 13.1 and 13.2, respectively. Except as described above, this Amendment does not modify or update any of the information previously presented in the Original Form and this Amendment does not reflect events occurring after the filing of the Original Form Accordingly, this Amendment should be read in conjunction with the Original Form and the Partnership’s other filings with the U.S. Securities and Exchange Commission subsequent to the filing of the Original Form
20-F,
20-F.
20-F
20-F.
PART II
| ITEM 15. | CONTROLS AND PROCEDURES |
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (Exchange Act)), as of the end of the period covered by this Form 20-F. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that as of December 31, 2023, our disclosure controls and procedures are designed at a reasonable assurance level and are effective to provide reasonable assurance that material information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. While disclosure controls and procedures and internal controls over financial reporting were adequate and effective we continue to implement certain measures to strengthen control processes and procedures.
Management’s Annual Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rule 13a-15(f) under the Exchange Act. Under the supervision and with the participation of our management, including persons performing the functions of principal executive and principal financial officers for us, we conducted an evaluation of the effectiveness of our internal control over financial reporting as of December 31, 2023, based on the criteria set forth in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework). Based on evaluation under the foregoing, our management concluded that our internal control over financial reporting was effective as of
Page 1
December 31, 2023. Management excluded from its design and assessment of the internal controls of investments acquired in 2023, which include a 12 GW operating and development portfolio of utility-scale solar, wind and battery storage assets in the United States, a 4.5 GW operating and development portfolio of utility-scale solar, wind and distributed generation assets in India, a 4 GW operating and development portfolio of utility-scale wind, battery and solar assets in the United Kingdom, a 136 MW portfolio of operating wind assets in Brazil, a 730 MW portfolio of distributed generation assets in Brazil, and a 60 MW portfolio of operating and wind assets in Brazil, whose total assets and net assets on a combined basis constitute approximately 10% and 10%, respectively, of the consolidated financial statement amounts as of December 31, 2023 and 3% of revenues for the year then ended.
Internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Report of Independent Registered Public Accounting Firm
The effectiveness of our internal control over financial reporting as of December 31, 2023 has been audited by Ernst & Young LLP, Chartered Professional Accountants, Licensed Public Accountants, who have also audited our consolidated financial statements, as stated in their reports which are included herein.
Limitations on Effectiveness of Controls and Procedures
In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs.
Changes in Internal Control
There was no change in our internal control over financial reporting during the year ended December 31, 2023, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
PART III
| ITEM 18. | FINANCIAL STATEMENTS |
See our financial statements beginning on page F-1, which are filed as part of this Form 20-F.
| ITEM 19. | EXHIBITS |
Page 2
Page 3
Page 4
| (1) | Filed as an exhibit to Registration Statement on Form 20-F including all amendments thereto, with the last such amendment having been made on May 16, 2013, and incorporated herein by reference. |
Page 5
| (2) | Filed as an exhibit to our 2014 Form 20-F as filed on March 2, 2015 and incorporated herein by reference. |
| (3) | Filed as an exhibit to Form 6-K on November 27, 2015, and incorporated herein by reference. |
| (4) | Filed as an exhibit to our 2015 Form 20-F as filed on February 26, 2016, and incorporated herein by reference. |
| (5) | Filed as an exhibit to Form 6-K on May 4, 2016, and incorporated herein by reference. |
| (6) | Filed as an exhibit to Form 6-K on May 6, 2016, and incorporated herein by reference. |
| (7) | Filed as an exhibit to Form 6-K on May 26, 2016, and incorporated herein by reference. |
| (8) | Filed as an exhibit to Form 6-K on February 14, 2017, and incorporated herein by reference. |
| (9) | Filed as an exhibit to Form 6-K on January 17, 2018, and incorporated herein by reference. |
| (10) | Filed as an exhibit to Form 6-K on February 28, 2019, and incorporated herein by reference. |
| (11) | Filed as an exhibit to Form 6-K on March 11, 2019, and incorporated herein by reference. |
| (12) | Filed as an exhibit to Form 6-K on February 24, 2020, and incorporated herein by reference. |
| (13) | Filed as an exhibit to Form 6-K on July 29, 2020, and incorporated herein by reference. |
| (14) | Filed as an exhibit to Form 6-K on August 3, 2020, and incorporated herein by reference. |
| (15) | Filed as an exhibit to Form 6-K on February 8, 2021, and incorporated herein by reference. |
| (16) | Filed as an exhibit to Form 6-K/A on April 16, 2021, and incorporated herein by reference. |
| (17) | Filed as an exhibit to Form 6-K on August 12, 2021, and incorporated herein by reference. |
| (18) | Filed as an exhibit to Form 6-K on December 9, 2021, and incorporated herein by reference. |
| (19) | Filed as an exhibit to Form 6-K on April 14, 2022, and incorporated herein by reference. |
| (20) | Filed as an exhibit to Form 6-K on November 14, 2022 and incorporated herein by reference. |
| (21) | Filed as an exhibit to Form 6-K on March 29, 2023 and incorporated herein by reference. |
| (22) | Filed as an exhibit to Form 6-K on June 2, 2023 and incorporated herein by reference. |
| (23) | Filed as an exhibit to Form 6-K on January 10, 2024 and incorporated herein by reference. |
| (24) | Previously filed. |
| (25) | Filed herewith. |
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SIGNATURE
The registrant hereby certifies that it meets all of the requirements for filing this Form 20-F/A and that it has duly caused and authorized the undersigned to sign this Form 20-F/A on its behalf.
| Dated: March 4, 2024 | BROOKFIELD RENEWABLE PARTNERS L.P. by its general partner, Brookfield Renewable Partners Limited | |||||
| By: | /s/ Wyatt Hartley | |||||
| Name: | Wyatt Hartley | |||||
| Title: | Chief Financial Officer of the Service Provider, Brookfield Canada Renewable Manager LP | |||||
Page 7
BROOKFIELD RENEWABLE PARTNERS L.P.
INDEX TO FINANCIAL STATEMENTS
| Page | ||||
| F - 2 | ||||
F - 1
MANAGEMENT’S RESPONSIBILITY
Management’s Responsibility for Financial Statements
The accompanying consolidated financial statements have been prepared by Brookfield Renewable Partners L.P. (“Brookfield Renewable”) management which is responsible for their integrity, consistency, objectivity and reliability. To fulfill this responsibility, Brookfield Renewable maintains policies, procedures and systems of internal control to ensure that its reporting practices and accounting and administrative procedures are appropriate to provide a high degree of assurance that relevant and reliable financial information is produced and assets are safeguarded. These controls include the careful selection and training of employees, the establishment of well-defined areas of responsibility and accountability for performance, and the communication of policies and the code of conduct throughout the company.
These consolidated financial statements have been prepared in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board and, where appropriate, reflect estimates based on management’s judgment.
Ernst & Young LLP, the Independent Registered Public Accounting Firm appointed by the directors of the general partner of Brookfield Renewable, have audited the consolidated financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States) to enable them to express to the partners their opinion on the consolidated financial statements. Their report outlines the scope of their examination and opinion on the consolidated financial statements.
The consolidated financial statements have been further reviewed and approved by the Board of Directors of the general partner of Brookfield Renewable acting through its Audit Committee, which is comprised of directors who are not officers or employees of Brookfield Renewable. The Audit Committee, which meets with the auditors and management to review the activities of each and reports to the Board of Directors, oversees management’s responsibilities for the financial reporting and internal control systems. The auditors have full and direct access to the Audit Committee and meet periodically with the committee both with and without management present to discuss their audit and related findings.
/s/ Connor Teskey | /s/ Wyatt Hartley | |
Connor Teskey Chief Executive Officer | Wyatt Hartley Chief Financial Officer |
February 29, 2024
F - 2
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors of Brookfield Renewable Partners Limited (General Partner of Brookfield Renewable Partners L.P.) and Partners of Brookfield Renewable Partners L.P.
Opinion on the Financial Statements
We have audited the accompanying consolidated statements of financial position of Brookfield Renewable Partners L.P. (“Brookfield Renewable” or the “Partnership”) as of December 31, 2023 and 2022, the related consolidated statements of income (loss), comprehensive income, changes in equity and cash flows for each of the three years in the period ended December 31, 2023, and the related notes (collectively referred to as the “financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Partnership at December 31, 2023 and 2022, and its financial performance and its cash flows for each of the three years in the period ended December 31, 2023, in conformity with International Financial Reporting Standards (“IFRSs”) as issued by the International Accounting Standards Board.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the Partnership’s internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated February 29, 2024 expressed an unqualified opinion thereon.
Basis for Opinion
These financial statements are the responsibility of Brookfield Renewable’s management. Our responsibility is to express an opinion on the Partnership’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Partnership in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
F - 3
| Revaluation of power generating assets | ||
| Description of the Matter | The Partnership measures power generating assets (classified as property, plant and equipment) using the revaluation method under IAS 16, Property, Plant and Equipment. As at December 31, 2023, property, plant and equipment on the consolidated statement of financial position totaled $64,005 million. Revaluations of property, plant and equipment recognized in the consolidated statement of comprehensive income totaled a loss of $133 million and a loss in the consolidated statement of income (loss) of $164 million for 2023. As discussed in Notes 1(g), 1(r)(i) and 1(s) (iii) and 12 – Property, Plant and Equipment, at Fair Value to the consolidated financial statements, significant estimation and management judgment are involved in assessing the estimates and assumptions regarding the future performance of the power generating assets.
Management applies a dual approach which involves a discounted cash flow model as well as a market evaluation in determining the fair value of the Partnership’s power generating assets. Significant assumptions included within the discounted cash flow models are future electricity prices, terminal value, discount rates, anticipated long-term average generation and estimated operating and capital expenditures.
Auditing the measurement of power generating assets is complex due to the highly judgmental nature of the significant assumptions described above, which required the involvement of specialists. Changes in these assumptions can have a material effect on the fair value of the power generating assets. | |
F - 4
| How We Addressed the Matter in Our Audit | We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over management’s processes in determining the fair value of power generating assets. We tested controls over management’s review of the valuation models, including the controls over the review and approval of all significant assumptions.
To test the fair value of the power generating assets, our audit procedures included, among others, evaluating the Partnership’s valuation methodology, the significant assumptions used, and testing the completeness and accuracy of the underlying data supporting the significant assumptions. For each power generating asset, we analyzed the significant drivers of the change in fair value including the future electricity prices, terminal value and discount rates. With the support of our valuation specialists, we inspected management’s valuation analysis and assessed the estimates of future electricity prices by reference to shorter-term broker price quotes and management’s longer-term market forecasts specific to each region and power generating asset. We also involved our valuation specialists in the evaluation of the terminal value and discount rates, which included consideration of benchmark interest rates, geographic location, whether the asset is contracted or uncontracted and type of technology.
For a sample of power generating assets, we performed audit procedures that included, among others, agreeing contracted power prices to executed power purchase agreements and assessing the anticipated long-term average generation through corroboration with third party engineering reports and historical trends. Further, we assessed the estimated operating and capital expenditures by comparison to historical data and to third party data for a selection of assets and corroboration with third party engineering reports. We also tested the computational accuracy of the fair value model. | |
With the assistance of our valuation specialists for the same samples, we also performed a sensitivity analysis over the future electricity prices, terminal value and discount rates to evaluate the fair value of power generating assets. We also evaluated the fair values using other market-based evidence by comparing the portfolio as a whole to recent similar transactions and by calculating the revenue and EBITDA multiples of a sample of the power generating assets and comparing them to multiples of comparable public companies.
Furthermore, we evaluated the adequacy of the Partnership’s disclosures regarding the significant assumptions and sensitivity analysis around the fair value of power generating assets. | ||
F - 5
| Significant acquisitions: wind and solar portfolio’s | ||
| Description of the Matter | During 2023, the Partnership completed the acquisitions of a U.S. Renewable Portfolio, an India Renewable Portfolio and a U.K. Wind Portfolio for purchase price of $1,083 million, $447 million, and $625 million, respectively. As described in Notes 1(o) and 3 – Acquisitions to the consolidated financial statements, these business combinations are accounted for using the acquisition method, and the results of operations have been included in the consolidated financial statements since the corresponding dates of acquisition.
Auditing the above noted acquisitions is complex given that significant estimation is required in determining the fair value of the power generating assets, tax equity liabilities and commodity derivatives acquired. The significant assumptions related to these estimates include but are not limited to future electricity prices, production tax credits, generation volumes, discount rates, terminal value and operating and capital expenditures. These assumptions are forward looking and could be affected by future economic and market conditions. | |
| How We Addressed the Matter in Our Audit | We obtained an understanding and evaluated the design of controls over management’s processes in determining the fair value of power generating assets, tax equity liabilities and commodity derivatives acquired. We tested controls over management’s review of the power generating assets, tax equity and commodity derivative valuation models, including the controls over the review and approval of all significant assumptions.
Our audit procedures included, among others, assessing the significant assumptions described above and testing the completeness and accuracy of the underlying data. For example, we evaluated the estimated generation volumes for a sample of power generating assets by comparing them to available engineering reports, benchmarking capacity factors against publicly available industry generation data, and also considering industry benchmarks for losses that impact capacity factors. Further, with the support of our valuation specialists, we inspected management’s valuation analysis and assessed the estimates of future electricity prices by reference to shorter-term broker price quotes and management’s longer-term market forecasts specific to each region and power generating asset. For production tax credit rates, we assessed management’s future projections against stated guidance for all production tax credit regimes and ensured that management’s projection was reasonable based on published guidance. We involved our valuation specialists to assist in evaluating the valuation methodologies and the significant assumptions, including discount rates and terminal values, used in the Partnership’s models, which included consideration of benchmark interest rates, geographic location, contracted or uncontracted assets and type of technology, as well as performing sensitivity analysis on such significant assumptions. | |
F - 6
| Further, we assessed the estimated capital expenditures by corroborating against recently signed construction contracts and component supply agreements. We compared operating expenditures to available engineering reports. We also compared operating expenditure forecasts against industry benchmarks and signed operations and maintenance contracts. We also tested the computational accuracy of the fair value model and considered the adequacy of disclosures made in Note 3 to the consolidated financial statements in respect of these judgements and estimates. |
/s/ Ernst & Young LLP
Chartered Professional Accountants
Licensed Public Accountants
We have served as Brookfield Renewable’s auditor since 2011.
Toronto, Canada
February 29, 2024
F - 7
INTERNAL CONTROL OVER FINANCIAL REPORTING
Evaluation of Disclosure Controls and Procedures
Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (Exchange Act)), as of the end of the period December 31, 2023. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that as of December 31, 2023, our disclosure controls and procedures are designed at a reasonable assurance level and are effective to provide reasonable assurance that material information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities and Exchange Commission, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. While disclosure controls and procedures and internal controls over financial reporting were adequate and effective we continue to implement certain measures to strengthen control processes and procedures.
Management’s Report on Internal Control over Financial Reporting
Management of Brookfield Renewable Partners L.P. (“Brookfield Renewable”) is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is a process designed by, or under the supervision of, the Chief Executive Officer and the Chief Financial Officer and effected by the Board of Directors, management and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board as defined in Regulation 240.13a–15(f) or 240.15d–15(f).
Management assessed the effectiveness of Brookfield Renewable’s internal control over financial reporting as of December 31, 2023, based on the criteria set forth in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework). Based on this assessment, management concludes that, as of December 31, 2023, Brookfield Renewable’s internal control over financial reporting is effective. Management excluded from its design and assessment of the internal controls of investments acquired in 2023, which include a 12 GW operating and development portfolio of utility-scale solar, wind and battery storage assets in the United States, a 4.5 GW operating and development portfolio of utility-scale solar, wind and distributed generation assets in India, a 4 GW operating and development portfolio of utility-scale wind, battery and solar assets in the United Kingdom, a 136 MW portfolio of operating wind assets in Brazil, a 730 MW portfolio of distributed generation assets in Brazil, and a 60 MW portfolio of operating and wind assets in Brazil, whose total assets and net assets on a combined basis constitute approximately 10% and 10%, respectively, of the consolidated financial statement amounts as of December 31, 2023 and 3% of revenues for the year then ended.
Brookfield Renewable’s internal control over financial reporting as of December 31, 2023, has been audited by Ernst & Young LLP, the Independent Registered Public Accounting Firm, who also audited Brookfield Renewable’s consolidated financial statements for the year ended December 31, 2023. As stated in the Report of Independent Registered Public Accounting Firm, Ernst & Young LLP expressed an unqualified opinion on the effectiveness of Brookfield Renewable’s internal control over financial reporting as of December 31, 2023.
/s/ Connor Teskey | /s/ Wyatt Hartley | |
Connor Teskey Chief Executive Officer | Wyatt Hartley Chief Financial Officer |
February 29, 2024
F - 8
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors of Brookfield Renewable Partners Limited (General Partner of Brookfield Renewable Partners L.P.) and Partners of Brookfield Renewable Partners L.P.
Opinion on Internal Control Over Financial Reporting
We have audited Brookfield Renewable Partners L.P.’s (“Brookfield Renewable” or the “Partnership”) internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the “COSO criteria”). In our opinion, the Partnership maintained, in all material respects, effective internal control over financial reporting as of December 31, 2023, based on the COSO criteria.
As indicated in the accompanying Management’s Report on Internal Control Over Financial Reporting, management’s assessment of and conclusion on the effectiveness of internal control over financial reporting did not include the internal controls of the 12 GW operating and development portfolio of utility-scale solar, wind and battery storage assets in the United States, the 4.5 GW operating and development portfolio of utility-scale solar, wind and distributed generation assets in India, the 4 GW of operating and development portfolio of utility-scale wind, battery and solar assets in the United Kingdom, the 136 MW portfolio of operating wind assets in Brazil, the 730 MW portfolio of distributed generation assets in Brazil, and the 60 MW portfolio of operating and wind assets in Brazil. The aforementioned acquisitions are included in the 2023 consolidated financial statements of the Partnership and constituted approximately 10% and 10% of total and net assets, respectively on a combined basis as of December 31, 2023 and 3% of revenues for the year then ended. Our audit of internal control over financial reporting of the Partnership also did not include an evaluation of the internal control over financial reporting of the aforementioned acquisitions.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (“PCAOB”), the 2023 consolidated financial statements of the Partnership and our report dated February 29, 2024 expressed an unqualified opinion thereon.
Basis for Opinion
Brookfield Renewable’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Partnership’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Partnership in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
F - 9
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ Ernst & Young LLP
Chartered Professional Accountants
Licensed Public Accountants
Toronto, Canada
February 29, 2024
F - 10
BROOKFIELD RENEWABLE PARTNERS L.P.
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
AS AT DECEMBER 31 (MILLIONS) | Notes | 2023 | 2022 | |||||||||
Assets | ||||||||||||
Current assets | ||||||||||||
Cash and cash equivalents | 20 | $ | 1,141 | $ | 998 | |||||||
Restricted cash | 21 | 310 | 139 | |||||||||
Trade receivables and other current assets | 22 | 1,517 | 1,860 | |||||||||
Financial instrument assets | 5 | 199 | 125 | |||||||||
Due from related parties | 28 | 1,443 | 123 | |||||||||
Assets held for sale | 4 | — | 938 | |||||||||
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| 4,610 | 4,183 | |||||||||||
Financial instrument assets | 5 | 1,768 | 1,500 | |||||||||
Equity-accounted investments | 19 | 2,546 | 1,392 | |||||||||
Property, plant and equipment, at fair value | 12 | 64,005 | 54,283 | |||||||||
Goodwill | 17 | 1,944 | 1,526 | |||||||||
Deferred income tax assets | 11 | 244 | 176 | |||||||||
Other long-term assets | 23 | 1,011 | 1,051 | |||||||||
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Total Assets | $ | 76,128 | $ | 64,111 | ||||||||
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Liabilities | ||||||||||||
Current liabilities | ||||||||||||
Accounts payable and accrued liabilities | 24 | $ | 1,539 | $ | 1,086 | |||||||
Financial instrument liabilities | 5 | 687 | 559 | |||||||||
Due to related parties | 28 | 835 | 588 | |||||||||
Corporate borrowings | 13 | 183 | 249 | |||||||||
Non-recourse borrowings | 13 | 4,752 | 2,027 | |||||||||
Provisions | 25, 27 | 42 | 83 | |||||||||
Liabilities directly associated with assets held for sale | 4 | — | 351 | |||||||||
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| 8,038 | 4,943 | |||||||||||
Financial instrument liabilities | 5 | 2,433 | 1,670 | |||||||||
Corporate borrowings | 13 | 2,650 | 2,299 | |||||||||
Non-recourse borrowings | 13 | 22,117 | 20,275 | |||||||||
Deferred income tax liabilities | 11 | 7,174 | 6,507 | |||||||||
Provisions | 25, 27 | 1,268 | 600 | |||||||||
Due to related parties | 28 | 705 | 1 | |||||||||
Other long-term liabilities | 26 | 1,764 | 1,530 | |||||||||
Equity | ||||||||||||
Non-controlling interests | ||||||||||||
Participating non-controlling interests – in operating subsidiaries | 14 | 18,863 | 14,755 | |||||||||
General partnership interest in a holding subsidiary held by Brookfield | 14 | 55 | 59 | |||||||||
Participating non-controlling interests – in a holding subsidiary – Redeemable/Exchangeable units held by Brookfield | 14 | 2,684 | 2,892 | |||||||||
BEPC exchangeable shares | 14 | 2,479 | 2,561 | |||||||||
Preferred equity | 14 | 583 | 571 | |||||||||
Perpetual subordinated notes | 14 | 592 | 592 | |||||||||
Preferred limited partners’ equity | 15 | 760 | 760 | |||||||||
Limited partners’ equity | 16 | 3,963 | 4,096 | |||||||||
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Total Equity | $ | 29,979 | $ | 26,286 | ||||||||
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Total Liabilities and Equity | $ | 76,128 | $ | 64,111 | ||||||||
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The accompanying notes are an integral part of these consolidated financial statements.
Approved on behalf of Brookfield Renewable Partners L.P.:
 |  | |
Patricia Zuccotti Director | David Mann Director |
F - 11
BROOKFIELD RENEWABLE PARTNERS L.P.
CONSOLIDATED STATEMENTS OF INCOME (LOSS)
YEAR ENDED DECEMBER 31 (MILLIONS, EXCEPT AS NOTED) | Notes | 2023 | 2022 | 2021 | ||||||||||
Revenues | 28 | $ | 5,038 | $ | 4,711 | $ | 4,096 | |||||||
Other income | 7 | 671 | 136 | 304 | ||||||||||
Direct operating costs(1) | 8 | (1,933 | ) | (1,434 | ) | (1,365 | ) | |||||||
Management service costs | 28 | (205 | ) | (243 | ) | (288 | ) | |||||||
Interest expense | 13 | (1,627 | ) | (1,224 | ) | (981 | ) | |||||||
Share of earnings from equity-accounted investments | 19 | 186 | 96 | 22 | ||||||||||
Foreign exchange and financial instruments gain (loss) | 5 | 502 | (133 | ) | (32 | ) | ||||||||
Depreciation | 12 | (1,852 | ) | (1,583 | ) | (1,501 | ) | |||||||
Other | 9 | (212 | ) | (190 | ) | (307 | ) | |||||||
Income tax recovery (expense) | ||||||||||||||
Current | 11 | (128 | ) | (148 | ) | (43 | ) | |||||||
Deferred | 11 | 176 | 150 | 29 | ||||||||||
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| 48 | 2 | (14 | ) | |||||||||||
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Net income (loss) | $ | 616 | $ | 138 | $ | (66 | ) | |||||||
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Net income (loss) attributable to: | ||||||||||||||
Non-controlling interests | ||||||||||||||
Participating non-controlling interests – in operating subsidiaries | 14 | $ | 619 | $ | 334 | $ | 209 | |||||||
General partnership interest in a holding subsidiary held by Brookfield | 14 | 111 | 92 | 77 | ||||||||||
Participating non-controlling interests – in a holding subsidiary – Redeemable/Exchangeable units held by Brookfield | 14 | (63 | ) | (117 | ) | (135 | ) | |||||||
BEPC exchangeable shares | 14 | (57 | ) | (104 | ) | (119 | ) | |||||||
Preferred equity | 14 | 27 | 26 | 26 | ||||||||||
Perpetual subordinated notes | 14 | 29 | 29 | 12 | ||||||||||
Preferred limited partners’ equity | 15 | 41 | 44 | 55 | ||||||||||
Limited partners’ equity | 16 | (91 | ) | (166 | ) | (191 | ) | |||||||
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| $ | 616 | $ | 138 | $ | (66 | ) | ||||||||
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Basic and diluted loss per LP unit | $ | (0.32 | ) | $ | (0.60 | ) | $ | (0.69 | ) | |||||
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| (1) | Direct operating costs exclude depreciation expense disclosed below. |
The accompanying notes are an integral part of these consolidated financial statements.
F - 12
BROOKFIELD RENEWABLE PARTNERS L.P.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
YEAR ENDED DECEMBER 31 (MILLIONS) | Notes | 2023 | 2022 | 2021 | ||||||||||
Net income (loss) | $ | 616 | $ | 138 | $ | (66 | ) | |||||||
Other comprehensive income that will not be reclassified to net income | ||||||||||||||
Revaluations of property, plant and equipment | 12 | (133 | ) | 3,745 | 4,573 | |||||||||
Actuarial (loss) gain on defined benefit plans | (12 | ) | 21 | 30 | ||||||||||
Deferred income taxes on above items | 11 | 81 | (852 | ) | (1,170 | ) | ||||||||
Unrealized gain (loss) on investments in equity securities | 5 | 2 | (11 | ) | 3 | |||||||||
Equity-accounted investments | 19 | 154 | (35 | ) | 184 | |||||||||
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Total items that will not be reclassified to net income | 92 | 2,868 | 3,620 | |||||||||||
Other comprehensive income that may be reclassified to net income | ||||||||||||||
Foreign currency translation | 10 | 1,317 | (647 | ) | (859 | ) | ||||||||
Gains (losses) arising during the year on financial instruments designated as cash-flow hedges | 5 | 252 | 175 | (64 | ) | |||||||||
Gain (loss) on foreign exchange swaps – net investment hedge | 5 | (128 | ) | 63 | 64 | |||||||||
Reclassification adjustments for amounts recognized in net income | 5 | (108 | ) | 148 | 43 | |||||||||
Deferred income taxes on above items | 11 | (13 | ) | (87 | ) | (2 | ) | |||||||
Equity-accounted investments | 19 | 8 | (30 | ) | (36 | ) | ||||||||
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Total items that may be reclassified subsequently to net income | 1,328 | (378 | ) | (854 | ) | |||||||||
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Other comprehensive income | 1,420 | 2,490 | 2,766 | |||||||||||
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Comprehensive income | $ | 2,036 | $ | 2,628 | $ | 2,700 | ||||||||
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Comprehensive income attributable to: | ||||||||||||||
Non-controlling interests | ||||||||||||||
Participating non-controlling interests – in operating subsidiaries | 14 | $ | 1,983 | $ | 1,582 | $ | 1,048 | |||||||
General partnership interest in a holding subsidiary held by Brookfield | 14 | 111 | 100 | 89 | ||||||||||
Participating non-controlling interests – in a holding subsidiary – Redeemable/Exchangeable units held by Brookfield | 14 | (50 | ) | 270 | 444 | |||||||||
BEPC exchangeable shares | (45 | ) | 238 | 394 | ||||||||||
Preferred equity | 14 | 39 | (16 | ) | 30 | |||||||||
Perpetual subordinated notes | 29 | 29 | 12 | |||||||||||
Preferred limited partners’ equity | 15 | 41 | 44 | 55 | ||||||||||
Limited partners’ equity | 16 | (72 | ) | 381 | 628 | |||||||||
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| $ | 2,036 | $ | 2,628 | $ | 2,700 | |||||||||
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The accompanying notes are an integral part of these consolidated financial statements.
F - 13
BROOKFIELD RENEWABLE PARTNERS L.P.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
| Accumulated other comprehensive income | Non-controlling interests | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
YEAR ENDED (MILLIONS) | Limited partners’ equity | Foreign currency translation | Revaluation surplus | Actuarial losses on defined benefit plans | Cash flow hedges | Investments in equity securities | Total limited partners’ equity | Preferred limited partners’ equity | Preferred equity | Perpetual subordinated notes | BEPC exchangeable shares | Participating non- controlling interests – in operating subsidiaries | General partnership interest in a holding subsidiary held by Brookfield | Participating non-controlling interests – in a holding subsidiary – Redeemable/ Exchangeable units held by Brookfield | Total equity | |||||||||||||||||||||||||||||||||||||||||||||
Balance, as at December 31, 2022 | $ | (1,898 | ) | $ | (845 | ) | $ | 6,817 | $ | 4 | $ | 17 | $ | 1 | $ | 4,096 | $ | 760 | $ | 571 | $ | 592 | $ | 2,561 | $ | 14,755 | $ | 59 | $ | 2,892 | $ | 26,286 | ||||||||||||||||||||||||||||
Net income (loss) | (91 | ) | — | — | — | — | — | (91 | ) | 41 | 27 | 29 | (57 | ) | 619 | 111 | (63 | ) | 616 | |||||||||||||||||||||||||||||||||||||||||
Other comprehensive income (loss) | — | 147 | (143 | ) | (3 | ) | 18 | — | 19 | — | 12 | — | 12 | 1,364 | — | 13 | 1,420 | |||||||||||||||||||||||||||||||||||||||||||
Equity issuance (Note 14, 16, 28) | 390 | — | — | — | — | — | 390 | — | — | — | 240 | — | — | — | 630 | |||||||||||||||||||||||||||||||||||||||||||||
LP Units purchased for cancellation (Note 16) | (43 | ) | — | — | — | — | — | (43 | ) | — | — | — | — | — | — | — | (43 | ) | ||||||||||||||||||||||||||||||||||||||||||
Capital contributions (Note 14) | — | — | — | — | — | — | — | — | — | — | — | 2,993 | — | — | 2,993 | |||||||||||||||||||||||||||||||||||||||||||||
Acquisition (Note 3) | — | — | — | — | — | — | — | — | — | — | — | 414 | — | — | 414 | |||||||||||||||||||||||||||||||||||||||||||||
Return of capital | — | — | — | — | — | — | — | — | — | — | — | (140 | ) | — | — | (140 | ) | |||||||||||||||||||||||||||||||||||||||||||
Disposal (Note 4) | 12 | — | (12 | ) | — | — | — | — | — | — | — | — | (449 | ) | — | — | (449 | ) | ||||||||||||||||||||||||||||||||||||||||||
Distributions or dividends declared | (383 | ) | — | — | — | — | — | (383 | ) | (41 | ) | (27 | ) | (29 | ) | (241 | ) | (1,428 | ) | (116 | ) | (265 | ) | (2,530 | ) | |||||||||||||||||||||||||||||||||||
Distribution reinvestment plan | 8 | — | — | — | — | — | 8 | — | — | — | — | — | — | — | 8 | |||||||||||||||||||||||||||||||||||||||||||||
Ownership changes | 113 | 16 | (107 | ) | — | (1 | ) | — | 21 | — | — | — | — | — | — | — | 21 | |||||||||||||||||||||||||||||||||||||||||||
Other | (226 | ) | (19 | ) | 188 | 1 | 2 | — | (54 | ) | — | — | — | (36 | ) | 735 | 1 | 107 | 753 | |||||||||||||||||||||||||||||||||||||||||
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Change in year | (220 | ) | 144 | (74 | ) | (2 | ) | 19 | — | (133 | ) | — | 12 | — | (82 | ) | 4,108 | (4 | ) | (208 | ) | 3,693 | ||||||||||||||||||||||||||||||||||||||
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Balance, as at December 31, 2023 | $ | (2,118 | ) | $ | (701 | ) | $ | 6,743 | $ | 2 | $ | 36 | $ | 1 | $ | 3,963 | $ | 760 | $ | 583 | $ | 592 | $ | 2,479 | $ | 18,863 | $ | 55 | $ | 2,684 | $ | 29,979 | ||||||||||||||||||||||||||||
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Balance, as at December 31, 2021 | $ | (1,516 | ) | $ | (842 | ) | $ | 6,494 | $ | — | $ | (48 | ) | $ | 4 | $ | 4,092 | $ | 881 | $ | 613 | $ | 592 | $ | 2,562 | $ | 12,303 | $ | 59 | $ | 2,894 | $ | 23,996 | |||||||||||||||||||||||||||
Net income (loss) | (166 | ) | — | — | — | — | — | (166 | ) | 44 | 26 | 29 | (104 | ) | 334 | 92 | (117 | ) | 138 | |||||||||||||||||||||||||||||||||||||||||
Other comprehensive income (loss) | — | (1 | ) | 480 | 4 | 67 | (3 | ) | 547 | — | (42 | ) | $ | — | 342 | 1,248 | 8 | 387 | 2,490 | |||||||||||||||||||||||||||||||||||||||||
Equity issuance | — | — | — | — | — | — | — | 115 | — | $ | — | — | — | — | — | 115 | ||||||||||||||||||||||||||||||||||||||||||||
Capital contributions | — | — | — | — | — | — | — | — | — | $ | — | — | 2,131 | — | — | 2,131 | ||||||||||||||||||||||||||||||||||||||||||||
Redemption of Preferred LP Units | — | — | — | — | — | — | — | �� | (236 | ) | — | $ | — | — | — | — | — | (236 | ) | |||||||||||||||||||||||||||||||||||||||||
Disposals | 14 | — | (14 | ) | — | — | — | — | — | — | $ | — | — | (75 | ) | — | — | (75 | ) | |||||||||||||||||||||||||||||||||||||||||
Distributions or dividends declared | (355 | ) | — | — | — | — | — | (355 | ) | (44 | ) | (26 | ) | $ | (29 | ) | (220 | ) | (1,275 | ) | (100 | ) | (250 | ) | (2,299 | ) | ||||||||||||||||||||||||||||||||||
Distribution reinvestment plan | 9 | — | — | — | — | — | 9 | — | — | $ | — | — | — | — | — | 9 | ||||||||||||||||||||||||||||||||||||||||||||
Other | 116 | (2 | ) | (143 | ) | — | (2 | ) | — | (31 | ) | — | — | $ | — | (19 | ) | 89 | — | (22 | ) | 17 | ||||||||||||||||||||||||||||||||||||||
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Change in year | (382 | ) | (3 | ) | 323 | 4 | 65 | (3 | ) | 4 | (121 | ) | (42 | ) | — | (1 | ) | 2,452 | — | (2 | ) | 2,290 | ||||||||||||||||||||||||||||||||||||||
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Balance, as at December 31, 2022 | $ | (1,898 | ) | $ | (845 | ) | $ | 6,817 | $ | 4 | $ | 17 | $ | 1 | $ | 4,096 | $ | 760 | $ | 571 | $ | 592 | $ | 2,561 | $ | 14,755 | $ | 59 | $ | 2,892 | $ | 26,286 | ||||||||||||||||||||||||||||
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The accompanying notes are an integral part of these consolidated financial statements.
