Brookfield Renewable (BEPC) 6-K Business Acquisition Report

Exhibit 99.1

FORM 51-102F4

BUSINESS ACQUISITION REPORT

Item 1 Identity of Company

1.1 Name and Address of Company

Brookfield Renewable Corporation

250 Vesey Street

New York, NY

United States

10281

1.2 Executive Officer

Wyatt Hartley Chief Financial Officer of our service provider, BRP Energy Group L.P. Telephone: 416.369.3366

Item 2 Details of Acquisition

2.1 Nature of Business Acquired

BEPC Reorganization

On July 29, 2020, in connection with the previously announced special distribution (the “Special Distribution”) by Brookfield Renewable Partners L.P. (“BEP”) of class A exchangeable subordinate voting shares (“BEPC Class A Shares”) of Brookfield Renewable Corporation (“BEPC”), BEPC acquired from Brookfield Renewable Energy L.P. (“BRELP”) all of BRELP’s interests in BRP Bermuda Holdings I Limited (excluding a 10% interest retained by BEP), Brookfield Power US Holding America Co. and BEP Bermuda Holdings IV Limited (collectively, the “BEPC Operating Subsidiaries”, and the acquisition of the BEPC Operating Subsidiaries by BEPC and related transactions, the “BEPC Reorganization”). The BEPC Operating Subsidiaries own and operate hydroelectric power, wind, solar and storage and ancillary assets in the United States and Brazil, and hydroelectric power assets in Colombia. The Special Distribution was completed on July 30, 2020 and each holder of BEP Units of record as of July 27, 2020 received one (1) BEPC Class A Share for every four (4) BEP Units held. The BEPC Class A Shares commenced trading on the Toronto Stock Exchange and on the New York Stock Exchange under the symbol “BEPC” on July 30, 2020.

TERP Acquisition

On July 31, 2020, BEP and BEPC acquired all of the outstanding shares of Class A common stock (“TERP Shares”) of TerraForm Power, Inc. (“TerraForm Power”),

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other than the approximately 62% of TERP Shares owned by BEP and its affiliates (the “TERP Acquisition”). TerraForm Power owns and operates a best-in-class renewable power portfolio of solar and wind assets located primarily in the U.S. and E.U., totaling more than 4,200 MW of installed capacity, and prior to the completion of the TERP Acquisition was listed on the Nasdaq Stock Market.

Following completion of the TERP Acquisition, TerraForm Power is owned as to 47% by Brookfield Asset Management Inc. (“Brookfield”) and as to 53% by BEP (including through its ownership of BEPC), and BEP has an indirect 67% economic interest. Concurrent with closing of the TERP Acquisition (i) an indirect subsidiary of Brookfield entered into a voting agreement with BEPC giving BEPC certain voting rights over the TERP Shares owned by Brookfield, and (ii) BEP and BRELP entered into a voting agreement with BEPC, giving BEPC certain voting rights over the TERP Shares controlled by BEP (collectively, the “TERP Voting Agreements”). As a result, BEPC (and therefore BEP) controls TerraForm Power and intends to consolidate it from an accounting point of view.

2.2 Acquisition Date

July 29, 2020 and July 31, 2020

2.3 Consideration

BEPC Reorganization

BRELP transferred its interests in the BEPC Operating Subsidiaries (excluding a 10% interest in BRP Bermuda Holdings I Limited retained by BEP) to BEPC in consideration for 77,842,712 BEPC Class A Shares and 126,400,000 class C non-voting shares of BEPC (“BEPC Class C Shares”), such shares constituting all of the issued and outstanding BEPC Class A Shares (prior to completion of the TERP Acquisition) and BEPC Class C Shares. The BEPC Class A Shares received by BRELP were then distributed by BRELP to holders of its equity units (including BEP) and to its general partner (the “BRELP Distribution”), following which BEP distributed such BEPC Class A Shares pursuant to the Special Distribution.

TERP Acquisition

Each TERP Share (other than TERP Shares owned by BEP and its affiliates) was acquired for either 0.47625 of a BEPC Class A Share or 0.47625 of a BEP Unit, at the election of holders of TERP Shares. Upon closing of the TERP Acquisition, BEP acquired an aggregate of 8,471,328 TERP Shares in exchange for the issuance by BEP of 4,034,469 BEP Units to such holders of TERP Shares and BEPC acquired an aggregate of 77,764,286 TERP Shares in exchange for the issuance by BEPC of an aggregate of 37,035,241 BEPC Class A Shares to such holders of TERP Shares. In addition, each outstanding restricted stock award issued under TerraForm Power’s 2018 Amended and Restated Long-Term Incentive Plan was converted into an award

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of the same type with respect to a number of BEPC Class A Shares determined by multiplying the number of TERP Shares subject to each outstanding TerraForm Power restricted stock unit award by 0.47625.

2.4 Effect on Financial Position

The estimated effect of the BEPC Reorganization and the TERP Acquisition to BEPC is outlined in the unaudited pro forma financial statements of BEPC incorporated by reference into this Report. The unaudited pro forma financial statements are based on preliminary estimates, accounting judgments and currently available information and assumptions that management believes are reasonable. The unaudited pro forma financial statements provide a detailed discussion of how such adjustments were derived and presented.

BEPC currently has no plans or proposals for material changes in the business affairs of the BEPC Operating Subsidiaries or TerraForm Power which may have a significant effect on the financial performance or financial position of BEPC.

2.5 Prior Valuations

Neither BEPC nor BEP within the 12 months preceding the date hereof, obtained a valuation opinion required by securities legislation or a Canadian exchange or market to support the consideration paid by BEP and BEPC to complete the BEPC Reorganization.

Neither BEPC nor, to its knowledge, TerraForm Power, within the 12 months preceding the date hereof, obtained a valuation opinion required by securities legislation or a Canadian exchange or market to support the consideration paid by BEP and BEPC to complete the TERP Acquisition.

2.6 Parties to Transaction

BEPC Reorganization

BEPC acquired the BEPC Operating Subsidiaries from BRELP. BRELP is an affiliate of BEPC since each of BEPC and BRELP is a subsidiary of BEP.

TERP Acquisition

Each of BEPC and BEP acquired TERP Shares pursuant to the TERP Acquisition. BEPC is an affiliate of BEP since BEPC is a subsidiary of BEP.

2.7 Date of Report

August 25, 2020

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Item 3 Financial Statements and Other Information

The following financial statements are included in and form part of this Report:

(a) the combined carve-out financial statements of the United States, Colombian and Brazilian operations of BEP as of December 31, 2019 and December 31, 2018 and for each of the three years in the period ended December 31, 2019, as contained on pages F-2 to F-56 of BEPC’s prospectus dated June 29, 2020 in respect of the Special Distribution and filed under BEPC’s profile on SEDAR at www.sedar.com on June 29, 2020, which financial statements are incorporated by reference herein;

(b) the unaudited interim condensed combined carve-out financial statements of the United States, Colombian and Brazilian operations of BEP as of June 30, 2020 and December 31, 2019 and for the three and six-month periods ended June 30, 2020 and June 30, 2019 and filed under BEPC’s profile on SEDAR at www.sedar.com on August 25, 2020, which financial statements are incorporated by reference herein;

(c) the consolidated balance sheet of TerraForm Power as of December 31, 2019 and 2018, the related consolidated statements of operations, comprehensive loss, stockholders’ equity and cash flows of TerraForm Power for the three year period ended December 31, 2019, and the related notes, together with the audit reports of Ernst & Young LLP and KPMG LLP thereon and the audit report of Deloitte S.L. in respect of TERP Spanish HoldCo, S.L., all as included in BEP’s annual report on Form 20-F dated February 28, 2020 for the fiscal year ended December 31, 2019, as amended by Amendment No. 1 thereto dated March 18, 2020 and filed under BEP’s profile on SEDAR at www.sedar.com on March 18, 2020, which financial statements are incorporated by reference herein;

(d) the unaudited interim consolidated financial statements of TerraForm Power as at June 30, 2020 and December 31, 2019 and for the three and six months ended June 30, 2020 and 2019 and related notes, attached as Schedule A to this Report; and

(e) the unaudited pro forma condensed combined statement of financial position of BEPC as at June 30, 2020 and the unaudited pro forma condensed combined statement of operations of BEPC for the six months ended June 30, 2020 and for the year ended December 31, 2019 attached as Schedule B to this Report, which pro forma financial statements were prepared to illustrate the effects of the BEPC Reorganization, the BRELP Distribution, the Special Distribution, the execution of the TERP Voting Agreements and the TERP Acquisition.

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BEPC is relying on such statements pursuant to the exemption in section 8.4(4) of National Instrument 51-102 – Continuous Disclosure Obligations, which allows reliance on earlier financial statements when certain conditions have been met.

Ernst & Young LLP, KPMG LLP and Deloitte S.L. have not provided consent to the inclusion in this Report of their respective audit reports referred to in Item 3(c) above.

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Schedule A

(see attached)

TERRAFORM POWER, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

	Three Months Ended June 30,						Six Months Ended June 30,
	2020			2019			2020			2019
Operating revenues, net	$	277,329		$	255,366		$	524,091		$	480,698
Operating costs and expenses:
Cost of operations		61,926			71,575			119,790			132,326
General and administrative expenses		18,351			22,057			44,568			45,219
General and administrative expenses - affiliate		10,717			6,159			20,494			11,323
Acquisition costs		114			293			469			475
Acquisition costs - affiliate		10			—			664			—
Depreciation, accretion and amortization expense		127,908			100,354			250,299			207,323
Total operating costs and expenses		219,026			200,438			436,284			396,666
Operating income		58,303			54,928			87,807			84,032
Other expenses (income):
Interest expense, net		85,332			71,041			163,291			157,328
Loss (gain) on modification and extinguishment of debt, net		—			—			3,593			(5,543	)
Gain on foreign currency exchange, net		(116	)		(6,440	)		(4,987	)		(15,192	)
Other (income) expenses, net		(2,747	)		1,485			(7,139	)		(1,195	)
Total other expenses, net		82,469			66,086			154,758			135,398
Loss before income tax expense		(24,166	)		(11,158	)		(66,951	)		(51,366	)
Income tax (benefit) expense		(10,832	)		5,669			13,629			1,518
Net loss		(13,334	)		(16,827	)		(80,580	)		(52,884	)
Less: Net income (loss) attributable to redeemable non-controlling interests		9			2,481			21			(6,900	)
Less: Net loss attributable to non-controlling interests		(13,282	)		(15,713	)		(25,469	)		(33,762	)
Net loss attributable to Class A common stockholders	$	(61	)	$	(3,595	)	$	(55,132	)	$	(12,222	)
Weighted average number of shares:
Class A common stock - Basic and diluted		226,528			209,142			226,520			209,142
Loss per share:
Class A common stock - Basic and diluted	$	—		$	(0.02	)	$	(0.24	)	$	(0.06	)
Distributions declared per share:
Class A common stock	$	0.2014		$	0.2014		$	0.4028		$	0.4028

See accompanying notes to unaudited condensed consolidated financial statements.

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TERRAFORM POWER, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(In thousands)

	Three Months Ended June 30,						Six Months Ended June 30,
	2020			2019			2020			2019
Net loss	$	(13,334	)	$	(16,827	)	$	(80,580	)	$	(52,884	)
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments:
Net unrealized gain arising during the period		8,545			4,050			18,809			8,872
Hedging activities:
Net unrealized loss arising during the period		(3,159	)		(18,128	)		(40,136	)		(27,288	)
Reclassification of net realized gain into earnings		(1,255	)		(2,917	)		(3,097	)		(5,828	)
Other comprehensive income (loss), net of tax		4,131			(16,995	)		(24,424	)		(24,244	)
Total comprehensive loss		(9,203	)		(33,822	)		(105,004	)		(77,128	)
Less comprehensive income (loss) attributable to non-controlling interests:
Net income (loss) attributable to redeemable non-controlling interests		9			2,481			21			(6,900	)
Net loss attributable to non-controlling interests		(13,282	)		(15,713	)		(25,469	)		(33,762	)
Hedging activities		(187	)		56			(433	)		732
Comprehensive loss attributable to non-controlling interests		(13,460	)		(13,176	)		(25,881	)		(39,930	)
Comprehensive income (loss) attributable to Class A common stockholders	$	4,257		$	(20,646	)	$	(79,123	)	$	(37,198	)

See accompanying notes to unaudited condensed consolidated financial statements.

2

TERRAFORM POWER, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share data)

	June 30, 2020			December 31, 2019
Assets
Current assets:
Cash and cash equivalents	$	259,753		$	237,480
Restricted cash, current		37,886			35,657
Accounts receivable, net		206,955			167,865
Due from affiliates		2,704			499
Derivative assets, current		7,688			15,819
Deposit on acquisitions		2,648			24,831
Prepaid expenses		19,724			13,514
Other current assets		44,714			57,682
Total current assets		582,072			553,347
Renewable energy facilities, net, including consolidated variable interest entities of $3,121,220 and $3,188,508 in 2020 and 2019, respectively		7,734,185			7,405,461
Intangible assets, net, including consolidated variable interest entities of $666,109 and $690,594 in 2020 and 2019, respectively		1,904,582			1,793,292
Goodwill		172,181			127,952
Restricted cash		60,156			76,363
Derivative assets		45,161			57,717
Other assets		41,602			44,504
Total assets	$	10,539,939		$	10,058,636
Liabilities, Redeemable Non-controlling Interests and Stockholders’ Equity
Current liabilities:
Current portion of long-term debt, including consolidated variable interest entities of $70,175 and $55,089 in 2020 and 2019, respectively	$	484,570		$	441,951
Accounts payable, accrued expenses and other current liabilities		192,023			178,796
Due to affiliates		12,794			11,510
Derivative liabilities, current portion		63,596			33,969
Total current liabilities		752,983			666,226
Long-term debt, less current portion, including consolidated variable interest entities of $1,137,671 and $932,862 in 2020 and 2019, respectively		6,262,346			5,793,431
Operating lease obligations, less current portion, including consolidated variable interest entities of $137,307 and $138,816 in 2020 and 2019, respectively		286,142			272,894
Asset retirement obligations, including consolidated variable interest entities of $120,525 and $116,159 in 2020 and 2019, respectively		321,183			287,288
Derivative liabilities		237,017			101,394
Deferred income taxes		185,127			194,539
Other liabilities		93,283			112,072
Total liabilities		8,138,081			7,427,844
Redeemable non-controlling interests		7,990			22,884
Stockholders’ equity:
Class A common stock, $0.01 par value per share, 1,200,000,000 shares authorized, 227,601,982 and 227,552,105 shares issued in 2020 and 2019, respectively		2,278			2,276
Additional paid-in capital		2,435,521			2,512,891
Accumulated deficit		(563,419	)		(508,287	)
Accumulated other comprehensive (loss) income		(12,346	)		11,645
Treasury stock, 1,070,317 and 1,051,298 shares in 2020 and 2019, respectively		(15,516	)		(15,168	)
Total TerraForm Power, Inc. stockholders’ equity		1,846,518			2,003,357
Non-controlling interests		547,350			604,551
Total stockholders’ equity		2,393,868			2,607,908
Total liabilities, redeemable non-controlling interests and stockholders’ equity	$	10,539,939		$	10,058,636

See accompanying notes to unaudited condensed consolidated financial statements.

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TERRAFORM POWER, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands)

																							Non-controlling Interests
	Class A Common Stock Issued				Additional Paid-in			Accumulated			Accumulated Other Comprehensive			Common Stock Held in Treasury												Accumulated			Accumulated Other Comprehensive					Total
	Shares		Amount		Capital			Deficit			Income			Shares			Amount			Total			Capital			Deficit			Income		Total			Equity
Balance as of December 31, 2018		209,642	$	2,096	$	2,391,435		$	(359,603	)	$	40,238			(500	)	$	(6,712	)	$	2,067,454		$	1,040,771		$	(373,420	)	$	117	$	667,468		$	2,734,922
Stock-based compensation		—		—		160			—			—			—			—			160			—			—			—		—			160
Net loss		—		—		—			(8,627	)		—			—			—			(8,627	)		—			(18,049	)		—		(18,049	)		(26,676	)
Distributions to Class A common stockholders		—		—		(41,987	)		—			—			—			—			(41,987	)		—			—			—		—			(41,987	)
Other comprehensive (loss) income		—		—		—			—			(7,925	)		—			—			(7,925	)		—			—			676		676			(7,249	)
Contributions from non-controlling interests		—		—		—			—			—			—			—			—			5,562			—			—		5,562			5,562
Distributions to non-controlling interests		—		—		—			—			—			—			—			—			(5,023	)		—			—		(5,023	)		(5,023	)
Purchase of non-controlling interests		—		—		(687	)		—			—			—			—			(687	)		(393	)		—			—		(393	)		(1,080	)
Non-cash redemption of redeemable non-controlling interests		—		—		(7,345	)		—			—			—			—			(7,345	)		—			—			—		—			(7,345	)
Balance as of March 31, 2019		209,642	$	2,096	$	2,341,576		$	(368,230	)	$	32,313			(500	)	$	(6,712	)	$	2,001,043		$	1,040,917		$	(391,469	)	$	793	$	650,241		$	2,651,284
Stock-based compensation		—		—		43			—			—			—			—			43			—			—			—		—			43
Net loss		—		—		—			(3,595	)		—			—			—			(3,595	)		—			(15,713	)		—		(15,713	)		(19,308	)
Distributions to Class A common stockholders		—		—		(41,991	)		—			—			—			—			(41,991	)		—			—			—		—			(41,991	)
Other comprehensive (loss) income		—		—		—			—			(17,051	)		—			—			(17,051	)		—			—			56		56			(16,995	)
Distributions to non-controlling interests in renewable energy facilities		—		—		—			—			—			—			—			—			(4,866	)		—			—		(4,866	)		(4,866	)
Balance as of June 30, 2019		209,642	$	2,096	$	2,299,628		$	(371,825	)	$	15,262			(500	)	$	(6,712	)	$	1,938,449		$	1,036,051		$	(407,182	)	$	849	$	629,718		$	2,568,167

See accompanying notes to unaudited condensed consolidated financial statements.

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TERRAFORM POWER, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands)

																							Non-controlling Interests
	Class A Common Stock Issued				Additional Paid-in			Accumulated			Accumulated Other Comprehensive			Common Stock Held in Treasury												Accumulated			Accumulated Other Comprehensive						Total
	Shares		Amount		Capital			Deficit			Income (Loss)			Shares			Amount			Total			Capital			Deficit			Loss			Total			Equity
Balance as of December 31, 2019		227,552	$	2,276	$	2,512,891		$	(508,287	)	$	11,645			(1,051	)	$	(15,168	)	$	2,003,357		$	1,024,396		$	(419,338	)	$	(507	)	$	604,551		$	2,607,908
Stock-based compensation		34		1		329			—			—			(13	)		(244	)		86			—			—			—			—			86
Net loss		—		—		—			(55,071	)		—			—			—			(55,071	)		—			(12,187	)		—			(12,187	)		(67,258	)
Distributions to Class A common stockholders		—		—		(45,488	)		—			—			—			—			(45,488	)		—			—			—			—			(45,488	)
Other comprehensive loss		—		—		—			—			(28,309	)		—			—			(28,309	)		—			—			(246	)		(246	)		(28,555	)
Contributions from non-controlling interests		—		—		—			—			—			—			—			—			3,008			—			—			3,008			3,008
Distributions to non-controlling interests		—		—		—			—			—			—			—			—			(28,828	)		—			—			(28,828	)		(28,828	)
Purchase of redeemable non-controlling interests		—		—		12,952			—			—			—			—			12,952			—			—			—			—			12,952
Balance as of March 31, 2020		227,586	$	2,277	$	2,480,684		$	(563,358	)	$	(16,664	)		(1,064	)	$	(15,412	)	$	1,887,527		$	998,576		$	(431,525	)	$	(753	)	$	566,298		$	2,453,825
Stock-based compensation		16		1		326			—			—			(6	)		(104	)		223			—			—			—			—			223
Net loss		—		—		—			(61	)		—			—			—			(61	)		—			(13,282	)		—			(13,282	)		(13,343	)
Distributions to Class A common stockholders		—		—		(45,489	)		—			—			—			—			(45,489	)		—			—			—			—			(45,489	)
Other comprehensive income (loss)		—		—		—			—			4,318			—			—			4,318			—			—			(187	)		(187	)		4,131
Distributions to non-controlling interests		—		—		—			—			—			—			—			—			(5,479	)		—			—			(5,479	)		(5,479	)
Balance as of June 30, 2020		227,602	$	2,278	$	2,435,521		$	(563,419	)	$	(12,346	)		(1,070	)	$	(15,516	)	$	1,846,518		$	993,097		$	(444,807	)	$	(940	)	$	547,350		$	2,393,868

See accompanying notes to unaudited condensed consolidated financial statements.

5

TERRAFORM POWER, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

	Six Months Ended June 30,
	2020			2019
Cash flows from operating activities:
Net loss	$	(80,580	)	$	(52,884	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation, accretion and amortization expense		250,299			207,323
Amortization of favorable and unfavorable rate revenue contracts, net		19,987			18,854
Amortization of deferred financing costs, debt premiums and discounts, net		7,652			4,143
Unrealized (gain) loss on interest rate swaps		(8,827	)		12,850
Unrealized loss (gain) on commodity contract derivatives, net		4,980			(2,563	)
Recognition of deferred revenue		(94	)		(1,594	)
Stock-based compensation expense		655			203
Loss (gain) on modification and extinguishment of debt, net		3,593			(5,543	)
Loss on disposal of renewable energy facilities		1,294			10,146
Gain on foreign currency exchange, net		(4,469	)		(14,461	)
Deferred taxes		11,454			(1,182	)
Charges to allowance for doubtful accounts		1,196			763
Other, net		(177	)		29
Changes in assets and liabilities, excluding the effect of acquisitions:
Accounts receivable		(8,679	)		(22,168	)
Prepaid expenses and other current assets		4,065			8,301
Accounts payable, accrued expenses and other current liabilities		(7,866	)		725
Due (from) to affiliates, net		(2,304	)		1,242
Other, net		(15,482	)		12,303
Net cash provided by operating activities		176,697			176,487
Cash flows from investing activities:
Capital expenditures		(18,123	)		(10,622	)
Proceeds from energy rebate and reimbursable interconnection costs		446			3,626
Proceeds from the settlement of foreign currency contracts, net		38,753			30,529
Payments to acquire businesses, net of cash and restricted cash acquired		(78,702	)		—
Payments to acquire renewable energy facilities from third parties, net of cash and restricted cash acquired		—			(18,255	)
Other investing activities		2,747			1,164
Net cash (used in) provided by investing activities		(54,879	)		6,442
Cash flows from financing activities:
Revolver draws		192,000			83,000
Revolver repayments		(148,000	)		(270,000	)
Term Loan principal payments		—			(1,750	)
Borrowings of non-recourse long-term debt		324,464			179,409
Principal payments and prepayments on non-recourse long-term debt		(331,592	)		(146,627	)
Debt financing fees paid		(9,689	)		(10,035	)
Contributions from non-controlling interests		3,008			5,562
Purchase of membership interests and distributions to non-controlling interests		(36,271	)		(11,566	)
Cash distributions to Class A common stockholders		(90,977	)		(83,979	)
Payments to terminate interest rate swaps		(16,331	)		—
Other financing activities		(971	)		—
Net cash used in financing activities		(114,359	)		(255,986	)
Net increase in cash, cash equivalents and restricted cash		7,459			(73,057	)
Effect of exchange rate changes on cash, cash equivalents and restricted cash		836			(2,233	)
Cash, cash equivalents and restricted cash at beginning of period		349,500			392,809
Cash, cash equivalents and restricted cash at end of period	$	357,795		$	317,519
Supplemental Disclosures:
Cash paid for interest	$	139,048		$	154,036
Cash paid for income taxes		848			1,554

See accompanying notes to unaudited condensed consolidated financial statements.

6

TERRAFORM POWER, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollar amounts in thousands, except per share data, unless otherwise noted)

1. NATURE OF OPERATIONS AND ORGANIZATION

TerraForm Power, Inc. (“TerraForm Power” and, together with its subsidiaries, the “Company”) is a holding company and its primary asset is an equity interest in TerraForm Power, LLC (“Terra LLC”). TerraForm Power is the managing member of Terra LLC and operates, controls and consolidates the business affairs of Terra LLC, which through its subsidiaries owns and operates renewable energy facilities that have long-term contractual arrangements to sell the electricity generated by these facilities to third parties. The related green energy certificates, ancillary services and other environmental attributes generated by these facilities are also sold to third parties. The Company is sponsored by Brookfield Asset Management Inc. (“Brookfield”) and its primary business strategy is to acquire operating solar and wind assets in North America and Western Europe. The Company is a controlled affiliate of Brookfield. As of June 30, 2020, affiliates of Brookfield held approximately 62% of the Company’s Class A common stock (“Common Stock”).

The Merger Transaction

On January 11, 2020, the Company received an unsolicited and non-binding proposal (the “Brookfield Proposal”) from Brookfield Renewable Partners L.P. (“Brookfield Renewable”), an affiliate of Brookfield, to acquire all of the outstanding shares of Common Stock of the Company, other than the approximately 62% shares held by Brookfield Renewable and its affiliates. The Brookfield Proposal expressly conditioned the transaction contemplated thereby on the approval of a committee of the Board of Directors of the Company (the “Board”) consisting solely of independent directors and the approval of a majority of the shares held by the Company’s stockholders not affiliated with Brookfield Renewable and its affiliates. Following the Company’s receipt of the Brookfield Proposal, the Board formed a special committee (the “Special Committee”) of non-executive, disinterested and independent directors to, among other things, review, evaluate and consider the Brookfield Proposal and, if the Special Committee deemed appropriate, negotiate a transaction with Brookfield Renewable or explore alternatives thereto. The Board resolutions establishing the Special Committee expressly provided that the Board would not approve the transaction contemplated by the Brookfield Proposal or any alternative thereto without a prior favorable recommendation by the Special Committee. As of June 30, 2020 Brookfield Renewable held an approximately 30% indirect economic interest in TerraForm Power.

On March 16, 2020, the Company, TerraForm Power NY Holdings, Inc., a wholly owned direct subsidiary of the Company (“TERP NY”), Brookfield Renewable, Brookfield Renewable Corporation, an indirect subsidiary of Brookfield Renewable (“BEPC”), and 2252876 Alberta ULC, a wholly owned direct subsidiary of Brookfield Renewable (“Acquisition Sub”), entered into that certain Reorganization Agreement and Plan of Reorganization (the “Reorganization Agreement”) for Brookfield Renewable to acquire all of the Company’s outstanding shares of Common Stock, other than the approximately 62% currently owned by Brookfield Renewable and its affiliates. Also on March 16, 2020, the Company and TERP NY entered into that certain Plan of Merger, dated as of March 16, 2020 (the “Plan of Merger”). The transactions contemplated by the Reorganization Agreement and Plan of Merger are referred to herein as the “Transactions”. Pursuant to the Reorganization Agreement, each holder of a share of Common Stock that is issued and outstanding immediately prior to the consummation of the Transactions would receive, at each such shareholder’s election, 0.381 of a Brookfield Renewable limited partnership unit or of a Class A exchangeable subordinate voting share of BEPC, a Canadian subsidiary of Brookfield Renewable which is publicly listed on the New York Stock Exchange and the Toronto Stock Exchange. The Special Committee unanimously recommended that the Company’s unaffiliated shareholders approve the Transactions. Consummation of the Transactions was subject to the non-waivable approval of a majority of the Company’s shareholders not affiliated with Brookfield Renewable, receipt of required regulatory approvals and other customary closing conditions.

On July 31, 2020, pursuant to the Reorganization Agreement, Brookfield Renewable, through Acquisition Sub and BEPC, acquired all of the outstanding shares of Class A common stock of the Company (“TERP Common Stock”) not held by the Brookfield Stockholders (as defined below) (such shares, the “Public TERP Shares”) through a series of transactions that include the Reincorporation Merger and the Share Exchange (each as defined below). Pursuant to the Reorganization Agreement and the Plan of Merger, at the effective time of the Reincorporation Merger (the “Reincorporation Effective Time”), the Company merged with and into TERP NY, with TERP NY as the surviving corporation of such merger (the “Reincorporation Merger”), and (i) BBHC Orion Holdco L.P. (“BBHC Orion”) and Orion U.S. Holdings 1 L.P. (“Orion U.S.” and, together with BBHC Orion, the “Brookfield Stockholders”), each an affiliate of BEP, received shares of class A common stock, par value $0.01, of TERP NY (“TERP NY Class A Common Stock”), (ii) holders of Public TERP Shares who did not elect to receive non-voting limited partnership units of BEP (the “BEP Units”) received shares of class B common stock, par value $0.01, of TERP NY (“TERP NY Class B Common Stock”), and (iii) holders of Public TERP Shares who elected to receive BEP Units received shares of class C common stock, par value $0.01, of TERP NY (“TERP NY Class C Common

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Stock”). Immediately thereafter, at the effective time of the Share Exchange (the “Exchange Effective Time”), (i) pursuant to a binding share exchange, BEPC acquired each share of TERP NY Class B Common Stock issued and outstanding after the Reincorporation Effective Time in exchange for the right to receive class A exchangeable subordinate voting shares, no par value, of BEPC (the “BEPC Exchangeable Shares”) and cash in lieu of fractional BEPC Exchangeable Shares (the “BEPC Exchange”) and (ii) pursuant to a binding share exchange, Acquisition Sub acquired each share of TERP NY Class C Common Stock issued and outstanding after the Reincorporation Effective Time in exchange for the right to receive BEP Units and cash in lieu of fractional BEP Units (the “BEP Exchange” and, together with the BEPC Exchange, the “Share Exchange” and, together with the Reincorporation Merger, the “Merger Transaction”).

For a detailed description of the Merger Transaction, see Note 17. Related Parties.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation and Principles of Consolidation

The accompanying unaudited condensed consolidated financial statements represent the results of TerraForm Power, which consolidates Terra LLC through its controlling interest.

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). They include the results of wholly-owned and partially-owned subsidiaries in which the Company has a controlling interest with all significant intercompany accounts and transactions eliminated and have been prepared in accordance with the regulations of the Securities and Exchange Commission (“SEC”) for interim financial information. Accordingly, they do not include all of the information and notes required by U.S. GAAP for complete financial statements. The financial statements should be read in conjunction with the accounting policies and other disclosures as set forth in the notes to the Company’s audited consolidated financial statements for the year ended December 31, 2019 included in the Company’s Annual Report on Form 10-K filed with the SEC on March 17, 2020. Interim results are not necessarily indicative of results for a full year or any subsequent interim period.

In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all material adjustments consisting of a normal and recurring nature necessary to present fairly the Company’s financial position as of June 30, 2020, results of operations, comprehensive income (loss) for the three and six months ended June 30, 2020 and 2019 and cash flows for the six months ended June 30, 2020 and 2019.

Use of Estimates

In preparing the unaudited condensed consolidated financial statements, the Company uses estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities as of the date of the financial statements. Such estimates also affect the reported amounts of revenues, expenses, and cash flows during the reporting period. The COVID-19 pandemic has caused significant volatility in global markets and resulted in the imposition of quarantines or closures of office spaces, travel and transportation restrictions which, among other factors, have contributed to a widespread decline in economic activity, both globally and in the jurisdictions in which the Company operates in. The Company has assessed the impact of the pandemic and is not aware of specific events or circumstances that required material revisions to the estimates and assumptions used in the preparation of this Quarterly Report. These estimates may change as new events occur and additional information is obtained. To the extent there are material differences between the estimates and actual results, the Company’s future results of operations would be affected.

Recently Adopted Accounting Standards - Guidance Adopted in 2020

In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326), to provide financial statement users with more useful information about the current expected credit losses (“CECL”). This ASU changes how entities measure credit losses on financial instruments and the timing of when such losses are recognized by utilizing a lifetime expected credit loss measurement. The guidance is effective for fiscal years and interim periods within those years beginning after January 1, 2020. The Company adopted ASU 2016-13, effective January 1, 2020, and did not result in a material impact on the allowance for doubtful accounts. See Note 13. Concentration of Credit Risk for additional details related to the Company’s exposure to credit risk.

In August 2018, the FASB issued ASU No. 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement. This ASU removes some disclosure requirements,

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modifies others, and adds some new disclosure requirements. The guidance is effective January 1, 2020, with early adoption permitted. The Company adopted ASU No. 2018-13 as of January 1, 2020, which resulted in additional disclosures related to the financial assets classified as Level 3. See Note 12. Fair Value of Financial Instruments for additional details.

In August 2018, the FASB issued ASU No. 2018-15, Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40) Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract. This ASU amends the definition of a hosting arrangement and requires a customer in a cloud computing arrangement that is a service contract to follow the internal use software guidance in ASC 350-402 to determine which implementation costs to capitalize as assets. Capitalized implementation costs are amortized over the term of the hosting arrangement, beginning when the module or component of the hosting arrangement is ready for its intended use. The guidance is effective January 1, 2020, with early adoption permitted. The adoption of ASU No. 2018-15 as of January 1, 2020 did not have an impact on the Company’s unaudited condensed consolidated financial statements.

In October 2018, the FASB issued ASU No. 2018-17, Consolidation (Topic 810): Targeted Improvements to Related Party Guidance for Variable Interest Entities. The amendments in this ASU require reporting entities to consider indirect interests held through related parties under common control for determining whether fees paid to decision makers and service provider are variable interests. These indirect interests should be considered on a proportional basis rather than as the equivalent of a direct interest in its entirety (as currently required in U.S. GAAP). The guidance is effective January 1, 2020, with early adoption permitted. Entities are required to apply the amendments in this guidance retrospectively with a cumulative-effect adjustment to retained earnings at the beginning of the earliest period presented. The adoption of ASU No. 2018-17 as of January 1, 2020 did not have an impact on the Company’s unaudited condensed consolidated financial statements.

Recently Issued Accounting Standards Not Yet Adopted

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. This ASU provides entities temporary optional guidance to ease potential accounting burdens to transition away from LIBOR or other reference rates that are expected to be discontinued to alternative reference rates. This ASU applies to all entities that have contracts, hedging relationships and other transactions affected by reference rate reform. The provisions in this ASU, among other things, simplify contract modification accounting and allow hedging relationships affected by reference rate reform to continue. ASU 2020-04 is effective upon issuance and entities may elect to apply the amendments prospectively through December 31, 2022. The Company is in the process of assessing the impact on its financial statements from the adoption of the new guidance and determining the timing of electing available optional expedients.

In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. The amendments in this ASU simplify the accounting for income taxes by removing certain exceptions to the general principles in Topic 740, Income Taxes. The amendments also improve consistent application and simplify GAAP for other areas of Topic 740 by clarifying and amending existing guidance. The guidance is effective January 1, 2021, with early adoption permitted. The Company does not expect the effect of the new guidance to be material on its consolidated financial statements.

3. ACQUISITIONS

2020 Acquisition

Termosol Acquisition

On February 11, 2020, TERP Spanish Holdco, S.L.U., a wholly-owned subsidiary of the Company, completed the acquisition of a portfolio of two concentrated solar power (“CSP”) facilities located in Spain with a combined nameplate capacity of approximately 100 MW (Termosol 1 & 2) from NextEra Energy Spain Holdings B.V. The purchase price of this acquisition, including working capital adjustments, was $126.9 million (the “Termosol Acquisition”). The acquired facilities are regulated under the Spanish framework for renewable power, with approximately 18 years of remaining regulatory life. In connection with this acquisition, over 60 employees joined the Company the majority of whom perform in-house operations and maintenance (“O&M”) services for the acquired facilities. The Company funded the purchase price of the acquisition using a draw on the Revolver and cash available on hand. See Note 9. Long-term Debt for definitions and additional details.

The Company accounted for the Termosol Acquisition under the acquisition method of accounting for business combinations. Under this method, the total consideration transferred is allocated to the identifiable tangible and intangible

9

assets acquired and liabilities assumed based on their respective fair values as of the date of the acquisition. The acquisition method of accounting requires extensive use of estimates and judgments to allocate the consideration transferred to the identifiable tangible and intangible assets acquired and liabilities assumed. The final accounting has not been completed since the evaluation necessary to assess the fair values of acquired assets and assumed liabilities is still in process. The provisional amounts for this business combination are subject to revision until these evaluations are completed. The additional information needed by the Company to finalize the measurement of these provisional amounts include, but not limited to, the settlement of the amount of net working capital acquired, credit spreads and other information necessary to estimate the fair value of non-recourse project debt, the assessment of the incremental borrowing rate for operating leases, and additional information to assess the discount rate factor used at the time of the acquisition. The provisional amounts for this business combination are subject to revision until these evaluations are completed.

The preliminary allocation of the acquisition-date fair values of assets and liabilities pertaining to this business combination as of June 30, 2020, was as follows:

(In thousands)	As of February 11, 2020, reported at June 30, 2020
Renewable energy facilities1	$	477,269
Accounts receivable		33,242
Other assets		7,550
Intangible assets		183,655
Deferred income taxes		14,419
Goodwill2		40,862
Total assets acquired		756,997
Accounts payable, accrued expenses and other current liabilities		16,609
Long-term debt		468,812
Asset retirement obligations		22,609
Derivative liabilities		147,536
Operating lease liabilities		17,139
Other liabilities		5,900
Total liabilities assumed		678,605
Purchase price, net of cash and restricted cash acquired3	$	78,392

(1) Includes $17.1 million operating lease right-of-use assets.

(2) The excess purchase price over the estimated fair value of net assets acquired of $40.9 million was recorded as goodwill and was assigned to the Regulated Solar and Wind segment. Goodwill is primarily attributable to expected synergies from the Company’s growing portfolio in Spain and the acquired employee knowledge of the operation and maintenance of concentrated solar power facilities.

(3) The Company acquired cash and cash equivalents of $22.0 million and restricted cash of $26.5 million as of the acquisition date.

The acquired non-financial assets primarily represent estimates of the fair value of acquired renewable energy facilities and intangible assets from licensing contracts using the cost and income approach. The key inputs used to estimate fair value included forecasted power pricing, operational data, asset useful lives, and a discount rate factor reflecting current market conditions at the time of the acquisition. These significant inputs were not observable in the market and thus represent Level 3 measurements (as defined in Note 12. Fair Value of Financial Instruments). Refer below for additional disclosures related to the acquired finite-lived intangible assets.

The results of operations of the acquired entities are included in the Company’s consolidated results since the date of acquisition. The operating revenues and net income of the Termosol Acquisition reflected in the unaudited condensed consolidated statements of operations for the three months ended June 30, 2020 were $22.9 million and $1.4 million, respectively, and for the six months ended June 30, 2020 were $34.0 million and $1.4 million, respectively.

Unaudited Pro Forma Supplementary Data

The unaudited pro forma supplementary data presented in the table below gives effect to the Termosol Acquisition, as if the transaction had occurred on January 1, 2019. The pro forma net loss includes adjustments to depreciation and

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amortization expense for the valuation of renewable energy facilities and intangible assets and excludes the impact of acquisition costs. The unaudited pro forma supplementary data is provided for informational purposes only and should not be construed to be indicative of the Company’s results of operations had the acquisition been consummated on the date assumed or of the Company’s results of operations for any future date.

	Six Months Ended June 30,
(In thousands)	2020			2019
Total operating revenues, net	$	533,549		$	535,321
Net loss		(100,904	)		(31,038	)

Intangibles at Acquisition Date

The following table summarizes the estimated fair value and weighted average amortization period of the acquired intangible assets as of the acquisition date. The Company attributed intangible asset value to licensing contracts in-place from the acquired renewable energy facilities. These intangible assets are amortized on a straight-line basis over the estimated remaining useful lives of the facilities from the Company’s acquisition date.

	As of February 11, 2020
	Fair Value (In thousands)		Weighted Average Amortization Period1
Intangible assets - licensing contracts	$	183,655	18 years

(1) For the purposes of this disclosure, the weighted average amortization period is determined based on a weighting of the individual intangible fair values against the total fair value.

2019 Acquisition

WGL Acquisition

On September 26, 2019, TerraForm Arcadia Holdings, LLC, a Delaware limited liability company and a wholly-owned subsidiary of the Company (“TerraForm Arcadia”), completed the acquisition of an approximately 320 megawatt (“MW”) distributed generation portfolio of renewable energy facilities in the United States (“U.S.”) from subsidiaries of AltaGas Ltd., a Canadian corporation (“AltaGas”), for a purchase price of $720.0 million, plus $15.1 million for working capital. The acquisition was pursuant to a membership interest purchase agreement (the “Purchase Agreement”) dated July 19, 2019, entered into by TerraForm Arcadia, WGL Energy Systems, Inc., a Delaware corporation (“WGL”), and WGSW, Inc., a Delaware corporation (“WGSW”, and together with WGL, the “Sellers”), both subsidiaries of AltaGas (the “WGL Acquisition”). Pursuant to the Purchase Agreement, the ownership of certain projects for which the Sellers had not yet received the required third party consents or had not completed construction (the “Delayed Projects”) were to be transferred to the Company once such third party consents were received or construction was completed, subject to certain terms and conditions. As of June 30, 2020, there was one Delayed Project that remained to be transferred and represented 4.2 MW of nameplate capacity. The purchase price allocated to the Delayed Project based on the Purchase Agreement as of June 30, 2020, was $2.6 million and is presented as Deposit on acquisitions in the unaudited condensed consolidated balance sheets. In the event that the title to the Delayed Project is not transferred to the Company within a certain period, the Company is entitled to a full refund of the value of these projects based on the Purchase Agreement.

The Company funded the purchase price and the related initial costs of the WGL Acquisition with the net proceeds of $475.0 million Bridge Facility and the remainder from draws on the Revolver. See Note 9. Long-term Debt for definitions and additional details.

The Company accounted for the WGL Acquisition under the acquisition method of accounting for business combinations. Under this method, the total consideration transferred is allocated to the identifiable tangible and intangible assets acquired and liabilities assumed based on their respective fair values as of the date of the acquisition. The acquisition method of accounting requires extensive use of estimates and judgments to allocate the consideration transferred to the identifiable tangible and intangible assets acquired and liabilities assumed. The final accounting has not been completed since

11

the evaluation necessary to assess the fair values of acquired assets and assumed liabilities is still in process. The additional information needed by the Company to finalize the measurement of these provisional amounts include, but not limited to, additional information the estimation of the removal costs for the acquired assets, the completion of the transfer of the remaining Delayed Project, and the assessment of the incremental borrowing rate for operating leases. The provisional amounts for this business combination are subject to revision until these evaluations are completed.

The preliminary allocation of the acquisition-date fair values of assets, liabilities and non-controlling interests pertaining to this business combination as of June 30, 2020 were as follows:

(In thousands)	As of September 26, 2019 reported at March 31, 2020			Adjustments1			As of September 26, 2019 reported at June 30, 2020
Renewable energy facilities in service2	$	590,291	��	$	7,877		$	598,168
Intangible assets		173,450			3,311			176,761
Accounts receivable		13,160			—			13,160
Prepaid expenses and other assets		9,661			—			9,661
Total assets acquired		786,562			11,188			797,750
Accounts payable, accrued expenses and other current liabilities		6,806			—			6,806
Asset retirement obligations		27,576			543			28,119
Operating lease liabilities		21,663			—			21,663
Other liabilities		7,650			—			7,650
Total liabilities assumed		63,695			543			64,238
Non-controlling interests3		3,028			—			3,028
Purchase price, net of cash and restricted cash acquired4		719,839			10,645			730,484
Deposit on acquisitions		12,984			(10,336	)		2,648
Total cash paid for the WGL Acquisition, net of cash acquired5	$	732,823		$	309		$	733,132

(1) The adjustments for the period were related to the transfer of title of certain Delayed Projects to the company during the three months ended June 30, 2020. See above for additional details.

(2) Includes $22.5 million operating lease right-of-use assets.

(3) The fair value of the non-controlling interests was determined using an income approach representing the best indicator of fair value and was supported by a discounted cash flow technique.

(4) The Company acquired cash and cash equivalents of $3.4 million as of the acquisition date.

(5) The adjustment to the amount of cash paid for the period represents additional payment made by the Company in relation to the net working capital acquired.

The acquired non-financial assets primarily represent an estimate of the fair value of the acquired renewable energy facilities and intangible assets from PPAs using the cost and income approach. Key inputs used to estimate fair value included forecasted power pricing, operational data, asset useful lives and a discount rate factor reflecting current market conditions at the time of the acquisition. These significant inputs are not observable in the market and thus represent Level 3 measurements, as defined in Note 12. Fair Value of Financial Instruments. Refer below for additional disclosures related to the acquired finite-lived intangible assets.