F - 14
BROOKFIELD RENEWABLE PARTNERS L.P.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
| Accumulated other comprehensive income (loss) | Non-controlling interests | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
YEAR ENDED (MILLIONS) | Limited partners’ equity | Foreign currency translation | Revaluation surplus | Actuarial losses on defined benefit plans | Cash flow hedges | Investments in equity securities | Total limited partners’ equity | Preferred limited partners’ equity | Preferred equity | Perpetual subordinated notes | BEPC exchangeable shares | Participating non- controlling interests – in operating subsidiaries | General partnership interest in a holding subsidiary held by Brookfield | Participating non-controlling interests – in a holding subsidiary – Redeemable/ Exchangeable units held by Brookfield | Total equity | |||||||||||||||||||||||||||||||||||||||||||||
Balance, as at December 31, 2020 | $ | (988 | ) | $ | (720 | ) | $ | 5,595 | $ | (6 | ) | $ | (39 | ) | $ | 3 | $ | 3,845 | $ | 1,028 | $ | 609 | $ | — | $ | 2,408 | $ | 11,100 | $ | 56 | $ | 2,721 | $ | 21,767 | ||||||||||||||||||||||||||
Net income (loss) | (191 | ) | — | — | — | — | — | (191 | ) | 55 | 26 | 12 | (119 | ) | 209 | 77 | (135 | ) | (66 | ) | ||||||||||||||||||||||||||||||||||||||||
Other comprehensive income (loss) | — | (116 | ) | 938 | 7 | (11 | ) | 1 | 819 | — | 4 | — | 513 | 839 | 12 | 579 | 2,766 | |||||||||||||||||||||||||||||||||||||||||||
Issuance of perpetual subordinated notes | — | — | — | — | — | — | — | — | — | 592 | — | — | — | — | 592 | |||||||||||||||||||||||||||||||||||||||||||||
Capital contributions | — | — | — | — | — | — | — | — | — | — | — | 1,121 | — | — | 1,121 | |||||||||||||||||||||||||||||||||||||||||||||
Redemption of Preferred LP Units | — | — | — | — | — | — | — | (147 | ) | — | — | — | — | — | — | (147 | ) | |||||||||||||||||||||||||||||||||||||||||||
Disposal | 38 | — | (38 | ) | — | — | — | — | — | — | — | — | (395 | ) | — | — | (395 | ) | ||||||||||||||||||||||||||||||||||||||||||
Distributions or dividends declared | (335 | ) | — | — | — | — | — | (335 | ) | (55 | ) | (26 | ) | (12 | ) | (209 | ) | (810 | ) | (85 | ) | (237 | ) | (1,769 | ) | |||||||||||||||||||||||||||||||||||
Distribution reinvestment plan | 9 | — | — | — | — | — | 9 | — | — | — | — | — | — | — | 9 | |||||||||||||||||||||||||||||||||||||||||||||
Other | (49 | ) | (6 | ) | (1 | ) | (1 | ) | 2 | — | (55 | ) | — | — | — | (31 | ) | 239 | (1 | ) | (34 | ) | 118 | |||||||||||||||||||||||||||||||||||||
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Change in year | (528 | ) | (122 | ) | 899 | 6 | (9 | ) | 1 | 247 | (147 | ) | 4 | 592 | 154 | 1,203 | 3 | 173 | 2,229 | |||||||||||||||||||||||||||||||||||||||||
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Balance, as at December 31, 2021 | $ | (1,516 | ) | $ | (842 | ) | $ | 6,494 | $ | — | $ | (48 | ) | $ | 4 | $ | 4,092 | $ | 881 | $ | 613 | $ | 592 | $ | 2,562 | $ | 12,303 | $ | 59 | $ | 2,894 | $ | 23,996 | |||||||||||||||||||||||||||
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The accompanying notes are an integral part of these consolidated financial statements.
F - 15
BROOKFIELD RENEWABLE PARTNERS L.P.
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEAR ENDED DECEMBER 31 (MILLIONS) | Notes | 2023 | 2022 | 2021 | ||||||||||
Operating activities | ||||||||||||||
Net income (loss) | $ | 616 | $ | 138 | $ | (66 | ) | |||||||
Adjustments for the following non-cash items: | ||||||||||||||
Depreciation | 12 | 1,852 | 1,583 | 1,501 | ||||||||||
Unrealized foreign exchange and financial instrument (gain) loss | 5 | (492 | ) | 258 | 122 | |||||||||
Share of earnings from equity-accounted investments | 19 | (186 | ) | (96 | ) | (22 | ) | |||||||
Deferred income tax recovery | 11 | (176 | ) | (150 | ) | (29 | ) | |||||||
Other non-cash items | (282 | ) | 102 | (136 | ) | |||||||||
Dividends received from equity-accounted investments | 19 | 58 | 89 | 78 | ||||||||||
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| 1,390 | 1,924 | 1,448 | ||||||||||||
Changes in due to or from related parties | 7 | (19 | ) | 2 | ||||||||||
Net change in working capital balances | 29 | 468 | (194 | ) | (716 | ) | ||||||||
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| 1,865 | 1,711 | 734 | ||||||||||||
Financing activities | ||||||||||||||
Proceeds from medium-term notes | 13 | 293 | 296 | — | ||||||||||
Commercial paper, net | 13 | (65 | ) | 249 | (3 | ) | ||||||||
Proceeds from non-recourse borrowings | 13 | 8,316 | 9,547 | 6,877 | ||||||||||
Repayment of non-recourse borrowings | 13 | (6,037 | ) | (6,310 | ) | (3,678 | ) | |||||||
Capital contributions from participating non-controlling interests – in operating subsidiaries | 14 | 2,593 | 1,863 | 1,200 | ||||||||||
Capital repaid to participating non-controlling interests – in operating subsidiaries | 14 | (248 | ) | (75 | ) | (511 | ) | |||||||
Issuance of equity instruments and related costs | 14,15,16 | 630 | 115 | 592 | ||||||||||
Redemption and repurchase of equity instruments | 14,15,16 | (43 | ) | (252 | ) | (153 | ) | |||||||
Distributions paid: | ||||||||||||||
To participating non-controlling interests – in operating subsidiaries, preferred shareholders, preferred limited partners unitholders, and perpetual subordinate notes | 14,15 | (967 | ) | (1,372 | ) | (900 | ) | |||||||
To unitholders of Brookfield Renewable or BRELP and shareholders of Brookfield Renewable Corporation | 14, 16 | (990 | ) | (915 | ) | (854 | ) | |||||||
Borrowings from related party | 670 | 1,470 | 1,188 | |||||||||||
Repayments to related party | (1,556 | ) | (1,127 | ) | (1,615 | ) | ||||||||
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| 2,596 | 3,489 | 2,143 | ||||||||||||
Investing activities | ||||||||||||||
Acquisitions, net of cash and cash equivalents, in acquired entity | 3 | (791 | ) | (2,452 | ) | (1,426 | ) | |||||||
Investment in equity-accounted investments | 19 | (725 | ) | (236 | ) | (54 | ) | |||||||
Investment in property, plant and equipment | 12 | (2,809 | ) | (2,190 | ) | (1,967 | ) | |||||||
Proceeds from disposal of assets, net of cash and cash equivalents disposed | 217 | 140 | 827 | |||||||||||
Purchase of financial assets | (644 | ) | (492 | ) | (58 | ) | ||||||||
Proceeds from financial assets | 5 | 431 | 70 | 220 | ||||||||||
Restricted cash and other | (35 | ) | 94 | (86 | ) | |||||||||
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| (4,356 | ) | (5,066 | ) | (2,544 | ) | |||||||||
Foreign exchange (loss) gain on cash | 38 | (28 | ) | (35 | ) | |||||||||
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Cash and cash equivalents increase | 143 | 106 | 298 | |||||||||||
Net change in cash classified within assets held for sale | — | (8 | ) | (5 | ) | |||||||||
Balance, beginning of year | 998 | 900 | 607 | |||||||||||
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Balance, end of year | $ | 1,141 | $ | 998 | $ | 900 | ||||||||
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Supplemental cash flow information: | ||||||||||||||
Interest paid | $ | 1,353 | $ | 1,138 | $ | 877 | ||||||||
Interest received | $ | 112 | $ | 37 | $ | 45 | ||||||||
Income taxes paid | $ | 194 | $ | 112 | $ | 71 | ||||||||
The accompanying notes are an integral part of these consolidated financial statements.
F - 16
BROOKFIELD RENEWABLE PARTNERS L.P.
NOTES TO THE AUDITED ANNUAL CONSOLIDATED FINANCIAL STATEMENTS
The business activities of Brookfield Renewable Partners L.P. (“Brookfield Renewable”) consist of owning a portfolio of renewable power and sustainable solution assets primarily in North America, South America, Europe and Asia-Pacific.
Unless the context indicates or requires otherwise, the term “Brookfield Renewable” means Brookfield Renewable Partners L.P. and its controlled entities, including Brookfield Renewable Corporation (“BEPC”). Unless the context indicates or requires otherwise, the term “the partnership” means Brookfield Renewable Partners L.P. and its controlled entities, excluding BEPC.
Brookfield Renewable’s consolidated equity interests include the non-voting publicly traded limited partnership units (“LP units”) held by public unitholders and Brookfield, class A exchangeable subordinate voting shares (“BEPC exchangeable shares”) of Brookfield Renewable Corporation (“BEPC”) held by public shareholders and Brookfield, redeemable/exchangeable partnership units (“Redeemable/Exchangeable partnership units”) in Brookfield Renewable Energy L.P. (“BRELP”), a holding subsidiary of Brookfield Renewable, held by Brookfield, and general partnership interest (“GP interest”) in BRELP held by Brookfield. Holders of the LP units, Redeemable/Exchangeable partnership units, GP interest, and BEPC exchangeable shares will be collectively referred to throughout as “Unitholders” unless the context indicates or requires otherwise. LP units, Redeemable/Exchangeable partnership units, GP interest, and BEPC exchangeable shares will be collectively referred to throughout as “Units”, or as “per Unit”, unless the context indicates or requires otherwise.
Brookfield Renewable is a publicly traded limited partnership established under the laws of Bermuda pursuant to an amended and restated limited partnership agreement dated November 20, 2011 as thereafter amended from time to time.
The registered office of Brookfield Renewable is 73 Front Street, Fifth Floor, Hamilton HM12, Bermuda.
The immediate parent of Brookfield Renewable is its general partner, Brookfield Renewable Partners Limited (“BRPL”). The ultimate parent of Brookfield Renewable is Brookfield Corporation (“Brookfield Corporation”). Brookfield Corporation and its subsidiaries, other than Brookfield Renewable, and unless the context otherwise requires, includes Brookfield Asset Management Ltd (“Brookfield Asset Management”), are also individually and collectively referred to as “Brookfield” in these financial statements. The term “Brookfield Holders” means Brookfield, Brookfield Reinsurance and their related parties.
The BEPC exchangeable shares are traded under the symbol “BEPC” on the New York Stock Exchange and the Toronto Stock Exchange.
The LP units are traded under the symbol “BEP” on the New York Stock Exchange and under the symbol “BEP.UN” on the Toronto Stock Exchange. Brookfield Renewable’s Class A Series 7, Series 13, Series 15, and Series 18 preferred limited partners’ equity are traded under the symbols “BEP.PR.G”, “BEP.PR.M”, “BEP.PR.O”, and “BEP.PR.R”, respectively, on the Toronto Stock Exchange. Brookfield Renewable’s Class A Series 17 preferred limited partners’ equity is traded under the symbol “BEP.PR.A” on the New York Stock Exchange. The perpetual subordinated notes are traded under the symbol “BEPH” and “BEPI” on the New York Stock Exchange.
F - 17
1. BASIS OF PREPARATION AND MATERIAL ACCOUNTING POLICY INFORMATION
(a) Statement of compliance
The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”). The accounting policies used in the consolidated financial statements are based on the IFRS applicable as at December 31, 2023, which encompass individual IFRS, International Accounting Standards (“IAS”), and interpretations made by the International Financial Reporting Interpretations Committee (“IFRIC”) and the Standard Interpretations Committee (“SIC”). The policies set out below are consistently applied to all periods presented, unless otherwise noted.
These consolidated financial statements have been authorized for issuance by the Board of Directors of Brookfield Renewable’s general partner, BRPL, on February 29, 2024.
Certain comparative figures have been reclassified to conform to the current year’s presentation.
References to $, C$, €, £, R$, COP, INR, and CNY are to United States (“U.S.”) dollars, Canadian dollars, Euros, British pound, Brazilian reais, Colombian pesos, Indian rupees, and Chinese yuan, respectively.
All figures are presented in millions of U.S. dollars unless otherwise noted.
(b) Basis of preparation
The 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 consolidated financial statements include the accounts of Brookfield Renewable and its subsidiaries, which are the entities over which Brookfield Renewable 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 Brookfield Renewable’s subsidiaries are shown separately in equity in the consolidated statements of financial position.
Brookfield Renewable has entered into a voting agreement with Brookfield, which provides Brookfield Renewable with control of the general partner of BRELP. Accordingly, Brookfield Renewable consolidates the accounts of BRELP and its subsidiaries. In addition, BRELP issued redeemable/exchangeable limited partnership units to Brookfield (“Redeemable/Exchangeable partnership units”), pursuant to which the holder may, at its request, require BRELP to redeem the Redeemable/Exchangeable partnership units for cash consideration. This right is subject to Brookfield Renewable’s right of first refusal which entitles it, at its sole discretion, to elect to acquire all of the Redeemable/Exchangeable partnership units so presented to BRELP that are tendered for redemption in exchange for LP units on a one-for-one basis. As Brookfield Renewable, at its sole discretion, has the right to settle the obligation with LP units, the Redeemable/Exchangeable partnership units are classified as equity of Brookfield Renewable (“Participating non-controlling interests – in a holding subsidiary – Redeemable/Exchangeable Units held by Brookfield”).
Brookfield Renewable has entered into voting agreements with Brookfield, whereby Brookfield Renewable gained control of the entities that own certain renewable power generating operations. Brookfield Renewable has also entered into a voting agreement with its consortium partners in respect of its Colombian operations. These voting agreements provide Brookfield Renewable the authority to direct the election of the Boards of Directors of the relevant entities, among other things, and therefore provide Brookfield Renewable with control. Accordingly, Brookfield Renewable consolidates the accounts of these entities. Refer to Note 28 – Related party transactions for further information.
F - 18
For entities previously controlled by Brookfield Corporation, the voting agreements entered into do not represent business combinations in accordance with IFRS 3, Business Combinations (“IFRS 3”), as all combining businesses are ultimately controlled by Brookfield Corporation both before and after the transactions were completed. Brookfield Renewable 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 for Brookfield Renewable’s policy on accounting for transactions under common control.
Equity-accounted investments
Equity-accounted investments are entities over which Brookfield Renewable has significant influence or joint arrangements representing joint ventures. Significant influence is the ability to participate in the financial and operating policy decisions of the investee, but without controlling or jointly controlling those investees. Such investments are accounted for using the equity method.
A joint venture is a type of joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the joint venture. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require unanimous consent of the parties sharing control. Brookfield Renewable accounts for its interests in joint ventures using the equity method.
Under the equity method, the carrying value of an interest in an investee is initially recognized at cost and adjusted for Brookfield Renewable’s share of net income, other comprehensive income (“OCI”), distributions by the equity-accounted investment and other adjustments to Brookfield Renewable’s proportionate interest in the investee.
(d) Foreign currency translation
All figures reported in the consolidated financial statements and tabular disclosures to the consolidated financial statements are reflected in millions of U.S. dollars, which is the functional currency of Brookfield Renewable. Each of the foreign operations included in these consolidated financial statements determines its own functional currency, and items included in the financial statements of each subsidiary are measured using that functional currency.
Assets and liabilities of foreign operations having a functional currency other than the U.S. dollar are translated at the rate of exchange prevailing at the reporting date and revenues and expenses at the rate of exchange prevailing at the dates of the transactions during the period. Gains or losses on translation of foreign subsidiaries are included in OCI. Gains or losses on foreign currency denominated balances and transactions that are designated as hedges of net investments in these operations are reported in the same manner.
In preparing the consolidated financial statements of Brookfield Renewable, foreign currency denominated monetary assets and liabilities are translated into the functional currency using the closing rate at the applicable consolidated statement of financial position dates. Non-monetary assets and liabilities denominated in a foreign currency and measured at fair value are translated at the rate of exchange prevailing at the date when the fair value was determined and non-monetary assets and liabilities measured at historical cost are translated at the historical rate. Revenues and expenses are measured in the functional currency at the rates of exchange prevailing at the dates of the transactions with gains or losses included in income.
F - 19
(e) Cash and cash equivalents
Cash and cash equivalents include cash, term deposits and money market instruments with original maturities of less than 90 days.
(f) Restricted cash
Restricted cash includes cash and cash equivalents, where the availability of funds is restricted primarily by credit and construction agreements.
(g) Property, plant and equipment and revaluation method
Power generating assets are classified as property, plant and equipment and are accounted for using the revaluation method under IAS 16 – Property, Plant and Equipment (“IAS 16”). Property, plant and equipment are initially measured at cost and subsequently carried at their revalued amount, being the fair value at the date of the revaluation, less any subsequent accumulated depreciation and any subsequent accumulated impairment losses.
Brookfield Renewable generally determines the fair value of its property, plant and equipment by using 20-year discounted cash flow model for hydroelectric assets and the estimated remaining useful life for other technologies. This model incorporates future cash flows from long-term power purchase agreements that are in place where it is determined that the power purchase agreements are linked specifically to the related power generating assets. The model also includes estimates of future electricity prices, anticipated long-term average generation, estimated operating and capital expenditures, terminal values and assumptions about future inflation rates and discount rates by geographical location. Construction work-in-progress (“CWIP”) is revalued when sufficient information exists to determine fair value using the discounted cash flow method. Revaluations are made on an annual basis as at December 31 to ensure that the carrying amount does not differ significantly from fair value. For power generating assets acquired through business combinations, Brookfield Renewable initially measures the assets at fair value on the acquisition date, consistent with the policy described in Note 1(o) – Business combinations, with no revaluation at year-end in the year of acquisition unless there is external evidence specific to those assets that would indicate the carrying value of the asset has either increased or decreased materially.
Where the carrying amount of an asset increased as a result of a revaluation, the increase is recognized in income to the extent the increase reverses a previously recognized decrease recorded through income, with the remainder of the increase recognized in OCI and accumulated in equity under revaluation surplus and non-controlling interest. When the carrying amount of an asset decreases, the decrease is recognized in OCI to the extent that a balance exists in revaluation surplus with respect to the asset, with the remainder of the decrease recognized in income.
F - 20
Depreciation on power generating assets is calculated on a straight-line basis over the estimated service lives of the assets, which are as follows:
| Estimated service lives | ||||
Dams | Up to 115 years | |||
Penstocks | Up to 60 years | |||
Powerhouses | Up to 115 years | |||
Hydroelectric generating units | Up to 115 years | |||
Wind generating units | Up to 30 years | |||
Solar generating units | Up to 35 years | |||
Gas-fired cogenerating (“Cogeneration”) units | Up to 40 years | |||
Other assets | Up to 60 years | |||
Costs are allocated to significant components of property, plant and equipment. When items of property, plant and equipment have different useful lives, they are accounted for as separate items (significant components) and depreciated separately. To ensure the accuracy of useful lives and residual values, a review is conducted annually.
Depreciation is calculated based on the fair value of the asset less its residual value. Depreciation commences when the asset is in the location and conditions necessary for it to be capable of operating in the manner intended by management. It ceases at the earlier of the date the asset is classified as held-for-sale and the date the asset is derecognized. An item of property, plant and equipment and any significant component is derecognized upon disposal or when no future economic benefits are expected from its use. Other assets include equipment, buildings and leasehold improvements. Buildings, furniture and fixtures, leasehold improvements and office equipment are recorded at historical cost, less accumulated depreciation. Land and CWIP are not subject to depreciation.
The depreciation of property, plant and equipment in Brazil is based on the duration of the authorization or the useful life of a concession asset. The weighted-average remaining duration at December 31, 2023 is 34 years (2022: 35 years). Since land rights are part of the concession or authorization, this cost is also subject to depreciation.
Any accumulated depreciation at the date of revaluation is eliminated against the gross carrying amount of the asset, and the net amount is applied to the revalued amount of the asset.
Gains and losses on disposal of an item of property, plant and equipment of operating assets are recognized in Other income and Other in the consolidated statements of income (loss), respectively. The revaluation surplus is reclassified within the respective components of equity and not reclassified to net income when the assets are disposed.
(h) Leases
At inception of a contract, Brookfield Renewable assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. To assess whether a contract conveys the right to control the use of an identified asset, Brookfield Renewable assesses whether:
| • | the contract specified explicitly or implicitly the use of an identified asset, and that is physically distinct or represents substantially all of the capacity of a physically distinct asset. If the supplier has a substantive substitution right, then the asset is not identified; |
| • | Brookfield Renewable has the right to obtain substantially all of the economic benefits from use of the asset throughout the period of use; and Brookfield Renewable has the right to direct the use of the asset. Brookfield Renewable has this right when it has the decision-making rights that are most relevant to changing how and for what purpose the asset is used. In rare cases where the decisions about how and for what purpose the asset is used are predetermined, Brookfield Renewable has the right to direct the use of the asset if either: |
F - 21
| • | Brookfield Renewable has the right to operate the asset (or to direct others to operate the asset in a manner that it determines) throughout the period of use, without the supplier having the right to change those operating instructions; or |
| • | Brookfield Renewable designed the asset in a way that predetermines how and for what purpose it will be used. |
At inception or on reassessment of a contract that contains a lease component, Brookfield Renewable allocates the consideration in the contract to each lease component on the basis of their relative stand-alone prices. However, for the leases of land and buildings in which it is a lessee, Brookfield Renewable has elected not to separate non-lease components and, therefore, accounts for the lease and non-lease components as a single lease component.
Brookfield Renewable recognizes a right-of-use asset and a lease liability at the lease commencement date. The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and an estimate of costs to dismantle and remove the underlying asset or to restore the underlying asset or the site on which it is located, less any lease incentives received.
The right-of use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the useful lives of the right-of-use asset or the end of the lease term. The estimated useful lives of right-of-use assets are determined on the same basis as those of property, plant and equipment. In addition, the right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability.
The lease liability is initially measured at the present value of the lease payments that are not paid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, Brookfield Renewable’s incremental borrowing rate. Generally, Brookfield Renewable uses its incremental borrowing rate as the discount rate.
Lease payments included in the measurement of the lease liability comprise the following:
| • | Fixed payments, including in-substance fixed payments; |
| • | Variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date; |
| • | Amounts expected to be payable under a residual value guarantee; and |
| • | The exercise price under a purchase option that Brookfield Renewable is reasonably certain to exercise, lease payments in an optional renewable period if Brookfield Renewable is reasonably certain to exercise an extension option, and penalties for early termination of a lease unless Brookfield Renewable is reasonably certain not to terminate early |
The lease liability is measured at amortized cost using the effective interest method. It is remeasured when there is a change in future lease payments arising from a change in an index or rate, if there is a change in Brookfield Renewable’s estimate of the amount expected to be payable under a residual value guarantee, or if Brookfield Renewable changes its assessment of whether it will exercise a purchase, extension or termination option.
When the lease liability is remeasured in this way, a corresponding adjustment is made either to the carrying amount of the right-of-use asset or, when the adjustment is a reduction to the right-of-use asset, is recorded in the consolidated statements of income (loss) if the carrying amount of the right-of-use asset has been reduced to nil.
Brookfield Renewable presents right-of-use assets in property, plant and equipment and lease liabilities in other long-term liabilities in the consolidated statements of financial position.
F - 22
Brookfield Renewable has elected not to recognize right-of-use assets and lease liabilities for short-term leases that have a lease term of twelve months or less and leases of low-value assets. Brookfield Renewable recognizes the lease payments associated with these leases as an expense on a straight-line basis over the lease term.
(i) Goodwill
Goodwill represents the excess of the price paid for the acquisition of an entity over the fair value of the net tangible and intangible assets and liabilities acquired. Goodwill is allocated to the cash generating unit or units (“CGU”) to which it relates. Brookfield Renewable identifies CGU as identifiable groups of assets that are largely independent of the cash inflows from other assets or groups of assets.
Goodwill is evaluated for impairment annually or more often if events or circumstances indicate there may be impairment. Impairment is determined for goodwill by assessing if the carrying value of a CGU, including the allocated goodwill, exceeds its recoverable amount determined as the greater of the estimated fair value less costs of disposal or the value in use. Impairment losses recognized in respect of a CGU are first allocated to the carrying value of goodwill and any excess is allocated to the carrying amount of assets in the CGU. Any goodwill impairment is charged to profit or loss in the period in which the impairment is identified. Impairment losses on goodwill are not subsequently reversed. In the year of a business acquisition, the recoverability of the acquired goodwill is assessed by revisiting the assumptions of the related underwriting model.
On disposal of a subsidiary, the attributable amount of goodwill is included in the determination of the gain or loss on disposal of the operation.
(j) Asset impairment
At each statement of financial position date, Brookfield Renewable assesses whether for non-financial assets there is any indication that such assets are impaired. This assessment includes a review of internal and external factors which includes, but is not limited to, changes in the technological, political, economic or legal environment in which the entity operates in, structural changes in the industry, changes in the level of demand, physical damage and obsolescence due to technological changes. An impairment is recognized if the recoverable amount, determined as the higher of the estimated fair value less costs of disposal or the discounted future cash flows generated from use and eventual disposal from an asset or CGU is less than its carrying value.
For non-financial assets (including equity-accounted investments), an impairment is recognized if the recoverable amount, determined as the greater of the estimated fair value, less costs to sell, and the discounted future cash flows generated from use and eventual disposal of an asset or CGU, is less than its carrying value. The projections of future cash flows take into account the relevant operating plans and management’s best estimate of the most probable set of conditions anticipated to prevail. Where an impairment loss subsequently reverses, the carrying amount of the asset or CGU is increased to the lesser of the revised estimate of recoverable amount and the carrying amount that would have been recorded had no impairment loss been recognized previously.
(k) Trade receivables and other current assets
Trade receivables and other current assets are recognized initially at fair value, and subsequently measured at amortized cost using the effective interest method, less any provision for expected credit losses.
F - 23
(l) Financial instruments
Initial recognition
Under IFRS 9 – Financial Instruments (“IFRS 9”), regular purchases and sales of financial assets are recognized on the trade date, being the date on which Brookfield Renewable commits to purchase or sell the asset. Financial assets are derecognized when the rights to receive cash flows from the financial assets have expired or have been transferred and Brookfield Renewable has transferred substantially all the risks and rewards of ownership.
At initial recognition, Brookfield Renewable measures a financial asset at its fair value. In the case of a financial asset not categorized as fair value through profit and loss (“FVPL”), transaction costs that are directly attributable to the acquisition of the financial asset are included at initial recognition. Transaction costs of financial assets carried at FVPL are expensed in income.
Classification and measurement
Subsequent measurement of financial assets depends on Brookfield Renewable’s business objective for managing the asset and the cash flow characteristics of the asset. There are three measurement categories into which Brookfield Renewable classifies its financial assets:
Amortized cost – Financial assets held for collection of contractual cash flows that represent solely payments of principal and interest are measured at amortized cost. Interest income is recognized as other income in the financial statements, and gains/losses are recognized in income when the asset is derecognized or impaired.
FVOCI – Financial assets held to achieve a particular business objective other than short-term trading are designated at fair value through other comprehensive income (“FVOCI”). For equity instruments designated at FVOCI, there is no recycling of gains or losses through income. Upon derecognition of the asset, accumulated gains or losses are transferred from OCI directly to retained earnings.
FVPL – Financial assets that do not meet the criteria for amortized cost or FVOCI are measured at FVPL. Gains or losses on these types of assets are recognized in income.
Brookfield Renewable assesses on a forward-looking basis the expected credit losses (“ECL”) associated with its assets carried at amortized cost and FVOCI. For trade receivables and contract assets, Brookfield Renewable applied the simplified approach permitted by IFRS 9, which requires expected lifetime losses to be recognized from initial recognition of the asset. The simplified approach to the recognition of ECL does not require entities to track the changes in credit risk; rather, entities recognize a loss allowance at each reporting date based on the lifetime ECL since the date of initial recognition of the asset.
Evidence of impairment may include:
| • | Indications that a debtor or group of debtors is experiencing significant financial difficulty; |
| • | A default or delinquency in interest or principal payments; |
| • | Probability that a debtor or a group of debtors will enter into bankruptcy or other financial reorganization; |
| • | Changes in arrears or economic conditions that correlate with defaults, where observable data indicates that there is a measurable decrease in the estimated future cash flows. |
Trade receivables and contract assets are reviewed qualitatively on a case-by-case basis to determine if they need to be written off.
ECL are measured as the difference in the present value of the contractual cash flows that are due under contract and the cash flows expected to be received. ECL is measured by considering the risk of default over the contract period and incorporates forward looking information into its measurement.
F - 24
Financial liabilities are classified as financial liabilities at fair value through profit and loss, amortized cost, or derivatives designated as hedging instruments in an effective hedge. Brookfield Renewable determines the classification of its financial liabilities at initial recognition. Brookfield Renewable’s financial liabilities include accounts payable and accrued liabilities, corporate borrowings, non-recourse borrowings, derivative liabilities, due to related party balances, and tax equity. Financial liabilities are initially measured at fair value, with subsequent measurement determined based on their classification as follows:
FVPL – Financial liabilities held for trading, such as those acquired for the purpose of selling in the near term, derivative financial instruments entered into by Brookfield Renewable that do not meet hedge accounting criteria, and tax equity are classified as fair value through profit and loss. Gains or losses on these types of liabilities are recognized in income.
Brookfield Renewable owns and operates certain projects in the U.S. under tax equity structures to finance the construction of utility-scale solar and wind projects. Such structures are designed to allocate renewable tax incentives, such as investment tax credits (“ITCs”), production tax credits (“PTCs”) and accelerated tax depreciation, to tax equity investors. Generally, tax equity structures grant the tax equity investors the majority of the project’s U.S. taxable earnings and renewable tax incentives, along with a smaller portion of the projects’ cash flows, until a contractually determined point at which the allocations are adjusted (the “Flip Point”). Subsequent to the Flip Point the majority of the project’s U.S. taxable earnings, renewable tax incentives and cash flows are allocated to the sponsor. The Flip Point dates are generally dependent on the underlying projects’ reaching an agreed upon after tax investment return, however, from time to time, the Flip Point dates may be dates specified within the contract. At all times, both before and after the projects’ Flip Point, Brookfield Renewable retains control over the projects financed with a tax equity structure. 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 consolidated statements of financial position and at each reporting date are remeasured to their fair value in accordance with IFRS 9.
F - 25
The fair value of the tax equity financing is generally comprised of the following elements:
Elements affecting the fair value of the tax equity financing | Description | |
| Production tax credits (PTCs) | Allocation of PTCs to the tax equity investor are derived from the power generated during the period. The PTCs are recognized in foreign exchange and financial instrument gain (loss) with a corresponding reduction to the tax equity liability. | |
| Investment tax credits (ITCs) | Allocation of ITCs to the tax equity investor are derived as a percentage of a projects total cost. Once received, the ITCs are recognized as a reduction to property, plant and equipment with a corresponding reduction to the tax equity liability. | |
| Taxable loss, including tax attributes such as accelerated tax depreciation | Under the terms of the tax equity agreements, Brookfield Renewable is required to allocate specified percentages of taxable losses to the tax equity investor. As amounts are allocated, the obligation to deliver them is satisfied and a reduction to the tax equity liability is recorded with a corresponding amount recorded within foreign exchange and financial instrument gain (loss) on the consolidated statements of income (loss). | |
| Pay-go contributions | Certain of the contracts contain annual production thresholds. When the thresholds are exceeded, the tax equity investor is required to contribute additional cash amounts. The cash amounts paid increase the value of the tax equity liability. | |
| Cash distributions | Certain of the contracts also require cash distributions to the tax equity investor. Upon payment, the tax equity liability is reduced in the amount of the cash distribution. | |
Amortized cost – All other financial liabilities are classified as amortized cost using the effective interest rate method. Gains and losses are recognized in income when the liabilities are derecognized as well as through the amortization process. Remeasurement gains and losses on financial liabilities classified as amortized cost are presented in the consolidated statements of income (loss). Amortized cost is computed using the effective interest method less any principal repayment or reduction. The calculation takes into account any premium or discount on acquisition and includes transaction costs and fees that are an integral part of the effective interest rate. This category includes trade and other payables, dividends payable, interest-bearing loans and borrowings, and corporate credit facilities.
Derivatives and hedge accounting
Derivatives are initially recognized at fair value on the date a derivative contract is entered into and are subsequently remeasured to their fair value at the end of each reporting period. The accounting for subsequent changes in fair value depends on whether the derivative is designated as a hedging instrument, and if so, the nature of the item being hedged and the type of hedge relationship designated.
Brookfield Renewable designates its derivatives as hedges of:
| • | Foreign exchange risk associated with the cash flows of highly probable forecast transactions (cash flow hedges); |
| • | Foreign exchange risk associated with net investment in foreign operations (net investment hedges); |
| • | Commodity price risk associated with cash flows of highly probable forecast transactions (cash flow hedges); and |
| • | Floating interest rate risk associated with floating rate debts (cash flow hedges). |
At the inception of a hedge relationship, Brookfield Renewable formally designates and documents the hedge relationship to which it wishes to apply hedge accounting and the risk management objective and strategy for undertaking the hedge.
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A hedging relationship qualifies for hedge accounting if it meets all of the following effectiveness requirements:
| • | There is an ‘economic relationship’ between the hedged item and the hedging instrument; |
| • | The effect of credit risk does not ‘dominate the value changes’ that result from that economic relationship; and |
| • | The hedge ratio of the hedging relationship is the same as that resulting from the quantity of the hedged item that Brookfield Renewable actually hedges and the quantity of the hedging instrument that Brookfield Renewable actually uses to hedge that quantity of hedged item. |
The fair values of various derivative financial instruments used for hedging purposes and movements in the hedge reserve within equity are shown in Note 5 – Risk management and financial instruments.
When a hedging instrument expires, is sold, is terminated, or no longer meets the criteria for hedge accounting, any cumulative deferred gain or loss and deferred costs of hedging in equity at that time remain in equity until the forecasted transaction occurs. When the forecasted transaction is no longer expected to occur, the cumulative gain or loss and deferred costs of hedging are immediately reclassified to income.
If the hedge ratio for risk management purposes is no longer optimal but the risk management objective remains unchanged and the hedge continues to qualify for hedge accounting, the hedge relationship will be rebalanced by adjusting either the volume of the hedging instrument or the volume of the hedged item so that the hedge ratio aligns with the ratio used for risk management purposes. Any hedge ineffectiveness is calculated and accounted for in income at the time of the hedge relationship rebalancing.
(i) Cash flow hedges that qualify for hedge accounting
The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognized in the cash flow hedge reserve within equity, limited to the cumulative change in fair value of the hedged item on a present value basis from the inception of the hedge. The gain or loss relating to the ineffective portion is recognized immediately in income, within foreign exchange and financial instruments gain (loss).
Gains and losses relating to the effective portion of the change in fair value of the entire forward contract are recognized in the cash flow hedge reserve within equity. Amounts accumulated in equity are reclassified in the period when the hedged item affects income.
(ii) Net investment hedges that qualify for hedge accounting
Hedges of net investments in foreign operations are accounted for similarly to cash flow hedges. Any gain or loss on the hedging instrument relating to the effective portion of the hedge is recognized in OCI and accumulated in reserves in equity. The gain or loss relating to the ineffective portion is recognized immediately in income within foreign exchange and financial instruments gain (loss). Gains and losses accumulated in equity will be reclassified to income when the foreign operation is partially disposed of or sold.
(iii) Hedge ineffectiveness
Brookfield Renewable’s hedging policy only allows for the use of derivative instruments that form effective hedge relationships. Sources of hedge effectiveness are determined at the inception of the hedge relationship and measured through periodic prospective effectiveness assessments to ensure that an economic relationship exists between the hedged item and hedging instrument. Where the critical terms of the hedging instrument match exactly with the terms of the hedged item, a qualitative assessment of effectiveness is performed. For other hedge relationships, the hypothetical derivative method to assess effectiveness is used.
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(m) Revenue and expense recognition
The majority of revenue is derived from the sale of power and power related ancillary services both under contract and in the open market, sourced from Brookfield Renewable’s power generating facilities. The obligations are satisfied over time as the customer simultaneously receives and consumes benefits as Brookfield Renewable delivers electricity and related products. Revenue is recorded based upon the output delivered and capacity provided at rates specified under either contract terms or prevailing market rates. The revenue reflects the consideration Brookfield Renewable expects to be entitled to in exchange for those goods or services. Costs related to the purchases of power or fuel are recorded upon delivery. All other costs are recorded as incurred.
Details of the revenue recognized per geographical region and technology are included in Note 6 – Segmented information.
Where available, Brookfield Renewable has elected the practical expedient available under IFRS 15 – Revenue from contracts with customers (“IFRS 15”) for measuring progress toward complete satisfaction of a performance obligation and for disclosure requirements of remaining performance obligations. The practical expedient allows an entity to recognize revenue in the amount to which the entity has the right to invoice such that the entity has a right to the consideration in an amount that corresponds directly with the value to the customer for performance completed to date by the entity.
If the consideration in a contract that does not apply the practical expedient available under IFRS 15 for measuring progress toward complete satisfaction of a performance obligation includes a variable amount, Brookfield Renewable estimates the amount of consideration to which it will be entitled in exchange for transferring the goods to the customer. The variable consideration is estimated at contract inception and constrained until it is highly probable that a significant revenue reversal in the amount of cumulative revenue recognized will not occur when the associated uncertainty with the variable consideration is subsequently resolved.
Brookfield Renewable also sells power and related products under bundled arrangements. Energy, capacity and renewable credits within power purchase agreements are considered to be distinct performance obligations. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied under IFRS 15. Brookfield Renewable views the sale of energy and capacity as a series of distinct goods that is substantially the same and has the same pattern of transfer measured by the output method. Brookfield Renewable views renewable credits to be performance obligations satisfied at a point in time. During the year ended December 31, 2023, revenues recognized at a point in time corresponding to the sale of renewable credits were $250 million (2022: $263 million and 2021: $183 million). Measurement of satisfaction and transfer of control to the customer of renewable credits in a bundled arrangement coincides with the pattern of revenue recognition of the underlying energy generation.
Revenues recognized that are outside the scope of IFRS 15 include realized gains and losses from derivatives used in the risk management of Brookfield Renewable’s generation activities related to commodity prices. From time to time, Brookfield Renewable also enters into commodity contracts to hedge all or a portion of its estimated revenue stream when selling electricity to an independent system operated market and there is no PPA available. These commodity contracts require periodic settlements in which Brookfield Renewable receives a fixed-price based on specified quantities of electricity and pays the counterparty a variable market price based on the same specified quantity of electricity. As these derivatives are accounted for under hedge accounting, the changes in fair value are recorded in revenues in the consolidated statements of income (loss). Financial transactions included in revenues for the year ended December 31, 2023 decreased revenues by $119 million (decreased by 2022: 146 million and 2021: $37 million).
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Contract Balances
Contract assets – A contract asset is the right to consideration in exchange for goods or services transferred to the customer. If Brookfield Renewable performs by transferring goods or services to a customer before the customer pays consideration or before payment is due, a contract asset is recognized for the earned consideration that is conditional.
Trade receivables – A receivable represents Brookfield Renewable’s right to an amount of consideration that is unconditional (i.e., only the passage of time is required before payment of the consideration is due).
Contract liabilities – A contract liability is the obligation to transfer goods or services to a customer for which Brookfield Renewable has received consideration (or an amount of consideration is due) from the customer. If a customer pays consideration before Brookfield Renewable transfers goods or services to the customer, a contract liability is recognized when the payment is made or the payment is due (whichever is earlier). Contract liabilities are recognized as revenue when Brookfield Renewable performs under the contract.
(n) Income taxes
Current income tax assets and liabilities are measured at the amount expected to be paid to tax authorities, net of recoveries, based on the tax rates and laws enacted or substantively enacted at the statement of financial position dates. Current income tax assets and liabilities are included in trade receivables and other current assets and accounts payable and accrued liabilities, respectively.
Deferred tax is recognized on taxable temporary differences between the tax basis and the carrying amounts of assets and liabilities. Deferred tax is not recognized if the temporary difference arises from goodwill or from initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither taxable profit nor accounting profit. Deferred income tax assets are recognized for all deductible temporary differences, carry forwards of unused tax credits and unused tax losses, to the extent that it is probable that deductions, tax credits and tax losses can be utilized. The carrying amount of deferred income tax assets is reviewed at each statement of financial position date and reduced to the extent it is no longer probable that the income tax assets will be recovered. Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the assets are realized or the liabilities settled, using the tax rates and laws enacted or substantively enacted at the statement of financial position dates.
Current and deferred income taxes relating to items recognized directly in OCI are also recognized directly in OCI.
(o) Business combinations
The acquisition of a business is accounted for using the acquisition method. The consideration for an acquisition is measured at the aggregate of the fair values, at the date of exchange, of the assets transferred, the liabilities incurred to former owners of the acquired business, and equity instruments issued by the acquirer in exchange for control of the acquired business. The acquired business’ identifiable assets, liabilities and contingent liabilities that meet the conditions for recognition under IFRS 3 – Business combinations (“IFRS 3”), are recognized at their fair values at the acquisition date, except for income taxes which are measured in accordance with IAS 12 – Income taxes (“IAS 12”), share-based payments which are measured in accordance with IFRS 2 – Share-based payment, liabilities and contingent liabilities which are measured under IAS 37—Provisions, contingent liabilities and contingent assets or IFRIC 21—Levies and non-current assets that are classified as held-for-sale which are measured at fair value less costs to sell in accordance with IFRS 5 – Non-current assets held for sale and discontinued operations. The non-controlling interest in the acquiree is initially measured at the non-controlling interest’s proportion of the net fair value of the identifiable assets, liabilities and contingent liabilities recognized or when applicable, at the fair value of the shares outstanding.
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To the extent that the aggregate of the fair value of consideration paid, the amount of any non-controlling interest and the fair value of any previously held interest in the acquiree exceeds the fair value of the net identifiable tangible and intangible assets acquired, goodwill is recognized. To the extent that this difference is negative, the amount is recognized as a gain in income. Goodwill is not amortized and is not deductible for tax purposes. However, after initial recognition, goodwill will be measured at cost less any accumulated impairment losses. An impairment assessment will be performed at least annually, and whenever circumstances such as significant declines in expected revenues, earnings or cash flows indicate that it is more likely than not that goodwill might be impaired. Goodwill impairment charges are not reversible.
When a business combination is achieved in stages, previously held interests in the acquired entity are re-measured to fair value at the acquisition date, which is the date control is obtained, and the resulting gain or loss, if any, is recognized in income. Amounts arising from interests in the acquired business prior to the acquisition date that have previously been recognized in OCI are reclassified to income. Upon disposal or loss of control of a subsidiary, the carrying amount of the net assets of the subsidiary (including any OCI relating to the subsidiary) are derecognized with the difference between any proceeds received and the carrying amount of the net assets recognized as a gain or loss in income.
Where applicable, the consideration for the acquisition includes any asset or liability resulting from a contingent consideration arrangement, measured at its acquisition-date fair value. Subsequent changes in fair values are adjusted against the cost of the acquisition where they qualify as measurement period adjustments. All other subsequent changes in the fair value of contingent consideration classified as liabilities will be recognized in the consolidated statements of income (loss), whereas changes in the fair values of contingent consideration classified within equity are not subsequently re-measured.
(p) Assets held for sale
Assets and disposal groups are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use. This condition is regarded as met only when the sale is highly probable and the non-current asset or disposal group is available for immediate sale in its present condition. Management must be committed to the sale, which should be expected to qualify for recognition as a completed sale within one year from the date of classification subject to limited exceptions.
When Brookfield Renewable is committed to a sale plan involving loss of control of a subsidiary, all of the assets and liabilities of that subsidiary are classified as held for sale when the criteria described above are met, regardless of whether Brookfield Renewable will retain a non-controlling interest in its former subsidiary after the sale.
Non-current assets and disposal groups classified as held for sale are measured at the lower of their previous carrying amount and fair value less costs to sell.
Assets classified as held for sale and the assets of a disposal group are presented separately from other assets in the consolidated statements of financial position and are classified as current. The liabilities of a disposal group classified as held for sale are presented separately from other liabilities in the consolidated statements of financial position and are classified as current.
Once classified as held for sale, property, plant and equipment and intangible assets are not depreciated or amortized.
(q) Other items
(i) Capitalized costs
Capitalized costs related to CWIP include eligible expenditures incurred in connection with acquisition, construction or production of a qualifying asset. A qualifying asset is an asset that takes a substantial period of time to prepare for its intended use. Interest and borrowing costs related to CWIP are capitalized when activities that are necessary to prepare the asset for its intended use or sale are in progress, expenditures for the asset have been incurred and funds have been used or borrowed to fund the construction or development. Capitalization of costs ceases when the asset is ready for its intended use.
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(ii) Pension and employee future benefits
Pension and employee future benefits are recognized in the consolidated financial statements in respect of employees of the operating entities within Brookfield Renewable. The costs of retirement benefits for defined benefit plans and post-employment benefits are recognized as the benefits are earned by employees. The projected unit credit method, using the length of service and management’s best estimate assumptions, is used to value pension and other retirement benefits. All actuarial gains and losses are recognized immediately through OCI in order for the net pension asset or liability recognized in the consolidated statements of financial position to reflect the full value of the plan deficit or surplus. Net interest is calculated by applying the discount rate to the net defined benefit asset or liability. Changes in the net defined benefit obligation related to service costs (comprising of current service costs, past services costs, gains and losses on curtailments and non-routine settlements), and net interest expense or income are recognized in the consolidated statements of income (loss).
Re-measurements, comprising of actuarial gains or losses, the effect of the asset ceiling, and the return on plan assets (excluding net interest), are recognized immediately in the consolidated statements of financial position with a corresponding debit or credit to OCI in the period in which they occur. Re-measurements are not reclassified to income in subsequent periods. For defined contribution plans, amounts are expensed based on employee entitlement.
(iii) Decommissioning, restoration and environmental liabilities
Legal and constructive obligations associated with the retirement of property, plant and equipment are recorded as liabilities when those obligations are incurred and are measured at the present value of the expected costs to settle the liability, using a discount rate that reflects the current market assessments of the time value of money and the risks specific to the liability. The liability is accreted up to the date the liability will be settled with a corresponding charge to operating expenses. The carrying amount of decommissioning, restoration and environmental liabilities is reviewed annually with changes in the estimates of timing or amount of cash flows added to or deducted from the cost of the related asset.
(iv) Provisions
A provision is a liability of uncertain timing or amount. A provision is recognized if Brookfield Renewable has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation and the amount can be reliably estimated. Provisions are not recognized for future operating losses. The provision is measured at the present value of the best estimate of the expenditures expected to be required to settle the obligation using a discount rate that reflects the current market assessments of the time value of money and the risks specific to the obligation. Provisions are re-measured at each statement of financial position date using the current discount rate. The increase in the provision due to the passage of time is recognized as interest expense.
(v) Interest income
Interest income is earned with the passage of time and is recorded on an accrual basis.
(vi) Government grants
Brookfield Renewable becomes eligible for government grants by constructing or purchasing renewable power generating assets, and by bringing those assets to commercial operation, coupled with a successful application to the applicable program or agency. The assessment of whether or not a project has complied with the conditions and that there is reasonable assurance the grants will be received will be undertaken on a case-by-case basis. Brookfield Renewable reduces the cost of the asset by the amount of the grant. The grant amounts are recognized in income on a systematic basis as a reduction of depreciation over the periods, and in the proportions, in which depreciation on those assets is charged.
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With respect to grants related to income, the government assistance (in the form of the difference between market price and guaranteed fixed price) typically becomes payable once electricity is produced and delivered to the relevant grid. It is at this point that the receipt of the grant becomes reasonably assured, and therefore the grant is recognized as revenue in the month that delivery of the electricity occurs.
(r) Critical estimates
Brookfield Renewable makes estimates and assumptions that affect the carrying value of assets and liabilities, disclosure of contingent assets and liabilities and the reported amount of income and OCI for the year. Actual results could differ from these estimates. The estimates and assumptions that are critical to the determination of the amounts reported in the consolidated financial statements relate to the following:
(i) Property, plant and equipment
The fair value of Brookfield Renewable’s property, plant and equipment is calculated using estimates and assumptions about future electricity prices from renewable sources, anticipated long-term average generation, estimated operating and capital expenditures, future inflation rates, discount rates and terminal value, as described in Note 12 – Property, plant and equipment, at fair value. Judgment is involved in determining the appropriate estimates and assumptions in the valuation of Brookfield Renewable’s property, plant and equipment. See Note 1(s)(iii) – Critical judgments in applying accounting policies – Property, plant and equipment for further details.
Estimates of useful lives and residual values are used in determining depreciation and amortization. To ensure the accuracy of useful lives and residual values, these estimates are reviewed on an annual basis.
(ii) Financial instruments
Brookfield Renewable makes estimates and assumptions that affect the carrying value of its financial instruments, including estimates and assumptions about future electricity prices, long-term average generation, capacity prices, discount rates, the timing of energy delivery and the elements affecting fair value of the tax equity financings. The fair value of interest rate swaps is the estimated amount that another party would receive or pay to terminate the swap agreements at the reporting date, taking into account current market interest rates. This valuation technique approximates the net present value of future cash flows. See Note 5 – Risk management and financial instruments for more details.
(iii) Deferred income taxes
The consolidated financial statements include estimates and assumptions for determining the future tax rates applicable to subsidiaries and identifying the temporary differences that relate to each subsidiary. Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply during the year when the assets are realized or the liabilities settled, using the tax rates and laws enacted or substantively enacted at the consolidated statement of financial position dates. Operating plans and forecasts are used to estimate when the temporary difference will reverse based on future taxable income.
(iv) Decommissioning liabilities
Decommissioning costs will be incurred at the end of the operating life of some of Brookfield Renewable’s assets. These obligations are typically many years in the future and require judgment to estimate. The estimate of decommissioning costs can vary in response to many factors including changes in relevant legal, regulatory, and environmental requirements, the emergence of new restoration techniques or experience at other power generating facilities. Inherent in the calculations of these costs are assumptions and estimates including the ultimate settlement amounts, inflation factors, discount rates, and timing of settlements.
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(v) Impairment of goodwill
The impairment assessment of goodwill requires estimation of the value-in-use or fair value less costs of disposal of the CGUs or groups of CGUs to which goodwill has been allocated.
Brookfield Renewable uses the following critical assumptions and estimates for the value-in-use method: the circumstances that gave rise to the goodwill, timing and amount of future cash flows expected from the CGUs; discount rates; terminal capitalization rates; terminal valuation dates and future leverage assumptions.
(s) Critical judgments in applying accounting policies
The following are the critical judgments that have been made in applying the accounting policies used in the consolidated financial statements that have the most significant effect on the amounts in the consolidated financial statements:
(i) Preparation of consolidated financial statements
These consolidated financial statements present the financial position, results of operations and cash flows of Brookfield Renewable. Brookfield Renewable exercises judgment in determining whether non-wholly owned subsidiaries are controlled by Brookfield Renewable. Brookfield Renewable’s judgment included the determination of (i) how the relevant activities of the subsidiary are directed; (ii) whether the rights of shareholdings are substantive or protective in nature; and (iii) Brookfield Renewable’s ability to influence the returns of the subsidiary.
(ii) Common control transactions
Common control business combinations specifically fall outside of scope of IFRS 3 and as such management has used its judgment to determine an appropriate policy to account for these transactions by considering other relevant accounting guidance that is within the framework of principles in IFRS and that reflects the economic reality of the transactions. Brookfield Renewable’s policy is to record assets and liabilities recognized as a result of transactions between entities under common control at the carrying value on the transferor’s financial statements, and to have the consolidated statements of income (loss), consolidated statements of comprehensive income, consolidated statements of financial position, consolidated statements of changes in equity and consolidated statements of cash flows reflect the results of the combined entities for all periods presented for which the entities were under the transferor’s common control, irrespective of when the combination takes place. Differences between the consideration given and the assets and liabilities received are recorded directly to equity.
(iii) Property, plant and equipment
The accounting policy relating to Brookfield Renewable’s property, plant and equipment is described in Note 1(g) – Property, plant and equipment and revaluation method. In applying this policy, judgment is used in determining whether certain costs are additions to the carrying amount of the property, plant and equipment as opposed to repairs and maintenance that are expensed when incurred. If an asset has been developed, judgment is required to identify the point at which the asset is capable of being used as intended and to identify the directly attributable costs to be included in the carrying value of the development asset. The useful lives of property, plant and equipment are determined by independent engineers periodically with an annual review by management.
Annually, Brookfield Renewable determines the fair value of its property, plant and equipment using a methodology that it has judged to be reasonable. The methodology for hydroelectric assets is generally a twenty-year discounted cash flow model. Twenty years is the period considered reasonable as Brookfield Renewable has twenty-year capital plans and it believes a reasonable third party would be indifferent between extending the cash flows further in the model versus using a discounted terminal value. The methodology for wind, solar and storage & other assets is to align the model length with the expected remaining useful life of the subject assets.
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The valuation model incorporates future cash flows from long-term power purchase agreements that are in place where it is determined that the power purchase agreements are linked specifically to the related power generating assets. With respect to estimated future generation that does not incorporate long-term power purchase agreement pricing, the cash flow model uses estimates of future electricity prices using broker quotes from independent sources for the years in which there is a liquid market. The valuation of generation not linked to long-term power purchase agreements also requires the development of a long-term estimate of future electricity prices. In this regard the valuation model uses a discount to the all-in cost of construction with a reasonable return, to secure energy from a new renewable resource with a similar generation profile to the asset being valued as the benchmark that will establish the market price for electricity for renewable resources.
Brookfield Renewable’s long-term view is anchored to the cost of securing new energy from renewable sources to meet future demand growth by the years 2027 to 2035 in North America, 2030 in Colombia, and 2027 in Brazil. The year of new entry is viewed as the point when generators must build additional capacity to maintain system reliability and provide an adequate level of reserve generation with the retirement of older coal-fired plants and rising environmental compliance costs in North America and Europe, and overall increasing demand in Colombia and Brazil. For the North American and European businesses, Brookfield Renewable has estimated a discount to these new-build renewable asset prices to determine renewable electricity prices for hydroelectric, solar and wind facilities. In Brazil and Colombia, the estimate of future electricity prices is based on a similar approach as applied in North America using a forecast of the all-in cost of development.
Terminal values are included in the valuation of hydroelectric assets in North America and Colombia. For the hydroelectric assets in Brazil, cash flows have been included based on the duration of the authorization or useful life of a concession asset with consideration of a one-time thirty-year renewal on qualifying hydroelectric assets.
Discount rates are determined each year by considering the current interest rates, average market cost of capital as well as the price risk and the geographical location of the operational facilities as judged by management. Inflation rates are also determined by considering the current inflation rates and the expectations of future rates by economists. Operating costs are based on long-term budgets escalated for inflation. Each operational facility has a twenty-year capital plan that it follows to ensure the maximum life of its assets is achieved. Foreign exchange rates are forecasted by using the spot rates and the available forward rates, extrapolated beyond the period available. The inputs described above to the discounted cash flow model require management to consider facts, trends and plans in making its judgments as to what derives a reasonable fair value of its property, plant and equipment.
(iv) Financial instruments
The accounting policy relating to Brookfield Renewable’s financial instruments is described in Note 1(l) – Financial instruments. In applying the policy, judgments are made in applying the criteria set out in IFRS 9 to record financial instruments at fair value through profit and loss, fair value through other comprehensive income and the assessments of the effectiveness of hedging relationships.
For power purchase agreements accounted for under IFRS 9 (“IFRS 9 PPAs”) that have unobservable values, Brookfield Renewable determines the fair value of these IFRS 9 PPAs using a discounted cash flow model based on the term of the contract and applies judgements surrounding the inputs used within the valuation model. The valuation model incorporates various inputs and assumptions including future power prices, contractual prices, contractual volumes and discount rates. Future power prices are based on broker quotes from independent sources and for IFRS 9 PPAs with no available broker quotes, future fuel driven merchant prices are incorporated within the model. Contractual prices are stipulated within each individual agreement, contractual volumes are either specified within the agreement or determined using future generation of the power generating assets and discount rate used in the valuation model is the credit adjusted risk free rate.
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(v) Deferred income taxes
The accounting policy relating to Brookfield Renewable’s income taxes is described in Note 1(n) – Income taxes. In applying this policy, judgments are made in determining the probability of whether deductions, tax credits and tax losses can be utilized.
(t) Recently adopted accounting standards
International Tax Reform—Amendments to IAS 12 – Pillar Two model rules
In May 2023, the IASB issued amendments to IAS 12 “Income Taxes” to give entities temporary mandatory relief from accounting for deferred taxes arising from the Organization for Economic Co-operation and Developments (“OECD”) international tax reform. The amendments are effective immediately upon their issue and retrospectively in accordance with IAS 8 “Accounting Policies, Changes in Accounting Estimates and Errors,” except for some targeted disclosure requirements which become effective for annual reporting periods on or after January 1, 2023. Brookfield Renewable operates in countries which have enacted new legislation to implement the global minimum top-up tax. Brookfield Renewable has applied the temporary mandatory relief from recognizing and disclosing information related to the top-up tax and will account for it as a current tax when it is incurred. The newly enacted legislation is effective from January 1, 2024 and there is no current tax impact for the year ended December 31, 2023. The global minimum top-up tax is not anticipated to have a significant impact on the financial position of Brookfield Renewable.
(u) Future changes in accounting policies
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. Brookfield Renewable is currently assessing the impact of these amendments.
There are currently no other future changes to IFRS with potential impact on Brookfield Renewable.
2. PRINCIPAL SUBSIDIARIES
The following table lists the subsidiaries of Brookfield Renewable which significantly affect its financial position and results of operations as at December 31, 2023:
| Jurisdiction of Incorporation or Organization | Percentage of voting securities owned or controlled (%) | |||||
BP Brazil US Subco LLC | Delaware | 100 | ||||
Brookfield BRP Canada Corp. | Ontario | 100 | ||||
Brookfield BRP Europe Holdings (Bermuda) Limited | Bermuda | 100 | ||||
Brookfield Power US Holding America Co. | Delaware | 100 | ||||
Isagen S.A. E.S.P.(1) | Colombia | 99.70 | ||||
TerraForm Power Parent, LLC(1) | New York | 100 | ||||
| (1) | Voting control held, in whole or in part, through voting agreements with Brookfield and co-investment. |
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3. ACQUISITIONS
The following investments were accounted for using the acquisition method by Brookfield Renewable, and the results of operations have been included in the audited annual consolidated financial statements since the date of acquisition.
Brazil Wind Portfolio
On March 3, 2023, Brookfield Renewable, together with its institutional partners, completed the acquisition of 100% interest in a 136 MW portfolio of operating wind assets in Brazil. The total purchase price of this acquisition was $95 million (approximately $24 million net to Brookfield Renewable), comprising of closing consideration, including working capital and closing adjustments of $90 million (approximately $23 million net to Brookfield Renewable) and $5 million of deferred consideration (approximately $1 million net to the Brookfield Renewable). Brookfield Renewable holds an approximately 25% economic interest. The total transaction costs related to the acquisition were less than $1 million and have been classified under Other in the consolidated statement of income (loss). If the acquisition had taken place at the beginning of the year, the revenue from the Brazil Wind Portfolio would have been $24 million for the year ended December 31, 2023.
Brazil Distributed Generation
On May 4, 2023, Brookfield Renewable, together with its institutional partners, completed the acquisition of a 90% interest in a distributed generation platform with approximately 730 MW of development pipeline in Brazil. The purchase price of this acquisition was $4 million (approximately $1 million net to Brookfield Renewable) with fair value of assets acquired of $5 million and liabilities assumed of $1 million. Brookfield Renewable holds an approximately 20% economic interest.
U.S. Renewable Portfolio
On October 25, 2023, Brookfield Renewable, together with its institutional partners, completed the acquisition of a 100% interest in a fully integrated developer and operator of renewable power assets in the United States with 5,900 MW of operating and under construction assets, with a 6,100 MW development pipeline for $1,083 million (approximately $308 million net to Brookfield Renewable) comprised of $565 million (approximately $161 million net to Brookfield Renewable) plus $518 million of deferred consideration (approximately $147 million net to Brookfield Renewable). Total fair value of net assets acquired, net of non-controlling interest was $1,453 million. The total transaction costs related to the acquisition were $6 million (approximately $2 million net to Brookfield Renewable) and have been classified under Other in the consolidated statement of income (loss). If the acquisition had taken place at the beginning of the year, the revenue from the U.S. Renewable Portfolio would have been $401 million for the year ended December 31, 2023.
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India Renewable Portfolio
On April 22, 2023, Brookfield Renewable, together with institutional partners, acquired an approximately 7% equity interest (1% net to Brookfield Renewable) in a leading commercial and industrial renewable development platform in India with 4,500 MW of operating and development pipeline for INR 2.5 billion ($30 million) (approximately INR 500 million ($6 million) net to Brookfield Renewable). The investment was recognized as an equity accounted investment. During the second and third quarters of 2023, Brookfield Renewable, together with institutional partners, subscribed for incremental shares for an aggregate INR 1.7 billion ($21 million) (approximately INR 340 million ($4 million) net to Brookfield Renewable).
On October 26, 2023, Brookfield Renewable together with its institutional partners, subscribed for additional shares for INR 9.8 billion ($118 million) (approximately INR 2 billion ($24 million) net to Brookfield Renewable). This subscription increased the total interest to approximately 37.54% (approximately 7% net to Brookfield Renewable) for aggregate consideration of approximately $168 million (approximately $34 million net to Brookfield Renewable) and results in control of the board of directors. Through the transaction Brookfield Renewable acquired the business at a total fair value of $447 million on a 100% basis. As such, Brookfield Renewable derecognized the existing equity accounted investment and recognized the transaction as a business combination. The total transaction costs related to the acquisition were $2 million (less than $1 million net to Brookfield Renewable) and have been classified under Other in the consolidated statement of income (loss). If the acquisition had taken place at the beginning of the year, the revenue would have been approximately $108 million for the year ended December 31, 2023.
Brazil Wind Portfolio
On November 6, 2023, Brookfield Renewable, together with its institutional partners, completed the acquisition of a 100% interest in a 60 MW portfolio of operating wind assets in Brazil for total consideration of R$113 million ($23 million) (R$28 million ($6 million) net to Brookfield Renewable). Brookfield Renewable holds an approximately 25% economic interest. The total transaction costs related to the acquisition were less than $1 million and have been classified under Other in the consolidated statement of income (loss). If the acquisition had taken place at the beginning of the year, the revenue from the Brazil Wind Portfolio would have been $9 million for the year ended December 31, 2023.
U.K. Wind Portfolio
On December 14, 2023, Brookfield Renewable, together with its institutional partners, completed the acquisition of a 100% interest in a leading independent UK renewables developer with 260 MW onshore wind assets, 800 MW near-term development and another 3 GW of later stage projects for a total purchase price of £489 million ($625 million) (£232 million ($296 million) net to Brookfield Renewable) comprising of closing consideration of £477 million ($610 million) (£226 million ($289 million) net to Brookfield Renewable) and £12 million ($15 million) (£6 million ($7 million) net to Brookfield Renewable) of contingent consideration. The total transaction costs related to the acquisition were $7 million (approximately $3 million net to Brookfield Renewable) and have been classified under Other in the consolidated statement of income (loss). If the acquisition had taken place at the beginning of the year, the revenue from the U.K. Wind Portfolio would have been $100 million for the year ended December 31, 2023.
F - 37
The purchase price allocations, at fair value, as at December 31, 2023, with respect to the business combinations are as follows:
| (MILLIONS) | Brazil Wind Portfolio | U.S. Renewable Portfolio(1) | India Renewable Portfolio(1) | Brazil Wind Portfolio(1) | U.K. Wind Portfolio(1) | Total | ||||||||||||||||||
Cash and cash equivalents | $ | 10 | $ | 88 | $ | 27 | $ | 1 | $ | 60 | $ | 186 | ||||||||||||
Restricted cash | — | 111 | 32 | — | 1 | 144 | ||||||||||||||||||
Trade receivables and other current assets | 9 | 127 | 69 | 4 | 26 | 235 | ||||||||||||||||||
Property, plant and equipment | 130 | 3,937 | 851 | 40 | 995 | 5,953 | ||||||||||||||||||
Deferred tax assets | — | — | 22 | — | — | 22 | ||||||||||||||||||
Financial instruments assets(2) | — | 38 | — | — | 8 | 46 | ||||||||||||||||||
Equity accounted investments | — | 36 | 8 | — | — | 44 | ||||||||||||||||||
Other non-current assets | 19 | 54 | 39 | 5 | — | 117 | ||||||||||||||||||
Accounts payable and accrued liabilities | (22 | ) | (88 | ) | (62 | ) | (2 | ) | (13 | ) | (187 | ) | ||||||||||||
Current portion of non-recourse borrowings | (4 | ) | (187 | ) | (35 | ) | (2 | ) | (61 | ) | (289 | ) | ||||||||||||
Financial instruments liabilities(2) | — | (1,037 | ) | — | — | (65 | ) | (1,102 | ) | |||||||||||||||
Non-recourse borrowings | (45 | ) | (905 | ) | (581 | ) | (17 | ) | (236 | ) | (1,784 | ) | ||||||||||||
Deferred income tax liabilities | — | (29 | ) | (48 | ) | — | (151 | ) | (228 | ) | ||||||||||||||
Provisions | (2 | ) | (219 | ) | — | — | (6 | ) | (227 | ) | ||||||||||||||
Other long-term liabilities | — | (130 | ) | (19 | ) | (6 | ) | (58 | ) | (213 | ) | |||||||||||||
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Fair value of net assets acquired | 95 | 1,796 | 303 | 23 | 500 | 2,717 | ||||||||||||||||||
Non-controlling interests | — | (343 | ) | (37 | ) | — | (34 | ) | (414 | ) | ||||||||||||||
Goodwill | — | — | 181 | — | 159 | 340 | ||||||||||||||||||
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Total fair value of net assets acquired including goodwill, net of non-controlling interests | $ | 95 | $ | 1,453 | $ | 447 | $ | 23 | $ | 625 | $ | 2,643 | ||||||||||||
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| (1) | The purchase price allocation is preliminary as at December 31, 2023. Brookfield Renewable is currently assessing the fair value of Property, plant and equipment, Financial instruments, Provisions, Deferred tax, Non-recourse borrowings, Other long-term liabilities and Goodwill for the purchase price allocation and expect to finalize the balances in 2024 within the one year measurement period. Refer to Note 7—Other income for more details. |
| (2) | Includes both short-term and long-term balances. |
F - 38
The following investments were accounted for using the equity method as Brookfield Renewable has significant influence through its position in the business, and the results of operations have been included in the audited annual consolidated financial statements since the date of investment.
India Sustainable Agricultural Solutions
On February 16, 2023, Brookfield Renewable, together with institutional partners, acquired an approximately 4% equity interest in a sustainable agricultural solutions company in India for INR 7 billion ($86 million) (approximately INR 1.4 billion ($17 million) net to Brookfield Renewable).
X-Elio
On October 10, 2023, Brookfield Renewable, together with its institutional partners, completed the acquisition of the remaining 50% interest in X-Elio for total consideration of $893 million ($76 million net to Brookfield Renewable for approximately 4.2% interest). Brookfield Renewable holds a 17% economic interest in the investment and continues to account for the investment as an equity accounted investment.
Westinghouse
On November 7, 2023, Brookfield Renewable, together with institutional partners, through a strategic partnership with Cameco Corporation, acquired 100% of Westinghouse, one of the world’s largest nuclear services businesses, from our affiliate Brookfield Business Partners L.P. and its institutional partners, for $4.37 billion ($442 million net to Brookfield Renewable). Brookfield Renewable, together with institutional partners, own an aggregate 51% interest (10.11% net to Brookfield Renewable) with Cameco owning 49%.
Completed in 2022
The following investments were accounted for using the acquisition method by Brookfield Renewable, and the results of operations have been included in the audited annual consolidated financial statements since the date of acquisition.
U.S. Utility-scale Solar Portfolio
On January 24, 2022, Brookfield Renewable, together with its institutional partners, completed the acquisition of 100% interest in a utility scale development business with a 20 GW portfolio of utility-scale solar and energy storage development assets in the United States. The total purchase price of this acquisition was $760 million comprising of closing consideration including working capital and closing adjustments of $702 million, plus $58 million of additional incentive payments to be paid contingent upon certain milestones being achieved. The total transaction costs related to the acquisition were $2 million. Brookfield Renewable holds an approximately 20% economic interest.
Europe Utility-scale Solar Portfolio
On February 2, 2022, Brookfield Renewable, together with institutional partners, completed the acquisition of 100% interest in a 1.7 GW portfolio of utility-scale solar development assets in Germany. The total purchase price of this acquisition was €81 million ($90 million) comprising of closing consideration including working capital and closing adjustments, was approximately €66 million ($73 million), plus €15 million ($17 million) of additional incentive payments to be paid contingent upon certain milestones being achieved. The total transaction costs related to the acquisition were €2 million ($2 million). Brookfield Renewable holds an approximately 20% economic interest.
F - 39
Chile Distributed Generation Portfolio
On March 17, 2022, Brookfield Renewable, together with institutional partners, completed the acquisition of 83% interest in a 437 MW distributed generation portfolio of high quality operating and development assets in Chile. The purchase price of this acquisition, including working capital and closing adjustments, was approximately $31 million. Through the transaction Brookfield Renewable acquired the business at a total fair value of $37 million on a 100% basis. The total transaction costs related to the acquisition was $1 million. Brookfield Renewable holds an approximately 20% economic interest in the investment.
During the fourth quarter of 2022, Brookfield Renewable, together with institutional partners, contributed an additional approximate $4 million to fund the development pipeline, increasing the ownership interest from 83% to 84%.
U.S. Distributed Generation Portfolio
On September 28, 2022, Brookfield Renewable, together with its institutional partners, completed the acquisition of 100% interest in an integrated distributed generation developer with approximately 500 MW of contracted operating and under construction assets, and an 1.8 GW of development pipeline in the United States. The purchase price of this acquisition was $614 million, consisting of $538 million initial equity price, a $22 million working capital and closing adjustments and $98 million to repay previously existing non-recourse borrowings (in aggregate $123 million net to Brookfield Renewable). The total transaction costs related to the acquisition were $5 million. Brookfield Renewable holds an approximately 20% economic interest. If the acquisition had taken place at the beginning of the year, the revenue from the U.S. Distributed Generation Portfolio would have been $46 million for the year ended December 31, 2022.
During the year ended December 31, 2023, the purchase price allocation was finalized and as a result the purchase price allocation as at December 31, 2022 does not correspond to the figures as disclosed in the 2022 Annual Report. The effect of the purchase price allocation finalization resulted in a decrease of $73 million to Goodwill and a corresponding increase of $36 million to Property, plant and equipment, a decrease of $7 million to Deferred tax assets, $33 million to Non-recourse borrowings, $3 million to Provisions, and $8 million to Financial instrument liabilities.
F - 40
The final purchase price allocation, at fair value, as at December 31, 2023, with respect to the U.S. Distributed Generation Portfolio business combination is as follows:
| (MILLIONS) | U.S. Distributed Generation Portfolio | |||
Cash and cash equivalents | $ | 33 | ||
Restricted cash | 6 | |||
Trade receivables and other current assets | 13 | |||
Property, plant and equipment | 744 | |||
Financial instruments assets | 10 | |||
Deferred income tax assets | 3 | |||
Other non-current assets | 21 | |||
Accounts payable and accrued liabilities | (66 | ) | ||
Current portion of non-recourse borrowings | (10 | ) | ||
Financial instruments liabilities | (7 | ) | ||
Non-recourse borrowings | (312 | ) | ||
Provisions | (22 | ) | ||
Other long-term liabilities | (35 | ) | ||
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Fair value of net assets acquired | 378 | |||
Goodwill | 236 | |||
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Total fair value of net assets acquired including goodwill | $ | 614 | ||
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U.S. Wind Portfolio
On December 16, 2022, Brookfield Renewable, together with institutional partners, completed the acquisition of 100% interest in a renewable developer with a portfolio of over 800 MW of operating wind assets and pipeline of over 22 GW of solar and storage assets in the United States. The purchase price of this acquisition, including working capital and closing adjustments, was approximately $1,092 million. The total transaction costs related to the acquisition were $4 million. Brookfield Renewable holds an approximately 20% economic interest. If the acquisition had taken place at the beginning of the year, the revenue from the U.S. Wind Portfolio would have been $82 million for the year ended December 31, 2022.