The results of operations from the acquired entities are included in the Company’s consolidated results since the date of acquisition. The operating revenues and net income related to the WGL Acquisition reflected in the consolidated statements of operations for the three months ended June 30, were $23.1 million and $6.9 million, respectively, and for the six months ended June 30, 2020 were $40.1 million and $7.1 million, respectively.

Intangibles at Acquisition Date

The following table summarizes the estimated fair values and the weighted average amortization periods of the acquired intangible assets and assumed intangible liabilities as of the acquisition date. The Company attributed the intangible asset values to favorable rate revenue contracts and PPAs in-place from renewable energy facilities and the intangible liabilities to unfavorable rate revenue contracts.

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	WGL Acquisition
	Fair Value (In thousands)		Weighted Average Amortization Period1
Favorable rate revenue contracts	$	27,400	16 years
In-place value of market rate revenue contracts		149,361	15 years
Unfavorable rate revenue contracts		7,650	2 years

(1) For the purposes of this disclosure, the weighted average amortization periods are determined based on a weighting of the individual intangible fair values against the total fair value for each major intangible asset and liability class.

Unaudited Pro Forma Supplementary Data

The unaudited pro forma supplementary data presented in the table below gives effect to the WGL Acquisition, as if the transaction had occurred on January 1, 2019. The pro forma net loss includes interest expense related to incremental borrowings used to finance the transaction and adjustments to depreciation, accretion and amortization expense for the valuation of renewable energy facilities and intangible assets, and excludes the impact of acquisition costs disclosed below. The unaudited pro forma supplementary data is provided for informational purposes only and should not be construed to be indicative of the Company’s results of operations had the acquisition been consummated on the date assumed or of the Company’s results of operations for any future date.

(In thousands)	Six Months Ended June 30, 2019
Total operating revenues, net	$	514,070
Net loss		(45,225	)

Acquisition Costs

Acquisition costs, which primarily consisted of professional fees for banking, legal and accounting services for the three and six months ended June 30, 2020, were $0.1 million and $0.5 million, respectively, and for the three and six months ended June 30, 2019, were $0.3 million and $0.5 million, respectively. Acquisition costs related to affiliates for the six months ended June 30, 2020, were $0.7 million and are reflected within Acquisition costs – affiliates in the unaudited condensed consolidated statements of operations. No acquisition costs related to affiliates were incurred for the three months ended June 30, 2020 and the six months ended June 30, 2019.

4. REVENUE

The following table presents the Company’s operating revenues, net and disaggregated by revenue source:

	Three Months Ended June 30, 2020											Three Months Ended June 30, 2019
(In thousands)	Solar			Wind			Regulated Solar and Wind		Total			Solar			Wind			Regulated Solar and Wind		��	Total
PPA rental income	$	50,908		$	49,695		$	—	$	100,603		$	56,203		$	46,293		$	—		$	102,496
Commodity derivatives		—			2,603			—		2,603			—			16,498			—			16,498
PPA and market energy revenue		28,763			21,848			14,437		65,048			8,753			19,402			27,758			55,913
Capacity revenue from remuneration programs1		—			—			82,142		82,142			—			—			54,304			54,304
Amortization of favorable and unfavorable rate revenue contracts, net		(2,013	)		(8,071	)		—		(10,084	)		(1,947	)		(7,769	)		—			(9,716	)
Energy revenue		77,658			66,075			96,579		240,312			63,009			74,424			82,062			219,495
Incentive revenue2		21,695			3,715			11,607		37,017			19,574			2,412			13,885			35,871
Operating revenues, net	$	99,353		$	69,790		$	108,186	$	277,329		$	82,583		$	76,836		$	95,947		$	255,366

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	Six Months Ended June 30, 2020											Six Months Ended June 30, 2019
(In thousands)	Solar			Wind			Regulated Solar and Wind		Total			Solar			Wind			Regulated Solar and Wind		Total
PPA rental income	$	87,602		$	102,760		$	—	$	190,362		$	93,972		$	104,138		$	—	$	198,110
Commodity derivatives		—			7,764			—		7,764			—			32,107			—		32,107
PPA and market energy revenue		44,870			46,451			27,879		119,200			14,357			44,722			50,909		109,988
Capacity revenue from remuneration programs1		—			—			156,742		156,742			—			—			100,141		100,141
Amortization of favorable and unfavorable rate revenue contracts, net		(4,038	)		(15,949	)		—		(19,987	)		(3,313	)		(15,541	)		—		(18,854	)
Energy revenue		128,434			141,026			184,621		454,081			105,016			165,426			151,050		421,492
Incentive revenue2		49,542			5,331			15,137		70,010			34,923			4,049			20,234		59,206
Operating revenues, net	$	177,976		$	146,357		$	199,758	$	524,091		$	139,939		$	169,475		$	171,284	$	480,698

(1) Represents the remuneration related on the Company’s investments in renewable energy facilities in Spain.

(2) Incentive revenue earned at the Regulated Solar and Wind segment represents the return per MWh generated by the Company’s solar facilities in Spain to recover certain operating expenses.

Contract balances and performance obligations

The Company recognizes accounts receivable when its right to consideration from the performance of services becomes unconditional. As of June 30, 2020 and December 31, 2019, the Company’s receivable balances related to PPA contracts with solar and wind customers were approximately $139.4 million and $104.1 million, respectively. Trade receivables for PPA contracts are reflected within accounts receivable, net in the consolidated balance sheets. The Company typically receives payment within 30 days for invoiced PPA revenue. See Note 13. Concentration of Credit Risk for additional discussion on the Company’s exposure to credit risk.

Contract liabilities as of June 30, 2020 were not material.

5. CASH AND CASH EQUIVALENTS

Cash and cash equivalents include all cash balances and money market funds with original maturity periods of three months or less when purchased. As of June 30, 2020 and December 31, 2019, cash and cash equivalents included $204.8 million and $138.5 million, respectively, of unrestricted cash held at project-level subsidiaries, which was available for project expenses but not available for corporate use.

Reconciliation of Cash and Cash Equivalents as Presented in the Unaudited Condensed Consolidated Statement of Cash Flows

The following table provides a reconciliation of cash and cash equivalents and restricted cash reported within the unaudited condensed consolidated balance sheets to the total of the same such amounts shown in the unaudited condensed consolidated statement of cash flows for the six months ended June 30, 2020:

(In thousands)	June 30, 2020		December 31, 2019
Cash and cash equivalents	$	259,753	$	237,480
Restricted cash - current		37,886		35,657
Restricted cash - non-current		60,156		76,363
Cash, cash equivalents and restricted cash shown in the unaudited condensed consolidated statement of cash flows	$	357,795	$	349,500

As discussed in Note 9. Long-term Debt, the Company was in default under certain of its non-recourse financing agreements as of the date of the issuance of the financial statements for the six months ended June 30, 2020, and for the year ended December 31, 2019. As a result, the Company reclassified $10.6 million and $11.0 million of non-current restricted cash to current as of June 30, 2020 and December 31, 2019, respectively, consistent with the corresponding debt classification, as the restrictions that required the cash balances to be classified as non-current restricted cash were driven by the financing

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agreements.

6. RENEWABLE ENERGY FACILITIES

Renewable energy facilities, net consisted of the following:

(In thousands)	June 30, 2020			December 31, 2019
Renewable energy facilities in service, at cost1	$	9,103,859		$	8,584,243
Less: accumulated depreciation		(1,388,289	)		(1,191,056	)
Renewable energy facilities in service, net		7,715,570			7,393,187
Construction in progress - renewable energy facilities		18,615			12,274
Total renewable energy facilities, net	$	7,734,185		$	7,405,461

(1) Includes $301.0 million and $288.3 million right-of-use assets related to operating lease obligations as of June 30, 2020 and December 31, 2019, respectively.

Depreciation expense related to renewable energy facilities was $98.7 million and $192.3 million for the three and six months ended June 30, 2020, respectively, as compared to $74.8 million and $155.9 million for the same periods in the prior year.

Repowering Activities

During the six months ended June 30, 2020, the Company committed to a plan to repower two wind power plants in the Northeast U.S. with a combined nameplate capacity of 160 MW by replacing certain components of the wind turbines with newer equipment while preserving the existing towers, foundation and balance of plant. The Company views repowering activities as opportunities to increase efficiency and extend the useful lives of existing renewable energy facilities. The Company revised the estimated useful lives of certain components of the renewable energy facilities that will be replaced with a net carrying amount of $43.9 million and accelerated the recognition of the depreciation expense of the related assets up to their expected removal date throughout September 2021. During the three and six months ended June 30, 2020, the Company recorded $1.5 million in accelerated depreciation in the unaudited condensed consolidated statements of operations.

7. INTANGIBLE ASSETS, NET AND GOODWILL

The following table presents the gross carrying amount, accumulated amortization and net book value of intangibles as of June 30, 2020:

(In thousands, except weighted average amortization period)	Weighted Average Amortization Period		Gross Carrying Amount		Accumulated Amortization			Net Book Value
Licensing contracts		14 years	$	955,977	$	(114,877	)	$	841,100
Favorable rate revenue contracts		13 years		744,836		(218,219	)		526,617
In-place value of market rate revenue contracts		16 years		684,379		(147,514	)		536,865
Total intangible assets, net			$	2,385,192	$	(480,610	)	$	1,904,582
Unfavorable rate revenue contracts		6 years	$	53,420	$	(41,504	)	$	11,916
Total intangible liabilities, net1			$	53,420	$	(41,504	)	$	11,916

(1) The Company’s intangible liabilities are classified within Other liabilities in the unaudited condensed consolidated balance sheets.

The following table presents the gross carrying amount, accumulated amortization and net book value of intangibles as of December 31, 2019:

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(In thousands, except weighted average amortization period)	Weighted Average Amortization Period		Gross Carrying Amount		Accumulated Amortization			Net Book Value
Licensing contracts		13 years	$	765,451	$	(81,647	)	$	683,804
Favorable rate revenue contracts		12 years		745,784		(195,287	)		550,497
In-place value of market rate revenue contracts		16 years		688,832		(129,841	)		558,991
Total intangible assets, net			$	2,200,067	$	(406,775	)	$	1,793,292
Unfavorable rate revenue contracts		8 years	$	48,420	$	(32,556	)	$	15,864
Total intangible liabilities, net1			$	48,420	$	(32,556	)	$	15,864

(1) The Company’s intangible liabilities are classified within Other liabilities in the unaudited condensed consolidated balance sheets.

Amortization expense related to concessions and licensing contracts is reflected in the unaudited condensed consolidated statements of operations within depreciation, accretion and amortization expense. During the three and six months ended June 30, 2020, amortization expense related to licensing contacts was $16.6 million and $32.5 million, respectively, as compared to $15.9 million and $33.2 million for the same periods in the prior year.

Amortization expense related to favorable rate revenue contracts is reflected in the unaudited condensed consolidated statements of operations as a reduction of operating revenues, net. Amortization related to unfavorable rate revenue contracts is reflected in the unaudited condensed consolidated statements of operations as an increase to operating revenues, net. During the three and six months ended June 30, 2020, net amortization expense related to favorable and unfavorable rate revenue contracts resulted in a reduction of operating revenues, net of $10.1 million and $20.0 million, respectively, as compared to $9.8 million and $18.9 million, net for the same periods in the prior year.

Amortization expense related to the in-place value of market rate revenue contracts is reflected in the unaudited condensed consolidated statements of operations within depreciation, accretion and amortization expense. During the three and six months ended June 30, 2020, amortization expense related to the in-place value of market rate revenue contracts was $8.9 million and $18.1 million, respectively, compared to $6.3 million and $12.9 million for the same periods in the prior year.

Goodwill

Goodwill represents the excess of the consideration transferred and fair value of the non-controlling interests over the fair values of assets acquired and liabilities assumed from business combinations, and reflects the future economic benefits arising from other assets acquired that could not be individually identified and separately recognized. The goodwill balance is not deductible for income tax purposes.

The following table presents the activity of the goodwill balance for the six months ended June 30, 2020 and 2019:

	Six Months Ended June 30,
(In thousands)	2020		2019
Beginning balance	$	127,952	$	120,553
Goodwill resulting from business combinations1		40,862		—
Adjustments during the period2		—		32,283
Foreign exchange differences		3,367		(2,051	)
Ending balance	$	172,181	$	150,785

(1) Represents the excess purchase price over the estimated fair value of net assets acquired from the Termosol Acquisition. See Note 3 Acquisitions for additional details.

(2) Represents the adjustments to the goodwill balance arising from the revision of the provisional accounting of the purchase price allocation related to the 2018 Saeta acquisition.

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8. VARIABLE INTEREST ENTITIES

The Company assesses entities for consolidation in accordance with ASC 810. The Company consolidates variable interest entities (“VIEs”) in renewable energy facilities when the Company is determined to be the primary beneficiary. VIEs are entities that lack one or more of the characteristics of a voting interest entity (“VOE”). The Company has a controlling financial interest in a VIE when its variable interest(s) provide it with (i) the power to direct the activities of the VIE that most significantly impact the VIE’s economic performance and (ii) the obligation to absorb losses of the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE. The VIEs own and operate renewable energy facilities in order to generate contracted cash flows. The VIEs were funded through a combination of equity contributions from the owners and non-recourse project-level debt. The Company determines whether it is the primary beneficiary of a VIE by considering qualitative and quantitative factors, including, but not limited to: the activities that most significantly impact the VIE’s economic performance and which party controls such activities, the obligation or likelihood for the Company or other interests to provide financial support to the VIE, consideration of the VIE’s purpose and design, including the risks the VIE was designed to create and pass through to its variable interest holders.

VOEs are entities in which (i) the total equity investment at risk is sufficient to enable the entity to finance its activities independently and (ii) the equity holders have the power to direct the activities of the entity that most significantly impact its economic performance, the obligation to absorb the losses of the entity and the right to receive the residual returns of the entity. The usual condition for a controlling financial interest in a voting interest entity is ownership of a majority voting interest. If the Company has a majority voting interest in a voting interest entity, the entity is consolidated.

For consolidated VIEs, the Company presented on its consolidated balance sheets, to the extent material, the assets of its consolidated VIEs that can only be used to settle specific obligations of the consolidated VIE, and the liabilities of its consolidated VIEs for which creditors do not have recourse to the Company’s general assets outside of the VIE.

The carrying amounts and classification of the consolidated assets and liabilities of the VIEs included in the Company’s unaudited condensed consolidated balance sheets were as follows:

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(In thousands)	June 30, 2020		December 31, 2019
Assets
Current assets:
Cash and cash equivalents	$	52,039	$	44,083
Restricted cash		8,022		10,562
Accounts receivable, net		39,951		39,804
Derivative assets, current		4,632		2,461
Prepaid expenses		6,379		3,466
Other current assets		23,903		21,228
Total current assets		134,926		121,604
Renewable energy facilities, net		3,121,220		3,188,508
Intangible assets, net		666,109		690,594
Restricted cash		4,356		4,454
Derivative assets		45,161		56,852
Other assets		7,424		7,061
Total assets	$	3,979,196	$	4,069,073
Liabilities
Current liabilities:
Current portion of long-term debt and financing lease obligations	$	70,175	$	55,089
Accounts payable, accrued expenses and other current liabilities		39,461		42,685
Derivative liabilities, current		1,576		449
Total current liabilities		111,212		98,223
Long-term debt and financing lease obligations, less current portion		1,137,671		932,862
Operating lease obligations, less current portion		137,307		138,816
Asset retirement obligations		120,525		116,159
Derivative liabilities		1,910		894
Other liabilities		42,923		41,813
Total liabilities	$	1,551,548	$	1,328,767

The amounts shown in the table above exclude intercompany balances that are eliminated upon consolidation. All of the assets in the table above are restricted for the settlement of the VIE obligations and all the liabilities in the table above can only be settled by using VIE resources.

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9. LONG-TERM DEBT

Long-term debt consisted of the following:

(In thousands, except interest rates)	June 30, 2020			December 31, 2019			Interest Type		Interest Rate (%)1			Financing Type
Corporate-level long-term debt2,3:
Senior Notes due 2023	$	500,000		$	500,000			Fixed		4.25		Senior notes
Senior Notes due 2028		700,000			700,000			Fixed		5.00		Senior notes
Senior Notes due 2030		700,000			700,000			Fixed		4.75		Senior notes
Revolver4		44,000			—			Variable		2.19		Revolving loan
Non-recourse long-term debt:
Permanent financing		4,316,857			3,854,386			Blended5		3.18	7	Term debt / Senior notes
Bridge Facility6		474,550			474,550			Variable		1.79		Term debt
Financing lease obligations		65,655			59,533			Imputed		5.52	7	Financing lease obligations
Total principal due for long-term debt and financing obligations		6,801,062			6,288,469					3.53	7
Unamortized discounts and premiums, net		(495	)		(3,509	)
Deferred financing costs, net		(53,651	)		(49,578	)
Less: current portion of long-term debt and financing lease obligations		(484,570	)		(441,951	)
Long-term debt and financing lease obligations, less current portion	$	6,262,346		$	5,793,431

(1) As of June 30, 2020.

(2) Represents the debt issued by TerraForm Power Operating, LLC (“Terra Operating LLC”) and guaranteed by Terra LLC and certain subsidiaries of TerraForm Operating LLC other than non-recourse subsidiaries as defined in the relevant debt agreements (except for certain unencumbered non-recourse subsidiaries).

(3) As discussed in Note 17. Related Parties, the Company entered into a credit agreement with Brookfield and one of its affiliates that establishes a $500.0 million senior secured sponsor line credit facility that terminates on October 16, 2022. The Company did not make any draws on this credit facility as of June 30, 2020 and December 31, 2019. On July 31, 2020, the Sponsor Line was terminated upon the completion of the Merger Transaction.

(4) Represents the Terra Operating LLC senior secured revolving credit facility with a limit of $800.0 million that is available for revolving loans and letters of credits and matures in October 2022 (the “Revolver”).

(5) Includes fixed rate debt and variable rate debt. As of June 30, 2020, 42% of this balance had a fixed interest rate and the remaining 58% of the balance had a variable interest rate. The Company entered into interest rate swap agreements to fix the interest rates of a majority of the variable rate permanent financing non-recourse debt (see Note 11. Derivatives).

(6) Represents non-recourse senior secured term loan (“Bridge Facility”) maturing on September 24, 2020. It was issued to fund a portion of the consideration paid for the WGL Acquisition. The Company has a one-year extension option and intends, through its subsidiaries, to complete a refinancing of the balance on a long-term basis prior to maturity. The balance, net of unamortized deferred financing costs, is included within non-current liabilities in the unaudited condensed consolidated balance sheets.

(7) Represents the weighted average interest rate as of June 30, 2020.

Non-recourse Project Financing

Certain subsidiaries of the Company have incurred long-term non-recourse debt obligations related to the renewable energy facilities that those subsidiaries own directly or indirectly. The indebtedness of these subsidiaries is typically secured by the renewable energy facilities or equity interests in subsidiaries that directly or indirectly hold renewable energy facilities with no recourse to TerraForm Power, Terra LLC or Terra Operating LLC other than limited or capped contingent support obligations, which in aggregate are not considered material to the Company’s business and financial condition. In connection with these financings and in the ordinary course of its business, the Company and its subsidiaries observe formalities and operating procedures to maintain each of their separate existence and can readily identify each of their separate assets and liabilities as separate and distinct from each other. As a result, these subsidiaries are legal entities that are separate and distinct from each of TerraForm Power, Terra LLC, Terra Operating LLC and the guarantors under the Senior Notes due 2023, the Senior Notes due 2028, the Senior Notes due 2030, the Revolver and the Sponsor Line.

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United States Project Financing

On March 26, 2020, one of the Company’s subsidiaries entered into a new non-recourse debt financing agreement issuing $246.0 million of 3.28% senior notes secured by approximately 218.0 MW utility-scale wind power plants located in the U.S. The Company used the net proceeds of this debt to (i) redeem, in full, the outstanding balance of the non-recourse project term debt previously incurred and secured by the subsidiary’s assets, of which $215.2 million remained outstanding plus accrued and unpaid interest, (ii) redeem, in full, derivative liabilities related to interest rate swaps with the hedge counterparties of which $16.3 million remained outstanding, and (iii) pay for the fees and expenses related to the issuance. As a result of the extinguishment of the project-level debt, the Company recognized a $3.6 million loss on modification and extinguishment of debt during the six months ended June 30, 2020 representing the write-off of unamortized debt discount and deferred financing costs as of the redemption date. The senior secured notes mature on June 30, 2037, and amortize on a seventeen-year amortization schedule.

Spain Project Financing

On June 30, 2020, two of the Company’s subsidiaries completed a €483.6 million refinancing agreement (equivalent to over $540.0 million at the closing date) of certain non-recourse project debt previously incurred and secured by the 100.0 MW utility-scale CSP facilities that were acquired in connection with the Termosol Acquisition as discussed in Note 3. Acquisitions (the “CSP Loans”). The CSP Loans comprise fixed and variable tranches bearing an average interest per annum equal to 2.77% and amortize on a sculpted amortization schedule over their respective maturity dates through December 2037. The Company entered into interest rate swap agreements with counterparties to hedge approximately 80% of the cash flows associated with the variable tranches, paying a fixed rate and in return, the counterparties agreed to pay the variable interest payments to the lenders. The Company used the net proceeds of the refinancing for general corporate purposes.

Non-recourse Debt Defaults

As of June 30, 2020 and December 31, 2019, the Company reclassified $164.7 million and $169.0 million, respectively, of non-recourse long-term indebtedness, net of unamortized deferred financing costs and debt discounts, to current in the unaudited condensed consolidated balance sheets due to defaults remaining as of the respective financial statements issuance dates. The defaults as of the June 30, 2020 and December 31, 2019 primarily consisted of indebtedness of the Company’s solar renewable energy facility in Chile. The Company continues to amortize deferred financing costs and debt discounts over the maturities of the respective financing agreements as before the violations, since the Company believes there is a reasonable likelihood that it will be, in due course, able to successfully negotiate waivers with the lenders and/or cure existing defaults. The Company’s management based this conclusion on (i) its past history of obtaining waivers and/or forbearance agreements with lenders, (ii) the nature and existence of active negotiations between the Company and the respective lenders to secure waivers, (iii) the Company’s timely servicing of these debt instruments, and (iv) the fact that no non-recourse financing has been accelerated to date and no project-level lender has notified the Company of such lenders election to enforce project security interests.

See Note 5. Cash and Cash Equivalents for discussion of corresponding restricted cash reclassifications to current as a result of these defaults.