During the year ended December 31, 2023, the purchase price allocation was finalized and as a result the purchase price allocation as at December 31, 2022 does not correspond to the figures as disclosed in the 2022 Annual Report. The effect of the purchase price allocation finalization included a decrease of $96 million to Property, plant and equipment, $6 million in Assets held for sale, $12 million to Other non-current assets, $97 million to Financial Instrument liabilities, $23 million to Other long-term liabilities, $6 million in Provisions. and an increase of $9 million in Liabilities classified as held for sale.
F - 41
The final purchase price allocation, at fair value, as at December 31, 2023, with respect to the U.S. Wind Portfolio business combination is as follows:
| (MILLIONS) | U.S. Wind Portfolio | |||
Cash and cash equivalents | $ | 26 | ||
Restricted cash | 5 | |||
Trade receivables and other current assets | 13 | |||
Assets classified as held for sale | 234 | |||
Property, plant and equipment | 1,700 | |||
Financial instruments assets | 2 | |||
Other non-current assets | 10 | |||
Accounts payable and accrued liabilities | (38 | ) | ||
Liabilities classified as held for sale | (143 | ) | ||
Financial instruments liabilities | (628 | ) | ||
Provisions | (22 | ) | ||
Other long-term liabilities | (45 | ) | ||
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Fair value of net assets acquired | 1,114 | |||
Non-controlling interests | (23 | ) | ||
Goodwill | 1 | |||
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Total fair value of net assets acquired including goodwill, net of non-controlling interests | $ | 1,092 | ||
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The purchase price allocations, at fair value, as at December 31, 2022, with respect to the business combinations are as follows:
| (MILLIONS) | Chile Distributed Generation Portfolio | Europe Utility- scale Solar Portfolio | U.S. Utility- scale Solar Portfolio (1) | U.S. Distributed Generation Portfolio(2)(3) | US Wind Portfolio(2)(4) | Total | ||||||||||||||||||
Cash and cash equivalents | $ | 2 | $ | 3 | $ | 22 | $ | 33 | $ | 26 | $ | 86 | ||||||||||||
Restricted cash | — | — | 6 | 6 | 5 | 17 | ||||||||||||||||||
Trade receivables and other current assets | 2 | 30 | 48 | 13 | 13 | 106 | ||||||||||||||||||
Assets classified as held for sale(4) | — | — | — | — | 240 | 240 | ||||||||||||||||||
Property, plant and equipment | 21 | 1 | 561 | 708 | 1,796 | 3,087 | ||||||||||||||||||
Deferred tax assets | — | — | — | 10 | — | 10 | ||||||||||||||||||
Financial instruments assets(5) | — | — | — | 10 | 2 | 12 | ||||||||||||||||||
Other non-current assets | 1 | — | 4 | 21 | 22 | 48 | ||||||||||||||||||
Accounts payable and accrued liabilities | (1 | ) | (5 | ) | (32 | ) | (66 | ) | (38 | ) | (142 | ) | ||||||||||||
Current portion of non-recourse borrowings | — | — | — | (9 | ) | — | (9 | ) | ||||||||||||||||
Liabilities classified as held for sale(4) | — | — | — | — | (135 | ) | (135 | ) | ||||||||||||||||
Financial instruments liabilities(5) | — | — | (15 | ) | (15 | ) | (725 | ) | (755 | ) | ||||||||||||||
Non-recourse borrowings | (6 | ) | — | (48 | ) | (346 | ) | — | (400 | ) | ||||||||||||||
Deferred income tax liabilities | — | (7 | ) | (43 | ) | — | — | (50 | ) | |||||||||||||||
Provisions | — | — | — | (25 | ) | (29 | ) | (54 | ) | |||||||||||||||
Other long-term liabilities | — | — | (30 | ) | (35 | ) | (68 | ) | (133 | ) | ||||||||||||||
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Fair value of net assets acquired | 19 | 22 | 473 | 305 | 1,109 | 1,928 | ||||||||||||||||||
Non-controlling interests | — | — | — | — | (26 | ) | (26 | ) | ||||||||||||||||
Goodwill | 18 | 68 | 287 | 309 | 9 | 691 | ||||||||||||||||||
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Total fair value of net assets acquired including goodwill, net of non-controlling interests | $ | 37 | $ | 90 | $ | 760 | $ | 614 | $ | 1,092 | $ | 2,593 | ||||||||||||
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| (1) | During the year ended December 31, 2022, Brookfield Renewable recorded purchase price allocation adjustment of $176 million primarily to Property, plant and equipment, Deferred tax asset, Other non-current assets, Deferred income tax liabilities and Other long-term liabilities. |
| (2) | The purchase price allocation was preliminary as at December 31, 2022 and was finalized during the year ended December 31, 2023. |
| (3) | During the ended December 31, 2022, Brookfield Renewable recorded purchase price allocation adjustments of $97 million primarily to Property, plant and equipment, at fair value, Deferred tax assets and Deferred income tax liabilities. |
| (4) | Refer to Note 4 - Disposal of assets. |
| (5) | Includes both short-term and long-term balances. |
The following investments were accounted for using the equity method as Brookfield Renewable has significant influence through its position in the business, and the results of operations have been included in the audited annual consolidated financial statements since the date of investment.
Powen
In February 2022, Brookfield Renewable, together with institutional partners, acquired an initial 16% interest in a DG solar development business in Spain and Mexico with approximately 700 MW of operating and development assets for $22 million ($6 million net to Brookfield Renewable). During the course of 2022, Brookfield Renewable, together with institutional partners, subscribed for additional shares for $34 million ($7 million net to Brookfield Renewable). This subscription increased our interest to approximately 32% (6% net to Brookfield Renewable)
In the second and third quarter of 2023, Brookfield Renewable, together with its institutional partner, subscribed for additional shares in Powen for $49 million ($10 million net to Brookfield Renewable). These subscriptions increased the total interest in Powen to 44% (8.8% net to Brookfield Renewable). Refer to Note 19 - Equity-accounted investments for more details.
Island Aggregator LP
On June 20, 2022, Brookfield Renewable, together with institutional partners, committed to invest $500 million, of which $122 million was deployed for a 20% stake in common equity into a private owner and operator of long-term, U.S. denominated, contracted power and utility assets across the Americas with 1.2 GW of installed capacity and approximately 1.3 GW development pipeline. Brookfield Renewable holds a 20% interest in this investment through an intermediate entity.
California Resources Corporation
On August 3, 2022, Brookfield Renewable, together with its institutional partners, formed a joint venture with California Resources Corporation (“CRC”) to establish a Carbon Management Business that will develop carbon capture and storage in California. Brookfield Renewable, together with its institutional partners, has committed to invest up to $500 million to fund the development of identified carbon capture and storage projects in California. This includes an initial investment of approximately $137 million, of which $48 million was deployed during the year ended December 31, 2022, which includes a put option that offers strong downside protection at a pre-determined rate of return. Brookfield Renewable holds an approximate 10% economic interest.
F - 44
California Bioenergy (“Calbio”)
On December 21, 2022, Brookfield Renewable, together with its institutional partners, closed its purchase of a 10% interest in a developer, operator and owner of renewable natural gas assets in the U.S. with an initial equity commitment of $150 million ($30 million net to Brookfield Renewable) and secured the option to invest up to approximately $350 million ($70 million net to Brookfield Renewable) of follow-on equity capital for future projects meeting our risk-return requirements. Brookfield Renewable holds an approximate 2% economic interest.
Completed in 2021
The following investments were accounted for using the acquisition method, and the results of operations have been included in the audited annual consolidated financial statements since the date of acquisition.
Oregon Wind Portfolio
On March 24, 2021, Brookfield Renewable, together with institutional partners, completed the acquisition of 100% of a portfolio of three wind generation facilities of approximately 845 MW and development projects of approximately 400 MW (together, “Oregon Wind Portfolio”) located in Oregon, United States. The purchase price of this acquisition, including working capital and closing adjustments, was approximately $744 million. The total transaction costs of $6 million were expensed as incurred and have been classified under Other in the consolidated statement of income (loss). Brookfield Renewable holds a 25% economic interest.
This investment was accounted for using the acquisition method, and the results of operations have been included in the consolidated financial statements since the date of the acquisition. If the acquisition had taken place at the beginning of the year, the revenue from the Oregon Wind Portfolio would have been $183 million for the year ended December 31, 2021.
During March 31, 2022, the purchase price allocation was finalized with no material changes from the purchase price allocation as at December 31, 2021 as disclosed in the 2021 Annual Report.
U.S. Distributed Generation Portfolio
On March 31, 2021, Brookfield Renewable, together with institutional partners, completed the acquisition of 100% of a distributed generation business (the “U.S. Distributed Generation Portfolio”) comprised of 360 MW of operating and under construction assets across approximately 600 sites and 700 MW of development assets, all in the United States. The purchase price of this acquisition, including working capital and closing adjustments, was approximately $684 million. The total transaction costs of $2 million were expensed as incurred and have been classified under Other in the consolidated statement of income (loss). Brookfield Renewable holds a 25% economic interest.
This investment was accounted for using the acquisition method, and the results of operations have been included in the consolidated financial statements since the date of the acquisition. If the acquisition had taken place at the beginning of the year, the revenue from the U.S. Distributed Generation Portfolio would have been $79 million for the year ended December 31, 2021.
F - 45
The purchase price allocation, at fair value, as at December 31, 2021, with respect to the business combinations are as follows:
| (MILLIONS) | Oregon Wind Portfolio | U.S. Distributed Generation Portfolio | Total | |||||||||
Cash and cash equivalents | $ | 1 | $ | 1 | $ | 2 | ||||||
Restricted cash | 49 | 5 | 54 | |||||||||
Trade receivables and other current assets | 28 | 23 | 51 | |||||||||
Property, plant and equipment | 1,643 | 723 | 2,366 | |||||||||
Current liabilities | (10 | ) | (6 | ) | (16 | ) | ||||||
Current portion of non-recourse borrowings | (74 | ) | (7 | ) | (81 | ) | ||||||
Financial instruments | (16 | ) | — | (16 | ) | |||||||
Non-recourse borrowings | (761 | ) | (133 | ) | (894 | ) | ||||||
Provisions | (83 | ) | (16 | ) | (99 | ) | ||||||
Other long-term liabilities | (33 | ) | (23 | ) | (56 | ) | ||||||
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Fair value of net assets acquired | 744 | 567 | 1,311 | |||||||||
Goodwill | — | 117 | 117 | |||||||||
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The following investments were accounted for using the equity method as Brookfield Renewable has significant influence through its position in the business, and the results of operations have been included in the audited annual consolidated financial statements since the date of investment.
Polenergia
In the first quarter of 2021, Brookfield Renewable, together with its institutional partners, closed its purchase of a 23% interest in a large scale renewable business in Poland, in connection with its previously announced tender offer alongside the current majority shareholder, at a cost of approximately $175 million (approximately $44 million net to Brookfield Renewable for a 6% interest). Brookfield Renewable, together with its institutional partners and the current majority shareholder, holds a 75% interest in the company.
In the first quarter of 2022, Brookfield Renewable, together with its institutional partner, subscribed for additional shares in Polenergia. This subscription increased the total interest in Polenergia to 32% (8% net to Brookfield Renewable).
4. DISPOSAL OF ASSETS
On March 17, 2023, Brookfield Renewable’s institutional partners completed the sale of a 78% interest in a 378 MW operating hydroelectric portfolio in the U.S., of which 28% was sold to affiliates of Brookfield Corporation. Brookfield Renewable retained its 22% interest in the investment and accordingly, did not receive any proceeds from the sale. Subsequent to the completion of the sale, Brookfield Renewable no longer consolidates this investment and recognized its interest as an equity-accounted investment. As a result of the disposition, Brookfield Renewable derecognized $667 million of total assets and $191 million of total liabilities from the consolidated statements of financial position. Brookfield Renewable’s post-tax portion of the accumulated revaluation surplus of $34 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.
F - 46
On May 17, 2023, Brookfield Renewable, together with its institutional partners, completed the sale of wind assets in the U.S. that were acquired in 2022 for proceeds of approximately $217 million ($14 million net to Brookfield Renewable) net of transaction fees. There was no gain or loss on disposition recognized in the consolidated statements of income (loss) as a result of the disposition. Brookfield Renewable derecognized $246 million of total assets, $155 million of total liabilities, and non-controlling interest of $23 million from the consolidated statements of financial position.
On September 20, 2023, Brookfield Renewable, together with its institutional partners, completed the sale of its 100% interest in a 95 MW portfolio of wind assets in Uruguay for proceeds of approximately $112 million ($65 million net to Brookfield Renewable) net of transaction fees. As a result of the disposition, Brookfield Renewable derecognized $238 million of total assets and $193 million of total liabilities from the consolidated statements of financial position. As a result of the disposition, accumulated other comprehensive income of $5 million was reclassified to profit and loss. This resulted in a gain on disposition of $72 million ($42 million net to Brookfield Renewable) recognized within Other income in the consolidated statements of income (loss).
On September 20, 2023, Brookfield Renewable, together with its institutional partners, completed the sale of its 100% interest in a 26 MW solar asset in Uruguay for proceeds of approximately $41 million ($13 million net to Brookfield Renewable). As a result of the disposition, Brookfield Renewable derecognized $43 million of total assets, and $1 million of total liabilities from the consolidated statements of financial position. As a result of the disposition, Brookfield Renewable’s post-tax portion of the accumulated revaluation surplus of $13 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.
5. RISK MANAGEMENT AND FINANCIAL INSTRUMENTS
Brookfield Renewable’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. Brookfield Renewable uses financial instruments primarily to manage these risks.
The sensitivity analysis discussed below reflects the risks associated with instruments that Brookfield Renewable considers are market sensitive and the potential loss resulting from one or more selected hypothetical changes. Therefore, the discussion below is not intended to fully reflect Brookfield Renewable’s risk exposure.
(a) Market risk
Market risk is defined for these purposes as the risk that the fair value or future cash flows of a financial instrument held by Brookfield Renewable will fluctuate because of changes in market prices.
Brookfield Renewable faces market risk from foreign currency assets and liabilities, the impact of changes in interest rates, and floating rate liabilities. Market risk is managed by funding assets with financial liabilities in the same currency and with similar interest rate characteristics and holding financial contracts, such as interest rate swaps and foreign exchange contracts, to minimize residual exposures. Financial instruments held by Brookfield Renewable that are subject to market risk include borrowings and financial instruments, such as interest rate, currency and commodity contracts. The categories of financial instruments that can give rise to significant variability are described below:
F - 47
(i) Electricity price risk
Brookfield Renewable aims to sell electricity under long-term contracts to secure stable prices and mitigate its exposure to wholesale markets. Electricity price risk arises from the sale of Brookfield Renewable’s uncontracted generation and is mitigated by entering into short-term energy derivative contracts. Electricity price risk is defined for these purposes as the risk that the fair value or future cash flows of a financial instrument held by Brookfield Renewable will fluctuate because of changes in electricity prices.
The table below summarizes the impact of changes in the market price of electricity as at December 31. The impact is expressed in terms of the effect on net income and OCI. The sensitivities are based on the assumption that the market price changes by 5% with all other variables held constant.
Impact of a 5% change in the market price of electricity, on outstanding energy derivative contracts and IFRS 9 PPAs, for the year ended December 31:
| Effect on net income(1) | Effect on OCI(1) | |||||||||||||||||||||||
| (MILLIONS) | 2023 | 2022 | 2021 | 2023 | 2022 | 2021 | ||||||||||||||||||
5% increase | $ | (62 | ) | $ | (76 | ) | $ | (37 | ) | $ | (23 | ) | $ | (36 | ) | $ | (21 | ) | ||||||
5% decrease | 62 | 75 | 40 | 23 | 36 | 22 | ||||||||||||||||||
| (1) | Amounts represent the potential annual net pretax impact. |
(ii) Foreign currency risk
Foreign currency risk is defined for these purposes as the risk that the fair value of a financial instrument held by Brookfield Renewable will fluctuate because of changes in foreign currency rates.
Brookfield Renewable has exposure to the Canadian dollar, euro, Brazilian real, Colombian peso, British pound sterling, Indian rupee, Malaysian ringgit, Chinese yuan and Polish złoty through its investments in foreign operations. Consequently, fluctuations in the U.S. dollar exchange rate against these currencies increase the volatility of net income and other comprehensive income. Brookfield Renewable holds foreign currency contracts primarily to mitigate this exposure.
The table below summarizes the impact to Brookfield Renewable’s financial instruments of changes in the exchange rate as at December 31. The impact is expressed in terms of the effect on income and OCI. The sensitivities are based on the assumption that the currency exchange rate changes by five percent with all other variables held constant.
Impact of a 5% change in U.S. dollar exchange rates, on outstanding foreign exchange swaps, for the year ended December 31:
| Effect on net income(1) | Effect on OCI(1) | |||||||||||||||||||||||
| (MILLIONS) | 2023 | 2022 | 2021 | 2023 | 2022 | 2021 | ||||||||||||||||||
5% increase | $ | 29 | $ | 27 | $ | 29 | $ | 307 | $ | 96 | $ | 95 | ||||||||||||
5% decrease | (29 | ) | (27 | ) | (29 | ) | (307 | ) | (96 | ) | (95 | ) | ||||||||||||
| (1) | Amounts represent the potential annual net pretax impact. |
(iii) Interest rate risk
Interest rate risk is defined for these purposes as the risk that the fair value or future cash flows of a financial instrument held by Brookfield Renewable will fluctuate, because of changes in interest rates.
Brookfield Renewable’s assets largely consist of long duration physical assets. Brookfield Renewable’s financial liabilities consist primarily of long-term fixed-rate debt or variable-rate debt that has been swapped to fixed rates with interest rate financial instruments. Other than tax equity, all other non-derivative financial liabilities are recorded at their amortized cost. Brookfield Renewable also holds interest rate contracts to lock-in fixed rates on certain anticipated future debt issuances.
F - 48
Brookfield Renewable will enter into interest rate swaps designed to minimize the exposure to interest rate fluctuations on its variable-rate debt. Fluctuations in interest rates could impact Brookfield Renewable’s cash flows, primarily with respect to the interest payable against Brookfield Renewable’s variable rate debt, which is limited to certain non-recourse borrowings with a total principal value of $11,574 million (2022: $7,823 million). Of this principal value, $4,681 million (2022: $3,396 million) has been fixed through the use of interest rate contracts. The fair values of the recognized asset and liability for the interest rate swaps were calculated using a valuation model with observable interest rates.
The table below summarizes the impact of changes in the interest rate as at December 31. The impact is expressed in terms of the effect on income and OCI. The sensitivities are based on the assumption that the interest rate changes by 1% with all other variables held constant.
Impact of a 1% change in interest rates, on outstanding interest rate swaps, variable-rate debt and tax equity, for the year ended December 31:
| Effect on net income(1) | Effect on OCI(1) | |||||||||||||||||||||||
| (MILLIONS) | 2023 | 2022 | 2021 | 2023 | 2022 | 2021 | ||||||||||||||||||
1% increase | $ | (129 | ) | $ | 20 | $ | 15 | $ | 148 | $ | 112 | $ | 114 | |||||||||||
1% decrease | 130 | (20 | ) | (16 | ) | (156 | ) | (118 | ) | (124 | ) | |||||||||||||
| (1) | Amounts represent the potential annual net pretax impact. |
(b) Credit risk
Credit risk is the risk of loss due to the failure of a borrower or counterparty to fulfill its contractual obligations. Brookfield Renewable’s exposure to credit risk in respect of financial instruments relates primarily to counterparty obligations regarding energy contracts, interest rate swaps, forward foreign exchange contracts and physical electricity transactions.
Brookfield Renewable minimizes credit risk with counterparties through the selection, monitoring and diversification of counterparties, the use of standard trading contracts, and other credit risk mitigation techniques. In addition, Brookfield Renewable’s power purchase agreements are reviewed regularly and the majority are with customers having long standing credit histories or investment grade ratings, which limit the risk of non-collection. See Note 22 – Trade receivables and other current assets, for additional details regarding Brookfield Renewable’s trade receivables balance.
The maximum credit exposure at December 31 was as follows:
| (MILLIONS) | 2023 | 2022 | ||||||
Trade receivables and other short-term receivables | $ | 923 | $ | 883 | ||||
Long-term receivables | 382 | 235 | ||||||
Financial instrument assets(1) | 400 | 390 | ||||||
Due from related parties(1) | 1,578 | 251 | ||||||
Contract asset(1) | 375 | 395 | ||||||
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| $ | 3,658 | $ | 2,154 | |||||
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| (1) | Includes both the current and long-term amounts. |
(c) Liquidity risk
Liquidity risk is the risk that Brookfield Renewable cannot meet a demand for cash or fund an obligation when due. Liquidity risk is mitigated by Brookfield Renewable’s cash and cash equivalent balances and its access to undrawn credit facilities. Details of the available portion of credit facilities are included in Note 13 – Borrowings. Brookfield Renewable also ensures that it has access to public capital markets and maintains a strong investment grade credit rating.
F - 49
Brookfield Renewable is also subject to the risk associated with debt financing. This risk is mitigated by the long-term duration of debt instruments and the staggered maturity dates over an extended period of time.
CASH OBLIGATIONS
The table below classifies the cash obligations related to Brookfield Renewable’s liabilities into relevant maturity groupings based on the remaining period from the statement of financial position dates to the contractual maturity date.
AS AT DECEMBER 31, 2023 (MILLIONS) | < 1 year | 2-5 years | > 5 years | Total | ||||||||||||
Accounts payable and accrued liabilities | $ | 1,197 | $ | — | $ | — | $ | 1,197 | ||||||||
Financial instrument liabilities(1) | 401 | 871 | 1,010 | 2,282 | ||||||||||||
Due to related parties | 835 | 705 | — | 1,540 | ||||||||||||
Other long-term liabilities – concession payments | 1 | 4 | 11 | 16 | ||||||||||||
Lease liabilities(1) | 41 | 193 | 534 | 768 | ||||||||||||
Corporate borrowings(1) | 183 | 679 | 1,981 | 2,843 | ||||||||||||
Non-recourse borrowings(1) | 4,752 | 9,474 | 12,794 | 27,020 | ||||||||||||
Interest payable on borrowings(2) | 2,651 | 7,123 | 6,977 | 16,751 | ||||||||||||
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Total | $ | 10,061 | $ | 19,049 | $ | 23,307 | $ | 52,417 | ||||||||
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AS AT DECEMBER 31, 2022 (MILLIONS) | < 1 year | 2-5 years | > 5 years | Total | ||||||||||||
Accounts payable and accrued liabilities | $ | 1,086 | $ | — | $ | — | $ | 1,086 | ||||||||
Financial instrument liabilities(1) | 559 | 1,018 | 652 | 2,229 | ||||||||||||
Due to related parties | 586 | 1 | — | 587 | ||||||||||||
Other long-term liabilities – concession payments | 2 | 6 | 12 | 20 | ||||||||||||
Lease liabilities(1) | 30 | 116 | 413 | 559 | ||||||||||||
Corporate borrowings(1) | 249 | 664 | 1,643 | 2,556 | ||||||||||||
Non-recourse borrowings(1) | 2,027 | 7,904 | 12,390 | 22,321 | ||||||||||||
Interest payable on borrowings(2) | 1,368 | 4,141 | 4,663 | 10,172 | ||||||||||||
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Total | $ | 5,907 | $ | 13,850 | $ | 19,773 | $ | 39,530 | ||||||||
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| (1) | Includes both the current and long-term amounts. |
| (2) | Represents aggregate interest payable expected to be paid over the entire term of the obligations, if held to maturity. Variable rate interest payments have been calculated based on estimated interest rates. |
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.
F - 50
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 Brookfield Renewable’s assets and liabilities including energy derivative contracts, IFRS 9 PPAs, interest rate swaps, foreign exchange swaps and tax equity measured and disclosed at fair value classified by the fair value hierarchy:
| (MILLIONS) | Level 1 | Level 2 | Level 3 | 2023 | 2022 | |||||||||||||||
Assets measured at fair value: | ||||||||||||||||||||
Cash and cash equivalents | $ | 1,141 | $ | — | $ | — | $ | 1,141 | $ | 998 | ||||||||||
Restricted cash(1) | 391 | — | — | 391 | 191 | |||||||||||||||
Financial instrument assets(1) | ||||||||||||||||||||
IFRS 9 PPAs | — | — | 50 | 50 | 2 | |||||||||||||||
Energy derivative contracts | — | 90 | — | 90 | 37 | |||||||||||||||
Interest rate swaps | — | 233 | — | 233 | 335 | |||||||||||||||
Foreign exchange swaps | — | 27 | — | 27 | 16 | |||||||||||||||
Tax equity | — | — | 27 | 27 | — | |||||||||||||||
Investments in debt and equity securities | — | 46 | 1,494 | 1,540 | 1,235 | |||||||||||||||
Property, plant and equipment | — | — | 64,005 | 64,005 | 54,283 | |||||||||||||||
Liabilities measured at fair value: | ||||||||||||||||||||
Financial instrument liabilities(1) | ||||||||||||||||||||
IFRS 9 PPAs(2) | — | (56 | ) | (742 | ) | (798 | ) | (668 | ) | |||||||||||
Energy derivative contracts | — | (82 | ) | — | (82 | ) | (238 | ) | ||||||||||||
Interest rate swaps | — | (105 | ) | — | (105 | ) | (82 | ) | ||||||||||||
Foreign exchange swaps | — | (353 | ) | — | (353 | ) | (110 | ) | ||||||||||||
Tax equity | — | — | (1,782 | ) | (1,782 | ) | (1,131 | ) | ||||||||||||
Contingent consideration(3) | — | — | (92 | ) | (92 | ) | (68 | ) | ||||||||||||
Liabilities for which fair value is disclosed: | ||||||||||||||||||||
Corporate borrowings(1) | (2,731 | ) | — | — | (2,731 | ) | (2,362 | ) | ||||||||||||
Non-recourse borrowings(1) | (2,116 | ) | (24,723 | ) | — | (26,839 | ) | (21,117 | ) | |||||||||||
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Total | $ | (3,315 | ) | $ | (24,923 | ) | $ | 62,960 | $ | 34,722 | $ | 31,253 | ||||||||
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| (1) | Includes both the current amount and long-term amount. |
| (2) | During the year ended December 31, 2023 $56 million (2022: nil) was transferred from Level 3 to Level 2. |
| (3) | Amount relates to business combination completed in 2022 and 2023 with obligations lapsing from 2024 to 2027. |
F - 51
Financial instruments disclosures
Financial assets and liabilities are offset with the net amount reported in the Consolidated Statements of Financial Position, where Brookfield Renewable currently has a legally enforceable right to offset and there is an intention to settle on a net basis or realize the asset and settle the liability simultaneously. The aggregate amount of Brookfield Renewable’s net financial instrument positions as at December 31 are as follows:
| Financial Instruments Assets | Financial Instruments Liabilities | |||||||||||||||||||||||||||||||||||
| Instruments not designated as hedges | Instruments not designated as hedges | |||||||||||||||||||||||||||||||||||
| (MILLIONS) | Instruments designated as hedges | Fair value through profit & loss | Fair value through OCI | Total | Instruments designated as hedges | Fair value through profit & loss | Fair value through OCI | Total | Net Assets (Liabilities) | |||||||||||||||||||||||||||
IFRS 9 PPAs | — | $ | 2 | $ | — | $ | 2 | $ | (94 | ) | $ | (574 | ) | $ | — | $ | (668 | ) | $ | (666 | ) | |||||||||||||||
Energy derivative contracts | 12 | $ | 25 | $ | — | $ | 37 | $ | (37 | ) | $ | (201 | ) | $ | — | $ | (238 | ) | $ | (201 | ) | |||||||||||||||
Interest rate swaps | 284 | 51 | — | 335 | (15 | ) | (67 | ) | — | (82 | ) | 253 | ||||||||||||||||||||||||
Foreign exchange swaps | 14 | 2 | — | 16 | (90 | ) | (20 | ) | — | (110 | ) | (94 | ) | |||||||||||||||||||||||
Investments in debt and equity securities | — | 1,010 | 225 | 1,235 | — | — | — | — | 1,235 | |||||||||||||||||||||||||||
Tax equity | — | — | — | — | — | (1,131 | ) | — | (1,131 | ) | (1,131 | ) | ||||||||||||||||||||||||
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Balance, as at December 31, 2022 | $ | 310 | $ | 1,090 | $ | 225 | $ | 1,625 | $ | (236 | ) | $ | (1,993 | ) | $ | — | $ | (2,229 | ) | $ | (604 | ) | ||||||||||||||
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Less: current portion | (125 | ) | 559 | 434 | ||||||||||||||||||||||||||||||||
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Long-term portion | $ | 1,500 | $ | (1,670 | ) | $ | (170 | ) | ||||||||||||||||||||||||||||
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IFRS 9 PPAs | $ | 39 | $ | 11 | $ | — | $ | 50 | $ | (71 | ) | $ | (727 | ) | $ | — | $ | (798 | ) | $ | (748 | ) | ||||||||||||||
Energy derivative contracts | 96 | (6 | ) | — | 90 | — | (82 | ) | — | (82 | ) | 8 | ||||||||||||||||||||||||
Interest rate swaps | 181 | 52 | — | 233 | (33 | ) | (72 | ) | — | (105 | ) | 128 | ||||||||||||||||||||||||
Foreign exchange swaps | 27 | — | — | 27 | (325 | ) | (28 | ) | — | (353 | ) | (326 | ) | |||||||||||||||||||||||
Investments in debt and equity securities | — | 1,403 | 137 | 1,540 | — | — | — | — | �� | 1,540 | ||||||||||||||||||||||||||
Tax equity | — | 27 | — | 27 | — | (1,782 | ) | — | (1,782 | ) | (1,755 | ) | ||||||||||||||||||||||||
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Balance, as at December 31, 2023 | $ | 343 | $ | 1,487 | $ | 137 | $ | 1,967 | $ | (429 | ) | $ | (2,691 | ) | $ | — | $ | (3,120 | ) | $ | (1,153 | ) | ||||||||||||||
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Less: current portion | (199 | ) | 687 | 488 | ||||||||||||||||||||||||||||||||
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Long-term portion | $ | 1,768 | $ | (2,433 | ) | $ | (665 | ) | ||||||||||||||||||||||||||||
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F - 52
The following table presents the change in Brookfield Renewable’s total net financial instrument asset position as at and for the year ended December 31:
| (MILLIONS) | Balance as at Dec 31, 2022 asset (liability) | Changes in fair value recognized in OCI(1) | Changes in fair value (hedge ineffectiveness)(2) | Changes in fair value on financial instruments through profit and loss(2) | Amounts reclassified from OCI to income | Acquisitions, settlements and other | Foreign exchange gain (loss) | Balance as at Dec 31, 2023 asset (liability) | ||||||||||||||||||||||||
IFRS 9 PPAs(3) | $ | (666 | ) | $ | 54 | $ | (6 | ) | $ | 74 | $ | 13 | $ | (217 | ) | $ | — | $ | (748 | ) | ||||||||||||
Energy derivative contracts | (201 | ) | 220 | (3 | ) | 89 | (110 | ) | 13 | — | 8 | |||||||||||||||||||||
Interest rate swaps | 253 | (20 | ) | — | 33 | (90 | ) | (47 | ) | (1 | ) | 128 | ||||||||||||||||||||
Foreign exchange swaps | (94 | ) | (128 | ) | — | (1 | ) | — | (103 | ) | — | (326 | ) | |||||||||||||||||||
Investments in debt and equity securities | 1,235 | 8 | — | 119 | — | 182 | (4 | ) | 1,540 | |||||||||||||||||||||||
Tax equity | (1,131 | ) | — | — | 243 | — | (867 | ) | — | (1,755 | ) | |||||||||||||||||||||
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| $ | (604 | ) | $ | 134 | $ | (9 | ) | $ | 557 | $ | (187 | ) | $ | (1,039 | ) | $ | (5 | ) | $ | (1,153 | ) | |||||||||||
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| (1) | Amounts recognized in Equity-accounted investments, Gains (losses) arising during the year on financial instruments designated as cash-flow hedges and Unrealized gain (loss) on foreign exchange swaps – net investment hedge on the consolidated statements of comprehensive income (loss). |
| (2) | Amounts recognized in Foreign exchange and financial instruments gain (loss) on the consolidated statements of income (loss) excluding realized gains and losses recorded on foreign exchange. |
| (3) | Level 3 power purchase agreements accounted for as energy derivatives that are either designated as a hedge or not designated as a hedge. |
| (MILLIONS) | Balance as at Dec 31, 2021 asset (liability) | Changes in fair value recognized in OCI(1) | Changes in fair value (hedge ineffectiveness)(2) | Changes in fair value on derivatives not designated in hedge relationships(2) | Amounts reclassified from OCI to income | Acquisitions, settlements and other | Foreign exchange gain (loss) | Balance as at Dec 31, 2022 asset (liability) | ||||||||||||||||||||||||
IFRS 9 PPAs(3) | $ | (20 | ) | $ | (75 | ) | $ | (13 | ) | $ | (216 | ) | $ | 22 | $ | (364 | ) | $ | — | $ | (666 | ) | ||||||||||
Energy derivative contracts | (151 | ) | (117 | ) | 2 | (134 | ) | 142 | 57 | — | (201 | ) | ||||||||||||||||||||
Interest rate swaps | (188 | ) | 331 | 5 | 85 | 5 | 18 | (3 | ) | 253 | ||||||||||||||||||||||
Foreign exchange swaps | (24 | ) | (56 | ) | — | 89 | — | (103 | ) | — | (94 | ) | ||||||||||||||||||||
Investments in debt and equity securities | 195 | (11 | ) | — | 13 | — | 1,046 | (8 | ) | 1,235 | ||||||||||||||||||||||
Tax equity | (455 | ) | — | — | 115 | — | (791 | ) | — | (1,131 | ) | |||||||||||||||||||||
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| $ | (643 | ) | $ | 72 | $ | (6 | ) | $ | (48 | ) | $ | 169 | $ | (137 | ) | $ | (11 | ) | $ | (604 | ) | |||||||||||
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| (1) | Amounts recognized in Equity-accounted investments, Gains (losses) arising during the year on financial instruments designated as cash-flow hedges and Unrealized gain (loss) on foreign exchange swaps – net investment hedge on the consolidated statements of comprehensive income (loss). |
| (2) | Amounts recognized in Foreign exchange and financial instruments gain (loss) on the consolidated statements of income (loss) excluding realized gains and losses recorded on foreign exchange. |
| (3) | Level 3 power purchase agreements accounted for as energy derivatives that are either designated as a hedge or not designated as a hedge. |
F - 53
(a) Tax equity
Brookfield Renewable owns and operates certain projects in the United States under tax equity structures to finance the construction of utility-scale solar 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 consolidated statements of financial position.
Gains or losses on the tax equity liabilities are recognized within foreign exchange and financial instruments gain (loss) in the consolidated statements of income (loss).
(b) Investments in debt and equity securities
Brookfield Renewable’s investments in debt and equity securities are classified as FVPL, FVOCI and amortized cost. Refer to Note 1(l) – Basis of preparation and material accounting policy information – Financial instruments.
(c) Energy derivative contracts and IFRS 9 PPAs
Brookfield Renewable 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 Brookfield Renewable’s 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.
There is an economic relationship between the hedged items and the hedging instruments as the terms of the energy derivative contracts match the terms of the expected highly probable forecast transactions (i.e. notional amount and expected payment date). Brookfield Renewable has established a hedge ratio of 1:1 for the hedging relationships. To measure the hedge effectiveness, Brookfield Renewable uses the hypothetical derivative method and compares changes in the fair value of the hedging instruments against the changes in fair value of the hedged items attributable to the hedged risks. The hedge ineffectiveness can arise from different indexes (and accordingly different curves) linked to the hedged risk of the hedged items and hedging instruments.
For the year ended December 31, 2023, gains of $119 million relating to energy derivative contracts were realized and reclassified from OCI to the consolidated statements of income (loss) (2022: $146 million and 2021: $25 million).
Based on market prices as of December 31, 2023, unrealized losses of $49 million (2022: $37 million loss and 2021: $72 million loss) recorded in accumulated other comprehensive income (“AOCI”) on energy derivative contracts are expected to be settled or reclassified into income in the next twelve months. The actual amount reclassified from AOCI, however, could vary due to future changes in market prices.
The following table summarizes the energy derivative contracts designated as hedging instruments:
| Energy derivative contracts and IFRS 9 PPAs | December 31, 2023 | December 31, 2022 | ||||||
Carrying amount (asset/(liability)) | 64 | (116 | ) | |||||
Notional amount – GWh | 26,083 | 13,674 | ||||||
Weighted average hedged rate for the year ($/MWh) | 50 | 58 | ||||||
Maturity dates | 2024-2044 | 2023-2038 | ||||||
Hedge ratio | 1:1 | 1:1 | ||||||
Change in discounted spot value of outstanding hedging instruments | 152 | (90 | ) | |||||
Change in value of hedged item used to determine hedge effectiveness | (118 | ) | 64 | |||||
There is nil of hedge ineffectiveness losses recognized within foreign exchange and financial instruments gain (loss) in the consolidated statements of income (loss) related to energy derivative contracts (cash flow hedges) for the year ended December 31, 2023 (2022: $18 million loss and 2021: $7 million loss).
F - 54
(d) Interest rate hedges
Brookfield Renewable 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 consolidated financial statements at fair value.
There is an economic relationship between the hedged items and the hedging instruments as the terms of the interest rate hedges match the terms of the respective fixed-rate debt (i.e., notional amount, maturity, payment and reset dates). Brookfield Renewable established a hedge ratio of 1:1 for the hedging relationships. To measure the hedge effectiveness, Brookfield Renewable uses the hypothetical derivative method and compares the changes in the fair value of the hedging instrument against the changes in fair value of the hedged items attributable to the hedged risk.
The hedge ineffectiveness can arise from:
| • | Different interest rate curves being applied to discount the hedged item and hedging instrument |
| • | Differences in timing of cash flows of the hedged item and hedging instrument |
| • | The counterparties’ credit risk having an asymmetrical impact on the fair value movements of the hedging instrument and hedged item |
As at December 31, 2023, agreements with a total notional exposure of $4,389 million were outstanding (2022: $3,621 million) including $718 million (2022: $701 million) associated with agreements that are not formally designated as hedging instruments. The weighted-average fixed interest rate resulting from these agreements is (1.0)% (2022: 2.9%).
For the year ended December 31, 2023, net movements relating to cash flow hedges realized and reclassified from OCI to interest expense in the consolidated statements of income (loss) were $3 million losses (2022: $2 million losses and 2021: $18 million losses).
Based on market prices as of December 31, 2023, unrealized losses of $53 million (2022: $50 million and 2021: $41 million) recorded in AOCI on interest rate swaps are expected to be settled or reclassified into income in the next twelve months. The actual amount reclassified from AOCI, however, could vary due to future changes in market rates.
The following table summarizes the interest rate hedges designated as hedging instruments:
| Interest rate hedges | December 31, 2023 | December 31, 2022 | ||||||
Carrying amount (asset/(liability)) | 148 | 269 | ||||||
Notional amount – $ | 1,633 | 803 | ||||||
Notional amount – C$(1) | 326 | 349 | ||||||
Notional amount – €(1) | 1,204 | 1,315 | ||||||
Notional amount – £(1) | 312 | 296 | ||||||
Notional amount – COP(1) | 196 | 157 | ||||||
Maturity dates | 2024-2061 | 2023-2061 | ||||||
Hedge ratio | 1:1 | 1:1 | ||||||
Change in discounted spot value of outstanding hedging instruments | (124 | ) | 333 | |||||
Change in value of hedged item used to determine hedge effectiveness | 124 | (328 | ) | |||||
| (1) | Notional amounts of foreign currency denominated interest rate hedges are presented at the U.S. dollar equivalent value based on the December 31, 2023 foreign currency spot rate. |
The hedge ineffectiveness loss recognized within foreign exchange and financial instruments gain (loss) in the consolidated statements of income (loss) related to interest rate contracts (cash flow hedges) for the year ended December 31, 2023 was nil (2022: $5 million and 2021: $17 million).
F - 55
(e) Foreign exchange swaps
Brookfield Renewable 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.
There is an economic relationship between the hedged item and the hedging instrument as the net investment or anticipated foreign currency transaction creates a translation risk that will match the respective hedging instrument. Brookfield Renewable established a hedge ratio of 1:1 as the underlying risk of the hedging instrument is identical to the hedged risk component.
Certain Brookfield subsidiaries that Brookfield Renewable controls, through a voting agreement, have entered into Master Hedge Agreements appointing Brookfield as their agent in entering into certain derivative transactions with external counterparties to hedge against fluctuations in foreign exchange. Pursuant to each Agreement, Brookfield was entitled to be reimbursed for any third party costs incurred in connection with the these derivative transactions. Substantially all of Brookfield Renewable’s foreign exchange swaps are entered into pursuant to a Master Hedge Agreement.
As at December 31, 2023, agreements with a total notional exposure of $6,690 million were outstanding (2022: $3,669 million) including $565 million (2022: $1,804 million) associated with agreements that are not formally designated as hedging instruments.
There are no unrealized gains or losses recorded in AOCI on foreign exchange swaps that are expected to be settled or reclassified into income in the next twelve months (2022: nil and 2021: nil). The actual amount reclassified from AOCI, however, could vary due to future changes in market rates.
The following table summarizes the foreign exchange swaps designated as hedging instruments:
| Foreign exchange swaps | December 31, 2023 | December 31, 2022 | ||||||
Carrying amount (asset/(liability)) | (298 | ) | (76 | ) | ||||
Notional amount for hedges of the Colombian Peso(1) | 2,602 | 601 | ||||||
Notional amount for hedges of the euro(1) | 644 | 302 | ||||||
Notional amount for hedges of the British pounds sterling(1) | 818 | 76 | ||||||
Notional amount for hedges of the Chinese yuan(1) | 701 | 575 | ||||||
Notional amount for hedges of the Indian rupee(1) | 710 | 128 | ||||||
Notional amount for hedges of the Brazilian real(1) | 607 | 79 | ||||||
Notional amount for hedges of other currencies(1) | 43 | 104 | ||||||
Maturity date | 2024 - 2027 | 2023 - 2024 | ||||||
Hedge ratio | 1:1 | 1:1 | ||||||
Weighted average hedged rate for the year: | ||||||||
COP/$ foreign exchange forward contracts | 4,642 | 5,038 | ||||||
€/$ foreign exchange forward contracts | 0.99 | 0.99 | ||||||
£/$ foreign exchange forward contracts | 0.80 | 0.83 | ||||||
CNY/$ foreign exchange forward contracts | 6.92 | 7.05 | ||||||
INR/$ foreign exchange forward contracts | 86 | 83 | ||||||
BRL/$ foreign exchange forward contracts | 5.37 | 5.69 | ||||||
| (1) | Notional amounts expressed in millions of U.S. dollars |
F - 56
The following table presents a reconciliation of the limited partners’ equity reserves impacted by financial instruments:
| (MILLIONS) | Cash flow hedges | Investments in equity securities | Foreign currency translation | |||||||||
Balance, as at December 31, 2021 | $ | (48 | ) | $ | 4 | $ | (842 | ) | ||||
Effective portion of changes in fair value arising from: | ||||||||||||
Energy derivative contracts | 7 | — | — | |||||||||
Interest rate swaps | 52 | — | — | |||||||||
Foreign exchange swaps | — | — | 10 | |||||||||
Amount reclassified to profit or loss | 37 | — | — | |||||||||
Foreign currency revaluation of designated borrowings | — | — | 68 | |||||||||
Foreign currency revaluation of net foreign operations | — | — | (74 | ) | ||||||||
Valuation of investments in equity securities designated FVOCI | — | (3 | ) | — | ||||||||
Tax effect | (29 | ) | — | (5 | ) | |||||||
Other | (2 | ) | — | (2 | ) | |||||||
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Balance, as at December 31, 2022 | $ | 17 | $ | 1 | $ | (845 | ) | |||||
Effective portion of changes in fair value arising from: | ||||||||||||
Energy derivative contracts | 4 | — | — | |||||||||
Interest rate swaps | 54 | — | — | |||||||||
Foreign exchange swaps | (8 | ) | — | (8 | ) | |||||||
Amount reclassified to profit or loss | (28 | ) | — | — | ||||||||
Foreign currency revaluation of designated borrowings | — | — | (77 | ) | ||||||||
Foreign currency revaluation of net foreign operations | — | — | 232 | |||||||||
Tax effect | (4 | ) | — | — | ||||||||
Other | 1 | — | (3 | ) | ||||||||
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Balance, as at December 31, 2023 | $ | 36 | $ | 1 | $ | (701 | ) | |||||
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F - 57
6. SEGMENTED INFORMATION
Brookfield Renewable’s Chief Executive Officer and Chief Financial Officer (collectively, the chief operating decision maker or “CODM”) review the results of the business, manage operations, and allocate resources based on the type of technology.
Brookfield Renewable operations are segmented by – 1) hydroelectric, 2) wind, 3) utility-scale solar, 4) distributed energy and storage (distributed generation and pumped storage), 5) sustainable solutions (renewable natural gas, carbon capture and storage, recycling, cogeneration biomass, nuclear services, and power transformation), and 6) corporate—with hydroelectric further segmented by geography (i.e., North America, Colombia, and Brazil). This best reflects the way in which the CODM reviews results of our company.
The reporting to the CODM was revised during the year to disaggregate the distributed energy & sustainable solutions business into distributed energy & storage and sustainable solutions. This change is consistent with the development of Brookfield Renewable’s business as distributed generation and sustainable solutions continue to grow as a more significant component of the business. The financial information of operating segments in the prior period has been restated to present the corresponding results of the distributed energy & storage and sustainable solutions.
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 Brookfield Renewable’s share from facilities which it accounts for using consolidation and the equity method whereby Brookfield Renewable either controls or exercises significant influence or joint control over the investment, respectively. Proportionate information provides a Unitholder (holders of the GP interest, Redeemable/Exchangeable partnership units, BEPC exchangeable shares and LP units) 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 Brookfield Renewable’s Unitholders.
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. Segment revenues, other income, direct operating costs, interest expense, depreciation, current and deferred income taxes, and other are items that will differ from results presented in accordance with IFRS as these items include Brookfield Renewable’s proportionate share of earnings from equity-accounted investments attributable to each of the above-noted items, and exclude the proportionate share of earnings (loss) of consolidated investments not held by us apportioned to each of the above-noted items.
Brookfield Renewable 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 Brookfield Renewable’s legal claim to such items, and the removal of financial statement amounts that are attributable to non-controlling interests does not extinguish Brookfield Renewable’s legal claims or exposures to such items.
Brookfield Renewable reports its results in accordance with these segments and presents prior period segmented information in a consistent manner.
The accounting policies of the reportable segments are the same as those described in Note 1 – Basis of preparation and material accounting policy information. Brookfield Renewable 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”).
F - 58
Brookfield Renewable uses Funds From Operations to assess the performance of Brookfield Renewable 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. Brookfield Renewable 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.
F - 59
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 Brookfield Renewable’s proportionate results to the consolidated statements of income (loss) on a line-by-line basis by aggregating the components comprising the earnings from Brookfield Renewable’s investments in associates and reflecting the portion of each line item attributable to non-controlling interests for the year ended December 31, 2023:
| Attributable to Unitholders | Contribution from equity- accounted investments | Attributable to non-controlling interests and other(1) | As per IFRS financials(2) | |||||||||||||||||||||||||||||||||||||||||||||
| Hydroelectric | Wind | Utility- scale solar | Distributed energy & storage | Sustainable solutions | Corporate | Total | ||||||||||||||||||||||||||||||||||||||||||
| (MILLIONS) | North America | Brazil | Colombia | |||||||||||||||||||||||||||||||||||||||||||||
Revenues | $ | 1,029 | $ | 240 | $ | 293 | $ | 511 | $ | 365 | $ | 241 | $ | 147 | $ | — | $ | 2,826 | $ | (234 | ) | $ | 2,446 | $ | 5,038 | |||||||||||||||||||||||
Other income | 22 | 5 | 6 | 146 | 106 | 20 | 19 | 88 | 412 | (81 | ) | 340 | 671 | |||||||||||||||||||||||||||||||||||
Direct operating costs | (381 | ) | (73 | ) | (124 | ) | (164 | ) | (99 | ) | (81 | ) | (105 | ) | (29 | ) | (1,056 | ) | 110 | (987 | ) | (1,933 | ) | |||||||||||||||||||||||||
Share of revenue, other income and direct operating costs from equity-accounted investments | — | — | — | — | — | — | — | — | — | 205 | — | 205 | ||||||||||||||||||||||||||||||||||||
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| 670 | 172 | 175 | 493 | 372 | 180 | 61 | 59 | 2,182 | — | 1,799 | ||||||||||||||||||||||||||||||||||||||
Management service costs | — | — | — | — | — | — | — | (205 | ) | (205 | ) | — | — | (205 | ) | |||||||||||||||||||||||||||||||||
Interest expense | (266 | ) | (19 | ) | (82 | ) | (105 | ) | (110 | ) | (43 | ) | (6 | ) | (114 | ) | (745 | ) | 33 | (915 | ) | (1,627 | ) | |||||||||||||||||||||||||
Current income taxes | (2 | ) | (7 | ) | (17 | ) | (6 | ) | (1 | ) | (4 | ) | (3 | ) | — | (40 | ) | 7 | (95 | ) | (128 | ) | ||||||||||||||||||||||||||
Distributions attributable to | ||||||||||||||||||||||||||||||||||||||||||||||||
Preferred limited partners equity | — | — | — | — | — | — | — | (41 | ) | (41 | ) | — | — | (41 | ) | |||||||||||||||||||||||||||||||||
Preferred equity | — | — | — | — | — | — | — | (27 | ) | (27 | ) | — | — | (27 | ) | |||||||||||||||||||||||||||||||||
Perpetual subordinated notes | — | — | — | — | — | — | — | (29 | ) | (29 | ) | — | — | (29 | ) | |||||||||||||||||||||||||||||||||
Share of interest and cash taxes from equity-accounted investments | — | — | — | — | — | — | — | — | — | (40 | ) | — | (40 | ) | ||||||||||||||||||||||||||||||||||
Share of Funds From Operations attributable to non-controlling interests | — | — | — | — | — | — | — | — | — | — | (789 | ) | (789 | ) | ||||||||||||||||||||||||||||||||||
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Funds From Operations | 402 | 146 | 76 | 382 | 261 | 133 | 52 | (357 | ) | 1,095 | — | — | ||||||||||||||||||||||||||||||||||||
Depreciation | (1,852 | ) | ||||||||||||||||||||||||||||||||||||||||||||||
Foreign exchange and financial instrument gain | 502 | |||||||||||||||||||||||||||||||||||||||||||||||
Deferred income tax recovery | 176 | |||||||||||||||||||||||||||||||||||||||||||||||
Other | (212 | ) | ||||||||||||||||||||||||||||||||||||||||||||||
Share of earnings from equity-accounted investments | 21 | |||||||||||||||||||||||||||||||||||||||||||||||
Net income attributable to non-controlling interests | 170 | |||||||||||||||||||||||||||||||||||||||||||||||
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Net loss attributable to Unitholders(3) | $ | (100 | ) | |||||||||||||||||||||||||||||||||||||||||||||
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| (1) | Amounts attributable to non-controlling interests and other includes certain non-recurring other income items. Refer to Note 7—Other Income. |
| (2) | Share of earnings from equity-accounted investments of $186 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 – in operating subsidiaries of $619 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. |
| (3) | Net income (loss) attributable to Unitholders includes net income (loss) attributable to GP interest, Redeemable/Exchangeable partnership units, BEPC exchangeable shares and LP units. Total net income (loss) includes amounts attributable to Unitholders, non-controlling interests, preferred limited partners equity, preferred equity, and perpetual subordinated notes. |
F - 60
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 Brookfield Renewable’s proportionate results to the consolidated statements of income (loss) on a line-by-line basis by aggregating the components comprising the earnings from Brookfield Renewable’s investments in associates and reflecting the portion of each line item attributable to non-controlling interests for the year ended December 31, 2022:
| Attributable to Unitholders | Contribution from equity- accounted investments | Attributable to non-controlling interests | As per IFRS financials(1) | |||||||||||||||||||||||||||||||||||||||||||||
| Hydroelectric | Wind | Utility- scale solar | Distributed energy & storage | Sustainable solutions | Corporate | Total | ||||||||||||||||||||||||||||||||||||||||||
| (MILLIONS) | North America | Brazil | Colombia | |||||||||||||||||||||||||||||||||||||||||||||
Revenues | $ | 964 | $ | 197 | $ | 273 | $ | 538 | $ | 374 | $ | 242 | $ | 48 | $ | — | $ | 2,636 | $ | (188 | ) | $ | 2,263 | 4,711 | ||||||||||||||||||||||||
Other income | 15 | 22 | 10 | 56 | 90 | 23 | 3 | 73 | 292 | (19 | ) | (137 | ) | 136 | ||||||||||||||||||||||||||||||||||
Direct operating costs | (376 | ) | (52 | ) | (82 | ) | (164 | ) | (102 | ) | (76 | ) | (43 | ) | (31 | ) | (926 | ) | 86 | (594 | ) | (1,434 | ) | |||||||||||||||||||||||||
Share of revenue, other income and opex from equity-accounted investments | — | — | — | — | — | — | — | — | — | 121 | 7 | 128 | ||||||||||||||||||||||||||||||||||||
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| 603 | 167 | 201 | 430 | 362 | 189 | 8 | 42 | 2,002 | — | 1,539 | ||||||||||||||||||||||||||||||||||||||
Management service costs | — | — | — | — | — | — | — | (243 | ) | (243 | ) | — | — | (243 | ) | |||||||||||||||||||||||||||||||||
Interest expense | (185 | ) | (20 | ) | (57 | ) | (96 | ) | (102 | ) | (40 | ) | (2 | ) | (94 | ) | (596 | ) | 19 | (647 | ) | (1,224 | ) | |||||||||||||||||||||||||
Current income taxes | (6 | ) | (9 | ) | (27 | ) | (8 | ) | (7 | ) | (1 | ) | — | (1 | ) | (59 | ) | 10 | (99 | ) | (148 | ) | ||||||||||||||||||||||||||
Distributions attributable to | ||||||||||||||||||||||||||||||||||||||||||||||||
Preferred limited partners equity | — | — | — | — | — | — | — | (44 | ) | (44 | ) | — | — | (44 | ) | |||||||||||||||||||||||||||||||||
Preferred equity | — | — | — | — | — | — | — | (26 | ) | (26 | ) | — | — | (26 | ) | |||||||||||||||||||||||||||||||||
Perpetual subordinated notes | — | — | — | — | — | — | — | (29 | ) | (29 | ) | — | — | (29 | ) | |||||||||||||||||||||||||||||||||
Share of interest and cash taxes from equity-accounted investments | — | — | — | — | — | — | — | — | — | (29 | ) | (8 | ) | (37 | ) | |||||||||||||||||||||||||||||||||
Share of Funds From Operations attributable to non-controlling interests | — | — | — | — | — | — | — | — | — | — | (785 | ) | (785 | ) | ||||||||||||||||||||||||||||||||||
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Funds From Operations | 412 | 138 | 117 | 326 | 253 | 148 | 6 | (395 | ) | 1,005 | — | — | ||||||||||||||||||||||||||||||||||||
Depreciation | (1,583 | ) | ||||||||||||||||||||||||||||||||||||||||||||||
Foreign exchange and financial instrument loss | (133 | ) | ||||||||||||||||||||||||||||||||||||||||||||||
Deferred income tax recovery | 150 | |||||||||||||||||||||||||||||||||||||||||||||||
Other | (190 | ) | ||||||||||||||||||||||||||||||||||||||||||||||
Share of earnings from equity-accounted investments | 5 | |||||||||||||||||||||||||||||||||||||||||||||||
Net income attributable to non-controlling interests | 451 | |||||||||||||||||||||||||||||||||||||||||||||||
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Net loss attributable to Unitholders(2) | $ | (295 | ) | |||||||||||||||||||||||||||||||||||||||||||||
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| (1) | Share of earnings from equity-accounted investments of $96 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 – in operating subsidiaries of $334 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. |
| (2) | Net income (loss) attributable to Unitholders includes net income (loss) attributable to GP interest, Redeemable/Exchangeable partnership units and LP units. Total net income (loss) includes amounts attributable to Unitholders, non-controlling interests, preferred limited partners equity and preferred equity. |
F - 61
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 Brookfield Renewable’s proportionate results to the consolidated statements of income (loss) on a line-by-line basis by aggregating the components comprising the earnings from Brookfield Renewable’s investments in associates and reflecting the portion of each line item attributable to non-controlling interests for the year ended December 31, 2021:
| Attributable to Unitholders | Contribution from equity- accounted investments | Attributable to non-controlling interests | As per IFRS financials(1) | |||||||||||||||||||||||||||||||||||||||||||||
| Hydroelectric | Wind | Utility- scale solar | Distributed energy & storage | Sustainable solutions | Corporate | Total | ||||||||||||||||||||||||||||||||||||||||||
| (MILLIONS) | North America | Brazil | Colombia | |||||||||||||||||||||||||||||||||||||||||||||
Revenues | $ | 876 | $ | 169 | $ | 224 | $ | 556 | $ | 348 | $ | 215 | $ | 27 | $ | — | $ | 2,415 | $ | (163 | ) | $ | 1,844 | 4,096 | ||||||||||||||||||||||||
Other income | 42 | 36 | 14 | 126 | 39 | — | 3 | 41 | 301 | (11 | ) | 14 | 304 | |||||||||||||||||||||||||||||||||||
Direct operating costs | (349 | ) | (50 | ) | (79 | ) | (171 | ) | (89 | ) | (55 | ) | (17 | ) | (30 | ) | (840 | ) | 75 | (600 | ) | (1,365 | ) | |||||||||||||||||||||||||
Share of revenue, other income and direct operating costs from equity-accounted investments | — | — | — | — | — | — | — | — | — | 99 | 43 | 142 | ||||||||||||||||||||||||||||||||||||
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| 569 | 155 | 159 | 511 | 298 | 160 | 13 | 11 | 1,876 | — | 1,301 | ||||||||||||||||||||||||||||||||||||||
Management service costs | — | — | — | — | — | — | — | (288 | ) | (288 | ) | — | — | (288 | ) | |||||||||||||||||||||||||||||||||
Interest expense | (158 | ) | (20 | ) | (28 | ) | (106 | ) | (111 | ) | (30 | ) | (8 | ) | (78 | ) | (539 | ) | 29 | (471 | ) | (981 | ) | |||||||||||||||||||||||||
Current income taxes | (2 | ) | (4 | ) | (3 | ) | (9 | ) | (2 | ) | (2 | ) | — | — | (22 | ) | 3 | (24 | ) | (43 | ) | |||||||||||||||||||||||||||
Distributions attributable to | ||||||||||||||||||||||||||||||||||||||||||||||||
Preferred limited partners equity | — | — | — | — | — | — | — | (55 | ) | (55 | ) | — | — | (55 | ) | |||||||||||||||||||||||||||||||||
Preferred equity | — | — | — | — | — | — | — | (26 | ) | (26 | ) | — | — | (26 | ) | |||||||||||||||||||||||||||||||||
Perpetual subordinated notes | — | — | — | — | — | — | — | (12 | ) | (12 | ) | — | — | (12 | ) | |||||||||||||||||||||||||||||||||
Share of interest and cash taxes from equity-accounted investments | — | — | — | — | — | — | — | — | — | (32 | ) | (33 | ) | (65 | ) | |||||||||||||||||||||||||||||||||
Share of Funds From Operations attributable to non-controlling interests | — | — | — | — | — | — | — | — | — | — | (773 | ) | (773 | ) | ||||||||||||||||||||||||||||||||||
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Funds From Operations | 409 | 131 | 128 | 396 | 185 | 128 | 5 | (448 | ) | 934 | — | — | ||||||||||||||||||||||||||||||||||||
Depreciation | (1,501 | ) | ||||||||||||||||||||||||||||||||||||||||||||||
Foreign exchange and financial instrument loss | (32 | ) | ||||||||||||||||||||||||||||||||||||||||||||||
Deferred income tax recovery | 29 | |||||||||||||||||||||||||||||||||||||||||||||||
Other | (307 | ) | ||||||||||||||||||||||||||||||||||||||||||||||
Share of earnings from equity-accounted investments | (55 | ) | ||||||||||||||||||||||||||||||||||||||||||||||
Net income attributable to non-controlling interests | 564 | |||||||||||||||||||||||||||||||||||||||||||||||
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Net loss attributable to Unitholders(2) | $ | (368 | ) | |||||||||||||||||||||||||||||||||||||||||||||
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| (1) | Share of earnings 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 income attributable to participating non-controlling interests – in operating subsidiaries of $209 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. |
| (2) | Net income (loss) attributable to Unitholders includes net income (loss) attributable to GP interest, Redeemable/Exchangeable partnership units and LP units. Total net income (loss) includes amounts attributable to Unitholders, non-controlling interests, preferred limited partners equity and preferred equity. |
F - 62
The following table presents information on a segmented basis about certain items in our company’s consolidated statements of financial position and reconciles our proportionate balances to the consolidated statements of financial position basis by aggregating the components comprising Brookfield Renewable’s investments in associates and reflecting the portion of each line item attributable to non-controlling interests:
| Attributable to Unitholders | Contribution from equity- accounted investments | Attributable to non-controlling interests | As per IFRS financials | |||||||||||||||||||||||||||||||||||||||||||||
| Hydroelectric | Wind | Utility- scale solar | Distributed energy & storage | Sustainable solutions | Corporate | Total | ||||||||||||||||||||||||||||||||||||||||||
| (MILLIONS) | North America | Brazil | Colombia | |||||||||||||||||||||||||||||||||||||||||||||
As at December 31, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||
Cash and cash equivalents | $ | 77 | $ | 20 | $ | 12 | $ | 225 | $ | 123 | $ | 50 | $ | 30 | $ | 3 | $ | 540 | $ | (85 | ) | $ | 686 | $ | 1,141 | |||||||||||||||||||||||
Property, plant and equipment | 15,134 | 1,694 | 2,490 | 6,024 | 3,635 | 2,386 | 341 | — | 31,704 | (1,578 | ) | 33,879 | 64,005 | |||||||||||||||||||||||||||||||||||
Total assets | 16,143 | 1,880 | 2,738 | 6,802 | 4,518 | 2,842 | 1,540 | 257 | 36,720 | (1,529 | ) | 40,937 | 76,128 | |||||||||||||||||||||||||||||||||||
Total liabilities | 9,231 | 531 | 1,645 | 4,727 | 3,484 | 1,705 | 1,126 | 3,159 | 25,608 | (1,529 | ) | 22,070 | 46,149 | |||||||||||||||||||||||||||||||||||
As at December 31, 2022 | ||||||||||||||||||||||||||||||||||||||||||||||||
Cash and cash equivalents | $ | 55 | $ | 15 | $ | 14 | $ | 150 | $ | 139 | $ | 61 | $ | 11 | $ | — | $ | 445 | $ | (43 | ) | $ | 596 | $ | 998 | |||||||||||||||||||||||
Property, plant and equipment | 15,331 | 1,743 | 1,826 | 4,853 | 3,046 | 2,110 | 227 | — | 29,136 | (1,165 | ) | 26,312 | 54,283 | |||||||||||||||||||||||||||||||||||
Total assets | 16,971 | 1,880 | 2,036 | 5,565 | 3,520 | 2,416 | 378 | 581 | 33,347 | (587 | ) | 31,351 | 64,111 | |||||||||||||||||||||||||||||||||||
Total liabilities | 9,456 | 892 | 625 | 3,709 | 2,874 | 1,322 | 113 | 2,827 | 21,818 | (577 | ) | 16,584 | 37,825 | |||||||||||||||||||||||||||||||||||
F - 63
Geographical Information
The following table presents consolidated revenue split by reportable segment for the year ended December 31:
| (MILLIONS) | 2023 | 2022 | 2021 | |||||||||
| Hydroelectric | ||||||||||||
North America | $ | 1,135 | $ | 1,211 | $ | 1,044 | ||||||
Brazil | 269 | 181 | 177 | |||||||||
Colombia | 1,285 | 1,135 | 929 | |||||||||
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| |||||||
| 2,689 | 2,527 | 2,150 | ||||||||||
Wind | 1,213 | 1,146 | 1,074 | |||||||||
Utility-scale solar | 751 | 700 | 563 | |||||||||
Distributed energy & storage | 350 | 298 | 267 | |||||||||
Sustainable solutions | 35 | 40 | 42 | |||||||||
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Total | $ | 5,038 | $ | 4,711 | $ | 4,096 | ||||||
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The following table presents consolidated property, plant and equipment and equity-accounted investments split by geography:
| (MILLIONS) | December 31, 2023 | December 31, 2022 | ||||||
United States | $ | 34,303 | $ | 29,056 | ||||
Colombia | 10,585 | 8,264 | ||||||
Canada | 7,483 | 7,560 | ||||||
Brazil | 5,622 | 4,754 | ||||||
Europe | 5,046 | 3,963 | ||||||
Asia | 3,320 | 1,932 | ||||||
Other | 192 | 146 | ||||||
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| |||||
| $ | 66,551 | $ | 55,675 | |||||
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7. OTHER INCOME
Brookfield Renewable’s other income for the year ended December 31 is comprised of the following:
| (MILLIONS) | 2023 | 2022 | 2021 | |||||||||
Interest and other investment income | $ | 107 | $ | 68 | $ | 59 | ||||||
Gain on regulatory and contract settlement | 22 | 43 | 35 | |||||||||
Gain on disposition of non core assets and development assets | 72 | — | 202 | |||||||||
Other(1) | 470 | 25 | 8 | |||||||||
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| |||||||
| $ | 671 | $ | 136 | $ | 304 | |||||||
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| |||||||
| (1) | During the year ended December 31, 2023, Brookfield Renewable’s application of the acquisition method for it’s completed investments resulted in the recognition of net assets at a fair value that exceeded consideration transferred. The difference in value of $370 million was recorded within other income in the consolidated statements of income (loss). Refer to Note 3—Acquisitions for more details. |
F - 64
8. DIRECT OPERATING COSTS
Brookfield Renewable’s direct operating costs for the year ended December 31 are comprised of the following:
| (MILLIONS) | Notes | 2023 | 2022 | 2021 | ||||||||||||
Fuel and power purchases(1)(2) | $ | (574 | ) | $ | (400 | ) | $ | (390 | ) | |||||||
Salaries and benefits | (464 | ) | (325 | ) | (293 | ) | ||||||||||
Operations and maintenance | (347 | ) | (309 | ) | (285 | ) | ||||||||||
Water royalties, property taxes and other regulatory fees | (238 | ) | (205 | ) | (201 | ) | ||||||||||
Insurance | (72 | ) | (71 | ) | (68 | ) | ||||||||||
Professional fees | (122 | ) | (59 | ) | (56 | ) | ||||||||||
Other related party services | 28 | (5 | ) | (1 | ) | (8 | ) | |||||||||
Other | (111 | ) | (64 | ) | (64 | ) | ||||||||||
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| |||||||||||
| $ | (1,933 | ) | $ | (1,434 | ) | $ | (1,365 | ) | ||||||||
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| (1) | Fuel and power purchases are primarily attributable to our portfolio in Colombia. |
| (2) | Includes $80 million in 2021 relating to the Texas winter storm event which reflect the cost of acquiring energy to cover our contractual obligations for our wind assets that were not generating during the period due to freezing conditions, net of hedging initiatives. |
Direct operating costs exclude depreciation expense of $1,852 million (2022: $1,583 million and 2021: $1,501 million) which is presented separately.
9. OTHER
Brookfield Renewable’s other for the year ended December 31 is comprised of the following:
| (MILLIONS) | Notes | 2023 | 2022 | 2021 | ||||||||||||
Change in fair value of property, plant and equipment | $ | (164 | ) | $ | (61 | ) | $ | (63 | ) | |||||||
Amortization of service concession assets | (11 | ) | (15 | ) | (14 | ) | ||||||||||
Transaction costs | (5 | ) | (2 | ) | (8 | ) | ||||||||||
Legal provisions | 27 | — | (6 | ) | (58 | ) | ||||||||||
Other | (32 | ) | (106 | ) | (164 | ) | ||||||||||
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| |||||||||||
| $ | (212 | ) | $ | (190 | ) | $ | (307 | ) | ||||||||
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10. FOREIGN CURRENCY TRANSLATION
Brookfield Renewable’s foreign currency translation for the year ended December 31 shown in the consolidated statements of comprehensive income is comprised of the following:
| (MILLIONS) | Notes | 2023 | 2022 | 2021 | ||||||||||||
Foreign currency translation on | ||||||||||||||||
Property, plant and equipment, at fair value | 12 | $ | 2,798 | $ | (2,011 | ) | $ | (1,510 | ) | |||||||
Goodwill | 17 | 150 | (131 | ) | (121 | ) | ||||||||||
Borrowings | 13 | (818 | ) | 975 | 436 | |||||||||||
Deferred income tax liabilities and assets | 11 | (698 | ) | 526 | 318 | |||||||||||
Other assets and liabilities | (115 | ) | (6 | ) | 18 | |||||||||||
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| |||||||||||
| $ | 1,317 | $ | (647 | ) | $ | (859 | ) | |||||||||
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F - 65
11. INCOME TAXES
The major components of income tax recovery (expense) for the year ended December 31 are as follows:
| (MILLIONS) | 2023 | 2022 | 2021 | |||||||||
Income tax recovery (expense) applicable to: | ||||||||||||
Current taxes | ||||||||||||
Attributed to the current period | $ | (128 | ) | $ | (148 | ) | $ | (43 | ) | |||
Deferred taxes | ||||||||||||
Income taxes – origination and reversal of temporary differences | 193 | 125 | 160 | |||||||||
Relating to change in tax rates / imposition of new tax laws | — | 10 | (147 | ) | ||||||||
Relating to unrecognized temporary differences and tax losses | (17 | ) | 15 | 16 | ||||||||
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| |||||||
| 176 | 150 | 29 | ||||||||||
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Total income tax recovery (expense) | $ | 48 | $ | 2 | $ | (14 | ) | |||||
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The major components of deferred income tax (expense) recovery for the year ended December 31 recorded directly to other comprehensive income are as follows:
| (MILLIONS) | 2023 | 2022 | 2021 | |||||||||
Deferred income taxes attributed to: | ||||||||||||
Financial instruments designated as cash flow hedges | $ | (15 | ) | $ | (75 | ) | $ | 3 | ||||
Other | 5 | (17 | ) | (13 | ) | |||||||
Revaluation surplus | ||||||||||||
Origination and reversal of temporary differences | 77 | (881 | ) | (1,003 | ) | |||||||
Relating to changes in tax rates / imposition of new tax laws | 1 | 34 | (159 | ) | ||||||||
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| |||||||
| $ | 68 | $ | (939 | ) | $ | (1,172 | ) | |||||
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Brookfield Renewable’s effective income tax recovery (expense) for the year ended December 31 is different from its recovery at its statutory income tax rate due to the differences below:
| (MILLIONS) | 2023 | 2022 | 2021 | |||||||||
Statutory income tax recovery (expense)(1) | $ | (165 | ) | $ | (38 | ) | $ | 14 | ||||
Reduction (increase) resulting from: | ||||||||||||
Decrease in tax assets not recognized | (11 | ) | (10 | ) | (5 | ) | ||||||
Differences between statutory rate and future tax rate and tax rate changes | — | 10 | (147 | ) | ||||||||
Non-controlling interest | 98 | 20 | 2 | |||||||||
Subsidiaries’ income taxed at different rates | 125 | 29 | 127 | |||||||||
Other | 1 | (9 | ) | (5 | ) | |||||||
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| |||||||
Effective income tax recovery (expense) | $ | 48 | $ | 2 | $ | (14 | ) | |||||
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| |||||||
| (1) | Statutory income tax expense is calculated using domestic rates applicable to the profits in the relevant country. |
The above reconciliation has been prepared by aggregating the information for all of Brookfield Renewable’s subsidiaries using the domestic rate in each tax jurisdiction.