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Indebtedness Assumed on Acquisition

In connection with the Termosol Acquisition, the Company assumed $468.8 million of project-level debt secured by the acquired renewable energy facilities. The debt matures on December 31, 2036 and bears an average interest rate of 4.7%. As of June 30, 2020, the Company obtained all required change of control consents from the lenders. As discussed above, on June 30, 2020, the Company entered into an agreement to refinance and extend the maturity of the debt.

Maturities

The aggregate contractual principal payments of long-term debt due after June 30, 2020, excluding the amortization of debt discounts, premiums and deferred financing costs, as stated in the financing agreements, are as follows:

(In thousands)	Remainder of 20202		2021		2022		2023		2024		Thereafter		Total
Maturities of long-term debt1	$	644,332	$	311,337	$	304,861	$	917,955	$	320,954	$	4,301,623	$	6,801,062

(1) Represents the contractual principal payment due dates for the Company’s long-term debt and does not reflect the reclassification of $164.7 million of long-term debt, net of unamortized deferred financing costs of $5.5 million, to current due to debt defaults that existed at June 30, 2020 (see above for additional details).

(2) Includes the $474.6 million Bridge Facility maturing on September 24, 2020. The Company has a one-year extension option and intends, through its subsidiaries, to complete a refinancing of the balance on a long-term basis prior to maturity. The balance, net of unamortized deferred financing costs, is included within non-current liabilities in the unaudited condensed consolidated balance sheets.

10. INCOME TAXES

The income tax expense (benefit) was calculated based on the income and losses before income tax between U.S. and foreign operations and consisted of the following:

	Three Months Ended June 30, 2020								Three Months Ended June 30, 2019
(In thousands)	Current		Deferred			Total			Current			Deferred			Total
U.S. federal	$	—	$	(7,905	)	$	(7,905	)	$	(22	)	$	(34	)	$	(56	)
State and local		3		(2,710	)		(2,707	)		—			—			—
Foreign		1,992		(2,212	)		(220	)		2,555			3,170			5,725
Total expense (benefit)	$	1,995	$	(12,827	)	$	(10,832	)	$	2,533		$	3,136		$	5,669
	Six Months Ended June 30, 2020								Six Months Ended June 30, 2019
(In thousands)	Current		Deferred			Total			Current			Deferred			Total
U.S. federal	$	—	$	7,452		$	7,452		$	145		$	(34	)	$	111
State and local		125		5,710			5,835			—			—			—
Foreign		2,050		(1,708	)		342			2,555			(1,148	)		1,407
Total expense (benefit)	$	2,175	$	11,454		$	13,629		$	2,700		$	(1,182	)	$	1,518

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	Three Months Ended June 30,						Six Months Ended June 30,
(In thousands, except effective tax rate)	2020			2019			2020			2019
Loss before income tax expense	$	(24,166	)	$	(11,158	)	$	(66,951	)	$	(51,366	)
Income tax (benefit) expense		(10,832	)		5,669			13,629			1,518
Effective tax rate		44.8	%		(50.8	)%		(20.4	)%		(3.0	)%

The overall effective tax rate for the three and six months ended June 30, 2020 and 2019 was different than the statutory rate of 21% and was primarily due to the recognition of an additional valuation allowance on certain income tax benefits attributed to the Company, the allocation of losses to non-controlling interests, the effect of foreign and state taxes and, for the six months ended June 30, 2020, the impact of the CARES Act, as discussed below.

As of June 30, 2020, and December 31, 2019, the Company had not identified any uncertain tax positions for which a liability was required under ASC 740-10. The Company expects to complete its analysis on tax positions related to the Termosol and WGL Acquisitions within the measurement period.

The Coronavirus Aid, Relief, and Economic Security (“CARES”) Act

On March 27, 2020, the U.S. government enacted the CARES Act in response to the COVID-19 pandemic. The CARES Act included certain income tax provisions that impacted the Company’s unaudited condensed consolidated financial statements for the three and six months ended June 30, 2020. The CARES Act allows partnerships to deduct 50% of the 2019 Excess Business Interest Expense in 2020 without limitation under Internal Revenue Code (“IRC”) section 163(j). Terra LLC will include this provision in its tax return for the year ending December 31, 2020, and expects to receive an additional $56.9 million deduction. In addition, for the year ending December 31, 2020, the CARES Act allows corporations and partnerships to calculate their IRC 163(j) limitations to 50% of Adjusted Taxable Income from 30%. The Company will analyze the relevant provisions and make the most appropriate tax elections. The CARES Act also allows corporate taxpayers to temporarily carryback net operating losses (“NOL”) generated in 2018, 2019 and 2020 to each of the five tax years preceding the tax year of such loss. Additionally, the CARES Act temporarily removes the 80% limitation imposed by the Tax Cuts and Jobs Act of 2017. The Company does not expect to be able to benefit from the NOL provisions as the Company is anticipated to incur a taxable loss during the year ending December 31, 2020. The Company reported the impact of the interest limitations on its valuation allowance of deferred taxes assets as of June 30, 2020.

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11. DERIVATIVES

As part of its risk management strategy, the Company entered into derivative instruments, which include interest rate swaps, foreign currency contracts and commodity contracts to mitigate interest rate, foreign currency and commodity price exposures. If the Company elects to do so and if the instrument meets the criteria specified in ASC 815, Derivatives and Hedging, the Company designates its derivative instruments as either cash flow hedges or net investment hedges. The Company enters into interest rate swap agreements in order to hedge the variability of the expected future cash interest payments. Foreign currency contracts are used to reduce risks arising from the change in fair value of certain foreign currency denominated assets and liabilities. The objective of these practices is to minimize the impact of foreign currency fluctuations on operating results. The Company also enters into commodity contracts to hedge price variability inherent in energy sales arrangements. The objectives of the commodity contracts are to minimize the impact of variability in spot energy prices and stabilize estimated revenue streams. The Company does not use derivative instruments for trading or speculative purposes.

As of June 30, 2020 and December 31, 2019, the fair values of the following derivative instruments were included in the respective balance sheet captions indicated below:

	Fair Value of Derivative Instruments1
	Derivatives Designated as Hedging Instruments						Derivatives Not Designated as Hedging Instruments
(In thousands)	Interest Rate Swaps		Foreign Currency Contracts		Commodity Contracts		Interest Rate Swaps		Foreign Currency Contracts		Commodity Contracts		Gross Derivatives			Counterparty Netting2			Net Derivatives
As of June 30, 2020
Derivative assets, current	$	—	$	—	$	2,079	$	—	$	—	$	5,609	$	7,688		$	—		$	7,688
Derivative assets		—		—		27,049		—		—		18,112		45,161			—			45,161
Total assets	$	—	$	—	$	29,128	$	—	$	—	$	23,721	$	52,849		$	—		$	52,849
Derivative liabilities, current portion	$	15,803	$	—	$	—	$	47,253	$	—	$	540	$	63,596		$	—		$	63,596
Derivative liabilities		61,154		—		—		175,863		—		—		237,017	��		—			237,017
Total liabilities	$	76,957	$	—	$	—	$	223,116	$	—	$	540	$	300,613		$	—		$	300,613
As of December 31, 2019
Derivative assets, current	$	—	$	349	$	1,040	$	—	$	8,092	$	7,279	$	16,760		$	(941	)	$	15,819
Derivative assets		809		24		33,269		—		504		23,583		58,189			(472	)		57,717
Total assets	$	809	$	373	$	34,309	$	—	$	8,596	$	30,862	$	74,949		$	(1,413	)	$	73,536
Derivative liabilities, current portion	$	12,046	$	631	$	—	$	21,923	$	310	$	—	$	34,910		$	(941	)	$	33,969
Derivative liabilities		41,605		315		—		59,412		534		—		101,866			(472	)		101,394
Total liabilities	$	53,651	$	946	$	—	$	81,335	$	844	$	—	$	136,776		$	(1,413	)	$	135,363

(1) Fair value amounts are shown before the effect of counterparty netting adjustments.

(2) Represents the netting of derivative exposures covered by qualifying master netting arrangements.

As of June 30, 2020 and December 31, 2019, the Company had posted letters of credit in the amount of $15.0 million, as collateral related to certain commodity contracts. Certain derivative contracts contain provisions providing the counterparties a lien on specific assets as collateral. There was no cash collateral received or pledged as of June 30, 2020 and December 31, 2019 related to the Company’s derivative transactions.

The Company is subject to credit risk related to its derivatives to the extent the hedge counterparties may be unable to meet the terms of the contractual arrangements. The maximum exposure to loss due to credit risk if counterparties fail completely to perform according to the terms of the contracts would generally equal the fair value of derivative assets presented

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in the above table. The Company seeks to mitigate credit risk by transacting with a group of creditworthy financial institutions and through the use of master netting arrangements.

The Company elected to present all derivative assets and liabilities on a net basis on the balance sheets as a right to set-off exists. The Company enters into International Swaps and Derivatives Association, Inc. (“ISDA”) Master Agreements with its counterparties. An ISDA Master Agreement is an agreement that can govern multiple derivative transactions between two counterparties that typically provides for the net settlement of all, or a specified group, of these derivative transactions through a single payment, and in a single currency, as applicable. A right to set-off typically exists when the Company has a legally enforceable ISDA Master Agreement. No amounts were netted for commodity contracts as of June 30, 2020 or December 31, 2019, as each of the commodity contracts were in a gain position.

The following table presents the notional amounts of derivative instruments as of June 30, 2020 and December 31, 2019:

	Notional Amount as of
(In thousands, except for GWhs)	June 30, 2020		December 31, 2019
Derivatives designated as hedging instruments:
Cash flow hedges:
Interest rate swaps (USD)		264,125		441,628
Interest rate swaps (CAD)		133,885		138,575
Interest rate swaps (EUR)		299,457		310,721
Commodity contracts (GWhs)		4,993		5,360
Net investment hedges:
Foreign currency contracts (CAD)		—		94,100
Foreign currency contracts (EUR)		—		199,750
Derivatives not designated as hedging instruments:
Interest rate swaps (USD)		11,149		11,399
Interest rate swaps (EUR)1		1,160,110		745,719
Foreign currency option contracts (EUR)2		—		625,200
Foreign currency forward contracts (EUR)2		—		118,550
Commodity contracts (GWhs)		7,002		7,610

(1) Represents the notional amount of the interest rate swaps at Saeta to economically hedge the interest rate payments on non-recourse debt. The Company did not designate these derivatives as hedging instruments per ASC 815 as of the respective balance sheet dates.

(2) Represents the notional amount of foreign currency contracts used to economically hedge portions of the Company’s foreign exchange risk associated with Euro-denominated intercompany loans that are not of long-term investment nature. The Company did not designate these derivatives as hedging instruments per ASC 815 as of June 30, 2020 and December 31, 2019.

Gains and losses on derivatives not designated as hedging instruments for the three and six months ended June 30, 2020 and 2019 consisted of the following:

		Three Months Ended June 30,						Six Months Ended June 30,
(In thousands)	Location of Loss (Gain) in the Statements of Operations	2020			2019			2020			2019
Interest rate swaps	Interest expense, net	$	10,222		$	6,961		$	14,587		$	29,278
Foreign currency contracts	Gain on foreign currency exchange, net		13,745			1,268			(4,384	)		(19,929	)
Commodity contracts	Operating revenues, net		(802	)		(7,207	)		(4,595	)		(13,618	)

Gains and losses recognized related to interest rate swaps, foreign currency contracts and commodity derivative contracts designated as hedging instruments for the three and six months ended June 30, 2020 and 2019 consisted of the following:

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	Three Months Ended June 30,
Derivatives in Cash Flow and Net Investment Hedging Relationships	(Loss) Gain Included in the Assessment of Effectiveness Recognized in OCI, net of taxes1						Location of Amount Reclassified from AOCI into Income	Loss (Gain) Included in the Assessment of Effectiveness Reclassified from AOCI into Income2
(In thousands)	2020			2019				2020			2019
Interest rate swaps	$	(3,504	)	$	(16,938	)	Interest expense, net	$	2,667		$	(435	)
Foreign currency contracts		—			(1,421	)	Gain on foreign currency exchange, net		—			—
Commodity contracts		179			3,620		Operating revenues, net		(1,801	)		(362	)
Total	$	(3,325	)	$	(14,739	)		$	866		$	(797	)

(1) Net of $2.5 million tax benefit for the three months ended June 30, 2020. No tax expense or benefit was recorded for the three months ended June 30, 2019.

(2) No tax expense or benefit was recorded for the three months ended June 30, 2020 and 2019.

	Six Months Ended June 30,
Derivatives in Cash Flow and Net Investment Hedging Relationships	(Loss) Gain Included in the Assessment of Effectiveness Recognized in OCI, net of taxes1						Location of Amount Reclassified from AOCI into Income	Loss (Gain) Included in the Assessment of Effectiveness Reclassified from AOCI into Income2
(In thousands)	2020			2019				2020			2019
Interest rate swaps	$	(39,767	)	$	(26,614	)	Interest expense, net	$	4,251		$	(995	)
Foreign currency contracts		20,890			8,276		Gain on foreign currency exchange, net		—			—
Commodity contracts		(535	)		4,155		Operating revenues, net		(3,169	)		(678	)
Total	$	(19,412	)	$	(14,183	)		$	1,082		$	(1,673	)

(1) Net of $6.6 million tax benefit for the six months ended June 30, 2020. No tax expense or benefit was recorded for the six months ended June 30, 2019.

(2) No tax expense or benefit was recorded for the six months ended June 30, 2020 and 2019.

Derivatives Designated as Hedging Instruments

Interest Rate Swaps

The Company has interest rate swap agreements to hedge certain variable rate non-recourse debt. These interest rate swaps qualify for hedge accounting and were designated as cash flow hedges. Under the interest rate swap agreements, the Company pays a fixed rate and the counterparties to the agreements pay a variable interest rate. The change in the fair value of the components included in the effectiveness assessment of these derivatives is initially reported in accumulated other comprehensive income (“AOCI”) and subsequently reclassified to earnings in the periods when the hedged transactions affect earnings (the payment of interest). The amounts deferred in AOCI and reclassified into earnings during the three and six months ended June 30, 2020 and 2019 related to these interest rate swaps are provided in the tables above. The loss expected to be reclassified into earnings over the next twelve months is approximately $13.7 million. The maximum term of outstanding interest rate swaps designated as hedging instruments is 19 years.

Foreign Currency Forward Contracts

The Company uses foreign currency forward contracts to hedge portions of its net investment positions in certain                      subsidiaries with Euro (“€”) and Canadian dollar (“C$”) functional currencies and to manage its foreign exchange risk. For instruments that are designated and qualify as hedges of net investment in foreign operations, the effective portion of the net gains or losses attributable to changes in exchange rates are recorded in foreign currency translation adjustments within AOCI. The recognition in earnings of amounts previously recorded in AOCI is limited to circumstances such as complete or substantial liquidation of the net investment in the hedged foreign operation.

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Cash flows from derivative instruments designated as net investment hedges are classified as investing activities in the unaudited condensed consolidated statements of cash flows.

There were no foreign currency contracts designated as of June 30, 2020. As of December 31, 2019, the total notional amount of foreign currency forward contracts designated as net investment hedges was €200 million and C$94.1 million. The maturity dates of these derivative instruments designated as net investment hedges range from 3 months to 33 months.

Commodity Contracts

The Company has two long-dated and physically-delivered commodity contracts that hedge variability in cash flows associated with the sales of power from certain wind renewable energy facilities located in Texas. One of these commodity contracts qualifies for hedge accounting and is designated as a cash flow hedge. The change in the fair value of the components included in the effectiveness assessment of this derivative is initially reported in AOCI and subsequently reclassified to earnings in the periods when the hedged transactions affect earnings (the sale of electricity). The amounts deferred in AOCI and reclassified into earnings during the three and six months ended June 30, 2020 and 2019 related to this commodity contract are provided in the tables above. The gain expected to be reclassified into earnings over the next twelve months is approximately $1.2 million. The maximum term of the outstanding commodity contract designated as a hedging instrument is 8 years.

Derivatives Not Designated as Hedging Instruments

Interest Rate Swaps

The Company has interest rate swap agreements that economically hedge the cash flows for non-recourse debt. These interest rate swaps pay a fixed rate and the counterparties to the agreements pay a variable interest rate. The changes in fair value are recorded in interest expense, net in the unaudited condensed consolidated statements of operations as these derivatives are not accounted for under hedge accounting.

Foreign Currency Contracts

The Company has foreign currency forward and option contracts that economically hedge its exposure to foreign currency fluctuations. As these hedges are not accounted for under hedge accounting, the changes in fair value are recorded in loss (gain) on foreign currency exchange, net in the unaudited condensed consolidated statements of operations. Cash flows from foreign currency forward and option contracts are classified as investing activities in the unaudited condensed consolidated statements of cash flows.

Commodity Contracts

The Company has commodity contracts that economically hedge commodity price variability inherent in certain electricity sales arrangements. If the Company sells electricity to an independent system operator market and there is no PPA available, it may enter into a commodity contract to hedge all or a portion of their estimated revenue stream. These commodity contracts require periodic settlements in which the Company 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 not accounted for under hedge accounting, the changes in fair value are recorded in operating revenues, net in the unaudited condensed consolidated statements of operations.

12. FAIR VALUE OF FINANCIAL INSTRUMENTS

The fair values of assets and liabilities are determined using either unadjusted quoted prices in active markets (Level 1) or pricing inputs that are observable (Level 2) whenever that information is available and using unobservable inputs (Level 3) to estimate fair value only when relevant observable inputs are not available. The Company uses valuation techniques that maximize the use of observable inputs. Assets and liabilities are classified in their entirety based on the lowest priority level of input that is significant to the fair value measurement. Where observable inputs are available for substantially the full term of the asset or liability, the instrument is categorized in Level 2. If the inputs into the valuation are not corroborated by market data, in such instances, the valuation for these contracts is established using techniques including the extrapolation from or interpolation between actively traded contracts, as well as the calculation of implied volatilities. When such inputs have a significant impact on the measurement of fair value, the instrument is categorized as Level 3. The Company regularly evaluates and validates the inputs used to determine the fair value of Level 3 contracts by using pricing services to support the underlying market price of the commodity.

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The Company uses a discounted cash flow valuation technique to determine the fair value of its derivative assets and liabilities. The primary inputs in the valuation models for commodity contracts are market observable forward commodity curves, risk-free discount rates, volatilities and, to a lesser degree, credit spreads. The primary inputs into the valuation of interest rate swaps and foreign currency contracts are forward interest rates and foreign currency exchange rates and, to a lesser degree, credit spreads.

Recurring Fair Value Measurements

The following table summarizes the financial instruments measured at fair value on a recurring basis classified in the fair value hierarchy (Level 1, 2 or 3) based on the inputs used for valuation in the unaudited condensed consolidated balance sheets:

	As of June 30, 2020								As of December 31, 2019
(In thousands)	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Assets
Interest rate swaps	$	—	$	—	$	—	$	—	$	—	$	809	$	—	$	809
Commodity contracts		—		3,056		49,793		52,849		—		5,859		59,312		65,171
Foreign currency contracts		—		—		—		—		—		7,556		—		7,556
Total derivative assets	$	—	$	3,056	$	49,793	$	52,849	$	—	$	14,224	$	59,312	$	73,536
Liabilities
Interest rate swaps	$	—	$	300,073	$	—	$	300,073	$	—	$	134,986	$	—	$	134,986
Commodity contracts		—		540		—		540		—		—		—		—
Foreign currency contracts		—		—		—		—		—		377		—		377
Total derivative liabilities	$	—	$	300,613	$	—	$	300,613	$	—	$	135,363	$	—	$	135,363

The Company’s interest rate swaps, foreign currency contracts and financial commodity contracts are considered Level 2, since all significant inputs are corroborated by market observable data. The Company’s long-term physically settled commodity contracts (see Note 11. Derivatives) are considered Level 3 as they contain significant unobservable inputs. There were no transfers in or out of Level 1, Level 2 and Level 3 during the six months ended June 30, 2020 and 2019.

The following table reconciles the changes in the fair value of derivative instruments classified as Level 3 in the fair value hierarchy for the six months ended June 30, 2020 and 2019:

	Three Months Ended June 30,						Six Months Ended June 30,
(In thousands)	2020			2019			2020			2019
Beginning balance	$	54,889		$	81,068		$	59,312		$	79,652
Realized and unrealized gains (losses):
Included in other comprehensive income (loss)		179			3,620			(535	)		4,155
Included in operating revenues, net		(224	)		3,383			29			6,088
Settlements		(5,051	)		(1,992	)		(9,013	)		(3,816	)
Ending balance	$	49,793		$	86,079		$	49,793		$	86,079
Change in unrealized (losses) gains for the period included in other comprehensive income for assets held at the end of the reporting period	$	(872	)	$	3,262		$	(2,051	)	$	3,718

The significant unobservable inputs used in the valuation of the Company’s commodity contracts classified as Level 3 in the fair value hierarchy as of June 30, 2020 are as follows:

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(In thousands, except range)	Fair Value as of June 30, 2020
Transaction Type	Assets		Liabilities		Valuation Technique	Unobservable Inputs as of June 30, 2020
Commodity contracts - power	$	49,793	$	—	Option model	Volatilities		14.5%
							Range1					Weighted Average2
					Discounted cash flow	Forward price (per MWh)	$	10.55	-	$	128.55	$	32.08

(1) Represents the range of the forward power prices used in the valuation analysis that the Company has determined market participants would use when pricing the contracts.

(2) Unobservable inputs were weighted by the relative fair value of the instruments.

The sensitivity of the Company’s fair value measurements to increases (decreases) in the significant unobservable inputs is as follows:

Significant Unobservable Input	Position	Impact on Fair Value Measurement
Increase (decrease) in forward price	Forward sale	Decrease (increase)
Increase (decrease) in implied volatilities	Purchase option	Increase (decrease)

The Company measures the sensitivity of the fair value of its Level 3 commodity contracts to potential changes in commodity prices using a mark-to-market analysis based on the current forward commodity prices and estimates of the price volatility. An increase in power forward prices will produce a mark-to-market loss, while a decrease in prices will result in a mark-to-market gain. An increase in the estimates of the price volatility will produce a mark-to-market gain, while a decrease in volatility will result in a mark-to-market loss.