Brookfield Renewable’s effective income tax rate was (8.5)% for the year ended December 31, 2023 (2022: (1.5)% and 2021: (26.9)%). The effective tax rate is different than the statutory rate primarily due to rate differentials, legislative changes in tax rates during the year, changes in tax assets not recognized and non-controlling interests’ income not subject to tax.
F - 66
The following table details the expiry date, if applicable, of the unrecognized deferred tax assets as at December 31:
| (MILLIONS) | 2023 | 2022 | 2021 | |||||||||
Less than four years | $ | 12 | $ | 9 | $ | 5 | ||||||
Thereafter | 166 | 144 | 138 | |||||||||
The deferred tax assets and liabilities of the following temporary differences have been recognized in the consolidated financial statements for the year ended December 31:
| (MILLIONS) | Non-capital losses | Difference between tax and carrying value | Net deferred tax (liabilities) assets | |||||||||
As at January 1, 2021 | $ | 1,140 | $ | (6,450 | ) | $ | (5,310 | ) | ||||
Recognized in net income | 23 | 6 | 29 | |||||||||
Recognized in equity | 8 | (1,068 | ) | (1,060 | ) | |||||||
Business combination | (28 | ) | 33 | 5 | ||||||||
Foreign exchange | 6 | 312 | 318 | |||||||||
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As at December 31, 2021 | 1,149 | (7,167 | ) | (6,018 | ) | |||||||
Recognized in net income | 132 | 18 | 150 | |||||||||
Recognized in equity | — | (947 | ) | (947 | ) | |||||||
Business combination | — | (42 | ) | (42 | ) | |||||||
Foreign exchange | (8 | ) | 534 | 526 | ||||||||
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As at December 31, 2022 | 1,273 | (7,604 | ) | (6,331 | ) | |||||||
Recognized in net income | 101 | 75 | 176 | |||||||||
Recognized in equity | — | 113 | 113 | |||||||||
Business combination | 78 | (268 | ) | (190 | ) | |||||||
Foreign exchange | 6 | (704 | ) | (698 | ) | |||||||
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As at December 31, 2023 | $ | 1,458 | $ | (8,388 | ) | $ | (6,930 | ) | ||||
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The deferred income tax liabilities include $6,885 million (2022: $6,914 million and 2021: $6,082 million) of liabilities which relate to property, plant and equipment revaluations included in equity.
The unrecognized taxable temporary difference attributable to Brookfield Renewable’s interest in its subsidiaries, branches, associates, and joint ventures is $5,203 million (2022: $6,028 million and 2021: $5,856 million).
F - 67
12. PROPERTY, PLANT AND EQUIPMENT, AT FAIR VALUE
The following table presents a reconciliation of property, plant and equipment at fair value:
| (MILLIONS) | Notes | Hydroelectric | Wind | Solar | Other(1) | Total | ||||||||||||||||||
Property, plant and equipment, at fair value | ||||||||||||||||||||||||
As at December 31, 2021 | $ | 31,513 | $ | 9,115 | $ | 7,389 | $ | 188 | $ | 48,205 | ||||||||||||||
Additions, net(2) | 5 | (194 | ) | (65 | ) | (7 | ) | (261 | ) | |||||||||||||||
Transfer from construction work-in-progress | 183 | 911 | 1,071 | 7 | 2,172 | |||||||||||||||||||
Acquisitions through business combinations | 3 | — | 1,418 | 495 | — | 1,913 | ||||||||||||||||||
Disposals | (97 | ) | — | — | — | (97 | ) | |||||||||||||||||
Transfer to assets held for sale | (677 | ) | — | — | — | (677 | ) | |||||||||||||||||
Items recognized through OCI: | ||||||||||||||||||||||||
Change in fair value | 2,490 | 779 | (31 | ) | 77 | 3,315 | ||||||||||||||||||
Foreign exchange | 10 | (1,634 | ) | (178 | ) | (191 | ) | 7 | (1,996 | ) | ||||||||||||||
Items recognized through net income: | ||||||||||||||||||||||||
Change in fair value | (2 | ) | 8 | (44 | ) | (2 | ) | (40 | ) | |||||||||||||||
Depreciation | 8 | (613 | ) | (557 | ) | (385 | ) | (28 | ) | (1,583 | ) | |||||||||||||
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As at December 31, 2022 | 31,168 | 11,302 | 8,239 | 242 | 50,951 | |||||||||||||||||||
Additions(3) | 5 | 60 | 394 | — | 459 | |||||||||||||||||||
Transfer from construction work-in-progress | 154 | 934 | 851 | 2 | 1,941 | |||||||||||||||||||
Acquisitions through business combinations | 3 | — | 3,177 | 1,980 | — | 5,157 | ||||||||||||||||||
Disposals(4) | 4 | — | — | (30 | ) | (5 | ) | (35 | ) | |||||||||||||||
Items recognized through OCI: | ||||||||||||||||||||||||
Change in fair value | (466 | ) | 367 | 28 | (36 | ) | (107 | ) | ||||||||||||||||
Foreign exchange | 10 | 2,435 | 113 | 178 | 9 | 2,735 | ||||||||||||||||||
Items recognized through net income: | ||||||||||||||||||||||||
Change in fair value | (7 | ) | (13 | ) | (164 | ) | 24 | (160 | ) | |||||||||||||||
Depreciation | 8 | (643 | ) | (716 | ) | (454 | ) | (39 | ) | (1,852 | ) | |||||||||||||
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As at December 31, 2023 | $ | 32,646 | $ | 15,224 | $ | 11,022 | $ | 197 | $ | 59,089 | ||||||||||||||
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Construction work-in-progress | ||||||||||||||||||||||||
As at December 31, 2021 | $ | 278 | $ | 295 | $ | 649 | $ | 5 | $ | 1,227 | ||||||||||||||
Additions, net | 209 | 1,155 | 1,325 | 7 | 2,696 | |||||||||||||||||||
Transfer to property, plant and equipment | (183 | ) | (911 | ) | (1,071 | ) | (7 | ) | (2,172 | ) | ||||||||||||||
Acquisitions through business combinations | — | 347 | 827 | — | 1,174 | |||||||||||||||||||
Transfer to assets held for sale | (8 | ) | — | — | — | (8 | ) | |||||||||||||||||
Items recognized through OCI: | ||||||||||||||||||||||||
Change in fair value | — | 269 | 161 | — | 430 | |||||||||||||||||||
Foreign exchange | 10 | 3 | (23 | ) | 6 | (1 | ) | (15 | ) | |||||||||||||||
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As at December 31, 2022 | 299 | 1,132 | 1,897 | 4 | 3,332 | |||||||||||||||||||
Additions | 159 | 1,026 | 1,509 | 10 | 2,704 | |||||||||||||||||||
Transfer to property, plant and equipment | (154 | ) | (934 | ) | (851 | ) | (2 | ) | (1,941 | ) | ||||||||||||||
Acquisitions through business combinations | 3 | — | 449 | 346 | — | 795 | ||||||||||||||||||
Items recognized through OCI: | ||||||||||||||||||||||||
Change in fair value | — | (60 | ) | 80 | — | 20 | ||||||||||||||||||
Foreign exchange | 10 | (3 | ) | 28 | 38 | — | 63 | |||||||||||||||||
Items recognized through net income: | ||||||||||||||||||||||||
Change in fair value | (1 | ) | (24 | ) | (32 | ) | — | (57 | ) | |||||||||||||||
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As at December 31, 2023 | $ | 300 | $ | 1,617 | $ | 2,987 | $ | 12 | $ | 4,916 | ||||||||||||||
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Total property, plant and equipment, at fair value | ||||||||||||||||||||||||
As at December 31, 2022(5)(6) | $ | 31,467 | $ | 12,434 | $ | 10,136 | $ | 246 | $ | 54,283 | ||||||||||||||
As at December 31, 2023(5)(6) | $ | 32,946 | $ | 16,841 | $ | 14,009 | $ | 209 | $ | 64,005 | ||||||||||||||
| (1) | Includes biomass and cogeneration. |
| (2) | Includes fair value changes to decommissioning assets of nil (2022: $255 million). |
| (3) | Includes adjustments to purchase price allocations. Refer to Note 3—Acquisitions for more details. |
| (4) | Relates to disposal of significant assets. See Note 4—Disposal of assets for additional details. |
| (5) | Includes right-of-use assets not subject to revaluation of $60 million (2022: $64 million) in hydroelectric, $284 million (2022: $242 million) in wind, $385 million (2022: $215 million) in solar and nil (2022: nil) in other. |
F - 68
During the year ended December 31, 2023, Brookfield Renewable, together with its institutional partners, completed the acquisitions of the following investments. They are accounted for as asset acquisitions as they do not constitute business combinations under IFRS 3:
| • | A series of distributed generation assets in the U.S. totaling 99 MW, with $156 million of property, plant and equipment included in the consolidated statements of financial position at the acquisition date. Brookfield Renewable holds a 25% economic interest. |
| • | A 48 MW portfolio of wind assets in China, with $53 million of property, plant and equipment included in the consolidated statements of financial position at the acquisition date. Brookfield Renewable holds a 25% economic interest. |
| • | A 50 MW portfolio of wind assets in China, with $68 million of property, plant and equipment included in the consolidated statements of financial position at the acquisition date. Brookfield Renewable holds a 20% economic interest. |
| • | A series of distributed generation assets in U.S. totaling 82 MW, with $86 million of property, plant and equipment included in the consolidated statements of financial position at the acquisition date. Brookfield Renewable holds a 20% economic interest. |
| • | A 60 MW portfolio of operating solar facilities in Colombia, with $71 million of property, plant and equipment included in the consolidated statements of financial position at the acquisition date. The company holds a 23% economic interest. |
The fair value of Brookfield Renewable’s property, plant and equipment is calculated as described in Notes 1(g) – and 1(r)(i) – Critical estimates – Property, plant and equipment. Judgment is involved in determining the appropriate estimates and assumptions in the valuation of Brookfield Renewable’s property, plant and equipment. See Note 1(s)(iii) – Critical judgments in applying accounting policies – Property, plant and equipment. Brookfield Renewable has classified its property, plant and equipment under level 3 of the fair value hierarchy.
Discount rates, terminal capitalization rates and terminal years used in the valuation methodology are provided in the following table:
| North America | Colombia | Brazil | Europe | |||||||||||||||||||||||||||||
| 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | 2023 | 2022 | |||||||||||||||||||||||||
Discount rate(1) | ||||||||||||||||||||||||||||||||
Contracted | 5.1% - 5.7% | 4.9% - 5.4% | 8.7% | 8.5% | 8.4% | 8.2% | 4.8% | 4.4% | ||||||||||||||||||||||||
Uncontracted | 6.3% - 7.0% | 6.2% - 6.7% | 10.0% | 9.7% | 9.7% | 9.5% | 4.8% | 4.4% | ||||||||||||||||||||||||
Terminal capitalization rate(2) | 4.4% - 5.0% | 4.3% - 4.9% | 8.0% | 7.7% | N/A | N/A | N/A | N/A | ||||||||||||||||||||||||
Terminal year(3) | 2046 | 2044 | 2043 | 2042 | 2053 | 2051 | 2037 | 2036 | ||||||||||||||||||||||||
| (1) | Discount rates are not adjusted for asset specific risks. |
| (2) | The terminal capitalization rate applies only to hydroelectric assets in the United States, Canada and Colombia. |
| (3) | For hydroelectric assets, terminal year refers to the valuation date of the terminal value. |
F - 69
The following table summarizes the impact of a change in discount rates, electricity prices and terminal capitalization rates on the fair value of property, plant and equipment:
| 2023 | ||||||||||||||||||||
| (MILLIONS) | North America | Colombia | Brazil | Europe | Total | |||||||||||||||
25 bps increase in discount rates | $ | (1,400 | ) | $ | (340 | ) | $ | (120 | ) | $ | (40 | ) | $ | (1,900 | ) | |||||
25 bps decrease in discount rates | 1,550 | 380 | 130 | 40 | 2,100 | |||||||||||||||
5% increase in future energy prices | 1,350 | 540 | 140 | — | 2,030 | |||||||||||||||
5% decrease in future energy prices | (1,340 | ) | (540 | ) | (140 | ) | — | (2,020 | ) | |||||||||||
25 bps increase in terminal capitalization rate | (450 | ) | (80 | ) | — | — | (530 | ) | ||||||||||||
25 bps decrease in terminal capitalization rate | 500 | 90 | — | — | 590 | |||||||||||||||
| 2022 | ||||||||||||||||||||
| (MILLIONS) | North America | Colombia | Brazil | Europe | Total | |||||||||||||||
25 bps increase in discount rates | $ | (1,530 | ) | $ | (310 | ) | $ | (110 | ) | $ | (50 | ) | $ | (2,000 | ) | |||||
25 bps decrease in discount rates | 1,650 | 260 | 110 | 50 | 2,070 | |||||||||||||||
5% increase in future energy prices | 1,280 | 440 | 120 | — | 1,840 | |||||||||||||||
5% decrease in future energy prices | (1,270 | ) | (440 | ) | (120 | ) | — | (1,830 | ) | |||||||||||
25 bps increase in terminal capitalization rate | (490 | ) | (70 | ) | — | — | (560 | ) | ||||||||||||
25 bps decrease in terminal capitalization rate | 540 | 80 | — | — | 620 | |||||||||||||||
Terminal values are included in the valuation of hydroelectric assets in the United States, Canada and Colombia. For the hydroelectric assets in Brazil, cash flows have been included based on the duration of the authorization or useful life of a concession asset plus a one-time 30-year renewal term for the majority of the hydroelectric assets. The weighted-average remaining duration of the authorization or useful life of a concession asset at December 31, 2023, including a one-time 30-year renewal for applicable hydroelectric assets, is 34 years (2022: 35 years). Consequently, there is no terminal value attributed to the hydroelectric assets in Brazil at the end of the authorization term.
The following table summarizes the percentage of total generation contracted under power purchase agreements as at December 31, 2023:
| North America | Colombia | Brazil | Europe | |||||||||||||
1 - 5 years | 75 | % | 61 | % | 81 | % | 100 | % | ||||||||
6 - 10 years | 57 | % | 29 | % | 70 | % | 76 | % | ||||||||
Thereafter | 30 | % | 3 | % | 40 | % | 47 | % | ||||||||
The following table summarizes average power prices from long-term power purchase agreements that are linked specifically to the related power generating assets:
| Per MWh(1) | North America | Colombia | Brazil | Europe | ||||||||||||||||
1 - 10 years | $ | 77 | COP | 294,000 | R$ | 313 | € | 73 | ||||||||||||
11 - 20 years | 74 | 357,000 | 381 | 65 | ||||||||||||||||
| (1) | Assumes nominal prices based on weighted-average generation. |
F - 70
The following table summarizes the estimates of future electricity prices:
| Per MWh(1) | North America | Colombia | Brazil | Europe | ||||||||||||||||
1 - 10 years | $ | 92 | COP | 412,000 | R$ | 279 | € | 62 | ||||||||||||
11 - 20 years | 117 | 600,000 | 424 | 65 | ||||||||||||||||
| (1) | Assumes nominal prices based on weighted-average generation. |
Brookfield Renewable’s long-term view is anchored to the cost of securing new energy from renewable sources to meet future demand growth between 2027 and 2035. A further one year change would increase or decrease the fair value of property, plant and equipment by approximately $153 million (2022: $140 million).
Had Brookfield Renewable’s revalued property, plant and equipment been measured on a historical cost basis, the carrying amounts, net of accumulated depreciation would have been as follows at December 31:
| (MILLIONS) | 2023 | 2022 | ||||||
Hydroelectric | $ | 10,582 | $ | 9,812 | ||||
Wind | 14,071 | 10,146 | ||||||
Solar | 12,508 | 8,576 | ||||||
Other(1) | 179 | 158 | ||||||
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| $ | 37,340 | $ | 28,692 | |||||
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| (1) | Includes biomass and cogeneration. |
F - 71
13. BORROWINGS
Corporate Borrowings
The composition of corporate borrowings as at December 31 is presented in the following table:
| December 31, 2023 | December 31, 2022 | |||||||||||||||||||||||||||||||
| Weighted-average | Weighted-average | |||||||||||||||||||||||||||||||
| (MILLIONS EXCEPT AS NOTED) | Interest rate (%) | Term (years) | Carrying value | Estimated fair value | Interest rate (%) | Term (years) | Carrying value | Estimated fair value | ||||||||||||||||||||||||
Credit facilities | N/A | 5 | $ | — | $ | — | N/A | 5 | $ | — | $ | — | ||||||||||||||||||||
Commercial paper | 6.0 | <1 | 183 | 183 | 5.1 | <1 | 249 | 249 | ||||||||||||||||||||||||
Medium-Term Notes: | ||||||||||||||||||||||||||||||||
Series 4 (C$150) | 5.8 | 13 | 113 | 121 | 5.8 | 14 | 111 | 114 | ||||||||||||||||||||||||
Series 9 (C$400) | 3.8 | 1 | 302 | 297 | 3.8 | 2 | 295 | 286 | ||||||||||||||||||||||||
Series 10 (C$500) | 3.6 | 3 | 377 | 366 | 3.6 | 4 | 369 | 350 | ||||||||||||||||||||||||
Series 11 (C$475) | 4.3 | 5 | 358 | 353 | 4.3 | 6 | 351 | 338 | ||||||||||||||||||||||||
Series 12 (C$475) | 3.4 | 6 | 358 | 335 | 3.4 | 7 | 351 | 316 | ||||||||||||||||||||||||
Series 13 (C$300) | 4.3 | 26 | 226 | 201 | 4.3 | 27 | 221 | 184 | ||||||||||||||||||||||||
Series 14 (C$425) | 3.3 | 27 | 321 | 240 | 3.3 | 28 | 314 | 218 | ||||||||||||||||||||||||
Series 15 (C$400)(1) | 5.9 | 9 | 303 | 324 | 5.9 | 10 | 295 | 307 | ||||||||||||||||||||||||
Series 16 (C$400) | 5.3 | 10 | 302 | 311 | — | — | — | — | ||||||||||||||||||||||||
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| 4.3 | 10 | 2,660 | 2,548 | 4.1 | 11 | 2,307 | 2,113 | |||||||||||||||||||||||||
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Total corporate borrowings |
| 2,843 | $ | 2,731 | 2,556 | $ | 2,362 | |||||||||||||||||||||||||
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Add: Unamortized premiums(2) |
| 2 | 2 | |||||||||||||||||||||||||||||
Less: Unamortized financing fees(2) |
| (12 | ) | (10 | ) | |||||||||||||||||||||||||||
Less: Current portion |
| (183 | ) | (249 | ) | |||||||||||||||||||||||||||
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| $ | 2,650 | $ | 2,299 | |||||||||||||||||||||||||||||
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| (1) | Includes $8 million (2022: $7 million) outstanding to Brookfield Reinsurance. Refer to Note 28 - Related party transactions for more details. |
| (2) | Unamortized premiums and unamortized financing fees are amortized over the terms of the borrowing. |
The following table outlines the change in the unamortized financing fees of corporate borrowings for the year ended December 31:
| (MILLIONS) | 2023 | 2022 | ||||||
Corporate borrowings | ||||||||
Unamortized financing fees, beginning of year | $ | (10 | ) | $ | (10 | ) | ||
Additional financing fees | (3 | ) | (1 | ) | ||||
Amortization of financing fees | 1 | 1 | ||||||
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Unamortized financing fees, end of year | $ | (12 | ) | $ | (10 | ) | ||
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Credit facilities
Brookfield Renewable had $183 million commercial paper outstanding as at December 31, 2023 (2022: $249 million).
Brookfield Renewable 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 debt service reserve accounts. See Note 27 – Commitments, contingencies and guarantees for letters of credit issued by subsidiaries.
F - 72
The following table summarizes the available portion of corporate credit facilities as at December 31:
| (MILLIONS) | 2023 | 2022 | ||||||
Authorized corporate credit facilities and related party credit facilities(1) | $ | 2,375 | $ | 2,375 | ||||
Draws on corporate credit facilities(1)(2) | (165 | ) | — | |||||
Authorized letter of credit facility | 500 | 500 | ||||||
Issued letters of credit | (307 | ) | (344 | ) | ||||
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Available portion of corporate credit facilities | $ | 2,403 | $ | 2,531 | ||||
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| (1) | Amounts are guaranteed by Brookfield Renewable. |
| (2) | Relates to letter of credit issued against Brookfield Renewable’s corporate credit facilities. |
Medium-term notes
Corporate borrowings are obligations of a finance subsidiary of Brookfield Renewable, Brookfield Renewable Partners ULC (“Canadian Finco”) (Note 30 – Subsidiary Public Issuers). Canadian Finco may redeem some or all of the borrowings from time to time, pursuant to the terms of the indenture. The balance is payable upon maturity, and interest on corporate borrowings is paid semi-annually. The term notes payable by Canadian Finco are unconditionally guaranteed by Brookfield Renewable, Brookfield Renewable Energy L.P. (“BRELP”) and certain other subsidiaries.
In the first quarter of 2023, Brookfield Renewable issued C$400 million of Series 16 medium-term notes. The medium-term notes have a fixed interest rate of 5.29% and a maturity date of October 28, 2033. The Series 16 medium-term notes are corporate-level green bonds.
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 Dollar Offered Rate (“CDOR”). 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. Non-Recourse borrowings in India consist of both fixed and floating interest indexed to Prime lending rate of lender (“MCLR”). Non-recourse borrowings in China consist of floating interest rates of People’s Bank of China (“PBOC”).
Effective January 1, 2022, SONIA replaced the £ London Interbank Offered Rate (“LIBOR”), and Euro Short-term Rate (“€STR”) replaced € LIBOR. The Canadian Overnight Repo Rate Average (“CORRA”) is expected to replace CDOR after June 28, 2024.
As at December 31, 2023, Brookfield Renewable’s floating rate borrowings have not been materially impacted by SONIA and €STR reforms. Brookfield Renewable 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 US$ LIBOR with SOFR referenced floating-rate borrowings, interest rate swaps, and updating hedge designations. The adoption did not have a significant impact on Brookfield Renewable’s financial reporting.
F - 73
The composition of non-recourse borrowings as at December 31 is presented in the following table:
| December 31, 2023 | December 31, 2022 | |||||||||||||||||||||||||||||||
| Weighted-average | Weighted-average | |||||||||||||||||||||||||||||||
| (MILLIONS EXCEPT AS NOTED) | Weighted- average interest rate (%) | Term (years) | Carrying value | Estimated fair value | Weighted- average interest rate (%) | Term (years) | Carrying value | Estimated fair value | ||||||||||||||||||||||||
Non-recourse borrowings(1)(2) |
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Hydroelectric | 7.8 | 9 | $ | 9,468 | $ | 9,292 | 7.2 | 10 | $ | 8,813 | $ | 8,104 | ||||||||||||||||||||
Wind | 6.1 | 9 | 6,866 | 6,922 | 5.4 | 8 | 5,943 | 5,824 | ||||||||||||||||||||||||
Utility-scale solar | 6.2 | 12 | 5,868 | 5,879 | 5.6 | 13 | 4,625 | 4,502 | ||||||||||||||||||||||||
Distributed energy & storage(3) | 6.2 | 6 | 3,035 | 2,963 | 5.3 | 8 | 2,593 | 2,340 | ||||||||||||||||||||||||
Sustainable solutions | 7.0 | 1 | 1,783 | 1,783 | 5.9 | 2 | 347 | 347 | ||||||||||||||||||||||||
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Total | 6.8 | 9 | 27,020 | $ | 26,839 | 6.2 | 10 | 22,321 | $ | 21,117 | ||||||||||||||||||||||
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Add: Unamortized premiums and discounts(4) |
| (11 | ) | 105 | ||||||||||||||||||||||||||||
Less: Unamortized financing fees(4) |
| (140 | ) | (124 | ) | |||||||||||||||||||||||||||
Less: Current portion |
| (4,752 | ) | (2,027 | ) | |||||||||||||||||||||||||||
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| $ | 22,117 | $ | 20,275 | |||||||||||||||||||||||||||||
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| (1) | Includes $2,626 million (2022: $1,838 million) borrowed under a subscription facility of a Brookfield sponsored private fund. |
| (2) | Includes $101 million (2022: $93 million) outstanding to an associate of Brookfield. Refer to Note 28—Related party transactions for more details. |
| (3) | Includes adjustments to purchase price allocations. Refer to Note 3—Acquisitions for more details. |
| (4) | Unamortized premiums, discounts, and financing fees are amortized over the terms of the borrowing. |
F - 74
Future repayments of Brookfield Renewable’s non-recourse borrowings for each of the next five years and thereafter are as follows:
| (MILLIONS) | 2024 | 2025 | 2026 | 2027 | 2028 | Thereafter | Total | |||||||||||||||||||||
Non-recourse borrowings | ||||||||||||||||||||||||||||
Hydroelectric | $ | 664 | $ | 691 | $ | 1,610 | $ | 718 | $ | 602 | $ | 5,183 | $ | 9,468 | ||||||||||||||
Wind | 1,081 | 615 | 731 | 529 | 725 | 3,185 | 6,866 | |||||||||||||||||||||
Utility-scale solar | 954 | 552 | 370 | 323 | 639 | 3,030 | 5,868 | |||||||||||||||||||||
Distributed energy & storage | 270 | 471 | 345 | 362 | 191 | 1,396 | 3,035 | |||||||||||||||||||||
Sustainable solutions | 1,783 | — | — | — | — | — | 1,783 | |||||||||||||||||||||
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| $ | 4,752 | $ | 2,329 | $ | 3,056 | $ | 1,932 | $ | 2,157 | $ | 12,794 | $ | 27,020 | |||||||||||||||
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The following table outlines the change in the unamortized financing fees of non-recourse borrowings for the year ended December 31:
| (MILLIONS) | 2023 | 2022 | ||||||
Non-recourse borrowings | ||||||||
Unamortized financing fees, beginning of year | $ | (124 | ) | $ | (132 | ) | ||
Additional financing fees | (50 | ) | (49 | ) | ||||
Amortization of financing fees | 25 | 36 | ||||||
Foreign exchange translation and other | 9 | 21 | ||||||
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Unamortized financing fees, end of year | $ | (140 | ) | $ | (124 | ) | ||
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The following table outlines the change in the unamortized premiums of non-recourse borrowings for the year ended December 31:
| (MILLIONS) | 2023 | 2022 | ||||||
Non-recourse borrowings | ||||||||
Unamortized premiums and discounts, beginning of year | $ | 105 | $ | 160 | ||||
Additional premiums and discounts | (90 | ) | (13 | ) | ||||
Amortization of premiums and discounts | (14 | ) | (15 | ) | ||||
Foreign exchange translation and other | (12 | ) | (27 | ) | ||||
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Unamortized premiums and discounts, end of year | $ | (11 | ) | $ | 105 | |||
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Brookfield Renewable’s financing and refinancing completed for the year ended December 31, 2023 are as follows:
Period | Region | Technology | Average Interest rate(1) |
| Maturity | Carrying Value | ||||||||
| Q1 2023 | US | Distributed generation | 7.03 | % | Financing | 2026 | $100 million | |||||||
| Q1 2023 | China | Wind | 4.40 | % | Financing | 2040 | CNY 971 million ( $141 million) | |||||||
| Q1 2023 | China | Wind | 4.60 | % | Financing | 2030 | CNY 200 million ($29 million) | |||||||
| Q1 2023 | China | Wind | 4.60 | % | Financing | 2039 | CNY 70 million ( $10 million) | |||||||
| Q1 2023 | China | Wind | 4.40 | % | Financing | 2039 | CNY 97 million ($14 million) | |||||||
| Q2 2023 | India | Solar | MCLR | Financing | 2043 | INR 10 billion ( $123 million) | ||||||||
| Q2 2023 | Brazil | Wind | CDI | Financing | 2024 | BRL $450 million ($93 million) | ||||||||
| Q2 2023 | Canada | Hydroelectric | 6.19 | % | Financing | 2045 | CAD $30 million ($22 million) | |||||||
| Q2 2023 | US | Solar | 6.62 | % | Financing | 2058 - 2060 | $45 million | |||||||
| Q2 2023 | US | Wind | SOFR | Refinancing | 2033 | $311 million | ||||||||
| Q3 2023 | Brazil | Wind | CDI | Financing | 2047 | $300 million ($60 million) | ||||||||
| Q3 2023 | Canada | Solar | CDOR | Financing | 2038(2) | CAD $34 million ($23 million) | ||||||||
F - 75
Period | Region | Technology | Average Interest rate(1) |
| Maturity | Carrying Value | ||||||
| Q3 2023 | US | Wind | SOFR | Financing | 2026 | $175 million | ||||||
| Q3 2023 | China | Wind | PBOC | Financing | 2040 | CNY 273 million ($37 million) | ||||||
| Q3 2023 | Colombia | Hydro | IBR | Financing | 2033 | COP 687 billion ($169 million) | ||||||
| Q4 2023 | China | Wind | 5.00% | Financing | 2039 | CNY 1.5 billion ($203 million) | ||||||
| Q4 2023 | China | Wind | 4.20% | Financing | 2041 | CNY 298 million ($42 million) | ||||||
| Q4 2023 | India | Solar | 8.80% | Financing | 2043 | INR 7.4 billion ( $90 million) | ||||||
| Q4 2023 | Brazil | Hydro | 7.72% | Refinancing | 2024 | BRL $800 million ($164 million) | ||||||
| Q4 2023 | US | Hydro | 6.16% | Refinancing | 2032 | $80 million | ||||||
| Q4 2023 | US | Hydro | 7.75% | Refinancing | 2033 | $125 million | ||||||
| Q4 2023 | US | Wind | SOFR | Financing | 2034(3) | $52 million | ||||||
| Q4 2023 | US | Wind | SOFR | Financing | 2024 | $140 million | ||||||
| Q4 2023 | US | Solar | SOFR | Financing | 2024 | $39 million | ||||||
| Q4 2023 | US | Solar | SOFR | Financing | 2028 | $48 million | ||||||
| Q4 2023 | US | Solar | SOFR | Financing | 2024 | $61 million | ||||||
| Q4 2023 | US | Various | SOFR | Financing | 2025 | $200 million | ||||||
| Q4 2023 | US | Various | SOFR | Financing | 2028 | $600 million | ||||||
| Q4 2023 | Colombia | Hydro | IBR | Financing | 2033 | COP $100 billion ($25 million) |
| (1) | Benchmarked financings bear a variable interest at the applicable rate plus a margin. |
| (2) | Term conversion date in 2024 automatically rolling into a maturity of 2038. |
| (3) | Term conversion date in 2024 automatically rolling into a maturity of 2034. |
In the second quarter of 2023, the Company extended the maturity of its $650 million credit facility associated with the United States business to mature in 2026.
In the fourth quarter of 2023, the Company extended the maturity of its $46 million credit facility associated with US wind assets to mature in 2024.
In the fourth quarter of 2023, the Company extended the maturity of its $64 million credit facility associated with US wind assets to mature in 2030.
In the fourth quarter of 2023, the Company extended the maturity of its $25 million credit facility associated with the United States business to mature in 2025.
In the fourth quarter of 2023, the Company extended the maturity of its $75 million credit facility associated with the US distributed generation business to mature in 2024.
F - 76
Supplemental Information
The following table outlines changes in Brookfield Renewable’s borrowings for the year ended December 31:
| Net cash flows from financing activities(1) | Non-cash | |||||||||||||||||||||||||||
| (MILLIONS) | January 1 | Acquisition | Disposal | Transfer to liabilities held for sale | Other(2)(3)(4) | December 31 | ||||||||||||||||||||||
2023 | ||||||||||||||||||||||||||||
Corporate borrowings | $ | 2,548 | 228 | — | — | — | 57 | $ | 2,833 | |||||||||||||||||||
Non-recourse borrowings | $ | 22,302 | 2,279 | 2,073 | (164 | ) | — | 379 | $ | 26,869 | ||||||||||||||||||
2022 | ||||||||||||||||||||||||||||
Corporate borrowings | $ | 2,149 | 545 | — | — | — | (146 | ) | $ | 2,548 | ||||||||||||||||||
Non-recourse borrowings | $ | 19,380 | 3,254 | 443 | — | (171 | ) | (604 | ) | $ | 22,302 | |||||||||||||||||
| (1) | Excludes $307 million (2022: $233 million) of net cash flow from financing activities related to tax equity recorded on the consolidated statements of cash flows. |
| (2) | Includes foreign exchange and amortization of unamortized premium and financing fees. |
| (3) | Includes $103 million (2022: $129 million) of non-recourse borrowings acquired through asset acquisitions. |
| (4) | Includes adjustments to purchase price allocations. Refer to Note 3 - Acquisitions for more details. |
14. NON-CONTROLLING INTERESTS
Brookfield Renewable’s non-controlling interests are comprised of the following as at December 31:
| (MILLIONS) | 2023 | 2022 | ||||||
Participating non-controlling interests – in operating subsidiaries | $ | 18,863 | $ | 14,755 | ||||
General partnership interest in a holding subsidiary held by Brookfield | 55 | 59 | ||||||
Participating non-controlling interests – in a holding subsidiary – Redeemable/Exchangeable units held by Brookfield | 2,684 | 2,892 | ||||||
BEPC exchangeable shares | 2,479 | 2,561 | ||||||
Preferred equity | 583 | 571 | ||||||
Perpetual subordinated notes | 592 | 592 | ||||||
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| $ | 25,256 | $ | 21,430 | |||||
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F - 77
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 | Brookfield Global Transition Fund I | Brookfield Global Transition Fund II | Canadian Hydroelectric Portfolio | The Catalyst Group | Isagen institutional partners | Isagen public non-controlling interests | Other | Total | |||||||||||||||||||||||||||||||||||||||
As at December 31, 2020 | $ | 1,002 | $ | 1,994 | $ | 3,623 | $ | 410 | $ | — | $ | — | $ | — | $ | 627 | $ | 97 | $ | 2,651 | $ | 14 | $ | 682 | $ | 11,100 | ||||||||||||||||||||||||||
Net income(loss) | 5 | 43 | (16 | ) | 38 | — | — | — | 4 | 16 | 113 | 1 | 5 | 209 | ||||||||||||||||||||||||||||||||||||||
Other comprehensive income (loss) | (122 | ) | 445 | 196 | 150 | — | — | — | 163 | 28 | (107 | ) | — | 86 | 839 | |||||||||||||||||||||||||||||||||||||
Capital contributions | — | 6 | 10 | 924 | — | — | — | — | — | — | — | 181 | 1,121 | |||||||||||||||||||||||||||||||||||||||
Disposals | (181 | ) | (214 | ) | — | — | — | — | — | — | — | — | — | — | (395 | ) | ||||||||||||||||||||||||||||||||||||
Distributions(1) | (18 | ) | (32 | ) | (350 | ) | (114 | ) | — | — | — | (25 | ) | (8 | ) | (215 | ) | (1 | ) | (47 | ) | (810 | ) | |||||||||||||||||||||||||||||
Other | (1 | ) | 11 | 155 | 2 | — | — | — | 205 | (1 | ) | — | (1 | ) | (131 | ) | 239 | |||||||||||||||||||||||||||||||||||
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As at December 31, 2021 | 685 | 2,253 | 3,618 | 1,410 | — | — | — | 974 | 132 | 2,442 | 13 | 776 | 12,303 | |||||||||||||||||||||||||||||||||||||||
Net income (loss) | 19 | (31 | ) | 144 | 16 | — | (50 | ) | — | 20 | 11 | 179 | 1 | 25 | 334 | |||||||||||||||||||||||||||||||||||||
Other comprehensive income (loss) | (103 | ) | 449 | 212 | 425 | — | 9 | — | 187 | (19 | ) | 67 | 1 | 20 | 1,248 | |||||||||||||||||||||||||||||||||||||
Capital contributions | — | 4 | — | 301 | — | 1,484 | — | — | — | — | — | 342 | 2,131 | |||||||||||||||||||||||||||||||||||||||
Disposals | (54 | ) | — | (21 | ) | — | — | — | — | — | — | — | — | — | (75 | ) | ||||||||||||||||||||||||||||||||||||
Distributions(1) | (71 | ) | (59 | ) | (460 | ) | (3 | ) | — | (14 | ) | — | (37 | ) | (9 | ) | (524 | ) | (1 | ) | (97 | ) | (1,275 | ) | ||||||||||||||||||||||||||||
Other | 1 | 1 | (3 | ) | (15 | ) | — | 32 | — | 4 | — | (5 | ) | — | 74 | 89 | ||||||||||||||||||||||||||||||||||||
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As at December 31, 2022 | 477 | 2,617 | 3,490 | 2,134 | — | 1,461 | — | 1,148 | 115 | 2,159 | 14 | 1,140 | 14,755 | |||||||||||||||||||||||||||||||||||||||
Net income (loss) | 27 | 64 | 108 | 43 | 291 | 20 | 1 | 15 | 7 | 98 | 1 | (56 | ) | 619 | ||||||||||||||||||||||||||||||||||||||
Other comprehensive income (loss) | (43 | ) | (96 | ) | 356 | 235 | — | 294 | (3 | ) | 2 | 3 | 603 | 4 | 9 | 1,364 | ||||||||||||||||||||||||||||||||||||
Capital contributions | — | — | 1 | 162 | 410 | 2,045 | 298 | — | — | — | — | 77 | 2,993 | |||||||||||||||||||||||||||||||||||||||
Return of capital | — | — | — | — | (140 | ) | — | — | — | — | — | — | — | (140 | ) | |||||||||||||||||||||||||||||||||||||
Disposals | (388 | ) | — | (32 | ) | — | — | (26 | ) | — | — | — | — | — | (3 | ) | (449 | ) | ||||||||||||||||||||||||||||||||||
Distributions(1) | (25 | ) | (123 | ) | (695 | ) | (172 | ) | — | (81 | ) | — | (42 | ) | (3 | ) | (156 | ) | (1 | ) | (130 | ) | (1,428 | ) | ||||||||||||||||||||||||||||
Acquisitions through business combinations | — | — | — | — | — | — | — | — | — | — | — | 414 | 414 | |||||||||||||||||||||||||||||||||||||||
Other | 27 | 1 | (14 | ) | 9 | 356 | (31 | ) | — | 165 | — | — | — | 222 | 735 | |||||||||||||||||||||||||||||||||||||
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As at December 31, 2023 | $ | 75 | $ | 2,463 | $ | 3,214 | $ | 2,411 | $ | 917 | $ | 3,682 | $ | 296 | $ | 1,288 | $ | 122 | $ | 2,704 | $ | 18 | $ | 1,673 | $ | 18,863 | ||||||||||||||||||||||||||
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Interests held by third parties | 75%-78 | % | 43%-60 | % | 69%-71 | % | 75 | % | 71 | % | 77% - 80 | % | 50% - 51 | % | 50 | % | 25 | % | 77 | % | 0.3 | % | 0.3% - 72 | % | ||||||||||||||||||||||||||||
| (1) | Distributions paid during the year ended December 31, 2023, totaled $870 million (2022: $1,275 million and 2021: $810 million). |
F - 78
The following tables summarize certain financial information of operating subsidiaries that have non-controlling interests that are material to Brookfield Renewable:
| (MILLIONS) | Brookfield Americas Infrastructure Fund | Brookfield Infrastructure Fund II | Brookfield Infrastructure Fund III(1) | Brookfield Infrastructure Fund IV | Brookfield Infrastructure Fund V | Brookfield Global Transition Fund I | Canadian Hydroelectric Portfolio | The Catalyst Group | Isagen (2) | TerraForm Power(3) | Onpath(4) | Other | Total | |||||||||||||||||||||||||||||||||||||||
Interests held by third parties | 75%-78 | % | 43%-60 | % | 69%-71 | % | 75 | % | 71 | % | 77% - 80 | % | 50 | % | 25 | % | 77 | % | 42 | % | 3%-51 | % | 0.3%-72 | % | ||||||||||||||||||||||||||||
Place of business | | United States, Brazil |
| | United States, Brazil, Europe |
| | United States, Brazil, Europe, India, China | | | United States, Brazil, India, China |
| | United States | | | North America, Europe, India, China, Australia | | Canada | | United States | | Colombia | | North America, South Europe |
| | United Kingdom | | | North America, South America, China, India | | ||||||||||||||||||||
Year ended December 31, 2021: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue | $ | 137 | $ | 302 | $ | 195 | $ | 316 | $ | — | $ | — | $ | 81 | $ | 136 | $ | 929 | $ | 1,239 | $ | — | $ | 19 | $ | 3,354 | ||||||||||||||||||||||||||
Net income | 7 | 64 | 1 | 50 | — | — | 10 | 62 | 214 | (245 | ) | — | 66 | 229 | ||||||||||||||||||||||||||||||||||||||
Total comprehensive income (loss) | (161 | ) | 895 | 348 | 252 | — | — | 329 | 173 | 11 | (243 | ) | — | 187 | 1,791 | |||||||||||||||||||||||||||||||||||||
Net income allocated to non-controlling interests | 5 | 43 | 2 | 38 | — | — | 4 | 16 | 162 | (109 | ) | — | 48 | 209 | ||||||||||||||||||||||||||||||||||||||
Year ended December 31, 2022: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue | $ | 120 | $ | 324 | $ | 213 | $ | 451 | — | $ | 54 | $ | 116 | $ | 131 | $ | 1,135 | $ | 1,324 | $ | — | $ | 170 | $ | 4,038 | |||||||||||||||||||||||||||
Net income (loss) | 25 | (66 | ) | 44 | 14 | — | (66 | ) | 40 | 44 | 340 | 94 | — | 45 | 514 | |||||||||||||||||||||||||||||||||||||
Total comprehensive income (loss) | (106 | ) | 732 | 183 | 586 | — | (51 | ) | 403 | (32 | ) | 467 | 301 | — | 132 | 2,615 | ||||||||||||||||||||||||||||||||||||
Net income allocated to non-controlling interests | 19 | (31 | ) | 31 | 16 | — | (50 | ) | 20 | 11 | 257 | 31 | — | 30 | 334 | |||||||||||||||||||||||||||||||||||||
As at December 31, 2022: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, plant and equipment, at fair value | $ | 131 | $ | 6,223 | $ | 2,873 | $ | 6,060 | $ | — | $ | 1,565 | $ | 2,686 | $ | 1,031 | $ | 8,264 | $ | 10,012 | $ | — | $ | 1,936 | $ | 40,781 | ||||||||||||||||||||||||||
Total assets | 852 | 6,368 | 3,529 | 6,911 | — | 5,298 | 2,984 | 1,053 | 9,178 | 11,192 | — | 2,787 | 50,152 | |||||||||||||||||||||||||||||||||||||||
Total borrowings | 14 | 1,332 | 1,051 | 3,120 | — | 497 | 466 | 476 | 2,356 | 6,371 | — | 651 | 16,334 | |||||||||||||||||||||||||||||||||||||||
Total liabilities | 240 | 1,618 | 1,172 | 4,173 | — | 3,502 | 520 | 491 | 5,112 | 8,275 | — | 1,178 | 26,281 | |||||||||||||||||||||||||||||||||||||||
Carrying value of non-controlling interests | 477 | 2,617 | 1,675 | 2,134 | — | 1,461 | 1,194 | 115 | 3,146 | 1,452 | — | 484 | 14,755 | |||||||||||||||||||||||||||||||||||||||
Year ended December 31, 2023: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue | $ | 56 | $ | 339 | $ | 192 | $ | 533 | $ | 45 | $ | 145 | $ | 130 | $ | 102 | $ | 1,285 | $ | 1,213 | $ | 13 | $ | 230 | $ | 4,283 | ||||||||||||||||||||||||||
Net income (loss) | 34 | 118 | 79 | 46 | 411 | 26 | 31 | 27 | 186 | (27 | ) | 2 | (19 | ) | 913 | |||||||||||||||||||||||||||||||||||||
Total comprehensive income (loss) | (19 | ) | (70 | ) | 306 | 362 | 411 | 409 | 28 | 40 | 1,331 | (93 | ) | (4 | ) | (172 | ) | 2,528 | ||||||||||||||||||||||||||||||||||
Net income allocated to non-controlling interests | 27 | 64 | 56 | 43 | 291 | 20 | 16 | 7 | 144 | (43 | ) | 1 | (7 | ) | 619 | |||||||||||||||||||||||||||||||||||||
As at December 31, 2023: | ||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, plant and equipment, at fair value | $ | 106 | $ | 5,878 | $ | 2,919 | $ | 7,293 | $ | 2,357 | $ | 4,700 | $ | 2,463 | $ | 1,024 | $ | 10,585 | $ | 9,718 | $ | 992 | $ | 4,294 | $ | 52,336 | ||||||||||||||||||||||||||
Total assets | 112 | 6,055 | 3,662 | 8,396 | 2,538 | 9,535 | 2,747 | 1,036 | 11,601 | 10,528 | 1,261 | 5,429 | 62,909 | |||||||||||||||||||||||||||||||||||||||
Total borrowings | 12 | 1,320 | 1,159 | 3,704 | 462 | 1,169 | 144 | 439 | 3,000 | 6,056 | 295 | 2,036 | 19,796 | |||||||||||||||||||||||||||||||||||||||
Total liabilities | 18 | 1,609 | 1,249 | 5,117 | 1,611 | 5,424 | 192 | 447 | 6,498 | 9,106 | 630 | 2,845 | 34,756 | |||||||||||||||||||||||||||||||||||||||
Carrying value of non-controlling interests | 75 | 2,463 | 1,713 | 2,411 | 917 | 3,682 | 1,332 | 122 | 3,948 | 847 | 335 | 1,018 | 18,863 | |||||||||||||||||||||||||||||||||||||||
| (1) | Excludes information relating to Isagen and TerraForm Power which are presented separately. |
| (2) | The total third party ownership interest in Isagen as of December 31, 2023 was 77.4% and comprised of Brookfield Infrastructure Fund III: 23.0%, Brookfield Global Infrastructure Income Fund: 1.5%, Isagen Institutional investors: 52.6% and other non-controlling interests: 0.3%. |
| (3) | The total third party interest in Terraform Power as of December 31, 2023 was 41.7% and comprised of Brookfield Infrastructure Fund III: 34.9% and Brookfield Global Infrastructure Income Fund: 6.8%. |
| (4) | The total third party interest in Onpath as of December 31, 2023 was 52.7% and comprised of Brookfield Global Transition Fund II: 49.7% and Brookfield Global Infrastructure Income Fund: 3.0%. |
F - 79
General partnership interest in a holding subsidiary held by Brookfield, Participating non-controlling interests – in a holding subsidiary – Redeemable/Exchangeable units held by Brookfield and Class A exchangeable shares of Brookfield Renewable Corporation held by public shareholders and Brookfield
Brookfield, as the owner of the 1% GP interest in BRELP, is entitled to regular distributions plus an incentive distribution based on the amount by which quarterly distributions exceed specified target levels. To the extent that LP unit distributions exceed $0.20 per LP unit per quarter, the incentive is 15% of distributions above this threshold. To the extent that quarterly LP unit distributions exceed $0.2253 per LP unit per quarter, the incentive distribution is equal to 25% of distributions above this threshold.
Consolidated equity includes Redeemable/Exchangeable partnership units, BEPC exchangeable shares and the GP interest. The Redeemable/Exchangeable partnership units and the GP interest are held 100% by Brookfield, the BEPC exchangeable shares are held 25% by Brookfield Holders, with the remainder held by public shareholders. The Redeemable/Exchangeable partnership units and BEPC exchangeable shares provide the holder, at its discretion, with the right to redeem these units or shares, respectively, for cash consideration. Since this redemption right is subject to Brookfield Renewable’s right, at its sole discretion, to satisfy the redemption request with LP units of Brookfield Renewable on a one-for-one basis, the Redeemable/Exchangeable partnership units and BEPC exchangeable shares are classified as equity in accordance with IAS 32, Financial Instruments: Presentation.
The Redeemable/Exchangeable partnership units, BEPC exchangeable shares and the GP interest are presented as non-controlling interests since they relate to equity in a subsidiary that is not attributable, directly or indirectly, to Brookfield Renewable. During the year ended December 31, 2023, exchangeable shareholders of BEPC exchanged 8,465 (December 31, 2022: 12,308) BEPC exchangeable for an equivalent number of LP units amounting to less than $1 million (December 31, 2022: $1 million). No Redeemable/Exchangeable partnership units have been redeemed.
On June 16, 2023, Brookfield Renewable completed the issuance of 8,200,000 LP Units and 7,430,000 BEPC exchangeable shares on a bought deal basis at a price of $30.35 per LP Unit and $33.80 per BEPC exchangeable Share for gross proceeds of $500 million.
The Redeemable/Exchangeable partnership units issued by BRELP and the BEPC exchangeable shares issued by BEPC have the same economic attributes in all respects to the LP units issued by Brookfield Renewable, except for the redemption rights described above. The Redeemable/Exchangeable partnership units, BEPC exchangeable shares and the GP interest, excluding incentive distributions, participate in earnings and distributions on a per unit basis equivalent to the per unit participation of the LP units of Brookfield Renewable.
As at December 31, 2023, Redeemable/Exchangeable partnership units, BEPC exchangeable shares and units of GP interest outstanding were 194,487,939 units (December 31, 2022: 194,487,939 units), 179,651,526 (December 31, 2022: 172,218,098), and 3,977,260 units (December 31, 2022: 3,977,260 units), respectively.
In December 2023, Brookfield Renewable renewed its normal course issuer bid in connection with its LP units and outstanding BEPC exchangeable shares. Brookfield Renewable is authorized to repurchase up to 14,361,497 LP units and 8,982,586 BEPC exchangeable shares, representing 5% of each of its issued and outstanding LP units and BEPC exchangeable shares. The bids will expire on December 17, 2024, or earlier should Brookfield Renewable complete its repurchases prior to such date. During the year ended December 31, 2023, there were 1,856,044 LP units (2022: nil) repurchased and cancelled at a total cost of $43 million (2022: nil). During the year ended December 31, 2023 and 2022, there were nil BEPC exchangeable shares repurchased.
F - 80
The composition of the distributions are presented in the following table:
| (MILLIONS) | 2023 | 2022 | 2021 | |||||||||
General partnership interest in a holding subsidiary held by Brookfield | $ | 5 | $ | 6 | $ | 5 | ||||||
Incentive distribution | 111 | 94 | 80 | |||||||||
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| 116 | 100 | 85 | ||||||||||
Participating non-controlling interests – in a holding subsidiary – Redeemable/Exchangeable units held by Brookfield | 265 | 250 | 237 | |||||||||
BEPC exchangeable shares held by | ||||||||||||
Brookfield Holders | 61 | 58 | 53 | |||||||||
External shareholders | 180 | 162 | 156 | |||||||||
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Total BEPC exchangeable shares | 241 | 220 | 209 | |||||||||
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| $ | 622 | $ | 570 | $ | 531 | |||||||
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The following table summarizes certain financial information regarding General partnership interest in a holding subsidiary held by Brookfield, Participating non-controlling interests – in a holding subsidiary – Redeemable/Exchangeable units held by Brookfield and Class A exchangeable shares of Brookfield Renewable Corporation held by public shareholders and Brookfield:
| (MILLIONS) | 2023 | 2022 | 2021 | |||||||||
For the year ended December 31: | ||||||||||||
Revenue | $ | 5,038 | $ | 4,711 | $ | 4,096 | ||||||
Net income (loss) | 616 | 138 | (66 | ) | ||||||||
Comprehensive income | 2,036 | 2,628 | 2,700 | |||||||||
Net income (loss) allocated to(1): | ||||||||||||
General partnership interest in a holding subsidiary held by Brookfield | 111 | 92 | 77 | |||||||||
Participating non-controlling interests – in a holding subsidiary – Redeemable/Exchangeable units held by Brookfield | (63 | ) | (117 | ) | (135 | ) | ||||||
BEPC exchangeable shares | (57 | ) | (104 | ) | (119 | ) | ||||||
As at December 31: | ||||||||||||
Property, plant and equipment, at fair value | $ | 64,005 | $ | 54,283 | ||||||||
Total assets | 76,128 | 64,111 | ||||||||||
Total borrowings | 29,702 | 24,850 | ||||||||||
Total liabilities | 46,149 | 37,825 | ||||||||||
Carrying value of (2): | ||||||||||||
General partnership interest in a holding subsidiary held by Brookfield | 55 | 59 | ||||||||||
Participating non-controlling interests – in a holding subsidiary – Redeemable/Exchangeable units held by Brookfield | 2,684 | 2,892 | ||||||||||
| (1) | Allocated based on weighted-average GP interest, Redeemable/Exchangeable partnership units, BEPC exchangeable shares and LP units of 4.0 million, 194.5 million, 176.3 million and 282.4 million, respectively (2022: 4.0 million, 194.5 million, 172.2 million and 275.2 million, respectively and 2021: 4.0 million, 194.5 million, 172.2 million and 274.9 million, respectively). |
| (2) | Allocated based on outstanding GP interest, Redeemable/Exchangeable partnership units, BEPC exchangeable shares and LP units of 4.0 million, 194.5 million, 179.7 million and 287.2 million, respectively (2022: 4.0 million, 194.5 million, 172.2 million and 275.4 million, respectively). |
F - 81
Preferred equity
Brookfield Renewable’s preferred equity as at December 31 consists of Class A Preference Shares of Brookfield Renewable Power Preferred Equity Inc. (“BRP Equity”) as follows:
| Shares outstanding | Cumulative dividend rate (%) | Earliest permitted redemption date | Dividends declared for the year ended December 31 | Carrying value as at | ||||||||||||||||||||||||
(MILLIONS, EXCEPT AS NOTED) | 2023 | 2022 | December 31, 2023 | December 31, 2022 | ||||||||||||||||||||||||
Series 1 (C$136) | 6.85 | 3.1 | April 2025 | $ | 4 | $ | 4 | $ | 129 | $ | 126 | |||||||||||||||||
Series 2 (C$113)(1) | 3.11 | 7.8 | April 2025 | 4 | 3 | 58 | 57 | |||||||||||||||||||||
Series 3 (C$249) | 9.96 | 4.4 | July 2024 | 8 | 8 | 187 | 183 | |||||||||||||||||||||
Series 5 (C$103) | 4.11 | 5.0 | April 2018 | 4 | 4 | 77 | 76 | |||||||||||||||||||||
Series 6 (C$175) | 7.00 | 5.0 | July 2018 | 7 | 7 | 132 | 129 | |||||||||||||||||||||
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| 31.03 | $ | 27 | $ | 26 | $ | 583 | $ | 571 | ||||||||||||||||||||
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| (1) | Dividend rate represents annualized distribution based on the most recent quarterly floating rate. |
Distributions paid during the year ended December 31, 2023, totaled $27 million (2022: $26 million and 2021: $26 million).
The Class A Preference Shares do not have a fixed maturity date and are not redeemable at the option of the holders. As at December 31, 2023, none of the issued Class A, Series 5 and 6 Preference Shares have been redeemed by BRP Equity.
In December 2023, the Toronto Stock Exchange accepted notice of BRP Equity’s intention to renew the normal course issuer bid in connection with its outstanding Class A Preference Shares for another year to December 17, 2024, or earlier should the repurchases be completed prior to such date. Under this normal course issuer bid, BRP Equity is permitted to repurchase up to 10% of the total public float for each respective series of the Class A Preference Shares. Shareholders may receive a copy of the notice, free of charge, by contacting Brookfield Renewable. There were no repurchases of Class A Preference Shares during 2023 or 2022 in connection with the normal course issuer bid.
Perpetual subordinated notes
In April 2021 and December 2021, Brookfield BRP Holdings (Canada) Inc., a wholly-owned subsidiary of Brookfield Renewable, issued $350 million and $260 million, respectively, of perpetual subordinated notes at a fixed rate of 4.625% and 4.875%, respectively.
The perpetual subordinated notes do not have a maturity date and are repaid in an Event of Default. The perpetual subordinated notes also provide Brookfield Renewable, at its discretion, the right to defer the interest (in whole or in part) until liquidation of assets due to an Event of Default. The perpetual subordinated notes are classified as a separate class of non-controlling interest on Brookfield Renewable’s consolidated statements of financial position as per IAS 32, Financial Instruments: Presentation. The interest expense on the perpetual subordinated notes during the year ended December 31, 2023 of $29 million (2022: $29 million and 2021: $12 million) are presented as distributions in the consolidated statements of changes in equity. The carrying value of the perpetual subordinated notes, net of transaction cost, is $592 million (2022: $592 million) as at December 31, 2023.
Distributions paid during the year ended December 31, 2023, totaled $29 million (2022: $27 million and 2021: $9 million).
F - 82
15. PREFERRED LIMITED PARTNERS’ EQUITY
Brookfield Renewable’s preferred limited partners’ equity comprises of Class A Preferred units as follows:
| Shares outstanding | Cumulative distribution rate (%) | Earliest permitted redemption date | Distributions declared for the year ended December 31 | Carrying value as at | ||||||||||||||||||||||||
(MILLIONS, EXCEPT AS NOTED) | 2023 | 2022 | December 31, 2023 | December 31, 2022 | ||||||||||||||||||||||||
Series 7 (C$175) | 7.00 | 5.50 | January 2026 | 7 | 7 | 128 | 128 | |||||||||||||||||||||
Series 11 (C$250) | — | 5.00 | April 2022 | — | 3 | — | — | |||||||||||||||||||||
Series 13 (C$250) | 10.00 | 6.05 | April 2028 | 9 | 10 | 196 | 196 | |||||||||||||||||||||
Series 15 (C$175) | 7.00 | 5.75 | April 2024 | 7 | 8 | 126 | 126 | |||||||||||||||||||||
Series 17 ($200) | 8.00 | 5.25 | March 2025 | 11 | 11 | 195 | 195 | |||||||||||||||||||||
Series 18 (C$150) | 6.00 | 5.50 | April 2027 | 7 | 5 | 115 | 115 | |||||||||||||||||||||
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| 38.00 | $ | 41 | $ | 44 | $ | 760 | $ | 760 | ||||||||||||||||||||
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In the second quarter of 2023, Brookfield Renewable declared the fixed quarterly distributions on the Class A Preferred Limited Partnership Series 13 Units during the five years commencing May 1, 2023 will be paid at an annual rate of 6.05%.
Distributions paid during the year ended December 31, 2023, totaled $41 million (2022: $44 million and 2021: $55 million).
Class A Preferred LP Units—Normal Course Issuer Bid
In December 2023, the Toronto Stock Exchange accepted notice of Brookfield Renewable’s intention to renew the normal course issuer bid in connection with the outstanding Class A Preferred Limited Partnership Units for another year to December 17, 2024, or earlier should the repurchases be completed prior to such date. Under this normal course issuer bid, Brookfield Renewable is permitted to repurchase up to 10% of the total public float for each respective series of its Class A Preferred Limited Partnership Units. Unitholders may receive a copy of the notice, free of charge, by contacting Brookfield Renewable. No shares were repurchased during 2023 or 2022.
16. LIMITED PARTNERS’ EQUITY
Limited partners’ equity
On June 16, 2023, Brookfield Renewable completed the issuance of 8,200,000 LP Units and 7,430,000 BEPC Exchangeable shares on a bought deal basis at a price of $30.35 per LP Unit and $33.80 per BEPC Exchangeable Share for gross proceeds of $500 million. Concurrently, a subsidiary of Brookfield Reinsurance purchased 5,148,270 LP units at the LP unit offering price (net of underwriting commission). The aggregate gross proceeds of the offering and the concurrent private placement was approximately $650 million. Brookfield Renewable incurred $20 million in related transaction costs inclusive of fees paid to underwriters.
As at December 31, 2023, 287,164,340 LP units were outstanding (2022: 275,358,750 LP units) including 74,339,049 LP units (2022: 68,749,416 LP units) held by Brookfield Holders. Brookfield owns all general partnership interests in Brookfield Renewable representing a 0.01% interest.
During the year ended December 31, 2023, 304,899 LP units (2022: 262,177 LP units) were issued under the distribution reinvestment plan at a total value of $8 million (2022: $9 million).
During the year ended December 31, 2023, exchangeable shareholders of BEPC exchanged 8,465 BEPC exchangeable shares (2022: 12,308 shares) for an equivalent number of LP units amounting to less than $1 million (2022: less than $1 million).
F - 83
As at December 31, 2023, Brookfield Holders held a direct and indirect interest of approximately 47% of Brookfield Renewable on a fully-exchanged basis. Brookfield Holders held a direct and indirect interest of 313,640,823 LP units, Redeemable/Exchangeable partnership units, and BEPC exchangeable shares, the remaining is held by public investors.
On an unexchanged basis, Brookfield Holders holds a 26% direct limited partnership interest in Brookfield Renewable, a 40% direct interest in BRELP through the ownership of Redeemable/Exchangeable partnership units, a direct 1% GP interest in BRELP and a 25% direct interest in the BEPC exchangeable shares of BEPC as at December 31, 2023.
In December 2023, Brookfield Renewable renewed its normal course issuer bid in connection with its LP units and outstanding BEPC exchangeable shares. Brookfield Renewable is authorized to repurchase up to 14,361,497 LP units and 8,982,586 BEPC exchangeable shares, representing 5% of each of its issued and outstanding LP units and BEPC exchangeable shares. The bids will expire on December 17, 2024, or earlier should Brookfield Renewable complete its repurchases prior to such date. During the year ended December 31, 2023, there were 1,856,044 LP units (2022: nil) repurchased and cancelled at a total cost of $43 million (2022: nil). During the year ended December 31, 2023, Brookfield Corporation purchased 441,363 LP units (2022: nil). There were no BEPC exchangeable shares repurchased during the years ended December 31, 2023 or 2022.
Distributions
The composition of the distributions are presented in the following table:
| (MILLIONS) | 2023 | 2022 | ||||||
Brookfield Holders | $ | 97 | $ | 88 | ||||
External LP unitholders | 286 | 267 | ||||||
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In February 2024, distributions to unitholders were increased to $1.42 per LP unit on an annualized basis, an increase of $0.07 per LP unit, which will take effect on the distribution payable in March 2024.
Distributions paid during the year ended December 31, 2023, totaled $370 million (2022: $345 million and 2021: $325 million).
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17. GOODWILL
The following table provides a reconciliation of goodwill:
| (MILLIONS) | Notes | Total | ||||||
Balance, as at December 31, 2021 | $ | 966 | ||||||
Acquisitions through business combinations | 3 | 691 | ||||||
Foreign exchange | (131 | ) | ||||||
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Balance, as at December 31, 2022 | 1,526 | |||||||
Adjustments to purchase equation | 3 | (54 | ) | |||||
Acquisitions through business combinations | 3 | 340 | ||||||
Disposal | (18 | ) | ||||||
Foreign exchange and other | 150 | |||||||
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Balance, as at December 31, 2023 | $ | 1,944 | ||||||
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Goodwill is allocated to the following CGUs or group of CGUs:
| (MILLIONS) | 2023 | 2022 | ||||||
Value-in-use method | ||||||||
Europe Utility-scale solar Development(1) | $ | 78 | $ | 66 | ||||
Europe Wind | 38 | — | ||||||
Europe Storage | 111 | — | ||||||
U.S. Utility-scale Solar | 307 | 287 | ||||||
U.S. Distributed Generation(2) | 350 | 424 | ||||||
U.S Wind | 9 | 9 | ||||||
Chile Distributed Generation | 16 | 17 | ||||||
India Wind | 86 | — | ||||||
India Utility-scale Solar | 77 | — | ||||||
India Distributed Generation | 18 | — | ||||||
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| 1,090 | 803 | |||||||
Fair value less costs of disposal | ||||||||
Europe Wind | 47 | 46 | ||||||
Europe Utility-scale Solar | 103 | 100 | ||||||
South America Wind | — | 18 | ||||||
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| 150 | 164 | |||||||
Colombia Hydroelectric(3) | 704 | 559 | ||||||
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| $ | 1,944 | $ | 1,526 | |||||
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| (1) | Includes $10 million (2022: nil) of goodwill related to a leading independent UK renewables developer with 260 MW onshore wind assets, 800 MW near-term development and another 3 GW of later stage projects acquired in 2023, and $68 million (2022: $66 million) of goodwill related to a 1.7 GW portfolio of utility-scale solar development assets in Germany acquired in 2022. |
| (2) | Includes $115 million (2022: $115 million) of goodwill related to 360 MW of operating and 700 MW of development business acquired in 2021, $235 million (2022: $309 million) related to the acquisition of an integrated distributed generation developer with approximately 500 MW of contracted operating and under construction assets and an 1.8 GW of development pipeline in the United States acquired in 2022. |
| (3) | Goodwill related to the Colombia hydroelectric segment was created as a result of recording the deferred tax liabilities assumed in the purchase price allocations of business combinations. The deferred tax liabilities are measured in accordance with IAS 12 in the purchase price allocations rather than at fair value. As a result, the goodwill recorded does not represent ‘core’ goodwill, but rather goodwill created as a result of accounting concepts or ‘non-core’ goodwill in order to avoid an immediate impairment of this ‘non-core’ goodwill. |
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As at December 31, 2023, Brookfield Renewable performed an impairment test at the level that goodwill is monitored by management. Brookfield Renewable did not identify any impairments of goodwill. In performing this impairment test, management removed the ‘non-core’ goodwill that continued to be supported by the existence of the original deferred tax liability that gave rise to the goodwill from the carrying value of the applicable assets.
For the remaining goodwill balance, goodwill is determined by cash flow or fair value less costs of disposal models where by the fair value measurement is classified as Level 3. The key inputs in determining the fair value of each cash generating unit under the value in use model are the utilization of discount rates ranging from 10% to 14% terminal capitalization rate of 2x to 6x, discrete cash flow periods from 2 to 6 years, and future leverage assumptions for the platforms.
18. CAPITAL MANAGEMENT
Brookfield Renewable’s primary capital management objectives are to ensure the sustainability of its capital to support continuing operations, meet its financial obligations, allow for growth opportunities and provide stable distributions to its LP unitholders. Brookfield Renewable’s capital is monitored through the debt-to-total capitalization ratio on a corporate and consolidated basis. As at December 31, 2023 these ratios were 12% and 40%, respectively (2022: 11% and 39%, respectively).
Brookfield Renewable has provided covenants to certain of its lenders for its corporate borrowings and credit facilities. The covenants require Brookfield Renewable to meet minimum debt-to-capitalization ratios. Subsidiaries of Brookfield Renewable have provided covenants to certain of their lenders for their non-recourse borrowings. These covenants vary from one credit agreement to another and include ratios that address debt-service coverage. Certain lenders have also put in place requirements that oblige Brookfield Renewable and its subsidiaries to maintain debt and capital expenditure reserve accounts. The consequences to the subsidiaries as a result of failure to comply with their covenants could include a limitation of distributions from the subsidiaries to Brookfield Renewable, as well as repayment of outstanding debt. Brookfield Renewable is dependent on the distributions made by its subsidiaries to service its debt.
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Brookfield Renewable’s strategy during 2023, which was unchanged from 2022, was to maintain the measures set out in the following schedule as at December 31:
| Corporate | Consolidated | |||||||||||||||
| (MILLIONS) | 2023 | 2022 | 2023 | 2022 | ||||||||||||
Commercial paper(1) | $ | 183 | $ | 249 | $ | 183 | $ | 249 | ||||||||
Debt | ||||||||||||||||
Medium-term notes(2) | 2,660 | 2,307 | 2,660 | 2,307 | ||||||||||||
Non-recourse borrowings(3) | — | — | 27,020 | 22,321 | ||||||||||||
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| 2,660 | 2,307 | 29,680 | 24,628 | |||||||||||||
Deferred income tax liabilities, net(4) | — | — | 6,930 | 6,331 | ||||||||||||
Equity | ||||||||||||||||
Non-controlling interest | — | — | 18,863 | 14,755 | ||||||||||||
Preferred equity | 583 | 571 | 583 | 571 | ||||||||||||
Perpetual subordinated notes | 592 | 592 | 592 | 592 | ||||||||||||
Preferred limited partners’ equity | 760 | 760 | 760 | 760 | ||||||||||||
Unitholders’ equity | 9,181 | 9,608 | 9,181 | 9,608 | ||||||||||||
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Total capitalization | $ | 13,776 | $ | 13,838 | $ | 66,589 | $ | 57,245 | ||||||||
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Debt-to-total capitalization | 19 | % | 17 | % | 45 | % | 43 | % | ||||||||
Debt-to-total capitalization (market value)(5) | 12 | % | 11 | % | 40 | % | 39 | % | ||||||||
| (1) | Draws on corporate credit facilities and commercial paper issuances are excluded from the debt-to-total capitalization ratios as they are not a permanent source of capital. |
| (2) | Medium-term notes are unsecured and guaranteed by Brookfield Renewable and excludes $10 million (2022: $8 million) of deferred financing fees, net of unamortized premiums. |
| (3) | Consolidated non-recourse borrowings include $2,626 million (2022: $1,838 million) borrowed under a subscription facility of a Brookfield sponsored private fund and excludes $140 million (2022: $124 million) of deferred financing fees and $11 million (2022: $105 million) of unamortized premiums. |
| (4) | Deferred income tax liabilities less deferred income tax assets. |
| (5) | Based on market values of Preferred equity, Perpetual subordinated notes, Preferred limited partners’ equity and Unitholders’ equity. |
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19. EQUITY-ACCOUNTED INVESTMENTS
The following table outlines the changes in Brookfield Renewable’s equity-accounted investments:
| (MILLIONS) | 2023 | 2022 | 2021 | |||||||||
Balance, beginning of year | $ | 1,392 | $ | 1,107 | $ | 971 | ||||||
Acquisitions through business combinations | 44 | — | — | |||||||||
Investment(1)(2)(3)(4) | 700 | 373 | 57 | |||||||||
Return of capital | — | (3 | ) | (8 | ) | |||||||
Share of net income | 186 | 96 | 22 | |||||||||
Share of other comprehensive income (loss) | 162 | (65 | ) | 148 | ||||||||
Dividends received | (58 | ) | (89 | ) | (78 | ) | ||||||
Change in basis of accounting(5) | 105 | — | — | |||||||||
Foreign exchange translation and other | 15 | (27 | ) | (5 | ) | |||||||
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Balance, end of year | $ | 2,546 | $ | 1,392 | $ | 1,107 | ||||||
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| (1) | Includes additional subscription for shares in Powen. Refer to Note 3 - Acquisitions for more details. |
| (2) | Includes the investment in an India sustainable agricultural solutions company. Refer to Note 3 - Acquisitions for more details. |
| (3) | Includes Brookfield Renewable’s incremental investment in X-Elio. Refer to Note 3 - Acquisitions for more details. |
| (4) | Includes Brookfield Renewable’s incremental investment in Westinghouse. Refer to Note 3 - Acquisitions for more details. |
| (5) | Includes the recognition of a 378 MW operating hydroelectric portfolio in the U.S. Refer to Note 4 - Disposal of assets for more details. |
The following table presents the ownership interests and carrying values of Brookfield Renewable’s investments in associates and joint ventures, all of which are accounted for using the equity method:
| Ownership Interest | Carrying Value | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
Hydroelectric | 14%-50% | 14%-50% | $ | 225 | $ | 111 | ||||||||||
Wind | 25%-50% | 25% | 159 | 108 | ||||||||||||
Utility-scale solar | 25%-65% | 25%-65% | 304 | 107 | ||||||||||||
Distributed energy & Storage | 25%-50% | 25%-50% | 1,049 | 815 | ||||||||||||
Sustainable solutions | 4%-49% | 8%-49% | 809 | 251 | ||||||||||||
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| $ | 2,546 | $ | 1,392 | |||||||||||||
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The following table presents total assets, as well as total liabilities of Brookfield Renewable’s investments in associates and joint ventures:
| Total Assets | Total Liabilities | |||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
Hydroelectric | $ | 1,221 | $ | 550 | $ | 422 | $ | 223 | ||||||||
Wind | 1,019 | 472 | 383 | 20 | ||||||||||||
Utility-scale solar | 2,884 | 457 | 1,160 | 70 | ||||||||||||
Distributed energy & Storage | 5,010 | 4,248 | 2,109 | 1,944 | ||||||||||||
Sustainable solutions | 7,757 | 2,890 | 1,564 | 1,140 | ||||||||||||
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| $ | 17,891 | $ | 8,617 | $ | 5,638 | $ | 3,397 | |||||||||
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The following table presents total revenues, net income and other comprehensive income (“OCI”) of Brookfield Renewable’s investments in associates and joint ventures:
| (MILLIONS) | 2023 | 2022 | 2021 | |||||||||||||||||||||||||||||||||
| Revenues | Net income (loss) | OCI | Revenues | Net income (loss) | OCI | Revenues | Net income (loss) | OCI | ||||||||||||||||||||||||||||
Hydroelectric | $ | 105 | $ | 74 | $ | (14 | ) | $ | 18 | $ | 69 | $ | (73 | ) | $ | 16 | $ | (15 | ) | $ | 170 | |||||||||||||||
Wind | — | 3 | 21 | — | 68 | 42 | — | 20 | 2 | |||||||||||||||||||||||||||
Utility-scale solar | 28 | 478 | 63 | — | (24 | ) | 2 | — | (18 | ) | (53 | ) | ||||||||||||||||||||||||
Distributed energy & Storage | 604 | 210 | 373 | 582 | 240 | (54 | ) | 449 | 92 | 256 | ||||||||||||||||||||||||||
Sustainable solutions | 1,016 | 46 | 62 | 363 | 11 | — | — | — | — | |||||||||||||||||||||||||||
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| $ | 1,753 | $ | 811 | $ | 505 | $ | 963 | $ | 364 | $ | (83 | ) | $ | 465 | $ | 79 | $ | 375 | ||||||||||||||||||
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20. CASH AND CASH EQUIVALENTS
Brookfield Renewable’s cash and cash equivalents as at December 31 are as follows:
| (MILLIONS) | 2023 | 2022 | ||||||
Cash | $ | 821 | $ | 728 | ||||
Cash subject to restriction | 251 | 268 | ||||||
Short-term deposits | 69 | 2 | ||||||
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| $ | 1,141 | $ | 998 | |||||
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21. RESTRICTED CASH
Brookfield Renewable’s restricted cash as at December 31 is as follows:
| (MILLIONS) | Note | 2023 | 2022 | |||||||||
Operations | $ | 299 | $ | 93 | ||||||||
Credit obligations | 79 | 56 | ||||||||||
Capital expenditures and development projects | 13 | 42 | ||||||||||
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Total | 391 | 191 | ||||||||||
Less: non-current | 23 | (81 | ) | (52 | ) | |||||||
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Current | $ | 310 | $ | 139 | ||||||||
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22. TRADE RECEIVABLES AND OTHER CURRENT ASSETS
Brookfield Renewable’s trade receivables and other current assets as at December 31 are as follows:
| (MILLIONS) | 2023 | 2022 | ||||||
Trade receivables | $ | 662 | $ | 672 | ||||
Inventory | 111 | 42 | ||||||
Collateral deposits(1) | 178 | 609 | ||||||
Prepaids and others | 127 | 86 | ||||||
Sales tax receivable | 94 | 73 | ||||||
Income tax receivables | 74 | 74 | ||||||
Current portion of contract asset | 61 | 54 | ||||||
Short term deposits and advances | 23 | 113 | ||||||
Other short-term receivables | 187 | 137 | ||||||
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| $ | 1,517 | $ | 1,860 | |||||
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| (1) | Collateral deposits are related to energy derivative contracts that Brookfield Renewable enters into in order to mitigate the exposure to wholesale market electricity prices on the future sale of uncontracted generation, as part of Brookfield Renewable’s risk management strategy. |
As at December 31, 2023, 86% (2022: 89%) of trade receivables were current. Brookfield Renewable does not expect issues with collectability of these amounts. Accordingly, as at December 31, 2023 and 2022 an allowance for doubtful accounts for trade receivables was not deemed necessary. Trade receivables are generally on 30-day terms and credit limits are assigned and monitored for all counterparties. In determining the recoverability of trade receivables, management performs a risk analysis considering the type and age of the outstanding receivables and the credit worthiness of the counterparties. Management also reviews trade receivable balances on an ongoing basis.