Fair Value of Debt

The carrying amount and estimated fair value of the Company’s long-term debt as of June 30, 2020 and December 31, 2019 was as follows:

	As of June 30, 2020				As of December 31, 2019
(In thousands)	Carrying Amount		Fair Value		Carrying Amount		Fair Value
Long-term debt	$	6,746,916	$	7,167,765	$	6,235,382	$	6,512,188

The fair value of the Company’s long-term debt, except the corporate-level senior notes, was determined using inputs classified as Level 2 and a discounted cash flow approach using market rates for similar debt instruments. The fair value of the corporate-level senior notes is based on market price information which is classified as a Level 1 input. They are measured using the last available trades at the end of each respective period. The fair values of the Senior Notes due 2023, Senior Notes due 2028 and Senior Notes due 2030 were 101.5%, 105.4% and 102.1% of the face value as of June 30, 2020, respectively. The fair values of the Senior Notes due 2023, Senior Notes due 2028 and Senior Notes due 2030 were 103.4%, 105.8% and 102.2% of the face value as of December 31, 2019, respectively.

Nonrecurring Fair Value Measurements

Assets and liabilities that are measured at fair value on a nonrecurring basis relate primarily to renewable energy facilities, goodwill and intangibles, which are remeasured when the derived fair value is below the carrying value. For these assets, the Company does not periodically adjust carrying value to fair value except in the event of impairment. When the impairment has occurred, the Company measures the required charges and adjusts the carrying value.

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13. CONCENTRATION OF CREDIT RISK

The Company’s financial assets are typically subject to concentrations of credit risk and primarily consist of cash and cash equivalents, accounts receivable and derivative assets. The following table reflects the balances of the major financial assets that are subject to concentrations of credit risk as of June 30, 2020 and December 31, 2019:

(In thousands)	June 30, 2020		December 31, 2019
Cash and cash equivalents	$	357,795	$	349,500
Accounts receivable, net		206,955		167,865
Derivative assets		52,849		73,536
Total	$	617,599	$	590,901

Cash and Cash Equivalents

The Company is subject to concentrations of credit risk related to the cash and cash equivalents that may exceed the insurable limits in the related jurisdictions. The maximum exposure to loss due to credit risk would generally equal the stated value of cash and cash equivalents in the above table. The Company places its cash and cash equivalents with creditworthy financial institutions and, historically, did not experience any losses with regards to balances in excess of insured limits or as a result of other concentrations of credit risk.

Accounts Receivable, Net

The Company serves hundreds of customers in three continents, and, in the U.S., the Company’s customers are spread across various states resulting in the diversification of its customer base. Furthermore, a significant portion of the Company’s operating revenues are contracted through long-term PPAs with offtake counterparties that are government-backed entities and public utility companies that, on average, had an investment grade credit rating.

During the six months ended June 30, 2020, the Company earned $199.8 million from the Spanish Electricity System of which $171.9 million were billing through the Comisión Nacional de los Mercados y la Competencia (“CNMC”). These operating revenues were earned within the Regulated Solar and Wind segment and represented 38% of the Company’s net consolidated operating revenues. The CNMC is the state-owned regulator of the Spanish Electricity System who collects the funds payable, mainly from the tariffs to end user customers, and is responsible for the calculation and the settlement of regulated payments. The Company’s management believes that this concentration of risk is mitigated by, among other things, the indirect support of the Spanish government for the CNMC’s obligations and, in general, by the regulated rate system in Spain.

Notwithstanding the creditworthiness and diversification of the Company’s offtake counterparties, any customers have the potential to impact the Company’s credit exposure resulting in credit losses.

Credit Losses

Credit losses refer to the financial losses resulting from non-performance or non-payment by counterparties under the contractual obligations they are bound by. The Company is exposed to credit losses primarily from its customers through the sale of electricity and the generation of green attributes.

The Company has policies in place to ensure that sales are made to customers who are creditworthy and are expected to honor their contractual obligations under their original terms. The Company assesses each customer’s ability to pay by conducting a credit review prior to entering into a new PPA or contracts to deliver RECs, and considers contract terms and conditions, country and political risk, and the business strategy in its evaluation.

The Company monitors the ongoing credit risk from its customers through the review of counterparty balances against contract terms and due dates. The Company reviews the aging of outstanding receivables and actively communicates with the customers on a regular to ensure timely collection. From time to time, the Company may employ legal counsel to pursue recovery of defaulted receivables.

The Company establishes an allowance for doubtful accounts to adjust its accounts receivables to the amounts considered to be ultimately collectible, and charges to the allowance are recorded within general and administrative expenses in

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the unaudited condensed consolidated statements of operations. The Company regularly reviews the adequacy of the allowance for doubtful accounts by considering factors as historical experience, credit worthiness, and current economic conditions that may affect a customer’s ability to pay. The allowance for doubtful accounts was $2.5 million and $1.4 million as of June 30, 2020, and December 31, 2019, respectively. The charges to the allowance recorded within general and administrative expenses for the three months ended June 30, 2020 and 2019, were $0.7 million and $0.6 million, respectively, and for the six months ended June 30, 2020 and 2019, were $1.2 million and $0.8 million, respectively.

Derivative Assets

The Company is subject to credit risk related to its derivatives to the extent the hedge counterparties may be unable to meet the terms of the contractual arrangements. The maximum exposure to loss due to credit risk if counterparties fail completely to perform according to the terms of the contracts would generally equal the fair value of derivative assets presented in the above table. The Company seeks to mitigate credit risk by transacting with a group of creditworthy financial institutions and through the use of master netting arrangements.

14. STOCKHOLDERS’ EQUITY

TerraForm Power, Inc. had 100,000,000 authorized shares of preferred stock of par value $0.01 per share, and 1,200,000,000 authorized shares of Common Stock of par value $0.01 per share as of June 30, 2020. There were no other authorized classes of shares and the Company did not have any issued shares of preferred stock as of June 30, 2020. On July 31, 2020, TerraForm Power completed the previously announced reincorporation merger whereby the Company merged with and into TERP NY, with TERP NY as the surviving corporation of the merger. See Note 1. Nature of Operations and Organization for additional details.

The following table reflects the changes in the Company’s shares of Common Stock outstanding during the six months ended June 30, 2020 and 2019:

	Six Months Ended June 30,
(In thousands)	2020		2019
Balance as of January 1		226,501		209,142
Net shares issued under equity incentive plan		31		—
Balance as of June 30		226,532		209,142

Stock-based Compensation

The Company has an equity incentive plan that provides for the award of incentive and nonqualified stock options, restricted stock awards and restricted stock units (“RSUs”) to personnel and directors who provide services to the Company. The maximum contractual term of an award is ten years from the date of grant. As of June 30, 2020 and December 31, 2019, an aggregate of 3,662,245 and 3,734,185 shares of Common Stock were available for issuance under this plan, respectively. Upon the vesting of RSUs, the Company issues shares that have been previously authorized to be issued.

During the six months ended June 30, 2020, the Company awarded 121,817 time-based RSUs to certain employees of the Company. The grant-date fair value of these RSUs was $2.2 million based on the Company’s closing stock price. These RSUs are subject to a three-year vesting schedule based on the date of the Board of Directors’ approval and are recognized as compensation cost in accordance with the vesting schedule. The amount of stock-based compensation expense related to the equity awards in the Company’s stock during the six months ended June 30, 2020 and 2019 was $0.7 million and $0.2 million, respectively and is reflected within cost of operations and general and administrative expenses in the unaudited condensed consolidated statement of operations.

The RSUs do not entitle the holders to voting rights and holders of the RSUs do not have any right to receive dividends or distributions. The following table presents information regarding outstanding RSUs as of June 30, 2020 and changes during the six months ended June 30, 2020:

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	Number of RSUs Outstanding			Weighted- Average Exercise Price		Aggregate Intrinsic Value (in thousands)		Weighted Average Remaining Contractual Life (in years)
Balance as of January 1, 2020		191,936		$	11.57
Granted		121,817			17.94
Vested		(49,877	)		11.84
Balance as of June 30, 2020		263,876			14.52	$	4,705		1.5 years

The total unrecognized stock-based expense related to the Company’s RSUs at June 30, 2020 was $3.0 million and will be recognized, net of any forfeitures, over a weighted-average amortization period of 1.5 years.

As more fully discussed in Note 17. Related Parties, pursuant to the Reorganization Agreement entered into by the Company with Brookfield Renewables and other affiliates, on July 31, 2020, upon consummation of the merger between the Company and Brookfield Renewable, all outstanding Company RSUs were converted into BEPC RSUs. Such RSUs are subject to substantially the same terms and conditions as were applicable to the Company RSUs (except that the form of payment upon vesting will be in BEPC Shares).

Cash Distributions

The following table presents the cash distributions declared and paid on Common Stock during the six months ended June 30, 2020 and 2019:

	Distributions per Share		Declaration Date		Record Date		Payment Date
2020:
First Quarter	$	0.2014		March 16, 2020		March 27, 2020		March 31, 2020
Second Quarter		0.2014		May 6, 2020		June 1, 2020		June 15, 2020
2019:
First Quarter	$	0.2014		March 13, 2019		March 24, 2019		March 29, 2019
Second Quarter		0.2014		May 8, 2019		June 3, 2019		June 17, 2019

Share Repurchase Program

On July 25, 2019, the Board of Directors of the Company authorized the renewal of the Company’s share repurchase program through August 4, 2020. Under the share repurchase program, the Company may repurchase up to 5% of the Company’s Common Stock outstanding as of July 25, 2019. The timing and the amount of any repurchases of Common Stock will be determined by the Company’s management based on its evaluation of market conditions and other factors. Repurchases of Common Stock may be made under a Rule 10b5-1 plan, which would permit common stock to be repurchased when the Company might otherwise be precluded from doing so under insider trading laws, open market purchases, privately-negotiated transactions, block purchases or otherwise in accordance with applicable federal securities laws, including Rule 10b-18 under the Exchange Act. The program may be suspended or discontinued at any time and does not obligate the Company to purchase any minimum number of shares. Any repurchased Common Stock will be held by the Company as treasury stock. The Company expects to fund any repurchases from the available liquidity.

No shares have been repurchased by the Company during the six months ended June 30, 2020 and June 30, 2019.

15. LOSS PER SHARE

Basic loss per share is computed by dividing net loss attributable to Class A common stockholders by the number of weighted average ordinary shares outstanding during the period, which is the average of shares outstanding and assumed to be outstanding, and includes contingently issuable shares as of the date when the contingent condition has been met. Diluted loss per share is computed by adjusting basic loss per share for the impact of weighted average dilutive common equivalent shares outstanding during the period, unless the impact is anti-dilutive. Common equivalent shares represent the incremental shares issuable for unvested restricted Common Stock and contingently issuable shares in the period the contingency has been met, for the portion of the period prior to the resolution of such contingent condition. Since the Company reported net losses for the periods presented, all potentially dilutive securities are considered antidilutive and, accordingly, basic net loss per share equals

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the diluted net loss per share.

Basic and diluted loss per share of the Company’s Common Stock for the three and six months ended June 30, 2020 and 2019 was calculated as follows:

	Three Months Ended June 30,						Six Months Ended June 30,
(In thousands, except per share amounts)	2020			2019			2020			2019
Basic and diluted loss per share:
Net loss attributable to Class A common stockholders	$	(61	)	$	(3,595	)	$	(55,132	)	$	(12,222	)
Weighted average basic and diluted Class A shares outstanding1		226,528			209,142			226,520			209,142
Basic and diluted loss per share	$	—		$	(0.02	)	$	(0.24	)	$	(0.06	)

(1) The computation for diluted earnings per share of the Company’s Class A common stock for the three and six months ended June 30, 2020 excluded 264 thousand of potentially dilutive unvested RSUs because the effect would have been anti-dilutive.

16. COMMITMENTS AND CONTINGENCIES

Letters of Credit

The Company’s customers, vendors and regulatory agencies often require the Company to post letters of credit in order to guarantee performance under certain contracts and agreements. The Company is also required to post letters of credit to secure obligations under various swap agreements and leases and may, from time to time, decide to post letters of credit in lieu of cash deposits in reserve accounts under certain financing arrangements. The amount that can be drawn under some of these letters of credit may be increased from time to time subject to the satisfaction of certain conditions. As of June 30, 2020, the Company had outstanding letters of credit drawn under the Revolver of $117.7 million and outstanding project-level letters of credit of $307.1 million drawn under certain project level financing agreements, compared to $115.5 million and $266.9 million, respectively, as of December 31, 2019.

Guarantee Agreements

The Company and its subsidiaries have entered into guarantee agreements to certain of their institutional tax equity investors and financing parties in connection with their tax equity financing transactions. These agreements do not guarantee the returns targeted by the tax equity investors or financing parties, but rather support any potential indemnity payments payable under the tax equity agreements, including related to management of tax partnerships and recapture of tax credits or renewable energy grants in connection with transfers of the Company’s direct or indirect ownership interests in the tax partnerships to entities that are not qualified to receive those tax benefits.

The Company and its subsidiaries have also provided guarantees in connection with acquisitions of third-party assets or to support project-level contractual obligations, including renewable energy credit sales agreements. The Company and its subsidiaries have also provided other capped or limited contingent guarantees and other support obligations with respect to certain project-level indebtedness.

The amounts of the above guarantees often are not explicitly stated and the overall maximum amount of the related obligations cannot be reasonably estimated. Historically, no significant payments have been made with respect to these types of guarantees. The Company believes the probability of payments being demanded under these guarantees is remote and no material amounts have been recognized for the underlying fair value of guarantee obligations.

Legal Proceedings

The Company is not a party to any material legal proceedings other than various administrative and regulatory proceedings arising in the ordinary course of the Company’s business or as described below. While the Company cannot predict with certainty the ultimate resolution of such proceedings or other claims asserted against the Company, certain of the claims, if adversely concluded, could result in substantial damages or other relief.

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Claim relating to First Wind Acquisition

On May 27, 2016, D.E. Shaw Composite Holdings, L.L.C. and Madison Dearborn Capital Partners IV, L.P., as the representatives of the sellers (the “First Wind Sellers”) filed an amended complaint for declaratory judgment against TerraForm Power and Terra LLC in the Supreme Court of the State of New York alleging breach of contract with respect to the Purchase and Sale Agreement, dated as of November 17, 2014 (the “FW Purchase Agreement”) between, among others, SunEdison, Inc. (“SunEdison”), TerraForm Power, Terra LLC and the First Wind Sellers. The amended complaint alleges that Terra LLC and SunEdison became jointly obligated to make $231.0 million in earn-out payments in respect of certain development assets SunEdison acquired from the First Wind Sellers under the FW Purchase Agreement, when those payments were purportedly accelerated by SunEdison’s bankruptcy and by the resignations of two SunEdison employees. The amended complaint further alleges that TerraForm Power, as guarantor of certain Terra LLC obligations under the FW Purchase Agreement, is liable for this sum. In addition, the plaintiffs have claimed legal costs and expenses and, under applicable New York law, their claim accrues interest at a non-compounding rate of 9% per annum.

The defendants filed a motion to dismiss the amended complaint on July 5, 2016, on the ground that, among other things, SunEdison is a necessary party to this action. On February 6, 2018, the court denied the Company’s motion to dismiss after which document discovery began. In April 2019, Terra LLC filed an amended answer to the amended complaint. As of the date of this Quarterly Report, the parties have filed their respective motions for summary judgment and supporting briefs and are waiting for the court’s ruling on these motions.

The Company cannot predict the impact on this litigation of any information that may become available through the course of these legal proceedings. The Company believes the First Wind Sellers’ allegations are without merit and will contest them vigorously. However, the Company cannot predict with certainty the ultimate resolution of any proceedings brought in connection with such a claim.

Whistleblower Complaint by Carlos Domenech Zornoza

On May 10, 2016, the Company’s former Director and Chief Executive Officer, Carlos Domenech Zornoza (“Mr. Domenech”), filed a complaint against the Company, TerraForm Global and certain individuals, with the United States Department of Labor. The complaint alleges that the defendants engaged in a retaliatory termination of Mr. Domenech’s employment on November 20, 2015, after he allegedly voiced concerns to SunEdison’s Board of Directors about public representations made by SunEdison officers regarding SunEdison’s liquidity position, and after he allegedly voiced his opposition to transactions that he alleges were self-interested and which he alleges SunEdison forced on the Company. He alleges that the Company participated in SunEdison’s retaliatory termination by terminating his position as Chief Executive Officer of the Company in connection with SunEdison’s termination of his employment. He seeks lost wages, bonuses, benefits, and other money that he alleges that he would have received if he had not been subjected to the allegedly retaliatory termination. The Company’s Position Statement in response to the complaint was filed in October 2016. Mr. Domenech subsequently filed a federal lawsuit (addressed immediately below) that had the effect of discontinuing this matter.

On February 21, 2017, Mr. Domenech filed Domenech Zornoza v. TerraForm Global, Inc. et. al against TerraForm Power, TerraForm Global and certain individuals as defendants in the United States District Court for the District of Maryland. The complaint asserted claims for retaliation, breach of the implied covenant of good faith and fair dealing and promissory estoppel based on the same allegations in Mr. Domenech’s Department of Labor complaint. On March 15, 2017, the Company filed notice with the Judicial Panel on Multidistrict Litigation to transfer this action to the SDNY where other cases not involving the Company relating to the SunEdison bankruptcy are being tried. The plaintiff opposed the transfer. However, the transfer was approved by the Judicial Panel on Multidistrict Litigation. On November 6, 2017, TerraForm Power and the other defendants filed a motion to dismiss Mr. Domenech’s complaint, and Mr. Domenech filed a response on December 21, 2017. On March 8, 2018, Mr. Domenech voluntarily dismissed the federal action without prejudice, which would permit the action to be refiled.

On August 16, 2018, Mr. Domenech filed a second complaint with the United States District Court for the District of Maryland, with substantially the same allegations. On October 17, 2018, the Company filed notice with the Judicial Panel on Multidistrict Litigation to transfer this action to the SDNY. The Plaintiff opposed the transfer. However, the transfer was approved by the Judicial Panel on Multidistrict Litigation. On March 15, 2019, the Company, TerraForm Global, and several individual defendants filed a joint motion to dismiss Mr. Domenech’s complaint. Mr. Domenech filed a response on April 15, 2019, and the Company, TerraForm Global, and the individual defendants filed a reply on April 25, 2019. On December 9, 2019, the Court dismissed two of his three claims against the Company and TerraForm Global. On January 22, 2020, the Company filed an answer to Mr. Domenech’s remaining, narrowed claim of retaliatory termination.

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The Company reserved for its estimated loss related to this complaint in 2016, which was not considered material to the Company’s consolidated results of operations, and this amount remains accrued as of June 30, 2020. However, the Company is unable to predict with certainty the ultimate resolution of these proceedings.

Derivative Class Action

On September 19, 2019, lead plaintiff Martin Rosson filed a derivative and class action lawsuit in the Delaware Court of Chancery on behalf of the Company, himself, and other minority stockholders of the Company against Brookfield and certain of its affiliates (including the Company as a nominal defendant). The complaint alleges that the defendant controlling stockholders breached their fiduciary duty to minority stockholders because the Company undertook a private placement of the Company’s stock on terms that the complaint alleges are unfair, instead of pursuing a public offering. The proceeds of this private placement were used to fund the acquisition by the Company of Saeta and had been approved by the Conflicts Committee of the Company’s Board of Directors. The complaint seeks the rescission and invalidation of the private placement and payment to the Company of rescissory damages, among other relief. In a related development, on October 15, 2019, the Company received a demand letter for the production of books and records pursuant to 8 Del. C. § 220 to allow counsel to the City of Dearborn Policy and Retirement System (a purported shareholder of the Company) to investigate potential breaches of fiduciary duty by Brookfield and the Company’s Board of Directors in connection with the funding of the acquisition of Saeta.

On January 27, 2020, the City of Dearborn Police and Retirement System filed a derivative and class action lawsuit in the Delaware Court of Chancery on behalf of the Company, itself, and other minority stockholders of the Company against Brookfield and certain of its affiliates (including the Company as a nominal defendant) alleging claims similar to those set forth in the Rosson complaint. The City of Dearborn Police and Retirement System and Martin Rosson agreed, with the consent of the Company and Brookfield, to consolidate their respective claims and such consolidation was approved by the Court during the first quarter of 2020. Brookfield then filed a motion to dismiss certain of the plaintiff’s claims and the Company filed a pro forma joinder to the motion to dismiss, which was recently heard by the Court. While the Company believes that these claims are without merit, it cannot predict with certainty the ultimate resolution of any proceedings brought in connection with these claims.

Demand for Access to Books and Records

On March 26, 2020, the Company received the first of seven demand letters for the production of books and records pursuant to 8 Del. C. § 220, one of which was subsequently withdrawn. These letters sought to allow counsel to the City of Dearborn Police and Retirement System, Martin Rosson and others to investigate potential breaches of fiduciary duty by Brookfield and the Company’s Board of Directors in connection with the announcement of the signing of a merger agreement among the Company, Brookfield Renewable and certain of their affiliates. To date, three related claims have been filed in Delaware Chancery Court demanding access to our books and records. The Company believes the allegations made in all of the letters and all related claims are without merit and that the requests for access to books and records are inappropriate; however, we cannot predict with certainty the ultimate resolution of proceedings brought in connection with these allegations.

Other Matters

Two of the Company’s project subsidiaries were parties to litigation that was seeking to recover alleged underpayments of tax grants under Section 1603 of the American Recovery and Reinvestment Tax Act from the U.S. Department of Treasury (“U.S. Treasury”). These project subsidiaries filed complaints at the Court of Federal Claims on March 28, 2014. The U.S. Treasury counterclaimed and both claims went to trial in July 2018. In January 2019, the Court of Federal Claims entered judgments against each of the project subsidiaries for approximately $10.0 million in the aggregate. These judgments were affirmed on appeal. The project subsidiaries had expected that losses arising from these claims would be covered pursuant to an indemnification agreement and, accordingly, the Company recognized a corresponding indemnification asset within Other current assets in the consolidated balance sheets as of June 30, 2020 and December 31, 2019. On July 17, 2020, the project subsidiaries settled the full amount of the litigation with the U.S. Treasury through payments made directly by the previous owners pursuant to the indemnification agreement.

Issuance of Shares upon Final Resolution of Certain Litigation Matters

Pursuant to the definitive merger and sponsorship agreement (the “Merger Agreement”) entered into with Orion Holdings on March 6, 2017, the Company has agreed to issue additional shares of Common Stock to Orion Holdings for no additional consideration in respect of the Company’s net losses, such as out-of-pocket losses, damages, costs, fees and expenses, in connection with the obtainment of a final resolution of certain specified litigation matters (including the litigation

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brought by the First Wind Sellers and Mr. Domenech described above) within a prescribed period following the final resolution of such matters. The number of additional shares of Common Stock to be issued to Orion Holdings is subject to a pre-determined formula as set forth in the Merger Agreement and is described in greater detail in the Company’s Definitive Proxy Statement on Schedule 14A filed with the SEC on September 6, 2017. The issuance of additional shares to Orion Holdings would dilute the holdings of the Company’s common stockholders and may negatively affect the value of the Company’s common stock.

On July 31, 2020, TERP NY (as successor by merger to the Company) and Orion U.S. entered into an amendment (the “2017 Merger Agreement Amendment”) to the Merger Agreement, by and among the Company, Orion U.S. and BRE TERP Holdings Inc., a Delaware corporation, pursuant to which, among other things, the provisions of the 2017 Merger Agreement relating to the contingent equity consideration payable to Orion U.S. under certain circumstances were amended to provide that the fair market value of such consideration would be determined based on an internal valuation determined by affiliates of the Brookfield Stockholders.

As of the date hereof, the Company is unable to predict the amount of net losses, if any, arising from the litigation brought by the First Wind Sellers and Mr. Domenech described above or the number of additional shares, if any, that may be required to be issued to Orion Holdings pursuant to the terms of the Merger Agreement in connection with any final resolution of such matters.

17. RELATED PARTIES

As discussed in Note 1. Nature of Operations and Organization, the Company is a controlled affiliate of Brookfield and as of June 30, 2020, Brookfield held approximately 62% of the voting securities of TerraForm Power’s Common Stock. Certain affiliates of Brookfield also hold all the outstanding incentive distribution rights (“IDRs”) of Terra LLC pursuant to an amended and restated limited liability company agreement of Terra LLC as discussed below under Brookfield Sponsorship Transaction.

Merger Transaction

On January 11, 2020, the Company received an unsolicited and non-binding proposal from Brookfield Renewable Partners L.P. (“Brookfield Renewable”), an affiliate of Brookfield, to acquire all of the outstanding shares of Common Stock of the Company, other than the approximately 62% shares held by Brookfield Renewable and its affiliates. The Brookfield Proposal expressly conditioned the transaction contemplated thereby on the approval of a committee of the Board consisting solely of independent directors and the approval of a majority of the shares held by the Company’s stockholders not affiliated with Brookfield Renewable and its affiliates. Following the Company’s receipt of the Brookfield Proposal, the Board formed a Special Committee of non-executive, disinterested and independent directors to, among other things, review, evaluate and consider the Brookfield Proposal and, if the Special Committee deemed appropriate, negotiate a transaction with Brookfield Renewable or explore alternatives thereto. The Board resolutions establishing the Special Committee expressly provided that the Board would not approve the transaction contemplated by the Brookfield Proposal or any alternative thereto without a prior favorable recommendation by the Special Committee. As of June 30, 2020, Brookfield Renewable held an approximately 30% indirect economic interest in TerraForm Power.

On March 16, 2020, the Company entered into an Agreement and Plan of Reorganization (the “Reorganization Agreement”), by and among Brookfield Renewable, Brookfield Renewable Corporation, a corporation incorporated under the laws of British Columbia and an indirect subsidiary of Brookfield Renewable (“BEPC”), 2252876 Alberta ULC, an unlimited liability corporation incorporated under the laws of Alberta and a wholly owned direct subsidiary of Brookfield Renewable (“Acquisition Sub” and, together with Brookfield Renewable and BEPC, the “BEP Entities”), the Company, and TerraForm Power NY Holdings, Inc., a New York corporation and a wholly owned direct subsidiary of the Company (“TERP NY” and, together with the Company, the “Company Entities”). The Board, upon the unanimous recommendation of the Special Committee, and the Board of Directors of the general partner of Brookfield Renewable approved the Reorganization Agreement and the transactions contemplated thereby.

On July 31, 2020, pursuant to the Reorganization Agreement, Brookfield Renewable, through Acquisition Sub and BEPC, acquired all of the outstanding shares of Class A common stock of the Company (“TERP Common Stock”) not held by the Brookfield Stockholders (as defined below) (such shares, the “Public TERP Shares”) through a series of transactions that include the Reincorporation Merger and the Share Exchange (each as defined below). Pursuant to the Reorganization Agreement and the Plan of Merger, at the effective time of the Reincorporation Merger (the “Reincorporation Effective Time”), the Company merged with and into TERP NY, with TERP NY as the surviving corporation of such merger (the “Reincorporation Merger”), and (i) BBHC Orion Holdco L.P. (“BBHC Orion”) and Orion U.S. Holdings 1 L.P. (“Orion U.S.” and, together with BBHC Orion, the “Brookfield Stockholders”), each an affiliate of BEP, received shares of class A common

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stock, par value $0.01, of TERP NY (“TERP NY Class A Common Stock”), (ii) holders of Public TERP Shares who did not elect to receive non-voting limited partnership units of BEP (the “BEP Units”) received shares of class B common stock, par value $0.01, of TERP NY (“TERP NY Class B Common Stock”), and (iii) holders of Public TERP Shares who elected to receive BEP Units received shares of class C common stock, par value $0.01, of TERP NY (“TERP NY Class C Common Stock”). Immediately thereafter, at the effective time of the Share Exchange (the “Exchange Effective Time”), (i) pursuant to a binding share exchange, BEPC acquired each share of TERP NY Class B Common Stock issued and outstanding after the Reincorporation Effective Time in exchange for the right to receive class A exchangeable subordinate voting shares, no par value, of BEPC (the “BEPC Exchangeable Shares”) and cash in lieu of fractional BEPC Exchangeable Shares (the “BEPC Exchange”) and (ii) pursuant to a binding share exchange, Acquisition Sub acquired each share of TERP NY Class C Common Stock issued and outstanding after the Reincorporation Effective Time in exchange for the right to receive BEP Units and cash in lieu of fractional BEP Units (the “BEP Exchange” and, together with the BEPC Exchange, the “Share Exchange” and, together with the Reincorporation Merger, the “Merger Transaction”).

The Reorganization Agreement provided for, among other things, the acquisition by the BEP Entities of the Company’s Common Stock that is not already owned by BEP and its affiliates (the “Public Shares”) on the terms and subject to the conditions set forth therein. Pursuant to the Reorganization Agreement, each holder of Public Shares was entitled to receive for each Public Share held by such holder as consideration 0.381 class A exchangeable subordinate voting shares, no par value, of BEPC (the “BEPC Shares”) or, at the election of such holder, 0.381 of a limited partnership unit of BEP (the “BEP Units”), in each case as adjusted for the BEPC Distribution (as defined and described below) (such 0.381 exchange ratio as adjusted, the “Adjusted Exchange Ratio”) plus any cash paid in lieu of fractional BEP Units or BEPC Shares, as applicable (the “Consideration”). Holders of Public Shares who did not make any election received BEPC Shares. There was no limit on the number of Public Shares that could elect to receive BEPC Shares or BEP units. The BEPC Shares are structured with the intention of being economically equivalent to the BEP Units, including identical distributions, as and when declared, and will be fully exchangeable at any time, at the option of holders of such BEPC Shares, for a BEP Unit, initially on a one-for-one basis, subject to adjustment for certain events.

The Transaction (as defined below) was tax deferred for holders of Public Shares.

The acquisition of the Public Shares was consummated through a series of transactions (the “Transaction”), including:

• the merger of the Company with and into TERP NY, with TERP NY surviving such merger (the “Reincorporation Merger”), with (x) each Company stockholder who did not make an election to receive TERP NY Class C Shares (as defined below) (and, upon completion of the BEP Exchange (as defined below), BEP Units) receiving a number of TERP NY’s Class B common stock, par value $0.01 (the “TERP NY Class B Shares”), equal to the number of Public Shares held by such stockholder, and (y) each Company stockholder who made an election to receive TERP NY Class C Shares (and, upon completion of the BEP Exchange, BEP Units) receiving a number of TERP NY’s Class C common stock, par value $0.01 (the “TERP NY Class C Shares”), equal to the number of Public Shares held by such stockholder; followed immediately by

• a series of binding share exchanges effected under New York Business Corporation Law (the “NYBCL”), pursuant to which (x) BEPC acquired each Holdings Class B Share in exchange for the applicable Consideration described above (the “BEPC Exchange”), consisting of BEPC Shares and cash in lieu of fractional BEPC Shares, and (y) Acquisition Sub acquired each TERP NY Class C Share in exchange for the applicable Consideration described above (the “BEP Exchange” and, together with the BEPC Exchange, the “Share Exchange”), consisting of BEP Units and cash in lieu of fractional BEP Units.

All outstanding restricted stock units of the Company (the “Company RSUs”) were converted into restricted stock units with respect to TERP NY Class B Shares (the “TERP NY RSUs”) on a one-for-one basis at the effective time of the Reincorporation Merger. At the effective time of the Share Exchange, each Holdings RSU was then converted into a time-based restricted stock unit of BEPC with respect to a number of BEPC Shares equal to the product of (i) the number of shares subject to such Holdings RSU immediately prior to the effective time of the Share Exchange and (ii) the Adjusted Exchange Ratio. Such restricted stock units are subject to substantially the same terms and conditions as were applicable to the Company RSUs (except that the form of payment upon vesting will be in BEPC Shares).

The Company Entities and the BEP Entities each made customary representations, warranties and covenants in the Reorganization Agreement, in each case generally subject to customary materiality qualifiers. The Company Entities and the BEP Entities also agreed, subject to certain exceptions, to various other customary covenants and agreements, including agreements to conduct their respective businesses in the ordinary course during the period between the date of the Reorganization Agreement and the closing and, subject to certain exceptions, to refrain from certain actions during that time, including, (i) declaring and making dividends; (ii) acquiring assets if such acquisition would reasonably be expected to prevent,

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materially delay or materially impede the consummation of the Transaction; (iii) with respect to BEP and BEPC, authorizing or entering into a plan of complete or partial liquidation or dissolution; and (iv) amending their organizational documents. The Company also agreed to refrain from soliciting or responding to alternative proposals for a transaction, except that the Board, acting at the recommendation of the Special Committee, was permitted to change its recommendation to stockholders if it determined that a failure to do so would be reasonably likely to be inconsistent with its fiduciary duties, subject to a three business day notification period for the BEP Entities.

The consummation of the Transaction was conditioned on the satisfaction or waiver (except with respect to the condition set forth in clause (i) below, which was not waivable) of certain events, including, among other matters, (i) the approval by each of (A) the holders of a majority of the Common Stock outstanding and entitled to vote thereon and (B) the holders of a majority of the Public Shares outstanding and entitled to vote thereon (collectively, the “Requisite Company Stockholder Approvals”), (ii) the BEPC Shares and BEP Units to be issued to the Company’s stockholders in the Transaction having been approved for listing on the New York Stock Exchange and the Toronto Stock Exchange, (iii) expiration of applicable waiting periods under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 and receipt of approval under the Competition Act, R.S.C., 1985, c. C 34 and certain other specified required government approvals, (iv) no temporary restraining order, preliminary or permanent injunction or other judgment or law entered, enacted, promulgated, enforced or issued by any court or other governmental entity of competent jurisdiction (collectively, “Restraints”) being in effect preventing, making illegal or prohibiting the consummation of the Transactions, (v) effectiveness of certain of the BEP Entities’ F-3 and F-4 registration statements, and (vi) filing of a prospectus in Canada under applicable securities law. The Company’s obligation to consummate the Transaction was also conditioned on the satisfaction or waiver of certain other events, including, (A) receipt by the Company of an opinion from Torys LLP with respect to certain tax matters, (B) the contribution of certain assets of BEP into BEPC, and (C) the BEPC Distribution (as defined below) having occurred or all actions reasonably necessary to cause the BEPC Distribution to occur substantially simultaneously with the closing having occurred. By reason of the commitment of the Stockholders (as defined below) under the Voting Agreement (as defined below) to vote their Common Stock in favor of the Transaction, the condition described in clause (i) above will be satisfied if the Transaction is approved by the holders of a majority of the Public Shares outstanding and entitled to vote thereon.

The Reorganization Agreement contained certain termination rights for both the Company and BEP, including, by mutual consent of the Company and BEP; by either the Company or BEP, if (i) the Transaction had not been consummated on or before December 16, 2020, subject to a further three-month extension under certain circumstances; (ii) if the other party breached any of its representations, warranties, covenants or other agreements in the Reorganization Agreement that was not reasonably capable of being cured by the end date above or was not cured in accordance with the terms of the Reorganization Agreement and such breach caused the applicable closing conditions not to be satisfied; (iii) if the condition set forth in clause (iv) of the preceding paragraph had not been satisfied and the Restraint giving rise to such non-satisfaction had become final and nonappealable; and (v) if either of the Requisite Company Stockholder Approvals had not been obtained upon a vote at a duly held meeting. Additionally, BEP had the right to terminate the Reorganization Agreement if the Board, acting at the recommendation of the Special Committee, changed its recommendation. If the Reorganization Agreement was terminated by either the Company or BEP because the Required Company Stockholder Approvals are not obtained, the Company would be required to pay to BEP a fee equal to $15,000,000.

The Reorganization Agreement provided that, on or prior to the closing date, the BEP Entities would, and would cause their applicable affiliates to, enter into various other agreements substantially in the forms attached to the Reorganization Agreement, including:

• a rights agreement between Brookfield and Wilmington Trust, National Association, as the rights agent (referred to in the Reorganization Agreement as the “Rights Agreement”), pursuant to which Brookfield would agree to satisfy the obligations of BEP and BEPC to exchange BEPC Shares for BEP Units where BEPC or BEP had not satisfied such exchange request by a holder of BEPC Shares, in each case, subject to the terms and conditions set forth in the Rights Agreement;

• certain subordinated credit agreements between a BEP and BEPC subsidiary in order to allow for cash management among BEP and its subsidiaries following the closing;

• an equity commitment agreement by and among Brookfield BRP Holdings (Canada) Inc., a subsidiary of BEP (“Canada HoldCo”), BEP and BEPC, pursuant to which (x) for 10 years following closing, Canada Holdco will agree to subscribe for up to $1 billion of BEPC class C non-voting shares, in order to fund growth capital investments and acquisitions or working capital and (y) until there were no longer any BEPC Shares held by the public, BEP will agree not to declare or pay any distribution on the BEP Units if BEPC does not have sufficient money or other assets to enable BEPC to declare and pay an equivalent dividend on the BEPC Shares; and

• amended articles of BEPC, which include the rights, preferences and privileges of the BEPC capital stock, including the BEPC Shares.

BEPC Distribution

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Concurrently with the closing of the Transactions, BEP undertook a special distribution of BEPC Shares (the “BEPC Distribution”) to holders of BEP Units. As a result of the BEPC Distribution, holders of BEP Units received BEPC Shares for their BEP Units in accordance with a distribution ratio determined by the Board of Directors of the general partner of BEP. Holders of Public Shares who elect to receive BEP Units pursuant to the BEP Exchange were not be entitled to receive, and did not receive, BEPC Shares in the BEPC Distribution.

Voting Agreement

Simultaneously with the execution of the Reorganization Agreement, the Company entered into a Voting Agreement (the “Voting Agreement”) with BBHC Orion and Orion U.S. Holdings 1 L.P. (and together with BHBC, the “Stockholders”), pursuant to which the Stockholders agreed, among other things, to vote their respective Common Stock in favor of the approval of the Reorganization Agreement and against any alternative proposal as further set forth in the Voting Agreement. The Stockholders beneficially own approximately 61.65% of the outstanding Common Stock.

Brookfield Sponsorship Transaction

As discussed in Note 1. Nature of Operations and Organization, the Company entered into a suite of agreements with Brookfield and/or certain of its affiliates providing for sponsorship arrangements, as are more fully described below.

Brookfield Master Services Agreement

The Company entered into a master services agreement (the “Brookfield MSA”) with Brookfield and certain affiliates of Brookfield (collectively, the “MSA Providers”) pursuant to which the MSA Providers provide certain management and administrative services to the Company, including the provision of strategic and investment management services. As consideration for the services provided or arranged for by Brookfield and certain of its affiliates pursuant to the Brookfield MSA, the Company pays a base management fee on a quarterly basis that is paid in arrears and calculated as follows:

• for each of the first four quarters following the closing date of the Merger, a fixed component of $2.5 million per quarter (subject to proration for the quarter including the closing date of the Merger) plus 0.3125% of the market capitalization value increase for such quarter;

• for each of the next four quarters, a fixed component of $3.0 million per quarter adjusted annually for inflation plus 0.3125% of the market capitalization value increase for such quarter; and

• thereafter, a fixed component of $3.75 million per quarter adjusted annually for inflation plus 0.3125% of the market capitalization value increase for such quarter.

For purposes of calculating the quarterly payment of the base management fee, the term market capitalization value increase means, for any quarter, the increase in value of the Company’s market capitalization for such quarter, calculated by multiplying the number of outstanding shares of Common Stock as of the last trading day of such quarter by the difference between (x) the volume-weighted average trading price of a share of Common Stock for the trading days in such quarter and (y) $9.52. If the difference between (x) and (y) in the market capitalization value increase calculation for a quarter is a negative number, then the market capitalization value increase is deemed to be zero.

Pursuant to the Brookfield MSA, the Company recorded charges of $9.8 million and $19.4 million within general and administrative expenses - affiliate in the consolidated statements of operations for the three and six months ended June 30, 2020, respectively, as compared to $5.9 million and $10.8 million for the same periods in 2019, respectively.

The Brookfield MSA was terminated on July 31, 2020, upon the completion of the Merger Transaction as discussed in Note 1. Nature of Operations and Organization.

Relationship Agreement

The Company entered into a relationship agreement (the “Relationship Agreement”) with Brookfield, which governs certain aspects of the relationship between Brookfield and the Company. Pursuant to the Relationship Agreement, Brookfield agrees that the Company will serve as the primary vehicle through which Brookfield and certain of its affiliates will own operating wind and solar assets in North America and Western Europe and that Brookfield will provide, subject to certain terms and conditions, the Company with a right of first offer on certain operating wind and solar assets that are located in such countries and developed by persons sponsored by or under the control of Brookfield. The rights of the Company under the Relationship Agreement are subject to certain exceptions and consent rights set out therein. The Company did not acquire any

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renewable energy facilities from Brookfield during the six months ended June 30, 2020 or during 2019.

On July 31, 2020, as a result of the termination of the Brookfield MSA, the Relationship Agreement automatically terminated in accordance with its terms.

Terra LLC Agreement

BRE Delaware, LLC (formerly BRE Delaware, Inc.) (the “Brookfield IDR Holder”), an indirect, wholly-owned subsidiary of Brookfield, holds all of the outstanding IDRs of Terra LLC. The Company, Brookfield IDR Holder and TerraForm Power Holdings, Inc. are party to the limited liability company agreement of Terra LLC (as amended from time to time, the “Terra LLC Agreement”). Under the Terra LLC Agreement, IDRs are payable when distributions on Common Stock reach a certain threshold. The IDR threshold for a first distribution is $0.93 per share of Common Stock and for a second distribution is $1.05 per share of Common Stock. There were no IDR payments made by the Company pursuant to the Terra LLC Agreement during the six months ended June 30, 2020 or during 2019.

On July 31, 2020, upon the completion of the Merger Transaction, as discussed in Note 1. Nature of Operations and Organization, TERP NY, TerraForm Power Holdings, Inc., a Delaware corporation, and Brookfield IDR Holder entered into the Fourth Amended and Restated Limited Liability Company Agreement of TerraForm Power, LLC (the “New LLCA”), pursuant to which, among other things, the obligations of Terra LLC to make incentive distribution right payments to Brookfield IDR Holder were terminated.

Registration Rights Agreement

The Company entered into a registration rights agreement (the “Registration Rights Agreement”) on October 16, 2017 with Orion Holdings. On June 11, 2018, Orion Holdings, Brookfield BRP Holdings (Canada) Inc. and the Company entered into a Joinder Agreement pursuant to which Brookfield BRP Holdings (Canada) Inc. became a party to the Registration Rights Agreement. On June 29, 2018, a second Joinder Agreement was entered into among Orion Holdings, Brookfield BRP Holdings (Canada) Inc., BBHC Orion Holdco L.P. and the Company pursuant to which BBHC Orion Holdco L.P. became a party to the Registration Rights Agreement. The Registration Rights Agreement governs the rights and obligations of the parties thereto with respect to the registration for resale of all or a part of the Class A shares held by Orion Holdings, BBHC Orion Holdco L.P and such other affiliates of Brookfield from time to time to the Registrations Rights Agreement.

On July 31, 2020, the Registration Rights Agreement was terminated, upon the completion of the Merger Transaction as discussed in Note 1. Nature of Operations and Organization.

Sponsor Line Agreement

On October 16, 2017, the Company entered into a credit agreement (the “Sponsor Line”) with Brookfield and one of its affiliates. The Sponsor Line establishes a $500.0 million secured revolving credit facility and provides for the lenders to commit to make LIBOR loans to the Company during a period not to exceed three years from the effective date of the Sponsor Line (subject to acceleration for certain specified events). The Company may only use the revolving Sponsor Line to fund all or a portion of certain funded acquisitions or growth capital expenditures. The Sponsor Line will terminate, and all obligations thereunder will become payable, no later than October 16, 2022. Borrowings under the Sponsor Line bear interest at a rate per annum equal to a LIBOR rate determined by reference to the costs of funds for U.S. dollar deposits for the interest period relevant to such borrowing adjusted for certain additional costs, in each case plus 3.00% per annum. In addition to paying interest on outstanding principal under the Sponsor Line, the Company is required to pay a standby fee of 0.50% per annum in respect of the unutilized commitments thereunder, payable quarterly in arrears. The Company is permitted to voluntarily reduce the unutilized portion of the commitment amount and repay outstanding loans under the Sponsor Line at any time without premium or penalty, other than customary “breakage” costs. TerraForm Power’s obligations under the Sponsor Line are secured by first-priority security interests in substantially all assets of TerraForm Power, including 100% of the capital stock of Terra LLC, in each case subject to certain exclusions set forth in the credit documentation governing the Sponsor Line. Under certain circumstances, the Company may be required to prepay amounts outstanding under the Sponsor Line. Total interest expense, including the amortization of the deferred financing costs incurred on the Sponsor Line for the three and six months ended June 30, 2020 and 2019 was $1.1 million and $2.1 million, respectively.

On July 31, 2020, the Sponsor Line was terminated upon the completion of the Merger Transaction as discussed in Note 1. Nature of Operations and Organization.