23. OTHER LONG-TERM ASSETS
Brookfield Renewable’s other long-term assets as at December 31 are as follows:
| (MILLIONS) | Note | 2023 | 2022 | |||||||||
Contract asset | $ | 314 | $ | 341 | ||||||||
Long-term receivables | 382 | 235 | ||||||||||
Due from related parties | 28 | 135 | 128 | |||||||||
Restricted cash | 21 | 81 | 52 | |||||||||
Intangibles(1) | 15 | 209 | ||||||||||
Other | 84 | 86 | ||||||||||
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| $ | 1,011 | $ | 1,051 | |||||||||
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| (1) | Relates to certain power generating facilities that operate under service concession arrangements. |
At December 31, 2023 and 2022, restricted cash was held primarily to satisfy operations and maintenance reserve requirements, lease payments and credit agreements.
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Contract assets are the result of contract amendments made to Brookfield Renewable’s long-term power purchase agreements with Brookfield associated with generating assets in Ontario held by Great Lakes Power Limited and Mississagi Power Trust. The net impact of these changes were offset by changes to Brookfield Renewable’s long-term energy revenue agreement with Brookfield associated with several entities owned by Brookfield Renewable in the United States, however the changes resulted in a difference in timing of cash flows. As a result, the amendments were accounted for in reflection of their substance, with the recognition of contract asset and liability balances and net financing charges to be recognized over the remainder of the term of the agreements. There are no material provisions for expected credit losses on contract assets. See Note 28 – Related party transactions, for additional details regarding Brookfield Renewable’s revenue agreements with Brookfield.
On September 20, 2023, Brookfield Renewable, together with its institutional partners, completed the sale of its 100% interest in a 95 MW portfolio of wind assets in Uruguay that operated under a service concession arrangement. See Note 4 – Disposal of assets, for additional details.
24. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
Brookfield Renewable’s accounts payable and accrued liabilities as at December 31 are as follows:
| (MILLIONS) | 2023 | 2022 | ||||||
Operating accrued liabilities | $ | 603 | $ | 440 | ||||
Accounts payable | 388 | 276 | ||||||
Interest payable on borrowings | 301 | 153 | ||||||
LP Unitholders distributions, preferred limited partnership unit distributions, preferred dividends payable, perpetual subordinate notes distributions and exchange shares dividends(1) | 58 | 53 | ||||||
Current portion of lease liabilities | 41 | 33 | ||||||
Income tax payable | 41 | 78 | ||||||
Current portion of contract liability | 35 | 24 | ||||||
Other | 72 | 29 | ||||||
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| $ | 1,539 | $ | 1,086 | |||||
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| (1) | Includes amounts payable only to external LP unitholders and BEPC exchangeable shareholders. Amounts payable to Brookfield are included in due to related parties. |
25. PROVISIONS
The following table presents the change in the decommissioning liabilities for Brookfield Renewable:
| (MILLIONS) | 2023 | 2022 | ||||||
Balance, beginning of the year | $ | 479 | $ | 668 | ||||
Acquisitions through business combinations | 227 | 54 | ||||||
Disposal | (1 | ) | (1 | ) | ||||
Accretion | 13 | 15 | ||||||
Changes in estimates(1) | 253 | (245 | ) | |||||
Foreign exchange | 6 | (12 | ) | |||||
Other | (1 | ) | — | |||||
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Balance, end of the year | $ | 976 | $ | 479 | ||||
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| (1) | Changes in estimates are driven by changes in underlying assumptions used as inputs to determine the value of the retirement obligation. |
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Brookfield Renewable has recorded decommissioning retirement obligations associated with certain power generating assets. The decommissioning retirement obligation has been established for hydroelectric, wind and solar operation sites that are substantially expected to be restored between the years 2031 to 2058. The estimated cost of decommissioning activities is based on a third-party assessment.
For details on other legal provisions, please refer to Note 27 – Commitments, contingencies and guarantees.
Provisions also includes contingent and deferred acquisition consideration of $249 million (2022: $68 million).
26. OTHER LONG-TERM LIABILITIES
Brookfield Renewable’s other long-term liabilities as at December 31 are comprised of the following:
| (MILLIONS) | 2023 | 2022 | ||||||
Contract liabilities | $ | 680 | $ | 662 | ||||
Lease liabilities | 727 | 526 | ||||||
Regulatory liabilities(1) | 104 | 149 | ||||||
Pension obligations | 66 | 51 | ||||||
Concession payment liability | 2 | 10 | ||||||
Other | 185 | 132 | ||||||
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| $ | 1,764 | $ | 1,530 | |||||
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| (1) | Regulatory liabilities are related to the regulated pricing mechanism at certain of Brookfield Renewable’s Spanish assets. |
Contract liabilities are the result of the amendment to the energy revenue agreement between Brookfield and several entities owned by Brookfield Renewable in the United States. See Note 23 – Other long-term assets, for additional details regarding Brookfield Renewable’s contract balances. See Note 28 – Related party transactions, for additional details regarding Brookfield Renewable’s revenue agreements with Brookfield.
27. COMMITMENTS, CONTINGENCIES AND GUARANTEES
Commitments
In the course of its operations, Brookfield Renewable and its subsidiaries have 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, Brookfield Renewable will enter into capital expenditure commitments which primarily relate to contracted project costs for various growth initiatives. As at December 31, 2023, Brookfield Renewable had $2,783 million (2022: $1,126 million) of capital expenditure commitments outstanding, of which $2,200 million (2022: $1,059 million) is payable in less than one year, $583 million (2022: $63 million) in two to five years, and less than $1 million (2022: $4 million) thereafter.
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The following table lists the assets and portfolio of assets that Brookfield Renewable, together with institutional partners have agreed to acquire which are subject to customary closing conditions as at December 31, 2023:
Region | Technology | Capacity | Consideration | Brookfield Renewable Economic Interest | Expected Close | |||||||||
China | Wind | 102 MW development | CNY $84 million ($16 million) | 20 | % | Q4 2024 | ||||||||
China | Wind | 350 MW development | CNY $577 million ($110 million) | 20 | % | Q4 2024 | ||||||||
Brazil | Distributed energy & storage | 730 MW development | R$136 millions ($28 million) | 20 | % | 2024 - 2026 | ||||||||
US | Distributed energy & storage | 25 MW development | $20 million | 25 | % | Q1 2024 | ||||||||
US | Distributed energy & storage | 93 MW development | $86 million | 20 | % | Q1 2024 | ||||||||
An integral part of Brookfield Renewable’s strategy is to participate with institutional partners in Brookfield-sponsored private equity funds that target acquisitions that suit Brookfield Renewable’s profile. In the normal course of business, Brookfield Renewable 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, Brookfield Renewable 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), Brookfield Renewable, or by co-investors.
Contingencies
Brookfield Renewable and its subsidiaries are subject to various legal proceedings, arbitrations 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 Brookfield Renewable’s consolidated financial position or results of operations.
Brookfield Renewable, on behalf of Brookfield Renewable’s subsidiaries, and the 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 activity on the issued letters of credit by Brookfield Renewable can be found in Note 13 – Borrowings.
Brookfield Renewable, 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. Brookfield Renewable’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.
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Letters of credit issued by Brookfield Renewable along with institutional partners and its subsidiaries were as at the following dates:
| (MILLIONS) | 2023 | 2022 | ||||||
Brookfield Renewable along with institutional partners | $ | 100 | $ | 99 | ||||
Brookfield Renewable’s subsidiaries | 2,026 | 1,510 | ||||||
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| $ | 2,126 | $ | 1,609 | |||||
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Guarantees
In the normal course of operations, Brookfield Renewable and its subsidiaries execute 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, credit facilities of certain Brookfield private funds and that are also secured by committed capital of our third-party institutional partners, and sales and purchases of assets and services. Brookfield Renewable has also agreed to indemnify its directors and certain of its officers and employees. The nature of substantially all of the indemnification undertakings prevents Brookfield Renewable from making a reasonable estimate of the maximum potential amount that Brookfield Renewable 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. Historically, neither Brookfield Renewable nor its subsidiaries have made material payments under such indemnification agreements.
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28. RELATED PARTY TRANSACTIONS
Brookfield Renewable’s related party transactions are recorded at the exchange amount and are primarily with Brookfield.
Brookfield Renewable and Brookfield have entered into, or amended, the following material agreements:
Principal Agreements
Limited Partnership Agreements
Each of the amended and restated limited partnership agreements of Brookfield Renewable and BRELP outline the key terms of the partnerships, including provisions relating to management, protections for limited partners, capital contributions, distributions and allocation of income and losses. BRELP’s general partner is entitled to receive incentive distributions from BRELP as a result of its ownership of the general partnership interest in BRELP. The incentive distributions are to be calculated in increments based on the amount by which quarterly distributions on the limited partnership units of BRELP exceed specified target levels as set forth in the amended and restated partnership agreement.
Master Services Agreement
Brookfield Renewable entered into an agreement with Brookfield Corporation pursuant to which Brookfield Corporation has agreed to provide oversight of the business and provide the services of senior officers to Brookfield Renewable for a management service fee. The fee is paid on a quarterly basis and has a fixed quarterly component of $5 million and a variable component calculated as a percentage of the increase in the total capitalization value of Brookfield Renewable over an initial reference value (subject to an annual escalation by a specified inflation factor beginning on January 1, 2013). Total capitalization value as of December 31, 2023 is $22 billion, which against the initial reference value of $8 billion and factoring in the annual amount of $26 million (as adjusted for inflation), resulted in a management service fee payment for the year ended December 31, 2023 of $205 million (2022: $243 million and 2021: $288 million).
Relationship Agreement
Since inception, Brookfield Renewable has had a Relationship Agreement with Brookfield pursuant to which Brookfield has agreed, subject to certain exceptions, that Brookfield Renewable will serve as its primary vehicle through which it will directly or indirectly, acquire renewable power assets on a global basis.
BRELP Voting Agreement
In 2011, Brookfield Renewable entered into a voting agreement with Brookfield pursuant to which Brookfield Renewable, through BRPL, has a number of voting rights, including the right to direct all eligible votes in the election of the directors of BRELP’s general partner.
Power Services Agreements
Power Agency Agreements
Certain Brookfield Renewable subsidiaries entered into Power Agency Agreements appointing Brookfield as their exclusive agent in respect of the sale of electricity, including the procurement of transmission and other additional services. In addition, Brookfield scheduled, dispatched and arranged for transmission of the power produced and the power supplied to third-parties in accordance with prudent industry practice. Pursuant to each Agreement, Brookfield was entitled to be reimbursed for any third party costs incurred, and, in certain cases, received an additional fee for its services in connection with the sale of power and for providing the other services.
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On closing of the Energy Marketing Internalization, all Power Agency Agreements were transferred by Brookfield to Brookfield Renewable.
Revenue Agreements
Contract Amendments
In the first quarter of 2021, two long-term power purchase agreements for sale of energy generated by hydroelectric facilities owned by Great Lakes Power Limited (“GLPL”) and Mississagi Power Trust (“MPT”) were amended and Brookfield’s third-party power purchase agreements associated the sale energy generated by GLPL and MPT were reassigned.
Historically, the power purchase agreements required Brookfield to purchase energy generated by GLPL and MPT at an average price of C$100 per MWh and C$127 per MWh, respectively, both subject to an annual adjustment equal to a 3% fixed rate. The GLPL and MPT contracts with Brookfield each had an initial term to December 1, 2029, and Brookfield Renewable will have an option to extend a fixed price commitment to GLPL from Brookfield through 2044 at a price of C$60 per MWh. There were no changes to the terms following the assignment of the third-party power purchase agreements from Brookfield to GLPL and MPT.
There were no amendments to or termination of the agreement that gives Brookfield Renewable the option to extend a fixed price commitment to GLPL from Brookfield from December 1, 2029 through 2044 at a price of C$60 per MWh.
Energy Revenue Agreement
In 2018, the energy revenue agreement between Brookfield and several entities owned by Brookfield Renewable was effectively amended.
Brookfield will support the price that Brookfield Renewable receives for energy generated by certain facilities in the United States at a price $75 per MWh. This price is to be increased annually on January 1 until 2021 by an amount equal to 40% of the increase in the CPI during the previous calendar year, but not exceeding an increase of 3% in any calendar year. The price will be reduced by $3 per MWh per year from 2021 to 2025 and then further reduced by $5.03 per MWh in 2026. The energy revenue agreement will terminate in 2046 and provides Brookfield the right to terminate the agreement in 2036.
Other Revenue Agreements
Pursuant to a power guarantee agreement, Brookfield purchased all energy from the two facilities of Hydro Pontiac Inc. at a price of C$68 per MWh, increased annually each calendar year beginning in 2010 by an amount equal to 40% of the increase in the CPI during the previous calendar year. This power guarantee agreement was scheduled to commence in 2019 for one facility and in 2020 for the other, upon the expiration of existing third-party power agreements. The agreement with Brookfield had an initial term to 2029 and automatically renewed for a successive 20-year period with certain termination provisions. On closing of the Energy Marketing Internalization, the power guarantee agreement with Hydro Pontiac Inc. was transferred to Brookfield Renewable.
In addition, Brookfield Renewable from time to time may enter into other power purchase agreements with Brookfield and its subsidiaries to deliver electricity, attributes related to generation and other related services. These agreements are typically entered into at market rates.
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Voting Agreements
Brookfield Renewable entered into voting agreements with Brookfield whereby Brookfield, as managing member of entities related to the Brookfield Americas Infrastructure Fund (the “BAIF Entities”) in which Brookfield Renewable holds investments in power generating operations with institutional partners, agreed to assign to Brookfield Renewable their voting rights to elect the Boards of Directors of the BAIF Entities. Brookfield Renewable’s economic interests in the BAIF Entities in the United States and Brazil are 22% and 25%, respectively.
Brookfield Renewable entered into voting agreements with certain Brookfield subsidiaries whereby these subsidiaries, as managing members of entities related to Brookfield Infrastructure Fund II (the “BIF II Entities”) in which Brookfield Renewable holds investments in power generating operations with institutional partners, agreed to provide to Brookfield Renewable the authority to direct the election of the Boards of Directors of the BIF II Entities. Brookfield Renewable’s economic interests in the BIF II Entities are between 40% and 50.1%.
Except as set out below in respect to TerraForm Power and Isagen, Brookfield Renewable entered into voting agreements with certain Brookfield subsidiaries as managing members of entities related to Brookfield Infrastructure Fund III (the “BIF III Entities”) in which Brookfield Renewable holds investments in power generating operations with institutional partners, Brookfield agreed to provide to Brookfield Renewable the authority to direct the election of the Boards of Directors of the BIF III Entities. Brookfield Renewable’s economic interests in the BIF III Entities are between 23% and 31%.
Brookfield Renewable holds its interest in its Colombian operations as part of a consortium. The consortium in turn holds its interest in Isagen through an entity (“Hydro Holdings”) which is entitled to appoint a majority of the board of directors of Isagen. The general partner of Hydro Holdings is a controlled subsidiary of Brookfield Renewable. Brookfield Renewable is entitled to appoint a majority of Hydro Holdings’ board of directors, provided that Brookfield Corporation and its subsidiaries (including Brookfield Renewable) collectively are (i) the largest holder of Hydro Holdings’ limited partnership interests, and (ii) hold over 30% of Hydro Holdings’ limited partnership interests. Brookfield Renewable currently meets this ownership test and is entitled to appoint a majority of the board of directors.
Simultaneously with the completion of the TerraForm Power acquisition, Brookfield Renewable entered into voting agreements with a controlled affiliate of Brookfield to transfer the power to vote their respective shares held of TerraForm Power to Brookfield Renewable. As a result, Brookfield Renewable controls and consolidates TerraForm Power.
Brookfield Renewable entered into voting agreements with certain Brookfield subsidiaries whereby these subsidiaries, as managing members of entities related to Brookfield Infrastructure Fund IV (the “BIF IV Entities”) and Brookfield Infrastructure Fund V (the “BIF V Entities”) in which Brookfield Renewable holds investments in power generating operations with institutional partners, agreed to provide to Brookfield Renewable the authority to direct the election of the Boards of Directors of the BIF IV Entities. Brookfield Renewable’s economic interests in the BIF IV Entities is 25% and expects to hold on average 25% in BIF V Entities.
Brookfield Renewable entered into voting agreements with certain Brookfield subsidiaries whereby these subsidiaries, as managing members of entities related to Brookfield Global Transition Fund (the “BGTF Entities”) and Brookfield Global Transition Fund II (the “BGTF II Entities”), agreed to provide to Brookfield Renewable the authority to direct the election of the Boards of Directors of the BGTF Entities, giving Brookfield Renewable control or significant influence over the entities that own certain renewable power and sustainable solution investments with institutional partners. Brookfield Renewable’s economic interest in BGTF I Entities is 20% and expects to hold 20% in BGTF II Entities.
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Brookfield Renewable entered into a voting agreement with Brookfield to gain control of BGTF Finco LLC, the primary borrower under the Brookfield Global Transition Fund subscription facility. The voting agreements provide Brookfield Renewable with control and accordingly, Brookfield Renewable consolidates the accounts of this entity.
Other Agreements
Credit facilities and funds on deposit
Brookfield Corporation 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 plus a margin. As at December 31, 2023, there were no draws on the committed unsecured revolving credit facility provided by Brookfield Corporation. Brookfield Corporation may from time to time place funds on deposit with Brookfield Renewable which are repayable on demand including any interest accrued. There were nil funds placed on deposit with Brookfield Renewable as at December 31, 2023 (2022: nil). The interest expense on the deposit and draws from the credit facility for the year ended December 31, 2023 totaled nil (2022: nil and 2021: $2 million).
Brookfield Renewable participates with institutional partners in Brookfield Americas Infrastructure Fund, Brookfield Infrastructure Fund II, Brookfield Infrastructure Fund III, Brookfield Infrastructure Fund IV, Brookfield Infrastructure Fund V, Brookfield Infrastructure Income Fund, Brookfield Global Transition Fund, Brookfield Global Transition Fund II, and Brookfield Infrastructure Debt Fund (“Private Funds”), each of which is a Brookfield sponsored fund, and in connection therewith, Brookfield Renewable, together with its institutional partners, has access to financing using the Private Funds’ credit facilities.
From time to time Brookfield Reinsurance and its related entities may participate in capital raises undertaken by Brookfield Renewable. These financings are typically provided at the market rates and as at December 31, 2023, $101 million of non-recourse borrowings (2022: $93 million) and $8 million of corporate borrowings (2022: $7 million) were due to Brookfield Reinsurance. Brookfield Reinsurance has also subscribed to tax equity financing of $2 million (2022: $3 million) and preferred limited partners equity of $11 million (2022: $11 million). As at December 31, 2023, Brookfield Renewable had $450 million (2022: $321 million) of borrowings from Brookfield Reinsurance classified as due to related party.
Subsidiaries of Brookfield Reinsurance may from time to time decide to participate in Brookfield Renewable’s equity offerings. For example, in June 2023, a subsidiary of Brookfield Reinsurance participated in a private placement of LP units. Refer to Note 16 Limited partners’ equity for from more details.
TERP Ownership Transfer
On December 28, 2023 a subsidiary of Brookfield Renewable transferred 13.75% of its interest in TerraForm Power to BEPC, a consolidated subsidiary. The intercompany transfer had no net impact to Brookfield Renewable’s financial statements. Brookfield Renewable continues to control and consolidate Terraform Power and there was no impact to its economic ownership. In conjunction with the transfer, Terraform Power declared a non-cash dividend to its shareholders resulting in a decrease of $483 million in Equity and an increase in due to related parties of $483 million.
Other Agreements
In 2011, on formation of Brookfield Renewable, Brookfield transferred certain development projects to Brookfield Renewable for no upfront consideration but is entitled to receive variable consideration on commercial operation or sale of these projects.
On November 7, 2023, Brookfield Renewable, together with institutional partners, through a strategic partnership with Cameco Corporation, acquired 100% of Westinghouse, one of the world’s largest nuclear services businesses, from our affiliate Brookfield Business Partners L.P. and its institutional partners, for $4.37 billion ($442 million net to Brookfield Renewable). Brookfield Renewable, together with institutional partners, own an aggregate 51% interest (10.11% net to Brookfield Renewable) with Cameco owning 49%. Refer to Note 3 - Acquisitions for more details.
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On December 29, 2023, a subsidiary of Brookfield transferred its indirect 8% economic interest in a greenhouse gas monitoring and ESG certification software investment that it held through Brookfield Technology Growth Partners III to Brookfield Renewable for $20 million. The investment is recognized as a financial instrument on the statement of financial position.
The following table reflects the related party agreements and transactions in the consolidated statements of income (loss), for the years ended December 31:
| (MILLIONS) | 2023 | 2022 | 2021 | |||||||||
Revenues | ||||||||||||
Power purchase and revenue agreements | $ | 14 | $ | 21 | $ | 103 | ||||||
Direct operating costs | ||||||||||||
Energy marketing fee & other services | (5 | ) | (1 | ) | (8 | ) | ||||||
Insurance services(1) | — | — | (26 | ) | ||||||||
Interest expense | ||||||||||||
Borrowings | $ | (35 | ) | $ | — | $ | (2 | ) | ||||
Contract balance accretion | (26 | ) | (20 | ) | (21 | ) | ||||||
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| $ | (61 | ) | $ | (20 | ) | $ | (23 | ) | ||||
Other | ||||||||||||
Distribution income | $ | 8 | $ | — | $ | — | ||||||
Other related party services | $ | 3 | $ | (5 | ) | $ | (4 | ) | ||||
Financial instrument gain/(loss) | $ | 21 | $ | 5 | $ | — | ||||||
Management service costs | $ | (205 | ) | $ | (243 | ) | $ | (288 | ) | |||
| (1) | Prior to November 2021, insurance services were paid to external insurance service providers through subsidiaries of Brookfield Corporation. The fees paid to the subsidiaries of Brookfield Corporation in 2023 were nil (2022 was nil and 2021: was nil). As of November 2021, Brookfield, through a regulated subsidiary, began providing insurance coverage through third-party commercial insurers for the benefits of certain entities in North America. The premiums and claims paid are not included in the table above. |
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The following table reflects the impact of the related party agreements and transactions on the consolidated statements of financial position as at December 31:
| (MILLIONS) | Related party | 2023 | 2022 | |||||||||
Current assets | ||||||||||||
Trade receivables and other current assets | ||||||||||||
Contract asset | Brookfield | $ | 61 | $ | 54 | |||||||
Due from related parties | ||||||||||||
Amounts due from | Brookfield(1) | 1,386 | 105 | |||||||||
| Equity-accounted investments and other | 57 | 18 | ||||||||||
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| 1,443 | 123 | |||||||||||
Non-current assets | ||||||||||||
Financial instrument assets | Brookfield | 170 | 395 | |||||||||
Other long-term assets | ||||||||||||
Contract asset | Brookfield | 314 | 341 | |||||||||
Due from related parties | ||||||||||||
| Equity-accounted investments and other | 135 | 128 | ||||||||||
Current liabilities | ||||||||||||
Contract Liability | Brookfield | 35 | 24 | |||||||||
Financial instrument liabilities | Brookfield Reinsurance | 2 | 3 | |||||||||
Due to related parties | ||||||||||||
Amounts due to | Brookfield(1) | 541 | 205 | |||||||||
| Equity-accounted investments and other | 13 | 24 | ||||||||||
| Brookfield Reinsurance | 242 | 321 | ||||||||||
Accrued distributions payable on LP units, BEPC exchangeable shares, Redeemable/Exchangeable partnership units and GP interest | Brookfield | 39 | 38 | |||||||||
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| 835 | 588 | |||||||||||
Non-current liabilities | ||||||||||||
Financial instrument liabilities | Brookfield Reinsurance | 2 | 3 | |||||||||
Due to related parties | ||||||||||||
Amounts due to | Brookfield(2) | 496 | — | |||||||||
| Equity-accounted investments and other | 209 | 1 | ||||||||||
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| 705 | 1 | |||||||||||
Corporate borrowings | Brookfield Reinsurance | 8 | 7 | |||||||||
Non-recourse borrowings | Brookfield Reinsurance and associates | 101 | 93 | |||||||||
Other long-term liabilities | ||||||||||||
Contract liability | Brookfield | 680 | 662 | |||||||||
Equity | ||||||||||||
Preferred limited partners equity | Brookfield Reinsurance and associates | $ | 11 | 11 | ||||||||
| (1) | Includes receivables of $1,328 million (2022: $45 million) associated with the Brookfield Global Transition Fund credit facility. |
| (2) | Includes payables of $6 million (2022: $39 million), $81 million (2022: $64 million), and $307 million (2022: nil) associated with the Brookfield Infrastructure Fund IV, Brookfield Global Transition Fund, and Brookfield Global Transition Fund II credit facilities, respectively. |
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Current assets
Amounts due from Brookfield are non-interest bearing, unsecured and due on demand.
Current liabilities
Amounts due to Brookfield are unsecured, payable on demand and relate to recurring transactions.
29. SUPPLEMENTAL INFORMATION
The net change in working capital balances for the year ended December 31 shown in the consolidated statements of cash flows is comprised of the following:
| (MILLIONS) | 2023 | 2022 | 2021 | |||||||||
Trade receivables and other current assets | $ | 540 | $ | (296 | ) | $ | (515 | ) | ||||
Accounts payable and accrued liabilities | (60 | ) | 109 | (282 | ) | |||||||
Other assets and liabilities | (12 | ) | (7 | ) | 81 | |||||||
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| $ | 468 | $ | (194 | ) | $ | (716 | ) | |||||
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30. SUBSIDIARY PUBLIC ISSUERS
The following tables provide consolidated summary financial information for Brookfield Renewable, BRP Equity, and Canadian Finco:
| (MILLIONS) | Brookfield Renewable(1) | BRP Equity | Canadian Finco | Subsidiary Credit Supporters(2) | Other Subsidiaries(1)(3) | Consolidating adjustments(4) | Brookfield Renewable consolidated | |||||||||||||||||||
As at December 31, 2023: | ||||||||||||||||||||||||||
Current assets | $ | 65 | $ | 400 | $ | 2,695 | $ | 790 | $4,611 | $ | (3,951 | ) | $ | 4,610 | ||||||||||||
Long-term assets | 4,735 | 246 | 2 | 44,239 | 71,435 | (49,139 | ) | 71,518 | ||||||||||||||||||
Current liabilities | 72 | 8 | 32 | 8,406 | 7,658 | (8,138 | ) | 8,038 | ||||||||||||||||||
Long-term liabilities | — | — | 2,650 | 56 | 35,405 | — | 38,111 | |||||||||||||||||||
Participating non-controlling interests – in operating subsidiaries | — | — | — | — | 18,863 | — | 18,863 | |||||||||||||||||||
Participating non-controlling interests – in a holding subsidiary – Redeemable/Exchangeable units held by Brookfield | — | — | — | 2,684 | — | — | 2,684 | |||||||||||||||||||
BEPC exchangeable shares | — | — | — | — | 2,479 | — | 2,479 | |||||||||||||||||||
Preferred equity | — | 583 | — | — | — | — | 583 | |||||||||||||||||||
Perpetual subordinated notes | — | — | — | 592 | — | — | 592 | |||||||||||||||||||
Preferred limited partners’ equity | 760 | — | — | 765 | — | (765 | ) | 760 | ||||||||||||||||||
As at December 31, 2022: | ||||||||||||||||||||||||||
Current assets | $ | 61 | $ | 391 | $ | 2,336 | $ | 834 | $4,172 | $ | (3,611 | ) | $ | 4,183 | ||||||||||||
Long-term assets | 4,860 | 241 | 3 | 33,830 | 59,860 | (38,866 | ) | 59,928 | ||||||||||||||||||
Current liabilities | 60 | 7 | 30 | 7,877 | 4,455 | (7,486 | ) | 4,943 | ||||||||||||||||||
Long-term liabilities | — | — | 2,299 | 16 | 30,567 | — | 32,882 | |||||||||||||||||||
Participating non-controlling interests – in operating subsidiaries | — | — | — | — | 14,755 | — | 14,755 | |||||||||||||||||||
Participating non-controlling interests – in a holding subsidiary – Redeemable\Exchangeable units held by Brookfield | — | — | — | 2,892 | — | — | 2,892 | |||||||||||||||||||
BEPC exchangeable shares | — | — | — | — | 2,561 | — | 2,561 | |||||||||||||||||||
Preferred equity | — | 571 | — | — | — | — | 571 | |||||||||||||||||||
Perpetual subordinated notes | — | — | — | 592 | — | — | 592 | |||||||||||||||||||
Preferred limited partners’ equity | 761 | — | — | 765 | — | (766 | ) | 760 | ||||||||||||||||||
| (1) | Includes investments in subsidiaries under the equity method. |
| (2) | Includes BRELP, BRP Bermuda Holdings I Limited, Brookfield BRP Holdings (Canada) Inc., Brookfield BRP Europe Holdings Limited, Brookfield Renewable Investments and BEP Subco Inc., collectively the “Subsidiary Credit Supporters”. |
| (3) | Includes subsidiaries of Brookfield Renewable, other than BRP Equity, Canadian Finco and the Subsidiary Credit Supporters. |
| (4) | Includes elimination of intercompany transactions and balances necessary to present Brookfield Renewable on a consolidated basis. |
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| (MILLIONS) | Brookfield Renewable(1) | BRP Equity | Canadian Finco | Subsidiary Credit Supporters | Other Subsidiaries(1)(2) | Consolidating adjustments(3) | Brookfield Renewable consolidated | |||||||||||||||||||
For the year ended December 31, 2023 | ||||||||||||||||||||||||||
Revenues | $ | — | $ | — | $ | — | $ | — | $5,038 | $ | — | $ | 5,038 | |||||||||||||
Net income (loss) | (50 | ) | — | 3 | (724 | ) | 1,686 | (299 | ) | 616 | ||||||||||||||||
For the year ended December 31, 2022 Revenues | $ | — | $ | — | $ | — | $ | — | $4,711 | $ | — | $ | 4,711 | |||||||||||||
Net income (loss) | (122 | ) | — | 2 | (1,322 | ) | 772 | 808 | 138 | |||||||||||||||||
For the year ended December 31, 2021 Revenues | $ | — | $ | — | $ | — | $ | — | $4,096 | $ | — | $ | 4,096 | |||||||||||||
Net income (loss) | (136 | ) | — | — | (1,185 | ) | 561 | 694 | (66 | ) | ||||||||||||||||
| (1) | Includes investments in subsidiaries under the equity method. |
| (2) | Includes subsidiaries of Brookfield Renewable, other than BRP Equity, Canadian Finco, and the Subsidiary Credit Supporters. |
| (3) | Includes elimination of intercompany transactions and balances necessary to present Brookfield Renewable on a consolidated basis. |
See Note 13 – Borrowings for additional details regarding the medium-term notes issued by Canadian Finco. See Note 14 – Non-controlling interests for additional details regarding Class A Preference Shares issued by BRP Equity.
31. SUBSEQUENT EVENTS
Subsequent to year-end, Brookfield Renewable issued C$400 million of Series 17 medium-term notes. The medium-term notes have a fixed interest rate of 5.32% and a maturity date of January 10, 2054. The Series 17 medium-term notes are corporate-level green bonds.
Subsequent to year-end, Brookfield Renewable, together with its institutional partners, completed the acquisition of a series of development distributed generation projects in the United States totaling 93 MW for total consideration of approximately $86 million (approximately $17 million net to Brookfield Renewable). Brookfield Renewable holds a 20% interest in these investments.
Subsequent to year-end, Brookfield Renewable, together with its institutional partners, completed the acquisition of a series of development distributed generation projects in the United States totaling 60 MW for total consideration of approximately $39 million (approximately $11 million net to Brookfield Renewable). Brookfield Renewable holds a 25% interest in these investments.
Subsequent to year-end, Brookfield Renewable repurchased 496,254 LP units on the Toronto Stock Exchange at a total cost of $12 million.
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