Governance Agreement

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In connection with the consummation of the Merger, the Company entered into a governance agreement (the “Governance Agreement”) with Orion Holdings and any controlled affiliate of Brookfield (other than the Company and its controlled affiliates) that by the terms of the Governance Agreement from time to time becomes a party thereto. The Governance Agreement establishes certain rights and obligations of the Company and controlled affiliates of Brookfield that own voting securities of the Company relating to the governance of the Company and the relationship between such affiliates of Brookfield and the Company and its controlled affiliates. On June 11, 2018, Orion Holdings, Brookfield BRP Holdings (Canada) Inc. and the Company entered into a Joinder Agreement pursuant to which Brookfield BRP Holdings (Canada) Inc. became a party to the Governance Agreement. On June 29, 2018, a second Joinder Agreement was entered into among Orion Holdings, Brookfield BRP Holdings (Canada) Inc., BBHC Orion Holdco L.P. and the Company pursuant to which BBHC Orion Holdco L.P. became a party to the Governance Agreement.

On July 31, 2020, as a result of the termination of the Brookfield MSA, the Governance Agreement automatically terminated in accordance with its terms.

New York Office Lease & Co-tenancy Agreement

In May 2018, in connection with the relocation of the Company’s corporate headquarters to New York City, the Company entered into a lease for office space and related co-tenancy agreement with affiliates of Brookfield for a ten-year term. The Company recorded $0.8 million and $0.9 million of charges related to the lease of the office space within general and administrative expenses - affiliate in the unaudited condensed consolidated statements of operations for the three and six months ended June 30, 2020, respectively, as compared to $0.3 million and $0.4 million for the same periods in 2019.

Other Brookfield Transactions and Agreements

Acquisition-related Services

During the six months ended June 30, 2020, an affiliate of Brookfield incurred $0.7 million for services and fees payable on behalf of the Company in relation to acquisitions made by the Company in Spain. These costs primarily represent professional fees for legal, valuation and accounting services.

Agreements with X-Elio Energy

On December 18, 2019, the Company acquired an approximately 45 MW portfolio of utility-scale solar photovoltaic power plants in Spain (the “X-Elio Acquisition”) from subsidiaries of X-Elio Energy, S.L. (“X-Elio”). Contemporaneously with the closing of the X-Elio Acquisition, Brookfield and certain of its institutional partners entered into a 50-50 joint venture in respect of X-Elio.

The X-Elio Acquisition was completed pursuant to three share purchase agreements with X-Elio (collectively the “X-Elio SPAs”), pursuant to which the Company acquired three X-Elio subsidiaries. In connection with the X-Elio Acquisition, on the closing date, the Company entered into a transitional services agreement with X-Elio, pursuant to which X-Elio has agreed to support the Company on a transitional basis by providing certain accounting and other services for an initial three-month term that may be extended at the election of the Company for an additional three-month term. In addition, the subsidiaries acquired by the Company were party to existing O&M agreements with X-Elio (collectively, the “X-Elio O&M Agreements”), pursuant to which X-Elio provided O&M services to the acquired solar power facilities. Under the terms of the X-Elio SPAs, the X-Elio O&M Agreements will remain in effect for a maximum 12-month term after the closing date, subject to earlier termination at the Company’s election, for a total consideration of approximately $1.1 million. Under the X-Elio SPAs, certain indemnity and other obligations remain in place post-closing of the acquisition but no post-closing payments are expected to be made by either party in the ordinary course.

Due from Affiliates

The $2.7 million due from affiliates amount reported on the consolidated balance sheets as of June 30, 2020 primarily represents a receivable from certain affiliates of Brookfield, as a result of payments made by the Company on their behalf, primarily related to professional fees and rent for shared corporate headquarters. There was no right of set-off with respect to these receivables from affiliates and the payables to the other Brookfield affiliates described herein, and thus these amounts were separately reported in due from affiliate in the consolidated balance sheets.

Due to Affiliates

40

The $12.8 million due to affiliates amount reported in the unaudited condensed consolidated balance sheets as of June 30, 2020 represented payables to affiliates of Brookfield of (i) $9.8 million for the Brookfield MSA base management fee for the second quarter of 2020, (ii) $1.6 million for services and fees incurred by an affiliate of Brookfield on behalf of the Company related to acquisitions in Spain, (iii) $0.1 million for O&M services payable to an affiliate of X-Elio and (iv) $1.3 million payables related to rent, office charges and other services to affiliates of Brookfield related to the Company’s corporate headquarters in New York. The $11.5 million due to affiliates amount reported in the consolidated balance sheets as of December 31, 2019 represented (i) $8.6 million payables to affiliates of Brookfield for the Brookfield MSA base management fee for the fourth quarter of 2019, (ii) $1.4 million for services and fees incurred by an affiliate of Brookfield on behalf of the Company related to acquisitions in Spain, (iii) $0.6 million standby fee payable under the Sponsor Line, (iv) $0.5 million payable for commodity contracts executed on behalf of the Company on a cost-reimbursement basis, and (v) $0.4 million payables related to rent, office charges and other services to affiliates of Brookfield related to the Company’ corporate headquarters in New York.

During the three and six months ended June 30, 2020, the Company paid to affiliates of Brookfield (i) $9.6 million and $18.2 million, respectively for the Brookfield MSA base management fee, (ii) $0.7 million and $1.3 million, respectively for the standby fee payable under the Sponsor Line and (iii) $0.8 million and $1.5 million, respectively for leasehold improvements, rent, office charges and other services with affiliates of Brookfield. During the three and six months ended June 30, 2019, the Company paid to affiliates of Brookfield (i) $4.9 million and $9.1 million for the Brookfield MSA base management fee and (ii) $0.9 million and $3.2 million, respectively, representing standby fee payable to a Brookfield affiliate under the Sponsor Line and for leasehold improvements, rent, office charges and other services with affiliates of Brookfield.

18. SEGMENT REPORTING

The Company has three reportable segments: Solar, Wind, and Regulated Solar and Wind. These segments, which represent the Company’s entire portfolio of renewable energy facilities, have been determined based on the management approach. The management approach designates the internal reporting used by management for making decisions and assessing performance as the source of the reportable segments. Each of the Company’s reportable segments represents an aggregation of operating segments. An operating segment is defined as a component of an enterprise that engages in business activities from which it may earn revenues and incur expenses, and that has discrete financial information that is regularly reviewed by the chief operating decision maker (“CODM”) in deciding how to allocate resources. The Company’s Chief Executive Officer and Chief Financial Officer have been identified as the CODMs. The Company’s operating segments consist of: (i) Distributed Generation, North America Solar Utility, International Solar Utility, which are aggregated into the Solar reportable segment; (ii) Northeast Wind, Central Wind, Texas Wind, Hawaii Wind and International Wind operating segments, which are aggregated into the Wind reportable segment; and (iii) the Spanish Regulated Solar and Spanish Regulated Wind operating segments that are aggregated within the Regulated Solar and Wind reportable segment. The International Wind operating segment comprises the Company’s wind operations in Portugal and Uruguay. The operating segments have been aggregated as they have similar economic characteristics and meet the aggregation criteria. The CODMs evaluate the performance of the Company’s operating segments principally based on operating income or loss. Corporate expenses include general and administrative expenses, acquisition costs, interest expense on corporate-level indebtedness, stock-based compensation and depreciation expense. All net operating revenues for the three and six months ended June 30, 2020 and 2019 were earned by the Company’s reportable segments from external customers in the United States (including Puerto Rico), Canada, Spain, Portugal, the United Kingdom, Uruguay and Chile, as applicable.

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The following table reflects summarized financial information regarding the Company’s reportable segments for the three and six months ended June 30, 2020 and 2019:

	Three Months Ended June 30, 2020														Three Months Ended June 30, 2019
(In thousands)	Solar			Wind			Regulated Solar and Wind		Corporate			Total			Solar			Wind			Regulated Solar and Wind			Corporate			Total
Operating revenues, net	$	99,353		$	69,790		$	108,186	$	—		$	277,329		$	82,583		$	76,836		$	95,947		$	—		$	255,366
Depreciation, accretion and amortization expense		36,382			44,267			46,958		301			127,908			27,841			41,444			30,809			260			100,354
Other operating costs and expenses		21,530			18,011			27,239		24,338			91,118			17,555			43,806			17,750			20,973			100,084
Operating income (loss)		41,441			7,512			33,989		(24,639	)		58,303			37,187			(8,414	)		47,388			(21,233	)		54,928
Interest expense, net		21,282			14,265			22,942		26,843			85,332			16,593			13,811			10,632			30,005			71,041
Other non-operating expenses (income), net		996			(276	)		38		(3,621	)		(2,863	)		(378	)		68			3,765			(8,410	)		(4,955	)
Income tax (benefit) expense		(1,076	)		(1,057	)		1,422		(10,121	)		(10,832	)		1,182			(422	)		4,940			(31	)		5,669
Net income (loss)	$	20,239		$	(5,420	)	$	9,587	$	(37,740	)	$	(13,334	)	$	19,790		$	(21,871	)	$	28,051		$	(42,797	)	$	(16,827	)
	Six Months Ended June 30, 2020														Six Months Ended June 30, 2019
(In thousands)	Solar			Wind			Regulated Solar and Wind		Corporate			Total			Solar			Wind			Regulated Solar and Wind			Corporate			Total
Operating revenues, net		177,976			146,357			199,758		—		$	524,091			139,939			169,475			171,284			—		$	480,698
Depreciation, accretion and amortization expense		72,844			85,705			91,096		654			250,299			55,076			83,642			67,998			607			207,323
Other operating costs and expenses		38,254			35,862			56,391		55,478			185,985			31,362			75,465			38,706			43,810			189,343
Operating income (loss)		66,878			24,790			52,271		(56,132	)		87,807			53,501			10,368			64,580			(44,417	)		84,032
Interest expense, net		43,257			29,225			37,168		53,641			163,291			29,391			28,953			38,466			60,518			157,328
Other non-operating (income) expenses, net		(2,253	)		1,628			41		(7,949	)		(8,533	)		(6,819	)		(418	)		(150	)		(14,543	)		(21,930	)
Income tax (benefit) expense		(715	)		(422	)		1,634		13,132			13,629			(2,121	)		429			3,096			114			1,518
Net income (loss)	$	26,589		$	(5,641	)	$	13,428	$	(114,956	)	$	(80,580	)	$	33,050		$	(18,596	)	$	23,168		$	(90,506	)	$	(52,884	)
Balance Sheet
Total assets1	$	3,421,255		$	3,593,334		$	3,490,109	$	35,241		$	10,539,939		$	3,509,076		$	3,716,447		$	2,731,892		$	101,221		$	10,058,636

(1) Represents total assets as of June 30, 2020 and December 31, 2019, respectively.

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19. ACCUMULATED OTHER COMPREHENSIVE (LOSS) INCOME

The following tables present the changes in each component of accumulated other comprehensive income (loss), net of tax:

(In thousands)	Foreign Currency Translation Adjustments			Hedging Activities1			Accumulated Other Comprehensive Income
Balance as of December 31, 2018	$	(8,405	)	$	48,643		$	40,238
Other comprehensive (loss) income:
Net unrealized (loss) gain arising during the period (net of zero tax impact)		8,872			(27,288	)		(18,416	)
Reclassification of net realized gain into earnings (net of zero tax impact)		—			(5,828	)		(5,828	)
Other comprehensive income (loss)		8,872			(33,116	)		(24,244	)
Accumulated other comprehensive income		467			15,527			15,994
Less: Other comprehensive income attributable to non-controlling interests		—			732			732
Balance as of June 30, 2019	$	467		$	14,795		$	15,262

(In thousands)	Foreign Currency Translation Adjustments		Hedging Activities1			Accumulated Other Comprehensive Income (Loss)
Balance as of December 31, 2019	$	7,247	$	4,398		$	11,645
Other comprehensive (loss) income:
Net unrealized gain (loss) arising during the period (net of zero and $6,663 tax benefit, respectively)		18,809		(40,136	)		(21,327	)
Reclassification of net realized gain into earnings (net of zero tax impact)		—		(3,097	)		(3,097	)
Other comprehensive income (loss)		18,809		(43,233	)		(24,424	)
Accumulated other comprehensive income (loss)		26,056		(38,835	)		(12,779	)
Less: Other comprehensive loss attributable to non-controlling interests		—		(433	)		(433	)
Balance as of June 30, 2020	$	26,056	$	(38,402	)	$	(12,346	)

(1) See Note 11. Derivatives for additional breakout of hedging gains and losses for interest rate swaps and commodity contracts in a cash flow hedge relationship and the foreign currency contracts designated as hedges of net investments in foreign operations.

20. NON-CONTROLLING INTERESTS

Non-controlling interests represent the portion of net assets in consolidated entities that are not owned by the Company and are reported as a component of equity in the unaudited condensed consolidated balance sheets. Non-controlling interests in subsidiaries that are redeemable either at the option of the holder or at fixed and determinable prices at certain dates in the future are classified as redeemable non-controlling interests in subsidiaries between liabilities and stockholders’ equity in the unaudited condensed consolidated balance sheets. Redeemable non-controlling interests that are currently redeemable or redeemable after the passage of time are adjusted to their redemption value as changes occur. However, the non-controlling interests balance cannot be less than the estimated redemption value.

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The following table presents the activity of the redeemable non-controlling interests balance for the six months ended June 30, 2020 and 2019:

	Six Months Ended June 30,
(In thousands)	2020			2019
Balance as of January 1	$	22,884		$	33,495
Net income (loss)		21			(6,900	)
Distributions		(270	)		(596	)
Repurchases of redeemable non-controlling interests, net1		(14,645	)		—
Non-cash redemption of redeemable non-controlling interests		—			7,345
Balance as of June 30	$	7,990		$	33,344

(1) Represents the carrying amount of the redeemable non-controlling interests repurchased. See below for additional details.

Repurchases of non-controlling interests

During the six months ended June 30, 2020 and 2019, the Company purchased the tax equity investors’ interests in certain distributed generation projects in the U.S. for a combined consideration of $1.7 million and $1.1 million, respectively, which resulted in increasing the Company’s ownership interest in the related projects to 100%. The difference between the consideration paid and the carrying amounts of the non-controlling interests was recorded as an adjustment to additional paid-in capital within Purchase of (redeemable) non-controlling interests in the unaudited condensed consolidated statement of stockholders’ equity.

21. SUBSEQUENT EVENTS

Merger Transaction

See Note 1. Nature of Operations and Organization and Note 17. Related Parties for details of the Merger Transaction and the related transactions.

Delisting and Deregistration

On July 31, 2020, in connection with the completion of the Merger Transaction, the Company notified Nasdaq that trading in TERP Common Stock should be suspended and listing of TERP Common Stock should be removed. The Company also requested that Nasdaq file a notification of removal from listing on Form 25 with the SEC with respect to the delisting and deregistration of the TERP Common Stock. The TERP Common Stock ceased being traded prior to the opening of the market on July 31, 2020, and is no longer listed on Nasdaq. In addition, the Company intends to file with the SEC a Form 15 requesting the suspension of the reporting obligations of the Company under Sections 13(a) and 15(d) of the Securities Exchange Act of 1934, as amended.

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Schedule B

(see attached)

BROOKFIELD RENEWABLE CORPORATION

UNAUDITED PRO FORMA FINANCIAL STATEMENTS

These Unaudited Pro Forma Financial Statements of Brookfield Renewable Corporation (“BEPC”) have been prepared to illustrate the effects of the following transactions (collectively, the “BEPC Transactions”):

• The issuance of 77,842,712 class A exchangeable subordinate voting shares of BEPC (“BEPC exchangeable shares”), 109 class B multiple voting shares of BEPC (“BEPC class B shares”) and 126,400,000 class C non-voting shares of BEPC (“BEPC class C shares”) in connection with the transfer of the United States, Colombian and Brazilian operations of Brookfield Renewable Partners L.P. (the “Business”) to BEPC.

• the delivery of BEPC exchangeable shares to holders of equity units of Brookfield Renewable Energy Partners L.P. (“BRELP”) (which does not include preferred partnership units) and to the general partner of BRELP;

• the delivery of BEPC exchangeable shares to the holders of equity units of Brookfield Renewable Partners L.P. (“BEP”) (which does not include preferred partnership units) and to the general partner of BEP (the “special distribution”);

• the execution of the voting agreements whereby certain indirect subsidiaries of Brookfield Asset Management (“BAM”) transferred the power to vote their respective shares held in TerraForm Power Inc. (“TERP”) to BEPC, which we refer to as the “Common Control Acquisition”; and

• BEPC’s acquisition of 77,764,286 shares of Class A common stock, par value $0.01, of TERP (“TERP shares”) not already owned by BEP and its affiliates (the “public TERP shares”), representing a 34% interest in TERP not already held by Brookfield and its affiliates, in exchange for 37,035,241 BEPC exchangeable shares to such holders of public TERP shares (the “TERP acquisition”)

Prior to the completion of the special distribution, BEPC entered into two subordinated credit facilities with BEP, one as borrower and one as lender, each providing for a ten-year $1.75 billion revolving credit facility to permit the movement of cash within the Brookfield Renewable group. No amounts were drawn under these credit facilities as of the date of the special distribution. In addition, BEP provided to BEPC an equity commitment in the amount of $1 billion which may be called upon by BEPC in exchange for the issuance of BEPC class C shares to BEP. The rationale for the Subordinated Credit Facilities and the equity commitment is to provide BEPC with access to debt financing and equity capital on an as-needed basis and to maximize BEPC’s flexibility.

Immediately following the BEPC Transactions, (i) holders of BEP units held approximately 29% of the issued and outstanding BEPC exchangeable shares, (ii) holders of public TERP shares held approximately 32.2% of the issued and outstanding BEPC exchangeable shares, and (iii) Brookfield and its affiliates held 38.8% of the issued and outstanding BEPC exchangeable shares, and (iv) a subsidiary of BEP held all of BEPC’s issued and outstanding BEPC class B shares which represent a 75% voting interest, and all of the issued and outstanding BEPC class C shares. Together, Brookfield and BEP held an approximate 84.7% aggregate voting interest in BEPC after giving effect to the BEPC Transactions.

The Common Control Acquisition is accounted for as a transaction between entities under common control as a result of BAM being the controlling shareholder of each of BEP and TERP. In the Common Control Acquisition, the net assets of BEP are combined with those of TERP at their historical carrying amounts in BAM’s consolidated financial statements and the companies are presented on a combined basis for historical periods that they were under common control. The Unaudited Pro Forma Financial Statements reflect this presentation for the years presented.

These Unaudited Pro Forma Financial Statements are presented for illustrative purposes only and do not necessarily reflect the operating results or financial position that would have occurred if the BEPC Transactions had been consummated on the dates indicated, nor are they necessarily indicative of the results of operations or financial condition that may be expected for any future period or date. Accordingly, such information should not be relied upon as an indicator of future performance, financial condition or liquidity. Additionally, these Unaudited Pro Forma Financial Statements do not give effect to revenue synergies, operating efficiencies or cost savings that may be achieved with respect of the BEPC Transactions. Actual results may differ materially from the assumptions within the accompanying Unaudited Pro Forma Financial Statements. During 2020, financial markets have been negatively impacted by the novel Coronavirus or COVID-19, which has resulted in

economic uncertainty. BEPC is not able to predict or forecast the extent or duration of the economic uncertainty, and consequently, it is difficult to reliably measure the potential impact of this uncertainty on future financial results.

The information in the Unaudited Pro Forma Condensed Combined Statements of Operating Results for the six months ended June 30, 2020 and for the year ended December 31, 2019 give effect to the BEPC Transactions as if they had occurred on January 1, 2019. The information in these Unaudited Pro Forma Condensed Combined Statement of Financial Position as at June 30, 2020 gives effect to BEPC Transactions as if they had been consummated on June 30, 2020. All financial data in these Unaudited Pro Forma Financial Statements is presented in U.S. dollars and has been prepared using accounting policies that are consistent with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board. For the purposes of these Unaudited Pro Forma Financial Statements, the consolidated financial statements of TERP for the relevant periods presented have been reconciled to IFRS and BEPC’s accounting policies for material accounting policy differences based on available information.

The historical financial information has been adjusted in these Unaudited Pro Forma Financial Statements to give effect to pro forma adjustments that are (1) directly attributable to the BEPC Transactions, (2) factually supportable, and (3) with respect to the Unaudited Pro Forma Condensed Combined Statement of Operating Results, expected to have a continuing impact on the combined results of the Business. The Unaudited Pro Forma Financial Statements are based on preliminary estimates, accounting judgments and currently available information and assumptions that management believes are reasonable. The notes to these Unaudited Pro Forma Financial Statements provide a detailed discussion of how such adjustments were derived and presented in these Unaudited Pro Forma Financial Statements.

These Unaudited Pro Forma Financial Statements and the notes thereto should be read together with (i) the audited combined carve-out financial statements of the United States, Colombian and Brazilian operations of BEP as at December 31, 2019 and 2018 and for each of the years in the three years ended December 31, 2019 contained in BEPC’s prospectus dated June 29, 2020 in respect of the special distribution filed under BEPC’s profile on SEDAR at www.sedar.com on June 29, 2020 (the “Special Distribution Prospectus”), (ii) the financial statements of BEPC as at and for the period ending December 31, 2019 and related notes thereto contained in the Special Distribution Prospectus, (iii) BEPC’s unaudited interim consolidated financial statements and notes as at June 30, 2020 and December 31, 2019 and for the three and six months ended June 30, 2020 filed under BEPC’s profile on SEDAR at www.sedar.com on August 7, 2020, (iv) the unaudited combined carve-out financial statements of the United States, Colombia and Brazilian operations of BEP as at June 30, 2020 and December 31, 2019 and for the three and six months ended June 30, 2020 and 2019, (v) TERP’s audited consolidated financial statements and the notes thereto as of December 31, 2019 and December 31, 2018 and for each of the years in the three years ended December 31, 2019, as included in BEP’s annual report on Form 20-F dated February 28, 2020 for the fiscal year ended December 31, 2019, as amended by Amendment No. 1 thereto dated March 18, 2020 and filed under BEP’s profile on SEDAR at www.sedar.com on March 18, 2020, and (vi) TERP’s unaudited consolidated financial statements and the notes thereto as of June 30, 2020 and December 31, 2019 and for the three and six month periods ended June 30, 2020 and 2019 contained in the BEPC Business Acquisition Report.

Unaudited Pro Forma Condensed Combined Statement of Financial Position

(MILLIONS) As at June 30, 2020	BEPC		United States, Colombian and Brazilian operations		Share capital		Transaction fees		Special Distribution		TERP (U.S. GAAP)		Reclassification to conform presentation			IFRS Adjustments			TERP (IFRS)		TERP acquisition		BEPC Transactions Pro Forma
Assets		(1a)		(1b)		(3)		(5)									(2)			(1c)		(4)
Current assets
Cash and cash equivalents	$	—	$	147	$	—	$	—	$	147	$	260	$	—		$	—		$	260	$	—	$	407
Restricted cash		—		179		—		—		179		38		—			—			38		—		217
Accounts receivable, net		—		—		—		—		—		207		(207	)		—			—		—		—
Trade receivables and other current assets		—		328		—		—		328		—		273			—			273		—		601
Financial instrument assets		—		35		—		—		35		—		8			—			8		—		43
Due from related parties		—		192		—		—		192		3		—			—			3		—		195
Prepaid expenses		—		—		—		—		—		19		(19	)		—			—		—		—
Derivative assets, current		—		—		—		—		—		8		(8	)		—			—		—		—
Deposit on acquisitions		—		—		—		—		—		3		(3	)		—			—		—		—
Other current assets		—		—		—		—		—		44		(44	)		—			—		—		—
		—		881		—		—		881		582		—			—			582		—		1,463
Financial instrument assets		—		5		—		—		5		—		45			—			45		—		50
Equity-accounted investments		—		338		—		—		338		—		7			—			7		—		345
Property, plant and equipment, at fair value		—		20,699		—		—		20,699		—		7,734			3,043			10,777		—		31,476
Renewable energy facilities, net		—		—		—		—		—		7,734		(7,734	)		—			—		—		—
Intangible assets, net		—		—		—		—		—		1,905		(231	)		(1,674	)		—		—		—
Goodwill		—		715		—		—		715		172		—			—			172		—		887
Restricted cash		—		—		—		—		—		60		(60	)		—			—		—		—
Derivative assets		—		—		—		—		—		45		(45	)		—			—		—		—
Deferred income tax assets		—		3		—		1		4		—		—			2			2		—		6
Other long-term assets		—		29		—		—		29		42		284			(14	)		312		—		341
Total assets	$	—	$	22,670	$	—	$	1	$	22,671	$	10,540	$	—		$	1,357		$	11,897	$	—	$	34,568

Unaudited Pro Forma Condensed Combined Statement of Financial Position (Continued)

(MILLIONS) As at June 30, 2020	BEPC		United States, Colombian and Brazilian operations		Share capital			Transaction fees			Special Distribution		TERP (U.S. GAAP)			Reclassification to conform presentation			IFRS Adjustments		TERP (IFRS)		TERP acquisition			BEPC Transactions Pro Forma
Liabilities		(1a)		(1b)		(3)			(5)											(2)		(1c)		(4)
Current liabilities
Current portion of long-term debt	$	—	$	—	$	—		$	—		$	—	$	485		$	(485	)	$	—	$	—	$	—		$	—
Accounts payable and accrued liabilities		—		269		—			6			275		192			—			—		192		—			467
Financial instrument liabilities		—		17		—			—			17		—			63			83		146		—			163
Due to related parties		—		219		—			—			219		13			—			—		13		—			232
Derivative liabilities, current		—		—		—			—			—		63			(63	)		—		—		—			—
Non-recourse borrowings		—		685		—			—			685		—			485			6		491		—			1,176
BEPC exchangeable shares		—		—		2,969			—			2,969		—			—			—		—		1,413			4,382
		—		1,190		2,969			6			4,165		753			—			89		842		1,413			6,420
Long-term debt		—		—		—			—			—		6,262			(6,262	)		—		—		—			—
Operating lease obligations		—		—		—			—			—		286			(286	)		—		—		—			—
Asset retirement obligations		—		—		—			—			—		321			(321	)		—		—		—			—
Derivative liabilities		—		—		—			—			—		237			(237	)		—		—		—			—
Financial instrument liabilities		—		15		—			—			15		—			245			321		566		—			581
Due to related parties		—		—		—			—			—		—			—			—		—		—			—
Non-recourse borrowings		—		4,978		—			—			4,978		—			6,262			39		6,301		—			11,279
Deferred income tax liabilities		—		2,911		—			—			2,911		185			—			96		281		—			3,192
Other long-term liabilities		—		254		—			—			254		94			607			157		858		—			1,112
Equity
Redeemable non-controlling interests		—		—		—			—			—		8			(8	)		—		—		—			—
Stockholder’s equity:
Class A common stock		—		—		—			—			—		2			(2	)		—		—		—			—
Additional paid-in capital		—		—		—			—			—		2,435			(2,435	)		—		—		—			—
accumulated deficit		—		—		—			—			—		(563	)		563			—		—		—			—
Accumulated other comprehensive income		—		—		—			—			—		(12	)		12			—		—		—			—
Treasury stock		—		—		—			—			—		(15	)		15			—		—		—			—
Non-controlling interests		—		—		—			—			—		547			(547	)		—		—		—			—
Total stockholders’ equity		—		—		—			—			—		2,394			(2,394	)		—		—		—			—
Non-controlling interests:
Participating non-controlling interests -in operating subsidiaries		—		6,332		—			—			6,332		—			2,394			655		3,049		(1,045	)		8,336
Participating non-controlling interests - in a holding company		—		—		194			—			194		—			—			—		—		—			194
Equity in net assets attributable to parent company		—		6,990		(3,163	)		(5	)		3,822		—			—			—		—		(368	)		3,454
Total equity in net assets		—		13,322		(2,969	)		(5	)		10,348		2,394			—			655		3,049		(1,413	)		11,984
Total liabilities and equity in net assets	$	—	$	22,670	$	—		$	1		$	22,671	$	10,540		$	—		$	1,357	$	11,897	$	—		$	34,568

Unaudited Pro Forma Condensed Combined Statement of Operating Results

(MILLIONS) Six months ended June 30, 2020	BEPC		United States, Colombian and Brazilian operations			Share capital		Transaction fees		Special Distribution			TERP (U.S. GAAP)			Reclassification to conform presentation			IFRS Adjustments			TERP (IFRS)			TERP acquisition		BEPC Transactions Pro Forma
		(1a)		(1b)			(3)		(5)											(2)			(1c)			(4)
Revenues	$	—	$	1,070		$	—	$	—	$	1,070		$	—		$	524		$	23		$	547		$	—	$	1,617
Operating revenues, net		—		—			—		—		—			524			(524	)		—			—			—		—
Other income		—		17			—		—		17			—			7			—			7			—		24
Direct operating costs		—		(416	)		—		—		(416	)		—			(127	)		—			(127	)		—		(543	)
Operating costs and expenses:
Cost of operations		—		—			—		—		—			(120	)		120			—			—			—		—
General and administrative expenses		—		—			—		—		—			(45	)		45			—			—			—		—
General and administrative expenses - affiliate		—		—			—		—		—			(20	)		20			—			—			—		—
Acquisition costs		—		—			—		—		—			—			—			—			—			—		—
Acquisition costs - affiliate		—		—			—		—		—			(1	)		1			—			—			—		—
Depreciation, accretion and amortization expense		—		—			—		—		—			(250	)		250			—			—			—		—
Management service costs		—		(46	)		—		—		(46	)		—			(19	)		—			(19	)		—		(65	)
Interest expense - borrowings		—		(174	)		—		—		(174	)		—			(186	)		3			(183	)		—		(357	)
Share of earnings from equity-accounted investments		—		1			—		—		1			—			—			—			—			—		1
Foreign exchange and unrealized financial instrument gain (loss)		—		26			—		—		26			—			(21	)		—			(21	)		—		5
Depreciations		—		(249	)		—		—		(249	)		—			(246	)		(24	)		(270	)		—		(519	)
Other		—		5			—		—		5			—			—			6			6			—		11
Other expenses (income):
Interest expense, net		—		—			—		—		—			(163	)		163			—			—			—		—
Loss on modification and extinguishment of debt, net		—		—			—		—		—			(4	)		4			—			—			—		—
Gain on foreign currency exchange, net		—		—			—		—		—			5			(5	)		—			—			—		—
Gain on sale of renewable energy facilities		—		—			—		—		—			—			—			—			—			—		—
Other income, net		—		—			—		—		—			6			(6	)		—			—			—		—
Income tax expense
Current		—		(14	)		—		—		(14	)		—			(2	)		2			—			—		(14	)
Deferred		—		(17	)		—		—		(17	)		—			(11	)		(9	)		(20	)		—		(37	)
Income tax (expense) benefit		—		—			—		—		—			(13	)		13			—			—			—		—
		—		(31	)		—		—		(31	)		(13	)		—			(7	)		(20	)		—		(51	)
Net income	$	—	$	203		$	—	$	—	$	203		$	(81	)	$	—		$	1		$	(80	)	$	—	$	123

Unaudited Pro Forma Condensed Combined Statement of Operating Results (Continued)

(MILLIONS) Six months ended June 30, 2020	BEPC		United States, Colombian and Brazilian operations		Share capital			Transaction fees		Special Distribution		TERP (U.S. GAAP)			Reclassification to conform presentation			IFRS Adjustments		TERP (IFRS)			TERP acquisition			BEPC Transactions Pro Forma
		(1a)		(1b)		(3)			(5)										(2)		(1c)			(4)
Net income attributable to:
Redeemable non-controlling interests	$	—	$	—	$	—		$	—	$	—	$	—		$	—		$	—	$	—		$	—		$	—
Non-controlling interests		—		—		—			—		—		(26	)		26			—		—			—			—
Class A common stockholders		—		—		—			—		—		(55	)		55			—		—			—			—
Non-controlling interests
Participating noncontrolling interests - in operating subsidiaries		—		112		—			—		112		—			(81	)		1		(80	)		28			60
Participating non-controlling interests - in a holding company		—		—		4			—		4		—			—		��	—		—			—			4
Parent company		—		91		(4	)		—		87		—			—			—		—			(28	)		59
	$	—	$	203	$	—		$	—	$	203	$	(81	)	$	—		$	1	$	(80	)	$	—		$	123

Unaudited Pro Forma Condensed Combined Statement of Operating Results    

(MILLIONS) Year ended December 31, 2019	BEPC			United States, Colombian and Brazilian operations			Share capital			Transaction fees			Special Distribution			TERP (U.S. GAAP)			Reclassification to conform presentation			IFRS Adjustments			TERP (IFRS)			TERP acquisition			BEPC Transactions Pro Forma
		(1a	)		(1b	)		(3	)		(5	)											(2	)		(1c	)		(4	)
Revenues	$	—		$	2,236		$	—		$	—		$	2,236		$	—		$	941		$	50		$	991		$	—		$	3,227
Operating revenues, net		—			—			—			—			—			941			(941	)		—			—			—			—
Other income		—			31			—			—			31			—			48			—			48			—			79
Direct operating costs		—			(801	)		—			—			(801	)		—			(252	)		—			(252	)		—			(1,053	)
Operating costs and expenses:
Cost of operations		—			—			—			—			—			(280	)		280			—			—			—			—
General and administrative expenses		—			—			—			—			—			(81	)		81			—			—			—			—
General and administrative expenses - affiliate		—			—			—			—			—			(28	)		28			—			—			—			—
Acquisition costs		—			—			—			—			—			(4	)		4			—			—			—			—
Acquisition costs - affiliate		—			—			—			—			—			(1	)		1			—			—			—			—
Depreciation, accretion and amortization expense		—			—			—			—			—			(434	)		434			—			—			—			—
Management service costs		—			(82	)		—			—			(82	)		—			(27	)		—			(27	)		—			(109	)
Interest expense - borrowings		—			(381	)		—			—			(381	)		—			(290	)		(29	)		(319	)		—			(700	)
Share of earnings from equity-accounted investments		—			12			—			—			12			—			—			—			—			—			12
Foreign exchange and unrealized financial instrument gain (loss)		—			9			—			—			9			—			(39	)		—			(39	)		—			(30	)
Depreciations		—			(509	)		—			—			(509	)		—			(423	)		(69	)		(492	)		—			(1,001	)
Other		—			(21	)		—			—			(21	)		—			(153	)		49			(104	)		—			(125	)
Other expenses (income):
Interest expense, net		—			—			—			—			—			(298	)		298			—			—			—			—
Loss on modification and extinguishment of debt, net		—			—			—			—			—			(27	)		27			—			—			—			—
Gain on foreign currency exchange, net		—			—			—			—			—			13			(13	)		—			—			—			—
Gain on sale of renewable energy facilities		—			—			—			—			—			2			(2	)		—			—			—			—
Other income, net		—			—			—			—			—			2			(2	)		—			—			—			—
Income tax expense
Current		—			(59	)		—			—			(59	)		—			7			(12	)		(5	)		—			(64	)
Deferred		—			(10	)		—			—			(10	)		—			(19	)		25			6			—			(4	)
Income tax (expense) benefit		—			—			—			—			—			(12	)		12			—			—			—			—
		—			(69	)		—			—			(69	)		(12	)		—			13			1			—			(68	)
Net income	$	—		$	425		$	—		$	—		$	425		$	(207	)	$	—		$	14		$	(193	)	$	—		$	232

Unaudited Pro Forma Condensed Combined Statement of Operating Results (Continued)    

(MILLIONS) Year ended December 31, 2019	BEPC		United States, Colombian and Brazilian operations		Share capital			Transaction fees		Special Distribution		TERP (U.S. GAAP)			Reclassification to conform presentation			IFRS Adjustments		TERP (IFRS)			TERP acquisition			BEPC Transactions Pro Forma
	(1a)		(1b)		(3)			(5)										(2)		(1c)			(4)
Net income attributable to:
Redeemable non-controlling interests	$	—	$	—	$	—		$	—	$	—	$	(12	)	$	12		$	—	$	—		$	—		$	—
Non-controlling interests		—		—		—			—		—		(46	)		46			—		—			—			—
Class A common stockholders		—		—		—			—		—		(149	)		149			—		—			—			—
Non-controlling interests
Participating noncontrolling interests - in operating subsidiaries		—		241		—			—		241		—			(207	)		14		(193	)		71			119
Participating non-controlling interests - in a holding company		—		—		12			—		12		—			—			—		—						12
Parent company		—		184		(12	)		—		172		—			—			—		—			(71	)		101
	$	—	$	425	$	—		$	—	$	425	$	(207	)	$	—		$	14	$	(193	)	$	—		$	232

NOTES TO THE UNAUDITED

PRO FORMA FINANCIAL STATEMENTS OF BEPC

(1) Historical Results

a. BEPC

BEPC was formed on September 9, 2019 by a subsidiary of BEP, which contributed one hundred dollars on formation. The Unaudited Pro Forma Financial Statements are derived in part from the financial statements of BEPC as at and for the period ending December 31, 2019 and related notes thereto contained in the Special Distribution Prospectus and BEPC’s unaudited interim consolidated financial statements and related notes thereto contained in BEPC’s interim report as at June 30, 2020 and December 31, 2019 and for the three and six months ended June 30, 2020 filed under BEPC’s profile on SEDAR on August 7, 2020 at www.sedar.com.

b. United States, Colombian and Brazilian operations of BEP

These Unaudited Pro Forma Financial Statements are derived in part from the audited combined carve-out financial statements of the United States, Colombian and Brazilian operations of BEP as at December 31, 2019 and 2018 and for each of the years in the three years ended December 31, 2019 contained in the Special Distribution Prospectus and the unaudited interim combined carve-out financial statements of the United States, Colombian and Brazilian operations of BEP as at June 30, 2020 and December 31, 2019 and for the three and six months ended June 30, 2020 and 2019 contained in the business acquisition report of BEPC filed under BEPC’s profile on SEDAR at www.sedar.com on August 25, 2020. Brookfield Renewable contributed the Business to BEPC on July 29, 2020. This contribution was valued based on Brookfield Renewable’s book value on the date of contribution, as the transfer of these assets to BEPC was considered to be a transaction between entities under common control.

c. Historical TerraForm Power, Inc.

Simultaneous to the completion of the TERP acquisition, BEPC entered into voting agreements with BEP and certain indirect subsidiaries of Brookfield to transfer the power to vote their respective shares held in TERP (or its successor entity) to BEPC. As a result, BEPC controls and consolidates TERP.

These Unaudited Pro Forma Financial Statements are derived in part from the financial statements of TERP, which have been reconciled to IFRS. This contribution will be valued based on Brookfield’s book value on the date of contribution, as the transfer of control of these assets to BEPC is considered to be a transaction between entities under common control.

(2) IFRS adjustments

The accounting policies used in the preparation of these Unaudited Pro Forma Financial Statements are those that are set out in the audited combined carve-out financial statements of the United States, Colombian and Brazilian operations of BEP contained in the Special Distribution Prospectus.

All financial data in these Unaudited Pro Forma Financial Statements are presented in millions of U.S. dollars.

While BEPC prepares its financial statements consistent with IFRS, TERP’s financial data have been prepared on a basis consistent with U.S. GAAP. Consequently, the consolidated financial statements for TERP as at and for the six months ended June 30, 2020, and for each of the years in the three years ended December 31, 2019 have been reconciled to IFRS from U.S. GAAP for material accounting policy differences.

Material differences in accounting policies for the historical period presented resulting in adjustments to TERP’s results reported under U.S. GAAP include the following:

• Under the revaluation model, property, plant, and equipment are measured at fair value subsequent to initial recognition on the consolidated statement of financial position. Increases in the fair value of the property, plant and equipment are recorded in revaluation surplus within the statement of other comprehensive income. Decreases in the fair value of property, plant and equipment are recorded in other comprehensive income, to the extent that surplus exists, and to the income statement thereafter.

• Similarly, certain revenue contracts that are capitalized as intangible assets under U.S. GAAP are included in the revaluation of property, plant and equipment on the basis that a ‘legal linkage’ could be established between the revenue contract and the power-generating facility such that the revenue contract would be unable to be satisfied with anything except the physical delivery of electricity and/or other services from the associated power-generating facility.

• The equity in net assets of TERP that is attributable to partners in a tax equity structure that is presented as non-controlling interest under U.S. GAAP is classified as a liability under IFRS and measured at fair value subsequent to initial recognition on the consolidated statements of financial position. Changes to the fair value of the liability are recorded in the income statement.

• Differences in the valuation of asset retirement obligations under U.S. GAAP and IFRS arise due to the differences in treatment of changes in cost estimates and discount rates associated with asset retirement obligations.

• Differences in the valuation of certain other assets and liabilities due to the application of IFRS acquisition accounting when the TERP business was acquired by BAM.

• Deferred tax provisions are adjusted to reflect the differences in the carrying value of assets and liabilities under IFRS with taxable temporary differences and deductible temporary differences.

(3) Share capital

Prior to the special distribution, BEPC acquired certain of BEP’s subsidiaries which hold renewable power assets in the United States, Brazil and Colombia, excluding a 10% interest in BEP’s current interest in certain Brazilian and Colombian operations, which was retained by a subsidiary of BEP through its ownership of 10% of the common shares of BRP Bermuda Holdings I Limited (“LATAM Holdco”). The 10% portion of the Business retained by a subsidiary of BEP is presented as “Participating non-controlling interests – in a holding company” in BEPC’s Unaudited Pro Forma Condensed Combined Statement of Financial Position as at June 30, 2020.

Immediately after the transfer of the Business, BEPC’s capital structure is comprised of 77,842,712 BEPC exchangeable shares, 110 BEPC class B shares and 126,400,000 BEPC class C shares. BEPC exchangeable shares are exchangeable at the option of the holder at any time at a price equal to the market price of a BEP unit (subject to adjustment in the event of certain dilutive or other capital events by BEPC or BEP). BEPC has the option to satisfy the exchange either by delivering a BEP Unit or the cash equivalent. BEPC class B shares and BEPC class C shares are redeemable for cash in an amount equal to the market price of a BEP unit. Due to the exchange feature of the BEPC exchangeable shares and the redemption feature of the BEPC class B shares, the BEPC exchangeable shares and BEPC class B shares are classified as financial liabilities in these Unaudited Pro Forma Financial Statements. BEPC class C shares, as the most subordinated class of all common shares, are classified as equity instruments.

Valuation of the liabilities associated with the BEPC exchangeable shares and BEPC class B shares will be based on the market value of BEP units for which they are exchangeable into, with remeasurement gains or losses recognized in BEPC’s Combined Statements of Operating Results. The valuation of the liability in the BEPC Unaudited Pro Forma Condensed Combined Statement of Financial Position as at June 30, 2020 was estimated based on the VWAP price for the last five business days ending June 30, 2020, of $47.68, adjusted for the pro forma effect of the special distribution, and 77,842,712 of BEPC exchangeable shares and BEPC Class B shares issued in aggregate. The impact of the remeasurement gains or losses has not been reflected in these Unaudited Pro Forma Financial Statements. An increase or a decrease in the per share fair market value of the BEPC exchangeable shares and BEPC class B shares by 10% is expected to decrease or increase, respectively, net income by approximately $297 million for the six months ended June 30, 2020, on a pre-tax basis.

(4) TERP acquisition

Following the completion of the special distribution, BEPC acquired 77,764,286 TERP shares not already owned by BEP and its affiliates, representing a 34% interest in TERP, in exchange for 37,035,241 BEPC exchangeable shares to such holders of public TERP shares. BEPC entered into voting agreements with certain indirect subsidiaries of BAM and BEP to transfer the power to vote their respective shares held in TERP (or its successor entity) to BEPC. As a result, BEPC indirectly controls and consolidates TERP upon completion of the TERP acquisition.

The impact of the remeasurement gains or losses on the BEPC exchangeable shares issued in the TERP acquisition have not been reflected in these Unaudited Pro Forma Financial Statements. An increase or a decrease by 10% in the per share fair market value of the BEPC

exchangeable shares issued in the TERP acquisition is expected to decrease or increase, respectively, net income by approximately $141 million for the six months ended June 30, 2020, on a pre-tax basis. The fluctuation in net income is estimated based on the VWAP price for the last five business days ending June 30, 2020 of $47.68, adjusted for the pro forma effect of the special distribution, and the 37,035,241 of BEPC exchangeable shares issued in the TERP acquisition.

In connection with the special distribution and the TERP acquisition, BEPC issued 114,877,953 BEPC exchangeable shares in aggregate.

(5) Transaction fees

The pro forma adjustments include provisions for transaction fees associated with the special distribution and the transfer of the Business to BEPC. As the transaction costs are non-recurring, the transaction costs of $6 million are recorded in equity.

The adjustment to reflect the tax effects of the transaction fees is calculated at the average statutory rates in effect in each relevant jurisdiction for the periods presented. The impact of the pro forma adjustments has the effect of increasing deductible temporary differences.

(6) Earnings per share

Earnings per share have not been presented as all the classes of BEPC’s share capital do not represent “ordinary shares” under IAS 33 Earnings per share.